Macau Business Daily, June 2nd, 2014

MOP 6.00 Closing editor: Sara Farr

No new gaming licences until 2025. This will enable Macau to digest the problems caused by strong growth and lack of preparation and planning, says economist. Albano Martins says the comments by Secretary for Economy and Finance regarding consolidation after the next wave of mega-resorts is built in Cotai, in 2017, is important. But the need to deal with the overheated economy and strangulation in terms of human resources is urgent

Definition of mass-market gaming floors and VIP gaming areas will no longer be immersed in clouds of smoke. DICJ promises to clarify the situation once and for all in the near future. A full smoking ban on local casino mass gaming floors comes into effect Oct. 6

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www.macaubusinessdaily.com

Year III

Number 551 Friday June 2, 2014

Publisher: Paulo A. Azevedo

Tam shows his hand

Smoke signals

Bridge over troubled waters Infrastructure delays are becoming the norm. Now it’s the reclamation work in one of the main zones to access the future Zhuhai-Macau-Hong Kong Bridge. The fault, says the government, is the “lack of preparation” by the contractor. But it has picked up the pace, and the original deadline is reachable Page 5

Powerhouse still performing Macau’s GDP grew slower in the first quarter, year-on-year, but still expanded at a robust pace. For the 12.4 percent growth, the export of gaming services and private investments were decisive

Macau’s merchandise trade deficit has widened to almost MOP26 billion

Brought to you by

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HSI - Movers May 30

No biz like show biz Macau poses specific challenges for big trade shows, like flight connections. The president of Reed Exhibitions China, the organiser of G2E Asia, tells Business Daily the event is still growing. More exhibitions are in the pipeline to Macau, a place Nat Wong believes is best suited for consumer-based shows

Name

%Day

Galaxy Entertainme

4.65

China Unicom HK

2.47

Want Want China H

2.08

New World Develop

1.95

Bank of China Ltd

1.93

COSCO Pacific Ltd

-1.54

China Resources Ent

-1.58

Cathay Pacific Airwa

-1.67

CNOOC Ltd

-2.06

Belle International

-2.53

Source: Bloomberg I SSN 2226-8294

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Picking up the pace

Losing less

Factory activity accelerated to reach the fastest growth in the last 5 months. Chinese government measures and increasing orders seem to be behind the successful figures

Studio City Finance Ltd made a net loss on paper of US$13.5 million in the first quarter, mainly due to higher interest capitalisation as the development of Studio City on Cotai continues

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June 2 30, 2014

Macau Iao Kun Q1 rolling chip turnover MOP38.33 bln Junket operator Iao Kun Group Holding Co Ltd’s rolling chip turnover was MOP38.33 billion in the first quarter of this year, 16 percent more than a year earlier. The company says its first-quarter revenue rose by 24 percent to MOP638 million but that its net profit fell to MOP25.5 million from MOP55.8 million. It attributed the fall in net profit mainly to a net increase in the contingent consideration liability for some VIP gaming rooms due primarily to an increase in the forecast rolling chip turnover performance based on past performance, and higher commissions resulting from a higher commission rate offered to non-credit agents and super agents.

MOP25.88 billion Merchandise trade deficit in Q1

Imported, exported watches increase 70pct in Q1 Overall, the combined total value of Macau’s imported and exported merchandise reached MOP32.5 billion between January and April Sara Farr

sarafarr@macaubusinessdaily.com

M

acau is exporting evermore clocks and watches, the total value of which reached 372 million patacas in the first quarter this year, up 70 percent year-on-year.

Official data released by the Statistics and Census Service shows that the combined total value of imported and exported merchandise grew by an average 12 percent to 32.5 billion patacas. Exports alone increased 8 percent with a total value

of 3.32 billion patacas, while imports increased 16 percent with a total value of 29.2 billion patacas. The value of re-exports also increased by 11 percent to 2.7 billion. Conversely, domestic exports dropped 2 percent to 619 million patacas.

Merchandise trade deficit widened to 25.88 billion patacas in the first four months of the year.

In addition, the overall exports of non-textiles increased by 11

percent between January and April to reach 3.06 billion patacas. Of these, machines and parts were exported 34 percent more than in the same period a year ago, with a total value of 586 million patacas.

Exports of textiles and garments decreased by 14 percent to 255 million patacas, of which non-knitted garments dropped 12 percent to 137 million patacas. The primary destination of exported goods in the

Watson offloading 50pct stake in Asian duty-free

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he retail arm of billionaire Li Ka-shing’s Hutchison Whampoa Ltd. plans to sell its 50 percent stake in a venture that operates duty-free stores as the company seeks to focus on its health and beauty business.

A.S. Watson & Co. reached an agreement on Thursday to sell its interest to venture partner Nuance Group AG by the end of June, according to an emailed statement by the company, although no financial details were disclosed. The venture operates 46 stores in Asian cities including Hong Kong, Macau and Singapore, offering retail services primarily in airports and duty-free stores in downtown shopping malls, according to the statement.

Hutchison agreed in March to sell a 25 percent stake in Watson to Temasek Holdings Pte for HK$44

first quarter of the year was Hong Kong, accounting for 2.05 billion patacas-worth of exports and representing an 18 percent increase, followed by the European Union with 103 million patacas, the equivalent of a 19 percent increase.

Goods exported to mainland China, however, registered a 9 percent decrease with at 431 million patacas, while those to the United States dropped 19 percent to 101 million patacas.

In terms of imports, mainland China remained Macau merchandise’s biggest country of origin, with the total value at 9.23 billion patacas, up 12 percent, while the European Union came in close with the total value of imported goods accounting for 7.53 billion patacas, an increase of 25 percent in the first four months of the year over that of a year ago.

Similarly to exports, jewellery and watches accounted for the largest slice of the cake in terms of imports, accounting for 3.74 billion patacas and an increase of 54 percent, and 2.85 billion patacas representing a 71 percent increase, respectively.

More construction materials were also purchased in the first quarter of the year, with the total value up 45 percent to 1.14 billion patacas over that of the same period last year.

External merchandise trade reached 32.52 billion patacas in the first four months of the year, up 16 percent compared with 28.14 billion patacas a year earlier.

For the month of April alone, the total value of exported merchandise reached 836 million patacas, up by 16 percent over the same month last year, with the value of re-exports increasing by 25 percent to 683 million patacas. Domestic exports dropped 12 percent to 153 million patacas. Imports, on the other hand, registered an increase of 13 percent to 7.35 billion patacas, and the trade deficit for that month alone amounted to 6.51 billion patacas.

billion (US$5.7 billion) and pushed back plans for an initial public offering for the unit. Hutchison (13) gained funds as it expands in Europe and North America, while reducing assets in Hong Kong and China.

“We see this deal as an opportunity for us to focus on our core retail operations,” said Dominic Lai, Watson’s managing director. “We continue to expand rapidly in Asia and Europe to sustain and extend our leadership in health and beauty retail, as well as our diverse retail portfolio in Hong Kong.”

Hutchison, with interests in retail, ports and telecommunications, scrapped plans to sell Park ‘n Shop, the grocery business of Watson, in October. Chairman Li said in March the company may continue to sell assets within the group. Watson is Hutchison’s biggest unit by sales with health and beauty stores and groceries such as Hong Kong’s Park ‘n Shop. Watson’s net income grew to HK$7.8 billion in 2013, from HK$6.9 billion a year earlier, Hutchison announced in March.

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June 2, 2014

Macau

Cotai a mixed blessing No new gaming licences makes sense, says economist. Macau still has to cope with excessive growth, Albano Martins tells Business Daily after Secretary Francis Tam tells legislators no new licences will be granted until 2025

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conomist Albano Martins believes that there is no more physical space for new gaming concessions in Macau, which explains last week’s remarks by Secretary for Economy and Finance Francis Tam Pak Yuen, who said in the Legislative Assembly that once the Cotai projects are finished in 2017 no gaming licences would be given at least until 2025.

“The second phase of Cotai is going to create major headaches for Macau,” Albano Martins told Business Daily. “Besides the obvious benefits brought by the gaming industry – the economic resources and the demand created for local companies – we already have an overheated economy and a strangulation in terms of human resources,” explained Martins.

The economist advises the government, as a matter of urgency, to try to control the harmful aspects generated by these gargantuan investments. “Even if Macau had more land I don’t think we could expect more gaming licences,” Mr. Martins told this newspaper.

Speaking in the Legislative Assembly, the Secretary for Economy and Finance said: “After 2016 or 2017, there will be a seven to eightyear period without new casino properties.” This period of almost a decade without new gaming resorts on the market should allow Macau some economic consolidation and a breathing space for society to adapt to the new stage of development.

Between 2015 and 2017, seven

casino-integrated resorts will open their doors on Cotai.

Mr. Tam also told legislators that as part of the casino concession renewal process “we will demand gaming operators assume greater social responsibility, hoping that the review process [of the licences] will rely on the input and opinions of the population so that large companies may assume their responsibilities,” said Mr. Tam. The topic came up during a discussion about the pressure exerted

on Macau society by the importation of labour. To the deputies, it is nonresidents who are responsible for the strong impact on areas such as housing, the price of goods, services and transport.

According to Francis Tam, the future expansion of casinos and the increasing need for a larger workforce will last until 2016, the year that the flow of construction of new resorts and casinos ends; this will be followed by a period of “adjustment.” Mr. Tam made assurances that foreign

workers being recruited from abroad are being monitored, with this group one of the major considerations in the population study that the government is undertaking for policy purposes.

In the year ended in April, the number of non-resident workers rose 29 percent to 149,200 people, with the majority (94,000) coming from mainland China, which has seen its quota of non-resident workers climb 36.25 percent between April 2013 and the same month this year.

Adelson defamation ruling reversed T

he Nevada Supreme Court has reversed a defamation lawsuit, now enabling former Sands China CEO Steve Jacobs to tell his side of the story, the Associated Press reports.

