Macau Business Daily, April 23, 2014

MOP 6.00 Closing editor: Sara Farr

Chief Executive ends the side betting on who will assume responsibility for planning the next decades of the biggest industry in Macau. Chui Sai On stated yesterday, indirectly but loudly, that the right time to start reviewing the renewal of all six gaming concessions and sub-concessions is 2015-16. And the man for the job is him, as no-one is expected to replace him as next CE Page

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Year III

Number 524 Wednesday April 23, 2014

Publisher: Paulo A. Azevedo

The boss dealer

www.macaubusinessdaily.com

Mission Macau

Melco’s helicopter en route to Macau Page 7

After 15 years, the IMF returns to Macau. This time to assess economic conditions and the risks emanating from China and rocketing property prices.

The mission started yesterday and concludes business April 29. Meetings with government, the monetary authority, banks and private companies are on the agenda. Final report out in summer, if the government agrees Page

More land, please Macau wants more land in Hengqin Island – and elsewhere - and has already filed a formal request with Beijing. All in the name of economic diversification

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Pansy Ho increases Shun Tak stake Page 8

Grand Waldo to re-open next year Page 8

HSI - Movers April 22

Name

%Day

China Mengniu Dairy

3.79

China Petroleum & Ch

3.43

State’s big biz shake-up

Want Want China H

1.77

Kunlun Energy Co Ltd

1.42

Belle International

1.06

China Shenhua Ener

-1.58

China Resources Land

-2.98

Lenovo Group Ltd

-3.34

China Resources Ent

-4.16

China Resources Pow

-9.62

Government starts to reform state-controlled companies with a record of negative performance.

Many national companies already restructuring.

Source: Bloomberg

I SSN 2226-8294

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April 23, 2014

Macau

2015-16 is “an appropriate time” for the city to discuss the renewal of the six gaming concessions and sub-concessions Chui Sai On

CE spells out considerations for casino licence renewal Tony Lai

tony.lai@macaubusinessdaily.com

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he current rules governing casino VIP rooms will be reviewed together with the city’s overall gaming policies during the discussion on gaming licence renewals in 2015-16, Chief Executive Fernando Chui Sai On has said.

The administration has also recently set out clearer definitions of what constitutes a casino executive in order to further promote the upward mobility of locals, he said yesterday at the Legislative Assembly in answer to legislators’ enquiries.

Assembly members like Tsui Wai

Kwan are concerned about the scale of future gaming development and how the government can harness the opportunity of gaming licence renewal talks to implement its policies.

Mr Chui reiterated that 2015-16 is “an appropriate time” for the city to discuss the renewal of the six gaming concessions and sub-concessions, which will expire from 2020 to 2022, as well as overall gaming policies.

He gave details yesterday, for the first time, of the major areas of discussion, saying: “We have to review the following:

the scale of gaming development, the management of VIP rooms, the proportion of gaming and non-gaming elements [in resorts], professionalisation and upward mobility of gaming employees, the prevention of problem gambling, and the social responsibility of gaming operators.”

But the Chief Executive did not clarify whether there will be a revamp of the system of gaming promoters operating VIP rooms in casinos.

VIP rooms accounted for 63.7 percent of the city’s gross gaming revenue in

the first quarter of this year, or 65.06 billion patacas (US$8.13 billion), official figures show.

Mr Chui also said yesterday that the Human Resources Office has reached consensus on the definitions of lowto-high level management executives in gaming companies after discussion with the operators.

“This aims to set up a particular ratio for locals in the senior management positions in casinos,” said the Chief Executive, who did not disclose a particular number.

He stressed that imported workers only supplement the local labour force, acknowledging at the same time that the local employed population is not enough to sustain the city’s development at the moment. For instance, he cited that 12.6 percent more new jobs were created in Macau from 2011 to 2013 but the amount of local labour only increased by 3.2 percent in the same period.

Imported labour only accounted for some 27 percent of the number of workers in the six gaming operators, or more than 27,000 employees, by the end of last year, Mr Chui added.

Govt. actively seeking to expand land bank

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he city has requested the central government cede it more plots of land on Hengqin Island to further diversify the territory’s economy, as well as jurisdiction over its surrounding waters, Chief Executive Fernando Chui Sai On said.

New possible cooperation with Jiangmen city in Guangdong province will also help diversification, said Mr Chui yesterday, addressing legislators’ questions in a plenary session at the Legislative Assembly.

Legislator and gaming executive Angela Leong On Kei told Mr Chui yesterday that the pace of economic

diversification and regional cooperation here is slow, as Beijing leaders have suggested before.

Mr Chui responded that the city’s development is constrained by the shortage of human resources and land.

“The current 5 square kilometre zone [reserved for Macau businesses on Hengqin] is definitely not enough as there are still many industries desiring to tap the island,” he said. “So, we have actively filed a formal request to the central government for more land… very beneficial to the economic diversification of Macau and regional cooperation.”

The central government has already reserved a 4.5 square kilometre zone for Macau investors in Hengqin, as well as a land plot covering 0.5 square kilometres for the Guangdong-Macau Traditional Chinese Medicine Technology Industrial Park.

Beijing has also granted 1 square kilometre of land on the island to the city for the new University of Macau campus The Macau government announced earlier this month that it will recommend to Hengqin 33 out of 87 proposals by Macau businessmen to invest in the 4.5 square kilometre zone.

The administration said at the time it will recommend the rest when there are more available land plots on Hengqin.

Still waters run deep Mr Chui also noted that the Guangdong government had recently mentioned the possibility of cooperation on a new place, the province’s Jiangmen city, but he did not elaborate.

The Macau government previously mentioned that they were discussing cooperation with Guangdong, namely regarding land in Nansha and Cuiheng in

T.L.

Guangdong, in addition to Hengqin.

The Chief Executive also said yesterday that the government is exploring other means of increasing the city’s land bank, not only for economic diversification but for housing.

“We have already made a formal request to the central government to let Macau have its own jurisdictional waters,” he said. “The central government has already replied it will start studying the matter.”

But Mr Chui did not confirm yesterday that this means that Macau wants to have another round of land reclamation in addition to the on-going reclamation of five plots of land at the moment.

Macau does not have jurisdiction over its surrounding waters and any land reclamation must first acquire Beijing’s approval.

The government will also quicken the procedures to seize idle and illegally occupied land plots in order to boost the land bank, Mr Chui added yesterday.

With regard to human resources, Mr Chui said that the government will continue to improve the three programmes of cultivating local elites and professionals it launched this year.

T.L.

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April 23, 2014

Macau

IMF mission puts Macau under forensic microscope For the first time since the handover, the International Monetary Fund is in Macau to conduct a check-up on the SAR economy. Risks arising from the growth of property prices and the credit surge in China and Hong Kong are two of the main topics on the agenda. The final report is out in the summer Alex Lee

alex.lee@macaubusinessdaily.com

A

fter fifteen years, the International Monetary Fund (IMF) is back in Macau.

Yesterday, the IMF embarked upon its first mission since the handover to conduct an x-ray of Macau’s economy and take a “second and deeper” look at its recent successes in order to assess the government’s capacity to cope with future crises.

For the next week, until the consultation concludes on April 29, IMF economists and officials will meet with the majority of political and financial agents in Macau. Meetings with the government, the Monetary Authority of Macau, banks, private companies, academics, associations and labour representatives are all pencilled in, Murtaza Syed, the mission’s chief to Macau and resident IMF representative in China told Business Daily.

The goal is to have a broader view of Macau’s economic and financial situation and to evaluate the sustainability of recent and impressive growth based on gaming and tourism. The visit will also serve to refresh IMF data on the territory since the last time the institution, based in Washington, was in Macau in 1998, a year before the handover.

While in Macau, IMF will meet with the government, the monetary authority, banks, private companies and academics

Without remarking on what the IMF expects to find in the next days, the mission’s chief told Business Daily that the recent property price spiral and credit growth in China and Hong Kong are two main areas of interest.

“The credit growth from Macau to China and Hong Kong has been very high lately and it’s important to look at where this money’s going”, Murtaza Syed said in a seminar yesterday in Macau University. “Also, we need to understand why the property prices in the territory are increasing so much’, added the IMF representative.

Success explained Despite being an “incredibly well managed economy” with no public debt, a huge public accounts surplus and impressive growth rates deriving from the gaming and tourism sectors, Macau’s economy is not without its risks, says the chief’s mission. Macau is a very open economy and as a

consequence is quite exposed to two main risks. The first is a drop in tourism as happened in 2008 and 2009 because of the financial crisis, and the second is financial spillover from China and Hong Kong, the two major trading and financial partners of Macau, Syed noted.

That’s why the IMF wants to have a “second look” at Macau’s risks and also assess “what could possibly go wrong in the future and the capacity of the government to cope with a crisis”, Alla Myrvoda, a research officer and member of the mission, told Business Daily.

During the next week, the representatives will address the economic situation, estimate a nearterm outlook, search for potential risks, conduct stress tests on the banks, analyse exchange rate stability, look at fiscal performance and seek out vulnerabilities in the domestic sector and abroad, Ms Myrvoda said.

The results will be presented to

Macau government may refuse to publish report

The last mission: Macau 1998

The kind of mission IMF is currently conducting in Macau - known as Article IV consultation - has a singular aspect: the final report or press release could be blocked by the government and hidden from the public eye. Contrary to typical IMF programmes that involve financial assistance like the Euro Zone bailouts, where the disclosure of information is mandatory, Article IV’s are not. Upon their return to the IMF, mission representatives will submit a report to the IMF’s executive board for discussion. The board’s views will subsequently be summarised and transmitted to the country’s authorities. If the government doesn’t agree with the conclusions, it has the option of blocking it. The IMF says that nine out of ten member countries agree to publish via a press release, which summarises the staff’s and the board’s views, while four out of five countries agree to publication of the staff report itself.

It was a very different Macau the IMF visited 15 years ago.

