Number 350 Friday August 16, 2013
Editor-in-chief Tiago Azevedo
April 19, 2013
Weng Hang business up on loan demand Page 6
CE wants more residents as casino managers C
asino operators should give Macau residents a chance to become managers, said Chief Executive Fernando Chui Sai On at the Legislative Assembly yesterday. His comments came during the first of his twice-yearly question and answer sessions with legislators. They were prompted by a question on whether more non-gaming elements would be added when several integrated gaming resorts open in 2015 and 2016. The official replied: “It is also important to have residents in the management of the [gaming] companies.”
“We hope the enterprises will give the residents chances to let them improve their status,” he added. The government will also review the city’s border facilities to accommodate visitors arriving during severe weather. It’s in response to criticism over the lack of transport when Typhoon Utor hit the city on Wednesday. Mr Chui told legislators: “Under severe weather conditions, the most important thing is to ensure the safety of tourists, not help them to reach their destinations.” More on page 3
Dah Sing doubles its profits in first half Page 7
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China’s shopping spree boosts Macau, HK
HSI - Movers
Increases in mainland tourists to Macau and Hong Kong and a rise in luxury brand outlets there have helped the two cities overtake Europe and the United States in share of Chinese shopping spend. Xinhua news agency quotes research saying the duo account for 44 percent of mainlanders’ outlay on luxuries so far this year, compared to 26 percent in 2012. Page 2
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Mainland package visitors rise a third in June
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The number of mainland Chinese tourists coming to Macau on package trips leapt nearly 34 percent year-on-year in June according to figures from the Statistics and Census Service. The number of package tourists of all nationalities rose 19.5 percent from a year earlier. The average occupancy rate for three-star hotels rose 6.1 percentage points year-on-year in June, to 78.2 percent. Page 4
Social measures boost govt spending in July The government spent eight billion patacas (US$1 billion) last month –more than in any so far this year, and more even than the entire first quarter. It included cash handouts to the public and billions of patacas for the Social Security Fund. Most – 7.18 billion patacas – went on running expenses, including the pay of public servants, the Financial Services Bureau said. Page 5
August 16, 2013
Mainland shoppers prefer Macau, HK The two cities replace Europe and the United States as the favourite places for mainlanders to shop Tony Lai
José I. Duarte Economist
odern societies produce loads of statistical data. Looking at those data is not something that one does for the pure enjoyment of it. That they would give any enjoyment is doubtful, and few people would confess to such a private pleasure. Skimming through stats is a necessary business, one that is done mostly for very practical reasons. Good stats and their careful analysis provide invaluable clues about what is going on in our societies and, as important, where they may be going. We listen all the time to the most varied and often inconsistent pieces of advice about what to do in all realms of public life. That is especially true when we deal with setting public policies that affect each and every one of us. That means advice is seldom totally disinterested. Figures, in their relative coldness and objectivity, provide necessary benchmarks against which we can judge how sound a policy or recommendation is, how much this or that course of action is viable or whether it is just wishful thinking. Summing up, careful consideration of the available statistical data is needed in all government activities. Finding out what the figures are telling us is necessary because they help us make an informed analysis and set better courses of action. We ignore the voice of figures at our own risk. As an illustration, let us have a look at something that affects us all, every day: road traffic. Just consider these few figures. Between 2004, the first year of the new casino era, and the end of last year, the number of motor vehicles on Macau’s roads increased by 67 percent. The total length of roadway, including bridges, increased by 21 percent. These two simple figures alone should be enough to set the alarm bells ringing. It is obvious this cannot go on forever. Neither can it go on for very much longer if, as is the case, you start with comparatively high figures.
acau and Hong Kong have become the most popular places for mainlanders to shop this year, overtaking Europe and the United States, research into duty-free shopping has found. The state-run Xinhua news agency quotes a research report as saying Macau and Hong Kong account for 44 percent of spending by mainlanders on luxuries so far this year. They accounted for 26 percent last year. The report, by the governmentbacked Fortune Character Research Institute at the University of International Business and Economics in Beijing, says Macau and Hong Kong are now more popular among mainland shoppers than Europe and the United States, which together account for 31 percent of spending so far this year. Xinhua quotes the head of the Fortune Character Research Institute, Zhou Ting, as saying: “This is due to more mainlanders favouring short-haul trips this year.” About 20 percent of what mainland shoppers have spent this year was spent in the mainland. Ms Zhou said shopping was cheaper in Macau and Hong Kong because they were free ports that did not tax luxuries. Mainlanders are the driving force behind Macau’s tourism and retailing industries. Over 8.9 million visited in the first half of this year, 9.8 percent more than a year earlier, and they made up about 63 percent of all visitors, official data show.
Middle-class mainlanders like to buy cosmetics and clothes, researchers have found
Each visitor from the mainland spent an average of 2,640 patacas (US$330) here in the first quarter, more than the average of 2,046 patacas spent by visitors generally. The Fortune Character Research Institute report says mainlanders with assets of over 100 million yuan (125 million patacas), are more inclined to shop abroad than in the mainland. Their preference is for jewellery, leather goods and watches. Middle-class mainlanders go for cosmetics and clothes. The institute expects mainlanders to spend more and more money
abroad as outbound tourism continues to increase. Last year 83 million mainlanders travelled abroad, and they spent about US$102 billion, official data show. The results of a study released this month by the United Nations World Tourism Organisation indicate that tourists visiting Macau spend US$3,213 each, including what they spend on gambling – more than tourists visiting any other place. Visitors spent 14.5 billion patacas here in the first quarter, 10 percent more than a year earlier, according to official estimates.
Impossibility ensured At the beginning of 2004 Macau had 387 vehicles per kilometre of road. At the end last year the figure had risen to 521. In the first half of this year the number of vehicles increased by 3 percent. Just consider this necessary consequence: to attain again the 2004 ratio, even if no more vehicles were sold from tomorrow, we would need to build 167 kilometres of roadway. That would mean increasing the present roadway by 40 percent, and more than doubling the length built in the past 10 years. The impossibility of doing this is ensured by the obvious limitations the confines of the city impose to any big extension of the length of roadway. To make things worse, the mixture of vehicles on the road is changing and not making things any simpler. The number of tourist vehicles, which usually stay on the road for longer, is rising. The proportion of private cars is also rising. The size and weight of vehicles in general is increasing. Not a single indicator seems to be suggesting that things will get any better before they get worse. For years, then, the data on vehicles and roads have been telling us that we are following an unsustainable path. After 10 years of clear trends – growing congestion, heavier pollution, increasing strain on the infrastructure – do we have anything that amounts to a transport policy? Can the relevant government departments define a frame of reference, put forward a coherent approach, or formulate a set of guiding principles that underpin their analysis and actions – something that could give us the confidence that the authorities are aware of the problems, capable of taking the appropriate decisions and ready to carry out their duties in these matters?
SJM ‘stronger in second half’: analysts Cite improvements in table games offer at Grand Lisboa as factors
everal analysts expect casino investor SJM Holdings Ltd to have a stronger second half to the year despite growth constraints on the firm’s current venues on Macau peninsula. Union Gaming Research Macau said SJM’s revenues would probably rise eight percent year-on-year in 2014, “likely below market average”. “…we would attribute this to three factors: firstly, SJM’s properties largely being capacity constrained, secondly that the company’s whollyowned properties are located entirely on the generally slower-growing Macau peninsula, and thirdly that a significant portion of the company’s revenues (and smaller portion of earnings) comes from its 3rd party satellite casinos, which given their age, lack of amenities, etc. should generally result in a lower growth rate,” said the
research house in a note. Union Gaming observed that SJM’s “self promoted” i.e., whollyowned casinos Lisboa and Oceanus reported first half gaming revenues of HK$2.8 billion (US$361 million). That was flat year-on-year and down 15 percent sequentially, said the research house. “EBITDA [earnings before interest, taxation, depreciation and amortisation] of HK$375 million was up 32 percent year-on-year but down three percent sequentially,” it noted. But Union Gaming added: “We believe the back-half of the year is shaping up well for SJM, particularly at Grand Lisboa. During the third quarter, Grand Lisboa put back into operation 10 VIP tables that had been taken out of service due to an underperforming junket. “In addition, the property is set to bring online between six to eight
more VIP tables in September, and then another 12 to 16 premium mass tables in the fourth quarter 2013. These tables should provide some incremental lift to the already seasonally stronger second half, and should have an even greater impact in 2014, which we do not think is reflected in current consensus expectations.” Cameron McKnight of Wells Fargo in New York noted: “SJM total second quarter 2013 market share fell to 25.3 percent from 25.9 percent in the first quarter 2013 and 27.1 percent in the second quarter 2012. We believe this is the result of the continued ramp at Sands Cotai Central, Galaxy [Macau], [The] Venetian, and City of Dreams.” But Mr McKnight stated: “Q3 and Q4 results could improve on table optimisation.” M.G.
