Year II
Number 361
Monday September 2, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
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April 19, 2013
Tam stresses ‘one-digit’ growth in 2013 S
ecretary for the Economy and Finance Francis Tam Pak Yuen has repeated that Macau’s economic growth will slow sharply in the second half meaning “single digit” expansion for the whole of 2013. Speaking to the media on the sidelines of a public event, Mr Tam said: “We will maintain our earlier forecast of GDP growth for this year, which is for single-digit growth.”
Govt talking tough on erring cabbies
Official data released on Friday show that the annual rate of GDP growth slowed to 10.2 percent in real terms in the second quarter. It was 10.8 percent in the first quarter. Gaming revenue was 86.16 billion patacas (US$ 10.79 billion) in the second quarter, 15.8 percent more than a year earlier, according to the Gaming Inspection and Coordination Bureau.
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Success Universe profits rise
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Election candidates reject grads idea Page 16
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Sales, prices slump as housing stock dries With new rules making it more difficult to sell flats off-plan, fewer than 650 apartments were sold in Macau in July. It was the lowest number since February last year, the Financial Services Bureau said. The 16-month low was due to a near-freeze in unit pre-sales as the market is still adjusting to new rules, said Jones Lang LaSalle (Macau) Ltd’s head of residential property, Jeff Wong Chi Wai. Page 2
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Banks, lawyers get access to mainland
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Changes to a bilateral trade pact will give Macau investors easier access to mainland markets for services such as banking and insurance. The government says it is now up to Macau enterprises to grasp the opportunities on offer. The new rules on cross-border business are in a supplement to the Closer Economic Partnership Arrangement (CEPA) which the Macau government and the Ministry of Commerce signed on Friday. Page 4
Melinda Chan: legislator for ‘everyman’ (and woman) Legislative Assembly member Melinda Chan Mei Yi will press for more and better public housing for rent, improved healthcare and a welfare system if she is returned to her directly elected seat in next month’s elections. Ms Chan, wife of gaming entrepreneur David Chow Kam Fai, told Business Daily in an interview that she would speak for everyone, not just for business interests. Pages 6 & 7
%Day
CHINA MERCHANT
2.95
GALAXY ENTERTAIN
2.72
CHINA RES POWER
2.53
CATHAY PAC AIR
1.68
COSCO PAC LTD
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CHINA COAL ENE-H
-0.65
CNOOC LTD
-0.77
CHINA RES ENTERP
-1.34
CHINA SHENHUA-H
-1.43
CHINA PETROLEU-H
-1.76
Source: Bloomberg
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September 2, 2013
Macau
Home sales, price slumps as off-plan buys dry out
The city’s first laws to regulate real estate agents, which also came into force in June, also dampened the number of transactions, Mr Wong said. Agents are now required to ink a contract with the buyers and sellers when they provide a service. “Most of the buyers or sellers are
not familiar with this. Only now can we see more people willing to sign the contract. As the situation improves there will be more available,” Mr Wong said. However, he believes the number of home sales “will not have a great pick-up”. With unfinished units – usually more expensive – frozen out, home prices also tumbled by 12.2 percent to an average of 66,244 patacas (US$8,293) per square metre, an eight-month low. The decrease becomes even more significant when compared to the peak reached May. In just two months the number of sales has fallen by more than half and the average price decreased by almost a third after inching closer to 100,000 patacas per square metre. Despite the slump, home prices in July were still up by 6.6 percent from the same month of last year. Macau property remains far from a buyer’s market, said Mr Wong. “Supply is on the low side and prices remain on the high-side,” he added. “Any deal that was closed was likely not a very good deal for the buyers,” perhaps involving older homes in less popular districts, the realtor said.
because it involves changes to the local general traffic regulations,” committee member Tony Kuok Leong Son told Business Daily. Mr Kuok confirmed that the government intends to introduce a merit deduction system to penalising taxi drivers. No exact blueprint has been discussed so far, he added. There was also no discussion on whether to introduce other penalties besides from higher fines, for drivers who breach rules, namely by turning down customers, said Mr Kuok. The government plans to name the Public Security Police as one of
two units, along with the Transport Bureau, in charge of monitoring taxi drivers’ misconduct. “It is still not easy for the inspectors to collect evidence [of misconduct] as some taxi drivers always find a way around the current rules,” said Mr Kuok. To tackle the situation, the government wants to introduce closed-circuit surveillance inside taxis as well, “just like in buses,” he said. But there needs to be a legal basis for this move, said Mr Kwok, who is also chairman of Macau Taxi Driver Mutual Association.
Macau property still far from a buyer’s market, says realtor Vítor Quintã
vitorquinta@macaubusinessdaily.com
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i t h new rules making it more difficult to sell unfinished flats, less than 650 flats were sold in July, the lowest number since February last year, the Financial Services Bureau announced on Friday. The 16-month low was due to an almost complete freeze in unit presales as the market is still adjusting to new rules, said Jones Lang LaSalle (Macau) Ltd’s head of residential property, Jeff Wong Chi Wai. Only 12 such deals were completed in July, a far cry from May when more than half of home sales were unfinished flats, as developers rushed to clinch deals before the new rules came into effect.
Starting from June 1, sales of flats “off the plan” will only be legal after the foundation of the housing development is complete and each flat is registered with the government. The freeze was most apparent in Coloane, where most of the available units are still under construction. As a result, just four flats were sold during the whole month. “We still need some time” before more unfinished flats become available, Mr Wong told Business Daily. He believes the situation will only change “towards the end of this year”. The Land, Public Works and Transport Bureau has approved some
Higher fines for ‘bad’ taxi drivers Law revision will only be ready by 2016, traffic advisor warns Stephanie Lai
sw.lai@macaubusinessdaily.com
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axi drivers may face fines of up to 5,000 patacas (US$625) instead of the current 1,000 patacas for misconduct, the Traffic Advisory Committee announced after a meeting on August 30. But changing the penalties and introducing a merit deduction mechanism will have to be done via a legal revision, said Wong Wan, head of the committee and Transport Bureau director.
“Penalties for repeated offences, point deduction or licence suspension will have to be submitted in the form of a law later on,” Mr Wong told media. “This cannot be made in the level of a bylaw,” which would not require the Legislative Assembly’s approval, he added. “As I learnt from the government, this amendment will take at least two-and-a-half years to be drafted,
15 projects for pre-sales but they are “either small, 10 to 20 units, or projects that have already been sold out, like One Oasis,” he said. Many developers are also waiting on the sidelines, “not eager to sell,” the realtor said.
Seller’s market
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September 2, 2013 April 19, 2013
Macau China State Construction buys into Nova City State-owned China State Construction International Holdings Ltd will invest HK$2 billion (US$258 million) and pay for 29 percent of the predevelopment costs – about HK$51 million – of the fifth phase of the Nova City residential development. Nova City owner Shun Tak Holdings Ltd told the Hong Kong Stock Exchange that China State Construction would be entitled to 29 percent of the profit or loss from the sale of the flats. Once the deal is completed, China State Construction will be awarded the construction contract to finish the project in a little over three years.
Economic growth eases as govt investment plummets Authorities on the subject forecast that GDP expansion will continue to weaken Tony Lai
tony.lai@macaubusinessdaily.com
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he economy secretary predicts that gross domestic product (GDP) growth will keep slowing in the second half of this year, having eased slightly in the second quarter – and an academic agrees with him. Official data released on Friday show that the annual rate of GDP growth slowed to 10.2 percent in real terms in the second quarter. It was 10.8 percent in the first quarter. The Statistics and Census Service said second-quarter growth had been spurred by exports of gaming services, which increased by 10.2 percent, and exports of other tourism services, which increased by 17.5 percent. Gaming revenue was 86.16 billion patacas (US$ 10.79 billion) in the second quarter, 15.8 percent more than a year earlier, according to the Gaming Inspection and Coordination Bureau. The easing of economic expansion in Macau coincided with a slowing of the annual rate of GDP growth in the mainland to 7.5 percent in the second quarter from 7.7 percent in the first. Secretary for the Economy and Finance Francis Tam Pak Yuen told reporters on Friday: “Even though economies elsewhere are fluctuating and unstable, Macau was still able
to maintain growth of 10 percent in the first half, which, we think, is a pretty ideal situation.” Almost all sectors of the economy grew. But government investment plunged by 29.3 percent. The Statistics and Census Service said the plunge was due to construction of the University of Macau’s campus on Hengqin Island nearing its end. This meant investment generally – one of the main engines of economic growth here – rose by just 4.3 percent, rising at the slowest rate since the third quarter of 2010.
Optimism eroded The vice-president of the Macau Association of Economic Sciences, Jack Chang Chak Io, expects investment to continue rising in the second half as the construction of casino resorts in Cotai and public infrastructure such as the Light Rapid Transit (LRT) elevated railway progresses. Work on the LRT on Taipa faces a delay of at least six months due to a public row between the government and a contractor over budgeting. While government investment fell in the second quarter, private investment rose at an annual rate of 13.6 percent.
