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MOP 6.00 Publisher: Paulo A. Azevedo Number 521 Friday April 18, 2014 Year III

Mega project revealed Business Daily reveals details of the latest mega gaming project to unfold in Manila. Japanese businessman Kazuo Okada’s Tiger Resort plans to open the first of three phases next year. Confident

that the bumpy start will give way to a smooth project to lead the industry in the Philippines capital, senior executives tell this newspaper what gaming can expect from the multibillion dollar investment



Dollars & sense

Less is more

The opening of six budget hotels is being evaluated by the government. A total of 462 rooms for budget travellers will be added to the existing 1,500. A much overdue addition, claim tourism analysts.

The gap between who has more and who has less is diminishing. At least, according to the government’s calculations. The gauge measuring the inequality of income distribution in the territory has declined over the past five years measured by the GINI coefficient of Macau

The report on pages 6 & 7

Swings and roundabouts

Brought to you by

HSI - Movers April 17



Sino Land Co Ltd




New World Develop


China Mengniu Dair


Wharf Holdings Ltd


Cathay Pacific Airwa


Hengan Internation


Belle International


Want Want China H


CITIC Pacific Ltd


Source: Bloomberg

I SSN 2226-8294

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Brought to you by

Residential mortgage loans drop drastically in February compared to January. Over 41 percent fall. But compared to the same month last year there was an increase of 24 percent. On the contrary, loans granted for commercial property grew but only for residents Page 3

Mystery explained Macau’s external reserves at a two-year low because local banks are selling more patacas to obtain foreign currency Page 2

Rolling high Macau Legend Development Ltd is tapping the gaming promotion business. One of its wholly owned subsidiaries has signed an agreement with a junket to diversify its business and participate in gaming promotion Page 5




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April 18, 2014


Banks jettison patacas Macau banks are selling patacas for foreign denominations, putting AMCM external reserves at a two-year low


he record drop in Macau’s foreign exchange reserves is happening because local banks are selling more patacas to the central bank in order to obtain foreign currency. Last month, the territory’s foreign reserves reached a two-year low, at 122.1 billion

patacas, some 6 percent less than a year before and minus 1.3 percent compared to February, preliminary data from the Monetary Authority of Macau showed this week. The holding of international currency in monetary authority coffers has been decreasing since

2012, gathering momentum in February and March. Contacted by Business Daily, the Monetary Authority of Macau (AMCM) justified the trend as “due to local banks’ reduction in the holding of monetary bills, or in other words, their exchange of pataca liquidity for foreign

currencies with the AMCM.” The ‘central bank’ did not disclose to Business Daily more information about the currency denominations requested by the banks and its foreign exchange basket. As more and more banks from the territory change patacas for other currencies

like yuan, Hong Kong dollars and US dollars the March reading of foreign reserves was also the lowest figure since February 2012 when the government separated the fiscal and exchange reserves and started managing them separately. “The banks decided not to apply their surplus funds in foreign currency to AMCM, preferring to receive them back, delivering monetary bills (a kind of treasury bond). As these assets, issued by AMCM in return for foreign currency, were being exchanged by the banks, the foreign reserves began to drop”, economist Albano Martins explained to Business Daily. The money in international currencies held by the central bank in March fell 7.8 billion patacas in one year and half a billion in one month. Since the separation of fiscal and foreign reserves in 2012, the record value of external reserves holdings in AMCM was set in January 2013 amounting to 137 billion patacas, 15 per cent more than today. “As the amount of outstanding monetary bills held by local banks was noticeably reduced during the period, foreign exchange reserves decreased correspondingly with monetary liabilities.”, AMCM told Business Daily.

WHY ENTER? Share publicly your annual achievements and boost the confidence of your stakeholders and staff Meet top level representatives from different industry sectors in Macau Benefit from wide media exposure for your company



April 18, 2014

Macau Better corruption than nothing: Mak Soi Kun Legislator Mak Soi Kun believes that corrupt officials cause less harm than officials doing nothing, years after former public works secretary Ao Man Long was jailed for money laundering and corruption. Mr Mak said in a TDM radio programme: “Doing nothing causes more harm than corruption, and I support political accountability.” The Legislative Assembly member also thinks that there should be “changes” in the positions of the territory’s five secretaries, lathough Mr Mak failed to pinpoint which ones he think should leave in the new term of government starting December 20.

Residents requesting fewer home loans Commercial loans, on the other hand, registered a noticeable increase Sara Farr


ewer people took out residential mortgage loans in February, with figures showing a 41.7 percent drop from that of a month earlier to 2.5 billion patacas. Official data released yesterday by the Monetary Authority shows 98 percent of these loans were granted to Macau residents. Overall, the number of new residential loans fell, while those for commercial property increased in February. The value of new home loans for residents decreased by 41.6 percent, while those for non-residents also dropped 46 percent month-onmonth. However, when compared to the month of February a year earlier, bank loans for residential properties increased by 24.2 percent. Unfinished apartment mortgages decreased 68.9 percent to 138

million patacas last month over the first month of the year. Equitable mortgages accounted for 96.6 percent of all home loans, and also registered a 69.1 percent dive. The number of unfinished flats that were collateralised increased by 70 percent in February over the same month in 2013. In addition, the outstanding value of residential mortgage loans increased 1 percent to 122.3 billion patacas from a month earlier. It was also a 23.5 percent increase from that of February 2013. Residents comprised the majority of lenders at 95.1 percent. Over the month of January, outstanding residential mortgage loans to residents increased by 1.1 percent, while those to non-residents dropped slightly by 0.9 percent. There was, however, an increase in the number of commercial property loans granted. These increased by 36.1

percent month-on-month to 7.5 billion patacas. The value of such loans also increased by 44.5 percent for residents and dropped 85.6 percent for nonresidents. New loans for commercial property increased slightly by 1.8 percent compared on an annual basis. In addition, the outstanding value of commercial property loans increased 2.6 percent to 90.6 billion patacas in February over that of the first month of the year. Residents took up the majority of the loans, accounting for 93.1 percent of the total. Compared with a month earlier, outstanding commercial property loans to residents increased by 2.7 percent, while those for non-residents also increased by 0.6 percent. According to figures from the Monetary Authority, the delinquency ratio for residential loans stood at 0.05 percent but went down by 0.01

MOP7.5 billion

Amount of commercial property loans in February, 36.1 percent increase over January percentage point from a year ago. For commercial property, the ratio went up 0.02 percentage points since the end of January, and was down by 0.11 percentage points to 0.05 percent in February over that of a year earlier.

Paulo A. Azevedo

Propaganda purgatory P

eople here in Macau that are tired, so tired, of laxity and inefficiency at so many levels of this administration might be inclined to agree with legislator Mak Soi Kun when he recently declared that corruption here does less harm then officials that do nothing. He went to this extreme, I believe, to dramatically highlight the worst in a system that does not operate well, and what its agents can do to a trusting society. And the fact that officials in Macau will never countenance the need for accountability to become reality as they fear one day that would rebound against them. I don’t believe the legislator was trying to minimise the insidiousness of corruption

when he spoke this week in the Chinese radio forum. I do think, however, that it is quite dangerous to use one theme (corruption) to demonstrate how we should tackle another (official inaptitude). Lately, this trend of minimising – or pretending to minimise – the impact of corruption has become somewhat fashionable in the city. I’ve heard the same from other businessmen and even from a couple of lawyers. “Ao Man Long was corrupt . . . but at least things were done”, they say. Of course, thinking this way is naive, to say the least, especially when strongly connected to the business sector. Both vices should be tackled vigorously, relentlessly,

transparently. Especially when - as I think is unfortunately the case in Macau on so many occasions - one is connected to the other. And how exactly can we help solve this problem? By leading, in the case of Mr Mak Soi Kun, who, as a legislator, should bring legislation to parliament in order to get his peers’ approval and thus help, within the Macau government. Responsible officials – we have them also – should rid us of the bad apples. Talking on the radio for the sake of talking, without action that we can all comprehend and support, is nothing more than cosmetic propaganda. Which, by the way, Macau has in spades.


April 18, 2014

Macau Recruiter sees 30 pct increase in job seekers MSS Recruitment Ltd’s Hello Jobs website has recorded 30 percent more people seeking jobs online this year than last, managing director Jiji Tu says.
The Portuguese-language Jornal Tribuna de Macau quotes Ms Tu as saying 81 percent of the job seekers were Macau residents.
Ms Tu said about 30 percent of vacancies posted on her company’s website were in casinos.
She said Macau’s employee turnover rate was now about 20 percent or 25 percent, and that she expected to be up to 30 percent next year, when new casino-resorts in Cotai begin to recruit staff.

Business Aviation Asia exploring private jet facilities The China-based corporate charter service provider is also expressing interest in booking parking space for private jets at Macau International Airport Stephanie Lai


orporate charter service provider Business Aviation Asia Ltd is eyeing a maintenance centre and a new parking area for private jets at Macau International Airport, which has yet to see the completion of a new private jet hangar. Business Aviation Asia Ltd, which is also engaged in aircraft management, told Chinese-language Civil Aviation Resource Net of China that the company has been scouting for more parking space for private jets at Macau International Airport in order to alleviate the parking pressure it experienced at Hong Kong International Airport. Business Aviation Asia Ltd has pilot bases in Hong Kong, Shengzhen, Beijing, Tianjin, Shanghai, Nanjing, Hangzhou and Chengdu. “At present there’s not much space for private jets to park in Macau, and Business Aviation Asia is trying to see if it can lease [a parking lot] at the hangar from Air Macau that is not frequently used by the carrier,” deputy general manager of the company Ricky C.M. Leung told Civil Aviation Resource Net of China.