August 16, 2013 April 19, 2013
CE wants more residents as casino managers Renewal of gaming concessions important task for next government adds Chui Sai On Tony Lai
Chief Executive also pledges to help SMEs invest in Hengqin
ig enterprises such as casino operators should give Macau residents a chance to reach management level, said Chief Executive Fernando Chui Sai On at the Legislative Assembly yesterday. His comments came during
a question and answer session with legislators at the assembly. The remarks were prompted by a question on whether more nongaming elements would be added when several integrated gaming resorts open in 2015-2016. The official replied: “It is also
Visitors told to stay indoors during typhoons T he government will review the city’s border facilities to accommodate visitors arriving during severe weather. The pledge yesterday was in response to criticism over the lack of transport when Typhoon Utor hit the city on Wednesday. Chief Executive Fernando Chui Sai On told legislators yesterday: “Under severe weather conditions, the most important thing is to ensure the safety of tourists, not help them to reach their destinations.” “We should not encourage them to move around [in the city] as this would be dangerous,” he added. Mr Chui said the government would review the facilities at the ferry terminals and the airport to encourage the visitors to stay there during typhoons. Typhoon signal 8 was hoisted for 10-and-a-half hours on Wednesday and the city’s public transport was suspended. A limited number of taxi drivers chose to continue operating at their own risk. The Gongbei border gate saw hundreds of visitors queuing for those taxis that remained on the street. Many tourists complained to
Business Daily and other media about taxi drivers profiteering. Mr Chui added yesterday the administration will also continue working on diverting tourists during normal visiting conditions from crowded spots, such as St Paul Ruins, to less visited areas such as the old neighbourhoods. “There are opinions from some neighbourhoods (…) that are afraid of too many people and of spikes in shop rents but overall we will still divert [the tourists],” he said. Mr Chui added it would take time to implement the policy. The Chief Executive added Macau was still far from reaching its maximum tourist capacity, which he said was 81,000 a daily, quoting a study commissioned by the Macau Government Tourist Office. That would mean a maximum capacity of 29.6 million visitors a year. Macau welcomed 28.1 million visitors last year. The Macau and Guangdong governments will continue to talk to the central government to obtain approval for the new border crossing at Ilha Verde, Mr Chui added. T.L.
important to have residents in the management of the [gaming] companies.” “We hope the enterprises will give the residents chances to let them improve their status,” the chief executive added. He also echoed recent remarks by Secretary for Economy and Finance Francis Tam Pak Yuen that 2015 was the “appropriate time” to discuss the renewal of gaming concessions. “This will be an important work for the next government,” he said, while stressing there was enough time left. The next election for Macau chief executive will take place in late 2014. The concessions or sub-concessions of the six casino operators will end between 2020 and 2022. Mr Chui also said: “The future gaming development will be different from the one in the beginning.” “To focus on one industry brings certain problems which have been experienced by you all along,” he told legislators. The gaming industry “has achieved astounding results but other sectors have been affected,” the official admitted. He reiterated the importance of diversifying the economy, namely turning Macau to a world-class
tourism centre and trade platform. But the chief executive quickly added: “Gaming will still play a very prominent role for a certain time in the future”.
Helping SMEs Assisting the development of the city’s small- and medium-sized enterprises (SMEs) is also a key task for the government, said Mr Chui. He admitted the current financial threshold for enterprises seeking to start businesses on Hengqin Island was “high”. Current rules require 100 million yuan (130 million patacas) in registered capital. Mr Chui offered two alternatives yesterday. “We will negotiate with some big project [developers] there to ask them to provide room for the participation of the SMEs.” Another method would be for the government to “bring the SMEs together” for a joint investment venture, he added. The chief executive added the administration is “now striving” to negotiate with Guangdong officials for incentives to be made available to Macau investors in Hengqin. The Hengqin authorities announced in March a list of industries they want to see on the island. The also pledged in principle offer incentives, but gave no details. Once details are released, the next step would be to discuss the employment of Macau residents on Hengqin, Mr Chui said. Hengqin and Nansha district, in Guangzhou, will be two key areas for bilateral cooperation between Macau and Guangdong, the chief executive added. The government will “gradually implement” cooperation with Nansha on cruise ships, yacht development, conventions and exhibitions, cultural creative industries, and education, he explained.
Income test required for public housing: govt C
hief Executive Fernando Chui Sai On has turned down a call to remove the income test for residents interesting in buying subsidised public homes. The call came from legislator Kwan Tsui Hang, who said a relaxation was needed to help “the sandwich class buy homes” in the red-hot property market. A Macau resident living alone can only apply for an affordable home if his or her monthly income ranges between 7,820 patacas (US$977.50) and 22,240 patacas. Mr Chui said he had “reservations” on this proposal. The income range “can cover about 80 percent of the city’s residents” and any change would imply revising the law on affordable housing that was amended in 2011, the official stressed. He also urged the public to look at the public housing policy “on a broader perspective” as the government is now studying the possibility of in some areas restricting home sales to those with resident status. One of five reclaimed land plots – due to be completed by 2015 – will be allocated to residential development
and could provide more than 18,000 homes, Mr Chui added. He didn’t say whether any of them would be subsidised public homes. He said the government would however build more public homes on land plots it had at hand. The authorities were in the process of taking back 28 idle land plots he stated. The administration currently has no plans for the plots where the residential project La Scala – allegedly tainted by corruption and subject to an ongoing criminal trial – was to have been built said Mr Chui Ms Kwan told reporters after the assembly session she “regretted” the government’s response, as it will take several years to change the affordable housing law. T.L.
August 16, 2013
Mainland package tourists up a third in June
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But Taiwan package arrivals down year-on-year and month-on-month
Mixed results The number of passenger ferries entering Macau has declined slowly between 2010 and last year by about 5.5 percent. But trends at the three ports follow very different patterns, without a uniting theme. Arrivals at the Outer Harbour Ferry Terminal weight heavily in the overall picture. Ferry arrivals between 2008 and the middle of this year represented half of all ferries to Macau. An average of about 200 ferries a day arrived at the Outer Harbour in that period. But arrivals declined by about 6.6 percent in the three years ending on December 31. The data for the first half of this year suggest arrivals are stabilising.
The star of this analysis is the Inner Harbour. Traffic there grew by 24 percent last year. Put into context, the service is a local one, a short crossing between Macau and Zhuhai’s Wanchai area. The crossing is a convenient alternative to the land crossings in Gongbei and Hengqin Island, not a connection to other regions. A trial in 2010 of a route to Shekou did not last long. The puzzling situation concerns the new Pac On terminal in Taipa. Aside from the never ending and ever-costlier soap opera associated with it, the fact is that the number of connections declined significantly in both 2011 and last year, in part due to the failure of ferry company Macao Dragon Co Ltd in September 2011. From 2010 to 2011, it was the fastest declining port, with traffic declining by almost 5 percent. Last year, it repeated the performance with a new loss of about 7 percent. That is a surprising result considering new plans were drawn up that would significantly increase its capacity. J.I.D.
Decline in ferry traffic at the Taipa pier, 2010-2012
he number of mainland Chinese tourists coming to Macau on package trips leapt nearly 34 percent year-on-year in June according to figures from the Statistics and Census Service. The number of package tourists of all nationalities rose 19.5 percent from a year earlier. There were 790,996 package tourists to the city in June 2013, of which 78.8 percent (622,977) were mainland people. In June 2012 there were 465,860 mainland package tourists. Judged month-on-month, the mainland arrivals this June rose 13.7 percent. But package tourists from Taiwan fell 23.8 percent year-onyear, to 306,949. Judged month-onmonth from May, they were down 15.7 percent. Late last month Jason Hu Chih Chiang, the city mayor of Taichung in Taiwan, said during a business trip to Macau that more frequent flights between Macau and the island were needed in order to increase bilateral trade and other exchanges. But days later an executive from an airline serving Taiwan told Business Daily there wasn’t currently any pent up demand looking for a service. “Since the beginning of direct flights between the mainland and Taiwan in 2008, I’ve seen no particular commercial need to increase flights,” the executive said, asking to remain anonymous because he wasn’t authorised by his firm to
speak on the issue. Ricardo Siu Chi Sen – associate professor of business and economics at the University of Macau – explained to Business Daily last month that month-on-month or year-on-year variations in package tourism data can sometimes be attributed to the presence or absence of marketing campaigns by particular hotels or resorts, as well as seasonal variations such as traditional holiday seasons associated with school breaks. One or more of those factors might account for the 12.4 percent year-
Mainland package visitors again on the rise
on-year increase in package visitors from Hong Kong this June, compared to the 10.3 percent year-on-year decline in package visitors from the neighbouring Special Administrative Region seen in May. The average occupancy rate for three-star hotels rose 6.1 percentage points year-on-year in June, to 78.2 percent. The next highest growth in occupancy rates was in the two-star segment, with a 2.1 percentage point rise to 70 percent, while the fivestar category was up 1.5 percentage points to 80.3 percent. The biggest decline in occupancy was in the four-star bracket, with a 3.8 percentage point slip. But it was still the fullest category of accommodation, with 82 percent occupancy. Guesthouses also slipped in their occupancy levels, losing 2.8 percentage points, to 58.8 percent occupancy in June. That’s a load factor 0.7 percentage points below what was achieved in June a year earlier. Business Daily reported earlier this week that since a law banning the operation of unlicensed accommodation came into effect on August 13, 2010, the city’s tourism regulator the Macau Government Tourist Office has sealed 377 alleged illegal guesthouses or inns. The city had 28,082 hotel and guesthouse rooms available in June, a 15.7 percent increase on a year earlier.
Old neighbourhoods draft law scrapped T
he long-awaited regeneration of the old neighbourhoods will take even more time. An earlier draft law has been scrapped and the government has now taken the drafting process for the new law out of legislators’ hands. The original drafting process began in 2006, with the government submitting a preliminary bill to the Legislative Assembly five years later. But in a statement released yesterday, the Office of the Secretary for Transport and Public Works says it is now outdated. Taking in consideration that the neighbourhoods draft law was submitted two years ago and that other bills of a similar vintage
have recently been approved, the government says it will send a new version of the neighbourhoods bill to the assembly as quickly as possible. The assembly approved revisions to the land law and a heritage protection bill this week. The legislators also gave the nod to the city’s first-ever urban planning law last week. The government said in the statement the recently approved bills already tackle some of the issues that were to be included in the neighbourhood regeneration proposal. Even if the government had not scrapped the original old neighbourhoods draft bill, it would probably have fallen anyway. The
Legislative Assembly’s current term ended yesterday ahead of September’s election, and unapproved bills cannot be held over for consideration by the new assembly. The government did not provide any timetable to submit a new proposal to legislators. “At this time we don’t have any further explanation about this subject,” the office for Secretary Lau Si Io said in a written reply to Business Daily. The amendments will be introduced once the advisory body “analyses the law deeply again”, it added. “We hope to submit the new draft of law to the Legislative Assembly as soon as possible.”
