Macau Business Daily, May 7, 2014

MOP 6.00 Closing editor: Luís Gonçalves Year III

Number 533 Wednesday May 7, 2014

Publisher: Paulo A. Azevedo

Inner Harbour on a shoestring

Dong Kin Cheong decides to build a 2-star guesthouse tower of up to 300 rooms in the Inner Harbour district to cater to budget travellers. 2017 is the opening target date, with an investment of up to 1.8 billion patacas, Chong Siu Kin, shareholder of the veteran developer, tells Business Daily Page

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www.macaubusinessdaily.com

Interview

BNU eyes China after record year Having achieved the biggest profit in its history, BNU is launching a new three-year strategic plan to expand into mainland China. New products and services are on the way for clients in Macau, as well, CEO Pedro Cardoso tells Business Daily. Two new local branches are in the wings.

Page

6&7

Space for everyone

Silence, please!

Antonio Ng Kuok Cheong’s request for a public consultation on the oneoff compensation for MSAR’s outgoing principal officials is rejected. The bill awaits final approval within the short term Page

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Sands China CEO Ed Tracy radiates confidence in a CNBC interview.

There’s plenty of market left to absorb the capacity coming onstream in 2017 and 2018, he says

HSI - Movers May 6

Name

%Day

China Unicom Hong K

2.74

Kunlun Energy Co Lt

0.66

CITIC Pacific Ltd

0.44

Bank of China Ltd

0.29

China Construction

0.19

China Mengniu Dairy

-2.69

Wharf Holdings Ltd

-3.13

Golden Week a winner

China Merchants Ho

-3.50

Cheung Kong Holdin

-7.62

Hutchison Whampoa

-8.14

Investors expect Macau casinos to see gross gaming revenues climb at least 15 percent this month alone. Massmarket gains could top 30 percent due to the Golden Week effect.

Source: Bloomberg

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I SSN 2226-8294

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Cautious pace

Closed skies Taiwan’s Legislative Yuan has a long list of controversial issues to address.

The open skies agreement signed by Macau and Taiwan in February may not take off any time soon.

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4

According to a Reuters poll, China’s factory output and investment reaches a stable pace as the government uses targeted policy measures to underpin growth.

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May 7, 2014

Macau

Consultation denied on outgoing top officials’ compensation The bill on one-off compensation for the city’s top officials can be passed as soon as this month Stephanie Lai

sw.lai@macaubusinessdaily.com

P

ro-democrat legislator Antonio Ng Kuok Cheong’s request for a public consultation on the one-off compensation for MSAR’s outgoing principal officials was rejected by a legislative committee on Monday, which expected the bill to be passed for final approval within the short term.

President of the second permanent committee of Legislative Assembly Chan Chak Mo, whose team is currently deliberating the bill, told reporters on Monday after a closeddoor committee discussion that “five out of eight” attendee legislators voted against Mr Ng’s request a public consultation to examine the bill, while two other legislators abstained.

Mr Ng issued a statement on Monday saying that he found the

committee’s decision ‘regrettable’.

The latest edition of the bill that stipulates the one-off compensation for outgoing principal officials, including the Chief Executive and the secretaries, suggests that officials who are not from a civil service background shall receive 30 percent of their monthly salary in their official post; for those that are from the civil service the oneoff compensation should amount to 14 percent of the outgoing official’s monthly salary.

On top of the one-off compensation, the bill declared that outgoing officials can receive an additional compensation for the suspension of their official duties, calculated on 70 percent of the monthly salary the outgoing top official received; this

additional compensation covers the period the official is prohibited from assuming a post with a private entity.

Mr Ng requested a public consultation on the bill as he believes that controversies still exist in the stances supporting the latest edition of the bill.

Mr Chan, also the managing director for restaurant operator Future Bright Holdings Ltd, conceded, however, that it is “rare” for public consultations to be held when a bill enters into the final round of discussion between the Assembly and government.

“We [the permanent committee] gather opinions to discuss the bill with the government but after several rounds of discussions, we think that it’s not proper to do it [a public

consultation] in this period,” Mr Chan said on Monday, without elaborating further to reporters.

“It’s rare to publicise article by article for every status of our discussion on the bills,” Mr Chan added.

The permanent committee chairman said that the bill on the one-off compensation for top officials should be passed to the general assembly for final approval within the month. The bill was first introduced to the Assembly and obtained a general approval in December last year. Speaking to Business Daily, Mr Ng said his supporting team in New Macau Association is considering means to further pressure the government to reconsider the subject of compensation.

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May 7, 2014

Macau

Downtown budget hotel to cost 1.8 billion patacas Veteran developer decides to build a 2-star guesthouse of up to 300 rooms in the Inner Harbour district to cater to budget travellers before 2017 Tony Lai

tony.lai@macaubusinessdaily.com

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veteran developer has forked out 1.8 billion patacas (US$225 million) to envisage a budget hotel of up to 300 rooms in the Inner Harbour district to cater to tourists searching for more affordable accommodation.

Chong Siu Kin, shareholder in Fomento Predial e Desenvolvimento Dong Kin Cheong Ltda and Real Estate Association of Macau president, expects the guesthouse can be ready by 2017.

A dispatch in the official gazette last week shows that the government approved developer Dong Kin Cheong’s application to build a 2-star, seven-storey guesthouse, including basement floor, at the end of the territory’s main thoroughfare, Avenida de Almeida Ribeiro.

Apart from building a guesthouse with floor space occupying 2,963

square metres, Dong Kin Cheong is also permitted to build shop space of nearly 800 square metres on the plot, opposite the Kam Pek Community Centre near casinohotel Ponte 16.

Mr Chong told Business Daily that his company bought the plot of land rights from another company three years ago in order to build a budget hotel in the area.

Including land costs of 1.5 billion patacas, the company is expected to spend 1.8 billion patacas in total to build the guesthouse tower providing 200-300 rooms and 13-17 commercial stores, Mr Chong said.

The veteran developer did not say when he expects the project could yield a return as budget hotels are often deemed to not have a high profit margin. He only said: “[The development] is good for the company as it can create cash flow, [making it] easier to secure bank loans for other projects in the future.”

Lack of supply

There’s a market here for offering rooms at low prices to travellers.

If not, the situation of illegal accommodation wouldn’t still be so prominent here Chong Siu Kin, shareholder in Fomento Predial e Desenvolvimento Dong Kin Cheong Ltd

“But we are positive about the market in that area as there is not much competition in the district in term of nice, low-cost accommodation,” Mr Chong said.

“Our advantage is that we will provide neat, clean hotel rooms with a not-so-expensive price tag.”

“There’s a market here for offering rooms at low prices to travellers. If not, the situation of illegal accommodation wouldn’t still be so prominent here,” he added.

By March this year, the territory had 45 budget establishments guesthouses and 2-star hotels – providing about 1,400 rooms, official figures show. The room figure of budget establishments is only 5 percent of the total of hotel and guesthouse rooms that the city can provide.

Only a few more low-cost rooms can be provided in the near future, compared with several thousands

of new rooms in the mega resorts in Cotai slated for opening starting 2015. The Macau Government Tourist Office told Business Daily earlier this month that they are currently studying the opening and expansion plans of six budget establishments, offering in total some 462 rooms in addition only.

Some ground works have already started in Dong Kin Cheong’s land plots, said Mr Chong, who expects construction on infrastructure to be started on the site half a year later.

“The government gives us 36 months to develop the plots from now, which means that the hotel should be completed by 2017,” he said. “But we’re optimistic the project can be ready by the end of 2016.”

ZAPE high-rise hotel halted The development of a high-rise hotel project in the ZAPE area near Nam Kwong Building has been suspended for over six years due to the height cap, says the developer, in the anticipation that the land will still sit idle for some time.

Real Estate Association of Macau president Chong Siu Kin said one of his companies – declining to identify the firm – aimed to build a hotel tower 115 metres high in the area several years ago.

“But [former] Chief Executive [Edmund] Ho Hau Wah suddenly set a cap for the height of properties in the nearby area surrounding the Guia Lighthouse in 2008,” he said.

“So the project is only allowed to build a tower up to a height of about 60 metres, sharply shearing the plot ratio of the project.”

The administration at the time set

MOP300 mln

Construction cost for the budget hotel

Following project completion, Dong Kin Cheong will either manage and run the guesthouse by itself, or recruit other firms to do so, Mr Chong said.

a height cap ranging from 46 metres to 90 metres high on new properties in the 2.8 square kilometre area surrounding the lighthouse in order to protect the views of the district, in which numerous heritage sites are situated.

The hotel land plot had then been left idle as no material progress arose from negotiations with the government on the project height and floor space, Mr Chong said.

“We’re now waiting for more details of urban planning in the area after the urban planning law comes into force this year,” he added. “But we expect there will still be at least three years before a more concrete blueprint is laid down.”

The city’s first urban planning bill came into force in March. The government admitted last month in a Legislative Assembly session, however, that the drafting of the master plan for strategic principles on the overall development of Macau will only start by year-end, completing only in three to five years.

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May 7, 2014

Macau

Open sky pact with Taiwan remains cloudy Review of the pact by Taiwan legislators may have to be delayed to later this year, which could affect the island’s budget carriers’ plans to fly here Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he open skies agreement signed between Macau and Taiwan in February may not be realised soon, as Taiwan’s Legislative Yuan has yet to review the aviation pact along with a list of other controversial issues being discussed on the island, Chinese-language newspapers from Taiwan report.

