Macau Business Daily, April 8, 2014

MOP 6.00 Publisher: Paulo A. Azevedo Number 513 Tuesday April 8, 2014 Year II

Cable Soap Macau Cable TV Co Ltd has already reached an agreement with the government on its concession renewal, on Melco Crown a non-exclusive basis. The consensus “in principle” advances was confirmed to Business Daily by the city’s sole pay Japan quest television service provider. However, the next episode will be to face competition from the internet TV boxes Page

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Can’t get a taxi?

Use an app Page 5

www.macaubusinessdaily.com

Searching for paradise Gaming machine supplier and casino operator Paradise Entertainment Ltd has already submitted a plan to the Macau government for a place on Hengqin island. The project aims to use part of the zone reserved for Macau investors to build an assembly factory.

Company chairman Jay Chun confirms the maths for Business Daily: reduce costs and expand operations overseas Page 2

All full up Macau is reaching the limit in dealing with its building debris. And is now in final talks with the mainland to offload the city’s construction waste in Guangdong

Priced out

Brought to you by

Macau has emerged as one of the world’s costliest places to buy a house. It outranks Hong Kong, says a Reuters report. Business Daily follows the trials and tribulations of some who are forced to keep on the move Pages 6 & 7

HSI - Movers April 7

Name

%Day

China Resources Po

3.10

China Unicom Hong

1.94

CNOOC Ltd

1.66

China Life Insurance

1.60

China Mengniu Dair

1.60

AIA Group Ltd

-2.09

Li & Fung Ltd

-2.36

Tencent Holdings Lt

-4.48

Sands China Ltd

-4.89

Galaxy Entertainm

-5.63

Source: Bloomberg

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World Bank rectifies growth numbers

Brought to you by

Although the WB has slightly cut general figures for Asia, growth and stability for China and the rest of the Asia Pacific area are the leading drivers for the next two years Page 9

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April 8, 2014

Macau

Paradise mulls Hengqin plant for overseas expansion Paradise Entertainment Ltd wants to build an assembly factory for its gaming machines on nearby Hengqin island while it seeks to increase its presence in the overseas market Tony Lai

tony.lai@macaubusinessdaily.com

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aming machine supplier and casino operator Paradise Entertainment Ltd is mulling the idea of building a factory on nearby Hengqin island to be more cost-efficient in accommodating its overseas expansion plans.

Jay Chun, the company’s chairman and managing director, told Business Daily that they have already submitted a plan to the Macau government to vie for a place in the 4.5 square kilometre zone reserved for Macau investors.

“Right now we sub-contract the assembly procedures of gaming machines to [companies in] Taiwan,” said Mr Chun, “but the cost can be reduced by 20 percent if we have an assembly factory on Hengqin.

“Basically it is impossible to have one in Macau now as labour is expensive and there’s no land.”

His remarks echo those of other companies in the territory, the unemployment rate of which sunk to a record-low of 1.7 percent for the December-February period.

Its proximity to Macau makes Hengqin an ideal location for the plant but the policies regarding the trading of goods in the island zone must first be resolved, Mr Chun

noted.

“As we’ll tackle more overseas markets in the future, it’s important there are clearer policies regarding the shipment of goods [there],” he said. He refers to what tax regime is applied for the outbound and inbound goods of the island zone, and whether goods shipped between the zone and Macau will be considered as trade.

He stressed that the Hengqin factory plan is still only in the “initial thoughts” stage.

“First, [we have to] consider the policy and second we have to see how big a piece of land we can get,” he added, explaining no investment figure had yet been assigned.

Overseas ambitions In addition to operating casino services in Kam Pek Paradise and Waldo Casino on the peninsula, Paradise Entertainment focuses on supplying gaming machines like slots and electronic table games to local gaming operators. But this is going to change.

Mr Chun hopes 35 percent of the new machine orders this year will come from the local market, with

65 percent for the overseas markets including the United States, Australia and Southeast Asian countries like the Philippines. The company hopes to have new orders for 3,000 gaming machines this year, he added, selling at about US$17,000 (136,000 patacas) each, giving a profit margin of 70 percent.

The company hopes to reduce the reliance of gaming machines on the local market from the current 90 percent to at least half in the future, the chairman said.

Paradise Entertainment’s Hengqin proposal is one of the 89 proposals the Macau government has received for investment in the 4.5-squarekilometre zone. It competes with other plans like a commercial mall developed by restaurant operator Future Bright Holdings Ltd and a similar project by Macau-based distributor of luxury brand products Rainbow Group.

Secretary for Economy and Finance Francis Tam Pak Yuen said on March 26 that they are in the final stages of reviewing proposals, and hope to announce a confirmed list of projects “within two weeks”.

The government will recommend 30 projects to Hengqin first, he added.

Waste not, want not Macau govt in talks with mainland to offload construction waste from here to a coastal Guangdong city to alleviate pressures on the saturated Cotai dumping site Tony Lai

tony.lai@macaubusinessdaily.com

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acau is in the final stages of discussion with mainland China regarding the dumping of building waste in Guangdong province as one of the measures to alleviate pressure on the nearlysaturated disposing site here.

The Environmental Protection Bureau told public broadcaster TDM Radio yesterday that they are “discussing with the mainland’s relevant departments about handling the construction waste of Macau through

regional cooperation”.

It is now “waiting for details for implementation”, the bureau said in a reply. But the bureau said it has to build facilities to classify the waste first, which could be ready “by year-end or early next year”, the broadcaster reported.

“I’ve not heard anything [about whether its plan is approved] and we’re not sure we can get the land,” Mr Chun remarked.

Mass market growth Paradise Entertainment reported profit of HK$103.78 million (US$13.3 million) last year, down 27.6 percent from a year earlier, despite a 41.4-percent increase in its turnover to HK$1.03 billion last year.

Over 83 percent of the company’s revenue last year came from casino operations while the rest came from supplying gaming machines.

The group attributed the drop in profit, in the filing to the Hong Kong Stock Exchange last month, to increased costs and the amortisation of acquiring a US$29.6-million patent for a betting terminal system in the US. Paradise Entertainment has 37 gaming tables and over 300 slot machines in Kam Pek Paradise, and operates the sales and service of 30 gaming tables and 200 slot machines in Waldo Casino. The company also supplies 800 live multi-game machines to Kam Pek Paradise, 150 in Waldo Casino and 300 in Casino Lisboa.

Mr Chun said he is optimistic about the company’s performance this year given the robust growth of the mass market here.

Brokerage Wells Fargo Ltd said last week that mass market gaming revenue here surged 39 percent from the previous year in the first three months of this year compared with a 12.5-percent growth in the VIP market.

The company’s subsidiary LT Game Ltd is currently involved in a patent dispute regarding equipment held by LT Game with rival SHFL Entertainment (Asia) Ltd. The latter’s parent firm, Bally Technologies Ltd, said last month that the courts here have dismissed the case, while Paradise Entertainment said the case continues.

Business Daily asked the bureau for more information yesterday, such as the exact location of the dumping site and the timetable for implementation but there was no reply before press time yesterday.

Mainland media and Chinese-language newspaper Macao Daily News, however, reported last month that the most probable location for the dumping site is Taishan, a coastal city in the south of Guangdong province and west of Macau.

The media quoted Liu Shaolin, director of the industrial park’s administrative committee in Taishan, as saying that building waste from Macau can be used for land reclamation in the coastal city. The mainland’s State Oceanic Administration is positive about the plan, Mr Liu said.

The Taishan site can help offload the burdens of the almost full waste dumping site on Cotai here, which has been operational since 2006.

Cheung Sio Kei, director of the environmental bureau here, said last year that the site could be saturated “within a year”. The site handled about 3.9 million cubic metres of building waste last year, compared with an annual average of 2.25 million cubic metres when the site first opened, according to the bureau.

Apart from disposing of waste in the mainland, the bureau is mulling a scheme to charge companies for dumping building waste.

The bureau said last year that it had commissioned an academic study for such a scheme making polluters pay but no progress has since been reported.

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April 8, 2014

Macau

Macau Cable squares up for internet challenge Macau Cable TV is to secure a position in the pay TV market. But as soon as the company gains its concession renewal it has to find ways to confront competition from internet TV boxes Stephanie Lai

sw.lai@macaubusinessdaily.co

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he city’s sole pay television service provider Macau Cable TV Co Ltd told Business Daily that it has already “reached consensus in principle” with the government on its concession renewal, whereby the extension term could stretch beyond months.

Speaking to Business Daily, chief commercial officer of Macau Cable TV John Chiang Kuong Io confirmed that both the company and the government have reached consensus on renewing its concession to run the pay television service on a “non-exclusive basis”.

“The renewal case will be just like [telecommunications operator] Companhia de Telecomunicações de Macau SARL (CTM), where their service [for running fixed-line telecom operations]

has been renewed while the government invited other companies to join the market,” said Mr John Chiang.

“In principle, Macau Cable TV and the government have no disagreements about the principle that the renewal of the concession service agreement will be signed on a non-exclusive basis,” he added.

However, Mr Chiang was unwilling to disclose for how long the concession renewal will be extended, although he noted that it would not be just in terms of “months”.

The company’s 15-year concession of running pay television service ends on April 21, after more than a decade embroiled in lawsuits over the use of unlicensed cable networks from the city’s antenna companies to retransmit TV channels

from around the region to households, and without authorisation from the copyright holders.

Grey competitor Although Macau Cable TV was almost secured a firm position in the local pay television service market via the concession renewal, the sales of internet TV boxes made by China consumer electronics developer Xiaomi also pose a competitive threat to the company, Mr Chiang acknowledged.

The internet TV boxes have been on sale in both Hong Kong and Macau.

The internet TV box of the brand Xiaomi - also known as a “set top box” - works on the Android operation system that is also used on

crime

Lady Luck deserts fraudsters Two people have been busted for concealing fake chips. A total of 145 chips worth HK$10,000 each are still unaccounted for

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wo Hong Kong men, both aged 23, were arrested at the weekend for concealing 55 fake gaming chips worth HK$10,000 each and marked “Galaxy”, at a casino in the Cotai area. Judiciary Police held a press conference yesterday to explain that the pair had been grilled whilst trying to change two chips at the exchange counter.