Las Vegas Sands Corp chairman Sheldon Adelson called Mr. Jacobs a “liar and delusional,” when Mr. Jacobs filed a lawsuit for wrongful

termination in 2010, accusing Sands of misdeeds and doing business with known gangsters. Mr. Adelson later said in an email that the company had “substantial” reasons why Mr. Jacobs had been fired for cause. In the same email to the Wall Street Journal, Mr. Adelson called Mr. Jacobs a “liar” and accused him of “fabrications,

which seem to have their origins in delusion.”

Mr. Jacobs then filed a defamation lawsuit against Mr. Adelson. Initially, a Clark country district judge dismissed the claim, saying Mr. Adelson’s comments were protected by litigation.

However, the high court overturned the decision saying that the newspaper does not

have ‘financial interest in underlying litigation’ and as such reversed the ruling, given that ‘people are often judged not on the outcome of their case but on the media’s portrayal of them during the proceedings.’ Mr. Jacobs has also been allowed to tell his side of the story with impunity, according to the Associated Press.

Packer talks up RatPac Australian billionaire James Packer supports China’s anti-corruption campaign, refutes the idea that the Macau economy is crime-ridden, and eyes China’s movie industry

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ames Packer said that he supports the Chinese government crackdown on corruption in Macau, The Australian reported last Friday. “I think absolutely that’s a good thing. We’re absolutely in favour of the Chinese government continuing to tackle corruption,” he said.

The Crown Resort Executive Chairman has also denied

any suggestion that Macau is crime-ridden. “It’s a misnomer that Macau is a place where money gets funnelled from illegal sources; that’s not our experience.”

Packer praised Chinese government policies’ successes in lifting people out of poverty, and also revealed that he would like to involve Lawrence Ho, Co-Chairman and Chief Executive Officer of

Melco Crown Entertainment Limited, in his RatPac Entertainment business. This involves his entrée into the China movie-making industry as the Australian billionaire believes that China’s movie market will overtake the US. “It doesn’t take much imagination to envisage a situation where the Chinese entertainment industry continues to grow. I’m hoping

RatPac figures out a way to look at doing things and make them both appealing for the Chinese market as well as for the US market,” Mr Packer said. “Obviously, the Chinese people will enjoy Chinese culture so I’m hoping that RatPac figures out a way to look at doing things; we’ll do it in a small way and a considered way if we do it,’’ he concluded.

Research house gloomy on Japanese casino schedule

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nion Gaming Research Macau says a split in one of the political parties that has thrown its weight behind the bill to make casino gambling legal in Japan may weaken support in parliament for legalisation – which has already been delayed. The research house says it is increasingly unlikely that the country’s first casinoresorts will open in time for the Olympic Games in Tokyo in 2020. “That said, we ultimately believe that Japan will indeed find a way to move forward with [integrated resort] development, given the host of long-term benefits associated with such development,” a Union Gaming Research Macau report says.

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June 2 30, 2014

Macau GDP powering onwards and upwards Macau’s economy grew 12.4 percent in the first quarter, fuelled by gaming revenues and casino investments in Cotai. This was the second best quarter performance in two years, official statistics reveal Alex Lee

alex.lee@macaubusinessdaily.com

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acau posted another record performance in the first quarter of this year, with revenues from casinos and investments in the construction of the new resorts and gaming facilities in Cotai powering the economy to its second highest growth rate in two years.

According to the Statistics and Census Service (DSEC), Gross Domestic Product (GDP) increased 12.4 percent year-on-year in the first quarter. The performance was slower than the previous quarter, when Macau’s economy expanded at a record pace of 14.3 percent year on-year, the highest growth since the first quarter of 2012. Nevertheless, January-March 2014 growth was the second highest in the last two years.

For this double-digit growth, the export of gaming services and private investments were decisive, contributing more than 90 percent

to economic expansion in the last quarter, the statistics bureau revealed.

Private investment was the component in the economy to register the highest growth in the quarter, increasing some 40 percent (39.8 percent) from a year ago due to the

huge investments made by casino operators, primarily in the construction of the new resorts in Cotai. The export of services, a major component in the economy here - comprising gaming, accommodation and retail revenues from gaming resorts - also climbed

12 percent.

On the other hand, government investment plummeted 49.2 percent due to a one-off factor: the completion of the Hengqin campus of the University of Macau last year. The absence of major new construction projects in the first quarter of 2014 also weighted the figures.

Public construction investment and equipment investment contracted substantially by 49.1% and 53.1%, respectively.

With unemployment at historical lows plus increasing job offers and income private consumption grew 4.7 percent year-on-year. Household final consumption expenditure in the domestic market jumped 4.8 percent.

The government’s final consumption expenditure expanded 8.6 percent, with the compensation of employees rising by 3 percent and net purchase of goods and services climbing 18.7%.

MTEL gearing up for November launch MTEL is expected to enter the market in November. The company’s consultant, Manuel Remédios, says that the installation of the fixed-line network is going according to the five-year plan Alex Lee

alex.lee@macaubusinessdaily.com

“W

e’re working in order to meet the criteria defined by the government. When we start to operate, the network coverage of MTEL will reach 30 percent of the Macau residential area as defined in the Official Gazette,” Manuel Remédios, consultant of MTEL Telecommunication Company Limited, told Business Daily. “I can say that so far everything’s going according to plan, including the installation of the fixed-line network.”

The entry of MTEL into Macau’s landline telecommunication market - expected to begin operating in November - will break the monopoly held thus far by Companhia de Telecomunições de Macau SARL

(CTM). “MTEL’s entry into the landline telecommunication market will be important as it will improve the services offered to customers. Also, we believe that as people will have the power to decide which company they want to provide them with service it will stimulate an increase in the usage of fixed-line services,” he explained on the sidelines of a conference organised

by IEEE (Institute of Electrical and Electronic Engineers of Macau). The conference - themed ‘Era of Big Date – From Prophecy to Reality’ – was hosted by Macau Science Centre last Friday.

Asked whether it would be difficult to face the competition of CTM, a well-established operation in Macau, Remédios claimed that MTEL will

earn its place in the market because of the quality of its services. “Our entire network will be built using fibre optic instead of copper, which is an advantage. We’re pretty confident about the quality of our services and we’re working to meet market demands,” he explained. Mr Remédios stressed, however, that the market will have room for both players. “We don’t have any intention of driving CTM out of the market. There’s room for both players, and what is really important is that the people of Macau will have an alternative which is able to provide a quality service,” he said.

MTEL received its fixed-line licence, which expires in December 2021, last July. Since then, the company will have invested some 1

Corporate “Best Season” gets the big prize at SJM Macau Derby “Best Season” won yesterday the 1,800 meters race SJM Macau Derby. Fourteen 4-year-old horses competed for a total prize-money of HK$2,6 million.

This year marked the twelfth consecutive year of title sponsorship by Sociedade de Jogos de Macau, S.A. (“SJM”) for the SJM Macau Derby held at the Macau Jockey Club yesterday. SJM’s directors, including Chairman of the Board of Directors Ambrose So and Managing Director Angela Leong, presented the trophies to the winning parties, and celebrated the event with the guests and horse fans.

In addition to the SJM Macau Derby, SJM also sponsored the Grand Lisboa Cup, Oceanus Cup, SJM e c card Cup and the Ponte 16 Resort Race held at the Taipa racecourse. Other major races included the Macau Hong Kong Trophy and the Chairman’s Challenge Cup. The overall prize-money for Saturday’s race meeting amounted to HK$8.34 million.

billion patacas to install its network.

According to the Official Gazette, the MTEL network is expected to cover 99 percent of the residential area within five years. “The goals are defined but in order to meet them we need authorisation from the Land, Public Works and Transport Bureau in order to excavate certain areas.

If the authorisation is guaranteed then the goals are achievable,” he explained.

When MTEL enters the market it is expected to charge no more than 70 percent of what CTM did for leased-line services in 2011. Last March, MTEL chairman and chief executive Michael Choi promised that the company’s tariff would always be more favourable than CTM’s.

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June 2, 2014

Macau

Reclamation delays on Bridge islands

The Infrastructure Development Office admits delays of two urban reclaimed zones, raising uncertainty about the timing of Macau’s connectivity to its neighbours Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he Infrastructure Development Office (GDI) conceded that it had encountered a “serious” delay in the reclamation work of urban Zone A just across the waters from Areia Preta, which is a major public infrastructure project linking Macau to the Hong Kong-ZhuhaiMacau Bridge.

Office coordinator Chan Hon Kit confirmed yet another delay in Macau’s infrastructure project when answering legislators’ interpellations on Friday, and noted that the “serious” delay of the Zone A reclamation has to do with a “lack of preparation” from the contractor for proceeding with the construction. The preparation referred to includes having the machinery ready for the reclamation works as well as the review and approval of the imported construction materials, Mr. Chan admitted. Zone A, the biggest of the five reclaimed zones, is located across the waters from Areia Preta – the northeastern district of the Macau Peninsula. The 138-hectare zone is to be linked to the Zhuhai-Macau artificial island to its east, where the Hong Kong-Zhuhai-Macau Bridge will land.

“Now the dredging of the waterways for the zone A reclamation has already been completed,” Mr. Chan

told legislators “but the reclamation works have encountered a serious delay, and for this the Infrastructure Development Office has already urged the contractor to adopt all necessary and effective measures to catch up with the schedule while meeting the respective safety standards.”

The public tender for the urban Zone A reclamation took place in March 2011 but the government withdrew the bidding process on May 3 – the deadline for the public tender – giving the reason that it needed to amend the evaluation criteria.

It was only by the end of 2012 that the Zone A reclamation works was finally granted to a joint venture comprising Companhia de Construção e Engenharia Omas, Limitada, China Road and Bridge Corporation and Companhia de Engenharia Porto da China, Limitada, which won with a bid of 1.88 billion patacas (about US$240 million) – the lowest of 6 candidates.

The highest bidding cost for the Zone A reclamation project came in at about 2.82 billion patacas.

The reclamation works for Zone A, which had only started by the end of February last year, are to last for 990 days, according to the Office’s record of the bid.

Fitch maintains ICBC Macau rating F

itch, the world’s third biggest rating agency, affirmed on Friday the ‘A’ level rating of ICBC Macau and Hong Kong-based ICBC Asia, saying the outlook is stable, meaning a downgrade is unlikely in the next three months for either bank.

