Macau Business Daily, November 12, 2013 by Business Daily

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Vitor Quintã

MOP 6.00

Gaming show 1 has govt support: organisers

April 19, 2013

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Cultural industries fund can get creative Page 6

Financing dries up for hungry SMEs T

he city’s small- and medium-sized enterprises need more financing channels, including streamlined government-backed loans, says a white paper prepared by the Macau SMEs Association. A study found that over 70 percent had no sources of finance other than their own savings, while the rest had access to bank loans, government loans or the

equity market. The administration has three schemes for giving out interestfree loans but the procedures are too complicated and should be made easier, the association said. The SME Aid Scheme should grant loans of as much as one million patacas (US$125,228), up from 600,000 patacas now, to companies with a bigger workforce, it suggested.

The association urged the government to come up with incentives to encourage banks to overlook the added risk and lend more to SMEs, such as tax breaks. The white paper says that eventually the administration could also invest in a financial institution that was meant specifically to cater to SMEs. More on page 3

Year II

Number 412 Tuesday November 12, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Population grows via imported labour

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Hang Seng Index 23090

23014

SJM net income up 10 pct in Q3

Govt revenue tops forecast with months to spare

Macau casino developer SJM Holdings Ltd yesterday missed analyst estimates for its third quarter earnings. SJM’s net income for the three months to September 30 climbed 10 percent from a year earlier, to HK$1.83 billion (US$236.04 million). Gaming revenue rose 11 percent to HK$21.1 billion. Market wide during the quarter, gaming revenue rose 19.6 percent according to government data. Page 2

The Macau government’s revenue is already higher than it had forecast for the whole of 2013, even though there are still two months to be counted. Public income hit 125.9 billion patacas (US$15.8 billion) and is close to setting a new record high. In contrast the authorities continue to spend much less than it had budgeted, driving the city’s budget surplus. Page 5

Partner in Lawrence Ho’s Russian bet is arrested Oleg Drozdov, an indirect partner in a Russian casino project to which Macau businessman Lawrence Ho Yau Lung is a party, has been arrested over the construction of a solid waste treatment facility. Summit Ascent Holdings Ltd, a company said in Hong Kong filings to be controlled by Mr Ho, says the police investigation is not linked to the Primorye gaming project in the Russian Far East. Page 16

22938

22862

22786

22710

November 11

HSI - Movers Name

%Day

CHINA MERCHANTS

3.50

LENOVO GROUP

3.05

ICBC LTD

2.68

AIA GROUP

2.62

TENCENT HOLDINGS

2.44

LI&FUNG LTD

-0.75

CHINA RES ENTERP

-0.76

CHINA RES LAND

-1.43

HENGAN INTERNATIONAL

-1.84

BELLE INTERNATIONAL

-2.00

Source: Bloomberg

I SSN 2226-8294

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November 12, 2013

Macau

SJM net income up 10 pct in Q3 Misses analyst estimates, faces competition pressure, but healthy HK$25 bln in the bank Michael Grimes

michael.grimes@macaubusinessdaily.com

acau casino developer SJM Holdings Ltd yesterday missed analyst estimates for its third quarter earnings. But the amount of capital it currently expends on servicing debt is extraordinarily low by industry standards. SJM’s net income for the three months to September 30 climbed 10 percent from a year earlier, to HK$1.83 billion (US$236.04 million). Gaming revenue rose 11 percent to HK$21.1 billion. Market wide gaming revenue during the quarter rose 19.6 percent according to government data. The firm’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation), rose eight percent to HK$2.04 billion in the three months to September, said SJM in a filing to Hong Kong’s stock exchange yesterday. That missed an average estimate of HK$2.11 billion calculated by Bloomberg based on information from 10 analysts. SJM repeated in its third quarter unaudited numbers the assertion that it was being required by the gaming regulator, the Gaming Inspection and Coordination Bureau, to count some revenue from high-limit mass market tables as VIP revenue. “VIP gaming revenue includes HK$144 million…of revenue from certain high-limit gaming tables located in casino mass market areas that was classified as VIP gaming revenue due to game size,” the firm stated. During the third quarter the group operated “an average” of 585 VIP gaming tables compared to 601 in the year prior period, and 1,186 massmarket tables versus 1,158 in the third quarter 2012. It additionally operated 3,348 slot machines in the

Cotai – the shape of things to come for SJM (Photo: Manuel Cardoso)

three months to September 30 – a 12 percent reduction on the 3,812 slots in operation in the equivalent 2012 period.

Cotai project In September SJM said it would spend HK$25 billion to build its first Cotai resort including a luxury hotel in partnership with Italian fashion house Gianni Versace SpA. SJM has asked for 700 gaming tables for SJM Cotai according to filings. Based on yesterday’s quarterly announcement, SJM currently holds enough cash – approximately HK$25.91 billion – to cover the entire cost of the Cotai scheme if it chose.

Finance industry sources told Business Daily earlier this year that while SJM remains committed to paying shareholder dividends, its strong net cash position even after provision for dividends gives it plenty of opportunities to shop around for project loans, both in terms of how it structures any project debt for SJM Cotai and how much it might pay to service it. At close of trading yesterday, SJM Holdings had a market capitalisation of HK$140.22 billion, and – according to its latest filing – only HK$1.56 billion in debt, indicating its gearing is a minuscule 1:90. But analysts have suggested its current lack of a Cotai operation – SJM Cotai is not expected to open

I Got Games posts profit Singapore-based game software developer to work on pachinko product at Fisherman’s Wharf

Macau Fisherman’s Wharf – new opportunity for I Got Games

n online games developer due to collaborate in Macau with pachinko hall operator Dynam Japan Holdings Co Ltd said its revenue grew 122 percent year-on-year in the three months to September 30.

I Got Games Inc has been listed on Hong Kong’s alternative bourse – the Growth Enterprise Market – since October 18. Its third quarter revenue jumped to approximately US$22.53 million (179.90 million patacas) from

US$10.17 million a year earlier. It also moved to a US$4.98 million profit for the quarter compared to a US$4.25 million loss in the year-prior period. IGG said the improvement was due to an increase in revenue from some of its

until late 2016 at the earliest – will put pressure on earnings over the short-term. “Constrained by capacity and product competitiveness, SJM’s growth may not be as strong as that of peers for the next three years,” said DS Kim, a Hong Kong-based analyst at BNP Paribas in a research note ahead of the results. Shares in SJM slipped 1.17 percent on Monday to close at HK$25.40. The stock is up 41 percent since the start of the year. In common with its Macau gaming peers, SJM has continued to outperform the Hang Seng benchmark index, which has appreciated by only 1.8 percent in the same period.

leading games. Singapore-based IGG is led by chief executive Cai Zongjian, who first founded an online games business called Fuzhou Tianmeng Touzi Zixun Co Ltd in Fuzhou, mainland China, in 2005. IGG currently supplies multi-language online games on a free-to-play basis for portable devices as well as browser games for laptops and personal computers. Its revenue is generated by selling so-called ‘virtual items’ to the players. The firm also provides ‘client-based’ games whereby players are charged to access a game server. IGG has regional offices in mainland China, the Philippines and the United States. Dynam Japan Holdings said in a Hong Kong filing last month it would invest US$15 million in IGG to help it develop software for “next generation pachinko machines” to be operated in Macau. Dynam is already a US$35 million investor in former Macau legislator David Chow Kam Fai’s casino services firm Macau Legend Development

Ltd. The latter currently operates two Macau casinos under a so-called ‘service agreement’ with Macau gaming concessionaire Sociedade de Jogos de Macau SA, and is building a third – Prague Harbor View – due to open next year. The third casino-hotel is at Macau Fisherman’s Wharf, which is also controlled by Macau Legend and is currently also undergoing major redevelopment. Dynam Japan said in its filing last month that its ‘next generation’ pachinko machines will be operated at Fisherman’s Wharf. Neither Dynam nor Macau Legend – which in July raised about HK$2.04 billion net from a share sale in Hong Kong – have yet revealed under what regulatory system the ‘next generation’ pachinko machines would be administered in Macau. Pachinko as operated in Japan is neither a casino slot game – as defined by Macau’s gaming regulator the Gaming Inspection and Coordination Bureau – nor technically, under Japanese law, a gambling game. M.G.

November 12, 2013 April 19, 2013

Macau

SMEs beg for more sources of finance A study finds that seven out of 10 SMEs have to rely only on their own savings Tony Lai

tony.lai@macaubusinessdaily.com

ore sources of finance, including quicker and easier government-backed loans, should be available to small and medium enterprises, the Macau SMEs Association says. The association published yesterday a white paper based on the findings of a study of 541 Macau SMEs by Jinan University in Guangdong. The study found that over 70 percent had no sources of finance other than their own savings, while the rest had access to bank loans, government loans or the equity market. Most of the SMEs said bank loans or government loans were their preferred sources of finance. Macau SMEs Association vicechairman Derek Szeto Bickong told a press conference that banks preferred to lend to big companies because it was less risky than lending to small enterprises. He said banks and SMEs had different ways of thinking. “The government should play a role – which would be very important – in narrowing the differences,” Mr Szeto said. He urged the government to come up with incentives for the banks to lend more to SMEs, such as tax breaks. The association’s white paper says that helping SMEs to establish “longterm corporate finance and credit guarantee mechanisms” could make the banks more confident. It says that eventually the government could also invest in a financial institution that was meant specifically to cater to SMEs. Data from the Monetary Authority of Macau show credit given to SMEs amounted to 12.6 billion patacas (US$1.6 million) in the first half of this year, nearly 90 percent more than a year earlier.

Minimum wage only a ‘political gimmick’ Employers will fire old, low-skilled workers and opt for better-qualified workers if a general minimum wage is imposed, Macau SMEs Association chairman Au Chong Kit predicts. Mr Au said yesterday that the proposal to impose a general minimum wage was a “political gimmick” used by some candidates in the recent Legislative Assembly elections. He said SMEs opposed the demand by trade unions that the government’s bans on migrant labour working as croupiers and drivers be enshrined in law. “The government should instead ask casinos to open up more important management positions to young people,” he said. Mr Au said some vacancies for croupiers should be open to migrant workers. T.L.

