MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo
accuses CE I
t’s just days before the CE elections on Sunday. But Next Magazine has made startling allegations. The Hong Kong publication has reported that Chief Executive candidate Chui Sai On was allegedly involved in transferring benefits to four Electoral Committee members. The magazine says the source of the information comes from a ‘confidential document’. Allegedly from Macau’s Commission Against Corruption. Other claims have been made, all refuted by Mr. Chui and his campaign office Page 2
Year III
Number 615 Friday August 29, 2014
Next
Illegally exploited www.macaubusinessdaily.com
Galaxy is the third local gaming operator to have its brand exploited. A pop-up website is the culprit. GEG said its trademark, name, photo and customer service hotlines had all been illegally compromised. The website has since closed down. SJM and Sands have been similarly exploited
FSS: Consideration needed if fund to rely on gaming industry Page 5
Sands sues brother of trader in Chinese probe over casino debt Page 6
HSI - Movers August 28
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Love thy neighbour Hong Kong is Macau’s biggest export destination. It accounts for as much as 59 percent of total merchandise exported. Mainland China comes in second at 15 percent, and the United States at 3 percent
Page
Name
%Day
China Unicom Hong K
1.52
Hang Lung Properties
1.17
China Mobile Ltd
0.58
Sun Hung Kai Propert
0.43
HSBC Holdings PLC
0.42
China Resources Lan
-2.73
Henderson Land Deve
-2.90
Want Want China Ho
-2.96
China Overseas Land
-3.11
China Mengniu Dairy
-6.71
Source: Bloomberg
4 I SSN 2226-8294
Making hay Dah Sing Financial Holding Ltd is celebrating a big first. It has posted a HK$1 billion profit for the first six months of the year. The company also owns Macau Insurance Company, Macau Life Insurance Company and BCM bank. The profit is almost 50 percent up on last year’s figures for the period
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CTM H1 profits up
Brought to you by
CTM is happy. Macau’s biggest telecom service provider posted profits of HK$531.6 million for January to July. That’s a 7 percent increase compared to the same period the previous year
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August 29, 2014
Macau
CE candidate denies corruption With just days left before the election of Macau’s next Chief Executive, Hong Kong media Next Magazine has published a report alleging that the sole candidate in the CE election was involved in transferring benefits to four Electoral Committee members as well as involvement in the Ao Man Long graft case. The candidate issued a statement yesterday denying the claims and saying that the report isn’t true Kam Leong
kamleong@macaubusinessdaily.com
Next Media halts trading
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E candidate Fernando Chui Sai On has rejected claims that he had intended to transfer benefits during his current term as Chief Executive to four Electoral Commission members who are reported to be involved in the graft case of disgraced former Macau official Ao Man Long. The accusations were made by Hong Kong Chineselanguage news outlet Next Magazine. The campaign office of Mr. Chui released a statement on Wednesday evening stating that the report in the Hong Kong media is inconsistent with the facts by reporting ‘During Chui Sai On’s term as Chief Executive, it was exposed that he had intended to transfer benefits to the four people. [In addition,] he did not avoid accepting their nominations which may cast aspersions.’ The four Electoral Commission members are named as Sio Tak Hong, Ng Lap Seng, Francisco Ho Ka Lon and Loi Keong Kuong, whose names, it was claimed by Next Magazine in its latest issue, were found in the ‘friendship notebook’ that Mr. Ao used for recording bribes. Campaigners for the CE candidate claim that the report by the Hong Kong media has no basis in fact and is totally fictional. It will ‘reserve the right to pursue the matter in court [against] the related actors of the false report as well as [claim for] possible loss and damage to the candidate,’ according to the press statement. The magazine claimed that the source of the information is wholly
based on a ‘confidential document’ from Macau’s Commission Against Corruption that it received earlier in June. Mr. Sio and Mr. Ng are members of the Chinese People’s Political Consultative Committee (CCPPC), while Mr. Ho and Mr. Loi are members of the first sector in the ongoing CE election.
Controversial North Taipa plan The news outlet accused the CE candidate of collusion with these Commission members when his government rushed to announce the amendment to the Taipa North urban development plan in January prior to the urban planning law taking effect in March this year. Mr. Ng, Mr. Loi as well as Mr. Ho’s father, Ho Weng Pio, own some plots of land in this area, according to Next Magazine. The proposed amendments to the plan allowed landowners in the area to build property developments 20 percent bigger than initially permitted, and raised the limit of the height of developments to 90 metres. Local pro-democracy group New Macau Association also questioned if Mr. Chui and his administration had colluded with private businesses at the time. However, the government later responded that every parcel of land in the area would have to follow the requirement of the urban planning
law, effective since March 1, as well as that of the land law. In addition, every drawing would require the approval of the urban planning committee.
Offering bribes to Ao? The magazine cited the ‘CCAC document’ saying that ‘there is evidence showing that the shareholders of Companhia de Construção e Investimento Ho Chun Kei Limitada, Ho Weng Pio, Ho Weng Cheong, Ho Ka Lon and Ho Hoi Neng, have a relationship of offering and receiving bribes with Ao Man Long.’ In response, the company released a press statement yesterday claiming that ‘the company has passed to lawyers to follow up yesterday’s [Wednesday’s] false report by a Hong Kong magazine [Next Magazine] and reserves all rights to pursue the matter in a court of law.’ Next Magazine claimed that the Ho family had offered a 1.2 million pataca bribe as well as real estate valued at around 4 million patacas to the former official. It also stated that Mr. Sio, Mr. Ng and Mr. Loi were also involved in offering bribes to Mr. Ao, which were valued at around 17.8 million, 15.5 million and 3 million patacas, respectively. Mr. Sio, the owner of Hotel Fortuna, was reported to have had a ‘close relationship’ with Mr. Ao, according to the magazine which also claimed that Mr. Sio’s bribes to the former secretary were for allowing the change in plot ratio of the A9
The parent company of Next Magazine, Next Media Limited, announced the suspension of all trading in the company’s shares yesterday morning. Earlier, before the suspension, the founder of the company, Jimmy Lai Chee-ying, was visited by several officers from Hong Kong’s Independent Commission Against Corruption (ICAC) at his home, while Mr. Lai’s lawyers also arrived at the house shortly after. The ICAC officers stayed in Mr. Lai’s home for four hours before leaving. Mr. Lai, accompanied by his lawyers, told reporters who had been waiting outside the house that he would not comment on the issue. The reasons for the cessation of trading and why ICAC officers appeared at Mr.Lai’s house remained unknown when this story went to press. Before the announcement of the cessation, the company stock dropped by 3.1 percent in the morning. In addition to Next Magazine, the publisher also owns one of the most popular daily newspapers in Hong Kong, Apple Daily. Mr. Lai himself is known as a pan-democrat.
section, which is believed to refer to that in Nam Van Lake. In fact, in the June 12 issue of the magazine, it also claimed that the CE candidate was also involved in the biggest graft case in the city. The magazine wrote in that issue that Mr. Ao recorded an item in a LUXE notebook saying ‘Pio/Penha Hill/Secretary Chui’. The entry refers to a construction project by Mr. Ho Weng Pio, who is a property developer. At the time, Mr. Chui was serving as the Secretary for Social Affairs and Culture. Mr. Chui denied such claims in a press statement in June. Recently, in his press conference following his presentation of his political manifesto on August 16, the candidate told reporters once again that he had already stated during his 2009 election bid that he had not participated or intervened in the awards of construction contracts. CCAC, on the other hand, refused to comment on the document in June, when media first revealed it had received the ‘confidential document’.
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August 29, 2014
Macau
Chinese Estates ‘determined’ to pursue legal options Chinese Estates also announced that it has refunded HK$316 million-worth of deposits to 256 La Scala homebuyers Stephanie Lai
sw.lai@macaubusinessdaily.com
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hinese Estates Holdings Ltd - formerly headed by Hong Kong businessman Joseph Lau Luen Hung who was found guilty of bribing Macau former official Ao Man Long in the La Scala case in March - said in its interim results filed with the Hong Kong Stock Exchange yesterday that it continues to ‘seek legal advice for appropriate legal actions’ regarding the case. The case surrounding the land deal of luxury project La Scala opposite the Macau International Airport is set to continue after Mr. Lau’s legal team is advised of the outcome of its appeal against the MSAR Government decision made in 2012 revoking two land grants made in 2006 and 2011. Joseph Lau and fellow Hong Kong businessman Steven Lo Kit Sing were alleged to have paid HK$20 million (US$2.58 million) to disgraced former government secretary Ao Man Long in order to secure the land plots. The company mentioned in the
results that regarding acknowledging the final court decision it ‘will seek legal advice for appropriate actions to be taken in respect to the La Scala project’. ‘The group is determined to pursue claims it may have against the Macau Government and/or the original owners for compensation for the losses of the group,’ Chinese Estates said in its interim results. On May 12, Moon Ocean, the wholly-owned subsidiary of Chinese Estates, decided to arrange the refund for homebuyers of the La Scala housing project. In the results filed yesterday, Chinese Estates said that the sales contracts of 256 of the 302 pre-sold units were revoked and cancelled, for which an accumulated amount of sales deposits of about HK$316 million and interest of about HK$49.74 million were repaid to the promissory purchasers. The company has already provisioned an interest payment of about HK$10.96 million for the revocation and cancellation of the contracts for the remaining 46 presold La Scala units, of which sales deposits totalled HK$67.46 million. Chinese Estates’ revenue for the first half of this year was down by a year-on-year 71 percent to HK$1.24 billion, mainly due to a huge 93 percent decline in property sales in the period – which amounted to HK$252.5 million. The net profit of the developer also plunged by 45 percent to HK$2.45 billion, the filing noted. The company announced basic earnings per share of HK$1.283, while declaring an interim dividend of HK$0.30.
