Macau Business Daily, Oct 17, 2014

MOP 6.00 Number 647 Friday October 17, 2014

Publisher: Paulo A. Azevedo

Closing editor: Luis Gonçalves

Air Macau’s Thai dream

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he Land of Smiles beckons. Air Macau has identified Thailand as a major source of expansion in 2015. The local airline is increasing its routes to get more foreign passengers using Macau as a hub for travel in Mainland China. Three daily flights to Bangkok, a new route to Koh Samui and an agreement with Thai Smile Airways drive the new strategy.

Air Macau’s 15 Mainland destinations attracts foreign visitors; while famous Thai destinations could bolster sales to Macau residents PAGE

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Year III

Toyota recalls 6,800 cars in Macau and HK PAGE 5

New team, new bills?

A cabinet reshuffle is imminent. Legislative Assembly president Ho Iat Seng hopes that new Secretaries don’t impede the passage of bills, but admits changes in some of them. Legislators have seven bills on hand, with six pending a second reading. The bills affect diverse areas of commercial, professional and political life plus medical responsibility

Elderly and disabled to receive MOP500 million

Agile seeks to raise HK$1.6 billion Tencent enters China LotSynergy capital

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HSI - Movers October 16

Name

PAGE

%Day

Tingyi Cayman Island

1.95

Sands China Ltd

0.71

Galaxy Entertainment

0.70

Luxury crisis

CLP Holdings Ltd

0.08

Hong Kong Exchanges

-0.17

New World Developm

-2.20

Want Want China Hol

-2.26

The luxury market is stalling. Luk Fook posted a 20 percent drop in sales in Macau and Hong Kong.

From July to September versus a year ago. Gold jewellery revenues declined almost 30 percent.

Golden Week sales increased just 3 percent

Lenovo Group Ltd

-2.34

Hang Lung Properties

-2.57

China Mengniu Dairy

-2.68

Page www.macaubusinessdaily.com

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Source: Bloomberg

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I SSN 2226-8294

Sands China profits up 3 pct Mixed signals There’s increasing competition in the mass gaming segment. Sands China has reported a flat performance in revenues for 3Q from a year ago.

Profits in the period increased 3.3 percent. While the operator’s shares in HK led the decline of casinos

PAGE 6

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It surpassed experts’ predictions. Chinese banks lent US$140 billion in September. But foreign exchange reserves dipped slightly, fuelling fears that speculators are active. The country’s economy is moving into ‘mild’ territory

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October 17, 2014

Macau

Assembly president: Secretary reshuffle may impact bills The Legislative Assembly’s president hopes for continuity from the government in the deliberation process over bills as the top official reshuffle gets underway Stephanie Lai

sw.lai@macaubusinessdaily.com

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hile the city awaits the imminent reshuffle of the Secretaries in December, Legislative Assembly president Ho Iat Seng expressed hopes for a smooth transition on the deliberation of several bills on the current agenda.

The reshuffle plan of the five Secretaries of Macau - the top officials governing various domains of public affairs – has yet to be announced by the government or Chief Executive Fernando Chui Sai On, who secured his re-election on August 31 and assumes office for his second term on December 20.

Legislative Assembly head Ho Iat Seng told media after a plenary session yesterday that the legislators would have to approve seven bills in hand – six of them are left over from the last legislative year pending a second reading and final approval from the Assembly.

“If the new Secretaries think differently to the incumbent ones, that could mean some changes to the second reading of the bills,” said Mr. Ho. “We hope that before December 20, the incumbent Secretaries can fix all the basic framework for the

discussion of all these bills,” Mr. Ho said. “For instance, regarding the bill about the treatment of disputes over medical errors, both the government and the Assembly have had several meetings and reached certain consensus on the issue. Before the reshuffle [of Secretaries] is to take place, the government should hand all their [opinion] texts on the bill to the Assembly.”

The six bills now at the second reading stage in the sub-committees of the Assembly and pending final approval are the qualification system for urban planners; the law for civil

servant employment contracts; the prevention of corruption in external trade; laws on treating medical errors; protection of workers’ claims, and the minimum wage for cleaners and security workers engaged in property management services. The other bill that has yet to gain the first approval of the legislators is the animal protection law.

Up to now, there has been no advance annual agenda officially announced on which bills are to be legislated or amended during a legislative year, or their respective priority in the legislators’ discussion timetable.

Apart from the bills that Mr. Ho mentioned, the Assembly will discuss the budget framework law, bills on the non-Mandatory Provident Fund scheme; amendment of residential buildings management rules as well as the amendment of subsidised housing law, according to our compilation of previous remarks made by the government.

Despite uncertainty over the reshuffle of the Secretaries, Mr. Ho expressed confidence that the Assembly could work well with the new team of top officials to be led

by Mr. Chui.

Before Mr. Chui is to take up his second term of office in December he will go to the Legislative Assembly to deliver a review of his policies of the past five years in November. He will also deliver the budget plan for the first quarter of next year, he told media on October 8.

The Policy Address for 2015 will only be delivered in March or April next year, Mr. Chui said at the time.

Meanwhile, the Policy Address for 2016 is scheduled to be delivered in November next year.

Ho Chio Meng: urgent need for mutual legal assistance in criminal matters and law reform

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rosecutor General, Ho Chio Meng, has pledged to make a breakthrough to change the fact that for over 10 years the Macau SAR has not yet reached any agreement on mutual legal assistance in criminal matters with Mainland China or Hong Kong.

“Time waits for no man,” he lamented. “The SAR should broaden its mind and adjust its strategy.

Firstly, the cooperation can start

from single cases through various means and then it can gradually transform into a standardised and legalised cooperative mechanism, in collecting evidence or delivering legal documents. On this basis, cooperation can be extended to transferring illicit money or goods, surrendering fugitive offenders, resolving conflicts of jurisdiction, and handling litigation.”

The Prosecutor General further indicated that law reform is inevitable

and is the only way to achieve a prosperous society and safeguard its security.

Mr. Ho said the Public Prosecutor’s Office has already initialed the revision of the Criminal Code, especially with regard to regulations regarding domestic violence and financial crimes.

It also imposes harsher punishment for drug dealing, bribery, instigating minors to commit crimes, and traffic accidents.

The President of the Court of Final Appeal of Macau, Sam Hou Fai, sided with the Prosecutor General. Mr. Sam said in terms of criminal punishment Macau has a relatively moderate system in the Asia Pacific region, especially in terms of probation, release on parole, financial crimes and crimes of negligence. But he pointed out that revising the policy or not requires more profound study.

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October 17, 2014

Macau MOP500 mln for elderly and disabled The Social Welfare Bureau started allocating subsidies for the disabled as well as old age pensions yesterday to the tune of more than MOP500 million (US$62 million).

According to the Bureau, some 8,439 disabled residents qualify for the subsidies. They will get MOP7,000 or MOP14,000 each, depending on if they are generally disabled or specifically disabled. The subsidies amount to MOP82.3 million. Meanwhile, more than MOP420 million has been allocated to 60,800 persons in the city aged 65 years or above, who are entitled to 7,000 patacas each from October 23.

Luk Fook sales drop 20pct in Macau, HK Gold by weight is being more sought after as international prices remain relatively low Sara Farr

sarafarr@macaubusinessdaily.com

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uk Fook Holdings (International) Ltd posted a 20 percent drop in same-store sales in Macau and Hong Kong in the three months between July and the end of September over that of a year ago.

According to the group’s sales performance report filed with the Hong Kong Stock Exchange, in both Special Administrative Regions the sales of gold jewellery witnessed the biggest decrease of 27 percent, followed by gold by weight that dropped 24 percent and gem-set jewellery, the sales of which decreased by 7 percent.

Same-store sales in mainland China also dropped considerably by 30 percent in the three months in question over that of a year earlier.

While the sale of gold jewellery and gold by weight dropped 38 percent

and 34 percent, respectively, that of gem-set jewellery increased by 14 percent year-on-year.

Overall, same-store sales dropped 21 percent between July and the end of September compared to the same period in 2013.

Meanwhile, the group posted positive results for same-store sales during Golden Week earlier this month. While it has been reported that mainland Chinese visitors to Macau had increased in number but spent less during the National Day Holiday, Luk Fook registered an increase in same-store sales for both its regional segments: Macau and Hong Kong (grouped together) and mainland China.

In Macau and Hong Kong, samestore sales increased by 3 percent, with

gold by weight being the most sought after item registering an increase of 23 percent, followed by gold at 13 percent. Gem-set jewellery registered an 11 percent drop in sales compared to that of Golden Week a year ago.

The company said in the filing that sales performance in Macau and Hong Kong had increased primarily due to the international price for gold remaining relatively low and, as such, being high in demand.

‘Although the Occupy Central movement in Hong Kong caused a disruption of normal operations in some shops at certain districts, the adverse impact mitigated by a substantial growth of sales of shops at other districts because of the switch of customers’ shopping locations,’ the filing reads.

In mainland China, however, all

three segments registered an overall increase of 28 percent. Similar to that of Macau and Hong Kong, gold by weight sales increased the most by 47 percent, followed by gold jewellery registering a 29 percent increase in sales and gem-set jewellery and increasing 28 percent over that of the seven-day holiday in 2013.

Luk Fook has 1,333 shops, of which 19 are in Macau and 46 in Hong Kong.

Meanwhile, another high luxury jeweller, Chow Tai Fook, also posted overall declines in same-store sales in the three months ended September 30. A filing with the Hong Kong Stock Exchange shows that same-store sales in Macau, Hong Kong and other Asian markets (all combined into one group) declined 29 percent over that of a year ago, while those in mainland China dropped 12 percent.

