Macau business daily, Feb 11, 2014 by Business Daily

MOP 6.00 Year II

Number 473 Tuesday February 11, 2014

Editor-in-chief Tiago Azevedo

Mainland projects by Macau firms hit 5-year high

April 19, 2013

ew investments in the mainland backed by Macau capital rose to a five-year high but the combined value of the projects dropped last year, official data show. The authorities in the mainland gave Macau investors permission to put money into 310 new projects there last year, seven more than in 2012 and the most for five years. But the combined value of the new direct investments approved was only about US$460 million (3.68 billion patacas), 8.9 percent less than in 2012, Ministry of Commerce data show.

The vice-president of the Macau Chamber of Commerce, Vong Kok Seng, believes Macau companies will keep taking opportunities in the mainland this year, particularly in less-developed markets, as Macau companies seek to cut costs, attracted by cheaper labour in inland provinces. Investments from Macau accounted for 0.8 percent of the overall foreign direct investment in China last year, according to ministry data. The mainland attracted a record US$117.6 billion in foreign direct investment in 2013, rising by 5.3 percent from 2012. More on page 3

www.macaubusinessdaily.com

Tourists spend 84 pct of their money on gambling What tourists spend on gambling, shopping and travel accounts for over onethird of Macau’s gross domestic product, a government survey has found. The Statistics and Census Service said a survey of the economic benefits of tourism had found that 84 percent of what tourists spent here, they spent on gambling. The Statistics and Census Service said

it had carried out its first tourism satellite account survey “to compile the aggregate direct contribution of tourism activities to the economy of Macau”. The survey found that the value added by the tourism industry in 2010 was 51.8 billion (US$6.48 billion), or 35 percent of GDP. GDP grew by 27.5 percent in real terms in that year. Page 5

Taiwan aviation accord to be inked next week

Number of new companies rises 24 pct in 2013

Late-night appetites help sushi shops mushroom

Taiwan and Macau will sign next week an open skies deal which will lift restrictions on air services between here and the island, the Civil Aviation Authority of Macau has said. Taiwan’s Chinese-language Economic Daily News reported that the agreement lifts all restrictions on the number of flights between Taiwan and Macau. The open skies agreement may mean more competition on Macau-Taiwan routes, which may mean cheaper air travel.

Macau’s economic fabric continues to swell as the number of companies incorporated in 2013 grew by 24.1 percent from the previous year, official data show. A total of 4,481 new firms were established in the city last year, the Statistics and Census Service said. The data released yesterday also hints a growing role for SMEs in Macau’s economy. Macau investors accounted for 58 percent of the capital of the firms established last year.

A shortage of street eateries open in the early hours of the morning that cater to casino staff working the night shift has seen demand bloom for takeaway Japanese food, according to restaurateurs. The trend is part of a boom in the takeaway food business that is likely to continue as casinos open and household wealth grows. One advantage is that it is relatively easy to find a cheap venue and the licensing process is much quicker.

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Brought to you by

Hang Seng Index 21660

21636

21612

21588

21564

21540

February 10

HSI - Movers Name

%Day

LENOVO GROUP LTD

2.38

TENCENT HOLDINGS

1.72

PETROCHINA CO-H

1.59

BOC HONG KONG HO

1.52

POWER ASSETS HOL

1.24

HENGAN INTL

-2.05

GALAXY ENTERTAIN

-2.11

BELLE INTERNATIO

-2.16

CHINA OVERSEAS

-2.41

HENDERSON LAND D

-2.60

Source: Bloomberg

I SSN 2226-8294

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2013-2-11

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February 11, 2014 April 19, 2013

Macau

Taiwan aviation accord to be inked next week The open skies agreement may mean cheaper air travel to and from the island Stephanie Lai

sw.lai@macaubusinessdaily.com

aiwan and Macau will sign next week an open skies deal which will lift restrictions on air services between here and the island, the Civil Aviation Authority of Macau has said. The authority declined to disclose what the agreement says. Taiwan’s Chinese-language Economic Daily News reported that the agreement lifts all restrictions on the number of flights between Taiwan and Macau. The newspaper said the agreement did not cover fifth freedom rights, which allow an international flight to pick up passengers at an intermediate destination and take them to its final destination. This means the deal will not allow Air Macau to fly between Taiwan and the mainland. The market for air travel between Taiwan and the mainland is growing. The newspaper quoted unidentified sources as saying the agreement would come into effect in March at the earliest. The Civil Aviation Authority of Macau told Business Daily yesterday that it could not confirm this. The present air services agreement between Macau and Taiwan allows only Macau flag carrier Air Macau and Taiwan’s Eva Airways, TransAsia Airways and Mandarin Airlines to serve Taiwan-Macau routes. The agreement was signed in 1995. It was due to expire in 2005, but the signatories continue to stick to it. At present Air Macau flies to Taipei and Kaohsiung. The open skies agreement may mean more competition on Macau-Taiwan routes, which may mean cheaper air travel.

V formation One airline that would like a bigger slice of this market is TransAsia Airways. In November Taiwan’s Civil Aeronautics Administration tentatively

Air Macau has flights to Taipei and Kaohsiung

gave the airline permission to set up a low-cost carrier, to be called V Air. TransAsia Airways told us V Air had plans to fly from Taiwan to Macau, Hong Kong, Southeast Asia and Northeast Asia. It hopes V Air can be operational as soon as September or by the end of the year at the latest. V Air is still thinking about how frequent its flights should be and how much to charge for them.

Taiwan’s biggest carrier, China Airlines, announced in December that it intended to enter into a partnership with Singapore’s Tigerair to set up a low-cost airline to be called Tigerair Taiwan. Taiwan’s Chinese-language news media have reported that Tigerair Taiwan intends to fly to the same sorts of places as V Air. The Taiwan authorities have yet to

give China Airlines permission to set up Tigerair Taiwan. China Airlines already runs Mandarin Airlines. The cheapest seat on a flight between Taipei and Macau costs about NT$5,000 (1,318 patacas), excluding airport tax and any fuel surcharge. Seats on flights between Taipei and Macau cost, on average, 263 patacas more than seats on flights between Taipei and Hong Kong.

Tourism boom helps retail SMEs mushroom Growing role of Macau investors in setting up new companies Stephanie Lai

sw.lai@macaubusinessdaily.com

acau’s economic fabric continues to swell as the number of companies incorporated in 2013 grew by 24.1 percent from the previous year, official data show. A total of 4,481 new firms were established in the city last year. Most new firms were small and medium enterprises (SMEs) working in the wholesale and retail sector and in business services, the Statistics and Census Service said yesterday. Total value of registered capital surged to 756 million

Over 1,600 wholesale and retail companies were created last year

patacas (US$94.6 million) last year, up by 24 percent from a year before. With tourism booming, the number of new firms set up in the wholesale and retail sector and in the business services grew rapidly to 1,656 and 996 respectively. Business services include building management and security companies. Even though SMEs in the wholesale and retail sector accounted for over one-third of the newly established companies, the money invested by them declined

slightly by 1.73 percent yearon-year to nearly 218 million patacas. The data released yesterday also hints a growing role for SMEs in Macau’s economy. A majority of the new firms set up last year, or 3,119 of them, were established with a registered capital of less than 50,000 patacas. Another 825 firms invested between 100,000 patacas and 500,000 patacas, the data show. In addition, Macau investors accounted for 58 percent of the capital of the firms established last year. Macau investors had to fork out about 438 million patacas to establish new firms, followed by mainland Chinese investors with nearly 178 million patacas. The number of companies dissolved last year was 515, with a value of 249 million patacas. At the end of 2013 Macau had 43,753 registered companies, including 489 offshore companies – ten less than the previous year.

February 11, 2014 April 19, 2013

Macau Govt demands more information from developers The government will spend more time assessing the plans for residential projects that have raised concerns, Secretary for Transport and Public Works Lau Si Io said yesterday. He told media they would ask developers to submit more information about the environmental impact of their projects “to allay public concern”. But he stressed they would review any project in accordance with laws, referring to a Coloane high-rise building project linked to businessman Sio Tak Hong and the second phase of the Lisboa Gardens project near the Small Taipa Hill.

Investors in mainland spread money thinly A business leader believes the number of investments by Macau will keep growing Tony Lai

tony.lai@macaubusinessdaily.com

Mainland-Macau trade up 19 pct The value of trade between Macau and the mainland rose by 19.4 percent to US$3.57 billion (28.5 billion patacas) last year, Ministry of Commerce data show. The rate of increase outpaced the rate of growth in trade between Macau and other places. Exports from Macau to the mainland rose by 38.7 percent to US$390 million. Most goods traded across the border go through the Gongbei crossing. Customs data show the value of goods that went through the Gongbei crossing was US$2.01 billion in the first 11 months of last year, 24.3 percent more than in the equivalent period in 2012. The Statistics and Census Service said last week that the value of Macau’s trade with the outside world had risen by 14 percent to 90.11 billion patacas last year. Statistics and Census Service data show the city’s trade deficit widened to 71.92 billion patacas last year from 62.77 billion patacas in 2012 because of strong domestic demand and tourist demand.

Manufacturing is the biggest draw for Macau firms investing in the mainland

he authorities in the mainland gave Macau investors permission to put money into 310 new projects there last year, seven more than in 2012 and the most for five years. But the combined value of the new direct investments approved was only about US$460 million (3.68 billion patacas), 8.9 percent less than in 2012, Ministry of Commerce data show. A business leader believes the number of investments in the mainland backed by Macau capital will keep growing, particularly investments in less important cities, as Macau companies seek to cut costs, attracted by cheaper labour in inland provinces. The number of new direct investments by Macau that the mainland authorities approved last year was the most since 2008, when they approved 435. But the combined value of the investments approved fell for the second year in a row last year. The vice-president of the Macau Chamber of Commerce, Vong Kok Seng, believes Macau companies will keep taking opportunities in the mainland this year, particularly in less-developed markets. “Recently there has been a trend of more Macau companies investing in second-tier and third-tier mainland cities instead of cities near the coast

There has been a trend of more Macau companies investing in second-tier and third-tier mainland cities instead of cities near the coast Vong Kok Seng, Macau Chamber of Commerce vice-president

such as Guangzhou and Shanghai, which are already well developed,” Mr Vong told Business Daily. “The competition there is less fierce than in the coastal cities, and costs such as land prices, rents and labour are lower,” he said.