A new hangar exclusively for private jets will see completion by June

A new hangar exclusively for private jets, on which construction started in October, will see completion by June, Macau International Airport Co Ltd (CAM) confirmed to Business Daily. The new hangar will be at least 36 metres high to accommodate the most common private or business jets, while it also includes an adjacent twostorey building and a workshop with a floor area of 2,000 square metres.

Business Daily tried to reach the management of Business Aviation Asia for more details on its plan for establishing a maintenance spot and parking lots at the new hangar but did not get an answer from the company before this story went to press. Mr Leung noted to the mainland news outlet that he expected the new hangar at Macau Airport could accommodate five to six long-range private jets like Bombardier’s Global

6000 aircraft, the Gulfstream G450 and Gulfstream G550. Along with the completion of the new private jet hangar construction, Macau International Airport Co Ltd is also expecting the bidding result to be out in May at the earliest that determines the companies responsible for managing the operation of the new hangar, including ground handling and passenger services plus aircraft maintenance for private jets.

Tigerair Taiwan stalks 4Q start Macau is one of the international destinations the newly founded low cost Taiwan carrier aims to fly to when it starts operations in 4Q Tony Lai


newly established, Taiwanbased budget carrier aims to fly to the territory by year-end after the two jurisdictions inked a new air services agreement in February. Macau International Airport Co Ltd said in a press statement yesterday that its chairman of the executive committee, Deng Jun, met with an executive of Tigerair Taiwan this week to discuss bilateral flights. The statement quoted Jeff Chang, assistant manager of Tigerair Taiwan’s preparatory office, as saying the carrier could launch “its first commercial service on the MacauTaiwan route in the fourth quarter of this year”.

“There will certainly be competition in the market,” Mr Chang was quoted as saying but he believes that more airlines operating the Macau-Taiwan route can enlarge the pie. Official figures show that over 74,600 Taiwanese visited Macau via air in the first two months, up 1 percent from the previous year. Right now, the air services agreement between the two places permits only Macau flagship carrier Air Macau Co Ltd, and Taiwan’s Eva Airways Corp, TransAsia Airways Corp and Mandarin Airlines to offer flights. But both sides signed a new pact in February allowing more airlines

to fly the route carrying unlimited passengers and freight between here and the island. The pact, however, has yet be implemented. Lu Chang Shui - director-general of the Taipei Economic and Cultural Office in Macau – said earlier this month that the recent ‘Occupy’ movements in the Taiwan parliament have delayed the Legislative Yuan’s review of the pact. He quickly added, though, that the pact would come into force “soon”. Macau is one of the international destinations Tigerair Taiwan – a venture set up in December between Taiwan’s China Airlines Ltd and Tiger Airways Pte of Singapore –

aspires to fly to. The low cost carrier could launch an official air service this October or November upon receiving an air operator’s certificate from the Taiwan authorities, Taiwan media reported. The budget airline’s newly appointed chief executive, Kwan Yue, said in a press conference that Japan, South Korea, and other Southeast Asian countries are also possible destinations. The carrier aims to operate three airbuses this year and 12 planes by 2017. Mr Kwan formerly served as manager of the bankrupted local carrier Viva Macau, which was grounded in 2010.


April 18, 2014


Macau Legend targets high rollers Businessman David Chow’s casino service firm forms a VIE structure with a VIP promoter to tap the market for increased revenues Tony Lai


asino service firm Macau Legend Development Ltd is tapping the gaming promotion sector, inking an agreement with a junket to raise the revenue contribution from high rollers. The listed firm told the Hong Kong Stock Exchange in a filing this week that its whollyowned subsidiary, Hong Hock Development Co Ltd, had formed a variable-interest-entity (VIE) agreement with a gaming promoter operating a VIP club on one of its premises, Pharaoh’s Palace Casino. The agreement is still subject to regulatory approvals. The deal with New Legend VIP Club Ltd will enable Macau Legend, controlled by prominent local businessman David Chow Kam Fai, to “diversify its business and indirectly participate in the gaming promotion business”, the filing said. “The company believes that the demand for VIP gaming will continue to increase,” the firm said, “and therefore it intends to

capitalise on the overall growth in VIP gaming in Macau by engaging in the gaming promotion business.” The agreement will boost Macau Legend’s share of the gross gaming revenue generated from New Legend’s VIP rooms to 42 percent, versus 2 percent in the past, the filing said, adding that the latter now only operates an unspecified number of VIP tables in Pharaoh’s Palace. Macau Legend’s latest annual report shows that the revenue contributed by the 67 VIP tables on its premises totalled nearly HK$127.39 million (US$15.9 million), up 15 percent from the previous year. In addition to the Pharaoh’s casino in the Landmark Hotel, Mr Chow’s firm controls Babylon Casino in its Macau Fisherman’s Wharf.

Nods awaited Analysts, however, forecast a bleak outlook for the VIP market here due to a credit squeeze in mainland China. Official Mainland

figures show new credit in China shrank 19 percent in March from a year earlier.

HK$127.4 mln

Revenue from Macau Legend VIP tables last year

Credit growth is a leading indicator of so-called VIP betting in Macau casinos by six to 12 months, according to Cameron McKnight, an analyst at Wells Fargo & Co in New York. “Credit growth hasn’t yet bottomed, and we could see VIP

growth meaningfully decelerate over the next six months,” Mr McKnight said in a note this week. He forecasts a 3 percent gain in betting by high rollers in this year’s first half, compared with about 13 percent in the first quarter. Macau Legend also explained in the filing that it has opted for a VIE structure with New Legend instead of buying out the promoter, as Macau laws do not permit companies to be shareholders of a gaming promoter. A VIE structure will give Macau Legend a controlling interest in New Legend without the necessity of holding shares in the enterprise. The VIE agreement “obtained the requisite approval” from the Macau regulator, Gaming Inspection and Coordination Bureau, on February 16, the filing said. The deal, however, still requires a nod from the Hong Kong Stock Exchange and shareholders of Macau Legend, with no date yet settled for the implementation, it added. With Bloomberg News


April 18, 2014

Macau Brought to you by

More low-cost hotels checking Six budget accommodation applications are now under consideration If approved, these will add 462 rooms to the 1,500 budget rooms Luciana Leitão

HOSPITALITY Domestic affairs The length of stay of hotel guests is one of the indicators that most would like to see rising. However, when we look into the related figures, the results go, broadly, in the opposite direction. In the top category of hotels, the declining trend for the last couple of years is clear. In 2013, the average stay at 5-star hotels was 1.4 nights, which compares with a figure of 1.7 nights in 2010 and 2011. As these hotels represent a big share of the supply of rooms and beds, they set the dominant trend. Figures for 4-star hotels have, in the same period, hovered between 1.1 and 1.2 nights. Other categories carry little weight in this tally and are left aside here.

The overall declining trend is strongly associated with a neat change in the pattern of stay of Chinese visitors, who represent the biggest proportion of hotel guests. In 2010 and 2011, their stay at 5-stars was always at or above the level of 1.5 nights; in the last two calendar years, the same figure was typically at or below 1.2 nights. The results for the first two months of the current year suggest, however, that the indicator may be improving, with figures slightly better than in the same months last year. The next major source of guests, Hong Kong, followed a similar declining trend, albeit one less pronounced than in the case of the mainland. The only region bucking the trend is, somewhat unexpectedly, Macau. Residents seem to use the facilities of the local hotels, mainly 5-stars, with increasing intensity. The associated lengths of stay are, as a rule, double those for mainlanders. Figures for 4-star hotels are closer to the average.

2.4 nights average length of stay for Macau guests at 5-star hotels, February


he government is currently studying the opening and expansion plans of six budget establishments, located throughout Taipa, and the northern and central districts of Macau. Together, these will provide 462 rooms for budget travellers. Analysts agree this is a much overdue addition to the low cost segment. At the moment, the government is reviewing applications for five establishments and has already granted approval to one guesthouse with seven rooms in the central district. “Among the applicants, there is an opening scheme for a guesthouse (with seven rooms) in the central district. Macau Government Tourism Office (MGTO) approved it last September and the applicant has been informed about the approval”, says a note sent to Business Daily. According to MGTO, a hotel falls into the category of budget accommodation if it is a 2-3star guesthouse or a 2-star hotel. Without revealing details about the budget establishments and the proposed dates of opening, the note from MGTO adds that according to

current regulations an applicant must apply for scrutiny within 18 months if the applicant’s opening scheme is approved. If the establishment passes muster, MGTO will then issue a licence to the establishment but “MGTO will not disclose details at this stage since [proposals] involves private investments.” In March, it was reported that property developer Agência Predial Song Chai Chuen had plans to build a 2-star, low-cost hotel in Patane. The Chinese language Macau Daily News quoted company executive director Tong Ut Song as saying the hotel would have about 200 rooms. The project has been studied by the government since 2012 and has not yet received approval.