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October 17, 2014

Macau Tencent buys into shares of lottery supplier China LotSynergy

Brought to you by

A subsidiary of China’s internet giant Tencent has agreed to subscribe to new shares in China LotSynergy Stephanie Lai

HOSPITALITY

sw.lai@macaubusinessdaily.com

Variable growth The total number of hotel guests has grown significantly since 2010. If we take the first eight months of the current year and compare the combined figures to the same period in 2010 we find the indicator went up at an annual average rate of almost 8.8 percent. Such a rate, if sustained, would imply a doubling of the total number of guests in just about eight years. However, that average hides a sharp reversal on trend in the current year. In that period, compared to 2013, total growth dropped to less than 1.2 percent. That value represents a decrease of the growth rate in excess of 13 percentage points. Moreover, the various categories of hotels have followed distinct growth trajectories: 5-star hotels, which represent the biggest share of the number of guests – over 58 percent currently - had an even sharper decline. They actually posted a negative growth rate this year to August, as their number was down by almost 1.7 percent relative to the same period last year. That figure contrasts heavily with a growth rate of 26.8 percent in the previous year. This category alone was responsible for most of this year’s growth slowdown.

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wholly owned subsidiary of Chinese Internet giant Tencent Holdings Ltd has agreed to subscribe to 594,034,513 shares at HK$0.75 (US$0.1) per unit of lottery supplier China LotSynergy Holdings Ltd, the firm said in a filing with the Hong Kong Stock Exchange yesterday.

The subsidiary of Tencent, Hongze Lake Investment Ltd, will pay HK$445.5 million for the share subscription. The price paid for the share subscription at HK$0.75 per share represents a discount of approximately 11.8 percent on China LotSynergy’s closing price of HK$0.85 per share as quoted on the Hong Kong Stock Exchange on Monday – the last trading day

before the firm halted trading.

China LotSynergy resumed trading yesterday morning.

After completion of the share subscription, Hongze Lake will own about 7 percent of the enlarged share capital of the Hong Kong-listed lottery supplier, the filing noted.

Both parties have also agreed to exercise an option for Hongze Lake to further subscribe to 273,140,969 new shares at HK$0.83 per unit; if the option is exercised along with the share subscription, Tencent’s subsidiary will control 9.9 percent of the enlarged issue share capital of China LotSynergy.

The net proceeds from the share transactions will be used as ‘general working capital, general corporate

purposes and investments when business opportunities arise’, China LotSynergy said in the filing. The lottery supplier also noted that the share subscription lays a ‘good foundation’ for future cooperation between them and Tencent.

China LotSynergy is a technology and service provider for lottery systems, terminal equipment, gaming products and their operations in China’s lottery market. The firm’s lottery products include video lottery (VLT), computergenerated ticket games, KENO-type lottery and new media lottery.

Tencent provides Internet, mobile and telecommunication value-added services in China. It also operates popular instant messenger services QQ and WeChat.

Agile attempts second fundraising to secure HK$1.6 billion With the chairman confined and an executive director unreachable, Agile is planning to raise more than HK$1.6 billion from its shareholders to refinance a loan due by the end of the year Kam Leong

kamleong@macaubusinessdaily.com

The 4-star establishments have been displaying a more consistent trend, although they also suffered a noticeable slowdown last year. They seem to be recovering well from it. The current growth rate is more than five percentage points above the one set last year: 2 and 3-star hotels have had a slightly negative evolution since 2010.

Both categories posted negative, albeit small, growth rates. But these types of hotel – together with guesthouses, which saw a sustained average growth close to 9.9 percent since 2010 – account for little in the overall scheme of things.

J.I.D.

7.2 mln

number of hotel guests, this year to August

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ainland Chinese property developer Agile Property Holdings Ltd. said yesterday that it is proposing its second funding attempt since last month in order to raise another HK$1.65 billion (US$ 206 million) from a rights issue to deal with the loan due in December.

The Hong Kong-listed company filed with the Hong Kong Stock Exchange yesterday that it is offering a 1-for-8 stock issue, at HK$3.80 per share. Meanwhile, the family trust of the chairman of the company, Chen Zhuolin, who is placed under house arrest by Chinese prosecutors, will underwrite the rights share.

The property developer revealed in the filing that it had lost contact with another director of the company, Huang Fengchao, who is in charge of the real estate development projects in Yunnan Province and Hainan

Province in China.

In addition, the company said the director has not been reachable since October 11, having assigned a general manager of the company to assist the Central Commission for Discipline Inspection (CCDI) of the Chinese Communist Party in its investigation into the Tengchong Agile Resort Co., Ltd project On Monday, shares of the company plunged, wiping some HK$150 million off in a day after the company admitted that its chairman had been confined by mainland prosecutors on September 30, even though it did not confirm whether the investigation was related to the bribery case linked to officials in Yunnan Province.

“In the short term, there is quite a big pressure on liquidity but this company isn’t at the point of going bust,” said Johnson Hu, a Hong

Kong-based property analyst at CIMB Group Holdings Bhd. “They could accelerate sales and think of other fundraising options,” as well as selling some commercial properties, he said.

According to the company, it is also discussing extending the deadline of the loan with banks.

In fact, in late September the company announced its first rights issue that would have raised HK$2.8 billion, about 70 percent more than the current issue.

Meanwhile, the company’s sales exhibition in Macau has not been affected by such issues. The exhibition, starting yesterday, will end on October 27. The exhibition primarily sells the company’s latest projects Notting Hill and Chamonix, located in Zhongshan City in Guangdong Province, the birthplace of the company.

With Bloomberg

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October 17, 2014

Macau

Toyota recalls 6,800 cars from SARs

Energy Conservation Fund

The Japanese manufacturer is recalling Crown, Noah and Corolla models which have developed problems related to the braking system. This is the second recall from Macau in two years

he government’s Environmental Protection and Energy Conservation Fund will distribute MOP42.4 million in the third quarter of the year, it was announced on Wednesday in Macau’s Official Gazette.

This amount represents an increase of MOP12.4 (40.7 percent) in comparison to the third quarter of 2013, when a total of MOP30 million was provided to companies.

The fund was launched in 2011 in order to subsidise the acquisition of environmentally friendly technology, equipment and other products by private companies and associations. The fund pays up to 80 percent of the cost of acquisition, up to a limit of MOP500,000 per grant.

João Santos Filipe

jsfilipe@macaubusinessdaily.com

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oyota is recalling 6,800 cars from Hong Kong and Macau, the Japanese manufacturer has informed the TDM’s Chinese channel. This is part of a larger operation by Toyota, which is recalling 1.75 million cars worldwide for maintenance.

The models to be recalled in Macau and Hong Kong include Toyota’s Crown, Noah and Corolla. According to a Hong Kong Toyota agent the models will have the seal in the brake master cylinder and gasket replaced.

The models in Macau and Hong Kong are part of an approximately 802,000 vehicles globally that have a faulty brake system, which could crack and result in

leaking brake fluid.

Business Daily contacted the Toyota distributor in Macau, Yat Fung Motors Ltd, and the Toyota office in Hong Kong but by the time the story went to the press both had failed to address our queries.

In an email sent to the broadcaster CNN’s office in Hong Kong last Wednesday the Japanese manufacturer explained that for the time being it was not aware of any

crashes, injuries or fatalities related to the braking system issue.

This is the second recall action by Toyota in Macau in a two-year period. The first operation of this kind took place in November 2012 when the Japanese company recalled 3,909 vehicles of the Corolla and Prius models produced between 2000 and 2009. At the time, the operation was also part of a worldwide action that recalled over 2.77 million cars due to water pump and steering malfunctions.

In the first six months of the year Toyota was number one in global vehicle sales, besting Volkswagen and General Motors, with sales of 5.097 million vehicles.

provides MOP42.4 million

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Casinos, banks and supermarkets The published list includes some of the best known companies in Macau in the hotel gaming industry such as MGM through MGM Grand Paradise, SJM Holdings through STDM and Melco Crown (COD)

Limited.

STDM received MOP488,420 patacas from the fund, MGM Grand Paradise received MOP500,000 and Melco Crown picked up MOP500,000. The last two were awarded the maximum amount paid by the fund.

Other well-known companies from different business areas are in the document, as well, such as Bank Tai Fung (MOP 444,592), Royal Supermarkets (MOP279,510) and Cafe Eskimo (MOP153,346). In total, some 438 companies are listed as being helped by the government fund.

The list was published a week after the Commission Against Corruption (CCAC) of Macau detected a case of document forgery and fraud related to four people.

Through the scheme the individuals caused the funding institution to subsidise the full amount, or even over-fund via fraudulent means. The total amount involved in the case amounted to some MOP800,000, with more than MOP200,000 subsidy defrauded.

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October 17, 2014

Macau

Sands China revenues turn flat in 3Q The company posted a 3.3 percent profit increase mainly due to increasing competition in the premium mass segment Sara Farr

sarafarr@macaubusinessdaily.com

S

ands China Ltd posted net revenues of US$2.3 billion (MOP18.4 billion) in the third quarter of the year, a slight decrease of 0.4 percent compared to the same quarter a year ago.

According to the company’s third quarter results report filed with the Hong Kong Stock Exchange, Sands China’s third-quarter adjusted property earnings before interest, taxes, depreciation and amortization (EBITDA) rose to US$811.6 million from a year earlier, and compared to the US$799.3 million average of four analysts’ estimates compiled by Bloomberg.

Net income in the quarter at Sands China climbed 4.3 percent to US$644.6 million from US$617.9 million a year ago, while net revenue fell 0.4 percent to US$2.33 billion, according to the parent company Las Vegas Sands Corp’s earnings statement.

