Macau business daily, Apr, 1st, 2015

MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo Number 761 Wednesday April 1, 2015 Year III

CAM counts the cost A

ll debts come due. Sooner or later. As CAM now realises. Macau International Airport Co. Ltd. (CAM) owes the government MOP1.647 billion. And the Administration is now asking for a repayment plan. Extended in the early 1990s, the money helped fund the building of the MOP8 billion airport. The gov’t is the biggest creditor. CAM registered a 21.1 pct Y-o-Y jump in profits of MOP230 million for 2014. Meanwhile, the full 6m passenger capacity of the facility has almost been reached, and expansion is in the air PAGE

4

Digital dialogue

HSI - Movers March 31

Name

Third-party payment platforms are on the drawing board. The Monetary Authority head says development is only hindered by current legislation. AMCM chairman Anselmo Teng Lin Seng suggests revising the law. And revealed that electronic bill clearing and settlement is underway. Courtesy of collaboration between the gov’t and the Macau Association of Banks

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%Day

Belle International

3.32

China Merchants Hold

3.26

Hengan International

1.86

Tencent Holdings Ltd

1.73

China Resources Powe

1.35

China Merchants Hold

-1.46

Kunlun Energy Co Ltd

-1.57

BOC Hong Kong Hold

-1.78

Galaxy Entertainment

-1.94

China Overseas Land

-3.65

Source: Bloomberg

Fourfold success

I SSN 2226-8294

A universal success. Success Universe increased profits 420 pct to HK$96.9 million in 2014. It attributes the jump to better performances in its Mainland China lottery operations.

And its Macau casino resort venture, Ponte 16

Brought to you by

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Outside looking in They’re forming a queue. But China has rejected Taiwan’s application to join the Asian Infrastructure Investment Bank. More than 40 countries have signed up. But Japan has cold-shouldered the opportunity

Cooling down

Inevitable. Macau’s average housing price dropped 1.17 pct Y-o-Y in February. Meanwhile, housing transactions continue to shrink. The MSAR CE recently conceded that housing prices remain at a high level. But the Administration is to maintain the status quo on regulatory measures

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www.macaubusinessdaily.com

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New giant pandas to arrive in Macau in May

Banny Wines Cellar launches membership card

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Li Ka-Shing’s recent shopping spree shakes up Asian acquisitions

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China’s international payment system to help yuan use

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2015-4-1

2015-4-2

2015-4-3

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2 | Business Daily

April 1, 2015

Macau editorial

Waving not drowning A

nd in the blink of an eye three years have sped by. And voila!

Business Daily embarks upon its fourth year of publication. As we celebrate this event – by the way, not so easy for an independent title surviving in a market subverted by an antiquated salad of subsidies - we have reasons to feel happy with the results of what matters most: the credibility this title already commands in this city and beyond. Paper subscriptions have grown and the website registers tens of thousands of individual readers and millions of pages viewed since its inception. It’s true, then: readers are the best asset a publication can have.

We can only promise to maintain the type of journalism our group’s publications introduced to Macau over a decade ago, without fear or favour.

And to respect all opinions as equal so that everyone may find in the Business Daily pages the opportunity to express their views.

To the number of companies and institutions that consider this newspaper a suitable vehicle to advertise their products, services, achievements or just to brand images that contribute to a better tomorrow, our thanks, as well, as they are the ones who enable uncompromising journalism to find a place in Macau.

As this town encounters certain obstacles, real or imagined, in its path, we remain confident that the coming years will continue to make the SAR an example of responsible growth. Plenty of difficulties and mistakes have to be addressed, for sure, but we should all find comfort in the opportunities that reaffirm the uniqueness of this exquisite place.

We can only promise to maintain the type of journalism our group’s publications introduced to Macau over a decade ago, without fear or favour

Housing prices drop 1.2 pct Y-o-Y in February Macau’s average housing price dropped in February as transactions of flats continued to dry up Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he city’s average housing price showed a 1.17 per cent yearon-year dip in February, a rare yearly fall in surging housing costs in recent years as Macau saw a continued shrinkage in housing transactions.

The average housing price here in February was MOP89,352 (US$11,187) per square metre, an increase of 4.2 per cent compared to the previous month but a drop of nearly 1.2 per cent vis-a-vis the same period a year earlier, data released by the Financial Service Bureau (DSF) yesterday shows.

The city saw 313 housing transactions in February, down more than 30 per cent compared to a year earlier and 7 per cent less than the previous month.

Macau already experienced a softening in the growth of residential prices in the fourth quarter of last year, when the average price of flats decreased 5.2 per cent quarter-on-

quarter to MOP94,788 per square metre of usable area. The average price of completed flats in the fourth quarter of last year decreased by 10 per cent quarter-on-quarter to MOP82,073 per square metre, according to official data.

The latest DSF data shows that offplan sales here contracted in both the number of transactions and average price in February.

In the month, only 44 off-plan sales were recorded, a drop of 41 per cent compared to the 75 cases in the same month last year; the average price of an unfinished flat, with the most expensive located in NAPE and Aterros da Baía da Praia Grande on the Macau Peninsula, has dropped by 10.3 per cent year-on-year to 128,541 patacas in the month.

For completed flats, the official data noted a nearly 30 per cent year-on-year fall in the number of transactions in February, which totalled 269.

The average price of a finished flat in the month is 81,258 patacas per square metre, which is 3.8 per cent more than the same month a year before. The most expensive residence in this category is also located in NAPE and Aterros da Baía da Praia Grande, where the average price of a unit is 125,891 patacas per square metre.

After delivering his Policy Address on March 23, Chief Executive Fernando Chui Sai On told media that he reckoned that Macau housing prices were still at a high level.

However, the city’s leader said the administration was maintaining the status quo for the existing home price regulatory measures, a set of policies enacted since October 2012.

At the time, the local government tightened the loan-to-value ratios for home buyers, while extending the special stamp duty from homes to shops, offices and carparks.

4 | Business Daily

April 1, 2015

Macau

Airport operator owes nearly MOP1.65 billion to Macau Government

The amount was loaned by the government to build the local airport on a parcel of reclaimed land in the early 1990s

Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he operator of the city’s airport, Macau International Airport Co. Ltd. (CAM), has confirmed to Business Daily that it is working on a plan to repay the Administration some MOP1.647 billion (US$206 million), which is what the government loaned to the company in the early 1990s to build the airport.

The amount was first revealed by government delegates led by Secretary for Economy and Finance Lionel Leong Vai Tac speaking at the Policy Address Q&A session at the Legislative Assembly on Monday, when the director of the Financial Service Bureau, Vitória Alice Maria da Conceição, said that the government is now requesting CAM to deliver a repayment plan.

“We’re still working on the repayment plan,” a spokesperson from CAM told Business Daily.

“And for that plan, it has to go through the approval of our shareholders.”

The local Administration is the biggest creditor to CAM for the

construction of the airport in the early 1990s, which was built at a cost of over MOP8 billion on a strip of reclaimed land on the east side of Taipa. The airport opened in December 1995.

Business Daily has asked CAM for confirmation of the overall loan cost involved but had not received a reply by the time this story went to press.

CAM registered a 21.1 per cent year-on-year rise in profits of MOP230 million for 2014, the third year that the company has been in the black since the government and Sociedade de Turismo e Diversões de Macau SA (STDM) joined the effort to inject almost MOP2 billion in capital into the operation in 2012.

At the time, CAM announced that it was issuing new redeemable preference shares with a total nominal value of MOP1.947 billion, the cash proceeds of which would be used to repay bank loans deriving from the financial needs of the airport infrastructure in its early stage of construction.

The Macau Government then subscribed to 66.97 per cent of the shares, while STDM subscribed to the remaining 33.03 per cent.

The move to issue the shares in 2012 was primarily to relieve CAM from the burden of the loan interest, the company noted.

Now the airport operator is to start the expansion works on the north side of the passenger terminal

within the first half of this year in order to expand passenger capacity, for which the investment cost has not yet been disclosed.

The expanded terminal, which is expected to come into use by 2017, will have the capacity to handle 1.5 million passengers more than the existing space at the terminal. The maximum capacity that the airport can currently handle is 6 million passengers.

The local airport handled 5.48 million passengers last year, a rise of 9 per cent compared to 2013.

Increased passenger volume helped boost CAM’s revenue last year, whereby the revenue generated by the main concessionaires working at the airport reached MOP4.38 billion, a rise of 6.6 per cent compared to 2013, according to the latest press statement released by CAM following their board meeting.

The airport operator forecasts that it will handle 5.65 million passengers this year, while aircraft movements will increase by 4 per cent year-on-year to 54,500.

Two new giant pandas to arrive in May

A

pair of giant pandas were selected as gifts from the central government to Macau after three months of deliberation.

A female panda, numbered 667, and a male, numbered 726, were chosen from 55 candidates who met the age requirement at the Chengdu Research Base of Giant Panda Breeding in Sichuan Province, said Zhang Zhihe, the base director.

They have no blood relations, get on well with each other and are at the prime years for breeding, he said.

The pandas, both 110 kilograms in weight, will be flown to Macau at the beginning of May, taking the place of two pandas previously sent as gifts. Male panda Kaikai and his partner Xinxin, who died of illness last year, arrived in Macau in 2010. It is not decided yet whether Kaikai will be returned.

According to Lan Jingchao, head of the base’s veterinary hospital, panda No. 726, born in 2008, has

large black patches around his eyes.

He is strong, energetic, active and good at climbing. He likes interacting with the keepers and other pandas and has shown leadership qualities.

Panda No. 667, born in 2007, has a very round mouth, head, ear and body shape, which makes her seem like a rolling ball when playing.

