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Year I Number 240 MOP 6.00 Friday March 15, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã www.macaubusinessdaily.com

HK firm to get reclaimed land in Galaxy Macau swap

Well paid Least happy

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Off-season discounts boost hotel competition

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I SSN 2226-8294

Brought to you by

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aming sector employees – of all the city’s workers polled in a recent survey – are the least committed to their jobs. That’s despite their higher-than-local-average salaries – currently nearly 16,000 patacas (US$2,000) monthly for a card dealer. A survey by the Institute for Tourism Studies’ Research Centre suggests gaming industry workers see themselves as under-paid and with few benefits. Choi Kam Fu, deputy director-general of the Ma-

cau Gaming Enterprises Staff’s Association, says he isn’t surprised. “Many workers complain the mechanism for promotion is not transparent enough and they do not see a future for their jobs,” he told Business Daily. In 2002, before liberalisation of the gaming industry, average monthly wages in manufacturing were under 4,000 patacas show government data. Average dealer wages were only measured from 2007 onwards. More on page 3

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HANG SENG INDEX 22625

22574

Young entrepreneurs to get free loans

Xi Jinping confirmed as head of state China’s parliament formally elected Xi Jinping as the country’s new president yesterday, completing the second orderly political succession since the Communist Party took power in 1949. The National People’s Congress chose Mr Xi in a ceremony at the Great Hall of the People in central Beijing. Mr Xi was appointed party and military chief – the key levers of state power – in November. The 59-year-old was also elected head of the Central Military Commission, the parallel government post to the party’s top military position – which he already holds – ensuring that he heads the party, state and armed forces. Page 8 & 9

The government is to launch an interest free loan scheme in the second quarter this year for young residents aged 21 to 35 wanting to start their own company, Business Daily has learned. It’s part of the government’s drivetohelpdiversifythelocal economy beyond tourism and gaming – something considered a priority by the central government. Fernando Chui Sai On, the Chief Executive, mentioned a plan for easy loans for youthful entrepreneurs and better support for domestic industries in his annual policy address in November.

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Hikes in shipping charges from April A group of shipping companies will start charging 10 to 15 percent more next month for handling goods sent by sea – due to rising operational costs. The Association of Macau Shipping Industry told Business Daily: “The shipping charges were relatively low in the past few years and we have not adjusted the prices for some years now.”A Macau shipping company spends an average of 100,000 patacas (US$12,500) pre month in diesel fuel, which “accounts for about 20 percent of the operating costs,” added a spokesman.

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22523

22472

22421

22370

March 14

HSI - MOVERS Name

%Day

KUNLUN ENERGY CO

2.26

HANG SENG BK

1.95

HONG KG CHINA GS

1.82

BOC HONG KONG HO

1.69

CHINA RES POWER

1.47

COSCO PAC LTD

-1.72

HANG LUNG PROPER

-1.98

WANT WANT CHINA

-2.09

SUN HUNG KAI PRO

-3.32

HENDERSON LAND D

-3.32

Source: Bloomberg


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business daily March 15, 2013

macau Ho Iat Seng re-elected for NPC Standing Committee Ho Iat Seng, the incumbent vice-chairman of Macau’s Legislative Assembly, was re-elected as member of the National People’s Congress (NPC) Standing Committee yesterday. Mr Ho, from a prominent industrialist family, is now in his fourth consecutive term. The outgoing director of Beijing’s China Liaison Office here, Bai Zhijian, was also elected as a standing committee member. The standing committee will be led by Politburo Standing Committee member Zhang Dejiang, who is tipped to be the Central Government’s top adviser for Hong Kong and Macau affairs.

Interest-free loans for young entrepreneurs by 2nd quarter Part of government efforts to diversify local economy beyond gaming and tourism Michael Grimes

michael.grimes@macaubusinessdaily.com

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he government is to launch an interest free loan scheme in the second quarter this year for young residents aged 21 to 35 wanting to start their own company, Business Daily has learned. It’s part of the government’s drive to help diversify the local economy beyond tourism and gaming – something considered a priority by the central government. Fernando Chui Sai On the Chief Executive, mentioned a plan for easy loans for youthful entrepreneurs and better support for domestic industries in his annual policy address in November. The Economic Services Bureau said in an e-mailed statement to the newspaper in response to our inquiry on the policy’s progress: “In order to enhance the diversity and competitiveness of Macau’s economy as well as promoting youth entrepreneurship, the government will set up an interest-free loan

petition

scheme under the Commercial Development Fund (Fundo de Desenvolvimento Industrial e de Comercialização) to provide financial assistance to local young people who want to start their own business but lack resources.” It added the proposed upper limit of loans is 300,000 patacas (US$37,500) and the maximum loan period would be eight years. The bureau stated it was working with relevant government departments on drafting the administrative regulation needed to implement the scheme. The regulation “will stipulate clearly the application requirements , the mechanism of granting loans as well as the after approval control measures,” added the e-mailed statement. “The loan scheme is proposed to open to young business starters in Macau between the ages of 21 and 35 years old. The Macao SAR government will announce further details concerning the regulation when it is passed by the Executive Council (Conselho Executivo). It is expected that the loan scheme will be opened for application[s] in the second quarter of this year,” added the statement. Henry Brockman chairman of the British Business Association of Macao, told Business Daily a fund for young entrepreneurs would be “a great opportunity to take a bet

on some good ideas in the form of inventions and innovations from people coming out of the universities and the SME sector”. The private sector has already been providing some assistance for young businesspeople. The Youth Entrepreneurship Fund of Inspirational Youth Association, runs a competition inviting young people to submit business ideas. The best are offered prizes disbursed via a 30 million-pataca fund set up with donations from Macau companies.

Beijing message The central government appear to send a strong signal during the National People’s Congress in Beijing last week that it wanted Macau to step up the pace of diversification. Chinese vice premier Zhang Dejiang – tipped as the next head of the Hong Kong and Macao Affairs Office

MOP 300,000

upper limit for interest-free loans

Street name for architect Manuel Vicente The Portuguese-language newspaper Jornal Tribuna de Macau has launched a public petition calling on the Civic and Municipal Affairs Bureau to name one of the city’s streets at Manuel Vicente, a Portuguese architect who has left extensive works in the territory. Mr Vicente was involved in the reclamation plan that created the Nam Van and Sai Van lakes, the World Trade Centre building, the Fire Services’ station in Areia Preta, as well as public housing projects in Fai Chi Kei and near the Gongbei border. After working for about 30 years in Macau, the architect returned to Portugal, where he was vice-president of the Architects’ Association between 2002 and 2007. Mr Vicente passed away on March 9 at the age of 78. This petition, which can be found at www. peticaopublica.com/?pi=JTM , has the support of Business Daily and its sister publication Macau Business magazine. Young guns – govt to offer interest-free loans for business start-ups

of the State Council – was reported after a meeting with Macau deputies to the NPC, China’s parliament last week, saying more effort was required on economic diversification. Mr Zhang is a former governor of neighbouring Guangdong province, and knows Macau and its economy at first hand. Macau currently depends on the casino industry for many jobs and most of its public income. One in five employed in the city works directly in a casino and many others in related services according to the Statistics and Census Service. Last year 83 percent of the 129.50 billion patacas in government revenue came from the 35 percent tax imposed on gambling. A step toward diversification came last year when the government raised the casino entry and working age to 21 in part as an incentive toward young people continuing in education. The new campus for the University of Macau on Hengqin Island due to have a first phase opening in September, will eventually have space for 15,000 students. Past experience suggests economic diversification would help to spread economic risk. When the Sars health emergency – severe acute respiratory syndrome – hit Hong Kong and southern China in late 2002, arrivals to Macau by ferry dipped by more than 40 percent in the first half of 2003, when compared to the final quarter of 2002.


March 15, 2013 business daily | 3

MACAU

Gaming workers least committed And tourism industry employees are the most dissatisfied with their jobs Tony Lai

tony.lai@macaubusinessdaily.com

Having less job satisfaction than other workers, tourism industry employees are more likely to move on

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mployees of the gaming industry are the least committed to their employers, even though their pay is higher than the average, new research has found. The results of a survey by the Institute for Tourism Studies research centre show that on a scale of one to five, gaming industry employees scored only 2.63 for commitment to the organisation they work for. A score of five would indicate the greatest commitment. The score of gaming industry employees was the lowest among workers in 16 sorts of occupation. The researchers surveyed 525 workers in the second half of last year. It was the first such survey here, so no previous data are available for comparison. The deputy director-general of the Macau Gaming Enterprises Staff’s Association, Choi Kam Fu, believes the low score of gaming industry employees is due to several factors. These include “the working environment, the shifts and unclear prospects of a future career”, Mr Choi told Business Daily. “Many workers complain that the mechanism for promotion is not transparent enough, and they do not see a future in their jobs,” he said. “Some workers with a belowaverage performance can get promoted for no apparent reason.” Mr Choi said “messy shift schedules” – the industry had more than 30 different sorts of timetable – made it more difficult for staff to adjust.

Tourist fatigue The survey shows gaming industry workers think they are underpaid and have few benefits. They scored 3.16 on a scale of one to five for fair compensation, below the average score of 3.35. “Even though we may have salaries higher than the average, our benefits – like annual leave – are just similar to what others get, as mandated by the labour law,” Mr Choi said. The law says an employee must be given at least six working days of annual leave. Official data show the average

monthly earnings of employees in the gaming industry in general were 18,040 patacas (US$2,255) in December, and that the average monthly earnings of croupiers in particular were nearly 16,000 patacas. Median monthly pay in all occupations was 12,000 patacas. Employees of businesses that depend on visitors – such as shops, hotels, restaurants and event organisers – were the least satisfied with their jobs. They scored 3.48 on a scale of one to five for job satisfaction. Workers in finance, property and construction scored 3.65 for job satisfaction. The survey report says these scores show “moderate satisfaction”. The president of the Macau Hotel Employees Association, Lei Pou Loi, said employees in the front line of the tourism industry were put under “high working pressure” by their employers and customers alike.

Erring customers “There is no low season for tourists right now, and employers want the workers to work continuously to receive customers,” Mr Lei told Business Daily. “Sometimes it is not easy for us to even go to the washroom when we are on shift,” he said. He said some customers easily lost their tempers when talking to staff. However, the survey found that tourism industry employees had a lower score for stress, 2.64 on a scale of one to five, than workers in other industries, who scored 2.78 points. Having less job satisfaction than other workers, tourism industry employees are more likely to leave. Tourism industry employees scored 3.11 on a scale of one to five for intent to stay in their jobs, while workers in other industries scored 3.28. The Macau Gaming Enterprises Staff’s Association and the Macau Hotel Employees Association both called for employers to be more considerate. “Employers should better protect employees in the event of unreasonable requests from customers, who are not always right,” said Mr Choi. “Front-line workers should receive more training,” said Mr Lei.

