Macau Business Daily, April 16, 2014

MOP 6.00 Publisher: Paulo A. Azevedo Number 519 Wednesday April 16, 2014 Year III

‘Team Business’

fires up

The Macau Grand Prix will, for the first time, hold a public tender for the right to sponsor the title event and individual races. Greater transparency and strong interest from companies are cited for this 61st edition innovation.

This year’s 190 million-pataca budget is15 percent up on 2012 16

www.macaubusinessdaily.com

Page

Urban myth

Brought to you by

We already have an Urban Planning Law. But its master plan may take up to five years, legislators were told yesterday by Secretary Lau Si Io Page 3

Seasonal factors slow revenues

Reality bites The advice is clear: the Year of the Horse does not favour property owners, as a result of less favourable conditions.

Mortgages, non-observance of loans for individuals and real estate agents caution aspiring property owners.

The report on pages

Foreign reserves drop to lowest level since separation from fiscal reserve Page 3

6&7

HSI - Movers April 15

Name

%Day

Cheung Kong Hold

0.37

Power Assets Hold

0.14

CITIC Pacific Ltd

0.14

April is, so far, lagging expectations in terms of gaming revenues. Seasonal factors, say analysts. Much better was the first quarter, with profits from casinos reaching 20 and even 30 percent

Sun Hung Kai Propert

-0.20

China Resources Powe

-0.23

China Overseas Land

-3.59

China Mengniu Dairy

-3.80

Page 8

China Petroleum & Ch

-3.91

Hong Kong Exchang

-5.27

China Merchants H

-5.55

A breath of fresh air

Source: Bloomberg

The China government is about to finish writing a law that will reinforce punitive measures in environmental cases. The ruling will be the first improvement on the matter in 25 years Page 10

Government evaluating ways to improve residents’ retirement pot Page 5

Osaka planning to overtake Tokyo in the casinos contest Page 9

I SSN 2226-8294

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April 16, 2014

Macau

IT, fashion design, logistics to spearhead training Macau Production and Technology Transfer Centre also notes that it will continue consultancy support for city’s SMEs Stephanie Lai

sw.lai@macaubusinessdaily.com

of Transportation and Logistics (AST & L) targeting logistics management professionals in the city, as well as reinforcing collaboration with local and overseas colleges in hosting beauty courses and fashion design programmes.

The Centre has organised 1,107 courses in the past year, of which about 45 percent are appointed by the government, private companies or local trade chambers for staff training; the remaining courses were open to the public.

SME consultant

P

roviding more training programmes for the city’s workforce in the fields of information technology, fashion design as well as the logistics business will be the target of the non-profit vocational training unit Macau Production and Technology Transfer Centre (CPTTM) this year, along with the continuation of consultancy services to answer small firms’ operational queries, the Centre’s director general Shuen Ka Hung told Business Daily.

In an interview, Mr Shuen, also a former director of the Labour Affairs Bureau, said that the challenge for the Centre is to cope with the diversification of the local economy, where the rise of new fields such as culture and the creative industry or traditional Chinese medical research mean that the Centre also has to update its training programmes.

“Many of our colleagues are administrative staff, and we’re not familiar with sectors like Chinese medicine or filming,” said Mr Shuen.

“But we have a big network of 70 associates that can step in to help.”

A majority of these 70 associates are local trade chambers, companies in the industrial and service sector. The Centre is a non-profit unit that majors in providing vocational training in which the Macau government owns 60 percent.

The Centre’s upcoming task is to place particular focus on reinforcing its information technology courses for the public, especially network engineering, Mr Shuen said.

“For programming, this work can be done long-distance and contracted to outside but for network engineering you have to work on-site,” Mr Shuen said. “It is very important to train locals in network engineering otherwise companies will have to rely on imported labour.”

According to Mr Shuen, it will host training programmes on “H3C certified network engineering” – a certification that will prove a grasp of knowledge in network design and configuration for medium and small

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The Centre’s upcoming task is to place particular focus on reinforcing awareness of its information technology courses to the public

companies. The centre will also host iPhone and iPad application design courses plus other regular courses on software use.

The Centre director also noted that it will host more certification courses recognised by the American Society

Mr Shuen, who was head of the Labour Affairs Bureau for over 13 years before assuming the Centre’s director post in April 2012, refused to comment on the labour quota policy and the insufficiency of workforce in the city.

But he stressed that his Centre is dedicated to helping local small and medium-sized firms enhance their operational capacity by using technology, introducing, for instance, accounting programmes or inventory software.

Mr Shuen said the Centre offers consultancy services to answer local small and medium firms’ queries on product promotion, management issues, and enquiries about the local investment environment. Beginning last year, the Centre also offers consultancy services for start-up businesses.

“We deal with various sorts of [operational] problems of the small and medium firms. For example, we clarify what documents a clinic start-up should prepare for opening its business, the legislation that it should meet or introduce renovation companies it can look for,” he added.

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April 16, 2014

Macau

The long urban march The long-awaited urban planning law is already in effect but it may take up to five years before Macau glimpses its master plan Sara Farr

sarafarr@macaubusinessdaily.com

I

t was August 12, 2013 when legislators approved a bill that would see Macau finally have the much awaited Urban Planning Law. While the law first came into effect last month, the government has still to introduce its master plan. However, that may take between three to five years, secretary for lands and public works Lau Si Io told legislators.

Government representatives attended the Legislative Assembly yesterday to answer legislators’ enquires from earlier in the year.

In response to Ng Kuok Cheong, who queried the government on when it plans to introduce a master plan for Macau’s urban planning and asked when public consultations will be held, Mr Lau said “the master

plan should be in line with regional development strategies and public policies outlined for the development of the SAR.” Drafting a master plan presents “great implications” of its own, Mr Lau said, adding that the administration would strive to begin working on it by the end of this year. First, the government will conduct a study on strategic urban development, which includes “technical issues” such as environment, traffic, heritage, landscape and public equipment.

In addition, a number of public consultations will be held in regard to the proposed conceptual plan. Once social consensus is reached, then the government will proceed with legal works, after which another public

Foreign reserves hit 2-year low M

acau’s foreign exchange reserves dropped in March to the lowest level since its separation from the fiscal reserve.

Preliminary data from the Monetary Authority of Macau showed yesterday that the foreign reserves of the territory totalled 122.1 billion patacas last month, a decrease of 6 per cent compared to one year ago and 1,3 per cent less than in February.

The money in international currencies held by the central bank fell 7.8 billion patacas in one year and half a billion in one month. The March reading was also the lowest figure since February 2012 when the government separated the fiscal

and exchange reserves and started to manage them separately.

The decline in exchange reserves could be due to the devaluation of the currency in which the assets held by authorities are denominated or by government selling. Central banks park external currency in their coffers to manage the exchange rate or protect the financial system against crises or market crashes.

The monetary authority also advised that the amount of exchange reserves in February (data for March not yet available) represented 11 times the money in circulation in Macau, also known as M2, that aggregates all notes and coins plus bank deposits and savings.

consultation will be held before it is approved by the Chief Executive.

“According to our preliminary estimates, this could be in three to five years,” Mr Lau said.

Northern Taipa issue Legislator Ng also asked for clarification on the northern Taipa urban development plan that embraces part of Macau’s historical centre.

In January, the New Macau

Association voiced concern about whether the government had unfairly favoured the construction sector by relaxing the height cap in the area to 90 metres under the new urban planning law. In addition, developers are now permitted to build projects with areas 20 percent larger than what has been specified for the area for the last two decades.

Critics accuse the government of rushing to amend the plan before the urban planning law came into effect on March 1 this year.

Secretary Lau yesterday told legislators that the northern Taipa urban development plan took into consideration social aspirations and seeks to overcome obstacles that prevent the development of the area for a “long time.” These changes, he said, will create the means to make better use of the land and offer public housing.

He added that with regard to “Zone C and D” of the urban plan, the plots of land around the Praia Grande coast will have to be in line with the Heritage Protection Law, and as such the relevant departments are still working on the plan for this area.

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April 16, 2014

Macau Centre says more problem gamblers seeking help Forty-six people asked for help last year from the centre for problem gamblers run by the Macau Industrial Evangelistic Fellowship. The director of the centre, Danny Lau Ka Shing, says this was almost twice the number of people that asked for help the year before. Mr Lau said 70 percent of the people that needed help last year were men. He said most of those that sought help gambled in casinos.

Tourists spending up in Q1

Trade union bill rejected for fifth time

The tourist price index has increased by 7.4pct, primarily due to soaring hotel room rates and restaurant services

V

isitors to Macau spent around 7.4 percent more than usual in the first quarter of the year, mainly due to the hike in price of hotel rooms during the Chinese New Year period.

Official data released yesterday by the Statistics and Census Service reveals that in the first three months of this year the price of accommodation increased 20.8 percent, followed by that of food and beverage by 5.6 percent, and entertainment and cultural activities by 5.4 percent.

The price index for transportation and communications, however, dropped by just under 3 percent due to low-cost airfares, while that of “miscellaneous goods” also dropped 2.4 percent due to the reduced prices of gold jewellery.

Compared to the previous quarter, the tourist price index increased 1.2 percent, with the index for accommodation increasing 5.6 percent, entertainment 3 percent, and food and beverage 2.6 percent. The

price index for clothing and footwear declined 8.7 percent quarter-onquarter, primarily due to the seasonal sales of adult clothing and handbags.

The average tourist price index for the last four quarters increased some 6.7 percent over that of the previous period.

The sectors with notable price increase were accommodation, with a 13.8 percent jump, and food and beverage with an 8.1 percent increase. The price index of “miscellaneous goods”, however, decreased by 3.6 percent.

