MOP 6.00 Year II
Number 497 Monday March 17, 2014
Publisher: Paulo A. Azevedo
From luxury to dirt
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Friday April 19, 2013
I
t was supposed to be a prime luxury property but it ended in court, linked to the jailed former Secretary for Public Works. The first act of the La Scala corruption case concluded with the conviction of Joseph Lau and Steven
Lo. Both Hong Kong businessmen have appealed the 5 ¼ year sentence for bribery and money laundering. Lau has resigned all of his Chinese Estates posts and been replaced by his son. Pages
2&3
www.macaubusinessdaily.com
Workplace wake-up P
rofessor William Mobeley says a successful labour policy should balance community interests with those of the economy and diversification. Current restrictive immigration policy may be increasing local wages but there are consequences, he fears – not least of which is high employee turnover, the squeezing of small enterprises, and an ‘iron rice bowl’ mentality.
Macau to begin selling Chimelong resort tours Page 8
All major bank cards abused, UnionPay Page 9
Pages 6 & 7
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Yuan’s trading band doubled
HSI - Movers March 14
Name
Authorities have released the range of daily trading on the yuan, which is now as much as double the current one. Experts claim this is a confident example of successful efforts against currency speculation. Proof that Beijing’s plan to stimulate the international usage of the yuan is progressing. The measure for operating to a 2 percent top rate takes effect today. Page
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%Day
CITIC Pacific Ltd
4.85
China Shenhua En.
2.07
China Petroleum
0.92
China Overseas Lan
0.64
China Resources La
0.51
Want Want China H
-1.53
Lenovo Group Ltd
-1.56
Cathay Pacific Airw
-2.06
Galaxy Entertainm.
-2.34
Source: Bloomberg
I SSN 2226-8294
Around and around The Light Railway train continues its circular journey while awaiting the green light to build on the peninsular. Legislators now proclaim they prefer the route through NAPE district. Page
4
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Macau
La Scala closes act I Joseph Lau and Steven Lo were sentenced to 5 1/4 years. But both Hong Kong businessmen have appealed decision convicting them of bribery and money laundering. Lau resigns Chinese Estates posts Tony Lai
tony.lai@macaubusinessdaily.com
H
ong Kong billionaire Joseph Lau Luen Hung and businessman Steven Lo Kit Sing were sentenced to jail for five years and three months after Macau’s Court of First Instance found them guilty of bribery and money laundering. But the case surrounding the land deal of luxury project La Scala in Taipa will likely continue for another year as lawyers for the pair have already appealed the verdict. A legal expert said neither man will stay behind bars as long as they do not enter Macau for 15 years due to the lack of an extradition treaty between Macau and Hong Kong. Mr Lau, chairman of listed developer Chinese Estates Holdings Ltd, and Mr Lo, chairman of entertainment conglomerate BMA Investment Group Ltd, were convicted of offering HK$20 million (US$2.56) to disgraced former Macau official Ao Man Long in 2005 in exchange for success in bidding for five plots of land near Macau Airport. The La Scala project was being built on the plots. Presiding Judge Mário Silvestre delivered the judgment on Friday when neither of the accused was present. The case involves six
other defendants for separate unrelated projects. Judge Silvestre arrived at the verdict based on “suspicious contact” between Mr Lo and Mr Ao, and the “tortuous path” of the HK$20-million payment to a bank account controlled by the former secretary of public works and transport. Mr Ao’s friendship notebook – recording the agenda and the bribes he took - also mentioned such a deal and the name of the Chinese Estates chairman a few times, the presiding judge announced. The “rash” decision to award the land to Moon Ocean Ltd originally controlled by Mr Lo but later bought out by Mr Lau – also contributed to the guilty verdict, Judge Silvestre added. “The land was supposed to be awarded to a developer with a reputation and international experience in the industry,” he said. “But it was at last awarded to Moon Ocean, which did not fulfil the requirement as it was established just before the bidding.” The former secretary Mr Ao “had been in control” behind the whole bidding process, Judge Silvestre added. Mr Ao was sentenced to jail in 2012
KEY POINTS Joseph Lau, Steven Lo sentenced for 5 years and 3 months Lau assumed leading role in bribery and money laundering, while Lo acted as ‘middleman’ Both have already appealed; expected to take another year for verdict No extradition treaty between Hong Kong and Macau Both men can escape jail by not entering Macau for 15 years Lau’s Chinese Estates has suspended trading
for 29 years for numerous charges of corruption and money laundering.
‘Upset’ Lo But Luis Mesquita de Melo – Mr Lau’s lawyer – and Jorge Neto Valente – Mr Lo’s lawyer – expressed “surprise” at the judgment and appealed the decision immediately. “We have already appealed the decision and Mr Lau maintains that he has not committed any improper acts whatsoever in relation to the fact he is accused of,” Mr Melo told reporters after the ruling on Friday. “We think … we have enough evidence to reverse this decision and that’s what we will have to convince the appeal court of.” He declined to reveal the grounds for the appeal before he further studies the judgment. Mr Neto Valente also told reporters following the decision: “I have already communicated with Mr Lo and he is very sad and very upset. And he insists that he wants to appeal.” “The facts that were accepted by the court are the ones that we do not accept,” the lawyer said. “We believe there is not enough evidence to draw this conclusion. “From the evidence produced in
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Macau court, it is obvious that Mr Lo didn’t get any benefit from ‘the facts’ that were attributed to him and Mr Lo’s name never appears in any document mentioned by Mr Ao Man Long.” Indeed, Judge Silvestre told the court on Friday: “We believe Lo Kit Sing had no intention of participating in the project [but] only served as middleman between Ao Man Long and Lau Luen Hung to help [Mr Lau] acquire the Taipa land.” The judge added that Mr Lau instead played a leading role. Despite the fact that Moon Ocean was owned by Mr Lo’s companies in the beginning, Mr Lau “had full control” behind Moon Ocean and the bidding process, he reasoned.
15 years The defence of Mr Lau had claimed that they had paid HK$20 million to a company called Eastern Base – which later forwarded the money to Mr Ao’s account - for consultancy services. But Judge Silvestre pointed out that there is “no written evidence” to prove Eastern Base had provided the services. Both Mr Lau and Mr Lo have 20 days starting Friday to submit their rationale against the lower court’s decision. The Court of Second Instance will then decide whether to accept their appeals and schedule a new trial, if accepted. A legal expert, who declined to be named, predicts it may take a year for the Court of Second Instance to handle the appeal and its decision could be final, meaning neither side could take the case to the Court of Final Appeal – the city’s highest court. The expert also quoted the Penal Code that the legality for sentencing between five and 10 years will lapse after 15 years. “This means that as long as they do not step in Macau for 15 years both of them will be fine as there is no extradition treaty between Macau and Hong Kong,” the expert said. Whether they could travel to other places depends on any treaties Macau has inked with those jurisdictions, and any international arrest warrant sought by the Macau government, the expert added. Mr Lo, attending most of the hearing sessions that began last June, was absent on Friday. He got sick, explained his lawyer Mr Neto Valente.
Another looming judgement W
hile the bribery trial of the two Hong Kong businessmen came to a temporary conclusion on Friday, the land deal at the centre of the case also features in another ongoing lawsuit. The government invalidated, respectively, two land grants regarding the plots adjoining Macau Airport after former government official Ao Man Long was convicted of taking bribes in 2012 from Joseph Lau Luen Hung and Steven Lo Kit Sing. The government had granted five plots of land to a subsidiary of listed Chinese Estates Holdings Ltd in 2006, while granting another
Trial suffers delays F
riday’s judgment on two Hong Kong businessmen - Joseph Lau Luen Hung and Steven Lo Kit Sing – was delivered a year and a half after the bribery trial was supposed to have begun. The trial suffered three delays owing to the illness of Mr Lau, the chairman of listed developer Chinese Estates Holdings Ltd, and a former presiding judge. The case first came to light during the third trial of Ao Man Long in April 2012, when the public first heard that the former secretary for transport and public works here allegedly received HK$20 million from Mr Lau and Mr Lo Mr Ao was sentenced to jail for 29 years on May 31, 2012 including on a charge of taking bribes from the pair in exchange for guaranteeing their success in securing five plots of land near Macau Airport. Chinese Estates notified the Hong Kong Stock Exchange in a filing in June 2012 that Mr Lau was charged with bribery and money laundering in relation to the airport land deal.
The bribery and money laundering trial of Mr Lau and Mr Lo was supposed to have started on September 17, 2012 but was postponed due to the sickness of the Chinese Estates chairman and presiding judge Alice Costa. Mário Silvestre replaced Alice Costa as presiding judge but the trial could not start on January 7, 2013 because of the absence of Mr Lau due to illness. A similar reason delayed the start of the trial on April 29, 2013 and Judge Silvestre decided to conduct the trial next time in Mr Lau’s absence. The trial finally proceeded on June 17, 2013 without Mr Lau’s presence. Despite his absence, the Chinese Estates chairman revamped his legal team twice during the hearing sessions. He was at first represented by a legal team led by lawyer Leong Weng Pun, who was then replaced by David Azevedo Gomes on September 18, 2013. But Mr Gomes could barely speak in court as Mr Lau replaced him with lawyer Luis Mesquita de Melo a month later. After hearing sessions of over 30 days, and listening to more than 40 witnesses, the case came to a temporary close on Friday. T.L.
