Macau Business Daily, May 6th, 2014 by Business Daily

A little more than half a million tourists visited Macau over the Labour Day weekend, between May 1-4. That’s 20 percent more than last year

MOP 6.00 Year III

Number 532 Tuesday May 6, 2014

Publisher: Paulo A. Azevedo

Closing editor: Sara Farr

Balance sheet skewed

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Carry on regardless

Deposits by foreigners working in Macau are growing at triple the rate of those of residents, and already account for one third of all deposits. Residents’ deposits, on the other hand, decreased slightly by 0.3 percent, the third consecutive fall of the year, while foreign and public sector deposits jumped Page

A possible crackdown on mainlanders bypassing normal visa application procedures to visit Macau will have little or no impact on visits to the territory, it is claimed Page

Sunny June?

The commerce ministry says in a report that trade will improve after May. Analysts partly attribute the weak trade figures to an inflated comparison base Page

Sands passes baton to SJM SJM is number one again in terms of market share, following a 5.2 percent growth in April. Sands China settles for second place, with a market share of 22.2 percent. Galaxy isn’t far behind with 18.8 percent of the market. Wynn Macau and MGM maintain the same position, and both operators, while building new resorts in order not to be dependent on just one property, also presented increases, both in April and in the first four months. Page 3

Brought to you by

Brick by brick

HSI - Movers May 5

Name

Legislator Ho Ion Sang says there’s no excuse to keep delaying the bill on the renovation and rejuvenation of old neighbourhoods, which was first drafted in 2006 Page

%Day

China Unicom Hong K

2.23

Kunlun Energy Co Lt

0.83

CITIC Pacific Ltd

0.74

China Construction

0.00

Bank of China Ltd

0.00

Cathay Pacific Airwa

-2.41

China Merchants Ho

-2.67

Wharf Holdings Ltd

-3.13

Cheung Kong Holdin

-7.62

Hutchison Whampoa

-8.14

Source: Bloomberg

I SSN 2226-8294

What rental laws?

Brought to you by

Only 27,000 lease agreements were registered in 2012 but as many as 41,376 families are living in rented apartments. The maths doesn’t add up, says a local lawyer. Page 4

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May 6, 2014

Macau

Non-resident deposits rose 50 percent in March Foreign workers’ deposits are growing three times faster than residents’ and are already one third of total, official data reveals Alex Lee

Alex.lee@macaubusinessdaily.com

he deposits of foreigners working in Macau are growing three times faster than those of residents. According to data released by the Monetary Authority of Macau yesterday, non-resident deposits increased 49.9 percent in March from a year ago reaching 196.7 billion patacas, beating residents and public sector growth rates. Resident deposits jumped 16.4 percent from March 2013 to 445.8 billion patacas, while the public sector saw its deposits rise 29.4 percent to 269.6 billion patacas, the central bank said. Today, the amount of deposits held by non-residents in Macau is almost half of the value of the ones held by residents and one third of total credit granted by banks in the territory (640 billion patacas). In March, the deposits saw a mixed scenario compared to February figures. Residents’ deposits decreased 0.3 percent, the third consecutive fall of the year, while foreign and public sector deposits jumped 1 and 5.2 percent, respectively. Deposits denominated in patacas grew 0.2 percent from February, while foreign currency deposits increased 0.9 percent. Hong Kong dollar deposits decreased 1.7 percent.

Retail leading The Monetary Authority also announced that domestic loans to

the private sector jumped 3.4 percent from February and 34 percent yearon-year to 283.9 billion patacas. Of those, almost two-thirds (62,7 percent) were denominated in Hong Kong dollars and the remaining in patacas. In the first quarter, the credit to wholesale and retail trade increased 25.5 percent, manufacturing industries and construction 15.7 percent and public works 14.1 percent compared with the previous quarter, the Monetary Authority said. Loans to non-monetary financial institutions and agriculture and fisheries dropped 42.2% and 23.5%, respectively. External loans jumped 15.3 percent in March year-on-year to 296.0 billion, a 2.0 percent rise from February. According to the Monetary Authority of Macao, as total loans are growing at a faster pace than deposits the loan-to-deposit ratio of the banking sector in March rose from a month earlier. It climbed 1.8 percent from February to a ratio of 53.4 percent, still a very low figure compared to other international markets –the norm is 120 percent - where normally the amount of credit given by banks is much higher than deposits on the balance sheet. The money supply currency in circulation in Macau dropped 2.3% in March.

Unsafe construction sites fined

GCL-Poly Energy pledge shares to BoC Macau branch

s many as 25 fines were handed out in the first quarter of this year to construction sites for non-compliance with safety and hygiene regulations. According to a statement released yesterday by the Labour Affairs Bureau, these fines amounted to a total of 128,500 patacas. The Bureau conducted 1,417 routine inspections on a total of 749 construction sites. A total of 25 work conditions were deemed unsafe, while 37 were deemed “life threatening” to the worker and as such

work was suspended. According to the numbers provided by the Labour Affairs Bureau, some 23 cases violated work safety by not having preventative fall measures in place for those working at heights of up to two storeys. Five cases of faulty suspension cables were also recorded. In addition, two of the inspected construction sites were ordered to suspend work after having failed to meet the requirements a second time after the Labour Affairs Bureau had let them off with a warning on their first inspection visit.

ong Kong-listed Chinese power company GCL-Poly Energy Holdings Ltd has announced a pledge of shares in favour of the local branch of Bank of China as security for a loan facility of up to US$50 million (399 million patacas), said a company announcement filed after closing hours with the Hong Kong Stock Exchange on Friday. The company noted that 375 million shares, held by major shareholder ‘Zhu Family Trust’, were pledged on April 30 in favour of Bank of China Ltd’s Macau Branch as security for a loan facility of up to a

maximum amount of US$50 million to Vision Best Holdings Ltd, a company wholly-owned by the Zhu family. The filing did not detail the use of the loan. Mr Zhu Gongshan and Mr Zhu Yufeng, both executive directors of GCL-Poly Energy, are beneficiaries of the Zhu Family Trust. The bank pledged shares that represent approximately 2.42 percent of the GCL-Poly Energy’s issued share capital. In addition, the Zhu Family Trust accumulatively pledged an aggregate of about 2.33 billion shares of the company, representing together 15 per-

cent of the company’s shares. As at the date of Friday’s announcement, the Zhu Family Trust is interested in a total of about 5.019 billion shares of GCL-Poly Energy, representing approximately 32.41 percent of the total issued share capital of the company. GCL-Poly Energy, listed in Hong Kong in 2007, was originally engaged in the operation of cogeneration plants. In 2009, GCL-Poly Energy’s chairman Zhu Gongshan turned to the application of solar power and introduced the production of polysilicon. S.L.

May 6, 2014

Macau

SJM reclaims market lead from Sands China Gaming race is on as SJM overtakes Sands China to resume its market share lead. Galaxy is closing in on second place

ociedade de Jogos de Macau (SJM) retook the lead in April’s market share, with 24.5 percent, after growing 5.2 percent year on year and turning over 7.7 billion patacas (US$962.5 million). SJM is also ahead calculated by the first four months gaming results, having secured almost 31.2 billion patacas (US$3.9 billion), according to data collected by Portuguese newspaper JTM. Stanley Ho’s company took 23.4 percent in the market share marathon. Sands China slipped back to second place last month and for the period from January to April. Adelson’s company’s gross revenues closed at 6.9 billion patacas (US$3.81 billion) last month (12.5 percent more year on year) to secure a market share of 22.2 percent. The results for the first four months were stronger, with a 27 percent growth. The 30.5 billion patacas (US$737.5 million) revenues bought the company a 29.9 percent share market in the 2014 race so far. Growing and threatening second

position is Galaxy Group, reports Sérgio Terra. In April, the company posted an 18.5 percent increase with 5.9 billion patacas (US$737.5 million) in gross revenues to land an 18.8 percent market share. But in the first four months of the year Lui Che-woo’s group is the one which has registered a bigger climb, reaching 20 percent share market following 29.2 percent growth due to its 26.7 billion-pataca (US$3.33 billion) revenues. On the less positive side, Melco Crown Entertainment registered less than 3.8 percent year on year although the company maintains fourth place. Its 4.4 billion patacas (US$550 million) in April were enough to secure Lawrence Ho and James Packer a 14.2 percent share of market, just one percent less (13.2%) if we consider the share market for the first four months of this year. From January to April, Melco secured 17.7 billion patacas (US$.21 billion), an increase of 9.3 percent on the same period last year. Wynn Macau and MGM maintain

the same position and both operators, while building their new resorts in order not to be dependent on just one property, also posted increases, in April and in the first four months. Wynn Macau grew 25.4 percent or 3.3 billion patacas (US$412.5 million) in gross revenues, the most expressive annual growth. From January to April, Steve Wynn’s

MOP133.5 billion Macau gaming revenues from January-April

operator nailed a market share of 10.7 percent and registered 14.3 billion patacas (US$1.78 billion), representing 15.6 percent growth. MGM was no exception in the good-news stakes and also posted good results, with share of market at 9.5 percent in April and 9.8 percent for the first four months. In April, the company led by Jim Murren and Pansy Ho posted revenues of 2.9 billion patacas (US$362.5 million), which means the company had an homologous growth of 18 percent and an even more healthy result of 13 billion patacas (US$1.62 billion) for the Jan-April period or a 23.7 percent increase. In April, gross gaming revenues increased 10.6 percent. It was the second lowest hike of the year. Nevertheless, the industry amassed 31.3 billion patacas (US$3.91 billion) compared to 28.3 billion in the same period last year. January-April revenues totalled 133.5 billion patacas (US$16.68 billion) according to the Gaming Inspection and Coordination Bureau.

