Macau business daily, Mar, 12, 2015

MOP 6.00 Closing editor: Joanne Kuai Year III

Number 747 Thursday March 12, 2015

Publisher: Paulo A. Azevedo

Caution 101

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t’s already been withdrawn in Hong Kong. But rumour has it, it may be introduced here. A high commission-paying investment-linked assurance scheme (ILAS) product. Dubbed the ‘101 Plan’ or ‘Harvest 101’. Hong Kong insurance authorities ban upfront commission payments on long-term policies. Chinese language newspaper The Sun reports that some insurance firms – licensed in both Hong Kong and Macau – are partnering co-brokers from Hong Kong to sell the plan in Macau to Mainland Chinese clients PAGE 3

General Weakness

Tightening the screws Beijing’s message is clear. Mainland officials should steer clear of Macau. This, according to the director of the Liaison Office of the Macau SAR, Li Gang. Who said their presence here is being monitored. He also urged a speedy conclusion to a criminal ‘repatriation’ agreement between the MSAR and the Mainland

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Investment, retail sales and factory output. A weaker than expected performance is fuelling a recurring idea. The gov’t may need to further stimulate the Chinese economy

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United, we stand

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8

Brought to you by

HSI - Movers March 11

Vote of confidence A lone voice in the wilderness. Rating agency Fitch expressed an optimistic outlook for the gaming industry this year. Forecasting a revenue drop of only 4 pct. Which is significantly lower than the market consensus. Fitch cites solid balance sheets and deep war chests. It also subscribes to the healing power of a 2H rebound via two new Cotai properties

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Urban Planning Committee members are taking a position.

And urging the gov’t to rule out ever more unified standards for old building planning.

Cultural heritage would be better served if buildings in the same area are considered as a harmonious whole, they say

PAGE

2

Name

%Day

China Resources Ente

1.91

Hutchison Whampoa L

1.90

Link REIT/The

1.81

Henderson Land Devel

1.08

Wharf Holdings Ltd/T

0.37

China Resources Powe

-2.44

Lenovo Group Ltd

-2.92

Galaxy Entertainment

-3.42

Sands China Ltd

-3.55

China Shenhua Energy

-3.79

Source: Bloomberg

www.macaubusinessdaily.com

I SSN 2226-8294

Brought to you by

Tighter infant formula controls

CCAC: legal to Melco denies dismiss urban agreement planning secretariat with CSH PAGE 2

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Japanese yen needs to fall lower to help economy PAGE 12

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2015-3-13

2015-3-14

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2 | Business Daily

March 12, 2015

Macau

Urban planning committee Macau wants more united standards tourism on preserving old buildings showcased

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rban planning committee members said yesterday that cultural heritage protection should be planned more broadly instead of issuing standards on one building each time.

In the general meeting of the committee yesterday, chaired by Secretary for Transport and Public Works Raimundo Arrais do Rosário, it discussed the re-construction plan for Pátio dos Cules No.8, a building behind Rua da Alfândega and under the protection of the Cultural Heritage Protection Law. In order to preserve the historical building, the Cultural Affairs Bureau

proposes that the re-construction of the building meet certain standards, such as maintaining the facade, the height not exceeding 20.5 metres, and the elevation being built with black bricks or painted by whitewashing.

However, members said that onethird of the buildings in the patio had already been re-built, questioning whether the Bureau’s request of keeping the antique appearance of the building would match the surroundings.

They also suggested the government consider buildings in the same area as a whole and thus rule out a united standard for them, so that they can

harmonise with each other.

“Does it mean beautiful if we only preserve one building?

Should we make standards for the whole environment [of the area]?” committee member and legislator Mak Soi Kun asked.

Some members also urged the government to subsidise landlords to re-construct their properties which are covered by the cultural heritage protection law, claiming some landlords may not want to spend the money; as such, these buildings will never be re-constructed and eventually become dangerous.

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CCAC: Dismissal of urban planning secretariat legal

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he city’s graft watchdog - the Commission against Corruption (CCAC) - said the recent dismissal of the secretariat of the urban planning committee did not violate any administrative legality, following investigation into a complaint filed by pan-democracy group New Macau Association, which claimed that the dissolution was illegal.

The dismissal of the secretariat announced last month had aroused suspicions from the public, questioning whether the dismissal would weaken the urban planning committee’s independence as an advisory body, as well as why the government had not consulted the committee itself before making the decision.

However, CCAC believes that the secretariat was established based on Administrative Regulation no.3/2014, and as such the dissolution by amending the article through article no.2/2014 did not violate the provision or principles of the Law of Urban Planning.

In addition, the watchdog perceives that the dissolution complied with the relevant provisions of the Legal Regime for Stipulating Internal Rules and Regulations.

CCAC also indicated that the dismissal did not contravene the provisions regarding consultation with the Council, claiming the dissolution is more related to the internal administration and operation

of the Council rather than substantive content of urban planning.

Nevertheless, CCAC noted that any drafts of legislation and regulations related to substantive content of urban planning can only be made or amended after consulting the committee.

The government recently claimed that the dissolution of the secretariat was only to meet with the Chief Executive’s policy of simplifying the administration structure, indicating it would not change the function of the urban planning committee. On Monday, the secretariat for the health system infrastructure committee was also dismissed for the same reason.

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HK, Macau service providers to enjoy easier market access in Guangdong

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outh China’s Guangdong Province will further facilitate market access for service providers from Hong Kong and Macau, the State Council, or the cabinet, announced on Tuesday.

Local authorities in Guangdong are required to make adjustments to regulations on administrative approval in order to boost service trade liberalization for investors from Hong Kong and Macau, according to a decision released by the State Council.

Businesses owned by Hong Kong and Macau investors will no longer be

treated as foreign companies whose establishment or business conversion usually need to undergo examination and approval procedures, it said.

According to the decision, Guangdong will further open the local services industry to investors from Hong Kong and Macau under the Closer Economic Partnership Arrangement (CEPA).

Adjustment is required for rules that regulate industries of telecommunications, joint school operation, sea transportation, entertainment, video gaming and civil aviation.

In December, Chinese mainland signed with Hong Kong and Macau new trade deals, which are under the framework of CEPA, respectively, in a bid to promote liberalization in service trade. Under the deals, Hong Kong and Macau enterprises will face the same conditions as mainland companies.

Tuesday’s decision was released to ensure the deals would be carried out smoothly.

The mainland signed the CEPA with Hong Kong and Macau in 2003 to forge closer ties.

Xinhua

in Berlin

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acau Government Tourist Office (MGTO) recently promoted Macau’s tourism products and its diverse tourism image at the renowned international tourism trade fair ITB Berlin, reaching industry partners from around the world.

ITB Berlin 2015 was held from 4 to 8 March in Berlin, the capital of Germany. Occupying some 63 square metres, the MGTO booth was themed ‘Touching Moments, Experience Macau’ to promote the rich and diverse tourism elements of Macau by showcasing the latest and upcoming tourism facilities, walking tour routes and other tourism products, etc. MGTO took the opportunity of this prominent occasion to enhance Macau’s reputation and gain wide recognition among local citizens and worldwide trade visitors, ultimately facilitating the development of longhaul markets.

MGTO representatives met trade partners and discussed business opportunities, seizing every opportunity to promote Macau. They also introduced various walking tour routes to visitors, striving to attract more visitors from different markets to Macau, to stroll around and explore different quarters of the city, including Taipa and Coloane, as a fascinating way to enjoy Macau’s diverse scenery and experience local customs.

In addition, MGTO’s promotional video of Macau received the silver award in the category for best regional video in the Golden City Gate Tourism Media Award held during the travel fair. Golden City Gate was held for the 14th edition with promotional art works judged by an international jury to honour outstanding tourism promotions from around the world.

The ITB travel fair boasts more than 40 years of history and enjoys worldwide recognition as one of the largest international travel trade shows in the world. With over 10,000 exhibitors from 186 countries, this year’s ITB Berlin attracted some 175,000 trade visitors and consumers.

Business Daily | 3

March 12, 2015

Macau

Controversial insurance-linked investment product for Macau?

A high commission-paying investment-linked assurance scheme (ILAS) product is reportedly to be sold here after exiting Hong Kong as its insurance authority has stepped up moves to regulate ILAS products Stephanie Lai

sw.lai@macaubusinessdaily.com

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nsurers are eyeing the sale of an investmentlinked assurance scheme (ILAS) product that charges high upfront commissions in Macau despite the fact the product has already been withdrawn from Hong Kong under tightened ILAS sales procedures.

Hong Kong’s insurance authority has banned upfront commission payments on long-term policies.

The ILAS product is what is often dubbed a ‘101 Plan or ‘Harvest 101’, an insurance plan under which the death benefit is 101 per cent of the insurance account value.

An ILAS is one that combines life insurance, investment and estate planning and allows investors to spread small sums of money between

different mutual funds.

Citing unidentified insurance industry sources, Hong Kong Chinese language newspaper The Sun reported that some insurance firms – licensed in both Hong Kong and Macau – are partnering with cobrokers from Hong Kong to

sell the ‘101 Plan’ in Macau to Mainland Chinese clients.

Business Daily has approached the Monetary Authority of Macau and the Macau Insurers’ Association to verify the reported practice but had not received a reply by the time the story went to press.

The Macau Branch of AIA International Ltd., which is the second largest by market share in the city, told Business Daily that the company does not provide the ‘101 Plan’ to clients.

New rules imposed by the Hong Kong insurance authority, in effect since January 1 this year, stipulates that all ILAS products would provide a minimum death benefit of 105 per cent of the account value.

The new rules put forward by the Hong Kong authority have also banned upfront commission payments on long-term ILAS policies to better safeguard clients’ interests.

‘Indemnity commission, or any standing arrangement that offers advance payment of commission, is strictly

prohibited. Insurers should only pay commission on an earned basis,’ say the rules, already in force since the beginning of the year.