Taiwan’s legislators have yet to review the open skies pact as their assembly has been occupied in ongoing discussions about the controversial Cross-Strait Trade in Service Agreement and the construction of the Fourth Nuclear Power Plant in New Taipei City on the island, Chineselanguage newspapers Economic Daily News and Commercial Times reported yesterday.

The review of the pact may be delayed to October as a new legislative term starts in September, Economic Daily News said, citing an unidentified official source.

The open skies pact, signed in February 17, permits airlines to carry unlimited passengers and freight between here and the island, and allows more airlines to do so.

Currently, the air services agreement between the two places permits only Macau flagship carrier Air Macau Co Ltd, and Taiwan’s Eva Airways Corp, TransAsia Airways Corp and Mandarin Airlines to offer flights. For each party, the present service agreement allows the airlines to carry only 19,400 passengers and 400 tonnes of freight per week.

A newly established budget carrier from the island - Tigerair Taiwan said earlier that it intends to launch its

first commercial service on the MacauTaiwan route in the fourth quarter of this year. Tigerair Taiwan is a venture set up in December between Taiwan’s China Airlines Ltd and Tiger Airways Pte of Singapore.

Another freshly minted Taiwanbased budget carrier, V Air, established by TransAsia Airways in November last year, is also eyeing flights between here and the island.

These two new carriers can only launch flights to Macau after the open skies pact comes into force,

a spokesperson from Taiwan’s Civil Aeronautics Administration confirmed to Business Daily.

Taiwan’s Minister of Transportation and Communications Yeh Kuang Shih was quoted by Commercial Times as saying that there have been no precedents of pacts similar to the open skies deal signed with Macau that have been sent to the Legislative Yuan.

Mr Yeh was further quoted by Commercial Times as saying that he has suggested that the island’s

Mainland Affairs Council, an organ specialising in diplomatic relations with China (including Hong Kong and Macau), not forward the open skies pact signed with Macau to the legislative unit for review.

Business Daily asked Taiwan’s Mainland Affairs Council to comment on the progress of the implementation of the open skies pact but has not received a reply by the time this story went to press. The Council has led talks on the open skies deal between Macau and the island.

Ed Tracy: Macau ready to ‘absorb’ growing supply President and CEO of Sands China reveals to CNBC that he expects the local market to absorb 2016/2017 supply as the gaming offer has only penetrated 1 percent of Mainland China Alex Lee

Alex.lee@macaubusinessdaily.com

“W

e’re pretty confident that there’s plenty of market left to absorb the capacity that’s coming in 2017 and 2018”, said Edward Tracy, president and CEO of Sands China, in an interview with American television channel CNBC yesterday. “Every time supply is added in Macau demand goes up. There’s a fairly heavy concentration of demand coming in 2017 and 2018. But you can’t look at supply and demand quotients without looking at the penetration of Mainland China. And the truth is that although our closest market, the five major cities on the east coast, are about 10

percent penetrated, across Mainland China we’re only about 1 percent penetrated” Mr Tracy proclaimed.

The veteran gaming executive also talked about the company’s strategy of investing in the gaming mass market. “It’s value added.

There are one billion more people in China than in the United States.

It’s an astonishing number. Sheldon [Adelson] built our product to accept the mass-market where a lot of our competitors’ capacity is constrained.

They only have a certain number of rooms. They don’t have a lot of nongaming entertainment and so it’s not that attractive” he explained to CNBC.

“The margins are extraordinarily efficient in the mass-market versus the VIP market because we’re not paying commissions. It is also less volatile” Tracy continued.

More than just tables But to make Macau more appealing to the mass-market Sands China strategy has also focused on showing that there is more to do than just gaming. “Most of the travellers that are coming today, the new premium masses, are coming because they are seeing Macau in a new light.

Of the 76 events that we promoted last year, such as Voice of China, China Music awards and some film

awards, 12 were broadcast in China with an astonishing viewership of 920 million. So suddenly people are seeing a different view that is not just gaming-centred”, he said.

The president of Sands China also revealed some details of the Eiffel Tower that is going to be built in the Parisian Casino, slated to open by the first quarter of 2016. “There will be a family-friendly restaurant on the third floor and then an elevator that goes up to an observation deck from which you can see all of Macau and across the Pearl River to China”, he enthused.

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May 7, 2014

Macau

Police probe junket disappearance

M

acau Judiciary Police have confirmed that they are investigating the alleged disappearance of a local junket operator who reportedly absconded with HK$10 billion (US$1.3 billion), which has led to worries

in the market.

A police spokesperson said that they had received a report on the case and that they are currently investigating. The spokesperson declined to reveal further details, only adding that they will make a

prompt announcement when they have more information.

The police are referring to the disappearance of Huang Shan an active junket operator in the Macau industry for about four years - sometime last month; the case

has been widely reported by local and international media in the past fortnight.

Mr Huang is believed to have departed with HK$8 billion to HK$10 billion, capital from investors for the junket operation.

Hong Kong media reported that the investors include Macau and mainland residents with some only putting in a small amount of money.

The way junkets work here resemble the operations of banks – the junket takes money from investors, giving them regular dividends, and lends it to gamblers.

This incident - coupled with the recent detention of the wife of a shareholder in the Neptune Group Ltd junket on suspicion of money laundering - has led to concerns that there may be a resulting credit squeeze in Macau.

“The key question remains whether this is an isolated incident or whether we will see a chain reaction” leading to a slowdown in VIP gambling revenue growth, newspaper Wall Street Journal quoted Bank of America Merrill Lynch analyst Billy Ng in a research note last week. The revenue raked in by the VIP floor of casinos expanded by 12.5 percent in this year’s first quarter.

Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen dismissed worries last week, however, saying: “Up to the present, we cannot see any big impact on the whole [gaming] market.”

T.L.

Macau wants more tourists from Middle East M acau Government Tourist Office (MGTO) expects to attract more visitors to the territory from the Middle East and is promoting Macau in the international annual tourism fair ‘Arabian Travel Market 2014’, taking place in Dubai.

Last year the number of visitors arriving from the Middle East in Macau was close to 15,000 which represented an increase of 5.5 percent compared to 2012, when the number of visitor arrivals from the region was some 14,175.

In the fourth quarter of last year, the per-capita spending of visitors was 2,210 patacas, which means that the

5.5 percent growth from Middle East tourists was likely to have attracted a value close to 1.8 million patacas.

This number is expected to increase, however, as according to data from MGTO in the first quarter of the current year arrivals from the Middle East have already increased 8 percent.

The MGTO showcase booth in ATM occupies 50 square metres and is dedicated to the theme ‘Touching Moments, Experience Macau’. The fair opened yesterday and runs in Dubai World Trade Centre until tomorrow.

The 21st edition of ATM has attracted 2,700 exhibitors representing 83 countries and territories.

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May 7, 2014

Macau

“We need a strong and active presence in China” BNU chalked up the biggest profit in its 111-year history in 2013 surpassing for the first time the 400-million pataca mark. In an interview with Business Daily, CEO Pedro Cardoso says branch expansion to mainland China and widening client services are goals for the next three years.

Alex Lee

Alex.lee@macaubusinessdaily.com

BNU CEO Pedro Cardoso: “BNU has devoted the last 111 years to serving the people of Macau but we can’t forget the deep integration of Macau and mainland China.”

A

fter three years of branch expansion in Macau, a bet on small and medium companies and increasing product selling to costumers, BNU is preparing for its next chapter. The new phase puts China very much in focus with possible openings in the areas bordering Macau plus new offerings in cards and online banking. But first, the record and ‘transformative’ 2013 exercise.

“It’s the greatest profit in our history and our best year ever”, said Pedro Cardoso in an interview with Business Daily. BNU posted a net profit of 402.6 million patacas in 2013, an increase of 23.1 percent from the previous year.

Credit for family housing and loans to Small and Medium Enterprises (SME) were the primary drivers of 2013’s

No less than 3 years to open a branch in China

strong results, together with a 33.4 percent jump in deposits, Mr. Cardoso explained. “Larger companies, on the other hand, have a lot of liquidity and are reducing their debt and asking for less credit”.

BNU’s bumper profits are the largest in its 111-year history, surpassing, for the first time, the 400-million pataca mark, a feat credited to the bank’s transformation plan launched in 2011.

The three-year strategy concluding in 2014 spurred the enlargement of branch net in Macau, SME’s and an increase in cross-selling (number of products per client) as its main pillars. “The first transformation plan is 89 percent completed and will be fully operational this year”, Cardoso informed Business Daily.

SMEs growing 30 percent every year “It was a very positive year for SME’s. Credit grew 30 percent last year and has doubled since 2011”, the BNU CEO emphasised. Today, the bank has some 20 percent of market share of corporate customers (6,000 clients in a universe of 30,000 companies in Macau) and wants to enlarge its customer base in this segment. “If among individuals our goal is to increase loyalty, by the SME’s - a segment that was not particularly strong in BNU - we want to broaden our customer base”, said Cardoso.

Client loyalty was another strategic task from the first transformation plan. At the end of 2013, the bank

Stay in the finest hotels in Macau and read Business Daily news where it matters

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May 7, 2014

Macau BNU Financial Highlights 2013 Net profit 402.6 million patacas 23.1 percent Business volume 26.5 percent Deposits 33.4 percent Loans 11.5 percent Net interest income 20.6 percent Non-performing loans (percentage of total credit) 0.3 percent (0.8 percent in 2012) Operating costs 306.3 million patacas 9.1 percent

had an average of 3.2 products per client, above the 2.4 rate of 2011, a low figure by international standards.

The objective in 2014 is to reach the 3.5 ratio, in sight of the original goal of 4 products per customer. The affluent segment – high income clients just below the private banking segment – now stands at 6 products per client: “It’s this trend we want to follow”, he stressed.