The previous mission to the territory arrived in the wake of the Asian financial crisis and the actual days of two-digit growth were a faraway dream for residents, government and companies. In 1997, the Macau economy stagnated and in 1998 the recession hit with GDP dropping 3.5%, with deficit in public accounts fixed at 1.5 percent. In late 1998, IMF representatives said the recovery of the economy would depend on China and Hong Kong, and urged the government to increase public spending if the economy didn’t show signs of recovery. Also, IMF advised Macau to keep the low tax regime for business, and asked for more supervision and transparency, while adhering to World Trade Organization principles. The IMF mission visited in late 1998 and the report was published in March 1999. Tourism and casinos were words absent from the main text.

the IMF board of directors in the middle of June and the publication of the final report and assessments will be out “around summer”, Syed told Business Daily.

Murtaza Syed: The mission leader The IMF’s resident representative in China, Murtaza Syed, is the chief of mission to Macau. The Pakistan-born Syed joined the IMF in 2004 and currently works in the Fiscal Affairs Department and the Asia Pacific Department. With a broad experience of Asian economies - including Japan, South Korea, Hong Kong SAR, and Laos - his research interests include trade, investment, inequality, fiscal sustainability, and financial spillovers. He earned a Ph.D. in Economics from Oxford University and before joining the ranks of IMF Murtaza worked as Research Economist at the Institute for Fiscal Studies (IFS) in London, Senior Policy Analyst at the UNDP-sponsored Human Development Center (HDC) in Islamabad, and taught at Oxford.

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April 23, 2014

Macau

Meter ticking for Taipa car park transactions Investors sense growing demand for car parking rentals from non-residents working in the Cotai resorts, fuelling rises in Taipa car park space values of over 30 percent this year, a property agent reveals Tony Lai

tony.lai@macaubusinessdaily.com

Beijing anoints free-trade delta B

eijing has given its blessing for a proposal to create pilot free-trade zones comprising Macau, Hong Kong and parts of Guangdong province.

Hong Kong newspaper South China Morning Post quotes Guangdong province governor Zhu Xiaodan as saying that he hoped the proposed pilot zone would “take” from Shanghai’s free-trade zone.

“I hope we don’t have to wait until the end of the year,” he is quoted as saying.

This new free-trade zone would

focus solely on the Pearl River Delta and is “intended to transform and upgrade the region’s economy from low-end manufacturing to highend industries,” the newspaper says. This is unlike the free-trade zone of Shanghai, which focuses on international trade. As with Shanghai, however, new regulatory approaches would be put in place in this new free-trade zone, which would also include public policy or economic policy programmes, facilitating business transactions, according to the newspaper.

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he capital value of car parking spaces in Taipa this year has been fuelled by the anticipation of the second-round openings of mega resorts in Cotai and development on Hengqin Island, says an agent specialising in car park sales.

Chan Lik Ki, general manager of CarparKing Co Ltd, told Business Daily that the value of parking spaces in Taipa has risen some 10 percent on average so far this year, compared with the end of last year.

“The rise in Taipa is generally more rapid than other parts of Macau,” he said. “In some cases, the price has risen more than 30 percent since the end of last year.”

The transacted price of a car parking space in one particular Taipa housing project, for example, reached about 1.3 million patacas (US$162,500) early this month, against some 900,000 patacas for a space in a similar project in Taipa at the end of last year, according to CarparKing.

“There are two reasons for the growth: one is due to the on-going development of resorts in Cotai, generating demand for parking spaces from imported workers, and another is about investors looking forward to the prospect of nearby Hengqin,” Mr Chan said.

The rental market for parking spaces in Taipa is dominated by imported workers and non-residents, he said.

Investors see opportunities to lease

the parking spaces to foreigners as the number of imported workers is set to rise with the opening of new resorts, he added.

The mega resorts opening in 201517 in Cotai are expected to require about 40,000 workers to man their operations. Figures from the Human Resources Office show that there were 143,752 non-resident workers by February, rising 26.9 percent yearon-year.

Investors are also buying parking spaces in Taipa because of Hengqin’s positive outlook, as the Lotus Bridge border terminal linking Macau to Hengqin is located there, Mr Chan added. But he admitted that the investment yield of car parks now is only about 2 percent, similar to that of homes, following the skyrocketing growth of parking space values last year.

The average transacted price of a parking space last year was 1.06 million patacas in Macau, surging by 60.6 percent from 660,093.7 patacas in 2012, calculations based on official figures show.

Some 751 car parking spaces were transacted in the first two months of this year totalling 1.12 billion patacas, government figures reveal. This means that the average transacted car parking price in the JanuaryFebruary period was about 1.49 million patacas, rising 18.3 percent from about 1.26 million patacas in the same period of last year.

Govt-owned company begins providing basic TV

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government-owned company, Basic Television Channels Ltd, begins relaying basic television services today in Macau.The company is working with antenna companies in relaying to households the 51 television channels that the government regards as

basic. The company has the main responsibility for some aspects of the arrangement. The start of the arrangement follows the expiry of Macau Cable TV Co Ltd’s exclusive concession to provide cable television. Macau Cable TV has a new cable television concession, but it is not exclusive.

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April 23, 2014

Macau

Inflation continues at blistering pace Consumer price index increases 6.4pct in March Sara Farr

sarafarr@macaubusinessdaily.com

M

acau inflation increased 6.36 percent in March over that of the same month last year.

Figures released yesterday by the Statistics and Census Service show that the prices of rentals and the increase in prices of vegetables and dining out are the main reasons driving the rise.

Compared with the month of March four years ago, in 2010, Macau’s inflation rate has increased by 25 percent.

Last month, the index for housing and fuel registered the biggest jump of 12.4 percent, followed by household goods and furnishings with a 7.2 percent increase. The index for food and beverages also climbed 6.5 percent.

Jenny Huang Bi Hong, assistant professor of public finance and business at University of Macau, told Business Daily that for the second quarter of this year the inflation rate “will be pretty similar to that of the first [quarter] around 6 percent.” This is mainly due to the number of holidays that fall in the second quarter of the year, namely Easter, Labour Day and the summer holidays.

“Even in the past quarter we saw that mainland China’s inflation slowed. The sub-index that you saw in food, for instance, has not gone down. [Because] restaurant owners will pass on their

rising rental cost to their food, hence making it a burden on the consumers.”

Economists predict that Macau’s inflation rate will remain around the 6 percent. Patrick Ho Wai Hong, associate professor of economics at University of Macau, said this will be “very much driven by the tourism

CE hints at no more property curbs T

he government is unlikely to introduce new measures to rein in the soaring property market as the curbs cannot cool down soaring prices, Chief Executive Fernando Chui Sai On hinted yesterday.

Mr Chui told the Legislative Assembly that the public has to consider whether more property curbs will be helpful to the real estate market.

Another round of new rein-ins “may only further shrink property transactions, while prices stay put”, he said.

Figures from the Financial Services

Bureau show that the average price of housing last year was 82,776 patacas (US$10,348) a square metre, 37.8 percent more than in 2012 despite the number of transactions dropping by about 4,000 to 11,306 homes. The government introduced several property curbs in October 2012 including tightening the mortgage lending ratio.

The government will work on finding more land plots for building houses to give confidence to young people seeking housing, Mr Chui said, adding that residents “needn’t be too worried”.

demand in the city, especially from the fact that we have some holidays in this quarter, including Easter, Labour Day and the summer vacation.”

The consumer price index (CPI) for March increased 0.38 percent from a month earlier. Part of this increase was due to seasonal winter sales in women’s

clothing plus receding prices of fresh fish and vegetables. The price index for transport also increased 1.14 percent, while that of housing and fuel went up 0.70 percent during this period.

For the 12 months ended March, the average composite CPI increased 5.69 percent, with housing and fuel registering the biggest jump of 10.66 percent, followed by the index for food and beverages with a 6.62 percent increase. The index of communication, however, registered a 2.12 percent decrease.

“The inflation here is very much driven by internal demand, especially from tourism growth. Rising rentals and labour cost are also reflected in this CPI trend,” Ms Huang said.

Overall, the CPI-A increased 6.95 percent, while CPI-B increased 6.24 percent in March, year-on-year. In Macau, CPI-A – as it is known by economists – measures prices for families with average monthly expenditure of between 6,000 patacas (US$751) and 18,999 patacas. Households under CPI-B spend a monthly average of between 19,000 patacas and 34,999 patacas.

For the whole of the first quarter, the average CPI increased 6.12 percent. with Stephanie Lai

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April 23, 2014

Macau

200 more black taxi licences up for tender

Brought to you by

Transport Bureau says no major changes will be introduced to the bidding system, which does not sit well with the president of the Macau Taxi Drivers Mutual Association

HOSPITALITY

Stephanie Lai

sw.lai@macaubusinessdaily.com

Steady pressure The main driver of the Tourist Price Index is, most of the time, the cost of accommodation.

The cost of hotel rooms shows significant seasonal variation but the major trend over the last few years has clearly been rising prices. The accommodation rates in the first quarter of the current year were 85 percent higher than in the corresponding period of 2010. That is the equivalent of an average annual rise of about 17 percent. This kind of cost is the biggest single item in our visitors’ basket of consumption. However, this is the TPI sub-component for which the demand pressure generated by tourist consumption is less likely to seriously impact the domestic price index. Those types of goods and services that impact are more likely to be food and up to a point restaurants as well as widely sought items such as clothing and footwear, medicine and personal goods.

Transportation and communication can also be included in this group but most of these prices are regulated and therefore less sensitive to changes in demand.

The chart suggests that the demand pressure on these types of goods may be increasing.

For most of the period, their prices trailed the overall index. That does not seem to be the dominant pattern anymore. In the last quarters of the timeframe under observation here, the prices of those categories of goods have risen at rates above the average for tourist prices. Even allowing for the fact that within these broad categories the specific basket of goods demanded by tourists and residents does not overlap completely the outcome of this trend may be a growing pressure on domestic inflation.

J.I.D.

