Macau Business Daily, March 6, 2014 by Business Daily

MOP 6.00 Closing Editor: Michael Grimes

work starts next year

ork on the new border crossing at Ilha Verde business daily will1 start midway through 2015 and should be complete in 2016, it emerged yesterday. The mainland’s official news service quoted an unnamed source from the Zhuhai Port Bureau as saying the immigration hall and passenger walkways would “start construction in the second half of 2015”. The agency added the new checkpoint – once completed – would be open 24 hours per day. The main immigration hall is designed to simplify customs and immigration for travellers by streamlining the work of mainland and Macau officials into a single inspection process. “After the completion of the new border in 2016, it will be first time for the two places to have one inspection together,” the official said. More on page

Year II

Number 490 Thursday March 6, 2014

Publisher: Paulo A. Azevedo

New border Friday April 19, 2013

Casinos hold key to economic diversity

www.macaubusinessdaily.com

Page 2

Use tech to fight laundering: PwC Page 4

That tricky second term

Another H7N9 case in Hong Kong Page 16

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he news that Fernando Chui Sai On would seek a second term as Macau’s Chief Executive had been widely predicted. But Mr Chui will face some tough challenges in that second period, after the leadership in Beijing signalled in the clearest possible terms that it wants to see the

city picking up the pace with economic diversification. Business Daily yesterday asked a selection of Macau’s business leaders and opinion formers what they thought were the main challenges ahead for Mr Chui and for the city.

Pages

6&7

Macau, Henqgin in 5-Yr Plan

Zero-fares tours are back

The central government wants Macau to diversify its economy from gaming via the development of Hengqin Island, according to the Chinese National Development and Reform Commission. The chairman of the commission told a press conference in Beijing the body aimed to include the idea in China’s 13th Five-Year Plan. It will cover development for the whole of China between 2016 and 2020, and is currently being drafted.

Travel agencies on the mainland have found a loophole enabling them to get around national regulations that ban package tours with low up-front costs but hefty hidden charges. The return of “zero-fee” tours just months after they were outlawed by the mainland authorities last October has caused most damage to the Macau-based tourist guides, an industry insider says.The new law to curb the practice was only enacted in October.

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%Day

Sands China Ltd

2.08

Tencent Holdings

1.63

Hutchison Whamp

1.47

Cheung Kong Hold

0.81

Swire Pacific Ltd

0.46

Want Want China

-2.08

PetroChina Co Ltd

-2.18

New World Develop

-2.20

Belle International

-2.47

China Unicom

-2.68

Source: Bloomberg

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March 6, 2014 Friday April 19, 2013

Macau

Casinos hold key to economic diversity, say economists Academics urge govt to lean on city’s gaming operators to help smaller businesses grow Tony Lai

tony.lai@macaubusinessdaily.com

Chinese Premier Li Keqiang mentioned development of Macau during NPC yesterday

aming companies hold the key to unlocking the city’s economic diversification, two economists have told Business Daily.

Allowing small-and-mediumsized enterprises greater access to the casino’s procurement processes is vital to diversification, says academic

business as usual

Indigestion for two, please

Paulo A. Azevedo pazevedo@macaubusinessdaily.com

e patient, even though you may be absolutely justified in being irritated by having to pay an enormous amount of money for a so-so meal in a supposedly good restaurant where the service is crap. Excuse the language, but sometimes there is no way to be genteel. Crap is the right word. In Las Vegas, Paris, London, Lisbon, or even in Dhaka, Mumbai or Colombo, you might accept having to pay a sevenfold mark-up for a bottle of wine that at best is no more than house plonk, and having to pay around 200 euros (about 2,200) patacas for a very ordinary set lunch for two, but you certainly would not accept terrible service. Well, get used to it. In Macau, terrible service is the norm. Here you can find fabulous interior design and cream-of-the-crop chefs, but when it comes to service, Macau is the pits. It is all because the government allows itself to be held hostage by a couple of ludicrous local trade unions. Any worker a business can find, no matter how bad he is, is good enough, since the alternative is that the business closes because it cannot find any workers at all. Five-star restaurants, supposedly the best, are reduced to the meanest level because the service, in effect, kills any appetite their diners have. I really do not care who benefits from the quotas for migrant workers, although I have my suspicions about who the beneficiaries are. But I find it strange that the people responsible for labour policy seem unworried that one day they will be held publicly accountable for creating bottlenecks that hinder progress towards making Macau a better place to live. Perhaps they expect to be far away when that day comes, safely out of range of public opprobrium.

Patrick Ho Wai Hong. And economist José Luís de Sales Marques sees SMEs powering a shift from the reliance on gaming. In Beijing earlier this week, National People’s Congress standing committee chairman Zhang Dejiang said Macau must do more to promote diversification. “This is a very clear direction to put effort in,” he said. Business Daily reported yesterday that Ho Teng Iat, a Macau deputy of the mainland’s top advisory body, had been told the pace of economic diversification was too slow. Mr Zhang is the No 3 ranked member of the Communist Party’s Politburo Standing Committee. “We have seen some results [in the diversification] but we have also seen some problems for which we have to think of possible solutions,” he said. Mr Ho, an associate professor of economics at the University of Macau, said economic diversification had been spoken about for “eight or ten years” and focused on conventions and events, and the cultural and creative industries. “But there are not any major breakthroughs as the gaming industry is so dominant that it squeezes out other industries by attracting the capital and the labour,” he said. Mr Ho wants the government to persuade the casino companies to promote more non-gaming entertainment. Negotiations to renew the licences of the city’s casinos could be used as leverage, he said. The licences of the city’s six gaming operators will come to an end by either 2020 or 2022. Secretary for Economy and Finance Francis Tam Pak Yuen has said the renewal talks would start next year and continue into 2016. The government was open to any

suggestions, he said. Mr Sales Marques says the key to diversification is to let SMEs grow and allow the gaming operators to play a significant role. “The small and medium enterprises right now don’t have the conditions and the access to the supply chains of services and products offered by the gaming companies,” he said. “They are dominated by companies outside the Macau economy.” The government should push casino management to improve access, he said. “It is not asking the government to impose anything on them, but to make their procurement process more transparent.” Only once SMEs were flourishing could they start developing in other areas, Mr Sales Marques said. His comments echo the call of Ho Iat Seng, chairman of the Industrial Association of Macau. Mr Ho, who is also the president of the Legislative Assembly, said at the time the government and the gaming operators should buy more locally-made products and services from the city’s manufacturers. MGM China Holdings Ltd chief executive Grant Bowie told Business Daily in December that his company was keen to work with Macau’s creative industries. The two economists pointed out labour and land resources are also important for diversification. Mr Sales Marques says the government should also relax its policy on migrant workers which was “too regulated”. “We don’t have any unemployment problem now but we have the problem of employing the right people,” he said. The unemployment rate was 1.7 percent for the three months ended January 31 – a record low.

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Photo by Manuel Cardoso

Macau

New border crossing – work starts next year Ilha Verde checkpoint should be ready by 2016 says report quoting mainland officials Tony Lai

tony.lai@macaubusinessdaily.com

ork on the new border crossing at Ilha Verde would start midway through 2015 and should be complete in 2016, Xinhua reported yesterday. The mainland’s official news service quoted an unnamed source from the Zhuhai Port Bureau as saying the immigration hall and passenger walkways would “start construction in the second half of 2015”. The agency added the new checkpoint – once completed –

would be open 24 hours per day. The main immigration hall is designed to simplify customs and immigration for travellers by streamlining the work of mainland and Macau officials into a single inspection process. “After the completion of the new border in 2016, it will be first time for the two places to have one inspection together,” the official said. Both sets of officials would share a common database, the report said. A border crossing in Ilha Verde

was first proposed in 2012 as a way to ease the strain on the facilities at the nearby Gongbei border terminal. Mainland Vice-Premier Wang Yang said approval for the new crossing was granted in October. Yesterday’s report said there were between 250,000 people and 300,000 people passing through Gongbei on average each day last year. That numbers are expected to reach 356,000 people a day next year – about 130 million passengers for the full year.

The Xinhua report said additional facilities near the Ilha Verde border post, including an exhibition centre and the redevelopment of land around Canal dos Patos, were Macau’s responsibility. The report did not mention a budget or which government would lead the building of the border crossing. The Secretary for Transport and Public Works and Zhuhai Port Bureau did not respond to requests for comment yesterday.

Macau, Henqgin, linked in China’s next Five-Year Plan T he central government wants Macau to diversify its economy from gaming via the development of Hengqin Island, according to the Chinese National Development and Reform Commission. Xu Shaoshi, chairman of the commission, told a press conference in Beijing yesterday the body aimed to include the idea in China’s 13th FiveYear Plan. It will cover development for the whole of China between 2016 and 2020, and is currently being drafted. The new plan will “likely” have a separate chapter on Macau and Hong Kong – as did the 12th Five-Year Plan covering 2011-2015, said Mr Xu quoted by the online version of the state-run newspaper People’s Daily. The Chinese Communist Party lays out a series of economic and

social development guidelines for the country in its Five-Year Plans. The 12th gave Macau – for the first time – a formal role as a “global tourism leisure centre”. Mr Xu did not reveal details of the new blueprint as it applies to Macau, only saying the aim was to “use the infrastructure development in Hengqin to promote the economic diversification of Macau”. His comment came a day after the National People’s Congress standing committee chairman, Zhang Dejiang, said the diversification here was “quite slow”. Mr Xu also said yesterday the application for a Guangdong-Hong Kong-Macau free trade zone “will gradually mature”. He added he wants to see the zone approved “soon”. T.L.

