Macau Business Daily, April 15, 2014

Publisher: Paulo A. Azevedo

MOP 6.00

Casinos petition CE

Number 518 Tuesday April 15, 2014

All casino bosses wrote to Chief Executive Chui Sai On saying they were willing to comply with the needs of healthy gaming floors but wanted to be listened to on five fundamental points. The letter, which Business Daily has seen, managed to get the approval of one of the five key points but operators still expect an answer on the remaining four: from interference on casino layouts to “inconsistent” air sampling method and sanctions that “lack detailed regulation”

www.macaubusinessdaily.com

Year III

Pages 6 & 7

Government boosts employee compensation Non-resident employees – like residents – will have access to a 160 million-pataca government fund covering up to half of workers’ claims against employers Page

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Help for SMEs Culture drops anchor in Coloane Coloane shipyards represent a part of Macau’s heritage. The now abandoned site could be transformed into a cultural centre. The only real investment needed is political will, says European Institute Studies president. Ideas and designs are ready to be studied.

Credit for Small and Medium-sized companies will increase from 500,000 patacas to 900,000 patacas. The bill passed yesterday in the local parliament almost unanimously

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Say cheese!

Uninterrupted signal Macau Cable TV gained an extension of its contract for 5 more years. A non-exclusive concession will be signed this week Page

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No, employment isn’t synonymous with happiness, at least according to a new survey.

A global study puts Macau’s service workers at the bottom of a worldwide smiling index

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April 15, 2014

Macau

Employee compensation to embrace non-residents The government will establish a MOP160 million fund to pay both resident and non-resident employees for claims unpaid by their employers Tony Lai

tony.lai@macaubusinessdaily.com

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new 160 million-pataca (US$20-million) fund set up by the government can cover both resident and non-resident workers for up to half of their claims against employers such as overdue salaries.

The latest inclusion of nonresidents was revealed yesterday by the Executive Council in a bill protecting employees on claims arising from the end of their work contracts. The bill will be submitted within this week to the Legislative Assembly for review, said Leong Heng Teng, the Council’s spokesperson, yesterday.

Currently, only local employees can apply to the government-run Social Security Fund for compensation if their employers, due to reasons such as financial shortfall, cannot

meet claims like salaries once their contracts end.

The new bill will grant such rights to non-resident workers as well, said Mr Leong yesterday in a press conference. “This time, the scope [of the bill] also expands to non-resident workers, in line with our work in the past few years to improve the regulations of labour affairs to better protect the rights of employees,” he said.

The workers can apply to the government for up to half the amount of claims unsettled by their employers – such as unpaid salaries, bonuses and compensation for illness - the bill says. The government would then become a privileged creditor in terms of recouping the money from the companies, if it approves a worker’s request.

MOP90 million

Money govt has given until last year to employees for unsettled claims

SMEs to get more money Legislators pass a bill that will allow SMEs to apply for loans of up to MOP900,000 Sara Farr

sarafarr@macaubusinessdaily.com

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he credit ceiling for Small and Medium-sized enterprises will be raised to 900,000 patacas from 500,000 patacas, after legislators passed a bill yesterday.

All but one legislator unanimously approved the bill, which raises the interest-free loan by 180 percent.

Legislator Lei Cheng I abstained from voting, saying the government failed to explain the reason behind the increase. “There’s no clarification [from the government], only the reinforced notion that there’s a need to help SMEs,” Ms Lei said. She also added that the government should look back at the credit loans made to SMEs in the last 10 years to better explain the reason behind the increase.

Last month, legislators approved the first reading of the bill without great discussion. During that

meeting, the government said that since 2003 one percent of the money loaned to SMEs had turned to bad debt. Two of the 436 loans approved

between 2003 and 2013 failed to repay the banks. At the time, Sou Tim Peng, director of the Macao Economic Service, failed to say

The bill will enable the administration to set up an independent fund from the Social Security Fund – the ‘Labour Credit Assurance Fund’ - and inject 160 million patacas into the new fund.

The new fund will be supported and administered by the Labour Affairs Bureau, which has been handling cases of workers’ claims against their bosses, said Mr Leong.

“This arrangement can be more beneficial to the workers for employee protection,” he said.

From 1990 to 2013, the Social Security Fund has processed the unsettled claims of 4,300 employees involving over 500 companies. The fund has granted over 90 million patacas to litigants, said Mr Leong, who has no data at hand on how

how many loans had been or were currently not paid on time.

So far, no official statement has been made as to what benefit the loans had brought the economy when it comes to creating jobs and boosting gross domestic product.

Under this newly passed bill, the government guarantees the full amount of loans up to one million patacas. Whereas under the previous scheme, the government guaranteed 70 percent of a five-year interestfree loan made to an enterprise by a participating bank. The maximum amount guaranteed under the first scheme was of 3.5 million patacas.

Since the start of the scheme 11 years ago, as much as 450 million patacas has been loaned on an interest-free basis, making the average loan per enterprise 1.03 million patacas.

Meanwhile, the legislators moved against approving a trade union bill, with 14 votes against, 9 in favor, while 7 abstained from voting.

Legislators said now is not the right time to implement the bill, and the draft needs better work.

Last year, the Legislative Assembly spent just under 117 million patacas, representing an execution rate of 92 percent of the initial budget. The assembly also added 7 million patacas as a supplement income to this year’s budget.

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April 15, 2014

Macau

Where’s the Provident Fund?

The draft bill for the new provident fund was meant to be presented at the end of 2013 but three months on no draft is in sight

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much money the fund can claim back from employers.

The spokesperson said: “These are their [the employees’] hard-earned money. They’re entitled to it.”

Mr Leong expects the bill can come into force this year after the

legislators’ review.

The bill mandates that claims made by employees are limited to the six months prior to the end of their labour contracts, and that the employees must repay the government if their bosses settle their claims.

Civil servants’ appointment mechanism revamped Mechanisms of civil servants under contract revamped to better unify the rules governing them Tony Lai

Tony.lai@macaubusinessdaily.com

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he government will revamp the mechanism of civil servants under contract to unify rules governing them, suggests a bill unveiled by the Executive Council yesterday.

The bill will also establish systems for re-hiring outgoing staff and the transfer of civil servants under contract with different public bodies.

Leong Heng Teng, spokesperson of the Executive Council, said that the bill will be submitted to the Legislative Assembly this week and could come into force this year after review.

The city’s civil servants can be categorised into two substantial categories: those appointed to permanent positions and under contract which has a time limit for the period of their tenure.

The new bill said the administration will only sign ‘administrative employment contracts’ in the future with staff under contract instead of two types of contracts at the moment. The government, meanwhile, will keep the so-called “labour contract” for short-term employment.

The ‘administrative employment contract’ can be renewed for five years after the end of its two-year tenure, compared with the two

current modes that do not specify the period. The new contract also specifies that workers can enjoy compensation worth three months salary following the termination of the contract, the bill said.

Such a new arrangement can level the treatment of all civil servants under contract with appointed civil servants, said Mr Leong.

“This new bill can better regulate the public administration management with a concrete legal mechanism to follow,” he said, adding this would “minimise the room” for different interpretation.

The director of the Professional Civil Servants Association of Macau, Kun Sai Hoi, welcomed the change, saying “this can simplify the complicated mechanisms of hiring civil servants”.

But he suggests that the renewal of contract tenure for police be longer than five years to ensure the stability of the security force.

According to the council, some 13,081 current civil servants under contract could be subject to this change, whilst over 12,000 appointed civil servants remain unaffected.

These figures do not include civil servants employed in autonomous institutes like the Macau Foundation and the universities, totalling over 2,000 workers.

egislator Lei Cheng I has called on the government to present the final draft of the new provident fund scheme that was first introduced in late 2007. During yesterday’s plenary session at the Legislative Assembly, Ms Lei said that the setting up of the fund is important for workers as it gives them enough living income after retirement.

“Last month, the president of the Social Security Fund, Ip Peng Kun, recommended that the proposed hedging mechanism be eliminated...

Hong Kong did the same two years ago... I agree with this measure. But this cannot be an excuse to delay the scheme,” Ms Lei said.

In August 2008, legislators unanimously approved the bill establishing a central provident fund. Under this new scheme, Macau workers and their employers set aside money on a monthly basis. This then goes towards employees’ retirement.

While no time line had been given as to when the law would come into effect, the government said it would have the draft ready by the end of last year.

“Right now we do not have the methods and political conditions to establish the central provident

fund,” Secretary for Social Affairs and Culture Cheong U said at the time of the final reading of the law.

“But this law acts as a legal basis for the future of the fund.”

The Provident Fund Scheme was first introduced in 2007, and is a retirement benefits plan towards which both public service workers and the government make monthly contributions. These are then accumulated with returns on investment for the provision of retirement protection, according to the booklet on the provident scheme for workers in public service.

Enrollment in the fund is compulsory for all workers on a government department payroll, and voluntary for workers recruited under other terms or employment. The only exception is for public service workers in departments that have their own retirement benefits scheme.

All private accounts in the central savings system founded in 2009 will be transferred to the new provident fund accounts. The new enabling law also reduces the age at which a person can open a provident fund account from 22 to 18.

S.F.

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April 15, 2014

Macau

Meet-and-greet nothing to smile about A survey discovers that smiles and greetings given by service workers here are the second-lowest in the globe, a result of heavy workloads and labour shortage, suggest pundits Tony Lai

tony.lai@macaubusinessdaily.com

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mployees in the local service industry are among the most stony-faced workers in the world because of work-related stress and the lack of qualified manpower, say observers.

They say the government should have better labour policies and training for staff to improve the services offered here, while some say the problem only occurs in the area of mass-market services.

