Macau Business Daily, November 25, 2013 by Business Daily

I represent the grassroots, not business: Chan Meng Kam Chan Meng Kam, the leader of Macau’s Fujianese community, attributes his capture of the biggest popular vote in September’s elections

to speaking up for ordinary people. Mr Chan – who controls Casino Golden Dragon under a so-called service agreement with Sociedade

de Jogos de Macau SA – denied he bought votes in the poll deciding seats in the Legislative Assembly. Pages 6 & 7

www.macaubusinessdaily.com

Year II

Number 421 Monday November 25, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

Interview

April 19, 2013

European firms to boost presence here J

osé Manuel Barroso, the President of the European Commission, was in Macau at the weekend to help launch officially the Macau European Chamber of Commerce. It will complement the work of several national business chambers established here. “We have an excellent trade partnership with Macau, with a surplus that has been growing,” said

Guangdong yet to apply for free trade zone

Mr Barroso, referring to commerce between the European Union bloc and the city. The EU’s exports to Macau rose by 7.4 percent to 16.65 billion patacas last year. In contrast, Macau shipments to EU members fell by 17.7 percent to 315.5 million patacas in 2012. “The establishment of the Macau European Chamber of Commerce

Grand Emperor profits from premium mass bets

Page 4

has clearly indicated that European companies have increasing interests in Macau,” said Secretary for Economy and Finance Francis Tam Pak Yuen. On Saturday the Macau government and the EU signed a new air services agreement, increasing the number of airlines each EU member state may allow to fly here. More on page 3

Hang Seng Index 23756

23738

23720

23702

Mainland maids’ hiring pushed back to May 2014

Page 5

Brought to you by

23684

23666

Page 8

November 22

HSI - Movers Name

SJM confirms lease deal for Casino Jai Alai

Revised tourism rules hit mainland tours

Casino Jai Alai on Macau peninsula – until November 2012 thought by most investors to be a wholly-owned core property of SJM Holdings Ltd – is to be leased from Angela Leong On Kei, fourth consort of the company founder Stanley Ho Hung Sun, a new filing confirms. The deal highlights the complexity surrounding the business structure of SJM, and the difficulty public investors face in understanding exactly what benefits accrue to whom – and from what assets – within the group.

The number of visitor arrivals in October increased by two percent year-on-year to 2.39 million, with mainland tourists accounting for more than 63 percent of the total. The number of mainlanders visiting Macau last month rose by nearly five percent to 1.51 million, according to data released on Friday by the Statistics and Census Service. But most of the tourists coming here are still daytrippers. Same-day visitors accounted for 53 percent of all the tourists in October.

Page 2

Page 9

%Day

PING AN INSURA-H

2.96

CHINA LIFE INS-H

2.67

CATHAY PAC AIR

2.24

CHINA SHENHUA-H

1.91

GALAXY ENTERTAIN

1.88

HENDERSON LAND D

-0.54

CHINA MOBILE

-0.62

CITIC PACIFIC

-0.71

MTR CORP

-0.84

BELLE INTERNATIO

-0.95

Source: Bloomberg

I SSN 2226-8294

Brought to you by

2013-11-25

2013-11-26

2013-11-27

16˚ 21˚

15˚ 20˚

16˚ 20˚

November 25, 2013

Macau

SJM confirms leaseback deal for Casino Jai Alai

of the three years, subject to a 10 percent buffer “for any unanticipated fluctuations of market rental”. SJM’s 2012 annual report had mentioned a buffer of five percent.

Legacy deal

Casino firm will pay its director Angela Leong to rent gaming venue under three-year deal Michael Grimes

michael.grimes@macaubusinessdaily.com

asino Jai Alai on Macau peninsula – until November 2012 thought by most investors to be a whollyowned core property of SJM Holdings Ltd – is to be leased from Angela Leong On Kei, fourth consort of the company founder Stanley Ho Hung Sun, a new filing confirms. The deal highlights the complexity surrounding the business structure of SJM, and the difficulty public investors face in understanding exactly what benefits accrue to whom – and from what assets – within the group. In SJM’s annual results for 2011 and 2012, Casino Jai Alai is referred to as a “self promoted” (i.e., non-satellite) casino operating “under the same license [sic]” as Casino Oceanus. In other words, for accounting purposes, Casino Oceanus and Casino Jai Alai operated as one cost centre, and the economic benefits they generated were wholly accruing to group. That’s distinct from the so-called satellite casinos of SJM spun off from the gaming licence of SJM’s concessionholding unit Sociedade de Jogos de Macau SA. With the satellite casinos, SJM has to share the economic benefits with third party owners. As Business Daily has

Jai Alai Palace prior to renovation

previously reported, in November last year, SJM announced in a regulatory filing that the Jai Alai Palace premises were 97.3 percent owned by Ms Leong. The November filing said she intended via her wholly-

owned company Netlink Capital Ltd – incorporated in the British Virgin Islands – to lease the premises to SJM “for the operations of Casino Jai Alai and additional facilities by the group for three years ending 31 December 2016”.

The new filing on Friday to the Hong Kong Stock Exchange says the lease will run from January 1, 2014 and end on December 31, 2016. The annual rent will be capped at HK$180 million (US$23.2 million) for each

The latest deal confirmed between SJM and Ms Leong – while not involving on paper any direct sharing of casino revenue – does indicate Casino Jai Alai, currently closed for major renovation, will be a hybrid between a core SJM property and a satellite one, insofar as SJM and its shareholders will have to share – via rental payments to Ms Leong for the complex where Jai Alai is housed – some of the economic benefits. Business Daily has been told by industry sources that it’s part of Mr Ho’s plan to ensure that Ms Leong – mother of his youngest children – has financial independence in the future. Ambrose So Shui Fai, chief executive of SJM Holdings, told reporters on the sidelines of an unrelated event on Saturday, referring to Jai Alai Palace: “That is a connected transaction. Angela Leong is an executive director of SJM Holdings, so when we sign an agreement to lease the properties from her we need to announce. Oceanus is not as big on its own but if we integrate it with Jai Alai to form an integrated part of the whole property it will be able to attract more critical mass to the property which will enhance the business of SJM.” In SJM’s 2012 annual report, published in April, the firm said that as of December 31, 2012, “Casino Oceanus at Jai Alai and Casino Jai Alai operated a total of 188 mass market gaming tables, one VIP gaming table and 648 slot machines”.

SJM shifts dredging work to subsidiary

Macau able to deal with international oversight: Tam

Will continue to get tax break from keeping city’s waterways navigable

acau Dredging Services Ltd – a wholly owned subsidiary of SJM Holdings Ltd – is to take over responsibility for keeping the city’s waterways navigable. SJM indicated in a filing some redundancies may result from the change. The dredging job has historic links to the days when Stanley Ho Hung Sun, the former gaming monopolist, was in charge of maintaining much of the city’s infrastructure via his conglomerate Sociedade de Turismo e Diversões de Macau SA. A Ho family company, Shun Tak Holdings Ltd – an investor in the TurboJET ferry service between Macau and Hong Kong – directly benefits from the dredging operations. In August it was announced in the territory’s Official Gazette that

Sociedade de Jogos de Macau SA – the local unit that holds SJM’s gaming concession – was to take on the dredging responsibilities from the parent STDM. SJM SA is now passing the work on to Macau Dredging Services. But SJM will continue to get tax breaks for providing the service. All the other casino operators must hand over 2.4 percent of their gross gaming revenue for “urban development, tourism promotion and social security”. In SJM’s case that figure is just 1.4 percent – in lieu of the dredging work. Last year alone this one percentage point difference was worth 806 million patacas (US$100 million) to the company. M.G.

ecretary for Economy and Finance Francis Tam Pak Yuen said Macau has no problems facing “international supervision” on its efforts in fighting money laundering and terrorism financing. He said the city has always followed rules and suggestions of international bodies like the Asia Pacific Group on Money Laundering. Mr Tam was commenting on the report from the U.S.-China Economic and Security Review Commission released last week. He was speaking on the sidelines of the inauguration ceremony of the Macau European Chamber of Commerce on Saturday. The report suggests that Macau should lower the reporting threshold for financial transactions in casinos to US$3,000 (23,953 patacas) from the current US$62,500. “Other countries may have comments on our laws and internal affairs,” said Mr Tam. “But we’re always actively engaged in efforts to fight money

With T.A.

laundering and terrorism financing.” “I’m confident that all companies operating here have no problems facing supervision from international bodies,” Mr Tam added. The secretary said the government is “very confident” for the upcoming review next year from the Asia Pacific Group on Money Laundering, but he did not elaborate on the current preparation work for meeting the group’s review. In an evaluation report issued in 2007, the Asia Pacific Group on Money Laundering gave Macau an overall positive mark for its anti-money laundering efforts, though it also said the authorities should do more to combat cash smuggling across the border. On Friday, in response to the congressional report, the Financial Intelligence Office issued a brief statement stressing that the city has a “strict licensing system and background check” for gaming promoters, also known as junkets. S.L.

November 25, 2013 April 19, 2013

Macau Edmund Ho named head of Hengqin’s advisory body Macau’s former chief executive Edmund Ho Hau Wah (pictured) was officially appointed as the head of the advisory committee for Hengqin New Area on Friday. The committee also includes Macau Chamber of Commerce president Ma Iao Lai, University of Macau rector Zhao Wei, Hong Kong Executive Council member Bernard Chan and Nobel Prize winning economist James Mirrlees. According to Hengqin’s regulations, the administrative committee, which is the policy execution unit, has to report to the advisory body every year on the island’s progress toward development. The members will hold their seats on the committee for three years.

EU set to boost business presence The new European Chamber of Commerce means to speak with a single voice Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

The European Chamber of Commerce brings together six national business chambers in Macau

uropean companies may boost their presence in Macau through a new European Chamber of Commerce, which brings together several national chambers of commerce. The new chamber was officially inaugurated on Saturday in a ceremony presided over by European Commission President José Manuel Barroso and Secretary for Economy and Finance Francis Tam Pak Yuen. “The presence of various European countries’ chambers of commerce or business associations in Macau is one of the major contributors behind this valuable economic partnership, and has helped make Macau a regional business platform,” Mr Tam said in his speech. Mr Barroso echoed this sentiment. He said he expected bilateral trade to grow in the coming years. “There is great potential for cooperation,” Mr Barroso told reporters on the sidelines of the event. “We have just established the European Chamber of Commerce, which will allow for more trade and investment between the European Union and Macau,” he said. Mr Barroso was in Macau to mark the 20th anniversary of the trade and cooperation

agreement between Macau and the EU. Trade between Europe and Macau has continued to grow this year. The value of trade in the first nine months was 13.8 billion patacas (US$1.73 billion), 10.9 percent more than a year earlier, according to data from the Statistics and Census Service. “We have an excellent trade partnership with Macau, with a surplus that has been growing,” Mr Barroso said. “European exports to Macau have been growing in the last years, even during years of less growth in Europe.” EU exports to Macau rose by 7.4 percent to 16.65 billion patacas last year. In contrast, Macau’s exports to EU members fell by 17.7 percent to 315.5 million patacas.

