Macau Business Daily, Dec 8, 2014

MOP 6.00 Closing editor: Sara Farr

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hey’ve had a very good year. Banks here have posted an operating profit of MOP9.5 billion for the first three quarters. That’s an almost 37 per cent y-o-y rise. Prolonged declining gaming revenues may have dragged the economy down but bank profits remain perky. Credit and deposits are growing at a brisk 30 per cent. In the last two years, the banking sector has outpaced the gaming industry and economy as a whole Page 3

Year III

Number 683 Monday December 8, 2014

Publisher: Paulo A. Azevedo

Banks on a roll

Two-step tango

MIA spreads its wings

It had been said before.

And was said again.

A prudent monetary authority and pro-active fiscal policy go hand in hand. Two things the Communist Party’s elite decision-making body will pursue in 2015.

The November figures are expected to show that export growth, investment and factory output have lost further momentum

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It’s certainly taking off. Macau International Airport handled just over 5 million visitors last year. The airport authority is now planning to expand capacity. To handle 7.5 million passengers per annum. A new business jet hangar, improved apron, and land reclamation are slated for next year. Plus extra office space and facilities. MIA was opened 19 years ago; it is likely to post record passenger through-flow this year

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Chui: Gov’t prepared for gaming dip Page 5

Page 2 Brought to you by

HSI - Movers December 5

Name

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Interview

Urban plan lacking www.macaubusinessdaily.com

Macau film industry awakening

Macau appears to have it all. But a long-term urban plan is missing. So says André Lui Chak Keong, local architect. He tells Business Daily that the current form of urban planning tends to address urgent needs, not future requirements. And that responsible urban planning starts with local identity rather than tourist-friendly photo ops. He worries about the territory’s rush into PRD hegemony

%Day

China Construction B

3.01

Industrial & Commerc

2.62

China Merchants Hold

2.62

Sino Land Co Ltd

2.25

Sun Hung Kai Propert

2.04

Li & Fung Ltd

-1.54

CNOOC Ltd

-1.82

Kunlun Energy Co Ltd

-2.11

China Unicom Hong Ko

-3.13

Cathay Pacific Airwa

-3.28

Source: Bloomberg

I SSN 2226-8294

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Pages 6 & 7

Prada’s Q3 profits down amid luxury goods gloom Page 5

2014-12-8

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2014-12-10

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December 8, 2014

Macau Ip Peng Kun: contributions to social security fund should be increased President of the Social Security Fund Ip Peng Kun said that the decelerating growth of gaming revenue should be a warning to society as the proportion the government takes from the gaming taxes that goes towards the social security fund is quite large, according to local media TDM radio. Meanwhile, Mr. Ip perceives that it is time for residents to account for their own responsibilities, such as increasing their contributions to the fund as the professional taxes and current contribution rate of the city are at a rather low level compared to other cities.

MIA to expand capacity to 7.5mln passengers Between January and November, the number of passengers using Macau International Airport increased 9.4 per cent year-on-year to roughly 5 million. As MIA is operating closer to its full capacity, it will expand capacaity next year to accommodate 7.5 million passengers

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João Santos Filipe

but the doctors’ employees were, as well, because they would also provide such kind of medical examinations.

In total, the two doctors received MOP1.4 million. However, the local authorities were subsequently only able to trace MOP45,000. The case was transferred to the Public Prosecutor’s Office.

Crimes of corruption in the private sector and fraud involving a great amount of money are punishable by prison sentences of between three and 10 years.

ncumbent Secretary for Economy and Finance Francis Tam, who is leaving office soon, said he has confidence in the ability of his successor, Lionel Leong Vai Tac, whilst speaking on the sidelines of a general meeting of the Legislative Assembly.

“He is a friend of mine whom I have known for a long time. Before the handover, we worked together in some associations. After the handover, he had been a member of the Executive Council so that we had also been cooperating with each other for a long time on government work. I’m very confident in Mr. Leong’s ability, especially his understanding of society and the economy,” Mr. Tam said on Friday.

In addition, as a Secretary for 15 years since the establishment of the SAR in 1999 Mr. Tam said he believes that the five new Secretaries will bring new ways of thinking to society as they are younger.

However, asked by reporters what tips he can give to his successor given the slowdown in gaming revenues, Mr. Tam declined to comment, saying only that this would relate to the future policy and works of the next government.

On the other hand, Mr. Tam said he does not have any working plans yet as he has a two-year ‘sterilisation’ period awaiting him after leaving office. Nevertheless, he will remain a member of the Chinese People’s Political Consultative Conference.

Meanwhile, president of the AL, Ho Iat Sent, perceives that the change of cabinet would not affect administration and legislation as the new cabinet has mostly been promoted from within government hence they are familiar with the operation of the AL as well as the Executive Council.

The city’s Prosecutor-General, Ho Chio Meng, once tipped as a possible candidate for Chief Executive when Fernand Chui Sai On won his first election in 2009, told media on Saturday that he would continue to serve the Public Prosecutor’s Office after stepping down from his present position – although he was still waiting to be assigned a new post at the office.

Mr. Ho, also a former coordinator of the High Commission Against Corruption and Administrative Illegality before the handover, has been nominated thrice as ProsecutorGeneral by Macau’s former Chief Executive Edmund Ho Hau Wah and current Chief Executive Mr. Chui throughout the 15 years since the handover in 1999.

Mr. Ho is soon to be replaced by judge Mr. Ip Son Sang, whom Mr. Ho remarked of as a capable judicial officer who could handle the Prosecutor-General’s position.

Lusa

K.L. & S.L.

jsfilipe@macaubusinessdaily.com

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acau International Airport (MIA) is focused on increasing its capacity to 7.5 million passengers per year with the extension of the Passenger Terminal Building (PTB) north side.

This improvement was decided upon based on the increasing number of travellers using Macau’s sole airport.

According to Aviation Business, the future project includes the creation of a new business jet hangar and the improvement of the apron.

“After the extension of the PTB North side, we expect to accommodate 1.5 million more passengers, adding up to a total of 7.5 million passengers that Macau International’s PTB can accommodate”, a spokesperson from the airport’s Infrastructure Development Department is quoted as saying. “Moreover, according to the MIA Master Plan by the Civil Aviation Authority of Macao, it is also planning land reclamation for further MIA development”, the spokesperson added.

At the moment, the business jet hangar is in its construction phase, and it is expected to come into service next year. Meanwhile, the north

side extension of the PTB is going through the tendering procedure.

The construction should be ready by 2015.

“For wholeness of the facilities appearance, the design of the expansion must match existing facilities, so the outlook of new and existing facilities is consistent”, the spokesperson explained to Aviation Business about the changes to be introduced.

This expansion will also improve the quality of the services in the Airport in areas such as retail and food & beverage. The construction works will result, as well, in extra office space for

the Airport’s operating entities.

Opened 19 years ago, the Macau International Airport has the capacity to handle 6 million passengers annually.

Traffic has been increasing steadily over the past years, thus justifying the need to improve current facilities in order to meet growing demand.

The number of passengers using Macau International Airport surpassed 5 million at the beginning of the year and as at November, posting an increase of 9.4 per cent in comparison to 2013, roughly 5.1 million people used the Airport.

In fact, MIA announced last week that the movement recorded between January and November is very close to matching the total number of passengers using the Airport for the whole of 2013.

However, changes at Macau Airport will not be solely limited to increase in capacity. MIA is also planning to introduce automatic check-in facilities, the installation of WIFI in the terminal building and an advanced CCTV system. MIA also plans to renew its website and launch a mobile application for passengers.

Doctors paid MOP1.4mln to recommend unnecessary exams The Commission Against Corruption has revealed that two doctors in Macau have been recommending unnecessary medical examinations to their patients at private laboratories in exchange for commissions

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he Commission Against Corruption (CCAC) has investigated a case of corruption and fraud involving two doctors who received MOP1.4 million in order to recommend their patients go through unnecessary medical examinations in private laboratories.

The two doctors, who worked for private institutions, approached the laboratories in 2012 on the pretext that the companies they represented wanted to hire the services provided by these laboratories.

Afterwards it was agreed, without

Francis Tam expresses confidence in Lionel Leong’s ability

the knowledge of the company for whom the doctors worked, that in exchange for recommending patients undergo unnecessary medical examinations and follow-up they would be paid a monthly commission.

According to information from the CCAC, the doctors also managed to convince, in exchange for the payment of undisclosed amounts, other medical staff to recommend such exams in private laboratories.

The CCAC concluded that not only the patients were damaged by the case, as they had paid for unnecessary exams,

Business Daily | 3

December 8, 2014

Macau Macau, US to sign agreement facilitating anti-tax evasion compliance The Monetary Authority has announced that Macau is to sign ‘in the near future’ an intergovernmental agreement with the U.S. that would facilitate compliance with the country’s anti-tax evasion regime - the US Foreign Account Tax Compliance Act (FATCA) - by financial institutions here. Under the agreement, financial institutions in Macau already conduct registration with the U.S. Internal Revenue Service (IRS) and have a separate individual agreement with the service. With the consent of their U.S. taxpayer accountholders, financial institutions here now would have to report their account information to the IRS on an annual basis.

2013 budget report passed by AL 2015 is just round the corner. Legislators approved the 2013 budget performance during their plenary session on Friday although the execution rate of the budget was low Kam Leong

kamleong@macaubusinessdaily.com

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he Legislative Assembly (AL) passed the final reading of the budget performance of 2013, of which the execution rate for the public investment plan (PIDDA) is at a 5-year low of 39.6 per cent, following delays and over-budgeted infrastructure. The president of the second standing committee of AL, legislator Chan Chak Mo, said Friday that the financial statement being able to remain good in 2013 – with a fiscal surplus reaching 124.6 billion patacas (US$15.6 billion) – was only due to the fact that public revenue was higher than budgeted.

“We must stress that the great [year-on-year] increase in the fiscal surplus of 2013 [up by MOP33.6 billion] was because the government had gained some MOP40.6 billion more than the budgeted revenues while actual expenditure decreased by some MOP34 billion than the budget,” Mr. Chan said when presenting the committee’s report on the performance of the 2013 budget.

