Macau Business Daily, Oct 16, 2014 by Business Daily

MOP 6.00 Closing editor: Luis Gonçalves

t’s a full agenda. The Legislative Assembly resumes begins work for the 2014/2015 year today. Two main topics shout for attention. The budget law and property management. The amendment to the budget framework law seeks to list all budgeted expenditure on major infrastructure projects and investment plans. As promised by Secretary for Economy

and Finance Francis Tam Pak Yuen. Meanwhile, legislation licensing property management firms is fraught with pitfalls. Some want to give the Housing Bureau more clout, legislators told Business Daily PAGE

Year III

Number 646 Thursday October 16, 2014

Publisher: Paulo A. Azevedo

Legislative Assembly gets down to business

Have a Cigar Generally it all boils down to tax. Cigarettes were the most apprehended goods seized by Macau Customs in 2013. Last year, 3.8 million sticks were seized, many destined to make a quick buck on tax differences. Pork was the second product most seized, while plants ranked third. Drugs came in at seventh place

PAGE

No. 1A Rua da Barca Heritage List Candidate PAGE 2

Dining out 8 pct more costlier in 3Q PAGE 4

Bank of America downgrades Wynn and LVS shares PAGE 6

HSI - Movers October 15

Name

Yummi to fight TripAdvisor in Macau

Not such a drag

www.macaubusinessdaily.com

Yummi Macau is up and running. And has launched its app to advise foodies on the best restaurants in Macau. With TripAdivsor and Open Rice squarely in its sights. Better personalisation and selection of eateries, it claims, will bring users in. So far, more than 2,000 people have downloaded the app

Casino operators are about to announce 3Q results. Telsey Advisory Group analysts are playing down the impact of the full smoking ban. The October 6 cut-off for a puff on mass gaming floors does not appear to have dented revenues

PAGE 6

Inflation slowing

PAGE

%Day

Lenovo Group Ltd

3.16

New World Developme

2.92

Galaxy Entertainment

2.62

Sands China Ltd

2.18

Hang Lung Properties

1.97

Kunlun Energy Co Ltd

-1.54

China Shenhua Energy

-1.87

PetroChina Co Ltd

-1.89

CNOOC Ltd

-2.08

Tingyi Cayman Island

-2.85

Source: Bloomberg

I SSN 2226-8294

The index has reached a near five-year low. While the index (CPI) rose 1.6 percent in September from a year earlier, it just rose 0.5 percent from the previous month. The 3.5 target is far away from being reached

Page 10

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October 16, 2014

Macau

Macau’s judiciary recruitment process ridiculed The Macau Bar Association’s chief has slammed the judiciary’s recruitment system for hiring legal personnel without knowledge of Macau’s legal system in public administrative departments Joanne Kuai

joannekuai@macaubusinessdaily.com

he president of the Macau Lawyers Association (AAM), Jorge Neto Valente, has slammed the recruitment of legal personnel for public administrative departments, claiming that many of the personnel engaged do not have a general idea of the legal and judicial system of Macau. Administrative regulations mandate an education background check for anyone employed in public departments. Neto Valente pointed out, however, that many with law degrees studied law in or concerning Mainland China, Hong Kong, Europe or other legal systems but have limited

knowledge of Macau’s legal system. Their recruitment, he maintains, has caused severe damage to the operation of public administration. Macau’s legal system is based on that of Portugal. Unlike Hong Kong’s Anglo-Saxon Common Law, Macau continues to adhere to the RomanoGermanic Civil Law system, also known as Continental European law. “No matter how good the other law systems are, we should not forget: the legal system that the Basic Law secured is the Macau legal system,” said Neto Valente. Addressing a ceremony marking the start of the 2014/2015 Judicial

Year in Macau, Valente also criticised the lack of space and facilities in local courts, the shortage of legal and judiciary staff, and the backlog of cases. He attributed the sluggishness of the system to the absence of any deep reform of the Law on Judicial Organisation. The AAM president also criticised the lack of respect for the courts, saying many are using public discussion, even via the media, to judge the decisions made by the courts

in a bid to affect the litigation process. Neto Valente also revealed that currently in Macau’s 81 law offices the number of registered lawyers has increased from 281 in 2013 to 304 now, of whom 40 percent cite Chinese as their mother tongue. Of 114 trainee lawyers, 80 percent speak Chinese as their native language; some 60 trainee lawyers are preparing for their final evaluation from the end of this year to the first quarter of 2015.

No. 1A Rua da Barca Heritage List Candidate The 1960’s-built No.1A Rua da Barca: to remove or not to remove, that is the question. The answer may only be known in 2016, when it may be listed as part of the cultural heritage of Macau, following a one-year assessment starting next year Kam Leong

kamleong@macaubusinessdaily.com

he Cultural Affairs Bureau has initiated an assessment procedure to decide if the disputed architectural attributes of No.1A Rua da Barca should be listed as part of the cultural heritage of the city – the first time in Macau that real estate would have been assessed for this purpose. The head of the Bureau, Guilherme Ung Vai Meng, who is also the acting president of the Cultural Heritage Committee, told reporters yesterday that the members of the Committee positively support the decision of conducting the assessment of No.1A during a press conference detailing the fourth general meeting of the Committee taking place on Tuesday. The assessment, initiated per the Cultural Heritage protection law, effective from March, will start during the first quarter of next year and will take no more than one year’s time, as regulated in the law, according to Mr. Ung. A decision will also be made concerning opinions gleaned from the public consulting session as well as the Cultural Heritage Committee, the Bureau head said. In addition, the assessment will cover not only the No.1A site but other real estate “which are mature enough to [qualify as] cultural heritage,” Mr. Ung said, although he declined to reveal how many more will be assessed during next year and where

they are located. The No.1A building is draped in 1960’s architecture. Last December, it was in the process of being demolished by a developer when the government halted the work after society expressed great concern about the site. However, Mr. Ung denied yesterday that the halt was due to pressure by society. The developer of the site, businessman Teng Man Lai, filed an appeal with the courts in September, asking why the government does not allow him to develop the site if is not included in the current UNESCOlisted Cultural Heritage Sites. The head of the Bureau, meanwhile, claimed yesterday that the appeal of the developer will not lead to conflicts to future assessment as the direction of the Bureau is to protect the building. Although the top two floors of No.1A have already been removed, the Bureau said that the building can still be maintained and preserved to keep its original value. Meanwhile, Committee members also met with the Transportation Infrastructure Office in Tuesday’s general meeting, with whom they raised concerns about the LRT stops in Nam Van and Sai Van; and whether the design of the stop in Nam Van would affect the view of the coastline facing government headquarters, according to Mr. Ung.

October 16, 2014

Macau

Budget law, property management rules on agenda Laws governing public finance plans and property management systems are among the top issues legislators will have to wrestle with soon Stephanie Lai

sw.lai@macaubusinessdaily.com

he law governing budgeting for the Macau administration and bills on property management systems here will be the urgent issues that the Legislative Assembly will have to deliberate upon in this new legislative year, which starts today. The amendment of the budget framework law, which seeks to list all the budgeted expenditure on major infrastructure projects and investment plans here, has been promised by Secretary for Economy and Finance Francis Tam Pak Yuen. He says the amendment could be handed to the Legislative Assembly for deliberation by the end of this year. Speaking to Business Daily, legislators Au Kam San and Kwan Tsui Hang voiced the hope that the bill to be delivered by the government could include terms giving authority to the legislators to deliberate on any major government spending, a direction that has not been mentioned by Mr. Tam regarding the amendment of the budget framework law. “It’s a rather mild request from us asking just for the right to deliberate on any major spending made by the government, instead of being required to approve the government’s budget allotment as legislators in Hong Kong have already been doing now,” the legislator from the pro-democratic New Macau Association, Au Kam San, remarked to us. During the review of the past legislative year, the president of the Legislative Assembly, Ho Yat Seng, told media in late August that he wanted to see a full law introduced for Macau’s annual budget within his remaining three-year tenure, and one that gives the Assembly the authority to deliberate on government budgets, setting a timeframe on when the government budget plan should be made. “We would like to set the rule that when a major infrastructure project or other investment plan goes over a certain budget level, it has to be deliberated upon by the Legislative Assembly,” Mr. Au said, “I totally agree with Mr. Ho Iat Seng’s initiative in forming a budget law that can allow us to have more monitoring power. It’s a technical issue now as to whether that very initiative can be reflected in the amendment of the budget framework law, or in a separate budget law.” Currently, the official disclosure of

the annual budget plan only includes regular and capital expenditure without detailed description of the cost of major infrastructure projects – a problem that the amendment to the budget framework law is set to fix. Another major direction that the government would like to pursue for the amendment is that it may stipulate 1 to 3 percent of the annual budgeted expense to be reserved for any ‘sudden’ adjustments of major public project costs or other emergency expenses.