‘Commission payable should also be spread over an appropriate duration to encourage good after-sale service and duly reward long-term relationships between intermediaries and policyholders,’ say the rules.

Such ILAS policies pay brokers indemnity commissions of up to 8 per cent of the account’s value immediately upon sale. The insurance firm is able to recoup these costs by imposing minimum payment terms and premium lock-ins on policyholders, Hong Kong’s South China Morning Post reported in August last year.

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March 12, 2015

Macau Infrastructure Development Office Chan Hon Kit resigns A government dispatch released yesterday announced that Mr. Chan Hon Kit has resigned from the post of Co-ordinator at the Infrastructure Development Office (GDI).

Mr. Chan is now replaced by the former assistant co-ordinator of the Office, Chau Vai Man, who assumes the acting chief position. Mr. Chan, who had been a former deputy director at the Land, Public Works and Transport Bureau, assumed the top post of Coordinator at GDI in November 2007. Mr. Chan submitted his resignation last month, citing “heath issues” as the reason for his intended departure from the Office.

Lawrence Ho denies agreement with CSH in Marianas

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awrence Ho, Melco Crown’s CEO and son of casino mogul Stanley Ho, yesterday denied any current or future co-operation with Chinese Strategic Holdings (CSH) regarding a hotel management investment in the Northern Mariana Islands. The islands are located in the Pacific Ocean and are a US territory with Commonwealth status.

‘The company clarifies that the company, its subsidiaries and Mr. Ho do not and will not in the foreseeable future have any business co-operation with CSH’, wrote Melco International Development in a filing submitted to the Hong Kong Stock Exchange.

Ho’s reaction came after rumours in the media that Melco was the

company behind the agreement CSH announced last month. In a filing with the HK bourse, Chinese Strategic said it ‘has been in negotiations with a publicly traded company listed on NASDAQ regarding a possible cooperation in the hotel management and investment in Northern Mariana’.

The NASDAQ company, CSH added, was also ‘a subsidiary of a

Construction companies propose fewer economic houses The Macau General Association of Real Estate has suggested the government launch a MOP6 billion fund to subsidise the acquisition of houses from the private sector João Santos Filipe

jsfilipe@macaubusinessdaily.com

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group of construction companies has told the government that building many economic houses will create problems for Macau society, as people acquiring their places from the private sector will feel unfairly

treated. This view was shared on Tuesday during a meeting with the Secretary for Transport and Public Works, according to the Portuguese language newspaper Jornal Tribuna de Macau.

In the Special Administrative Region, there are two types of social housing. Social houses are built by the government or contractors to rent to deprived people, while economic houses are built by the government

reputable casino gaming group active in the Asia Pacific region operating a hotel-casino complex including one of the only six companies granted concessions or sub-concessions by the government of the Macau Special Administrative Region to operate casinos in Macau’. It was this sentence that sparked the rumours that Melco was the casino operator behind the agreement. The unknown Macau gaming operator would provide CSH assistance for the possible application of a gaming licence of and for the new hotel complex plus the rendering of consultancy services in negotiations with the government and relevant regulatory authorities.

as a complement to the private sector and seeks to offer houses at affordable prices to Macau residents.

However, the Macau General Association of Real Estate says those who buy houses in the private sector feel unfairly treated because they have to face high prices in the private sector, while the economic houses are cheaper. According to the association led by Chong Sio Kin the government should give priority to social housing instead of economic.

The group of construction companies asked as well during the meeting with Raimundo Arrais do Rosário for the government to reduce the requirements for Macau people to have loans to buy their own houses.

The construction companies also suggested that instead of building so many economic houses, the government should create a MOP6 billion fund to subsidise those who want to buy houses in the private sector in order to increase their purchase capacity.

Fourth span between MGTO promotes joint Macau and Taipa awaiting tourism with Zhuhai Beijing approval & Zhongshang

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he fourth bridge connecting Macau Peninsula and Taipa is at the moment awaiting the approval of the Central Government, the Director of Land, Public Works and Transport Bureau (DSSOPT) said in a reply to Member of the Legislative Assembly Ho Ion Sang, according to the Portuguese language newspaper Hoje Macau.

“In due time the Administration will begin a study about the fourth connection between Macau and Taipa in order to assure that it will be essential in the future sustainable development of Macau’s transportation network”, Li Canfeng explained.

This is not going to be the first study concerning the fourth bridge connecting Macau to Taipa. In July

last year, a study was conducted to assess the impact of the link on the environment. Also in 2013, a company specialising in bridge and tunnel design was hired to assess the importance of the construction of the bridge. However, there is not yet a specific date for the construction of the connection to begin.

The Director of the Land, Public Works and Transport Bureau also revealed, as quoted by the Portuguese language newspaper, that the process to reclaim the Urban Zone E1 will begin during this quarter following a public tender for the works. Zone E1 will add around 73 hectares to the territory of the Special Administrative Region.

J.S.F.

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acau Government Tourist Office (MGTO) is to continue co-operating with the tourism departments of Zhuhai and Zhongshang in Guangdong Province to jointly promote tours across the three cities abroad.

According to MGTO, the three authorities met and agreed on Monday that a joint promotion will be held in Southeast Asia and Sichuan Province in China this year with the objective of attracting overseas tourists as well as overseas Chinese travelling to the three cities.

The promotion is themed ‘Xiangshan in the past, Zhongshang, Zhuhai and Macau today. It will also promote the historical story of Dr. Sun

Yat-sen, who is the Founding Father of the Republic of China.

The three governments began cooperating 2006, having promoted their joint travel plan for tourists in Taiwan, Japan, South Korea, Canada, Singapore, India, Thailand, Malaysia, Indonesia, Portugal and Spain, in addition to Mainland China.

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Business Daily | 5

March 12, 2015

Macau

Macau still a good bet, says Fitch The rating agency projects an optimistic outlook for the gaming industry this year. Revenues are forecast to drop only 4 per cent (a fifth of the current market consensus) and Macau casinos with a solid balance sheet can tackle the crisis. Dividends are expected to be cut, however Luís Gonçalves

Luis.goncalves@macaubusinessdaily.com

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t’s by far the most optimistic outlook for the year. Fitch, one of the world’s three rating agencies, believes gaming operators in Macau ‘are still a good bet’ despite the current headwinds. Dividend cuts are almost certain in the coming months, however. The agency notes also that casino companies here still have enough cash to accommodate a longer than expected recovery of revenues.

The Fitch report contrasts with the majority of investors who follow the gaming industry, whose predictions point to a double-digit drop in revenues this year, along with profits and likely delays in the new Cotai projects.

The rating agency estimates a decrease of only 4 per cent in revenues for the sector in Macau this year.

That’s a fifth of what Deutsche Bank and Wells Fargo are estimating (21 per cent). ‘While the recent operating declines are concerning we are encouraged by the fact that the long-term fundamentals for the higher-margin, lower-volatility mass

business remain intact’, wrote Fitch in a note to clients yesterday. ‘Macau is still a good bet’, the company added.

Second half rebound Fitch says its optimism for 2015 is based in the assumption that revenue growth will resume in the second half of the year as two new properties open ( Galaxy Phase II and Melco’s Studio City ) attracting new customers. And also due to the fact that negative comparisons with last year should disappear. ‘Despite the negative forecast Fitch remains positive on medium-to-long-term Macau fundamentals, continuing to hold that Macau and the greater China market remain under-penetrated’, says Fitch.

Contrary to an increasing number of banks and brokerages, Fitch believes that supply will drive demand in Macau hoping the ten new casino integrated resorts scheduled to open up to 2017 - and worth US$20 billion - will bring millions of new guests

David Chow: Gaming industry to adjust for 2 more years

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avid Chow Kam Fai, cochairman and chief executive officer of casino service firm Macau Legend Development Ltd. predicts that the adjustment phase of the gaming industry will last for two more years, according to local broadcaster TDM Chinese Radio.

Mr. Chow, who is also a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), told reporters in Beijing yesterday that the gaming industry will depend on the traffic auxiliary facilities during the adjustment phase, which may decide whether patronage can be attracted to the city, such as the Hong Kong-Zhuhai-Macau Bridge.

Meanwhile, following the nine consecutive month-gaming revenue decline Mr. Chow perceives that it is the appropriate time for Macau to create a new market.

He also indicated that even if the city’s gaming revenue drops to MOP15

sheet strength to absorb the nearterm volatility although dividends may have to be ratcheted down if the current operating weakness persists’.

billion per month it won’t matter to the local gaming corporations as they have already reached a payback, and have enough cash and ability to finance forwards.

Regarding rumours that the Macau Government may grant one more gaming licence to a Chinesesubsidised enterprise, Mr. Chow remarked that “Many people think that such a Chinese-subsidised company refers to [mine]. But this news is not from me,” TDM Radio quoted Mr. Chow as saying.

In fact, the director of the Liaison Office of the central government in Macau, Li Gang, told reporters earlier this week that he had not received any related orders regarding the issue of one more gaming licence for Chinese companies, claiming all the news regarding the gaming industry, such as the number of licences that will be issued in the future, are all rumours prior to the interim review.

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Exposed

to town. The Chinese economy is expected to grow in 2015 (6.8%) and 2016 (6.5%) generating an influx of mass-market demand for Macau.

Fitch believes that gaming operators in Macau are still financially solid enough to face the current volatility in their stocks and diminishing revenues but it won’t prevent a wave of dividend cuts.

In a report this week, Macquarie also warned of dividend cuts in the sector, namely through the reduction of special or quarterly dividend payouts. ‘All six concession holders have good liquidity and balance

But with a so large a drop in revenues not all the cases are the same. In terms of credit, MGM is the weakest link of all the operators here.

Fitch says the company that manages MGM Macau is the most exposed, as the group ‘most heavily relies on Macau dividends for credit support’.

