Macau Business Daily, Jan 12, 2015

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 705 Monday January 12, 2015 Year III

The ties that bind O

n the surface it’s all smiles. But Macau residents are becoming less confident in the gov’t. And the territory’s relations with China. According to a University of Hong Kong survey, local support for ‘One country, two systems’ is waning. There are positive indicators. But the study claims ‘people are getting less positive than previous years regarding the development of Macau in the year past’ PAGE

Diminishing Fortunes Make a billion, lose a billion. It’s all part of Forbes’ Hong Kong’s 50 richest people list. The gaming industry slowdown and plummeting stock prices took their toll on Macau casino tycoons last year. Lui Che Woo, Pansy Ho, Lawrence Ho and Angela Leong all got burned. Some much more than others

PAGE 4

Crackdown on illegal gaming sites Eight arrests in three months. Police have taken more mainland Chinese into custody for promoting illegal gaming websites. Junk phone messages and outdoor banners are the media of choice. Criminal gangs are suspected of masterminding the operation

PAGE 8

Summer salvation?

Everyone’s betting on it. From casino operators to the gov’t. The imminent opening of new properties will hopefully save the day.

The new Secretary for Economy and Finance, Lionel Leong Vai Tac, put it in a nutshell. The gaming industry is in a “deep-level adjustment period”. Revenues will only likely recover momentum in the second half

PAGE 3

2

Agile property’s sales miss 2014 target PAGE 4 Medical professional accreditation bill on horizon PAGE 5 Social Security Fund dues to be discussed today PAGE 5 Lei Chan Tong steps down from GIT PAGE 2

HSI - Movers January 9

Name

%Day

China Unicom Hong Ko

5.26

Li Ka-shing revamps biz

Cathay Pacific Airwa

2.91

BOC Hong Kong Holdin

2.14

Wharf Holdings Ltd/T

1.98

‘Superman’ is going to restructure. Hong Kong entrepreneur Li Ka-shing is to adapt his corporations to the prevailing economic winds. A responsibility to his employees, he says

China Life Insurance

1.67

Sands China Ltd

-0.94

China Petroleum & Ch

-0.96

Tingyi Cayman Island

-1.56

China Shenhua Energy

-1.72

Galaxy Entertainment

-2.07

PAGE 9

Source: Bloomberg

www.macaubusinessdaily.com

INTERView

Designed to distinction Recognition is the fuel of business. Fledgling interior design and project management company KPM know that. They recently picked up the prestigious Best SME accolade at the 2014 Business Awards. Giving company partner Rui Barbosa a platform to speak.

The MD says people are becoming aware of the added value that interior and architectural design brings to their projects. Lack of human resources rears its head once more but he’s all for weeding out the unqualified, and putting quality above profit

Page 6 & 7

I SSN 2226-8294

Brought to you by

2015-1-12

2015-1-13

2015-1-14

12˚ 14˚

12˚ 15˚

14˚ 19˚

2 | Business Daily

January 12, 2015

Macau Lei Chan Tong steps down from GIT Lei Chan Tong is no longer the Co-ordinator of the Transportation Infrastructure Office (GIT), a position he assumed in 2007 when he was appointed by former Secretary for Transport and Public Works Lau Si Io. Mr. Lei is stepping down as his term ended on November 2014, the Portuguese-speaking newspaper Tribuna de Macau reports. The decision was motivated by personal reasons although he will continue to serve as a public servant.

During his tenure, Mr. Lei was in charge of the co-ordination of the Light Rapid Transit (LRT) System, a project that has been delayed and run substantially over budget. The Secretary for Transport and Public Works, Raimundo Rosário, has yet to announce Mr. Lei’s successor.

Residents’ trust in Macau’s future waning The University of Hong Kong’s annual survey of Macau revealed that people are increasingly less confident about Macau and the ‘One Country, Two Systems’ arrangement. Trust in Macau and Beijing’s Government is also declining in the SAR João Santos Filipe

jsfilipe@macaubusinessdaily.com

P

eople are increasingly less confident in the future of Macau, the second part of the annual survey on the SAR for 2014 of the University of Hong Kong reveals.

‘Trust in Macau’s future and ‘One country, two systems’ has dropped to an all-time low since the handover in 1999’, the authors of the study said.

‘People’s confidence in the future of Macau, the future of China, and ‘One country, two systems’ have all remained positive but their net values continue to drop’, it added.

Of 502 questionnaires completed

by Macau residents, 74 per cent said they had confidence in the city, while in 2013 76 per cent expressed confidence in it. At the same time, the number of people saying that they did not have confidence in the future of Macau increased from 19 to 21 per cent. Five per cent did not respond to this question.

In relation to the ‘One country, two systems’ policy, 70 per cent answered that they were confident about it, while in 2013 75 per cent were. By contrast, 23 per cent of Macau residents confessed to a lack of confidence in this policy, an increase of 4 per cent in relation to 2013. This year, 7 per cent did not answer this question, while that value was 6 per cent in 2013.

With relation to the future of China, 80 per cent (down from 81 per cent in 2013) said they were confident, while 14 per cent (up from 12 per cent in 2013) said they lacked confidence in it.

Although most indicators are positive, the study stresses ‘people are getting less positive than previous years regarding the development of Macau in the year past’.

With relation to the main concerns of the Macau population,

livelihood problems were identified as their main concern by 69 per cent, while the economic situation was stressed by 24 per cent, and 4 per cent mentioned the political situation. Roughly 3 per cent of those questioned failed to answer the question. ‘Livelihood issues continue to be Macau people’s most concerning issues followed by economic and then political issues, a pattern which has existed for many years’, the study explained.

People losing faith in Macau and Central Governments According to the results of the annual survey for 2014, the Macau and Beijing Government are seen as trustworthy but are nonetheless losing the trust of the Special Administrative Region residents.

In relation to the executive of Chui Sai On, 53 per cent (down from 58 per cent) said they trust it, while 21 per cent (up from 19 per cent) confessed to no trust in it.

President Ji Xinping is also struggling to retain the trust of the people living in Macau. While in 2013, 56 per cent of Macau residents said they trusted his government, this value decreased to 52 per cent in 2014. On the other hand, more people say they do not trust the Central Government. This number increased in one year from 16 to 19 per cent.

‘Compared to one year ago, people’s net trust [difference between positive and negative answers] in the Macau SAR and Central Governments have both dropped, to positive 32 and 33 percentage points, respectively.

The latter is a record low since the handover in 1999’, the report declared.

Business Daily | 3

January 12, 2015

Macau

Lionel Leong: Gaming industry to pick up in second half The Secretary for Economy and Finance, Lionel Leong Vai Tac, says that the gaming industry is in a ‘deep-level adjustment period’ and predicts that revenue will only recover momentum in the second half of the year Joanne Kuai

joannekuai@macaubusinessdaily.com

T

he new gaming regulator estimates that gross gaming revenue will continue sliding until at least the first half of 2015.

The Secretary for Economy and Finance, Lionel Leong Vai Tac, said that without much change externally gaming revenue might keep dropping.

Following the opening of various new tourism-integrated projects in Cotai, however, gaming revenue and [the increased] number of visitors to Macau may have a positive effect.

The government, he said, would closely monitor the situation and adopt a cautious but optimistic attitude.

Secretary Leong said that the government would keep a close eye on the impact on society of the everchanging economic environment, especially the impact on small and medium-sized enterprises and the labour market. In addition, the government would use this change to continue to promote diversification and encourage more people to use

on-the-job training in order to have a better chance to move up the career ladder. He was speaking to reporters after attending the plenary meeting of the Standing Committee for the Co-ordination of Social Affairs on Friday.

Transformation Secretary Leong pointed out that the gaming operators are obliged to put more effort into developing nongaming sectors in order to achieve the diversification of the industry as well as the source of tourists so that the SAR need not rely so heavily on gaming revenue.

“Now that the gaming industry has entered its adjustment phase, we can all better understand the meaning of the Central Government’s instruction to Macau to think of danger in times of soundness and promote economic diversification”, he said. “The current adjustment has pointed out some new directions

for enterprises in their operational concept as well as for career planning for the working population”.

He stressed that the government has the responsibility to help local workers get more on-the-job training through contacting, encouraging and supporting relevant enterprises so that employees have more value and multiple professional skills to move forward or even change job to non-gaming sectors.

The Labour Affairs Bureau and Macau Productivity and Technology Transfer Centre would enhance their co-operation with gaming operators and associations to tailor training courses that could help employees so that the general quality of Macau’s human resources could be improved, as well.

Lionel Leong added that he has instructed the Labour Affairs Bureau to take a more active role in helping resolve problems affecting labour and capital in the event of a company shutting down or laying off staff, on

issues such as debt or owing salaries as well as providing unemployed workers with information and services so that they can find another job.

Regarding non-resident workers issues, Secretary Leong reiterated that the government has always upheld the principle that non-residents should only be imported when local human resources are inadequate. He pledged to keep a close eye on the changes in the labour market and to further discuss the issue through the Standing Committee for the Coordination of Social Affairs.

He added that the government would like to build up a relatively scientific system in forecasting the economy trend and the change in gross gaming revenue. He said that the changing gross gaming revenue would affect Macau’s fiscal reserves but that the government had established a stable reserve in the last 15 years, and that he was confident about facing the current adjustment.

4 | Business Daily

January 12, 2015

Macau

Macau movers and shakers slide down Hong Kong’s 50 richest list Lui Che Woo, Pansy Ho, Lawrence Ho and Angela Leong have all slid down the Forbes Magazine ranking. Li Ka Shing is known as Superman for a reason and for the 17th year in a row he tops the list João Santos Filipe

Jsfilipe@macaubusinessdaily.com

T

he slowdown in the gaming industry and the consequences of it for casino stocks have resulted in the predominant casino personalities of Macau falling behind in Hong Kong’s 50 richest people list, published by Forbes Magazine on Friday. The list is topped by ‘Superman’ Li Ka Shing (86), who boasts a net worth of US$33.5 billion.

His flagship operations include Cheung Kong, Husky Energy and Hutchison Whampoa.

The founder and Chairman of Galaxy Entertainment, Lui Che Woo, is the first casino mogul to appear on the list, ranking 5th. However, in the course of a year Mr. Lui lost one third of his fortune, which now amounts to US$13.4 billion, while last year it was estimated to be US$21 billion, when he occupied second place.