Market Share Per Operator (2013-2014)

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

SJM

26% 23% 25% 24% 24% 25% 26% 23% 24% 23% 22% 24% 25%

Sands China 22% 21% 21% 23% 23% 22% 20% 22% 23% 22% 25% 22% 22% Galaxy

18% 19% 19% 20% 17% 19% 21% 19% 18% 20% 21% 20% 19%

Wynn

9% 12% 10% 10% 12% 11% 10% 11% 11% 9% 11% 12% 11%

MPEL

16% 14% 15% 13% 14% 14% 13% 14% 14% 14% 12% 13% 14%

MGM

9% 11% 11% 10% 10% 10% 9% 11% 10% 11% 9% 9% 10%

Total

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

* Figures are rounded to nearest unit, therefore they may not add exactly to the rounded total

May 6, 2014

Macau

Landlords flouting rental laws Only 27,000 lease agreements registered in 2012 Sandra Lobo Pimentel *

MOP367 million rent-related tax collected in 2012

he regulations on property tax are clear and the Financial Services Bureau (DSF) advertises it: landlords must register lease agreements within 15 days of signing and a tax on the property must be paid. However, according to data provided by DSF and quoted by Portuguese-language newspaper Jornal Tribuna de Macau, only 27,000 lease agreements were registered in 2012, while 41,376 families were living in rented apartments, according to the 2011 Census. For lawyer Manuel Pinto, who was involved in a petition requesting fairer rents, the data reveals a startling discrepancy. He estimates that around 90 percent of landlords are not paying tax on private renting. While data relating to 2013 is not yet available, numbers from 2012 reveal that some 27,000 units registered a lease agreement that year. In the same year, the amount of taxes related to rent collected reached 367 million patacas, an average of 13,592 patacas per unit rented. However, data from the 2011 Census reveals that 41,376 families were living in rented units, as on average the number of families per rented unit was 1.01. “You just have to look at the numbers to see that there’s a discrepancy”, says Manuel Pinto, a local lawyer involved in a petition delivered to the Executive Council to request ‘fair rents’. Manuel Pinto told the newspaper he believes that “around 90 percent

of lease agreement contracts are not registered.” The scenario, however, is different when it comes to commercial renting because “rents are registered as expenses and so the tax, in this case, is more likely to be guaranteed”.

The government is losing money because it’s not receiving its part Manuel Pinto, local lawyer

The value of property tax is 10 percent on the income collectable from rented units. This income corresponds to the amount of rent that the landlord receives. The law also defines rent as ‘everything that the landlord receives from the tenant’. The tax is paid every year in a single payment, during the months of June, July and August.

Government losing income According to the Finance Bureau, inspection ‘is performed by crossing different data from varied sources, as well as through follow-up procedures

on a regular basis’. However, Pinto says that that when a property is bought, landlords pay taxes. But when they are leasing they don’t register the contract “as it is less tax to be paid”. The lawyer also said that interest in the property market is vast as the profits are significant. “But landlords are forgetting that the market is not all about advantages. There are also responsibilities”, he says. “The government is losing money because it’s not receiving its part”, Mr Pinto adds. “If the Financial Services say they perform inspection procedures on a regular basis, then they just have to visit houses when people are in their places to check who are the landlords and the tenants”, he explains. According to the law, if the landlord fails to register a lease agreement he can be punished with a fine that ranges from 500 to 5,000 patacas. Regulations on property tax also define that if taxpayers fail to present the declaration forms they are obliged to present or if it contains inaccuracies they are punishable by a fine ranging from 100 to 5,000 patacas. If it is found that the information provided was intentionally inaccurate or missing, fines range from 200 to 10,000 patacas. If one fails to pay the tax in the due month, a 3 percent interest rate will be charged in the following 60 days. The value of the fines doubles for re-offenders during the 18 months following the first offence.

Tenants can also be fined if they refuse to show inspection agents their rental receipts. Fines, in this case, jump from 100 to 5,000 patacas.

Estate agencies could help collect taxes If landlords do not register lease agreements, tenants can inform the Finance Bureau. After that, the Bureau can check the information provided. However, authorities say landlords must ‘report to the Financial Services the lease agreements according to the regulations on taxed property’. Mr Pinto does not agree that tenants should provide such information. He says that “the contract is signed by both the landlord and tenant” and so there must be goodwill by both parties to legalise the contract. “The government trusts in landlords’ good faith too much. But at a practical level that doesn’t work,” Mr Pinto says. The lawyer also believes real estate agencies should help the government in the task of collecting property taxes. “Real estate agencies are the third party that earns money through this business and so they could play a major role in this matter”, he says. In order to do that, he thinks that real estate agents should prepare the documents to register the lease agreements while they are taking care of all the paperwork for the contract to be signed.

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May 6, 2014

Macau

Old districts revamp can’t wait: legislator Traditionalist legislator Ho Ion Sang reckons the government should revisit the subject of revamping old districts again, and consider supporting conditions Stephanie Lai

sw.lai@macaubusinessdaily.com

ith sufficient supporting legal terms on urban planning, there is no excuse for the government to delay the bill on the rejuventation of Macau’s old neighbourhoods by keeping it away from the legislative table. The city is in urgent need of more land, legislator and also head of the Legislative Assembly’s special committee on land affairs and public concessions, Ho Ion Sang declares. The bill - first drafted in 2006 - setting the rules on what decides if a building should be revamped or reconstructed, was scrapped by the government from the legislative discussion in August last year. The government explained at the time that the scrapping of the bill had to do with its task of bringing it into line with land, urban planning and cultural heritage protection legislation. These three said legislations already came into force on March 1 this year. “Now we have laws that help define the city’s cultural heritage sites or historical sites, and the advisory committees that oversee our urban planning and deliberate the constructions,” legislator Ho Ion Sang told Business Daily in an interview. “We still feel that the government doesn’t have a definite schedule on when this bill can be put on the table...”, Mr Ho said. “But what I think is that even before the urban planning committee and the government decide on our city’s master and detailed urban plans, the government can already start to zone out which of our old districts need to be revamped, or that the two processes can at least go side-by-side.” Mr Ho, along with his supporting team in the traditionalist General Union of Neighbourhood Associations, informally estimated that there are about 4,000 residential buildings

of at least 30 years old. The legislator’s union has also helped in three reconstruction cases involving homeowners in the city’s old lowrise residences, whereby the union offered legal assistance and advice on negotiating reconstruction costs. The owners of some of these buildings in the city’s old districts, in particular the Iao Hon district in Macau’s northern area, have suffered from poor construction or buildings that have already become dilapidated, and there are calls for their buildings to be revamped or reconstructed, Mr Ho claimed.

“There are many forms of so-called old neighbourhood rejuvenation: it could be just a revamp of the building when the government decides a district is to be revitalised, or the reconstruction of a building,” said Mr Ho. “But now everyone’s focus is on reconstruction.” “The most important reasons for why the rejuvenation bill is delayed for so long are that, one, it’s hard to form consensus on the proportion of home owners’ agreement on deciding a building is to be reconstructed,” the legislator explained. “Second, there’s also a lack of consensus on who should lead a redevelopment plan.”

Owners’ struggle

But what I think is that even before the urban planning committee and the government decide on our city’s master and detailed urban plans, the government can already start to zone out which of our old districts need to be revamped, or that the two processes can at least go side-by-side

According to the bill on the old neighbourhoods reform, for a building reconstruction initiated by a ‘private entity’ - a developer for instance - the agreement to reconstruction from at least 80 percent of the home owners of the building has to be obtained, given that the building is situated in a district that the government intends to revamp. If the building is in urgent need of reconstruction but the developer fails to gain home owners’ approval, the government can further lower the proportion of agreeing home owners from 80 percent to 70 percent. But if the building is situated in a district that is not set to be revamped, then agreement from at least 90 percent of the building’s home owners has to be gained for a reconstruction to occur, the bill reads. Currently, the unanimous support of flat owners within a single building is needed for a redevelopment to take place – a rule that Mr Ho reckons is an obstacle in many instances for the reconstruction or revamp of residences.

“I’d support that the agreement from 80 to 85 percent of the homeowners has to be obtained for a reconstruction to take place if the residence they are living in is situated in a district to be revamped,” said Mr Ho. “And that this proportion should be 90 percent, as the bill suggests, if the residence is outside the to-berevamped district.” “We suggest that the government alleviate the tax burden on homeowners if they are to live in their reconstructed residence because the taxation terms are now very costly,” said the legislator. “For that the government is positive towards our suggestion, and I think they will do something about it, especially since the Sin Fong Garden incident has happened.” “I’ll bring up the bill with our follow up committee on land affairs to see if we can get a chance to discuss it with the government on the subject again,” the legislator added. The costly taxation terms Mr Ho refers to include the buyer’s stamp duty that homeowners need to pay for them to purchase the reconstructed residence, another stamp duty on the property transfer as well as other legal expenses. Homeowners of Sin Fong Garden in Patane, which suffered near-collapse on October 10 in 2012, are to meet on May 25 to decide if they desire a revamp or reconstruction of the whole building, and also whether the owners would agree to file a lawsuit against their building contractor.

We suggest the government alleviate the tax burden on homeowners if they are to live in their reconstructed residence because the taxation terms are now very costly,” said the legislator. “For that the government is positive towards our suggestion, and I think they will do something about it, especially since the Sin Fong Garden incident has happened Ho Ion Sang

May 6, 2014

Macau

Better support needed for walking trails Government should learn from mistakes to better plan for ancillary facilities and support for the four new proposed tourist walking routes, a business leader says Tony Lai

tony.lai@macaubusinessdaily.com

he government should learn from past lessons to set up complementary support for the new tourism walking trails as soon as possible, suggests a business leader. The comment of Lei Cheok Kuan, president of the Industry and Commerce Federation of Macau Central and Southern Districts, comes after the Macau Government Tourist Office said it will propose four new tourist walking trails on Thursday. The proposed routes are in addition to the four trails launched last September in a bid to divert tourists from the city’s overcrowded tourist spots. “The administration should learn from the mistakes it made the first time,” Mr Lei said. “It should illustrate as quickly as possible the intention and details of the four new routes.” “It should have more promotion of the routes and list ancillary facilities like eateries, transportation plus accommodation in the districts covered by the routes so that visitors can be sure to know what they will encounter.” The four routes launched last year

covering downtown Senado Square, Tap Seac and Barra have received criticism, as tourists were unaware of the routes and there were no clear indicators for the facilities along the routes.