The referrals The government says that there are currently 46 budget accommodation establishments in Macau, which together provide 1,500 rooms. Yet, renowned travel websites mention only four to five establishments. Ubiquitous international travel guide publisher Lonely Planet, for

Some people travelling for leisure or business don’t need full service hotels, they just need a bed to sleep in Glenn McCartney instance, introduces the budget offering category in Macau on its website with the following: “The vast majority of new hotels in Macau are aimed at the moneyed rather than budget travellers, so you have to look hard for good budget sleeping options. But for those with the cash, there are world-class choices.” It refers to three venues. The first referral by Lonely Planet is the first overseas project of Singapore’s 5footway.inn chain on


April 18, 2014


in by the government. already serving guests

Rua de Constantino Brito in front of Ponte 16 casino resort. The website says room prices start from USD28 per night [MOP223.64] and considers it a boutique hotel. Robert Cai, manager of 5footway. inn, in Macau, says they opened last October. “We’re a boutique hotel and hostel chain in Singapore; we have four properties in Singapore, and Macau is our latest addition”, he explains. The mission of the chain is to maintain heritage buildings and refurbish them, whilst retaining local flavour. It all started because the

owner of the former Pensão Ruby decided to replace the old hotel with a new one, associating efforts with the chain 5footway.inn. Quite well known in Singapore, Mr Cai says most of the visitors staying at the hotel in Macau already know the brand. “In Singapore, we have more than 500 beds”, he says. In the territory, 5footway.inn offers 24 rooms, each able to accommodate on average two to three people. He says prices range from HKD700 to HKD1,300, depending on weekdays or weekends, and the type of room. Since October until now, 5footway. inn Macau has hosted visitors from Europe, US, Malaysia and Hong Kong, with only 20 percent checking in from Mainland China. Many guests are families and young tourists but some are businessmen who usually book online one or two months beforehand. “We also have quite a lot of walk-ins.” Even though he recognises that they are not so economical in terms of price, he says they include breakfast with their offering providing more than most accommodation in Macau. “Even 2-star hotels don’t include breakfast”, he says. The second reference from Lonely Planet website is the Towns Well Hotel, a 2-star hotel located in the centre of downtown Macau, in Calçada das Verdades. According to Lonely Planet, room prices start at USD33 per night [Mop 263.57] and include services like free Wi-Fi in the public area, restaurant and 24-hour housekeeping services. General manager Daniel Cheong says Towns Well Hotel opened in November 2011 to cater to the needs of another type of visitor, as the existing offer was “old and small . . . We observe that more and more high-end hotels are appearing in the Macau hotel industry and that recently the market is lacking the supply of 2 to 3-star hotel rooms for those budget travellers.” He says the price per room ranges from MOP600 to MOP800 during weekdays. Guests coming to the territory are from many different places, such as Japan, Korea, Philippines, China, Europe, US and Indonesia. Some are backpackers, others are businessmen and some are families. With an occupancy rate during the normal season of around 80 percent - and more than 90 percent for peak seasons - he expects to open more budget hotels in the coming years. Another hotel referred by Lonely Planet is the Ole Tai Sam Un Hotel. Located in the centre of Macau on Rua da Caldeira, near Rua da Felicidade and Avenida de Almeida Ribeiro, prices per night start from USD54

[MOP 431.30] and you may choose between a king bedroom, twin-bed room or deluxe room. Other websites, like JustBookHotels or refer to Fu Hua Guang Dong Hotel, located on Rua Francisco Xavier Pereira, a 3-star hotel with room prices starting at USD47.95 [MOP 382.98]. On the Macau Budget Hotels Site, created by the Macau Hoteliers and Innkeepers Association with the help of MGTO in November 2012, there is information about 46 budget accommodation premises, with prices ranging from about MOP100 to MOP400.

Long overdue Amy So Siu Ian, associate professor at the University of Macau, says there are a few 2 to 3-star hotels and guesthouses in Macau that fit the low cost accommodation category and that can be considered quality rooms. Yet, she believes some of the existing offering is in “need of renovation” in order to be more competitive. Overall, she says Macau needs more quality budget accommodation that can be considered safe and clean, in order to meet current demand. Even though Macau’s current tourism offering does not target mostly budget travellers, Ms So says “It’s still good for Macau to have budget accommodation in order to diversify our segments”. Considering the number of tourists entering Macau every year, she believes that there is room for even more than the six budget accommodation businesses currently being reviewed by the government. Overall, she expects a bigger offering in budget accommodation will bring

We observe that more and more highend hotels are appearing in the Macau hotel industry and that recently the market is lacking the supply of 2 to 3-star hotel rooms for those budget travellers Daniel Cheong

It’s still good for Macau to have budget accommodation in order to diversify our segments Amy So Siu Ian

a different type of visitor to the territory, like family travellers and Western tourists. Glenn McCartney, assistant professor in Gaming and Hospitality Management at the University of Macau, believes that the government should cater to low budget-type accommodation, instead of just focusing on the luxury offering. Moreover, he says the general perception regarding what a budget offering is, is currently mistaken. “People think low cost means cutting corners in safety and health but that’s not necessarily the case”, he explains. Budget accommodation does not necessarily attract only budget travellers. “Some people travelling for leisure or business don’t need full service hotels, they just need a bed to sleep in”, he says. In fact, some people just prefer to give spend their money differently, and not simply invest in a luxury hotel. “A hotel is just a facility I might stay in: somewhere I sleep, and then I can start spending.” Around the world, there are very high quality budget organisations. “Low cost hotels around the world are part of big international hotel conglomerates that operate 5-star hotels but also offer budget accommodation, and not necessarily with diminished quality”, he says. He says that in certain cases for an accommodation to be considered affordable they can cut costs on things like check-in services. “I’ve been in hotels where there are self checkin terminals. Some people don’t need seven employees at a check-in counter.” So, overall, he believes Macau needs to increase its accommodation portfolio if it really wants to diversify the type of tourist visiting the territory. By diversifying the type of visitor he clarifies that it does not necessarily mean budget travellers but people who may want to spend their money differently. Besides, by increasing the product portfolio, Macau also becomes more competitive with regard to other regional destinations.

The family hostels plan Macau Government Tourism Office (MGTO) is studying the possibility of operating family hostels in a singleblock building, which should fit into the budget accommodation segment. Amy So Siu Ian, associate professor at University of Macau, says this should be a good option for Macau, as it will help diversify the tourism segment. Glenn McCartney, assistant professor in Gaming and Hospitality Management at the University of Macau, says it all depends on what kind of family hostel model there will be in Macau. “It depends on what branding they’re looking at”, he says.


April 18, 2014


Lobby lounge

Tiger bares its teeth Investment for first phase to top US$1.5 billion with 1,000 rooms, 500 tables, 3,000 slot machines, 22 restaurants, beach club and a dancing fountain. In an exclusive preview of its Manila resort, Universal Entertainment tells Business Daily it is confident that it will get the go-ahead from authorities for the biggest casino in the Philippine capital Alex Lee


niversal Entertainment (UE), owned by Japanese businessmen Kazuo Okada, the former pugnacious shareholder of Wynn Macau, is ready to open its first casino resort in Manila by the end of 2015. The project, as senior company officials reveal firsthand to Business Daily from UE headquarters in Tokyo, is to attract an international audience of high-end gamers and explore one of the new frontiers of the global gambling market, the Philippines.

Executive vice-president for casino operations and marketing, Matt Hurst, said the project known as Tiger Resort - located on Manila Bay, will open its doors by the end of next year. With an investment ranging from US$1.3 billion to US$1.5 billion, the first phase will focus on gaming. It will offer 1,000 rooms to accommodate players that will play in Tiger’s casinos with 3,000 slot machines and 500 tables, the majority of which will be

for baccarat. “ It’s a pretty big casino, the biggest in town”, Mr. Hurst declared in a conference call from UE headquarters in Tokyo together with Takahiro Usui, general manager of Aruze Gaming America, the group’s arm for slot machines and gaming devices (like pachinko or arcade games). Being an integrated resort casino, the Tiger will also have, in this first phase, some 7,500 square metres of shopping area, 2,400 parking places, nightclub and

beachclub and a dancing fountain, similar to the one in front of the Bellagio in Las Vegas “but bigger”, says the vice-president for casino operations. The restaurants, both executives say, are other pillar. Twenty-two restaurants serving a broad range of international cuisine will feature Chinese, Thai, Italian, Japanese, steakhouses and buffet places geared to satisfying not only gamblers’ tastes but regular visitors to the shopping area.