However, the company founded by the 85-year old businessman will open Phase II of Galaxy in the coming months, which will boost financial results. Besides controlling Galaxy Entertainment, the investments of Mr. Lui include the property firm K. Wah International and Stanford Hotels.

After dropping three places on the list, Pansy Catalina Ho Chiu King now places 12th on the list with a

Macau gaming personalities on Hong Kong’s 50 Richest People List Position

Name

Age

Net Worth(US$)

1

Li Ka Shing

86

33.5 billion

5

Lui Che Woo

85

13.4 billion

12

Pansy Ho

52

5 billion

31

Lawrence Ho

37

2 billion

36

Angela Leong

53

1.8 billion

net worth of US$5 billion, while last year her net worth was US$6.8 billion. The 52-year old maintains the best position among the women.

The daughter of Stanley Ho Hung Sun is Co-chairman of MGM China, managing director of Shun Tak, and Chairman of budget airline Jetstar, a position she assumed last year.

Lawrence Ho’s precipitous fall Lawrence Ho Yau Lung (37) is the youngest person to make it onto

Hong Kong’s Richest People List, ranking 31st with a net worth of US$2 billon. However, the son of Stanley Ho and brother of Pansy, weathered a difficult year as the slowdown of the Macau gaming industry decimated his wealth by 41 per cent. Last year, the Cochairman and CEO of Melco Crown Entertainment occupied 12th position with an estimated fortune of US$3.4 billion. Nevertheless, the prospects for Lawrence Ho are more positive for 2015 as the Studio

City casino in Macau is due to open and the City of Dreams Manila project will start to operate at full capacity. Besides investments in the gaming industry, the billionaire has interests in financial services, technology and property businesses through Melco International.

The last person on the Hong Kong list related to the Macau gaming industry is the Executive Director of SJM Holdings and fourth consort of Stanley Ho. Angela Leong On Kei (53) has a net worth of US$1.8 billion. The member of Macau’s Legislative Assembly saw her fortune hit as SJM Holdings lost half its value and she dropped from 19th (US$2.85 billion) to 36th. The good news for SJM was that the company started construction on its Lisboa Palace in Cotai.

After being sentenced to five years in prison in Macau for bribery, 63-year old Joseph Lau Luen Hung dodged a bullet as Hong Kong does not currently have an extradition agreement with the Macau SAR. In addition, the Chairman of the Chinese Estates property company increased his net worth from US$9.7 billion to US$10.9 billion, holding onto 6th place in the rankings.

Agile Property’s 2014 sales fall short of target

F

or the year ended December 31, 2014, the Guangzhou-based property developer Agile Property Holdings Ltd gained 44.16 billion yuan (US$7.12 billion) from its housing presales, realised from deals with the average selling price at 9,625 yuan per square metre, the company told its unaudited operational data to Hong Kong stock exchange on Thursday.

For Agile Property, popular amongst local and Hong Kong investors for its residential projects in mainland, the fullyear accumulated presales figure still falls short of the company’s yearly sales target at 48 billion yuan.

Agile Property’s gain of 44.16 billion yuan from housing presales represented a

year-on-year rise by nearly 9.5 per cent, realised from sales of the corresponding gross floor area at 4.59 square metres.

The average selling price at 9,625 yuan per square metre for presales achieved in 2014 also represented a fall by 17 per cent when compared with the previous year.

The developer has had a tough fourth quarter last year over the alleged bribe-related probe into the company’s management, the shelving of a rights issue plan and the pressure to extend its shortterm loan repayment period.

Mr Chen Zhuo Lin has only resumed his duties as the Hong Kong-listed Agile Property’s chairman, executive director and president since December 14, following the episode

of Kunming City People’s Procuratorate’s notice of a “designated residence” imposed onto Mr Chen in

late September last year.

The “designated residence” applied was related to alleged bribe of

Yunnan province officials from the developer, mainland Chinese media reported at the time.

Business Daily | 5

January 12, 2015

Macau

Social Security Fund dues to be discussed today Representatives of both employers and labour from the Standing Committee for the Co-ordination of Social Affairs have agreed to increase dues but hold different views on the proportion of contributions Joanne Kuai

joannekuai@macaubusinessdaily.com

L

abour Affairs Bureau director Wong Chi Hong said that representatives from both employees and employers have received the latest proposal from the Social Security Fund, which suggests increasing dues to MOP90 per month.

Representatives from both sides agree on the increase in dues but hold different opinions regarding the proportion of contributions.

Currently, employees pay one third of dues while employers pay two thirds.

Representatives from the employers said that they hope that the proportion of the contribution can be gradually adjusted to 1:1 to express the principle of fairness while representatives from

the employees’ side hope to retain the current proportion.

Wong Chi Hong said that it is universal that employers and labour have divided opinions on many issues but that the most important thing is for both sides to communicate and that the government balance the interests of both sides and put forward plans that can benefit the social economy and relations between labour and employers.

He hopes that the differences of both sides can be narrowed and that they are able to reach a consensus. Mr. Wong said that the relevant issues would be discussed at a meeting on the 19 January at the Standing Committee for Co-ordination of Social Affairs.

The standing committee held a plenary session last Friday to review the work report of 2015 and lay out plans for the year. The meeting was hosted by Secretary for Economy and Finance Lionel Leong Vai Tac. The Labour Affairs Bureau director said that this year a major task of the standing committee will be to revise the regulations on employment

agencies. Relevant revisions were under discussion by the committee in November: he expects employers as well as labour representatives to submit a position paper by the end of January so that authorities can follow up as soon as possible.

Mr. Wong added that the government has also finished the revision framework of the Labour Relations Law and the

law on hiring non-resident workers. He expected both drafts would be handed in to the committee to discuss in the first quarter of this year.

Other tasks of the committee include discussing the possibility of launching a minimum wage for all sectors, adjusting housing subsidies for non-resident workers, and reviewing the enforcement of work salary subsidies.

Medical professional accreditation bill on horizon Legislator Chan Iek Lap has urged the government to balance the public and private medical sector and suggested increasing the value of the medical coupon to MOP1,200 from the current MOP600

T

he indirectly-elected legislator from the medical sector, Chan Iek Lap, said a bill on medical professionals accreditation has been under discussion at the medical affairs committee for more than a year and that the discussion is nearly coming to an end and will be passed to Health Bureau consultants for revision. He expects the government to pass the bill to the Legislative Assembly within this year. He was speaking on a TDM radio forum last Friday.

The Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, announced last week that in 2015 the public health sector plans to recruit 529 more staff and is considering increasing the salary of medics. The announcement aroused some fear that the private health sector might lose staff.

Chan Iek Lap commented that not only in the medical sector but

also in other government departments whenever the government is hiring there will be a fluctuation of human resources in the market due to the different salary, welfare and benefits structure of the government and the private sector.

Mr. Chan stressed that the government shouldn’t focus on its own needs but balance the public and private health sector and make medium and long term plans so that the private health sector can prepare and hopefully not suffer too much by losing human resources.

He is also of the opinion that an overly strong public health sector would harm the overall healthy development of the medical sector.

He agrees that there is a social need for free medical service as a security net to some extent but points out that society also needs to reflect on whether the government should serve as last resort in solving any problem.

With regard to the medical coupon that the government has launched for five years for local residents to use at private clinics, Mr. Chan said that the purpose was to help the private clinics’ business as well as lower the burden on the public hospital and encourage residents to maintain their health. He said the effects so far, however, were not obvious and attributed this to the relatively low value of the coupon and suggested increasing it to MOP1,200 per year per resident from the current MOP600 per year per resident.

He added that besides increasing benefits and welfare the authorities should pay attention to whether

medical staff have a sense of achievement in their posts.

The Health Bureau representative explained to the radio audience that there is an accreditation mechanism

for Macau residents who receive medical education outside the SAR to be recognised and be received in the local medical sector.

J.K.

Government of the Macao Special Administrative Region MACAU GOVERNMENT TOURIST OFFICE NOTICE The Macau Government Tourist Office hereby announces an invitation to tender for the “Macau Tourism Industry Development Master Plan Service Provision”, in accordance with the approval of the Secretary for Social Affairs and Culture dated 5th of December of 2014.

From the date of publication of the present notice, interested bidders may visit the Macau Government Tourist Office Reception Counter, located in Alameda Dr. Carlos d’ Assumpção, no. 335-341, “Hotline” Building, 12th floor, Macau, to view the Tender Program and Terms and Conditions of the Tender within the working hours, and pay MOP 500.00 (five hundred patacas) to obtain the copies.

For any further enquiries, please visit the Macau Government Tourist Office website (http://industry.macautourism. gov.mo) to submit your enquiries starting from the day of publication of the present notice until 10 days before the tender submission deadline. All replies will be posted on the same website.

The maximum price limit for the tender is MOP 20,000,000.00 (twenty million patacas).

Criteria for tender evaluation and their respective percentages are as follow: - Appreciation of the planning task (35%); - Planning methods and programme of work of the phases (20%); - Price (15%); - Experience (30%).

Bidders must submit the tender written in Chinese, Portuguese or English, within the working hours by 17:45 hours on 2nd of March of 2015, to the Macau Government Tourist Office Reception Counter, located in Alameda Dr. Carlos d’Assumpção, no. 335-341, “Hotline” Building, 12th floor in Macau and shall submit the provisional guarantee fee of MOP 400,000.00 (four hundred thousand patacas). The provisional guarantee fee shall be paid by: 1) cash deposit to the account of “Tourism Fund” at Banco Nacional Ultramarino of Macau; 2) bank guarantee; 3) cash, cashier’s order or mark good cheque deposit directly to the Macau Government Tourist Office, cashier’s order or mark good cheque should be made payable to “Tourism Fund”; 4) wire transfer directly to the account of Tourism Fund, at Banco Nacional Ultramarino of Macau (account no. 8003911119).

The tender opening session will be held in the Auditorium of the Macau Government Tourist Office, located in Alameda Dr. Carlos d’Assumpção, no. 335-341, “Hotline” Building, 14th floor in Macau, at 10:00 hours on 3rd of March of 2015.

In case of the services of the Macau Government Tourist Office are suspended owing to typhoon or force majeure, the scheduled closing date and time for submission of tender, as well as the date and time for opening the tender shall be extended to the next working day that follows immediately.