Fate of the six S
ix other defendants are related to the money laundering and bribery case of Ao Man Long in projects involving wastewater treatment plants in Coloane and the Zhuhai-Macau Cross-Border Industrial Park. Luc Vriens, Belgian chief executive of Waterleau Global: sentenced to four years and six months on four charges of bribery; acquitted of one charge of money laundering, lawyer lodges appeal Chan Ying Lun, employee of China Overseas Civil Engineering Ltd: sentenced to two years and 10 months on three charges of bribery but handed suspended sentence of three years, acquitted of one charge of money laundering Xu Jianping, general manager of China Construction Engineering (Macau) Co Ltd: same as Mr Chan Fong Chun Yau, managing director of ATAL Engineering Ltd: same as Mr Chan Pedro Chiang, Mr Ao’s business partner: sentenced to three years and three months on four charges of corruption; acquitted of one charge of money laundering Camila Chan Meng Ieng, Mr Ao’s wife: sentenced to four years on two charges of money laundering
Lo got sick, Lau resign all Chinese Estates posts
Mr Lau had never attended any session, citing illness as the reason. On the same day he was convicted,
eight plots nearby to the firm in 2011. The luxury housing project La Scala was being developed on the plots before the revocation. Chinese Estates, chaired by Mr Lau, appealed in 2012 the decision to void the two land grants. The company told the Hong Kong Stock Exchange earlier this month that the Court of Second Instance had yet to make decisions on the two appeals. But the company said it has “strong legal arguments” to overrule the Macau government’s decision to revoke its two land grants. Even if the appeals are unsuccessful, the company will sue the government for claims, the filing added; namely, HK$558.6 million (US$72 million) for construction costs and land costs of HK$1.95 billion. The firm has already pre-sold 302 units in the La Scala project worth HK$3.83 billion in total, the filing noted, adding it had received related deposits of over HK$383.9 million. T.L.
Chinese Estates communicated to the Hong Kong Stock Exchange that Joseph Lau had resigned as Executive Director, Chairman, CEO and authorised representative of the company. He is replaced by his son, Lau Ming Wai. Chinese Estates, with a market cap of nearly HK$37.8 billion, has suspended trading since
Friday afternoon due to the verdict on Mr Lau. Its shares lost 18 percent this year, according to Bloomberg. The board of the company expects to resume trading this morning at 9am. The tycoon was ranked 158th in the rich list of Forbes across the globe this year with a net worth of US$8.4 billion as at this month.
FUND RAISING FOR STRAY ANIMALS Anima will launch in April and May its first fund raising activity for 2014 for supporting stray animals. This fund raising activity will coincide with the beginning of operations of its mobile clinic, which’s major function is, on a regular and systematic basis, to inventory and take care of the animals that live in streets, including neutering, feeding and vet care. The head of the campaign will be Gina Rangel, Anima founder member. All documents must have the logo of the organization and all volunteers involved should be properly authorized for such activity. Albano Martins, President
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Macau Congested roads The number of vehicles circulating in Macau has increased a staggering 74.9 percent in the last decade, with the major exporting market being Taiwan, says Portuguese news agency Lusa. Between January 2004 and the same month of 2014, Macau streets accommodated 181,200 motor vehicles, 46 percent of which came from Taiwan and 33.4 percent from Japan, the two biggest suppliers. China contributed 6.1 percent, while Germany and Korea account for 7 percent and 1.2 percent, respectively. With 21,977 units sold, 2007 was the year that has posted record sales to date.
NAPE area favourite route for LRT Of the three routes proposed for the peninsular stretch of the light railway train, the one through NAPE is the best, legislators say Stephanie Lai
sw.lai@macaubusinessdaily.com
M
embers of the Legislative Assembly have expressed their preference for the peninsular stretch of the Light Rapid Transit (LRT) railway to run through the NAPE district. They did so in a meeting on Friday of public works officials and members of the assembly’s special committee on land and public concession affairs. The assembly members said a route through NAPE to Nam Van Lake would be better than other routes that would take the LRT south by way of Governor Nobre de Carvalho Bridge.
The Transportation Infrastructure Office proposed the NAPE route. It would take the railway from Golden Lotus Square to Avenida 24 de Junho, Jardim das Artes, Nam Van, Sai Van, Barra and then on to Taipa. The proposal is similar to one the Transportation Infrastructure Office made in 2009, which would have taken the LRT via Rua de Londres and Rua do Porto in the centre of NAPE to Nam Van. Assembly member Ho Ion Sang said the special committee backed the route through NAPE because it would soothe the worries of residents
of central NAPE, pose fewer technical difficulties and allow the railway to be built more quickly. The Commission against Corruption said in September 2012 that it agreed with a NAPE neighbourhood association that had demanded that the LRT avoid Rua de Londres and Rua do Porto and run instead along the coast. A report by the commission said this would allow “balanced development of the district” and “more protection for the legitimate rights and interests of the population”.
Next stop: casino row A source close to the Transport Infrastructure Office said the government had yet to decide where to put all the stations on the peninsular stretch of the LRT. “There will no longer be a station at Dr Carlos d’Assumpção Park, and we’ll have to think of a new station to replace it,” said the source, who declined to be identified. The route preferred by the special committee would take the LRT via Avenida 24 de Junho, which is lined with casinos. “We don’t speculate about how the casinos are going to react at the moment,” the source said.
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The government is proposing two other routes for the LRT on the peninsular. Both would take the railway along the NAPE waterfront to Sai Van and Barra by way of Governor Nobre de Carvalho Bridge. One would take the LRT direct from Avenida Dr Sun Yat Sen to the Macau Tower and Barra. The other would take the LRT to Barra across land newly reclaimed from the sea. Neither route would have a station by Nam Van Lake giving easy access to an important business district.
Train is approaching Assembly member Au Kam San told Business Daily that government officials had not disclosed at Friday’s meeting how much it would cost to run the LRT along each of the routes proposed. “But we made it clear that what we want is a railway that has fewer complications and technical difficulties so it can be built as soon as possible,” Mr Au said. “The design of the peninsular stretch has already been delayed too long.” The LRT project has so far cost the government 8.4 billion patacas (US$1.05 billion). The government has spent the money on preliminary studies, consultants, buying the rolling stock and building the Taipa stretch. Officials said on Friday that the Taipa stretch would start operating in 2016. “At the meeting I asked for more details of how much various aspects of the design and construction of the LRT route would cost, but I got no reply,” Mr Au said.
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Macau
The virus was already in Macau The avian influenza virus may have entered the city before poultry imported from the mainland was found to have been infected Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he Civic and Municipal Affairs Bureau found an H7-type avian influenza virus in tissue samples recently collected from two wet markets, indicating that the bird flu virus was present in Macau before a batch of poultry that was imported from the mainland turned out to be inflected, Health Bureau director Lei Chin Ion has said. Mr Lei said two infected samples had been collected from live poultry stalls in São Domingos wet market in the city centre and São Lourenço wet market during spot checks of fresh food stalls last Wednesday. The authorities ordered a 21-day ban on imports of live poultry from the mainland last Thursday after they detected an H7-type bird flu virus in some of a batch of 1,000 live chickens in Nam Yue wholesale market the night before. The chickens were imported from the Doumen district of Zhuhai. “The virus-infected samples that we found in the two local wet markets were not collected from live chickens, but from the butcher’s blocks at the stalls,” a spokesman for the Civic and Municipal Affairs Bureau told Business Daily. “But we have yet to confirm the source of this avian flu virus and how it got into these wet market stalls,” the spokesman added. The Health Bureau had reported no cases of humans in Macau being infected with the H7N9 bird flu virus. Further information is to to be released but had not been received
at time of going to press. Mr Lei told reporters after meeting Civic and Municipal Affairs Bureau officials on Friday that he believed the H7N9 virus had been present in Macau before the batch of poultry imported from the mainland turned out to be inflected. He said he believed “a certain number” of Macau people had been in contact with the virus. The Health Bureau issued a written statement saying nine staff of poultry stalls in the two wet markets where the H7-type virus was found have been given medical checks, and that no samples collected from them have proved positive for the virus. The World Health Organisation says most patients infected with the H7N9 virus get severe pneumonia. Common symptoms include fever, cough and shortness of breath. A spokesman from the Health Bureau told Business Daily: “We also found none of the people working on the live poultry floor in Nam Yue wholesale market showed symptoms of contracting the H7N9 virus.” The Health Bureau said it had sufficient antiviral drugs to cope with any spread of infection by H7-type viruses among humans in Macau. A Civic and Municipal Affairs Bureau official, Ung Sau Hong, told reporters on Friday that wet markets here could operate normally. Ms Ung said no live chickens had been imported since the ban had been announced and that all live poultry stalls in wet markets had been thoroughly sterilised.
Record jump in Future Bright profits R
estaurant operator Future Bright Holdings Ltd said it has seen ‘healthy growth’ in both turnover and profits for 2013, which is in line with the rise in the inflow of visitors seen in the city during the year, the group said in a filing of its annual results. The turnover of the Hong Konglisted group reached HK$746.5 million last year, increasing by 15.5 percent from the previous year; its gross operating profit has grown by a similar margin, 14.6 percent to HK$271.8 million, Future Bright’s annual results released on Friday disclosed. The restaurant operator’s profit before interest, tax expenses, depreciation and amortisation (EBITDA) was HK$357.9 million, 4.2 percent more than the previous year. The food and beverage business was the main turnover engine for Future Bright last year, in which Japanese-style restaurants were the key driver bringing in more than half of the group’s turnover
at HK$385.7 million. The group’s turnover from industrial catering looked relatively modest at about HK$18.4 million for 2013. The group said it will operate two more canteens in the four dormitories of University of Macau’s Hengqin campus, an operation which will start by the middle of this year. The group saw an improved turnover from the wholesale business of Japanese food and materials at HK$31.6 million last year, anticipating further growth potential following the completion of casinoresorts in Cotai from 2015 to 2017. Future Bright proposed paying a final dividend of HK5.5 cents per share for 2013, which would fall in line with the group’s suggested payout ratio of not less than 30 percent of its annual net ordinary operating profit, which stands at HK$155.4 million for the year. The final dividend payout proposal is subject to approval of the annual general meeting on May 2, the group confirmed. S.L.
