Hengqin retail area fails to lure Macau SMEs A
catering firm admits “failure” in its attempts to entice Macau’s small- and medium-sized enterprises to sell food and souvenirs near the Chimelong International Ocean Resort on Hengqin Island. That’s despite Beijing saying that Hengqin will be at Macau’s service in broadening the city’s economy. Companies here say it’s not so simple. They cite their business – perishable foods – as incompatible with the red tape and officialdom linked to mainland customs
clearance. That’s despite the fact that as a Special Economic Zone, Hengqin is supposed to have a more business-friendly approach to outside investors. “We’ve tried to answer the Hengqin administration’s call to encourage Macau enterprises to run stalls, but we’ve failed,” Lin Shuxiong, manager of ZhiMing Catering Service Co Ltd, told Business Daily. More on page
Page 4
La Scala firm thinks will get land back Page 6
Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen says there “should be no increase” in the number of gaming concessionaires – six at present – allowed in the city’s gaming market following the expiry of the current permits in 2020 and 2022. Francis Lui Yiu Tung, vice chairman of Macau gaming operator Galaxy Entertainment Group Ltd, said separately in an interview with the Hong Kong Economic Times newspaper that he is “not worried” about the gaming concession issue, saying the government is doing a good job.
Page
3
MOP30 mln revamp of Canto Opera house
Good neighbours… Strong start to city’s Chimelong Hengqin Bay Hotel China-wide FDI this year
Entrepreneur William Kuan Vai Lam is to spend at least 30 million patacas (US$3.75 million) to renovate a century-old Chinese theatre once used for Cantonese Opera. He cites as the spur, support for the central and local government policy of broadening the economy beyond casino gambling. The facelift of the Cheng Peng Theatre is scheduled for completion next year and will operate on a “nonprofit” basis.
The newly opened Chimelong Hengqin Bay Hotel on Hengqin Island is working closely with travel agencies in Macau to set up packages that include both destinations, reports our sister publication Macau Business magazine. “A win-win situation will be visitors being willing to extend the length of their packages to stay in Macau and here,” says hotel general manager Ivan Leung.
Page
4
Page
5
2
Legislators want yellow taxi debate
Maximum six gaming licensees post-2020: Tam
www.macaubusinessdaily.com
Year II
Number 493 Tuesday March 11, 2014
Publisher: Paulo A. Azevedo
Closing Editor: Michael Grimes
MOP 6.00
business daily 1
Friday April 19, 2013
Macau’s direct investments in mainland China – including Hengqin Island – have so far in 2014 shown year-on-year growth in cash terms. That’s despite a fall in the number of projects approved, data from China’s Ministry of Commerce show. The ministry yesterday announced it had approved new investments backed by Macau companies totalling more than US$60 million (480 million patacas) in January. That was a 31.2 percent from the previous year. Page
6
Macau Legend joins Hang Seng index Page 16
Brought to you by
HSI - Movers March 10
Name
%Day
Li & Fung Ltd
0.40
Bank of East Asia Lt
-0.33
Cathay Pacific Air
-0.38
Hong Kong Exchan
-0.42
HK & China Gas
-0.48
Galaxy Entertainm
-3.24
China Resources En
-3.32
China Shenhua Ene
-3.36
China Unicom Hong
-3.67
China Merchants H
-4.10
Source: Bloomberg
I SSN 2226-8294
Brought to you by
2014-3-11
2014-3-12
2014-3-13
13˚ 17˚
16˚ 20˚
17˚ 22˚
22 business daily
March 11, 2014 Friday April 19, 2013
Macau Fuel cost up – and down The Fuel Association of Macau – a trade body of importers – has announced an increase of 10 cents per litre in the price of various vehicle fuels – leaded petrol, lead-free petrol and low sulphur diesel for cars. It brings the prices in patacas per litre to 12.26 (US$1.55) for leaded petrol, 12.36 for lead-free petrol and 13.61 for car diesel. But judged year-on-year, leaded and lead-free petrol have actually dropped in price by 21 cents per litre. Low sulphur diesel has increased by 28 cents per litre. The previous three price adjustments were on December 31, 2013, January 10 and January 18 respectively.
Artist’s impression of Hongqi village retail zone
Back to the drawing board Hengqin retailing area fails to lure Macau SMEs Stephanie Lai
sw.lai@macaubusinessdaily.com
M
onths of promotion and the opening of the Chimelong International Ocean Resort just across the border on Hengqin Island have failed to entice Macau small- and medium-sized enterprises to sell food and souvenirs near the resort. The authorities on the island have reserved two streets in an area designated Hongqi village – a traditional place name in Hengqin – for about 70 food and souvenir stalls. ZhiMing Catering Service Co Ltd manages the retailing area project and is responsible for finding stallholders. “We’ll see half of these 70 stalls in operation, starting on March 26,” said ZhiMing Catering’s manager Lin Shuxiong. “About a dozen of the stalls opening will be run by mainland Chinese enterprises, while the rest will be run by Hong Kong businesses, selling imported fruit juice and food,” Mr Lin told Business Daily. The retailing area was originally meant for Macau SMEs, but he said their response had been weak. “We’ve tried to answer the Hengqin administration’s call to encourage Macau enterprises to run stalls, but we’ve failed,” he said. “For instance, we’ve offered to let them run a stall for a trial period
of six months to see if they like it before signing an actual contract,” Mr Lin said. “We’ve also offered all businesses running a stall two months rent free, starting on March 26,” he said. “But still no Macau enterprises are interested.”
Steering clear ZhiMing Catering says rents for stalls in Hongqi village now range from 3,000 yuan (3,915 patacas or US$490) to 3,800 yuan. In October they ranged from 4,000 yuan to 5,400 yuan. For a month last year Ricacorp (Macau) Properties Ltd was the sole agent in Macau for inviting enterprises here to run stalls in the Hongqi village retailing area. Ricacorp Macau managing director Jane Liu Zee Ka said: “Last year we received a lot of inquiries from Macau small businesses about the Hongqi village project, but eventually they gave up because of Hengqin’s customs policy and tax issues.” The Hengqin authorities began trying out on August 1 immigration, customs and tax policies that impose levies on consumer goods and construction materials imported from Macau.
We’ve tried to answer the Hengqin administration’s call to encourage Macau enterprises to run stalls, but we’ve failed Lin Shuxiong, ZhiMing Catering Service
The policies even impose tax and duty on goods made on Hengqin that are sold in the mainland. “We spoke to over 100 local enterprises, and many of them that were interested in the Hongqi village project are delicatessens,” Ms Liu said. “But they decided to steer clear of the project as they feared a timeconsuming quarantine process for ingredients they would have had to bring to Hengqin from Macau, and
they are not used to the mainland’s tax terms,” she said. “Many of these small enterprises in Macau have no usual supplier or manufacturing base in the mainland. If they had, it would have made their logistics much more convenient,” she said. “And they are too short-handed to do burdensome administrative tasks like following customs procedures.”
Counting heads Macau’s Choi Heong Yuen Bakery runs the October Fifth Bakery in the Chimelong International Ocean Resort. The bakery sells products made in the nearby city of Jiangmen. Choi Heong Yuen Bakery managing director Alan Wong Yeuk Lai said his company would wait and observe the number of visitors to Hongqi village once the retailing area opened. “We don’t rule out running stalls or doing other business in the retailing area if the visitor traffic is good,” Mr Wong said. Mr Lin of ZhiMing Catering, the retailing area project manager, said the Chimelong resort’s rough estimate was that the resort now had 10,000 to 20,000 visitors a day at weekends and about 5,000 a day on weekdays.
business daily 33
March 2014 Friday 11, April 19, 2013
Macau No more than 6 gaming licensees post-2020: Tam But legal experts say govt has no power to cherry pick length of fresh concessions Michael Grimes
michael.grimes@macaubusinessdaily.com
M
acau’s Secretary for Economy and Finance Francis Tam Pak Yuen says there “should be no increase” in the number of gaming concessionaires – six at present – allowed in the city’s gaming market following the expiry of the current permits in 2020 and 2022. He was speaking during his trip to Beijing. “The government has not determined whether [the gaming concessions] should be renewed for five years. The government has no stance on this matter,” added Mr Tam. “But it is impossible for the government to have no stance on all issues [regarding the renewal of gaming concessions],” he said on the sidelines of the Chinese People’s Political Consultative Conference. “For example, there should be no increase to the number of gaming operators, which is six now.” Mr Tam’s statement on the length of “renewed” concessions has surprised some commentators on Macau law. It also potentially highlights confusion around the use of the term ‘renewal’ and how that applies to Macau law.
Legal precepts One person told Business Daily: “What is amazing is how everyone writes about it as if there were no legal precepts ruling the subject of Macau gaming concessions. Of course the relevant Macau law can always be changed or amended. But, until then, it is important to mention the existing precepts.” The person added: “The relevant statute is Law 16/2001. It was not
Galaxy boss ‘not worried’ by concession talk Francis Lui Yiu Tung, vice chairman of Macau gaming operator Galaxy Entertainment Group Ltd, said in an interview with the Hong Kong Economic Times newspaper on Friday that he is “not worried” about the gaming concession issue. “I believe the Macau government is a capable and understandable government,” he told the newspaper. “I believe it will strive for a balance and [will] know how to handle issues like the number of gaming tables.” “So I am confident that the Macau government will give a reasonable solution,” Mr Lui said. “Since the establishment of the Macau SAR, the government has always supported the [gaming] industry and backed the socioeconomic development.” He added the talk of the gaming renewal is only at the beginning stage and any official dialogue and consultation will begin next year. Talking about Galaxy’s project on the nearby Hengqin, Mr Lui told the Hong Kong newspaper that the project will include both land and water-based sport facilities. With Tony Lai
it is definite the public will have more demands for the operators in the next stage Francis Tam
made for a one-off tendering process. It was established as a principle.” Article 13 (1) of Law 16/2001 states: “The term of a concession for the operation of casino games of chance is established in the concession contract and cannot be of more than 20 years.” Article 13 (2) adds: “If a concession is awarded for a period of less than the maximum authorised by the present law, the Government may, at any time and up to six months prior to the end of the concession, authorise one or more extensions of the concession, as long as the total period does not exceed the maximum term foreseen in the previous number.” The statute adds: “When the maximum term foreseen in no. 1 is reached, the duration of the concession may, exceptionally, be extended, by means of a substantiated order issued by the Chief Executive, once or more times, as long as the overall period extended does not exceed five years.” In other words, the law mentions the power of a chief executive to extend existing concessions by up five years. It doesn’t foresee the government cherry picking how long it would like future, new, concessions to last – whether they are “renewals” in the sense of going to existing market operators or concessions granted to new entrants, argue several jurists spoken to by Business Daily.