Property management issue While the budget framework law amendment is in the queue for legislators’ reading, other pressing issues to be discussed in this legislative year include laws licensing property management firms as well as proposals that give the Housing Bureau the power to arrange how residential buildings are managed here, legislators told Business Daily. “As the city’s first-ever minimum wage bill is still being deliberated by a sub-committee of the Assembly, I think the really important thing to go with that bill is the laws licensing the property management firms here, which I hope could be delivered to us for approval soon,” legislator Ho Ion Sang told Business Daily. The minimum wage bill Mr. Ho mentioned is only meant to cover the city’s cleaning and security workers employed by the property management services, which is setting the wage level at no less than 30 patacas (US$3.8) per hour, or 240 patacas a day or 6,240 patacas a month. From September 11 to November

Bills to be delivered by the government to Legislative Assembly in new legislative year (Oct 2014 – Aug 2015) Budget framework law amendment; animals protection law; non-Mandatory Provident Fund scheme; amendment of residential buildings management rules; amendment of subsidised housing law

Bills to pass second reading of legislators in new legislative year (Oct 2014 – Aug 2015) Qualification system for urban planners; law for civil servant employment contract; prevention against corruption in external trade; laws on treating medical errors; protection of workers’ claims; minimum wage for cleaners and security workers engaged in property management services

9 this year, the Housing Bureau is consulting the public on its proposals for licensing local property management firms, including the rule that such a licence has to be renewed every three years. The government noted last month that this bill is expected to reach the Legislative Assembly between the second half of 2015 and the beginning of 2016. “Another issue on the 2015 legislation agenda is the amendment to the laws governing the management of residential buildings, which is crucial for the numerous households here,” Mr. Ho added. The amendment the legislator mentions, discussed by the public last year, suggests that the Housing Bureau be given the power to require each company that manages a residential building to convene a meeting of the owners of the flats in the building to set up a body to administer it. The administrative body would then choose whether to allow the company to continue managing the building, to get another company to mange it, or to take over the management of the building itself.

Remaining passive At present, there has yet to be a set quarterly or yearly agenda

during which bills are to be legislated or amended during the legislative year; their respective priority in the legislators’ discussion timetable. Legislators Au Kam San, Kwan Tsui Hang and Ho Ion Sang blamed this lack of agenda on the poor coordination between the government and Legislative Assembly, a problem demanding resolution. During a Question and Answer Session on the Policy Address for 2014 in November last year, Secretary for Administration and Justice Florinda Chan said that the government would consider establishing a centralised mechanism for legislation in all domains. Since the Handover to present, each government department handles their own legislation process once the Chief Executive or the leading secretaries have confirmed the respective policy. Up to this point, however, the legislators say it remains uncertain when the mechanism that Ms. Chan mentioned can be built. “[Up to] now we have still not been informed how that centralised mechanism can happen,” said Federation of Trade Union legislator Kwan Tsui Hang. “And on this matter it’s really uncertain, as there is an imminent reshuffle of our secretaries.” Most bills that have been successfully approved before were those delivered by the government rather than the legislators. Very limited rights remain for legislators to propose bills to the Assembly, as the Basic Law of Macau stipulates that legislators can only propose bills that do not involve ‘public expenditure and revenues, political system or the operation of the government’. Legislators that would like to propose bills touching on ‘government policy’, as the Basic Law said, would have to obtain written approval from the Chief Executive – a situation that renders the Assembly here ‘passive’ in monitoring government, legislator Au Kam San concluded.

October 16, 2014

Macau Yummy Macau utilises app restaurant rater The project for advising on the best restaurants in Macau was launched in July and the company expects to beat competition such as TripAdivsor or Open Rice. Better personalisation and selection of eateries recommended are advantages that have already persuaded more than 2,000 people to download the app João Santos Filipe

jsfilipe@macaubusinessdaily.com

ince July, Yummy Macau has been operating in the Special Administrative Region. The free app and website, available in Chinese, English and Portuguese, is aimed not only at tourists but locals searching for the best places to eat. “Macau has a lot to offer when it comes to food. However, many places do not meet the minimum requirement for food lovers, who are more demanding. This app was created in order to easily indicate the best places to have the different kinds of food that one can find in Macau”, the co-founder

of Yummy Macau, Gilberto Camacho, said. “We hope that in the long term this app can help the Macau restaurant industry develop and grow further in terms of quality”. “As for the breakeven, our plan is to have the money invested returned in one year’s time. At this moment we’re happy with the popularity of our application. More than 2,000 people have downloaded it already”, Camacho told Business Daily. “It’s a good result especially if we have in mind that our product has been promoted by word of mouth. However,

we always planned to grow slowly”, he added. The co-founder of the application and website also said that to begin with

Dinning out 8 pct more costly in 3Q The price index of restaurant services increased by 8 percent, while accommodation rose by 6.3 percent, inflating the Tourist Price Index for the third quarter of the year Sara Farr

sarafarr@macaubusinessdaily.com

i n i n g a n d accommodation were the two principal factors that brought up the overall Tourist Price Index by 4.9 percent in the third quarter of the year. The latest figures from the Statistics and Census Service show that the price of restaurant services increased by 8 percent, while that of accommodation increased 6.3 percent over the same period a year earlier. The increase in price of clothing and footwear also contributed to the increase in the overall Tourist Price Index, rising 8.9 percent yearon-year. Even when compared to the previous quarter, the overall Tourist Index Price increased slightly by 1.2 percent with the index of restaurant services and accommodation accounting for the biggest increases in price. The former increased by 3.5 percent, while the latter 3.3 percent quarter-onquarter. This was primarily due to ‘higher hotel room rates and rising charges for restaurant services during the summer holidays,’ a statement from the Statistics and Census Service reads. However, the price index for transport and

communications dropped by 4.6 in the third quarter compared to the same period a year earlier, and dropped slightly by 1.4 percent quarter-on-quarter. The price index of food and beverage dropped by 1 percent between June and the end of September vis-a-vis the previous three months, while that of clothing and footwear decreased by 0.7 percent. The reason for this, the Statistics and Census Service say, is the ‘reduced prices of local food

products and seasonal sale of summer clothing.’ In addition, the overall average tourist price index for the last four quarters ended September 30 increased 6.2 percent over that of the previous period. Comparing both periods, accommodation accounted for the biggest increase at 13.6 percent, followed by clothing and footwear as well as restaurant services, both at 5.9 percent, and food and beverage at 5.7 percent.

they expect to avoid having advertisements. “At this point we do not want to have ads in the application. It’ll only make it slow and less user-friendly”, he noted. “However, we don’t know the future and if we can find a good solution in one or two years that’s good for users - we may introduce ads to our application”. The business model is primarily based on a membership fee paid by the restaurants that want to appear in the app. At the moment, around 30 restaurants are registered on the website. All the places in Yummy Macau are rated according to the quality of food, cleanliness, ambience and service. Then an average of the four items is displayed,

which range from 0 to 100. The higher a restaurant scores the best it is rated. “There are websites that already provide this service such as TripAdvisor or Open Rice. However, the former is too automatic and the company doesn’t have a personalised experience of the restaurant, which in Yummy Macau we have. We go to the places before adding them to the application”, he said. “As for Open Rice, it’s too focused on the Chinese population and lacks selection. For instance, in Yummy Macau we do not accept every restaurant if we consider that the minimum requirements have not been met. We are selective. On a scale of from 1 to 5 we don’t accept places that cannot score higher than 2”, he concluded.

Residential, commercial real estate lending increases in August

oans granted by banks for both residential and commercial mortgages increased in August. The latest figures released yesterday by the Monetary Authority of Macau show that while the majority of people taking out loans were residents, new residential mortgage loans went up by 51.7 percent in August compared to the same month the previous year. The value of new bank lending for residential estates totalled MOP5 billion in August, of which 92.4 percent were loans taken out by Macau residents. When compared to those of a month earlier, this figure was down 8.3 percent. New residential mortgage loans collaterised by uncompleted units, however, increased by 27 percent

month-on-month to MOP1.4 billion. Of these, 92.9 percent were loans granted to residents. According to the latest data, the outstanding value of residential mortgage loans totalled MOP144 billion, a 2.3 percent increase from those of a month earlier and 30.4 percent increase from August 2013. That of commercial real estate loans increased by 40 percent yearon-year to MOP111.7 billion. In addition, new lending approved by banks here for commercial properties dropped by 36.9 percent in August to MOP11 billion over that of the previous month. But when compared to the same month a year earlier, commercial real estate loans granted by banks increased a staggering 169 percent. S.F.

October 16, 2014

Macau

Casino smoking ban ‘negligible’, say analysts Average daily revenues calculated by analysts at Telsey Advisory Group suggest that the impact of the full smoking ban is too small to affect casino performance Sara Farr

sarafarr@macaubusinessdaily.com

ust days ahead of casino operators here starting to announce third quarter results, analysts at Telsey Advisory Group (TAG) play down the impact the full smoking ban that came into effect on October 6 will have on gaming revenues. ‘The good news is that expectations are multi-year lows over elevated fears of a collapsing Macau,’ the group’s latest note to clients reads. While there have been concerns on how a number of factors will impact Macau’s overall gaming revenues, which have witnessed steady declines for four straight months now, analysts have, for the most part, been unanimous in

calling this a rocky year. These factors include Beijing’s crackdown on corruption, the tightening of credit, the implementation of the full smoking ban in casinos, Chinese President Xi Jinping’s visit to Macau later this year and visa restrictions imposed on visitors from mainland China. ‘Based on weekly performance, the impact has been negligible, with the slowdown in average daily revenue from week 1 (Golden Week) to week 2 actually less severe this year than last despite the addition of a smoking ban this year,’ analysts write in the note. According to official figures from the Gaming Inspection and

Amax clinches Vanuatu gaming deal

aming investor Amax International Holdings announced on Tuesday night that it had finally clinched the deal with Forenzia Enterprises Limited to own a gaming licence in the Republic of Vanuatu, acquiring 60 percent stake of the foreign company for a total consideration of HK$48 million. The Hong Kong listed company filed with the Hong Kong Stock Exchange after trading hours on Tuesday night that it would issue and allot to Forenzia up to 37,000,000 ordinary shares at HK$0.20 each in

the capital of Amax for full or partial settlement of the deal. Forenzia, a company incorporated in the British Virgin Islands, holds a gaming licence on the Pacific island issued by the Ministry of Finance and Economic Development of Vanuatu for a term of 15 years. The deal was first proposed in March, when the chairman of Amax, junket operator Ng Man Sun, announced that the company had “entered into a non-legally binding letter of intent (LOI)” with Forenzia. However, the two parties experienced.