The agency decided to maintain the ‘A’ rating – a premium investment level – because both banks remain core subsidiaries of their Chinese parent company ICBC China (also rated ‘A’ and a stable outlook) and as such there is an extremely high probability of

Mr. Chan said that after several warnings, the contractor has recently shown improvement in its work progress but he did not elaborate on what percentage of the 1.88 billion-pataca concession cost the contractor would be fined if it could not meet the government’s requested construction schedule.

The Infrastructure Development Office’s coordinator said he still believed the reclamation works for Zone A can be completed by the original deadline of November 14 next year. In the Friday Assembly, several legislators expressed concern that the delay of Zone A reclamation works will affect its linkage with the manmade island where the Hong Kong-Zhuhai-Macau Bridge will land. The bridge is expected to be in use by 2016. Addressing legislators’ concerns, Mr. Chan only briefly noted that the government would have a back-up plan ready to link the artificial island to the Macau Peninsula should Zone A reclamation works encounter problems.

The Infrastructure Development Office is also facing another delay in the reclamation works for reclaimed

Zone E, located northeast of Taipa Island. Comprising some 73 hectares altogether, Zone E is formed of plots E1 and E2. The 53-hectare E1 is adjacent to the Taipa Terminal, while the 20-hectare plot E2 is near the Macau International Airport to the southeast.

The government has cancelled the public tender process for Zone E1 reclamations after the bids evaluation was completed in June last year. The cancellation was due to “a rare instance” in which two bidders quoted the same cost for the Zone E1 reclamation works, Mr. Chan said.

The two bidders were the joint venture of Changjiang Waterway Bureau and Companhia de Obras de Construção and Engenharia Jiao Hang (Macau) Limitada; the other was China Road and Bridge Corporation. Both submitted a bid for Zone E1 reclamation cost of 456 million patacas. The cancellation of the public tender has invited lawsuits filed by the two bidders against the government, Mr. Chan added. He said that the government was now reviewing the bidding criteria and would re-launch the public tender for the E1 reclamation works by the third quarter of this year.

support from the parent if necessary.

Fitch says that ICBC Asia is the largest overseas subsidiary by assets responsible for 1.3 percent of ICBC China’s operating profit. ICBC Macau is the territory’s second-largest bank by assets and the third-largest overseas subsidiary of ICBC by assets (0.6%) and profit (0.3%).

The US rating agency is confident that ICBC remains committed to supporting the two subsidiaries with

liquidity and capital to accommodate their further growth.

Capturing financing needs for mainland customers’ overseas expansion remains one of the banks’ core businesses, Fitch said on Friday, expecting both banks’ China-related exposure to continue to increase in line with this strategy. More than 64 percent of ICBC Asia’s assets are in the hands of mainlanders versus 38 percent in ICBC Macau (34 percent in 2012).

Zone E

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June 2, 2014

Macau

Reed reaching out

Brought to you by

HOSPITALITY Consolidating trends The first quarter of the current year was the first on record when the number of monthly tourists topped 2.5 million every single month. The total number of visitors for the period increased 9 percent, compared to the same months last year. The proportion of mainland visitors has risen, representing more than two-thirds of the total. These figures mean that the mainland share has risen by more than 4 percentage points since last year: an evolution that consolidates the rising dependence upon the mainland market for visitors. It is, moreover, reinforced by losses in visitor numbers from the two next main sources of tourists, Hong Kong and Taiwan. In the latter cases, the shares in the first four months of total number of visitors dropped by 3 percentage points and 0.4 percentage points, respectively.

Consequently, whilst last year there were about 2.3 mainland visitors for each one from Hong Kong and Taiwan combined, that ratio has risen to more than 2.8 in the current year.

This evolution is well illustrated by the chart, which shows the growth rate for each of the first four months and for their combined total, compared to the corresponding values in 2103. These three markets represent 90 percent of the total number of visitors. It is quite apparent that the mainland drives total growth. From January to April, the respective homologous growth exceeded 16.2 percent; Hong Kong and Taiwan posted negative growth rates, close to minus 5 percent. In absolute terms, total visitors rose by slightly more than 850,000 in the period. As mainland visitors rose by almost 970,000, these figures imply a net loss of visitors from all other regions of close to 115,000 visitors.

J.I.D.

10,326.780 number of visitors this year, January-April

After organising the eighth edition of the Global Gaming Expo Asia (G2E Asia), the president of Reed Exhibitions China says the results were satisfactory but could have been better.

Stating that they wish they could have had more foreign buyers, in a phone interview with Business Daily, Nat Wong explains that it may be related to the lack of flight connections and consequent difficulties in reaching the territory.

As a result, when thinking of the expansion of Reed Exhibitions in Macau, Mr. Wong says they’ve reached the conclusion that trade shows are not the best fit for the territory. Still, for an event such as G2E Asia, focused on gaming, the MSAR continues to be the natural choice Luciana Leitão

leitao.luciana@macaubusiness.com

What are your expectations of growth in Macau?

We have G2E Asia in Macau and we’re looking at the possibility of bringing more exhibitions to Macau.

We feel that the Macau positioning may not be the best for trade shows — perhaps, it’s better for consumer-based shows, conferences and meetings. We have many shows in the Reed Exhibitions calendar worldwide and we’re trying to see if we can bring some more matching shows that fit the genre of Macau better.

Obviously, G2E Asia, as a gaming event, is a natural fit for Macau.

I would say so.

If you look at other successful MICE cities, for example Melbourne, Singapore, Bangkok, Dubai, London, Paris, New York, all these places host a very large quantity of MICE events and the transportation and travel infrastructure is very important.

I would agree that the need for a world-class airport and the need for connecting flights all over the world, the need for a range of hotels — from 5-star hotels to 4-stars, even budget hotels for some of the lower budget travellers — are all essential and important in successful MICE cities.

Why do you say trade shows are not the best fit for Macau?

Trade shows, where we do B-to-B, we do have to bring in buyers and the sellers, business to business. So, most of the time, in a trade exhibition, one of the key ingredients will be the buyers sector. For example, in G2E the buyers are all in Macau, so the show is a very natural event to have in Macau. But if we want to bring, for example, a machine tool exhibition to Macau - not to say that it’s impossible - but, perhaps, the attraction is not so great for the buyers because they will have to travel all the way to Macau.

Whereas a place like, let’s say Shanghai, which has a very large manufacturing base, will probably be better for some of these types of exhibition.

Similarly, I can give you an example of a stone exhibition in Xiamen — it’s an area rich in natural resources, so quite naturally a stone exhibition grew up in that area and is now a very important show for the world calendar. So, I’m not saying that it’s impossible, but the fit will probably be better for B-to-C shows — or consumer-based — shows and, maybe, entertainment performances as well as conferences and meetings.

What kind of events, other than G2E Asia, do you see Reed Exhibitions organising in Macau that would be considered a good fit?

I guess things that are more suitable for B-to-C type events or maybe even B-to-B events in the hospitality business, like hotels and food supplies and services — perhaps leisure and entertainment would be another potential B-to-B success in Macau.

Would you say trade shows aren’t the best fit because there are still many difficulties in reaching Macau, mainly due to flight connections?

Do you have any other events, already planned, for Macau?

We’re still in the planning stage at the moment. We have a very busy schedule. We’re in China and we’re reaching out to quite a few cities that have some potential for

We feel that Macau positioning may not be the best for trade shows — perhaps, it’s better for consumer-based shows, conferences and meetings

the type of exhibitions we do. Reed Exhibitions is very focused on B-to-B events.

How to grow What are your expectations of growth in Mainland China?

We have grown quite nicely over the years, so we definitely would like to continue to grow in tandem with the growth of the country.

Although China has stepped down a little bit from the high GDP growth of the earlier years, 7.5 percent GDP growth is still very good in many countries, so there’s still growth in the economy in China. We need to continue to try and grow our shows and to also expand into related areas — a good example would be, when we look at a show like G2E, how we continue to expand the show and grow the show, so we may look into other areas of gaming, other areas of hospitality and perhaps even hotels and entertainment and leisure.

What are the difficulties in organising large-scale events in Mainland China?

Some of the challenges we face in China are the various levels of quality deliverables in different cities. China has got this segmentation of first, second and third-tier cities, so the offering and the services are very different in these cities and obviously it would be much easier to organise an event in the first tier and experienced city, perhaps like Shanghai, Shenzhen or Beijing.

Other challenges that we face — sometimes language is a problem.

Isn’t the fact that you’re a foreign company organising events in Mainland China a big challenge, considering the costs and the bureaucracy to set up in an Asian country?

We pay Chinese taxes, so we’re very local as well.

I would say that, as a foreign multinational company, wherever we go to we definitely have to ensure that while we bring in the global events and the global brands

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June 2, 2014

Macau and a certain level and quality we ensure that we embrace the local culture and the local environment in such a way we are able to find a good mix and a good blend to have better longevity in a country like China.

We try to localise as much as possible in China. We have about 500 staff and we only have a handful of expatriates — not more than 10 — so with that we have a good quality turnout with the local staffing and local culture, local knowledge, local guanxi, local networking and, most of all, being able to communicate and reach out to the local visitor sectors here in China.

Local culture Do you also have local partners to organise such events?

Yes. When I say engage the locals it’s not just in terms of hiring locals. We need the support of the local government; whether the central or the municipal government, we do require the support of the ministries as well as specialised agencies. We do work with the local authorities to look after the exhibition industry as well.

In addition to getting support, we also respect the local culture a great deal and in certain areas where we feel the local parties are more advanced than us in that particular industry, we engage in partnerships.

What sort of events have you already organised in Mainland China?

We have a tranche of events organised in China for quite a few years and very successfully.

We do have a partnership with Sinopharm, and with them we’ve organised some 20 events in the pharmaceutical and medical industries.

What type of events do you intend to organise in the future in Mainland China?

New events in the pipeline that we’re trying to launch and bring into China are. for example. our fitness brand from Europe. We hope it can gain the same kind of success that our ALUMINIUM brand has gained in China.