Together we can “Economic ties will provide a strong base for further cooperation,” said Mr Tam. “The establishment of the Macau European Chamber of Commerce has clearly indicated that European companies have increasing interests in Macau,” he said. Mr Barroso said the EU and Macau intended to extend their collaboration in fields

such as law, education, the environment and urban planning. Chief executive of SJM Holdings Ltd Ambrose So Shu Fai said the new chamber would be beneficial to both Macau and European firms. “The sum is greater than the parts added together,” Mr So, honorary chairman of the chamber, said. “United we have a wider network, we’ll do more and this will help strengthen and promote business exchanges between Macau and Europe,” he said. The European chamber brings together the Portuguese Chinese Chamber of Commerce and Industry Macau delegation, the France Macau Business Association, the British Business Association of Macau, the German Macau Business Association, the Macau-Romania Chamber of Commerce and the Irish Chamber of Commerce of Macau. The head of the France Macau Business Association, Franklin Willemyns, will chair the new chamber. “I believe that together we can do more, supporting businessmen from Macau and Europe,” Mr Willemyns told reporters. “Macau is growing very rapidly and there will be interesting opportunities for

European firms here and, at the same time, they can bring knowledge and technology that can help diversify Macau’s economy,” he said. “We hope to have support not only from Europe but also from the Macau government and the community in establishing this chamber,” he said. The new chamber may become part of a consortium to revive the European Union Business Information Programme (EUBIP), which is meant to improve the EU’s business ties with Macau and Hong Kong.

The EUBIP began in 2009 with a budget of 750,000 euros (7.9 million patacas) and ended last year. Mr Willemyns did not say when the programme might be revived, but Confirm interest in reviving it. “I’m confident we will have the necessary support in the future,” he said. Other members of the European chamber had told Business Daily in June that the programme would resume with a budget of 400,000 euros for arranging events in Macau and Hong Kong over the next 30 months.

Macau, EU ink aviation pact The Macau government and the European Union have signed a new air services agreement on November 23, increasing the number of airlines that an EU member state may allow to fly here. The agreement was signed by the Secretary for Transport and Public Works Lau Si Io and the head of the Office of the European Union to Hong Kong and Macau, Vincent Piket. The deal will cover access for airlines to airports, and has to do with access to landing slots, access to gates, rules for the services and fees. The agreement could make Macau more attractive to European airlines as a place to fly, Mr Piket had told media last week. “We very much hope that it will create a new impetus for the aviation industry to look at Macau as a destination,” he said. But Mr Piket said the introduction of direct flights from EU countries to Macau would be up to the airlines.

November 25, 2013

Macau GDP growth to hit 10.7 pct this year: Economist The city’s economy is expected to grow 10.7 percent this year, according to projections in the latest report on Macau by the Economist Intelligence Unit (EIU), from The Economist, cited by news service website macauhub.com. GDP growth should accelerate to 13.5 percent in 2014, it added. Second-quarter real GDP was 10.2 percent higher than a year earlier, according to official data. Macau’s gross domestic product annual growth slowed down to 9.9 percent in real terms last year, official data show. Secretary for Economy and Finance Francis Tam Pak Yuen said he is expecting the growth rate for this year’s GDP to stay in the single-digits.

China’s consumer finance trial to lure Macau, HK firms Mainland’s bank regulator expands consumer finance pilot programme

hina’s banking regulator expanded a pilot programme for the establishment of consumer finance companies on Friday, part of a broader effort to liberalise its financial system and promote a greater role for consumption in driving economic growth. The new rules from the China Banking Regulatory Commission (CBRC) allow private investors to establish consumer finance companies for the first time. While the initial pilot scheme was limited to financial institutions, the new rules also allow Chinese non-financial firms, including

private firms, to participate. Foreign financial institutions are also permitted, but foreign non-financial firms remain barred. The revised rules will permit two qualified financial institutions from Macau and Hong Kong to set up consumer finance business in Guangdong province, bringing the number of new companies to 12, the regulator said. By expanding the types of investors in consumer finance, the regulator hopes to “make full use of private capital,” an unidentified CBRC spokesperson said in a separate statement on the revised rules. Individuals will be

allowed to borrow as much as 200,000 yuan (262,120 patacas) from consumer finance companies, compared with a previous limit of five times their monthly income, the CBRC said.

Broader push The rules also open the way for more diverse shareholding structures by decreasing the minimum equity stake that must be held by the largest shareholder from 50 percent to 30 percent. The expansion follows a directive in July from the State Council, China’s cabinet, to encourage private capital to

invest in consumer finance. The move to permit private investment in consumer finance is part of a broader push to bring private capital into China’s banking system. In August China’s cabinet unveiled plans to set up more private banks to boost financial support for cashstarved smaller firms. CBRC’s initial consumer finance pilot was launched in 2009 in Beijing, Shanghai, and two other cities, with a single finance company permitted in each city. It was expanded in September to ten additional cities, including Chongqing, Nanjing, Guangzhou, and Qingdao.

Under the latest expansion, participating cities will each be permitted to host up to 12 companies, with the CBRC responsible for approving applications. The rules were posted on CBRC’s website. Economists say China needs to rebalance its economy towards consumption and away from investment in order to foster sustainable growth. The contribution made by investment to GDP growth in the first nine months of 2013 was 4.3 percentage points, compared to 3.5 percentage points by consumption, the statistics bureau said last month. Reuters/Bloomberg News

Guangdong yet to apply for free trade zone Macau has pledged its support for joint plan with Hong Kong and Guangdong

uangdong officials are completing the study on how to develop a new integrated free trade zone in cooperation with Macau and Hong Kong. Authorities will accelerate the drafting process and the proposal will be submitted to China’s State Council as soon as possible, Guangdong governor Zhu Xiaodan said. Mr Zhu said field surveys and feasibility studies for the proposed Guangdong-Hong Kong-Macau free trade zone have been going on for more than six months. He was speaking to media on the sidelines of an international conference in Guangdong. “We have conducted preliminary discussions with the Hong Kong and Macau special administrative governments and have widely consulted national ministries for advice,” Hong Kong’s South China Morning Post quoted Mr Zhu as saying. “We pledge to deliver a practical and feasible action plan for the freetrade zone construction,” he added. Guangdong already has three special economic zones: Qianhai near Shenzhen, Nansha in Guangzhou and Hengqin Island. The Pearl River Delta free trade zone would bundle these zones together with the Guangzhou Airport economic development zone. The proposed free trade zone will also help expand cooperation between Guangdong, Hong Kong and Macau and further open up the province’s economy, Mr Zhu was quoted as saying. Macau has pledged its support for the proposal, Secretary for the Economy and Finance Francis Tam

We pledge to deliver a practical and feasible action plan for the free-trade zone construction Zhu Xiaodan, Guangdong governor

Pak Yuen said last month. “Hong Kong and Guangdong reached a consensus on setting up a Guangdong-Hong Kong-Macau free trade zone and we, the Macau side, surely support this development,” Mr Tam said, adding that Macau’s role in the zone has yet to be defined. “We will also do our best to contribute.” Some mainland media outlets had speculated that Beijing would approve Guangdong’s free-trade-zone bid after the third plenum, which ended on November 12. Friday was the first time that a top Guangdong official revealed details regarding the progress of the proposal. Guangdong’s governor said

The Shanghai FTZ opened at the end of September

that the proposal would include streamlined government functions, decentralised administrative powers, improved market access and simplified procedures for company registration, customs and quarantine inspection. The Shanghai free trade zone officially opened on September 29. It has been described as the central government’s test bed for financial reform, commodities trading and logistics. Goods can be imported into the free trade zone, processed there and then exported without the customs service getting in the way. Companies in the zone get tax breaks and can exchange currencies more easily. T.A.

November 25, 2013

Macau

Grand Emperor profits from premium mass bet Hotel-casino operator moving more tables to the growing mass-market segment Vítor Quintã

vitorquinta@macaubusinessdaily.com

he operator of Macau’s Grand Emperor hotel-casino saw its revenue increase by more than a fifth year-on-year in the six months ended September 30. The increase was mostly thanks to more business from the so-called ‘premium mass’ segment of high stakes cash gamblers. Emperor Entertainment Hotel Ltd said its income grew by 21.5 percent to HK$1.1 billion (US$141.8 million) in a filing to the Hong Kong Stock Exchange on Friday. The casino outperformed the market. In the same period the city’s overall gaming revenue rose by 17.7 percent year-on-year, official data show. Grand Emperor “made notable progress” in attracting more premiummass customers, the company said, “on the back of the continuing influx of middle class visitors”. Mass-market gaming was the star performer, with revenue rising by 23.9 percent to HK$780.8 million, accounting for 71 percent of the group’s total revenue, the company said. The average daily win across the half-year was about HK$114,800 a table, “a record high,” the company stressed.

HK$1.1 bln

EMPEROR ENTERTAINMENT HOTEL REVENUE IN SIX MONTHS ENDED SEPT

Grand Emperor claims ‘notable progress’ in luring more middle-class gamblers

Emperor Entertainment decided to move a further two gaming tables from its VIP rooms to its mass-market concourse. With 67 tables currently serving mass-market gaming, the company is bullish about the future. “The group expects an increasing contribution from the mass market, which is less vulnerable to macroeconomic volatility,” the filing adds. Despite cutting its VIP tables to 10, Grand Emperor pocketed HK$200.1

million from this segment, up by 18.8 percent from a year earlier. With the role of premium mass gaming becoming more important, Emperor Entertainment’s profit grew far more slowly – by about 14.9 percent to HK$426.8 million. Grand Emperor’s casino operations are run under the gaming licence held by Sociedade de Jogos de Macau SA. Emperor Entertainment Hotel is a unit of Emperor Group, a conglomerate founded by Hong Kong businessman Albert Yeung Sau Shing.

Another of the group’s units – Emperor International Holdings Ltd – reiterated in a separate filing on Friday a projected 2014 opening for a prime commercial site at the junction of Avenida do Infante D. Henrique and Avenida da Praia Grande on Macau peninsula. The plot is being redeveloped as a “multi-storey premium retail complex” with a total gross floor area of approximately 30,000 square feet (2,787 sq. metres), it said in the sfiling.