August 16, 2013
Social measures boost govt spending in July
permanent residents 4,800 patacas. Handouts will be given to 569,780 permanent residents and 68,112 non-permanent residents, official data show. Cash handouts began in 2008 as a short-term measure to help people deal with inflation. This year’s handout will be the biggest yet, nearly 1.9 times bigger than 2008’s. That year permanent residents received 5,000 patacas each and nonpermanent residents 3,000 patacas.
The government hands out cash and tops up the Social Security Fund Vítor Quintã
he government spent more last month than in any month so far this year as it handed out cash to the public and put billions of patacas into the Social Security Fund. The government spent 8 billion patacas (US$1 billion) last month, more than it spent in the entire first quarter of this year, official data show. Of that sum, 7.18 billion patacas went on running expenses, including the pay of public servants, the Financial Services Bureau said on Monday. The bureau later told Business Daily in an e-mailed reply that the increase in spending last month had been due mainly to spending on social measures. The government put about 1 billion patacas into the voluntary Social Security Fund, which pays for social benefits and which relies heavily on government money. It is forecast that the fund will run out unless contributions are increased and the government keeps pumping in money.
Employers and employees have so far failed to agree on any increase in contributions to the fund. At present employers put in 30 patacas a month for each employee, and each employee puts in 15 patacas. The government also deposited last month 2.1 billion patacas in private accounts in the fund’s central savings system, which is open only to permanent residents. The system will be turned into a central provident fund, which will serve as the second tier of a two-tier system for giving savers a retirement income. A year ago the government said it would finish drafting all the legislation necessary for the system by the end of this year. The government spent 1.3 billion patacas on cash handouts last month. It said in May that it expected to spend more than 4.88 billion patacas, or about 5.91 percent of its budget, on this year’s cash handouts. Permanent residents will receive 8,000 patacas each and non-
Sum deposited in the Social Security Fund last month
Industrial production hits five-year high As factories here pump out more tobacco and construction materials Vítor Quintã
acau’s factories were busier in the last quarter than at any other time in the past five years, thanks to record-high production of tobacco. The manufacturing production index rose to 85.2 points in the second quarter of 2013, 9.5 percent higher than the previous quarter and the highest in any first quarter since 2008. Manufacturing output has been rising since 2009, having declined in the preceding six years as the textiles industry contracted after quotas for international trade in textiles were abolished. This time around the growth was fuelled by a 79.1 percent jump in the tobacco production index, which rose to a record high of 202.9 points in the second quarter. Production of non-metallic
mineral goods – which include construction materials such as cement, ceramics, glass and lime – rose by 42.9 percent to 109 points, a five-year high. This reflects activity in the construction industry, which is ramping up thanks to the launch of the construction works for several new casino resorts in Cotai. In contrast factories of food products and beverages lost some steam, with second-quarter output falling by 8.7 percent from the previous period. Food and drink processing accounts for over one-third of the manufacturing production index, driven by the booming tourism sector. The activity decrease was smaller for Chinese bakers, whose output was 3.5 percent lower than in the first quarter of 2013. Chinese bakery
Tobacco production in Macau was twice as high as in 2008
products are a popular souvenir purchase for visitors. The textiles and clothing industries combined still account for about 30 percent of the manufacturing
production index. But the output of both industries continues to shrink. The clothing production index fell to 5.5 points, having been 241.5 in 2003.
August 16, 2013 April 19, 2013
Macau Brought to you by
Financial Monitor Dollar domination
Banco Weng Hang thrives on high demand for loans First-half net interest income and cross-border lending increase Vítor Quintã
One of the most, if not the most, used measures of the amount of money available in an economy is M2. It uses a broader definition than M1, the other common measure. M1 includes currency in circulation and in cheque accounts, considered the most liquid types of currency. But there are additional types of deposits and bank accounts that can be converted into currency at short notice and negligible cost. These deposits include term deposits and savings accounts. If we add these to M1, M2 is the result. It is a more broad measure of the means of payment, including “quasi-money” – that is, it includes all the cash available in the economy and all the assets that can be converted into cash immediately or at relatively short notice. M2 is usually strongly correlated with several other important economic indicators, such as economic growth, and is sensitive to changes in financial market conditions or monetary policy.
anco Weng Hang SA’s firsthalf profit was over one-third bigger this year than last year owing to strong demand for loans and to property sales. The bank’s parent company, Hong Kong’s Wing Hang Bank Ltd, told the Hong Kong Stock Exchange yesterday that Weng Hang’s first-half net profit was 195.9 million patacas (US$24.5 million), 38.3 percent more than a year earlier. The parent company said the rise had been due in part to sales of property. The proceeds increased revenue, which rose by 20 percent to 289.4 million patacas. The parent company said “robust demand” for loans continued as Macau’s economy grew strongly
and the gaming and tourism industries expanded. The Wing Hang group lent 16.48 billion patacas to be spent in Macau in the first half, 8.5 percent more than a year earlier. The group’s lending to its customers here was 15.5 billion patacas. The difference suggests that it lent a considerable amount to borrowers in Hong Kong or mainland China for investment in Macau. That would be in line with the trend in foreign direct investment in Macau, which has risen almost sixfold since the handover. The Wing Hang group’s nonperforming loans in Macau amounted to 25.5 million patacas at the end of the first half.
Banco Weng Hang’s lending generated more revenue, its net interest income rising by 21 percent to 207 million patacas. The bank had 12 branches here at the end of June. It expanded its business outside Macau, lending 10.75 billion patacas beyond the city’s borders, 9.3 percent more than a year earlier. The Fitch rating agency said in May that that it regarded the Wing Hang group’s “exposure and growth relating to China as a potential negative rating trigger”. Banco Weng Hang’s first-half performance was better than its parent’s. The Wing Hang group’s firsthalf net profit fell to HK$1 billion, 1.8 percent less than a year earlier.
Banco Weng Hang had 12 branches here at the end of June
The striking feature of M2 here is the pataca is not the dominant currency in the supply of money. The Hong Kong dollar accounts for 55 percent of M2. Less than onequarter of M2 is denominated in patacas, which is just 4 percentage points above the remaining currencies in the “other” category. Unfortunately, the figures do not identify assets held in yuan. They are included in the “other” category. J.I.D. The content of this column is the work of Business Daily’s journalists.
M2 growth, January to April this year
Cotai Water Jet posts ‘considerable profit’ T
he Cotai Water Jet ferry services have turned a profit in the first half of 2013, said operator Chu Kong Shipping Enterprises (Group) Co Ltd, after a fare hike earlier this year. The company said in a filing to the Hong Kong Stock Exchange yesterday that its Hong KongMacau ferries “contributed a
considerable profit” to its business. Chu Kong High-Speed Ferry Co Ltd, a wholly-owned subsidiary of Chu Kong, has a 96 percent stake in a Macau subsidiary that has been running Cotai Water Jet since 2007 under an agreement with casino operator Sands China Ltd. Chu Kong told Business Daily in March Cotai Water Jet had been
losing money for the past five years, although it gave no figures. On March 25 Cotai Water Jet increased fares for its routes from Macau peninsula and Taipa to Sheung Wan and to Hong Kong airport by 5.5 percent and 6 percent. Chu Kong Shipping saw its overall revenue rise 11 percent year-on-year to HK$761.4 million (US$98.2 million). Profit rose by 43 percent to HK$100.3 million. More than half of that profit, HK$57.5 million, came from the group’s passenger transportation business, which includes Cotai Water Jet. V.Q.
August 16, 2013 April 19, 2013
Dah Sing doubles profits in first half Group says economic outlook gives cause for ‘caution’ in short term Vítor Quintã email@example.com
Dah Sing owns commercial bank Banco Comercial de Macau SA (Photo: Manuel Cardoso)
ah Sing Financial Holdings Ltd has reasons to be pleased with the performance of its Macau operations in the first half, after doubling its profit in a year. In a filing to the Hong Kong
Stock Exchange yesterday, Dah Sing said its operations in Macau recorded a profit before tax of HK$96.6 million (US$12.5 million), double that of the same period last year.
Dah Sing Banking Group Ltd owns Banco Comercial de Macau SA and holds a 96-percent stake in insurers Macau Insurance Co Ltd and Macau Life Insurance Co Ltd. Dah Sing Financial Holdings is the majority shareholder in the group. The group’s operating income and profit came mostly from the bank, according to a second filing. Operating income in Macau, less insurance claims, reached HK$203 million, up by 43.5 percent from the first half of last year. The bank saw its profit before taxes double to HK$69 million. The figure hints at reduced operational costs but a greater focus on more profitable business. Banco Comercial’s operating income rose much more slowly to HK$158.2 million, an 18.5-percent increase, while loans issued grew by 16.3 percent to HK$9.78 billion. Dah Sing’s insurance companies recorded a profit of HK$27.6 million, up by 123 percent yearon-year, according to calculations by Business Daily. Dah Sing told the exchange it was “cautious in the near term” but confident of a more positive outlook in the longer term. “The better medium-term prospects for the mainland than most other economies, with the positive impact this will bring to Hong Kong and Macau, provide a good platform for further growth,” the group said. Dah Sing Holdings saw its overall profit increase by 14 percent to HK$887.6 million, thanks to “a significant improvement” in net interest margin, up by 0.3 percentage points to 1.77 percent.