April 18, 2014


VIP entrance

Mesina dining

Front view


Phase 1 30,000m2 casino 500 tables 3,000 slots 1,000 rooms 1,900m2 ballroom 7,500m2 high end retail Night club Beach club World’s largest dancing fountains 22 restaurants 2,400 parking spaces

Phase 2 (opening first half of 2016) 1,000 rooms 5 restaurants 62,650m2 shopping mall /restaurants/leisure 3,100 parking spaces

Phase 3 (2017 or later) Theatre 1,500 seats Parking 2,400 300,000m2 high end residential

VIP common

If the first phase of Tiger Resort is focused on gaming, the next two phases will spotlight shopping, leisure and residential segments, says Hurst. “In the first semester of 2016, the resort will have completed its second round adding 1,000 rooms, five restaurants, 62,650 square metres of retail and leisure spaces and 3,100 more parking places”. At this stage, however, the amount of investment has not been disclosed. The final phase is planned for conclusion in 2017. A show theatre with 1,500 seats will be an “entertainment mark” at the site, together with a 300,000 square metre residential area built next to the casino, sold on Manila’s high end real estate market. Hurst said Universal Entertainment is “very confident” that the final licence for Tiger Resort will be issued by the Philippine authorities, namely PAGCOR, the gaming regulator in the country. The company already has a provisional licence and Mr. Hurst sees “no reason for refusal . . . We expect a green light like all the other gaming operators”, he added. Hurst expects, when finished, that Tiger Resort will be an

Kazuo Okada Universal Entertainment Corp. is headed by Kazuo Okada, the former major shareholder of Wynn Resorts in Macau and the 24th richest Japanese according to Forbes Magazine. With a fortune of US$1.4 billion, the 71 year old businessman has made his career in the gaming industry, creating UE in 1973 managing casinos in the US, Macau - and in the near future the Philippines. In 2012, he parted ways with Steve Wynn. Okada is also known for heading Azure, one of the major manufacturers of slot machines, Pachinko machines and other game machines, and peripheral devices in Japan. The road to Tiger Resort in Manila has not been smooth. Philippine authorities have delayed the project, saying UE has not addressed the full requisites for opening the casino resort, namely the rule that limits foreign ownership of land to 40 per cent.

“iconic property” in Manila that will “beat everyone up”. The feedback received from investors, gamblers and junkets from various

road shows has been “not globally positive, but universally positive”, he told Business Daily during the Tokyo conference call. Universal believes that the new integrated resort will be in the top segment of Manila’s gaming scene. The Tiger will compete directly with Resorts World, run by Genting, the casino group in Malaysia and owner of Sentosa in Singapore, and sit in the high end market of Manila. But the company also pretends to attract some gamblers from the City of Dreams Manila, belonging to Melco Crown Entertainment, a casino venture owned by Australian billionaire James Packer and Lawrence Ho. The goal, says Matt Hurst, is to have at least 75 per cent of international gamblers in Tiger Resort. For the gaming promoters market, the complex will offer nine junket rooms, the biggest with 20 tables, and an option for six more. UE also expects that by the time of opening, the highways connecting the airport and linking the north and south of Manila will be ready, avoiding the overcrowded and chaotic city traffic - thereby smoothly transporting gamblers to Tiger Resort. “When they’re done, it will help a lot”, he said.


April 18, 2014

Greater China Weibo valued at US$3.46 billion The company will be valued at a lower-than-expected US$3.46 billion when it goes public on the Nasdaq yesterday, amidst concerns about the microblogging service’s slowing user growth and the country’s highly censored media environment. The Twitter-like microblogging service, owned by web portal Sina Corp, sold 16.8 million American Depositary Shares (ADSs) for US$17 apiece, raising US$285.6 million, an underwriter told Reuters. The company had planned to sell 20 million ADSs at between US$17 and US$19 per share. Weibo will add to the list of Chinese companies flocking to the U.S.

Workers increase pressure Workforce evolution reflects country’s evolution


hina’s workforce is growing more restive as it shrinks. The number of strikes so far this year is up by close to a third - the biggest surge in protests since the global financial crisis, according to one labour group - as businesses cut costs and foreign companies restructure or close operations in response to slowing growth in the world’s second-biggest economy. There are no accurate national statistics on the total number of

strikes, work stoppages and protests in China, but China Labour Bulletin, a Hong Kong-based labour rights group, says there were 119 last month alone. Employers face an uncomfortable new reality: workers who not only know their rights and will challenge management to defend them, but who also demand more than the legal minimum. “This is going to be a very tough year for employers in China,” said

Lesli Ligorner, Shanghai-based partner at Simmons & Simmons. “There will be more strife and strikes. It’s only going to continue.” Thousands of workers at a factory in Dongguan in the Pearl River Delta run by Yue Yuen Industrial Holdings, the world’s largest shoe maker, have been on strike for around 10 days demanding improved social insurance payments, a pay rise and more equitable contracts. Other companies caught up in this

Jeep deal for China production by end-April Fiat Chrysler Automobiles will announce an agreement by the end of April to allow production of Jeep models in China, the head of the Jeep brand, Mike Manley, said on Wednesday. Manley said he hoped the deal with Chinese officials could be announced at this weekend’s Beijing auto show. “It will be ideal if I can get the timing right for the Beijing show, but I’m not at the stage to say that definitely,” Manley said in a telephone interview from the New York Auto Show.”

March cotton imports tumble China’s cotton imports in March fell 58 percent from a year ago to 222,100 tonnes, data from the China Cotton Association showed yesterday. Imports in March were down 9.7 percent compared with February. Total shipments of the fibre in the first three months of 2014 were 760,600 tonnes, down 44.3 percent from a year ago, the association said on its website.

Workers’ claims in China have a long history that spans from ancient kingdoms to recent times

Beijing car show warms up Growth in auto sales in China decelerating in February and March

FDI up 5.5 percent China drew US$31.5 billion in foreign direct investment (FDI) in the first quarter of 2014, up 5.5 percent from a year earlier, the Commerce Ministry said yesterday. In March alone, China attracted US$12.2 billion in FDI, down 1.5 percent from a year ago, the ministry said. First quarter outbound, non-financial direct investment fell 16.5 percent to US$19.9 billion.

Gap sees sales triple in 3 years

The company expects its sales in China to triple in the next three years to US$1 billion, making the country its second largest market, the retailer said on Wednesday. Last year, Gap opened 34 namesake stores in China, bringing its total there to 81. It will open about another 30 this year. The company recently opened its first Old Navy store in China. “We can push Old Navy deep into China,” said Jeff Kirwan, president of Gap Inc’s greater China business, speaking at the retailer’s investor day, which was webcast.


lobal automakers will flock to the largest car show in the world’s biggest car market next week -but environmental concerns and slowing Chinese economic growth mean the road ahead could be bumpy. The Beijing auto show, which opens to the public on Monday, will showcase more than 1,100 vehicles, according to organisers. Leading global automakers such as General Motors, Toyota, Volkswagen and Hyundai are set to attend along with domestic manufacturers SAIC Motor -the country’s biggest by salesand Dongfeng Motor. China, which over the past 35 years has transformed from a nation reliant mostly on bicycles to one where urban roads are clogged with motor vehicles, now sits firmly at the centre of manufacturers’ profit dreams. The country’s auto sales surged 13.9 percent to 21.98 million vehicles last year, though analysts warn that purchases could be dampened by restrictions on car numbers by some cities -so far, six- to help battle pollution and congestion. Slowing economic growth could pose another obstacle. China’s leaders say they envision a transformation whereby growth will be increasingly driven by private-led demand such as consumer spending rather than the traditional locomotive of massive state-backed investment projects.

That could be good for carmakers, but as China’s economy develops more citizens are clamouring for a better environment, including cleaner air in cities such as Beijing. Dangerous levels of pollution in the capital have spurred authorities to take action, including by restricting car numbers. Although still expanding at rates most countries would envy, China’s economic growth is slowing after decades of double-digit leaps. Gross domestic product in the first quarter of this year, announced on Wednesday, grew 7.4 percent, its weakest performance in 18 months. The auto market has not been immune to the effects of the slowdown, with growth in auto sales in China decelerating in February and March after hitting a record in January. Sales of all types of vehicles rose 6.6 percent year-on-year to 2.17 million units in the month, the China Association of Automobile Manufacturers said, slowing from a 17.8 percent increase the month before.

‘The most promising market’ Despite issues facing the market, it remains a key hope for global automakers eager to boost sales and profits. “China represents between 26 percent and 28 percent of worldwide demand,” Yann Lacroix, a Paris-

National cars, like the Dongfeng pictured, will be an

based auto analyst with credit insurance company Euler Hermes, told AFP. “It will remain the most promising market for years to come.” China’s importance to the global auto industry was visible earlier this year when French auto giant Peugeot Citroen handed part control to Dongfeng -China’s number two automaker- and the French state, in a bid to help revive itself by using China’s market to boost its profile in Asia.


April 18, 2014

Greater China

measures rising tide of worker unrest so far include Wal-Mart Stores Inc, which is negotiating with the union at a store it closed last month; International Business Machines Corp (IBM), where staff at a Shenzhen computer server factory protested over insufficient severance pay during the transfer of the plant’s ownership to Lenovo Group Ltd last month, and Samsung SDI Co Ltd, whose supplier Shanmukang Technology negotiated with workers over social insurance contributions after a strike in March.

Explosive growth Workers are emboldened by demographic trends -China’s working age population shrank by almost 6 million in the past two years to 920 million, National Bureau of Statistics data show- and by government policies to better protect worker interests after decades of neglect. China’s family planning policy, introduced 35 years ago, has eaten away at factories’ labour supply for a decade. Parents are more reluctant to allow their children to work in gruelling conditions, particularly as rapid economic growth offers alternatives. Factories first responded to the shortages by adding leisure facilities like basketball courts and libraries, and later by raising wages. Few workers globally have seen the kind of explosive wage growth that Chinese workers have experienced in recent years: the average official

Stronger economy than anticipated minimum wage has more than tripled since 2005 - to around 1,300 yuan (US$210) a month - according to UBS. Wages are up 80 percent since the global financial crisis, yet workers say this has barely kept pace with the rising cost of living.

