Spend spend spend as city rakes in cash
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Each of Macau’s 26,000 civil servants – along with other govt current expenses – cost the public purse on average 884,615 patacas (US$110,755) in the eight months to August, Financial Services Bureau data show. But Macau – despite an infrastructure spending spree of 2.8 billion patacas in just two months – is still likely to register a huge budget surplus for 2012. Page 3
Peace breaks out at New Century T
he Macau junket operator beaten in June by masked intruders at the New Century Hotel, Taipa, is likely to be named today executive director of a Hong Kong-listed gaming investment company – Amax Holdings Ltd – that auditors previously stated might have been manipulated by him. In return Ng Man Sun is giving up any claim he had to control either the New Century – or the Greek Mythology Casino inside it – via Amax. His apparent good intent is backed up by a Macau court injunction asserting the right of the hotel and casino holding companies – controlled by his former girlfriend Chan Mei Fun – to run the operations without him. Granting Mr Ng an executive directorship in Amax is part of a pragmatic if apparently cynical peace deal. Mr Ng, a 24 percent shareholder in Amax and long-time junket partner of Stanley Ho Hung Sun, was criticised – though not by name – in Amax’s 2012 annual report by independent auditor Baker Tilly Hong Kong Ltd. It was over the verifiability of a HK$2.06 billion (US$265.6 million) loss on loans for junket gambling made by Ace High, a firm controlled by Mr Ng.
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Developer holds firm on Guia Hill tower
Consumer watchdog needs legal teeth
The government is to have fresh talks with the developer of a controversial part-built 126-metre-high residential building near historic Guia Hill. The government would rather the scheme had never been started. Now the skeleton is up, the developers don’t want to budge. The new rules allow for only 52 metres.
The city’s consumer watchdog had a 20 percent rise in inquiries from the public in the first half of 2012 said one of its management team. Wong Hon Neng, president of the Consumer Council’s executive committee, said as the city’s consuming class grows and gets more exposure to selling and marketing campaigns, the greater the need for improved consumer protection in Macau’s legal system.
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Judge in Jacobs case raps LVS
‘Neither Monte Carlo nor Vegas’: SJM boss Page 2 www.macaubusinessdaily.com
Chinese economy ‘on track’, says Wen Page 5
Year I - Number 118 Wednesday September 12, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
business daily September 12, 2012
City’s future in tourism starts at unique features A successful tourist destination should have its own unique brand, says SJM’s executive director Xi Chen email@example.com
acau is not the Monte Carlo of the Orient, nor is it the Asian Las Vegas, but it should highlight its own best qualities, SJM Holdings Ltd executive director Ambrose So Shu Fai told visiting tourism officials yesterday. The long-time associate of gambling tycoon Stanley Ho Hung Sun told participants at the Global Tourism Economy Forum the territory had two dominant parts to its tourism offering, a rich cultural history and gambling. “Macau was the first intersection of East and West in Asia. It has 500 years of history,” he said during a keynote speech yesterday. “Gambling was legalised in 1847, 84 years earlier than Las Vegas and it is now the largest gambling destination in the world. He said the city enjoyed an advantageous location and had benefited from improved transport around the Pearl River Delta that had made travelling to Macau more convenient. To make the most of its natural
remain competitive.” Two months ago, a referendum supported Taiwan government plans to build casino resorts in the Matsu archipelago – a 30-minute ferry ride from Fujian in the mainland. Mr So told the conference the make-up of the city’s primary source of tourist arrivals was changing. Average incomes and more leisure time in the mainland had created new markets, including family holidays and multi-day visits. The Pearl River Delta region, which includes Macau and Hong Kong, had the potential to offer multi-destination travel itineraries to tourists. To make the best of these changes, Macau needed to be further integrated into the region to transform itself to a world-class leisure hub.
A different type of mainland tourist is destined for Macau, as family holidays and multi-stop itineraries become more popular, Ambrose So says
advantages, the city should follow a path of “diversification plus integration”. “The central government’s 12th Five-Year Plan will propel Macau to further strengthen its regional
cooperation,” Mr So said. “More and more cities want to set up casinos. The city needs to develop more diversified facilities and activities to attract tourists and
Speaking to reporters after his speech, Mr So said SJM is still interested in taking over two parcels in Cotai that were previously included in Sands China Ltd’s plans for that area – the so-called lots 7 and 8. The government took back the land from Sands China in 2010 and has decided to keep the two sites as land reserve. SJM is likely to be awarded another piece of land on Cotai, next to the Macau Dome. The casino operator applied for a 70,000 square-metre plot. Mr So yesterday said it was too soon to talk about SJM’s project for Cotai and the number of gaming tables the operator plans to have in that property.
Complaint against Macao Daily reaches ombudsman
he New Macau Association wants the Commission against Corruption to review a government decision to okay the Macao Daily News letting office space to a think tank. The pan-democrats reported the case to the graft watchdog and ombudsman yesterday and suggested there was an “administrative error” in the government’s decision. The government said last month they saw no problem with the Chineselanguage newspaper providing office space in its building to the Macau Civility Development and Research Centre for a “service charge” of 29,000 patacas (US$3,625) a month. New Macau Association president Jason Chao Teng Hei said the
newspaper’s land concession says the office is exclusively “for own use”. Mr Chao said the same clause was in contracts for affordable public housing and that the example from the Macau Daily News inquiry would lead to some subsidised flat owners subletting or leasing their flats. Mr Chao said the ombudsman should ask why the government has not set accounting thresholds for associations receiving public funding. The pan-democrats suggested in July that any association receiving more than 498,000 patacas of public funds should be made to disclose their financial reports. A threshold is included in existing legislation but has not been spelt out. T.L.
September 12, 2012 business daily | 3
Public investment leaps in August Government still spending more on staff salaries and benefits than on public projects Vítor Quintã
n two months alone, the government has spent a staggering 2.8 billion patacas (US$350.6 million) on public projects, almost twice as much as in the January-May period. According to provisional data released by the Financial Services Bureau yesterday, the administration used up 1.3 billion patacas in August alone, after having spent a staggering 1.5 billion patacas in June. The Bureau said the June boom was due to the construction works of the new campus of University of Macau in Hengqin Island, including a riverbed tunnel. Up to May, authorities had spent just 1.43 billion patacas on the plan. It also includes the reclamation works for the offshore artificial island that will be the landing point for the Hong Kong-Zhuhai-Macau Bridge. Despite the boom, infrastructure accounts for just 22.6 percent of the government’s 19.8 billion patacas investment budget this year. Official data show that public spending tends to rise in the second half of the year. But in order to reach the 2012 investment target, the authorities would have to spend over
MOP 23 billion
Macau government’s running expenses by end August
19.8 billion patacas public investment plan includes new University of Macau campus in Hengqin Island (Photo: Manuel Cardoso)
15.3 billion patacas in the remaining three-and-half months of the year. The administration has spent most – 23 billion patacas – on running costs, including salaries and benefits for public servants. The government has already spent 53.6 percent of its administration budget for the year, much higher than for public investment. A 6.5 percent pay rise for civil workers came into effect in May. Running expenses that have fuelled a 36.5 percent year-on-year
growth in overall spending to 29.65 billion patacas. However, this figure accounts for less than half of the 65.87 billion patacas budgeted. In fact, spending is likely to even fall below the 48.98 billion patacas registered last year. With the pace of gambling growth recovering slightly in August after near standstill year-on-year in July, the government already pocketed 80.4 percent of the revenue it had forecast for the whole year.
The revenue is likely to overtake the estimate of 101.89 billion patacas during next month. Macau’s budget surplus has already exceeded the 36 billion patacas forecasted by the government for the whole of 2012 and has reached 52.2 billion patacas. If this pace remains unchanged then the territory would close the books for the whole year with a surplus of 78.3 billion patacas, almost 2.2 times higher than it predicted.
China Eastern seeks 2 bln yuan funding Govt takes Shanghai-based carrier flies to Macau once a day
hina Eastern Airlines Corp., which flies between Shanghai and Macau, expects to raise more than 2 billion yuan (2.5 billion patacas) selling shares to its stateowned parent, according to two people familiar with the situation. The offering will be bigger than similar sales by Air China Ltd and China Southern Airlines Co. to their state-owned parents announced earlier this year, said the people, who asked not to be identified as the talks are private. The Shanghai-based carrier is one of four airlines currently connecting Macau to Shanghai-Pudong airport,
with one daily flight. China has acted to help the nation’s big three carriers as they contend with slower traffic growth and an end to gains from currency appreciation. China Eastern, mainland’s second-largest carrier by passenger numbers, said last week it was planning a share sale to help pare debt. “Capital injection will give some relief to China Eastern’s stretched balance sheet,” said Davin Chunpong Wu, a transportation analyst at Credit Suisse Group AG in Hong Kong. “This sort of support will continue
China Eastern plans to spend 12.6 billion yuan in the second half
as the government encourages the highly regulated airline industry to expand into less-profitable new markets such as western China.” A capital injection may boost China Eastern’s book value, according to Mr Wu. This is because the placement is likely to be priced with reference to the airline’s domestic shares, which are trading at about a 74 percent premium to its Hong Kong stock and a 55 percent premium to book value, he said. China Eastern closed at HK$2.32 in Hong Kong and 3.29 yuan in Shanghai before trading was suspended last week. China Eastern’s first-half profit tumbled 65 percent, the smallest drop among the nation’s big three airlines, to 806.9 million yuan because of higher fuel costs and currency losses. China Eastern plans 12.6 billion yuan in capital spending in the second half, mainly for plane purchases. It will receive 21 new aircraft including Airbus SAS A320s, twin-aisle A330s and Boeing Co. 737s. Separately, China Eastern plans to sell 4 billion yuan of 270-day bills today, according to a statement posted on the Shanghai Clearing House website yesterday. T.A./Bloomberg
back land for Guia footbridge
he government repossessed more than 4,400 square metres of land near the Liaison Office of the Central People’s Government in Macau for the second phase of the Guia Hill pedestrian system. ThedirectoroftheLand,PublicWorks and Transport Bureau, Jaime Carion, told reporters that the land would be used for a 30-metre pedestrian overpass linking Guia Hill and the ZAPE area. Mr Carion said the occupants of the land did not resist the repossession. The authorities removed some construction materials left on the plot. Since March 2009, the government has repossessed 48 plots of land that it says were occupied illegally. Their combined area was about 196,000 square metres. The Land, Public Works and Transport Bureau invited bids for the construction of the Guia Hill pedestrian system last month. It drew seven bids ranging from 39.9 million patacas (US$4.99 million) to 48.8 million patacas. The work should be completed by the end of next year. T.L.