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The Legislative Assembly has voted to reject the latest trade union bill. Members voted 14 to nine against the bill, with seven abstentions. The bill would have allowed trade unions to call strikes and offer workers legal advice, and would have exempted unions from paying court costs. The bill was the fifth to be rejected by the assembly since the handover. Members said the bill should have been better drafted and that, anyway, this was not the right time for such legislation.

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5

April 16, 2014

Macau

Provident fund for the elderly MOP270mln for Social Security Fund yesterday started inviting public building repairs opinion on the provisions of the provident fund. The 60-day consultation seeks to solicit ideas for better protecting the retirement of Macau residents Tony Lai

tony.lai@macaubusinessdaily.com

T

he amount companies contribute on behalf of their employees in a proposed central provident fund will be considered three times more when calculating their tax costs as the sole incentive the government proposes to appeal to firms to join the scheme.

But the official proposal still includes the possibility of a so-called ‘hedging mechanism’ in the nonmandatory central provident fund, which still has a long way to go before materialisation.

Yesterday, the Social Security Fund kicked off a 60-day public consultation for the provident fund, which was first envisaged in 2008 as one of the means of better protecting the retirement of Macau residents.

The government p rop ose s employers and workers each pay 5 percent of the latter’s monthly income, up to 1,500 patacas (US$187.5), to contribute to the latter’s provident fund. The fund applies to permanent and non-permanent Macau residents.

Ip Peng Kun, president of the Social Security Fund, said yesterday: “It is an appropriate timing to have change in the territory’s overall pension system because of the aging population and economic growth of recent years.”

“The operating costs for particularly the small-and mediumsized enterprises will surely increase,” he admitted. “But they should also assume a certain social responsibility for the protection of employees.”

Employers’ contributions would be regarded as operating costs when calculating their complementary tax, which taxes annual company profits

over 32,000 patacas at rates between 3 percent and 12 percent, according to the government proposal. In the first three years of the scheme, however, the government will consider the amount three times more in calculation, as an incentive.

Mr Ip did not comment yesterday on whether such an incentive is enough, only saying that they are open to opinions in the public consultation. He added that the companies joining the private pension fund do not currently enjoy the benefits of considering their contribution as three times more.

Some business leaders say benefits arising from complementary tax are not enough and that the government should think of tax breaks for professional tax as well.

Many hurdles Official figures show that there were over 106,300 workers in companies here joining the private pension scheme - one of the government’s targets for this proposed provident fund.

But it may still take a long time before the materialisation of such a fund because Mr Ip said that the scheme still requires numerous approvals from different bodies. He did not lay out a timetable for the work yesterday, only saying that they will “conduct the work as soon as possible”.

Once the public consultation ends in June, the government will draft a report before submitting a draft bill on the provident fund to the Standing Committee for the Coordination of Social Affairs for discussion. After discussion, the bill needs approval from the Executive Council and

Chinese Estates may pursue STDM

D

eveloper Chinese Estates Holdings Ltd, controlled by tycoon Joseph Lau Huen Hung, confirms in its annual report that it may ask the Macau government and three companies for land costs if its two land grants are deemed invalid.

The company said that the two appeals to the government’s invalidation of two grants of land plots near Macau airport were still ongoing.

But Macau government, Macau International Airport Co Ltd, Sociedade de Turismo e Diversões de Macau, SA (STDM), and veteran

businessman Ng Fok should be responsible for returning the HK$1.33-billion land cost, if its appeals are unsuccessful, Chinese Estates said in the report released this week. The three companies and Macau government are shareholders of the companies granting Chinese Estates the land plots.

The Macau government voided the two land grants when they came under the spotlight in the bribery case of Mr Lau, who was sentenced last month to jail for five years and three months.

Mr Lau has appealed.

the Legislative Assembly prior to implementation.

The official proposal revealed yesterday has two plans for the public to decide on how to handle the employers’ contribution when workers leave their companies.

One suggests that the amount workers can take depends on their years working in the company, regardless of whether they resign or are sacked without cause. Another proposes the so-called ‘hedging mechanism’, meaning bosses can use their contribution to compensate workers for dismissal.

But Mr Ip said last month that such a hedging mechanism - strongly rejected by workers’ unions here – would not be considered. He only explained yesterday that such a change could help “make this fund more easily implemented” The government will review whether it will make this provident fund mandatory for companies to join after a three-year implementation of the fund, he added.

A

s many as 2,508 applicants have submitted requests for financial support from the government for repair and maintenance works on old buildings. Six such government plans have been in effect since 2008 and fall under the Building Maintenance Fund.

To date, all submitted applications total 270 million patacas-worth. In addition, since 2008 until the end of last month, a total of 2,014 applicants have had their paperwork deferred, in the amount of 230 million patacas.

Speedier visits via smart-chip

M

ainland visitors are likely to spend less time queuing in immigration terminals on the Labour Day holiday on May 1, according to the administration of Guangdong. The Guangzhou government has confirmed in its official Twitter-like Weibo account that the new smart-chip permits to Macau and Hong Kong for mainlanders will be piloted in Guangdong province “soon”.

The government predicts that Guangdong tourists can use the new permits as soon as the May 1 holiday. It is expected to take just eight to 10 seconds to complete immigration procedures with smart-chip permits, compared to the current half a minute using the booklet permit.

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April 16, 2014

Macau Brought to you by

HOSPITALITY Obstinate figures The length of stay of hotel guests is usually a figure that changes little for long periods of time. In the case of Macau the indicator also stands stubbornly at comparatively low values. In the period shown, from the beginning of 2010 up to February 2014, the most typical overall figures for the sector have been 1.4 nights and 1.5 nights, occasionally dropping below those values.

This means that most of the guests stay just one night at hotels. The figures for Asia are as a rule even smaller, as many of the visitors come from neighbouring regions, which makes the travel easier and the stay quite often a short one. There are, however, a few significant differences in the patterns displayed by the regions contributing the most to the hotel guest tally.

Real estate transactions are decreasing but prices continue to rise, especially for old houses in old districts

Mortgaged owners, beware With the prospect of interest rates increasing, driven by the US banking system, Macau’s interest rates will be subject to the same fate. People in the property business advise those seeking bank loans for housing to stay alert Luciana Leitão Photos by Manuel Cardoso

Of the six top sources of guests, China is the one with the shortest average length of stay. For most of the last two years the figure has stood at 1.1 nights, occasionally dropping to one night. That suggests these are mostly package tours with a single night stay in the city. The only major country in that group which has seen the average stay rise slightly is Japan. It is also the one with the most significant decrease in the total number of guests. All other countries and regions, with the exception of Macau, have seen their average stay decline over the second half of the period shown, compared to the first half. Macau is here the only real exception. The number of nights has increased noticeably over past years, rising from 1.6 nights in the first half of the period plotted to 1.9 nights in the second half.

J.I.D.

2.2 nights average hotel length of stay for Macau guests, February

T

his is not a favourable year for property owners, so said the Monetary Authority of Macao in a report released in March. In the same month, the chief executive officer of Midland Realty Macau, Ronald Cheung Yat-fai, warned young people – and those on average incomes - not to buy a house in the territory. Such warnings come at a time when the US central bank is expected to increase interest rates, signalling potential buyers to be more cautious.

The Monetary Authority of Macao said in March in an online report about the financial conditions of the region that property owners are facing less favourable conditions this year and that the government should take precautionary measures.

It should be particularly alert to data concerning mortgages and the nonobservance of loans for individuals and real estate agents that, up to now, remain stubbornly low. The report also stated that despite the government cooling measures over the past years, prices continue to rise,

adding to the uncertainty of the real estate market.

Rose Neng Lai, assistant professor of Economics from the Faculty of Business Administration of University of Macau, says the report addresses changing conditions, due mostly to conditions in the North American

economy. “It’s clearer now that the Fed [Federal Exchange Reserve] will increase interest rates by the second half of next year. This means there’s already a lot of expectation about increases in borrowing costs”, she told Business Daily. Mortgage rates charged by local banks here mimic interest rates in the United States, due to the indirect currency peg between the pataca and the US dollar.

Minimum impact

Prices of residential units doubled from MOP 41,433 per square metre in 2011 to MOP 81,811 per square metre in 2013

The Monetary Authority of Macao report itself is not a surprise for local residents, says Jones Lang LaSalle’s head of residential property in Macau, Jeff Wong Chi Wai. Transactions continue to drop because people already bear in mind that increased interest rates are in the offing. “It mostly serves as a reminder for future situations”.

As for the conditions stated in the report, Ricacorp Macau managing director Jane Liu Zee Ka says up to now these haven’t impacted the market too much as property owners

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April 16, 2014

Macau different”, says Ms Liu. Ms Liu says the world economic situation this year is “unstable” and things like “interest rate stability in Europe and Russia” certainly impact the world economy. And, even though she admits it does affect the property market in Macau, she says it does not do so to the same degree as in the rest of the world. “We have the best growth in the world and in the coming five years a lot of infrastructure will be going on in Macau, like land reclamation, the bridge connecting Hong Kong, Zhuhai and Macau, and many hotels.” She also expects that property market prices in Macau will not rise as much as in past years, even though these should not come down, unless there are new cooling measures from the government.

Average resident priced out

in Macau are “quite rich” and usually do not ask for bank loans. “I don’t see local landlords selling because of this.” Yet what she has noticed to be a bit different is the fact that property owners from Hong Kong and Mainland China are now more open to negotiation with regard to the selling price. “People can now negotiate a little bit because the situation is

On a seminar at the University of Macau the chief executive officer of Midland Realty Macau, Ronald Cheung Yat-fai, alerted locals, especially youngsters, about the risks they face when buying a house.