Although the fiscal surplus of 2013 is equal to 31.1 per cent of local Gross Domestic Product (GDP) for

that year, which is considered good, the execution rate of the operation of the government was only 65.7 per cent, while that of PIDDA was even less at 40 per cent.

Mr. Chan said that the low execution rate of PIDDA, according to the explanation of the government, was because the construction of infrastructure was extremely slow and ‘seriously over budget’.

Low execution rates were found on the construction of the new prison, the new wholesale market, the managing zone of Macau Border, reclamation of Zone A of the new urban area as well as the mass transit system, Mr. Chan said.

As such, the committee suggested the government establish an effective scheme when selecting enterprises in charge of related infrastructure by evaluating their skills and experience to ensure the quality, construction period and cost of governmentinvested projects.

Meanwhile, another member of the committee, legislator António Ng Kuok Cheong, urged the government to also regulate infrastructure, with the establishment of new government

department or their expansion to be included in the initial budgets when amending the budget framework law.

Secretary for Economy and Finance Francis Tam Pak Yuen, whose term in office ends on December 19, told legislators that the next administration must consider legislators’ suggestions.

Mr. Tam’s post will be taken up by businessman and Executive Council member Lionel Leong Vai Tac. In 2013, the general integrated budget of public revenue totalled more than MOP175.9 billion, up 21.3 per cent year-on-year, while the general integrated budget of public expenditure was around MOP51.4 billion, an increase of 4.9 per cent year-on-year.

On the other hand, Mr. Ng’s peer, legislator Au Kam San, slammed the over-budget problem in infrastructure during his oral interpellation before the agenda of the day, urging the government to initiate the amendments on the budget framework as soon as possible.

The legislator claims that society had a consensus on amending the budget framework law so that the expenditure of public expenditure

Bank profits up 36.8pct to October Growing non-resident deposits and more credit given to companies are the primary drivers behind the healthy momentum of a sector that’s turned in a stellar performance this year Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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anks in Macau continue to amass the profits of the booming economy as credit and deposits grow in excess of 30 per cent, despite the current slowdown of gaming revenues and the first recession in years likely to happen this quarter. Banks here are profiting 50 per cent more than last year and double that of 2012, in sharp contrast to what’s happening in the casinos.

According to data released by the Monetary Authority of Macau (AMCM) last Friday, the operating results of banks here totalled MOP9.5 billion from January to October, a 36.8 per cent rise compared to the

same period last year. The operating result is the profit made in the current year before taxes, interest and excluding one-off operations are included.

The banking sector in Macau has posted solid growth in recent years as the institutions finance new businesses and grant bigger loans for housing. The arrival of thousands of non-residents here has also helped fuel the deposit bonanza. In the last two years, the banking sector grew more than the gaming industry and the economy as a whole. In the first 10 months of 2013, the operating results of banks reached MOP6.9 billion, almost 50 per cent less than

this year. In 2012, banks here made a profit of MOP5 billion (January to October period) or half of what they’re making today.

Credit flow AMCM data also shows that in October deposits by residents and non-residents remained flat from September but registered a strong increase from a year ago. Deposits by non-residents amounted to MOP233.8 billion, a 0.4 per cent decrease from the previous month but a 38.5 per cent jump compared to the same month last year. Resident deposits reached MOP479.2 billion, growing 0.4 per

can be restricted while excessively large expenditure of the government and over-budget for infrastructure can be passed to AL for discussion and approval.

He perceives that the current problems of frequent over-budgeting in government projects, overlapping functions between government departments, and abuse of public expenditure are all due to the government excluding supervision by the AL. “The Legislative Assembly, as regulated by the Basic Law, can supervise the financial expenditure of the government. However, it was not able to effectively supervise the operation of public finances due to the defective system,” Mr. Au said.

Meanwhile, during Friday’s agenda, the AL also approved the first reading of the amendment to the current law on employees’ compensation insurance ordinance, suggesting employees should also be compensated when they encounter accidents during trips between their workplaces and homes two hours before or after work when a Typhoon Signal 8 is hoisted.

cent from September and 9.7 per cent from October 2013. Deposits made by the government also went up, rising 2.2 per cent sequentially and 16.9 per cent year-on-year, AMCM reported.

Public Sector deposits amounted to a total of MOP323 billion.

Loans granted by banks also posted a good performance two months ago. Domestic loans to the private sector grew 32.8 per cent to MOP331 billion year-on-year, while external loans accelerated 31.5 per cent to MOP348 billion.

Banks in Macau continue to show a low loan-to-deposit ratio compared to international standards. The ratio for the resident sector in October rose 0.1 percentage points from the previous month to 58.3 per cent. The ratio for both resident and non-resident sectors also increased by 0.3 percentage points to 84.7 per cent. According to major financial institutions an 80 to 90 per cent loan-to-deposit ratio is the benchmark. Above this ratio, banks are adopting a risky position by lending too much. If it’s lower, banks could make more money from its clients and increase lending.

In October, currency in circulation and demand deposits jumped 3 and 6.1 per cent, respectively, AMCM also reported.

4 | Business Daily

December 8, 2014

Macau

Macau film industry awakening

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Lack of a network for distribution, limited exposure and shortage of professionals and infrastructure is hindering the development of the local film industry. Local directors agree Macau’s movie industry is on the right track, with the government’s support, but say there’s still a long way to go

HOSPITALITY Guest signals A well established feature of Macau’s visitor profile is the fact that the majority of visitors do not stay overnight. The figures for same-day visitors have almost always been higher, with very few exceptions, than the figures for overnighters. That gap widened in October more than has been the case lately, with the share of overnighters in the total number of visitors dropping by about 5 percentage points relative to 2013. As October is a month that usually registers bigger numbers, due to the holiday period in China, that result is somewhat worrying, suggesting that a drop in the number of overnighters may follow the drop in casino revenues. Should that be the case, it will also impact travel agencies, which are responsible for a sizeable portion of the hotel guest total. Those relations have been relatively stable, as shown in the table below. The monthly figures shown have all been smoothed with a 3-month moving average. That makes analysis easier by removing most of the sharpest seasonal oscillations.

The number of overnighters has usually kept within the boundaries set by 70 per cent and 75 per cent of the total. The figures imply that a significant number of overnighters do not stay in hotels or guesthouses. Even allowing for those who stay all night in casinos before going directly back to their places of origin, the number suggests a significant use of informal facilities, be they saunas or illegal guesthouses. On the other hand, less than 40 percent of the guests book into their hotels through the services of travel agencies. Of these, almost half go to 5-star hotels; if we add 4-star hotels the ratio climbs to about 85 per cent.

J.I.D.

10350

daily number of overnighters who did not stay in hotels or guesthouses, October

Joanne Kuai

joannekuai@macaubusinessdaily.com

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hree years of work, more than MOP400,000, and 93 hours of raw footage turned into a 90 minutes film – “it was a big effort that was made with a lot of passion,” said local Portuguese director Pedro Cardeira of Inner Harbour Films on the sidelines of the national premier of his first film documentary ‘Mio Pang Fei’ at UA Galaxy Cinemas.

The documentary features the life and work of Macau-based painter Mio Pang Fei, who was born in Shanghai in the 1930s and developed an interest in contemporary Western art in his early career. He finally achieved widespread recognition after moving to Macau and developing his unique techniques called neo-Orientalism.

Having been in the movie industry for many years but directing for the first time, Pedro Cardeira shared some of the hardships the team underwent with Business Daily. He said that so far the film industry here is supported by people with a love for the art, and that it’s far from mature.

“There is this serious lack of professionals and infrastructure,” said Cardeira. “The government subsidised MOP350,000 and I had to come up with the rest of the money myself. But once a film is supported by the government, it’s much easier to get recognition elsewhere compared to other independent films. The government’s financial support was mainly for production. We still need a network for distribution,” he added.

The director said even making a profit from a documentary is difficult but he believes it’s not impossible. By screening in theatres, making DVDs, and broadcasting on television, a film can reach out to wider audiences and Macau can become more visible as well which eventually contributes to a healthy chain of an industry.

“A continuous production is not easy to achieve. Portugal spent 10 to 15 years getting back on track after the revolution. I believe Macau still has a long way to go, as well. It takes time,” said Mr. Cardeira.

MOP1.5mln to start off This year, four local directors were granted a subsidy by the Cultural Affairs Bureau to make fiction films.

Seventy per cent of the film’s budget or a maximum of MOP1.5million was available to the directors. These

directors will have one year to finish shooting – by August 2015 - while post-production has to be finished within next year as well.

One of the directors that was granted a subsidy, Chan Ka Keong, told Business Daily that the financial support from the government was of great help in kicking off his project but in order to fundamentally support the local film industry better distribution channels have to be built.

Chan Ka Keong said he has perfect confidence in local creative cultural production but the main problem lies in these productions not getting enough exposure and hence unable to reach out to a wider audience in order to boost the market.

However, he agrees the local film industry is on the right track with the strong support of the government.

Examples cited by him were that with the government’s recognition of his film it would be easier for him to reach out to other investors to finance the rest of the budget; the Cultural Affairs Bureau has organised local filmmakers to join some fairs or movie festivals both inside and outside Macau where they can find investors, producers and distributors.

“Macau nowadays resembles Hong Kong in the ‘70s,” said Chan. “The

then-Governor of Hong Kong Murray MacLehose, paid a great deal of attention to culture. And the city just went though some political turmoil.

Everything was bubbling. Then came the golden age of Hong Kong’s pop culture in the ‘80s, including movies, music, and many other areas.”

Mr. Chan says one of the most important things about developing Macau’s cultural and creative industry is cultural identification. He pointed out that Macau’s culture is rather unique, and only with Macau people recognising it and having confidence can it lead to a way of finding one’s own style and path.

“Macau may not be able to and shouldn’t copy the style of Hong Kong or Taiwan. It has to develop its own path,” said Mr. Chan. “Many human interest stories are universal. But only by developing the original taste of it and coming up with a chain of production can the local film industry become more visible and successful.”

Currently, Mr Chan is still trying to find the right cast for his upcoming film – ‘Passing Rain’ - a story enveloping several incidents that occurred in Macau. Each of the six main characters has lost something and eventually finds it in a certain way.