New contracts boost profits of state-run builder C
hina State Construction International Holdings Ltd, the third-largest contractor in the world, saw its Macau profit grow four-fold in the first half of 2013 after signing two new major contracts. The state-owned builder told the Hong Kong Stock Exchange that its first-half profit here was HK$92.2 million (US$11.9 million), up from just HK$22.5 million it made a year before. The profit jump came even though the contractor’s revenue grew only slightly, up by 1 percent to HK$394.6 million, according to a filing released yesterday. In the first half the group won “the largest government project in Macau” for public housing in Ilha Verde, a contract worth HK$1.89 billion. However, one of the losing bidders for this contract has appealed to the Court of Second Instance against the decision. In addition China State signed the largest wholly conducted contract in its history, a HK$10.5 billion deal to act as main contractor for the construction of MGM China Holdings Ltd’s maiden project in Cotai, a new casino resort. V.Q.
August 16, 2013 April 19, 2013
Greater China Court rejects oil spill lawsuit A Chinese court has dismissed a legal action against the State Oceanic Administration (SOA) for allowing U.S. oil major ConocoPhillips to resume production after spills off northern China, an official said yesterday. “The conclusion of the case is dismissal,” a member of staff at the Beijing No.1 Intermediate People’s Court, who did not give her name, told AFP. The state-backed All-China Environment Federation launched an administrative misconduct lawsuit against the SOA last month. It is rare for a Chinese official agency to face court action from another governmentbacked entity. The case related to oil spills in June 2011 at the offshore Penglai field, jointly developed by ConocoPhillips and state-owned China National Offshore Oil Corp, which saw 3,000 barrels of oil and oil-based mud vent into the sea. ConocoPhillips was ordered to cease production in September 2011 following the spills, which the SOA classified as “severe accidents”. But the agency approved the resumption of production in February this year, despite the lack of any public hearings or feasibility studies, reports said.
China Mobile’s profit up on 3G subscribers China Mobile Ltd, the world’s largest phone company by users, posted second-quarter profit that beat analyst estimates as new subscribers to its third-generation network increased data use and boosted sales. Net income rose to 35.2 billion yuan (US$5.8 billion), from 34.4 billion yuan a year earlier, according to figures derived from first-half financial results released by the Beijing-based company yesterday. Chief executive Li Yue is luring subscribers to the China Mobile’s third-generation network with subsidies on a range of devices, including Huawei Technologies Co’s Ascend P6 that is advertised as the world’s slimmest smartphone. The company, the only one of the country’s three largest carriers to not offer Apple Inc’s iPhone, is looking to mobile web users who download games and movies to help stem a decline in its share of the nation’s 1.18 billion wireless users. “China Mobile’s 3G business is starting to gain traction,” Wang Jinjin, an analyst at UBS AG in Hong Kong, wrote in an August 13 report. Data usage, “has taken off driven by more smartphones since late last year”.
Fewer millionaires as economy slows China’s millionaires, a symbol of the country’s growing wealth, increased at their slowest rate in five years in 2012 as the economy and stock market stumbled, a survey showed. The number of millionaires – defined as those with personal wealth of at least 10 million yuan (US$1.6 million) – rose just three percent yearon-year to 1.05 million, said the independent Hurun Research Institute and consultancy GroupM Knowledge. The number of “super-rich” Chinese – with personal wealth of at least 100 million yuan – went up only two percent to 64,500, also the slowest pace in five years, according to the survey. The slowdown came as growth in the world’s second largest economy slipped to a 13-year low of 7.8 percent in 2012. Only a quarter of Chinese millionaires were “very confident” about the domestic economy in the coming two years, the survey showed, down from 28 percent in 2011 and nearly half of those questioned in 2010. China’s economic growth slipped further to 7.7 percent in the January-March period this year and slowed to 7.5 percent in the second quarter, raising alarm bells over possible deeper weakness. Beijing, the nation’s capital and political centre, had the highest number of millionaires with 184,000, or 17.5 percent of total, the survey said, ahead of the financial hub Shanghai on 147,000.
Wenzhou eases property rules in singular change First-home buyers can now buy two houses Xiaoyi Shao and Koh Gui Qing
he eastern Chinese city of Wenzhou has relaxed restrictions on property purchases to allow some people to buy second homes, the first in the country to ease controls, though analysts say other Chinese cities are not expected to follow suit. Wenzhou’s policy shift comes as investors increasingly bet that China may soon loosen its near four-year-old property controls to shore up its economy, which is grinding towards its slowest annual growth in 23 years this year. Under the new rule, first-home buyers in Wenzhou can now buy two houses, reversing a restriction introduced in March 2011 that barred them from purchasing two properties as part of a nationwide campaign to calm China’s frothy real estate prices. “This is true,” an official from the Wenzhou House Management Centre said this week, confirming a
local media report that the city has eased its property policy. Wenzhou’s property controls were always more stringent than other Chinese cities, where only purchases of third homes were barred. As such, Wenzhou’s latest policy easing brings it in line with its peers. A birthplace for Chinese enterprise, prosperous Wenzhou was previously plagued by fervent property speculation. But its housing market has slowed under the weight of government policy, and the city was alone among 70 Chinese cities to see annual price falls in May and June, official data showed. House prices in Wenzhou have fallen year-on-year for 22 consecutive months since September 2011, official data showed. The property sector is a rare bright spot in China’s slowing economy, ironically so since it is the one area where the government most desires a cooldown.
Despite having leaned against the house market for almost four years by banning purchases of multiple homes – a centrepiece in property controls – and choking off financing to developers, China still faces record home prices. The failure to keep house prices in check is in part because controls have butted up against local governments’ need to keep property market buoyant so they can sell land at high prices to raise revenues.
No turnaround Analysts say Wenzhou’s move does not signal an imminent relaxation in property purchase restrictions nationwide, and that it remains to be seen whether the city’s policy change would win the support of government leaders in Beijing. “Wenzhou’s previous property curbs were too harsh and its home prices have fallen too steeply,”
HK rents hinder ParknShop sale Bidders expected to ‘be pretty cautious’, says analyst Vinicy Chan
oaring Hong Kong rents helped make Li Ka Shing Asia’s richest man. They’re now becoming a hindrance as he looks to sell the city’s No. 2 grocery chain. His biggest company, Hutchison Whampoa Ltd, is seeking US$3 billion (HK$23.3 billion) to US$4 billion for its ParknShop supermarkets and has asked potential buyers to submit bids by today, according to people with knowledge of the process. Hong Kong’s surging rents and a slowing grocery market could deter buyers from offering top price for the chain. Shop leases have doubled over the past four years in the city, according to property agent Savills Plc. And broker Cushman & Wakefield Inc last year said Hong Kong’s Causeway Bay area had overtaken New York’s Fifth Avenue as the world’s most expensive district for retail rents. Meanwhile, with the grocery market approaching saturation, sales growth in the industry slowed to 7.9 percent in May from last year’s annual increase of 11 percent and a 2011 peak of 13 percent, government statistics show. Bidders “are going to be pretty cautious,” said Benjamin Lo, an analyst at Nomura Holdings Inc. “A buyer must take into account the rising costs, especially the high rents in Hong Kong, as they are going to affect the retailer’s profitability.” A price of about US$3 billion would be “reasonable” given ParknShop’s 2012 sales of US$2.8 billion, said Jason Song, an analyst
ParknShop operates 345 stores in Hong Kong, Macau and the mainland
at Guotai Junan Securities Co in Hong Kong. Morgan Stanley analysts estimate the chain could be valued at US$2.5 billion to US$3 billion. In a statement last month, Hutchison said it is conducting a strategic review of ParknShop and there is no assurance the process will result in a sale. If the conglomerate doesn’t get a good price, it could keep the chain, Nomura says. ParknShop gets most of its revenue from Hong Kong’s US$6.6 billion supermarket industry, where it has more than 270 of its 345 outlets, including higher-end stores Great and International that sell imported
cheeses, wines and condiments. It has prime locations at residential and commercial complexes developed by Mr Li’s property company Cheung Kong Holdings Ltd. ParknShop has 33 percent of the Hong Kong grocery market, trailing Wellcome, controlled by Singaporelisted Dairy Farm International Holdings Ltd, with 40 percent, according to researcher Euromonitor. CR Vanguard Supermarket, run by China Resources Enterprise Ltd, a state-backed mainland conglomerate, ranked third with 7.8 percent. Bloomberg News
August 16, 2013 April 19, 2013
HKEx Q2 profit climbs on improved volumes, IPOs H
House prices in Wenzhou have fallen for 22 consecutive months on-year
said Jia Yatong, a property analyst from Haitong Securities Co Ltd in Shanghai. “It is only an individual case. We need to see whether other cities will follow, or whether Beijing will stop it,” Jia said. Still, investors are hopeful China will soon relax its property policy to bolster an industry that accounts for 15 percent of the world’s secondlargest economy. Some analysts have even jumped the gun by saying China has effectively loosened property controls by allowing developers to raise funds again. Five property firms including
Xinhu Zhongbao Co Ltd have announced since July fund-raising plans, but these plans have not been carried out as they have not been approved by the securities regulator, which says its ban on new financing for developers remain in place. A July statement from China’s top decision-making body did not mention a continuation of the government’s property controls, stirring analysts’ hopes that the government would desist from imposing new restrictions on the real estate market, and perhaps even loosen controls. Reuters