She is gentle and has a good appetite.

She has displayed typical rutting behaviors for three years but has not yet mated, Lan said.

The pandas have gone through three rounds of selection. After the first two rounds, which were conducted by experts from across the country, two pairs stood out based on criteria such as age, health and fertility. The final selection was conducted by representatives from Macau.

A 30-day quarantine will be carried out before the two pandas set off on their journey to Macau.

Xinhua

6 | Business Daily

April 1, 2015

Macau

AMCM to develop third-party payment The AMCM head said the government is considering amending the current Bank Law so that third-party payment platforms can be developed in the city Kam Leong

kamleong@macaubusinessdaily.com

T

he city’s Monetary Authority will clear the barriers to developing third-party online payment in the Special Administrative Region by amending the current law, the chairman of the Authority, Anselmo Teng Lin Seng, said yesterday. In addition, he revealed that AMCM is discussing with the Macau Association of Banks the establishment of an electronic bill clearing and settlement scheme, as well as a credit reference agency.

“According to the current Bank Law, there are some regulations restricting the development of third-party payments in Macau. Despite there are third-party online payment platforms eyeing to expand their businesses in Macau, they have to apply for independent licences.

[In addition], due to the cost effectiveness, there is not yet any co-operation between Macau and such platforms reached,” Mr. Teng said when attending the Policy Address debate

session for the Secretary for Economy and Finance Lionel Leong Vai Tac at the Legislative Assembly (AL) yesterday.

The AMCM head indicated that the development of e-commerce in Macau may lead the Authority to amend the current law, or propose a new bill to clear the current restrictions for the city to develop online payment business.

Clearing and settlement scheme Meanwhile, Mr. Teng claimed that a working group of AMCM and the Macau Association of Banks has been formed for the setting up of an electronic scheme for bill clearing and settlement, with an initial proposal to be finished within this year.

“Despite the number of cheque transactions not increasing a lot in the past few years in Macau, the scheme is still an urgent task for us, in order to improve the efficiency

of [bill settlement], and to improve the overall settlement scheme, and for the further development,” Mr. Teng indicated.

“We hope that we can come up with some particular proposals for the scheme within this year. Some of the banks in Macau are large-scale ones so that the number of cheque transactions in different banks may vary.

In addition, different banks may have different hardware demands… As such, we have to decide first what model should be applied [to operate the scheme],” he added.

According to the AMCM head, in Hong Kong the clearing and settlement scheme is run by a joint venture between the Hong Kong Monetary Authority and the Hong Kong Association of Banks.

On the other hand, the two local parties are also working on establishing a credit reference agency in Macau.

Credit reference agencies

are to offer lenders a range of information about potential borrowers, which lenders use to decide whether they will offer borrowers credit or not.

“Currently, in Hong Kong, there are [two different credit reference agencies], handling personal information and company information, and run by two separate companies, respectively,” he said, claiming the government may take similar schemes in other cities as references.

However, regarding the clearing and settlement scheme, AMCM is still discussing with the city’s bank association actual ideas, although they already have an initial plan.

“Such as, it still remains uncertain about how the banks will join such agencies, and whether it should be mandatory or voluntarily, the scope of [the information covered], as well as the types of services [to be provided],” Mr. Teng claimed, without giving a timeframe on the establishment of such.

“The Macau Association of Banks suggested that the future operation of the credit reference agencies can be handed to Hong Kong companies. However, the government expressed reservations about the idea,” he said.

Tax Code bill to be sent for legislation by year-end During the debate session, the director of the Financial Services Bureau (DSF), Vitória da Conceiçã, said that the draft amendment to the Tax Code will be submitted to the AL for approval again within this year.

According to Ms. da Conceiçã, the Bureau had already finished the draft of the bill at the beginning of last year and is now analysing the opinions of legal departments.

In fact, another bill amending the Tax Code was submitted to the AL in 2012 but was later withdrawn by DSF itself, despite having spent 10 years drafting it.

Congratulations on the 3rd Anniversary of Business Daily

Power outage hits Areia Preta and Iao Hon districts

A

brief power outage hit the districts of Areia Preta and Iao Hon yesterday, the electrical power company Companhia de Electricidade de Macau (CEM) has announced. The reason behind the outage was an underground cable failure.

‘A brief power supply interruption happened in Areia Preta and Iao Hon districts on 31 March (Tuesday) at 12:58 pm due to underground cable failure. The incident affected 35 buildings and 4,200 households.

CEM immediately operated remotely

for power restoration and supply was resumed within four minutes at 1:02 pm’, the company said in a press release.

According to CEM, the Border Gate Frontier Post was affected by the outage but the fact that the backup power supply equipment was instantly activated in the building avoided the interruption of the services at the Post.

In a press release the company issued apologies to citizens and customers and promised to strive to improve its infrastructure to provide a reliable and secure electricity service.

Congratulations on the 3rd Anniversary of Business Daily

8 | Business Daily

April 1, 2015

Macau Young entrepreneurs granted MOP94 mln since 2013 The head of the Macau Economic Services (DSE), Sou Tim Peng, said on Monday that the Bureau had granted a total of more than MOP94 million (US$11.8 million) for the Young Entrepreneurs Aid Scheme, which offers interest-free loans of up to MOP300,000 to local youngsters to start their own businesses. According to the Bureau head, since the commencement of the scheme in August 2013 DSE has received 643 applicants, of whom 410 have been approved. However, 16 businesses that received the government subsidy have already closed, Mr. Sou said.

Congratulations on the 3rd Anniversary of Business Daily

Sale of cruise ship and World Cup boost Macau Success annual results Part of the joint venture in charge of Hotel Ponte 16, the company had a good year in 2014, with its lottery business profiting handsomely from FIFA World Cup football João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he sale of the cruise ship Macau Success for HK$93 million (US$11.99 million) plus the improved performances of flagship Hotel Ponte 16 and of its Chinese lottery business boosted the profits of Success Universe Group to HK$96.6 million.

According to the annual results for 2014 released late on Monday, the Group improved its results by around 420 per cent year-on-year from a profit of HK$18.6 million to HK$96.6 million.

The results for 2014 include the sale of the cruise ship Macau Success, sold for HK$93 million, and allowed the company to achieve a gain of around HK$45.2 million.

During the course of last year, the company managed to increase its profit with the flagship hotel in Macau Ponte 16. For the year of 2014 the integrated resort generated an Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of HK$461 million, which was an increase of 19 per cent year-onyear from HK$387.3 million in the annual year of 2013.

The Group also announced that in December from the 109 gaming tables at Ponte 16, some 88 were focused on the mass market, while

11 were high-limit tables and 10 were VIP tables. The average occupancy rate of Ponte 16 was over 90 per cent in 2014.

In relation to the China lottery business, revenues jumped, led by the FIFA World Cup 2014 that took place in Brazil in June and July. Overall, the lottery sector in

Mainland China grew 24 per cent year-on-year to RMB382.4 billion.

In the sports sector alone, lottery sales in Mainland China surged 33 per cent to RMB176.4 billion.

The growth of Chinese lotteries combined with the efforts of Success Universe, which ran an online broadcast channel for the World Cup and a WeChat campaign, resulted in a profit of HK$24.5 million. The lottery is an area where results improved steeply as in 2013 the company had registered a loss of HK$13.4 million.

With regard to 2015, the Group will focus more on non-gaming activities in Macau, which it explained in their annual results answers a new trend among visitors to the Special Administrative Region.

The opening of the 3D Museum Pier 16 which will occupy over 18,000 square feet and have more than 150 photography points is set for mid-2015. In addition, Ponte 16 will open an indoor Taiwanese food hall to attract more customers.

Concerning the lottery industry, the goal of Success Universe is to grow the business and expand it to more provinces and cities in Mainland China. At the moment, the Group is operating in Jiangxi, Qinghai and Heilongjiang.

Banny Wines Cellar launches membership card

Y

esterday, Banny Wines Cellar launched its new scheme for customers at Macau Wine Museum. The new MasterCard Red Wine Tour Card provides them with discounts in Macau and other parts of the world, including Europe.

“This card will be aimed at our VIP clients and we will offer it to any client that makes a purchase of MOP2,000 in one of our shops”, the Chief Executive Officer of Banny Wine Cellar, Bandy Choi, told journalists on the sidelines of the event. “This card can be used in some of the world’s best restaurants; not only in Macau, Hong Kong or Mainland China but all over the world”, he explained.

The new membership cards of Banny Wines Cellar are the result of a partnership with MasterCard and CMN. During the presentation, the CEO of MTEL, Michael Choi Tak Meng, was also present. In addition to the presentation of the MasterCard Red Wine Tour Card, guests were invited to participate in a wine tasting ceremony.

“This is a membership card but at the same time it is a debit and credit card. It has many features.

We are hoping to make important partnerships around the world in order to offer better discounts”, Choi said.

“During the first phase, I hope this card will be used by 10,000 clients or more. This is the goal of our project.

But, of course, we’ll need to spend more resources on advertising it. At the moment, Banny Wines Cellar has around 78 shops in Macau, Hong Kong and Mainland China and our clients can ask for the card there”, he said.

Banny Wines Cellar - operating in Macau for over a decade - says the card launched by the company is inspired by the MasterCard Tour Card.

Congratulations on the 3rd Anniversary of Business Daily

J.S.F.

10 | Business Daily

April 1, 2015

Macau

Macau casino analysts slash forecasts as downturn accelerates Analysts are racing to slash their forecasts for Macau casino revenue this year after a lackluster Lunar New Year showed the pace of the downturn is accelerating

M

acau’s Gross gambling revenue is now expected to fall 21 per cent this year, according to the median estimate of 13 analysts surveyed by Bloomberg, more than than doubled their projected decline two months ago.