Conditions have changed and they are not as good for those who need to borrow money from the bank, he warned.

To Business Daily, Mr Cheung admitted that the “overall environment of the property market may not be as good as last year”. In the first half of last year, with several firsthand property units launched in the market, the price increased. Yet, in the second half, due to the approval of several property related laws such as the agencies real estate law, the land law and the pre-sales unit law, the number of real estate transactions decreased more than 50 percent, although prices continued to climb.

According to the Statistics and Census Service (DSEC), regarding residential units, in 2012 there were less than 259 property transactions compared to the preceding year, accounting to a total of 16,917, while in 2013 there were 4,871 less for a total of 12,046 transactions last year.

As for the price of residential units, they increased from MOP 41,433 per square meter in 2011 to MOP 81,811 per square metre last year.

“Some of the major residential units increased by more than 70 percent since January 2013 until December 2013; some may even have doubled, especially in the old districts”, he says. As such, 20 to 30-year old apartments, without lifts, are now fetching from MOP3 to MOP5 million.

But the continuous reduction in the number of transactions results mostly from the lack of supply. “Owners are reluctant to sell their property, as there is no supply in the market”, he says.

This leads to a continuous increase in prices, making it favourable for property owners, even though it is not favourable for real estate agencies surviving on commission.

Prices have increased to a level only a few can afford, with younger people squeezed out. “The number of transactions will drop when prices climb further, no matter the regulations”, he says.

Most of property owners in Macau are low to medium level ones, he says, while the rich constitute a small percentage. Considering young people are just entering the labour market, and unless they are buying with their parents’ money, Mr Cheung believes they cannot afford to buy a house in Macau. “Brand new buildings cost close to HKD10 million”, he says.

Even if they work for 10 years, if

Some of the major Property owners With the current loanresidential units from Hong Kong and to-value ratio, and more increased by more than Mainland China are than 50 percent of 70 percent from January now more open for down payment, people 2013 to December 2013; negotiation in regards to need to see the monthly some may even have the selling price. People mortgage payment, the doubled, especially in can now negotiate a interest rate increase the old districts little bit, because the and whether this situation is different [buying a property] can Ronald Cheung Yat-fai still compensate the Jane Liu increment in rental Jeff Wong Chi Wai

Major cooling measures June 2011

• Special stamp duty on transactions for residential units;

October 2012:

• Special stamp duty on transactions extended to the sale of shops, offices and car parks; • Imposition of additional 10 percent stamp duty for foreign and corporate buyers; • Tighter mortgage lending rules for completed and pre-sale flats; • Increase in supply of public housing;

2013:

• New rules on pre-sales constrict the supply of unfinished flats.

they have no money for the initial deposit, they cannot get onto the housing ladder.

As such, he believes that the whole property market environment is unfavourable, particularly when one adds the fact that interest rates will increase in the very near future.

“It’s a natural cooling measure, the whole environment caused by the North American environment”, he concludes.

Uncertain advice The question that seems to arise from all these warnings is: “Should people buy a house in Macau or not at this moment?” The answer is far from simple. “No-one has the answer [to that]. Simply put, any answer either way can in itself be self-fulfilling”, says Ms Lai. And should owners be already selling their houses? “Perhaps the answer can come from what will happen in 2016 and 2017 when the developments on the Cotai strip are completed”, she says.

Before answering such questions, Mr Wong explains that there are two basic indicators of market performance: price level and transaction volume. The price level has kept climbing but at a reasonable level. “The amount of increment is much less than two years ago. This year’s increment is still in line with the projections at the beginning of this year - 10 percent increase”, he says.

The transaction volume, however, continues to go down and in this regard he does not see any instability.

As for the US Fed projections, he only believes that it is now being “more transparent”.

As such, considering the current conditions, and mostly due to the increase in rentals, he believes it still pays off for buyers purchasing a property for their own use. “Rentals will still go up in the next two to three years”, he says.

In fact, Mr Wong believes the big question is whether it is worth renting an apartment that keeps going up. “With the current loan-to-value ratio, and more than 50 percent down payment, people need to see the monthly mortgage payment, the interest rate increase and whether this [buying a property] can still compensate for the increment in rental”, he warns.

Business Daily asked the secretariat for Transport and Public Works whether there will be any new precautionary and cooling measures but received no reply by the time of the closing of this edition.

8

April 16, 2014

Macau

Good quarter, bad month?

Gambling profits soar 30 percent in the first quarter, April in the red Alex Lee and Toni Lai

newsdesk@macaubusinessdaily.com

M

ass market players continue to fuel investor optimism in Macau’s gambling industry, despite a gloomy April due to less spending ahead of the May 1 holiday, reports show.

According to estimates released yesterday from JP Morgan and Goldman Sachs, profits from casinos in the territory could increase 30 percent and revenues jump around 20 percent in the first quarter compared to a year ago.

Both investment banks underline the mass market segment, which has a lower revenue volume compared to VIP gamblers but provides a double profit margin to companies, that continues to compensate the deceleration of the high rollers.

JP Morgan expects revenue from Macau’s mass market to increase 39 percent in the first quarter on a yearly basis, more than triple the rate for healthy players (12 percent more compared to the first quarter of 2013). For global Macau’s gambling revenues Goldman Sachs points to a 16 percent increase figure, with JP Morgan more optimistic at 20 percent.

According to JP Morgan forecasts, Galaxy is the best performer of the year so far in Macau followed by MGM, both with profits before tax

in the upper single digits (above 7 percent) compared to the fourth quarter of 2013. Melco Crown, SJM and Wynn Macau will underperform with operational profits declining between 2 and 4%. Macau’s earning season starts this month.

May 1 effect Despite the strong performance in the January/March period, April is set to be a gloomy month for the industry due to seasonal factors (May 1 holiday). The US-based brokerage

MOP30.72 billion Telsey’s estimate on April’s gaming results

firm Telsey Advisory Group LLC forecasts a downturn for gaming revenue this month due to slower spending ahead of the Labour Day holiday starting May 1.

Telsey’s analysts wrote in a client note on Monday night that the broker expects that the casinos here could take in as much as HK$29.83 billion (US$3.85 billion), or 30.72 billion patacas, this month, rising by only 8.5 percent over the previous year.

This is in contrast with estimates by other investment banks like Credit Suisse and Barclays Capital, which envision revenue growing at least in the low double-digits this month.

Barclays said in a note last week that April revenue could hit 32.83 billion patacas.

Telsey’s Mr Jones reasoned his gloomy forecast as “the May 1 Golden Week could cause a slowdown in spending ahead of the holiday, as was seen last year.”

Telsey also indicated April was a traditionally weaker month for gaming revenue growth. “After a strong February/March, investors clearly expected the momentum to continue,” the note said. “Instead … the especially strong February and March this year left gamblers fatigued, leading to a softer April.”

Official figures show Macau’s

gaming revenue expanded by 19.8 percent year-on-year in the first quarter of this year to 102.2 billion patacas, following 40.3-percent growth in February for a record monthly figure of 38 billion patacas.

Indeed, numerous analysts have commented that the gaming revenue in the first week of April has slowed down by up to 23 percent from the average weekly figure in March, because of wet weather and low win rate in the VIP market.

The figure in the second week of April, however, has already slightly recovered to HK$927.2 million, up 7.1 percent from the April 1-7 period, Jones wrote.

Galaxy is the best performer of the year so far JP Morgan

Red ink for the bottom line Hong Kong-listed group C Y Foundation has issued a profit warning, saying its losses are mainly attributable to the net loss of the slot machines business segment Stephanie Lai

sw.lai@macaubusinessdaily.com

C

Y Foundation Group Ltd expects to record a consolidated loss for the financial year ended March 31, 2014, mainly attributable to net losses in its electronic gaming business in the period, the company said in its latest profit warning note filed with the Hong Kong Stock Exchange.

In the filing, C Y Foundation noted that “the significant startup operating costs, amortisation and depreciation charges” for the management of electronic gaming equipment in Macau outweighed the group’s profit in the year, leading to an expected loss.

On September 16 last year, C Y Foundation announced that it had completed the deal to acquire Weike (G) Management Macau Ltd for HK$69 million (US$8.9 million). The target firm has a five-year contract – renewable for a further five years – to manage 205 slot machines in Pharaoh’s Palace Casino, licensed

by Sociedade de Jogos de Macau SA. Later in September, the group announced that its acquired Weike (G) Mangement Macau Ltd had signed two more deals to supply and

maintain slot machines in Casino Casa Real on the Macau Peninsula and Casino Grandview in Taipa, both licensed under SJM. Under the deal, Weike (G) Management will supply a minimum of 120 slots and multiterminal machines for each property, in addition to selecting and training maintenance and operational staff.

In the latest profit warning note, the group said that the significant costs incurred in advertising and promotion, technical team development and capital expenditure outweighed profit during the financial year, including gains derived from the disposal of a wholly-owned subsidiary of the group Expert Global

Investments Ltd for 110 million yuan (HK$136.75 million). This is in addition to the collection of the settlement sum in relation to litigation between another subsidiary, Lucky Zone Holdings Ltd, and Ronald Leung Ching Yuen, in which the latter paid US$2 million plus legal expenses of HK$100,000.

The disposed Expert Global Investment Ltd was principally engaged in property investment and the digital entertainment business, C Y Foundation explained in its interim report.

