Macau Business Daily, Nov 17, 2014

MOP 6.00

Harbourview to open next month

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t starts here. The new flow of 10 casino resorts begins with Harbourview Hotel in Fisherman’s Wharf. Collectively, the new projects are predicted to propel Macau’s gaming market into a unique US$100 billion league. Slated to open next month, the Harbourview is the first of three new MFW hotels. A skywalk connects to adjacent slot hall Flamingo Casino, while hotel construction came in comfortably under budget.

Co-chairman and CEO of Macau Legend Development Ltd David Chow Kam Fai officiated at the hotel completion ceremony on Saturday night PAGE

PAGE 3

Different strokes for different folks

Pansy Ho: Gaming revenue decrease not linked to anti‑graft campaign PAGE 8

He’s the Council chairman of the Association of Advertising Agents in Macau. Keyvin Bi told Business Daily that a new trend is starting. Social media is attracting increasing attention vis-a-vis traditional media. Bi reckons that in five to 10 years time newspapers and magazines will have to find an effective way to link up with the Internet. And big data? Macau still has a long way to go, he says

HSI - Movers November 14

Name

PAGEs 6 & 7

2.68

MTR Corp Ltd

2.09

Tencent Holdings Ltd

1.85

China Resources Ente

1.78

Sands China Ltd

1.71

China Life Insurance

-0.86

CNOOC Ltd

-1.02

PetroChina Co Ltd

-1.70

China Petroleum & Ch

-1.85

Kunlun Energy Co Ltd

-2.36

Source: Bloomberg

Further education today means going to further lengths for space. City University of Macau and Polytechnic Institute will receive the biggest slice of land from the Taipa campus site of University of Macau (UM). The Institute for Tourism Studies will get about 23,028 square metres of the 140,000-square metre plot. Government departments will also benefit

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China Mengniu Dairy

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It’s painfully dragging on. The government proposes increasing civil servants’ salaries almost immediately. On top of a pay rise this year already. But outsourced cleaners and security guards still wait. This sector is being neglected, says Ella Lei Cheng I. The legislator accuses the government of using ‘minimum wage legislation is in process’ as an excuse not to pay up. There’s no reason for the delay, and it won’t do, she says

Divide and conquer

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Minimum wage, maximum procrastination

www.macaubusinessdaily.com

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Commercial real estate loans drop 56 pct

INTERVIEW

1

Year III

Number 666 Monday November 17, 2014

Publisher: Paulo A. Azevedo

Closing editor: Luís Gonçalves

Australia and China sign Free Trade Pact Page 20 | Gold demand by mainlanders dives 37 pct Page 5

2 | Business Daily

November 17, 2014

Macau

Chow: New Harbourview Hotel operational next month The new Harbourview Hotel will be connected to an adjacent slot hall called ‘Flamingo Casino’, a site featuring live gaming tables and Macauslot betting station Stephanie Lai

sw.lai@macaubusinessdaily.com

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he first of three new hotels in Macau Fisherman’s Wharf theme park - the Harbourview Hotel - is set to be operatioal next month. The property is connected via a skywalk to the adjacent Flamingo Casino slot hall, co-chairman and chief executive officer of casino service firm Macau Legend Development Ltd David Chow Kam Fai said at the hotel completion ceremony on Saturday night.

The construction of the 4-star Harbourview Hotel, which is part of Macau Legend’s revamp of the whole waterside theme park, has taken a year and a month to finish, about a month behind the company’s original schedule, Mr. Chow said. His company is now awaiting an occupation permit so that the new hotel may operate next month.

Satisfied with the construction progress of Harbourview, Macau Legend’s co-chairman and former legislator said that the investment cost of building it was less than US$200 million (HK$1.5 billion) or about 8 percent less than the company’s original estimate.

Harbourview Hotel, which houses no gaming facilities, has a skywalk on its first floor that connects the property to an adjacent slot hall called ‘Flamingo Casino’. The new hotel is also a short walk from the first phase of Macau Fisherman’s Wharf Marina, which now features 18 berths.

Apart from placing two live gaming tables inside Flamingo Casino, Mr. Chow said his company was also in talks to have a Macauslot sports betting station installed in the venue. But he did not elaborate on how many slot machines his company would place in this new gaming venue.

Sociedade de Lotarias e Apostas Mutuas de Macau, Limitada [SLOT, commonly branded as Macauslot] holds the monopoly running nonracing sports betting on football and basketball matches here.

“This [Flamingo] venue will mainly rely on the gaming machines...” said Mr. Chow. “For that we don’t need many staff, and the venue can [complement] the operation of the new hotel.”

Flamingo Casino is in the same complex as Hong Kong Macau (International)

Duty Free Shop, located right opposite the Harbourview Hotel.

Macau Legend declined to reveal the expected operation date for Flamingo Casino, saying that the development plan of the slot hall “was still being finalised”.

The Harbourview Hotel is also indirectly linked to the Babylon Casino – currently the only gaming venue inside Macau Fisherman’s Wharf – as the Flamingo Casino is also connected to Babylon via a skywalk.

Speaking to media on Saturday, Mr. Chow noted that his company has already placed 35 extra gaming tables in Babylon Casino, approved by the government previously under the application from Sociedade de Jogos de Macau S.A. (SJM) asking for a total of 45 new gaming tables. SJM provides the gaming licence for Mr Chow’s company.

Before securing these new tables, Macau Legend originally had 19 mass market tables in Babylon Casino as at Septemberend; the company also had 56 mass market tables and 75 VIP tables at Pharaoh’s Palace Casino in Landmark Hotel.

“These 35 new gaming tables will be placed on the second floor of Babylon, where we will be operating a membership-based premium mass segment,” said Mr. Chow, “New Legend [VIP] Club is managing that – we’ll have no gaming promoters there as we’re directly operating ourselves.”

Macau Legend shareholders approved on July 3 at an extraordinary general meeting a variableinterest-entity (VIE) agreement between whollyowned subsidiary Hong Hock Development Co Ltd and

the VIP gaming promoter New Legend VIP Club Ltd, enabling Macau Legend to ‘indirectly participate in the gaming promoting business’, and ‘have a greater control over the management and marketing of the VIP rooms operated by New Legend’.

Instead of a rolling chip commission model, the VIE agreement allows Macau Legend to have a revenue share from the VIP gaming promoter calculated at 42 percent.

Mr. Chow declined to give the number of gaming tables his company intended to get for the next batch to go with the overhaul of Macau Fisherman’s Wharf, while stressing that he agreed with the government’s approach in granting gaming tables. For the revamp project, Macau Legend has said before that it would like to have up to 500 tables for its operation.

Polytechnic, City University and IFT share UM’s Taipa campus

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he City University of Macau and the public tertiary education unit Polytechnic Institute have landed the largest slice of the Taipa campus site of University of Macau (UM), a plot totalling some 140,000 square metres that has been reserved for higher education purposes following the departure of UM to Hengqin.

According to a press briefing by the Tertiary Education Services Office on Friday, City University has been allotted 37,644 square metres

of land at UM’s old campus site for several education buildings and a dormitory. The land lease period and rental cost involved are still under discussion, the office noted.

Legislator and Executive Council member Chan Meng Kam chairs the council of City University, which now has scattered premises in commercial buildings in the NAPE district and in the Sam Yuk Middle School on Taipa.

The private university originally planned to build a campus for up to

6,000 students near Hac Sa beach on Coloane – a plot owned by Mr. Chan - but the plan was eventually scrapped as the government has found ancient artefacts on the site.

Polytechnic Institute has the biggest plot of land allocated – it will get 38,108 square metres reserved for its education centres, student centre, and two dormitory buildings.

Another public tertiary education unit here - the Institute for Tourism Studies - will also get about 23,028 sqarue metres at the UM’s old campus

site – an additional teaching space granted on top of its main campus on Macau peninsula and a provisional teaching space in Taipa.

The rest of the space at the UM’s Taipa site will be used for the university’s library and engineering research centres; the Sports Development Board, Public Administration and Civil Service Bureau and Transport Bureau will also share the site for a stadium, a training base and parking lots, respectively.

S.L.

Business Daily | 3

November 17, 2014

Macau

Residents taking out fewer commercial real estate loans The value of commercial real estate loans granted by local banks to Macau residents dropped almost 60 percent in September Sara Farr

sarafarr@macaubusinessdaily.com

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he month of September saw the value of commercial real estate loans granted by banks in Macau decline 56.2 percent to MOP4.8 billion vis-a-vis August’s MOP11 billion. Of these, the biggest drop was in the value of commercial real estate loans taken out by Macau residents, which went down 59.7 percent to MOP4.4 billion. The same loans granted by local banks in August amounted to MOP10.8 billion.

Official figures released Friday by the Monetary Authority of Macau (AMCM) show that while Macau residents accounted for the great majority of such loans granted by local banks, those granted to non-residents in the month of September totalled MOP479.5 million. By contrast, this represents a 104.8 percent increase over that of the previous month.

When looking at the figures on a yearly basis, the overall value of commercial real estate loans increased by 43.6 percent over that of September 2013, with credit granted by banks to non-residents increasing

by 255.2 percent and that of residents increasing by 34.7 percent.

Overall, the outstanding value of commercial real estate loans increased 3.6 percent in September over that of the previous month to MOP115.6 billion, a yearly increase of 42.4 percent.

Meanwhile, new residential mortgage loans approved by banks here dropped 9.8 percent in September

to MOP4.6 billion month-on-month, representing a slight decrease of 0.8 percent year-on-year. As in every other month, the majority of people taking out real estate mortgage loans were Macau residents accounting for MOP4.4 billion of the total value.

This figure is also a 5.9 percent drop from that of a month earlier but a 2.8 percent increase on September 2013.

The most notable drop in new

residential mortgage loans, however, was by non-residents, the values for which dropped significantly by 57.4 percent month-on-month from MOP383.1 million, and a total 48.8 percent yearly to MOP163 million. Of these, equitable mortgage collaterised by uncompleted units decreased 13.1 percent to MOP1.2 billion from MOP1.4 billion.

In addition, the outstanding balance of new residential mortgage loans increased overall by 29.8 percent in the month of September from that of a year earlier and 1.9 percent month-on-month to MOP146.8 billion from MOP144 billion in August. That of non-resident workers increased 43.6 percent compared to that of September 2013, while that of residents increased 29 percent in the same period.

The delinquency ratio for residential mortgage loans remained unchanged at 0.07 percent. The ratio for commercial real estate loans increased to 0.08 percent at the end of September.

4 | Business Daily

November 17, 2014

Macau Brought to you by

HOSPITALITY Bloated purse The gaming sector - and in particular casino operations - have always represented a significant part of the economy, and share of the sector in the economy has been growing markedly. The sector survey provides us with figures for the sector’s Gross Added Value.