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August 29, 2014
Macau Brought to you by
Hong Kong Macau’s biggest export destination More than half of the goods exported from Macau end up in Hong Kong
HOSPITALITY
Sara Farr
sarafarr@macaubusinessdaily.com
Arrival Points In the second quarter of the current year, almost 7.6 million visitors crossed Macau’s borders. This was the eighth quarter in a row with a number of visitors exceeding 7 million level, and the second consecutive semester delivering more than 15 million visitors. Most of the arrivals transit the land crossings, the leading points of entry for visitors from mainland China. The proportion of those land crossings in the total number of arrivals has been rising slowly. It stood above 55 percent in the last three full quarters ending in June, some two to three percentage points above the typical values in 2010. Conversely, in relative terms, arrivals by sea and by air have declined slightly in the period shown. They represented in the last quarter, respectively, about 38.3 percent and 6.4 percent of the total amount of arrivals. Arrivals at the Outer Harbour heliport proved to be the most volatile component in this ranking. But the corresponding figures amount to very little, usually representing less than 0.1 percent of the total volume of arrivals.
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There was slow but steady growth in all categories. Overall, the first semester figure for visitors has increased by just under 25 percent since 2010 and by 8.1 percent since last year. Leaving aside helicopter arrivals – as noted, comparatively much fewer than any other type, and subject to wide changes from one quarter to the other - the fastest growing segment is land arrivals. They went up by almost a third in the full period observed here, whereas air and sea arrivals displayed more moderate growth rates: just over 20 percent in the first case, and 16 percent in the second. That pattern of change has been mostly stable since 2010.
254,730
Visitors’ monthly average, 2014H1
ong Kong is the primary destination for exported goods from Macau, accounting for 59 percent of the total merchandise exported. Mainland China comes in second at 15 percent, followed by the United States at 3 percent and Japan at 2 percent. The latest official figures released yesterday by the Statistics and Census Service Bureau (DSEC) show that between January and the end of July the value of exports to Hong Kong increased by 19 percent to MOP3.4 billion, while those to countries in the European Union increased by a combined 16 percent to MOP196 million. By contrast, the value of exports to mainland China dropped 10 percent to MOP862 million, as did those to the United States with a 9 percent decrease to MOP44.8 billion. Overall, in the first seven months of this year the total value of merchandise exported increased by 8 percent year-on-year to MOP5.8 billion. Of this, MOP1.2 billion accounted for the value of re-exports, a 12 percent increase over the same period a year earlier. The value of domestic exports, however, dropped 2 percent to MOP1.2 billion, while the total value of merchandise grew by 12 percent to MOP50.5 billion. In addition, the merchandise trade deficit widened to MOP44.8 billion. Based on country of origin, the value of merchandise from mainland China increased by 10 percent to MOP16.4 billion, while that from
59pct exported goods to Hong Kong, January-July 2014
countries in the European Union increased 24 percent to MOP12.8 billion year-on-year. In July, the total value of exports rose slightly by 2 percent to MOP759 million compared with the same month last year, re-exports increased 1 percent to MOP567 million and domestic exports rose 6 percent to MOP192 million. Overall merchandise imported increased by 4 percent to MOP7.2 billion in July over that of a year ago, while the merchandise trade deficit amounted to MOP6.5 billion. The value of non-textile exports increased by 11 percent to MOP3.4 billion, of which the exports of watches increased a staggering 80 percent to MOP621 million, while exports of machines and parts increased 32 percent to MOP1.04 billion. Textiles and garments witnessed a 15 percent drop in exports, the value of which totalled MOP431 million, while the exports of knitted garments declined 16 percent to MOP141 million. Imports of consumer goods rose 13 percent to MOP32.4 billion, with imports of food and beverages increasing 23 percent to MOP6.6 billion, while watches increased 52 percent to MOP4.9 billion. In addition, imports of construction materials saw a 38 percent jump to MOP2.01 billion. For the first seven months of the year, external merchandise trade was up by 12 percent to MOP56.3 billion from MOP50.4 billion in the same period a year ago.
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August 29, 2014
Macau
CTM’s H1 profit up by 7.1 pct The dominant telco here reported a net profit of HK$531.6 million for the first half of the year thanks to stable growth in its mobile and Internet services Stephanie Lai
sw.lai@macaubusinessdaily.com
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elecom service provider C o m p a n h i a d e Telecomunicações de Macau, S.A.R.L. (CTM) has posted a 7.1 percent growth in net profit for the first half of this year thanks to the ‘steady growth’ of its handset sales and unrivalled Internet service business. The first half net profit after taxation of CTM amounted to HK$531.6 million (US$68.6 million) which is up 7.1 percent year-on-year, CTM’s parent firm Citic Telecom International Holdings Ltd said in its interim report filed with the Hong Kong Stock Exchange. The dominant Macau telco’s turnover reached HK$2.4 billion in the period, about 7.8 percent more than a year before thanks to the “steady business growth” of mobile services, Internet services and enterprise solutions services, the filing noted. Most takings by CTM are from the ‘mobile services and equipment sale’ segment, which generated HK$1.57 billion for the company, representing an annual increase of 4 percent from more smartphone sales.
CTM’s mobile user base in the period was ‘stable’ with about 766,000 users or a market share of 45 percent in the city. It is the ‘data, enterprise solution services’ segment that has seen the fastest growth in the first half, in which CTM has seen its turnover reach HK$346.5 million, up 29 percent on the year before as more government and corporate customers subscribed to the professional service. Due to a ‘good uptake of fibre broadband service’, CTM’s Internet service turnover reached HK$272.6 million for the first half, which is up 17 percent. The telco’s broadband market penetration rate in the period was around 83 percent by June. Unrivalled in the market for providing Internet services, CTM saw a net growth of more than 4,000 users during the first half, taking the total number of users to about 156,000, including some 22,000 fibre-optic broadband service users in the period. The telco mentioned to media a fortnight ago that it was eyeing a 100 percent fibre-optic coverage of the city’s buildings by the end of next year, while its emerging competitor in
FSS: Consideration needed if fund to rely on gaming industry
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he President of the Social Security Fund (FSS), Ip Peng Kun, said that society should consider if the Social Security Fund should be supported by the gaming industry, which fluctuates greatly. The president said that although gaming taxes were currently high and the government was allocating more to the Fund, it still needed a longterm plan to “store up grain against dearth”. He spoke whilst attending a radio show of local media TDM, Macau Forum. Mr. Ip said that the current incomes of FSS are from one percent of the fiscal budget’s recurring income, as well as a 75 percent allocation in a maximum three percent of the gross income of the gaming industry. He said the Fund would deepen the
consideration with other departments on the feasibility of the mechanism suggested by the CE candidate to link up the allocation to FSS with fiscal dividends. Meanwhile, Mr. Ip also said that the preliminary actuarial report indicates that it is hard to calculate if the amount of the pension will be less when the elderly get it before they reach the age of 65 years than those getting pensions only at or after that age. He cited an example saying that the family of the elderly may think the government ‘lies’ when an elderly person wants to get the pension only at the age of 65, yet passes away at 64 years old. He maintained that it is difficult to gauge the situation as it varies according to different people. K.L.
the leased line service sector - MTEL Telecommunication Company Ltd - is also currently setting up fibre-optic networks for local households with the declared objective of covering 30 percent of local households by November this year. In the first half of this year, CTM saw a less satisfactory result in its fixed line service against the backdrop of global trends of declining fixed IDD traffic volumes and fixed residential lines. CTM’s local fixed line users have slightly decreased to about 166,000 in the period, and its revenue in the segment declined 2.1 percent to HK$210.3 million. The group-wide revenue of Citic Telecom is up by 120 percent yearon-year to HK$4.14 billion for the first half, which is largely due to the inclusion of CTM’s results subsequent to its CTM acquisition completed in June last year. Citic Telecom noted in the filing that it has decided to expand the existing data centres of CTM by building 300 additional racks to strengthen the company’s capability of developing data centre business.