“The policy of the central government aims to push the wave of development from the coast to the centre and the west, meaning investment opportunities for companies here.” Beijing, Shanghai, Guangzhou and Shenzhen are commonly but not officially regarded as first-tier cities, and Tianjin, Chongqing and Nanjing as second-tier cities.

Drop in the ocean Mr Vong said the choices Macau entrepreneurs made about where to invest in the mainland were influenced by their personal networks. The central government’s undertaking to cut red tape may also entice Macau entrepreneurs to invest in the mainland. Bureaucracy is among the main obstacles to investment there, Mr Vong said. The Ministry of Commerce announced in December that investments made in yuan would be less closely scrutinised from this year than before. Previously foreign companies or individuals had to say where they got their yuan from and do extra paperwork if they wished to invest over 300 million yuan (395 million patacas). The ministry approved 27 new

direct investments backed by Macau capital in December, one more than a year earlier. The combined value of the investments was about US$30 million, the same as a year earlier. Investment by Macau accounted for 0.8 percent of all foreign direct investment in the mainland last year. The mainland had US$117.6 billion in FDI in last year, 5.3 percent more than 2012 and the most ever. Ministry of Commerce spokesman Shen Danyang said last month: “We are confident that we will see steady growth in FDI in 2014, as global investor sentiment recovers and reforms by the new leadership help attract more foreign capital.”

US$460 mln Value of Macau investments in the mainland approved in 2013

February 11, 2014 April 19, 2013

Macau

Late-night appetites are good news for sushi shops Eatery owners say casino staff searching for satisfaction late at night reveal a shift in the city’s catering scene Stephanie Lai sw.lai@macaubusinessdaily.com

shortage of street eateries open in the early hours of the morning that cater to casino staff working the night shift has seen demand bloom for takeaway Japanese food, according to restaurateurs. Business Daily spoke to the owners of Ichipon and Tian Gi Chun, two sushi takeaway and delivery shops that have been in business for more than one year. Both said they have noticed a rapid rise in orders for takeaway Japanese meals. The trend is part of a boom in the takeaway food business that is likely to continue as casinos open and household wealth grows. “More casinos will operate in the city and we see an increasing number of foreign employees. This will support the takeaway business,” said Tian Gi Chun’s owner and chef Joe Lok. “When we opened in 2012, there were three to four Japanese takeaways [like us]. Now you actually see different kind of takeaway business emerging in the city. “But last year, from what we observed, the number of these sushi takeaway stores has doubled to about eight,” Mr Lok said. Unlike most family-run sushi shops, both Ichipon and Tian Gi Chun take orders from 6pm until 2am. Other takeaway shops, such as Chachako, have kept more conventional opening hours, from around lunch to 10pm or 11pm. Mr Lok and Ichipon’s owner Alexandre Catarino de Sousa said their businesses had a regular clientele of casino staff finishing night shifts at a time when there are few dining options. “Late at night you can’t find many restaurants working, except for some monotonous Chinese cuisines like congee or noodles,” said Mr Lok. “About one-third of our customers are casino workers, and the rest are family orders.” Mr Sousa said about half of Ichipon’s orders came from late-night casino staff.

Variable licensing Mr Lok’s restaurant offers a sushi delivery service and ready-made sushi boxes for walk-in customers.

KEY POINTS Fast-food industry does a roaring trade Smaller eateries discover a late-night niche Shift workers support mounting demand Worker shortages hampering small businesses

Ichipon has made a name for itself by catering for late-night clients (Photo: Manuel Cardoso)

For business owners, one advantage to operating a takeaway shop instead of a restaurant is that it is relatively easy to find a cheap venue. The business licensing process is also much quicker, said Mr Sousa. “For a group of twenty-somethings that start off the business together, you’d like to find a place where the rental cost will not be too expensive,” Mr Sousa told Business Daily. Ichipon found an 800-square-foot space near Lou Lim Ieok Garden on the peninsula, for a monthly rent of about 12,000 patacas (US$1,500) in 2012. “The good thing with a takeaway business is that you don’t need to find a space that faces the main road, where the rent will be much more expensive,” Mr Sousa said. “It only took us about a month to obtain our licence from the Financial Services Bureau as we operate like a snack shop. We don’t work on stoves. “And unlike restaurants, we don’t need to go through the complicated checks for fire safety,” he said. The Civic and Municipal Affairs Bureau launched a “one-stop” licensing service for food and beverage outlets in 2003. The licensing service applies to simple eateries, such as cafes and tea shops. On the one-stop service website,

the bureau says an approval should not take more than 60 working days. “From what we learned, it can take you nine months to a year to get a restaurant licence,” said Mr Sousa. “That could be a big problem because when operators are waiting to get the licence, without any income, they still have to pay the monthly rent.”

a new branch in Taipa this year. There are also plans to expand the restaurant’s sushi takeaway business to the mainland and Australia. “But this [human resources] is posing a challenge to our expansion plans because we have to invest time to train the employees,” said Mr Lok.

All hands Although they operate on a much smaller scale than restaurants, the owners of Ichipon and Tian Gi Chun both say a lack of human resources is one of the most challenging parts of the business. “We have 15 staff working at Tian Gi Chung,” said Mr Lok. “And onethird of our employees are imported labour. In our first year of operation, we’ve spent a lot of time getting the imported labour quota.” “The turnover issue is serious. Of three locals that we employ, only one will stay for a year,” he said. “Every few months, you will see a local worker leaving because he is lured by the higher salaries offered by casinos. After they learn something here they head for the casinos or the chain restaurants.” Tian Gi Chun may expand to open

The good thing with a takeaway business is that you don’t need to find a space that faces the main road, where the rent will be much more expensive Alexandre Catarino de Sousa, Ichipon

February 11, 2014 April 19, 2013

Macau

Tourist spending accounts for 35 pct of Macau’s GDP Visitors spend 84 percent of the money here on gambling, a survey finds Tony Lai

tony.lai@macaubusinessdaily.com

Tourists spent 220.4 billion here in 2010 (Photo: Manuel Cardoso)

Daily: “The contribution of the tourism industry will have been even greater in recent years, with the recordbreaking gaming revenue.” Gaming Inspection and

Coordination Bureau data show that gross gaming revenue rose to a record 360.75 billion patacas last year, 91.5 more than in 2010. Other official data show

that Macau had 29.3 million visitors last year, 17.5 percent more than in 2010. The survey report says tourists spent 220.4 billion patacas here in 2010,

Source: Statistics and Census Service

hat tourists spend on gambling, shopping and travel accounts for over one-third of Macau’s gross domestic product, a government survey has found. The Statistics and Census Service said a survey of the economic benefits of tourism had found that 84 percent of what tourists spent here, they spent on gambling. The Statistics and Census Service said it had carried out its first tourism satellite account survey “to compile the aggregate direct contribution of tourism activities to the economy of Macau”. The survey looked at what tourists spent in 2010 on gambling, shopping, eating and drinking, getting around town, accommodation and other aspects of travel that they paid travel agents to arrange. The survey found that the value added by the tourism industry in 2010 was 51.8 billion (US$6.48 billion), or 35 percent of GDP. GDP grew by 27.5 percent in real terms in that year. The survey report says tourism accounted for only 2.6 percent of Hong Kong’s GDP in 2009. An associate professor of gaming at the Macao Polytechnic Institute, Zeng Zhonglu, said: “I am not surprised by this figure, as previous government data indicated that the gaming industry, measured on its own, accounted for some 30 percent of Macau’s GDP.” Mr Zeng told Business

184.5 billion patacas of it on gambling. Tourists spent 19.3 billion patacas on shopping and 6.9 billion patacas on eating and drinking. They spent 4.2 billion patacas on accommodation. Mr Zeng said these findings tallied with the results of other studies done by academic institutions. He said the findings showed the development of tourist attractions other than gaming had a long way to go. Mr Zeng said the new casino-resorts that would begin to open in Cotai next year could be a game changer by offering tourists a wider variety of attractions other than gaming. “But it will take time to see any substantial results: at least five to 10 years,” Mr Zeng said. The survey report says about 90.4 percent of the tourism industry’s takings in 2010 came from visitors, as opposed to Macau people. Some 97.3 percent of the gaming industry’s takings came from visitors. The Statistics and Census Service said: “The gaming sector relied heavily on visitor arrivals, and tourism activities had significant impact on the industry.” Nearly two-thirds of the retail industry’s takings and over two-fifths of the food and drink industry’s takings came from tourists. Oddly, only 60.4 percent of the accommodation industry’s takings came from tourists. The Statistics and Census Service said this was because the casinos sometimes paid the accommodation costs of their players.

SMEs can’t support 10 pct salary hike: Au

Continuing education budget raised to MOP700 mln

he city’s small and mediumsized enterprises will not be able to support a big jump in salaries, says Stanley Au Chong Kit, chairman of the Macau SMEs Association. “What we are worried now is not whether there should be salary rise. It is about how much the raise should be so that the employees are satisfied while the companies can continue to operate,” Mr Au said. He was speaking on the sidelines of a public event. Mr Au said that a rise of 5 percent in salaries would be “an affordable range”, but any increase of more than 10 percent could mean that many companies may go belly up. Some casino operators, the biggest

private employers in Macau, have announced a pay increase of 5 percent for its employees. Pay is likely to increase by between 5 percent and 10 percent this year as the supply of labour remains tight, recruitment agencies say. They say the state of the labour market, with Macau’s unemployment rate one of the lowest in the world, will make it harder for small and medium enterprises to keep their employees. SMEs say it’s getting harder to survive as labour costs and rents keep increasing. Mr Au said he expects the labour shortage for SMEs to further worsen in coming years with the opening of new casino resorts in Cotai. T.L.

he Education and Youth Affairs Bureau will fork out about 700 million patacas (US$87.6 million) for the second phase of the continuing education scheme, a government official said. That’s up by 40 percent from the programme’s first phase. “Based on the enthusiastic response from residents in the first phase, the budget this time is expected to be about 700 million patacas,” said Kong Ngai, chief of the bureau’s continuing education division. The next phase of the scheme is likely to start on April 1 and run until the end of 2016, Mr Kong told public broadcaster TDM in an interview yesterday. Macau residents aged 15 or above

are entitled to a maximum 6,000 patacas to spend on governmentapproved courses or examinations in the next three years, up from 5,000 patacas. The budget for the three years ended December 31 2013, was 500 million patacas. The city’s Commission of Audit released a report in 2012 claiming that hundreds of courses and exams in the scheme had been wrongly approved. Mr Kong said over 144,000 out of 420,000, or 34.3 percent, of eligible residents used the subsidies in the first phase. It was “a high participation rate” compared with other places, he said. The ratio reached 70 percent for residents aged between 15 and 40, he added. T.L.

