Macau Business Daily October 12, 2015

MOP 6.00

SARs drive CEPA

Closing editor: Joanne Kuai

CEPA. Macau and Hong Kong will start negotiations on the Closer Economic Partnership Arrangement Agreement by the end of the year. The new arrangement will bind tariffs at zero. Minimise non-tariff barriers. Avoid imposing trade remedies. And facilitate Customs procedures

Year IV

Number 896 Monday October 12, 2015

Publisher: Paulo A. Azevedo

Page 3

Big discounts, less business for luxury hotels Almost 20 pct off rack rate. And National Day Golden Week. But the lustre had come off 5-star hotels with Air Macau cuts a 3.3 drop in occupancy y-o-y. Macau Government Tourist Office say hotels and guesthouses provided fuel surcharge to US$26 per sector 30,526 rooms between October 1 and 7. Local 4-star hotel room rates plunged an average 28.09 pct y-o-y. Page 2 While occupancy nudged up 0.49 pct for the period Page 2

Page 5

UN bribery suspects netted

Leaders say China ready to overcome its economic hurdles

Page 9

A Dominican Republic ambassador.

Prosecutors say the UN official is the bagman for a wide-ranging bribery scheme. Bailed from jail on US$2 million surety. Francis Lorenzo was charged this week with five others.

Including the UN General Assembly’s former president John Ashe. And billionaire Macau developer Ng Lap Seng

Page 4

Finance ministers to fight multinational tax avoidance

Page 14

HSI - Movers

A pact for Asia

Report ‘ignoring facts’

Regional Comprehensive Economic Partnership talks. Starting this week.

The 16 Asian country pact would be the world’s biggest such bloc. Encompassing 3.4 billion people

‘Macau did not make progress towards ‘an electoral system based on universal and equal suffrage . . .’. So says the U.S. Congressional-Executive Commission in its 2015 report. Pointing the finger, too, at the MSAR’s banning of pro-democrats and journalists from Hong Kong ‘for political reasons’. All roundly refuted by the SAR Government

Page 10

October 9

Name

Page 4

Interview

Rock ‘n’ Roll F&B www.macaubusinessdaily.com

Melco goes it alone for Barcelona casino licence

A lack of human resources. And relentless rental hikes. Veteran restaurateur Norman Tam sings a familiar refrain. The director and general manager of Hac Sa Park Restaurant in Coloane tells Business Daily these issues continue to hinder the operations of local small and medium-sized enterprises. But the company’s successful school catering business helps balance the books. As does his passion for music, with his rock band Test mixing business with a lot of pleasure

Pages 6&7

%Day

BOC Hong Kong Holdin

+4.29

CNOOC Ltd

+3.58

Lenovo Group Ltd

+3.54

Bank of East Asia Ltd/T

+2.74

China Unicom Hong Ko

+2.72

China Mobile Ltd

-1.56

Hong Kong & China Ga

-1.59

Sino Land Co Ltd

-1.75

China Mengniu Dairy C

-1.80

Cheung Kong Property

-1.97

Source: Bloomberg

I SSN 2226-8294

2015-10-12

2015-10-13

2015-10-14

18˚ 24˚

20˚ 27˚

22˚ 28˚

2 | Business Daily

October 12, 2015

Macau Air Macau cuts fuel surcharge to US$26 per sector Local flag carrier Air Macau reduced its fuel surcharge to US$26 (MOP208) per flight sector from US$28 effective today. A statement issued by the airline last week said all of its tickets issued on or after today for travel from the city to Mainland China, Taiwan, Thailand, Japan, Korea and Vietnam would be subject to the new surcharges. This is the third time Air Macau has reduced its fuel surcharges this year, following a reduction of US$2 from US$30 per sector in September, and a decrease of 21 per cent to US$30 from US$38 per sector in February.

5-star hotel occupancy rate down 3.3 pct in Golden Week

T

he average hotel occupancy rate of the city’s 5-star hotels registered a year-on-year drop of 3.31 per cent for National Day Golden Week despite average room rates plunging 19.14 per cent yearon-year, data released by the Macau Government Tourist Office (MGTO) reveals.

Quoting figures provided by the local tourism industry, the Tourist Office said all hotels and guest houses in the territory provided a total of 30,526 rooms between October 1 and 7. But the occupancy rate of local 3 to 5-star hotels decreased by 0.3 per cent year-on-year to 86.86 per cent, while room

rates of these hotels dropped by nearly 22 per cent yearon-year to MOP1,477 on average.

Nevertheless, local 5-star hotel groups were the only star-rated entities to see occupancy decline during

the week-long holiday.

According to MGTO, the occupancy rate of 5-star hotels decreased to an average of 88.69 per cent for Golden Week despite room rates dropping to MOP1,958 from one year ago.

By contrast, local 4-star hotels, with average room rates plunging 28.09 per cent year-on-year to MOP1,151 for the week, registered a slight increase of 0.49 per cent year-onyear in occupancy rate to 84.43 per cent.

In addition, the occupancy rate of the city’s 3-star hotels increased 1.91 per cent yearon-year on average to 84.36 per cent, with room rates

SARs see slowing Golden Week tourism from Mainland China

T

he number of Chinese tourists flocking to Macau and Hong Kong during the Golden Week holidays increased at a slower pace than last year after a typhoon disrupted travel.

Arrivals in Macau from mainland China during the Oct. 1-7 break, officially called the National Day holidays, rose 7.1 per cent from last year, when visitations gained 17 per cent, according to Macau government data. In Hong Kong, growth in visitations from China decelerated to 2.3 per cent from 6.8 per

cent, according to Hong Kong government data.

Both Macau and Hong Kong had been counting on Golden Week, a key gambling and shopping season, to provide relief from their recent slumps. Gaming revenue in Macau has shrunk for 16 straight months as China’s anti-corruption crackdown keeps high rollers away from the baccarat tables, while retail sales in Hong Kong have been dropping nonstop since March.

Typhoon Mujigae, the strongest October storm to hit the Chinese mainland since 1949, didn’t help. As

the typhoon made landfall in southern China on October 4, the number of arrivals in Macau from the mainland fell 16 per cent.

Yet optimists remain.

“There’s still pent up demand coming into the market, especially over holiday periods,” Vitaly Umansky, a gaming analyst at Sanford C. Bernstein, said by phone referring to arrivals in Macau. “It would be a bad indicator if there were no growth or a decline in visitation.”

There are also indications that betting volumes in Macau got off to a “strong start” during Golden Week,

down 20.2 per cent yearon-year to MOP1,321. For guest houses in the territory, the average room rate was MOP542 for the National Day holiday, a year-on-year decrease of 18.74 per cent.

During Golden Week, overall visitor arrivals, including non-local employees and students in Macau, posted a year-onyear growth of 2.72 per cent to some 1.07 million, according to statistics released by the Public Security Police Force (PSP) last Thursday.

MGTO said it had received four tourismrelated complaints during the holiday, regarding taxi service and consumption. In terms of measures against illegal accommodation, the Office said it had conducted nine joint actions, inspected 20 premises and sealed five premises allegedly operated as illegal accommodation.

K.L.

according to an October 7 note by Daiwa Securities Group Co. The picture in Hong Kong may be grimmer. Some retailers there saw sales shrink, sometimes by a doubledigit percentage, during the first two days of October, compared with a year earlier, according to the Hong Kong Retail Management Association. And the comparison wasn’t coming off a high base because shops in the city last year were hit by pro-democracy protests that blocked key shopping districts and prompted some stores to shut.

Signs also point toward Macau and Hong Kong losing their luster among Chinese tourists. Though they were the top choices last year, Japan and South Korea became the most popular destinations for Chinese tourists during the first four days of Golden Week, according to a recent Credit Suisse Group AG report.

Bloomberg

Business Daily | 3

October 12, 2015

Macau

C

M

Y

CM

MY

CY

CMY

K

Belt and Road Initiative

Unleashing the New Dynamics of Cultural Tourism

12-14 • 10 • 2015 The Venetian® Macao

FOR MORE INFORMATION, PLEASE VISIT

www.GTE-Forum.com

HOST

IN COLLABORATION WITH

CO-ORGANISER

COORDINATOR

OFFICIAL HOTEL & VENUE

WORLD TOURISM ORG ANIZ ATION

中國全聯旅遊業商會

@ gteforum

@ Global Tourism Economy Forum

@ gteforum

SUPPORTING UNITS

澳 門特別 行政區 政 府社會 文化司 SECRETARIA PARA OS ASSUNTOS SOCIAIS E CULTURA GOVERNO DA REGIÃO ADMINISTRATIVA ESPECIAL DE MACAU SECRETARIAT FOR SOCIAL AFFAIRS AND CULTURE GOVERNMENT OF THE MACAO SPECIAL ADMINISTRATIVE REGION

@ Global Tourism Economy Forum

ALL-CHINA FEDERATION OF INDUSTRY & COMMERCE

LIAISON OFFICE OF THE CENTRAL PEOPLE’S GOVERNMENT IN THE MACAO SPECIAL ADMINISTRATIVE REGION

SUPPORTING UNIT OF BUSINESS NETWORKING ACTIVITIES

MAJOR SPONSORS

OFFICE OF THE COMMISSIONER OF THE MINISTRY OF FOREIGN AFFAIRS OF THE PEOPLE’S REPUBLIC OF CHINA IN THE MACAO SPECIAL ADMINISTRATIVE REGION

NATIONAL TOURISM ADMINISTR ATION OF THE PEOPLE’S REPUBLIC OF CHINA

FORUM CARRIERS

Macau & HK to commence CEPA negotiation this year

M

acau and Hong Kong will start negotiations on the Closer Economic Partnership Arrangement Agreement (CEPA) by the end of the year, the two governments announced last Friday.