We don’t yet have the production based estimates of Gross Domestic Product for the last year, which should provide a more precise breakdown of the contributions of the various sectors to the economy. However, assuming the relationship of these figures with the expenditure GDP-based calculation, which is already available, remains stable – as has been the case in the last three years - we can reach a rough approximation of the evolution of the share contributed by the sector to the total economy looking at the changes in that ratio, without the need for further considerations at this time. Under this assumption, to be confirmed when the final figures are published, we can conclude that the sector has almost doubled its contribution to GDP since 2004, as shown by the GAV/GDP ratio in the chart.

A kind of plateau has been reached around 55 percent, which seems to be stabilising.

Minimum wage legislation procrastination While the government proposes increasing civil servants’ salaries, the outsourced cleaners and security guards servicing government departments are being neglected, says legislator Ella Lei Cheng I Joanne Kuai

joannekuai@macaubusinessdaily.com

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Meanwhile, other relevant ratios associated with the sector impactong other economic activities have remained stable. Public revenue from gambling, meaning essentially taxes, has varied little. It stood throughout the period at values around and above the equivalent of 60 percent of the sector’s GVA. Therefore, public coffers swelled even more, with annual revenue rising 8.8-fold in the full period observed here.

Staff compensation, however, has been losing relative weight since the 2008 crisis. Its share of GVA as at last year was the lowest observed in the period.

MOP388.2 million

daily public revenue from gambling in 2013

he government is using ‘minimum wage legislation is in process’ as an excuse not to give a pay rise to outsourced cleaners and security guards working in government departments, says legislator Ella Lei Cheng I. The legislator submitted a written enquiry to the government on Friday demanding a pay rise for workers in the sector, saying that Chief Executive Fernando Chui Sai On had announced an increase in civil servants’ pay index to 79 patacas [per point] in January next year hard on the heels of a salary increase in May based on inflation, while grassroots outsourced workers’ rights are being neglected.

Ms. Lei said in March that she had asked the government to increase these workers’ minimum wage, which currently stands at 26 patacas per hour, but the government simply said that only after the minimum wage draft being discussed in the Legislative Assembly finally passed would they adjust the pay. But Ms. Lei sees no reason for the government to delay this process.

“Government outsourced worker’s minimum wage is protected by a regulation which came into effect in 2007, and in 2008 some subsidies scheme was granted to guarantee their right. We have been paving the way for a minimum wage law in order to protect their livelihood.

The government shouldn’t use it as

an excuse to delay the process of giving them a pay rise,” said Lei. Ms. Lei told Business Daily she expects the minimum wage for workers should be no less than 30 patacas per hour which is the number agreed on for the minimum wage law in discussions by the Legislative Assembly; or the increase should be no less than 6 percent which is the average rate of inflation in recent years.

The legislator also urged the government to come up with policies to prioritise locals for such positions, saying that locals face unfair competition against nonresident workers as some employers are biased and have a preference.

Ms. Lei stressed a better welfare and salary system would attract locals to these kinds of job.

Double-edged sword While regulating the minimum wage is expected to protect the workers’ rights, it could also create pressure on employers and the government may be criticised for manipulating the market, said Chan Kin Sun, chairman of the Macau Social Security Society.

Mr. Chan told Business Daily that he agreed that the minimum wage bill covering only cleaners and security guards would provide the reference for the government after it received feedback from society once the law is enacted.

He stressed that it is an issue that needs to be well balanced as all parties would have their stance but he said the government has the social responsibility to urge the companies outsourcing services to public departments to take better care of their workers.

With regard to protecting the local labour market, Mr. Chan said government policies restraining the non-resident workers pouring into Macau is one means but the authorities should also focus on enhancing local workers’ skills and abilities so that they have more freedom to choose jobs and a better career ladder.

In July, the Legislative Assembly passed the first reading of the city’s first-ever minimum wage – covering only cleaners and security workers – at 30 patacas (US$3.8) per hour, or a daily 240 patacas.

All legislators present at the voting were in favour of the bill. The government also proposed to cover all the areas in the minimum wage bill and has cleaners and security guards in the appendix but Secretary for Economy and Finance Francis Tam said earlier that in order not to delay the legislation process the minimum wage bill will first cover the two positions and that the government is studying the technical issues of drafting the bill so that in the future more positions can be included with a relatively simpler procedure.

Business Daily | 5

November 17, 2014

Macau

Demand for gold falls foul of Chinese anti-graft storm The ‘powerful’ anti-graft storm has claimed yet another victim; this time it’s the gold industry, which slumped 37 pct year-on-year during the third quarter, an industry body said Kam Leong

kamleong@macaubusinessdaily.com

Chow Tai Fook Jewellery Group Limited also posted a 10 percent decline year-on-year in its retail sales value during the second quarter, claiming the decrease ‘was due to the high base effect caused by the gold rush extending from the first quarter of 2014 as a result of a sharp fall in international gold prices,’ according to its filing with the Hong Kong Stock Exchange in October.

Below expectations

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he impact of the central government’s crackdown on corruption continues to spread. In addition to affecting Macau’s all-pervasive gaming industry, gold retailers have been suffering from the policy. A report released by the World Gold Council last week revealed that gold demand in China had slumped during the third quarter despite product prices dropping.

According to the New-York based Council, the purchase of gold by the China markets had shrunk by 37 percent year-on-year to 182.7 metric tons in the third quarter to September, following a slump in demand.

Business Daily tried to reach several Jewellery retailers with stores in both Hong Kong and Macau to confirm the situation for the third quarter but all remain reluctant to comment prior to release of their quarterly results.

However, second quarter results

of some jewellery retailers suggest that the drop in demand for gold has actually been apparent since the first half of the year.

According to an earlier announcement by Luk Fook Holdings (International) Ltd., the group’s gold sales during the second quarter had posted a decline of 28 percent yearon-year, while the metric tons of gold sold had also dropped some 25 percent year-on-year.

These decreases in gold sales were experienced by Hong Kong & Macau and the Mainland markets of the Group, where the sales of gold posted declines of 27 and 38 percent year-on-year, respectively.

In fact, Luk Fook is not the only enterprise affected. Tse Sui Luen Jewellery (International) Ltd. also indicated in its interim results that the sales of gold had decreased, without quoting the exact percentage, saying the decrease had led the sales of the Group to decline by some 14.6 percent year-on-year.

No limit for RMB conversion on the table

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acau Association of Banks representative Yip Sio Kai said there has been no limit on renminbi conversion in Macau since last year, according to Chinese newspaper Macau Daily.

This follows Hong Kong’s de facto central bank’s announcement on Wednesday that it would lift a daily cap for converting the local currency to Chinese yuan in order to facilitate a trading link between the city’s bourse and the Shanghai Stock Exchange. The Monetary Authority of Macau issued a statement last Wednesday saying that currently the limit on the value of renminbi exchange for each individual is the equivalent of RMB20,000 per day but that it is seeking the possibility of discussing lifting the limit with

the People’s Bank of China.

Mr. Yip said that in order to satisfy their customers and enlarge the scope of renminbi business, banks in Macau have been trying different means of acquiring the currency from the overseas market while complying with the regulations of the People’s Bank of China, according to the Macau Daily report.

With the development of the offshore renminbi market, by the end of 2013 there was more than 2,000 billion yuan capital in stock in the overall offshore market, said Mr. Yip. He added that the banks would launch more financial products, personal loans, and foreign currency exchange services to promote the development of Macau’s renminbi business.

In fact, The World Gold Council said it expected Chinese demand to be 850-950 tonnes this year, down from its previous estimate of 9001,000 tonnes. Early in the year, the London-based group had said Chinese appetite could even reach 1,100 tonnes.

‘The scale of 2013’s exceptional buying continued to overshadow the market, the Council said in its quarterly report that surveys

global demand patterns. ‘The quiet environment provided China’s notoriously price-savvy investors with a further reason to stay out of the market.

‘China’s jewellery market continued to normalise following last year’s rapid expansion. Chinese investment demand this year has paused to catch its breath. Fourthquarter bar and coin demand is shaping up to be much the same - steady, but unremarkable.’

The anti-graft drive in China this year has hurt demand for luxury goods including bullion, while the volatility that sank to a four-year low dampened interest in the metal as an alternative investment. Banks, including Goldman Sachs Group Inc., expect prices to extend losses, in part as the buying frenzy that accompanied gold’s drop into a bear market in April 2013 hasn’t been sustained.

With Reuters and Bloomberg

6 | Business Daily

November 17, 2014

Macau

“We’re still waiting to learn how to use big data in Macau” A new trend is starting as social media attracts increasing attention vis-a-vis traditional media like newspapers and magazines. Council chairman of the Association of Advertising Agents in Macau, Keyvin Bi, tells Business Daily that in five to 10 years time, newspapers and magazines will have to find an effective way to link up with the Internet if they want to survive Luciana Leitão

lucianaleitao@macaubusiness.com

Photos by Manuel Cardoso

What are the main challenges for the ad industry in Macau?

All companies in Macau face the same issue: human resources. This is the main problem. Another problem is the rental increase. I’m still a lucky man because I bought this office a long time ago. After a few years, some of our members move — they don’t have any choice because the rental increase is crazy and salaries increase very quickly. So, there’s too much pressure. Still, the advertising industry is growing very quickly, so we can keep running.

So, I needed to change. But we still have the ad department, we’re just not focused on that. We don’t have sales and marketing. The client comes and we help.

Is the ad industry growing because of the big casinos?

Actually, it’s the whole environment, not only the casinos.

Our members don’t serve only casinos. We also serve government.

A few years ago we conducted a survey in which we asked our members where their principal income came from and almost 50 percent said it came from the government.

You started the interview by saying that the ad industry has grown.

Because of the casinos or because new media like social media is pushing it forward?

New media means clients are just changing from traditional media to new media. It’s the whole environment — it’s better year-onyear.

Business growing But it’s not the general trend for ad agencies?

It’s not; because some of the ad agencies focus on media they cannot sit and wait, they need to convince the customer and they need many meetings with the client.

You’ve mentioned human resources are a problem. Is it difficult to find people to do this type of work in your advertising agency?

It isn’t easy. Most of our staff just work a few years and then move on — they may change within the industry or go to another one.

Why are they changing?

Maybe it’s more attractive outside.

We’re just a small/medium company so it’s not easy to keep our staff. We now create a lot of projects ourselves, we don’t wait [for the customer]. It’s our main difference from other companies.

A few years ago we conducted a survey in which we asked our members where their principal income came from and almost 50 percent said it came from the government

What do you mean create your own projects?

In the very beginning, when I started this advertising company, it was for my family. My family are developers for the whole building [where we have the office]. After they had almost finished the project, they needed to promote.

That’s why we set up an internal office for our own advertising agency.

Now, we have changed and we provide a service for outside. Now, if I’m advertising I know how to promote, how to get the best price from the media and if I can help my clients I can also help my business. So, I now have my own projects rather than handling projects from outside. If some friends ask me, we also provide a service for them but we don’t have a sales team to get new projects.

industry) and also gaming. Next week, for example, the Macao Gaming Show will open and it’s also our show.