With a record year behind it, BNU is already preparing a new strategic plan for the next three years with the assistance of an international consultancy firm. Transformation plan 2.0 will embrace two strategic areas.

The first is to build on the work done since 2011 and improve relationships with the customer base in Macau with more and better services in online and phone banking, cards and more branch openings. “Retail banking is made up of details. It’s much more important to have a set of many details than to have a big and single idea”, he told Business Daily.

Border crossing The second area is China: “BNU has devoted the last 111 years to

Zero US interest rates threaten Macau BNU warns that banks in Macau are operating on a financial margin of only 1 percent, one of the lowest figures in the world, which poses a risk should the economic tide turn. “This is a concern because we’re currently experiencing a favourable context in Macau and it’s very important that banks are able to prepare and provision for more adverse scenarios”. With the pataca indirectly pegged to the US dollar and with US interest rates close to zero “a bank with as much liquidity as BNU suffers from such a small financial margin because we’re applying our liquidity at interest rates close to zero”. Pedro Cardoso expects that an increase of one percentage point in US interest rates will increase BNU’s financial margin to 20 percent.

serving the people of Macau but we can’t forget the deep integration of Macau and mainland China. We’re examining the best ways to be present in this flow of cross-border business”, Cardoso said.

As the majority of business today is conducted across Macau and mainland China borders, BNU suffers a disadvantage because it only has a representative office in Shanghai. “We have several alternatives in terms of analysis but the logical move is an expansion to areas bordering Macau. We need a strong and active presence in China to support our clients”, he admitted to Business Daily.

Without any decision taken yet, one of the options BNU is studying is entering China via branch openings in border areas like Hengqin Island. “The opening of a branch or subsidiary in China is a lengthy process, no less than three years from decision to branch opening, but BNU has all the requirements to expand and is well placed. We have a solvency ratio of 24%, three times more than the minimum requirement of 8% in Macau”.

2014: Lower profit growth and two new branches

Excessive alarmism about China’s slowdown

BNU will post a lower profit growth in 2014 as the expected strong credit expansion will lead to more provisions. “We expect 2014 to be a year of consolidation in which credit will grow quite strongly and more expressively than in previous years.

But credit growth means increased provisions that negatively affect profits”, says Pedro Cardoso. Having opened four new branches last year, the bank is planning to add two more in 2014 for a net total of 20 in the territory. The two branches will be located in Macau and Taipa in “areas with potential growth but where we’re underrepresented”, the BNU CEO said.

Pedro Cardoso considers there’s an excessive alarmism accompanying the recent data on China’s economic slowdown. “There’s no country in the world that has the growth and dynamism of China. After years of growth rates of 10% it’s natural that the economy is in a more mature stage, presenting more moderate growth”, the CEO told Business Daily.

“The Chinese reality is so big and diverse that it allows comments of all kinds , whether positive or negative”.

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May 7, 2014

Macau

Mid-teens revenue for May predicted Macau casinos could see gross gaming revenues of at least 15pct this month alone, analysts say Sara Farr

sarafarr@macaubusinessdaily.com

I

f the first four days of this month are anything to go by, then casinos here could rake in gross gaming revenue growth in the mid-teens at the end of May. While this would mainly be due to Golden Week, or Labour Day weekend, Brokerage Wells Fargo Ltd calculates that ‘levels of play for the rest of May [will] revert back to [a year to date average daily rate] of 1.1 billion patacas.’

The brokerage’s analysts, led by Cameron McKnight, wrote in a client note on Monday, US time, that the average daily rate from May 1 to May 3 was 1.46 billion patacas, up 9 percent from the average daily rate of the first five days of May last year. This month’s figure, so far, is also up by 40 percent compared to the average daily rate of April, of 1.04 billion patacas.

“Following strong results from the

However, 2014 could be choppy due to a potential slowdown in VIPs driven by decelerating credit growth and a softer microenvironment Cameron McKnight, Wells Fargo senior analyst

first four days of May, we could expect mid-teens year-on-year growth for May, versus our 15 percent estimate”, the client note reads. This means that the average daily rate could track between 4 percent and 7 percent below the year to date average daily rate through April of 1.1 billion patacas for the rest of the month.

This, in turn, would be similar to that of prior years.

Should Macau’s gross gaming revenue grow by 15.5 percent, as forecast by the brokerage firm, this could imply a 9 percent growth in the VIP segment and a 32 percent growth in the mass market over the same period last year.

According to Gaming Inspection and Coordination Bureau figures,

VIP baccarat raked in 65.1 billion patacas in the first quarter of this year, a 12.6 percent growth from 57.8 billion patacas over that of the same period in 2013. For the whole of 2013, VIP baccarat raked in 238.5 billion patacas, up from 210.9 billion patacas in 2012.

Slower second quarter For the second quarter, the brokerage firm forecasts a market growth of 14.2 percent, down from 19.8 percent in the first quarter of the year. “Assuming May tracks at 15.5 percent, this implies 16 percent growth is needed in June,” Wells Fargo said in its client note, adding that it remains positive on the long-term

secular gaming revenue growth here.

“However, 2014 could be choppy due to a potential slowdown in VIPs driven by decelerating credit growth and a softer microenvironment,” the brokerage firm warns.

Macau’s gross gaming revenue recorded a 17.5 percent growth in the first four months of this year, with casinos here raking in 133.5 billion patacas between January and April.

Last month alone, casinos raked in 31.3 billion patacas. While this figure was up 10.6 percent over that of the previous year, it was down by 11.8 percent from that of the month of March. Analysts at the time said casinos could expect a slight slowdown in anticipation of the fourday Labour Day weekend.

Macau’s mainland investments Genting’s revenues surge 40 percent up 24 pct T G he amount of direct investments from Macau companies in mainland China in the first quarter surged by more than two-fifths, reversing the lacklustre performance of the past two years, official figures suggest.

The mainland’s Ministry of Commerce announced this week that the amount invested in new projects in the mainland backed

by Macau enterprises in March hit US$30 million (240 million patacas), down 43.6 percent from the previous year.

But the slump in March did not overly affect the overall investment figure in the first quarter, which shot up by 40.7 percent to US$150 million, versus nearly US$100 million in the January-March period of 2013.

The strong start of the Macau investments in the mainland this year

was in stark contrast to the declines of the past two years. The amount Macau companies invested in the mainland only reached US$460 million last year, down 8.9 percent.

The Ministry also said yesterday that the number of investment projects from Macau in the mainland was 61 in the first three months, up from 58 a year earlier.

Meanwhile, the trade volume between Macau and the mainland suffered a decline in the first quarter, with value dropping 4 percent from the previous year to US$810 million.

Imports to Macau from the mainland jumped 9.2 percent yearon-year to US$760 million in the January-March period, while exports to the mainland plunged by nearly two-thirds to just US$50 million in the first quarter.

T.L.

enting Singapore’s net revenues for the first quarter of this year increased 24 percent year-on-year to S$829 million (5.3 billion patacas). These were above analysts’ expectations, with Union Gaming group having forecast revenues of S$768 million.

‘The upside was entirely due to much higher than expected VIP rolling chip volume, which resulted in a 59 percent rolling chip market share relative to Marina Bay Sands’ 41 percent share,’ Union Gaming said in a note to clients.

Analysts at the group say they continue to be cautious about the outlook for Genting Singapore, taking into account key feeder markets for VIPs, mainland visitors from mainland China, Malaysia and Indonesia. ‘Our current forecast calls for a 5 percent mass market gross gaming revenue decline in 2014, as

compared to our previous estimate of a 3 percent decline,’ the group said in a client note.

Meanwhile, analysts at brokerage firm Wells Fargo Ltd expect this to be a ‘challenging’ year for Genting Singapore. ‘While the Singapore market is compositionally different to the Macau market, management noted that it expects 2014 to be a somewhat challenging year partially driven by a slowdown in China,’ the note to clients reads.

Singapore has two casinos – Resorts World Sentosa run by Genting Singapore, and Marina Bay Sands run

by Las Vegas Sands Corp.

Sands’ net revenues for the first quarter of the year from Singapore were US$835 million (6.7 billion patacas), while in Macau they were US$2.7 billion (21.6 billion patacas).

S.F.

9

May 7, 2014

Greater China

State companies sale to help local debt Shanghai may release a plan on changes to more than 50 SOEs in as soon as a month

Citic Group (HK headquarters pictured)

Shanghai plan Shanghai may release a plan on changes to more than 50 SOEs in as soon as a month, Shanghai Securities News reported today, citing an unidentified person.

Cities with “a good economic foundation and high-quality assets,”

mainly located in the Yangtze River Delta and Pearl River Delta, are well-suited to use asset sales for debt reduction, Hu Yifan, chief economist at Haitong International Securities Group Ltd. in Hong Kong, wrote in her 2013 book “Strategic Priorities: China’s Reforms and the Reshaping of the Global Order.”

Successful sales would help counter a swelling in local authority debt to an estimated 17.9 trillion yuan, the consequence of the previous group of national leaders unleashing unprecedented stimulus to counter the 2007-09 global credit crisis. Xi and Premier Li Keqiang are now seeking to repair a fiscal system that starves local governments of tax revenue.

SPECIAL OLYMPICS GOLF MASTERS 2014

May 26th to 31st 2014

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resident Xi Jinping’s plans to open China’s state-owned enterprises to competition are spurring local officials to consider asset sales that could help rein in provincial and municipal debt.