According to the Hong Kong Government press release, the key elements of the free trade agreement between the two Special

Administrative Regions will include a commitment to bind tariffs at zero; minimising non-tariff barriers; and avoiding imposing trade remedies including anti-dumping - with safeguards, and countervailing measures as well as Customs facilitation procedures built in.

Meanwhile, the Macau Government Spokesperson’s Office said in a press

release that the city’s Economic Service Bureau (DSE) had already initiated the first stage of consultation for the agreement in August with government departments, related industries, local youth groups and academic organisation.

‘All of the opinions we had collected perceive the [CEPA] agreement will further strengthen

MEDIA PARTNERS

the economic co-operation between the two cities, and will enhance the general competitiveness of the two Regions,’ the Office wrote.

It also noted that the trade in services of the two cities still differed from each other in particular fields.

‘Hence, the Macau Government will continue to maintain close communication with local industry whilst cautiously boosting the related negotiation,’ the Spokesperson’s Office claimed.

The two Special Administrative Regions have currently reached CEPA agreement with Mainland China separately. Official data published

by DSE indicates the total export value of CEPA goods from Macau to the Mainland reached MOP70.52 million (US$8.82 million) between January and September this year.

“After the establishment of the HK-Macau CEPA, the three places may build upon those CEPAs to establish a new, common platform to advance further liberalisation and facilitation of trade and investment in the ‘Greater China’ region,” the Hong Kong Government spokesperson said.

According to Hong Kong’s official data, Macau was the 19th largest trading partner of Hong Kong in terms of goods in 2014. Bilateral trade in goods between the two economies jumped on average by 22 per cent per annum between 2010 and 2013, whilst bilateral trade in services posted an annual growth rate of 18 per cent between 2009 and 2013 on average.

In addition, the city is the 11th largest source and recipient of foreign direct investment (FDI) into and from Hong Kong, according to the Hong Kong Government.

K.L.

4 | Business Daily

October 12, 2015

Macau

U.S: No improvement in political reform in Macau

T

he U.S. CongressionalExecutive Commission on China (CECC) said the Special Administrative Region had made no improvement in establishing a universal suffrage election for the city, urging the local government to increase its support for democratic reform.

‘Although Macau’s Basic Law does not mention ‘universal suffrage,’ it ensures the applicability of the International Covenant on Civil and Political Rights (ICCPR) in Macau. During the Commission’s 2015 reporting year, Macau did not make progress towards ‘an electoral system based on

universal and equal suffrage . . .’ in line with the ICCPR,’ the American Commission wrote in its 2015 Annual Report released last week.

In the report, the U.S. Commission highlighted that local society activists were pressured by the Macau and Chinese governments. ‘Civil society activists in Macau

reported intimidation from the Macau and Chinese governments meant to pressure activists to ‘tone down’ their activities, reportedly because of fear of pro-democratic unrest in Hong Kong spreading to Macau,’ it wrote.

In addition, it said the Macau Government’s banning

U.N. diplomat charged by U.S. for bribe scheme on US$2 million bail

A

deputy United Nations ambassador from the Dominican Republic facing U.S. charges over a bribery scheme had his bail set at US$2 million on Friday, despite a prosecutor’s warnings that he poses a flight risk.

Francis Lorenzo, who was arrested on Tuesday, must also live under house arrest with his mother after bail conditions are met and waive diplomatic immunity from future arrest, a federal magistrate judge in Manhattan ruled.

The decision by U.S. Magistrate Judge Henry Pitman came over the objections of prosecutor Daniel Richenthal, who said the ongoing investigation had unearthed evidence that Lorenzo received even more bribes than authorities initially alleged.

“His incentive to flee is massive,” Richenthal said.

Brian Bieber, Lorenzo’s lawyer, sought to assure Pitman that Lorenzo would return to court, adding the Dominican Republic had just suspended him from his post. Outside of court, Bieber said he was confident that Lorenzo “didn’t commit a federal crime.”

The hearing followed the announcement of U.S. charges on Tuesday against six individuals including Lorenzo and John Ashe, a former president of the U.N. General Assembly and U.N. ambassador from Antigua and Barbuda.

A criminal complaint said Ashe, 61, took more than US$1.3 million in bribes from Chinese businessmen, including billionaire Macau real estate developer Ng Lap Seng, who was arrested last month in a separate case.

Prosecutors said Lorenzo, 48, acted as an intermediary for Ng to pay US$500,000 to Ashe to submit

of Hong Kong pro-democrats and journalists from entering the territory last year was ‘for political reasons’. ‘[We] urge Macau authorities to set a clear timeline for transition to universal suffrage in executive and legislative elections, as required by Article 25 of the ICCPR and as repeatedly urged by the UN Human Rights Committee,’ CECC said.

The U.S. Commission also voiced its concerns about the Macau Government detaining and facilitating the return of a fugitive corruption suspect from the city to Guagndong Province in China in July this year.

‘Some of Macau’s legal experts criticised Macau authorities, referring to two previous rulings from Macau’s highest court holding that due to the lack of an extradition agreement between Macau and Mainland China, Macau authorities were not permitted to detain individuals wanted for extradition to Mainland China.’ it said.

Meanwhile, the local government said in a press release yesterday that the accusations of the U.S. department in the report were ‘ignoring facts’.

‘The Macau SAR Government strongly opposes such groundless accusations. The Macao SAR is an inalienable part of the People’s Republic of China and the United States of America has no right to interfere in China’s domestic affairs,’ the government stated.

K.L.

a document telling the U.N. secretary general that a yet-to-be built multibillion-dollar U.N.-sponsored conference center in Macau was needed.

At the same time, Ng paid Lorenzo US$20,000 monthly while he served as “honorary president” of one of his organizations, South-South News, and directed additional payments to a company controlled by Lorenzo’s brother in the Dominican Republic, prosecutors said.

At Friday’s hearing, Richenthal, the prosecutor, said the bribes were even more extensive than first alleged and included being allowed to live in a US$3.6 million luxury apartment near the United Nations that Ng bought last month.

Lorenzo also received a US$20,000per-month contract with another of Ng’s organizations, Sun Kian Ip Group Foundation, after attending a conference in Macau where Lorenzo “aggressively pushed” for the conference center, Richenthal said.

Bieber acknowledged Lorenzo, who was living in an apartment rented by South-South News, had been offered the opportunity to live in the apartment, but said it was “not gifted to him in any manner.”

Reuters

Business Daily | 5

October 12, 2015

Macau

Gaming sector adapts to new normal doing more with less Last year, players in the gaming industry became more efficient in coping with declining revenues, a gaming sector survey for 2014 reveals João Santos Filipe

jsfilipe@macaubusinessdaily.com

I

n 2014, the receipts of the gaming sector decreased for the first time since 2004, recording a drop of 2.5 per cent. However, and according to the Gaming Sector Survey published by the Statistics and Census Service (DSEC) on Friday, the companies operating in the sector have been quick to adapt. In the same period, the Gross Surplus-Expenditure Ratio, which measures the cost effectiveness of the sector, was up 3 percentage points year-on-year to 140 per cent.

The same trend for the companies operating in the sector to optimise

their costs was also reflected by the Gross Surplus Ratio, which indicates the effectiveness of the sector in converting receipts into gross surplus. During the past year, while gross surplus decreased 1.6 per cent year-on-year to MOP206.28 billion (US$25.84 billion) from MOP209.69 billion, the Gross Surplus Ratio rose 0.5 percentage points to 58.3 per cent.

During 2014, total casino receipts dipped 2.5 per cent to MOP354.06 billion from MOP363.07 billion, primarily driven by the decrease from

receipts from Gaming and Related Services. In this domain, receipts from gaming decreased 2.6 per cent to MOP352.36 billion from MOP361.61 billion whilst all the other services related to the sector grew.

Receipts from Food and Beverage (F&B) went up 8.8 per cent yearon-year to MOP613 million, from MOP564 million, currency exchange went up 4.6 per cent to MOP100 million, from MOP96 million and others increased 16.9 per cent to MOP556 million from MOP475 million.

Regarding total expenditure, the sector recorded a decline of 3.7 per cent year-on-year to MOP150.90 billion from MOP156.65 billion.

This drop also reflects the decline in terms of commissions paid to junket operators. According to the survey, the purchase of goods, commission paid and customer rebate went down 10.3 per cent year-on-year to MOP103.84 billion from 115.74 billion.

Increasing costs with staff

Last year, the number of full-time employees increased 3.5 per cent year-on-year to 57,757 from 55,779, which is related to the opening by the operators of new projects in Cotai. At the same time, efforts to retain staff led to an increase in compensation paid.

Total compensation increased 17.3 per cent year-on-year to MOP18.97 billion from MOP16.18 billion.

In respect to this, remuneration in cash increased 17.7 per cent to MOP17.43 billion from MOP14.81 billion. Meanwhile, payments-in-kind went up 7.1 per cent to MOP747 million from MOP698 million and other benefits climbed 8.6 per cent to MOP34 million from MOP31 million.

Contributions to pension funds, provident funds and social security are to increase at a faster pace, by growing 19.5 per cent year-on-year to MOP761 billion from MOP637 billion.

In spite of the increase in staff costs, in 2014 the average value added per full-time employee decreased 3.7 per cent to MOP3.9 million from MOP4.05 million in 2013.

Melco goes it alone for Barcelona casino licence Initially, the company controlled by Lawrence Ho submitted two bids for the project, one of which included a Spanish partner.

Now, the company is bidding alone for the casino licence

M

elco International is bidding ‘solo’ for a casino licence in Barcelona, following the termination of its partnership with the Spanish company Veremonte España, according to an announcement on Friday in a filing with the Hong Kong Stock Exchange.