Who are your customers?

We serve different industries — a telecom company, Lohas Expo (health and environmental

So, instead of focusing on advertising, you’re now focusing more on events and exhibition organisation?

Yes; because we have the knowledge we know how to connect service providers, invite the right company to come and hold the project. Now, we have many projects inside and also we bring some local companies to join other exhibitions. Exhibitions happen every year so our business is stable.

In the past, as an advertising agency, every project was held just once but the following year they might not ask us to help with the next promotion. Now, we run our own projects — it belongs to our company and then we provide a service for different clients. But, looking at the members [from the association] many of them still keep to the advertising side — they don’t join or organise any exhibition.

You’ve changed the focus of your company from advertising to exhibition events because it’s more profitable?

It’s more stable because at different stages people need to think about what they need to do or change. I need to think about all my staff. Every year, my income is different, so how can I provide a stable environment for the staff?

Looking specifically at the ad industry, you’ve mentioned new media. Do you see more companies in Macau using new media, like social media, rather than using traditional channels like newspapers?

They should keep using newspapers but Macau has many newspapers and companies use just one or two. Also, free newspapers can get a percentage of the market.

New media should increase very quickly. We use WeChat and also Facebook. Companies should have a website and then extend to other new media platforms.

You’re saying most of the companies prefer to place ads in just one or two newspapers. With so many in town, is there a market for every publication?

If they’re still here, that means they still have a market. Some media can really earn money but not much. Some traditional media already existed in Macau before the return to Mainland China; that kind of media is a bit special because when the Macau government wants to promote something, they’ll use traditional media but not all media. As for the new newspapers or magazines, these have to find a new market.

Are you saying that new publications need to be more specialised?

Yes. One media in Macau is focused on exhibitions only and they found a good position but they got support because the government needs to support the MICE industry.

They’ve got some market. Some are free newspapers and they have a market. Still, if they just run this business, I don’t think they can keep

Business Daily | 7

November 17, 2014

Macau

running for a long time — if they’re a big group with many businesses, including newspapers, they can.

Social media Do you believe the trend is to use more social media rather than newspapers and magazines for advertising?

The new generation will use only the new media because they don’t read the newspapers. Most people send a newspaper to me and I don’t have the time to read all the pages but if, through the Internet, some people share parts with me, I will take a look through my phone.

It’s easier. I can use my mobile any time to see the news. This should be the new market.

But we’re always talking about the big data — which is, how can you push the ad to the right person?

They’ve been talking much more about this in the last few years and they haven’t found the best way to

New media means clients are just changing from traditional media to new media

use big data. Some companies will provide the service — they collect the data from telecom companies in China, they can guess through their programme from the IP address, and, even if they don’t know who they are, they can guess if it’s a woman or a man and they can send the ad to them. It’s not easy to use this. I’m still learning.

In Macau, we’re still waiting to learn how to use big data.

Are companies in Macau using big data correctly?

In Macau, it’s not easy to create our own big data; we use big data from outside. If you want to reach Macau people, newspapers, radio, billboards, taxis and buses, we all can use; it’s easier and there’s more market. Mainly we need to focus on outside — ads from casinos are not here, it’s outside.

So, if we want to grow our business, we need to work with them, so this is different to before.

Ten years ago, we didn’t have much connection with outside media companies. We need to really keep contact with more associations around the area.

Big companies, like casinos in Macau, are advertising using their own teams. Do they outsource to an overseas media company or use local companies?

They should have their own ad agency but not in Macau. They recruit big companies, mostly from Hong Kong. Even if they buy an ad in the local market it’s through them.

What kind of media are they using to spread their message in Macau - outdoors, newspapers or social media?

Outdoor and Internet, and all the others. They have many ways of promoting hotels and casinos; I cannot say which one they don’t use. They use them all. Even if I open a website, I’ll get a phone message when I get to Macau — they will focus on who is their main market.

The new generation will use only the new media because they don’t read the newspapers

How about SMEs in Macau, what kind of ads do they use?

Newspapers and outdoors. They use taxis a lot.

How about social media?

The cost is much lower, so they use it also.

Is it effective?

Once they create the channel or website they don’t promote too much, so I don’t think they can have a good result. If you create your website or open a page in Facebook, many years ago many people would follow. Now it’s different — there are too many social media applications. If you open many, you need to update all of them but not many people do that.

Small and medium enterprises cannot. To create it is easy but after you create it how do you maintain it? You write something, you take a picture. Even if we create the website or a different channel, you don’t have enough time to update because you need to invest a lot.

Considering young people only use social media to get their information, at a certain point won’t they have to follow the trend, if they want to get more business?

Small companies don’t need to expand the market too much, they just use word of mouth or some newspapers [for advertisements].

It’s enough for them. Also, if you do your business well, the customer will use social media to advertise for you. So, the SMEs don’t need to put in a lot of effort.

What is the future of the ad industry in Macau?

New media just needs to wait more years because the new generation will change. The new generation just wants to see the new media; so, in five or ten years traditional media will have to link up with web media.

8 | Business Daily

November 17, 2014

Gaming

Atlantic City revamp includes pension deferrals, asset lease

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tlantic City should defer pension payments, lease its water utility, sell assets and consolidate services including its drug-treatment facilities to turn around its finances, a New Jersey advisory commission said.

The panel, created by Governor Chris Christie, also recommended appointing an emergency manager with “extraordinary supervisory powers” to implement its proposals.

Other suggestions include extending a tourist district that Christie created around the casinos to the entire city and redirecting money from advertising to help fund a new notfor-profit development agency.

“These are initial findings and recommendations – I’m not necessarily invested in any of them,” Christie said yesterday at the Casino Reinvestment Development Authority’s headquarters in Atlantic City. “There are clearly some that I will enthusiastically endorse.”

Christie, a second-term Republican contemplating a 2016 run for president, has struggled to turn around Atlantic City, the onetime U.S. East Coast gambling capital that has seen four casinos close this year.

Casino revenue is projected to drop to US$2.5 billion this year from a peak of US$5.2 billion in 2006 as Pennsylvania, Delaware, Maryland and New York expand gambling.

US$2.5 bln Expected casino revenue in 2014, less than half of 2006’s peak of US$5.2 billion

Atlantic City has issued US$345 million of bonds since 2010, largely to cover tax appeals from casinos and deficit spending in budgets that have grown by 40 percent since 2006, according to the report. Debt service has grown 71 percent in the past eight years and now represents 15 percent of the 2014 budget.

Pension payments, meanwhile, have increased by 139 percent in the same period, according to the report.

Atlantic City would save US$71.1 million by deferring three years of contributions, the commission said.

Also, about US$1 million a year of pension contributions for the city’s lifeguards should be “waived indefinitely,” according to the report.

The city can also save more than US$25 million by transferring services to the county, such as the public health department, it said.

Pansy Ho: No correlation between anti-graft and plummeting GGR

Bloomberg

Corporate Bath & Body Works opens store in Macau Regional fashion and beauty retailer Valiram Group has announced the opening of its first Bath & Body Works store in Macau. The north American brand has over 1,600 stores in the United States and 100 internationally. “We’re excited about bringing this exciting brand to Macau and to the rest of Asia Pacific. The Bath & Body Works brand is strong and well-recognised in the U.S. and all over the world for its devotion to creating a fun yet pampering experience for everyone,” Mukesh Valiram, executive director of Valiram Group, said. The 1,400-square foot store, located in The Venetian, marks the group’s first foray into the Greater China region. “We celebrate our first store opening here with great expectations, and look forward to our future expansion into Hong Kong and China,” Mr. Valiram added.

P

ansy Ho said last week in Brisbane, Australia that she does not see a direct correlation between the anti-graft campaign being conducted by the Chinese central government and the slowdown in gaming revenues in Macau. Rather, she believes the slowdown may benefit the Special Administration Region.

According to news outlet The Australian, Ms. Ho spoke at the Global Café business forum prior to the G20 summit in Australia during the past weekend, claiming a slowdown in the gaming industry was inevitable following continuous double digit growth for nearly a decade.

“When we started to see a slowing down of the continuous growth, it really means we have seen the possibility now of a more healthy and steady kind of business environment,” the news outlet quoted Ms. Ho saying.

“We don’t want to see a very spiky kind of cycle. I think that helps us

to prevent a bubble which we might have been leading to over the past year or two,” she said.

The anti-graft campaign is believed to be scaring high-rollers away from Macau - one of the chief factors driving the city’s gaming revenues dropping for five consecutive months since May. SJM Holding Ltd.’s chief executive officer Ambrose So Shu Fai - is not as positive as Ms. Ho, as he predicted last week that slowing gaming revenues in the VIP sector in the next six months may be exacerbated by the central government’s escalating crackdown on corruption.

During the third quarter, SJM posted a 16.4 percent drop in its profits to HK$1.5 billion (US$187 million) compared to the same period last year; meanwhile, the net revenue of MGM China registered a slight decrease of 2 percent year-on-year, amounting to HK$794 million.

K.L.

Business Daily | 9

November 17, 2014

Gaming

Caesars stock jumps as bankruptcy plan unveiled creditors stand to lose more if the operating unit gets weaker than the loan holders do, Snow said. Lenders to the unit hold a guarantee of collection from the parent company that promises to make up for any loan obligations the unit doesn’t pay in full, according to an August 11 regulatory filing.

Casino holdings “There’s a lot of relief they’ll figure a way out of their conundrum without having to put the entire company into Chapter 11,” Frank Fantini, who publishes Fantini’s Gaming Report, a Dover, Delaware-based newsletter for casino executives, said by telephone.

Parent-company Chairman Gary Loveman “has said all along that Caesars won’t declare bankruptcy.”

The operating company’s US$2.1 billion of 11.25 percent first-lien bonds due June 2017 rose 3.4 cents on the dollar today to 77.5 cents to yield 23.5 percent, while the US$3.6 billion of 10 percent second-lien bonds due December 2018 fell by 0.5 cent to 14.4 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Caesars Entertainment Operating Co. owns 20 U.S. casinos from its flagship Caesars Palace Las Vegas to tiny Harrah’s Louisiana Downs, a race-track and casino in Bossier City, Louisiana, said Thompson, the Caesars spokesman. It owns 10 international casinos located mostly in the U.K., according to the August 11 filing.

C

aesars Entertainment Corp. shares jumped 23 percent at the end of last week as a key group of senior creditors agreed to the outline of a restructuring plan that will put its biggest unit in bankruptcy as soon as January.

The stock surged to US$13.67, the highest since September 22, as investors judged that the broad agreement to put Caesars Entertainment Operating Co. into bankruptcy appears to protect the parent company’s interests in two other operating units.

“If they can put this into bankruptcy and still have value for what’s left, that is what the market is reacting to,” Chad Beynon, an analyst at Macquarie Capital, said today by telephone. Beynon has a “neutral” rating on the stock.