In addition, ‘Studio City with US$2.1 billion of project financing would also be susceptible if not accounting for potential parent support’.

The most worrying sign for operators and investors is the assumption that the current crisis will not be V-shaped like the previous one in 2009. A V-shaped recovery is known for a quick drop, followed by a quick rebound. But the current ‘recovery’ has until now been flat and prolonged (see chart).

6 | Business Daily

March 12, 2015

Macau Brands

Trends

Apple-licious Raquel Dias newsdesk@macaubusinessdaily.com

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he most recent Apple press conference gave substance to most of the rumours circulating.

There is indeed a new Gold, Space Grey and Silver MacBook. Yes, Gold.

While all the other lines are still maintained with few upgrades - be it the MacBook Pro, MacBook Air or iMac - the new MacBook is Apple’s boldest move in a long time. Tim Cook is not disappointing.

I’m not to be trusted when talking about Apple. Few brands inspire as much love and hatred at the same time and I have to admit I really am team Apple. However, even I, proud user of Macintosh since 1993, have my reservations. Sure, the new line looks just as sleek and shiny (did I mention the GOLD computer?) but it’s limiting the number of USB ports to one, and the USB-C is really the right move? I know we’re in the wireless age and the USB-C port offers charging, quick USB 3 data transfer for connecting to external devices and peripherals, and video output that supports HDMI, VGA, and Mini Display Port connection, but even so…

From a design perspective the new MacBook is amazing.

Everything’s been reinvented - from keyboard to screen - making it thinner, lighter and faster than the MacBook Air. It even has the craved Retina Display.

Love it or hate it, like all Apple products, I’m sure it will be the reason for never ending queues when it finally arrives in shops all over the planet.

Thinking beyond Macau borders

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ollowing a 37.75 per cent growth in profits last year, ICBC Macau remains the leading lender in Macau whilst preparing for the expansion of its business beyond the local market.

Structural adjustment is a phrase that Jiang Yisheng, Chief Executive Officer of the Industrial and Commercial Bank of China (Macau) Ltd., uses a lot, referring to both the ongoing restructure of the Mainland Chinese economy and the restructuring taking place within the lender itself.

Regardless of which adjustment he is referring to, the goal of the bank remains clear after “reaching a milestone” last year: To hold onto the lead it enjoys in the territory and use Macau as a base for business expansion.

“If I have to find a phrase to describe the development of ICBC (Macau) last year, it’s ‘good and quick’,” said Mr. Jiang in an interview in early February. “The quality of our assets remain outstanding with the ratio of non-performing loans staying at a very low 0.05 per cent, at a time when the economy has been subjected to downward pressures since the second half of last year.”

Regardless of the tougher environment, ICBC (Macau) has still managed to deliver a balance sheet that other local lenders would envy. Preliminary figures show that the lender’s profits surged some 37.75 per cent year-on-year for a record high of MOP2 billion (US$250 million) last year, Mr. Jiang

revealed, compared with an average growth of 28.5 per cent in operating profits, figures from the Monetary Authority of Macau suggest, in the local banking sector in 2014.

“It’s not easy [to achieve such results] as growth in the past few years was usually above 20 per cent,” said the CEO who took up his position in January 2014. He attributed the robust performance of last year to several factors: the increase in market share, the structural adjustment that the bank has implemented, and the growth in yuan business.

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.

‘Holding up half the sky’

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acau Business has sought out organisations in the territory formed specifically for female members. There are four main women’s organisations in the territory, with hundreds – even thousands - of members. Most of these groups have no political aspirations whatsoever, and focus solely on charity. But still they are a soft power in local society.

They not only undertake charitable works but run schools and nurseries, homes for the elderly, look after the underprivileged, and, in particular, raise millions every year. Even if they are not very active politically, they have for many years played an

active and important role in Macau.

The Women’s General Association is the largest women’s organisation in Macau and the only one with political aspirations. The Association was established in 1950 and is dedicated to the education, health and welfare of women and children. Two of its board members are also members of the Legislative Assembly. Chan Hong is vice-president of the Association board and occupies one of the LA’s indirectly-elected seats, while Wong Kit Cheng is a directly-elected member. In fact, this Association is one of the most influential in the local political field as part of the so-called

pro-Beijing camp or traditional forces.

Mothers’ Work - the English translation for Obra das Mães, the official name in Portuguese of another charity association - is a smaller organisation that is also headed by Tina Ho. However, they steer clear of politics and refuse to comment on controversial issues related to women.

“Our job is just to love and support those that are most in need,” Filomena Costa, a member of the board tells Macau Business.

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.

Corporate Career Fair for Studio City Melco Crown Entertainment Limited - developer, owner and operator of casino gaming and entertainment resort facilities in Asia – has announced that it has launched the first career fair for Studio City, its new cinematically-themed gaming, entertainment and leisure destination resort in Macau. Studio City boasts not only the most diverse collection of entertainment offerings ever seen in Macau but will also create thousands of job opportunities for Macau residents in a unique, fun and stylish workplace.

The four-day career fair, running from March 9 to March 12 and exclusively for Macau ID holders, is being held at Grand Hyatt Macau, City of Dreams. Known as an innovator of world-class entertainment, Melco Crown Entertainment has crafted ‘The Audition: Are You In?’ - an immersive recruitment experience for its potential ‘stars’ of Studio City.

The ‘Wow’ and ‘Super Wow’ attractions for new employees wanting to join include the opportunity to participate in the best employee loyalty programme in Macau, the ‘Golden Nest Egg’. This enables new nonmanagement employees joining the Company on or before July 31, 2015 to receive an additional one month’s salary in July or August 2015, and to be eligible to receive an additional five months’ salary in 2018.

Business Daily | 7

March 12, 2015

Macau Central Government warns Mainland officials to avoid Macau João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he central government is keeping an eye on Mainland officials gambling in Macau and is ready to act against them, the Director of the Liaison Office of the Macau SAR, Li Gang, said in an interview with Chinese newspaper The Beijing News. This policy is part of the anti-corruption campaign on the Mainland that is considered accountable for the sharp drop in the VIP segment of Macau’s gaming industry.

“As the crackdown on graft is stepped up, some corrupt officials – including executives of some stateowned enterprises – now dare not go to Macau to gamble. Moreover, because of measures taken by Macau’s gambling industry, if such officials do gamble in Macau they will be discovered”, Li Gang said.

Furthermore, Li Gang stated that it is time for the authorities of Mainland China and Macau to establish an extradition agreement that would ensure the repatriation of officials found to have transgressed in the world’s biggest gaming destination.

“It’s necessary for both sides to strengthen co-operation in this field.

Once any criminal flees to Macau with money, the Macau authorities could repatriate [that person] so as to jointly crack down on crimes”, he said.

“So far, there is a discussion mechanism in place between Macau and the Mainland but there is not any repatriation agreement, which should be sealed as soon as possible.”

Macau gaming revenue has been declining for nine consecutive months. Last year, gaming revenues shrank 2.6 per cent year-on-year from MOP360.7 billion to MOP351.5 billion. In relation to the first two months of 2015, revenues fell 35.1 per cent year-on-year from MOP66.7 billion during the first months of 2014 to MOP43.3 billion during the same period this year.

In terms of gaming revenues, the VIP segment has been more affected than the mass market with the corruption crackdown pointed to as one of the main reasons for this reality. As VIP gamblers are keen to keep a low profile in order to avoid trouble, analysts say they are choosing other destinations more distant from China, such as Vietnam and the Philippines.

The Beijing government is monitoring Chinese gamblers in Macau as part of its antigraft policy, the Director of the Liaison Office in the territory, Li Gang, has confirmed to a Mainland newspaper

8 | Business Daily

March 12, 2015

Greater China Free trade feasibility study with Georgia China and the former Soviet republic Georgia will set up a joint working group to look at the feasibility of signing a free trade agreement, China’s commerce ministry said yesterday. Trade between China and Georgia totalled US$960 million last year, and China is Georgia’s third largest trading partner, the ministry said, providing no other details of the trade agreement talks. China inked major free trade agreements with Australia and South Korea last year, and already has deals with a handful of other countries, including Costa Rica, Peru, New Zealand and the Association of Southeast Asian Nations.

Organ harvesting ban not to cause shortage China’s ban on the harvesting of organs from executed prisoners for transplant will not cause the shortage of donated organs, an expert said yesterday. Huang Jiefu, head of the country’s human organ donation and transplant committee, made the remarks at a press conference on the side-lines of the annual session of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) in Beijing. “The more respect we pay to death-row prisoners, the more voluntarily donated organs from citizens we will have,” Huand said.

GSK moves to Singapore after China fine Drugmaker GlaxoSmithKline said yesterday it was establishing a new global headquarters for Asia in Singapore, strengthening its presence in the city-state. GSK was fined 3 billion yuan (US$479 million) in China last year following allegations in 2013 it funnelled funds to travel agencies to facilitate bribes to doctors and officials. The high-profile case hit GSK’s drug sales in the country. The drug maker said its new eight-storey headquarters in Singapore would have capacity for up to 1,000 staff. Construction is expected to be completed by the end of 2016.

Aircraft manufacturing to take off in 2015 China expects breakthroughs in aircraft manufacturing this year as the development of several types of large planes will likely bear fruit after years of effort, sources close to the matter said on Tuesday. “China’s largest home-grown air freighter Xi’an Y-20 (Kunpeng) will become available for delivery in the near term,” Tang Changhong, deputy chief engineer of Aviation Industry Corporation of China (AVIC) said on Tuesday. The aircraft has been shown to rival international counterparts with cutting-edge technology after testing in highly challenging and extreme conditions, Tang said.