The casino employee called police after having her suspicions aroused and they were apprehended the same day. On site and in addition to the two chips detected, police found another 34 fake chips with a total face value of HK$340,000 plus 45 genuine HK$1,000 chips on the two individuals.

Upon investigation, the casino found 19 other fake HK$10,000 chips in their racks. The effective loss for the casino now stood at HK$190,000 but the accused confessed that last Saturday they had gone to Zhuhai to get supplies, returning to Macau the same day. They said that a total of 200 chips had been counterfeit and that nine other individuals were involved in Macau at the time, a statement the police say they do not believe.

Their modus operandi was to change the fake chips at the tables, where security is considered more “vulnerable”. The two men are charged with forgery, and the case is still under investigation.

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smartphones. Users can plug the box into their television, connect to the internet and select the application for iCNTV, which offers content from mainland video websites. iCNTV is known as Future TV Co Ltd, a subsidiary of China Network Television, and is one of China’s leading streaming content providers.

However, users can have boxes “jail-broken”, which means that they can remove certain security restrictions and gain access to installing unapproved and unofficial applications that allow them to view a host of content, such as English Premier League football.

“The emergence of this product actually poses an issue that the government and television content providers have been looking at not only

in Hong Kong but in Singapore and Malaysia as well,” Mr Chiang remarked, adding that he was also doubtful about whether all the content that users can access through the installation of the Xiaomi internet TV box have gained the copyright holders’ approval.

He noted that most of the programmes that local consumers love to access through the Xiaomi TV box are Korean dramas or other Asian episodes, while Macau Cable TV mainly provides Western movies and sports channels.

“The Xiaomi TV box here is now only consumed by a small group, and the content does not show much overlapping with our pay television programmes,” said Mr Chiang.

“But I think it could still affect a pay TV operator’s business.”

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April 8, 2014

Macau

Dreamlike partnership unfolds Bella Corp, a local partner for Melco Crown in the Philippines, has reported more than a six-fold rise in net income. The company has benefited from deals to develop the City of Dreams Manila, which needs as many as 5,000 workers Tony Lai

tony.lai@macaubusinessdaily.com

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local partner of gaming operator Melco Crown Entertainment Ltd in a casino resort in the Philippines posted a nearly sevenfold increase in earnings last year via the cooperation.

Belle Corp said in a regulatory filing with the Philippine Stock Exchange last week that its net income last year totalled 3.63 billion Philippine pesos (640 million patacas), surging 553.3 percent from 555.66 million Philippine pesos in 2012.

Its gross revenue expanded more than five times to 2.62 billion pesos last year, the filing said.

Last year’s solid performance was “due to the receipt of revenues arising from lease and operating agreements with Philippine subsidiaries of Melco Crown Entertainment Ltd, totalling 2.28 billion [Philippine peso],” the filing explained.

Belle Corp, holding one of the four casino licences in the country, signed an agreement in March last year with Melco Crown (Philippines) Resorts Corp to develop and manage the US$1.3-billion (10.4-billionpataca) gaming project - The City of Dreams Manila - which is expected to open this year.

Belle Corp, gaming and leisure development unit of Philippine mall and banking conglomerate SM Investments Corp, is the developer of the project on a land area of 6.2-hectares (15.3 acres), while Melco Crown is the project operator.

The 2.28 billion peso deal includes 949.6 million pesos paid by Melco Crown to be included as the colicensee of the project, the filing said, while the rest was for the leasing of project facilities.

The filing did not go into specifics regarding the opening date of the project, only saying: “The company has been devoting significant resources to development activities connected with its integrated resort project located… in Parañaque City and targets its grand opening in 2014.”

Recruitment starting According to previous statements

by Melco Crown, The City of Dreams Manila will offer up to 365 gaming tables, 1,680 slot machines and 1,680 electronic table games.

The project will also feature six hotel towers, including an approximately 260-room Crown Towers hotel and “other hotels with VIP and 5-star luxury rooms and high-end boutique hotel rooms”, according to previous

statements. Melco Crown - controlled by local tycoon Lawrence Ho Yau Lung and Australian billionaire James Packer - confirmed in January hat luxury hotel and restaurant chain Nobu, co-founded by actor Robert De Niro, will be the second major hotel brand in the Philippine project, offering 321 rooms.

Philippine newspaper Manila Bulletin reported on March 31 that the Manila project is expected to hire 5,000 workers for operations on a full-time and part-time basis.

Melco Crown Philippines has already organised job fairs to recruit new blood for the project, the report added.

The newspaper quoted Kevin Sim, City of Dreams Manila chief operating officer, as saying the complex “is not only set to bring outstanding worldclass entertainment attractions to Paranaque City but is also offering the opportunity for many thousands of ‘Dream Careers’.”

The Philippine gaming regulator Pagcor says it expects gambling revenues in the country could grow from US$1.3 billion in 2011 to at least US$10 billion by 2017, with most of the growth generated by four new casino resorts including The City of Dreams Manila. Rival project Solaire Resort & Casino became operational last year.

Melco Crown prepares groundwork in Japan James Packer to reveal Melco Crown’s plans for Japan resort bid

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elco Crown is trying to reach an agreement with some local operators in order to build a $US5 billion casino resort in Japan. Todd Nisbet, the Crown executive in charge of the bid, revealed the information through an interview granted to The Australian newspaper. Nisbet is responsible for the creation of the famous City of Dreams show The House of Dancing Water, a production included in the Japan resort bid.

Japan is apparently a very sweet candy to chew as it represents a massive market of more than 120 million inhabitants and is, therefore, a major target for Melco Crown’s joint venture.

Nisbet commented in The Australian interview that Japan ”is the biggest single opportunity that we

are looking at in terms of an international expansion and growth story, just because of the sophistication of the market.”

A spokesperson confirmed to Business Daily that “it’s always Melco Crown Entertainment that is closely monitoring the major jurisdictions in Asia, including Japan”. One

$US5 billion

Proposed casino investment in Japan Pachinko is currently the only gaming allowed in Japan

of the most interesting developments gaming analysts are paying more attention to is the possibility of joint ventures pursuing other business opportunities rather than preferring to go their separate ways.

Crown owner and Melco Crown’s co-owner, James Packer, flew to Japan yesterday as an Aussie government

counsellor. Packer, the second richest man in Australia, is accompanying Australia’s Prime Minister Tony Abbot on his official Japan and China tour. The billionaire will reveal his company’s plans for the Tokyo project at a business meeting.

According to Nisbet, Lawrence Ho, the other owner of Melco Crown’s joint venture, is a main asset in the bid, minimising in this way the current tensions existing between Japan and China.

Regardless of the evolution of the talks with the operators, one key element necessary to undertaking the project is a sea-change in the Japanese regulation that bans gambling.

On this subject, Asian gambling regulations are the main obstacle to the proliferation of the casino business. Nisbet revealed that Crown is also talking to Vietnamese, Sri Lankan and South Korean authorities regarding possible expansion but all of them need to modify existing legislation to legalise gambling.

O.G.

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April 8, 2014

Macau

Riding the apps to get a taxi A local association weighs up the launch of a taxi-hailing application popular in the mainland Stephanie Lai

sw.lai@macaubusinessdaily.com

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local black taxi drivers’ association is expecting its 300 member taxis to adopt a taxi-hailing smartphone application by around June this year, one that has previously been integrated by China internet giant Tencent into its instant messenger tool WeChat, Business Daily has learnt.

“The functions of this taxi-hailing application to be used in Macau will be very similar to Tencent’s-backed Didi Dache on the mainland, which mainly targets Chinese visitors travelling here, and the application is linked to the Wechat interface,” Macau Taxi Driver Mutual Association chairman Tony Kuok Leong Son told Business Daily.

Didi Dache, or “Honk Honk, Catch a Cab” in Mandarin, enables smartphone application users in mainland China to track down and reserve a taxi by

inputting their destinations.

Taxi fees can be deducted from the bank account that the user has registered with Didi Dache application, or paid in cash to the taxi driver.

“But what is different from the mainland version is that we intend to deduct around 20 patacas from users that have booked our taxi using the app but who do not turn up,” said Mr Kuok.

The taxi-booking applications Didi Dache and its competitor Kuaidi Dache, backed by China’s

e-commerce company and Tencent’s rival Alibaba, have been locked in a fierce price war on the mainland with cash rebates policy offered to both the taxi-hailing application users and taxi drivers, by which the companies sought to boost usage of the mobile apps.

On February 18, stimulated by Kuaidi Dache’s move that raised a subsidy for users’ taxi fares, Didi Dache has raised its subsidy of its users’ taxi fares from 10 yuan (12.98 patacas) to amounts

We intend to give an additional tip to taxi drivers that have successfully given a ride to users that have made the application booking Tony Kuok

of between 12 yuan and 20 yuan; while drivers could get an additional cash reward of 5 to 10 yuan on top of the fare price for each taxi trip successfully booked through the application.

However, after rounds of subsidy war against Kuaidi Dache, Didi Dache’s cash reward for users for each taxi trip went down to 5 yuan on March 18. From January 10 to the end of March this year, the mobile application company Didi Dache saw its user number reaching nearly 100 million, along with its subsidy splash amounting to 1.4 billion yuan, Chineselanguage newspaper Hong Kong Economic Times reported.

“Macau is a market where the demand far outweighs the taxi number, so Didi Dache’s subsidy plan can’t work here,” said Mr Tony Kuok.

“But we do intend to give an additional tip to taxi drivers that have successfully given a ride to users that have made the application booking.”

Mr Kuok added that his association is currently testing the taxi-hailing application, which they hope to launch

by June.

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April 8, 2014

Macau Brands

Trends

Crystal clear Raquel Dias

newsdesk@macaubusinessdaily.com

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or a few years already dare I say decades - gold and silver jewellery has been in decline. A possible explanation might be the fact that apart from top brands like Cartier, Bulgari and Tiffany (to name but a few) none of your local jewellery shops offers cute and trendy designs. The only real gold you see these days is your grandmother’s jewellery and wedding rings.