Corporate SJM title sponsors Theodore Racing Sociedade de Jogos de Macau (SJM) has become the title sponsor for Theodore Racing and official partner of the 61st Macau Grand Prix. Speaking about the partnership, SJM chairman Ambrose So said the company “is delighted and honoured to expand sponsorship of the Theodore Racing Team. With a local heritage that parallels SJM, Theodore Racing is a Macau institution with a winning tradition.” Theodore Racing was founded by Teddy Yip, who first competed as a driver in 1956, winning a total of six Macau Grand Prix victories until 1992. His son, Teddy Yip Jr, followed in his father’s footsteps last year. “My father ran drivers who went on to become F1 World Champions, and I hope in time the drivers we run will do the same. Two of them are already contracted F1 junior drivers and certainly on paper all three of them have the talent to do so.”

Coordination Bureau (DICJ), Macau casinos raked in MOP36.5 billion (US$4.6 billion) in October last year alone, up 31.7 percent from the corresponding month a year earlier. And despite the fact that gross gaming revenues have dropped monthly since June, when looking at the accumulated gross revenue for the first nine months of the year casinos have raked in 5.9 percent more (MOP275.9 billion) than in the same period last year. ‘October and Golden Week this year are both simply not representative of what is to come in Macau,’ the brokerage firm said, adding that ‘the events that have unfolded in Macau

and Hong Kong over the last couple of weeks are largely unprecedented, including smoking in casinos, the Hong Kong protests and the junket liquidity squeeze.’ In addition, analysts say new properties opening in Cotai in 2015 are ‘key positive catalysts for Macau names’ and ‘will make the space an attractive investment for investors’ that year. The shift from the VIP segment to the mass market segment is likely to continue, according to analysts’ estimates ‘as higher margin mass market revenues significantly outpaced lower margin VIP business in the third quarter of 2014.’

four extensions to the deadline on the deal before finally reaching an agreement on Tuesday night. “The Company is of the view that with the high demand from high rollers and the possible shortage of supply of VIP tables in Macau, there will be demand for a new gaming market diverting high rollers to other places

out of Macau,” the company wrote as its reason for developing the gaming business outside the city in the filing. In June, Amax announced a net profit for the financial year ended March 31 of HK$65.4 million, compared to a net loss of HK$39.4 million the year before. K.L.

Wynn Resorts and Las Vegas Sands Stock Ratings downgraded

ank of America has lowered shares for Wynn Resorts, Limited and Las Vegas Sands Corp. from a ‘buy’ rating to a ‘neutral’ rating in a note issued to investors released on Tuesday, according to international business wires. The bank reduced its price target for Wynn Resorts to US$195 from US$210, while the target price for Las Vegas Sands’ stock was revised downwards to US$67 from US$72 because of increasing uncertainty about the future of the gambling market in Macau. Bank of America’s target price would suggest a potential upside of 12.43% from the company’s current price. The analysts noted that the move was a valuation call. Analysts led by Shaun C. Kelley believe that ‘Macau’s challenges are likely to last longer than we previously anticipated’ - including a disappointing Golden Week, declines in VIP revenue in October’s second week, and expected disruptions from the smoking ban. According to the report, ‘new supply is the other challenge to Macau in 2015-2016. Near-term

we think this is likely to keep the group range-bound as: a weaker demand environment will keep the Cotai projects as a ‘show-me’ story, Macau properties have historically relied on VIP business to ramp up operations quickly, and there remains risk to project timelines and budgets as is always the case with large-scale construction projects.’ Analysts predict a further decline in customer traffic to the region amid political demonstrations in Hong Kong and the accelerating pace of the Chinese government’s anti-corruption campaign. Struggling gaming revenues have severely impacted the stock price of both casino operators due to their increased reliance and exposure to the region. Las Vegas Sands’ stream is over 58% of its revenue from Macau, while Wynn Resorts grabs over 70% of its revenues from the region. Last month, Macau’s gross gaming revenues posted their worst-ever decline since the downturn started in June this year. For September, gaming revenue decreased by 11.7 percent to MOP25.6 billion (US$3.2 billion).

October 16, 2014

Macau Customs seized 3.8 million cigarettes in 2013 Smoking laws may be more and more restrictive but when it comes to the most apprehended goods spirited across the border to Macao tobacco tops the list. Industry sources tell Business Daily that this phenomenon is a consequence of the tax on tobacco in the SAR João Santos Filipe

jsfilipe@macaubusinessdaily.com

igarettes were the most apprehended goods seized by the Macau Customs Service in 2013, data provided to Business Daily by the government reveals. In the past year, some 3,779,000 sticks were seized in what roughly accounts for 188,990 packs. Pork was the second product most seized, while plants ranked third. “The problem is that near the border people can buy cigarettes that are duty free or have cheap taxes in contrast to the tax on tobacco in Macau. So people try to cross the border with more than the allowed quantity”, a spokesperson from the Macau Customs Service explained to Business Daily. According to the current law of Macau people are allowed to cross the border with 100 cigarettes as long as their total weight does not exceed 125 grams. “Some people try to cross the border and bring tobacco to Macau for personal consumption. However, there are cases when it is brought in to be illegally sold here at cheaper prices, as tax is avoided. Usually, in these cases there is someone waiting on the Macau side of the border to collect the cigarettes and sell them to shops”, the spokesperson said. The same scenario was also explained to Business Daily by Sunny Iao, Sales Manager of Hing Cheong Hong Tobacco Company Limited, a private enterprise that wholesales cigars and cigarettes. “This is all about the tax on tobacco in Macau. Here there is a HK$10 tax on the product,

while in Mainland China the tax is much smaller. Also, in duty free shops people don’t have to pay tax and so they prefer to bring cigarettes from outside”, Iao said. “There’re also many people trying to bring them into Macau in order to sell them cheaper than the legal tobacco. Speaking of general figures for the whole cigarette industry this problem causes sales to drop by 30 to 40 percent”. In 2013, the Customs Services also seized 51,540 kilograms of pork, making it the second most apprehended product. There were 814 different cases of people trying to cross the border with pork. “Once again, as with tobacco, the pork cases are about price. It’s much cheaper to buy it in Mainland China and then bring it to Macau, where the price is more expensive”, the of Macau Customs Service spokesperson said. “In such cases, some try to bring pork to Macau in order to sell it while others do it for consumption”. In relation to the third most seized products in 2013 the number of cases involving plants totalled 273, accounting for 1,784 kilograms. Last year, drugs ranked as 7th most apprehended item, with 138 cases totalling 1,471 grams. Ketamine was the most seized drug with 103 cases and 635.8 grams. Methamphetamine ranked second with 24 cases and 144.21 grams, and marijuana/cannabis ranked third with 24.35 grams. Although only one case involved cocaine, some 630.96 grams were seized.

2013 NO.

TYPES OF GOODS

CASES

QUANTITY

UNIT

Cigarettes

1,926

3779800

sticks

Pork

814

51540

Plants

273

1784

Chicken/duck/goose

254

2419

Eggs

195

835

Sea foods etc.

142

1494

Drugs

138

1471

grams

Livestock offal

134

1580

Alcoholic drinks

131

726

liter

Fish

115

1340

QUANTITY

UNIT

2013 NO.

TYPES OF DRUGS

CASES

Ketamine

103

635.8

grams

Methamphetamine

144.21

grams

Marijuana / Cannabis

24.35

grams

Heroin

11.85

grams

Cocaine

630.96

grams

October 16, 2014

Macau Brands

Trends

From Beirut to the world Raquel Dias newsdesk@macaubusinessdaily.com

ew young designers have made a statement like Elie Saab. What’s more, fewer still came from a non-Western background. Elie Saab was born in Beirut and soon thought about designing and sewing. In 1982, Saab launched his Beirut-based fashion label when just 18 years old with a team of 15 employees. At first, his atelier specialised in bridal couture making wedding dresses and gowns using rich fabrics, lace, detailed embroidery, pearls, crystals and silk threads. In Beirut, his reputation grew from dressing the women in his neighbourhood, and was soon enhanced by high society women sporting his designs. Although he started in bridal wear it was a just a short step to taking the world by surprise with his uniquely beautiful nightwear pieces. If you see an Elie Saab runway you’ll know it’s his. Impeccably tailored and with a signature cut that transforms fabric into air, the beautiful dresses could have leapt from the pages of a fairytale.

Children of a lesser god Some under-aged children, sons and daughters of Macau residents or blue card holders, are denied a home in the MSAR

hey are boys and girls aged under 18 years that have no-one else they can turn to other than their families residing in the territory. Regardless, Macau authorities deny them the right to reside here, putting their parents in a desperate plight should they wish to remain in the territory. The reasons for rejecting such requests are usually economic and/or legal. According to a note from the Macau Public Security Police Force, in 2012 some 302 children of nonresident workers were granted special authorisation to stay, while 102 were refused permission. One year later, 390 requests were granted, while 93 were declined. As at August 31 this year, 273 requests have been approved with 60 rejected.