20.8%

cost of accommodation increase in the first quarter, on previous year

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he government is planning to launch a public tender for 200 licences for conventional taxis soon with bidding rules unlikely to undergo any major adjustment, Business Daily learnt from the Transport Bureau and a Traffic Affairs Consultative Committee member.

On top of the 1,080 conventional taxis - the black taxis currently running on the streets – the Transport Bureau is launching an open tender for 200 conventional taxi licences “very soon”, a bureau spokesperson told Business Daily.

“We’re in the final stage of preparing for the tender, for which we’ll only fine tune some of the bidding rules,” said the spokesperson, refusing to disclose more details.

“We’ll announce these rules to the public soon.”

The head of the bureau’s vehicle and driver licensing department, Luís Correia Gageiro, told public broadcaster TDM Chinese Radio yesterday that the principle of the highest bidder winning the licence will remain for the upcoming auction, and that the 200 new taxis could enter into service before the end of the year.

The 200 new conventional taxi licences only have a validity period of eight years, and are nonrenewable and cannot be transferred to third parties, rules a dispatch

signed by the Chief Executive gazetted yesterday.

The last auction for conventional taxi licences was in April 2012, for which the base bidding price for each licence was 200,000 patacas (US$25,042). Bidders were also required to pay a deposit of 20,000 patacas.

Some 200 conventional taxi licences were available via open bidding in 2012, at a time when the government also required that newly licensed taxis meet Euro IV emission standards.

Traffic Affairs Consultative

MOP 200,000

the base bidding price for each licence at last tender in April 2012

Committee member Tony Kuok Leong Son, also president of the Macau Taxi Drivers Mutual Association, told Business Daily that he was concerned that no change would be introduced to the bidding rules prioritising cab drivers.

“From what we saw at the last auction, half of the 200 bidders were pure investors, not drivers, and it’s hard for us to compete with them because they were better financed,” said Mr Kuok. “After they won the bid, they just contracted companies to hire several drivers to drive one licensed taxi, where even these drivers had no idea who the car and licence owners were.”

“Under this existing rule, it’s also hard to monitor the service quality of taxi drivers because as complaints occur, it’s hard to trace responsibility by the drivers and car owners,” Mr Kuok complained.

Of the 2,000 and more bids made for the 200 taxi licences offered in April 2012, the highest exceeded 1.1 million patacas.

By 2015 and 2016, around 230 conventional taxi licences, which enjoy a validity period of 8 years or 10 years, will expire, Mr Kuok estimates. The licences are nonrenewable, which means that the Transport Bureau will have to launch another public tender to get more black taxis on the road.

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April 23, 2014

Macau

Melco chopper en route to Macau Melco’s helicopter is arriving in Macau and already has a certificate to operate issued by the local civil aviation authority. Meanwhile, Jet Asia is in advanced talks to sell its eighth G650 jet Alex Lee

alex.lee@macaubusinessdaily.com

T

he Civil Aviation Authority of Macau (AACM) has issued Melco Crown Entertainment Ltd with a certificate to operate the helicopter the gaming company recently bought.

“The helicopter is on the way and the company has the certificate to operate it following the reassembly of some of its parts”, an AACM source confirmed to Business Daily.

This newspaper broke the news of the intended acquisition of an Agusta 109, similar to the helicopters operated by Sky Shuttle Helicopters Ltd. on the trips between Macau and Hong Kong, in May 2013.

The difference between Melco’s helicopter and Sky Shuttle’s is the VIP configuration Laurence Ho’s company decided upon. Instead of 12 passenger seats it will only accommodate six, while its interior has been upgraded to pamper more luxurious tastes.

The helicopter will use the space in the hangar provided by Jet Asia Ltd, the private jet company that belongs to Laurence Ho’s father Stanley Ho Hung Sun, Sociedade de Turismo e Diversões de Macau SA. Jet Asia, as Business Daily has been reporting, has already succeeded in selling off 7 of its 10 jets, five of them to an American company that operates in Mexico and two to

Melco’s helicopter is configured to accommodate 6 VIP’s with all the trimmings

Malaysia. An eighth aircraft - the Gulfstream 650 - is “on the way to being sold as well”, a source with the company told Business Daily.

The last two planes will remain in the service of STDM. The existing hangar, managed by Menzies, should be directly managed by the Macau Airport Company

(CAM) at the end of the year, we were also told.

A new hangar exclusively for private jets should be ready soon according to the programme for tendering for the project.

The airport needs the new hangar to cope with the expansion of general aviation.

One of the main thrusts of the airport’s master plan for expansion is the development of its capability to handle private jets.

The number of take-offs and landings at the airport by private jets has grown steadily since 2005, according to data provided by the Civil Aviation Authority.

Cosmopolitan Packer does Las Vegas Australia, Macau, Japan, Philippines, Sri Lanka - and now Las Vegas. James Packer slaps his money down on multiple bet gaming investments

US$1.5b to US$2b Estimated selling price of The Cosmopolitan in Las Vegas

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elco Crown Entertainment’s Australian partner, James Packer, is placing his chips on several tables at the same time.

While his business partner Lawrence Ho tries to reinforce Crown’s position at home – while in Macau work on Studio City is going full steam – new gaming bets are on. During a recent visit to Japan, James Packer reinforced his commitment to invest

there, whilst the Australian billionaire is simultaneously eyeing a US$2 billion casino complex in Las Vegas.

Crown Resorts Ltd will lodge an expression of interest for threeyear old casino and hotel complex The Cosmopolitan of Las Vegas, currently owned by Deutsche Bank, the Australian Financial Review said yesterday, citing unnamed industry sources. The sale is expected to fetch

US$1.5 billion to US$2 billion, AFR added.

Crown is also bidding for a US$1 billion-plus casino project in Brisbane after winning the right to operate a VIP gaming facility at its luxury hotel project in Sydney.

The company is building new casinos in Sri Lanka and the Philippines, and it has expressed an interest in building a US$5 billion-plus casino

James Packer

and resort in Japan.

The deal would be another attempt

by Crown to break into the U.S. market, having got burned by its two previous investments there made just before the global financial crisis.

Crown bought Cannery Casino Resorts for US$1.75 billion in 2007 and invested US$250 million in a 19.6 per cent stake in the Fontainebleau Resort.

The Cosmopolitan opened in December 2010 but posted net losses of US$298.3 million for its first three years of operation, the paper said.

Deutsche Bank, which assumed ownership of the resort when it foreclosed on the project’s previous owner, has been preparing to sell it since late 2012.

A.L. with Reuters

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April 23, 2014

Macau Crimea hopeful about gaming zone Crimean First Deputy Premier Rustam Temirgaliyev thinks a gaming zone in Crimea may prove to be a serious rival to Macau, Las Vegas and Monaco, the ITAR-TASS news agency reports. The news agency quotes Mr Temirgaliyev as saying: “Our task is to create a tourist cluster, which will operate year-round, using a gambling zone as an advantage. We have been considering construction of a gambling township on Crimea’s southern coast and have been considering several more sites.” He said plans would be drawn up by the middle of May.

Pansy Ho fastens hold on Shun Tak

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ansy Ho Chiu King, managing director of shipping and property conglomerate Shun Tak Holdings Ltd, has increased shares in her company under her name as well as a wholly-owned company of hers, shareholding disclosure data from Hong Kong Stock Exchange reveals.

The data shows that on April 14, Ms Ho held an additional 50 million shares in Shun Tak at an average price of HK$4.0 (US$0.52) per share, which saw her share ownership grow from the previous 20.59 percent to 22.05 percent.

On the same date, a company called Classic Time Developments Ltd, wholly-owned by Ms Ho, also acquired an additional 50 million shares at an average price of HK$4.0 per share in Shun Tak, taking its share ownership in the conglomerate to 5.93 percent. The listing rule stipulates mandatory disclosure when a shareholder first expresses interest in 5 percent or more of the shares in a listed corporation.

The conglomerate is currently seeing several property development projects to be completed in China and Hong Kong within this year, including the Dong Zhi Men Commercial Land Use Project in Beijing and the reconstruction of luxury mansions in Chung Hom Kok in Hong Kong.

Shun Tak also noted in its annual results for 2013 that it has applied for a land grant to the Macau government

vis-a-vis its plan to launch a hotel development project in Cotai.

The conglomerate also expects the foundation works for an integrated property project comprising office, hotel, commercial and serviced apartments in Hengqin to start in the

Grand Waldo to re-open early next year: report G aming operator Galaxy Entertainment Group Ltd will re-open the Grand Waldo complex next to its flagship premise Galaxy Macau resort in Cotai early next year following extensive refurbishment.

Its vice-chairman Francis Lui Yiu Tung told Chinese-language newspaper Macao Daily News in an interview that the operator will announce details of the Grand Waldo revamp in due course.

The Grand Waldo complex has been suspended for operation since last year after Galaxy Entertainment acquired it for HK$3.25 billion (US$419 million).

Mr Lui, quoted the newspaper, said that the Grand Waldo project will be family-oriented in a complementary positioning to its nearby flagship resort. Regular performances are to be held in the Grand Waldo, like singing and magic acts, he added; he hopes that in the long run the complex can host its own creative shows.

The report did not mention, however, whether the complex will retain any gaming tables or slot machines. According to a note released by Union Gaming Research Macau last year, the Grand Waldo had 38 gaming tables.

Mr Lui added that the company’s request to build a pedestrian bridge connecting Grand Waldo and Galaxy Macau is still pending government approval, according to the newspaper.

Once the second phase of Galaxy Macau resort is completed next year, Mr Lui believes it will not be difficult for it to host events and exhibitions accommodating more than 1,000 people. The first and second phases are expected to feature convention facilities for 3,000 people, 3,600 hotel rooms and 200 retail stores.

Visitors currently stay in Galaxy Macau for over two days and Mr Lui hopes that the length of stay can be extended to three days in the future, the newspaper said.

T.L.

second half of this year, the company revealed in its annual results. But the company did not confirm to Business Daily whether the European citizenM hotel brand will be introduced to the Hengqin project by the time the story went to press.