According to the article n.º 27 of Decree-Law n.º 63/85/M, of 6th July, the legal representatives of the Bidder should be present during the tender opening session for any complaints and/or to explain any doubts regarding their respective tender.

Macau Government Tourist Office, on 18th of December of 2014.

Director Maria Helena de Senna Fernandes

6 | Business Daily

January 12, 2015

Macau

“Authentication of interior designers is necessary in Macau” KPM Project Management, a four-year old interior design and project management company, won the award for best Small and Medium Enterprise (SME) at the Business Awards in 2014. Rui Barbosa, one of the partners of the company, says people are becoming aware of the added value that interior and architectural design can bring to their projects. But in Macau lack of human resources is a challenge as local SMEs have to compete with big players like casinos for manpower Kam Leong

kamleong@macaubusinessdaily.com

KPM flying high

Why did you want to engage in interior design in Macau?

When I came to Macau, I actually came as an engineer for the company that I was working for [before KPM], which was as a consultant in the interior design area. I worked on the interior design area in Portugal for more than three years seven years ago.

So when starting KPM, [interior design] became one of the core businesses that we decided to reach for. I had also worked in the area of project management before, so it is one of [my] interests.

Why is interior design one of the core businesses?

It’s one of the strongest possibilities that you had. It is because when you start something like this, you have to go for the profits and the clients. Here in Macau, for example, it’s a very small place with not much construction.

When you have construction, it’s the big companies which have the power to get those projects, so we have more market in the renovations of offices and retail shops. In addition, it’s because we want to make a bit of difference to the sort of services offered by [other] companies. We saw that we could [undertake] an initiative in the market to offer services with higher quality and more variety of design. Another reason is because I had experience in the area.

What are the challenges and limits that you have encountered whilst developing your business?

For interior design as well as architectural design, yes, we

noticed at the beginning that although some parts of the market were interested in the designs, many people did not consider them to be their major concern. So, it is a process whereby we have to convince clients about their needs for interior and architectural design and that they can achieve a little bit more. It is a challenge that you need to let them know that there are a lot of possibilities [in design], which are good for their businesses as well.

How about human resources; are they an issue?

It’s a problem. As an SME, it’s an issue in Macau…It’s really hard for us to compete with strong companies like the casinos, which first of all can offer higher salaries and compensation to workers that most small businesses cannot.

Many of the government rules encourage you to hire residents but I put an ad [in the media] for a position in the company before but didn’t receive any resume at all. So, it comes to the point that you don’t have anyone but your company wants to keep growing.

The second step is to hire someone from outside but the difficulties that the SME faces is the time it takes, which may jeopardise some of the projects as things cannot stop. If you do not have enough human resources, it will be apparent in the services and the quality that you provide. So it is a really big issue.

Do you think that interior design is actually getting more important here in the city?

Sometimes it takes a very long time in Macau to let people know of your existence

It is. I noticed four years ago that clients would go to the shops for renovation materials by themselves. But I see there’s now a difference. Many people have realised the importance of having some architects and designers, who think a project [through] as a whole, on which they will advise and prepare everything.

We make the project easier for the contractors and for the clients, as we can advise them very well on the projects they want for renovation… we know how.

However, the residential part is still suffering a little bit from the old situation.

When your clients do turn to you, is there any so-called ‘Macau style’?

I think that when people come to us, it’s most of the time because of the projects that we’ve done.

As such, they understand that we have our own identity and present them with very modern designs.

So, when they come to us they

KPM Project Management Ltd. is a company that specialises in interior design, architecture, engineering and project management as core businesses. The company was established in Macau in 2010, when the current partner of the company, Rui Barbosa, was invited by two investors as managing director - and the only staff that the company had.

Mr. Barbosa, who came to Macau seven years ago from Portugal and became a partner after one and a half years following the establishment of the company, set off the operation by working on renovation work inside residential flats at the beginning.

After four years of development, the company now works on small-sized and medium-sized projects, offices, retail shops and casinos. In addition to separate services, the company provides ‘through-train’ services from design to build, based on the demands of the client, according to Mr. Barbosa.

In November 2014, the company was recognised as the territory’s best SME by the Business Awards of Macau.

Currently, the company is working on the lounge of Air Macau at Macau International Airport, of which the design, architecture and project management are all under the charge of the company, which Mr. Barbosa sees as a big step for KPM and one of the company’s most important projects.

know that they have to leave much of [the project] in our hands. So, I don’t see much ‘Macau style’ as it’s more like world-style.

How do you see the prospects of the industry?

I see that it can grow yet it is not likely to be a huge one. As Macau is not a big market - we only have, like, half a million people - if we want to keep growing we have to reach a certain stage like we are reaching now [where] the casinos are the major clients.

For smaller clients, it can grow but less than the big clients. However, it is a fact that the interest of people in [our] services is growing, which is good for us, after all. I hope that people will become more aware of interior design and architecture, and understand their importance more.

You said that you see the industry growing. Comparing the operation to the beginning, has the demand for KPM’s services increased a lot?

Yes, I think so. We can reach much farther now than we could four

Business Daily | 7

January 12, 2015

Macau years ago. So when I compare with four years ago to today, we have grown a big list of clients, while four years ago we were just dealing with private clients, two or three or four. So the demands are higher now than four years ago for sure.

So what is the future path for KPM? I really see that 2015 is a very important year for our company. My idea of growth is always that it be a very secure one with strong roots, so [any] fall would not be that huge if it happens. I like doing things more firmly and being able to deliver to clients what they need than just going for two steps or three steps ahead. However, that’s the struggle that I have to face in 2015 because I know that I have to go three steps ahead to be able to reach the capacity to answer the demands.

If you do not have enough human resources, it will be apparent in the services and the quality that you provide

Meanwhile, the Business Award that was given us last November is very important to us. Many people didn’t know about us but now they may have heard about our name, they know we exist.

Sometimes, it takes a very long time in Macau to let people know about your existence. We hope to reach bigger projects step by step and be able to deliver the quality to our clients that we have always tried to provide.

The government passed a bill not long ago that construction and urban planning professionals in Macau have to get an official qualification before starting their businesses; do you think interior designers also need authentication?

I think authentication is necessary.

I don’t think there are any cons to it. As it is for improvement and to be stricter on the regulations to not allow anybody to do something that probably they aren’t very qualified to do. I see it as a good thing as I always think it’s good to be stricter and for things to be more regulated.

But if it really gets implemented in the future, do you think such authentication will further affect human resources?

Well, it might affect those who don’t have any qualifications at all. And actually we’ve been trying to have people who really are qualified to work for us. So for us, it won’t affect us much.

People who are capable of doing their job would still love to do it.

As a result, the authentication may work as a filter and Macau will gain from it.

Many people have realised the importance of having architects and designers, who think a project [through] as a whole, for which they will advise and prepare everything

With the gaming industry dominating the economy, do you think it actually provides more opportunities for SMEs or does it block their development?

It’s a challenge, a huge challenge.

It makes the market very odd and very difficult, and the market is divided into very big stones and very small stones. What will make the different to the situation is that you have to maintain quality for your services and to have the patience to reach a big industry, like the casinos. Many SMEs have been suffering from that process

THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design

and probably a lot of them just quit in the middle. It is because if you cannot get to the big clients, the capacity of profits that you get is very small. If you keep your initial size, O.K., but if you want to grow and you don’t have the capacity to get there, it’s very difficult for the development of SMEs. How about support from the government? Did you get any?

There is some support like what we got for SMEs, the plan by which the government lends you money for investment with the tax interest at zero per cent. These loans are for you to get the space for the office or equipment, etc.

However, money should not be the only concern for the government; it depends on what people can do with the money. I think there should be greater concern from the government to help the SMEs on human resources since there are such various levels of salary and compensation, and casinos occupy a huge part of human resources. So, they should help SMEs on the human resources part as it’s very important in Macau for SMEs to grow. We don’t want Macau’s SMEs, after 10 years from now, still dependent on foreign companies for everything.

Smaller projects from the government should also try to look for smaller companies to work with from Macau. Meanwhile, they should help SMEs as well, for the space, as the rent is huge.

However, they do give loans to SMEs, after all, so the support of the government is not really bad at all.

There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life.

Those people and their actions are our inspiration.

•••

info@goldfishmacau.com +853 2833 1258

8 | Business Daily

January 12, 2015

Gaming Louis XIII’s upsize option seeks HK$531 million Louis XIII Holdings Ltd, currently developing a boutique hotel-casino on the fringes of Cotai and Coloane in Macau, has announced a further exercise of an upsize option that has raised gross proceeds of approximately HK$531.1 million – which has yet to enter into completion. According to the company’s filing, since December 19 to the time the Friday announcement was made Louis XIII had raised an aggregate amount of about HK$2.17 billion, representing HK$1.56 billion via the placing of shares and convertible bonds and approximately HK$609.1 million under an upsize option.

In an announcement made on November 21, Louis XIII said that part of the new money raised would be used for the ‘design upgrades related to the fit-out of the interiors of the hotel development’.

Mainland Chinese arrested for promoting illegal gaming sites Within the course of three months, police have arrested a total of eight mainland Chinese for promoting illegal gaming websites via junk phone messages and outdoor banners Stephanie Lai

sw.lai@macaubusinessdaily.com

O

n Friday, Judiciary Police arrested four more mainland Chinese in the Border Gate district regarding the illegal promotion of online gambling websites here via the sending of junk mobile phone messages and posting banners outside residential buildlings.

The four, all from Fujian Province, were believed to be employed by a criminal gang that runs illegal online gaming websites, police told media on Friday following the arrests made in four residential units in the Border Gate district, the checkpoint with the heaviest inland visitor traffic in the city.

By using radio frequency simulation systems and antennas,

the suspects could successfully simulate the spectrum of mainland’s telecommunication operators and send junk messages to visitors travelling from the checkpoint to

the Border Gate district, according to police. These latest arrests follow a joint action launched by Judiciary Police and the Bureau of Telecommunications Regulation in November last year, when four mainland Chinese were arrested in the same district at the time for the crime of sending junk mobile phone messages promoting the said online gambling websites to people crossing the Zhuhai-Macau border.