Swedish-based firm Better Business World Wide recently released a global ranking of smiles and greetings in the service industries, such as retail and transport, across the globe. The firm finds that Macau’s service industries only scored 54 out of 100 points last year, placing us second-lowest among 53 economies in the smile ranking, just slightly better than the 45 points scored by South Korea.

For the ranking of greetings, Macau was also the second-lowest, scoring 60 out of 100 points to beat the 59 points of India by a whisker.

The scores mean that customers only get smiles and greetings in about half of their shopping experiences here, compared with the global average of 83 percent for smiling and 86 percent for greetings.

The firm compiled the ranking through data from the Mystery Shopping Providers Association, which recorded over 1.6 million responses last year on customers’ experiences across the globe regarding whether they received smiles and greetings during shopping.

Pundits here are not surprised by the findings. Andy Wu Keng Kuong, president of the Travel Industry

Council of Macau, said: “These findings are in line with other surveys undertaken by the local institutes that there is still room for improvement in the level of services offered here.”

Bosses dare not advise workers to improve because of the current labour shortage, claimed Mr Wu. “They’re afraid their workers may resign after being rebuked,” he said.

Government lead Fong Koc Hon, president of the Service Sector Employees’ General Association of Macau, said they were “too stressed” to smile due to the workload.

He advised companies to talk more to the workers to relieve their

stress, as well as “strengthening the training of the workers instead of only relying on them to follow some guidelines by themselves”.

But Frederick Yip Wing Fat, president of the Macau Association of Retailers and Tourism Services, questions the sampling of the survey, which the Sweden-based firm did not give details about.

“If all the samples are collected from shopping malls like New Yaohan and Venetian Macao, the score here will not be low as the service of highend retail is quite good here,” he said.

“The problem lies with the small-and medium-sized enterprises which have difficulty retaining staff, let alone providing training for them.”

Mr Wu thinks that the obligation

of training not only resides with the companies but also the government.

“Such service awareness cannot be promoted by one or two people but society as a whole,” he said, adding an “appropriate” labour policy is also required.

Asian economies generally scored poorly in the rankings for smiling and greeting, according to Better Business World Wide. Mainland China and Hong Kong placed third and fourth lowest in the ranking of smiling, better than Macau and South Korea, while Poland, Ireland and Spain ranked in the top three.

For the greeting ranking, four South American countries – Guatemala, Panama, Peru and Uruguay – took the crown with a perfect score.

The problem lies with the small and mediumsized enterprises which have difficulty retaining staff, let alone providing training for them Frederick Yip Wing Fat, president of the Macau Association of Retailers and Tourism Services

Chow Tai Fook trusts Making a difference?

Korea’s casino resort distinct in tourists for sparkling sales South from Macau, says developer T T he jewellery group’s chairman, Henry Cheng, revealed yesterday that it expects same-store sales to turn positive in Macau and Hong Kong this year, aided by an increase in the number of visitors to both cities from the mainland.

Last week, the world’s most valuable jewellery retailer said samestore sales in both cities had fallen 9 percent in the fiscal fourth quarter, which ended March 31.

Cheng told reporters that the decline was largely due to the fact that a drop in gold prices in the same year-ago period had sent sales soaring to unusually high levels. He said that the anticipated increase in Chinese tourists would help reverse the decline this year.

Macau’s casinos are the main draw for mainland visitors, who have turned the autonomous region into the world’s biggest gambling hub. A

new free trade zone being developed in southern China’s Qinghai region and an increasing population should also help sales in Macau, where Chow Tai Fook has recently established a regional office, Managing Director Kent Wong added.

The number of outbound Chinese tourists hit 100 million last year and is expected to double by 2020, according to a recent report by broker CLSA. “As mainland tourists continue to come to Hong Kong, and without the high base effect that dragged down sales in the latest quarter, we’re confident that the same stores sales growth for this year will be positive,” Cheng said.

Chow Tai Fook will continue to add 200 new stores a year in the next few years, Cheng said, adding that the jeweller expects overall sales growth to average over 20 percent annually.

Reuters

he first foreign-owned casino resort in South Korea will be positioned differently to the mega projects here, despite the fact that all the resorts are targeting mainlanders, said a top executive with the project developer.

The joint venture between Las Vegas-based Caesars Entertainment Corp and Hong Kong-listed property developer Lippo Ltd says the project - worth of up to 2.3 trillion won (17.7 billion patacas) - can start construction this year, Hong Kong newspaper Apple Daily reports.

John Lee Luen Wai, managing director and chief executive of Lippo, told the newspaper that he is not worried that his South Korean project will vie for mainlanders with the mega resorts here. The mainland market is “enormous”, as there are already dozens of mainland cities supporting a population of more than

4 million within one hour’s flight of their project, Mr Lee said.

Their project and the Macau resorts also have “different selling points”, the chief executive told the newspaper, although he did not elaborate. He only added that the project, near Incheon International Airport west of Seoul, will not solely focus on gambling but “family entertainment”.

The project will be developed in three phases, with the first phase including gaming facilities, a five-storey retail and restaurant tower and 500 hotel rooms. Construction could start this year at the earliest, Mr Lee said.

The first phase, worth 743.7 billion won, can be completed by 2018 when Pyeongchang in South Korea hosts the 2018 Winter Olympics, Casears and Lippo said before getting the green light last month for the project from the South Korean administration.

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April 15, 2014

Macau

All the right signals Government to ink 5-year renewal contract with Macau Cable TV. The non-exclusive concession will be signed this week Stephanie Lai

sw.lai@macaubusinessdaily.com

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he government is about to sign government has yet to announce the a 5-year concession renewal time frame for when it will launch contract with the city’s sole open bidding for operators to run a pay television service provider Macau pay television service, Mr Ho noted.

Cable TV Co Ltd on a non-exclusive The only company that has basis, legislator Ho Ion Sang told voiced interest in participating media after a closed-door meeting in the local pay television service with officials chaired by Secretary is telecommunications operator for Transport and Public Works Lau Companhia de Telecomunicações Si Io yesterday. de Macau SARL (CTM), which “ W i t h t h i s 5 - y e a r s e r v i c e informed media last Wednesday that renewal contract to be signed, the the company was seeking to achieve government answered our concerns 100 percent coverage of the fibrethat this should not affect the optic network across Macau this year. local market from opening up [for Business Daily tried to approach pay television service],” said Mr Mr Lau and Legal Affairs Bureau’s Ho Ion Sang. He spoke after his director Mr André Cheong Weng Chon special committee monitoring land after the legislative meeting for further and public concessions met with comment on the renewal contract officials yesterday. requirement for pay television service “During these five years, it will but both declined. be a period for new investors [in pay Ricky Tam Mong Peng, operations television service] to make technical director of Macau Cable TV, only told preparations and invest in related us that the company would disclose infrastructure,” Mr Ho recounted the details of the renewal contract in per officials’ remarks. public “later”.

Macau Cable TV’s 15-year concession to run a pay television Slow opening service expires on April 21, after more than a decade of being embroiled in “On one hand, through a lawsuits over the use of unlicensed government-owned company, the cable networks from the city’s administration is having the antenna antenna firms to firms transmit TV signals retransmit TV [legally] and channels from gradually taking around the region down their to households, [unlicensed] w i t h o u t hanging cables authorisation over the city’s from the residences...” copyright Mr Ho Ion Sang holders. Some told media. programmes “Meanwhile, aired have been for the pay in conflict with television service, the content the government provided by noted that there Macau Cable TV. are not sufficient The renewal conditions contract to be Ho Ion Sang to open the signed with Legislator market now for Macau Cable newcomers.”

TV this week Last week, will be of a the governmentnon-exclusive owned company nature but the

This would be a gradual process for the local market to see more potential players come in to provide pay television service

Sin Fong owners should file lawsuit: govt H ome owners of Sin Fong Garden in Patane, which suffered a near-collapse incident in 2012, should file lawsuits to claim for losses incurred regarding the flawed residence, as well as funding or loans offered by local associations that seek to partly cover the building’s reconstruction, Secretary for Transport and Public Works Lau Si Io said on the sidelines of a legislative assembly meeting yesterday. Legal Affairs Bureau

head André Cheong Weng Chon stressed to media that given the government’s reports on Sin Fong Garden’s construction problems, home owners have “sufficient materials” to file a lawsuit with legitimate cause against the contractor. Even if home owners decline to sue, the government “will try its very best” to claim its rental subsidies given to the home owners through a lawsuit filed on its behalf, Mr Cheong said.

- Macau Basic Television Channels, Limited - was established to lead the relay of free-to-air broadcasts to local households, whereby the antenna firms are responsible for delivering the signals to inside residential buildings via their 34 signal access points across the territory.

Deputy director of the Bureau of Telecommunications Regulation, Mr Hoi Chi Leong, announced a fortnight ago that their short-term goal is to have all the transmission cables going underground via the use of the fixedline telecommunication networks, namely from CTM and Companhia de Telecomunicações de MTEL. Mr Hoi noted at the time that

this goal was important in order to prepare the city for the launching of triple play service – the integration of mobile phone service, internet and television service.

“The government said that it was still studying how many more competitors the local market can take for pay television service,” legislator Ho Ion Sang noted.

“This would be a gradual process for the local market to see more potential players come in to provide pay television service,” Mr Ho added.

“A difficulty for the government is that given Macau’s small market, there might not be many new operators interested in coming here.”

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April 15, 2014

Macau Brands

Trends

More than Gangam Style Raquel Dias newsdesk@macaubusinessdaily.com

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t’s no secret that Korean fashion, in tandem with Japanese, is one of the main influences on the Asian market. The love affair that also extends to other industries like food and beverages, and particularly music - seems to be chugging along nicely. A good example is the German-born brand Mode Creation Munich (MCM). MCM was acquired in 2005 by the South Korean Sungjoo Group, which has since tailored its products to the young Asian market.

