Portfolio January 2015

Portfolio

Issue 109 ■ January 2015

Exclusive to Emirates First Class and Business Class

A BROWN WINTER Trouble For Ski Resorts PAWN LOANS A High-Interest Solution MACA WARS Peru’s Super Vegetable

Travis The Uber Capitalist

Wilfred Thesiger @ Pitt Rivers Museum

A rich history and a continuous legacy

QASR AL HOSN FESTIVAL 11-21 FEBRUARY 2015 Under the patronage of His Highness General Sheikh Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces

Discover Abu Dhabi’s cultural heart at the iconic Qasr Al Hosn Fort on a journey not to be missed. Celebrate Emirati culture, heritage and tradition across the festival’s extensive grounds and enjoy a wide range of workshops, displays and activities highlighting the latest conservation and preservation updates.

OFFICIAL MEDIA PARTNER

QASRALHOSNFESTIVAL.AE

QASRALHOSNAD

@QASRALHOSN

#QASRALHOSN

ORGANISED BY

This issue JANUARY 2015

Portfolio

Exclusive to Emirates First Class and Business Class

Cover Story 30 The Uber Capitalist From its launch in 2010, Uber has grown into a company valued at $40 billion. But the ride sharing service has faced stiff opposition from governments, licensing authorities and professional taxi bodies. Fortunately, Uber’s CEO Travis Kalanick loves a good fight.

Features 36 Buying Is Easy. Delivery Is Hard.

54 A New Energy Policy

China’s huge size and underdeveloped inland logistics

Mexico’s regulator, the National Hydrocarbons Commission,

infrastructure is posing delivery problems for e-commerce

will soon hold the country’s first open auctions for oil and

firms.

gas fields.

42 Brazilian Pawnshops’ Loan Business

58 Growth Tops Environment

Due to soaring interest rates, Brazilian consumers often turn

The Indian government has swept away a host of

to loans from pawnshops to make ends meet.

bureaucratic environmental regulations in favour of economic

46 California’s Ski Resorts Face a Brown Future

growth.

California is in the grip of a massive drought, but its ski

62 Cleaner Energy Through Carbon Capture

industry has been facing declining snowfall for decades.

A $1.2 billion update to capture the carbon dioxide equivalent of 250,000 cars at a Canadian power plant and

50 Vegetable Spawns Larceny and Luxury

bury it underground may be the way of the future.

Maca, a turnip-like vegetable grown in Peru, has surged in price due to Chinese demand.

42

46

58

11

Portfolio

12

Exclusive to Emirates First Class and Business Class

Essentials 67 Green Peace When big-city buzz, crowds and shopping begin to lose their lustre, Hong Kong’s overlooked parks and green spaces are just the place to unwind.

72 Korean Baseball’s Unique Culture In South Korea, baseball is as much sport as it is a social event with singing and dancing.

67

76 The Battle for African Parks As many African countries try to alleviate poverty it becomes increasingly tempting to allow oil exploration and mining in national parks.

80 A Bad Year for Italian Olives Insects, hail, floods and bacteria made 2014 a devastating year for the Italian olive oil industry.

72

84 A Colonial Legacy Yangon, formerly known as Rangoon, was the capital of Burma during the colonial era. As a result it has some grand, but crumbling, architecture.

88 Other Business Portfolio takes a light-hearted look at the latest business news.

76

Departments

84

15 Notebook World business in a nutshell.

21 Observer Spotting and analysing business trends.

28 Column: Will Hutton Falling Oil Prices Create Opportunity

Published for Emirates by

Media One Towers, Dubai Media City, PO Box 2331, Dubai, UAE. Telephone: (+971 4) 4273000 e-mail: emirates@motivate.ae

Editor-in-Chief Obaid Humaid Al Tayer Managing Partner & Group Editor Ian Fairservice Editorial Director Gina Johnson Group Editor Guido Duken Deputy Editor Vishwas Kulkarni Junior Writer Mary Sophia Picture Researcher Hilda D’Souza Editorial Assistant Londresa Flores Senior Art Director Tarak Parekh Senior Designer Charlie Banalo Head of Production S Sunil Kumar Assistant Production Manager Murali Krishnan Group Sales Manager Jaya Balakrishnan Email: jaya@motivate.ae General Manager – Group Sales Anthony Milne Email: anthony@motivate. ae International Sales Manager Martin Balmer Email: martin.balmer@motivate.ae Senior Sales Manager Michael Underdown Email: michael@motivate.ae INTERNATIONAL MEDIA REPRESENTATIVES AUSTRALIA/NEW ZEALAND Okeeffe Media; Tel + 61 412 080 600, licia@okm.com.au BENELUX M.P.S. Benelux; Tel +322 720 9799, francesco.sutton@mps-adv. com CHINA Publicitas Advertising; Tel +86 10 5879 5885 GERMANY IMV Internationale Medien Vermarktung GmbH; Tel +49 8151 550 8959, w.jaeger@imv-media. com HONG KONG/MALAYSIA/THAILAND Sonney Media Networks; Tel +852 2151 2351, hemant@sonneymedia.com INDIA Media Star; Tel +91 22 4220 2103, ravi@ mediastar.co.in ITALY & SPAIN IMM International; Tel +331 40 1300 30, n.devos@imm-international.com JAPAN Tandem Inc.; Tel + 81 3 3541 4166, all@tandem-inc. com NETHERLANDS GIO Media; Tel +31 6 29031149, giovanni@gio-media.nl TURKEY Media Ltd.; Tel +90 212 275 51 52, mediamarketingtr@medialtd.com.tr UK Spafax Inflight Media; Tel +44 207 906 2001, nhopkins@spafax.com USA Totem Brand Stories; Tel +212 896 3846, faith.brillinger@totembrandstories.com

Emirates takes care to ensure that all facts published herein are correct. In the event of any inaccuracy, please contact The Editor. Any opinion expressed is the honest belief of the author based on all available facts. Comments and facts should not be relied upon by the reader in taking commercial, legal, financial or other decisions. Articles are by their nature general, and specialist advice should always be consulted before any actions are taken.

Printed by Emirates Printing Press, Dubai, UAE

Portfolio

M ESUR E ET D ÉMESUR E *

TONDA METROGR APHE

Steel Automatic chronograph movement Steel bracelet Made in Switzerland

www.parmigiani.ch

F O R

S H O P P I N G

L O V E R S

CA S T E L L A N A

S TO R E

S TO R E

M A D R I D / D I AG O N A L

DEPARTMENT STORES SPAIN & PORTUGAL

BA R C E LO N A

Notebook

15

getty images

BUSINESS NEWS IN BRIEF

Middle East’s Luxury Appetite Conversely, Japanese citizens were found

The Middle easT was ranked

in consumer spending power. A recent report

10th among the top global luxury markets

by consultant Knight Frank named Qatar,

to make the most of their luxury purchases at

in the world, according to the latest report

the UAE and Saudi Arabia as the top three

home with the yen devaluating by nearly 30

by consultant Bain & Co. The report added

countries in the new luxury opportunity index.

per cent since 2012.

that the consumption of luxury goods in the

The study forecast that spending by ultra

Tourists are also increasingly influencing

Middle East surged by 11 per cent in 2014,

high net worth individuals in these countries

the luxury market in the Americas, while

largely driven by increased tourist flows to

is expected to have risen in 2014, with almost

tourists’ behaviour in Europe is sharply

the region.

a third of the wealth managers polled saying

changing as proven by the analysis of tax-free

that they expected their clients to step up

shopping in Europe, the report added.

“While the international luxury market is affected by a number of causes such as the economic slowdown, unrest in various parts

expenditure on luxury goods.

Meanwhile, Bain & Co predicted that the

“With such cross-pollination of luxury spending, it no longer makes sense to think

of the world, and currency fluctuation, the

global luxury market was on target to reach

only in terms of geographies,” said Claudia

Middle East continues to demand luxury

$282 billion in 2014, down seven per cent

D’Arpizio, a Bain partner in Milan and lead

goods,” said Cyrille Fabre, a Bain partner

from 2013. The US topped the list of global

author of the study.

and leader of the retail & consumer products

luxury markets, followed by Japan and Italy.

practice in the Middle East. “The trend will

Globally, Chinese consumers were the top

“The focus is shifting to consumers, with local trends and tastes representing only

continue to grow, especially in the GCC with

spenders on luxury products, spending more

part of the picture. This new mind-set has

the opening up of new malls and luxury

than three times in other countries than

important implications for luxury brands. It

brand stores in the next five years.”

what they spend locally. However, Chinese

requires that they think about their product

consumption grew by just 10 per cent in the

offering from a more global perspective, with

steadily growing in the Gulf markets, aided by

first eight months, a clear slowdown from the

the concept of seasons, a key pillar of this

a growth in mega shopping malls and a rise

same period in 2013, the report said.

industry, becoming increasingly obsolete.” n

Expenditure on luxury goods has been

January 2015

Notebook Numbers Game

A Year of Record Recalls More than 60 million US automobile recalls set an unenviable record in 2014, largely because of the rush to prevent more deaths from

$2.4

million was

defective General Motors Co.

the price that

ignition switches and Takata Corp. air bags.

Napoleon Bonaparte’s hat netted at a recent auction in

The tally of 60.5 million

Paris. The French emperor’s

through to December 21 is

iconic hat was part of the Prince

almost double the previous annual record of 30.8 million

of Monaco’s Napoleon-era collection. It was bought by a South Korean bidder.

$700

billion market capital

20

th anniversary PS4 game console sold for over $15,000 on eBay. Sony marked its 20th year of console gaming by manufacturing just 12,300 special units of PS4s, making it a seriously limited edition. The retro console, priced at $499.99, was sold out within minutes of Sony putting it up for pre-order.

grossing the highest capital ever. apple’s shares rose 60 per cent with the success of its

according to an analysis of data on the website of the National Highway Traffic Safety Administration.

GM alone recalled almost

reached by apple in 2014 has established a new record for

recalled vehicles set in 2004,

The World

company Merck & Co will

27 million cars and trucks in

fetch it rights over Lexington-

the US last year, a record for

In Figures

based Cubist Pharmaceuticals

any single automaker. Honda

Inc. Cubist has amassed an

Motor Co., the third-largest

impressive portfolio of drugs

Japanese automaker, has

iPhone 6 and iPhone 6 Plus.

Exxon Mobile, with a net worth

International Labour Organisation.

to treat superbugs that are

recalled 5.4 million vehicles to

of $495 billion, ranked second

The ILO has recommended a

resistant to today’s antibiotics.

replace Takata air bags.

followed by Microsoft and

number of ways to overcome

Merck expects the deal to

Google valued at $392 billion

the difference in pay between

generate more than $1 billion

one million vehicles in 2014

and $368 billion respectively.

men and women, including wage

of revenue next year and to

included those related to

policies and equality legislations.

significantly add to corporate

steering, cruise control, engines

profits in 2016 and beyond.

and seat belts, according to

10

of Europe’s top 50 “super-polluting”

power stations and factories are owned by Britain, causing it to

$9.5

the NHTSA data, which is

billion pay-out offer made by

giant american pharmaceutical

Other recalls of more than

$2.3

billion merger

compiled from automaker

deal has been

filings to the agency.

be ranked as the third highest

struck between South africa

contributor to air pollution. The

brewer SaBMiller, the US Coco-

new air pollution figures form the

Cola Company and the South

European environment agency

african Gutsche family to form

(EEa) claim these plants cost the

Coca-Cola Beverages africa.

UK economy over £10 billion.

The new bottler will operate in 12 countries, employ over

4%

to 36% gender pay

14,000 people across more

gap has been found

than 30 bottling plants and

across all of the 38 European

have gross assets of about

countries according to the

$2.3 billion.

GETTY IMaGES

16

Portfolio

Notebook Stranded Oil FieldS inveStmentS Oil projects planned for 2015 are under threat due to crude prices dropping 49 per cent in the last six months of 2014. These ‘zombie’ projects that have little hope of a productive future proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela.

Goldman Sachs found almost $1 trillion in investments in future oil projects at risk.

They looked at 400 of the world’s largest

with oil at $70. If the unprofitable projects

oil and gas companies will make final

new oil and gas fields – excluding US shale

were scuttled, it would mean a loss of 7.5

investment decisions on 800 projects worth

– and found projects representing $930

million barrels per day of production in

$500 billion. If the price of oil averages $70

billion of future investment that are no

2025, equivalent to eight per cent of current

in 2015, $150 billion could be pulled from

longer profitable with Brent crude at $70.

global demand.

oil and gas exploration around the world.

In the US, the shale-oil party isn’t over yet,

The Goldman tally takes the long view

A sharp reduction in oil projects will lead

of project finance as it plays out over the

to lower production. This means that when

According to Goldman Sachs less than a

next decade or more. But the initial impact

prices start rising again there could be a

third of planned projects are still profitable

of low prices may be swift. This year alone,

sharper rebounding price spike.

but zombies are beginning to crash it.

Airlines Poised for $12 Billion Windfall

advantage of the new era. American Airlines Group Inc., which doesn’t hedge its fuel purchases, said it may save more than $2 billion this year. Even with losses because of fuel contracts pegged to higher prices, Delta Air Lines Inc. said it expects

Airlines around the world are poised for a

to the International Air Transport

to pay about $1.7 billion less for jet

$12 billion windfall as the global oil crash

Association, the trade group for the

kerosene in 2015 while Southwest Airlines

cuts bills for jet fuel, the biggest expense

world’s major airlines.

Co. forecast savings of $1 billion.

in an industry that was battered by surging commodity prices last decade.

The savings promise to produce

Investors are welcoming a respite from

weak euro is likely to damp the benefit of

a barrel in 2012 and 2013. Led by China

lower fuel bills.

fatter profits and, in the US, rewards

Eastern Airlines Corp. and Air China

for shareholders through sweetened

Ltd., the Bloomberg World Airlines Index

dividends or stock buybacks.

has soared 25 per cent this quarter while

Unlike 2008 and 2009, when sagging

Brent tumbled 37 per cent. Industry-wide

travel demand damped the boost from

fuel outlays in 2015 will drop to $192

fuel plunging 51 per cent from its peak,

billion from $204 billion this year even as

crude’s collapse to a five-year low is

consumption rises 4.8 per cent, Geneva-

providing a tailwind for airlines posting

based IATA said.

record earnings. Profits in 2015 will swell 25 per cent to $25 billion, according January 2015

For airlines based in the Eurozone, the

Brent crude that averaged more than $100

US carriers strengthened by mergers since 2008 are also poised to take

17

18

Notebook DUBAI EVENT: DUBAI SHOPPING FESTIVAL DATE: 1 JANUARY – 1 FEBRUARY VENUE: ACROSS DUBAI WEBSITE: MYDSF.AE This edition will mark the 20th anniversary of the month-long Dubai Shopping Festival. To mark the occasion Dubai Gold and Jewellery Group has designed the Dubai Celebration Chain, which is claimed to be world’s longest 22 carat gold chain measuring five kilometres and weighing 180kg. Thousands of retail outlets are participating and the event organisers have introduced special categories for trading outlets to choose from in running promotions and discounts, including opening weekend special, DSF 20th edition special and DSF raffles and scratch and win promotions. The shopping extravaganza attracts around 4.4 million visitors each year who spend more than $15 billion.

EVENT: ARABPLAST 2015 DATE: JANUARY 10-13 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE WEBSITE: ARABPLAST.INFO Arabplast is regarded as the MENA region’s leading event for the plastics, petrochemicals and rubber industry. The event will exhibit an entire spectrum of design and moulding machinery including rubber processing technology, plastic packaging and injection moulding. This three-day event provides an opportunity for exhibitors to generate fresh leads, demonstrate new products and services, and keep abreast of international trends.

DUBAI

United Arab Emirates

EVENT: SGI DUBAI 2015 DATE: JANUARY 11-13 VENUE: DUBAI WORLD TRADE CENTRE WEBSITE: SIGNMIDDLEEAST.COM The 18th edition of Sign & Graphic Imaging Middle East will bring together professionals from the graphic images, outdoor media and printing industry. This edition the SHOP ME show will take centre stage. The programme will focus on retail ideas, concepts and solution across all aspects of retail shopping. Exhibitors will promote a gamut of signage solutions such as LED signage, graphic promotions, pop up banners and much more. The show draws key decision makers, retail industry buyers and professionals from across the region.

EVENT: METAL MIDDLE EAST DATE: JANUARY 10-13 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE WEBSITE: METALMIDDLEEAST.COM Metal Middle East is the only specialised event of its kind in the region. It offers a unique platform for international companies involved in metallurgical technology, thermo processors, and foundry machinery to establish business contacts with potential clients from the region. The event programme will highlight global market trends, study the GCC market and address issues facing the metal industry today. It also features high-profile speakers, interactive panel discussions, as well as host a Gala Night.

