Macau Business Daily, Sept 9, 2014 by Business Daily

MOP 6.00 Closing editor: Sara Farr

ands China has given fair warning. Carving for itself the largest slice of Macau’s gambling pie in August. CEO Edward Tracy says 25 percent market

share is a foretaste of things to come. The operator predicts that its Cotai projects will consolidate and expand its number one positioning. Sands China will hire 6,000-plus workers. And add 3,400 more rooms to its portfolio up to 2016 “We have the greatest capacity and content that none of our competitors can compare with”, says Tracy. PAGE

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Year III

Number 622 Tuesday September 9, 2014

Publisher: Paulo A. Azevedo

Taking it to the limit

Hollywood comes to town Melco Crown Entertainment is serious. It wants to give Studio City a great start. The company will allegedly pay Robert DeNiro, Leonardo DiCaprio and Brad Pitt US$13 million each to star in a short film promoting the Cotai Strip property. Directed by Martin Scorsese – and the possibility of personal appearances by Hollywood’s A-list actors

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HSI - Movers September 8

Name

Licensed to bill Property management companies are in the cross-hairs. Again. The new set of proposed rules says they have to get a licence. And hire at least one ‘technical officer’ to provide professional guidance. Minimum capital will be dependent upon the number of apartments managed. Infringements will attract fines of up to 500,000 patacas PAGE

%Day

Lenovo Group Ltd

2.44

Henderson Land Deve

2.10

China Life Insurance

1.70

China Shenhua Energ

1.28

China Mobile Ltd

1.10

Li & Fung Ltd

-1.13

China Merchants Hol

-1.15

Galaxy Entertainmen

-1.15

Tencent Holdings Ltd

-1.71

Power Assets Holdin

-1.76

Source: Bloomberg

PAGE 6

Grim warning

Transformers should up game

‘Gutter oil’ fraud

Financial institutions in Hong Kong have been warned. The Securities and Futures Commission is toughening up. New penalties will replace the previous palliative measures.

Old perceptions die hard. Macau continues to fail to convince visitors it is more than a casino-resort destination. Despite the government investing substantially in the MICE sector. A University of Macau academic says nothing will change without a master plan

The suggestion came from the Taiwanese authorities. Importers may consider requesting compensation from the island’s vendors over “fraudulent” sales of recycled lard oil. The Food and Drug Administration of the island announced in a press briefing yesterday that claims would not be impeded by the government

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September 9, 2014

Macau

Sands China to hire 6,000 workers The CEO and President of the company said that Sands China is focused on consolidating its position as the leader of the gaming market in Macau, expanding its current 25 percent market share João Santos Filipe

jsfilipe@macaubusinessdaily.com

ands China is planning to hire extra 6,000 workers for the hotel St. Regis Macao and hotel and casino Parisian Macau, opening in early 2015 and early 2016, respectively. The number was revealed by Hong Kong newspaper The Standard in an interview with Edward Tracy, Chief Executive Officer of the Las Vegas subsidiary. “Sands China has 27,000 employees, making it the largest employer in Macau. It will hire 6,000 more for its future projects”, the newspaper says. The company currently has 9,000 rooms in five hotels. However, the opening of St. Regis will increase it by 400 rooms and the opening of the Parisian will add another 3,000. In August, Sands China overtook SJM Holdings as the market leader in Macau’s gaming industry with a share of 24.6 percent. The company

benefited from its strategy to invest in the mass market. Former frontrunner SJM occupies 22.4 percent of Macau’s gaming market. “We’re confident that we can expand market share as we have the greatest capacity and content that none of our competitors can compare with”, Tracy said of Sands China. The 61-year old American admitted, as well, that his intention is to consolidate its leading position and further expand market share. In the first half of the year the company owned by Sheldon Adelson posted a record adjusted earnings before interest, taxes, depreciation and amortisation of US$1.74 billion (an increase of 35.7 percent year-on-year). However, some investment houses downgraded Sands China stocks. “We still have an EBITDA – operational profit - of US$800

million in the second quarter, which is extraordinary . . . Market psychology is something I can’t do. I will keep on doing my job every day and stay very focused on fundamentals although there are many people who want to distract you”, Tracy told The Standard in reference to investment houses. Edward Tracy was appointed Chief Operating Officer in August 2010. In June 2011, he assumed the roles of Chief Executive Officer (CEO) and President of Sands China. “I certainly do have stress. It’s the biggest job in the industry. I’m responsible for lots of people”, he said. The Sands China CEO also said that he works hard to set an example for the team. The President of Sands China also highlighted that the client is the most important part of the business. “I’m dedicated to the

hospitality industry be it retail, hotel, entertainment or casino. Instead of focusing on profitability, customers always come first”, he explained. This approach may be justified by the occupancy rate

of the Sands China resorts. “We have 200,000 customers on weekdays and 500,000 during holidays; the hotels have an overall occupancy rate of 96 percent”, he said. “The number of transactions is huge”.

Macau failing to transform popular image Glenn McCartney, Assistant Professor in Gaming and Hospitality Management at the University of Macau, says that despite the government’s efforts Macau has been unable to change the way it is perceived by tourists

espite the Macau Government’s desire to diversify the economy and bet more on the MICE [Meetings, Incentives, Conferences and Exhibitions] industry, the SAR has failed to transform its image from a one-day destination, a research paper by Glenn McCartney, Assistant Professor in Gaming and Hospitality Management at the University of Macau, declares. ‘Macau has been unable to lose the image and historical challenge of being considered a day-tripper destination’, the paper claims. Titled ‘With or Without You? Building a Case for Further MICE Development in Macao’, the paper appears in the Journal of Convention & Event Tourism. “It still grapples with trying to move from being predominantly a day-tripper market, attracting a smaller percentage of international travel to longer-stay business markets important to developing a MICE sector’, it says. The paper also supports its main idea from data collected between 2009 and 2011. In this period, the number of MICE events decreased from 1,215 to 1,045. Average duration increased from 2 days to 2.5 days in 2009 and 2010 but fell from 2.5 to 2 days in 2011. During the past three years the number of participants increased significantly from 572,684 to 1,278,054. “To what degree numbers

established and globally recognised tourism and financial hubs.” To stress the limited results achieved so far by Macau in its attempt to increase the importance of the MICE industry, the reality of the Chinese Special Administrative Region is compared to Las Vegas. “By 2012, non-gaming revenues still made up less than 5% of Macao’s total tourism revenues compared to Las Vegas where non-gaming registers more than half of total revenues.’

Solutions

of visitors to Macao’s MICE are inflated due to complimentary public admission is unknown” Mr. McCartney says about the numbers. “While the Macau Government takes the position that Macau is an ideal location for MICE with world class convention and exhibition facilities, there appears to be a mismatch between what is communicated and what is actually being believed by travellers, particularly MICE organisers and delegates, and the current visitor profile to Macau”, McCartney says. “What is apparent is that the aggressive promotional and sales campaigns by casino operators are dominating and winning greater

visitation aimed at gambling revenue creation first”, he said regarding economic diversification. Despite the tourist perception of Macau, the fact that the former Portuguese enclave is located near two well-established MICE centres is also pointed to as one of the reasons the industry is lagging. “With aggressive casino-oriented marketing actions from Macao’s integrated resorts, creating a competitive MICE framework for Macao is further exacerbated by the fact it operates in a highly competitive regional MICE environment short distances from Hong Kong and Singapore. These are both well

To change this reality, the academic stressed the need for a master plan in order to increase the importance of MICE events to the Special Administrative Region economy. “A master plan will be a critical factor to ensure MICE receives greater recognition and collaboration from tourism stakeholders, in particular the casinos industry and related Macao Government departments”, he explains. He also suggested a change in the way the image of Macau is presented by the government. “The MICE industry needs to be increasingly packaged and reinforced within a commonly agreed and creative communications strategy to make any shift from present perceptions.” J.S.F.

September 9, 2014

Macau Importers may lodge lawsuits over problem lard Importers may consider requesting compensation from Taiwanese vendors over “fraudulent” sales of recycled lard oil, official claims Stephanie Lai

sw.lai@macaubusinessdaily.com

mporters of the contaminated lard oil produced by Taiwan food oil manufacturer Chang Guann Co may consider pursuing compensation from the company via fraud charges, an official from the Food and Drug Administration of the island announced in a press briefing yesterday. An investigation has been launched after the Taiwanese manufacturer was accused of using illegally recycled products – including fat collected from grease traps – for export to the southern Chinese cities of Hong Kong and Macau. According to the Civic and Municipal Affairs Bureau here, at least 21 local bakeries and food processing companies have been identified as purchasers of two brands of lard oil produced by Chang Guann in the past four months. Taiwanese authorities say a factory in the south of the island illegally used 243 tonnes of tainted products, often referred to as ‘gutter oil’, to mix into lard oil in a case that has reignited regional concerns about food safety standards. In a press briefing yesterday, the director of the northern centre of Food and Drug Administration of Taiwan, Ms. Feng Ruenn Lan,

noted that the Taiwanese Government would not intervene in possible lawsuits concerning problem lard oil exported to Hong Kong, as both jurisdictions enjoyed liberalised trade and the exported products have fulfilled the food export standard, Taiwan’s Chinese-language media outlets reported. Popular Hong Kong bakery chain Maxim’s Cakes removed pineapple buns from their shelves over the weekend after confirming that they had used oil from Chang Guann, the

Taiwanese oil manufacturer at the heart of the scandal. The chain said there was no evidence that the lard oil used to make the buns contained tainted products but it was removing them anyway “to be ultra cautious about food safety”. It has since switched to a Dutch supplier. Ms. Feng told media yesterday that overseas purchasers of the problem lard oil could pursue compensation from the Taiwan sellers with their sales contract via “fraud” charges.