ong Kong Exchanges & Clearing Ltd, the world’s second-biggest bourse operator by market value, said profit climbed 10 percent last quarter as trading volumes rose. Net income increased to HK$1.17 billion (US$151 million) in the three months through June 30 from HK$1.07 billion in the same period a year earlier, according to a statement yesterday. Led by chief executive Charles Li, the bourse acquired the London Metal Exchange, the largest platform for trading industrialmetals futures, for US$2.2 billion in December to expand into commodities. The benchmark Hang Seng Index fell 0.5 percent this year through August 13, the only decline among developed markets tracked by Bloomberg, as economic expansion in China slowed and amid speculation the U.S. Federal
Reserve will pare stimulus as global growth shows signs of improving. “With the gradual recovery of the global economy, trading activities at HKEx in the first half of 2013 were better than those in the corresponding period last year,” Chow Chung Kong, Hong Kong Exchanges chairman, said in the statement. “Looking forward, the global financial market remains challenging, in particular with the anticipated unwinding of the liquidity easing policy in the U.S.” Revenue increased 17 percent in the second quarter to HK$2.2 billion, Hong Kong Exchanges said. Operating expenses climbed 37 percent to HK$672 million. The average daily volume of LME metals contracts traded rose 13 percent, compared with a 5 percent gain in the first three months of the year. The LME contributed about 11 percent of Hong Kong Exchanges’ HK$2.33 billion profit in the first half of the year, according to the statement. The daily average value of shares traded in Hong Kong rose 20 percent to HK$68.3 billion in the first half from the same period last year, according to the statement. Funds raised through initial public offerings in Hong Kong jumped 29 percent in the first six months of the year to HK$39.7 billion, while futures and options turnover reached a record on June 25, Hong Kong Exchanges said. Bloomberg News
Lenovo mobile devices outstrip PC sales Company seeks acquisitions in PCs and phones, CEO says
enovo Group Ltd, the world’s largest maker of personal computers, reported firstquarter profit that beat analyst estimates after increasing its global market share for tablet computers, smartphones and PCs. Net income climbed 23 percent to US$173.9 million in the three months ended June from US$141.4 million a year earlier, the company said in a statement yesterday. Revenue rose 9.7 percent to US$8.79 billion. Lenovo’s PC unit sales fell 0.6 percent, giving it a market share of 16.7 percent, compared with HewlettPackard Co’s 16.3 percent of the market after a 4.8 percent drop in shipments, according to Gartner Inc. Lenovo and HP have been trading the top spot since last year. However, for the first time, Lenovo’s combined sales of smartphone and tablets overtook its PC sales during this quarter. Smartphone shipments by Lenovo more than doubled from a year earlier to a record 11.4 million units, the company said. “This was driven by strong smartphone demand in China and expansion into more countries outside of China,” it added. The company said it’s looking for acquisitions in PCs and smartphones as expanding share for those products boosted quarterly profit.
The industry is in a period of consolidation, so we definitely should take the opportunity if we can find the right target Yang Yuanqing, Lenovo chief executive
“We are definitely seeking opportunities in both the PC and phone areas,” Lenovo chief executive Yang Yuanqing said in a phone interview yesterday. “The industry is in a period of consolidation, so we definitely should take the opportunity if we can find the right target.” Lenovo will be more “proactive” on acquisitions, Mr Yang said, declining to name specific targets. Lenovo was in talks to buy part of International
Business Machines Corp’s server division until the two sides couldn’t agree on a price, a person familiar with the discussions said in May. BlackBerry Ltd said it will consider takeover bids after almost a year of advisers unsuccessfully canvassing potential buyers. Mr Yang declined to comment on whether the company would be interested in either IBM or BlackBerry assets. “Lenovo has come close a couple times already this year to a big acquisition,” Stephen
Yang, a Hong Kong-based analyst with Sun Hung Kai Financial Ltd, said yesterday. “We do believe something will happen this year.” Lenovo’s chief financial officer Wong Wai Ming said in January the company was assessing potential acquisition targets and strategic alliances, including a deal with BlackBerry. The company, which has headquarters in Beijing and Morrisville, North Carolina, said in March there hadn’t been any specific evaluation
of BlackBerry as a target. “I believe that Lenovo may potentially explore either an acquisition of BlackBerry or form a joint venture with the company,” Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong, said yesterday. “BlackBerry holds a significant amount of IP which Lenovo may need as it ramps up sales of smart devices outside of China, and in particular in the developed markets.” Bloomberg News
August 16, 2013 April 19, 2013
Whither China seen in Australia Analysts look elsewhere for accurate view on Chinese economy Michael Heath
rom his Manhattan office, Steven Englander looks to commentary from policymakers and executives in Sydney, not Beijing, for the best take on China’s economy. “They get a direct, immediate view of China demand for highly cyclical products and have an incentive to give it a close read, so if they are sensing an extended slowdown I would take their views seriously,” said Mr Englander, 58, head of Group of 10 currency strategy at Citigroup Inc. “It may be better to have an accurate view of a limited but important segment of Chinese demand, than an uncertain view of aggregate demand.” Doubts over the accuracy of Chinese data focus attention on readings and statements more than 3,500 miles south of Beijing, to Australia, China’s biggest iron-ore supplier. The Reserve Bank of Australia said on August 9 China’s growth isn’t likely to “pick up much, if at all, in coming quarters,” while Prime Minister Kevin Rudd has flagged the danger of a Chinese credit crunch in a re-election pitch based on economic management. China’s government said in June it will start an investigation to ensure the accuracy of data filed by companies as part of efforts to improve the reliability of statistics. Li Keqiang, who became premier this year, said in 2007 that gross domestic product figures were “man-made” and “for reference only,” according to a WikiLeaks cable published in 2010. Mr Englander isn’t alone in looking to Australia to get a reading on China. Frederic Neumann, co-head of Asian economics at HSBC Holdings Plc in Hong Kong, said his team studies ironore exports, while Saul Eslake, chief Australia economist at Bank of America Merrill Lynch in Melbourne, said he tracks what mining executives say and monitors iron ore and coal shipments.
Diverging gauges Divergent indications on manufacturing underscore a lack of clarity in the world’s second-largest economy’s direction. While an official Purchasing Manager’s Index has held in a tight range since October, a similar gauge published by HSBC and Markit Economics shows wider swings. The government’s PMI also contrasts with concern flagged by stocks, with the Shanghai Composite Index down about 7 percent this year. “You look at the equity market, you look at the way people think about China’s economy, you look at economic growth, even if you look at the official industrial production numbers, the range has been a lot wider,” said Ken Peng, senior economist at BNP Paribas SA in Beijing. The government is trying “to create a sense of stability and I think it does just the opposite. It loses credibility,” he said. China’s export gains collapsed in May after a crackdown on fake invoices used to disguise money flows that inflated data in the first four months of the year. In July, China suspended the release of industryspecific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyse the large volume of responses. “There is no smoking gun that suggests the numbers are directly manipulated,” said HSBC’s Mr
Beijing is trying to ensure the accuracy of trade data
Neumann. “They may probably not be terribly good, all of them, but I wouldn’t say that they’re systematically manipulated.” Confusion about China’s growth goals was highlighted when Finance Minister Lou Jiwei told reporters in Washington on July 11 that a pace as low as 6.5 percent may be tolerable in the future. State-run Xinhua later amended the English-language report on Mr Lou to say there’s no doubt that China can achieve this year’s growth target of 7.5 percent. Premier Li said last month 7 percent was the “bottom line” rate for the nation.
Growth pace Even so, Mr Englander, who previously worked as an economist for the Federal Reserve Bank of New York and the Organisation for Economic Cooperation and Development, estimates some risk of a dip below 7 percent for a period. He sees GDP rising 7 percent next year and in 2015. The implications are that the Australian dollar, which has fallen more than 12 percent since the start of April to about 91 U.S. cents, has more room to fall, according to Mr Englander. “We suspect it will take 85 cents or below for international investors to think that a major stabilisation has occurred.”
It may be better to have an accurate view of a limited but important segment of Chinese demand, than an uncertain view of aggregate demand Steven Englander, Citigroup Inc
KEY POINTS Accuracy of Chinese data questioned Analysts look to Australia to get reading on China Sydney gets direct view of Chinese demand – analyst Exports almost quadrupled in five years Australia’s links with China tightened in recent years as exports to what’s now its largest trading partner almost quadrupled in five years. The central bank has one of three international offices in Beijing – solely for economic analysis, rather than for trading, which is the main function of the New York and London locations. The RBA, which has noted the increasing correlation with China, has a team of about 10 analysts to focus on China and India. The RBA said last week that recent Chinese growth rates have been “somewhat less than previously expected, reflecting a weaker contribution from external demand and diminished prospects for an upswing in domestic demand.” Governor Glenn Stevens cut Australia’s benchmark interest rate on August 6 to a record-low 2.5 percent, seeking to boost nonmining areas of the economy. The bank last week also trimmed its projection for Australian GDP to a 2.25 percent gain for 2013, from the 2.5 percent pace estimated in May. The central bank pared the outlook for mining investment, saying that while the local statistics bureau’s capital expenditure survey showed expectations remain strong, “this is inconsistent with information from the bank’s liaison, few new commitments to mining projects and a lack of current expenditure on the development and planning work that would typically precede new projects”.
Mr Rudd, a Mandarin speaker and former diplomat in Beijing, has put the case of a China slowdown more starkly than his central bank governor as he campaigns ahead of elections on September 7 – flagging the danger of an Australian recession should opposition leader Tony Abbott win power and execute pledged fiscal tightening. The Treasury on Tuesday said the peak in resource investment will be lower than forecast in May, citing uncertain global prospects, particularly in China and India.