Last year, the company controlled by Hong Kong billionaire Lawrence Ho Yau Lung was involved in two different bids for a licence to develop a hotel and casino complex in BCN World, a recreation and tourism centre development in Spain near Barcelona. One of the bids was an individual one via its

subsidiary company Melco Property Development. The other bid was submitted via another subsidiary of Melco Group involved in the provision of lottery technologies in Mainland China, MelcoLot. The bid of MelcoLot was presented in a joint-venture with Veremont, a Spanish company headed by businessman Enrique Banueos and was one of the main promoters of the BCN project, in a partnership with the Catalan Government.

Both bids were selected to take part in the second phase of the tender by the local government. On Friday, however, Melco announced that the co-operation with the

Spanish company had been terminated.

While the Melco Group did not make any reference to the reason for the contract with Veremonte being scrapped, it had been long been reported in the Spanish press that the local company faced problems raising the amount necessary to invest in the project.

Besides the partnership with Melco, the Spanish company had presented another two bids during the first phase of the tender. The partnerships that Veremonte is now expected to terminate involve Hard Rock Café International, which was selected for the second phase of the tender, and Caesars

Entertainment Corp, which was rejected.

MelcoLot will lead second phase

The end of the partnership with Veremonte will not put MelcoLot out of the tender running for the Spanish resort, which plans to create a world entertainment centre to compete with locations such as Las Vegas.

While the company bidding for the licence alone, Melco Property Development, was created for the single purpose of bidding for the casino authorisation, this company will now be acquired

by MelcoLot.

According to the filing, MelcoLot will purchase the Melco Group’s 99 ordinary shares in the share of Melco Property Development, which represent 99 per cent of the issued share capital of this company, for HK$502.92 million.

The deal is dependent upon certain conditions, such as Melco Property Development being granted a licence to run the casino in Barcelona.

‘In light of this opportunity, the MelcoLot Group will benefit from the transaction with the group’s level of participation in the project being 99 per cent, if the transaction is approved, compared to 50 per cent per the previous co-operation with Veremonte’.

The results of the tender are not expected to be known before the second quarter of 2016, according to Melco’s filing. In addition to Barcelona, MelcoLot is considering the possibility of building a casino in the Republic of Georgia in Eurasia.

J.S.F.

6 | Business Daily

October 12, 2015

Macau “Lack of human resources remains the biggest problem for the development of the F&B industry” Macau is presenting increasingly more opportunities for people to pursue the dream of running their own business. But the dearth of human resources and relentless rental hikes continue to be the elephant in the room. Hindering, in particular, the operation of many local small and medium-sized enterprises, says local F&B veteran Norman Tam. The guiding light of the popular Hac Sa Park Restaurant is heavily into school catering as a way of expanding and diversifying his operations.

Revealing to Business Daily that he’s as passionate about R&B as he is about F&B Joanne Kuai

joannekuai@macaubusinessdaily.com Photos: Rui Borges

How did you start the Hac Sa Park Restaurant in the first place?

I’ve been engaged in the F&B (Food and Beverage) business since the 70s, having worked at Hotel Lisboa for 15 years. At the beginning of the 90s, I started the Hac Sa Park Restaurant, so it has a history of more than 20 years now.

I was employed by Hotel Lisboa as a restaurant manager but you know that as a young man I always wanted to have my own business.

It was a big challenge. But it’s something completely different to working for someone else. [As an employee]You start from junior staff and progress to senior staff and get promoted to manager, but there’s always a limit. It’s a natural progression to start your own business if you want to take a step forward.

It delivers a huge sense of satisfaction and accomplishment; if you’re successful, of course!

Back in those days, there was basically nothing in Coloane. It was very deserted and remote, far from everywhere and few people visited.

In order to develop the tourism here in Coloane, the government initiated a programme to revitalise the area. Fortunately, our company won the bid for this restaurant and we’ve been running it ever since.

The restaurant and pub are part of the recreational complex area of Hac Sa, which consists of a park, swimming pool, tennis court and football field. It’s owned by the government. We have entered into a contract with the government that has no end, unless we make a mistake.

We have to pay rent to the government to use this space. But we are in charge of the operation; no matter gain or loss, it’s down to the company. In general, it’s doing ok lah.

What was it like opening a restaurant in Coloane in the early 90s?

It was such a big challenge.

The transportation was very inconvenient. The flow of people was very low. There was only this beach but no other infrastructure at all.

A restaurant that has customers and income but can’t cover the rental cost or labour cost can’t survive

This recreational area was first built for locals and tourists to relax and chill during weekends and they could dine in the restaurant as well.

This restaurant used to only offer BBQs for local groups, associations and students. It all started here.

In the very beginning, this used to be outdoors and it only opened during the summer time. When the weather got cold, we couldn’t even

run the business because it was too cold. Later, we applied to the government to build a restaurant with indoor areas. Only afterwards, could we open the whole year round instead of only six months a year.

How has the business been throughout the years?

It’s usual for a business to have some ups and downs. With the development of society and the improvement of the infrastructure - especially easier access to Coloane due to better traffic and public transportation - the business started to get better and better.

But we’ve been through some extremely hard times, such as during the SARS (Severe Acute Respiratory Syndrome) outbreak and the period before the Portuguese Government returned the sovereignty of Macau to China [at a time] when the social environment was very complicated.

We had a hard time maintaining the operation back then.

The spring of our business really came when the Macau Government

Business Daily | 7

October 12, 2015

Macau liberalised the gaming industry.

There were batches and batches of tourists flocking into Macau, adding to the increasing number of tourists from Mainland China travelling through the Individual Visa Scheme. And the livelihood of Macau locals has also seen a significant improvement, so that they were more willing to travel a bit further for a change of scenery and relax during days off and come here. In the beginning, the locals always complained “Wow, no way!

We can’t dine at your restaurant!

It’s too far!” But, you know, now they have a different mentality and it helps our business get better and better.

What do you think is the biggest change before and after the handover as you have witnessed the changes with your very own eyes?

Security is much better. And since the opening up of the gaming market, there are businessmen from all around the world coming to Macau looking for opportunities.

There’s a tremendous improvement in terms of the chances for every industry and sector to grow compared to the old days.

But speaking of transportation, traffic jams are one of Macau’s biggest problems. A lot of people make a reservation and they have difficulty reaching here on time because it takes them forever to go through Macau city centre and then they can’t find a parking space before reaching here and some have a hard time taking a bus. It affects our business as well.

Why did you brand it as a Portuguese food restaurant?

In the very beginning, we offered only BBQs. But Macau belonged to Portugal and our cooks have mastered the skills of Portuguese cuisine. Also, after all, Portuguese cuisine is better for Western customers and tourists. And the menu lures tourists. Some tourists come to Macau in search of Portuguese food. It’s a major attraction for them.

Nowadays, 50 per cent of the business comes from local customers; 50 per cent comes from tourists, more or less.

Out of curiosity, as a restaurant boss, do you look at restaurant review websites such as TripAdvisor and Yelp?

Yes, I look at those. Sometimes, when they reflect some problems of some certain dishes, I will discuss this with my kitchen staff.

Good ideas we accept; bad ideas we forget.

You’re not really suffering from rent problems like other restaurants, are you? Since it’s a government-owned space…

We do! The rent has been increasing every year according to the contract. But, of course, if the general economy is in a bad condition, we can negotiate with the government, such as in the time of SARS.

Your company is also engaged in school catering services…

Yes, besides this restaurant and pub, our company is engaged in school catering. The business has been growing very well so far. Currently, we undertake the catering for 15 schools, providing thousands of students and staff with breakfasts and lunches, with some other partnerships under negotiation. The operation is of a relatively large scale. The kitchens are mostly located in Macau, with

I hope the development of Macau continues so that the next generation will have more and more opportunities in the city

some provided by the schools, and some provided by the government.

This is one direction we can expand the company’s portfolio.

Also, as we discussed before, the business of this restaurant used to be tough during the old days as the location is far from the city centre.

In order to maintain the operation of the company, we had to look for a way out, that’s why we started school catering. We’re very lucky that so far it’s been doing great.

What do you consider the biggest challenge?

The lack of human resources is the biggest problem.

The government has been helpful in granting us quotas to hire nonresident workers. We have some at managerial level, some official staff, mainly kitchen staff and service staff. But recruitment remains a huge headache for the F&B business.

What’s your daily life routine nowadays?

My routine nowadays is seven days a week. From Monday to Friday, I have to come to the restaurant. Besides, I need to look after the school catering business.

The operation is crucial since it involves more than a dozen schools and food consumed by thousands of people. After that finishes in the afternoon, I come to the restaurant.

In addition, I have my own band – Test Band - which performs at various events and functions in Macau. Our band has a long history and has participated in many events in the promotion of Macau’s tourism and celebrations of many occasions, such as the National Day holidays, sometimes by invitation of the Macau Government. Here’s a photo of us with (Hong Kong Cantopop singer) Paula Tsui Siu-fung, and here’s another one of us with (former MSAR Chief Executive)

Edmund Ho, and another one with the incumbent Chief Executive (Fernando Chui Sai On).

I’m the lead singer of the band. It’s my hobby and my favourite thing to do.

I’ve been managing our band and participating in performances all around for more than 20 years.

You have a stage for a live band in the restaurant. That’s convenient…

Here, we mainly have the restaurant business and the band normally performs outside.

But, of course, if someone hosts an event here and wants some entertainment, we can provide the service. You can also bring your own band or entertainers. We have all the gear and instruments here guitar, bass, drum set, and a mixer worth more then MOP150,000.

For example, if you want to have a birthday party with buffet dinner, but you have your own entertainers, all are welcome to come and have fun here.

Many local brand restaurants open branches in casinos in collaboration with gaming operators? Have you ever considered that?