Although produced from recycled oil, the heavy metal content of Chang Guann’s Fragrant Lard Oil was found to pass Taiwan’s food safety standards, a Food and Drug Administration inspection result of the ‘gutter oil’ released yesterday said. But the Taiwan health authority stressed that as the lard oil was produced from unqualified ingredients, all of the products had to be taken off shelves, recalled and destroyed. Fragrant Lard Oil products have been exported to Macau via local importer Companhia de Alimentos Tai Heng Lda over the past four months. During the period, the importer has purchased a total of approximately 2,300 cans of lard oil (each containing 15 kg) from Chang Guann, of which about 1,600 cans remain in stock, the Civic and Municipal Affairs Bureau said in a press release published on Saturday. Business Daily has approached Tai Heng regarding the import period of Chang Guann’s lard oil and whether the company would pursue compensation from the Taiwan firm but had not received a reply by the time the story went to press. with AFP

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September 9, 2014

Macau

Property management: professional advisory mandatory for licence All property management companies will have to obtain a licence, hire at least one ‘technical officer’ to provide professional guidance, and will be forced to have minimum capital to operate, says the new law that will regulate the industry. Infringements will incur a fine of up to half a million patacas Kam Leong

kamleong@macaubusinessdaily.com

a guarantee of between 150,000 patacas and one million patacas, dependent on category managed. Such a guarantee, according to the Housing Bureau, is to ensure that companies will execute their responsibilities. Should they not be able to do so, the total amount of their guarantees will be forfeit.

Technical Officers

fter a similar drafted law on regulating the city’s property management in 2008, the Housing Bureau announced another new proposal yesterday. This involves a licensing scheme for the industry and requires related companies to put up minimum levels of capital. The deputy director of the Bureau, Ieong Kam Wa, claimed that the consultation on the previous suggested law may be outdated as it was floated six years ago. The current proposed law, which suggests regulating property management companies and their officers to obtain related licences, may improve the property management system in Macau, while standardising appropriate mechanisms. The consultation text of the law indicates that the founding members of the property management companies and the companies themselves will

have to obtain licences, or their businesses will be deemed illegal. One of requirements for such companies to get a licence is to hire at least one so-called ‘technical officer’ to work in the company to provide professional opinions on property management. Such technical officers, meanwhile, will also have to obtain licences beforehand. The licences of all the three parties will be renewed every three years. Qualified companies currently managing local properties will be issued a three-year provisional licence when the law comes into force. Although no schedule has been set, Mr. Ieong estimated that the bill may only be sent to the Legislative Assembly between the second half of next year and the beginning of 2016. A fine of up to 500,000 patacas will be imposed on companies violating the regulations by

Corporate

running businesses without licences. Meanwhile, the public consulting session will extend from this Thursday to November 9.

Minimum capital required In addition, the law will require that companies own a minimum amount of capital, dependent upon the number of flats they manage. According to the consultation text, companies that manage 5,000 flats or more will have to have capital of at least three million patacas. Those which manage between 1,201 and 4,999 flats will require capital of no less than one million patacas. Meanwhile, companies will need at least 300,000 patacas of capital to manage 1,200 flats or less. Apart from the minimum capital requirement, property management companies will also have to provide

IPIM: Ten Macau firms established in Hengqin

O Galaxy, MGM celebrate Mid-Autumn Festival with charity MGM China and Galaxy Entertainment Group distributed thousands of mooncakes to charity ahead of today’s Mid-Autumn Festival. Galaxy (left) distributed mooncakes to 215 elderly people from several elderly homes here, namely Asilo de Felicidade, Lar de Idosos Ian Qi Limitada, S. Francis Xavier Home for the Aged, Asilo de Santa Maria and Asilo Vila Madalena. MGM China (right) gave 1,700 boxes of mooncakes to Caritas Macau so that they can be distributed to different groups in need including the elderly, youths, individuals with disabilities and lowincome households.

The technical officers will be another important factor in deciding if a company can obtain a licence or not. According to the consultation text, the ‘technical officer’ may also be understood as being the secretary of the property management or housing managers as in Mainland China or Hong Kong. They are the ones responsible for providing professional guides and suggestions to the companies and guards regarding affairs of maintenance, finance and human resources. These officers, who must have had high school education, must attend a 300-hour course run by the Labour Affairs Bureau to get their licences. Although the course can be dispensed with if the officers have a higher education certificate, an exam will still be needed to be passed prior to licences being issued. In addition, none of these licences - for the technical officers, the companies and their owners - may be transferred to a fourth party, according to the proposal. According to the vice director of the Bureau, Cheang Sek Lam, Macau currently supports 5,139 estate security guards and some 200 property management companies.

f the 33 local investment projects that the Macau Government recommended to Hengqin authorities earlier in the year, about 10 of these firms have already settled in the island, president of the Macau Trade and Investment Promotion Institute (IPIM) Jackson Chang told media on the sidelines of an event held in Xiamen City in Fujian on Sunday. The local investment projects were agreed by the Hengqin authorities for the Guangdong-Macau Cooperation Industrial Park on the island, which refers to 4.5 square kilometres of land parcels scattered throughout Hengqin and designated for different business sectors. These include tourism and leisure and businesses, cultural and creative businesses, information technology and other trade services.

Speaking to media on the sidelines of the 18th China International Fair for Investment and Trade on Sunday, Mr. Chang noted that the 10 established projects in Hengqin include tourism and cultural and creative businesses but did not elaborate on the firms. In mid-July, IPIM released a preliminary list of seven Macau firms that have signed contracts with the Hengqin administration in connection with setting up business on the island. The firms include restaurant operator Future Bright Group’s food plaza project, and local pro-Beijing businessman Lao Ngai Leong’s investment project ‘i CITY Hong Kong-Macao’ - a ‘cultural’ project that comprises a media production centre and an education and training base. SL.

September 9, 2014

Macau

CityChamp mulls acquisitions The watch and jewellery group’s general manager said that the company plans to purchase ‘good’ brand watches with its HK$1.4 billion cash flow. Revenues jumped 32 percent in the first half Sara Farr

sarafarr@macaubusinessdaily.com

ityChamp Watch and Jewellery Group Ltd has posted a 32 percent increase in its first half-year revenues to HK$1.72 billion from HK$1.3 billion a year earlier. The group’s overall gross profits were also up, to HK$874.6 million for the six months ended June 30, from HK$672 million at the end of June 2014. Shang Jiang Guang, the group’s chief executive officer, said last week that sales in the newly established Citychamp branch in Macau were performing well. He is also quoted by Hong Kong newswires and media as saying that the group’s strategy is to promote its home-brand watches ‘Rossini’ and ‘EBOHR’ to overseas markets, while introducing imported brands into mainland China. Apart from Macau, Hong Kong and the United States markets, Citychamp is looking at

expanding distribution in Taiwan, Southeast Asia, India and Australia. The factors that led Citychamp to post a 32 percent increase in revenue are primarily a ‘compound growth rate of revenue at around 40 percent per annum over the last five years’ and that both subsidiaries Eterna and Corum have started to regain momentum. ‘We have restructured these businesses and positioned them for strong improvement in the medium term,’ the group’s interim report reads. Eterna focuses on manufacturing and distribution of Eterna watches in countries outside Asia, while Eterna (Asia) focuses on distribution of Eterna watches in Asia. The latter has subsidiaries in Beijing and Shanghai and 49 distribution outlets in Hong Kong, Macau, mainland China and Taiwan. Thirty-five of these are in

Macau alone as at the end of June. Eterna Group contributed revenue of HK$34.98 million year-on-year, up from HK$26.28 million in the first six months of last year. It also posted a net loss after tax of HK$30.92 million. ‘The loss was due to the new product development cost, new market development cost, and in particular promotional

and advertising costs incurred for the branding and strategic marketing activities conducted in mainland China and Hong Kong.’ In addition, the group said that given the increasingly strong revenue being generated by Hong Kong and mainland China, ‘Eterna is expected to achieve breakeven in one or two years.’ Meanwhile, Mr. Shang

said Citychamp had already installed online shopping platforms Tmall.com and JD.com in mainland China. According to the group’s interim report, Internet sales increased to HK$54.1 million at the end of June from HK$26.4 million in the same period last year. ‘Unique product lines, that are different than those available in physical distribution outlets are developed for Internet sales… [and] while the Internet sale is a powerful tool… it is considered complementary to the sales from physical distribution outlets and expected to grow significantly,’ the report reads. In addion, Citychamp has a cash flow of around HK$1.4 billion, which Mr. Shang said is a basis for the group to consider the further purchase of ‘good’ watch brands without mentioning any in particular.

September 9, 2014

Gaming Brands

Trends

Packing Bags Raquel Dias newsdesk@macaubusinessdaily.com

f you’re older than 25 you probably remember the time when the Rollaboard (the upright wheeled bag) didn’t exist. If you’re older than 35 then it is possible you travelled with luggage that had no wheels on at all. For me, I can still remember seeing my first Rollaboard. I was very young but living in Macau meant I had to travel a lot. I was about 9, and wondered how on earth they had taken so much time to invent it. How was it possible that no-one had thought of that before? Those where the days when luggage was boring, black and the hardshell had just gone out of fashion. You seriously had to tag your bags otherwise you would not identify them because they all looked the same. A few years ago, when I saw the first four-wheeler bag (they call it a spinner) I did not have the same reaction. It was not lifesaver enough. But, I have to admit, there’s been an improvement in the way we travel. Brands have put some of the glamour back into luggage sets. Although it is unlikely that you’ll find neatly, coordinated, hard-shell sets in the airport, you do see some of that old charm creeping back. We’ve spoken before about higher end products but more accessible brands are doing a good job, too. Samsonite, Delsey and American Tourister all have innovative luggage systems. With the appearance of new materials, the traditional hard-shell has made a big comeback and out of the box ideas have given travellers fun alternatives.