Lawmakers file 522 motions at NPC Chinese lawmakers have filed about 522 motions to the secretariat of the third session of the 12th National People’s Congress (NPC), an official said Tuesday. According to Guo Zhenhua, an official with the secretariat of the session, the number is about 13 percent more than that of last session and 511 of them concerned legislation in various areas ranging from election procedure, court system, business to environmental protection.

Economic results weaker th

Sluggish factory activity reinforces expectations that China’s econom Koh Gui Qing and Kevin Yao

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rowth in China’s investment, retail sales and factory output all missed forecasts in January and February and fell to multi-year lows, leaving investors with little doubt that the economy is still losing steam and in need of further support measures.

The figures came a day after data showed deflationary pressures intensified in the factory sector in February, reinforcing expectations of more interest rate cuts and other policy loosening to avert a sharper slowdown in the world’s secondlargest economy.

“Activity data surprised the market on the downside by a large margin, suggesting that China’s first quarter GDP growth could likely fall to below 7 percent,” ANZ economist Li-Gang Liu said in a research note.

“In our view, the extremely weak data at the beginning of the year suggest that China needs to engage in more aggressive policy easing, and we see that a reserve requirement ratio (RRR) cut will be imminent,” he said, adding that stimulus measures rolled out since last year seem to have had limited effect.

Industrial output grew 6.8 percent in the first two months of the year compared with the same period a year ago, the National Bureau of Statistics said yesterday, the weakest expansion since the global financial

The figures came a day after data showed deflationary pressures intensified in the factory sector i

crisis in late 2008.

Analysts polled by Reuters had forecast a 7.8 percent rise, down slightly from December.

Retail sales rose 10.7 percent, the lowest pace in a decade and missing expectations for a 11.7 percent rise.

Fixed-asset investment, a crucial driver of the Chinese economy, rose 13.9 percent, the weakest expansion since 2001 and compared with estimates for a 15 percent gain.

“Fixed asset investment will likely face even more challenges,” economists

Steel firms call for state action The industry ministry is expected to issue new guidelines this year that will further raise environmental standards in the sector and therefore costs David Stanway

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hina’s struggling steel mills appealed for government intervention this week to ease a capacity glut that has depressed prices and seems unlikely to get any better this year.

Crude steel production capacity reached 1.16 billion tonnes in 2014, way higher than actual output of 822.7 million, an executive with one of the country’s biggest producers told Reuters on the side-lines of a meeting of parliament.

“It is hard to see this year being any better than last year, and I actually think it will be worse,” said Cao Huiquan, chairman of Hunan Valin Iron and Steel Group, a statecontrolled mill that has ArcelorMittal among its strategic investors.

China has pushed through a series of measures aimed at forcing mergers and closing smaller polluting plants, but enforcement is weak and firms have resisted restructuring. Cao said it was likely that total capacity would continue to increase in 2015.

The industry ministry is expected to issue new guidelines this year that will further raise environmental

Overcapacity is a macroeconomic policy issue and I believe it needs to be solved through law and industry standards. This is the best way, rather than interfering on a microeconomic level by shutting down projects Cao Huiquan, chairman, Hunan Valin Iron and Steel Group

standards in the sector and therefore costs, adding to the problems of smaller mills with razor-thin margins.

Cao said the crucial issue was creating a level playing field.

“What is needed is equal implementation and not selective implementation,” he said, adding that in regions where enforcement was lax, mills could be paying as little as 20-30 yuan per tonne to comply with environmental rules, compared to 150 yuan elsewhere.

In a proposal submitted to parliament, Deng Qilin, the chairman of Wuhan Iron and Steel Group, China’s fourth-biggest producer, said China should use the country’s new environmental law to raise levels of compliance throughout the sector.

Valin’s Cao said it was unclear whether there would be a new wave of closures this year, noting that local governments were doing their utmost to support mills in order to save jobs.

“Resolving these employment issues will need input from the government,” he said.

Reuters

Business Daily | 9

March 12, 2015

Greater China

han expected

mic growth will slow to a quarter-century low

February data releases for investment, retail sales and factory output to minimise distortions from the Lunar New Year holiday, which fell in late January last year but in mid-February this year.

Sluggish factory activity reinforces expectations that China’s economic growth will slow to a quarter-century low of around 7 percent this year from 7.4 percent in 2014, even with expected additional stimulus measures.

Power generation rose 1.9 percent in January and February from a year earlier, well below 3.2 percent seen in all of 2014.

Yin Weimin, minister of human resources and social security, cautioned this week that China’s labour market also faces greater pressure. Employment fell more in January and February than in the same period last year, he said, while adding that he was confident China can still create more than 10 million jobs this year.

Buckle seat belts

in February

at Credit Suisse said in a note this week, adding that crackdowns on corruption and shadow banking have heavily squeezed spending by local governments.

“Local officials and executives at state owned enterprises are

more worried about their jobs than investment ... The central government is pushing out more investment projects, but with the aim of partially offsetting losses in local investment, rather than accelerating growth.”

China combines its January and

The Chinese economy has had a rough ride in the last 15 months as a property downturn compounded slackening growth in foreign and domestic demand and persistent industrial overcapacity.

A widening corruption crackdown also has weighed on everything from investment to retail sales.

Policymakers have cut interest rates twice since November, and in early February reduced the amount of cash that banks must hold as reserves (RRR), freeing up fresh liquidity to flow into the economy to offset rising outflows of capital.

But because those adjustments so far have been largely defensive in nature, economists say, they haven’t translated into lower real

KEY POINTS Growth weakens more than expected, cements policy easing views Jan-Feb factory output up 6.8 pct y/y vs 7.8 pct f’cast Jan-Feb retail sales up 10.7 pct y/y vs 11.7 pct f’cast Jan-Feb investment up 13.9 pct y/y vs 15.0 pct f’cast

interest rates or increased investment.

Chinese companies are cautious about expanding in the face of weak business prospects, and bankers are wary of a spike in non-performing loans.

With consumer inflation hovering near the government’s “vigilance level” of around 1 percent, analysts expect the central bank to lower reserve requirements and interest rates again to head off a potential deflationary cycle, in what would be its biggest easing campaign since the global crisis.

The central bank has singled out the rise in real interest rates on the back of cooling inflation as a further drag on the economy, especially as many companies are struggling with heavy debt levels and end-user demand remains weak.

“Double-digit industrial production levels will be a thing of the past,” said Chester Liaw, an economist at Forecast Pte in Singapore. “It is highly unlikely that retail sales will hold out for long above the 10 percent mark as well.”

Reuters

N.Z. baby formula poisoning leads to tighter rules Exporters say they’ve had some orders reduced or halted after police revealed an anonymous threat to poison Matthew Brockett and Tracy Withers

C

hina stepped up scrutiny on New Zealand baby formula imports as orders for the product fell, sending the kiwi dollar to fresh five-week lows a day after the South Pacific nation revealed a plot to poison baby food.

New Zealand milk powder must have a government certificate and an importers’ examination report to prove it doesn’t contain the toxic pesticide 1080, China’s General Administration of Quality Supervision, Inspection and Quarantine said in a statement.

“Our major customer is China and I think what happens over the next 48 hours is going to be critical,” said Michael Barnett, chairman of the New Zealand Infant Formula Exporters Association. “It has the potential to be disastrous for exporters, whether they be big or small, because it’s reputational risk. It’s about food and it’s about New Zealand.”

Our major customer is China and I think what happens over the next 48 hours is going to be critical Michael Barnett, chairman, New Zealand Infant Formula Exporters Association

Exporters say they’ve had some orders reduced or halted after police revealed Tuesday that they’re investigating an anonymous threat to poison infant formula with 1080 unless the government stops using it by the end of this month.

It’s the third dairy contamination scare in two years for a nation that relies heavily for economic growth on dairy exports, which are worth NZ$14 billion (US$10 billion) a year and account for 29 percent of total overseas sales. China is the biggest customer.

Letter threats Threatening letters were sent to Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, and Federated Farmers in November, police said on Tuesday.

Tests of more than 40,000 samples had found no trace of the poison, the government said, defending its decision to delay disclosure while police investigated.

“I will continue to buy milk powder from New Zealand as I trust its quality and my girl is used to its flavour,” Isabelle Rao, a Beijing-based mother, said in an interview. “I don’t think

A tin of Fonterra Karicare baby formula is pictured in Melbourne

the New Zealand government will let its pillar industry fall apart and will solve the problem very soon.”

Shares in the Fonterra Shareholders’ Fund, a publicly traded trust that tracks the cooperative’s dividend pay-out and earnings, closed unchanged at NZ$5.80 in Wellington after falling as much as 1.2 percent on Tuesday.

The poison threat comes

after a botulism scare in 2013 prompted a global recall of some Fonterra products and an import ban by China until it was proved to be a false alarm.

In January that year, Fonterra said traces of a fertilizer additive had been found in some of its milk products. They were within safety guidelines and posed no health risk, it said.

Bloomberg News

10 | Business Daily

March 12, 2015

Greater China

State-owned company share gains highlight market risks The CSRC has said it will investigate China’s largest brokerages and fund managers

The CSRC (China Securities Regulatory Commission) has always taken a hard-line attitude toward insider trading and widely reported market manipulation Zhang Xiaojun, spokesman, China Securities Regulatory Commission

Shares in top train makers China CNR Corp and CSR Corp both rose by 10 percent before the companies announced that their merger had been approved

S

hares in five Chinese state-owned firms rose by their daily limit last week ahead of the companies filing potentially market-moving news, raising questions over whether Beijing’s plans to restructure the state sector are reaching some investors ahead of them being made public.

Securities regulators have struggled for years to restore the reputation of China’s stock market as a

place for retail investors to safely park their savings. But the multi-tiered bureaucracy and heavy regulation have proved tough to manage.

Companies need to cultivate political contacts within the bureaucracy to gain approval to list or restructure, and that chain of communication can be vulnerable to leaks.