New rules, fresh dilemmas China has overhauled its labour legislation in recent years. A 2008 labour contract law strengthened worker protections, including provisions for better severance pay. In 2011, a new social insurance law strengthened requirements on companies to contribute to the national social insurance scheme on behalf of their staff, and, last month, a law was introduced limiting the use of labour dispatch agencies - or temporary workers though companies have two years to comply. Draft legislation under consideration in southern Guangdong province would help codify collective bargaining rules there. Ironically, a more solid legal grounding - which should in theory have clarified the rules around labour conflicts - has created fresh dilemmas for both workers and the government. Beijing and local officials want to defuse labour protests and create a more stable workforce. But by giving workers more leverage, they also risk negotiations spiralling out of control. Reuters


Commerce official says trade numbers in 2013 artificially inflated by the reporting of fake deals


hina’s economy is doing better than official data suggests, the Commerce Ministry said a day after figures showed growth at an 18-month low, adding that targets for exports and imports this year should be met despite some caution over the trade outlook. Ministry spokesman Shen Danyang said a rise in export deliveries, a customs department poll of exporters and growth in trade in individual provinces all showed that the economy was in good shape. “I agree with the opinion that the economy and trade were faring better than the released data showed,” Shen told reporters at a briefing yesterday. Data on Wednesday showed the economy grew an annual 7.4 percent in the first quarter, its slowest pace in 18 months but just ahead of forecasts for 7.3 percent growth. March trade figures earlier this month showed exports unexpectedly fell for a second successive month and imports dropped sharply. Shen said trade numbers in 2013 had been artificially inflated by the reporting of fake deals, used to avoid capital controls, before a crackdown. That was one of the reasons for the sharp drop in trade figures in the first quarter, he added. “Stripping off the abnormally

Investment flows Outbound investment by nonfinancial Chinese firms was $19.9 billion in the first quarter, down 16.5 percent from a year ago. It had fallen an annual 37.2 percent in the first two months of 2014, and the commerce ministry had previously said a US$15 billion acquisition by oil and gas producer CNOOC in early 2013 was the reason for the sharp drop. The data showed outbound investment to Hong Kong fell 47 percent in the first quarter from last year. Investment in ASEAN countries and the European Union also fell. Last week, the economic planning commission said it would ease restrictions on overseas investments by allowing firms to make deals of less than US$1 billion without approval. Reuters

WTO rules against China on rare earth The United States said the export limits allowed China to artificially increase world prices for raw materials crucial for many products

after hitting a record in January


important part of the show

German auto giant Daimler said last month it had signed a deal worth one billion euros (US$1.4 billion) with its Chinese partner Beijing Automotive Industry Corporation to expand production at their joint Beijing-based venture. South Korea’s largest carmaker Hyundai Motor, whose vehicles are a common sight on China’s roads, said last month it planned a fourth plant in the country. Manufacturers from Japan are also hoping to expand sales in China,

high comparison base of last year, China’s exports and imports in the first quarter actually grew 4.6 percent and 9.6 percent respectively,” he said. The government has repeatedly said it would accept slower growth to push forward its restructuring of the economy away from a reliance on investment and credit for growth.

although political tensions between Tokyo and Beijing have cast a shadow over their business. Protests in 2012 over a maritime territorial dispute saw crowds attacking and overturning Japanese vehicles in some Chinese cities. Sales took a hit but have been recovering. “We believe China will be an important market for Japanese automakers in 2014,” Akira Kishimoto, auto analyst with J.P. Morgan in Tokyo, said in a report. AFP

hina said yesterday it would appeal against a World Trade Organization (WTO) ruling that found it violated global trade rules with its export limits on rare earth minerals used in defence and technology products. China lost a WTO dispute in March, handing Europe and the United States a victory over what they see as China’s unfair trade practices. “China will make the utmost efforts in the appeals process,” Ministry of Commerce spokesman Shen Danyang told reporters at a monthly briefing. China produces more than 90 percent of the world’s rare earths, key elements in defence industry components and modern technology from iPhones and disk drives to wind turbines. China imposed strict rare earth export quotas in 2010, saying it was trying to curtail pollution and preserve resources. “Regardless of the appeal’s outcome, China’s policy objectives to protect the environment and natural resources will not change,” Shen said. “They will also continue to strengthen management of natural resource products in a manner that accords with WTO rules and safeguards fair competition.” Prices of the prized commodities

soared by hundreds of percent after China imposed is export quotas, and the United States, European Union and Japan complained that the restrictions gave Chinese companies an unfair competitive edge. The United States said the export limits allowed China to artificially increase world prices for raw materials crucial for products like hybrid car batteries, wind turbines and energyefficient lighting, while artificially lowering prices for Chinese producers. China had been widely expected to lose the case, after a successful challenge two years ago to its export restraints on a different set of raw materials used in the steel, aluminium, and chemicals industries, including bauxite and magnesium. In that ruling, a WTO panel said China had failed to demonstrate that its export duties were to curtail pollution or conserve resources. Decades of unrestrained economic growth has hit China’s environment hard. Refining rare earths requires large amounts of acid, and also produces low-level radioactive waste. China has pointed out that other countries, notably the United States, have closed many of their own rare earths refineries, citing pollution concerns. Reuters


April 18, 2014


Indonesia’s population is the

Woodside Q1 revenue up Australia’s largest independent oil and gas producer, reported a 5 percent rise in first quarter production yesterday but said it had not yet finalised a deal to take a stake in Israel’s Leviathan gas field. Woodside had been expected to invest up to US$2.7 billion in Leviathan last month, but delayed the signing while it sought clarity with the Israeli government over tax treatment. Woodside said first quarter production was 23 million barrels of oil equivalent (mmboe), versus 21.9 mmboe a year ago and 23.2 mmboe in the fourth quarter.

Aussie central bank sold A$736 million in March The Reserve Bank of Australia (RBA) sold A$736 million (US$639 million) of Australian dollars on a net basis on the spot foreign exchange market during March, central bank data shows. The RBA manages the forex needs of the government, which for example may need foreign currency to buy military hardware or pay embassy salaries, and that usually makes up the vast bulk of its spot transactions in any month. The RBA sold A$763 million for foreign currency on behalf of the government in February.

S.Korea March producer prices extend record Producer prices in South Korea eased in March, maintaining their record-breaking streak to an 18th month on low global commodity prices, but the extent of the fall eased compared with the previous month, central bank data showed yesterday. The producer price index in March eased 0.5 percent from a year earlier against a 0.9 percent fall in February. Producer prices have slowed their pace of falls considerably this year, compared with an average 1.6 percent decline in 2013. Headline inflation remains far below the bottom band of the central bank’s 2.5 to 3.5 percent target range.

Sony sells 7 million Playstations

The firm has sold over 7 million Playstation 4 video game consoles as of April 6, the company said on Wednesday. In February, the Japanese company said it surpassed its full-year target of 5 million units by the end of March. The console went on sale on November 29 in the United States, Western Europe and Latin America, around the same time that rival Microsoft Corp’s Xbox One was released. That console topped 3 million units at the end of last year.

The hottest industry for investment is automotive, with companies and South Korea planning new investments


onsumer-focused companies from Ikea to European automakers are putting money into Indonesia to target the country’s young population. Investment will grow at least 15 percent this year, a slower pace than last year’s 27 percent, and a more sustainable level, Mahendra Siregar, chairman of the Indonesia Investment Coordinating Board, said in Jakarta yesterday. Investment growth has been faster in recent years only as it came from a lower base, with the main challenges a lack of infrastructure and the need to improve the ease of doing business, he said. The Indonesian government is seeking foreign investment to support growth in Southeast Asia’s largest economy, which slowed to the weakest in four years in 2013, and help narrow a current- account deficit. Elections for a new president in July are spurring consumer confidence, leading to greater investor interest in the world’s fourth-largest population, Siregar said. “Everybody has confidence that investing in Indonesia is almost a must,” Siregar said in the interview, after recent trips to meet investors in South Korea, Vietnam, Dubai and Abu Dhabi. “The biggest opportunity is the growing market.” Siregar will head to the U.S. this

First Ikea shop will open in Indonesia this year. (Photo: Shenzhen’s facilities)

month to meet with software and gaming companies including Facebook Inc., Google Inc. and Yahoo! Inc. to discuss designing applications aimed specifically at a country with half the population aged below 30. Facebook, with 65 million users in Indonesia, opened an office in the capital last month, the Jakarta Post reported.