Yes. The most important thing about expanding the business by opening a branch is location. If we can find some ideal location, I don’t see why not. But you know that rent is a big problem in Macau nowadays. It’s so expensive. A restaurant that has customers and income but can’t cover the rental cost or labour cost can’t survive.

Also, as we mentioned, another main problem lies in human resources. We’re already running with a tight group of staff. I have to take some chores into my own hands to help out. It’s really hard to hire good staff. We depend a lot upon imported labour but the standards are not stable all the time.

If we have enough people, expanding the business wouldn’t be a big problem as we have the experience.

Some say the general economic outlook is gloomy. Do you feel that?

Of course, we feel the direct impact. For example, with gaming revenues dropping our business has dropped slightly as well.

The gamblers come less. The consumption is less. But as our main target clients are not exactly high-rollers but mainly locals and tourists, the impact on our business is not that obvious.

Some have voiced fears that if the Light Railway Transit (LRT) systems link Coloane or if this area is more developed, it will take away the last piece of serenity of Macau. What’s your take on that?

The LRT project is part of the development of Macau society.

It would solve some of Macau people’s transportation problems and provide more convenience for tourists. Of course, Coloane is not what it used to be. It was so quiet.

But I wouldn’t say it would be damaged. As a restaurant owner, the more customers, the better.

I believe there will still be a nice environment here - and it’s very family friendly.

Do you identify yourself as a Macau person? When you have tourists in the restaurant, what would you tell them about your city?

I’m proud to be a Macau citizen.

Macau is a very friendly place, compared to other cities such as Hong Kong; too many argument going on there! Macau is a nice place. As I was born and raised here, I can say that Macau is a very small place but through the years it has become what it is now, it’s quite something. When we were kids, Macau was a tiny little place with little opportunity for people to run a business or pursue one’s dream. In the 60s and 70s a lot of people went to Hong Kong or somewhere else to seek their future. They wouldn’t stay in Macau. But now with the development of Macau, that’s all changed. A lot of them came back.

Also, back then only Macau people went to Hong Kong in search of work. Now, a lot of Hong Kongers come to Macau to work.

I hope the development of Macau continues so that the next generation will have more and more opportunities in the city.

You’ve been working in F&B for more than 40 years. Have you ever considered looking for a successor?

Yes, that’s the plan. I was born in 1951. I opened the restaurant when I was 38. It’s about time for me to look for a successor. Of course, I want to still work here as long as possible, in two areas – music and F&B.

You said that it gives one a huge sense of satisfaction when one’s own business is successful. Do you consider it’s successful now?

I think it’s successful in general . . . but there’s always room to improve!

8 | Business Daily

October 12, 2015

Greater China

Government makes fresh push for yuan inclusion in IMF basket Figures this week showed the renminbi has overtaken the yen to become the fourth most-used world payment currency

C

hina made a fresh push for its yuan currency to be included in the International Monetary Fund’s benchmark currency basket on Friday and argued that recent reforms put it closer to qualifying.

Beijing is pushing for the yuan, also known as the renminbi (RMB), to be included in the IMF’s Special Drawing Rights basket as part of its long-term strategic goal of reducing dependence on the dollar.

In an address to the IMF’s main advisory committee, China’s deputy central bank governor, Yi Gang, sought to reassure trading partners about yuan weakness and said reforms to make the currency more flexible would continue.

The IMF’s executive board is scheduled to decide in November on adding the yuan to a basket of currencies comprising dollars, euros, pounds and yen, a move which would be an important marker for China’s economic coming of age.

As long as they have the threat and reasonable expectation that in a moment of panic or crisis that they would clamp down on the movement of capital so it doesn’t disrupt their economy, there is no way that anyone would view the RMB as a reserve currency John Williams, San Francisco Fed President

One of the criteria is that the yuan be “freely usable,” or widely used to make international payments and traded on foreign exchange markets. IMF staff in August also said the yuan had a way to go to meet operational requirements, allowing IMF members to use yuan-denominated instruments to manage reserve holdings and hedge risks.

Yi said in a statement to the International Monetary and Financial Committee (IMFC) that steps to improve the transparency of Chinese data, develop representative foreign exchange and interest rates and open interbank

markets helped address operational concerns.

“We believe that with the completion of these reforms, the RMB can meet the operational requirements for inclusion in the SDR basket,” he said. “More efforts will likewise be made to continuously facilitate the international use of the RMB.” France and the United Kingdom have backed its inclusion and countries including Germany and Italy said in their IMFC statements they were open to the move.

Still, Japan noted the debate had to be based on

“principles well-established in past discussions” and an influential U.S. Federal Reserve policymaker said Beijing had taken only “baby steps” towards allowing free movement of the yuan.

“As long as they have the threat and reasonable expectation that in a moment of panic or crisis that they would clamp down on the movement of capital so it doesn’t disrupt their economy, there is no way that anyone would view the RMB as a reserve currency,” San Francisco Fed President John Williams told reporters on Thursday.

Reuters

Food deliver

The firm, which has 6,86 of reviving growth when Adam Jourdan

A

s China’s economy stutters, growing numbers of diners on a budget are tapping into smartphone applications to snap up meal delivery deals, spelling big trouble for fast food chains like Yum Brands Inc’s KFC and Pizza Hut. People like Li Jiali, a 20-year-old Shanghai student, say they have all the dining options they need nestling in their phones, without needing to venture out of the house. Yum’s shares dived this week after it said it’s way

KEY POINTS KFC, Pizza Hut parent chasing recovery after food scandals Squeezed by ‘savage battle’ among apps offering meal deals Yum cites dud marketing, slower China growth as profit hit The rise of online apps is an extra blow to Yum, already facing a crowded fast food market

Shares sag near 20 pct after says way behind China target

Business Daily | 9

October 12, 2015

Greater China World finance leaders upbeat on China, may be ignoring risks

Intensified crackdown on illegal money transfers

David Chance

G

lobal finance leaders believe China will weather its slowing growth and manage a successful transition from an export to a consumer economy despite a huge build-up of internal debt in the world’s second largest economy.

The International Monetary Fund believes the Chinese economy will grow 6.8 percent this year and 6.3 percent in 2016, slower than recent levels but still enough to keep driving global economic growth when other positives have largely disappeared.

France’s Finance Minister Michel Sapin is among the optimists, along with Britain’s George Osborne and IMF chief Christine Lagarde.

China’s Deputy Central Bank Governor Yi Gang was keen to reassure his peers at this week’s IMF meetings in Lima, saying a recent devaluation was a one-off and that China’s economy was stable.

“We are satisfied by the measures currently being implemented by the Chinese government to limit the risk of contagion caused by the economic downturn in the short run,” Sapin said at the IMF meeting in Lima on Friday.

Yet cracks are already appearing in China, an economy whose red-hot

growth of almost 10 percent a year for 30 years fuelled a commodity super-cycle that in 2008 pushed oil prices as high as US$145 a barrel, and inflated demand for iron ore and edible oils, as well as industrial goods from advanced economies like Germany.

It is not just China that is a risk although it is by far the biggest one to the relatively rosy IMF forecasts of global economic growth of 3.1 percent this year and 3.6 percent in 2016.

In Germany exports to China, Brazil and Russia account for 3.4 percent of gross domestic product, according to investment bank Barclays, a risk for Europe’s largest economy. China alone accounts for 10 percent of Germany’s auto exports.

A sharp drop in German exports in August, which fell at their fastest pace since the 2009 financial crisis, is likely to be related to the fall in trade in Asia, Barclays said.

Industrial production and factory orders also declined.

“Because of China’s weight in global production and trade, and because of the high commodity intensity of its production and demand, China’s recession is the one that matters most for the global

economy,” Willem Buiter, Citi’s chief economist has warned.

One of the few reports at the IMF’s meetings in Peru to sound the alarm over China was a report on lending.

The IMF Global Financial Stability report said that over borrowing by Chinese companies was equivalent to a quarter of gross domestic product.

While China’s August stock market crash and sudden devaluation rattled global markets, it may have just been a foretaste of things to come if China does not address its huge debt problems.

“Direct financial spill overs include a possibly adverse impact on the asset quality of at least US$800 billion of cross-border bank exposures,” the Fund report said.

It calculates that if a tightly wound credit cycle in emerging economies, including China, unwinds with rising corporate default rates, aggregate global output could be as much as 2.4 percent lower by 2017 relative to the IMF’s baseline forecast.

“China still has policy buffers to absorb financial shocks, including a relatively strong public sector balance sheet, but overreliance on these buffers could exacerbate existing vulnerabilities,” the Fund said.

Reuters

ry apps bite into Yum revival

67 restaurants in the country, now also faces the challenge consumers are redirecting spending from food to other areas

behind target in a bid to recover from damaging food scandals in China, its top driver for profit and revenue.

Li’s Huawei smartphone is packed with cut-price food delivery apps from some of China’s biggest internet firms, like Baidu Inc’s Waimai, Alibabalinked Meituan and Tencent-backed Ele.me - meaning “Hungry?” These allow thousands of mom-and-pop restaurants to lure diners previously beyond their marketing reach.

“On my phone I have Meituan, Baidu and Ele.me, and I use whichever one has the biggest discount,” Li said. Baidu’s platform is currently offering the best deals at around 40 percent off, she said, evidence of a price war raging online.

Yum this week pointed the finger at a “savage battle” under way between apps to explain why China same-store sales grew only 2 percent in the third quarter, well below the expected 9.6 percent jump. Yum cut its global forecasts on weakness in China, where the firm has been whipsawed by food safety scandals and marketing missteps over the last few years.

The rise of online apps is an extra blow to Yum, already facing a crowded fast food market, where consultants Euromonitor forecast growth will slow to around 4 percent

by 2019, less than a third of the pace a decade before.

“We are experiencing what we believe is a short-term but significant impact of online ordering aggregators entering the casual dining space,” Yum’s chief financial officer Pat Grismer said on an earnings call after the results.