business daily September 12, 2012
macau Non-gaming key for MGM Cotai
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Non-gaming elements will account for one-third of MGM China Holdings Ltd’s new project in Cotai, said Pansy Ho Chiu King. The company’s cochairwoman said on the sidelines of yesterday’s Global Tourism Economy Forum that MGM’s future development might require more imported labour, as long as working opportunities for Macau human resources were ensured. While the neighbouring regions plan to open new casinos, the city could take a step ahead to develop non-gaming sectors like meetings, incentives, conferencing and exhibitions, she said, quoted by public broadcaster TDM.
HOSPITALITY Labour magnet Labour shortages, particularly in tourismrelated businesses, have become permanent features of the economy. The unemployment rate has been around 3 percent or less for several quarters and the number of unemployed has oscillated around 10,000 or fewer for a long time.
Show goes on at New Century and Greek Mythology Beaten junket boss to be named director of Amax in deal with ex-girlfriend Associate Editor
T Gaming is an important industry, not least because of its importance in the labour market. The proportion of the employed workforce that work in the gaming industry has been increasing steadily, and by the end of the second quarter of this year was about 15.3 percent. This trend is likely to continue, increasing the domination of the labour market by the gaming industry and the closely associated restaurant and hotel industries. Despite the recent growth in the gaming industry, the number of vacancies in the industry as a percentage of the number of people it employs is relatively high. The number of people employed by the gaming industry grew by 20 percent between the second quarter of 2010 and the second quarter of this year. But the number of vacancies in the gaming industry is still 3.5 percent of the number of people it employs.
he Macau junket operator given a beating in June by masked intruders at the New Century Hotel, Taipa, is due to be appointed an executive director of Amax Holdings Ltd in a special general meeting in Hong Kong today according to a regulatory filing. The move marks a peace deal that industry sources say has been brokered over several months between the victim of that assault, Ng Man Sun – also known as Ng Wai – and his former girlfriend Chan Mei Fun, also known Chen Mei Huan. The pair had been business partners as well as lovers but after an acrimonious breakdown in the relationship earlier this year they became embroiled in a power struggle for control of the New Century and the Greek Mythology Casino – licensed by Sociedade de Jogos de Macau SA – housed inside it. Mr Ng’s savage beating with sticks and hammers at the hands of six still unidentified men sparked negative and lurid headlines locally and around the world.
The continuation of these trends will put more pressure on other industries. They will have to cope both with the shortage of qualified workers and with the attraction that gaming industry has for the few qualified workers available. The gaming industry can afford to pay salaries well above what most other industries can afford. It could also absorb instantly a high proportion of the unemployed, assuming they were suitably qualified. The pressure faced by other industries is well expressed by the number of vacancies in the gaming industry as a proportion of the number of unemployed. In the second quarter of this year the number of vacancies in the gaming industry was the equivalent of one-quarter of the unemployed. In the fourth quarter of 2010 it was 42.3 percent. J.I.D.
From his hospital bed Mr Ng launched a bizarre and at times rambling publicity campaign including a series of advertisements in local Chinese-language newspapers that all but accused his former partner of being behind the attack. Ms Chan’s side also held a series of at times chaotic press conferences in which people claiming to be her relatives – she was reported to be lying low in the United States – issued denials of the accusations and in turn blamed Mr Ng for trying to wrest control of the hotel and casino from her. SJM’s parent company Hong Kong-listed SJM Holdings Ltd described the feud as “an internal matter”. But Business Daily understands executives at the highest level of the company had a role in brokering a peace deal as the row reflected badly on Macau in general and on SJM as the casino licence holder in particular. Mr Ng worked for more than three decades as a
Ng Man Sun
junket operator partner to SJM’s founder Stanley Ho Hung Sun. In August Ambrose So Shu Fai, chief executive of SJM Holdings, revealed part of the price of that deal. SJM took back 40 gaming tables from Greek Mythology’s table allocation, as well as 200 employees. On August 14 Amax said in a filing to the Hong Kong Stock Exchange that a new share structure had been proposed for the company. Business Daily can now reveal that Ms Chan subscribed to that new share structure. Mr Ng kept his 24 percent in Amax, but in effect relinquished any claim to control Greek Mythology via his Amax holding. Ms Chan was confirmed as a 76 percent shareholder in both the hotel and Greek Mythology, and will have new directors loyal to her on the Amax board if all goes to plan at the general meeting today.
Under pressure Part of the reason for Mr Ng’s previously aggressive pursuit of an interest in Greek Mythology is he was under financial pressure because of HK$2.06 billion (US$265 million) in bad debts racked up by Amax. According to Amax’s latest annual report, the amount represents combined losses on loans made by an Amax subsidiary to another company, AMA International, an aggregator of junkets. AMA used the money to provide gambling credit to agents and casino players. Mr Ng
needed access to Greek Mythology’s earning power to cover the Amax debts. But SJM had complained privately that in a market currently constrained by a 5,500 government cap on live tables, Greek Mythology’s allocation – understood to be around 200 – was much bigger than could be justified by the casino’s current business. Business Daily can also now reveal that the peace deal was cemented after Macau’s Court of First Instance recently issued an injunction. It confirmed the right of the Greek Mythology holding company and the New Century Hotel entity – Empresa Hoteleira de Macau Ltda, also known as Macau Hotel Developers Ltd (in turn owned by two British Virgin Islands shell companies) – to operate the casino and hotel without involvement from Mr Ng. Sources suggested it could take two or three years however before that temporary judgement is confirmed by the court – depending on whether Mr Ng decides to appeal. A casualty of the peace is a plan – announced in February – to raise US$200 million by listing Greek Mythology on the Hong Kong Stock Exchange through a new holding company, Greek Mythology Holdings Ltd. Until the Court of First Instance gives a permanent ruling confirming Ms Chan’s control of the hotel and casino, then it’s unlikely that the Listing Committee of the Hong Kong bourse would sign off on the plan, said insiders.
September 12, 2012 business daily | 5
MACAU Macau sales help Shuffle Master Casino equipment maker Shuffle Master Inc. reported a 9 percent year-on-year increase in its revenue during the quarter ended July, partially thanks to higher sales in Macau. Revenue rose to US$63.4 million (506.4 million patacas) “due to recurring revenue growth in proprietary table games,” the United States company said. In addition, revenue from equipment sales grew 8 percent to US$24.4 million, helped by a sale of shuffler units “to a casino customer in Macau,” Nasdaq-listed Shuffle Master said. However, the firm’s earnings missed analysts’ estimates.
LVS not ‘forthright’ about some evidence: judge Casino op faces possible fine in U.S. court battle with former Sands China CEO, Steve Jacobs Associate Editor
judge said on Monday Las Vegas time that casino operator Las Vegas Sands Corp. had not been “forthright” when it failed to disclose that some computer evidence for a lawsuit – including data it had previously said couldn’t be taken out of Macau – had already been brought to the United States. The data – including files from the laptop of sacked former Sands China Ltd chief executive Steve Jacobs – are, says the former company executive, central to his case for wrongful termination. His lawyers argue that LVS’s failure to disclose the export of the material from Macau are part of a pattern of behaviour by the company aimed at impeding progress of the case in Clark County District Court. LVS says the suit should be heard in Macau, where Mr Jacobs was based during his tenure, not in Nevada. The firm argues that Sands China, the Macau operating entity listed in Hong Kong and incorporated in the Cayman Islands, doesn’t do business in Nevada. The Nevada Supreme Court put the case on hold last year while case judge Elizabeth Gonzalez resolved those jurisdictional disputes. The judge said on June 28 that while she won’t jail anyone over the data disclosure
dispute and probably won’t prevent LVS from using the disputed evidence in court, she might impose a fine.
‘Illegal demands’ Mr Jacobs, the former CEO of Sands China, sued in 2010 after he was sacked. He alleges he was dismissed because he wouldn’t give in to his then boss’s “illegal demands.” Steve Jacobs said the LVS chairman Sheldon Adelson directed him to investigate secretly Macau government officials and to use “improper leverage” against them. Mr Adelson, aged 79 – the seventh richest person in the U.S. with a net worth of approximately US$24.9 billion (199 billion patacas) as of March according to Forbes – strongly denies the claim. He and his wife Miriam have given about US$36 million to Republican Party socalled super-PACs [political action committees] so far this presidential election cycle. The couple contributed US$10 million in June to Restore Our Future, which is dedicated to backing Republican Mitt Romney’s presidential campaign. The timing of the court case during the run up to the presidential vote
and Mr Adelson’s position as a major Republican donor has given an extra and potentially partisan dimension to discussion of the lawsuit in the U.S.