The government could set up an institution to finance SMEs, a white paper says

The association calls for the government to improve and streamline its three schemes for giving out interest-free loans. These include the SME Aid Scheme. Another vice-chairman of the association, Daniel Iong Ieng Chun, urged the government to increase the maximum loan available under the SME Aid Scheme to 1 million patacas from 600,000 patacas. A member of the board of the association, Chow Siu Seong, said that whether the maximum was

appropriate depended on which industry an SME was in. “For small eateries, 600,000 patacas is surely more than enough,” Mr Chow said. “But it is not enough for a small factory with 30 to 40 employees, as the cost of equipment alone may exceed 600,000 patacas.” He suggested that different ceilings be set, reflecting the size of the borrower’s workforce. Nearly half of the SMEs surveyed said they would not seek to borrow

under any of the three loan schemes. Over one-third think the procedures for getting loans are “too complicated”. Official data show the government lent 184 million patacas under the three loan schemes in the first half of this year, 120 million patacas more than a year earlier. The Macau SMEs Association estimates that 99.8 percent of Macau’s 57,180 registered companies at the end of last year were SMEs employing fewer than 200 workers each.

New gaming show has govt support: organisers Casino regulator sponsored event to produce study into local industry Michael Grimes

michael.grimes@macaubusinessdaily.com

acao Gaming Show – a new locally inspired and locally run trade event for the city’s casino industry – has strong support from the government, one of the people behind it said yesterday. “We have had support from all the different departments of the government,” said Jay Chun – chairman of the Macau Gaming Equipment Manufacturers Association, and chairman of local electronic games maker LT Game Ltd – during a press conference ahead of the show’s first edition later this week. Kevyn Bi, of China-Macao Resources Advertising & Exhibition Co Ltd – the firm tasked with organising the new show – said three key government departments were involved. They are: Macau Economic Services, responsible for promoting the city’s meetings, incentives,

conferences and exhibitions industry; Macau Trade and Investment Promotion Institute, known by its Portuguese acronym IPIM, and the regulator the Gaming Inspection and Coordination Bureau, known as DICJ. “The Macau Economic Services supports the exhibition via sponsorship. Another department is IPIM, via support for us as an SME. The other department is DICJ,” said Mr Bi. According to the Economic Services website, MICE events lasting at least three days and with a minimum of 100 ‘overseas’ participants – a definition that includes those from mainland China – are entitled to a 10 percent subsidy on accommodation costs; 400 patacas (US$50) per person for food expenses; 50 percent of promotion and marketing expenses up to a maximum of 100,000 patacas, and 15 percent of translation fees to a

ceiling of 20,000 patacas. Macao Gaming Show is scheduled to run from this Thursday until Saturday. IPIM’s ‘SME Credit Guarantee Scheme’ provides each beneficiary with credit guarantees equal to 70 percent of any loans approved by participating banks, to a maximum of 3.5 million patacas. In addition, local associations registered with the government are also entitled to seek support from Macau Foundation, a body funded via a levy on casino gross gaming revenue. Mr Bi also told Business Daily on the sidelines of the press event that DICJ had sponsored a study six months ago by Macao Gaming Show into the local industry. The results of the study will be announced on the opening day of the show at The Venetian Macao.

Jay Chun, brains behind Macao Gaming Show

November 12, 2013

Macau

La Scala bribery trial to end early in 2014 Counsel for the two accused Hong Kong businessmen will call over a dozen witnesses Tony Lai

tony.lai@macaubusinessdaily.com

he trial of two Hong Kong tycoons accused of bribing Ao Man Long when he was a government secretary is set to end in January, seven months after it began. Counsel for the accused businessmen, Joseph Lau Luen Hung and Steven Lo Kit Sing, will call more than a dozen witnesses in the coming weeks, the Court of First Instance was told yesterday. Mr Lau, chairman of Hong Konglisted developer Chinese Estates Holdings Ltd, and Mr Lo are accused of bribing Mr Ao, secretary for transport and public works at the time, with HK$20 million (US$2.58 million) to ensure the success of their

bid in 2005 for land for La Scala, a high-end housing project. The courts have already convicted Mr Ao of corruption and sentenced him to 29 and a half years in prison. The presiding judge in the La Scala trial, Mário Silvestre, said he expected the court to be able to finish hearing the last witness by the end of this year. The judges expect closing statements from the prosecution and the defence in January. “Some time will be given to prepare closing statements after the last witness,” Judge Silvestre said. “And two weeks is enough to get ready.” He did not say when the court

would deliver its verdict. Counsel for Mr Lau will call six more witnesses in the coming weeks and counsel for Mr Lo will call nine more. The court was due to hear the testimony of Transportation Infrastructure Office deputy director and former Infrastructure Development Office official André Sales Ritchie yesterday. But at the last minute the defence decided to dispense with his testimony, without saying why. The trial was originally due to have begun in September last year, but Mr Lau was ill, so the original presiding judge postponed the start until June this year.

Steven Lo Kit Sing will call nine witnesses to testify in the coming weeks

Sands China M ‘seeks US$1.5 bln revolver’

acau casino developer Sands China Ltd is seeking a US$1.5 billion (11.98 billion patacas) six-year revolving credit facility for its Macau unit Venetian Macau Ltd, according to three people familiar with the matter reports Bloomberg News. The facility would be for “general corporate purposes” suggested the outlet. Sands China has approached lenders involved in an existing loan secured in 2011, and is aspiring to invite more than 10 banks as senior lenders for the new facility, the people said, asking not to be identified because details are private stated

the media service . Discussions on pricing have mentioned an “all-in rate of slightly under 200bps [basis points] over Libor [London Interbank Offered Rate],” added Bloomberg. Sands China expects to market the loan for general syndication in December after the senior lender group is formed, stated the Bloomberg report. Sands China told Business Daily in an e-mailed statement yesterday: “…we do not, as a matter of policy, comment whatsoever or in any way on financing matters”. M.G.

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Migrant workers keep population expanding People that mean to make Macau their home also add to the growth Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau’s population inched closer to 600,000 in the third quarter, swollen by the arrival of more migrant workers than ever before, official data show. The city had 598,200 inhabitants at the end of September, 6,300 more than three months earlier, according to a Statistics and Census Service estimate published yesterday. A spokeswoman for the Statistics and Census Service said the growth had been due mainly to “slightly more than 5,000” people coming here to work. Most were among the 9,628 migrant workers that employers hired in the third quarter of this year. Macau now has 130,822 migrant workers. The third-quarter hiring spree was the biggest since the Statistics and Census Service began collecting data on migrant labour in 2000. The spokeswoman said not all migrant workers lived in the city, many choosing to live instead across the border in Zhuhai, where accommodation is cheaper. She said the results of the 2011 census showed that about 20,000 migrant workers worked here but did not live here. More people came to Macau with a view to making it their home. The city had 911 immigrants from the mainland in the third quarter, 13.9 percent more than in the second. Most came from Guangdong. It had 388 immigrants from places other than the mainland, the most in any quarter for two years. So far this year immigration from the mainland has been slowing but immigration from elsewhere increasing. In the first nine months 2,391 mainlanders immigrated, 27.2 percent fewer than a year earlier, while 840 people from elsewhere gained provisional residency, three times as many as a year earlier. Macau residents have been having fewer babies this year than last year, when there was something of a baby boom because by tradition the lunar Year of the Dragon is supposed to an auspicious year to give birth. The number of babies born here in the third quarter was under 1,700, or 14.7 percent fewer than a year earlier.

November 12, 2013

Macau

Gaming drives public income to top forecast Spending rises faster as government pays more to civil servants Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau’s administration has received more money than it had forecast for the whole of 2013, even though there are still two months to be counted, official data show. Government income in the January-October period of 2013 was up by one-fifth from the same period last year to 125.9 billion patacas (US$15.8 billion), the Financial Services Bureau said yesterday. The authorities had planned for revenue of just 115.08 billion patacas in 2013 – a conservative estimate that would mean a steep downturn from last year. In contrast the government income is close to overtaking last year’s record high of 129.5 billion patacas, fuelled by intake from the gaming taxes. The revenue from the direct gaming tax was up by 16.8 percent in year-on-year terms to 103.04 billion patacas. Gaming tax revenues accounted for 81.8 percent of all revenue by the end of last month. The government pockets 35 percent of takings from gaming directly. It collects another four percent indirectly. The government is also taking in far more from sales of capital assets

than last year, including returns on financial investments and sales of public property. The government booked 3.96 billion patacas up to October 31, compared with just 56.2 million patacas in the same period last year. This class of revenue is about 41.7 percent higher than the government’s annual forecast for sales of capital assets. Government spending also rose faster last month, reaching 4.74 billion patacas. Most of that went into current spending, which includes the pay and benefits for civil servants. Current spending rose by nearly one-quarter in year-on-year terms to 37.4 billion patacas in the first 10 months. It is bound to increase even more with the government announcing it will give low-paid civil servants monthly allowances for a year. The government has nonetheless spent just 40.43 billion patacas in total, far less than the 74.63 billion patacas it had budgeted for the whole year. The authorities have so far spent 2.38 billion patacas on public investment projects, or 13.3 percent of the ambitious budget for the entire year.

Gaming tax accounted for 81.8 percent of all govt revenue

The administration said it would spend 17.91 billion patacas namely on works for the Hong Kong-ZhuhaiMacau Bridge and the Light Rapid Transit elevated railway. The construction of the railway depot and transportation hub in Taipa has been held up by delays after the

government and contractor fought publicly about budget overruns in August. With spending still timid, the government surplus continues to grow. It hit 85.47 billion patacas by the end of October, up by 27.9 percent year-on-year.

November 12, 2013 April 19, 2013

Macau

Cultural industries fund keeping an open mind The newly created fund has no preconceptions about its beneficiaries Stephanie Lai

sw.lai@macaubusinessdaily.com

he cultural and creative industries fund will not be picky about the sort of businesses it will help with the 200 million patacas (US$25 million) it contains. The fund may begin taking applications for money in the first quarter of next year. A member of the fund’s administrative committee, Banny Chao Son U, told Business Daily that no particular sort of business would have priority. “The cultural and creative industries are constantly changing,” Mr Chao said yesterday after the committee briefed reporters about the fund. “We may encounter businesses that are not direct offshoots of the key industries the government has named, although they may help the development of local cultural industries as a whole,” he said. The government said in 2010 that it would offer incentives to the design, publishing, film, fashion, music and animation industries. The fund’s rules say it should encourage the invention, production and marketing of “cultural and creative products” and encourage projects that promote “intellectual property registration”. The administrative committee chairman, Leong Heng Teng, said the supervisors of the fund and representatives of cultural and creative industries were discussing more detailed rules on when the fund should give money away and when it should lend it interest-free. The rules say that

The government has set up a MOP200 mln fund to help cultural, creative businesses

money should be lent rather than given for projects that could lead to mass production of cultural and creative products.

