Macau Business Daily, Nov 6, 2014 by Business Daily

MOP 6.00 Publisher: Paulo A. Azevedo

Closing editor: Sara Farr

Macau Treasury hit by gaming slowdown O

Number 661 Thursday November 6, 2014

f course, it’s affecting the operators. But decelerating gaming revenues are hitting the SAR Treasury in the pocket, too. Over the past 5 months MOP5.6 billion in taxes has slipped away vis-à-vis last year. Last month was the worst with MOP3 billion ‘lost’. Given we had a good start to the year, though, the government has reached 94.1 percent of this year’s gaming tax target. We should hit a home run in November

Year III

Page 3

Moving round the corner

Cultural Industry Committee beefs up task force Page 2

The scourge of skyrocketing rents strikes again. Obliged to move from the Yellow House at the foot of St. Paul’s Ruins, local design house MO-Design has reinvented itself. It will set up home in the old Tak Seng On pawnshop next year. Staff are being recruited, and trademarks registered. Opening dates are sketchy but it will still be in the heart of the city, in San Ma Lou

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MIA’s Sky Shilla Duty Free starts today Page 6

Want to diversify a gaming economy? Get in the swim Page 7

Too much lending?

HSI - Movers November 5

Name

The loan-to-deposit ratio has reached record highs. For non-resident customers it still stands at 147 percent. Anything above 120 percent poses a problem, say experts. Outstanding loans for residents totalled MOP328 billion in September compared to MOP346billion for non-residents.

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%Day

Want Want China Hol

1.39

COSCO Pacific Ltd

1.32

Power Assets Holding

1.21

Belle International

1.13

Tencent Holdings Ltd

1.06

PetroChina Co Ltd

-2.50

CNOOC Ltd

-2.83

China Overseas Land

-2.84

Galaxy Entertainment

-2.96

Sands China Ltd

-3.31

www.macaubusinessdaily.com

Source: Bloomberg

Taking its toll

I SSN 2226-8294

Businessmen have complained loud and long. Hong Kong’s turbulent street protests are taking a toll. On tempers, politics and the economy. Private sector activity fell substantially according to HSBC/Markit Purchasing Managers’ Index. Companies say the protests are killing trade

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November 6, 2014

Macau

Partial implementation of new air pollution bill in 2015

he Environmental Protection Bureau (DSPA) said it is striving to implement part of the bill formulating Macau’s emission standards for major stationary sources of air pollution in addition to improving the supervisory system next year, which temporarily targets three of seven major stationary sources. These are namely the sewage treatment works, power plant and incineration plant, according to the Advisory Council of Community Services of the Central Area. DSPA met with the council yesterday afternoon to introduce the bill and present a report on opinions gained from the related

public consultation conducted at the beginning of this year. The bill primarily increases the current emission standards for major sources of air pollution. According to council members Lam U Tou and U Sio Chao the Bureau said during the closed-door meeting that although DSPA is trying to implement the bill as soon as possible it will also consider the conditions of the industries involved – in particular, whether they can catch up with the new standards. Following the implementation of the new bill, 40 percent of the facilities in the major stationary sources of air pollution will not reach the new standard, DSPA estimated.

Meanwhile, the council suggested the government start discussing issues with the affected industries now, helping them either to apply for the fund for environmental protection or invest in it themselves, encouraging them to update current facilities to meet the new standards instead of only doing so once the bill comes into force. In addition, the council said the government should improve the planning of the locations of such plants polluting the air of residential buildings; usually, the distance is too close thus even after the new bill is passed air pollution may still affect residents. K.L.

Cultural Industry Committee to beef up task force The Cultural Industry Committee will adjust its task force and increase the number of groups from three to five. An industrial census and index evaluation group will be set up to provide more scientific data as references to develop the cultural industry Joanne Kuai

joannekuai@macaubusinessdaily.com

he Cultural Industry Committee held this year’s second plenary meeting yesterday. Host of the meeting, and vice president of the Committee, Jose Chui Sai Peng, said the government had issued the creative industry development framework some time ago, in response which the allocation of resources and organisation of special task groups will be adjusted accordingly. Of the five groups, the Policy Coordination group will be headed directly by the Secretary for Social and Cultural Affairs, while Mr. Chui will assist as sub-convener. All 12 government departments will have representatives in the group. The Industrial Statistics group will focus on collecting official data. Mr. Chui said this division is especially important, as more scientific studies should be done to provide practical measures for developing the cultural

industry. The director of the Statistics and Census Bureau Director will head of this group as research conducted by this group requires a scientific background regarding the data collected and its compilation, and how to evaluate existing data so that the results are meaningful in promoting the creative industry. The sub-convener of this group would be the director of the Cultural Affairs Bureau. The other groups include the Regional Cooperation and Policy Study group, Creative Design and Art Collection group, two of the sectors mentioned in the policy recently announced. The other two sectors would be represented by the Cultural Performance and Multi-Media group. Members of the Cultural Industry Committee are free to sign up for any group except the policy coordination group, as this is designated for government-level officers. Once applications are submitted by

Wednesday next week group conveners will gather and present their ideas and work to the Committee. Mr. Chui added that some studies had been presented during the meeting, including what kind of policies the industry needs to expand the market into the Pearl River Delta, namely Hengqin in Zhuhai, Nansha in Guangzhou, and Zhongshan in neighbouring Guangdong Province. He said that the Macau Government would later incorporate the studies into its policies. Regarding the MOP200 million cultural industry fund, Mr. Chui said the Committee is still reviewing the applications and no deadline has been set in order not to put pressure on the Committee making careful decisions and ensuring public money is well spent. The president of the Committee, Secretary for Social and Cultural Affairs Cheong U, was not present

due to other official duties. During yesterday’s meeting, Lei Heng Iok, president of the Macau Polytechnic Institute, suggested adjusting the culture-related curriculum of local tertiary education organisations to better cultivate talent according to the development of the industry. Kong Mei Fan, a local entrepreneur, urged the development of microfilmmaking and for the government to initiate and set up awards to encourage local youth to join the cinema industry. Chong Cho Lam, an active local artist, proposed setting up Macau Creative Communication Centre in neighbouring regions around Asia to boost exchanges between Macau and other places in areas of commercial development within the cultural industry. Pedro Ip said local artists are having a hard time selling their work to the outside world and recommended setting up an agency to better promote the business.

Bill bars non-resident professionals from signing construction plans

on-resident professionals can assist in the design and planning of a construction project here but they may not assume the position of the signatory in charge of registering the construction plan with the government, legislators and the government concluded yesterday following a discussion of a bill legislating the registration and qualification system of construction and urban planning professionals. Ms. Kwan Tsui Hang, president of the first permanent committee of the Legislative Assembly, informed reporters yesterday that the government

has already removed an article in the bill that allowed non-resident professionals from being employed by public departments to “provide construction planning” services under “exceptional conditions”. The “exceptional conditions” were understood as special or complicated construction projects where foreign expertise - not registered in Macau - is required to be employed by the government. “This [change made in the bill] does not prevent outside experts from coming here to assist in some big construction projects, as is practised

now,” Ms. Kwan said after a committee meeting yesterday. “But the person responsible for signing the construction plan with the government has to be a locally registered professional – whether it is a project for a public department or a company.” The sub-committee head added that the change made to the bill follows a “strong request” by the local construction sector. “This change made in the bill is not denying any existing cooperation mechanism with outside experts working on construction projects here,” said Ms. Kwan. “It’s just that

the signatory in charge of the project has to understand the local laws well.” Ms. Kwan’s committee has still to finish deliberating on the bill that will legislate the local registration and qualification of 13 types of professional related to the construction and urban planning profession, ranging from architecture to urban planning to civil engineering to chemical engineering. However, she added that it remained uncertain when the bill will obtain a final approval at the general assembly having passed the first reading in November last year. S.L.

November 6, 2014

Macau

Gaming slowdown hits SAR Treasury The decelerating gaming industry is not only affecting operators but the government of Macau, as there is a direct 35 percent tax on gross gaming revenues. Over the last five months, in comparison to 2013, some MOP5.6 billion has slipped away from the Treasury João Santos Filipe

jsfilipe@macaubusinessdaily.com

he Macau Government ‘lost’ MOP5.6 billion from June to October in comparison to last year as a result of the slowdown in gross gaming revenues. According to Business Daily calculations, for the five months mentioned the government collected around MOP48.3 billion, while in 2013 it had already amassed 53.9 billion from the gaming industry. Current legislation decrees that gaming operators pay a special tax to the Macau Government of 35 percent on gross gaming revenue (GGR). As such, casinos are not the only ones losing money as a result of the slowdown of Macau’s main industry. So far, the worst month has been October, when GGR plummeted 23.2 percent year-on-year from MOP36.5 billion to MOP28 billion. This difference resulted in MOP3 billion less for the Treasury this year. Last October, operators paid MOP12.8 billion in taxes to the government, whilst this year gaming tax raked in MOP9.8 billion. The reduction in the tenth month of this year alone accounts for a value exceeding the

a drop in GGR from MOP29 billion to MOP25.6. In relation to the months of August, July and June the impact on the Treasury was milder, as gross gaming revenue registered single-digit drops of 6.1 percent, 3.6 percent and 3.7 percent, respectively. This means the government saw MOP651 million in August, MOP375 million in July, and MOP369 million in June slip away vis-à-vis the same period in 2013.