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Macau

LVS hackers saw Fight money laundering Bethlehem data via tech says PwC

as Vegas Sands Corp says that information about some patrons at its Bethlehem, Pennsylvania, casino resort in the United States was compromised during the February 10 hacking attack on company websites. Spokesman Ron Reese said the number of customers affected appeared to be in the midfive figure range. Examples of the kinds of legally protected data potentially stolen include social security and driver’s licence numbers. A special website LVS has set up – www.sandsinfo.com – warns that credit card information and bank account information may also have been accessed. The company is providing credit monitoring and identity theft protection to customers affected by the hacking. Mr Reese didn’t say whether credit card information was taken. A mailing database similar to something a direct marketing firm would use was also stolen, LVS said. The company added it was still working to determine whether customer information from other properties was breached, a process made more time-consuming by the destruction the hackers wrought. The Las Vegas-based company took down its corporate and individual hotel websites on February 11 after hackers defaced them with images condemning comments Sands CEO Sheldon Adelson had made about tackling Iran.

Sticky end for theft attempt A 35-year-old woman from mainland China was arrested by the Judiciary Police and accused of stealing HK$10,000 in gaming chips. In one casino, in Taipa, a witness reported seeing the women using adhesive tape in her hand to pick chips up from gaming tables. She was detained while still on the casino premises.

Transaction reports involved only 5 pct of the time in detecting economic crimes here suggests survey Michael Grimes

michael.grimes@macaubusinessdaily.com

acau and Hong Kong respondents to a worldwide survey of economic crime reported only five percent of the time do such offences come to light locally using suspicious transactions analysis or data analytics. The techniques have been widely touted by law enforcement agencies and financial regulators as a way to sift through the many millions of transactions that take place each day, identifying potential problem areas. The author of the report – financial services firm PwC – says that the five percent frequency of detections via such techniques and technology compares poorly with the 25 percent detection frequency via that method globally.

…only 5 percent of respondents in Hong Kong and Macau say that economic crimes were detected by whistleblower hotlines PwC’s 2014 Global Economic Crime Survey

“This represents an opportunity for the Hong Kong and Macau markets to increase data analytics as a technique for looking for economic crime,” states the report – ‘Economic crime: The danger within’.

Methods matter

Loan sharks detained The Judiciary Police detained eight men from mainland China and a female Macau resident on suspicion of loansharking and illegal detention. The latter was revealed after a complaint by a friend of the alleged victim. The victim was being held in an apartment. She later told authorities she had contracted two loans each of HK$1 million (US$129,000). As she was unable to pay back the money with interest as instructed, she was allegedly held against her will. Police said the suspects had been active in loansharking in Macau for more than a year. The apartment where they were finally detained was rented by one of the alleged gang. JTM/Business Daily

How ‘economic crimes’ are categorised from jurisdiction to jurisdiction could have an impact regarding how frequently high-tech detection is employed. There might also be an element of economic selfinterest in a report that highlights the role of data analytics in business – from a firm such as PwC that itself offers data analytics services. But the report does however touch upon an issue that has been raised elsewhere regarding Macau. The territory doesn’t have its own financial services industry in the manner of Hong Kong, but it nevertheless annually moves a huge amount of money – much of it from mainland Chinese gamblers – via its casino industry. The tally last year was 360.75 billion patacas (US$45.2 billion). Business Daily reported in

November that a congressional commission in the United States had called for all Macau betting transactions over US$3,000 (23,953 patacas) to be logged. Macau officials have previously said such a low threshold would be impracticable given the volume and velocity of money passing though the gaming rooms.   But the commission complained: “…Macau continues to allow a very high threshold of US$62,500 for reporting large transactions at casinos.” Business Daily approached Macau’s Financial Intelligence Office for comment on the PwC survey findings, but no response was available by press time. Macau linked businessman Carson Yeung Ka Sing – who on Monday was found guilty of laundering HK$720 million – some of it allegedly via Macau – is due to be sentenced today in Hong Kong. He faces up to seven years in prison.

Common knowledge The PwC study, part of its 2014 Global Economic Crime Survey, reported that a significant portion of Macau and Hong Kong respondents cited encounters with money laundering activity, but indicated they expected such encounters to be rarer in the near-future. The report states: “…37 percent of [local] respondents who reported economic crime say they experienced money laundering, but only 15 percent of all respondents say they think it will affect them in the next 24 months.” But the report added there appeared to be no real culture in Macau, Hong Kong or the mainland, for reporting on the actions of others. The survey said: “…47 percent of

respondents in Hong Kong and Macau and 26 percent of respondents in mainland China whose organisations have whistleblower hotlines said that these systems were not used at all. Moreover, only 5 percent of respondents in Hong Kong and Macau (none in mainland China) say that economic crimes were detected by whistleblower hotlines.” The study also states that 37 percent of Hong Kong and Macau respondents who reported economic crime say they have experienced cybercrime, and nine in ten respondents say the consequences they most fear are reputational damage, financial loss, and regulatory risk. The document adds: “Furthermore, 7 percent of all Hong Kong and Macau respondents say their companies lost more than US$1 million through cybercrime.”

Survey method The ‘2014 GECS - Mainland China, Hong Kong and Macau’ supplement is based upon responses from 201 respondents (85 from mainland China and 116 from Hong Kong and Macau). A total of 51 percent of all respondents from mainland China and 53 percent of respondents from Hong Kong and Macau were senior executives of their respective organisations says PwC. Additionally, 55 percent of respondents from mainland China and 49 percent from Hong Kong and Macau represented listed companies. The company adds that 70 percent of respondents from mainland China and 64 percent from Hong Kong and Macau represented organisations with more than 1,000 employees.

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Macau

Pre-sold – cut-price tourers signed up for shopping before leaving mainland

Zero-fare tours make an unwelcome return Tourist guide association says its members are unfairly targeted by new law Tony Lai tony.lai@macaubusinessdaily.com

ravel agencies on the mainland have found a loophole enabling them to get around national regulations that ban package tours with low up-front costs but hefty hidden charges. The return of “zerofee” tours just months after they were outlawed by the mainland authorities last October has caused most damage to the Macau-based tourist guides, an industry insider says. Macau Tourist Guide Association president Angelina Wu Wai Fong said mainland agencies were offering one- and two-day package tours to Macau for 88 yuan (115 patacas) at the Guangzhou International Travel Fair 2014 that ended on Saturday. “The money is not even enough to cover the transportation expenses between Guangzhou and Macau, so what can they [the travel agencies] earn? The commissions,” she told Business Daily. A typical two-day tour to Macau or Hong Kong costs more than 1,200 yuan, while a three-day trip costs in the vicinity of 1,900 yuan. On October 1, the mainland banned free or excessively cheap package tours run by operators that recoup their costs by forcing tourists to shops where the travel agent earns a commission. The law permits agents to escort tour groups to shops

but only if their customers agree before the trip.

In compliance Travel Industry Council President Andy Wu Keng Kuong – no relation of the guide association’s Ms Wu – said all tour groups to Macau met the requirements of the new law.

We originally hoped the new law could improve the quality of tourists visiting Macau but I don’t see it is making any difference now Angelina Wu, president, Macau Tourist Guide Association

“I don’t think there is any so-called getting around the law or taking advantage of the grey areas,” he said. “All the tour groups

visiting here since October have been in compliance with the new law and its spirit. And the law allows shopping to be included in itineraries as long as the travellers agree.” Mr Wu is also the managing director of Gray Line Tours of Macau Ltd. But there have been reports in the mainland and Hong Kong media that some travel agencies had tried to get around the law by offering coupons to shop in designated shops. Angelina Wu, the tour guide association president, said: “There were really fewer tourist groups immediately after the implementation of the new law but the situation has returned to normal now. “They [the agencies] still bring the tourists to designated stores and get commissions, but they just ask them to sign the authorisation documents first. “We originally hoped the new law could improve the quality of tourists visiting Macau but I don’t see it is making any difference now.”