“I think there is not enough right now, so some staff may not be ready psychologically to handle guests.” The survey report says bosses

should be “open and transparent” about how they manage, and that they should make wages and benefits reflect rising standards of living.


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business daily March 15, 2013

macau Brought to you by

HOSPITALITY So near, so far Macau’s reliance on visitors from mainland China, Hong Kong and Taiwan means the ups and downs in the numbers of visitors from other places make little difference to the totals. Together, the nine main sources of visitors in Asia outside Greater China sent us slightly over 2.2 million visitors last year, fewer than the number the mainland sent us in any given two months. Japan and South Korea are the main sources of visitors in Asia outside Greater China, but together have never sent us as many as 500,000 in any one year. The number of visitors from the nine main sources has not changed much since 2008, growing by just 48,500 or 2.2 percent. Last year the number dropped by almost 30,000.

The numbers of visitors from most of the nine main sources in Asia outside Greater China have increased since 2008, but not by much. The increase in the number of South Korean visitors, 59 percent, was the greatest. The flow of visitors from India is curious. The number of Indian visitors more than doubled from 2008 to 2011, but dropped by 18.8 percent last year. The flow of visitors from Singapore is similar. The number of Singaporean visitors fell by over 26 percent last year. The number of Japanese visitors seems to have reached a peak in 2001 and to have decreased since then by about 5 percent. The drop in the number of Malaysian visitors was the greatest. Malaysia was the biggest source of visitors in Asia outside Greater China in 2008, when it sent us almost 430,000, but was only the third- biggest last year, when it sent us 30 percent fewer than that number.

Freight rates to rise next month The cost of bringing in imports from Hong Kong by sea will jump by 10 percent to 15 percent Tony Lai

tony.lai@macaubusinessdaily.com

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he freight rates of a group of Macau shipping companies will rise by 10 percent to 15 percent next month because, they say, their operating costs have increased. “The freight rates have been relatively low for the past few years and we have not adjusted them for some years now,” the chairman of the board of supervisors of the Association of Macau Shipping Industry, Tou Man Kan, told Business Daily. “So we decided to increase them by between 10 and 15 percent, depending on each company, to catch up with the surges in inflation and operating costs,” Mr Tou said. The annual rate of inflation was 5.96 percent in January, having been above 4.7 percent for the preceding two years. Mr Tou said the surge in operating costs was due to increases in the price of fuel, in port fees and in wages. He said a Macau shipping company spent, on average, 100,000

MOP 100,000

Average monthly diesel bill of a Macau shipping company

patacas (US$12,500) per month on diesel, which accounted for about 20 percent of its operating costs. There had been “significant raises” in fuel costs in the past few years, he said, without giving figures. According to the New York Mercantile Exchange, the international price of crude oil was US$91.95 (735.60 patacas) on March 8, 12.8 percent more than three years before. The Association of Macau Shipping Industry’s assertions are similar to those of others in the shipping industry.

On the bandwagon The government said last month that the main operators of passenger ferries serving Macau – TurboJET and Cotai Jet – had applied to increase their fares by an average of 13 percent. Both operators said higher fuel prices, inflation and the introduction of a minimum wage in Hong Kong, where most of their services go, meant they had to increase their fares. Mr Tou said his association had 10 members, most of which carried cargo between Macau and Hong Kong. “There have been business opportunities in the industry in the past few years but our freight rates are too low,” he said. “Can you believe the unit price of a container of canned products is only a few patacas?” Mr Tou said the members of his association relied on importing goods from Hong Kong, usually food and

J.I.D.

16 %

Increase in number of Indonesian visitors since 2008 Most Macau shipping companies bring in imports from Hong Kong

other necessities. He said two-thirds of these imports were consumed in Macau and the rest were re-exported, most by land to mainland China. “We used to count on exports in the past, when manufacturing industry here was still strong, but now we deal with only a few exports by sea,” he said. Hong Kong is the third-biggest source of Macau’s imports, sending us 11.6 percent of the goods we bought abroad, or 8.2 billion patacas-worth, last year. Many of Macau’s imports from elsewhere are transhipped in Hong Kong. Hong Kong is also the main immediate destination of Macau’s exports, taking over half of the goods the city sold abroad, or 4.1 billion patacas-worth, last year.

Can you believe the unit price of a container of canned products is only a few patacas? Tou Man Kan, Association of Macau Shipping Industry chairman


March 15, 2013 business daily | 5

MACAU

Long-distance call cut may cost CTM 98mln Slow broadband internet access is not solely a problem of CTM’s service, executive says Tony Lai

tony.lai@macaubusinessdaily.com

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he city’s sole fixed-line service provider and major mobile service provider announced an average reduction of 25 percent on charges for long distance calls. Ebel Cham Pou I, Companhia de Telecomunicações de Macau’s (CTM) vice president for the consumer market, said the company estimates a decline of 20 percent in its long-distance calling revenue. She said during a press conference yesterday that the revenue from long-distance calls accounts for about 10 percent of CTM’s operating turnover. With a turnover of about 4.9 billion patacas (US$612.5 million) recorded last year, according to the annual report of Citic Telecom International Holdings Ltd, such reduction may cost CTM about 98.4 million patacas, based on Business Daily’s calculations. Citic Telecom currently holds

CTM reduced its long-distance call rates to Hong Kong by 10 percent

20 percent of CTM’s shares but its stake is set to increase to 99 percent after an operation to buy out two shareholders is completed

later this year. “But we also estimate there will be more demand [for IDD usage] on the overall market so that’s why we

Time to grillax Dining in local homes offers menu innovation and a break from the hustle and bustle Alexandra Lages

alexandra@macaubusiness.com

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rivate dining – in effect eating in someone’s home or private premises – has been a feature of the Macau nightlife scene for at least eight years. But it’s now getting more publicity and attention. That’s possibly because Macau is starting to catch up with Hong Kong when it comes to soaring commercial rents and the pressure it puts on restaurant owners to ‘play safe’ with menus that appeal to the lowest common denominator and pack people in. It seems there’s a growing number of Macau diners hungry for an eatery experience driven by ingredients and ambience rather than just the owner’s balance sheet. Some private kitchens have their own Facebook pages, but advertising is mostly by word of mouth. Victor’s Kitchen is one of the oldest and most popular private kitchens in Macau. It is tucked away in a shop owned by Victor Lo. It has a single round table for diners next to the kitchen. “People ask me: ‘How come just one table? You are a businessman, so you would like to have more tables, right?’ But, after coming here, if they find this is interesting, they bring their friends next time. That is why business is increasing,” Mr Lo told our sister publication Macau Business magazine.

Some private kitchens have been reviewed in glossy magazines covering the hospitality industry, driving more tourists to them. Owners say business is increasing by between 15 percent and 50 percent a year. There is a month-long wait for a table at some kitchens. That’s probably, says Victor Lo, because the

private dining rooms offer a whole experience, not just a refuelling stop. “If you drink wine, you have got to spend at least two hours. If you sit in a restaurant two to three hours drinking and not ordering too much food, the owner may not be happy because he needs customers to come and go as

A different mood – Victor Lo of Victor’s Kitchen (Photo: Naty Tôrres)

need to see the market’s response,” Ms Cham quickly added. The tariff cut, which came into force yesterday, can be applied to users making calls to 89 jurisdictions, with reductions of up to 49 percent for countries like Pakistan and Turkey. But the reduction rate was only of 10 percent to 0.89 patacas a minute for more popular destinations like Hong Kong, the United Kingdom and the United States. The vice president explained this was due to the higher costs for services in those regions. Ms Cham also said her company was not the only one to blame for the slowness broadband internet connection here. “The customers’ comments or complaints [over the internet speed] involve many types of issues … but on the customers’ side they only think CTM has issues,” she said. Outdated equipment used by customers and browsing websites with servers based outside of Macau might slow down the internet access, she explained. The executive also linked the issue to changes in the habits of internet users, which now commonly download movies from websites, thus jamming the network. When asked what measures the operator would take to ensure that the three telecommunication blackouts reported last year do not happen again, Ms Cham reiterated an investment plan worth 1.2 billion patacas is in place to upgrade CTM’s hardware. But she provided no further details on the three-year plan that was first unveiled last year.

quickly as possible,” he explains. Mr Lo opened Victor’s Kitchen in 2004. He had run his own delicatessen and wine shop for more than 10 years beforehand and wanted to cook for friends and customers. Private kitchens in Macau typically have up to three tables and can seat, at most, two parties of diners a night. Their capacities vary; the biggest can seat 30 guests at a sitting. The price per head for a meal with multiple courses ranges typically from 250 patacas (US$31.25) to 1,000 patacas or more, including wine. For the full story on private dining in Macau read the latest edition of Macau Business magazine on sale now. With M.G.

The family of Manuel C. M. Vicente hereby informs all relatives and friends that he has deceased in Lisbon on March 9 at the age of 78. On Saturday March 16 at 6pm there will be a religious ceremony and mass held in his memory at Macau’s Sé Cathedral. The family would appreciate the presence of all friends and acquaintances.


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business daily March 15, 2013

macau

HK developer to get reclaimed land in Galaxy Macau swap

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Job drivers The international financial crisis affected Macau’s labour force, which contracted until the middle of 2009. The two most dynamic industries here – gaming, and hotels and restaurants – adapted to the circumstances differently. In the gaming industry, the contraction of the workforce was strong, the number of workers dropping by more than 10 percent in just 18 months. The gaming industry now employs 11.5 percent more people than at the beginning of 2008. It seems to have been consolidating its share of the labour force. Since the fourth quarter of 2011 its share has been above 18 percent in every quarter. Employment data for the fourth quarter of 2012 suggest the number of people the gaming industry employs is stabilising around 80,000. This stabilisation appears to end a period of recovery which began in the second half of 2009.

Kerry Properties expecting new plot in return for giving up land Vítor Quintã

vitorquinta@macaubusinessdaily.com

Kerry has a luxury apartment project planned for a site near Nam Van Lake

H The hotel and restaurant industry showed greater resistance to the urge to ditch employees during the international financial crisis. In 2008 hotels and restaurants employed even more people than they did before, and in 2009 the number of people they employed was virtually stable. The industry now employs over one-third more people than in early 2008. Hotels and restaurants accounted for 31 percent of the increase in employment between 2008 and 2012. Two other businesses strongly linked with structural changes in the economy are commerce and property. The number of people working in commerce increased by 21.7 percent between 2008 and 2012, and number of people working in property increased by 10.8 percent. Gaming, hotels and restaurants, commerce and property together accounted for over 80 percent of the jobs created in that period. J.I.D. The content of this column is the work of Business Daily’s journalists.