In the interim report filed on November 29 last year, C Y Foundation stated that it has registered its total revenue, other income and gains at HK$57.2 million for the six months ended September 30, 2013, of which the electronic gaming business contributed just HK$0.3 million. During the period, the company noted that it has generated profits in the manufacturing and sales of its packaging products business and property investment, although it recorded a loss for its digital entertainment business and electronic gaming activities.

9

April 16, 2014

Macau Dance Star purchases China Star Ltd Dance Star Group Ltd, a subsidiary of China Media and Films Holdings Ltd, has purchased China Star Entertainment Holdings Ltd, a subsidiary of China Star, for HK$4.3 million in cash. According to the filing, Hueng Wah Keung, chairman and executive director of both China Star and China Media, now has around 4.7 million shares in China Star, representing 41.5 percent of the entire issued capital of China Star. China Star, owner of Lan Kwai Fong hotel-casino, last month increased its presence in the casino junket market here by offering a HK$200 million loan to a junket. The move enabled the company to have a better grasp of the operation.

Osaka pulls ahead Osaka set to designate site for Japan’s first proposed casino.

Melco Crown Entertainment CEO Lawrence Ho met with the city’s governor last week Nathan Layne and Yoshiyuki Osada

KEY POINTS Osaka governor says city to soon designate site for proposed casino Governor supports casino plan; Tokyo officials yet to voice support Parliament to start debating legalising casino gambling bill next month

T

he Japanese city of Osaka plans to invite operators to build a casino on a plot of reclaimed land on Osaka Bay, its governor told Reuters, pipping Tokyo in the race to attract global gaming firms to set up the country’s first gambling resort.

Yumeshima, with about 170 hectares (420 acres) of land available for development, is likely to be designated as the preferred site for a casino when Osaka officials meet on April 22 to discuss the issue, Governor Ichiro Matsui said in an interview.

Tokyo, the other city most likely to host a casino, has yet to officially name a site for a development, although the Odaiba area in Tokyo Bay is being touted as the preferred location. Tokyo Governor Yoichi Masuzoe has yet to say whether he supports a casino in the capital.

“It’s about time that as a city we narrow down the candidate sites,” Matsui said as Japan’s parliament prepares to debate a bill that would start the process of legalising casino gambling in Japan.

“We have reached the point where we need to start accepting proposals,” he added.

Brokerage CLSA predicts Japan could become the world’s thirdbiggest gambling market with annual

revenue of over US$40 billion.

Matsui, in office since 2011, is a member of the Japan Restoration Party, which has so far supported the casino bill.

Proponents of the initial bill expect debate to start in May, and aim to pass it before the house adjourns in June.

This initial bill would then be followed by a second bill in 2015 cementing concrete laws on how the licenses are selected and the resorts regulated. Supporters say casinos could be in operation by the time Tokyo stages the summer 2020 Olympic Games, boosting leisure industry spending.

Some casino operators and industry analysts say Tokyo may be wary of building a casino at the same time as it prepares to host the Olympics.

Global and Asian gaming companies including Las Vegas Sands Corp, MGM Resorts International, Wynn Resorts Ltd and Malaysia’s Genting Bhd have courted officials in both Osaka and Tokyo ahead of the initial bill.

Japan is widely viewed as a prize market for casino operators due to its wealthy population and proximity to China, home to some of the world’s most prolific, and richest, gamblers.

CLSA estimates Japan could be the world’s third-biggest gambling market after Macau and the United States, and with many more years of growth before it starts to mature.

Matsui said he would like to see a unique casino complex in Osaka that features local elements such as the region’s renowned cuisine.

While Yumeshima has lots of space for hotels, convention centres and entertainment and gaming facilities, the city has yet to expand rail services in the area.

Matsui believes casino operators will invest more than 500 billion yen (US$4.91 billion) in an integrated resort in the city, adding that he was visited last week by Lawrence Ho, chief executive of Melco Crown Entertainment.

Melco has said it would cost at least US$5 billion to develop a Japan casino complex.

Operators are also expected to carry some of the infrastructure costs, but the details will be ironed out after the city receives official proposals.

“That will be for the negotiations,” Matsui said, referring to the breakdown of costs. “Right now we have many companies that want to make proposals. I’d like to see those first.”

Reuters

Japan weighs social costs of casinos A

ccording to media reports, Japanese society is concerned about casino deployment implications. Alleged criminal activities surrounding casinos might cloud the economic improvement they could bring to the country.

Newspaper Asahi Shimbun said yesterday that “economic benefits could be overshadowed by the social costs evident in other countries where gambling is legal”. To prove the point, media reporters narrate stories related to Macau and South Korea.

Regarding Macau, journalists Kenichi Hato and Roppei Tsuda revealed how junkets play a key role in the casino scene. Junkets consist of independent liaison organisations under commission who introduce high betting gamblers to casinos.

Gamblers pay the commission and bet in the casino, receiving in return free accommodation, transportation and meals. Junket customers and other VIP clients represent 70 percent of the 360.7 billion patacas Macau casinos take in annual income.

Asahi Shimbun says “suspicions continue that some junkets are involved in money laundering or have relations with gangsters”.

The online media says that due to China government restrictions, the only way to get enough money for high stakes gambling is by borrowing money from the junkets. This process also makes it possible to launder money. Those who resist paying debts “may even face mafia threats”.

The governor’s bet Shintaro Ishihara started the trend in 1999, when, as governor of Tokyo, he proposed establishing casinos in the fashionable Odaiba district of the capital.

Hokkaido, Osaka, Nagasaki and Okinawa “have all earmarked budgets for casino-related studies this fiscal year”, says an Asahi Shimbun survey.

A supra-partisan group of lawmakers in December submitted a bill to the Diet that seeks to promote the establishment of casinos in Japan. Deliberations are likely in the current session.

O.G.

Hokkaido, Osaka, Nagasaki and Okinawa have all earmarked budgets for casino-related studies

10

April 16, 2014

Greater China

Environment over development A new law would give the ministry the legal authority to take stronger punitive action

S

mog-hit China is set to pass a new law that would give Beijing more powers to shut polluting factories and punish officials, and even place protected regions off-limits to industrial development, scholars with knowledge of the situation said.

Long-awaited amendments to China’s 1989 Environmental Protection Law are expected to be finalised later this year, giving the Ministry of Environmental Protection (MEP) greater authority to take on polluters.

While some details of the fourth draft are still under discussion, it has been agreed that the principle of prioritising the environment above the economy will be enshrined in law, according to scholars who have been involved in the process. The fourth draft is due to be completed within weeks. “(Upholding) environmental protection as the fundamental principle is a huge change, and emphasises that the environment is a priority,” said Cao Mingde, a law professor at the China University of Political Science and Law, who was

involved in the drafting process.

The first change to the legislation in 25 years will give legal backing to Beijing’s newly declared war on pollution and formalise a pledge made last year to abandon a decades-old growth-at-all-costs economic model that has spoiled much of China’s water, skies and soil.

Cao cautioned that some of the details of the measures could be removed as a result of bureaucratic horse-trading. The MEP has called for the law to spell out how new powers can be implemented in practice, but the National Development and Reform Commission (NDRC), the country’s top economic planning agency, prefers broader, more flexible principles.

“There is a usual practice when everyone is unable to come to a complete agreement - we first put an idea into the law and then draw up detailed administrative rules later,” Cao said.

Local authorities’ dependence on the taxes and employment provided by polluting industries is reflected by the priorities set out in China’s

growth-focused legal code, said Wang Canfa, an environment law professor who runs the Centre for Pollution Victims in China and also took part in the drafting stage.

The environment ministry did not respond to a faxed request for comment on its role in the drafting process and the specific content of the new amendments.

New powers In the absence of legally enshrined powers, the environment ministry has often made do with one-off national inspection campaigns to name and shame offenders, as well as ad hoc arrangements with local courts and police authorities to make sure punishments are imposed and repeat offenders shut down. It has also stretched existing laws to its advantage.

Last year, it began to use its powers of approval over environmental impact assessments, which are mandatory for all new industrial projects, to force powerful industrial

The environment ministry could only impose fines and management deadlines.

Now we can close and confiscate them. It’s an important right Cao Mingde law professor China University of Political Science and Law

Yangtze delta hoards credit risks There is a risk that defaults could trigger a chain reaction of credit problems destabilising China’s financial system

S

uzhou, an ancient city in Jiangsu province 100 km (60 miles) west of Shanghai, lives in legend as one of China’s most beautiful, famous for its elegant gardens and charming canals.

More recently, it became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove China’s economic boom.

Now it is ground zero for a painful corporate de-leveraging that has tacit government approval. One third of all loan delinquencies come from the region, and credit is getting harder to come by.

“The more banks do this, the more they promote a vicious cycle, and companies are even less able or willing to repay their loans,” said Zhou Dewen, vice chairman of the China Association of Small and Medium Enterprises.

The Yangtze River Delta (YRD) covers the financial capital of Shanghai and the eastern provinces

of Zhejiang and Jiangsu. In 2012, it accounted for half of China’s exports and attracted 57 percent of its foreign direct investment.

The outsized role of small, private firms, their savvy entrepreneurs and the vibrant underground financing networks that supported them have been a source of strength for the YRD. But now it may be vulnerability as the government shows it is prepared to let companies fail, at least private ones.

Among the six largest domestic banks that classify their nonperforming loans geographically, this region accounts for one-third of their bad debts.

“The YRD’s economy has been pretty seriously battered. Risks are multiplying,” said a risk-management executive at a mid-sized bank in Shanghai.

Economists say a series of isolated defaults would be mostly positive in the long run for China, by improving risk pricing and the efficient allocation of capital.