Another suspect was caught by the Zhuhai police on the mainland for publicising online gambling in text messages.

“We’re still investigating whether the arrested suspects we have this time were working in the same gang

as in the previous [November] case”, the head of the IT crimes division of the Judiciary Police, Mr. Sou Sio Keong, said. Scams could be involved with the sending of junk mobile phone promotion messages as police believe suspects could, by that action, retrieve the personal data of mobile phone owners by intruding upon their network.

The police also told media that it has already ordered the taking down of the banners promoting the illegal gaming websites outside residential buildings in the Border Gate zone. A constant change has been made in the content of these outdoor banners by the suspects to avoid investigation, police added.

Marina Bay Sands pursues New York to Consider You Group’s chairman over debt New Casino Bidding

M

arina Bay Sands, Las Vegas Sands’ Singapore subsidiary, has sued the chairman of China For You Group, Chen Huaide, in a case related to S$3.9 million of debt, South China Morning Post reports. The case is in the Hong Kong High Court.

‘A charging order may have been made restraining Mr. Chen from transferring

certain shares of certain company or companies on January 7’, said the company’s press release to explain its recent stock price variation. Shares declined 27.4 per cent last Thursday and another 11 per cent on Friday, SCMP wrote.

‘Mr. Chen confirms that the action is his personal matter; the shares of one of his private companies are the subject assets of the charging

order; and the matter can be resolved at the soonest.

The board considers that the action and all the orders are personal matters of Mr. Chen. Besides, the company confirms that it had no involvement in the matters’, said For You. Chen Huaide was appointed chairman of For You in October 2014, following the dismissal of He Jianhong.

T

he Southern Tier, the New York region along the Pennsylvania border that was dealt a blow when Governor Andrew Cuomo banned fracking, may now get a casino.

The panel charged with choosing sites for Las Vegasstyle gambling will consider soliciting bids for a fourth licence, Kevin Law, its chairman, said today in a statement. The panel approved three of four potential sites last month, bypassing the Southern Tier in favour of the Finger Lakes region.

Law said at the time a fourth casino wouldn’t make sense in the saturated Northeast gambling market.

The other sites selected are in the Albany area and the Catskills.

After the fracking decision, Cuomo, a 57-year-old Democrat, sent a letter last month urging that the bidding process be re-opened for the region to help create jobs and boost economic development.

“As this would be the last licence issued in New York state, it may excite national competition,” Cuomo said in the December 26 letter.

The region, which is home to some of the highest unemployment rates in New York, sits above the gasrich Marcellus Shale. On December 17, the Cuomo administration banned hydraulic fracturing, the drilling process that extracts natural gas from rock. Hours later, the siting panel picked an application for Lago Resort & Casino in Tyre, about 100 miles (161 kilometers) north of Binghamton near Cayuga Lake.

The move led to an uproar from Southern Tier officials, who said the decisions were a double blow to the area.

Cuomo said in the letter that Tyre isn’t really in the Southern Tier, where jobs are needed most.

Law said he has reviewed the governor’s letter with his fellow board members.

“We all agree that our recommendation for Lago for the Eastern Southern Tier/ Finger Lakes Region was appropriate,” Law said in the statement. “Nevertheless, we are willing to entertain the governor’s request.”

Bloomberg

Business Daily | 9

January 12, 2015

Greater China

Li Ka-shing undertakes business restructuring

“It is a good move for investors as it helps to unlock the embedded value of both companies,” Steven Leung, director of institutional sales at UOB Kay Hian Ltd., said by phone. “CK- Hutch, the new company, will offer a greater growth potential whereas the property spinoff would provide steady investment.”

A reshuffle will end Hutchison Whampoa’s 37-year history as a separate listed company

Property assets

Michelle Yun and Vinicy Chan

After the deal, CK Hutchison will spin off Cheung Kong Property and list it separately on the Hong Kong stock exchange, according to the filing.

“Property is something about which investors are very cautious right now,” said Lee Wee Liat, a Hong Kongbased analyst at BNP Paribas SA. “They are spinning it off because they want to take out the lesser-valued assets.”

China’s residential real estate market has been slowing, while transactions in Hong Kong have stalled as the government imposed several rounds of curbs since 2010.

C

heung Kong Holdings Ltd. offered US$24 billion in stock to buy out unit Hutchison Whampoa Ltd. and will spin off its property assets in the biggest reorganization of Hong Kong billionaire Li Ka-shing’s corporate empire.

Cheung Kong investors will swap their shares in the Hong Kong developer for stakes in a new holding company called CK Hutchison Holdings Ltd., the company said in a January 9 exchange filing. CK Hutchison will then issue new shares to buy out minority owners of Hutchison Whampoa, a conglomerate which controls ports, retail and telecommunications operations.

The reshuffle will end Hutchison Whampoa’s 37year history as a separate listed company, which Li kept after he became the first Chinese to control a British colonial trading company in 1979. The deal will simplify Li’s empire that has grown to stretch beyond Hong Kong, allowing investors to more easily choose between a local property business and growing global assets in more than 50 countries.

The streamlined business also paves the way for Li to hand the company to his elder son, Victor, currently Cheung Kong’s deputy chairman.

“As a person reaching a certain age, you want the company’s successor and all the executives here to more

I want the company to do well not only today but also in the future. That’s my responsibility

Dividend pay-out

Li Ka-shing, Cheung Kong Holdings, chairman

easily operate and to do well, so it’s not a surprise,” Li, 86, said at a press conference after the announcement.

Deal value CK Hutchison will offer Hutchison Whampoa shareholders 0.684 CK Hutchison share for every Hutchison share, according to the statement. Based on the January 9 close in Hong Kong, Cheung Kong is offering the equivalent of HK$85.36 for each Hutchison Whampoa share, or a 2.3 percent discount, data compiled by Bloomberg show.

After the reorganization, all of Li’s non-property assets, including stakes in Cheung Kong Infrastructure Holdings Ltd. and the recently acquired aircraft leasing business, will go into CK Hutchison. Real estate assets that are currently spread across Hutchison Whampoa and Cheung Kong’s portfolios, mostly located in Hong Kong and China, will be consolidated into Cheung Kong Property Holdings Ltd.

Hutchison Whampoa expects the reorganization to be completed by the end of June, Managing Director Canning Fok said at a separate press briefing.

Li and his family trusts currently owns 43 percent of Cheung Kong, which controls 50 percent of Hutchison Whampoa. Following the reorganization, they will have a 30 percent stake in each of the new companies.

The reorganization is good for both companies and reflects their real value, Li said. He will be chairman of both companies, according to the statement.

He has a net worth of US$28.2 billion, according to Bloomberg Billionaires Index.

Li said he hopes to increase the dividend payout this year.

The octogenarian tycoon has been accelerating overseas acquisitions while slowing investments at home. Last year, Li’s group of companies snapped up Australian gas distributor Envestra Ltd. and entered the plane-leasing market with purchase of 45 planes for US$1.9 billion.

HSBC Holdings Plc. advised Cheung Kong, according to the filing.

Bloomberg News

Bank of Communications forecasts mild growth for 2015 The bank estimated 13.5-percent growth in new loans year on year

T

he report said uncertainties in the domestic and global situation will continue affecting China’s economy and result in more exports, less investment and stable consumption.

Moderate economic recovery in the United States will help strengthen China’s 2015 exports with faster expansion of about 7 percent.

It said the surplus in commodity and service trade will hit US$420 billion and US$195 billion, respectively, while the actually utilized foreign capital will stand at US$125 billion.

Fixed investment will see slower growth of 14 percent because of overcapacity and stricter supervision of local debt and financing.

New consumption patterns and a booming capital market will ensure a stable growth rate of about 11.8 percent in total retail sales volume by the end of this year.

The bank estimated 13.5-percent

7 percent China’s 2015 exports growth - China’s Bank of Communications forecast

growth in new loans year on year to 11 trillion yuan (US$1.79 trillion), and the capital market will see total social financing of 3.6 trillion yuan through bonds and stocks.

BOCOM forecast that China’s 2015 GDP growth will slow to around 7.2 percent, but remained cautiously optimistic about development, noting that deepening reforms will improve

economic efficiency and bring benefits.

The report also predicted that the country’s consumer prices will not face sharp surges amid prudent monetary policy, but weak domestic demand and overcapacity will continue to drag down the growth of producer prices.

Meanwhile, China’s central bank is likely to announce slight cuts in interest rates and the reserve requirement ratio, said the report.

Xinhua

10 | Business Daily

January 12, 2015

Greater China

Central bank vows prudent policies in 2015 The central bank lowered interest rates in November, fanning speculation on further moves, including RRR cuts

Economic growth can not rely on money supply, but policies with better coordination of tight and loose measures can stabilize the economy Guo Tianyong, China’s Central University of Finance and Economics, professor

C

hina’s central bank said it will continue with its prudent monetary policies in 2015 with better coordination of tight and loose monetary measures and proper finetuning.

The central bank will adapt to China’s economic “new normal” of slower growth but higher quality and highlight industrial transformation and restructuring, said the People’s Bank of China (PBOC) at a meeting on its work in 2015.

The central bank will strengthen support for the real economy and cut fund-raising costs, said a statement on the PBOC website.

Zeng Gang, researcher with Chinese Academy of Social Sciences, said monetary policy should support the real economy and structural adjustment amid increasing downward pressure.

He expects more liquidity in 2015.

The growth of M2, a broad measure of money supply that covers cash in circulation and all deposits, slowed to

12.3 percent on a year-on-year basis by the end of November.

The meeting said various tools should be used flexibly to maintain the reasonably rich liquidity in the bank system.

The PBOC implemented new tools to tackle changing situations in 2014, including Medium-term

Lending Facility (MLF) and Pledged Supplementary Lending (PSL).

The new tools are more flexible and targeted to ensure sufficient liquidity, support the real economy and facilitate structural adjustment, Zeng said.

Traditional measures like adjustment in interest rates and reserve requirement ratio (RRR) still remain an option.

The PBOC said lending and private financing should grow in a steady and moderate way. Macro-control measures in a targeted approach will be continued and lending support will be given to key or vulnerable links.

The meeting also reiterated the establishment of a bank deposit insurance scheme.

Zhao Xijun, deputy director of Finance and Securities Institute under Renmin University of China, expects the scheme to be carried out this year and lower risks while improving banks’ capacity to serve the real economy.