11.5 %

Increase in labour force since 2008

ong Kong developer Kerry Properties Ltd is set to get a plot in one of Macau’s five new reclaimed areas in return for giving up part of the land granted for the Galaxy Macau resort. In September 2009 the company’s subsidiary here, Kerry Construções (Macau) Ltda, returned to the government an undeveloped parcel with some 28,900 square metres in Cotai. The following month the government pledged to grant the developer another piece of land with a value of at least 69.8 million patacas (US$8.7 million), the money Kerry did paid for the Cotai plot. That 2009 notice published on the Official Gazette said the location and size of the plot still had to be identified and agreed upon between the two sides. The exchange procedure is still “under discussion,” Kerry said yesterday. But the firm expects the new site “to be within one of Macau’s new land reclamation projects”. “The precise location [is] to be decided upon the finalisation of the New City Master Plan by the Macau SAR Government,” the developer told the Hong Kong Stock Exchange. The five reclamation projects will have 3.5 square kilometres and will be included in Macau’s first-ever urban master plan, which should

take two years to complete, the government said in December. But the authorities are still waiting for the Legislative Assembly to approve the city’s urban planning law before starting the procedures. Kerry received the Cotai plot in 1996 for the construction of an exhibitions and conventions centre, while agreeing to pay a total land premium of nearly 280 million patacas. The concession allowed Kerry to build a development with almost 2 million square feet (185,800 square metres) in floor area, the company revealed in a statement.

Nam Van planning When the government launched negotiations to get back the plot in 2002 the land remained undeveloped but Kerry was not penalised for the delay, Legislative Assembly member Au Kam San stressed in 2009. To do otherwise could have delayed the land approval to Galaxy Entertainment Group Ltd, Secretary for Transport and Public Works Lau Si Io replied at the time. Any further delay could have forced the gaming operator to sue the government, Mr Lau added. The official land grant contract with Galaxy Entertainment took almost seven years to be gazetted, even though the company applied

for the plot in 2002. Kerry also has a luxury apartment project with a gross floor area of 400,000 square feet (37,160 square metres) for a site near Nam Van Lake. “Development planning is currently underway,” the developer said. There are several other projects planned for the same area, all of which have been frozen by the government until the approval of a master zoning guideline for the lake area. In August Hong Kong company China Star Entertainment Ltd decided to drop out of a deal to develop a lakeside plot. “It did not appear that the master zoning guideline for the Macau land would be issued anytime soon,” the owner of Lan Kwai Fong hotelcasino said. On the other hand, conglomerate Shun Tak Holdings Ltd could “soon” get government approval for its Harbour Mile scheme, also on a lakeside plot, Credit Suisse Group AG said last week. Hong Kong-listed Shun Tak said last month it planned to issue up to US$1 billion in U.S. dollar denominated bonds. At the time it said it wanted the money for “general corporate purpose”. Last week Credit Suisse said the bond exercise could be a sign Harbour Mile was moving nearer to getting its build plan approved.

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March 15, 2013 business daily | 7

MACAU

Off-season discounts boost hotel competition In off-peak season, Cotai hotels’ price-cutting poses increased challenge, operators say Stephanie Lai

sw.lai@macaubusinessdaily.com

M

acau budget hotels and four-star hotels are facing a tougher Easter this year, operators told Business Daily, in face of the challenge from the discount packages offered by the Cotai high-end hotels. Ole London Hotel, a budget hotel located in the Inner Harbour district, says the hotel’s advance booking for the upcoming three-day Easter period starting March 29 is “much weaker than last year”. “Actually, these two years in general the business has gotten less prosperous as we feel the purchasing power of mainland Chinese has weakened,” said Ole London Hotel assistant general manager Bill Poon Zhe. “Last year the advance booking for Easter could still reach 80 percent of our total number of rooms,” Mr Poon said. “But in this year’s Easter the advance reserves have so far hit just

Cotai hotels are offering room rates cuts for the Easter period

less than half of our total number of rooms,” he added. For the budget hotels that are charging a room rate of 900 to 1,000 patacas (US$125) during the off-peak season, the discount room rates offered by the Cotai hotels have stood as strong competition.

“With the discount packages, now the big hotels in Cotai are following a trend of adjusting down their room rates, for which we feel a particularly strong pressure this year,” said Mr Poon. After reaching almost 2,000 patacas during the Chinese New Year,

Ole London’s average room rate has plunged back to 500 to 600 patacas in recent days, he added.

Tour optimism The Macau Hoteliers and Innkeepers Association, whose members are mainly three- and fourstar hotels targeted at package tours, said they are not so pessimistic over the upcoming Easter period. “Last year our occupancy rate for the Easter period was still up to 80 to 90 percent, and for this year I think the rate will pretty much remain unchanged,” said Kenny Cheung Kin Chung, secretary-general of the association. The main sources of tourists coming to Macau during the Easter period are Hong Kong and Southeast Asia, Mr Cheung added. “Though in recent years we have also increasingly noticed tourists from the mainland visiting Macau during the Easter days, whose aim is mainly to experience the festive mood,” he explained. With more rooms provided on the Cotai strip and the discount strategy, the association’s secretarygeneral admits that the competition can be felt. “But I do not think the impact from the competition is a direct one,” said Mr Cheung. “The discount packages are strictly targeted at visitors that got advance planning, so the business travellers from the Pearl River Delta, whose trip is more impromptu in nature, may still lie outside the packages’ appeal,” he added.

Special Olympics

Is not about disabilities. It’s about celebrating abilities

April 22nd-27th 2013

Package tour growth immune to visitor decline D espite the overall year-on-year decline in visitors’ arrivals to Macau for nine months in a row, the number of tourists in package tours still soared by 18.3 percent to over 757,000 in January. Such year-on-year growth was mainly spurred by a surge in package tours from mainland China, which rose by 31.7 percent to over 562,700 travellers, official data published yesterday shows. This increase was significant as the total number of mainland tourists dropped by 1.4 percent the same month to about 1.47 million visitors. But any year-on-year comparison is skewed by the Lunar New Year holidays – one of the peak travel seasons for mainlanders – falling this

year in February, having fallen last year in January. The package-tour visitors accounted for almost one third (32.7 percent) of all the tourists in January. But the package tours improvement did not apply to Macau’s second biggest tourist source, Hong Kong. The number of visitors from the neighbouring city plunged by over 20 percent to merely 30,000. Data also show the number of rooms provided in the city’s 100 hotels and guesthouses went up by 16.5 percent year-on-year to over 26,000 rooms in January. The occupancy rate was up by 3.8 percent to 82.9 percent. T.L.


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business daily March 15, 2013

GREATER CHINA

Xi Jinping completes rise to the top Tightly scripted ceremony confirms China’s peaceful leadership transition

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hina’s parliament formally elected heir-in-waiting Xi Jinping as the country’s new president yesterday, completing the country’s second orderly political succession since the Communist Party took power in 1949. The largely rubber-stamp National People’s Congress chose Mr Xi in a tightly scripted ceremony at the Great Hall of the People in central Beijing, putting the final seal of approval on a generational transition of power. Mr Xi was appointed party and military chief – where real power lies – in November. The 59-year-old was also

elected head of the Central Military Commission, the parallel government post to the party’s top military position which he already holds, ensuring that he has full power over the party, state and armed forces. There was virtually no opposition among the carefully selected legislators to Mr Xi becoming president. Mr Xi drew just one no vote and three abstentions from the almost 3,000 delegates. Mr Xi bowed deeply and shook hands with his predecessor Hu Jintao upon the announcement of the result, carried live on state television. Mr Xi and Mr Hu exchanged a few inaudible words. Having all the formal positions gives Mr Xi a leadership mandate in a system where retired leaders still hold sway, said Kerry Brown, a former British diplomat in Beijing. “The party secretary is the bones, this is the covering of flesh,” said Mr Brown, now a professor at the

University of Sydney. “Granting Xi the full suite so quickly is a big deal – it shows huge confidence in him by the party elders and across factions.” Li Yuanchao was also elected vice president.

Corruption stance Vice premier Li Keqiang is set to succeed premier Wen Jiabao in a similarly scripted vote today. Mr Hu, 70, relinquished the presidency after serving the maximum two five-year terms. Mr Hu’s accession to president a decade ago marked Communist China’s first peaceful transition of power. Violent events such as the Cultural Revolution and the 1989 Tiananmen crackdown on pro-democracy demonstrators had overshadowed previous hand-overs. Since taking up the position of the much more powerful post of

party chief last November, Mr Xi has focused his rhetoric on fighting corruption and promoting austere practices such as banning senior military officers from holding alcohol-fuelled banquets. Many Chinese hope Mr Xi will bring change in a country that has risen to become the world’s secondbiggest economy but is marred by deepening income inequality, corruption and environmental destruction left over from the outgoing administration. Mr Xi inherits a constituency that is more distrustful of government and well-versed at using the Internet to criticise their leaders. At the same time, his administration must deal with a slowdown in economic growth, juggle the urgent task of calming a frothy housing market, defuse local government debt risks and wean China off its addiction to investmentled expansion. As head of state, Mr Xi will take the global stage later this month when he visits Russia, Tanzania and South Africa, where he is set to represent China at the meeting of the BRICS group of emerging-market nations in Durban. Mr Xi will also have to deal with an increasingly provocative North Korea and tensions with the United States, Japan and Southeast Asia. Reuters/Bloomberg

A president raised by elite, steeled by turmoil Considered a cautious reformer, Xi Jinping has a low-key political style Ben Blanchard

F

our years ago in Mexico, China’s new president provided a rare glimpse of a leader who was born into a revolutionary aristocracy and came of age in the tumult of Mao Zedong’s Cultural Revolution. Yesterday, Xi Jinping sported the dark suit and cautious public mask that is the uniform of the party leadership as he took his place as the head of state after delegates to China’s rubber stamp parliament voted him in almost unanimously at the cavernous Great Hall of the People. But in Mexico, Mr Xi dropped his guard in a steely defence of his country against criticism from abroad. “In the midst of international financial turmoil, China was still able to solve the problem of feeding its 1.3 billion people, and that was already our greatest contribution to humankind,” he said in comments that drew applause from Chinese Internet users. “Some foreigners with full bellies and nothing better to do engage in finger-pointing at us,” he went on. “First, China does not export revolution; second, it does not export famine and poverty; and third, it does not mess around with you. So what else is there to say?” Mr Xi assumed the role of Communist Party and military chief from Hu Jintao in November at a key party congress, and has now completed his rise to the top, replacing incumbent Hu Jintao. Mr Xi has crafted a low-key, sometimes bluff political style.

He has complained of officials’ speeches and writings being clogged with party jargon and demanded more plain speaking.