In their note to Macau Business the Macau Public Security Police Force explained that in the main rejected applicants were nonspecialised non-resident workers, saying: “Their nature of work, mode and qualifications did not fulfill the requirements of non-resident workers with special qualifications.” Macau Business specifically asked about the descendants of Macau ID holders but the note did not address this issue. The law is clear and the government is usually sympathetic about under-aged children dependent upon resident and non-resident workers but in some circumstances the government blocks the requests, says a law expert. Icília Berenguel, a lawyer who specialises in this field, says that with

regard to what concerns non-skilled non-resident workers the authorities usually refuse such requests on the grounds of economic sustainability. “For instance, domestic workers come here to earn MOP3,500/4,000 per month and with that money they barely manage to survive alone in Macau. Now, let’s imagine, instead of paying for one room for her, she needs to pay for another room for the daughter, the school, the bus - there’s no chance to have the children here in Macau”, she says. Consequently, the authorities usually refuse, even though the worker may have been living in the territory for as long as 20 years. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.

entered into force in October 2012 and that the data for 2013 has yet to be announced. In a written response to Macau Business, the Agency for Investment and Foreign Trade of Portugal said that as it is not mandatory to register foreign investment it does not possess a comprehensive list. Nevertheless, the note says: ‘Portugal is on the radar of Asian investments’. Ronald Cheung Yat Fai, chief executive of Midland Macau, said that initially there was a rush to invest, mostly by Mainland Chinese citizens, when the Golden Visa programme started but that enthusiasm appears to be waning. Overall, Mr. Cheung says that were it not for the Golden Visa the

Chinese would not be investing in real estate in Portugal. “Chinese people won’t buy any property in Portugal unless the buyers want to get a residency card. They aren’t looking for property potential in Portugal, they’re just looking for the passport or the Golden Visa”, he says, adding that these Chinese buyers primarily come from Mainland China and not from Macau. “In our experience, only one or two applicants are Macau people”, he says, explaining, “They’re actually from Mainland China but already have Macau ID.” The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.

Not so fast Macau investors still coy about Portuguese investment

ocal direct investment in Portugal still appears lukewarm. Overall, other than clean energy, casinos and real estate, there doesn’t seem to be much interest expressed by local businessmen in investing in the Iberian Peninsula. Macau Economic Services, Macau Institute for Trade and Investment Promotion and the Forum for Economic and Trade Cooperation between China and Portuguesespeaking Countries all told Macau Business that they do not possess data on local investment in Portugal. Only the Statistics and Census Service responded to Macau Business’s request, revealing that in 2012 ‘less than three Macau enterprises engaged in direct investment in Portugal’. The number should now be higher, given that the Golden Visa programme

October 16, 2014

Greater China

Internet financing booms in China amid challenges Interest rates for loans with such services are more fluid, changing depending on the platform and allowing individuals to avoid the strictly set rates by banks

ike many small business start-ups, bespectacled college grad Zhang Shilang had a solid idea but no money to follow through. With plans to begin a door-to-door optometry service, the 25-year-old Beijinger did what most of the younger generation do to solve problems - he hit the internet. Roughly 6 months after registering with online crowdfunding site Angelcrunch, Zhang has managed to find several investors for his business, raising more than 600,000 yuan (US$97,561). He expects an additional 1 million yuan from five more investors in the near future. Internet financing services such as crowdfunding and peer-to-peer (P2P) lending are helping to break the stranglehold state-owned finance once held on those looking to fund a new business. With the sector growing to include areas of payment, investment and financing, funds and insurance, using the web to conduct daily transactions or finance businesses is slowly becoming a way of life for those in China. According to a recent report by iiMedia Research, a third-party data mining agency, 61 percent of China’s more than 600 million Internet users have used Internet financing products.

Internet will inevitably penetrate the financial sector as Taobao and WeChat have changed people’s habits of shopping and communication Jiang Qiping, Information Research Centre secretary general at Chinese Academy of Social Sciences

And that, he says, is not such a bad thing. The internet improves the efficiency of capital utilization and lowers trading costs, which injects vitality into economic development and industrial innovation, Jiang said. In addition to convenience, online wealth management products such as peer-to-peer lending (P2PL) allow users to avoid tight interest rate controls. Platforms such as PPDAI, China’s first P2PL platform, allows site members to invest

or borrow without involving major financial institutions. Qi Dong, an office worker in Beijing, has invested more than 120,000 yuan across three leading P2P platforms, helping individual borrowers in need of money for smaller projects such as house renovation, stock replenishment or a car purchase. While individuals would usually have trouble getting financing from the bank for such projects, Qi can provide them with the money they need and earn a slightly

higher 10 percent interest rate on the loan, compared with the 6 percent basic interest rate set by banks. By the end of 2013, PPDAI had 2 million registered clients with an accumulated trade volume of 1.6 billion yuan. With no industry standard or regulations, the P2P industry has experienced wild growth. By the end of June, there were 1,263 such P2P platforms producing a turnover of about 100 billion yuan in the first half of this

year, according to the Internet Society of China. While the industry may provide benefits, at the same time, the lack of regulation also brings risk to investors, says Li Chao, an analyst with iRearch, an Internet consulting firm. By the end of July, 150 P2P firms were recorded to have pooled investors’ money and fled, according to Wang Yanxiu, an official with the China Banking Regulatory Commission. At present, information about the P2P and crowdfunding firms have not been included in the central banks’ credit reporting system, which provides room for fraud. Although supervision details are not in place, Li is optimistic the authorities will hold a positive view toward development of Internet financing. Yi Huanhuan, deputy head of the Beijing-based Hongyuan Securities’ research arm, called for the government to be explicit on supervision principles over Internet financing, exerting restrictions on areas including registered capital, lending leverage, reserve ratio and single loan limits. Self-discipline and risk control are key to the longterm survival of Internet financing companies, said Liu Yanfeng, CEO of Anxindeli, a new P2P platform that was launched on July 31. Xinhua

More than 82 million in poverty in China Per capita GDP in the country of 1.36 billion people was US$6,767 last year

ore than 82 million people in China still live on less than about US$1 a day, a senior official said, despite a decades-long boom that made it the world’s secondlargest economy. China’s official poverty standard is an annual income of 2,300 yuan (US$375), close to the long-used benchmark of US$1 a day. More than 82 million people were living on less than that at the end of last year, senior government development official Zheng Wenkai told reporters. The World Bank’s own definition of poverty is US$1.25 a day, and Zheng said China’s poor would rise to more than 200 million if “international standards” were applied. “The poverty-stricken population not only suffer from low income but also face various difficulties in getting drinking water, roads, electricity, education, medical care and loans,” he said at a press conference. Most of them live in areas prone to natural disasters or with inadequate

The poverty-stricken population not only suffer from low income but also face various difficulties in getting drinking water, roads, electricity, education, medical care and loans Zheng Wenkai, senior government development official

The World Bank’s own definition of poverty is US$1.25 a day

infrastructure, and lifting them out of poverty is “a tough nut to crack”, added Zheng, vice director of the State Council Leading Group Office of Poverty Alleviation and Development. Over 30 years of reforms have led to an economic boom in China, which displaced Japan as the global number two in 2010, behind the US. But per capita GDP in the country of 1.36 billion people was just US$6,767 last year, less than 13

percent of that in the US, the staterun Global Times newspaper said yesterday. More worrying is the country’s widening income gap, which was highlighted in a Peking University report earlier this year pointing out that the top one percent of households in the Communist-ruled country controlled more than one third of its wealth in 2012, while the bottom 25 percent controlled just one percent. AFP

October 16, 2014

Greater China

Sept inflation cools to near

RMB to become world’s 3rd in middle term The producer price index fell 1.8 pct for the 31st consecutive month China’s currency renminbi, or the RMB, is expected to become the world’s third largest currency in the middle term under an optimistic scenario, the International Monetary Institute (IMI) under Renmin University of China (RUC) said on Tuesday. In the next three to five years, the RMB is expected to be second only to the U.S. dollar and the euro, given the material foundation provided by China’s solid growth and the robust performance of the currency, IMI Deputy Director Tu Yonghong told in a seminar.

First luxury cruise ship with Carnival China, the world’s largest shipbuilder, is looking to build its first luxury cruise vessel, with help from cruise operator Carnival Corp and Italian shipyard Fincantieri SpA, as the country looks to expand domestic tourism. Carnival said yesterdayit has signed a memorandum of understanding with China State Shipbuilding Corporation (CSSC), with the eventual aim of forming a joint venture that would also include Italy’s Fincantieri. China’s cruise industry is predicted to become one of the world’s largest with 4.5 million passengers by 2020, according to government figures.

CICC chairman Jin Liqun to resign China International Capital Corp (CICC) chairman, Jin Liqun, plans to resign from his post this year, two sources with direct knowledge of the matter told Reuters. “If there are no surprises, Jin Liqun will submit his resignation within the next two months,” said one source. The sources added that Jin plans to take up a position at Asia Infrastructure Investment Bank, a Beijing-led effort which analysts say is aimed at extending its influence in the region. A public relations official at CICC declined to comment.

Taiwan regulator blocks loans to Ting Hsin Taiwan’s top financial regulator said on Wednesday he has urged local banks to refrain from giving new loans to Ting Hsin International Group, one of China’s biggest instant noodles makers, over the sale of what prosecutors allege was tainted cooking oil. The comments come after Taiwan prosecutors launched an investigation into a unit of Ting Hsin this month. “We have asked banks not to give them new loans,” William Tseng, chairman of the Financial Supervisory Commission, told reporters on the sidelines of a legislative session.