Easy targets Mr Wu of the Travel Industry Council said the law’s impact on tourist arrivals had been slighter than the industry had expected, and mainland tourists were now used to the higher prices. The number of package tourists to Macau dropped by 6.2 percent year-on-year to

No basic pay for tourist guides A request by more than a thousand tour guides for a basic salary has been rejected as the travel agencies here do not want to fork money from their own pockets, says an industry figure. The Macau Tourist Guide Association previously wanted to broker a deal with the travel agencies to offer a basic daily wage of 1,200 patacas (US$150) for the guides after the new mainland tourism law in October. But Angelina Wu Wai Fong, the association’s president, said the agencies declined to do so as “they think the amount is too high”. “They also don’t want to use their own money to pay the tourist guides first. They still prefer to give us part of the commissions they can recoup from the tourists instead,” she said. Travel Industry Council President Andy Wu Keng Kuong said the pay system for guides is “complicated” and the industry should “have rights to decide freely” how their guides are paid. Tourist guides here are now either paid by commissions, daily wages or a mix of both, he added. T.L.

about 3.1 million visitors in the October-January period, according to calculations based on official data. But the decrease had already eased from 11.5 percent in October to only 2.1 percent in January. The industry had originally expected decreases between 10 percent and 20 percent. Ms Wu also said her association had fielded complaints from members and from the government. She said local guides had been approached by the Macau Government Tourist Office, warning them they

risked a 30,000-patacas fine for leading tourists to shop at designated stores. “We only follow what the agencies ask us to do but why does the government choose to fine us instead of the agencies?” she said. “Are we easy targets to show the government is determined in helping [the mainland] to enforce the law?” Business Daily asked the tourist bureau for comment on Ms Wu’s claims and for its view on the effects of the new tourism law. We had not received a reply by press time.

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Macau

That tricky second term What the CE should do in his likely second stint at the helm – and what the community can do to help

he news on Tuesday that Fernando Chui Sai On would seek to run for a second term as Macau’s Chief Executive had been widely predicted. But Mr Chui will face some tough challenges in that second period, after the leadership in Beijing

signalled in the clearest possible terms that it wants to see the city picking up the pace when it comes to economic diversification. The news – the same day – that H7N9 avian influenza had arrived on the doorstep of the territory, killing a middle aged man in

Zhuhai, was a firm reminder of the risks of relying on one industry for most of the wealth generation in the community. A report by Fitch Ratings last month, estimated that in 2012, 88 percent of the city’s gross domestic product was generated from the gaming industry.

Business Daily yesterday asked a selection of Macau’s business leaders and opinion formers what they thought were the main challenges ahead for Mr Chui and for the city, and what they – and the community at large – could do to help him.

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Macau Frederico Rato, lawyer and political commentator In terms of general policy, Mr Rato said the priorities are to reinforce the political mechanisms of ‘One Country, Two Systems’ – China’s policy for managing its relations with the two Special Administrative Regions – and to introduce more elements of democratisation. He added: “Education, civic consciousness, culture, a culture of inquiry and science – as sectorial policies – are the basis of the civic, political, economic and cultural development of any country or region. It’s to be able convincingly to play on the chessboard of the future; it’s about citizenship and individual and collective wellbeing.” As to how that can be achieved, Mr Rato counselled: “There are no miracles. Some of these foundations have already been laid. Some are more advanced than others. There are yet others that remain neglected. The way to obtain better results [via public policy] is to inform better the public and clearly define general and specific [government] objectives, provide adequate policy and generous financing for it.”

José I. Duarte, economist “Defining priorities requires that objectives are set first, they do not exist by themselves. In a system where power is as centralised as it is the case for Macau, much will depend on what kind of legacy the Chief Executive wants to leave behind when he leaves the job,” stated Mr Duarte. “If that issue is not a major concern, the approach will be ‘business as usual’. That will mean leaving behind a city with bulging coffers but an irretrievably damaged society and an increasingly vulnerable economy.” He added: “If the objective is set to remedy much of the harm already inflicted to the social structure, the economic organisation and the natural and man-made space, then the priorities are almost obvious. They are to define a sustainable and credible path of reference for the economic and population growth; to implement a labour policy that answers the needs of a growing economy and that – while protecting the reasonable expectations of the residents – prevents the development of a ‘rentier’ mindset in the local labour force; to get a solid policy mix aimed at stopping and reverting the effects of rising congestion and pollution levels; to deal with the real estate imbalances through an aggressive supply policy; to increase the transparency of the political system and to strengthen the rule of law.”

Tommy Lau Veng Seng, chief-executive-appointed legislator and president of the Macau Association of Building Contractors and Developers “The government definitely has to continue its policies of the past five years namely the three important laws about the land mechanisms – the urban planning law, the cultural heritage law and the amendments to the land law. It should lay out clearer guidelines and execution details of the three laws.” All the long-waited three laws come into force in the beginning of this month. Mr Lau added: “As an industry figure in the development sector I am also concerned about the land supply and whether the government can put up the plots in the market promptly.” He stated: “There are actually a few areas where the government will soon release its urban planning proposals – like the Ilha Verde district and Coloane. Once the administration can figure out the planning for such areas, the developers can promptly start building houses or commercial spaces for the city.” He concluded: “Another top issue the government should handle is any change to the labour policy to accommodate the current labour market.” But he declined to say whether he meant more imported labour.

Vong Kok Seng, vice-president of Macau Chamber of Commerce Mr Vong said he would fully support the re-election of Mr Chui. In the past five years, added Mr Vong, Macau citizens have witnessed what he described as effective policy deployments and governance. However, he said Mr Chui should pay close attention to labour issues including industrial disputes and a shortage of bus drivers. Mr Vong stated: “To solve the above problems, Mr Chui needs to continue with the existing policy direction since it meets the needs of Macau.”

EiIeen Stow, management committee chairman of the British Business Association of Macao and director and general manager of Lord Stow Bakery “I would be happy if Chui Sai On receives another mandate,” Ms Stow told us. “In 5 years, Macau will need more housing and infrastructure… For my own business and smaller companies, we would like to offer a full level of services. We can’t because of the [labour] quotas. I have to hire a percentage of locals before hiring a foreigner but with higher salaries offered by casinos, it’s even harder to hire. I think this is one of the biggest problems to be solved in Macau right now and in the coming years. I would also do something about transport for locals. Coloane is far away and people don’t want to come and work here because there’s no direct access, no bus stops. Most of the transport is big buses filled up with as many people as possible to bring them to key areas in town. But nothing is provided for on-the-spot services,” she explained.

Franklin Willemyns, chairman of France Macau Business Association “The challenge that matters for all governments is keeping and managing the growth of the city,” said Mr Willemyns. “In five years, Macau will be much different. Imagine the bridge linking Hong Kong to Macau and all the new resorts and casinos that will be finished just in about a year… It will definitely lack infrastructure and we will need more of everything: hospitals, police, transport etc. The two main problems smaller businesses encounter in Macau are rent prices going up and lack of qualified manpower. A good solution would be relaxing some policies regarding foreign labour in Macau,” he suggested.

Journalists wanted We are looking for highly skilled candidates to fill the following positions:

Editor • Reporter

The roles would involve covering and/or editing – with our existing team – stories about business, economics and politics. As well as covering the main stories of the day we would expect the successful candidates to have initiative and be able to generate their own story ideas and angles. They should also be able to pursue exclusive stories and investigations.

Requirements

Bachelor’s degree holder, preferably in Journalism or English, with an excellent command of the English language; At least 2 years of experience gained at a newspaper and/or magazine for the reporter position, and 5 years of experience for the editor position. (Those with prior involvement in trade and business publications will have an advantage); Ability to work under pressure and strong sense of responsibility; Excellent organisational skills and exceptional attention to detail; Proofreading skills. Interested parties should send a CV with full career details, availability and expected salary to: editor@macaubusiness.com All personal data collected are used for recruitment purposes only.

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Greater China

Tadashi Yanai, billionaire CEO of Fast Retailing, in Hong Kong yesterday

Uniqlo owner gains in HK debut Fast Retailing aims for bigger China presence Elzio Barreto

niqlo brand owner Fast Retailing Co Ltd climbed 5.6 percent on its first day of trade in Hong Kong, where it listed to boost its profile in China and bolster its ambitious aim of becoming the world’s top clothing retailer by 2020. The company raised no new funds with the listing, opting to issue Hong Kong depositary receipts (HDRs) that are reserved for foreign firms and that tend to be sparsely traded, although they can enhance a global company’s

presence among local investors. Fast Retailing, which retains its primary listing in Tokyo, plans to triple the number of its stores in Greater China to 1,000 by the end of the decade - one of the most aggressive plans for the area by a global clothing firm. China is Uniqlo’s second biggest market after Japan, and by number of stores it is the largest global apparel brand in China, ahead of Hennes & Mauritz (H&M), Inditex

S.A.’s Zara, and Gap Inc. Fast Retailing’s HDRs, basking in the attention of their market debut, outperformed the 3 percent gain of their counterparts traded in Tokyo. At one point in early thin trade the HDRs shot up by nearly a third before quickly paring gains. They closed at HK$28.90. One hundred HDRs are equivalent to one Tokyo-traded share. The value of receipts traded in Hong Kong on yesterday was

only about 5 percent of trading in Tokyo, where Fast Retailing is the most heavily weighted share in the benchmark Nikkei average.

Liquidity issues To mark the debut, Chief Executive Tadashi Yanai rang the opening bell at the Hong Kong bourse. He did not speak to media eager to quiz him on the company’s interest in possibly acquiring J.Crew Group Inc.