No reason to worry… yet

previous four months combined. With regard to September, the decrease in money collected by the gaming tax totalled MOP1.2 billion, a reduction of 11.7 percent, following

In spite of the reduction in terms of taxes collected there is currently no reason for the government to be concerned. Since the beginning of the year MOP106.4 billion has been rung up by the government. This is an increase of 2.3 percent in comparison to the previous year, when around MOP104.3 billion was collected by October in gaming taxes. In fact, until the month of June, when GGR started to drop year-onyear, revenues were increasing 15.8 percent in 2014 over 2013, which

means that the amount of tax collected was increasing at the same pace, as these two variables are proportional. However, the Chief Executive, Fernando Chui Sai On, and the Secretary for Economy and Finance, Francis Tam Pak Yuen, have no real reasons to worry about the budget. The Macau Government forecast that for this year it would collect MOP117.8 billion for all gaming taxes, including not only the 35 percent special gaming tax on gross gaming revenue but other taxes such as the ones paid by the gaming promoters (junket operators). As in October, calculating all taxes related to gaming paid until September plus the amount collected in the tenth month of the year by the 35 percent tax on GGR, the government has already secured 94.1 percent of its target, in the amount of MOP110.9 billion. In fact, it is almost certain that the value target of the Macau Executive will be reached in November, as in the last five months the amount collected in gaming taxes never dipped below MOP9.5 billion.

November 6, 2014

Macau

MO-Design moving to Tak Seng On Pawnshop Local design house MO-Design is opening a new store in the old Tak Seng On pawnshop next year, having departed the Yellow House due to soaring rent Stephanie Lai

sw.lai@macaubusinessdaily.com

ocal design house MO-Design Lda is operating its new store next year in the historic Tak Seng On Pawnshop on Avenida de Almeida Ribeiro, better known as San Ma Lou, following the departure of a trade association previously running a cultural club inside the building. The move is due to unfavourable rental renewal terms in its previous location. MO-Design’s activities range from selling locally designed clothes, stationery, household goods and souvenirs to event planning. The company used to run MOD Design Store in the Yellow House, a commercial building near St Paul’s Ruins, until it closed on December 26 last year after the Macau Government Tourist Office (MGTO) failed to renew its lease of the property from Future Bright Holdings Ltd. Chao Sio Leong, managing director of MO-Design, confirmed to Business Daily that his company is operating a new store in the three-storey Tak Seng On Pawnshop in the popular

tourist district of San Ma Lou next year, although his company has yet to disclose the exact opening date. MO-Design has already started recruiting retail staff for its new store, while the company has also registered four new trademarks in Chinese with the government – ‘Tak Seng On’, ‘MOD Tak Seng On’, ‘Foo Hang Bank’ and ‘MOD Foo Hang Bank’. Business Daily approached MODesign for more details on the rental terms it has secured with the private owner of the historic Tak Seng On building but the company declined to elaborate. Following the departure of MODesign Store from the Yellow House last year, Future Bright let the building to U.S. fashion label Forever 21 at a rent of HK$2.4 million (US$309,590) a month. The government used to pay HK$1.17 million. MGTO used to sub-let space in the Yellow House. Its tenants included a Portuguese-style café and a showroom for industrial products made in Macau.

The new home for MO-Design’s store – the Tak Seng On Pawnshop building – previously housed a cultural club and a pawnshop museum. The club - comprising a cultural exhibition hall, a teahouse, an art gift store and a library for works of popular contemporary Chinese novelist Jin Yong - closed in midJanuary this year. The closure followed a dispute between Macau Fair and Trade Association with the building’s owner on rental renewal terms. Tony Lam Chong In, president of the trade association, told us that the owner of the building had offered them a two-year rental contract rather than three years, a term that his party found unsatisfactory as they had intended to make an investment of 1-2 million patacas in the building in the future. Mr. Lam’s club in the Tak Seng On building, which he called a “loss-making venture”, opened in March 2003.

Giordano sales dip in Q3

lothing retailer Giordano posted a slight decrease of 4 percent year-on-year in its sales during the third quarter of this year, due to the weakness of sales in Hong Kong and South East Asia as well as the Middle East, the company has announced. During the third quarter, Giordano posted sales of HK$1.33 billion (US$166 million). In addition, gross profit for the quarter was HK$743 million, down 7 percent compared to the same period last year. The Hong Konglisted company filed with the Hong Kong Stock Exchange yesterday. Although the retailer said its mainland Chinese market was stabilising following the restructuring of its store portfolio, sales in its mainland China market still decreased by 5 percent yearon-year, reaching only HK$341 million, compared to the HK$360 million in the same period last year. Meanwhile, in Hong Kong, sales of the group declined by 6 percent in the three months, totalling HK$217 million, compared to the same period last year. In fact, the group claimed sales have been dropping through the year, mainly due to the slowing growth of mainland Chinese visitors. Consequently, Giordano said it is re-positioning its merchandise mix in Hong Kong to attract younger, more affluent customers although it believes it will take time to be fully effective. In addition, the group’s sales in South East Asia and the Middle East have both registered declines of 9 percent year-on-year and 8 percent year-on-year, respectively. At the end of September, the group operated a total of 2,479 outlets all over the world, 136 less stores compared to September last year. These stores primarily sell the group’s own brands, such as Giordano & Giordano Junior, BSX and Giordano Ladies. K.L.

Si Ka Lon urges supervision of ads

L Health Bureau investigates Melco Crown smoking ban breach

he Healt h Bureau h as announced that it is investigating complaints that parts of the VIP rooms of Melco Crown Entertainment which were converted from mass gaming floors had established smoking areas without applying for a permit from

the authority. The company claims its smoking areas meet the law’s requirements, which the director of the Bureau, Lei Chi Iong, said was probably due to the two parties having different interpretations of the law. He said that the Bureau’s legal advisor is dealing with issues based on the

law, while Melco Crown can file an appeal after receiving the notice from the health authorities, according to local media TDM Radio. In addition, Mr. Lei denied that the government did not communicate well enough with gaming operators on the issue of the smoking ban.

egislator Si Ka Lon has filed an interpellation with the government challenging the profusion of advertisements promoting online gambling in the city. He queries whether this kind of advertisement violates the law, while online gambling groups claim they have legal licences and are supervised by the government. In addition, he questioned if there is a loophole in the law making it difficult to enforce. Mr. Si is also urging the government to review the law regarding advertising, which was established 25 years ago, claiming that the fine for contravening it is too low. In a joint action with the Zhuhai police and the Bureau of Telecommunications Regulation, the Judiciary Police arrested four mainland Chinese men in the Border Gate district yesterday afternoon for alleged involvement in sending mobile phone messages promoting online gambling to people who cross the border into Macau.

November 6, 2014

Macau

Are Macau banks lending too much to non-residents? The loan-to-deposit ratio here reached a record high in September. For nonresident customers, the ratio is still at 147 percent, when the market considers 85 percent a sustainable value and everything above 120 percent a problem. Deposits from residents are serving as insurance for loans to foreigners Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

hey were and still are a goldmine for local banks. The arrival of thousands of foreigners in Macau in the last few years has been a shot in the arm for the local economy, funnelling a flow of fresh customers – and their funds - to the financial institutions here. New customers available to give credit to and receive deposits from. The problem – contrary to what happens with local customers – is that banks are giving much more credit to non-residents than they receive in deposits from them, a trend that is increasing the risk of the banks’ balance sheets. According to data from the Monetary Authority of Macau (AMCM) the loanto-deposit ratio of nonresident customers reached 147 percent in September and has stayed around the 150 percent mark for the last five years. The ratio, as the name implies, measures the amount of loans vis-a-vis deposits. If the ratio is 100 percent, it means that for each pataca lent there’s a pataca deposited. In the event of a crisis, at least the bank would have the funds to repay its customers. A ratio of 80 percent means that the bank lends 80 cents for each pataca deposited,

assuring full payment to its customers and also allowing some financial margin. But in Macau, and for non-resident clients in particular, it’s the opposite. Banks here are lending 1.5 patacas for each pataca deposited.