The company’s executives also cited a dud marketing campaign at its Pizza Hut brand and slowing growth in the world’s second-biggest economy hitting consumers’ willingness to fork out on discretionary spending.

Shares sank nearly 20 percent after the earnings report.

Levelling out

Yum’s stumble also undermined bullish predictions earlier in the year, when the firm pegged global growth targets to a then-hoped-for sharp second-half China bounce, posing a problem for newly installed China boss Micky Pant.

“Apps like this level the playing field so that every venue has its virtual spot that’s equal,” said Stone Shi, Shanghai-based founder and Chief Executive of restaurant search platform Bon App. “It used to about being a household name in one sector - pizza, pasta, fast food etcetera.

Now people want to see what else is out there.”

Yum did not respond to specific queries after the earnings disclosure on how the firm would combat the rise of online platforms in China.

The firm, which has 6,867 restaurants in the country, now also faces the challenge of reviving growth when consumers are redirecting spending from food to other areas such as healthcare and transport, analysts said. “(Chinese) consumers now really watch what they are spending,” said Edward Jones senior analyst Jack Russo.

Yum’s executives say they remain bullish on China in the long-term.

But the concern for investors is how the U.S. chain was caught out so dramatically - and whether headwinds such as online apps will continue to cause a drag in the market.

“The apps will always survive, though whether the companies that are currently powering those apps survive is another question,” said Mark Secchia, founder of Shanghaibased food delivery platform Sherpa’s.

“These guys are only going to get busier in a down market.”

Reuters

China will step up its crackdown on illegal cross-border money transfers conducted by underground money dealers and offshore companies, as part of efforts to fight corruption, the central bank said on Saturday. Authorities, including the People’s Bank of China (PBOC), State Administration of Foreign Exchange (SAFE) and the police, will intensify measures to clampdown on illegal money outflows, the PBOC said in a statement on its website. China has already detected 92 “major” cases involving more than 800 billion yuan (US$126 bln) since launching the campaign in April this year, it added.

Central bank to expand relending pilot scheme China’s central bank said on Saturday it will expand a pilot scheme on relending, the latest effort by Beijing to help support a slowing economy. The scheme, which allows banks to refinance high quality credit assets rated by the central bank, was introduced in Guangdong and Shandong provinces last year. Analysts have said the policy tool is aimed at supporting smaller firms. It will be expanded to include Shanghai, Beijing, Chongqing and six other provinces and municipalities, the People’s Bank of China said in a statement posted on its website.

Draft rules to regulate online car hailing services China on Saturday published draft rules to regulate online car hailing businesses, a booming sector where U.S. firm Uber Technologies Inc and Chinese rival Didi Kuaidi have been aggressively competing for market share. The draft rules, published on the website of the Ministry of Transport, said they are aimed at maintaining order by strengthening supervision of online car hailing apps.

Like in many other countries, the legality of car hailing services has vexed regulators in China where the authorities say drivers are operating outside the law.

Hebei Iron & Steel Group eyes investment in Serbia Hebei Iron & Steel Group is considering a strategic partnership in Serbia’s only steel plant and an investment of at least 300 million euros, Serbian Prime Minister Aleksandar Vucic said on Friday.

The loss-making Zelezara Smederevo plant, which has two furnaces, has been swallowing US$120 million a year in subsidies since 2012, when Serbia’s government bought it back from U.S. Steel for US$1 to avert its closure and save more than 5,000 jobs.

Plane maker reveals stealth jet capabilities to lure buyers China’s top aircraft manufacturer has revealed specifications of an advanced stealth fighter jet in a bid to lure foreign buyers, the official China Daily reported on Friday. In a rare disclosure, the stateowned Aviation Industry Corp of China (Avic) unveiled the capabilities of the J-31 aircraft at an aviation show, even though the jet is still being tested, the newspaper said. Avic officials have made no secret of the fact that they are seeking foreign buyers for the aircraft, hoping to compete with Lockheed Martin’s F-35.

10 | Business Daily

October 12, 2015

Greater China

Regional trade pact playing catch-up after U.S.-led deal China's central bank estimates the world's second-largest economy could forfeit a 2.2 percent boost to gross domestic product if Beijing does not join the Trans-Pacific Partnership Jack Kim

KEY POINTS RCEP trade-pact talks begin in Busan, S. Korea, on Monday Talks begin a week after U.S.-led TPP deal struck China, India not part of TPP deal Some see RCEP as bridge to ultimate merger with TPP Unlike TPP, RCEP not expected to include workers’ rights

Regional Comprehensive Economic Partnership was first conceived by the 10 members of the Association of Southeast Asian Nations (ASEAN)

L

eft outside the U.S.-backed Trans-Pacific Partnership (TPP) trade pact struck last week, China and India approach this week's talks for a huge Asia-wide equivalent with fresh urgency, lest competitor nations steal a march on export access.

Beijing is a key driver of the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world's biggest such bloc, encompassing 3.4 billion people.

"Member countries will be under pressure to fast-track negotiations for RCEP," said a senior official in India, which is keen to avoid being excluded from major trade accords.

While China's rivalries with India and Japan will complicate progress, it has incentive to get things moving.

China's central bank estimates the world's second-largest economy could forfeit a 2.2 percent boost to gross domestic product if Beijing does not join the TPP, according to a commentary by the bank's chief economist, Ma Jun, published in the

official Shanghai Securities News on Friday.

China stands to lose ground to manufacturing competitors such as Vietnam, which as a TPP member will have greater duty-free access to the United States and other member nations, said Tu Xinquan, a professor at the University of International Business and Economics in Beijing.

"It's not that there is a competition between the RCEP and the TPP, but overall, because of the pressure put on by the TPP, there's hope for a faster end to negotiations for more liberalised trade in the region," Tu said.

RCEP was first conceived by the 10 members of the Association of Southeast Asian Nations (ASEAN), but China is increasingly prominent as backer of the proposed pact.

While RCEP has largely been seen as an alternative to U.S.-led trade plans, some say that view is evolving.

China may ultimately look to steer RCEP talks towards a broader pact that would encompass TPP into a Free Trade Area of the Asia-Pacific (FTAAP), said Kim Young-gui, head

of regional trade studies at the Korea Institute for International Economic Policy in Seoul - an idea first put forward by the Asia-Pacific Economic Cooperations (APEC) grouping.

Seven countries - Australia, Japan, Malaysia, New Zealand, Singapore, Vietnam and Brunei - are in both TPP and RCEP. "New Zealand views TPP and RCEP as complementary stepping stones to the vision of a Free Trade Area of the Asia Pacific," said a Ministry of Foreign Affairs and Trade spokesperson.

The TPP deal, reached on October 5 after marathon talks between the United States and 11 Pacific Rim nations, aims to liberalise commerce in 40 percent of the world's economy and would be a legacy-defining victory for President Barack Obama.

Raising standards?

Obama wants TPP to help boost U.S. influence in East Asia and counter the rise of China, but Beijing officially welcomed the pact, saying it hoped the deal would promote Asia-Pacific trade.

"We hope that regardless of whether it is the TPP or the RCEP, they both can supplement, promote and be beneficial to strengthening the multilateral trade system," said Chinese foreign ministry spokeswoman Hua Chunying.

Prime Minister Shinzo Abe of Japan, a key player in TPP, held out the prospect of bringing China into the deal in future, saying it would increase the pact's strategic significance and improve regional stability.

Washington does not dismiss the possibility, though China would need to undertake reforms to meet the standards of commerce envisioned by the TPP. "It is not designed to encircle China," Deputy U.S. Secretary of State Antony Blinken said in Seoul last week when asked if Washington sees the TPP deal as a way to check China. "To the contrary, if China is interested in pursuing membership and it is able to meet the standards, we would welcome that."

Those standards include minimum labour rights and principles for currency management that RCEP is unlikely to demand of Beijing.

A Japanese foreign ministry official said TPP would accelerate the pace of RCEP and could have some impact on "raising the level of the outcome of the negotiations", but the "very diverse group" had different ideas on what might be desirable.

The 16 RCEP countries will present their offers for market opening when they meet in Busan in South Korea today, with an aim to make "best efforts" towards reaching agreement by year-end, a South Korean official close to the negotiations said.

Negotiators are expected to share their lists of offers for tariff reductions on goods and service sectors.

Song Yeong-kwan, a research fellow at the state-run Korea Development Institute, believes agreement nevertheless remains years away.

"Some countries have tensions with China, so it will not be easy, and the process could be a bumpy ride," Song said.

Reuters

Business Daily | 11

October 12, 2015

Asia

Philippine exports fall but economy resilient The government has promised to accelerate spending after a slow start in the year

P

hilippine exports fell by the most in four months, reflecting weak global demand that has floored regional economies, but Manila’s pledge to raise spending and strong domestic consumption promise to keep the Southeast Asian economy on an even keel.

Exports in August fell 6.3 percent from a year earlier due to doubledigit declines in the shipments of other mineral products, apparel as well as chemicals.

But the drop was not as steep as the 17.4 percent slide in May as exports of electronic products, machinery and transport equipment, and woodcrafts and furniture registered annual increases.

Shipments to Japan, the country’s top destination, fell 1.6 percent compared with the previous month’s 14.6 percent drop.

However, exports to United States, the second biggest market declined 4.0 percent in August after a 0.4

percent rise in July. Shipments to third biggest market China decreased 23.5 percent, after a 24.1 percent rise in July.

“It shows that global demand continues to be weak, we are seeing that across Asia. But it does not mean that Philippine growth is going to collapse as we saw domestic demand holding up the economy,” said Jose Mario Cuyegkeng, economist at ING bank in Manila.