Caesars agreed with at least six first-lien bondholders including Paul Singer’s Elliott Management Corp. and Pacific Investment Management Co. on the structure a reorganization of the unit’s debt would take, two people familiar with the negotiations told Bloomberg News yesterday. The proposal includes a prearranged bankruptcy for the operating unit as soon as January 14, the people said.

Caesars, taken private by Leon

Black’s Apollo Global Management and TPG Capital for US$30.7 billion in 2008, has said it wants to tame the US$22.9 billion debt burden it took on in one of the biggest leveraged buyouts ever. The company has lost money every year since 2009.

Involuntary bankruptcy A January 14 filing would give the company a one-day window to avoid an interest payment of about US$225 million on second-lien bonds due December 15, the people said.

Failing to make the disbursement may allow second-lien bondholders who’ve sued the company for fraudulently transferring and wasting assets to push the unit into involuntary bankruptcy.

Gary Thompson, a spokesman for Las Vegas-based Caesars, Francis McGill, a spokesman for Apollo at Rubenstein Associates Inc., and Lisa Baker, a spokeswoman for TPG at Owen Blicksilver PR Inc., declined to comment on the restructuring talks.

Caesars’ restructuring may depend on whether it can convince its most senior creditors including KKR & Co. and Blackstone Group LP’s credit arm, GSO Capital Partners LP, to accept less than full value for

their US$5.3 billion of loans. The casino company is proposing to give them a series of new securities that wouldn’t all immediately provide par value, according to three people with knowledge of the talks who asked not to be identified because the negotiations are private.

‘Least worst’ Lenders are unhappy that the plan doesn’t propose to pay them out in full using exit financing at the end of the bankruptcy, said two of the people.

Caesars is attempting to gain the support of both sets of first-lien creditors to impose a plan that may offer little recovery on its lowerranked borrowings.

The negotiated plan with the firstlien lenders “may be the least worst option for both parties, even if it carries obvious faults,” analysts led

by Chris Snow wrote in a November 11 CreditSights Inc. report. “There is no 100 percent solution to the structure.”

The term-loan holders “presumably want to come to some agreement with this,” Snow added in a telephone interview.

Caesars probably began talks with bond owners first because those

Smaller units The two smaller Caesars operating companies are linked to the larger unit only through the parent. Caesars Entertainment Resort Properties LLC owns six casinos from Paris Las Vegas to Harrah’s Atlantic City, the filing shows. The newest operating entity, Caesars Growth Partners LLC, owns interactive gaming assets like World Series of Poker as well as six casinos that include The Cromwell and Planet Hollywood in Las Vegas.

At least 12 firms have been involved in the private debt negotiations, Bloomberg News has reported. In addition to Elliott and Pimco, Beach Point Capital Management LP, BlackRock Inc., Brigade Capital Management LLC and JPMorgan Asset Management Inc. are engaged as representatives of first-lien bondholders, people told Bloomberg in September.

After Richard Perry’s Perry Corp. left the talks last month, five term-loan holders remain in the negotiations: Franklin Resources Inc., GSO, HG Vora Capital Management LLC, KKR and Och-Ziff Capital Management Group LLC, people with knowledge of those talks told Bloomberg last month.

Bloomberg

10 | Business Daily

November 17, 2014

Greater China Beijing police bust “underground banks” Beijing police have shut down more than 10 “underground banks” responsible for illegally funnelling more than US$22.6 billion out of China, the official Xinhua news agency reported on Friday. Police arrested 59 suspects, froze 264 bank accounts and seized more than 800 bank cards after raiding locations in central Beijing, according to the report. Police said suspects operating out of their private homes had borrowed, rented or purchased bank accounts to buy US$50,000 in foreign exchange with each account. Chinese law prohibits individuals from transferring more than US$50,000 out of the country per year.

HK-SHG link test successful Hong Kong Exchanges & Clearing Ltd. said it conducted a successful final test of systems before the start of a stock link with Shanghai today. The Shanghai exchange also conducted a trial this weekend, Hong Kong’s bourse said in a statement on its website yesterday. “We’re ready to launch,” said Charles Li, Hong Kong Exchanges’ chief executive officer. The debut of the link will give global investors unprecedented access to mainland shares, with a daily limit of a net 23.5 billion yuan (US$3.8 billion) of cross-border purchases.

China-Brazil agree on railway cooperation Chinese President Xi Jinping met his Brazilian counterpart Dilma Rousseff yesterday in Brisbane, calling for early substantial progress in China-Brazil railway cooperation. The relationship between China and Brazil has a promising future, Xi told Rousseff on the side-lines of the Group of Twenty (G20) Summit in Australia, noting that he and Rousseff reached broad consensus on deepening bilateral cooperation in all fields in his July visit to Brazil. Both sides should continue to work together to achieve more results in bilateral cooperation and promote trade facilitation and liberalization, said Xi.

Xi claims sustainable growth Chinese President Xi Jinping said on Saturday China’s economy will maintain strong, sustainable and balanced growth, state media reported. Xi also said China will provide more demand and investment opportunities for the global economy as it undergoes structural reforms that foster opportunities for growth, according to the official Xinhua news agency. China’s economy grew in the third quarter at its slowest pace since the global financial crisis, sparking concern that the world’s second largest economy is faltering as the government tries to make it more driven by domestic consumption and less by exports and investment.

Personal trips to Taiwan exceed 1 mln Over one million personal trips have been made to Taiwan by Chinese mainland visitors so far this year, according to official data released at the on-going China International Travel Mart. Li Jinzao, director of the China National Tourism Administration, said tourism cooperation across the Taiwan Strait will be enhanced and the mainland’s travel sector should learn more about management, marketing and catering from Taiwan. The number of trips from the Chinese mainland to Taiwan will surpass 3 million by the end of the year, according to statistics by the Taiwan Strait Tourism Association.

Hedge funds pile into Aliba

Since pricing at US$68 per share in the IPO, the stock has surged t Luciana Lopez

H

edge funds scooped up shares of China’s Alibaba Group Holding in the third quarter, making the e-commerce giant one of the most commonly bought stocks among some of the biggest U.S. investors, according to regulatory filings.

Among the institutional investors that took new stakes in Alibaba were Soros Fund Management, the hedge fund firm founded by billionaire George Soros; Jana Partners, the US$11 billion hedge fund run by Barry Rosenstein; Janus Capital Management; Tiger Management; Louis Bacon’s Moore Capital Management; John Paulson’s Paulson & Co; David Tepper’s Appaloosa Management; Dan Loeb’s Third Point, Viking Global Investors LP and Leon Cooperman’s Omega Advisors.

Alibaba made its market debut in late September after a US$25 billion initial public offering that ranked as the largest ever.

The 10 hedge funds bought the following stakes in Alibaba: Viking Global had 11.4 million Alibaba shares with a US$1 billion market value; Soros Fund Management, 4.4 million shares; Paulson & Co, 1.9 million shares; Third Point, 7.2 million shares; Janus Capital Management, 3.464 million shares;

Jack Ma at Alibaba’s IPO session

Tiger Management, led by Julian Robertson, one of the most influential hedge fund managers, 1.216 million shares, making Alibaba the largest single holding listed on Tiger’s 13F form filed with regulators on Friday;

Moore Capital, 1.52 million shares; Omega Advisors, 410,000 shares; Jana, 300,000 shares; Appaloosa, 725,000.

From Alibaba’s market debut through the close of the third quarter on

New giant dairy company to focus on infant formula A Chinese company and an Australian tycoon agree to establish the firm Morag MacKinnon

M

ining tycoon Gina Rinehart has agreed to invest A$500 (US$437 million) in partnership with a Chinese company to create one of Australia’s largest dairy farms to meet soaring demand for premium infant formula in China.

The deal was announced on Saturday

by Hope Dairies Ltd, majority owned

by Rinehart, with minority investment from state-owned Chinese industrial giant China National Machinery Industry Corp.

Hope Dairies said it plans to process 30,000 metric tonnes, equivalent to 35 million tins, of infant formula per year at a processing plant in Queensland state.

The company plans to begin exporting in late 2016, it said in a statement.

“Australia has some of the finest agricultural products in the world and we need to position ourselves to meet the demands of our region,” Rinehart said following the signing of an agreement with the Queensland government in Brisbane.

Hope Dairies said it plans to manufacture pharmaceutical grade product which will help allay fears after a spate of food safety scandals involving infant formula in China.

The scares have prompted a wave

of tie-ups between foreign and Chinese dairy firms, including a US$550 million investment last month by France’s Danone SA in formula maker Yashili International Holdings.

China’s imports of milk and milk powder soared 70 percent in the first half of the year to 830,000 tonnes, customs data showed. Infant milk formula sales in China are forecast to double from last year to US$31 billion by 2017, according to research firm Euromonitor.

Australia is attempting to transition from a reliance on exports of minerals such as coal and iron ore to expanding its food and agricultural exports to a growing Asian middle class, moving

from a “mining boom” to a “dining boom”.

The Hope Dairies announcement comes as China and Australia are on the verge of signing a free trade agreement, anticipated to be announced during Chinese President Xi Jinping’s current visit to Australia for the G20 meeting.

Hope Dairies has acquired the majority of some 5,000 hectares of prime pasture in south-east Queensland and plans to supplement its production with milk supplied from other local producers in the vicinity.

Hong Kong-based businessmen Dave Garcia and Dano Chan are minority investors in Hope Dairies.

Reuters

Business Daily | 11

November 17, 2014

Greater China

aba shares

Banks’ bad loans rise

to about US$115

Weakness in the economy and extra competition for lenders because of financial deregulation may weigh on banks’ profitability

September 30, the company’s shares peaked at US$99.70, suggesting, for example, that Janus paid at most US$345.36 million for its stake. At the US$68 IPO price, the same stake would have cost US$235.55 million.

Jana, Soros, Paulson and Appaloosa all declined to comment.

Viking, Janus, Tiger Management, Moore, Omega and Third Point did immediately not respond to requests for comment. Alibaba did not immediately return a request for comment.

US$99.70 Alibaba’s shares peak

While many stocks struggle after hype-laden debuts, Alibaba has advanced.

Mark Yusko, head of the US$4 billion Morgan Creek Asset Management, told Reuters last month

that the shares could more than double in the next three years, which could vault Alibaba past Apple Inc’s current valuation, which ranks it as the world’s biggest publicly traded company.

Yusko said Morgan Creek has bought Alibaba steadily, both before and as the company went public.

Last week, Alibaba founder Jack Ma, who is also the executive chairman, said the company’s finance services arm “will definitely go public,” and is looking at a mainland China listing for the e-commerce company’s crown jewel.

Alipay, part of Alibaba’s Ant Financial Services Group, is the lifeblood of the company’s e-commerce network and China’s dominant online payment processor, making it in the eyes of some analysts one of the most valuable assets in the Alibaba universe.

Friday’s 13F filings provide a window onto the strategies of some of the world’s biggest investors. But the view is limited. The documents look back to the previous quarter, and they do not disclose short positions.