EVENT: INTERSEC DATE: JANUARY 18-20 VENUE: TRADE CENTRE ARENA AND SHEIKH SAEED HALLS 1-3 WEBSITE: INTERSECEXPO.COM Intersec is a leading international meeting platform involving the safety and security industry. This 17th edition will have some brand new pavilions on show, including a Dubai SME pavilion offering UAE start-ups an opportunity to shine on a global stage of more than 1,3000 international exhibitors. There is also the GPEC pavilion that will cover all relevant products for internal security encompassing traffic, forensic technology and criminal science, and a Techtextil Pavilion targeting engineers, safety officers and buyers of protective clothing looking for solutions and developments in personal and property protection.

Portfolio

INDIA - A NEW ADDITION TO OUR BANKING EXCELLENCE COLLECTION Wherever we operate in the world, we pride ourselves in our standards of professionalism and excellence in banking. Our regional teams have extensive local knowledge of their individual markets, helping your business break through and succeed.

Qatar • Abu Dhabi • Dubai • Frankfurt • Hong Kong • Istanbul • Kuwait • London • Mumbai • Seoul • Shanghai • Sharjah • Singapore • Sydney • Tokyo • Toronto

Observer

21

getty images

BUSINESS NEWS IN BRIEF

Malaysia’s Solar Windfall

producer of solar equipment, trailing China

Malaysia is now the world’s third-largest producer of solar equipment, thanks to trade wars that have embroiled the solar sector, reports Keith Bradfsher.

role in the global solar trade is only likely to

by a wide margin but catching up rapidly with the European Union. And Malaysia’s increase in the coming months.

“We liked Malaysia because it was a cross between just a straight low-cost play and a high-engineering play – it was sort of in the middle, where it was lower-cost but good engineering,” said Tom Werner, chief

Tucked away in The former Tin

in Chemor. Hanwha Q Cells and SunPower

executive of the California-based SunPower,

mining town of Kulim, past the small farms

have giant factories even further south, while

which manufactures half its solar panels in

of banana trees and oil palms, is one of the

Solexel, a Silicon Valley startup, is preparing

Malacca, Malaysia.

solar industry’s best-kept secrets.

to build an $810 million solar panel factory

The six factories here with cavernous

© 2014 New york times News service

rooms up to nearly a half-kilometre long

in stages.

Malaysia, a Southeast Asian nation with

The solar manufacturing boom in Malaysia has been almost invisible, a rarity in an industry known for heavily promoting

constitute the production backbone of First

just 30 million people, is the biggest winner

even the smallest factory opening or new

Solar. Working alongside minivan-size

in the trade wars that have embroiled the

solar panel farm as progress toward cleaner

robots adapted from car assembly plants and

solar sector. As Chinese companies have

energy. Manufacturers don’t want to draw

other industries, 3,700 employees produce

been hit with American tariffs and European

attention to moving production offshore.

five-sixths of the US company’s solar panels.

quotas, Malaysia has increasingly attracted

The factories here are almost entirely owned

Workers in Ohio make the rest.

multinationals with its relatively low labour

by American, European, South Korean and

costs, lucrative tax breaks, warm relations

Japanese companies that much prefer to talk

Panasonic of Japan has a solar panel factory

with the West and abundance of English-

about operations in their home countries.

less than two kilometres down the road.

speaking engineering talent.

The list of manufacturers is long.

SunEdison makes wafers 97 kilometres away January 2015

Malaysia is now the world’s third-largest

Hanwha Q Cells, for example, produces 1,100 megawatts a year worth of panels

22

Observer technology to

The plunge in prices through 2013,

achieve our energy

which levelled off as Chinese giants like

efficiency goals,

Suntech Power and LDK Solar began

the administration

going bankrupt from underpricing their

needs to

panels, put a heavy emphasis on cost

implement a more

competitiveness. China’s rapidly rising

aggressive and

wages, together with mounting geopolitical

comprehensive

tensions, prompted multinationals to look

trade strategy,”

elsewhere as well. That gave an edge to

said Michael

Malaysia, with its fairly low pay for skilled

Wessel, a member

engineers and machinery operators.

of the US-China Economic and

Malaysian wages were much higher than those in China for years, but the disparity has

in Malaysia and just 200 megawatts in

Security Review Commission, an advisory

now disappeared or even reversed. According

its home market in Germany. But the

group created by Congress. “If not, we’ll

to Malaysian government statistics, median

company highlights that the engineering

simply trade our historical dependence

nationwide monthly pay last year was

work is still done at its headquarters in

on foreign oil for a dependence on foreign

$765 for factory technicians and $400 for

Thalheim, Germany.

energy technologies and products.”

machinery operators and assembly-line workers. That is similar to or lower than

Production in Malaysia “gives us the flexibility to reliably address very different

Malaysia is a beneficiary of the complex

pay scales these days in coastal provinces of

and dynamic international market

interaction of global trade rules, economic

China with large export industries.

needs with high-quality products

competitiveness and environmental policies

‘engineered in Germany,’” said Jochen

in the solar industry. Tariffs have had the

10-year exemption from corporate taxes for

Endle, a company spokesman.

most immediate effect.

large domestic and foreign investors. While

One of Malaysia’s biggest attractions is the

It is a common theme. The technology

Solar prices started plummeting during

comes from overseas, but the employees and

the global financial crisis in 2009, as Chinese

holidays from federal taxes are not available.

most of the materials are Malaysian.

factories swiftly increased production,

The Office of the US Trade Representative

buoyed by large loans from state-owned

expressed concern this year about Malaysia’s

department, all of First Solar’s 3,700

banks at preferential interest rates, and free

tax breaks in a review of trade policies. The

employees on three shifts are local hires. A

or nearly free land from local governments.

White House agency has asked Malaysia to

few materials are imported from the United

Chinese manufacturers were also dumping

provide details of how they work so other

States, like certain electrical cables. But

panels, or selling them for less than it cost to

countries can assess whether the tax breaks

most others are now bought from Malaysian

make and ship them.

violate a World Trade Organisation ban on

Except for two expatriates in the finance

suppliers, like cord plates.

Multinationals are also hustling to

A flood of cheap Chinese exports caused two dozen solar manufacturers in the

some US states offer breaks, comparable

export subsidies.

Malaysia denies breaking any trade rules.

introduce their latest inventions just as

United States and Europe to go bankrupt or

“All of the incentives, all the things that

quickly here as in their home markets, to

close factories. The United States responded

we do, are WTO-compliant,” said Senator

maintain standardised production techniques

in 2012 by imposing stiff anti-subsidy and

Idris Jala, Malaysia’s minister for economic

and quality. “When the decision is made to

anti-dumping duties totalling about 30 per

development and efficiency.

add more robots or make other production

cent on panels from China. The European

changes,” Jeyaganesh said, “it happens almost

Union set import quotas and minimum

Solar to set up most of its production

simultaneously in Perrysburg and here.”

prices for Chinese panels last year. Pending

here, said Maja Wessels, an executive vice

The tax break cinched the deal for First

American litigation would impose duties

president at the company. “That’s easy,

irritated some of the original backers of

on panels made partly in China and partly

the 10-year tax holiday,” she said. “When

US trade action against China. Critics say

in Taiwan, closing a loophole that allowed

you look at solar manufacturing, and our

the goal was to create jobs in the United

some Chinese companies to bypass the

manufacturing in particular, low labour costs

States, not Southeast Asia. “In solar, a key

original duties.

contribute, but those taxes are critical.” n

Malaysia’s surge in the solar industry has

Portfolio

24

Observer O N E 2 W AT C H TExT: HildA d’sOuzA

John P. Tague US car rental company Hertz Global Holdings Inc. named John P. Tague as chief executive officer on November 21 last year. The board and the search committee set up by Hertz unanimously selected the travel and transportation industry veteran.

Company shares surged 4.5 per cent on the announcement.

Tague, 52, is a former United Airlines executive and more recently the CEO of Cardinal Logistics Holdings. He replaced Mark Frissora who stepped down last September in the midst of worrying financial issues including weak results and accounting errors. Brian MacDonald, the head of the company’s equipmentrental business served as the interim CEO. Tague’s appointment took place at a crucial juncture when Hertz confirmed that it had to restate financial statements from 2011 to 2013 and initiate a probe into accounting errors to the tune of $87 million. The company directors were trying to determine whether management had any influence on those mistakes. Hertz shares fell 14 per cent in light of the transgressions, taking the total drop in shares to 24 per cent last year.

Tague brings with him eight years of experience gained at United Airlines where as president and chief operating officer he effectively turned round the company’s flagging performance.

He introduced innovative products and pricing programmes that revived the airline’s business, spruced up operations and boosted customer satisfaction. Later he was appointed chairman and chief executive of Greatwide Logistics Services where, under his supervision, the company merged with Cardinal Logistics Management to form Cardinal Logistics Holdings, one of the largest US providers of dedicated transportation.

Given Tague’s past performance, the board has shown confidence in his deep knowledge and experience. “The board was very clear about what we need in a new CEO for Hertz,” said Hertz’s non-executive chairperson in a statement. “We were looking for a world-class global leader who knows the travel industry and its players, has an intimate understanding of the revenue-optimisation equation, drives operational excellence, has driven turnarounds, is a superb people leader, and most of all, understands how to create shareholder value. In John we have found that leader.”

Shareholders, including activist investor Carl C. Icahn who holds 10.77 per cent of Hertz, have backed the appointment. “I am happy to say that after listening to John’s ideas concerning Hertz and evaluating what he has accomplished at United, I believe he ranks at or near the top of the group” Icahn said.

Robots Fake Web Video Ad Views Computers being remotely operated by hackers account for almost one in four views of digital video ads worldwide, according to a study that estimates such fraud will cost advertisers $6.3 billion dollars this year.

The fake views, which also account for 11 per cent of other display ads, often take place in the middle of the night when the owners of the hijacked computers are asleep. The result is retailers, automakers and other companies paying for web advertisements that are never seen by humans, or are seen by fewer people than they are paying for, according to a report released by the US-based Association of National Advertisers.

Left unchecked, advertisers will lose $6.3 billion globally due to the fraud in 2015, said Michael Tiffany, chief executive officer of White Ops Inc., a cybersecurity company based in New York that conducted the study. The fraud could undermine confidence in a fast-growing industry. Online display advertising accounted for an estimated 10 per cent of ad spending in the US last year, a figure that is projected to nearly double, to 19 per cent, in 2018, according to EMarketer Inc. Hackers use malicious software to string together computers, many of them privately owned, into “botnets.” They then command the computers to surf the internet, watch videos and click on ads. Hackers make money by selling their botnet services to companies that specialise in driving traffic to websites, Tiffany said.

Portfolio

25

Record Fine for Cosmetic Firms

L’Oreal, which received the stiffest total

Henkel, L’Oréal, Beiersdorf

fine of ¤189 million due to its majority

and Johnson & Johnson’s

stake in the cosmetics sector at the time,

Laboratoires Vendôme,

said it would appeal.

had colluded on price

Likewise, Anglo-Dutch company

increases between 2003

Unilever, which had the second-largest fine

and 2006. “These two

of ¤173 million, said it would challenge

sanctions are among the

the decision, calling the fine “completely

most significant imposed

disproportionate and unjustified”.

to date by the competition reuters

number of popular brands.

The regulator said the extent of the

authority,” it said. The

penalties reflected the size of the French

regulator added that the

cleaning products market, at ¤4.7 billion

price-fixing had kept prices

a year, and the personal hygiene market,

Some of the world’s biggest consumer

“artificially high” affecting consumers and

which is worth ¤7 billion. The French spent

products companies, including Unilever,

“caused harm to the economy”.

on average ¤190 each a year on cosmetics

France’s Autorité de la concurrence

Reckitt Benckiser, Procter & Gamble

and personal hygiene products at the time

and Gillette, have been fined a combined

imposed sanctions totalling ¤345.2 million

of the investigation. Both markets are

¤951 million by the French competition

related to cleaning products and a further

dominated by eight companies with the

watchdog for price fixing in supermarkets.

¤605.9 million related to personal hygiene

biggest three accounting for 43 per cent

products. Most companies received two

of the personal hygiene market, led by

fines. The price-fixing affected a large

L’Oréal, which alone has 28 per cent.

The regulator said the 13 companies, Kaldewei.pdf

1

12/16/14

10:10 AM

www.kaldewei.com

which also include Colgate-Palmolive,

A STUNNING MASTERPIECE MEISTERSTÜCK Centro Duo Oval

C

M

Y

• Freestanding, fully enamelled, seamless

CM

• Crafted from KALDEWEI steel enamel

MY

• Made in Germany • 30-year guarantee on complete material

CY

• Family company since nearly 100 years

CMY

K

IMPACT RESISTANT

CHEMICAL RESISTANT

HEAT RESISTANT

SCRATCHPROOF

LIGHTFAST

HYGIENIC

KALDEWEI • Mrs. Diane Ritzau-Starkmann • tel.: +49 171 4933624 • email: Diane.Ritzau-Starkmann@kaldewei.de

DIMENSIONALLY STABLE

Observer The World

CompIled by Hilda d’souza

Top 10

Coal Use To Surge

WoRld’s MosT EXPENsiVE REsidENCEs rank

Homes

Value ($billion)

1.

buckingham

1.550

british monarch

owner mukesh Ambani

2.

Antillia

1.000

3.

Villa leapolda

0.750

4.

5.

Four Fairfield pond 0.248.5 18-19 Kensington place Garden 0.222

6.

ellison estate

0.200

larry ellison

7.

Hearst Castle

0.191

William Randolph Heart’s Trustees

8.

9.

Seven The pinnacle 0.155 Kensington palace Gardens 0.140 17 Upper phillimore Gardens 0.128

edra and Tim blixseth

10.

lily Safra Ira Rennert lakshmi mittal

Roman Abramovich elena Franchuk

ReUTeRS

26

Global coal use is on an upwards march despite calls to halt fossil fuels demand at a UN climate summit in Peru and will hit a record nine billion tonnes by 2019, according to the International Energy Agency.

(SoURCe: CompAReCAmp.Com)

A proposal for greenhouse gas emissions falling to zero by

BEsT sTudENT CiTiEs rank

student Cities

earnings ($mil)

1.

paris

412

2.

melbourne

397

3.

london

392

4.

Sydney

388

to tackle emissions by spring 2015 was intensely debated. But the

2050 surfaced at the Lima summit, attracting support from Scandinavian countries, island states and some central American nations, and an obligation on countries to announce their plans

5.

Hong Kong

387

final agreement merely asked member states to announce their

6.

boston

386

emissions plans by 31 March.

7.

Tokyo

385

8.

montreal

380

9.

Toronto

375

10.

Seoul

372

Fears that these will not keep global warming below the 2°C rise that governments have agreed to hold it to will be stoked by the latest real-world energy trends, showing a large rise in coal consumption from the 7.2 billion tonnes used in 2010.

SoURCe: QS WoRld UNIVeRSITy RANKINGS

China is expected to account for 60 per cent of growth in the

RiCHEsT FaMilY oFFiCEs rank

Firm name

aua in $billion

1.

HSbC private Wealth Solutions

143.5

2.

Northern Trust

116.4

3.

Citi private bank

206

4.

bessemer Trust

96.6

The IEA predicts that global coal demand will grow at an

global coal industry by 2019 and, along with India, and other countries in south and east Asia, will be “one of the main engines of growth in coal consumption.”

5.

bNy mellon Wealth management

81.2

average rate of 2.1 per cent per year through 2019. This is less

6.

UbS Global Family office

67.6

than last year’s forecast of 2.3 per cent – and the actual growth

7.

pictet

55.0

8.

CTC I myCFo

40.4

rate of 3.3 per cent per year between 2010 and 2013.

9.

Abbot downing (Wells Fargo)

37.4

10.

US Trust Family office

36.2

AUA INClUdeS WeAlTH dIReCTly mANAGed by THe oFFICeS ANd FUNdS oUTSoURCed To moNey-mANAGemeNT FIRmS. (bloombeRG.Com)

Coal-fired power plants account for just 40 per cent of global electricity production, but they are responsible for more than 70 per cent of its emissions according to WWF Europe.

Portfolio

Commentary

28

Will Hutton

Falling Oil Prices Create Opportunity For the past 18 months, the

exports, will flip. Russia’s 2014 budget

world’s biggest oil producer has been the US.

was based on an oil price of $100 a barrel.

So falling oil prices offer the world

At $70 a barrel, the economy will contract

economy a great opportunity. But if it is

the US will maintain this new standing

by at least three per cent in 2015, the

not leapt upon purposefully by aggressively

for the foreseeable future, according to

country will run a balance of payments

expansionary economic policy, secular

official projections.

deficit and the government’s finances will

stagnation might worsen. Because energy

spin out of control.

prices affect all goods and services, their fall

Courtesy of the fracking revolution,

The world as we’ve known it for the past 50 years is being stood on its head.