Safeguards The administrative committee said during yesterday’s briefing that the supervisors would closely watch how money from the fund was spent. “The supervisory board

and the fund trustees will both monitor the overall operation of the fund and whether its usage fits our policy aims,” Mr Chao said. “We also have bodies such as the Audit Commission and the Commission against Corruption as another layer of supervision to ensure the reasonable use of public money.” In considering disbursing money, the supervisors would take into account “the nature

of the project – whether it will play an active role in lifting the cultural sector’s competitiveness”, he said. “Whether the applicant is a small or big company is not the key point in the matter.” Mr Chao said projects financed by the fund would get no other money from the wwgovernment. He said the various organs of government would check with each other whether a project was receiving

government money. Mr Leong dismissed misgivings about several of the supervisors of the fund lacking ties to cultural and creative industries. He said the people in charge of the fund would be “in close contact” with the cultural and creative industries. The fund would offer beneficiaries the services of consultants and encourage them to take part in international trade fairs, he said.

Govt seek bidders to run art film centre Four associations and companies eye project near Ruins of St Paul Stephanie Lai

sw.lai@macaubusinessdaily.com

The film centre will be located at a three-storey building in Travessa da Paixão

he government is launching an open bid in May or June next year for associations or companies interested in running an art-house film centre to open near the Ruins of St Paul. The film centre, a three-storey building of Portuguese architecture located at Travessa da Paixão, will have a small 60-seat screening room, a film library and a film editing room. The building is being renovated and the works should be over by March next year, said Cultural Affairs Bureau director Guilherme Ung Vai Meng. The open bidding will then be launched and the winner will have six

months to carry out trial operations before an official opening by the end of next year, he told a press briefing yesterday. Business Daily has learned that at least four non-profit cultural associations and companies have expressed interest in running the centre. One of them is the Audio-Visual Cut Association. The association believes the project would be a valuable chance to promoting a film culture in the city. “The film centre fits our association’s founding aim for over a decade. The city has for a long time been lacking a proper venue [art house] for film screenings,” Ho Ka Cheng, the Audio-

Visual Cut Association’s supervisor, told Business Daily. The government “would like to build here a venue for more active screening activities or film festivals, which could serve as an important cultural and leisure spot in the city,” said Mr Ho. In the long-term the government would like to build a cultural and creative industries park in a new reclaimed zone, the advisory Cultural Industries Committee told yesterday’s briefing. The park will have studios for artists and a product display centre, “which could also serve as leisure space for residents and tourists,” said the committee’s secretary-general Wong Keng Chao.

November 12, 2013 April 19, 2013

Macau

Macau shines as Chinese grow cautious on luxury Jewellery sales trends improving in October, says maker of Cartier Vítor Quintã

vitorquinta@macaubusinessdaily.com

hinese consumers are becoming more cautious after years of splurging on luxury goods, said luxury goods group Compagnie Financière Richemont SA. The maker of Cartier jewellery and Piaget watches reported lower sales in mainland China in the six months to September, offset by growth in Macau and Hong Kong. “Asia Pacific was led by good growth in Hong Kong and Macau,” the Switzerland-based company said in a filing. Weaker demand in China is “largely reflecting a prudent consumer sentiment after several years of exceptional expansion,” Richemont said. Revenue in the Asia-Pacific region, the source of about 40 percent of Richemont’s sales last year, is rising more slowly as China cracks down on the use of watches and jewellery as bribes and illegitimate gifts. Growth in that market was 4 percent in the first half, excluding currency shifts. Asia-Pacific revenue rose 5 percent on that basis in the past fiscal year and 46 percent in the prior 12 months.

Watchmakers have been grappling with weaker demand from Chinese customers, the biggest buyers of luxury goods worldwide, but recently Swiss watch exports to Greater China have picked up in a sign retailers are restocking on watches. Richemont said sales trends in October had improved, but that was mainly due to some one-off sales of very expensive jewellery items in the Asia-Pacific region.

Turn around The group reported sales growth of 9 percent to 5.32 billion euros (56.8 billion patacas) in the six months to September, in line with forecasts, and a pick-up to 12 percent growth in October. Chief financial officer Gary Saage said orders from Chinese retailers were still subdued. Across regions, the muted environment called for “increased caution”, Richemont said. “The underlying trend overall in October is pretty much the same that we’ve seen in September although the mix is changing a bit. The watches

Switzerland-based Richemont owns high-end brands like Cartier and Piaget

and jewellery segment is getting a little better while fashion and accessories and Montblanc are not getting better,” Mr Saage said. Richemont decided not to sell underperforming businesses such as leather goods maker Lancel in part because it couldn’t get a good enough price, disappointing analysts’ hopes for a quick solution. Instead, the company said it hoped to turn around lagging businesses, which also include menswear brand

Dunhill and Montblanc writing instruments, within two to three years. Richemont’s core jewellery and watch businesses, which account for 80 percent of sales, generated higher operating results in the halfyear to September. The group plans to invest 800 million euros to 850 million euros this fiscal year and a net increase of 50 stores, some of which may be larger, Mr Saage said. With agencies

November 12, 2013 April 19, 2013

Greater China Swap deal with Beijing in 2013 unlikely: Taiwan Taiwan’s central bank said its deputy governor will visit China next month but it does not expect a currency swap agreement between the two central banks to be signed before the end of 2013. “We have been constantly negotiating with China’s central bank, but as the status of a swap is above an MOU [memorandum of understanding], its issues involved are also much more than an MOU,” central banker Fai-Nan Perng told the legislative council yesterday. Taiwan and China signed a clearing system for each other’s currencies in September, kicking off the last leg of an economic integration that has helped lift trade to more than US$160 billion annually.

Auto sales at fastest pace in 9 months Passenger-vehicle sales last month climbed the most since January, helped by a recovery in economic growth and rebound in demand for Japanese brands. Wholesale deliveries of cars, multipurpose and sport utility vehicles rose 24 percent to 1.61 million units in October, according to the state-backed China Association of Automobile Manufacturers yesterday. “The recovery of demand for Japanese-brand cars is spurring overall vehicle sales,” said Harry Chen, an analyst with Guotai Junan Securities Co in Shenzhen. “It’ll take the Japanese automakers more time to gain back market share.”

Gold vault opens in Shanghai A gold vault that can store 2,000 metric tons, double China’s projected consumption this year, opened in Shanghai this month as owner MalcaAmit Global Ltd seeks to benefit from rising demand in Asia’s largest economy. The facility is the biggest for the Hong Kong-based company, and it can also store diamonds, jewellery and art, Joshua Rotbart, precious metals general manager, said in an interview. The site could hold bullion worth about US$82.7 billion at yesterday’s price, Bloomberg calculations show. China’s total demand may reach 1,000 tons in 2013, the World Gold Council forecasts.

SOEs faced a major reform in the 1990s

Beijing to allow more private investment in state firms Move would give investors a bigger say in decision-making

hina will allow private investors to buy up to 15 percent stakes in state-own enterprises (SOEs), the official China Daily reported, as Beijing moves to leverage private funds to avoid having to bail out heavily indebted state owned firms. Chinese leaders are gathered in Beijing this week to establish the economic blueprint for the next 10 years and the State-owned Assets Supervision and Administration Commission (SASAC), which administers more than a hundred of China’s biggest state-owned companies, has said reform of SOEs as a major area of focus. The report quoted Bai Yingzi, director of SASAC’s enterprise reform division, saying that private investors could create private equity consortia to purchase direct stakes in SOEs between 10 percent and 15 percent of assets, without giving further details. Private investors are already allowed to purchase shares in major

state-owned enterprises listed on domestic stock exchanges, but state-owned entities usually retain a controlling interest. Private and state-owned firms can currently create joint ventures in which the private share is higher than 15 percent. The report cited a joint venture between privately held industrial conglomerate Fosun Group and state-owned China National Medicine Corp in 2003, in which Fosun owned 49 percent, but described it as a “rare exception”. In June the official Xinhua news service reported that public utilities would be opened up to private investment. Late last month, an influential think-tank, the State Council’s Development Research Centre, recommended ending state-owned monopolies in the rail, oil and gas, and electricity industries, as a key reform. Other high-level officials, including former premier Wen Jiabao, have

called for state-owned banks, key financial enablers of inefficient SOEs, to be subjected to more competition. Many economists and analysts remain sceptical that China will take more substantial steps to end SOEs’ privileged market monopolies during this week’s Communist Party plenum, due to a lack of consensus between conservatives and reformers. The last time SOEs faced a major reform and restructuring programme was in the 1990s, when most of them were loss-making bureaucratic dinosaurs. These days, SOEs are more profitable. A report by the official Xinhua news service published yesterday Ministry of Finance data showing rising revenues at SOEs in 2013, with profits up 10.5 percent in the first three quarters of the year. The better performance, however, in large part is thanks to SOEs’ ability to borrow cheaply and roll over debt indefinitely. Reuters

Yashili jumps as Temasek bets on dairy boom Stake sale helps Yashili meet Hong Kong free float rules

New yuan loans trail estimates China’s new local-currency loans and the government’s broadest measure of credit trailed estimates in October while money supply grew more than projected, data from the People’s Bank of China yesterday showed. New yuan loans were 506.1 billion yuan (US$83.1 billion), the Beijing-based central bank said on its website, above market consensus and up from 505.2 billion yuan a year earlier. Aggregate financing was 856.4 billion yuan, compared with the 1.115 trillion yuan median projection and 1.29 trillion yuan a year earlier. M2, China’s broadest measure of money supply, rose 14.3 percent from a year earlier, compared with a 14.2 percent rate in September.