But there is a risk that defaults could trigger a chain reaction of credit problems that has the potential to destabilise China’s financial system, similar to the way global markets froze after the collapse of Lehman Brothers in 2008.

Bad-debt management Private companies in the YRD control 28 percent of assets held by industrial firms, compared to a national rate of 19 percent, according to Reuters calculations based on official data. The true ratio in the YRD is likely higher, since official figures only cover firms with annual operating revenue above 20 million yuan.

“Some specific industries bring risk,” said Xu Chengming, professor at Nanjing University of Finance and Economics, located in Jiangsu’s provincial capital.

Xu said solar panels and steel were the biggest sources of nonperforming loans in Jiangsu. The

channelling of funds into speculative investments, such as real estate, has further amplified risks.

Not surprisingly, Jiangsu was the first local government to establish its own bad-loan asset management company, modelled on the asset managers that Beijing used to clean up the balance sheets of the country’s four biggest banks, followed by Zhejiang and Shanghai.

Most analysts think bad loans, both in the YRD and nationally, are higher than official figures indicate,

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April 16, 2014

Greater China Great Hall of the People in Beijing will discuss the law by the end of the year

Land price growth slows Other official figures have shown that China’s home price rises slowed to a six-month low in February

C

firms such as Sinopec and the China National Petroleum Corporation to cut emissions at some of their plants, threatening to veto all new approvals until the firms met their targets.

“The environment ministry could only impose fines and management deadlines,” Cao said. “Now we can close and confiscate them. It’s an important right.”

It will also set up a more comprehensive range of punishments, putting an end to a maximum fine system that allowed enterprises to continue polluting once they had paid a one-off fee normally much lower than the cost of compliance.

Cao said the final draft was also likely to impose an “ecological red line” that will declare certain protected regions off-limits to polluting industry, though detailed definitions are likely to come later.

The legislation also proposes to formalise a system by which local cadres are assessed according to their record on pollution issues, including meeting emissions targets.

Reuters

hina’s residential land price gains slowed for the first time in nearly two years in the first quarter, and are likely to slow further in the second quarter, the land ministry said yesterday, another indication the property market is losing steam.

The average price of land for residential homes rose 2.1 percent to 5,139 yuan (US$830) per square metre in 105 major cities in the first quarter from the previous quarter, according to a report released by the China Land Surveying and Planning Institute, a research unit under the ministry.

That marks a slowdown from a gain of 2.6 percent in the fourth quarter of 2013 and the first easing since the second quarter of 2012.

The slowdown, a prelude to easing home prices, adds to evidence that China’s red-hot property market has lost some steam since late 2013 as local governments tightened controls on speculative buying, and as banks made it harder for home buyers and small developers to get loans.

The institute said the easing trend is likely to be sustained in the second quarter as the broader economy still faces “relatively big” downward pressures.

“Land prices will probably stop rising or begin to drop in some cities in the second quarter,” it said in the report on its website, www.landvalue.com.cn.

Compared with a year earlier, land prices for residential homes still rose 9.5 percent in the quarter, quickening from last quarter’s 9.0

average price of land for residential homes

Hong Kong development pictured. One of the top cities facing property pressure

The rise of Chinese energy equipment manufacturers and services firms overseas is putting pressure on established companies

Yangtze region powered China’s growth during boom years Now YRD accounts for a third of all non-performing loans Struggling textile firm highlights changed fortunes Factories battered by falling prices, rising costs

as banks can extend overdue loans and use other techniques to disguise delinquencies.

“These are China’s most developed places. The most developed places are growing the slowest,” said Zhu Tian, chair of the economics department at China Europe International Business School in Shanghai.

“If growth is slowing, you are going though some kind of transition, and some low value-added industries will have to die.”

Reuters

Reuters

US$830

New kid in oil and gas town KEY POINTS

percent annual growth, it added.

Other official figures have shown that China’s home price rises slowed to a six-month low in February as some developers started to cut prices. Data for March will be released later this week.

A recent Reuters poll showed that China’s home price inflation is likely to slow in 2014 compared with the previous year, while some small cities plagued with oversupply might see a price correction.

G

lobal oil companies are increasingly turning to China for services and equipment, attracted by lower costs and a newly acquired expertise that is challenging more established rivals.

State-run and privately controlled Chinese rig makers, oil and gas services and engineering firms are showing up in the supply chain everywhere from the Middle East, the North Sea and North America to frontier areas like Mozambique.

Chinese yards, having come from nowhere in less than a decade, are building more jack-up rigs -the most common offshore rig used for shallow water drilling- than all the other yards in the world put together, data from industry consultants IHS Petrodata shows.

Helped by strong government support, plentiful labour and an abundant supply of raw materials

like steel, China could become a major offshore oil equipment manufacturing hub in less than 10 years, industry executives say, just like Singapore and South Korea overtook the United States and Europe in the 1990s.

“The Chinese provide products with better value,” said Scott Darling, Hong-Kong based head of Asia oil

and gas research at JPMorgan, which hosted an investor tour of the Middle East last month to study the competitiveness of Chinese energy equipment and services suppliers.

“And they are experts in managing supply chains, thanks to their domestic experiences.”

The rise of Chinese energy equipment manufacturers and services firms overseas, partly fuelled by the rapid expansion of state energy giants, is putting pressure on established companies including Singapore oil rig makers Keppel Corp and Sembcorp Marine, and land drilling giant National-Oilwell Varco Inc (NOV).

To stay ahead, both Keppel and Sembcorp are increasingly building more sophisticated equipment, an area where Chinese firms still lack expertise. Leading the Chinese overseas expansion are statecontrolled shipyards and units of state giants China National Petroleum Corp (CNPC), parent of PetroChina , Sinopec Group and China National Offshore Oil Corp (CNOOC).

Chinese companies won over half the global orders for jackup rigs last year, up from around a third between 2008 and 2012, data from IHS Petrodata showed. In the area of land drilling equipment, a number of privately run companies have emerged as major overseas players.

Reuters

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April 16, 2014

Asia

Japan to miss gender equality goals Abe’s 30 percent target unattainable

P Skyline of Kuningan Area, Jakarta

Jakarta: city of the future Emerging Cities Outlook list highlights the main role of Asia in emerging scenario

I

ndonesia’s capital is the likeliest emerging city to gain a global role as a young workforce attracts foreign companies, according to a ranking by A. T. Kearney Inc. Indonesia’s capital led 34 cities in low and middle-income countries in a survey released yesterday by the Chicago-based consulting firm that measures the likelihood of an improved global standing over the next 10 to 20 years. Citing metrics such as business activity, human capital and innovation, the survey ranked Manila second. Addis Ababa, the capital of Ethiopia, was third.

Cities in emerging Asia made up half of the top 20, reflecting the potential of a region the Asian Development Bank predicts will grow 6.2 percent this year. With half of its population under the age of 30, Indonesia has lured companies such as L’Oreal SA, the French cosmetics company, which opened its largest factory worldwide there in 2012.

“Jakarta’s demographic advantage is quite significant,” John Kurtz, A. T. Kearney’s Asia-Pacific head, said in a phone interview on April 11. “Indonesia in general has been increasingly recognized by both companies and their counterparts in foreign governments as a rising influence in regional and global politics and regional and global business.”

Jakarta and Manila are benefiting from the emergence of the Asean Economic Community, according to Kurtz. Officials from the 10-member Association of Southeast Asian Nations are working toward allowing the free movement of goods, services, investment, capital and skilled labour as part of a European Union-style

integration plan, without the common currency, by the end of 2015.

Infrastructure development Indonesia ranked 114 out of 177 countries in Transparency International’s corruption perceptions index last year, compared to 118 in 2012. Jakarta Mayor Joko Widodo, frontrunner to become the nation’s next president, has addressed traffic and flooding while making infrastructure development and streamlined tax collection centrepieces of his governance.

“The real challenges for Jokowi and for Jakarta are the same challenges that face the country: to have a coherent long- term plan” to develop infrastructure and combat corruption, Kurtz said, referring to the mayor by his nickname.

The Emerging Cities Outlook ranked five Indian cities including New Delhi, Mumbai and Bangalore among the top 20. Kuala Lumpur ranked 10th and Beijing 12th, ahead of Johannesburg and Caracas.

Developing Asia’s economic growth will probably accelerate next year, helped by increasing momentum in developed nations, the ADB said this month. The region is forecast by the Manila- based lender to grow 6.4 percent next year.

“Incomes could keep rising, people have a lot more spending power,” said Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc. The ranking “is definitely a ‘look East’ kind of indicator, that people are increasingly seeing the prospects of Asia in the longer term,” he said.

Top 20 ‘Cities of the Future’ 1. Jakarta 2. Manila 3. Addis Ababa 4. Sao Paulo 5. New Delhi 6. Rio de Janeiro 7. Bogota 8. Mumbai 9. Nairobi 10. Kuala Lumpur 11. Bangalore 12. Beijing 13. Johannesburg 14. Kolkata 15. Istanbul 16. Cape Town 17. Chennai 18. Tunis 19. Dhaka 20. Caracas Source: A.T. Kearney

Bloomberg News

rime Minister Shinzo Abe will fail to meet his goal of having women in 30 percent of management positions in the civil service by 2020 unless candidates are lured from private industry, the gender equality minister Masako Mori said in an interview.

More than a year since Abe won election promising to boost female employment, the government has only managed to fill 3 percent of supervisory positions in the civil service with women.

“Unless they appoint people from outside, they won’t make the target,” Masako Mori said in an interview in Tokyo on April 9.