That would cut total annual casino receipts for the Chinese gaming enclave to about 277.7 billion patacas (US$34.8 billion), the smallest take since 2011.

As recently as January, analysts were evenly split over whether Macau casino revenue would shrink at all this year and the median prediction was for an 8 per cent decline. Now CLSA has the gloomiest estimate, with a 26 per cent drop, in the latest survey, while the most optimistic sees a 9 per cent contraction.

“We’ve lived through downturns before and said to people things were

going to be OK and they were OK, but this time we got it wrong.” said Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd., who almost tripled his projected decline from 9 per cent in a December report. “I wasn’t as conservative before.”

Macau casinos saw their firstever drop in annual revenue last year as the Chinese economy slowed and President Xi Jinping expanded his battle to curb corruption in the ruling Communist Party. Xi’s campaign -- now into its third year -- has hurt sales of luxury goods and kept away high rollers who helped the former Portuguese colony’s gambling industry grow to about seven times the size of the Las Vegas Strip.

None of the analysts were more downbeat than Macau’s own government, which last week slashed

its average monthly forecast to a figure that would represent a 32 per cent plunge from last year.

Gloomy Views Casino operators including Sands China Ltd. and Galaxy Entertainment Group Ltd. have seen about US$19.4 billion in market value wiped out in the first quarter this year.

CLSA now expects that the industry won’t start to recover until next year, rather than the second half of 2015, as it had previously predicted, Fischer said.

Macau’s gambling regulator could as early as tomorrow report the city’s second-worst monthly casino revenue.

The figure would probably drop 40 per cent, according to a median estimate of nine analysts surveyed

by Bloomberg.

That would be Macau’s 10thstraight month of decline, after experiencing its biggest-ever fall -49 per cent -- in February, due to weak demand over the Lunar New Year holiday.

Adjustment Period VIP business could face more trouble as the government considers expanding its casino smoking ban to include gaming rooms that cater to the highest-stakes gamblers. Hourly cigarette breaks could cut playing time by about 20 per cent, directly impacting gaming activity, according to Bloomberg Intelligence.

Macau has entered an “adjustment” period of slower growth and needs to develop a broader range of attractions to draw travelers and fulfill the

government’s goal of making the city a global tourism center, Chief Executive Fernando Chui said last week in his annual policy address.

As Macau diversifies its economy, casino operators are opening new resorts and adding shops, restaurants and entertainment shows to woo tourists. Galaxy will open its expanded resorts on May 27, the first of the city’s six big operators to open a new facility.

That project -- followed by Melco Crown Entertainment Ltd.’s Studio City and a new Sands China resort -- will open the next year and they together will add more than 4,000 hotel rooms in the only Chinese city where gambling is legal, according to Bloomberg Intelligence. That would be a 25 per cent increase from the current level.

Gaming Tables The expansion could help lure more overnight visitors, who spend about five times more than daytrippers, Bloomberg Intelligence said.

Analysts are watching closely the number of gambling tables the government will grant for new projects, Fischer of CLSA said. Both Galaxy and Melco’s new properties have the capacity to add as many as 500 tables, although the market expects an increase of 100-200, he said.

“There’s a risk that the companies don’t receive as many tables as they’d like,” he said. “If they received a bad number -- and that’s 100 -- that would be a negative for the entire sector.”

Bloomberg

Due to a transcription mistake in the interview with Mr. Albano Martins published this Monday the interviewee is quoted as saying of the Light Rail Transport progress: “The faster solution for this problem would have been to have built it [all] above ground.” Instead of ‘above’ it should read ‘below’. Business Daily apologises to Mr. Albano Martins and to its readers for this mistake.

12 | Business Daily

April 1, 2015

Greater China

Asia-Pacific M&As surge in Q1 on Li Ka-shing spree Baosteel vice president under investigation A senior official of China’s Baosteel Group, the parent of Baoshan Iron & Steel, is being investigated for “serious disciplinary violations”, China’s corruption watchdog said yesterday. The graft watchdog, the Central Commission for Discipline Inspection (CCDI), named the official as Vice President Cui Jian but gave no further details in a short statement.

“Serious disciplinary violations” is the term usually used to refer to corruption in China. A Baosteel spokesman said the company was aware of the investigation and was watching developments but had no further immediate comment.

Faurecia forms joint venture with Dongfeng France’s Faurecia yesterday said it had agreed to form a joint-venture with Dongfeng Motor Corporation with the objective of generating annual sales of around 2 billion euros (US$2.2 billion) in the medium term. The joint venture will serve Dongfeng and its automotive partners for passenger and commercial vehicles and when fully deployed, will cover all of Faurecia’s businesses, the two companies said in a joint statement.

Bank tech restrictions delayed China has agreed to delay implementing new bank technology restrictions that Washington has complained represent unfair regulatory pressure on foreign firms, a senior U.S. Treasury official said in Beijing. China said this month work was on-going on a draft antiterrorism law that would require foreign companies to hand over encryption keys and otherwise facilitate Beijing’s ability to bypass security measures, triggering U.S. protests. Another set of financial sector regulations would push China’s state-owned banks to buy technology from domestic vendors.

Alibaba to develop health platform Alibaba’s healthcare subsidiary will tieup with Zhejiang DiAn Diagnostics Co Ltd to help develop an online hospital platform, the diagnostics firm said in a filing late on Monday. The firm said it had signed a strategic cooperation agreement with Alibaba Health Information Technology Ltd to explore an online health testing platform - part of Ali Health’s drive to take healthcare services online. Ali Health is looking to leverage technology to overhaul China’s fragmented healthcare market, which suffers from an under-supply of doctors, snarling queues and a wide gap between urban and rural healthcare.

At almost a third of the global whole, the proportion was the region’s biggest ever for the first quarter Denny Thomas and Anshuman Daga

T

he deal-making spree of Hong Kong tycoon Li Kashing propelled the value of Asia-Pacific firms’ mergers and acquisitions (M&As) to a record 32 percent of the global total in the first quarter, kicking off what bankers see as a bumper year for Asian deals.

Li’s restructuring of his empire in January and multi-billion dollar purchases of British transport and telecoms firms is likely to be complemented by Chinese and Japanese companies vying for mining and energy targets, cheapened by falling commodity prices, bankers say.

Asia-Pacific ex-Japan deals rose 68 percent in January-March to US$243 billion, showed preliminary data from Thomson Reuters. At almost a third of the global whole, the proportion was the region’s biggest ever for the first quarter, and compared with a quarterly average over the past decade of 19 percent.

“The bigger theme going around is restructuring, where companies are trying to place more focus on businesses inside their portfolios,” said Jason Rynbeck, Asia-Pacific M&A head at HSBC. “The theme about people looking at shareholder value and moving assets into more clear buckets is getting some traction.”

HSBC Holdings PLC acted as financial adviser for most Asia-Pacific M&As in value terms, cornering a quarter of market share, the data showed.

Chinese interest Sparking hope of outbound deals from China in particular was China National Chemical Corp’s (ChemChina) US$7.7 billion bid this month for Italian tyre maker Pirelli & C SpA, bankers said.

“There are many large transactions under discussion,” said Rohit Chatterji, Asia-Pacific M&A head

Li Ka-Shing leads the 2015 1Q merges and acquisitions chapter

at JPMorgan Chase & Co, which with Rothschild advised ChemChina on the Pirelli transaction.

“There is huge interest from Chinese and Japanese buyers across many industrial sectors and so it

KEY POINTS Asia-Pac M&As rise 68 pct in Q1 to US$243 bln Asia-Pac accounts for record 32 pct of global Q1 total More deals expected in mining, energy on commodity slump

promises to be an interesting year ahead,” said Chatterji, referring to companies in search of growth outside their slowing domestic economies.

Mining and energy firms are particularly in the spotlight, said Chatterji. “In another six months, if commodity prices do not recover, and once capital expenditure is exhausted, people need to explore options.”

In Southeast Asia, however, M&As fell to a two-year low of US$16.8 billion as acquisitive tycoons from Thailand paused after recent deal-making rush.

That has resulted in banks cutting staff at Southeast Asian operations.

The Southeast Asian M&A heads at UBS Group AG, Goldman Sachs Group Inc and Bank of America Corp have left in recent months, said people with knowledge of the matter, who declined to be identified as they were not authorised to speak with media.

Reuters

Asia-Pacific’s biggest M&As in Q1 Date Jan 9

Target

Acquirer

Hutchison Whampoa

Cheung Kong

Rank Value (US$mln)

Jan 23 O2 Hutchison Whampoa Feb 3

Novion Property

March 22

Pirelli

Jan 20

CITIC

March 11 Jan 20

15,381.2 8,209.5

Bidco

7,913.8

Japan Post

6,021.2

5,924

ITR Concession Co

Industry Funds

5,725

CITIC

Chia Tai Bright

4,433.3

March 3 AWAS Aviation Jan 6

Federation Centres

Feb 18 Toll Holdings

45,410.8

Chia Tai Bright

Macquarie Bank

Kenon Holdings Shareholders

4,000 3,242.2

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

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Business Daily | 13

April 1, 2015

Greater China Ren builds global chemicals group ChemChina’s 57-year-old chairman, who agreed last week to buy the world’s fifth-largest tyre maker Pirelli, sees himself as an “industrialist” and not as a politician Chen Aizhu and Matthew Miller

R

en Jianxin, the architect behind China National Chemical Corp’s US$8 billion bid for Italian tyre maker Pirelli, is rare among Chinese state company bosses: he gets the importance of markets and the limits of government assistance.