Chief Executive convenes meeting on health
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Macau
Damaging immigration policy
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Government driving out small businesses, accuses researcher Luciana Leitão Photos by Manuel Cardoso
HOSPITALITY Lop-sided figures At the end of last year, there were 98 hotels and guesthouses in Macau. The most common categories were those in the upper and lower limits of the ranking. Guesthouses led the ranking with 33 units, followed by 5-star hotels with 27 units. All other categories had between 12 and 14 units. However, this distribution is quite misleading if we want to grasp the real weight of the various categories. A look at the number of rooms and bed places results in a much more polarised picture; 5-star hotels represent just about 28 percent of the total number of hotels. Nonetheless, they represent two-thirds of the total number of rooms. And that proportion rises to more than 70 percent when we account for the number of bed places. In 2013, the 18,400 rooms and 50,600 bed places in 5-star hotels were more than three times as numerous as those in the next category; 4-star hotels had 5,600 rooms and 13,600 bed places. The remaining categories in the sector carry very little weight. Their combined totals amount to just 3,800 rooms and 7,900 beds.
This strong asymmetry is growing. The number of rooms in the three lower categories has not changed since 2009; and their combined number of bed places has even decreased slightly. On the contrary, the two top categories rose strongly on both counts, with 5-star and 4-star hotels getting visibly bigger. In the period shown, the average number of rooms rose by 35 percent and 21 percent, respectively. The rise in the average size of 5-star hotels was especially dramatic in terms of bed places. It has gone up by almost 600 bed places since 2009. J.I.D.
The current immigration policy is too restrictive and the government should be more flexible by importing highly skilled workers that are able to train locals. In an interview with Business Daily, the Professor of Management of the University of Macau, William Mobley, says that by continuing with such a policy the government is not only forcing up employee turnover but disrupting small businesses. Furthermore, looking at the 40,000 workers necessary for the developments of Cotai, the codirector of the Asia Pacific Academy of Economics and Management believes that the government should loosen its labour policy and be more flexible towards other sectors of the population, such as senior residents.
What’s your take on the current government policy on human resources? The government has to balance many things: the local interests of citizens, economic growth, and I would say increasing the diversification of the economy. My sense is that the immigration policy is too restrictive. Recognising all of the arguments on keeping it restrictive, it will force up wages, which it is doing, but it is also forcing up employee turnover, which is costly to companies and organisations and also costly to individuals. They get misplaced and are constantly moving, and this will have some effect on the small employer. Unemployment is less than two percent. Underemployment is less than 1 percent, very low. The average household is 1.8 people working. This is a saturated labour market and you’re making it more expensive for the small retailer and small restaurant because people are going to generally migrate to higher wage jobs, so you’re going to drive out the small businesses which a community needs for diversity and self-interest. You can argue that the integrated resorts are making significant profits and all of that is leaving the community: but a lot of it is staying in the community. Going forward, I don’t think it’s going to happen but China could change its policy and could say ‘Hainan Island, you can have casinos’. That would dramatically
alter things. Taiwan is building a casino. Japan is coming online and that’s going to be a major alternative, much more so than the Philippines or Korea. There will be competition for the gaming industry and hospitality that goes with it, so in time Macau needs to be thinking longer term. And this could go away. So, you’ve got to find the right balance. And like so many things in management, HR policies need to balance local self-interest with the interests of small and medium size employers, and balance the interests of the big integrated resorts, who have choices, too they can put their new investment elsewhere. Clearly, in hospitality and resort related things. Obviously, the big development on Hengqin Island, the amusement and entertainment centre over there, that will add more variety. But I would suggest you need to diversify into some other areas as well - one could be Health Sciences. Think about a future where you have both worldclass integrated resorts hospitality and destination healthcare. That could be a big deal in Asia. Why don’t Hengqin, Macau, South China, become that? It complements the integrated resort but it is a whole other economic sphere, which balances the risk for Macau, of casino peak or decline, and gives you a whole other focus. It’s going to come down to talent in that sphere as well. You’re going to have to bring a lot of talent very
quickly to get this up and running.
Don’t open the floodgates Should Macau open up to any kind of imported labour? I won’t argue for totally open, but more flexible. We all need to recognise China is a huge talent base and so there is the ability of Chinese with appropriate talent skills to come and go, also globally. Don’t open the floodgates – politically, that is not acceptable nor is it wise. The citizens [must] have an interest that they get some benefit from, not just rising housing prices. You mention alternatives for the gaming industry but what we have on the table now are the projects for Cotai, with huge demands for human resources. Does the government need to act fast, or with its current policy is it possible to hire the necessary labour? The estimate is 40,000 new jobs with the current expansion on the way. There aren’t that many unemployed, and there aren’t that many underemployed. I’d be more flexible. There are many possibilities: the ageing population, older folks that don’t want a full time job. Like me; I don’t want a full time job but I want to work, so lots of folk need flexible hours, sharing shifts. Or I’m happy to work the night shift and I could sleep during the day. Maybe there are ways; if you’re more flexible with older folks, part-time, that they could contribute. As for youth employment, it may be the case that in certain positions interns or student workers can do some things. It’s learning for them and it brings some revenue but it adds to the labour force. But the crucial issues are the more talent-based positions, competency-based positions, and you can say companies train faster. How long does it take to develop a senior leader? In a western model of organisational development, about 20 years. You hire fresh graduates and you may have a training programme or an early assignment or you progressively, over 15 to 20 years, develop. Some of it is classroom training but most of it is experience-based training, and by that time I’m ready to run a big unit or run a big function. Here in Macau, we’re essentially turning that into a five-year process. Train them and develop them to run F&B for one of the major 3,000-room hotels. Most
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Macau successful there, then they’re not going to risk putting you in that position. It will come back.
How long does it take to develop a senior leader? In a western model of organisational development, about 20 years
of the local F&B talent are fully employed, and there’s not enough that have the experience. Is it possible to have such a thing in a five-year period? No. It’s not possible to do it well. So what can happen is people are getting promoted a bit too early, and that’s risky. It puts them under a lot of stress. They like the pay but it’s setting a number of them up to fail; they just haven’t had the experience yet. It’s just too fast. Meanwhile, organisations have to operate, so you see poor service, breakdowns in compliance, you see people that haven’t really run a team now having a huge department of people and not having the capability. The resorts are doing a lot with training and development, and this is great. The government policy of having some monetary support for people to develop themselves is a good idea but perhaps it needs to be a bit more focused - things that will develop career competencies, not my selling abilities or whatever. Should the government allow big companies to only import labour that is highly skilled for senior positions, in order to train the locals? Yes, that’s right. The government has an obligation there as well. The University of Macau, that’s a major commitment; it has lots of new programmes and a new campus. That’s government driven and university school driven but given the tightness of this labour market and the size relative to the potential they have to find ways to relax the policy. Targeted, certain skill sets . . . but not one by one. If we’re hiring imported labour for more senior positions aren’t we putting locals in an inferior position? No. If you’re good and I’m an employer, I want you. I’d rather hire locally. We’ve had a project on employee turnover for PHD students here in Macau. Why do people quit their job? Why do they intend to quit? And those that haven’t done so yet, but are intending to, why? One reason is, I don’t like the job or my boss. The second factor is: even if I’d like to move, can I move? With this low unemployment, everybody knows that if I’m breathing, I can move. The third thing is: Can I go
to something better? What is the cost/benefit of moving? In addition, how embedded am I in the community? Do I like Macau? Would there be costs and consequences if I left Macau? Maybe I’d stay in Macau because I like Macau and I may move jobs but if I’m not committed to the community then I’m off to Hong Kong, I’m off to Singapore, I’m off to London or wherever. I may or may not like them, I don’t like casinos in general, but I’m staying because of family issues. They’ve got three connecting circles: the job, the community, the family, and all of that in an economic context. And the economic context is: I’ve got a lot of opportunities here, so if I’m competent I can move. Our results show that. If I like my job, I’m more likely to stay. If my boss is supportive, coaches me and shows an interest in my development, I’m much more likely to stay. It puts the employer in a very difficult position - there is no stability, you’re spending on costly turnover, the cost of recruitment, the cost of training; it takes a
while to get productivity up, and double that if the person leaves because I have to spend that same amount to get somebody else to get to the point where you were when you left.
Stimulate housing development How about the costs for the employee - how does that affect his own development? Policymakers need to think about this. We need to drive the rapid promotion of people. It is a good idea, and we should encourage that to the extent we can but if we move people too quickly or force them into roles when they’re not ready, one it is stressful and then people will feel that and there are health consequences to that and mental consequences. But there are also organisational costs that the job is not being done, so you’ve got to bring in other support. And for the individual, if they get moved aside, and that shows up on an employment record, the casino next door does some checking and find out you were less than
Why is the government taking such a long time to take a real position? Because of certain interests that are very vocal - the unions are very vocal. Two, societal pressures that come from this rapid growth are here and you see them - the traffic congestion, the cost of housing and some of that, people coming in, willing to pay more. So, for younger folks and fixed income folks and others, it’s a whole system. The government would be well advised to do all it can to stimulate housing development at all levels, not just the high end. What incentives can you create for the private sector to address in an accelerated way? Make land available, give tax incentives, get housing more stimulated. And then, an educational programme. Why will all boats rise if Macau’s economy rises? We get more diversified and there are going to be more jobs, and there will be more choices. I’ve talked to some people that prefer not to work in a casino but those are the best jobs for them right now. There really aren’t choices. Create more diversity - whether retail, small business, micro electronics, other kinds of financial services, create some diversity. That must mean you have to bring in some talent. Currently, this policy that employers cannot hire international graduates from the University of Macau, that seems so short-sighted. There are talented people who have mastered integrated resorts from outside of Macau, and they get no preference. Employers want to hire them but they have to hire them in Singapore, which they do. What’s your opinion on the fact that some positions are being exclusively assigned to locals, like dealers? In principle, let the labour market work. You’ve got to be more competitive, too, just like Macau. You’ve got to be motivated, to aggressively develop yourself. You’ve got to not just say: ‘I’m going to get promoted no matter what, so I’ll just cruise along and not invest in my own development, not demonstrating a commitment to the organisation knowing I’m protected’. That’s not a prescription for personal accomplishment or organisational effectiveness. Some level of competitiveness in the labour market I think is good. If I know I’m going to get promoted because I don’t have anywhere else to go, I may be less motivated.