Business Daily | 5

December 8, 2014

Macau

China’s shadow banking Prada’s Q3 profits main driver of Macau’s down amid luxury gaming slowdown, goods gloom says Macquarie Macquarie has revised down its estimates for all Macau gaming operators adding that growing visitation to the new Cotai openings cannot translate into similar revenue growth Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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acquarie has advised its clients to sell all Macau gaming operators shares except one – Melco Crown Entertainment.

The Australian bank last week warned that investors are too bullish on next year’s and 2016 expectations, adding that casino profits here will suffer more with rising staff costs, especially with the new openings in Cotai.

In a note to clients, Macquarie painted a grim scenario for the gaming industry in Macau. It also decided to revise down its profit estimations for the upcoming two years by more than 20 per cent for all the gaming operators the bank follows.

Macquarie believes the main driver of the gaming revenue slowdown here is attributable to the tightening of shadow banking lending in China. These shadow institutions have cut or reduced credit lines to small and medium enterprises (SME’s) on the Mainland, the owners or managers of whom form the majority of VIP and mass premium gamblers in Macau. Macquarie now estimates revenues will decline 2 per cent in 2015 and recover to an increase of 10 per cent in 2016.

Macquarie follows a different path to justify the gaming crisis in Macau than

most other analysts. It gives much more importance to the slowdown of gamblers’ companies’ activities than the anti-corruption campaign launched by Beijing, which most investors believe is diverting players from Macau.

‘Macau experienced two slowdowns in the recent past (2009 and mid-2012), both of which were followed by strong recoveries ignited by unprecedented credit growth in shadow banking’, says the Australian bank.

It also adds that ‘V-shaped recovery following the 2009 and 2012 slowdowns is unlikely to repeat this time as Beijing is firm on curbing shadow banking. The current administration is careful not to repeat past policy mistakes and limit systemic risks on what is already a debtburdened economy’.

Macquarie tells its clients, however, that market consensus on Macau’s performance is too optimistic and not properly pricing the impact of staff costs. ‘Consensus maybe overlooking the negative operating leverage from structural labour cost inflation, especially for new openings in the next three years’.

With 10 mega-projects in the pipeline until 2017, the Macau gaming industry is preparing to double its size

and become a US$100 billion market by 2020. Macquarie expects the new opening in Cotai could lift the growth rate of overnight visitation to 13 per cent annually.

But the bank also says that there are no guarantees that this increasing visitation will translate into the same growth in gaming revenues.

With this outlook, Macquarie has decided to advise its clients to sell all gaming operators shares in their portfolios, except for that of Melco Crown Entertainment. The Australian institution cut Sands China’s share price by 48 per cent and reduced its estimation for profits in 2015 and 2016 by 28 and 35 per cent, respectively.

Galaxy profit for next year was also reduced by 22 per cent (and 32 per cent in 2016) with share price decreasing 49 per cent.

Wynn Macau will also suffer a correction of 25 per cent in its expected profit for 2015 but Macquarie increased by 22 per cent 2016’s net income to accommodate the Cotai ramp up. Despite being the only stock Macquarie decided to mark as ‘Buy’ for its clients the gaming operator also saw its forecast slashed: profits are expected to decrease by 31 and 25 per cent against current estimations, with target price cut by 42 pe cent.

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talian fashion house Prada SpA posted a decline in both sales and profit for the latest quarter ended October 31 due to a slowing demand for luxury goods, in particular in Asia where the group said the pinch was strongly felt in Hong Kong and Macau.

For the three months ended October 31, Prada saw net sales decline 5.6 per cent from 839.6 million euros (MOP82.4 billion) in the same period last year to 792.3 million euros, the fashion house told the Hong Kong Stock Exchange after trading hours on Friday.

Prada’s net sales in the Asia Pacific market, which occupies about 36 per cent of total net sale value, also contracted 6.8 per cent yearon-year to 283.6 million euros for this latest quarter when the group’s sales in other markets, except for Japan and the Middle East,

all posted a decline.

The fashion house informed the Hong Kong Stock Exchange that its profit for the third quarter of the year was 74.5 million euros, almost 44 per cent less than the 132.6 million euros in the same period last year.

The group markets Prada, Miu Miu, Church’s and Car Shoe. For third quarter results, Prada, which generated most of the group’s sales revenue, also saw a year-on-year slip of 7.5 per cent.

In the filing, Prada noted that for the nine months ended October 31, retail net sales achieved in Greater China was down 4.1 per cent to 566.2 million euros.

The fashion house noted that its retail channel for the nine months also contracted by 4.3 per cent as the result of a ‘general slowdown in demand [which was] particularly strong in Hong Kong and Macau’.

S.L.

Chui Sai On:

Gov’t prepared for gaming dip

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hief Executive Chui Sai On said he anticipated that gross gaming revenue would decline to MOP27.5 billion per month in 2015 and that the SAR Government is prepared for the fall.

The Chief Executive was speaking to reporters yesterday before departing for Beijing for an opening ceremony of an exhibition introducing the journey of the SAR’s development at the

Beijing Exhibition Hall today.

Mr. Chui said that throughout the last 15 years the SAR’s favourable policies had enabled the gaming industry to flourish.

The government has also made an effort to develop the overall economy and improve people’s livelihood, he said, but one cannot deny the contribution of the gaming industry.

Regarding this transition phase that the gaming

industry in Macau has entered, Chui said that the government had foreseen it and made relevant contingent policies as well as financial arrangements beforehand. The government has enough fiscal reserves, he said.

Chui Sai On pledged that the local government would keep an eye on the situation and propose a long-term mechanism in response.

J.K.

6 | Business Daily

December 8, 2014

Macau

Architect: Macau lacks long-term urban planning With changes occurring in the territory at such a rapid pace there is a need for some kind of long-term strategic urban planning, if not a master plan.

In an interview with Business Daily, architect André Lui Chak Keong says that urban planning here only seems to answer the urgent needs of the population and may not address future needs.

Also at risk is the territory’s identity, which faces being lost with the current type of planning – or lack thereof – as Macau moves towards further integration in the Pearl River Delta region.

Luciana Leitão leitao.luciana@macaubusiness.com Photos by Ruka Borges

How do you perceive the changes occurring over the years in Macau in terms of urban planning?

There are many new planning [projects] occurring because we have the land reclamation plans, and Cotai has been developed and there are new plans for it.

The general direction of Macau’s future development depends on the Pearl River Delta. You can see Macau is trying to integrate with Zhuhai and the Hengqin area — this is the main direction for the development, also indicated by the Central Government.

What are the main risks facing Macau regarding future urban development?

Macau has an identity — for example, Macau has the World Heritage area, the old city district and its cultural identity. For the new development, which is moving towards integration with the [Pearl River Delta] region, the planning has to try to maintain the identity of Macau. If not, we’ll see it’ll reduce the importance of Macau in the Pearl River Delta.

Thinking of future urban development, do you believe it is urgent to have a master plan?

Yes. Nowadays, we find that many problems are related — for example, traffic problems are also related to urban planning. For the old district, we have limits but for the new reclamation area we have to plan, we have to reserve some areas for pedestrians or for bicycles. We cannot solve the traffic problem just looking at this problem — we have to think of the whole integration. Also, the tourism problem — we have many tourists now, from Mainland China, during the weekends or holidays, the city centre is full of tourists and you can see that tourists are not going to other areas, except to the casinos or resorts. We have to analyse the behaviour - what attracts major tourists from Mainland China - and solve this

problem.

Macau has two different cultures — you can see it has a Chinese culture and we can see Macau has a European culture; the different phases of the territory can attract different tourists.

The new projects There are quite a few new projects in the pipeline, one of which is the five new reclamation zones. What are your expectations of these?

Since the last century Macau has had problems with land resources — we don’t have much land and nowadays we also have the new reclamation lands. We have to preserve the old heritage district and with the protection guidelines we can’t build many things. In fact, the way for the development of the historical district is more in terms of human scale, for the pedestrian or something like that.

So, for the new reclamation land, we can build the Macau of the 21st Century, but I’m afraid.

Sometimes, where land is concerned, you have the planning but it already has owners. If these five zones are really empty, we can really plan the future city.

This month we’ll have the border [with Mainland China] open 24 hours and this will change the

Macau development is more integrated into the Pearl River Delta region, so the preservation of cultural identity and city identity is important.

In our society, the heritage protection is more related to tourism and tourism is just one purpose of heritage protection. The main function should be to protect out identity, the identity of the city.

city a little bit. Since its historical origins, the border has been very restrictive for this city but from this month on the border will be open and this will be different — not only for city planning but for the life and mentality of the people. Now, we no longer live in a limited city.

Going back to land reclamation, you said there are a few risks involved.

What are they?

For example, some people have said that the landfill near Kun Iam statue, which is almost finished, is already destined for a touristic building, even though we don’t even have the whole plan. If this happens for the five zones how can we design or plan it?

Last year, the land, the urban planning and the heritage protection bills were passed. Have these had any impact?

We now have the Urban Planning Committee — and something similar for heritage — but I know from the Chinese newspapers that in fact the important decisions always depend on the government.

They [laws] need time but the land policy is now a bit more transparent because we can see and we can have more information aout these types of meetings.

Heritage and tourism You’ve said on previous occasions that one of the problems in Macau

is that cultural heritage protection is too related to tourism. Why is this?

In our society, heritage protection is more related to tourism and tourism is just one purpose of heritage protection. The main function should be to protect our identity, the identity of the city. Nowadays, in the era of globalisation, Macau development is more integrated into the Pearl River Delta region, so the preservation of the cultural identity and city identity is important, not just for tourists to go there and take photos. The city environment will help to build the culture — the environment will influence the culture, so the culture may be more concentrated not just for the tourists but also for cultural affairs.

Recently, it was reported that there were over 170 breaches of the Cultural Heritage Protection Law. Is there something missing in this bill?

This law is suitable because it amended some articles from the previous one, concerning World Heritage and Intangible Heritage.