Samsonite’s Marshmallow is pretty, vintage and designed to be sat on

Fitch downgrades New Jersey credit rating

itch Ratings has cut its credit rating for New Jersey by one notch to ‘A’ because of the state’s budget gaps and a broken promise to make a full contribution to its public pension system. It was the latest warning from a Wall Street credit rating agency about the state’s continuing financial problems due to New Jersey’s slow economic recovery from the recession, large liabilities, and incorrect assumptions for several years that it would bring in more tax revenue. The outlook remains negative. The action affects US$2.16 billion of general obligation bonds and about US$33.5 billion of other outstanding GO-linked debt. The Fitch action also pressures upcoming bond sales, including a plan by junk-rated Atlantic City to borrow up to US$140 million later this year to pay off property tax appeals by struggling casinos. On its own, Atlantic City would

have to pay exorbitant yields to borrow because of its non-investment grade rating. So through the state’s Qualified Bond Act, the city will pledge about US$8 million of a state grant to repay bondholders over time and get a higher credit rating – and, it expects, lower interest rates – on the sale. But Fitch’s action has also lowered the qualified bond programme to an ‘A-’ rating. New Jersey Governor Chris Christie, a potential 2016 Republican presidential contender, worked with Democratic legislative leaders on the 2011 pension reforms. Those changes mandated annual increases in the state’s pension contribution to make up for years of skimping and to plug billions in future unfunded liabilities. But in May, citing financial constraints from an unexpected revenue shortfall, Christie slashed two years of pension contributions by about US$2.5 billion altogether,

prompting lawsuits by organised labour. This is the kind of one-time budget gimmick that has landed Christie and past New Jersey governors in trouble with rating agencies. All three major agencies downgraded the state into single-A territory this year. Fitch’s action reflects the need for further pension reform that Christie “has emphasised daily since his budget message” in February, said Christopher Santarelli, a spokesman for the state treasurer’s office. “Without raising taxes on an already overburdened populace, Governor Christie has already contributed more to the pension system than any previous Governor,” he said in a statement. Christie has not laid out any specific proposals yet, and Democratic leaders have rejected the idea of additional changes to public employee retirement benefits. Reuters

Ho, Packer to shell out US$39mln for Hollywood stars

obert DeNiro, Leonardo DiCaprio and Brad Pitt are each getting US$13 million (MOP104 million) to star in a short film directed by Martin Scorsese in a campaign for Melco Crown Entertainment’s newest property – Studio City. The three have been in

New York for a two-day ad shoot for Melco Crown. According to a New York Post news report, the total budget for the short film is US$70 million. The script was written by Wolf of Wall Street scribe and Boardwalk Empire creator Terence Winter. In addition to

RatPac’s Brett Ratner and RSA’s Jules Daly, Lawrence Ho and James Packer – co-chairmen of Melco Crown Entertainment – will also be executive producing Scorsese’s short. The film is set to premier next year at the opening of Studio City, slated to open in mid-2015.

September 9, 2014

Gaming

New Jersey may end Atlantic City monopoly As Governor Chris Christie seeks a lifeline for an Atlantic City weakened by a spate of casino closings, lawmakers are considering a move that could doom the ocean-side resort

oters may be asked as soon as November 2015 to overturn an almost 40-year-old law that gives Atlantic City a monopoly on gambling in New Jersey. The restriction helped turn the tourist spot at the state’s southern end into the top U.S. East Coast gambling destination, until competition in neighbouring states led to seven straight years of declining revenues. With four of Atlantic City’s 12 casinos closing this year, some lawmakers say allowing gambling in other towns is crucial to reclaim revenue that has gone to New York and Philadelphia. Senator Raymond Lesniak, a Democrat from Elizabeth, says the move would help the ailing city because lawmakers can direct new money there. Fitch Ratings, for one, disagrees. “A northern New Jersey casino would be more of a threat than an aid to Atlantic City, even if you have some kind of revenue-sharing component,” said analyst Alex Bumazhny in New York. “We view it as more of a risk than an opportunity for Atlantic City casinos.” Christie, 52, a second-term Republican, is meeting behind closed doors today with political leaders and casino officials on strategies to build Atlantic City revenue on non-gambling attractions including entertainment and retail. The summit comes four years into his five-year plan to revitalise the city.

Rating downgrade That turnaround effort, which included more marketing, policing and tax breaks, hasn’t delivered,

prompting Moody’s Investors Service to cut the city’s US$245 million of general obligation debt to junk in July. Revel, the US$2.6 billion hotel and casino meant to usher in a new era of opulence when it opened in 2012, ceased operations September 2 following two bankruptcies and a 10-month search for a buyer. Revel was the third casino to close this year, after Atlantic Club in January and Caesar’s Showboat on August 31. A fourth, Trump Plaza, is set to close Tuesday next week. The growth of gambling in Pennsylvania, Delaware, Maryland and New York has slashed casino revenues in Atlantic City to US$2.9 billion last year from a peak of $5.2 billion in 2006. The drop means less money for New Jersey, which collects an 8 percent tax from casinos and dedicates the money - US$205 million last year – to programmes for senior citizens and the disabled.

Tax comparisons Fitch, in an August 29 credit market commentary, estimated a drop to US$2.5 billion in 2015, then “closer to US$2 billion as new competition opens in neighbouring states and, possibly, northern New Jersey,” said Bumazhny, the rating company’s director of gaming, lodging and leisure. Bumazhny, in a telephone interview last Friday, said a North Jersey location would attract “pretty good competition for gaming licences” because of population density, proximity to New York City and the state’s comparatively low casino levy. Pennsylvania taxes slots at 55 percent;

four casinos to open in New York will pay a range of 10 percent to 45 percent tax on slots and table games. New Jersey, the first northeastern state to legalise gambling, doing so in 1976 with a referendum that limited it to one location to revive the decaying resort. It grew to become the second-largest U.S. gambling market after Las Vegas, losing that spot to Pennsylvania in 2012.

Voters wary Expansion of casinos beyond Atlantic City faces another hurdle in New Jersey voters, who rejected widespread gambling in a 1974 ballot question and who remain opposed, 50 percent to 42 percent, to allowing it in other towns, according to an August 4 poll by Fairleigh Dickinson University’s PublicMind. Still, Senate President Steve Sweeney, from the Philadelphia suburb of West Deptford, says an Atlantic City breakout is inevitable. “We used to collect a half billion dollars in tax from them – now it’s down to about US$200 million,” Sweeney, the state’s highest-ranking elected Democrat, said September 4. “We need to find a way to bring that back up.” Constitutional amendments like the one Lesniak is proposing don’t need the governor’s approval. The lawmaker, whose party controls the legislature, said he is confident voters will support the measure if it limits new casinos and spells out how the money would help Atlantic City. He expects the most opposition from New York and Pennsylvania, as well as the gambling industry.

“To let that money leave the state, and those jobs go elsewhere, is not the solution,” Lesniak, of Elizabeth, said by telephone last week. “The only hope for Atlantic City is a North Jersey casino.”

Meadowlands proposal North Jersey lawmakers have long pushed to allow gambling terminals at the Meadowlands horse racetrack in East Rutherford. Their efforts were stymied after casinos lobbied against it. Kevin Ortzman, president of the Casino Association of New Jersey, which represents six properties, didn’t return a phone call for comment placed last Friday to his office at Bally’s Atlantic City, where he is senior vice president, general manager and chief executive officer. He holds the same titles for Caesars Atlantic City. In recent months, Fireman Capital Partners Chairman Paul Fireman has been discussing building a casino in Jersey City, Lesniak said. The plan calls for a $4.2 billion, 95-story casino, hotel and motor sports stadium on Fireman’s golf course along the Hudson River. Fireman, whose private equity firm is based in Boston, didn’t respond to a voicemail message for comment on the plan last Friday. “Increased competition is only going to hurt Atlantic City more, and casinos just aren’t the revenue source for the state that they were 10 or 15 years ago,” said Dan Cassino, a Fairleigh political-science professor and poll analyst. Bloomberg

September 9, 2014

Greater China Jamie Dimon, chairman and chief executive officer of New York-based JPMorgan

Ten years to become the top economy China will become the world’s largest economy in 2024, as the country’s consumer spending is expected to almost quadruple from 2013 to 2024, said IHS Inc., a global industrial data and analysis company. IHS forecast in a press release that in 2024, with anticipated nominal gross domestic product (GDP) of US$28.25 trillion, China will overtake the United States’ US$27.31 trillion, becoming the biggest economy in the world. China’s share of world GDP is forecast to rise from around 12 percent in 2013 to 20 percent in 2025, said the Colorado, USbased company.

Argentina gets closer to yuan

Argentina’s central bank chief, Juan Carlos Fábrega, met his Chinese counterpart to discuss how a currency swap worth billions of dollars will be put into action, the Argentine monetary authority said. The swap will allow Argentina to bolster its foreign reserves or pay for Chinese imports with the yuan currency at a time weak export revenues and an ailing currency have put the Latin American nation’s foreign reserves under intense pressure. The South American country’s La Nación newspaper reported that the Buenos Aires government would receive a first tranche of yuan worth US$1 billion before the end of the year, without saying how it obtained the information.