Contract wording Mr Tam said in Beijing: “Regardless of how the contracts are renewed or set up, it is definite the public will have more demands for the operators in the next stage [after 2020 or 2022]. The government will listen to the opinions of the public and propose the same demands for the gaming operators,” said Mr Tam, who is also a Macau delegate to the NCCPCC – China’s senior political advisory body. He continued: “There are some reasonable demands like how to promote more locals [to casino managements] and how to take better care of the local enterprises namely in cooperation [with the sector]. The regulations for the gaming sector will also be stricter in the future. These are all reasonable demands that [on which] the government definitely has stance.”
Secretary Tam did not comment when asked whether the current three gaming sub-concessionaires will turn into full concessionaires post-2020 and 2022. Mr Tam only said such a change would require revision of the city’s current gaming law and the approval of the Legislative Assembly. He denied having discussions
with the central government prior to giving his thoughts on the gaming concessions process. Asked whether he will leave the government after his 15-year tenure ends by this December, Mr Tam only answered with a smile, “Don’t talk about this now.” With Tony Lai
44 business daily
March 11, 2014 Friday April 19, 2013
Macau Legislators want yellow taxi debate Legislators José Pereira Coutinho and Leong Veng Chai have asked the Legislative Assembly to debate the government’s nine-month contract extension with Vang Iek Radio-Taxi Co. Ltd – operator of dial up-only yellow taxis. They have criticised the government decision last month to grant the extension, saying it was “without any advanced notification or public consultation”. The two have also complained the government broke its promise not to renew Vang Iek’s contract unless all the 100 yellow cabs were made available for on-call service. Vang Iek says it currently is offering 60 oncall vehicles, citing lack of available drivers due to the city’s labour shortages.
Cheng Peng Theatre as it looked yesterday
MOP30 mln revamp of old theatre Buzzword ‘diversification’ cited in plan for century-old Cantonese Opera venue Tony Lai
tony.lai@macaubusinessdaily.com
E
ntrepreneur William Kuan Vai Lam is to spend at least 30 million patacas (US$3.75 million) to renovate a century-old Chinese theatre once used for Cantonese Opera. He cites as the spur, support for the central and local government policy of broadening the economy beyond casino gambling. The facelift of the Cheng Peng Theatre is scheduled for completion next year and will operate on a “nonprofit” basis to provide a venue for the performing and cultural creative industries, said Mr Kuan yesterday. The Cheng Peng Theatre was opened in 1875 and has been a venue for hosting numerous Cantonese Opera performances. It fell into disuse in 1992 and has remained derelict ever since. The project is backed by the government, which will also supervise part of the restoration. Cheng Peng Cultural Centre Co Ltd and the Cultural Affairs Bureau announced yesterday in a press conference a detailed plan for the work. The theatre is in Rua da Felicidade next to the popular tourist area of San Ma Lo, adjoining Avenida de Almeida Ribeiro. The theatre, occupying 25,000 square feet, will – after the revamp – house three performance venues that can accommodate between 150 and 200 people each. The three-storey building will also have
exhibition halls, a youth centre, shops and eating places. Mr Kuan, Cheng Peng company’s deputy managing director, said: “After the Cheng Peng theatre has been revitalised the theatre will be positioned mainly as a Chinese Opera [centre] with other cultural elements. The project will be open for public usage as a low-cost operation – a so-called non-profit operation – to promote the diversification of industries here.” Mr Kuan also developed the highend housing project Windsor Arch in Taipa.
Non-profit The entrepreneur did not reveal how much clients of the theatre spaces will be charged in the future, only saying: “We will adopt similar prices to those of the government when it leases its venues to different associations. We only hope we can cover our operating expenses [from rents] but not the investment costs.” Mr Kuan said the revamp will cost “no less than 30 million patacas” but no figure has yet been confirmed. The entrepreneur put the cost at 20 million patacas last year when the renovation plan was first mooted, having secured a 30-year lease from the theatre owner. Cheong Cheok Kio, head of the Cultural Affairs Bureau’s cultural heritage department, said the
The project will be open for public usage as a low-cost operation William Kuan, Developer
government will help restore part of the building, which will cost an additional 5 million patacas at least. The bureau is involved in this project as it thinks the building is worthy of preservation, he explained. Mr Kuan’s company will lease the venues in the theatre to deserving bodies for free “some time in the future” in exchange for the government’s support, he added. The revamp for the main infrastructure of the theatre will be finished by the first quarter of next year but there is no date set for the official opening, Mr Cheong said. The announcement comes hot on the heels of an announcement last week by one of China’s most senior leaders – Zhang Dejiang – that Macau’s economic diversification was “quite slow”.
business daily 55
March 2014 Friday 11, April 19, 2013
Macau
Good neighbours Chimelong Hengqin Bay Hotel is complementary to Macau’s tourism offer says its management
T
he newly opened Chimelong Hengqin Bay Hotel on Hengqin Island is working closely with travel agencies in Macau to set up packages that include both destinations, reports our sister publication Macau Business magazine. “A win-win situation will be visitors being willing to extend the length of their packages to stay in Macau and here,” says hotel general manager Ivan Leung With just 1,888 rooms, Chimelong Hengqin Bay Hotel is not a big hotel by Macau standards. But it’s regarded by the Macau government and by the central government in Beijing as an important complement to Macau’s own tourism offer – both in terms of adding extra capacity nearby, and in its appeal to families who may not want to spend all their time in the casino jurisdiction. Last month, Chimelong Hengqin Bay welcomed close to 60 travel agents from around the Asia-Pacific region on a familiarisation trip to the property. Business Daily reported a fortnight ago that Macau
Ivan Leung, general manager, Chimelong Hengqin Bay Hotel (Photo: Carmo Correia)
Government Tourist Office has already started marketing two-centre tours to Taiwan tourists. “Macau has gradually become a leisure tourism destination worthy of a longer trip,” said MGTO director Maria Helena de Senna Fernandes. That was a reference to the fact about half of Macau’s total 29.3 million
visitors in 2013 were daytrippers rather than overnight sleepers. They helped keep the average length of visitor stay down to 1.1 nights. Sterne Agee, a United States-based brokerage, forecasts that up to 20 percent of tourists heading to Hengqin Island will also visit Macau. Longer opening hours at the border would help the
drive to build a two-centre holiday market says Ivan Leung. The Lotus Bridge crossing from Cotai to Hengqin is currently open from 9am to 8pm seven days per week. The Macau and Guangdong governments agreed in November on a plan to open the border crossing from 8am to 10pm daily, an additional three hours a day. The change
has yet to be implemented. “It is definitely possible” that the operating hours of the border will extended within this year, Mr Leung says. “It would benefit the Chimelong Group, the governments and also the people, not only the government and people from Zhuhai, but also from Macau.” Round-the-clock operations are the ultimate objective, but that will take time, he says. The Gongbei Border Gate checkpoint, Macau’s main land border crossing linking Macau peninsula and Zhuhai with the mainland, operates from 7am to midnight. The Zhuhai government announced last week that the new Ilha Verde crossing point – to be built on the peninsula starting next year and due to open in 2016 – will be operated on a 24-hour basis. The Ilha Verde checkpoint’s inauguration should coincide with the opening of a number of new gaming resort properties on Cotai. For more on the Chimelong Hengqin Bay Hotel and the two-centre tour plan, see the March edition of Macau Business magazine on sale now.
66 business daily
March 11, 2014 Friday April 19, 2013
Macau La Scala firm thinks will get land back Chinese Estates Holdings Ltd – the Hong Kong-listed firm that had hoped to develop a luxury apartment complex called La Scala near Macau International Airport – told Hong Kong Stock Exchange it has “strong legal arguments” to win appeals against Macau government decisions to revoke its two land grants. The two permissions – made in 2006 and 2011 – were voided after Joseph Lau Luen Hung, the company’s chairman, was charged with bribing a former Macau government official – Ao Man Long – to get the Taipa plots. The company would sue the government for HK$558.6-million (US$72 million) in construction and land costs if the appeals were unsuccessful, the filing added.
Strong start to city’s China-wide FDI this year Combined value of new investments from territory US$60 million in January Tony Lai
tony.lai@macaubusinessdaily.com
M
acau’s direct investments in mainland China – including Hengqin Island – have so far in 2014 shown year-on-year growth in cash terms. That’s despite a fall in the number of projects approved, data from China’s Ministry of Commerce show. The ministry yesterday announced it had approved new investments backed by Macau companies totalling more than US$60 million (480 million patacas) in January. That was a 31.2 percent from the previous year. It was double the US$30million FDI from Macau recorded for December, figures show. The January growth rate for Macau investments on the mainland was much faster than that seen for all FDI in China. The latter recorded a 16.1-percent rise, to US$10.76-billion. Ministry spokesman Shen Danyang said in a press conference last month: “The double-digit growth in FDI in January answered the question of whether China’s investment environment remains favourable.” “We expect foreign direct investment to maintain sound momentum this year,” he said at the time.