Rather than spending a few thousand on a perfectly resalable item, we find it easier to splurge on costume pieces to wear for a season or two at most.

Prohibitive home prices Casino riches fuel Macau property ‘bubble’ forcing residents elsewhere As such, we’ve seen the growth of brands like Swarovski.

The brand cleverly marketed itself as a high quality crystal manufacturer. The Austrianborn brand originated in Bohemia (the modern-day Czech Republic), the known birthplace of most of the world’s best quality crystal, and traces its lineage way back to the 19th Century.

Just a few years ago they were making those kitsch crystal swans and pandas to put on your TV top. Today, they’re everywhere. From edgy statement pieces to elegant USB pens and headphones made in partnership with Phillips, Swarovski is marketed as the-real-deal jewellery.

They’ll even give you a nice dark blue case with velvet interior every time you purchase an item.

But it’s even more than that; they did such a wonderful job in promoting themselves as the best crystal in the industry that other brands commission their products. How many jeans and items of lingerie have you seen lately claiming to be “made with genuine Swarovski crystal” or “contains genuine Swarovski elements” ?

As I enter their shop I wonder why I’d rather pay MOP2,000 for a ring here, knowing perfectly well I could be buying a real gold piece. I still do it. I like how it shines.

That, my friends, is good marketing.

Yimou Lee and Farah Master

Watch the Reuters video report on www.macaubusiness.com

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s the world’s gambling capital races to open more than 17,000 new hotel rooms over the next three years to keep pace with a flood of Chinese visitors, only about 4,000 affordable homes for locals are expected to be built in the same period.

With an average apartment costing more than US$500,000 (4 million patacas), Macau has emerged as one of the world’s costliest places to buy

One of the sayings in Macau is that since I can’t afford to buy a house, I might as well buy a car Larry So, Political analyst

property, outranking neighbouring Hong Kong, where prices are already among the most expensive in the world.

Prices in Macau are forecast to rise 10-20 percent this year and the situation looks set to worsen as Macau’s new crop of mega resorts open.

For residents like taxi driver Dengbao Xian, soaring property prices mean the chance of owning a home in the former territory once administrated by Portuguese looks impossible.

“Buying a flat? Not a chance, even if you work for your entire life,” the 50 year-old lamented as he drove past the glitzy front of MGM’s metallic hued casino tower.

Population growth in the tiny territory, one-third the size of Manhattan, is expected to jump 20 percent to 700,000 by 2016 according to government estimates.

“Four years ago you could buy a flat with 1 million patacas ($125,100).

Now you can’t even buy a parking space,” said Cherrie Choi, a sales director at realtor Centaline Property.

Some residents are choosing to buy in Hong Kong where investment returns are twice that of Macau.

Others are buying in neighbouring Chinese provinces and some, like many retirees, are giving up on the city and moving as far away as Thailand.

In March more than 400,000 people competed for 1,900 affordable housing units with locals lining up outside Macau’s public housing bureau at 4 a.m., local media reported.

“It’s really the biggest problem in Macau. Right now the rents and prices of flats have shot up way beyond people’s financial capabilities,” said lawmaker Jose Coutinho, who accuses the government of not doing enough to reverse the situation due to its ties with tycoon developers.

Property prices have more than tripled since 2009, according to data from the Macau government. The rise is in tandem with Macau’s gaming revenues, which last year totalled US$45 billion, nearly three times greater than Las Vegas, Australia and Singapore combined.

Macau’s economy relies on the gaming industry with gaming taxes accounting for more than 80 percent of government revenues.

40,000 workers still needed With unemployment at 1.7 percent, an estimated 40,000 new workers will be required as new properties open over the next three years, increasing demand for housing and exacerbating tension among protectionist labour unions worried about job security.

Macau laws dictate only locals can work as dealers, and the government is under pressure from residents who regularly take to the streets to ensure these restrictions remain.

Analysts estimate new casinos opening in 2015-2017 will require 12,600 new dealers, yet only about 700 are available per year.

A lack of a long-term plan for affordable housing is widening inequality say lawmakers and property consultants, to such a degree

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April 8, 2014

Macau

At the time, I didn’t know that the Macau [tenancy] law stated that rental agreements need to be of two years Jane Tsai

Property tango 700,000 Population expected by 2016

Property prices have skyrocketed over the last decade, with the lack of regulation forcing tenants to move a number of times every couple of years Sara Farr

sarafarr@macaubusinessdaily.com

that even well-paid foreign executives in the casino industry are finding Macau prohibitively expensive.

“I have great empathy for the local Macau residents,” said Linda Switzer, vice president of retail at MGM Macau, who explained her monthly rent has jumped from a low of 8,000 patacas ($1,000) to 33,000 patacas in the seven years she has lived in Macau.

Macau’s government said it will continue to “be mindful” of outside economic changes impacting the local property market and deploy timely measures like increasing land supply and launching public housing depending on the situation.

Two of Macau’s largest property developers, Shun Tak Holdings and Polytec Asset Holdings, declined to comment for the story.

For now, new housing developments are limited to the luxury segment with projects such as the Fountainside, featuring 3,000 squarefoot villas and landscaped gardens, which are springing up across Macau’s crammed peninsula to cater to wealthy buyers looking for a convenient place to park their gambling winnings.

With the majority of properties lying idle once purchased and a lack of affordable housing projects in the pipeline, locals are feeling increasingly marginalized.

“One of the sayings in Macau is that since I can’t afford to buy a house, I might as well buy a car,” said Macau-based political analyst Larry So. Reuters

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any people face housing problems, especially tenants, whether long-term or short.

Some chose not to buy a home before the property market bubble and are now forced to find a new place to rent every two years or so. For others, rental prices are so high that they are forced to live in shared accommodation with either co-workers or others in a similar situation. The scenario isn’t ideal but for the most part it’s make do.

Jane Tsai, vice-president of marketing and communications at Galaxy Macau, has had to move three times in the four years she has lived in Macau. By chance, it has always been in the same building. On the first occasion, the residential apartments in the Manhattan south tower were sold by the property developer to a private company. The property developer rented out residential apartments. Ms Tsai and her husband were paying around MOP16,000 a month at the time. Once they moved to their second apartment, also in the Manhattan, their new rent increased some 30 percent compared to their initial one.

“At the time, I didn’t know that the Macau [tenancy] law stated that rental agreements need to be for two years,” Ms Tsai said. She had only stayed a year in their Taipa apartment before the properly developer sold the south tower. “The second time [we moved] we knew [about the two years],” she added.

Their landlord had wanted to move into that home, forcing Ms Tsai to look for another apartment.

Once their lease came up for renewal, Ms Tsai and her husband moved a third time. “We ended up having to look somewhere else,” she said.

While they had seen an apartment they wanted to move into, it turned out that the real estate agent wasn’t speaking to the right landlord. “It might have been a language barrier because my husband doesn’t speak Chinese,” Ms Tsai said. Nonetheless, the couple found their current home and moved into a different apartment in the same building. Their current lease is for two years.

the University of Macau, and her family first moved to Macau 24 years ago. Back then, her husband worked for the Portuguese administration, under which most contracts included an apartment. The rent was minimal and deducted directly from the civil servant’s monthly pay.

Five years after their move to Macau, Mrs Dias and her family still lived in the same governmentowned house but had gone to see a three-bedroom apartment for sale in Taipa for MOP100,000. They chose not to buy it. In 1997, they were living in Nova Taipa Gardens.

The landlord of the four-bedroom apartment wanted to sell it. Mrs Dias and her husband still enquired about the price. MOP500,000 was the asking price.

They decided against it, and purchased a home in Portugal instead, where they had always thought they’d move back to one day. As with some other Portuguese who first came to work under the Portuguese administration, Mrs Dias and her husband never went back, regardless of owning a home there. Not many considered buying property in Macau.

“In 2003, things started getting complicated,” Mrs Dias said. Their Nova Taipa Garden landlord had been able to find a buyer, and the family was forced to move out.

Since first arriving in Macau in 1990, Mrs Dias and her family have moved five times. They have lived in their current home for three years, and will be moving to Hengqin Island to live on-campus at the University of Macau.

Should have…?

This is just one of several cases in which the property market fails tenants. Rarely are landlords nice and tenants allowed to stay in the same apartment for a slight increase in rent. Usually, rents go up by at least 20 percent. There have been cases in which rents increase by as much as 80 percent. In some cases, it’s all the doing of the real estate agents and not solely the landlord.

While not everyone is a homeowner, long-time residents who came to Macau in 1990 and didn’t buy a home then are faced with the same problem.

Ana Cristina Dias, a professorat

In 2003, things started getting complicated Ana Cristina Dias

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April 8, 2014

Stocks

Jeez, not a good day Casino shares tough it out Alex Lee

alex.lee@macaubusinessdaily.com

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ong Kong shares ended lower yesterday, pulled down by index heavyweight Tencent as the Internet firm tracked a slide in tech stocks on Wall Street. News to Macau casinos were not the best, with all operators listed in Hong

Kong falling between 3.45 percent and 5.63 percent. The Hang Seng Index closed down 0.6 percent at 22,377.15.

Shares in Chinese Internet company Tencent slipped 4.5 percent to its lowest close since Jan. 27, while software firm Kingsoft fell 6.2 percent.

Gaming plays Galaxy Entertainment Group Ltd and Sands China Ltd dropped 5.63 percent and 4.89 percent, respectively. Other casino operators followed suit, with Wynn Macau Ltd dropping 4.09 percent, Melco Crown Entertainment losing 3.96

percent and SJM Holdings Ltd falling 3.45 percent.

Asian stocks fell for the first time in nine days, snapping the longest winning streak on the regional gauge this year, with telecommunication and technology shares leading declines.