The difficulty in promoting women in the bureaucracy illustrates Abe’s challenge in reaching the 30 percent target for the entire economy as part of his bid to replenish a workforce forecast to shrink as much as 42 percent by 2060. Long working hours, difficulty in finding childcare and lack of opportunities to return to work after a career break have hampered women’s progress, Mori said.

“I’ve cursed the world around me as I’ve worked. It’s just so hard for women to work in this country,” she said.

Mori warned Abe’s deputy chief cabinet secretaries the goal was at risk in a meeting last week.

That warning came days before parliament gave final passage on April 11 to a law increasing Abe’s control over the bureaucracy by placing 600 senior appointments in the hands of the Cabinet Office.

Aged-based promotions Under the civil service’s age-based promotion system it typically takes more than 20 years to reach the rank of section chief, the first rung of the management ladder at the ministries. Women made up just 12 percent of new recruits for the top echelons of Japan’s bureaucracy in 1994, according to government data, meaning there are currently few internal candidates to choose from.

Economic growth under Abe and local government efforts to cut waiting lists for childcare have already resulted in more women joining the workforce. The number of working women rose by 470,000 last year to 27 million. The increase was less than 2 percent and still marked the largest gain since 1991, according to the internal affairs ministry.

Bloomberg News

editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Michael Armstrong, Pierre-François Metayer, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee International editor Óscar Guijarro Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari interns Cynthia Wong, Yvonne Wong 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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April 16, 2014

Asia Korea unification included in S. Korea budget South Korea’s 2015 budget plan will focus on laying groundwork for reunification with the Democratic People’s Republic of Korea (DPRK), reflecting President Park Geunhye’s commitment to seeking the so-called “reunification bonanza” despite rising tensions on the Korean Peninsula. South Korea picked the groundwork laying as one of the five major investment focuses for the 2015 budget plan, according to the Finance Ministry. The guideline on the 2015 fiscal spending, which was approved at the cabinet meeting and ratified

by President Park, will act as a principle under which ministries apply for next year’s budgets.

NZ finance minister reaffirms budget surplus New Zealand will post a budget surplus in the coming financial year, and will keep a tight rein on government spending to help limit rate rises in the strongly-growing economy, the finance minister said yesterday. Bill English reaffirmed the budget for the 2014/15 fiscal year to be delivered next month will show government finances back in surplus after six years of deficit.

The Treasury’s mid-year update last December forecast a surplus of NZ$86 million (US$74.6 million) in the year to June 2015, rising to NZ$3.1 billion by 2016/17.

Goldman profits on Japan’s convertible debt Goldman Sachs Group Inc. helped regional Japanese banks sell the most dollar-denominated convertible debt since at least 1999, as the lenders took advantage of a stock-market rally to fund overseas expansion. The world’s largest underwriter of the notes helped to arrange three of the firms’ five U.S. currency sales in the last 12 months. It co-managed deals by Yamagata Bank Ltd., Bank of Iwate Ltd. and Shizuoka Bank Ltd., whose convertible offering last April was the first by a Japanese company since 2002, according to data compiled by Bloomberg.

HCM City to slow down growth

Vietnam’s southern economic hub Ho Chi Minh (HCM) City is set to see a slowdown in economic growth from 2016 onwards, according to a master plan recently approved by the Vietnamese government. Accordingly, the socioeconomic development plan for HCM City and the Southern Focal Economic Zone until 2020 envisaged annual growth of 9.5 to 10 percent between 2016 and 2020, and 8.5 to 9 percent over the following five years, compared with the present 10 to 10.5 percent. By 2015, income per capita will be expected to reach from US$4,856 to US$4, 967.

Malaysia and Indonesia retrieve foreign investment Less than 11 months after former Federal Reserve Chairman sparked an exodus of funds from Southeast Asia by flagging an end to U.S. stimulus, the foreign money is back. Lured by higher yields, renewed fiscal discipline and robust economic growth, overseas ownership of Malaysian and Indonesian local-currency debt has almost recovered to May 2013 levels after US$7.4 billion of outflows in June through August. Offshore holdings of Malaysian sovereign notes were US$44 billion as of February 28, and the proportion of Indonesian securities owned by foreigners rose to 34 percent last week.

Fuel hedging in Asian skies S&P Capital IQ says top-tier airlines will be pressured by intense competition from low-cost carriers and relatively firm jet fuel prices

T

op Asian airlines are hedging a substantial portion of their jet fuel usage this year, a Reuters survey showed, signalling they expect prices of the fuel to be firm and indicating sustained pressure on their profit margins.

Jet fuel makes up at least 30 percent of most airlines’ overall operating costs and an effective hedging strategy is crucial as heightened competition forces carriers to cut fares and operate on thin margins.

While there should be sufficient supply of jet fuel in Asia this year to meet buoyant demand driven by healthy passenger traffic, airlines are unlikely to benefit from lower prices.

Jet fuel prices are market based -unlike diesel, kerosene and some other fuels which are subsidized in nations such as China, India and parts of Southeast Asia- and users pay rates that are closely linked to crude oil prices.

Geopolitical tensions are adding to the uncertain operating environment.

Industry body International Air Transport Association (IATA) said last month that airlines globally expect to make US$1 billion less profit this year than previously hoped, as the Ukraine crisis pushes up oil prices.

And research firm S&P Capital IQ said in a report last quarter that earnings of flag carriers, especially top-tier airlines, will be pressured by intense competition from lowcost carriers and relatively firm jet fuel prices, even as the Asian airline industry’s overall profits for 2014 rise.

Japan Airlines (JAL), Asia’s second-biggest airline by market value, is hedging about 40 percent of its fuel consumption in the 2014 financial year, similar to volumes seen in the previous year, a spokesman of the airline said.

“Hedging helps us to reduce the risk of volatile and potentially rising fuel costs in the long term. This hedging will be operated monthly,” the spokesman said in an email.

Singapore Airlines SIA 747-412. The company is Asia’s biggest airline by market value.

ANA Holdings Inc’s hedge ratio for its 2014 financial year is 45 percent, similar to the 2013 and 2012 financial years, said a spokesman for Japan’s largest carrier.

Korean Air Lines generally keeps its hedging volumes around 30 percent of its annual fuel consumption and this year is no exception, a spokesman said.

The spokesmen of JAL, ANA and Korean Air declined to divulge price details of their hedges.

Cathay, SIA Consulting firm Energy Aspects estimates Asia’s overall availability of jet fuel at nearly 2.491 million barrels per day (bpd) in the fourth quarter of 2014 versus demand of 2.412 million bpd. The last quarter of a year is typically the busiest for airlines due to holiday travel.

Brent crude has averaged US$108 a barrel so far this year against 2013’s average of US$109. And jet fuel has averaged US$121.20 a barrel this year compared to US$126.62 last year and US$125.95 the year before.

Airlines may hedge a big portion of the fuel purchases during the times they believe oil prices will be firm but they’ll refrain from boosting hedging volumes substantially. A plunge in prices, though, will draw them out

Aussie banks lose lending market share Tighter global regulations on banks increase lending costs

A

ustralia’s bond market is likely to take more lending business away from banks as tighter banking regulations make marketbased finance relatively cheaper, a top central banker said yesterday.

Reserve Bank of Australia (RBA) Assistant Governor Guy Debelle said corporate bond issuance had already increased markedly, both onshore and abroad, with investors happier to buy lower-rated and longer-term debt.

Australian corporates had sold A$35.1 billion (US$33 billion) of paper since the start of 2013 while domestic issuance of debt rated BBB+ to BBB- was the strongest on record.

“While bank-based finance remains

dominant today, in the future we may well see the Australian financial system move to more market-based sources of finance, particularly bond issuance,” Debelle said in a speech.

Tighter global regulations on banks, including requirements for holding more liquid assets, had raised their cost of funding, he said.

“As a result, market-based sources of finance are now more cost effective for a wider range of companies and one would expect them to respond to this with increased bond issuance.”

Debelle noted offshore demand for Australian paper remained strong, with foreigners holding more than 80 percent of outstanding corporate

as they will seek to protect against future rises in prices.

Cathay Pacific Airways, which consumed 39.5 million barrels of fuel in 2013, did just that in April 2013 when it took advantage of a brief drop in fuel prices to extend fuel hedging into 2016, the Hong Kong airline disclosed with its earnings in March this year.

Singapore Airlines, Asia’s biggest airline by market value, which hedges between 20 and 60 percent of its fuel requirements, went for the cap of 60 percent for the second half of its financial year that ended in March at US$118 a barrel of jet fuel prices, a spokesman said.

Reuters

KEY POINTS Fuel accounts for at least 30% of airlines’ costs Jet fuel average prices hold above US$120 No let up in margin pressure for flag carriers

bonds and over 65 percent of Federal government debt.

The outstanding stock of government debt is expected to swell to more than A$600 billion by 2016/17, up from less than A$200 billion before the global financial crisis. Yet Australia is still one of only 13 sovereigns rated triple-A by Standard & Poor’s, making its bonds attractive to offshore investors.

“A sizeable share of this demand comes from official reserve managers who are attracted to the relatively higher yield on Australian government bonds, the high and stable credit rating of the Australian government and Australia’s strong and stable economic performance,” said Debelle.

Even the market for residential mortgage-backed securities (RMBS) was returning to normal after suffering badly in the fallout from the financial crisis.

Total Australian dollar issuance in 2013 was only exceeded by issuance in the two and a half years immediately preceding the onset of the crisis.

Debelle estimated around 40 percent of each RMBS sale in 2013 was taken by offshore investors.