group of investors led by Singapore’s Temasek Holdings Pte Ltd bought a US$213 million stake in Yashili International Holdings Ltd, sending shares of the milk powder producer soaring after its parent sold down stock to meet Hong Kong listing requirements. The deal took place as China Mengniu Dairy Co Ltd was forced to reduce its stake after it failed to buy enough shares of Yashili to force a delisting of the company. The Yashili stake sale adds to a slew of mergers, acquisitions and equity market deals in Greater China as companies look to raise funds for expansion to cope with booming demand for everything from raw milk and infant formula to yoghurt and other dairy products. “The government is trying to push

forward industry consolidation, that’s why we’re seeing more acquisitions in this area,” said Jacqueline Ko, an analyst at Kim Eng Securities in Hong Kong. “There are lots of positive actions from the government. In three to five years, we’re talking about twothirds of the companies involved in the industry will be gone, so that will benefit the bigger players.” Shares of dairy companies have jumped in anticipation of consolidation in the sector and stronger domestic demand in China, where sales of dairy products are expected to nearly double from 2012 to 2017 to about US$89 billion, according to estimates by business consulting firm Frost & Sullivan. Singapore state investor Temasek, through one of its Mauritius

subsidiaries, China-focused private equity firm Hopu and three individual investors agreed to buy 471.13 million shares of Yashili from its parent China Mengniu Dairy Co Ltd for HK$3.50 each, putting the total deal at HK$1.65 billion (US$213 million), the dairy companies said in a securities filing. Yashili gained 17.13 percent to HK$4.25 in Hong Kong trading, and hit a record high of HK$4.45 as it resumed trading after a nearly three-month halt. Temasek bought 47 percent of the Yashili shares, with Hopu taking 38 percent. The three individual investors bought the remaining 15 percent through British Virgin Islands holding companies, according to the filing, which did not name them. Reuters

November 12, 2013 April 19, 2013

Review of Major Policies of the MSAR Government in 2013 Development of four long-term mechanisms to enhance the well-being of society Social security

Education

Development of systems

Establishment of monitoring and periodic adjustment mechanism for the minimum subsistence index. The minimum subsistence index was adjusted upward to 3,450 patacas from January 2013 (up 7.81%, higher than the inflation rate of 6.11% in 2012); Establishment of a cross-departmental study group on the 10-year development plan for rehabilitation services; Establishment of a cross-departmental study group on Macao’s retirement protection mechanism; A public consultation on the non-mandatory central provident fund system will be conducted.

Allocation of resources

Implementation of a budget allocation of five billion patacas to the Social Security Fund, and increase in the proportion of contribution from gross gaming revenue to the Social Security Fund from 60% to 75%; Increase in various benefits paid through the Social Security System, including upward adjustment of the pension and the disability gratuity from 2,000 patacas to 3,000 patacas, while also raising other subsidies (unemployment, illness, marriage, births, etc) by 70%; A total of 43 social service facilities to commence operations from 2013 to 2015; As at Q3 of 2013, total expenditure on financial assistance was 280 million patacas, providing support to an average of 5,000 families per month, involving about 9,000 persons in total;

Short-term measures

Disbursement of an extra one-month full subsidy to families registered with the Social Welfare Bureau to receive financial assistance; Disbursement of special subsidies and special living allowances to the three categories of disadvantaged families, and inclusion of autism, dementia and epilepsy under the subsidy umbrella;

Housing

Implementation of the blueprint for the ten-year plan for non-tertiary education (2011-2020); Amendment to the law on the Criteria for Private Schools; Amendment to the bill on the Compulsory Education System; Pilot implementation of the Formal Education Curriculum Framework; Implementation of the Framework for Private School Teaching Staff; Amendment to the law on Tertiary Education; The talent database has completed the report on the assessment of talent requirements in the next five to ten years in the sectors of healthcare services; kindergarten, primary and secondary teaching; social work; hotel operation; convention and exhibition services; and information technology; Formulation of the Long-term Youth Policy for Macao (2012-2020).

Following the establishment of the Medical Affairs Committee, and discussion of the Medical Officer Registration System, discussion of the law to regulate house officer training is now in progress; Submission to the Legislative Assembly of the bill on Legal System for Resolving Disputes in Medical Incidents, for its consideration; Enforcement of the Prevention and Control of Smoking Law; Establishment of geriatrics and specialist outpatient departments (memory clinics) as well as a crossdepartmental geriatric working group; Implementation of the first development stage of an electronic medical records system for Macao residents;

Deliberation and passing of the Land Law, the Urban Planning Law and the Cultural Heritage Protection Law by the Legislative Assembly; The Legal System of Commitment to Title Transfer of Buildings Under Construction, the Real Estate Agency Law and the Stipulations of the Real Estate Agency Law have already entered into force; Expedited processing of granted land that is not yet being used; Commencement of research on urbanisation planning in northern Taipa; Conduct of studies on the “Macao Property for Macao Residents” policy, with consultations soon to be launched.

Increase in free education subsidies; Increase in textbook allowances for non-tertiary education; Increase in school fee subsidies, meal allowances and stationery allowances, and subsidies for optimisation of class-teacher ratios and teacher-student ratios; Increase in disbursement of various scholarships and loans for tertiary education; Increase in seats and subsidy amount for the programme to attract outstanding students to enrol in professional teacher training; Participation in the Programme for International Student Assessment (PISA); Increase in stationery allowances for tertiary students; Increase in number and value of scholarships for postgraduate students; Completion of the New Hengqin Campus of the University of Macau and commencement of operations; Commencement of the pilot programme of training of young volunteers.

Gradual commencement of operations of the Emergency Care Building of the Conde S. Januario Hospital, which provides almost 100 beds and offers 24-hour emergency outpatient services; Commencement of operations of the Seac Pai Van Temporary Health Services Station in Coloane; Initiation of the layout planning stage of development of the Islands Medical Services Complex, and the construction of the Coloane Peak Infectious Disease Rehabilitation Centre is underway; Approval for a total of 1,031 patients with financial difficulties to receive medical subsidies, as at Q3 of 2013; Under enhanced cooperation with non-profit medical services institutions, the offer of a total of 370,000 quotas for general outpatient, medical examination and specialist inpatient services.

Launch of the new round of applications for public housing, with applications for multi-unit HomeOwnership Scheme housing due to commence by the end of 2013; Completion, in August, of the process of allocation of the 19,000 public housing units to families on the waiting list; The four “post-19,000 units” public housing projects are expected to provide about 3,900 public housing units; Commencement of applications for the 1,544 one-bedroom Home-Ownership Scheme housing units offered at Ip Heng Building; Approval, as at Q3 of 2013, of a total of 2,418 applications for subsidies under the Building Maintenance Fund Scheme, involving a total of 264 million patacas for repairs and maintenance of more than 2,000 buildings.

Disbursement of a one-off grant to honour teachers, made to about 1,000 eligible recipients and involving a total of 60 million patacas; As at the end of Q3 of 2013, approximately 127,000 residents had participated in the Continuing Education Programme, involving a total subsidy of 430 million patacas.

Offering of 600-pataca healthcare vouchers; Launch of the Provisional Supporting Plan for Mothers and Babies, serving almost 4,000 participants, as at Q3 of 2013.

Rent waivers for public housing tenants for the whole year; Disbursement of temporary housing subsidies to eligible families on the public housing waiting list; Waiver of the first 3,500 patacas of real estate tax; Waiver of real estate stamp duty on the first three million patacas of a home’s value, for Macao permanent residents purchasing a residential property for the first time.

AD- LAG

Regular subsidies to non-government organisations for continuous development in services have been increased by 10% during the year.

Medical and health

Substantial increase in rent subsidies from 300-800 patacas to 1,350-2,050 patacas; Continuous implementation of the Community Employment Assistance Scheme and the Positive Life Programme; Extension of each implementation period of the Short-term Food Assistance Programme to eight weeks; Increase in the Old-age Allowance to 6,600 patacas; Increase in disability gratuity to 6,600 patacas and 13,200 patacas.

Supports for SMEs

Public administration Completion of the fifth Legislative Assembly Election in accordance with the amended Legislative Assembly Election Law of the Macao Special Administrative Region; Completion of the rectification and adaptation of laws previously in force in Macao; Commencement of performance assessment for department heads and compilation of the report on the implementation of government policies; Commencement of rationalisation of the functions of the Civic and Municipal Affairs Bureau.

Food safety The Food Safety Law has entered into force, and the Food Safety Centre has officially commenced operations.

Public order Prevention and combatting of drug-related crime, establishment of a liaison mechanism between the community and the police, enhancement of convenient immigration services and strengthening of crime prevention promotion.

The tenth anniversary of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries Bolstering of Macao’s function as a platform for commercial and trade services between China and Portuguese-speaking and Romance language-speaking countries.

Community facilities for the public housing estates in Seac Pai Van Community facilities

Shops

Library

Integrated services centre for the elderly Community activity centre Family and community integrated services centre Vocational training centre Social work centre

Home for children and youth Hostel for the disabled Medication centre Post office

Under renovation

Nurseries / kindergartens and primary schools

Under tender procedures

Health centre

In operation

Wet market

Bank Three restaurants Shopping centre Bakery Convenient store Hardware shop Super-market Restaurant Other foods and drinks store Convenient store Pharmacy Medical clinic Four retail businesses One restaurant

Transport

Environmental protection measures

Bus interchange

Use of natural gas

Bus routes

Use of recycled water

25 26

26A 50 N3 Express services (25F, 22F) Serving between Seac Pai Van Bus Terminal and Border Gate Terminal and the Ferreira do Amaral Roundabout Five public car parks Four pedestrian footbridges

Installation of LED street lights Collection of recyclable waste Greening of podium gardens Natural ventilation Natural lighting

The Macao Business Support Centre, the SME Service Centre and Macao Ideas are established to provide SME support services; Establishment of a support scheme for young entrepreneurs to provide loans of up to 300,000 patacas with a maximum repayment term of eight years; Establishment of a cultural industry fund, with an injection of 200 million patacas, to foster local cultural and creative industries and talent in the form of subsidies and awards.

Measures to support SMEs in effect as at Q3 of 2013 Programme

Approval (cases)

Macao Industrial and Commercial Development Fund SME Assistance Programme SME Credit Assurance Scheme SME Special Credit Assurance Programme

Amount (patacas) About 36.91 million patacas

529 64 4

About 192 million patacas Credit assurance of about 121 million patacas Credit assurance of about 3.9 million patacas About 222 million patacas in the form of subsidies, Interest Subsidy Scheme on Bank Loans to 69 with a total interest subsidy amounting to about 17.86 Enterprises million patacas Conventions and Exhibitions Incentive Scheme 54 About 45.73 million patacas Assistance to SMEs with market development, organisation of participation in 33 overseas exhibitions involving 283 exhibitors, arrangement of 4,630 business matching sessions, and successful facilitation of contract signings for 115 projects involving a total of seven billion patacas.

Livelihood and employment Completion of consultations on the population policy framework; Proactive and proper handling of the takeover and transition of the operations of Reolian Public Transport Company Limited, to ensure stable provision of public bus services; Protection of local residents’ employment rights and interests, enhancement of regulation on hiring non-resident workers, encouragement of businesses to prioritise the promotion of local employees, and support for upward mobility of local employees.