We’re also looking at some new areas in China that are opening up in the fields of pollution, waste management or even specialised sectors. We’re looking at bringing in our brands as well as our speciality areas.

You’ve organised G2E Asia for eight years in Macau. Do you see potential for other places in Asia to do this or is Macau still the obvious choice?

We will obviously be looking at the upcoming countries, be they Japan, Korea, or even China, where gaming might be opening up. But obviously Macau generates about US$45 billion from this business; Singapore about US$6 billion and the Philippines about US$2 billion.

So, with that, Macau is a clear leader in this field at the moment.

Unless there are good opportunities in some of the new areas; and we’ll obviously will be looking at them to develop branches of G2E.

Singapore have grown - despite Macau’s presence in this business for a long time, and Macau itself has grown, as the other countries do open up - I believe they would probably be able to generate a lot of interest but on the other hand we do like to bring in the ‘whales’ to Macau casinos and hopefully the business can grow in that sector.

The countries themselves would probably be able to have a large enough local-based kick-start of business. At the end of the day, when Japan liberalises, there will be opportunities and potential for a show like us to be able to launch in Japan and, at the same time, work together with the Japanese market, to grow in tandem.

I don’t think there’ll be a lot of cannibalisation because I believe this industry is fairly well dissected. For example, the language in Japan would be something that might deter the Japanese from coming out to Singapore or Philippines, whereas they will be very comfortable at home. At the same time, if you go to Japan, it will probably give you a whole genre of mixed offerings in terms of gaming and leisure.

So, I think the package could be different from city to city and the positioning as well as the offering to the potential attendees or visitors will be very different from city to city. I believe there will be a positioning in Japan that would be very unique.

I’d agree that the need for a world-class airport and the need for connecting flights all over the world, the need for a range of hotels — from 5-star hotels to 4-stars, even budget hotels for some of the lower budget travellers — are all essential and important in successful MICE cities

Japan is different

After eight years of organising G2E Asia in Macau, are you satisfied with the growth it has had?

We think the market has grown very well. We’re not unhappy with the growth, but we really wish we could do more. And probably gaming will find its equilibrium in the market, in terms of the size of the exhibition, so therefore we need to try to enhance the package for G2E, to perhaps add in adjacent segments and launches that will synergise with the gaming offering. Hopefully, we will experience steady growth over the years.

If Japan legalises gaming, that could be a potential competitor to Macau?

I don’t think so. Japan has a very large population base and if you look at how the Philippines and

So, you will change a bit of your strategy for the next G2E Asia event?

The strategy in Macau probably will have to change along with the environment at present. We feel

Macau is a tourism and gaming attraction and we’ll focus on those key areas — obviously, we will try to build on other segments like hospitality, entertainment and leisure, and we will try to focus more on that. Whereas if we go to some other place, we will have to look at what that city has to offer that differs from Macau.

Why haven’t you done more in Macau, in G2E Asia?

Although the Macau gaming market is huge, if you look around in Macau, the decision makers and the buyers of gaming services and gaming hardware and gaming technology are but a handful.

What we’ll probably face pretty soon in Macau is that it might reach a maximum or peak in terms of the number of casinos that Macau is willing to build.

When that happens, the growth market for equipment coming into Macau will probably then become a sustenance market, whereby the machines and the software for the machines will change but the number of new casinos coming out will not be as fast. When that happens, we will obviously have to implement a few other things, like adjacent launches, segment launches, related synergy launches.

We could also look at satellite meetings, whether we could host various related meeting with various related conferences or events related in conjunction with this field.

How about this latest edition of G2E Asia; was it satisfactory?

Yes. The number of visitors has grown 36 percent over last year and the space has also grown nicely. We do have a very healthy exhibition on our hands. The challenge now is probably to maintain this growth and to try and bring in new elements and exciting elements that continue to bring the investors and buyers to Macau.

What do you think could have gone better?

If I really want to do better, I would have loved to bring in more foreign buyers. We did bring in a fairly decent delegation from Japan, in view of the coming vote on the deregulation of the market, but obviously we could do a lot more in the overseas visitor side. Once we are able to bring in sizeable groups from Philippines, Vietnam, Cambodia, then we’ll truly have a regional show.

Does the lack of regional visitors have to do with the lack of connecting flights and the difficulties in reaching Macau?

I guess G2E is quite attractive and it’s the biggest show of its type in Asia — it’s attractive in its own right. But the availability of the connections may deter some people coming from faraway places.

They probably would prefer to be closer to where they stay. Or, on the other hand, if they have a trip to make that year to a gaming show, if they have already gone to Macau, they may reserve that trip for a location in Europe or to Las Vegas, for G2E in Las Vegas.

Will G2E Asia continue to be organised in Macau for the short term?

We also have to ensure that we put our ears very close to our customers and if they do have some new opportunities that they want to seek out in a different place, we may have to listen to what they have to say, and we have to make a decision that is the best for the show. In the foreseeable future, it will definitely still be in Macau.

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June 2, 2014

Macau Live poultry imports back on sale The Civic and Municipal Affairs Bureau (IACM) has lifted a ban on imported live poultry, which are back for sale again today. IACM detected H7 subtype avian influenza virus in the environment samples from three poultry booths in Patane Provisional Market a month ago. To ensure the heath and safety of the public, authorities activated the emergency mechanism and temporarily suspended live poultry trade in Macau on April 19. Authorities also conducted cleaning and sterilisation on wholesale, slaughtering and retail premises, while the Health Bureau conducted medical surveillance of poultry retailers in Patane Provisional Market.

Up and down of home sales The number of home sales dropped 40 pct in the first quarter, but prices continue increasing

Economic gateway to Guangdong A Chinese studies academic, Carmen Amado Mendes, thinks Macau is the “gateway” for Portuguese companies into Guangdong province. “It’s often said that Macau is a gateway to Mainland China, but it’s mainly a gateway to the region in which the SAR is,” she said

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armen Amado Mendes was speaking in the international conference Business Opportunities in Regional Markets of Portuguese-Speaking Countries, organised by the Portuguese Industrial Association (AIP) and held in Lisbon.

The University of Coimbra academic argued that “Macau could be a gateway to the region” where Macau and Hong Kong are located because Beijing gives to mainland provinces some degree of autonomy in terms of

economic policy, licensing procedures and rules for the establishment of foreign companies.

According to a study by consulting firm PricewaterhouseCoopers (PwC) quoted at the beginning of the seminar, in 2012 Guangdong province attracted US$23.5 billion in Foreign Direct Investment (FDI), the third highest in the country. Guangdong also recorded the biggest GDP (11%) of mainland China provinces.

Mendes also highlighted the role of the Forum for Economic and

T Trade Cooperation between China and Portuguese-Speaking Countries, created and managed by Beijing as a platform approach - “almost a showcase” - but little explored.

“The forum is not a priority” for the Macanese authorities, she said. “The priority is the sources of income of the territory: gaming and tourism.”

The two represent more than 50 percent of Macau’s GDP. Beijing wants to develop Macau as a “preferential access platform for the CPLP countries,” said Paulo Ribeiro from PwC upon the presentation of the study.

The same study indicates that Angola and Brazil are the largest trading partners of China.

Mendes said that the “lack of interest [by the Portuguese authorities] in the bilateral relationship is a niche market to exploit by Portuguese companies, stressing the need for companies to settle in Macau before the completion of the bridge that will connect Hong Kong, Macau and Zhuhai, scheduled for 2016. “If the Portuguese companies do not settle by then, they will hardly manage to do so later,” she said, referring to the dominant role of the former British colony [Hong Kong].

The CPLP includes Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Portugal, Sao Tome and Principe and East Timor.

he number of home sales recorded in the first quarter of the year dropped 41.9 percent to 2,906 housing units. Prices, however, increased by 24.5 percent in the same period compared to the first four months of last year.

Portuguese news agency Lusa quotes official numbers by the Finance Service Bureau here, which show that between January and April this year the average home price per square metre rose to 101,445 patacas, an almost 25 percent increase over the same period last year.

On the Macau Peninsula alone, prices increased 27.4 percent to 101,605 patacas per square metre, while in Taipa prices jumped 34.4 percent to 97,725 patacas. In Coloane, the average price per square metre of a home rose by 8.7 percent to 114,998 patacas.

In the month of April alone, the 998 home sales recorded represent a 32.4 percent drop. However, the average price per square metre of 131,589 patacas of these same homes represents an increase of just under 54 percent compared to April 2013.

On the Macau Peninsula, the average price per square metre increased by 59.3 percent to 137,931 patacas, in Taipa the price increased by around 37.5 percent to 105,630 patacas, and in Coloane the average price per square metre increased 18 percent to 113,958 patacas.

Property prices in the territory, when averaged by square metre, is one of Macau’s major problems, particularly when it comes to rentals.

Mourners remember Ma Man Kei Hundreds gathered to remember Macau’s renowned entrepreneur and senior political advisor to the central government Ma Man Kei, whose funeral was held in Macau Forum yesterday. State leaders and incumbent politburo members Hu Jintao and Jiang Zemin sent flowers in memory of Mr. Ma. The 95 year-old died last Monday in Beijing of illness. Many remember him as a distinguished social activist, patriot and close friend of China’s Communist Party. He was buried at Hau Si Cemetery in Taipa.

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June 2, 2014

Greater China Workers reject Walmart’s offer in labour dispute Walmart employees in central China’s Hunan Province have voted against a mediation plan by the world’s largest retailer over a labour dispute. In an out-of-court settlement, Walmart planned to offer each worker 3,000 yuan (US$480) in the name of legal costs after a two-day arbitration. “In our understanding, they (Walmart) have offered 3,000 yuan as a compensation for our laid-off colleagues’ efforts to seek legal assistance. But we didn’t feel respected,” Huang Xingguo, the labour union chairman at Walmart’s Changde store, told Xinhua yesterday.

Freight transport volume continues to rise

China’s total volume of freight transport rose in the first four months, but at a slower pace amid an economic slowdown. The volume of freight transport by road stood at 11.5 billion tonnes in the first four months, up 8.9 percent from a year earlier, according to the National Development and Reform Commission. But the increase was slower compared to the double-digit growth during the same period last year. During this period, a total of 1.61 billion tonnes of cargo were carried on waterways, up 6.3 percent year on year.