Over three decades, Ren has led the restructuring of China’s chemicals industry, organizing more than 100 firms under the ChemChina banner into six main operating divisions, producing everything from basic chemicals to fertilizers and silicones. Along the way, he also founded the Malan Noodle Co, a popular restaurant chain.

His biggest gambit, though, has been to globalize ChemChina through acquisitions aimed at bringing international brands and professional management to China. Since 2006, he has spent about US$4.4 billion on firms in Australia, France, Norway and Israel. In 2007, Ren also sold a 20 percent stake in Bluestar, his specialty chemicals arm, to private equity firm Blackstone for US$600 million.

For Ren, the key is to make ChemChina more competitive.

Despite increasing revenue

Ren’s lastest acquisition is been tyre maker Pirelli

by nearly a quarter last year to around 300 billion yuan (US$48.3 billion), earnings in the rubber and oil and gas businesses have been squeezed by oversupply and falling prices.

Those same market factors in 2012 forced Oslo-based Elkem, a US$2 billion acquisition, to halt solar grade silicon production for 16 months.

“For all these years

ChemChina has been battling with market turmoil,” Ren told a small group of reporters on Sunday.

Tyre “revolution” Ren predicts the Pirelli acquisition - which the companies first discussed three years ago when he visited the firm’s Milan headquarters -

will have a “revolutionary” impact on ChemChina’s rubber and tyre business.

“I was impressed by Pirelli’s excellent technology, management, well-known brand and competitive distribution,” Ren said.

A potential merger was scuttled after market rumours leaked to the media, but Ren saw the chance to rekindle discussions six months ago.

“I believe both our strategies and visions hadn’t changed over the last three years,” he said. “We very quickly reached an agreement ... with respect to strategies, corporate governance structure and shareholder structure.”

Ren expects a combined company to have its greatest impact in the industrial tyre segment, making more tyres for trucks and heavy machinery and reaching new consumers in Asia, where Pirelli’s current market share is small.

Focus, patience Ren had his eye fixed on building a state chemicals powerhouse since 1984, when the then-26-year-old chemicals plant mechanic in China’s landlocked northwest borrowed 10,000 yuan (US$1,611 at today’s rates) from the

government to start a factory making industrial solvents.

He built ChemChina, which was officially established in 2004, by absorbing mostly financially stressed chemical plants that had been under the Ministry of Chemical Industry, which was dissolved in 1998.

Ren employed strategic partners to consolidate the companies and hired professional managers to operate them, winning ChemChina a reputation in the global chemical industry and among investors as China’s most ‘internationalized’ and market-oriented stateowned enterprise.

ChemChina’s relatively small size - just one-tenth that of domestic peer Sinopec Corp and its acquisition targets, which are less sensitive politically than the energy and resources deals that have dominated China’s M&A footprint, have allowed the company to make sound purchases.

“We only target good companies,” Ren said. “And you need to be super patient for a good buy.”

Colleagues describe Ren as a workaholic, but say he displays a sincerity and charm, showing equal respect to senior foreign counterparts and canteen staff. He has initiated an annual summer camp, putting three dozen or so children of foreign employees through a 20day programme that includes a home-stay with local ChemChina staff.

Saying he has little appetite for a political career, Ren wants to remain a dedicated governmentbacked entrepreneur.

“It takes a lifetime to excel in one thing,” he said over a bowl of his favourite Lanzhou noodles.

Reuters

CIPS payment system seen boosting yuan usage Bankers believe CIPS will make automation possible, bringing costs down, making using the yuan more attractive for companies Michelle Chen and Andreas Kröner

C

hina’s launch of its international payment system (CIPS) this the year should end the monopoly that China’s yuan clearing banks enjoy, giving foreign banks a share of the mushrooming yuan clearing business.

Seven of the 20 banks selected to participate in the system initially are foreign, sources told Reuters.

About 80 percent of cross-border yuan transactions are cleared through 14 Chinese clearing banks in offshore centres, with Bank of China Hong Kong handling most of that. The rest is done through correspondent banks on the mainland.

“CIPS actually puts all its members in an equal position in terms of yuan clearing, which will be a boost to foreign banks’ agent bank business since most yuan transactions are handled by Chinese clearing banks now,” said Wilson Chan, a senior consultant to the Institute of Bankers in Hong Kong.

This is significant for foreign banks

because yuan-denominated crossborder trade settlement was worth 6.55 trillion yuan (US$1.06 trillion) in 2014, more than 20 percent of China’s trade volumes, up from 1 percent in 2010. That is expected to climb to over 50 percent by 2020, HSBC estimates.

CIPS is expected to roll out as early as September or October and will replace a cumbersome patchwork of networks.

Bank of China Hong Kong said it was still waiting for details of CIPS when asked by Reuters about the impact it would have on yuan clearing banks.

Enhanced efficiency CIPS is planned to accelerate yuan internationalisation by creating a bigger and more diverse group of clearing banks and making yuan clearing cheaper.

Whereas current clearing channels involve different language codes and

document formats in China and globally, CIPS is expected to adopt the international standard, smoothing the process.

“We’ve had complaints from banks on clearing processes as they need to manually categorize a transaction and assign a payment code, which is timeconsuming,” said Ngan Kim Man, head of renminbi business strategy and planning at Hang Seng Bank.

About 15 percent of renminbidenominated payments are rejected, versus a 5 percent rejection rate for other currencies, according to SWIFT.

Offshore hubs CIPS will largely replace the role of the current officially appointed clearing banks, if U.S. experience is any guide.

CHIPS - the U.S. forerunner of CIPS - handles more than 90 percent of cross-border dollar flows.

This dominance came at the expense of the local and regional U.S. dollar

clearing systems. CHIPS achieved it by being more efficient and providing longer operating hours, said Nathan Chow, an analyst at DBS in Hong Kong.

“Most of the clearing business globally is done at the hub of a currency. The U.S. dollar clearing hub is New York and offshore clearing banks only play a very minor role,” said a senior banker in Frankfurt.

He said the tendency of currencies would apply to renminbi as well, with offshore clearing banks becoming less important once CIPS was in full swing.

Nevertheless, market players believe China will keep setting up more offshore yuan hubs to showcase the yuan’s rise and to help Chinese banks expand overseas.

“There will still be advantages for clearing banks. If there is a payment within Europe, it doesn’t make sense to clear it through Asia,” said Bernd Meist, a managing director in the Bank of China’s Frankfurt branch, the yuan clearing bank in Germany.

Reuters

14 | Business Daily

April 1, 2015

Greater China

Beijing rebuffs Taiwan’s AIIB bank application

Norway applied, too, but Japan refused to join the Nationalist Party of Ma. Japan remains cautious about signing up to the AIIB, indicating that Tokyo will miss the March 31 deadline for application.

Finance Minister Taro Aso reiterated Japan’s concerns about governance at the AIIB, its debt sustainability and environmental and social safeguards.

“Unless these conditions are secured, Japan has no choice but to be very cautious about joining,” Aso told reporters after a cabinet meeting.

Latest European application

Far from the few participants who posed for the AIIB kick-off portrait, more than 40 countries have signed up

C

hina signalled yesterday that Taiwan would not be allowed to join the Beijing-backed Asian Infrastructure Investment Bank (AIIB), which is seen as a counterweight to the Washingtonbased World Bank.

“As for Taiwan joining (the AIIB), we maintain that we should avoid the ‘two Chinas’ and ‘one China, one Taiwan’ situation,” foreign ministry spokeswoman Hua Chunying told a regular briefing.

Taiwan will present a letter of intent to the AIIB preparatory committee, the presidential office in Taipei said Monday following a national security meeting chaired by

Taiwanese President Ma Ying-jeou.

But Beijing regularly proclaims the importance of its “One China” policy, seeing the island as part of its territory awaiting reunification, and often curtails Taiwan’s involvement in international agreements. The two split in 1949 at the end of the Chinese civil war.

Taiwan is not a member of the United Nations, World Bank or International Monetary Fund.

Inner oposition In Taiwan, the main opposition Democratic Progressive Party (DPP) protested against what it called the

government’s unilateral decision to seek to join the AIIB. “The AIIB is led single-handedly by a Beijing which still promotes ‘one China’,” it said in a statement.

China views Taiwan as a renegade province and has not ruled out the use of force to bring it under its control. However, since Taiwan’s current president Ma Ying-jeou took office in 2008, enmity has declined considerably and the two sides have signed a number of trade and investment deals.

The DPP maintains Taiwan is a de-facto independent country and adopts a much more conservative stance toward China dealings than

Norway also said it wanted to join as a prospective founder member.

“Norway is a substantial contributor to global development efforts, and wishes to join countries from Asia and other parts of the world in further refining the structure and mission of the AIIB,” Foreign Minister Boerge Brende said in a statement on a government website.

China set a March 31 deadline to become a founding member of the AIIB and over 40 nations have joined or said they intend to, adding clout to an institution seen as enhancing Beijing’s regional and global influence.

Japan and the United States are the two notable absentees.

The AIIB is seen as a challenge to the World Bank and Asian Development Bank and has drawn a cool response from the United States, although many of Washington’s allies, including Australia, South Korea, Britain, France, Germany and Italy, have announced they would join the bank.

Reuters and AFP

Dalian Wanda to invest US$2 bln in overseas hotels Parent Dalian Wanda Group aims to lower property contribution to revenue to less than 35 per cent by 2020 Clare Jim

D

alian Wanda Commercial Properties Co Ltd yesterday said it plans to invest in one to two overseas hotel projects annually, spending up to US$1 billion each, as it pushes into tourism and entertainment while domestic real estate slows.

China’s biggest commercial property developer by sales is looking at France and Germany to add to its six projects in the United States, United Kingdom, Spain and Australia.