It was an improvement. The old law was approved 30 years ago when there was no World Heritage, while nowadays we have the [UNESCO-recognised] World Heritage and we are also concerned with Intangible Heritage. It could be better if it included certain technical specifications. For the heritage or heritage buildings, if

Business Daily | 7

December 8, 2014

Macau

They [laws] need time but the land policy is now a bit more transparent

you have an architectural degree, you can do the project. But I learned in Paris that with regard to heritage buildings or the heritage area we need an expert’s certificate, not just from people with a Bachelor’s degree in architecture, because this is a very specialised area, even the design and the protection. Before this bill, even engineers could do the projects and now it is required that an architect sign the project. Still, for the future, it shouldn’t be a general architect — you should need some special qualification for this kind of design.

The Plan for the Preservation and Management of the Historic Centre of Macau is currently undergoing public consultation. What are your

suggestions for the plan?

In what concerns management, I told them that management is not only of the building; sometimes you also have to protect the environment of the historical centre. The environment is also important. For example, here we talk about an advertisement but if some area or space is very commercial it will also change the environment of the historical space, so it depends on the management. In terms of protection, it also needs to be coordinated by different government departments. For example, in case of fire you have to follow the regulations but these regulations may be designed for modern buildings, while for historical buildings we have some different regulations. In Europe, they treat historical buildings differently.

Speaking of projects like the Light Railway Transit and the bridge connecting Macau, Hong Kong and Zhuhai, is it possible to do these without a master plan?

Nowadays, we’re already doing these without a master plan.

In Macau, the problem is they build everything without a very long-term view of planning and some problems may appear only 10 years later because in fact the bridge and also now the opening of the border will make Macau more integrated within this region.

Integration in this region can bring

more people and if I don’t plan, the train may have two or three cars, I don’t know if it’s good enough for future use.

So, a master plan is highly necessary?

Yes, a master plan or some other kind of strategic plan.

Corporate Marathon success The 2014 Macau Galaxy Entertainment International Marathon took place yesterday, attracting some 6,000 runners from local and overseas regions. Kenya’s Julius Kiplimo Maisei was the first to cross the finishing line in 2:14:45, scooping the men’s title for the 42-kilometre run. Flomena Chepchirchir Chumba, also from Kenya, won the women’s race, clocking 2:33:24.

This year marks the 11th consecutive year that the Galaxy Entertainment Group have been title sponsor of this international event, and the 10th year in a row to garner the Marathon’s Group Trophy, ‘demonstrating the company’s commitment to facilitating local sporting events and its team members’ passion for sports,’ Galaxy said in a statement.

8 | Business Daily

December 8, 2014

Greater China Dalian Wanda’s IPO firmly backed Kuwait Investment Authority (KIA) and Och-Ziff Capital Management Group Ltd are among the group of 11 investors that have committed about US$2 billion towards Dalian Wanda Commercial Properties Co Ltd’s Hong Kong initial public offering (IPO), a person with direct knowledge of the matter told Reuters. Dalian Wadia, the world’s second-largest developer of shopping malls and office buildings, is set to launch the IPO today, seeking to raise between US$3.2 billion and US$3.86 billion.

2015 GDP target in focus as stimulus expectations heat up Growth in industrial production, which slowed in October, is likely to have taken another hit in November Kelly Olsen

State assets watchdog needs self reform The State-owned Assets Supervision and Administration Commission (SASAC) is confronted with a pressing need of reforming itself, a senior official told Xinhua on Saturday. Shao Ning, vice director of the Financial and Economic Committee of the National People’s Congress, China’s top legislature, said the SASAC controlled state-owned enterprises (SOE) too tight. “The commission took a grip on much more than it should do and some enterprises are complaining,” said Shao, who resigned as SASAC vice director in 2013. In his view, inflexible regulation of SOEs’ core business hindered their restructuring and.

92 million Chinese in poverty China has identified 128,000 impoverished villages and 92 million people living in poverty, said a senior poverty alleviation official on Saturday.

According to Liu Yongfu, head of the State Council leading group office of poverty alleviation and development, poverty has declined substantially in China, but the country still has 832 poor counties and districts. About 116,600 work teams with 466,000 cadres were dispatched to the villages for poverty alleviation, he told a seminar in central China’s Hubei Province. He pointed out that more work should be done to improve people’s lives in poor areas in all respects.

Steel firms must evolve or perish China’s steel firms must change if they want to avoid more hard times, said Zhu Jimin, head of the China Iron and Steel Association (CISA) on Saturday.

The warning comes at a hard time for steel makers. In the first nine months, a quarter of China’s steel makers operated at a loss, according to the latest CISA figures. Revenues of large and medium steel companies dipped to 2.7 trillion yuan (US$4439 billion) in the JanuarySeptember period. The steel sector is entering its “new normal”, just like the whole economy; slower but higherquality growth.

Experts expect Government and People’s Bank of China (pictured) to release further stimuli

C

hina is poised to cut its growth target for the first time in three years and ramp up stimulus as the economy comes under increasing downward pressure, analysts say ahead of a key policymakers’ conference expected this week.

President Xi Jinping and other top leaders are trying to put China’s increasingly affluent consumers at the centre of the world’s second-largest economy, rather than investment and exports, and are ready to tolerate slower expansion in GDP to achieve more sustainable growth.

But how much lower is the question, with China’s economy assailed on multiple fronts including a deflating property bubble, high debt levels, and the threat of deflation hovering in the background.

Economists will be looking for clues in next year’s gross domestic product (GDP) growth target, which is likely to be decided at the annual Central Economic Work Conference.

The gathering -- which is not announced in advance -- is expected this week, although its conclusions will probably not be formally unveiled until March.

Separately, main monthly economic statistics are due this week, with analysts expecting weakening industrial production growth and chronically low inflation.

The closely watched economic conference brings together key officials to decide policy for the coming year, with topics expected to include monetary policy, the consumer price index (CPI) target, and further economic reforms.

“We expect the government to lower its 2015 economic targets for GDP growth to 7.0 percent from 7.5 percent in 2014 and CPI inflation to 3.0 percent from 3.5 percent,” Nomura economists wrote.

“We believe the government will need to ease policy further -- even to meet a lower GDP growth target -due mainly to strong headwinds from the property market correction, severe overcapacity in upstream industries and high local government debt.”

China last lowered the target in 2012 to 7.5 percent from 8.0 percent and a drop to 7.0 percent would be the lowest since 2004.

Slowing growth this year prompted the central bank to carry out a surprise interest rate cut last month, reducing benchmark borrowing costs for the first time in more than two years.

The move wrong-footed many economists, who had expected policymakers to continue with a series of fine-tuning measures introduced from April onwards on concerns that the economy needed a boost.

The cut showed that top leaders “are certainly worried to a certain point” about the economy, Bank of America Merrill Lynch economist Lu Ting told AFP. They are likely to take a similar step during the first half of next year, he added, while also reducing the amount of cash banks must keep on their books -- the reserve requirement ratio -- to free up money for lending.

Shares soar The Chinese Communist Party’s powerful Politburo gathered Friday ahead of the economic conference, with the official Xinhua news agency citing a statement that in 2015, the government will “keep the economy operating within a reasonable range”.

It gave no details on precise measures that might be taken.

ANZ economist Liu Li-Gang said that authorities need to push broader reforms beyond tweaks to monetary policy.

“China should allow rapid development of its capital markets in the future to replace banks as the pillar of the financial system,” he said. “Or else it’s very likely that a credit contractionled economic slowdown will emerge.”

But the slowing growth outlook has not dented enthusiasm for Chinese shares, with the benchmark Shanghai Composite index leaping 38.8 percent so far this year. Much of the improvement has come in the wake of the interest rate cut and amid expectations for more stimulus.

Growth in industrial production,

which slowed in October, is likely to have taken another hit in November, economists say, as China ordered factories in and around Beijing to close to ensure blue skies for the APEC summit.

The figure is due on Friday, two days after the monthly inflation statistics. Consumer and producer price inflation have both been weak in China, and the latter has been negative for more than two years.

Capital Economics economists Julian Evans-Pritchard and Mark Williams see CPI falling to a near-fiveyear low of 1.5 percent in November, down from 1.6 percent in October, with further falls ahead.

Still, they described worries about the threat of deflation as “overdone”.

“With the prices of industrial inputs falling, but factory gate prices of finished consumer goods flat, many firms are actually better off,” they wrote.

“Meanwhile, since much of the downward pressure on inflation is the result of global price falls, consumption in real terms should receive a boost.”

AFP

China should allow rapid development of its capital markets in the future to replace banks as the pillar of the financial system.

Or else it’s very likely that a credit contraction-led economic slowdown will emerge Liu Li-Gang ANZ economist

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December 8, 2014

Greater China

Economic reforms in 2015 to deepen The reform agenda was made more difficult this year by a cooling economy China is experiencing its worst downturn in at least six years

Growth in exports, investment and factory output are all expected to have lost further momentum in November

C

hina will pursue prudent monetary policy and proactive fiscal policy next year, the ruling Communist Party’s elite decision-making body was quoted as saying in a reiteration of the government’s existing stance.

China will deepen reforms in the world’s second-largest economy in 2015 as it tries to boost domestic demand and further urbanise the country, Xinhua quoted the politburo as saying.

Crucially, the politburo said China must balance the competing needs of stabilising and reforming its economy, a nod to an on-going debate about how it can stimulate its sagging

economy without compromising its quest for change.

After 30 years of double-digit growth that lifted hundreds of millions from poverty but also polluted the air, land and water, China wants to remake its growth model into one that is greener and more sustainable.

Indeed, after saying for months that China does not need any big stimulus, the central bank unexpectedly cut interest rates for the first time in over two years on November 21 in a move that it described as being “neutral” for policy.

The 25-member politburo acknowledged the risks faced by the economy on Friday. It said the

economy was beset by difficulties and challenges that authorities needed to monitor, even though it noted that the Chinese growth engine remained in good shape.

Authorities will pay close attention to the labour market and work on reducing poverty, the politburo said, repeating the government’s stance that keeping unemployment low is a priority.

The world’s largest exporter of goods will also balance its import and export of products and investment capital, the Xinhua news agency quoted the politburo as saying.

Slugged by unsteady exports, a sagging housing market and falling domestic investment, the economy is

estimated by some analysts to likely grow by 7.4 percent this year.

That is its slackest rate in 24 years and just shy of the government’s 7.5 percent target.

With the economy so lukewarm - growth in exports, investment and factory output are all expected to have lost further momentum in November - there is speculation that Beijing may cut its annual growth target to 7.0 percent next year.