Environmental protection As at 31 August, the Environmental Protection and Energy Conservation Fund has granted approval to 1,743 applications involving a total subsidy of about 150 million patacas. Further extension of eligibility for subsidies to local schools, in response to community demands; Formulation of subsidy scheme to replace highly polluting vehicles in phases; Support for bus operators to introduce environmentally friendly LNG buses and conduct pilot tests on electric public buses; Completion of the recycled water pipline network project in the Seac Pai Van new community district and the area within the New Hengqin Campus of the University of Macau.

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November 12, 2013 April 19, 2013

Greater China

Hong Kong had 86,000 luxury homes at the end of 2012

HK luxury flat prices choked by tightening

Prices of mass-market homes rose 20 percent in 2012, almost double that of luxury homes, according to Savills. Prices of luxury homes began to decline after the government in October 2012 slapped a 15 percent tax on all non-resident buyers as it sought to stem the inflow of Chinese capital into the property market.

Prices of high-end homes expected to fall in the fourth quarter Kelvin Wong

ong Kong businessman Raymond Chiu says he has perfect credit and is prepared to spend about HK$16 million (US$2 million) on a 1,000-square-foot apartment in the city’s Mid-Levels residential area. There’s just one catch. The government requires a 50 percent down payment. That’s “really putting us off,” said Mr Chiu, 45, who owns an information technology consulting company. “I run a business so cash flow is important. It’s frustrating because this is non- negotiable, though I have perfect credit history.” Prices of high-end apartments, defined as those larger than 1,000 square feet or costing at least HK$10 million, have gained less than the broader market since the second half of 2012 as buyers in Mr Chiu’s price bracket have been hardest hit after the government raised minimum down payments six times over less than three years as part of curbs to make homes more affordable. The slowing price growth in highend apartments is the first sign that efforts to temper rampant speculation that has fuelled a surging housing market are working even as it stings luxury developers and potential homebuyers. Broker Cushman & Wakefield Inc forecasts that prices of homes valued at more than HK$10 million will fall about 3 percent in the fourth quarter,

THERE ARE THINGS WE DON’T DO

Frozen transactions

extending a 3 percent drop so far this year, while those selling for less will be little changed. “The luxury segment has taken the first and the most direct hit,” said Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong’s biggest realtor by branch numbers. “The measures were aimed at driving the speculators away and they have certainly achieved that, but many people wanting to buy for their own use are also affected.”

The luxury segment has taken the first and the most direct hit Buggle Lau, chief analyst at Midland Holdings

World’s highest An influx of wealthy buyers from mainland China, mortgage rates close to record lows and a financial-services sector that has thrived thanks to fundraising by Chinese companies helped fuel a 250 percent increase in luxury-home prices from 2003 to the beginning of 2012, outpacing the 150 percent gain in mass-market homes, according to statistics compiled by Savills Plc. The London-based broker defines luxury homes as those with at least 1,000 square feet (93 square metres) or value of at least HK$15 million. Hong Kong home prices are the world’s highest in a Savills survey of 10 cities, including London, New York and Tokyo. The value of luxury properties will drop as much as 5 percent in the second half after a 3.2 percent

decline in the first three months of the year, according to Savills. Prices in the mass market will see no change after increasing 1.7 percent in the first six months, the broker said. There were about 86,000 luxury homes – or units of at least 100 square metres (1,076 square feet) – in Hong Kong at the end of 2012, according to statistics from the government. That represents about 7.7 percent of private homes in the city. About 24 percent of the 10,149 new homes completed by developers in 2012 were larger than 100 square metres, government statistics show. The gap between the top end of the market and the cheaper bracket narrowed last year as the government’s mortgage tightening started to impact the luxury segment.

BUT WE DO•••

In February, the government doubled stamp-duty taxes for all properties over HK$2 million, with new tax rates ranging from 1.5 percent for properties valued below HK$2 million, to 8.5 percent for those priced above HK$21.7 million. “The extra stamp duties and mortgage rules are like progressive taxes,” said Vincent Cheung, Hong Kong-based national director of valuation at Cushman & Wakefield. “The higher the property value, the higher the tax rates and the tighter the mortgage rules. Of course this would impact luxury properties the most.” Hong Kong’s government won’t cut back property curbs until there’s a “steady supply” of new housing, Chief Executive Leung Chun Ying said in June. There were 607 sales of homes worth over HK$12 million in the third quarter, according to statistics compiled by Centaline Property Agency Ltd. The number is the lowest since the first quarter of 2009, according to the Hong Kong-based realtor. “The curbs have frozen transactions,” said Thomas Lam, Hong Kong-based research director at broker Knight Frank LLP. “The drop in prices we’re seeing is actually taken from a very small sample. I’d be very cautious about calling this a down market for now.” The average mortgage rate in Hong Kong was about 2.17 percent in September, compared with about 3 percent at the end of 2008, according to mReferral Mortgage Services. Bloomberg News

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November 12, 2013 April 19, 2013

Asia

Japanese firms team up for possible Tokyo casino Companies aim to develop integrated resort as part of a special economic zone Junko Fujita and Nathan Layne

apan’s biggest property developer Mitsui Fudosan Co Ltd has joined forces with media firm Fuji Media Holdings Inc and builder Kajima Corp to develop a proposed casino and resort complex in Tokyo. After more than a decade of lobbying by lawmakers, a bill to legalise casino gambling is seen as having a decent chance of passing next year with the business-friendly Liberal Democratic Party in power and after Tokyo won the bid to host the Summer Olympics in 2020. The three firms want to build a complex in Odaiba, near Tokyo Bay, that would include a hotel, conference centre and a casino, Mitsui Fudosan said at an earnings briefing last week. That plan hinges on the passage of the law and Tokyo being chosen to host a casino. Japan’s biggest city is seen as a prime location for an integrated resort, but it is likely to face competition from more than a dozen other locations across the country. “Our role in this project would

be to get involved and make a contribution to help Tokyo become a more attractive city,” said Masatoshi Satou, Mitsui Fudosan’s executive

Developers seek prime location for casino resort

Hanjin Shipping CEO quits as losses raise concerns H

anjin Shipping Co Ltd’s chief executive Kim Young-min resigned, taking responsibility for two successive years of losses at South Korea’s largest shipper and a delay in getting financial support from creditors. Mr Kim, 58, will stay until a replacement is found, the Seoulbased company said in an e-mailed statement yesterday. Mr Kim was appointed as CEO in January 2009 after 20 years with Citigroup Inc, and his term was to end in March 2015. Shares of the container-tocommodity mover, which last month received a loan from affiliate Korean Air Lines Co to ease a “temporary” liquidity shortage, fell for a fifth straight day in Seoul. Laden with debt, Hanjin is among liners battling a global overcapacity and slump in cargo rates caused by China’s weak iron-ore demand, factors that pushed STX Pan Ocean Co to file for a court receivership in June. “There’s no good news for Hanjin right now,” said Yun Hee-do, an analyst at Korea Investment & Securities Co in Seoul. “The company

managing officer. “But it is totally up to what happens to the bill and the direction of the government.” Mitsui Fudosan, Fuji Media and

hasn’t been able to make money recently and its interest payment has been increasing. There’s quite a sizable amount of debt coming due next year for Hanjin.” Korean Air said last month it will provide 150 billion won (US$141 million) to Hanjin to help ease the company’s liquidity shortage. The shipping line has 736.4 billion won of debt and loans maturing next year, compared with 58 billion won in 2013, according to data compiled by Bloomberg. Its cash and cash equivalent was 506.6 billion won at the end of June. Hanjin Shipping is considering selling new shares, loans and perpetual bonds to raise funds to repay its debt and improve finances, Korea Economic Daily said on October 31, citing unidentified company officials. Korea Development Bank and other lenders may provide short- term loans to the shipping company, Maeil Business Newspaper said yesterday, citing financial industry officials it didn’t name. Hanjin posted a loss in each of the past 10 quarters. Bloomberg News

Kajima all declined to give further details on the project beyond saying that they had submitted a proposal to the government to develop a casino resort as part of a special economic zone. Japan is widely viewed as one of the last great untapped markets due to its wealthy population and proximity to China. Union Gaming Research has predicted Japanese gaming revenues could top US$15 billion a year, making it the second-largest market in the world after Macau. International casino operators like MGM Resorts International, Las Vegas Sands Corp, Melco Crown Entertainment Ltd and Wynn Resorts Ltd have also shown interest in developing casino resorts in Japan. A group of more than 100 lawmakers, many from the LDP, will meet today to finalise plans for an initial bill which they plan to submit during the current parliament session that ends next month. If the legislation passes next year, as the lawmakers hope, the government would have to come up with concrete regulations within a year. That could mean the first casino would open in Japan in time for the 2020 Olympics. Property developer Mori Building Co Ltd, which controls land in the Odaiba area, has also been working on plans to develop a casino resort with other companies, people with knowledge of the matter said. A Mori Building spokesman said the company supports the move to legalise casinos and declined to comment further. Reuters

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November 12, 2013 April 19, 2013

Asia

Philippines confident on growth as rescuers battle to reach victims Typhoon deaths show task to halt country’s tragedy

estruction from super typhoon Haiyan, the most powerful storm on record to strike the Philippines, shows the task facing President Benigno Aquino to curb the death toll in a country prone to natural disasters. The Philippine economy is the most at risk globally from natural hazards, according to Maplecroft, a risk research company based in Bath, England. The Asian Development Bank estimates losses from typhoons to earthquakes average US$1.6 billion annually, the most in Southeast Asia. The country’s capital, Manila, tops the list of 616 cities ranked by the impact of natural perils to the economy, according to Swiss Re Ltd, the world’s second-largest reinsurer. Even with this handicap, Mr Aquino’s administration has overseen an economic revival that has allowed the government to increase spending on roads, airports and flood prevention to try to mitigate the effect of the catastrophes. Philippine stocks retreated yesterday, with the benchmark index heading for its biggest drop in six weeks, amid concern the devastation from Haiyan will weigh on economic growth. The peso declined to a five-week low. Growth has exceeded 7 percent for four straight quarters and this year the country won investment-grade scores from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s. “Disaster preparedness should be a clear priority because it can have huge economic costs and affect the poorest in the society,” said Prakriti Sofat, a Singapore-based economist for Barclays Plc. “President Aquino has the second half of his term to focus on improving disaster management further and, if implemented, the benefits will be long-lasting.” Philippine economic growth could