Railway traffic surges as holiday begins China’s railways saw an increase in passenger trips as the three-day Dragon Boat Festival holiday kicked off, according to data released by railway authorities. Some 7.6 million passenger trips were made on China’s railways on Friday, increasing 15.9 percent from a year earlier, and 8.7 million trips are expected on Saturday, said the China Railway Corporation. To cope with the rising traffic, China has added over 200 temporary trains to ease the pressure, the corporation said.

IBM partners with TransWiseway International Business Machines Corp. is working with Beijing TransWiseway Information Technology Co. to offer drivers in China more connectivity in their vehicles. IBM’s cloud-based technology will connect vehicles to the Internet and each other to deliver information such as traffic alerts, weather advisories and suggestions for alternate routes to a driver’s mobile phone, the companies said today in a statement. The new platform may connect with 1.5 million trucks next year and 10 million in two to three years, the companies estimates.

PMI hits 5-month high The official survey showed a broad-based recovery in manufacturing activity in May Aileen Wang and Matthew Miller

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hina’s factory activity expanded at the fastest pace in five months in May due to rising new orders, official data showed yesterday, reinforcing views that the world’s second-largest economy is regaining momentum in the second quarter following Beijing’s targeted measures to bolster growth.

The official Purchasing Managers’ Index rose to 50.8 in May from April’s 50.4, the National Bureau of Statistics said yesterday, beating market expectations of 50.6.

“The PMI reading continued to improve in May, indicating that a trend of economic stabilization is becoming more evident,” Zhang Liqun, a researcher at the Development Research Centre said in the statement accompanying the data.

As one of the first leading indicators gauging economic momentum, the improved reading could bode well for other May data, bolstering market expectations that the economy is regaining some strength as the government’s pro-growth measures started to kick in.

The official survey showed a broadbased recovery in manufacturing activity in May, with nine out of the 13 sub-indices pointing to improvement from the previous month.

A sub-index for new orders, a measure of foreign and domestic demand edged up to 52.3 in May from 51.2 in April, marking the highest level since last November.

The PMI data also showed export orders inched higher to 49.3 in May from 49.1 in April, though the indicator remained below the 50-level threshold that separates growth from contraction.

unveiled a slew of targeted measures this year to help shore up the economy, which has dipped to a 18-month low in the first quarter and is seen on track to post the weakest annual showing in 24 years.

“It is clear that the government has become more concerned about the continued economic slowdown and wants to further increase the strength of policy support,” said Wang Tao, economist at UBS in a note to clients.

China’s cabinet announced fresh easing measures on Friday to help lower funding costs and reduce operating burdens for companies to give more support for the real economy.

The measures included lowering the reserve requirement for more banks, increasing the scale of relending and bond financing to support smaller firms, and a further reduction of administrative fees for businesses.

China’s finance ministry had also urged their local branches to quicken the pace of budget allocation to guarantee the completion of key projects and lift the slowing economy.

Those policy moves, together

with the earlier steps, such as hastening construction of railways and public housing, tax cuts for smaller enterprises, have combined to give a boost to the economy, though officials and economists warned that the downside pressure still exists.

Chinese leaders have ruled out the possibility of any big fiscal stimulus to spur economic growth as they tolerate a slower growth rate while pushing ahead with structural reforms.

China has set an annual target for the economy to grow about 7.5 percent in 2014 and a Reuters poll found that economists expected growth of 7.3 percent for this year.

A preliminary HSBC/Markit PMI issued late last month showed the factory sector turning in its best performance in five months, although the reading remained below the 50-point level that suggests contraction in manufacturing activities.

All eyes now will be on the release of the final HSBC PMI on Tuesday, which favours smaller and private companies compared with the bigger ones captured by the official PMI. Reuters

Policy support Beijing stepped up policy finetuning in recent weeks and has

China signals policy easing State Council said it would trim reserve requirements for banks which lend to the agricultural sector and small enterprises

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hina has signalled it will further ease monetary policy to kick-start the world’s second largest economy by cutting the amount of funds that some banks must hold in reserve, according to a government statement.

The State Council, China’s cabinet, announced after a meeting on Friday that it would trim reserve requirements for banks which lend to the agricultural sector and small enterprises, said the statement posted on the central government website.

It gave no details of the timing or sum involved.

China launched a similar, targeted reserve cut for banks in rural areas just over a month ago as worries mount that its economy - a key driver of world growth - is slowing more sharply than expected.

“Currently, the movement of the economy is stable, but downward pressure is still relatively large,” the State Council said, adding the government would “fine-tune” policy at an appropriate time.

China’s economy grew an annual 7.4 percent in the first quarter of this year, weaker than the 7.7 percent in the October-December period and the worst since a similar 7.4 percent expansion in the third quarter of 2012.

Premier Li Keqiang in March announced an economic growth target of “around 7.5 percent” for this year.

“It is clear that the government has become more concerned about the continued economic slowdown and wants to further increase the strength of policy support,” Wang Tao, a Hong Kong-based economist for bank UBS, said in a research note.

“Policy support will strengthen as the economy weakens further, so as to defend the growth target for 2014,” she said.

The State Council announced a basket of other measures on Friday, including more financial support for small companies, lowering the cost of financing and cutting administrative fees, the statement said.

China’s economy grew an annual 7.7 percent in 2013, the same level as 2012, which was the worst pace since 1999.

But some analysts believe China will refrain from more aggressive measures to boost growth, such as slashing interest rates or cutting reserve requirements for all banks, on worries excessive credit could pose financial risk.

AFP

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June 2, 2014

Greater China China house prices fall after 23 months In 31 out of 100 cities prices fell on an annual basis

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ome prices in major Chinese cities posted their first monthly decline in nearly two years in May, an independent survey showed, providing new evidence the once redhot market is losing steam.

The average price of a new home in 100 major cities declined this month by 0.32 percent from April to 10,978 yuan (US$1,758) per square metre, according to the China Index Academy (CIA), the first fall since June 2012.

Prices dropped in 62 cities and were unchanged in one, according to the academy, the research unit of real estate website operator Soufun.

The biggest monthly fall was in Shantou, in the southern province of Guangdong, where prices slumped 3.64 percent

US$1,758 square metre price in April

on April.

Year on year, new home costs rose by 7.84 percent in May, 1.22 percentage points lower than April and the fifth consecutive month the increase slowed, CIA said.

But, in 31 of the 100 cities, prices fell on an annual basis, with those in Wenzhou -a centre of private enterprise and lending in the eastern province of Zhejiangdropping most of all, down 8.30 percent.

But, at the same time, local authorities in the country make much of their income from land sales to developers, and have often rushed to loosen limits on purchases when property prices have fallen.

Among China’s 10 biggest cities, Nanjing saw the biggest fall in May, with

Managers: the new labour activists The involvement of managers underscores the growing complexity and unpredictability of labour relations in China

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ehind China’s biggest strike in decades last month was a new player in Chinese labour activism: management.

A previously unpublished account from inside the strike at Taiwanese shoe manufacturer Yue Yuen obtained by Reuters shows that supervisors were the first to challenge senior plant leaders about the social insurance contributions that became the focus of the dispute. Yue Yuen Industrial Holdings declined to comment.

The involvement of managers underscores the growing complexity and unpredictability of labour relations in China. A generation of long-serving migrant factory employees is starting to retire just as the economy slows and the spread of social media makes strikes easier to organize.

Yue Yuen’s strike wasn’t the first time in recent years managers, rather than front-line workers, helped orchestrate industrial action in China. Managers were also involved in leading a strike at IBM’s facility in Shenzhen in March, according to a worker and another person briefed on the strike. IBM declined to comment.

Supervisors and other low- and mid-level managers also helped corral workers during a March strike at Shanmukang Technology, which supplies mobile phone cases to Samsung Electronics, a former employee said.

Managers have been orchestrating strikes during international deals for years, lawyers said. “It happens

all the time” that managers encourage workers to strike during an international transaction that affects a company’s Chinese operations, said Jonathan Isaacs, special counsel with responsibility for Chinese employment and labour issues at law firm Baker & McKenzie in Hong Kong.

In many cases “the reason an M&A transaction, layoffs or restructuring goes sideways or causes labour unrest is that the local management were disgruntled and riled up the rankand-file workers”, he added.

In November 2011, mid-level managers led thousands of PepsiCo Inc. workers to strike in protest against the terms of the company’s acquisition by Tingyi Holdings, according to Hong Kong-based worker advocacy group China Labour Bulletin (CLB).

However, some of the largest recent strikes, including the Yue Yuen action, don’t involve a factory sale or restructuring.

Labour unrest has surged in China in recent months as slowing economic growth and rising costs have squeezed companies in industrialized areas like the Pearl River Delta in southern Guangdong province. CLB has recorded 319 strikes and labour protests since the beginning of the year.

More active role Chinese factory disputes typically start with younger employees pushing management for higher

pay. But in the last few years, as restructurings have become more common, managers have begun to take a more active role in negotiations and work stoppages because they have more at stake, lawyers said.

China’s 2008 labour contract law requires companies terminating employees to pay compensation worth one month’s salary for every year of employment. The longer an employee has been working at a factory, the greater the potential payoff from a closure, merger or

Strikes started by older workers often come about because of a change in the company, when a company is being merged or restructured Dong Baohua Politics and Law professor East China University

prices going down 1.36 percent month-on-month, the CIA statement showed.

Only two -Beijing and the northern port of Tianjin- saw new home prices increase, with the average cost in the Chinese capital rising 0.69 percent from April to 33,472 yuan per square metre.

That was up 22.39 percent from a year ago, narrowing from a 23.94-percent increase the previous month, CIA said.

China’s commercial capital Shanghai saw the average cost of a new home fall to 32,388 yuan per square metre, down 0.43 percent from a month ago. Year on year, the price went up by 14.59 percent, compared with a 15.34-percent gain in April, the statement showed.