November 25, 2013 April 19, 2013

Macau Brought to you by

HOSPITALITY Asian also-rans Over 99 percent of package tourists visiting Macau in the past two years came from Asia. The number of package tourists has been increasing, but the increase is due almost exclusively to more coming from the mainland and, to a lesser extent, Taiwan and Hong Kong. Macau’s main sources of package tourists after Greater China are South Korea and Japan. More have been coming from South Korea but fewer from Japan. The rest of Asia is not a great source of package tourists.

Fewer package tourists came from most other Asian countries in the third quarter of this year than in the third quarters of the preceding years. Only Thailand sent more package tourists than before. In the third quarter of this year the number of Thai package tourists was three times the number four years earlier. The numbers of package tourists from three of the countries represented in the chart peaked in 2011. Since then the falls in the numbers of Indian and Indonesian package tourists have been particularly noticeable. India sent 47 percent fewer in the third quarter than two years earlier and Indonesia sent 53 percent fewer. The numbers of package tourists from Malaysia and the Philippines peaked last year. The falls this year have been pronounced. The Philippines sent 50 percent fewer in the third quarter than a year earlier. Vietnamese package tourists are a case apart. Since the third quarter of 2010 their numbers have never been more than 30 percent of their number a year earlier.

33.4 %

Annual increase in Q3 Thai package tourists

I represent the grassroots, not Of all the campaigns mounted by candidates in this year’s elections to the Legislative Assembly, the most outstandingly successful was that by Chan Meng Kam, the leader of Macau’s Fujianese community. In an interview with Business Daily, Mr Chan attributed his success neither to his ties to Fujian, nor to his background in the casino business, nor yet to what some suspect was vote buying. He said he devoted most of his time to serving the ordinary people of Macau, and denied being a voice for the business camp. Mr Chan said he saw nothing wrong with being member of both the Legislative Assembly and the Executive Council.

I basically devote all of my time to legislative work. Even with the Golden Dragon, I have friends to help me manage the business

Stephanie Lai

sw.lai@macaubusinessdaily.com

Photo by Manuel Cardoso

What influence did the clan associations like yours or the Macau Jiangmen Communal Society have on the elections?

There are nearly 110,000 residents that are of Fujianese origin. Macau is an immigrant city, and these immigrants have already become a part of Macau. In fact, these immigrant groups have lived here for generations. But as legislators we are serving the entire population, not just a certain group. And we are not bound by the interests of certain districts in this city of 30 square kilometres. In my legislative career, from 2005 to now, I hope that I have contributed something to Macau and can continue to do so. We have seven offices in the city: on Taipa, and in the Inner Harbour, the Three Lamps district, Fai Chi Kei and Areia Preta. I think that we have been serving the whole Macau community. I will not comment on the Jiangmen Communal Society or what people

say about the special care it gives its 200,000 members in the city. But in my eight years serving in the assembly I have cared about all Macau citizens.

What does your People’s Alliance of Macau do between elections?

I have bought a place for the alliance in the northern district and I opened it to our members for 1.00 pataca [US$0.13] per month. Our alliance has two clinics. And we also help residents with property management issues or disputes, and arrange contacts with the government. This service is available in the northern district, the city centre and NAPE. As an association for the grassroots, I hope that we can solve problems for residents. The association is a non-profit body that serves society and is supported by thousands of volunteers. For instance, we have helped the Civic and Municipal Affairs Bureau’s cleaning work in the hygiene black spots in the

northern district. Our alliance will soon have one service centre in Seac Pai Van to serve the neighbourhood. Through the alliance we hope to do what we can to help the grassroots, which are particularly impacted by the city’s gaming development and the wealth gap. Seac Pai Van’s population is

now growing, thanks to the public housing projects there. We have been granted space by the government there, and if it asks us to do so, we are willing to provide care for children and the elderly among the residents. The space is now under renovation and will start operating this year.

You gave benefits to people under the guise of helping them deal with the impact of inflation. What role did that have in your success in September’s Legislative Assembly election? In the past four years we have held several meetings – sometimes

November 25, 2013 April 19, 2013

Macau

business: Chan Meng Kam discuss the renewal of the gaming concessions. That would also be the opportunity to look into our suggestion.

Do you worry that the gaming concession renewal will impact casinos operating under service agreements, including your Golden Dragon casino?

You too have held positions in several trade associations and other non-profit bodies, such as youth associations…

Actually, I have quit many of them. For instance, I am no longer a director of the Chamber of Commerce and I don’t serve in youth associations any more. There are only 24 hours in a day and it is impossible to do everything in the time available.

I am not worried about it at all. The format is good and I think it will continue.

Vasco Fong Man Chong, the head of the Commission Against Corruption, said restrictions on the number of gaming executives in the assembly should be considered. Do you agree? I think what we should look at what a legislator has done and is doing in the assembly. I understand that the aim would be fairer representation. But as for this concern about the gaming background of legislators, you can check my eight years in the assembly. Did I say anything on behalf of the gaming industry? As legislators, what we do is in the overall public interest, not for the industry any legislator belongs to. As for whether the election law should be amended, there should be more public debate on the subject to form a consensus. We will support any changes that make elections more just and fairer. In 2005 some reporters called me a representative of the business sector. I don’t really agree. My contribution is mainly on behalf of the grassroots.

What should change in Macau’s political system?

I think there should be more competition in indirect elections, which would be a way to push gradually for democracy in the city.

We had lucky draws, but we did not offer any cash to people

attended by audiences over one-hundred strong, at other times attended by only dozens – during which we listened to people’s opinions before writing our political programme for the elections. At the meetings we had lucky draws, but we did not offer any cash to people. We operate only three supermarkets in the city – a project which we think can help disadvantaged groups and ease the inflationary burden they bear. The supermarkets sell products at prices close to wholesale prices to our members and to other disadvantaged groups, like those with low incomes or disabilities. These supermarkets cannot be compared with the main ones, but our aim is achieved even though we are not making profits anywhere near those of the big supermarket chains. The supermarket project’s purpose was not to win votes and we made

no cash handouts. And I believe that residents are getting better in civic matters. They know how to defend their rights.

You have argued for the establishment of a public investment fund and a publicly owned casino. How would that work in practice?

The city has the highest income per capita in Asia. But when we visited residents of the northern district, they complained to us that their lives had become harder, with high inflation and soaring property prices. Even if you earn 15,000 patacas a month, the cost of living is immense. Whether or not the measure is taken depends on the government. They should look at the examples of Temasek Holdings (Pte) Ltd in Singapore and the Government Pension Fund – Global in Norway, where the public shares the earnings. So what we suggest is to establish a public investment fund, a body that can invest money in Hengqin, for instance, and in Macau. The fund could also invest in the gaming industry here. Gaming is our leading industry. The six gaming companies earn income of billions of patacas a year, so why can’t we operate our own casino? You can employ internationally renowned management companies and good accounting firms to run it. Secretary for the Economy and Finance Francis Tam mentioned that 2015 would be the time to

The same individual is often on several government advisory committees at the same time, and that is not desirable

How much time do you spend on your many businesses, such as the Golden Dragon casino and the City University? Since 2005 I have disposed of almost all my small businesses and I have had partners to help me with my main businesses. I am quite lucky in that respect. I basically devote all of my time to legislative work. Even with the Golden Dragon, I have friends to help me manage the business. Certainly, I have missed many opportunities to earn more in the past few years while attending the Legislative Assembly. But I don’t really mind.

What kind of small businesses did you dispose of?

Property investment businesses, and selling electronic appliances at the Golden Dragon.

You can check my eight years in the assembly. Did I say anything on behalf of the gaming industry?

You are a legislator and a member of the Executive Council, which takes part in the government’s decision-making. Is there not a conflict of interest here?

As long as you are really serving the interests of society as a whole, I don’t think there is any problem with being a legislator and an Executive Council member at the same time, and the Basic Law allows that. But, of course, we could debate whether or not there are too many individuals holding several positions, an issue that I am also pondering these days. What I mean is: the same individual is often on several government advisory committees at the same time, and that is not desirable because it stops younger people from having a voice on these committees.

In the elections three of the candidates on your ticket won seats. Your two colleagues are newcomers to the assembly. Are they up to task?

I have every confidence in Si Ka Lon and Song Pek Kei, because before taking on their roles as legislators they had been working for the community for years. As a legislator, the most important thing is that you are determined to serve – which I think they both are. And they deserve a chance to learn deliberative skills in the assembly.

One of the challenges the assembly will face in this legislative term will be the bill on a minimum wage for all cleaning and security staff. Are you for the bill? Yes, I am.

Are you happy with the progress of the debate on the minimum wage bill? Do you think there should be a general minimum wage? Yes, because of inflation. We should protect residents, especially low-income residents. But we should introduce this in stages. I hope a deal can be reached soon. During the election campaign many people expressed concern about this issue. I think the government is aware of the problem. I would even suggest that, for the present, the minimum wage should be set at 30 patacas an hour.

November 25, 2013 April 19, 2013

Macau

Mainland maids’ hiring pushed back to May Domestic workers will earn at least 2,500 patacas a month: govt Vítor Quintã

vitorquinta@macaubusinessdaily.com

Mainland maids required to live in with Macau employers (Photo: Manuel Cardoso)

acau could bring in about 300 domestic workers from mainland China under a trial scheme by May, Human Resources Office coordinator Lou Soi Peng said. There will be no minimum salary for mainland maids but the office reiterated its policy of not approving any applications to hire non-resident staff if the monthly wage is below 2,500 patacas (US$312.5). Households interested in hiring mainland maids will have between December 16 and January 30 to file an application, it was announced on November 22. The names of those who make it to the preliminary list will be released in late February, unless any of those excluded chooses to appeal, said Ms Lou. Any potential appeals will be dealt with until April, she added. The central government said it would take one month to handle the final procedures, such as issuing passports for the 300 maids. Those families seeking help to take care of elderly residents will be given priority. If the number of applicants is higher than the quota, the remaining households will have to enter a draw. An applicant must prove it makes enough money and also that his or her house is big enough to host a maid. Unlike overseas domestic workers, who are given 500 patacas to help pay for accommodation, mainland maids will be required to live with

their employers. All domestic helpers in neighbouring Hong Kong are required to live in with their employers, a situation that support groups for domestic helpers say contributes to abuse. This will be the only difference in treatment between overseas and mainland maids, Ms Lou said. The wage of mainland maids will “be determined by supply and demand,” she added. “The general level for domestic helpers’ pay now is around 3,200 patacas,” Cecilia Ho Wing Yin, a lecturer in social work at the Macau Polytechnic Institute, said in February.