Dangerous path A loan-to-deposit ratio of 150 percent is considered unsustainable in the financial world. The market benchmark is a ratio of 80 to 90 percent. The International Monetary Fund (IMF) says 120 percent is the top limit for a sustainable ratio. Before the recent financial crisis in Europe, most banks there were running loanto-deposit ratios of 150 percent, following years of

abuse in terms of credit. When the crisis hit, dozens of banks went bankrupt due to excessive credit and not enough available liquidity. In Europe, banks are now forced to have a ratio of lower than 120 percent. The Macau banking system is still sound but the

increasing credit frenzy here could mean bigger problems in the future. The loan-todeposit ratio in Macau stayed at 84.4 percent in September, a sustainable level by international standards but already an all-time record. The ratio for local clients also increased to a record level of 58.2 percent. A non-resident customer ratio of 150 percent means that the risk for these customers is being supported by local customers. If the nonresidents don’t repay their loans banks here will not have enough money to cover these losses and have to turn to residents’ deposits.

Leading the credit race However, Macau banks lend today more to nonresidents than to locals, even

though the amount of the deposits of the former are only half of the latter. In September, outstanding loans for residents totalled MOP328 billion compared to MOP346billion for nonresidents. The bank deposits of local customers amounted to MOP477 billion versus MOP234 billion for non-residents. According to AMCM data, credit in Macau is growing much faster than deposits. In September, total outstanding loans reached MOP675 billion, 31.8 percent more than a year ago, while deposits reached MOP800 billion, a 21.9 percent increase. In one year, Macau banks granted MOP160 billion in new loans, while they only pulled in MOP60 billion in new deposits, three times less.

Loans and Deposits in Macau ( September Overall

Residents

Non- residents

84.4%

58.2%

147.5%

Total Loans*

675

328

346

Total Deposits*

800

477

234

Loan-to-Deposit ratio

*in MOP billion Source: AMCM

November 6, 2014

Macau Brands

Trends

Gucci & Beauty Raquel Dias newsdesk@macaubusinessdaily.com

lmost every luxury brand - from Chanel to Burberry - has a beauty line. Some are old, others are keeping up the pace to conquer a broader range of the market. Not everyone can buy a Chanel bag but most middle class ladies can afford their perfumes once in a while. Besides the already classic beauty lines from Chanel and Dior, it seems that most fashion houses are learning by example. After Dolce & Gabbana, Burbury’s, Christian Louboutin’s musthave Rouge and even Sisley, it is time for Gucci. The new collection includes eye, lip, nail and face makeup as well as brushes and skin preparation products, and it’s produced with P&G Prestige, the company behind key fragrances such as Gucci Guilty and Gucci Première. The shades – called the Iconic Six, which are gold, black, red, ottanio, bronze and copper – anchor the collection’s palette via a number of trendy colours. The packaging is inspired by vintage beauty products and is covered all over with an embossed Guccissima pattern. The collection is already available in selected Gucci flagship stores - just in time for early Christmas shopping.

High-end fair to attract professional buyers Macau Convention & Exhibition Association chairman has downplayed concerns about the declining number of visitors attending Macau events. Li Zhizhong said that some fairs focussing on trade volume seek to attract professional buyers rather than browsers Joanne Kuai

joannekuai@macaubusinessdaily.com

he 2014 China Macau Distinguished Gathering kicks off today, featuring three exhibitions – automobiles, yachts and business aviation. The event is being hosted by the Macau Convention & Exhibition Association and Nam Kwong Group Company Limited in collaboration with National Machinery Industry Corporation and China Aviation Supplies Holding Company. Organiser Li Zhizhong, chairman of the Macau Convention & Exhibition Association, said that this year they are focusing on attracting professional buyers. Whilst talking to reporters during the press conference announcing the event, Mr. Li downplayed concerns about declining visitors to Macau’s exhibitions. Last month, fewer visitors attended this year’s International Trade and Investment Fair (MIF) than the previous edition. Mr. Li said the growth of population in Macau is limited, and that besides locals their aim is to attract buyers from other regions. He said that when the MICE (meetings, incentives, conferences, exhibitions) industry first developed in a region, the focus may be scale and number of visitors in order to boost its popularity and reputation. But there are exhibitions for public and professional fairs. While exhibitions aim to welcome more visitors, fairs focus on the volume of trades and transactions made during the sessions. Mr. Li said that last year some

10 percent of exhibition-goers were from Hong Kong, 20 percent from Mainland China, and 60 to 70 percent from Macau. As an organiser, he hopes that this year’s edition will see some returning customers as well as professional buyers from neighbouring regions, especially from the Pearl River Delta.

Three shows, one weekend The 3rd Business Aviation Exhibition runs from today until Sunday. It will showcase 18 aircraft, including the Lineage 1000 from Brazil, Legacy 650, Gulfstream series, Global Express 6000 and Piaggo P180. The 4th China (Macau)

International Automobile Exhibition will open in The Venetian Macao tomorrow in an area occupying 62,000 square metres, in which over 400 automobiles from more than 90 brands will be displayed, a 10 percent increase compared to the previous year. From this Saturday, the 4th International Yacht Import and Export Fair will be held in Grand Coloane Resort with two display areas showcasing onshore and offshore. Exhibitors of sailing boats, powerboats, high-speed vessels, tourism and leasing, and water sports will present their products and services. The fair will display around 40 yachts. Some brands are expected to premiere their newest models at the show.

Sky Shilla ready to take off

ky Shilla Duty Free Limited is going to start operating one of the two Duty Free shops at the Macau International Airport (MIA) tomorrow and the consortium has already registered its trademark in Macau, the Official Gazette

Corporate Conrad Macao appoints Emmanuel Souliere Executive Chef Conrad Macao has appointed Emmanuel Souliere as Executive Chef. Originally from France, Souliere has more than 24 years experience in both the hospitality and restaurant industries and will be overseeing all the hotel food and beverage operations including Western banquet kitchens, in-room dining kitchen, Dynasty 8 and Grand Orbit restaurants, the company said in a statement. “We’re thrilled to have Chef Souliere as our new Executive Chef,” said Charles Newland, senior vice president of food and beverage and director of Paiza operations for Venetian Macau Limited. “With his extensive Western and Asian experience, along with his vast culinary knowledge we know our discerning guests will appreciate his talent and passion for culinary excellence.” According to the statement, Souliere’s passion is to find good produce which drives his creativity, and then he thinks of what will be the best cooking method to bring out the best flavours, believing that seasonings and garnishes add drama to his cuisine.

announced yesterday. The Sky Shilla consortium, a venture by the South Korean-based Hotel Shilla and Hong Kong-based Sky Connection, was one of the winners of the tender for the two duty free shops at Macau Airport.

Although the airport decided only to announce the winners of the tender on October 27, the registration process was initiated on September 8. The other company selected to run a duty free shop was King Power Duty Free (Macau) Company Limited.

November 6, 2014

Gaming

Want to diversify a gaming economy? Get a special pool Singapore and its Marina Bay Sands are showing Macau how a good diversification strategy can generate millions in revenues and tourists beyond casinos

ourists wanting to float in an infinity pool 57 storeys in the sky are paying the most ever to stay at Singapore’s Marina Bay Sands. The hotel’s owner would rather they spend their holiday at a roulette table downstairs. Even as room rates at Las Vegas Sands Corp.’s Singapore resort surged to a record US$468 a night last quarter, more than double the average in the city-state, earnings declined. The taste for luxury accommodation didn’t extend to the casino floor, where high-stakes gaming revenue slumped 34 percent from a year earlier. “We didn’t come here for the casino,” German tourist Raik Wernicke said last week as he and his family waited for a bus to take them from Marina Bay Sands to Singapore’s zoo. “We booked this hotel because of the infinity pool at the sky deck that offers a magnificent view of the city. This is our first visit to Singapore so we’re seeing the sights, enjoying the food and doing some shopping.”

We booked this hotel because of the infinity pool at the sky deck that offers a magnificent view of the city Raik Wernicke, German tourist

More European, Canadian and South Korean tourists aren’t offsetting a slump in visitors from China, whose citizens are estimated to account for half of the city-state’s VIP gambling. Singapore’s woes are mirrored in Macau, Asia’s gaming hub, where casino spending plunged in October by the most since at least 2005 as China’s campaign against corruption prompted gamblers to cut back on lavish spending. Singapore tourist arrivals fell 3.3 percent to 10.3 million in the eight months through August from a year earlier, according to data from the tourism board. Shares of Las Vegas Sands, controlled by billionaire Sheldon Adelson, fell 24 percent this year through yesterday, while Genting Singapore Plc, which operates the Southeast Asian city’s other casino, fell 27 percent to lead declines on the benchmark Straits Times Index. Genting sank as much as 4.2 percent yesterday.