‘Princeling’ Since November, he has waged a campaign against corruption and excess, responding to widespread public anger that party members are both above the law and wasteful. “The style in which you work is no small matter, and if we don’t redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our party and the people, and we will lose our roots, our lifeblood and our strength,” Mr Xi told a meeting of the party’s top anti-graft body in January. Mr Xi, 59, is the son of reformist former vice premier and parliament vice-chairman Xi Zhongxun, making him a “princeling” - one of the privileged sons and daughters of China’s incumbent, retired or late leaders. He grew up among the party elite and then watched his father purged from power before the 1966-76 Cultural Revolution, when Mr Xi himself spent years in the poverty-stricken countryside before scrambling to university. Considered a cautious reformer, having spent time in top positions in the coastal Fujian and Zhejiang provinces, both at the forefront of China’s economic reforms, Mr Xi had long been marked out as the likely successor to Mr Hu. Married to a famous singer

and briefly in charge of Shanghai, China’s richest and most glamorous city, Mr Xi unsettled Chinese people and the foreign business community alike when he vanished from public without explanation for about two weeks in September, prompting feverish rumours of serious illness and a troubled succession. Sources said Mr Xi hurt his back while swimming and that he had been obeying doctors’ orders to get bed rest and undergo physiotherapy.

“Sent-down youth” Mr Xi went to work in the poor northwest Chinese countryside as a “sent-down youth” during the chaos of the Cultural Revolution, and became a rural commune official. He studied chemical engineering at Tsinghua University in Beijing, an elite school where Mr. Hu also studied. Mr Xi later gained a degree in Marxist theory from Tsinghua and a doctorate in law. Mr Xi shot to fame in the early 1980s as party boss of a rural county in Hebei province, which surrounds Beijing. He had rare access to then national party chief Hu Yaobang in the leadership compound, Zhongnanhai, west of the Forbidden City. A native of the remote, inland province of Shaanxi, home of the terracotta warriors, Mr Xi was promoted to governor of the southeastern province of Fujian in August 1999 after a string of provincial officials were caught up in a graft dragnet.

In March 2007, the tall and portly Mr Xi secured the top job in China’s commercial capital, Shanghai, when his predecessor, Chen Liangyu, was caught up in another huge corruption case. Seven months later, Mr Xi was promoted to the party’s Standing Committee – the ruling inner-circle. Mr Xi is married to Peng Liyuan, a renowned singer who was once arguably more popular in China than her husband, until the party began ordering her to keep a low profile as her husband moved up the ranks. Reuters

If we don’t redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our party and the people, and we will lose our roots, our lifeblood and our strength


March 15, 2013 business daily | 9

GREATER CHINA

Animal dumping common problem T

Xi Jinping (right) was appointed as China’s president, replacing Hu Jintao

Since November Mr Xi has waged a public campaign against corruption and excess

he rotting bodies of about 6,000 pigs in a river that supplies tap water to Shanghai has drawn attention to an ugly truth – China’s pig farms are often riddled with disease and one way or another, sick animals often end up in the food chain. Authorities have found traces of a common pig virus in some of the animals floating in the Huangpu River this week. A pig farm in Jiaxing, in Zhejiang province, on Wednesday confessed to dumping dead pigs into the river, local authorities said. Industry insiders say dumping pigs into a river is not unheard of farmers in an industry which has no system of compensation for losses from disease. “There is no mechanism by which, whenever diseases are found among pigs, the government compensates pig breeders so as to control the spread of diseases or compensate pig breeders for losses,” said Feng Yonghui, general manager at pig-industry research organisation Soozhu.com. To make matters worse, Mr Feng said insurance companies were unwilling to insure pig breeders because the risks were so high. While there was no proof any sick animals had been butchered and sold for meat in this case, Xinhua reported that a court in Zhejiang jailed 46 people for selling diseased pork. The Jiaxing city government said a total of 70,000 pigs died due to crude raising techniques and extreme weather at the beginning of the year. All the collected corpses were disposed of safely, and no mass swine epidemic had broken out in the region so far, it added. But talk of pigs dying would seem to suggest an outbreak of some sort. One Jiaxing farmer, 69-year-old Jiang Lie, said about 30 percent of his pigs had died of disease since January. Reuters witnesses visited three reeking swine disposal pits in Jiaxing which appeared to have been just filled up and had signs saying they were at capacity. Lin Rongquan, a veterinary health expert in Shanghai, points the finger at the local government. “They do not regulate the pig business well,” he said. On Sunday, the central government unveiled restructuring plans, which included bundling the responsibilities of several agencies into a ministerial-level General Administration of Food and Drug. Analyst Mr Wang said that should help but it would not change things overnight. Reuters/Xinhua


10 |

business daily March 15, 2013

ASIA

Japan’s lower house backs central bank nominations The upper house of parliament votes on new management today

T

he government’s nominees to lead the Bank of Japan won approval from the lower house of parliament yesterday, moving the trio a step closer to taking the top jobs at the central bank. Proposed central bank governor Haruhiko Kuroda, a finance veteran who has announced his resignation

South Korea holds rates, govt readies stimulus Analysts see rate cut ahead as central bank admits to a downbeat outlook Christine Kim and Se Young Lee

S

outh Korea’s central bank held interest rates steady as the new government prepared stimulus measures to energise an economy hit by a slow global recovery and weak corporate and consumer spending. The export-reliant economy, Asia’s fourth largest, faces predominant downside risks such as fiscal consolidation in the United States and the yen’s precipitous decline, but inflation will remain tame for a considerable period, the Bank of Korea said. It held the base rate steady at 2.75 percent for a fifth consecutive month yesterday, as widely expected, but the decision was split, governor Kim Choong-soo told reporters, without providing more details on the voting. Mr Kim may have signalled an intention to coordinate rate cuts with proposed government stimulus measures, saying: “Policies are helpful when in harmony, and it is important to choose a good policy mix,” without referring specifically to government stimulus steps. Many analysts expect the Bank of

Korea to cut the rate as early as next month when the government’s stimulus steps will probably have been prepared, a view taken by a senior presidential aide speaking on Wednesday. Thirteen out of 24 analysts in a poll conducted by Reuters prior to the decision saw at least one more rate cut this year, while the consensus was for a rate hold yesterday. “I would say when the new government settles down and starts

laying out stimulus policies, the Bank of Korea could cut rates,” said Lee Min-koo, an economist at Eugene Investment and Securities in Seoul, forecasting a cut for the second quarter. A senior presidential aide told Reuters on Wednesday the government would unveil an economic stimulus package in a few weeks, while the finance minister designate made remarks indicating he saw the need for more central bank policy easing. President Park Geun-hye, who took office late last month but has yet to form her government due to a political standoff, has promised to revive the economy by boosting domestic service industries and creating more well-paid jobs. The Bank of Korea cut the policy rate by 25 basis points each in July and October last year after raises by a total of 125 basis points between July 2010 and June 2011. The central bank’s latest forecast is for South Korea’s economic growth to pick up to 2.8 percent this year from an estimated 2 percent rise in 2012, but it would be below the global economy’s 3.4 percent gain seen by the central bank. Reuters

Seoul’s largest urban development project is close to collapse, in an economy hit by weak spending

as head of the Asian Development Bank, is widely expected to win upper house confirmation today. The lower house also approved Mr Kuroda’s proposed deputies, Kikuo Iwata and Hiroshi Nakaso, with both also on course to win upper house support, clearing the way for them to take up the central bank posts. Japanese media have said the largest opposition party would not back Mr Iwata, throwing his hiring into question although the nomination is still widely expected to get through the upper house. Mr Iwata is a strong supporter of giving Tokyo more control of the independent Bank of Japan, and is also an advocate of further aggressive monetary easing. “The first test is cleared without a hitch,” said Akito Fukunaga, chief rates strategist at RBS Securities Japan Ltd. in Tokyo, a unit of Royal Bank of Scotland Group Plc. “The focus is now on the upper house: If all three nominees are approved, that will prepare the ground for speedier monetary stimulus.”

Aggressive easing The new Bank of Japan management team is slated to take office next week. Prime minister Shinzo Abe nominated the 68-year-old Mr Kuroda, also a former finance ministry bureaucrat, who is likely to back the premier’s prescription of big spending and aggressive monetary easing to drag Japan out of years of deflation which has crimped private spending and corporate investment. During parliamentary confirmation hearings, Mr Kuroda vowed that he would do “everything possible” to reverse years of falling prices, while criticising previous central bank administrations for failing to fix the problem. “We will do everything possible to get rid of deflation,” Mr Kuroda told lawmakers earlier this month. Since coming to power in December after landslide national elections, Mr Abe ramped up a pressure campaign on Bank of Japan policymakers to launch more aggressive policy and adopt a twopercent inflation target aimed at beating deflation. Outgoing central bank chief Masaaki Shirakawa, who sparred with Mr Abe over policy matters, adopted the measures in January under heavy pressure. In contrast, Mr Kuroda has openly praised Mr Abe’s policies, and argued that the Bank of Japan must also expand its monetary easing programmes to boost the world’s third-largest economy which has suffered slow growth for years. AFP/Bloomberg


March 15, 2013 business daily | 11

ASIA

India to hand land to rural poor India’s government is drawing up a major new welfare reform which would hand small plots of land to millions of homeless poor in the countryside, reports said yesterday. The proposed entitlement programme is seen as a potential vote-winner in rural areas ahead of elections next year. The draft bill, which must be approved by cabinet and then passed by parliament, would provide for a minimum of 400 square metres to be given to each homeless family, The Indian Express said. An estimated eight million rural families are believed to be homeless and landless.

Singapore to order F-35 fighter jets Singapore is in the “final stages of evaluating” the F-35 to upgrade its air force, a process American sources say should turn quickly into orders for several dozen of the stealthy warplanes that have been beset by cost overruns and delivery delays. Singapore, a major business and shipping hub with the bestequipped military in Southeast Asia, is expected to submit a “letter of request” soon for the F-35 Joint Strike Fighter. Singapore’s defence minister, Ng Eng Hen, said on Tuesday the air force “has identified the F-35 as a suitable aircraft to further modernise our fighter fleet”.

Nintendo to pay up in 3-D patent suit Nintendo Co said it was ordered to pay US$30.2 million to a former Sony Corp employee after a federal jury in New York ruled that the maker of the 3DS machine infringed on his patent. The jury ruled that Nintendo’s handheld player infringed on a 3-D technology patent held by Seijiro Tomita, who worked for Sony for almost 30 years before quitting in 2002. Nintendo will appeal, spokesman Yasuhiro Minagawa said. “We believe we can win a ruling that our 3DS doesn’t infringe the patent,” Mr Minagawa said.