In addition, the meeting said financial reforms will be boosted, including reforms on interest rates, the yuan exchange rate formation system and foreign exchange management. And more efforts will be spent on promotion of cross-border use of the yuan.

Xinhua

SMEs struggle with tight financing The rising number of runaway billionaires reflects the financing difficulties facing the Chinese private sector

L

iao Rongna is one of Interpol’s most wanted men. He does not run a drug cartel or lead a smuggling network. The Chinese billionaire owns a conglomerate with interests in automobiles, construction and logistics.

Interpol issued a red notice for Liao because he ran away from a debt of 3.2 billion yuan (US$522 million). Liao, 58, is said to have cheated his way into billions in loans by promising investors high returns, and then failing to repay the debt. A guilty verdict for this kind of crime in China can result in the death sentence.

For Liao, a life of burning through other people’s money was better than dealing with bankruptcy and the wrath of domestic law. So he chose to flee the country, a common way out for rich Chinese who borrow with the promise of high returns, but later run out of money to pay their debts.

The rising number of runaway billionaires reflects the financing difficulties facing the Chinese private sector, according to analysts.

Ma Jun, chief economist at the Research Bureau of

the People’s Bank of China, told Xinhua the borrowing rate for Chinese small and medium enterprises (SMEs) is usually around 20 percent.

The interest rate an SME needs to pay often surpasses its profit margin.

In nominal terms, China’s financing costs are not high compared with the country’s GDP growth and industrial profit margins. The benchmark rate for one-year bank loans is only 5.6 percent.

The benchmark rate, however, is reserved for stateowned and big corporations, and SMEs usually face significant mark-ups.

Liu Gang, general manager of an auto parts company in Guangxi’s Liuzhou City, said banks hike the rates for SMEs with the help of special terms and shadow banking lenders.

According to Liu, banks often request a SME borrower put half of the loans they have received back in deposits, but ask the borrower to pay interest on the total amount.

“Our financing cost is then doubled,” Liu said, adding that the practice, though banned, still occurs.

Despite the high rates, most Chinese SMEs cannot actually get loans from banks.

They only receive funding

from shadow banking institutions, often with annual interest rates around 24 percent, said Liu Qiao, a professor of finance at the renowned Peking University.

“Using high returns to lure money from the public is like an economic opiate.

Entrepreneurs are often tempted to take a dose to avoid breaking their capital chains,” said Liu, the auto parts company owner. “It is impossible to quit once you start borrowing like this, and the financial conditions often get worse.”

Chinese decision-makers have been trying to tackle the financing difficulty that has burdened China’s real economy for years.

In last week’s south China tour, Chinese Premier Li Keqiang visited Guangdong’s Qianhai Webank, which has low costs compared to traditional banks and focuses on small loans to individuals and small firms.

The phrase “tackle financing difficulty” was mentioned eight times at State Council executive meetings held in 2014, showing the government’s desire to ease funding conditions for SMEs.

On December 22, 2014, the People’s Bank of China announced it would lower the country’s benchmark lending interest rates by 0.4 percent, the largest drop since 2008.

However, authorities need to roll out more reforms to lower SMEs’ borrowing costs, said Yuan Gangming, a researcher at the Institute of China and World Economy at Tsinghua University.

Yuan said the fundamental cause of SMEs’ financing difficulty lies in imbalanced distribution of financial resources between large corporations and SMEs. To solve this problem, China might pull funding from some massive projects and reallocate the loans to SMEs that need them.

He urged banks to cancel unnecessary charges and simplify the loan approval process for SMEs. Professor Liu, meanwhile, suggested that liberalization of interest rates would be an effective measure, and authorities could foster more financing channels such as Internet finance.

Xinhua

Business Daily | 11

January 12, 2015

Greater China Deeper cooperation links with Latin countries

Consumer inflation Both sides will strive to achieve a trade volume of US$500 billion at 1.5 pct and investment of at least US$250 billion within a decade China’s annual consumer inflation hov-

Ecuadorian Foreign Minister Ricardo Patino and Costa Rican Foreign Minister Manuel González listen as Chinese Premier Li Keqiang speaks during a meeting with foreign ministers from Latin American and Caribbean countries at the Great Hall of the People in Beijing

C

hina and the Community of Latin American and Caribbean States (CELAC) agreed on three major documents on the last day of the first China-CELAC forum ministerial meeting.

The two-day meeting, co-chaired

by Chinese Foreign Minister Wang Yi and his Costa Rican counterpart, Manuel González Sanz, passed a fiveyear cooperation plan, regulations for the forum and the Beijing Declaration.

According to the plan (20152019), on the political front, China will invite 1,000 party leaders from CELAC members to visit China.

Services and e-commerce cooperation should be strengthened

to facilitate trade and frictions should be properly handled, the plan said.

Infrastructure projects will help integration in Latin America and the Caribbean and connectivity between China and CELAC. Civil aviation authorities and enterprises are encouraged to cooperate more and explore the possibility of increasing flights between China and the region.

China promises 6,000 government scholarships for CELAC members from 2015 to 2019 and will set up Chinese language courses in primary and middle schools.

According to the Beijing Declaration, China and CELAC will

coordinate on major global issues, and work together on multilateral policy-making with more exchanges between legislative organizations, governments and youth.

Calling the forum a first, Wang said that China and CELAC were embracing opportunities for their all-round cooperation partnership, noting that the forum had given a strong “China-CELAC message” to the world.

China will work for both sides to reap early harvests from the forum and build a new model of South-South cooperation, Wang said.

China-CELAC cooperation is “open, inclusive and balanced” and excludes no third party, Wang added.

“In cooperation with developing countries, China will consider their need for self-development... instead of simply trade and investment or mere one-off sales of resources and energy,” he said.

Co-chair González described the meeting as “very practical” with an outcome defining concrete areas of cooperation. Key areas include political dialogue, trade, investment, infrastructure, tourism as well as agriculture, industry and science and technology.

The meeting will build a closer CELAC-China relationship and benefit people from both sides, González said.

The forum’s next meeting will be held in Chile in 2018.

Xinhua

The central goal is giving the market the decisive role in allocating resources, and improving overall efficiency

T

We expect restructuring to be gradual as the government tries to balance growth and restructuring, overcome resistance from various interest groups, and address redundancy and debt issues Wang Tao, UBS chief China economist

More mutual investment with S.K. China and the South Korea will encourage mutual investment in more sectors as new opportunities are brought by the expected free trade agreement (FTA).

The two countries will boost investment in automobiles, culture, elder care, film and television production, manufacturing and medicine, Yang Yihang, an official of the Ministry of Commerce, said. The ministry will cooperate with agencies of the ROK to support the building of industrial parks in China for enterprises of both sides. The governments of Changzhou, Weifang, Weihai, Wenzhou and Yantai intend to set up China-SK industrial parks.

JD and Tencent to invest in Bitauto Chinese auto information website operator Bitauto Holdings Ltd said JD.com Inc and Tencent Holdings Ltd would invest about US$1.3 billion in the company, sending its shares sharply higher in early trading on Friday. E-commerce company JD.com and Tencent, best known for its communications app WeChat, will also invest a total of US$250 million in Bitauto unit YiXin Capital Ltd. “...The three companies will work together to provide enhanced online automotive transaction services to car buyers across China,” Bitauto said. The two companies will invest about US$1.15 billion in new shares priced at US$73.31 each.

Policy design to propel state enterprises reforms

he restructuring of China’s state-owned enterprises (SOEs) will proceed rapidly in 2015 as the government is set to unveil 10 policies for SOE reform.

Chu Xuping, head of research for the State-owned Asset Supervision and Administration Commission (SASAC), described “major breakthroughs” in the overall plan for SOE reform.

“The majority of policies will be rolled out before Spring Festival,” Chu said. Spring Festival falls on February 19 this year.

The 10 policies include a guideline for reform, a general plan for state asset management, plans for mixed ownership and improvements to the evaluation system.

UBS chief China economist Wang Tao expects SOE reform will be obtained through improved corporate incentives and private participation.

Deteriorating SOE performance, general resilience in the labour market, and an improving social safety net may help the government move faster, she said.

Combined profits of China’s SOEs

ered at a near five-year low of 1.5 percent in December, signalling persistent weakness in the economy but giving policymakers more room to ease policy to support growth. Analysts polled by Reuters had expected annual consumer inflation to be 1.5 percent in December, compared with 1.4 percent in November. The consumer price index rose 0.3 percent in December from November, the National Bureau of Statistics said on Friday, in line with economists’ expectations. The producer price index in December declined 3.3 percent from a year earlier, its 34th consecutive monthly decline.

rose 4.5 percent to 2.24 trillion yuan (about US$365 billion) in the first 11 months of 2014, slower than 8.2 percent growth reported in the same period of 2013.

Resolving key issues will raise the efficiency and competitiveness of SOEs, according to a statement after the central economic work conference in December that set the tone for 2015.

Reforming SOEs is crucial as they are seen as key to sustained growth and stability.

Li Jin, deputy director of the China Enterprise Reform and Development Society, believes mixed ownership will break the monopoly and increase efficiency. Wang agrees that mixed ownership will change management incentives, improve profitability and cash flow, and increase government revenue.

Last year, Sinopec, PetroChina and State Grid all released plans to open some sectors to private investment.

The government has also decided to grant more rights to corporate entities in 2015.

Xinhua

Taiwan protects against bird flu

Taiwan began culling 120,000 chickens after a strain of bird flu identified as highly pathogenic H5N2 was discovered in live chickens from a farm of the southernmost Pingtung county. Taiwan’s agriculture authority said that it has collected samples from 15 farms in three counties amid concerns that avian influenza might have spread from the chicken farm to other regions. Samples from 15 duck and goose farms in Pingtung, Chiayi and Yunlin counties have been taken for test as the farms reported an abnormal drop in egg production and an increase in death numbers.

12 | Business Daily

January 12, 2015

Asia Myanmar prepares Yangon stock market Myanmar is inviting applications for service providers for its first ever stock exchange to be established in Yangon, setting February 27 as the deadline for submission of applications, according to the Securities and Exchange Commission yesterday. The commission will grant four kinds of services licenses -- underwriters, dealers, brokers and consultants, prescribing different levels of capital requirement for each, said the commission chairman U Maung Maung Thein, who is also deputy finance minister. A license for underwriting, which tops the requirement, will also be granted to operate in other three business areas, he said.