The policy that employers cannot hire international graduates from the University of Macau seems so short-sighted
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Macau Fitch rates Wynn Macau’s US$750m Fitch Ratings has assigned a ‘BB’ rating to Wynn Macau, Ltd.’s add-on issuance of USD750m senior unsecured notes due 2021. Fitch rates Wynn Macau S.A.’s senior secured credit facility ‘BBB-’ and Wynn Macau, Ltd.’s existing senior unsecured notes ‘BB’. The Rating Outlook is stable. The notes will mature in October 2021, about eight months before Wynn Macau’s concession is due to expire in June 2022. The US$750m of new notes are an add-on to US$600m of 5.25 percent senior unsecured notes issued in October 2013. Proceeds will be used for general corporate purposes and will not have meaningful restrictive covenants.
Macau to begin selling Chimelong resort tours in April But travel agents are wary of offering combined tours of Macau and the Chimelong resort straight away Tony Lai
tony.lai@macaubusinessdaily.com
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acau travel agents will begin selling package tours to the Chimelong International Ocean Resort on Hengqin Island next month. But travel agents say they will offer combined tours of Macau and Guangdong Chimelong Group Co Ltd’s Hengqin resort only if demand warrants it. “Agencies here can now book tickets for the theme park and transport for individual travellers,” said the president of the Macau Travel Industry Council, Andy Wu Keng Kuong. “Some agencies are already in talks with the company about offering package tours there.” EGL Tours (Macau) Co Ltd is selling two-day tours to the theme park. They will start next month. The travel agency’s general manager, Sabrina Iong Ut Iong, said: “It will be a two-day tour, including a visit to the theme park and a stay in the Chimelong Hengqin Bay Hotel.” Ms Iong said EGL Tours would charge about 2,000 yuan (2,604 patacas or US$326), which would include the cost of a 300 yuan theme park ticket. The tours would depart daily, she said. “We will keep the tours as twoday tours for the moment while we see how many bookings we get,” she said. Hong Kong’s Hong Thai Travel Services Ltd has been selling two-
day tours costing between HK$939 and HK$1,829 since the Chimelong resort’s theme park opened for trials on January 28. The theme park opened for business in earnest on March 1. Business Daily asked Guangdong Chimelong Group about the theme park’s performance in the past month and its plans for the theme park’s immediate future, but the company
We will keep the tours as two-day tours for the moment while we see how many bookings we get Sabrina Iong, EGL Tours (Macau) Co Ltd
had failed to reply by the time we went to press.
Gap on shelves Guangdong Chimelong Group said last month that the theme park had had about 500,000 visitors during its first 10 days of trials. A research note issued by Union Gaming Research Macau Ltd last month says the Chimelong resort could draw between 3.6 million and 5.5 million visitors this year, at a rate of 10,000 to 15,000 each day. United States stockbroker Sterne Agee thinks up to 20 percent of tourists that visit Hengqin Island may visit Macau, too. Macau travel agents are wary of offering combined tours of Macau and the Chimelong resort straight away. “We have no package on our shelves as we still have to see the demand in various markets, such as Southeast Asia,” said Mr Wu of the Macau Travel Industry Council. Mr Wu is the managing director of Gray Line Tours of Macau Ltd. “We definitely want to launch such tours, as we are pushing for multi-stop trips,” he said. The general manager of the Chimelong Hengqin Bay Hotel, Ivan Leung, told our sister publication, Macau Business, that his hotel was working closely with travel agents here on combined tours.
“A win-win situation would be visitors being willing to buy longer tours so they could stay both in Macau and here,” Mr Leung told the magazine. Half of the 29.3 million visitors to Macau last year were day-trippers. The average visitor stayed for 1.1 nights. The Macau Government Tourist Office has said it wishes to persuade visitors to stay here longer by promoting tours that take in other places as well as Macau.
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Macau New court will cost MOP380 million The new building of the Court of Lower Instance (Tribunal Judicial de Base) was adjudicated by the government to a consortium headed by Chinese state company China Road and Bridge. The value of the adjudication is 380 million patacas. The consortium has already made its mark in Macau by building the 138 hectares of artificial island included in the land reclamation project. China Road and Bridge was part of the Seak Pai Van urbanisation and was awarded the first works with the still ongoing Pac On Maritime Terminal. Construction on the new court building – to be situated near Sai Van Lakes - will commence in the first half of this year and is slated to be ready by early 2017.
All brands of bank card abused China UnionPay says it is not alone in having its cards used to get around currency controls Tony Lai
tony.lai@macaubusinessdaily.com
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ll big bank card system operators face having their cards used to funnel money into Macau so it can be wagered in the casinos, an official of central government-backed China UnionPay has said. But the official said UnionPay had strict checks on transactions in Macau to counter money laundering, which had led to the system cutting its links to 20 merchants here. The official was speaking after the Reuters news agency reported last week that the use of UnionPay cards to transfer money illegally to Macau for use in the casinos was growing.
China’s official news agency, Xinhua, quoted the UnionPay official, whom it did not identify, as saying in response: “All major bank card brands face the problem of bank cards being used as a channel for gambling money to flow into Macau, given the unique position of the gaming tourism industry to Macau’s economy.” Macau’s gaming revenue was seven times Las Vegas’s last year. Reuters reported that many jewellery and watch shops around Macau’s casinos allowed mainlanders to use their UnionPay cards for purported purchases, but handed over cash for gambling
instead of goods. This is a way to get round the mainland’s tight currency controls. The UnionPay official said the bank card system operator had arrangements for monitoring suspect merchants linked to its system and large transactions made with its cards. In June 2012 UnionPay lowered the daily limit on the value of transactions made in Macau with any of its cards to 1 million yuan (1.3 million patacas or US$162,615) from 10 million yuan. The official said UnionPay had cut its links to 20 suspect merchants in recent years.
Xinhua reported that UnionPay had taken action against 49 merchants equipped with 55 UnionPay terminals used for transactions together worth 1.86 billion yuan. The Public Prosecutor’s Office said last week it was investigating four mainlanders on suspicion that they had tried to use a UnionPay terminal to let gamblers obtain some 45 million patacas in cash. The Office issued a written statement saying it was “highly concerned about recent discoveries of the use of UnionPay terminals for committing offences in Macau”. With Reuters, Xinhua
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Greater China
Yuan doubles trading range
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entral bank loosened its grip on the yuan on Saturday by doubling the daily trading range for the currency, adding teeth to a promise it would allow market forces to play a greater role in the economy and its markets. Analysts said the move was a sign of confidence that the central bank had successfully fought off a plague of currency speculators, and at the same time signalled that regulators believe the economy is stable enough to handle more promised reforms going forward. But as far as Beijing’s project to encourage the international usage of the yuan is concerned, there is less consensus, with some warning that more volatility could discourage firms from using the yuan in the short run. The People’s Bank of China (PBOC) said the exchange rate would be allowed to rise or fall 2 percent from a daily midpoint rate it sets each morning. The change is effective from today.