Wait and see An experienced domestic in Guangzhou typically earns about 4,000 yuan (5,118 patacas) a month, the Guangzhou Home Service Association said in January. Two thirds of the first new group of mainland recruits – 200 people – will come from neighbouring Guangdong province and the remainder from Fujian province just to the northeast. Would-be employers are asked to state their preference as to home province for their helper. Macau and the central authorities in Beijing will make a decision later on whether to bring in more mainland maids based on feedback from employers and recruitment agencies, as well as to demand, said Ms Lou. Ao Ieong Kuong Kao, president of the Macau Overseas Employment Agency Association, said earlier this year the city requires about 6,000 mainland workers to meet demand. By the end of September, over 19,000 non-residents were employed here as domestic helpers, with 47.4 percent from the Philippines and 35.6 percent from Vietnam. The government first mentioned in 2011 it would ask Beijing to allow mainland domestic workers here. The hiring of the first batch of maids was originally scheduled for the first half of 2013.

Louis XIII Holdings records paper loss Las Vegas Sands, Beckham Adds has ‘reasonably good chance’ of defending announce Asian tie-up 780 million yuan court claim against it L Michael Grimes

michael.grimes@macaubusinessdaily.com

ouis XIII Holdings Ltd made a loss of HK$52 million (US$6.7 million) in the six months to September 30, compared to a profit of HK$21 million in the year prior period. The firm said it “mainly resulted from the investment in hotel development” – a reference to its project for a 66-table casino-hotel on the Cotai-Coloane border under a so-called service agreement with an existing Macau licence holder. The Hong Kong-listed firm’s basic loss per share was 14.5 HK cents. Equity attributable to shareholders fell by one percent to approximately HK$3.03 billion – due to operating losses related to the hotel development.

Union Gaming Research Macau said last week it believes the casino project is now fully funded. “…total capital raised year to date (assuming the debt deal is finalised in short order) amounts to approximately US$1.058 billion, which suggests the property is therefore fully funded and should open with approximately US$100 million in cash on hand upon opening in early 2016,” said Union Gaming in a note. Louis XIII Holdings – which changed its name from Paul Y. Engineering Group Ltd in April – is also involved in general construction contracting and civil engineering, property management and

property investment. The firm stated in its latest results that a writ was served on it in the Hong Kong courts on July 28, 2011 seeking 780 million yuan (US$128 million at current prices) in damages from the group in connection with a Beijing property project. The writ claimed the company and two of its subsidiaries were in breach of an oral agreement. The firm denies that. Based on legal opinion the company and its units believe they “would have a reasonably good chance in defending the alleged claim and that it is probable there would not be material adverse impact on the financial position of the group,” states the filing.

as Vegas Sands Corp plans to brand it like Beckham by signing an agreement to cooperate with the former Manchester United, Real Madrid and England football star’s company to promote its business in Asia. The co-branding venture will focus on dining and retail, Sands China Ltd chief executive Edward Tracy said at a press conference on Saturday, without providing further details. The parent company last year got almost 60 percent of its revenue from casino resorts in the Chinese city. Sands is betting David Beckham’s celebrity status in China will help give its brand a boost in a country where casinos are forbidden from advertising. Earlier this year, the former England captain said he would act as a global ambassador for soccer in the world’s most

populous nation, and the China Football Association invited him to promote the game among the youth. Chinese tourists helped drive up casino revenue here by 18 percent to 297.1 billion patacas (US$37.2 billion) in the first 10 months of this year, close to the US$38 billion revenue raked in last year. “I miss football but I’m happy that I have something set up and I can just jump into another career as long as I get off the field,” Mr Beckham told reporters, referring to his company Beckham Ventures as well as work on various brand tie-ups and charities. “I’m glad that there are so many business opportunities presenting in front of me and I can become a businessman now.” Singapore’s Marina Bay Sands resort will also benefit from the deal announced Saturday. Bloomberg News

November 25, 2013 April 19, 2013

Macau

Mainland’s free trip ban curbs package tourism A smaller proportion of visitors from the mainland were package tourists last month Stephanie Lai

sw.lai@macaubusinessdaily.com

More than 24 million tourists have visited Macau this year

ome 2.39 million people visited Macau last month, 2 percent more than a year earlier, official data show. The data show 53 percent of all tourists were day-trippers. The number of mainlanders that visited last month was 1.51 million, nearly 5 percent more than a year earlier, the Statistics and Census Service announced on Friday. The government is hoping to attract more tourists from South Korea, and the number of South Korean visitors grew by 12 percent. The number of visitors from Taiwan rose by 3 percent to 89,248, reversing a falling trend that began last year. More visitors came from most European countries and from the United States, but the number of visitors from Canada fell by 13.6 percent to 7,579. In the first 10 months of this year Macau had over 24.3 million visitors, 4.7 percent

more than in the equivalent period of last year. The city had 28 million visitors last year. The National Day holidays fall in October, which means it is usually a peak month for tourism. But fewer mainlanders visited last month than in the summer peak month, August, when 1.88 million visited – 15 percent more than a year earlier and the most in any month since the Statistics and Census Service began publishing monthly data on tourism in 2008. About 837,000 or 55.3 percent of last month’s visitors from the mainland were package tourists. The proportion had been 60 percent in September and 57.7 percent a year earlier. The mainland’s effort to curb free package tours may be behind the contraction. On October 1 the mainland banned free or excessively cheap package tours run by operators that recoup their costs by making tourists shop

in shops that pay commission or making them go on expensive excursions. The ban has made package tours more expensive. The president of the Macau Travel Industry Council, Andy Wu Keng Kuong, told Business Daily: “Since the new tourism law came into effect the number of mainland package tourists has turned out not to be as bad as some travel agencies had expected. They had feared a much more drastic drop.” Mr Wu said that since the mainland’s ban on free tours had come into effect travel agents had increased the prices of package tours to Macau by between 30 percent and 70 percent. “But I think that as travel agencies and consumers gradually adapt to the new law, the proportion of package visitors will pick up, starting in November,” Mr Wu said. “The increase in package tour prices will also be a milder,” he said.

10 10

November 25, 2013 April 19, 2013

Greater China

Regulator pressures banks for

Norway, Chinese firm in Iceland tie-up Banking supervisor orders more disclosure on shadow bank products Norway said it would team up with a Chinese firm to explore for oil offshore Iceland, in a rare cooperation for the two countries since a diplomatic row over the award of the 2010 Nobel Peace Prize to Chinese dissident Liu Xiaobo. Norway has the right to join an exploration licence with Chinese oil firm China National Offshore Oil Corp in the waters between Iceland and Norway’s Jan Mayen island, and Norway’s government decided it should participate. “Icelandic authorities are now planning to allocate an additional licence as part of the second licensing round, and Norway should participate,” the oil ministry said.

Nokia workers to continue strike Striking workers at a Nokia OYJ factory in southern China on Friday threatened to extend industrial action after the company terminated the contracts of 59 employees for failing to return to work. Hundreds of employees stopped work on Tuesday, complaining of changes in the wake of Nokia’s sale of its mobile phones business to U.S. software giant Microsoft Corp. The striking workers said they are being forced to sign new contracts with worse terms of employment. Striking employees said they were told they had violated work regulations because they refused to return to work.

Weihao Cao and Gabriel Wildau

he China Banking Regulatory Commission (CBRC) will require banks to report detailed information on their holdings of wealth management products beginning in 2014, four sources with direct knowledge of the new regulations told Reuters. Wealth management products (WMPs) are short-term investment products that Chinese banks market to clients as a higher-yielding alternative to traditional bank deposits. They have become a crucial element of China’s shadow banking system, which analysts warn has contributed to excessive debt growth that has led to a build-up of financial risk. Many WMPs are recorded offbalance-sheet and are used to finance lending to risky sectors such as real estate developers and local governments, to which banks are otherwise discouraged from lending. “After implementation, (WMP) holdings will be transparent to regulators. The initiative and authority are in their hands,” said a director of wealth management business at a major state-owned bank, who spoke to Reuters on condition of anonymity as the rules are not yet published. He said the greater transparency could change which assets get packaged into WMPs, reducing the share of “non-standard” assets such as loans, while raising the proportion of bonds and money market instruments. “This will directly cut off the traditional methods for operating wealth management products,” said

KEY POINTS MOVE TO CURB RISKS FROM OPAQUE INVESTMENT PRODUCTS NEW REGISTRATION SYSTEM MANAGED BY BOND CLEARINGHOUSE BANKS MUST DISCLOSE COUNTERPARTIES, DAILY VALUATIONS LENDERS SHOULD SEGREGATE ON- AND OFF-BALANCE SHEET BUSINESS

a fixed-income trader involved in internal negotiations at China Central Depository and Clearing Co, the state-backed clearinghouse that will manage the new registration system. CBRC could not be immediately reached for comment.

Reducing risks Regulators have rolled out a series of rules this year to reduce risks from off-balance-sheet lending. Reuters also reported on Friday that the CBRC has drafted new rules to curb complex transaction that banks use to evade lending restrictions by

disguising corporate loans as loans to other banks. A key focus of the registration system is to force banks to match each WMP with a specific set of underlying assets, with returns on the product linked solely to the performance of those assets. CBRC wants to eliminate the practice in which banks sell new products to raise the cash necessary, or use on-balance-sheet funds, to make payouts on maturing products. Such practices can enable banks to hide losses on the assets underlying WMPs. China’s chief securities regulator has compared the practice to a Ponzi scheme. The practice also creates liquidity risk for banks, which could find themselves unable to meet payouts on maturing products if WMP investors decline to roll over maturing products into newly issued ones. Regulators also want to force banks to strictly separate their onand off-balance sheet businesses, forbidding them from using onbalance-sheet funds to finance payoffs of off-balance-sheet products. Analysts warn that investors widely perceive WMPs as carrying an implicit guarantee from stateowned banks, even when the fine print says otherwise. They say that banks will face enormous pressure to compensate investors in the event of default, leaving them heavily exposed to risks that do not show up on their balance sheets. Reuters

Beijing extends air defence China CNR aiming for HK listing China CNR Corp Ltd, one of China’s biggest train makers, is planning to list shares in Hong Kong equal to about 15 percent of its total outstanding shares, the China Securities News reported on Saturday. The company would list in Hong Kong via public offering and international placement within 18 months of getting a green light from shareholders, it said. The company would not list more than 1.8218 billion H-shares, or about 15 percent of its total shares, it said. The funds would be used for overseas investment and development, globalisation of its equipment purchasing and investment in promoting research and development, it said.

Lee Man Fong’s painting sets record Indonesia artist Lee Man Fong’s painting “Bali Life” sold for HK$35.96 million (US$4.7 million) at Christie’s in Hong Kong on Saturday setting a record for the artist. The work dated 1962-1964 measuring 1 metre (3.3 feet) by 2.43 metres did not have a pre-sale estimate. His previous record was set when Mr Lee’s painting sold for HK$34.3 million at Sotheby’s in Hong Kong in October 2012.