Slugging out In court neither Mr Jacobs nor LVS have pulled their punches. A filing in June by Mr Jacobs’ lawyers alleged LVS had adopted a “prostitution strategy” in its Macau casinos personally approved by Mr Adelson. Las Vegas Sands and Sands China called the allegations “a new low” in Mr Jacobs’s efforts to “besmirch” the companies and draw media attention. “Mr Adelson regards prostitution as morally abhorrent,” lawyers for the casino operators said in a July 17 filing. “The notion that Mr Adelson would approve a ‘prostitution strategy’ is as insulting as it is absurd.” Mr Jacobs seeks unspecified compensatory and punitive damages, including for severance pay and unexercised stock options in LVS and Sands China to which he says he’s entitled because he wasn’t fired for cause. Sands China said in a July 31 filing to the Hong Kong Stock Exchange it was being investigated by Macau’s
Disputed evidence – former Sands China boss Steve Jacobs, top, claiming wrongful termination against LVS, chaired by Sheldon Adelson
Office for Personal Data Protection in relation to “the alleged transfer from Macao by VML [Venetian Macao Ltd] to the United States of America of certain data.” The company said it couldn’t comment further on that inquiry. The investigation is understood to be ongoing.
Steve Wynn wins US$20 mln in slander case Claims casino producer threatened to kill and bury soft porn boss malicious says jury Steve Gorman
asino owner Steve Wynn was awarded US$20 million (159.7 million patacas) in damages on Monday United States time in his defamation suit against a producer of soft pornography. A court found “Girls Gone Wild” creator Joe Francis had slandered Mr Wynn for falsely claiming the Las Vegas and Macau casino boss wanted him killed over a gambling debt. A Los Angeles County Superior Court jury, which began its deliberations on Friday, also found that Mr Francis acted with malice, setting the stage for a second trial phase – due to open on TuesdayU.S.time–todetermine
Monday accused Mr Francis, 39, founder of a video series featuring college-age women exposing themselves for the camera, often during alcoholsoaked parties, of publicly stating on several occasions that MrWynnwantedhimkilledwith a shovel and buried in the desert.
Court battle – Joe Francis, left, ordered to pay US$20 mln damages to Steve Wynn
whether Mr Francis should also pay punitive damages. The sum awarded so far was US$8 million higher than the amount sought by Wynn’s lawyers and comes on top of a
US$7.5 million judgment the 70-year-oldcasinoexecutiveand his company won against Mr Francis in a separate defamation case earlier this year. The lawsuit decided on
Mr Wynn said the slanderous statement was first uttered in April 2010 during a court hearing stemming from a US$2 million gambling debt Mr Francis allegedly ran up at one of the Wynn casinos. The court heard the statement was repeated during a nationally televised broadcast of ABC’s “Good Morning America”. The Wynn chairman said the accusation by Mr Francis was fabricated and posed a threat of undermining his business empire in Nevada, where the gambling industry is tightly regulated.
The large size of the award demonstrated that the jurors “really understood that this was a vile, reprehensible characterassassination attempt,” said Mitchell Langberg, one of Mr Wynn’s attorneys. “Not only does his career depend on his reputation, but 12,000 employees at Wynn Las Vegas depend on his reputation,” Mr Langberg said of his client. The verdict in the Wynn Resorts Ltd founder’s favour capped a week-long trial during which he and Mr Francis both testified, as did music producer Quincy Jones. Mr Francis claimed threatening e-mails about him from Mr Wynn were seen by others, including Quincy Jones. But Mr Jones testified last week that he was unaware of any verbal or written threats by Steve Wynn against Joe Francis. Neither Mr Wynn nor Mr Francis was in court for the verdict. Joe Francis said in a statement he expects the verdict to be overturned on appeal due to judicial error. Reuters
business daily September 12, 2012
macau Macau Insurance ratings unchanged
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Insurance rating company A.M. Best Co. has kept its current ratings on Macau Insurance Co. Ltd and Macau Life Insurance Co. Ltd. The two insurers, part of Hong Kong-based Dah Sing Financial Group, have a financial strength rating of ‘A-’ and an issuer credit rating of ‘a-’, the fourth-best rating. The outlook for the ratings is stable. A.M. Best Co. said that the capital levels of the insurers remain adequate. The companies also maintain a cautious exposure to risky practices, more conservative than its competitors.
Dominance of services External trade is characterised by two dominant trends. One has been the rise of service exports associated with the gambling and tourism boom. The other is the decline in the export of manufactured goods, which has been linked to the decline of the textile industry. That downturn is sometimes portrayed as a negative and there is public sentiment that something must be done to arrest its decline. The public is right to be concerned about workers losing their jobs and that, in some cases, may require government intervention. Overall, these two trends in exports seem to be for the better and the changes may be less significant than they look.
Govt hopes talk will end Guia tower row An official says the government will take the dispute over San Va’s Guia Hill housing project to court only if all else fails Tony Lai
Exports of services are bigger, noticeably, than exports of goods, and that has been the case for a long time. Since 2004, before the gambling boom, services exports were three to five times greater in real terms than exports of goods. Even excluding the investment in the gambling industry, the export of goods were bound to decline as international trade was liberalised. Textiles was always an industry with a time limit. The decline is more substantial than it looks because a big share of exports of goods is actually re-exports. That is, goods that were not produced here. Imports of services have since overtaken imports of goods. The ever increasing reliance on services is not necessarily a bad development for the city’s economy.
Developer San Va intended to build a 126-metre-high residential building on a plot near Guia Hill (Photo: Manuel Cardoso) The second graph charts the quarterly balance of trade figures from 2004 to the end of the first half of this year. The balance of trade for goods has been negative for a long time and if manufacturing continues to decline and the population to increase, that is bound to continue. It is changing at a much slower rate than the overwhelmingly positive balance of trade in services, whose value has more than tripled since 2004, dragging with it the total balance of trade in goods and services, which has almost increased four-fold in the past seven and a half years. J.I.D.
he government says it will hold more talks with the developer of the stalled housing project near Guia Hill in an effort to settle their dispute, with court action a last resort only. In a full-page newspaper advertisement on Monday, developer San Va Construções e Fomento Predial Ltda, accused the government of holding up the project. San Va gave the government an
ultimatum: either resume talks soon or allow the company to complete the project as originally proposed. The company bought a plot of land near Guia Hill in 2006 with a view to building a 126-metrehigh residential tower. Two years later the government capped the height of buildings around the Guia Lighthouse at 52.5 metres. San Va stopped work on the
project and has been haggling with the government about it ever since. Land, Public Works and Transport Bureau director Jaime Carion said yesterday that the government was in constant contact with the company. Mr Carion praised San Va for cooperating with the government and abiding by the height limit. However, he warned: “No timetable has been set, but the negotiations won’t continue endlessly.” Mr Carion told reporters that if no agreement was reached, the developer could sue the government and the government could take legal action to expropriate the land. “But we don’t want to reach this stage as this process takes a long time,” he said. San Va has twice in the past fortnight criticised the government in advertisements in the Chineselanguage Macao Daily News. San Va said the government’s offer in December 2010 to buy the development for 1,726 patacas (US$215.80) per square foot of usable area was “severely detached from reality”. Data from the Financial Service Bureau show that the average price of residential space in the Guia Hill district in December 2010 was 2,135 patacas a square foot. Mr Carion said: “The current status of the negotiation is that both sides have yet to reach a consensus over the price but we will continue to communicate with the developer.” He said the government and San Va would continue to consider prices asked by other developers but did not say what these prices are. “We will continue the talks based on the conditions of the good use of public money and in line with the public interest and law,” Mr Carion said.
September 12, 2012 business daily | 7
Consumer law is out of date, council says The Consumer Council tells the government it must do more to protect consumers in the 21st century Tony Lai firstname.lastname@example.org
and Finance Francis Tam Pak Yuen. Mr Wong did not say how urgent it was to bring the law up to date. Official data released this week show consumers consulted the council on 2,972 occasions in the first half of this year, an increase of about 20 percent on the same period last year. They lodged 760 complaints, almost 10 percent fewer. Consumers made 13 complaints about financial services, many of them about banks increasing their charges without advance notice. The Consumer Council said it had made public the findings of
Consumers made 13 complaints to the Consumer Council about financial services in the first half
he Consumer Council wants changes to the law to guard the privacy of consumers and protect them from misleading advertisements. The president of the council’s executive committee, Wong Hon Neng, said the 20-year-old law on consumer protection had not kept up with changes in consumer
behaviour such as shopping online and widespread use of credit cards. Mr Wong told the Chineselanguage Macau Daily News the council had submitted its opinions on the matter to the appropriate government departments. The Consumer Council operates under auspices of Secretary for Economy
Increase in H1 complaints about mobile phones
numerous surveys of charges for financial services to allow consumers to make informed choices. Consumers made 47 complaints about retailers in the first half, about 50 percent more than a year before. Many of the complaints were about clothes or leisure services. In an effort to polish Macau’s reputation as a place for tourists to visit, the council has called for retailers to get their sales staff to do a better job of describing their merchandise to shoppers. Consumers made 50 complaints about mobile phones in the first half, about 70 percent more than a year before. Mainland visitors lodged twothirds of these complaints. The council attributed this increase to differences in what consumers in Macau and the mainland expect of a mobile phone and the subscription that goes with it. Consumers made 122 complaints about telecommunication services in general, one fewer than a year before. Buyers complained they had not known how much they would end up paying when they opted for some service plans.