Businesses controlled by local administrations, which range from hotels to retailers to power generators, had assets of 43.8 trillion yuan (US$7 trillion) as of the end of March, according to Ministry of Finance estimates. The southern provinces of Guangdong, which has the biggest regional economy, and Guizhou pledged this year to look at changes in ownership structures for their holdings in coming years.

With the central government setting direction, such as through the transfer of assets at Citic Group Corp. to its Hong Kong-listed unit, a “quiet wave” of stake sales by local authorities may come in 2015-16, according to Standard Chartered Plc. Productivity gains from revamping public-sector businesses would help China counter its investment-led slowdown.

“The movement on this has happened at a surprisingly fast pace,” said Andrew Batson, an analyst in Beijing at researcher Gavekal Dragonomics who has covered China since 1998.

“Local governments have these huge off-balance-sheet debts, so they have a much stronger incentive than the central government necessarily does to try to raise cash from asset sales.”

Local SOEs span businesses from Kweichow Moutai Co., the Guizhoubased producer of baijiu liquor, to Jilin province-based China FAW Group Corp., which makes Audi and Volkswagen vehicles in China. There were some 98,554 locally-controlled state businesses at the end of 2012, according to Ministry of Finance data compiled by Gavekal Dragonomics, whose clients include Fortune 500 companies and hedge funds.

Markets’ role While Xi, Li and their Communist Party leadership team in November underscored the primacy of the state in the economy, they elevated the role of markets at the conclusion of an annual gathering. The shift has been followed by periodic signs of what’s shaping up to be the biggest revamp of public enterprises since Zhu Rongji in the 1990s gutted a swath of moneylosing companies, helping fuel years of growth in excess of 10 percent.

Signs of momentum in restructuring state businesses include last month’s US$36 billion deal that will shift assets from Citic Group -- China’s first stateowned investment corporation, set up in 1979 -- to its main Hong Konglisted unit.

China Petroleum & Chemical Corp., or Sinopec, has plans for what may become the nation’s biggest asset sale by an SOE. Private investment will be allowed in 80 projects from energy to infrastructure, the government said last month. The nation also plans to fold developers of military hardware into publicly traded state-owned firms, Bloomberg News reported last month.

A more broad-based retreat from public ownership at the central government level is unlikely, given the determination to keep the state sector as “dominant,” in the November Communist Party leadership statement.

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May 7, 2014

Greater China Social credit system to be created China will soon release an outline for building a government-led national social credit system to assess individuals and organizations on areas ranging from tax payment to judicial credibility.

The outline, the drafting of which was led by the National Development and Reform Commission and the People’s Bank of China, focuses on credibility building in four areas, including administrative affairs, commercial activities, social behaviours, and the judicial system, the Economic Information Daily reported on Monday. According to the outline, China will also establish an integrated platform by 2017.

Tencent to acquire part of Navinfo Internet service provider Tencent Holdings plans to acquire an 11.3 percent stake in digital mapping service provider Navinfo Co Ltd for 1.17 billion yuan (US$187.33 million), Navinfo said late on Monday. Tencent will buy 78 million shares at 15.04 yuan per share from Navinfo’s major shareholder China Siwei Surveying & Mapping Technology Corporation, according to a statement posted on the website of the Shenzhen Stock Exchange. The deal is pending regulatory approval

Juneyao plans IPO Juneyao Airlines, a small privately owned carrier, said it aims to raise 1.9 billion yuan (US$304 million) in an initial public offering in Shanghai to fund its fleet expansion. The Shanghai-based carrier plans to issue up to 200 million shares or 29 percent of its enlarged total equity, according to a prospectus released by the China Securities Regulatory Commission ahead of China’s labour day holiday. Proceeds of the listing would fund the purchase of seven Airbus Group NV A320 jets and back-up engines, it said.

Shanghai unifies urban and rural pension plans Shanghai has unified its pension plans for rural and unemployed urban residents, authorities said on Monday.

The unified system combines Shanghai’s 5-level rural pension plan with the 10-scale scheme for unemployed urban residents to create a 12-level pension program. The new pension plan came into effect on May 1. The pension fund combines contributions from the individual, collective and government. Individuals can choose to pay from 500 yuan to 3,300 yuan annually, in accordance with different levels of the pension plan.

Power consumption rise forecast China’s power consumption is expected to mildly rebound starting from the second quarter, but it may still be below the level recorded in 2013, according to a report released on Monday. China Electricity Council forecast in the report that power consumption may pick up in the remainder of the year following 5.4-percent year-onyear growth in the first quarter. The growth rate in the fourth quarter of 2013 was 8.4 percent. The report said the country’s power consumption may finally increase by 7 percent for all of 2014, and it will still be 0.5 percentage point lower than in 2013.

April data to show stable Fixed-asset investment growth likely grew 17.7 percent in the first

G

rowth in China’s factory output and investment likely stabilised in April as the government uses targeted policy measures to underpin growth, while the pace of declines in exports and imports may have eased, a Reuters poll showed.

However, the world’s second-largest economy may only get a temporary boost from such policy support, as growth will inevitably slow while the government seeks to tackle high debt levels and excessive factory capacity.

China’s industrial output may have grown 8.9 percent in April from a year earlier, slightly ahead of the 8.8 percent rise in March, according to the poll of 18 economists.

Fixed-asset investment growth likely grew 17.7 percent in the first four months from a year earlier, also slightly firmer than the 17.6 percent pace seen in the first three months. The government only publishes cumulative investment data.

The government has in recent weeks hastened construction of railways and affordable housing and cut taxes for small firms to support the slowing economy, but top leaders ruled out any forceful policy measures in favour of reforms.

“Economic growth is stabilising but it’s hard to see a rebound because policies that help stabilise growth are limited,” Peng Wensheng, chief economist at CICC said in a research note.

“The economy still faces downward pressures in the future.”

The government is trying to restructure the economy so it is driven more by consumption than

Government trying to make China evolve from an industrial nation to a services based one

the traditional engines of exports and investment, but wants to avoid a sharp slowdown that could fuel job losses and threaten social stability.

Recent official and private factory surveys for April pointed to initial signs of stabilisation, but external demand likely remained weak.

Exports are expected to fall 1.7 percent in April from a year earlier, compared with a 6.6 percent fall in March. The pace of decline in imports

may have moderated to 2.3 percent in April from 11.3 percent in March, the poll showed.

As a result, the April trade surplus is likely to widen to US$13.9 billion from US$7.7 billion in March.

Retail sales, a key gauge of consumption, may have grown 12.2 percent in April, the same as in March.

An earlier, separate Reuters poll showed China’s economic growth could slow to 7.3 percent in the

Premier Li calls for deeper relations with Africa China announces it will increase its loans for African countries by US$10 billion

C

hinese Premier Li Keqiang proposed Monday that China and Africa join hands to bring forth an upgraded version of their all-round cooperation. Speaking at the headquarters of the African Union (AU) here in the Ethiopian capital, Li expounded China’s Africa policy and reaffirmed Beijing’s commitment to further deepening the ChinaAfrica comprehensive cooperative partnership.

Li suggested that the two sides stick to the four principles of treating each other sincerely and equally, consolidating solidarity and mutual trust, jointly pursuing inclusive development and promoting innovation in bilateral practical cooperation.

Noting that China and Africa now share more common interests and boast a stronger foundation for cooperation, Li proposed that the two sides seize the momentum and open a new chapter in bilateral cooperation.

The premier identified six areas -industry, finance, poverty reduction, ecological protection, people-topeople exchanges, and peace and security- for the two sides to make the leap forward.

Chinese Prime Minister Li Keqiang (L) shakes hands with his Ethiopian counterpart Hailemariam Desalegn (R) during the inauguration ceremony of the Addis Ababa-Adama Expressway in Tulu Dimtu on Monday.

With regard to industrial cooperation, Li noted the rapid growth of bilateral trade over recent years and urged the two sides to bring the volume to US$400 billion by 2020 and push China’s cumulative direct investment in Africa toward US$100 billion. China-Africa trade reached

US$210.2 billion in 2013.

China is ready to expand cooperation with Africa in building road, rail, telecommunications, power grid and other infrastructure so as to help the continent realize regional interconnection, he said, adding that Beijing also encourages Chinese

11

May 7, 2014

Greater China

growth

More cities loosen property controls

four months from a year earlier

By softening the rules, the local governments are effectively reversing a near-five-year-old policy of reining in China’s frothy property market

KEY POINTS April industrial output seen up 8.9 pct, vs 8.8 pct in March Jan-April investment seen up 17.7 pct vs 17.6 pct in Jan-March April retail sales seen up 12.2 pct, same as in March April exports seen down 1.7 pct, imports down 2.3 pct Trade data due May 8, CPI on May 9 and activity data on May 13

second quarter from 7.4 percent in the previous three months. The economy is expected to grow 7.3 percent in 2014 - the weakest showing in 24 years.

Analysts see the property sector as a key risk to growth as evidence mounts of a rapid cooling in what had been one of the few strong spots in the economy.

In April, banks may have granted 880 billion yuan (US$140.90 billion) in new loans, down from 1.05 trillion

enterprises to form joint ventures with African counterparts in a bid to improve Africa’s regional aviation industry.

In the financial area, Li said China has decided to increase its loans for African countries by US$10 billion, which brings the total pledged amount to US$30 billion, and to expand the China-Africa development fund by US$2 billion to US$5 billion.

As to poverty reduction, China will train 2,000 agricultural technicians and management personnel for Africa in the coming five years, and tilt its assistance toward such publicwelfare areas as drinking water and prevention and control of epidemics.