February 11, 2014 April 19, 2013

Macau TDM wants land for new broadcast centre Chief executive of Teledifusão de Macau (TDM) Leong Kam Chun said the company wants to build a new broadcast centre with new studios, theatres and office space. Mr Leong said the public broadcaster is waiting for the government to approve its bid for a land plot on the Macau peninsula. The public broadcaster is lacking studios and its offices are scattered in several commercial and industrial buildings around town, Mr Leong told Business Daily. While several residential projects are competing for the existing land bank, Mr Leong said the broadcaster would have no problems in building a new centre on the new reclaimed zones.

CNY holiday boosts Chow Tai Fook sales

Jewellery retailer counts blessings from lucrative holidays

how Tai Fook Jewellery Group Ltd, the world’s largest jewellery retailer, benefited from the increasing number of visitors coming to Macau and Hong Kong, as jewellery sales jumped during the Lunar New Year holiday. The retailer recorded 28 percent more revenue in Macau and Hong Kong during this year’s holiday period amid a decade-low retail growth in mainland China. More than a million people visited Macau in the seven days from January 31 to February 6 inclusive – a 12.5 percent increase from a year earlier according to figures published by Macau Government Tourist Office. Around 72 percent of the visitors were from mainland China. Chow Tai Fook, controlled by tycoon Cheng Yu Tung, told the Hong Kong Stock Exchange that same store sales in the two special administrative regions grew by 11 percent from January 17 to February 4 from the corresponding period a year earlier. But the rise in same store sale volume was even bigger at 35 percent, meaning that products sold during the holiday period could only yield lower profits. Chow Tai Fook’s same store sales of gold products, including sales in

28%

Jump in revenue in Macau and Hong Kong

the mainland, surged by 19 percent in the 19-day period. But sales of gem jewellery, with higher profit margin, jumped by 13 percent, it said. The jeweller’s results came amid a growth of 13.3 percent in consumption in mainland China during the weeklong Chinese New Year holiday. Official news agency Xinhua reported that sales in the retail and catering industries rose to 610.7 billion yuan (798.7 billion patacas) in the mainland. That was the lowest pace since 2005, according to Hong Kong newspaper South China Morning Post. T.L.

Hengqin to set up arbitration centre An international arbitration system may be in operation there by July Stephanie Lai

sw.lai@macaubusinessdaily.com

he authorities in the Hengqin New Area special economic zone just across the border on Hengqin Island are preparing to set up an international arbitration centre to settle business disputes. Chinese-language newspapers have reported that the arbitration centre could begin work in the first half of 2014. The reports said the centre might recruit arbitrators from Macau, Hong Kong and Taiwan. It will settle commercial disputes involving companies from outside the special economic zone. According to reports, it will use international arbitration methods. Chinese-language newspaper Macao Daily News reported that the centre will employ lawyers that specialise in international trade law. Business Daily tried but failed to get

details of the arbitration centre from the Zhuhai Arbitration Commission. Other special economic zones in the mainland, including Qianhai in Shenzhen and Nansha in Guangzhou, already have international arbitration arrangements. The vice-director of the Hengqin New Area Administrative Committee, Ye Zhen, floated last June the idea of an international arbitration system to settle disputes involving companies operating on Hengqin Island. The Macau Trade and Investment Promotion Institute’s website says the Hengqin New Area Administrative Committee is making arrangements for dealing with Macau or Hong Kong companies. The institute says the commercial registration system there will be like the systems used in Macau and Hong Kong.

February 11, 2014 April 19, 2013

Macau

Si blows whistle on illegal letting Legislator Si Ka Lon says the threat of fines is insufficient to prevent the letting of subsidised housing Stephanie Lai

sw.lai@macaubusinessdaily.com

egislative Assembly member Si Ka Lon says he has received complaints about owners of subsidised housing letting their flats, which is against the law. The Housing Bureau says it has detected no cases of illegal letting. Mr Si said most of the complaints were by residents of the subsidised housing in Rua de Tranquilidade in Areia Preta and in Edifício do Lago on Taipa. He said the complaints indicated that some owners of flats there were asking for rents of between 5,000 patacas (US$625.67) and 7,000 patacas a month. The law says letting part of a flat in subsidised housing is punishable by a fine of 5 percent to 10 percent of the price the owner paid for the flat, and that letting all of a flat in subsidised housing is punishable by a fine of up to 40 percent of the price. The Housing Bureau’s

15,470 Flats in subsidised housing built or planned since 2000

Housing Bureau should check up on subsidised housing more often, says legislator

website says that since 2000 the government has built or made plans for 15,470 flats in subsidised housing. The bureau told public broadcaster TDM’s Chineselanguage radio service that

it had found no cases of illegal letting. But it said suspicions of illegal letting should be reported. Mr Si said: “When we received the complaints about illegal letting of affordable units, not many residents were willing to tell us which flats were being let.” He told Business Daily: “We usually ask them to try to tell the whole story to the Housing Bureau.” He said the threat of fines had limited illegal letting but failed to prevent it altogether. Mr Si said the Housing Bureau should check up on who was occupying subsidised housing more often. “We hope that the Housing Bureau will be more active in inspecting subsidised housing to check for illegal letting, as it is the only department with the authority to do so,” he said.

February 11, 2014 April 19, 2013

Greater China

PetroChina makes huge gas find Sichuan basin is one of the largest gas discoveries in more than a decade

Exports to China sank 10.3 percent from a year earlier

Taiwan Jan exports unexpectedly fall Imports contract 15.2 percent, twice as much as expected

aiwan’s exports unexpectedly fell in January, hit by erratic global demand for its pivotal hi-tech products and a slump in shipments to China, its largest market. The decline in exports adds to worrisome signs about the economy in China, a major importer of parts and goods from Asia’s exporting nations. But the figures may have been skewed to some degree by the timing of the long Lunar New Year holiday, which started in late January this year but in February last year. Many plants and offices close for lengthy periods during the holiday. Taiwan’s annual exports fell 5.3 percent in January compared with a median growth forecast of 0.45 percent in a Reuters poll of 12 analysts. That compared with

revised growth of 0.7 percent in October, 3.4 percent in November and 1.2 percent in December, adjusted from previous declines. Taiwan’s finance ministry had revised up fourth quarter trade to growth from decline last month, citing system errors that had resulted in missing export data. Exports to China sank 10.3 percent from a year earlier, while those to the United States rose by 4.6 percent, data from the Ministry of Finance showed yesterday. Exports to Europe inched up 0.4 percent, and rose 4.8 percent to Japan. Taiwan’s imports in January slumped by 15.2 percent year-on-year, bringing the trade balance to US$2.97 billion from US$1.41 billion in December. Economists had expected imports to contract 7.1 percent. While actual exports have

China’s largest gas find etroChina Co Ltd, Asia’s largest oil and was announced in 2001 at gas producer, has found the Sulige field, in northern 308.2 billion cubic metres of China’s Ordos basin, also technically recoverable gas in operated by PetroChina. That southwest China’s Sichuan find held proven geological basin, according to parent reserves of 533.7 bcm of China National Petroleum natural gas as of 2003. PetroChina has since 2011 Corp, one of China’s largest gas discoveries in more than a decade. China, the top energy user and fourthlargest consumer of gas, is racing to increase supply of the cleaner-burning fuel by boosting domestic exploration and raising imports, as demand Number in billions is forecast to nearly of recoverable gas quadruple between 2011 and 2030. The Moxi block of An’yue field was officially certified to drilled two exploration wells hold 440.4 bcm of proven - Gao Shi-1 and Moxi-8 - in geological reserves, CNPC An’yue field, both striking said in yesterday’s report high gas flows, according to o n i t s w e b s i t e , c i t i n g the CNPC report. Single-well production hit PetroChina’s Exploration and 1.1 million cubic metres per Development department. P e t r o C h i n a i s n o w day on average during trial building a production facility productions, and 600,000 able to pump 4 bcm a year cubic metres per day in under phase-1 development, development stages. China produced a total which is to be followed by another 6 bcm/year in a of 121 bcm of natural gas last year, up 9.8 percent second phase, CNPC said. CNPC gave no timeline over 2012. The 2013 output for the development and did includes 3 bcm of coal-seam not say how much it would gas and a tiny 200 million cost. CNPC and PetroChina cubic metres of shale gas, the officials were not immediately government said in January. Imports last year amounted available for comment. The find is “set to provide to 53.4 bcm, or 31.5 percent abundant gas resources to of China’s total implied gas the national gas grids,” said demand of 169 bcm. Reuters the report.

308.2

been relatively sluggish, reflecting the impact of manufacturing moving offshore, export orders have shown signs of resilience. Taiwan’s tech industry, the main driver of the island’s export machine, has been facing upheaval from changing consumer tastes worldwide and the commoditisation of formerly high-growth smartphones and tablets. Once-ascendant Taiwanese smartphone brand HTC Corp, a notable casualty of this shift, said yesterday that January sales fell 37.8 percent from a year earlier to T$9.67 billion (US$319.23 million). Compal Electronics Inc, the world’s second-largest contract manufacturer of laptop computers, on Monday reported a 6.5 percent yearon-year fall in January sales. Reuters

Peugeot awaits Chinese green light French carmaker tie-up talks reported to be in final stage

hina’s Dongfeng Motor Group Co Ltd, currently in talks to buy a stake in PSA Peugeot Citroen, asked yesterday for a trading halt in Hong Kong pending an announcement concerning “inside information”. Dongfeng, which already has a joint venture with Peugeot in China, did not give further details and company spokesman Zhou Mi said he was not aware of the reason behind the suspension. The halt comes after sources in France told Reuters on Friday that Peugeot

negotiators and French government officials will be in China this week for what they hope will be a final round of negotiations on the tieup with the China’s second biggest automaker. The sources said the proposed deal that would see the Chinese carmaker and French government take matching stakes in the Parisbased company through a 3 billion euro (US$4.09 billion) share issue. The final push for an agreement, due to be presented to the French carmaker’s board on

February 18, follows public discord among members of the founding Peugeot family and protests from minority shareholders over the planned capital increase. It was immediately not clear whether the final agreement, if reached, would be between Peugeot and Dongfeng or its unlisted, state-owned parent, Dongfeng Motor Corp. Crippled by Europe’s sixyear market slump, Peugeot has said it needs fresh funding to survive in the medium term. The company’s financing arm is already being kept