The U.S. Securities and Exchange Commission sometimes allows managers not to disclose sensitive positions.

Reuters

C

hinese banks’ bad loans rose to the highest level since 2008 in the third quarter as a property slump and an economic slowdown boost the odds that soured credit will keep climbing.

Nonperforming loans rose 72.5 billion yuan (US$11.8 billion) from the previous quarter to 766.9 billion yuan, the China Banking Regulatory Commission said in a statement yesterday. Soured credit accounted for 1.16 percent of lending, up from 1.08 percent three months earlier.

Weakness in the economy and extra competition for lenders because of financial deregulation may weigh on banks’ profitability. In signs that the slowdown may be prolonged, factory output expanded at a slower pace in October, and a person with knowledge of Communist Party talks said leaders had discussed lowering the nation’s growth target for 2015.

Bad loans are “likely to rise for the next few quarters as a result of the slowdown in the Chinese economy, but I think the systemic risk should be contained,” Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp., said before the statement.

Banks’ bad-loan coverage ratio, a measure of reserves for soured credit, fell to 247.2 percent as of September 30 from 262.9 percent in June. Their capital adequacy ratio, a measure

The systemic risk should be contained Tommy Xie, Oversea-Chinese Banking Corp, economist

of financial strength, increased to 12.93 percent from 12.4 percent three months earlier.

Leaders have discussed lowering the 2015 growth target from this year’s 7.5 percent goal, the person said this week. Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, last month reported its biggest quarterly jump in bad loans since at least 2006.

Stresses in the economy are visible through companies such as Sinosteel Corp., a state-owned miner and steel trader that in September reported financial difficulties. China’s gross domestic product will rise 7.4 percent this year, the least since 1990, according to analysts’ median estimate.

Bloomberg News

Painful adaptation to the “new normal” Figures on Friday showed bank lending tumbled in October and money supply growth cooled Jane Wardell

The main problem of shadow banking is the offshoot business of the banks, and it’s mainly about the trust funds that they run

Zhu Guangyao, China’s Vice Finance Minister

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hina’s economy is going through a “period of pain” as authorities try to shift it towards slower, more sustainable growth, with the rapid expansion of its shadow banking sector a major problem, the vice finance minister said on Saturday.

“We do have problems that have been accumulating over time,” Vice Finance Minister Zhu Guangyao told reporters at the G20 Leaders Summit in Australia.

Zhu reiterated President Xi Jinping’s catchphrase of a “new normal” for the Chinese economy, saying it would be “running at relatively high speed instead of super high speed.”

“We are changing gear and our economic structure is undergoing a period of pain and a period where we are absorbing the large-scale stimulus packages we rolled out earlier,” he said.

The IMF expects global growth of 3.3 percent this

year, with China growing 7.4 percent and the United States 2.2 percent. That would still be China’s slowest growth in 24 years.

Shadow banking Zhu said shadow banking, a term that broadly refers to a variety of lending that does not appear on bank balance sheets, and overcapacity in the parts of the economy were some of the major problems facing China.

Zhu Guangyao, China’s Vice Finance Minister

“The main problem of shadow banking is the offshoot business of the banks, and it’s mainly about the trust funds that they run,” Zhu said.

The Financial Stability Board said in a recent report that China’s shadow banking sector grew rapidly in 2013

and was now the third largest in the world.

Zhu said the size of the shadow banking sector compared with the total financial volume of the world’s second-largest economy “is not that great, but the biggest risk here is that growth is very rapid.”

Beijing has been trying to rein in the riskier elements of shadow banking without shutting down the flow of money to smaller businesses that need funding.

Figures on Friday showed bank lending tumbled in October and money supply growth cooled, raising fears of a sharper economic slowdown and prompting calls for more stimulus measures, including cutting interest rates.

Zhu said the global economy recovery was too slow and unbalanced, and also called on the United States to ratify a much-delayed IMF quota and governance reform package.

“We also really hope to see that our partners in Europe, in Japan... will restore a relatively high growth rate,” he said.

Reuters

12 | Business Daily

November 17, 2014

Asia Japan joins UN climate fund Japan confirmed yesterday plans to give up to US$1.5 billion to the UN-backed Green Climate Fund, joining a US pledge of US$3 billion to mitigate the impact of global warming on poor nations. The move was flagged by Japanese media ahead of the summit of G20 leaders in Brisbane, and was rubber-stamped in a statement by the White House after US President Barack Obama met Prime Minister Shinzo Abe on the summit side-lines. France and Germany have pledged to contribute US$1 billion each to the UN’s new climate framework.

India makes HDFC foreigner India’s foreign investment regulator has approved raising the foreign holding limit in second-biggest private sector lender HDFC Bank Ltd but counts its parent’s holding as foreign, the Business Standard newspaper reported on Saturday. Counting the 22.50 percent stake owned by mortgage lender Housing Development Finance Corp and two of its units in HDFC Bank would limit capacity for any further foreign fund raising by the bank, the report said, citing an unidentified government official.

Lew urges Japan to use “three arrows” U.S. Treasury Secretary Jack Lew emphasised to Japan’s finance minister Taro Aso the need for Japan to use all three arrows of its economic recovery policy to escape deflation, a U.S. Treasury official said on Saturday. “Secretary Lew noted that, to ensure the recovery and escape from deflation, Japan needs to more than fully offset the short-term, contractionary impact of the expiration of past fiscal stimulus measures and the next consumption tax increase, should Prime Minister Abe decide to proceed with it on the current schedule.”

Third-quarter Japan figures Economists said a recovery in spending will be among the most on whether Tokyo should raise the levy on everyday goods Kyoko Hasegawa

A

set of economic data due in Japan today look likely to determine the fate of “Abenomics”, with anticipation a poor showing from third quarter GDP figures will prompt a general election.

Unless the July to September Gross Domestic Product figures show an unexpected rally, today’s release is likely to provide the catalyst for Prime Minister Shinzo Abe to rule out a promised consumption tax rise and seek a new popular mandate, two years ahead of schedule.

The tax rises are aimed at paying down Japan’s enormous national debt, but they have put Abe in a tricky position as he tries to balance them with his pro-spending growth plan -- dubbed Abenomics.

The market’s median forecast is for a 2.47 percent annualised growth rate, according to a survey of some 40 economists conducted by the Japan Centre for Economic Research.

That would sidestep a technical recession, after Japan’s GDP shrank an annualised 7.1 percent in the second quarter, but it pales next to the ringing endorsement that came

in during the first three months of the year, when the economy grew 6.0 percent.

Since his late 2012 election, Abe’s plan to conquer years of deflation that have held back growth in the once world-beating economy had been bearing fruit.

But those efforts stumbled as consumers closed their wallets -and nervous firms capped their own spending -- after sales taxes rose to 8.0 percent from 5.0 percent on April 1.

While most commentators said a dip in spending was inevitable after the rise -- shoppers had front-loaded ahead of the increase -- the secondquarter contraction was much more painful than many economists had expected.

Fears abound that the scheduled second hike -- written into law and due to take effect in October 2015 -- could snuff that recovery out altogether, and hurt Abe politically.

“Because it will take time for the Japanese economy to pick up in a sustainable way, general elections later on would risk his chance of being re-elected as the ruling party

The second tax hike is likely to be postponed unless the data shows a high growth rate, something like an annualised rate of four to five percent Hiromichi Shirakawa, Credit Suisse analyst

leader in September next year,” said Tokyo University politics professor Sadafumi Kawato.

“It’s better for Mr Abe to call snap elections sooner rather than later in order to minimise the number of parliamentary seats that he will lose.”

S.Korea’s Iran oil imports drop South Korea imported 9.98 million tonnes of crude last month Meeyoung Cho

Malaysia’s growth slows Malaysia’s economy grew at its slowest pace this year during the third quarter, as annual growth slipped to 5.6 percent from a revised estimate of 6.5 percent growth in the previous quarter, with exports struggling against a fragile global economy. The third quarter growth matched the median forecast from a Reuter’s poll of economists.

Expectations for the Southeast Asian economy were subdued as exports have slowed considerably following a robust first half.

SpiceJet cuts losses Indian budget carrier SpiceJet Ltd lost 3.1 billion rupees (US$50.2 million) in the three months to September 30, the company said late on Friday, less than the 5.6 billion rupees it lost last year after it lowered fares to fill more seats.

SpiceJet, which has now lost money for five consecutive quarters, has been discounting ticket prices, trimming costs and reducing the size of its fleet in the last few months, as it battles fierce competition in a country where all but one of India’s main carriers are losing money.

S

outh Korea’s imports of Iranian crude in the first 10 months of 2014 were below the 2013 average, meeting international sanction requirements, and it imported nearly 120,000 tonnes from the United States as it brought the first Alaskan crude in a decade.

Preliminary customs data from the world’s fifth-largest crude importer showed on Saturday that Seoul bought 283,287 tonnes of crude oil from Tehran last month, or 66,984 barrels per day (bpd), compared with 420,402 tonnes the year before.

Iranian crude shipments between January and October into Asia’s fourth-largest economy hit more than 5 million tonnes, or 122,564 bpd, down 9 percent from a year ago. It was also 9 percent below the 2013 average of 134,000 bpd, according to the data and Reuters calculations.

Iran has suspended higher-grade uranium enrichment and big Asian buyers, including South Korea, will hold their crude imports from Iran at

end-2013 levels under a preliminary deal between Iran and Western powers agreed in November 2013.

World powers and Iran may not be able to secure a deal on curbing Tehran’s nuclear programme before a November 24 deadline, a Russian Foreign Ministry spokesman has said.

South Korea’s SK Energy and Hyundai Oilbank import Iranian oil and their imports fluctuate as each buys crude every other month.

The customs data showed that South Korea imported 119,439 tonnes, or more than 875,000 barrels, of crude worth US$79.394 million from the United States last month, giving an average price of US$91 a barrel, according to Reuters calculations.

In September, a company source and shipping data showed the first U.S. export of Alaskan crude to South Korea in more than a decade had set sail after South Korea’s GS Caltex Corp - a joint venture between GS Holdings and Chevron Corp - bought the oil on the spot market.

Kharg oil terminal handles a big proportion of Iran’s crude exports

Overall, South Korea imported 9.98 million tonnes of crude last month, or 2.36 million bpd. The total was down 6 percent from the 10.7 million tonnes in October last year, the customs data showed. Final data for last month’s crude oil imports will be released by state-run Korea National Oil Corp later this month.

Reuters

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Business Daily | 13

November 17, 2014

Asia

catalyst for snap election crucial readings in the data, but they are divided

Major Japanese media have reported that Abe will announce a snap election at a press conference on Tuesday, possibly for December 14.

Tax delay ‘likely’ Advocates say part two of the rise must go ahead if Japan is to maintain the confidence of the markets and not risk the punishing interest rates seen in the heavily indebted countries of the eurozone.