Area covers islands in Japan row; Tokyo lodges diplomatic protest

hina declared an air defence identification zone in the East China Sea covering islands at the centre of a row with Japan and said its armed forces will take “defensive emergency measures” if aircraft don’t comply. The new rules, which took effect yesterday, include reporting flight plans and providing identification of aircraft, according to the Chinese Ministry of Defence, which didn’t specify what measures might be taken against non-cooperation. Japan’s Foreign Ministry lodged a complaint with China, while the U.S. government called the action “a destabilising attempt to alter the status quo”. Both nations’ militaries must work together to prevent China’s declaration from becoming an “explosive situation,” Masahiko Komura, vice president of Japan’s ruling Liberal Democratic Party and a former foreign minister, said on NHK Television’s Sunday Debate programme. China is unlikely to easily abandon the declaration, he said. The move risks increasing tension between Asia’s two biggest economies, which are in dispute over the ownership of islets known as Diaoyu in Chinese and Senkaku in Japanese. The islands lie inside the zone

This is a necessary measure taken by China in exercising its self-defence right Yang Yajun, Chinese Ministry of Defence’s spokesman

Patrol boats from the two countries have tailed one another through the area

and both nations claim sovereignty over the surrounding waters, which are rich in oil, natural gas and fish. A map, details of the zone’s coordinates and rules governing the area were posted on the Chinese Ministry of Defence’s website on Saturday, along with a question and answer statement from Yang Yajun, a ministry spokesman.

The announcement of the zone follows a decision by China’s Communist Party leaders last week to form a state committee to better coordinate security issues as the country expands its military reach and faces growing dissent at home. The rules include reporting flight plans to China’s Foreign Ministry or civil aviation authorities and

11 11

November 25, 2013 April 19, 2013

Greater China

more disclosure Xi to promote allies in sweeping reshuffle Changes to allow president to deepen his power base

Officials trying to curb lending to risky industries

perimeter

hinese President Xi Jinping plans to promote a string of allies in coming months as part of a sweeping reshuffle of the Communist Party, the government and the military, three separate sources with ties to the leadership said. The reshuffle would allow Mr Xi, who is also party and military chief, to deepen his power base and counter opposition to the bold reforms unveiled this month at the third plenum of the party’s leaders, said the sources. The reforms, which included a relaxation of the one-child policy and letting financial markets play a greater role in the economy, were seen as an indication of how effectively Mr Xi had been able to consolidate his power just a year after taking over as party chief. “With the third plenum over, Xi will promote his men to work with him and implement his policies and the reforms,” one of the sources said. The changes will happen in the run-up, during or just after the annual full session of parliament next March, the sources said. Li Zhanshu, 63, one of Mr Xi’s closest allies, is the front-runner to replace Han

The Chinese air force conducted its first patrol inside the zone yesterday, comprising two reconnaissance planes with fighter jets and early-warning aircraft in support, the ministry said in a separate statement.

Japan protest

providing radio and logo identification of aircraft, according to China’s Defence Ministry. “This is a necessary measure taken by China in exercising its self-defence right,” Mr Yang said, according to the English-language statement. “It is not directed against any specific country or target. It does not affect the freedom of over-flight in the related airspace.”

Junichi Ihara, the director-general for Asian and Oceanian Affairs at the Japanese Foreign Ministry, protested to the minister at China’s embassy in Tokyo by phone, the ministry said in an e-mailed statement. Mr Ihara told the official that Japan “absolutely cannot accept” the establishment of the zone covering the Senkaku Islands, which he said “are Japanese territory”. Mr Ihara’s comments come amid speculation Japan will release a new 10-year defence plan next month that includes increased security over the disputed islands. Since the Japanese government bought three of the islands from a private owner in September 2012, patrol boats from the two countries have tailed one another through the area and the row has damaged trade and tourism ties. Top-level political contact has ground to a halt. The U.S. is “deeply concerned” about the Chinese announcement, Secretary of State John Kerry said in a statement. “This unilateral action constitutes an attempt to change the status quo in the East China Sea,” he said. “Escalatory action will only increase tensions in the region and create risks of an incident.” Bloomberg News

Han Zheng, Shanghai’s party boss

Zheng, 59, as Shanghai’s party boss, the sources said. The party boss outranks the city mayor. “Han Zheng will definitely step down and go to Beijing,” a second source told Reuters, who like the others requested not to be identified to avoid repercussions for discussing secretive elite politics. The sources said Mr Han is tipped to be named to a senior role in the reform committee that the president is setting up to oversee the reform process. However, Mr Li’s and Mr Han’s appointments are not set in stone, they said.

Both men sit on the party’s decision-making 25-member Politburo and stand a good chance of promotion to the pinnacle of power – the sevenmember Politburo Standing Committee – during the next five-yearly party congress in 2017, the sources said. A spokeswoman for the Shanghai city government declined to comment when reached by telephone. The Communist Party spokesman’s office, also declined to comment. Barring any last-minute veto by Jiang Zemin, a former president who still wields political clout, Mr Li would take over the top job in Shanghai with the priority of overseeing the development of the city’s free trade zone. “Jiang is hoping that Han Zheng can stay on to look after the interests of his family and allies,” a third source said, also speaking on condition of anonymity. Mr Han was only named as the Shanghai party boss last November. He served as the city’s mayor from 2003 to 2012, overlapping with when Mr Xi was party boss there. Mr Han is acceptable to all camps, including Mr Xi’s immediate predecessor, Hu Jintao. Reuters

Candidates for Hong Kong leadership need vetting Beijing’s opponents ‘cannot become chief executive’, Li Fei says

hina said candidates for Hong Kong’s chief executive election in 2017 must be vetted by a committee, reiterating the ground rules as the city plans to start public consultation on universal suffrage. The nomination procedure allows for input from different parts of society and will ensure the elected leader is acceptable to all, Li Fei, deputy secretary-general of China’s National People’s Congress Standing Committee, told lawmakers and officials in Hong Kong. Mr Li’s comments underline China’s desire to retain control of the 2017 election process as opposition lawmakers in Hong Kong call for the introduction of full-fledged democracy. Civic groups have threatened to organise demonstrations in the city’s financial district next July if Chief Executive Leung Chun Ying doesn’t speed up political reforms. “The chief executive’s post must be filled by a patriot,” Mr Li said. “Someone who opposes the central government cannot become chief executive.”

Mr Leung is the last leader picked by a group of billionaires, professionals and lawmakers to run Hong Kong as China has pledged to allow an election in four years. Public consultation on the electoral process will start next month, Chief Secretary Carrie Lam said on Thursday. Limiting the number of candidates wouldn’t be an unreasonable limit, Mr Li told a group of bureaucrats at a separate seminar in Hong Kong yesterday, according to a transcript published on the Chinese government’s website. “Anyone who seeks to create unrest from the universal suffrage issue or tries to promote a type of universal suffrage that may lead to social instability will not receive support from Hong Kong society,” Mr Li said at the seminar. Under the Basic Law candidates for 2017 must be nominated by a committee. Universal suffrage in the city will have “Hong Kong characteristics,” Zhang Xiaoming, the Chinese government’s representative in the city, said on July 16. Bloomberg News

12 12

November 25, 2013 April 19, 2013

Asia

Japan cuts view on exports, warns of risks from overseas First time since 2002 that it cuts exports outlook for three months in a row

US$10.9 bln JAPAN’S TRADE DEFICIT IN OCTOBER

Recent data showed signs of a pickup in exports last month

apan cut its view on exports for a third straight month saying they were weakening due to sluggish demand from emerging economies, in direct contrast to the central bank’s more upbeat outlook about recovery in the world’s third-largest economy the day before. Still, the government maintained its overall assessment on the economy, which it said was on track

for a moderate recovery, underpinned by firm private consumption and a pickup in capital spending on improving corporate earnings. Weak exports are a source of concern for policymakers as shipment volume has struggled to grow this year amid a slowdown in emerging economies, hit by capital outflows as portfolio funds positioned for an eventual tapering of U.S. stimulus. “Exports have a weak tone

recently,” the Cabinet Office said in its latest monthly economic report issued on Friday. Its assessment in the November report was weaker than its previous view that exports were almost flat. “Exports are expected to move toward picking up … however, the slowing down of overseas economies remains a downside risk for the Japanese economy.” It was the first time since 2002 that the government cut

its assessment on exports for three months in a row. The latest assessment comes a day after the Bank of Japan retained its assessment that the economy was recovering moderately, with BOJ Governor Haruhiko Kuroda saying the U.S. and eurozone economies were gaining strength. Data on Wednesday showed signs of a pickup in exports in October, but the rebound was not strong enough to alleviate concerns about shipments, prompting the government’s downgrade on the key sector. “The global economy as a whole is recovering moderately but it lacks strength,” a Cabinet Office official told reporters. “As commodity prices decline, demand is weakening mainly among resourceproducing countries,” he said, citing weak demand for cars

from Russia and the Middle East and for construction machinery from Brazil and Australia. The government stuck to its previous assessment on other key sectors including industrial output, capital spending and private consumption. It said industrial output was rising moderately, business investment showed a pickup mainly among nonmanufacturers, and private consumption was seeing an improving trend. The government maintained the view that Japan was approaching an end to deflation, as a key consumer price index, which excludes both food and energy, stopped falling for the first time in five years in September. Asked about the chance the government could change its diagnosis on deflation, the Cabinet Office official said the government would carefully examine whether price hikes were broadening and taking root in the economy before making a judgment. The central bank maintained on Thursday the massive monetary stimulus put in place in April, under which it aims to achieve 2 percent inflation in roughly two years by doubling base money through asset purchases. Japan’s economy slowed in July-September as exports and household spending moderated, but analysts expect growth to accelerate in the current quarter as exports recover and consumers rush purchases before a sales tax hike next April. Reuters

Abbott seeks to repair Indonesia ties Jakarta called a halt to cooperation with Australia last week

ustralian Prime Minister Tony Abbott wrote to Indonesian President Susilo Bambang Yudhoyono as he seeks to repair relations after claims the phones of Indonesia’s leaders were tapped. Mr Yudhoyono called a halt to cooperation with the Abbott government on asylum seekers and military operations after withdrawing his ambassador from Canberra last week, as tensions escalated to their highest level in 14 years amid claims the phones of Indonesia’s leaders were tapped. The government is reviewing cattle exports from Australia, Trade Minister Gita Wirjawan said on Saturday, in the first sign the spying spat may affect trade between the neighbours. “One of the fundamental tasks of my government is to ensure that

our relationship with Indonesia goes from strength to strength,” Mr Abbott said in Sydney, according to an e-mailed transcript. “I have written to President Yudhoyono and the letter is now in the process of being delivered,” he said, declining to comment on the content. Mr Abbott, whose government was elected two months ago, said on November 19 that “Australia should not be expected to apologise for the steps we take to defend this country”. He said he regretted any embarrassment to Mr Yudhoyono, while defending security measures implemented by past governments. Mr Yudhoyono has received Mr Abbott’s letter and is studying it, said Teuku Faizasyah, a spokesman for the president.