Cyber attacks slow down mobile data service A slowdown of mobile data service was reported by users for about an hour starting at 12:30pm yesterday, which CTM said was due to ‘[sudden] cyber attacks’ that disrupted an ‘abnormally large volume of traffic’ in the company’s network. The slowdown in mobile data service prompted about 500 customer enquiries about noontime. CTM told Business Daily that it was the first time that the company had been confronted by this type of cyber attack. While the company stressed that the cyber attacks did not result in any problems reported by corporate Internet networks, its network team had yet to identify the source of the attacks.
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August 29, 2014
Macau
Galaxy brand illegally exploited online The gaming operator has issued a warning that its brands are being used by fraudulent gaming and betting websites. After SJM and Las Vegas Sands, the Galaxy group is the third operator to face online exploitation João Santos Filipe
jsfilipe@macaubusinessdaily.com
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alaxy Entertainment Group trade names, trademarks and property images are being used illegally by online gaming and fraudulent betting websites. The warning was issued on Wednesday by the gaming operator. ‘We would like to bring to the public’s attention that recently it has come to our notice that our hotels and/or resort properties’ trade names, trademarks, photo images and customer services hotlines have been exploited by illegal and unauthorised online gaming and betting websites’. According to the company the names Galaxy Macau Casino, Galaxy Entertainment City and Macau Galaxy Entertainment City were used by websites such as www.yh9889.com, which is no longer online. Galaxy also explained that the purpose of using the company’s names is to mislead members of the pubic. The group also clarified that it is not involved in any form of online gambling or betting activities. ‘Galaxy Entertainment Group Limited and its subsidiaries hereby declares that the Group and all of our properties, including Galaxy Macau and StarWorld Macau Hotel have no affiliation with any online gambling or betting sites nor have we authorised any websites and/ or related companies to carry out any form of online gambling and betting activities for or on behalf of the Group’, the statement reads.
The company also said that it will consider taking legal action against individuals or entities that illegally use the name and trademarks of the group. ‘The Group shall not be responsible for any losses or damages that may result from any person’s access and/or use of fraudulent websites’.
First SJM and Sands, now Galaxy Galaxy is not the first casino operator in Macau to be affected by the illegal use of its brands online. SJM and Sands China have also faced similar online problems.
Corporate Galaxy donates MOP1.4mln to TIS The International School of Macau announced yesterday the receipt of a MOP1.4 million donation from Galaxy Entertainment Group for the school’s ‘Business Supports Education’ programme. The funding will enable TIS to continue providing top-level academic and extra curricular programmes to the local and expatriate communities. “We are thrilled to have Galaxy Entertainment Group on board as one of our business partners and are profoundly grateful for their generous donation to TIS,” school head Howard Stribbell said. In 2005-2006, the ‘Business Supports Education’ programme was introduced to encourage local businesses to support education through the introduction of new programmes and the enhancement of existing programmes each year.
Lu cuisine at MGM Lu cuisine, also known as ‘Shandong cuisine’, is one of the Eight Culinary Traditions of Chinese cuisine. From September 11 to 18, Chef Quhao known as the master of Lu cuisine and a transmitter of China’s intangible cultural heritage - will be joining Chef Chow Chung, Chinese Cuisine Consultant Chef, and Chef Louie Vong, Executive Sous Chef of Chinese Cuisine of MGM Macau, to present an array of savoury dishes at Grand Imperial Court that delivers the essence and characteristics of authentic Lu cuisine: fresh, tender and crispy, with a fine-crafted presentation that will leave guests impressed with this northern gastronomic feast.
In May 2012, SJM Holdings issued a statement warning the public that a fraudulent website was using its logo, images and details of the company properties and directors. At that time, the fraudulent website was using the domain www.sjm-holdings.com, which was similar to the official one of the company founded by the King of Gambling, Stanley Ho (www. sjmholdings.com.). ‘For the record, SJM does not operate any gaming operations online’, it was clarified in a filing to the Hong Kong Stock Exchange at the time. The company also reported the case to Macau authorities. Last June, Las Vegas Sands filed a
federal lawsuit with the United States District Court against the owners of 35 websites and domain names. According to the suit filing, the unknown registrants were using Las Vegas Sands Corp’s world famous ‘Sands’ trademark on websites. The intention was to be associated with the American company in order to lure prospective gamblers to overseas online casinos, and ‘to unlawfully and in bad faith advertise, promote, and provide online casino services and gambling services’. In the suit filing, Las Vegas Sands asked the court for injunctive relief as well as damages, attorneys’ fees and costs.
Sands sues brother of trader in Chinese probe over casino debt
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he brother of Chen Jihong, the metals trader said to be at the centre of a Chinese loan fraud probe, was sued by Las Vegas Sands Corp’s Singapore unit over unpaid gambling debts. Chen Jilong, a so-called premium casino player at Marina Bay Sands Pte, owes S$1.88 million (US$1.5 million, MOP12 million) and has refused to make payment, according to a lawsuit filed with the Singapore High Court earlier this month. The casino gave him S$3 million credit in November 2011, according to court papers. Chen Jilong, a Singapore permanent resident, hasn’t hired a lawyer or filed his defence, according to court papers. He didn’t return three phone calls to his office. Marina Bay Sands declined to comment in an e-mailed statement. Both brothers are directors of Singapore-based metals trader Zhong Jun Resources (S), which is fighting a lawsuit from HSBC Holdings Plc for allegedly failing to repay a bank loan. Chinese officials are investigating
whether Chen Jihong, a Singapore citizen, used the same batches of commodities as collateral for loans from several lenders. Standard Chartered Plc said on August 6 it has made provisions of US$175 million related to the potential fraud, while Chinese banks have about 20 billion yuan (US$3.3 billion) of exposure, two government officials said July 16, citing findings of an official probe.
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August 29, 2014
Macau
Dah Sing Group hits new record For the first time in its history, Dah Sing Financial Holding Limited has posted a HK$1 billion profit for the first six months of the year. In Macau, the group, via different companies, owns Macau Insurance Company, Macau Life Insurance Company and Banco Comercial de Macau (BCM) João Santos Filipe
jsfilipe@macaubusinessdaily.com
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ah Sing Financial Holding Limited (DSFH) registered a record profit of HK$1 billion during the first six months of the year, the group announced in a filing to the Hong Kong Stock Exchange. The holding of the Macau Insurance Company and Macau Life Insurance Company had an increase in its profits of 48.9 percent from HK$680 million in 2013. ‘We are pleased to report improved earnings, with profit attributable to shareholders increasing by 49 percent to a record HK$1,012.8 million for the period’, the group said in the filing. ‘Overall business conditions were a little better than expected, which contributed to the record profit for the first half of the year.’ These results were justified by the strong performance of both the insurance and banking business during this period. Also, the conditions in the markets where the group is present - Macau, Hong Kong and mainland China – were favourable ‘Local market conditions in Hong
Kong were relatively stable during the first half of the year, with Mainland and Mainland-related growth slowing but continuing to move at a comparatively faster pace than Hong Kong. Conditions in Macau remained similar to those in Hong Kong”, the filing reads. However, the company is cautions about the rest of the year and it is expecting the speed of growth to slow in the second half. ‘Whilst there are always risks on the downside, we do not see significant volatility in the market at present that indicates that those risks are becoming more severe. However, neither do we see opportunities for very rapid growth, bearing in mind the balance of risk and reward, and the need to preserve ample levels of capital and liquidity.’ The other company in the Dah Sing Group, the Dah Sing Banking Group Limited (DSG), recorded a 29 percent increase in profits. The company that owns Banco Comercial de Macau (BCM bank) increased its profit during the
first half of the year to HK$1 billion from HK$813 million registered in the first sixth months of 2013. ‘Our banking businesses performed strongly over the period with strong volume growth in both loans and deposits. Bank of Chongqing once
again delivered a strong and growing contribution to our bottom line’, the company announced. DSG holds a 17 percent interest in the mainland Chinese Bank of Chongqin, which has a network of over 100 branches.
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August 29, 2014
Greater China Former political advisor on trial A senior political advisor from Guangxi Zhuang Autonomous Region stood trial in Yanbian in northeast China yesterday on charges of taking bribes, the Supreme People’s Court (SPC) said. The Intermediate People’s Court of Yanbian Korean Autonomous Prefecture in Jilin Province heard the case against Li Daqiu, former vice chairman of the Guangxi Committee of the Chinese People’s Political Consultative Conference. According to the prosecution, from 2003 to 2013, Li sought benefits for others and illegally accepted a large sum in bribes from others during his tenure as the Communist Party chief of Hezhou City in Guangxi and as vice chairman of the region’s political advisory body, Xinhua reported.
Local govts can swap out of pricey debt China’s local governments can swap high-interest debt previously sold by their financing companies for more cost-effective municipal bonds, Finance Minister Lou Jiwei said. In a speech in parliament about China’s fiscal system, Lou said China will control the amount of debt borrowed by its regional governments, but will also improve the way in which they can sell bonds themselves to raise cash. China’s rubber stamp parliament is meeting this week and reviewing proposed amendments to the country’s fiscal law that would allow regional governments to issue bonds for themselves. Lou’s comments were made on Wednesday but announced only yesterday on the finance ministry’s website.