KEY POINTS Up to 10,000 people are believed to have died Economic impact may reach US$14 bln – analyst Philippine stocks drop with peso Exceeding annual growth target ‘still doable’ – official

still exceed this year’s 6 percent to 7 percent goal despite damage from super typhoon Haiyan, a senior government official said yesterday. “Exceeding the upper limit [of the growth target] is still doable,” economic planning chief Arsenio Balisacan told Reuters. Mr Balisacan said the government was still assessing the impact of the typhoon on the economy, particularly on the production sector and therefore he wasn’t able to give a damage estimate at the moment. Annual growth in the first half of the year was 7.6 percent, and Mr Balisacan said earlier growth in the third quarter will likely reach more than 7 percent on strong spending and an increase in investments. Haiyan may have killed 10,000 people, according to Philippine authorities cited by the Red Cross in Geneva. Almost 9.7 million Filipinos, or about a 10th of the population, were affected by the storm, the

National Disaster Risk Reduction and Management Council said. Many areas were still out of contact, said Major Rey Balido, the council’s spokesman. “The numbers are really alarming, but still subject to verification,” Mr Aquino told reporters late on Sunday in Tacloban City, scene of some of the worst devastation, after flying over the affected region in a helicopter. “Areas made of light materials are totally destroyed. The priority now has to be food, restoration of water, and power and communications.” Haiyan’s total economic impact may reach US$14 billion, about US$2 billion of which will be insured, according to a report by Jonathan Adams, a senior analyst at Bloomberg Industries, citing Kinetic Analysis Corp. Mr Aquino plans to more than double state spending on public works to 824 billion pesos (US$19 billion) by 2016, or about 5 percent of gross domestic product, a ratio the World Bank says is needed to cut poverty and strengthen the economy. The Philippines plans to spend about 16 billion pesos on flood control and drainage projects this year, out of a record 295 billion-peso infrastructure budget. Another 644 million pesos are allocated for equipment to forecast or monitor storms, volcanic eruptions and quakes, and 7.5 billion pesos for a calamity fund. “What is lacking is a long-term disaster management plan that not only focuses on response but more importantly prevention,” said Benito Lim, a political science professor at Ateneo de Manila University who advised the governments of Ferdinand Marcos and Mr Aquino’s mother, Corazon. “What we need are permanent solutions like resettlement plans for flood-prone areas, more infrastructures like dams and waterways.” Bloomberg News/Reuters

Japan’s current account balance jumps 14.3 pct Japan’s current account surplus unexpectedly expanded in September to the widest since April as a weaker yen boosted the value of overseas investment income. The surplus rose 14.3 percent from a year earlier to 587 billion yen (US$5.9 billion). The income surplus gained 24.6 percent to a record for September, lifted by higher interest receipts and dividends from foreign investments. The bigger surplus in Japan’s widest measure of trade offers support to a recovery that Prime Minster Shinzo Abe jump-started with fiscal and monetary stimulus.

Sri Lanka keeps policy rates steady Sri Lanka’s central bank kept key policy interest rates steady at a multiyear low yesterday as expected after it slashed them by 50 basis points last month in a surprise move to stimulate the economy. The current monetary policy stance is appropriate, the central bank said in a statement. The repurchase rate and reverse repurchase rate were left at 6.50 percent and 8.50 percent, respectively. It also said the country had recorded a balance-of-payments surplus of US$749 million by end-October, broadly in line with the year-end target of US$700 million.

Panasonic ready to spend US$1 bln Panasonic Corp said it can afford a deal worth 100 billion yen (US$1 billion) as the maker of electric-car batteries and solar panels looks to expand its automotive and housing businesses. Acquisitions could include adding a company that can advance its auto technology or an overseas marketing channel for its home-related unit, chief financial officer Hideaki Kawai said. The company last month announced a US$460 million deal for a 90 percent stake in an Istanbul-based wiring device maker. Panasonic is heading toward its first annual profit in three years.

S.Korea brokerages allowed FX dealing South Korea will allow foreignexchange dealing between securities companies from next year as part of efforts to broaden the local currency market dominated by a small number of banks, the finance ministry said yesterday. Stock brokerage houses presently have to carry out foreign exchange dealing with banks, but the ministry plans to allow brokerage firms to directly deal with other brokerages, the ministry said in a statement.

Hundreds of thousands of people are displaced

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, José Carlos Matias, 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.

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November 12, 2013 April 19, 2013

Asia

Selling a stake in Coal India could fetch about US$1.5 billion

India targets US$2.3 bln asset sales by year-end Government targeted US$6.4 billion asset sales in the fiscal year ending March 2014 Prashant Mehra

ndia has revived plans to sell stakes in two stateowned companies to raise about US$2.3 billion to boost

public finances, aiming to push through a sale by midDecember to take advantage of a share market rally.

Two sources with direct knowledge of the matter said investor roadshows will be launched in the United

States today for a 10 percent stake in state refiner Indian Oil Corp (IOC). The government’s Department of Disinvestment (DoD), which oversees stake sales in state companies, has also completed most of the overseas roadshows to sell a 5 percent stake in state miner Coal India Ltd, which could fetch about US$1.5 billion, the sources told Reuters. The department hopes to launch the stake sales in the two state companies before December 15, they said, after which overseas investors typically start to wind down for Christmas and New Year holidays. “We would like to launch both before mid-December, but not sure if we will be able to do that,” one of the sources said. The government’s planned sale of stakes in Indian Oil and other state companies including Coal India is critical to relieving pressure on public finances that could put the country’s investment-grade credit rating at risk. India has targeted raising US$6.4 billion from selling stakes in state companies in the fiscal year ending March 2014, but has so far managed only US$233 million, as ministries squabbled over the timing of the issues and the rupee fell against the dollar. IOC’s share sale had been set for October, but planned roadshows were cancelled

after the oil ministry pulled out, citing the weak share price and uncertainty over a new fuel-subsidy formula. The Coal India stake sale has been halved from 10 percent to 5 percent after union opposition. “IOC roadshows are starting from the 12th [of November], even though it is a difficult issue to market because of the sector problems,” the source said, referring to losses that state oil retailers incur because of selling diesel, kerosene and cooking gas at statecapped rates. DoD officials, as well as officials at Indian Oil and Coal India could not be reached for comment. The divestment department is keen to push through the stake sales to take advantage of a share market rally that sent India’s benchmark stock index to a record high this month on the back of strong foreign inflows. The index is up 6.4 percent this year. The Indian Oil investor roadshows will be held in New York and Boston. The Indian cabinet cleared the sale in August. At current market prices, the 10 percent stake sale in Indian Oil could fetch New Delhi around US$800 million. The government owns nearly 79 percent in Indian Oil, and 90 percent in Coal India. Reuters

14 14

November 12, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 58.40

88.4

26.8

58.25

88.2

26.7

58.10

88.0

57.95

87.8

26.6 26.5

Max 58.25

average 57.989

Max 55.2

Min 57.8

average 54.614

Last 58.15

Min 54.2

Last 55.1

57.80

Max 88.4

average 87.85

PRICE

Min 26.3

Last 26.75

26.3

54.95

25.3

29.25

54.70

25.1

29.00

54.45

24.9

28.75

54.20

Max 25.4

average 25.118

DAY %

YTD %

(H) 52W

Min 24.75

Last 25.4

(L) 52W

0.08492569

0.974617115

109.6999969

85.51999664

BRENT CRUDE FUTR Dec13

103.42

-0.038662285

-1.326209331

114.4399948

95.95999908

GASOLINE RBOB FUT Dec13

250.62

0.12384643

-1.501336268

290.3199911

241.5999889

GAS OIL FUT (ICE) Dec13

885.25

-0.056449337

-1.802551303

973

837

3.539

0.568343279

-10.35967579

4.744000435

3.378999949

283.91

-0.003522119

-4.852709541

321.1599827

276.4999866

Gold Spot $/Oz

1311.67

-0.2851

-21.1955

1754.46

1180.57

Silver Spot $/Oz

NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13

21.7235

-0.2342

-27.8529

34.3838

18.2208

Platinum Spot $/Oz

1458.6

-0.5217

-3.8972

1742.8

1294.18

Palladium Spot $/Oz

761.5

0.3254

8.8386

786.5

604

LME ALUMINUM 3MO ($)

1821

-0.054884742

-12.15629522

2184

1758

7145

0.421644413

-9.910477872

8346

6602

1900.5

-0.653423941

-8.629807692

2230

1811.75

LME COPPER 3MO ($) 3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14

14000

-0.779588944

-17.93669402

18770

13205

15.495

-0.064495324

0.518975024

16.80999947

14.91500092

420.25

-0.059453032

-29.92913714

647

419

WHEAT FUTURE(CBT) Dec13

653.25

0.038284839

-20.40816327

913

635.5

SOYBEAN FUTURE Jan14

Dec13

1264.25

-0.177654955

-3.418640183

1406

1169

COFFEE 'C' FUTURE Dec13

103.8

-0.144300144

-33.65292426

172.0999908

100.9499969

SUGAR #11 (WORLD) Mar14

18.08

0.22172949

-12.14771623

20.71999931

16.69999886

COTTON NO.2 FUTR Dec13

76.42

-0.442926061

-2.946405893

93.72000122

74.34999847

World Stock Markets - Indices NAME

average 26.466

29.50

94.28

CORN FUTURE

Max 26.8

25.5

WTI CRUDE FUTURE Dec13

LME ZINC

87.6

24.7

Max 29.5

average 29.008

Min 28.55

Last 29.3

28.50

Currency Exchange Rates

NAME

METALS

Last 87.8

55.20

Commodities ENERGY

Min 87.65

26.4

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9462 1.6087 0.9165 1.3418 98.21 7.9841 7.7516 6.0908 62.655 31.402 1.2434 29.462 43.193 11413 92.929 1.22975 0.83405 8.1707 10.7127 131.78 1.03

-0.3161 0.0684 -0.3601 -0.6442 0.5091 0 0 0.0115 -0.3831 -0.2452 -0.0643 -0.1358 0.0509 -0.1752 0.8264 0.2862 0.7314 0.8065 0.6562 1.161 0

-8.8264 -0.5502 -0.12 1.7286 -12.3307 -0.0113 -0.0129 2.2953 -12.2257 -2.6177 -1.7693 -1.4561 -5.0656 -14.1943 -3.8761 -1.8109 -2.2337 0.5728 -1.7017 -13.8185 -0.0097

1.0599 1.6381 0.9839 1.3832 103.74 8.0111 7.7664 6.2566 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 11.0434 135.51 1.032