US$210.2 billion

2013 China-Africa trade

Stressing that ecological protection is a shared responsibility of all humanity, Li said the Chinese government will provide Africa with US$10 million of free aid for wild life preservation and promote joint research in protecting biological diversity, preventing and controlling

yuan in March, while annual growth in the broad M2 money supply may hold largely steady at 12.2 percent, the poll showed.

Annual consumer inflation is expected to ease to 2.0 percent in April from 2.4 percent in March, while the producer price index is expected to drop 1.8 percent, falling for a 26th straight month but moderating from a decline of 2.3 percent in the previous month.

Trade data will be released on Thursday, followed by inflation data on Friday, while activity data will be released on Tuesday, May 13.

Reuters

desertification and promoting modern agriculture.

In respect of people-to-people exchanges, Li said China will carry out its African talent plan in an all-round manner and will provide African countries with 18,000 government scholarships and help them train 30,000 various professionals as scheduled.

As for peace and security, Li said China supports Africa to solve African problems in the African way and stands ready to assist Africa’s capacity-building in such areas as peace-keeping, counter-terrorism and anti-piracy.

China, he said, will offer South Sudan another 50 million yuan (about US$8 million) of humanitarian aid to help deal with the humanitarian crisis in the African country.

About 1,500 dignitaries from Ethiopia, the AU and other countries and international organizations listened to the address at the AU Convention Centre. Ethiopian Prime Minister Hailemariam Desalegn and AU Commission Chairperson Nkosazana Dlamini-Zuma also spoke at the event.

China and the AU released a joint statement on comprehensively d ee p eni n g b i l a ter a l fr i en d l y cooperation and an outline of a joint program for strengthening cooperation on poverty reduction.

Ethiopia is the first leg of Li’s on-going Africa tour, which will also take him to Nigeria, Angola and Kenya. After arriving in the Ethiopian capital on Sunday, he held talks with Hailemariam and the two leaders vowed to further boost bilateral cooperation.

Xinhua

M

ore Chinese cities are rolling out measures to encourage home purchases, expanding efforts by local governments to support the cooling property market as authorities come under pressure to steady China’s faltering economy.

The eastern city of Tongling in the Anhui province has introduced steps including providing tax subsidies to first-home buyers, and cutting down payment to 20 percent from 30 percent for selective buyers, a statement on the city’s government website said on Monday.

Ningbo, the coastal city of the eastern Zhejiang province, has also relaxed home purchase restrictions, the official China Securities Journal newspaper reported yesterday, quoting a meeting held by a local industry association.

By softening the rules, the local governments are effectively reversing a near-five-year-old policy of reining in China’s frothy property market, underscoring policymakers’ resolve to support an economy growing at its slowest pace in decades.

China’s growth engine has lost steam in the past year, squeezed by lacklustre demand for exports and the government’s push to cut its own investment in a bid to reshape the economy.

The moves follow recent similar measures by three other cities - the southern city of Nanning, the eastern city of Wuxi and the Xiaoshan district in the eastern city of Hangzhou - to

Housing is one of the biggest concerns in China

relax property controls by easing rules for buying homes or land.

China’s home prices rose at doubledigit rates in most cities last year, but the market has shown signs of cooling since late 2013 as authorities clamped down on property speculation, and as banks made it harder for home buyers and small developers to get loans.

A cooling property market puts more pressure on regional economies as incomes of local governments take a hit. Analysts expect more cities to follow suit as a recent cooling in land prices will likely further crimp local governments revenues.

“If property activities weaken further, we think the government may allow various local governments to relax home purchase restrictions and cut down the current hefty downpayment requirements,” economists at UBS said in a note to clients.

Reuters

Guangzhou starts poultry measures to eradicate bird flu Governments from Guangzhou to Hangzhou temporarily closed some markets after finding that victims came into contact with live birds

C

hina’s southern city of Guangzhou began a six-month trial campaign to end the sale of live poultry in some districts to reduce the spread of bird flu and improve food safety.

Retailers located in four areas were ordered to switch to the sale of chilled fresh poultry from approved slaughterhouses, according to a statement on the city’s website.

Raising, storing, slaughtering and selling live birds is prohibited, effective since Monday, according the statement, which was dated April 26.

Trials are also under way in the nearby cities of Foshan and Shenzhen as Guangdong province seeks to phase out the live- poultry trade, blamed for fuelling the spread of bird flu to humans, Nanfang Daily newspaper reported on April 29, citing Lin Yongsheng, deputy director of the food safety committee.

More than 120 people in China had been killed by the H7N9 strain of Avian Influenza as of April 21, according to the state-run Xinhua News Agency. Governments from Guangzhou in the south to Hangzhou in the east temporarily closed some

markets after finding that victims came into contact with live birds.

Guangzhou aim to “ensure poultry meat safety, prevent bird flu and transform the domestic poultry industry,” according to the report in the Nanfang Daily, which is controlled by the Guangdong province government. The province is China’s biggest regional economy and neighbours Hong Kong.

Guangzhou Kwangfeng Industry Co., Guangzhou Rongli Poultry Co. and Guangdong Tiannong Food Co., were chosen as authorized suppliers from among eight companies selling poultry to Hong Kong, the newspaper said, citing Lin. The city government will give 7.2 million yuan (US$1.2 million) in subsidies to the stalls and markets to install proper equipment for selling chilled fresh poultry, according to the daily.

The measures will be gradually extended city-wide after October, covering 70 percent of the Guangzhou’s poultry trade by 2017, Nanfang Daily said, citing a draft plan.

Bloomberg News

12

May 7, 2014

Asia U.S.-Singapore tax evasion agreement Singapore has reached a tax information-sharing agreement with the United States under a new law meant to combat offshore tax dodging by Americans, a U.S. Treasury Department spokeswoman said on Monday. Set to take effect on July 1, the Foreign Account Tax Compliance Act of 2010 (FATCA) will require foreign banks, investment funds and insurers to hand over information about Americans’ accounts that have more than US$50,000 to the U.S. Internal Revenue Service. Foreign firms that do not comply face a 30 percent withholding tax on their U.S. investment income and could effectively be frozen out of U.S. capital markets.

N.Z. rebuilds to cut jobless numbers

The RBA headquarters

RBA keeps rates low Low rates are needed in part to offset the squeeze from tightening fiscal policy

A Prime Minister John Key yesterday confirmed his government was on track to hitting an operating service this financial year and outlined new plans to deal with the country’s stubborn jobless figures. Speaking ahead of the Budget to be delivered next week, Key said the government was moving into a period of fiscal surplus after taking on a considerable amount of debt to help vulnerable families, maintain living standards and support the rebuild of earthquake-battered Christchurch. The Budget would focus on the four priorities: responsibly managing finances; building a more competitive and productive economy; delivering better public services; and rebuilding Christchurch.

Japan to research a fast-breeder atomic reactor Nippon will join a French research effort to develop a new nuclear reactor that promoters say will use fuel more efficiently and produce less atomic waste. Japanese Prime Minister Shinzo Abe and French President Francois Hollande agreed to “intensify their civil nuclear research,” according to a joint statement yesterday following a meeting between the two leaders in Paris.As part of Abe’s state visit, the Japanese ministries of economy and science and France’s atomic research institute Commissariat a l’Energie Atomique et aux Energies Alternatives signed an accord to cooperate on a project for a so-called fourth generation fast-breeder reactor called Astrid.

ustralia’s central bank kept interest rates at record lows for an eighth meeting yesterday, just a week before the government is expected to lay down a frugal budget that is likely to be an added drag on the economy over the next few years.

The local dollar edged higher after the Reserve Bank of Australia (RBA) held rates at 2.5 percent as expected, noting improvements in consumer demand, housing and employment.

“Looking ahead, continued

accommodative monetary policy should provide support to demand, and help growth to strengthen over time,” RBA Governor Glenn Stevens said in a brief statement after the bank’s May policy meeting.

“On present indications, the most prudent course is likely to be a period of stability in interest rates.”

The central bank has been on the side-lines since August, content that past cuts were percolating through to home building and consumption,

while boosting household wealth.

A Reuters poll of 25 economists had found all expected a steady outcome this week, while most suspected the next move would be upward, albeit not until 2015.

The futures market implies almost no chance of a further easing, and has priced in only a small probability of a rate rise late this year.

Low rates are needed in part to offset the squeeze from tightening fiscal policy as Tony Abbott’s Liberal

Aussie PM sees popularity decline A government-commissioned report released May 1 recommended cuts to family benefits

S

upport for Prime Minister Tony Abbott’s coalition dropped to the lowest level in four years as the government prepares to raise the pension age and cut welfare benefits to curb Australia’s deficit in next week’s budget.

The Liberal-National coalition is trailing on 47 percent to Labor’s 53 percent on a two-party preferred basis, according to a News poll published in The Australian newspaper yesterday.

Voter satisfaction with Abbott fell five points from the previous poll to 35 percent, the lowest level since he won office in September.

Abbott, who pledged not to increase taxes in the election campaign, is reportedly considering a temporary levy as the government seeks to create a surplus of 1 percent of gross domestic product within a decade. Treasurer Joe Hockey announced last week the retirement age will rise to 70 from 65 by 2035, as he tackles a A$123 billion (US$114 billion) projected shortfall for the four years through June 2017

cuts to family benefits, making people pay more to visit public doctors and the privatization of rail and postal assets.

Older voters

Tony Abbot with Hilary Clinton, when Abbot was still opposed to building a monorail in the capital

in the May 13 budget.

“The government has backed itself into a tight political corner,” said Nick Economou, a political analyst at Monash University in Melbourne. “Abbott made the mistake of promising too much. The voters are more concerned about higher taxes or their benefits taken away than they are about a deficit.”