Cars, shopping The country has a pipeline of 1,400 trillion rupiah (US$122

billion) to 1,500 trillion rupiah of investments, based on investor interest in the past two years, Siregar said. Around two-thirds is foreign direct investment, and consumerfocused manufacturing and services have replaced natural resources as the key area, he said. The number of middle class and affluent Indonesians may almost double to 141 million by 2020, according to The Boston Consulting Group, while McKinsey & Co. estimates 90 million Indonesians will

Aussies show successful mortgage route Australian homes are already ranked among the most expensive on the planet by some measures


he adage “safe as houses” has been an oxymoron since the global financial crisis. But it still has a resonance for Australians who use their homes as a piggy bank, salting away money by paying down their mortgages at a breakneck pace. It’s a distinctive feature of the Australian housing market that gives borrowers a vital buffer should the economy take a turn for the worse. It is also a major reason policymakers have been sanguine about a run-up in house prices that some worry could morph into a bubble if left unchecked. Speculative froth in property is not hard to find. A tiny 15 m2 studio apartment in inner Sydney recently went for A$220,000 (US$205,800), or A$14,666 per m2 - not far off Manhattan heights. Home prices are up almost 11 percent in the past year, and 15 percent for Sydney, when Australian homes are already ranked among the most expensive on the planet by some measures.

KEY POINTS Habit of prepaying mortgages lessens housing risks Mortgage buffer equal to around 24 months of payments Mountain of home equity suggests bubble fears overdone

Yet the talk of bubbles belie years of sober saving by borrowers who have built up sizable equity in their homes by paying down their mortgages at an accelerated pace. “It’s a huge advantage for the market,” says Michael Workman, a senior economist at Commonwealth

Bank, who estimates 70 percent of borrowers across the four major local banks are ahead on their mortgages by at least 10 months. “To be a genuine threat, rising home prices need to be driven by leverage, and that’s just not happening while so many are ahead on their debt.” Australia is unusual by global standards because around 85 percent of all mortgages are at variable rates and, unlike fixed rate loans, there are no penalties to paying off early. Banks do not automatically cut payments should official interest rates fall, instead the borrower has the choice whether to reduce their payments or not. The system has proved so effective the International Monetary Fund highlighted mortgage “pre-payments” as a distinct advantage of the housing market when it gave the financial system a clean bill of health earlier this year. Reuters

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April 18, 2014



investment expected to lift the country’s production capacity, Siregar said.

from Europe, the U.S.

join the “consuming class” by 2030. The hottest industry for investment is automotive, with companies from Europe, the U.S. and South Korea either planning new investments or expansion of existing plants, Siregar said, declining to name them. Monthly car sales raised an average 5 percent in the first quarter, after reaching 1.2 million last year, according to data compiled by Bloomberg. Only around 10 percent of Indonesians have a car, showing the growth potential, with existing

Ikea store Ikea, which already gets some of its wood from the country, will open its first store in Indonesia this year, he said. Ikea, the world’s largest furniture retailer, will invest US$100 million for its first store due to be opened in September, Mark Magee, its Indonesia general manager, said in November. Dubai companies are interested in investing in consumer goods, hospitals, mineral smelting and property, he said after talks in the country, while the National Bank of Abu Dhabi is looking at Indonesia, he said, with the country needing access to cheaper long-term funding for infrastructure projects. The top challenge remains infrastructure, he said. President Susilo Bambang Yudhoyono, who steps down this year after two terms, has struggled to make progress on the new ports, railways and roads needed to transport goods. The country ranked 114th among 177 countries in a 2013 Transparency International survey on corruption perceptions, also undermining its investment appeal. Indonesia’s consumer confidence index rose in March to the highest level in 16 months, according to data compiled by Bloomberg. Foreign funds have poured US$2.7 billion into Jakarta stocks this year and the rupiah is up more than 6 percent, the most among 11 Asian currencies tracked by Bloomberg. Bloomberg News

Gold restrictions to persist in India Central bank’s governor says the country will have to go “slowly and steadily” in removing these curbs


ndia, the world’s second-largest gold consumer, will probably keep restrictions on imports to control the current account deficit and defend the rupee, said the managing director of the country’s biggest refiner. The limits would result in shipments of 650 metric tons to 700 tons in the 12 months started April 1 from 650 tons a year earlier, according to Rajesh Khosla at MMTC-PAMP India Pvt. Purchases were 845 tons in 2012-2013, the finance ministry says. While the form of restrictions may change, the government will continue to restrain buying, he said in an interview. India represented about 25 percent of global demand in 2013, the World Gold Council says. Prime Minister Manmohan Singh requires importers to supply 20 percent of purchases to jewellers for export and sell 80 percent on the local market. Singh also raised import taxes and only allows banks and government- nominated entities to ship in gold. The new finance minister may review the rules after elections in progress now. “I’m sure he will do something on 20:80,” said Khosla, referring to the import regulations. “You may come up with a quota system, you may come up with an auction system, you

845 tons

gold purchased in India 2012-2013 may ask the banks to bid. Freeing the import of gold as it used to be prior to the 20:80, I don’t think that is going to happen,” he said in New Delhi on April 8. China overtook India as the biggest consumer last year. India buys almost all its gold from abroad. Unofficial imports almost doubled to 200 tons in 2013 while official flows dropped 4 percent to 825 tons, the Londonbased council estimates. Gold climbed 8.6 percent this year to US$1,304.91 an ounce yesterday. The country will have to go “slowly and steadily” in removing these curbs, Raghuram Rajan, governor of the Reserve Bank of India, said this month. “It would be useful for some of the big uncertainties facing us to be behind us rather than still in front of us before major actions are taken. I do not rule out smaller steps.”

Toyota continues the revolution Hydrogen and electricity cars pretend to dominate the future


n 1997, Toyota caught its competitors by surprise with the revolutionary Prius, the first commercially successful gasoline-electric hybrid car. Now, the Japanese firm is trying to do the same with a technology that seems straight out of science fiction. Toyota Motor Corp will next year launch a hydrogenpowered car in the United States, Japan and Europe. For now, people at Toyota are calling it the 2015 FC car, for fuel cell. Fuel-cell cars use a “stack” of cells that electro-chemically combine hydrogen with oxygen to generate electricity that helps propel the car. Their only emission, bar heat, is water vapour, they can run five times longer than battery electric cars, and it takes just minutes to fill the tank with hydrogen -far quicker than even the most rapid charger can recharge a battery electric car. The 2015 launch culminates a 20-year zigzag quest during which Toyota first struggled to get the technology to work and then strained to lower manufacturing costs enough to permit realistic pricing. It has also been playing catchup to rival Honda Motor Co, which has set the early pace with its FCX Clarity, a sleek,

Toyota wants to replicate hybrid Prius’ (pictured) success on 2015 FC Car hydrogen fuelled

purpose-built hydrogen car. The cost-cutting continues, though Toyota thinks it has cracked the code with incremental design improvements, such as using wider, flatter “fettuccinestyle” copper in coils that make the motor more powerful, and thus smaller and cheaper. “With the 2015 FC car we think we’ve achieved a degree of dominance over our rivals,” Satoshi Ogiso, a Toyota managing director,

said in a recent interview at the group’s global headquarters. “With the car, we make a first giant step” toward making fuel-cell vehicles practical for everyday use. What’s more, executives and engineers say Toyota is willing to sell the car at a loss for a long while to popularize the new technology - just as it did with the Prius, which, with other hybrids, now accounts for 14 percent of Toyota’s annual sales, excluding group companies,

of around 9 million vehicles. As a result, drivers in key “green” markets such as California may be able to buy the car for a little more than US$30,000-US$40,000, after government subsidies - if management approves a pricing strategy put forward by a group of managers and engineers. General Motors Co’s Chevrolet Volt, a nearall-electric plug-in hybrid, for comparison, starts at around US$35,000 in the United States.

Bloomberg News

As with battery electric cars, a major challenge for fuel-cell automakers is a lack of infrastructure, with few hydrogen fuel stations in the world. Estimates vary, but it costs about US$2 million to build a single hydrogen fuel station in the United States, according to Toyota executives. Safety is also a concern. Hydrogen is a highly flammable element when not handled properly. Other global automakers in the fuel-cell camp include Daimler AG, Hyundai Motor Co and Honda, which plans to introduce an upgraded FCX Clarity next year with seating for five, a smaller fuel-cell stack, greater power and a longer driving range. Those betting on battery electric cars include Nissan Motor Co, Tesla Motors Inc, Bayerische Motoren Werke AG, GM, Ford Motor Co and Chinese automakers backed by the country’s industrial policymakers. Even Toyota only expects tens of thousands of fuel-cell cars to be sold each year a decade from now as the new technology will need time to gain traction. While costs have come down significantly, Toyota says a hydrogen car’s fuelcell propulsion system alone still costs it close to US$50,000 to produce. That’s partly why some Toyota money managers want a more conservative pricing strategy - of US$50,000-US$100,000 said one individual on the 2015 FC car launch team. Reuters


April 18, 2014


Qatar battling neighbours pays with investors

Co-op reveals 2013 US$4.2 billion loss

The dispute is undermining investor confidence in Qatar

Demonstrations in Egypt in 2012 heralded Morsi’s rise and fall. Conflicting factions generate tensions between Persian Gulf neighbours


atar is paying the price for its six-week spat with neighbours in the Gulf Cooperation Council as the nation’s borrowing costs and credit risk increase. The yield on the country’s dollar bond due January 2020 climbed nine basis points since March 4, the day before the United Arab Emirates, Saudi Arabia and Bahrain pulled their ambassadors after Qatar denounced the crackdown on the Muslim Brotherhood in Egypt. Rates on similar-maturity dollar debt from Abu Dhabi and Dubai fell in the period. The dispute is undermining investor confidence in Qatar even as the world’s biggest liquefied-naturalgas producer spends US$200 billion on roads, stadiums and a new city in preparation for the 2022 soccer World Cup. The U.A.E. was the country’s fourth-biggest source of imports in 2012, and Qatar’s economy is vulnerable should Saudi Arabia hamper trade across its only land border, the Brookings Doha Centre

said last month. Qatar “is perceived as the party at risk should the dispute escalate, regardless of the real likely economic impact,” Farouk Soussa, head of Middle East economics at Citigroup Inc. in London, said in an April 15 e-mail. “The whole affair has brought into sharper focus the credit dynamics of the individual GCC countries.”