Textiles and food production two areas of Macau FDI on mainland
The vice-president of the Macau Chamber of Commerce, Vong Kok Seng, recently told Business Daily that Macau companies would keep taking opportunities in the mainland this year, particularly in less-developed markets. Lower operating costs and cheaper labour in the mainland’s inland provinces are likely to lure Macau companies. Markets in socalled ‘first-tier’ cities such as Guangzhou, are not likely
to be as appealing, said Mr Vong. The combined value of new direct investments to the mainland approved from Macau was about US$460 million (3.68 billion patacas) last year, an 8.9 percent decline on 2012. March 10’s figures also show the amount of investments from Macau in January came from 18 approved new projects. The number was five projects fewer than the 23
Corporate Fountainside signs management firm Bela Vista Property Services says it has been appointed as manager of The Fountainside residential development on Macau peninsula. The service business was founded in 2011 and is an affiliate of regional property investor Sniper Capital. The Fountainside is in turn controlled by London-listed Macau Property Opportunities Fund, which is managed by Sniper Capital (Macau) Ltd. Bela Vista says that in addition to standard property management services it will offer a number of personalised ones to residents, including a 24-hour hotline, housekeeping, and on-call technicians. Karen Lau, Head of Bela Vista said: “We are very pleased to be appointed as the property manager of The Fountainside. We believe our attention to detail and dedication to quality will bring a world-class standard of property management services to the project…” The Fountainside is close to Macau’s upmarket Penha Hill district and comprises 38 apartments and four villas.
31.2% Y-o-y rise in Macau’s China-wide FDI in Jan
new projects approved in January 2013. The ministry added the trade volume between Macau and mainland dropped by 12.1 percent from previous year to US$290 million in January. The city’s imports from mainland dropped by 9.3 percent from previous year to about US$260 million in January, whereas the exports plunged faster at 34.2 percent to merely US$30 million. With Reuters
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.
business daily 77
March 2014 Friday 11, April 19, 2013
Macau
Macau main source of Hengqin FDI Territory contributing 77 pct of foreign direct investments on the island Tony Lai
tony.lai@macaubusinessdaily.com
M
acau’s role as a designated foreign direct investor in neighbouring Hengqin Island could further deepen this year, said a Hengqin official. It follows statements from Beijing during the National People’s Congress last week that Hengqin-Macau cooperation would again be in China’s Five-Year Plan – the 13th, starting in 2016 – as a way to help the territory broaden its economic base beyond casino gambling. Under China’s ‘One Country Two Systems Policy’, Macau and Hong Kong are regarded as “foreign” or “offshore” investors – as the mainland seeks to introduce market forces to a greater portion of its economy, after decades of isolation.
Numbers building Zhuhai government-run newspaper Zhuhai Daily quoted latest official data indicating Macau-to-Hengqin investment totalled US$3.21 billion (25.7 billion patacas) up to February 28. It represented 77.6 percent of the total foreign direct investments on the island, the newspaper reported. That figure is sure to grow as up to 30 further investment projects from Macau are likely to be approved –
businesswoman Terry Siu. Future Bright Holdings Ltd, controlled by businessman and Macau legislator Chan Chak Mo, also aims to raise HK$276 million on the Hong Kong Stock Exchange to fund its ‘food plaza’ plan on Hengqin.
Yuan loans
probably this year – Francis Tam Pak Yuen, Secretary for Economy and Finance said last month. The current tally of Macau investments is calculated from January 2009, when Xi Jinping – then Chinese vice president and in overall charge of Macau and Hong Kong affairs – visited and announced that Macau would get help to broaden its economy. He said Hengqin would assist by providing land. That pledged appeared in China’s 12th Five-Year Plan. Currently, investments have been approved for 44 Macau companies registered on the island, accounting for over one-third of the foreign firms
Corporate citizens step up to the tee Macau Business Charity Golf yesterday handed cash cheques to several good causes. The recipients were chosen by the winning teams in the 7th edition of the golf tournament. It is the oldest and most popular event of its kind in Macau. For this edition, the 200,000 patacas cash prize pool was shared by three good causes – namely, Evangelize China Fellowship Orphanage, Cradle of Hope and Macau Special Olympics. The winners of the tournament – who also had the honour of choosing the institutions and delivering the prizes – were SHFL entertainment/Bally Technologies, Wynn Macau and BNU. The presentations came during a lunch hosted by Melco Crown Entertainment Ltd – one of the tournament’s major sponsors – at Aurora restaurant at the company’s Altira Macau casino-hotel. During the lunch, details of the 8th edition of the golf tournament – to be contested in November – were announced. There was also discussion of the 3rd edition of the biggest Special Olympics golf tournament in the world, which will take place in Macau at the end of May. The Charity Association of Macau Business Readers is behind both events. The association is – for the first time ever – supporting a Macau Special Olympics team to compete in Austria’s national Special Olympics. It will be the only foreign team competing. The Austrian tournament comes immediately after the Macau Special Olympics golf tournament.
setting up there. Liu Jia, the Communist Party’s secretary of the Hengqin New Area, told the Zhuhai official newspaper: “I believe such proportion will further be raised in the future as there will be a continuous influx of Macau companies and projects.” Ms Liu was referring to 89 pending proposals made by Macau companies for FDI. The submitted proposals include a 500-million-yuan (652.3 million patacas, or US$81.5 million) shopping outlet from the Rainbow Group, a Macau-based distributor of luxury branded goods led by veteran
Lao Ngai Leong, a Macau deputy to the National People’s Congress, submitted a motion to the Chinese parliament last week urging Beijing to allow Macau banks to provide crossborder loans denominated in yuan to companies in Hengqin. The motion said Beijing could pilot the policy on some projects first before a larger implementation. Latest figures from the Monetary Authority of Macau show the yuan deposits in the banks here reached over 108.83 billion yuan by January, surging by 135.9 percent from previous year. Bank of China Macau Branch announced last month it was among the first batch of banks allowed to offer offshore loans for companies in the new Shanghai Free Trade Zone. The bank said in a statement it hoped the trade could “provide experience” for a similar policy in Hengqin.
88 business daily
March 11, 2014 Friday April 19, 2013
Greater China Hong Kong shares go south Hong Kong shares suffered their biggest one-day loss in five weeks yesterday, after a slew of tepid China economic data over the weekend reignited fears of a bigger slowdown in the world’s second-largest economy. The Hang Seng Index finished down 1.8 percent at 22,264.9 points, while the China Enterprises Index of the leading offshore Chinese listings in Hong Kong also sank 1.8 percent. This was their biggest one-day loss since February 4. China’s consumer prices rose 2 percent in February from a year earlier, their slowest rate in 13 months.
Shanghai Chaori will sell solar farms Chaori, the first Chinese company to default on corporate bonds onshore, plans to sell assets outside the country to raise cash and repay noteholders. The manufacturer will seek buyers for solar farms in Greece, Bulgaria, Italy and the U.S., Vice President Liu Tielong said yesterday. Chinese banks that had previously agreed to provide 800 million yuan (US$130.3 million) in loans if the company faced a temporary cash squeeze “have no willingness to lend,” he said. “Potential buyers aren’t determined yet,” Liu said. “The solar plants are worth more than 1 billion yuan and are more than enough to cover the bond interest.”
Lenovo CEO urges data protection law The CEO and chairman of Lenovo, Yang Yuanqing, has urged politicians to draft a law on personal information protection in the mobile area. According to him, mobile Internet has fostered economic development and technology innovation. However it also brings new challenges, such as infringement on personal information safety. Yang pronounced such speech at the ongoing annual session of the National Committee of the Chinese People’s Political Consultative Conference. Absence of legislation and lack of social integrity are major challenges for personal information safety, said Yang.
China jitters hit emergingShanghai Composite Index fell 2.9 pct – most since June
E
merging-market equities fell, with a gauge of Chinese stocks dropping to a five-year low, while industrial metals slid and the Australian dollar depreciated on weaker-than-expected Chinese trade data. The MSCI Emerging Markets Index dropped 0.9 percent at 10.04am in London, the most in a week. China’s CSI 300 Index fell 3.3 percent to the lowest close since February 2009. The Stoxx Europe 600 Index rose 0.3 percent and futures on the Standard & Poor’s 500 Index were little changed. Copper dropped to an eight-month low, nickel fell 1.1 percent and zinc 1.5 percent. Precious metals also retreated and the Australian dollar slipped 0.3 percent against its U.S. counterpart. China’s exports dropped the most since 2009 in February, highlighting challenges facing Premier Li Keqiang in achieving this year’s economicgrowth target of 7.5 percent as lawmakers meet to set economic policy. The country’s first onshore bond default last week underscored growing credit risks. In Crimea, Russian troops detained Ukrainian border guards as the region prepares for a referendum on joining Russia. “China is moderating but only very modestly,” Donna Kwok, a Hong Kong-based senior China economist at UBS AG, said in a Bloomberg TV interview. “Ultimately you need to wait for March data to really get a true sense of the underlying outlook. The
PBOC is very consciously guiding the recent volatility. We see the default as a risk, as a shift in investors’ mind set.”