One of the fundamental tasks of my government is to ensure that our relationship with Indonesia goes from strength to strength Tony Abbott, Australian Prime Minister

Several hundred people gathered outside the Australian Embassy in Jakarta on Thursday, burning that country’s flag, police said. Indonesians were demanding an apology from Australia, said protester Donny Manurung, from a local youth group, and more rallies were planned. Indonesia, which takes more than 60 percent of Australia’s live cattle exports, may revise rules to let it import from other countries, Mr Wirjawan said in Jakarta. Malaysia buys most of its beef from India at half the price of Australian meat, and Indonesia should act to follow that, he said. Two-way trade between Australia and Indonesia, which includes wheat, oil and dairy products, reached A$14.6 billion (US$13.4 billion) last year. Bloomberg News

EDITORIAL council COUNCIL Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok editorial FOUNDER & Publisher PUBLISHER Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Founder EDITOR-IN-CHIEF Tiago Azevedo DEputy DEPUTY Editor-in-Chief EDITOR-IN-CHIEF Vitor Quintã Editor-in-Chief ASSOCIATE editor EDITOR Michael Grimes GROUP SENIOR ANALYST José I. Duarte Associate NEWSDESK Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Newsdesk CREATIVE Director DIRECTOR José Manuel Cardoso WEB & IT Janne Louhikari Creative CONTRIBUTORS James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Contributors Ricardo Siu, Rose N. Lai, Zen Udani PHOTOGRAPHY Carmo Correia, Manuel Cardoso Photography ASSISTANT to TO the THE publisher PUBLISHER Laurentina da Silva | ltinas@macaubusinessdaily.com Assistant OFFICE manager MANAGER Elsa Vong | elsav@macaubusinessdaily.com office AGENCIES Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed PRINTED in Macau by Welfare Ltd. Agencies

Business Daily is a product of De Ficção – Multimedia Projects ADDRESS Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Address Av. Dr. Francisco Vieira Machado, No. 679, Macau TEL. (853) 2833 1258 / 2870 5909 Tel. FAX (853) 2833 1487 Fax EMAIL newsdesk@macaubusinessdaily.com Email ADVERTISING advertising@macaubusinessdaily.com Advertising SUBSCRIPTIONS sub@macaubusinessdaily.com Subscriptions

13 13

November 25, 2013 April 19, 2013

Asia

India to seek rupee trade payments Government to lobby countries that run large trade surpluses with India

ndia is preparing to lobby major trading partners including Japan, Iraq and Venezuela to accept rupee payments for some of their exports, one of a series of moves to stabilise the volatile currency and make it more globally acceptable. Restrictions on large transactions of rupees against foreign currencies are intended to protect India from sustained speculative assaults, but they also limit interest in the rupee and foreign investment flows. A panel set up in August to study currency swaps has now won support from the finance ministry, the commerce ministry and the central bank to target about 10 countries for such deals, focusing on oil exporting nations and others that run large trade surpluses with India, three sources said. The panel is likely to decide within the next few days on the size of the swap deals it will seek and finalise which countries to target first, said two sources who have attended meetings. The finance ministry has already agreed in principle to lobby Venezuela to accept rupees for some oil transactions. Another idea is to accept some partners’ currencies for trade.

The rupee is down about 12 percent against the U.S. dollar

“There is a broad agreement between the commerce and finance ministries and the Reserve Bank of India to push currency swap agreements, particularly with the countries with which India runs a large trade deficit,” a senior trade ministry official with the direct knowledge of the issue, told Reuters. China is already keen to start yuan-rupee trade, and India is hopeful Japan may show an interest in accepting

rupee payments. The idea to target oil producers Iraq and Venezuela stems from a rupee payment programme already in place with Iran. Japan recently agreed to extend an emergency currency swap facility with India to US$50 billion from US$15 billion. The new proposal would be separate from that deal and would focus on trade, the commerce ministry official said. India has over a period of years been loosening

capital controls and allowing foreigners to invest in more rupee assets. The move to full convertibility got fresh impetus when the rupee crashed 20 percent against the dollar earlier this year. It is still down about 12 percent. “This might be a strange time to talk about rupee internationalisation, but we have to think beyond the next few months. As our trade expands, we will push for more settlement in

rupees,” Reserve Bank of India Governor Raghuram Rajan said after taking charge of the RBI in September. An important step towards internationalization came earlier this week when the World Bank’s IFC arm issued its first rupee bond to the value of US$160 million, part of a new US$1 billion offshore rupee bond programme. The bond was strongly oversubscribed, the IFC said. Reuters

Stay in the finest hotels in Macau and read Business Daily news where it matters

Sony’s Hirai plans US$250 mln in cuts

ony Corp will cut US$250 million in costs at its entertainment units over two years, part of chief executive Kazuo Hirai’s plan to boost profit and keep full ownership of the movie, TV and music businesses. The company is reducing the number of films from Columbia Pictures, shifting investment to television production and media networks, and identifying more savings, Sony told investors and analysts at its Culver City, California, film studio. Mr Hirai is under pressure to prove his One Sony plan tying entertainment to electronics can work, following a disastrous second quarter that included a US$181 million operating loss at Sony Pictures Entertainment. Six months after billionaire Daniel Loeb called for a partial sale of the entertainment assets, Mr Hirai outlined priorities for cutting costs while investing in higher-growth

Singapore operator to run Rio airport for US$8.3 bln

areas, stressing ways entertainment can dovetail with electronics from the Tokyo-based company. “I know that the whole of Sony is greater than the sum of its parts,” Mr Hirai said. “Sony Entertainment is a core part of Sony and is crucial to our future growth.” Sony’s film and television business will have operating profit of US$630 million next year on sales of US$8.4 billion, David Hendler, the division’s chief financial officer, said at the conference. To improve profit margins, the company has identified US$150 million of overhead and operational efficiencies, and US$100 million in procurement savings, Mr Hendler said. The division is also working with consultants to find additional cuts, Michael Lynton, CEO of the entertainment unit, said from the stage. Bloomberg News

unit of Singapore’s Changi Airport Group and Odebrecht SA will acquire Galeao airport in Rio de Janeiro for almost four times the minimum bid to run Brazil’s second-busiest air hub for 25 years. Changi Airports International and the Brazilian construction and engineering company offered to pay 19 billion reais (US$8.3 billion) for Galeao, which will host visitors for the soccer World Cup next year and the 2016 Olympic Games. This compares with the minimum required bid of 4.83 billion reais. The contract is expected to be signed in March, Changi said in an e-mailed statement yesterday. The airport auction was part of President Dilma Rousseff’s 212 billion-reais plan to modernise infrastructure and shore up investor confidence as growth in Latin America’s largest economy slows.

The government is under pressure to complete the projects as the country prepares to welcome a projected 600,000 international visitors for the World Cup in June. “It’s going to be an incremental process, but this is going in the right direction for Brazil,” said Jefferson Finch, an analyst from political risk consultancy Eurasia Group. “If they can follow this up with three successful highway auctions, it could really be very helpful in turning the boat of sentiment away from negative to more positive.” The first phase of the airfield’s expansion will include building an additional 26 airbridges and parking lots by April 2016, according to Changi’s statement. The airport will be able to handle more than 60 million passengers annually by the end of the concession period, it said. Bloomberg News

14 14

November 25, 2013 April 19, 2013

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

Max 59.80

Average 59.439

Max 57.30

Min 58.90

Average 56.933

Last 59.65

Min 56.55

Last 56.55

59.80

89.70

27.60

59.62

89.34

27.52

59.44

88.98

27.44

59.26

88.62

27.36

59.08

88.26

27.28

58.90

Max 89.65

Average 88.935

PRICE

Average 27.358

Min 27.20

Last 27.55

57.14

23.86

29.8

56.98

23.82

29.6

56.82

23.78

29.4

56.66

23.74

29.2

56.50

Max 23.90

Average 23.802

DAY %

YTD %

(H) 52W

Min 23.70

Last 23.75

(L) 52W

-0.628656814

1.770576242

107.9400024

85.45999908

BRENT CRUDE FUTR Jan14

111.05

0.881177326

6.339174567

113.3099976

96.13999939

GASOLINE RBOB FUT Dec13

272.61

-0.64509075

7.141172772

290.3199911

241.5999889

GAS OIL FUT (ICE) Jan14

937.75

1.625575725

4.194444444

968

838.75

3.768

1.782820097

-4.559270517

4.744000435

3.378999949

NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13

304.13

1.150763295

1.923656959

321.1599827

276.4999866

Gold Spot $/Oz

1243.8

-0.3677

-25.2731

1753

1180.57

Silver Spot $/Oz

19.8717

-0.5769

-34.003

34.3838

18.2208

Platinum Spot $/Oz

1385.5

-1.011

-8.7136

1742.8

1294.18

Palladium Spot $/Oz

715.05

-0.5079

2.1996

786.5

629.75

LME ALUMINUM 3MO ($)

1782

-0.168067227

-14.03762663

2184

1758

LME COPPER 3MO ($)

7095

1.068376068

-10.5409154

8346

6602

LME ZINC

1909

1.058761249

-8.221153846

2230

1811.75

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14 Mar14

13560

0.96798213

-20.51582649

18770

13205

15.715

-0.600885515

1.946156341

16.80999947

14.91500092

429.25

-0.058207218

-29.57342084

654.75

420

657

0.343642612

-21.00991885

904.75

647.75

WHEAT FUTURE(CBT) Mar14 SOYBEAN FUTURE Jan14

1319.5

2.16802168

0.802139037

1406

1169

COFFEE 'C' FUTURE Mar14

107.5

-3.500897666

-32.95915186

172.25

104.1499939

17.4

-0.62821245

-15.45189504

20.71999931

16.69999886

SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14

23.70

77.23

-1.429483089

-2.745246191

90.61000061

76.58999634

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

Max 29.85

Average 29.445

Min 29.05

Last 29.20

29.0

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9183 1.6226 0.9067 1.3558 101.27 7.9859 7.7531 6.0936 62.865 31.81 1.25 29.609 43.86 11700 92.88 1.22935 0.83553 8.2213 10.7907 137.28 1.03

-0.8957 0.8014 1.1139 0.878 -0.3654 -0.0188 -0.0142 -0.0131 0.1193 -0.0314 -0.096 -0.0642 -0.2394 0.0427 0.6675 0.2278 -0.0754 -0.5048 -0.5625 -1.2165 0

-11.5147 0.3091 0.9595 2.79 -14.9798 -0.0338 -0.0322 2.2483 -12.5189 -3.8667 -2.288 -1.9454 -6.5093 -16.2991 -3.8254 -1.779 -2.4069 -0.0462 -2.4123 -17.2713 -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 11736 105.433 1.265 0.88151 8.4957 11.0434 137.35 1.032