On Friday, the government’s top spokesman refused to end the speculation.

“I’m not going to comment on hypothetical questions, but our basic policy is that exiting from deflation and the revival of Japan’s economy are our first priority,” Chief Cabinet Secretary Yoshihide Suga told a regular press briefing.

“At the same time, we are a government chasing two hares -- we’re not an irresponsible administration,” he said referring to the nation’s large debt burden.

Hajime Takata, chief economist at Mizuho Research Institute, said

the tax plan was a must, and added that “we shouldn’t be too obsessed with the July-September GDP data”.

“Rather, it’s better to take a longerterm view on how the economy has been doing over the past two years,” he added.

“The economy seems to be on track for a sustainable recovery, but the current situation is still as if it has caught a cold: it needs medicine -- three drugs comprising monetary easing, fiscal stimulus and a growth strategy (structural reforms).”

Calls for reforms Abe has been under increasing pressure to make good on plans to shake up Japan’s highly regulated economy.

While he has made some progress, such as trying to cut farm subsidies and deregulating the electricity sector, his ambitious plans have put him on a collision course with the politically powerful agricultural lobby, among others.

One of Abe’s economic policy advisors, Koichi Hamada, who opposed the April tax hike, has called for the second increase to be deferred.

“The tax hike should be delayed by half a year, or even one year, if the July-September GDP figures turns out to be weak,” the professor emeritus at Yale University said in a Japanese magazine interview this month.

“Japan’s potential growth rate has already fallen significantly due to the impact of the April tax hike.

If demand is hit by another rise, the economy would face the risk of decelerating growth,” he added.

AFP

Reliance Entertainment plans to acquire game studios Reliance Games hopes to use acquisitions to expand into other genres

I

ndia’s Reliance Entertainment plans to begin acquiring North American and European mobile game studios starting in early 2015, in hopes of becoming a significant global player in the fast-growing mobile games industry.

The company, which is the biggest stakeholder in DreamWorks Studios, is in talks with bankers to identify and acquire up-and-coming mobile game studios in North America and Europe to boost sales, Chief Executive of Reliance EntertainmentDigital Manish Agarwal told Reuters in a phone interview.

“We will go full steam in the January and February time frame in terms of identifying studios,” Agarwal said. “Gaming is going to be the largest share of the pie of entertainment time spent, and Reliance would like to be a sizeable player in that space.”

Reliance Entertainment is a unit of Reliance Anil Dhirubhai Ambani, one of India’s largest conglomerates, with businesses ranging from financial services to infrastructure and power.

Its Reliance Games unit is looking at smaller studios at US$2 million to US$5 million a pop, at least initially, according to Agarwal.

Agarwal said the potential for Reliance Games is “huge.”

India is the fastest growing market in terms of Android and gaming is going to compete with TV watch. ... What China is today, India will be in the next 24 to 36 months Manish Agarwal, Reliance Entertainment-Digital, Chief Executive

“In three years, our business will make US$50 million in net revenue, and in five years we’ll be a US$100 million company,” he said.

Net revenue is after cuts taken by app stores from Google, Apple and others.

In the face of competition from larger and more seasoned players such as King

and Japan’s GungHo Online Entertainment, Reliance has yet to make waves in a competitive mobile gaming space that investors worry is a fickle, hit-driven business.

Agarwal, who did not identify targets, made it clear that Reliance does not want studios that could be one-hit wonders, such as OMGPOP,

which was acquired by Zynga for US$200 million but shut down over a year later.

Reliance Games wants nimble studios of five to 12 members and that are “one game away from creating that elusive hit and looking to scale,” Agarwal said. “If the game is already doing good, the shelf life of the game

could be six to 12 months.”

Currently, about 70 percent of Reliance Game’s revenue comes from North America, the UK, Russia and Korea, and about 20 percent from India, mostly from games offered through telecom carriers rather than app stores.

Reuters

14 | Business Daily

November 17, 2014

International Juncker under pressure on tax role European Commission President JeanClaude Juncker came under fresh criticism on Saturday over his involvement in driving tax reform in Europe, a position described as like “putting Dracula in charge of the blood bank”. Juncker, at the G20 Summit in part to discuss with leaders ways of resolving tax evasion issues, has come under fire after news broke on Luxembourg’s role in helping global companies avoid tax when he served as finance minister and prime minister of the tiny state.

Russia to invest wealth fund in banks

Russia has prepared legal changes that would enable the government to invest up to 20 percent of its National Wealth Fund (NWF) in subordinated debts of banks, according to a document published on a government website. The draft governmental resolution would change the investment rules for the US$82 billion fund, one of two major sovereign funds financed from oil taxes.

The portal where it was posted is used to flag upcoming regulatory amendments and invite public discussion of them.

UBS to take back traders bonuses UBS AG, among the six banks fined this week for their role in the global foreign exchange scandal, is looking at clawing back bonuses from its traders. A UBS spokeswoman confirmed a Financial Times report, which said UBS and four other banks were preparing to take back millions of dollars in bonuses from traders. Regulators on Wednesday fined six major banks a total of US$4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation.

Paulson hangs on to gold Hedge fund Paulson & Co maintained its stake in the world’s biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the third quarter, bolstering the confidence of bullion investors at a time when an improving U.S. economic outlook pummelled gold prices. Legendary investor George Soros, however, has sharply cut his stake in Barrick Gold Corp and several gold mining company ETFs after boosting his investments in the metal during the second quarter.

Investors pay close attention to the quarterly filings by Paulson and other notable hedge fund managers.

Oil price shakes energy sector Tumbling oil price may have pushed companies into a dialogue about mergers

T

alks that could lead to oilfield services provider Halliburton Co buying rival Baker Hughes Inc. may herald increased deal-making in the energy business as companies bet on a protracted drop in oil prices, industry bankers said.

Competing service companies including National Oilwell Varco Inc. and Weatherford International may also be targets, bankers and lawyers said. In any deal, the incentives will be the same: consolidation would allow them to better weather the downturn and resist pressure from oil producers to slash prices.

The Baker Hughes/Halliburton talks have stalled after the companies weren’t able to agree on issues including price, people familiar with the matter said.

As oil prices fall, oil field service companies get squeezed, one industry lawyer said. That’s because when prices fall far enough, it’s no longer economical to get oil out of the ground.

If it’s too expensive to drill, there’s no need to pay an oilfield service company.

While services companies are likely to feel the effect of lower oil prices sooner, overleveraged exploration and production companies may also be pushed to do deals over the medium term, bankers said. Such companies could include Apache Corp, Hess Corp, Marathon Oil Corp or Devon Energy Corp, bankers said.

Those four exploration companies along with the oil services companies including Baker Hughes, all have market values that range between about US$20 billion and US$31 billion.

In the end, price expectations will decide whether upstream exploration and production companies turn into sellers. If sellers’ management believe the oil price will rebound fairly soon, sellers would wait until then, hurting chances for large deals.

Certainly there will be instances where you will find more compromised balance sheet operators possibly being more inclined to sell their entire position Ted Harper, fund manager, Frost Investment Advisors LLC

Until prices stabilize, exploration and production company deals will likely remain asset-level deals in distressed situations such as Samson Resources’ sale of its Bakken assets.

Not all will be targets, Ted Harper, a fund manager at Frost Investment Advisors LLC in Houston. Some

Reuters

G20 commits to higher growth Obama put climate change squarely on the G20 agenda with a speech on Saturday calling on all nations to act

L

eaders from the G20 group of nations agreed yesterday to boost flagging global growth, tackle climate change and crack down on tax avoidance but ties between the West and Russia plummeted to a new low over the crisis in Ukraine.

Security and climate change overshadowed G20 talks on boosting

global economic growth at the summit, although the leaders did sign off on a package of measures to add an extra 2.1 percentage points to global growth over five years.

“This will add more than US$2 trillion to the global economy and create millions of jobs,” said a communiqué issued at the end of

Ukraine to close bank services Ukrainian President Petro Poroshenko issued several decrees on Saturday to shut state institutions and banking services in pro-Russian eastern regions, pressing a move to cut links with the rebel-held territory. Ukraine has cut all state funding to separatist parts of Donetsk and Luhansk regions after separatists held elections in late October which Poroshenko condemned as illegal and in violation of a ceasefire agreement made in September.

exploration and production companies will seek to buy at a discount additional potential reserves near where they are already drilling “to enhance returns from existing production,” he said.

Because exploration and production companies will slow or stop drilling if they are not making money, there is enormous pricing pressure on oil field services providers as oil prices fall.

While Halliburton “has first mover advantage” in its bid to acquire Baker Hughes, “it’s common knowledge that Schlumberger made a run at Baker Hughes years ago to plug a major hole in (well) completions. That hole remains unfilled,” Bill Herbert, oilfield analyst at energy-focused investment bank Simmons & Co told clients.

“Further, GE is lurking in the shadows as well, manufacturing cultures are comparable,” said Herbert.

General Electric Co. has a large oil and gas business.

While another bidder for Baker Hughes may not emerge, oilfield services companies and private equity firms will be looking to buy up any Baker Hughes business units shed to meet antitrust requirements if the Halliburton deal goes through, bankers said.

US President Barack Obama addresses the media during the final G20 press conference at the Brisbane Convention and Exhibitions Centre (BCEC) in Brisbane

the meeting, which also committed to tackle global tax avoidance denying government’s billions of dollars in revenue.

The United States and other nations overrode host Australia’s attempts to keep climate change off the formal agenda. Australia is one of the world’s biggest carbon emitters per capita.

The final communiqué called for strong and effective action to address climate change with the aim of adopting a protocol, with legal force, at a U.N. climate conference in Paris in 2015.

“The most difficult discussion was on climate change,” an EU official told reporters on condition of anonymity.

“This was really trench warfare, this was really step by step by step. In the end we have references to most of the things we wanted.”

Obama put climate change squarely on the G20 agenda with a speech on Saturday calling on all nations to act, and committing US$3 billion to the Green Climate Fund. Japan pledged US$1.5 billion to the fund yesterday.

Reuters

Business Daily | 15

November 17, 2014

More than 80,000 watched enthralled as Felix Rosenqvist became the new hero of Macau’s unforgiving streets.

The Swede had a perfect racing weekend on the Guia Circuit, nailing qualification race, pole position and the 61st Macau Grand Prix João Santos Filipe jsfilipe@macaubusinessdaily.com Photos by GCS & John Ho Lu Ming

16 | Business Daily

November 17, 2014

Clean sweep for Rosenqvist The Swedish driver had the perfect weekend, taking pole position, qualification race and the Formula 3 Grand Prix of Macau. The race was stopped during the first lap following a collision involving Ocon and Blomqvist Formula 3 Macau Grand Prix

F

elix Rosenqvist (Dallara-Mercedes) won the Formula 3 Grand Prix of Macau yesterday after taking 18:46.691 to complete the 15 laps of the Guia Circuit.

The Swede managed to avoid the collisions in the first start, which was essential for his result.