Metals slide The Shanghai Composite Index fell 2.9 percent, the most since June on a closing basis and the lowest since Jan. 20. The Hang Seng China Enterprises
Index of mainland companies listed in Hong Kong slid 1.8 percent to a one-month low. China’s overseas shipments plunged 18.1 percent in February, customs data showed March 8. That compared with a median estimate of a 7.5 percent increase in a Bloomberg survey of economists. Premier Li announced the goal for 2014 gross domestic product growth last week at the opening of
PRC behind on 2020 hydro goals Premier urges new dam building in drive for cleaner environment
C
Tobacco ban law dulls tax income The efforts to restrict tobacco use pits future economic gains from a healthier population against more than US$95 billion in annual tax revenue. The regulator, the State Tobacco Monopoly Administration, also runs the China National Tobacco Corp., producer of 97 percent of China’s cigarettes. Last year China raised its annual budget for medical and health care to 260.25 billion yuan (US$42.5 billion), a 27 percent increase from the year earlier. The government said on February 8 it would expand a programme to enable people with serious illnesses to get more compensation from medical insurance plans.
Short-term money rate at 21-month low China’s benchmark interest rate for short-term interbank financing fell to a 21-month low on speculation demand for cash is weakening as growth slows as the last export report seems to indicate. The seven-day repurchase rate, a gauge of funding availability in the banking system, declined three basis points, or 0.03 percentage point, to 2.37 percent, according to a fixing compiled by the National Interbank Funding Center released at around 11am in Shanghai. That was the lowest level since June 1, 2012, after the rate slumped 113 basis points last week.
hina’s Premier Li Keqiang said more hydropower plants would go into construction this year as the country tries to wean itself off polluting fossil fuels. It’s also trying to catch up with an ambitious target to raise hydropower generation capacity by half before 2020. The mainland, already the biggest hydropower producer, is on course to exceed a target to raise its hydro capacity by 70 gigawatts (GW) between 2011-2015. But a slowdown in project approvals means it is behind on its longer-term goals. New capacity approved for construction between 2011-2013 accounted for under one quarter of the amount originally scheduled in a five-year energy plan published two years ago. Li Keqiang said in his annual address to the National People’s Congress last week that China would start construction on a number of hydro and nuclear power projects this year, with cleaner energy a key part of its new “war against pollution.” Heavy and hazardous smog in major cities has put the government under severe pressure to ease China’s dependence on coal. Giant hydropower projects are considered the most effective option, despite the huge costs of resettling migrants and the added risks of earthquakes and ecosystem losses. China has already built the world’s biggest hydropower facility at the Three Gorges on the Yangtze River,
22%
Hydropower’s share of capacity, 2013
with 22.5 gigawatts (GW) of capacity. The third biggest, the Xiluodu project in Sichuan province, will be completed this year. China said in its five-year plan for 2011-2015 that it would raise total capacity from 220 GW to 290 GW. Capacity had already reached 280 GW by the end of last year, up 12.3 percent from 2012, according to official data. Hydro accounted for about 22 percent of China’s total power capacity by the end of last year, with thermal power accounting for 862 GW or nearly 70 percent of capacity. Reuters
business daily 99
March 2014 Friday 11, April 19, 2013
Greater China
-market stocks
Local automakers should face market forces
commodities fell 0.9 percent. Copper extended declines after tumbling 3.8 percent on March 7 as weaker-thanexpected Chinese data fuelled concern that demand for industrial metals is slowing. Copper fell to US$6,608 a metric ton on the London Metal Exchange, the lowest since June 25.
Industrial metals
the annual meeting of the National People’s Congress in Beijing, a pace unchanged from last year. The People’s Bank of China weakened the Yuan’s reference rate by 0.18 percent, the most since July 2012. The currency declined 0.2 percent to 6.1385 per USdollar, according to China Foreign Exchange Trade System prices. The S&P GSCI Index of
Nickel slid as much as 3 percent to US$14,830 a ton on the LME, the biggest daily drop since Sept. 20, and traded recently at US$15,138. Zinc fell 1.5 percent, lead 1.5 percent and aluminium 0.8 percent. China is the biggest consumer of industrial metals. Gold declined 0.5 percent to US$1,333.03 an ounce in London. Silver fell 0.7 percent to US$20.8041 an ounce, palladium dropped 1 percent to US$773.50 an ounce and platinum retreated 1 percent to US$1,467.50 an ounce. Crude oil fell 1.2 percent in New York to US$101.31 a barrel. Brent crude dropped 0.9 percent to US$107.97 in London. Libya’s government vowed to prevent a tanker from leaving a rebelheld oil port as it struggled to reassert control over the nation’s main source of revenue. Libya’s inability to restore oil exports from its eastern terminals is among the reasons Citigroup Inc. raised its 2014 forecast for Brent crude to US$103 a barrel from US$93 a barrel on February 25. Bloomberg News
Minister says domestic manufacturers too uncompetitive to succeed with exports
A
government minister said local automakers aren’t competitive enough and lack the capability to expand overseas. “We have been playing catch-up in key technologies and lack cuttingedge innovation and technology that can lead in the global auto industry,” Miao Wei, minister of industry and information technology, which regulates the auto industry, said yesterday on the sidelines of the National People’s Congress in Beijing. Miao’s comments come hours after the country’s main car industry association released data showing local brands lost market share for a sixth consecutive month in February. Among the foreign brands, Toyota Motor Corp. to Honda Motor Co. extended their recovery from the antiJapan protests of 2012, while Ford Motor Co.’s sales rose at their fastest pace in seven months in the world’s biggest auto market. “China indeed needs to study how to turn the country into a stronger player in the auto industry from simply being a big one,” Miao said. “A superpower can’t play catch-up all the time. It needs to lead.” The government isn’t working on a plan to change the rule limiting foreign ownership of Chinese joint ventures to 50 percent, Miao said,
responding to a question about the growing debate about the merits of the rule requiring foreign carmakers to partner with predominantly stateowned companies to manufacture vehicles in the country. A spokesman for his ministry said last month that China’s automakers are still too weak and need to increase collaboration with foreign automakers.
More competition Li Shufu, the billionaire chairman of Zhejiang Geely Holding Group Co., China’s first private automaker, said last week that he’s in favour of allowing foreign carmakers to control their own China operations to encourage competition and bring down prices. A Ministry of Commerce official sparked a debate last year after saying that local automakers should prepare for the day when the foreign stake limit is relaxed. The comments, made during an industry forum discussion, prompted the country’s main auto association to say that Chinese brands would be “killed in the cradle” if foreign automakers are allowed to become more independent from their domestic partners. Bloomberg News
Likely slowdown in shadow banking A general credit gauge trailed experts’ predictions last month
C
hina’s broadest measure of new credit trailed analysts’ estimates in February, indicating a slowdown in shadow banking following the near-default of a trust investment product. Aggregate financing was 938.7 billion yuan (US$153 billion), the People’s Bank of China said yesterday in Beijing, compared with the 1.31 trillion yuan median estimate of analysts surveyed by Bloomberg News. New local-currency loans were 644.5 billion yuan, accounting for about 69 percent of aggregate credit, the largest proportion since July. Reining in a US$6 trillion shadow-finance industry would help reduce risks of financial turmoil while adding to chances that the government will boost proexpansion policies to meet a growth target of about 7.5 percent this year. Exports unexpectedly fell last month by the most since the global financial crisis, while producer prices had the biggest drop since July, showing weakness in the economy. “Off-balance sheet activity has been curtailed and been contained,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong.
938.7 bln yuan Aggregate financing in PRC, Feb.
“The policy stance is very obviously less accommodative than the first half of last year. Under those macro policies, we think it would be quite challenging to achieve 7.5 percent GDP growth.”
Zhou briefing People’s Bank of China governor Zhou Xiaochuan may elaborate on the central bank’s policy in a briefing tomorrow in Beijing with other Chinese financial regulators as part of the annual meeting of the National People’s Congress. The lending figures were released after the close of China’s stock market. The benchmark Shanghai
Composite Index fell 2.9 percent, the most since June, after figures on foreign trade and producer prices released over the previous two days. The yuan weakened 0.22 percent to 6.1416 against the dollar after the central bank cut the reference rate by 0.18 percent. Li Daokui, a former academic adviser to the central bank, said China’s growth would hit bottom at 7.4 percent in the second quarter, spurring the government to take steps such as allowing more private investment projects. Authorities may also make the supply of funds “less tight,” Li said in an interview yesterday in Beijing ahead of the lending data.
M2, the broadest gauge of money supply, rose 13.3 percent from a year earlier, after January’s pace of 13.2 percent. New local-currency loans compared with the 730 billion yuan median estimate of economists and January’s 1.32 trillion yuan.
Trust bailout The nation in late January averted its first trust default in at least a decade as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured. In another sign of financial stress, Shanghai Chaori Solar Energy Science & Technology Co., a solar-cell maker, said
March 7 it won’t be able to make an interest payment due that day in full, providing the first default in China’s onshore bond market. Chaori plans to sell assets outside the country to raise cash and repay noteholders, Vice President Liu Tielong said yesterday. China’s economic data in January and February are usually distorted by the timing of the weeklong Lunar New Year holiday, which began on January 31 this year. Economists’ estimates for aggregate financing, which includes bank lending, corporate bond issuance and shadow- banking products like entrusted loans, ranged from 650 billion yuan to 1.57 trillion yuan. February’s figure compared with a previously reported record 2.58 trillion yuan in January. A drop in new trust loans was “perhaps affected by the payment issues in some trusts,” Wang Tao, chief China economist at UBS AG in Hong Kong, said in an e-mail. The latest data shouldn’t “have much implication for growth and policy in the next few months” amid the holiday distortions, she said. Bloomberg News
10 10 business daily
March 11, 2014 Friday April 19, 2013
Greater China
Disney in China co-production deal Shanghai Disney Resort due to open in 2015 according to firm
KEY POINTS Walt Disney Studios, Shanghai Media Group, in multi-year co-production deal Iron Man 3 grossed US$120 mln in China Shanghai Disney Resort due to open in 2015 Kung Fu Panda 3 is Oriental DreamWorks co-production
Shanghai Disney Resort ground breaking ceremony, April 2011
W
alt Disney Studios and Shanghai Media Group Pictures, a subsidiary of Shanghai Media Group, have signed a multi-year agreement to develop movies under the Disney brand reports China Daily. The films will be released in China and other markets. Disney Studios, a unit of The Walt Disney Co., would pair writers from the United States who specialise in action, adventures and fantasy to work with writers and filmmakers in China. Shanghai Media, Disney Studios signed a deal for joint film production Disney, China’s BesTV agree on joint venture The jointly produced films will feature Chinese elements, meaning they can be made locally while targeting international markets. “For over 90 years, Disney has built a rich legacy of entertaining families with high-quality storytelling and compelling characters,” Disney Studios President Alan Bergman said in a statement. “Disney’s collaboration with SMG adds an exciting chapter of new stories for the next generation of global Disney fans.”