Shares in top train makers China CNR Corp and CSR Corp both rose by 10 percent - the maximum

allowed per trading day - on March 5, hours before the companies announced that their merger into an entity with combined revenue of around US$32 billion had been approved by the Stateowned Assets Supervision and Administration Commission (SASAC).

Similarly, shares in statecontrolled Shenyang Machine Tool Co rose by a tenth for two consecutive days ahead of its March 3 trade suspension announcement. And local government-owned Shanghai Bailian Group Incorporated

Co and Beijing Shunxin Agricultural Co Ltd shares both rose by the daily limit ahead of trade suspension filings.

“Very often domestic stock markets move ahead of formal disclosure,” said a market analyst who asked not to be named because of the sensitivity of the matter.

“Obviously asymmetric information exists.”

Beijing Shunxin said there was definitely no leak of information ahead of its public announcement.

Shenyang Machine Tool declined to comment.

Shanghai Bailian couldn’t be reached for comment.

SASAC, the ministry-level body that directly oversees 112 central government industrial and services conglomerates, couldn’t be reached for comment in Beijing or Shenyang. In Shanghai, SASAC declined to immediately comment.

Asked if insiders may have traded shares ahead of the rail merger announcement, Zhang Xiaojun, spokesman for the China Securities Regulatory Commission (CSRC), said the regulator is paying close attention to the matter.

No prior knowledge In January, CNR and CSR denied media allegations of insider trading, saying senior executives who traded shares ahead of the merger announcement had no prior knowledge of the reorganisation.

Shoe factory workers strike over benefits Slowing economy, rising costs and the spread of social media have driven an increase in strikes

A

bout 5,000 workers have gone on strike at a shoe manufacturer in southern China over benefits, two activists and a worker said, marking one of the biggest workstoppages in the country in months.

The company that owns the factory, Stella International Holdings Ltd, lists Guess?, Michael Kors Holding Ltd, Prada SpA and Burberry Group PLC among its customers.

Last year, the number of strikes more than doubled to 1,378 from 656 the year before, according to China Labour Bulletin, a Hong Kong-based advocacy group.

The strike at Stella’s Xing Ang factory in the city of Dongguan started on Sunday with workers unhappy about not receiving housing assistance, said Liu Zai, who added she had not received the funds in eight years at the factory.

“We want an explanation. Why haven’t they paid this for so many years?” she said by telephone.

Premier Li Keqiang told the congress last week the government would “improve the mechanisms for supervising the handling of labour issues and disputes, and ensure the law fully functions as the protector of the rights and interests of anyone in employment”

Liu and two activists said all of the factory’s workers, about 5,000 people, were on strike. Yesterday, most were forced to return to their workplace but were still refusing to work, Liu said.

A spokeswoman for Stella International said only “a few hundred” workers had gone on strike, not 5,000.

1,378

Strikes in China in 2014

The CSRC has said it will investigate China’s largest brokerages and fund managers, including China Asset Management Co Ltd and HFT Investment Management Co Ltd, for alleged regulatory violations, as part of the regulator’s intensifying crackdown on insider trading.

“When the government implements top-bottom strategies, the central level, including agencies such as the National Development and Reform Commission, will know first. Then companies will be notified and reach out to securities firms,” said Liu Jingde, a markets analyst at Cinda Securities.

“Restructuring plans will be reported to the CSRC, the SASAC and other government bodies. The information should be kept in confidence, but sometimes that can’t be controlled.”

As Beijing rolls out ambitious reforms to its massive state sector, and sells part of those firms to private investors, a key measure will focus on controlling company insiders.

The ruling Communist Party’s top graft-buster has targeted executives at statecontrolled conglomerates for inspection as part of President Xi Jinping’s anti-corruption drive. China’s Central Commission for Discipline Inspection sanctioned more than 70 senior officials at state firms last year, the official Xinhua News Agency said last month.

Reuters

“Discussions are still on-going, but as of this morning almost all workers have returned to work,” the spokeswoman wrote in an email.

She said she could not comment on production or customer orders because Stella International was under blackout ahead of its annual results announcement next week.

There was no immediate comment from Guess, Burberry or Prada. Calls to Michael Kors went unanswered.

The strike comes as China’s parliament, the National People’s Congress, holds its annual session in Beijing. Premier Li Keqiang told the congress last week the government would “improve the mechanisms for supervising the handling of labour issues and disputes, and ensure the law fully functions as the protector of the rights and interests of anyone in employment”.

April last year saw China’s biggest strike in decades, when about 40,000 employees of Adidas and Nike supplier Yue Yuen went on strike to demand social insurance payments.

In 2004, the Xing Ang factory and another run by Stella International in Dongguan saw thousands of workers strike over low wages, long hours and poor quality food, China Labour Watch reported. Several were arrested.

Reuters

Business Daily | 11

March 12, 2015

Asia

Japan machinery orders fall The decrease in machinery orders was smaller than a median market forecast though Leika Kihara

J

apan’s core machinery orders fell 1.7 percent in January from the previous month, underscoring the challenges facing the government as it attempts to nudge firms into boosting spending on wages and equipment with its aggressive stimulus policies.

Nonetheless, emerging signs of a steady pick up in exports have some analysts taking a more sanguine view of the outlook for capital spending even as the economy struggles to motor on from last year’s recession.

Indeed, the decrease in machinery orders was smaller than a median market forecast for a 4.1 percent drop, and the government said the decline was largely payback for the 8.3 percent rise in December - the fastest pace in six months.

“Capital spending is recovering, although at a slower pace than initially thought,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.

“There are emerging signs of recovery in exports so capital expenditure will pick up.”

Compared with a year earlier, core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, increased 1.9 percent in January, data by the Cabinet Office showed yesterday.

Capital spending and wage growth hold the key to the ultimate success of Prime Minister Shinzo Abe’s policy recipe dubbed “Abenomics” aimed at generating a virtuous cycle of private-sector-led growth.

The Bank of Japan, which is aiming to end 15 years of deflation with a massive stimulus drive, has also been urging companies to increase wages and investment so inflation can accelerate towards its 2 percent target.

KEY POINTS Jan machinery orders -1.7 pct vs f’cast -4.1 pct Data shows capex demand weak, tests “Abenomics” BOJ expects capex to rise in response to its stimulus BOJ Shirai warns of uncertainty on capex outlook

But companies have been slow to implement their robust capital spending plans on uncertainty over the outlook.

The BOJ expects capital spending to increase in coming months as the economy emerges steadily from recession thanks to a much-awaited rebound in exports and factory output.

Still, a mixed set of economic data in recent months has kept alive market expectations the central bank will expand stimulus again later this year.

In a speech delivered in Europe on Tuesday, BOJ board member Sayuri

Shirai warned of uncertainty over the outlook for capital expenditure.

“Households’ and firms’ economic growth expectations may not rise unless the government’s growth strategies make progress,” according to a text of her speech released yesterday.

Japan’s economy grew much less than initially thought in the fourth quarter as capital expenditure declined, data showed on Monday, in a worrying sign that a rebound in consumer spending is not encouraging business investment.

Reuters

Australian consumer sentiment dips in March A survey of respondents finds news about the budget and taxation, economic conditions and employment as being mostly unfavourable

A

measure of Australian consumer sentiment dipped from 13-month highs in March as concerns about proposed budget measures and taxation tempered the favourable effect of lower interest rates.

Yesterday’s survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment slipped a seasonally adjusted 1.2 percent in March.

Still, the dip only unwound a little of February’s sharp 8.0 percent gain which followed a cut in interest rates early that month. The index reading of 99.5 matched the reading from March last year, showing pessimists just slightly outnumbering optimists.

“Some softening in sentiment was always likely in March given the big lift last month following the rate cut,” said Westpac senior economist Matthew Hassan.

The Reserve Bank of Australia (RBA) lowered rates by a quarter point to a record low of 2.25 percent in early February and left the door open for further easing if needed.

Survey respondents recalled news about the budget and taxation, economic conditions and employment as being mostly unfavourable.

The Liberal National government of Tony Abbott has spent weeks arguing that tough measures would be needed to deal with the

Some softening in sentiment was always likely in March given the big lift last month following the rate cut Matthew Hassan, senior economist, Westpac

budget deficit over time.

Yet, Hassan noted respondents were not as pessimistic as they were at the end of last year.

“The overall message seems to be that while consumers remain very concerned about the outlook for the economy and job security, they are less concerned than they were in December and acknowledge the more positive situation around interest rates,” said Hassan.

Individual measures in the March survey were mixed.

The index of family finances compared to a year ago rose 1 percent, but that for the next 12 months fell 1.9 percent.

The survey’s index for economic conditions over the next 12 months edged

up 0.3 percent.

The greatest weakness was shown in the index on whether it was a good time to buy a major household item which fell 5.1 percent in the month.

“March’s reading is the second weakest since 2009,” noted Hassan. “It is very likely that at least part of this decline is a reaction to recent falls in the Australian dollar and the impact this is expected to have on the cost of imported goods.”

There was a slight pullback in the outlook for house prices and whether it was a good time to buy a home. Yet 61 percent of respondents expected home prices to rise over the next year.

Reuters

12 | Business Daily

March 12, 2015

Asia India’s ex-PM Singh accused in coal case

Yen needs to reach 140 per dollar to nail inflation target Foreign exchange market participants predict yen will extend its slide

J India’s former Prime Minister Manmohan Singh was summoned as an accused to appear in court as part of an inquiry into the allocation of coal blocks during his administration, Indian media reported yesterday. Most coal block awards made by Singh’s government, which ran India for a decade until last year, were overturned by the Supreme Court after it ruled the process illegal.

The current government is in the process of re-auctioning the blocks.