One of their most successful products - the one you see in Macau and Hong Kong - is their special backpack. The craze is said to have started when Korean celebrities, namely those in the K-pop industry, were photographed wearing them.

Targeting younger consumers, the original backpacks have become something of a status symbol.

They’re available in almost any colour imaginable, from black to pink and bright orange. Prices also depend on the embellishments to each model. Whereas the basic monogrammed piece can start low, more detailed models can reach MOP7,000.

The brand’s signature is the spikes and metallic pins, while snakeskin and other luxury materials can be used as well.

Although right now the easiest place to find these must-haves is in the Rainbow shop in One Central, this might soon change as the brand expands. MCM plans to have 72 outlets in China, Macau, Hong Kong and Taiwan by the end of this year: until then, fashionistas will have to make do with the look-at-me backpack.

Smoking gun The bosses of Macau’s casinos wrote a letter to the Chief Executive requesting an agreement on five points regarding the smoking law in gaming areas. Months later, the government announced smoking areas in the mass gaming area, one of the points requested in the missive accessed

by Business Daily. Operators still await decisions on the other four key points and are divided in the way to “lobby” Alex Lee

alex.lee@macaubusinessdaily.com

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t was with mixed feelings that gaming operators received the recent announcement by the government related to smoking in casinos. While some consider the decision as a compromise by the government, buying more time for further agreements in the near future, others advocate a more “aggressive” approach, demanding a “full answer” to a letter sent to Chief Executive Chui Sai On at the end of 2013.

‘There are two positions within the gaming operators”, a well-informed source told Business Daily. Operators that defend a more negotiated approach gained momentum when Secretary for Social Affairs and Culture Cheong U told the Legislative Assembly that the government would improve the current arrangements on the partial smoking ban but was “in no rush to amend the legislation”. There is no urgent need to completely ban smoking in casinos, he told legislators.

Smoking is banned in up to half of the space in casinos and other gaming establishments. “Casinos can ask for a smoking area of only 20 percent, or none at all,” Mr Cheong said.

In March, the Health Bureau accepted the suggestion by the six casino operators that smoking zones in mass gaming halls be scrapped and replaced with smoking rooms without slot machines or gaming tables.

Secret letter The subject, however, far from appeases gaming operators still awaiting a response to a letter sent

to the Chief Executive requesting agreement on five points. The “smoking lounges in the mass market area” was one of the subjects; but other issues have still to be addressed and “we want to know if yes or no”, a source with one of the operators told Business Daily.

The position of the casinos’ top bosses was expressed in the letter sent on November 20th 2013, one year after Chui Sai On signed Order 296/2012 that set new standards for smoking and non-smoking areas in casinos.

The letter, which Business Daily has seen sight of, touches on five points related to the smoking amendments. One of them – the lounges or smoking rooms - has in the meantime been accepted.

In the 10-page letter, in Chinese and English, gaming operators say they have been introducing changes requested by the Health Department and show their “determination to cooperate” in order to improve air quality inside the casinos but wanted to express to the Chief Executive the difficulties they have been facing.

However, as gaming sources told Business Daily, operators only had answers from the Health Department on one of the five points operators consider important to resolve, concerning the smoking areas. “What about the other four questions?” our sources ask.

The letter, signed by the top representative of each company, say the changes to the smoking areas were presented in December 2012,

with “all the submissions to fulfill the criteria defined by the regulations . . . Unfortunately, none of the requests presented so far, were answered or commented on by the Health Department”, complain gaming operators. The silence is interpreted as “not authorising the changes” that ultimately “jeopardise the capacity of the industry to innovate its products and consequently the positioning of Macau in a regional environment that is changing at a very fast pace”, they say.

Since the smoking areas approved in 2012 “were never meant to be final and unchangeable”, the operators also requested Chui Sai On’s attention to their requests regarding layout alterations.

To Business Daily one of our sources explained that the government is not only trying to “impose” the results, which “we would understand” but “forcing layouts and aesthetics that go against the architecture of the casinos.

They should be more concerned about results of the air quality instead”, this newspaper was told.

Requested time guarantee In the letter sent to the CE, gaming operators wanted clarification regarding the 50 percent of smoking areas that “will remain unchanged in the existing properties, as well as in those under development or to be developed”. A clarification they never received, as we understand. A full smoking ban is now being mulled.

Last week, the Secretary for Social Affairs, however, told the Legislative

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April 15, 2014

Macau Assembly that a complete ban is not on the cards for now.

That is, however, the main concern of the operators: substantially changing the smoking areas would imply renewed efforts and costs and thus a commitment to “long term stability in respect of the smoking regulations needs to be reached”, they point out. In other words, casinos don’t like the idea of spending too much money in renovating in order to meet criteria that would be changed soon after. The government, however, “seems not ready to make a final decision or hasn’t even found the right decision”, complains one of the sources.

Air quality standards Another “serious concern” pointed out by the extensive letter to the CE refers to current indoor air quality standards.

To the operators, there is no mistake: the air on the streets is even worse than in the casinos, they say. “Tests using the same parameters in Macau’s outdoor air reveal that outdoor air quality is not recommended and is frequently above the levels accepted for the casinos’ indoor air quality”, says the missive.

Do you smoke?

January 1, 2012

Law No. 5/2011 “Regime for prevention and control of tobacco use” comes into effect, banning smoking in all indoor public spaces in Macau. Casinos given one-year grace period to ensure at least half the space on their gaming floors is smoke-free.

October 31, 2012

Gaming concessionaires permitted to apply to set up “negative pressure ventilation” (low-speed airflow from uncontaminated areas into contaminated areas) no-smoking zones occupying at least 50 percent of their casino floor area.

January 1, 2013

Partial smoking ban in casinos takes effect. Casinos that have applied for smoking areas – allowed up to fifty percent of casino floor space – must submit a monthly air quality report to the Health Bureau. Anyone found smoking in a non-smoking area in a casino can face a maximum on-the-spot fine of 400 patacas (US$50).

March 25 – 30, 2013

KEY POINTS For the most comprehensive changes in the casino layout operators want a guarantee that the rules will remain unchanged for existing [casinos] and those to be built Air sampling method used by the Health Department accused of producing “inconsistent” results Sanctions “lack detailed regulation which was never approved and published”

“All properties have to pump air from the outside, which has to be repeatedly filtered in order to achieve the levels set up” by CO order 296/2012. Because some of the components of the outdoor air can’t be totally eliminated, those same standards will not be easily reached, they say. In sum, operators ask for a revision of the parameters in which they might be directly responsible for the quality of the air “directly correlated with smoking and which cannot be heavily influenced by outside air quality” which they claim not to have the power to control.

The subject, our sources say, “is still to be answered as well”.

Last but not least, operators say the sampling method used by the Health Department produces “inconsistent” results and sanctions “lack detailed regulation which was never approved and published”, which, as operators claim, leaves them in a level of “uncertainty that is not acceptable”.

To Business Daily, knowledgeable sources use the example of the DICJ (Gaming Inspection Bureau) to overcome minor decisions and problems without the need for all the subjects to be presented to the Chief Executive. “If every little detail needs to be decided by the CE this will be a never-ending story”, they concluded.

First round of regular checks on air quality conducted in 44 casinos and slot parlours. Almost two-thirds of the casinos and slot parlours were detected to have air quality problems; 16 of the gaming venues were run under the licence of Sociedade de Jogos de Macau SA. The rest belong to Melco Crown (Macau) SA, Galaxy Casino SA and Wynn Resorts (Macau) SA.

April, May, 2013

Some 16 gaming venues fail second round of air quality tests held in April and May. By law, they are required to reduce their smoking areas by 10 percent but the reduction plan is never announced.

Failed casinos: Golden Dragon, StarWorld, Jimei, Emperor Palace, Lan Kwai Fong, Club VIP Legend, Kam Pek, Diamond, Grandview, Casino Taipa Square Failed slot-machine parlours: Mocha Hotel Royal, Mocha Hotel Taipa Squre, Mocha Marina Plaza, Mocha Golden Dragon, Mocha Hotel Sintra, Mocha Lan Kwai Fong

December, 2013

Government receives suggestion from the city’s six gaming operators to instal smoking rooms inside casinos, instead of smoking areas that take up half their gaming floors

March 19, 2014

Health Bureau director Lei Chin Ion told that the proposal to adopt smoking rooms should be tested in the gaming venues that failed the second round of air quality tests in 2013. Mr Lei also notes that such arrangements should be tried out on massmarket gaming floors.

H1, 2014

Government to release first assessment report for smoking control law implementation

2015

Government and Legislative Assembly to review partial smoking control inside casinos

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April 15, 2014

Macau

The nine best works for the shipyards will be on public display at Creative Macau until April 22

Getting shipshape for culture Macau should start preserving and rebuilding its unique historic areas. The idea of a cultural centre for the Coloane shipyards proposed by young foreign architects is a starting point for the rebirth of the Inner Harbour or Macau shoreline, says IEEM president José Sales Marques Alex Lee

alex.lee@macaubusinessdaily.com

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he construction of a cultural centre with shops and leisure areas in the former Coloane shipyards for the enjoyment of local families and tourists visiting Macau should be an example to be exported to other districts in the territory such as Macau’s shorefront and the Inner Harbour.

Speaking to Business Daily, José Sales Marques, president of the Institute of European Studies of Macau (IEEM), says that Macau has to stop copying models and monuments from other parts of the world and start rehabilitating its unique spaces, like the Coloane shipyards.