“We’re prudent in choosing our overseas projects,” Chairman Ding Benxi said, without offering further specifics, at Wanda’s first earnings briefing since its US$3.7 billion December listing.

Wanda’s diversification drive comes as China’s government eases housing tax and lending rules to combat a downturn in the broader property market, in an economy growing at its slowest pace in a quarter of a century.

At the same time, parent Dalian Wanda Group aims to lower property’s contribution to revenue to less than

KEY POINTS Looking at French, German markets Part of diversification into tourism, entertainment Plans e-commerce expansion, asset securitisation

Wang Jianlin, Dalian Wanda’s founder

35 percent by 2020 from 66 percent.

It also wants fewer assets requiring significant funding under its “asset light” business model.

As part of that change, Dalian Wanda Commercial Properties on Tuesday said it will expand in e-commerce with an online-to-offline

platform at the end of June where consumers can shop in its malls but pay online.

Wanda also said, without elaborating, that it will create investment funds and securitise assets, or sell its assets as financial products.

Wanda also plans to issue up to 35 billion yuan worth of corporate bonds and debt financing instruments, to help cut funding costs, Chief Financial Officer Liu Xiaobin said.

A day earlier, Wanda said core profit rose 14 percent in 2014 to 14.8 billion yuan (US$2.39 billion), matching analyst estimates. Net profit, which includes fair value gains, rose 1 percent to 24.8 billion yuan.

Reuters

Business Daily | 15

April 1, 2015

Asia

South Korea February factory output rebounds After a 3.8 percent drop in January Christine Kim

S

outh Korea’s industrial output in February rebounded strongly from the previous month thanks to the automobile and semiconductor sectors, but the underlying trend showed factory activity remains soft and highlighted a fragile economic recovery.

Industrial output last month rose by a seasonally adjusted 2.6 percent on monthly terms, handily beating a 0.4 percent median rise tipped in a Reuters poll, Statistics Korea data showed yesterday.

It followed a 3.8 percent drop in January, which was revised from a preliminary 3.7 percent fall.

However, in a more realistic reflection of factory activity, Statistics Korea also released data showing average output during the first two months of the year fell 0.3 percent compared to average activity in the fourth quarter.

“January and February numbers were likely affected by irregular factors from early in the year. When you put the two months together activity was not very remarkable,” said Suh Dae-il, an economist at Daewoo Securities.

A government official also downplayed the strong data.

“Once you eliminate the base effect, factory activity in February was similar to what we saw in the fourth quarter of last year,” said Jeon Baek-geun, a statistics official at Statistics Korea.

South Korean economic indicators in January and February tend to be distorted due to the Lunar New Year holiday which can fall on either month in any given year.

Car assembly line of South Korean carmaker Hyundai

KEY POINTS Feb factory output s/adj +2.6 pct m/m (Reuters poll +0.4 pct) Gain mostly due to holiday distortions, fall expected in March

The latest data come just a day after Bank of Korea Lee Ju-yeol said the economy is unlikely to shake off its weakness in a hurry.

On an annual basis, February’s industrial output dropped 4.7 percent, worse than a 1.5 percent decline tipped by analysts.

Furthermore, inventories rose 2.9 percent in February, picking up from a 0.3 percent rise in January and adds to the uncertain outlook for manufacturers confronting uneven global demand and sluggish domestic consumption.

Vietnam hit by rare strike at major footwear factory

The Bank of Korea, the nation’s central bank, has cut interest rates three times since August last year, taking the benchmark rate to a record low 1.75 percent, in an effort to jumpstart the recovery. Analysts are largely divided between another cut and no change for the rest of the year.

Service sector output in February rose a seasonally adjusted 1.6 percent on monthly terms - the biggest rise since February 2012 - and more than recouped a revised 0.6 percent fall in January.

Reuters

The strike is another blow for a factory that was among dozens hit by anti-China rioting last year

Ho Binh Minh

T

housands of workers at a major factory in southern Vietnam went on strike for a fifth day yesterday in protest over social insurance cover, in rare show of labour unrest in a country positioning itself as a future Asian manufacturing powerhouse.

Witnesses in the industrialised suburbs of Ho Chi Minh City said hundreds of workers massed peacefully inside and outside the factory owned by Pou Yuen Vietnam, a footwear maker for firms that include Nike Inc and Adidas and brands like Lacoste, Converse and Reebok.

Pou Yuen, which employs close to 80,000 workers, is controlled by Chinese shoemaker Yue Yuen

Industrial Holdings Ltd, a subsidiary of Taiwan-listed Pou Chen Corp.

Strikes and protests are rare in communist Vietnam, which has been tightly controlled by one party for four decades. It is known for taking decisive action to thwart the kind of labour and civil unrest that has affected other textile manufacturing rivals like China and Cambodia.

That has earned Vietnam a reputation as a safe bet for firms like Gap, H&M and Inditex’s Zara. Such companies have helped fuel annual export growth of 15.8 percent last year in garments, to US$20.8 billion, and 21.6 percent in footwear, to US$10.2 billion.

Workers blocked nearby

streets on Monday, according to news websites of some state-run media, which has given the issue only limited coverage. VN Express reported several nearby factories closed for security reasons.

The employees are disgruntled about a social insurance law taking effect from 2016, which restricts the scope of entitlements for a lump sum payment if they leave.

The parent companies of the Vietnamese firm gave no immediate comment and city officials were trying to settle the dispute.

“The company has given them a day off today and we are holding dialogue with workers,” Nguyen Tran Phuong Tran, deputy

Pou Yuen, which employs close to 80,000 workers, is controlled by Chinese shoemaker Yue Yuen Industrial Holdings Ltd., a subsidiary of Taiwan-listed Pou Chen Corp.

chairwoman of the city’s Labour Union, told yesterday Reuters by telephone.

The strike is another blow for a factory that was among dozens hit by antiChina rioting last year during a maritime diplomatic row between Hanoi and Beijing.

It comes as Vietnam’s tries to lure big firms with its cheap labour, tax breaks and its looming accession to Free Trade Agreements (FTA) with its biggest export partners.

Vietnam is in the final stages of FTA talks with the European Union and hopes soon to conclude a Trans Pacific Partnership (TPP) in a region covering 40 percent of global GDP, including the United States, Japan and Australia.

Reuters

16 | Business Daily

April 1, 2015

Asia Thai household debt rises to record Thailand’s household debt rose to a record high 85.9 percent of gross domestic product at the end of 2014 from 84.7 percent at the end of September, the central bank said yesterday. Household debt was 10.43 trillion baht (US$320 billion) at the end of 2014, continuing to crimp consumption as the economy struggles.

At the end of September, the total was 10.22 trillion baht. The Thai economy grew only 0.7 percent in 2014. A senior Bank of Thailand official said the pace of increases in household debt has slowed sharply.

East Asia countries halt Thai air route expansion About 100 charter flights to Japan alone have been cancelled and some 30,000 tickets either refunded or modified Khettiya Jittapong and Manunphattr Dhanananphorn

KEY POINTS

Australian new home sales up Sales of new homes in Australia rose again in February thanks to solid demand in the multi-unit sector, an industry survey showed yesterday. The Housing Industry Association (HIA) said its survey of large volume builders showed sales of new homes rose 1.1 percent in February, following a 1.8 percent gain in January. Sales of multi-units jumped 11.1 percent in the month, while sales of detached homes slipped 1.3 percent.

Tokyo bourse operator stricter Tokyo bourse operator Japan Exchange Group will seek to strengthen screening measures for companies looking to go public, including requiring firms to provide the basis of earnings projections at the time of the initial public offering (IPO), two sources familiar with the matter said yesterday. The move comes after mobile game developer Gumi Inc issued a loss warning and plans to cut its workforce just months after raising hundreds of millions of dollars in a stock market listing.

Gumi’s shock announcements followed revelations last year of inappropriate accounting and lack of internal controls.

Thai current account in surplus Thailand posted a current account surplus of US$3.51 billion in February, compared with the previous month’s US$2.51 billion surplus, the central bank said yesterday.

The Bank of Thailand’s index for private consumption in February rose 0.1 percent from January, while its index for investment was down 0.1 from the previous month. It said exports in February slipped 6.0 percent from a year earlier, extending January’s 2.6 percent fall.

Honda to invest in UK plant

Honda Motor Co said yesterday it would spend more than 200 million pounds (US$296 million) to upgrade its UK plant, turning it into a global production hub for the next-generation five-door Civic. In a move that secures the medium-term future of the under-utilised factory in Swindon, Japan’s No.3 automaker said it would invest in advanced production technologies and processes, bringing cumulative investment in the plant to more than 2.2 billion pounds since 1985.

The factory plans to produce 120,000 Civics a year, selling about half in Europe and the rest for export markets, a Honda spokesman said.

Halt impacts new routes, charters About 100 flights cancelled in April, peak travel season International auditor finds significant safety concerns

C

hina has joined South Korea and Japan in stopping Thailand-based airlines from flying charters and new routes because of safety concerns highlighted by an international audit, Thai officials said.

The move will come as a blow to Thai air carriers that have just begun to recover after a poor 2014 when political protests slashed the number of tourists visiting the Southeast Asian country.

The halt is disrupting the peak travel season around the Thai New Year holiday in April. About 100 charter flights to Japan alone have been cancelled and some 30,000 tickets either refunded or modified, Somchai Piputwat, the director

general of Thailand’s Department of Civil Aviation (DCA), told reporters.

Budget carriers have been worst hit, Thai officials said, though national carrier Thai Airways International, which is in the midst of a major restructuring, has also been prevented from expanding because of the halt.