HK main share index closes at lowest Hong Kong’s benchmark index finished at a two-week low in choppy conditions yesterday, hurt by continued weakness in the Chinese onshore market and poor corporate earnings. The Hang Seng Index closed down 0.7 percent at 24,741.00 points. It opened up 0.6 percent on a firmer Wall Street but swung as much as 1 percent lower during the session. Analysts said the volatility was related to index futures settlement on the day. The China Enterprises Index of the leading offshore Chinese listings in Hong Kong sank 1.3 percent in its worst day in four weeks. PetroChina was the top index drag, sliding 2.8 percent from its highest in more than two years.
Reference rates for offshore yuan market Taiwan’s central bank said yesterday the benchmark fixing rates for offshore yuan on the island will be set daily from Monday, Sept. 1. The move marks another step for Taiwan toward becoming a competitive offshore yuan center. Taiwan’s yuan deposits have been increasing and the island records a trade surplus with China namely because many export-oriented Taiwan companies operate manufacturing plants on the mainland. Thomson Reuters is the official calculating agent for this industry interest rate benchmark and the fixing. The fixing will be published at 0315 GMT (11:15 a.m. local time) every trading day in Taiwan and based on contributions from 15 regional and global banks, according to a statement from Thomson Reuters.
Double trouble Property launches to deepen inventory overhang, price declines Clare Jim
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roperty launches in China are set to surge in the latter half of the year with developers sticking to their schedules despite mounting inventories, spelling double trouble for a market hammered by months of falling prices. Prices started to decline in March as the slowing economy hit demand, inventories ballooned and developers began offering discounts. The current slump was confirmed by official data only around the middle of the year, way after developers had already committed themselves to completing projects for 2014. Developers also have little choice but to heap even more supply in a bloated market due to regulations that stop them from sitting on undeveloped land. Those that fail to break ground on new projects a year after purchasing land will face fines, while those that wait more than two years could have their land confiscated. The rush to expedite projects will worsen chronic oversupply that analysts warn may take years to clear. Unsold properties will also have broader implications - the sector accounts for over 15 percent of the economy and its fortunes are tied to other industries such as concrete and steel.
Earlier this month, Kaisa Group and China Merchants Land confirmed that they planned to launch around 70 percent of their 2014 projects in the second half. Country Garden said it aimed to meet 60 percent of its sales target during the period. Price cuts and promotions are the most common methods that developers use to clear inventory. But tight mortgage credit lines from banks and discrepancies in price expectations between developers and home buyers are not helping, analysts say. “Buyers’ attitude has changed. They feel they can wait,” said CIFI Holdings Chief Financial Officer Albert Yau. China’s once white-hot housing
Chinese characteristics Hong Kong told ‘perfect democracy’ risks hurting business Natasha Khan
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hina can’t allow “perfect democracy” in Hong Kong’s next leadership election because it must also safeguard the interests of the business community, said a Chinese law professor who sat on a committee that oversees the city’s constitution. Politics isn’t the only consideration when implementing universal suffrage in 2017, Wang Zhenmin told an audience in Hong Kong as tensions rise in the city over the issue. Prodemocracy campaigners will rally Aug. 31 to protest a decision by Chinese lawmakers that day which is expected to enable China’s Communist Party rulers to vet candidates for the top executive position in the city. “Democracy is a political matter and it is also an economic matter,” said Wang, who is the dean of Tsinghua University’s law school. “No one should be left behind, especially those whose slice of pie will be shared with others upon implementation of universal suffrage, which is the business community.” Historically, the business community was the “enemy of the Communist Party,” Wang said in a speech to the Foreign Correspondents’ Club. Now, the party’s ruling status means it must take into account the interests of all the classes, no matter
rich or poor, he said. Even though it’s a “small group of people,” the business community controls “the destiny of the economy of Hong Kong,” Wang said. “If we just ignore their interest, Hong Kong capitalism will stop. We must guarantee the continued development of capitalism in Hong Kong.”
market is slowing this year, weighed by the cooling economy and the government’s five-year-long campaign to curb price rises. New home prices fell in July for a third consecutive month, with declines spreading to a record number of big cities including Beijing. So far, only a handful of small developers such as China Overseas Grand Oceans and Jingrui Holding have issued profit warnings. Analysts see little prospect for improvement in the short term. “The outlook for the next three to five years is not favourable,” said Rosealea Yao, a Beijing-based analyst at Gavekal Dragonomics. “If sales are not recovering and inventory is not coming down fast enough, companies will have no choice but to cut their new starts construction.” Some developers such as Longfor, Greentown China and Fantasia Holdings have said they would slow construction according to market conditions. Big-name developers Longfor Properties and China Vanke said this month that 80 percent and 70 percent of their planned projects for 2014 were scheduled to be completed in the second half, respectively. Reuters
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Greater China
Child abuse? Supplier of Samsung, Lenovo denies using child workers
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China-based supplier for Samsung Electronics Co Ltd and Lenovo Group Ltd said yesterday it had never hired child labourers, denying allegations by a U.S.-based activist group. Samsung Electronics also said it had found no children or students working on the Samsung production line at the Huizhou-based factory of supplier HEG Technology, which was cited as violating China’s labour laws by the New York-based watchdog China Labor Watch. A Lenovo spokeswoman said the company would look into the report. In a statement, China Labor Watch said it had found more than 10 children working at the HEG factory during an investigation that took place in July and August. It also said the probe had found over 100 student workers who were not being paid overtime wages or a night shift subsidy. The watchdog said it had shared the evidence with Samsung last week and that Samsung demanded the supplier pay some students’ wages. It did not say whether Samsung took any action on the matter of child labour or whether it had reached out to Lenovo with the information. An employee surnamed Zeng at HEG Technology’s human resources department told Reuters the company had never hired children, and that it had facial recognition systems in place to ensure workers were not underage. For Samsung products, HEG
Elite committee
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employs workers aged 18 and over while the minimum age for workers on Lenovo’s product lines is 16 years, she said. The company relies on an outsourcing company to hire students, she added. In its statement, Samsung said it had proposed to China Labor Watch that they conduct a joint onsite investigation “for more precise verification” of the allegations. Samsung also said it had informed the watchdog about the results of its own investigation, adding: “We find it regrettable that CLW issued the allegations today without any mention of our statement.” This is the second time in as many months that China Labor Watch has said it found children working at Samsung’s Chinese suppliers. Samsung halted business with one supplier and later reinstated it, but with a 30 percent reduction in orders.
Other multinational companies, including Apple Inc, have been plagued by revelations of underage workers in their supply chains. Child workers have previously been discovered at Foxconn, the supplier for some of the world’s biggest tech brands, including Apple. Foxconn is the trading name of Taiwan’s Hon Hai Precision Industry. Two years ago, China Labor Watch accused HEG of using child labour. Samsung subsequently said it had not found any workers below the legal working age of 16 in its audit of the facility. The problem goes beyond electronics, according to the U.S. Department of Labour’s Bureau of International Labor Affairs. Bricks, cotton, fireworks, textiles and toys also feature on its list of goods which it says it has reason to believe are produced by child labour in China.
hina has pledged to introduce universal suffrage in Hong Kong in 2017 to replace the current system whereby the chief executive is selected by a 1,200-member election committee, rather than through a popular vote. The committee is dominated by the city’s business elite and trade associations. Chinese lawmakers meeting in Beijing this week are discussing a draft plan that would require each candidate to have the support of 50 percent of a nominating committee that will also be 1,200 strong, the South China Morning Post reported yesterday, citing two people it didn’t identify. Once the ruling from China is announced, the Hong Kong government will hold a public consultation which Chief Executive Leung Chunying will take into account when he submits proposals to the city’s legislature. The bill will require two-thirds of the 70-member Legislative Council to support it, meaning the legislation could be vetoed by the 27 members of the pan- democratic camp.
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Greater China
Winning black gold China private energy firm wins rare crude oil import permit
Fayen Wong and Chen Aizhu
Energy, which operates in the natural gas and coal-to-chemicals business, does not own an oil refinery and would have to sell the oil to refiners owned mostly by Sinopec Corp and PetroChina. “As global oil prices become more stable, there will be less financial risk for the government to open the market to smaller, private players,” said Gordon Kwan, head of oil and gas at Nomura in Hong Kong. Traders said Guanghui may have benefited from being an active investor in China’s oil and gas rich region of Xinjiang in the remote northwest, an area Beijing is keen to develop. The company also owns two oil blocks in Kazakhstan. China’s independent oil refineries, a main swing supplier of the world’s second-largest fuel market, have been eagerly waiting for Beijing to grant them crude oil import permits. Long deprived of crude oil as feedstock, the plants have to import lower-quality fuel oil for processing into gasoline and diesel. In the stock filing, Guanghui Energy did not give a quota for next year. At 200,000 tonnes, it’s less than one cargo of very large crude vessel (VLCC), or less than a third of China’s daily imports. Reuters
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hina’s Guanghui Energy has received a crude oil import licence from the government, becoming one of only a few private firms to win the sought-after licence as Beijing slowly loosens its grip on the state-controlled market. While the licence was for just 200,000 tonnes in 2014 - less than a third of China’s daily imports - traders said the move showed a gradual
opening up the sector was on track, which could lead to increased crude imports and greater investment. Guanhui Energy said in a statement that its wholly owned Xinjiang Guanghui Petroleum Co Ltd would be allowed to import 200,000 tonnes of crude oil for 2014, joining a market dominated by Sinopec Corp and PetroChina since an industry revamp in 1998.