Celebrity chefs Lonely Planet named Singapore its top country destination for 2015, citing the “boat-shaped” Marina Bay Sands complex as a drawcard. As well as the infinity pool, tourists can dine at restaurants run by celebrity chefs including Wolfgang Puck and Tetsuya Wakuda, and shop at the 800,000 square-foot mall across the street that boasts luxury brands and an indoor canal complete with gondolas-forhire, and watch performances such as “Lion King” at two theaters that can accommodate as many as 2,155 guests. Such attractions helped to make the Singapore property the busiest and most expensive among Las Vegas Sands’s hotels. Occupancy at the 2,561-room Marina Bay Sands sat at 99.4 percent in the third quarter, compared with 92.6 percent for the

gaming company’s hotels in Macau and 91.9 percent in Las Vegas. It’s also higher than Singapore’s average occupancy of 86.1 percent in the first eight months.

Big spenders Even with the hotel almost full, Marina Bay Sands posted adjusted earnings before interest, tax, depreciation and amortization of US$351.7 million last quarter, a 5.9 percent drop from a year earlier. “They’re probably not getting big casino spenders into their hotels these days,” Alan Richardson, an investment manager at Samsung Asset Management Co. in Hong Kong. “The gaming revenue normally comes from Chinese tourists and we have seen a decline in visitors from China.” Travelers from the world’s most populous nation, Singapore’s biggest source of tourists after Indonesia, plunged 29 percent in the eight months through August, according to official data. President Xi Jinping is cracking down on corruption and spending by officials, while the disappearance of a Malaysia Airlines’s plane bound for Beijing in March spurred Chinese holidaymakers to choose destinations other than Southeast Asia.

Genting’s profit Marina Bay Sands spokeswoman Gayathri Ramasamy declined to comment when asked how many of its guests visit the casino. Lee Sin Yee, spokeswoman for Genting’s Resorts World Sentosa, declined to comment pending the release of quarterly results on November 11. Genting is expected to post thirdquarter net income of S$138.8 million (US$107.7 million), according to the average estimate of five analysts in a Bloomberg survey, down from S$193 million a year ago.

They’re probably not getting big casino spenders into their hotels these days… The gaming revenue normally comes from Chinese tourists and we have seen a decline in visitors from China Alan Richardson, HK investment manager

Genting is likely to report a steep decline in VIP gaming revenue, according to an Oct. 16 report by Macquarie Group Ltd. Casino revenue from highrollers at Marina Bay Sands dropped 34 percent to $9.1 billion in the third quarter, Las Vegas Sands said last month. With a full house at Marina Bay Sands, that means visitors such as South Korean engineer Jeong Hoon Moon can only see the famous infinity pool from the observation deck. “We wanted to stay in this hotel because it’s a Singapore landmark, but we were told there are no available rooms,” he said on October 30, dragging his luggage. “We’ll just go up the sky park and then head out to a nearby hotel.” Bloomberg

November 6, 2014

Greater China Macau Premier Li to attend ASEAN meetings Chinese Premier Li Keqiang will attend a series of leaders’ meeting on East Asia cooperation from November 12 to 14 in Myanmar, Foreign Ministry spokesman Qin Gang announced yesterday. The meetings, held in the capital city of Nay Pyi Taw, will include the 17th China-ASEAN leaders’ meeting; the 17th ASEAN-China, Japan and Republic of Korea leaders’ meeting; and the 9th East Asia Summit, Qin said. Li will also pay an official visit to Myanmar at the invitation of Myanmar’s President U Thein Sein, Qin said. Myanmar currently holds the rotating chair of the ASEAN.

Growth to moderate in coming years China’s economic growth will moderate further in the next two years as domestic demand is weakened by the property downturn, UBS has forecast. “We forecast China’s GDP growth to slow to 6.8 percent in 2015 and 6.5 percent in 2016. This slowdown is mainly driven by the ongoing property downturn,” Wang Tao, chief China economist with UBS, said. The property downturn is expected to drag down domestic demand through softer construction, weaker heavy industry production and investment, smaller local government financing and slower income growth, Wang added.

Cheung Kong to buy stakes in aircraft

Protests mark Hong Kong business activity fall Sub-indices measuring new orders and output led the decline with a number of companies surveyed attributing the drop to recent political protests

ctivity in Hong Kong’s private sector fell by its biggest margin in three years in October, a private survey showed yesterday, offering a first glimpse of the impact pro-democracy protests are having on the economy and signalling a further slowdown. The monthly Purchasing Managers’ index (PMI) in Hong Kong’s private sector compiled by HSBC/Markit fell to 47.7 in October -- its strongest pace of deterioration in operating conditions since September 2011 -- from 49.8 a month ago. Sub-indices measuring new orders and output led the decline with a number of companies surveyed attributing the drop to recent political protests that have blocked key roads and hurt business activity for more than a month. “The slowdown in economic activity in Hong Kong deepened in October as orders and output fell at an accelerated pace,” John Zhu, HSBC’s economist in Asia, said. The dismal data is the first set of figures that factor in the impact of pro-democracy protests that have rocked the former British colony. It is a harbinger for a weak set of

retail sales figures for October due to be released next month and will weigh on a slowing economy in the second half of 2014, analysts said. The numbers also add pressure on government officials to take

remedial action as the economy suffers from the protracted street protests even though financial markets and central bank officials have downplayed its impact. For more than a month, some

Services PMI falls to 3-month low Cheung Kong Holdings Ltd , owned by Asia’s richest man Li Ka-shing (pictured), said it had agreed to buy stakes worth US$2.02 billion in about 60 aircraft as part of the property firm’s push into airplane leasing. Cheung Kong agreed to wholly buy 45 aircrafts as well as a 60 percent interest in another 15 aircraft from various sellers including GE Capital Aviation Services Ltd, unit of U.S. conglomerate General Electric Co, and Bank of China’s aviation leasing unit, the company said in a filing late on Tuesday.

Cotton farmers subsidized

China will give farmers subsidies of up to 2,000 yuan per tonne for cotton harvested this year outside its top producing region of Xinjiang, the China Cotton Association said yesterday. Xinjiang accounts for more than half of China’s cotton production but the fibre is also grown in provinces including Shandong, Hebei, Henan and Jiangsu. China has overhauled its support policy for cotton growers this year, replacing a stockpiling programme with direct subsidies for farmers. Growers in Xinjiang will be subsidised if the market price for cotton drops below 19,800 yuan per tonne.

An official survey released earlier this week showed that the services sector grew at its slowest pace in nine months in October as the cooling property sector weighed on demand

rowth in China’s services sector weakened further in October as new business cooled, a private survey showed on Wednesday, reinforcing signs of a gradual economic slowdown that could prod the government to unveil fresh stimulus measures. The services purchasing managers’ index (PMI) compiled by HSBC/ Markit pulled back to 52.9 in October - the weakest reading since July - from 53.5 in September.

While this pattern will likely continue, we still expect further (policy) easing measures in the coming months to help offset the downward pressure on the economy Qu Hongbin, chief China Economist, HSBC

A sub-index measuring new business fell to 53.1 in October from 53.2 in October, but subindex measuring employment and outstanding business both inched up, painting a mixed picture. The services sector made up 46.1 percent of gross domestic product in 2013, surpassing the secondary sector - manufacturing and construction for the first time, as the government aims to create more jobs and boost domestic consumption. On Saturday, an official factory survey showed growth falling to a fivemonth low as firms fought slowing orders and rising borrowing costs. Taken together, the surveys appear to indicate that China’s economy lost further momentum heading into the fourth quarter as a cooling property market weighed on activity and export

demand softened, putting Beijing’s official 7.5 percent growth target for the year at even greater risk. Annual economic growth slowed to 7.3 percent in the third quarter, the weakest pace since the global financial crisis, even as the government rolled out more stimulus measures. A Reuters poll published last month forecast the economy could grow at an annual 7.3 percent in the fourth quarter, leaving the full-year pace at 7.4 percent - the weakest in 24 years. Most analysts believe authorities will announce further modest support measures in coming months to support growth, but they are divided over whether policymakers will act more aggressively, such as by cutting interest rates, unless there is a risk of a sharper slowdown. Reuters