August new loans expected to rebound China’s new loans may rebound to between 600 billion yuan (US$97.2 billion) to 700 billion yuan in August, according to a latest report from the China International Capital Corporation. Earlier data showed new credit flowing into the Chinese economy dropped surprisingly to 385.2 billion yuan in July, raising concerns that the world’s second-largest economy may be stuck in a period of weak demand. Shenyin & Wanguo Securities said the August forecast figure remained relatively weak, attributing the depression to the high financing costs that affected demands in the real economy.

Carlyle sets fourth Asia investment fund Carlyle Group, one of the world’s largest private equity firms, said yesterday it has closed its fourth Asia fund at US$3.9 billion, the second-largest private equity fund ever raised for Asia investments. The new fund adds to an estimated record US$140 billion of uninvested capital, or dry powder, that private equity firms have raised for the region, prompting worries that there is too much money chasing too few deals. But Carlyle’s co-head of Asia buyouts, X.D. Yang, dismissed those concerns.

Richer banker doesn’t make a richer bank Chinese top officials at state banks reduce their salary while their corporations’ profits peak, just the opposite to US firms

iang Jianqing, chairman of Industrial & Commercial Bank of China Ltd., earned less than 2 percent of Jamie Dimon’s compensation last year while reporting twice the profit of JPMorgan Chase & Co. Instead of a reward, Jiang is poised for a pay cut. China’s government said last month it will reduce salaries for executives at state-owned companies because “unreasonably high” incomes have become a source of public discontent. The biggest banks have pledged to implement the plans, part of President Xi Jinping’s campaign to bolster support by tackling government waste and corruption.

Pay gap The nation’s five largest statecontrolled banks -ICBC, China Construction Bank Corp., Agricultural Bank of China Ltd., Bank of China Ltd. and Bank of Communications Co.- paid their combined 1.7 million employees an average of 230,300 yuan (US$37,500) in salaries, bonuses and benefits in 2013, according to data compiled from annual reports. That’s one-third less than at Beijing-based China Minsheng Banking Corp., the country’s only privately owned listed lender and one of 12 mid-size national banks with mixed ownership, also known as joint-stock banks. The gap was even larger with foreign firms: JPMorgan spent an average of US$122,700 in employee salaries and benefits globally, while at HSBC Holdings Plc., the largest European bank, the amount was US$71,400, according to data compiled by Bloomberg. Citigroup

Inc.’s locally incorporated China unit spent an average of about 363,000 yuan, or US$59,000, on employee compensation last year, including salaries, bonuses, stock incentives and benefits, according to its annual report.

Golf, perks ICBC’s Jiang, 61, earned 2 million yuan last year in salary, bonus and benefits as head of the world’s biggest bank by assets and profit. That’s equivalent to about US$326,000, or 1.6 percent of the US$20 million in total compensation for Dimon, 58, who is chairman and chief executive officer of New York-based JPMorgan, the largest U.S. lender by assets. The salaries of the heads of banks and so-called central state-owned enterprises may be reduced by as much as 70 percent and capped at 600,000 yuan, or less than US$100,000, Caijing magazine reported on August 25, citing people it didn’t identify in the ministries of finance and human resources. The cutbacks at state-owned enterprises also involve bans or restrictions on perks such as cars, club memberships, golf and “physical therapy,” the government said on August 29.

Unswerving support Agricultural Bank’s President Zhang Yun said on August 26 that the Beijing-based lender will “unswervingly support and strictly implement” any pay cuts, a position echoed by the leaders of other staterun banks. Zhang was paid 1.79 million yuan

2013 earnings US$326,000 Jiang Jianqing ICBC Chairman US$20 million Jamie Dimon JPMorgan chairman

in 2012. His 2013 compensation is yet to be disclosed. Bank of China Chairman Tian Guoli got 1.36 million yuan for his first nine months at the Beijing-based lender after joining in April 2013. The pay-cut plans come as the government pledges to improve incentives at state-owned enterprises, reduce state ownership and hire top executives from outside government. Bank of Communications, the Shanghai-based lender partly owned by HSBC, says it wants to be the first to introduce stock incentives

September 9, 2014

Greater China Anonymous Analytics report aims at Morgan Stanley While Anonymous has a patchy record of success with its reports, Morgan Stanley’s unit has never made a loss on a China investment in over 20 years of deals

when China lifts a ban imposed in 2008 on such compensation. Caijing reported August 25 that Bank of Communications and Bank of China may be selected for a trial. Wang Yichuan, a Wuhanbased bank analyst at Changjiang Securities, said staff may find that stock incentives do no more than offset salary cuts.

Stock incentives Since the global financial crisis, regulators around the world have wrestled with how to align bankers’ pay with the long-term interests of shareholders, depositors and other stakeholders to discourage excessive risk-taking. The European Union capped bonuses at twice-fixed pay. The Bank of England, meanwhile, has told lenders to ensure that such payments can be clawed back as long as seven years. In July, U.S. President Barack Obama said banks “take big risks because the profit incentive and the bonus incentive is there for them.” In China, the Ministry of Finance banned stock incentives at financial institutions in 2008, saying the government wanted to “avoid further widening the gap with the average pay level in society.” Now, as officials change tack, the finance ministry is drafting rules for such measures and seeking feedback, according to Liu Xinhua, a vice chairman at the China Securities Regulatory Commission. The finance ministry is planning trials that would let almost all staff at big state banks use as much as 30 percent of their salaries to buy shares, two people with knowledge of the matter said, declining to be identified because they aren’t allowed to speak publicly. The employees would pay about market price, one of the people said, raising questions about how it would be an incentive, or different from buying shares through personal accounts in the open market. The number of staff to be affected by pay cuts isn’t clear. The government has indicated that the key targets are executives, like Jiang, who are political appointees installed by the Communist Party. Bloomberg News

hen stock researcher Anonymous Analytics accused China’s Tianhe Chemicals last week of doctoring the books ahead of a Hong Kong IPO, it was pitting itself against one of Asia’s top private equity firms, Morgan Stanley Private Equity Asia. The Morgan Stanley private equity unit put up US$300 million for a minority stake in Tianhe in 2012 after spending over US$2 million on third-party diligence work over a three-year period, according to a source with knowledge of the matter. Tianhe represents its biggest equity investment in Asia, while the bank itself was one of the underwriters of the IPO in June. Industry insiders say the amount is unusually high for diligence work. Anonymous Analytics, on the other hand, says it conducted all of its investigations using publicly available information, most of it posted online, combined with a few visits to the offices of Tianhe customers in Shanghai. But if the accusations by Anonymous turn out to be true, besides facing potential losses, the scale of the fraud will represent a huge loss of face for the Morgan Stanley firm, which manages mostly third party money

US$300 million

2012 Morgan Stanley’s minority stake Tianhe buyout such as U.S. pension funds, and has invested around US$2.5 billion in over 50 investments in Asia. Although Tianhe’s shares have been targeted by short-sellers for weeks, Anonymous said it had not gained from the transactions and had issued the report for the public good. It said yesterday that the Chinese industrial firm, which last had a market capitalisation of US$8 billion, falsely reported on its tax statements and provided falsified documents to its auditor, Deloitte. The report also said Tianhe does not make the revenues it claims. Tianhe has denied the charges. Reuters

The Hong Kong International Commerce Centre hosts Morgan Stanley headquarters

Obama’s visit preparation kicks off Xi Jinping and Obama agreed in their telephone talk in July to continue to work jointly in building a new model of major country relations

Chinese State Councilor Yang Jiechi and United States’ President Barack Obama

.S. President Barack Obama will attend the APEC economic leaders’ meeting in China in November, said Chinese State Councilor Yang Jiechi yesterday, adding that the two countries have already started the preparatory work. Yang made the remarks in talks with Obama’s National Security Advisor Susan Rice, who is paying her first visit to China since she took office in July, 2013. Stressing that the ChinaU.S.relationship has maintained overall stability and made progress with both sides’ efforts, Yang said Chinese President Xi Jinping and U.S. President Obama agreed in their telephone talk in July to continue to work jointly in building a new model of major country relations between China and the United States. The two sides have been making

steady progress in exchanges and cooperation in economics and trade, counter-terrorism, energy, environment protection and other fields, including Korean Peninsular nuclear issue, Iranian nuclear issue, Middle East, Afghanistan, South Sudan and disease control, he said. “The current international environment has further highlighted the strategic significance for China and the United States to jointly build a new model of major country relations,” Yang told Rice. He added that China is ready to work with the United States on the presidential consensus, advance bilateral dialogue and cooperation in all fields and make good preparations for President Obama’s visit to China. For her part, Rice said President Obama asked her to travel here “even as there are many other

The current international environment has further highlighted the strategic significance for China and the United States to jointly build a new model of major country relations Yang Jiechi, Chinese State Councilor

issues on our shared global agenda because of the priority he attached to the U.S.-China relations.” Calling the U.S.- China relationship “very important to the United States,” she said having this kind of “highlevel, continuing dialogue is helpful to enable us to sustain and deepen the type of productive relations” and the good work is necessary for the interests of the United States, China and the international community. Xinhua

September 9, 2014

Greater China

Trade surplus improves, surprising analysts A breakdown of yesterday’s trade data showed Chinese exports slowed across most major markets