China, the world’s second-largest oil consumer, regulates its oil imports via a quota system to ensure stable domestic supply. The government has pledged to allow more private participation in the energy sector as part of a broader move to reform its clunky and inefficient stateowned sector. Senior oil traders said the latest move was largely cosmetic as Guanghui
Guanghui allowed to import 200,000 tonnes for 2014 Volume less than a third of China’s daily imports Minimal market impact as Guanghui owns no refinery Independent refineries awaiting market access
Sailing smoother China COSCO poised for 2015 profit as market hits bottom Brenda Goh
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he tide may be turning for statebacked shipping company China COSCO Holdings Co Ltd as a slower influx of new vessels and an uptick in global trade begin to lift the industry from its longest slump in three decades. COSCO, China’s top shipping line, is expected to return to substantial profitability in 2015 after five lean years, Reuters data shows. Its first-half results are widely expected to show a loss of up to 3.2 billion yuan (US$520 million) due to weak freight rates and shipping volumes. The global shipping industry has been stuck in its longest slump in three decades after too many ships were ordered in the years before the global financial crisis, leaving a capacity glut that sunk freight rates and hit carriers’ earnings. But observers say the market is getting back into balance and may be nearing a recovery, as evidenced by recent stronger-than-expected results from smaller carriers such as Orient
Overseas International. “The supply and demand’s behaving better, there’s been less ships being delivered this year,” said Jefferies analyst Bonnie Chan. “Demand’s actually holding up pretty well on both dry bulk and container.” Analysts on average expect COSCO, which oversees China’s largest dry bulk fleet, to report net income of 1.02 billion and 2.36 billion yuan in 2015 and 2016, respectively. The company squeezed out a slim profit in 2013 by selling properties to its parent, enabling it avoid a delisting. COSCO declined to comment. While overcapacity is still an issue, global fleet growth has slowed thanks to falling deliveries from China, which makes most of the world’s ships. Chinese shipbuilders delivered 20.66 million dead weight tonnage of new ships from January to July, a 21.5 percent decrease from a year earlier, the China Association of the National Shipbuilding Industry said on Aug. 22. Companies such as COSCO have
also been taking advantage of a government programme that offered incentives for scrapping ships, allowing them to restructure their fleets and make them more efficient. COSCO sent more than 20 ships to the scrapyard in the first half of the year. As the supply of ships falls, there are signs that demand is picking up. After a weak start to the year, China’s exports grew nearly twice as much as expected in July, driven by firmer demand from the United States and Europe. The Baltic Dry Index, which tracks the price of moving goods such as coal and iron ore by sea, picked up to hit a four-month high in August after being on a mostly downward trend since the start of the year, suggesting that demand for shipping services is growing. Any rebound in China’s real estate market may also benefit COSCO. Haitong Securities analyst Jiang Ming
wrote in an Aug. 19 note that recent moves by the Chinese government to relax property market controls could push the Baltic index up a further 50 percent beyond the 1500 level before the end of 2014, as it would drive up import demand for iron ore used in steel. Optimism could quickly fade, however. Factors such as rising fuel prices could derail the recovery, as well as continued volatility in freight rates, which saw the BDI sink to its lowest level since January 2013 in July. “At the beginning of the year everyone had an optimistic outlook for dry bulk shipping,” said UOB Kay Hian analyst Lawrence Li. “But freight rates, particularly in the second quarter, have been substantially below expectations. There is a lot of noise around the sector.” Reuters
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Looking for blue skies Qantas looks past record loss, opens door to foreign investors Jane Wardell
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antas Airways Ltd is looking past a record annual loss and predicting blue skies ahead, as a landmark change in Australian laws opens the door to significant foreign investment in the airline’s international arm - its biggest headache. The prospect of new funding - long desired by the struggling national flag carrier - and a surprisingly positive outlook for the current year sent Qantas’ shares rising to a threemonth high on the Sydney exchange yesterday. The so-called ‘Flying Kangaroo’ has been bruised by high fuel costs, a strong Australian dollar, increasing international competition and a domestic price war with arch-rival Virgin Australia Holdings. Qantas has also long complained it is competing at a disadvantage due to Australian laws restricting the level of foreign investment in the carrier while its rivals are allowed unfettered funding. Qantas revealed yesterday that obstacle has been swept away. The airline unveiled a new holding structure that will divide its domestic and international arms, a separation made possible following the passing of changes to the Qantas Sale Act earlier this week, the carrier said. Foreign and individual investors
can now take a stake of up to 49 percent in the international arm. That is a major change from the previous limits on ownership by individual investors of 25 percent and by foreignowned airlines of 35 percent. “The changes to the Qantas Sale Act have removed a significant impediment for Qantas to be involved in long-term consolidation,” Chief Financial Officer Gareth Evans told reporters in Sydney. “By providing a separate subsidiary you give an option for a foreign investor to take equity directly in the international business.” Chief Executive Alan Joyce stressed that greater foreign investment was a long-term strategy, and the focus remained on a A$2 billion turnaround program that includes stripping costs
and slashing 5,000 jobs. “We are focused now in the short to medium term on the transformation program,” he said. “We are not actively out there looking for an airline investor.” The move to establish a new structure led a hefty A$2.6 billion (US$2.4 billion) writedown in the value of its fleet and a resulting net loss of A$2.8 billion for the year ended June 30. That overshadowed a smaller-thanexpected underlying loss before tax of A$646 million, compared with a restated A$186 million profit a year earlier. Analysts had on average anticipated an underlying loss around A$750-770 million. “There is no doubt today’s numbers
are confronting, but they represent the year that is past,” Joyce said. “We have now come through the worst.”
Capacity war Despite an investor push for major asset sales, Joyce said a review of its profitable Frequent Flyer loyalty scheme, which analysts value at up to A$2.5 billion, had concluded there was “insufficient justification” for a partial sale. However, he said the airline had identified other potential asset sales, including airport terminals, property and land holdings. Any proceeds from such sales would be used to repay debt. Joyce said there was a “clear and significant” easing of both international and domestic capacity growth, which would stabilise the revenue environment. Qantas and Virgin Australia have waged war over the past year to boost or retain market share. Analysts expect Virgin to post a A$250-270 million pre-tax loss when it reports earnings on Friday, with both airlines caught out by excess capacity in global markets and moves by international carriers to increase capacity into Australia. Joyce said that Qantas would extend a freeze on increasing domestic capacity into the first half of the current year. In stark contrast to the Australian carriers, Air New Zealand Ltd, which owns around 26 percent of Virgin Australia, on Wednesday reported a 44 percent jump in annual net profit to NZ$262 million. The New Zealand flag carrier also said it planned to significantly grow capacity this year. Reuters
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Asia Philippines’ concern The slowdown in state spending in the second quarter is a “cause for concern” but the government can catch up on its expenditure plans, with overall growth still likely to hit the target for the year, Arsenio Balisacan, socioeconomic planning secretary, said yesterday. Government expenditure in the second quarter was flat from a year earlier, compared with 12 percent growth in the same period of 2013, official data showed. Manila is targeting growth of 6.5-7.5 percent this year after growth of 7.2 percent in 2013.
Maybank Q2 profit up 0.5 pct
Malayan Banking Bhd (Maybank), Malaysia’s largest bank by assets, said its second-quarter net profit rose 0.5 percent, helped by a pick-up in loans and deposits and a rising market share in its consumer and Islamic banking operations. Net profit for the three months to end-June stood at 1.58 billion malaysian ringgit (US$502 million) compared to 1.57 billion ringgit a year ago. Revenue improved by 2 percent to 8.76 billion ringgit. Most analysts covering Maybank do not release quarterly forecasts. Maybank has notched up more than four years of year-on-year quarterly growth, and last year posted record earnings for a second year in a row. Like other Southeast Asian rivals, it has benefited from booming property markets and double-digit loan growth in rapidly expanding economies like Indonesia, Singapore and Thailand.
Kia targets 270,000 new Sorento sales Kia Motors said yesterday that it aims to sell 270,000 new Sorento sport utility vehicles (SUVs) globally next year, seeking to maintain its momentum in the United States and other key markets. South Korea’s Kia Motors, an affiliate of Hyundai Motor, launched yesterday the redesigned Sorento SUV in Korea in the model’s first major makeover in over five years. The model, which is Kia’s third-biggest selling model in the United States after the Optima sedan and the boxy Soul car, will be launched in the United States, Europe and other markets in the first half of next year. Kia aims to sell 50,000 new Sorentos in Korea and 220,000 overseas next year.