…the significance of this cooperation…might be something beyond creating good stories Peng Kan, Legend Media
Tony To, Disney Studios’ executive vice-president of production, will oversee the programme. Su Xiao, general manager of SMG Pictures, which was established in 2007, said the company’s rich media resources and understanding of the Chinese market, coupled with Disney’s tradition of storytelling, will provide audiences across nationalities and ages with new experiences. China’s film business is expanding rapidly, and it’s the world’s secondbiggest movie market behind the United States. Disney has made many efforts to break into the Chinese film market. One of those efforts was a 2013 superhero film, Iron Man 3, which was shown in China. The movie included special footage featuring local actress Fan Bingbing. It grossed more than US$120 million in China. Over the years, Disney has been increasing its investment in China. For example, Shanghai Disney Resort, the first Disney resort on the Chinese mainland, is scheduled to open in 2015. For its part, SMG has enhanced collaboration with Hollywood filmmakers.
Oriental DreamWorks is a joint venture backed by China Media Capital, SMG, Shanghai Alliance Investment Ltd and Hollywood’s DreamWorks Animation SKG.
Animation projects Kung Fu Panda 3 is underway as an Oriental DreamWorks coproduction, much of which is being made at a world-class animation studio in Shanghai. However, the latest deal has its drawbacks. For one thing, SMG Pictures is better-known for television series than films, analysts noted. Peng Kan, research and development director of the Beijing-based consultancy company Legend Media, said: “Given the timing of the deal, I think the significance of this cooperation for both parties might be something beyond creating good stories for movie production.” SMG Pictures has been preparing for an initial public offering for quite some time, and joining forces with Disney will burnish the company’s reputation in the industry, among other benefits, Peng said.
Chinese pay high price for foreign hotels Mainland tourists in top 10 of heavy payers when away from home
C
hinese travellers were on the top 10 list of those who paid the most for accommodation outside their own country, according to an industry report, says China Daily. Outbound visitors from China ranked number 8 spending an average of 1,031 yuan (US$166) for a hotel night abroad, according to the Hotel Price Index, a regular report on hotel rates in major destinations across the world released by Hotels. com. The report is based on
bookings made on the site, and rates shown are those actually paid by customers per room per night, rather than advertised rates. The index shows Chinese travellers spent more in more than half of the international destinations included in the report. Travellers from Switzerland once again paid the most when traveling outside their own borders, with an average of 1,120 yuan per room night followed by the Argentinians at 1,089 yuan, making them
the highest-paying Latin American nation. Travellers from the United States came third, paying an average room rate of 1,067 yuan. In 2013 Chinese travellers chose Asia and the United States as their favourite destinations, with Europe coming third, according to the report. Hong Kong maintained its position among the most popular destinations in Asia, but Taipei was the highest riser, up four places to ninth, according to the report.
1,031 yuan Per night hotel cost for PRC residents overseas
According to the China Tourism Academy, China became the world’s largest outbound tourism market during 2012. It expects Chinese citizens will make more than 100 million trips overseas for the first time during the period from July 2013 to June 2014. China, which also became the largest outbound market in 2012 in terms of spending, with an expenditure of US$102 billion, saw an increase of 28 percent in the first three quarters of 2013
business daily 11 11
March 2014 Friday 11, April 19, 2013
Asia
Penang to build US$1.39 bln-worth of new property Ambitious plans despite possible softening of housing market this year
K
uala Lumpur-based and local developers will construct 4.56 billion ringgit (US$1.39 billion) worth of residential and commercial projects in the state of Penang this year. It comes amid a challenging environment where the domestic property market is expected to soften, reports Malaysia’s The Star newspaper. About RM1.86 billion worth of residential and commercial projects are being planned in the mainland – Seberang Prai – while the remaining RM2.7 billion will be launched on the island. The island, however, is seeing fewer residential property launches due to the growing shortage of land, higher land cost and a challenging property market environment. This is despite the gross development value (GDV) of projects launched on the island this year being higher. Developers set to launch new projects include IJM Land Bhd (GDV of RM538.5mil), Mah Sing Group Bhd (RM280 million), DNP Land Sdn Bhd (RM800 million), Wing Tai Malaysia Bhd’s subsidiary Ideal United Bintang (RM935 million), Tambun Indah Land Bhd (RM616 million), Sunway Bhd (RM290 million), S P Setia Bhd (RM300 million), and Eastern & Oriental Bhd (RM800 million). In Seberang Prai, among the bigger projects planned so far are DNP Land’s RM250 million BM Mahkota, the RM550 million Jesselton Hills scheme in Bukit Mertajam and Tambun Indah Land’s RM616 million worth of landed property launches in Bukit Mertajam and Pearl City in Simpang Ampat, South Seberang Prai. On the island, Ideal United
“Since January, we can see fewer enquiries for primary and secondary market properties, as the rejection rate of housing loans is currently hovering at about 60 percent. “Property prices are expected to remain more or less the same as last year,” Fook said. Raine & Horne Malaysia director Michael Geh said property prices would soften this year, unless Bank Negara changed its housing loan policies.
60%
rejection rate for housing loans
Bintang has planned the most number of projects for launch this year. The group is launching about RM935 million of residential projects in the south-west district, which include mixed-development projects such as the RM265 million Solaria and the RM220 million Ideal Vision Park second phase, and the RM450 million Imperial Residences second phase. Seberang Prai is drawing the attention of developers due to plans to develop a RM200 million premium
retail outlet known as Penang Designer Village and an integrated shopping mall, which will be anchored by an IKEA store. The entire project is located in Batu Kawan, which is the landing point of the newly-opened second bridge. Sarawak-based PE Land Sdn Bhd will develop The Penang Designer Village, while the integrated shopping mall with residential components will be developed by Aspen-Ikano. The recently opened 24-kilometre second bridge
connecting Batu Maung on the island and Batu Kawan in South Seberang Prai has also boosted property prices in the surrounding areas on both ends of the bridge. The volume of property transactions in Seberang Prai is expected to soften this year, due largely to the difficulty in obtaining housing loans. Henry Butcher Seberang Prai associate director Fook Tone Huat said in an interview that there would definitely be fewer transactions this year, compared with about 12,000 registered for 2013.
“There will definitely be a dip in the volume of transactions, due to the stringent loan conditions,” he said. To be noted is that since the announcement of the second link in 2007, land prices in areas leading to the bridge in Penang and Seberang Perai have risen significantly. In Seberang Prai, Fook said vacant land prices were now hovering around RM40RM50 per sq. ft, compared with RM8-RM9 per sq. ft before the announcement. “Landed properties such as double-storey terraced houses are now priced between RM350,000 and RM400,000, compared with RM150,000 and RM200,000 prior to the announcement of the second bridge,” Fook said.
Mt. Gox seeks U.S. court protection Seeks shelter from creditors while it reorganises during Japan bankruptcy process
J
apan-based Mt. Gox Co., the bitcoin exchange that filed for bankruptcy in Tokyo last month, started a related case in the United States, blaming its failure on a software flaw in the digital currency. Mt. Gox asked the U.S. Bankruptcy Court in Dallas to use its powers under Chapter 15 of the Bankruptcy Code to protect any U.S.-based assets the company may have while it tries to reorganise under the authority of the Japanese court. Mt. Gox last month said almost 750,000 customer bitcoins and 100,000 of its own were missing and were probably stolen. “The facts known to date indicate that it was caused or related to a flaw in
US$473 mln Estimated value of ‘lost’ bitcoins
the software algorithm that underlies bitcoin, and ‘hacking’ attacks of one or more persons,” Mt. Gox Chief Executive Officer Mark Karpeles said in a sworn statement filed in Dallas. The Tokyo-based exchange filed for bankruptcy in a Japanese court after losing bitcoins worth about US$473 million at the time. That is about 7 percent of all bitcoins in existence worldwide, the company said in court papers. The U.S. bankruptcy case was filed partly to halt lawsuits against the company while it tries to reorganise in Japan and repay creditors. Last month, Mt. Gox was sued by an Illinois resident accusing it of misappropriation and
fraud in federal court in Chicago. Mt. Gox has about US$37.7 million in assets and US$63.9 million in liabilities, according to U.S. court records. The exchange was founded in 2011, two years after bitcoins first appeared. Shortly after it opened in July of that year, hackers attempted to break into the system or shut it down with so-called denial of service attacks, according to court papers. Jed MacCaleb, who built the initial Mt. Gox software, owns 12 percent of the company. Tibanne Co., a Japanese company, owns the rest, according to court documents. Bloomberg News
12 12 business daily
March 11, 2014 Friday April 19, 2013
Asia Won falls on China export data After a three-day rising period, South Korean currency was quoted yesterday at 1,065.5 against the U.S. dollar. It was 0.5 per cent down on last Friday’s closing level of 1,060.6. The main cause is concern over China’s unexpectedly weak export figures in February said analysts. The U.S. non-farm payrolls report, which helped boost the U.S. dollar against several currencies, was also an important factor. The benchmark Korea Composite Stock Price Index was down 0.9 per cent at 1,957.53 points while March futures on threeyear treasury bonds were unchanged at 105.84.