Indonesia Feb motorbike sales fall Indonesia’s motorcycle sales in February fell 18.11 percent from a year earlier, an industry association said yesterday. On a monthly basis, sales rose 10.6 percent in February. Total sales in Southeast Asia’s biggest economy, where motorbikes are hugely popular, amounted to 556,091 in February. Sales were led by Honda Motor Co Ltd, Yamaha Motor Co Ltd and Kawasaki, the data showed.

Samsung Elec raises production target South Korea’s Samsung Electronics Co Ltd has raised its production target for the new flagship Galaxy smartphones following positive market reception, the Electronic Times newspaper reported yesterday. The South Korean paper, citing an unnamed source, said Samsung increased its total production target for the Galaxy S6 and Galaxy S6 edge devices to 8 million units for April from 7 million previously. The company’s production target for March remained unchanged at 5 million units, according to the paper. They will start selling in 20 countries on April 10.

RBA cautions growth not guaranteed Low interest rates will continue to underpin the Australian economy and the housing market, a top central banker said yesterday, though he also cautioned that forecasts for gradually rising growth were not assured. Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent also said the fall in the local dollar to date was starting to help the economy, though it remained too high overall. “The Bank’s central forecast for economic activity is for growth to gradually pick up over the course of the next couple of years,” Kent told a conference in Hobart.

apan’s central bank is far from done driving down the yen if it wants to secure a 2 percent inflation target next year, a survey of economists by Bloomberg News shows.

The median estimate of 27 economists in a survey March 5-10 shows that the yen needs to fall to 140 per dollar, a level last seen in 1998, to help the Bank of Japan meet its goal. Even after a 23 percent decline since Governor Haruhiko Kuroda began record monetary stimulus, that means a further 13 percent drop from the current level.

Kuroda and his colleagues are projected to step up their stimulus later this year, once it becomes clear that it’s unlikely to achieve a 2 percent increase in consumer prices in or around the 12 months starting in April, a separate survey shows. What’s unclear is whether politicians, Japan’s trading partners and the small companies hurt by a weaker yen would tolerate actions that sent the yen down so much.

“The BOJ needs a much weaker yen to achieve the 2 percent target,” said Yasuhide Yajima, an economist at NLI Research Institute, who was one of three in the survey who said a

rate of 150 was required for inflation to reach the BOJ’s goal.

Export pickup Kuroda said last month it’s desirable for exchange rates to reflect fundamentals and be stable. The

BOJ will watch risks to achieving its inflation target and adjust policy as needed, he said last week, predicting the goal would be reached in or around the year starting in April.

Japan’s more competitive exchange rate and stronger demand in the U.S. have helped drive a pick up in exports

Indonesia seeking Bank Ekonomi relisting A public offering would sell at least 20 percent entity combined with HSBC under Bank Ekonomi’s name Fathiya Dahrul and Chanyaporn Chanjaroen

I

ndonesia’s Financial Services Authority will seek the relisting of PT Bank Ekonomi Raharja on the nation’s bourse after the lender’s assets are combined with the local unit of its majority shareholder HSBC Holding Plc. HSBC has submitted a proposal that assets of the two Indonesian lenders will be combined under Bank Ekonomi, Muliaman Hadad, chairman of the regulator known as OJK, told reporters on March 6 in Jakarta. That would leave HSBC’s Indonesian unit as a streamlined entity focused on investment banking, he said.

Bank Ekonomi had sought to delist its shares, according to a February 16 exchange filing by HSBC, which said it was planning to integrate its local unit’s operations with the Indonesian lender. Bank Ekonomi, 99 percent

owned by HSBC, has been suspended from trading since then.

“We will ask them later to refloat again in the proposal, that’s a promise,” Hadad said. “There will be time given, until all of this process is concluded. In several years, not this year.”

A public offering would sell at least 20 percent of the combined entity under Bank Ekonomi’s name, Hadad said. Gareth Hewett, a HSBC spokesman, declined to comment.

HSBC said in June 2013 that it was

reviewing its stake in Bank Ekonomi, without giving any reason for doing so. The London-based lender bought 88.9 percent of the Indonesian company for US$607.5 million in 2008, a move that almost doubled its branch network in Southeast Asia’s largest economy.

HSBC’s current shareholding is worth 5.55 trillion rupiah (US$420 million), based on Bank Ekonomi’s last stock price of 2,100 rupiah.

The Indonesian lender had total assets of 29.7 trillion rupiah at the end of December, 3 percent higher than 2013, according to its 2014 financial statement. HSBC’s local unit has 47 branches with more than 3,000 employees with services that include commercial and retail banking, and wealth management, according to its website.

Bloomberg News

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Business Daily | 13

March 12, 2015

Asia

I don’t think the yen will weaken that much, but if it does, that’s likely to spur discontent among households and small companies Yasuhide Yajima, economist, NLI Research Institute

that aided the economy’s emergence from recession last quarter. The boost to import costs from the lower yen also led early progress in stoking inflation.

At the same time, the surge in prices of imported energy, commodities and parts manufactured overseas that feed Japan’s production chain is inflicting pain on importers and smaller companies.

“The more the yen weakens, the more profits exporters will get,” said Yuichi Kodama, an economist at Meiji Yasuda Life Insurance Co.

Counterproductive step BOJ policy makers view further easing to shore up inflation as a

counterproductive step for now, amid concern it could trigger declines in the yen that damage confidence, people familiar with the talks said last month.

Toyota Motor Corp. has forecast a bigger annual profit than all other Japanese automakers combined.

There were 282 company failures in 2014 in which the weak yen as cited as a contributor, more than double the 139 cases in 2013, even as overall bankruptcies declined.

The Japanese currency will fall to 125 per dollar by the fourth quarter of 2015 and 127 in the following three-month period, according to a separate survey by Bloomberg News.

‘Comfortable’ level The yen has weakened to a “comfortable” level and the BOJ can hold off expanding stimulus for now, given prospects for a recovery in the economy, said Etsuro Honda, when the currency was trading around 119 per dollar.

Honda, an adviser to Prime Minister Shinzo Abe, said 117 to 120 against the U.S. currency “is a comfortable level for Japan’s economy.”

An exchange rate of 105 to 120 per dollar would have the biggest net positive effect on the Japanese economy, according to the majority of economists in the Bloomberg News survey March 5-10.

Japanese companies see the yen at 119.5 per dollar in January 2016, according to a Cabinet Office survey of 982 companies across all industries released on March 3.

Bloomberg News

Doubt lingers over NZ surplus

T

he New Zealand government’s accounts returned to a small but unexpected operating surplus in the seven months to the end of January, prompting claims it was massaging the books to meet its target of a surplus this financial year.

Financial statements from the Treasury yesterday showed an operating surplus of NZ$77 million (US$55.76 million), which was NZ$712 million (US$515.64 million) above forecast in December last year and the first part- year surplus since 2009.

The surplus was a result of tax revenue being 1.2 percent above forecast and government expenses being under forecast, said a statement from the Treasury.

However, it added that the government’s operating balance fluctuated from month to month due to the seasonal nature of tax revenue and expense trends.

Net debt at NZ$61.8 billion (US$44.71 billion), or 26.1 percent of gross domestic product (GDP), was NZ$1.2 billion (US$868.55 million) lower than forecast.

Finance Minister Bill English warned it was still too early to say whether the government would have a surplus for the full 2014- 2015 fiscal year.

“We won’t know until the final accounts are published in October whether we will achieve a surplus for

Finance Minister Bill English

the whole year. The variance of both tax and expenditure from forecasts reinforces that message,” English said in a statement.

The opposition Green Party said the Treasury figures showed the government was failing to meet its self-imposed surplus target and would instead see a deficit of NZ$572 million (US$414.01 million) this financial year.

“We’re now seeing evidence that the government is massaging the books in an attempt to return to surplus,” Green Party co-leader Russel Norman said in a statement.

He said the government was keeping state-run accident insurance levies artificially high, delaying settlements and slowing spending in order to show a surplus.

Xinhua

Early talks in Singapore for regional rubber bourse SGX has proposed several models for the regional exchange A. Ananthalakshmi

T

he Singapore Exchange (SGX) is in preliminary talks to be part of a Southeast Asian rubber exchange that would bring together the top three producing nations, industry sources said on Tuesday.

SGX held a meeting late last month with the International Tripartite Rubber Council (ITRC), an industry body comprising Thailand, Indonesia and Malaysia, which together produce 70 percent of the world’s rubber.

The meeting came three months after ITRC said it was studying a plan to set up a regional exchange to facilitate hedging and easy trade for the different rubber grades, amid a tumble in prices of the commodity to five-year lows.

SGX said in an emailed statement yesterday that it was “happy and ready to work with ITRC to establish a regional rubber market.

“We understand that studies and consultations are still on-going within ... an expert group of the ITRC, so any cooperation model will have to be considered after that,” said Lily Chia,

KEY POINTS SGX in talks with top three rubber producers Industry body studying plan for regional bourse since 2014 More meetings between SGX, industry group likely

head of SGX’s commodities product development and management.

SGX, whose SICOM futures contract is already the benchmark for the TSR20 rubber grade, has proposed several models for the regional exchange, including connecting commodity exchanges in the three countries to its platform to provide integrated trading, clearing and delivery, said a source with direct knowledge of the matter.

Another proposed option is to operate individual trading venues and use SGX’s clearing and delivery mechanism, added the source, who did not wish to be named as the talks are private.

However, the sources said it was possible for the three producing countries to start their own platform, without involving SGX. No final decision on the regional exchange has been made yet, though the industry group had said in November

that it was looking to launch the bourse in 18 months.

ITRC would prefer to wait until a study, led by UK-based consultancy LMC International, on the viability of such a regional exchange is completed, said a Malaysian official present at the February meeting.

It was not clear if anyone outside of the top three producers and SGX had made proposals to join ITRC’s proposed regional bourse.

Apart from SGX’s SICOM

contract, the other established rubber contracts are traded on the Tokyo Commodity Exchange and Shanghai Futures Exchange.