0.8848 1.4814 0.8891 1.2662 79.08 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 81.971 1.20302 0.79607 7.8281 10.1113 100.33 1.0289

Macau Related Stocks NAME ARISTOCRAT LEISU

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.8

-3.225806

52.38095

5.12

2.56

5119668

16.67

-1.767826

56.23243

17.38

9.77

1690257

AMAX HOLDINGS LT

1.15

0.877193

-17.85714

1.72

0.75

1175750

BOC HONG KONG HO

24.65

2.282156

22.85

6196030 1342000

CROWN RESORTS LT

CENTURY LEGEND

0.43

-4.444444

62.26416

0.56

0.24

CHEUK NANG HLDGS

7.17

-0.6925208

19.6995

7.28

4.1

58091

CHINA OVERSEAS

-0.862069

-0.4329021

25.6

17.7

13809852

CHINESE ESTATES

21.35

1.184834

89.8529

22.25

9.543

17500

CHOW TAI FOOK JE

12.28

-2.073365

-1.28617

13.4

7.44

5488906

EMPEROR ENTERTAI

4.14

0.9756098

119.0476

4.66

1.48

1835000

3.2

-1.538462

164.0207

3.41

1.103

1314000

57.7

0.5226481

90.11532

63.75

6226717

HANG SENG BK

126.1

0.3980892

6.234207

132.8

110.6

1026908

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15593.98

-0.970986

19.00041

15797.67969

12471.49

NASDAQ COMPOSITE INDEX

3857.333

-1.89761

27.74683

3966.71

2810.8

FTSE 100 INDEX

6668.25

-0.4325675

13.06315

6875.62

5605.589844

DAX INDEX

9019.32

-0.6795485

18.48211

9193.980469

6950.53

HOPEWELL HLDGS

25.95

0.9727626

-21.95489

35.3

23.2

1065934

NIKKEI 225

14086.8

-0.995471

35.51281

15942.6

8619.45

HSBC HLDGS PLC

85.4

-0.5241701

5.043046

90.7

73.55

6976862

HANG SENG INDEX

22744.39

-0.5971759

0.3860662

23944.74

19426.35938

HUTCHISON TELE H

3.39

-0.2941176

-4.775279

4.66

3.12

3046000

CSI 300 INDEX

2307.945

-1.393133

-8.522035

2791.303

2023.171

LUK FOOK HLDGS I

27.3

11.88525

30.05

16.88

1591003

MELCO INTL DEVEL

24.25

-2.414487

169.1454

25.75

7.46

6229700

TAIWAN TAIEX INDEX

8229.59

-0.6533305

6.884731

8476.63

7061.87

MGM CHINA HOLDIN

26.4

-2.402957

98.82094

12.236

3521163

KOSPI INDEX

1984.87

-0.9565677

-0.6099023

2063.28

1770.53

MIDLAND HOLDINGS

3.19

-0.3125

-13.78378

4.29

2.68

658000

NEPTUNE GROUP

0.32

110.5263

0.4

0.131

53490000

NEW WORLD DEV

10.6

-0.7490637

-11.81365

15.12

9.98

13231515

SANDS CHINA LTD

54.35

-0.3666361

60.08836

60.5

29.35

8297260

FUTURE BRIGHT GALAXY ENTERTAIN

5400.665

-0.3941508

16.16956

5457.3

4334.3

4475.451

-0.2375778

3.677917

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1806.39

-0.0121775

6.953437

1826.22

1590.67

SHUN HO RESOURCE

1.55

-4.320988

10.71429

1.92

1.19

10000

NZX ALL INDEX

1042.651

0.5462947

18.2073

1048.998

853.452

SHUN TAK HOLDING

4.44

-1.113586

5.966586

4.8

3.12

2281259

PHILIPPINES ALL SHARE IX

3876.9

-1.048752

4.809973

4571.4

3440.12

SJM HOLDINGS LTD

25.7

0.1949318

44.80784

16.762

5527982

SMARTONE TELECOM

9.95

-0.5

-29.33239

9.93

1798600

WYNN MACAU LTD

28.85

-2.037351

37.70883

32.6

3752937

ASIA ENTERTAINME

3.96

N/A

69409

69.76

-4.294142

56.02774

78.03

43.16

808399 10350

S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX

Euromoney Dragon 300 Index Sin

622.76

-0.41

0.27

STOCK EXCH OF THAI INDEX

1399.32

-1.817952

0.5309098

1649.77

1260.08

HO CHI MINH STOCK INDEX

498.61

-0.25007

20.51579

533.15

374.15

BALLY TECHNOLOGI

Laos Composite Index

1305.31

7.453266

1455.82

1123.21

BOC HONG KONG HO

3.3

0.9174312

7.491859

3.6

2.99

GALAXY ENTERTAIN

7.4

-1.069519

86.39798

8.11

3.468

600

17.18

-12.39164

21.24206

21.2

12.37

19066005

JONES LANG LASAL

93.6

-0.02136296

11.50822

101.46

72.56

364783

LAS VEGAS SANDS

68.46

-2.934921

48.31023

73.49

37.8353

6175166

MELCO CROWN-ADR

33.23

-5.084262

97.32779

13.43

5208583

MGM CHINA HOLDIN

3.4

-3.68272

94.25337

3.88

1.703

1500

MGM RESORTS INTE

18.58

-2.722513

59.62199

20.98

9.15

9143388

SHFL ENTERTAINME

23.15

-0.1724881

59.65517

23.25

12.35

752637

SJM HOLDINGS LTD

3.35

47.08362

3.6

2.1396

2117

159.51

-2.962648

41.79927

173.38

103.34

2623948

INTL GAME TECH

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

38.1

-0.78125

22032334

NAME CHINA UNICOM HON

ALUMINUM CORP-H

2.76

-3.157895

20683013

CITIC PACIFIC

BANK OF CHINA-H

3.54

-0.2816901

209385244

BANK OF COMMUN-H

5.45

-0.3656307

23422095

BANK EAST ASIA

33.75

1.351351

2488182

BELLE INTERNATIO

10.02

-1.571709

52775000

CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

BOC HONG KONG HO

24.65

6196030

HANG LUNG PROPER

CATHAY PAC AIR

14.92

-0.7978723

2063926

HANG SENG BK

CHEUNG KONG

120.4

0.08312552

3387033

CHINA COAL ENE-H

4.67

-1.684211

28878885

CHINA CONST BA-H

5.9

-0.5059022

176504706

VOLUME

-2.01005

17781485

10.86

1.30597

6873048

61.7

2833301

15.28

-1.036269

41998169

-2.48227

5775410

14.98

4.608939

16263666

25.7

-0.3875969

126.1

0.3980892

1584743

TENCENT HOLDINGS

401.4

-1.472754

4618402

3250992

TINGYI HLDG CO

21.75

-0.9111617

4851090

1026908

WANT WANT CHINA

11.16

-1.06383

10513405

WHARF HLDG

63.95

0.3137255

1831421

HONG KONG EXCHNG

124

-0.4815409

2558814

HSBC HLDGS PLC

85.4

-0.5241701

6976862

-0.9840098

14620450

HUTCHISON WHAMPO

-0.862069

13809852

IND & COMM BK-H

CHINA PETROLEU-H

6.28

-1.257862

63831697

CHINA RES ENTERP

26.45

0.3795066

SINO LAND CO

2902150

7282204

8297260

-0.1647446

-0.1108647

80.5

-0.3666361

90.9

18.02

2066469

54.35

SWIRE PACIFIC-A

2787771

20922495

2823848

SANDS CHINA LTD

4917530

1982217

-0.9661836

VOLUME

0.4926108

0.2217295

-0.9124088

-0.4746835 -0.7476636

-0.8291874

20.5

DAY %

62.9

102

89.7

27.15

PRICE

POWER ASSETS HOL

10.62

45.2

HONG KG CHINA GS

NAME

SUN HUNG KAI PRO

HENDERSON LAND D

CHINA MERCHANT CHINA OVERSEAS

DAY %

11.7

HENGAN INTL

CHINA LIFE INS-H CHINA MOBILE

PRICE

94.45

-0.839895

4657290

5.22

-0.9487666

162991440

LI & FUNG LTD

10.64

-0.3745318

19337796

2792445

MTR CORP

29.35

-0.676819

2325260

MOVERS

23090

INDEX 23069.85 HIGH

23111.65

LOW

22706.92

CHINA RES LAND

21.05

-1.864802

7724588

NEW WORLD DEV

10.6

-0.7490637

13231515

52W (H) 23944.74

CHINA RES POWER

19.44

0.9345794

8389634

PETROCHINA CO-H

8.61

-0.2317497

53138281

(L) 19426.36

CHINA SHENHUA-H

23.85

-0.625

18457500

PING AN INSURA-H

61.05

0.1640689

11540284

22700

7-November

11-November

15 15

November 12, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China Daily Major steps to reform stateowned enterprises will be taken after the four-day third plenum of the Communist Party of China, which started on Saturday, Huang Shuhe, vice-chairman of the stateowned Assets Supervision and Administration Commission, was quoted as saying. To pave the way for changes, commission officials said private companies and investors are welcome to acquire larger shares in SOEs so they can have a bigger say in decisionmaking. There are 112 large state-owned corporations under the direct supervision of the commission.

Jakarta Post Indonesia’s major banks plan to maintain low exposure to foreign currencies in an effort to shield them from foreign exchange (forex) volatility. State-owned Bank Mandiri, currently the biggest lender by assets, aimed to keep its forex loans-to-deposit ratio (LDR) below 75 percent, according to Mandiri finance and strategy director Pahala N. Mansury. “We have quite a lot of excess liquidity in U.S. dollars, but we are trying to rein in forex loans, considering the macroeconomic situation and rupiah’s development,” he said recently.

Yomiuri Shimbun U.S. Treasury Secretary Jacob Lew will arrive in Japan today for talks with government officials, including discussions on concluding Trans-Pacific Partnership free trade talks by the end of this year, according to the Treasury Department. Mr Lew is expected to hold talks with Finance Minister Taro Aso, informed sources said. Mr Lew is also scheduled to meet with business leaders. The treasury secretary’s visit to Japan, his first since assuming office in February, is part of an Asian tour that will also take him to Singapore, Malaysia, Vietnam and China.

Economic Times India’s finance ministry has steered clear of monetary policy under an unwritten agreement. But economic affairs secretary Arvind Mayaram has written to Reserve Bank of India governor Raghuram Rajan seeking a change in the rules for infrastructure financing and the treatment of nonperforming loans to the sector, pitching it as a necessary measure to revive growth and investment. The finance ministry has suggested that the RBI could ease rules for infrastructure projects that are delayed but where the promoters are not at fault.