Economic growth remains driven by tourism and gaming services
Mr Tam believes economic growth will slow further. He told reporters: “We will maintain our earlier forecast of GDP growth for this year, which is for single-digit growth.” He had predicted in July “midsingle-digit growth” this year, which implied that growth would slow during the remainder of the year. Mr Chang shares Mr Tam’s view. The economist told Business Daily that he was “less optimistic” about growth in the second half. Mr Chang said the mainland economy had recently shown signs that it was stabilising, but warned: “There is a chance the economy will still be susceptible to further easing.” He said slower growth in the mainland would curb tourism, which Macau’s economy depended on. Federal Reserve chairman Ben Bernanke said in June that the United States central bank might begin to reduce its bond-buying programme this year and end it in the middle of next year. Mr Chang said this “could also impact the mainland, which would then affect the economy here”. He is sticking to the Macau Association of Economic Sciences forecast that the economy here will grow by between 5 percent and 8 percent his year.
opinion
The joke is on us Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he official electoral campaign period began on Saturday. At last the candidates can come out on the streets to give Macau a taste of democracy. Never mind the fact many of them had been carrying out badly disguised pre-electoral campaigns for months, including gift-giving, launching charities and making cold calls to possible voters. The real thing starts now with candidates eagerly sharing with us their political platforms, namely with noisy rallies in the wee small hours of the morning. Well, at least those of us who can read Chinese can share in the events. Only two of the 20 electoral tickets have provided a Portuguese-language version of their programmes. Three tickets have accused the Electoral Affairs Commission of censoring parts of their programmes. Those bits involved calls for the resignation of Secretary for Administration and Justice Florinda Chan, for a probe on Edmund Ho’s role in the gaming liberalisation and for the expulsion of Philippines non-resident workers. It is reasonable to question whether the commission did the right thing, even in the case of Lee Sio Kuan’s racist and populist demand against the second biggest overseas community here. On the other hand, to include such calls in an electoral programme even though the Legislative Assembly has no power to fulfil any of them can only mean one of two things. The candidates either underestimate Macau residents’ intelligence or they know little of how the city’s political system and democracy in general work. A sign of the latter was already given by the embarrassing candidacy of Luiz Pedruco. Ho conceitedly said he had the “implicit” support from the Portuguese and Macanese communities but couldn’t even get his own ticket in order. Meanwhile the New Macau Association is again trying to get around the election process by putting forward three tickets. But the pan-democrats are being stretched to the limit by the emergence of Jason Chao, whose convictions – and homosexuality – are clearly beginning to grate on his older colleagues. Don’t be surprised or worried if you see a lot of wealthy businesspeople, developers and gaming operators making their best to highlight their unwavering link to the grassroots. A bag of rice, a free meal or a supermarket voucher always helps assure people of how much a wannabe legislator cares about them. Intimidating their workers into voting for them also helps, by the way. I am sure these candidates’ fever will pass as soon as September ends and they can happily go back to defending their economic interests. Thanks to the electoral reform, associations will formally vote for ‘indirectly’ elected legislators; but the 12 candidates for those 12 seats were selected behind closed doors – as indirect seat candidates have been since the handover. Businessman Victor Cheung Lap Kwan, who topped the absent legislator list for two years in a row, and restaurant operator Chan Chak Mo will do their worst to protect the interests of the sports and culture sectors. The electoral circus has hit the Macau roads once again and, despite the dim hopes created by the electoral reform, nothing changed. As usual, the joke is on us.
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September 2, 2013
Macau
Banks, lawyers get access to mainland
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The economy secretary urges Macau enterprises to make the most of the CEPA
Growing preponderance
Tony Lai
tony.lai@macaubusinessdaily.com
In the first seven months of this year Macau had over 16.7 million visitors, about 4.3 percent more than in the equivalent period of last year. In contrast, last year the number of visitors in the first seven months was only about 1.4 percent more than in the equivalent period of 2011. The main sources of visitors, as usual, were the mainland, Hong Kong and Taiwan, in that order. The proportion of visitors that come from the mainland, Hong Kong and Taiwan combined is rising slowly. It was 90.2 percent in the first seven months of this year, about one percentage point greater than it was in the equivalent periods of last year and 2011. But the combined figures hide diverging trends in the flows of visitors from each of the three main sources.
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Macau banks with mainland offices will be allowed to do business in yuan for foreign investors
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Growth in the number of visitors is essentially growth in the number of visitors from the mainland. Almost 1 million more mainlanders visited in the first seven months than a year earlier. That is 10.4 percent more. The number of visitors from all sources rose by about 685,000, which means over 300,000 fewer visitors came from places other than the mainland. In the past two years almost 10 percent fewer came from Hong Kong and almost 25 percent fewer came from Taiwan. All this means the proportion of visitors that come from the mainland has increased to 63.2 percent from 56.5 percent in 2011. The number of visitors from Hong Kong and Taiwan combined is now less than half the number from the mainland. J.I.D.
18.25 pct Increase since 2011 in visitors from the mainland in the first seven months
hanges to a bilateral trade pact will give Macau investors easier access to mainland markets for services such as banking and insurance. Secretary for the Economy and Finance Francis Tam Pak Yuen says it is now up to Macau enterprises to grasp the opportunities offered by easier access. The opportunities are presented by a supplement to the Closer Economic Partnership Arrangement (CEPA) which the Macau government and the Ministry of Commerce signed on Friday. The supplement covers banking, securities, legal services, insurance, telecommunications, film production and certification. It will come into effect on January 1. It will allow Macau banks that operate in the mainland and are authorised to do business in yuan for Macau companies to do business in yuan for foreign investors. It will allow Macau-funded financial institutions and mainland enterprises to form joint fund management companies, of which the Macau partner can own up to 50 percent. It will allow the Macau and mainland partners to set up one licensed joint-venture securities firm each in Shanghai, Guangdong and Shenzhen. The Macau partners can own up to 51 percent of these
securities firms. After the signing ceremony, reporters asked Mr Tam why Macau was failing take as much advantage of the CEPA as Hong Kong was taking of its equivalent trade pact. He replied: “We may not use the CEPA as much as Hong Kong in trade and investment in the mainland due to the limited scale of our economy.” Hong Kong signed a supplement to its own pact with the mainland on Thursday. The contents of Hong Kong’s supplement and Macau’s are almost the same. Mr Tam said of Macau’s CEPA: “It helps to clear all hurdles for Macau firms to enter the mainland market, but how our enterprises grasp these benefits offered by the policies […] depends on the conditions and plans of our own enterprises.”
A lot of good A written statement issued on Friday says Chief Executive Fernando Chui Sai On has promised to promote the CEPA more vigorously among small and medium enterprises and among those engaged in various occupations. The supplement allows mainland lawyers to work as consultants in representative offices set up in Guangdong by Macau lawyers. It allows Macau enterprises to
form joint ventures in Guangdong to process data and transactions online. The Macau partners can own up to 55 percent. It allows Macau residents to serve temporarily Macau enterprises in the mainland in various fields, including tourism, conventions and other events, entertainment, funeral services, real estate and construction. Mr Tam said the CEPA “has done a lot of good” in helping Macau become a platform for trade and a global centre for tourism. Macau and the mainland signed the original CEPA in 2003 with a view to opening up the mainland economy to Macau. Mr Tam said liberalisation of trade in goods has “been basically achieved”. He said he was hopeful that trade in services could be liberalised fully by 2015. Vice-minister of Commerce Gao Yan told reporters on Friday that his ministry would make the procedure for investment in the mainland by Macau enterprises smoother. The CEPA allowed Macau to export 420 million patacas (US$52.5 million) worth of goods to the mainland tariff-free between 2003 and July 31 this year. By the end of last year 897 Macau businesses with combined registered capital of 56.5 million yuan (73.7 million patacas) were operating in the mainland.
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September 2, 2013
Macau
Success Universe profit on falling turnover
uccess Universe Group Ltd – a 49 percent investor in the Ponte 16 casino resort next door to Macau’s Inner Harbour – recorded a profit in the first half, on turnover that actually fell 2.3 percent. The firm made a profit of approximately HK$68.08 million (US$8.78 million) in the six months to June 30, compared to a near HK$30.61 million loss in the same period a year earlier. Turnover was approximately HK$834.68 million, compared to HK$854.33 million in the year prior period. Diluted earnings per share were 1.96 HK cents compared to a loss of 0.72 HK cents per share a year earlier. During the reporting period Japanese pachinko hall operator Maruhan Corp. exercised its contractual right to sell its 10.2 percent interest in World Fortune Ltd, an indirect non-wholly owned subsidiary of Success Universe, together with shareholder’s loans provided by Maruhan to World Fortune. According to Success Universe’s interim half-year results the acquisition was completed in May at a cost of approximately HK$219.12 million. It consisted of around HK$109.56 million in cash and the remainder via allotment of 550,546,025 new ordinary shares
in Success Universe. Cost of sales for Success Universe during the reporting period fell nearly two percent to approximately HK$795.75 million from around HK$810.75 million in the six months a year earlier. Another factor in Success Universe’s improved performance was a near HK$83.43 million gain on “derecognition of a long term payable”. Such entries in accounting usually refer to situations where a business liability is either discharged (for example, when a debt is repaid), cancelled (a debt is released), or expires. In a July filing Hong Kong-listed Success Universe issued a positive profits warning, saying Ponte 16 had an “improved performance” in the first half. Success Universe reported a loss group-wide of HK$28.3 million in the same period of 2012. It has other businesses including a travel agency in Canada and a cruise ship. In April 2012 Success Universe secured bank loans worth more than 2.4 billion patacas for a third phase of development at Ponte 16, including a new shopping mall. The third phase hasn’t happened yet. The original permission for the extension was granted by now-jailed former government secretary Ao Man Long, and the Macau administration is currently reviewing that approval, the Success Universe management told Business Daily in November last year. There is no suggestion by this newspaper of improper conduct on the part of Ponte 16’s investors or managers. Ponte 16 opened in 2008. As at 31 December 2012, the casino had 109 gaming tables, 82 of which were mass gaming tables, nine were high-limit mass-market tables and 18 were VIP tables according to a filing in April. The other portion of the Ponte 16 venture is controlled by Macau casino concessionaire Sociedade de Jogos de Macau SA via its 51 percent holding. SJM also supplies the casino licence for the property.
million in cash, HK$200 million in a promissory note, and HK$480 million in shares. In a June filing by Paradise Entertainment, the deal was said to involve unspecified promissory notes and 600 million shares in Paradise at an exercise price of HK$1 per share – giving Mr Chun 68.7 percent of Paradise as compared to 9.2 percent before the deal.
The May 8 document said the intellectual property in the deal was for “five approved patents and six patents applications pending approval in the U.S. in relation to a betting terminal system, which are beneficially owned by and stand or are proceeding in the name of the vendor”. In the May filing Paradise also stated that an objective of the deal was to promote sales in the United States.