Vietnam lowers rice export price Vietnam has reduced a 2.7 per cent the export price floor for low-grade rice to US$355 a tonne, an industry source said yesterday, amid rising supplies and falling exports. The Vietnam Food Association set the price that came into force yesterday. This is the second time Vietnam has reduced the price in nearly one month in order to help boost competitiveness against competitors. But Vietnam’s rice exports in January and February still dropped 12 per cent from a year ago. Vietnam is the world’s secondlargest rice exporter after India.
Thailand mulls ‘negative income tax’ The Finance Ministry’s Fiscal Policy Office (FPO) Director-general Somchai Sujjapongse said a negative income tax could solve political problems while being more cost effective than the current populist policies, according to the Bangkok Post. In such a system, people earning below a fixed figure would benefit from a subsidy instead of paying taxes. The measure aims to increase the amount of money in the hands of rural residents. Other policies to aid the poor include a fouryear debt suspension for farmers, a universal healthcare scheme and a one-million-baht-per-village funding programme.
Myanmar census risks ethnic problems At the end of this month Myanmar will start a census. Questions of identity go to the very heart of divisions in Rakhine State, where longheld animosity between Buddhist and Muslim communities erupted into bloodshed two years ago, leaving scores dead and displacing 140,000 people – mainly among the stateless Rohingya. The census “risks inflaming tensions at a critical moment” in Myanmar’s democratic transition, according to a recent study by International Crisis Group, which added that controversial sections on religion and ethnicity should be dropped in favour of a focus on key demographic data.
Japan’s growth slowed in Grew 0.7 pct judged quarter-on-quarter says Cabinet Office
J
apan’s economy expanded more slowly than estimated in the fourth quarter and the current-account deficit widened to a record in January, highlighting risks to Abenomics as a sales-tax increase looms. Gross domestic product grew an annualised 0.7 percent from the previous quarter, the Cabinet Office said yesterday in Tokyo, less than a preliminary estimate of 1 percent and a 0.9 percent median forecast in a Bloomberg News survey of 20 economists. The current-account deficit widened to 1.59 trillion yen (US$15.4 billion), a record in data back to 1985, the finance ministry said. While growth is set to surge this quarter before the bump in the sales levy next month, a sentiment survey released yesterday highlighted expectations for a sharp pullback when businesses and consumers face the higher burden. Prime Minister Shinzo Abe is due to detail growth measures in June to sustain momentum, while economists forecast the Bank of Japan will add to unprecedented easing to keep the world’s third-biggest economy on track for a 2 percent inflation target. “Capital spending remains weak and exports are not coming back to strengthen the recovery, and without support in these areas, Japan’s economy is going to contract significantly in the second quarter,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “The negative effect
India challenges U.S. Election Advertisement industry expects to see a US$800 million injection
I
ndian politicians are expected to spend around US$5 billion on campaigning for elections next month - a sum second only to the most expensive U.S. presidential campaign of all time - in a splurge that could give India’s floundering economy a temporary boost. India’s campaign spend, which can include cash stuffed in envelopes as well as multi-million-dollar ad campaigns, has been estimated at 300 billion rupees (US$4.9 billion) by the Centre for Media Studies, which tracks spending. That is triple the expenditure the centre said was spent on electioneering in the last national poll in 2009 - partly a reflection of a high-octane campaign by pro-business opposition candidate for prime minister, Narendra Modi, who started nationwide rallies and advertising last year.
Wide net “They started much before, and they are also focusing on states where
US$4.9 bln Spending on next Indian election
they are traditionally not strong. They are leaving no area untouched,” said N. Bhaskara Rao, chairman of the Centre for Media Studies. The campaign spending for this election could give a boost to the economy, which has been heading for its longest slump since the 1980s. Economists have forecast a second year of growth below 5 percent in the financial year ending this month.
Candidate and party funding in India is opaque and the source of much of the spending is hard to ascertain, but the Centre for Media Studies and other transparency advocates say the main contenders have built up large war chests. “This election spending largesse will help to boost Indian consumption expenditure over the second quarter of 2014, but this will be a temporary
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 & Trends 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.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
business daily 13 13
March 2014 Friday 11, April 19, 2013
Asia
fourth quarter from the sales tax rise could be worse than the BOJ and government expect.” The Topix index of shares fell for the first time in five days after growth missed estimates, closing down 0.8 percent. The yen traded at 103.15 per USdollar at 3:11 p.m. in Tokyo, up 0.1 percent. Business investment rose 0.8 percent from the previous quarter, revised down from a preliminary 1.3 percent increase, yesterday’s data showed. Consumer spending climbed 0.4 percent, below an initial estimate of a 0.5 percent gain. Abe jump-started the economy last year with reflationary policies dubbed Abenomics. Record easing by the BOJ helped to push the yen down 18 percent against the dollar last year, boosting corporate profits and fuelling economic growth. The government in December approved a 5.5 trillion yen extra budget to offset the higher sales levy, which will rise to 8 percent in April from 5 percent now.
Sentiment falls Companies and consumers have rushed to make purchases before April, with industrial production rising the most in January since June 2011 and retail sales gaining at the fastest pace since April 2012. Businesses are bracing for a drop in economic activity after the sales tax rise, according to a survey released
Malaysian Airline System stock falls Malaysian Airports Co also suffered following disappearance of Flight 370.
yesterday by the Cabinet Office. Economic expectations of people such as taxi drivers, supermarket managers and restaurant workers fell in February by the most since March 2011, when the economy was struck by a record earthquake and tsunami, the Economy Watchers survey showed. The expectations index fell to 40 from 49 in January, reaching the lowest since April 2011 and erasing all the improvement made after Abe took office in December 2012. The BOJ, which concludes a twoday board meeting today, will keep its main policy target of expanding the monetary base at a pace of 60 trillion to 70 trillion yen per year, according to 33 of 34 economists surveyed by Bloomberg News. Meiji Yasuda Life Insurance Co. forecasts the central bank will today add to its record stimulus measures. The firm predicts a boost in the target range to between 80 trillion and 90 trillion yen. Thirty-eight percent of 34 economists forecast the BOJ will add to easing by the end of June, according to the Bloomberg survey, which was conducted from Feb. 26 to March 4. Prolonged deterioration in Japan’s current-account balance would erode the nation’s position as a net creditor, one of its main credit strengths, Moody’s Investors Service said last month in a report. Bloomberg News
M
alaysian Airline System Bhd. shares headed for the biggest decline in nine months after the national carrier’s Flight 370 disappeared en route from Kuala Lumpur to Beijing on Saturday. The stock sank 10 percent to 22.5 sen at 10.03am local time, poised for the lowest close on record, after falling as much as 18 percent. It was the most active on Kuala Lumpur’s exchange with 212 million shares traded. The benchmark FTSE Bursa Malaysia KLCI Index slid 0.6 percent, while the ringgit weakened 0.6 percent against the US dollar. Malaysia stepped up efforts to locate the jet that may have crashed in the Gulf of Thailand with 239 people on board, focusing on oil slicks. The prospect of terrorism arose after Austria and Italy said passports used by two male passengers were stolen from their citizens. The oil slicks discovered by Vietnamese military aircraft were about 140 kilometres south of Tho Chu Island in the Gulf of Thailand, off the South China Sea. Searchers looking for the missing Boeing Co. 777-200 said they found a suspected window or door fragment. Flight 370 departed the Malaysian capital at about 12.41am local time March 8 and was scheduled to land in Beijing at 6.30 am. The twinengine, wide-body plane carried 227 passengers and 12 crewmembers,
212 mln
Shares of carrier traded last session with Chinese travellers accounting for the largest group by nationality at 153, including an infant, the airline said. Also aboard were three U.S. citizens, according to the U.S. State Department. Two people using stolen Italian and Austrian passports had consecutive ticket numbers, suggesting the tickets were issued together, Cable News Network reported, citing the Chinese e-ticket verification system Travelsky. The missing plane was a code-share service with China Southern Airlines Co., which said it sold seven tickets on the flight, including to people of Austrian and Italian nationality, according to the company’s microblog. Malaysia Airports Holdings shares fell 3.8 percent, set for the biggest retreat since September. China Southern Airlines dropped 3.1 percent in Hong Kong trading, heading for the lowest close since Feb. 6. The Bloomberg World Airlines Index slipped 0.3 percent. Bloomberg News
spending record
Sydney can be currency trading hub
during the campaign
Australia’s stable AAA credit rating makes it a haven says Goldman Sachs should benefit media firms, such as DB Corp, which owns the highcirculation Hindi language daily Dainik Bhaskar. Much of India’s campaign spend will remain in its thriving black economy. Rules allow candidates to spend 7 million rupees (US$114,000) on campaigns for a parliament seat but the real cost of winning is about 10 times that, thanks to spending on rallies, fuel and media campaigns that often include payments for coverage.