Shanghai, Sofia to become sister cities An intent agreement between Shanghai and Sofia was signed on yesterday with the goal of becoming sister cities. Yin Yicui, Chairwoman of the Standing Committee of the Shanghai Municipal People’s Congress, and Jordanka Fandakova, Mayor of Sofia, agreed at a meeting before the signing ceremony that joint projects could be developed initially in the areas of education, culture, sport and tourism. A Chinese painting and photo exhibition titled “Shanghai in My Heart” opened yesterday in Sofia. Shanghai will become Sofia’s first sister city in China.

hina’s inflation rate slowed more than expected in September to a near five-year low, adding to concerns that global growth is cooling fast unless governments take bolder measures to shore up their economies. The consumer price index (CPI) rose 1.6 percent in September from a year earlier, the National Bureau of Statistics said yesterday, missing market expectations for a 1.7 percent rise and down from 2 percent in August. The CPI rose 0.5 percent in September from the previous month, versus a 0.4 percent gain expected by economists. With inflation well below the official annual target of 3.5 percent, Chinese policymakers will have ample scope to announce more stimulus measures, though analysts appear divided over whether Beijing will continue to roll out more modest measures or if it now needs to take more aggressive action such as cutting interest rates to fend off the risks of deflation. “Easing gains (in) non-food prices and the worsening PPI provide more evidence of a weakening economy, which means the problems of weak domestic demand and over capacity are more severe than expected,” said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai. The producer price index fell 1.8 percent for the 31st consecutive month, dragged by lower oil and steel prices as weakening demand curbed

Trade data on Monday showed China’s export performance in September beat forecasts

companies’ pricing power and put increasing strains on their balance sheets and ability to pay back debts. The market had expected a 1.6 percent fall in producer prices after a drop of 1.2 percent in August. Highlighting faltering demand in China, the country’s second-biggest steelmaker, Baoshan Iron and Steel (Baosteel), said on Friday it will cut its main product prices for November delivery. Major construction machinery

maker Zoomlion Heavy Industry Science and Technology Co Ltd said late on Tuesday it expects thirdquarter net income to fall as much as 90 percent on continued weakness in the market. Trade data on Monday showed China’s export performance in September beat forecasts, an encouraging sign for authorities who are trying to avert a sharp downturn, even though domestic demand likely remained weak despite surprisingly

EU, China resolve telecoms dispute Failure to reach a deal could have led to the EU launching an anti-subsidy procedure and imposing punitive levies on Chinese telecoms equipment exports

hina and the European Union have found a way to end a long-running dispute over Chinese exports of telecoms equipment, resolving one of the most divisive issues between the major trade partners, the EU’s top trade official said. EU Trade Chief Karel De Gucht told Reuters he would ask fellow commissioners to back his proposal to end the dispute over an annual 1 billion euros (US$1.27 billion) of imports by Huawei and the smaller ZTE. “I will in the coming days ask the college (of commissioners) to drop the case in the light of the agreement we have reached and the agreement itself will be made official in the coming days as well,” De Gucht said at the sidelines of a trade conference in Rome. Sources told Reuters last week that Beijing was considering a deal in which China would promise to limit its export credits Huawei and ZTE. Both sides would also agree to monitor the market share of Chinese telecoms companies in Europe and European companies in China. Rising imports have made the Chinese companies fierce competitors of European firms including Ericsson, the world’s biggest mobile telecommunications equipment maker, Nokia Networks and AlcatelLucent.

EU Trade Chief Karel De Gucht is heading the negotiation

It is off the table in an acceptable way. I think we made progress on this file Karel De Gucht, EU Trade Chief

According to an EU document, Huawei’s share of the European telecoms equipment market has risen from 2.5 percent in 2006 to 25 percent today, with prices some 18 percent below those of European rivals. Europe is China’s most important trading partner and for the EU, China is second only to the United States. Ties between the EU and China have been bedevilled by a series of damaging trade rows ranging from steel and wine to solar panels as China seeks to produce sophisticated products that compete directly with Europe. Reuters

October 16, 2014

Greater China Costco to enter China through Alibaba’s Tmall

5-year low

The move is part of Costco’s push to grow its online business We expect policymakers will take more measures to stabilise the economy. The possibility of an interest rate cut is increasing in the coming months Li Huiyong, economist, Shenyin & Wanguo Securities

firm imports. Premier Li Keqiang said earlier this month that China will avoid a hard landing despite worries over the cooling real estate market, which economists say poses the biggest single threat to the economy. Li also said he was confident the economy would continue to grow at a “medium to high tempo”, forecasting growth of about 7.5 percent this year, which appears sharply at odds with the low inflation figure.

The latest Reuters poll, conducted before the trade and inflation data, showed the economy likely grew at its weakest pace in more than five years in the third quarter as the property downturn weighed on demand, raising the chances of more aggressive policy steps that may include cutting interest rates. Third quarter gross domestic product along with September retail sales, industrial output and investment data will be released on Oct. 21.

.S. retailer Costco Wholesale Corp plans to open an online store in China using Alibaba Group Holding Ltd’s fast-growing Tmall online marketplace, entering the country’s booming e-commerce market to combat slowing sales at home. The warehouse club operator said the online store would sell branded products, which would initially comprise food and healthcare goods, and store-branded products under its Kirkland Signature private label. “This low capital entry will give Costco a good look at the Chinese opportunity with nominal capital investment,” Janney Capital Markets analyst David Strasser wrote in a note. Alibaba’s Tmall offers virtual store fronts and payment portals to merchants. Several western retailers, including Zara owner Inditex, Britain’s Burberry and ASOS, have joined TMall this year as they look to boost their presence in China.

Costco said Tmall Global’s warehouse stores would help it cut logistics costs and delivery time. The move is part of Costco’s push to grow its online business. Most U.S. retailers are struggling with falling store traffic as shoppers make more purchases online. Costco has reported slowing samestore sales growth for the last three years. “Longer term there’s significant potential to grow (in China) ... we are talking five plus years,” S&P Capital IQ analyst Joseph Agnese told Reuters. China-based iResearch in July raised its 2014 growth forecast for the country’s online retail sales to 45.8 percent from 32.4 percent. The consultancy forecast sales of 2.76 trillion yuan (US$446.6 billion) for the year. Tmall.com would also connect Costco with its consumer online marketplace Taobao.com and its daily deals site Juhuasuan.com. Costco’s Asian presence, as of May, included 19 shops in Japan and 10 each in Taiwan and Korea through majority-owned subsidiaries, while its online presence was restricted to the United States, Canada, the United Kingdom and Mexico. Reuters

Reuters

Italy and China sign business deals The deals in Italy follow a series of business accords Li signed during a visit to Berlin last week

taly and China signed business deals worth about 8 billion euros (US$10 billion) on Tuesday in sectors ranging from energy to engineering, deepening Beijing’s commercial ties with the euro zone’s No. 3 economy. China has already spent well over 5 billion euros buying stakes in some of Italy’s biggest companies this year. At a news conference with Chinese Premier Li Keqiang in Rome, Italian Prime Minister Matteo Renzi said the deals were no more than an “antipasto” and should open the way to further accords with China in the future. “We must bring more China to Italy and take more Italy to China,” he said. With Italy’s economy now back in recession for the third time since 2008 and foreign investors wary of the country’s notorious red tape and unpredictable legal system, Renzi’s government has been keen to woo cash-rich buyers from China. Italian state lender CDP said it had signed an accord with China Development Bank (CDB) for cooperation projects worth up to 3 billion euros over the first five years of the deal. It gave no details but said the projects could be in infrastructure, direct equity investments or export financing. I n addit ion, Italian state investment fund FSI said it had signed

Italian Prime Minister Matteo Renzi (R), and Chinese Prime Minister Li Keqiang (L) give a press conference after their meeting at Chigi Palace in Rome, Italy

a memorandum of understanding with China Investment Corp for joint investment projects in which each would provide up to 500 million euros. Among other deals, aerospace group Finmeccanica announced a 400 million euro contract to supply 50 helicopters, while electricity group Enel signed a memorandum of understanding with Bank of China potentially making available up to 1 billion euros of financing over the next five years. As well as being a big buyer of Italian government bonds, China’s central bank has made a series of significant investments in blue- chip Italian companies this year. They

KEY POINTS Italian and Chinese state lenders in 3-billion-euro deal Chinese Premier Li meets Italian PM Renzi Italy woos cash-rich China as recession bites

include stakes of about 2 percent in Italy’s biggest carmaker Fiat, top domestic telecoms operator Telecom Italia and world No. 1 cable maker Prysmian. In March, the central bank bought similar stakes in leading oil and gas operator Eni -- an investment worth 1.3 billion euros -- and in utility Enel. In addition, China’s State Grid bought a 35-percent stake in energy grid holding company CDP Reti for 2.1 billion euros and Shanghai Electric Group took a 40 percent stake in power engineering company Ansaldo Energia from Italian state fund FSI in a deal worth 400 million euros. Reuters

October 16, 2014

Asia

Bank of Korea cuts rates

S. Korea posts trade surplus

Yesterday’s move brought the monetary policy rate to the lowest since the middle of 2010

South Korea posted a trade surplus for 32 months in a row due to solid export growth, customs data yesterday. The final figure for trade surplus reached US$3.43 billion in September, staying in the black for the 32nd consecutive month, according to the Korea Customs Service. Exports, which account for about half of the economy, increased 6.9 percent from a year earlier to 47.75 billion dollars in September, and imports advanced 8 percent to US$44.32 billion. By item, exports of chips, ships and cars jumped 7.4 percent, 23.3 percent and 5.2 percent each last month.

Australia consumer sentiment perks up A measure of Australian consumer sentiment rose in October, steadying from a sharp fall in the previous month as households signalled they were more confident about the longer term economic outlook. The survey of 1,200 people by the Melbourne Institute and Westpac Bank showed the index of consumer sentiment rose a seasonally adjusted 0.9 percent in October, from September when it dropped 4.6 percent. The index reading of 94.8 in October was down 12.5 percent on the same month last year, with pessimists exceeding optimists for eight months in a row.

Dai-ichi Life to raise US$1 bln Japan’s Dai-ichi Life Insurance Co Ltd will raise US$1 billion by issuing dollar-denominated subordinated bonds in overseas markets, a source with direct knowledge of the matter said yesterday. Dai-ichi, the only listed company among Japan’s four leading life insurers, is tapping the bond market to take advantage of low interest rates and will use the proceeds to help refinance subordinated loans expected to be redeemed next year, said the source, who was not authorised to discuss the matter publicly. Dai-ichi will issue perpetual subordinated bonds in Europe, the United States and Asia outside Japan, a source said.