“I had already finished second here and I had started another three times on the first row of the grid. I’m

happy that this has finally worked well for me. Today [Yesterday] when I woke up I thought it had to be today because I knew I wouldn´t have other chance”, he said.

This was the perfect weekend for the 23-year old that had taken pole on Friday and was victorious in the qualification race on Saturday. Lucas Auer (Dallara-Mercedes) came second, followed by Nick Cassidy (Dallara-NBE).

However, the start of the Grand Prix was very troubled.

Right at the beginning, Blomqvist (DallaraVolkswagen) and Esteban Ocon (Dallara-Mercedes) overtook Rosenqvist and were in first and second positions. However, the two drivers collided on Lisboa Bend and on the next bend at S. Francisco. The last crash caused them to retire, as well as four other drivers, forcing the race to be suspended.

Driver

Car

Time

Felix Rosenqvist

Dallara-Mercedes

18:46.691

Lucas Auer

Dallara-Mercedes

+4.372

Nick Cassidy

Dallara-NBE

+8.999

Roberto Merhi

Dallara-Mercedes

+9.799

Nicholas Latifi

Dallara-Mercedes

+10.413

“I saw the crash happening but I tried to remain calm and avoid it. Then, after the restart, I got to the front and just tried to push to leave the other guys behind”, Rosenqvist said.

After the second start, Lucas Auer took the lead from Rosenqvist but went straight ahead at Lisboa corner. This allowed the Swede to hold the first position and promoted Cassidy to second position.

However, Auer would regain second place with two laps to go.

Max Verstappen, who will race in Formula 1 next season finished 7th, after crashing in qualification race. As a result, he started the Macau Grand Prix from 24th.

“After my mistake on Saturday, I’m happy with my performance in the race”, the Dutchman said. “My pace was good and I overtook a lot during the race”.

Macau driver Andy Chang Wing Chung (Dallara-Mercedes) finished the Grand Prix in 19th place. “After the first crash, I had to stop because the track was blocked and my engine overheated. I thought my race was over.

However, as the race had to be restarted I had the opportunity to take the car to the grid and recharge the batteries. I was very lucky”, he told Business Daily. “I hope that next year I’ll be back to improve my performance”.

Walk in the park for Stuart Easton

S

tuart Easton won the 48th Macau Motorcycle Grand Prix on Saturday to conquer allcomers for the fourth time on the narrow Guia track.

The Scottish rider started in pole position and led the race from start to finish.

Following the first qualifying session, 8-times record winner Michael ‘The Blade’ Rutter warned that Easton had been very strong all season. This proved correct, with the Scotsman taking the chequered flag 14.050 seconds ahead of Rutter, taking 29:45.143 to complete the 12 laps of the Guia Circuit. At one point the gap was close to 20 seconds but in the last laps Easton just focused on managing his pace and bringing his bike home.

“I’m very happy to win here and it wasn’t as easy as it seems. I thought I’d have a big fight with Rutter but luckily that didn’t happen and I managed to win”, Easton said afterwards.

Macau Motorcycle Grand Prix

“After I achieved that big gap I was just trying to remain focused. Usually, with big gaps riders tend to lose concentration and then it’s easy to make mistakes”.

Stuart Easton has now

chalked up four victories in Macau. He won from 2008 to 2010, inclusive, and has now added this year’s convincing victory to his portfolio. Despite being a relatively young 31-one year

Rider

Motorcycle

Time

Stuart Easton

Kawasaki

29:45.143

Michael Rutter

Yamaha

+14.050

Martin Jessopp

BMW

+14.505

Gary Johnson

Honda

+15.717

Lee Johnston

Honda

+24.163

old, he is not aiming, yet, for Michael Rutter’s crown.

“You cannot take anything for granted here. Michael is a great rider and he’s still there”, he added.

Michael Rutter finished in second place but did not have an easy race. The King of Macau had to battle hard for his position until the end with Martin Jessopp, Gary Johnson and Lee Johnston.

Hitting a wall on a corner also dented his confidence.

“I was struggling all the time to get the grip right in the [Melco] Hairpin. As a result of that I was being

passed all the time and could not go after Stuart Easton.

He did a brilliant job and deserved to win”, he said.

Martin Jessopp finished in third position, having started from eighth. The Briton managed to reach second place for some time but could not fend off the relentless pressure of Michael Rutter.

As for Ian Hutchinson, last year’s winner had a good start and was third but missed the turn at Lisboa on the first lap. He would retire on the second lap after crashing.

Business Daily | 17

November 17, 2014

Lopez and Huff wrap up WTCC in Macau Lopez and Huff were the winners of the World Touring Car Championship on the Guia Circuit. WTCC will not return next year to Macau being replaced

by Touring Car Series 3

J

osé María Lopez (Citroen) and Robert Huff (Lada) won the last races of the World Touring Car Championship (WTCC) to be held in Macau. Sources inside different teams all confirmed to Business Daily that WTCC will not return to Macau next year, being replaced by the TC3 - Touring Car Series 3.

In the first race, the Argentine started from pole and kept extending his gap lap after lap. José María Lopez took 24:50.183 to complete 10 laps of the Guia Circuit.

“I’ve felt very good since the beginning of the weekend.

I’m happy to have won here because this is the race everybody wants to win”, Mária Lopez, the 2014 WTCC champion, said at the end of the race.

Second place was occupied by two Hondas driven by Hungarian Norbet Michelisz and Italian Gabriele Tarquini.

Robert Huff won the second race in dramatic fashion after taking 28:21.086 to complete eleven laps. Tiago Monteiro (Honda) led for most of the

race after starting in fourth.

However, the Portuguese had to retire due to power steering failure and handed victory to the Lada driver with roughly one lap to go.

“It was very tough. I wouldn’t have won the race if Tiago hadn’t retired. But I have driven some of my best laps in Macau and tonight [yesterday night] we’re going to party for sure”, Huff said.

The Briton has notched up seven victories in 20 races in Macau.

Frenchmen Yvan Muller (Citroen) and Hugo Valente (Chevrolet) finished the last race second and third, respectively.

As for the Macau drivers, Filipe de Souza was the best, finishing the first race in 17th and the second in 13th. In both races, Souza stayed

ahead of fellow Macau driver Mak Ka Lok, who was 18th and 13th.

“I’m satisfied with the final results because I managed to finish both races. However, during the second race I could have got the 12th position but then the safety car came on the track and stopped me from doing it”, Filipe de Souza said.

WTCC - Macau Race 1 Driver

Car

Time

José María López

Citroen

24:50.183

Norbert Michelisz

Honda

+2.741

Gabriele Tarquini

Honda

+3.661

WTCC - Macau Race 2 Driver

Car

Time

Rob Huff

Lada

28:21.086

Yvan Muller

Citroen

+0.344

Hugo Valente

Chevrolet

+3.352

Maro Engels drives Mercedes to victory The German driver won the Macau GT Cup amid controversy. At the end of the race, Edoardo Mortara, who started the race on pole and finished third, complained that Mercedes’ drivers had jumped the start

M

aro Engel (Mercedes SLS AMG) won the Macau GT Cup, the first man to defeat Edoardo Mortara since 2009. The German assumed the first position following the start and led the race until the end, completing 12 laps in 28:22.871.

“I wasn’t expecting to be leading before the first corner but I knew that our car had a lot of torque, which could make the difference. Being first into Lisboa Bend was key to this victory”, the Macau GT winner said.

The Mercedes SLS AMG proved to be the car to beat, with Renger Van der Zande securing second place. For a large part of the race, the

Belgian was under pressure

by Mortara (Audi R8 LMS Ultra) and could only get away when the lapping of the last racers started.

Mortara started from pole but lost his position right at the start and was overtaken by the two Mercedes drivers

at once. The Italian pushed hard until the end but did not have the top speed to improve his position. At the end, he complained that the Mercedes drivers had jumped the start.

“The start was anticipated and the officials didn’t do anything. I had cars flying every-

Macau GT Cup Driver

Car

Time

Maro Engel

Mercedes SLS AMG 28:22.871

Renger Van Der Zande Mercedes SLS AMG +1.223 Edoardo Mortara

Audi R8 LMS Ultra

+6.623

Laurens Vanthoor

Audi R8 LMS Ultra

+8.353

Augusto Farfus

BMW Z4

+18.925

where so I feel that some of the drivers jumped the start”, he said. “My feeling is not great at this moment. We were on pole position and we lost”.

As for the Macau drivers, André Couto (Ferrari 458 Italia GT3) was the best representative of the Special Administrative Region, securing 13th position, 42.619 behind the winner, while Rodolfo Ávila (Porsche 997 GT3) was 30th, trailing a lap behind.

“It was a very tough weekend and the gearbox was risking breaking down. I would have liked to have achieved a better result but given our racing conditions I have to be happy that I managed to finish”, Couto said at the end of the race.

Andy Yan snatches CTM Macau Touring Car Cup

I

n addition to the four main competitions of the Grand Prix, there was more racing excitement on Saturday. Hong Kong driver Andy Yan Cheuk Wai in a Peugeot RCZ won the CTM Macau Touring Car Cup, completing 12 laps of the Guia circuit in 34:40.561.

The winner of the Chinese Racing Cup was also a driver from Hong Kong. Samuel Hsieh took the BAIC Motor Senova D70 trophy in 27:21.830 for what was to become a 9-lap race. The safety car was out on the track for most of the race because of racing accidents.

Meanwhile, honours for Macau. The Macau Road Sport Challenge was won by home driver Wong Wan Long, who covered the full 10 laps in his Mitsubishi Lancer EVO X in 37:27:628.

18 | Business Daily

November 17, 2014

Farewell, fast friends

Business Daily | 19

November 17, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

TAIPEI TIMES Online job bank yes123 released a survey on the average pay grades in the five special municipalities and people’s preferred places to work that found 65 percent of respondents think they are underpaid, while up to 56 percent of those working in the Greater Taipei area are contemplating returning to their hometowns. According to the survey, Taiwanese on average need a salary of NT$40,000 (US$1,333) to pursue their desired quality of life, with those holding jobs in the Greater Taipei area saying that they need to be paid between NT$43,000 and NT$45,000 to fulfil their basic needs.

THE KOREA HERALD The share of South Korean goods in China’s import market reached nearly 10 percent this year, retaining the status as the market leader for a second year, a local think tank said yesterday. In the first nine months of this year, China imported US$140.7 billion worth of South Korean products, or 9.6 percent of its total imports worth US$1.47 trillion, according to the Institute for International Trade. South Korea retained its status as the top goods exporter to China for the second consecutive year, with Seoul overtaking Japan for the first time.

THE TIMES OF INDIA The law ministry has cleared the goods and services tax (GST) bill that was brought to it for legal consultation and now the finance ministry will take the proposed constitutional amendment to the Cabinet in this week week for its approval before it is tabled in the winter session of Parliament. Sources said the combined rates could be around 22% with states getting a higher levy and the freedom to impose certain taxes in addition to the central GST. A final decision on the tax structure will be left to the GST council.