Naver Corp. slumped 6.5 percent in Seoul, SoftBank Corp. lost 4.6 percent in Tokyo and Tencent Holdings Ltd. fell 4.5 percent in Hong Kong as telecom and technology shares slid. Fanuc Corp., a Japanese maker of factory equipment, sank 1.7 percent. Japanese drug company Daiichi Sankyo Co. rose 3.3 percent after Indian drugmaker Sun Pharmaceutical Industries Ltd. agreed to buy Ranbaxy Laboratories Ltd. Daiichi owns 63.5 percent of Ranbaxy.

The MSCI Asia Pacific Index lost 0.6 percent to 138.51 as of 5:41 p.m. in Hong Kong, with six of the 10 industry groups on the measure falling.

Losses in Asian technology firms followed the Nasdaq Composite Index’s biggest retreat in two months on April 4, as investors pared holdings in Internet companies that have led gains in global equities during the past 12 months.

“Some parts of the hightech space were looking bubbly and overvalued, so there’s some much-needed profittaking going on,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11 trillion yen ($107 billion).

“The rout won’t last long, especially considering the U.S. economic recovery is firm.

There may be some change where the selloff in overvalued shares leads to flows into undervalued sectors.”

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With agencies

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April 8, 2014

Greater China

Economist expect monetary movements China will probably need to ease monetary policy for the first time in two years in coming months to prevent the economy from losing too much momentum

B

eijing has fast-tracked spending on railways and other projects in the country’s poorer regions and also cut taxes for small businesses, in what looks like a carbon copy of the fine-tuning that helped the economy tide over a soft patch last year.

This time, though, Beijing will also need monetary easing - such as the first cut to bank reserve ratios since May 2012 - and other steps to bring the economy back to desired cruising speed, economists say.

“The measures will do some help but probably not enough. We think there may be monetary easing,” said Kevin Lai, senior economist at Daiwa Capital Markets in Hong Kong.

Economists with top government think-tanks believe a cut in the amount of commercial banks’ cash tied up in central bank reserves is probably part of the “policy reserves” that Premier Li Keqiang has mentioned to reassure nervous investors.

In fact, the existence of these reserves helped give the leadership the confidence it needed last December to keep its economic growth target for 2014 steady at 7.5 percent, they say.

“When we set the 7.5 percent target, we have taken such (mini stimulus) policies into consideration.

We are just rushing them out now,” said Zhu Baoliang, chief economist at State Information Centre, a top government think-tank.

Economists polled by Reuters expect first-quarter GDP figures due on April 16 to show growth slowing to 7.3 percent, from 7.7 percent for the whole of 2013. That would be near the minimum level needed to ensure stable employment and the slowest growth in five years. Many analysts see further slowdown in the second quarter, despite the announced steps.

Partial information might suggest that the authorities could spend more than last year. There are plans to build 6,600 km (4,100 miles) of new railway, 1,000 km (621 miles) more than last year. This year’s central government budget also set aside 457.6 billion yuan (US$73.7 billion) for affordable housing, railways, energy saving, water conservation and agriculture - 20 billon yuan more than 2013.

Reuters

WB headquarters in Washington

World Bank trims forecasts Latest results prompt the World Bank to readjust its economic predictions for Asia

T

he World Bank trimmed its 2014 growth forecast for developing East Asia but said the region’s economies were likely to see steady growth in the next couple of years, helped by a pick-up in global growth and trade.

The Washington-based development bank expects the developing East Asia and Pacific (EAP) region to grow 7.1 percent in 2014 and 2015, down from the 7.2 percent rate it had previously forecast for both years.

Growth in 2016 is also seen at 7.1 percent, staying slightly below the 2013 growth rate of 7.2 percent.

“Stronger global growth will help most developing East Asia Pacific (EAP) countries grow at a steady pace while they adjust to tighter global financial conditions,” the World Bank said in its latest East Asia Pacific Economic Update report.

“The tailwinds from improving global trade will offset the headwinds from the tightening of global financial markets.”

Emerging markets, including those in Asia, had been roiled by capital outflows from around May to September last year as investors began positioning for the U.S. Federal Reserve to start tapering its monetary stimulus.

While financial markets in the East Asia Pacific region have shown a muted reaction to the Fed’s actual decision in December to begin scaling back its quantitative easing, the possibility of capital flow reversals remains a concern for developing countries in the region, the World Bank said.

“Going forward, higher global and domestic interest rates, rather than more volatile capital flows and financial markets, may be the greater concern,” it added.

The prospects for a normalisation of U.S. policy rates will put upward pressure on interest rates and could trigger more sizeable capital outflows from weaker economies, as well as make debt management more difficult in countries where leverage has risen, the bank said.

“Overall, as interest rates rise, developing countries will face higher

capital costs, which will weigh on investment and growth in the medium term,” it added.

China growth The World Bank trimmed its 2014 growth forecast for China to 7.6 percent, from 7.7 percent previously.

It kept the 2015 growth forecast for China steady at 7.5 percent, down slightly from 7.7 percent actual growth in 2013.

The new 2014 outlook reflected “the bumpy start to the year,” it said, noting that China’s industrial production and exports had been weak in the January-February period.

“While the growth rate of industrial production has slowed, and exports contracted in the first two months of 2014, the trend is nevertheless strengthening, and we expect quarterly growth to rise at midyear as external demand from the high-income countries solidifies,” the World Bank said.

Among Southeast Asian economies, the biggest changes in the World Bank’s economic forecasts were for Thailand and Myanmar.

It cut its forecast for Thailand’s economic growth to 3.0 percent in 2014 and 4.5 percent in 2015, from its previous forecasts of 4.5 percent and 5.0 percent, respectively.

The World Bank said a recovery in external demand would lift growth in Thailand compared with the 2.9 percent actual growth in 2013.

Domestic demand in Thailand, however, remains dampened because of the on-going political unrest, which has affected tourism receipts, public investment and investor confidence, it said.

“If the political situation stabilizes sufficiently ... growth will be stronger in 2014,” the bank said.

Growth in Myanmar is likely to stabilise at 7.8 percent in 20142016, after the government made progress in 2013 on macroeconomic reforms, it said. The World Bank had previously forecast 6.9 percent growth for Myanmar in both 2014 and 2015.

The World Bank said downside and upside risks to growth in developing East Asia Pacific countries were evenly balanced.

Reuters

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April 8, 2014

Greater China Pentagon official to visit aircraft China showed off its new aircraft carrier to US Defence Secretary Chuck Hagel yesterday, allowing the Pentagon chief a first-hand look at a symbol of the country’s growing military prowess. Hagel arrived in the port city of Qingdao to kick off a three-day tour of China with a visit to the carrier at Yuchi naval base. He will be the first foreigner allowed aboard the vessel by the often-secretive Chinese People’s Liberation Army (PLA), officials said. Upon arrival in Qingdao, Hagel was greeted by Chinese military officers and US ambassador Max Baucus.

German container victim of monsoon A German container ship ran aground off the coast of Hong Kong on Sunday as monsoon winds caused rough seas in one of the world’s busiest shipping lanes. The vessel Hansa Constitution ran aground off the Pok Fu Lam residential district on the west side of Hong Kong Island, duty officers at the police’s public relations branch said by phone on Sunday. Julia Eble, a spokeswoman with Hansa Treuhand Gruppe, the Hamburg-based owner of the ship, said the accident might have been caused by a loss of power.

Dissident justifies Uighur violence Militancy is on the rise in China among Uighurs driven to despair over Beijing’s “terrorist colonisation”, Wu’er Kaixi, a Uighur exiled after his role in the 1989 Tiananmen Square protests, has warned.

Wu’er -who spoke after two high-profile incidents outside Xinjiang, the vast, nominally autonomous western region that is home to the Muslim ethnic minority- pointed the finger of blame for the unrest squarely at Beijing. “If you call Uighur people terrorists, did they have any other options? Who started terror and who pushed them to this place?”

Wu’er, a former prominent student leader who fled China after the 1989 crackdown, told AFP in a recent interview.

China warns US about HK Beijing warned the United States on Monday against interfering in Hong Kong’s affairs after US Vice President Joe Biden met with two of the city’s outspoken pro-democracy campaigners last week. In an unusually high sign of support, Biden attended talks at the White House on Friday with Martin Lee, a founder of Hong Kong’s opposition Democratic Party, and Anson Chan, former number two in the city’s government. Biden “underscored our long-standing support for democracy in Hong Kong”, the White House said in a statement.

Taiwan protesters about to Local media speculate that protesters will leave following Wang’s a law for watching agreements with China

P

rotesters said yesterday they were considering ending their three-week occupation of Taiwan’s parliament, after its Speaker intervened to try to end the standoff over a contentious services trade pact with China.

“Discussions about the direction of the movement are now under way,” said Shih Yen-ting, a spokesman for the Sunflower movement which is staging the first parliamentary occupation in the island’s history.

“Hopefully there will be a conclusion by early this evening,” he said, as the number of protesters occupying the main chamber dwindled to dozens from a peak of around 200.

Parliamentary speaker Wang Jinpyng of the ruling Kuomintang party entered the chamber Sunday to meet students.

He pledged not to preside over further parliamentary debate about the pact until a law has been introduced to monitor such agreements with China.

Protesters described his promise as a “goodwill” gesture.

Calls for the demonstrators to quit parliament have been rising even among some of their sympathisers.

“Now it’s a opportune time to leave parliament,” said Rex How, a publisher who quit as an adviser to President Ma Ying-jeou in protest at the pact with China.

Local media speculated that the protesters would leave following Wang’s concession.

In the first days police used water cannons for dispersing demonstrators although it did not work

But unconfirmed reports said some radical student groups had refused to back down.

Politicians from both ruling and opposition parties have been meeting the students since the occupation, but Sunday was the first time that the speaker had entered the chamber since it was seized.

Around 200 student-led

Delayed delivery casualties Chinese banks face big trouble when refunding guarantees of big be reimbursed

C

hinese banks are stuck in a lose-lose legal battle between domestic shipyards and foreign buyers over billions of dollars in refund guarantees that are supposed to be paid out if shipbuilders fail to deliver on time.