Dongfeng Peugeot-Citroen plant

afloat by a 7 billion euro loan guarantee from the French state. The French company probably lost money for the second year in a row in 2013, according to analyst estimates, as industrywide

car sales in Europe reached a two-decade low. Zhang Yuguang, Chinabased spokesman for Peugeot, said he was not aware of a trip to China by company negotiators. Reuters

February 11, 2014 April 19, 2013

Greater China

Surge on gold demand Precious metal tops 1,000 tonnes for first time

hina’s gold consumption jumped 41 percent in 2013 to exceed 1,000 tonnes for the first time, an industry body said yesterday, as a sharp slide in prices attracted buyers for jewellery and bullion. The demand surge has helped China become the No. 1 gold consumer and should support prices, which took a hit last year from expectations of a tapering of commoditiesfriendly economic stimulus by the U.S. Federal Reserve and a drop in demand in the other major buyer India. Gold consumption in China grew to 1,176.40 tonnes last year, with jewellery demand climbing 43 percent to 716.50 tonnes and bullion demand soaring 57 percent to 375.73 tonnes, the China Gold Association said on its website. Chinese demand hit a record as gold prices fell for the first time in 13 years amid an improving global economy and a rally in equities. Prices tumbled 28 percent in 2013. “The sharply lower prices

attracted a lot of Chinese consumers looking for bargains,” said Chen Min, an analyst at Jinrui Futures in Shenzhen. “Gold will continue to be an attractive investment in China in the near term as prices look steady near US$1,200 an ounce,” Mr Chen said. Data last month showed that China’s 2013 gold imports from Hong Kong

KEY POINTS Consumption jumps to 1,176.4 tonnes in 2013 Gold jewellery demand last year up 43 pct Full-year gold production up 6 pct to 428.163 tonnes

Regulator orders smaller banks to set aside funds C

hina’s banking regulator ordered some of the nation’s smaller lenders to set aside more funds to avoid a cash shortfall, three people with knowledge of the matter said, signalling rising concern that defaults may climb. Branches of the China Banking Regulatory Commission asked some

more than doubled from the previous year to reach a record 1,158.162 tonnes. Data from the industry association also showed that China’s gold output in 2013 rose 6.2 percent from the previous year to a record high 428.163 tonnes, making the country the world’s biggest producer for a seventh straight year. China’s gold consumption figures do not include demand from the central bank, whose gold reserves stand at 33.89 million ounces (1,054 tonnes), unchanged since April 2009, according to the latest figures on the central bank’s website. China last announced a rise in its gold reserves in April 2009 and has not revised the figure since, though there had been recent market speculation that the bank had been accumulating gold reserves and would announce a new figure. China’s foreign exchange reserves, the world’s largest, rose to US$3.82 trillion at the end of 2013.

city commercial banks and rural banks to strengthen their liquidity management this year, the people said, asking not to be named as the matter is confidential. Different requirements are being instituted in each province, such as quarterly stress tests, in response to CBRC studies last year that showed

Reuters

Gold prices fell last year for the first time in 13 years

increasing risks and pressure at those lenders, the people said. The requirements add to steps taken to protect against soured loans weighing on China’s economy, which included speeding up badloan writeoffs and limiting local government debt sales. The bailout of a 3 billionyuan (US$495 million) high-yield investment product days before it matured last month highlighted challenges for authorities seeking to rein in an unprecedented credit boom and ensure stable growth. Some of the banks were asked by their local CBRC branches to set aside reserves to ensure cash supply

for 30- to 45-day periods, the people said, declining to identify the names of the banks. Press officers at the CBRC’s headquarters in Beijing didn’t return three calls seeking comment. One or two small Chinese banks may fail this year as they get about 80 percent of their funding from interbank markets and higher-cost deposits in savings vehicles known as wealth management products, Fang Xinghai, a bureau director at the Office of the Central Leading Group for Financial and Economic Affairs, said in November. The group is the highest-level agency within the Communist Party for financial and economic policies. Bloomberg News

China opens fourth Antarctic research station C

TV report and the team in front of the Antarctic station

hina’s fourth Antarctic research station – the flying saucer-shaped Taishan – has officially opened, in another step for the country’s exploration ambitions in both earth and space. The station, named for one of China’s five sacred mountains, sits at an altitude of 2,600 metres (8,530 feet) between China’s Zhongshan and Kunlun stations, according to the State Oceanic Administration (SOA). The site’s average annual temperature is minus 36.6 degrees Celsius (minus 33 degrees Fahrenheit) and construction began on December 28. The state-run Xinhua news agency reported at the weekend that President Xi Jinping offered written congratulations, calling scientific research in the frozen continent

important for exploring nature and developing mankind. State media announced in December that workers were on their way to construct the facility to be used during summer for research into “geology, glaciers, geomagnetism and atmospheric science”, saying its main building would be shaped “like a Chinese lantern”. A fifth station is also being planned, media reported. China is a relative latecomer to Antarctic exploration, sending its first exploration team to the remote continent in 1984 and establishing its first research base a year later. Approximately 30 nations operate permanent research stations in Antarctica including the U.S., China, Russia, Australia, Britain, France and Argentina. AFP

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February 11, 2014 April 19, 2013

Greater China

Diplomatic warnings U.S. general tells Japan, Philippines to cool China rhetoric Sanat Vallikappen and Rosalind Mathieson

omments by the leaders of Japan and the Philippines drawing parallels between China’s growing assertiveness in the region and events in pre-war Europe are “not helpful,” said the commander of U.S. air forces in the Pacific. “The rise of Germany and what occurred between the U.K. in particular and Germany, and what happened in Europe, I don’t draw that comparison at all to what’s going on today” in the Asia-Pacific, General Herbert “Hawk” Carlisle, 58, said in an interview yesterday in Singapore. “Some of the things, in particular that have been done by Japan, they need to think hard about what is provocative to other nations.” General Carlisle urged all countries involved in territorial disputes with China in both the East and South China Seas to try and defuse tensions. He said any move by China to extend an air-defence identification zone south, where it has disputes over oil-rich waters with the Philippines, Vietnam and Malaysia, would be “very provocative”. The recent comments by Japanese Prime Minister Shinzo Abe and Philippine President Benigno Aquino – two U.S. allies – have escalated tensions at a time when China is pushing its territorial claims in both the East and South China Seas, and as President Xi Jinping expands the reach of his country’s navy. Both sought to cast China’s actions against the historical perspective of Germany’s ascension in the first half of the 20th century. “The de-escalation of tensions has got to be a multilateral approach and it’s not just one country that needs to de-escalate,” said General Carlisle, a former fighter squadron commander who is responsible for air force operations for more than half the globe, with oversight of 45,000 personnel. “All of them do. The risk from miscalculation is high. It’s greater than it should be.”

failure to back Czechoslovakia against Adolf Hitler’s demands for the Sudetenland in 1938. China and Japan haven’t held a summit since Mr Abe took office in December 2012. Protests broke out in China in late 2012 after Japan bought some of the disputed East China Sea islands, known as Senkaku in Japanese and Diaoyu in Chinese, from a private owner. China in November set up an air defence zone in the area, demanding civil and military aircraft present flight plans before entering the space. In December, Mr Abe roiled ties by visiting the Yasukuni shrine, which honours Japan’s war dead including 14 World War II military leaders convicted as Class-A criminals.

‘Very provocative’ “If you look at some of the things that have been going on in the East China Sea, both militaries have been conducting themselves very professionally,” said General Carlisle. “But the potential for something, a mistake to occur or miscalculation or misunderstanding to occur, is out there. There is significantly more activity from both nations around the disputed territorial claims, and that to me is a risk.”

Shifting South Chinese Foreign Ministry spokesman Hong Lei on February 1 dismissed as “speculation” a report by Japanese newspaper Asahi that China also plans a zone in waters rich in fish, oil and gas that are home to some of the world’s busiest shipping lanes. China introduced fishing rules last month requiring foreign vessels to seek permission before entering waters off its southern coast. The South China Sea is estimated to have as much as 30 billion metric tons of oil and 16 trillion cubic metres of gas, which would account for about one-third of China’s oil and gas resources, according to China’s official Xinhua News Agency. Policing any air zone over the South China Sea would require China to shift some of its forces, which are now predominantly on the east coast of China, General Carlisle said. “There’s less of an established force today in the south,” he said. “The numbers it would take to patrol that size of air space, they would have to shift some of their force. Whether they do that or not, I couldn’t tell you. The capability of their systems to range the entire South China Sea does exist.”

Aircraft carrier

KEY POINTS No summit since Abe took office in Dec 2012 Beijing introduced fishing rules last month China expanded military spending by 10.7 pct

Nazi comparison Mr Abe said in Switzerland late last month that Germany and the U.K. went to war despite strong economic ties, and warned Japan and China must avoid a similar fate. In an interview with the New York Times published February 5, President Aquino called on nations to support the Philippines in defending its territory in the South China Sea, drawing a parallel with the West’s

channels, made that known to the PRC,” General Carlisle said, referring to the People’s Republic of China.

Any attempt by China to replicate its air zone in the South China Sea would be a “very provocative act,” said General Carlisle, who has more than 3,600 flying hours in a variety of aircraft and was promoted to the rank of general in August 2012, according to his official Air Force profile. The U.S. opposes any such move and “we’ve strongly, through diplomatic

In December China’s first aircraft carrier, the Liaoning, returned from an initial training mission in the South China Sea. Its drills triggered diplomatic tensions after a Chinese vessel cut in front of the USS Cowpens guided-missile cruiser from a distance of 100 yards in the area on December 5, an incident U.S. Defence Secretary Chuck Hagel said was “irresponsible”. China is already building its second aircraft carrier to be completed in 2018, the South China Morning Post reported on January 19, citing a regional Communist Party chief. Even so, China is some way from combat-readiness for the Liaoning, General Carlisle said. “What the U.S. Navy does with an aircraft carrier is simply amazing,” he said. “That is a lot of years of experience and training and understanding. The ability to actually go out on a carrier, conduct operations and be effective and become air ready on an aircraft carrier is not an easy task. It’s going to take some work from the PRC to get to that.”

The U.S. needs to maintain a capable air force presence in the region to act as a deterrent and help defuse tensions, General Carlisle said. “That’s not pointed at any one nation, but nations throughout the world. Our air force continues to advance its capabilities,” he said.