Artyzen Hospitality Group Ltd, the hotel management subsidiary of Shun Tak, announced in October last year its joint venture with citizenM hotels and its plans to introduce the boutique hotel brand to Asia.

S.L.

9

April 23, 2014

Greater China

Yue Yuen offers to call off strike Wal-Mart Stores Inc. and International Business Machines Corp. faced strikes earlier this year in China

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he world’s largest branded shoemaker, offered to raise worker salaries and increase benefits in a fresh bid to end a strike that disrupted output for a sixth day.

The Hong Kong-listed company, a supplier to companies including Adidas AG and Nike Inc. is willing to raise wages in its factories in southern China by 230 yuan (US$37) month starting May 1, spokesman George Liu said in a phone interview yesterday. It also agreed to bring forward to next month a social-security benefit plan originally scheduled for 2015, Liu said.

Workers have disrupted production in Yue Yuen’s Dongguan factory complex, which employs more than 40,000 people, since April 14 in a dispute over pay, benefits and the right to pick their own union. They were seen coming to the plant, clocking in and then leaving yesterday.

Some employees, who asked not to be identified because they or their family members could lose their jobs, said in interviews that they were still on strike.

Dongguan city hosts some important companies as Yue Yuen, the largest shoemaker in the world

The labour dispute adds to number of Chinese manufacturers faced with disruptions as wages rise and workers demand better compensation. Rising costs have also prompted some employers to move production abroad.

Employees interviewed at the factory yesterday and on April 19 said the company had failed to agree on demands for more pay, a change in contract status and reimbursement for unpaid benefits contributions. Some demanded no punishment for

strikers and the right to elect their own union leaders.

More demands At least 80 percent of the workers won’t take the offer, said Xiang Feng, a worker in the factory’s

Budget law may be revised for transparency Local officials have used local government financing vehicles to finance urban infrastructure and affordable housing

Shenzhen: massive development will benefit from a possible l changes in the law

C

hina’s legislature is considering revisions to budget law that may clear the way for local governments to raise

funds directly, rather than borrowing through specialpurpose vehicles, state media said, as Beijing tries to clean up opaque municipal debt.

China’s economic reformers want to bring greater transparency to the roughly US$3 trillion in local government debt already outstanding.

Local governments have borrowed heavily over the years in the service of investment-driven growth, but rising bad loans and bond defaults have rattled confidence, with some investors forecasting that the world’s second-largest economy may be edging into a full-blown debt crisis.

The current budget law, which took effect in 1995, forbids governments from taking out bank loans or directly issuing bonds. But localities have skirted this ban by creating opaque special purpose vehicles that borrow on their behalf.

Local officials have used local government financing vehicles (LGFVs) to finance urban infrastructure and affordable housing, but they have also been used for real estate speculation and to prop up pet firms in sunset industries, a practice economists warn could create systemic risk.

Zhu Xiaoping, former director of the legislature’s

finance and economics drafting committee, who was involved in earlier drafts of the budget law revision, was quoted by the official Shanghai Securities News saying that the original prohibition of local government bond issuance had become obsolete since the ban was written into law some two decades ago.

But they have also warned that allowing opaquely managed local governments to tap bond markets directly would do little to help the situation in the absence of other reforms, and the government has vacillated on the issue, alternately considering revisions to the budget law then rejecting them.

State media reported that the most recent proposed amendments submitted to a regular meeting of the National People’s Congress Standing Committee on Monday would establish quotas for issuance and add transparency requirements regarding revenue streams, as well as specifying punishments for officials found responsible for illegal bond issues.

Reuters

finance department. The company’s plan to raise monthly contributions for social security would make it compulsory for employees to boost their own share of payments, she said.

“Workers may end up with a take-home salary almost unchanged or maybe even lower than before,” Xiang said.

The strikers expanded demands after an initial dispute over contributions to government-mandated social security and housing benefits for workers. The local government is fully aware and supportive of Yue Yuen’s proposed plan, Liu said.

Monitoring group China Labour Bulletin said on its website strikers at the Dongguan facility numbered at least 10,000, while Yue Yuen said April 16 that more than 1,000 were striking.

Wal-Mart Stores Inc. and International Business Machines Corp. faced strikes earlier this year in China by workers demanding better compensation.

Riot police China’s wages are set to increase by 10 percent or more in 2014, driving more low-cost manufacturers out of the country and boosting consumption, according to analysts at firms including Bank of America Corp.

10,000 workers joined the strike

Nike has produced more shoes in Vietnam than in China since 2010. Adidas said in 2012 it would close the last factory it owned in China.

Police with riot gear and dogs were present outside Yue Yuen’s 1.4 millionsquare-meter (15 million square-foot) Dongguan complex yesterday. Police took dozens of workers away last week, the official Xinhua News Agency reported April 17, without saying why the workers were taken. No one was injured and there were no clashes, Xinhua reported.

Police have told workers not to congregate around the factory, said three workers who asked not be identified because they or their family members could lose their jobs.

Taiwan-based Pou Chen Group, the shoemaker’s parent company, is in discussions with the local government to resolve the striking workers’ concerns and an investigation will be conducted as soon as the strike ends, Adidas China said in an e-mailed statement April 18.

Bloomberg News

10

April 23, 2014

Greater China

State firms start reforming China’s 113 central government-controlled conglomerates raised their debt-to-equity ratio 40 percentage points from 2008 to 2013

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ar from the spotlight, in secretive high-level meetings and company boardrooms, Beijing is drawing up one of the country’s thorniest reforms: an overhaul of China’s hugely inefficient state-owned industry.

It shapes up as an eclectic mix of pilot projects and initiatives rather than a single blueprint, which makes it harder to judge their progress than, for example, regulation-driven financial liberalisation.

Yet taken together they probably mark the beginning of the biggest revamp of China’s state sector since late 1990s, when Beijing set out to shore up the nation’s industry ahead of joining the World Trade Organization.

In recent weeks, some of China’s top conglomerates have announced spin-offs and restructuring plans, local authorities have begun experimenting with new management structures, and political sources say a group focused on state enterprises plays a prominent role among six teams that form President Xi Jinping’s economic brain trust.

Last week, CITIC Group Corp, China’s flagship investment company, detailed plans to inject its main operating business into the firm’s Hong Kong-listed subsidiary CITIC Pacific Ltd in a US$36.5 billion deal that should improve the management and outside scrutiny of the conglomerate.

During the last reform push, the government sold off or closed thousands of firms, laying off 30 million workers and cutting the number of state firms to around 110,000 from 260,000. That boosted efficiency, opened room for private businesses and cemented China’s position as the world’s factory floor.

This time, however, there is no one-size-fits-all solution.

total state enterprise debt to about half of the country’s GDP.

Scaling back

Citic Tower in Hong Kong. Citic Group has already started structural changes

“The situation is now different,” Li Yining, a Peking University economist and a leading advocate of privatisation, told reporters last month. He said resistance from interest groups and institutional inertia were the hardest nuts to crack.

There is no question that it is time for another overhaul. In the five years since the global financial crisis, state firms have grown bigger and more

dominant but also more indebted and plagued by overcapacity.

China’s 113 central governmentcontrolled conglomerates alone have borrowed 18 trillion yuan (US$2.89 trillion) between 2008 and 2013, raising their debt-to-equity ratio 40 percentage points to 192 percent.

That is on top of 32 trillion yuan borrowed by 110,000 firms owned by local governments, which raised

US lobby against China investment Concerns over market access and slower growth are greater this year than they were in the past

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ultinational firms are planning to invest less in China because of market access barriers and slowing growth in the world’s second-largest economy, a U.S. business lobby said yesterday.

China’s economy expanded 7.4 percent year-on-year in the JanuaryMarch quarter, its slowest pace in 18 months.

Concerns over market access and slower growth are greater this

AmCham China website contains exhaustive details about country investment opportunities

year than they were in the past, the American Chamber of Commerce in China said in it annual report on the business climate in China.

“We refer to market access barriers as one of the primary reasons for lowered investment,” Chamber Chairman Greg Gilligan told reporters at a briefing on the report.

“With slower growth, our member companies do not reflect less need for investment, but perhaps less need for investment based on the old economic model that was more reliant on exports and infrastructure spending,” Gilligan said.

At a plenum meeting of the Communist Party last November, China announced ambitious reforms that signalled the shift of China’s economy from infrastructure- and export-fuelled growth towards a slower, more balanced and sustained expansion.

The annual report, which the Chamber uses to lobby both the Chinese and U.S. governments,

“The financial leverage at SOEs is too high,” said Steven Sun, head of China equity strategy at HSBC Global Research.

Sun calculates China’s state-owned firms have spent all the cash flow generated from business operations in the past five years on capacity expansion, double the ratio for nonfinancial S&P 500 companies.

“They need to scale back, and one of the best ways to do that is selling stakes to strategic investors and private capital,” said Sun. Spearheading the government’s restructuring efforts is one of six teams named by Xi Jinping as part of his comprehensive reform office.

The team has already held several meetings, people familiar with its activities say.

Membership of the group hasn’t been made public, but analysts say that vice premier Zhang Gaoli may be in charge.

“This economic reform team is most important, no matter who is leading the team,” said Zhang Chunxiao, an adviser to a state body that oversees the top conglomerates.

Provinces and major cities are already running trials aiming to bring more non-government capital to the firms they control and embracing new management structures and incentives.

The provinces of Guangdong, Anhui, Hunan, Guizhou and Shaanxi along with the municipalities of Shanghai, Chongqing and Tianjin and the city of Zhuhai have all announced privatisation plans that are likely to vary depending on firms’ role and market position.

Bloomberg News

placed industrial policies that support Chinese state-owned enterprises atop the list of complaints.

“State-owned enterprises have increased their control over certain sectors of the economy in recent years, and government support for SOEs was overwhelmingly citied by AmCham China member companies as the most negative industrial policy, being chosen more frequently than all the other options combined,” the Chamber said in the report.