One in three ships ordered from Chinese builders was behind schedule in 2013, according to data from Clarksons Research, a UK-based shipping intelligence firm. Although that was an improvement from 36 percent a year earlier, it was well behind rival South Korea, where shipyards routinely delivered ahead of schedule the same year.

That means Chinese banks may be on the hook to pay large sums to buyers if the yards can’t come through per contract, with little hope of recouping the cash from the yards. China is the world’s biggest shipbuilder, with US$37 billion in new orders received last year alone.

Buyers pay as much as 80 percent of the purchase price upfront.

Chinese bankers rushed to finance shipbuilding after the 2008 global financial crisis as Beijing pushed easy credit and tax incentives to lift the industry and sustain industrial employment levels in the face of collapsing exports.

Foxconn to buy Taiwan cable firm Apple Inc’s main contract manufacturer, is in talks with Asian private equity firm MBK Partners to buy Taiwanese cable TV company China Network Systems (CNS), a source with knowledge of the matter told Reuters yesterday. Foxconn could pay about T$64 billion (US$2.1 billion) for MBK’s 60 percent stake in Taiwan’s largest cable provider, according to the Economic Daily, which first reported the talks on Monday. Foxconn, whose flagship unit is Hon Hai Precision Industry Co Ltd, is aiming to team up with CNS to compete with Chunghwa Telecom Co Ltd.

demonstrators occupied the chamber on March 18 and swiftly drew a large crowd of supporters, with more than 10,000 congregated outside at one point.

There were violent clashes on March 23 when baton-wielding police turned water cannon on protesters who had stormed the nearby government headquarters.

Dalian shipyard is one of the most important in the country

Fees generated by offering such guarantees looked like easy money until massive oversupply and falling demand started taking a toll on the yards around 2010. Shipyards fell behind schedule and buyers demanded their money back. But behind or not, the builders, keen to keep orders on the books and prepaid money in their pockets, have submitted injunctions against banks in Chinese courts to prevent them from paying out.

“China’s ambitions to take over South Korea as the top major shipbuilder meant that all the banks were encouraged to open up their wallets and lend money to the shipbuilders without making thorough due diligence,” said AKM Ismail, former finance director for Dongfang Shipyard, the first Chinese shipyard to be listed on London’s AIM Stock Exchange in 2011.

Since ships cost millions of dollars and can take years to deliver, a shipbuilder generally asks for part of the purchase price upfront to cover material and labour costs. Buyers normally obtain a refund guarantee from a bank to assure their money is returned if the yard defaults, and the yard pays the bank’s fee for the service.

Lawyers say that in many cases, banks did not require shipyards to pledge any specific collateral, partly because these guarantees are like a form of insurance rather than a

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April 8, 2014

Greater China

disperse concession to create

but the protesters have rejected the government’s bill.

The latest pact would further open up trade in services between China and Taiwan, which split 65 years ago after a civil war.

The company says now may be a good time to reduce holdings of Chinese high-yield bonds following the longest winning streak in six weeks

Discussions about the direction of the movement are now under way

“I

Shih Yen-ting, spokesman for the Sunflower movement

And on March 30 tens of thousands gathered to pressure the embattled President Ma to retract the trade pact, which they say will damage Taiwan’s economy and leave it vulnerable to political pressure from China Ma, who has pursued closer ties with China since taking power in 2008, has agreed to the students’ demand for a law to monitor all pacts with China,

GS recommends investors reduce overweight

Ma has said failure to ratify the pact would be a grave setback to efforts by trade-reliant Taiwan to seek more free trade agreements and avoid isolation as regional economic blocs emerge.

The deal is a follow-up agreement to a sweeping Economic Cooperation Framework Agreement signed in 2010 to reduce trade barriers between China and Taiwan.

Ma has overseen a marked thaw in relations with Beijing since he came to power pledging to strengthen trade and tourism links.

He was re-elected in January 2012 but his approval ratings are currently only around 10 percent.

China still considers Taiwan as part of its territory awaiting reunificationby force if necessary.

AFP

nvestors should use the recent rally to reduce overweight positions,” analysts led by Hong Kong-based Kenneth Ho wrote in a note dated April 4. “We believe that there will be more headlines noises to come out of China and expect to see further credit differentiation.”

Dollar-denominated junk bonds from the nation gained 0.95 percent in the seven days through April 4 for the second straight weekly advance, according to Bank of America Merrill Lynch indexes.

While recent improvement in emerging-market sentiment and China’s announcement of stimulus last week fuelled the rally, betterquality issuers remain Goldman’s preferred bet amid continued concern about the world’s second-biggest economy, according to the note.

China unveiled a package of measures to support the economy including railway investment and tax breaks last week, as the government seeks to bolster slowing growth.

Exports likely rose 4.9 percent in March from a year earlier, according to the median estimate of 37 analysts surveyed by Bloomberg News before

trade data this week, after the biggest drop since 2009 in February.

Manufacturing contracted a third month in March, an HSBC Holdings Plc and Markit Economics gauge showed last week.

Sinopec sells China Petrochemical Corp., known as Sinopec Group and parent of Asia’s largest oil refiner, sold US$5 billion of bonds on April 2, the biggest dollar-denominated sale by an Asian issuer in a decade, data compiled by Bloomberg show.

China Citic Bank International Ltd. meets investors from today about a possible offering of notes in the U.S. currency, a person familiar with the matter said last week.

“We expect China issuance to increase and to catch up in the remaining quarters, especially given the improvement in market sentiment in recent weeks,” wrote Ho. Offerings from the nation slumped to US$12.7 billion in the first three months of the year, from US$15.1 billion during the same period last year, according to Goldman data.

Bloomberg News

Tin exports ready to boom projects have to

Although last year a total of 3,000 tonnes were exported, the current season is expected to broadly surpass these figures

loan. That leaves banks stuck with the default bill.

If banks obey local court injunctions and hold off from issuing refunds, they risk being taken to court by ship buyers in foreign jurisdictions. But if they pay out under the refund guarantee or seek compensation from the shipyard for the loss, bankers say they risk alienating local governments, which can damage the banks’ business interests in the region.

“The whole issue of refund guarantees has been a big headache,” said a finance executive at China Minsheng Bank.

“On the one hand, we know that our clients, the shipyards, will be saddled with huge debt that they will struggle to repay to us, if they can even pay back at all. But at the same time, our credibility is at risk, so we have to pay them out.”

He and other bankers interviewed for this article all spoke on condition of anonymity because of the legal sensitivities of the issue.

In one case, UK court records show that in November 2012, subsidiaries of German ship owner First Class Ship Invest GmbH took China Construction Bank Corp to court in London to enforce payment of more than US$10 million under a refund guarantee after Zhejiang Zhenghe Shipbuilding Co Ltd allegedly failed to deliver on an order.

Reuters

KEY POINTS China price, minus export tax, falls below LME price Global price rises still needed for China-LME arbitrage China’s tin imports slump to 10-year low in Feb

I

ndonesian curbs on tin exports are offering a prop to Chinese producers facing slumping demand at home, underpinning global prices and boosting the opportunity to ramp up overseas sales.

Tin prices in China have slipped below the London Metal Exchange (LME) price for the first time in three years, as a rise in the international benchmark has outpaced local prices.

While Chinese producers still face a 10 percent export tax, the current price gap will make some exports possible and further LME price rises will open an arbitrage window for increased sales from China, say traders and analysts.

“Producers are actively looking,”

said a trader at a bank in China. “If (prices) stay at current levels and demand picks up, you may see a couple of big names in China starting to ship out.”

China is the world’s biggest producer of tin and is also a major importer of the metal used primarily in solder for electronics.

Speculation that China producers could step up exports has been growing since Indonesia tightened control over its sprawling tin industry last year, part of a wider drive to earn more from mining by encouraging processing within the country.

Jakarta has forced domestic smelters to produce higher purity tin before export, and also made tin producers trade via a domestic exchange before shipping material

for export.

Monthly tin exports have fallen by a third, pushing consumers to draw from London Metal Exchange stocks, which hit five-year lows near 8,000 tonnes in late February.

Analysts expect the global tin market to remain in deficit again this year, supporting global prices.

“The tin market is facing a deficit for the fifth year in a row. If Indonesia exports less ... one of the ways you fill that is Chinese exports,” said analyst Stephen Briggs of BNP Paribas in London.

Briggs said he expected Chinese exports to easily eclipse last year’s total of 3,000 tonnes, as long as the gap between global and local prices stayed profitable.

Reuters

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April 8, 2014

Asia World’s biggest election starts The first Indians cast their votes in the world’s biggest election on yesterday with Hindu nationalist opposition candidate Narendra Modi seen holding a strong lead on promises of economic revival and jobs but likely to fall short of a majority. Some 815 million people are registered to vote over the next five weeks as the election spreads out in stages from two small states near Myanmar to include northern Himalayan plateaus, western deserts and the tropical south, before ending in the densely-populated northern plains. Results are due on May 16.

Australia hardens renewing gas leases The Western Australian government said it will only renew two leases in the Browse LNG development if the partners set up a supply base onshore in the state and set aside some gas for industrial use in the state. The Browse LNG partners, led by Woodside Petroleum, disappointed the state government last year by scrapping plans to build a liquefied natural gas plant onshore, where the state wanted it, and opting instead to pursue a floating LNG project to cut costs. The project, previously estimated at US$45 billion, would add to US$200 billion in gas projects under construction in Australia.

Tyres business shines in India Replacement tyres are buoying Indian tyre companies as a sputtering domestic economy hits vehicle sales, crimping orders from automakers.

India’s top six tyre-makers by value are forecast to see average revenue growth of 11.8 percent in the fiscal year that started this month, according to Thomson Reuters SmartEstimates.

That would be the fastest expansion in three years. Tyre-makers including Apollo Tyres Ltd, India’s biggest by revenue, are leaning on car and truck owners replacing worn-out tyres on vehicles bought during the 2009-2011 boom to insulate them from slower demand for original tyres.