November 6, 2014

Macau Greater China KEY POINTS BIGGEST DECLINE IN OPERATING CONDITIONS SINCE SEPT 2011 FIRST SET OF NUMBERS THAT FACTOR IMPACT OF PROTESTS HERALDS WEAK RETAIL SALES, GDP DATA IN COMING WEEKS key roads leading into Hong Kong’s most economically and politically important districts have been barricaded with wood and steel by thousands of protesters. Retail sales, which have faced the

brunt of the impact, are in for more pain. The sector made up nearly a quarter of GDP in 2013, up from 13.6 percent in 2002, according to Deutsche Bank. “If we can achieve flat growth this year, we should all be clapping our hands. I will be very happy if we can still achieve zero growth,” Caroline Mak, chairwoman from the Hong Kong Retail Management Association, told a conference call on Monday. “In view of the uncertain factors, I’m pessimistic over the retail sector.” Cosmetics retailer Sa Sa International Holdings Ltd had early last month posted a drop in retail sales during China’s “Golden Week” holiday between Oct. 1 and 7, as civil unrest in its home market hit shopping activity. Befo r e th e p r o - d em o cr a cy protests kicked off in September, the economy was already slowing thanks to a drop in consumption driven by a decline in tourist spending. Official forecasts for real GDP growth is between 2-3 percent for the full year, compared with 2.9 percent in 2013 though some banks such as Goldman Sachs have already cut their growth targets for 2014 anticipating a weak final quarter. In another sign of how the economy is hurting, private sector firms reduced staffing levels for the seventh consecutive month in October, and the rate of job losses was the quickest in 16 months. The PMI survey polls around 300 companies that represent the structure of the Hong Kong economy, including manufacturing, services, retail and construction. Reuters

HKEx Q3 profit climbs Shares in HKEx have surged by nearly a third in value this year

ong Kong Exchanges & Clearing Ltd (HKEx) posted a 6 percent rise in third-quarter profit as trading volumes climbed ahead of a proposed trading link with Shanghai, but said it did not know when the delayed scheme would launch. The world’s second-largest listed stock market operator reiterated that while it had completed preparations, the scheme, seen as a milestone in the opening up of China’s capital markets, had not received regulatory approval. Lack of clarity on how capital gains tax will be applied is also hindering the launch of the scheme, market professionals speaking at a Reuters China Summit said last week. The bourse’s net profit climbed to HK$1.28 billion (US$165 million) in July-September from HK$1.2 billion a year earlier, according a Reuters calculation from HKEx’s statement yesterday. It also hinted that it could scale back an aggressive fee hike on the London Metal Exchange, which it purchased in 2012. HKEx said last September it would hike fees by 34 percent in January 2015, but in yesterday’s statement said the hike ‘could be subject to minor revisions’.

KEY POINTS Q3 NET PROFIT UP ON INCREASED TRADING VOLUMES POLITICS, TAX CONCERNS HINDER SHANGHAI STOCK CONNECT LAUNCH HKEX REITERATES NO TIMETABLE FOR LAUNCH HKEX HINTS COULD TINKER WITH LME FEE HIKE

Shares in HKEx have surged by nearly a third in value this year compared with a 2.6 percent rise in the benchmark Hang Seng index on anticipation of the new link with Shanghai. The trading link could boost the average daily value of trading on the bourse by around 38 percent to HK$93 billion (US$12 billion) by 2015, according to estimates by BNP Paribas. Reuters

Reform plan to loosen grip on some state firms The guidelines will encourage the separation of business from politics

hina is set to publish a planning document aimed at improving the country’s inefficient stateled firms by harnessing the power of the market, subject to the government’s enduring reluctance to cede too much control over the economy. One year after President Xi Jinping called for measures to diversify ownership and improve management at state-owned enterprises (SOE), the document will provide new nationwide principles to draw non-state capital and grant managers more freedom from political interference, according to officials briefed on the plan. The guidelines, expected within weeks, will fall short, however, of the most farreaching measures, such as privatisation and market deregulation, which might challenge the state’s preeminence in economic matters. Improving the efficiency at the SOEs, which dominate China’s economy, is critical as the country struggles to maintain the breakneck pace of growth it has delivered for two decades.

Off limits The guidelines, which follow a year of pilot

investors familiar with the deal.

Open door

President Xi Jingping (L) and Premier Li Keqiang (R) implemented measures for separating politics and business links

programmes at central and local government-backed entities, will encourage the separation of business from politics through the appointment of independent company management and boards of directors, which would be answerable to independent state asset managers. They are also expected to promote stake sales to portfolio and private investors, particularly in the country’s most competitive sectors, though strategic industries would remain largely off limits, especially to foreign investors.

For sectors involved in national security, there “certainly won’t be opening”, said Zhang Chunxiao, professor of economics at Peking University and adviser to SASAC, while there will be restricted opening for public service industries such as utilities. Beijing is considering publishing a ‘negative list’ of the strategic sectors and businesses restricted to domestic investment, said Zhang. A landmark trial for mixed ownership took place in September, when statecontrolled oil giant Sinopec

Corp sold 30 percent of its retail business to 25 big financial companies for US$17.5 billion. While foreign investors such as Asia private equity firm RRJ Capital was allowed to take a small stake in the deal, China’s biggest asset managers, including Harvest Capital Management Co, China Life Insurance Co and People’s Insurance Group of China Co. Ltd, took the lion’s share. Such transactions might make financial sense for foreign buyers, but would not necessarily improve operational efficiency, said

At a State Council meeting last month, Premier Li Keqiang said China would “open the door” for non-state investment in infrastructure, agriculture and culture. Drafting of the guidelines is being spearheaded by President Xi’s comprehensive reform office, which in October sent teams to various provinces, municipalities and state-owned firms to conduct assessments. Local reports say reaching consensus has been complicated by differing political interests at the national and local level and bureaucratic rivalries among government bodies including SASAC, the finance ministry, and top planning agency the National Development and Reform Commission. While the government wants to promote independent management at SOEs, it has also weighed the competing priority of stamping out corrupt practices at state firms, where executives have regularly enriched themselves. Reuters

November 6, 2014

Greater China

Draft rules ease limits on foreign investment The draft cuts the number of sectors where China limits foreign investment to 35 from the current 79

hina aims to loosen restrictions on foreign investment in certain sectors to improve the efficiency of its domestic companies and bring in new technologies, the country’s top regulator said late on Tuesday. New draft rules, a revision of an existing list, cut the number of sectors where China limits foreign investment to 35 from the current 79, opening up areas such as steel, oil refining, paper making and premium spirits, the National Development and Reform Commission (NDRC) said. Beijing is keen to improve the country’s inefficient stateled firms by harnessing the power of the market to stave off slowing growth. However, despite the government’s calls for greater reform of state-owned enterprises, it has been reluctant to cede too much control over the economy. The NDRC said that the measures were aimed at adapting to a more globalised economy and would help China actively hasten its

The focus will be on opening up manufacturing and services sectors to the outside NDRC statement

“opening up” process and improve transparency. “The focus will be on opening up manufacturing and services sectors to the outside,” the NDRC said in a statement on its website, adding that the move would help boost China’s international competitiveness. Sectors such as steel have faced overcapacity, while others are keen to lure foreign investors to bring in technological know-how to help upgrade their operations. Beijing will still ban foreign investment in 36 sectors, the draft rules said. The NDRC is seeking feedback on the proposed revision until Dec. 3, it said. China has issued a similar list since 1995 and has been revising it every three years. The current version was issued in 2011, state news agency Xinhua said. In total, the draft lists 349 sectors that welcome foreign investment, including vocational training, homes for seniors and services for children and the disabled. Reuters

Alibaba’s results affirm growth Gross merchandise volume rose 48.7 percent to US$90.5 billion Paul Carsten

libaba Group Holding Ltd’s e-commerce and mobile businesses surged in the September quarter, far outpacing its rivals’ and glossing over weakening margins and decelerating earnings growth. Its shares edged as much as 3 percent higher to a record high after the Chinese e-commerce company reported a brisk 49 percent rise in the gross value of merchandise sold. Revenue rose 53.7 percent in the three months ending in September, dwarfing Amazon.com Inc’s 20 percent growth over the same period. Alibaba’s first quarterly report since its record US$25 billion U.S. initial public offering affirmed Wall Street’s expectations of industryleading growth. Investors have focused on its dominance in China, despite concerns about corporate governance and sliding margins.

The company indicated that its shopping spree, in which it has spent more than US$6 billion since the beginning of the year, might not be ending yet as it aims to increase its user base. Margins on earnings before interest, taxes, depreciation and amortization contracted to a slightly weaker-thanexpected 50.5 percent, from 54.4 percent in the previous quarter. But on Tuesday, investors focused on 52 percent growth in active users, to 307 million - roughly as many people as there are Americans and an improvement in the mobile monetization rate to 1.87 percent versus 1.49 percent previously. That means the Chinese company is getting a larger percentage of every mobile transaction it handles. Its shares rose to a high of US$104.96, up more than 50 percent from its US$68 debut price.