One aviation source with knowledge of the matter told Reuters that significant safety concerns had been uncovered during an audit of Thailand’s civil aviation authority by the Montréal-based International Civil Aviation Organization.

The source said the ICAO’s concerns revolved around the issue of operator certificates to carriers

by the Thai authority. While the ICAO cannot “downgrade” states, its audits identify concerns that could lead countries to take steps such as banning flights.

The U.S. Federal Aviation Administration said it was aware of ICAO’s safety concerns, but declined to say whether it was reviewing Thailand’s aviation safety status, and referred questions to Thai authorities.

Analysts say an FAA downgrade of Thailand’s aviation safety assessment would prevent Thai airlines from launching or expanding service to the United States, either directly or as code-share partners. It would also limit their choice of aircraft and

Bank of Japan’s lone voice Kiuchi starting to be heard The 51-year-old former market economist proposed making quantitative easing a temporary scheme to be reviewed in two years Leika Kihara

T

akahide Kiuchi often appears a lone voice of dissent on the Bank of Japan board as his proposals to change key elements of its massive monetary stimulus are consistently voted down, but two years into the policy he is looking increasingly prescient.

With the BOJ no closer to hitting the 2 percent inflation target it set for April 2015 when Governor Haruhiko Kuroda embarked on his radical money-printing drive, other members on the nine-strong board are starting to share Kiuchi’s concerns about the pitfalls of the policy.

“He may appear like an outcast, but he probably yields more influence on the board’s debate than many people think.”

The 51-year-old former market economist did not oppose the BOJ’s decision to adopt its stimulus, dubbed “quantitative and qualitative easing” (QQE), in April 2013. But he proposed making it a temporary scheme to be reviewed in two years.

He also called for making the 2 percent inflation target a long-term goal without a set deadline. Both proposals have been voted down 8-1 at every policy-setting meetings.

Behind the proposals are his concern that setting too high a target could hurt the BOJ’s credibility and delay an exit from massive moneyprinting, sowing the seeds of a future bubble.

While Kuroda has rebuffed the idea of a bubble, he has been forced to qualify the two-year commitment for hitting the target - just as Kiuchi predicted - a move that could be self-defeating by tempering price expectations.

Inflation target elusive As inflation grinds to a halt - data on Friday showed core annual inflation was zero in February when the effect of a sales tax hike was removed - and households show no signs of boosting

spending, Kiuchi’s persistence in pointing to the diminishing returns of QQE has gained some traction on the board.

Three other board members broke ranks and joined him in opposing October’s decision to expand the stimulus, which needed Kuroda’s casting vote to pass 5-4.

So far, there is little sign Kiuchi will find support for his alternative proposals from the dissenters, who share his wariness over the cost of QQE but disagree on almost everything else.

All three withdrew their opposition to October’s action a month later - unlike Kiuchi, who continues to propose reverting to the pace of asset purchases before October’s easing.

Kiuchi is unfazed, feeling that even without followers his lone dissent can act as a deterrent to Kuroda’s radicalism.

“The costs of QQE would have exceeded the benefits at some point

Business Daily | 17

April 1, 2015

Asia increase inspections of Thai aircraft at U.S. airports.

Domino effect Thai Transport Minister Air Chief Marshall Prajin Juntong told reporters on Monday that Thailand had struggled for a decade to comply with ICAO standards.

While the ICAO has not made the results of the audit public, Prajin said aviation authorities in some countries had taken pre-emptive steps to stop Thai carriers from flying new routes.

Authorities in China have rejected plans by budget carrier Orient Thai Airlines and charter flight operator Sky View to operate more flights to the country, the DCA’s Somchai said.

South Korea has rejected plans by charter carrier Asia Atlantic Airlines to start new flights, he added. Japan had already made a similar move, according to Thai media reports.

Other airlines affected by the ban are Thai Airways and long-haul, lowcost carrier Thai AirAsiaX. “It’s a domino effect,” Prajin said, adding that the ministry hoped the issue would be resolved within eight months.

Thai Airways declined to comment.

Nok Airlines said the impact on NokScoot, its joint venture with Singapore Airlines subsidiary, would be limited.

Voradech Hanprasert, deputy permanent secretary at the Thai Transport Ministry, said the ICAO findings had no impact on existing flights.

But Thailand is concerned the results could lead the FAA to put Thailand on its watch list, he said.

An ICAO representative from one Asia-Pacific country said on Monday he felt Thailand would rectify the concerns raised in the audit.

“A (country) like Thailand will definitely take measures to address these issues,” he said. “I think they need time.”

Reuters

Samsung and LG call off washer spat LG appliances chief was indicted by Seoul prosecutors on a charge of deliberately damaging Samsung washing machines at a retail store in Germany last September Se Young Lee and Sohee Kim

S

outh Korean rivals Samsung Electronics Co Ltd and LG Electronics Inc said yesterday they have agreed to call off all their legal disputes including a bitter months-long conflict over a set of damaged washing machines.

The two companies said in a joint statement they would withdraw all complaints against each other and ask legal authorities to refrain from meting out harsh punishments in on-going cases.

The announcement comes more than a month after LG appliances chief Jo Seong-jin was indicted by Seoul prosecutors on a charge of deliberately damaging Samsung washing machines at a retail store in Germany last September, following a formal complaint filed by Samsung seeking criminal punishment.

Prosecutors have not declared what penalty they would seek against Jo. The two companies have attracted public mockery as they bickered over issues such as how many washers were damaged by Jo and other employees.

When LG published surveillance video footage to YouTube in an attempt to prove Jo’s innocence, Samsung said the video was heavily edited in the executive’s favour.

The case adds to a history of clashes between the firms, including an argument over refrigerator capacity and which of the two has the bigger air-conditioning market share.

“Both sides have agreed to avoid legal action and resolve any future conflicts or disputes through dialogue and mutual agreement,” the companies said.

The agreement extends to Samsung Electronics subsidiary Samsung Display and to LG Display Co Ltd. Samsung Display employees were indicted in February on charges of stealing organic light-emitting diode (OLED) display panel technology from LG Display. Samsung Display has said the technology was widely known in the industry and that the indictment was excessive.

Hideo Kumano, chief economist, Dai-ichi Life Research Institute

Kiuchi seems to be the only one to oppose Kuroda’s (pictured) guidelines

his quiet, restrained character earned the respect of peers.

Before joining the BOJ, he was a frequent expert commentator on economics for television current affairs shows.

Back to rate policy When Kiuchi joined the BOJ in 2012, he was considered a reflationist

Samsung Elec, LG Elec agree to stop all legal battles LG appliances chief indicted in Feb for damaging Samsung washers Agreement also includes LG Display, Samsung Display

Reuters

Kiuchi’s views serve as a powerful counterbalance to Kuroda because they resonate with what the ordinary Japanese feel

even without additional easing. The October move only brought forward that timing,” Kiuchi told reporters on March 5. “Monetary policy isn’t all-mighty, so there are limits to what it can achieve.”

His persistence may come from heading a team of economists at Nomura Securities, a major Japanese brokerage famous for its cut-throat culture, where contemporaries say

KEY POINTS

who could instil a dose of boldness in a board seen by many analysts as too as timid in addressing persistent deflation and a strong yen.

But when Kuroda arrived and led a radical policy makeover eight months later, Kiuchi found himself in the camp of the conservatives suspicious that money-printing alone can shift consumer expectations of falling prices that entrench deflation.

Unlike others on the board, Kiuchi refused to change tack and continued to warn of the risks of QQE. He feels that, while QQE was effective in shocking people awake from stagnation, it is ill-suited to respond to blips in economic and price growth.

That is why the BOJ should taper asset purchases soon and revert to a policy targeting interest rates, he argues.

As the April 4 anniversary of the introduction of QQE approaches, Kiuchi faces his own time of reckoning.

He remains mum on what he will do with his proposal to review the programme in two years. Kuroda is unlikely to swallow his call for ditching the timeframe, and the board is too fragmented to rally under Kiuchi in revolt against the governor.

Still, outliers have traditionally served a key role on the BOJ board and Kiuchi may be no exception.

Nobuyuki Nakahara proposed adopting quantitative easing and an inflation target in 1999, when these concepts were barely known in Japan. Years later, the BOJ adopted both ideas.

It is uncertain whether Kiuchi’s proposals will see the light of day, but his presence will help the BOJ face up to the tough realities of QQE, analysts say.

Kiuchi continues to do just that.

“One big accomplishment of QQE was that it made the public understand the limits and flaws of monetary policy,” he told a recent news conference.

Reuters

18 | Business Daily

April 1, 2015

International Peru’s Prime Minister fails vote of confidence Peru’s prime minister was ousted by Congress in a vote of no confidence late on Monday following allegations of spying on her opponents, delivering a blow to President Ollanta Humala who will now have to form a new government. Seventy-two lawmakers voted to remove Prime Minister Ana Jara from office after less than a year in the job, while 42 opposed the move. Jara, who denies snooping on her political rivals, must now present her resignation to the president, who has 72 hours to accept it.

Eurozone deflation eases, unemployment drops But so-called core inflation still fell to 0.6 percent from 0.7 percent a month earlier Alex Pigman

Massive power cut causes chaos in Turkey A massive power cut caused chaos yesterday in large parts of Turkey, shutting down the metro systems in Istanbul and the capital Ankara, reports and official sources said. The power cut began around 10:40 am (0740 GMT) in Istanbul and around the same time several other Turkish cities, private NTV television said. It added that the power cut resulted from a failure in the country’s power distribution system. The Istanbul municipality also confirmed on Twitter that the city’s subway network was halted.