The de-escalation of tensions has got to be a multilateral approach General Herbert Carlisle

China expanded military spending 10.7 percent to 740.6 billion yuan (US$122 billion) in 2013, while Mr Abe, who is seeking to reinterpret Japan’s pacifist constitution to allow his country’s troops to defend allies, plans a second consecutive rise in Japan’s defence budget. China is expected to release its military spending figure for the year at the National People’s Congress in early March. “Everything we see with respect to the PRC spending, from my perspective, is their ability to continue to project power, more than they have in the past,” General Carlisle said. “They’re continuing to go after less in the defensive nature and more on their ability to get power outwards. You see that in their air force too with respect to their ability to use their aircraft carrier, their ability with long-range bombers, their ability with fighter aircraft.” China’s air force is fielding new precision-guided cruise missiles, longrange bombers and drones, according to U.S. military intelligence officials. “While we would not characterise the modernisation as accelerated,” it’s “progressing at a steady pace,” Lee Fuell, a director at the Air Force’s National Air and Space Intelligence Centre, said in a presentation released January 30. The People’s Liberation Army Air Force is becoming “better,” General Carlisle said. “The PLAF is a very capable air force and they are getting more capable all the time.” Bloomberg News

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Asia

Japan’s current account gap hits new record Trade imbalance continues to get wider under Abenomics Stanley White

apan posted its smallest current account surplus on record last year in a worrying sign that sluggish exports and the rising cost of energy imports will hamper economic growth. The deteriorating external position is also bound to put the spotlight back on Japan’s ability to service its huge debt, which at over twice the size of its economy is the worst in the industrialised world. The Ministry of Finance data yesterday also showed the current account balance for December slid to the largest deficit on record as exporters failed to reap the benefits of a weak currency. Economy Minister Akira Amari said in parliament last week that the trade deficit stemmed from factors including strong domestic consumption, weak economies in export destinations, and companies shifting production abroad. Many policymakers expected a falling yen would push up exports and support the economy but lacklustre external demand and declining competitiveness have hampered the trade sector. After stagnating for decades, the government’s aggressive

KEY POINTS 2013 current account surplus shrinks to 3.3 trln yen Current account in December shows largest deficit on record Weak yen pushing up cost of energy imports

Disappointing exports weighing on growth expectations

fiscal and monetary stimulus policies over the past year have seen the economy rebound. Still, the uneven recovery may prompt officials to consider other options to keep economic growth on track, some analysts say. “Gains in exports are weaker than I expected, reflecting declining competitiveness,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.

“The current account can remain in surplus, but the surplus will be small. This is an economic headwind that could place pressure on the government and the Bank of Japan to respond.” For 2013, Japan’s current account recorded a 3.3 trillion yen (US$32 billion) surplus, the data showed. This was the smallest surplus in comparable data available from 1985. Last year imports rose

15.4 percent versus a 9.0 percent gain in exports, the data showed. In December, the current account deficit stood at 638.6 billion yen, against a median forecast for 707.7 billion yen. The yen has fallen around 23 percent versus the dollar since late 2012 as Prime Minister Shinzo Abe’s government embarked on a bold plan to end 15 years of deflation with expanded

Yoichi Masuzoe wins Tokyo governor vote T

Yoichi Masuzoe benefited from a split in the opposition

okyo voters elected a former health minister backed by Japanese Prime Minister Shinzo Abe as governor after a race that one opponent sought to turn into a referendum on nuclear power. The victory by Yoichi Masuzoe, 65, may smooth the path to re-starting some of Japan’s nuclear reactors, all 48 of which are off line for safety reviews after the March 2011 earthquake and tsunami sparked meltdowns at the Fukushima Dai-Ichi plant. Their mothballing has forced Japan to step up fuel imports, widening the current account deficit to a record. Mr Masuzoe secured a convincing win over the competition, including 76-year-old former prime minister Morihiro Hosokawa, who emerged from retirement to campaign against nuclear power. Mr Masuzoe won around 2.1 million votes, followed by the former head of the Japan Federation of Bar Associations, Kenji Utsunomiya, on around 983,000 votes and Mr Hosokawa on about 956,000, according to the Tokyo Metropolitan Government website.

quantitative easing from the Bank of Japan. Many in the government also expected the yen’s fall to boost exports, but this has largely failed to materialise as Japanese companies are producing more goods outside of the country. Japanese companies have also been losing market share to rivals from South Korea and other countries. Years of fiscal stimulus to revive a stagnant economy and surging social welfare costs for a rapidly ageing population have led to Japan running a record 1,000 trillion yen in public debt. The deteriorating current account balance has refocussed attention on the debt pile and on Japan’s ability to service it. The increased debtservicing cost forced Mr Abe to go ahead with a scheduled two-stage sales tax hike from April this year, which is seen as a necessary first step in fixing Japan’s tattered finances. The economy is likely to boom until March as consumers rush to beat the sales tax hike, and many analysts agree with the BOJ’s view that the pain from the higher tax will be temporary. “A surge in domestic demand ahead of the sales-tax hike is adding to the deficit, a trend that is expected to continue through March,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Temporary factors are playing a large role in pushing the deficit wider.” However, weak exports could mean that the rebound is slower than some economists anticipate. Reuters

Tokyo residents struggled to the polls through a record snowfall that national broadcaster NHK said left at least 12 dead nationwide, with the snow also disrupting flights, train services and power lines. Turnout for the vote was around 46 percent, which NHK reported as the third lowest for such an election. While most Japanese people say they oppose restarting the nuclear plants, the issue took a back seat to jobs and welfare in the Tokyo campaign. Last month the government approved a plan for Fukushima operator Tokyo Electric to rebuild, based upon reopening Asia’s largest nuclear plant, Kashiwazaki-Kariwa, in Niigata prefecture on the western coast. Mr Masuzoe has called for improving safety at the country’s nuclear plants, rather than shuttering them, and he pledged to boost renewable energy use in Tokyo to 20 percent from six percent of total power consumption. While the 13-million-strong Japanese capital has an economy bigger than that of Indonesia, accounting for about a fifth of Japan’s output, it suffers like the rest of the country from an ageing population. Mr Masuzoe has pledged to strengthen social welfare. “I want to make Tokyo the world’s best city in terms of welfare, disaster prevention and the economy,” Mr Masuzoe told reporters after exit polls were released last night. “Above all I want to make the Tokyo 2020 Olympics a success.” Bloomberg News

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Asia

Toyota to exit Australia Manufacturer to stop making cars there from 2017 Maggie Lu Yueyang

oyota Motor Corp said yesterday it would stop making cars and engines in Australia by the end of 2017, marking the end of an era for a once-vibrant auto production base and the loss of thousands of direct and indirect jobs. Toyota’s decision follows the planned exits of General Motors Co and Ford Motor Co announced last year and would leave no global automaker remaining in Australia as high costs and a strong currency make it an unattractive production base. “We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia,” Toyota Australia President Max Yasuda said in a statement. About 2,500 jobs will be affected when the plant stops building cars in 2017, the company said. Toyota’s exit from Australia after more than half a century there is a setback to Prime Minister Tony Abbott’s conservative government, which is seeking to manage a slowdown

in the US$1.5 trillion economy as a decade-long mining investment boom slows. “This is obviously devastating news for everyone involved with Toyota. It’s devastating for me and for the government,” Mr Abbott said in Canberra. Union leaders were more vocal in their criticism of the government’s handling of the auto industry’s woes. “The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy,” said Australia Council of Trade Unions (ACTU) Secretary David Oliver. “They’ve [the government] done absolutely nothing to keep Toyota in this country,” he added, warning that A$21 billion (US$18.80 billion) would be wiped from the economy and that some regions would go into recession. The ACTU groups the main Australian trade unions under an umbrella group. A pull-out by Toyota had been widely feared because of the blow to

Toyota was the top-selling brand last year

Boeing sees Asia-Pacific fleet nearly tripling Anshuman Daga

Fires in Melbourne A member of the Country Fire Authority (CFA) walks past a destroyed house after a fast moving bushfire burnt at least three houses in the Warrandyte suburb of Melbourne, Australia. A total fire ban is in place across Victoria as heat wave temperatures persist and while several fires are burning throughout the state. EPA/JOE CASTRO

Snow-covered roads Roads are covered with heavy snow in downtown Gangneung, an East coastal city in Gangwon Province, South Korea. More than one metre of snow fall was recorded in the area over the weekend. EPA/YONHAP

oeing Co maintained its 20-year forecast for airplane demand at US$4.8 trillion, and predicted that nearly half of the world’s air traffic growth would be driven by travel to, from or within the AsiaPacific over the next two decades. Boeing estimated airlines in the Asia Pacific region would need an additional 12,820 jets valued at US$1.9 trillion over the next 20 years. It said the fleet would rise to 14,750 in 2032, from 5,090 in 2012. “Asia Pacific economies and passenger traffic continue to exhibit strong growth,” Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes told a media briefing yesterday ahead of the Singapore Airshow. “Over the next 20 years, nearly half of the world’s air traffic growth will be driven by travel to, from or within the region. The Asia Pacific fleet will nearly triple, from 5,090 airplanes in 2012 to 14,750 airplanes in 2032, to support the increased demand.” Both Airbus Group NV and Boeing have committed to record production rates for their most popular models, but executives are closely watching the

KEY POINTS Global demand at US$4.8 trln over 20 years Budget carriers want single-aisle planes Asia Pacific airlines to add 12,820 jets – Boeing financial turmoil in key aviation markets such as Indonesia and Thailand. Asia Pacific is home to some of the world’s biggest long-haul carriers and budget carriers AirAsia Bhd and Lion Air have placed aircraft orders valued at billions of dollars and are among the biggest customers of Boeing and Airbus. Boeing’s data projects that passenger airlines in the region will rely primarily on single-aisle airplanes such as the Next-Generation 737 and the 737 Max, a new engine-variant of the 737, to connect passengers.