With the US needing to buy less oil on

But Western governments cannot

Summers has described it.

could reinforce the trend for the general

hope that economic benefits will arrive

price level to fall further and so accelerate

international markets and China’s growth

automatically. These are new times. It has

deflation and all the ills that go with it.

sinking to its lowest mark for 40 years,

been obvious since the 2008 financial crisis

there is now, amazingly, the prospect of

that the economic landscape is wholly

European Central Bank to throw down

an oil glut. The oil price has nosedived to

different. Digitisation is gnawing away at

the gauntlet to Germany. The European

its lowest level for four years, below $70 a

established companies’ business models and

Commission has launched a plan with at

barrel – down more than a third in three

empowering new insurgents at an escalating

least an eye-catching top line – to trigger

months. There was mayhem in the markets

pace. And this is happening in a world in

an additional ¤300 billion spending on

as investors reassessed the sober prospects

which there is a massive overhang of private

vital infrastructure across the continent.

for oil companies, and banks suddenly

debt and where banks are still nursing

Except it was a phantom ¤300 billion, with

realised that they were exposed to a new

damaged balance sheets.

Germany insistent that it should involve no

round of write-offs to distressed energy companies and even to governments.

But although particular companies may

Uncertainty and fear abound. Interest

This is the moment for the EU and the

extra spending by the commission, nor by

rates in Britain alone have been pegged

governments, nor extra borrowing by the

at 0.5 per cent for more than five years.

European Investment Bank. Why? Because

lose out, the first-round effect of this fall

But still business is reluctant to invest, not

there was an alleged risk of inflation.

should provide good news. High oil prices

knowing what technologies to back or not

depress economic activity. They suck money

knowing how much demand there will be

in a few months, the risk is non-existent.

from consumer spending and redirect it

for new products and services. We live in

Rather, the problem is of the opposite order:

to oil-exporting countries, which typically

an era of stagnation, “secular stagnation”,

not seizing the moment to launch a genuine

hoard it in foreign exchange reserves or

as former US treasury secretary Larry

economic stimulus of some scale. n

However, with oil prices falling by a third

unspent bank deposits. It is a tax by the few on the many.

It should be no surprise, then, that in the past rising oil prices were associated with recessions and falling oil prices with booms. If the oil price carries on falling back towards $50 a barrel, and if history is any guide, the Western economy should respond The European economy, in particular, dependent on oil imports, is an obvious and immediate potential beneficiary. Suddenly,

getty images

© observer neWs service

– to the good.

the balance of economic advantage with Russia, no less dependent on oil and gas Portfolio

Be secure.

Be first.

Wealth is the power to make things happen. At FGB, we are committed to turning your goals into reality. Through our expertise and investment strategies we focus on protecting and growing your wealth, so that the future is a promise of freedom for you.

Global Wealth Management - Business Banking - Personal Banking Solutions Transaction Banking - Financing - Advisory - Global Markets - Islamic Solutions UAE - QATAR - INDIA - SINGAPORE - HONG KONG - SOUTH KOREA - UNITED KINGDOM - LIBYA www.fgb.ae

Profile

30

THE UBER CAPITALIST From its launch in 2010, Uber has grown into a company valued at $40 billion. But the ride sharing service has faced stiff opposition from governments, licensing authorities and professional taxi bodies.

Fortunately, Uber CEO Travis Kalanick loves a good fight, reports Guido Duken.

Portfolio

31

January 2015

Profile

32

T ravis Kalanick, Uber’s CEO, is a tough man. “As an entrepreneur, I try to push the limits. Pedal to the metal.” And pushed the limits he has.

‘Creative disruption’, with its aim of creating a new paradigm by destroying the existing one, has been the buzz phrase of the computer-tech business era. Kalanick prefers his own adaptation of the same idea to describe his antagonistic approach to local governments, licensing authorities and professional taxi bodies. He calls it “principled confrontation”.

Kalanick sees any laws and regulations

Uber customers can check on the location of their ride through GPS.

that are unfavourable to Uber as anachronisms in need of overhauling. His

LEGEND HAS it that Uber was born

Francisco in the summer of 2010, with a

usual method of getting his point across

on a wintry night in Paris in 2008, when

few cars, a handful of employees, and a

is a one-two combination of provocative

Kalanick and his friend Garrett Camp

small amount of capital.

statements and aggressive lobbying.

couldn’t get a cab. The two vowed then

But he is facing a tough opponent. The

and there to solve the problem with a

a cease-and-desist order from the San

licensed taxi business is one of the most

revolutionary new app. The premise was

Francisco Municipal Transportation

regulated on the planet with numerous

dead simple: push a button and get a car.

Agency, as well as the California Public

vested interests. The basic business model

The reality is less prosaic. The pair were

That October, UberCab was hit with

Utilities Commission. Among other

of metered drivers that enjoys a form of

in Europe attending LeWeb, an annual

issues, they objected to the use of ‘cab’ in

monopoly is standard in many cities.

European tech conference. Kalanick and

UberCab’s name, since it was operating

Camp had capital in their bank accounts

without a taxi licence. “We’re totally legal,

has already become a protracted battle

and were on the hunt for the next great

like totally legal, and the government

with the taxi industry and the regulators

business idea. At their flat on the outskirts

is telling us to shut down. And you can

whom he claims are deep in its pocket.

of Paris they discussed start-up ideas with

either do what they say or you can fight

And as Kalanick disagrees with everything

some other entrepreneurs. Among the

for what you believe,” said Kalanick. Their

the taxi industry stands for and what

many schemes under discussion was the

solution was simple: they ignored most of

he regards is an outdated concept, he is

notion for an on-demand car-service app.

the order and changed the name to Uber.

unwilling to compromise. “If you don’t

But the idea didn’t stand out and Kalnick

agree with the core principles, which are

largely forgot about it. Camp, however, did

a war where more fronts opened up

the premise of that compromise, then

not, and he even bought the domain name

as Uber expanded its service to the

you have to have what I call principled

UberCab.com. He eventually convinced

current 53 countries and more than 200

confrontation,” he says.

Kalnick and the service launched in San

cities worldwide. Uber is the subject of

As a result, Kalanick is waging what

But this was only the first salvo in

Portfolio

33

nations. In Paris, Uber cars had their

when his first start-up, a search engine

tyres slashed and the company continues

and file-sharing service called Scour, was

to be involved in disputes with several

targeted by the film and music industries

governmental bodies, including those

in a $250 billion copyright suit and filed

of the US and Australia.

for bankruptcy. He had more luck with his

“There’s a lot of regulations that

next venture, Red Swoosh, another file-

go way back that didn’t contemplate

sharing service, which was bought in 2007

what the future was going to look like,”

by Akamai Technologies for $19 million.

Kalanick says. Those laws didn’t imagine

Kalanick has realised that confrontation

a smartphone era where “you’d be able

is not enough to win. As a result he has

to get out an app and get a car in two

moved towards a more political approach

minutes”. In other words, the current

through the use of lobbying – Uber

taxi model and legislations are antiquated

has 16 lobbyists in the US alone. Plus

and Uber is the future.

Kalanick hired David Plouffe, who was

Kalanick takes opposition in his stride as he’s used to adversity. He was just 23

the strategist begind the 2008 Obama presidential campaign. “What we maybe

“If you don’t agree with the core principles, which are the premise of that compromise, then you have to have what I call principled confrontation”.

Co-founder Garrett Camp convinced Travis Kalanick that they should launch Uber.

ongoing protests from taxi drivers, taxi companies and governments who believe that it is an illegal taxicab operation that engages in unfair business practices and compromises passenger safety. As of December 2014, protests had been staged in Germany, India, Thailand, Spain, France and England, among other January 2015

Uber CEO Kalanick has had to deal with a lot of opposition.

Profile

34

Management, among others. This means that Uber was valued at $18.2 billion, and that made Kalanick the world’s newest tech billionaire – at least on paper. It was also recently announced that the Chinese search engine Baidu was making a significant investment in Uber, although the amount was not disclosed. According to the latest valuation, Uber is now worth $40 billion.

All that money has raised the ire of Uber’s opponents. “They started off by operating illegally, without following any of the regulations and unfairly competing,” said Barry Korengold, president of the San Francisco Cab Drivers Association.

“And that’s how they became big – they had enough money to ignore all the rules.”

A rally is held by DC Taxi drivers against Uber operations.

Not that Kalanick cares. According to him, Uber is currently quadrupling in size each year and he is adamant he will not stop until he has won every city across the globe. With international protests just about everywhere, Kalanick has his work cut out for him, even as his ambitions are larger than ever. “We want to get to the point where using Uber is cheaper than owning a car,” says Kalanick.

“Transportation that’s as reliable as running water.”

BUT KALANICK is eyeing a future that goes far beyond offering rides. He sees in Uber the potential for a smoothly functioning instant-gratification economy, powered by the smartphone as the remote control for life. “If we can get you a car

David Plouffe ran Barack Obama’s presidential campaign. He now works for Uber.

in five minutes, we can get you anything in five minutes,” he says. One avenue for

In February 2011, Uber received $10

expansion is in the delivery category by

are running a political campaign and the

million in funding from Benchmark. The

running errands. “In Los Angeles, we’re

candidate is Uber,” Kalanick told Vanity

next round, in October 2011, attracted

doing something called Uber Fresh, which

Fair. “And this political race is happening

venture capitalist Shervin Pishevar

is you push a button and you get a lunch

in every major city in the world. And

who invested $20 million and brought

in five minutes,” Kalanick told CNN. “In

because this isn’t about a democracy, this

others on board. Overall, the round

DC, we’re doing Uber Corner Store. So

is about a product, you can’t win 51 to 49.

totalled $37.5 million, which valued

imagine all the things you get at a corner

You have to win 98 to 2.”

Uber at $330 million. In the most recent

store. FedEx isn’t going to go to the

round, held at the end of last year, Uber

nearest pharmacy and deliver something

money. And that is one thing that is not in

raised $1.2 billion from BlackRock,

to you in five minutes.”

short supply at Uber.

Fidelity Investments and Wellington

should’ve realised sooner was that we

To win any political race, you need

This desire to enter and dominate Portfolio

Travis Kalanick (L) and Baidu Chairman and CEO Robin Li shake hands after a signing ceremony and press conference in Beijing

“We want to get to the point where using Uber is cheaper than owning a car,” says Kalanick.

“Transportation that’s as reliable as running water.” the “everything economy” echoes the ambitions of much bigger and more established companies such as Google, Amazon, eBay, and Walmart.

BUT FIRST, Kalanick will have to get on top of all the challenges facing the company. Following allegations of rape against an Uber driver in December, the company was banned from New Delhi for not following the city’s compulsory police verification procedure. Uber Taiwan received over $30,000 in fines for operating illegally, including a cease

Uber Fresh is a new delivery service that promises customers lunch in five minutes.

and desist of the app, on December 5.

On December 8, Dutch judges banned the UberPop ridesharing service that was launched as a pilot project in Amsterdam between July and September 2014. On December 9, a judge ordered Uber to cease all activities in Spain. And that is just a month’s worth of problems.

Although Kalanick loves a good fight, the question remains whether Uber can surmount all these problems. Then again, there’s a reason why the main conference room at Uber’s shiny, new San Francisco headquarter is called the War Room. In 2011, venture capitalist Marc Andreessen said: “Uber is a software that eats taxis. It’s a killer experience.” Kalanick will be hoping

On paper, Kalanick is the latest tech billionaire.

January 2015

to keep that killer experience growing. n

Profile

35

Logistics

36

Workers sort customers’ orders at a JD.com warehouse in Beijing.

BUYING IS EASY. DELIVERY IS HARD. China’s huge size and underdeveloped inland logistics infrastructure is posing delivery problems for e-commerce firms, report Shanshan Wang and Paul Mozur

Portfolio

37

A messenger from e-commerce giant JD.com sets out to deliver an order in Beijing.

I

A delivery cart passes a sign advertising JD.com’s Singles’ Day promotion in Beijing.

T WAS THE BIGGEST SHOPPING

Jiang, who owns a bakery in the

China has caught the e-commerce bug.

day of the year in China, and the

western Chinese city of Urumqi, spent

An underdeveloped retail sector and a

discounts were steep. But Jiang Shan

2,000 renminbi ($325) on a water

flourishing network of online merchants

waited to buy some of what she wanted.

purifier and kitchen supplies and would

offering huge selections at low prices have

On November 11, tens of millions

have spent even more, she said, were she

led the Chinese to look to the web first

of Chinese like Jiang bought more than

confident the products she ordered would

to buy everything from shoes and ovens

$9 billion worth of products online on

get to her quickly and undamaged. “I tend

to toilet paper and toothbrushes. The

Singles’ Day, China’s de facto e-commerce

not to buy things on Singles’ Day because

Chinese e-commerce market is already

holiday and the world’s largest internet

the logistics just worry me too much,” she

bigger than that of the United States and,

shopping event. But buying was one thing.

said. “If I get the stuff I ordered this year

by 2020, is projected to be the size of

Delivery was another.

in 10 to 15 days I’ll be happy.”

the US, British, German, Japanese and

January 2015

Logistics

38

by geography and wealth. In the largest and most affluent cities on the country’s eastern coast, just about anything can be delivered within a day.

Zhang Rui, an information technology salesman who lives in Beijing, no longer buys small daily necessities at stores.

“Just about anything I need at home I buy online, whether it’s groceries, toilet paper, rice, cooking oil, salt, a toothbrush or shampoo,” he said.

For Jiang, living inland, it’s another GETTY IMAGES

story. She recalled when a courier refused

Workers distribute Singles’ Day packs at an express company in Nantong, China.

to help her carry a heavy parcel up the stairs to her apartment. Some couriers would not wait for her to open the package to ensure the goods she ordered

French markets combined, according to a

e-commerce company, and JD.com,

were all there and undamaged. Her

KPMG report.

its smaller rival, have tried to make

friends who live on the east coast and use

things more efficient, especially inland.

Alibaba question how she survives.

But the country struggles with

“When the package comes, I don’t

delivery, largely because of decades of

Alibaba has pledged to invest 100 billion

underinvestment in inland logistics

renminbi ($16.3 billion) in an initiative

expect it to be pretty,” she said. Even if

infrastructure and inefficient local

to link third-party companies that deliver

products have a few scratches, she said,

regulation. Goods are slow to arrive in

its shipments. The idea is to form an

“I don’t care anymore.”

the country’s interior, and damage is

alliance that uses Alibaba’s consumer and

a persistent problem – affecting both

shipment data to better anticipate orders

late 2013 one person was killed and

consumers and small businesses.

and make delivery more efficient.

seven were hospitalised after a toxic

Safety has also become an issue. In

liquid sent by a chemical company leaked

“Imagine having 30 NBA teams but only a few high school gyms to play in –

onto other parcels being delivered. In

that was China’s logistics infrastructure

2012, a China Southern Airlines plane

when e-commerce took off,” said Shen

caught fire when weatherproof matches

Haoyu, chief executive of Chinese

inside a parcel ignited.

China’s delivery problems are

e-commerce giant JD.com’s business-to-

highlighted on Singles’ Day, which was

consumer website.

conceived as a way for the unmarried

Deliveries within China are so inefficient that the country spent 18 per cent of its

of China to shop away their loneliness.

gross domestic product on logistics in

Beginning the night of November 11,

2013, 6.5 per cent more than the global

items from the 278.5 million orders placed on Singles’ Day at Alibaba’s e-commerce

average and 9.5 per cent above what is spent in developed countries like the United States, said Fox Chu, director of Asia

A messenger from JD.com delivers an order in Beijing.

sites were to be shipped, largely by truck, across a land mass crisscrossed by

JD.com, on the other hand, is building

dizzying mountain ranges. The trucks

its own warehouses and shipping its own

shuttle the packages from warehouses

goods. The company can manage same-

to smaller distribution centres, drivers

can be more expensive than shipping

day deliveries in 100 cities and next-day

paying costly tolls and running into

something from Beijing to California,”

deliveries in 600 others, said Shen, the

traffic jams along the way. After goods

he said, referring to the roughly

JD.com executive.

are dropped off, many vehicles will

Pacific infrastructure and transportation at consulting firm Accenture.

“Shipping goods from Fujian to Beijing

not bring packages back because of

1,900-kilometre trip from the southern Chinese province to the country’s capital.

AS WITH most things in China, the

Recently, both Alibaba, China’s main

state of logistics can be broken down

convoluted local regulations.