Locals welcome Casinos in Vietnam may gain local gamblers in state revenue push Nguyen Dieu Tu Uyen
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ietnam is drawing closer to allowing its citizens to gamble in the nation’s casinos as the government tries to boost revenue and compete for regional gaming investment. The finance ministry plans to submit the final draft of a new casino decree to Prime Minister Nguyen Tan Dung as soon as October, Ngo Van Tuan, head of the department for banking and finance at the ministry, said by telephone in Hanoi yesterday. Approval is likely before the end of the year, he said. The decree is modeled on Singapore’s gaming regulations and would permit Vietnamese to enter local casinos. “There are many Vietnamese who gamble at casinos in Singapore and Cambodia, and it’s obvious that we’ve lost some state revenue here,” said Phan Thi Thu Hien, deputy head of the banking and finance department. “We’ve studied what regional countries have done and think we should do the same. These changes would help increase government income.” Vietnamese policy makers are seeking to replicate the success of Singapore and Macau in attracting gaming resorts and tourism. The
government is grappling with the challenge of spurring an economy that risks missing this year’s growth target of 5.8 percent. The Vietnamese government collected about 250 billion dong (US$12 million) of taxes from the five casinos operating in 2012, on gaming revenue of 900 billion dong, state radio reported on its website last week. There are currently six casinos in operation in the country, with another licensed one yet to start. Currently, only foreign passport holders are permitted to enter and gamble in the casinos.
‘Significant progress’ The proposal is “significant progress toward the establishment of a more detailed legal framework for the gaming industry in Vietnam,” Colin Pine, general director of Ho Tram Project Co., which runs the US$4 billion Ho Tram Strip casinoresort complex in southern Vietnam, said in an e-mail. “There is demand for this form of entertainment in this market.” Vietnam has a population of almost 90 million, according to World Bank data.
The Grand Ho Tram Strip casino resort, which opened in July 2013 in Ba Ria-Vung Tau province, is a twohour drive from Ho Chi Minh City. Canada’s Asian Coast Development is developing the Ho Tram Strip, bringing hotel resorts, a casino and a Greg Norman-designed golf course to the 2.2-kilometer (1.4-mile) beachfront, according to its website. The complex will include a second casino-resort operated by Pinnacle Entertainment Inc., the Las Vegas-based-owner of U.S. casinos, according to Asian Coast Development.
Entrance fee Under the draft proposal, Vietnamese who are at least 21 and have “sufficient financial ability” will need to pay an entrance fee to gamble in casinos, according to Hien. The financial-assessment criteria and entrance fees will be specified by the prime minister in separate regulations after the decree’s approval, Hien said. In Singapore, citizens and permanent residents must pay a S$100 (US$80) daily levy to enter the casinos, or S$2,000 for an annual pass, in a government effort to deter those who can’t afford to gamble.
Manila skyline
Growing stronger Philippine Q2 GDP growth fastest in five quarters, rate hike likely Karen Lema
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he Philippine economy grew at its fastest pace in more than a year in the second quarter, strengthening views the central bank will raise interest rates again to curb inflation. The Southeast Asian economy remains a popular investment destination due to relatively strong economic fundamentals, a stable
political environment and improved credit ratings. Standard & Poor’s raised the country’s long-term credit ratings in May to two notches above investment grade. After a slow start to the year, economic growth accelerated to 6.4 percent in the second quarter from a year earlier on strong manufacturing
and exports. The outcome beat market forecast of 6.2 percent, putting the country on track to meet its full-year GDP target of 6.5-7.5 percent. On a quarter-on-quarter basis, the economy grew a seasonally adjusted 1.9 percent against the upwardly revised 1.4 percent in the March quarter, the fastest pace in five quarters.
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luciana Leitão, Luis Gonçalves, Michael Armstrong, Sara Farr, Stephanie Lai, Óscar Guijarro, Kam Leong GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Asia
Grand Ho Tram Strip casino
It is only a matter of time before liberalized gaming rules take effect in Vietnam and “attract significant amounts of development capital,” according to a recent research note from Union Gaming Group in Macau. “Governments everywhere are considering gaming as a source of tax revenue, as well as an economic and tourism stimulus,” Grant Govertsen,
KEY POINTS S/adjusted Q2 growth 1.9 pct, highest in 5 quarters Annual Q2 growth highest since Q3 2013 Second rate hike seen this year to curb inflation Growth in the first half was 6.0 percent. For the economy to hit the low end of the government’s target this year, growth should average at least 6.9 percent in the second half, Arsenio Balisacan, socioeconomic planning secretary, told reporters. The latest data bolsters expectations the central bank will follow up on July’s rate hike - the first in three years – as early as next month to stay on top of rising prices. “The strong growth print means that the BSP (Bangko Sentral ng Pilipinas) can focus on taming inflationary pressures. We expect a 25-basis-point hike of both the SDA (special deposit account) and policy rates,” said Trinh Nguyen, economist at HSBC in Hong Kong. Inflation has averaged 4.3 percent in the seven months to July, above the midpoint of the central bank’s 3-5 percent goal this year and outside next year’s 2-4 percent inflation target. The consensus from a Reuters quarterly poll in July was for the central bank to raise the main policy rate to 4.0 percent before the end of the year. Domestic demand continued to be underpinned by remittances from Filipinos working and living abroad, which grew 5.8 percent to US$11.4 billion in the first half of the year from a year ago.
an analyst at Union Gaming, wrote in an e-mail. “Ultimately, gaming is proliferating throughout Asia, and no government wants to be the last to the party.”
Budget deficit In Singapore, Las Vegas Sands Corp. and Genting Singapore Plc
That coupled with robust exports and manufacturing makes the Philippines one of the fastestgrowing economies in Asia, matching Malaysia’s second-quarter annual growth. The second quarter has been largely uneven for Southeast Asian economies. While growth in Malaysia accelerated, Singapore and Thailand escaped recession and Indonesia underperformed expectations with growth at its weakest in nearly 5 years. One bright spot for the Philippines is that exports are gaining momentum, expanding for a fifth straight month in June, with the growth rate at its fastest in six months. The economy is benefitting from a pick-up in global demand while factories that produce parts in the global tech supply chain are also reaping from launches of new mobile phones and tablets such as from Apple Inc. Growth was led by the industrial sector which grew an annual 7.8 percent, higher than 5.3 percent in the first quarter but below growth of 10.5 percent in the same period of 2013. Balisacan said the government can step up spending in the second half, especially for reconstruction in communities devastated by a super typhoon last year, allowing the country to hit this year’s growth target. But his outlook is not without risks, he said, given the impact later this year of an El Nino dry weather phenomenon on power and farm output. A policy paralysis that has not moved government plans forward in sectors such as the auto industry, could also cause multinationals to shift production out of the Philippines and hurt future investment, industry executives say.
poured more than US$10 billion into the two gaming resorts that opened in 2010 after the country ended a casino ban. The nation’s economic growth surged to a record of almost 15 percent that year. Vietnam’s 2013 budget deficit widened to 5.3 percent of gross domestic product, compared with
a planned 4.8 percent, according to the General Statistics Office. Tax cuts to help struggling businesses are estimated to reduce state revenue by an average 19 percent annually in the 2011to-2015 period, Deputy Finance Minister Nguyen Cong Nghiep said in Danang on Aug. 7. Bloomberg
Buying at home Japan Airlines said to plan order of 32 Mitsubishi airplanes Kiyotaka Matsuda
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apan Airlines Co., the country’s second-largest airline, plans to buy 32 aircraft from Mitsubishi Aircraft Corp., the carrier’s first order from Japan’s only civilian jet plane manufacturer, according to people familiar with the matter. The Mitsubishi planes are valued at about 150 billion yen (US$1.4 billion), according to the people, who asked not to be identified because the matter is private. JAL plans to begin using the fuel-efficient planes in 2021 and the companies will announce the agreement today after board meetings, the people said. The order is Mitsubishi Aircraft’s third this year, highlighting demand for planes the manufacturer expects to start delivering in 2017. The Mitsubishi Heavy Industries Ltd. unit is challenging Embraer SA and has set a goal of winning half the global market for regional aircraft over the next 20 years. U.S. carrier SkyWest Inc. is the
biggest customer for Mitsubishi so far, with an order for 100 planes and an option for another 100. The Nagoya-based planemaker has also won orders for 25 of the jets from Japan’s ANA Holdings Inc. and 100 from Trans States Airlines Inc.