Singapore delegation to visit India A business delegation led by Singapore’s Second Trade and Industry Minister S Iswaran will be in India until Tuesday to boost ties and explore new business opportunities, the Ministry of Trade and Industry said. Iswaran is scheduled to speak at the opening of the Vibrant Gujarat Summit 2015 in Ahmedabad, where Singapore is a first-time Partner Country at the summit. He is also scheduled to call on India’s Prime Minister Narendra Modi. Singapore is assisting in the development of Andra Pradesh’s new capital city, and both sides will discuss the partnership in producing a master plan.

Air Mekong stops operations Private carrier Air Mekong has its business license officially revoked by Vietnam’s Ministry of Transport (MoT) after it has suspended flights for nearly two years, local media reported. Air Mekong’s extended license was expired on December 31, 2014 as it failed to present new operation plans for 2015, one year after it suspended flights for restructuring, Vo Huy Cuong, deputy chief of the Civil Aviation Administration of Vietnam (CAAV). The carrier now has no efficient conditions to retain its business license for air transport in line with CAAV’s regulations, said the official.

Cambodia reiterates alcohol ads ban The Cambodian Ministry of Information yesterday warned to cancel licenses for any television stations that still broadcast alcohol advertisements during the prime time 6 p.m. to 8 p.m. slot. “If any television stations still continue to broadcast alcohol advertisements in violation of an October’s directive, the Ministry of Information will suspend their broadcast temporarily between two weeks and one month and will completely revoke their television licenses in case of repeated violation,” Information Undersecretary of State Huy Saravuth said in a statement yesterday.

Oil-driven Asian bond rally could boomerang The imminence of further monetary easing in Europe and Japan builds a strong case for bond yields to drop further Vidya Ranganathan

P

lunging oil prices have sparked a big rally in Asian government bond markets as lower fuel costs cut inflation expectations, but the rally could be built on shallow foundations as monetary policymakers remain out of step with tumbling bond yields.

The price of oil, of which Asia is a net importer, has halved in less than six months, driving bond yields down across the region, from India to South Korea, as markets anticipate looser monetary policy to accommodate the resulting disinflation.

There is little sign yet of official rate cuts, particularly in markets such as Indonesia, Malaysia and the Philippines, where central banks were sounding hawkish or even raising rates into the final months of 2014.

“The oil price has caught central banks by surprise,” said ING’s chief Asian economist Tim Condon.

“The panic of 2013 is right now foremost in their minds, and they are looking at a Fed rate hike, and so I

think they will remain pretty dug in,” he said.

The fear of a repeat of 2013’s “taper tantrum”, when talk of the Federal Reserve withdrawing monetary stimulus prompted vast sums of foreign capital to bail out of the region, helps explain why Asian central banks might err on the side of tighter monetary policy.

But there are other factors that also suggest official policy will stay tighter than the bond markets imply.

For one, a rising U.S. dollar is pushing down all emerging market currencies, which already indirectly eases monetary conditions for Asian policymakers and creates pressure on them to keep interest rates up to prevent the flight of foreign cash.

The market mismatch is evident in Indonesia, where the rupiah currency has fallen 9 percent against the dollar in the past six months.

Ten-year Indonesian government bond yields, which are normally significantly higher than overnight

KEY POINTS Oil price collapse cuts inflation expectations Bond market yields fall in anticipation of looser money But no sign of interest rate cuts from Asian central banks Market could be wrong-footed if oil fall spurs U.S. growth A rise in Treasury yields could trigger Asian rate rises policy rates to reflect the risk of holding bonds to term, are just 5 basis points above the 7.75 percent policy rate, having fallen 60 bps since mid-December.

Sri Lankan presidential defeat drags central bank governor down Standard & Poor’s said that new government could bring a period of instability

S

ri Lankan central bank Governor Ajith Nivard Cabraal resigned after the incumbent president was defeated in an election, giving his successor an opportunity to overhaul an institution critics say is opaque.

President Mahinda Rajapaksa, 69, conceded defeat in the January 8 election. His successor, Maithripala Sirisena, had campaigned on a pledge to reduce the powers of the presidency in favour of parliament, a move that threatens greater instability in an economy that has seen 7 percent growth on average since 2009.

“On the surface a lot of things look good,” said Razeen Sally, an economics professor at the National University of Singapore, referring to the growth rate and inflation at a five- year low. “But that hides a lot of mess. For one thing, it’s difficult to believe some of these numbers given the central bank has become highly politicized under the Rajapaksa regime.”

I have tendered my resignation. It’s a good thing for a new president to have a new governor, so I have paved the way for that Ajith Nivard Cabraal, Sri Lankan outgoing central bank Governor

Cabraal, who’s held the post for most of Rajapaksa’s 10-year rule, is the first high-profile Rajapaksa appointee to step down since the

election. During his tenure, the share of Chinese lending has risen sevenfold and interest costs are among the highest in countries rated by Moody’s.

An increased dependence on foreign debt endangers Sri Lanka’s economic security, Sirisena said in his manifesto. His government will have to repay or rollover about US$2 billion of debt in 2015, the most in data going back to 2005.

It remains to be seen if Sirisena will break with past tradition and give more independence to the central bank.

Under Rajapaksa, growth in the US$67 billion economy was based on a system of patronage and corruption, Sirisena said in his campaign. He vowed to empower lawmakers, boost salaries of state-run employees, protect religious minorities and pass the Right to Information Act within 100 days of taking office. This will culminate in parliamentary elections in April.

Bloomberg News

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

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 editor editor@macaubusinessdaily.com newsroom newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

Business Daily | 13

January 12, 2015

Asia

One plausible scenario that could trigger a bond market tumble is if lower oil costs dramatically improve U.S. growth numbers in the next couple of months, leading to renewed optimism about global growth and a rise in Treasury yields.

Far from cutting rates, policymak-

ers might then have to raise rates.

The odds of this high-growth scenario playing out are perhaps reflected in how well equity markets have held up despite worries about disinflation, patchy economic growth and the possibility that Greece could return to the emergency room.

Despite a wobbly start to 2015, Asian shares are up 6 percent in the past three months.

“We are apparently on the edge of deflation, and yet equity markets aren’t collapsing,” said BofA Merrill Lynch strategist Claudio Piron. “And there are certain elements to what is

going on which are reminiscent of the Asian financial crisis -- oil prices falling, dollar strengthening, bonds rallying strongly -- which all seems very ominous.”

With the exception of Thailand, none of Asia’s central banks has explicitly spoken of the need for easier policy.

Inflation has slowed sharply, except in Indonesia and Malaysia, where fuel subsidies were cut late last year.

While consumer price inflation in the Philippines is well below the central bank’s expected 3 percent average for the year, the rhetoric from policymakers suggests markets may at best hope for rates to be on hold.

On the other hand, Indonesia’s inflation is running at nearly double the official forecast range for this year, thanks to a jump in domestic oil prices.

ING’s Condon doesn’t expect any of Asia’s central banks to react in a hurry to either oil or slowing inflation, and instead says they might be prepared to tolerate disinflation just as the European Central Bank and Fed do.

“There is some sort of asymmetry there. It’s okay to undershoot inflation, it’s prohibitive to overshoot. That, I think, will be the story in Asia as well.”

Some market participants recognise that bias, which is possibly why short-end yields in Asian bond markets haven’t moved much. But it is in longer-term yields that investors might read a warning that 2015 will hold more pain than gain.

Reuters

“Vibrant India”: Modi’s superlative act to charm investors Modi has made headway on making it easier for outsiders to invest more in real estate, insurance and defence, but a rigid labour market and rotten infrastructure are huge deterrents Rupam Jain Nair and Aman Shah

G

lobal statesmen and business titans descended on Indian Prime Minister Narendra Modi’s home state yesterday to pay homage to the man they count on to unleash bigbang reforms and create one of the few bright spots in a troubled world economy.

Big business cheered Modi when he won India’s strongest election mandate in 30 years last May, and he has caught its attention with eye-catching initiatives like a ‘Make in India’ campaign complete with lion logo.

Now, the 64-year-old leader has ramped up the Vibrant Gujarat jamboree he founded as the state’s chief minister in 2003, turning it into a pitch to put his nation of 1.25 billion people, most of them poor, firmly on the investment map.

U.S. Secretary of State John Kerry led a roll call of leaders, including U.N. Secretary General Ban Kimoon and World Bank head Jim Yong Kim, converging on Modi’s home town of Gandhinagar for the threeday Davos-style bash.

President Barack Obama visits India later this month.

Yet, eight months into Modi’s rule, the failure of Asia’s third-biggest economy to emerge from its longest growth slowdown in a generation is raising questions about how much substance there is behind Modi’s promise of “red carpet, not red tape”.

His Make in India drive has drawn comparisons with the manufacturing miracle that turned China into the world’s second-largest economy, outstripping India’s fourfold since 1980.

Sceptics argue that India’s competitive strengths are not in making and exporting things, but in areas like information technology and business process outsourcing where it is a world leader.

Delivering on the promise Vibrant Gujarat, held every two years, has yielded billions of dollars in investment promises but only a fraction of the deals announced has come to fruition.

Indian prime minister Narendra Modi’s cutouts seen during a Bharatiya Janata Party election rally at the Ramlila Maidan in New Delhi, India, 10 January 2015

In keeping with tradition, Ambani said his Reliance Industries conglomerate would invest a huge 1 trillion rupees (US$16 billion) in its home state of Gujarat over the next year to 18 months. He gave no details, but Reliance has embarked on major expansion.

“There is an air of optimism in the air of India,” said Sam Walsh, CEO of global mining giant Rio Tinto, who flagged two potential projects: a US$2 billion iron ore project in Odisha state and an investment

in Madhya Pradesh that could employ 30,000 diamond cutters.

Modi needs investors to put their money where their mouths are to lift stagnant capital investment that has held back India’s growth to 5.3 percent.

That is expected to accelerate this year to 6.4 percent, said the World Bank’s Kim, who called India a “bright spot” in an otherwise gloomy global economic landscape.

That would still be short of

the 7-8 percent India needs to create work for the one million people who join the workforce every month.