Maria Helena de Senna Fernandes, director of the Macau Government Tourist Office, said on Sunday that the government will install more signs along the four existing routes. It is difficult to gauge the

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effectiveness of the routes at the moment, she said, adding that they will launch an incentive scheme in the summer to better appeal to tourists using the routes. Mr Lei, whose chamber has numerous business members along the routes, acknowledges that the four routes may not be as effective as they are supposed to be in attracting tourists. But the chamber, other neighbourhood associations and the administration have been working on improvements, he said. “We’ve been organising dozens of tours for residents to join to experience the four routes,” Mr Lei said. “This could be helpful if residents know more about the routes as they may be asked by tourists.” Ms Senna Fernandes said on Sunday that the four new routes her department will propose on Thursday cover the northern district, west of the Ruins of St Paul’s, Taipa and Coloane. After making proposals this week, the administration will start collecting public opinion later this month until June on the four proposed routes, she added.

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May 6, 2014

Macau

Limited impact of crackdown Labour Day on transit chicanery visitors surge

by a fifth

Research firm Union Gaming expects limited impact on the territory’s visitations from a possible crackdown on mainlanders bypassing normal visa application procedures Macau welcomed to visit Macau and Hong Kong following a CCTV exposé over 550,000 tourTony Lai ists in the 4-day holiday starting May 1, up 20.3pct y-o-y tony.lai@macaubusinessdaily.com

he report by a state-run broadcaster exposing the loopholes employed by mainlanders to bypass normal visa procedures to visit Macau suggests a potential crackdown, but the impact on tourism and gaming would be limited, says a research house. The China Central Television (CCTV) report over the weekend underscores figures provided by the Macau authorities, suggesting that only 20 percent of mainlanders visiting Macau using a visa for overseas trips actually continued their itineraries last year. Current Macau immigration rules permit mainland passport holders to stay in the territory up to seven days if they use Macau as a transit to other destinations, and another 2 days following a second entry within 30 days. Such rules have been in force for a long time but have only come to media attention recently as it has become apparent that the rules are used by mainlanders to bypass standard procedures to apply for visas under the Individual Visa Scheme or tour group visas. Analysts Grant Govertsen and Felicity Chiang from Union Gaming Research Macau wrote in a client note yesterday: “When CCTV does exposé reports, it’s generally interpreted as coming directly from the government and corrective actions are often taken.” The research house estimates that up to 11.2 percent of mainland visitations could be subject to possible crackdown “in theory”, based on figures provided by Macau’s Cabinet of the Secretary for Security last week. The Cabinet said 2.64 million mainlanders entered Macau using

180 yuan Amount mainlanders pay for an overseas destination visa

visas for overseas journeys last year but only 547,836 of these visitors - or 20.8 percent - exited Macau through the city’s airport or ferry terminals. This means 2.08 million mainlanders visited Macau bypassing normal visa procedures, or nearly 11.2 percent of 18.63 million mainland visitors the territory received last year.

No worries But Union Gaming added in the note: “Our gut reaction is that a low single digit percentage of visitations (at most) is likely at risk given that we believe the vast majority of visitors using the transit visa method are

We think that even in the event of a small decrease in visitations, these visitors whose trip frequency could be impacted, might, in theory, simply increase their per-trip gaming budgets Union Gaming Research Macau

not coming twice per month every month… We think that even in the event of a small decrease in visitations, these visitors whose trip frequency could be impacted, might, in theory, simply increase their per-trip gaming budgets.” The cabinet for the security secretary told Chinese-language newspaper Macao Daily News on Saturday that they will study shortening the stay period that mainland visitors can enjoy when transiting Macau, with new measures possibly being put forward in July. Official figures show Macau received 5.17 million mainland visitors in this year’s first quarter, surging 17.2 percent year-on-year, accounting for over two-thirds of the territory’s tourism market. CCTV reported over the weekend that travel agencies and even grocery stores in mainland cities Zhuhai, bordering Macau, and Shenzhen, next to Hong Kong, helped mainlanders obtain visas for other destinations like Guinea and Cambodia. The agencies and stores help mainlanders book outbound tickets but cancel these following the arrival of the latter in Macau and Hong Kong, the report said. “You can visit [Macau] twice in a month and visit there again twice after a month,” CCTV quoted a travel agency staff member in Zhuhai as saying. Mainlanders can only visit Macau and Hong Kong once every two or three months with normal visas to the two cities. The broadcaster said such overseas visas only cost between 180 yuan (233.7 patacas) and 280 yuan in Zhuhai, adding that the businesses running such services were “prospering” there.

Tony Lai

tony.lai@macabusinessdaily.com

acau received one-fifth more visitors in the Labour Day holiday ended the past weekend, outpacing neighbouring city Hong Kong which recorded its first slump in visitor arrivals for a decade. Macau’s Public Security Police Force said yesterday that the territory welcomed 551,957 travellers in the May 1-4 holiday, surging nearly 20.3 percent from the previous year. Analysts Cameron McKnight and Rich Cummings from investment bank Wells Fargo & Co also anticipate that gaming revenue would have benefited from the holiday influx. They said in a client note on May 1: “Our channel checks suggest May Golden Week is off to a very strong start, with record mass market crowds in Macau over the past four days. Even our most sceptical contacts in Macau are surprised at the crowds they’ve seen this week.” The figures are in stark contradiction to recent Hong Kong media reports that the crackdown on corruption in mainland China had affected visitations to the two special administrative regions for last week’s holiday, specifically for mainlanders. According to the Hong Kong Government, the city received 387,700 mainland visitors in this year’s period of May 1-3, down 1.7 percent from the previous year. It was the first drop in the May 1 holiday suffered by Hong Kong since the Individual Visit Scheme was introduced in July 2003. A report by the mainland’s state-run newspaper People’s Daily speculates that the visitation decline in Hong Kong is due to the softer mainland economy and the escalation of anti-mainlander sentiment in the territory in the past few months. Indeed, mainland cities were also crowded with visitors. State-run agency Xinhua reported that the mainland enjoyed a record-breaking figure of 37 million train journeys made by Chinese travellers during the Labour Day holiday this year, surging 16 per cent from last year. The Forbidden Palace in Beijing received over 109,000 travellers over the past weekend, its highest figure for the May 1 holiday.

May 6, 2014

Macau Data watchdog probes public bodies

he data protection watchdog is investigating cases involving two public bodies breaching the rules with the usage of smartphone applications, its chief said yesterday. Chan Hoi Fan, coordinator of the Office for Personal Data Protection, said her department has launched investigations into 36 cases since starting up in 2007 concerning the data usage of applications. Two public bodies – whose identities Ms Chan withheld - were involved in

the cases, she said, adding that the investigations concerning the public bodies have yet to be concluded. Of the 19 cases that the Office has completed investigating 12 involve the same private company, Ms Chan told media on the sidelines of a forum about data protection for smartphone applications. That company used the users’ information from a smartphone application and sent commercial advertisements to local numbers,

Ms Chan revealed, adding that the company had been fined 20,000 patacas (US$2,500) for data breaches. The Office coordinator also reiterated that the government intends to release guidelines in the second half of this year about data protection concerning the applications. The watchdog has so far released 11 guidelines, non-legally binding, in different areas, reminding entities to avoid breaching the city’s data protection law of 2005. T.L.

Forum facilitates visit to Macau, Nansha

liaison platform between mainland China and Portuguese-speaking countries has organised a two-week visit to Macau and Nansha to consolidate business exchanges between the two sides. The visit, organised by the Forum for Economic and Trade Co-operation between China and Portuguesespeaking Countries (Macau) with the University of Macau, attracted 28 participants from government departments and business chambers in seven Lusophonic countries including Brazil. Chang Hexi, secretary-general of the forum, said: “Attending seminars and having exchanges

with counterparts [during the visit], the participants can have a better understanding of the economic development of Macau and mainland China. This can be helpful to the establishment of the special economic zones in their countries.” Building the special economic zones is a “complicated” issue, requiring the

support of the administration and participation by the private sector, said Mr Chang. He added that this visit could also further consolidate business exchanges between the two sides. Rita Santos, deputy secretarygeneral of the forum, believes that this visit utilises the territory’s role as a regional platform for commercial services between the mainland and Portuguese-speaking countries. The visit officially kicked off yesterday and lasts until May 18. This is the second time that the Macau Forum has organised such a visit or such training for delegates from Portuguesespeaking countries this year.

2,000 join LRT railway guided tour M

ore than 2,000 people have already participated in guided tours of the Light Rapid Transit (LRT) railway exhibition since it was renewed four months ago, the Transportation Infrastructure Office (GIT) announced yesterday. Students and teachers were the main visitors to the exhibition that seeks to demonstrate the benefits of the LRT and the technologies involved in its construction. Some 43 groups of students and teachers account for 1,400 of the total number of visits. The other visitors taking the guided tour are members of the general public. The LRT exhibition is on the sixth floor of the Science Centre.

T.L.

