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Closing Editor: Michael Grimes
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Jay Chun gets daily role 1 business in Waldo Casino ops
Friday April 19, 2013
Publisher: Paulo A. Azevedo
NPC delegate to urge longer border opening Page 5
Residency requests rose last year
Number 486 Friday February 28, 2014
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ecord-low unemployment has set alarm bells ringing about the supply of labour, provoking calls for the government to make it easier to employ migrant workers. The unemployment rate fell to 1.7 percent in the three months ended January 31, official data show. The vice-chairman of the Macau Small and Medium Enterprises Association, Daniel Iong, told us that employers, especially SMEs, urgently needed recruits but often failed to find any that were suitably qualified.
“We used to have sales assistants that were well-informed and easily able to tell customers the source of products, or waiters that could serve people properly,” Mr Iong said. “But now you don’t see this attitude to work any more, and you see staff leaving every three months or so and hopping over to other jobs.”
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In the grip of a manpower shortage, more small- and medium-sized companies have turned to neighbouring Zhuhai in a search for employees to fill jobs that require specialised skills. While Zhuhai has traditionally been viewed as a convenient source of workers to fill lower-skilled and blue-collar jobs, Macau businesses are now headhunting clerical staff and specialists there. Recruitment agency World Hee (Macau) International Human Resources Co Ltd says it has seen more of these skilled roles – requiring higher education – going to mainland candidates.
Source: Bloomberg
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Electricity disruptions twice in two weeks
Subsidised homes sales 8x oversubscribed
The government has asked the city’s sole electricity supplier, CEM – Companhia de Electricidade de Macau SA – to hire “an international-standard laboratory” to probe the reasons behind two service disruptions in fewer than two weeks. The Office for the Development of the Energy Sector said yesterday it is “highly concerned” about the situation as the latest disruption – though extremely brief – affected 90 percent of the users here.
At least eight applicants are vying for each governmentsubsidised home on offer in the second round of sales, according to the latest data provided by the Housing Bureau. Kuoc Vai Han, the bureau’s acting director, told media yesterday that her department had received more than 16,000 applications so far for the second round of applications for public homes.
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February 28, 2014 Friday April 19, 2013
Macau LT Game’s NSW deal with Ainsworth Australia’s Ainsworth Game Technology Ltd and Macau-based casino equipment maker LT Game Ltd say they have signed a “multi-year distribution agreement”. It will give Ainsworth exclusive distribution rights for LT Game’s Fully Automated Multi Game system in slot clubs in the Australian state of New South Wales. “On many visits to Macau we have seen the growth and success of LT game in this market segment. They are now the market leader and set the benchmark in both live and simulated multi terminal gaming,” said Danny Gladstone, Ainsworth’s chief executive.
‘Don’t wait to close local slot club’ says community Neighourhood group organises petition against Inner Harbour gaming venue Tony Lai
tony.lai@macaubusinessdaily.com
General Union of Neighbourhood Associations delivers petition to govt HQ
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ne of the largest neighbourhood groups in Macau says it has collected 16,000 signatures asking the government to remove a slot machine parlour in the Inner Harbour district now instead of waiting longer. Secretary for Economy and Finance Francis Tam Pak Yuen said last week the government aims to eliminate all non-casino slot venues, but indicated that might not be completed until at least 2015. That’s when the government expects to begin formal talks with the gaming concessionaires and sub-
concessionaires on possible renewal of their licences. This week the General Union of Neighbourhood Associations delivered a petition with the signatures to the government’s headquarters calling for swifter action. Ho Chong Chun, vicepresident of the union, said: “The government said it will ask the gaming operators to remove all standalone slot parlours in 2015-16, which is too long [a wait].” “The gaming operator should remove that slot parlour [in the Inner Harbour] now,” he said,
“while the government should be responsible for persuading the operator.” The venue he referred to is in a renovated hotel in Rua Cinco de Outubro, and part of the Mocha Clubs chain operated by Melco Crown Entertainment Ltd. Mocha sought to re-locate the venue there after being required under a November 2012 government regulation to move a venue from another residential area. The government gave the two local slot club operators – the other is SJM Holdings Ltd – a 12-month grace period to
16,000
Signatures against slot club
move those parlours that were either in residential buildings or not within 500 metres of an existing casino-hotel. Technically Mocha’s Rua Cinco de Outubro venue complies
Paradise unit participating in Waldo Casino ops
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ong Kong listed casino equipment maker Paradise Entertainment Ltd says its subsidiary LT (Macau) Ltd is to provide services including “sales, marketing, promotion, player development and referral,” to Waldo Casino in Macau. The property – branded as Waldo Casino & Hotel – operates under a gaming licence from Galaxy Entertainment Group Ltd. “It is anticipated that this arrangement will further expand the group’s business and market share
in Macau,” said Paradise in a press statement, which at the time Business Daily went to press, had not been filed with the Hong Kong Stock Exchange. Paradise stated that Waldo Casino has 30 gaming tables, including “Live Multigame Machines”, and 200 slot machines. The firm added: “LT (Macau) is entitled to approximately 56 percent of the net win of the tables, Live Multigame Machines and slot machines of Waldo Casino, and such income will undoubtedly boost the group’s revenue”.
with the rules, because it is within 500 metres of the SJM-licensed Ponte 16 resort. But some residents complain the relocation doesn’t comply with the spirit of the government’s rules. Mr Ho of the neighbourhoods association said the government should freeze any relocation requests from the five affected parlours and there should be a cap on the increase of slot machines. Business Daily approached Mocha Clubs for a comment on the association’s petition, but no response was available by press time.
The company also stated that LT (Macau) Ltd had been providing “sales, marketing, promotion, player development and referral and other services to Casino Kam Pek Paradise” since 2007. The latter operates under a gaming licence from Stanley Ho Hung Sun’s Sociedade de Jogos de Macau SA. Paradise’s chairman Jay Chun said during the Macao Gaming Show in November that Paradise as a group intended to be involved in the operation of two more casinos in Macau – aside from Kam Pek – under so-called service agreements with existing Macau concessionaires. Mr Chun is also chairman of that gaming show’s initiator, the Macau Gaming Equipment Manufacturers Association.
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Macau
Record-low jobless rate prompts dire warnings As unemployment falls to 1.7 pct, the SMEs association demands easier access to migrant labour Stephanie Lai
sw.lai@macaubusinessdaily.com
next year, as the expanding gaming companies and the expanding civil service fought for recruits. He said the government alone intended to take on 5,000 employees this year.
Wanted: data miners
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ecord-low unemployment has set alarm bells ringing about the supply of labour, provoking calls for the government to make it easier to employ migrant workers. The unemployment rate fell to 1.7 percent in the three months ended January 31, official data show. The rate was 0.1 percentage point less than in the three months to December and lowest since the Statistics and Census Service began posting employment figures online in 1992. The number of unemployed was 6,500 in the three months to January, 300 fewer than in the three months to December.
Newcomers First-time jobseekers made up 14.6 percent of the unemployed. The number of people in employment rose by 1,700 to 372,000. Most were employed in the hospitality industry. The number working in hospitality jobs grew by 1.9 percent. “For a country or region, an unemployment rate of 4 percent or below generally suggests full employment,” said University of Macau associate professor of economics and international finance Ricardo Siu Chi Sen. “But when the rate drops further, to the level of 1 percent or below, it indicates that the labour supply is so tight that the problem of the mismatch
between the workers and jobs available will become even more prominent,” Mr Siu told Business Daily. “Actually, this problem is already occurring.” The vice-chairman of the Macau Small and Medium Enterprises Association, Daniel Iong, told us that employers, especially SMEs, urgently needed recruits but often failed to find any that were suitably qualified. “Member-companies tell us that their need for staff is so acute that they will hire workers whose qualifications are below their usual expectations,” Mr Iong said. Most members of the SMEs association are in retailing, restaurants or construction. “We used to have sales assistants that were well-informed and easily able to tell customers the source of products, or waiters that could serve people properly,” Mr Iong said. “But now you don’t see this attitude to work any more, and you see staff leaving every three months or so and hopping over to other jobs.” Government policy requires an employer to have a certain number of Macau permanent residents on its payroll before it is allowed to take on any migrant workers. The SMEs association thinks the supply of labour is so tight that this policy is obsolescent. Mr Iong said the battle for workers would enter a crucial phase from the middle of this year until early
28 illegal workers caught
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he Public Security Police last month carried out inspections at 303 sites in search of illegal workers. A total of 25 illegal workers were found, according to figures released yesterday by the Public Security Police. The Labour Affairs Bureau also carried out inspections at 12 sites, where three illegal workers
were found. In two joint operations by the Labour Affairs Bureau, the Public Security Police, Macau Customs and the Macau Government Tourist Office, no illegal workers were found. All the inspections were carried out at construction sites, residential buildings and commercial and industrial establishments.
Mr Iong acknowledges that the Human Resources Office has speeded up the process of granting quotas for the employment of migrant workers, which generally takes three to four months. “But that’s not enough to help local SMEs get the workers they need. The labour market should be more open,” he said. Mr Iong and Mr Siu are both calling for the government to rethink the quota system. “The government really ought to do data mining on the different kinds of human resources needed in the coming years, and consider how it can apply the quota system appropriately and set more specific rules,” said Mr Siu.