India slipped to 142nd out of 189 in the World Bank’s latest Doing Business Index.

Modi wants India in the top 50.

“Investors want credibility, stability and at the same time flexibility. Right now, India is a bit of an inflexible market,” said Kilbinder Dosanjh, a director for Asia at Eurasia Group, a geopolitical risk consultancy.

Reuters

14 | Business Daily

January 12, 2015

International Fed paid record Treasury in 2014 The regional Federal Reserve banks turned over a record US$98.7 billion in profits to the U.S. Treasury in 2014, essentially recycling the earnings the central bank gets from the US$4 trillion in securities it accumulated through three rounds of quantitative easing.

The figure tops the US$79.6 billion that the Fed’s 12 regional banks paid back to the U.S. government in 2013 and the US$88.4 billion paid in 2012.

The Fed earns interest on U.S. Treasury bonds and other U.S. agency securities it purchased to battle the financial crisis.

S&P reaffirms Malta’s stability The newly credit rating report of the American financial services company Standard and Poor’s (S &P) confirmed on Saturday Malta’s BBB+/A-2 longand short-term rating and reaffirmed the outlook of the Maltese economy as stable. Standard and Poor’s acknowledged the robust economic growth achieved by the Maltese economy and further highlighted that it expects Malta to continue to grow more rapidly than the eurozone as whole, with economic growth expected to equal 3 percent in 2014 and 2.5 percent in 2015. This growth is attributed to the investments in the energy sector which boosted domestic demand.

Citigroup cut bonuses for traders Citigroup Inc. this week cut its bonus pool for fixed-income and equity market traders after market revenues plunged during the last two weeks of the year, according to a person familiar with the matter. Bonuses will be down about 5 to 10 percent from a year earlier, said the person who was not authorized to speak publicly about the matter. As of mid-December, they had been expected to hold steady with the past year. The change is the result of declines across the trading businesses in the last half of the month, the person said.

BP, Anadarko fail to review fines BP and Anadarko Petroleum Corp narrowly failed to persuade a U.S appeals court to reconsider its 2014 ruling that they could face civil fines under federal pollution laws over the 2010 Gulf of Mexico oil spill. By a 7-6 vote, the 5th U.S. Circuit Court of Appeals let stand a three-judge panel’s decision to uphold a 2012 ruling from U.S. District Judge Carl Barbier in New Orleans. Barbier is scheduled on January 20 to begin a non-jury trial to determine pollution fines.

JPMorgan to pay Bear Stearns JPMorgan Chase & Co has agreed in principle to settle class action litigation arising from Bear Stearns’ sale of US$17.58 billion of mortgage securities that proved defective during the recent U.S. housing and financial crises. The largest U.S. bank, which bought Bear in 2008, will pay roughly US$500 million to investors led by a group of pension funds, a person familiar with the matter said on Friday. It is separate from JPMorgan’s US$13 billion settlement with regulators in November 2013 over mortgage securities sales.

More jobs, same wages in U.S. The drop in earnings was the biggest on record dating back to 2006

U

.S. job growth increased briskly in December, but wages posted their biggest decline in at least eight years in a sign the tightening labour market has yet to give much of a boost to workers.

Nonfarm payrolls increased by 252,000 last month after an upwardly revised jump of 353,000 in November, the Labour Department said. The jobless rate fell 0.2 percentage point to a 6-1/2-year low of 5.6 percent, but that was mainly because people left the labour force.

The drop in labour participation and a surprise five-cent, or 0.2 percent, decrease in average hourly earnings, which nearly erased November’s gains, took some shine off the otherwise upbeat report.

December marked the 11th straight month of payroll increases above 200,000, the longest stretch since 1994. For last year as a whole, the economy generated 2.95 million new jobs, the strongest annual showing since 1999.

However, some economists wondered whether last month’s broad-based fall, which was led by a record 1.2 percent plunge in the retail trade sector, was a seasonal fluke that would be revised away.

A separate, narrower earnings gauge posted its largest percentage decline since 1983.

The fall exacerbated a soft trend that has been in place since the 20072009 recession. Over the past year, earnings rose only 1.7 percent, the smallest 12-month gain since October 2012.

While December’s earnings decline bolstered the case for the Federal Reserve to take a go-slow approach to raising interest rates, it did not remove a possible June hike from the table, economists said.

The good and the bad All sectors of the economy had employment gains last month and, in another sign of strength, 50,000 more jobs were created in October and November than previously thought.

Overall, the data suggested the economy was positioned for strong growth this year despite troubling weakness in some economies overseas.

Construction employment rose by 48,000, the largest gain since January, while manufacturers added 17,000 workers. Government employment increased by 12,000 positions.

In addition, the length of the average work week held at a 6-1/2-year high of 34.6 hours, suggesting further job gains are in store.

The softness in wages is striking given the tightening jobs market. The unemployment rate dropped by more than a percentage point last year, and is now near territory Fed officials consider commensurate with full employment.

A San Francisco Federal Reserve Bank research paper published this week suggested wage growth was tepid because many firms were unable to reduce wages during the recession and are holding the line on increases in return.

Even so, economists expect to see a spark soon as the labour market

Iran to help Venezuela to stem oil price fall Venezuela’s economy contracted in the first three quarters of 2014 and its international reserves have deteriorated sharply

I

ran’s supreme leader Ayatollah Ali Khamenei told Venezuela’s president on Saturday he backed coordinated action between Tehran and Caracas to reverse a rapid fall in global oil prices which he described as a “political ploy hatched by common enemies”.

President Nicholas Maduro is on a tour of fellow OPEC countries to lobby for higher oil prices, which hit new lows last week below US$50 per barrel, nearly half of what they were back in June 2014.

The plunge in crude prices has pummelled the public finances of Iran and Venezuela, whose economies rely heavily on oil exports. “(Khamenei) endorsed an agreement between the presidents of Iran and Venezuela for a coordinated campaign against the slide in oil prices”, the official IRNA news agency said.

Venezuela’s economy contracted in the first three quarters of 2014 and its international reserves have deteriorated sharply due to the tumbling oil prices.

KEY POINTS Nonfarm payrolls increase 252,000 in December Jobless rate falls to 6-1/2-year low as labor force shrinks Average hourly earnings fall five cents; workweek steady Mixed employment report leaves possible June rate hike on the table continues to tighten. About 21 states are raising their minimum wage this year.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell two-tenths of a percentage point, to 11.2 percent, the lowest level since September 2008.

The ranks of the long-term unemployed continued to shrink in December. Almost two-thirds of the decline in the level of unemployment last year was among the long-term unemployed.

But the labour force participation rate, the percentage of the working age population who either have a job or are looking for one, dropped back to the 36-year low of 62.7 percent reached in September.

Reuters

The decline has spurred concerns that Venezuela may default on its foreign bonds, which in turn has pushed its bond yields to the highest of any emerging market nation. Maduro has denied his country will default.

Earlier on Saturday, Iranian President Hassan Rouhani said OPEC hawks Iran and Venezuela “can undoubtedly cooperate to thwart world powers’ strategies ... and to stabilise prices at a reasonable level in 2015”.

Already hit by global sanctions over its suspected nuclear programme, Iran has been particularly frustrated by the failure of OPEC countries -led by its arch regional rival Saudi Arabia -- to cut output to ease the existing glut in the oil market.

At its previous meeting on November 27, the cartel decided to keep output at 30 million barrels per day. Saudi Arabia blamed the weak market on oversupply by non-OPEC producers such as Russia, Mexico, Kazakhstan and the United States.

OPEC is due to meet next in June.

Reuters

Business Daily | 15

January 12, 2015

Opinion Business

wires

Europe’s lapse of reason

Leading reports from Asia’s best business newspapers Joseph E. Stiglitz

Nobel laureate in economics, is University Professor at Columbia University

THE KOREA HERALD South Korea’s budget deficit is expected to be higher than expected to surpass an earlier estimate of 3.4 trillion won (US$3.1 billion) this year due to lower-thanpredicted economic growth and inflation, a parliamentary report said yesterday. The National Assembly Budget Office (NABO) in October forecast the government to collect 218.2 trillion won in taxes based on a 5.6 percent nominal growth rate, expecting a tax revenue shortfall of over 3 trillion won of this year. In the latest report, the NABO said the state tax income will be lower than the October estimate.

PHILSTAR Remittances likely remained robust in November last year although at a slower growth rate than in October, UK-based investment bank Barclays said.

The bank has forecast cash remittances to have grown 5.9 percent in November from the prior year. “A high base will lead to minor moderation in remittances growth in November,” Barclays noted.

Official November remittances data will be released by the central bank on Wednesday, January 14. Money sent home by Filipinos abroad went up seven percent to US$2.224 billion in October from US$2.079 billion in the same month in 2013.

THE NEW ZEALAND HERALD At least four farmers have taken their lives since Fonterra cut its milk pay-out forecast for the coming season. On December 10, the dairy giant dropped its pay-out forecast for 2014-15 to an eight-year low of NZ$4.70 a kilogram of milk solids. That’s nearly half the NZ$8.40 paid in the 2013-14 season and is estimated to mean an income drop for farmers of NZ$6.6 billion. Federated Farmers dairy industry group vicechairman Kevin Robinson confirmed to the Herald on Sunday that it was aware of the December deaths.

THE ASAHI SHIMBUN Tokio Marine & Nichido Fire Insurance Co. released a new winter-storm policy that enables retailers and tourist facilities to receive compensation for business losses resulting from heavy snow--even when they sustain no property damage.

The new service, marketed in December, allows operators of retail shops, restaurants, amusement parks, hotels and others to receive insurance money when snowfall causes no direct damage to their properties, but they see a drop in sales and customers due to heavy snowfall. The new weather derivative was developed in response to a succession of requests.

A

t long last, the United States is showing signs of recovery from the crisis that erupted at the end of President George W. Bush’s administration, when the nearimplosion of its financial system sent shock waves around the world. But it is not a strong recovery; at best, the gap between where the economy would have been and where it is today is not widening. If it is closing, it is doing so very slowly; the damage wrought by the crisis appears to be long term.

Then again, it could be worse.