Yangshan port in Shanghai, China

hina’s import growth unexpectedly fell for the second consecutive month in August, posting its worst performance in over a year and stoking speculation about whether authorities should loosen policy further to revive domestic demand. Imports by the world’s secondbiggest economy fell 2.4 percent in August compared with a year ago, the General Administration of Customs said yesterday, missing a Reuters estimate for a 1.7 percent rise. It was the second straight month that China’s import growth was surprisingly weak, raising concerns that tepid domestic demand exacerbated by a cooling housing market is increasingly weighing on the economy. In contrast, China’s exports were surprisingly buoyant in August amid stronger global demand. They jumped 9.4 percent from a year earlier to beat a forecast rise of 8 percent, although the growth rate slowed from 14.5 percent in July. That pushed the trade surplus to an unexpected all-time high of US$49.8 billion, which could put further appreciation pressure on the yuan currency. Although falling commodity prices have magnified the weakness in imports as China’s trade data is measured in terms of value, analysts said Chinese demand also seemed to be fizzling. “It’s an interesting set of numbers for policymakers,” said Louis Kuijs, an economist at RBS. “It calls for more policy easing, but at the same time, strong exports and a record surplus will put some pressure on policymakers to let the currency

KEY POINTS Aug exports +9.4 pct y/y, growth slows but beats forecasts Imports fall 2.4 pct, highlight soft domestic demand Trade surplus hits record high US$49.8 bln Economists say data argues for more policy easing

rise in some way or the other.” China’s economy has had a bumpy ride this year. Growth rebounded slightly in the second quarter from an 18-month low thanks to a stream of government stimulus measures, but hopes that the recovery would gain traction were dashed in July when data showed activity was stumbling again. As a result, authorities have repeatedly warned that China may miss its target to grow its trade sector by 7.5 percent this year, even though they maintained that the broader economy can grow by around 7.5 percent in 2014. Indeed, a breakdown of yesterday’s trade data showed Chinese exports slowed across most major markets, compared with July when growth hit a 15-month high.

Exports to the United States, the top buyer of Chinese exports, rose 11.4 percent from a year earlier, compared with July’s 12.3 percent increase. Sales to Europe, where factory activity is faltering, cooled to 12.1 percent on an annual basis, from July’s 17 percent. In terms of imports, purchases from Europe - a major seller of goods and services to China - fell to a 14-month low of 4.5 percent from a year earlier. Some analysts said the lacklustre data corroborated with figures seen elsewhere. Steel demand, for instance, has not rebounded despite a steep fall in iron ore prices, noted Mark Pervan, head of research at ANZ Bank. “That’s telling you that they are more cautious on short-term demand,” Pervan said, referring to steel mills. “I think that’s because of the direction of the housing market currently, which is moving downward.”

Property drag China’s trade sector is a major employer in the country even though it dragged on the economy last year - net exports subtracted 4.4 percent from gross domestic product. The export sector was also surprisingly buoyant in July, helping the trade surplus to balloon to a then record of US$47.3 billion. The upbeat performance was helped in part by a strengthening U.S. economy, China’s top export destination. But risks posed by the cooling property sector have dimmed any optimism brought on by perkier foreign demand. The real estate sector, which accounts for about 15 percent

of China’s economic output, is experiencing its worst downturn in two years as sales and prices turn south. The housing slump, combined with a startling drop in credit supply last month to a six-year low, has led many analysts to predict that China’s leaders need to loosen policy further and offer more stimulus if they wish to grow the economy by the targeted 7.5 percent. More analysts are calling for the central bank to cut banks’ reserve requirement ratio nationwide, though the majority still feel that the central bank is not likely to cut interest rates. “The trade data indicated downward pressure on China’s economy,” said Li Huiyong, an economist at Shenyin Wanguo in Shanghai. “Policymakers may need to enhance their efforts to support the domestic economy if industrial output growth slows to 8.6 percent or below in coming months.” August industrial output data later this week is expected to show a slowdown to 8.8 percent growth from 9.0 percent in July. Growth in retail sales and fixed-asset investment likely also cooled slightly. With China’s trade surplus expanding to record levels, some economists said the yuan could rise further, driven by stronger market demand, after hitting a near sixmonth high last week. That could force China’s central bank to decide whether it should let the yuan rise further at the cost of hurting Chinese exporters, or intervene in the foreign exchange market to temper the currency’s strength. Reuters

September 9, 2014

Asia

Toyota’s line-up of hybrids dominates the market for gasoline-electric cars, with more than 4 million Prius (pictured) sold since 1997

Volkswagen dooms Japanese fuel-cell cars Toyota said it expects Japan, Germany, California and the U.S. East Coast to generate the highest demand for fuel-cell vehicles

olkswagen AG, vying with Toyota Motor Corp. for the lead in the global auto industry, said cars powered by hydrogen fuel cells will probably struggle catching on beyond Japan’s borders. Government subsidies of as much as 3 million yen (US$28,500) a vehicle offered in Japan will probably be too high for other countries to match, Volkswagen Group Japan President Shigeru Shoji said in an interview last week. Even in Toyota’s home country, refuelling will be impractical because handling hydrogen is challenging and building out infrastructure will be costly, he said. “It may fly within Japan, but not globally,” said Shoji, 51. Fuel cells could become another example of the “Galapagos syndrome” that plagues Japanese companies for making products that are only popular at home, he said. Shoji joins Tesla Motors Inc. Chief Executive Officer Elon Musk among sceptics of fuel cells and his comments illustrate the growing divide within the auto industry over which technology will prevail in replacing traditional gasoline and diesel cars. In Japan, fuel-cell vehicles have won government financial support, paving the way for such cars to benefit just as hybrids including Toyota’s Prius have. “In order to survive, you need to come up with new products, better products,” said Thanh Ha Pham, a Tokyo-based analyst at Jefferies Group Inc. “It’s not nationalistic.”

‘Relatively expensive’ Fuel-cell cars, which only emit water vapour, offer one of the best solutions to reduce carbon emissions in Japan, said Dion Corbett, a Toyota spokesman based in Tokyo. He declined to comment on Shogi’s remarks.

“Fuel-cell system costs are still relatively expensive so we need subsidy support from the Japanese government,” Corbett wrote in an e-mail. “It’s difficult to imagine that FCVs will become widely used in the next couple of years alone.” In June, Toyota said it expects Japan, Germany, California and the U.S. East Coast to generate the highest demand for fuel-cell vehicles. Prime Minister Shinzo Abe, leader of Japan’s ruling Liberal Democratic Party, has outlined a vision for creating a “hydrogen society,” with fuel cells powering homes and office buildings, as well as cars made by the Toyota-led auto industry.

It’s an Abe and Toyota deal. It’s an industry giant and the most powerful LDP party, and they are working very close. It’s sort of difficult to complain about it Yasuo Maruta, Volkswagen Japan spokesman

“It’s an Abe and Toyota deal,” said Yasuo Maruta, a Volkswagen Japan spokesman. “It’s an industry giant and the most powerful LDP party, and they are working very close. It’s sort of difficult to complain about it.”

Hybrid domination Volkswagen Chief Executive Officer Martin Winterkorn said last year the Wolfsburg, Germany-based company would sell 14 hybrid and electric models by 2014 and may offer as many as 40 depending on demand, without specifying a timeframe. Toyota’s line-up of hybrids dominates the market for gasolineelectric cars, with more than 4 million Prius sold since the model’s debut in 1997. Japan has provided subsidies to buyers of hybrids that helped spur early demand for such models. The Japanese government’s plans to support hydrogen cars go further than through rebates for the vehicles. The New Energy and Industrial Technology Development Organization aims to make hydrogen the equivalent price of gasoline and to have 100 hydrogen fuelling stations in place by about 2015. Toyota has cited U.S. government estimates that predict hydrogen fuel will initially be more expensive than conventional gasoline in the U.S.

68 stations Toyota’s fuel-cell car going on sale next year, initially in California, will cost about US$50 to fill up for about 300 miles of range, Bob Carter, senior vice president at Toyota’s U.S. operations, said August 12 at a JPMorgan Chase & Co. conference. The cost will eventually fall to about US$30 based on Energy Department estimates, he said. Toyota partnered with the University of California to model

100

hydrogen fuelling stations forecast to be in place in Japan by 2015

the specific locations that would be needed to handle a population of more than 10,000 fuel cells and believes it needs only 68 stations initially, Carter said last month. The state plans to spend US$200 million to build at least 100 stations by 2024, with 40 ready by the end of 2016, he said. “There are still a lot of questions lingering about how practical it is even though Toyota launches next year,” said Maruta, the Volkswagen spokesman. “By the time it gets very usable by the normal customers, it’s maybe still a decade or two decades away.” Still, Volkswagen is hedging its bets. The company is monitoring Toyota’s progress with the aim of staying within no more than three years of development work behind its Japanese rival in matching its fuel cell technology, Shoji said. Still, Volkswagen is hedging its bets. The company is monitoring Toyota’s progress with the aim of staying within no more than three years of development work behind its Japanese rival in matching its fuel cell technology, Shoji said. Bloomberg News

September 9, 2014

Asia India to resume buying rice from Myanmar India will resume buying rice from Myanmar after suspension for three years, offering to import 500,000 tons of rice from the Southeast Asian country, said a Myanmar rice traders organization yesterday. Prices for the rice deal are under negotiation, said the Myanmar Rice Federation, adding that India’s offer to import Myanmar rice will create competitive prices in the domestic market. According to the Central Statistical Organization, Myanmar exported 1.2 million tons of rice in the fiscal year 2013-14, down 14.2 percent from 1.4 million tons in 2012-13.