The United States has a massive trade deficit with China, which maintains a tight grip on state-owned businesses.

The report also said that 40 percent of the lobby’s member firms felt they were targeted by Chinese media, increasing perceptions that foreign investment is becoming less welcome.

Other concerns included fear of retribution if companies defend their interests through the Chinese legal system, and the report noted moderate or low progress on a host of perennial issues, from government procurement to intellectual property rights protection.

Despite the deep-seeded worries over market access, the Chamber was optimistic about renewed negotiations on a U.S.-China bilateral investment treaty.

Reuters

11

April 23, 2014

Greater China

Tesla outlines China strategy

Land registration system by 2016

The Model S, when equipped with an 85 kilowatt-hour battery, will be priced from US$118,000

China plans to establish the system and make it operational within two years, the country’s Ministry of Land and Resources said, part of an effort by Beijing to make the real estate market more transparent. Chinese regulators have been struggling to get a grip on real estate speculation, in particular by corrupt officials and companies under their control that can drive up prices in the housing market. If those bets turn sour, as they have begun to do in thirdand fourth-tier cities, economists fear the taxpayer will ultimately be on the hook for the bad debts incurred.

T

esla Motors Inc. Chief Executive Officer Elon Musk, who’s preparing to begin deliveries of the Model S electric vehicle in China, said he expects to be making cars in the country in the next three to four years.

The company is also building a “big” network of battery- charging stations in China, including superchargers in Beijing and Shanghai, the billionaire CEO said at a packed Geekpark Conference in the nation’s capital today. Musk is scheduled to host an event tomorrow to mark the beginning of Model S deliveries in the country.

“At some point in the next three or four years we’ll be establishing local manufacturing in China,” Musk said. “China is very important to the future of Tesla. We’re going to make a big investment in China in terms of charging infrastructure.”

Local production in the world’s biggest auto market would allow Tesla to sell cars at cheaper prices by avoiding China’s 25 percent import tariff. While entering the country presents an opportunity for Tesla to sell as many vehicles there as in the U.S. by as soon as next year, Musk will attempt to accomplish what the Chinese government has struggled to do: get people to buy electric cars.

“I think they can sell quite a few here in the market,” said Finbarr O’Neill, president of J.D. Power & Associates. “There’s a lot of talk about Tesla but, you know, their numbers are not huge. Mr. Musk has been successful in many fields. I wish him luck, but there’s a limit to every market.”

Surging shares The Model S, when equipped with an 85 kilowatt-hour battery, will be priced from 734,000 yuan (US$118,000) in China -compared

March jobless rate up in Taiwan Tesla Model S in the charging process

with about US$71,000 in the U.S. before federal tax credits- as shipping charges, value-added taxes and import duties increase the price tag.

Tesla has said it wants the vehicle to qualify for China’s electric-car subsidies to help offset extra costs associated with selling in the country.

Tesla rose 3.2 percent to US$204.38 at the close in New York.

Shares in the Palo Alto, Californiabased company, after jumping more than fourfold in 2013, have risen 36 percent this year, outpacing a 1.3 percent increase in the Standard & Poor’s 500 Index.

The company is starting deliveries as the world’s biggest carmakers gather in Beijing to display their latest models at the annual China auto show that opens to the public this week. Tesla didn’t participate in yesterday’s media day at the show.

Tesla has been taking orders since August and opened an 800 m2 store in a Beijing shopping mall late last year to showcase its vehicles.

Competing carmakers are watching Tesla’s entry into the country closely.

China lags behind its target of 5 million alternative energy-powered vehicles by 2020 as a lack of charging stations and high costs deter buyers, even as air pollution worsens and chokes its inhabitants.

Beijing lottery Beijing’s license-plate lotteries underscore the extent of the challenges automakers have had luring electric-car buyers in China. While the city received more than 90 bids for each available permit for conventional gasoline autos in a February drawing, there were only 1,428 applicants for 1,666 new-energy vehicle plates offered, the municipal government said.

Tesla moved ahead with its entry into China after losing its general manager for operations there last month. Kingston Chang, who joined Tesla from Volkswagen AG’s Bentley about a year earlier, left for personal reasons, Sina.com reported.

Tesla Vice President Veronica Wu confirmed his departure.

Bloomberg News

Wang Yi in cooperation talks with Venezuela Beijing is an important source of investment capital for Venezuela

C

hinese Foreign Minister Wang Yi, on a tour of Latin America, met his Venezuelan counterpart Elias Jaua Monday to discuss boosting cooperation in a range of areas including energy.

The diplomats also talked about enhancing collaboration on industrial development, as well as education, housing and cultural matters, the Venezuelan foreign ministry said.

Beijing is an important source of investment capital for Venezuela, which sits atop the world’s largest proven crude oil reserves.

In September, China pledged to invest more than US$20 billion in Venezuelan oil and social cooperation when President Nicolás Maduro paid his first visit to Beijing.

President Nicolás Maduro will meet Wang Yi this week

China and Venezuela had trade worth more than US$20 billion in 2012.

Wang, who was due to meet later with Maduro, an elected socialist, voiced support for political dialogue aimed at ending more than two months of opposition protests against widespread shortages, hyperinflation and the repression of demonstrators.

“We trust in the ability and intelligence of the Venezuelan people to settle independently and on their own, the current problems,”

Wang said, describing the countries as “friends ... who understand and support 21st century socialism.”

At least 41 people have been killed since a wave of demonstrations against Maduro’s government broke out in early February.

Maduro, the hand-picked successor to the late leftist icon Hugo Chavez, was narrowly elected to office in a controversial election one year ago.

A former bus driver and union leader and the self-proclaimed political “son” of Chavez, Maduro was sworn in on April 19, 2013, pledging to carry on his mentor’s socialist legacy.

The top Chinese diplomat arrived in Caracas from his first stop in the region, Cuba.

China is Cuba’s number two economic partner after Venezuela and is a critical source of financing for the Americas’ only Communist-run nation, which is cash-strapped and cannot get financing from most lenders.

After his Venezuelan visit, Wang was to head to Argentina and Brazil, the latter being South America’s industrial, farm and financial giant.

AFP

Taiwan’s jobless rate for March, released by the Directorate General of Budget, Accounting and Statistics yesterday. March’s unemployment rate was 4.06 compare to 4.05 in February. The number of unemployed people in March is 467,000 being the unemployed 11.047 million.

PBOC to drain 100 billion yuan China’s central bank will drain 100 billion yuan (US$16.06 billion) from the money markets through 28-day forward bond repurchase agreements yesterday, traders said. Maturing repos will inject a net 183 billion yuan into the banking system this week.

The People’s Bank of China (PBOC) conducted a net drain of 41 billion yuan from the banking system last week.

Taiwan to push on nuclear plant The nation’s premier has rejected opposition demands to halt construction of a controversial atomic power plant, sparking threats of street protests from anti-nuclear campaigners. Plans for the island’s fourth nuclear power plant have come under the spotlight in the wake of the 2011 Fukushima disaster in Japan, with the public sceptical about the safety of such facilities in earthquakeprone regions. Premier Jiang Yi-huah, effectively Taiwan’s No.2 politician after President Ma Ying-jeou, said in a briefing late on Monday that the administration would not halt construction of the plant or change rules to make a referendum on the issue more likely.

Shandong Airlines orders airplanes

The company said it has agreed to buy 50 737 passenger airplanes worth US$4.6 billion from US manufacturer Boeing. Shandong “signed an agreement with Boeing on April 21 to purchase 50 Boeing 737 planes”, it said in a statement dated on Monday.

The planes include 16 737-800s and 34 737MAX models.

12

April 23, 2014

Asia

Japan’s public pension fund to be more risky The fund’s panel shrinks to eight members from 10

Asset allocation The fund, which was set up in 2001, conducted the biggest shake-up of its investment strategy last June when it revised its allocation targets to raise the core weighting for Japanese stocks and lower the weighting for domestic bonds in a bid to achieve higher returns.

GPIF now targets 12 percent of its investments in Japanese stocks, 60 percent in domestic bonds, 11 percent in foreign bonds, 12 percent in foreign stocks and 5 percent in short-term assets.

In February, GPIF agreed with Canada’s Ontario Municipal Employees Retirement System and the Development Bank of Japan to invest in infrastructure projects through an investment trust fund.

GPIF recently began benchmarking some passive investments to the new JPX 400 index, which focuses on return on equity and corporate governance. The fund also uses more active investment strategies, in line with the Ito panel’s recommendations.

GPIF has said it plans to expand its investment in foreign bonds to emerging markets bonds, foreign high-yield bonds and foreign inflation-linked bonds.

T

he country’s overhauled the world’s biggest public pension fund yesterday, appointing new committee members, in a push toward Prime Minister Shinzo Abe’s goal of a more aggressive investment strategy.

The government announced a reshuffle of the Investment Committee of the US$1.26 trillion Government Pension Investment Fund (GPIF), in line with Abe’s drive to have the fund make riskier investments and rely less on low-yielding government bonds.

Global financial markets are keenly watching GPIF’s investment strategy as the fund, bigger than Mexico’s economy, is a huge investor and a bellwether for other Japanese institutional investors.

The new committee will play a leading role when GPIF sets its new investment allocation targets over the coming months. Abe has promised GPIF reform as an element of his growth strategy, the “third arrow” in his policy, following aggressive monetary and fiscal stimulus.

Health Minister Norihisa Tamura, who appoints the GPIF Investment Committee members, shrank the panel to eight members from 10 as part of the overhaul. Two members retained their seats and one former member was brought back on.

Tamura said yesterday he hopes that new investment advisers will use their expertise to raise investment returns, while controlling risks and taking into account economic development in setting up new investment targets.

“The interests of pension beneficiaries come first in pension fund management,” Tamura told a news conference after the regular cabinet meeting.