Credit risk Qatar’s five-year credit default swaps, contracts for insuring debt, gained seven basis points since March 4 to 62 on Wednesday. That compares with declines of two basis points to 53 for Abu Dhabi and 24 basis points to 170 for Dubai. The three GCC countries withdrew their diplomats from Doha, accusing Qatar of failing to take action against those who threaten the security of the GCC and honour a pledge to refrain from supporting “hostile media.” Qatar’s Foreign Minister Khalid bin Mohamed Al-Attiyah said last month

the country’s foreign policy “isn’t negotiable.” Qatar, which became the richest country in the world per capita through LNG exports, backed the Muslim Brotherhood government of Mohamed Mursi in Egypt after it gained power in a 2012 election and extended US$8 billion in aid. Saudi Arabia and the U.A.E. welcomed Mursi’s overthrow by Egypt’s army a year later and, along with Kuwait, pledged about US$15 billion in support to the new military-backed government. “I don’t think that where we are today is a reflection of a lasting impact,” Yaser Abushaban, executive director for asset management at Dubai-based Emirates Investment Bank PJSC, said in a March 15 phone interview. “We are talking about a couple of basis points here or there. If that reflects increased risk, that’s very insignificant risk.”

Causing inconvenience The yield on Abu Dhabi’s 6.75 percent notes maturing in 2019 fell 10 basis points to 2.13 percent in the period, while that on Dubai’s 7.75 percent debt due 2020 dropped 29 basis points to 3.37 percent. While the IMF projects Qatar’s economy will grow 5.9 percent this year, the fastest in the six-nation GCC, its 34 percent ratio of gross government debt to gross domestic product last year was second to Bahrain. The country’s budget surplus shrank 1.4 percent in this year’s fiscal budget versus last year’s. Saudis and Emiratis could “cause quite a bit of inconvenience if they wanted to” by choking off the flow of fresh produce from the kingdom or goods shipped via Dubai, Salman Shaikh, director of the Brookings Doha Center, said by phone last month. Bloomberg News

Committee and world sporting federations last week criticized the Brazilian government for the slow pace of work


since Rio won hosting rights for the event in 2009. Paes said 57 percent of the infrastructure costs would be paid for with public funds, coming from federal, state and municipal governments, and the rest would be private. The total cost of Rio 2016 has risen to 36.7 billion reais (US$16.38 billion), which does not include more than half of the 52 projects or facilities that will be used exclusively for the games and still require approval. So far, only 24 projects have been budgeted at 5.6 billion reais. Additionally, the organising committee’s budget has risen 27 percent to 7 billion reais. This operating budget was originally set to include up to 1.4 billion reais in public funds but officials changed their minds in

Brazil money-laundering gang dismantled Police in Brazil have named 46 people, including an ex-executive at oil giant Petrobras, as suspects in an alleged US$4.5 billion money laundering and drug operation, officials said Wednesday. Officials are investigating a criminal gang that allegedly engaged in illegal currency trading, illegal diamond trafficking and bribing government officials and other offenses, besides the money laundering and drug allegations. A former refining director at Petrobras, Paulo Roberto Costa, was already arrested on March 21. Of the 46 suspects, 30 are already in preventive custody and two are on the run, media reports said.

Europe’s car sales still weak Europe’s car sales recovery may be taking hold, according to registrations data published yesterday, but a confidential industry survey shows the pickup is failing to halt a price war. Discounts outgrew first-quarter sales, according to the data seen by Reuters, casting doubt on the strength of the recovery and earnings outlook for carmakers in the region. Registrations rose 10.4 percent in March, the Association of European Carmakers said, rounding off an 8.1 percent gain for the first three months, after six straight years of contraction.

Ivory Coast to sell US$500 million of Eurobonds

Brazil unveils budget for Rio Olympics uthorities unveiled an infrastructure budget of 24.1 billion reais (US$10.76 billion) for the Rio 2016 Olympic Games, 25 percent more than planned, as they try to reassure the world they can deliver facilities on time. The budget covers 27 projects in urban development and public transport, including 8 billion reais for a newly added fourth metro line for Rio, Brazil’s congested second largest city, where getting around town is an ordeal. Other initially envisaged projects were excluded, such as the upgrade to Rio’s international airport Galeao, which has been handed to private operators. Rio Mayor Eduardo Paes said the higher budget was due to the inclusion of new projects and inflation, which has blown up costs by 30 percent

Britain’s Co-operative Group made a loss of 2.5 billion pounds ($4.2 billion) in 2013, a year it described as disastrous and the worst in its 150-year history. Co-op, which was hit by a 1.9 billion pound funding gap at its bank, a drugs scandal and an exodus of top executives, said yesterday the results served as a wake-up call to the serious challenges that it faces. Interim Chief Executive Richard Pennycook said in a statement that today’s results demonstrate fundamental failings in management and governance at the group over many years.

response to public outcry over the high cost of stadiums and other projects required by the Olympics and 2014 World Cup, which kicks off in June.

Slow pace The Rio 2016 organising committee estimated in 2009 that the games would cost 28.8 billion reais in total. With just over two years to go, the International Olympic Committee and world sporting federations last week criticized the Brazilian government for the slow pace of work, and some asked about contingency plans should Brazil fail to deliver. Construction work at the Deodoro Olympic Park, where eight events will take place, has yet to start, and the pace of progress at other venues is slow. Reuters

This is the first issue on the international market since a default more than three years ago, Prime Minister Daniel Kablan Duncan said. The world’s biggest cocoa producer will use the funds to spur economic growth that will probably be more than 10 percent this year, Duncan said. The government hired Casablancabased lender Banque Marocaine du Commerce Exterieur as an adviser on the sale. The offering was previously scheduled for as early as this month. Hypo Alpe loss broadens

Hypo Alpe-Adria-Bank International AG Austria’s most costly bank failure, pushed up bad debt charges and write-downs to 1.7 billion euros (US$2.4 billion) last year to account for a shutdown ordered by the European Union. Loan-loss provisions and asset write-downs were more than four times higher than in 2012, widening the bank’s net loss to 1.86 billion euros from a restated 23 million-euro loss.


April 18, 2014

Opinion Business


Rank Mysteries

Leading reports from Asia’s best business newspapers Howard Davies Professor at Sciences Po in Paris, was the first chairman of the United Kingdom’s Financial Services Authority (1997-2003)

THE KOREA HERALD South Korea will invest 15 billion won (US$14.4 million) this year in fostering its Ultra HD industry to secure a competitive edge before the expected sales boom from global sports events, the telecom ministry said Thursday. The Ministry of Science, ICT, and Future Planning said it will inject 5.8 billion won to develop core devices needed in creating and transmitting UHD contents, such as cloud-based editing systems and a High Efficiency Video Coding encoder. It will also allocate 2.2 billion won to install shared UHD equipment and allow content makers easier access to state-of-the-art devices.

TAIPEI TIMES Taiwan Affairs Office (TAO) spokesperson Fan Liqing ( 范麗青) on Wednesday said that there is no precedent for reopening negotiations on signed agreements between countries and that the “authority” of treaties inked by authorized representatives from both sides of the Taiwan Strait must be defended. Fan made the remarks at a routine press conference in China yesterday amid growing calls for the government to renegotiate the controversial cross-strait service trade agreement it signed with Beijing on June 21 last year.

THE STAR Bukit Gelugor MP and veteran DAP leader Karpal Singh was killed when the car he was travelling in collided with a five-tonne lorry near Gua Tempurung on the North South Expressway here early Thursday. The impact of the crash at about 1AM killed the prominent lawyer and his assistant, C Michael, on the spot. Karpal’s son, Ramkarpal, and the car’s driver, C Selvam, were injured. Karpal’s Indonesian domestic helper was also injured and is in critical condition. He was on his way to Penang to attend a court case later in the day.

THE ASAHI SHIMBUN Japanese businesses are helping China in its battle against pollution, hoping that technical cooperation may also help clear the air concerning bilateral relations. Eleven business representatives from the Chinese city of Tianjin visited Japan in March at the invitation of “the cooperation network for abating China’s air pollution,” which was set up in March 2013 by the Japan-China Economic Association. They met with Japanese industry officials in an office building in Tokyo’s Kasumigaseki district.