Hengqin tests new anti-graft setup The mainland conducts an experiment in fighting corruption and hopes some of the experience of Macau and Hong Kong will rub off Xi Chen email@example.com
he central government will make Hengqin Island in neighbouring Zhuhai the test bed for new arrangements for fighting corruption in mainland China. Beijing established an office of clean governance on Hengqin on Saturday. The new office combines the anti-corruption office, the public prosecutor’s office, the auditor’s office and the Communist Party commission for discipline inspection. The China Daily quoted party chief Li Jia as saying Hengqin would “borrow from the experiences in Hong Kong and Macau to build a role model for others to follow”. An official of the Zhuhai Commission Office for Public Sector Reform, Lei Zhiyu, said details of what the new office would do and how it would do it would be revealed in the coming months. The China News Service quoted a spokesman for the party discipline committee in Guangdong as saying: “By integrating these functions, we can build a platform to share information and resources to fight and prevent corruption.” “The office is a trial to shift the functional departments from coordinated to integrated methods.” He said the office was also
expected to require fewer people and less money to run. The deputy director of the Administrative Committee of Hengqin New Area, Ye Zhen, said the government would use Hengqin’s special status to research ways to fight corruption and to draft regulations for the purpose. Mao Shoulong, a professor of gov er n a n ce a t th e R en m i n University of China, told the China Daily that the convergence of the administrative, judicial, auditing and party functions would improve cooperation and multiply the forces ranged against corruption. However, the government should think about how to turn the convergence into real synergy. Each office used to operate separately, so it was important to keep the independence and professionalism of each office free from interference by the others. The Global Times quoted a researcher at the Chinese University of Political Science and Law, Wang Zhenyu, as saying that combining all four offices would compromise the independence of the prosecutor’s office, which was a judicial body. “This model will turn the prosecutor’s office into an administrative office,” Mr Wang told the news organisation.
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business daily September 12, 2012
Beijing sends ships in islands row
strong protest over Tokyo’s move to purchase the islands, while vowing to take counter-measures.
Tension has been brewing over the East China Sea
hina has dispatched two patrol ships to “assert its sovereignty” over islands at the centre of a row with Japan, state media reported yesterday, as Tokyo completed its purchase of the disputed territory. The two marine surveillance ships had reached the waters around the Diaoyu islands – known in Japan as the Senkaku islands – and would “take actions pending the development of the situation,” the Xinhua news agency said. The arrival came as the Japanese government yesterday announced it had completed its planned purchase of the islands. “China sees it as a pretext for Japan to reaffirm its sovereignty
of the islands, and the Chinese leadership cannot afford to be seen as being complacent in light of this,” said Stephanie Klein-Ahlbrandt, the Beijing-based North East Asia project director for the International Crisis Group. “We will see more tensions over this disputed area, with higher risk for skirmishes or incidents that could be hard to de-escalate.” The islands are near rich fishing grounds and potentially huge maritime gas fields and have been at the heart of long-running territorial disputes between the world’s second and third-largest economies. “This should cause no problem for Japan’s ties with other countries and regions,” said Japan’s Chief Cabinet Secretary Osamu Fujimura.
“This is just the ownership of land, which is part of Japan’s territory, moving from one [private] owner to the state, and should not cause any problem with other countries,” Mr Fujimura said. “Having said that, we don’t want the Senkaku issue to affect overall Sino-Japanese relations. Because it is important to avoid misunderstanding and unforeseen development, we have been closely communicating with China through diplomatic channels to this day.” Mr Fujimura did not disclose the purchase price, but Japanese media said last week the government was set to pay 2.05 billion yen (US$26.26 million). Beijing had earlier summoned the Japanese ambassador and lodged a
China and Japan have been locked in a diplomatic spat over the islands
Chinese Premier Wen Jiabao said the islands were “an inherent part of China’s territory” and vowed his country would “never ever yield an inch” on its sovereignty. “We have been monitoring the developments of the situation closely and will take necessary measures to uphold China’s territorial sovereignty,” China’s foreign ministry spokesman Hong Lei told reporters. “Should the Japanese side insist on going its own way, it shall have to bear all serious consequences arising therefrom.” President Hu Jintao had warned Japan against buying the islands on Sunday. “It is illegal and invalid for Japan to buy the islands via any means. China firmly opposes it,” China’s CCTV quoted Mr Hu as saying. “China will unswervingly safeguard its sovereignty. Japan must realise the severity of the situation and not make a wrong decision.” Often testy Japan-China ties took a turn for the worse in August when pro-Beijing activists, including one from Macau, landed on one of the islands. They were arrested by Japanese authorities and deported. Days later about a dozen Japanese nationalists raised their country’s flag on the same island, Uotsurijima, prompting protests in cities across China. Japan’s government currently leases four islands and owns a fifth. It does not allow people to visit and has a policy of not building anything there. China’s state television and all major Chinese dailies in China yesterday highlighted Beijing’s condemnation of the purchase, in what appeared to be an official effort to stoke patriotic sentiment over the issue.
Bailiffs remove HK occupy activists New loans poi Scuffling broke out at the HSBC plaza
As slowdown starts to im
Stephanie Tong and Stanley James
ccupy Central protesters in Hong Kong, the last major holdout of the global Occupy movement, were evicted by court bailiffs from HSBC Holdings Plc’s Asian headquarters. At least two demonstrators were carried out by the court bailiffs, who have also started to pack and remove the belongings of the protesters. “They were able to hang on to the spot largely because of the tolerance of HSBC,” said Joseph Cheng, a professor of political science at the City University of Hong Kong. “The political culture of Hong Kong is that to generate a movement, a campaign to attract a lot of public attention, media attention and then to exert pressure on the authorities. Usually the protesters do not have the resources to maintain the campaign for a very long time.” The Occupy Central protesters took over the plaza under the iconic HSBC building, designed by Norman Foster, last October. Police in London removed campaigners on June 14, while U.S. demonstrations ended in confrontation with authorities in November. Scuffling broke out earlier yesterday at the HSBC plaza, with the protesters and security guards pushing each other. The demonstrators, armed
Hong Kong occupy protesters had refused to leave
with a bullhorn and whistle, yelled and struggled. The area was littered with tents, couches, and mats.
Group’s ideals Occupy Central, with protesters numbering about 50 at its peak, wants to create a community space for the discussion and sharing of the group’s ideals, activists said on a Facebook page. “Our consensus is that we will persist and stay till the end,” according to a statement posted on the Facebook page of Occupy Central on August 29. The demonstrators were ordered to leave the area before 9pm on August 27 by Hong Kong’s Court of First Instance. There were about 12
protesters on site yesterday. While Hong Kong has seen its wealth gap widen to a record, stoking public discontent, the Occupy Central movement has failed to attract demonstrators equal in number to those who took part in protest marches this year. Occupy Wall Street plans to mark its first anniversary by trying to block traffic in the financial district and encircle the New York Stock Exchange, according to the organisers. The September 17 protest, dubbed S17, may include attempts to make citizens’ arrests of bankers, and some activists intend to bring handcuffs, the organisers said. Bloomberg
hina’s new lending was the highest of any August on record as the government tries to reverse an economic slowdown that threatens to cost jobs and undermine support for the Communist Party. New local-currency lending was 703.9 billion yuan (US$111 billion) last month, the People’s Bank of China said yesterday in Beijing. The pickup in lending follows interest-rate cuts in June and July, government approvals for subway and road projects and a warning from the labour ministry that the slowdown is starting to hit the job market. Data earlier this week showed imports fell in August and industrial output rose the least in three years, building the case for more stimulus. “The data suggests that China is managing to boost the funding necessary to implement stimulus measures,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said in a note yesterday. “This bodes well for a clearer recovery of growth momentum” in the fourth quarter, he said. Chinese stocks fell after auto sales rose less than analyst estimates and Macquarie Group Ltd cut its forecast for full-year economic growth. The CSI300 Index of the top Shanghai and Shenzhen listings closed down 0.6 percent at 2,311.9. The Shanghai Composite Index shed 0.7 percent.
September 12, 2012 business daily | 9
greater china Fuel prices up for a second month Chinese authorities yesterday hiked government-set fuel prices for the second month in a row with shares in listed oil giants falling despite expectations the move would narrow their losses. State planner the National Development and Reform Commission said late Monday it would raise retail prices for petrol and diesel. The benchmark price for petrol rose 6.6 percent to 8,840 yuan (US$1,403) per tonne and diesel rose 7.2 percent to 8,020 yuan per tonne, according to a statement. The latest hike reflected changes in international crude prices, the commission said.