The panel retains a balance of academics and economists, with

The advisory panel was led by Tokyo University Professor Takatoshi Ito, who has been outspoken in calling for GPIF to undertake a more aggressive investment strategy.

Reuters

Japan’s Prime Minister Shinzo Abe pushing pension funds onto shakier ground

one representative each from the main trade union federation - whose pensions are at stake - and the biggest business lobby.

But in a sign of Abe’s more aggressive strategy, three of the now eight members sat on the advisory panel that spearheaded a change in the fund’s strategy last year to achieve higher investment returns.

They are Sadayuki Horie, senior researcher at Nomura Research Institute; Isao Sugaya of the JTUC Research

Institute for Advancement of Living Standards, a think tank of Japan’s top labour federation; and Yasuhiro Yonezawa, a professor of Waseda University’s graduate school of finance.

Yonezawa, an expert on pension matters, headed the GPIF Investment Committee from 2008-2010 and sits on several advisory panels of the Health Ministry’s Pension Fund Bureau.

Tamura declined to comment on who will head GPIF’s investment committee.

KEY POINTS New panel retains balance of academics and economists Asset size of GPIF larger than economy of Mexico Members to play key role in setting new allocation targets

Aussie wage growth affects bonds approach Wage costs rose at an annual 2.6 percent pace in the fourth quarter

B

ond investors are betting slowing wage growth and a stronger currency in Australia will curb inflation that economists forecast has exceeded the central bank’s target.

The consumer price index probably rose 3.2 percent in the first quarter from year earlier, the first break of the RBA’s target range of 2 percent to 3 percent since 2011, according to a Bloomberg News survey of 23 economists before a government report tomorrow. The difference between yields on 10-year

notes and similar-maturity inflationlinked bonds, a measure of expected CPI over the life of the securities, is 2.50 percentage points, less than 2.61 points in January.

Mizuho Asset Management Co. and Tyndall Investment Management Ltd. say the smallest wage gains on record will cool the highest inflation rate among major developed economies.

For Mizuho, the Australian dollar’s 4.9 percent climb this year is another damper on the cost of living. In one sign prices are in check, a McDonald’s Corp. Big Mac costs US$4.47 in

Australia, headed for a third yearly decline from US$4.94 at the end of 2011, according to the Economist Big Mac Australia index.

“Inflation is not a problem yet,” Yusuke Ito, a senior fund manager in Tokyo at Mizuho, which has the equivalent of US$39.2 billion in assets, said in an April 16 phone interview. “Wage growth is very important. It’s still declining. If the currency strengthens, imported prices for goods will be reduced.”

Mizuho has preferred bonds due in 10 years and longer this year, he

said, favouring those securities that will benefit most from low inflation.

Yields on government 10-year notes dropped to 3.94 percent April 17, a level unseen since February 4.

Wage costs rose at an annual 2.6 percent pace in the fourth quarter, the smallest gain in government data that started in 1998. Alcoa Inc., Toyota Motor Corp., Ford Motor Co., General Motors Co., Qantas Airways Ltd., Philip Morris International Inc. and Boeing Co. all plan to reduce or end operations in the nation.

Bloomberg New

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13

April 23, 2014

Asia

More benefits for housemaids in Vietnam Current average monthly salary for a housemaid ranges from US$150-US$200 ADB urges development disaster risk instruments The Asian Development Bank (ADB) yesterday urged countries in Asia to develop disaster risk financing instruments to insulate their economies from the ill effects of natural calamities.

In a report, the Manila-based lender warned that the cost of natural disasters in Asia, estimated at US$53 billion annually, could wipe out economic gains in many countries in the region.

“Over the past four decades, direct physical losses from disasters in the region significantly outpaced growth in gross domestic product,” ADB said.

Despite the natural disasters in the region, ADB said only 7.6 percent were insured in Asia last year.

New Zealand to raise rates An outperforming economy is expected to prompt New Zealand’s central bank to raise interest rates to a three-year high this week, but a strong currency and early signs of cooling inflation pressures may slow the pace of further tightening. All 17 economists polled by Reuters expect the Reserve Bank of New Zealand will lift its official lending rate by 25 basis points to 3.0 percent at its Official Cash Rate review on Thursday as it seeks to contain inflation. Markets have priced in a 97 percent chance of a rate rise.

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ousemaids in Vietnam will get additional benefits when a decree recently signed by Vietnamese Prime Minister Nguyen Tan Dung takes effect April 25.

Under the decree, employers are required to sign a labour contract with their household helps. The housemaids are also entitled to 12 days holiday per year, a guaranteed eight hours rest a day, and at least four days off each month.

More significantly, employers are required to grant social security and insurance benefits to their housemaids.

That decree has made the work of a domestic or household help among those protected under Vietnamese Labour Law. The work of domestic helpers was not recognized as a job in its true sense.

According to a survey conducted by the International Labour Organization (ILO), up to 98.7 percent of housemaids in big cities in Vietnam are women, one-third of them unmarried or divorcees.

Because of Vietnam’s economic growth in recent years, there is now an increasing demand for housemaids.

However, the government found out that majority of the domestic helpers have only “verbal” contract (accounting for 91.5 percent) with their employers.

As a result, only 2 percent of housemaids in Vietnam has health insurance and 0.83 percent with social insurance, paid by their employers, according to statistics from the Vietnam Research Centre for Gender, Family and Community Development.

Results of a survey conducted in 2011 by the Vietnamese Ministry of Labour, Invalids and Social Affairs (MoLISA) and ILO show that about 7.1 percent of housemaids are under 18 years old.

In big cities like Hanoi and Ho Chi Minh (HCM) City, about 17.3 percent of housemaids started working when they were less than 18 years old.

Vietnam’s Labour Code permits children from 15 years old to work

Sri Lanka keeps rates Central bank kept policy rates steady at multiyear lows yesterday, as expected, and said it hopes for a rebound in privatesector credit growth from the second quarter after it slowed to 4.4 percent yearon-year in February from 5.2 percent a month earlier. “The Sri Lanka economy is poised for stronger performance with the recovery observed in the external sector, sustained momentum in construction and manufacturing sectors and with monetary aggregates performing as expected, and inflation remaining low and stable,” the central bank said in a statement.

to support their family on condition that the job is suited to their age and physical health. However, increasing demand on housemaids in recent years led to the hiring of under-aged girls as housemaids.

Around 98.4 percent of housemaids are untrained for professional skills, 72 percent are hired through recommendations of employers’ friends, and 26 percent through services centres.

In Vietnam, employers are required to pay a bigger portion of a medical insurance and social security for their workers if there is a signed labour contract.

“I most appreciate the regulation on insurance, as it means that I can now go for medical check-up using my health insurance card,” 50-yearold Nguyen Thi Dung told Xinhua.

Dung has worked as a care-giver for a family in HCM City for almost five years now, taking care of her employer’s 80-year-old mother. She said since she is growing older she is worried about her future after giving up the job without any social security and health insurance.

According to the Ministry of Justice, once the decree takes effect, domestic employers must be responsible for paying the compulsory social security and health insurance benefits of their housemaids along with the share of the housemaids.

In the labour contract, the monthly salary of a housemaid should be specified and cannot be lower than the government’s regulated minimum wages applied in Vietnam. These could run from 1.9 million VND to 2.7 million VND (US$90.5- US$128.5) per month.

Actually, the current average monthly salary for a housemaid ranges from 3-4 million VND (roughly US$150-200), while the average income of a rural resident is 1.4 million VND, and that of a new university-level graduate around 2 million VND (US$100). In the peak time, like on traditional lunar New Year holidays, many needy families have to pay up to 5 million VND per month for a housemaid.

Xinhua

Fuel consumption confirms India’s low times India shipped in about 3.81 million barrels per day S.Korea Q1 GDP softer The median estimates the economy to have expanded a seasonally adjusted 0.8 percent in the JanuaryMarch quarter over the previous three months, just below a 0.9 percent rise for the final quarter of 2013. It would mark the slowest quarterly growth for Asia’s fourth-largest economy since a 0.6 percent gain in the first quarter of last year, but much higher than the average of 0.5 percent growth experienced in 2012 before the recovery took root. Recent data suggest the recovery is becoming more sure footed.

L

ocal fuel sales increased at their slowest pace in more than a decade in the year to March, reflecting the sluggish growth of its economy and manufacturing activity.

India’s economic growth has almost halved to below 5 percent in the past two years on weak investments and consumer demand, the worst slowdown for the south Asian nation since the 1980s.

Local oil product sales, a proxy for oil demand in the world’s fourthlargest oil consumer, rose 0.7 percent to 158.2 million tonnes in fiscal year 2013/14, according to the data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

It was the slowest pace of growth since a 0.4 percent rate was registered

in 2001/02.

Diesel consumption, which accounts for over 40 percent of local fuel sales, declined 1 percent in the year, its first fall in more than a decade, the data showed.

Higher rainfall and improved power supply curbed demand for diesel from farmers, who use it to power irrigation equipment.

A sustained rise in retail diesel prices narrowed the gap with prices of gasoline. Gasoline consumption grew by 8.8 percent in the year, despite declining vehicle sales.

Sales of trucks and buses, which mostly run on diesel, declined about a fifth in the year due to a weak economy and high interest rates.

In March, India consumed 0.8

percent more refined products than in the same month of 2013, the data showed, helped by higher sales of cooking gas after the government raised the cap on the number of subsidised gas cylinders allowed per household.

India shipped in about 3.81 million barrels per day (bpd) of crude oil in 2013/14, a growth of 2.6 percent over the previous year. In March, imports declined 1 percent to 3.5 million bpd, the data showed.

Both imports and exports of oil products declined 4.6 percent in March versus the same month a year ago, the data showed.

The data for imports and exports is preliminary, because private refiners provide data at their discretion.