Pachinko operator Maruhan disposed of 10.2 pct stake in indirect non-wholly owned unit during half-year period Michael Grimes
michael.grimes@macaubusinessdaily.com
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Ponte 16 – improved performance
LT Game parent’s profits down Paradise Entertainment acquired gaming patents from Jay Chun in first half Michael Grimes
michael.grimes@macaubusinessdaily.com
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rofits at Paradise Entertainment Ltd – parent of LT Game Ltd, a maker of casino electronic multi-game products – fell 14 percent year-onyear in the first half, on turnover that rose 27 percent. Paradise recorded profits of approximately HK$45.38 million (US$5.85 million) in the six months to June 30 versus nearly HK$52.84 million in the equivalent period a year earlier. Turnover rose to approximately HK$405.13 million, compared to HK$318.10 million in the first half 2012. But cost of sales also increased; by 43 percent year-on-year to around HK$153.69 million against almost HK$107.22 million in the
year prior period. The firm used approximately HK$116.33 million in net cash for investment, compared to only HK$11.34 million in the period a year earlier. During the first half 2013 the company’s intangible assets – a phrase often used in accounting to denote things such as intellectual property – rose more than fourfold year-on-year to HK$802.93 million. Paradise said in an earlier filing on May 8 that it was acquiring gaming equipment patents from Jay Chun, an executive director and shareholder of the company, for “a total consideration” of HK$740 million. It added that the deal would involve HK$60
Jay Chun, chairman of Paradise Entertainment
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Macau Brought to you by
Financial Monitor Growth sustained The Macau economy was far from immune to the shocks of the 2008 and 2009 international crisis. However, all things considered, the pause in growth and slight contraction of the economy in those years were mild. Growth in gross domestic product in 2010 and 2011 was fast as the economy recovered. The annual rates of growth of GDP in each quarter were always over 10 percent and most were over 20 percent. In the second quarter of 2010 the annual rate of growth peaked at nearly 33 percent. Last year growth slowed. The annual rates of growth in the second, third and fourth quarters were under 10 percent. That caused worry that the economy was entering a period of persistently slower growth.
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Let the poor or sick, young or old come to me, says Melinda Chan Legislative Assembly member Melinda Chan Mei Yi will press for more and better public housing for rent, improved healthcare and a welfare system if she is returned to her directly elected seat in next month’s elections. Ms Chan, wife of gaming entrepreneur David Chow Kam Fai, told Business Daily in an interview that she would speak for everyone, not just for business interests. She said she would continue fighting for the disadvantaged and lobbying for proper training and certification of doctors and nurses. Luciana Leitão
leitao.luciana@macaubusiness.com 40000
In the first quarter of this year the annual rate of growth rose to about 11 percent. Unusually, GDP was higher in the first quarter than in the fourth quarter of last year. Usually GDP in the first quarter of any year is lower than in the fourth quarter of the preceding year. So people eagerly awaited the GDP figures for the second quarter of this year to see if the first-quarter performance was just a blip or an indication that growth would be sustained. The second-quarter figures suggest it is more likely that growth will be sustained. But we should not dismiss the possibility that the recent performance of the economy is due in part to people getting round to taking action that they had hesitated to take amid the uncertainty caused by the transfer of power in China to a new set of leaders. J.I.D. The content of this column is the work of Business Daily’s journalists.
10.5 pct H1 GDP growth yearon-year
Photo by Manuel Cardoso
What are your expectations of the upcoming elections? My expectation is to get better results. Last year I was the last one to get into the Legislative Assembly, so for the past four years – which started with nobody knowing me – I have really tried to do my best. I really want to get results. This is a test of my accomplishments in the past four years. I just want to get better results. Whether my ticket can get one or two legislators elected, it depends on Macau’s citizens. How would you describe your work as a legislator? Overall, it is quite satisfying. That’s why I have the confidence that I will get a seat. Whether I can get better results than last time, we’ll have to see. Our citizens are becoming more educated and civilised, so the competition is greater. This year, because of the two extra seats, so many people want to run, so the competition is greater than last time. Were your electoral promises fulfilled? I’ve already had some success. In
2009 the pension for the elderly was 1,700 patacas [US$213] and, before I became a legislator, I wanted to raise it to 3,000 patacas. I was the one to say it in the Legislative Assembly. Secondly, I was already fighting for young people before I became a legislator. Ever since 2003, when I established the Sin Ming association, I have been paying more attention to young people. Now, this year, you can see many associations are more concerned about young people, because all the associations are doing more
I do a lot of campaigning against drug abuse, but we can still see it going up. It’s because of the law. The penalties are too low
for them. So I’ve had success on this point. As a legislator I have continued to defend young people. Then the government came up this year with a measure for young people: when they establish a company they can have a loan. As for medical issues, in 2009 I said we needed a new hospital, and that there were not enough beds or manpower in the hospital, and I said we needed to establish a committee. Following my efforts in the past four years, the government promised to build a hospital. In 2011 the government announced a 10-year plan for the whole medical system. It means the government is paying more attention to medical issues. They promised a new hospital and they’ve also established a medical committee. But it is very disappointing, as it is only an advisory committee. In this coming term, I will try to ask our government how it is going to solve all the problems. We have to go back to the causes. At least, as a legislator, I really can do something for the public. What new proposals do you have for next assembly term?
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Macau For the past four years I have been mostly concerned with social welfare because, since I became a legislator, a lot of people have contacted me and asked me to say something about it. In the future, if I remain a legislator, I will continue to focus on social welfare, and I also want to push for a stable and long-term social welfare system for all Macau’s people. Also, we have to change some legislation. Since I am in the Sin Ming association, I do a lot of campaigning against drug abuse, but we can still see it going up. It’s because of the law. The penalties are too low, compared with Hong Kong and other neighbouring places. We will push the government to change that law. The penalties are too low, but I will try to change this. Another piece of legislation I want to change is the domestic violence bill. We still have the chance, because it is only in the consultation phase. The bill hasn’t come to the Legislative Assembly yet. Should domestic violence become a crime than anyone can report, not just the victims? The victims don’t want to face up to the problem, so we need to help them. They talk to me. It happens, maybe, to just a small number of people, but I don’t want it to happen to even one person. What changes are needed in health care? We do not have enough manpower. Also, the government has to implement a mechanism for professional certification. We don’t have enough doctors and nurses now, compared with Hong Kong and cities in Southeast Asia. According to the government, in 2019 the new hospital should be finished. Just building a hospital is not enough, because if the region has money you can build a hospital with very good facilities. But the manpower is very important. How do you do the professional certification and professional training? Also, if a doctor does something wrong, you need a professional and independent group of people set up to ensure justice is done. What about the Social Security Fund? When we are old, we should get something. Before in Macau, the government didn’t even think about it. Although we have the pension already and that is very good, we want a long-lasting fund that is suitable for everyone. Last month the government said it would put some money into the fund, but we need to have agreement between the employers and employees. This is very important and beneficial to the employee, because when they retire, they get something. What is the full plan for the second tier of the social welfare system and social security fund? How can they merge? What is our responsibility? What are the employer’s and employee’s responsibilities? The government has to tell us what the plan is, what I can get when I retire. So are you going to press the government for a more detailed welfare plan? The bill has to come out first. We want to have a stable social welfare system for everyone in the future. Everybody should have a pension when they get old. Also, young people have been complaining about housing. No matter how hard they work and how much
they get paid, they still cannot afford to buy a home. What is the solution to the housing problem? We have enough land. We will have reclaimed areas, and those are big. Hence the government has to think about how many homes to build. We have been asking for it for so long, but they just say they will reserve land to build public housing. The government hasn’t said how many plots of land or how many homes they are going to develop. They have to show us the figures. The government should build more homes, but they have to do research to find out how many. Is public housing the solution for members of the middle class that do not make enough money to buy private flats? The government doesn’t have to think about the private sector. Yet it has to think about the people who don’t have enough money to buy in the private market. For those people, the government has to build more affordable homes. It needs to have a long-term strategic plan for how many homes must be
We have to take care of both businessmen and workers. If we have no business, we will not have enough money for charity and social welfare
built, and for how many people. The government has built much public housing in Seac Pai Van, but it was criticised over the size of the homes and the lack of supporting facilities. Was it badly planned? They didn’t plan it properly. You have to think about things like supermarkets and social clubs. They didn’t think it through. Also, the quality of the public housing units is not very good. They didn’t put their heart into it. Small and medium enterprises are one of your campaign themes. How do you propose to help them? SMEs are facing many problems, such as rents that are going up. Also, there is not enough manpower for them. The government should take some measures that favour them, instead of only big enterprises. Tourists now only go to San Ma Lou and spend money in big hotels. The government should promote more a larger tourist area, to bring tourists to other places. For instance, look at the Red Market area, and those five streets that only have small and medium enterprises. There the customers are mostly Macau citizens, and there are no tourists. The government revamped it to allow ambulances to go in, but now business has gone down by 40 percent. I have been asking the government not just to make it beautiful and safe, but also to keep the businesses there going. How do you make more and more people go there? They could have flexible labour rules for small shops. Small shops
have fewer than three people, and they need to have one resident employee to hire an outside employee. Also, the rules say the cook cannot be the cashier, but if there are only one or two people working there… You are usually perceived as a voice for business, given that you are married to David Chow Kam Fai. Is this perception fair? I don’t agree. We have to take care of both businessmen and workers. If we have no business, we will not have enough money for charity and social welfare. We need the government to have enough money and good income from taxes, so we can succeed in any welfare system, and to establish a new
hospital. As a legislator, I am there to balance both sides. I understand the business sector’s interests and I understand, through the Sin Ming association, people that are helpless. All Macau people know my husband is a businessman, but I myself don’t play any role in local businesses or enterprises. For the past four years I haven’t said anything in the Legislative Assembly that showed I was mainly concerned about the business sector’s interests. We cannot just choose one side. If I had been elected indirectly, I would be representing only one group of people. But, now, as a directly elected legislator, I have to represent different voices. I try my best to strike a balance.
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Greater China
Factory gauge jumps as momentum picks up Fiscal and mini-stimulus programme boost manufacturing activity Kelly Olsen
C
hina’s manufacturing activity strengthened in August, official figures showed yesterday, the latest data to suggest that the world’s second-largest economy is picking up steam after two quarters of slower growth. The official purchasing managers’ index (PMI) rose to 51.0 last month from 50.3 in July, according to figures released by the National Bureau of Statistics (NBS). The index tracks manufacturing
activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. A reading below 50 indicates contraction, while anything above signals expansion. The PMI strengthened for the second straight month and comes as other recent data has spurred optimism a slowdown in the economy may have been stemmed. Zhao Qinghe, a statistician with the NBS, said in a report on the
bureau’s website that the result marked the highest this year and “shows that China’s manufacturing industry as a force for economic development has strengthened to some extent and makes obvious that a return to corporate stability has quickened further”. In July, generally upbeat economic data, including a jump in industrial production to a five-month high, helped spur optimism that China’s economic weakness may have hit bottom.