KEY POINTS Tokyo completes purchase of disputed islands Japanese government to pay US$26.26 mln Plan triggers angry rebuke from China Islands are located near potential huge gas reserves
The islands, which lie around 200 kilometres (125 miles) from Taiwan and 2,000 kilometres from Tokyo, are also claimed by Taipei, which strongly protested the Japanese move yesterday. “We strongly demand that the Japanese government revokes this move,” Taiwan’s foreign minister Timothy Yang told reporters in Taipei. “Japan’s unilateral and illegal action cannot change the fact that the Republic of China [Taiwan’s official name] owns the Diaoyu islands.” Taiwan yesterday summoned Japan’s top envoy Sumio Tarui in Taipei to protest Japan’s “nationalisation” of the disputed islands. AFP/Reuters
Xi’s absence sets off rumour mill China’s leader-in-waiting skips meetings, fuels speculation
hinese Vice President Xi Jinping’s absence for more than a week from public events fuelled speculation about the health of the leading candidate to succeed President Hu Jintao in a once-in-adecade leadership change. Since speaking at the Party School of the Communist Party on September 1, Mr Xi has cancelled events with foreign officials including a September 5 meeting with U.S. Secretary of State Hillary Clinton. Foreign journalists in Beijing were also told the same day that Xi would meet Danish Prime Minister Helle Thorning-Schmidt on Monday. The meeting wasn’t included in an official agenda distributed on September 7. Secrecy surrounding China’s leadership, combined with the ouster of Politburo member Bo Xilai, have left investors with limited information on who’ll be overseeing the world’s secondbiggest economy. The Communist Party has yet to release the dates for the gathering anticipated in coming weeks where the next generation of policy makers will be appointed. Mr Xi’s meeting with Mrs Clinton was cancelled following an injury to his
oint to stimulus spending
mpact the job market
The pickup in lending follows interest-rate cuts in June and July
Besides cutting interest rates, the PBOC lowered banks’ reserve requirements three times from November to May. The central bank didn’t release money-supply figures with the new loans data yesterday.
US$111 billion China’s new lending in August
Analysts’ estimates for new localcurrency loans ranged from 540 billion yuan to 843 billion yuan. Banks extended 548.5 billion yuan of loans in August 2011. Aggregate financing, which includes bank lending, off-balance sheet loans and bond and stock sales, increased 16 percent in August from a year earlier to 1.24 trillion yuan, central bank data showed yesterday. The figure was 1.04 trillion yuan in July. The PBOC introduced the measure, also known as total social financing, last year to have a clearer picture of credit creation in the economy. “The increases in TSF and bank loans reinforce our belief that the government’s policy stance has become more proactive,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. Reuters
back, the Wall Street Journal reported on September 5, citing an unnamed U.S. official. The cancellation was a “normal adjustment,” Chinese Foreign Ministry spokesman Hong Lei said that same day. Hong said on Monday that a “timely introduction” of Mr Xi’s activities on foreign affairs had been provided after he was asked whether the vice president was injured. In an indication of the sensitivity surrounding the issue, Danish embassy spokesman Ming Ou Lu refused to confirm or deny that a meeting between the two had even been scheduled. Other Chinese leaders have continued to make public appearances. Mr Hu attended the Asia-Pacific Economic Cooperation summit in Vladivostok, Russia, over the weekend and Premier Wen Jiabao was scheduled to speak yesterday at the World Economic Forum’s conference in the Chinese port city of Tianjin. “Obviously the Chinese authorities
are also concerned about any news that may create an adverse speculation concerning the leadership succession process,” said Joseph Cheng, China scholar at Hong Kong’s City University. “They are so worried and sensitive. [The result is] that they have not been acting sensibly.” A week after the ouster of Mr Bo as party chief of the municipality of Chongqing, speculation of a coup spread on the Internet, helping spark the biggest jump in credit-default swaps on Chinese government bonds in four months. Bloomberg/AFP
business daily September 12, 2012
ASIA Philippine exports climb a fourth month Philippine exports rose for a fourth straight month in July as sales of manufactured goods and forest products rose. Shipments abroad increased 7.8 percent from a year earlier to US$4.8 billion after a 4.3 percent advance in June, the National Statistics Office said in Manila yesterday. Shipments to neighbours including Singapore and Hong Kong are supporting overseas sales even as Europe’s sovereign-debt crisis and an uneven U.S. recovery crimps demand.
Japan cost-cutting leaves wages near crisis low Govt monitoring economy before adding extra policy measures Keiko Ujikane
ost-cutting by Japanese companies is dragging on wages, resulting in weaker consumer demand and a stronger case for monetary easing to counter deflation. Nationwide compensation fell to 243.5 trillion yen (US$3.1 trillion) in the second quarter, according to a government report in Tokyo yesterday. The number, which is seasonally adjusted, was only 0.7 percent above the level in the final quarter of 2009, which was the lowest since 1991. Japanese companies targeting cost reductions span Tokyo Electric Power Co., the operator of the nuclear plant at the centre of last year’s disaster, and exporters Panasonic Corp. and Sharp Corp. The risk for the economy is a prolonging of the deflation that has plagued the nation since an asset bubble burst in the 1990s, and weakness in consumption that may be exacerbated by a sales-tax increase in April 2014. “As long as wage deflation continues, there will be no doubt that the Bank of Japan will have to continue monetary easing,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “There won’t be an end.” Second-quarter economic growth was on Monday revised down to an annualised 0.7 percent from 1.4 percent, fuelling concern a contraction is possible in the three months ending September. The Nikkei 225 Stock
As long as wage deflation continues, there will be no doubt that the Bank of Japan will have to continue monetary easing Hiroaki Muto, Sumitomo Mitsui Asset Management Co.
Average closed 0.7 percent lower yesterday, paring this year’s gain to 4.2 percent, as investors focused on Europe’s debt crisis, including the struggle by Greece to qualify for aid.
Monitoring economy Finance Minister Jun Azumi said yesterday that the government will keep monitoring the Japanese economy “for a while” before deciding whether any extra policy measures are warranted. In one positive sign, Japan’s largest manufacturers turned optimistic for the first time in four quarters, according to a government index released yesterday. Unit labour costs, measured by
the difference between growth in compensation for workers and real gross domestic product, fell 3.6 percent in the three months through June from a year earlier, the largest decline since the July-September period in 2010, according to data compiled by Bloomberg. Goldman Sachs Group Inc. says declines in nominal wages are lengthening the route to an exit from deflation. JPMorgan Securities Japan said this month that softness in incomes may partly explain a weakening in private consumption. The Bank of Japan remains distant from a 1 percent inflation goal, with the benchmark consumer-price gauge falling 0.3 percent in July from a year earlier. At the same time, the government sees improvements ahead, predicting the gross domestic product deflator, the broadest gauge of price trends, will rise 0.2 percent in the year ending March 2014, the first increase in 16 years.
Japan’s nationwide compensation in the second quarter
Exports, production Besides falling prices, the economic backdrop in Japan includes declines in exports and industrial output in July, the most recent month for which that data has been released. “The economy has been losing momentum this quarter, with exports likely to decrease while consumption and capital spending are deteriorating,” Kiichi Murashima, chief economist at Citigroup Global
Markets Japan Inc., said after yesterday’s report. “The chance that the Japanese economy will slip into a contraction in the third quarter is increasing.” The Bank of Japan may increase its asset-purchase programme at a meeting next week if the U.S Federal Reserve leads the way by easing, Daiwa Institute of Research in Tokyo says.
India’s biggest iron ore exporter plunges As Goa state bans all mining
esa Goa Ltd, India’s biggest iron ore exporter, plunged in Mumbai following a ban on all mining in the western state that accounts for more than half of the nation’s overseas sales of the steelmaking raw material. The ban is effective since yesterday, R.K. Verma, principal secretary in the Goa government, said in a statement on the mines ministry website, without specifying the duration. Trading and transportation of minerals that have already been mined will be allowed, the ministry said. The decision follows a report by a government panel to probe into illegal mining of iron ore and manganese in the mineral-rich
regions of the country and comes a year after a similar ruling by India’s top court on mining in the southern state of Karnataka. Suspension of mining in Goa may have an impact on global supplies and prices of iron ore should the ban remain for some time, said R.K. Sharma, secretary general at the Federation of Indian Mineral Industries. “Goa has some inventory at this time, so there may not be an immediate impact on exports,” Mr Sharma said in a phone interview. “We’ll have to cut our forecast if the ban continues.” Sesa Goa shares fell as much as 7 percent to 157.85 rupees, the most in more than six months, and traded at 159.90 rupees as of 3pm Mumbai time. Sterlite Industries India Ltd,
which is set to be merged with Sesa Goa, fell as much as 5 percent to 93.60 rupees. The government-appointed panel, headed by Justice M.B. Shah, in a report last week said air and water pollution in the mining areas in Goa were not being controlled and had exceeded tolerance limits. The other states being scrutinised by the commission include Odisha, Chhattisgarh, Jharkhand and Karnataka. Sesa Goa produced 12.7 million tonnss of iron ore from its mines in the state in the year ended March 31 out of its total output of 13.8 million tonnes, according to the company’s website. Bloomberg
Goa has ban all mining to probe into illegal mining of iron ore and manganese
September 12, 2012 business daily | 11
asia India mulls reform to lure supermarkets India’s government is to propose watered down legislation later this month to open up the retail sector to foreign supermarkets, media reports said yesterday. The government would propose allowing groups such as U.S. giant Wal-Mart or French multinational Carrefour to own up to 49 percent of local subsidiaries, said the reports. The legislation would also include provisions for state governments to set local conditions for the groups, a move designed to head off opposition to the highly controversial legislation.