From the distribution centres, equipped Portfolio

Logistics

40

organised to cause traffic jams.

only with shelving to hold the deluge

130,000 employees filled 1.5 billion

of packages, hundreds of thousands of

orders across China. For the increase in

deliverymen will begin the slow process of

orders on Singles’ Day, YTO hired 30,000

Singles’ Day, JD.com ran promotions the

taking each parcel to recipients spread out

temporary workers. It plans to buy its first

week before and brought in temporary

across distant Himalayan hamlets, eastern

airplane next year.

workers from around the country. The

Chinese megacities and jungle towns on the South China Sea. Part of Alibaba’s plan is to establish

This year, for the first time, Alibaba was

To help reduce the backlog during

warehouse can process more than

hoping to track the location of every item

200,000 orders a day. Although it has

ordered during Singles’ Day.

proved costly to build what is effectively its own FedEx, the strategy enables

warehouses at critical choke points to help streamline deliveries. “China is too

JD.COM’S 50,000-square-metre

JD.com to process orders more quickly

big, so we cannot buy a lot of land for

warehouse in southern Beijing, the largest

than its rivals can, even as its scale lags.

warehouses,” said Alibaba’s chief operating

in the city, shows the advantages of building

Most critically, the company is able to

officer, Daniel Zhang. “Instead, we will

its own delivery service. The huge structure

train the couriers that Shen calls “literally

choose key areas, very strategic locations

is ergonomically organised and employees

the face of JD.com.”

where resources are quite limited.”

run full speed, pushing carts loaded with

Zhu Sichang, 29, is one of those

goods in lanes segmented for those going

couriers. Zhu said his favourite time on

space with logistics partners like YTO

at different speeds. A screen displays how

his job came after he dashed up several

Express, a private delivery company. YTO

many orders each employee has processed.

flights of stairs to get an urgent delivery to

It’s a far cry from most warehouses

a customer quickly. “He saw I was pouring

The company will share the warehouse

grew huge by delivering goods ordered on Alibaba’s e-commerce sites. Last year,

in China, which are often open-air and

sweat and offered me a cup of water to

just 13 years after it was founded, YTO’s

exposed to the elements, seemingly

thank me for my hard work,” he said. n

JD.com built a 50,000-squaremetre warehouse in southern Beijing to speed up logistics.

Portfolio

THE PENTHOUSE COLLECTION A selection of exquisite Penthouses and Premier Apartments located at London’s most prestigious waterside locations The Tower Chelsea Creek, London SW6

The Penthouse Collection, Lockside House Chelsea Creek, London, SW6

Goldhurst House Fulham Reach, London W6

Faulkner House Fulham Reach, London W6

Brunswick House Fulham Reach, London W6

For further information please contact: Chelsea Creek Show Apartments and Marketing Suite 9 Park Street, Chelsea Creek, London SW6 2FS

Fulham Reach Riverside Show Apartments and Marketing Suite Distillery Road, London W6 9RU

+44 (0)20 8003 6379 sales@chelseacreek.co.uk www.chelseacreek.co.uk

+44 (0)20 8003 6005 sales@fulhamreach.co.uk www.fulhamreach.co.uk

Prices from £1,799,950 to £16,950,000*

Computer generated images are indicative only. *Prices correct at time of going to press.

Proud to be a member of the Berkeley Group of companies

Finance

42

An employee examines jewellery to be pledged as collateral for a loan, at a branch of the Caixa Economica Federal, a government-owned chain of pawnshops.

Due to soaring interest rates, Brazilian consumers often turn to loans from pawnshops to make ends meet, reports Dan Horch.

Brazilian PawnshoPs’ loan Business Portfolio

43

Interest rates In BrazIl would make a loan shark blush. Credit cards charge more than 240 per cent a year. Bank loans top 100 per cent. For a rising number of consumers in need of cash, a pawnshop is actually the better option.

When Angela Pereira, a stay-at-home mother in São Paulo, needed extra money to buy her daughter school supplies, she pawned a gold chain to get 530 reais (about $210). Adjusting for the country’s high inflation, she is paying interest of around 19 per cent a year, only modestly higher than what the average American reuTers

pays on a credit card.

“It’s accessible and cheap,” she said.

The growing prominence of pawnshops

The Brazilian Central Bank keeps raising interest rates in an effort to stem inflation.

is the latest sign that the country’s consumer debt binge may be reaching its limit. The swelling Brazilian middle

who took power in the 1930s in a

cent of the item’s value. The teller does

class – and its shopping habits – helped

military coup and showed sympathy for

not ask about employment, income or

feed the broader economy for years. But

European fascism. But he also introduced

credit history – just name, address and

growth is slowing, and consumers are

progressive reforms, including the eight-

tax ID number.

struggling to pay their bills.

hour workday. As part of his attempt

The weak economy was a flash point in

João Régis Magalhães, Caixa’s national

to lower interest rates, he abolished

superintendent of consumer finance, said

the recent election, with the incumbent

private pawnshops in 1934 and gave the

it was logical that pawn loans should

President Dilma Rousseff narrowly

monopoly to Caixa.

charge lower interest rates than other

winning in a recent run-off. The central

Like those of any other bank, Caixa’s

loans: “The operation is simple, so we

bank increased interest rates again, in an

branches have walls of ATMs; desks for

have very few costs, and the risk is very

effort to fight inflation. But that could

new savings accounts, mortgages and

low because we have a guarantee that we

weigh on growth and further complicate

loans; and rows of tellers for deposits and

will get our money back.”

the consumer debt landscape.

withdrawals. But in 463 of Caixa’s branch

The growth in pawnshop lending in

While still a relatively small portion of

offices, one row of tellers has scales and

some ways follows the broader boom

lending, the pawnshop business has been

jewellers’ kits to weigh and test precious

in household debt. From June 2004 to

booming, even as other types of loans

metals, jewels and luxury watches. After

June 2014, consumer credit in Brazil rose

have fallen out of favour. Some Brazilians,

the inspection, the teller immediately

658 per cent to $297 billion, according

even those solidly in the middle class, are

offers a loan, generally equal to 85 per

to the country’s National Association of

using pawnshops to pay off their credit cards, cover unexpected expenses or just get a cheaper line of credit.

Unlike in the United States, pawnshops

© 2014 New York Times News service

in Brazil are regulated at the national level. Instead of being independent players that set their own rates and make their own rules, pawnshops are operated by a government-owned bank, Caixa Econômica Federal. The strict oversight is the legacy of the former Brazilian President Getúlio Vargas, a strongman January 2015

The growing prominence of pawnshops is the latest sign that the country’s consumer debt binge may be reaching its limit. The swelling Brazilian middle class – and its shopping habits – helped feed the broader economy for years. But growth is slowing, and consumers are struggling to pay their bills.

reuters

Finance

44

Caixa has 463 bank branches that also serve as pawnshops.

Executives in Finance, Administration

requires some kind of collateral, like a

problem,” she said. Her credit cards were

and Accounting. Caixa’s pawn loan

pawn loan, fits that bill, she said. And

soon maxed out, too. Brazilian credit

portfolio has more than doubled in the

even middle-class households are turning

cards’ minimum monthly payments

last four years to $670 million, with 1.3

to pawnshops to try to break the cycle

are often not large enough to keep the

million loans outstanding.

of debt.

amount owed from growing. So two years

The fallout from the credit binge has

At the start of the decade, Arianna

ago, she pawned her jewels and raised

been more painful for other types of

França, an event coordinator for the São

40,000 reais to pay off her credit cards.

loans. The central bank reports that 6.7

Paulo state court system, faced a medical

The interest is low enough that she is now

per cent of personal bank loans and 26.3

emergency. Her father’s health insurance

paying down her principal and expects to

per cent of credit card accounts are in

did not cover all the procedures needed to

have her jewels back next year.

default. By comparison, Caixa said that

treat his cancer.

only 0.6 per cent of pawn customers

As a civil servant, França has the

While pawn loans can provide a muchneeded lifeline, they also pose risks.

missed their payments. While other

option to use so-called consigned credit.

types of lending have slowed, pawn loans

On such loans, the borrower’s employer

For years, Valéria Ferraz, a holistic

continue to rise rapidly. Caixa is planning

automatically deducts the amount

therapist in São Paulo, has pawned

to double the number of branches that

owed each month from the borrower’s

her jewels to help pay the bills when

offer such loans by the end of 2015.

paycheque, and the rate is about the same

business is slow, then redeemed them

as on pawn loans. But like many other

when clients return. “It becomes

the National Confederation of Commerce,

civil servants and pensioners, França

addictive,” she said. “It’s so easy to get

said many low-income households, for

was already spending more than 30 per

extra money, sometimes I do it even if I

whom credit was a novelty a few years

cent of her income on consigned-credit

don’t really need it.”

ago, “are now learning how interest

payments – the limit permitted by law.

Marianne Hanson, an economist with

works and that they have to look for the cheapest alternative.” Credit that

“There’s so much credit available, you can just buy and buy. It can become a

Ferraz admitted that she had once lost a gold ring with diamonds because she had failed to make her interest payments.

Portfolio

Finance

45

When a consumer defaults, Caixa displays the pawned item on its website.

Interested parties bid through the bank’s ATMs. If the amount raised in the auction is greater than what the client owes, the client receives the difference.

But because Caixa values jewels based only on their raw materials, without taking craftsmanship into account, the auction price rarely reflects the full value.

Reinaldo Domingos, president of the Brazilian Association of Financial Educators, said pawn loans might be cheaper than other options but they are still not cheap. “For many people, the snowball of debt keeps growing,” he said.

Yet for those who keep their borrowing under control, pawn loans can replace high-interest credit cards.

Carmelita Valente, a retired getty images

administrative assistant in São Paulo, pawned rings, necklaces, a pendant and earrings to help with household expenses just after her husband died in 1992. Since then, Valente has never defaulted. But

Credit cards only took off in Brazil early last decade. Since then consumer credit has risen by 658 per cent.

she also has not redeemed her valuables.

so I paid off 1,200 reais. Last month I

Instead, for the last 22 years, she has used

took out 600 to pay for repairs in my

just supporting the bank,” she said. Her

her pawn account as a line of credit.

home. It depends on what I need each

income, though, does not let her save for

month,” Valente said. She currently owes

unexpected expenses. “But with God’s

2,300 reais.

help, I’ll redeem my things, someday,”

Based on her items’ value, Caixa lets her borrow up to 4,000 reais, but it is a rare month that she owes that whole sum.

“A few months ago I had some money,

She said she knows that it would be best not to borrow at all.

An employee retrieves jewellery to be returned to an owner from the safe of a Caixa Economica Federal branch.

January 2015

“My daughter always tells me that I’m

she said. “I couldn’t bear to let them go.

They’re part of my family history.” n

Brazilian credit cards’ minimum monthly payments are often not large enough to keep the amount owed from growing. So two years ago, she pawned her jewels and raised 40,000 reais to pay off her credit cards.

Tourism

46

California’s ski resorts faCe a Brown future

Boreal Mountain Resort blows manmade snow over a ski run in order to open for business.

Portfolio

47

California is in the grip of a massive drought, but its ski industry has been facing declining snowfall for decades, reports John Branch.

At ski AreAs up And down the

second lowest of the last 90 years. With

jagged peaks of the Sierra Nevada, where

most of the snow arriving late in the

California’s drought has hit historic

season, skier and snowboarder visits in

proportions and the broader threat of

this area were down 25 per cent from the

climate change hangs heavy over an

season before, according to the National

industry built on optimism, the manmade

Ski Area Association.

snow is flying.

Similarly meagre snow packs in 2012

A couple of resorts managed to open

and 2013 have exacerbated the Californian

a few runs in November. But beyond the

drought, with ramifications far beyond the

occasional strip of white, the mountains

ski industry. A fourth lacklustre season

remained mostly bare.

would be unprecedented, according to

“From a business perspective, I’m a farmer,” said John Rice, general manager

snow records kept since 1879.

Some dismiss the snow drought as an

of Sierra-at-Tahoe, a ski area south of

anomaly, pointing to near-record snowfalls

Lake Tahoe. In late November, he had a

in the Sierra Nevada as recently as 2011.

small pile of manmade snow, a mountain

When viewed on graphs, the data is spikier

of naked runs and a hope to open in early

than ever, but the trend lines point down.

December. “I’m not in the ski business,” Rice said. “I farm snow.”

The season was just starting, and snow

“It might well be that there will be more snow on the Californian mountains in the next few years again,” Christoph Marty, a

may yet pile high, but the harvest in

researcher for Switzerland’s Institute for

California the last three years was bleak,

Snow and Avalanche Research, wrote in

and the globe’s long-range forecast is grim.

an email. “However, this does not change

Fortunes are as unpredictable as ever, with

the fact that there will be less snow in the

bigger swings of weather variability. While

long run.”

snow levels have decreased drastically in the West and are generally on decline elsewhere in the United States, the drop is hardly uniform.

The ski industry, which expects higher temperatures, less snow and shorter seasons in the coming decades, is seen as the canary in the coal mine of climatology. “This is a very serious and as strategically significant a topic as you can get,” said Andy Wirth, president and chief

The ski industry, which expects higher temperatures, less snow and shorter seasons in the coming decades, is seen as the canary in the coal mine of climatology.

executive of Squaw Valley, a major resort near Lake Tahoe.

© 2014 New York Times News service

Californian resorts, big and small,

January 2015

Equally troubling for ski areas is the

are combating the trends with bigger

rising percentage of precipitation that falls

investments in snow making ($8 million

as liquid, not solid, even in winter, said

worth at Squaw Valley and neighbouring

Randall Osterhuber, a researcher at the

Alpine Meadows in the last three years)

Snow Lab. In the late 1970s, about 82 per

and more activities less reliant on snow,

cent of the annual precipitation at the lab,

whether indoors in the winter or outdoors

with a relatively high elevation of 2,100

in the summer.

metres, fell as snow. These days, it is about

Last year’s snowpack at the Central Sierra Snow Lab, in the heart of California

67 per cent.

If the debate about global warming still

ski country near Lake Tahoe, topped out

echoes around the world of politics, it has

at a depth of about 132 centimetres, the

long since faded at ski areas.

Tourism

48

Scott Cizek, a snow-making supervisor at Boreal Mountain Resort, checks on the quality of their manmade snow.

“I don’t know of anybody in the industry who is saying that climate change is not an issue for us,” said Bob Roberts, president and chief executive of the California Ski Industry Association.

The industry was among the first pushing for awareness of the global warming threat, long before the turn of the century, led by resorts like Aspen in Colorado. The National Ski Area Association adopted a climatechange policy in 2000. In 2007, snowboarder Jeremy Jones founded Protect Our Winters to further rally the winter-sports community.

Making snow requires two Californian things in short supply – temperatures below freezing, generally, and ample water.

And, despite recent advances in efficiency, snow making contributes to global warming, representing 15 to 20 per cent of Squaw Valley’s carbon footprint, for example, according to Squaw Valley officials.

Squaw Valley’s Formal Sustainability Initiative is a report on the ways it intends to reduce its own carbon footprint and promote advocacy among its customers. “Our intention is to lead the fight against climate change,” the report says, while acknowledging that the A snow-making machine.

company expects changing conditions.

“Ski seasons are projected to be three to six weeks shorter by the 2050s” in the Portfolio

Tourism

49

Sierra Nevada, the report reads.

“Will ski areas be around in 30 to 40 years? The answer is yes,” Wirth said. “Will we look different than we do today? Yes. But we look dramatically different now than we did 40 or 50 years ago, too.”

Ski areas may look more like Big Bear Mountain Resorts in Southern California.

About a two-hour drive east from Los Angeles, Big Bear can open – and sometimes has opened – 100 per cent of its terrain with nothing but manmade snow. It has built a vast snow-making operation since the 1960s, a strategy that has propped up ski areas on the East Coast for decades.

“We’re certainly better positioned than most areas for the possibility of warmer temperatures and less snowfall,”

A ski run, mostly bare except for small amounts of manmade snow, at Heavenly Mountain Resort in South Lake Tahoe.

Chris Riddle, Big Bear’s vice president of

November 7, operating one lift and one

marketing, said. “We’ve lived with that our

run. It closed again for a few days, waiting

snow,” Boreal’s general manager, Amy

entire existence.”

for colder conditions to make more snow,

Ohran, said. “A lot of discussions are about

and reopened in late November.

seasonal diversity, and expanding revenues

But making snow requires two

Two years ago, Boreal opened Woodward

“We have to get our heads out of the

in areas that are not dependent on snow.

Californian things in short supply –

Tahoe, an indoor action-sports gym, with

Our hearts are in skiing and snowboarding,

temperatures below freezing, generally,

year-round use for everyone from Olympic

and we want to see that succeed. But we

and ample water. And, despite recent

athletes to cheerleading squads. Ski areas

have to cast a bigger net.”

advances in efficiency, snow making

everywhere are adding non-snow activities,

contributes to global warming,

like mountain-bike parks and zip-line

relies mostly on snow from the sky. And

representing 15 to 20 per cent of Squaw

courses, especially since 2011, when federal

when it falls, the resort has a plan to make

Valley’s carbon footprint, for example,

legislation allowed expanded uses for ski

the most of it. “Every flake counts,” Rice,

according to Squaw Valley officials.

areas on government land.

the general manager, said. n

Still, snow is the thing. Sierra-at-Tahoe

Days before Mammoth Mountain opened in November, on the strength of manmade snow, crews were drilling wells for water. But ski areas play down the effects of heavy water use during a drought.