1.7%
lowest ever recorded jobless figures
Tertiary Education Services Office director Sou Chio Fai said last month that the government would study demand in the next few years for labour in the hotel industry, and in the fields of accountancy, translation and interpretation, and engineering. Mr Sou did not say when the government would finish its study.
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Macau Macau to host APEC event A group has been set up to plan a meeting of tourism ministers from around the region at the 2014 Asia-Pacific Economic Cooperation (APEC) forum due in Macau – probably in August. Hong Kong had been due to host another regional government get-together – the APEC Finance Ministers’ Meeting – initially scheduled to take place from September 10 to 12. But as of Tuesday this week that had been “postponed to a new date after late September,” the Hong Kong government said. However, according to APEC’s own schedule for this year, the Finance Ministers’ Meeting is now scheduled for Beijing with the date yet to be confirmed.
Hutchison Telephone Macau ‘satisfied’ with results The company undertakes to improve its 3 Macau network coverage in Cotai Tony Lai
tony.lai@macaubusinessdaily.com
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utchison Telephone (Macau) Co Ltd says its 3 Macau mobile phone network’s financial performance last year was on target, even though revenue fell. The company also says it will improve its network’s coverage in Cotai so it can better serve the casino-resorts springing up there. Hutchison Telephone Macau’s parent company, Hutchison Telecommunications Hong Kong Holdings Ltd, told the Hong Kong Stock Exchange this week that the annual turnover of its Macau subsidiary had fallen by 17.2 percent last year to HK$569 million
3 Macau has been closely monitoring the progress of big infrastructure projects here Ho Wai Ming, CEO, Hutchison Telephone Macau
(US$71.1 million). But Hutchison Telephone Macau chief executive Ho Wai Ming told reporters yesterday: “The result for Macau is ideal, hitting our target.” Mr Ho declined to say how much profit his company had made. The parent company said the whole Hutchison telecommunications group’s net profit had fallen by onequarter to HK$916 million last year. It blamed lower sales of smartphones and other devices. Mr Ho said the number of Hutchison Telephone Macau subscribers had surpassed 500,000 and that the amount of data they had used had
“almost doubled” from 2012. “The rise in data usage helped to push up our business last year,” he said. He said the company would continue to invest in network infrastructure this year to improve its coverage in Cotai. “3 Macau has been closely monitoring the progress of big infrastructure projects here, including new hotels and casino-resorts, and public housing.” Mr Ho said his company would improve its network’s resilience in case of breakdowns, but declined to say how much it would spend on doing so. Last year the government
fined Hutchison Telephone Macau 370,000 patacas for two bouts of disruption of its services in 2012. Mr Ho said the company was ready to provide fourthgeneration (4G) wireless telecommunications as soon as the government allowed it to. The Bureau of Telecommunications Regulation said this week it was endeavouring to finish this year drawing up a proposal for issuing licences for 4G services. Hutchison Telephone Macau’s biggest rival, Companhia de Telecomunicações de Macau SARL, has also expressed interest in a 4G licence.
Two electricity disruptions in two weeks
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he government has asked the city’s sole electricity supplier, CEM – Companhia de Electricidade de Macau SA – to hire “an international-standard laboratory” to probe the reasons behind two service disruptions in fewer than two weeks. The Office for the Development of the Energy Sector said in a press statement yesterday it is “highly concerned” about the situation as the latest disruption – though extremely
brief – affected 90 percent of the users here. The statement said the latest incident took place on Wednesday night, lasting for 0.1 seconds. An initial investigation found the disruption was caused by damage to an electric circuit connecting a substation at llha Verde on Macau peninsula, and one near the Lotus Bridge border crossing point on Cotai, the office added. The same circuit, which was
only commissioned in June 2012, had already been linked to a service disruption of a few seconds duration on February 15, the statement added. But most residents could not feel any impact from the two incidents as back-up circuits had come into force promptly, the office said. An attempt by Business Daily yesterday to reach CEM for comment outside business hours was unsuccessful.
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February 28,19, 2014 Friday April 2013
Macau Film investment seminar for Pearl River Delta The city will hold the first regional business seminar for movie production covering Macau, Hong Kong, and Guangdong province by the middle of this year, said the Cultural Affairs Bureau. Chan Peng Fai, the bureau’s official in charge of promoting cultural and creative industries, said the three jurisdictions would each pick 10 film scripts for the seminar, which will arrange matching sessions between investors and the production teams for each script. Mr Chan said at a media gala on Wednesday that the investor exchange would be held annually if this year’s edition proves successful.
NPC delegate to urge longer Subsidised home sales border opening 8x oversubscribed L A
ao Ngai Leong – a businessman and Macau delegate to China’s government advisory body the National People’s Congress – told Business Daily yesterday that he would be lobbying for longer opening hours for the Macau-Zhuhai border with mainland China. The NPC meets in Beijing from next Wednesday, and Mr Lao said he would raise the issue there. He would like to see staff numbers boosted for customs and for Public Security Police at crossing points to enable the longer hours. Currently the Gongbei land border to Zhuhai is open from 7am to midnight seven days per week, and the Lotus Bridge crossing to Hengqin is open from 9am to 8pm seven days per week. Mr Lao said he would urge the central government to develop its staffing policy better to serve those locations and also the new
peninsular crossing point planned for Ilha Verde. The border issue is also of concern to other Macau delegates to the NPC Mr Lao said. The congress delegate suggests that tourist coaches from Macau should also be allowed to drive up to the Hengqin border, where at present only a shuttle service co-operated by Sociedade de Transportes Colectivos de Macau (TCM) and Kee Kwan Motor Road Co Ltd picks up passengers to travel between Lotus Bridge border crossing and the Hengqin border. The transport hub near the Hengqin border is meant to accommodate bus and taxi stations and a gateway to Guangzhou-Zhuhai Intercity Railway. The transport hub and the new Hengqin border will cover about 210,000 square metres, the Hengqin government has announced. S.L.
t least eight applicants are vying for each governmentsubsidised home on offer in the second round of sales, according to the latest data provided by the Housing Bureau. Kuoc Vai Han, the bureau’s acting director, told media yesterday that her department had received more than 16,000 applications so far for the second round of applications for public homes. Such figure represents 8.4 times the supply of 1,900 flats available in this round. But demand is likely to tighten further as the three-month application window will only end on March 17. The 1,900 units range in size from one bedroom to three bedroom apartments. They are located in public housing projects in Taipa, Ilha Verde on Macau peninsula and Seac Pai Van at Coloane. The housing bureau yesterday
also finished drawing up a list of applicants – ranked in priority order – for the first tranche of subsidised homes, totalled 1,544 flats. All the flats available in the first round are one-bedroom flats located in Ip Heng Building in Seac Pai Van. “We expect we can verify again the credentials of the applicants by the second half of March,” Ms Kuoc said, “and [the applicants] can buy the flats in the second quarter.” There were nearly 12,000 verified applicants for the first round of sales. But according to Macau law, the more than 2,700 applications by families will be given priority against those made by single people. The rule has been criticised by some legislators for allegedly ignoring the housing needs of singles. T.L.
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Macau
Some of Macau’s most reliable workers are mainlanders commuting daily
Search for staff crosses all boundaries With the city’s unemployment rate at all-time lows, Zhuhai has become a source of workers for small businesses Stephanie Lai sw.lai@macaubusinessdaily.com
I
n the grip of a manpower shortage, more smalland medium-sized companies have turned to Zhuhai in a search for employees to fill jobs that require specialised skills. While Zhuhai has traditionally been viewed as a convenient source of workers to fill lower-skilled and blue-collar jobs such as kitchen staff, sales people, cleaners and security workers, more Macau businesses are headhunting clerical staff and specialists. Recruitment agency World Hee (Macau) International Human Resources Co Ltd says it has seen more of these skilled roles requiring higher education going to mainland candidates. It is a trend that has developed over the past two years, said World Hee general manager Mr Ieong Wai Ian. “We’ve seen construction companies here hiring civil engineers, quantity surveyors and draftspersons from Zhuhai, and also some other businesses that look for information technology (IT) specialists from there, such as IT support and maintenance staff,” he said. “Another reason some local businesses turn to hiring in Zhuhai is that mainland workers can stay longer in the company, whereas local
labour are a bit more unstable and tend to hop to other jobs every three to four months.” Macau Construction Association chairman Lo Kai Jone said construction companies had engaged Zhuhai-based recruitment websites and human resource agencies in their search for staff. “This has been a phenomenon that you saw in 2006 to 2009 during the first casino-resort construction boom, and now it appears again in recent years,” Mr Lo said.