Cuyegkeng said the Philippine economy could the end the year with growth of 5.9 percent. While its is slower than the government’s new forecast of 6.0-6.5 percent, the pace is enough to keep the country as one of Asia’s fastest growing economies.

Others in the region, including Singapore, South Korea and Taiwan, have been hit hard by a collapse in exports, as a slowdown in China continues to drag on global growth.

Philippine imports rose for a second straight month in July as shipments of capital and consumer goods rose, suggesting a pick-up in business activity and domestic demand.

The government has promised to accelerate spending after a slow start in the year to help offset the impact of faltering exports and a worsening El Nino, which is threatening to crimp farm production and raise inflation.

That, coupled with strong domestic demand, underpinned by US$2 billion monthly remittances from its overseas workers, have given policymakers reason to stand pat on interest rates.

“Indeed, we expect net exports to continue to drag down growth, but fortunately exports in the Philippines constitute one of the lowest shares of GDP across Asia, and the weakness is sufficiently offset by robust private consumption, government spending and investment,” said Joseph Incalcaterra, economist at HSBC in Hong Kong.

Reuters

KEY POINTS Exports in Aug at $5.13 bln vs yr-ago $5.47 bln Electronics shipments up 3.3 pct in Aug from yr ago Jan-Aug exports down 4.4 pct to $39.34 bln vs yr-ago

Malaysia to use state funds to lift stocks The government does not see an immediate need to take steps to defend the ringgit Leika Kihara

M

alaysia will use its state funds to put a floor under the country’s battered stock market, though currency intervention and interest rate hikes are ruled out as tools to keep sharp falls in the ringgit in check, its deputy finance minister said.

The world’s secondlargest exporter of liquefied natural gas has been hit by the collapse in global crude prices that added to the pains of an economy grappling with mounting household debt.

Foreign investors have trimmed exposure to Malaysia, causing its stock and bond prices to tank. Its currency, down 16 percent this year, remains vulnerable to further falls against the

dollar as the U.S. Federal Reserve eyes raising interest rates.

Asked whether state investment funds are ready to prop up slumping domestic stock prices with purchases, Johari Abdul Ghani said: “Yes, our state fund is quite big right now, in the sense we always have ample space” to absorb any sell-off by foreign investors.

“Every year these (domestic) pension funds are getting new funds almost close to 40-50 billion ringgit (US$9.7-12.0 billion), so I think there is enough for them to continue buying while waiting for external factors to improve,” he told Reuters on Saturday during his visit to Lima for the World Bank

and International Monetary Fund meetings.

Malaysian markets may face a temporary setback from an expected U.S. rate hike but if the Fed wanted to raise rates, it would have to do so quickly as markets “don’t like uncertainty” on when it will happen, Johari said.

He stressed that the government does not see an immediate need to take steps to defend the ringgit and will leave markets to determine its levels.

“Pegging (the ringgit to the dollar) is out of the question,” as well as direct intervention to prop up the currency or imposing capital controls, Johari said.

“We do a lot of trade with

a lot of countries ... We allow markets to find their ways,” he said.

An interest rate hike by Malaysia’s central bank is also ruled out as an option to rein in declines in the ringgit as it would hurt households with high debt and cool consumption, Johari said.

Malaysia has sufficient foreign reserves to weather further declines in its currency and can repatriate profits or liquidate assets its state funds hold overseas if needed, he added.

“Our financial system is very solid compared to 19971998,” when Asia suffered from a financial crisis. “I think we’re ready to face the headwind.”

Johari also said the government will liquidate assets of heavily indebted state fund 1Malaysia Development Berhad (1MDB), including its energy and property investment, by early next year that will raise enough funds to avoid a bailout.

Reuters

12 | Business Daily

October 12, 2015

Asia India rekindles ties with Maldives visit India’s foreign minister arrived in the Maldives on Saturday, on a visit expected to revive ties after years of cooler relations during which China asserted its influence. Indian Prime Minister Narendra Modi cancelled a trip to the Maldives earlier this year, after the arrest and contested trial of former president Mohamed Nasheed, the country’s first democratically elected leader. However, foreign minister Sushma Swaraj’s trip should lay the groundwork for Modi to visit the Indian Ocean nation. India has been concerned about China’s growing involvement in the Indian Ocean.

Iran to announce oil and gas contracts in Nov and Feb An official in Iran’s oil ministry said on Saturday that Tehran will announce new oil and gas contracts at conferences in Tehran and London on November 2122 and February 22-24 respectively according to the ministry’s news agency.

Tehran approved in September a draft of international oil and gas contracts to attract foreign investors and oil buyers once sanctions are lifted but has not given details. “Both events have their exclusive advantages ... There are no limitations for Iranian and foreign firms to attend the Tehran or London conferences,” Chairman of Oil Contracts Revision Committee, Mehdi Hosseini was quoted as saying by Shana.

Indonesia’s trade minister calls for TPP membership Indonesia’s trade minister on Friday appealed for widespread support for the government’s belated bid to join the U.S.-led Trans-Pacific Partnership (TPP) within two years. Tom Lembong said firms would continue to invest in Southeast Asia’s largest economy as long as there was certainty that it would eventually be part of the TPP free trade agreement and conclude a similar pact with the European Union.

“If the government can give that, in 2-3 years we would have TPP and the European (agreement), they will keep on investing in Indonesia,” he said.

Japan Inc sounds alarm on consumer spending The main problem is wages are not rising fast enough to keep pace with rising food prices Izumi Nakagawa and Stanley White

D

o not believe in official statistics, Japanese retailers seem to be saying, as they cut earnings forecasts and warn of lacklustre consumer spending, a key growth engine for Japan at a time when exports and factory output are stalling.

If you go by the larger-thanexpected 2.9 percent gain in household spending in August - the first yearon-year rise in three months - then consumption looks like it is finally alive and well again, after a sales tax hike last year stifled the economy.

But profits of retailers suggest the spending data, which has a small sample size, has not captured the full picture. Restrained household consumption raises the stakes for a central bank policy meeting on October 30, and for the government’s plan to flesh out new economic policies before the year-end.

“Consumer spending has ground to a halt,” said Noritoshi Murata, president of Seven & i Holdings.

“There are a lot of concerns about the global economy and not many positives for consumption. Weak spending could continue into the second half of the fiscal year.”

Seven & i, which operates Japan’s ubiquitous 7-Eleven convenience stores, on October 8 trimmed its fullyear profit forecast by 1.6 percent to 367 billion yen (US$3.05 billion) and cut its revenue forecast by 3.9 percent to 6.15 trillion yen, triggering a fall in its shares in Tokyo.

The main problem is wages are not rising fast enough to keep pace with rising food prices, and consumers are starting to cut back on other goods.

Real wages, adjusted for inflation, rose 0.5 percent in July from a year earlier. That was the first gain in 27 months. But wage growth subsequently slowed to 0.2 percent in August, and summer bonuses fell from last year, government data shows.

Another problem is more and more workers are getting stuck in jobs with low pay. Part-time and irregular workers comprised a record 37.4 percent of the workforce last year, according to the National Tax Bureau.

Irregular workers earn on average less than half of what regular full-time workers earn, tax data show.

The third problem is the government plans to raise the nationwide sales tax again, to 10 percent in 2017 from 8 percent, and households are already changing their behaviour.

“Shoppers are tightening their purse strings,” said Masaaki Yoshizawa, senior managing director at apparel maker Onward Holdings.

“There is a lot of uncertainty about consumer spending, and another sales tax hike is on the way. Women are cutting back on clothes.”

Onward Holdings had expected to make a 2.4 billion yen profit in the six months ended September. But when it closed its books, operating profit was only 200 million yen.

Low growth

Some economists worry consumer spending is now stuck in a prolonged period of very low growth.

In June and July, same-store sales at Fast Retailing’s Uniqlo clothing outlets in Japan fell from a year earlier

before notching modest gains of 2.5 percent and 2.6 percent in August and September, respectively.

Earnings from Japan’s retailers show consumer spending has undergone a reversal from the early days of Prime Minister Shinzo Abe’s administration.

Shortly after Abe took office late in 2012, the wealthy cashed in on a stock rally and went shopping.

Unions got the pay increases they asked for, and companies started raising retail prices.

Since then, the monetary and fiscal measures taken by Abe to rekindle Japan’s economy have delivered uneven results.

A sales tax hike last year to 8 percent from 5 percent helped tip the economy into a brief recession.

Now, the world’s third-largest economy is at risk of falling into its fourth recession in the past five years as exports, factory output and consumer spending stumble.

Abe had a bold agenda of ending deflation and knocking down the barriers to growth, but many economists say the requisite policies never really materialised.

Now the retail sector is adapting to a return to more subdued household spending.

“Some companies are starting to realise they’ve actually driven away some customers by raising retail prices,” said Norio Miyagawa, senior economist at Mizuho Securities.

“The government’s initial growth strategy did not really expand the pie. Now the government is simply left trying to redistribute wealth.”

Reuters

S.Korean president to visit U.S. next week South Korean President Park Geun-hye will make a state visit to the United States next week to hold a summit with U.S. President Barack Obama, the presidential office Cheong Wa Dae said yesterday. President Park will arrive in the United States on Tuesday for her second visit to its closest ally since she took office in early 2013, according to her office. Park will hold her fourth bilateral summit with President Obama in Washington next Friday.

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte 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 Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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

th

14 | Business Daily

October 12, 2015

International Massive protest in Berlin against EU-U.S. trade deal Hundreds of thousand marched in Berlin on Saturday in protest against a planned free trade deal between Europe and the United States that they say is anti-democratic and will lower food safety, labour and environmental standards. Organisers said 250,000 people had taken part in the rally against free trade deals with both the United States and Canada, far more than they had anticipated.

Opposition to the so-called Transatlantic Trade and Investment Partnership has risen over the past year in Germany, with critics fearing the pact will hand too much power to big multinationals at the expense of consumers and workers.