No crackdown on Internet finance – for no Central bank boss does say China will regulate the fast-growing sector

he People’s Bank of China will regulate the fast-growing Internet finance sector more carefully, but it won’t crack down on it, the head of the central bank said. PBOC Governor Zhou Xiaochuan made the comment on the sidelines of the annual session of the National Committee of the Chinese People’s Political Consultative Conference. China Daily said it was Zhou’s first comment on Yu’ebao, a popular but controversial online fund offering, and its Internet competitors. He didn’t give any indication of what steps the PBOC will take – or when. What, if any actions, the government might take to regulate Internet finance has been the subject of much speculation as China’s lawmakers gather this week in Beijing to discuss social and economic policies. The growth of online financial products, such as Yu’ebao, an investment service offered by Tian

Hong Asset Management Co Ltd and Alipay (an e-payment division of Alibaba Group Holding Ltd),is being closely watched by the banking industry and the Internet sector. Some praise it as an innovation. Others condemn it as a threat to traditional banks. Yu’ebao, which offers consumers a way to invest their idle cash in money market funds with higher returns than typical bank deposits, has become widely popular with the public, although some financial experts have warned of possible risks. Since it was launched in June 2013, Yu’ebao has attracted 81 million customers, with aggregate deposits estimated at 500 billion yuan (US$81 billion). Although it said that online financial products are an innovation that promotes interest rate liberalization, the China Securities Regulatory Commission has also said it noticed illegal promotion and advertising activities by fund

management companies. “Some of them don’t fully disclose potential risks to investors, and some don’t have quality risk management systems,” Zhang Xiaojun, a spokesman for the CSRC, said on Friday. Zhang said at the time that the CSRC would draw up special regulations covering the online sale of financial instruments and mandating tighter risk controls for money market funds.

500 bln yuan aggregate deposits of Yu’ebao

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Greater China Sources have said that Yanai has looked at a possible deal but that the billionaire is likely to baulk at the US$5 billion price tag J.Crew is said to be seeking. Traders said liquidity in Hong Kong would be an issue and there was very little reason for institutional investors to buy into the stock on the island city’s bourse when they could get better liquidity in Tokyo. “HDRs in Hong Kong are targeted mainly at the retail market, so liquidity tends to be low,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales. While other companies such as Coach Inc. and casino operator Melco Crown Entertainment Ltd have also listed in Hong Kong to boost their profile, without raising capital, at least one - financial firm SBI Holdings - has said low liquidity meant it was no longer worth the effort. As SBI’s primary bourse is Tokyo, it will delist in June, it said on Tuesday, saving annual costs of more than 100 million yen (US$980,000). HDRs now represent just 0.05 percent of its outstanding shares, down from the 9.1 percent when it originally listed in 2011, while trading “has been minimal”. But it said it might consider Hong Kong as a primary bourse for some of its units. The sole sponsor for Fast Retailing’s Hong Kong listing was Morgan Stanley, which earned about 150 million yen in fees, according to Fast Retailing’s listing prospectus. Fast Retailing has also said it may list on other bourses. Reuters

KEY POINTS Uniqlo owner to bolster China profile with HK listing

Dairy imports to rise sharply

VW’s Seat considers PRC production

Mainland farmers supply under 20 pct of domestic demand

Volkswagen AG, Europe’s largest automaker, is weighing options for its Spanish division Seat to begin producing cars in China as part of a broader effort to restore earnings at the company’s only unprofitable unit. Seat is examining opportunities for local assembly in the world’s largest car market, Juergen Stackmann, the head of the brand, said in an interview at the Geneva International Motor Show. A time frame for a decision isn’t set. “It’s clear that a purely export-driven strategy won’t work” to establish a profitable business for Seat in China, Stackmann said.

mports of dairy products to China will exceed 20 percent growth in 2014 as continued urbanisation pushes up demand and a lack of large domestic dairy farms limits supply, said China Daily, quoting a bank report. The number of domestic manufacturers will increase to make up 30 percent of the country’s raw milk supply in 2016, a rise from less than 20 percent this year, according to a study by Rabobank Nederland. The current demand-supply gap will gradually be filled by the robust development of bigger dairy pastures, as well as a government-orchestrated industry consolidation that resolved to avoid food safety lapses. The number of dairy farms in China dropped by 15 percent to 2.2 million from 2008 to 2011, the research found. The proportion of backyard mom-and-pop milking stations was slashed from 70 percent of all farms to fewer than 50 percent in 2013. The efforts to limit smaller dairy farms stemmed in part from the 2008 melamine scandal that killed at least six babies and sickened thousands more. The industry is being directed to build larger, vertically integrated farms that house on average herds of 100 cows or more. According to the Dutch bank, these bigger farms boast on average 1.35 times (and up to 1.7 times) the productivity of smaller ones and ensure better quality produce. “Milk production in China is struggling to grow as a result of small-scale farmers exiting the

Zinc climbs to one-year high Zinc reached a one-year high in London after China retained its target for economic growth, bolstering the demand outlook in the biggest global consumer of industrial metals. Zinc inventories tracked by the London Metal Exchange are the lowest since December 2011. Traders bought zinc to close out bets on falling prices, Fastmarkets.com said yesterday. Nickel touched the highest price since June and aluminium traded at a six-week high. “The rebound in the base metals looks somewhat like a knee-jerk reaction driven by short-covering,” William Adams, an analyst at Fastmarkets.com in London, said in a note.

industry and large-scale farms still under development,” said Chen Wei, director of Food and Agribusiness Research at Rabobank Nederland in Shanghai. “It is likely to be at least two to three years before the pace of large-scale dairy farm expansion in China outweighs the current contraction in ‘backyard’ sources and leads to a reduction in import growth.” Building premium dairy houses requires a substantial amount of time and financial input. For instance, the rough cost of a 6,000-head pasture may be as much as 150 million yuan (US$24.4 million), leaving aside the additional expenditure in milking facilities and environmental protection measures.

China promoting recovery in solar sector Chinese authorities are working to promote a rebound in the photovoltaic manufacturing industry and to change the shareholder structure of LDK Solar Co., a local government official said. “We plan to promote full recovery of production of the solar industry and to change their share holding structure,” said Liu Jie, party secretary of Xinyu, the city where LDK is based, said in Beijing as the National People’s Congress gathered. LDK, which makes solar wafers and panels, this month named liquidators to wind up its business after missing bond repayments.

HK receipts gain 5.6 pct vs 3 pct rise for Japan shares Low trading volumes for HDRs a concern Japan’s SBI Holdings to delist in Hong Kong on low volumes

Taiwan to boost export promotion Spending up to 10 pct more to market goods to outside world

aiwan’s Ministry of Economic Affairs (MOEA) said it plans to raise spending this year by 5 percent to 10 percent from a year earlier to promote exports in a bid to widen Taiwan’s global visibility. The money will be used in part to assist continued efforts to help exporters enter emerging markets, while the ministry will also organise trade delegations to forge closer ties with those markets, it said. The ministry has set a goal of a 4.2 percent rise in exports this year over last year, when outbound trade hit US$305.45 billion, up 1.4 percent from 2012. The ministry last year spent about NT$180 million (US$5.94 million) promoting Taiwan-made products in 10 markets – China, Russia, Brazil, India, Vietnam, Indonesia, the United Arab Emirates (UAE), Egypt, Myanmar and Mexico. The ministry said promotional expenses could reach about NT$195 million this year, not including personnel and operational costs in the ministry’s foreign-based offices. Last year, promotional spending regarding exports to China hit NT$130 million, representing the

majority of the year’s total spending. The ministry said that this year’s spending for the China market is expected to remain about the same as last year’s. China and Hong Kong accounted for almost 40 percent of Taiwan’s total exports last year. The six ASEAN members came in second to make up 18.8 percent of total exports. However, export-focused promotional spending for other emerging markets is set to increase, with expenses for the UAE expected to rise by 40 percent, Vietnam 30 percent, and Myanmar and Brazil expected to climb more than 20 percent, the ministry said. The ministry will also send high-level delegations to several markets, including Myanmar, the UAE, Indonesia and India this year, and provide subsidies to industrial associations and local companies to promote their products in the global market. Meanwhile, the ministry said it has approved 34 applications this year from exporters seeking subsidies for marketing and distribution. The subsidies are expected to cost about NT$107 million, it said.

Mainland to trial telecoms VAT China will trial a new value-added tax for telecommunication services providers as a replacement for business tax, Premier Li Keqiang said at the opening of the annual meeting of parliament, a change which could hit the companies’ profits. The trial is part of a set of reforms aimed at state-owned enterprises such as China Telecom Corp Ltd, China Unicom Hong Kong Ltd and China Mobile Ltd, the world’s biggest mobile carrier by subscribers. Li did not provide details, but some analysts expect VAT of around 11 percent and a start date in the first half of this year.