Big projects “Meanwhile the government is also competing with companies to look for people to attend to longterm infrastructure projects such as LRT. “It has got a bit harder for local companies to find construction workers and project management officers from Zhuhai because other mainland cities are also competing for these people. “Also, the yuan appreciation factor has meant the wage gap between here and the mainland has narrowed. “Construction workers and management officers from the mainland are receiving almost the same wages as
locals now when you count in the accommodation subsidies for imported labour.” The boom in construction has been led by a new wave of casino-resorts and major infrastructure projects. In Macau, the hiring of migrant workers is approved by the Human Resources Office on a case-by-case basis, and companies are required to maintain a minimum proportion of residents in their staff. But there is no legal stipulation or official guideline on specific labourforeign quotas, except in the construction industry where one resident must be hired for each migrant worker – a policy the Macau government announced in 2010. “No one knows how this labour quota system works, and this is problematic for the small and medium size companies when they are in urgent need of staff and there are no locals to take up the positions they offer,” Mr Ieong said. “In some cases these companies say that they had waited for half a year to get work permits for their foreign staff. “One solution that some local companies have adopted to overcome this quota issue is that they have established offices in Zhuhai
…local labour are a bit more unstable and tend to hop to other jobs every three to four months Ieong Wai Ian, recruitment agency manager
to hire the labour they need, such as in the Cross-Border Industrial Zone.” Macau retailer, Seng Fung Jewellery Co Ltd, told Business Daily late last month that it had decided to establish an office in the Cross-Border Industrial Zone. The move was designed to circumvent the labour quota, which had prevented the company from successfully sourcing jewellery design professionals from the mainland, according to Seng Fung’s general manager Lee Koi Ian. While the government has not announced any major changes in its labour policy to address the manpower shortage, Mr Ieong said the trend of local companies looking for professionals with tertiary education background or unique skills would continue. But MSS Recruitment Ltd managing director Tu Jiji says that any influx of migrant workers from Zhuhai in the near future would be skilled and semi-skilled workers in blue-collar jobs. “In terms of quantity of employees imported from Zhuhai, I think it will still be dominated by the more entry-level positions of the service sector, such as waiters, chefs and salespersons,” said Ms Tu.
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Macau
Hospitality firms play nice to lure staff Better salaries and worker-friendly features are being rolled out as the main ways to find and retain staff Tony Lai tony.lai@macaubusinessdaily.com
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s companies in the hospitality industry compete to find and retain staff, they are innovating by offering better salary packages and conditions. MGM Macau’s director of human resources Fatima Cou says the squeeze is going to become tighter over the next few years, when new resorts open in Cotai. “Regardless of whether [the company] is a gaming operator or small- and medium-sized enterprise, everyone knows it is difficult to hire people in Macau now,” she told Business Daily. Among the new Cotai projects is MGM’s 1,600-hotel room development that is scheduled to open in 2016. Ms Cou refused to say how many new staff would be required to staff the property. “Not many fresh graduates [from universities] want to join the hospitality industry as they have many options,” she said. She spoke to Business Daily at a career day organised by the Institute for Tourism Studies. MGM Macau has improved its facilities and activities for staff in an attempt to make the working environment more appealing to employees. “We also use many new means like applications of WhatsApp and WeChat to communicate with the youths to let them know what kind of jobs we can offer.”
Competing claims The city’s unemployment rate hovered around 1.8 percent between October and December. It was the lowest rate recorded since data was first published in 1996.
The career day at the Institute for Tourism Studies
Regardless of whether [the company] is a gaming operator or small- and medium-sized enterprise, everyone knows it is difficult to hire people in Macau now Fatima Cou, MGM Macau’s director of human resources
Locals complain against WhatsApp
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here have been a number of complaints from Macau inhabitants that the mobile telecommunications application firm WhatsApp Inc. has been using clients’ personal data and information and giving it to third parties. The third parties would then message promotions or advertising to these clients said the complainants. Macau’s Office for Personal Data Protection revealed the issue this week. According to the office, the government is taking these complaints seriously and will speak with its respective counterparts in other countries and regions. Last month, the Office of the Privacy Commissioner of Canada and the Dutch Data Protection Authority released their findings from a joint investigation into the handling of personal information by WhatsApp. Its report said that while WhatsApp had taken steps to implement regulators’ recommendations, “outstanding issues need to be fully addressed.” German privacy regulators also recommended the company switch to a more secure messaging service now that Facebook had bought it.
Ms Cou said the onus was with the government to develop and implement policies that would solve the labour shortage. The retail sector is also battling to keep its workers from leaving for the gaming sector. The main weapons managers are using include more attractive salary packages and better promotion opportunities. “There are better promotion chances [in the retail sector] than [with] casino operators as the industry need many people with different brands opening shops here each year,” said Tommy Leung, the DFS Group Ltd talent acquisition manager for Macau. “We also have better welfare packages and the workers do not need to be on shift around the clock. “The salary the retail sector can offer is also quite attractive against casinos.
“The average the newcomers can get is between 17K [17,000 patacas or US$2,127] and 18K a month including basic salaries and commission.” Official data said the median monthly earnings of residents stayed at 15,000 patacas (US$1,877) by the fourth quarter of last year while the average earnings of gaming employees were 18,900 patacas a month by the second quarter of last year. From the employees’ point of view, the outlook is rosy. “It can be said all IFT students are employed after their graduation,” recent graduate Kevin Shen Pak Tong said. The institute claims that 96.7 percent of his graduates from 2011 and 2012 found jobs immediately, with the remainder pursuing further studies. The career day included 19 companies offering more than 1,300 jobs.
Macau tops Residency Management Today applications ‘economies to watch’ list increase in 2013
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acau heads a ranking compiled by Management Today magazine as one of the emerging economies the world should be watching. It cites positive aspects for Macau as its gaming sector that “puts Las Vegas to shame,” the high number of visitors and the fact the town is a freeport as well as being a low-tax jurisdiction generally. But the publication also mentions concerns that “Macau is running out of steam”. The magazine states: “It faces challenges in managing its ballooning casino industry, tackling moneylaundering and the need to diversify the economy away from heavy dependence on gaming revenues”. Macau is the best rated of all emerging markets listed – scoring nine out of a possible 10 points. The city is followed by Mongolia (8 points), Serbia (7), Ethiopia (6), Panama (5), East Timor and Rwanda (4), Liberia (3), Tunisia (2) and, finally, Iraq.
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total of 587 applications for temporary residence were filed last year with the Macau Trade and Investment Promotion Institute, an increase of 47 cases compared with 2012. These were applications made under the managerial personnel, technical and professional qualification. In addition, 105 applications for major investment and major investment plans were filed, representing an 84.8 percent and 15.2 percent, respectively, of the total 692 new applications submitted. Approved applications for managerial personnel totaled 251, an increase of 11 cases, year-on-year. While approved applications for major investment plans totaled 41, also an increase of 33 compared with 2012. There were no new residency applications in 2013 based on fixed assets purchases. The government changed the law in April 2007 regarding residency linked to property purchase. However, seven applications filed before then have been approved, and two are still being processed.
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Greater China Yuan forwards near 3-month low Forward contracts in China’s yuan traded within 0.2 percent of the weakest level since November after the central bank reduced the onshore currency’s daily fixing. The People’s Bank of China cut the reference rate by 0.05 percent to 6.1224 per dollar, the weakest since Dec. 6. The recent volatility in the exchange rate is normal and the market shouldn’t read too much into the drop, the State Administration of Foreign Exchange said on Thursday. The yuan traded in Shanghai and in Hong Kong have both plunged more than 1 percent this month.
Tencent climbs to record in HK Hong Kong shares rose for a second day, with the city’s benchmark index advancing to a one-month high as Tencent Holdings Ltd. surged to a record. Tencent, Asia’s biggest Internet company, climbed 5.2 percent, contributing the most to the Hang Seng Index’s advance. China Petroleum & Chemical Corp., also known as Sinopec, jumped 5.3 percent after comments from chairman Fu Chengyu indicated Asia’s biggest refiner will step up the pace of reforms. Zijin Mining Group Co., China’s top gold producer, slid 2.3 percent after prices of the precious metal fell.
Taiwan 10-yr bonds gain for third month Taiwan’s 10-year bonds advanced for a third month as expectations U.S. interest rates will remain low boosted demand for long-dated debt. The yield difference between fiveand 10-year Treasuries is the least in three weeks, while the equivalent gap in Taiwan narrowed yesterday to the smallest since October. While U.S. unemployment has dropped, other economic indicators have weakened amid severe winter weather, suggesting the Federal Reserve will continue to keep interest rates near zero. U.S. consumer prices climbed 0.1 percent in January from the previous month, following a 0.2 percent increase in December.
U.S.-China ‘seek direct military links’ The U.S. and China are discussing ways to improve communication between their militaries to avoid potential conflict at a time of heightened tensions in the region, departing U.S. Ambassador to China Gary Locke said. The two militaries are talking about establishing a “more direct instantaneous method of communication,” Locke said today in a speech in Beijing. Sparring between the two countries has intensified as China flexes its economic and military muscle in Asia. The U.S. doesn’t recognise an air defence identification zone China set up in November over a swathe of the East China Sea that includes islands disputed with Japan.