Reuters

14

April 23, 2014

International

Canada’s frustration rigs

Novartis transforms drug business

New delay after more than five years first application submitted to build pipelines

Swiss drug maker Novartis is transforming its business by exchanging certain assets with GlaxoSmithKline and divesting its animal health business to Eli Lilly in deals worth billions of dollars. The revamp, announced yesterday, is the result of a keenly awaited strategic review at the company. Chief Executive Joe Jimenez said the changes would focus the company on innovative businesses with global scale. “They also improve our financial strength, and are expected to add to our growth rates and margins immediately,” he said.

S

ix years after applying to build the Keystone XL pipeline, Canada’s frustrated oil industry appears steadfast in its support of the plan even though Washington has again delayed a decision on whether to approve the politically charged project.

The reason is simple: A massive new pipeline to the U.S. Gulf Coast remains the most elegant solution for producers looking to export burgeoning supplies of crude from Canada’s oil sands to the United States. TransCanada Corp’s US$5.4 billion pipeline would seamlessly pump enough crude from Alberta to Texas to meet 4 percent of total U.S. demand.

“We’re definitely supportive of the project,” said Brad Bellows, a spokesman for MEG Energy Corp, which produces crude from Alberta’s oil sands though it has not committed to ship on Keystone. “It’s good for the whole circulatory system of the energy industry.”

That is not to say the latest setback for the ambitious project sits well with its backers. And the decision could build momentum behind a host of other pipelines proposals as well as plans to expand shipments of oil by rail. But those options, as currently configured, could only supplement, not replace, the export capacity of the massive Keystone project, experts say.

“There’s never certainty that any one pipeline will be approved. We’ve made commitments to the East Coast, the Gulf Coast and the West Coast, plus rail,” said Rhona DelFrari, a spokeswoman for Cenovus Energy Inc, one of the largest developers of Alberta’s massive oil sands reserves.

“There’s always a Plan B and a Plan C as well.”

“Disappointed and frustrated” Citing uncertainty over Keystone’s route because of a legal dispute in

GM seeks court protection

Athabasca oil sands production in Canada in Alberta, origin of the pipeline

Nebraska, the Obama administration said on Friday it would allow more time for federal agencies to weigh in on the project, setting no new deadline for comments. As a result, it is likely a decision will not occur before November elections.

In response, TransCanada said it was “disappointed and frustrated” with the fresh delay, which comes more than five years after it first applied to build the pipelines.

“Another delay is inexplicable,” Russ Girling, the company’s chief executive officer, said. He pointed out that the first leg of the Keystone pipeline, which runs from Hardisty, Alberta, to Cushing, Oklahoma, took only 21 months to study and approve.

Keystone XL, which could start operating two years after it gets a final approval, would run from Alberta to Steele City, Nebraska, where it will meet the project’s southern stretch.

Despite the latest setback, none of the companies that have signed up for space on the line have backed out.

Indeed, TransCanada says that it has a waiting list of companies that want

to pounce on any available capacity.

The line’s shippers have remained loyal in part because they have signed contracts. More importantly, rising Canadian production means more lines are already needed, even as their options to move crude through alternative measures expand.

In 2008, when Keystone XL was first proposed, Canada’s exported 1.1 million barrels of crude per day to the United States. This year, exports are nearing 2.7 million bpd on higher oil sands production and another million bpd is expected to be added over the next few years, according to industry data.

To be sure, projects that would complement or perhaps even help make up for a Keystone rejection have proliferated.

Taking advantage of tight pipeline capacity, rail terminals are expanding so quickly they could ferry more than 1 million barrels per day (bpd) of crude to U.S. refiners in two years, more than Keystone’s 830,000-bpd capacity, a survey has shown.

General Motors Co filed a motion in a U.S. court to enforce an injunction contained in its sale order, which GM says bars plaintiffs from suing the reorganized company for any claims related to its predecessor. “May New GM be sued in violation of this Court’s Sale Order and Injunction for economic damages relating to vehicles and parts sold by Old GM?” the company asked in a filing on Monday in the Bankruptcy Court for the Southern District of New York.

UniCredit and Intesa deal with bad loans Italy’s two largest banks, UniCredit and Intesa Sanpaolo, are teaming up with U.S. private equity firm Kohlberg Kravis Roberts to pool some of their bad loans into a vehicle that will provide fresh capital for the struggling companies, the Financial Times reported. The preliminary agreement, which also involves restructuring adviser Alvarez & Marsal. The vehicle could house several billion euros of loans, the paper said.

The two Italian banks are considering how much of their bad loan portfolio to transfer into the vehicle and whether to contribute fresh funds themselves, the FT reported.

Reuters

Ivory Coast prices Abidjan train

Challenging year for Philips Group sales declined by 4.5 percent in the first quarter

P

hilips reported a bigger-thanexpected fall in quarterly operating profit and warned of a challenging 2014 owing to unfavourable exchange rates and slowing demand for medical equipment in China and Russia.

The Dutch healthcare, lighting and consumer appliances group said yesterday that earnings before interest, tax and amortisation (EBITA) dropped 22 percent to 314 million euros (US$433.4 million) in the first quarter through the end of March, missing consensus for 341 million in a Reuters poll.

“Our first-quarter financial results reflect a challenging start to the year,” Chief Executive Frans van Houten said in a statement, adding he remained confident that Philips would meet medium-term 2016 financial targets.

Like other European companies, Philips’ earnings have been hurt by

the euro’s strength against other currencies, especially the Russian rouble and Argentina’s peso.

Analysts acknowledged currency fluctuations have affected many companies, but pointed out that Philips had badly missed their expectations for higher underlying growth of 3.4 percent.

“There was no organic growth. It was zero and that’s difficult,” said one analyst who asked not to be named because his firm advises Philips.

“It’s everything. It’s the currency (and) not growing in Europe or North America - the big core markets - and China was weaker.”

Philips has reinvented itself since van Houten took over as CEO in April 2011. It has cut costs, sold weak businesses and targeted new growth segments, sending its shares up more than 80 percent in the past two years.

But group sales declined by 4.5

percent in the first quarter, weighed down by slowing demand from China and Russia and currency effects unfavourable exchange rates alone shaved 5 percentage points off quarterly sales.

Philips is still targeting a 20142016 EBITA margin of 11-12 percent, return on invested capital of at least 14 percent and sales growth of 4-6 percent, though it has warned that this year would see only a modest step towards achieving those goals.

In the first quarter, the EBITA margin narrowed to 6.3 percent from 7.6 percent.

Reuters

KEY POINTS Philips Q1 EBITA 314 mln euros vs Rtrs poll avg 341 mln Says 2014 to be challenging, but affirms 2016 outlook Q1 hit by weaker Russia, China, currency effects

A planned commuter train for Ivory Coast’s commercial capital of Abidjan will cost as much as 1 billion euros (US$1.4 billion) to build and will be ready in 2020, according to the nation’s Ministry of Transport. The 37.5-kilometer (23.3-mile) route will cost 800 million euros to 1 billion euros and will transport about 300,000 passengers a day in the nation’s most populous city, Noumory Sidibe, a technical adviser for Minister of Transport Gaoussou Toure, said in an interview April 15.

Colombia boosts dollar buying Central bank is stepping up its pace of dollar purchases to curb the biggest currency rally in emerging markets. The bank bought US$19 million on Monday, up from an average of US$10.5 million between April 1 and April 16. Finance Minister Mauricio Cardenas said the increase of about 80 percent is a response to the peso’s recent strength.

“As the peso has strengthened, we’ve taken the decision to accelerate the pace of buying within the framework that we’d already established,” Cardenas told reporters in Bogota. “This will allow us to counteract the trend of the dollar in recent days.”

15

April 23, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The experts’ advantage

Amanda H. Goodall

Senior lecturer at Cass Business School, City University London

THE STAR The new auditors of 1Malaysia Development Bhd (1MDB) highlighted several critical areas in the accounts for the period ended March 31, 2013, which revealed that a sum of US$1.58bil (RM4.9bil) which was meant to be used for the development of the Tun Razak Exchange (TRX) has been placed with overseas investment institutions.

The latest amount invested through overseas licensed financial institutions adds to the controversial US$2.3bil that the fund had placed with a Segregated Portfolio Company (SPC) registered in the Cayman Islands on September 12, 2012.

THE PHNOM PENH POST Cambodian stockbrokers on Monday admitted to a disappointing level of investor interest in Grand Twins International’s (GTI) initial public offering. Garment industry unrest, distrust in the private sector and a lack of liquidity in the market were all said to be discouraging investors from buying into the Taiwanese firm’s eight-million-share offering. Sorn Sokna, CEO of Sonatra Securities, one of the brokers assigned to the IPO, said that so far just four clients had registered their interest with Sonatra in the GTI listing, which is slated to officially take place on May 29.

INQUIRER The Manila Electric Co. (Meralco) has expressed optimism that issues on the recent electricity rate hikes will soon be resolved even as the Supreme Court’s temporary restraining order (TRO) on the controversial power rate hike last December 2013 expires Tuesday. William S. Pamintuan, Meralco first vice president and head of legal affairs, said in a text message that the lifting of the TRO will allow the implementation of the Energy Regulatory Commission’s (ERC) earlier order for spot market operators to recalculate the “unusually high” and “unjustified” rates of the Wholesale Electricity Spot Market (WESM).

THE STRAITs TIMES Singapore’s trade and economic partnership with the Chinese Southern province of Guangdong has been taken a step further with the setting up of its first overseas representative office here.

The Sino-Singapore Guangzhou Knowledge City Investment and Development Co’s Singapore representative office was unveiled

by Guangzhou City vice-mayor Chen Zhiying and Singbridge Corporate chief executive Chong Phit Lian on Tuesday.

The new office will focus on enhancing relationships with collaboration partners, promoting investments into the Knowledge City, conducting research on relevant industries, exploring opportunities for collaboration, and coordinating event organisation and official visits.

LONDON – Nearly everyone who sits on Google’s board of directors has at least one computer science or engineering degree or doctorate. There are two university presidents and eminent scholars – Stanford University’s John Hennessy and former Princeton University President Shirley Tilghman – and several members of the National Academy of Engineering and other illustrious organizations.