A government-commissioned report released May 1 recommended

The survey showed a significant drop in support for the coalition among older voters, the Australian reported, citing News poll Chief Executive Officer Martin O’Shannessy.

The government is considering a deficit-reduction levy that would temporarily increase the top tax rate, the Australian reported. The coalition blames the previous Labor government for creating a “budget emergency” that would see Australia’s net debt peak at 16.2 percent of gross domestic product by mid-2019 without policy changes.

“You’ve just got to make hard decisions at a time like this,” Abbott, 56, said in a television interview yesterday. “Otherwise our country is doomed to years of economic stagnation.

Bloomberg News

editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk Alex Lee, Luciana Leitão, Michael Armstrong, Sara Farr, Stephanie Lai, Tony Lai International editor Óscar Guijarro GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari interns Cynthia Wong, Yvonne Wong Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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13

May 7, 2014

Asia unlikely to be lifting rates this year.”

The Australian economy expanded an annual 2.8 percent in the fourth quarter, and growth is seen closer to 3 percent this year.

KEY POINTS RBA keeps rates at 2.5 pct for an eighth straight meeting Signals policy to stay on hold for a while longer Next week’s budget expected to be a drag on economy

National government embarks on spending cuts and possible tax rises.

Treasurer Joe Hockey has spent months warning of a fiscal crisis and even floated the idea of a temporary levy on higher income tax payers to help deal with state debt.

The dismal drumbeat has had an unwelcome impact on the national mood, with one measure of consumer confidence tumbling by 8 percent in just the past two weeks.

The survey from ANZ and Roy Morgan showed consumer perceptions of the economy for the next year had plunged by a fifth in the same time period.

“Undoubtedly, a tighter than expected budget -- or one that more negatively impacts consumer sentiment -- adds some downside risk to our growth outlook,” said Scott Haslem, chief economist at UBS. “It supports our view that the RBA is

Exports on a China roll On the brighter side Australia’s exports are on a roll as the hundreds of billions of dollars spent on mining projects expands production of everything from iron ore, to coal and liquefied natural gas.

Data from the Australian Bureau of Statistics out on Tuesday showed exports to China hit a record A$9.5 billion (US$8.8 billion) in March, 29 percent higher than a year earlier.

For the three months to March the country boasted a trade surplus of A$2.72 billion. That was a huge turnaround of A$3.7 billion from the previous quarter and implies net exports made a significant contribution to economic growth.

The strength looks to have continued in April with shipments of iron ore to China from Port Hedland, the world’s busiest iron ore port, up no less than 50 percent on April last year.

Much of this is going into Chinese infrastructure where spending remains strong despite the slowdown in manufacturing.

Australian miners are also gaining market share, says Paul Bloxham, chief economist for Australia and New Zealand at HSBC. “Australia is the lowest cost producer of iron ore, so that even if overall demand for iron ore slows, other producers are likely to see cuts before there is a reduction in demand for Australian iron ore,” he said.

Reuters

Modi takes battle to Gandhi citadel Opinion polls show the BJP and its allies taking the largest share of seats in the five-week election

I

ndian opposition challenger Narendra Modi, riding a wave of popular anger against the ruling Congress party, took his battle to the Gandhi citadel yesterday, telling voters it was time to send the dynasty packing for its broken promises.

Modi, in the final leg of a mammoth general election, took his campaign to the seat of Congress heir apparent Rahul Gandhi, breaking a tradition in which top politicians stay off each other’s home turf.

Such has been the intensity of the campaign and the hostility between Modi and the Gandhis that he did not spare even Rahul’s father and former Prime Minister Rajiv Gandhi, who was assassinated in 1991.

“In 60 years, three generations have been wasted here. This family has destroyed your dreams. I have come to fulfil your dream,” the prime ministerial candidate of the Hindu nationalist Bharatiya Janata Party (BJP) told a large crowd.

Opinion polls show the BJP and its allies taking the largest share of seats in the five-week election.

Congress, in power for the past

decade, faces its worst defeat.

Rahul Gandhi, the party’s campaign ‘face’, has been ineffectual on the stump and it has fallen to his sister Priyanka to lead late efforts to defend the family’s seats in the northern state of Uttar Pradesh that vote on Wednesday.

“I know this is a difficult time for a mother,” said the 63-year-old Modi, mocking Rahul as a mama’s boy of his Italian-born mother Sonia, the president of the Congress party.

“This mother has suffered for 10 years to get her son ready,” Modi said. “Your hard work is going down the drain and I can understand your troubles.”

Reacting, Priyanka Gandhi said at a separate event in Amethi: “The BJP has insulted my late father in Amethi and people here will never forgive it.”

The Congress party dismissed speculation, however, that Rahul Gandhi would campaign in Varanasi, where Modi is running as a candidate. The holy city on the river Ganges goes to the polls on May 12, the final day of the election.

Reuters

Overseas investors back Philippine’s stocks Southeast Asia’s fifth-biggest economy capped its fastest two-year expansion since the 1950s

T

he longest stretch of inflows into Philippine equities since at least 1999 shows growing confidence among foreign investors that the economy has the best prospects in Asia, according to the nation’s topperforming stock picker.

Overseas money managers were net buyers on the Philippine Stock Exchange for a 25th straight day on Monday, adding US$561 million to holdings during the period and capping the longest streak of inflows since Bloomberg began compiling the data in March 1999. Noel Reyes, the chief investment officer at Security Bank Corp., says fresh purchases may drive further gains as long as the nation maintains economic

growth near 7 percent.

Southeast Asia’s fifthbiggest economy capped its fastest two-year expansion since the 1950s in 2013 as the central bank held interest rates at record lows, while exports jumped at a bigger-thanestimated 24 percent pace in February. The benchmark equity index has climbed 18 percent from last year’s low in August, approaching the 20 percent threshold that signals a bull market.

“The Philippines continues to be the country with the best prospects on the macro side,” Reyes, 48, who helped oversee about US$810 million at Security Bank as of December from Manila. The firm’s SB Peso Equity Fund has returned about 20 percent

in 2014, the most among 29 Philippine peers tracked

by Bloomberg. “Funds are betting that these good GDP expectations will translate into good corporate earnings.”

Top holdings Reyes said he favours infrastructure, consumer and energy companies.

While he declined to name specific stocks, data compiled

by Bloomberg show Manila Electric Co. and Puregold

The Philippines continues to be the country with the best prospects on the macro side Noel Reyes, chief investment officer, Security Bank Corp

West Tower of Philippine Stock Exhange

Price Club Inc. were among the SB Peso Equity fund’s biggest holdings at the end of January.

Manila Electric, the nation’s largest power retailer, has climbed 10 percent this year while Puregold, the biggest grocery-store operator, rallied 21 percent. The Philippine Stock Exchange Index advanced 15 percent, versus a 2 percent decline in the MSCI Asia Pacific Index.

“The government will spend on infrastructure and power will be required to sustain economic expansion, while consumption remains a big component of the economy,” Reyes said. The money manager has an underweight position in banks on expectations they will fail to repeat trading gains that boosted earnings in 2013.

Aquino economy Philippine President Benigno Aquino plans to raise spending to a record this year and will seek more than US$11 billion of investment in airports and roads to deliver economic growth between 6.5 percent and 7.5 percent.

Gross domestic product expanded 7.2 percent in 2013 and 6.8 percent in 2012, data compiled by Bloomberg show. That compares with 4.7

percent growth for developing economies worldwide last year, according to the International Monetary Fund.

Sustained economic expansion will support the premium on Philippine stock valuations relative to the region, according to Reyes. Shares in the nation’s benchmark index trade at 17.8 times estimated 12-month earnings, compared with a 12.3 multiple for the MSCI Asia Pacific Index.

“The key for valuation is sustainability of economic growth,” Reyes said. “If GDP weakens, then that valuation will drop because that will have an effect on corporate earnings.”

The economy will probably expand 6.5 percent this year while corporate earnings grow 8 percent, Reyes said.

Consumer prices, which climbed at a 3.9 percent pace in March, may increase in a range between 3.7 percent and 4.2 percent, he said.

Reyes said the Philippine Stock Exchange index may climb to as high as 7,000 this year if GDP and inflation figures are better than investors anticipate.

The gauge, which closed at 6,766.46 yesterday, reached a 2014 high of 6,784.95 on April 22.

Bloomberg News

14

May 7, 2014

International

Tobin tax starts to take shape at EU

Hollande says GE must improve Alstom bid French President Francois Hollande said General Electric’s bid for Alstom’s energy business is not acceptable as it stands and that the government’s aim is to get better offers. “The bid is not good enough, it’s not acceptable,” Hollande told RMC radio yesterday. Asked whether it was possible that the state, which currently holds around 1 percent in Alstom, could itself increase its stake in the ailing engineering group, he said: “For now I would prefer to get better offers.” Alstom said last week it was reviewing a binding US$16.9 billion bid from GE.

Germany, France, Spain, Italy, Belgium, Austria, Portugal, Greece, Estonia, Slovakia and Slovenia are the countries that have signed up to the transaction-tax effort

E

uropean finance ministers are designing a financialtransaction tax on equities and derivatives that could start in 2016 for the 11 nations that have signed up to participate.

French Finance Minister Michel Sapin said details could be presented by the end of this year, to take effect at the start of 2016. “A critical mass” is emerging among nations including France, Germany, Italy and Spain, he told reporters yesterday after euro-area ministers met in Brussels.

Work on a transaction tax for the 11 willing countries began more than a year ago, after a European Union-wide proposal failed. So far, the participants have remained committed to the cause without finding agreement on how the tax could work.