The Macau unit of Las Vegas Sands Corp had reported a 3.3 percent rise in profit due to growth in mass-market gamblers. “Management mentioned increasing competition in the premium mass segment” and that’s impacting

margins for this higher-spending group of gamblers, Barclays Plc analyst Phoebe Tse wrote in a note yesterday.

Margins for lower-tier, mass-market gamblers remained high at more than 45 percent, she said.

Billionaire Sheldon Adelson, who controls Sands China, said this month that he expects VIP gambling business in the city to recover after casino revenue in the three months ended September fell 7.1 percent. Chinese players have been “staying below the radar” by avoiding Macau and not spending money in ostentatious ways, Mr. Adelson said.

the premises’ shopping malls, where revenues were up 12.1 percent to US$51 million.

At the group’s property across the street, Cotai Central registered a 25.1 percent increase in mass table, slot and electronic table game win per day to US$5.4 million in the third quarter compared to the third quarter of 2013. Non-rolling chip was US$1.9 billion, up 32.3 percent, and slots increased 38.7 percent to US$2.03 billion.

Venetian, Cotai Central EBITDA recorded at the company’s Venetian Macao property decreased by 1.3 percent to US$352.7 million in the third quarter over that of the same period last year. According to the earnings’ statement, non-rolling chip drop increased 10.1 percent to reach US$2.2 billion.

In addition, slot machines registered a 25.9 percent increase to reach US$1.4 billion.

Also registering an increase was

While we expect some investors will view LVS’ results as a mixed bag, we see no reason to change our positive outlook’ Telsey Advisory Group

Sands Cotai Central’s Dragon Palace premium mass lounge “failed to attract premium mass players,” analysts at Deutsche Bank AG said in a note to clients after Sands China released its quarter earnings.

According to the company filing, more than 80 percent of Las Vegas Sands’ operating profit in both Macau and Singapore operations comes from mass gaming and nongaming segments. And less than 20

percent of the profit comes from the VIP segment.

Leading declines Meanwhile, Sands China led declines among casinos in Hong Kong trading as intense competition between the resorts hit margins for higher-stakes mass-market gamblers.

Sands China fell as much as 2 percent to HK$41.40 as at 10:13 a.m., while MGM China Holdings Ltd. declined 1.1 percent and Galaxy Entertainment Group Ltd. slipped 0.5 percent.

China’s clampdown on corruption and lavish spending has hit the big spenders who contributed more than 60 percent to Macau’s gambling revenue. These high-rollers now increasingly bet outside the city, the only place in China where casino gambling is legal, boosting overseas casinos from Manila to Las Vegas.

Operators such as Sands China and Galaxy Entertainment Group Ltd. have allocated more resources to the premium mass-market gamblers who bet in cash and provide bigger margins than high rollers. Such players don’t use junket operators, which charge companies a commission to bring them to Macau.

Casinos in Macau are also facing greater labour unrest and a profit margin squeeze as more employees join protests to demand higher pay and better welfare support.

Analysts at Telsey Advisory Group said in their latest note to clients that investors could view Las Vegas Sands’ results as a ‘mixed bag’. ‘We see no reason to change our positive outlook,’ the note reads. ‘In Macau, VIP headwinds persist as expected, but it appears the smoking ban is a non-event so far, wage inflation appears under control and margins remain intact.’ with Bloomberg

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October 17, 2014

Macau

Air Macau mulling 3 daily flights to Bangkok Joanne Kuai

Air Macau is considering resuming its three daily flights from Macau to Bangkok, with Koh Samui as the next destination in Thailand in its sights for a new route in its 2015 business plan

joannekuai@macaubusinessdaily.com

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ir Macau’s business plan 2015 mulls the possibility of resuming its three daily flights from Macau to Bangkok in the first quarter of next year. The flights were reduced to two due to the company’s financial situation last year.

The airline is also considering flying to Koh Samui, an island off the east coast of the Kra Isthmus in Thailand, as another destination in the Land of Smiles, said Winston Ma Sze Lok, General Manager of Southern China of Air Macau Company Limited.

Whilst attending an Amazing Thailand presentation by the Tourism Authority of Thailand and Thai Smile Airways, Ma said Air Macau also pledged further cooperation with the two parties.

Winston Ma said that as Thailand is one of the preferred destinations of Macau residents Air Macau considers the Macau-Bangkok route of some importance as the two places serve as popular transport hubs.

“All the residents in Macau can use

either Thai Smile or Air Macau to go to Bangkok and beyond. Vice versa, Air Macau flies to 15 destinations in Mainland China, and the majority of capitals. So either way, it would be more than welcome for people from Thailand or even the rest of the world to go through Macau into Mainland China. And we will have a win-win situation,” Ma said.

Mr. Ma said that Air Macau

cooperates with Thai Airway on a regular basis. Regarding Thai Smile, one of Thai Airway’s subsidiaries, it may require a renewal of the agreement so that the interlining policies for domestic routes remain applicable.

“Air Macau is quite happy and willing to offer our domestic routes prorate agreement to them (Thai Smile) so that we both bring passengers either from Thailand or even from China and vice versa,” said Mr. Ma. With regard to more airlines opening new routes directly from Thailand to Mainland China rather than using Macau as the connecting point, Winston Ma said it is “not a concern”.

“We fly to 15 destinations in Mainland China with a daily capacity of around 9,000. They can transfer either for their inbound or outbound trip,” he said. “For PRC residents, we have also always encouraged them to include Macau in the itinerary – two destinations in one trip.”

Thai Smile, a 100% subsidiary of Thai Airways, was approved by the Thai Airways Board of Directors earlier this month to fully operate two Bangkok-Macau flights per day for Traffic Schedule 2014/15 which commences 26 October 2014.

Thailand’s airport statistics show that Thai Airways’ Revenue Passenger-Kilometer including that of Thai Smile Airways was 6.9 percent lower in August than the same month last year – with intercontinental routes 8.3 percent lower and Asia’s routes 5.7 percent lower than the same month last year.

Amid the passenger slump, Thai Smile plans to add one daily flight to Macau as a vote of confidence in the SAR’s market as the company sees great potential for both foreign and domestic passengers.

“Macau is very much different from other destinations in Mainland China,” said Woranate Laprabang, CEO of Thai Smile Airways Company Limited.

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October 17, 2014

Greater China Commerce Ministry says export normal China’s Commerce Ministry said that strong exports in September were normal but it will monitor flows to Hong Kong, appearing to respond to suspicions that Chinese currency speculators have returned to manipulating trade invoices to bet on a rising yuan. Beijing has struggled to prevent currency speculators from using simulated trade between Hong Kong and bonded customs zones using metals or lightweight items such integrated circuits to get more yuan on hand, circumventing controls on capital flows. Such flows have been repeatedly blamed for producing mysterious spikes in exports even while trade with other Asian neighbours has fallen.

Agile shrinks rights issue Chinese developer Agile Property Holdings Ltd yesterday slashed the size of a planned rights issue to refinance debt and said another one of its executives was missing, following the detention of its billionaire founder last month. The struggling company, saddled with debt and slumping sales amid China’s economic slowdown, said it planned a rights issue to raise HK$1.65 billion (US$212.72 million), much less than the HK$2.79 billion it proposed to raise in September. It also said an executive director responsible for overseeing its estate development projects in Yunnan and Hainan provinces was missing.

Li pledges stronger exchanges with Italy Chinese Premier Li Keqiang met respectively with Italian Lower House President Laura Boldrini and Senate President Piero Grasso, vowing to boost closer parliamentary exchanges between the two countries. While meeting with Boldrini, Li pledged joint efforts with Italy to take the opportunity of celebrating the 45th anniversary of diplomatic ties next year, to push for greater achievements of bilateral comprehensive strategic partnership. After briefing her about China’s new measures and progresses in its reform and opening-up, Li said although the two countries differ in their national conditions, they both face the task of sustainable development.

MMG to complete Peru mine China’s MMG Ltd said it expects to spend around US$3 billion completing construction of the huge Las Bambas copper mine in Peru and aims to start producing in the first quarter of 2016, a higher cost and later start than previously expected. MMG led a Chinese consortium that bought Las Bambas, set to become the world’s third largest copper mine, for US$7 billion from Glencore Plc in August and outlined its plans for the mine for the first time yesterday.

Chinese electric taxis in service in Brussels Belgian officials on Wednesday welcomed 34 fully electric Chinese-made taxis being put into service in Brussels.

“Using electricity in public transportation, including the taxi sector, is vital for European citizens’ quality of life,” Pascal Smet, Brussels’ minister for mobility and public works, said at the official launch of the “e6” taxis made by BYD (Build Your Dreams), a Shenzhen-based Chinese manufacturer of rechargeable batteries and automobiles. Smet said the electric taxis generate less pollution and noise.

Chinese Ambassador to Belgium Liao Liqiang said China had paid great attention to the development of greener vehicles.

Sept lending beats forecasts but Broad M2 money supply rose 12.9 percent in September from a

C

hinese banks made 857.2 billion yuan (US$140 billion) worth of new loans in September, data showed yesterday, beating market expectations in a sign that demand for credit may be picking up.

But a drop on China’s foreign exchange reserves in the third quarter signalled speculative money outflows amid increased worries about the country’ economic slowdown.

Economists polled by Reuters had expected new loans totalling 730-735 billion yuan last month, an increase from 702.5 billion yuan in August.

The People’s Bank of China (PBOC) has been steadily easing policy this year by cutting reserve requirements for selected banks and guiding short-term money market yields lower to help bring down borrowing costs for the real economy.