ARIS – Gibraltar received exciting news last month. The latest Global Financial Centres Index (GFCI), published by the consultancy Z/Yen in London, revealed that the Rock had risen further and faster up the ranks than any other centre – 17 places, from 70th to 53rd position, since the previous report in September 2013. I can imagine the celebrations in Gibraltar Town, where, now that the British naval base has closed and Spain is being difficult at the border, financial services are crucial for employment. And I can also imagine that many in Hamilton, Bermuda, which plummeted almost as far as Gibraltar climbed – 16 places, to 56th – must be crying into their rum punch. Of course, it is also possible that Gibraltar and Bermuda have chosen to ignore the results, or dispute their significance. Either way, there is no doubting the global obsession with league tables nowadays. One can find a ranking for almost every form of human activity. Commercial banks are ranked by assets. Investment banks are ranked on a variety of metrics, as are universities – from academic results to their prowess in environmental management, or their appeal to gay students. In the United Kingdom, you can find a table showing where it is best to live if you wish to win Britain’s National Lottery. (Your chances are almost twice as good in the northeast as in Northern Ireland.) When one looks closely, most of these tables are, as Henry Kissinger famously put it, “content-free.” For one brief shining moment, the Royal Bank of Scotland was global top dog in rankings of commercial banks, and we know how that story ended. Is this true of the GFCI, or does it contain valuable insights into how the global financial

system is evolving? The press headlines accompanying the release of the latest GFCI focused on the change at the top of the league: New York leapfrogged ahead of London, while Hong Kong and Singapore held on in third and fourth place, respectively. Is this a significant switch? Much speculation has centred on the recent damage to London’s reputation stemming from the scandal surrounding banks’ manipulation of the Libor interest rate. Even if some of the machinations were carried out in other cities, there is no escaping the fact that Libor is the London Interbank Offered Rate. Moreover, London is the biggest centre for foreignexchange trading, the new focus of regulatory attention. And, though Bruno Iksil was a Frenchman working for the American bank JPMorgan Chase, he became known universally as the “London Whale.” But GFCI’s detailed results do not bear out that explanation. London’s reputational factors “are firmly above average and have not seen much change over the past five editions.” Indeed, it seems that London’s small decline is attributable to negative scores on general factors such as the “business environment” and “infrastructure.” Overcrowded Underground trains and Heathrow’s congestion are having an impact, though it is hard to understand why New York wins on these measures. Riding the Subway often brings unpleasant surprises, while JFK Airport is hardly a favourite among travellers (and there remains no fast rail link to it). And yet these subtle switches at the top of the table are not the real story. From a ten-year perspective, the big gainers have been Hong Kong and Singapore.

Hong Kong and Singapore have played their cards astutely. The combination of an Asian market with strong Chinese connections and a system of English law and property rights continues to provide a powerful competitive advantage.

It was once fashionable to argue that when China opened up to the world, Hong Kong and Singapore would suffer. Once the Chinese got their act together, these cities’ role in intermediating the region’s finances would be marginalized by Shanghai, Shenzhen, and other new centres. That still may happen one day, but it has not happened yet. Hong Kong and Singapore have played their cards astutely. The combination of an Asian market with strong Chinese connections and a system of English law and property rights continues to provide a powerful competitive advantage. That is especially true in fund management. Chinese companies may increasingly raise capital in Shanghai, but wealthy Chinese

with money to invest like to hold it in financial centres that are perceived as safe and nonpolitical. In Europe, we see a different pattern. Over 15 consecutive surveys, London’s ranking and ratings have remained broadly constant, while Zurich, Geneva, Frankfurt, and Luxembourg have gradually narrowed the gap with it – though that gap remains wide. There is little doubt that Frankfurt has won the contest with Paris to be the Eurozone’s most important financial centre. The Germans were smart to insist on putting the European Central Bank there. Given the ECB’s new function as the Eurozone’s banking supervisor, Frankfurt can consolidate its victory. Every European Union bank will need to bend the knee to its supervisor on the Main River, even if she does happen to be a Frenchwoman, Danièle Nouy. In the United States, Boston, San Francisco, and Washington, DC, continue to consolidate their positions as important centres for asset management and, in the last case, for regulation. The 2010 Dodd-Frank financial-reform legislation has given the Federal Reserve Board a much larger regulatory role than it had before the crisis. But, unless New York’s populist new mayor, Bill de Blasio, tries to run the banks out of town, Western sheriff-style, these cities do not seem likely to steal Wall Street’s crown anytime soon. All of the best award shows include a surprise. This year’s wild card, billed as the financial centre most “likely to become more significant” in the near future, is Casablanca. I have no idea why Casablanca is an up-and-coming centre, and the GFCI’s compilers do not explain. Sometimes, in rankings as in life, a kiss is just a kiss. © Project Syndicate 2014


April 18, 2014

Closing Goldman Sachs profit falls 11 percent

16 percent of China’s soil is polluted

Goldman Sachs Group Inc reported an 11 percent drop in first-quarter profit as client activity remained constrained and fixedincome revenue shrank. The Wall Street bank said yesterday its net income fell to US$1.95 billion, or US$4.02 per share, in the first three months of the year from US$2.19 billion, or US$4.29 per share, in the same period of 2013.

A nationwide investigation has shown that as much as 16 percent of China’s soil contains higher-than-permitted levels of pollution, the environment ministry said yesterday. China is desperate to tackle the impact of rapid industrialisation and urbanisation on its food supplies, with the aim of maintaining self-sufficiency and reducing its dependence on grain imports amid soaring demand.

Macau’s magic GINI benefiting all Rising income fuelled by a robust economy has more evenly distributed the economic fruits among different classes over the past five years, govt claims Tony Lai


he gauge measuring the inequality of income distribution in the territory declined over the past five years with rising income benefiting all households, the government has announced. The Statistics and Census Service revealed yesterday that the Gini coefficient of Macau was 0.35 on a scale of 0 to 1 in 2012/13, compared to 0.38 in 2007/08. The higher the coefficient, the more the income in a place is unevenly distributed. Wealth distribution in Macau is more widespread than in neighbouring jurisdictions, with Hong Kong’s Gini digging in at 0.537 in 2011, and 0.473 for mainland China last year. “Households having monthly incomes under 30,000 patacas (US$3,750) dropped noticeably . . . indicating that income growth was broad-based and beneficial to households in different income groups,” the statistics bureau said. “Household income was more equally distributed,” it noted, adding that households earning less than 30,000 patacas only accounted for 39.3 percent of the 181,074 households in 2012/13, against 58.7 percent five years earlier.

The average monthly income per household here reached 41,432 patacas in 2012/13, rising 34.1 percent in real terms from five years earlier, whereas the median monthly income per household surged by 43.2 percent to 36,857 patacas. “Over the past five years, the expanding economy of Macau and tight labour

market has kept driving up the salary levels of all industries, bringing about robust growth in household income,” the statistics bureau said. Household expenditure in the past five years has grown at a slower pace than income, government figures show. The statistics bureau said that the average monthly expenditure per household rose by 27.1

percent in real terms, removing the effect of inflation, to 29,177 patacas in 2012/13. “High property prices” drove up the household spending on expenses for housing and utility fees like electricity. Such spending accounted for 25.7 percent of the monthly spending in 2012/13, rising 4.7 percentage points from five years earlier.

Official figures show that the average housing price here stood at 81,811 patacas a square metre in 2013, surging 250.9 percent from over 23,300 patacas a square metre in 2008. Yesterday’s data also revealed that over 86 percent - or over 155,700 - of households resided in private housing.

Macau: new Press bill ready by end-June

Angola: Reconciliation Portugal: Easter tourism going into reverse looking good

The draft bill that will regulate the press and broadcasters in Macau is expected to be ready by the end of June. During a press conference yesterday, director of the Government Information Bureau Victor Chan said his office would conclude works on the draft bill in the next couple of months. It will then be sent to the Executive Council for review and appraisal before it lands in the Legislative Assembly for discussion and to be voted on. “We cannot say when this will be because it depends on the Executive Council to submit the proposed bill to the Legislative Assembly,” Mr Chan told reporters. Asked on whether the new bill would state what media can and cannot report, Mr Chan said “it’s not up to the Press Law to regulate what is published and what isn’t.”

The Angolan peace and reconciliation process is heading backwards was the key message at a press conference held by UNITA leader Isaías Samakuva late Wednesday. Isaías Samakuva called the press conference to present his interpretation of the one hour meeting held on Tuesday with President José Eduardo dos Santos at the latter’s request. “Our concern is that this setback is taking on dangerous proportions and that may involve the country getting into instability and that I believe does not represent any exaggeration,” said Samakuva. The UNITA leader, who has headed the main opposition party since 2002, when the Angolan civil war came to an end, said that under his leadership political violence had already taken the lives of over 40 persons with UNITA connections. The meeting between the Angolan President and the opposition leader was the first since 2011.

Hotels in the Algarve have seen a 4 percent to 5 percent surge on last year’s Easter in a rise reflected across much of the country, Elidérico Viegas, President of AHETA, the Algarve Tourism and Hotel Association, told Lusa yesterday. Viegas explained that such was the surge, some entities were already fully booked out for Easter with the representative adding that this was not only due to a pick up in demand from Portuguese vacationers, kicking a six year long run of declines, but also that Easter is significantly later this year. Meanwhile, Lisbon also comes in for some sunny tourism forecasts. According to Pestana Group Director Luigi Valle, “all group units in the region forecast better occupancy rates than last year with the Pousada de Cascais, Cidadela Historic Hotel & Art District up by around 20 percent”.



Macau Business Daily, April 18, 2014  

Macau Business Daily digital version

Macau Business Daily, April 18, 2014  

Macau Business Daily digital version