AFP

restructuring.

Turnover at Chinese factories is high - reaching 100 percent a year in some companies. Younger workers spin through jobs quickly, sometimes staying only months in one plant. Managers can be among a plant’s longest serving employees.

“Strikes started by older workers often come about because of a change in the company, when a company is being merged or restructured,” says Dong Baohua, professor at the East China University of Politics and Law. “Older workers want to cash in on their years of service.”

Line managers may have information about organizational changes before rank-and-file workers.

And they may use the threat of a work stoppage to motivate corporate leaders to improve managers’ pay or compensation, lawyers said.

Reuters

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June 2, 2014

Asia S.Korean exports decline dragged by China There were 1.5 fewer working days in May than a year earlier and this meant the average exports per working day in fact rose 6 percent Christine Kim

KEY POINTS Exports fall in May mostly due to calendar effects Shipments to China post sharpest fall since Aug 2009 Robust exports to EU, U.S. evidence of uneven global recovery Trade seen improving, but China slowdown a risk

percent in May from a year before, setting the fastest drop in nearly five years and eclipsing a stellar 32 percent jump in sales to the European Union and a 4.5 percent rise in shipments to the United States.

Analysts and the government called for caution over the May export data, pointing to distortions arising from unusually long holidays falling in May in South Korea and China.

“In May, China had many holidays along with ours and so that, on top of China’s slowdown, steepened the fall in exports. I think it’s too early to say that we will continue to see a decline in shipments to China,” said Park Sang-hyun, chief economist at HI Investment & Securities.

Partly supporting the view on holiday effects, a Chinese government survey showed on Sunday the country’s official Purchasing Managers’ Index rose to 50.8 in May from 50.4 in April, indicating its manufacturing activity picked up.

China remains drag Seoul night view. Figures look distorted due to holiday

S

outh Korean exports last month suffered their worst decline in eight months as a drop in Chinese demand and the effect from fewer working days more than offset

growing purchases by European and U.S. customers.

South Korea, the fourth-largest economy in Asia, said yesterday exports last month fell 0.9 percent

India’s central bank holds first meeting with Modi in power Economists widely expect the central bank to keep its trend-setting repo rate Aditya Phatak

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ndia’s central bank holds its first monetary policy-setting meeting this week amid speculation its hawkish stance could bring it into conflict with the pro-growth policies of the new prime minister, Narendra Modi.

Analysts say the central bank’s strong anti-inflation policies may clash with Modi’s aim of reviving an economy which grew by 4.7 percent last year -the lowest level in nearly a

decade, and half the rate seen during India’s boom years.

Central bank chief Raghuram Rajan, a former International Monetary Fund chief economist, has hiked interest rates three times since taking over the helm last September.

The Reserve Bank of India (RBI) governor’s policies have been widely lauded for helping to reduce the current account deficit -the widest

from a year earlier to US$47.88 billion, while imports rose 0.3 percent to US$42.53 billion. It resulted in a trade surplus of US$5.35 billion.

Exports to China plunged 9

measure of trade- and restoring the rupee’s stability.

But his tight money policy has disappointed business leaders who have called for lower borrowing costs to spur growth -a view analysts say could find sympathy with Modi’s Bharatiya Janata Party (BJP) government.

“The RBI and the government may not be on the same page,” said Anjali Verma, an economist at financial services firm PhillipCapital.

“But it would be a big risk to remove Rajan, especially after his moves were responsible for bringing back stability” to the currency market, she told AFP. Economists widely expect the bank to keep its trend-setting repo rate -at which the RBI lends to commercial banks- on hold at eight percent at Tuesday’s policy meeting, but say there is no chance it will lower the rate.

A tendency to find a wedge Modi swept to victory earlier this month, ousting the left-leaning Congress. The party trumpeted “the start of a new era” after winning the first parliamentary majority in three decades, and it faces huge public

In South Korea, there were 1.5 fewer working days in May than a year earlier and this meant the average exports per working day in fact rose 6 percent to US$2.23 billion, the second-best on record, from US$2.10 billion a year before.

The median forecast from a Reuters survey of 16 economists

The gov’t can fire me, but the government doesn’t set the monetary policy Raghuram Rajan central bank chief expectations to revive growth.

But with consumer inflation nudging 10 percent and fears that a weak monsoon could push prices higher, the central bank has little scope to loosen monetary policy.

Rajan, whose chiselled features prompted the daily Times of India to describe him as an “economist with rock star appeal”, warned when he took over the job he might have to take unpopular steps to achieve “low and stable inflation”.

Some experts have warned Rajan

editorial council Paulo A. Azevedo, José I. Duarte, 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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June 2, 2014

Asia was for South Korean exports to grow 1.2 percent in May from a year before, but five of them had predicted losses. Imports were seen up a median 4.2 percent.

It was the first decline in exports since January this year and the sharpest since September last year.

As the world’s seventh-largest exporter, South Korea is the first major industrial powerhouse to report foreign trade data each month, making its data an important guide on the latest state of the global economy.

The country has some of the world’s top providers of smartphones, cars, ships and industrial equipment such as Samsung Electronics Co Ltd, Hyundai Motor Co and Hyundai Heavy Industries Co Ltd. South Korea’s export figures by key markets underscored the global economy on an uneven pattern of recovery as the slowing growth in China, the world’s second-largest economy, remains a drag whereas the advanced economies were leading the way.

The ministry said oil products and liquid-crystal display panels were the main products for which Chinese customers sharply reduced purchases from South Korea.

It said the slowing demand from China deserved a close watch over the coming months, while adding South Korea’s global exports as a whole would likely keep growing thanks to a sustained recovery in the advanced economies.

“Given the slowing exports to China in recent months, the government plans to draw up ways to help boost shipments there including those based on the analysis of the changing imports pattern in China,” the ministry said in a statement.

South Korea’s central bank expects economic growth to quicken to 4 percent this year from 3 percent last year, predicting both exports and domestic demand would improve.

Online banking thefts hit Japanese firms Corporate users of online banking in Japan tend to be small businesses and family-owned firms

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ackers stole nearly US$2 million from the online bank accounts of Japanese businesses in April, a surge in theft that has prompted some banks to curtail online services and rethink compensation policies, executives and regulators say.

In April there were 50 cases of theft from online accounts held by Japanese businesses with nearly 200 million yen stolen, according to a person with knowledge of the industry-wide tally, which has not been made public. That was more than the entire previous year.

Japanese businesses reported 34 cases of online banking theft for the year ended March with a total of 182 million yen (US$1.8 million) stolen, according to data released by the Japanese Bankers Association.

Earlier this month, a senior official with Japan’s Financial Services Agency told regional bank executives that regulators were concerned that online theft could cause a chain of small business failures and bankruptcies.

Mitsubishi UFJ Financial Group and Mizuho Financial Group said their corporate customers had been hit by online thefts.

Corporate users of online banking

in Japan tend to be small businesses and family-owned firms. In a typical theft, hackers trick owners into surrendering passwords or gain control of poorly protected computer systems to make transfers out of their accounts, industry officials and security experts said.

Japan’s banks are divided on how to respond. Promising compensation might remove an incentive for businesses to tighten security, some executives say. At the same time, tightening security too much could kill the convenience of online banking.

In April, many regional banks suspended a service that allowed clients to transfer money on the spot to accounts that were not pre-registered.

Chiba Bank reduced its online transfer limit to 10 million yen, from just fewer than 100 million yen.

Until now, the question of whether to compensate businesses for online theft has been left to each bank. Most offer fewer protections than they do for individual accounts.

Resona Bank has said it will compensate business clients for Internet losses of up to 50 million yen when customers have taken appropriate security measures.

Reuters

Reuters

could be under threat from a BJP government, with the bank chief coming in for criticism from the party before the election for keeping rates high.

“The government can fire me, but the government doesn’t set the monetary policy,” he was quoted as saying by the Indian media in Switzerland earlier this month, highlighting the RBI’s nominal independence. At another conference in Tokyo on Friday, he denied any discord with the government. There is “often a tendency to try and find a wedge between the two and widen the wedge”, he said, according to media reports. He met the new BJP finance minister Arun Jaitley on Tuesday, the day after the government was sworn in. Rajan afterwards insisted the RBI has always “maintained the balance between growth and inflation”.

Jaitley indicated similar priorities, saying: “We have to restore back the pace of growth, contain inflation, and obviously concentrate on fiscal consolidation itself”.

India’s economy has registered sub-five-percent growth for two straight years, with tightening of monetary and fiscal policy fuelling downward pressure.

Along with controlling inflation, analysts also say higher growth requires long-term reforms by the government including an overhaul of the nation’s creaking infrastructure and a simplified tax system.

“Rajan is well respected through the global investor community... He has enough credentials to just walk away from the current situation,” said Rajiv Biswas, chief Asia economist for global consultancy IHS. AFP

Myanmar advances on World Bank projects T he country is benefiting from World Bank-supported national community development project worth of US$86.3 million which is being implemented to help improve rural infrastructure and people’s living.

According to the Department of Rural Development of Myanmar, the six-year project, which started in March, will initially cover three townships, Kanpetlet in Chin State, Namhsam (Palaung selfadministered zone) in Shan State and Kyunsu in Taninthayi Region during the first year.

During the second year of its operation, the project will benefit people in four more selected townships, Pinlebu, Sedoktara, Laymyethna and An in Sagaing, Magway, Ayeyawaddy and Rakhine regions or states respectively.

According to the World Bank, five more townships will be added in the second year and seven in the third year of the project.

Over the next two years, 15 townships out of 330 will benefit from the project.

The first year of its operation dealt with a wide range of areas, including inter-urban roads and highways, water, sanitation and flood protection, irrigation and drainage, health and education.

In subsequent years, local people will choose the type of public infrastructure they wish to build or upgrade.

In addition to the rural infrastructure development project, the World Bank also supported Myanmar’s education project from which 8.2 million students are also benefiting.

More than 100,000 poor students will receive financial support to attend classes through the Decentralizing Funding to Schools Project, the World Bank said.