Some domestic media reported this week that China would kick off its annual economic work conference on December 9, when it will decide the growth blueprint for the economy in 2015.

Reuters

Regulator urges caution on stocks trading China’s world-beating equity rally is drawing out sceptics who say the gains don’t reflect the nation’s economic fundamentals

I

nvestors must consider risks while putting money into stocks, China’s securities regulator warned after a buying spree drove daily trading turnover to above 1 trillion yuan (US$163 billion) for the first time.

Illegal activities including stock manipulation have recently been “raising their head” and investors should invest rationally, Deng Ge, a spokesman for the China Securities Regulatory Commission, said in a statement on the agency’s website.

A stable market is important for the economy, Ge said.

“I hope investors, especially small and medium investors that are new to the market, invest rationally, respect the market, fear the market and bear in mind the risks present in the stock market,” Ge said.

The Shanghai index’s 21 percent rally over the past month, the most among 93 global indexes tracked by Bloomberg, is spurring investors to open share accounts at the fastest pace in three years and boosting turnover

to record highs. The value of shares that changed hands on the Shanghai and Shenzhen stock exchanges surged to a record 1.05 trillion yuan.

Resurgence, sceptics China’s stock resurgence has also reduced the odds of the central bank cutting lenders’ reserve-requirement ratios as such a move would be akin to “adding oil to the fire,” said Ting Lu, Bank of America Corp.’s head of Greater China economics in Hong Kong. The Shanghai index has rebounded 39 percent this year on speculation the central bank will loosen monetary policy to support economic growth. It dropped 35 percent from the start of 2010 through the end of last year.

China’s world-beating equity rally is drawing out sceptics who say the gains are amplified by borrowed money and don’t reflect the nation’s economic fundamentals.

The gains are “irrational,” said

Ken Peng, a strategist at Citigroup Inc.’s private bank in Hong Kong. The advance is another bubble driven by leveraged traders, said Andy Xie, a former World Bank economist who was one of the 50 most influential people in global finance, according to Bloomberg Markets magazine rankings last year.

“We note that recently there has been stock price manipulation and illegal activities surfacing,” the CSRC’s Ge said. “We will increase market supervision, resolutely crack down and earnestly safeguard the normal market order.”

Bloomberg News

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December 8, 2014

Greater China

Labour movement “concertmaster” tests Beijing’s boundaries China Labour Bulletin recorded 1,171 strikes in China from June 2011 through 2013, and 1,213 just this year John Ruwitch

Workers’ rights in China are still a key point for the country’s effective development

W

hen local officials warned striking shoe factory workers in China’s Pearl River Delta this summer that they were breaking the law, a slight, bespectacled figure barely 1.65 metres tall faced them down.

“Where is the law that says striking is illegal? If this activity is prohibited by the law, then you need to say so with crystal clarity. Which law is it?” labour lawyer Duan Yi said he told them, with his characteristic growl.

They had no answer.

While striking workers and those helping them have often been harassed, detained and sometimes imprisoned, Duan, 57, is unscathed after nearly 10 years spent testing the boundaries as China’s economy has been transformed.

“If you industrialise,” says Duan, “it inevitably touches upon industrial relations. And if you don’t resolve the problem of labour-capital relations, your industrialisation won’t go very far.”

China’s ruling Communist Party is deeply paranoid about social instability arising from labour disputes. Though the country boasts the biggest union in the world, the All-China Federation of Trade Unions (ACFTU), it is a state-run body that critics say regularly favours investors over workers.

Under President Xi Jinping, pressure has intensified on rights advocates, but that has not stemmed a wave of labour activism engendered by a slowing economy, shifting demographics and the rise of social media.

The rope that Beijing appears to give Duan is, say some, a recognition in official circles that labour disputes have not always been well handled.

Even President Xi, behind closed doors, criticised the ACFTU in late 2013 for not doing more for workers, according to academics and former union cadres.

“We hear internally that (Duan) has support,” said a scholar at a state-run training institute linked to the ACFTU, the only legal union.

“The fact that there is space for him to exist shows that there are certain forces that have given him that space.”

It helps that Duan, a dynamo in golf shirt and slacks, has a pedigree.

The son of a military officer and a government ministry worker, he spent his childhood among “princelings” in an army compound in Beijing.

The hint of swagger in his walk might reflect that past or his eminent present.

“He is the concertmaster of China’s labour movement,” said Beijing-based scholar Wang Jiangsong.

Striking advice Duan has helped workers at one of the world’s busiest ports negotiate for better pay and benefits, shown labourers at an Apple supplier in southern China how to establish a union branch, counselled Wal-Mart employees battling for pay-outs, and advised striking workers at IBM and Nokia how to protect their rights during ownership changes.

Workers flock to his modest 26thfloor offices in Shenzhen, southern China, to hear advice sometimes peppered with profanity.

That advice is that Chinese workers have the right to organise and, if necessary, strike. And more and more seem to be listening.

China Labour Bulletin, a Hong

Kong-based watchdog with whom Duan cooperates, recorded 1,171 strikes in China from June 2011 through 2013. This year it has tracked 1,213 so far. That includes China’s biggest strike in decades, involving 40,000 workers at a company that supplies Nike, Adidas and other global

KEY POINTS Labour lawyer Duan Yi advises workers on collective action Duan has spent 10 years acting on behalf of workers Brought up among China’s elite in Beijing army compound Duan’s connections may have spared him police attention Some say he has been “given space” to do his work

brands in April.

After setting up Laowei Law Firm in 2005, Duan and his colleagues have helped hundreds of individuals fight employers, but he soon realised that the problems they faced unpaid arrears, lack of job security, inadequate social insurance payments - could only be resolved by collective bargaining, backed by the threat of action such as strikes.

Duan believes he has on occasion sailed close to the wind.

Late last year, he said he received warnings that the police had developed “opinions” about him in connection with a case he was working on, and that he ran the risk of detention.

Through a friend in the capital - a member of the “SecondGeneration Reds”, the children of China’s Communist revolutionaries - he passed a letter to President Xi explaining his work. Thereafter, he said, the pressure eased.

He sometimes draws criticism for endangering his clients, too, such as security guards he was advising at a Guangzhou hospital, who were arrested after staging a rooftop protest.

Ma Jianjun, a lawyer who considers Duan a friend, says he has great respect for this “man of ideals” but doesn’t give him a free pass.

“To a very large extent he is half-lawyer, half-social activist.

From a lawyer’s perspective he is unprofessional,” he said.

“He’s a controversial but impressive figure,” said Mary Gallagher, associate professor of political science and China labour expert at the University of Michigan.

“I think people are really interested to see how far things go.”

Reuters

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December 8, 2014

Asia Australian banks need billions in extra capital A report argues that Australia’s financial system has characteristics that give rise to risks, including its dependence on importing capital Swati Pandey

Commonwealth Bank of Australia is one of the top four banks that hold 80 percent of the market

A

ustralia’s major banks should set aside more capital to ensure they can survive a repeat of the global financial crisis, a government-backed review recommended yesterday, a measure that may rein in the banks’ hefty dividend pay-outs.

Bank executives have been bracing for the Financial System Inquiry report for months, arguing that higher levels of capital are unnecessary and would come at a cost to the economy.

The 348-page report chaired

by David Murray rejected banks’ concerns and argued that Australia’s

financial system has characteristics that give rise to risks, including its dependence on importing capital.

While it did not specify the extent of the increase needed, the review said capital levels at Australian banks needed to rise to 12.2 percent to be in the top quartile of international banks, from current levels of 10-11.6 percent.

Australia’s “Big Four” lenders Commonwealth Bank of Australia, Westpac Banking Corp, Australia & New Zealand Banking Group and National Australia Bank - hold a combined market share of more than 80 percent, raising fears they are “too

big to fail”.

They survived the global financial crisis that began in 2008 relatively unscathed and have been generating record profits in recent years, largely on the back of massive mortgage books.

Murray said in his report that the major banks would be rendered insolvent in the absence of capital raising if they were hit by a shock similar to what overseas banks suffered during the global financial crisis.

In a note last month, credit rating agency Fitch Ratings estimated the Big Four could face a capital shortfall of up to A$53 billion ($44.1 billion) in the most aggressive scenario.

While the numbers are large, Fitch said the banks were “well positioned” to meet the additional buffers through internal capital generation measures.

Murray, a former head of CBA, also proposed lifting the so-called risk weights on mortgages for major banks, a move that could hit profitability or lead to higher home loan rates.

“These crises impose massive costs on economies and societies, and the circumstances that assisted us during the recent global financial crisis will not be present in future crises,” Murray told reporters at a news conference.

The first major review of the financial system since 1997 also recommended raising funding for regulators and reducing disclosure requirements for large listed

corporates issuing ‘simple bonds’ to boost the retail corporate debt market.

It found that the country’s A$1.8 trillion compulsory superannuation industry, or pension industry, was inefficient due to a lack of strong competition and was failing to deliver the expected benefits due to its high costs.

Recommendations will be considered by regulators, the central bank and the government, which will consult with industry and consumers until March 31.

Reuters

Overall, Murray’s recommendations around capital, while not entirely surprising, are a negative for the major banks. I would expect bank shares to underperform the market on Monday Omkar Joshi Watermark Funds Management investment analyst

Fixed subsidies may halve Indonesia’s fuel spending The new system could also add pressure to inflation due to fluctuating domestic fuel prices Adriana Nina Kusuma

I

ndonesia’s spending on fuel subsidies might only be half the current budget figure for 2015, the finance minister said, if Southeast Asia’s largest economy introduces a fixed subsidy mechanism next year.

In his first major economic policy decision, President Joko Widodo last month raised subsidised gasoline and diesel prices by more than 30 percent to help fund his reform agenda and tackle the country’s budget and current account deficits.

Indonesia currently sets domestic fuel prices below the market price, with the government subsidising the difference.

The change would mean Indonesia could avoid ballooning subsidy spending when oil prices increase.

“Next year we will make a fixed subsidy, which will reflect fluctuations in international prices,” Finance Minister Bambang Brodjonegoro told reporters on Friday.