Slush funds spike,” said Rajiv Biswas, the AsiaPacific chief economist at IHS Global Insight. India’s projected campaign spending is only rivalled by the US$7 billion spent by candidates, parties and support groups in the 2012 U.S. presidential race, the world’s most expensive, according to data provided by the U.S. election commission. Spending on previous Indian elections have benefited a wide range of businesses, from media groups and advertisers that rake in campaign-ad revenues to consumer-based firms that capitalise indirectly on the overall jump in spending, such as motorbike manufacturers and brewers like United Spirits. India’s advertising industry expects to see an US$800 million injection during the election season, according to an outlook by the country’s largest local agency, Madison Media. That
Indian politicians regularly bribe voters with cash payouts or alcohol to secure their support. Recent state elections have seen innovations such as getting money to voters via mobile phone credit and envelopes of cash delivered in morning papers. In the last three years, election authorities seized from politicians a total of about US$32.65 million in the form of concealed cash, some if it stashed in helicopters, milk trucks and even funeral vans, a former election commissioner said. The dates for the month-long election starting on April 7 were announced last week, with polls staggered in nine stages to help security forces prevent polling booth fraud. Despite evidence of vote buying, India’s elections are now largely seen as free and fair on polling day. Reuters
I
n spite of the fact that Australia’s dollar has tumbled 15 percent from its high last year and strategists forecast more pain ahead, for Goldman Sachs Group Inc., it’s the perfect time to develop Sydney as a hub for trading local-currency assets. Australia’s stable AAA credit rating makes it a haven and encourages sovereign-wealth funds to allocate more money there, said Simon Rothery, the chief executive officer of Goldman Sachs’s operations in the country and neighbouring New Zealand. The New York-based firm moved its Australian credit derivatives business from Hong Kong to Sydney last month after bringing over bond and swaps trading last year, Rothery said.
A$28 bln
Offshore investment in govt bonds, 2013 “The Aussie dollar is an ever more important part of sovereign-wealth funds, central banks and global accounts,” Rothery said in a February 27 interview in Sydney. “Everybody wants to play the China story, but you can’t get exposure directly so people gain access through Australia.”
In a sign of Australia’s rising prominence, the International Monetary Fund began breaking out central banks’ holdings of the local dollar at the end of 2012. Before that, it was lumped together in the organization’s “other currencies” category. Offshore investors boosted their holdings of the country’s government bonds – the highestyielding top-rated sovereign securities – by A$28 billion (US$25 billion) in 2013, to a record A$217.4 billion. Goldman Sachs is in talks to hire about 10 people as it seeks to expand Australian businesses from trading to capital markets, Rothery said. Australian fixed-income trading is the firm’s biggest growth area, at a time when regulation is forcing some competitors to dial back. Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc are among firms that have pulled back from Australian debt markets after losses during the global credit crisis spurred increasing regulation. Bloomberg News
14 14 business daily
March 11, 2014 Friday April 19, 2013
International
The pontiff who sold the world Pope Francis marks the first anniversary of his papacy this week Annick Benoist
In comments that made waves around the world, Francis last July famously asked: “If someone is gay and seeks the Lord with goodwill, who am I to judge?” Gay rights groups cautiously welcomed the words as a change in tone, but warned they did not reflect a shift in Catholic Church policy – and certainly not a move towards accepting same-sex marriage.
Gay rights
F
ive minutes. That’s all it took to make papal history. Never has a leader of the Roman Catholic Church become as popular in as short a time as Pope Francis did when he humbly asked the crowd gathered in St Peter’s Square on March 13 last year to pray for him. A year on, Francis, known for his gentle smile and infectious energy, has won over hearts worldwide. Admirers from Manila to Mexico fondly remember his first appearance on the balcony in the Vatican when he began with the simple greeting, “Good evening.” Maria Angelica Largo, a 50-year-old from Colombia, said she “immediately felt he
was closer to the people, more simple and more human.” “We have never seen a pope become so popular in just a couple of minutes,” said Odon Vallet, a French historian and an expert on religion. The Argentine-born pope’s humble and homespun style – he likes to mingle with the crowds – also bowled over Roger Kouassi, a teacher in the west African country of Ivory Coast for whom the main thing is that “Francis is closer to the people.”
Social media On Twitter too, the 77-year-old pontiff has built up a following of millions of
people and his messages are re-tweeted more than those of tech-savvy US President Barack Obama. Francis became the first non-European pope in nearly 1,300 years when he was elected by the College of Cardinals – a year ago on Thursday this week – to succeed Benedict XVI, who chose to retire and is now pope emeritus. Over the past year, Francis has won accolades and plaudits for powerful gestures such as washing the feet of young Muslim inmates, embracing the handicapped and asking that gay people not be judged. In France, where only three percent of Catholics are identified as practising
their religion, priests say there has been an increase in church attendance since Pope Francis’s election. “Before it was ‘uncool’ to be Catholic, now it’s ‘in’,” said Vallet. Still the man who was born Jorge Mario Bergoglio has to walk a tightrope in his papacy. Among his challenges are the thorny issues of marriage for priests and overhauling the Vatican’s coffers after a string of scandals, including allegations of waste, corruption and even money laundering. And the world’s 1.2 billion Catholics are grappling with sensitive and often divisive issues, such as homosexuality and abortion.
Blood test to predict Alzheimer’s: study 90 pct success rate claimed for innovative new technique
R
esearchers in the United States say they have developed a prototype blood test that can tell with 90-percent accuracy whether a healthy person will develop Alzheimer’s disease within three years. The test looks for 10 signatures of fatty proteins called lipids, according to a study published on Sunday in the journal Nature Medicine. It could help families of people developing the cognitive disorder make early decisions on how best to care for them and may also aid the search for treatment, the authors said. Several years of clinical trials are likely to be needed to assess the
prototype technique, the first blood “biomarker” to predict the tragic degenerative disease. Alzheimer’s, caused by toxic proteins that destroy brain cells, is a currently incurable and fatal degenerative disease. Around 35 million people have the disease, a tally that is expected to reach 115 million people by 2050, according to the World Health Organization. “Our novel blood test offers the potential to identify people at risk for progressive cognitive decline and can change how patients, their families and treating physicians plan for and manage the disorder,” said Howard
115 mln
People likely to have Alzheimer’s by 2015
Federoff, a professor of neurology at Georgetown University Medical Center in Washington. It could also help efforts to treat the disease, he said in a press release.
“If homosexuals want to marry, they can do so in a civil ceremony but we cannot change the Church of Christ to suit one’s tastes,” said Aurora Gómez, a Catholic in Mexico. On the other side of the Pacific in the world’s fourth largest Catholic country, Filipino Nona AndayaCastillo said she would back moves to ease Church policies on homosexuality. But living in one of the few countries where abortion is still illegal, the 52-yearold added she opposed any moves to soften the Church’s stance on that issue. Although no one has expected Francis to make radical changes in doctrine, the pope has shown a willingness to encourage greater understanding and pastoral care of Christians who are divorced, single mothers, or homosexuals. “The simple humanity of Francis has worked its charm,” said Gilda Rey, a Catholic from the southern French city of Toulouse. “He doesn’t hesitate to mingle with the crowds or even celebrate Saint Valentine’s Day. He’s a very fraternal pope.” AFP
Attempts to develop drugs for Alzheimer’s have failed possibly because they are tested when the disease has progressed too far, Federoff said. These treatments may have a better chance of braking or reversing the disease if they are trialled at a much earlier stage, he said. The researchers started by taking blood samples from 525 healthy volunteers aged 70 and older. Three years later, they looked at a group of 53 volunteers who had developed symptoms of early Alzheimer’s or a memory-affecting condition known as amnestic mild cognitive impairment (aMCI). The blood samples from this group were compared against the samples from 53 otherwise healthy volunteers to see what the difference was. From this, the scientists spotted the 10 tell tale lipid proteins, which appear to be metabolised residues of brain cell membranes. AFP
business daily 15 15
March 2014 Friday 11, April 19, 2013
Opinion Business
wires
Who’s afraid of tapering?
Leading reports from Asia’s best business newspapers
CHINA DAILY
Koichi Hamada Special economic advisor to Shinzo Abe
Chinese smartphone maker Xiaomi Corp will not look for a public listing within five years, although it has registered a sharp sales increase since it was established some four years ago, a senior manager of the company said. “Boosting production to meet the increasing market demand will be prioritised in the years ahead because our products have become more popular both in the domestic and overseas market,” said Lei Jun, founder and chief executive officer of Xiaomi. The company was established in 2010.
THE AGE Outlaw motorcycle gangs have gained a foothold in Melbourne’s lucrative car wash business after establishing a strong presence in the security, tattoo, brothel and debt collection industries. The Comancheros have a stake in several car washes in Port Melbourne and St Kilda and have threatened the owners of rival businesses in neighbouring suburbs. Senior Comanchero Ali Kesici, who was photographed during the recent raids on Comanchero clubhouses, is believed to control two car washes, including EBA Pro Wash on Inkerman Street, St Kilda.
ASAHI SHIMBUN A group of scholars concerned about the woeful state of Japan-China relations held its first public event on Saturday on the Komaba campus of the University of Tokyo with a look back at the early 1970s when diplomatic relations were normalised. The Association of Scholars Advocating Renewal of the Japan-China Relationship is seeking to build trust between government officials, the public and scholars of Japan and China to overcome exclusive nationalism. The group was established last October mainly by Japanese researchers of China.
THE STAR The Sustainable Energy Development Authority Malaysia, which is in the midst of revising the degression rates for several renewable energy sources, is expected to make an announcement on the new rates at the upcoming International Sustainable Energy Summit 2014. Chief executive officer Datin Badriyah Abdul Malek explained that the degression rates were “necessary to ensure financial efficiency in managing the renewable energy fund”. “If the take-up rate of solar photovoltaic is too rapid, then the feed-in-tariff rate is probably overpriced,” she told StarBiz.