Sun Pharma to buy Ranbaxy India’s Sun Pharmaceutical Industries Ltd said it will buy generic drug maker Ranbaxy Laboratories Ltd, which has hit regulatory snags in its key U.S. market over quality issues, in an all-share deal with total equity value of US$3.2 billion. Ranbaxy, India’s No.1 drug maker by sales and 63.4 percent held

by Daiichi Sankyo Co Ltd, is banned from exporting drug ingredients to the United States, while Sun Pharmaceutical’s Karkhadi plant is also barred from shipping products by the U.S. Food and Drug Administration. Sun Pharmaceutical said Ranbaxy shareholders will get 0.8 Sun Pharma shares for each Ranbaxy share.

Australian Prime Minister on Visiting Japan and China, he faces a difficult balancing act

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ony Abbott, having called Japan his country’s closest friend in Asia, will seek this week to overcome Chinese unease about his loyalties in a region beset by territorial tensions.

Abbott is visiting Japan, a strategic ally, and China, his country’s biggest economic partner, in his first visit to North Asia since taking office almost seven months ago. The trip is aimed at giving momentum to free-trade deals with both nations, which together account for a third of Australia’s annual trade.

With the U.S. looking to its allies to counter a more assertive China, and with Japan embroiled in a dispute with its neighbour over the East China Sea, the task for Abbott, 56, will be to balance longstanding diplomatic leanings against the need to safeguard economic ties with China. Japan, China and South Korea, which Abbott will also visit, buy more of Australia’s iron ore, coal and other exports than the rest of its customers combined.

“China is the ascending power and Japan is the declining power and there’s nothing that Abbott or his values can do to change that,” said Geoff Raby, Australia’s ambassador to China from 2007 to 2011. Abbott’s willingness to criticize China means “he will be under a great deal of scrutiny about his messaging and whether he can get the balance right.”

Abbott met Japanese Prime Minister Shinzo Abe at Sunday night, Chief Cabinet Secretary Yoshihide Suga told reporters yesterday. He said he did not know what they discussed.

Military escorted ceremony at the State Guest Houses in Tokyo

Shotaro Yachi, head of the National Security Council secretariat, was also at the meeting at the state guesthouse, the Nikkei reported. Abbott will yesterday become the first foreign leader to take part in a meeting of Japan’s NSC. Abbott is seeking to build on international goodwill generated

by his handling of the search for a missing Malaysia passenger plane off Australia’s west coast, and his government’s success so far in hosting this year’s Group of 20 meetings. G-20 finance ministers in February agreed to a proposal to lift collective gross domestic product by an additional 2 percent.

Singapore targets China consumers Experts say shipments will probably increase exports driven by consumer goods, infrastructure, logistics and energy

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overnment is encouraging companies to expand in China to tap rising consumption in the world’s second-largest economy as President Xi Jinping sustains efforts to reduce his country’s reliance on investment and exports.

The island’s shipments to China will probably increase as a share of total exports, driven by consumer goods, infrastructure, logistics and energy, said Seah Moon Ming, chairman of the trade promotion agency known as IE Singapore. Seah, who also heads an energy supply and trading company, will lead a business delegation to Shandong, China this week in his first overseas mission as head of the agency.

“We want to leverage on every possible access channel that we can have, either market access or

business access,” he said in an April 2 interview. “China still will have net growth over the U.S.” of 5 to 6 percentage points even as its economic expansion will probably slow below 7 percent, he said.

Asia’s biggest economy overtook Malaysia as Singapore’s top trading partner last year, as direct investment to China from the island rose 7 percent in 2012. The Southeast Asian nation’s faith in China contrasts with concern among investors that growth will slow as credit risks escalate. The Shanghai Composite Index has fallen 2.7 percent this year as investors anticipate the government will miss its growth target.

China’s government targets growth of 7.5 percent this year after the economy expanded 7.7 percent in 2013, the same pace as in 2012.

“In the bigger scheme of things, China is still a fantastic growth story,” said Wai Ho Leong, a Singaporebased economist at Barclays Plc, who predicts China’s economy will grow 7.2 percent this year. “We shouldn’t be going there to set up factories, we should be going there to sell directly to the increasingly affluent Chinese consumer.”

IE Singapore forecasts non-oil domestic exports will rise 1 percent to 3 percent in 2014, after falling 6 percent last year. The Southeast Asian nation’s economy expanded more than economists estimated in the fourth quarter of 2013 after a pick-up in manufacturing, a sign the economy is recovering after exports fell 10 months out of the year in 2013.

Bloomberg News

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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April 8, 2014

Asia

Asia tour

A month after winning power Abbott labelled Japan his “best friend in Asia.” Previous governments avoided so overtly aligning with the country from a strategic perspective in the region. Abbott has said he plans to bolster defence cooperation with Japan as part of his visit this week.

“He’s still going to be on probation,” said White, author of “The China Choice: Why America Should Share Power.” “The challenge will be whether he can refrain from causing further offense and salve the wounds in Beijing,” he said.

China imperative

The lead Australia has taken in the hunt for Malaysia Air Flight 370, which carried more than 150 Chinese nationals, risks being overshadowed

by Abbott’s “beginner mistakes” that have fostered tricky ties with China, according to Hugh White, a professor of strategic studies at the Australian National University in Canberra.

China has become a bigger economic imperative, having tripled trade with Australia in seven years and taking three- quarters of its iron ore shipments. Twenty-five years ago Japan accounted for 23 percent of Australia’s two-way trade of merchandized goods, and China 2.3 percent; now Japan has a 13 percent share against China’s 27 percent.

Tensions with China increased after the previous Labour government cited national interest concerns for its refusal to let Huawei Technologies Co., China’s largest phone-equipment maker, work on Australia’s A$30 billion (US$27.7 billion) broadband infrastructure project.

In November Abbott’s government publicly rebuked China for its introduction of an air-defence identification zone over the East China Sea. Ambassador Ma Zhaoxu, who was summoned by Foreign Affairs Minister Julie Bishop, issued a statement condemning the “erroneous remarks” and said China “required the latter to respect facts, do not take sides and take concrete measures to uphold China-Australia strategic partnership.”

Bloomberg News

Taxpayer aid sought

D

eutsche Bank AG predicted last month sales of residential mortgage-backed securities will slip to A$23 billion (US$21.4 billion) in 2014, down from last year’s A$26.1 billion, the most since 2007 when issuance was double that amount. The government should restart RMBS purchases, focusing on the secondary market to encourage investment, the Australian Securitisation Forum, an industry association whose members accounted for 94 percent of last year’s issuance, wrote in a submission to the Financial System Inquiry dated March 31.

A year after the government judged the market had returned to health and ended a A$20 billion support program, issuers say trading volumes have failed to revive despite a housing boom fuelled by record-low interest rates. The industry body will have to persuade Prime Minister Tony Abbott, who is focused on spending cuts and says he doesn’t believe in a “government by check book.”

“One of the biggest issues with Australian RMBS is that in the secondary market, there’s not a great deal of turnover and that tends to put off some foreign investors,” said James Austin, chief financial officer at Firstmac Ltd., a Brisbane- based nonbank lender that sold A$1.64 billion of mortgage notes to the Australian Office of Financial Management. “To the extent that the AOFM could play a role in promoting market turnover, that would be a good outcome,” he said by phone on April 1.

About half the almost A$50 billion of mortgage debt sold by the nation’s lenders in 2007 was denominated in a foreign currency, according to

Deustche Bank predictions on mortgages are a basic gauge

the ASF’s report, citing data from Macquarie Group Ltd. Issuers haven’t sold any new foreign- currency bonds this year after sales slumped 39 percent in 2013 from a year earlier, data compiled by Bloomberg show.

Offshore demand for home loanbacked bonds was a “significant factor” in boosting Australian issuance and compressing costs before the financial crisis, according to the ASF. Most managers and asset consultants see the securities as being illiquid, so that influences how much they buy,” said Chris Dalton, chief executive officer of the organization.

Bloomberg News

Experts forecast BOJ’s next steps Bank of Japan’s governor Haruhiko Kuroda is inclined to monetary intervention

J

apan’s central bank will probably double purchases of exchangetraded funds in a second round of monetary easing under Governor Haruhiko Kuroda anticipated in coming months, a Bloomberg News survey of economists shows.

The Bank of Japan, which is forecast to leave unchanged a 60 trillion yen to 70 trillion yen (US$674 billion) target for yearly expansion of the monetary base, will increase annual ETF buys to 2 trillion yen in months ahead, according to a survey of 36 analysts. The bank could boost annual bond purchases by at least 10 trillion yen, with July most favoured for a policy move.

While Kuroda pointed to the equivalent of trillions of dollars of financial assets the BOJ could buy before he took the helm in March 2013, the survey signals little change in tactics is likely. Evidence of budding inflation expectations among Japan’s companies may restrain more ambitious plans, such as open-ended ETF purchases, even as the economy slows because of this month’s sales-tax increase.

“Kuroda doesn’t need

Bank of Japan’s foundation site

to move as drastically as in April last year, when he was shifting the economy from deflation,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “By doubling the ETF buys, the BOJ can send a message that it’s there to take action when the economy weakens.”

Unprecedented stimulus that helped weakened the yen 5.5 percent against the dollar over the past year has fuelled inflation even as government bond yields remain the world’s lowest.

The yen was little changed at 103.21 against the U.S. currency. The Topix index fell 1.1 percent after a selloff in technology shares sent U.S. markets lower.

The central bank’s

benchmark price gauge was at 1.3 percent in February, compared with a target of stable 2 percent inflation, and a BOJ survey last month indicated companies see price gains persisting for at least the next five years, marking an end to 15 years of deflation.

For now, the central bank needs to help steer the economy through the slump in consumption projected to follow the increase in the sales tax to 8 percent from 5 percent on April 1. In expanding stimulus, one challenge for Kuroda would be to avoid any perception that he has returned to the incremental policy steps of predecessor Masaaki Shirakawa. There may also be opposition within the BOJ board to extra

Kuroda doesn’t need to move as drastically as in April last year, when he was shifting the economy from deflation Yoshimasa Maruyama, Chief economist, Itochu Corp

stimulus, with board member Takahide Kiuchi saying that negative side effects may outweigh benefits.