In the budget for 2015 proposed by Susilo Bambang Yudhoyono, whose term as president ended in October, spending on fuel subsidies was seen at 276 trillion rupiah (US$22.4 billion).

In January, President Joko Widodo is expected to submit proposed 2015

US$11.38 billion forecast state spending reduction

budget revisions to parliament, which is dominated by opposition parties.

Obstacle in parliament?

The new system of fixed fuel subsidies could slash state spending on these by half to below 140 trillion rupiah (US$11.38 billion), Brodjonegoro said.

But a proposed subsidy cap of between 1,000 and 2,000 rupiah a

litre still needs to be approved by the parliament.

Brodjonegoro said 2014’s fuel subsidy bill is expected to fall below this year’s budget target of 246 trillion rupiah as global fuel prices have fallen, but was still expected to top 200 trillion rupiah.

The move to a fixed fuel subsidy could also help narrow Indonesia’s current account deficit to between 2 percent and 2.5 percent of gross domestic product

(GDP) in 2015, the minister said, from 2.5-3.0 percent previously.

Brodjonegoro estimated next year’s inflation rate could by 0.30.5 percentage points higher than the assumed 4.4 percent in the current 2015 state budget.

Due to the hike in fuel prices in mid-November, the annual inflation rate for last month shot up to 6.23 percent from 4.83 percent in October.

Reuters

12 | Business Daily

December 8, 2014

Asia Myanmar starts oil exploration A Singapore-based company will cooperate with Myanmar’s state enterprise and private company in oil and gas exploration in one more offshore block in the Southeast Asian country, local media reported yesterday. The undertaking at the Mottama offshore M-8 block is to be carried out under a production sharing contract signed between the Berlanga Myanmar Pte Ltd registered in Singapore, state-run Myanmar Oil and Gas Enterprise and A-1 Mining Co Ltd. The three companies will spend US$153 million on a one-year feasibility study and six-year operation, said the Global New Light of Myanmar.

Vietnam’s wages lag behind neighbours Despite the overall positive developments, wages in Vietnam still lag behind many neighbouring countries, said the International Labour Organization (ILO) in Vietnam’s capital Hanoi. Between 2011 and 2013, Vietnam recorded an overall increase of 13.67 percent in average real wages, which was driven partly by substantial increases in minimum wages, ILO said in a press release on the launching of the Global Wage Report 2014-2015 released in Hanoi. Among the countries in the Association of Southeast Asian Nations (ASEAN), average monthly wages in 2012 of Vietnam US$181 was placed only ahead of Laos (US$119), Cambodia (US$121) and Indonesia (US$174).

Indonesia launches sustainable financing roadmap Teaming up with the Financial Service Authority, Indonesian Environment and Forestry Ministry launched the Roadmap Sustainable Finance, aimed at encouraging financial service providers in providing services that address sustainable growth in the country. The roadmap details the efforts to attain targets of national financial condition in short term (2015- 2019) and long term (2015-2024) that address sustainability values. Among the efforts to address sustainable financing stipulated in the roadmap were plans to issue legal basis and guidance on the implementation of sustainable financing schemes that would be conducted from 2015 to 2016.

Malaysia’s exports decline in October Malaysia’s exports fell 3.1 percent to RM65.1 billion (about US$19.15 billion) in October from a year ago, Statistics Department said. On a year-on-year basis, exports declined RM2.1 billion (about US$630 million) from RM67.2 billion (about US$20.36 billion) a year ago as exports of petroleum products and electrical and electronics (E&E) products shrank, it said. In seasonally adjusted terms, exports rose 0.7 percent. The increase was due to the rise in exports to South Korea, New Zealand, European Union, Singapore and Thailand.

Pacific free trade deal for 1Q 2015 A meeting of the Trans-Pacific Partnership chief negotiators is due to take place in Washington next week

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deal on an ambitious 12-nation Asia-Pacific trade pact should be finalized in the first quarter of 2015, a senior Chilean official told Reuters.

The planned Trans-Pacific Partnership (TPP) has faced stumbling blocks, largely because of wrangling between the pact’s two biggest economies, the United States and Japan, over agricultural tariffs.

But there was a lot of pressure from the United States to close a deal, said Chile’s head of international economic relations, Andres Rebolledo, on the side-lines of an International Monetary Fund regional conference in Santiago.

“We are in the final stretch,” said Rebolledo, who has overall responsibility for the trade talks in Chile.

A meeting of TPP chief negotiators is due to take place in Washington next week.

U.S. Representative Sander Levin, the senior Democrat on the congressional committee with jurisdiction over trade, said there was still a long list of “major issues” outstanding in the TPP, which includes developing nations such as Vietnam and Malaysia as well as developed economies like Canada and Japan.

Workers’ rights, access to medicines in developing countries

and the phase-out period for U.S. tariffs on Japanese cars were among issues still to be resolved, he said, calling for Congress to have more input into the deal.

A spokesman for the U.S. trade representative said the administration had held more than 1,500 meetings with members of Congress on TPP, including sharing negotiating text, and would continue to consult closely.

TPP negotiations made significant progress at a meeting in Australia in October but there was still a gap between Japan and the United States over market access and other hurdles, trade representatives said at the time.

Reuters

Indian pollution to rise in pursuit of growth While India’s emissions are the third-highest in the world, 30 percent of its residents live in poverty, scraping by on 75 cents a day or less Archana Chaudhary

I

ndia said its pollution levels will need to increase in the years ahead to support its economic development and it won’t discuss limiting greenhouse-gas emissions at United Nations climate talks that began this week.

Environment Minister Prakash Javadekar also said the government is preparing to make a pledge on how India will develop cleaner forms of energy, though he stopped short of indicating when the country might take on the sorts of caps for emissions that the U.S., China and Europe are adopting.

“We have a need to grow, so our emissions will grow,” Javadekar said at a press conference in New Delhi. He said the onus on reducing emissions should be on richer industrial nations most responsible for global warming to allow poorer countries “space for more development.”

The comments indicate the difficulty in bringing all of the 190 nations gathered at the UN climate talks in Peru this week into a deal that will cut back on the pollution blamed for driving up the Earth’s temperature.

Javadekar spoke before departing for the UN talks in Lima, Peru, which run through next week. They’re aiming to put together the building blocks for a deal by the end of next year that would cut pollution in all nations from 2020.

India is under pressure to make its

environmental goals more clear after China and the U.S. jointly agreed November 12 to rein in fossil fuel emissions. It was the first time a big developing country said it would take on a mandatory limit on pollution.

Cutting emissions Under that deal, the U.S. pledged to cut greenhouse gas emissions by as much as 28 percent from 2005 levels by 2025. China will cap emissions by 2030 and turn to renewable sources for 20 percent of the country’s energy.

Javadekar said China’s target is less ambitious than it looks and still allows the biggest polluter much higher emissions per capita than India will have.

“The math about China that has been published speaks about 12 tons per capita,” he said. “Mine is 1.7 tons.

Now you do the math. All I will say is that the Chinese are low on ambition.”

Having India on-board a UN deal is crucial, since its emissions

are surpassed only by the U.S. and China, and its levels are expected to grow rapidly in the decades to come. Carbon dioxide emissions will jump 34 percent in India by 2020 and double by 2030 under its existing policies, according to the International Energy Agency.

The U.S. and European Union are reducing their pollution levels, and China has said it will peak by 2030.

Industrial nations India, whose pollution is less than a quarter of China’s level, maintains it’s the richer countries that must move first on the issue. He said the country will push for an extension of the Kyoto Protocol, which called on industrial nations to cut back fossilfuel pollution.

“Developed countries must take up their responsibilities which are due,” Javadekar said. “Those who were not part of the Kyoto protocol -- USA, Japan, Australia, Canada, New Zealand -- they must also take voluntary action. And must declare what will be their actions till 2020.”

At the same time, India is moving forward with tapping cleaner forms of energy, especially for its power industry.

It will add 100 gigawatts solar power capacity by 2017, an ambition on par with China’s own target.

Bloomberg News

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December 8, 2014

Asia

Fugitive Thai millionaire protests his innocence The energy tycoon added that he believed he was being targeted because he was perceived as being close to former premier Thaksin Shinawatra Jerome Taylor

General Prayuth Chan-ocha

A

fugitive Thai millionaire wanted on charges including royal defamation broke cover to protest his innocence yesterday in a graft probe that has seen relatives of the crown prince’s wife arrested.

Nopporn Suppipat denied police accusations that he helped orchestrate the kidnapping of a man who owed him money, and said he fled to Cambodia on November 30 after discovering he would be charged under Thailand’s draconian lese majeste law.

“I knew ‘112’ would mean I wouldn’t get bail... I couldn’t take that risk,” the 43-year-old told AFP in a phone interview from an undisclosed location early yesterday.

Under section 112 of Thailand’s criminal code, anyone convicted of insulting the king, queen, heir or regent faces up to 15 years in prison on each count.

The comments from the energy tycoon -- ranked by Forbes magazine in 2013 as Thailand’s 31st richest

man -- are the latest twist in a corruption scandal that has rocked the kingdom’s elite and led to the arrest of three relatives of Princess Srirasmi, the wife of Crown Prince Maha Vajiralongkorn.

The police corruption case exploded at the end of November when three senior officers -- including the head of the elite Central Investigation Bureau -- were arrested on a string of bribery charges in the junta-ruled kingdom.

More than 20 people have been arrested so far in the probe as the junta-backed police chief promotes an anti-corruption crusade.

Palace intrigue But the investigation has also seen the palace fall under a rare spotlight at a time of deep uncertainty.

On Friday, the ailing King Bhumibol Adulyadej cancelled plans to hold a public audience marking his 87th birthday, adding to anxiety about the kingdom’s future after the

army, headed by General Prayuth Chan-ocha, seized power from a civilian government in May. Vajiralongkorn, the king’s son and heir, meanwhile has demanded the ruling regime ban anyone from using the surname ‘Akkharapongpricha’.

Three people with the surname -- an honorific given to relatives of Princess Srirasmi following her marriage to the crown prince -- were arrested nearly two weeks ago on graft charges.

Police accuse Nopporn of hiring the Akkharapongprichas to kidnap his former business partner to force him to reduce a loan he owed. But Nopporn said he had never met or hired Princess Srirasmi’s relatives.