0.8848 1.4814 0.8891 1.2746 81.69 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 85.24 1.20302 0.80331 7.8281 10.195 105.28 1.0289

Macau Related Stocks NAME ARISTOCRAT LEISU CROWN RESORTS LT

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.78

-0.4166667

16.55

1.037851

VOLUME CRNCY

51.74603

5.12

2.73

2297925

55.10778

17.38

9.98

943106

AMAX INTERNATION

1.08

0.9345794

-22.85714

1.72

0.75

1403225

BOC HONG KONG HO

26.2

0.7692308

8.713691

22.85

11345043 2452747

CENTURY LEGEND CHEUK NANG HLDGS CHINA OVERSEAS CHINESE ESTATES

0.5

-1.960784

88.67926

0.56

0.24

7.03

0.4285714

17.36227

7.28

4.13

80000

23.95

0.4192872

3.679652

25.6

17.7

10628675

-1.123596

95.63297

22.8

9.767

68713

CHOW TAI FOOK JE

12.26

0.4918033

-1.446942

13.4

7.44

3548500

EMPEROR ENTERTAI

3.95

1.542416

108.9947

4.66

1.65

900000

3.7

12.12121

205.2739

3.87

1.103

10486000

59.65

1.878736

96.54036

63.75

6867783

126.4

0.3971406

6.486945

132.8

110.6

756399

26.05

-0.1915709

-21.65414

35.3

23.2

1067000

HSBC HLDGS PLC

86.6

0.1735107

6.519061

90.7

76.55

7944977

HUTCHISON TELE H

2.93

0.3424658

-17.69663

4.66

2.91

17019000

LUK FOOK HLDGS I

30.05

0.5016722

23.15574

30.5

16.88

1205469

MELCO INTL DEVEL

26.55

1.724138

194.6726

28.1

7.84

2505000

7148.97

MGM CHINA HOLDIN

27.55

1.848429

107.4817

12.805

2341312

1770.53

MIDLAND HOLDINGS

3.2

-13.51351

4.29

2.68

764725

NEPTUNE GROUP

0.3

1.694915

97.36843

0.4

0.131

62675000

NEW WORLD DEV

10.5

-0.1901141

-12.64559

15.12

9.98

12856646

SANDS CHINA LTD

56.55

0.5333333

66.56848

60.5

30.35

5239577

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16064.77

0.3421614

22.59309

16068.78

12765.32031

NASDAQ COMPOSITE INDEX

3991.649

0.5667201

32.1951

3994.969

2935.878

GALAXY ENTERTAIN

FTSE 100 INDEX

6674.3

-0.1052186

13.16573

6875.62

5755.23

HANG SENG BK

DAX INDEX

9219.04

0.2496716

21.10572

9253.679688

7219.55

HOPEWELL HLDGS

NIKKEI 225

15381.72

0.1049097

47.96973

15942.6

9304.72

HANG SENG INDEX

23696.28

0.4918939

4.587382

23944.74

19426.35938

CSI 300 INDEX

2397.962

-0.4990479

-4.954117

2791.303

2023.171

TAIWAN TAIEX INDEX

8116.78

0.2139651

5.41957

8476.63

KOSPI INDEX

2006.23

0.624442

0.4596746

2063.28

FUTURE BRIGHT

S&P/ASX 200 INDEX

5335.912

0.8999837

14.77671

5457.3

4397.9

JAKARTA COMPOSITE INDEX

4317.96

-0.1905827

0.02948903

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1794.52

-0.007243752

6.250633

1826.22

1590.67

SHUN HO RESOURCE

1.62

15.71429

1.92

1.22

NZX ALL INDEX

1015.975

-0.02115746

15.18299

1048.998

858.253

SHUN TAK HOLDING

4.4

0.456621

5.011932

4.8

3.27

4976198

PHILIPPINES ALL SHARE IX

3717.63

-0.5231217

0.5041904

4571.4

3440.12

SJM HOLDINGS LTD

4324181

Euromoney Dragon 300 Index Sin

27.20

30.0

94.84

NAME

Max 27.55

23.90

WTI CRUDE FUTURE Jan14

CORN FUTURE

87.90

Currency Exchange Rates

NAME

METALS

Last 89.35

57.30

Commodities ENERGY

Min 87.90

616.01

-0.79

-0.82

STOCK EXCH OF THAI INDEX

1359.07

-1.220328

-2.360759

1649.77

1260.08

HO CHI MINH STOCK INDEX

505.64

0.4170473

22.21497

533.15

374.15

LAOS COMPOSITE INDEX

1277.82

-0.1593924

5.190277

1455.82

1196.44

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

23.75

33.82048

16.762

SMARTONE TELECOM

8.64

-1.030928

-38.63636

14.66

8.63

5004000

WYNN MACAU LTD

29.2

0.5163511

39.37947

32.6

3150763

ASIA ENTERTAINME

N/A

BALLY TECHNOLOGI

71.76

0.1255756

60.50101

78.03

43.57

208175 3128

BOC HONG KONG HO

3.39

10.42346

3.6

2.99

GALAXY ENTERTAIN

7.728

1.684211

94.65995

8.11

3.6

2830

INTL GAME TECH

16.96

-1.509872

19.68948

21.2

12.9

3508052

JONES LANG LASAL

98.17

1.289723

16.95258

101.46

76.7013

281734

LAS VEGAS SANDS

70.47

0.7002001

52.66465

73.49

40.9632

3120083 1272661

MELCO CROWN-ADR

34.5

-0.02897711

104.8694

13.95

MGM CHINA HOLDIN

3.44

96.53871

3.88

1.703

100

MGM RESORTS INTE

18.82

-0.3705664

61.68384

20.98

9.8

4434899

SHFL ENTERTAINME

23.19

59.93103

23.25

12.98

344231

SJM HOLDINGS LTD

3.108

36.45847

3.6

2.1494

8000

WYNN RESORTS LTD

162.45

-0.6604293

47.0644

170.254

104.7075

717949

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

0.5154639

18085719

CHINA UNICOM HON

12.1

0.1655629

11496481

ALUMINUM CORP-H

2.88

1.052632

13692686

CITIC PACIFIC

11.2

-0.7092199

BANK OF CHINA-H

3.73

1.084011

418558726

BANK OF COMMUN-H

5.73

0.7029877

23824024

BANK EAST ASIA

34.2

0.736377

1814867

BELLE INTERNATIO

9.41

-0.9473684

37064200

AIA GROUP LTD

NAME

CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

62.95 -0.07936508

PRICE

DAY %

POWER ASSETS HOL

62.75

0.07974482

1763153

5305225

SANDS CHINA LTD

56.55

0.5333333

5239577

2469363

SINO LAND CO

10.86

0.1845018

3451275

SUN HUNG KAI PRO

99.35

-0.251004

2624750

92.5

0.7076756

905071

424.6

0.6638217

2699442

0.2554278

46153846

11.48

-0.173913

5369604

SWIRE PACIFIC-A

16.4

-0.243309

8097007

TENCENT HOLDINGS TINGYI HLDG CO

22.3

0.2247191

5712856

WANT WANT CHINA

11.1

0.5434783

6037762

WHARF HLDG

65.3

0.7716049

2475958

26.2

0.7692308

11345043

HANG LUNG PROPER

26.55

1.335878

3484471

16.44

2.238806

8647463

HANG SENG BK

126.4

0.3971406

756399

CHEUNG KONG

HENDERSON LAND D

45.8

-0.5428882

3967634

HENGAN INTL

95.6

-0.156658

1237324

HONG KG CHINA GS

18.18

-0.3289474

8766155

HONG KONG EXCHNG

137.3

-0.2904866

3345193

86.6

0.1735107

7944977

96.85

0.2587992

2738012

5.55

0.7259528

141984226

LI & FUNG LTD

10.96

10240352

29.65

-0.8361204

2484377

122.5

0.8230453

3785956

CHINA COAL ENE-H

5.14

0.9823183

96743147

CHINA CONST BA-H

6.27

1.129032

296485845

CHINA LIFE INS-H

2.669405

86219456

CHINA MERCHANT

-0.172117

3010953

CHINA MOBILE

80.45

-0.6176652

29994062

HUTCHISON WHAMPO

CHINA OVERSEAS

23.95

0.4192872

10628675

IND & COMM BK-H

CHINA PETROLEU-H

7.01

0.7183908

112908820

CHINA RES ENTERP

27.6

1.284404

5532453

MTR CORP

HSBC HLDGS PLC

VOLUME

15.7

CATHAY PAC AIR

BOC HONG KONG HO

NAME

CHINA RES LAND

21.05

-0.4728132

3733998

NEW WORLD DEV

10.5

-0.1901141

12856646

CHINA RES POWER

18.38

-0.5411255

8716600

PETROCHINA CO-H

9.42

-0.2118644

88012427

CHINA SHENHUA-H

26.65

1.912046

24360591

PING AN INSURA-H

73.15

2.955665

37175566

MOVERS

23790

INDEX 23696.28 HIGH

23789.99

LOW

23521.03

52W (H) 23944.74 (L) 19426.35938

23521

20-November

22-November

15 15

November 25, 2013 April 19, 2013

Opinion BUSINESS

WIRES

Leading reports from Asia’s best business newspapers

TAIPEI TIMES

The U.S. dollar and its rivals

Expressing regret that Beijing issued a map of an East China Sea air defence identification zone that includes the disputed Diaoyutai Islands, the Taiwanese government called on all parties involved to remain calm in dealing with the issue to avoid an escalation of regional tensions. The islands, known as the Senkaku Islands in Japan, are also claimed by Taiwan and Japan. Taiwan’s National Security Council urged all parties to show restraint and work together to develop the resources in the waters around the islands.

Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

Renminbi still far At the same time, the IMF’s data indicate that the vaunted renminbi is not yet among the top seven currencies in terms of central-bank reserve holdings. And, according to the BIS, while the renminbi has finally broken into the top ten currencies in foreignexchange markets, it still accounts for only 2.2 percent of all transactions, just behind the Mexican peso’s 2.5 percent share. Despite recent moves by the Chinese government, the renminbi still has a long way to go. To try to explain the recent stabilisation of the dollar’s status, one might note something that the last three years have in common with the previous period of temporary reversal from 1992 to 2000: striking improvements in the U.S. budget deficit.

INQUIRER BUSINESS SM Prime Holdings Inc, the property arm of Henry Sy’s SM Investments Corp, is shelving for now plans to take its mall business in China public as the company’s top official said they have yet to achieve the required scale. SM Prime president Hans Sy said that an earlier goal to list by 2014 would be deferred and he indicated it could take several more years before the business was ready. “A China listing is still part of the game plan. But we are not yet there,” Mr Sy said.