The participants haven’t been able to agree on whether to tax all derivatives, only equity derivatives or none at all. Nations pushing for the levy are also split over who should get to collect it, a trading firm’s country of origin or the nation where trading takes place. Smaller countries have generally sought a broader tax that raises more revenue, while bigger nations have been willing to start on a smaller scale.

EU Tax Commissioner Algirdas Semeta said in Vilnius yesterday that there isn’t a common approach on how to handle derivatives. Sapin said further work would pin down how the tax’s scope would take shape.

More than shares “It won’t just cover shares, but also a certain number of derivatives which we now have to define,” Sapin said.

All 28 EU nations will take part today in a discussion on the tax plan’s state of play, allowing nonparticipating countries like the U.K. to raise concerns about potential spill over effects. A May 2 document prepared by Greece, which holds the EU’s rotating

UN chief in war-torn South Sudan to push for peace Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem (L) and President of the European Central Bank (ECB) Mario Draghi (C) chat at the start of Eurogroup Finance Ministers meeting at EU council headquarters

presidency, said more technical work will be needed.

A common European financial transaction tax could drive away companies and hurt the growth outlook, Maltese Finance Minister Edward Scicluna said. Malta, which isn’t one of the 11, shares the participants’ concern that an improperly designed tax could cause economic harm, he said in an interview in Brussels.

“Talking to countries who are in favour, we have the same concerns: We both wish that the business won’t go elsewhere,” Scicluna said. Germany and other supporters have made clear that they’ll withdraw support if the design looks likely to drive firms away from the region where the tax takes effect, he said.

Risky speculation Germany, France, Spain, Italy, Belgium, Austria, Portugal, Greece, Estonia, Slovakia and Slovenia are the countries that have signed on to the transaction-tax effort. Backers say the tax is needed to raise revenue and limit risky market speculation, and that it could expand over time.

“We know that we can only proceed step by step,” German Finance Minister

Wolfgang Schaeuble said on Monday.

“The possibilities, the situations and the interests of the individual participating states are so different that only a limited taxation of shares and some derivatives is possible in a first step.”

Fewer participating nations creates a higher risk that trades will flee from the tax zone, Scicluna said.

He said this is economic activity that most nations can’t afford to lose.

“We, a small island, rely on diversified sectors,” Scicluna said.

“We can’t afford that any sector -whether its financial, manufacturing, other services, maritime- is losing competitiveness to other countries.”

A European financial-transaction tax would do economic damage even if its scope were narrowed from initial proposals, according to the employers’ federation BusinessEurope.

“Even a narrowly scoped FTT will still have a negative impact on growth and jobs, while leaving the door open for further taxation through a step-by-step approach risks creating unnecessary uncertainty for investors,” BusinessEurope said in letter to EU finance ministers.

Bloomberg News

Climate change threatens U.S. health Unlike ozone in the stratosphere, ground-level ozone can trigger a number of health problems

T

he United States may face a 70 percent increase in unhealthy summertime ozone levels by 2050 as the climate warms, according to a government-funded study released on Monday.

The study, published in the U.S. Journal of Geophysical ResearchAtmospheres, found that warmer temperatures, higher atmospheric levels of methane, and other atmospheric changes related to a changing climate spur chemical reactions that increase overall levels of ozone.

“It doesn’t matter where you are in the United States, climate change has the potential to make your air worse,” lead researcher Gabriele Pfister of the U.S. National Center for Atmospheric Research (NCAR) said in a statement.

“A warming planet doesn’t just mean rising temperatures, it also means

risking more summertime pollution and the health effects that come with it,” said Pfister.

Ozone pollution is not emitted directly, but instead forms as a result of chemical reactions that take place between nitrogen oxides and volatile organic compounds in the presence of sunlight. These gases come from human activities such as combustion of coal and oil as well as natural sources such as emissions from plants.

Unlike ozone in the stratosphere, which benefits life on Earth by blocking ultraviolet radiation from the Sun, ground-level ozone can trigger a number of health problems, ranging from coughing and throat irritation to more serious problems, including aggravation of asthma, bronchitis, and emphysema. Ozone pollution also damages crops and other plants.

To examine the impacts of climate change on ozone pollution, Pfister and her colleagues looked at two scenarios.

In one, emissions of nitrogen oxides and volatile organic compounds would continue at current levels through 2050. In the other, emissions would be cut by 60 to 70 percent.

The researchers found that if emissions continue at present-day rates, the number of eight-hour periods in which ozone would exceed 75 parts per billion (ppb), a threshold considered unhealthy, would jump by 70 percent on average across the United States by 2050.

Overall, the researchers said that 90 percent of the time, ozone levels would range from 30 to 87 ppb in 2050 compared with an estimated 31 to 79 ppb in the present.

Xinhua

Ban Ki-moon flew into South Sudan yesterday to demand an end to a brutal civil war, with leaders defying peace efforts despite dire warnings of genocide and famine. The visit, coming as rebels and government forces battle for control of a key oil town, is the latest major push for a ceasefire in the nearly fivemonth-old civil war, which has seen the world’s youngest nation collapse amid a brutal cycle of war crimes. “The Secretary-General has repeatedly called on the leaders to find a political solution, and to put an immediate end to the violence which has led to the suffering of so many innocent civilians,” a UN statement read.

Lexmark bids for Readsoft U.S. group Lexmark International said yesterday it had made a 1.2 billion crown (US$183.20 million) cash bid for Sweden’s Readsoft that was unanimously recommended by the software company’s board. Lexmark, which sells laser printers and imaging software, is offering 40.05 Swedish crowns per share in Readsoft, which supplies business software for invoicing and processing sales orders. The bid offers a premium of 118 percent over Readsoft’s closing price on Monday.

Portugal’s largest private bank improves BCP cut its first quarter net loss to €41 million and down from €152 million in the same period of last year, the bank said as it announced its first quarter earnings on Monday. “We still have negative profitability but clearly lower than last year” bank president Nuno Amado told the respective press conference.

“The international operations contributed towards the objective of boosting their contribution towards group results” said Amado before revealing international earnings had surged 18% year-on-year to total €48 million and described as the best in the last two years.

LatAm countries have widest wealth gap Latin America and the Caribbean have the widest wealth gap of any region on the planet, a UN official said Monday.

“This is the most unequal region in the world. Not the poorest, but the most unequal,” Alicia Barcena, executive secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), told Xinhua. “This situation is the result of great wealth concentrated in few hands, and the large number of the poor that live in these countries,” said Barcena, who held a seminar on sustainable development.

15

May 7, 2014

Opinion Business

Global Ground Zero in Asia

Leading reports from Asia’s best business newspapers

Nouriel Roubini

wires

Professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics

THE STAR It is literally a less fruitful year for Malaysians with a 60% drop in local fruit production brought about by the recent dry spell. Fruits have also become costlier with price rises of between 50 sen and 60 sen a kilo for many varieties. The situation is not likely to get any better as the year progresses.

With the Meteorological Department forecasting another dry spell later, fruit growers are bracing for another round of poor harvests. Malaysian Fruit Farmers Association said the drop in supply of fruits was expected to last until July before the situation returned to normal.

THANH NIEN NEWS The Vietnamese Ministry of Foreign Affairs has protested the illegal foray of China’s deep-water drilling rig into Vietnamese waters.

Any foreign drilling operation conducted in Vietnamese waters without express permission is illegal; Vietnam strongly protests it, the ministry’s spokesperson Le Hai Binh said in a statement posted on a government website Sunday. On May 3, the Chinese Maritime Safety Administration announced that the rig HD981 would drill in a location of 15 degrees and 29’58’’ North latitude and 111 degrees and 12’06’’ East longitude from May 2 to August 15.

JAKARTA GLOBE An association of iron and steel producers says their industry must be included by the government in a list of strategic industries that would entitle it to greater attention and assistance from the state. Basso Datu Makahanap, a committee member of the Indonesian Iron and Steel Association, said on Monday that such a move would help the future growth of the industry. “The steel industry is at the centre of all industries,” he added. The newly amended Industry Law authorizes the government to determine “strategic industries” that can be controlled in one form or another.

THE ASAHI SHIMBUN The number of children under 15 in Japan fell for the 33rd straight year, plunging by 160,000 from last year to reach a record low of 16.33 million, the internal affairs ministry said. As of April 1, children under 15 made up 12.8 percent of the Japanese population, the lowest ratio among 30 nations with populations of at least 40 million, according to ministry officials.

The figures were estimated from national census research and released by the Ministry of Internal Affairs and Communications a day before the Children’s Day national holiday.

N

EW YORK – The biggest geopolitical risk of our times is not a conflict between Israel and Iran over nuclear proliferation. Nor is it the risk of chronic disorder in an arc of instability that now runs from the Maghreb all the way to the Hindu Kush. It is not even the risk of Cold War II between Russia and the West over Ukraine.

All of these are serious risks, of course; but none is as serious as the challenge of sustaining the peaceful character of China’s rise.

That is why it is particularly disturbing to hear Japanese and Chinese officials and analysts compare the countries’ bilateral relationship to that between Britain and Germany on the eve of World War I. The disputes between China and several of its neighbours over disputed islands and maritime claims (starting with the conflict with Japan) are just the tip of the iceberg.

As China becomes an even greater economic power, it will become increasingly dependent on shipping routes for its imports of energy, other inputs, and goods. This implies the need to develop a blue-water navy to ensure that China’s economy cannot be strangled by a maritime blockade.