New Zealand manufacturing sales edge down Manufacturing sales dropped by 0.7 percent in the June quarter, led by a 1.4-percent fall in meat and dairy product manufacturing, the government statistics agency announced yesterday. “Meat and dairy manufacturing sales have edged down in the last two quarters following a large rise in the December 2013 quarter,” Statistics New Zealand business indicators manager Neil Kelly said in a statement. Another major drop was seen in chemical, polymer and rubber product manufacturing, which fell 3 percent, while petroleum and coal product manufacturing was up 2.4 percent.

Ore prices plunge Western Desert into difficulties Australian junior iron ore miner Western Desert Resources Ltd said it had called in administrators after failing to negotiate a deal with its bankers, due largely to plunging iron ore prices. Western Desert, which started mining at its Roper Bar mine in the Northern Territory last December, said it was suspending its shares and appointing an administrator after Macquarie Bank rejected its funding proposals. “The recent substantial fall in the iron ore price to a five year historical low… coupled with a strong Australian dollar, has substantially contributed to this outcome,” the company said in a statement.

Injection Kashmir flood affected Modi said he’ll provide an additional 10 billion rupees (US$166 million) of aid after an aerial survey of the inundation, which has killed 116 people so far. He also wrote to Prime Minister Nawaz Sharif to offer help for relief efforts in areas of the disputed region of Kashmir controlled by Pakistan. The deadly flooding has for now overshadowed rising tension in Kashmir, which the two nations have fought over for more than six decades. India last month called off the first formal talks with its neighbour in two years.

Taxes shrink Japan over expectations Govcrnment revises forecast following second quarter figures Leika Kihara

apan’s economy shrank an annualised 7.1 percent in AprilJune from the previous quarter, more than a preliminary estimate, underscoring concerns the hit from an April increase in the sales tax may have been bigger than expected. The revised contraction was the biggest since January-March 2009, when the global financial crisis hit Japan’s exports and factory output, keeping policymakers under pressure to expand fiscal and monetary stimulus should the economy fail to recover from the disruption of the April tax hike. “Growth this year will be less than what policymakers are expecting. The BOJ will ease policy in April because inflation will be too low to meet its target,” said Takuji Aida, chief economist at Societe Generale Securities. The revision was largely due to a bigger than expected decrease in capital expenditure and a deeper decline in consumer spending, suggesting the economy could struggle to overcome the April sales tax increase.

Bank of japan Governor Haruhiko Kuroda

NZ government offers tax cut before election National Party has been campaigning on its record of strong economic growth

ew Zealand’s ruling centreright National Party yesterday offered the prospect of modest personal tax cuts within the next three years, a little under two weeks ahead of an election that polls suggest it will win comfortably. The party said that if re-elected to a third three-year term in the September 20 vote, it would start saving for tax cuts to apply from early 2017. “Any tax reductions will be modest, given the fiscal headroom available, and they will focus on low and middle income earners,” Finance Minister Bill English said in a statement. New Zealand has a graduated fourstep personal tax rate system, ranging from 10.5 NZ cents in the dollar for low-income earners, through to a top tax rate of 33 cents. National has been campaigning on its record of strong economic growth, a return to budget surpluses and paying back debt, and has portrayed its spending promises as modest and responsible.

A John Key (current New Zealand Prime Minister) billboard in the Helensville electorate in a past New Zealand general election

The annual budget released in May forecast a return to a small surplus in the year to June 30, the first in seven years, with limits on new spending to help reduce pressure on interest rates. English said a re-elected National government would put aside NZ$500 million (US$416 million) in each of the next three years for tax cuts and debt repayments. National, which currently rules in a

coalition with three minor parties, has a commanding lead in opinion polls, with a Reuters survey of five major polls giving it 49.1 percent support, compared to the main opposition centre left Labour Party’s 25.2 percent. Labour is proposing a comprehensive capital gains tax, while the environmental Green Party wants to raise taxes for top income earners. Reuters

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September 9, 2014

Asia KEY POINTS Q2 GDP shrinks annualised 7.1 pct, revised from -6.8 pct Revision largely due to decline in capex, consumer spending Soft data keeps policymakers under pressure GDP was revised down from a preliminary 6.8 percent drop, according to Cabinet Office data released yesterday, and was more than the median market forecast for a 7.0 percent decline in a Reuters poll of economists. On a quarter-to-quarter basis, the economy shrank 1.8 percent in the second quarter, compared with a preliminary reading of a 1.7 percent contraction. Separate data showed the current account swung back into surplus in July, reflecting higher earnings on overseas investments. The surplus stood at 416.7 billion yen (US$3.96 billion), compared with economists’ forecast for 444.2 billion yen. That followed a shortfall of 399.1 billion yen in June, which marked the first deficit in five months. Policymakers had predicted the economy would shrink in the AprilJune quarter as consumers withheld spending after a shopping spree ahead of the sales tax hike to 8 percent from 5 percent on April 1.

But a recent run of weak data, including a slump in household spending and tepid output growth in July, has cast doubt on the policymakers’ forecast that the economy will rebound steadily in the current quarter to sustain a moderate recovery. The pace of growth from July will be crucial to Prime Minister Shinzo Abe’s decision, expected by yearend, on whether to proceed with a scheduled second increase in the sales tax to 10 percent in October next year. Exports were starting to recover, so as long as the economy expands in July-September Abe is likely to go ahead with the second sales tax increase, Societe Generale’s Aida said, but added the government is likely to launch a fiscal stimulus package to soften the tax hike’s impact. If the economic recovery falters, it will also heighten pressure on the BOJ to expand the already massive monetary stimulus that it deployed in April last year to raise the economy out of deflation and reach a 2 percent inflation target. The BOJ, which kept monetary policy steady on Thursday, remains unfazed so far by the soft data, arguing that the tax hike-pain is temporary with household spending set to pick up as a tightening job market pushes up wages. BOJ Governor Haruhiko Kuroda has also expressed confidence the central bank can meet its inflation target sometime in fiscal 2015, but many private-sector economists say it will take longer. Reuters

Australia job ads reach 17-month peak Official employment figures for August are due on Thursday

ustralian job advertisements in newspapers and on the Internet rose for a third straight month in August to hit a 17-month high, offering hope that a recent spike in unemployment might prove temporary. A survey by Australia and New Zealand Banking Group showed total job advertisements rose 1.5 percent to 135,569 per week on average in August. That was the highest average since March last year. July ads were revised up to show an increase of 0.5 percent while ads were 7.7 percent higher than in August last year. Ads on the internet rose 1.5 percent in August, while those in newspapers showed a rare increase of 1.8 percent. “Recent trends in job advertising are consistent with a gradual turnaround in the labour market,” said ANZ chief economist Warren Hogan. “Importantly, these developments appear to jar with the surprise jump in July’s unemployment rate to 6.4 percent and suggest recent labour market conditions are steadily improving,” he added. Official employment figures for August are due on Thursday

and markets are on edge after the July report showed unemployment unexpectedly spiking to a 12-year peak of 6.4 percent, up sharply from 6.0 percent in June. Analysts suspect some of the increase was due to statistical noise and generally look for the jobless rate to dip back to 6.3 percent in August, with employment rising by around 12,000. Hogan noted that recent trends in business confidence and capacity utilisation suggested a relatively solid pick up in the pre-conditions for hiring. There had also been a drop in the number of unemployment benefits recipients and consumers’ unemployment expectations had improved, he added. “We envisage the unemployment rate remaining a touch above 6 percent for a few quarters and only very gradually falling from there,” said Hogan. The ANZ job ads survey’s correlation with employment has weakened somewhat over the last couple of years, in part due to firms using other methods of reaching job seekers such as social media. Reuters

State support for job cuts at Malaysia Airlines MAS said it would shed nearly a third of its 20,000 workforce

he plan to save Malaysia Airlines (MAS) could succeed where past endeavours have failed because the government has finally put politics aside by agreeing to sweeping job cuts, people briefed on the restructuring told Reuters. The job cuts - if they are followed through - would mark a departure from previous attempts to restructure the loss-making airline, which has for years operated with bloated staff numbers amid political pressure from unions. Under the radical US$1.9 billion overhaul unveiled last week, MAS said it would shed nearly a third of its 20,000 workforce after the airline was broadsided by two jet disasters this year. Flight MH370 remains missing since it disappeared en route to Beijing in March and MH17 was shot down over Ukraine in July. “Unfortunately, it took two crashes to make the government realise that sweeping changes were needed at MAS,” said one of the people. “With the job cuts, MAS finally has a plan that has a chance of succeeding.” Both the sources declined to be identified as they were not authorised to speak to the media. It is not the first time that

MAS has announced a big job cull. In 2006, as then chief executive Idris Jala returned MAS to profitability by cutting costs, the airline announced that 6,500 jobs would go. But those cuts were never implemented in full, partly due to opposition from the main labour union, which has close ties to the ruling United Malays National Organisation (UMNO), the party of Prime Minister Najib Razak. UMNO often uses state firms like MAS as a tool to reinforce affirmative action

policies favouring majority ethnic Malays over other races, a strategy that has helped keep it in power. MAS has failed to turn a profit since 2010. One of the sources said that the union’s ties to UMNO turned job cuts into an “insurmountable political decision”. “The management were frustrated. They could not do anything,” he added. “After MH370 and MH17, and with Khazanah planning to spend six billion ringgit of taxpayer money, the mandate is there.”