“This is a major step towards building more market-oriented exchange rate mechanisms in China, signifying a gradual withdrawal by the central bank from regular intervention in the foreign exchange market,” said Fu Qing, head of foreign exchange trading at Standard Chartered Bank in Shanghai. “However, with more volatility in the yuan’s exchange rate created by the reform, Chinese companies will face an uphill task learning how to hedge their currency risks.” Many market participants have long viewed the yuan as a oneway appreciation bet. Authorities are trying to change that by demonstrating that it is now more of a genuine market that can go up and down like any other. “The People’s Bank of China will continue to increase the twoway flexibility of the renminbi exchange rate, keeping the exchange rate fundamentally stable within reasonable and balanced levels,”
Government struggles against public waste A
to innovate disciplinary inspection and make it “the Sword of Damocles” that will hang over officials’ heads, the official Xinhua news agency reported. The commission is preparing to investigate numerous government agencies this year, including the Ministry of Science and Technology, Shanghai-based Fudan University, state-owned China National Cereals, Oils and Foodstuffs Corporation (COFCO), the Xinjiang Production and Construction Corps and other regional governments including that of Beijing city, Xinhua said. Wang asked inspectors to keep a “sober mind” as the situation of the country’s anti-corruption fight
campaign against Chinese government excess took major bites out of spending on official meetings, travel and vehicles in 2013, the Communist Party’s chief disciplinary body said. The Central Commission for Discipline Inspection (CCDI) said in statement money spent on meetings, official overseas trips and vehicle purchases fell by about 53 percent, 39 percent and 10 percent respectively from 2012. The Chinese leadership under President Xi Jinping has been publicising efforts to crack down on wasteful government spending and corruption to shore up its mandate to rule, which has been shaken by suspicion that officials waste taxpayers’ money on extravagances even as economic growth slows. Anti-corruption chief Wang Qishan on Saturday called for efforts
the PBOC said in a statement on its website. A PBOC spokesman in a separate statement said that the new flexibility would help improve efficiency and
Chinese companies will face an uphill task learning how to hedge their currency risks Fu Qing Standard Chartered Bank Shanghai
increase the decisive role of the market to allocate resources. The widening of the band had been broadly expected after the yuan fell in value from mid February through early March. Traders suspected that the central bank, working through state banks, pushed the currency down to try to force those speculating on appreciation to unwind their positions. The idea was to leave the market more balanced between buyers and sellers to reduce the chances of dramatic moves once the trading band was widened. The central bank’s clamp down came after it had guided the yuan to rise 2.9 percent against the dollar in 2013, far outperforming other emerging economy currencies and surprising markets, which had not been so bullish. That rally encouraged capital to flow into the country betting on a steady increase in Chinese interest rates, which made Chinese assets relatively attractive given the weakness of the dollar. Many Chinese importers even inflated their receipts to bring in more cash to speculate on the yuan, which repeatedly and massively distorted the country’s trade figures in certain months. However, since the beginning of 2014, the central bank’s action has pushed the currency down 1.6 percent. While that is not a major move for many currencies, for the yuan it marked a bigger slide than the currency posted over six months during the Greek debt crisis in 2012. In pushing the yuan lower, the risk was that traders bullish on the yuan would see the weaker levels as a buying opportunity. However, foreign exchange traders said that the yuan continued to fall in recent weeks and stay closer to the central bank’s midpoint, even though state-owned banks had stopped intervening, indicating many bulls had been shaken out of the market. Reuters
Xi Jinping’s leadership trying to crack down wasteful spending
39 pct less spending on overseas trips
remains “grave and complicated”, Xinhua added. He urged inspectors to earnestly perform their duties, adding that those who “turn a blind eye to violations will be held accountable”. But Wang made no mention of specific cases, such as that of retired former domestic security chief Zhou Yongkang, who sources have told Reuters is the target of a corruption probe. The government has yet to make any announcement about Zhou,
though Beijing has confirmed the downfall of several of his allies, including Jiang Jiemin, briefly top regulator of state-owned enterprises, and former Vice Minister of Public Security Li Dongsheng. The crackdown has damaged the business of many high-end restaurants and hotels, in particular in Beijing, and has also caused concern that a decline in government fleet vehicle purchases will reduce revenues at foreign luxury automobile makers. Reuters
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Greater China
Cell phone bar code payments stopped
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entral bank demanded that payments made by scanning a bar code with mobile devices be halted, hitting the payment arms of Internet companies Tencent Holdings Ltd and Alibaba Group Holding. The People’s Bank of China (PBOC) made its decision amid concerns about the security of verification procedures and asked both companies to provide detailed reports about their products. The suspension affects the rollout of new virtual credit cards by Tencent and Alibaba as competition intensifies in China’s e-commerce market. Both companies announced this week they would launch cards, which can use QR bar codes scanned by smartphones to process payments, in partnership with China CITIC Bank Corp. Alibaba’s card launch is planned for next week. “We have received the letter on the respective payment business and are currently communicating with PBOC on this,” Tencent said in a statement. “We will fully cooperate with PBOC and submit the materials
as required.” China’s online and mobile payment transactions have been growing at a torrid pace and consultancy McKinsey forecasts China will overtake the United States as the world’s largest online retail economy this year. Analysts say the halt of any new services is likely to be temporary, as the PBOC moves to assess how customer information is being secured. The central bank’s suspension also underscores the clash between China’s finance sector and domestic Internet companies, which have pushed into the banks’ territory by ramping up their own financial services, offering online payment services and wealth management products. “This is a milestone in the innovation of China’s Internet finance, said Yi Huanhuan, deputy director at Hong Yuan Securities Research. “The ways the Internet is used has already reached the ‘meat’ of the core business of traditional banking institutions.” China’s three Internet giants, which also include Baidu Inc , have
invested heavily in technologies and businesses that make use of scanning QR codes with mobile devices to cash in on China’s 500 million smartphone and tablet users. China’s mobile payment market last year increased by more than 700 percent, to 1.22 trillion yuan (US$199 billion) in transactions. Reuters
China’s largest state refiner, Sinopec Corp, said it had entered a long-term deal to buy liquefied petroleum gas (LPG) from Phillips 66, showing the U.S. shale drilling boom is having an impact on Asian markets. The U.S. shale boom in recent years has led to a surge in production of LPG, or propane, which is bringing down global prices and challenging established suppliers in the Middle East. LPG can be used for heating, transportation fuel or for making petrochemicals.
Weibo prepares US IPO
US$199 bln
China’s mobile payment market value
A test for Beijing
China’s biggest microblogging outlet, with 129 million monthly active users, filed to raise US$500 million in an initial public offering in the U.S., according to a regulatory filing yesterday. The company didn’t specify the number or price of American depositary shares it will offer, using the figure as a placeholder to calculate registration fees. Goldman Sachs Group Inc. and Credit Suisse Group AG are managing the offering. The company plans to use some of the proceeds from the offering to repay loans to parent Sina Corp., which has a 78 percent stake.
Bank of China deepens in Brazil Petroleo Brasileiro SA’s decision to hire Bank of China Ltd. to help arrange the state-controlled oil producer’s US$8.5 billion bond sale is raising the likelihood their ties go much deeper. The deal, the first-ever Latin American offering underwritten by a Chinese lender, was probably preceded by a loan the bank provided to the Rio de Janeiro-based company, said Getulio Vargas Foundation professor Hsia Sheng and Credit Agricole SA’s Marco Aurelio de Sa. Bank of China and Petrobras both declined to comment on whether a loan was made.
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hina could miss its official growth target for the first time in 16 years, a snap poll of economists by AFP shows after surprisingly weak data for January and February. Industrial output, a key measure of production at factories, workshops and mines in the world’s secondlargest economy, rose just 8.6 percent in the first two months of 2014, the slowest pace in five years. Retail sales, an indicator of consumer spending, increased at the lowest rate since February 2011, while growth in fixed asset investment, a gauge of government spending on infrastructure, came in at a surprisingly low 17.9 percent during the period, according to the data. In a survey of 10 economists by AFP on Friday, the median forecast for 2014 growth was 7.4 percent, with some saying the weak start to the year had led them to cut their annual predictions. At the just-concluded National People’s Congress (NPC), Premier Li Keqiang set this year’s growth target at “around 7.5 percent”, lower than last year’s actual expansion of 7.7 percent -which was unchanged from 2012 and the worst since 7.6 percent in 1999. China is a key driver of the world economy and the last time its actual GDP growth came in below the government target was in 1998, at the height of the Asian financial crisis. “The disappointing economic data in January-February will be a test of the government’s tolerance level, as this pace of deceleration has rarely been seen before,” Shen Jianguang, a Hong Kong-based economist with Mizuho Securities, said in a research note. He cut his projection for 2014 growth from 7.5 percent to 7.3 percent. Bank of America Merrill Lynch analysts also lowered their prediction from 7.6 percent to 7.2 percent for the full year due to the “significantly
Sinopec reaches a LPG buying deal
National People’s Congress session
weaker than expected” data in the first two months. Goldman Sachs, meanwhile, said that if economic growth falls under 7.5 percent in the first quarter, there would be “significant risks of not hitting the annual target”. Chinese shares closed down Friday on worries over an economic slowdown, with the benchmark Shanghai Composite Index dropping 0.73 percent.
Key downside risks China’s top leaders have said they are ready to accept slower expansion as they seek to transform the economy’s growth model away from an overreliance on often-wasteful investment, and instead make private demand the driver of future development. After the close of the NPC, China’s Communist Party-controlled legislature, on Thursday Premier Li sought to downplay the importance of the target. “We have a level of flexibility by setting the target at around 7.5 percent,” he said. He did not specify the lowest rate the government could accept; only saying it must ensure sufficient job creation.
“We think the government will not let growth slide below the 7.0 percent mark,” Wang Tao, a UBS economist in Hong Kong, said in a report. Key downside risks ahead this year include uncertainties in export recovery, credit volatilities related to China’s multi-trillion-dollar shadow banking sector -heightened by the country’s first-ever default on a domestic corporate bond last week -and a “more pronounced” property slowdown, she said. Yao Wei, an analyst with Societe Generale, said in a research note: “New leaders are now facing a critical test: whether they can stabilise the economy, without significantly compromising the progress of lowering debt risks.” However, the government has avoided introducing stimulus, making difficult to intervene in the economy, for example with infrastructure investment, as such policies “may conceptually contradict the goal”, Goldman Sachs economist Song Yu said in a report. “It does imply more constraints on what and how much the government can do compared with the past,” Song wrote. AFP
No reason for claim against HTC HTC Corp, Huawei and ZTE did not violate digital camera patents owned by Apple Inc. spinoff FlashPoint Technology to make its Android smartphones, the U.S. International Trade Commission said. FlashPoint Technology, which filed the complaint in 2012, had originally accused Taiwan-based HTC, China’s Huawei Technologies Co Ltd and ZTE Corp of infringing four patents for smartphone cameras. If the companies had been found guilty of violating the patents, the smartphones could have been banned from the United States.
Copper smelters agreement in Hong Kong China’s large copper smelters have drawn up a plan to jointly boost exports of refined metal in the coming months by three times the contracted volumes in an effort to cope with low domestic prices, a senior executive of the top producer said. Six large smelters, including Jiangxi Copper Company Limited, Tongling Nonferrous Metals and Jinchuan Group, have agreed to export a total of about 150,000 tonnes of refined copper per month. Higher shipments will help diversify their client base at a time when demand for the metal at home is slowing.
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Asia Thai self-confident with monetary policy The institution said it had room to cut interest rates further if necessary, on top of a reduction last week that was aimed at supporting an economy hurt by a slump in confidence after months of political unrest. “Monetary policy will have to remain accommodative. We’ve long accepted that monetary policy is needed to help the domestic economy,” Bank of Thailand spokeswoman Roong Mallikamas told reporters at a weekly briefing. “At the moment, there is still room for interest rates (to be cut),” she said.
Vietnam: Too much harbours for so few ships
New Suzuki factory in India Maruti Suzuki India Ltd. said it will seek the approval of minority shareholders on parent Suzuki Motor Corp.’s plan to build a fully-owned factory in the state of Gujarat amid investor calls to scrap the proposal. “Even though not required by law, the board decided, as a measure of good corporate governance, to seek minority shareholders’ approval,” Maruti, India’s biggest carmaker by volume, said in a statement today. Suzuki Motor in January said it will spend 50 billion yen (US$492 million) on the factory in western India that would start production in 2017.
Mongolia encouraged to raise debt Country’s foreign currency reserves, down 40 percent in the last year, are on pace to run out by the end of 2014 unless the country can sell more debt, according to Moody’s Investors Service. Should reserves expire Mongolia “would issue another bond and that would buffer reserves for an extent,” Anushka Shah, Moody’s lead analyst on the Central Asian nation. Currency reserves have dwindled amid falling prices for copper and coal, Mongolia’s main exports. Foreign investment has also fared poorly, falling by half last year during a protracted dispute with Rio Tinto Plc.