Airbus China opens door to massive market Talks to extend the Sino-European joint venture beyond its original 10 years Julien Girault
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n a series of vast hangars, dozens of Chinese technicians swarm over fuselages of Airbus A320 planes, foot soldiers in the battle to dominate what will become the world’s largest aircraft market. The nearly completed aircraft at the Airbus assembly plant in the northern city of Tianjin, an hour outside Beijing, are resplendent in the livery of their Chinese airline buyers. Since it opened in 2008, the plant has effectively acted as a showcase for Airbus’s wares and given the European manufacturer an advantage as it competes with US arch-rival Boeing to dominate Chinese aircraft sales, Airbus officials said. Early controversy over technology transfer, the safety of the aircraft assembled at the plant and comparatively lower salaries of Chinese workers appears to be forgotten. Now negotiations to extend the joint venture beyond its original 10-year shelf-life are entering the final stages.
KEY POINTS Airbus China’s Tianjin plant opened in 2008 Airbus’ 1,000th Chinese delivery took place on Dec. 23 160 medium-range A320 aircraft so far built in Tianjin China’s state-owned aircraft maker AVIC holds 49 pct of venture
“The Tianjin site is an expensive investment, but you have to have a global vision and look at what it brings us,” said Eric Chen, president of Airbus China. “Since we decided to set up here, our market share in China has gone from 25 to 50 percent,” he told journalists on a visit to the plant, the only Airbus assembly plant outside Europe. Some 20 percent of the worldwide production of Airbus already goes to China. For now, it still lags Boeing in terms of final deliveries in the country, sending 133 aircraft to clients last year – 10 fewer than the US firm. But its 1,000th Chinese delivery took place on December 23, 28 years after the first in 1985. Now it is aiming to achieve its second 1,000 deliveries by 2020. It is a conservative goal given the boom in Chinese air traffic, Chen said. According to Boeing’s projections, the Chinese civil aviation fleet will triple over the next 20 years. Airbus only started winning large Chinese orders after the memorandum of understanding for the Tianjin plant was agreed in 2005, Chen said. “This is what has made the difference” in the fight against Boeing, he added. Around 160 medium-range A320 aircraft have so far been assembled in Tianjin, which now produces four of them a month, and there are plans to adapt it to produce the more fuel-efficient A320neo aircraft in the future.
Mostly locals When it opened it had 133 foreign employees, a figure that now stands at 32.
Will Horton, a senior analyst for CAPA Centre of Aviation in Hong Kong, said it was a mutually beneficial relationship. “Airbus is growing its share of the Chinese market, and China rightfully sees pride and value in having a local assembly line,” he told AFP. “Local final assembly means more of the aircraft’s value is kept in China.” On Wednesday Airbus reported net profit of 1.5 billion euros (US$2.05 billion) for last year, up 22.0 percent. The company said it took orders worth 218.7 billion euros with its global order book now worth a record 686.7 billion euros.
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Number of foreigners working at Tianjin plant Airbus has a 51 percent share in the joint venture and a consortium of Chinese investors including stateowned aircraft manufacturer AVIC holds 49 percent. The deal was originally agreed to extend till 2016. “Discussions are underway to renew and significantly deepen this partnership,” French Foreign Minister Laurent Fabius said this week after visiting the plant. Chen told AFP he was “confident” a deal would be reached in time for signature when Chinese President Xi Jinping visits France in late March. But some aspects were still being negotiated, he said, declining to give details. AFP
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Greater China
Greying China Tentative pension reforms tackle inequality – financing issues linger Natalie Thomas and Paul Carsten
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hina’s latest step to overhaul its pension system to even out payments between urban and rural residents is a move experts say is more symbolic than sweeping. After years of robust growth, China is confronting a growing income gap and unhappiness over economic disadvantages, especially those endured by its millions of migrant workers. The current system offers vastly different payouts depending on which scheme workers are covered by, a source of much rancour to employees increasingly aware of the unequal nature of development in the world’s second-largest economy. China’s fragmented pension system is loosely divided into four categories: civil servants and state officials, private sector workers, non-employed urban residents and rural residents.
Qualifying age The latest reforms, details of which were given on Wednesday, will merge
the final two of the four streams. The new fund will be made up of annually paid pension insurance, government subsidies and other contributions, and will pay pensions to residents from the age of 60, the State Council said.
You have to raise [the retirement age] gradually, not overnight Ma Jun, chief economist, Deutsche Bank
Monthly pensions will only begin after 15 years of payments, and will offer payouts ranging from 100 yuan (US$16.32) a year to 2,000 yuan (US$330).
Experts cautiously welcomed details of the reform, which is particularly aimed at migrant workers, who were previously unable to transfer money accumulated in one region to another. “Merging the systems is absolutely essential. But getting so many people under one scheme needs time,” said Lu Xuejing, head of the Labour and Social Security department at the Capital University of Finance and Economics. Lu also noted that this step would prove relatively easy. “Even though the names are different, when the system created these two separate (pension schemes) they were already basically the same.” In October, Reuters reported that China was close to announcing longawaited pension reforms as it seeks to create a sustainable safety net for a rapidly ageing population.
Demographics issue Economists pointed out that funding issues, which were not mentioned in the reforms, are of greater
concern when it comes to how sustainable the pension system is. Deutsche Bank’s chief economist Ma Jun estimated that China could face a 68 trillion yuan (US$11.1 trillion) funding shortage by 2033. “The No. 1 source of China’s fiscal and debt risk is the financing gap in the pension system,” said Ma,
KEY POINTS China pension reform began in 1997 Monthly state pensions only begin after 15 years of payments Pay-as-you go option has included employer contribution of 20 pct of wages DB says China faces 68 trln yuan pension funding gap by 2033
who authored an 80-page report that came up with the figures. Ma said that if the government transferred 80 percent of listed stateowned enterprise shares to the pension system and raised the retirement age, then the funding deficit problems could largely be addressed. But these two issues face some opposition, especially from a public that has spoken out strongly against previous proposals to raise the retirement age. “You have to raise (the retirement age) gradually, not overnight, this is something to do over several years,” Ma said. The two streams covered by this round of reforms were originally introduced as part of a drive to extend basic social security coverage to all citizens. Both streams offer similar payouts, but they are much lower than other pension streams. Experts, however, doubt the changes will make a big difference to payouts. “In terms of the amount of money paid out, this new integration plan won’t really have much difference at all,” said Ka Lin, a professor in Zhejiang University’s School of Public Administration. China first announced plans to merge the two streams earlier this month, saying the change would improve social security, allow workers to more easily move for the best job prospects and support domestic consumption. Reuters
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Greater China
Outgoing U.S. envoy to China urges greater human rights U
.S. ambassador to China Gary Locke yesterday urged Beijing to improve its human rights record, in parting remarks just days before he is to leave his post. Rights are “universal” values that represent more than economic benefits, he said, speaking to journalists at the U.S. embassy. “We call on China to continue to improve – well we call on China to improve its record in this area,” Locke said. “There’s been great prosperity and an increase in the quality of life and the standard of living here in China,” he said. “But human rights is more than economic prosperity and the economic conditions of people, but also fundamental universal rights – freedom of speech, freedom of assembly, the ability to practice one’s own religion. “We’re very concerned about a recent increase in arrests of activists and journalists... and we very much are concerned about the arrests and detentions of people who are engaged in peaceful advocacy.”
Kevin Lau speaking to the media recently
HK police probe cleaver attack on editor Kevin Lau said to be in stable condition after emergency surgery
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ong Kong police were yesterday investigating an attack on a former newspaper editor who is in a critical condition after being hacked with a cleaver, the latest incident to stoke fears over media freedom in the territory. The attack on Kevin Lau Chun To, former editor of the liberal Ming Pao newspaper, has sparked condemnation from the US and press groups at a time of growing unease over media rights in the southern Chinese city. “Officers are now at the scene and they are investigating,” a police spokeswoman said. Lau, who was known for his hard-hitting political investigations, was attacked on Wednesday by two men who escaped on a motorbike in the Chai Wan district where the newspaper’s headquarters are located.
“From initial investigations, it is believed that the motorcycle was stolen,” the police spokeswoman said. The journalist has undergone surgeries for wounds including a 16 centimetre-long (six-inch) gash that cut through his back muscles and remains in “a critical condition”, a Hong Kong Hospital Authority spokesman said yesterday morning. Hong Kong chief executive Leung Chun Ying later told reporters “Mr Lau’s situation has made progress”, without elaborating on his condition. The police have described the attack as “a classic triad hit, which was designed to maim, not kill, to send a warning”, the South China Morning Post reported. Security camera images released by police late Wednesday showed two people, believed to be the suspects, wearing dark clothing and riding a motorcycle on a busy street. Yesterday investigators visited shops and restaurants in the neighbourhood where the attack took place to seek clues, but no arrests have been made so far.
Outrage voiced
a classic triad hit, which was designed to maim, not kill, to send a warning South China Morning Post, quoting police sources
The attack on Lau has triggered widespread condemnation, with the U.S. consulate saying on Wednesday it was “deeply concerned about... this vicious crime” as it joined calls from media groups for the authorities to bring the perpetrators to justice. The International Consortium of Investigative Journalists, behind a recent expose on the offshore accounts of China’s elites on which it worked with papers including Ming Pao, said it was “horrified” by the assault. “There is simply no justification for such an attack and it should provoke
outrage in all fair-minded citizens,” said the group director Gerard Ryle in a statement. The brutal attack on Lau has made headlines in papers across Hong Kong with Ming Pao’s usual red logo coloured black yesterday. “My colleagues won’t be scared because of this incident, we will continue with our work,” wrote the newspaper’s interim chief editor Cheung Kin-por.