But what China considers a defensive imperative could be perceived as aggressive and expansionist by its neighbours and the United States. And what looks like a defensive imperative to the US and its Asian allies – building further military capacity in the region to manage China’s rise – could be perceived by China as an aggressive attempt to contain it.

Historically, whenever a new great power has emerged and faced an existing power, military conflict has ensued.

The inability to accommodate Germany’s rise led to two world wars in the twentieth century; Japan’s confrontation with another Pacific power – the US – brought World War II to Asia.

Of course, there are no iron laws of history: China and its interlocutors are not fated to repeat the past. Trade, investment, and diplomacy may defuse rising tensions.

But will they?

Europe’s great powers finally tired of slaughtering one another. Facing a shared threat from the Soviet bloc and US prodding, European countries created institutions to promote peace and cooperation, leading to economic and monetary union, now a banking union, and possibly in the future a fiscal and political union.

But no such institutions exist in Asia, where long-standing historical grievances among China, Japan, Korea, India, and other countries remain open wounds. Even two of America’s most important allies – Japan and South Korea – find themselves in a bitter dispute about the Korean “comfort women” forced to work in Japanese military brothels before and during World War II, despite an official apology from Japan 20 years ago.

Why are such tensions among Asia’s great powers becoming more serious, and why now?

For starters, Asia’s powers have recently elected or are poised to elect leaders who are more nationalistic than their predecessors. Japanese Prime Minister Shinzo Abe, Chinese President Xi Jinping, South Korean President Park Geun-hye, and Narendra Modi, who is likely to be India’s next prime minister, all fall into this category.

Second, all of these leaders now face massive challenges stemming from the need for structural reforms to sustain

Different types of structural reforms are crucially important in China, Japan, India, Korea, and Indonesia.

If leaders in one or more of these countries were to fail on the economic front, they could feel politically constrained to shift the blame onto foreign “enemies”

satisfactory growth rates in the face of global economic forces that are disrupting old models.

Different types of structural reforms are crucially important in China, Japan, India, Korea, and Indonesia. If leaders in one or more of these countries were to fail on the economic front, they could feel politically constrained to shift the blame onto foreign “enemies.”

Third, many US allies in Asia (and elsewhere) are wondering whether America’s recent strategic “pivot” to Asia is credible. Given the feeble US response to the crises in Syria, Ukraine, and other geopolitical hot spots, the American security blanket in Asia looks increasingly tattered. China is now testing the credibility of US guarantees, raising

the prospect that America’s friends and allies – starting with Japan – may have to take more of their security needs into their own hands.

Finally, unlike Europe, where Germany accepted the blame for the horrors of WWII and helped to lead a decades-long effort to construct today’s European Union, no such historical agreement exists among Asian countries. As a result, chauvinist sentiments have been instilled in generations that are far removed from the horrors of past wars, while institutions capable of fostering economic and political cooperation remain in their infancy.

This is a lethal combination of factors that risks eventually leading to military conflict in a key region of the global economy. How can the US credibly pivot to Asia in a way that does not fuel Chinese perceptions of attempted containment or US allies’ perceptions of appeasement of China? How can China build a legitimate defensive military capability that a great power needs and deserves without worrying its neighbours and the US that it aims to seize disputed territory and aspires to strategic hegemony in Asia? And how can Asia’s other powers trust that the US will support their legitimate security concerns, rather than abandon them to effective Finlandization under Chinese domination?

It will take enormous wisdom on the part of leaders in the region – and in the US – to find diplomatic solutions to Asia’s multitude of geopolitical and geo-economic tensions. In the absence of supporting regional institutions, there is little else to ensure that the desire for peace and prosperity prevails over conditions and incentives that tend toward conflict and war.

The Project Syndicate 2014

16

May 7, 2014

Closing Chinese citizen abducted in Malaysia

UBS sees net profit swell

A Chinese citizen was abducted by five armed men yesterday in Malaysia’s eastern state of Sabah, according to Bernama, Malaysia’s state news agency. Eastern Sabah Security Command director-general Mohammad Mentek confirmed that the incident occurred at 2:45 a.m. and the victim was a 34-year-old manager of a cage fish breeding company. He said the Chinese national, surnamed Yang, has been employed to work for the Wonderful Terrace Sdn Bhd, a company operating a fish farm in the area, for three years. The Chinese Consulate in Kuching (pictured), Malaysia, said Yang is from Guizhou province in southwest China.

Swiss banking giant UBS yesterday reported surprisingly strong first-quarter net profits, and announced an overhaul of its legal structure targeted at benefiting shareholders.

For the three first months of the year the bank, Switzerland’s biggest, posted a net profit up 7.0 percent to 1.05 billion Swiss francs (US$1.2 billion). It thus easily beat the expectations of analysts polled by the AWP financial news agency, who had anticipated a net profit of 855 million Swiss francs for the quarter. UBS chief Sergio Ermotti and chairman Axel Weber hailed the result as “a solid performance achieved despite a volatile operating environment.”

OECD cuts China 2014 growth forecast to 7.4 percent China’s economic growth is likely to slow to 7.4 percent in 2014 from 7.7 percent last year due to the government’s drive to curb credit risk and excessive factory capacity, the OECD said on Tuesday

I

n November, the Organisation for Economic Co-operation and Development predicted that China’s economic growth could accelerate to 8.2 percent

in 2014.

The OECD attributed the slower growth forecast to Beijing’s efforts to rein in the shadow banking sector, overcapacity in

such industries as steel and cement and a cooling property market. Many real estate developers and local governments have relied on shadow banking credit

such as trust loans and other forms of off-balance sheet borrowings to stay liquid.

China’s government has in recent weeks hastened construction of railways and affordable housing and cut taxes for small firms in a bid to support the slowing economy although Premier Li Keqiang has ruled out any forceful measures.

“Investment may slow more than projected if the supportive measures fail to counterbalance the effects of the phasing out of excess capacity and the anticorruption campaign,” the OECD report says.

“Consumption may also surprise on the downside if a cooling property market were to dampen housingrelated spending and weak income growth were to curtail spending on durables.”

The latest Reuters poll shows China’s growth could slow to 7.3 percent this year, its weakest showing

in 24 years and slower than the official target of 7.5 percent.

Beijing’s efforts to tackle factory overcapacity and pollution have hit output, while a sustained anticorruption campaign has hurt consumption, especially of high-end goods.

The government is trying to restructure the economy so that it is driven more by consumption than the traditional engines of exports and investment but wants to avoid a sharp slowdown that could fuel job losses and threaten social stability.

“The pace of structural reforms will influence shortterm outcomes, the challenge being to keep up sufficient momentum to reduce imbalances whilst avoiding overly abrupt adjustments that might trigger a crisis,” the OECD said.

The OECD predicts that China’s consumer inflation will ease to 2.4 percent in 2014 from 2.6 percent last year.

The volume of China’s exports of goods and services will grow 7.5 percent in 2014, slowing from 8.6 percent last year, while import growth could ease to 9.2 percent from 10.7 percent.

China’s current account surplus as a share of GDP could shrink to 1.2 percent in 2014 from 2 percent last year, it added.

Six wounded in knife attack Power to the young in Guangzhou

China’s SOE dividend payment rises

A

T

t least two, and as many as four, assailants wielding long knives wounded six people in an attack yesterday at a railway station in China’s southern city of Guangzhou, police and state media said, in the latest of a series of assaults to raise jitters around the country.

Police gave no reason for the attack, but China’s nervousness about Islamic militancy has grown since a car burst into flames on the edge of Beijing’s Tiananmen Square in October and 29 people were stabbed to death in March in the south-western city of Kunming. The government blamed militants from the restive far western region of Xinjiang for both those attacks. Resource-rich and strategically located Xinjiang, on the borders of central Asia, has for years been beset by violence blamed by the Chinese government on Islamist militants.

Guangzhou police “arrived quickly on the scene” yesterday and shot one of the attackers.

The official Nanfang Daily said another suspect had been caught by police after fleeing the scene.

Reuters

W

orld youth need to get involved to define the post-2015 global development agenda because “the stakes are just too high” to do otherwise, President of the United Nations General Assembly John William Ashe said yesterday.

Addressing the World Conference on Youth (WCY) 2014 in Sri Lanka, Ashe insisted that youth have to spearhead the next decade of global development. “There are sections of society that was clearly not included in the previous global development drive,” he said referring to the Millennium Development Goals.

“This time around we have to make sure that they are involved. This is about youth, without you this cannot happen. Do not let this happen the stakes are far higher. You need to get involved. You have to make this about you. Ultimately you have to take part in decision making. Get involved,” he said at the opening ceremony of the event.

He also acknowledged that better tracking of goals and tighter timelines are needed to deal with the challenge of extreme poverty, adding high levels of illiteracy, lack of healthcare, violence and inequality continue to hamper youth in all parts of the world.

Xinhua

REUTERS

he country will increase dividends paid by wholly state-owned enterprises (SOEs) by 5 percentage points to up to 25 percent of their profits, the finance ministry said yesterday, in the latest move to push ahead long-awaited state sector reforms.

There have been frequent calls for SOEs to raise dividend payments, in part because of criticism that they make profits from exclusive occupation of national resources, but the benefits don’t trickle down to ordinary people.

Beijing is well aware of such complaints and has pledged to reduce state firms’ dominance as part of its efforts to rebalance the economy. Plans for raising dividend pay-outs were first laid out in the Communist Party’s Third Plenum meeting in November.

The ministry said the dividend increase will start from this year and the extra payments will be largely used for projects and services to improve people’s livelihoods, according to the statement on its website.

After the increase, the dividend collected by the central government will range from 10 percent to 25 percent of companies’ profits.

Reuters