JAKARTA GLOBE Indonesia’s government is preparing to raise US$450 million from selling dollardenominated bonds this week. “The auction will be conducted on Monday and the results will be announced on the same day,” the finance ministry’s debt management office said in a statement posted on its website last week. The debt sale, aimed at local investors with access to dollars, would be the last offering of such securities in Indonesia this year. It is also meant to plug the country’s budget deficit. The budget shortfall is forecast to reach 224 trillion rupiah (US$19.3 billion), according to the government.

KOREA HERALD Inter-Korean trade has gradually been returning to normal levels following the reopening of a joint industrial park in North Korea’s border city of Kaesong in September. According to data from the Ministry of Unification and the Korea Customs Service, two-way trade between South and North Korea amounted to US$152.15 million last month. The amount is equivalent to 80.9 percent of total bilateral trade in the same month last year. “Exports have grown… as [the Kaesong complex] prepares to resume operations in earnest,” a ministry official said.

it. They obviously still regard U.S. Treasury bills as a safe haven and the dollar as the top international currency, especially given the absence of good alternatives. In particular, the euro has its own all-too-obvious problems. Indeed, the euro’s share in reserve holdings and foreignexchange transactions have both declined by several percentage points in the most recent statistics.

ince 1976, the U.S. dollar’s role as an international currency has been slowly waning. International use of the dollar to hold foreign-exchange reserves, denominate financial transactions, invoice trade, and as a vehicle in currency markets is below its level during the heyday of the Bretton Woods era, from 1945 to 1971. But most people would be surprised by what the most recent numbers show. There is an abundance of explanations for the downward trend. Since the Vietnam War, U.S. budget deficits, money creation, and current-account deficits have often been high. Presumably as a result, the dollar has lost value relative to other major currencies or in terms of purchasing power. Meanwhile, the U.S. share of global output has declined. And, most recently, the disturbing willingness of some members of the U.S. Congress to pursue a strategy that would cause the Treasury to default on legal obligations has undermined global confidence in the dollar’s privileged status. Moreover, some emergingmarket currencies are joining the club of international currencies for the first time. Indeed, some analysts have

suggested that the Chinese renminbi may rival the dollar as the leading international currency by the end of the decade. But the dollar’s status as an international currency has not fallen uniformly. Interestingly, the periods when the public is most concerned about the issue do not coincide with the periods when the dollar’s share in international transactions is in fact falling.

Surprising resilience By the criteria of international use as a reserve currency among central banks and as a vehicle in foreign-exchange markets, the most rapid declines took place from 1978 to 1991 and from 2001 to 2010. Between these two intervals, from 1992 to 2000, there was a clear reversal of the trend, notwithstanding a popular orgy of dollar declinism around the middle of that decade. Central banks held only an estimated 46 percent of their foreign-exchange reserves in dollars in 1992, but that share rebounded to almost 70 percent by 2000. Subsequently, the long-term downward trend resumed. According to one estimate, the dollar’s share in central-banks’

foreign reserves declined from about 70 percent in 2001 to barely 60 percent in 2010. During the same decade, its share in the foreign-exchange market also declined: the dollar constituted one side or the other in 90 percent of foreignexchange trades in 2001, but only 85 percent in 2010. The International Monetary Fund’s most recent statistics suggest, unexpectedly, another pause in the dollar’s long-term decline. According to the IMF, the dollar’s share in foreignexchange reserves stopped falling in 2010 and has been flat since then. If anything, the share is up slightly thus far in 2013. Similarly, the Bank for International Settlements (BIS) reported in its recent triennial survey that the dollar’s share in the world’s foreignexchange trades rose from 85 percent in 2010 to 87 percent in 2013. Given dysfunctional U.S. fiscal policy, the dollar’s resilience is surprising. Or maybe we should no longer be surprised. After all, when the global financial crisis erupted in 2008 from the bowels of the American subprimemortgage market, global investors responded by fleeing to the U.S., not from

The day may come when the dollar, too, succumbs to a rival. But today is not that day

By the end of the 1990’s, the record deficits of the 1980’s had been transformed into record surpluses; today, the federal deficit is less than half its 2010 level. Perhaps the fiscal observation is a coincidence. After all, it would be foolish to read too much into two historical data points. It would be even more foolish to believe that just because American politicians have failed to dislodge the U.S. dollar from its paramount status over the last 40 years, they could not accomplish the job with another few decades of effort. It is not an eternal law of nature that the dollar shall always be number one. The pound sterling had the top spot in the nineteenth century, only to be surpassed by the dollar in the first half of the twentieth century. The day may come when the dollar, too, succumbs to a rival. But today is not that day. © Project Syndicate

16 16

November 25, 2013 April 19, 2013

Closing Swiss to reject cap on bosses’ pay

Airlines warned over engine ice

Swiss voters rejected a proposal to limit executives’ pay to 12 times that of junior employees, a measure that would have gone further than any other developed nation. The measure was opposed by 65 percent of voters, SRF television projections showed as of 1pm there. Polls, including one by research consultancy gfs.bern, had signalled that outcome as probable. No margin of error was given. “It’s a big relief,” Valentin Vogt, president of the Swiss Employers’ Association, told SRF in an interview. “It’s a signal that it’s not up to the state to have a say in pay.” Switzerland is the home to at least five of Europe’s 20 best-paid chief executive officers.

Fifteen airlines have been warned about the risk of ice forming on Boeing’s new 747-8 and 787 Dreamliner planes. The issue – affecting some types of engines made by General Electric when planes fly near high-level thunderstorms – prompted Japan Airlines to cancel two international routes. There have been six incidents since April when aircraft powered by GE engines lost power at high altitude. These are the latest technical issues to hit the Dreamliner. They saw the entire fleet being grounded earlier this year following battery problems. The Boeing 747-8 series and the new 787 Dreamliner are the only types of aircraft affected.

Six powers reach nuclear deal with Iran Tehran to get about US$7 billion in sanctions relief

Six powers clinch breakthrough deal curbing Iran’s nuclear activity

ran has agreed to curb some of its nuclear activities in return for about US$7 billion in sanctions relief, after days of intense talks in Geneva. Iran and six world powers reached the breakthrough deal early on Sunday to curb Tehran’s nuclear programme, in what could be the first sign of an emerging rapprochement between the Islamic state and the West. Aimed at ending a dangerous standoff, the agreement between Iran and the United States, France, Germany, Britain, China and Russia was clinched after more than four days of tortuous negotiations in the Swiss city of Geneva. Halting Iran’s most sensitive nuclear work, it was designed as a package of confidence-building steps to ease decades of tensions and confrontation and banish the spectre

of a Middle East war over Tehran’s nuclear aspirations. But Iran’s arch foe Israel denounced it as a “bad deal” and said it would not be bound by it. EU foreign policy chief Catherine Ashton, who has been coordinating talks with Iran on behalf of the major powers, said it created time and space for talks aimed at reaching a comprehensive solution to the dispute. “This is only a first step,” Iranian Foreign Minister Mohammad Javad Zarif told a news conference. “We need to start moving in the direction of restoring confidence, a direction in which we have managed to move against in the past.” Hard-pressed by sanctions, many Iranians were elated by the easing of tensions and prospect of economic improvement. U.S. President Barack Obama

welcomed the deal, saying it included “substantial limitations which will help prevent Iran from building a nuclear weapon”. Iran agreed to give better access to inspectors and halt some of its work on uranium enrichment. President Hassan Rouhani said the deal recognised Iran’s nuclear “rights”. But he repeated, in a nationwide broadcast, that his country would never seek a nuclear weapon. The deal has also been backed by Iran’s Supreme leader Ayatollah Ali Khamenei. U.N. Secretary-General Ban Kimoon warmly welcomed the interim agreement and urged the governments concerned “to do everything possible to build on this encouraging start”. But Israel was unhappy. But the Israeli Prime Minister Benjamin Netanyahu told his cabinet it was a

“historic mistake” and that his country reserved the right to defend itself. “Today the world became a much more dangerous place because the most dangerous regime in the world made a significant step in obtaining the most dangerous weapons in the world,” he said. Israeli officials however stopped short of threatening unilateral military action that could further isolate the Jewish state and imperil its alliance with Washington, saying more time was needed to assess the agreement. The West fears that Iran has been seeking to develop a nuclear weapons capability. The Islamic Republic denies that, saying its nuclear programme is a peaceful energy project. The United States said the agreement halted progress on Iran’s nuclear programme, including construction of the Arak research reactor, which is of special concern for the West as it could yield potential bomb material. It would neutralise Iran’s stockpile of uranium refined to a fissile concentration of 20 percent, which is a close step away from the level needed for weapons, and calls for intrusive U.N. nuclear inspections, a senior U.S. official said. Iran has also committed to stop uranium enrichment above a fissile purity of 5 percent, a U.S. fact sheet said. Refined uranium can be used to fuel nuclear power plants – Iran’s stated goal – but also provide the fissile core of an atomic bomb if refined much further. Reuters

Last-minute deal saves climate talks UN envoys endorse first steps toward next pact on global warming

iplomats from almost 190 nations endorsed a set of measures on global warming, laying the groundwork for a treaty to be adopted in 2015 that would limit pollution by all nations for the first time. The delegates at a United Nations conference called on those who are ready to make pledges on emissions by the first quarter of 2015. They authorised work on a “loss and damage” mechanism that

would help the poorest cope with the impact of climate change, took in US$100 million in aid pledges to fund adaptation programs and agreed on a forestprotection deal. The meeting sidestepped the most thorny issues in the debate, namely how to divide up responsibility for emissions cuts and how richer nations will meet their promise to channel US$100 billion a year by 2020 in aid

for climate projects. Those concerns may stymie work toward a broader accord in two years. “There are some very difficult political issues that will need to be addressed over the next two years if we are going to have a successful outcome,” said Alden Meyer, an observer of the talks for two decades at the Union of Concerned Scientists, said at the meeting yesterday in Warsaw, Poland. “We’re just

at the beginning of a long and potentially difficult journey.” This year’s meeting of the UN Framework Convention on Climate Change was never designed to produce a breakthrough. Instead, it was meant to work out the technical groundwork necessary for the 2015 deal, which will be negotiated in Paris after an interim meeting in Lima, Peru. Record carbon emissions have lifted the Earth’s

temperature about 0.8 degrees Celsius since the industrial revolution, and the planet is on a path to exceed the UN-endorsed maximum of 2 degrees Celsius (3.6 degrees Fahrenheit) of warming by 2100. As a result, sea levels are rising, oceans are acidifying and glaciers and sea ice are melting. Scientists predict more freak weather, droughts and stronger storms. Bloomberg News