T
he US Federal Reserve’s gradual exit from socalled quantitative easing (QE) – open-ended purchases of long-term assets – has financial markets and policymakers worried, with warnings of capital flight from developing economies and collapsing asset prices dominating policy discussions worldwide. But, given that most major economies operate under a flexible exchange-rate regime, these concerns are largely unwarranted. The logic behind the fear of the Fed’s “tapering” of QE is straightforward. Unconventional monetary policy in the United States – and in other advanced countries, particularly the United Kingdom and Japan – drove down domestic interest rates, while flooding international financial markets with liquidity. In search of higher yields, investors took that liquidity – largely in the form of short-term speculative capital (“hot” money) – to emerging markets, putting upward pressure on their exchange rates and fuelling the risk of asset bubbles. Thus, the Fed’s withdrawal from QE would be accompanied by a capital-flow reversal, increasing borrowing costs and hampering GDP growth.
‘Fragile five’ Of course, not all emerging markets, according to this logic, are equally exposed. Among the most vulnerable countries are Turkey, South Africa, Brazil, India, and Indonesia – the so-called “Fragile Five” – all of which
are characterised by twin fiscal and current-account deficits, high inflation, in addition to faltering GDP growth. This logic would be correct if the world were operating under a fixed exchange-rate regime, with governments tying official exchange rates to another country’s currency or the price of gold. Under these conditions, monetary contraction (or slowing expansion) would have a recessionary (or a less stimulative) impact on other economies.
…the concept of a ‘currency war’ is a myth
With flexible exchange rates, however, monetarypolicy contraction in a major economy would stimulate other economies in the short run, while monetary expansion would damage their performance. (To be sure, in the medium or long run, monetary expansion can facilitate increased domestic production and trade, thereby generating positive spill over effects.) After the collapse of Lehman
Brothers in 2008, the rapid expansion of the money supply in the US and the UK triggered a sharp appreciation of the Japanese yen, as well as of some emerging-market currencies. In short, QE is what merits concern – not its termination. Of course, the Fed’s policy reversal could hurt countries that maintain fixed – or, like China, “managed floating” – exchange rates. Likewise, weaker eurozone economies like Greece and Spain, which would prefer stronger monetary stimulus than their more competitive counterparts in Europe are willing to accept, may suffer. But, given that these economies have chosen to adhere to a fixed exchange rate, the Fed cannot really be blamed for the fallout. In fact, the Fed – and other advanced-country central banks – should not be blamed for the negative effects of monetary expansion, either. Japan’s bold monetary easing, for example, was a critical element of Prime Minister Shinzo Abe’s strategy for lifting the Japanese economy out of more than a decade of recession – and it has led to a remarkable recovery. The problem is that the policy has also caused the yen to depreciate, leading nearby countries to accuse Japan of adopting “beggarthy-neighbour” policies. Similarly, emerging-market officials warned that monetary expansion in the US and the UK would trigger a wave of competitive currency devaluations, with Brazilian Finance Minister Guido Mantega going so far as to accuse the Fed and the Bank of England of waging a full-
blown “currency war.” But, while it is true that such expansionary policies can have a recessionary impact on other economies, modern international-finance theory shows that the concept of a “currency war” is a myth. The reality is that, under a flexible exchange-rate regime, competitive devaluations do not produce undesirable imbalances. On the contrary, they can bolster recovery in participating economies.
Letting go In fact, currency devaluations were critical to ending the Great Depression. As Barry Eichengreen and Jeffrey Sachs demonstrated in 1984, while abandoning the gold standard had an immediate negative impact, it quickly spurred recovery, with the first countries to devalue their currencies escaping depression earlier than others. The fact is that, with a flexible exchange rate, a country can offset the recessionary impact of a neighbouring country’s monetary easing using its own independent monetary policy, guided by carefully chosen inflation targets. If all countries adopt this approach, the entire global economy benefits. By working to revive the domestic economy, the Fed, like other advancedcountry central banks, is simply fulfilling its mandate. Instead of complaining about its actions, emergingcountry policymakers should be devising strategies for offsetting the spill over effects on their own economies. After all, they have the tools to do so. © Project Syndicate
16 16 business daily
March 11, 2014 Friday April 19, 2013
Closing Macau Legend joins Hang Seng index
Khodorkovsky seeks Swiss residency
Shares in casino services firm Macau Legend Development Ltd joined Hong Kong Stock Exchange’s Hang Seng Composite Index with effect from yesterday. The casino operator – co-chaired by former Macau legislator David Chow Kam Fai – said its stock would be a component of the exchange’s Global Composite Index, Broad Consumption Index and Composite Index Series. The company owns Macau Fisherman’s Wharf and The Landmark Macau hotel-casino. “The selection of Macau Legend by HSCI also demonstrates the investment community’s recognition of and confidence in the group’s significant market capitalisation and adequate free float,” Macau Legend said in a statement.
Former Russian oil tycoon and Kremlin critic Mikhail Khodorkovsky, who spent a decade in prison in Russia, has applied for a residency permit in Switzerland, his spokesman told AFP yesterday. “His application for residency was filed a while ago,” said spokesman Boris Durande, without specifying which part of Switzerland Khodorkovsky intends to settle in. The 50-year-old top foe of Russian President Vladimir Putin has been living at a Zurich hotel since shortly after he was pardoned and released from prison on December 20. He was once Russia’s richest man and an influential politician with presidential ambitions.
Search for vanished jet widens Response teams now covering 100 nautical miles
T
he desperate search for a Malaysian jet, which vanished carrying 239 people, was significantly expanded yesterday with frustrations mounting over the failure to find any trace of the plane. The initial zone spread over a 50 nautical miles (92 kilometres) radius around the point where flight MH370 disappeared over the South China Sea in the early hours of Saturday morning, en route from Kuala Lumpur to Beijing. Malaysian authorities announced it was doubling the size of the search area to 100 nautical miles. “The area of search has been expanded in the South China Sea,” Civil Aviation Department chief Azharuddin Abdul Rahman told reporters late yesterday. He also confirmed the search area covers land on the Malaysian peninsula itself, the waters off its west coast and an area to the north of the Indonesian island of Sumatra. The huge area now being covered reflects authorities’ bafflement over the disappearance of the flight. A total of 40 searching ships and more than 30 planes
had found no sign of it up to yesterday evening. Emotions are running high as Beijing blamed Kuala Lumpur for a lack of information, while tearful relatives of the 153 Chinese passengers aboard voiced frustration with all sides of the response effort. China said Malaysia needed to “step up” its efforts after authorities admitted they were mystified.
Spain says still a target 10 years on A
decade after Al-Qaeda-inspired bombers blew apart four Madrid commuter trains, killing 191 people, Spain’s government warned the country remains a target. On the eve of the 10th anniversary of Spain’s worst terrorist attack, Interior Minister Jorge Fernández Díaz said Islamist extremists were still a threat. Al-Qaeda’s leaders and its affiliates, including north African group Al-Qaeda in the Islamic Maghreb and armed fighters battling the regime of Syrian President Bashar al-Assad, referred frequently in their statements to “Al Andalus”, or Spain, the minister told Onda Cero radio. “Clearly Spain forms part of the strategic objectives of global jihad. We are not the only ones but we are in their sights obviously,” Fernández Díaz said. The Spanish counter-terrorist service’s alert level is at its second-highest category, signifying “a likely risk of attack”, a level that has not changed in recent years and is identical to that of most countries in the region.
“The Malaysian side cannot shirk its responsibilities,” the Global Times newspaper, which is close to the ruling Communist Party, wrote in a scathing editorial. “The initial response from Malaysia was not swift enough.” A day of conflicting information deepened relatives’ anguish, with tests on oil slicks in the South China Sea showing they were not from the Boeing 777 and
reports of possible debris from the flight proving to be false alarms. Hong Kong’s Civil Aviation Department said that a pilot on a flight from the southern Chinese city to Kuala Lumpur had reported seeing “large debris” while flying over Vietnamese waters in the latest sighting to be investigated. Malaysia has launched a terror probe after at least two of the passengers on board
the plane were found to have travelled on stolen passports. Two European names – Christian Kozel, an Austrian, and Luigi Maraldi of Italy – were listed on the passenger list, but neither man boarded the plane. The United States has sent an FBI team to help investigate the passengers, but US officials stressed there was as yet no evidence of terrorism.
Globe Theatre taking 19 Belgians on Hamlet to N. Korea ‘jihadi’ charges S T hakespeare’s Globe Theatre in London will take a production of Hamlet to North Korea next year as part of a vast world tour, it said yesterday. The Globe’s actors will perform the play in the secretive state in September 2015 as part of its ‘Globe to Globe’ tour marking the 450th anniversary of the English playwright’s birth. The exact tour dates in North Korea are yet to be confirmed, a spokeswoman for the theatre said. The plot of Hamlet revolves around family feuds and Hamlet’s eventual killing of his uncle, echoing recent events in North Korea where leader Kim Jong-Un’s regime ordered the execution of his uncle Jang Song-Thaek in December last year. Jang, once the country’s unofficial number two and Kim’s political mentor, was put to death on December 12 on an array of charges including corruption and plotting to overthrow the state. The world tour will begin on April 23 this year.
AFP
he trial of 19 Belgians on terrorism charges began yesterday under tight security amid concerns the 15 men and 4 women were part of a local jihadist recruitment network. They face charges of either fighting alongside jihadist groups in Somalia, having attempted to go to Somalia or Syria, or of having provided support to a Belgian-based recruitment operation. All 19 face the charge of “belonging to a terrorist group”. One of the accused, Brussels hairdresser Hassan Khafi, has admitted to the court that he left Belgium in 2011 in an attempt to join the Somali Al-Shebab militant group, which has links to Al-Qaeda. Khafi, 39, told the criminal court in Brussels that he had not taken part in fighting in Somalia and the Al-Shebab militants he met had not trusted the Belgians and had confiscated their passports, the Belga news agency reported. He was arrested in Kenya in May 2012 and was extradited to Belgium last year.