They consider their system relatively closed, with minimal consumptive use. The water is used to make snow, then mostly melts back into the ground or runs off into reservoirs to be used again.

Boreal Mountain Resort, a small ski area along Interstate 80 near Lake Tahoe, has many enviable qualities – a relatively high altitude and north-facing slopes. But it has invested heavily in snow-making equipment since 2007 and competes annually to be the first California area to open. It won the race last year on January 2015

Randall Osterhuber is the manager of the Central Sierra Snow Laboratory.

Agriculture

50

Dried maca ready for processing in Junin, Peru.

Thieves recenTly broke inTo

heralded as a cancer-fighting superfood

a storehouse in the farming town of JunĂ­n

and sold on the shelves of supermarkets

high in the Andes, knocked the manager

like Whole Foods.

Š 2014 New York Times News service

over the head and made off with about

It is so popular in China for its perceived

1,179 kilogrammes of contraband. Trucks

aphrodisiac effects that this year Chinese

have been surreptitiously crossing the

buyers showed up with suitcases full of

border, laden with an illicit substance

cash to buy up the harvest, inciting a gold

bound for China. And with the price of

rush and setting off alarms from Lima to

their signature crop soaring, once-poor

Los Angeles and beyond.

farmers bounce along the unpaved roads in shiny new vehicles.

The precious stuff that has provoked

As maca booms, some Peruvians fear that they are losing control of a valuable crop with a history that goes back long

sudden larceny and luxury in Peru is not

before the time of the Inca empire. Officials

drugs, gems or precious metals. It is a

say that many Chinese buyers smuggled

pungent, turnip-like vegetable called maca,

the root out of the country in violation of a

Vegetable SpawnS larceny and luxury in peru Maca, a turnip-like vegetable grown in Peru, has surged in price due to Chinese demand, reports William Neuman.

Portfolio

51

Workers harvest maca roots in the mountains outside of Tarma, Peru.

law that requires maca to be processed in Peru before it can be exported – a measure intended to protect local businesses. They also say seeds were smuggled out of the country illegally, despite a ban meant to prevent the root from being grown anywhere else.

“Thousands of acres are being grown outside the country without authorisation,” said Andrés Valladolid, the president of Peru’s National Commission Against Biopiracy.

Oswaldo Castillo, a maca grower and processor, worried that the Chinese “will get a monopoly over maca and be able to set the price on the world market.” He January 2015

warned that some farmers had sold maca

The Chinese buying spree and the clandestine export of whole maca and seeds has raised questions about the ability of developing countries to control access to native species.

seeds to Chinese buyers. “We can’t let the seeds leave the country,” he said. “Maca is our ancestral food. It’s our pride.”

The Chinese buying spree and the clandestine export of whole maca and seeds has raised questions about the ability of developing countries to control access to native species. But it has also stunned buyers of the root in the United States, Europe and Japan, who suddenly saw prices of processed maca shoot up, or were told there was simply no maca left to ship to them.

Zach Adelman, the founder of Navitas Naturals, based in Novato, California, one

Agriculture

52

Workers sort dried maca to be processed at the Koken of Peru processing plant in Junin.

of the top importers in the United States,

in the new year when they go and find a

said those plantings could have been

said his company previously paid about

bag that’s three times as much,” he said.

started only with seed smuggled out of

$3.60 for a half-kilogramme of maca

In June, as the harvest started, Chinese

Peru illegally.

powder. Now some suppliers are asking

buyers arrived in Junín, a town of 10,000

for more than $20 a half-kilogramme.

people, which sits at 4,132 metres above

sucking out its nutrients, farmers typically

“It doesn’t look like it’s coming down or

sea level on a bleak plain surrounded by

plant a field for only two years, after which

stabilising even,” Adelman said. At

windswept dun-coloured hills. Within

it must lay fallow for as long as 15 years.

Whole Foods stores, the price of his

weeks, the vegetable, a member of the

That has forced farmers to go farther and

organic maca, labelled “Incan superfood,”

mustard family with a pungent smell

farther away to find land to plant, often

recently increased to $30 for a half-

and taste, soared in value, from about

tilling dizzyingly steep hillsides.

kilogramme from as low as $20. Next

$1.80 for a half-kilogramme to more than

year, he said, shoppers will pay up to

$11 for a half-kilogramme for the most

53, considered by many in Junín to be the

$80 for a half-kilogramme.

sought-after variety.

maca king for his extensive plantings. Last

“It’s going to hit them like a ton of bricks

Because maca rapidly depletes the soil,

That is the problem faced by Hugo Arias,

Fortunes were made overnight.

year, he farmed more than 243 hectares

Many of the Chinese who bought maca

and said he would increase that by 20 per

last summer loaded the dried vegetables

cent for next year’s crop. He said he had

onto trucks and sent them clandestinely

used much of this year’s profit to buy farm

across the border to Bolivia, according

equipment and rent more land to grow

to government officials. That hurt local

maca. He is also building a large new house

processors. But of greater long-term

in town.

concern were news reports that farmers in

Wanque Zhu, a buyer from China, shops for maca products.

China had begun growing large amounts

On a recent day, Arias exhorted about

of maca. Valladolid, the biopiracy official,

200 workers harvesting maca, in a field

Out of earshot of Arias, some workers said that despite receiving a raise this year they were not benefiting enough from the stunning rise in maca prices. They are paid $11.37 a day, they said, up from $9.65 last year.

Portfolio

Agriculture

53

Growers said they were staying up at night to guard drying tents and storehouses from thieves.

Their worries increased after the storehouse of a Japanese buyer was raided.

Maca harvest workers hold a meeting with their boss, Hugo Arias, left, in Tarma.

at a breath-sapping 4,511 metres, to work

pay us so little and treat us badly?”

a week, at breakfast. They boil the root

The price jump has also brought trouble.

and blend it with milk, fruit and sugar,

pampa as vicuñas grazed on yellowed tufts

Growers said they were staying up at night

turning it into a hot drink called maca

of coarse grass. “They say I’m exploiting

to guard drying tents and storehouses from

juice. But with the rising price, many now

people,” said Arias, wearing only a light

thieves. Their worries increased after the

forgo the staple.

windbreaker against the cold. “I don’t

storehouse of a Japanese buyer was raided.

exploit anyone. I give people work.”

The company’s local representative said the

maca anymore,” said Olga Rapri, 48, who

Out of earshot of Arias, some workers

thieves hit him on the head, then loaded

has a clothing shop in town. “Now you

said that despite receiving a raise this year

sacks of dried maca into a pickup truck.

have to be rich to have maca.” She said

harder. A frigid wind blew mist across the

they were not benefiting enough from

“I never thought the price of maca

“The poor person in Junín can’t eat

sales at her store had increased as money

the stunning rise in maca prices. They

would go so high,” said the man, Alex

poured into town during the harvest, but

are paid $11.37 a day, they said, up from

Rojas, 33, who said the thieves threatened

less than she had hoped. “People would

$9.65 last year.

to shoot him.

rather buy cars, motorcycles, tractors,

The harvesters, including some women with babies on their backs, knelt down to

Junínos, as residents here are called, typically consume maca two or three times

scrape the earth with short-handled picks to expose the maca roots, which range from about five centimetres across to the size of a small fingernail. It is hard to imagine that anything can grow in this harsh landscape besides lichen and wild grasses. But the maca is well adapted to the conditions, its pale green, frisee-like leaves hugging the cold ground.

Victor Parra, 56, one of the workers, said it is so cold sometimes that he could barely pick the maca out of the soil. The harvesters were given short rest periods, he said, and brought their own food and water. They travel to and from the fields in the back of cramped trucks. “A kilo of maca is how high?” Parra said. “So why do they January 2015

Freshly harvested maca, heralded as a superfood is sold on the shelves of supermarkets like Whole Foods.

seed,” Rapri said. “They would rather invest in growing more maca.” n

Energy

54

A NEW

ENERGY POLICY Mexico’s regulator, the National Hydrocarbons Commission, will soon hold the country’s first open auctions for oil and gas fields, reports Elizabeth Malkin.

Portfolio

55

The compuTer screens lining the bubble-like control The La Muralla IV has been drilling exploratory wells in deep water.

room on the La Muralla IV, a giant floating platform, monitor pressure levels in a narrow shaft cut through bedrock to a reservoir of valuable natural gas nearly five kilometres below sea level.

For six months, an international team hired by a contractor for Petróleos Mexicanos (Pemex), Mexico’s state-owned oil monopoly, has been drilling an exploratory well here in the Gulf of Mexico. Now, the work is nearly done. Drill pipes are stacked like sentries. An underwater robot has been pulled back up from the deep seafloor. A wireline sensor is gathering data to determine how much oil and gas lie below.

An operation like this would attract little attention in the northern part of the gulf, where dozens of deepwater platforms are part of the mosaic fuelling America’s energy boom. On the Mexican side, though, the search is just beginning.

Pemex is counting on a future in deepwater production. But after eight years of exploratory drilling, it is still years away from producing the first barrel of oil in deep waters. Before it can, Pemex must shed its past as a lumbering state monopoly and remake itself as a streamlined company ready to compete or ally with the world’s biggest firms.

“The real large fields, the material opportunities for Pemex, lie in deep water,” Emilio Lozoya Austin, the chief executive of Pemex, said in an interview in Mexico City. “This is where our biggest learning curve lies.”

Lozoya’s ambitious plans are part of a sweeping overhaul of Mexico’s energy sector intended to increase flagging oil and gas production. By ending Pemex’s monopoly, the government hopes to attract serious outside investment for the first time since Mexico kicked out foreign oil companies in 1938.

Within a year, Mexico’s regulator, the National Hydrocarbons Commission, will hold the country’s first open auctions for oil and gas fields, including deepwater regions in the Gulf of Mexico. And Pemex will have to compete in the bidding just like any other company, either alone or with partners.

“Pemex will not have any special privileges at all,” said Juan Carlos Zepeda, the president of the hydrocarbons commission.

“We have two main mandates. One is transparency and the other is competition.”

The change will not be easy for Pemex, long run as an arm of the government. For decades, the company’s task has been to

© 2014 New York Times News service

pump oil and provide cash for the Mexican government, a job

January 2015

made possible by generous discoveries in the shallow waters of the southern gulf in the 1970s. The result was that Pemex racked up losses and never invested for the future – when the easy oil would run out. Closed off from the global industry, it fell further and further behind the energy giants. Now, Pemex is venturing into uncharted territory, as its traditional fields decline. Since the peak in 2004, Mexican crude oil production

Energy

56

own deposits from the same Eagle Ford geological formation, called Agua Nueva in Spanish, are dormant because the small exploration companies working just kilometres across the border were excluded from Mexico by Pemex’s monopoly.

Lozoya’s priority for deep water next year is to attract partners to begin production at two fields, Trion and Maximino. He acknowledged that the companies that had developed deepwater fields on the American side of the gulf were “clear candidates.” Among those are major corporations like Exxon Mobil, Chevron and Shell. Lozoya is also seeking partners for other types of deposits, including mature fields or extra-heavy offshore crude. That would allow Pemex An operator of the remote controlled submersible robot on La Muralla IV.

to increase production quickly as it focuses on its deepwater strategy.

has fallen by about a million barrels a day

high gear, Pemex has neither the financial

to an expected 2.35 million barrels a day

capital nor the expertise to produce oil and

Private investment in oil and gas

this year.

gas from its complex deepwater reserves.

production is forecast to rise steadily each

That includes the deepwater oil that the

year to reach about $27 billion by 2020.

to look for the quick win and not have a

company has discovered in the Perdido

“The potential in Mexico is still huge,” said

very diversified portfolio of investment

Fold Belt, a deposit that extends across

Luis Miguel Labardini, an oil consultant

that would give you the short-term

American and Mexican waters, or these

at Marcos y Asociados in Mexico City.

barrels, the medium-term barrels and

natural gas fields further south, where the

“There are going to be findings where

the long-term barrels,” Lozoya said.

Mexican contractor Grupo R has been

Pemex can’t do the work.”

“Obviously the short-term barrels have

drilling exploratory wells with Pemex.

“The tendency was for the government

been declining very quickly.”

As Mexico’s energy overhaul kicks into

Similarly, Mexico has watched the shale gas boom in Texas from the sidelines. Its

getty images

Pemex has trouble managing its sprawling industrial properties that include refineries and petrol stations.

The government has granted Pemex a comfortable cushion of reserves, enough to produce at its current level for two

The tendency was for the government to look for the quick win and not have a very diversified portfolio of investment that would give you the short-term barrels, the medium-term barrels and the long-term barrels.

Portfolio

involving fake Pemex invoices. Pemex

more decades. But it must get to work fast in deep water, because the laws return any new field to the state if commercial production does not begin within five years.

“Now you have a credible threat,” Zepeda said of the hydrocarbons commission. “Before the reform, if Pemex was not performing, I could not take the area and give it to someone else.”

Lozoya, 39, who has a background in corporate turnarounds and was appointed in December 2012, is in a hurry. “I think it’s something that can definitely be achieved in less than a decade,” he said of Pemex’s transformation. But he faces serious challenges. Pemex has had chief executives from the private sector in the

Mexican prosecutors are investigating one of Pemex’s largest contractors, the politically connected marine services company Oceanografía, over accusations of a $400 million bank fraud scheme involving fake Pemex invoices.

has not explained why it gave so many contracts to Oceanografía, a financially shaky company with no experience outside Mexico.

To tighten control over Pemex’s $40 billion contract operations, Lozoya has centralised them in one department. He predicts this move will save the company $1 billion this year.

And Pemex has trouble managing its sprawling industrial properties – from refineries to the franchises that operate its signature green and white petrol stations – that bleed money and attention from the company’s exploration and production division.

The company has lost $1.15 billion this year to criminals’ tapping into its

past who tried and failed to thin the thicket of interests that allows contractors, union

issue that everybody has said we need is

leaders and managers to get rich off the

complete transparency.”

enormous wealth the company generates.

Mexican prosecutors are investigating

pipelines, a longtime problem.

Lozoya argues that Pemex has taken the most important step in a turnaround.

one of Pemex’s largest contractors, the

“We have stopped talking about barrels,”

one of investors’ main concerns, said

politically connected marine services

he said. “We only talk about US dollars

Deborah Byers, a managing partner at

company Oceanografía, over accusations

and pesos now. It’s not about volumes. It’s

EY consulting in Houston. “The No. 1

of a $400 million bank fraud scheme

about value.” n

Pemex’s reputation for corruption is

Energy

57

getty images

Pemex produces around 2.35 million barrels a day, but production is falling.

January 2015

Industry

58

Growth tops

EnvironmEnt The Indian government has swept away a host of bureaucratic environmental regulations in favour of economic growth, report Ellen Barry and Neha Thirani Bagri.

A wastewater treatment plant in Vapi, a city in India’s Gujarat state.

Portfolio

59

Factory owners in Vapi, a

and pesticide factories were again free to

candidate, Modi promised to open

city on the western coast of India, have

expand, and to snap at China’s share of the

the floodgates, and he has been true

been fuming, railing and arguing for

global chemical export market.

to his word. The new government is

© 2014 New York Times News service

years against a single troublesome

Rightly so, said Harshad Patel, standing

moving with remarkable speed to

number: The pollution index used by the

outside the plant where he works. The air

clear away regulatory burdens for

Ministry of Environment and Forests,

had an acrid-sweet smell, and reddish-

industry, the armed forces, mining

which identified Vapi as an area so badly

brown effluent was gushing from a

and power projects.

contaminated that any further industrial

treatment plant down the road at a rate

growth there was banned.

of 208 million litres a day into the Daman

be coming. In a report made public

Ganga River, but Patel looked untroubled.

recently, a high-level committee

June, about two weeks after Narendra

“Clean India is fine – we also like clean

assigned to rewrite India’s

Modi was sworn in as prime minister. The

India,” he said. “But give us jobs.”

environmental laws assailed the

They finally got some good news in early

More permanent changes may

new officials at the ministry told them

Indian industries have often complained

existing regulatory system, saying

the pollution index would be revised –

that convoluted environmental regulations

it has “served only the purpose of

and in the meantime, Vapi’s chemical

are choking off economic growth. As a

a venal administration” seeking to

January 2015

Industry

60

extract bribes.

To speed up project approvals, the committee recommended scrapping a layer of government inspections; instead, it said, India should rely on business owners to voluntarily disclose the pollution that projects will generate and then monitor their own compliance, an approach the committee described as “the concept of utmost good faith.”