Everbright fined for insider trading, ex-president banned Brokerage tried to profit from computer glitch that hit Shanghai market
C
hina’s stock regulator said it has fined Everbright Securities 523 million yuan (US$85.5 million) and barred the brokerage’s former president from the industry for life, after uncovering evidence of insider trading and other irregularities. A glitch in Everbright’s computer system caused an unintended placement of buy orders worth 68.6 billion yuan to the Shanghai stock exchange on August 16 and led to a massive but short-lived jump in the country’s main stock index. While the exchange’s risk control system reduced the spike in orders, mistaken orders worth 23.4 billion yuan still reached the bourse and nearly a third of those were traded. Everbright then built up huge
short positions in index futures and exchange-traded funds before disclosing details of the trading glitch, knowingly breaking exchange rules, and some brokerage executives deliberately circulated information that misled investors, the China Securities Regulatory Commission (CSRC) said on Friday. Xu Haoming, former president of Everbright Securities who was replaced on August 22, was barred from the industry for life, as were three other executives. They are: Yang Chizhong, assistant president and head of research; Shen Shiguang, director and head of finance; and Yang Jianbo, manager of the strategic investment department. The brokerage made a profit of 87.2 million yuan from the trades,
Everbright made a profit of 87.2 million yuan from the trades
which the regulator has confiscated, the CSRC told reporters at a briefing. The CSRC also said it would suspend approvals of any new businesses by Everbright Securities, and investors who suffered losses from the trading glitch can take the brokerage to court and demand compensation. The CSRC has already barred the brokerage from offloading the shares it mistakenly bought on that day for the next three months, forcing it to consider selling some of its securities holdings to help cope with a possible funding crunch. The brokerage has also been suspended from lead-underwriting any new debt financial instruments by non-financial enterprises in the country’s interbank market. Reuters
And British banking giant HSBC said last month that the initial reading of its PMI survey for August came in at 50.1, rebounding from an 11-month low and marking the first time since April the indicator had expanded. HSBC is due to release its closely watched final PMI index for August today. The first half of this year saw a spike in analyst concerns about China’s economy after an expected rebound from the worst growth performance in 13 years failed to materialise.
Mini stimulus China’s gross domestic product (GDP) grew 7.8 percent in 2012, the weakest result since 1999. Growth in the first quarter of this year dipped to 7.7 percent from 7.9 percent in the final three months of last year and slowed further to 7.5 percent in the three months through June. ANZ bank economists Liu Li Gang and Zhou Hao said in a report that the August PMI figure shows China’s “growth momentum has accelerated thanks to faster implementation of the fiscal programme and ‘mini stimulus’ initiated by the new government”. Authorities have been loathe to introduce large-scale stimulus measures such as the four trillion yuan (US$650 billion) package thrown at the 2008-2009 global financial crisis, but in late July did announce some steps to boost growth, such as reducing taxes on small companies and encouraging railway development. “The government has allowed extra infrastructure investments, including railway, urban infrastructure construction, and shanty town renovation”, the ANZ report said, adding that would result up to about 200 billion yuan of output, estimated as equal to 0.8 percent of China’s GDP in the first half of 2013. China’s leaders say they are aiming to move the economy away from dependency on big ticket investment and instead want consumer demand to become the key growth engine. Authorities are targeting 2013 growth of 7.5 percent, which is the same as the objective set last year. They see annual growth in the seven percent range as being more sustainable for the future as the country’s economy matures. As recently as 2011 GDP grew 9.3 percent and expanded 10.4 percent in 2010. President Xi Jinping told business leaders in April that China’s days of “ultra-high speed” growth are probably over and that officials would be emphasising “quality and efficiency” in economic development. AFP
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September 2, 2013 April 19, 2013
Greater China Taiwan probes HTC staff over secrets theft Taiwanese prosecutors are investigating allegations that three employees at smartphone maker HTC stole trade secrets to sell to Chinese firms, reports said Saturday. Investigators Friday searched HTC’s research and development centre as well as the suspects’ offices and homes after the company accused them of stealing key interface technology. HTC said the men were suspected of discussing plans with unidentified Chinese firms to acquire the technology, the report said. The technology is to be used in HTC’s new Sense 6.0 smartphones, which are set to be unveiled later this year.
Anti-graft agency probes state assets chief Jiang Jiemin caught in Beijing’s clampdown on corruption
Jiang Jiemin has a seat on the Communist Party’s central committee
A
high-ranking Chinese official who oversees state-owned firms is being probed for “serious disciplinary violations”, official media reported yesterday, as the country’s new leaders intensify a clampdown on corruption. The investigation of Jiang Jiemin follows several graft cases against top officials and the dramatic trial of fallen Communist Party heavyweight Bo Xilai for alleged bribery, embezzlement and abuse of power. In a brief dispatch, the state-run Xinhua news agency said Mr Jiang “is being investigated over suspected serious disciplinary violations”, a term used as a euphemism for corruption by officials. Xinhua said it obtained the
information about Mr Jiang, head of the State-owned Assets Supervision and Administration Commission of the State Council, from the Central Commission for Discipline Inspection of the ruling Communist Party. The commission is the party’s anti-corruption watchdog. Mr Jiang has a seat on the party’s central committee, which has more than 200 members. The State Council is China’s cabinet. Mr Jiang was previously chairman of China National Petroleum Corp., the country’s biggest oil and gas producer and chairman of PetroChina Co, CNPC’s listed arm. He worked in the nation’s petroleum industry for almost four
decades, according to CNPC’s website. Four officials who had roles at CNPC and PetroChina were removed from their posts on August 26 and 27 following a government probe, according to exchange statements and Xinhua reports. President Xi Jinping, who took office in March, has vowed to oust corrupt officials all the way from lowlevel “flies” to high-ranking “tigers” amid fears graft could threaten the party’s hold on power. News of the investigation into Mr Jiang comes as state media last month reported that the party had expelled one of its highest-ranking officials to come under suspicion for graft. Former top economic policymaker Liu Tienan “took advantage of his
position to seek profits for others” and was “morally degenerate”, Xinhua reported, citing the party discipline inspection commission. On Friday, a Hong Kong newspaper reported that China will launch a corruption investigation into one of the country’s most powerful politicians of the last decade. The probe of former security tsar Zhou Yongkang was reported by the South China Morning Post, which cited “sources familiar with the leadership’s thinking”. Mr Zhou is a recently retired member of the party’s Politburo Standing Committee, its top body and would be the highest-ranking official to be investigated for decades. AFP/Bloomberg News
Bond futures trading back after 18-year halt Li Kepqiang makes new move to deepen China’s financial markets
C
hina will start trading government bond futures on Friday, providing investors with a tool to manage risk 18 years after the derivatives were suspended following a probe into alleged market manipulation. Trading will commence Friday, according to a China Securities Regulatory Commission statement on its website. The daily trading limit for the 3 percent five-year note as the underlying security is set at 2 percent on either side of the previous day’s settlement price, according to the China Financial Futures Exchange on its website. The contracts will help China achieve the central bank’s goal
of liberalising interest rates and deepen financial markets as premier Li Keqiang tackles slowing growth. The People’s Bank of China in July removed a floor on borrowing costs previously set at 30 percent below the benchmark, as Mr Li pledged to give market forces a bigger role. Governor Zhou Xiaochuan said August 19 he is preparing to free up savings rates. “The futures will function as a basic tool to manage volatility,” said Huang Hai, Beijing-based deputy head of the research department at SDIC CGOG Futures Co, a unit of State Development & Investment Corp. “As China is trying to liberalise
interest rates, markets can be more volatile, and such a product is essential for risk management.” China became Asia’s secondlargest government bond market at the end of 2012, with 7.42 trillion yuan (US$1.2 trillion) of notes outstanding, according to the China Securities Regulatory Commission. The nation began treasury futures trading in 1992 and stopped it three years later. China’s government bond sales were 1.03 trillion yuan in the first seven months this year, following total issuance of 1.61 trillion yuan in 2012, according to data from ChinaBond, the government debt clearing house. Maturities range from 91 days to
50 years. The yield on government notes due 2018 climbed 25 basis points this month to 3.91 percent on August 29, ChinaBond data show. The rate touched 3.99 percent on August 20, the highest in almost a year. “The futures will help improve portfolio management,” Huang Hai said. “It is also a good hedge, given the expectation for interest rates to rise.” The China Financial Futures Exchange in Shanghai currently only trades CSI 300 Index futures. The exchange is studying shortterm interest rate futures, the Securities Times reported on Auguest 26, citing an unidentified person. Bloomberg News
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September 2, 2013 April 19, 2013
Asia
India pushes for joint forex intervention Emerging economies worried over volatility in currency exchange markets Manoj Kumar
I
ndia is seeking support from other emerging market countries for coordinated intervention in offshore foreign exchange markets after a currency rout the past three months, but at least one critical partner, Brazil, said it is not involved in such planning at this time. Mexico and Russia, two other key developing nations, had no comment on such a plan. Concern about the end of cheap dollars from the United States Federal Reserve’s stimulus programme has prompted a massive capital flight toward dollar-denominated assets. The rout has been compounded by short-seller attacks in offshore trading centres. “It is now time to stop,” Dipak Dasgupta, the Indian finance ministry’s principal economic adviser, told Reuters on Friday, referring to speculative behaviour in offshore markets he said was damaging the stability of the world economy. “It is going to happen in a matter of days rather than weeks,” he said. “Brazil and India can start the move.” Other major emerging market economies have either rejected outright involvement in any
intervention, or declined comment. Brazil’s central bank and its finance minister Guido Mantega said the government was not currently participating in any planning for co-ordinated intervention in offshore markets. Mr Mantega said the leading emerging market nations that form the BRICS group - including Brazil, Russia, India, China and South Africa - are planning coordinated actions to create a joint bank and a joint reserve fund. The Indian rupee is the worst performing major currency in recent months, having lost about 20 percent against the dollar since May to hit an all-time low. Other hard-hit emerging market currencies include the Brazilian real, which has fallen more than 14 percent and the Indonesian rupiah, which has slid nearly 12 percent in 2013. The idea of intervention did not come up at a Kremlin briefing earlier on Friday looking ahead to the annual Group of 20 summit in St Petersburg on September 5-6. A meeting of BRICS finance ministers on the fringes of a G20 gathering in Moscow in July made
The Indian rupee lost about 20 percent against the dollar since May to hit an all-time low
no progress on setting up a joint currency fighting fund, sources said at the time. Russian officials have not shown any great concern over recent declines in the rouble to four-year lows, describing them as normal fluctuations. They have argued that a weaker currency will boost the export
Thailand billionaire said to vie for ParknShop Hutchison in talks with five potential buyers after reviewing bids
T
hai billionaire Dhanin Chearavanont’s Charoen Pokphand Group is bidding for Hutchison Whampoa Ltd’s ParknShop supermarket chain, said three people with knowledge of the matter. Hutchison, the Hong Kong conglomerate controlled by billionaire Li Ka-shing, is in talks with about five potential buyers after reviewing first-round bids for its ParknShop chain, one of the people said, asking not to be identified because the process is private. Hutchison is seeking US$3 billion to US$4 billion for the unit, a person familiar with the sale said this month.