PHILSTAR Philippine merchandise exports growth may start decelerating in the last quarter of the year, DBS said, citing the slowdown in imports which are largely inputs to outbound shipments of the country.

“Total 2014 export growth may now come in lower than our earlier estimate of nine percent,” DBS said in a research note. “Yet, even at the current pace, net exports are likely to contribute about one-third of overall GDP (gross domestic product) growth this year, which we still estimate to be circa 6.4 percent,” the bank added.

Emissions reduction by the numbers Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

D

iscussions in Beijing between US President Barack Obama and Chinese President Xi Jinping – the leaders of the world’s two largest carbon-emitting countries –produced an unexpected, ground-breaking bilateral agreement on greenhouse-gas emissions. Under the new deal, the US is to reduce its emissions by 26-28% from 2005 levels within 20 years, and China’s emissions are to peak by 2030. In the absence of a binding global agreement, such unilateral or bilateral commitments by countries to rein in their contribution to global warming represent the most realistic hope for addressing climate change.

The 1997 Kyoto Protocol marked a major step forward in efforts to head off the most disastrous consequences of climate change, establishing a precedent for legally binding limits on emissions. But it lacked commitments by large developing countries, such as China and India, and, largely for that reason, the United States never ratified the treaty.

A loose system of individual commitments, in which each country unilaterally sets emissions targets, can help build trust and momentum for a more inclusive successor to the Kyoto Protocol, which many hope will be forged at the United Nations Climate Change Conference in Paris in 2015. But if such a system is to work, general agreement would need to exist about what constitutes a fair target for each country. Then advocacy groups and researchers could compile scorecards that would show which countries are meeting the standard – and shame those that are not.

At first blush, there would seem to be no agreement on what fair cuts would look like. India point outs that an average American emits ten times as much as an average Indian, and argues that emissions allowances should therefore be allocated according to population. The US insists that it would be unfair to burden its companies if energy-intensive industries could simply relocate to developing countries that had not yet constrained their emissions. Both sides have a point.

Fortunately, a study of the emissions targets to which countries have already agreed – in Kyoto and at the 2010 UN Climate Change Conference in Cancún – allows us to describe, and even quantify, what has historically been considered fair and reasonable. Emission targets implicitly tend to obey a formula that quantifies three major principles: all countries should rein in their emissions,

The question of how to share the economic burden of any particular global emissions path is completely different from the question of how environmentally ambitious overall climate-change mitigation efforts should be

but rich countries should accept bigger cuts than poor countries; countries where emissions have recently increased rapidly should be given some time to bring them back down; and no country or group of countries should suffer disproportionately large economic costs.

In Kyoto, every 10% increase in per capita income corresponded to an agreed emissions reduction of 1.4%. In Cancún, every 10% increase in income corresponded to a cut of 1.6%. If this pattern continues through the rest of the century, with emphasis gradually shifting from historic levels to per capita targets, economic models predict that no country need suffer a loss of more than 1% of GDP in present discounted value (assuming that market mechanisms such as international trading are allowed).

To be sure, the question of how to share the economic burden of any particular global emissions path is completely different from the question of how environmentally ambitious overall climate-change

mitigation efforts should be.

But, as negotiations proceed, this approach can allow us to evaluate whether the burden of reducing the harmful effects of climate change is being fairly distributed, and to judge whether individual countries are doing their part as they head into the 2014 UN Climate Change Conference in Peru next month.

The graph below compares the per capita income of countries with the emissions cuts that they have pledged to deliver in 2020. Each country’s cut is measured relative to a particular baseline that averages its actual emissions level in 2005 with emissions expected in 2020, absent international action.

The slope of the line corresponds remarkably well with the data from Kyoto and Cancún, indicating that what is considered fair has remained stable over time. On average, each 10% increase in income corresponds with a 1.4% cut in emissions.

The fact that countries cluster close to the line indicates that the relationship is statistically significant.

The graph reveals further interesting insights. For example, India’s targets are modest, but also appropriate, given its residents’ low income. Norway offers the biggest cuts of all. This can be explained partly by its high income; but it is doing more than its share. Singapore, Turkey, and Moldova appear to be shirkers.

Most important, the graph allows us to evaluate the targets that China and the US – the two most prominent holdouts from the Kyoto protocol – have proposed. As the figure shows, these targets are roughly in line with what has historically been considered their fair share, though each could do slightly more.

As others join China, the US, and the European Union in setting targets for 2030 and beyond, this statistical yardstick for judging fairness can serve as a powerful tool for establishing what share of the burden is appropriate for each country to assume.

Project Syndicate

20 | Business Daily

November 17, 2014

Closing China to host G20 summit in 2016

Silk Road travel to be promoted in 2015

Asian powerhouse China will host world leaders for the G20 summit in 2016, Australian Prime Minister Tony Abbott said yesterday at the conclusion of two days of talks in Brisbane. Turkey will host the event in Antalya next year, but in a communiqué the group of the world’s biggest economies said China would be home to the G20 in 2016. “Australia looks forward to working with Turkey over the next year and it is my very great pleasure to announce that China will be the G20 host in 2016,” Abbott said.

China will promote travel to countries along the Silk Road in 2015, according to the latest decision by the China National Tourism Administration (CNTA).

Du Jiang, deputy director of the CNTA, said at the China International Travel Mart 2014 (CITM) that the decision was made against the backdrop of the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives which were proposed by China to boost regional economic and infrastructure cooperation, as well as people-to-people exchange in Asia.

G20 makes Australia-China free trade deal a reality Negotiations on the trade deal began in 2005 and languished under the previous Labour government

A

ustralia will sign free trade deal with China today, cementing ties with its biggest economic partner and reducing its reliance on resource exports.

“The free-trade agreement … with China will be a game changer,” Josh Frydenberg, parliamentary secretary to the prime minister, said in an interview in Brisbane yesterday. “Opening up the Chinese economy in various sectors, including services and agriculture, to Australian exports, is going to be really beneficial.”

Australia is the most China-dependent developed economy in the world, with exports to the nation accounting for 5.3 percent of gross domestic product, according to Commonwealth Bank of Australia. Two-way trade, which reached A$151 billion (US$132 billion) in 2013, has been driven by China’s insatiable appetite for resources and energy, while Australia mainly buys cheap Chinese manufactured products.

“There is the distinct possibility of a knee-jerk lift in the Australian dollar upon

Xi Jinping and Tony Abbott during G20 sessions last weekend

the announcement,” said Richard Grace, chief currency and rates strategist and head of international economics at Commonwealth Bank, the nation’s biggest lender.

Chinese President Xi Jinping is in Canberra today to deliver an address to the Australian parliament.

Abbott, who was elected in 2013, imposed a target to sign it by the end of this year. The FTA would be the third that Australia has reached this year following agreements

IMF standards decision benefits economy

with Japan and South Korea.

China supplied 20 percent of Australia’s A$256 billion of imports in 2013 and bought more than 35 percent of its exports last year, International Monetary Fund data show.

Under the deal with Australia, China has agreed to reverse higher duties it recently imposed on Australian coal exports: the coking coal duty will be cut to zero and the thermal coal duty to 4 percent from

6 percent and then phased out across two years, the Australian newspaper reported on Saturday. It said Australian agricultural exports including beef, most grains and seafood will see tariffs cut to zero between now and 2021.

Australia’s exports to China will need to adjust as the government in Beijing engineers a transition to consumption-led growth from fixed investment. That will require Australia to

JSW Energy agrees deal for hydro assets

C

market its services industries to China rather than digging holes in the ground.

While services account for about 70 percent of Australia’s GDP, they made up just 17 percent of exports in the 12 months through June 2013, government data show.

Some companies are already adapting to the change and diversifying away from mining.

The move comes as Australian miners including Fortescue Metals Group Ltd.’s Andrew Forrest expand into food production to tap rising demand from Asia’s middle classes. It positions Rinehart, the richest woman in Asia, to compete in an infant formula market in China forecast to swell after the world’s most populous nation loosened its one-child policy last year.

“The FTA will deliver a net benefit to both the Australian household and business sectors. Most of the benefits will take time to deliver a material impact, but some of the benefits will be immediate,” Commonwealth Bank’s Grace said.

Bloomberg News

China and France to enhance partnership

I

C

hina’s decision to observe the Special Data Dissemination Standards (SDDS) of the International Money Fund (IMF) will help its economy and improve transparency, economists said.

Chinese President Xi Jinping announced Saturday at the Group of Twenty Summit that China has decided to switch to the SDDS of the IMF from the General Data Dissemination System (GDDS).

The GDDS applies to all IMF members while the SDDS applies to those member countries having or seeking access to international markets.

To date, there have been 71 subscriptions to the SDDS. Hung Tran, executive managing director of the Institute of International Finance, said the switch will enhance the availability of timely and comprehensive economic and financial data, thus contributing to sound macroeconomic policy and better access to international capital markets.

He also believed that China’s decision to release data about oil regularly would help markets process supply and demand data efficiently, avoiding surprises which can lead to market volatility.

ndia’s JSW Energy Ltd said yesterday it had agreed to buy two hydropower projects from Jaiprakash Power Ventures Ltd for 97 billion Indian rupees (US$1.57 billion) including debt.

The two projects -- both in the north Indian Himalayan state of Himachal Pradesh -- have a combined capacity of 1,391 megawatts, JSW said in a statement.

Jaiprakash has been in talks with JSW, controlled by billionaire Sajjan Jindal, since September, part of its efforts to sell assets and pay down its debts.

The talks with JSW followed the collapse of two sets of negotiations -- first with a consortium led by the Abu Dhabi National Energy Co in July, and then with Reliance Power Ltd in September -- over the sale of Jaiprakash’s hydropower projects.

Jaiprakash, alongside its parent Jaiprakash Associates , is one of several Indian power and infrastructure companies weighed down by debts and weak profitability. Many of these firms have struggled to sell assets as quickly as hoped.

hinese President Xi Jinping and his French counterpart Francois Hollande agreed yesterday to continuously deepen their countries’ comprehensive strategic partnership.

Meeting with Hollande on the side-lines of the Group of Twenty (G20) Summit, Xi said that during his state visit to France in March, he and President Hollande jointly decided to bring the Sino-French comprehensive strategic partnership into a new era.

Over the past half year since then, a series of consensuses reached between the two sides have been implemented actively and effectively, and bilateral ties have been upgraded and accelerated in an all-round way, said Xi. The two sides have witnessed positive progress in their cooperation on nuclear energy, finance and trade as well as over 800 celebration events marking the 50th anniversary of the establishment of their diplomatic ties, said Xi. Both sides should maintain such positive momentum, make good use of the strategic, financial and people-to-people dialogue and cooperation mechanisms and endeavour to make greater progress in pragmatic cooperation and people-to-people exchanges, said Xi.

Xinhua

Reuters

Xinhua