Bullish miners Even so, Australian evidence isn’t all stark, and underscores the unlikelihood of worst-case scenarios such as one at Barclays Plc where GDP growth dips to 3 percent for a time. Neville Power, chief executive of Fortescue Metals Group Ltd, said in an interview that underlying demand for iron ore from China remains strong. BHP Billiton Ltd chief executive Andrew Mackenzie said in an interview he’s “reasonably positive” about Chinese growth. “They’re doing a good job at rebalancing and moving more towards a consumption-based economy and at the same time thinking more deeply how they can make more efficient use of the resources that we sell to them,” Mr Mackenzie said. “Urbanisation will continue and so we’re looking in the next 10 or 15 years at the possibility of another 250 million Chinese moving from the countryside into the city.” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd, uses naturalresources data, such as iron-ore shipments from a remote port in Australia’s northwest, to help form his estimates of Chinese activity. “Chinese data gives you a rough guide as to how things are going, but you wouldn’t rely on it as much as data from Australia or the U.S,” said Mr Oliver. “The fact that the data comes out so quickly after the end of the period that it relates to, such as the quarterly data coming out within a few weeks of the end of the quarter, suggests that it’s pretty rough.” Bloomberg News
August 16, 2013 April 19, 2013
India’s slow growth ‘not to last long’: Singh
Singapore July home sales drop
Regulator curbs FX outflows, targets gold imports in new rupee salvo
ndia’s slow economic growth will not last long as the government removes hurdles for stalled projects, eases foreign ownership rules and starts work on new ports and rail lines, Prime Minister Manmohan Singh said. “Economic growth has slowed down at present and we are working hard to remedy the situation,” Mr Singh said in New Delhi yesterday in a speech to mark Independence Day, the date in 1947 when British colonial rule ended. Work on two new ports, eight airports, industrial corridors and rail projects will start in coming months, he said. Mr Singh is seeking to repair the image of his government and the ruling Congress party before elections due by May. A series of corruption allegations, a slowing economy and rising prices have all weighed on his administration. The prime minister responded by rolling out populist legislation to expand distribution of cheap food to the poor and ease foreign ownership rules to resurrect a stalled economic agenda. “In the coming months, we will see visible results of these efforts to increase investment,” said Mr Singh. “Our growth will accelerate, new employment
opportunities will be generated and there will be improvements in the infrastructure sector.” The head of the government is facing a record current account deficit, slowing growth and a rising inflation rate. Eleven months after India began easing caps on foreigndirect investment and restrictions on the bond market to spur growth, data this week showed a contraction in industrial output and an increase in price pressures. Industrial production fell 2.2 percent in June from a year earlier, while consumer prices rose 9.64 percent
Indians invested overseas in the seven months to July 31
year-on-year in July, government reports showed on Monday. The current-account imbalance widened to an unprecedented 4.8 percent of gross domestic product in 2012-2013. “It is not only our country that is facing economic difficulties. The last year has been difficult for the world economy as a whole,” Mr Singh said. “I believe that this phase of slow growth in India will not last long,” he added. The rupee has fallen more than 10 percent this year, the worst performer in 2013 after the yen in a basket of 11 Asian currencies tracked by Bloomberg. The government raised import tariffs on gold and silver on Tuesday as part of steps to ease the deficit and reduce pressure on the currency. The move to check imports comes after the central bank raised two interest rates last month to fight the rupee slump that risks fuelling inflation. On Wednesday, the Reserve Bank of India cut the amount local companies can invest overseas without seeking approval to 100 percent of their net worth, up from 400 percent. Those investments reached US$3.2 billion in July, according to central bank data. Bloomberg News
Indonesia to focus on raising domestic demand
Singapore’s home sales in July slid to the lowest since December 2009 as investors balked at new curbs on property loans and developers marketed fewer projects. Home sales fell to 481 units last month, 73 percent lower from a month earlier, according to data from the Urban Redevelopment Authority released yesterday. Sales rose to a record 2,793 units in March. “The lower sales are due to the shock of the new loan rules,” said Nicholas Mak, executive director at SLP International Property Consultants in Singapore. “That coupled with slower loan processing by banks to enforce new rules resulted in fewer launches by developers.”
Rio to lay off 1,700 at Mongolia project As many as 1,700 workers at Rio Tinto Group’s US$6.6 billion Oyu Tolgoi copper and gold mining project in Mongolia, where shipments began last month, have been laid off amid a financing dispute. “This is a difficult time for everyone at Oyu Tolgoi but it is especially difficult for those who work on the underground mine,” Rio’s Oyu Tolgoi LLC said in an e-mailed statement. The layoffs are a mix of contractors and employees. The layoffs at Oyu Tolgoi, owned by Rio and the Mongolian government, follow months of disagreement between the two sides over how to share revenue from the mine.
This year’s 6.3 pct growth target hard to reach, says Finance Minister
Abe stays away from war shrine
Japanese Prime Minister Shinzo Abe avoided visiting a Tokyo shrine on the anniversary of the country’s World War II defeat, sending a donation instead in an attempt to avoid new damage to regional ties. But Mr Abe broke with two decades of tradition by omitting in his speech any expression of remorse over Japan’s past aggression in Asia. Two members of Mr Abe’s cabinet paid their respects at the Yasukuni Shrine, seen by many in Asia as a symbol of Japan’s past military aggressions. A group of about 90 lawmakers, including the policy chief of Mr Abe’s ruling Liberal Democratic Party, prayed together at the site.
ndonesia’s budget for next year will put heavy emphasis on promoting domestic demand as the driver of growth as the country’s exports will remain weak, Finance Minister Chatib Basri said. In an interview with Reuters, Mr Basri conceded that this year’s 6.3 percent economic growth target would be hard to reach and said the figure was likely to end up “around” 6 percent, which is more in line with the view of private economists. Last month, Indonesia’s central bank cut its 2013 growth forecast to 5.8-6.2 percent from 6.2-6.6 percent. “The current global economic situation is not very promising… So the role of fiscal policy is quite clear. We have to provide stimulus for the economy,” said the Australianeducated economist who, at 47 years, is one of Indonesia’s youngest finance ministers. Though economists said it is still too early to judge Mr Basri’s performance since becoming minister in May, he has been widely praised in his role as head of the state investment board, overseeing a period of record foreign investment into Southeast Asia’s biggest economy. But Mr Basri, who retains his investment chief role, came to the job of finance minister just as the economic outlook for Indonesia began to cloud, with slowing, exports struggling, inflation surging and the
It’s about time for Indonesia to change the composition of growth Chatib Basri, Finance Minister
Toyo Tires files complaint to block Chinese Copycats rupiah slumping. “It’s about time for Indonesia to change the composition of growth,” he said. “Countries like Indonesia can’t continue to rely on natural resources or cheap labour. We have to move forward into the next stage of our development with … innovation and technology,” the minister said. In June, the government sharply cut fuel price subsidies – a move that it says will make available for the 2014 budget 18.4 trillion rupiah (US$1.79 billion) saved this year. Mr Basri said some 13 trillion
rupiah of that will be earmarked for Indonesia’s notoriously inadequate infrastructure. The rest will go towards developing human resources and improving public transport. The government’s budget proposal for 2014 will be unveiled on today. Mr Basri said he hopes Indonesia can have a “good budget posture” in 2014 with a deficit of 1.49 percent of gross domestic product. By doing so, “we will able to reduce the debt to GDP ratio to become less than 33 percent, the lowest in our history,” he said. Reuters
Toyo Tire & Rubber Co., the maker of tires for Audi AG and Toyota Motor Corp vehicles, said it lodged a U.S. trade complaint accusing almost two dozen companies of selling replacements that copy its patented tread and sidewall designs. In the complaint, filed yesterday with the U.S. International Trade Commission in Washington, Toyo claimed tires made in China and Thailand are copying proprietary designs used for the Toyo and Nitto brand of tires. It asks that the trade agency block U.S. imports of products that infringe eight patents.