“We haven’t discussed yet when exactly we will meet with SGX again but from earlier talks we agreed that we should definitely meet again in the coming months,” said Yiam Thavarorit, chief executive of the International Rubber Consortium Ltd, part of ITRC. Reuters

14 | Business Daily

March 12, 2015

International Denmark ready to intervene in euro peg Denmark is monitoring its property market and is ready to act should the country’s efforts to defend its euro peg result in unsustainable house-price distortions. Morten Oestergaard, the country’s economy minister, says such a scenario “may come in the second or third wave” of the economic cycle as the central bank drives its main interest rate well below zero to keep the krone pegged to the euro. “If you can make money on borrowing, it’s probably not healthy in the long run. We’ve been through a housing bubble and we’re pretty much back where we started.”

Grain producers seen boosting output on weak currencies The benefit of depreciating local currencies may, however, be limited in countries that are dependent on imports of raw materials Naveen Thukral

U.K. factory output falls U.K. manufacturing output unexpectedly fell in January as computer and electronics production plunged. Output fell 0.5 percent after a 0.1 percent increase in December, the Office for National Statistics said in London yesterday. Economists in a Bloomberg News survey had forecast a 0.2 percent gain. The weakness reflected a 9.5 percent drop in electronics -the biggest in 13 years- after a surge in December because of a large defence industry contract. Total industrial production, which accounts for about 15 percent of gross domestic product, fell 0.1 percent in January, against an estimate for a 0.2 percent gain.

U.S. small business confidence up The U.S. small business confidence rose in February as job market kept moving forward, a leading industry association said.

The National Federation of Independent Business (NFIB) said its Small-Business Optimism Index rose 0.1 point to 98 in February a solid result despite some unfavourable conditions. “In spite of slow economic activity and awful weather in a lot of the country, small business owners are finding reasons to hire and spend which is great news,” said Bill Dunkelberg, NFIB chief economist. Over 99 percent of all employing organizations in the United States are small businesses.

Kazakhstan set to re-elect Nazarbayev The ruling party of Kazakh President Nursultan Nazarbayev proposed yesterday to appoint him as its candidate to run for another five-year term in a snap election on April 26, a live television broadcast from the party’s congress showed. “We propose to officially appoint Nursultan Abishevich Nazarbayev as Nur Otan party’s candidate and ask him to give his consent,” Kazakh scientist Kenzegali Sagadieyv told the congress which is being held in the capital Astana. Nazarbayev, a 74-year-old former steelworker, has run his oil-rich Central Asian nation without interruption since 1989 when he headed the local Communist Party.

Global merchants fall short on card data security Four out of five global retailers and other merchants failed interim tests to determine whether they are in compliance with payment card data security standards, putting them at increased risk of cyber attacks, according to a new report by Verizon Communications Inc. Most of the companies have a tendency to run upgrades of security software and hardware only when they approach an annual compliance check, according to Verizon.

T

he world’s top food exporters in Latin America and the Black Sea region are expected to boost grain and oilseed output this year, as weakening local currencies against the dollar give them an advantage over supplies from key producer the United States.

This will further swell bulging global stockpiles of food, as a firm dollar saps buyers’ purchasing power and cuts into demand, dragging on benchmark U.S. grain prices that are near their lowest in several years.

“You think about where the big incremental production is going to come from, for beans you have Brazil and Argentina while for grains you

have Russia and Ukraine,” an analyst said on the side-lines of a grains conference in Singapore.

“Local currencies in these countries have collapsed,” added the analyst, who did not want to be named because he was not authorised to speak to media.

Brazil, the world’s No.2 soybean producer after the United States, has seen the real drop around 40 percent versus the dollar since September, while the Russian rouble has shed 69 percent. The Argentine peso is down around 3 percent so far this year, after crumbling by a third in 2014.

The benefit of depreciating local currencies may, however, be limited

in countries that are dependent on imports of raw materials such as fertilizers and seeds.

“It is a win-win situation for countries like Brazil which don’t have to import raw materials,” said James Dunsterville, a Geneva-based analyst at AgFlow, an agricultural commodities information platform. “But the advantage may not be that much where you are importing fertilizers or other inputs.”

Fertilizer costs have risen for countries such as Ukraine and Russia on weaker currencies, traders said.

Further headwinds are expected from bleak Asian demand as a drop in currencies there make it difficult for the region’s buyers to cash in on cheap global grain prices.

Chicago wheat has shed almost 15 percent this year and is less than 40 cents away from its lowest since 2010, while U.S. corn has lost almost 3 percent and is around 65 cents above a 5-year low of US$3.18-1/4 a bushel hit in October.

Soybeans are 40 percent below a 2013 high of US$16.30.

The oilseed came under more pressure after the U.S. Department of Agriculture in its latest report left its forecast for U.S. ending stocks unchanged at 385 million bushels, above an average analyst estimate of 376 million.

Reuters

Russia’s energy minister sees crude oil exports rising Novak said Russia planned to export 31 million tonnes of oil to China this year, up 3 million tonnes from 2014 Vladimir Soldatkin and Katya Golubkova

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ussian crude oil exports are expected to rise this year and beyond as volumes are diverted away from domestic refineries which are cutting capacity as part of a modernisation drive, Russian Energy Minister Alexander Novak said.

Novak told Reuters that Russia, one of the world’s biggest oil producers, will maintain its crude oil output at over 10 million barrels per day (bpd), despite some expectations of a plunge in production due to lower prices.

He said Russia will continue consultations with the Organization of the Petroleum Exporting Countries (OPEC). Russia will meet OPEC officials in June in Vienna to discuss the impact of shale oil production on global oil markets.

Up to now, Russia has been cutting crude oil exports and instead sending much of its crude production to domestic refineries, a move that offers

better margins than selling crude to the market at current low prices.

But crude oil exports are seen rising by up to 3 million tonnes in 2015 and to 280 million tonnes per year by 2035 from 224 million tonnes in 2014, Novak said.

Since 2000, refinery output in Russia has grown by over 45 percent to 294 million tonnes per year in 2014. That is on a par with the peak reached in the mid-1980s when the Red Army needed fuel for its campaign in Afghanistan.

Under the modernisation programme, Russia’s refineries will switch to produce fewer low-quality products such as fuel oil and more high-quality products such as diesel and gasoline, but in lower volumes.

“The strategy is to cut refining throughput,” Novak said. “That’s due to an increase in light products output on the back of modernisation.”

He forecast a decrease in oil product output to 291 million tonnes in 2015 and further to 280 million tonnes by 2035.

Consultants EY, which advise the Energy Ministry on taxes, say they expect a rise in Russian diesel production to 33 percent of the domestic oil product basket by 2020, from 26 percent in 2013.

The growth in refinery production and improvements in oil product quality have so far continued, despite Western sanctions over Moscow’s role in the Ukraine conflict. According to the Energy Ministry, 19 new units are expected to be commissioned at Russian refineries in 2015 against eight in 2014.

Novak said there was no need for new refineries, while out-dated plants would be closed.

“Ineffective (plants) will cease to exist due to competition,” he said.

Reuters

Business Daily | 15

March 12, 2015

Opinion Business

wires

The Fed under fire

Leading reports from Asia’s best business newspapers

Barry Eichengreen

Professor at the University of California, Berkeley, and the University of Cambridge

THE KOREA HERALD Loans extended by South Korean banks to companies using their high-level technologies as collateral have soared 70-fold in the past seven months on a strong drive by the government, industry data showed yesterday, spawning concerns that a huge chunk of such loans could turn sour, thus undermining lenders’ financial health. The outstanding loans provided by local banks, including state-run lenders, to hi-tech companies totalled 13.5 trillion won (US$12 billion) as of endFebruary, compared with 192.2 billion won in July, when they first launched the technology financing program, according to the data compiled by the Financial Services Commission.

VIETNAM NEWS Fifteen commercial banks have signed a cooperative agreement with the General Department of Taxation under the Ministry of Finance to offer online tax payment services.

These include the An Binh Commercial Joint Stock Bank (AB Bank), the Maritime Commercial Joint Stock Bank of Viet Nam (Maritime Bank) and the Saigon Commercial Bank (SCB). According to the agreement, these banks will build and implement a system for exchanging information and managing the database on online tax payments. The service will also use digital signatures to verify the validity of data.

TAIPEI TIMES Housing market transactions dropped to a record low last month, as the Ministry of Finance is pressing ahead with plans to levy capital gains tax on property transactions, government data showed. Housing deals totalled 12,009 units in the six special municipalities last month, slumping 20.9 percent from a year earlier and 37.5 percent from a month earlier, the lowest level since local governments launched surveys in 1999.

Transactions in Taipei fell to 1,851 last month, representing a contraction of 18 percent from a year earlier and 24.4 percent from January, municipal government statistics showed.

PHILSTAR Revenues from the country’s merchandise exports continued to decline at the start of the year due to the weak performance of five major commodities, the Philippine Statistics Authority (PSA) said. Data released by the PSA showed the country’s export earnings reached US$4.357 billion in January 2015, a 0.5 percent decrement from the US$4.379 billion recorded value in the same month last year.

The negative growth was attributed to the decrease of five major commodities out of the top 10 commodities for the month such as other manufactures; woodcrafts and furniture; chemicals; metal components and coconut oil.

Fed Chair Janet Yellen

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he Federal Reserve is under attack. Bills subjecting the United States’ central bank to “auditing” by the Government Accountability Office are likely to be passed by both houses of Congress.

Legislation that would tie how the Fed sets interest rates to a predetermined formula is also being considered.

Anyone unaware of the incoming fire only had to listen to the grilling Fed Chair Janet Yellen received recently on Capitol Hill. Members of Congress criticized Yellen for meeting privately with the president and treasury secretary, and denounced her for weighing in on issues tangential to monetary policy.