Single-aisle airplanes will represent 69 percent of the new airplanes in the region. “New low-cost carriers and demand for intra-Asia travel have fueled the substantial increase in single-aisle airplanes,” Mr Tinseth said. After a record US$200 billion of deals at last November’s Dubai Airshow, few expect Asian buyers to be ordering in similar quantities – yet the February 11-16 event in Singapore will test the appetite of one of aviation’s fastest growing regions. Reuters

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

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Asia KEY POINTS Toyota exit will affect 2,500 jobs Follows similar plans by GM, Ford High costs, strong dollar hurt competitiveness

the parts supply base from the flight of GM and Ford. “It’s a huge moment for industry in Australia,” Industry Minister Ian Macfarlane told reporters in Canberra after Toyota’s announcement. “Toyota have made no requests to us other than express their frustration with the difficulty they were having with the industrial relations process,” he said, when asked whether Toyota had sought financial assistance or other forms of aid. Australia’s car industry includes about 150 companies working in sectors from components to tooling, design and engineering, with more than 45,000 people employed directly in the car and parts-making sectors, according to government data. While Australians bought a record 1.14 vehicles last year, according to the Australian Federal Chamber of Automotive Industries, the proportion made domestically was a record low at barely 10 percent. Toyota was the top-selling brand, holding nearly onefifth of the market. Vehicle production in Australia has nearly halved in the past decade to just above 200,000 in 2012 from more than 400,000 in 2004. Sales of locally made vehicles have suffered in recent years as a stronger Australian dollar makes imported cars more competitive. In contrast, global automakers have been building new factories and ramping up capacity in countries like Indonesia, where a burgeoning middle class and lower costs make it an increasingly attractive production base. Reuters

Nissan becomes Japan’s least profitable carmaker Company got the lowest margin among any carmaker last quarter Ma Jie and Yuki Hagiwara

issan Motor Co became Japan’s least profitable carmaker at a time when the weaker yen is driving up earnings at most of the nation’s exporters. Net income rose 57 percent to 84.3 billion yen (US$825 million) in the three months ended December 31, the Yokohama, Japan-based company reported yesterday. While net beat the average analyst estimate compiled by Bloomberg, it was 3.3 percent of revenue, the lowest margin among any Japanese carmaker last quarter. Operating profit was below analysts’ estimates. It’s an about-face for chief executive Carlos Ghosn, whose company led all Japanese carmakers in profits almost two years ago, when it was faster than its peers in recovering from the natural disasters of 2011, moving production overseas to counter the stronger yen and expanding in emerging markets.

Today, Nissan is recovering from production delays, facing slowing emerging markets and missing out on the earnings boon from the weaker yen. “There’s a sense of crisis in the company and Ghosn has started to address problems,” said Tsuyoshi Mochimaru, an auto analyst at Longine, a Tokyo-based investment analysis firm. “Things will improve, but will take some time.” Nissan advanced 0.1 percent to close at 885 yen in Tokyo trading, before the company reported earnings. Last year, when the weaker yen was driving up the Nikkei 225 Stock Average to its biggest annual gain since 1972, Nissan shares only rose 9 percent, the worst-performers in Japan’s auto industry after Daihatsu Motor Co. Toyota Motor Corp surged 60 percent and Honda Motor Co climbed 38 percent. Bloomberg News

Tensions high on parallel 38

Whaling row

U.S.-South Korea to hold drills after North threat on reunions

New Zealand hauls in Japan ambassador

Sam Kim

he U.S. military said it will begin its annual exercises with South Korea on February 24, five days into scheduled reunions of Korean families separated by war with the North. North Korea threatened last week to scrap the reunions if the South’s drills with the U.S. continue. It calls the drills war preparations, while the allies say the exercises are defensive in nature. Key Resolve, a command post exercise, will end March 6, and Foal Eagle, a field drill, will last through April 18, both involving thousands of troops, U.S. Forces Korea said yesterday in an e-mailed release. North Korea has been notified of the dates, it said. “Key Resolve is a vital exercise to strengthen readiness of the Republic of Korea and U.S. alliance,” USFK commander General Curtis Scaparrotti, was quoted as saying in the release. “The scenarios are realistic, enabling us to train on our essential tasks and respond to any crisis which may arise.” For a second time, the North rescinded an invitation for a U.S. envoy to travel to Pyongyang to discuss the release of Kenneth Bae, a Korean-American missionary and tour guide detained in November 2012, State Department spokeswoman Jen Psaki said yesterday. “We are deeply disappointed by the DPRK decision,” Ms Psaki said, referring to the North by its

official name, the Democratic People’s Republic of Korea. “These exercises are in no way linked to Mr Bae’s case.”

Family reunions North Korea threatened to attack the U.S. and South Korea with nuclear missiles last spring when the allies conducted their drills, after the country carried out its third nuclear test in February and launched a longrange rocket in December. Expansion work at North Korea’s western rocket launch site may be completed by March or April, the U.S.-Korea Institute at Johns Hopkins University said on its blog last week. The drills coincide with the February 20-25 reunions of families separated by the 1950-53 Korean War. North Korea called off the last scheduled family reunions in September just days before they were to be held. South Korean President Park Geun Hye on February 7 warned the North not to “hurt the hearts of separated families again”. Bloomberg News

ew Zealand called in Tokyo’s ambassador yesterday to protest about a Japanese whaling ship entering its exclusive economic zone (EEZ), escalating a diplomatic row over the incident. Foreign Minister Murray McCully said officials summoned Japanese ambassador Yasuaki Nogawa to express “deep disappointment” at the incursion last Friday. The complaint to Japan’s ambassador comes after the South Pacific nation, one of the strongest critics of Tokyo’s whaling programme, had already hauled in the embassy’s deputy head of mission for a tongue-lashing. “The meeting with the ambassador served to further reiterate how deeply disrespectful the vessel’s entry into our EEZ was,” Mr McCully said in a statement. “New Zealand’s strong opposition to Japanese whaling in the Southern Ocean is well known and further action may be taken,” he added. The incident occurred last Friday, when the whaling ship Shonan Maru 2 entered the EEZ as it was pursuing the protest vessel Steve Irwin, operated by the environmental group Sea Shepherd. The foreign ministry said the ship did not enter New Zealand’s territorial waters, which extend 12 nautical miles from the coast, but did breach its EEZ, which covers from 12 to 200 nautical miles offshore. While the vessel was legally entitled to sail in the EEZ, the ministry said it had been made clear to Japanese officials before it entered the waters Friday that it was not welcome. In a statement released late Sunday, it called the decision to ignore

New Zealand’s wishes “unhelpful, disrespectful and short-sighted”. High-seas confrontations are common between Sea Shepherd’s protest ships and the Japanese, who hunt whales under a “scientific research” loophole in the moratorium on whaling. In 2010 a collision involving the Shonan Maru 2 resulted in the sinking of Sea Shepherd’s speedboat Ady Gil. New Zealand’s foreign ministry said that the ship “travelled for some distance inside the (EEZ) zone, but stayed well clear of New Zealand territorial waters”. It did not say how long it was in the EEZ. Yesterday, Mr McCully said he was yet to clarify whether the incursion occurred with the blessing of the Japanese foreign ministry or was merely the fisheries agency “flexing its muscles ... without proper regard for the foreign policy consequences”. It was “deeply annoying” regardless, Mr McCully said. The Japanese embassy in Wellington refused to comment on the issue. AFP

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

Max 71.5

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average 58.204

last 69.6

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71.60

107.0

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70.50

106.0

30.2

69.95

105.5

30.0

69.40

Max 106.6

average 105.995

PRICE

WTI CRUDE FUTURE Mar14

99.47

BRENT CRUDE FUTR Mar14 GASOLINE RBOB FUT Mar14

NATURAL GAS FUTR Mar14 NY Harb ULSD Fut Mar14 Gold Spot $/Oz

average 30.127

Min 29.8

last 30.1

29.8

34.1

59.25

25.0

34.0

58.70

24.8

33.9

58.15

24.6

33.8

57.60

Max 25.2

average 24.781

DAY %

YTD %

(H) 52W

Min 24.55

last 24.65

(L) 52W

0.933536276

104.5199966

84.87999725

109.03

-0.49283563

-1.357097621

112.4399948

96.31999969

274.52

-0.134599294

-1.672696013

287.3600006

244.6799994

920

0.436681223

-2.30953013

954.5

840

4.693

-1.717277487

11.9246363

5.737000465

3.469000101

303.79

-0.406517392

-0.520662781

314.9999857

278.9799929

1273.19

0.4671

5.8575

1669.69

1180.57

20.135

0.5538

2.9523

31.53

18.2208

Platinum Spot $/Oz

1391.56

0.4918

2.6413

1734.5

1294.18

Palladium Spot $/Oz

715.75

0.7035

0.6681

786.5

629.75

1719

0.350262697

-4.513262047

2174

1671.25

Silver Spot $/Oz

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

7141

0.161301634

-2.975543478

8293.5

6602

LME ZINC

2022

1.251877817

-1.605839416

2230

1811.75

3MO ($)

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

WHEAT FUTURE(CBT) Mar14 SOYBEAN FUTURE Mar14

14140

1.108330354

1.726618705

18495

13205

15.39

0.325945241

0.752864157

16.77000046

15.12000084

440.75

-0.787844682

4.443127962

582.75

406.25

573.5

-0.692640693

-5.245766212

793

550

1330.75

-0.05632745

2.959381044

1377.75

1174

COFFEE 'C' FUTURE Mar14

135.7

-0.036832413

22.58355917

159.6499939

104.1499939

SUGAR #11 (WORLD) Mar14

15.54

-1.207883026

-5.301645338

20.15999985

14.69999981

COTTON NO.2 FUTR Mar14

87.49

0.022864982

3.367202268

90.61000061

76.65000153

World Stock Markets - Indices NAME

Max 30.55

25.2

-0.410492591

GAS OIL FUT (ICE) Mar14

CORN FUTURE

105.0

24.4

Max 34.05

average 33.897

Min 33.7

last 33.95

33.7

Currency Exchange Rates

NAME

METALS

last 105.1

59.80

Commodities ENERGY

Min 105

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15794.08

1.059281

-4.720975

16588.25

13784.01

NASDAQ COMPOSITE INDEX

4125.861

1.69428

-1.214603

4246.553

3105.365

FTSE 100 INDEX

6574.48

0.04260707

-2.587162

6875.62

DAX INDEX

9310.03

0.0871863

-2.534818

9794.05

NIKKEI 225

14718.34

1.769622

-9.655269

HANG SENG INDEX

21579.26

-0.2661663

DAY %

YTD %

(H) 52W

(L) 52W

0.8914 1.6408 0.8964 1.3642 102.18 7.9897 7.757 6.0603 62.3275 32.82 1.2697 30.347 44.975 12173 91.075 1.2229 0.8314 8.2684 10.9001 139.39 1.03

-0.5023 -0.0183 0.1896 0.0513 0.1174 0.0225 0.0206 0.0594 -0.0602 -0.0609 -0.1181 -0.1714 0.0222 -0.0986 0.6346 0.1104 -0.0589 -0.387 -0.5505 0.1004 0.0097