RAK ceramics profit rises The world’s largest maker of ceramic tiles, posted the biggest jump in full-year profit since 2009 on production efficiencies at its factories. Net income rose 21 percent to 272 million dirhams (US$74 million) from 224 million dirhams in 2012, the Ras al Khaimah, United Arab Emirates-based company said in an e-mailed press release. Total revenue rose 11 percent to 3.52 billion dirhams. “We had improvements in efficiencies in our plants worldwide, and together with rising prices, we saw an increase of profits across our operations,” Chief Executive Officer Abdallah Massaad said in a phone interview yesterday.
Harbour facilities at Saigon port
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obert Hambleton wants to hear more noise from the huge container port outside his office near Ho Chi Minh City. Towering cranes at the next-door competitor are silent, without a ship on the horizon. “It’s a brand-new terminal without any customers,” said Hambleton, general director of Cai Mep International Terminal Co. “You get a sense of how dire the situation is. The whole terminal industry is oversupplied.” With companies from Intel Corp. to Samsung Electronics Co. building billion-dollar factories in Vietnam, regional governments have established competing ports capable of handling overseas traffic, causing plunging rates and losses for operators estimated at US$1.5 billion or more, according to Seaport Consultants Asia. Vietnam, with a coastline of about 3,400 kilometres (2,100 miles) along one of the world’s busiest sea cargo lanes, has ambitions to compete with Singapore and Hong Kong. The government wants to build even more ports, emphasizing “quantity over quality,” a World Bank report in January said. The overcapacity may undermine Vietnam’s ability to attract higher-value manufacturing that demands efficient transportation systems, the report said.
‘Corruption’ possible “Almost every province along the coast of Vietnam managed to have a port project,” Vu Tu Thanh, chief Vietnam representative of the U.S.ASEAN Business Council, said in an interview in Hanoi. “The process allows for a lot of opportunity for corruption and special interests.
Many of the good ports do not have enough business.” Foreign investors may be deterred from investing large sums in future government infrastructure projects, David Wignall, managing director of Seaport Consultants Asia, said in an e- mail. “No one trusts anything the government says on development,” he said. Wignall estimates operators in Cai Mep alone have collectively lost as much as US$1.5 billion because of terminal oversupply. The losses at the port come as the Ministry of Transport seeks about US$32 billion in private funding for transportation infrastructure projects through 2020, Vietnam News reported in February.
Global Slowdown The oversupply of terminals at Cai Mep is tied to the slow global economy, not government policy,
I believe ports in Vietnam will do well when the world economy has recovered Nguyen Hong Truong Vietnam Deputy Transport Minister
Deputy Transport Minister Nguyen Hong Truong said after attending a conference in Hanoi February 28. As the global economy rebounds, so will Vietnam’s ports, Truong said. “With its long coastal line and geographic location connecting it to international sea routes, from now until 2020 Vietnam will need to have more deep-water ports,” he said. “I believe ports in Vietnam will do well when the world economy has recovered.”
Cai Mep About US$2 billion has been invested in state-of-the-art terminals at Cai Mep port, Vietnam’s only deepsea facility located at the mouth of the Cai Mep River and South China Sea, by foreign investors and state-owned and private Vietnamese companies. Opened in 2009, the port is part of the country’s goal to boost shipping volume more than 130 percent from 2012 to the end of the decade. Investors backed the sprawling port southeast of the country’s commercial hub with the understanding that some of Ho Chi Minh City’s ports would shut down their container business, said Nguyen Xuan Thanh, the representative of Harvard’s Kennedy School of Government in Vietnam, who has studied the country’s terminal industry. Ho Chi Minh City port operators are reluctant to close facilities, located on prime real estate, during the country’s economic slowdown, and the city has resisted relinquishing its shipping industry to a neighbouring province, Thanh said. Vietnam’s government forecasts the economy will grow 5.8 percent this year after a 5.42 percent expansion in 2013. Bloomberg News
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.
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Asia
Mizuho suffers the bitcoin hangover
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izuho Bank, one of Japan’s largest lenders, has became ensnared in North American legal fallout from Mt. Gox, once the world’s biggest bitcoin exchange, which collapsed last month after losing nearly half a billion dollars worth of customers’ digital currency. Lawsuits in the United States and Canada represent a new legal front - and a deep-pocketed defendant in the battle over Mt. Gox, which claims hackers stole huge amounts of its own and its customers’ assets. Mizuho, the core unit of Mizuho Financial Group Inc , Japan’s secondbiggest “megabank” by assets, was added as a defendant on Friday to an existing U.S. lawsuit against Mt. Gox for allegedly aiding in a fraud by providing banking services to the exchange. Also on Friday, Mizuho was named in a class-action lawsuit in Canada against Mt. Gox, alleging a lengthy security breach at Mt. Gox resulted in “the pilfering of millions of dollars’ worth of its users’ bitcoins.” A Mizuho spokeswoman in Tokyo declined comment on Sunday on the lawsuits, filed in Chicago federal court and the Ontario Superior Court of Justice. Tokyo-based Mt. Gox closed its virtual doors on February 25 and three days later filed for Chapter 11-style bankruptcy protection with a Japanese court. The company said it had likely lost all 750,000 customer bitcoins it was holding, as well as 100,000 of
“all non-bitcoin currency received by the Mt. Gox defendants from its users was held in an account or accounts” at Mizuho.
Mizuho versus Mt. Gox
750,000 people lost US$567 million
its own and 2.8 billion yen in cash. That represents US$567 million of vanished assets at current market prices, as well as about 7 percent of the bitcoins in circulation. Mt. Gox blames systematic attacks on what it acknowledges was lax computer security. Customers - more than 99 percent of who are non-Japanese - suspect a massive fraud. On Monday, Mt. Gox filed for a U.S. Chapter 15 bankruptcy, which shields the company from lawsuits in U.S. courts as the Tokyo case proceeds.
Nokia-Microsoft transfer difficulties in India N
okia Oyj needs to guarantee tax liabilities of the Indian unit before the company can transfer one of its largest phone factories to Microsoft Corp. as part of the device unit’s sale, India’s top court ruled. The Supreme Court upheld the decision of the lower court asking Nokia to deposit 22.5 billion rupees (US$368 million) into an escrow account and said the parent should agree to pay any tax dues after related litigation is over, according to a twojudge bench headed by A.R. Dave in New Delhi today. “Nokia is disappointed by today’s decision,” Brett Young, a spokesman for Nokia, said in an e-mail. “The company strongly believes its offer to the Indian tax department is fair for all sides.” Microsoft agreed in September to buy Nokia’s mobile-phone division, including its factories, in a 5.44 billion-euro (US$7.6 billion) deal. The market for phone devices in India, Asia’s third-biggest economy, expanded 18 percent in 2013, outperforming global growth of 4.8 percent, according to IDC. Indian tax officials last year raided Nokia’s manufacturing plant in Chennai, the southern Indian city previously known as Madras, claiming the Espoo, Finland-based phone maker hadn’t paid enough in taxes on royalty payments made by the unit to its parent. Nokia established the factory in 2006. An Indian court told Nokia in
December to deposit money into an escrow account and agree to guarantee any tax dues to enable transfer of the factory in Chennai. The country’s tax department had sought a halt to the transfer to Microsoft. Nokia filed an appeal to India’s top court saying the conditions laid out by the Delhi High Court were not aligned with international treaties and practices. The Finnish company has said it expects the deal for its phone unit to close before the end of March. Nokia on February 14 said the tax case in India is not expected to affect the timing or the deal terms of the anticipated transaction between the company and Microsoft. The company’s factory employs 8,000 workers and makes entry-level devices including the Nokia 105 that sells for as little as 1,135 rupees. Bloomberg News
US$368 million deposit Nokia must pay
Mizuho held non-bitcoin currency on behalf of Tokyo-based Mt. Gox and its customers, according to the amended U.S. complaint by Gregory Greene, an Illinois resident who has said he lost US$25,000 when Mt. Gox shut down. The U.S. suit accuses Mizuho of knowing of Mt. Gox’s fraud, of not segregating funds that belong to Mt. Gox from those of its customers and of continuing to provide banking services that inflated losses for bitcoin customers. “Mizuho profited from the fraud,” said the complaint. The Canadian plaintiffs allege that
In fact, the bank by January was trying to close the exchange’s account. An unnamed Mizuho manager at Mizuho bank, in a recording leaked on the internet, asks Mark Karpeles, Mt. Gox’s 28-year-old French CEO, to close his firm’s account with the bank, citing compliance issues and moves by other banks to cut ties with the exchange. A person familiar with the situation confirmed the recording as authentic. If Mizuho had to close the account forcibly, the manager warned, it could damage Mt. Gox’s business. “There would be confusion when your regular users try to deposit money. We don’t think that’s right,” he says. “If there’s confusion, we’d come under criticism and you’d be in trouble as well.” Karpeles told the Mizuho official Mt. Gox was unwilling to cooperate. The Canadian suit was filed on behalf of “all persons in Canada who paid a fee to Mt. Gox to buy, sell or otherwise trade bitcoins” and all those who had bitcoins or currency stored with Mt. Gox on Febreuary 7. On Tuesday, the federal judge overseeing Greene’s lawsuit temporarily froze the U.S. assets of those three. Reuters
Bank of Japan might double bond pace T he Bank of Japan can double its annual pace of bond accumulation to 100 trillion yen (US$985 billion) to give fresh impetus to the economy after next month’s sales-tax increase, said an aide to Prime Minister Shinzo Abe. “It’s not taboo for the BOJ to double the goal of bond holdings,” Koichi Hamada, 78, a retired Yale University professor who advises Abe on monetary policy, said in an interview yesterday in Tokyo. “The BOJ will be concerned about the real risk of being seen as financing debt, but drastic action is justified to pull Japan’s economy out of 15 years of stagnation.” Hamada said the central bank should add stimulus as soon as May should indicators show the 3 percentage-point tax rise is seriously damaging the economy. He said annualized growth of 0.7 percent in the final quarter of 2013 showed that “Abenomics isn’t strong enough.” “It would be too late if the BOJ waits for April-June GDP data” due in August, Hamada said. “I don’t doubt the BOJ’s projection that Japan’s economy will continue a moderate recovery even after the sales-tax increase because Kuroda’s stance shows he can quickly and flexibly add powerful stimulus.” Economists at BNP Paribas SA and HSBC Holdings Plc. were among 10 of 34 analysts in a Bloomberg News survey who said the BOJ would need to accumulate at least 90 trillion yen of Japanese government bonds
a year -equal to all new issuance and up from about 50 trillion yen now- to have the same impact as April’s easing.