Chinese industrialisation and its discontents Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

s the Third Plenum of the 18th Central Committee of the Chinese Communist Party convenes in Beijing, China stands at a crossroads. Its recent growth record is stupendous; no country in history can match it. But China’s economic imbalances are also stupendous. The country has sustained its output growth by investing fully one-half of GDP, though no country can productively invest more than a third of national income for an extended period. Household consumption accounts for only one-third of GDP, compared to two-thirds in a normal economy. Associated with this low level of consumption is widening inequality – between the countryside and the cities, and between the political elites and the masses. University graduates with rising aspirations cannot find the office jobs that they seek and will not accept the factory jobs that they are offered. Social unrest, whether expressed in blogs or spontaneous demonstrations, is mounting. China’s leaders understand all of this. They acknowledge the need to rebalance the economy from investment to consumption, and they recognise that this means developing the service sector, where good white-collar jobs will be found. They also appreciate the need to build a social safety net and strengthen rural property rights. But Chinese officials worry that the shift from investment to consumption, and from manufacturing to services, will mean slower growth. Less investment will mean less capital deepening. Expanding the service sector, where productivity is low, will hold back aggregate output. And if growth decelerates further – the annual rate has already dropped from 10 percent to 7.5 percent – social unrest may increase.

U.K. example Knowing this, Chinese leaders may hesitate to move ahead with needed reforms, causing imbalances to continue to rise. But this cannot go on indefinitely. At some point, the ticking time bomb will explode, and the growth rate will crash. So where should Chinese leaders look for help in meeting these challenges? It may seem improbable, but they can find guidance from the United Kingdom. Just as Chinese industrialisation is unprecedented – no developing country has grown

by more than 10 percent per year without interruption for two full decades – Britain’s industrialisation 200 years ago was similarly unparalleled. Britain was, of course, the homeland of the Industrial Revolution. Its economic growth was faster than that of any economy in human history up to that time. But Britain’s rapid growth created severe problems. There was growing inequality, or so it appears from recent scholarly contributions to the so-called “standard-of-living debate”. There was the alienation of smallholders’ property, in what was known as the “enclosure movement”. And there were complaints about urban pollution and inhumane factory conditions in what William Blake called Britain’s “dark Satanic mills”. Inevitably, there were eruptions of social unrest. Recall the Luddites, who responded to the early nineteenth-century mechanisation of the textile industry by smashing the new technology, and the Swing Riots, in which workers destroyed threshing machines. British politicians responded by reforming the social safety net. In 1834, the New Poor Law established national standards for social benefits. In the face of considerable controversy, assistance continued to be provided without requiring the poor to

enter oppressive workhouses. Outdoor relief, as the alternative was known, was expanded as the most costeffective way to address the poverty problem.

Political reform Second, political reform gave voice to the rising middle classes. The 1832 Reform Act gave the vote to individuals with at least £10 (US$16) of property – not an inconsequential sum, to

Just as Chinese industrialisation is unprecedented … Britain’s industrialisation 200 years ago was similarly unparalleled

be sure, but low enough to enfranchise the middle class. The act also created a system of special courts to adjudicate disputes over voter registration. Moreover, along with political reform came policy changes aimed at rebalancing the economy. Abolition in 1846 of the Corn Laws, which had propped up the declining agricultural sector, facilitated structural shifts, first toward manufacturing and then toward services, notably financial services. Finally, British politicians did not seek to maintain at any cost their country’s position as the world’s fastestgrowing economy. Admittedly, they faced criticism when the United States, Germany, and other countries overtook Britain in the late nineteenth century. But, by not standing in the way of the economy’s natural evolution from agriculture to industry and then to services, they enabled the United Kingdom to enjoy a full century of sustained economic growth. China may regard the nineteenth-century experience of a windswept island off the northwest coast of Europe as an odd source of inspiration. But if Chinese leaders meeting at their party plenum accomplish half as much as their nineteenth-century English predecessors, they will have done very well indeed. © Project Syndicate

16 16

November 12, 2013 April 19, 2013

Closing India’s October trade deficit jumps

Shire buys U.S. drug firm for US$4.2 bln

India’s trade deficit jumped in October, rebounding from a 2-1/2 year low the previous month, as purchases of gold picked up ahead of the festival season, provisional government data showed yesterday. Last month’s deficit stood at US$10.56 billion, compared with US$6.7 billion in September, the trade ministry said. Finance Minister P. Chidambaram said this month the current account gap would be US$60 billion or lower, well below the previous estimate of US$70 billion. S. R. Rao, India’s trade secretary, told reporters yesterday the government was confident of reaching its export target of US$325 billion.

Drug company Shire Plc agreed to buy ViroPharma Inc for about US$4.2 billion to gain treatments for rare diseases and lessen dependence on its best-selling Vyvanse pill for attention deficit hyperactivity disorder. Shire will pay US$50 a share in cash, 27 percent more than the closing price of ViroPharma on November 8, the Dublin-based drugmaker said yesterday in a statement. “This is the big deal the market had been waiting for,” Savvas Neophytou, an analyst at Panmure Gordon & Co, said in a note to investors. The purchase is “clearly at an eye-watering multiple but strategically very sound”.

Partner in Lawrence Ho’s Russian investment arrested Oleg Drozdov facing allegations of US$11 mln ‘malpractice’ in unrelated solid waste scheme Michael Grimes

michael.grimes@macaubusinessdaily.com

ummit Ascent Holdings Ltd – a company said in filings to be controlled by Macau casino developer Lawrence Ho Yau Lung – has confirmed to the Hong Kong bourse that an indirect partner in a Russian casino project has been arrested by police in that country. A Russian newspaper, Kommersant, reported on November 7 that Oleg Drozdov had been detained for investigation by Russian law enforcement. It’s reportedly regarding alleged malpractices by a business called OOO Vladivostokservis and relates to the construction of a solid waste treatment facility in Vladivostok in the Russian Far East. The investigation relates to events in 2009 and 2010 and is said to involve 367 million roubles (US$11.2

million, or 89.72 million patacas). The company OOO Vladivostokservis was reported to have been the general contractor on the waste treatment facility and Mr Drozdov served a director of the firm at the relevant time. Summit Ascent stated in yesterday’s filing: “Management of the company has since spoken to Mr Sergey I Bondar, attorney advocate acting for Mr Drozdov, who has confirmed that Mr Drozdov has been detained for questioning by the Russian law enforcement authorities.” In earlier filings Summit Ascent said it was paying US$9.02 million for 46 percent of an entity called Oriental Regent Ltd. The latter is a holding company that currently owns 50 percent of First Gambling

Lawrence Ho – controlling share of Summit Ascent says a filing

Company of the Far East LLC. First Gambling in turn has a gaming licence in Primorye, the Russian Far East province of which Vladivostok is the capital. Previous filings also said that Lawrence Ho’s primary investment vehicle Melco International Development Ltd – which also holds a stake in Macau casino developer

EU, U.S. to resume trade deal talks

he European Union and United States are to resume talks on the world’s largest free-trade accord aiming to make progress despite damaging revelations of U.S. spying on its allies. This second round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP) was meant to have been held in October, but due to the U.S. government shutdown had to be postponed just as the spy scandal worsened. Since then the steady flow of charges has sparked bitter recriminations and demands in some EU quarters that the TTIP talks be halted altogether. An EU official close to the talks conceded “there may be issues of trust” involved, but stressed that

Melco Crown Entertainment Ltd – would pay US$980,392 for a five percent stake in Oriental Regent. Mr Drozdov is an indirect minority shareholder in Oriental Regent. He controls 30 percent of it via Elegant City Ltd, a British Virgin Islands company that is in turn wholly owned by Mr Drozdov. Summit Ascent stressed

yesterday that the investigation into Mr Drozdov “does not relate, in any way, to the Primorye gaming project or to Oriental Regent or FGCE [First Gambling Company of the Far East]”. Summit Ascent added the investigation was in progress and no charges had so far been made against Mr Drozdov. It stated: “The company has also received direct assurances from Mr Sidorov, first vice governor of the Primorsky Administration, which administers the Gambling Zone of the Primorye Region, that the investigation and allegations relating to Mr Drozdov will not, in any way, affect the Primorye Gaming Project or the company’s investment in the Primorye Gaming Zone.” The estimated total investment for the first phase of the casino resort complex to be constructed at an ‘Integrated Entertainment Zone’ in Primorye – next door to China’s northeastern Heilongjiang province – is about US$130 million according to earlier filings. It will have a 119-room hotel, approximately 800 slot machines, 25 VIP gaming tables and 40 mass-market gaming tables, according to the previous statements. Business Daily asked Melco International for a comment but got no response by press time.

Crown Resorts wins Sydney casino approval

Europe would not compromise its personal data protection standards even as it must discuss the wider issue of information transfer. “The transfer of data … is a key component of a modern economy,” the official said, but as far as personal data is involved, it can “only be done so in compliance with [EU] legislation on data privacy”. U.S. Secretary of State John Kerry last week urged European leaders not to allow the row to disrupt the talks. Together the U.S. and EU account for about US$30 trillion of annual output. The EU says a deal could bring annual benefits of US$159 billion for its 28 member states. AFP

rown Resorts Ltd, the Australian gaming company controlled by billionaire James Packer, won final approval from the New South Wales state government to develop a casino in Sydney’s Barangaroo precinct. The binding agreement reached between the state and Crown Resorts is consistent with the conditions set down in the government’s initial approval in July, New South Wales Premier Barry O’Farrell said in a statement yesterday. Melbourne-based Crown Resorts will operate a gaming facility restricted to VIP clients and will provide tax payments of at least A$1 billion (US$938 million) in the first 15 years of operation, according to the statement. Crown’s proposed casino and

hotel tower at Barangaroo on Sydney Harbour will be its first site in the city alongside resorts in Melbourne and the West Australian capital of Perth. The project will compete with Echo Entertainment Group Ltd, which has been the city’s only casino operator. Mr Packer is co-chairman of Melco Crown Entertainment Ltd, a Macau casino venture with businessman Lawrence Ho Yau Lung. Crown’s development will have 350 hotel rooms and suites, 80 luxury apartments, restaurants and bars, and conference rooms, according to the company. The agreement includes conditions that there will be no poker machines in the casino or low-limit bets on table games, the government said. Bloomberg News