The challenge to renovate the old shipyards was undertaken by IEEM and the School of Architectural Engineering of Politecnico di Milano.

Last year, the Italian institution selected Coloane as the theme for its

Compasso Volante competition. The contest proposes to architectural students new ideas for rebuilding old and historic sites around the world. Prior to Coloane in 2013, the Compasso Volante prize had already renovated areas in Europe (Portugal, Italy, France), the Middle East (Turkey) and Asia (China and Singapore) to name but a few. The nine best works for the shipyards will be on public display at Creative Macau until April 22.

Mr Sales Marques described the new cultural centre not as a final proposal but as an ‘exercise’ following a path that Macau should follow in terms of urbanization in the future. “First, we want to underline the importance of the shipyards to the territory, their beauty and their brand as a unique infrastructure in the region. This area in Coloane is a symbol of the

real Macau; it’s not a copy from another place, its foundations are part of Macau’s roots”, said the former pre-handover mayor.

The president of IEEM added that Macau needs to rethink what it wants to be in the future in terms of urbanization. The abandoned

Political will is the only investment required José Sales Marques

shipyards don’t project “a good image” of the territory today, especially as they’re in a very exposed area, just opposite Mountain Island and Macau’s university campus.

This visibility is also key to success or failure. On the one hand, the great view is a magnet for investors looking for ‘other projects’ probably more lucrative than a leisure or cultural centre, like residential skyscrapers or casinos.

On the other hand, a successful and sustainable project such as those presented in the Compasso Volante competition with green zones for pedestrians, shops and art centres could also work as a magnet for locals and tourists, with opportunities to become a Macau landmark, declared José Sales Marques.

Without quoting figures for the possible investment necessary for the rebuilding of Coloane shipyards,

Corporate 2-Michelin star Chef at Vida Rica From 7 to 10 May, Vida Rica Restaurant at Mandarin Oriental, Macau welcomes the Michelin-starred guest chef Thierry Marx to showcase the very best of his creative and modern French cuisine.

Known for his acclaimed restaurants, Sur Mesure par Thierry Marx and Camélia at Mandarin Oriental, Paris, Thierry Marx marries French tradition and Asian influences with inspirations drawn from his travels and a career that has taken him to Australia, Hong Kong, Thailand and Japan. With a belief that food is about pleasure and sharing, his aim is to touch the heart with food that is beautiful to taste and to look at.

9

April 15, 2014

Macau

The shipyard site as it is today (photo by Manuel Cardoso)

the president of IEEM emphasised that money was not a problem in this instance. The proposed Compasso Volante’s architectural projects are not expensive: political will is the only investment required.

Sales Marques admits that the fact Coloane is still a more or less protected area in Macau could be an advantage in convincing the government to dedicate the old shipyards to a more cultural and sustainable future.

The IEEM stated that the proposed projects for Coloane do not pretend to create an elite cultural centre or an infrastructure exclusively for tourists. Its goal and inspiration is to involve the local community who, for example, would

run the shops, he said.

More than twenty projects participated in this year’s Compasso Volante - involving universities from Japan, Singapore and Italy. The use of local materials like bamboo, mother-of-pearl, and even the colours of Macau’s temples were employed as inspiration by the architects.

Regardless, Sales Marques admits that projects for a cultural centre in Coloane may never see the light of day. But he reiterated that the expositions of the best nine works in Creative Macau could make the community and the government aware of the benefits of preserving Macau’s most renowned historical places.

10

April 15, 2014

Greater China

Citic expands its scope through BTIG

C

Pudong financial district in Shanghai

New guidelines pressure shadow banking sector The latest guidelines appear consistent with regulators’ overall approach to shadow banking

C

hina has issued stricter guidelines governing trust companies, two sources with direct knowledge of the rules told Reuters yesterday, in a bid to counter systemic risks posed by the biggest players in the country’s shadowbanking sector.

Trust companies are non-bank lenders that raise funds by selling high-yielding investments known as wealth management products (WMPs) and use the proceeds to fund loans to risky borrowers such as property developers, local governments and others to whom banks are reluctant to lend.

The new rules from the China Banking Regulatory Commission (CBRC) aim to reduce liquidity risks associated with off-balance-sheet WMPs by forbidding trusts from operating so-called “fund pools” that enable them to fund cash pay-outs on maturing products with the proceeds from new WMP sales.

The latest guidelines appear consistent with regulators’ overall approach to shadow banking, which has become an important funding source for weak borrowers.

Policymakers have encouraged the rise of non-bank lending as a means to diversify China’s bankdominated financial system, while issuing targeted rules to curb the riskiest practices.

The guidelines also require trust companies to develop clear mechanisms for shareholders to provide emergency support to the trust firm during periods of liquidity stress.

Regulators are concerned that liquidity problems with a single trust product has the potential to ignite

systemic risk, said a trust industry executive who has seen the document.

He said the document signals that liquidity risk will be a key focus for regulators this year.

“Fund pools” refer to pools of cash and credit assets from various different WMPs that banks and their trust company partners maintain.

Regulators have increasingly focused on such structures over the last year, targeting the liquidity

KEY POINTS Trust companies urged to improve liquidity safeguards Concern over maturity mismatch between assets and liabilities Regulator wants to halt trust companies’ “fund pools”

risk posed by the practice of using proceeds from the sale of new WMPs to finance cash pay-outs on maturing products. China’s securities regulator has compared such practice to a “Ponzi scheme”.

Regulators want trusts to strictly match each WMP with a specific set of underlying assets, rather than

pooling cash and assets from different products together into common pools.

Trusts face pressure to use fund pools because doing so allows them to offer more attractive yields on the WMPs they sell. Such products typically carry a maturity of a year or less, even as the assets underlying such products are often longer-term loans that can’t be easily sold when the WMP matures and cash is due to investors.

Such risks came to the fore last June, when a nasty liquidity squeeze roiled China’s interbank money market, sending short-term borrowing rates as high as 30 percent.

Money-market traders at the time cited the concentration of maturing WMPs as one factor contributing to excess cash demand.

Trust companies and banks often rely on borrowing from money markets to fund pay-outs on maturing WMPs for a few days until they complete fundraising on new products.

Several high-profile defaults on trust products earlier this year based on loans to struggling coal producers raised concern over systemic risks.

Assets under management at Chinese trust firms rose to 10.9 trillion yuan (US$1.8 trillion) at end-December. Trusts surpassed insurance companies last year to become the largest sector of China’s financial system behind commercial banks.

In addition to the focus on fund pools, the CBRC guidelines also require trusts to reduce lending when their capital levels fall due to losses.

The regulator also pledged to tighten the approval process for trusts to expand into new business lines.

Reuters

hina’s largest brokerage by market value, acquired a stake in U.S. firm BTIG LLC as it seeks a bigger foothold in offering equities trading for overseas institutional investors.

The Chinese investment bank is making the investment through its Hong Kong-based CLSA unit, BTIG said in a statement. New York-based BTIG, which has more than 450 employees, will continue operating independently. The financial terms and stake size weren’t disclosed.

The investment in BTIG, which offers equity, options and foreignexchange trading, is the latest step in Beijing-based Citic’s international expansion as it seeks to compete with rivals such as Goldman Sachs Group Inc. The transaction builds on the CLSA acquisition, which cost about US$1 billion and gave Citic a brokerage with more than 1,500 employees located in 21 cities across Asia, Europe and the U.S. “The deal demonstrates Citic’s determination to expand overseas,” Fanny Chen, a Hong Kong-based analyst at Haitong International Securities Group, said by phone. “It will further cement Citic Securities’ leading position in China’s brokerage industry. A large overseas operation is a great advantage” as China opens up its capital markets, she said.

Since Steve Starker, a former Goldman Sachs partner, and ex-Bank of America Corp. equities chief Scott Kovalik founded BTIG a decade ago, the stock-trading firm has opened offices across the U.S. and in Europe and Australia. BTIG plans to use the funds to add to its research and banking businesses, Starker said in a phone interview.

Main business “Many have concluded that electronic trading is more profitable, and the reality is there is still a need for high- touch service,” said Starker.

“Our model is all about relationship, trust, service and liquidity.”

BTIG’s main business is trading big blocks of stock for hedge funds and other institutional clients. The firm has been expanding as rivals shrink or close. The pool of stock-trading fees on Wall Street has dwindled by 33 percent since 2009 to US$9.3 billion a year, Greenwich Associates said last year.

BTIG has gained market share in equities and is looking to repeat that in other asset classes, Starker said.

Bloomberg News

Citic tower in Hong Kong

11

April 15, 2014

Greater China

Aussie cattle industry targets China

H Closer bonds with Timor-Leste China and Timor-Leste have pledged to establish a partnership of good-neighbourly friendship and mutual trust and benefit, as Timor-Leste Prime Minister Xanana Gusmao concluded a weeklong visit to China. According to a joint statement released by the two governments yesterday, they agreed to strengthen political, economic, trade, energy, agricultural, defence and security cooperation during Gusmao’s tour. They agreed to strengthen cooperation in infrastructure building and expand bilateral trade and investment on the basis of equality and mutual benefit and in keeping with their respective development strategies.

Beijing office prices rise Bucking the trend of a cooling down property market across China, rents and sales price of grade-A office space in Beijing edged up in the first quarter, said the world’s leading real estate consulting company DTZ. Beijing’s average grade-A office rents climbed to 301.03 yuan/m2 (about US$49) in the first quarter, up 0.7 percent from the previous quarter, the company said in a latest report. In the first three months, the overall average sales price for grade-A office space in Beijing saw a 0.7-percent increase over the prior quarter to 63,936 yuan/m2.