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May 6, 2014

Greater China

Trade improvement expected after May Exporters face increasing challenges including rising labour and land costs, appreciation of the yuan currency and trade friction

hina’s overall trade is likely to gain momentum after May when high base effects fade off and data more accurately reflects the underlying picture, the commerce ministry said in a report on its website. External trade is looking in better shape this year than the previous year although uncertainties continue to weigh on exports, the ministry said in its quarterly report on foreign trade. It noted that demand from emerging markets was constrained due to slower growth there while consumption from developed economies was also relatively soft. China’s exports unexpectedly fell for the second straight month in March and import growth dropped sharply, intensifying concerns about weak manufacturing and slowing growth. Analysts have attributed the weak trade figures partly to an inflated comparison base with last year due to a rash of fake invoicing of exports to beat foreign exchange restrictions. The authorities have cracked down on such

activities since May of last year. “With the base effects that affect trade growth disappearing, the foreign trade data will reflect the situation more accurately and the situation is likely to improve after May,” said the report on the ministry’s website, www.mofcom.gov. cn, on Sunday. Imports and exports in the first quarter were within a stable growth range after excluding the base effects and were better than other major economies, the ministry said. “If there are no big changes in the external environment, China’s imports and exports are likely to maintain relatively stable growth in 2014,” the report said. Still, exporters face increasing challenges including rising labour and land costs, appreciation of the yuan currency and trade friction, it added. A private survey on China’s manufacturing sector yesterday, and a separate one from the government last week, both showed export

Premier Li Keqiang said last week that China will step up support for trade

orders contracted in April. China’s Premier Li Keqiang said last week that China will step up support for

trade, including quickening the pace of tax rebate payments for exporters, as part of policy measures to

Safe and risky reform path Since November no week has passed without new initiatives

Deng Xiaoping’s cautious reform style is kept in mind but current circumstances might be overwhelming

ix months into China’s grand economic makeover, Beijing is playing it safe, choosing gradual progress on many fronts over gamechanging, riskier reforms such as removing all controls over bank interest rates. Yet taken together, the incremental steps promise to reach enough critical mass to sustain reform momentum and help the world’s second-largest economy shift down fairly smoothly after decades of red-hot investmentfuelled growth. It’s a 21st century version of Deng Xiaoping’s “crossing the river by touching the stones” strategy of cautious economic experimentation in the 1970s and 1980s. The caution is still there, the difference is today China is crossing that river in many spots at once and the water is probably deeper.

Economists say there is no substitute for fundamental changes if China is to succeed in its transformation from bureaucratically-run, pollutionspewing industrial powerhouse to a more balanced, market-driven economy. However, reforms such as freeing up bank interest rates or dismantling state monopolies will cause much shortterm pain, and provide gains only in the long-term. With the economy expected to grow by 7.3 percent this year, the slowest in 24 years and close to the level Beijing believes is needed to preserve financial and social stability, those reforms will have to wait. “We are doing easier ones first and leaving the difficult reforms for later,” said Xu Hongcai, senior economist at China Centre for International Economic Exchanges, an influential think-tank in Beijing.

But Xu and others are encouraged by the progress so far and the consistency President Xi Jinping and Premier Li Keqiang have shown in pushing for a greater role for markets across the economy. “The leadership is committed to reforms, there is no doubt about that,” said Lu Feng, vice dean of National School of Development at Peking University and a government policy advisor. Since November, when Communist Party leaders adopted a reform blueprint for the rest of the decade, no week has passed without new initiatives in areas ranging from the environment, resource pricing to capital flows and financial regulation. “We have indeed seen in the last four or five months a steady accumulation of steps in key areas,” said Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong and a former World Bank economist in Beijing. Financial market liberalisation is a good example. Freeing up of lending rates last July and the doubling of the yuan trading band in March got most airtime, but they were accompanied by many other steps making it easier to move capital within China and across its borders.

Steady trickle Just over the past two months, regulators eased curbs on foreign investments in Chinese stocks,

support a slowing economy. China will release April trade data on Thursday. Reuters

allowed cross-border share investment between China and Hong Kong, and eased approvals for overseas acquisitions and domestic mergers and takeovers. However, a deposit insurance scheme expected to pave the way to removal of curbs on deposit rates has been slow in coming and it is clear that a free-floating yuan and opening up of China’s capital account are still years away. But changes made so far have already had the effect of allowing more balanced capital flows. The scaling back of central government’s administrative approval powers and simplified business registration are also expected to bring not yet easily measurable, but tangible economic benefits. For example, the easing of capital registration rules on March 1 brought a 46 percent surge in that month alone in the number of newly registered firms over a year earlier. Gradual removal of distortions in pricing of resources such as gas, and services like rail transport and healthcare, is another area where Beijing has been making progress, though many of those steps, taken in isolation, would have little impact. While those could be seen as low hanging fruit, the vigour with which many local authorities have been experimenting with mixed ownership of state-firms or new management incentives qualifies as one of positive surprises. Provinces have also shown similar resolve in launching new pilot schemes and special economic zones. It is too early to tell how much impact they may have but the direction is clear: towards more opening up, more competition, more markets, more smart technologies, and cleaner technologies. Reuters

May 6, 2014

Greater China HSBC reports factory activity shrinks Activity in China’s manufacturing sector contracted for a fourth consecutive month in April, a private survey showed yesterday, adding to questions about whether the world’s second-largest economy is still losing momentum. The final reading of the HSBC/Markit purchasing managers’ index (PMI) for April came in at 48.1, lower than a preliminary reading of 48.3 but up slightly from an eight-month low of 48.0 in March. The HSBC/Markit PMI has been below the 50 levels that separates growth from contraction since the start of 2014. Output and new orders contracted in April, and new export orders slipped back.

Beijing fines 652 firms for pollution Authorities in the Chinese capital fined 652 industrial facilities for breaching environmental regulations in the first four months of the year as it stepped up efforts to fight pollution. Beijing’s air quality has come under intense scrutiny since January last year, when heavy smog settled over the city to the alarm of its residents. Premier Li Keqiang in March promised a “war on pollution” as the country seeks to stem public anger over premature deaths while weaning the economy off over-dependence on energy-guzzling heavy industry.

IPO prospectus disclosures reach 211 China’s securities regulator on Sunday evening unveiled prospectuses of 25 IPO applicants, bringing the total number to 211 since April 19. In the latest round of disclosures, 12 applicants bid for the main board of the Shanghai Stock Exchange, 5 for the small and medium-sized enterprises board in Shenzhen and 8 for the ChiNext Board, the China Securities Regulatory Commission (CSRC) said. The commission has revealed a total of 10 rounds of prospectuses since April 19.

Imports from Port Hedland rise

Yuan’s strategy harvests Since the central bank started aggressively pushing the currency it has fallen more than 3 percent

eijing’s attack on yuan s p ecu l a to r s h a s p r o v en extraordinarily successful, so much so that traders no longer see it as a short-term intervention but a deeper market shift that has now gained a self-reinforcing momentum. That’s bad news for speculators still holding onto bullish yuan positions. And for the People’s Bank of China (PBOC), the risk is it has unleashed bearish forces it may not be able to rein in, souring enthusiasm for the yuan and complicating the push to increase the international adoption of the currency. “The market had expected the yuan’s weakness to last no more than a few weeks, but the PBOC has now sent clear signals that it is the central

KEY POINTS Expectations yuan dive would be short-lived under revision Authorities have previously had difficulty managing sentiment Yuan slide in 2012 ran for nearly 5 months Economists say weak economy gives Beijing room to depreciate

bank, not the market, that will decide when the yuan’s weakness will end,” said a trader at a European bank in Shanghai. “With the PBOC giving no signal that it intends to do so, corporates have become alarmed, and many are now building dollar positions to hedge.” Since the central bank started aggressively pushing the currency lower in February, to shake the

market out the view the yuan was a one-way bet, it has fallen more than 3 percent and more than unwound its gains of 2013. On Wednesday, it touched an 18-month low of 6.2676 per dollar. Markets were closed for holidays on Thursday and Friday. For its part, the PBOC has continued to set the daily midpoint rate near seven-month lows, which traders say signals it is still happy

Baosteel to expand resources acquiring Aquila The WPIO project has more than 2 billion tonnes of resources

Iron ore exports to China from Australia’s Port Hedland, which accounts for about a fifth of the globally traded market, rose by almost 7 percent in April, from March when they jumped 27 percent. Shipments to China amounted to 28.89 million tonnes in April, up from 27.04 million in March, data from the Port Hedland Port Authority showed. That was almost 50 percent higher than in April last year, a sign of still resilient demand from the Asian giant and of Australia’s success in grabbing market share from other producers.

Alibaba to issue different type shares The company wants to give a group of insiders the exclusive right to nominate a majority of the board. Unlike the dual-class model, where a minority shareholder wields disproportionate voting power, Alibaba plans to give all shares otherwise equal weight. Companies using dual-class structures have underperformed as investments by almost one-third over the long run. T. Rowe Price Group Inc. is calling for changes that would phase out the dual-class structure following a company’s IPO. Granting insiders some control while giving shareholders an equal say on most matters is an idea that could be replicated.

Baosteel chairman Xu Lejiang

hinese steel giant Baosteel Resources and an Australian partner launched a US$1 billion takeover bid for Australian explorer Aquila Resources in a move that could help break the grip of mega iron ore exporters Rio Tinto and BHP Billiton. Yesterday’s unsolicited US$1.06 billion offer to take over Aquila

Resources Ltd could open up a new Australian iron ore export region to supply Asian steelmakers, by jumpstarting the US$7 billion West Pilbara Iron Ore project (WPIO), half-owned by Aquila. State-owned Baosteel’s move would be the biggest foray into an undeveloped iron ore project in Australia by a Chinese investor

since China’s CITIC Pacific ran into massive cost blowouts and delays on the US$10 billion Sino Iron project. Sino Iron started producing in 2013. Baosteel, which already has a 20 percent stake in Aquila, said it first invested in the company back in 2009 to help it fund the iron ore project and a separate coking coal mine. “But after five years we haven’t

May 6, 2014

Greater China

doubts lower in February

that much firepower, smaller market players had no choice but to follow. But now dealers say such intervention is no longer necessary; “animal spirits” have taken hold and, in the context of wider economic malaise, given the trend a momentum of its own. And following the doubling of the yuan’s trading band in March to 2 percent either side of the midpoint, the market has a much bigger say over the direction of intra-day trade.