Environmentalists are worried that the new approach will go beyond cutting red tape and will do away with effective regulation altogether.

“If you’re building something like a brewery or a dam, faith is the last thing you want to think about,” said Leo Saldanha, coordinator of the Bangalore-based Environment Support Group. “Do you have

A fisherman walks on the banks of the Daman Ganga River.

‘utmost good faith’ in enforcing income tax,

corrupt bureaucrats sat on files that were

raft of regulatory changes and dilutions

or corporate tax law? No. This is a territory

lined up for approval, waiting for bribes.

that followed. Smaller coal mines were

on which the government wants to be weak – because they want growth.”

Modi’s new environment minister,

granted one-time permission to expand

Prakash Javadekar, made it clear that

without holding a public hearing; projects

speedy clearances would be the order of the

in forests will no longer have to seek the

inherit cumbersome regulations. The

day. The newly appointed National Board

approval of tribal village councils; smaller

environmental activist Sunita Narain, in a

for Wildlife, which must approve projects

mining projects of less than 100 hectares

recent article, described a system in which

in and around protected areas, ploughed

will no longer undergo ministry inspection.

“the same project had to be cleared by

through 140 pending projects during a

Several categories of projects will be

five to seven agencies,” not one of which

two-day gathering in mid-August. One

allowed to proceed as soon as they receive

monitored compliance. Industrialists

member said they worked at a rate of 15 to

clearances from state bodies.

complained that corrupt inspectors made

30 minutes per file.

Modi’s new government did

the rounds with their hands out, and that

More significant, activists say, were the

“We have decided to decentralise decision-making,” Javadekar said.

Chemical trucks on the roads in the morning.

New roads are being built in Vapi as industry expands.

Portfolio

Environmentalists are worried that the new approach will go beyond cutting red tape and will do away with effective regulation altogether.

“Ninety per cent of files won’t come to me anymore.” He said the new government was not phasing out important environmental protections, just “those which, in the name of caring for nature, were stopping progress.”

EnvironmEntal activists are alarmed at the plan to devolve power to

India. Vapi was at the top of the list.

“That was the only way I felt I would get these guys to act,” he said. “Enforcement was weak, the penalties were very weak, and there was no visible deterrent penalty for noncompliance.”

The moratorium did impose pain on businesses in Vapi, forcing abrupt cancellation of planned expansions. But it

state regulators, in part because state chief

did not lead to any significant reduction

ministers have powerful incentives to

in pollution levels, at least according to the control board, which renewed the ban

support industry.

“It would be a rubber stamp, because the

Downstream from the plant, the riverbanks

last year.

chief minister would just call the pollution

are abandoned and villagers said their

The general election in the spring,

control guy and say, ‘Clear it,’” said Jairam

old fishing grounds are useless. Acrid

which replaced a Congress-led coalition

Ramesh, who served as environment

fumes settle thickly in the area early in the

government with Modi and his Bharatiya

minister under the previous national

morning, making it difficult to breathe.

Janata Party, seems to have changed all that.

government. “In the state, the chief

Ask business leaders here about pollution,

minister is the king, he’s the sultan.”

though, and they bristle, arguing that the

Association was an upbeat place. A copy

During a recent visit, the Vapi Industries

government inspectors’ sampling is faulty.

of the magazine Corporate India was on

regulators and industry as starkly as Vapi,

“People talk as if you go to Vapi and you

display, with the headline “The Light at the

where around 800 factories – mostly small

can’t breathe, your lungs are damaged,” said

End of the Tunnel.”

ones – produce dyes, pharmaceuticals,

Rajju Shroff, chairman of one of India’s

pesticides and other chemicals and

largest pesticide manufacturers. “It’s all lies.

owners would invest in the equipment

employ about 80,000 people. For decades

People are nice and healthy in Vapi. There is

necessary to monitor their own pollution

the factories simply dumped caustic

no problem at all.”

levels, as envisaged in the government’s

Few places embody the tensions between

byproducts and waste into open ditches;

Regulators say it is nearly impossible

Shroff said he was sure that business

new “utmost good faith” policy. Or at least, the ones who could afford it would.

when pressure mounted in the 1990s to

to police the country’s many small

clean up the mess, they banded together to

manufacturers. In frustration, Ramesh

build an effluent treatment plant.

imposed a total ban in 2010 on industrial

and 10 per cent are difficult to convince,”

growth in 43 areas that the Central Pollution

he said. “It is human nature to cheat, to do

Control Board said were the most polluted in

something to save the headache.” n

But while the effluent plant has improved

reuters

matters somewhat, Vapi is still polluted.

January 2015

“The problem is, 90 per cent are good,

In 2010, the Central Pollution Control Board said Vapi was the most polluted place in India.

Industry

61

Energy

62

Cleaner energy Through Carbon Capture

© 2014 New York Times News service

A $1.2 billion update to capture the carbon dioxide equivalent of 250,000 cars at a Canadian power plant and bury it underground may be a blueprint for the future, reports Henry Fountain.

So much Soot belched from

by a much larger and cleaner one along

this autumn, a gleaming new maze of

the old power plant in Estevan, Canada,

the vast Saskatchewan prairie. Sooty

pipes and tanks – topped with what looks

that Mike Zeleny would personally warn

shirts and socks are a thing of the past.

like the Tin Man’s hat – will suck up 90

the neighbours. “If the wind was blowing

But as with even the most modern

per cent of the carbon dioxide from one

in a certain direction,” Zeleny said, “we’d

coal plants, its smokestacks still emit

of the boilers so it can be shipped out for

call Mrs Robinson down the street and tell

enormous amounts of carbon dioxide,

burial, deep underground.

her not to put out her laundry.”

the invisible heat-trapping gas that is the

That coal plant is long gone, replaced

main contributor to global warming. So

If there is any hope of staving off the worst effects of climate change, many scientists say, this must be part of it – capturing the carbon that spews from power plants and locking it away, permanently. For now, they contend, the world is too dependent on fossil fuels to do anything less.

If all goes as planned, the effort in Saskatchewan will be the first major one of its kind at a power plant, the equivalent of taking about 250,000 cars off the road.

And at least in theory, that carbon dioxide will be kept out of the atmosphere forever.

“Think about how far we’ve come,” said Zeleny, who recently retired after four decades here, most recently as plant manager.

Despite President Barack Obama’s push to rein in emissions from power plants across the United States, coal is not going away anytime soon. The administration expects coal will still produce nearly a third of the nation’s electricity in 2030,

The Southern Company’s new $5.5 billion power plant will capture most of the carbon dioxide it produces.

down from about 40 per cent today, even if Obama’s plan survives the political Portfolio

63

getty images

China burns almost as much coal as all of the world’s nations combined.

January 2015

Energy

64

onslaught against it.

whether carbon dioxide can be safely

Battling delays, the plant’s owner,

stored underground. And the technology

Southern Co, hopes to have it open next

overseas. China already burns almost as

is expensive. Updating the Saskatchewan

year. But it is more complex than the

much coal as all other nations combined,

plant alone cost $1.2 billion – two-thirds

Saskatchewan effort, and the price tag

and its appetite keeps expanding.

of which went for the equipment to

has ballooned to $5.5 billion, more than

Worldwide, coal consumption in 2020

remove the gas.

double the original estimate.

The challenge is even more stark

“It’ll work,” Harrington said. “It won’t

will be about twice what it was in 2000,

In the pine woods of Kemper County,

according to the US Energy Information

Mississippi, another carbon-capture effort

Administration, and will continue to grow

is taking shape, in a massive new power

for decades.

plant that will be fed a steady diet of coal

decades how to capture carbon dioxide

from the strip mine next door. Bruce

from power plants, scant progress has

unleashed by fracking, while cleaner than

Harrington, the operations manager,

been made. The United States and other

coal, is a major source of greenhouse

likened the hulking beast to an anthill:

nations have paid for research and helped

gases. Ultimately, many scientists say,

It seems curiously quiet on the outside,

some projects – Canada gave $220 million

those emissions will also need to be

but deep within an army of workers is

to the Saskatchewan plant’s owner,

trapped and stored.

cutting, welding and testing. Disturb it, he

SaskPower, and Southern Co received

said, and thousands of people will come

$270 million from the Department of

pouring out.

Energy – but the costs are high enough

Even the abundant natural gas

“If you want to carry on using those fossil hydrocarbons, that means

be easy at first, but it’ll work.”

Though the world has known for

cleaning up their emissions,” said Stuart Haszeldine, a geologist at the University of Edinburgh. Capturing carbon, he said, “is the single best way of doing that.”

Yet it is no magic bullet. Because it requires so much energy, sucking up carbon reduces a plant’s ability to make electricity – the whole point of its

Even the abundant natural gas unleashed by fracking, while cleaner than coal, is a major source of greenhouse gases. Ultimately, many scientists say, those emissions will also need to be trapped and stored.

existence. There are basic questions of

Portfolio

65

that few other power companies have done much beyond study the concept.

“There’s no market,” said Edward Rubin, a professor of engineering and public policy at Carnegie Mellon University, unless governments impose “a requirement to substantially reduce emissions.”

That is precisely what is happening in Saskatchewan, given the Canadian government’s recent restrictions on coal plants both old and new. But whether Obama’s new rules are aggressive enough to spur a change in the US remains unclear.

Some experts see the Obama policy as a turning point, a moment that could help drive the business of collecting carbon dioxide. Yet the administration has been wary of pushing too hard, warning that any move to force existing coal plants to siphon off their carbon dioxide emissions “would affect the nationwide cost and

Bruce Harrington, left, operations manager, and Randy Stonestreet at the Southern Company’s new integrated gasification combined cycle (IGCC) power plant near De Kalb, USA.

supply of electricity.”

So at a time when many experts say 10 or more projects need to be undertaken to improve the technology and reduce costs, the opposite is happening. Work to modify a coal plant in Texas is expected to start this year, but there are only a few other projects worldwide, all in the planning stage.

Carbon dioxide has been buried around the world with few problems. In Norway, a million tons have been stored every year since 1996, injected into sandstone about 914 metres beneath the

Carbon dioxide has been buried around the world with few problems. In Norway, a million tons have been stored every year since 1996, injected into sandstone about 914 metres beneath the North Sea.

injected again. Over time, nearly all of it should remain underground.

The oil and gas industry has done this for decades, mostly with naturally occurring carbon dioxide that accumulates underground. But each year in North America, more than 15 million tons of carbon dioxide from industry is used as well. Selling that carbon dioxide to the oil industry helps make a business case for capturing it at places like Boundary Dam. The practice could be expanded at many oil fields around the United States

North Sea. (By some estimates, that site

and beyond, experts say, potentially

alone could store as much carbon dioxide as the world could capture for years.)

with the oil, it will be compressed and

Most of Boundary Dam’s carbon dioxide

storing billions of tons of carbon dioxide

will not simply be buried in storage wells.

and serving as a bridge to the day when

could minimise the risk of earthquakes and

Instead, the emissions from burning one

it becomes necessary, and economical, to

leaks. But even then, storage wells would

fossil fuel – coal – will become a tool to

store the gas elsewhere.

have to be monitored, presumably forever,

extract and consume yet another: oil.

Picking the right geological features

at a cost someone would have to bear.

After being sold and shipped through a

Yet the prognosis for carbon capture is less clear. If the United States moves

If done poorly, storing carbon dioxide

64-kilometre pipeline to an oil field, the

forward, China and other countries may

can cause problems, said David Hawkins,

carbon dioxide will be pumped into old

make bigger strides as well.

the director of climate programmes with

wells, where it will mix with the oil inside,

the Natural Resources Defense Council,

making it flow better. The process is

hard to tell,” said Rubin. “Inevitably, there

an advocacy group. “But that’s also true

known as enhanced oil recovery, and while

will be a balance between technological

with operating an oil refinery.”

some of the carbon dioxide will come up

capability, cost and political realities.” n

January 2015

“How this will play out over time is

Our lifestyle often determines our health.

Have you made the right choices for your family?

The Diabetes Center at the American Hospital Dubai.

Awareness, prevention, detection, and management.

Living with diabetes doesn’t have to mean a life full of compromises. The Diabetes Center at the American Hospital Dubai can help you better understand the disease and empower you to take control by working out a treatment plan and diet and exercise routine that’s uniquely suited to your individual needs. Our trained and certified physicians are also equipped to provide your family with the right preventative methods so they too can lead a well-balanced and active lifestyle. Put your life back on track and make sure you and your loved ones can look forward to a long and healthy future.

Clinical Offerings • Insulin Pump Therapy • Hormone Disorders • Thyroid, Pituitary & Adrenal Glands • Lipid Disorders • Obesity • Endocrine Hypertension • Endocrine Tumors • Calcium & Mineral Disorders • Hirsutism • Metabolic Bone Diseases Osteoporosis • Polycystic Ovary Syndrome • Male & Female Infertility • Bone Density Measurement

The first hospital in the Middle East to be awarded Joint Commission International Accreditation (JCIA) The first private laboratory to be certified by the College of American Pathologists (CAP)

American Hospital Dubai accepts most major insurance plans. For more information please call 800 - 5500

XJ41704

Call us for a consultation today on +971 4 377 6876 or visit our website a h d u b a i .c o m

Essentials

67

THE BEST OF LEISURE AND LIFESTYLE

GREEN PEACE

GETTY IMAGES

When big-city buzz, crowds and shopping begin to lose their lustre, Hong Kong’s overlooked parks and green spaces are just the place to unwind, says Brian Johnston.

January 2015

68

Essentials

Travel

T

he last time you went

of butterflies. And if skyscrapers leave you

cool-climate conservatory – whose

shopping in Hong Kong, you

cold, downsize and inspect dwarf bonsai

fogging system is as close as you’ll get to

probably missed the bargain-

instead. Even in the middle of Hong Kong’s

heaven on a humid Hong Kong day – and

priced flamingos. (Actually,

urban density and hubbub, parks and

elegant Flagstaff House, a British colonial

they’re free.) And if you’ve ascended

gardens provide a green oasis in which to

building dating from 1846, which houses a

Victoria Peak by rack railway before, you

refresh yourself.

delightful Museum of Chinese Teaware.

were probably so busy snapping photos

Hong Kong Park is the first of these

The highlight of Hong Kong Park,

of the fabulous harbour views that you

unsung gems, hidden away behind the

however, is a superb aviary, one of the

failed to notice the forest on the other

skyscrapers of Central and seldom sought

world’s largest, housing some 600 birds.

side of the hill. No need to feel bad

out by tourists. At its heart lies a pond

A visit is like stepping from an urban

about that: Hong Kong tends to hide its

full of fat carp, surrounded by flowerbeds.

jungle into a real one as you follow an

natural assets, and many visitors come

At weekends, newlyweds pose here for

elevated walkway suspended among

and go oblivious to its urban greenery.

photographs after getting married at the

the branches of the surrounding trees.

nearby registry. Further on, a viewing

Watching birds swooping against a

exhaust you, there is an alternative.

tower with interlocking spiral staircases

magnificent background of skyscrapers,

If you’ve had enough of listening to

allows fine views over the surroundings

while listening to a mossy stream tumble

honking taxis, take a break and listen to

and a courtyard below, where locals often

through the tangled undergrowth, is

honking geese instead. When you can’t

gather in the early morning to practice tai

almost a surreal experience.

face another crowd, delight in a swarm

chi. Other park assets include an enormous

Yet once the metropolis starts to

A short walk from Hong Kong Park Portfolio

Hong Kong Park is the first of these unsung gems, hidden away behind the skyscrapers of Central and seldom sought out by tourists. At its heart lies a pond full of fat carp, surrounded by flowerbeds.

January 2015

Š Brian JoHnsTon

Sweeping view of Hong Kong Harbour from Victoria Peak.

Flamingos wade in a pond in Kowloon Park.

Š Hong Kong Tourism Board

69

Essentials

70

Travel

Looming above the botanic gardens is Victoria Peak, which the Chinese call Taiping Shan or ‘Mountain of Great Peace’, which just about sums up its atmosphere. Famous for its rack railway and stunning views, it has its share of crowds and tourist hustle. takes you to the Zoological and Botanical Gardens, which opened in 1864. The zoo has a rather uninspiring collection and heavy cages, though a notable collection of rare birds. You’d do best to concentrate on the botanic gardens, which retain a stately Victorian atmosphere. Statues of British monarchs lurk among hydrangeas, camellias and poinsettias, while tree ferns © Brian Johnston

and rosewood trees overhang shady paths.

The day kicks off at seven o’clock with elderly residents practising tai chi among the shrubbery, moves on to mothers and Locals gather in Yuen Po Street Bird Market.

kids taking the air, and doesn’t finish until the last chattering gibbon from the adjacent zoo falls silent at dusk.

Looming above the botanic gardens is Victoria Peak, which the Chinese call Taiping Shan or ‘Mountain of Great Peace’, which just about sums up its atmosphere.