ThaiBev teams up to bid for F&N Says it is not seeking funding for a takeover
Japan’s wage deflation is resulting in weaker consumer demand
Sharp Corp. and Panasonic Corp. are among companies targeting costs. Consumer electronics manufacturer Sharp is cutting 5,000 jobs and may sell off factories after increasing its annual loss forecast to 250 billion yen as lower demand for televisions and a strong yen erode earnings. The company said yesterday is in talks with its labour union to deepen salary cuts as it projects a second straight annual loss. Sharp is also reducing managers’ salaries by 10 percent starting next month and cutting bonuses in half to save a total of 14 billion yen (US$179 million) in fixed costs, the company said in a statement. Panasonic will probably cut costs by 130 billion yen this fiscal year after reducing them by 64 billion yen in the first quarter from a year earlier, according to chief financial officer Hideaki Kawai.
Asian competitors “To compete against China and other Asian nations which have lower labour costs in relation to Japan, Japanese exporters need to secure profits by cutting fixed costs, such as wages,” Morishige said. In Japan, “deflationary expectations” make it more difficult for companies to pass on higher costs to consumers, the analyst said. The government faces the risk that boosting the sales tax to help contain the world’s biggest public debt will be a further drag on consumption. “There will be a flood of demand right before the sales- tax rise, and a reaction to that after it rises,” said Masahiko Hashimoto, an economist at Daiwa in Tokyo. “There will almost definitely be a chill in consumption when the tax is raised.” Bloomberg
hai Beverage Pcl said it’s cooperating with an entity that may bid for Fraser & Neave Ltd, the Singapore-based conglomerate which is in a deal to sell its stake in an Asian brewery to Heineken NV. For two months, ThaiBev and Heineken battled for control of Asia Pacific Breweries Ltd (APB), the maker of Tiger beer. Eventually, Heineken sweetened its offer and won over F&N, which agreed to sell its APB stake to the Dutch brewer. The deal requires approval from F&N shareholders, including ThaiBev. Should the Thai group gain control of F&N, it could potentially block the transaction. But sources with knowledge of ThaiBev’s plans say the group is now shifting its focus to F&N – a drinks distributor and holder of one of Asia’s biggest real estate portfolios – after succeeding in extracting a better deal from Heineken. “A party acting in concert with the company is exploring the possibility of making an offer for F&N,” ThaiBev, controlled by billionaire Charoen Sirivadhanabhakdi, said in a filing on the Singapore Exchange yesterday. It did not identify the partner.
Decision looming ThaiBev stands to gain S$1.16 billion (US$939.65 million) based on their 29 percent stake in F&N, and will get more if it takes over the Singapore conglomerate. Any move to block the US$6.3 billion Heineken deal will force the Dutch brewer to walk away, putting the shares in F&N and APB under pressure. Heineken declined to comment
Lion Air to launch airline in Malaysia New LCC to fly to Manila, Hanoi and cities in Australia and China Shannon Teoh
ndonesia’s PT Lion Mentari Airlines said yesterday it will launch a new low-cost airline with Malaysian firm NADI Sdn Bhd that could challenge regional budget giant AirAsia Bhd. The new Malindo Airways will start regional flights by May next year with a fleet of 12 Boeing 737s, said Indonesia’s largest privately run airline, which operates as Lion Air, and Malaysia’s National Aerospace and Defence Industries (NADI). Lion Air president Rusdi Kirana said the companies were counting on an increase in travel, with the Asia Pacific region expected to have 2.2 billion passengers in 2030 and need 11,450 new airplanes to meet the demand.
NADI, which specialises in maintenance, repair and overhaul services, will own 51 percent of the joint venture. Lion Air will supply the fleet, based out of Kuala Lumpur, AirAsia’s home market. “We are giving affordable prices but with better services” than other budget airlines, such as in-flight entertainment, Mr Kirana told reporters before the joint venture signing ceremony in Kuala Lumpur. The airline plans to initially fly to Kota Kinabalu in Malaysia as well as destinations across Indonesia, Manila, Hanoi and cities in Australia and China. Over the next decade it hopes
to expand its fleet to 100 planes, including five flagship 787 Dreamliners to arrive in 2015, when Malindo plans to fly to Europe.
Regional challenge OSK Research aviation analyst Ahmad Maghfur Usman said Lion Air working with a local partner to break into Malaysia’s regulated airspace could pose a “real challenge” to AirAsia. “Lion Air already has a strong infrastructure to begin with,” he told AFP. “As long as they offer a competitive compelling fare, it will put a fight to AirAsia... The winners here will be the consumers.”
on ThaiBev’s latest move. F&N has scheduled a shareholder vote on September 28 to approve the sale of a 40 percent stake in APB to Heineken. ThaiBev is F&N’s biggest shareholder, followed by Japan’s Kirin Holdings Ltd. Heineken, already a direct shareholder in APB, raised its offer to buy out APB shares held by F&N and minority shareholders last month. The move was seen as an attempt to fend off Mr Charoen in what was previously a battle for control of a leading beer brand in Southeast Asia. The Thai group, facing a cash windfall from the APB sale, is now unlikely to take further steps in squeezing Heineken’s offer, sources familiar with the matter said, declining to be identified because details of the plan were confidential. A source familiar with the matter told Reuters that Mr Charoen is now taking steps to ensure that his group is in a strong position to influence the outcome of the potential breakup of F&N after extracting a higher offer from Heineken. ThaiBev has spent S$3.6 billion to build its stake in F&N to 29 percent. The purchase includes a block of F&N shares the Thai brewer acquired from Singapore’s Oversea-Chinese Banking Corp group at S$8.88 each. ThaiBev said it has been in talks with banks to refinance a loan taken out to fund its initial stake purchase in F&N. Under Singapore law, it would be required to bid for all of F&N if its holding rose to 30 percent. “The company is not seeking funding for a potential general offer for F&N,” it said. Reuters
AirAsia has become one of the aviation sector’s biggest successes, since Tony Fernandes, a former record industry executive, plucked it from insolvency in 2001 and quickly turned it into a profitable, rapidly expanding company. Last month, the budget carrier announced that it would buy Indonesia’s Batavia Air for US$80 million, as it spreads its wings in Southeast Asia’s largest economy. It also recently set up a regional headquarters in Jakarta to direct its expansion. Lion Air flies to 72 destinations with 600 daily departures. It also flies to Singapore, Malaysia, Vietnam and Saudi Arabia while its long-haul arm Batik Air will begin operations in March next year with six Boeing 737s and five Boeing B787 Dreamliners. This year Lion Air sealed a record US$22.4 billion deal for 230 Boeing 737 jets. The first aircraft will be delivered in 2017, and the deliveries will run up until 2026. AFP
business daily September 12, 2012
MARKETS Hang SENG INDEX NAME
AIA GROUP LTD
BANK OF CHINA-H
BANK OF COMMUN-H
BANK EAST ASIA
BOC HONG KONG HO
CLP HLDGS LTD
CHINA UNICOM HON
COSCO PAC LTD ESPRIT HLDGS HANG LUNG PROPER
CATHAY PAC AIR
HANG SENG BK
HENDERSON LAND D
CHINA COAL ENE-H
CHINA CONST BA-H
CHINA LIFE INS-H
SANDS CHINA LTD
SINO LAND CO
SUN HUNG KAI PRO
TINGYI HLDG CO
WANT WANT CHINA
HONG KONG EXCHNG
IND & COMM BK-H
LI & FUNG LTD
CHINA RES ENTERP
POWER ASSETS HOL
HONG KG CHINA GS HSBC HLDGS PLC
CHINA RES LAND
NEW WORLD DEV
CHINA RES POWER
PING AN INSURA-H
INDEX 19857.88 HIGH
52W (H) 21760.33984 (L) 16170.35
Hang SENG CHINA ENTErPRISE INDEX NAME
AIR CHINA LTD-H
CHINA RAIL CN-H
CHINA RAIL GR-H
BANK OF CHINA-H
CHINA CITIC BK-H
CHINA COAL ENE-H
CHINA COM CONS-H
IND & COMM BK-H
BANK OF COMMUN-H BYD CO LTD-H
CHINA CONST BA-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
CHINA COSCO HO-H CHINA LIFE INS-H
CHINA MINSHENG-H CHINA NATL BDG-H CHINA OILFIELD-H
INDEX 9377.07 HIGH
52W (H) 11916.1
Shanghai Shenzhen CSI 300 PRICE
DAQIN RAILWAY -A
AIR CHINA LTD-A
DATANG INTL PO-A
EVERBRIG SEC -A
BANK OF BEIJIN-A
BANK OF CHINA-A
BANK OF COMMUN-A
BANK OF NINGBO-A
BAOSHAN IRON & S
SANY HEAVY INDUS
SHANG PHARM -A
GD MIDEA HOLDING
GD POWER DEVEL-A
SHANXI LU'AN -A
BYD CO LTD -A
CHINA CITIC BK-A
CHINA CNR CORP-A
CHINA COAL ENE-A
CHINA CONST BA-A
HONG YUAN SEC-A
CHINA COSCO HO-A
CHINA CSSC HOL-A
HUAXIA BANK CO
YANGQUAN COAL -A
CHINA EAST AIR-A
IND & COMM BK-A
CHINA LIFE INS-A
INNER MONG BAO-A
CHINA MERCH BK-A
INNER MONG YIL-A
CHINA MINSHENG-A CHINA NATIONAL-A
CHINA PETROLEU-A CHINA RAILWAY-A
PANGANG GROUP -A
CHINA STATE -A
PING AN BANK-A
CHINA VANKE CO-A
PING AN INSURA-A
POLY REAL ESTA-A
CSR CORP LTD -A
PRICE DAY %
PRICE DAY %
NINGBO PORT CO-A PETROCHINA CO-A
52W (H) 2796.352 (L) 2186.962
FTSE TAIWAN 50 INDEX NAME
ASIA CEMENT CORP
AU OPTRONICS COR
PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
HON HAI PRECISIO
HOTAI MOTOR CO
HUA NAN FINANCIA
CHANG HWA BANK
CHENG SHIN RUBBE
CHIMEI INNOLUX C
CHINA STEEL CORP
YULON MOTOR CO
MEGA FINANCIAL H
NAN YA PLASTICS
DELTA ELECT INC
FAR EASTERN NEW
FAR EASTONE TELE
SYNNEX TECH INTL
FORMOSA CHEM & F
TAIWAN GLASS IND
INDEX 5159.45 HIGH
52W (H) 5621.53 (L) 4643.05