Test flights The aircraft maker, which expects to start test flights next year, has also said it plans to sell as many as 40 regional jets to U.S. startup Eastern Air Lines Group Inc. Japan Airlines is considering buying the planes, the carrier said yesterday in a statement to the Tokyo Stock Exchange. The airline is not the source of the report that it plans to order the planes, according to the statement. Mitsubishi Aircraft spokeswoman Miho Takahashi said yesterday nothing has been decided about the order. Bloomberg
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International Germany’s anti-euro party eyes breakthrough Germany’s fledgling anti-euro party, which rejects Chancellor Angela Merkel’s handling of the economy, hopes to gain a political foothold Sunday by winning its first seats in a state parliament. Voters in Saxony kick off the first of three elections in excommunist eastern states in a fortnight as Germany gears up to mark 25 years since the Berlin Wall fell. Formed in early 2013, the Alternative for Germany (AfD) narrowly missed entering the German parliament in last September’s general election but made its debut at the European Parliament in May.
Colder Winter Ukraine warns Europe of Russian gas cut-off, Moscow denies claim Natalia Zinets
Niger politician faces probe in babytrafficking case
Supply to Ukraine halted
Niger’s head of parliament, who faces questioning in a probe into international baby-trafficking, has “discreetly” left the country for Burkina Faso, an opposition official said. Hama Amadou is suspected of “complicity” in the trafficking of babies born in Nigeria and trafficked into Niger via Benin.But Amadou, who is considered the leading challenger to President Mahamadou Issoufou ahead of elections in 2016, has denounced the charges as politically motivated and said they would involve a breach of his parliamentary immunity.
Uruguay begins registering marijuana growers Just a handful of people had registered by midday Wednesday to be private growers of marijuana in Uruguay, the first country to fully legalize the production, sale and distribution of the drug. Under a controversial law passed last December, marijuana users who sign up for a national register are allowed to grow cannabis, buy it at a pharmacy or join a distribution club. On the first day of registration for private growers, 10 people had signed up in the morning -- three in the capital Montevideo and seven in the South American country’s interior. Growers are limited to six plants per home and maximum production of 480 grams (17 ounces) a year.
Liberia Ebola crisis ‘will get worse’ The Ebola epidemic in Liberia is set to get worse and many cases of the deadly disease are not included in the official tally, the head of the US’s top public health body said Wednesday. “The cases are increasing. I wish I did not have to say this, but it is going to get worse before it gets better,” Tom Frieden, the director of the Centers for Disease Control and Prevention, told a news conference in Monrovia. “The world has never seen an outbreak of Ebola like this. Consequently, not only are the numbers large, but we know there are many more cases than has been diagnosed and reported,” he said.
mislead or misinform European consumers of Russian gas”. He added, “We will put forth maximum efforts to fulfil gas contract obligations to European importers regardless of political issues in this or that transit country.” Russia is open to “constructive dialogue” on energy with interested partners including Ukraine, he said. Kremlin spokesman Dmitry Peskov said on Wednesday Russia is and will be a reliable supplier of natural gas to Europe. “Russia was, is and will be a reliable supplier of energy resources to Europe,” Peskov told journalists, “We hope that Ukraine in turn will guarantee unhindered transit.” A Russian ministry source said Ukraine would be more likely to start taking gas intended for the European Union to meet its own needs than Russia would be to cut off supplies to Europe. Gazprom declined immediate comment.
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kraine warned Europe on Wednesday that Russia could cut off gas to the continent this winter, but Moscow responded that the supply of gas would continue regardless of politics. Ukrainian Prime Minister Arseny Yatseniuk said Kiev knew of Russian plans to halt gas flows this winter to Europe, comments that were promptly denied by Russian Energy Minister Alexander Novak. “The situation in (Ukraine’s) energy sector is difficult. We know of Russia’s plans to block (gas) transit even to European Union countries this winter, and that’s why their (EU) companies were given an order to pump gas into storage in Europe as fully as possible,” Yatseniuk told a government meeting, without disclosing how he knew about the Russian plans. Russia has halted gas flows to
Ukraine, a major transit route for EU gas, three times in the past decade in 2006, 2009 and since June this year because of price disputes with Kiev. In the past Russia’s Gazprom has insisted it has been a reliable supplier to the European Union, its biggest market, and that flows to Europe were disrupted in 2006 and 2009 only after Ukraine took some of the gas intended for the EU to meet its own winter demand. Ukraine’s warning came less than 24 hours after a meeting between Russian President Vladimir Putin, his Ukrainian counterpart Petro Poroshenko and Europe’s main energy diplomat, Guenther Oettinger, which included talks to secure Russian gas flows during the peak winter months. Novak called Yatseniuk’s comment a “groundless attempt to intentionally
Brazil telecom battle heats Luciana Bruno and Leila Abboud
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razil’s Grupo Oi SA unveiled plans on Wednesday to take over Telecom Italia’s local mobile unit, in a move sources said was aimed at breaking up the country’s second-biggest wireless carrier and upstaging merger bids by foreign rivals. Oi said it hired Brazilian investment bank Grupo BTG Pactual SA to explore alternatives to acquire Telecom Italia SpA’s 67 percent stake in TIM Participações SA, the country’s second biggest wireless carrier. Oi’s plan is to bring in Mexico’s America Movil SAB de CV and Spain’s
Telefonica SA in a deal to split TIM three ways, easing the financial and regulatory burdens of consolidation, according to two sources who asked not to be named due to the sensitivity of the deal. The move adds a new twist to the bidding war for Vivendi SA’s Brazilian broadband unit GVT, which both Telecom Italia and Spain’s Telefonica SA are pursuing to bolster their mobile businesses in the country. Telecom Italia said in a statement that it knew nothing about the move, was not involved in the plans, and saw TIM as a “strategic asset.”
EU officials also say they do not expect Russia to cut off supplies to EU customers, which account for about 80 percent of Gazprom’s gas sales. But they say they have options if it does. “We have a Plan B for the worstcase scenario. But we don’t expect to need it,” European Energy Commissioner Guenther Oettinger said in Ungheni, Moldova on Wednesday. European and Ukrainian power and gas providers have been preparing for a potential Russian supply cut by injecting as much gas as possible into storage over the spring and summer seasons. Preparations have also been made for Ukraine to import reverse flows of Russian gas from EU countries. “The government has amassed 15 billion cubic metres (bcm) of gas in storage,” Yatseniuk said, and has plans to boost storage to 25 bcm. A lack of sufficient alternative supplies still means Ukraine and some central and southeastern European countries would not be able to cope with a winter gas cut without large-scale energy supply disruptions, analysts say. Russia is Europe’s biggest supplier of oil, coal and natural gas, meeting around a third of demand for all those fuels, according to Eurostat data. It receives in return some US$250 billion a year, or around two-thirds of government revenue. Reuters
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Opinion Business
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Leading reports from Asia’s best business newspapers
Measuring inclusive growth Mahmoud Mohieldin
Corporate Secretary and the President’s special envoy at the World Bank
THE STAR MALAYSIA Malayan Banking Bhd (Maybank) posted net profit of RM1.575bil in the second quarter ended June 30, 2104, up 0.5 percent from RM1.567 billion a year ago, boosted by growth in the group’s net loans, advances and financing, mainly contributed from Islamic Banking operations. It said on Thursday its revenue rose 1.98 percent to RM8.759 billion from RM8.588bil. The group’s net loss from insurance and takaful business increased by RM47.2 million to RM102.2 million mainly due to lower net earned premiums of RM106.2mil.
JAKARTA POST More companies are seen relocating to the Philippines, Indonesia and Malaysia to tap these countries’ young and educated talent base amid rising labour costs in China, according to global workforce solutions provider ManpowerGroup. In a report titled “The Next Big Thing in Southeast Asia,” ManpowerGroup said that “major companies, including Fortune Global 500s, were starting to locate their operations in Malaysia, Indonesia and the Philippines, the way they once flocked to China.”
ELEVEN MYANMAR The arid zone in central Myanmar is likely to face a food crisis in the coming three years if the current climate pattern continues, said Dr Ohmar Khaing, project coordinator of the Food Security Working Group. “The dry zone may face a food crisis if the current climate change consecutively goes on for three years. Even now farmers have to face a loss of sesame plantations due to the lack of rainwater,” he said.
THE KOREA HERALD An investigation is underway into allegations that South Korea’s Kakao Corp, operator of the country’s most-used messenger service Kakao Talk, was involved in abusing its market dominance in deals with smaller service suppliers. A probe is also being conducted on its scheduled merger with Daum Corp., the country’s No. 2 Internet portal operator, the sources close to the matter said on condition of anonymity. Kakao messenger commands 37 million users in Korea, where the population stands at around 50 million.