Worries that a sudden falloff in credit supply could further hobble China’s shaky economy were reinforced in July when total social financing - a broad measure for liquidity in China - unexpectedly hit a six-year low.

“The authorities will likely place more importance on financing data in the coming months, especially in light of the relaxation of mortgage rules and the cuts in the 14 day repos, to gauge lending appetites before deciding whether to introduce more easing measures,” said Chester Liaw, an economist at Forecast Pte Ltd in Singapore.

Broad M2 money supply rose 12.9 percent in September from a year earlier, the People’s Bank of China said in a statement on its website, in line with market expectations.

Double-digit growth rates for both M2 and outstanding loans that were much faster than China’s economic expansion have fed concerns that they were driving up debt levels and fuelling ever-less efficient investment.

Such fears were heightened after the 2008/09 global financial crisis when China’s central and local governments went on a spending spree to boost the economy, leading to a massive rise in debt levels.

Outstanding yuan loans grew 13.2 percent from a year earlier, in line with expectations.

The central bank also said China’s total social financing aggregate, a broad measure of liquidity in the economy, was 1.05 trillion yuan in

Financial district in Beijing hosts country’s most significant institutions

Bank of China bolsters balance sheet with US$6.5 bln issue It is the first time a Chinese bank has issued so-called additional Tier 1 preference shares Lawrence White

B

ank of China (BoC) yesterday sold US$6.5 billion worth of contingent capital, launching a landmark wave of fundraising by China’s biggest banks as they strengthen their balance sheets to meet new global bank capital rules.

It is the first time a Chinese bank has issued so-called additional Tier 1 preference shares, instruments which behave like bonds and convert into common equity if the bank’s core capital falls below certain trigger ratios.

It is also the world’s largest ever contingent capital deal, beating a US$5.6 billion deal by HSBC in September.

As growth slows and bad debts build up, China’s banks are rushing to replenish their balance sheets to meet the tough new global bank capital regulations known as Basel III. This deal follows a wave of similar issuance by European banks earlier this year.

China’s four biggest lenders are expected to issue US$20 billon worth of additional Tier 1 and Tier 2 capital by the end of the year, according to Fitch Ratings.

The Chinese government has been rigorously enforcing Basel III

KEY POINTS First ever contingent capital deal by a Chinese bank Issuance is world’s largestever contingent capital deal Move aimed at bolstering balance sheet under Basel rules Similar deals from Chinese banks to follow by year-end Bank of China tower in Shanghai

regulations in its efforts to ward off a financial crisis following a huge runup in debt since 2008 and a marked slowdown in the economy.

BoC said the preference shares would yield 6.75 percent, within the range expected by investors. Investors in these kind of preference shares demand a premium over straight bonds from the same issuer, for the additional risk

that their securities may be converted into common shares in times of stress for the bank.

BoC on August 14 said it received regulatory approval to issue up to US$16 billion worth of preference shares.

Bank of China International led the deal, along with BNP Paribas, China Merchants Securities (HK), Citigroup, CITIC Securities International, Credit Suisse, HSBC, Morgan Stanley and Standard Chartered.

Reuters

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October 17, 2014

Greater China Tighter bond issuance rules on the horizon

FX reserves recede year earlier September, versus 957.4 billion yuan in August.

Officials blame off-balance-sheet financing - such as trust and bank bills - for pushing up borrowing costs.

An on-going crackdown by Beijing on the shadow banking sector may have forced banks to shift more loans back onto their books.

While loan demand softened along with the economy, recently erratic loan and financing data could also be due in part to seasonal factors, analysts say.

KEY POINTS Sept new loans 857.2 bln yuan vs f’cast 730-735 bln yuan Sept M2 up 12.9 pct yr/yr, in line with f’cast Sept TSF 1.05 trln yuan vs 957.4 bln yuan in Aug FX reserves fall US$100 bln in Q3, signal money outflow

China’s foreign exchange reserves, the world’s largest, fell slightly to US$3.89 trillion at the end of September from US$3.99 trillion at the end of June, central bank data showed.

The decline in foreign reserves signalled “hot money” outflows from China amid increased market jitters about whether the world’s secondlargest economy may be at risk of a sharper slowdown, analysts said.

“We actually had a much higher trade surplus so that means there must be a lot of outflows outside the trade account or current account,” said Kevin Lai, senior economist at Daiwa Capital Markets in Hong Kong.

Reuters

The National Development and Reform Commission (NDRC) issued an internal notice to its provincial bureaux listing stricter requirements for information disclosure

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hina’s top economic planner is considering tightening rules for bond issuance by Chinese companies, bond traders said, prompting widespread speculation that it has indefinitely suspended approval for such bond sales.

The National Development and Reform Commission (NDRC) issued an internal notice to its provincial bureaux listing stricter requirements for information disclosure, collateral and assets, among other things, according to traders and a leaked document posted on Chinese news websites.

That sparked talk among some media that corporate bond issuance had been suspended indefinitely, or alternatively that state-owned enterprises had been halted from issuing bonds, but sources told Reuters the adjustments were focused on technical changes to the application process managed by the NDRC. Media has speculated that NDRC officials have been targeted by an anti-graft campaign, or alternatively that Beijing is preparing to shift some authority over fixed income markets away from NDRC to other departments.

Behind all the speculation, however, lies an underlying issue of frustration

among Chinese investors with the approval mechanism for domestic bond issuance.

The NDRC approves applications from non-listed and non-financial firms to issue “enterprise bonds” of one year and above. The China Securities Regulatory Commission (CSRC) retains authority to approve or deny plans by listed firms to issue “company bonds.”

The People’s Bank of China, the central bank manages the “financing bills” market, a platform used by prequalified institutions that can freely issue instruments with tenors mostly between one and seven years without further approval.

In particular, investors have complained of red-tape at the NDRC, which has the power over the socalled “enterprise bond” market with outstanding bonds worth around 3 trillion yuan (US$123 billion). The investors believe this is a legacy of China’s planning economy, traders say.

Unlike the CSRC and the PBOC, the NDRC has no role in supervising China’s financial markets, which calls into question the practicality of its role in supervising the secondary bond market, traders say.

Reuters

US Treasury: China does not manipulate yuan The Treasury has consistently decided to not brand China a currency manipulator, which could lead Congress to impose sanctions

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he US Treasury said that China does not manipulate its currency, but pushed Beijing to do more to focus on domestic demand -- not exports -- to drive economic growth.

In a twice-yearly report to Congress, which would set sanctions on any country officially branded a “manipulator,” the Treasury said the yuan, or renminbi (RMB), had “partially recovered” from a sharp plunge earlier in the year and had appreciated by 1.9 percent since late April.

However, the yuan remained “significantly undervalued,” the Treasury said, reiterating the description it has long used in pressing China to allow its currency to move toward a market-determined exchange rate.

The Treasury has consistently decided to not brand China a currency manipulator, which could lead Congress to impose sanctions on the world’s second-largest economy and top holder of US debt.

But President Barack Obama’s administration, lawmakers and manufacturers have long criticized China, alleging it keeps the yuan undervalued to support cheap exports, gaining an unfair trade advantage that has ballooned the US trade deficit.

“In China, the gradual appreciation of the RMB this summer and low apparent levels of intervention indicate some renewed willingness by the authorities to allow a stronger

Important metrics continue to indicate that the RMB exchange rate remains significantly undervalued U.S. Treasury statement

U.S. Treasury main building in Washington

domestic currency and to reduce intervention in line with Strategic & Economic Dialogue commitments,” the Treasury said in a statement.

“Even so, important metrics continue to indicate that the RMB exchange rate remains significantly undervalued, highlighting the need for sustained progress toward a marketdetermined exchange rate.”

Trillions in foreign-exchange reserves The Treasury said the yuan gradually appreciated in July and August amid low intervention “and strong FX inflows also indicates renewed willingness by authorities to allow the exchange rate to strengthen.”

The nominal effective exchange rate has appreciated 1.6 percent in the year-through September 30, it said.

The yuan was 1.4 percent weaker

against the dollar in that period.

At the end of June 2014, China’s total holdings of foreign-exchange reserves reached nearly US$4 trillion, or about 40 percent of China’s gross domestic product.

“This is well beyond established benchmarks of reserve adequacy, and it is very much in China’s interest to fulfil its own commitment to move more rapidly to a market-determined exchange rate, with intervention only in the case of disorderly market conditions.”

The Treasury also pointed to South Korea’s market intervention with the official aim of smoothing won volatility. Exports accounted for all of the country’s 2.9 percent annualized growth in the first half of 2014, “highlighting the economy’s continued dependence on external demand.”

AFP

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October 17, 2014

Greater China

Companies’ spending cuts deepen Some 30 years of breakneck, double-digit growth has left the government and banks with a pile of debt

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hinese companies are on a pace to cut capital spending by around 7 percent this year, the biggest annual reduction since the global financial crisis, deepening an economic chill.

Slower spending by companies underscores the challenges that China faces this year in containing an economic slowdown that is set to be its worst in 24 years, and which has been aggravated by a sagging property market.

The cutbacks could persist, indicating that China’s economy, which has relied heavily on investment, will need to speed up rebalancing to feed growth.

Economic uncertainty and a government campaign to curtail industries that are either heavy polluters or are stuck with a glut of unsold goods mean that investment could fall next year as well, interviews with companies and analysts showed.

A Reuters analysis of 335 Chinese companies, ranging from drug to machinery makers, shows investment is expected to fall 7.3 percent this year - or 74 billion yuan (US$12.1 billion) - from 2013 levels, according to Thomson Reuters Starmine data.