Reuters

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April 16, 2014

International Overruling and free-speech right U.S. industry tries hard to avoid complying with SEC rules

A

U.S. Securities and Exchange Commission rule requiring companies like Boeing Inc. and Apple Inc. to disclose whether any “conflict minerals” are used in their products violates their freespeech rights, an appeals court in Washington said.

The rule was part of the 2010 DoddFrank Act overhauling regulations of securities markets and applies to certain minerals, including gold, tin, tungsten and tantalum, mined in Democratic Republic of the Congo and neighbouring countries. It was intended to help ensure that use of the minerals didn’t benefit armed groups responsible for violence in the region.

The appeals panel decision represents the second time courts have faulted regulators for carrying out a requirement of the 2010 Dodd-Frank Act. SEC Chair Mary Jo White said in October the goals of the Dodd-Frank disclosure mandates were laudable while questioning Congress’s decision to have her agency implement them.

The SEC’s authority to require disclosure of important information to investors shouldn’t be used to “effectuate social policy or political change,” White said.

The requirement to disclose the information will cost thousands of companies as much as US$4 billion to put in effect, according to the SEC.

DRC conflict-free It obligates a company to disclose those products that have “not been found to be ’DRC conflict-free’” in reports to the SEC that must also be posted on the firm’s website.

That statement goes beyond disclosure that is merely factual and non-ideological, U.S. Circuit Judge A. Raymond Randolph, wrote for the majority of a three-judge panel at the U.S. Court of Appeals.

“It requires an issuer to tell consumers that its products are ethically tainted,” and leaves a company unable to use its free-speech right to dispute that assessment by remaining silent, Randolph wrote. “By compelling an issuer to confess blood on its hands, the statute interferes with that exercise of the freedom of speech under the First Amendment.”

U.S. Circuit Judge Sri Srinivasan declined to join the First Amendment part of the ruling and suggested in a separate opinion that it might be

Securities and Exchange Commission Chair Mary Jo White

undermined by the full Washington appeals court in a pending case.

Challenges rebuffed Th e co u r t r eb u f f e d o t h e r challenges to the disclosure rule, rejecting arguments by the National Association of Manufacturers and other business groups that the SEC didn’t properly measure compliance costs and set overly rigorous due diligence standards for identifying the presence of the minerals.

The appeals panel sent the case back to a lower court to address the speech issues in the rule.

“I think the decision is actually quite good for the SEC” because most of the rule was affirmed, said Julie Murray, an attorney who represented Amnesty International USA Inc., which intervened in the case on behalf of the commission.

Judith Burns, a spokeswoman for the SEC, said the agency is studying the ruling.

The National Association of Manufacturers is pleased that the court found the regulation unconstitutional, James Hennigan, a spokesman for the group, said in an e-mailed statement.

“We understand the seriousness of the humanitarian situation in the Democratic Republic of Congo (DRC) and abhor the violence in that country, but this rule was not the appropriate way to address this problem,” Hennigan said.

In the case highlighted by Srinivasan, he and 10 other judges on the Washington appeals court are slated to hear arguments May 19 concerning a Department of Agriculture requirement that meat labels specify where an animal was born, raised and slaughtered.

Srinivasan urged his colleagues on the panel in the mineral case to hold off ruling on its free-speech component “rather than issue an opinion that might effectively be undercut by the en banc court in relatively short order.”

Bloomberg News

Costa Rica forms a team for reshaping economy

L’Oreal rises in Paris The company rose in Paris trading after accelerating revenue growth in western Europe helped offset weak sales of Garnier shampoo and Maybelline mascara in North America.

First-quarter revenue gained 2.8 percent in western Europe, excluding currency shifts and acquisitions, while southern European sales grew for the first time in six years, Paris-based L’Oreal said on Monday after markets closed. The performance confirms the region’s “renewed vitality” and bodes well for annual profit, the company said. Western Europe is the company’s most profitable region. The stock rose as much as 2.1 percent.

Poland prepares for monetary intervention European Central Bank President Mario Draghi’s plan for further monetary easing is prompting his counterpart in Poland to respond with preparations of his own to keep the zloty from threatening the nation’s recovery. The Polish central bank is “preparing instruments” to intervene on “asset markets of different classes,” Governor Marek Belka said on April 13 in a panel discussion at the International Monetary Fund’s meeting in Washington. The comments came a day after Draghi said the strengthening of the euro required further monetary stimulus.

Nestle reports slower 1Q The world’s largest food company, reported its worst first-quarter sales growth since 2009 on pricing pressure in Europe and decelerating conditions in emerging markets. Sales rose 4.2 percent excluding acquisitions, divestments and currency shifts in the three months through March, the Vevey, Switzerland-based maker of DiGiorno pizzas said today in a statement. That matched the 4.2 percent median estimate of 13 analysts surveyed by Bloomberg. Sales in Europe fell 0.8 percent. Deflation will probably persist in Europe after pricing pressure led to the weakest sales growth in the region last year since 2009, Nestle said.

Tanzania president to ease controls by 2015

The country was ranked fourth behind Russia, Argentina and Ukraine on a list of countries confronting the biggest loss of investor confidence

P

resident-elect Luis Guillermo Solis appointed his economic team as the Central American country moves to reassure investors and the public after two foreign investors announced plans to cut jobs.

Solis yesterday tapped economist and Vice President-elect Helio Fallas to be finance minister and Banco Nacional de Costa Rica Director Olivier Castro as central bank president. Welmer Ramos was picked to be economy minister. The new government will be sworn in May 8.

Solis and his economic advisers will take office a month after Intel Corp. and Bank of America Corp. stunned the country by announcing 3,000 firings, prompting Citigroup Inc. to cut its growth forecast for the US$45 billion economy. They’ll

also confront a budget deficit the government says will reach 6 percent of gross domestic product this year, up from 5.4 percent last year. Solis has ruled out raising taxes before 2016.

“Fiscal reform is important, but it’s more important to improve tax collections,” Fallas said in an interview after the announcement in the capital, San Jose. “The reforms should be made simultaneously, but most efforts should go to tax collection,” he added.

In a Bloomberg survey published last month, Costa Rica was ranked fourth behind Russia, Argentina and Ukraine on a list of countries confronting the biggest loss of investor confidence. The survey cited data including the rising cost of credit default swaps and the currency’s

performance against the dollar.

Intel, the world’s largest computerchip maker, said it would cut 1,500 out of 2,500 jobs in Costa Rica as part of an effort to consolidate some operations in Asia. BofA said it would exit some operations in Costa Rica as well as in Guadalajara, Mexico and Taguig, Philippines.

Following the announcement, Citi cut its growth forecast for Costa Rica’s 2014 GDP to 3.1 percent from 3.5 percent. The 2015 forecast was lowered to 2.2 percent from 4 percent.

The firings come after President Laura Chinchilla, who wasn’t eligible for re-election, made progress in reducing unemployment that peaked at 10.5 percent in the second quarter of 2013.

Bloomberg News

The country will ease controls on foreign ownership of its stocks and bonds by next year as the country seeks to attract investment to finance infrastructure projects that will cost billions of dollars, President Jakaya Kikwete said. Restrictions that bar non-residents from buying the nation’s bonds and block companies that are more than 60 percent owned by foreigners from trading on the Dar es Salaam Stock Exchange will be eased under East African Community rules.

A common market agreement by the five-nation bloc, which includes Kenya and Uganda, calls for liberalization to take place by 2015, he said.

15

April 16, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Philstar The country’s budget deficit narrowed in February as state revenue growth surpassed a moderate increase in spending, the Department of Finance reported on Monday.

The government recorded a budget deficit of P9.7 billion in February, 17 percent lower than the fiscal gap recorded a year ago. The latest data reflects the continued improvement in the country’s finances and brings the fiscal gap for the first two months of the year to P43.9 billion.

Revenues climbed seven percent to P120.3 billion in February, faster than the five percent growth rate in total spending, which amounted to P130 billion.

Taipei Times The global market for wearable devices will grow substantially over the next four years as development is now focused on such devices, a report by the Institute for Information Industry said. This year, the worldwide wearable device market is expected to reach US$6 billion and by 2018, is to climb to US$20.6 billion, the government-backed institute said in a research note released on Monday. It said local companies should tap into the smart device market early, in light of Taiwan’s strong information and communication technology sector, which would give the country an advantage.

VietNam News Party General Secretary Nguyen Phu Trong yesterday received a visiting delegation from the Communist Party of China (CPC) and expressed his pleasure at the flourishing development of Viet NamChina ties. At the reception for the delegation led by Hu Chunhua, CPC Politburo member and Secretary of the Guangdong Party Committee, Trong highlighted the outcomes of economic and trade co-operation between Guangdong and Viet Nam’s localities, voicing his hope that the visit would enhance exchanges between the two sides.

The Phnom Penh Post The Zongtex Garment factory off Phnom Penh’s Russian Boulevard looks like a nondescript residential compound, hidden down a dead-end road. There are no signs suggesting that it supplied to some of the world’s leading high street names – and the US military.

Taiwanese-owned Zongtex Garment Manufacturing made clothes for Sears, Macy’s, the Moret Group, Komar Brands and Costco, according to a Worker Rights Consortium (WRC) audit released last month. It also supplied to the US military’s Army & Air Force Exchange Service.

Losing interest Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund

T

wo of the world’s most prominent economic institutions, the International Monetary Fund and Former US Treasury Secretary Larry Summers, recently warned that the global economy may be facing an extended period of low interest rates. Why is that a bad thing, and what can be done about it?