BMW to recall 10,000 cars in China German premium carmaker BMW will recall 10,234 imported cars in China due to software glitches, the country’s quality watchdog said yesterday. The carmaker will recall 8,676 7-series sedans produced between March 1, 2004 and July 31, 2008 due to a software glitch that could potentially cause a car to slip downhill when parked on a slope, the General Administration of Quality Supervision, Inspection and Quarantine of China said in a statement on its website. BMW will recall a further 1,558 7-series cars made between March 1, 2004 and July 8, 2008 due to a software issue.

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Greater China

China retains 7.5 pct growth target Challenges in balancing economic progress and social wellbeing likely to mount

hina set a 7.5 percent target for economic growth in 2014, a pace that may make it more difficult to achieve the leadership’s goals of curbing credit risks and stemming the pollution choking the nation’s biggest cities. The growth target, which is the same as last year’s, will boost market confidence and protect jobs, Premier Li Keqiang told the annual meeting of the legislature in Beijing yesterday. “We must keep economic development as the central task and maintain a proper economic growth rate,” Li said. The government has pledged to move away from growth at all costs as it tries to clean up the nation’s air and water, and control an unprecedented debt surge that’s evoked comparisons to the run-up to Asia’s financial crisis. In the latest sign of financial stresses, a solar company on Tuesday signalled the risk of what may be the first onshore bond default. “It is going to be very challenging to achieve everything promised in this work report,” said Yao Wei, China economist at Societe Generale in Hong Kong. “Speeding up reform, fighting pollution, managing debt risk and yet the same growth target – something has to give.”

Ensuring employment Li’s work report, which opens the meeting of the National People’s Congress, is his first since the 58-yearold was named premier toward the end of last year’s legislative gathering. He succeeded Wen Jiabao, 71, as part of the Communist Party’s oncea-decade leadership handover. Inflation and money-supply targets also matched those of 2013 and the budget deficit as a percentage of gross domestic product will be about the same as last year. The 7.5 percent target “is in

keeping with our goal of finishing building a moderately prosperous society in all respects, and it will boost market confidence and promote economic structural adjustment,” Li said. “More importantly, stable growth ensures employment.” The expansion goal is “flexible and guiding,” the National Development and Reform Commission said in a related report yesterday. Local governments “must not seek faster growth or compete with each other to have the highest growth rate,” the economic-planning agency said.

Boost confidence “It would take lots of public spending to achieve 7.5 percent growth this year, given how weak the investment interest is in the private sector,” said Dong Tao, an economist with Credit Suisse Group AG in Hong Kong. “Entirely removing the growth target and replacing it with a qualitative target would be wise to me, but I guess the government needs to boost confidence.” China will “declare war” on pollution and intensify a clean up while preventing and addressing debt risks, Li said. “We will take strong measures to strengthen pollution prevention and control,” he said. The nation’s ability to sustain its pace of growth in coming years will help determine the path of a global economy and emerging markets roiled by events including the U.S. Federal Reserve’s tapering of monetary stimulus, turmoil in Ukraine and a currency devaluation in Argentina.

Developing country Li and President Xi Jinping are trying to balance clampdowns on credit and shadow banking, and the broadest economic-policy changes

KEY POINTS 7.5 pct target makes curbing credit, inflation, hard Inflation, money-supply targets also matched 2013’s US$3 trln local govt debt China ‘declaring war’ on pollution

since the 1990s, with sustaining a “reasonable” pace of expansion. Previous data this year have shown a slowdown in manufacturing, while trade and credit expansion exceeded estimates. “China is still a developing country in the primary stage of socialism, and development remains the key to solving all our country’s problems,” Li said in the report. The nation is dealing with rising financial risks, including US$3 trillion in local government debt and a US$6 trillion shadow-banking industry. China averted its first trust default in at least a decade in January as investors in a 3 billion-yuan (US$489 million) high-yield product issued by China Credit Trust Co. were bailed out days before it matured. Shanghai Chaori Solar Energy Science & Technology Co., a Chinese solar company, may not be able to make an 89.8 million yuan interest payment in full by the March 7 deadline. The Shanghaibased company said in a statement that it plans to pay 4 million yuan to bondholders.

’Mystery meat’

It is going to be very challenging to achieve everything promised in this work report Yao Wei, China economist at Societe Generale, Hong Kong

Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co., said in February that China is the “mystery meat of emerging-market countries” because “nobody knows what’s there.” The budget deficit is estimated to rise to 1.35 trillion yuan this year from 1.2 trillion yuan last year, the Ministry of Finance said in its work report. That would account for about 2.1 percent of gross domestic product, it said. The 2013 gap was also 2.1 percent, according to data compiled by Bloomberg. Bloomberg News

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Asia

Henry Sy – could certainly afford a gold-plated wheelchair

Belle’s Henry Sy on Forbes’ 100 richest Filipino-Chinese entrepreneur brought in Lawrence Ho as Manila casino investor

s the Philippines gained the bragging rights as one of Southeast Asia’s fastestgrowing economy, 10 of its tycoons led by SM group founder Henry Sy made it to Forbes magazine’s 2014 list of wealthiest people on the planet, reports the Philippine Daily Inquirer. Mr Sy’s vehicle Belle Corp scored a success in 2012-13 by recruiting Macau casino developer Melco Crown Entertainment Ltd – co-chaired by Lawrence Ho Yau Lung – as an equity partner in its US$1 billionplus casino resort project at Manila Bay. It’s now been branded as City of Dreams Manila. In the latest annual ranking of global billionaires published on March 3, the net worth of Sy and family was estimated at US$11.4 billion, lower than last year’s US$13.2 billion. But it was enough to enable him to keep his ranking as the country’s richest man and to be among the world’s top 100 billionaires. The 89-year-old Sy, whose SM group dominates the local banking, retailing and property development scene, ranked 97th globally, down from last year’s 68th. The magazine said its estimates were a snapshot of wealth on Feb. 12, when it locked in stock prices and exchange rates from around the world.

Tapering effects Stock prices in the Philippines have pulled back from record highs seen last year as large global funds pulled out of emerging markets since May last year when the US Federal Reserve announced a tapering of the monetary stimulus that boosted financial markets in the last few years. A total of 1,645 billionaires made it to the global list this year with a combined net worth of US$6.4 trillion, up from US$5.4 trillion a year ago. The ranks of the world’s billionaires

continued to scale new heights and expand to new corners of the world, according to Forbes. The country’s second-richest man is still Lucio Tan, with an estimated net worth of US$6.1 billion, ranking 227th globally. The 79-year-old Tan, who has interests in tobacco and beverage manufacturing, banking, property development and aviation, saw his net worth rise from last year’s US$5 billion.

US$11.4 bln

Estimated worth of Henry Sy and family

Ranked third-richest in the Philippines this year is Megaworld and Alliance Global Group founder Andrew Tan, 61, with an estimated net worth of $4.7 billion, rising from last year’s US$3.95 billion. He was followed by Enrique Razon Jr, chief of global port operator International Container Terminal Services Inc. and Bloomberry Resorts Corp., with a net worth of US$4.2 billion. At 54, Razon is the youngest among Philippine billionaires. Joining this year’s list and ranking fifth among the country’s wealthiest is JG Summit founder John Gokongwei Jr., 86, with an estimated net worth of US$3.9 billion. Completing the local roster are construction magnate David Consunji (net worth: US$3.3 billion),

Metrobank group and GT Capital founder George Ty and family (US$2.3 billion), Jollibee group founder Tony Tan Caktiong (US$1.7 billion), stockbroker, insurance and car dealership magnate Robert Coyiuto Jr (US$1.5 billion) and Filinvest group founder Andrew Gotianun (US$1 billion). Except for Gokongwei, all these billionaires were also on the 2013 list. Two names that were part of Forbes’ 2013 global list but are no longer on this year’s roster are retailer Lucio and Susan Co, founder of fastgrowing retailing chain Puregold and Cosco Capital as well as Alphaland and Philweb chair Roberto V. Ongpin, who complained about being included on the list.

Bill Gates Globally, Microsoft founder Bill Gates is back on top, toppling telecom mogul Carlos Slim Helu of Mexico, who had topped the list the past four years. Spanish clothing retailer Amancio Ortega, best known for the Zara fashion chain, retained the No. 3 spot for the second year in a row, extending his lead over legendary American investment guru Warren Buffett, who is again at No. 4. The magazine said roughly twothirds of the billionaires had built their own fortunes, 13 percent inherited them and 21 percent had been adding on to fortunes they received. Other notable newcomers include World Wrestling Entertainment CEO Vince McMahon, fashion king Michael Kors and Denise Coates of UK online betting firm Bet365. This is the 28th year for the Forbes billionaires list. To compile net worths, the magazine valued individuals’ assets— including stakes in public and private companies, real estate, yachts, art and cash—and take into account estimates of debt.

Global ranking on Forbes’ list

“We attempt to vet these numbers with all billionaires. Some cooperate; others don’t. We also consult an array of outside experts in various fields,” the magazine said.