-0.0897 -0.5636 -0.5689 -0.8864 2.75 -0.0388 -0.04 -0.099 -0.8463 -0.1371 -0.441 -1.7794 -1.2896 -0.0164 2.8262 0.3116 0.3308 0.878 0.8505 3.6731 0

1.0582 1.6668 0.9839 1.3893 105.44 8.0179 7.7678 6.2492 68.845 33.148 1.2862 30.426 45.485 12281 105.433 1.265 0.88151 8.4133 11.0434 145.69 1.0327

0.866 1.4814 0.88 1.2746 90.88 7.9818 7.7514 6.0393 53.605 28.56 1.2268 29.293 40.555 9603 86.41 1.21196 0.81683 7.8281 10.195 118.73 1.0289

Macau Related Stocks NAME ARISTOCRAT LEISU CROWN RESORTS LT

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.76

1.709402

1.492536

5.12

3.49

3691126

16.81

1.632406

-0.237391

18.22

11.45

2502742

AMAX INTERNATION

1.63

-0.6097561

-5.23256

2.12

0.75

636925

BOC HONG KONG HO

23.45

1.515152

-5.633804

22.85

9261390

CENTURY LEGEND

0.445

3.488372

3.48837

0.68

0.26

1660000

7.33

-0.6775068

3.971628

7.5

87000

CHINA OVERSEAS

19.86

-2.407862

-8.899079

17.7

28766468

CHINESE ESTATES

17.84

0.3374578

-25.9751

24.7

10.384

1000

CHOW TAI FOOK JE

12.48

3.311258

7.958474

13.2

7.44

14736800 1675000

CHEUK NANG HLDGS

COUNTRY

PRICE

EMPEROR ENTERTAI

4.11

-2.375297

2.75

5.4

1.95

FUTURE BRIGHT

4.85

1.677149

3.411513

5.3

1.758

5068000

GALAXY ENTERTAIN

69.6

-2.109705 0.07188634

84.5

15497193

6023.44

HANG SENG BK

119

0.762066

-5.330149

132.8

110.6

1156547

7418.36

HOPEWELL HLDGS

2.857143

35.3

23.2

5500104

16320.22

11065.06

HSBC HLDGS PLC

79.2

-0.1261034

-5.882355

90.7

77.85

18100317

-7.410546

24111.55078

19426.35938

HUTCHISON TELE H

2.78

-5.442179

4.66

2.5

1069000

LUK FOOK HLDGS I

27.3

-7.457627

16.88

2063000

CSI 300 INDEX

2267.534

2.4882

-2.682028

2791.303

2023.171

MELCO INTL DEVEL

27.9

-0.8880995

-2.105263

32.5

11.52

2811222

TAIWAN TAIEX INDEX

8391.95

0.0548445

-2.549606

8668.95

7663.23

MGM CHINA HOLDIN

30.1

-1.633987

-9.06344

36.15

15.798

3597723

KOSPI INDEX

1923.3

0.04161248

-4.377177

2063.28

1770.53

MIDLAND HOLDINGS

3.34

-4.022989

-10.45576

3.82

2.68

801900

NEPTUNE GROUP

0.31

5.084746

-8.82353

0.4

0.131

51800000

NEW WORLD DEV

9.34

-1.372756

-4.596527

14.48

9.16

11198018

SANDS CHINA LTD

58.2

-1.689189

-8.129437

67.15

33.5

19393745

S&P/ASX 200 INDEX

5222.147

1.076506

-2.43008

5457.3

4632.3

JAKARTA COMPOSITE INDEX

4451.779

-0.3332688

4.155234

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1817.8

0.5092365

-2.633153

1882.2

1599.94

SHUN HO RESOURCE

1.64

-0.6060592

1.92

1.33

54000

NZX ALL INDEX

1018.583

-0.1234505

1.970977

1048.998

904.128

SHUN TAK HOLDING

4.46

-1.327434

-2.192981

5.18

3.27

4474000

PHILIPPINES ALL SHARE IX

3677.3

0.5845298

1.742513

4571.4

3440.12

SJM HOLDINGS LTD

24.65

-0.804829

-5.192308

17.04

6540780

8.21

-0.6053269

-7.33634

14.46

7.38

900000

WYNN MACAU LTD

33.95

-0.4398827

-3.413944

38.25

19.6

6027803

ASIA ENTERTAINME

#N/A N/A

BALLY TECHNOLOGI

69.5

-4.018782

-11.40854

82.67

1985366

Euromoney Dragon 300 Index Sin

581.7

0.93

-4.87

STOCK EXCH OF THAI INDEX

1291.58

-0.3787148

-0.5490067

1649.77

1205.44

HO CHI MINH STOCK INDEX

555.9

1.116851

10.15992

564.61

459.64

Laos Composite Index

1247.46

-0.4683519

1446.66

1218.84

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

SMARTONE TELECOM

BOC HONG KONG HO

3.04

-0.3278689

-5.590063

3.6

2.93

3160

GALAXY ENTERTAIN

9.224

-0.8172043

2.375136

10.81

3.8975

10090

INTL GAME TECH

14.74

1.236264

-18.8326

21.2

13.91

4014385

JONES LANG LASAL

117.3

1.964534

14.56197

117.32

80.86

344292

LAS VEGAS SANDS

76.97

0.9045621

-2.409031

82.48

47.95

3408084

MELCO CROWN-ADR

40.94

1.036525

4.385514

45.4799

17.76

2209693

MGM CHINA HOLDIN

3.99

1.785714

-7.424593

4.66

6585

MGM RESORTS INTE

24.8

2.099629

5.442175

26.7

11.72

7941806

SHFL ENTERTAINME

#N/A N/A

23.25

14.54

SJM HOLDINGS LTD

3.23

4.530744

-3.293411

3.6

2.2

24152

221.95

2.422704

14.2835

222.45

111.3456

1665162

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

35.65

28607788

ALUMINUM CORP-H

2.78

5301236

BANK OF CHINA-H

3.18

-1.242236

340942010

4.9

-1.010101

19036698

29.05

0.8680556

1286369

8.16

-2.158273

18593606

23.45

1.515152

15.4

-0.3880983

AIA GROUP LTD

BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO CATHAY PAC AIR CHEUNG KONG

NAME CHINA UNICOM HON CITIC PACIFIC

DAY %

VOLUME

10.36

-0.9560229

39095456

9.59

-0.2081165

5290423

NAME POWER ASSETS HOL SANDS CHINA LTD

58.05

-0.257732

2770703

12.1

-0.1650165

93776138

9.9

-1.394422

3628116

ESPRIT HLDGS

14.24

0.4231312

16653128

9261390

HANG LUNG PROPER

21.75

-1.360544

4953974

TINGYI HLDG CO

3195462

HANG SENG BK

119

0.762066

1156547

WANT WANT CHINA WHARF HLDG

112.7

-0.2654867

3212668

CHINA COAL ENE-H

4.04

-0.7371007

31452505

CHINA CONST BA-H

5.18

-1.520913

269502067

CLP HLDGS LTD

PRICE

CNOOC LTD COSCO PAC LTD

HENDERSON LAND D

41.2

-2.600473

2975392

HENGAN INTL

83.7

-2.047981

2247809

HONG KG CHINA GS

15.36

-0.9032258

13090922

HONG KONG EXCHNG

121.1

0.6650042

2000896

79.2

-0.1261034

18100317

CHINA LIFE INS-H

20.55

21955886

CHINA MERCHANT

26.6

0.9487666

7326652

CHINA MOBILE

73.55

0.6155951

19305034

HUTCHISON WHAMPO

CHINA OVERSEAS

19.86

-2.407862

28766468

IND & COMM BK-H

CHINA PETROLEU-H

5.78

-1.027397

122795348

CHINA RES ENTERP

22.5

-1.960784

HSBC HLDGS PLC

96.45

-1.127627

5411007

4.64

-1.276596

193746393

LI & FUNG LTD

10.48

-0.3802281

16828205

4523000

MTR CORP

26.95

-1.100917

3056888

PRICE

DAY %

61.35

1.237624

VOLUME 5038266

58.2

-1.689189

19393745

SINO LAND CO

10.22

3811142

SUN HUNG KAI PRO

95.15

-0.1573977

3819562

SWIRE PACIFIC-A

82.65

0.4252734

1156854

TENCENT HOLDINGS

533.5

1.71592

6553930

MOVERS

19.7

-0.605449

6590936

10.12

-0.589391

17427894

-1.328273

3484752

21690

INDEX 21579.26 HIGH

21688.13

LOW

21220.01

CHINA RES LAND

17.66

-1.450893

3075242

NEW WORLD DEV

9.34

-1.372756

11198018

52W (H) 24111.55078

CHINA RES POWER

18.26

-1.083424

4236211

PETROCHINA CO-H

7.67

1.589404

142029127

(L) 19426.35938

CHINA SHENHUA-H

-0.2375297

21658244

PING AN INSURA-H

60.55

-0.4111842

14189336

21290

6-February

10-February

15 15

February 11, 2014 April 19, 2013

Opinion Business

wires

Stagnation by design

Leading reports from Asia’s best business newspapers

Wall Street Journal

Joseph E. Stiglitz

Nobel laureate in economics, is University Professor at Columbia University

Beijing is refusing to back down in a verbal stand-off with the U.S. over China’s territorial ambitions in South China Sea, with China’s foreign ministry rejecting comments by a U.S. diplomat that Chinese moves threatened stability in the region. “As a sovereign state, China is fully entitled to take any measures it sees fit as regards air security, including the establishment of an airdefence identification zone, to safeguard national security,” Chinese foreign ministry spokesman Hong Lei said, calling U.S. comments on the issue “irresponsible”.

adjust to a new reality in which long-term productivity growth will be significantly below what it has been over the past century. Given economists’ miserable record – reflected in the runup to the crisis – for even three-year predictions, no one should have much confidence in a crystal ball that forecasts decades into the future. But this much seems clear: unless government policies change, we are in for a long period of disappointment.

Flawed policies

Bangkok Post Uncertainty over whether the February 2 general election will eventually become null and void, and when exactly a new government can be formed, has worsened the situation in Thailand. The government set a spending budget of 2.53 trillion baht (US$77.2 billion) this fiscal year. The election law also prohibits the caretaker government from imposing a financial burden on any new government formed in the future.

NZ Herald Enticing more migrants into the country could dramatically increase the income of New Zealand, a new research has found. Attracting an additional 40,000 people a year for 10 years would increase GDP per capita by NZ$410 (US$339) a year, the findings from the New Zealand Institute of Economic Research show. “New Zealand’s point-based immigration framework gets the mix of migrants required about right. But we need to do more to keep lifting the number of migrants that come,” Kirdan Lees, senior economist at NZIER said.