August 16, 2013 April 19, 2013
Rudd plans lower tax rate opinion In bid to boost Northern Australia economy and gain votes
ustralian Prime Minister Kevin Rudd, seeking re-election in a September 7 ballot, said his Labor government would lower company tax rates in northern Australia within five years under a plan to boost the region’s economy. Labor would also work with the Northern Territory government to expand the Ord Irrigation Scheme, boosting output in the region by about A$150 million (US$138 million) a year though increased agricultural production, including sugar, Mr Rudd told reporters in Darwin yesterday. “This is a key part of Labor’s plan to keep Australia’s economy strong by creating new jobs for the future as the decade-long China resources boom is coming to an end,” Mr Rudd said in an e-mailed statement. Mr Rudd and opposition leader Tony Abbott have placed management of the nation’s US$1.5 trillion economy at the centrepiece of their election campaigns as growth slows, unemployment rises and mining investment wanes. Mr Abbott, whose Liberal-National coalition is ahead in opinion polls, has also pledged to open the nation’s remote northern regions to agriculture, while mining billionaire Gina Rinehart has championed a special economic zone in the area. Mr Abbott criticised a lack of detail in the plan and said Labor was only just waking up to the region’s potential
after six years in office. “It is just another thought bubble,” Mr Abbott told reporters. “He doesn’t have a plan to actually grow our economy.” Labor’s proposal will seek to attract foreign investment by streamlining and simplifying regulation and reducing the company tax rate for Northern Territorybased businesses within five years, Mr Rudd said. The prime minister told reporters his personal objective was for a company tax rate one-third lower than the rest of the country. The Ord Irrigation Scheme would be expanded to 43,000 hectares from its current 29,000 hectares. Australia is seeking to increase the area available for farming as rising incomes and population growth in Asia boosts demand for food. That’s prompted companies
Kevin Rudd, Australian Prime Minister
Temasek sells stake in Cheniere as shares jump T emasek Holdings Pte Ltd, Singapore’s state-owned investment firm, sold its stake in Cheniere Energy Inc after shares of the U.S. natural gas importer surged. Temasek sold 9.2 million shares of the Houston-based company directly or through its units in the second quarter, valuing the stake at US$257 million, according to a filing yesterday with the U.S. Securities and Exchange Commission. Shares in the U.S. energy company gained as much as 200 percent by the end of the second quarter after Temasek announced in May 2012 that it would spend about US$468 million on an equity investment in Cheniere together with RRJ Capital. “The shares had a decent run over the past year,” said Enrico Soddu, an analyst at the London-
including Glencore Xstrata Plc and Archer-DanielsMidland Co to target agricultural assets as they seek a foothold in the world’s third-biggest exporter of sugar and wheat. The value of Australia’s farm exports, including crops and livestock, may total A$35.8 billion in the year ending June 30, according to the Australian Bureau of Agricultural and Resource Economics and Sciences. “The idea of a special economic zone for northern Australia has been around for decades and Abbott himself has toyed with it,” said Stephen Stockwell, a political analyst and Griffith University professor of journalism and communications in Brisbane. “The move is trying to send a message that Rudd has a big vision for Australia.”
based Institutional Investor’s Sovereign Wealth Center. “Temasek just seized the opportunity to make a solid profit.” Tan Yong Meng, a Temasek spokesman, confirmed the filing and declined to comment further. Temasek bought 15.5 million shares in Cheniere during the second quarter of 2012 for US$228 million, according to previous SEC filings. The company increased its holdings to 18.3 million shares in the third quarter and halved its position during the first quarter this year. Investments in energy and resources made up 6 percent of the Southeast Asian investment company’s portfolio on March 31, unchanged from the previous year, according to its latest annual report published last month.
Temasek also bought 180,547 shares in Mosaic Co, the second-largest North American potash producer, maintaining its position as its biggest shareholder with a stake of 6.6 percent, according to data compiled by Bloomberg. The investment firm also acquired 867,727 stocks in Monsanto Co, the world’s largest seed company, increasing its holdings to 0.3 percent, according to the data. Temasek, wholly owned by Singapore’s Ministry of Finance, is the 10th-biggest state fund, according to the Sovereign Wealth Fund Institute website. The world’s biggest is Norway’s Government Pension Fund Global, while Singapore’s other investment firm GIC Pte is the eighth-biggest, according to the institute estimates. The share of assets denominated in U.S. dollars in Temasek’s portfolio declined to 6 percent as of March 31 from 7 percent in the previous year, according to last month’s report. Bloomberg News
Companies not playing along with Abenomics
James Saft Reuters columnist
benomics has a critical weakness: Japan’s companies are not playing along and it’s hard to blame them. Japan’s economy, struggling to end decades of deflation and recession, grew at a disappointing 2.6 percent annualised clip in the second quarter, according to figures released on Monday, a full percentage point below forecasts and a marked slowing from the first three months of the year. While the poor showing immediately focused minds on whether the economy could withstand a planned hike in sales tax, the real puzzle lies in the story behind yet another fall in investment by companies. So-called capital expenditure fell by 0.1 percent in the quarter, frustrating predictions of the first gain in almost two years. That’s critical because an unwillingness by Japanese companies to invest and to hire is acting as a circuit breaker on Abenomics, effectively blunting the transmission of monetary and fiscal policy to the real economy. Abenomics, a cocktail of fiscal and economics stimulus poured over a base of reforms, is intended, among other things, to drive down the value of the yen, which in turn should allow newly competitive companies to export more, hire more workers and contribute to a virtuous cycle of investment, consumption and growth. The yen part has worked perfectly, with the currency falling about 20 percent against the dollar in the past year. That has certainly been a boon for Japanese companies, many of which have seen profits double. High profits have not translated into investment and growth however, despite reasonable demand for Japanese products globally. Perhaps even worse, recent surveys of purchasing managers point to a worse outlook for the coming months. “Worryingly, PMI data also showed companies cutting headcount again after two months of job creation, reflecting growing uncertainty about the economic outlook,” according to Chris Williamson, chief economist of Markit, whose combined manufacturing and services barometer fell to 50.7 in July, just above the 50 reading which divides contraction from growth. So why aren’t companies playing their part? Because they don’t have to, for one thing. While the yen means companies could cut prices to expand market share, they have another quite attractive option: simply keep prices competitive on exports but, rather than expand market share, allow profit margins to expand. That is especially attractive given all the uncertainty in Japan’s outlook. The weak yen is by no means permanent and many factors might mean that investments made in Japan now don’t pay off.
Quadrillion debt For one thing, Japan’s quadrillion-yen debt (yes, that’s right, public debt passed 1,000 trillion, or a quadrillion,
yen in June, equal to 200 percent of GDP) might force it to raise sales taxes as planned. That in turn would crimp domestic demand, with about a third of economists forecasting a recession if the sales tax rises from 5 percent to 8 percent next April as proposed. So far, the behaviour, as opposed to the rhetoric, of major Japanese exporters shows a tendency to book profits and play conservatively. Toyota almost doubled its net profits in the second quarter even though it sold fewer cars. And while Nissan bumped U.S. sales of cars by a fifth after it cut prices, Ford, GM and Chrysler all gained market share in their home market so far this year. In other industries profits are improving, as are exports, but it mostly seems to be a demand story rather than a result of the newly weak yen. To be sure, investment is a long process, and Japanese companies are not known for making lightning-fast decisions about significant expansions. It may well still turn out, should the yen remain weak and should the domestic economy seem stable, that Japanese companies in the end do come through with investment, improving the outlook perhaps for 2014 and beyond. Interestingly, the phenomenon of just sitting back and enjoying fat margins without making new investment probably has a different cause in Japan than in other places, like Britain. While when the pound dropped in 2008, British companies “priced to market,” simply allowing fat profits to roll in. That was likely driven in part by compensation practices in Britain, which tie executive pay closely to stock market movements through share options. British CEOs, faced with the option of a gratifying short-term bump in the value of their shares versus a risky long-term investment in more production, usually chose to take the money now. In Japan, executive pay practices are significantly different, making low investment more likely to be the result of risk analysis coloured by the very difficult experience anyone managing a big company in Japan has had these past 20 years. While there are a quadrillion reasons Abenomics may not work, the weight of history only adds to the count.
While there are a quadrillion reasons Abenomics may not work, the weight of history only adds to the count
August 16, 2013 April 19, 2013
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Leading reports from Asia’s best business newspapers
Thanh Nien Daily
Europe’s fake normal
Mohamed A. El-Erian
CEO and co-CIO of PIMCO, and the author of When Markets Collide
Vietnam’s Ministry of Construction has proposed that foreigners residing in the country are given more chances to buy homes in Vietnam as part of efforts to reduce inventories in real estate sector. In a report the ministry proposed that organisations like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies as well as all foreigners who have a visa to the country that is valid for at least three months, are allowed to buy homes – apartments and independent houses – in Vietnam.
banks to embark on a proper mobilisation of prudential capital and shrink balance sheets to less risky levels.
Myanmar Times The Japan International Cooperation Agency (JICA) is deepening its assistance to Myanmar by launching new programmes to alleviate poverty, develop human resources and enhance ties between domestic and Japanese firms, the president of the agency said following the opening of the JapanMyanmar Centre last week. JICA’s Akihiko Tanaka also said that creating a proper investment environment in Myanmar is key to attracting businesses. “Japanese companies are watching very carefully now,” he said. “When Myanmar can offer the right environment, they will come.”
Jakarta Globe Oil and gas industry activities in Indonesia will continue as usual despite the arrest of SKKMigas head Rudi Rubiandini. “Oil and gas activities must not be disrupted,” SKKMigas secretary Gde Pradnyana told reporters. Mr Pradnyana said SKKMigas is working with the Ministry of Energy and Mineral Resources to keep operations running smoothly. The Corruption Eradication Commission arrested Mr Rubiandini on Tuesday night, accusing him of taking US$400,000 in bribes from a private oil company.
Bangkok Post Thailand’s Prime Minister Yingluck Shinawatra said that she wants Democrat Party and opposition leader Abhisit Vejjajiva to take part in the political reform forum so that all parties involved can together find a way out of the crisis afflicting the country. She denied Mr Abhisit’s allegation that her decision to invite highprofile international figures to join the forum was merely intended to create a favourable image. But the prime minister denied that the forum was intended to pave the way for constitutional amendment.
ugust is traditionally Europe’s holiday month, with many government officials taking several weeks off. In the process, important initiatives are put on hold until the “great return” at the beginning of September. This year, there is another reason why Europe has pressed the pause button for August. With a looming election in Germany, few wish to undermine Chancellor Angela Merkel’s likely victory. After all, Germany is central to Europe’s well-being, and Merkel’s steady hand has allowed the continent to overcome a series of challenges over the last few years. As a result, many are eager to postpone any controversial policy decisions rather than rock the German political boat. Some of the recent economic news has seemed to justify this approach. At the end of July, the widely watched indicator of European manufacturing activity crossed the threshold signalling expansion for only the second time in 23 months. Adding to the sense of comforting normality, several European officials have taken to the airwaves with optimistic pronouncements. Whereas the euro and the euro zone were “under threat just nine months ago,” European Council President Herman Van Rompuy recently declared, “this isn’t the case anymore”. All of this has underpinned a much-welcome calm in financial markets. Sovereign interest-rate spreads have been well-behaved, the euro has strengthened, and equity markets have risen robustly. Yet no one should be fooled. This summer’s sense of normality is neither natural nor necessarily tenable in the long term. It is the result of temporary and – if Europe is not attentive – potentially
reversible factors. If officials do not return quickly to addressing economic challenges in a more comprehensive manner, the current calm may give way to renewed turmoil.