Lessons from 2012

with current levels. Initially, traders said the PBOC had to play hard ball to convince them it was serious - especially since its last attempt to pull back the yuan in late 2012 was widely considered a failure. Instead of relying solely on using the midpoint to guide the market, traders said the PBOC also ordered major state-owned banks to buy dollars and dump yuan. Facing

KEY POINTS Aim to open new iron ore export region in Australia Aquila says bid unsolicited, hires Goldman Sachs to advise Aurizon sees West Pilbara Iron Ore producing from 2017-18 Aquila shares surge, investors see bid succeeding

seen any projects being started. So we have been very patient, but we’ve become frustrated,” chief financial officer Wu Yiming told reporters on a conference call from Sydney. Baosteel, China’s no.2 steel maker, and rail company Aurizon Holdings Ltd said they will offer A$3.40 in cash per share, a 39 percent premium to Aquila’s close on Friday. Including Baosteel’s existing stake, the offer values the target at A$1.42 billion. Aquila shares rocketed 39 percent to a high of A$3.41 and last traded at A$3.36, just below the offer price, indicating investors expect the offer to succeed without a higher bid, with the suitors only seeking 50 percent acceptances. “The iron ore market has begun to enter into a period of oversupply but for Baosteel, as one of China’s top steel producers, they likely see this opportunity to secure their own resources and control a significant

For investors clinging to bullish derivative bets, and for foreigners who moved funds into Chinese equities and bonds in recent months, signs that market sentiment is souring on the yuan are unwelcome. “Short-term flows do tend to exhibit herd behaviour, which could generate unstable capitalflow dynamics in the short run,” said Enswar Prasad, economist at Cornell University and former head of the International Monetary Fund’s China division. “Further depreciation of the ç (yuan) could feed on itself as domestic capital could start leaving China in search of higher returns and for diversification purposes.” The last episode of sustained yuan weakness was more moderate, with the currency losing about 1.6 percent over five months in the first half of 2012. Even that had a noticeable negative impact on offshore sentiment toward the yuan, a setback for Beijing’s project to make its currency a rival to the dollar. Perhaps with that in mind, the PBOC has moved to further ease crossborder flows for major multinationals, another step in opening up its capital account. Reuters

part of their costs,” said an analyst at a major Chinese bank.

Fourth port If the Baosteel-Aurizon bid is successful, and feasibility studies prove the West Pilbara Iron Ore project to be commercially viable, the partners expect to start producing iron ore in 2017-18, said Aurizon Chief Executive Lance Hockridge. The WPIO project has more than 2 billion tonnes of resources, just below the 2.4 billion tonnes that Australian billionaire Gina Rinehart has at the Roy Hill project, also in the Pilbara, due to start producing in 2015. As designed, WPIO would produce 30 million tonnes a year in its first stage, dwarfed by Rio Tinto and BHP Billiton, which together are expected to be producing around 620 million tonnes a year by 2017. But more importantly for Asia’s steel producers, the WPIO partners plan to build a new rail and port at Anketell Point that would be open to other iron ore producers, unlike Rio Tinto’s rail and ports, providing an outlet for resources that have been stranded with no transport routes up to now. Aquila said it was approached out of the blue by Baosteel and Aurizon on Saturday even though it has been talks with Baosteel for some time about the stalled WPIO project. The suitors decided to go straight to Aquila shareholders with an offer after failing to secure a meeting on Sunday with Aquila’s executive chairman and 29 percent owner, Tony Poli. “It’s effectively a hostile offer,” said the analyst, who was not authorised to talk to the media on Aquila. Bloomberg News

Ethiopia welcomes Premier Li with deals Chinese ministers and company executives accompanying Li signs 16 deals with Ethiopian counterparts

hina signed a raft of agreements with Ethiopia on Sunday as Premier Li Keqiang arrived for the first leg of his four-nation Africa tour aimed at shoring up burgeoning Sino-Africa ties that saw their trade top US$200 billion last year. This is Li’s first visit to Africa since he became premier last year, and follows a trip to the continent by President Xi Jinping in March 2013, when he renewed an offer of US$20 billion in loans to Africa between 2013 and 2015. Africans broadly see China as a healthy counterbalance to Western influence but there are growing calls from policymakers and economists for more balanced trade relations. In Ethiopia, Chinese firms have invested heavily in recent years with their worth swelling well over US$1 billion in 2014, according to official figures. Beijing is also a key partner in Ethiopia’s bid to expand infrastructure such as roads, railways and telecom services. Chinese ministers and company executives accompanying Li signed 16 deals with their Ethiopian counterparts, including loans and cooperation agreements for the construction of roads and industrial zones. “This right track in the relationship between us has been laid. I am sure it will lead us to stronger growth in our ties,” Li told a press conference. Huawei Technologies Co Ltd the world’s second largest telecom equipment maker - and ZTE Corp are currently working to introduce a high-speed 4G broadband network

in the capital Addis Ababa and a 3G service throughout the country. Officials said both firms have now signed an US$80 million deal to lay optical ground cables to form a nationwide network.

No colonial ambitions China has a relationship with Africa which pre-dates its current resourcehungry economic boom. In previous decades, China’s Communist leaders supported national liberation movements and newly independent states across the continent. Li’s tour, which will also take in Nigeria, Angola and Kenya, comes virtually on the 50th anniversary of then-Premier Zhou Enlai’s landmark trip to 10 African nations from December 1963 to January 1964. Beijing has been accused of holding back the continent’s economic development by focusing on the pursuit of raw materials rather than the creation of local jobs and markets. Keen not to be perceived as an imperial master, Li said China was willing to sit down with African countries to resolve any issues that arose over investment projects. “I wish to assure our African friends in all seriousness that China will never pursue a colonialist path like some countries did, or allow colonialism, which belongs to the past, to reappear in Africa,” the official news agency Xinhua quoted Li as saying ahead of his arrival in the Ethiopian capital. Reuters

Nuclear power goes public China has emerged as the biggest market for nuclear plants, approving four to eight projects a year

hina National Nuclear Power Co Ltd plans to raise 16.3 billion yuan (US$2.60 billion) in the industry’s first initial public offering, as part of the world’s biggest expansion of civilian nuclear power capacity. The listing, if approved by the securities regulator, could be the largest on the mainland since Agricultural Bank of China Ltd in July 2010 - though Guotai Junan Securities Co Ltd could take that accolade after applying for an IPO to raise 22 billion yuan, based on Reuters calculations. State-owned China National Nuclear said in a preliminary prospectus on the regulator’s website that it plans to sell 3.651 billion shares, or 25 percent of its enlarged capital base, to fund projects and replenish working capital. The listing would be part of the government’s drive toward cleaner energy, under which it aims for installed nuclear power capacity of 58 gigawatts (GW) by 2020 from 14.6 GW in 2013, rising to 200 GW by 2030 - a goal analysts labelled ambitious. E x p a n s i o n wa s s u s p e n d e d after the 2011 nuclear disaster at Fukushima, Japan, but plant

construction is widely expected to resume in coming months. China, the world’s largest power producer, has emerged as the biggest market for nuclear plants, approving four to eight projects a year for the rest of the decade, many using U.S. or French technology, according to some estimates. The country generates less than 2 percent of electricity from 17 nuclear reactors - nine owned by China National Nuclear and the rest by state-owned China General Nuclear Power Corporation (CGN). A further 31 more are under construction. China National Nuclear, descended from the former nuclear ministry, is one of the country’s biggest central-government controlled conglomerates and maintains strong military links. The utility, alongside CGN, has been looking to internationalize its technologies and designs, many of which were developed with Toshiba Corp subsidiary Westinghouse and Areva SA. Last year, China National Nuclear won a contract to build two reactors for the Karachi Coastal Nuclear Power Project in Pakistan at a cost of US$9.59 billion. Reuters

May 6, 2014

Asia Indonesia’s Q1 GDP growth slower Indonesia’s economy grew at a much slower than expected pace in the first quarter as investments and exports weakened, the statistics bureau said yesterday. Gross domestic product in the January to March quarter rose 5.21 percent from a year earlier, against 5.72 percent in the fourth quarter and compared with 5.60 percent forecast in a Reuters poll. On a quarterly basis, the economy expanded 0.95 percent. Growth in Southeast Asia’s biggest economy has been supported by buoyant domestic demand and underpinned by strong consumption from a rising middle class.

Australia April new vehicle sales hit Sales of new vehicles in Australia fell in April from a year earlier but largely because the month had fewer selling days this year, an industry report showed yesterday. The Australian Federal Chamber of Automotive Industries’ VFACTS report showed sales of 80,710, were down 5.2 percent on April last year. April this year had 2 fewer selling days, so sales per day actually increased from last year. Sales in original terms were down 17 percent in April compared to March, but when adjusted for seasonal factors that equated to a rise of 0.3 percent.

N.Z. horticulture feeds Pacific rim New Zealand’s growing horticulture exports are driving an thriving trade in machinery and equipment as demand surges in developing Pacific rim countries, figures from a government research institute revealed yesterday. Horticultural products accounted for 8 percent of New Zealand’s total goods exports in the year ending June 2013, up from 7.8 percent the year before, according to a report from Plant & Food Research. In the year to June 2013, the horticulture industry generated more than NZ$3.6 billion (US$3.12 billion) in export revenue, with the wine accounting for 33 percent of that figure.

Barclays gives up Singapore office for LinkedIn The second-largest U.K. bank by assets, has given up two stories of prime office space in Singapore’s financial district, which has been leased to LinkedIn Corp., people familiar with the matter said. Barclays returned about 5,575 square meters at the Tower 2 of Marina Bay Financial Centre to the landlord, one of the people said, asking not to be named because the information is private. Barclays declined to comment in an e-mailed response. The bank has been shuffling its real estate space in the city-state, where it’s moving employees from suburban offices to the Marina Bay area to cut costs.