Weapons business dismantled Police have seized a huge cache of weapons including 15,000 guns and 120,000 knives from an illegal arms ring and detained 15 suspects, state media reported yesterday. The weapons were confiscated after a four-month investigation, according to the state-run China Daily newspaper, which called the operation the largest-ever such seizure in China. Police were tipped off to the arms ring’s existence after investigating a robbery in Guiyang and tracing the source of a gun used in the robbery to a family-run “gang” in Hunan that advertised itself as a factory but controlled several warehouses where guns and knives were sold.

Chongqing Changan Auto earnings rocket The company reported robust earnings for 2013 and predicted strong net profit growth in the first quarter of this year. The earnings report, released on Saturday, showed preliminary 2013 net profit up 142.4 percent on year to 3.51 billion yuan. The company sees first-quarter net profit rising over 200 percent on year to as much as 2.05 billion yuan (US$329.98 million). The strong results pushed the shares up 10 percent, their highest single-day gain since October 2013. China’s vehicle sales grew 6.6 percent in March, China Association of Automobile Manufacturers said on Friday.

Chengdu Xuguang Electronics profits decline The listed firm on the benchmark Shanghai Composite Index, announced net profits of 86.72 million yuan (US$14.1 million) in 2013, down 25.06 percent from the previous year due to weak market demand. The Sichuanbased company attributed the decrease of net profits to anaemic demand amid a sluggish global economic recovery and slowdown of the Chinese economy. The company’s business revenue rose to 443.59 million yuan in 2013, edging up 2.06 percent from 2012, according to its annual report.

ot on the back of winning lower tariffs for beef exports from its largest buyer Japan, Australia is setting its sights on winning another major prize for its beef industry by persuading China to open its market to live cattle sales.

China’s growing middle class seems to have an insatiable hunger for beef, but with limited domestic stock, beef imports are hitting record levels, jumping 40 percent in the past year.

Importing live cattle would not only be a windfall for outback ranchers, but make economic sense for China, with abattoirs there running at only 30 percent of capacity and labour costs around a fifth of wages in Australia, say beef industry firms.

China and Australia are keen to finally commence live cattle trading, having seen a 1998 deal fail because of regulatory issues, say Australian officials.

Chinese officials visited Australia in March to discuss live cattle trade issues, and with Australian Prime Minister Tony Abbott in Beijing last week for free trade deal talks, hopes of one day mustering cattle for China are rising.

Cattle trail to China Australia is the world’s thirdlargest beef supplier, after the United States and India, and has been exporting live cattle to neighbouring Indonesia since the early 1990s.

But the dream of cracking the Chinese live trade market has been illusive. Biosecurity concerns, raised by the Chinese delegation in March, are seen as one of the stumbling blocks.

“The Chinese technical delegation were here to discuss some of the health concerns they have...and hopefully we will be able to find a resolution where we can export cattle to China,” said Alison Penfold, chief executive of the industry group, Australian Live Export Council.

A deal with China would reduce Australia’s dependence on Indonesia.

The trade has suffered disruptions over animal cruelty concerns and import curbs by Jakarta as its strives for self-dependency.

It would also benefit Australia’s cattle ranchers in the Northern

Cattle auction in Australia

Territory and Western Australia, with the Territory capital Darwin already a live cattle export hub to Asia.

It would also allow access to underutilised feedlots and abattoirs in China, reducing costs for both ranchers, who have to transport cattle vast distances to reach abattoirs, and buyers in China.

“There is a clear benefit for the Chinese to use excess capacity. Their labour costs are still significantly lower in the processing sector than Australia,” said Craig Aldous, China-

KEY POINTS Australia keen to sell live cattle to China Chinese demand for beef jumped 40 pct in past year Chinese delegation to Australia discussed biosecurity Australia live cattle exports steadily growing

based general manager at Elders Fine Foods, who estimated costs at around at one-fifth of Australian wages.

Liu Chunsheng, sales manager at Fuhua Meat, a beef processor on the outskirts of Beijing, said the firm is currently only using about 40 percent of its capacity, which is still better than most of the industry running as low 30 percent as demand outstrips stagnant domestic production.

Chinese beef imports this year could hit 550,000 tonnes, up nearly 40 percent from last year, the U.S. Department of Agriculture attaché in Beijing has forecast.

The Organisation for Economic Co-operation and Development expects beef consumption to become the fastest growing for meat in China, increasing 7 percent per year over the next eight years to an annual consumption of around 850,000 tonnes.

The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) expects live cattle exports to hit a five-year high of 600,000 head in the 2014/15 season, worth A$600 million ($565 million) to the industry.

Driven mainly by Indonesian demand, ABARES expects live cattle exports to grow steadily, peaking at 875,000 in 2018/19. Any live cattle deal with China would shake up Australia’s exports.

Reuters

Minmetals acquires copper mine in Peru G lencore Xstrata has sold its interest in the Las Bambas copper mine in Peru to a Chinese consortium in a US$6 billion cash deal, making it one of China’s largest mining acquisitions in recent years.

The commodities trader said yesterday it had sold its interest to a consortium led by Hong Kong-listed MMG Ltd., the offshore arm of China Minmetals Corp.

Hong Kong-based Guoxin International Investment Corp Ltd and China’s Citic Metal Co Ltd are the other partners in the consortium.

Minmetals had been reported to be the preferred bidder for the Peruvian copper mine.

Glencore agreed to sell Las Bambas to secure approval from China’s competition authorities for its takeover of Anglo-Swiss miner Xstrata as Beijing feared the merged

group would have too much power over the copper market.

A Chinese buyer had been considered a virtual certainty since Las Bambas was put on the block, given the deep pockets of China’s state-owned enterprises and China’s hunger for copper - it is already the world’s top consumer of the metal.

Las Bambas, one of the largest mines in Xstrata’s project portfolio, is due to begin production in 2015.

It is expected to produce more than 450,000 tonnes of copper a year in its first five years and 300,000 tonnes a year thereafter.

Glencore will receive about US$5.85 billion in cash upon completion of the deal. In addition, all capital expenditure and development costs since the beginning of the year until the closure of the deal will also be payable by the consortium.

Capital expenditure and other costs incurred since the start of the year were about US$400 million as of March 31.

Glencore said proceeds from the sale will “immediately and materially” deleverage its balance sheet.

The deal, which is expected to close prior to the end of the third quarter, is subject to approval from China’s Ministry of Commerce (MOFCOM) as well as approval from MMG’s shareholders.

China Minmetals Non-Ferrous Metals Co Ltd, which holds about 74 percent of MMG, has agreed to vote in favour of the deal, Glencore said.

Glencore said it would continue to look for opportunities to reinvest capital and any surplus capital would be returned to shareholders.

BMO Capital Markets and Credit Suisse advised Glencore on the sale.

Reuters

12

April 15, 2014

Asia

Mild growth, same rate The central bank’s latest statement on policy comes as an advance estimate of first-quarter gross domestic product (GDP)

S

ingapore’s central bank stuck to its tight monetary policy stance yesterday despite weaker growth in the first quarter, saying core inflation will remain elevated as the economy grows at a moderate pace this year.

In a widely expected decision, the Monetary Authority of Singapore (MAS) said it will maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar, with no changes to the slope, width or centre of the policy band.

The MAS trimmed its forecast for headline inflation in 2014 to 1.52.5 percent, down from 2-3 percent previously, but kept its forecast for core inflation, which excludes the changes in the prices of cars and accommodation, unchanged at 2-3 percent.

The Singapore dollar dipped briefly after the MAS statement, but much of the weakness appeared to be linked to a broadly stronger U.S. dollar. It was last trading down 0.3 percent to 1.2521.

“The fact that we’ve seen the headline inflation forecast come off, I don’t think it’s too much of a surprise. It’s important to note that core inflation was kept the same,” said Daniel Wilson, an economist for ANZ. “The fact that core is still the same signals that inflation pressure is still on their mind,” he added.

Commenting on its outlook for headline inflation, the MAS said imputed rentals on owner-occupied accommodation are expected to stabilise and the impact of car prices on inflation will be negligible for the whole of 2014.

Core inflation, meanwhile, is expected to pick up in coming months, the central bank said.

“Barring a significant shock in the

0.1%

estimated first quarter Singapore GDP growth

Monetary Authority of Singapore building

external environment, the Singapore economy should expand at a moderate pace over the course of the year. Wage pressures will persist and firms are likely to pass on business costs to consumer prices. Consequently, MAS Core Inflation is expected to stay

elevated,” the Monetary Authority of Singapore (MAS) said in its halfyearly statement.

“MAS will therefore maintain its policy of a modest and gradual appreciation of the S$NEER policy band,” the MAS said, adding that it

was keeping the slope, the width and the centre of the band unchanged.

The MAS had been widely expected to maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar to guard against inflationary pressures, as core inflation was expected to rise later this year due to wage cost pressures from a tight labour market.

Singapore manages monetary policy by controlling the exchange rate, rather than borrowing costs, because trade dominates the economy.

MAS lets its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band.

The central bank’s latest statement on policy came as an advance estimate of first-quarter gross domestic product (GDP) showed that Singapore’s economy grew 0.1 percent in the first quarter from the previous quarter on a seasonally adjusted, annualised basis.

That matched the median forecast in a Reuters survey of 0.1 percent, and was a sharp slowdown form 6.1 percent growth in the fourth quarter of 2013.

Growth in the latest three months was hit by an annualised 1.8 percent quarter-on-quarter contraction in the services sector, from 6.1 percent growth in the fourth quarter of 2013.

Slowing momentum in wholesale and retail trade as well as finance and insurance sectors crimped activity in the service sector.

The economy expanded 5.1 percent from a year ago, the government said, matching market expectations and down slightly from a 5.5 percent growth in the fourth quarter.