Australia adds most jobs in almost 13 years Hiring at small-to-medium sized firms offset job cuts at high profile companies

A

ustralian monthly jobs growth hit a near 13year high in February, an “extraordinary” result that helped keep the unemployment rate steady and eased pressure on the central bank to cut rates. The Australian Bureau of Statistics said 71,500 jobs were created last month, smashing forecasts for a rise of 10,000 and the biggest jump since July 2000. UBS economist George Tharenou said: “It is clearly a strong result and shows that employment growth is tracking much faster than some people had been expecting.” The bureau said the rate of unemployment stood at 5.4 percent, unchanged from January due to more people re-entering the workforce, and better than predictions for a rise to 5.5 percent. Yesterday’s figures come just nine days after the Reserve Bank of Australia kept interest rates at historic lows of 3 percent, saying previous cuts were beginning to take effect. Macquarie Bank senior economist Brian Redican said the numbers were “extraordinary” and added: “With that kind of employment growth there is no rationale for cutting rates.” Shares in Sydney plunged 1.18 percent to close at 5,032.2 as dealers bet the central bank would not cut rates further at its next policy meeting. “Such strong unemployment data reduces the chances of seeing the RBA pull the trigger on rates anytime soon,” IG Markets analyst Stan Shamu said. “This in turn weighs on some interest-rate-sensitive and exchangerate-sensitive stocks.” The big rise included 17,800 full-time posts and 53,700 parttime positions, helping to offset an increase in the participation rate – the proportion of people in work or looking for work – to 65.3 percent

from 65 percent. Economists said it appeared that headline-grabbing job cuts at a number of high profile companies did not reflect the hiring at small-tomedium sized firms. Prime minister Julia Gillard said

71,500

Jobs created in Australia in February

the figures highlighted the strength of the economy. “That tells you about the resilience of the Australian economy and we should be proud of it as a nation,” she told parliament. HSBC Australia chief economist Paul Bloxham expects the unemployment rate to stay below 5.5 percent for the remainder of 2013, edging down in the second half of the year. “This survey helps add further weight to our view that the soft patch in the economy is probably behind us,” he said. “The housing market is recovering, house prices are rising, consumer sentiment has bounced and equity markets are up.” AFP