RBNZ to purchase govt bonds The Reserve Bank of New Zealand said yesterday it would buy government bonds maturing on April 15, 2015 from the market, adding that the offer which would drain liquidity would have no implications on its monetary policy stance. The RBNZ said the offer would open at 10 a.m. NZT today Thursday and continue until further notice. Transactions would be priced using the yield-to-maturity discount formula. The central bank said it would hold the purchased bonds on its balance sheet until maturity or sell them to the New Zealand Debt Management office, which would cancel the bonds.

The government has been widely seen as pressuring the central bank to keep lowering rates to boost the economy after Finance Minister Choi Kyung-hwan (pictured) took office in July

outh Korea’s central bank cut its policy interest rate for the second time in three months yesterday to spur the flagging economy, in line with the market’s expectations, but many analysts see slim chances of further easing. “Our decision to cut rates was based on three main reasons: the fact that the negative output gap is

expected to close later than expected, price pressures are likely to be weaker than forecast, and the slow improvement of sentiment among financial bodies may act as a downside risk on the economy,” Bank of Korea Governor Lee Ju-yeol said. The Bank of Korea’s monetary policy committee cut its base rate by 25 basis points to 2.00 percent, a media

official said without elaborating. “The decision by the Bank of Korea to lower its policy rate shows that the central bank has harmonised its policy with the government. The policy rate is now at its post-Lehman low,” said Ronald Man, economist at HSBC in Hong Kong. “Given we expect external demand to gradually recover and lift Korea’s

Lynas rare earths revenue jumps Production rose to 2,043 tonnes of rare earths oxides in the first quarter of the 2015 financial year

ynas Corp, one of two rare earths producers outside China, reported a 24 percent rise in revenue in the September quarter from the previous quarter as the first stage of its Malaysian plant finally moves toward full capacity. Lynas’ progress is being closely watched as it tries to attract institutions to invest in its battered shares after years of disappointment following delays in opening and ramping up production at the controversial Malaysian plant. Production rose to 2,043 tonnes of rare earths oxides in the first quarter of the 2015 financial year, Lynas said yesterday, which was more than half the volume it produced in the whole of the previous year. Revenue rose to A$32.9 million (US$28.7 million) in the September quarter from A$26.5 million in the June quarter, while costs fell 14 percent to A$42.7 million, including restructuring costs. Lynas is currently carrying out a heavily discounted, fully underwritten entitlement offer as part of a broader A$83 million share sale to five

institutions and existing shareholders, who are nearly all mom and dad investors. It also recently renegotiated an easier debt repayment schedule with its Japanese lenders, Japan Oil, Gas and Metals National Corp (JOGMEC) and Sojitz Corp, matching its more modest forecast of ramping up output. “This financing structure and equity raising gives us the runway to get to cash positive,” Lynas Chief Executive Amanda Lacaze told Reuters in an interview this week. The company has long said it would be cash positive when its plant reaches full phase 1 capacity of 11,000 tonnes a year.

Lacaze, who took over as CEO about four months ago, said in July that should be achievable in the December quarter, and indicated earlier this week that this target was on track. “The best indication of that is that we are bringing the phase 2 assets on line this quarter,” she told Reuters. In trying to attract institutions back into the company, Lacaze said she has stressed she would focus on delivering results rather than overpromising what could be achieved. Lacaze is acting as a sub underwriter for US$100,000 of the equity raising. Reuters

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October 16, 2014

Asia

We expect the rate cuts in both August and October will have a considerable boost in economic growth Lee Ju-yeol, Bank of Korea Governor

GDP growth from 3.5 percent to 3.7 percent in 2015, we believe the monetary easing cycle is over.” Of the 30 analysts polled by Reuters, 18 forecast the Bank of Korea would cut its policy rate at yesterday’s meeting, while the rest saw a hold. Yesterday’s move brought the monetary policy rate to the lowest since the middle of 2010. The government has been widely seen as pressuring the central bank to keep lowering rates to boost the economy after Finance Minister Choi Kyunghwan took office in July. Governor Lee Ju-yeol has said South Korea’s economy is expected to grow 3.5 percent this year and 3.9 percent next year, down from the 3.8 percent and 4.0 percent forecast in

the central bank’s July projection. Lee said next year’s growth would reach only 3.7 percent without the government’s fiscal spending increase announced recently. The central bank had forecast growth of 3.8 percent for 2014 and 4.0 percent next year. Analysts do not see large changes in the bank’s forecasts. “The negative output gap in the domestic economy will narrow gradually, but the time of its closing will be later than expected,” the Governor added. “The rate cuts aren’t happening because the economy is facing a risk of depression...If the economy was facing depression the cuts would have to be much quicker and faster. This is to raise domestic demand,” said Im No-jung, chief economist at IM Investment & Securities. Recent economic indicators have shown domestic consumption in Asia’s fourth-largest economy is well on the mend, with imports in September rising at their fastest since early 2012. Exports last month also grew at their quickest pace in nine months, a good sign for the trade powerhouse. Despite the positive signs, Finance Minister Choi has kept applying pressure on the central bank to cut rates further, citing the softness of the recovery as well as weak corporate interest in investing domestically. This pressure was widely seen as the force that drove the central bank to cut rates in August to 2.25 percent in a move to align policy with new government policies aimed at boosting growth. Reuters

Malaysia’s oil, gas sector expected to cut earnings Contract awards to Malaysian Oil and Gas players in the third quarter of this year fell

alaysia’s oil and gas sectors are likely to cut earning over the next two years as project rollouts is slowing down and delays in new tenders are expected, according to a local research house AmResearch. An AmResearch report said “we have downgraded our sector view to neutral from overweight given the slow rollout of domestic developments, downscaled projects, declining marine charter rates, increasing competition from overseas fabrication players due to the relaxation of local content requirements and deteriorating visibility of regional prospects, especially in Australia’s mega-billion gas field developments.” “Additionally, there are concerns that the possible replacement of Petronas president and chief executive officer Tan Sri Shamsul Abbas next year may lead to further temporary delays in contract awards,” AmResearch said. The research house noted that contract awards to Malaysian Oil and Gas players in the third quarter of this year fell to only RM 711 million (about US$218.76 million) from RM 8 billion (about US$3.55 billion) previously.

Petronas CEO could be replaced shortly

“The slower project rollouts are underscored by recent Upstream reports that the Petronas-operated Baram Delta Gas Gathering Project 2 (Bardegg 2) and Baronia enhanced oil recovery development off Malaysia appear to

Australia’s Hoyts plans record cinema IPO IPO’s worth to reach US$800 million early next year

n Australian private equity firm is preparing the world’s biggest listing of a cinema chain, in a shrinking market that’s already the world leader in Internet piracy and is about to receive online streaming juggernaut Netflix. Yet Pacific Equity Partners is hoping to convince investors that the only way is up for Australian cinemas, which have already withstood the hit from existing streaming services like Apple Inc’s iTunes and cheaper couch bound entertainments like gaming. Pacific Equity is planning to exit the country’s No.2 movie theatre operator Hoyts in an IPO worth up to US$800 million early next year, dwarfing the US$322 million raised by AMC Entertainment in 2013. That comes ahead of an expected launch by Netflix in the home of Crocodile Dundee and Mad Max, threatening to speed up the decline in cinema audiences in a country where they are already falling faster than in the United States. But Australian industry veteran Andrew Pike - whose resume includes discovering the Baz Luhrmann careermaking hit “Strictly Ballroom”, and who saw multiplexes kill three of his own theatres in the mid-2000s - believes it’s premature to announce the

The production houses now know what to make to get people into cinemas, as opposed to ... just download for free Darren Vincent, Shaw Stockbroking analyst

death of Australian cinema. From 2005 to 2013, Australia per capita admissions fell 12 percent compared with 9 percent in North America, according to data compiled by Reuters. Box office takings in both regions have stalled at about A$1.1 billion (US$961 million) in Australia and US$10.6 billion in North America annually since

2009, when 3D sci-fi epic “Avatar” set the standard for modern blockbusters. Analysts say, however, that Hoyts can bank on a two-year roster of hits to keep audiences coming, and on premium seating and candy bar offerings to boost earnings even if theatres remain half-empty. The blockbuster pipeline includes two “Avatar”

sequels expected in 2016 and 2017, and in 2015 the first of three new “Star Wars” instalments, sequels to the “Avengers” and a new “James Bond”. Foxtel, an Australian pay TV company half-owned by Rupert Murdoch’s News Corp, has halved its fees and two other media firms said they would start a A$100 million streaming joint

venture - both seen as preemptive strikes on Netflix. Hoyts announced a streaming service two years ago but shelved it in June, media reported, citing competition. Hoyts declined to comment. While some Australian cinema chains have diversified into theme parks or expanded offshore, Hoyts has invested in DVD rental kiosks and a unit that holds a monopoly on cinema advertising. Reuters

October 16, 2014

International Russia shifts rouble’s trading band Central bank said yesterday it had shifted boundaries of its floating rouble corridor by 35 kopecks, following market interventions to curb the pace of the currency’s decline. As of October 14, the new corridor extended from 36.70 to 45.70 against a dollar-euro basket, compared with 36.35 to 45.35 previously. The central bank automatically intervenes to defend the rouble once it reaches the boundary of its trading band. Once it has spent US$350 million defending the currency, it moves the band by 5 kopecks.