Singapore’s trade-dependent economy is seen likely to be underpinned this year by an expected pick-up in U.S. and European growth.

Reuters

Australian pace to delay RBA rises UBS doesn’t predict an increase until the first quarter of 2015

T

he Australian dollar’s 4.7 percent rally in the past three months is damping the bond market’s expectations for economic growth, supporting UBS AG’s view the central bank will keep its benchmark at a record low this year.

The gap between two and 10 year bond yields narrowed to the least in almost nine months, indicating a more muted view on prospects for the US$1.5 trillion economy.

Interbank cash-rate futures showed expectations for a Reserve Bank of Australia increase by end December are at about 32 percent, down from 56 percent in January, based on

Bloomberg calculations.

The Australian currency is hovering near a four-month high, threatening recoveries in employment and business confidence as the economy rebalances toward industries such as tourism and education. The local dollar may cap inflation and weigh on activity if it holds at current levels, leading the RBA to defy some forecasts it will raise the cash target as soon as the third quarter, UBS said.

“Our judgment is that the higher Australian dollar is mostly about positioning and does not reflect a healthier growth outlook,” Matthew Johnson, Sydney-based rates strategist

at UBS, said in an e-mailed response to questions on April 11. “It’s a net negative and will delay rate hikes.”

UBS doesn’t predict an increase until the first quarter of 2015, when it sees the benchmark rising by as much as half a percentage point from its current level of 2.5 percent. Six of 39 economists surveyed by Bloomberg predict Governor Glenn Stevens will implement his first increase by September 30.

Its recovery from a 3 1/2-year low of 86.60 on January 24 came as hedge funds and other large speculators turned bullish last week for the first time in 11 months. The difference

in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -socalled net longs- was 3,310 on April 8, compared with net shorts of 4,880 a week earlier, and 65,723 in the week through January 28, Commodity Futures Trading Commission data show.

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 15, 2014

Asia

Japan’s rapid inflation erodes Abe’s popularity A consumer confidence gauge fell for a third straight month in February to 38.3

P

rime Minister Shinzo Abe’s bid to vault Japan out of 15 years of deflation risks losing public support by spurring too much inflation too quickly as companies add extra price increases to this month’s sales-tax bump.

Businesses from Suntory Beverage and Food Ltd. to beef bowl chain Yoshinoya Holdings Co. have raised costs more than the 3 percentage point levy increase. This month’s inflation rate could be 3.5 percent, the fastest since 1982, according to Yoshiki Shinke, the most accurate forecaster of Japan’s economy for two years running in data compiled

by Bloomberg.

The challenge for Abe and the Bank of Japan is to keep the public focused on the long-term benefits of exiting deflation when wages are yet to pick up and, according to BOJ board member Sayuri Shirai, most people still see price gains as “unfavourable.”

Any jump in inflation that’s perceived as excessive by a population more used to prices falling could worsen consumer confidence and make it harder to boost growth.

Fast retailing Tadashi Yanai, the billionaire president of clothing retailer Fast Retailing Co., said April 10 that he’s not optimistic about the outlook for consumption, ahead of a plunge in his company’s shares that contributed to this year’s 13 percent slide in the Topix index.

Accelerated inflation would squeeze

Shinzo Abe’s popularity at lowest ebb

households, with wages excluding overtime and bonuses declining in February for a 21st straight month, down 0.3 percent from a year earlier, according to April 1 labour ministry data. Saito, ranked No 3 forecaster last year, sees the risk of a 3.6 percent increase in the April consumer price gauge, which excludes fresh food, after a 1.3 percent gain in February.

A consumer confidence gauge fell for a third straight month in February to 38.3, down from a six-year high of 45.7 last May and the lowest since September 2011, according to a Cabinet Office survey.

“Consumer sentiment has been undermined to a large extent by rising prices,” wrote Goldman Sachs Group Inc. economists Naohiko Baba and Yuriko Tanaka in an April 12 note, predicting “a major retreat in

Philippines’ peso band rate operativity narrows The peso completed its biggest jump in almost seven months last week

T

he Philippines’ record-low benchmark interest rate isn’t sacred and will need to be reviewed as the central bank guards against price pressures, Deputy Governor Diwa Guinigundo said.

“Current interest rate levels are not sacred, I should stress that,” Guinigundo, 59, said in an April 12 interview in Baguio city, north of Manila. “They remain to be appropriate, but if they will produce unintended consequences in the future, then we will have to review those policy rates.”

Bangko Sentral ng Pilipinas ordered lenders to set aside more money as reserves from April 4, a move that may herald an increase in the benchmark interest rate which has been held at 3.5 percent since October 2012. While inflationary pressures appear to have eased, “upside risks” persist, including increases in power and utility costs, ample liquidity and uncertainty posed by the U.S.

Federal Reserve’s stimulus tapering, Guinigundo said.

“The central bank should remain proactive in tightening, but do so on

We expect inflation to be on an uptrend in the second quarter, narrowing the scope to keep rates steady Diwa Guinigundo Philippines’ Deputy Governor

sentiment from April as the tax hike drives inflation.”

The sales tax increase is Abe’s biggest attempt since he took office in December 2012 to a get grip on the world’s heaviest debt burden. While his reflationary effort has helped boost the job market, the blow from the higher levy is forecast to trigger a 3.35 percent annualized contraction in the three months from April, according to a survey of economists by Bloomberg.

Abe’s attack on deflation -spearheaded by unprecedented easing by the central bank- has helped weaken the yen by 23 percent against the dollar over the past year and a half, boosting the cost of imported goods and energy for Japanese companies.

Companies tend to change their prices in April -when Japan’s fiscal year begins- and in October, the start of the second half, Shinke said.

The government is trying to ensure businesses pass the burden of the higher sales tax on to customers.

The Ministry of Economy, Trade and Industry dispatched 474 inspectors to check companies’ handling of the levy and had ordered 1,199 cases of wrongdoing to be corrected as of the end of March, it said in a statement on April 7.

Many businesses likely weren’t able to fully pass on higher material and operations costs when Japan’s economy was stagnating and are now seizing the sales-tax bump as a chance to act, with some likely also looking to claw back costs of wage increases, Shinke said.

Bird flu in Japan forces chicken restrictions Japan has restricted shipments of almost 400,000 chickens in Kumamoto prefecture after the nation’s first outbreak of bird flu in three years, according to the Agriculture Ministry.

Local authorities yesterday finished culling about 112,000 chickens in two farms in the prefecture on the southern island of Kyushu, Yoshihiro Kawada at the ministry’s animal health division said by phone from Tokyo.

Japan started culling on Sunday following the discovery of the H-5 avian influenza virus that killed about 1,100 chickens in a farm in Taragi town in the prefecture.

S. Korea revises March export figures South Korean exports grew 5.1 percent in March from a year earlier, revised customs data showed yesterday, barely changed from the trade ministry’s first estimate earlier this month.

Exports to the European Union rose 15.1 percent from a year earlier in March, and those to the United States gained 16.9 percent year-on-year.

Meanwhile shipments to China edged up an annual 4.4 percent.

India’s election fuelled by sugar As the campaign picks up pace in the scorching summer heat, sales of sugar based drinks will soar, potentially boosting the demand in top consumer India to a record high this month. At the same time, the surge in demand for sugar would divert supply away from exports and support global sugar prices that have shed more than 5 percent so far in April. Consumption of cold drinks and ice cream, and as a result demand for sugar, rises in India during the summer months that run roughly from March to June.

S. Korean health insurer sues Philip Morris

Bloomberg News

a gradual basis so as not to affect growth prospects,” said Jeff Ng, a Singapore-based economist at Standard Chartered Plc, who predicts an increase in the overnight deposit rate in the third quarter. “We expect inflation to be on an uptrend in the second quarter, narrowing the scope to keep rates steady.”

Capital outflows The Philippine economy can absorb or accommodate higher interest rates and macro prudential measures that the central bank may implement if and when it believes necessary, Guinigundo said at a conference in Baguio the same day.

“We should be more forward looking, more pre-emptive because monetary policy works with a lag and the lag could be long,” Guinigundo said in the interview, declining to provide a timetable for an increase in borrowing costs. The possibility of higher interest rates in the U.S. and other advanced economies may lead to capital outflows and cause the peso to weaken, he said.

The peso completed its biggest jump in almost seven months last week, rising 1.5 percent, on speculation the currency will catch up with gains in other emerging-market exchange rates. The peso weakened about 9 percent against the U.S. dollar in 12 months through March 31.

Bloomberg News

South Korea’s state health insurer said yesterday it was seeking an initial 53.7 billion won (US$51.9 million) from three tobacco companies, including the local units of Philip Morris and British American Tobacco, to offset treatment costs for diseases linked to smoking.

The National Health Insurance Service (NHIS) said it was suing the two global cigarette makers, as well as local market leader KT&G Corp, in a South Korean court. Only four tobacco lawsuits have ever been heard in South Korea, all by individuals or families.

Malaysia Governor trusts in prices evolution

Malaysia’s central bank Governor Zeti Akhtar Aziz said the country’s accelerating inflation doesn’t make her nervous, signalling confidence price increases will remain contained. “We don’t see these second-round effects emerging” from faster price increases, Zeti, 66, said in an interview in Washington on April 12. “We know the source of the inflation. It is not induced from strong demand, because this is a period when demand is quite modest.” Bank Negara Malaysia has kept its key interest rate at 3 percent since early May 2011.