12 |

business daily March 15, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

34

0.2949853

21286152

CHINA UNICOM HON

10.66

-0.5597015

32613118

POWER ASSETS HOL

ALUMINUM CORP-H

3.17

0

10064193

CITIC PACIFIC

10.24

-1.348748

15466624

BANK OF CHINA-H

3.59

0.8426966

347967495

66.6

0.4524887

6158980

CNOOC LTD

14.52

0.5540166

64373996

COSCO PAC LTD

11.46

-1.715266

9636250

9.25

-0.751073

11731897

NAME AIA GROUP LTD

BANK OF COMMUN-H

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

VOLUME

72

1.408451

2776519

SANDS CHINA LTD

35.8

0

7800103

SINO LAND CO

13.3

-0.7462687

11718939

SUN HUNG KAI PRO

107.9

-3.315412

16572885

SWIRE PACIFIC-A

99.15

-1.14656

2099427

TENCENT HOLDINGS

275.8

-0.8626887

5819978

20.9

-0.7125891

5444294

11.24

-2.090592

20136967

65

-0.1536098

7323391

5.86

0.8605852

50297831

31.55

1.446945

2937286

14.8

-0.8042895

36075965

ESPRIT HLDGS

27

1.694915

15931619

HANG LUNG PROPER

29.75

-1.976936

6362435

TINGYI HLDG CO

CATHAY PAC AIR

14.02

-1.267606

6253823

HANG SENG BK

130.9

1.94704

2737060

WANT WANT CHINA

CHEUNG KONG

HENDERSON LAND D

49.55

-3.317073

10721083

HENGAN INTL

77.75

-0.8922881

2831248

HONG KG CHINA GS

22.35

1.822323

13434136

HONG KONG EXCHNG

136.4

0.5158438

3647643

HSBC HLDGS PLC

84.75

0.8928571

10350030

BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

115.7

-0.9417808

7478184

CHINA COAL ENE-H

7.21

-0.1385042

34097660

CHINA CONST BA-H

6.28

1.290323

354354705

CHINA LIFE INS-H

22.2

0.4524887

48301914

CHINA MERCHANT

26.6

0.5671078

2041677

83.35

0.2405292

26447743

HUTCHISON WHAMPO

CHINA OVERSEAS

CHINA MOBILE

21.6

0

24503153

IND & COMM BK-H

CHINA PETROLEU-H

8.76

0.1142857

89925635

CHINA RES ENTERP

84

0.779844

5495442

5.43

1.117318

314188194

LI & FUNG LTD

10.88

-0.729927

16693708

MTR CORP

31.55

0

2880600

WHARF HLDG

MOVERS

22

25

3 23230

INDEX 22619.18 HIGH

23220.49

LOW

22381.66

24.45

-0.2040816

3098867

CHINA RES LAND

20.5

0.7371007

12759461

NEW WORLD DEV

13.9

-0.8559201

26382114

CHINA RES POWER

20.7

1.470588

7535745

PETROCHINA CO-H

10.66

-0.1872659

53765906

CHINA SHENHUA-H

28.8

-0.6896552

18170588

PING AN INSURA-H

61.9

-0.3220612

22504638

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

26.05

0.3853565

18526507

YANZHOU COAL-H

11.3

0.177305

40828589

CHINA PETROLEU-H

8.76

0.1142857

89925635

ZIJIN MINING-H

2.51

-1.568627

34817282

52W (H) 23944.74 (L) 18056.4

22350

12-March

14-March

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.83

0.2617801

207897147

AIR CHINA LTD-H

6.29

-0.6319115

9779096

ALUMINUM CORP-H

3.17

0

10064193

CHINA RAIL CN-H

7.52

3.013699

20263616

ZOOMLION HEAVY-H

9.35

1.520087

11255017

ANHUI CONCH-H

26.8

0.1869159

11455404

CHINA RAIL GR-H

4.13

4.556962

35822621

ZTE CORP-H

14.8

8.823529

21829010

BANK OF CHINA-H

3.59

0.8426966

347967495

CHINA SHENHUA-H

28.8

-0.6896552

18170588

BANK OF COMMUN-H

5.86

0.8605852

50297831

CHINA TELECOM-H

4

0.2506266

67417739

BYD CO LTD-H

26.3

-0.5671078

5530159

DONGFENG MOTOR-H

10.76

0.1862197

16268423

4.7

1.075269

62161798

GUANGZHOU AUTO-H

6.39

2.24

10118138

CHINA COAL ENE-H

7.21

-0.1385042

34097660

HUANENG POWER-H

7.81

1.297017

11750188

CHINA COM CONS-H

6.91

1.023392

22121298

IND & COMM BK-H

5.43

1.117318

314188194

CHINA CONST BA-H

6.28

1.290323

354354705

JIANGXI COPPER-H

17.74

2.071346

10557808

CHINA COSCO HO-H

4.06

0.2469136

16122821

PETROCHINA CO-H

10.66

-0.1872659

53765906

CHINA LIFE INS-H

22.2

0.4524887

48301914

PICC PROPERTY &

10.76

-0.5545287

14871379

CHINA LONGYUAN-H

6.79

5.434783

23464119

PING AN INSURA-H

61.9

-0.3220612

22504638

CHINA MERCH BK-H

16.64

0.1203369

17470215

SHANDONG WEIG-H

7.55

-0.7884363

6763400

CHINA CITIC BK-H

CHINA PACIFIC-H

CHINA MINSHENG-H

10.48

1.158301

46375678

SINOPHARM-H

26.95

4.054054

3374636

CHINA NATL BDG-H

11.58

1.757469

44295843

TSINGTAO BREW-H

48.6

-1.818182

1924250

CHINA OILFIELD-H

15.28

-0.9079118

8355588

WEICHAI POWER-H

25.85

3.607214

7687880

NAME

MOVERS

27

12

1 11540

INDEX 11101.96 HIGH

11527.14

LOW

10934.34

52W (H) 12354.22 10920

(L) 8987.76 12-March

14-March

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.84

1.428571

125330023

CITIC SECURITI-A

13.16

-0.3785011

110948388

SANY HEAVY INDUS

10.53

-0.2840909

15389962

AIR CHINA LTD-A

5.33

0.5660377

11360840

CSR CORP LTD -A

4.4

-0.9009009

19205763

SHANDONG DONG-A

49.99

2.860082

6394429

ALUMINUM CORP-A

4.56

-1.511879

18591392

DAQIN RAILWAY -A

7.51

0.1333333

27854344

SHANDONG GOLD-MI

33.47

-1.616696

7273747

17.22

-1.37457

23051368

DATANG INTL PO-A

4.3

-3.370787

17360382

SHANG PHARM -A

12.68

0.955414

7611927

13.55

0.5192878

21624287

SHANG PUDONG-A

10.45

1.95122

163419368

2.95

0

31550039

SHANGHAI ELECT-A

4.38

3.791469

39570226 14715857

NAME

ANHUI CONCH-A

NAME

NAME

BANK OF BEIJIN-A

9.16

0.3285871

31289561

EVERBRIG SEC -A

BANK OF CHINA-A

2.94

0.6849315

24270235

GD POWER DEVEL-A

BANK OF COMMUN-A

4.71

0.4264392

45012820

GF SECURITIES-A

14.31

0.7746479

27293325

SHANXI LU'AN -A

18.57

0.759631

BANK OF NINGBO-A

10.67

-0.1870907

10364842

GREE ELECTRIC

27.11

1.497566

13894666

SHANXI XINGHUA-A

39.55

-4.306799

4681115

BAOSHAN IRON & S

4.88

-0.204499

27766710

GUANGHUI ENERG-A

19.82

2.747538

23434771

SHANXI XISHAN-A

12.44

1.302932

11779970 19871468

23.28

1.041667

3882733

HAITONG SECURI-A

11.12

-0.5366726

104802232

SHENZEN OVERSE-A

5.83

1.039861

CHINA CITIC BK-A

4.47

0.6756757

16947275

HANGZHOU HIKVI-A

37.75

5.47639

6485023

SICHUAN KELUN-A

66.75

3.95577

1243036

CHINA CNR CORP-A

4.26

-1.616628

38383281

HENAN SHUAN-A

70.1

-1.29541

1613132

SUNING APPLIAN-A

6.23

0

24975317

CHINA COAL ENE-A

7.24

-0.2754821

9676655

HONG YUAN SEC-A

18.63

-1.11465

11990608

TASLY PHARMAC-A

69.61

5.886827

4406555

10.3

-0.1937984

31594404

TSINGTAO BREW-A

35.81

-0.4448151

792206

10.37

0.5819593

20223335

WEICHAI POWER-A

21.75

-0.6849315

7582323

BYD CO LTD -A

CHINA CONST BA-A

4.6

0.6564551

23784838

HUATAI SECURIT-A

CHINA COSCO HO-A

4.08

-0.2444988

11189268

HUAXIA BANK CO

CHINA EAST AIR-A

3.23

0.310559

10408868

IND & COMM BK-A

4.16

0.7263923

40704560

WULIANGYE YIBIN

24.25

-0.3697617

16571390

CHINA EVERBRIG-A

3.18

0.3154574

74982431

INDUSTRIAL BAN-A

18.54

0.05396654

61343062

YANGQUAN COAL -A

14.1

2.47093

19794821

CHINA INTL MAR-A

12.77

-0.7770008

4710223

INNER MONG BAO-A

30.14

-2.20636

24425266

YANTAI WANHUA-A

16.33

1.365611

5875248

CHINA LIFE INS-A

17.24

0.4662005

11795178

INNER MONG YIL-A

29.05

3.123891

7624407

YANZHOU COAL-A

19.46

10.00565

38133685

CHINA MERCH BK-A

12.67

0

47569824

INNER MONGOLIA-A

4.97

-2.54902

38674925

YUNNAN BAIYAO-A

77.85

3.496411

2096930

CHINA MERCHANT-A

13.02

0.1538462

27068720

JIANGSU HENGRU-A

32.84

1.703314

3656066

ZHONGJIN GOLD

14.7

-1.737968

17303834

CHINA MERCHANT-A

24.05

-0.2902156

9510301

CHINA MINSHENG-A CHINA NATIONAL-A CHINA OILFIELD-A

9.86

0.8179959

276041107

8.53

3.143894

28615426

16.97

0.8917955

7709178

JIANGSU YANGHE-A

73.76

-3.983338

5474263

ZIJIN MINING-A

3.53

-0.5633803

50191701

JIANGXI COPPER-A

22.92

-1.546392

9554377

ZOOMLION HEAVY-A

8.38

0

29162206

JINDUICHENG -A

12.14

-2.646351

16157472

11.93

7.963801

51506870

JIZHONG ENERGY-A

13.51

0.8961912

20946114 23758727

CHINA PACIFIC-A

18.7

-0.2134472

18242521

KANGMEI PHARMA-A

16.31

3.162555

CHINA PETROLEU-A

7.44

-0.4016064

37118792

KWEICHOW MOUTA-A

178.94

-2.660066

3512400

30.28

-1.496422

9256323

-0.9708738

16384540

CHINA RAILWAY-A

5.11

-0.776699

17623702

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

2.88

-0.3460208

21531367

METALLURGICAL-A

2.04

CHINA SHENHUA-A

21.73

-0.4124656

14541081

NINGBO PORT CO-A

2.54

2.419355

62268065

3.46

-1.142857

45708131

CHINA SHIPBUIL-A

5.07

-0.1968504

35243873

PANGANG GROUP -A

CHINA SOUTHERN-A

3.64

0

14576506

PETROCHINA CO-A

8.87

0.1128668

14502087

21.67

-1.901313

ZTE CORP-A

MOVERS 139

136

25 2620

INDEX 2534.273

CHINA STATE -A

3.47

-0.2873563

55302472

PING AN BANK-A

57785359

HIGH

2615.33

CHINA UNITED-A

3.37

0

39928030

PING AN INSURA-A

42.78

0.3518649

22549023

LOW

2515.89

CHINA VANKE CO-A

10.8

-1.369863

70496318

POLY REAL ESTA-A

11.1

-0.3590664

43439178

CHINA YANGTZE-A

7.11

-0.2805049

13939108

QINGDAO HAIER-A

12.26

2.251877

9231591

CHONGQING CHAN-A

8.66

-0.3452244

20022771

QINGHAI SALT-A

27.3

-0.3285871

3275762

CHONGQING WATE-A

6.41

-0.7739938

11952303

SAIC MOTOR-A

15.19

-0.1971091

14427219

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 2791.303 (L) 2102.135

2510

12-March

14-March

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

-2.757353

17414330

FORMOSA PLASTIC

72.2

-1.768707

10220266

ADVANCED SEMICON

24.6 -0.8064516

17083488

FOXCONN TECHNOLO

81.1

0.1234568

4071822

ASIA CEMENT CORP

36.2 -0.9575923

5850341

FUBON FINANCIAL

42.85

1.180638

ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH CATHAY FINANCIAL

26.45

2286320 32367465

UNI-PRESIDENT

59.5 -0.1677852

UNITED MICROELEC

11.6

4.504505

33.3

0.6042296

6144822

15.45 -0.6430868

12398847

348

0.8695652

2999954

HON HAI PRECISIO

80.5

0.625

22003677

-1.879699

73795385

HOTAI MOTOR CO

234

-3.305785

303464

131

0.7692308

3870280

HTC CORP

241

0

17512190

WISTRON CORP

40.65 -0.7326007

27608006

HUA NAN FINANCIA

17.4 -0.8547009

10163903

YUANTA FINANCIAL YULON MOTOR CO

1.694915

58791676

LARGAN PRECISION

745

0.6756757

1285076

-1.085645

5221301

LITE-ON TECHNOLO

46.4

1.310044

9354463

18

-2.439024

111848699

MEDIATEK INC

343

-2.695035

7283887

8.85 -0.7847534

42613526

MEGA FINANCIAL H

24.9

0.4032258

22041052

CHINA STEEL CORP

27 -0.3690037

14826118

NAN YA PLASTICS

54.6

-2.673797

8458439

CHINATRUST FINAN

18 -0.8264463

30639359

PRESIDENT CHAIN

163.5

-1.506024

686749

66.5

0.4531722

6725595

34 -0.1468429

9087679

DELTA ELECT INC

92.4 -0.3236246

4082800

QUANTA COMPUTER

-1.937046

19132884

SILICONWARE PREC

124

4.201681

19078398

SINOPAC FINANCIA

14.1

0.3558719

21276421

FAR EASTERN NEW

31.85

-0.46875

4633131

SYNNEX TECH INTL

58.9 -0.3384095

4617386

FAR EASTONE TELE

70

0.1430615

5789265

TAIWAN CEMENT

37.4

-2.857143

11637149

18.65 -0.5333333

13422049

FIRST FINANCIAL

7030587

104 -0.4784689

13.05

20.25

Volume

TSMC

82

COMPAL ELECTRON

-1.428571

27986637

18

CHUNGHWA TELECOM

103.5

591 -0.6722689

CHENG SHIN RUBBE CHIMEI INNOLUX C

PRICE DAY %

TAIWAN MOBILE CO TPK HOLDING CO L

CHANG HWA BANK

CHINA DEVELOPMEN

NAME

TAIWAN COOPERATI

17.1

0.2932551

6994024

FORMOSA CHEM & F

73.2

-1.081081

3792174

TAIWAN FERTILIZE

71.2

-1.248266

3270353

FORMOSA PETROCHE

81.7

-1.684717

1964550

TAIWAN GLASS IND

28.7

-1.37457

721771

MOVERS

54.5

16

33

-2.154399

6188869 165141533

3824278

1 5610

INDEX 5548.85 HIGH

5608.44

LOW

5548.85

52W (H) 5639.93 5540

(L) 4719.96 12-March

14-March


March 15, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange)

Max 31.05

Average 30.841

Min 30.65

Last 31.05

31.20

53.4

16.7

31.05

53.2

16.6

30.90

53.0

16.5

30.75

52.8

16.4

30.60

Max 53.8

Average 52.983

Min 52.4

52.6

Last 52.65

Max 16.92

Average 16.620

Min 16.5

16.3

Last 16.6

18.2

36.0

21.1

35.8

21.0 18.1

35.6

20.9

35.4

Max 35.9

Average 35.570

Min 35.2

35.2

Last 35.8

20.8 Max 18.2

Average 18.115

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Apr13

92.84

0.345871163

0.118623962

108.4599991

81

BRENT CRUDE FUTR Apr13

108.71

0.175082934

-0.320924262

118.2900009

91

GASOLINE RBOB FUT Apr13

314.28

0.015911912

8.353732115

334.4000101

238.2400036

GAS OIL FUT (ICE) May13

915.5

0.054644809

-0.027300027

1000.75

801.25

NATURAL GAS FUTR Apr13

3.691

0.298913043

8.463120776

3.997000217

3.032000065

292.7

0.095752684

-2.290025371

324.6999979

254.189992

1589.01

-0.3912

-4.533

1796.08

1527.21

HEATING OIL FUTR Apr13 METALS

Gold Spot $/Oz Silver Spot $/Oz

28.945

-0.7203

-3.8691

35.365

26.1513

Platinum Spot $/Oz

1591.2

-0.0942

4.8394

1742.8

1379.05

Palladium Spot $/Oz

765.5

-0.5715

9.4103

786.5

553.75

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) LME ZINC

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE

18.0

Last 18.08

Max 21.05

Average 20.895

Min 20.75

Last 20.8

May13

1966

-0.78223568

-5.161601544

2281

1827.25

7787.5

-0.542784163

-1.809355693

8702.75

7219.5

1982

-0.201409869

-4.711538462

2230

1745

16945

-0.499119201

-0.674091442

19600

15236

14.71

-0.473612991

-5.004843397

16.95000076

14.71000004

712.5

0.316789863

1.749375223

838

520.25

MAJOR

ASIA PACIFIC

CROSSES

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

PRICE

DAY %

1.0364 1.4948 0.9543 1.2953 96.25 7.9897 7.7571 6.2157 54.265 29.63 1.2494 29.709 40.624 9705 99.754 1.23609 0.86652 8.051 10.3499 124.67 1.03

0.5823 -0.0468 -0.723 -0.3998 -0.5506 0.0038 0.0039 -0.0241 0.0761 -0.0675 -0.096 -0.0976 -0.1699 -0.1649 -1.1177 -0.3252 0.3543 0.7279 0.3981 -0.1444 0

YTD %

(H) 52W

-0.1349 -7.5915 -4.0763 -1.7968 -10.5455 -0.0814 -0.0838 0.2397 1.3453 3.2062 -2.2411 -2.2754 0.9379 0.9067 -10.4527 -2.3146 -5.8972 2.0681 1.744 -8.9035 -0.0097

(L) 52W

1.0637 1.6381 0.9972 1.3711 96.71 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 99.777 1.25692 0.88151 8.4957 10.9254 127.71 1.0314

0.9582 1.4832 0.9002 1.2043 77.13 7.9824 7.7498 6.2105 50.07 29.55 1.2152 28.913 40.54 9095 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