The project financed by a US$80 million credit from the International Development Association (IDA) and US$20 million from the government of Australia through the Myanmar Partnership MultiDonor Trust Fund, will improve and expand the Myanmar Government’s School Grants Program and Student Stipends Program.

The project provides direct support to the Ministry of Education to expand funding for the national schools grants program that benefits all schools under the Ministry of Education, and a student stipends program focusing on 40 townships.

The project will also contribute to important longer-term goals in Myanmar’s education sector.

World Bank Country Manager in Myanmar said, “improving access to quality education and focusing on the most disadvantaged and poor children in remote areas of the country, is essential to reducing poverty and development of the country.”

Xinhua

Brunei to crack down on tobacco-smuggling Brunei will crack down tobaccosmuggling and curb tobacco consumption in the country, health minister Haji Adanan Bin Begawan Pehin Siraja Khatib Dato Seri Setia Haji Mohammad Yusof, was quoted by state broadcaster Radio and Television Brunei (RTB) as saying yesterday. In his World Anti-Tobacco Day message 2014, The minister said tobaccoconsumption has been proven to cause cancer, cardiovascular disease, diabetes and chronic breathing problem. He calls on smokers to quit the habit of smoking for the sake of their own health and the family, adding that his ministry is always supportive of such endeavour.

Japan-U.S. still far to go on trade talks The United States and Japan still have a way to go in resolving access for U.S. farm exports to the Japanese market as part of Pacific trade talks, a senior Japanese official said on Friday. “There was some progress but we are still far apart,” Japan’s Deputy Chief Negotiator Hiroshi Oe told reporters after two days of meetings with U.S. officials on farm exports. Talks on the Trans-Pacific Partnership, a 12-nation grouping that would stretch from Asia to Latin America, seek to remove tariffs and other barriers to trade, particularly for agricultural goods.

Indian economy grows 4.7 pct Economic growth stood at 4.7 percent in 2013-14 fiscal year and 4.6 percent in the fourth quarter of the financial year from January to March this year.

A decline in manufacturing and mining output is blamed for the sluggish growth rate which, however, is a little higher than the 4.5 percent in 2012-13 fiscal year but fell short of the Central Statistics Office’s advance estimate of 4.9 percent. The manufacturing sector declined 1.4 percent in the fourth quarter as against growth of 3 percent in the same period of the previous fiscal year.

Indonesia trade balance swinging to deficit Trade performance was foreseen to flip to deficit in April due to increasing import and falling export amid weakened demand, the country’s central bank governor said. Governor Agus Martowardojo said such condition discouraged the country’s effort to narrow its current account deficit this year. Indonesia saw a surplus of US$673.3 million in March as shipment of palm oil scaled up to Japan and China following rising demand, after gaining a surplus US$785.3 million in February, according to the national statistics bureau. Agus said that in April, Indonesia’s import grew by 11 percent on month.

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June 2, 2014

International Russia to build national payment system Russian President Vladimir Putin said that Russia is going to create its national payment system (NPS) based on the experience of the Japan Credit Bureau and China’s UnionPay. “We must bear in mind that in future it (the NPS) will sign corresponding agreements with its foreign partners, so it could gradually move to the international market,” the Itar-Tass news agency quoted Putin as saying.

He told head of Russia’s VTB bank Andrei Kostin that the prospective Russian NPS should learn from national payment systems which already work in Japan and China.

Wal-Mart touts web book sales Wal-Mart Stores Inc. says it’s benefiting from the spat between Amazon.com Inc. and publisher Hachette Book Group. The world’s largest retailer, which offers Hachette titles for sale on its Web store, said that physical book sales on Walmart.com have climbed 70 percent. The company didn’t give a time frame for the gain. Wal-Mart is promoting its online operations following a dispute between Amazon and Hachette this month over digitalbook prices. In the fallout, Amazon blocked pre-orders for some of the publisher’s forthcoming releases.

Draghi to take an unknown monetary journey Mario Draghi is preparing to lead the European Central Bank into the unknown. From negative interest rates to conditional liquidity for banks, the ECB president and his fellow policy makers have signalled all options are up for discussion when they meet on June 5. Of the 50 economists surveyed

by Bloomberg News, 44 expect the ECB to become the first major central bank to take interest rates into negative territory. The ECB is trying to head off the threat of deflation as the economy struggles to cope with the aftermath of a debt crisis.

JBS said to fire JPMorgan from IPO The world’s biggest meat producer removed JPMorgan Chase & Co. from the group of investment banks underwriting its food unit’s planned initial public offering, two people familiar with the matter said. The Sao Paulo-based company’s decision was triggered by an announcement

by Tyson Foods Inc. that the bank is advising it in a rival offer to buy Hillshire Brands Co., the people said, asking not to be identified because the matter is private. The firing came a day after JBS removed Morgan Stanley as lead underwriter of a planned bond sale for the same reason.

Protecting data to save saving money Consultants working on the centralised data cannot cut and paste, take screenshots or print out the data they are working on

I

t would be an insider trader’s dream to know ahead of time which of Europe’s banks will fail or need more capital, and all that data will be stored somewhere in cyberspace as the European Central Bank assesses the euro zone’s top banks.

The chances of a leak are multiplied by the thousands of consultants who will work on data for the ECB’s Comprehensive Assessment of the currency bloc’s most important 128 banks, which include household names like Deutsche Bank and Santander along with national champions Bank of Cyprus and Bank of Valletta.

“Aside from the fact that much of the information required to conduct the AQR is commercially sensitive to individual banks, details of the conclusions regarding the AQR have the potential to be market influencing, and could damage financial stability,” said Dan Keeble, a partner at Deloitte, which is working on part of the ECB’s assessment, an Asset Quality Review (AQR) for the euro zone’s 13 largest banks and some smaller ones.

That is why the consultants working on the centralised data - U.S. firm Oliver Wyman - cannot cut and paste, take screenshots or print out the data they are working on. And they will only have access to their part of the project, and only for as long as it takes to complete their task.

Thousands of other consultants working on individual banks face similar restrictions. Anyone caught leaking the information risks a hefty jail sentence, and the ECB said all access to the data is monitored, so users can be traced.

All data communicated to, from and within the ECB is stored on ‘Darwin’, the ECB’s document and records management system. Anyone who wants access must file a request through a designated security manager at a national financial supervisor, and the central project management office must approve.

Data about individual banks is stored on isolated servers within Darwin, and elevating it to Secret means access to the database, which is encrypted, is controlled by more senior people.

As well as staff at the ECB’s newly created supervisory arm, much of the heavy lifting in the review is being done by private consultancy Oliver Wyman, which is acting as project manager.

“Oliver Wyman maintains strict processes to manage the confidentiality of proprietary client information as standard policy,” the ECB said. “Each person working on the Comprehensive Assessment has signed additional confidentiality documents.”

Beyond the Frankfurt bubble The data worked on by the ECB and Oliver Wyman in Frankfurt is the

ECB headquarters in Frankfurt

final link in a project that spans the Eurozone and beyond into countries where the banks have operations.

Almost all of the national supervisors producing information for the ECB have hired auditors to help them with the job, while many of the banks have also hired third parties.

They face a similarly strict list of requirements. Documents are typically reviewed on bank PCs, and any transfer of information to auditors’ computers is severely restricted, people familiar with the process told Reuters.

Auditors that do store information in their own environments must prove that access controls are good enough to protect the information, the people added.

A source familiar with the process said data on individual banks is sent to national supervisors using encrypted emails through a specially secured channel. Both sides need keys to code and decode the data. Auditors send their work in the same way.

Deloitte’s Keeble said there were also financial penalties built into the audit contracts to deal with data security breaches.

But even the most advanced technology protocols are only as strong as the weakest link in the chain.

KEY POINTS Data security huge concern in landmark ECB bank tests Hackers could make billions from obtaining test results early ECB may soon upgrade project from ‘confidential’ to ‘secret’ Centralised data stored in Frankfurt, all work done on ECB computers Every consultant must get individual ECB security clearance Financial penalties for consultants who breach confidentiality

Reuters

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June 2, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE AGE

Harnessing China’s competitive streak

Tax and security regulators are warning of a more ‘’aggressive and assertive’’ approach to loans and apartment purchases by owners of self-managed super fund investors amid growing concerns about possible abuses. Securities regulators are focusing on commission payments of up to three times recommended amounts being paid by developers to advisers, accountants and real estate agents for recommending apartments, typically off the plan, as investments.

Tax authorities are stepping up inquiries into a spike in scheme members making low, or zero-interest rate, loans.

Andrew Sheng

Distinguished Fellow of the Fung Global Institute and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission

Xiao Geng

Director of Research at the Fung Global Institute

THE TIMES OF INDIA Overseas investors pumped in nearly Rs 34,000 crore in the Indian market last month on hopes that the new government at the Centre would push reforms and spur economic growth.

As per data compiled by capital markets regulator Sebi, net investment by FIIs into Indian equities in May was Rs 14,006 crore (US$2.35 billion), while in the debt markets it stood at Rs 19,772 crore (US$3.34 billion) taking the total to Rs 33,778 crore (US$5.7 billion). Market analysts said foreign investors are betting on the Narendra Modi-led BJP government.

JAKARTA GLOBE Perusahaan Gas Negara, a state gas distributor, posted a 33.5 percent drop in first quarter profit on rising costs. Net income at the Jakarta-based company fell to US$176.7 million in the January to March period this year from US$265 million a year earlier, while revenue increased 15.1 percent to US$841.6 million, the company said in a press statement.

However, the state gas firm, or PGN, saw its cost of revenue rising 35.3 percent to US$502 million from US$371 million.

PGN distributed 875.7 million metric standard cubic feet per day (mmscfd) of natural gas.

THE STRAITS TIMES The world’s biggest hedge funds are managing more money than ever before even while the returns they provide look less attractive compared to those achieved by younger, smaller firms. Large institutions managing money for wealthy individuals have always tended to look towards wellestablished money managers but this trend has become more pronounced following the financial crisis. According to data from industry tracker Preqin some 90 per cent of assets are now held by just 505 funds worth at least US$1 billion (S$1.25 billion).