ParknShop attracted eight offers in mid-August from suitors including China Resources Enterprise Ltd and Sun Art Retail Group Ltd, according to people with knowledge of the process. The supermarket operator, which sells everything from eggs to whiskey, is one of the two largest chains in Hong Kong’s US$6.6 billion supermarket industry. KKR & Co, TPG Capital, Japan’s Aeon Co and Woolworths Ltd were also among those who made offers in the first round of bidding, the people said earlier this month. TPG and KKR have since dropped
Hong Kong-based supermarket chain ParknShop has 11 outlets in Macau
out of the process, people with knowledge of the matter said. While some bidders that do not have operations in Hong Kong are asking Hutchison to retain a small stake in ParknShop and continue managing the stores, Hutchison would prefer an outright sale, one person said.
Deal spree Mr Dhanin is buying at home and abroad, accounting for more than half of the US$27 billion in purchases announced in the last year by Thai companies, including CP
competitiveness of Russia’s flagging economy. Coordinated action among major emerging economies to support their depreciating currencies against a buoyant dollar had been mentioned in June by Brazilian President Dilma Rousseff in a phone call to her Chinese counterpart. Reuters
Group’s purchase of a US$9.4 billion stake in China’s Ping An Insurance (Group) Co. CP All Pcl, a Bangkok-based 7-Eleven operator controlled by the billionaire, recently struck Thailand’s largest ever takeover with the 189 billion baht (US$5.9 billion) purchase of discount wholesaler Siam Makro Pcl. Hong Kong-based China Resources has said it may partner with Tesco Plc to bid for ParknShop. The supermarket, which had revenue of HK$21.7 billion (US$2.8 billion) last year, currently has 11 of its 345 outlets in Macau. Hutchison is looking into a sale as it accelerates overseas investments and expands in telecommunications. Sales growth in Hong Kong’s supermarket industry slowed to 7.7 percent in June from last year’s annual increase of 11 percent and a 2011 peak of 13 percent, government statistics show. ParknShop had 33 percent of the Hong Kong grocery market in 2012, trailing Wellcome, controlled by Singapore-listed Dairy Farm International Holdings Ltd, with 40 percent, according to researcher Euromonitor. CR Vanguard Supermarket, run by state-backed mainland conglomerate China Resources, ranked third with 7.8 percent. China Resources had 8 eight shops in Macau at the end of last year. Mr Dhanin has a net worth of US$5.8 billion, according to the Bloomberg Billionaires Index. Many of his assets are owned through closely-held holding companies that he shares with his three brothers. Mr Dhanin’s net worth calculation excludes the stakes held by his brothers, Jaran Chiaravanont, Montri Jiaravanont and Sumet Jiaravanon. With Bloomberg News
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September 2, 2013 April 19, 2013
Asia
Extra Japan stimulus needed for sales tax The sales-tax increase threatens to damp the economy’s recovery
Prime minister Shinzo Abe is trying to fuel growth without worsening public debt
J
apan will need extra stimulus to cushion the economy from a sales tax increase planned for April, according to most of the people in panels advising the government. A majority of those in seven consultative panels favored proceeding with the increase, Economy minister Akira Amari told reporters Saturday in Tokyo, after the final group met. “Most panel members called for sufficient stimulus” if the tax rise was implemented, he said.
Prime minister Shinzo Abe is trying to fuel growth without worsening a public debt more than twice the size of the economy. The sales-tax increase threatens to damp the economy’s recovery even as it would help to shore up the nation’s finances and pay for rising social welfare costs for an aging population. Japan is due to detail a mid-term fiscal plan at the Group of Twenty meeting in Russia this week. The plan will be a credible framework for fiscal consolidation,
Finance minister Taro Aso told the G-20 meeting in July. Mr Abe will decide whether to go ahead with the increase by early October, Mr Amari told reporters last week. The levy is set to rise to 8 percent in April from the current 5 percent, and Mr Abe can postpone or cancel this increase should he determine the economy can’t bear the impact. Mr Abe will look at various economic indicators including revised second quarter gross domestic
South Korea exports grow faster in August
S
outh Korea’s exports rose 7.7 percent in August from a year ago, helped by robust shipments of cars and technology products, official data released yesterday show. Exports from Asia’s fourth-largest economy increased to US$46.37 billion, Seoul’s trade ministry said. In July, exports grew 2.6 percent. Shipments to the United States rose by 17.9 percent in August in
annual terms, while exports to China grew by 12.8 percent. Shipments to the Association of Southeast Asian Nations rose by 15.6 percent, while those to the European Union fell by 8.8 percent during August. Exports of ships and home appliances soared about 26 percent year-on-year each. “New smartphones by South Korean firms, including Samsung’s Galaxy S4 and LG’s G2 helped
boost exports of mobile devices,” the ministry said in a statement. Strong sales of mobile devices also helped bolster overseas shipments of memory chips, which posted 22.1 percent year-on-year growth, the ministry said. Imports gained 0.8 percent onyear to reach US$41.45 billion, resulting in a trade surplus of US$4.9 billion in August. AFP/Reuters
Australia gold output up in second quarter
G
old output in Australia, the world’s second biggest producer after China, rose 5 percent in the second quarter from a year ago as producers cut costs by increasing the ore grade. Output was 67 tonnes for the three months ended June 30, 3 tonnes up from the same period a year ago and 3.5 tonnes above the preceding quarter, according the Gold Quarterly Review by Melbourne-based Surbiton Associates. “The higher gold output in the June quarter was due to higher
tonnages of ore treated plus slightly higher ore grades,” said Surbiton managing director Sandra Close. “The increase in grade was precisely what we expected would happen following the price fall in early April.” Gold output fell 5 percent in the first quarter as wet weather impeded production in parts of Western Australia state, where roughly 80 percent of Australia’s gold is mined. The Australian dollar gold price averaged A$1,570 (US$1,398) per ounce in the March quarter 2013,
product data, due September 9, and also consider the views of the 60 economists, business leaders, regional representatives and other people on the panels that met last week. Forty-four of them supported the planned increase, NHK television reported Saturday.
Cautious advisers Some panel members expressed caution over the increase, with Mr Abe’s economic advisers Etsuro Honda and Koichi Hamada both calling for the tax to rise by 1 percentage point a year. Japan should not raise taxes while it is still in deflation, and the 3 percentage point increase is a downside risk to the economy, Mr. Honda wrote in a submission to Saturday’s panel. Others in the government are in favor of the measure, with Mr Aso saying last month that strong growth in the second quarter supported the case for the rise. The economy grew an annualized 2.6 percent from the previous period in three months through June, the third straight quarter of expansion. “No one on the panels said we would be able to do nothing and overcome the effects” of raising the levy, Mr Amari said yesterday. At the same time, “the panel members thought the risks of not raising the tax were much larger than the risks from increasing it as planned,” he said.
Fiscal stimulus
but fell to average A$1,425 per ounce for the June quarter. Reuters
After taking office in December, Mr Abe’s first major economic policy was 10.3 trillion (US$105 billion) in fiscal stimulus to boost growth and end deflation. In April, newly appointed Bank of Japan governor Haruhiko Kuroda announced unprecedented monetary easing, doubling monthly bond purchases to achieve a 2 percent inflation target. Japan will need another 5 trillion yen (US$51 billion) stimulus package to cushion the impact of the tax increase, according to the median estimate in a survey of 23 economists by Bloomberg News. The economy will shrink an annualized 4.4 percent in the AprilJune quarter next year if the tax is raised, before returning to growth, according to a different survey. Bloomberg News
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September 2, 2013 April 19, 2013
Asia
Indonesia’s investment stature under siege More short-term pain to put pressure on vulnerable rupiah Rieka Rahadiana
F
rom a tumbling currency to a crippling current-account shortfall, slowing economic growth, high inflation and retreating investors, Indonesia’s stature as emerging-market superstar is under siege. The immediate prospects look forbidding. Measures imposed by the government and central bank are no panacea for a near-record currentaccount deficit that has torpedoed the rupiah currency and spooked foreign investors who own nearly a third of its government debt. Expected further interest rate increases and a possible rise in bank reserve deposit requirements, along with fiscal-stimulus measures, could stabilise Indonesia’s markets in the longer term and ultimately restore the allure of Southeast Asia’s biggest economy. But the cost, say economists, will be more short-term pain both to an already-slowing economy and to the vulnerable rupiah, as foreign capital dwindles ahead of an expected end to the U.S. Federal Reserve’s policy of ultra-cheap money that had propelled investors into higher-yielding markets, from Brazil to Indonesia. “There is still an investment party … But it won’t [any more] be caviar, foie gras and vintage wine,” said Standard Chartered Plc senior economist in Jakarta, Fauzi Ichsan.