Dictators, royalty excluded The Forbes billionaires list ranks individuals rather than large, multigenerational families who share large fortunes. The list neither includes dictators who derive their fortunes entirely as a result of their positions of power nor royalty who, often with large families, control the riches in trust for their nation, the magazine said. Because of the technology boom and strong stock market, the United States once again has the biggest number of billionaires (492). Zuckerberg The year’s biggest gainer was Facebook’s Mark Zuckerberg, aged 29, whose fortune jumped by US$15.2 billion to US$28.5 billion as shares of his social network skyrocketed. The United States was followed by China (152) and Russia (111) as the countries with the biggest concentration of billionaires. But Forbes also noted that wealth was spreading to new places. New billionaires have been discovered in Algeria, Lithuania, Tanzania and Uganda. The magazine said that for the first time, an African, Aliko Dangote of Nigeria, broke into the Top 25 with a net worth of US$25 billion.

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Asia Indonesians buying more bread Wheat imports by Indonesia may jump to more than 10 million tons a year in five years as rising incomes spur demand for noodles, cakes and cookies in Southeast Asia’s largest economy, according to Rabobank International. Shipments expanded more than threefold over the past two decades to 7.1 million metric tons in 2012-2013, analyst Pawan Kumar wrote in a report sent yesterday. Imports of more than 10 million tons would place Indonesia, which can’t grow the grain locally because it’s too hot and humid, on par with the current leading global importer, Egypt, Kumar wrote.

Singapore sees structural deficit risk Singapore may run into structural budget deficits in the next decade if it does not raise revenues to meet increases in spending on infrastructure and health care, Finance Minister Tharman Shanmugaratnam said. Revenue gains will ease in coming years as the government collects less from asset market-based taxes, while a slowdown in foreign-worker growth means related levies will taper off, Shanmugaratnam said in Parliament yesterday. There is further room for the government to “enhance” its tax regime after it raised property tariffs on luxury homes last year, he said.

Indian sugar exports jump as Brazil bakes Sugar shipments from India, the world’s second-largest producer, are poised to climb as the biggest monthly gain in prices since 2011 and a state subsidy help mills compete with supplies from Brazil and Thailand. Shipments may total 2 million metric tons to 2.2 million tons in the year ending Sept. 30 if prices remain at current levels, said Rahil Shaikh, managing director of ED&F Man Commodities India Pvt. Exports totalled 1.3 million tons between October and February, compared with full-year sales of 345,000 tons in 2012-2013, according to the Indian Sugar Mills Association, or ISMA.

Perth Mint gold sales shine The Perth Mint’s sales of gold bars and coins climbed in February from the same period last year as bullion prices rose the most in seven months, but sales of silver coins fell. The Perth Mint runs the only gold refinery in Australia, the world’s second-biggest gold producer after China. Sales of gold coins and minted bars rose to 47,003 ounces in February from 44,399.48 ounces in the year-ago period, according to data emailed to Reuters. Silver sales fell 9 percent to 392,088 ounces last month.

NZ building slows Commercial activity drops for a second quarter in Q4

ew Zealand building activity slowed in the final three months of 2013 as nonresidential work dropped for a second quarter, offsetting a pick‑up in house building, reports the New Zealand Herald. The volume of building work put in place across all building fell 1 per cent in the three months ended Dec. 31, compared to a 1 per cent gain in the September quarter, according to Statistics NZ. Non-residential work fell 3.9 per cent, adding to the September decline of 6.7 per cent, while residential work grew 1.1 per cent in the quarter, having gained 7.7 per cent in the prior period. The value of work increased 0.6 per cent to a seasonally adjusted NZ$3.17 billion (US$2.66 billion) across all buildings, with a 2.6 per cent decline in non-residential work to NZ$1.27 billion and a 2.5 per cent gain in residential work to NZ$2.01 billion.

Annual tally On an annual basis, total value of building work put in place rose 16 per cent to NZ$12.47 billion in calendar 2013 from a year earlier, led by a 28 per cent gain in new dwellings worth US$6.01 billion. Non-residential

building work increased 3.3 per cent to NZ$4.89 billion in the year. Construction is seen as lynchpin for the local economy this year with the NZ$40 billion Canterbury rebuild expected to ramp up this year. “Weaker-than-expected building activity presents a clear downside risk to our forecast of 1.1 per cent growth in December quarter GDP,” Westpac Banking Corp senior economist Michael Gordon said in a note after the figures were released. Building activity in Christchurch, where the rebuild is gathering pace, rose a seasonally adjusted 0.7 per cent in the quarter, following a 20 per cent surge in the September quarter.

KEY POINTS Value of work increased 0.6 pct in Q4 Total a seasonally adjusted NZ$3.17 bln Sector up 16 pct to NZ$12.47 bln, calendar 2013 Property prices up sharply in Auckland, Christchurch

The sobering side of globalisation Myanmar’s opening up could bring headaches for the country’s booze makers

lans to liberalise the importation of alcohol in Myanmar have run into opposition from local liquor companies who claim a new law opening the market would put their businesses at risk, reports the Myanmar Times. The question of imported alcohol became controversial late last year after customs raids on importers. Their work shipping alcohol is technically illegal under current laws. Customs seized thousands of bottles of wine, leading to a temporary alcohol drought in local stores. With imported alcohol suddenly withdrawn from the shelves at the peak of the holiday season, U Win Myint, from the Ministry of Commerce, said the government would work quickly on a new policy easing outdated import regulations. The ministry promised to deliver – no later than March – a policy that would not raise the price of booze. But local liquor manufacturers are cautious, saying at a press conference recently that any leniency shown toward foreign importers would hurt local industry.

The cheapest and lowest-quality products have more of a social impact U Aung Moe Kyaw, International Beverages Trading Co

“We have more than 10,000 farmers under contract to grow corn as a raw material for our products. If our business decreases because of unlimited importation of liquor, they would suffer too,” said U Zaw Win, deputy chair of the Myanmar Liquor Association (MLA) and director of

Asia Beverages Company, which produces ABC beer and whisky. In order to retain a competitive advantage over foreign brands, local producers are asking that the ministry set a minimum retail price of US$6 per bottle of imported alcohol in order to prevent cheap regional imports from undercutting local alcohol. “The cheapest and lowest-quality products have more of a social impact,” said U Aung Moe Kyaw, group chair of International Beverages Trading Company (IBTC), adding that certain cheap whiskies being sold on the market from Singapore and Thailand are in fact not whisky at all, but sometimes poisonous fakes. The Ministry of Commerce’s Illegal Trade Prevention and Supervision Control Committee has confiscated millions of kyats worth of illegal products since September at seaports and border crossings, officials have said. Currently, there are 25 local liquor factories employing about 12,000 permanent workers, MLA sources said.

editorial council Paulo A. 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, Pierre-François Metayer, Cynthia Wong EDITOR AT LARGE Alex Lee BRANDS & FRIENDS Raquel Dias 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 Residential work climbed 6 per cent in the quarter, while non-residential dropped 6.6 per cent.

New permits The figures follow new building consents data last week, which showed

a decline in permits to build new housing in January, as apartment and retirement unit numbers dwindled from records in the tail-end of 2013. Rising property prices, particularly in Auckland and Christchurch, became a headache for the Reserve Bank last year, which was loathe to

lift interest rates in response for fear of fuelling demand for an already elevated currency. Instead, the central bank imposed restrictions in October on the level of low-equity mortgage lending banks could undertake as a means to reduce the level of riskier loans.

Thai govt to start paying rice arrears T

he Thai government is expected to start paying around 30 billion baht (US$923 million) to farmers next week for rice sold in recent months to the state. But some farmers protesting in the capital complained that fell far short of what was owed. “There should be 20 billion baht from the budget and another 10 billion baht from rice stock sales,” said Luck Wajananawat, president of the Bank of Agriculture and Agricultural Cooperatives (BAAC), which manages the scheme. The rice subsidy scheme run since 2011 by the government of Prime Minister Yingluck Shinawatra has gone disastrously wrong, with hundreds of thousands of farmers left unpaid and big losses for the state budget. After a disrupted election last month, Yingluck now heads a caretaker government with little authority to borrow money to fund the scheme, and it has struggled to sell rice from stocks to other governments as it hoped. On Tuesday, the Election Commission gave the government the authority to borrow 20 billion baht from the fiscal budget to pay farmers and the Commerce Ministry is also selling rice through auctions to fund the scheme. Reuters

Storing up trouble Japan’s earthquake disaster could have long-term effects on its child victims

ore than 30 percent of children affected by Japan’s March 2011 earthquake and tsunami suffered from post-traumatic stress disorders (PTSD), such as a prolonged state of anxiety and insomnia. That’s about nine times the rate of such anxiety found in ordinary children, reports Asahi Shimbun. There are concerns that the effects of such traumatic events – when experienced by a whole generation of a population – could have implications for the long –term mental health and economic effectiveness of those individuals. Research on the topic is however limited and inconclusive. A survey of children involved in the tsunami disaster was conducted by a health ministry study group about two years after the disaster, covering 198 children in the devastated prefectures of Iwate, Miyagi and Fukushima, as well as 82 children in unaffected Mie Prefecture. The survey results were announced March 1. The children were aged 6 to 8 when the study group, made up of child psychiatrists, interviewed them and their parents. Nearly 34 percent of the children in Iwate, Miyagi and

Children’s problems often go unnoticed because they cannot explain their conditions well Takeo Fujiwara, National Center for Child Health and Development

Fukushima prefectures were suffering from symptoms of PTSD, compared with 3.7 percent in Mie Prefecture. In the three prefectures, 14 percent said they suffered flashbacks of painful experiences during the disaster or they repeatedly relived such experiences in dreams.