Cocoa industry helps fund Ebola fight Chocolate and cocoa companies have donated US$600,000 toward combating Ebola in West Africa, the World Cocoa Foundation (WCF) said yesterday, the first sign the industry is striving to prevent the virus from spreading to the world’s top two growers. So far, the Ebola virus has killed nearly 4,500 people in West Africa with nearly 9,000 infected, the World Health Organization estimates. But the virus has not spread to the world’s top two cocoa producers, Ivory Coast and Ghana, the West African countries where roughly 60 percent of the world’s beans are produced.

Qualcomm trumps Microchip Qualcomm has agreed to buy chip maker CSR for US$2.5 billion, pushing out its rival Microchip Technology to win the British Bluetooth specialist which is growing in areas like automotive and wearable devices. Qualcomm, the world’s number one mobile chipmaker, has agreed to pay 900 pence a share in cash for CSR, representing a 56.5 percent premium on the share price before the start of the offer period, the British company said yesterday.

ASML on track to hit sales target Dutch electronic chip manufacturing equipment maker ASML reported a drop in quarterly sales yesterday but said it was still on track to hit its full-year target as it delivers on two system orders that were delayed. Sales figures from ASML, which supplies chip lithography systems to all of the world’s largest chip makers, including Intel, Samsung Electronics and Taiwan Semiconductor Manufacturing, serve as a leading indicator of the investment plans for the industry as a whole. The company posted net sales of 1.32 billion euros (US$1.67 billion) in the three months to end-September.

German public pension fund favours buyout Biggest public pension in Germnay fund plans to invest more in private equity and hedge funds and reduce its bond holdings as low interest rates curb returns. “We started committing the first funds to private equity in 2007 and we are now beginning to reap the first rewards,” said Andre Heimrich, chief investment officer of Bayerische Versorgungskammer, in an interview in Munich. “There is still room for expansion and we could imagine doubling our share of private-equity investments.” BVK currently has about 4 percent of its assets committed to buyout funds.

Oil relieves barrel inflation pressure

are at two-year lows and only a net 18 percent view monetary policy as too stimulative, down 14 percentage points from last month and the weakest since August 2012.

It makes it cheaper for companies to churn out everything from cars to toys and for consumers to fill their tanks, spurring demand

Bank of America economist Gustavo Reis calculates a 20 percent drop in the oil price would shave 0.5 percentage points off global inflation in the next year, pushing the rate back toward the 1.7 percent it reached in 2009 from 2.2 percent. A persistent decline in energy and agriculture costs “would put a significant downward pressure on headline inflation,” New York-based Reis wrote in an October 10 report. European Central Bank President Mario Draghi has particular reason to be anxious. He already blames energy and food prices for a “large extent” of the slowing in euro-area inflation to its weakest in almost five years. Fed Chair Janet Yellen will be less concerned given she doesn’t face a deflation risk. What’s more, Deutsche Bank AG economist Joseph LaVorgna estimated yesterday that if the recent decline in energy costs is maintained, consumer cash flow would improve by $40 billion. At the same time, the U.S. is now the world’s biggest oil producer and is again a net exporter. “Cheaper oil is a good thing for the U.S. economy overall, but may be a reason the Fed errs on the side of keeping rates low or raising them more slowly,” said Andrew Kenningham, an economist at Capital Economics Ltd. in London. The Bank of Japan is sounding more upbeat. “Japan imports massive amounts of oil so falling oil prices itself is a plus for the economy,” Bank of Japan Governor Haruhiko Kuroda said in Washington last week.

Simon Kennedy and Greg Quinn

ver since the oil shock of the early 1970s, central bankers have fretted that rising energy prices spelled recession. Now they’re discovering cheaper energy can be a headache too, especially when warding off deflation is the economic challenge du jour. Historically, the 27 percent drop in Brent crude from its June peak to its lowest in four years would have been a reason for happiness among policy makers. It makes it cheaper for companies to churn out everything from cars to toys and for consumers to fill their tanks, spurring demand. A study published in August by the Federal Reserve calculated rising oil prices explained a 5 percent reduction in the size of the U.S. economy during the recent financial crisis. So what could be wrong now? More than almost ever, central banks are as worried about low inflation as weak growth. What they’re working against is a deflationary spiral that will drive up debt burdens and derail demand as businesses and households retrench in anticipation of even lower prices.

Mario Draghi

Just on Tuesday, the U.K. reported the slowest inflation in five years and prices actually fell in Sweden for a second month. The euro area will say tomorrow that its rate is also the weakest since 2009. A survey of fund managers by Bank of America Corp. yesterday reported global inflation expectations

Oil impact

Bloomberg News

Greece will seek Algerian LNG if Russia stops Depa has a contract with Algeria’s Sonatrach Group for the supply of 500,000 metric tons of LNG to the Revithoussa LNG terminal

reece is discussing additional liquefied natural gas supply from Algeria to cover shortages and help neighbouring nations if a gas dispute between Russia and Ukraine disrupts pipeline deliveries. Depa SA may have to pay US$150 million to US$200 million to secure extra cargoes for December and January, the peak months of winter demand, George Spanoudis, the staterun gas supplier’s chairman, said in an interview in London. The nation, which gets two-thirds of its gas from Russia’s OAO Gazprom, may not be able to offset shortfalls under the existing contracts with Turkey and Algeria that meet the rest of demand, he said. While Greece lost as much as twothirds of its gas supply when flows via Ukraine were cut in a similar conflict during freezing weather in January 2009, it was able to buy LNG to limit the effects of the shortfall and supply neighbouring Bulgaria, according to the Oxford Institute of Energy Studies. Depa has a contract with Algeria’s Sonatrach Group for the supply of 500,000 metric tons of LNG into the Revithoussa LNG terminal,

An LNG plant in the Adriatic Sea

according to the International Group of Liquefied Natural Gas Importers. The terminal is also the nation’s only gas storage facility. The company is looking at extra cargoes of as much as 125,000 cubic meters each, compared with vessels of 75,000 cubic meters normally, Spanoudis said. Depa is preparing financing to secure the extra LNG, which it expects to come at “reasonable prices,” he said.

The average LNG price for Greece was 31 euros (US$39) a megawatthour in the first four months of the year, compared with estimates of 29.81 euros for Russian pipeline gas, according to a report by the European Commission October 8. Spot LNG prices in southwest Europe were about 38 euros a megawatthour in the period, according to assessments by World Gas Intelligence. Bloomberg News

October 16, 2014

Opinion Business

The procurement goldmine

Leading reports from Asia’s best business newspapers

Ricardo Hausmann

wires

Director of the Centre for International Development and Professor of the Practice of Economic Development at the John F. Kennedy School of Government at Harvard University

THE JAPAN NEWS The land ministry is discussing new styles of housing contracts that are better suited to families with children in an effort to address the falling birth-rate. It has established a study group on housing and welfare policies. In February, the group will draw up an interim report that the ministry will use in policy measures to be introduced as early as fiscal 2015. Reflecting a variety of lifestyles, the group will review the conventional housing contract choice between purchase and lease and explore hybrid deals.

BANGKOK POST Thailand’s border trade with Myanmar is expected to flourish over the next couple of years, driven mainly by the planned development of a special economic zone (SEZ) in Tak’s Mae Sot district. Isara Vongkusolkit, chairman of the Thai Chamber of Commerce (TCC), said this year alone the cross-border trade between the two countries was expected to grow by 10% from last year’s 197 billion baht. This is fuelled particularly by the bustling activity in Mae Sot, where the border trade is expected to surge 30% this year from 43.7 billion baht in 2013.

THE STRAITS TIMES Singapore plans to supply liquefied natural gas (LNG) to fuel ships by 2020, Minister for Transport Lui Tuck Yew said yesterday, as part of a global trend to move away from oil to gas to reduce emissions. “We are working towards LNG bunkering in Singapore by 2020, hopefully earlier if possible,” Mr Lui said at an industry event. Sinapore’s plans to start a pilot programme by early 2017 to fund up to US$2 million (S$2.55 million) per vessel for up to six LNG-fuelled vessels for the testing of safety procedures and standards, he said.

PHILSTAR Investments registered with the Philippine Economic Zone Authority (PEZA) went up by 6.18 percent in the January to September period from a year ago, supported by the entry of new locators and expansion of existing players. Data obtained by reporters showed investments committed with the PEZA rose to P148.213 billion as of end-September this year from P139.591 billion in the comparable period in 2013. PEZA director-general Lilia De Lima told reporters on the side-lines of the International IT-BPM (Information Technology-Business Process Management) Summit on Tuesday the investments came from manufacturing firms looking to set up facilities and expand operations.

The World Bank publishes the names of firms barred for fraud or corruption from bidding on Bank-financed projects

old is rare. More than 99.9% of the Earth’s crust is composed of oxides of silicon, aluminium, calcium, magnesium, sodium, iron, potassium, titanium, and phosphorus. So, for most of human history, people have become quite excited when they have discovered gold. Despite the serious environmental consequences of gold mining, including mercury and cyanide pollution and the devastation of landscapes, humanity has not given up the search – and seems unlikely to do so any time soon. But there is a figurative goldmine – safer and potentially at least as lucrative as the real thing – that most countries possess, but few choose to exploit fully: government procurement. The potential adverse consequences of government procurement are well known. It can enable companies to charge excessive prices for low-quality goods and unreliable services, while facilitating corruption, abuses of power, and waste. To mitigate these risks, most countries have implemented requirements for open bidding processes and strict transparency rules for government purchases. Indeed, most recent free-trade agreements require signatories to open up government procurement to one another’s firms, and the World Bank publishes the names of firms barred for fraud or corruption from bidding on Bank-financed projects. Countries that forego open bidding processes end up with the kind of large-scale theft that has been documented in Venezuela and almost certainly occurred in Ukraine under deposed President Viktor Yanukovych. But beneath all of this arsenic is gold. Most modern production involves not just the cost of doing things, but also the cost of figuring out how to do them. Before aircraft manufacturers can produce and sell a

Governments are in the business of procuring solutions to their particular society’s most pressing challenges. Given that a country’s problems are rarely unique, innovative solutions can spawn globally competitive – even dominant – industries

new airplane model, they must spend billions of dollars over a decade or more of development – costs that must later be recouped. If they were not sure whether there would be a market for the new model, few would assume these costs. That is where government procurement comes in. For example, in 1946, the United States government issued a contract for Boeing to develop the B-52. The government obviously did not want the company to deliver more of the same; it wanted the first fast jet-powered strategic bomber. After all, the second-best army in a war is the loser. The contract thus had to reflect the risks inherent in finding out how to design and produce the most advanced aircraft of its time.