16 cm
Length of gash in Kevin Lau’s back The assault on Lau comes at a time of mounting concerns that Beijing is seeking to tighten control over the semi-autonomous region. Lau was removed as editor in January, triggering protests over media freedoms. He still works at the paper in a different role. Apple Daily, a popular tabloid critical of Beijing, described Lau as a journalist who steers clear of personal scandals. The attack on Lau is the latest in a series against journalists in the territory. In June last year there were multiple attacks against employees of Apple Daily, and Chen Ping – a publisher of a magazine known for its outspoken coverage of mainland issues – was also beaten up. AFP
…human rights is more than economic prosperity and the economic conditions of people U.S. ambassador Gary Locke
Locke, who arrived in Beijing in August 2011, drew attention during his tenure for travelling far from Beijing to visit ethnic Uighur and Tibetan areas, where rights group say China imposes tight security along with cultural and religious repression. The diplomat also earned a reputation as a humble dignitary – in contrast to many Chinese officials – after being seen carrying his own luggage and using a regular car. He oversaw two diplomatic dramas in 2012 that required intense negotiation with Chinese authorities. In February that year top Wang Lijun, the right-hand man of Bo Xilai, then the head of the metropolis of Chongqing, fled to the U.S. consulate in Chengdu, blowing open the scandal surrounding his boss. Wang soon left the premises to be dealt with by Chinese authorities, and was ultimately sentenced to 15 years in prison. A few months later, blind rights activist Chen Guangcheng escaped house arrest in the eastern province of Shandong and sought refuge at the U.S. embassy in Beijing. After days of tense talks involving then-U.S. Secretary of State Hillary Clinton, Chen and his family were allowed to go to the U.S. Locke, whose grandfather emigrated to the United States from Guangdong province in southern China, stood out as Washington’s first ethnic Chinese ambassador to the country. AFP
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Asia
Mt. Gox bitcoin customers could lose it all Experts warn chances of a refund are likely lost in cyberspace Joseph Ax and Karen Freifeld
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hat can you do if you deposited bitcoins at Mt. Gox, which shuttered on Tuesday with little explanation? Probably not much. Customers of the bitcoin exchange may have little chance of recovering their funds if they prove to be missing, legal and regulatory experts said. Clients could file lawsuits, claiming negligence or breach of contract, but the virtual currency is subject to very little regulatory oversight and no government guarantees. Japan-based Mt. Gox went dark weeks after a spate of cyber attacks, leaving customers unable to access their accounts and underscoring the risks associated with bitcoins. A message yesterday on the mtgox.com website – empty but for a few lines of text –said: “Dear MtGox Customers, As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support
Chris Yim (left) and Kyle Powers, co-founders of Liberty Teller, with the company’s Bitcoin ATM
of different parties to find a solution to our recent issues. Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for
further announcements and updates. Sincerely, Mark Karpeles.” Bitcoins, which exist in electronic form, depend on a network of computers to solve complex mathematical problems in order to verify and record every transaction.
Investors deposit their bitcoins in digital “wallets” at various exchanges; Mt. Gox had been the largest as recently as Feb. 7, when it and other exchanges were forced to halt withdrawals following several cyber attacks. Unlike bank accounts in
Philippines’ Megaworld to develop P10 bln project
Andrew Tan
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he Philippines-based Megaworld Group of property tycoon Andrew L. Tan is to develop a 561-hectare “integrated community” south of the
Metro Manila estimated to cost 10 billion pesos (US$223.9 million) reports the Philippine Inquirer. Southwoods City, located in parts of Cavite and
Laguna, will be the largest fully integrated township development of GlobalEstate Resorts Inc. (GERI), company officials said. “The development is positioned to be the next residential, business, commercial and leisure hub that is closest and most accessible to Metro Manila,” GERI said. “We are bringing the expertise of Megaworld Corp. to this new township in the south. We look forward to a vibrant mixed-use community that incorporates the live-work-play-learn lifestyle concept in this multibillion peso development,” said Megaworld first vicepresident Jericho Go. Megaworld will take charge of the design, conceptualisation and master planning of Southwoods City. It will also manage the office towers and commercial components of the township. Of the 561-hectare property, 376 hectares were allotted for the residential segment, including the 26-hectare residential village Pahara which consists of 602 available lots ranging from 239 to 523 square metres with views of the golf course and Laguna de Bay. “Southwoods City will also feature a central business
district, commercial and retail hubs, malls, residential condominiums, schools, a church, a cyber park, a medical facility, open parks, leisure facilities, a weekend market and its own transport hub,” said Mary Rachelle I. Peñaflorida, vice-president of marketing arm Megaworld Global-Estate Inc. The 125-hectare portion of the township will be occupied by the Jack Nicklaus-designed Southwoods City Golf and Country Club while the remaining 60 hectares were set aside for the Southwoods Business Park. Two office buildings offering 20,000 sq. m. of space for business process outsourcing (BPO) firms are already in the advanced planning stages, Go said.
561 hectares Size of new development near Cavite
the United States, bitcoin deposits have no governmentbacked insurance. Instead, customers would have the same avenues of legal redress as anyone who entrusted property to an institution that failed to keep it protected, such as negligence, breach of contract or even fraud, said James Grimmelmann, a professor at the University of Maryland who focuses on Internet law. “To me, the first really important conceptual hurdle to get over is that these things really are property,” he said. “When you take money from the public and store it somewhere you claim is secure, you put property law in play.” If Mt. Gox has no assets, however, individual claims would fail to recover any funds, said Daniel Friedberg, a lawyer with Riddell Williams in Seattle who specialises in financial regulatory matters. “The practical reality is, even if you do get a judgment against Mt. Gox, do they have the ability to pay?” Friedberg said.
Crisis plan A document circulating online that purports to be a crisis plan for Mt. Gox indicated that the exchange had US$174 million in liabilities against US$32.75 million in assets, though its veracity could not be confirmed. The Tokyo-based Mt. Gox could also file for bankruptcy in Japan, leaving it up to a court to distribute any remaining assets to its creditors. Several regulatory and legal experts said they expected the Mt. Gox shutdown could spur regulators to take more immediate steps to protect future customers. Jeffrey Matsuura, a lawyer at Alliance Law Group in Virginia who specialises in online commerce issues, said he wouldn’t be surprised if state or federal consumer protection agencies eventually take some kind of action regarding Mt. Gox and other exchanges. But Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, said people who deposited bitcoins with Mt. Gox knew that the exchange had experienced problems in recent months. “At this point, bitcoin is speculative,” he said. “People are going in with eyes wide open.” Thus far, the only U.S. regulatory agency with specific oversight of Mt. Gox is the U.S. Treasury Department’s anti-money laundering unit, the Financial Crimes Enforcement Network, or FinCEN, after the exchange agreed to register as a money services business last summer. Reuters
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Asia
Yingluck’s ousting to hinge on Thai courts Protests against majority party stalling after months of street demos punctuated by violence Chris Blake
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hai Prime Minister Yingluck Shinawatra and ruling party lawmakers face a series of legal cases aimed at accomplishing what months of opposition-led street protests could not: ejecting them from office and political life. The country’s anti-corruption agency called Yingluck to appear yesterday, saying it had enough evidence to charge her with negligence in overseeing a rice-purchasing programme the agency says is riddled with graft. It is also ready to charge lawmakers from her Pheu Thai party with attempting to overthrow the country’s form of government, after they sought to change the selection process for members of the Senate. With the number of street protesters dwindling and the military refusing to publicly choose a side, Yingluck’s opponents are looking for a repeat of 2008, when Pheu Thai’s predecessor was removed from office by a ruling its members call a judicial coup. Yingluck’s supporters have vowed to respond to any eviction with protests and a possible government in exile, risking further entrenchment of nearly a decade of unrest. Twentytwo people have been killed and 766 injured in violence since October.