Swiss central bank sees low risk of downward wage Switzerland’s central bank sees a low risk of a negative price and wage spiral and is hopeful that a recent “slight” depreciation in the currency will continue, the head of the Swiss National Bank said on Saturday.

In an interview on the side-lines of International Monetary Fund meetings in Lima, SNB Chairman Thomas Jordan repeated a pledge to keep interest rates in negative territory and intervene in currency markets if needed. Switzerland is wrestling with falling consumer prices, weak economic growth and a strong currency.

Former M&S boss to lead campaign to keep Britain in EU Stuart Rose, former boss of the Marks and Spencer store chain and one of Britain’s best-known businessmen, will head the campaign to keep the country in the European Union, the “In Campaign” said as it prepared to launch its bid today. Rose, an experienced retail executive and member of the House of Lords for the Conservative party, is likely to add a strong voice to the view held by most big British businesses that Britain is better in than out.

U.S. hopes to release TPP deal text in 30 days The U.S. administration hopes to release the full text of a Pacific trade deal within the next 30 days, U.S. Trade Representative Michael Froman said in an interview with CNN. The United States sealed the Trans-Pacific Partnership (TPP) with 11 trading partners this week, after more than five years of negotiations. “The lawyers are working right now to finalize the text and to prepare it for release.

We hope to get it out within the next 30 days,” Froman said in an interview.

Draghi urges Greece to stick to bailout European Central Bank Governor Mario Draghi urged Greece on Saturday to stick to its latest bailout to pave the way for bank recapitalisation and talks on debt relief. In an interview with Sunday’s edition of Kathimerini newspaper, Draghi said the second tranche of funds set aside for Greek banks’ recapitalisation, worth 15 billion euros, would be disbursed after the first review by lenders and no later than November 15. Greek Prime Minister Alexis Tsipras has said he hopes the first review, expected to begin at the end of the month, will be completed by mid-November.

Leading economies agree plan to fight corporate tax avoidance The agreement endorsed by the G20 ministers aims to close the gaps in existing international rules Paul Carrel

T

he Group of 20 major economies have endorsed a package of measures to tackle corporate tax avoidance, but questions remain about whether countries will follow through on the plans or leave loopholes multinationals can exploit.

G20 finance ministers agreed to back proposals drawn up by the Organisation for Economic Cooperation and Development (OECD) which aim to shake up rules dating back almost a century that govern taxation of profits from international commerce.

The ministers reached the agreement against a backdrop of concern about weak economic growth, tight government finances and media reports on the tax structuring used by companies including Starbucks and Google that have spurred public anger in Europe and the United States in recent years over tax avoidance.

“This is a reaction of people who cannot stand anymore that they pay their fair share of taxes, that they contribute to fiscal consolidation while companies, especially multinationals, can avoid tax,” European Economic Affairs Commissioner Pierre Moscovici told Reuters.

The practise of so-called Base Erosion and Profit Shifting (BEPS) has allowed companies to move profits out of the countries where money is earned and into jurisdictions such as Luxembourg, Ireland or Bermuda that do not tax them.

The plans include provisions to give governments a global picture of the operations of multinational companies,

and minimum standards on so-called “treaty shopping” to put an end to the use of conduit companies to channel investments.

“The challenge is consistent implementation,” said Pascal SaintAmans, director of the OECD Centre for Tax Policy and Administration.

The OECD said a conservative estimate of the amount of untaxed money moved by companies into tax havens was US$100 billion to US$240 billion annually, suggesting tens of billions of dollars in lost tax revenue.

Technology companies are seen as the most adept at exploiting loopholes, but drug makers, medical device groups, banks, fast food groups and retailers all commonly use contrived arrangements to cut their tax bills.

Tax advisers agree the measures could force many companies to restructure their operations and rethink how they fund themselves.

However, multinational enterprises (MNEs) will try to exert influence over

the way the plans are implemented.

“The implementation phase now starts and MNEs and their advisers will have to continue to make their voice heard in the implementation phase to limit negative impacts on business,” said Keith O’Donnell, board member at Taxand, which provides tax advice to multinational businesses.

“If certain states don’t implement or implement partially, MNEs may be able to take advantage of this,” he added.

The crackdown on corporate tax avoidance has been led by governments, who asked the OECD to develop the plans.

British Finance Minister George Osborne urged OECD chief Angel Gurria to put pressure on countries to enact the measures.

“I think he should call out countries that are not implementing what has been signed up to and hold our feet to the fire,” Osborne said after the meeting of G20 ministers in Lima.

Reuters

Bank Governors and Finance Minister pose for a group photograph at the Lima Convention Center during the IMF/World Bank Annual Meetings at the Lima Convention Center in Lima

Basel makes U-turn on banks’ use of credit rating agencies Banks complain privately that regulators are piling on changes to the Basel III industry reforms Huw Jones

G

lobal banking regulators have decided to allow lenders to keep using credit rating agencies to help them determine how much capital they need to hold to cover the risks of borrowers getting into trouble, a top central banker said on Friday.

Stefan Ingves, head of the Swedish central bank and chairman of the Basel Committee on Banking Supervision, said few banks were happy with proposals made in March to revise a ‘standardised’ approach for calculating credit risk. This refers to actual losses or fall in credit quality at the individuals, companies and other banks it deals with.

Revised proposals would be

published by the end of the year, Ingves said.

The Basel Committee of banking regulators from nearly 30 countries proposed in March revising how lenders assess what capital provisions they must make to guard against credit risks, which for many banks account for most of their risk-weighted assets.

In particular regulators wanted to simplify how the capital buffers are calculated after seeing wide variations in the methods used, and proposed reducing a reliance on external credit ratings of borrowers issued by agencies like Moody’s, Standard & Poor’s and Fitch.

This followed policymakers’ concerns following the 2007-09 financial crisis

that banks had become too reliant on agencies, some of whose ratings on securities such as collateralised debt obligations (CDOs) were too lenient, leaving lending such as in the sub-prime U.S. home loans market to balloon.

Since then U.S. financial industry reforms under the Dodd-Frank Act have gone as far as barring all references to external ratings agencies, leaving regulators scratching their heads as to how exactly banks should assess their inter-bank risks.

While many banks use Basel’s standardised approach to assessing risks big bank use more bespoke inhouse models which can mean having to hold less capital.

Reuters

Business Daily | 15

October 12, 2015

Opinion Business

wires

China’s monetary-policy choice

Leading reports from Asia’s best business newspapers

Zhang Jun

Professor of Economics and Director of the China Centre for Economic Studies at Fudan University

THE KOREA HERALD The South Korean economy is expected to expand 2.8 percent in 2016 from this year, fuelled by the gradual recovery in both domestic demand and exports, a leading private economic think tank said yesterday. In its 2016 economic outlook, the Hyundai Research Institute predicted Asia’s fourth-largest economy to grow 2.7 percent in the first half of next year and 2.8 percent in the second half.

HRI’s full-year projection is 0.3 percentage point higher than its growth estimate of 2.5 percent for this year.

Exports are projected to increase 3.9 percent on-year in 2016.

TAIPEI TIMES President Ma Ying-jeou in his final Double Ten National Day speech expressed concerns about the development of cross-strait relations, saying that any future president should continue to pursue a cross-strait policy based on the so-called “1992 consensus.” “Without the ‘1992 consensus,’ the maintenance of the ‘status quo’ becomes an empty slogan; an unrealizable goal that does not advance the peaceful development of cross-strait ties,” Ma said in a speech to the crowd gathered in front of the Presidential Office Building in Taipei to celebrate the 104th birthday of the Republic of China (ROC).

PHILSTAR A pool of fund working as an insurance for natural catastrophes is targeted to be established by countries vulnerable to climate change, led by the Philippines, in five years. The Vulnerable 20 (V20) group, led by Finance Secretary Cesar Purisima, concluded Friday its high-level inaugural meetings in Lima.

In a major first step, the V20 agreed to set up a “climate risk pooling mechanism,” where both governments and the private sector would contribute and provide insurance funds to help nations absorb the impact of natural calamities.

THANH NIEN NEWS With its recent name-andshame policy proving to be successful, Hanoi’s tax office has released the names of another 89 businesses whose back taxes have amounted to nearly VND311.7 billion (US$13.78 million). Real estate company Quang Thai topped the list, recently published on the agency’s website. Two of the defaulters failed to pay land fees totalling over VND17.7 billion ($783,000) for their property projects. The agency said in a statement that it will continue taking tough measures against tax defaulters, especially those who keep delaying payment and refusing to collaborate with tax officers.

Jun says tightening financial constraints have weakened growth in the real-estate sector considerably

C

hina’s economy has followed a remarkable course in recent years: from record-breaking powerhouse to major global risk, at least in the eyes of some.

Indeed, with GDP growth this year almost certain not to reach the authorities’ 7% target, the world is now watching closely for signs of crisis and a much sharper slowdown. How did China get here, and can it put its economic growth back on track?

China’s growth has been unsustainable for a while. A stimulus package of less-thanprudent fixed-asset investment, adopted in response to the 2008 global financial crisis, sustained 9% GDP growth for two years.

But, after 2011, stimulus turned to macroeconomic tightening, causing investment growth to plummet from a nominal rate of over 30% to about 10% recently. This prevents full utilization of production capacity and resources, and explains why GDP growth above 7% is simply not possible.

Excess capacity and falling growth are mutually reinforcing.

Not only does excess capacity have a negative impact on growth; perhaps more important, sharply declining growth also contributes to massive redundancy in some industries (especially resources and the heavy and chemical industries).

The question is why growth continues to slow. One popular line of thinking focuses on long-term structural factors, such as demographic transition.