‘No Limit’ Governor Haruhiko Kuroda said there is “no limit” to what the BOJ could do if it needed to adjust its policy, Jiji news agency reported, citing comments he made in a March 13 interview. The central bank doesn’t have to “outwit” the market, he said, according to Jiji. The yen weakened 18 percent against the dollar last year and the benchmark Topix stocks index rose 51 percent after the BOJ began unprecedented stimulus on April 4. The yen has strengthened about 4 percent this year. Bloomberg News
Drastic action is justified to pull Japan’s economy out of 15 years of stagnation Koichi Hamada Japan’s Prime Minister Advisor
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International CRO: the new financial key position
O Argentina to begin talks on repayment The Argentine government is awaiting formal notice from the Paris Club of creditor nations to begin talks on final terms for the repayment of defaulted debt, Cabinet Chief Jorge Capitanich said. The club of 19 creditor nations accepted an offer from Argentina to pay debt in default since 2001 in instalments, Buenos Aires-based newspaper BAE reported today, citing unidentified foreign diplomatic officials and Argentine government officials. Clotilde L’Angevin, Paris Club’s secretary-general and spokeswoman, declined to comment “at this stage” on the report.
European banks complain about data requirements Euro-area banks urged the European Central Bank to reduce the information they have to provide as part of a review of their balance sheets because they say the demands are excessive. European Banking Federation Chief Executive Officer Guido Ravoet wrote to the ECB yesterday, asking it to consider “substantially simplifying” the template for part of the Asset Quality Review. In the letter the EBF also said that some of the data sought is not useful. A spokeswoman for the ECB couldn’t immediately confirm that the letter had been received.
nce modest of pay and profile, risk experts are being reborn as rock stars of the banking world - their status and salaries soaring as regulators force financial institutions to clean up. Industry-wide investigations into alleged exchange rate manipulation, trading scandals at UBS, Societe Generale and JPMorgan and HSBC’s US$1.9 billion fine for lax moneylaundering rules have upped the ante for banks already under pressure to curb reckless behaviour that led to the financial crisis. Now watchdogs and central banks want to see a clear line of responsibility for the avoidance of such fiascos in the future, and as a result, the position of chief risk officer (CRO) has jumped up the ranks. Many CROs now sit alongside the finance director as second in importance behind the chief executive. “The role of the CRO has become broader, higher profile and more influential,” said Anne Murphy, head of UK financial services for executive recruitment firm Odgers Berndtson. In turn, salaries have soared. Pay in risk-related jobs rose 6 percent in 2013 and rocketed 19 percent for those who moved firms, according to a report by recruitment firm Barclay Simpson.
Vucic to rule Serbia another term Serbs headed to the polls yesterday in early elections designed to install Deputy Prime Minister Aleksandar Vucic as the head of a government vowing to spur the economy and win European Union membership by 2020. Vucic’s Progressive Party, which forced a ballot two years earlier than scheduled, leads the campaign with 44.6 percent, compared with 13.8 percent for Premier Ivica Dacic’s Socialist Party, according to a March 10-11 poll by Belgrade-based Faktor Plus. The survey has a margin of error of 3 percentage points.
The role of the CRO has become broader, higher profile and more influential Anne Murphy recruitment firm Odgers Berndtson
Odgers Berndtson headquarters in London
HSBC chief risk officer Marc Moses joined the bank’s board at the start of 2014, alongside the chairman, chief executive and finance director, and could be paid 6 million pounds (US$10 million) this year. Chief Executive Stuart Gulliver, who could be paid 11.4 million this year, says pre-crisis, the bank’s CRO would not have made it into the top 50 earners. At Spain’s Santander the top risk executive Matias Rodriguez Inciarte was its second-highest paid director last year, getting 4.7 million euros. Those numbers, says Murphy, are “recognition that it’s a big job. There aren’t many people who have the skills and abilities to do it well, combined with the increase in seniority and responsibility.”
Wide remit Chief risk officers ensure that where potential dangers exist, they are monitored and kept in check. That can range from measuring how likely loans are to be paid back, how risky banks’ positions in financial markets might be, and what potential losses may be incurred from fraudulent activities. However after the financial crisis of 2007-2008 this already wide remit has become larger still, and its parameters more clearly policed. CROs must ensure banks abide by
tougher regulations around the world, hammered out by governments that had to use public funds to keep many of them from sinking under the burden of bad loans resulting from excessive borrowing, risky investments and a lack of transparency. The new rules demand that banks take fewer risks, assess loans more closely and hold more accessible capital as a buffer against bad bets. Many CROs are now also responsible for ensuring cyber security and spotting terror financing and money laundering - so-called compliance functions that previously often fell under the remit of a bank’s legal division. The scale of the new CRO job is reflected in the amount of time such concerns occupy at board level. Santander said its board spent 30 percent of its time last year on risk management, and Barclays’ board has spent 35-40 percent of its time on governance and risk issues in the last two years. As a result some CROs are being invited to join the board, another notch for their status and pay packets. Juan Colombas, chief risk officer at Lloyds Banking Group since the start of 2011, joined its board in November 2013 and is one of only three executive directors. He could earn 4.4 million pounds this year. Reuters
Peruvian President offers to quit Ollanta Humala said his cabinet offered to resign after widespread abstentions by opposition lawmakers during a vote of confidence yesterday, in which they accused the first lady of undue influence over the government. After a presentation in Congress by Cabinet Chief Rene Cornejo, legislators voted 47-0 in favour of the cabinet, with 71 abstentions. A second vote was 42-6, with 73 abstentions. Speaking from the presidential palace, Humala said the legislature hadn’t been clear and urged them “to express the mandate with clarity and its willingness to give or not give the vote of confidence to the cabinet.”
Madagascar will have financial support The World Bank and the European Union will resume financial support to Madagascar, officials said, pledging to help rebuild the Indian Ocean island economy still reeling from a coup in 2009. The International Monetary Fund said it had restored ties with Madagascar for the first time since 2009, prompted by the peaceful election of President Hery Rajaonarimampianina in December. Although the President is yet to appoint a government, his election is seen as a vital step to rebuild confidence in an economy which was crippled by a five-year political crisis.
New York overthrow London from the finance throne
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ew York replaced London as the world’s leading financial centre for the first time, after the City was rocked by a series of scandals and questions over the U.K.’s place in the European Union. New York holds the top spot in the latest Global Financial Centres Index with a “shaky, statistically insignificant” two-point lead, according to Michael Mainelli, chairman of Z/Yen Group Ltd., which compiles the index. Hong Kong and Singapore, the two leading Asian centres, have narrowed the gap between them and the top two to fewer than 30 points on a scale of 1,000, the index shows. Scandals including banks abusing their clients by selling unneeded insurance, manipulation of financial benchmarks and trading losses,
have combined to damage the City’s reputation for probity, just as plans for a referendum on EU membership cast doubt on the terms of its access to that market. While New York has challenged London for the pedestal since the inception of the index, a seven-point rise in its rating gained it the top spot after the U.K. capital suffered a 10-point decline, the largest of any centre in the top 50. “London needs a reputation that everyone who comes will be treated fairly and can compete fairly,” according to Mainelli. “Without the large domestic economies behind New York and Hong Kong, London needs to act more like a Singaporean city state or have the backing of a European Union domestic economy.” The index, which is updated every
six months and is in its 15th edition, is compiled from replies to an online survey. It also uses external gauges including rankings for specific areas such as telecommunications. The index, which was first published in 2007, takes into account broad areas including the business environment, finance, infrastructure, human capital and reputation. The U.K. government “is determined to build a banking sector that boosts the economy and supports consumers and businesses,” the Treasury said in a statement. More than 3,000 finance professionals responded to the survey with 25,441 assessments of the various centres in the 24 months to December last year, according to Z/Yen. Bloomberg News
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Opinion Business
wires
Fallen Tiger, Shaken Dragon
Leading reports from Asia’s best business newspapers
PHNOM PENH POST
Minxin Pei
Professor of Government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States
Corruption is weighing on businesses, and the avenues to address it are limited, according to Cambodia’s leading employer association. At a joint conference with the International Labour Organization (ILO) and the Cambodian Federation of Employers (CAMFEBA) in Phnom Penh yesterday, the employer representative called on the government to provide greater protection for company whistle-blowers. “It is quite well known that there is quite a lot of corruption in the judicial system, said Matthew Rendall, a CAMFEBA board member who spoke at the conference. “One of the areas of concern is that inequitable access to the judiciary is impeding business,” he said.
CHINA DAILY China’s central bank hit the brakes on burgeoning virtual credit card services and barcodebased mobile payments as competition for the country’s Internet finance services becomes cutthroat. The move, made just two days after major Internet companies launched such services, has sent the shares of the relevant companies tumbling amid concerns that regulatory supervision may tighten in favour of the mammoth State-owned financial institutions. The People’s Bank of China issued a statement on Friday that halted virtual credit card products and face-to-face payment services, including QR code payments, ruling that this line of business was too risky.