Still others, like Richard Fisher, the outgoing president of the Dallas Fed, have inveighed against the special role of the Federal Reserve Bank of New York. Reflecting the New York Fed’s heavy regulatory responsibilities, owing to its proximity to the seat of finance, its president has a permanent seat on the Federal Open Market Committee, the body that sets the Fed’s benchmark interest rate. This, its detractors warn, privileges Wall Street in the operation of the Federal Reserve System.

Finally, some object that bankers dominate the boards of directors of the regional Reserve Banks, making it seem that the foxes are guarding the henhouse.

This criticism reflects the fact that the United States has just been through a major financial crisis, in the course of which the Fed took a series of extraordinary steps. It helped bail

out Bear Stearns, the government-backed mortgage lenders Freddie Mac and Fannie Mae, and the insurance giant AIG. It extended dollar swap lines not just to the Bank of England and the European Central Bank but also to the central banks of Mexico, Brazil, Korea, and Singapore. And it embarked on an unprecedented expansion of its balance sheet under the guise of quantitative easing.

These decisions were controversial, and their advisability has been questioned – as it should be in a democracy. In turn, Fed officials have sought to justify their actions, which is also the way a democracy should function.

There is ample precedent for a Congressional response. When the US last experienced a crisis of this magnitude, in the 1930s, the Federal Reserve System similarly came under Congressional scrutiny. The result was the Glass-Steagall Act of 1932 and 1933, which gave the Fed more leeway in lending, and the Gold Reserve Act of 1934, which allowed it to disregard earlier gold-standard rules.

The Banking Act of 1935, as amended in 1942, then shifted power from the Reserve Banks to the Board in Washington, DC, and confirmed the special role of the Federal Reserve Bank of New York.

These reforms reflected an overwhelming consensus that the Fed had been derelict in fulfilling its duties. It had failed to prevent the money supply from contracting in the early stages of the Great Depression. Heedless of its responsibilities as an emergency lender, it had allowed the banking system

Fed officials have sought to justify their actions, which is also the way a democracy should function

to collapse. When financial stability hung in the balance in 1933, the Reserve Banks’ failure to cooperate prevented effective action.

Given such incompetence, it is not surprising that subsequent reforms were far-reaching. But these reforms went in precisely the opposite direction from today’s proposed changes: fewer limits on policy makers’ discretion, more power to the Board, and a larger role for the New York Fed, all to enable the Federal Reserve System to react more quickly and robustly in a crisis. It is far from clear, in other words, that the right response to the latest crisis is an abrupt about-face.

Ultimately, whether significant changes are warranted should depend on whether the central bank’s interventions in fact aggravated the recent crisis, as they aggravated the crisis of the 1930s. But the Fed’s critics have been curiously nonspecific about what they regard as the Fed’s mistakes. And where they have been specific, as with the accusation that the Fed was fomenting inflation, they have been entirely wrong.

Fed officials, for their part, must better justify their actions. While they would prefer not to re-litigate endlessly the events of 2008, continued criticism suggests that their decisions are still not well understood and that officials must do more to explain them.

In addition, Fed officials should avoid weighing in on issues that are only obliquely related to monetary policy. Their mandate is to maintain price and financial stability, as well as maximum employment. The more intently Fed governors focus on their core responsibilities, the more inclined politicians will be to respect their independence.

Finally, Fed officials should acknowledge that at least some of the critics’ suggestions have merit. For example, eliminating commercial banks’ right to select a majority of each Reserve Bank’s board would be a useful step in the direction of greater openness and diversity.

The Federal Reserve System has always been a work in progress. What the US needs now is progress in the right direction.

Project Syndicate

16 | Business Daily

March 12, 2015

Closing Thailand signs deal with China over rice Both countries yesterday ironed out some details of a deal signed earlier, where China will buy rice and rubber from the Southeast Asian country, Thailand’s commerce minister said. The two nations signed the deals for China to buy 2 million tonnes of rice and 200,000 tonnes of rubber in December, when Chinese premier Li Keqiang visited Thailand. He had announced that China would double its imports of Thai agricultural produce in 2015.

China wants 1 million tonnes of new, five percent broken rice and 1 million from stockpiles to be delivered within 2 years.

Offshore waters heavily polluted The majority of China’s offshore sea areas have unhealthy ecosystems due to heavy pollution, a report from the State Oceanic Administration (SOA) has indicated. Of the areas monitored by the SOA in the summer of 2014, 81 percent, or 41,000 sq km, was polluted. It said most of the polluted water was concentrated in river estuaries or sea bays. The main pollutants are inorganic nitrogen, reactive phosphate and oil. The situation has only slightly improved from the previous year, when the SOA recorded 44,340 sq km of polluted sea waters.

Alibaba enlists start-ups to provide UK trade financing

A

libaba Group Holding Ltd has enlisted two UK start-ups to provide financing for small British businesses looking to buy from Chinese suppliers, aiming to help cash-strapped firms access the world’s largest economy.

The partnerships with iwoca Ltd and ezbob announced by Alibaba yesterday are a first for the Chinese company in Europe, and are intended to provide short-term working capital to businesses that otherwise would have trouble securing funds from banks.

Its British arrangement is similar to its recently announced tie-up with LendingClub Corp in the United States.

British firms looking to source cheap components or goods from Chinese suppliers apply for credit online; the start-ups review their business track records, tax returns and other data; then provide a swift decision.

“We want to make financing as easy as possible for the millions of British companies that do business through Alibaba.com,” said Wei Duan, Alibaba.com’s European marketing and business development director.

Unlike LendingClub, a peer-topeer loans matching service, ezbob and iwoca would provide the financing themselves. They already lend to Amazon.com and eBay merchants.

Ezbob gets its name from the British colloquialism for a shilling and is the trading name for Orange Money Ltd. The 4-year-old company is backed by the British government’s

It’s the first partnership of the company with European enterprises

Alibaba’s headquarters in Hangzhou

Angel CoFund and its loans are guaranteed by the European Union.

Iwoca, or “instant working capital,” has secured financing from investors including Global Founders Capital and Redline Capital.

Iwoca will provide micro-loans of up to 50,000 pounds ($75,315) for qualified firms, at anticipated interest rates of 1.5 percent to 2 percent monthly. Ezbob will provide microloans of between 50,000 pounds and 120,000 pounds at an interest rate of 0.75 percent per month.

Iwoca Chief Executive Officer Christoph Rieche said in a statement he expects to finance some 100 million pounds of deals over the next 12 months. Funds are channelled directly to Chinese suppliers.

Malaysia sees slower growth in 2015

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We want to make financing as easy as possible for the millions of British companies that do business through Alibaba.com Wei Duan European marketing and business development director Alibaba

Britain is one of Alibaba’s major markets, primarily for business-tobusiness goods sourcing on Alibaba. com. The Chinese company derives the lion’s share of its revenue from retail platforms Taobao and Tmall, but it got its start supporting small businesses with Alibaba.com, which Jack Ma co-founded out of his Hangzhou apartment in 1999.

The service is used by businesses on the lookout for cheap products and services from China, anything from manufacturing to components in bulk.

Its executives have said they are looking for similar providers to extend financing beyond the United States, to major markets such as Australia, Germany and Canada.

Reuters

Hong Kong’s exporter confidence rises

Thailand cuts interest rates as economy stutters

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C

alaysia’s economy is expected to expand 4.5 to 5.5 percent this year as strong domestic demand and resilient exports will anchor growth, although the risks of declining oil prices affecting its outlook linger, the central bank said yesterday. Southeast Asia’s second-largest oil and natural gas producer has seen slumping global energy prices hit revenue, putting pressure on the country’s fiscal position and knocking the ringgit to a six-year low. Problems stemming from a heavilyindebted investment fund, 1Malaysia Development and the prospect of the first rise in U.S. interest rates in almost a decade, have also added to the risk of a sovereign downgrade and capital outflows.

Bank Negara, in its annual outlook, said growth would be supported by sustained expansion in services, manufacturing and construction sectors, broadening of the government’s revenue base and from managing expenditure. The central bank in November forecast 2015 economic growth at between 5-6 percent. Household spending is likely to be affected by the implementation of the Goods and Services Tax (GST) in April.

onfidence among Hong Kong exporters rose in the first quarter of this year with the latest Export Index rebounding 6.7 points to 44.9 points, the Hong Kong Trade Development Council (HKTDC) said yesterday. “Although confidence has improved, the Export Index remained below the watershed mark of 50, indicating that export sentiment for the immediate future remained slightly pessimistic,” said HKTDC Director of Research Nicholas Kwan. Among industry subindices, machinery and electronics performed better, recording 49.1 and 45.6 respectively. Except for jewellery, the indices of other industries also picked up compared to the previous quarter.

Export sentiment in all major markets also improved. The indices for Japan, the United States and the Chinese mainland edged up to close to 50, reflecting relatively neutral sentiments of exporters for these markets. Confidence in the European market was still rather weak at 46.7. Price indices and procurement indices both remained below 50, signalling that unit prices would be lower and procurement activities may shrink in the short term.

Reuters

Xinhua

entral bank cut its benchmark interest rate yesterday in a surprise move to boost the kingdom’s economy, which is still struggling despite junta promises to revive its fortunes since taking power last year.

The Bank of Thailand said in a statement its policy board members voted by 4-3 to cut the rate to 1.75 percent from 2.0 percent. Most analysts had been expecting it to hold rates.

The reduction is the first since last March as the recovery in the economy since the junta’s May coup has been slower than hoped.

It is also the latest by regional central banks - including China and India - as they try to prop up their economies in the face of a global slowdown.

“The committee judged that the outlook of the Thai economic recovery is weaker than previously assessed,” the bank warned.

“Fiscal stimulus will take time to materialise, while headline inflation is projected to remain low for a certain period of time,” it added.

AF