Famous for its rack railway and stunning views, it has its share of crowds and tourist hustle. However, you only need to wander away from the rack-railway terminal to get lost in expanses of parkland, forests and country walks. Victoria Peak is a

© Brian Johnston

great place for picnics, kite flying, solitary A wood pigeon in the aviary in Hong Kong Park.

rambles, or simply staring at the views.

One of the best walks takes just an hour and leads you on a circuit of the peak via Harlech and Lugard roads, which are Portfolio

Essentials Travel View over Hong Kong Park, framed by the skyscrapers of Central.

© Brian Johnston

© hong Kong tourism Board

Beautiful flowers in Victoria Park.

71

little more than narrow paths lined with

fields, and a jogging path. In between,

for their singing voices. You’ll see owners

giant palm trees and rhododendron. The

there are some fine lawns and landscaped

swapping tips, feeding birds honey to

only traffic is an occasional car heading

flowerbeds. If you’re here in mid-autumn,

soothe their vocal chords, and offering

towards a secluded millionaire’s villa

don’t miss the evening Lantern Festival,

them live grasshoppers on the ends of

nestled among bamboo thickets. After

when the park comes alive with hundreds

chopsticks. The birds ruffle their feathers

about half an hour (if you’re heading

of coloured lights suspended from the trees.

and burst into beautiful song that rises

clockwise from the rack-railway terminal)

Just before Chinese New Year, the park

above the background hum of air-

the path rises above the trees and

also hosts a huge flower market: orchids

conditioning units and traffic.

suddenly the whole panorama of

in white and purple, roses in every lipstick

On a much grander scale, Kowloon

Hong Kong spreads out below, making

shade, and slender lotus flowers with rich

Park is an oasis of peace in one of Hong

this one of the world’s most spectacular

purple heads.

Kong’s most crowded districts. Walk

urban walks.

Cross the harbour to the Kowloon side

along Nathan Road, with its frantic

and you’ll find two more urban escapes.

traffic, hustling salesmen and unbearable

Another splendid but rather more

A true hidden delight is Yuen Po Street

heat, and you might well miss Kowloon

strenuous walk takes you up steep Mt

bird market, a ten-minute walk from

Park altogether: it’s suspended above

Austin Road to a little white gatehouse,

Prince Edward Road MRT station. You

a row of trendy shops and the MRT

all that remains of the summer residence

can hear the bird market before you come

station. On a hot afternoon, you could do

of former British governors. The original

to it: a discordant chorus of cheeping that

no better than visit its swimming pools,

gardens are open to the public and you can

manages to rise even above the rumbling

linked together by waterfalls. Kowloon

amble though landscaped woods to the

traffic. In all truth this isn’t really a park

residents practice martial arts in the

summit of Victoria Peak. It’s refreshingly

at all, more a wide lane shaded by trees,

sculpture garden, with its bizarre modern

cool up here, and you sometimes find

but it lies behind a wall and has a tranquil

art, while children play on the swings or

yourself in the clouds. The views stretch

feel that feels more like rural China than

get lost in the maze of hedges.

away into the blue and, on weekdays, you

downtown Kowloon.

may have the hillside to yourself.

Old men gather here to discuss and

The park also houses a caged collection of bored-looking birds. Much better is the

Far down below in crowded Causeway

contemplate their songbirds, housed

park’s lake, with its variety of waterfowl.

Bay, Victoria Park is one of Hong Kong’s

in ornate wooden cages hung on tree

Here you’ll be greeted by the extraordinary

largest parks, and another welcome green

branches. Birds are favoured in Chinese

sight of a flock of flamingos wading

space among a jumble of high-rises.

culture as the harbingers of good fortune.

against a backdrop of skyscrapers: a most

Facilities include a swimming pool, tennis

If you wonder why the birds are so

unexpected sight, but just another of the

and squash courts, basketball courts, soccer

nondescript, it’s because they’re valued

pleasures of Hong Kong’s lovely parks. n

January 2015

Essentials

72

Sport

I

t was the bottom of the ninth and the home team was behind, 10-6. In an American ballpark, fans might have started glumly filing out of the

stands to beat the traffic. But here at Sajik Stadium in Bosun, home to the Lotte Giants, drums were thundering, plastic trumpets were blowing and thousands of people were singing, chanting and catcalling themselves hoarse.

“I come here to scream the stress out of me,” said Ok Hyun-ju, a 44-year-old math teacher sharing drinks, chicken and roasted squid with her friends on a

K O REAn BaseBall’s UniqUe CUltUre

In South Korea, baseball is as much sport as it is a social event with singing and dancing, reports Choe Sang-hun.

September afternoon. “When it comes to

© 2014 New York Times News service

shouting whatever you like, never minding what other people might think of it, there the national pastime requires a visit to

in “cheer battles.” The crowds chant and

the stands, where the festivities are both

sing in unison, doing synchronised hand

signalled the end of another season

raucous and organised to a degree that

moves and banging out a rhythm with

in a country where baseball remains

American fans might find startling.

noise-making plastic tubes. Meanwhile,

is no place like a ballpark.”

The Korean Series in November

the most popular spectator sport. But understanding South Korea’s version of

The infield stands are in a constant

cheerleaders dance on raised platforms

uproar, with the opposing fans engaging

like choreographed K-pop groups, often

Cheerleaders for the Lotte Giants perform during a baseball game at Sajik Stadium in Busan, South Korea.

Portfolio

73

The infield stands are in a constant uproar, with the opposing fans engaging in “cheer battles.” The crowds chant and sing in unison, doing synchronised hand moves and banging out a rhythm with noise-making plastic tubes.

Bae Shin-gyu, centre, and other fans, cheer on the Lotte Giants.

with moves that older Koreans might frown upon.

“There is much more music, much more dancing, much more singing and much more cheering,” said Daren Hoelscher, an oil and gas engineer from Houston who was watching the Giants play. By comparison, he said, “Baseball in America is mostly quiet.”

Professional baseball in South Korea dates from 1982, when President Chun Doo-hwan threw out a ceremonial first pitch in a Seoul ballpark. From that unpopular dictator’s point of view, one benefit of the game was to give the people something to rally and shout about besides his regime. (He provided tax incentives to team owners, along with other forms of support, encouraging

Fans do a choreographed cheer for the Lotte Giants during a baseball game.

at a ballpark selling ice cream. “Except

and to couples. About 40 per cent of

for the ballpark, there was no place

spectators are women, somewhat lower

widespread political protests continued,

where women could shout in public and

than the percentage in the United States

eventually leading to South Korea’s

didn’t have to worry about ‘face’ in our

and roughly comparable to that in Japan,

democratisation. But baseball thrived,

Confucian society,” she said, referring to

which has its own proud baseball tradition

building on a national tendency to

the traditional decorum that had required

– including organised mass cheering.

identify strongly with hometowns – and a

women to look coy in public.

baseball to “entertain the people.”)

That did not work out for Chun;

fondness for mass singing and dancing.

In those early years, the crowds were

But South Korean crowds are considerably younger than in either of

almost entirely male and known for

those countries. An Olympic gold medal

sense of liberation she felt when she first

drinking, smoking and brawling. Today,

in 2008 – the last for baseball, which was

went to a game as a high school student in

smoking and hard liquor are banned,

dropped as an Olympic sport afterward –

the late 1980s, and later worked part time

and teams actively market to women

lifted the game’s popularity among young

Ok, the math teacher, remembers the

January 2015

74

Essentials

Sport

“The hardest time being a Giants cheerleader is when the game is going badly and some drunken fans look at us full of anger and try to boo us offstage, as if it’s our fault that the team is losing.”

reason the Giants handed them out in the

2000s, the Giants spent four consecutive

first place.

seasons in last place; angry fans

Japanese fans rarely boo the opposing team, but South Koreans act as if they

responded with boycotts, and one game was played in front of just 69 spectators.

can change the game’s outcome through

The Giants finished in seventh place

sheer volume. During the recent game in

this year, their worst season since 2007.

Busan, when the pitcher for the visiting

Fans lamented a “dark age” for the team

SK Wyverns made a pickoff attempt to

and demanded the ouster of the current

first base, Giants fans pointed to him

management. Giants management issued

three times in unison with a menacing

a statement saying that it “humbly accepts

“Ma!” meaning “Hey you!” (The opposing

their admonishments.”

fans will often respond to this with “Wa!” meaning “So what?”)

One long-struggling team, the

“The hardest time being a Giants cheerleader is when the game is going badly and some drunken fans look at us

Hanwha Eagles – sometimes mocked as

full of anger and try to boo us offstage,

the Hanwha Chickens – recently tried

as if it’s our fault that the team is losing,”

to improve its fortunes with cheering

Park Ki-ryang, 23, a cheerleader who

robots. The “fanbots” held up screens that

has her own fan club, said at the game

scrolled messages of support, uploaded by

in September.

fans who weren’t at the game; fans were

Bae Sin-kyu, a 54-year-old fan, knows that anger well.

South Koreans, who are known for their

also encouraged to send selfies, which

particularly fervent patriotism when

appeared on the robots’ screen faces. The

Korean teams compete internationally.

robots were also programmed to do “the

will never come again,” Bae, whose blue

Tickets are cheap, starting at about

wave.” So far, they have failed to lift the

jersey was studded with Giants pins,

Eagles out of last place.

said while waving flags during the game

$7.50. And in a distinction that Americans might find downright revolutionary, fans

Historically, the Giants haven’t had

“When we lose a game, I swear that I

against the Wyverns, which ended in a

are allowed to bring in their own food

an easy road, despite the high spirits at

10-8 loss for the home team. “But I know

and drinks (though stadiums do sell their

Sajik Stadium. The team has not won the

I will be here for the next game,” he said.

own, including Korean standbys like dried

Korean Series since 1992. In the early

“I can’t help it.” n

squid). Some ballparks provide seating at tables with built-in grills, for those who want to do their own cooking.

The LoTTe Giants fans in Busan, a port city that is South Korea’s largest after Seoul, are widely considered the country’s fiercest. (While South Korea’s nine teams are strongly associated with their home cities, their names are derived from their owners, conglomerates like Samsung and Lotte, which is best known for its department stores.) Each Giants player has his own cheer song, which the crowd sings as he steps to the plate. A curious Giants tradition is for fans to inflate orange trash bags and strap them to their heads, which results in a bobbing sea of orange as they jump up and down while singing. When the game is over, they use the bags to pick up their trash – the

Park Ki-ryang and other cheerleaders for the Lotte Giants perform during a baseball game.

Portfolio

76

Essentials

Environment

the

Battle african Parks for

As many African countries try to alleviate poverty it becomes increasingly tempting to allow oil exploration and mining in national parks, reports Jeffrey Gettleman.

Portfolio

77

T

are now circling several African parks

grinding poverty, including drilling for

appeared in this iconic and spectacularly

like this one, home to critically

oil in pristine natural environments.

beautiful national park, prospecting

endangered wildlife, such as colossal

for oil.

silverback mountain gorillas, among the

activity in this region, environmentalists

last of their kind.

vowed to “draw the line” in Virunga,

technology like deeper drilling has led to

Democratic Republic of Congo’s

a bonanza of new energy discoveries here

a moral obligation to pursue anything

Virunga National Park when

on the continent’s east side. Oil companies

that might lift their countries out of

a British company suddenly

Much like the fight over drilling on

With an unprecedented surge of oil

But development is far more than

Africa’s oldest national park and

struggle over oil exploration in Africa’s

just a buzzword here. The people in

a UNESCO World Heritage Site,

national parks is a classic quandary,

the Democratic Republic of Congo,

protected for its “outstanding universal

pitting economic development against

Tanzania, northern Kenya, Uganda

value” to all humankind. The World

environmental preservation. But out here,

and Mozambique – all places of recent

Wildlife Fund swung into action,

the quest for oil seems to be more volatile,

hydrocarbon finds – are among the

signing up hundreds of thousands of

and the stakes are arguably higher – on

poorest in the world, many without

supporters in a global campaign.

both sides.

electricity or clean water, their

federal lands in the United States, the

© 2014 New York Times News service

African governments say they have

he trouble started in the

While West Africa has been a major hydrocarbon producer for decades, new

In June, it made a triumphant

children often facing relentless illness

announcement: “Major Conservation

and few prospects.

Win: Oil Company Backs Off Oil

Park rangers hike down from their outpost on the Nyiragongo volcano in the Virunga National Park, where environmentalists are opposing oil drilling.

January 2015

Essentials

78

Environment

getty images

The Selous Game Reserve, also a UNESCO World Heritage Site, in neighbouring Tanzania is one of the largest protected areas left in Africa. It is also where large quantities of uranium were discovered.

Virunga National Park is one of the last outposts for endangered gorillas.

millions, rely on.

Exploration in Africa’s Oldest National

they lose the battle here, it will open

Park.” It looked like a happy ending for

the floodgates to drilling in protected

the gorillas and the trees.

spaces across the continent. The park is

the Mediterranean,” said Emmanuel de

considered one of the most biodiverse

Merode, Virunga’s director. “It could reach

slices of the planet. Its savannahs of

all the way to Spain.”

There’s just one problem: It might not be true.

In a private letter sent the same day the

“Any toxins from here could flow up to

yellow grass, towering volcanoes bubbling

environmentalists were savouring their

with lava, jungles, swamps and cloud

De MeroDe has made countless

victory, SOCO International reassured

forests constitute an otherworldly place

enemies over the years. He routinely

the Congolese government that it was

for gorillas, elephants, lions and chimps –

confronts rebels, poachers and various

continuing to evaluate seismic data so

a rare mix.

other outlaws who skulk through Virunga,

that “the DRC government can take all

Beyond that, Virunga’s Lake Edward,

which lies on the border of Rwanda and

appropriate measures to pursue, or not,

where the oil is believed to lie, is part of

Uganda, in the eye of several recent wars.

such exploration.” A few days later, the

the headwaters of the Nile. While SOCO

“I’m going to keep doing what I’ve been

company’s chairman, Rui de Sousa, said at

has said it will not proceed without

doing,” he said, “just a little bit more.”

SOCO’s annual general meeting, “We have

UNESCO and Congolese approval, an oil

not pulled out.”

spill here could contaminate water that

Environmentalists have seen how

tens of millions, possibly hundreds of

malleable the boundaries of protected

getty images

Virunga’s champions say that if

It may take a lot more.

Hippos relax on the shore of Lake Edward, which is threatened by oil exploration.

Portfolio

Essentials Environment

A woman hauls water from Lake Edward in Virunga National Park.

If there are billions of barrels, as in

Fund agreed to the declaration. “We had a

neighbouring Uganda, they suspect

massive support base, and overnight that

UNESCO World Heritage Site, in

the Congolese government will redraw

support base was wiped out,” said Joanna

neighbouring Tanzania is one of the

Virunga’s boundaries or possibly rename

Natasegara, the film’s producer. “The

largest protected areas left in Africa. It

it as a new park – minus Lake Edward.

declaration said Virunga was safe, SOCO

is also where large quantities of uranium

“This is the battle not only for the

was gone, and everyone could move on to

were discovered. In 2012, the Tanzanian

oldest national park in Africa, it’s also

government persuaded the World Heritage

the battle for maintaining the World

Committee, the international body that

Heritage Convention,” said Guy

now acknowledge that the battle over

designates World Heritage Sites, to modify

Debonnet, who has worked for the

Virunga is hardly over. SOCO has yet

the Selous’ boundaries so that the uranium

UNESCO World Heritage Centre. “If

to relinquish its operating permits or

area would lie just outside the site and

Virunga goes, many others will follow.”

commit to an unconditional withdrawal.

areas can be.

The Selous Game Reserve, also a

mining could begin. Several observers

In June, SOCO signed a joint

the next fight.”

World Wildlife Fund executives

“They’re leaving the door open,” said Zach

at the meetings said some committee

declaration with the World Wildlife

Abraham, director of the World Wildlife

members had environmental concerns,

Fund, saying it would not drill in

Fund’s global campaigns.

but ultimately did not want to appear as if

Virunga “unless UNESCO and the DRC

they were trying to keep Africans poor – or

government agree that such activities are

fights around the planet, if we don’t take

valuing animals over humans.

not incompatible with its World Heritage

a moment to celebrate achievements, we

status.” SOCO has also said it would not

lose an important opportunity.”

Many predict something similar in store for Virunga.

Officially, the Congolese government

harm buffer zones adjacent to World Heritage Sites.

Still, he said, “there are so many losing

“You need to remind the audience these fights are worth fighting,” Abraham said.