But the benefits of the government purchase extended beyond its specific goal, when Boeing used the knowhow it acquired developing the B-52 to create its commercial B-707 aircraft. Though the government never purposely promoted the development of commercial airplanes, its procurement of high-quality, technologically advanced military aircraft was essential to the emergence of America’s globally dominant commercial aircraft industry. Simply put, figuring out how to do one thing often makes it easier to do other things. In this way, a government that is exacting about the quality of its purchases can have a powerful impact on the evolution of its country’s comparative advantage. Israel’s government has had a similar impact through its effort to manage its limited water resources. Let’s say that the country incurs a cost of 100 of some unit because of its water shortages. The innovations that the government encourages, such as drip irrigation or desalination, not only reduce the domestic cost of such shortages to, say, 70, but also underpin an industry that, by selling its wares in the most demanding markets, accrues a global value of more than 1,000. In this sense, Israel’s water scarcity has made the country wealthier than it otherwise would have been. Likewise, Israel’s military investments have generated a set of solutions that, with some extra effort, have had useful – and lucrative – civilian applications. This helps to explain why private investment in research and development constitutes a larger share of GDP in Israel than anywhere else in the world. The lessons from army purchases can be applied elsewhere. Governments are in the business of procuring solutions to their particular society’s most pressing challenges. Given that

a country’s problems are rarely unique, innovative solutions can spawn globally competitive – even dominant – industries. And solutions for one problem may have applications in other areas. This should serve as a model for Latin America as it works to improve the quality of its educational systems. As it stands, the eight Latin American countries that take the OECD’s standardized PISA exam are among the 15 worst-performing countries of the 65 that participate in the program. Instead of sinking massive amounts of money into poorly performing school systems, Latin American governments would undoubtedly be interested in innovative solutions, such as tablet-based textbooks, that can help teachers provide effective lessons, monitor their students’ progress, and identify remediation strategies. Beyond improving their own children’s performance, such efforts could spawn a globally competitive industry in state-of-the-art teaching tools. These are just a few examples of the value that can be extracted from the government-procurement goldmine. By committing to purchase large amounts of high-quality products that address major national challenges, governments can encourage private, public, or mixed organizations to incur the fixed costs of finding solutions. In many cases, the benefits of those solutions will extend far beyond their original purpose. But, in pursuing such a path, governments must remember that mining is a potentially dangerous industry that must be approached with care. To this end, they could begin by applying, say, 5% of their procurement budgets to nurture urgently needed solutions in areas with potentially large global markets. After all, anything that is worth doing is worth doing better. Project Syndicate

October 16, 2014

Closing China Resources seeks to restore reputation

Big Brazil banks ready to ride out economic downturn

China Resources Holding’s (headquarters pictured) new chairman has met with at least 10 provincial governments since taking the helm six months ago - a charm offensive that is helping the state-owned conglomerate move past a major corruption scandal. In the wake of an investigation that has ensnared former chairman Song Lin and six other executives, Fu Yuning, who holds a rank equivalent to vice minister in the Chinese government, vowed that the conglomerate would emerge from the scandal. The meetings have seen him warmly chatting with leading politicians as well as promising new and often big sums in investment.

Brazil’s economy has stagnated and will remain weak well into 2015 but its big private-sector banks are poised to safely weather the downturn thanks to a cautious business model that keeps a lid on risky lending and costs. Latin America’s largest economy is in its fourth year of disappointing growth and slipped into recession in the first half of the year. Weaker consumer spending, a cooling labour market and a slide in investor confidence mean 2015 is also likely to be tough. Modest credit growth and higher default rates may also persist next year regardless of who wins election.

Bank of China starts marketing massive note sale The securities are expected to be rated Ba2 by Moody’s Investors Service and BB- by Standard & Poor’s

Most participants were expecting slightly lower initial guidance. But given what’s happened in European additional Tier 1 notes and in Chinese high yield, that may have pushed the guidance a bit wider

ank of China Ltd. has begun marketing what may be Asia’s biggest sale of bank capital securities. China’s fourth-biggest lender by market value plans to sell as much as US$6.5 billion of offshore preference shares to yield 6.875 percent to 7 percent, people familiar with the matter said today, asking not to be identified because the details are private. The notes may price as early as today. China’s banking giants are shoring up their capital buffers at a record pace as bad loans spike to the highest level since the global financial crisis.

Nonperforming loans touched a five- year high of 694.4 billion yuan (US$113 billion) on June 30, 1.08 percent of total advances, making it more urgent for banks to build capital cushions against losses. Beijing-based Bank of China said it more than doubled the money it set aside for bad loans in the second quarter. It has regulatory approval to issue 40 billion yuan of offshore notes eligible as Tier 1 capital and the entire amount may be sold at once, people familiar said. The lender can also sell as much as 60 billion yuan of Tier 2 notes before the end of 2015.

Hong Kong’s New World wins site tender

Diwakar Vijayvergia credit trader Royal Bank of Scotland

Bank of China’s US$2.5 billion of 5.55 percent 2020 bonds, sold at a 200 basis-point spread in February 2010, are trading at a spread of 217.6 basis points, Bloomberg-compiled prices show. The gap over similar-maturity Treasuries has widened from 214.9

Widodo inherits poisonous budget

basis points at the end of last month. Yields on dollar-denominated contingent convertible notes sold by European lenders, similar to the ones being offered by Bank of China, have also spiked in the past 10 days, as investors reduced their exposure to riskier assets. The premium over Treasuries of Barclays Plc’s US$1.2 billion of 6.625 percent perpetual notes that count as capital has increased 47.5 basis points this month to 677 basis points. The securities convert to stock in the London lender if the bank’s Tier 1 ratio drops to 7 percent.

Capital ratios Bank of China was able to sell the offshore preference shares in either U.S. dollars or euro, according to a preliminary offering circular. The nine banks leading the transaction indicated pricing today for only U.S. currency- settled notes. The deal may boost Bank of China’s common equity Tier 1 capital adequacy ratio to 10.12 percent from 9.7 percent, according to the circular. The People’s Bank of China requires the country’s systemically important financial institutions to have a 9.5 percent ratio before the end of 2018. The offshore preference securities will be converted into Bank of China’s H-shares at HK$3.44 apiece if its Tier 1 ratio falls to 5.125 percent or below. Orders of about US$14 billion were received before Bank of China started marketing the notes, including some US$4.5 billion to US$5 billion from anchor investors, the people familiar with the matter said today. The sale is limited to 200 places in primary syndication, they added. The notes won’t be eligible for inclusion in JPMorgan Chase & Co.’s Asia series of credit indexes or its global measure, according to an October 10 report from the U.S. lender. Bloomberg News

IndiGo agrees to buy 250 Airbus

ew World Development Co., the builder controlled by the family of Hong Kong billionaire Cheng Yu-tung, won the tender for a HK$10.4 billion (US$1.3 billion) site in the city that can provide at least 2,900 new homes. New World will pay HK$2.9 billion of the land premium for the site atop a train station while MTR Corp., Hong Kong’s government-owned railway operator, will pay the rest, MTR said in a statement. New World will fund and build the development, including the commercial portion which will be owned by MTR, according to the filing. The project at Tai Wai station in the New Territories is part of a push by the government, the city’s largest supplier of land, to ease a housing shortage and contain surging home prices. MTR plans to tender two other sites this year that can provide at least 4,600 flats, Paul Chan, Hong Kong’s development secretary, said earlier.

ndonesia faces a US$6.15 billion tax revenue shortfall this year, a finance ministry document shows, raising concerns that the fiscal deficit could bust a legal limit, and place president-elect Joko Widodo into an early budget and political crisis. Widodo takes office next Monday knowing that he has to act swiftly to boost revenue collection and cut spending to ensure the deficit does not breach 3 percent of gross domestic product. Officials, however, say they are confident that reduced spending will help avoid the deficit breaking the legal limit. Breaking the budget law could feasibly embolden the opposition to launch an impeachment bid, even though the budget mess is the responsibility of outgoing president Susilo Bambang Yudhoyono. Making matters more tricky, Widodo faces a hostile parliament with the opposition. Parliament passed a law in 2003 restricting the budget deficit to below 3 percent of GDP in an effort to prevent a repeat of the financial crisis of 1998.

ndian budget carrier IndiGo has agreed to buy 250 single-aisle A320neo aircraft from Airbus SA, the companies said on Wednesday, potentially marking the largest number of jets ever sold by the European plane maker in a single order. The deal would be worth US$25.7 billion at list prices, although airlines typically get a discount and the memorandum of understanding between the two must still be confirmed as firm orders. Reuters reported on Tuesday that IndiGo, India’s largest airline, was close to placing a large order worth billions of dollars for a variety of aircraft as it looks to expand in one of the world’s fastest growing aviation markets. IndiGo has a fleet of 83 Airbus A320s and has ordered or taken delivery of 280 Airbus aircraft, including 160 of the upgraded and reengined A320neo model that will begin arriving next year. It was one of the first customers for the A320neo.

Bloomberg News

Reuters