PT Indonesia Infrastructure Finance on a roll The company has capital of 1.8 trillion rupiah and is financing roads, hydropower plants, airports and seaports with loans

T Indonesia Infrastructure Finance plans to raise by at least 60 percent the funding that the government-backed company provides to help build roads, power plants and airports in Southeast Asia’s largest economy. The financial institution will increase loans this year to more than 4 trillion rupiah (US$347 million), from 2.5 trillion rupiah last year, its Sukatmo Padmosukarso said in Jakarta on May 2. Padmosukarso is meeting potential investors in Singapore, Japan and Hong Kong on a road show, he said. Indonesia’s Ministry of Finance set up the company in 2010 to provide long-term funding and help kick-start transportation and power projects across the archipelago, as the nation seeks to catch up with its neighbours in physical development. A lack of infrastructure is the main obstacle for investors, Mahendra Siregar, the country’s investment chief, said last month. “The government really understands that Indonesia already lags behind neighbouring countries on infrastructure,” Padmosukarso

Jakarta Governor Joko Widodo has begun building a monorail in the capital

said in an interview. Shareholders in the company include Indonesia’s government, the World Bank’s International Finance Corp. and Sumitomo Mitsui Banking Corp, according to Padmosukarso. Foreign direct investment growth slowed to 9.8 percent in the JanuaryMarch quarter, from 25.4 percent in the previous three months, according to government data. Foreign funds

have bought US$2.9 billion of Indonesian stocks so far this year on optimism for investor-friendly measures from a new government following presidential elections in July.

New airports The company has capital of 1.8 trillion rupiah and is financing roads,

Vietnamese army marches to market Over the past three decades the Vietnam People’s Army has built up a network of businesses and corporate interests that generate significant revenue

rom ragtag volunteers with home-made shotguns to stealth frigates, telecoms conglomerates and golf courses - the Vietnam People’s Army has transformed since its victory over the French six decades ago. Vietnam is now one of the top spenders on defence in Southeast Asia as it seeks to safeguard territorial claims in the contested South China Sea. “Their procurement of modern military systems is really accelerating to a tremendous degree,” Jon Grevatt, Asia Pacific defence industry analyst with IHS Jane’s, told AFP. In acquiring hardware -mainly from Russia- and forging strategic partnerships with countries from Germany to South Korea, Vietnam’s army is becoming “more professional, more efficient, more effective,” Grevatt said. IHS Jane’s estimates the country’s “opaque” defence procurement budget

at US$1.26 billion for 2014 but says evidence suggests these figures may underestimate the true scale of spending. “It is supplementing its defence procurement budget through offbudget revenues: oil and gas, nuclear,” Grevatt said. Over the past three decades the Vietnam People’s Army has built up a network of businesses and corporate interests that generate significant revenue. The army has always been “a crucial force in Vietnam’s politics,” but as the communist country embraced economic reforms in the late 1980s, the nature of the army’s role changed, said Professor Jonathan London at City University of Hong Kong. “The military has taken an active role in the market economy,” he said. The army owns hotels, golf courses, television stations, newspapers and even one of the country’s largest

telecoms companies, Viettel, which has expanded overseas in countries from neighbouring Cambodia to Haiti. Over the course of Vietnam’s decades of war, the military ended up holding vast tracts of land, many of which have not been handed back to civilian control but are developed, often controversially. The army has companies that earn hundreds of millions of dollars a year, supplementing the defence budget, said Professor Carl Thayer of the University of New South Wales in Australia. And as these companies also employ veterans and military families they are a powerful lobby group, he added. Even as the army’s business interests grew, its size has shrunk, from roughly 1.2 million men in uniform at the end of the 1980s to under 600,000 now.

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AFP

May 6, 2014

Asia hydropower plants, airports and seaports with loans of as much as seven years, Padmosukarso said. It is limited to financing a maximum 35 percent of each project. It is also advising on plans to expand 10 small airports, he said. The government in December announced new rules that will allow foreigners to own as much as 49 percent of airports and 100 percent of power plants built under public-private partnerships.

The government really understands that Indonesia already lags behind neighbouring countries on infrastructure Sukatmo Padmosukarso, PT Indonesia Infrastructure Finance, President Director

“For airports, as long as passenger traffic is more than three million a year, it’s not difficult to invite investors,” Padmosukarso said. The revenue and risk outlook for power plants was also straightforward to determine, he said.

For some toll roads, such as a plan to build one across the commodityrich island of Sumatra, it’s trickier because of the uncertainty of traffic volume, he said. Land clearance was another major issue for building infrastructure, he said.

Train lines President Susilo Bambang Yudhoyono, whose second term ends this year, has struggled to deliver on his promise to build more roads, bridges and ports. Jakarta Governor Joko Widodo, who leads opinion polls to be the next president, has yet to detail his plans to tackle the challenges of an economy that grew at its slowest pace in four years in 2013. Since being elected governor in September 2012, Widodo has begun building a monorail in the capital and pushed through the start of construction on a metro train system that had been delayed for years. An Indikator Politik Indonesia poll released March 18 put him more than 25 percentage points ahead of his closest competitor for the presidency, Prabowo Subianto, a former general. The Japan Bank for International Cooperation last week signed an agreement with a Japanese and an Indonesian lender to discuss rupiah financing for Japanese-affiliated companies. The two nations agreed to strengthen financial ties in May 2013 as Japan eyes Indonesia as an attractive investment destination. Yudhoyono’s government has been relying on public-private partnerships, or PPP, to develop infrastructure and cover the funding shortfall, yet this has not been a success so far, Padmosukarso said. Bloomberg News

Aussie inflation gauge climbs Prices excluding fuel, fruit and vegetables climbed 0.7 percent and 2.4 percent, respectively

private gauge of Australian inflation jumped in April as the cost of postal services, tobacco, communication and travel all rose, a potential sign of returning price pressures following a softer patch in the first quarter. The TD Securities-Melbourne Institute’s monthly measure of consumer prices rose 0.4 percent in April, from March when it increased by 0.2 percent. That saw the annual pace tick up to 2.8 percent, and nearer the top of the Reserve Bank of Australia’s (RBA) long-term target band of 2 to 3 percent. Markets are pricing in almost no chance of a further easing and some prospect of a hike late in the year, in part because domestically-driven inflation pressure have proved more stubborn than hoped. That pressure was evident in the TD-MI survey with prices for nontradable, mainly services, surging 0.9 percent in April to be up 3.4 percent for the year. In contrast, prices for tradable goods and services fell 0.4 percent in the month to be 2 percent higher for the year, likely held back by a stronger Australian dollar. Measures of core prices were also high in April. The trimmed mean rose 0.5 percent for the month and

0.4 pct April’s inflation 3.1 percent on the year, while prices excluding fuel, fruit and vegetables climbed 0.7 percent and 2.4 percent respectively. Some of the gains were government mandated, with tobacco up 2.4 percent on rising taxes, while postal costs rose 12 percent. Communication costs increased by 2.6 percent and holiday travel and accommodation 6.4 percent. These were partly offset by a 6.7 percent drop in fruit and vegetables prices, a 2.1 percent fall in clothing and footwear and a 2.1 percent decrease in automotive fuel. “This first taste of the June quarter reveals an alarming jump in headline and trimmed mean inflation, of which only a portion can be attributed to seasonality, with annual rates for both measures sitting on top of the RBA’s two to three per cent target band,” said TD’s head of Asia-Pacific research, Annette Beacher. Reuters

Indian stock unbalanced Earnings disappointment has been especially acute for infrastructure shares

rally that’s taken India’s stock market to record highs faces a reality check as profits at some blue chips have been bolstered by non-operating items such as tax credits and investments, rather than by a revival in demand. The reliance on “other income” to pad profits in January-March quarter results reported thus far indicates that an anticipated economic recovery has yet to take hold, and that the current rally may be running ahead of fundamentals. Investors have been betting on improving profits. Earnings at 170 large and midcap Indian companies tracked by Thomson Reuters StarMine currently are expected to surge by an average of 17.8 percent in the fiscal year that started in April, more than double the 7.7 percent a year earlier. “Markets would increasingly start looking expensive if earnings don’t keep pace with it,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance in Mumbai. Recent share-price gains “would be futile unless operating margins and profits follow,” he added. Both the NSE index, the country’s biggest stock exchange, and the BSE, the

Mumbai Stock Exchange building

oldest, have hit record highs since February. A market rally for the NSE this year has been driven by bets that the opposition Bharatiya Janata Party will handily win elections concluding this month, and by hopes that India’s economy is on the mend after hitting a decade-low growth pace. At this year’s peak - on April 23 - the index was up 8.5 percent. As of Friday, it was 6.2 percent ahead in 2014. Analysts had widely expected core earnings to recover after an analysis of

128 companies in the BSE 200 index showed operating margins fell to 14.7 percent in the October-December quarter, the lowest since December 2008. But those hopes have taken a knock from recent company results.

No sign of revived demand One example is Maruti Suzuki Ltd, India’s biggest automaker. It disappointed investors last month by posting a bigger-than-expected 36 percent decline in quarterly

net profit to 8 billion rupees (US$132.64 million). Making it worse, half of the entire net profit came from treasury income including investments such as mutual funds. Meanwhile, its sales in April were down 11.4 percent on a unit basis from a year earlier, hardly a sign of revived demand. Maruti Suzuki’s reliance on non-operating items was much higher than over its previous two fiscal years, when other income accounted for a median of 32 percent of earnings.