But, so far, few studies have indicated that structural factors are adequate to explain the extent of the decline in China’s potential growth rate over the last couple of years.

A more convincing answer lies in China’s monetary-policy stance.

Since assuming office in 2013, Premier Li Keqiang’s government has chosen not to loosen the previous government’s rigorous macro policies, instead hoping that the resulting pressure on existing industries might help to stimulate the authorities’ soughtafter structural shift toward household consumption and services. Economists welcomed this ostensibly reasonable approach, which would slow the expansion of credit that had enabled a massive debt buildup in 2008-2010. China’s lower growth trajectory was dubbed the “new normal.”

But, for this approach to work, GDP growth would have had to remain steady, rather than decline sharply. And that is not what has happened. Indeed, although structural adjustment continues in China, the economy is facing an increasingly serious contraction in demand and continued deflation. The consumer price index (CPI) has remained below 2%, and the producer price index (PPI) has been negative, for 44 months.

In a country with a huge amount of liquidity – M2 (a common measure of the money supply) amounts to double China’s GDP – and still-rising borrowing costs, this makes little sense. The problem is that the government has maintained a PPI-adjusted benchmark interest rate that exceeds 11%. Interest rates reach a ludicrous 20% in the shadow banking sector, and run even higher for some private lending.

The result is excessively high financing costs, which have made it impossible for firms in many manufacturing industries to maintain marginal profitability. Moreover, the closure of local-government financing platforms, together with the credit ceiling imposed

It is doubtful that China can achieve the consumptiondriven rebalancing that it seeks.

After all, no highperforming East Asian economy has achieved such a rebalancing in the past, and China has a similar growth model

by the central government, has caused local capital spending on investment in infrastructure to drop to a historic low. And tightening financial constraints have weakened growth in the real-estate sector considerably.

With local governments and companies struggling to make interest payments, they are forced into a vicious cycle, borrowing from the shadow banking sector to meet their obligations, thereby raising the risk-free interest rate further.

If excessively high real interest rates are undermining the domestic demand that China needs to reverse the economic slowdown, one naturally wonders why the government does not take steps to lower them. The apparent answer is

the government’s overriding commitment to shifting the economy away from investmentand export-led growth.

But it is doubtful that China can achieve the consumption-driven rebalancing that it seeks. After all, no high-performing East Asian economy has achieved such a rebalancing in the past, and China has a similar growth model.

Given this, China’s current deflation should motivate its policymakers to pursue monetary easing, reducing real interest rates to a much lower level, even zero. Such a move – for which China has plenty of room – would not only enable the reduction of existing debt burdens; perhaps more important, it would also allow for the rollover of debt as the economy accelerates.

Indeed, because most bank loans in China – unlike, say, in Europe – are now locked up in infrastructure and other physical assets, boosting demand is preferable to deleveraging.

The key is to lower interest rates enough to mitigate the financial risks of high leverage and enable the restructuring of local-government debts. Lower borrowing costs would also boost China’s capital market, which is critical to provide equity financing to innovative small and medium-size businesses.

Of course, China needs to continue debt write-offs and swaps, and it must remain on the path of gradual structural reform. But policymakers must recognize the damage being done by excessively high real interest rates. Monetary loosening is vital to prevent growth from slowing further, and thus to ensure economic stability at home and maintain the momentum of recovery worldwide.

Project Syndicate

16 | Business Daily

October 12, 2015

Closing Forestry tourism in mainland booms

10,000 new Chinese firms every day

China’s forestry tourism has seen rapid growth with huge potential in the future, said a senior forestry official. The comprehensive output value of the country’s forestry tourism reached 650 billion yuan (US$103 billion) in 2014, accounting for one fifth of the country’s tourism revenue, said Zhang Yongli, deputy head of the State Forestry Administration. The rapid development of the forestry tourism sector shows its huge potential and wide prospects, he said at the opening of the country’s forestry tourism festival held in central Wuhan city. At the end of 2014, China had more than 8,500 forestry tourism sites and built 3,101 forest parks nationwide.

China sees more than 10,000 firms born every day amid government support for entrepreneurship, a vice minister said. Most of the firms are small enterprises. Data was collected last March through the end of August this year and about 6 million firms were registered during the period, said Xin Guobin, vice minister of Industry and Information Technology. The government has been cutting taxes and fees, helping small firms save about 48.6 billion yuan (US$7.93 billion) in the first half of the year, Xin said. Lending to small firms stood at 16.2 trillion yuan at the end of June, up 14.5 percent from last year, Xin said.

Philippine firms on billion-dollar global shopping spree Filipino firms are leveraging their earnings from a robust local economy to snap up bargains in countries where growth has slowed, analysts said Joel Guinto

P

hilippine firms are on an unprecedented global shopping spree, spending billions on everything from vineyards to food manufacturers and casinos, reflecting the nation’s recent economic rise.

A combination of strong domestic growth, bargain prices in retreating economies abroad and rock-bottom borrowing rates have fuelled the acquisitions, analysts said.

The Southeast Asian nation has for years exported shopping malls and junk food to the region, but cashedup Filipino firms have diversified in recent years with acquisitions around the world and in many sectors.

“It has not happened in this rapid succession. It’s like a colonial mentality in reverse,” said Luis Limlingan, research head at Manila stock brokerage Regina Capital.

Third richest man in Philippines opened a billion-dollar casino in Manila in 2013, and then in March this year his Bloombery Resorts firm announced it was buying an island in South Korea

The pace of the acquisitions has startled both local and foreign investors, according to BDO Unibank chief market strategist Jonathan Ravelas.

In one of the most-recent big-ticket acquisitions, local instant noodle firm Monde

Support for Merkel’s party falls over refugee influx

Nissin said last month it was buying British meat substitute manufacturer Quorn for 550 million pounds (US$833 million).

In the last two years, the private company also snapped up popular fruit

juice brand Nudie and chilled dips manufacturer Black Swan, both from Australia, for undisclosed amounts.

Monde Nissin is owned by Betty Ang, who started her company 30 years ago and is now the nation’s 19th richest person with a net worth of US$900 million, according to Forbes.

Meanwhile, Emperador, a company controlled by the Philippines’ fourth richest man, Andrew Tan, and which specialises in cheap brandy at home, is looking to spend more than one billion dollars on diversifying in Europe.

In May, the company said it would bid to acquire French cognac maker Louis Royer SAS. There has been no resolution in that attempt yet but last year it paid 430 million pounds (US$726 million) for Scottish whisky maker Whyte and Mackay.

South Africa ‘on track’ to keep duty-free access to U.S.

B

S

Emperador also spent 60 million euros (US$82 million) last year for half of Spanish brandy producer Bodega Las Copas.

The Philippines’ thirdrichest man, Enrique Razon, has made headlines by expanding on the port operator business that has made him his fortune by setting his sights on the Asian gaming market.

He opened a billion-dollar casino in Manila in 2013, and then in March this year his Bloombery Resorts firm announced it was buying an island and part of another one in South Korea for his first overseas gaming foray.

Analysts said these were some of the highest-profile acquisitions overseas, but there were many others in a wide range of sectors, including telecommunications, power, fast food and oil.

AFP

Myanmar targets conquest of malaria by 2030

M

acking for German Chancellor Angela Merkel’s party has fallen to its lowest point in two years, a survey published Sunday showed, as dissatisfaction over a record refugee influx spreads.

Support for her Christian Democratic Union (CDU) has dropped two percentage points to 38 percent -- its lowest since the last parliamentary election in September 2013, according to the latest weekly polls by newspaper Bild am Sonntag.

Almost one in two Germans (48 percent) believe that Merkel’s decision to open the country’s doors to those fleeing war was wrong. Those who back her stance stood at 39 percent.

The survey also showed political parties that have been pressing for Germany to shut its doors to refugees as gaining ground, with the far-right Alternative for Germany (AfD) and the liberal FDP both gaining one percentage point to 6 percent each.

Germany is expecting to receive between 800,000 and one million asylum seekers this year. The record influx has left regional authorities scrambling to find ways to house the new arrivals.

Merkel has however refused to budge, insisting that Europe’s largest economy can manage the large numbers.

outh Africa will probably retain duty-free access for exports to the U.S. worth as much as US$1.7 billion a year under the Africa Growth and Opportunity Act, Trade and Industry Minister, Rob Davies said in an interview, citing a letter he received from the U.S. trade representative.

“I am confident that we are on track to keep us in AGOA,” Davies said. “The issues that are going to be central to their decisions on the outer-cycle review are related to the three meats. These were about the importation of 65,000 tons of poultry, the regulations on pork and on beef.”

The U.S. is reviewing South Africa’s status as a full beneficiary of a preferential trade pact that eliminates import levies on more than 7,000 products ranging from textiles to manufactured items. AGOA, as the accord is known, was renewed in June for another 10 years, benefiting 39 African nations.

To remain a beneficiary of AGOA, countries are required to, among other things, eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.

yanmar has set a target of getting malaria out of the country by 2030 through a shift of program from “control” to “elimination”, according to the Ministry of Health yesterday.

As the number of malaria case has gradually declined since 2011, Myanmar is likely to attain the millennium development goal of reducing the malaria-related death by half in 2015, the Yangon Region Public Health Department was quoted as saying.

Although the number of malaria case in most of the regions and states sees a downward trend, it is still high in western and northern parts, especially in Rakhine state and Sagaing region where malaria remains endemic, the sources said, warning that most malaria transmission occurs in forested foothill zones below an altitude of 1 kilometre with high risk groups being residents, like plantation workers and migrants living near or in forests.

According to official statistics, 9 in 1,000 people in Myanmar were infected with malaria in 2007 but the number declined to 5.13 in 2013.

The disease killed 0.48 in 100,000 people in 2013, down from 2. 18 in 2007.

AFP

Bloomberg News

Xinhua