Instead he says he was engaged in a lengthy court dispute over money with the businessman, eventually enlisting the help of a senior army officer to help negotiate a final settlement. Nopporn said the officer hired the Akkharapongprichas without his knowledge.

The energy tycoon added that

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he believed he was being targeted because he was perceived as being close to former premier Thaksin Shinawatra, although he insisted he was not a supporter of the ousted leader, who lives abroad in self-exile.

May’s coup deposed Thaksin’s sister Yingluck as prime minister. It was the latest chapter in a long-running conflict that broadly pits a Bangkok-based middle class and royalist elite, backed by parts of the military and judiciary, against rural and working-class voters loyal to Thaksin.

“People said the police believed I was close to Thaksin, and with that I knew I had to run,” Nopporn said.

He said he had no intention of returning to Thailand any time soon because he believed he would be unable to get a fair hearing in the junta-led nation.

Junta spokesman Werachon Sukondhapatipak said he could not comment on Nopporn’s remarks as the case was still under investigation.

AFP

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December 8, 2014

International Gazprom receives gas prepayment Russian natural gas producer Gazprom said on Saturday it had received a prepayment of US$378.22 million from Ukraine for natural gas supplies, paving the way for the first shipments to Kiev since Moscow cut supplies in June.

Ukraine’s state energy firm, Naftogaz, said on Friday it had transferred the sum to Gazprom for December. A Gazprom spokesman confirmed the money had been received. In line with a deal signed

by Naftogaz and Gazprom in October, flows to Ukraine from Russia will resume within 48 hours from when the Russian firm receives the transfer.

Mexico holds rate while staring at inflation Mexico’s central bank held borrowing costs steady but said a slump in the peso could add to inflation pressures, and noted that growing social unrest in Latin America’s No. 2 economy may crimp growth. The central bank left its main interest rate at a record low of 3.00 percent, as expected by 19 of 20 analysts polled by Reuters last week.

Mexico’s peso slumped to a fresh 2-1/2 year low against the dollar on Friday. The Mexican currency has been hammered as global oil prices have dropped, driving prices for Mexico’s crude to a five-year low.

U.S. factories show lustre with bullish November hiring The factory sector is now an example of America’s economic upswing Jason Lange

W

hile the acceleration in U.S. hiring last month was surprisingly sharp and broad-based, a sector that has had a particularly rough 21st century manufacturing - offered one of the brightest signals.

U.S. factories added 28,000 jobs in November, the most in a year, according to government data released on Friday. Manufacturers also raised the average work week for their production workers to 42.2 hours, returning to levels reached earlier in 2014 that were the highest since the end of World War Two. “We are definitely in growth mode,” said Lee Eilers, the chief executive at Marion Mixers, an Iowa maker of giant mixing machines used in the production of everything from pancake mix to dishwasher soap.

The firm has added three welders this year, bringing its head count to 44, and Eilers plans to hire six more people in 2015, although he said

there are enough available workers in Marion, Iowa, that he doesn’t have to pay signing bonuses.

After haemorrhaging hundreds of thousands of jobs during the first decade of this century, the U.S. factory sector is now an example of America’s economic upswing even as a slowing global economy and a stronger dollar clouds the outlook for exporters.

Employers added 321,000 workers to their payrolls last month, with strong gains in most sectors, from construction and retail to finance.

In manufacturing, the rise in hours worked was particularly illustrative because it could signal further hiring ahead for a sector that has added about 700,000 jobs over the last five years but that remains 5 million jobs in the hole in the 21st century.

While part-time employment has climbed significantly since the 200709 recession, a brisker pace of business in November led businesses across the economy to give their workers more

hours as well. Among all private sector workers, the workweek in November was its longest since May 2008.

Still, factories are also good examples of the U.S. economy’s inability in recent years to generate a faster pace of wage gains. Manufacturing wages grew a tepid 1.5 percent in the 12 months through November.

While a top Federal Reserve official said this week that faster wage growth could be around the corner, Friday’s data suggested that manufacturers and other firms still had leverage in setting wages even as they expanded their payrolls. Across the private sector as a whole, average hourly earnings were up just 2.1 percent over the past year.

Grammer Inc., a subsidiary of Germany’s Grammer AG , opened a factory in Lee County, Mississippi, in September and plans to hire 650 workers to make car consoles and seats for heavy machinery. The plant currently employs 92 workers who were selected out of a torrent of applicants from the region, which suffered throughout the 1990s and early 2000s as the furniture manufacturing industry shrank.

When Grammer’s hiring began in the spring, the agency in charge of the process had to cap the number of applications at 5,000.

Reuters

S&P cuts Italy’s rating Standard & Poor’s cut Italy’s sovereign credit rating from BBB to BBB-, just one notch above junk, saying weak growth and poor competitiveness undermined the sustainability of its huge public debt. The downgrade is a blow for Prime Minister Matteo Renzi, who came to office in February pledging an ambitious reform agenda to lift Italy out of recession, but has seen the economy continue to shrink. S&P said the new BBB- rating carried a stable outlook. It forecast Italian economic growth would be just 0.2 percent in 2015 and would average 0.5 percent in 2014-2017.

German Chancellor Angela Merkel

Ethiopia completes Eurobond debut Ethiopia said it had completed raising US$1 billion with its debut Eurobond with a term of 10 years and coupon of 6.625 percent, adding that the offer had been oversubscribed. Ethiopia is the latest African sovereign to receive a strong response on its first foray into the international debt markets. Investors have been eyeing Africa’s sturdy growth rates and Ethiopia’s economy is now expanding by about 9 percent a year.

Deutsche Bank and JP Morgan were the lead managers. The ministry said a French firm had acted as financial adviser but did not name the company.

Argentina put hopes on bond swap Argentina’s offer to swap or pay early on a dollar-denominated bond due in 2015, if successful, will ease pressure on its foreign reserves and may embolden the government in its fight against U.S. hedge funds suing over unpaid debt.

Economy Minister Axel Kicillof said the government planned to issue new dollar-denominated Bonar24 notes worth up US$3 billion. It would be the first foreign currency debt sale by Argentina, Latin America’s No. 3 economy, since it defaulted in July.

Merkel says France and Italy must do more on reforms The Commission could fine France for falling short of its deficit-cutting obligations and put Italy under a disciplinary process because of its debt levels

G

erman Chancellor Angela Merkel said in a newspaper interview yesterday that both France and Italy needed to do more on the reform front to ensure that their 2015 budgets respected European Union fiscal rules.

Last month, the European Commission postponed until March a decision on whether the budgets of both countries conformed with EU rules, while making clear that France was at risk of “non-compliance”.

Unless further steps are taken by the new deadline, the Commission could fine France for falling short of its deficit-cutting obligations and put Italy under a disciplinary process

because of its debt levels.

Merkel, in an interview with German daily Die Welt, said giving France and Italy more time to finalise their reform plans was defensible.

But she then added: “The Commmission has made clear that what has been put on the table so far is insufficient. I would agree with this.”

Last year, the Commission won new powers to assess draft national budgets to ensure they are in line with EU agreements.

But insisting that countries introduce additional reforms remains politically sensitive.

French Finance Minister Michel

Sapin said last week during a visit to Berlin that France would do what was necessary to meet its EU obligations but that boosting growth had to be the top priority.

A day later, he announced that France was aiming to cut its deficit to 4.1 percent of gross domestic product (GDP) in 2015, compared to a previous goal of 4.3 percent, thanks to extra savings.

France initially pledged to bring its deficit down to the EU limit of 3 percent by 2013 but has now acknowledged that it won’t reach that threshold until 2017.

Reuters

Business Daily | 15

December 8, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE AGE

Making water conservation pay

Tax breaks for housing, shares and superannuation could all be scrapped, and GST could apply more broadly, if the Abbott government listens to the final recommendations of the financial systems inquiry. The report by former Commonwealth Bank chief executive David Murray suggests a raft of tax breaks distort borrowing including negative gearing, capital gains tax concessions and dividend imputation. Mr Murray takes particular aim at tax breaks for housing, saying negative gearing and capital gains tax exemptions on the family home “tends to encourage leveraged and speculative investment.”

Giulio Boccaletti

Global Managing Director for Water at The Nature Conservancy

THE TIMES OF INDIA The government is likely to unveil more measures to rationalize subsidies after the Expenditure Management Commission submits its recommendations, Finance Minister Arun Jaitley said on Saturday, and reiterated his call for easing interest rates. Jaitley also hoped that the government would be able to push the Insurance legislation and the Bill on Goods and Services Tax (GST) in the current session of Parliament. “I had a series of meeting with the Expenditure Management Commission.

They are effectively working on some very valuable suggestions with regard to rationalisation of subsidies...,” Jaitley told.

PHILSTAR HSBC said the Philippine banking system remains one of the strongest in the 10-member Asean with credit growth seen strengthening in the next few years. HSBC economist Frederic Neumann said Philippine banks possess excess liquidity with robust consumer demand growth while property prices continue to pick up steam. “The Philippines is in a bucket of its own,” Neumann said in a recent report. Liquid assets as a share of deposits have also increased, which implies that banks also have ample buffers – not to mention the robust external fundamentals on the sovereign side.

THE JAPAN NEWS About 100 companies have filed suits against Mitsubishi Heavy Industries Ltd. for damages totalling about ¥60 billion over the sinking of a Mitsubishi Heavy-built freighter last year, Jiji Press learned Friday. The plaintiffs include Mitsui O.S.K. Lines Ltd., which operated the cargo ship MOL Comfort, as well as Tokio Marine & Nichido Fire Insurance Co., according to sources. In the suits, filed with Tokyo District Court, the companies blame the accident on a design flaw in the freighter, the sources said.

C

all it a sign of the times.

Rarely a month passes in which a water crisis does not make headlines somewhere in the world. In early August, an algal bloom in Lake Erie, the result of agricultural runoff, contaminated drinking water in Toledo, Ohio.

In September, the reservoirs in China’s Henan province dried up, leaving crops to shrivel and forcing some residents to drink from puddles on the ground.

In late October, the city of Hyderabad, India, discovered that its water supply might be diverted next year for agricultural uses upstream, leaving some eight million people to wonder where they will find the 190 million gallons of water they need every day.