Popular resistance “Despite all the pressures for a new judicial coup, the courts are in much the same situation as the military: It’s relatively easy to bring down a government and very difficult to put anything plausible or legitimate in its place,” said Duncan McCargo, professor of political science at the University of Leeds. “Removing Yingluck could trigger a scale of popular resistance that Thailand has not seen before in its recent modern history.” The National Anti-Corruption Commission is investigating at least 15 cases against Yingluck or her party members, ranging from allegations of corruption in water projects to harming national security by allowing television stations to air a speech by Yingluck’s brother, Thaksin Shinawatra. Thaksin was ousted in a 2006 coup and lives abroad to avoid a jail term. The rice case against Yingluck, filed by an opposition lawmaker, has progressed the most. It alleges the programme to buy the crop from farmers at above-market rates was blighted by corruption, and the prime minister was negligent for not ending it. If indicted and found guilty, Yingluck faces removal from office and a five-year ban from politics. The NACC has not said when it will reach a decision on whether to indict her. Yingluck has denied the claims and accused the agency of playing politics, noting that a rice corruption case
Lady’s not for turning – Yingluck Shinawatra
involving the previous government led by the now-opposition Democrat Party has not progressed after several years and that the case against her took three weeks to investigate. “If there were indeed true justice without any hidden agenda, the NACC would not have hurriedly investigated and delivered a verdict in such a manner that has allowed society to deem it as beneficial only to those who want to topple the government,” Yingluck said in a Feb. 20 statement on her official Facebook page. Agency spokesman Vicha Mahakhun said Feb. 25 that the body had been investigating Yingluck for more than a year and that it acted without any bias and was unmoved by political pressure.
appointed court in 2007 disbanded Thaksin’s Thai Rak Thai party for breaking election laws, banning him and more than 100 party executives from politics for five years. Amid the seizure of Bangkok’s airports by anti-government protesters in 2008, the Constitutional Court found Thaksin’s allies guilty of vote buying, disbanding their party and banning another 30 executives. The ruling, which came just weeks after the court ordered Thaksin ally Prime Minister Samak Sundaravej to step down for hosting a cooking show, opened the door for the Democrats to take control of government. Thaksin’s supporters in the socalled red-shirt movement say the removal of governments they voted
Checks, balances In a separate case, the agency has said it has enough evidence to charge 308 lawmakers for supporting an amendment that would have made the Senate fully elected, which it was under the nation’s 1997 constitution. A new charter in 2007, written by a military-appointed assembly after the coup, says that 73 out of 150 senators are to be appointed. The Constitutional Court ruled the amendment would have undermined checks and balances and could be seen as an attempt to overthrow the system of government. Pheu Thai refused to accept the ruling and said it would seek the prosecution of the judges. Thaksin and his allies have a history of tensions with the country’s legal institutions. A military-
KEY POINTS Graft watchdog probing ‘at least 15 cases’ against P.M. and party Possible negligence charges over rice-buying programme Policy was riddled with corruption says watchdog P.M. sought to change Senate seat selection process
into office, the current cases against the government and the inability of the Election Commission to complete a disrupted poll held Feb. 2 show that their voices are not respected. The aristocratic elite is threatening the democratic rights of people, red shirt chairwoman Thida Thavornseth said at a weekend rally of the group’s leaders, according to the Bangkok Post. She said the red shirts must be ready to stand up to anti- government protesters, independent agencies, the judiciary and military. A group of about 250 red shirts rallied outside the anti- corruption commission office ahead of today’s meeting, saying they would not allow commissioners to enter.
‘Do-gooders’ Academics and analysts such as Sunai Phasuk, a senior researcher at Human Rights Watch, say there are questions over the impartiality of the courts and independent watchdogs, which were given increased power in the post-coup constitution. “The coup claimed to replace bad politicians with the do-gooders,” Sunai said. “But it put in place the judiciary, the bureaucracy, that have very intrusive power.” The 2007 charter allows the Senate to select Constitutional Court judges, election commissioners, anticorruption committee members and members of several other watchdog agencies. Appointed senators are in turn picked by a committee made up of the heads of those same bodies. Bloomberg News
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com CLOSING 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
Millions without power in southern Philippines
Optus chief Kevin Russell quits
Island of Mindanao home to a quarter of country’s population
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illions of people were left without electricity in the southern Philippines yesterday after a massive power breakdown, officials said, as repair crews worked to determine the cause of the outage. The power cuts began before dawn and affected heavily populated areas in Mindanao, home to a quarter of the country’s nearly 100 million population. “Reports indicate that the Mindanao grid experienced a disturbance at 3.53 am... [We are] still determining the cause and extent of the disturbance,” the National Grid Corporation of the Philippines (NGCP) said in a statement. Mindanao, the nation’s main southern island which relies mostly on hydroelectricity, has been grappling with chronic power shortages for years. The NGCP said at least 12 of Mindanao’s key cities and provinces – including major trading hubs – were affected, although limited power was restored in some parts a few hours later. Philippine Energy Secretary Jericho Petilla said repair crews were working to trace the cause of the interruption, stressing that he was confident power would return to all areas within the day. “So far, there are no reports of damaged power plants,” Petilla told
Asian shares soft, on Ukraine fears
DZBB radio in Manila. “They are ready to come back online to the grid, we just have to turn them (on) one by one.” “We are trying to figure out where” the source of the interruption was, he said, adding the outage was likely caused by a tripped transmission line.
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Cities affected by blackout
An electricity shortage last year forced the NGCP to ration off supply in Mindanao, resulting in up to 12 hour daily blackouts which damaged the local economy as factories slowed production. The power cuts on Thursday hit islanders just as they were getting ready for work. “I had to keep using my lighter because the shops were still closed and we didn’t have candles,” said market vendor and mother-of-two Mary Villasenor from the southern Davao City. “The kids had to go to school with wrinkled clothes because we couldn’t plug in the flat iron,” she said. AFP
Air NZ profit leaves Qantas in shade Kiwi carrier reports 29 pct rise in interim pre-tax profit
A
ir New Zealand has reported a 29 per cent rise in interim profit before tax to a record NZ$180 million (US$150 million) in a result that will outshine both of the major Australian airlines. Air NZ chairman Tony Carter said that based on stable fuel prices and a traditional seasonal earnings pattern of a stronger first half, the airline expected full-year earnings to rise to more than NZ$300 million. That compares with Qantas Airways, which yesterday reported a first-half pretax loss of around US$300 million. Virgin’s Australian operation is due to report a pretax loss of US$49 million, excluding additional losses from Tigerair Australia tomorrow.
Chief executive Kevin Russell is set to leave Australian telecommunications company Optus after fewer than two years at the helm, reports The Age newspaper in Melbourne. He will leave at the end of next month. Former chief executive Paul O’Sullivan, who is currently Singapore telco SingTel’s group consumer chief executive, will act as an interim head for Optus until a replacement for Russell is found. It is understood that Russell resigned of his own accord. He had privately flagged to the company his intentions to leave the company some time ago.
Air NZ is the largest shareholder in Virgin Australia Holding. “Virgin Australia has a sound strategy and I look forward to helping the airline to realise its potential when I join its board,” Air New Zealand chief executive Christopher Luxon said. “We are confident that over the coming years Virgin Australia can deliver consistent earnings performance.” He said Air NZ’s improved results were enabling his airline to improve the customer experience, explore new markets and invest in its people and culture. “We have worked hard on improving our cost base in an environment where we have not grown,” he said. “In fact, we have
reduced our capacity flown overall as we realigned our long-haul network. with new fleet additions and capacity growth, our scale grows.” Mr Luxon said conditions in the Australian domestic market remained tough. “The trading conditions in Australia have obviously been very very difficult,” he told media yesterday. “The reality is that [Virgin] has invested really strongly for growth. It is putting itself in a very, very competitive situation. Ultimately in the long term we believe that business can be profitable and that is why we are there.” Mr Luxon will join the board later this year, along with representatives from Etihad Airways and Singapore Airlines. All three carriers backed a US$350 million capital raising by Virgin that infuriated Qantas and led it to seek aid from the Australian government. Air NZ and Virgin are fierce competitors against the QantasE m i r a tes a l l i a n ce o n t r a n s Tasman routes. But Mr Luxon said he wasn’t fixated by Qantas’s woes, which could result in the loss of thousands of jobs at the Australian airline. “It doesn’t affect us at all if I am really honest about you,” he said. “We are very focused on our strategy. Air NZ declared a 4.5 NZ cents per share interim dividend, up 50 per cent from last year.
Asian shares struggled to find a solid footing yesterday as escalating tensions in Ukraine sent investors scurrying to the safety of the dollar and U.S. Treasuries. Japanese stocks skidded, with the Nikkei slipping 0.4 percent although MSCI’s broadest index of Asia-Pacific shares outside Japan managed to erase early losses to eke out small gains on a rebound in Chinese shares. Wall Street’s failure to extend its rally above historical highs on Wednesday United States time did not help soothe fears that a wider conflagration in Ukraine could intensify market risk.
Malaysia’s Maybank sees Q4 net profit rise Malayan Banking Bhd (Maybank), Malaysia’s biggest bank, said net profit for the latest quarter jumped 18.5 percent due in part to growth in income from loans and in Islamic banking, which helped push annual earnings to a record. Net profit came to 1.73 billion Malaysian ringgit in the October-December quarter, up from 1.46 billion ringgit a year earlier, and ahead of an average estimate of 1.69 billion ringgit from two analysts polled by Thomson Reuters I/B/E/S. For the full year, net profit climbed 15.8 percent to 6.6 billion ringgit.
Japan bonds steady as BoJ eases buying Japanese government bond prices were mostly steady on Thursday, with the super long zone weakening slightly after the Bank of Japan bought less than usual in those maturities via its regular purchasing operations the previous day. The yield on 10-year JGBs was flat on the day at 0.585 percent. The 20-year yield rose a basis point to 1.455 percent. Market participants expect support returning to the super long zone when index-following investors begin extending the duration of their holdings as they customarily do at the end of each month.