Across the Atlantic, there are few signs of even a modest USstyle recovery: The gap between where Europe is and where it would have been in the absence of the crisis continues to grow. In most European Union countries, per capita GDP is less than it was before the crisis. A lost half-decade is quickly turning into a whole one. Behind the cold statistics, lives are being ruined, dreams are being dashed, and families are falling apart (or not being formed) as stagnation – depression in some places – runs on year after year.

The EU has highly talented, highly educated people. Its member countries have strong legal frameworks and wellfunctioning societies. Before the crisis, most even had wellfunctioning economies. In some places, productivity per hour – or the rate of its growth – was among the highest in the world.

But Europe is not a victim.

Yes, America mismanaged its economy; but, no, the US did not somehow manage to impose the brunt of the global fallout on Europe. The EU’s malaise is self-inflicted, owing to an unprecedented succession

of bad economic decisions, beginning with the creation of the euro. Though intended to unite Europe, in the end the euro has divided it; and, in the absence of the political will to create the institutions that would enable a single currency to work, the damage is not being undone.

The current mess stems partly from adherence to a long-discredited belief in wellfunctioning markets without imperfections of information and competition. Hubris has also played a role. How else to explain the fact that, year after year, European officials’ forecasts of their policies’ consequences have been consistently wrong?

These forecasts have been wrong not because EU countries failed to implement the prescribed policies, but because the models upon which those policies relied were so badly flawed. In Greece, for example, measures intended to lower the debt burden have in fact left the country more burdened than it was in 2010: the debt-to-GDP ratio has increased, owing to the bruising impact of fiscal austerity on output. At least the International Monetary Fund has owned up to these intellectual and policy failures.

Europe’s leaders remain convinced that structural reform must be their top priority. But the problems they point to were apparent in the years before the crisis, and they were not stopping growth then. What Europe needs more than structural reform within member countries is reform of the structure of the eurozone itself, and a reversal of austerity policies, which have failed time and again to reignite economic growth.

Those who thought that the euro could not survive have been

The EU’s malaise is self-inflicted, owing to an unprecedented succession of bad economic decisions, beginning with the creation of the euro

repeatedly proven wrong. But the critics have been right about one thing: unless the structure of the eurozone is reformed, and austerity reversed, Europe will not recover.

The drama in Europe is far from over. One of the EU’s strengths is the vitality of its democracies.

But the euro took away from citizens – especially in the crisis countries – any say over their economic destiny. Repeatedly, voters have thrown out incumbents, dissatisfied with the direction of the economy – only to have the new government continue on the same course dictated

from Brussels, Frankfurt, and Berlin.

But for how long can this continue? And how will voters react? Throughout Europe, we have seen the alarming growth of extreme nationalist parties, running counter to the Enlightenment values that have made Europe so successful. In some places, large separatist movements are rising.

Now Greece is posing yet another test for Europe. The decline in Greek GDP since 2010 is far worse than that which confronted America during the Great Depression of the 1930s.

Youth unemployment is over 50%. Prime Minister Antonis Samaras’s government has failed, and now, owing to the parliament’s inability to choose a new Greek president, an early general election will be held on January 25.

The left opposition Syriza party, which is committed to renegotiating the terms of Greece’s EU bailout, is ahead in opinion polls. If Syriza wins but does not take power, a principal reason will be fear of how the EU will respond. Fear is not the noblest of emotions, and it will not give rise to the kind of national consensus that Greece needs in order to move forward.

The issue is not Greece. It is Europe. If Europe does not change its ways – if it does not reform the eurozone and repeal austerity – a popular backlash will become inevitable.

Greece may stay the course this time. But this economic madness cannot continue forever.

Democracy will not permit it.

But how much more pain will Europe have to endure before reason is restored?

Project Syndicate

16 | Business Daily

January 12, 2015

Closing Xi Jinping’s anti-graft remarks published

Bangladesh economy hit hard by blockade

A compilation of select remarks by Chinese President Xi Jinping on the fight against corruption and the construction of a clean Communist Party of China (CPC) has been published. The book was published by the Central Party Literature Press and the China Fangzheng Publishing House, according to a press release by the CPC’s central committee yesterday. The book, divided into 9 sections, brings together 216 remarks by Xi from more than 40 speeches, articles and written instructions between November 15, 2012 and October 23, 2014.

A rolling transport blockade organised by the opposition is taking a huge toll on Bangladesh’s economy, with the vital garment industry hit particularly hard, a business leader said yesterday.

Opposition leader Khaleda Zia (pictured) called the open-ended blockade of roads, railways and waterways after she was confined to her office by police on January 3 while trying to mobilise anti-government protests. In the nine days that Zia has been locked in her office, her supporters have taken to the streets in their hundreds, torching vehicles and derailing trains.

Volvo to sell Chinese-made cars in U.S. Volvo expects to ship roughly 1,500 made-in-China S60L cars to the U.S. this year

Workers in a Geely factory

V

olvo Car Group plans to export a Chinesemade midsize sedan this year to the United States, and is starting to weigh the possibility of building a vehicle factory in the United States, people familiar with the Chinese-owned automaker’s plans said.

Both moves would be significant for the auto industry and Volvo’s parent, Zhejiang Geely Holding Group Co. So far, global automakers have chosen not to ship vehicles made in China to the U.S. market in any significant numbers, and efforts by Chinese automakers to export vehicles to the United States

have foundered.

Volvo is also behind rivals BMW and Mercedes in establishing production in the United States, which insulates the German brands from currency fluctuations.

Volvo might also export a large “strategic, flagship” sedan based on a newly developed underpinning technology, said the executives, who work for Zhejiang Geely.

That car would be shipped out of China in addition to the Volvo S60L, a long wheelbase version of the S60 sedan Volvo began producing in the southwestern China city of Chengdu more than a year ago.

The moves are aimed at

Korean Gas firm CEO to resign

S

reviving Volvo’s momentum in the U.S. market where volume last year fell 8 percent from 2013 to 56,371 vehicles. The U.S. market, which has long been Volvo’s largest market, was replaced by China last year. China bought 81,221 Volvos in 2014, up 33 percent.

More broadly, the moves are part of Geely’s turnaround strategy for Volvo which has struggled to go beyond being a brand with an annual volume of less than a half-million vehicles. Thanks to its focus on China where the brand expanded its distribution network and product portfolio, Volvo sales volume is on the rise. It sold a total of 465,866

Volvo is not an indigenous Chinese brand but it is wholly Chinese-owned.

Perhaps this is the model or strategy that finally works for Chinese companies trying to enter the U.S. market and other markets James Chao, Asia-Pacific director of consulting and research, IHS Automotive

vehicles globally last year, up 9 percent from 2013.

Long-standing goal “The S60L forms just one part of our U.S. revival plan,” said David Ibison, a Gothenburg, Sweden-based Volvo spokesman. Ibison said Volvo plans to launch seven new products by 2018 and

increase U.S. sales to around 100,000 cars a year in the medium term. He declined to elaborate.

Exporting Chineseproduced mainstream passenger cars to the United States and other advanced auto markets has been a long-standing goal of China’s indigenous automakers - an objective that has largely eluded the industry.

Geely’s purchase of Volvo from Ford Motor Co five years ago surprised many in the auto industry, who doubted that a relative newcomer could turn around the nearly 90-yearold Swedish business while protecting its famous brand.

The S60L was developed originally as a China-specific model to cater to wealthy Chinese consumers who prefer cars with bigger, comfortable rear seats because many of these owners have chauffeurs.

Volvo expects to ship roughly 1,500 made-in-China S60L cars to the United States this year, compared with the car’s projected volume in China this year of 26,000.

The additional car Volvo plans to export to the United States, those executives said, is a flagship large sedan that might be called the S90 which uses Volvo’s new vehicle underpinning technology called “scalable platform architecture” or SPA.

China and Kenya pledge to deepen ties

Maduro in OPEC kingpin Saudi for talks

C

V

tate-owned Korea Gas Corp said yesterday its president and chief executive Jang Seokhyo will tender his resignation today after the energy ministry asked the country’s president to sack him.

Jang has been indicted on charges of bribery and breach of duty.

Jang was quoted in a KOGAS statement as saying he would tender his resignation so as not to be a burden on the company and the country’s president, Park Geun-hye.

But he did not comment on the charges against him.

Last month, prosecutors indicted Jang on suspicion of breach of trust over a sum of 3.03 billion won (US$2.79 million) at an LNG tanker tugboat company he headed before taking over as KOGAS chief executive in 2013.

He is also suspected of taking 280 million won in bribes as KOGAS chief executive.

Jang is scheduled to head the global gas promotion agency the International Gas Union from 2018 to 2021.

hina and Kenya have pledged to further deepen bilateral relations and practical cooperation, visiting Chinese Foreign Minister Wang Yi said. “We have agreed to make further progress in the comprehensive cooperative partnership between our two countries featuring equality, mutual trust, mutual benefit and win-win outcomes,” Wang told media after meeting with his Kenyan counterpart Amina Mohamed. The two sides also agreed to continue to support each other on issues regarding their core interests and major concerns, so as to lay even firmer foundation for the development of bilateral relations, he added. Wang said China is willing to transform bilateral traditional friendship into impetus for common development, and work with Kenya to convert its potential in human and natural resources into economic strengths. The Chinese foreign minister stressed that both sides would further cooperation in seven priority areas of agricultural modernization, infrastructure development, industrial relocation, renewable energy, ecology and environmental protection, people-to-people exchanges, and peace and security cooperation.

Reuters

Xinhua

Reuters

enezuelan President Nicolás Maduro has arrived in OPEC’s leading oil producer Saudi Arabia, state media reported yesterday, after he visited Iran to discuss the impact of plummeting crude prices.

Maduro landed on Saturday in Riyadh where Deputy Crown Prince Moqren bin Abdul Aziz received him, the Saudi Press Agency said.

“The Venezuelan president was accompanied by a number of ministers,” it said, giving no further details.

Saudi Arabia is the world’s largest crude exporter and the biggest producer in the 12-member Organisation of the Petroleum Exporting Countries (OPEC), to which Venezuela and Iran also belong.

While Saudi Arabia says it is financially strong enough to withstand the drop in world oil prices, which fell about 50 percent last year, the budgets of Venezuela and Iran are under strain.

Venezuela has said it is willing to cut production to support prices but OPEC decided in November to maintain an output ceiling of 30 million barrels per day.

AFP