City officials usually respond to such supply crises by upgrading their water infrastructure, namely, drilling, damming, and laying pipes. Every day, the world’s largest 100 cities move 3.2 million cubic meters of water more than 5,700 kilometres to address local water shortages or problems with pollution. But this is an expensive solution, one that only the wealthiest cities can afford. It also puts city managers at odds with environmentalists, who campaign for restrictions on development to ease pressure on forests and watersheds.

Fortunately, it is not the only option.

Nature, it turns out, can play an important – and so far largely untapped – role in water delivery and treatment. Protecting water at its source can be cheaper and more efficient than treating it after it has already been polluted. In a new report, my colleagues at The Nature Conservancy, the C40 Climate Leadership Group, and the International Water Association show that investing in forest protection, reforestation, stream

bank restoration, improved agricultural practices, and forestfire management can reduce the amount of pollutants flowing into supplies of drinking water.

The report, “The Urban Water Blueprint,” analyses the state of water supplies in 534 cities and 2,000 watersheds to provide a comprehensive overview of the potential natural solutions that can be integrated with traditional infrastructure. The results are compelling. Water quality for more than 700 million people could be significantly improved by adopting conservation practices in watersheds. And at least one in four cities examined

The authors of “The Urban Water Blueprint” have calculated that more than US$18 billion could be productively directed toward conservation activities, saving cities money and creating a new market comparable in size to the market for the water sector’s existing technologies

would find such interventions financially viable, based solely on savings from avoided watertreatment costs.

In some places, such measures have already been introduced.

Farmers near Beijing, for example, have been paid to convert croplands from rice to corn. Rice paddies need to be constantly flooded, and, because they are often located on steep slopes, this leads to significant runoff of fertilizers and sediment. Shifting to corn not only reduces water consumption; it also cuts the amount of pollution that reaches city residents downstream. The program costs about US$1,330 per hectare of farmland to implement, but produces US$2,020 per hectare of benefits.

In Brazil, a water-conservation fund is working to restore the Cantareira watershed, the source of 50% of Sao Paulo’s water. The area has lost 70% of its original forest cover, and sediment from eroding hillsides has clogged the city’s reservoir, jeopardizing the water supply of Brazil’s largest city. Under the new program, farmers and ranchers are paid US$120 per hectare to reforest or terrace their fields. So far, about 3,500 hectares have been planted with trees or put under improved soil-management practices. Reforesting another 14,200 hectares could cut the concentration of sediment in the watershed by half.

The savings produced by these programs should be viewed in the context of the US$90 billion per year that cities spend to build treatment plants, pipes, and other components of water infrastructure. The authors of “The Urban Water Blueprint” have calculated that more than US$18 billion could be productively directed toward conservation activities, saving

cities money and creating a new market comparable in size to the market for the water sector’s existing technologies.

But if these solutions are to be adopted at the necessary scale, environmentalists and city officials alike will have to expand the scope of their traditional activities. Environmentalists will have to embrace the idea that conservation does not only mean protecting pristine landscapes. It also sometimes requires the improvement of lands under production.

Indeed, these are the areas where some of the most costeffective solutions are to be found. Water quality would be improved for more than 600 million people if the farms and ranches operating within their watersheds limited runoff and restored stream banks.

City officials, meanwhile, need to think beyond their municipalities’ boundaries. The 100 largest cities occupy much less than 1% of the planet’s land, but the watersheds on which they depend account for a full 12%. Because many cities share water resources, cross-jurisdictional financing mechanisms and a shared sense of commitment will be needed in order to protect and restore natural sources of clean water. These partnerships will require the cooperation of a broad variety of interest groups, all of which will have to be persuaded to support efforts to improve the water supply. Farmers and ranchers should be at the top of the engagement list.

Land use and water security are firmly linked. By embracing both natural and traditional water infrastructure, cities will not only secure their future water supply; they will also reshape our planet’s landscape for the better.

Project Syndicate

16 | Business Daily

December 8, 2014

Closing China’s Long March puts satellite in orbit

30,000 overseas Chinese language teachers by 2017

China yesterday put into orbit a satellite jointly developed with Brazil after the 200th launch of its Long March rocket family, state media reported. The Long March-4B rocket blasted off from the Taiyuan satellite launch centre in the northern province of Shanxi, Xinhua news agency said. It was the fifth environmental monitoring satellite to be launched since 1999 as part of the joint programme with Brazil. The latest one will watch for deforestation in the Amazon. Brazil’s National Space Agency said last week the two countries would share the US$30 million cost of sending the two-ton satellite.

Plans to train about 30,000 overseas Chinese teachers by the end of 2017 were announced yesterday. Better curricula, improved textbooks and standard testing are also on the agenda, Qiu Yuanping, head of the Overseas Chinese Affairs Office of the State Council told the third World Chinese Language and Culture Education Conference. There are more than 60 million overseas Chinese in about 200 countries and regions, and some 20,000 schools of Chinese language and culture. However, many schools lack guidelines, textbooks and financial support. Qiu said the office will help establish 100 demonstration schools by the end of 2017.

Chui Sai On bets all on “One country, Two systems” policy

Macau Chief Executive Chui Sai On has pledged to give priority to comprehensively implementing the ‘One country, Two systems’ policy and the Basic Law, which he said would be the top principle for his governance of Macau in the next five years.

“The achievements in Macau have highlighted the great vitality of the ‘One country, Two systems’ policy,” Chui told Xinhua on

the eve of the 15th anniversary of Macau’s return to China.

Chui, 57, will be sworn in as the fourth-term Chief Executive of the Macau Special Administrative Region (SAR) on December 20 after winning re-election on August 31.

“The past 15 years since Macau’s return to the motherland has been the fastest-growing period in Macau,” he said, citing a rapidly developing economy,

ever-improving livelihood, and a harmonious and stable society in the Region.

The Chief Executive attributed the rapid development of Macau to an accurate understanding and comprehensive implementation of the ‘One country, two systems’ policy, and the healthy development of relations between the central government and the Macau SAR. “The Mainland is always a

Rate cut calls grow in Australia

Water diversion quality monitoring begins

P

O

ressure is building on Australia’s central bank to cut interest rates from their record lows as growth in the resources-driven economy, already faltering on the back of China’s slowdown, takes a further hit, analysts say.

The Reserve Bank of Australia (RBA) has repeatedly said it will continue to maintain a “period of stability in interest rates”, but softening GDP growth figures last week sparked a flurry of economists forecasting further monetary policy easing.

That would take the cash rate below 2.5 percent, where it has been for 16 months.

“The GDP read... is creating a very dark shadow over the state of the Australian economy with income growth now in recession,” IG markets strategist Evan Lucas said.

The data showed the economy expanded by just 0.3 percent in the third-quarter, far below consensus estimates of 0.7 percent, to take the annual growth rate to a below-trend 2.7 percent.

“The pressure on growth in 2015 is ratcheting up as key commodities remain in bear markets,” added Lucas.

AFP

As swearing-in ceremony and hand-over anniversary approach, Chui Sai On reflects on the Macau-Mainland relationship

strong supporter of Macau, and I believe the backing will continue in the future,” Chui said.

He appreciated the support of the central government and other provinces and autonomous regions for Macau, by such means as the Mainland and Macau Closer Economic Partnership Arrangement, the GuangdongMacau cooperation framework agreement, and promotion of Macau as a World Centre for Tourism and Leisure envisaged in the central government’s 12th five-year plan for socio-economic development, among others.

Chui believed that Macau can properly handle the relationship between the ‘One country’ and ‘Two systems’ largely due to the local citizens’ tradition and values of “loving the country and loving Macau.”

“Most of the Macau people are fully aware that Macau is a Special Administrative Region under China’s sovereignty.

The SAR’s interests can be safeguarded only when the country’s interests are safeguarded,” he said.

“The regional cooperation

between Guangdong province, Hong Kong and Macau will be an opportunity for Macau to develop a diversified economy,” he said.

The Chief Executive acknowledged that the shortage of land and human resources are the major challenges facing Macau.

However, a plan, approved by the central government in 2009 for the Macau SAR to reclaim 350 hectares of land from the sea, has been finalized, according to Chui.

The land will be used for public housing rather than the gaming industry.

A talent development committee, chaired by Chui, was also established earlier this year to look for ways to increase the number of people undertaking tertiary education and fill gaps in the labour market.

Realizing his great responsibility as Chief Executive of the Macau SAR, Chui said, “We will join hands with various social communities to build a harmonious Macau that maintains stable development.”

Xinhua

Five ex-Madoff aides face 20-years sentence

F

peration of the first phase of the middle route of China’s South-North water diversion project will soon begin, and water quality monitoring is underway.

The environmental protection bureau of central China’s Henan Province said yesterday that the province’s twelve cities, including the provincial capital of Zhengzhou, have started testing the quality of water diverted from the south.

Water temperature, PH value, and the index of chemical composition such as dissolved oxygen, ammonia nitrogen and permanganate are to be tested. So far, there has been no reported problem in Henan, said Zhou Wenxian, of the provincial environmental protection bureau.

Areas along the route have emergency response mechanisms. If the water in the trunk channel is found to be polluted, it will be diverted.

In the first phase, the middle route of the project will see 9.5 billion cubic meters of water per year pumped through canals and pipes from the Danjiangkou reservoir in Hubei Province to the northern areas.

ive former employees of Bernard Madoff, convicted in March of helping the fund manager bilk investors of billions of dollars in his massive Ponzi scheme, will be sentenced this week, with prosecutors seeking prison terms of up to 20 years.

Like the six-month trial, one of the longest white-collar trials in recent memory, the sentencing will take time, stretching out over a week in four separate hearings.

The sentencing have been delayed for months, as defence lawyers fought the government’s demand that the three men and two women should be ordered to pay billions of dollars.

First up on Monday is former back office director Daniel Bonventre, followed in the coming days by portfolio manager Annette Bongiorno, computer programmers Jerome O’Hara and George Perez and portfolio manager Joann Crupi.

The five aides were convicted on all counts, including conspiracy and fraud charges, by a federal jury in March. Prosecutors said they knowingly propped up Madoff’s fraud by creating fake documents and backdating trades.

Xinhua

Reuters