I would say we are likely at or near the bottom right now. Nonetheless, even if we argue the selloff has been overdone, I don’t see it will come back very soon Gordon Ip, manager of Value Partners
“It’ll be gado-gado,” he added, a reference to a popular, but cheap, Indonesian vegetable dish. Less than a year ago, Indonesia was feted by investors clamouring to tap a booming middle class in the world’s fourth-most populous country and its vast reserves of coal, natural gas and other resources. Annual economic growth raced ahead at more than 6 percent. But demand growth, especially from China, weakened, commodity prices fell and easy global capital started to dry up.
‘Near the bottom’ Gordon Ip, manager of Hong Kong-based Value Partners Ltd, sees a bottom approaching after a turbulent two weeks that has sliced 14 percent off Jakarta’s benchmark stock index since August 12 and driven the rupiah to four-year lows of 10,900 per dollar – a drop of nearly 11 percent this year that has made it one of Asia’s worst-performing currencies. To some, a test of 11,000 per dollar is now on the cards. Mr Ip notes that the rupiah is not far from the 15,000 per dollar level reached during Asia’s 1997/98 financial crisis, a period when Indonesia was far more vulnerable with reserves only amounting to about half of its short-term external debt. Today, its foreign-exchange reserves cover about 170 percent of short-term external debt, reducing the risk of a balance of payments crisis. “I don’t believe the country is like what it was in the past,” said Mr Ip. “At the end of the day, Indonesia is a country with massive natural resources, one of the most populous countries so that it can provide a lot of labour and its demographic is also one of the youngest in the world. All these will be positive drivers for future growth.” Mr Ip invests 10 percent to 15 percent of his US$500 million fund in Indonesia and sees opportunities in government bonds where 10-year yields have shot up 300 basis points since May to 8.5, their highest since March 2011. “I would say we are likely at or near the bottom right now,” he said.
“Nonetheless, even if we argue the selloff has been overdone, I don’t see it will come back very soon.”
Widening shortfall Central to Indonesia’s problems is its current account. The widest measure of the flow of goods, services and money in and out of Indonesia has remained in deficit for seven quarters, driven by price declines for its most lucrative commodity exports – from coal to tin and palm oil. The shortfall reached an unexpectedly large US$9.8 billion in the quarter ended June 30, the biggest since before the 1997/98 Asian financial crisis and equivalent to 4.4 percent of GDP.
KEY POINTS Analysts see little shortterm benefit Further selling of Indonesian assets seen More increases in interest rates seen inevitable Higher rates could hit growth, drag on jobs
A stimulus package unveiled a fortnight ago sought to mend that deficit by shoring up exports, in part by offering tax breaks to companies in labour-intensive industries, such as garments and textiles, that export at least 30 percent of their production. A luxury tax on certain domestic products would be phased out, meanwhile, to reduce imports. Some measures, say economists and business leaders, could accelerate growth, curb inflation and lift foreign-direct investment over the longer-term, but their short-term impact on the current
account looks negligible. A stubborn current-account deficit makes Indonesia heavily dependent on increasingly scarce foreign capital. And further losses in the rupiah will make imported goods more expensive, adding to already strong inflationary pressures. The central bank projected that the annual inflation rate could exceed 8.9 percent in August, the highest since January 2009 and above July’s already lofty 8.61 percent. Indonesia’s central bank raised its main interest rates on Thursday. It is the third time in four months that Bank Indonesia has raised both its benchmark reference rate and the rate it pays banks for overnight deposits. The benchmark rate is now its highest since June 2009 after it was raised 50 basis points to 7.0 percent. “It may not turn markets around, but it should at least bring back some stability,” HSBC Holdings Plc’s Singapore-based Southeast Asian economist Su Sian Lim said. Geoff Lewis, a Hong Kongbased global market strategist at JPMorgan Asset Management, said the recoiling of global capital that has wiped US$45 billion off the value of Indonesian stocks since August 12 could be followed by more selling. He warned economic growth will slow and corporate earnings may have to be downgraded in the short term. “Indonesia was late to see that circumstances had changed for emerging markets with large external deficits, and should have started to tighten monetary policy earlier. Another rate hike looks inevitable,” he said. Economists fault Southeast Asian leaders for failing to make structural economic reforms while investment was booming. Indonesian infrastructure remains woeful, corruption rampant and economic nationalism is on the rise, disadvantaging foreigner investors in lucrative resources industries. “Difficult times like now require good policies from emerging markets and provide a wake-up call for Indonesia, Thailand and Malaysia to push through with structural reforms,” said Mr. Lewis at JPMorgan Chase & Co. Reuters
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September 2, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 71.0
47.30
23.25
70.9
46.85
23.06 70.8
46.40
Max 47.3
average 46.854
Min 45.95
45.95
Last 47.2
Max 71
average 70.85
Min 70.6
70.6
Last 70.95
44.95
44.63
44.31
Max 44.95
average 44.556
Min 44
44.00
Last 44.6
Max 19.92
average 19.732
Commodities PRICE
DAY %
YTD %
(H) 52W
Last 19.88
(L) 52W
WTI CRUDE FUTURE Oct13
107.65
-1.056985294
15.01068376
112.2399979
BRENT CRUDE FUTR Oct13
114.01
-0.998610629
7.831268325
117.3399963
96.37999725
GASOLINE RBOB FUT Oct13
289.01
-1.381969563
11.076521
298.210001
246.6799974
GAS OIL FUT (ICE) Oct13
969.25
-0.920010222
6.951724138
985.5
835.5
3.581
-1.022664456
-1.349862259
4.525000095
3.154000044
313.66
-1.621553806
4.871443378
322.8999853
276.1999846
Gold Spot $/Oz
1395.27
-1.2771
-16.1728
1796.08
1180.57
Silver Spot $/Oz
23.5225
-2.7554
-21.8781
35.365
18.2208
Platinum Spot $/Oz
1522.54
-0.429
0.3156
1742.8
1294.18
Palladium Spot $/Oz
722.28
-2.45
3.233
786.5
587.4
LME ALUMINUM 3MO ($)
1813.5
-1.171662125
-12.51808973
2200.199951
1758
NATURAL GAS FUTR Oct13 NY Harb ULSD Fut Oct13 METALS
Min 19.58
Min 22.7
22.70
Last 22.8
23.60
19.83
23.55
19.75
23.50
19.66
23.45
19.58
86.04000092
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
ASIA PACIFIC
CROSSES
LME COPPER 3MO ($)
7100
-0.740947854
-10.47787164
8422
6602
1905
-1.550387597
-8.413461538
2230
1809.75
13800
-1.953818828
-19.10902696
18920
13205
15.75
0.127145582
2.173207914
16.65000153
14.77000046
482
0.10384216
-19.63318049
665
445.75
654
-0.038211693
-20.31678343
913
635.5
SOYBEAN FUTURE Nov13
1357.5
-0.803799781
4.202648244
1409.75
1162.5
COFFEE 'C' FUTURE Dec13
116.3
-1.147471313
-25.66315117
200
116.0999985
NAME
15.92999935
ARISTOCRAT LEISU
74.34999847
CROWN LTD
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13 Dec13
WHEAT FUTURE(CBT) Dec13
SUGAR #11 (WORLD) Oct13
16.34
COTTON NO.2 FUTR Dec13
-0.183262065
83.49
-18.5443669
0.300336377
21.82999992
6.032512065
93.72000122
World Stock Markets - Indices NAME
average 22.725
19.92
COUNTRY MAJOR
LME ZINC
CORN FUTURE
Max 22.8
Max 23.6
average 23.466
Min 23.4
Last 23.45
23.40
Currency Exchange Rates
NAME ENERGY
22.88
70.7
DAY %
YTD %
(H) 52W
(L) 52W
0.8901 1.5504 0.9298 1.3222 98.17 7.9871 7.755 6.1203 65.705 32.15 1.2749 29.929 44.58 11184 87.375 1.22945 0.85287 8.1047 10.575 129.8 1.03
-0.3917 -0.0193 -0.1398 -0.264 -0.0306 0.01 0.0064 0.0016 1.3545 0.0995 0.1098 0.1771 0.157 -2.2264 0.3697 0.1212 0.2368 0.1727 0.1409 0.2311 0
-14.232 -4.1543 -1.5487 0.2426 -12.295 -0.0488 -0.0567 1.8022 -16.3001 -4.8834 -4.1964 -2.9938 -8.0193 -12.4374 2.234 -1.787 -4.3911 1.3918 -0.4217 -12.5039 -0.0097
1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3544 68.845 32.31 1.2862 30.228 44.82 11433 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032
0.8848 1.4814 0.9022 1.2502 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20071 0.78875 7.8281 9.9897 97.99 1.0289
Macau Related Stocks PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.52
2.262443
43.49206