Shares of the automaker which is 56 percent owned by Suzuki Motor Corp. of Japan - have fallen 5 percent since earnings results compared to near 2.1 percent fall in the NSE index. Earnings disappointment has been especially acute for infrastructure shares, which had surged because of hopes the sector would benefit most from any economic recovery and will be boosted by a BJPled government focussing on new investment projects. Major cement maker ACC Ltd, a unit of Swiss cement maker Holcim Ltd, reported results that some analysts considered less than solid. The earnings report showed that non-operating items, including a one-time tax credit, contributed 27 percent of ACC’s net profit, more than a median of 22.7 percent in the last two years. Other blue-chips such as Cairn India Ltd and Sesa Sterlite Ltd showed a similar reliance in other income. For now, fund managers are willing to wait, given about half of India’s blue chips are yet to post quarterly results, and because they are reluctant to miss out on a potential rally should the election outcome due on May 16 show the BJP winning an outright majority. Reuters

May 6, 2014

International

Mining strike impacts South African economy

Maroc Telecom acquires Etisalat’s African business

The 14-week strike over pay by more than 70,000 platinum workers is a headwind for expansion

Emirates Telecommunications Corp., the most valuable publicly traded company in the United Arab Emirates, agreed to sell businesses in six west African countries to Maroc Telecom as it combines assets before completing a US$5.8 billion acquisition from Vivendi SA. Today’s deal, valued at US$650 million, includes units in Benin, Central African Republic, Gabon, Ivory Coast, Niger and Togo that provide mobile voice and data services, the Abu Dhabi- based company known as Etisalat said in a statement. Etisalat agreed in November to acquire Vivendi’s 53 percent stake in Maroc Telecom in the Middle East’s largest takeover of a phone carrier.

he longest mining strike in South African history risks weighing on investors as the threat to growth builds, clouding the economic outlook amid preparations by the African National Congress for its fifth general election. The rand was little changed in April following its biggest back-to-back monthly gain since February 2012, data compiled by Bloomberg show. The number of days foreign investors were net sellers of government bonds was the most since this January, according to stock exchange statistics. The 14-week strike over pay by more than 70,000 platinum workers is a headwind for expansion, forecast this year to be half the 5.4 percent pace that the government estimates is needed to reduce the nation’s 24 percent jobless rate. The labour dispute, given that mining accounts for almost 60 percent of South African exports, is a bigger risk to investors than this week’s elections, which polls show the ANC will win, according to Mohammed Nalla at Nedbank Group Ltd. “We cannot underestimate the impact that has on the South African economy, where you have an entire industry that is shut down for a quarter of the year,” Nalla, head of strategic research at Nedbank’s investmentbanking group in Johannesburg, said by phone on May 2.

ANC win South African bonds due in 10 or more years were one of only two fixed-income categories that lost money in April among 144 indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies. Rand bonds earned 0.3 percent in the period, the worst performance since a loss of 3.2 percent in January, according to Bloomberg bond indexes. The ANC is set to win more than

Pemex to sell Repsol stake Finance Minister Pravin Gordhan played down the effect of the labour unrest.

60 percent of the support when South Africans vote in two days, ensuring a second term in office for President Jacob Zuma. Because it’s a given that the ANC will win, the election outcome and its effect on the economy is not a concern, Thabi Leoka, head of South African research at Renaissance BJM Securities, said. The strike by workers at the South African operations of Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc have cost almost 16 billion rand (US$1.52 billion) in lost revenue and workers have foregone 7.1 billion rand in wages, according to the companies.

Beyond mining The weight of mining in South Africa’s exports means the strike will start to affect the current-account deficit, which widened to 5.8 percent of gross domestic product in 2013, as platinum mining companies’ inventories are run down, said Moshabele Modise, an investment analyst at Citadel Investment Services in Cape Town. While Zuma said on May 1

protracted strikes aren’t in the interest of the workers or the economy, Finance Minister Pravin Gordhan on April 29 played down the effect of the labour unrest. “Investors know how to discriminate and discern the difference between one particular sector of the economy and other sectors,” Gordhan said in an interview with Bloomberg TV Africa. The ANC has won every election since the end of apartheid in 1994 with more than 60 percent of the vote. The main opposition Democratic Alliance is forecast to win about 22 percent, according to market-research company Ipsos. The party is worried about the effect of the strike on the economy, Enoch Godongwana, the head of the ANC’s economic policy committee, said. “If affects the profitability of the companies, it affects the incomes of the individuals, it affects our imports earnings in terms of the balance of payments, it affects our revenue as government, so it has a huge knock-on effects on the economy,” said today in Johannesburg. Blomberg News

Portugal to end bailout with clean break Germany hails Portugal’s decision to forego more aid

ortugal decided to make a clean break from its EU-IMF bailout on Sunday, following in the footsteps of Ireland by forgoing a credit line as it prepares a full return to the credit markets. The decision, made during an evening cabinet meeting, came after the country passed the final bailout audit by EU-IMF experts on Friday, thereby closing out the essential part of its 78-billion-euro three-year rescue. “The government decided that we will exit our rescue programme without resorting to any precautionary programme,” Passos Coelho said during a television broadcast following the meeting surrounded by his ministers. The decision was the “best for the interests of Portugal” after the country “regained its credibility,”

he added. Portugal is now set to emerge from the bailout on May 17, and is expected to try to finance itself on bond markets without a so-called safety net, becoming the second stricken Eurozone country to do so after Ireland. Portugal made the decision while still enacting the latest round of severe measures to keep its public finances within targets laid down by the International Monetary Fund, European Union and European Central Bank. Rafts of reforms tied to rescue loans pushed the country into recession and the people into severe hardship, with cuts in pay, pensions and public services. The auditors, who began their last audit of progress on reforms on April 22, finished their work

late on Thursday after marathon negotiations. Their approval of the national accounts and progress opens the way for the release of the last payment of 2.6 billion euros of the total rescue package of 78 billion euros (US$108 billion) extended in May 2011. By following the example set by Ireland, Portugal will now proceed to issue bonds without having the backup of a precautionary line of credit. Passos Coelho said the government had enough funding reserves to protect itself from at least a year of financial turbulence. German Finance Minister Wolfgang Schaeuble welcomed a decision by Portugal on Sunday not to tap further credit from the European Union when the current bailout package comes to an end soon. AFP

Mexican state-run oil company Pemex has hired Credit Agricole to sell its stake of just over 9 percent in Spanish oil major Repsol, Spanish online newspaper El Confidencial reported yesterday, citing financial sources. Pemex, a long-time Repsol shareholder, has had an increasingly fractious relationship with the Spanish group. It has publicly locked horns with Repsol Chairman Antonio Brufau over how he handled negotiations after Argentina’s 2012 seizure of the company’s YPF business, which ended in a US$5 billion settlement this year.

Panama leader’s deputy wins presidency

The vice-president, running as an opposition candidate, won the presidential election on Sunday after a campaign in which he took credit for outgoing leader Ricardo Martinelli’s successful economic policies while promising a cleaner government. Juan Carlos Varela of the centre-right Panamenista Party (PP) helped Martinelli get elected as president in 2009 but later fell out with him. He has vowed to tackle corruption, lower inflation and reduce poverty. Varela had 39 percent support with about 80 percent of votes counted, enough for a comfortable victory over his two main rivals.

No money for east Ukraine Ukraine’s largest bank has temporarily closed branches in separatist-held Donetsk and Luhansk, saying it could no longer carry out cash transactions in regions riddled with crime that could “threaten the lives” of its workers. Pro-Russian separatists have targeted Privatbank, after its co-owner, billionaire Igor Kolomoisky, was appointed by the new government head of the nearby Dnipropetrovsk region and swiftly announced a US$10,000 bounty on the heads of Russian “saboteurs”. Rebels set fire to a branch in the town of Mariupol in the Donetsk region late on Saturday.

May 6, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

PHILSTAR Century Pacific Food Inc., the Philippines’ largest canned goods producer, is set to debut in the local bourse this week after completing a P3.2-billion initial public offering (IPO). The book building and offer period of the second IPO this year was met by strong demand that would translate to favourable prices come trading time, underwriters said. “The Century Pacific IPO was greeted with overwhelming demand with a three times oversubscription at book building,” said Roberto Juanchito Dispo, president of underwriter First Metro Investment Corp.

Infrastructure in a class of its own Justin Yifu Lin Kevin Lu Former chief economist and senior vice president at the World Bank Fellow at INSEAD Global Private Equity Initiative Professor and Honorary Dean of the National School of Development, Peking University Managing director of Partners Group

TAIPEI TIMES An investigation launched by the Taiwan Stock Exchange (TWSE) has found no falsification of Asia Plastic Recycling Holding Ltd’s (APR, 亞塑再生) financial records, despite a US-based research firm accusing the company of overstating its earnings. The TWSE, which had sent a three-member team to APR’s production base in China on Tuesday, said on Friday that the team has found that the company’s financial records were authentic and were based on facts. The TWSE said the investigating team probed a wide range of records, including the certification of APR’s accountants.

THE STAR Despite the stock market adage: sell in May and go away, technical analysis indicate that Malaysia’s stock market is likely to test a record high this week. According to technical analysts, near-term indicators suggest that the benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) will likely rewrite its all-time high of 1,882 that was recorded on December 31, 2013. Hong Leong Investment Bank (HLIB) stated the near-term outlook for the FBM KLCI to reach its all-time high was positive following a strong breakout above the estimated 10-day simple moving average of 1,861.

THE PHNOM PENH POST Savings levels at Cambodia’s microfinance institutions (MFIs) have recovered well since the widespread withdrawal that followed last July’s disputed national election, with more than US$90 million deposited in the first quarter of this year. The amount of deposits in MFI accounts fell from US$378 million in June 2013 to a low of US$365 million the following quarter. Since then, deposits have recovered strongly, reaching US$445 million at the end of 2013 and US$536 million on March 31 this year, according to the Cambodian Microfinance Association (CMA).