Alibaba’s Taobao office

“Results came in strong, particularly on the top line, with accelerating revenue growth, while the bottom lines were somewhat noisy,” said Cantor Fitzgerald’s Youssef Squali. Revenue totalled US$2.74 billion, versus expected sales of US$2.7 billion, its fastest growth in three quarters.

Non-stop shopping The company’s investments are geared toward adding more customers and converting them into users of Alibaba’s core e-commerce businesses, as well as increasing the number of products and services Alibaba offers, said Joe Tsai, the company’s executive vice chair. Alibaba also said it would invest in new initiatives such as its mobile operating system, location-based services and digital entertainment, though those were long-term projects, he said. The e-commerce giant “will continue to make strategic investments to grow our revenue,” Chief Financial Officer Maggie Wu said on an earnings call with analysts. Mobile revenue was more than 10 times higher than in the same period last year and accounted for 22 percent of total revenues. Mobile GMV accounted for 35.8 percent of that total, up from 14.7 percent in the same quarter of 2013.

KEY POINTS E-commerce volume surges more than 50 percent Mobile business continues to deepen and expand Shares scale new peaks

The non-GAAP net income of US$1.11 billion for the JulySeptember quarter - which excludes the share-based compensation expenses and amortisation of intangible assets - compared with a consensus estimate of US$1.17 billion based on a Thomson Reuters SmartEstimate poll of 21 analysts. Diluted earnings per share were US$0.20, while non-GAAP diluted earnings per share were US$0.45, up 9.4 percent year-on-year and in line with Wall Street estimates. But overall profit margins shrank to a two-year low of 18 percent, as extraordinary expenses the company chiefly attributed to share-based compensation charges of US$490 million around the time of its initial public offering ate into profits. Reuters

November 6, 2014

Asia

NZ’s immigrants hold wage inflation down The growth has helped create jobs in the South Pacific island nation, pulling down the unemployment rate from a 14-year high of 7.2 percent in 2012

ew Zealand’s robust economy is soaking up jobs at its fastest rate in more than five years even as immigration soars, keeping a lid on wages and relieving pressure on the central bank to raise interest rates. Official data yesterday showed the country’s unemployment rate fell to 5.4 percent in the third quarter, its lowest level since the first quarter of 2009, while annual wage growth was contained at 1.9 percent. That enviable milestone is a side effect of an economy, which grew at a decade-high rate of 3.9 percent in the second quarter, humming on all cylinders led by a booming housing market and growing global demand for dairy products - the country’s biggest export earner. While this would normally be a recipe for higher inflation, rising immigration has added to buoyant labour supply, keeping the participation rate hovering near a record of around 70 percent, one of the highest levels among OECD countries. As a flood of returning New Zealand expatriates boosts annual immigration to record highs, a widening pool of workers has enabled employers to stave off wage increases, helping to lower overall annual inflation to 1.0 percent in the third quarter. That is well below the central bank’s 2.0 percent target, and most economists believe inflation pressures will remain subdued in coming months. That will allow the Reserve Bank of New Zealand (RBNZ) to keep official interest rates on hold at 3.5 percent until at least the second half of 2015. Overall price pressures have been subdued, as an annual rise in housingrelated inflation has been offset by only minimal rises in most consumer price categories. A high New Zealand dollar has also helped dampen price pressures from imports. Like the majority of forecasters,

Dairy products constitute a major part of New Zealand’s economy

KEY POINTS NZ unemployment rate falls to 5 1/2-yr low of 5.4 pct Economy soaking up flood of returning workers, migrants Swelling labour pool keeping lid on wages, inflation RBNZ seen on hold until late next year

Westpac expects the RBNZ to deliver its next rate rise in September 2015. New Zealand has enjoyed a relatively low unemployment rate since 2000. It hovered below 4 percent in 2004-2008, in part because the small island’s growing economy has a working-age population of only 3.5 million. The wave of immigration has provided a large pool of workers for infrastructure projects in the Canterbury region, which is under reconstruction following earthquakes in 2010 and 2011. Job recruiters and job site operators say that New Zealanders returning from overseas, a dwindling flow of

Kuroda bets all to meet price goal The BOJ shocked global financial markets last week by expanding its massive stimulus spending in a stark admission Leika Kihara and Stanley White

ank of Japan Governor Haruhiko Kuroda, who last week stunned global financial markets by expanding a massive monetary stimulus programme, said the central bank is determined to do whatever it takes to hit its 2 percent inflation in two years. Kuroda also stressed the BOJ stands ready to ease monetary policy again should risks threaten achievement of its price target. “There’s no change to our policy of trying to achieve 2 percent inflation at the earliest date possible, with a roughly two-year time horizon in mind,” the central bank chief said in a speech at a seminar yesterday. The BOJ shocked global financial markets last week by expanding its

massive stimulus spending in a stark admission that economic growth and inflation have not picked up as much as expected after a sales tax hike in April.

Kuroda said while inflation expectations have been rising as a trend, the BOJ decided to ease to preempt risks that slumping oil prices will slow consumer inflation and delay

“Kiwis” leaving to work in Australia, and an influx of skilled migrants from Asia and beyond are being snapped up by firms focused on expansion after recovering from the global financial crisis. But they added that, as much as the domestic labour pool has grown, employers are still struggling to find skilled workers at home to fill new positions, prompting more companies to look overseas to recruit. As a buoyant economy prompts more workers to seek better paying jobs, job recruiters said that employers struggling to fill positions were starting to relent to demands for higher wages. Reuters

progress in shaking off the public’s deflationary mind-set. “In order to completely overcome the chronic disease of deflation, you need to take all your medicine. Halfbaked medical treatment will only worsen the symptoms,” he said. Kuroda repeated the BOJ’s projection that Japan will likely hit the bank’s price target sometime in the next fiscal year beginning in April 2015, supported by expanded quantitative and qualitative easing (QQE) programme. While he stressed that Japan’s economy continued to recover moderately, Kuroda said falling commodity prices could be risks to the outlook if they reflected weakness in global growth. In deploying QQE last April, the BOJ pledged to double base money via aggressive asset purchases to achieve its 2 percent inflation target in roughly two years. But many analysts still doubt whether inflation will accelerate so quickly in a country that had been mired in deflation for nearly two decades. The Japanese economy was hit hard in the second quarter, suffering its biggest slump since the global financial crisis after an April sales tax hike dented consumption. Reuters

November 6, 2014

Asia S.Korea foreign reserves fall South Korea’s foreign reserves fell for a third straight month in October, as its holdings of euros and sterling weakened against the dollar, the central bank said yesterday. Foreign reserves held by South Korea edged down to US$363.72 billion by the end of October from US$364.41 billion at the end of September, the Bank of Korea said in a statement. The central bank said the euro fell 0.7 percent against the dollar and the pound slipped 1.5 percent in October, leading to an overall decline in its foreign reserves. It does not give a breakdown of its reserves.

Aussie economy to suffer in 2015

Investment bank Morgan Stanley yesterday released a report estimating that Australia’s economic growth in 2015 will slow to below 2 percent and unemployment will rise to nearly 7 percent. The bank’s team of Asia-Pacific researchers said Australia had not made a successful transition from its dependence on mining- related infrastructure to a more balanced growth. It said Australia was suffering in declining trade and the property boom had not yet translated into broader business expansion.

Myanmar opens investment Myanmar allowed 12 local companies and four foreign firms to make investment in the country last month, the Directorate of Investment and Company Administration said yesterday. Of the 12 national-owned companies, two are expected to invest in local and foreign air transportation services, while others will build and run hotels, private hospitals, produce stones or pave roads, as well as in shoe manufacturing and garment. The foreign firms are allowed in joint ventures in logistics services, cinemas, refurbishment of Mandalay airport and distribution of food and beverage.

CBA profit rises Commonwealth Bank of Australia, the country’s top lender by market value, posted a near 10 percent rise in first-quarter cash profits yesterday as demand for home loans remained strong and bad debt charges fell. Unaudited cash profits for the three months to September 30 totalled A$2.3 billion (US$2 billion), CBA said, compared with A$2.1 billion reported in the same period a year ago. Group net interest margins fell slightly while revenues rose faster than costs, it said. Three of Australia’s major four banks, including CBA, have posted record profits in the recently-ended financial year.