September 12, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GaLaXy eNTerTaINMeNT
MeLCo CroWN eNTerTaINMeNT
MGM CHINa HoLDINGS 31.25
SaNDS CHINa LTD
SJM HoLDINGS LTD
WyNN MaCaU LTD 16.3
BRENT CRUDE FUTR Oct12
GASOLINE RBOB FUT Oct12
GAS OIL FUT (ICE) Oct12
NATURAL GAS FUTR Oct12 HEATING OIL FUTR Oct12
Gold Spot $/Oz
Silver Spot $/Oz
Platinum Spot $/Oz
Palladium Spot $/Oz LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov12 Dec12
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
1.0373 1.6017 0.9436 1.2801 78.02 7.9869 7.7543 6.3353 55.3738 31.09 1.2317 29.668 41.54 9581 80.937 1.20785 0.79925 8.1048 10.2231 99.88 1.03
0.2319 0.1438 0.2331 0.133 0.3589 0.02 0.0206 0.0379 0.1286 0 0.3816 0.0573 0.0337 -0.0209 0.1174 0.1035 0.0025 0.0074 -0.1144 0.2203 0
1.6064 3.0496 -0.5829 -1.2345 -1.4227 0.159 0.1689 -0.6361 -4.1695 1.4796 5.2691 2.0595 5.5368 -5.3439 -3.095 0.7402 4.2715 0.3627 1.2609 -0.2203 0.0097
1.0857 1.6302 0.9972 1.4247 84.18 8.0413 7.8077 6.4029 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88308 9.0277 11.4015 111.6 1.0311
0.9388 1.5235 0.8568 1.2043 75.35 7.9823 7.7526 6.2769 46.9663 30.13 1.2314 29.084 41.488 8573 72.057 1.19995 0.77553 7.7018 9.6245 94.12 1.0288
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business daily September 12, 2012
Why Germany should lead or leave George Soros Chairman of Soros Fund Management and of the Open Society Institute
urope has been in a financial crisis since 2007. When the bankruptcy of Lehman Brothers endangered the credit of financial institutions, private credit was replaced by the credit of the state, revealing an unrecognised flaw in the euro. By transferring their right to print money to the European Central Bank (ECB), member countries exposed themselves to the risk of default, like Third World countries heavily indebted in a foreign currency. Commercial banks loaded with weaker countries’ government bonds became potentially insolvent. There is a parallel between the ongoing euro crisis and the international banking crisis of 1982. Back then, the International Monetary Fund saved the global banking system by lending just enough money to heavily indebted countries; default was avoided, but at the cost of a lasting depression. Latin America suffered a lost decade. Germany is playing the same role today as the IMF did then. The setting differs, but the effect is the same. Creditors are shifting the entire burden of adjustment on to the debtor countries and avoiding their own responsibility. The euro crisis is a complex mixture of banking and sovereign-debt problems, as well as divergences in economic performance that have given rise to balance-of-payments imbalances within the eurozone. The authorities did not understand the complexity of the crisis, let alone see a solution. So they tried to buy time. Usually, that works. Financial panics subside, and the authorities realise a profit on their intervention. But not this time, because the financial problems were combined with a process of political disintegration.
Changing Europe When the European Union was created, it was the embodiment of an
open society – a voluntary association of equal states that surrendered part of their sovereignty for the common good. The euro crisis is now turning the EU into something fundamentally different, dividing member countries into two classes – creditors and debtors – with the creditors in charge. As the strongest creditor country, Germany has emerged as the hegemon. Debtor countries pay substantial risk premiums for financing their government debt. This is reflected in their cost of financing in general. To make matters worse, the Bundesbank remains committed to an outmoded monetary doctrine rooted in Germany’s traumatic experience with inflation. As a result, it recognises only inflation as a threat to stability, and ignores deflation, which is the real threat today. Moreover, Germany’s insistence on austerity for debtor countries can easily become counterproductive by increasing the debt ratio as GDP falls. There is a real danger that a two-tier Europe will become permanent. Both human and financial resources will be attracted to the centre, leaving the periphery permanently depressed. But the periphery is seething with discontent. Europe’s tragedy is not the result of an evil plot, but stems, rather, from a lack of coherent policies. As in ancient Greek tragedies, misconceptions and a sheer lack of understanding have had unintended but fateful consequences. Germany, as the largest creditor country, is in charge, but refuses to take on additional liabilities; as a result, every opportunity to resolve the crisis has been missed. The crisis spread from Greece to other deficit countries, eventually calling into question the euro’s very survival. Since a breakup of the euro would cause immense damage, Germany always does the minimum necessary to hold it together. Most recently, German Chancellor Angela Merkel has backed ECB
President Mario Draghi, leaving Bundesbank President Jens Weidmann isolated. This will enable the ECB to put a lid on the borrowing costs of countries that submit to an austerity programme under the supervision of the Troika (the IMF, the ECB, and the European Commission). That will save the euro, but it is also a step toward the permanent division of Europe into debtors and creditors. The debtors are bound to reject a two-tier Europe sooner or later. If the euro breaks up in disarray, the common market and the EU will be destroyed, leaving Europe worse off than it was when the effort to unite it began, owing to a legacy of mutual mistrust and hostility. The later the breakup, the worse the ultimate outcome. So it is time to consider alternatives that until recently would have been inconceivable.
Hard choice In my judgment, the best course of action is to persuade Germany to choose between either leading the creation of a political union with genuine burden-sharing, or leaving the euro. Since all of the accumulated debt is denominated in euros, it makes all the difference who remains in charge of the monetary union. If Germany left, the euro would depreciate. Debtor countries would regain their competitiveness; their debt would diminish in real terms; and, with the ECB under their control, the threat of default would disappear and their borrowing costs would fall to levels comparable to that in the United Kingdom. The creditor countries, by contrast, would incur losses on their claims and investments denominated in euros and encounter stiffer competition at home from other eurozone members. The extent of creditor countries’ losses would depend on the extent of the depreciation, giving them an interest in
The debtors are bound to reject a twotier Europe sooner or later. If the euro breaks up in disarray, the common market and the EU will be destroyed
keeping the depreciation within bounds. After initial dislocations, the eventual outcome would fulfil John Maynard Keynes’ dream of an international currency system in which both creditors and debtors share responsibility for maintaining stability. And Europe would avert the looming depression. The same result could be achieved, with less cost to Germany, if Germany chose to behave as a benevolent hegemon. That would mean implementing the proposed European banking union; establishing a more or less level playing field between debtor and creditor countries by establishing a Debt Reduction Fund, and eventually converting all debt into Eurobonds; and aiming at nominal GDP growth of up to 5 percent, so that Europe could grow its way out of excessive indebtedness. Whether Germany decides to lead or leave, either alternative would be better than creating an unsustainable two-tier Europe. © Project Syndicate
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September 12, 2012 business daily | 15
Are you better off? wires Take a look at the stock market Business
Leading reports from Asia’s best business newspapers
Betsey Stevenson Justin Wolfers Associate professor of public policy at the University of Michigan
Associate professor of business and public policy at the University of Pennsylvania
Bangkok Post Thai tourism has recovered, with international tourist arrivals to Thailand during the first eight months of this year increasing by 8.66 percent year-on-year to 14.3 million. The momentum will continue until year-end, according to a report by the Tourism Department. Last month alone, arrivals rose by 11.5 percent yearon-year to 1.92 million. Key emerging markets did well. Tourist numbers from China surged by 43.7 percent, from Russia by 22.2 percent and from India by 14.7 percent.
Business Times Thai Beverage PCL said it may work with a partner to make an offer for Fraser & Neave Ltd. The company, already F&N’s biggest shareholder with 29 percent, is seeking a loan of around S$9 billion (US$7.3 billion) for the operation. F&N shareholders, which include Japan’s Kirin Holdings, prepare for a crucial vote on September 28 on the proposed sale of a 40 percent stake in Tiger beer maker Asia Pacific Breweries Ltd to Heineken.
Jakarta Globe Indonesia’s central bank believes the government’s target of 6.8 percent economic growth next year is too optimistic, citing slowing exports forecast for next year. Bank Indonesia governor Darmin Nasution said Indonesia’s exports were predicted to slow down because its main export destinations, particularly China and India, were expected to have slower economic growth due to the global economic situation. Last year Indonesia’s economy expanded by 6.5 percent, while in the first semester this year it grew by 6.3 percent.