“Virunga is one of the most incredibly

has stayed mum. Many observers say

De Merode and those who worked

President Joseph Kabila is waiting to

with him on a Virunga documentary

beautiful places you will ever see in your

see how much oil is actually in Virunga.

film were furious that the World Wildlife

entire life.” n

January 2015

79

Essentials

Culture

geTTY images

80

Portfolio

81

S

trolling through the olive grove that abuts his family villa near the town of Calenzano on a gloomy

November morning, Federico Dufour knelt on the ground and picked up a few purplish, pellet-sized lumps.

“I am ashamed to call them olives,” he said mournfully.

Inviting closer inspection of a tiny perforation, he displayed the withered fruits on his palm. “Look, here’s a hole,” he said, then described the brief but devastating life cycle of an olive fruit fly that ravaged his crop. In its lifetime, each fly can deposit hundreds of eggs in as many olives, wiping out entire olive groves “in no time,” he said. “It’s an infinite drama.”

This year, that drama played out in hundreds of olive oil producing farms in Tuscany and other parts of Italy, helping make 2014 Italian olive oil’s – the Bactrocera oleae, to be precise – severe hailstorms and flooding, and a devastating bacteria in parts of Puglia,

Insects, hail, floods and bacteria made 2014 a devastating year for the Italian olive oil industry, reports Elisabetta Povoledo.

worldwide. The commodity price for Italian extra virgin olive oil has doubled since last year, and the outlook is also very bad for Spain, the world’s biggest olive oil producer.

“We anticipate a significant increase in olive oil prices,” starting next February or March, said Lou Di Palo, of Di Palo’s Fine Foods in New York City, who noted that prices were so far stable because the olive oil on shelves was still from last year’s release.

“I feel for the olive growers in Italy, especially small producers who put so much passion in their oil,” Di Palo said. “This year was like a punch in the stomach. It’s not a monetary question; it’s their life’s work.”

The looming scarcity of olive oil will affect the entire chain of production, from olive mills down the line to exporters, and has fuelled concerns about fraud and adulteration that could blight the reputation of a business worth about $2.5 billion for Italy.

Then there are the nagging worries

Italy’s largest olive oil producing region,

for farmers and others about how to

cut olive production by about 35 per cent.

plan for what they fear are permanent

The devastation has already translated

changes to the climate that threaten to

into rising prices in Italy for a family

undercut a pillar of Italian identity over

The looming scarcity of olive oil will affect the entire chain of production, from olive mills down the line to exporters, and has fuelled concerns about fraud and adulteration that could blight the reputation of a business worth about $2.5 billion for Italy.

geTTY images

© 2014 New York Times News service

annus horribilis. Aside from the fly

A BAd YeAr for ItAlIAn olIves

staple, and will soon be felt by consumers

Freshly-picked olives are cleaned and processed to produce olive oil in Siena, Italy.

January 2015

Essentials

82

REUTERS

Culture

The price of olive oil is set to rise significantly due to Italy’s poor harvest.

The olive fruit fly ravaged farms in Tuscany, leaving nothing but withered olives behind.

the long term.

for two months, he said. “This year,

Gerardo Gondi, another Tuscan olive oil producer, whose family estate, the

But an olive oil festival without olive oil

we’ve reached maybe 20,000 kilos for

left little to celebrate. Gondi joined other

the entire season.”

local producers at a large community hall

Fattoria di Volmiano, has a pedigree that

“It wasn’t meant to be an olive oil year,”

over two November weekends. But all

dates to the 15th century, said that more

he mused. “Everything that could possibly

he could offer at his stand was the last

than 18,000 olive trees had not yielded a

go wrong, did.”

remaining bottle of the 2013 harvest and

single usable olive this year.

His pain was widely shared. Here in

pamphlets showcasing his estate, which

Calenzano, about 19 kilometres north of

over the years has diversified to offer

stone mill also used by local farmers,

Florence, production was down about

agritourism lodgings and walking tours.

fared little better. In 2013, the mill

80 per cent. Some farmers did not even

processed 20,000 kilos of olives a day

bother trying to harvest; it was not worth

what would have been substandard oil,”

the cost.

he said. “It’s what our grandfather would

The estate’s olive press, a traditional

Truth be told, few of the local producers at the festival had any of their own olive oil to sell. Some were peddling secondary products – wines, biological spelt, legumes, honey – that might tide them over to next year and, the hope is, a better crop.

Many local farms are organic and did not use pesticides to stave off the

“It was an ethical choice to not produce

have done.”

Truth be told, few of the local

fly. Biological methods were ineffective

producers at the festival had any of their

because the persistent rains made mass

own olive oil to sell. Some were peddling

trapping more difficult and required

secondary products – wines, biological

nearly constant reapplications of various

spelt, legumes, honey – that might tide

sprays, like fruit fly bait and kaolin clay.

them over to next year and, the hope

Many olive oil presses here, as well as

is, a better crop. Others were hawking

elsewhere in Tuscany, did not even open.

Sicilian or Greek olive oil, even as they

While some Tuscan towns opted to

murmured sotto voce that, though the

call off their annual olive celebrations,

oil was good, it just was not the same as

Calenzano’s administrators felt it was

their homegrown product.

important for its festival – now in its 19th year – to go on. “It’s a tradition, and we

Olive Oil labels must specify the

didn’t want to lose our link with local

origin of the olives, indicating whether

farms,” said Damiano Felli, the council

they are from Italy, the European Union

member responsible for agriculture and

or abroad. But the drop in production has

economic development.

been spurring suspicion of substitutions Portfolio

Essentials Culture and scams.

“This is global warming, people

Harmon Jenkins, whose book on olive

continue to say that it will take many

oil, Virgin Territory will be published in

economic circumstances are negative,

years for the weather to change, but the

February. “Maybe that’s what we’re facing

so the temptation is greater,” said Fedele

rain, the flooding and everything else

in the future,” she added. “More warm

Verzola, commander of the Florence

suggests otherwise,” said Dufour, who is

winters and wet summers, which is the

branch of the military police unit that

a marquis and whose full title is Dufour

opposite of Mediterranean and not what

investigates major food and health

Berte Landucci. From Liguria to Sicily it

olive trees are used to withstand.”

fraud. Speaking on a recent weekend in

was a bad year, compared by many to the

Calenzano at a seminar on olive oil fraud,

harsh winter of 1985, which froze many

their fingers that the temperatures

he called on local farmers to be “sentinels

thousands of trees and took years to

will drop below freezing this winter,

of this patrimony – not spies” and to

recover from.

killing the flies, but until now warm

“Concerns about fraud are higher when

report any suspicions about possible adulterations.

The real fear in these parts is that

This year, again, the weather was to

83

Farmers throughout Italy are crossing

temperatures have prevailed. If that

blame, with a hot spring, followed by

continues, more aggressive steps must be

a tempestuous rainy summer – which

taken to combat the blight.

“It shouldn’t even cost much,” said

encouraged the proliferation of the fruit

unpredictable, and that the debacle

fly – and a hot, humid autumn. “I don’t

Niccolò Taiti, the head of Calenzano’s

of 2014 is but a taste of years of bad

think this is going away, because those

tourist bureau. “But it has to be done,

harvests to come.

miserable bugs are out there,” said Nancy

otherwise trouble is assured.” n

REUTERS

the weather has become permanently

Authorities are worried that Italy’s bad harvest may lead to olive oil mislabeling and other fraud.

January 2015

Essentials

84

Architecture

A Colonial LegAcy

getty images

Yangon, formerly known as Rangoon, was the capital of Burma during the colonial era. As a result it has some grand, but crumbling, architecture, reports Jane Perlez.

A view across downtown Yangon.

Portfolio

85

The once grand colonial

conditioning in sweltering heat – and a few

building of marble floors and iron fretwork

families who live for free in dank rooms.

“The future is all about cities,” said Thant

Named the Balthazar Building after

Myint-U, who is trying to convince the

trading empire, is now a wreck. Moss

the well-to-do Armenian merchants who

government that the old has value and

encrusts the walls, rainwater drips down

financed its construction at the turn of the

must be preserved. “Having a beautiful

rusted steel beams, flimsy lights glow yellow

20th century, the edifice is one of hundreds

downtown will bring investment and give

in dark interiors. A century-old birdcage

that made this city, formerly Rangoon, a

us an advantage over cities like Chennai and

elevator lies idle, stuck on the first floor. It

place of British ostentation in the tropics.

Kuala Lumpur.”

hasn’t moved in more than 60 years.

Now the race is on to salvage banks

in Yangon, an elegant outpost of Britain’s

© 2014 New York Times News service

Heritage Trust.

During the colonial period, Rangoon

flanked by Corinthian pillars, courthouses

served as the capital of Burma. (The place

merchants who sold teak, oil and rice

adorned with limestone lions, and shipping

names used by the British were retained

around the world, but lowly lawyers and

headquarters decorated with dark wood and

until 1989 when the ruling junta changed

petty traders who pay minimal rent – $20

brass fixtures before they collapse of decay.

the city to Yangon and the country to

The occupants are no longer the

a month for an office cubicle with no air-

The conservation of the buildings, laid

Myanmar.) The city had its own particular ethos. Students who had studied at Oxford

“It was built by a people who refused compromise with the East, and has wide, straight, shadeless streets, with much solid bank-architecture of vaguely Grecian inspiration.”

and Cambridge made it the crucible of Burmese nationalism, reading Karl Marx and listening to jazz.

The port was one of the busiest in the region, the gateway for hundreds of thousands of Indians, who in the 1920s and ’30s were the largest ethnic group in the city. Gandhi visited. The British actor John Gielgud came in 1945 to perform Hamlet at the Empire Theatre to audiences reclaiming the city after a brutal Japanese occupation during World War II. In his 1934 novel, Burmese Days, George Orwell had his leading female character,

out on a grid of broad avenues designed

the young husband-hunting Elizabeth

by British engineers, would make the city

Lackersteen arrive by ship at the Rangoon

a star attraction of Southeast Asia, says

docks, although Orwell refrained from

Thant Myint-U, the head of the Yangon

describing the city, reserving his acidity about

Buddhist monks walk in front of the Secretariat, closed for decades, one of many such buildings.

January 2015

86

Essentials

Architecture

A man removes a rusted water pipe from the exterior of the Sofaer building, one of many decrepit structures from the British colonial era.

British rule for smaller towns in Burma.

occupied, if not maintained. Among the

in Myanmar: Many decisions are made on

Not everyone admired the colonial

abandoned structures, the Secretariat, a

an ad hoc basis, and developers are looking

cityscape as much as those who want to

vast Victorian-era complex arranged around

for cheap insider deals as the economy goes

preserve it today.

lush gardens that had served as the heart of

through a rough transition. There is no legal

the government, fell on hard times. The red

framework for protection of the buildings,

compromise with the East, and has wide,

domed buildings now need an estimated

and no discussion of how to protect the

straight, shadeless streets, with much

$100 million in repairs.

people who have been living in hallways,

“It was built by a people who refused

solid bank-architecture of vaguely Grecian inspiration,” Norman Lewis, the British

In november, Thant Myint-U showed

travel writer, said in his 1952 account of

President Barack Obama, who visited

Burma, Golden Earth. “There is much

Myanmar for an Asian summit, around the

facade and presence, little pretence at

Secretariat. “We discussed the need for an

comfort and no surrender to the climate.”

overall vision and plan for the city,” he said

The Burmese economy was nationalised soon after World War II, and under the

of the president’s tour.

The Trust has won some victories. The

military government that took power in

group objected to plans for a major new

1962 the buildings of the empire were

building of more than 20 storeys in the

allowed to rot. Economic sanctions by the

historic downtown area. The government

West crippled the flow of supplies – oil,

ruled in favour of the Trust, and now

glass, fixtures – needed for maintenance.

there is an informal agreement that new

In 2005, the government moved to a

structures downtown will not rise higher

new capital, Naypyidaw, leaving empty many buildings that had at least been

than six storeys.

There is no legal framework for protection of the buildings, and no discussion of how to protect the people who have been living in hallways, towers and hidden back rooms.

But government works in strange ways Portfolio

87

towers and hidden back rooms.

The Trust hopes to change that with a master plan that would sort out legal

The dome of the old Accountant General’s offices.

ownership, designate renovation projects and deal with traffic and sanitation by the end of 2015, said Thant Myint-U, the grandson of U Thant, former UN secretarygeneral, and a historian who has written books on Myanmar.

At the heart of the plan will be the idea that downtown Yangon should retain its vibrancy rather than become another sanitised zone that appeals to well-to-do tourists impressed by expensive hotels and cafés, Thant Myint-U said. To preserve a sense of authenticity, he said, there will be efforts to keep residents in some of the buildings, perhaps with subsidised rents, and to limit the number of big, impersonal international hotels that attract foreign visitors but are off-limits to most locals.

The distinctive charm of the teetering colonial-era buildings lies in the street life around them: the bookstalls along Pansodan Street with paperbacks laid out on the sidewalk and vendors overseeing their wares from little plastic stools; the makeshift food booths selling small snakes in screw-top jars, watermelons the size of several footballs, bright orange papayas and emerald green limes.

In the Balthazar Building, the decrepit lobby serves as the kitchen for Daw Than Hla, a 63-year-old widow. In the early evening, as the office workers head home, she lights a brazier in an alcove beside the

A construction site where preservationists forced plans for a 20-storey building to be scaled back in Yangon.

elevator and tosses sliced onions in oil, the

needs renovation, but it is very convenient

house where the Chilean poet Pablo Neruda

aromas adding a decidedly domestic touch

to the courts,” he said.

lived in the late 1920s.

to the crumbling marble and iron décor as

In the parts of the city outside the

Neruda served briefly as his country’s

historic zone, the skyline has changed little,

consul in Rangoon, an unpaid posting that

though life has become more hectic after

left him poor but led to a passionate love

pointing to small rooms where her daughter,

decades of somnolence under the military

affair with a Burmese muse he called Josie

son and grandchild sleep. “My husband

dictatorship. Migrants from the countryside

Bliss. He wrote a poem during his stay,

worked in the fisheries department and

squeeze into crowded apartments; hundreds

Rangoon 1927, that includes these lines:

when he died they allowed me to stay.”

of thousands more cars, a product of the

Supreme light that opened over my hair

she prepares dinner.

“I’ve lived here for 40 years,” she said,

growing economy, create some of the worst

a world at its zenith, it entered my eyes

Aung Ning Tun, a lawyer, said he would be

gridlock in Southeast Asia. Some historic

and ran through my veins

reluctant to leave, even if offered modern

buildings have been demolished, including

into every corner of my body,

office space elsewhere.

the grandiose 1895 government house

until granting me the sovereignty

resplendent with turrets and gables, and the

of an excessive, exiled love. n

In one of the cubicles on the third floor,

“It’s very hot in the building, and it badly January 2015

Essentials

Other Business

Potato Fries Seek Cultural Heritage Belgium is seeking to get its potato

“fritkot”, generally a shack or trailer.

fries recognised as global cultural

There are some 5,000 of these in

heritage, which would put them

Belgium, making them 10 times

on a par with Peking opera and

more common, per capita, than

the Argentinian tango. To become

McDonald's restaurants in the

recognised by the United Nations’

United States.

UNESCO has a list of 314 items of

cultural arm UNESCO, the chips need to be endorsed by a minister

intangible cultural heritage worthy

of culture, and Belgium has three

of preservation, ranging from

of them.

Turkish coffee to the polyphonic Central African Republic.

sold in a paper cone, from a

NY City Bans Bunny Sales

REUTERs

singing of the Aka pygmies of the

Belgian fries are traditionally

GETTyIMAGEs

What do bunny rabbits have in common with hyenas, wolverines and polar bears?

The adorable little creatures are about to join a menagerie of wildlife prohibited for sale by New York City pet shops.

REUTERs

88

The New York City Council voted to glut of unwanted rabbits at city shelters

Robot Flies As Airline Passenger

by people who had second thoughts about

A humanoid robot with a head, hands and

make her perform tasks too dangerous for

caring for the cuddly creatures.

feet and wearing stylish red sneakers

humans, such as cleanup after the nuclear disaster at Fukushima, Japan.

outlaw the bunny trade to help curb a

The list of animals specially banned

boarded a flight for Germany at Los Angeles

for sale by New York pet stores includes

International Airport in December, becoming

skunks, cougars, wolves, pandas, bats and

what was billed as the first robot travelling

scene at the Tom Bradley International

gorillas, among dozens of others. But city

as a paid passenger on an airline.

Terminal as she was pushed in a

officials are currently weighing lifting the

Built by the salt Lake City engineering and

The robot, named Athena, created a

wheelchair up to the Lufthansa counter to

ban on ferrets, which the Department of

robotics company sarcos, Athena was

pick up her ticket to Frankfurt. Television

Health and Mental Hygiene pronounced

purchased by Germany’s Max Planck

crews swarmed, camera flashes went off

prone to “vicious, unprovoked attacks”

society, which along with researchers at the

and people aimed their cellphone cameras

when it outlawed the creatures in 1999.

University of southern California are trying to

at her.

Portfolio