Bertelsmann core profit up German media group Bertelsmann yesterday reported a 2.7 percent rise in its 2014 core profit fuelled by its book publishing and music businesses. Privately-held Bertelsmann is co-owner of Penguin Random House, the publisher of bestsellers such as Gillian Flynn’s “Gone Girl” and John Green’s “The Fault in Our Stars”. The company said 2014 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 2.37 billion euros (US$2.5 billion), the highest in seven years. Bertelsmann said sales from continuing operations rose 3.1 percent to 16.7 billion euros.

Credit bureau TransUnion files for IPO TransUnion, one of the largest credit bureaus in the United States, filed with U.S. regulators yesterday for an initial public offering of common stock. The company, which sells credit reports and services to business, listed Goldman Sachs, J.P. Morgan Securities, Deutsche Bank Securities Inc and Merrill Lynch, Pierce, Fenner & Smith among underwriters to the IPO.

Yoox agrees to buy Net-a-Porter Italian online fashion retailer Yoox has agreed to buy Net-a-Porter, its upmarket rival, in an all-share deal that creates an industry leader in the booming online luxury market, with combined sales of 1.3 billion euros (US$1.4 billion). Net-a-Porter (NAP) owner Richemont will receive 50 percent of the combined Yoox Net-a-Porter Group but its voting rights will be capped at 25 percent, putting Yoox effectively in charge of the combined business. Yoox boss, founder and minority shareholder Federico Marchetti will become chief executive and shape strategy.

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eflation in the eurozone eased in March, official data showed yesterday, reducing concerns that the economy faces a dangerous spiral after four straight months of falling consumer prices.

Prices in the 19-nation single currency bloc were down 0.1 percent in March, less than the drop of 0.3 percent in February with low energy costs still impacting the cost of living, the EU statistics agency Eurostat said.

Unemployment also slipped to 11.3 percent in February, down from a revised 11.4 percent in January and 11.8 percent a year before in a further positive sign.

The threat of deflation in the eurozone remains a global concern, with fears that a huge bond-buying spree by the European Central Bank

came too late to fight off the negative effects of falling prices.

Prices first fell into negative territory in December with a -0.2 figure and hit -0.6 percent in January.

But the easing to -0.3 percent in February and the further weakening in March will be welcomed by the ECB. However, after stripping out volatile energy and food prices, so-called core inflation still fell to 0.6 percent from 0.7 percent a month earlier.

In January, the ECB set out its huge bond-buying programme, an audacious and controversial scheme to ward off deflation and stimulate growth in the eurozone, which expanded a weak 0.9 percent in 2014.

But with a cash-strapped Greece in a bitter row with its European

partners and on the cusp of tumbling out of the euro, analysts fear that a new debt crisis in the eurozone could affect the world.

On Monday, Fitch ratings agency said a renewed eurozone debt crisis was the biggest risk to the global economy, even greater than unstable oil prices and despite the ECB’s quantitative easing programme.

Joblessness remained hugely varied across the 19 nation eurozone, with a record low 4.8 percent in Germany and alarmingly high levels persisting in Spain, at 23.2 percent, and 26 percent in crisis-hit Greece, the highest rate in Europe.

Youth unemployment in Greece stood at a huge 51.2 percent and 50.7 percent in Spain.

The data for Italy, the eurozone’s third biggest economy remained a worry, with unemployment at up to a high 12.7 percent in February and youth unemployment at 42.6 percent.

French unemployment remained flat at 10.6 percent.

The biggest drops in unemployment were felt in small nations Estonia down to 6.2 percent from 8.4 percent a year earlier and Ireland, down to 9.9 percent from 12.1 percent.

Across the 28-member EU, unemployment stood at 9.8 percent in February, down from 9.9 percent in January and 10.5 percent a year earlier.

AFP

U.K. economy grows more than estimated The economy grew 2.8 percent in 2014 Jennifer Ryan

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he U.K. economy grew more than initially estimated in the fourth quarter as consumers and exporters steered Britain into its longest stretch of uninterrupted growth since 2008.

Household spending rose 0.6 percent in the three months through December and exports jumped 4.6 percent, the most since 2013, the Office for National Statistics said in London yesterday. Gross domestic product expanded 0.6 percent, more than the 0.5 percent reported last month, for an eighth consecutive quarterly gain.

While the economy powers ahead, the Bank of England says it will keep the key interest rate at a record low as it monitors the implications of the unprecedented slide in the inflation rate to zero. That’s a boon for the coalition government, which is fighting for voter support with 37 days to go before the general election.

“Upwardly revised growth in 2014 will be welcomed by the Conservatives and the Liberal Democrats, who will be fervently hoping that they get a

late boost in May’s general election,” said Howard Archer, an economist at IHS Global Insight in London.

Real incomes There were upward revisions to services and production in the fourth quarter. Rising wages and cheaper food and fuel are boosting real incomes, which rose 1.4 percent in the fourth quarter. In the third quarter, GDP growth was revised down to 0.6 percent from 0.7 percent.

GDP expanded 3 percent in the final three months of 2014 from a year earlier, revised up from 2.7 percent.

The economy grew 2.8 percent in 2014 and is now 3.7 percent larger than its previous peak reached in early 2008.

With imports rising just 1.6 percent, net trade contributed 0.9 percentage point to GDP in the fourth quarter, the most since the first quarter of 2013. Consumer spending added 0.4 percentage point. Business investment acted as a drag on growth after falling 0.9 percent in the quarter.

The ONS said in a separate report that the current-account deficit narrowed to 25.3 billion pounds (US$37.4 billion) in the fourth quarter. The improvement was largely due to the trade balance, which narrowed to 6 billion pounds from 10.2 billion pounds in the third quarter. In 2014, the current-account deficit was 97.9 billion pounds, or 5.5 percent of GDP, the most since records began in 1948.

Savings ratio The statistics office also said its index of services for January fell 0.2 percent, with the decline led by business services and finance. Services grew 0.8 percent in the three months through January.

Yesterday’s GDP report showed the savings ratio, the amount of disposable income households set aside rather than spend, rose to 5.9 percent in the fourth quarter from 5.8 percent in the third.

Bloomberg News

Business Daily | 19

April 1, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China’s new normal and America’s old habits

THE KOREA HERALD Stephen S. Roach

South Korea’s duty-free shop sales surged 21.6 percent on-year in 2014, the finance ministry said yesterday, thanks to the steady rise in foreign travellers. Data sent by the ministry to the National Assembly showed sales by the 43 duty-free shops in the country hitting 8.3 trillion won (US$7.5 billion) last year, up more than 1.5 trillion won from a little over 6.8 trillion won in 2013. It said of the total, sales of shops located in cities jumped 32.2 percent on-year while those in airports and seaports moved up 5.9 percent.

Faculty member at Yale University and former Chairman of Morgan Stanley Asia

VIETNAM NEWS Private enterprises have laid the foundation for and imparted momentum to the development of Viet Nam’s economy, said Bui Quang Vinh, Minister of Planning and Investment. Vinh hailed the contributions of businesses while addressing more than 150 businesses, from both inside and outside the country, at a discussion on, “Viet Nam Economy 2015: Opportunities and Challenges,” held in Ha Noi yesterday. “All businesses, ranging from State-owned enterprises, to private and foreign direct investors, have played a decisive role in Viet Nam’s economy,” he said.

BANGKOK POST Two state majority-owned utility companies plan to list on the Stock Exchange of Thailand this year. The move is aimed at raising capital for expansion, senior officials of both firms said yesterday. The two are Global Power Synergy Co (GPSC), a power-generating firm that is a subsidiary of national oil and gas conglomerate PTT Plc; and Universal Utilities Co (UU), a waterworks manager and a subsidiary of SET-listed Eastern Water Resources Development and Management Plc. GPSC is expected to launch its initial public offering (IPO) and start trading by May.

THE PHNOM PENH POST Phnom Penh’s state-owned water utilities firm – one of the only two companies listed on Cambodia’s fledgling stock exchange – will boost its annual dividend almost twofold. According to a March 27 announcement, Phnom Penh Water Supply Authority will pay out 9.149 billion riel – more than US$2.2 million – on April 24. Shareholders will receive 105.2 riel (US$0.026) per share, almost double last year’s amount of 54.75 riel.

PPWSA’s revenues for last year stood at more than YS$39 million, with net profit after tax, up over 19 per cent to US$11.363 million year-onyear.

The Great Hall of the People (pictured) hosted the National People’s Congress, which determined the trail China will follow

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hina is generating a lot of confusion nowadays, both at home, where senior officials now tout the economy’s “new normal,” and abroad, exemplified by America’s embrace of Cold War-style tactics to contain China’s rise. On both counts, the disconnects are striking, adding a new dimension of risk to the impact of the “China factor” on a fragile world.

The official view in China is that its economy has already arrived in the Promised Land of the “new normal.” Indeed, that was the theme of the just-concluded China Development Forum (CDF) – an important platform for debate among China’s senior officials and a broad cross-section of international participants that occurs immediately after the annual National People’s Congress.

Since the CDF’s inception in 2000, the Chinese government has used the event to signal its policy priorities. In 2002, for example, the CDF focused on the impact of China’s accession to the World Trade Organization – a precursor to a spectacular surge of export-led growth. In 2009, the emphasis was on China’s aggressive post-crisis stimulus strategy. And last year’s event addressed implementation of the so-called Third Plenum reforms.

This suggests that China’s “new normal” will be the government’s top priority this year. But there remains considerable ambiguity as to what exactly the new normal entails – or whether it has even been achieved.