Asahi Shimbun Japan Airlines Co. (JAL) set the pre-market price for its initial public offering at 3,790 yen (US$48.55) per share in a sign of solid demand for the world’s second-largest IPO this year. JAL has emerged from its bankruptcy with a clean balance sheet and industry topping profits. It will list on the Tokyo Stock Exchange on September 19. At the premarket price, the company will raise nearly double the 350 billion yen injected by a Japanese governmentbacked fund following its failure in 2010.
o you remember the news four years ago? Banks collapsed, markets cratered, companies struggled to make payroll and millions of people lost their jobs. Your retirement savings were decimated, the value of your house plunged, credit was unobtainable. Politicians dithered and economists argued. Only confusion prospered. Against this background, it’s surprising to hear Republicans returning to Ronald Reagan’s classic debate question: “Are you better off than you were four years ago?” To anyone whose memory extends a full electoral cycle, the answer is clearly yes. When assessing our politicians, what matters isn’t just the here and now. It’s at least as important to consider how well we are set up for tomorrow, next year and the decades that follow. This distinction is particularly important in assessing the aftermath of the last recession. The anxiety that gripped us in late 2008 wasn’t born out of a typical cyclical decline that hurts for a year or two before the economy returns to growth. Rather, it was a fear that something more fundamental had changed, altering our whole economic trajectory. Only a forward-looking indicator can pick up both this fear and its ultimate resolution. Unfortunately, most economic statistics tell us only what happened last month, last quarter or last year.
Stock market The stock market, by contrast, is obsessively focused on the future. When investors decide whether to buy a company’s stock, they aren’t just thinking about its current earnings (if they were, a company like Twitter Inc. would be worthless). They are trying to figure out what its future earnings will be, and what that stream of income should be worth today. Their collective judgment, while far from perfect, tells a compelling story about how America’s prospects have changed over
the past four years. On the day of President Barack Obama’s inauguration, the Standard & Poor’s 500 Index (SPX) closed at 805, just over half its pre-recession level. In other words, investors thought the recession had done so much damage that the future earnings of corporate America were worth only
The stock market is also an imperfect proxy for the outcomes we truly care about
about half what they were before. And because corporate earnings are a roughly constant share of the broader economy, the stock prices suggested a decline of historic magnitude in investors’ assessment of the long-run prospects for the entire U.S. economy. As of September 10, the S&P 500 index stood at 1429, about 78 percent higher than it was on inauguration day. Probable translation: investors believe the long-run outlook for
the American economy has improved enormously. True, the stock market can rise for various reasons. Investors might expect corporate profits to grow faster than the economy, or corporate taxes to fall. They might have become more patient, causing them to place a higher value on earnings way out in the future. Given the current political climate, and the way the crisis shattered peoples’ complacency, none of these stories seems particularly plausible. The stock market is also an imperfect proxy for the outcomes we truly care about. If there were futures markets more directly tied to economic output, unemployment or perhaps even well-being, they would provide an even better picture. Surveys asking people to evaluate their well-being can also provide a useful insight given that people’s responses are influenced by their outlook. One index run by research company Gallup Inc., for example, shows people’s perceived well-being at a fouryear high. (Disclosure: Justin Wolfers is a senior scientist at Gallup.) Of course, the stock ticker can’t answer the most important political questions. It can’t say we are better off because of Obama’s policies, or for other reasons. It can’t say whether we are better off than we would have been under President Mitt Romney. It does,
however, capture well the narrative of disaster, survival and recovery that has marked the past four years. It helps us to remember how bad we felt back then, and to appreciate where we are today. Bloomberg View
Letters Traffic accidents I noticed the report in your newspaper about the increase in traffic accidents. Whilst we should all be concerned about road safety I hope the authorities do not overreact. Given the reported figures, that is one accident for every 158 vehicles. I know not whether that is high or low compared to other countries in the region but, to me, it does not seem too bad given the fact that Macau’s roads are very narrow. What has been intriguing me in recent years is the nature of the accidents occurring. I suspect that a very large percentage of accidents are caused, directly or indirectly, by motor scooter riders. By direct I mean where there is actual physical contact, either with a pedestrian or another vehicle. By indirect I mean where an accident is caused by a scooterist “zooming” through a gap which is rapidly ceasing to exist and escaping only because the motorist breaks or takes avoiding action. Do the traffic police, or the insurance companies, keep any statistics of this nature? Roy Goss
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business daily September 12, 2012
CLOSING S.Korea approves weapons expenditure German court to rule on ESM South Korea will spend US$2.3 billion over the next five years to secure tactical weapons targeting North Korea’s nuclear weapons facilities and missile bases. The defence ministry has approved a five-year plan that includes buying hundreds of home-built ballistic missiles and other weapons, the Defence Acquisition and Procurement Agency said. It needs parliamentary approval to be implemented. South Korea also wants the United States to expand the range of Seoul’s ballistic missiles. The South believes the North has 1,000 missiles of various types, many of them targeted at Seoul.
The German Constitutional Court rejected a last-minute legal challenge by a eurosceptic politician and said it will issue today its main decision on whether German President Joachim Gauck can sign into law the European Stability Mechanism (ESM) and the European fiscal pact. This decision is seen in the European Union and on global markets as a crucial moment for the eurozone. A decision today to hold up Germany’s participation in the 500-billion-euro (US$640 billion) ESM bailout fund would negate the strategy elaborated by European leaders to overcome the debt crisis.
China on track to meet 2012 growth target Premier Wen says govt can use 100 bln yuan fund if needed
hina is on track to meet this year’s target for economic growth and if needed the government could utilise a 100 billion yuan (US$15.8 billion) fiscal stability fund to boost growth, Premier Wen Jiabao said yesterday. Mr Wen, speaking at a meeting of the World Economic Forum held in China’s eastern port city of Tianjin, sounded confident of keeping the economy on a track of steady and relatively fast growth, despite underwhelming economic data released by Beijing in the past few days. “China’s economic development trend is good, economic growth still
remains within the target range set at the beginning of the year, and the economy is stabilising,” Mr Wen said. He added that the central government would tap a special stabilisation fund if needed to support economic activity. “There is around 100 billion yuan left in the stabilisation fund as of this year,” he said. China set a 7.5 percent target for economic growth in 2012, but some analysts fear that could be missed as a global slowdown drags down activity in the world’s second biggest economy. Growth in China has slowed for six successive quarters and some
investors fear it could slide into a seventh in the third quarter of this year, despite the “fine-tuning” of economic policies that began in November 2011. Two interest rate cuts, the freeing of an estimated 1.2 trillion yuan (US$190 billion) for new lending by cutting required reserve ratios (RRR) at banks and a raft of tax tweaks have so far failed to halt the slide. Instead China’s factories are running at their slowest rate of expansion since May 2009. Surveys of purchasing managers in the manufacturing sector earlier this month showed concerns growing
Premier Wen Jiabao says Chinese economy ‘on track’
about new business, suggesting that factories would run inventories down further before they begin to turn production up again. China said last week that it had approved more than US$150 billionworth of infrastructure projects. That comes on top of the monetary and fiscal easing undertaken since last year. But some economists fear that will be insufficient to stop growth falling below the official 2012 growth target. China’s last officially declared stimulus package was the 4 trillion yuan spending plan unveiled in 2008, when global trade ground to a halt and at least 20 million Chinese workers lost their jobs in a matter of months as financial turmoil swept around the world. Mr Wen said all the initiatives undertaken by the government so far this year were within budgeted expenditure and that Beijing was in fiscal surplus of about 1 trillion yuan in the year to date. Mr Wen’s comments came after China’s President Hu Jintao warned at the weekend that the world economy is hampered by “destabilising factors and uncertainties” and that the 2008/09 financial crisis is far from over. Mr Hu promised China would do all it can to foster a global recovery by rebalancing its economy. Reuters
Demonstrations for independence in Catalunya Regional president demands new fiscal pact
ens of thousands of Catalans poured into Barcelona yesterday demanding a split from the rest of crisis-hit Spain and control of their own economy. A thousand buses from across the northeastern Spanish region carried supporters of Catalan independence to Barcelona for a march on the region’s national day, or Diada, organisers said. They rallied for the demonstration under the slogan: “Catalonia, a new European state.” Fiercely proud of their distinct language and culture, Catalans increasingly feel they are getting a raw deal from Madrid. Last month, the region reached out for a 5.0 billion euro (US$6.3-billion) central government rescue so as to make repayments on its 40-billion-euro debt, equal to a fifth of its total output. But the Catalan government, led
by regional president Artur Mas and his pro-autonomy Convergence and Union alliance, says the region is just asking for its own money back. Catalonia, which accounts for onefifth of the Spanish economy, says it pays the central government far more in taxes than it receives in return: a deficit of seven to eight billion euros a year. In Barcelona’s Plaza de Catalunya, which was dressed in red and yellow striped Catalan flags, protesters gathered for the evening march. “The crisis gives us more reasons for independence,” said 24-year-old lawyer Mar Tarres. “There is a feeling that we have more cuts here because we are paying for the others,” she said, citing the example of Castellon airport, which was built in neighbouring Valencia during a boom but now has no commercial flights. Catalonia’s regional president wants
a new “fiscal pact” to allow the region to raise and spend its own taxes, rather than relying on the central government. The northern Basque Country region already enjoys those rights, and its debt has a higher credit rating than the rest of the country. A survey taken in July and published in Barcelona-based La Vanguardia on Sunday showed 51.1 percent of people
in Catalonia in favour of independence, compared to just 36 percent in 2001. But nationwide, 77 percent of Spaniards are against Catalan independence, and 86 percent think Madrid should control Catalonia’s accounts if it extends a rescue to the region, said a survey Monday in rightwing daily La Razon. AFP
Crisis feeds Catalans separatist sentiments