Bailout fatigue The task for Europe is not just a matter of restarting and completing the economic and political initiatives, whether regional or domestic, that have been put on hold until after the German election. In fact, these top-down decisions, while admittedly complex and certainly consequential, may be the least of Europe’s challenges. Europe must also counter and reverse micro-level challenges that are becoming more deeply embedded in its economic and financial structure. Each day that passes complicates the design and implementation of lasting solutions to four
Despite hopeful blips in an economic indicator here and there, too many countries lack both immediate growth and longer-term growth engines
problems in particular. First, joblessness continues to spread. The overall unemployment rate (12 percent) has yet to peak, led by an alarming lack of jobs among the young (24 percent joblessness in the euro zone as a whole, with highs of 59 percent and 56 percent in Greece and Spain, respectively). Second, adjustment fatigue is widespread and becoming more acute. Long-struggling European citizens – especially the long-term unemployed – have yet to gain any sustained benefit from the austerity measures to which they have been subjected. And the result is not just general disappointment and worrisome social unrest. In the last few weeks, political stability in Greece and Portugal has been threatened as governments struggle with declining credibility and a rising popular backlash. Third, bailout fatigue is apparent. Citizens in the stronger European economies are increasingly unwilling to provide financial support to their struggling neighbours; and their elected representatives will find it hard to ignore growing resentment of repeated diversion of national tax revenues, which has yielded only disappointing outcomes. Meanwhile, high levels of past exposure and weakening creditor coordination are undermining the availability of external funding, including from the International Monetary Fund. Finally, little oxygen is flowing to the private sector. While Europe has succeeded in stabilising its sovereignbond markets, financial intermediation for small and medium-size enterprises remains highly disrupted. With most credit pipelines already partly blocked, the shortage of corporate credit will become more severe as regulators finally force
All of this adds up to a sad reality for Europe. Despite hopeful blips in an economic indicator here and there, too many countries lack both immediate growth and longer-term growth engines. As a result, debt overhangs will remain problematic. Owners of private capital that could be allocated to productive investment will remain hesitant. And societies will continue to lack the jobs and capital investment that are essential for durable prosperity and general well-being. Europe’s external environment is not helping, either. On the demand side, the ongoing economic slowdown in China is starting to affect companies’ orders and revenues, adding to the challenges stemming from the persistently sluggish U.S. economy. Meanwhile, the euro’s recent appreciation (particularly against the Japanese yen) limits Europe’s ability to compensate for anaemic global demand by capturing greater market share. These developments point to a much larger phenomenon: because of delayed awareness of the complex challenges (and the related slow and partial policy responses) facing much of the West, the low-equilibrium growth pattern that has prevailed in recent years (what has been called the “new normal”) is becoming less stable. And Europe is a leading indicator of this. In essence, Europe (and the West more generally) owes its recent tranquillity to a series of experimental measures by central banks to offset the troubling combination of too little demand to generate sufficient job creation, inadequate structural reforms to revamp growth engines, debt overhangs that undermine productive investment, and insufficient policy coordination. Consequently, the resulting surface calm masks stillworrisome economic and financial fundamentals. Let us hope that European policymakers return well rested from their August break. They will need all the energy and dedication they can muster to pivot quickly from Europe’s forced normality to a more durable strategy for recovery, or at least to stop drivers of renewed prosperity from slipping farther away before they can be harnessed. © Project Syndicate
August 16, 2013
Closing European auto market improving
Cisco announces 4,000 job cuts
The European car market is showing the first signs of improvement as a recession ends in the 17 countries using the euro, industry executives said. GDP in the euro area rose 0.3 percent in the three months through June. Car sales in July rose in Germany, France, the U.K. and Spain, and the decline in Italy was the least this year. Ford Motor Co’s deliveries last month in its 19 main European markets increased 8.7 percent from a year earlier to 90,000 cars, the company said yesterday. “It’s a bit early to say that we’re now on a way up. Certainly the outlook has improved,” Roelant de Waard, head of sales for the Ford of Europe division, said.
Network equipment maker Cisco Systems Inc is cutting 4,000 jobs, or 5 percent of its workforce, as it makes a fresh attempt to reduce costs and refocus on growth areas in the face of uncertain demand for its networking equipment. The news came after it reported net income of US$2.3 billion in the fourth quarter, up from $1.9bn a year earlier. It forecast 3 to 5 percent revenue growth this quarter. “The environment in terms of our business is improving slightly but nowhere near the pace that we want,” said chief executive John Chambers on a conference call following quarterly earnings. “We have to very quickly reallocate the resources.”
Regulator warns Crown of Philippines risk Authorities in casino op’s home state of Victoria voice concerns over Manila casino investment Michael Grimes
ne of Australia’s state gaming regulators has warned Macau casino joint venture partner Crown Ltd of risks associated with investing in the Philippines. Australian Securities Exchangelisted Crown, chaired by James Packer, is a backer of the US$1 billion Belle Grande Manila Bay project in that country. Crown’s interest comes via its tie up with Melco International Development Ltd, headed by Lawrence Ho Yau Lung. The two firms manage casino investments in Macau and The Philippines via Melco Crown Entertainment Ltd. Crown is also independently pursuing a casino hotel scheme in Sri Lanka. The warning on public governance risks in the Philippines and Sri Lanka comes in the recently published fiveyear review of the Crown Melbourne casino operation and licence by the Victorian Commission for Gambling and Liquor Regulation. “While no specific recommendations have been made, the VCGLR remains cautious about Crown Limited’s expansion into countries with public sector governance challenges and will
be monitoring current and future investments closely, including Melco Crown’s investment in the Philippines, and any possible Crown Group investment in Sri Lanka,” said the latest review. The commission adds it has found no evidence of impropriety, either with
the Philippines operation, the local partner Henry Sy and his companies or with Crown’s external auditor. But the body adds with reference to Crown’s external audit: “…the proportion of non-audit fees are particularly high and the VCGLR has recommended that Crown
Indonesia holds rate to support growth But central bank introduces changes to trim loan growth
ndonesia’s central bank held its benchmark interest rate yesterday and took steps to contain loan expansion to battle inflation without further slowing the pace of economic growth. Bank Indonesia also kept the overnight deposit facility rate, known as FASBI, at 4.75 percent. While leaving its policy rate at 6.5 percent, BI announced several measures aimed at trimming loan growth. It cut the ceiling on the loanto-deposit ratios of commercial banks to 92 percent from 100 percent.
BI also said it plans to increase the secondary minimum reserve requirement for rupiah deposits to 4 percent, from 2.5 percent at present. The loan-to-deposit ratio is being changed “due to high loan growth and to strengthen loan disbursement,” BI spokesman Peter Jacobs said. The reserve change is for “strengthening the ability to counter risk as well as strengthening financial stability,” he added. The central bank wants to rein in inflation – running at an annual rate of 8.61 percent in July, the fastest pace
since early 2009 – without cutting Indonesia’s growth rate too much. Economic growth is slipping, partly because exports have been weak and domestic demand is slackening. President Susilo Bambang Yudhoyono today will present the government’s 2014 budget, which Finance Minister Chatib Basri told Reuters will emphasise raising domestic demand. But increasing domestic demand can also push up inflation, which is the central bank’s top target. Many analysts think BI will later
Limited periodically perform a comprehensive assessment of the independence of its external auditor.”
Global ranking The commission notes that the Philippines ranked 105th in Transparency International’s Corruption Perceptions Index 2012. “By contrast, Australia ranked 7th,” stated the regulator. The commission adds that risks posed by having gaming operations in the Philippines include potential non-compliance with Australian and international laws against money laundering and bribery. The body adds: “It [Crown] does not currently have a specific framework for assessing public sector governance risks. The VCGLR considers it would be better practice if it did so.” An industry source told Business Daily that Victoria doesn’t presently have the sort of long arm regulatory powers wielded by the U.S. state of Nevada over its casino licensees when they seek to expand into foreign markets. “I suspect Victoria may further amend its gaming law. Currently under the amended Casino Control Act 1991 it can only regulate an ‘associate’ of a licensee, rather than holding a licensee accountable for public governance in another jurisdiction, in the way that Nevada can,” the person told us. Business Daily approached Crown Ltd for a comment on the commission’s appraisal of risks in the Philippines, but no response was available by press time. Crown did however tell the regulator it had recently started to implement a centralised, formal anti-bribery and anti-corruption compliance process.
this year raise the benchmark rate. Seven out of 11 economists polled by Reuters had expected it to hold the policy rate yesterday, while three predicted a 25 basis point rise and one a 50 bps hike. Yesterday’s meeting took place on the same day the rupiah slipped to its lowest level since June 2009 as it was weaker than 10,345 to the dollar. The fall came in the wake of Bank Indonesia’s announcement late Wednesday that foreign reserves fell sharply again in July. In June, BI became the first Asian central bank to raise interest rates since 2011. At meetings in June and July, it hiked the benchmark rate and the overnight deposit facility rate, known as FASBI, by a total of 75 basis points, on concern over high inflation and the depreciating rupiah. Reuters