US$1.9 billion

Malaysian Airlines overhaul plan State investment fund Khazanah Nasional Bhd, the majority shareholder in MAS, is spearheading the restructuring, which will also

see the airline delisted from the local exchange by the end of the year. Khazanah said it would invest in “re-skilling” those who lose jobs and pledged to set up a panel to improve often rocky relations between unions and management. The airline could also sell its six Airbus A380s, which it uses on services to London, Paris and Sydney, to stem the losses it makes on operating these jumbo jets. Reuters

September 9, 2014

International Oil falls under US$100 Brent crude oil fell below US$100 a barrel for the first time in 14 months yesterday as Chinese and U.S. data pointed to slower-than-expected growth in the world’s top oil consumers. Weak economic growth combined with ample supply has pushed oil prices down from a high for the year above US$115 hit in June. Saudi Arabia and other OPEC producers have said they prefer oil above US$100. Prices below this level will put pressure on the budgets of many exporters, and could encourage some producers to pump less in an attempt to support the market.

FMC buys Denmark’s Cheminova US-based FMC Corporation announced yesterday it is buying Denmark’s multinational insecticide and pesticide maker Cheminova for US$1.8 billion in an all-cash transaction. The seller is Auriga Industries A/S and the purchase is due to be finalized in early 2015. “Cheminova is a company that we have long considered to be an attractive potential partner,” FMC Corporation president, chief executive and chairman Pierre Brondeau said in a statement. “It follows a similar strategic approach to FMC in applying technology to deliver solutions to its customers, and has a highly complementary product portfolio and geographic footprint.”

AB Foods maintains year guidance Associated British Foods maintained its annual earnings guidance, with a good finish to the year from discount fashion chain Primark offsetting continued weakness in the group’s sugar operations. The firm said yesterday it expected adjusted earnings per share for the 2013-14 year to be ahead of the 98.9 pence made in 2012-13. AB Foods said strong operating profit performances from Primark and its grocery division, and improvement in its ingredients business would offset the adverse effect of lower sugar prices and the hit of some 50 million pounds (US$80.9 million) from the strengthening of sterling.

Electrolux acquires GE appliances unit The Swedish company said it will continue using the GE Appliances brand under a 40-year agreement

lectrolux AB agreed to buy General Electric Co.’s centuryold appliances unit for US$3.3 billion in cash, bridging the gap with industry leader Whirlpool Corp. of the U.S. The purchase, Electrolux’s biggest, brings together brands such as Hotpoint and AEG and creates a company with annual revenue of about US$22.5 billion. Acquiring the predominantly U.S. business will add to earnings from the first year, Stockholm- based Electrolux said today in a statement, sending its shares soaring to the highest in at least 25 years. Electrolux and Whirlpool will dominate the North American appliance market, according to Johan Eliason, an analyst at Kepler Cheuvreux. Each company will control about 40 percent of the industry in the region, he said in a note. “We like the deal and think it will be very positive for Electrolux,” Eliason wrote. The purchase will also give the company a “very strong position” in Latin America, he said. The purchase by Electrolux comes only two months after Whirlpool increased its market leadership by acquiring a controlling stake in Italian appliance maker Indesit Co. for 758 million euros (US$981 million). Together, Whirlpool and Indesit had annual revenue of US$22.3 billion last year.

Appliance park Today’s acquisition “provides Electrolux with the scale and opportunity to accelerate our investments in innovation and global growth,” Electrolux Chief Executive Officer Keith McLoughlin said in today’s statement. The GE unit, which employs about 12,000 people, had sales of US$5.7

billion last year, or 4 percent of GE’s total revenue, according to the company. About half of the employees work at the 900-acre headquarters campus, known as Appliance Park. Electrolux, which has its North American headquarters in Charlotte, North Carolina, generated sales of 31.9 billion kronor (US$4.5 billion) across the continent last year, almost 30 percent of its global revenue. The company said in July that it expects U.S. sales to grow 4 percent this year. The appliances unit helped make GE a household name with American consumers after introducing its first toaster in 1905. The sale, which follows an unsuccessful attempt to divest the business in 2008, furthers GE CEO Jeffrey Immelt’s effort to reshape the company around its highmargin industrial units. “This transaction is consistent with our strategy to be the world’s

best infrastructure and technology company,” Immelt said in the statement. “We are creating a new type of industrial company, one with a balanced, competitively positioned portfolio of infrastructure businesses with strong advantages in technology, growth markets, driving customer outcomes and a culture of simplification.” The deal will generate an aftertax gain of 5 to 7 cents per share at closing, according to GE, which has invested US$1 billion in the Louisville, Kentucky-based appliances division since the global financial crisis. In addition to enhancing Electrolux’s presence in North America, where the GE unit generates more than 90 percent of revenue, the acquisition will give the Swedish company a 48.4 percent stake in Mexican appliance company Mabe. Bloomberg News

MD Medical posts higher earnings Russian private healthcare company MD Medical Group said yesterday its first-half net profit more than doubled, buoyed by an increased number of patients and a reduction in its debt. MDMG, which specialises in women’s healthcare, has been benefiting from rising demand for quality medical services from a growing middle class in Russia. It is the only Russian company in the sector to have floated its shares, having raised more than US$300 million in a London share sale in 2012 to expand its chain of clinics.

Kerviel leaves jail after 4-month term Rogue trader Jerome Kerviel, who lost his bank nearly five billion euros, paints himself as a simple soul caught up in an orgy of greed, who furnished his modest suburban flat with Ikea furniture. The 37-year-old, who nearly brought Societe Generale -one of Europe’s biggest banks- to its knees with wildly risky trades, walked free from a French prison yesterday after just over four months behind bars. His first thought was for his mother, whom he said he “couldn’t wait” to ring.

German trade surplus brings hope Imports fell by 1.8 percent while the consensus forecast had been for them to fall by 0.1 percent Michelle Martin

ermany posted a record trade surplus of 22.2 billion euros in July, suggesting Europe’s largest economy could bounce back strongly in the third quarter after suffering a surprise contraction in the second. Seasonally-adjusted data from the Federal Statistics Office showed exports surged 4.7 percent to 98.2 billion euros, the most goods and services Germany has ever sent abroad in a single month. It was the sharpest rise in exports since May 2012, easily outstripping expectations for a modest 0.5 percent increase. Coming on the heels of July data showing industrial output and orders jumping, the trade figures suggest

the German economy will be able to skirt a technical recession in the third quarter after shrinking by 0.2 percent in the April to June period. “It looks like demand from U.S. and U.K. is more than offsetting any weakness from German exports to Russia so these fears that German exports would go down the drain were clearly exaggerated,” said Carsten Brzeski, senior economist at ING. He expects the German economy to grow by around 0.3 percent in the third quarter. The German economy shrank by 0.2 percent in the second quarter due to slow trade and weak investment, leading some economists to warn of

a risk that Germany will fall into a technical recession in the third quarter. Exports -the traditional backbone of Germany’s economy- struggled last year and fell in three of the first seven months this year, weighing on overall growth. Exports to Russia plunged by 15.5 percent in the first half of 2014 amid a standoff between the West and Moscow over Ukraine. A breakdown of unadjusted data showed exports to the euro zone climbed by 6.2 percent in July compared to the same period last year, while exports to countries outside of Europe were up 7.2 percent. Reuters

September 9, 2014

Opinion Business

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Leading reports from Asia’s best business newspapers

THANH NIEN NEWS The Binh Duong government has offered soft loans of up to VND50 billion (US$2.4 million) to each firm hit by anti-China riots in May, aiming to restore its reputation as a safe province for foreign businesses. The loans will be drawn from a VND1 trillion (US$47.2 million) relief package intended to help businesses purchase new equipment and rebuild damaged factories. The victims of vandalism, looting and arson during the riots can contact the Bank for Investment and Development of Vietnam (BIDV) to obtain preferential loans at a fixed annual interest rate of seven percent for three years.

Democracy in the Twenty-First Century

Joseph E. Stiglitz

Nobel laureate in economics and University Professor at Columbia University

BANGKOK POST The Customs Department will lower the reward given to customs officials and thirdparty whistle-blowers on any customs avoidance, and reduce the penalty to make the probe process more transparent. The current reward-sharing system provides 55% of the penalty recovered from an offender to be distributed as a reward. Of this amount, 30% is given to third-party whistle-blowers. The remaining 25% is shared between the customs officials who identified and handled the case. The department will cut the maximum paid to customs officials to 15% of the penalty, or 5 million baht.

THE STRAITS TIMES Resale prices of non-landed private homes crept up by 0.4 per cent last month, compared with the previous month, latest data from the Singapore Real Estate Exchange (SRX) showed. The month-on-month increase came about as nonlanded private home sales in the core central region and rest of central region rose by 4.8 per cent and 1.5 per cent respectively, the SRX said yesterday. But compared with the same period a year ago, the price index dropped 5 per cent. SRX also said prices have fallen 5.3 per cent since the recent peak in January this year.