Seventeen percent said they could not remember what they had experienced. Some of those that did remember, said they steered clear of places or actions associated with that day. Ten percent complained about suffering from insomnia and a heightened state of sensitivity.

“Children’s problems often go unnoticed because they cannot explain their conditions well,” said Takeo Fujiwara, a department director of the National Center for Child Health and Development and a member of the study group. “Experts should help teachers and nursery staff

take appropriate steps.” According to the survey, children tended to suffer from PTSD when they endured more painful experiences, such as the earthquake, tsunami, fire, separation from family and friends, and life in evacuation centres and temporary housing.

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International

Home and duty Ukrainians rush to enlist for army amid Crimea crisis Germain Moyon

here may not be any fighting in Ukraine yet but as tensions ratchet up in Crimea, young men in Kiev were queuing to sign up for the army, ready to take up arms if it comes to a war with Russia. “I want to take part in the fight,” said Roman Surzhikov, a 33-year-old engineer and army reservist, one of a steady stream of people going into an army recruitment centre in the city centre on Tuesday, despite a “closed” sign outside. “Have they declared a general mobilisation yet?” he asked the woman at reception. Ukraine’s Black Sea peninsula of Crimea has been under the de facto control of pro-Kremlin forces in recent days, while President Vladimir Putin has reserved the right to send troops into the autonomous but mainly Russian-speaking region. He denies claims that Russian soldiers are already operating there. “It’s obvious an intervention is under way in Crimea and it’s not impossible there will also be one on Ukrainian territory,” Surzhikov told AFP as he explained why he wanted to enlist.

Defending country “I can’t say I look forward to it, but if there is going to be a war, it’s my duty. We have to defend the country,” he said, adding that “10 million men are prepared to take up arms.” For now, he was told to just come back in a few days and leave his details. So far, only some Ukrainian army reservists are being called up and he was not one of them. The Ukrainian army was put on alert over the weekend after Russia’s parliament gave Putin permission to send

troops into Ukraine, a former Soviet state. In response, the head of Ukraine’s national security and defence council Andriy Parubiy announced on Sunday that Kiev was to call up all military reservists, a move he said was to “ensure the security and territorial integrity of Ukraine”. While short of a general mobilisation, the announcement nevertheless drew hundreds of young men across the country eager to do their bit. Television footage showed long queues in front of recruitment centres. The defence ministry declined to tell AFP how many had actually signed up, saying the information was top secret. Faced with more volun-

teers than it could take, the recruitment office in central Kiev decided to shut its doors. It’s due to reopen them today. Volodymyr Bykovski, who works at the office and has already been signed up himself, confirmed he had seen an influx of keen men – young and old – since the weekend. “Most of them came on their own initiative” rather than being called up, he said, smoking a cigarette outside the centre, which was topped by the blue-and-yellow Ukrainian flag. “Many are disappointed because they thought a mobilisation was already under way but we’re still telling them to wait, that we’ll call them when it’s time.” Not just individuals but

companies have stepped forward – for example with computer equipment – to help a Ukrainian army that has seen better days. Compared to Russia’s military force of some 845,000 troops, the armed forces here have six times fewer soldiers and their equipment is mostly outdated. With this in mind, “people are scared of course, and I too am scared,” said Bykovski. “But it has to be done, it’s our duty.” This sense of patriotism in the face of stiff odds was shared by Dmytro Gerzhan, 42, who had just left his contact details with the recruitment office. “If the situation gets more complicated – who knows how things will develop, what

An unholy tangle Malaysia’s highest court takes up use of ‘Allah’ by Catholics

undreds of Muslims demonstrated yesterday outside Malaysia’s highest court as it took up the Catholic Church’s bid to be allowed to refer to God as “Allah” in a case that has increased tensions in the multi-ethnic nation. The church is seeking to challenge a lower court’s ruling last October that sides with the Muslimmajority country’s government by forbidding non-Muslims from using the Arabic word “Allah” in the local Malay language. A seven-judge bench in Malaysia’s Federal Court was due to decide whether it will allow a full hearing of

the case or whether the lower court’s verdict stands. Some 500 Muslims gathered outside the court complex in the administrative capital of Putrajaya as the case began, chanting “Allahu Akbar” or “God is great” and holding banners that read: “Want to use ‘Allah’, join Islam. Don’t be ill-mannered”. “Allah cannot be used by outsiders or Christians. People now may know the difference but our children will not know,” Rosli Ani, a representative of a Muslim NGO known as Per3, said. Father Lawrence Andrew, the editor of the Catholic newspaper

‘Allah’ cannot be used by outsiders or Christians Rosli Ani, Muslim NGO representative

Russia will do – we have to join up,” he said. At another recruitment centre, Arthur said he was spurred to sign up by the memory of the nearly 100 protestors killed in the violence in Kiev’s Independence Square which preceded the ousting of pro-Moscow president Viktor Yanukovych late last month. “After what happened... it would be shameful not to go (and sign up),” the 23-yearold student said. “I think it will all be resolved peacefully because the whole world is backing Ukraine and Ukraine has the truth on its side,” he said. “But if Putin decides to start a war against a brother nation, a lot of men will be ready to defend the country.” AFP

Herald, which launched the case, said Christians across Malaysia were fasting and praying for a favourable verdict. Yesterday was Ash Wednesday, the beginning of the Christian holy period of Lent, which precedes Easter and during which many of the faithful fast. An appeals court in October barred the Herald from using “Allah” in its Malay-language edition, overturning a lower court’s 2009 ruling in favour of the church. The church argues “Allah” has been used for centuries in Malaylanguage Bibles and other literature to refer to “God” outside of Islam. But authorities say using “Allah” in non-Muslim literature could confuse Muslims and entice them to convert, a crime in Malaysia. The dispute first erupted in 2007 when the Home Ministry threatened to revoke the Herald’s publishing permit for using the word. AFP

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March 2014 Friday 6, April 19, 2013

Opinion Business

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Globalising the Fed

Leading reports from Asia’s best business newspapers

CHINA DAILY

Ngaire Woods Geoffrey Gertz

Director, Global Economic Governance Programme, University of Oxford Research officer, Global Economic Governance Programme

A China Southern Airlines’ Boeing 777-300ER has made its maiden passenger flight from Guangzhou to Shanghai. The airline, said to be the only one in the world that operates both the Airbus A380 and Boeing 787, has bought ten 777-300ER planes from Boeing. The others will be delivered by 2016. The plane will be used for longhaul flights. The airline has equipped its 777-300ER planes with the latest entertainment system by TopSeries AVANT. The system made its debut on the same flight.

NZ HERALD Government politicians are pressing for funding bureaucrat John Bishara to be the no-controversy chief executive for Maori TV after ructions last year, broadcasting sources say. Upheavals last September led to scrapping of the employment process for a new CEO after the board identified two finalists for the CEO role. One was the former TVNZ Maori unit boss Paora Maxwell and the other education bureaucrat Richard Jefferies. But ructions erupted with staff signing a petition against Maxwell being appointed and a Maori Television board member Ian Taylor resigning over the process for selecting finalists.

BUSINESS INQUIRER Oil firms cut diesel and kerosene prices as demand for fuel tapered off amid the tail end of winter in the United States. In separate advisories, Petron, Shell, Chevron and Seaoil announced a rollback of 30 centavos per litre on diesel and on kerosene effective from midday on Tuesday. PTT Philippines – a local unit of Petroleum Authority of Thailand Public Co. Ltd – implemented the same price cut but for diesel only, “to reflect movements in the international petroleum market,” PTT said. Phoenix Petroleum implemented the same price cut for diesel on the same day.

TIMES OF INDIA Jewellery and lifestyle products manufacturer Titan Company has confirmed plans to export its gold jewellery to marquee global retailers, as current gold import regulatory norms in India mandates the Tata Group company to have a sizable export portfolio. Titan Jewellery, which constitutes 75 percent to 80 percent of Titan’s US$2 billion revenue, will supply its Tanishq brand of gold jewellery to Dubai-based Damas and Singapore’s Mustafa. The exports will also include diamond jewellery sales. Titan had a gold export business until 2007, but closed it because margins were thin.

hould the United States worry about whether its monetary policy is wreaking havoc on emerging and developing countries (EMDCs)? That was the question faced by the Federal Reserve at the height of its quantitative-easing program, when its monthly purchases of long-term assets drove yield-hungry investors into these countries, causing their currencies and asset prices to rise. And it is still a pressing question today, now that the Fed is winding down its asset purchases, causing capital flows to reverse and leaving many EMDCs high and dry. Contrary to what most observers seem to believe, the answer does not lie in scrutinising the Federal Reserve’s mandate or debating the record of developing-country policymakers. Rather, the question concerns whether, and how, the US wants to lead in the global economy. If the US wants to preserve an open, stable global financial order, it cannot afford to ignore the current turmoil in emerging markets. Since talk of “tapering” began last year, a growing number of EMDCs have come under pressure: their currencies are depreciating, capital is fleeing, and their central bankers are left with the unenviable task of combating a domestic growth slowdown while maintaining external stability. The incipient recovery in the advanced economies appears to be sparking widespread instability, from Argentina to Turkey to India.