EIJING – After several months of disappointing economic indicators, China’s State Council has unveiled a “ministimulus” package, focused on social-housing construction and railway expansion. The decision came a month after Premier Li Keqiang’s declaration that China had set its annual growth target at “around 7.5%” – the same as last year’s goal. The implication is clear: While consumption-driven growth remains a long-term goal for China, infrastructure will continue – at least in the short term – to serve as a key driver of China’s economy. Of course, China is not the only economy that depends on infrastructure investment to buttress economic growth. The World Bank estimates that infrastructure investments accounted for nearly half of the acceleration in Sub-Saharan Africa’s economic growth in 2001-2005. According to the Bank, a 10% increase in infrastructure investment is associated with GDP growth of 1%. Such investment also creates jobs, both in the short term, by creating demand for materials and labour, and in the long term, for related services. For example, every US$100 million invested in rural road maintenance translates into an estimated 25,000-50,000 job opportunities. But these benefits are diluted in China, owing to its excessive reliance on public funding. Indeed, in recent years, less than 0.03% of Chinese infrastructure investment – which amounted to roughly 9% of GDP – was derived from private capital. This problem is not limited to China; of the 7.2% of GDP that Asian countries spend, on average, on infrastructure development, only about 0.2% is privately funded. By

contrast, in Latin America and the Caribbean, private capital finances, respectively, 1.9% and 1.6% of infrastructure investment. Discussions within the G-20 have produced two possible explanations for Asian countries’ inability to attract more private capital to infrastructure projects. Most developing countries argue that the problem is rooted in the provision of capital, with investors preferring to fill their infrastructure portfolios with low-risk projects, and insurance companies and banks facing overly restrictive regulations. OECD countries like Germany counter that the problem is the lack of investment-worthy assets; there are simply not enough bankable projects available. In fact, both explanations are correct – but neither is complete. It is time for Asia’s leaders to recognize that the lack of private funding for infrastructure projects cannot be reduced to one or even two problems, and to develop comprehensive solutions that account for the full scope of the challenge. This requires, first and foremost, abandoning the view that infrastructure assets fit into the paradigm of traditional asset classes like equity, debt, or real estate. Infrastructure must be redefined as a new asset class, based on several considerations. For starters, there is the public-good element of many infrastructure projects, which demands contingent government obligations like universal coverage levels for basic services. In order to make such projects more appealing to private investors, economic externalities should be internalized, and a link should be established between the internal rate of return, which matters to a commercial investor, and the

It is time for Asia’s leaders to recognize that the lack of private funding for infrastructure projects cannot be reduced to one or even two problems, and to develop comprehensive solutions that account for the full scope of the challenge

economic rate of return, which matters to society. Moreover, innovative mechanisms to supply new assets to investors would be needed – and that requires the creativity found and priced by markets. To this end, privatesector sponsors must be given space to initiate valuable projects. The new asset class would need its own standardized risk/ return profile, accounting, for example, for the political risks that public-sector involvement may imply and for the lower returns from infrastructure relative to traditional private equity. Moreover, the risks associated with the new asset class would change as projects progress from feasibility study to construction

to operation, implying that each phase would attract different sources of funding. A clear understanding of this process would enable potential investors to assess projects more effectively, which is critical to encouraging them to put up financing. Another important consideration is the considerable technical expertise that infrastructure investments demand, which makes them more complex than most assets. Similarly, a specialized network of actors would be needed to ensure that intermediation of infrastructure transactions is efficient and cost-effective, instead of fragmented and slow, as it is now. For countries that lack China’s strong fiscal position, the need to attract private capital to infrastructure investment is obvious. With nearly 70% of Sub-Saharan Africa’s population lacking access to electricity and 65% of South Asians lacking access to basic sanitation, there is no greater imperative than to plan, fund, build, and maintain infrastructure assets. But private investment in infrastructure remains vital even in countries like China, because it brings the power and dynamism of the market, which improves the allocation of capital and promotes transparency. Indeed, more private-sector involvement would make the kind of scandals that have occurred in China’s railway sector far less likely. In short, redefining infrastructure as a new asset class is the only credible way to attract funding for infrastructure construction, and thus to boost long-term economic growth and the employment rate. It is time for Asia’s leaders to step up. The Project Syndicate 2014

May 6, 2014

Closing Anti-graft campaign takes its toll again

Development forum opens in Beijing

Two Chinese Communist Party officials from a county where a bank run occurred in March are under investigation for corruption, the party’s anti-graft watchdog said yesterday. Tian Weiyou, governor of Sheyang county in east China’s Jiangsu province, was being investigated for “serious law and discipline violations,” a euphemism for corruption, the Central Commission for Discipline Inspection said on its website. Xu Chao, the former top Communist Party official in Sheyang county, is also under investigation, the commission said in a separate statement.

The Dajiang Forum, a new platform to discuss development of cross-Strait ties, kicked off yesterday in Beijing. Scholars, professionals and representatives of industry associations and social organizations from culture, education, art, business, science and technology, leisure and agriculture took part. The forum aims at establishing common ground for developing cross-Strait relations. Lin Wenyi, chairwoman of the Central Committee of the Taiwan Democratic Self-Government League (TSL), expressed hope that peaceful development of relations will become an unstoppable trend and Taiwan compatriots, particularly those from grass-roots level, can benefit.

Ferry schedules resumed as normal Official figures suggest that ferry operators have reinstated normal ferry trips after scaling back last year in the wake of a new tourism law introduced in mainland China Tony Lai

tony.lai@macaubusinessdaily.com

erry operators have resumed normal ferry schedules having scaled back some ferry services in the fourth quarter of last year owing to the new tourism law, official figures suggest. The Statistics and Census Service announced yesterday that the number of passenger ferry sailings the city handled in the first quarter hit 35,068, up 44 trips from the same period a year earlier. This figure also represents a 3.5 percent jump from the fourth quarter of last year. The number of ferry trips dropped by 3.2 percent year-on-year in the OctoberDecember period, as ferry operators cut their ferry shifts amid a declining sea passenger figure resulting, it is believed, from the new mainland tourism law, Marine and Water Bureau director Susana Wong Soi Man said in February. Starting in October last year, the mainland banned tour operators from compelling package

tourists to shop in places that then pay the operators’ commission. The number of package tourists in Macau subsequently declined for about three months as higher package tour prices scared some mainlanders away. Mainland package tourists usually come to Macau via sea after visiting Hong Kong. Recent official figures,

however, show that the city’s package tourism market has startedtorecover.Thecityreceived 697,500 mainland package tour visitors in March, surging 30.1 percent year-on-year. The statistics bureau also said yesterday that commercial flight movements in the territory had risen by 9 percent year-on-year to 11,567 in the first quarter,

40 percent of which were mainland Chinese flights. Inward air cargo surged some 27 percent to 1,730 tonnes in the first three months with more goods incoming from Japan and the mainland, while outward cargo declined by 4 percent. The territory’s sea cargo throughput slightly went up by 2 percent in the January-March

Melco-Crown’s owner in real boxing match

Shipwreck in Hong Kong leaves 11 missing

illionaire gambling tycoon James Packer and his former best man, the head of Australia’s Nine Network, insisted Monday they were still friends despite being involved in an ugly punch-up at Bondi Beach. The Sydney Morning Herald said more than 50 images show Packer and David Gyngell throwing and receiving punches and wrestling on the ground on Sunday afternoon. It sparked a bidding war for the photos, which Rupert Murdoch’s News Corp. appears to have won, publishing the first four pictures online Monday afternoon. “We have been friends for 35 years and still are,” Packer and Gyngell said in a joint statement as News Corp. non-executive chairman Lachlan Murdoch arrived at the Packer compound. “In that time we have had our fair share of ups and downs. We respect each other and neither of us will be commenting further.” Bondi resident Chris Walker, who says he witnessed the incident, tweeted about a “massive street fight” outside Packer’s multi-million dollar home. AFP

leven people are missing after a container ship collided with a much smaller vessel carrying cement off Hong Kong’s Po Toi Islands today. The cement ship may have sunk after the 2:30 a.m yesterday. collision, according to Hong Kong’s marine department. China’s Guangdong provincial government sent vessels and helicopters for the search-and-rescue efforts, said Cai Zhuangbiao, a director at its marine department rescue center. The ships crashed into each other about two nautical miles off the islands, and crew members from the smaller cement- carrying vessel remain missing, Hong Kong’s marine department said. The bigger ship, a container carrier called MOL Motivator, was on its way to China’s Shenzhen Yantian port from Hong Kong. “We’re focusing on the search and rescue efforts,” and will conduct an investigation into the cause of the accident, Cai said over the phone. The incident comes a month after a German container ship ran aground off the coast of Hong Kong. Bloomberg News

period to 30,736 TEUs or 20foot equivalent containers. In the same period, the city saw an increase in the number of mobile phone users and Internet subscribers - 7 percent and 16 percent, respectively, to over 1.66 million and 275,200. The number of fixed-line telephone users dropped 3 percent to 157,100.

EU: ready, steady, growth

he European Commission tweaked its 2014 and 2015 economic forecasts yesterday but left intact the overall outlook for gradual recovery from a record recession. The Commission stressed again the need for all member states to stick to the reforms and measures agreed to tackle the global slump and ensuing debt crisis, saying this was vital for continued growth. The 18-nation Eurozone economy will grow by 1.2 percent this year, as previously estimated, it said, while cutting its 2015 forecast to 1.7 percent from 1.8 percent. The full 28-member European Union economy will expand 1.6 percent in 2014, up from the previous estimate of 1.5 percent, and grow 2.0 percent in 2015, unchanged from the earlier forecast. The estimates rest “on the assumption that the agreed policy measures will be implemented ... taking forward” steps to stabilise the public finances and open up the economy, the Commission said. “The recovery has now taken hold. Deficits have declined, investment is rebounding and, importantly, the employment situation has started improving,” acting Economic Affairs Commissioner Siim Kallas said in a statement. AFP