In an interview on February 11 last year, before becoming governor, Kuroda said that the BOJ needed to use “whatever measures are available” to

eradicate deflation, adding that the bank could buy the equivalent of trillions of dollars of financial assets. Still, it has held off from seeking some additional tools such as purchases of foreign bonds, a measure advocated by former BOJ Deputy Governor Kazumasa Iwata.

Kuroda is not without his critics. Kunio Okina, a former head of the BOJ’s Institute for Monetary and Economic Studies, has raised concerns that the BOJ is financing government spending.

“The Bank of Japan is making large-scale government bond purchases that will paralyze the market, and public spending that relies on these purchases is propping up the economy,” Okina, a Kyoto University professor, said in an e-mail.

All economists in the survey conducted March 28 to April 3 forecast the BOJ will stay on hold at the meeting starting today. Seventy-two percent said extra easing would happen before or during July.

Most said the BOJ would boost its target for accumulation of government bonds from 50 trillion yen.

Bloomberg News

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April 8, 2014

International Hedge funds rush for oil Fewer than three weeks into spring, oil speculators are already thinking about the summer. Hedge funds and other money managers boosted bullish wagers the most since February, betting that refineries will need to buy more crude to accelerate gasoline output before the peak U.S summer driving season. Fuel supply is already tight, with consumers paying the most at the pump in seven months. U.S. refineries are processing the most oil since January as plants come out of seasonal maintenance, squeezing crude stockpiles for the first time in 11 weeks.

Greek crisis legacy Antonis Samaras’s mission to end Greece’s exile from bond markets faces a reality check this week as data shows how deeply the economy remains mired in deflation with the worst jobless rate in the euro area.

Fresh from his success last week in securing the release of bailout aid, the Greek prime minister’s ambition to tap investors is chafing against the legacy of his country’s debt crisis.

Statistics due April 10 will show unemployment above 27 percent and consumer prices falling from a year earlier for a 13th month, according to Bloomberg surveys of economists.

Hungarian premier consolidates Hungarian Prime Minister Viktor Orban won another four-year term as his ruling party trounced rivals in an election the opposition said was a referendum on the premier’s unprecedented consolidation of power. Orban’s Fidesz party was on the brink of retaining its two- thirds parliamentary majority with 99 percent of the ballots counted, the election regulator said on its website yesterday. It gained 44 percent of the party-list votes and led in 96 of the 106 single-member districts, the results showed. The result boosts Orban, who clashed with the European Union and international companies.

Jordan and Russia in talks on Syria Jordan’s King Abdullah II is to travel to Moscow on Wednesday for talks with Russian President Vladimir Putin on the Syrian conflict, after visits to the Vatican and Austria, the palace said.

The king stopped yesterday in the Vatican to meet with Pope Francis, who is to visit Jordan as part of a Holy Land tour in May, before heading to Austria today. He will then travel to Moscow for talks with Putin on the devastating three-year war in Syria, an ally of Russia, the palace said in a statement.

Costa Rica elects ‘unknown’ president A candidate who was virtually unknown just months ago was elected Costa Rica’s president Sunday, becoming the first third-party member to win the highest office in decades.

Luis Guillermo Solis with the moderate Citizen Action Party (PAC) soundly defeated ruling party candidate Johnny Araya in a run-off vote that followed a first round of balloting on February 2 in this Central American country.

Araya dropped out of the race last month when surveys showed he had no chance of winning, but his name remained on the ballot.

Nigeria becomes 1st African economy In spite of the good national economic results, social breach still widening

T

he country has overtaken South Africa as Africa’s largest economy after a rebasing calculation almost doubled its gross domestic product to more than US$500 billion, data from the statistics office showed.

GDP for 2013 in Africa’s top oil producer was 80.22 trillion naira, or US$509.9 billion, the Nigeria Bureau of Statistics said, up from the 42.3 trillion estimated before the rebasing.

The new figure shrank Nigeria’s debt-to-GDP ratio to 11 percent for 2013, against 19 percent in 2012, statistics chief Yemi Kale told reporters in the capital of Abuja.

Most governments overhaul GDP calculations every few years to reflect changes in output, but Nigeria had not done so since 1990, so sectors such as e-commerce, mobile phones and its prolific “Nollywood” film industry now worth 1.4 percent of GDP, Kale said - had to be factored in to give a better picture.

Growing attention from foreign investors was forcing Nigeria to more accurately calculate its statistics, including GDP, Kale said, adding that the base year would now be recalibrated every five years, in line with global norms.

Nigeria, Africa’s most populous country with 170 million people, has been growing as an investment destination owing to the size of its consumer market and growing capital markets.

The jump in the official GDP figure ranks Nigeria as 26th biggest economy in the world, up from 33rd before the rebasing, Kale said. It comes at a time of rising investor interest in the African continent’s growth potential and expanding middle class.

Finance Minister Ngozi OkonjoIweala told Reuters last week that billions of dollars of foreign and domestic investment were envisaged for this year, including US$1.5 billion in agriculture.

But political risks as Nigeria approaches what will be hotly

Nigeria’sFinance Minister Ngozi Okonjo-Iweala

contested elections next February remain a concern, as do multiple security headaches, especially an insurgency waged by Boko Haram, an Islamist sect, in the under-developed northeast.

“Vanity” Analysts said the recalculated GDP would raise Nigeria’s profile, but change little on the ground.

“Is the money in your bank account more on Sunday than it was on Saturday? If you had no job yesterday, are you going to have a job today?” asked Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives.

“If the answer to those questions is ‘no’, then this is an exercise in vanity,” he added, though he said the new figure was more accurate.

Many Nigerians shrugged off the GDP news.

“I’m not really impressed. I don’t feel it in my pocket,” said Richard Babs-Jonah, 47, a small farmer, rubbing his thumb against his index and middle fingers to signify cash, before fumbling in his pocket for small change to buy traditional ‘suya’ - spicy grilled meat served

at roadside barbecues.

“It’s not the masses who are rich.

Those controlling the economy, those with government contracts, get all the money,” he added, expressing the common view that Nigeria’s economy is rigged in favour of a handful of well-connected oligarchs.

Though GDP per capita rose to US$2,688 last year from an estimated US$1,437 in 2012, poverty and inequality widened.

“We need to work hard on infrastructure, governance, corruption and building a social safety net,” Okonjo-Iweala said. “ Inequality has been rising.”

Services replaced farming as the biggest sector, worth 41.9 trillion naira, compared with 17.6 trillion naira for farming. Most services growth came from telecoms and real estate.

Nigeria’s annual GDP growth for 2013 is expected to come in at 7.41 percent after the rebasing, compared with about 6.5 percent in 2012, Kale said.

Nigeria’s taking the title of Africa’s biggest economy will fuel a longstanding rivalry with South Africa.

Reuters

Merkel backs US trade deal German Chancellor persists in punishing Russia whilst approaching US despite people’s reservations

A

ngela Merkel stepped up her support for a trans-Atlantic trade deal one day after saying that Europe shouldn’t fear the cost of imposing economic sanctions on Russia.

Merkel, in a speech opening the Hanover fair on Sunday, said there’s a need for renewed momentum to kick start free- trade talks between the European Union and the U.S. A fresh push is needed to create a common trading zone of 800 million people and it would be “an irony of world history” if the talks were to fail, she said.

“Sure, we hold our standards dear, and so do the Americans,” she said. “But we should give ourselves a push so that, without giving up on standards, we bring together what

belongs together.”

As the leader of Europe’s biggest economy and Russia’s largest EU trading partner, Merkel’s stance is key to reaching a trans-Atlantic trade deal and will guide Europe’s ability to maintain a united response to Russia’s annexation of Crimea.

Addressing a national convention of her Christian Democratic Union party on April 5, the chancellor combined her offer to “keep talking” to President Vladimir Putin with the message that he shouldn’t underestimate European resolve to enact economic sanctions if Russia “violates Ukraine further.”

“Nobody should harbour any illusion,” she said in the speech to party delegates in Berlin. “As different as we are in Europe, it’s our good

fortune to be united and we will unite to make that decision.”

Merkel, whose stance has won the backing of German industry while riling some company executives, is boosting her domestic standing as Germans see her reprising her role during the sovereign-debt crisis of Europe’s pivotal player.

As during the debt turmoil that dominated her second term, her approach to the Ukraine crisis at the start of her third is a delicate balancing act. Merkel’s approval rating rose for the third consecutive month to 72 percent in an ARD television poll published April 3. The same poll suggested that most Germans want to avoid conflict with Russia.

Bloomberg News

15

April 8, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Uniting Against Extremism Charlotte Keenan

Chief Executive of the Tony Blair Faith Foundation

Jakarta Globe The Transportation Ministry will hand the management of three local airports to the private sector in a bid to improve services ahead of the implementation of the Asean Open Skies policy next year, which would see access to all international airports in Southeast Asia opened to any airlines of the 10 member states. “At the moment, three tender documents are being prepared, from a total of 10 airports,” Bambang Tjahjono, director of airports at the Transport Ministry, said in the statement. Bambang also said that 38 investors had expressed interest in the tender.

The Star A broad-based tax, such as goods and services tax, is generally considered to be a regressive tax. Before we go further, let us look at what regressive actually means. In simple terms, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption or income. Any consumption taxes, including the Goods and Services Tax (GST), is generally regarded as regressive.

Taipei Times Legislative Speaker Wang Jinpyng (王金平) promised yesterday to enact a law monitoring Taiwan’s pacts with China before the legislature reviews the controversial cross-strait service trade agreement. The move was welcomed by the student activists, but they have yet to decide whether to withdraw from the legislative compound. Wang made the announcement during a high-profile visit to the student protesters on the occupied legislative chamber, but prior to entering the room, he held a press conference saying that he has never shunned the responsibility for mediating between KMT and DPP.

PhilStar Rejecting mounting calls for his resignation, the camp of Sen. Ramon Revilla Jr. will appeal today the decision of the Office of the Ombudsman indicting those implicated in the pork barrel scam.