India to discuss Islamic endowments India’s Ministry of Minority Affairs has enlisted a Kuala Lumpur-based body to help develop Islamic endowments, or awqaf, aiming to mobilise a large pool of assets in a country that is home to one of the biggest Muslim populations in the world. The World Islamic Economic Forum Foundation, which organises conferences and workshops on Muslim business around the world, will hold a roundtable later this year to discuss ways to improve management of India’s estimated 490,000 awaqf properties. Institutions such as the Jeddah-based Islamic Development Bank, Malaysia’s Hajj Pilgrim Fund and its largest state-owned fund manager Permodalan Nasional Bhd will attend the event, the WIEFF says.
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International
Massive logging scars Eastern Europe
Three no crowd in fight against hereditary disease
Corruption in post-communist states, legal loopholes and not enough guards
US panel debates controversial medical technique involving threeparent embryos
Mihaela Rodina
Jean-Louis Santini
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ith its steep, forested mountains set against blue skies, Romania’s central Pojarna Valley once looked like a postcard landscape but illegal logging has turned the site into an ugly scar. “The guys who did this used excavators. They even destroyed the young trees,” said Gheorghe Ridichie, an official at Romania’s forestry ministry, pointing to thousands of stumps poking out of the valley’s now-barren slopes. Last year, authorities rallied to halt rampant deforestation in the Balkan state. But the draft law, setting stricter controls and heavier penalties for offenders, still awaits a vote in the lower house of parliament after making it through the upper house. Official figures show that in 2012, illegal logging in Romania – some of it in lush, century-old forests – had doubled over five years. “If this goes on, there will be no wood left for the economy and no forests to walk in,” Minister Delegate for water and forests Lucia Varga told AFP. “Over the past 20 years, some 80 million cubic metres of wood were illegally cut, causing five billion euros (US$6.8 million) in damage,” she said. And “the worst part is that the pace of illegal logging is twice that of reforestation and regeneration.”
Wider issue Similar problems exist in other east European states, notably Bosnia and Bulgaria. But some conservationists fear efforts to change matters may be too little too late. Both officials and conservationists blame the surge on several factors, including alleged collusion between local authorities and offenders, corruption in post-communist states, loopholes in legislation and an insufficient number of forest guards. The draft bill has angered forest
80 million Cubic metres of Romanian wood illegally cut in 20 yrs
owners and wood processors who fear it will create additional costs and legal roadblocks. Environmentalists, meanwhile, suspect some local authorities are part of the “mafia” that controls the trade. “The illegally cut wood is often accompanied by seemingly legal documents that are actually issued by dummy companies,” Catalin Tobescu, president of Nostra Silva forest owners’ association, told AFP. “When the authorities eventually decide to check on these companies, it is too late, they no longer exist and their managers are gone.”
‘Irreversible impact’ In a robust sector with high demand, wood processing companies do not always check the origin of the raw material. Romania’s own market is estimated at four billion euros a year, dominated by the 400-year-old Austrian firm Schweighofer which moved into the country a decade ago. Schweighofer’s plans to open a fifth plant in Romania have annoyed conservationists and local woodworkers who say it will have an “irreversible impact” on forests here. But Schweighofer spokeswoman Theresa Willmann disputes this.
The new site involved “a reorganisation of the market”, she said, and would create 650 jobs in the sawmill and an additional 2,000 indirectly. “The total forest fund in Romania will not be affected by the logs Schweighofer needs,” she told AFP in an email.
Last wilderness In a region that hosts Europe’s largest old-growth forests outside Russia – and one that is home to 8,000 brown bears, 4,000 wolves and 3,000 lynx – Romania is not the only state threatened by deforestation. In Bosnia, whose rich, 43 percent woodland is greater than the European average of 32 percent, conservationists estimate that hundreds of thousands of trees are felled illegally every year. Mersudin Avidbegovic, the head of a Sarajevo-based association of forestry experts, said it was unclear “if this is to blame on poverty or on a mafia”. “But the main reason is the absence of steps to fight illegal logging,” he said. Likewise in Bulgaria, “illegal logging is an extremely serious problem,” Neli Doncheva, Worldwide Fund for Nature (WWF) programme coordinator, told AFP. But authorities have passed a new penal code to try to end the scourge. Not only can companies breaking the law lose their permits and incur fines of up to US$7,000 (5,000 euros), but offenders can get up to five years in jail. In Romania, the draft bill sets fines up to 3,000 euros and the state has undertaken an active reforestation effort to plant one million hectares by 2030. But Dorina Danciu of Greenpeace remains sceptical. “Even if we start planting trees now, it will take dozens of years for the scars left by illegal logging to heal,” he said. AFP
US advisory board has debated a controversial new technique that would use DNA from three people to produce embryos free of a particular type of hereditary disease. The panel, which provides independent advice to the US Food and Drug Administration, weighed whether a procedure that replaces part of a human egg cell with that of another is safe for clinical trials. Supporters of “three-parent in vitro fertilisation” point to the technique’s huge medical potential, while detractors say it could lead to custom-made “designer babies.” It has only been tested on monkey embryos so far. The panel’s chairman, Evan Snyder, suggested the time may not be right to proceed to human trials. “There is overall a great concern for the well-being of these kids,” he said at the meeting, according to participants. “I think there was a sense of the committee that at this particular point in time, there was probably not enough data either in animals or in vitro to conclusively move on to human trials.” The panel did not conduct a vote, according to a Food and Drug Administration spokeswoman. At the centre of debate lie mitochondria, a structure where most of a cell’s energy is created, that also contains DNA separate from the 23 chromosomes in a cell’s nucleus. Each year, some 1,000 to 4,000 children born in the United States develop mitochondrial diseases, which often affect the central nervous system, or cause blindness or heart problems. The diseases, which generally become evident before age 10, often result from genetic abnormalities in mitochondria, which are passed down from a child’s mother. Under the procedure, a diseaseproducing mitochondria in an egg is replaced with another woman’s mitochondria, before the egg is then fertilised in a laboratory and implanted in the mother. AFP
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Leading reports from Asia’s best business newspapers
PHILIPPINE STAR First Metro Investment Corp. (FMIC), the investment house of the Metrobank Group, more than tripled its net income to 11.54 billion pesos in 2013 from 3.27 billion pesos in 2012 due to higher trading gains. The unprecedented 253-percent growth in earnings translated to a return on equity of 68.34 percent, company officials said. “This solid and strong income performance result clearly strengthens our capital base, helping us to ensure that the company can face the regulatory changes starting this year,” FMIC chairman Francisco Sebastian said. FMIC’s Treasury Group alone earned a solid 4.29 billion pesos during the period.
KOREA HERALD The nation’s top court upheld a four-year jail sentence against the head of the country’s thirdlargest conglomerate, SK Group, for embezzling company funds. Chey Tae-won was convicted of embezzling 46.5 billion won (US$43.6 million) from two SK Group affiliates, including top mobile carrier SK Telecom Co., and funnelling the funds into personal investments in stock futures and options in 2008. The Supreme Court rejected the 53-year-old tycoon’s final appeal against a verdict handed down by two lower courts, saying that he had acted out of personal greed.
JAKARTA GLOBE Richard Graham, Britain’s Trade Envoy to Indonesia, said that the high-profile cases pitting two British companies, Churchill Mining and Bumi Plc, against the Indonesian government and an Indonesian business group would not affect the sentiment of British enterprises in the long run. “In any business relationship, there will be ups and downs but as a whole, I think people who have been here for a long time actually have been doing very good business by building long-term relationships,” Graham said in an interview with the Jakarta Globe.
THE AGE Sky News Australia chief executive Angelos Frangopoulos is pushing for a slot on free-toair television in a move that would put the service in direct competition with the ABC’s News 24 channel. It understood Mr Frangopoulos raised the prospect of Sky becoming a free-to-air channel at a Sky board meeting on Tuesday. Broadcast on pay television operator Foxtel, Sky is owned by Nine Entertainment Co, Kerry Stokes’ Seven West Media and British Sky Broadcasting, which is controlled by Rupert Murdoch’s 21st Century Fox. Sources close to the Sky board said the ‘’idea’’ to broadcast Sky on free-to-air television would face opposition from Nine and Seven.
Reviving Ukraine’s economy Anders Åslund
Senior Fellow, Peterson Institute for International Economics
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kraine has suddenly arrived at a democratic breakthrough. After former President Viktor Yanukovich incited major bloodshed, many of his MPs defected to the opposition, creating a large majority. In order to consolidate its authority, whatever new government emerges will need to act fast and resolutely – and receive considerable international support – to overhaul the country’s crisisridden economy. Ukraine suffers from three large economic problems. First, its foreign payments are unsustainable. Its currentaccount deficit last year was an estimated 8.3% of GDP, and its foreign-currency reserves are quickly being depleted, covering just over two months of imports. Second, public finances are also unsustainable, with the budget deficit reaching almost 8 percent of GDP and government-bond yields skyrocketing. Third, the economy has been in recession for five quarters since mid-2012.
and must be done very quickly, because Ukraine is running out of money. For starters, the new parliamentary majority needs to appoint a new government, so that a fresh economic-policy agenda can be launched. A new central bank governor also should be named, with the first order of business being to float the exchange rate. This would lead to a substantial devaluation of perhaps 10%, thereby ending the current run on the hryvnia, eliminating the current-account deficit, and enabling a reduction in Ukraine’s extremely high interest rates, which would stimulate investment.