Indonesia Q3 GDP grows at slowest pace in 5 years The data showed that growth slowed most notably in trade, transport and communication, and financial services Gayatri Suroyo and Nilufar Rizki

ndonesia’s gross domestic product grew 5.01 percent in the third quarter from a year earlier, its slowest in five years, highlighting the challenge that the new President Joko Widodo faces trying to turn around Southeast Asia’s largest economy. Growth in the G20 economy has trended lower since a peak in 2010 as exports suffered from weak global demand, while a wide current-account deficit plus political uncertainty in an election year has unnerved investors. “We doubt that growth will slow much further from here, but we don’t expect it to rebound either,” said Gareth Leather, an economist at Capital Economics, adding that exports are likely to remain weak. Exports were 0.7 percent lower in the third quarter from a year ago, following on from a fall of 1.04 percent in the second quarter. Imports were down 3.63 percent in the third quarter from a year ago, after 5.02 percent fall in the second quarter.

Elected in July and sworn in late last month, Widodo has pledged to boost economic growth to 7 percent on average during his five-year-term. In the previous quarter, gross domestic product (GDP) grew slightly quicker at 5.12 percent, but was also the slowest rate since the third quarter of 2009. During July to September, investment rose 4.02 percent in the third quarter from a year ago, and down from the second quarter rate of 4.53 percent. It had been growing twice as fast two years ago. Growth in private consumption, which accounts for more than half of the GDP, decelerated slightly. The data also showed that growth in manufacturing and several services sector slowed, most notably trade, transport and communication, and financial services. Annual growth in manufacturing, which accounts for almost a quarter of GDP, slowed to 4.61 percent in

We doubt that growth will slow much further from here, but we don’t expect it to rebound either Gareth Leather, economist, Capital Economics

the third quarter, compared to 5.04 percent in the second quarter. Mining sector gained in the third quarter, growing 0.31 percent after contracting in the first half of the

Philippines central bank may defer rate hikes Growth in money supply also supported views the central bank would stand pat on rates at its last meeting for the year

he Philippine central is likely to leave interest rates on hold for the rest of the year, given easing inflation and slowing money supply growth, before it resumes raising them next year ahead of policy tightening by the U.S. Federal Reserve. Bangko Sentral ng Pilipinas Governor Amando Tetangco said yesterday the central bank can pause its tightening cycle after data yesterday showed inflation slowed for a second straight month in October. Growth in money supply, which rose at its slowest annual pace in over a year in September, also supported views the central bank would stand pat on rates at its last meeting for the year on December 11. “These developments give us room to pause,” Tetangco told reporters in a mobile text message, giving his strongest hint yet the central bank would wait on the side lines at least for the rest of the year.

Lower food and fuel prices helped bring down consumer price index growth to 4.3 percent, the slowest in six months, but slightly above economists’ 4.2 percent estimate in a Reuters poll. Prices of food and non-alcoholic drinks rose 7.0 percent, the smallest increase in five months. Food prices saw their smallest rise since May. Food accounts for 39 percent of the consumer price basket. The housing, water, electricity, gas and other fuels index has been in the negative territory for most part of the last five months. “We expect the central bank to pause until the middle of next year,” said RBS economist Vaninder Singh. “With the US Fed tightening or expectations of Fed tightening, we see volatility in currency and that would push BSP (central bank) to raise rates.” After five consecutive tightening moves, the central bank on Oct. 23

KEY POINTS CPI slows for second straight month Food price index at 5-month low Money supply growth at slowest in a year left the overnight borrowing rate and the rate on its special deposit accounts steady at 4.0 percent and 2.5 percent, respectively. The central bank expects inflation to slow to an average of 3.7 percent next year after a projected 4.4 percent rate in 2014. It has a 3-5 percent inflation target this year and 2-4 percent next year. Reuters

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November 6, 2014

Asia Indian services growth stalls in October The HSBC Purchasing Managers’ Index (PMI) fell to 50.0 in Oct from Sept’s 51.6

The government’s near-term focus is on regaining investors’ confidence Coordinating Minister of Economics Sofyan Djalil said

year, after PT Freeport Indonesia and PT Newmont Nusa Tenggara reached an agreement with the government to resume exports of copper concentrates. Analysts also doubt whether the central bank will be able to adopt policies supportive of growth, given the need to dampen inflation, with expectations that regulated fuel prices will be raised soon. The government’s near-term focus

is on regaining investors’ confidence through reforms of the bureaucracy to cut red tape, Coordinating Minister of Economics Sofyan Djalil told a press briefing last Friday. The president recently visited the Investment Coordinating Board on one of his signature “spot checks” to ensure that the agency is going to be ready to serve as one-stop investment service. Reuters

rowth in India’s dominant service industry stalled last month as new orders came in at a weaker pace, adding to pressure on the government to drive through economic reforms, a business survey showed yesterday. The stagnation came despite firms barely raising their prices - probably writing off any likelihood that Reserve Bank of India will cut interest rates anytime soon to support economic growth. Any evidence of a slowdown will be disappointing for Prime Minister Narendra Modi, who took over in May, after Asia’s third-largest economy expanded a better-than-expected 5.7 percent year-on-year in the quarter ended in June. The HSBC Purchasing Managers’ Index (PMI), compiled by Markit, fell to 50.0 in October from September’s 51.6, the lowest in six months and right on the break-even point between growth and contraction. New Delhi has so far managed to push through only minor reforms to boost the economy and attract investments but last month’s success in a couple of state elections could change that.

Modi’s government picked up the pace on economic reforms last month and a recent Reuters poll predicted that would drive India’s economic growth to its fastest pace in two years in the current fiscal year. “The revival of reforms post recent state elections, if sustained, should lift growth on a broad basis,” said Frederic Neumann, co-head of Asian economic research at survey sponsor HSBC. New business growth slowed a fivemonth low but continued to expand at a modest pace. Still yesterday’s PMI showed services firms were only able to increase their prices a bit faster last month, pointing to sluggish consumer demand. The prices charged sub-index only nudged up to 50.7 from September’s near four-year low of 50.6. The Reserve Bank of India is not expected to cut its key interest rate to support the economy until well into next year, the Reuters poll found. Weak inflation - which at 6.46 percent in September was the lowest since figures were first published in January 2012 - will do little to change that view. Reuters

Japan real wages fall at slower pace The wage report is likely to be of little comfort to Prime Minister Shinzo Abe The wage report is likely to be of little comfort to Prime Minister Shinzo Abe (pictured)

apan’s real wages fell at a slower annual rate in September, government data showed, but doubts about consumer spending are likely to linger as the government has made little progress with policies to promote economic growth. Real wages, which are adjusted to reflect changes in consumer prices, fell 2.9 percent in September from a year earlier, following a revised 3.1 percent annual decline in August, data from the labour ministry showed yesterday. Summer bonus payments grew at the fastest pace in 23 years, but this coincided with a slump in consumption, suggesting households were not confident enough to boost spending. The wage report is likely to be of little comfort to Prime Minister Shinzo Abe, who is struggling with a slump in popularity amid a looming decision by year’s end on raising the sales tax next year. Doubts about real wages could make politicians reluctant to go ahead with a sales tax hike to 10 percent from 8 percent scheduled for October 2015. Japan’s economy shrank an annualised 7.1 percent in AprilJune, the worst slump since the global financial crisis in 2009, as consumer spending and capital expenditure weakened after an initial increase in the sales tax to 8 percent from 5 percent in April.

2.9 pct yearly wages decline in September

The wages data are also important for the Bank of Japan, which last week expanded its quantitative easing programme after inflation and inflation expectations started to slow. Summer bonus payments, which cover the period from June to August, rose 3.1 percent from a year ago, the largest gain since 1991, the data showed. The bigger bonuses should be welcome news for policy makers hoping to stoke domestic demand, but consumers remain reluctant to open their wallets given a fragile economic recovery. Overtime pay, a barometer of strength in corporate activity, rose 1.6 percent in September from a year earlier. That was faster than a revised 1.2 percent annual gain in August. Total cash earnings rose 0.8 percent in the year to September, slower than a revised 0.9 percent annual increase in the previous month. Reuters

November 6, 2014

International Putin and Obama not to meet at APEC No bilateral meetings between Presidents Barack Obama and Vladimir Putin are scheduled during the APEC and G20 summits next week, a Kremlin spokesman said yesterday. “No bilateral meeting is planned for the moment,” spokesman Dmitri Peskov said, according to the RIA Novosti news agency. He added that informal contacts between the US and Russian leaders were not ruled out. The Asia-Pacific Economic Cooperation (APEC) forum is to be held in Beijing on Monday and Tuesday, while the G20 will convene in Australia days later, on November 15-16.

Alstom refocuses on rail France’s Alstom, which is selling most of its energy equipment business to General Electric, said it expects its remaining rail arm to grow and generate cash this year. Over the medium term, the engineering group said it expects sales at the “new Alstom” to grow over 5 percent per year like-for-like and its operating margin to gradually improve within a 5 to 7 percent range. Alstom said in a statement that it would hold a shareholder meeting on December 19 to approve the 12.4 billion euro (US$15.55 billion) deal with General Electric.