For many companies such as Yunnan Tin Co Ltd, whose sales and profits have been hit by China’s softening economy, being frugal is a matter of survival. Analysts on

For the traditional manufacturing sectors, I’m afraid their expenditure will continue to shrink Cai Jin, China Federation of Logistics and Purchasing vice president

average expect the firm, which is the world’s largest tin producer, to slash capital expenditure by 81 percent this year.

“We feel that the economic downturn will continue, so it’s better to keep our eye on our wallet,” said Pan Wenhao, board secretary at Yunnan Tin, which posted a net loss of 1.27 billion yuan last year.

Others are also staying lean in tough times.

A Reuters study showed that cash balances at 726 companies rose 13 percent in the first six months of this year compared with the year-ago

period, as firms curbed investment in the face of uncertainty.

The flight to safety comes as China’s economy is forecast to grow at its slackest rate in five years in the third quarter, as slower investment growth and a housing downturn increasingly dampened activity.

Analysts polled by Reuters forecast China’s economy likely grew 7.2 percent in July-September, the weakest since the first quarter of 2009 when the world was smarting from the financial crisis.

With no recovery in sight, firms like Anhui Jinhe Industrial Co Ltd, which makes chemical products, said it would rather play safe. It plans to stop investing in expanding its capacity from this year for an unstated period of time, as it tries to cut corporate flab and increase

automation, it said in its 2013 annual report in March.

“From 2014 onwards for a long period of time, the economic environment is likely to become more complicated,” it said.

No need for so much Investment has long been a crucial driver of China’s economy.

It accounted for 54 percent of growth last year, with private investment making up as much as 63 percent of the total 43.7 trillion yuan (US$7.1 trillion) spent.

Reflecting China’s wobbly economy, data due later this month is expected to show annual investment growth slid to a near 13-year low of 16.2 percent in January-September.

Reuters

11

October 17, 2014

Asia

Indian subsidy fix tests Modi Oil Minister Dharmendra Pradhan said this week that election rules prevent the government from commenting on a diesel price reduction until after October 19

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here hasn’t been a better time for Prime Minister Narendra Modi to deregulate diesel prices.

Oil prices are near a fouryear low and two major state elections are out of the way. Reserve Bank of India Governor Raghuram Rajan has called on Modi to “seize this moment” while inflation is the lowest in three years and refiners are selling at a profit for the first time since 2009.

Steps to dismantle India’s subsidies would build optimism that Modi will follow through with a pledge to take tough steps to revive Asia’s third-biggest economy.

Five months since winning India’s biggest electoral mandate in 30 years, he’s hesitated on major steps to curb one of Asia’s widest fiscal deficits while focusing mainly on attracting foreign investment and ensuring that bureaucrats make it easier to do business.

Brent crude has fallen 25 percent this year, and the median forecast of estimates compiled by Bloomberg shows it will linger near US$100 per barrel through 2018. Brent for November settlement declined as much as 73 cents, or 0.9 percent, to US$83.05 a barrel on the London-based ICE Futures Europe exchange.

State elections The price drop means the government and state-

The markets have been awaiting reforms, and there has been nothing big, so if they fail to do this it will be treated very negatively Upasna Bhardwaj, ING Vysya Bank, economist

Indian voters hold up their IDs as they wait patiently in a long queue to cast their votes at a polling station during the Assembly election of Maharashtra state, in Mumbai, India, 15 October 2014

owned explorers including Oil and Natural Gas Corp. are no longer subsidizing diesel -- and deregulation would ensure that the government won’t have to pay the subsidy if crude starts to rise again.

Modi’s predecessor had already set the process in motion, eliminating controls on petrol prices in 2010 and last year raising diesel prices by 0.5 rupees a litre each month.

Oil Minister Dharmendra Pradhan said this week that election rules prevent the government from commenting on a diesel price reduction

until after October 19, when state legislative election results are announced in Maharashtra and Haryana.

The two states, which voted yesterday, hold 11 percent of India’s population.

India budgeted 634 billion rupees (US$10 billion) this fiscal year for petroleum subsidies -- including diesel, cooking gas and kerosene -down 25 percent from the previous 12 months. Falling oil prices may help Modi narrow the deficit in the current fiscal year through March 2015 to about 4 percent of gross domestic product

instead of the targeted 4.1 percent, according to Mizuho Bank Ltd. While petroleum subsidies are coming down, they only account for a quarter of India’s 2.6 trillion rupee subsidy bill. Outlays on food are budgeted to rise 25 percent to 1.15 trillion rupees in the year through March.

Diesel in India is used in everything from cars and trucks to back-up power generators and agricultural water pumps.

The fuel accounts for 43 percent of Indian petroleum consumption.

Abe jobs pushes beyond Tokyo He’s also creating six strategic special zones that promise to loosen regulations in areas such as agriculture, medicine and labour

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ending by Japan’s regional banks grew at triple the pace of the nation’s megabanks as Prime Minister Shinzo Abe acted to rejuvenate areas outside of Tokyo.

Loans by the smaller lenders increased 3.6 percent from a year earlier to 215 trillion yen (US$2 trillion) in September, while those by city banks including Mitsubishi UFJ Financial Group Inc. and Sumitomo Abe wants to promote emplyment beyond Tokyo boundaries

Mitsui Financial Group Inc. rose 1.2 percent to 201 trillion yen, according to Bank of Japan data. The gap in funds extended was the largest on record since regional banks overtook city lenders in July 2011.

Abe submitted legislation this month to create jobs outside of Tokyo, aiding regional lenders who need to boost their profitability as local populations shrink, according to

Dai-ichi Life Research Institute Inc. Megabanks are looking elsewhere for growth with interest rates near zero, expanding overseas loans while cutting domestic mortgages.

Average interest rates on new loans in Japan fell to 0.767 percent in August, the lowest in BOJ data going back to 1993. The interest margin on dollar loans in the AsiaPacific region excluding Japan was at 2.3 percentage points more than the London interbank offered rate on average, according to data compiled

by Bloomberg.

Promoting tourism Abe said in a policy speech on September 29 that he will try to bolster local economies by relaxing visa requirements, increasing tax-free shops for tourists and supporting the commercialization of local specialty goods.

Regional lenders had core profits of 1.6 trillion yen in the year ended March 31, trailing the 2.5 trillion

Back in 2002, Modi’s BJP freed prices of both petrol and diesel only to reverse the decision two years later when crude prices started rising. The party lost the 2004 election and spent 10 years in opposition before its victory in May. Modi may couple the deregulation in diesel prices with an increase in natural gas prices that would make exploration more attractive, according to U.R. Bhat, a director at Dalton Capital Advisors India Pvt. in Mumbai.

Bloomberg News

yen income of city banks, according to Japanese Bankers Association data. The megabanks are able to earn money by lending abroad and making consumer loans through subsidiaries even with lending rates falling, according to Nana Otsuki, a banking analyst at Bank of America Corp. in Tokyo.

Regulator report Japan’s Financial Services Agency said in a report in July that regional banks are increasing lending by boosting low- margin loans to local public organizations and mortgages.

The firms are emphasizing the volume of the deals rather than profitability, the regulator said.

Banks outside of Tokyo need to provide more funding to private companies to improve their earnings, Otsuki said.

All three banks are increasing overseas lending. Mitsubishi UFJ’s loans abroad rose 33 percent to 33.9 trillion yen at the end of March, while Sumitomo Mitsui’s increased 13 percent to US$165 billion and Mizuho’s climbed 9.4 percent to US$150.2 billion.

Regional banks might only indirectly benefit if Abe’s policies succeed in getting more large companies to move operations outside of Tokyo, according to Shinichi Ina, an analyst at UBS AG. Bloomberg News

12

October 17, 2014

Asia South Korea’s finance minister sees downside risks

Japan’s trade minister involved in funds misuse The minister has become mired in controversy as reports of misuse of funds, possibly violating electoral and political funding laws, surface

South Korea’s finance minister said yesterday the economy faces downside risks, possibly endangering the government’s growth target of 3.7 percent for this year. Choi’s was commenting in response to a question on the Bank of Korea downgrading its growth forecast for this year to 3.5 percent from 3.8 percent on Wednesday, after it slashed interest rates from 2.25 percent to 2.0 percent.

Recruit makes solid debut Japanese staffing firm Recruit Holdings Co Ltd climbed in its market debut after a US$2 billion initial public offering, and looked poised to snap a run of weak high-profile Tokyo listings this year. The shares rose climbed 4 percent to 3,220 yen in early trade yesterday, compared with a 2.5 percent decline for the Nikkei benchmark average. The IPO, the second biggest in Japan this year, priced at the top of its book building range, raising expectations of strong demand.

Bangladesh’s annual inflation cools Annual inflation edged down in September to 6.84 percent from 6.91 percent a month ago, cooling for the second successive month, as prices of both food and non-food items rose at a slower pace. Food inflation inched down to 7.63 percent from 7.67 percent in August, when non-food inflation eased to 5.63 percent from 5.76 percent, officials at the Bangladesh Bureau of Statistics said yesterday. Annual inflation in Bangladesh accelerated to 7.35 percent in the last fiscal year that ended in June, up from 6.78 percent the previous year, exceeding a target of 7 percent on food prices.

Cuba and Vietnam to enhance cooperation Cuba and Vietnam on Wednesday signed an agreement to boost cooperation in various areas, local media reported. Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca and Vietnamese Construction Minister Trinh Dinh Dung signed the document, which covers cooperation in such areas as agriculture and fishing, biotechnology, health, tourism and sports. The two ministers agreed that Cuba’s new foreign investment law, which offers investors better tax breaks and more legal protections, provides a favourable environment for Vietnamese firms.