External forces To be sure, some of the EMDCs’ recent struggles are rooted in home grown weaknesses. But domestic politics is only part of the story. Indeed, some countries with strong economic fundamentals and responsible macroeconomic policies – such as Mexico – are still suffering. Just as successive rounds of monetary-policy loosening in the US and the EU caused large shifts in EMDCs’ financial conditions and asset prices that were largely unrelated to underlying fundamentals, so the current instability in many EMDCs is driven more by the unwinding of these policies than by domestic factors. So, is there anything EMDCs can do to avoid being buffeted by flooding and receding waves of international capital? Compared to a decade or two ago, EMDCs (at least theoretically) have an expanded toolkit at their disposal. These instruments – including measures aimed at capital-flow management, currency-market interventions (either sterilised or unsterilised),

macro-prudential financial regulation, and the accumulation of reserves – provide some room for manoeuvre. Yet these tools are costly, technically complicated, and – even when executed perfectly – not always effective. Moreover, while even the International Monetary Fund has come around to supporting the use of capitalflow measures under certain conditions, many rich countries continue to push for provisions in trade and investment agreements – for example, the Trans-Pacific Partnership – that would bar any use of capital controls. So EMDCs find themselves in a real bind. The domestic instruments at their disposal are of limited use in coping with overwhelming global capital flows driven by monetary-policy decisions made in faraway capitals. Yet simply sitting back and watching their currencies gyrate as capital races in and out is both economically and politically untenable. One can imagine several scenarios. EMDCs might increasingly insulate themselves by erecting walls to foreign capital and closing themselves off from world markets: a reversal of globalisation. Alternatively, EMDCs might turn to powerful new patrons – namely China – to support and shield them from global market swings that are beyond their control. In a third scenario, the US pays greater heed to its interest in

sustaining an open international financial order and works to alleviate the dilemmas posed by the mismatch between globally-integrated financial flows and nationally-determined monetary policy.

Emerging countries might turn to powerful new patrons – namely China – to support and shield them

The US obviously would be best served by encouraging the third of these scenarios and discouraging the first two. But the more indifference the US shows to EMDCs’ fluctuating fortunes, the more it pushes them toward one of the alternatives. Insular monetary policy in the US will be met with insular monetary policy abroad; and everyone will be left worse off. What can the US do to

ensure that major markets remain open to it? Earlier this month, the G-20 called for US policy to be more “carefully calibrated and clearly communicated.” This is not enough. The US needs to keep providing swap lines to EMDCs in need of dollar liquidity, engage in meaningful formal and informal monetary consultative processes, and support countries’ own regional arrangements, such as the Chiang Mai Initiative. Moreover, US trade negotiators need to stop insisting that countries give up their right to use measures to protect themselves from the unfortunate consequences of US monetary policy. Crucially, the US also needs to stop withholding consent for the IMF to reform and deploy additional resources from all countries. Recent US monetary-policy measures and statements have reflected the belief that America’s stake in EMDCs’ financial stability is limited to the extent to which volatility poses a risk to the near-term US economic outlook. This short sighted strategy runs counter to the US government’s broader geopolitical and economic goals. The US benefits incalculably from an open global financial order, which is now at risk. A monetary policy that acknowledges today’s interdependence would protect America’s long‑term interests. © Project Syndicate

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Closing Sarkozy fumes over secret tapes

All you need is love says Rahul Gandhi

Nicolas Sarkozy was seething yesterday after it emerged that an aide had secretly recorded hundreds of hours of meetings and private conversations involving the former French president when he was in office. A scandal that swept the Ukraine crisis off the top of the country’s news agenda erupted after transcripts of some of the illicit recordings were published by satirical magazine Le Canard enchaîné and website Atlantico. The initial revelations contain excerpts in which top officials express scorn over the presence of Sarkozy’s wife, the ex-supermodel Carla Bruni, at meetings at the Élysée Palace.

Rahul Gandhi, scion of India’s leading political dynasty, said yesterday – just hours after national elections were announced – that his ruling Congress party will rout the main opposition with “love”. Gandhi, frontman for the Congress campaign and likely to become prime minister if it wins, said the party would overcome the Bharatiya Janata Party (BJP) with love just as it did the British 67 years ago. “The way that the Congress party sent the British away with love ... the Congress will now send the BJP away similarly with love,” said Gandhi at a rally.

HK confirms new case of H7N9 Comes only day after news of a fatality in Zhuhai, next door to Macau

ong Kong confirmed a new human case of the deadly H7N9 avian influenza found in an 18-month-old girl, the sixth case to be discovered in the city. It follows the death from the virus of a Zhuhai man at the weekend, reported by Business Daily on Tuesday. Fears over avian flu have grown following the deaths of three men from the H7N9 strain in Hong Kong since December last year, all of whom had recently returned from mainland China. The child, who had also recently visited the mainland, was hospitalised on February 28 after developing a fever and was treated in an isolation ward, the city’s health department said in a statement. She was sent home “in a stable condition” on Monday but routine laboratory test results later showed positive for the virus, the statement said. She had travelled to the neighbouring Chinese province of Guangdong for three weeks in February, the health department said, where her mother had taken her to a wet market – though reportedly they did not buy poultry. Family members and patients from the first hospital that admitted the child will be taken in for testing and

Venezuela marks year without Hugo Chávez V

observation, the statement said. Others who may have had contact with the girl will be “put under medical surveillance”, it added. A total of 31 people died from H7N9 bird flu in mainland China in January, the government said, making it by far the worst month of the outbreak. There were a total of 127 confirmed human H7N9 cases that month, according to the National Health and Family

enezuela yesterday marked one year since Hugo Chávez died, with his successor set to lead ceremonies for the ‘eternal comandante’ whose socialist revolution is now facing persistent opposition protests. After a month of sometimes-deadly demonstrations, President Nicolás Maduro will oversee a parade showing off the government’s military might before a ceremony at the former barracks where the late leader is entombed. But anti-government students and the opposition intend to rain on the parade, announcing new protests to keep pressure on Maduro’s nearly yearold administration. At least 18 people have died since early February in protests that Maduro has denounced as a USbacked plot by “fascists” to overthrow him. Maduro urged Venezuelans to pay tribute to the man he dubs the “eternal comandante” in “peace and with love.” Three of Chávez’s leftist allies in the region, Presidents Raúl Castro of Cuba, Evo Morales of Bolivia and Daniel Ortega of Nicaragua flew to Caracas.

Planning Commission. The outbreak, which first emerged on the mainland in February 2013, has reignited fears that a bird flu virus could mutate to become easily transmissible between people, threatening to trigger a pandemic. Hong Kong slaughtered 20,000 chickens in January after the virus was found in poultry imported from Guangdong.

Pope defends Church record on tackling abuse P

ope Francis has defended the Catholic Church’s record on tackling the sexual abuse of children by priests, saying “no-one else has done more” to root out paedophilia. The comments, in an interview published yesterday, were the Pope’s first response to a scathing UN report that denounced the Vatican for failing to stamp out child abuse and allowing systematic cover-ups. “The Catholic Church is perhaps the only public institution to have acted with transparency and responsibility. No one else has done more. Yet the Church is the only one to have been attacked,” he said in an interview with Il Corriere della Sera daily. Last month’s hard-hitting UN report called on the Church to remove clergy suspected of raping or molesting children. It accused the Vatican of systematically placing the “preservation of the reputation of the Church and the alleged offender over the protection of child victims” – an accusation the Church heatedly rebuffed.

Officials said last month that they were extending for four months a ban on live poultry imports from mainland China to guard against the disease. Hong Kong is particularly alert to the spread of viruses after an outbreak of Severe Acute Respiratory Syndrome (SARS) swept through the city in 2003, killing 299 people and infecting around 1,800.

Filipino doctors slam portrayal as ‘tax cheats’ F

AFP

urious Philippine doctors yesterday demanded the government withdraw newspaper advertisements, which they claimed portrayed them as tax cheats. The government ads, which ran in newspapers on Sunday, showed a female teacher lecturing in front of her class with a woman in a medical suit holding a doctor’s clipboard sitting on her shoulders. “When you don’t pay your taxes, you’re a burden to those who do,” read the accompanying caption below sets of figures that showed less than one percent of a doctor’s income went on taxes while the lower-paid teacher contributed 26 percent of her earnings. “The Bureau of Internal Revenue should withdraw the negative ads. They create a very bad impression of doctors in the eyes of the public and are defamatory,” Philippine Medical Association president Leo Olarte told AFP. He said many members were angry and some were demanding the association sue the internal revenue commissioner Kim Henares for “moral damages”.