3.71

-1.591512

17.77777

3.94

2.29

6489683

137.5999908

CROWN LTD

12.1

-3.508772

13.40206

12.59

8.06

1935894

710.25

0.035211268

-9.83814662

938

665

SOYBEAN FUTURE May13

1441.75

-0.362819627

3.037341433

1639.5

1218.75

140.6

-1.229364243

-4.158145876

204.5999908

COFFEE 'C' FUTURE May13

COUNTRY

ARISTOCRAT LEISU

WHEAT FUTURE(CBT) May13

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) May13

18.81

0.053191489

-4.030612245

24.56999969

17.67000008

AMAX HOLDINGS LT

0.053

1.923077

-24.28571

0.104

0.048

60673000

COTTON NO.2 FUTR May13

89.02

0.462701727

17.34774585

91.59999847

68.18999481

BOC HONG KONG HO

27

1.694915

12.03319

27.1

20.85

15931619

0.35

1.449275

32.07548

0.42

0.215

28000

6.2

-1.587302

3.505847

6.74

2.8

127000 24503153

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

DOW JONES INDUS. AVG

US

14455.28

0.03612442

NASDAQ COMPOSITE INDEX

US

3245.117

0.08623452

FTSE 100 INDEX

GB

6481.5

DAX INDEX

GE

NIKKEI 225

CHINA OVERSEAS

21.6

0

-6.493508

25.6

14.124

CHINESE ESTATES

11.9

-0.5016722

-1.891421

12.964

7.697

606000

CHOW TAI FOOK JE

10.78

0.1858736

-13.34405

13.4

8.4

4688700

EMPEROR ENTERTAI

2.02

1

6.878308

2.15

1.1

540000

FUTURE BRIGHT

2.45

2.083333

100.8197

2.54

0.495

2158000

(H) 52W

(L) 52W

10.31079

14478.8

12035.08984

GALAXY ENTERTAIN

31.05

-0.3210273

2.306424

35.7

16.94

6739700

7.47151

3252.874

2726.68

HANG SENG BK

130.9

1.94704

10.27801

131.3

99.2

2737060

-0.4472692

9.896723

6533.99

5229.76

HOPEWELL HLDGS

33.5

0

0.7518797

35.3

19.049

3134640

7970.91

0.06012965

4.709691

8015.07

5914.43

HSBC HLDGS PLC

84.75

0.8928571

4.243539

88.45

59.8

10350030

JN

12381.19

1.156323

19.10511

12461.97

8238.96

HANG SENG INDEX

HK

22646.68

0.3991284

-0.04519694

23944.74

18056.4

CSI 300 INDEX

CH

2534.273

0.2685277

0.4487222

2791.303

TAIWAN TAIEX INDEX

TA

7951.76

-0.5471821

3.276314

KOSPI INDEX

SK

2002.13

0.1200162

0.254373

S&P/ASX 200 INDEX

HUTCHISON TELE H

3.8

0

6.741575

3.92

2.98

1750000

LUK FOOK HLDGS I

23.6

3.056769

-3.278687

30.05

14.7

2124500

MELCO INTL DEVEL

12.46

-0.4792332

38.29078

13.96

5.12

2864000

2102.135

MGM CHINA HOLDIN

16.66

0.3614458

25.46806

18.449

9.509

3618800

8170.31

6857.35

MIDLAND HOLDINGS

3.42

0.8849558

-7.567569

5

3.249

2412000

2057.28

1758.99

NEPTUNE GROUP

0.164

5.806452

7.89474

0.226

0.084

12530000

NEW WORLD DEV

13.9

-0.8559201

15.64059

15.12

7.95

26382114

SANDS CHINA LTD

35.8

0

5.449188

39.95

20.65

7800103

SHUN HO RESOURCE

1.53

0

9.285716

1.67

1.03

0

2.56

6741068

AU

5032.222

-1.181664

8.244269

5163.5

3985

ID

4798.397

-0.7660525

11.15925

4904.477

3635.283

FTSE Bursa Malaysia KLCI

MA

1641.77

-0.2703162

-2.793448

1699.68

1526.6

SHUN TAK HOLDING

4.27

0.2347418

1.909306

4.65

JAKARTA COMPOSITE INDEX

20.7

CURRENCY EXCHANGE RATES

NAME ENERGY

Min 18

NZX ALL INDEX

NZ

937.914

0.9731126

6.333069

944.123

755.149

SJM HOLDINGS LTD

18.08

-0.877193

0.4444444

22.15

12.34

8511396

PHILIPPINES ALL SHARE IX

PH

4183.3

-0.730173

13.09333

4268.160156

3238.77

SMARTONE TELECOM

13.04

-1.062215

-7.386363

17.5

13.02

1645299

HSBC Dragon 300 Index Singapor

SI

632.92

-0.61

1.9

NA

NA

WYNN MACAU LTD

20.75

-1.190476

-0.9546575

25.5

14.62

4338800

STOCK EXCH OF THAI INDEX

TH

1581.9

0.2026984

13.64795

1586.41

1099.15

ASIA ENTERTAINME

4.12

2.743142

34.64053

6.95

2.4

161298

BALLY TECHNOLOGI

50.92

0.4537384

13.88951

51.16

41.74

371187

HO CHI MINH STOCK INDEX

VN

474.6

0.3000972

14.71249

497.87

372.39

BOC HONG KONG HO

3.54

2.608696

15.30945

3.55

2.68

21000

Laos Composite Index

LO

1421.22

-0.5708769

16.99498

1455.82

933.43

GALAXY ENTERTAIN

4.08

2.38394

2.77078

4.57

2.25

250

17.09

-0.05847953

20.60692

17.38

10.92

2554471

JONES LANG LASAL

99.5

-0.2606255

18.53705

100.33

61.39

141935

LAS VEGAS SANDS

53.17

0.8153204

15.18631

58.3216

32.6127

5454424

MELCO CROWN-ADR

20.76

0.5813953

23.27791

21.475

9.13

4901256

MGM CHINA HOLDIN

2.29

0

23.78378

2.44

1.36

1200

MGM RESORTS INTE

12.41

0.48583

6.615117

14.8

8.83

4092898

SHFL ENTERTAINME

16.3

4.020421

12.41379

18.77

11.75

378556

SJM HOLDINGS LTD

2.35

1.293103

1.731604

2.85

1.65

7500

118.63

0.5509408

5.458265

129.6589

84.4902

762388

INTL GAME TECH

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

WYNN RESORTS LTD

AUD HKD

USD


14 |

business daily March 15, 2013

Opinion

The economist’s stone Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

T

his year marks the 100th anniversaries of two distinct institutional innovations in American economic policy: the introduction of the federal income tax and the establishment of the Federal Reserve. They are worth commemorating, if only because we are at risk of forgetting what we have learned since then. Initially, neither the income tax nor the Fed was associated with the explicit concepts of fiscal and monetary policy. Indeed, it wasn’t until after the experience of the 1930’s that they came to be viewed as potential instruments for macroeconomic management. John Maynard Keynes pointed out the advantages of fiscal stimulus in circumstances like the Great Depression. Milton Friedman blamed the Depression on the Fed for allowing the money supply to fall. Keynes is associated with a belief in activist economic policy aimed at ensuring counter-cyclical responses to economic fluctuations – expansionary policies during recessions and policy tightening during upswings. Friedman, by contrast, opposed discretionary policymaking, believing that government institutions lacked the ability to get the timing right. But both opposed pro-cyclical policy, such as the misguided US fiscal and monetary tightening of 1937: before the economy had fully recovered, President Roosevelt raised taxes and cut spending, while the Federal Reserve raised reserve requirements, prolonging and worsening the Great Depression. After World War II, students and policymakers internalized the lessons of the 1930’s. But episodes in recent decades – for example, high inflation in the 1970’s – overwhelmed much of what was learned. As a result, many advanced countries today are repeating the mistake of 1937, despite facing similar macroeconomic conditions: high unemployment, low inflation, and near-zero interest rates. The pros and cons of austerity nowadays have been thoroughly debated. Austerity’s proponents correctly point out that permanently expansionary macroeconomic policies

lead to unsustainable deficits, debts, and inflation. Advocates of stimulus are right to note that in the aftermath of a recession, when unemployment is high and inflation is low, the immediate consequences of policy contraction are continued unemployment, slow growth, and rising debt/GDP ratios. And pro-cyclicalists, both in the US and Europe, represent the worst of all worlds by pursuing expansionary policies during booms, such as in 2003-07, and contractionary policies during recessions, such as in 2008-2012.

Multiplier effect But, if counter-cyclicalists are right to favor moderating, rather than exacerbating, upswings and downswings in the economy, we still need to know what works best. Given recent conditions, is monetary or fiscal stimulus the more effective instrument? John Hicks addressed this question clearly in a once-famous 1937 article called “Mr. Keynes and the Classics.” Under the conditions that prevailed then, and that prevail again now (high unemployment, low inflation, and near-zero interest rates), monetary expansion is relatively less effective, because it cannot push interest rates below zero. Moreover, firms are less likely to respond to easy money by investing in new physical capital and labor if they cannot sell what they already produce in the factories they already have with the workers they already employ.

Many advanced countries today are repeating the mistake of 1937, despite facing similar macroeconomic conditions: high unemployment, low inflation, and near-zero interest rates

by spending more, as do the recipients of that spending, and so on. Again, the multiplier is much more relevant under current conditions, because it does not fuel higher inflation and interest rates (and thus crowd out private spending). Unfortunately, many economists and politicians have forgotten much of what they knew (or have been blinded by new theories of policy ineffectiveness). Indeed, by the time the 20082009 global recession hit, even advocates of fiscal stimulus had lowered their estimates of the multiplier. But the continuing severity of recessions in the United Kingdom and other countries pursuing fiscal contraction has suggested that multipliers are not just positive, but greater than one – just as the old wisdom had it. The International Monetary Fund has responded by forthrightly confessing that official forecasts, including its own, had underestimated the multiplier’s size.

Financial alchemy Fiscal stimulus is relatively more effective in these conditions, because it creates demand for goods without driving up those rock-bottom interest rates and crowding out private-sector demand (as it would in normal times). None of this should be controversial. Introductory economics used to emphasize the Keynesian multiplier effect: recipients of government spending (or of consumer spending stimulated by tax cuts or transfers) respond to the increase in their incomes

Of course, the effects of fiscal policy are uncertain. One never knows, for example, when rising debt levels might alarm international investors, who then start demanding sharply higher interest rates, as happened to countries on the European periphery in 2010. We are also uncertain about the magnitude of the negative long-term effects of high tax rates on growth. And monetary policy is much better understood than it was in the past. Indeed, a much-admired

recent paper characterized monetary policy as science and fiscal policy as alchemy. To be sure, the state of knowledge and practice at central banks is close to the best that modern society has to offer, whereas fiscal policy is set in a highly political process that is poorly informed by economic knowledge and largely motivated by officials’ desire to be re-elected. But the problem with the ancient alchemists and their search for the philosopher’s stone was not that they were stupid or selfish people. Nor was their problem that political leaders refused to listen to them. Rather, the state of knowledge at the time simply fell far short of the modern science of chemistry. In this sense, the term alchemy could be applied to pre-Keynesians like US Treasury Secretary Andrew Mellon, whose prescription at the start of the Great Depression was to “liquidate labor, liquidate stocks, liquidate farmers, [and] liquidate real estate” in order to “purge the rottenness out of the system.” It could also be applied to those today who favor returning monetary policy to the pre1914 gold standard. This does not mean that either fiscal policy or monetary policy has graduated to the status of a science like chemistry, underpinned by natural laws that generate precisely foreseeable outcomes. But surely we have learned since 1913 that fiscal expansion is appropriate under some conditions, even if it is inappropriate under others. © Project Syndicate

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March 15, 2013 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Learning from Germany Daniel Gros

Director of the Center for European Policy Studies

The Jakarta Post State-owned investment firm PT Permodalan Nasional Madani (PNM), has credited its 45.9 percent year-on-year profit jump in its 2012 yearend financial report to the growing economy and its affect on micro-businesses and their demand for micro-credit. Parman Nataatmadja, president director of PNM, attributed the growth in its top line and bottom line numbers to proceeds flowing from the firm’s Micro-Credit Service Unit. This unit, which disburses micro-credit loans to micro, small and medium enterprises, earned Rp 785 billion (US$81 million) from interest, contributing 91.2 percent to overall revenues.