The Age Macquarie Group and Australia & New Zealand Banking Group are among firms planning bids for about US$2 billion in loans being sold by Investec, said two people with knowledge of the matter. Investec, which owns a bank and money manager in South Africa and the U.K., cut 80 jobs and closed or scaled back its Australian securities, equity capital markets and structured financial products businesses last year. In November, it appointed Ernst & Young, King & Wood Mallesons and Greenhill & Co to review the potential sale of some Australian units.

oon after the global financial crisis erupted in 2008, I warned that unless the right policies were adopted, Japanese-style malaise – slow growth and near-stagnant incomes for years to come – could set in. While leaders on both sides of the Atlantic claimed that they had learned the lessons of Japan, they promptly proceeded to repeat some of the same mistakes. Now, even a key former United States official, the economist Larry Summers, is warning of secular stagnation. The basic point that I raised a half-decade ago was that, in a fundamental sense, the U.S. economy was sick even before the crisis: it was only an asset-price bubble, created through lax regulation and low interest rates, that had made the economy seem robust. Beneath the surface, numerous problems were festering: growing inequality; an unmet need for structural reform (moving from a manufacturing-based economy to services and adapting to changing global comparative advantages); persistent global imbalances; and a financial system more attuned to speculating than to making investments that would create jobs, increase productivity, and redeploy surpluses to maximise social returns. Policymakers’ response to the crisis failed to address these issues; worse, it exacerbated some of them and created new ones – and not just in the U.S. The result has been increased indebtedness in many countries, as the

collapse of GDP undermined government revenues. Moreover, underinvestment in both the public and private sector has created a generation of young people who have spent years idle and increasingly alienated at a point in their lives when they should have been honing their skills and increasing their productivity. On both sides of the Atlantic, GDP is likely to grow considerably faster this year than in 2013. But, before leaders who embraced austerity policies open the champagne and toast themselves, they should examine where we are and consider the near-irreparable

Only some people must adjust to a permanently lower standard of living. Unfortunately, those people happen to be most people

damage that these policies have caused.

Misleading numbers Every downturn eventually comes to an end. The mark of a good policy is that it succeeds in making the downturn shallower and shorter than it otherwise would have been. The mark of the austerity policies that many governments embraced is that they made the downturn far deeper and longer than was necessary, with long-lasting consequences. Real (inflation-adjusted) GDP per capita is lower in most of the North Atlantic than it was in 2007; in Greece, the economy has shrunk by an estimated 23 percent. Germany, the top-performing European country, has recorded miserly 0.7 percent average annual growth over the last six years. The U.S. economy is still roughly 15 percent smaller than it would have been had growth continued even on the moderate pre-crisis trajectory. But even these numbers do not tell the full story of how bad things are, because GDP is not a good measure of success. Far more relevant is what is happening to household incomes. Median real income in the U.S. is below its level in 1989, a quarter-century ago; median income for full-time male workers is lower now than it was more than 40 years ago. Some, like the economist Robert Gordon, have suggested that we should

Markets are not selfcorrecting. The underlying fundamental problems that I outlined earlier could get worse – and many are. Inequality leads to weak demand; widening inequality weakens demand even more; and, in most countries, including the U.S., the crisis has only worsened inequality. The trade surpluses of northern Europe have increased, even as China’s have moderated. Most important, markets have never been very good at achieving structural transformations quickly on their own; the transition from agriculture to manufacturing, for example, was anything but smooth; on the contrary, it was accompanied by significant social dislocation and the Great Depression. This time is no different, but in some ways it could be worse: the sectors that should be growing, reflecting the needs and desires of citizens, are services like education and health, which traditionally have been publicly financed, and for good reason. But, rather than government facilitating the transition, austerity is inhibiting it. Malaise is better than a recession, and a recession is better than a depression. But the difficulties that we are facing now are not the result of the inexorable laws of economics, to which we simply must adjust, as we would to a natural disaster, like an earthquake or tsunami. They are not even a kind of penance that we have to pay for past sins – though, to be sure, the neoliberal policies that have prevailed for the past three decades have much to do with our current predicament. Instead, our current difficulties are the result of flawed policies. There are alternatives. But we will not find them in the self-satisfied complacency of the elites, whose incomes and stock portfolios are once again soaring. Only some people, it seems, must adjust to a permanently lower standard of living. Unfortunately, those people happen to be most people. © Project Syndicate

16 16

February 11, 2014 April 19, 2013

Closing Barclays suffers sharp fall in profits

Bitcoin plunges on Japan exchange halt

Barclays Plc reported full-year profit that missed analyst estimates as litigation and compensation charges complicated chief executive Antony Jenkins’s overhaul of Britain second-biggest bank. Adjusted pre-tax profit for 2013 was 5.2 billion pounds (US$8.5 billion), London-based Barclays said in a statement yesterday. That’s 26 percent down from 7.05 billion pounds in 2012. Barclays raised about 5.8 billion pounds from investors in a rights offering last year to appease regulators’ concerns about the bank’s capital strength. The bank is cutting jobs to remove 1.7 billion pounds of costs by 2015.

Bitcoin exchange Mt. Gox said customers can take out cash “as normal” and it’s working to resolve technical issues that prompted it to halt withdrawals of the digital currency. “There is a problem in the way transactions are verified,” Michael Keferl, a communications officer for Tokyo-based Mt. Gox, said. Bitcoin prices fell after Mt. Gox said it stopped withdrawals because of the malfunction. The company released a statement yesterday explaining the technical issues and saying it will resume Bitcoin withdrawals once they are addressed. The price of Bitcoin tumbled 11 percent to US$606.56 yesterday, according to the CoinDesk Bitcoin Price Index.

Dismay in Europe at Swiss quota vote Decision raises possibility of limited access to common market

he Swiss government faces enacting immigration curbs that threaten to upset ties to the European Union and hurt the economy following a popular vote on Sunday demanding limits on foreign workers. Almost 12 years after opening borders to EU expatriates, Swiss citizens recoiled, backing an initiative to impose limits on immigration. The measure, which doesn’t specify how high those quotas should be, passed by fewer than 20,000 ballots in a national vote. The government has three years to impose new rules, which will primarily affect workers from the EU, many of them highly qualified. Swiss business reacted with concern yesterday, as the decision raises the possibility that the EU could cancel some agreements allowing Swiss companies access to the common market, a move that would deal a severe blow to the nation’s export‑oriented economy. Immigration has supported economic growth in Switzerland, which is surrounded by EU countries without being a member itself. The decision, due to popular discontent about scarce housing, transport bottlenecks and falling

Swiss vote triggers bank concern

blue-collar wages, could undermine the economy by making it difficult to take on foreigners and sour relations with the EU, the top destination for Swiss exports, the government warned. “The quick population growth led to anxiety about social change, and people felt Switzerland was losing its identity,” said Michael Hermann, senior lecturer at the University of Zurich. “It’s a protest vote, and an

expression of scepticism,” he said, adding that the EU “will take a hard line” as the immigration issue “has now been raised to a symbolic level”.

Cherry picking “Clearly this vote didn’t set the right tone for the start of negotiations on an inter-institutional accord that will govern relations between the EU and

Switzerland,” European Commission spokeswoman Pia Ahrenkilde-Hansen told reporters in Brussels yesterday. The specific ramifications of the Swiss vote “will be discussed with the member states,” she said. Switzerland is already at odds with the EU over how it taxes multi-national corporations. Relations with the governments of neighbouring countries such as Germany and Italy

have been strained due to a dispute over their citizens who evaded taxes with secret bank accounts. Citizens from those two countries were the biggest groups of foreigners living in Switzerland in 2012. “Switzerland has to know that cherry picking in relations with the EU can’t be a lasting strategy,” German Foreign Minister Frank-Walter Steinmeier told reporters in Brussels yesterday. His Belgium counterpart agrees. “We can’t work a la carte,” Didier Reynders said. “They have to accept the entirety of the European accords.” About 20 percent of Swiss residents are foreigners and 45 percent of employees in the country’s chemical, pharmaceutical and biotech industry aren’t Swiss. Companies are concerned about a return to a decadesold system under which they had to file for permission with the government for each new foreign employee. A clause in Switzerland’s package of agreements with the EU means that the one on immigration cannot be cancelled without rendering the others null and void too. The pacts touch on topics such as electricity and the environment. Bloomberg News

Emerging markets output growth slows to 4-month low

usiness activity across emerging markets expanded in January at the slowest pace in four months, dragged down by sluggish services sectors in the BRIC quartet of big developing countries, a survey showed yesterday. HSBC Holdings Plc’s composite emerging markets index of manufacturing and services purchasing managers’ surveys slipped for the second month running to 51.4 in January. It stayed under the 2013 average of 51.7 and well below the score of 64.1 posted last January. But the monthly index

remained above the 50 threshold which marks the difference between expansion and contraction. Based on data from purchasing managers at about 8,000 firms in 17 countries, the survey showed signs of manufacturing and export revival in some countries but Chinese factory output fell below the 50 mark, Brazilian manufacturing growth slowed and output fell in Russia and Indonesia. Growth was stronger in India, Poland, Taiwan and Mexico. January services activity in the biggest emerging

markets was at a six-month low. India and Brazil both posted declines, while growth rates in China and Russia were weak, HSBC said. HSBC’s global head of emerging markets research, Pablo Goldberg, said the data showed a clear divergence in recovery pattern between emerging economies. “Among the winners, we have countries in a clear cyclical recovery that are being lifted by the improvement in the developed markets: Mexico, Poland and the Czech Republic,” Mr Goldberg said. “By contrast, PMIs de-

celerated in Turkey, Brazil, Russia and Indonesia. These are among the countries where deteriorating external balances have prevented monetary easing or forced tigh ening.” Several emerging central banks such as Turkey, India, South Africa and Brazil have tightened monetary policy in recent weeks and many more are expected to follow suit, with severe consequences for economic growth. While inflationary pressures were subdued, weak currencies were raising costs for some manufacturers, HSBC said. Turkish firms for

instance saw the steepest rise in input prices in nearly three years, a result of the lira’s fall to record lows. The future output index, which tracks firms’ expectations for activity in 12 months’ time, picked up in January after falling in December to a sixmonth low. But within this, manufacturing sentiment hit a ten-month high while that in the service sector fell to a record low. The HSBC index is calculated using data produced by Markit. Reuters