Joel Bodegon, Revilla’s lawyer, said they will file today a motion for reconsideration to discuss at length and pointby-point the supposed errors committed by the Office of the Ombudsman when it found probable cause to charge Revilla with plunder along with Senators Juan Ponce Enrile and Jinggoy Estrada.

L

ONDON – Governments worldwide are increasingly facing a fundamental question: how to deal with the causes of violent – often religiously motivated – extremism. They are not short of advice – and from a wide range of sources.

A former Al Qaeda member, for example, recently stated that the UK authorities’ failure to explain properly why it had not intervened in Syria’s civil war risked radicalizing more Muslims. Meanwhile, London Mayor Boris Johnson suggested removing children from radicalized parents.

Although such ideas have received a somewhat mixed reception, they are a welcome sign of much-needed public debate.

Most people accept the need for security services to respond to terror, particularly in the aftermath of an attack.

Achieving lasting change, however, requires addressing not just the consequences of extremism but also its root causes. What can be done?

First, governments must start thinking about education as a security issue. For example, while endlessly worrying about the existence of dangerous material online, we could do more to educate our youth in the critical thinking skills needed to dismiss such content.

This is a new challenge, and it will not be easy. Before the digital revolution, young people met those from other countries and cultures in relatively restricted circumstances, such as on a holiday abroad or a school exchange program. Today, however, they can interact with any number of people from anywhere in the world in a matter of seconds on their smart phones. Many of these connections take place on un-moderated platforms

that expose children to a wide variety of opinions, beliefs, and cultures – not all positive or safe.

Unfortunately, there are few sources of good advice to help young people navigate these dangers. Most parents are barely able to keep up with the evolving technology, let alone oversee their children’s online conversations.

This means that it is up to our education systems to intervene early to help the connected generation interact safely in today’s digital world.

If we can teach children to recognize what they have in common with those from other cultures, we can also help them to resist the prejudices of those who seek to distort the truth and divide people.

The Tony Blair Faith Foundation’s schools program has made an important start in this respect. It provides a moderated space in which 1217 year olds worldwide can discuss challenging issues from a variety of perspectives, in a respectful and safe way.

Second, governments should support those groups that are already working on the ground and online to counter extremism. One approach is to encourage “counternarratives.” In countries afflicted by religious conflict, such as Nigeria, this means helping religious leaders to develop strong intercommunity relationships.

We know that when people of different religions work together for the good of the wider community, they come to understand one another in a way that helps them resist the call of extremists.

This type of sustained longterm work comes into its own when the worst happens.

For example, in response to attacks last year on a church in Peshawar, Pakistan, local

Muslims formed human chains around churches, allowing them to hold services. Such visible demonstrations of defiance in the face of violence strengthen ties between communities and can prevent the division that extremists try to generate.

If we can teach children to recognize what they have in common with those from other cultures, we can also help them to resist the prejudices of those who seek to distort the truth and divide people

The benefits of such intercommunity spirit are evident in one of the world’s most diverse cities, London. Last June’s arson attack on the Somali Bravanese Welfare Association’s centre in the city’s Muswell Hill district (which followed the murder of British Army fusilier Lee Rigby by religious extremists) served only to unite its

different communities. London Citizens, a network of local civic institutions, organized Jewish assistance programs for Somali Muslims, including after-school events at Hendon School and Eden School.

Meanwhile, Finchley Reform Synagogue hosted a Ramadan festival, and Finchley United Synagogue hosted an Eid event. These activities sent a powerful signal to extremists that their attempts to turn religious communities against each other had the opposite effect.

Third, it is essential to remove online extremist content promptly. YouTube uses sophisticated technical procedures to ensure that the most inappropriate videos are swiftly taken down. But this is only half the story: we also need to support and promote alternative, credible voices online to counter the extremist narrative. Of course, this does not mean uploading videos of politicians in suits telling young men not to join the jihad in Syria. Rather, it means identifying and backing those groups whose anti-extremist messages resonate with the intended audience.

Finally, in these tough economic times, we need to consider cost-effective ways to promote this work globally. One future source of support for effective but under-resourced groups might be the recently established Global Fund for Community Engagement and Resilience, the first ever public-private global fund to support local, grass-roots efforts to counter extremism.

As the pace of globalization and technological change accelerates, extremists are finding ever more creative ways to spread their message.

Governments must respond in kind. © Project Syndicate, 2014

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April 8, 2014

Closing Matisse painting subject to rival claims

Russian marine kills Ukrainian officer

The heir of a Nazi-era art dealer said yesterday that a priceless Henri Matisse painting he aims to return to its rightful owner is now the subject of a claim dispute. A spokesman for Cornelius Gurlitt, 81, in whose homes hundreds of works by European masters have been discovered, said a second, rival claimant had come forward for the Matisse portrait “Sitting Woman”.

A Russian marine has shot dead a Ukrainian naval officer in Crimea, the Ukrainian defence ministry said yesterday, the second reported death since Moscow claimed the Black Sea peninsula last month. The Ukrainian officer was killed “at point-blank range by two shots fired from an AK-74 machine gun,” the ministry said in a statement. It added that another officer in the residence hall “was brutally beaten and arrested by Russian soldiers.”

China’s sports lottery spreads betting net Starting April 12, sports betting options in three mainland cities will expand to 12 types from the current basketball and football flutters

C

ustomers can start betting on 12 kinds of sport like tennis and volleyball in addition to football and basketball starting April 12 in some parts of mainland China, the General Administration of Sport of China has announced.

The latest announcement from the centre last week will serve as a fresh boost to Sports Lottery sales, which grew 20.2 percent last year.

The administration said the betting options of the Sports Lottery will have ten more categories including tennis and volleyball besides the original two choices of football and basketball.

But the offer of such new products will only be piloted in three places in the country including Guangdong province, the leading province by total lottery revenue, and the municipalities of Beijing and Tianjin.

The strengthening coverage of Sports Lottery represents an attempt across the country to capture wider public interest in local sporting tastes and benefit from the successes

of mainland athletes such as tennis champion Li Na. The new products are expected to spike the sales of the Sports Lottery but the Sports Lottery Administration Centre said it was not possible to predict the effect on revenue.

The centre only added that the changes concentrate on increasing product variety through sport selection rather than new forms of lottery.

The sales of Sports Lottery rose by 20.2 percent year-onyear to 132.8 billion yuan (172.35 billion patacas) according to the Ministry of Finance.

For the new sport options, customers must bet on within three to 15 results, with the maximum prize for a single betting ticket totalling 5 million yuan.

But the low pay-out rate on the mainland compared to global industry standards still makes the Sports Lottery susceptible to competition from underground and unlicensed online betting networks.

Pay-out to customers will be 65 percent and 13 percent of revenue will serve

as administrative fees, while the remaining 22 percent is to be channelled into social funds.

Starting April 12, the Sports Lottery will offer betting products for football, basketball, tennis, volleyball, beach volleyball, badminton,

table tennis, ice hockey, field hockey, team handball and water polo.

China Securities analyst Chen Kaiwei told reporters on Thursday that lottery companies like 500.com “will directly benefit” from the changes as well as

the general growth of the lottery market.

“Also, the chances of the Chinese Super League and the CBA [the national football and basketball leagues] being included in the list of lottery contests are high,” he added.

T.L. with GamblingCompliance

Tennis star Li Na

Asia economies to grow at slower pace

No stimulus for economy: China

Internet companies spook 51 pct of Americans

Developing East Asian economies will grow slower than forecast this year as China’s expansion moderates and political upheaval weighs on Thailand’s outlook, the World Bank said.

China will expand 7.6 percent this year, down from 7.7 percent projected in October, while Thailand will grow 3 percent, 1.5 percentage points lower than seen six months ago, the World Bank said in its East Asia and Pacific Economic Update released today. Developing East Asia is forecast to grow 7.1 percent in 2014, down from 7.2 percent seen in October, it showed.

Even so, the region’s expansion will be underpinned by a recovery in high-income economies and the market’s modest response to the Federal Reserve’s tapering of its quantitative easing program to date, the report showed. It said “structural reforms” are key to reducing vulnerabilities and enhancing the sustainability of long-term growth in the region.

“China has already begun a series of reforms in finance, market access, labour mobility and fiscal policy to increase the efficiency of growth and boost domestic demand,” the World Bank said in a statement.

China is going to avoid going down the “familiar path” of resorting to large stimulus measures for the economy, and there is no sign of a shift in monetary and fiscal policy, state news agency Xinhua wrote in a commentary yesterday.

Flagging growth has unnerved global investors and fuelled speculation about a modest stimulus package to boost activity.But Xinhua, in an Englishlanguage piece, dismissed speculation about any stimulus package in the offing.

“A ‘mini stimulus’ theory has been widely circulated after the State Council announced a set of policies on Wednesday,” it wrote.

“However, any talk about an incoming stimulus package is misleading and those anticipating the kind of stimulus China unleashed following the 2008 global financial crisis are likely to be disappointed,” Xinhua added.

Such commentaries are not official policy statements, but can be read as a reflection of government thinking.

China acted for the first time this year to steady its stumbling economy by cutting taxes for small firms last Wednesday and announcing plans to speed up the construction of railway lines.

The personal data gathering abilities of Google, Facebook and other tech companies has sparked growing unease among Americans, with a majority worried that Internet companies are encroaching too much upon their lives, a new poll showed.

The survey highlights a growing ambivalence towards Internet companies whose popular online services, such as social networking, e-commerce and search, have blossomed into some of the world’s largest businesses.

Now, as the boundaries between Web products and real world services begin to blur, many of the top Internet companies are racing to put their stamp on everything from home appliances to drones and automobiles. With billions of dollars in cash, high stock prices, and an appetite for more user data, Google, Facebook, Amazon and others are acquiring a diverse set of companies and launching ambitious technology projects.

But their grand ambitions are inciting concern, according to the poll of nearly 5,000 Americans.

Of 4,781 respondents, 51 percent replied “yes” when asked if those three companies, plus Apple, Microsoft and Twitter, were pushing too far and expanding into too many areas of people’s lives.

Bloomberg

Reuters

Reuters