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April 15, 2014

International Israel to export more than gas Israel’s drive to export its new-found natural gas could help to rebuild strained ties with old regional allies Egypt and Turkey. Israel has in recent months already signed energy deals with Jordan and the Palestinian Authority and now needs to expand its export horizons to cash in on its huge energy discoveries. If all goes well, the latest developments could see first pipelines being laid between Israel and Turkey as soon as 2015, and gas cooperation between Israel and Egypt is also emerging, which would allow export access to Asia’s major markets.

Banks lay off 80,000 in Europe Only three of the banks added jobs last year, and those totalled less than 770

Big-ticket restructuring

Egypt to raise electricity prices for wealthiest Egypt plans to boost electricity prices for the richest 20 percent of its citizens before the presidential elections at the end of May, as the country has ‘no time to waste’ in starting reforms, the planning minister said. Ashraf alArabi, Egypt’s minister of planning and international cooperation, this week said the decision on raising gasoline prices will be taken “very soon,” but declined to provide further details. Al-Arabi’s sense of urgency suggested that for the first time in years, Egypt was on the same page with the International Monetary Fund.

Bullish U.S. March retail sales U.S. retail sales recorded their largest gain in 1-1/2 years in March, in the latest sign the economy was emerging from its weather-induced slumber and on track to accelerate in the second quarter.The Commerce Department said yesterday retail sales increased 1.1 percent last month, the biggest gain since September 2012, as receipts rose in nearly all categories.“The case continues to grow that the economy is bouncing back in March following an unusually severe winter,” said John Ryding, chief economist at RDQ Economics in New York.February’s increase in retail sales, which account for a third of consumer spending, was raised to 0.7 percent from 0.3 percent. Economists had expected retail sales to advance only 0.8 percent last month.

Peugeot sets profit goals

Bankia (Madrid headquarters pictured) fired most workers in Europe last year

E

urope’s largest banks cut their staff by another 3.5 percent last year and the prospect of a return to pre-crisis employment levels seems far off, despite the region’s fledgling economic recovery.

Spurred into action by falling revenue, mounting losses and the need to convince regulators they are no longer “too big to fail”, banks across the globe have shrunk radically since the 2008 collapse of U.S. bank Lehman Brothers sparked the financial crisis.

Last year, the tide of bad news began to turn for European banks, which are among the region’s largest employers.

But despite the improved outlook, Europe’s 30 largest banks by market

value cut staff by 80,000 in 2013, calculations by Reuters based on their year-end statements showed.

Recruitment consultants warn workers’ hopes for a turnaround this year could be misplaced, bad news for countries like Spain where tens of thousands of bank layoffs have helped drive unemployment to 26 percent.

However, while painful for the people who have lost their jobs, the reduction of large banks’ workforces through a combination of asset sales and redundancies means banks won’t have as big an impact on overall employment in future crises.

Antoine Morgaut, chief executive for Europe and South America at recruiter Robert Walters does not expect the industry’s employment

UK starts breathing after recession Earnings growth below 2 percent remains weak by historical standards

PSA Peugeot Citroen pledged to achieve a 2 percent automotive division operating margin in 2018 as new Chief Executive Carlos Tavares outlined a recovery plan for the struggling French carmaker yesterday. Peugeot said it would cut costs and reduce its number of models to restore profitability from a loss of 1.042 billion euros (US$1.45 billion), or 2.9 percent of sales, at the core manufacturing division last year.

“We are going to focus the creative power of our teams on a more limited number of products that people want to buy,” Tavares said in a presentation to investors.

to ever return to what it was in its heyday of 2008. Then, the 25 of the top 30 banks with comparable figures employed about 252,000 more than the 1.7 million they do today.

“It’s been a bubble for 20 years,” said Morgaut.

“In speciality areas we are seeing a bit of an upside but it is quite marginal and it will stay like that for the next six to nine months,” he added.

B

ritain’s recovery from its deepest recession in decades looks set to pass a milestone this week when a six-year run of declining living standards is expected to show a turnaround.

An end to the erosion of earnings by inflation will be a welcome change for Prime Minister David Cameron as the May 2015 national election approaches, even if it will take several more years to repair the damage caused by the financial crisis.

Figures due on Wednesday are expected to show that average weekly earnings, the most widely watched measure of pay, picked up speed to rise by 1.8 percent in three months

to the end of February, according to a Reuters poll of economists.

That would edge earnings above the 1.7 percent rise in the consumer price index in February.

Analysts say the trend looks to be reverting back in favour of earners after Britain’s economy picked up speed over the last year and unemployment fell fast. Higher income would help ease concerns about a reliance on debt to fuel consumption.

Prices have been rising faster than pay almost continually since the start of the financial crisis in 2008, with the exception of a few months that were affected by one-off factors.

The most dramatic of last year’s job cuts came from major restructurings, such as Spain’s Bankia which shed 23 percent of its workforce to help meet the conditions of its 41 billion euro (US$56.9 billion) European rescue.

Italy’s Unicredit, which reduced the highest number of staff, 8,490, said in its annual report that some of the reductions were the result of a project to outsource IT functions to joint ventures.

Belgium’s KBC cited asset sales as a major reason for its 7,938 reduction in headcount, 22 percent of its workforce. The bailed-out bank sold Russian offshoot Absolut Bank and Serbian business KBC Banka.

Staff figures for Absolut Bank were not available, while KBC Banka’s most recent figures show 501 staff at the end of 2012.

Spain’s BBVA also cited asset sales as the driver of its 6,547 reduction in staff, or 23 percent of headcount, which came in a year when the bank sold operations in Latin America.

At Bank of Ireland, where a 6.3 percent fall in headcount was the fifthlargest in the region, a redundancy programme was the main reason.

The pace of staff reductions approximately halved last year and most banks are now coming to the end of disposals and cutbacks agreed during the crisis.

However, upcoming European Union-wide tests on whether banks need to hold bigger capital cushions could trigger another wave of asset sales and cuts.

Routine streamlining continued last year. HSBC the biggest employer in the pack, cut headcount by 6,525, or 2.5 percent of its global total. The bank came through the crisis without a bailout, but has slimmed down over the last three years by closing or selling dozens of businesses.

Only three of the banks - Barclays, Handelsbanken and Deutsche Bank - added jobs last year, and those totalled less than 770.

Reuters

So this week’s numbers are likely to give Britain’s finance minister George Osborne a chance to build on his increasingly upbeat tone about the economy, even as he sticks to his other core message of more painful spending cuts in the years ahead.

The opposition Labour party has made the “cost of living crisis” a key message ahead of the elections.

Wage earners are unlikely to feel much of an immediate improvement in their living standards.

Earnings growth below 2 percent remains weak by historical standards.

Before the financial crisis the Bank of England was relaxed about wage rises of 4-5 percent.

And pay is only on the verge of overtaking inflation because of a sharp fall in price growth, something that could change if productivity gains remain weak and inflation picks up again.

Many workers in Britain are already seeing their pay grow more quickly than consumer prices.

Reuters

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April 15, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The growing divide within developing economies

The Times of India The Central Board of Direct Taxes (CBDT) and the ministry of corporate affairs (MCA) are getting their act together to ensure a strict vigil over mergers and amalgamations (M&A) to safeguard tax revenues. M&A deals involving the proposed merger of a loss-making company into a profit-making entity to set off the loss and, thereby, reduce the tax liability of the corporate group, are likely to come under the glare of the regulators.

Through internal memos’, both the CBDT and the MCA have geared up to strengthen the implementation of the existing regulations.

Dani Rodrik

Professor of Social Science at the Institute for Advanced Study, Princeton, New Jersey

The Age Woolworths will have to go back to the drawing board to engineer a new petrol shopper docket scheme after the Federal Court ruled yesterday the supermarket giant breached undertakings made to the regulator this year that limited it to a standard discount of 4 cents per litre off petrol.

Last year the Australian Competition and Consumer Commission reached a deal with Woolworths and Coles that limited discounts on shopper dockets earned at supermarkets to 4 cents per litre. The shopper docket scheme has generated a huge amount of political debate.

The New Zealand Herald Hellaby Holdings, whose interests range from footwear to oil and gas services, expects to add US$20 million to annual revenue after buying New Zealand Trucks South Island and Dasko Marketing NZ. The Auckland-based investor paid “less than US$10 million” for the auto-related companies and expects they will deliver a combined US$2.5 million boost to yearly earnings before interest, tax, depreciation and amortisation, it said in a statement. New Zealand Trucks is a Christchurch-based truck servicing business while Auckland-based Dasko is a distributor of auto electrical, fuel and engine management components to auto retailers.

VietNam News President Truong Tan Sang has asked the province of Vinh Phuc to focus on developing support industries, since they play an important role in attracting investors, especially from overseas. The President made the request at a meeting with key provincial leaders during his visit to the province last Saturday. He also emphasised the need for Vinh Phuc, and the nation as a whole, to develop automotive manufacturing industries and increase the amount of official development assistance (ODA) being received. He also asked the local authorities and residents to make more efforts to successfully implement the Resolution of the 11th National Party Congress.

W

hen researchers at the McKinsey Global Institute (MGI) recently dug into the details of Mexico’s lagging economic performance, they made a remarkable discovery: an unexpectedly large gap in productivity growth between large and small firms.

From 1999 to 2009, labour productivity had risen by a respectable 5.8% per year in large firms with 500 or more employees. In small firms with ten or fewer employees, by contrast, labour productivity growth had declined at an annual rate of 6.5%.

Moreover, the share of employment in these small firms, already at a high level, had increased from 39% to 42% over this period. In view of the huge gulf separating what the authors called the “two Mexicos,” it is no wonder that the economy performed so poorly overall.

As rapidly as the large, modern firms improved, through investments in technology and skills, the economy was dragged down by its unproductive small firms.

This may seem like an anomaly, but it is in fact an increasingly common occurrence. Look around the developing world, and you will see a bewildering fissure opening up between economies’ leading and lagging sectors.