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ess than two months into her job, Japan’s trade and industry minister, Yuko Obuchi, apologized yesterday for a controversy caused by reports that political funds were spent buying theatre tickets for supporters and goods from her relatives’ businesses.

Obuchi, the 40-year-old daughter of a former prime minister, was picked

by Prime Minister Shinzo Abe to head the powerful ministry of economy, trade and industry (METI) in a cabinet reshuffle in early September.

Regarded as a possible future contender to become Japan’s first woman premier, Obuchi became mired in controversy as the reports of misuse of funds, possibly violating electoral and political funding laws, hit the news-stands yesterday.

The weekly magazine Shukan Shincho reported that two political support groups in Obuchi’s constituency had spent some 26 million yen (US$245,600) on theatre tickets for her backers in 2010 and 2011. Major newspapers also followed up on the allegations made by the magazine.

Japanese Prime Minister Shinzo Abe

Tata in talks to sell UK steel plants Its exit from some of its largest operations in Britain would be another blow to the country’s bruised industrial heartland

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ndia’s Tata Steel Ltd is in talks to sell loss-making European operations including mills in northern England and Scotland to Geneva-based Klesch Group, as it battles weak prices and tentative economic recovery.

Tata, Europe’s second-largest steel producer, said in a statement it had agreed to negotiate with Klesch over its Long Products division, which serves the construction and engineering industries and employs 6,500 people in Britain and Europe.

Tata -- which came into the European steel market with the acquisition of Corus in 2007, just before the financial crisis -- employs 30,500 people in Europe, including 17,500 in Britain.

Its exit from some of its largest operations in Britain would be another blow to the country’s bruised industrial heartland, even as the UK government seeks to diversify the economy away from financial services.

Karl Koehler, chief executive of Tata Steel’s European operations, said the group would now focus

Tata’s Port Talbot Steelworks in Wales, U.K.

on strip products, a higher-margin category of steel which is used in cars, construction components, white goods and packaging.

“Tata Steel has a strategy of differentiating itself,” Koehler said.

“This is best done by sharpening the focus on the biggest part of our European business, in order to build a sustainable, robust, viable business with improved products and first class manufacturing expertise, therefore achieving a better competitive base,” he said.

Koehler declined to give a value for the potential sale or to disclose losses by the division. But he said the operations being put up for sale were close to breaking even.

Tata, one of the world’s largest steel companies, has an annual crude steel capacity of 29 million tonnes a year. In total, Koehler said the European long products division, which was restructured in 2011 and again last year, produces around 3.2 million tonnes of steel a year.

Reuters

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October 17, 2014

Asia The Mainichi newspaper also said Obuchi’s political funding oversight body had spent about 3.6 million yen over five years from 2008 at a clothing shop run by her sister’s husband and a design office run by her sister, raising more questions.

“I apologise from the bottom of my heart for the fuss created by my private matter,” Obuchi said in response to questions at a panel in the upper house of parliament.

Tasked with winning public’s trust She said that she had instructed the political groups to investigate the matter, adding she believed the payments to her sister’s shop fell within the scope of political activities but that further checks would be made.

Obuchi said she believes her supporters had paid for the theatre events themselves but was aware it would be a violation of the law if

KEY POINTS New trade minister Obuchi mired in controversy Furore could delay nuclear reactor restarts Controversy could damage PM Abe’s administration

her political groups made additional payments, Kyodo news agency reported.

Chief Cabinet Secretary Yoshihide Suga told a news conference on Thursday that he expected Obuchi would provide an explanation.

Since her appointment, Obuchi has been given the tough task of trying to gain public trust for the government’s unpopular policy of restarting nuclear reactors following the 2011 Fukushima atomic disaster.

Political analysts said the reports of funds misuse could delay the nuclear restarts if Obuchi’s image was damaged or she had to resign, as well as deal a blow to Abe’s administration.

“Given the power balance between the ruling and opposition parties, I don’t think she will have to resign.

But for sure, this is damaging to Abe’s image,” said independent political analyst Atsuo Ito. Abe’s ruling coalition has a hefty majority in parliament and the opposition is fractured and in disarray.

“The Abe cabinet will try hard to protect her, because her resignation would cause even bigger damage.”

Abe’s first brief tenure as prime minister in 2006-2007 was marked by scandals among his cabinet members, several of whom were forced to resign, but since his return to office in December 2012, his cabinet has been relatively scandal-free.

The opposition Democratic Party, however, has been targeting new cabinet ministers in parliamentary debate in hopes of denting Abe’s popularity, still relatively robust at around 50 percent.

Reuters

Holiday Inn owner to triplicate presence in India InterContinental is also seeking growth beyond developed markets as profit declines 8 percent

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nterContinental Hotels Group Plc, the owner of the Holiday Inn and Crowne Plaza brands, plans to more than triple its properties in India amid signs of a rebound in demand under Prime Minister Narendra Modi.

Europe’s second-largest publicly traded lodging operator, which has 18 hotels in the South Asian country, plans to add 46 more over three to five years, Clarence Tan, senior vice president of development for Asia, Middle East and Africa, said in an interview. InterContinental will target the mid-scale segment with Holiday Inn before offering premium brands, he said, without disclosing the planned amount of investments.

The chain is among operators including Wyndham Hotel Group and Starwood Hotels & Resorts Worldwide Inc. looking to tap the US$1.9 trillion economy, even as an oversupply of rooms has depressed room rates for the last three years. A key gauge of occupancy and rates in August rose the most since October 2012, stoking optimism Modi’s efforts

to boost investment and tourism will drive demand for lodging.

Modi, who took office on May 26, has expedited environmental clearances for almost 300 projects and vowed to make it easier to do business in India. Last month, he won more than US$53 billion of funding pledges from China and Japan to boost infrastructure in Asia’s thirdbiggest economy.

Finance Secretary Arvind Mayaram said on September 29 that India’s economy will expand 7 percent in the next three years.

Apart from his focus on manufacturing growth, Modi is also seeking to boost inbound tourism, a move that may benefit the hospitality industry. His administration plans to spend US$81 million this financial year to develop five theme-based tourist areas.

While foreign tourist arrivals into India account for less than 0.5 percent of world tourism, the “iceberg” is domestic travellers, estimated at 1.1 billion in 2013, he said.

Bloomberg News

Asian currencies lose immunity to selloff The International Monetary Fund last week cut its 2015 global growth forecast for the second time this year

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sia’s resistance to the emerging-market currency rout is wearing off.

An index tracking 10 of the region’s exchange rates has fallen 1.2 percent since the start of September, led by losses in Indonesia’s rupiah and South Korea’s won that have erased the gauge’s gains for the year.

While Asia managed to resist an exodus from developingnation currencies for months, the region’s US$7.5 trillion in foreign reserves are no longer proving enough to offset the slump in global growth that threatens to curb demand for the region’s exports.

Asia is among the regions most vulnerable to a weakening global economy, with exports accounting for at least 50 percent of gross domestic product in countries including South Korea and Malaysia. Signs of the slowdown are mounting, with German exports rising the least since 2009 in August and U.S. retail sales dropping in September for the first time in eight months.

The International Monetary Fund last week cut its 2015 global growth forecast for the second time this year, saying it estimates expansion of 3.8 percent rather than a forecast of 4 percent given in July.

Since then, overseas investors have pulled US$2.5 billion from a group of six of the biggest emerging-Asia stock markets tracked by Bloomberg, paring inflows this year to US$34 billion.

Leading declines Both the rupiah and won have declined more than 4 percent against the dollar in the past month and a half.

China’s yuan is the only one of the 24 most-traded developing-nation currencies to strengthen over that time, apart from Hungary’s forint.

Until last month, Asia had been a bright spot in emerging markets. A broader developing-nation currencies index plunged at the start of the year, rebounded and then started falling in May again.

It has lost 6.1 percent since May 19, leaving it down 5

percent for the year following a 7.2 percent drop in 2013, according to data compiled

by Bloomberg.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks 10 emerging-Asia currencies, has fallen 0.6 percent in 2014, after tumbling from this year’s high on August 27.

Median estimates in Bloomberg strategist surveys see Thailand’s baht,

Malaysia’s ringgit and the rupiah all falling at least 0.6 percent by the end of 2015 as the world economy deteriorates and the prospect of higher U.S. interest rates drives up the value of the dollar.

Five of the 10 biggest hard-currency stockpiles are held by emerging-Asian countries, according to data compiled by Bloomberg.

Bloomberg News

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October 17, 2014

International Switzerland lowers growth forecasts Setbacks for recovery of the eurozone economy are affecting Switzerland which cut its own growth forecasts yesterday.

The national statistics agency cut its growth outlook for 2014 from 2.0 to 1.8 percent. The State Secretariat for Economic Affairs, or SECO, also revised down its growth forecast for 2015, from 2.6 to 2.4 percent. “As a result of the continuing fragility of the global environment, in particular the faltering recovery in the Euro region, the Swiss economy has lost some of its momentum since the beginning of 2014,” it said.

ECB trims haircut on Greek banks’ collateral

The European Central Bank has reduced the haircut it applies on bonds submitted

by Greek banks as collateral to borrow funds, a Greek central bank (offices pictured) official told Reuters yesterday, in a move to boost their access to liquidity. “The move was decided late on Wednesday evening after talks between the government, the ECB and Greece’s central bank governor,” the official said. “It is a supportive move given the pressures in the last two day.”

Bank of Greece Governor Yannis Stournaras was in Frankfurt on Wednesday.