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ASHINGTON, DC – When the Millennium Development Goals (MDG) deadline expires next year, the world will be able to point to several important achievements since their launch in 2000. Extreme poverty has been halved during this period; an estimated 100 million slumdwellers have gained access to safe drinking water, and millions to health care; and large numbers of girls are now receiving an education. But considerable unfinished business and significant performance discrepancies remain. The post-2015 development agenda will continue where the MDGs left off, while adding further objectives relating to inclusion, sustainability, jobs, growth, and governance. The success of the coming Sustainable Development Goals (SDGs) will depend on how new programs are developed, implemented, and measured. Strong economic growth enables people to improve their lives and creates space for new ideas to thrive. But such growth is often accompanied by environmental degradation, which diminishes human health and quality of life, threatens water supplies, and compromises ecosystems, impeding growth for future generations. Moreover, short-term growth that erodes natural capital is vulnerable to boom-and-bust cycles, and can cause people who live close to the poverty line to fall far below it. Taking a longer-term view of growth and accounting for social, economic, and environmental equity must be a top priority for the post-2015 development agenda. Discussion of the SDGs is now taking into consideration the need to incorporate food, water, and energy security, together with urban planning
and biodiversity. But translating prospective goals into actions at the country level will not be feasible without measurable and meaningful indicators to guide policy and measure progress. One method of measurement is “natural capital accounting,” which assesses the value of natural resources in development planning and national accounts, just as a family would account for their home’s value – and the cost of maintaining it – when deciding how much of their regular income to consume. A recent World Economic Forum report proposes a “dashboard” for inclusive and sustainable growth. This model brings together natural capital accounting, a humanopportunity index, a gendergap index, measures of public investment as a percentage of GDP, a competitiveness index, indicators of shared prosperity, and disaggregated unemployment data. A World Bank-led partnership, Wealth Accounting and the Valuation of Ecosystem Services (WAVES), shows governments how certain behaviour depletes natural assets, and how natural capital accounting can help to establish more sustainable development policies. Following a campaign at the 2012 Rio+20 Summit, 70 governments, including those representing 40 middle- and low-income countries, endorsed natural capital accounting. The method has already been put to good use around the world. “Forest accounts,” for example, have revealed that Guatemala has the fastest deforestation rate in Central and South America, with most uncontrolled logging being carried by households for their cooking needs. This information has spurred the Guatemalan government to review the country’s forestry law, and to fund new
Taking a longer‑term view of growth and accounting for social, economic, and environmental equity must be a top priority for the post-2015 development agenda
strategies to control firewood use, prevent unauthorized logging, and encourage families to use alternative energy sources. Botswana’s attempts to diversify its economy are constrained by water shortages; but “water accounts” are helping the government to identify sectors – including agriculture, mining, and tourism – that can grow with minimal water consumption. In the Philippines, where 60% of GDP is generated by industries and associated services in the Laguna Lake region of Metro Manila, pollution and siltation has already reduced the lake’s depth by one third. “Ecosystem accounts” have become instrumental in determining how better to manage this resource. These accounts are also being used to improve forest management in the Indian state of Himachal Pradesh, where forests are a vital resource for two major growth sectors, tourism and hydropower generation. These experiences are vital in shaping the post-2015 development agenda. Incorporating sustainability forces governments and businesses to consider the environmental impact of their decisions. A UN report calls on all governments to adopt natural capital accounting so that their sustainability efforts can be consistent, accurate, and comparable over the long term. Institutionalizing sustainability in this way will make it an intrinsic part of day-to-day governance. Only by shifting to a broader understanding of growth and development can the world address the pressing problems of inequality and sustainability. Placing that understanding at the heart of the SDGs will help to improve the health and wellbeing of all societies long into the future. The Project Syndicate 2014
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Closing U.S. judge rejects Apple bid
Honda to recall 63,200 vehicles
A U.S. judge rejected Apple Inc’s latest bid for a permanent injunction against Samsung Electronics Co Ltd in another sign of the diminishing impact of the smartphone patent wars. Apple won a US$120 million jury verdict against Samsung earlier this year over three Apple patents. However, U.S. District Judge Lucy Koh in San Jose, California, on Wednesday denied Apple’s request to stop Samsung from selling infringing features on its smartphones related to those patents.
Honda Motor Co is recalling about 63,200 vehicles globally due to a defect in driver-side air bags made by Takata Corp, the Japanese automaker said yesterday. Honda is recalling certain CR-V, Civic, Brio and Amaze, models from 2012-2015, mostly in China and other Asian countries. It is also recalling vehicles from several countries in Europe, Latin America and Africa, spokesman Teruhiko Tatebe said. The car maker is not recalling any vehicles in North America, he added.
Back to diplomacy China and Vietnam agree on territorial talks after oil rig spat John Boudreau
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hina and Vietnam agreed to negotiate on their South China Sea disputes without backing away from territorial claims that have caused a rift between the two communist countries. Vietnamese politburo member Le Hong Anh, at the invitation of China, met with President Xi Jinping and other officials in Beijing. Ties cooled after a Chinese oil rig was placed off Vietnam’s coast in May, triggering skirmishes between boats of the two countries and deadly antiChinese riots in Vietnam. The two countries agreed to government-level negotiations on border and territorial
issues, Vietnam News reported yesterday. They will seek ways to contain sea disputes and implement principles to guide the settlement of such disputes, the paper said. Leaders have previously issued statements on the intent to negotiate even as tensions continue, said Alexander Vuving, a security analyst at the Asia-Pacific Center for Security Studies in Hawaii. The Beijing meeting allowed each side to size up the other, particularly after U.S. leaders began calling for a lifting of an embargo on lethal weapons sales to Vietnam, he said. “I don’t see any breakthrough in China-
ICBC posts record profit on margins
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ndustrial & Commercial Bank of China Ltd., the world’s largest lender by assets, posted a record quarterly profit by boosting loan margins and limiting money set aside for soured debt. Net income climbed 7.5 percent to 74.8 billion yuan (US$12.2 billion) in the three months ended June 30 from 69.6 billion yuan a year earlier, based on figures published by the Beijing- based company yesterday. ICBC increased provisions for soured debt by less than rivals including Bank of China Ltd. and Agricultural Bank of China Ltd., limiting the drag on profit. The nation’s biggest lenders are grappling with rising bad loans and a cooling economy as they enter an era of annual profit growth lower than 10 percent. The bank’s net interest margin, a measure of lending profitability, widened to 2.62 percent as of June 30 from 2.57 percent a year earlier. Second-quarter profit growth compared with a 6.6 percent gain in the first three months of the year, which was the slowest pace since 2009. Bloomberg
Vietnam relations,” Vuving said by phone. “There are no reasons China would refrain from provocations. They are very assertive. Vietnam has no other option than to continue to move closer to China’s rivals, such as the U.S., Japan and India.” Xi called for China and Vietnam to restore ties, the official Xinhua News Agency reported, saying “a neighbor cannot be moved away and it is in the common interests of both sides to be friendly to each other.” The president said he hopes “the Vietnamese will make joint efforts with the Chinese to put the bilateral relationship back on the right
track of development.” Anh invited Xi to visit Vietnam, Vietnam News reported yesterday. The meeting followed the removal of the HYSY 981 rig from waters near the disputed Paracel Islands on July 15 and the Aug. 8 visit to Hanoi by U.S. Senators John McCain and Sheldon Whitehouse, who vowed to push Congress to lift the ban on the sale of lethal weapons to Vietnam. Almost 40 years after the end of a war that killed almost 60,000 American serviceman and probably more than 1 million Vietnamese, the U.S. and Vietnam are moving closer, with trade and
ICAC raids home of media tycoon
investment growing. Vietnam needs Indian balance in the region, Vietnamese Ambassador to India Nguyen Thanh Tan said in an interview with India Writes Network posted Aug. 22 on Vietnam’s foreign ministry website. The pledge by China and Vietnam to avoid actions that could be provocative is similar to proposals made by the U.S. and the Philippines at the Association of Southeast Asian Nations regional forum in Myanmar earlier this month, which were rejected by Chinese leaders, Vuving said. Bloomberg
The right to gamble
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nti-corruption officers in Hong Kong raided yesterday the home of Jimmy Lai, a media magnate and outspoken critic of Beijing who has supported pro-democracy activists through his publications and with donations. The raid on Lai’s home in an affluent avenue in Hong Kong’s Kowloon district came after media said on Wednesday China had decided to limit nominations for the 2017 election to a handful of candidates loyal to Beijing, which will likely escalate protests by pro-democracy activists. “The timing is not uncoincidental with this week in our opinion. If you wanted to cool things down, this is the last thing you would do,” Lai’s top aide and spokesman Mark Simon told Reuters. The standing committee of China’s parliament, the National People’s Congress, is expected to announce its decision on Hong Kong’s future on Sunday. Lai owns Hong Kong-based media company Next Media, which publishes Next Magazine and the popular pro-democracy Apple Daily tabloid newspaper. Reuters
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n advisor to Japanese lawmakers seeking to legalise casinos said yesterday he wants local gamblers to be allowed in amid media reports that the health ministry is pushing to ban Japanese nationals due to fears about addiction. Toru Mihara, a professor at the Osaka University of Commerce who helped lawmakers draft the casino bill, told reporters the government should tackle the issue of problem gambling through counselling and other means, and not by imposing a ban. Mihara’s comments suggest the debate over the casino bill, which is currently in parliament, may be protracted with supporters unwilling to accept any measures that would reduce the number of potential gamblers. Asked whether he thought casino gambling should be limited to foreigners, Mihara said: “It would be entirely out of the question.” “I would estimate that about 80 percent of all visitors will be Japanese. The remainder will be foreigners,” he said. Reuters