In his keynote speech at the CDF, Zhang Gaoli, one of the seven members of the Politburo Standing Committee (the Chinese Communist Party’s highest decisionmaking body), declared that the senior leadership has rendered the “strategic judgment that China’s economy has entered the

stage of the new normal.” Yet, at the CDF’s wrap-up session, Premier Li Keqiang suggested, a bit less decisively, that China is basically following the world economy in its transition to a new normal.

In short, China’s government is confusing a path with the final destination – a point that I stressed in my remarks to the CDF, in which I argued that China is in the early stages of rebalancing its economy toward services and consumption. In fact, China is far from settling in to a new normal.

The best way to measure how far China still has to go is to consider the development of its services sector – the infrastructure of consumer demand in an economy. The good news is that services are now growing faster than any other sector, having reached 48% of GDP in 2014 (thus surpassing the end2015 target of 47% well ahead of schedule). The tough news is that this remains significantly lower than the 60-65% share typical of a more “normal” economy.

Given this, it is worrying that China’s leaders believe that the

The imperative to cooperate is an inevitable outgrowth of globalization

new normal is already at hand. The notion that this critical transition has occurred risks generating complacency at a time when China should be focused on the wrenching, but essential, process of structural adjustment – one that will take at least another decade to complete.

Continuing the shift to a servicesled growth model is important for a number of reasons. With services in China employing 30% more workers per unit of output than manufacturing and construction, the sector’s expansion will help to preserve social stability, even as economic growth slows to 7%. Observers in the West, focused largely on the slowdown of headline GDP growth, continue to miss this key point. Moreover, because the services sector also requires fewer commodities and less energy, this transition will help China address its serious environmental problems.

In the meantime, China faces another, equally daunting challenge: the United States’ growing determination to contain its growing influence. At this year’s CDF, tensions between the hegemon and the rising power were widely discussed, both in the formal sessions and on the side-lines.

Three developments were especially noteworthy: US resistance to China’s efforts to establish the Asian Infrastructure Investment Bank – a stance now rejected by most of America’s closest allies; President Barack Obama’s signature trade initiative, the Trans-Pacific Partnership, which excludes China; and yet another effort by the US Senate to enact legislation on currency manipulation that takes dead aim at China. Combined with on-going disputes over cyber security and territorial claims in the East and South China

Seas – not to mention questions about America’s geostrategic “pivot” toward Asia – these issues have chilled the SinoAmerican relationship.

It fell to Henry Kissinger, who was present at the dawn of the modern US-China relationship, to put it all into context. At the CDF, he stressed how different the situation is now, compared to 1972, when he and then-President Richard Nixon first met with Mao Zedong and Zhou Enlai.

Unlike the immediate military threats back then, today’s challenges – such as climate change, cyber security, and global health – can be addressed only through collaborative strategic engagement.

The imperative to cooperate is an inevitable outgrowth of globalization. As Kissinger emphasized, the Middle Kingdom of China’s dynastic era knew nothing of the Roman Empire, and vice versa. In today’s world, however, no great power can afford to operate in a vacuum.

They receive instantaneous feedback from one another – especially on shared challenges – whether they like it or not.

In a sense, it is no surprise that the US is bristling over China’s ascendance. After all, dominant powers have always struggled to cope with rising ones. Nonetheless, China, burdened by 150 years of perceived humiliation by the West, does not take kindly to that reaction.

As China confronts the challenges of its economy’s shift to a new normal, it will need to find common ground with the US. And America will need to work to deepen its understanding of China’s transition.

Both countries will have to show leadership, vision, and openness to collaborative engagement.

Sadly, there was little sign of that at this year’s CDF. Project Syndicate

20 | Business Daily

April 1, 2015

Closing Bank deposits to be insured from May 1

Half a million complaints about food in 2014

China will introduce an insurance scheme for bank deposits from May 1, the cabinet said yesterday, bringing in a reform seen as crucial for the liberalisation of the banking sector. Deposits of up to 500,000 yuan (US$80,658) will be insured under the scheme, which is expected to help reduce financial risks, the cabinet said in an online statement. Insuring deposits is seen as a vital step on the way to full liberalisation of the country’s interest rates market and greater competition between banks. Sources had told Reuters that the government was set to make the announcement soon.

A total of 562,402 complaints and tip-offs about food, pharmaceuticals, dietary supplements, cosmetics and medical equipment were received in China last year, double the figure of 2013, an official with the State Food and Drug Administration (SFDA) said yesterday.

Most complaints were about online sales of fake products, false advertising, unlicensed production and adverse reactions, said Liu Pei, director of the complaint centre of the SFDA. About 74 percent of the complaints were about food, and 12.9 percent were related with pharmaceuticals and some 6.3 percent on dietary supplements. Nearly 78 percent complaints were collected via hotline 12331.

India’s boardrooms scramble to appoint women before deadline In terms of female labour participation the country ranks a dismal 120th among the 131 nations surveyed by International Labour Organisation in 2013

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undreds of India’s companies have failed to find women for their boards despite a last-minute rush to meet a mandatory deadline to appoint at least one female director.

More than 1,500 companies, or 33 percent of those on India’s two main exchanges have not complied with a new law aimed at reversing a lack of women in boardrooms, a group that tracks listed firms said yesterday.

Others, including India’s second richest man Mukesh Ambani, have found unusual solutions -- appointing their wives rather than opting for outside talent.

Ambani’s giant conglomerate, Reliance Industries, has appointed wife Nita, while industrialist Gautam Singhania also named wife Nawaz Singhania as a director of his massive textile manufacturing conglomerate, Raymond Group.

Pranav Haldea, managing director of PRIME Database, said companies were scrambling to appoint one female director ahead of the April 1 deadline set by India’s

It is the height of ridiculousness.

Companies are just being lazy. It is impossible not to find the required number of qualified women from a billion people Shriram Subramanian, InGovern

market regulator.

“This sort of last-minute rush pattern is typical when it comes to regulatory compliance,” said Haldea, whose firm has compiled figures on the companies complying with the order.

Some 1,819 companies

March home price fall slows

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out of more than 5,000 listed on the National Stock Exchange (NSE, pictured) and the Bombay Stock Exchange (BSE) had still not announced female directors as of March 27, the firm said.

“It is the height of ridiculousness. Companies are just being lazy. It is impossible not to find the required number of qualified women from a billion people,” said Shriram Subramanian, head of corporate advisory firm InGovern, based in the southern city of Bangalore.

“Firms think if a large number of companies do not

follow the norm nobody will be fined and the deadline will be pushed ahead. It is like if (all people) spit on the road nobody can be fined.”

Ahead of the deadline, regulator, the Securities Exchange Board of India (SEBI), warned that firms face regulatory action for failure to comply.

SEBI chief U.K. Sinha also said last week he found it “very shameful” that so many companies didn’t already have women on their boards.

SEBI announced the rules 13 months ago in a bid to boost gender diversity at the top

and has already extended its original deadline from last October.

During a visit to India earlier this month, International Monetary Fund chief Christine Lagarde said the lack of female workers in India is a “huge missed opportunity” for the country’s economic growth.

Women make up roughly 50 percent of India’s population of 1.2 billion, but in terms of female labour participation the country ranks a dismal 120th among the 131 nations surveyed by International Labour Organisation in 2013.

AFP

Deficit in foreign service trade extended

Southeast Asian borrowers wince as deflation looms

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alls in Chinese house prices decelerated in March from the previous month, a survey showed yesterday, after authorities loosened mortgage and tax policies as growth in the world’s second-largest economy slows.

The average price of a new home in China’s 100 major cities edged down 0.15 percent from February to 10,523 yuan (US$1,697) per square metre, the China Index Academy (CIA) said in a statement.

The decrease slowed from a drop of 0.24 percent in February, according to the academy’s data.

Home prices had been declining for eight straight months until a tepid increase of 0.21 percent was recorded in January, CIA figures showed, as the market in second-tier and smaller cities became saturated.

In a move to support the market, the government on Monday lowered minimum downpayment levels on second homes nationwide, rolling back a fouryear-old policy first introduced to try to cool the then red-hot property market as rocketing prices put homes out of the reach of many, raising worries over social unrest.

hina continued to see a deficit in foreign service trade in February, data from the State Administration of Foreign Exchange (SAFE) showed yesterday.

The country’s service trade deficit reached 76.7 billion yuan (US$12.5 billion) in February, narrowing from 103.7 billion yuan in January, according to the SAFE. Last month, the country spent a total of 175.5 billion yuan in international service trade, nearly double the 98.8 billion yuan it made during the period.

Distinct from merchandise trade, trade in services refers to the sale and delivery of intangible products such as transport, tourism, telecommunications, construction, advertising, computing and accounting.

China’s State Council has pledged a string of measures to accelerate the development of trade in services, including gradually opening up business in finance, education, culture and medical treatment.

The SAFE began issuing monthly data on service trade in January 2014 to improve the transparency of balance of payments statistics.

Beginning in 2015, it added monthly data on merchandise trade to the report.

AFP

Xinhua

oans to businesses and households in Southeast Asia are growing at their slowest pace in five years, but the region’s most indebted economies aren’t becoming any less leveraged. Because of deflation, borrowers are at risk of shouldering heavier debt burdens.

In Singapore, bank loans grew 3.26 percent in February from a year earlier, official data published yesterday shows, the slowest since November 2009. In Thailand, loan growth is also far below the rates seen after the 2008 global crisis when the authorities unleashed liquidity to revive the economy. But outstanding loans remain staggering. The Asian Development Bank says debt in Singapore, Thailand and Malaysia is now equal to at least twice the size of their gross domestic product, fuelled by inflows of capital which funded bank loans and bond sales.

The ability of borrowers to pay down debts will be tested if deflationary pressures that crept into the region four months ago via Thailand increase.

Reuters