Adjusted for inflation, interest rates have been falling for three decades, and their current low level encourages investors, searching for yield, to take on additional risk. Low rates also leave central banks little room for loosening monetary policy in a slowdown, because nominal interest cannot fall below zero.

And they are symptomatic of an economy that is out of sorts.

Identifying the problem, much less prescribing solutions, requires diagnosing underlying causes. And here, unfortunately, economists do not agree. Some point to an increase in global saving, attributable mainly to highsaving emerging markets.

Readers will detect here echoes of the “savings glut” argument popularized nearly a decade ago by the likes of former US Federal Reserve Board Chairmen Alan Greenspan and Ben Bernanke.

There is only one problem: the data show little evidence of a savings glut. Since 1980, global savings have fluctuated between 22% and 24% of world GDP, with little tendency to trend up or down.

Even if global saving slightly exceeds 24% of world GDP in 2014, it is unlikely to remain that high for long. China’s saving will come down as its GDP growth slows, the authorities decontrol interest rates on bank deposit, and the

There should be tax incentives for firms to hire the long-term unemployed; more public spending on infrastructure, education, and research to compensate for the shortfall in private capital spending

economy rebalances toward consumption. That will be true of other emerging markets as well, as their growth rates similarly fall from the exceptional peaks scaled at the end of the last decade.

The same empirical objection applies to arguments that blame low interest rates on the increasing concentration of income and wealth. It is plausible that the wealthy consume smaller shares of their income, and recent trends in income and wealth distribution certainly are troubling on many grounds.

But to affect global interest rates, these trends have to

translate into increased global savings. And the evidence is not there.

A second explanation for low interest rates is a dearth of attractive investment projects. But this does not appear to be the diagnosis of stock markets, notably in the United States, where equities are trading at recordhigh prices. And it sits uneasily with the enthusiasm with which venture capitalists are investing in firms commercializing new technologies.

Some economists, led by Northwestern’s Robert Gordon, argue that, stock market valuations notwithstanding, all the great inventions have been made.

The commercial potential of the Internet, the human genome project, and robotics pales in comparison with that of the spinning jenny, the steam engine, and indoor plumbing.

Maybe so, but it is worth observing that technology sceptics have been consistently wrong for 200 years. History suggests that, while we may not know what the high-return inventions of the future will be, we can be confident that there will be some.

Still others, like the Fed’s current leader, Janet Yellen, suggest that investment and interest rates are depressed as a result of the damage done to the economy and the labour force during the Great Recession. Specifically, the skills and morale of the long-term unemployed have been eroded. Detached from the labour market, they lack incomes to spend; and, stigmatized by longterm unemployment, they are not regarded as attractive employees.

As a result, firms see inadequate demand for their products, and a shortage of qualified workers to staff their assembly lines. The result is low capital spending, one of the striking anomalies of the current recovery, which in turn can explain other troubling aspects of the recovery, from slow growth to low interest rates.

This argument has considerable merit. But, though it can explain why capital spending has been weak and interest rates have been low for the last three years, it cannot account for why capital expenditure has been insufficient to prevent rates from trending down for more than three decades.

Here, the only explanation still standing is the shift in the composition of activity away from capital-intensive forms of production, like manufacturing, to less capital-intensive activities, like services.

If the disorder has multiple causes, then there should be multiple treatments. There should be tax incentives for firms to hire the long-term unemployed; more public spending on infrastructure, education, and research to compensate for the shortfall in private capital spending; and still higher capital requirements for banks and strengthened regulation of nonbank financial institutions to prevent them from excessive risk-taking.

Finally, central banks should set a higher inflation target, which would give them more room to cut nominal interest rates in response to a future slowdown. This is not something that a new Fed chair, anxious to establish her anti-inflation bona fides, can say out loud. But that is what her arguments imply. © Project Syndicate 2014

16

April 16, 2014

Closing BMW i3 electric production begins

Angola: auction of oil blocks set for 30 May

A power cable runs out of the trunk of a new BMW i3 battery-powered car, manufactured by Bayerische Motoren Werke AG, at the company’s factory in Leipzig, Germany. BMW is expanding its lineup with new models such as the 4-Series coupe, the X4 SUV, the i3 electric city car, and the i8 plug-in hybrid sportster

Angola’s state energy concern, Sonangol, said that it plans on 30 May to stage the auction of 10 further blocks for hydrocarbon exploration that are said to contain more than half the country’s known oil reserves.

The 10 blocks contain at least 7 billion barrels of oil. The government in October estimated the country’s reserves at 12.6 billion barrels

Race on to tender for Grand Prix Budget for this year’s race will top 190 million patacas, 15 percent more than in 2012 Alex Lee

alex.lee@macaubusinessdaily.com

F

or the first time, Macau’s Grand Prix organisers will offer the sponsorship for the event title and races through a public tender due to the strong interest expressed by companies eager to put their name on Macau’s flagship sporting event.

The Grand Prix Coordinator, João Manuel Costa Antunes, told Business Daily, that the torrent of requests for sponsorship of the 61st edition of the race was one of the main reasons for the decision but also to ensure transparency in the final call.

Costa Antunes added that following the success of last year’s event title sponsorship - awarded to Star River and Windsor Arch - this year the strategy will be extended to the races, namely the Macau GT Cup, Macau Road Sport Challenge and Macau Touring Car Cup. The organisers are showing optimistic signs

that the 2014 Macau Grand Prix could generate more sponsorships and revenue, and attract more race-goers than ever. According to the event coordinator, the budget for this year will reach 190 million patacas, a 15% increase on 2012, when the organisation invested 160 million patacas. These figures only trail last year’s when

the competition celebrated its 60th anniversary with a budget surpassing 230 million patacas.

To break new records in 2014, the promotion is already under way, with one of the highlights of the international campaign this weekend’s Formula 1 Grand Prix in Shangai, said the race committee in a press release.

Rush hour roadblock

Declining sales also take shine off Luk Fook Jeweller

A

nother large-scale jeweller reports declining same-store sales here and in Hong Kong in the first quarter, underscoring the lacklustre performance of both markets to date this year.

Hong Kong-listed Luk Fook Holdings (International) Ltd said in a filing to the stock exchange that its same-store sales in Macau and Hong Kong declined 12 percent from the previous year in the JanuaryMarch period.

The same-store sales of gold products in 10 shops here and 143 shops in Hong Kong plunged some 18 percent in the first quarter, while the sales of gem-set jewellery dropped only slightly at 3 percent in both cities.

The jeweller explained the negative sales in both cities as due to “the relatively high base effect” compared with last year, when Macau and Hong Kong saw jewellery stores packed with customers after gold

Ticket reservations have already been received from Hong Kong, Japan, the United Kingdom and Australia, as well as from local Macau residents.

In 2012, direct revenues reached 37 million patacas, with sponsorship accounting for 27 million and the remaining 10 million coming from gaming operator Sociedade de Jogos de Macau,

the former official sponsor.

The event boasts an average attendance of 65,000 avid fans and attracts almost half a million visitors to Macau during the four-day speedfest.

The territory hotel occupancy rate surpasses 90 percent, and almost 1,000 journalists and crew broadcast the event from Macau.

Mr Antunes stressed that the public works on and around the Guia street circuit will be conducted at night to minimise inconvenience and diminish the flow of traffic.

Nine new barrier gates, which allow roads to be opened the moment racing has ceased for the day, will be added at key junctures while five more will be further improved.

The 61st edition of the Macau Grand Prix will take place from November 13 to 16 and includes the star category Formula 3 Macau Grand Prix, the two final rounds of the 2014 FIA World Touring Car Championship, and the Macau Motorcycle Grand Prix.

Sara Farr sarafarr@macaubusinessdaily.com

prices plummeted. The international gold price plunged the most for three decades in April last year.

The high base effect was also the same reason cited by Chow Tai Fook Jewellery Group Ltd - the globe’s most valuable jewellery retailer - after it last week posted a 9 percent decline in same-store sales in Macau and Hong Kong in this year’s first quarter.

But Henry Cheng Kar Shun, Chow Tai Fook’s chairman, told media on Monday he was confident that sales will rebound for the rest of the year, thanks to the continuing influx of mainland tourists.

Business Daily reported last week, quoting Lei Chi Fong, president of the Macau Goldsmith’s Guild, as saying “…there will be ups and downs [in gold and jewellery sales]. Sales will grow robustly again following a period of adjustment.”

T.L.

I

f bus service operators choose to increase their frequency during non-peak hours, the government will not pay for the service. These were the words of the director of the Transport Bureau, Wong Wan, who yesterday addressed legislator Song Pek Kei’s enquiry from earlier in the year regarding government plans to improve the public transport network here.

As at February this year, 786 buses serviced Macau, with an average daily rate of frequency of 9,100 vehicles.

Ms Song said it is virtually impossible to get a bus during rush hour and the situation is even worse on a rainy day. In response, Mr Wong said the government is working on improving the frequency of buses, and further details would be announced in due course. He admitted that the frequency of buses during rush hour is “not satisfactory”, and added

that the government is taking into consideration the needs of shopkeepers in narrower streets and would seek their opinions in order to improve bus services. “We have to adopt plans that are advantageous,” Mr Wong said.

The government directly pays the bus operators for their services, and in exchange the bus operators give the government the fares they collect. In June 2012, the government announced a 23.3-percent increase in the payments it makes to public bus operators. A year later, in April, the government increased payments to Transmac – Transportes Urbanos de Macau SARL and Sociedade de Transportes Colectivos de Macau SARL (TCM) but not Reolian. At the time, the Transport Bureau justified its decision by saying that Reolian did not meet the “required standard of quality”.