Economic policy
With Yanukovich out of the way, official extortion of Ukrainian business should end
These problems reflect Yanukovich’s economic policy, which had one aim: enriching him, his family, and a few of his cronies. During the last four years, Ukraine has experienced unprecedented embezzlement by its rulers, with estimates putting the Yanukovich family’s wealth at $12 billion. Here, too, the new government will need international assistance if it is to recover at least some of this loot. With Yanukovich out of the way, official extortion of Ukrainian business should end, enabling the economy to recover. In fact, Ukraine’s GDP actually grew by 3.3% in the last quarter of 2013, because his cronyism was stifled by the protests. Yet much can
As soon as a government has been appointed, the International Monetary Fund should send a mission to Ukraine. Within two weeks, the IMF mission could conclude a new financial stabilisation program with the new administration. The IMF works fast and could make a first large disbursement in late March. The IMF could lend Ukraine US$10-12 billion for a one-year stabilisation program, with the European Union using US$3-
5 billion from its balance-ofpayments facility to co-finance an IMF standby program. These two sources alone could cover much of the US$35 billion in external financing that Yuriy Kolobov, Ukraine’s acting finance minister, has said the country could need over the next two years. Moreover, IMF loans carry a lower interest rate and a longer maturity than the Russian loans on which the Yanukovich government relied (and which are unlikely to continue). The conditions that the IMF places on its loans can help Ukraine undo Yanukovich’s venal policies. First and foremost, Ukraine will have to reduce its budget deficit sharply, which, given large tax revenues, should be accomplished through expenditure cuts and freezes. Large industrial subsidies – for example, to the coal industry – amount to nothing but giveaways to Yanukovich’s supporters and should be eliminated immediately. Likewise, gas prices should be liberalised to stop corrupt enrichment from regulatory arbitrage. Needy consumers, not wealthy producers, should receive assistance. Similarly, the IMF will insist on the reintroduction of competitive tenders. Since 2010, orderly public procurement has ceased, with Yanukovich simply doling out state contracts to friends and acolytes at twice the market price. Naturally, sales of state enterprises to loyalists – typically at rock-bottom prices – must end as well. Another source of corruption has been refunds of valueadded tax for exporters, for which top tax officials charge a commission. Putting a stop to this would stimulate exports. In addition, Ukraine should reintroduce the simplified tax code for small businesses that Yanukovich abolished.
Two million small enterprises were wiped out by that change; many of them could be revived if tax procedures were no longer prohibitive. Ukraine also needs to work with the EU. Within a week, the new government can fulfil the EU’s conditions for signing the long-concluded Association Agreement, and doing so should be on the agenda at the EU-Ukraine summit in March. Parliament has already scheduled new elections, and former prime minister Yuliya Tymoshenko has been released from prison. The only remaining EU condition – legislation reforming the prosecutor’s office – can be adopted quickly.
European union The EU-Ukraine Association Agreement will greatly benefit Ukraine. It amounts to a comprehensive reform program for the Ukrainian state apparatus, including its lawenforcement bodies. Sixty state agencies in various EU countries have already concluded agreements with their Ukrainian counterparts concerning the necessary reforms. The agreement also contains a Deep and Comprehensive Free Trade Area, which will open the vast European market to Ukrainian exporters – and thus attract more foreign direct investment to Ukraine. This will also help to safeguard the country against possible Russian trade sanctions. Here, diplomacy will play an important role as well. The United States and the EU need to persuade Russian President Vladimir Putin to reach an understanding with Ukraine’s new leaders, rather than follow through on his threat to impose sanctions. Peaceful co-existence, not mounting bilateral tension, is in both countries’ best interest. © Project Syndicate
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Closing Madrid bomb detainees claim innocence
Hollande supports Nigeria on Boko Haram
A group of Pakistanis jailed in Spain in 2009 over a 2004 plot to bomb the Barcelona metro, protested their innocence yesterday, claiming a corrupt witness framed them. Jan Khan, the legal consultant for the men, said they wanted to clear their names of the terror charges. Ten Pakistanis and one Indian were jailed for between eight and 14 years in December 2009 for planning a terror attack on the metro system. Eight of the Pakistanis have served their sentences and seven of them have been deported, while one is a Spanish resident.
French President Francois Hollande yesterday promised Nigeria support in the battle against Islamist group Boko Haram. He said France would always be ready to help combat extremism in defence of democracy. “Your struggle is also our struggle,” Hollande told delegates at a security conference in the capital Abuja ahead of Nigeria’s unification centenary celebrations. “…the struggle against terrorism is also the struggle for democracy,” the French leader stressed. Earlier this week militants massacred at least 43 students in their sleep at a secondary school dormitory.
‘You can’t kill us all’ say HK journos Anger at attack on former Ming Pao editor Kevin Lau
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ong Kong journalists vowed yesterday evening not to be intimidated by a savage attack on a veteran colleague that has stoked fresh concerns for media freedom in the city. “They can’t kill us all,” they declared. Kevin Lau Chun To – former editor of the liberal newspaper Ming Pao – remains in intensive care in hospital after an earlier cleaver attack by two men. It has sparked condemnation from the United States, the European Union and press groups. The attack came amid mounting concern that China – which also condemned the attack and offered words of support to Lau and his family – is trying to tighten its control over the semiautonomous territory. Lau was removed as editor at the daily last month, triggering protests by staff. They feared that replacing
him with an editor from Malaysia seen as pro-Beijing was an attempt to stifle the paper’s strong track record of investigative reporting. On Sunday protesters staged a demonstration in support of press freedom.
Journalists took to social media yesterday to express support for Lau, saying they would not be deterred from doing their jobs. “They can’t kill us all,” read a widely shared banner on Facebook, accompanied
by a graphic featuring three fists clutching a pencil, a smartphone and a microphone, representing a journalist’s tools. “We are angry. We roar. We need to stand up,” said a statement by a group of
university journalism students on the social network. At the Chinese University, where Lau taught journalism part-time, banners and flyers featuring the slogan were displayed. Chan Yuen Man, a journalism lecturer there, told AFP that freedom of the press cannot succumb to “pressure or the invisible hand”. Ming Pao’s usual red logo was coloured black yesterday. “My colleagues won’t be scared because of this incident, we will continue with our work,” wrote the newspaper’s interim chief editor Cheung Kin Por. Around 200 people held a candlelight vigil while wearing black to mark what they called the loss of press freedom. They wrote slogans such as “Condolences to press freedom” on the ground with white chalk at government headquarters late yesterday. AFP
Germany’s NATO warns N.Korea test-fires ex-president Wulff Russia to avoid four short-range cleared in favours trial Crimea ‘escalation’ missiles into sea
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court yesterday cleared former German president Christian Wulff of influence peddling, closing a high-profile case that sparked the resignation of the former head of state two years ago. “The accused Wulff has been found not guilty,” presiding judge Frank Rosenow told Hanover regional court, adding that the defendant was entitled to compensation for police searches in the investigation. Wulff was once a deputy leader of Chancellor Angela Merkel’s Christian Democratic Party. The verdict marked the end of a legal and political drama around the one-time conservative rising star who fell from power and grace amid claims he took favours from rich friends and tried to bully the media into silence. Wulff, 54, who had been Germany’s youngestever president, had insisted on his innocence and last year rejected an offer to settle the case with a 20,000-euro (US$27,000) fine, vowing instead to clear his name and honour. Prosecutors built a case around payments amounting to about 720 euros (US$980).
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ATO head Anders Fogh Rasmussen yesterday warned Russia not to take any action over Crimea that could stoke tensions or misunderstandings in the Ukraine crisis. “I’m concerned about developments in Crimea,” Rasmussen said in a tweeted message. “I urge Russia not to take any action that can escalate tension or create misunderstanding,” he said. Rasmussen’s comments were made as the Ukraine interim government called in Moscow’s representative in Kiev to warn that Russia must respect its territorial integrity after pro-Russian gunmen seized control of government buildings in the Crimea peninsula. Rasmussen later told a meeting of the NATO-Ukraine Commission that the latest developments in Crimea were “dangerous and irresponsible”. “I urge all parties to step back from confrontation,” he said, calling on the Kiev authorities to lead the country forward via an inclusive political process. NATO defence ministers on Wednesday agreed a statement saying a sovereign, independent and stable Ukraine was essential to security in Europe.
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orth Korea test-fired four short-range missiles into the sea yesterday, Seoul’s defence ministry said, in an apparent show of force to coincide with South Korea-US joint military exercises. A ministry spokesman said the missiles, with an estimated range of around 200 kilometres (125 miles), were fired off the east coast of North Korea. “Our military will maintain tight vigilance in preparation for additional launches or any military provocation from the North,” the spokesman said. It is not unusual for North Korea to carry out short-range missile tests and it has used them before to display its anger at the annual military exercises. Observers said the tests were unlikely to trigger a significant rise in military tensions. “It seems fairly routine,” said Kim Yong-Hyun, an expert on North Korean affairs at Seoul’s Dongguk University. “It’s mainly about sending a message – about the drills and also its anger over the recent UN rights report,” Kim said.