What is new is not that some firms and industries are substantially closer to the global productivity frontier than others. Productive heterogeneity – or what development economists used to call economic dualism – has always been a central feature of low-income societies. What is new – and distressing – is that developing economies’ low-productivity segments are not shrinking; on the contrary, in many cases, they are expanding.

Typically, economic development occurs as workers and farmers move from traditional, low-

productivity sectors (such as agriculture and petty services) to modern factory work and services. As this takes place, two things happen. First, the economy’s overall productivity increases, because more of its labour force becomes employed in modern sectors.

Second, the productivity gap between the traditional and modern parts of the economy shrinks, and dualism gradually diminishes. Agricultural productivity increases during this process, owing to better farming techniques and a decline in the number of farmers working the land.

This was the classic pattern of post-war development in the European periphery – countries like Spain and Portugal. It was also the mechanism that generated the Asian growth “miracles” in South Korea, Taiwan, and eventually China (the most phenomenal example of all).

One thing that all of these high-growth episodes had in common was rapid industrialization. Expansion of modern manufacturing drove growth even in countries that relied mostly on the domestic market, as Brazil, Mexico, and Turkey did until the 1980’s. It was structural change that mattered, not international trade per se.

Today, the picture is very different. Even in countries that are doing well, industrialization is running out of steam much faster than it did in previous episodes of catch-up growth – a phenomenon that I have called premature deindustrialization.

Though young people are still flocking to the cities from the countryside, they end up not in factories but mostly in informal, low-productivity services.

Indeed, structural change has become increasingly perverse: from manufacturing to services (prematurely), tradable to non-tradable activities, organized sectors to informality, modern to traditional firms, and medium-

size and large firms to small firms. Quantitative studies show that such patterns of structural change are exerting a substantial drag on economic growth in Latin America, Africa, and in many Asian countries.

There are two ways to close the gap between leading and lagging parts of the economy.

One is to enable small and microenterprises to grow, enter the formal economy, and become more productive, all of which requires removing many barriers. The informal and traditional parts of the economy are typically not well served by government services and infrastructure, for example, and they are cut off from global markets, have little access to finance, and are filled by workers and managers with low skills and education.

Even though many governments exert considerable effort to empower their small enterprises, successful cases are rare. Support for small enterprises often serves social-policy goals –

The challenge is to create an economic environment in which there are incentives for local talent and capital to invest in firms in the modern, tradable parts of the economy

sustaining the incomes of the economy’s poorest and most excluded workers – instead of stimulating output and productivity growth.

The second strategy is to enlarge opportunities for modern, well-established firms so that they can expand and employ the workers that would otherwise end up in less productive parts of the economy. This may well be the more effective path.

Studies show that few successful businesses begin as small, informal firms; they are started, instead, at a fairly large scale, by entrepreneurs who pick up their skills and market knowledge in the more advanced parts of the economy. Enterprise surveys in Africa by John Sutton of the London School of Economics indicate that it is often entrepreneurs with experience in importing activities who found modern domestic firms. Domestic subsidiaries of multinational firms or stateowned enterprises – which are repositories of skilled workers and managers – are also a source of such firms.

The challenge is to create an economic environment in which there are incentives for local talent and capital to invest in firms in the modern, tradable parts of the economy.

Sometimes, it is enough to remove certain of the more stifling government regulations and restrictions. At other times, governments need more proactive strategies – such as tax incentives, special investment zones, or hypercompetitive currencies – to raise the profitability of such investments.

The details of appropriate policies will depend, as usual, on local constraints and opportunities. But every government needs to ask itself whether it is doing enough to support the expansion of capacity in the modern sectors that have the greatest potential to absorb workers from the rest of the economy. © Project Syndicate 2014

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April 15, 2014

Closing World trade picture still below trend

Mozambique’s budget troubles

The World Trade Organization revised its 2014 forecast for growth in global goods trade slightly upward to 4.7 percent yesterday, but said it did not expect growth to return to the historical trend level of 5.3 percent until 2015. “If GDP forecasts hold true, we expect a broad-based but modest upturn in the volume of world trade in 2014 and further consolidation of this growth in 2015,” WTO Director General Roberto Azevedo told a news conference in Geneva.

Mozambique’s budget deficit may widen to 12 percent of gross domestic product this year, which is negative for the nation’s credit outlook, Moody’s Investors Service said. The expansionary fiscal policy to pay for infrastructure projects and maritime safety will boost the government’s debt to 47 percent of GDP this year and 50 percent next year from 44 percent in 2013, Moody’s said in an e-mailed statement yesterday.

Totally good news for Luanda Total goes ahead with US$16 bln Angolan Kaombo oil project Natalie Huet and Shrikesh Laxmidas

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rance’s Total said it had decided to go ahead with the Kaombo oil project offshore Angola after reducing its cost by US$4 billion to US$16 billion, an advance that could help Angola keep up oil output over the long run.

The decision to invest in the ultra-deep sea project, which has been repeatedly delayed because of its cost, is seen as important for Africa’s No. 2 oil producer to replace older fields and hit its production targets.

In recent years, a number of other large-scale projects around the world have fallen victim as oil companies have reduced global investment and returned cash to shareholders.

“Total has significantly optimized the project’s design and contracting strategy in recent months. Kaombo illustrates both the group’s capital discipline and objective to reduce capex,” YvesLouis Darricarrere, Total’s president for upstream, said in a statement yesterday.

The project in Block 32 is scheduled to start up in 2017, when it will have a production

capacity of 230,000 bpd, the French oil company said.

“Globally, deep water costs are rising - this year by almost 20 percent, so the fact that Total could find slack in its capex to continue with its Angola project shows how investors view Angola’s longer-term offshore prospects,” said Rolake Akinkugbe, head of energy and natural resources coverage at FBN Capital.

“By and large, they

CapitaLand mall take over CapitaLand Ltd, Southeast Asia’s biggest property developer, said it has offered S$3.06 billion (US$2.45 billion) to buy out minority shareholders in its 65-percent owned CapitaMalls Asia Ltd business.

In a deal that would simplify its corporate structure and taking advantage of a discount valuation at the unit, CapitaLand said yesterday it’s offering S$2.22 per share in CapitaMalls, a shopping malls operator. That represents a 23 percent premium to last Friday’s CapitaMalls closing share price of S$1.80.

Trading in both CapitaMalls and CapitaLand, 39-percent-owned by Singapore sovereign investor Temasek Holdings, was halted from the start of trading yesterday pending an announcement.

Reuters

are bullish.”

Total is already the top operator in Angola, with equity production of 186,000 bpd, mainly due to its Girassol, Dalia and Pazflor deepwater fields in the huge Block 17. The blocks it operates produce a total of 600,000 bpd, over a third of the country’s output.

Total also confirmed yesterday that it was on track to start output at the CLOV project in Block 17,

which will have a production capacity of 160,000 bpd in mid-2014.

“With the investments it is making in Blocks 17 and 32, it will be very difficult for any other oil company to overtake Total as the leading operator in Angola,” said José de Oliveira, head of the Energy Nucleus at Luanda’s Catholic University.

Angola wants to increase production to 2 million bpd next year from 1.73 million

Creative dominates Hengqin list Nearly one-third of the Macau-backed projects recommended to Hengqin authorities for investment have come from the cultural creative and tourism industry, said the Macau Trade and Investment Promotion Institute.

The Institute announced in a press statement yesterday night that the Macau government will recommend to Hengqin 33 projects on land occupying 4.5 square kilometres, after reviewing 87 qualified applications. The figure exceeded the 30 projects Secretary for Economy and Finance Francis Tam Pak Yuen indicated last week.

Apart from the cultural and tourism industry accounting for 30.3 percent of the recommended total, logistics and trade was the next biggest category, taking up 24.2 percent, or eight, of the recommended projects. Science and research followed with 9 percent.

All the 33 recommended projects scored 430 out of 900 points, said the statement, adding that the government does not rule out recommending the rest of the 54 projects to Hengqin if more land becomes available.

In November, the Macau administration received 89 proposals from local companies and individuals interested in investing in the 4.5 square kilometre zone on the island specially earmarked for Macau investors.

Two proposals have submitted more than one application, thus the government only evaluated 87 applications, the statement explained.

T.L

bpd in 2013 and then maintain that level for five years.

Still, analysts say the country’s plans to ramp up production have proven more challenging than expected due to technical problems and declines at older fields.

Credit rating agency Fitch on Thursday revised Angola’s outlook to stable from positive, citing challenges to the oil sector as one of the main drivers behind the decision.

“Kaombo is very important if Angola wants to put production at 2 million bpd, because output at some of the older fields, namely in blocks 14 and 15, is declining,” Oliveira said.

Total and Angolan stateowned firm Sonangol each hold 30 percent stakes in Block 32, while Angolan-Chinese joint venture Sonangol Sinopec International has 20 percent, Exxon Mobil’s Esso unit 15 percent and Portugal’s Galp 5 percent.

The Kaombo project is located about 260 km (162 miles) off Luanda in water depths of 1,400 to 1,900 metres (4,600-6,200 ft).

Reuters

Philippine Q1 GDP growth The Philippine economy likely grew around 7 percent or better in the first quarter from a year earlier supported by export growth, domestic consumption, and infrastructure spending, a senior government official said yesterday.

The country is likely to sustain its growth momentum after ending 2013 with 7.2 percent growth, the second fastest in the region after China.

“I’m sure it will be very close or will be above 7 percent,” Gil Beltran, undersecretary and chief economist at the Finance department, told reporters.

“It will be a very good number because of car sales, exports, also electricity consumption - all point towards robust growth,” he said.

Reuters