IMF to determine increase in Ukraine aid The International Monetary Fund’s mission to Ukraine will determine at the end of October how much additional financial aid Kiev needs, central bank Governor Valeria Gontareva said yesterday. “The IMF mission which will arrive in late October will determine the demand in real terms,” Gontareva said at a news conference. “If the geopolitical risks that are related to Ukraine threaten the development of the entire world, ... then everyone understands what devastating consequences they have for the Ukrainian economy.”

Jimmy Choo set bottom price at IPO Luxury shoemaker Jimmy Choo is expected to price its London stock market listing at 140 pence a share, the bottom of the price range, two sources familiar with the matter said yesterday. The price gives the company an equity value of 546 million pounds (US$874 million). The firm had initially set a price range of 140-180 pence a share before narrowing it to 140160 pence earlier this week. Trading is due to begin on Friday. Weaker equities markets have recently hit demand for new share issues in Europe.

Russia shifts trading band limits Russia’s central bank said yesterday it had shifted the boundaries of the rouble’s trading band by 25 kopecks, following market interventions to curb the pace of the currency’s decline. As of Oct. 15, the new corridor extended from 36.95 to 45.95 against a dollar-euro basket, compared with 36.70 to 45.70 previously.

U.S. budget deficit lowest since 2008 Fiscal 2014 revenues grew 9 percent to US$3.02 trillion, boosted by a jump in individual and corporate tax receipts and a 31 percent rise in Federal Reserve earnings David Lawder

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he U.S. budget deficit fell by nearly a third to US$483 billion in fiscal 2014, the lowest level since 2008, as a quickening economic recovery boosted tax collections and spending grew only modestly, the Treasury Department said.

The deficit, down from US$680 billion last year, was the lowest since a US$459 billion budget gap in fiscal 2008, which was followed by four straight years of US$1 trillion-plus deficits in the wake of the financial crisis.

U.S. Treasury Secretary Jack Lew and White House Budget Director Shaun Donovan hailed the data on Wednesday as a “return to fiscal normalcy” as the 2014 deficit fell to 2.8 percent of gross domestic product. That was the lowest since 2007 and a smaller share of the economy than the annual average for the last 40 years.

Lew told a news conference the United States was now in a period of fiscal sustainability that is providing a strong foundation for growth.

“What I don’t think we have is an emergency right now,” Lew said.

“The challenge we have is to sustain the economic engine so that we’re seeing the growth now and over these next 10 years.”

The improving fiscal picture has sapped the urgency for a major budget deal between Congress and the White

House aimed at slashing deficits by trillions of dollars over the next decade and starting to reduce the US$17.8 trillion federal debt.

Lew insisted he has not given up on further deficit reduction, but said budget savings could not come at the expense of economic growth.

Both Lew and Donovan said growth and revenues in 2014 were helped by the easing of across-the-board budget cuts that went into effect last year, along with the lack of a fiscal crisis such as last year’s federal government shutdown.

Donovan told Reuters on Tuesday he wanted to further reduce those budget cuts next year and would be willing to consider some savings to mandatory spending programs to reach a deal with Republicans, who control the U.S. House of Representatives.

Fiscal 2014 revenues grew 9 percent to US$3.02 trillion, boosted by a jump in individual and corporate tax receipts and a 31 percent rise in Federal Reserve earnings, mostly from the central bank’s massive bond portfolio.

Outlays grew just 1 percent to US$3.50 trillion.

For September, the Treasury recorded a budget surplus of US$106 billion, up from a year-ago surplus of US$75 billion. Analysts polled by Reuters had expected a US$80.9 billion surplus for the final month of fiscal 2014.

A nearly US$500 billion deficit is nothing to celebrate. And CBO still projects that, in the coming years, the deficit will rise even higher to unsustainable heights Paul Ryan, House Budget Committee, Chairman

Receipts last month grew 17 percent to US$352 billion while outlays were up 9 percent to US$246 billion.

The Congressional Budget Office has forecast a US$469 billion deficit for fiscal 2015, which started on October 1. It expects deficits to rise again later this decade as costs associated with an aging population mount.

Reuters

Merkel say “all members” of EU must enforce debt rules The Commission has new powers to enforce the deficit limit, and could for the first time send the budget back to Paris for changes to a national spending plan

G

erman Chancellor Angela Merkel said yesterday she was confident that the European Union would enforce its own budget rulebook with debt sinners, as France faced a reckoning in Brussels.

Speaking to parliament, Merkel noted the entire EU had signed up to the Stability and Growth Pact regulating fiscal discipline.

“All, and I stress here all, member states must fully respect the strengthened rules of the Stability and Growth Pact,” she said.

“Only then can the Pact fulfil its purpose as the main anchor for stability and above all confidence in the eurozone.”

Without mentioning France by name, Merkel said she was “sure” that the “current and future European Commission is aware of the primary responsibility that it bears for maintaining the credibility of the Stability and Growth Pact”.

Paris announced last month that next year’s budget deficit --

Current and future European Commission is aware of the primary responsibility that it bears for maintaining the credibility of the Stability and Growth Pact Angela Merkel, German Chancellor

the shortfall between revenue and spending -- will hit 4.3 percent of annual economic output, far above the 3.0-percent ceiling set by the European Union for member states.

The deficit is not expected to drop to this level until 2017.

The European Commission, the EU’s executive branch, has two weeks to decide whether countries’ budget submissions break the rules.

The Commission has new powers to enforce the deficit limit, and could for the first time send the budget back to Paris for changes to a national spending plan.

Failure to reach a deal could alarm global financial markets and cause a political crisis at a time when Europe risks slipping into a triple-dip recession.

Germany is said to be working behind the scenes to give Paris a way to avoid disgrace, while also securing a far firmer commitment to reform, notably of strict rules controlling the labour market.

AFP

15

October 17, 2014

Opinion

New battlegrounds wires in development finance Business

Leading reports from Asia’s best business newspapers

BANGKOK POST In a bid to stimulate border trade, the Thai Chamber of Commerce (TCC) is teaming with its Myanmar counterpart on a master plan for the proposed special economic zone (SEZ) in Tak’s Mae Sot district.

TCC vice-chairman Somkiat Anurat said the two parties yesterday agreed to set up an SEZ joint committee to handle the master plan and ensure Mae Sot was developed into an integrated zone that took into account regulations, worker mobility and goods transport. A comprehensive SEZ will attract more investment and trade between the two countries, he said.

Nancy Alexander Francis A. Kornegay

Program officer at the Heinrich Böll Foundation (North America) Senior research fellow at the Institute for Global Dialogue at the University of South Africa

THE JAPAN NEWS “Tough” issues remain in Japan-U.S. negotiations on a proposed Trans-Pacific Partnership multilateral free trade deal, Acting Deputy U.S. Trade Representative Wendy Cutler said Wednesday after finishing six-day bilateral working-level talks in Tokyo. “We were encouraged by the progress made this week during our negotiations,” Cutler said.

Cutler also said a meeting between Akira Amari, minister in charge of TPP talks, and U.S. Trade Representative Michael Froman will take place on the side-lines of a ministerial session in Australia on October 25-27 of the 12 countries taking part in TPP negotiations.

JAKARTA GLOBE Indonesia Employers Association, or Apindo, is urging government officials to settle with less costly meetings in order to make room for infrastructure spending that can boost the country’s economic growth to 5.8 percent next year. “It is a realistic growth target. But it also means government has to simplify and trim some of its budget and focus on [spending] that can boost investment,” said Franky Sibarani, a deputy chairman at Apindo. Franky said that President-elect Joko Widodo needs to eliminate overlapping programs among ministries and reduce expenses on official meetings.

THE PHNOM PENH POST Despite on-going protests over the minimum wage in the garment industry and the political deadlock that lasted well in to July, Cambodia registered over 3,000 new businesses from January to September this year. The latest data from the Ministry of Commerce reveal there were 3,025 newly registered businesses representing a 36 per cent increase from the 2,220 registered in the same period last year. Some 1,330 of this year’s new business were foreign registered, a 20 per cent increase, while 1,690 were registered by Cambodians, up 46 per cent.

Last meeting gathering of BRICS and Latin American leaders

T

he popularity of public-private partnerships (PPPs) to support infrastructure development in emerging countries is growing worldwide. The G-20 backs PPPs to boost global growth and create jobs. The BRICS economies (Brazil, Russia, India, China, and South Africa) see them as a way to build essential infrastructure quickly and cheaply. The United Nations hopes that infrastructure PPPs will provide the means to realize its post-2015 global development agenda. PPPs’ new appeal may redefine not just development economics, but also the overall relationship between rich and poor countries – though not necessarily for the better.

The PPP bandwagon has three essential components: an explosion in infrastructure finance (backed by pension and other large funds); the creation of “pipelines” of lucrative mega-PPP projects to exploit countries’ raw materials; and the dismantling of environmental and social safeguards. Each must be carefully monitored as the use of PPPs expands.

The World Bank is already seeking to double its lending within a decade by expanding infrastructure projects. Its new Global Infrastructure Facility (GIF) will mobilize global pension and sovereign wealth funds to invest in infrastructure as a specific asset class.

The emerging world has also been active. The BRICS recently announced plans for a New Development Bank (NDB) for infrastructure and sustainable development. Its first Regional Centre for Africa will be based in South Africa. China will launch a new Asian Infrastructure Investment Bank. Both banks aim to offer alternatives to the US-led World Bank and the Japan-led Asian Development Bank, respectively.

Indeed, these new develop-

It is important to have citizens’ groups that can step in (the projects) to ensure that investments operate fairly

ment-finance institutions are seen as a reaction against the Bretton Woods institutions, whose pursuit of neoliberal austerity policies and failure to reform their governance structures to share power with emerging economies, has been blamed for strangling public spending, de-industrialization, and the dismantling of national development banks.