THE TIMES OF INDIA The government has hiked the import tariff value on gold to $445 per 10 grams from $433 per 10 gram earlier. However, the import tariff value, the base price at which customs duty is determined to prevent underinvoicing, in case of silver has been reduced to $694 per kg from $699 per kg earlier, a notification by the Central Board of Excise and Customs said. The tariff value is revised on a fortnightly basis after analysing the global price trend.
JAKARTA GLOBE Southeast Asia’s largest economy needs to improve its infrastructure to attract more foreign tourists, according to experts who blame slow foreign tourist arrivals in part on the country’s poor airports. Indonesia reaped more than $10 billion in foreign exchange earnings from overseas tourists last year, underscoring the industry as a growing contributor to the nation’s economy. The country welcomed 8.8 million foreign tourists last year, compared with 8 million the year before. “Indonesia sees an average increase of 5 percent per year [in the number of foreign tourists],” according to Stephanie Riady, committee head at Agora Exhibitions, which organizes the “Hospitality Career and Education Expo.”
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ess than 18 months after becoming General Secretary of the Chinese Communist Party, Xi Jinping is poised to cage the biggest political “tiger” – a corrupt top official – in the history of the People’s Republic. Although rumors of the imminent fall of former internal security chief Zhou Yongkang have been swirling for months, many observers remained unsure whether Xi would prosecute Zhou and thus break the party’s longestablished unwritten rule of immunity for sitting or retired members of the Politburo Standing Committee. But doubts about Zhou’s fate have now been dispelled by a recent flurry of uncensored news stories in the Chinese media that revealed shocking details of corruption involving Zhou’s family and former subordinates. One newspaper reported that the authorities recently searched the homes of Zhou’s two brothers. Though these stories have yet to implicate Zhou directly, it will be only a matter of time before the Chinese government officially charges him with corruption. Whispered reports are even more lurid. Zhou is said to have plotted to murder his first wife, and there are rumors that at the height of last year’s scandal involving disgraced former Chongqing party boss Bo Xilai, he attempted to assassinate Xi in the leadership compound at Zhongnanhai. Based on what the Chinese press has disclosed thus far, it is clear that the Zhou case
will be the ugliest and most sensational scandal involving a senior party leader that the country has ever seen. It will make Bo, an ally of Zhou and a former Politburo member who was sentenced to life imprisonment for corruption, look like a petty thief. Apparently, the Chinese government is meticulously building a case against Zhou by pursuing two critical leads. The first one targets his son, Zhou Bin, a businessman who has amassed a huge fortune through shady deals and possibly criminal activities. With so many officials and private businessmen eager to curry favor with his father, Zhou Bin had no difficulty cashing in. His business activities include brokering sales of oil-field equipment to Iraq (causing huge losses for Chinese state-owned oil companies); construction of hydroelectric power stations in Sichuan (where his father was the provincial party boss from 1997 to 2002); providing information technology for 8,000 state-owned gas stations; and investments in real estate, oil exploration, and toll roads. The most damaging revelation so far concerns Zhou Bin’s friendship with a billionaire mafia boss, Liu Han, who is now standing trial for organized crime and murder. Liu made his fortune with Zhou Bin’s help. In one case, the younger Zhou allegedly used his political connections to help Liu sell two hydroelectric power stations to a state-owned power company for a profit of
The unfolding Zhou scandal reconfirms a profoundly worrisome fact: the Middle Kingdom remains deeply corrupt. Caging a tiger will not destroy a vampire
¥2.2 billion ($330 million). The second lead centers on Zhou Yongkang’s former lieutenants. A tactic favored by Chinese anti-corruption investigators is to detain junior officials who have worked closely with their primary target. Typically, these minions are threatened with long prison sentences, or even the death penalty, unless they cooperate. In this case, a dozen officials who worked for Zhou in the energy sector in Sichuan and in the Ministry of Public Security (where Zhou was Minister from 2003 to 2008)
have been arrested. Most ominously for Zhou, the officials include two of his former executive assistants, who presumably have intimate knowledge of Zhou’s activities. When the Chinese government formally announces Zhou’s arrest – probably after the conclusion of the annual session of the National People’s Congress in mid-March – the revelations of the rot within the Chinese party-state will stun even the most jaded observers. What Zhou, his family, and their cronies have done can be described only as insatiable looting and blatant gangsterism. More important, the Zhou scandal will almost certainly implicate a record number of senior officials. As of now, one minister, two provincial vice governors, one vice minister, and several senior executives in state-owned oil companies have been detained. More officials are expected to fall in the coming year. For Xi, ensnaring Zhou in his anti-corruption net will likely provide a boost in his popular standing. He can show a skeptical Chinese public that he has the political will to take down one of the country’s most powerful politicians. Moreover, vanquishing a once-untouchable politician will leave no doubt about Xi’s personal authority. For the rest of the world, the unfolding Zhou scandal reconfirms a profoundly worrisome fact: the Middle Kingdom remains deeply corrupt. Caging a tiger will not destroy a vampire.
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Closing Malaysia appeals for aid in wider search
Russia to briefly lift blockade of Crimea bases
Malaysian authorities have asked 25 countries to support the hunt for a missing passenger jet as it prepared to extend the search to an area stretching from Kazakhstan in the north to the two-mile deep waters off Australia in the south. “The search area has been significantly expanded and the nature of the search has changed,” Transport Minister Hishammuddin Hussein said at a press conference today in Kuala Lumpur “From focusing mainly on shallow seas, we are now looking at large tracts of land, crossing 11 countries, as well as deep, remote oceans.”
Ukraine’s defence minister said yesterday that Russia had agreed to temporarily lift its blockade of Ukraine’s military bases in Crimea in order to ease tensions surrounding the peninsula’s secession referendum. “Agreements have already been reached between our commanders... on there being no attempts to blockade our military installations until March 21,” Interfax quoted Defence Minister Igor Tenyukh as saying. “We have reached this truce, and I think it will remain in place until March 21.”
Alibaba picks US for IPO Move is a blow to Hong Kong stock exchange
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libaba Group Holding Ltd said yesterday it has decided to begin the process for an initial public offering (IPO) in the United States, ending months of speculation about where the Chinese e-commerce giant would go public. Alibaba’s planned U.S. listing is the most anticipated IPO since Facebook Inc raised US$16 billion in 2012. Alibaba’s decision to go to the United States is a blow to the Hong Kong stock exchange, which was initially the company’s preferred venue for the IPO. Analysts estimate the Hangzhou, China-based company has a value of at least US$140 billion, and the IPO
proceeds could exceed US$15 billion, Reuters previously reported. Alibaba also said in a statement on its corporate news Web site it might consider extending its public status to Chinese capital markets in future in order for local investors to be able to share in its growth. Alibaba, which controls about 80 percent of the country’s e-commerce, had been in discussions with the Hong Kong stock exchange and the Securities and Futures Commission since last year about a listing, but the island city’s regulators blocked its proposal as it violated the “oneshare-one-vote principle”. Alibaba’s executive vice chairman
Dubai to raise billions in mall listing
Joe Tsai upped the rhetoric against Hong Kong when he told Reuters last week that the firm would not change its partnership structure in order to list on the Hong Kong stock exchange. After an initial rebuff, Alibaba and the Hong Kong regulators were back at the negotiating table late last year, to find a solution to the problem. While the Hong Kong Exchanges and Clearing Ltd has initiated a review of its listing rules to accommodate more flexible structures, any change to the existing rules would take months. “We wish to thank those in Hong Kong who have supported Alibaba Group,” Alibaba said in its statement. “We respect the viewpoints and
Qantas risk tops Air France-KLM
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policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong.” The listing also is closely watched by Alibaba’s two largest shareholders - Yahoo Inc, which owns 24 percent, and Japan’s Softbank Corp, which controls 37 percent. Alibaba’s founders and some senior managers jointly own about 13 percent of the company. Credit Suisse and Morgan Stanley are among the two banks poised to win top underwriting mandates, while other banks are also expected to join the syndicate, people familiar with the matter added. Reuters
Dubai considers rule change to lure funds
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maar Properties PJSC, developer of the world’s tallest tower, said it expects to raise as much as US$2.45 billion in the public offering of a 25 percent stake in its shopping malls and retail business after revenue surged. The estimated 8 billion dirhams (US$2.18 billion) to 9 billion dirhams generated from the secondary public offering in the Emaar malls and retail unit will primarily be distributed to the company’s shareholders as a dividend. The Dubai-based company didn’t give a time frame for the share sale or location. Emaar is benefiting from a tourism and retail boom in Dubai that’s driving up visitor numbers at its flagship malls and boosting sales. The malls and retail business posted a 20 percent increase in revenue to 2.84 billion dirhams in 2013, while the Dubai Mall received 75 million shoppers last year.
oubts over Qantas Airways Ltd.’s plan to stem losses pushed bond risk for Australia’s biggest carrier above that of Air FranceKLM Group, which is attempting a turnaround from near bankruptcy. Credit-default swaps protecting against non-payment of Qantas’s debt have risen by 48 basis points since Feb. 28 to 300 on March 13, the highest level since November 2012. Risk for Air France-KLM fell to a three-year low on March 7. Qantas, named Australia’s most highly-regarded brand last year by the Reputation Institute consultancy, has struggled to protect its market share in a price war with Virgin Australia Holdings Ltd. A A$2 billion (US$1.8 billion) cost-cutting plan, involving a pay freeze and the lowest capital spending since 1998, may not be enough, according to Kapstream Capital Pty.
ubai is considering regulatory reforms to persuade more funds to base themselves in its financial centre, though industry experts believe that other parts of its investment environment may also need to change for the emirate to compete globally. The proposed rules would create a new class of funds in the Dubai International Financial Centre (DIFC) in an effort to attract asset managers, such as hedge funds and private equity funds, serving the richest and most risk-tolerant investors. The DIFC has boomed since it was set up as a financial free zone in 2004, becoming the Middle East’s top banking hub. The number of registered firms operating in the DIFC jumped 14 percent to 1,039 last year, but it has not come close to competing with the likes of Luxembourg, Dublin and the Cayman Islands as a top domicile for funds.
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