4.63
2.545
VOLUME CRNCY 2075478
14.61
1.670146
36.92596
15.09
8.9
1219666
AMAX HOLDINGS LT
0.99
0
-29.28571
1.72
0.75
327600
BOC HONG KONG HO
24.45
-0.2040816
1.452281
28
22.85
11198618
CENTURY LEGEND
0.38
0
43.39623
0.42
0.22
0
CHEUK NANG HLDGS
6.36
2.912621
6.176966
6.74
3.1
91884
CHINA OVERSEAS
23.1
1.315789
0
25.6
17.28
17222265
CHINESE ESTATES
17.32
3.588517
54.0165
17.5
8.004
347000
CHOW TAI FOOK JE
10.7
0.1872659
-13.98714
13.4
7.44
9299753
EMPEROR ENTERTAI
2.84
1.792115
50.26455
3.07
1.38
1565000
FUTURE BRIGHT
2.28
0
88.11476
2.76
1.053
984000
GALAXY ENTERTAIN
47.2
2.720348
55.51894
47.35
20.45
12943799
120.5
0.166251
1.516431
132.8
109
1314747
24.6
1.234568
-26.01504
35.3
23.2
1667405 10651459
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
14810.31
-0.2064558
13.02008
15658.42969
12471.49
NASDAQ COMPOSITE INDEX
US
3589.868
-0.8406755
18.88894
3694.188
2810.8
FTSE 100 INDEX
GB
6412.93
-1.08159
8.734092
6875.62
5605.589844
DAX INDEX
GE
8103.15
-1.115375
6.446856
8557.86
6889.79
HOPEWELL HLDGS
NIKKEI 225
JN
13388.86
-0.5263858
28.79874
15942.6
8488.14
HSBC HLDGS PLC
HANG SENG INDEX
HK
21731.37
0.1225076
-4.085069
23944.74
19076.78906
CSI 300 INDEX
CH
2313.91
-0.1898365
-8.285611
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8021.89
1.316424
4.187157
8439.15
7050.05
KOSPI INDEX
SK
1926.36
0.986611
-3.539724
2042.48
S&P/ASX 200 INDEX
AU
5134.957
0.8354785
10.45412
ID
4195.089
2.229656
FTSE Bursa Malaysia KLCI
MA
1727.58
NZX ALL INDEX
NZ
PHILIPPINES ALL SHARE IX
PH
JAKARTA COMPOSITE INDEX
PRICE
HANG SENG BK
82
-0.6060606
0.8610048
90.7
65.85
HUTCHISON TELE H
3.36
4.347826
-5.617976
4.66
2.98
5564000
LUK FOOK HLDGS I
26.5
1.727447
8.606559
30.05
16.88
2699088
MELCO INTL DEVEL
17.68
0.7981756
96.22641
18.18
5.91
2628000
MGM CHINA HOLDIN
23.15
1.535088
74.34488
23.65
11.346
9464301
1770.53
MIDLAND HOLDINGS
2.94
-1.342282
-20.54054
5
2.68
1174000
5249.6
4261.2
NEPTUNE GROUP
0.168
1.818182
10.52632
0.23
0.131
11120000
-2.816932
5251.296
3837.735
NEW WORLD DEV
10.88
0.7407407
-9.484196
15.12
9.38
9868695
1.396894
2.28722
1826.22
1590.67
SANDS CHINA LTD
44.6
0.6772009
31.36966
45.5
26.05
6120027
SHUN HO RESOURCE
1.8
2.272727
28.57143
1.9
1.13
10000
967.073
0.3436537
9.638879
998.487
804.506
SHUN TAK HOLDING
4.02
0.2493766
-4.057281
4.65
2.78
3929889
3702.38
2.019796
0.09191459
4571.4
3411.69
SJM HOLDINGS LTD
19.88
2.158273
12.01478
22.382
15.401
9053081
SMARTONE TELECOM
11.22
4.664179
-20.3125
16.92
10.6
2482848
WYNN MACAU LTD
23.45
0
11.93317
26.5
16.92
3557283
ASIA ENTERTAINME
4.02
0.5
42.82248
4.7647
2.4835
65599
BALLY TECHNOLOGI
72.13
-0.7294247
61.32857
75.61
43.16
301612
BOC HONG KONG HO
3.15
-1.5625
2.605865
3.6
2.99
8353
GALAXY ENTERTAIN
5.99
0.6722689
50.88161
6
2.735
6633
INTL GAME TECH
18.89
-0.6834911
33.30981
20.25
12.01
980632
JONES LANG LASAL
82.24
-1.931791
-2.025259
101.46
70.9
280566
LAS VEGAS SANDS
56.35
-0.6698396
22.07539
60.54
37.8353
2793409
MELCO CROWN-ADR
27.19
-0.4758419
61.46081
27.75
11.46
1902154
MGM CHINA HOLDIN
2.88
0
64.54403
2.98
1.5327
4000
MGM RESORTS INTE
17.69
-0.5061867
51.97594
18.54
9.15
6668002
SHFL ENTERTAINME
22.77
0
57.03448
23.08
12.35
746191
SJM HOLDINGS LTD
2.53
0
11.08106
2.9481
2.0015
3200
141.04
-0.5850426
25.38004
146.04
93.1279
705189
HSBC Dragon 300 Index Singapor
SI
576.79
1.15
-7.13
NA
NA
STOCK EXCH OF THAI INDEX
TH
1294.3
0.1369407
-7.014002
1649.77
1211.38
HO CHI MINH STOCK INDEX
VN
472.7
0.8857112
14.25326
533.15
372.39
Laos Composite Index
LO
1341.96
0
10.47029
1455.82
1003.17
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
34.5
0.4366812
19545528
ALUMINUM CORP-H
2.64
-1.492537
5910471
BANK OF CHINA-H
3.31
-0.6006006
281981174
BANK OF COMMUN-H
5.23
-0.7590133
23865990
BANK EAST ASIA
30.45
0.3294893
936133
BELLE INTERNATIO
10.42
-3.518519
26814000
NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD
TINGYI HLDG CO
18.38
-1.71123
6902679
WANT WANT CHINA
10.34
0.3883495
9273408
WHARF HLDG
65.55
-0.4555809
2924719
HENDERSON LAND D HENGAN INTL
47.4
2.597403
5800385
85
-0.2347418
1400281
HONG KG CHINA GS
18.58
-0.1075269
14665882
HONG KONG EXCHNG
122.4
-0.5686434
1300742
83.7
0.1795332
12519417
89.95
-0.6077348
6246670
5.14
-0.3875969
220499907
11.82
-1.5
26808900
HSBC HLDGS PLC
83.15
0.4833837
16393395
HUTCHISON WHAMPO
23.15
0.2164502
14900562
IND & COMM BK-H
CHINA PETROLEU-H
5.72
-0.3484321
67409499
LI & FUNG LTD
CHINA RES ENTERP
22.85
-1.508621
3198000
MTR CORP
28.4
0.3533569
1777466
22.3
0.6772009
3625400
NEW WORLD DEV
11.18
1.636364
11429776
PETROCHINA CO-H
8.5
-2.298851
171958874
-3.26087
8086527 24268505
3344605
995805
CHINA MOBILE
1.242236
-1.166667
4444485
CHINA OVERSEAS
17.8
1119219
355.8
1.848049
2693282
24.45
0.3359462
24.8
83906035
CHINA RES POWER
1756298
89.6
121.1 -0.08250825
0.6122449
CHINA SHENHUA-H
7658562
-0.0998004
TENCENT HOLDINGS
-0.1833181
CHINA RES LAND
-0.7707129
2895995
4.93
1683226
10.3 100.1
1.501502
108.9
0
2168146 5674242
13.52
CHEUNG KONG
23.5
SINO LAND CO
-1.972243 0.9248555
ESPRIT HLDGS HANG SENG BK
CHINA MERCHANT
4444863
67.1 43.65
SWIRE PACIFIC-A
HANG LUNG PROPER
22919158
SANDS CHINA LTD
POWER ASSETS HOL
5076000
5861163
231560662
6182000
1.25
3542244
0.1039501
11983016
-1.428571
VOLUME
11.34
0.204918
-0.8561644
-0.8417508
8.97
DAY %
COSCO PAC LTD
1.447178
5.79
PRICE
97391045
24.45
19.26
11.78
61.8 -0.08084074
NAME
0.7741935
14.02
CHINA LIFE INS-H
VOLUME
15.62
BOC HONG KONG HO
CHINA CONST BA-H
DAY %
CNOOC LTD
CATHAY PAC AIR CHINA COAL ENE-H
PRICE
PING AN INSURA-H
53.2 -0.09389671
12258974
SUN HUNG KAI PRO
MOVERS
31
19
0 21739
INDEX 21731.37 HIGH
21739.43
LOW
21494.28
52W (H) 23944.74 21494
(L) 19076.78906 28-August
30-August
14 14
September 2, 2013 April 19, 2013
Classifieds Mountain Villa For Sale in Koh-Samui Price: HK$ 16 million
3 x King Bed en-Suites, 1 x King Bed basement Suite, 2 x 2 Single Bed, Spacious Living area and fully furnished kitchen, Swimming pool - children / adult, 2 levels Maid’s quarter, Fully Furnished, Balcony, Terrace / Patio, 2 x Outside Salas, Barbecue, 2 x Parking Spaces, 7-seater SUV included. Contact Ms Chan - Sarah@clever-cloggs.com.hk Tel: 2861-3317
Unique opportunity The Fountainside
Apt. on Top Floor Approx. 180 square meters HKD 19.9 million
LIKE NEW 4 APARTMENTS BUILDING IN LISBON Price: HK$ 17,000,000
2 Apartments T3 (1st and 2 floor), 1 Apartment T2 (3rd floor), 1 Apartment T0 (top floor), garage for 4 cars + laundry and storage area. Location: Close to RPC embassy classifieds@macaubusinessdaily.com Mobile: +351910836655
Year: 2007 30,000 Km Very good condition Price: MOP88,000
classifieds@macaubusinessdaily.com
FOR SALE - ONE GRANTAI Tower 3; Flat 10K.
Luxury hilltop flat, fully air conditioned, 3 bedrooms, 2 full bathrooms, maid’s room, fully equipped kitchen , living room, dining area, and 2 balconies with stunning Cotai Strip and sea views. Facilities include: health club, swimming pool, tennis, play area, and much more. 2320 sq. ft. selling price: HK$ 7,950/sq. ft. Contact: Steven Kahn (852) 2541 7775 Monday - Friday 11am - 6pm
Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden 140 sq metres with Mezzanine
Translations
Price: HKD 12 million
Inês Dias
classifieds@macaubusinessdaily.com
Languages English, Portuguese and French
Contact now for a quote: inezfernandesdias@gmail.com
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
15 15
September 2, 2013 April 19, 2013
Opinion
Don’t Blame the Fed wires for Asia’s problems Business
Leading reports from Asia’s best business newspapers
Taipei Times Taiwan’s Council of Labour Affairs proposed that the minimum wage should be increased next year, starting with the hourly rate. The council’s minimum wage review committee recommended that the hourly wage be increased from NT$109 (US$3.6) to NT$115 starting on January 1. This should be followed by an increase in the minimum monthly wage to NT$19,273, from NT$19,047, effective on July 1 next year, it said. The proposals have to be approved by the Cabinet before they can be implemented.
William Pesek
Bloomberg View columnist
Times of India While the Indian government is looking to fast-track stalled projects, about 46.8 percent (97) of 207 projects classified as mega infrastructure projects or more are facing delays. According to a report of the ministry of statistics and programme implementation, till May the delayed projects saw a cost overrun of 11.8 percent from the originally budget. According to latest data, 64 projects are on track and three projects are ahead of the completion deadline.