For Google, it pays to have technical expertise at the top.

But Google is an unusual corporate giant in promoting those with scientific prowess to the top of the management ladder. Beyond Silicon Valley, few senior corporate executives boast technical expertise in the products that their companies produce.

American boardrooms are filled with MBAs, especially from Harvard, while firms in the rest of the developed world (with the possible exception of Germany) seem to prefer professional managers over technical or scientific talent.

Nowadays, it seems as anomalous to have knowledge workers serve as professional leaders as it once did to have scientists in the boardroom.

It was previously thought that leadership is less necessary in knowledge-intensive organizations, where experts were assumed to be superior because they were motivated by intellectual pleasure rather than such extrinsic motivations as profit growth and cost targets.

This difference in attitude is evident in many areas of society, not least in hospitals in the United States and the United Kingdom, where knowledge-intensive medical practitioners operate separately from managers.

Hospitals used to be run by doctors; today, only 5% of US hospitals’ CEOs are medical doctors, and even fewer doctors run UK hospitals. “Medicine should be left to the doctors,” according to a common refrain, “and organizational leadership should be left to professional managers.”

But this is a mistake.

Research shows that higherperforming US hospitals are likely to be led by doctors with outstanding research reputations, not by management professionals.

The evidence also suggests that hospitals perform better, and have lower death rates, when more of their managers up to board level are clinically trained.

We see similar findings in other fields. My research shows that the world’s best universities, for example, are likely to be led by exceptional scholars whose performance continues to improve over

Thomas Edison represents a brilliant example of successful scientist and businessman

time. Departmental-level analysis supports this.

A university economics department, for example, tends to perform better the more widely its head’s own research is cited.

With experts in charge, it may not always look like there is an effective reporting structure in place. But, as the academic saying goes: just because you cannot herd cats, does not mean there is not a feline hierarchy. As with cats, academics operate a “relative hierarchy” in which the person in charge changes, depending

A leader with prior experience knows how her subordinates feel, how to motivate them, and how to create the right working environment

on the setting.

Even in the world of sports, where success is not an obvious preparation for management, we see interesting linkages between experience and organizational performance. The very best NBA basketball players often make top coaches, while former Formula 1 champion drivers are associated with great team performance. Of the 92 soccer clubs in the English football league, club managers played an average of 16 years in senior clubs.

Alex Ferguson, arguably Britain’s best manager, scored an average of one goal every two games in his professional career.

But where the pattern does occur, especially in the business world, we should take note. The senior partner of any professional services firm is likely to have been a top performer during a long career with the firm. This might be because experts and professionals in knowledgeintensive organizations prefer a boss who has excelled in their field. The leader’s credibility is vital: if she sets high standards, it seems only right that she should have matched or exceeded them herself. In short, she must lead by example.

This sort of leadership arrangement creates a

virtuous circle. A leader with prior experience knows how her subordinates feel, how to motivate them, and how to create the right working environment. She probably makes better hiring decisions, too – after all, the best scientist or physician is more likely than a professional manager to know which researchers or doctors have the greatest potential.

The problem, however, is not simply that today’s leaders lack technical knowledge; it is that experts are often reluctant to lead. But that can change. By communicating the importance of management and leadership early in a specialist’s career, and by offering tailored, digestible, and jargon-free training, we could bridge the gap. Many medical schools are already considering including management education as part of the curriculum.

The trick is to get experts, who are trained to go ever deeper into their specialization, to step back and view the big picture.

With the right preparation, there is no reason why a leader cannot specialize and manage. The results could be remarkable. Think of how governments run by scientists with management skills might respond to climate change.

Top minds should be put to top use.

The Project Syndicate 2014

16

April 23, 2014

Closing Xerox cuts 2014 adj profit forecast

McDonald’s profit falls

Xerox Corp cut its full-year earnings forecast as growth stalled in its services business and margins contracted due to higher investment on U.S. health insurance exchange platforms, sending its shares down about 5 percent in premarket trading.

Gross margin fell to 30.2 percent in the first quarter from 30.5 percent a year earlier, hurt by a 0.7 percentage point drop in services margin.

McDonald’s Corp posted a lower quarterly profit yesterday as sales at the fast-food chain’s established U.S. restaurants fell more than expected on fewer customers.

Sales at U.S. restaurants open at least 13 months in the first quarter fell 1.7 percent.

This was lower than the average estimate of 21 analysts polled by Consensus Metrix, which forecast U.S. same-restaurant sales would decline 1.4 percent.

Now it’s a casino island Japan theme park considers buying island to boost casino appeal Yuki Yamaguchi

H

.I.S. Co.’s Dutchthemed amusement park along Japan’s southwestern coast is considering buying a deserted offshore island in an expansion to boost its appeal as a possible site for a casino resort.

“We are planning to buy new land to offer more games at the Huis Ten Bosch theme park,” Hideo Sawada, chairman of the Tokyo-based travel agency and park operator, said in an interview. “There are a lot of deserted islands nearby.” He said at least 100 billion yen (US$974 million) is needed to fund a gambling resort at the park.

Huis Ten Bosch and sites across Japan are preparing to compete for possible gambling resort developments before the nation ends a ban on casinos, with preliminary legislation expected to pass in coming months. Global operators from Las Vegas Sands Corp. to Melco Crown Entertainment Ltd. have said they are prepared to invest billions of dollars should they win permits for casinos in the world’s thirdlargest economy.

Japan’s casino market

could eventually generate US$40 billion in annual revenue , tra i l i n g o n l y China’s Macau as a gambling hub, CLSA Asia-Pacific Markets estimates.

Adding a casino could double sales at H.I.S., while

the effect on profit would depend on how much the company invests, Sawada said. Revenue jumped to 480 billion yen, the highest since at least 1994, in the year ended October and is expected to climb 12 percent

to 536 billion yen this fiscal year, according to the average of seven analyst estimates compiled by Bloomberg.

H.I.S., the country’s largest listed travel agency, plans to lease land to casino developers at Huis Ten Bosch in Nagasaki on the western edge of Japan’s Kyushu island. Sawada bought the development in 2010, following its 2003 bankruptcy, and has returned the property to profit, partly by organizing tours incorporating the park and hotels on the premises.

The travel agency is in talks with video game makers in Japan and overseas to partner on building what Sawada calls a “Game Kingdom” at Huis Ten Bosch. He declined to name companies involved in the negotiations. The facility will

offer a variety of interactive games, including a paintballlike battle simulation known as “survival games” in Japan.

H.I.S. is also in discussions with the Japan Racing Association, a governmentaffiliated group overseeing horse racing, to use its 1,800seat theatre near the theme park as part of the expansion to add an entertainment venue, Sawada said.

Legalization drive J apanese lawmakers from the ruling Liberal Democratic Party, the Japan Restoration Party and other groups submitted a bill to legalize casinos to parliament in December. Supporting lawmakers have said they will push for passage this year. A subsequent bill detailing the rules of casino operation would also need to be approved.

Nagasaki Governor Houdou Nakamura said in March that the prefecture will try to introduce casino resorts with the Huis Ten Bosch area as a potential site.

Local governments in Japan’s biggest cities including Tokyo, Osaka and Yokohama have said they intend to pursue casino resort developments, as have representatives of less-populated prefectures including Nagasaki, Miyazaki, Hokkaido and Miyagi.

Huis Ten Bosch is spread across 1.52 million square meters (376 acres), about twice the size of Tokyo Disneyland, according to its website.

Bloomberg

Harley-Davidson posts HK jobless rate steady at 3.1 pct higher profits

Gazprom will fuel Europe

Harley-Davidson Inc posted a stronger-thanexpected quarterly profit on Tuesday, lifted by strong sales growth outside its core North American market, and its shares rose more than 7 percent.

The Milwaukee-based company reported firstquarter net income of US$265.9 million, or US$1.21 a share, up from US$224.1 million, or 99 cents a share, a year earlier.

Analysts on average had expected a profit of US$1.08 a share, according to Thomson Reuters I/B/E/S. Sales rose 10.2 percent to US$1.73 billion, the company said.

Harley-Davidson said it had shipped 80,682 motorcycles to its independent dealers and distributors worldwide during the quarter, in line with its expectations and up 7.3 percent from a year earlier.

Sales jumped 20.5 percent in the Asia-Pacific region, 8.9 percent in Latin America and 8.2 percent in Europe, the Middle East and Africa, the company said.

Hong Kong jobless rate is steady at 3.1 percent for January-March while underemployment is at 1.2 percent, according to data released yesterday.

The seasonally adjusted unemployment rate stayed at a 16-year low, reflecting the persistently tight labour market. Total employment, though subsiding further from its earlier festive high around the Lunar New Year, showed little change from the level in the same period last year. Meanwhile, the underemployment rate remained also a 16-year low,” said Matthew Cheung, the Secretary for Labour and Welfare.

On the short-term outlook, Cheung said, “The unemployment rate is likely to stay at a relatively low level on the back of a largely stable domestic segment.

Nonetheless, we will continue to monitor how the external environment evolves and the potential impact on the local labour market. The Labour Department will keep up its efforts in providing comprehensive employment support to job-seekers and enhance its employment service in relatively remote districts.”

Russia’s top natural gas producer Gazprom said it would be able to meet Europe’s rising demand for gas thanks to new projects, even while the European Union is aiming to reduce its energy dependence on Moscow.

“According to most of the scenarios, which have been reviewed, long-term gas demand will increase in the European market, a key one for Gazprom, against the background of its (Europe’s) own production decline,” Gazprom said in a statement yesterday after its board meeting.

Supplies to Europe can be increased via the Nord Stream undersea pipeline as well as through the proposed South Stream link, which is expected to start operating next year, the company specified.

Gazprom also plans to build a gas liquefaction plant on the shores of the Baltic Sea, which could then export liquefied natural gas (LNG) to European markets.

Partly as a result of the Ukraine crisis, meanwhile, Europe is stitching together a patchwork of measures.

Reuters

Reuters

Reuters