Many emerging countries also resent the World Bank’s environmental and social safeguards, which they see as compromising their national sovereignty. In response to this criticism, the Bank is revising its safeguards and enforcement mechanisms. But weaker oversight by the World Bank would leave loan recipients to monitor and enforce environmental and social standards themselves – regardless of their resources or

political will to do so –thus jeopardizing efforts to defend the rights of indigenous peoples, resettle displaced people, mitigate environmental damage, or protect forests and biodiversity.

The weakening of World Bank safeguards might also trigger a “race to the bottom,” pitting private or state investors, new financing institutions, and a deregulated World Bank against one another, while provoking a popular backlash. That is why it is important to have citizens’ groups that can step in to ensure that investments operate fairly. Though civil-society groups have long monitored the “supply side” – the project financing – they often ignore the “demand side” – namely, the value and impacts of the projects being implemented.

This is especially the case for infrastructure investments in energy, water, transport, and information and communications technology (ICT). The Program for Infrastructure Development in Africa, for example, has planned US$360 billion worth of “bankable mega-projects” in these sectors by 2040. PIDA gives priority to energy (especially hydropower) projects to support mining operations and oil and gas pipelines, while side-lining renewable energy technologies, such as solar, wind, and geothermal. Similar concerns surround the project “pipelines” of the Initiative for the Integration of Regional Infrastructure in South America and the ASEAN Infrastructure Fund in Asia.

Though some PPP projects offer high returns, they also demand hefty additional guarantees from the host government to offset private-sector risk. In this way, fundamental tensions are created both in the way these deals are put together and in the overall conduct of North-South and South-South integration.

For example, powerful groups

and transnational corporations (such as the World Economic Forum, General Electric, and Rio Tinto) are gaining influence within the G-20, the G-7, and the BRICS, whose members compete among themselves for access to resources and markets. That competition now features new Infrastructure Project Preparation Facilities (IPPFs) to accelerate and replicate large PPPs with a disturbing reliance on big dams and fossil-fuel infrastructure, such as Nigeria’s gas-supply pipeline to the European Union – a top priority of PIDA that implies slow progress toward a low-carbon future.

Indeed, the struggle for sustainability, especially in Africa, is becoming a new battleground, featuring deployments by the BRICS, the G-20, Asia-Pacific Economic Cooperation (APEC), Mercosur, and other international groupings and local vested interests. To understand how this plays out requires a rigorous new development paradigm.

That is a difficult challenge, because civil society organizations with the greatest interest in learning how to cope with the new pressures tend to specialize in specific development areas, such as the Millennium Development Goals, or sectoral issues, rather than having a broader view of how development finance institutions and their big shareholders operate.

A revived World Social Forum might take on the task, by reverting to its original intention of being a counterweight to the WEF. In Africa, pan-African bodies charged with coordinated oversight and agenda-setting authority should be judged by whether mega-PPPs in infrastructure reinforce a colonial-style extraction and consumption economy, or create a healthy and sustainable economy for generations to come.

Project Syndicate

16

October 17, 2014

Closing September’s power consumption rises 2.7 pct

China remains biggest trade partner of Vietnam

China’s electricity consumption, an important indicator of economic activity, rose 2.7 percent year on year to 457 billion kilowatt hours in September, the National Energy Administration (NEA) said yesterday. The data, though recovering from the 1.5-percent drop seen in August, remained lukewarm in a sign of continued subdued strength in the world’s second largest economy. In the first nine months, power use went up 3.9 percent, significantly below the market forecast of around 6 percent for the whole year.

China remained the biggest trade partner of Vietnam in the first nine months of 2014, accounting for some 19.5 percent of Vietnam’s total trade turnover. According to statistics of Vietnam Customs yesterday, during the nine-month period, Vietnam sold over US$11.094 billion worth of goods to China and spent nearly US$31.27 billion for imports from China. Trade revenue between Vietnam and China in January-September stayed at US$42.364 billion, said the customs office.

Meanwhile Vietnam reported some 217.484 billion in revenue from foreign trade activities.

Has “civil servant fever” cooled down?

In March Premier Li Keqiang admitted the employment situation is tough

Government positions seem less attractive recently. Pictured People’s Great Hall, China’s legislative organ in Beijing

nab a government post, the exam is tied to many more.

One college graduate from Beijing University of Civil Engineering and Architecture who was attending an exam preparation workshop, told Beijing News he applied the exam in the hope of obtaining a Beijing hukou, or a registered permanent residence.

The registration is tied with much of the city’s welfare services.

However, civil servant fever is showing signs of cooling, according to Zhang Yongsheng, a civil service exam expert with Zhonggong Education. “With the development of civil servant recruitment, there will be fewer blind followers.”

For many college graduates, applying to sit the exam is only an option in their graduate plan, which also includes attending graduate school or going abroad to further study. In fact, many applicants even abstained from attending written tests.

Last November, more than 400,000 who had signed up for the test ended up not taking it, making the actual exam takers even fewer than the year before.

There appears the fact that holding the “iron bowl” of being a civil servant is less secure than the past.

Wu Jiang, executive vice president of China Talent Research, said civil servants, as a profession, should not be particular about salaries and pay, rather it is about service spirit.

Wu said that in the 1980s, a large number of government officials “jumped into the sea,” a term used to describe those who left their government posts for better pay in the business fields. He wonders whether the case will be the same in the future remains to be seen.

T

he annual application for China’s civil service examination started on Wednesday with at least 22,200 government spots to fill.

In the past the exam attracted scores of fresh college graduates, with a record of more than 1.5 million candidates competing for some 19,000 posts in 2013.

This year’s application, however, kicks off amid China’s on-going crackdown on officials’ extra perks, pomp dining and extravagance.

With the addition of China’s reform drive to let the market better play a decisive role, some predict that there will be a drop of applicants this year.

But Sun Xiaoli, a professor with Chinese Academy of Governance,

expects civil servant fever to continue.

The frenzy was mainly caused not by officials’ invisible perks but by its job security and respectable social status, she said.

While the exam helps select a large number of high-quality civil servants, many people have feared it may hamper China’s innovative spirit.

Even Edmund Phelps, a Nobel Laureate in economics, slammed the frenzy of civil servant applicants in 2013, saying fresh-graduates applying to become civil servants are wasting their talent.

One reason why so many fresh graduates prefer landing a government post is that it is too difficult to find a good job, said Yin Weimin, China’s human resources and social security minister

Taiwan’s TSMC reports record profits in Q3

T

in a previous interview with Xinhua.

Employment has always been a key issue considered by Chinese leaders. In a time of flat growth, there is no bigger topic.

In March, Premier Li Keqiang admitted the employment situation is tough while delivering a government work report to the country’s top legislature. He said a record 7.27 million college students will join the job-hunting this year.

Li also said “pursuing government office and making money have been ‘two separate paths’ since ancient times” when meeting the press after first assuming office in 2013.

The anti-corruption campaign has made it less comfortable to be a civil servant, but for those eager to

Modi kicks off overhaul of archaic labour rules

Vietnam posts nearly US$2.27 bln trade surplus

I

V

aiwan Semiconductor Manufacturing Co said yesterday its third quarter net profit and revenue both rose to record highs on robust demand for chips used in mobile devices, reportedly including Apple’s new iPhone.

TSMC, the world’s biggest contract microchip maker by revenue, said profit in the three months to September rose 46.9 percent yearon-year to Tw$76.34 billion (US$2.51 billion).

Revenue also reached a record high of Tw$209.05 billion, up 28.6 percent from the same period last year, it said in a statement.

“In the third quarter, strong (semiconductor) wafer demand for mobile computing related applications drove our revenue growth,” the company said.

Chips for communication -- such as smartphones -- accounted for 59 percent of the company’s revenue in the third quarter, up 26 percent from the previous quarter.

ndia will simplify employment rules and smooth the way for people to move social security funds when they change jobs, Prime Minister Narendra Modi said yesterday, unveiling steps to reform the labour sector and boost employment.

India’s archaic labour laws strictly regulate hiring and firing, while an onerous ‘inspector raj’ deluges employers with paperwork, discouraging them from expanding and taking on new staff.

“Fifty types of departments chase them, 50 types of forms have to be filled in. The world has changed,” Modi said, adding that companies would now only need to fill a single form online.

The change would chiefly benefit firms that employ just a few employees, he said. In 2009, 84 percent of India’s manufacturing workers were employed by firms with fewer than 50 workers, research by the Asian Development Bank shows.

It is difficult to estimate the size of this workforce, but just 8 percent of Indian workers have formal jobs with any security and benefits.

AFP

Reuters

Xinhua

ietnam posted nearly US$2.27 billion in trade surplus in the first nine months of 2014, according to the statistics by the Vietnam Customs yesterday. Specifically, in the ninemonth period, Vietnam earned some US$109.875 billion from exports, an increase of 14.4 percent year-on-year, while spending around US$107.609 billion for imports from the world market, up 11.6 percent year-on-year. In September alone, the country saw a decrease of 4.8 percent year-on-year in export value, while import turnover grew by 8.3 percent year-on-year, the customs office said on its website. In the January-September period, the foreign-invested sector continued to account for a large proportion of the country’s import and export revenue, contributing 56.37 percent and 61.71 percent, respectively. During the period, Vietnam mainly imported petroleum, animal feed, fabric, materials for garment, textile and footwear, steel, computers, machinery while it exported garment, footwear, phones and accessories, and crude oil.

Xinhua