Wall Street Journal Japan is considering a novel approach to stem the spread of radioactive water at the crippled Fukushima Daiichi nuclear plant: installing a subterranean ring of ice. The project, being touted by Japanese officials from the chief government spokesman to the minister overseeing the plant’s private operator, is risky because it could cost hundreds of millions of dollars and hasn’t been tried on such a large scale and over such a lengthy period before. A study on the proposal will be completed by year’s end.
Korea Herald South Korean President Park Geun-hye urged the country’s top conglomerate owners to pursue aggressive investment and expand employment to rev up the country’s slumping economy. “Now more than ever is the time for each business to make aggressive and pacesetting investments,” she said. In return, Ms Park said the “economic democratisation” regulations will not aim to damage the businesses with excessive control, and that the government will “carefully review” the controversial Commercial Law revision that the businesses claim will impair their managerial right.
A different kind of smugness has afflicted Asia in recent years
I
t’s time to set our clocks
back in Asia. Not to 1997, as many are recommending, but to 1994. Memories of the former year remain raw. Currencies had gone into free fall and current-account deficits exploded. Central bankers and International Monetary Fund officials scurried to contain the chaos. It’s true that another 1997-like crisis is highly unlikely. Today, exchange rates are more flexible, foreigncurrency debt is lower, banks are healthier, countries are sitting on trillions of dollars of reserves, and economies are far more transparent. The differences between 1997 and today trump the similarities. The same can’t be said of 1994, the year the Federal Reserve last reminded the world that its monetary policy is decided in Washington, not Bangkok, Jakarta or Seoul. Then-Fed chairman Alan Greenspan doubled benchmark interest rates over 12 months, causing hundreds of billions of dollars in bondmarket losses and helping set the Asian financial crisis in motion. The dollar’s post1994 rally made currency pegs impossible to maintain, leading to devastating devaluations across the region. Asia’s real problem was hubris. All that hot money coursing in its direction in the 1990s made rapid growth too easy. Policy makers were too busy signing foreigndirect investment deals, attending ribbon-cutting ceremonies for factories and flashy skyscrapers, and congratulating themselves
for surging stocks to do their real jobs. Financial systems went neglected, unproductive investments accumulated and cronyism ran wild.
Victory lap A different kind of smugness has afflicted Asia in recent years. After the 2008 global crash, regional governments started believing their own press. They were convinced they had decoupled from the West. Bankers were abandoning New York and London for Hong Kong and Singapore. Asian debt had become a safe haven from turmoil in Europe. And, as China’s 1.3 billion people grew richer, the good times would keep rolling on. Asia does indeed deserve a victory lap; the region has come a long way since 1997. But rapid growth and its unquestioned success in surviving the global meltdown has revived a hubris that policy makers need to own and analyse. The price of this cockiness is mounting as currencies in Indonesia, Thailand and elsewhere suddenly seem toxic to investors. India is in chaos at a time when China’s growth trajectory is more uncertain than it has been in 15 years. Asian governments need to face up to realities. Perhaps they can live without American and European consumers for four or five years, but thriving beyond that requires more buoyant and self-supporting domestic economies. Also, if you are going to hitch your fortunes to another economy – say, China’s –
it would be better not to choose a developing one whose growth model may have run its course. The test, as it was in 1994, will be what Asia does now to modernise its economies. Examples of complacency are all too easy to find. In Indonesia, President Susilo Bambang Yudhoyono seems to have forgotten that political stability only goes so far if corruption and inefficiency remain rampant. In Thailand, Prime Minister Yingluck Shinawatra has been too busy tweaking the constitution to notice a potentially disastrous bubble in household debt. In the Philippines, President Benigno Aquino forgot that 7.8 percent growth only matters if you create lots of jobs. In Malaysia, Prime Minister Najib Razak has been too focused on trying to shore up his political position to tend to a current account that is swinging toward deficit. “While the U.S. has been given a free pass on the twin deficit issue, emerging-market countries will not be so lucky,” says Simon Grose-Hodge, head of investment strategy for South Asia at LGT Group in Singapore.
Hard decisions Take India, which has been acting as though its rise to superpower status was inevitable, no matter what the government did (or, more important, didn’t do). Reforms have stalled, while unaffordable government handouts have proliferated.
And with an election due in nine months, no one expects that the hard decisions needed to get the economy back on track will be taken. There’s great excitement that respected economist Raghuram Rajan will soon helm the Reserve Bank of India. But the nation’s problems – which include a government as bereft of ideas is it is flush with corruption and inefficiency – are largely beyond his control. Things are far from hopeless for Asia. Among the reasons 2013 is not 1997 is Japan. Back then, Japan’s shaky banking system held about US$100 billion worth of loans to the five Asian economies hardest hit in 1997. When Japanese bankers pulled the plug, the crisis reached a fever pitch. Today, Japan Inc is healthier, the government is shoring up the economy, and the central bank stands ready to add new liquidity as the Fed’s tapering process begins. Chinese leaders are also likely to pull out all the stops to keep growth above 7 percent. In fact, as the Fed ends its quantitative-easing programme and credit markets tighten, cash-rich China may act to fill the void as a way of upping its regional prestige and power. Yet as markets crack anew, Asia should remember the years it squandered between 1994 and 1997. There are all too many similarities to the last few years, a period during which Asia should have been reducing vulnerabilities – not basking in its headlines. Bloomberg View
16
September 2, 2013
Closing Verizon, Vodafone vote on wireless deal
Dubai shares rebound as Obama stalls
The boards of Verizon Communications and Vodafone Group Plc were expected to vote yesterday on a US$130 billion deal, funded by about US$65 billion of debt, to give the American telecom giant complete ownership of Verizon Wireless, people familiar with the matter said on Saturday. A deal, which the sources said could be announced today, would cap Verizon’s decade-long effort to win full control of the biggest United States wireless provider. It would be the third-largest corporate acquisition of all time and mark British telecom giant Vodafone’s exit from the American market.
Dubai shares gained the most in 18 months, rebounding from the worst weekly slump since 2011, after American President Barack Obama put off a military strike against Syria. The Dubai Financial Market General Index advanced 3 percent, the biggest jump since March 2012. The measure slid 6.6 percent last week amid concern a military strike was imminent and would hurt tourism and investments in the emirate. Mr Obama said yesterday he will seek authorization from Congress before ordering the strike against Syria for using chemical weapons, delaying military action to at least September 9.
Re-exports of electronics, jewellery double Non-domestic exports climb while domestically produced ones fall in first seven months Michael Grimes
michael.grimes@macaubusinessdaily.com
The electoral campaign for the Legislative Assembly began on Saturday
Election candidates say no to non-resident graduates Jobs and homes for residents among priorities of potential legislators Stephanie Lai
sw.lai@macaubusinessdaily.com
S
everal Legislative Assembly election candidates are against the government’s idea of making it easier for non-resident university graduates to work here. Hong Weng Kuan, leader of the ‘Macau Association for Promotion of Civic Rights’ ticket, says they “oppose any form of allowing [non-resident] university students to live and work in Macau as special talents”. The lawyer and former president of the Macau Police Association told Business Daily the existing channels for hiring imported labour are enough. “We think the government should not create new channels to import non-resident graduates and offer them the right of residency here,” he added. Chief Executive Fernando Chui Sai On mooted the idea of allowing non-resident graduates to work here in April, to meet future demand as more casino resorts open in Cotai. Several other candidates, including one of the New Macau Association’s three electoral tickets, share Mr Hong view. “We oppose any acts of blindly absorbing non-resident graduates as labour here,” Breakthrough Action’s candidate Issac Tong Weng Io told Business Daily.
“First of all the government has to be clear on what kind of talent and how many [people] they need, and have a professional qualification system ready for all workers,” he added. “Opening a new channel to absorb non-resident graduates will just create a vicious competition with resident students for jobs,” said the first-time candidate. The ‘Macau land for Macau residents’ proposal, inspired by a similar Hong Kong policy, has become a common political programme catchphrase, including for incumbent legislators Au Kam San, Chan Meng Kam and José Pereira Coutinho. In a question and answer with residents held yesterday, Mr Au said this policy should cover the five new urban reclaimed zones. The homes included in these areas should be priced to target buyers whose income falls outside the limits of public housing but is not enough to afford the high private property price. Secretary for Transport and Public Works Lau Si Io said in December that research and public consultation on the ‘Macau land for Macau residents’ would be carried out this year.
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erchandise exports from Macau in July amounted to 745 million patacas (US$96.07 million), up by 16 percent year-on-year, according to data from the Statistics and Census Service. But most of it was due to re-exports of goods from elsewhere. Domestically generated exports actually fell 16 percent year-onyear to 181 million patacas. The census service said there was a 33 percent year-on-year rise in re-exports, valued for the month at 563 million patacas. Total merchandise imports reached 7.12 billion patacas, up by 24 percent year-on-year. The balance of trade – the difference between the cash value of tangible goods exported versus the total cash value of imports – showed a deficit of 6.38 billion Patacas for the month. As Business Daily reported in April, a recent report titled ‘Illicit Financial Flows from China and the Role of Trade Misinvoicing’ written by Dev Kar, a former senior economist at the International Monetary Fund, identified regional import-export trade as a measure not purely of economic performance but also potentially of unauthorised cross border capital flows. ‘Trade misinvoicing’ in the
report’s context is the under reporting of exports out of China, or an over reporting of imports into China. The under reporting of exports gives an opportunity for the economic value of goods or services to change hands abroad without being declared and taxed, while the over reporting of imports provides a pretext for sending an excess of cash outside the country under the cover story of invoice settlement. The more complicated or specialised the merchandise, the harder for customs officials to arrive at a verifiable value. In the first seven months of the year, exports from Macau of electronic components (590 million patacas) and diamonds and diamond jewellery (369 million patacas) surged by 101 percent and 123 percent respectively year-on-year according to the statistics bureau. All exports to Hong Kong (2.89 billion patacas) and mainland China (961 million patacas) in the first seven months of 2013 increased by 28 percent and 30 percent respectively year-on-year. Exports to the United States (216 million patacas) and European Union (169 million patacas) decreased by 29 percent and 20 percent respectively. The city’s trade deficit widened to 40.35 billion patacas for the first seven months.
Exports of diamonds double