Straits Times The twin car measures announced in February have affected Singapore’s Certificate of Entitlement prices in the first tender on Wednesday, but not exactly in the way observers expected. Certificates for cars up to 1,600cc ended at S$74,689 (US$59,835), down slightly from S$78,301 before the loans curb and tiered taxation system were announced. This is the first time that buyers of a economy car will pay substantially more for a certificate than the buyer of a luxury car since the certificate system was introduced 23 years ago.

The Times of India In a speech with strong progrowth bias, Reserve Bank of India governor Duvvuri Subbarao has said that rate cuts will not worsen the current account deficit, raising hopes that further cuts may be in the offing next week in the central bank’s mid-term review. Citing 8.2 percent as the minimum growth required, Mr Subbarao has said that India needs sustained double-digit growth to eliminate poverty. “In emerging economies such as India, import demand is less a function of lower interest rate than of increased income,” he said.

Inquirer Business British bank Standard Chartered expects the Philippines to outperform most other nations in Asia and enjoy another year of strong economic growth. In a report released on Wednesday, Standard Chartered said that the country’s gross domestic product could grow by 5.8 percent this year, and 6.1 percent the next. The bank noted that the Philippines’ economic growth in the coming years would exceed the country’s 10-year average performance of 5.2 percent from 2003 to 2012. “The Philippines stands out within the region for its bullish on-the-ground sentiment,” the report said.

T

en years ago, Germany was considered the sick man of Europe. Its economy was mired in recession, while the rest of Europe was recovering; its unemployment rate was higher than the eurozone average; it was violating the European budget rules by running excessive deficits; and its financial system was in crisis. A decade later, Germany is considered a role model for everyone else. But should it be? In considering which lessons of Germany’s turnaround should be applied to other eurozone countries, one must distinguish between what government can do and what remains the responsibility of business, workers, and society at large. The one area in which government clearly is in charge is public finance. In 2003, Germany ran a fiscal deficit that was close to 4 percent of GDP – perhaps not high by today’s standards, but higher than the EU average at the time. Today, Germany has a balanced budget, whereas most other eurozone countries are running deficits that are higher than Germany’s ten years ago. The turnaround in Germany’s public finances was due mostly to a reduction in expenditure. In 2003, general government expenditure amounted to 48.5 percent of GDP, above the eurozone average. But expenditure was cut by five percentage points of GDP during the next five years. As a result, on the eve of the Great Recession that began in 2008, Germany had one of the lowest expenditure ratios in Europe. But the government could not really do much about Germany’s key problem, namely its perceived lack of competitiveness. It is difficult to imagine today, but during the euro’s first years, Germany was widely considered uncompetitive, owing to its high wage costs.

hours, while wages continued to increase by 2-3 percent per year in the eurozone’s booming peripheral countries. On the other hand, while the German government did enact important labor-market reforms a decade or so ago, those measures apparently had no impact on productivity. All of the available data show that Germany had one of Europe’s lowest rates of productivity growth over the last ten years. That is not surprising, given the absence of any reforms whatsoever in the service sector, which is widely regarded as over-regulated and protected. Manufacturing productivity increased somewhat, owing to intense international competition. But, even in Germany, the service sector remains twice as large as the industrial branches. Deep service-sector reforms would thus be necessary to generate meaningful productivity gains in the German economy.

Productivity reform When the euro was introduced, it was widely feared that Germany’s competitiveness problem could not be resolved, because the authorities would no longer be able to adjust the exchange rate. But, as we now know, Germany did become competitive again – too competitive, according to some, owing to a combination of wage restraint and productivity-enhancing structural reforms. In fact, that analysis is only half right. On one hand, wage restraint was the key element, though the government could not impose it. Persistently high unemployment forced workers to accept lower wages and longer working

The reforms, even if initially implemented under duress, represent the strongest grounds for optimism. Over time, they will foster productivity and flexibility

But this did not happen even in 2003, because all the attention was focused on international competitiveness and manufacturing. Nonetheless, the German model does hold some useful lessons for the eurozone’s embattled peripheral countries today. Long-term fiscal consolidation requires, in the first instance, expenditure restraint; and labor-market reforms can, over time, bring marginal groups into employment.

Low-growth trap But the biggest challenge for countries such as Italy or Spain remains competitiveness. The periphery can grow again only if it succeeds in exporting more. Wages are already falling under the weight of extremely high unemployment rates. But this is the most painful way out, and it generates intense social and political instability. A much better way to reduce labor costs would be to increase productivity – and Germany is no model in this respect. Fortunately, however, some peripheral countries are now being forced by their creditors to undertake drastic reforms not only of

their labor markets, but also of their service sectors. The reforms, even if initially implemented under duress, represent the strongest grounds for optimism. Over time, they will foster productivity and flexibility, and the countries that implement them thoroughly should thus become more competitive. The most important lesson that has emerged from the reversal of fortunes within the eurozone over the last ten years is that one should not extrapolate from the difficulties of the moment. The reforms undertaken in some peripheral countries are much deeper than those undertaken by Germany a decade ago. Those countries that persist with these reform efforts could well emerge leaner and more competitive. Those that do not (Italy appears to be heading in this direction) will be stuck in a low-growth trap for a long time, while Germany’s top position is not guaranteed forever. Indeed, where individual countries will end up in ten years is highly uncertain, and the current pecking order within the European economy could change quickly. © Project Syndicate


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business daily March 15, 2013

CLOSING Philippine unit for Melco Crown

Spanish banks’ debt drops

Melco Crown (Philippines) Resorts Corporation – a new unit of Macau casino operator Melco Crown Entertainment Ltd – joins the Philippine Stock Exchange from next Tuesday according to a filing. The entity will sell up to 1.2 billion shares towards the cost of furnishing and operating the Belle Grande Manila Bay resort. MCE said in an October filing it is interested in investing US$650 million – in a reported US$1 billion joint venture – alongside local firm Belle Corp. The management deal with Belle – builder of the casino’s shell – was clinched on Wednesday.

The net debt owed by Spanish banks to the European Central Bank fell in February for the sixth straight month, official data showed yesterday, a sign that lenders are having an easier time financing themselves on the interbank market. Net average borrowing from the ECB totalled 271.84 million euros (US$353.49 million), an 8.9 percent drop from January, the Bank of Spain said. The growing reliance on the eurozone’s central bank was fuelled by the decision to pump more than 1 trillion euros in cheap long-term loans into the European banking system.

US plans to let spy agencies scour Americans’ finances Move is likely to trigger intense criticism from privacy advocates Emily Flitter and Stella Dawson and Mark Hosenball

Obama administration’s is seeking to tighten supervision on transactions

T

he Obama administration is drawing up plans to give all United States spy agencies full access to a massive database that

contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.

The proposed plan represents a major step by United States intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under United States law, is nonetheless likely to trigger intense criticism from privacy advocates. Financial institutions that operate in the United States are required by law to file reports of “suspicious customer activity,” such as large money transfers or unusually structured bank accounts, to Treasury’s Financial Crimes Enforcement Network (FinCEN). The Federal Bureau of Investigation already has full access to the database. However, intelligence agencies, such as the Central Intelligence Agency and the National Security Agency,

currently have to make case-by-case requests for information to FinCEN. The Treasury plan would give spy agencies the ability to analyse more raw financial data than they have ever had before, helping them look for patterns that could reveal attack plots or criminal schemes. The planning document, dated March 4, shows that the proposal is still in its early stages of development, and it is not known when implementation might begin. Some privacy watchdogs expressed concern about the plan when Reuters outlined it to them. A move like the FinCEN proposal “raises concerns as to whether people could find their information in a file as a potential terrorist suspect without having the appropriate predicate for that and find themselves potentially falsely accused,” said Sharon Bradford Franklin, senior counsel for the Rule of Law Program at the Constitution Project, a non-profit watchdog group. Despite these concerns, legal experts emphasize that this sharing of data is permissible under American law. More than 25,000 financial firms routinely file “suspicious activity reports” to FinCEN. The requirements for filing are so strict that banks often over-report, so they cannot be accused of failing to disclose activity that later proves questionable. This over-reporting raises the possibility that the financial details of ordinary citizens could wind up in the hands of spy agencies. Reuters

BMW achieves record year Carmaker eyes 2013 sales growth as it roll out its first electric vehicle

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erman top-of-the-range carmaker BMW said yesterday that 2012 had been the best year in the company’s history and forecast further sales growth this year. Group profit last year increased by 4.4 percent compared to 2011, to 5.1 billion euros (US$6.6 billion), on 11.7 percent higher revenues to 76.8 billion euros, the company, which also produces the Mini and Rolls-Royce, said. “The past year has been the most successful year in BMW group’s corporate history with new high levels achieved for sales volume, revenues and group earnings,” chairman Norbert Reithofer said in

a written statement. “We have achieved or surpassed all of our targets for 2012 in the face of very challenging market conditions,” he added. The company had announced in January that it achieved a new sales record in 2012 and in its annual results statement yesterday confirmed it sold 1.84 million vehicles last year, an increase of 10.6 percent over 2011. “We are again targeting further sales volume growth worldwide in 2013 and hence a new record level for deliveries,” Mr Reithofer said. BMW is introducing the 3-Series GT and the 4-Series coupe and is preparing to roll out its first electric

“Economic conditions are likely to remain challenging in many markets,” Mr Reithofer warned

vehicle, the i3 city car. The expansion is aimed at securing a third consecutive year of record sales in 2013 and countering Audi, which trails the BMW brand by 407 car deliveries after two months in 2013. The investment comes as European car sales head for a sixth

consecutive annual decline this year. “Economic conditions are likely to remain challenging in many markets,” Mr Reithofer warned. On the back of its results, BMW group said it would propose increasing the dividend to 2.5 euros per share from 2.3 euros for 2011. AFP/Bloomberg


Macau Business Daily, March 15, 2013