H

ONG KONG – China’s State Council recently unveiled a comprehensive blueprint for capital-market reform until 2020, in which it identifies two key objectives: “to support open, fair, and integral market processes, and to protect investors, particularly the legal rights of small investors.”

Achieving these goals, as the blueprint recognizes, will require policymakers to weigh market autonomy against state authority, innovation against stability, investor protection against caveat emptor, and the temptation of rapid reform against the need for pragmatism. Can it be done?

From a policy perspective, the goal should be to strike a balance between competition (which spurs growthenhancing innovation but can also generate instability) and cooperation (which promotes long-term social cohesion but can also lead to stagnation).

In doing so, China’s leaders must account for three levels of competition: inter-enterprise competition, inter-sectoral competition, and competition among the interests of citizens, businesses, and the state.

The implementation of a competition framework for enterprises is a work in progress. In 2008, the government enacted an anti-monopoly law aimed at preventing anti-competitive or “monopoly” agreements among enterprises, minimizing abuse of market dominance, and blocking mergers and acquisitions that would eliminate or unduly restrict competition.

But managing competition in a market that has three major players – state-owned enterprises (SOEs) and domestic and foreign private companies – is a complex task. Private-sector firms are frustrated with the privileges that SOEs enjoy, while foreignowned enterprises complain that they are at a disadvantage vis-à-vis domestic companies.

The management of intersectoral competition is even more complicated. In banking,

for example, competition is extremely fierce, and China is one of the few economies where concentration (the market share of the top five players) has declined in recent years. But, more than a decade after China’s accession to the World Trade Organization, foreign banks’ share of the Chinese market stands at a miniscule 2% – a reflection of Chinese regulators’ failure to create a level playing field.

The challenge is intensified by technological advances and regulatory arbitrage.

E-commerce platforms like Alibaba have not only breached banks’ payment business; they have also begun to offer wealth-management products.

And regulatory arbitrage has fuelled the emergence of

Given the difficulty of identifying which of the old rules needed to be reformed or eliminated, the process depended on the delegation of central-government powers to local governments, which were better equipped to experiment with market rules to boost economic growth

shadow banking, which is competing actively with traditional financial institutions for wealth-management and lending business.

Regulatory arbitrage arises from competition among central-government agencies for the authority to regulate – competition that often delays market reforms and institutional change, owing to agencies’ unwillingness to accept one another’s authority.

For example, overlapping regulation by at least five agencies and ministries has delayed the development of China’s bond market considerably.

The best example of healthy competition in China is that which occurs among cities.

China has 287 prefecturelevel cities, with a median population of 3.7 million and median per capita GDP of US$5,800. Sixteen cities have already crossed the World Bank’s threshold for highincome status, with annual per capita incomes of more than US$12,616, and four – Beijing, Shanghai, Guangzhou, and Shenzhen – have global reach.

These cities hold the key to the ability of China as a whole to avoid the middle-income trap.

That should come as no surprise. The secret of China’s economic success since 1979 has been the easing of centralplanning rules to empower cities, markets, and private businesses to experiment, innovate, and grow. Given the difficulty of identifying which of the old rules needed to be reformed or eliminated, the process depended on the delegation of centralgovernment powers to local governments, which were better equipped to experiment with market rules to boost economic growth.

At the same time, in order to preserve the system’s stability and integrity, these efforts were accompanied by the centralization of fiscal authority and certain oversight powers. This balance between horizontal competition and vertical regulation was critical to promoting growth and

dynamism in Chinese cities.

But the balance has been far from ideal. Indeed, competition among cities – intensified by the large role that municipallevel GDP growth plays in determining local officials’ career paths – went too far, creating destabilizing imbalances.

Yes, local autonomy facilitated bold productivity-enhancing activities, such as the use of rural land for industry and commerce and the creation of public-private partnerships to finance major infrastructure projects; private enterprises were thus able to seize market share from SOEs in the service and manufacturing sectors. But cities’ hasty efforts to imitate one another’s growth models also led to overwhelming environmental pollution, mounting debt, excess infrastructure capacity, rising inequality, depletion of farmland, and rampant corruption, including administrative abuses that encroached on citizens’ property rights.

Competition-fuelled growth propelled China’s emergence as the world’s second-largest economy.

But it is unsustainable. The imperative now is to rebalance competition to address the negative externalities of state and market activities that harm citizens’ interests.

The central government’s recent removal of certain judicial powers from local governments, thereby strengthening protection of property rights, is an important step in this direction. But it is not enough. Enabling the market to drive resource allocation, while ensuring a level playing field for all participants, will require the establishment of clear competition principles, possibly supported by a powerful “competition commission.”

No competition can work without clear, fair rules. That is the real challenge facing China’s leaders today. If they succeed, a high-income China will be only a matter of time.

The Project Syndicate

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June 2, 2014

Closing Black cab licence bid sets new record

Portugal: Troika out, EC steps in

The Transport Bureau received 999 bids in total for the auction of 200 licences for the conventional black taxis, where the highest bid amounted to over 1.2 million patacas (US$152,526) – more than the highest bid at 1.1 million patacas cast for the same 8-year conventional taxi licence in 2012. Within this year, these 200 new taxis will be joining the existing fleet of 1,080 black taxis to serve on the streets, the Bureau confirmed.

The European Commission (EC) is going to present today half-yearly specific recommendations for each country and Portugal is going to be included for the first time as it has just finished its bailout package. Portugal is now going to get specific recommendations from the Commissions, apart from the vigilance programme, and a Community source told Lusa that this would involve Brussels sending regular missions, but these would not “involve adopting any additional measures to those already in place”.

Crimea adopts ruble C DICJ gets out the dictionary The gaming regulator said that it will soon announce the definition of mass gaming floors and VIP gaming areas ahead of the smoking ban on Oct 6 Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he Gaming Inspection and Coordination Bureau will soon announce the definition of mass-market gaming floors and VIP gaming areas in anticipation of exercising the full smoking ban on local casinos’ mass gaming floors starting from October 6, Bureau director Manuel Joaquim das Neves told reporters at the weekend.

The Health Bureau announced on May 15 that smoking will be banned on the mass gaming floors of all casinos here starting October 6 but that gaming operators may install smoking lounges without gaming equipment on the floors. Also, after that date, smoking zones inside VIP rooms will still be allowed.

Speaking to media on the sidelines of the SJM Macau Derby, Gaming

Inspection and Coordination Bureau director Manuel Joaquim das Neves said that his Bureau is conducting an internal analysis and discussion on the distinction between mass-market gaming floors and VIP gaming floors.

The Bureau is also engaging legal consultants to study the issue, Mr. Neves said. Recently, Angela Leong On Kei, executive director of SJM Holdings Ltd, raised doubts about the definition of VIP rooms and mass gaming floors.

There have also not been any written rules announced by the authority on how it will handle the ‘premium mass’ segment, in which gamblers can play with big bets as VIP gamblers on mass gaming floors without requesting credit from junket operators. Current regulations permit gaming operators to

set up smoking areas of up to fifty percent of the gaming floor space in casinos.

Attending the same event as Mr. Neves on Saturday, SJM Holdings Ltd chief executive Ambrose So Shu Fai remarked that it was “too early to predict” at the moment how the smoking ban on mass gaming floors will affect gaming revenue.

Mr. So added that the design of setting up smoking lounges in the casinos operating under the licence of Sociedade de Jogos de Macau, S.A. (SJM) has already been completed, and is pending government approval.

He expressed confidence that the installation of smoking lounges in most of the casinos operating under SJM will be completed before the full smoking ban on mass gaming floors comes into force on October 6.

Studio City Finance reports paper loss of US$13.5mln Net loss in the first quarter of this year was US$8 million less than in the same period last year Sara Farr

sarafarr@macaubusinessdaily.com

S

tudio City Finance Ltd, a unit of Macau casino developer Melco Crown Entertainment Ltd, says it made a net loss on paper of US$13.5 million (108 million patacas) in the first quarter of this year. According to the firm’s filing with the Hong Kong Stock Exchange, this was ‘primarily due to higher interest capitalisation upon our continuous development of Studio City.’

Studio City Finance has issued US$825 million-worth of senior

notes with an 8.5 percent coupon, due to mature in 2020 to help fund the resort’s construction. The project also has a term loan and revolving credit facility amounting to just under HK$10.85 billion (US$1.4 billion).

Interest expenses, which are the net of capitalised interest, were US$2.2 million in the first quarter of the year, compared to US$12.9 million a year earlier. The firm said the decrease of US$10.7 million was ‘primarily

rimea moves to the ruble in a further step toward integration with Russia, which annexed the Black Sea peninsula in a move Ukraine and its allies the U.S. and European Union have denounced as illegal.

Crimean shops will no longer use double pricing in hryvnia and rubles, and all transactions will be carried out solely in the Russian currency, news service ITAR-TASS reported today, while in Kiev, supporters of the Maidan movement rallied.

Ukraine’s government is facing new demonstrations there after the city’s authorities tried to remove the tent camp that was the centre of deadly protests that ousted former President Viktor Yanukovych in February.

The currency switch comes as Ukrainian forces battle to stop proRussian separatists from carving off more territory in the country’s east. Leaders in Kiev and the U.S. and EU accuse Russian President Vladimir Putin of encouraging the tumult by sending cash, weapons and manpower to the separatists, while Russia says Ukraine should stop targeting its own citizens.

Bloomberg

due to a higher interest capitalisation of US$10.1 million associated with the Studio City construction and development projects.’ It was also attributable to lower interest expenses on Studio City’s land use right, which costs US$600,000.

The property’s pre-opening costs in the first three months of the year were US$900,000 compared to US$600,000 in the same period last year.

Meanwhile, Melco Crown Entertainment (MCE) Finance Ltd announced in a filing with the Hong Kong Stock Exchange that total net revenues for the first quarter this year increased 19.2 percent to US$1.15 billion. This was primarily due to ‘improved group-wide revenues across all gaming segments, particularly in the mass market table games segment,’ the filing reads.

In addition, MCE Finance Ltd’s net income was US$252.6 million in the first three months of the year compared to US$103.4 million a year earlier.