THE STAR SAM Engineering & Equipment (M) Bhd, which specialises in producing component parts for airline companies such as Airbus and Boeing, is looking at organic expansion as well as through acquisitions. The group with backlog orders of RM2bil that will keep it busy until 2020 has set aside RM200mil to invest in its operations in Malaysia over the next two years. Group managing director Jeffery Goh Wee Keng told StarBiz the expansion would be in line with its plan to position the group as a global player in the aerospace industry.

he reception in the United States, and in other advanced economies, of Thomas Piketty’s recent book Capital in the Twenty-First Century attests to growing concern about rising inequality. His book lends further weight to the already overwhelming body of evidence concerning the soaring share of income and wealth at the very top. Piketty’s book, moreover, provides a different perspective on the 30 or so years that followed the Great Depression and World War II, viewing this period as a historical anomaly, perhaps caused by the unusual social cohesion that cataclysmic events can stimulate. In that era of rapid economic growth, prosperity was widely shared, with all groups advancing, but with those at the bottom seeing larger percentage gains. Piketty also sheds new light on the “reforms” sold by Ronald Reagan and Margaret Thatcher in the 1980s as growth enhancers from which all would benefit. Their reforms were followed by slower growth and heightened global instability, and what growth did occur benefited mostly those at the top. But Piketty’s work raises fundamental issues concerning both economic theory and the future of capitalism. He documents large increases in the wealth/output ratio. In standard theory, such increases would be associated with a fall in the return to capital and an increase in wages. But today the return to capital does not seem to have diminished, though wages have. (In the US,

for example, average wages have stagnated over the past four decades.) The most obvious explanation is that the increase in measured wealth does not correspond to an increase in productive capital – and the data seem consistent with this interpretation. Much of the increase in wealth stemmed from an increase in the value of real estate. Before the 2008 financial crisis, a real-estate bubble was evident in many countries; even now, there may not have been a full “correction.” The rise in value also can represent competition among the rich for “positional” goods – a house on the beach or an apartment on New York City’s Fifth Avenue. Sometimes an increase in measured financial wealth corresponds to little more than a shift from “unmeasured” wealth to measured wealth – shifts that can actually reflect deterioration in overall economic performance. If monopoly power increases, or firms (like banks) develop better methods of exploiting ordinary consumers, it will show up as higher profits and, when capitalized, as an increase in financial wealth. But when this happens, of course, societal wellbeing and economic efficiency fall, even as officially measured wealth rises. We simply do not take into account the corresponding diminution of the value of human capital – the wealth of workers. Moreover, if banks succeed in using their political influence to socialize losses and retain more and more of their ill-gotten gains, the measured wealth in the

The problem may not be with how markets should or do work, but with our political system, which has failed to ensure that markets are competitive

financial sector increases. We do not measure the corresponding diminution of taxpayers’ wealth. Likewise, if corporations convince the government to overpay for their products (as the major drug companies have succeeded in doing), or are given access to public resources at below-market prices (as mining companies have succeeded in doing), reported financial wealth increases, though the wealth of ordinary citizens does not. What we have been observing – wage stagnation and rising inequality, even as wealth increases – does not reflect the workings of a normal market economy, but of what I call “ersatz capitalism.” The problem may not be with how markets should or do work, but with our political system,

which has failed to ensure that markets are competitive, and has designed rules that sustain distorted markets in which corporations and the rich can (and unfortunately do) exploit everyone else. Markets, of course, do not exist in a vacuum. There have to be rules of the game, and these are established through political processes. High levels of economic inequality in countries like the US and, increasingly, those that have followed its economic model, lead to political inequality. In such a system, opportunities for economic advancement become unequal as well, reinforcing low levels of social mobility. Thus, Piketty’s forecast of still higher levels of inequality does not reflect the inexorable laws of economics. Simple changes – including higher capitalgains and inheritance taxes, greater spending to broaden access to education, rigorous enforcement of anti-trust laws, corporate-governance reforms that circumscribe executive pay, and financial regulations that rein in banks’ ability to exploit the rest of society – would reduce inequality and increase equality of opportunity markedly. If we get the rules of the game right, we might even be able to restore the rapid and shared economic growth that characterized the middle-class societies of the mid-twentieth century. The main question confronting us today is not really about capital in the twenty-first century. It is about democracy in the twenty-first century. Project Syndicate 2014

September 9, 2014

Closing Anti-graft crackdown on mooncakes gifts

China launches remote sensing satellite

China’s top anti-graft body publicized 177 cases of rule breaking, including three cases of mooncake bought with public funds. One of the three is experimental school in Quanzhou City, southeast China’s Fujian Province, where the principal held extravagant dinners and distributed mooncake coupons to staff. The other two cases include the civil affairs bureau of Xiangyin County in the central province of Hunan and an official in charge of a reservoir in Wuxuan County, southwest China’s Guangxi Zhuang Autonomous Region, who bought mooncakes and went travelling with public funds.

China successfully launched the Yaogan-21 remote sensing satellite into pre-set orbit at 11:22 a.m. yesterday Beijing Time (0322 GMT) from Taiyuan Satellite Launch Centre. Also launched in this mission was the Tiantuo-1 satellite, designed and built by the National University of Defence Technology and carried by Long March-4B rocket. Yaogan-21 will be used for scientific experiments, natural resource survey, estimation of crop yield and disaster relief, while Tiantuo-1 was designed for smart satellite experiments. The launch is the 193rd mission for the Long March rocket family.

Brand new iPhone victims Aggressive and loyalty-lacking negotiation attitude spells hardship for suppliers

Apple store in New York

hen Apple Inc. Chief Executive Officer Tim Cook unveils the company’s new smartphone today, he will also crown the latest winners in the iPhone economy. For makers of screens to suppliers of power amplifiers, the iPhone serves as a trophy for companies

in the behind-the-scenes business of supplying Apple with components for its d evic es. With US $ 1 7 1 billion in sales in its last fiscal year -on par with the gross domestic product of Vietnam- Apple plays kingmaker by picking who provides semiconductors, graphics processors and

China aluminium exports rise

other parts, helping to determine the fate of companies from California to China. The most recent additions include Taiwan Semiconductor Manufacturing Co., the chip foundry that Apple is using to make processors that have long been provided

by Samsung Electronics Co. and which posted record quarterly profit in July as iPhone production ramped up. GT Advanced Technologies Inc. stock has more than doubled since the company said it is supplying Apple with a sapphire material that makes glass sturdier. And NXP Semiconductor NV shares have risen 15 percent in the past month on reports that its technology will enable the new iPhone to be used for in-store payments. Yet keeping Apple’s business is no sure thing. Companies in one version of an iPhone or iPad can just as easily face an existential moment if dropped from the next -a lesson learned by suppliers such as Audience Inc. and TPK Holding Co. “With Apple, the business is won and lost in huge chunks,” Audience CEO Peter Santos said in an interview earlier this year. The maker of audio components saw its revenue from Apple plummet to less than 1 percent this year from 82 percent of total sales in 2010 after it was left out of the iPhone 5. The debut of new products will showcase the influence of landing Apple’s business. At least nine publicly traded companies get more than 40 percent of their revenue from Apple, according to a supplychain analysis compiled by Bloomberg.

Dialog Semiconductor Plc, which makes powermanagement chips for the iPhone, has the most exposure, with 80 percent of its $903 million in revenue last year tied to Apple, according to the data.

No loyalty Still, Apple has a reputation as a tough negotiator with suppliers and has shown little loyalty if it can get a better price or more advanced technology elsewhere, said Francis Sideco, a senior manager at IHS Inc., which studies components used in the iPhone. Apple’s employees burrow into the operations of its suppliers, studying costs for labour and materials to determine the price it will pay for components, two former Apple engineers said. Apple leaves companies little room to negotiate, especially for those that have hitched themselves to the iPhone, which sold 150 million units last year. Companies such as Audience and touch-screen designer TPK know firsthand the consequences of relying too much on Apple. Both companies saw orders from Apple curtailed when new iPhone models were introduced, and their balance sheets and stock prices were bruised as a result. Bloomberg News

Moody’s warns about HK Vietnam to levy unrest economic impact stainless steel

luminium shipments from China climbed to the highest in three years while steel products exports rose 26 percent from last year amid domestic oversupply and improving international demand. China exported 390,000 metric tons aluminium and 7.76 million tons of steel in August, according to data released by the country’s General Administration of Customs yesterday. Aluminium shipments, up 22 percent from the same period last year, were the most since July 2011. Exports are rising as prices at home remain below those overseas while domestic production outpaces demand. Consumption is falling as manufacturing in the country slowed in August for the first time in six months and property sales weaken. “The Chinese domestic markets for steel and aluminum just remain depressed and oversupplied and the rest of the world is more solid,” Ian Roper, an analyst at CLSA Ltd., said by phone from Singapore. “As long as that price arbitrage is there, then China is going to be a drag on global commodity price recovery.” Bloomberg News

atings agency Moody’s said yesterday prolonged political discord in Hong Kong over China’s refusal to grant the key financial hub full democracy could negatively impact the city’s economy. But the agency added that the southern Chinese city would likely weather any storm caused by the current political crisis. Activists in the former British colony had their hopes for genuine democracy dashed after China announced last week that the city’s next leader would be vetted by a pro-Beijing committee. A coalition of pro-democracy groups, led by Occupy Central, have vowed to usher in a new “era of civil disobedience” against the decision, calling on followers to blockade major thoroughfares in the city’s financial district. “A prolonged period of demonstrations would likely negatively affect economic growth, indirectly affecting government finance, and confidence and, therefore, capital flows,” Moody’s said in a statement. The agency tempered their warning with the view that Hong Kong was well placed to manage any economic fallout from on-going protests. AFP

ietnam levied anti-dumping taxes on imported stainless steel products from China, China’s Taiwan, Indonesia and Malaysia, which is the first time Vietnam has imposed anti-dumping duties on imported products. The new tariffs will range from 10.7 percent to 37.29 percent, with the highest level to be imposed on Yuan Long Stainless Steel Corporation of China’s Taiwan. The ministry said on its decision posted on MoIT website that the duties will be applied 30 days after the signing which dated on September 5, 2014. At present, imported cold-rolled steel products are charged a zero to 10 percent import tax based on their origin. The zero tax rate was applied to products from China and members of the Association of Southeast Asian Nations (ASEAN) in compliance with commitments made by Vietnam under ASEAN Free Trade Agreements, reported Vietnam’s state-run news agency VNA yesterday. Earlier in July 2013, Vietnam Competition Authority (VCA) under MoIT initiated an antidumping investigation on stainless steel imports. Xinhua