Russia limits interventions Russia’s central bank said yesterday it had changed its intervention policy for the rouble exchange rate and was now limiting the size of its interventions to US$350 million a day. In a statement, the bank said the move would significantly increase the flexibility of the exchange rate, meaning the rate will now largely be determined be market factors. The bank also said it would continue to move the rouble’s corridor against a dollar-euro basket by five kopecks once the bank has expended US$350 million in interventions.

IMF gave richer countries wrong austerity advice IMF advocated loose monetary policies to sustain growth and boost demand in advanced economies, initially ignoring the possible spill-over risks Anna Yukhananov

he International Monetary Fund ignored its own research and pushed too early for richer countries to trim budgets after the global financial crisis, the IMF’s internal auditor said. The Washington-based multilateral lender, concerned about high debt levels and large fiscal deficits, urged countries like Germany, the United States and Japan to pursue austerity in 2010-11 before their economies had fully recovered from the crisis. At the same time, the IMF advocated loose monetary policies to sustain growth and boost demand in advanced economies, initially ignoring the possible spill over risks of such policies for emerging market countries, the Independent Evaluation Office, or IEO, said in a report that analysed the IMF’s crisis response. The IMF advises its 188 member countries on economic policy, and provides emergency financial assistance to its members on the condition they get their economies back on track. The internal auditor said the IMF should have known that the combination of tight fiscal policy and expansionary monetary policy would be less effective in boosting growth after a crisis. Evidence showed that the private sector’s focus on reducing debt made it less susceptible to monetary stimulus. In 2012, the IMF finally admitted that it had underestimated how much budget cuts could hurt growth and recommended a slower pace for

IMF Managing Director Christine Lagarde (pictured) said the IMF’s advice was reasonable

austerity policies. But its auditor said the IMF’s own research showed this relationship even before the crisis. IMF Managing Director Christine Lagarde said the IMF’s advice was reasonable, given the information and economic growth forecasts it had in 2010. “I strongly believe that advising economies with rapidly rising debt burdens to move toward measured consolidation was the right call to make,” Lagarde said in a statement. The IEO report looked at the IMF’s crisis response through the end of 2013 but excluded lending to euro zone countries in order to avoid interfering with current programs, such as the IMF’s loan program to Cyprus, which will not end until 2016. However, the auditor did acknowledge that the IMF’s close work with the European Central Bank and European Commission on euro zone loan programs raised some concerns

about the IMF’s independence and equal treatment of all members. Echoing that point, Paulo Nogueira Batista, IMF executive director for Brazil and 10 other emerging market countries, said the IMF played the role of “junior partner” in the trio of lenders, at times ignoring its own policies, according to a statement Batista and others in his office presented to the IMF board. The statement does not represent the IMF’s views. The IEO also urged the IMF to quickly pass 2010 governance reforms meant to boost its funding and give more say to emerging markets. The reform measures have been held up because the U.S. Congress has not ratified them. The delay leaves the IMF reliant on temporary or bilateral borrowing for 70 percent of its credit capacity and leaves it vulnerable in case of a future crisis, the IEO said. Reuters

Twenty-First Century Fox revenue up

BTG Pactual misses profit estimates

Twenty-First Century Fox Inc., the film and TV company controlled by Rupert Murdoch, reported an 11.7 percent rise in quarterly revenue, helped by growth in its cable network and film studio businesses. Net income attributable to shareholders fell to US$1.04 billion, or 47 cents per share, in the quarter ended Sept. 30, from US$1.26 billion, or 54 cents per share, in the same quarter of 2013. The company said first-quarter revenue rose to US$7.89 billion from US$7.06 billion a year earlier.

Expenses fell 4.7 percent, more than the 1.8 percent decline the poll predicted

Cards to cut fees for Canadian merchants Visa and MasterCard voluntarily agreed to cut the fees they charge to Canadian retailers for credit transactions, the government said, adding it now sees no need to regulate fees set by credit card networks. The Canadian government said the agreement should result in lower prices for consumers. Canadian retailers have long bemoaned the high interchange fees they pay credit card companies and banks for transactions. Unlike American Express, which typically negotiates a flat fee with every merchant, Visa and MasterCard have variable fees based on the status of their different cards.

rupo BTG Pactual SA missed third-quarter profit estimates as Latin America’s largest independent investment bank grappled with an unexpected jump in taxes and a shortfall from proprietary investments that weighed on revenue. Net income at the São Paulobased bank, controlled by billionaire financier André Esteves, declined for the first quarter in six, driving annualized return on equity to the lowest level since the first quarter of last year. On the other hand, the bank grew its loan book at the fastest pace this year. BTG Pactual earned 769 million reais (US$308 million) in the quarter, below the average estimate of 864 million reais in a Reuters poll. Return on equity, the most widely watched gauge of profitability in the banking industry, slipped to 17.3 percent, compared with the poll’s 19.4 percent estimate. Operational revenue fell 2.3 percent on a quarter-on-quarter basis to 1.702 billion reais, below the poll’s estimate

In a quarter marked by volatility and adverse conditions in credit and equity markets, we reduced risk and exposure and remain confident that steps towards consolidating our business platform will broaden our revenue base André Esteves, BTG Pactual CEO

of 1.863 billion reais. Investmentbanking revenue plunged 41 percent sequentially, in line with estimates, as mergers and acquisitions advisory as well as equity offerings struggled with the impact of Brazil’s presidential election. Esteves’s drive to trade more physical commodities helped sales and trading income rise an unexpected 21.2 percent. That line, which totalled 784 million reais, stood above last year’s quarterly average, a sign of healthy revenue generation. Principal investments, or income from investing the bank’s own money in hedge funds, private-equity investments and real estate, had a shortfall of 164 million reais, compared with the poll’s estimate of a gain of 302 million reais. Income tax payments rose almost six-fold to 231 million reais on a quarterly basis, following the booking of interest on equity and after a significant portion of recurring revenues were subject to higher levies in the period. Reuters

November 6, 2014

Opinion Business

The Asian paradox

Leading reports from Asia’s best business newspapers

Yoon Young-kwan

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Former Minister of Foreign Affairs and Trade of the Republic of Korea, is Professor of International Relations at Seoul National University

BANGKOK POST Volatile foreign exchange rates will be the biggest threat to Thailand’s exports next year as some signs point to an economic recovery, says a leading business group. The concern was raised at a meeting of the Joint Private Standing Committee on Commerce, Industry and Banking, a group of some of the most powerful businessmen in the country. It sees risks in the Ebola outbreak in West Africa and tensions and tensions in the Middle East having a significant effect on Thailand’s shipments next year.

THE STRAITS TIMES A number of real estate investment trusts (Reits) and other market players have banded together to form a Reit industry association, the Straits Times has found out. The news of the association on the back of proposals from the Monetary Authority of Singapore (MAS) in early October to shake up the US$63 billion Reit sector in Singapore, which is the biggest in Asia after Japan. The Reit Association of Singapore (Reitas) has nine members in its executive committee, which includes large Reit sponsors such as Mapletree, CapitaLand and Keppel.

THE STAR Proton Holdings Bhd and Honda Motor Co Ltd are currently engaged in a series of meetings to explore the possibility of collaborating in the field of technology enhancement, new product lines and sharing of platform and facilities. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said it would signal a long-term strategic collaboration which would involve more Proton engineers and local automotive vendors in a technical collaboration that would meet customer satisfaction. “This new development model is expected to help Proton save millions in investment and development time for a new model,” he said.

THE JAKARTA POST The government has boosted exports of a number of new items in a bid to meet its export targets and reduce the trade deficit. It has intensified overseas shipment of at least eight types of goods and commodities, such as shrimp, processed food, chemicals and jewellery, for the end of this year, amid continuing weak overseas demand, according to the Trade Ministry’s director general for national export development Nus Nuzulia Ishak. Monthly shrimp and fish exports surged significantly by 32.1 percent to US$292.6 million in September from a year earlier, according to Trade Ministry data.

iven that the 21 members of the Asia-Pacific Economic Cooperation forum account for some 54% of global GDP and about 44% of world trade, the agenda for this month’s APEC summit should be drawing much global attention. Yet the only issue in which anyone seems interested is whether or not Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe will meet on the side lines, and, if they do, whether a substantive discussion to ease bilateral tensions will take place. Of course, this is not altogether unreasonable, given the two countries’ importance in shaping East Asia’s future. Indeed, the uncertainty about whether two of APEC’s key leaders will even speak to each other highlights the grim reality of Asian international relations today. The supposed “Asian century” is being thwarted by a paradox: deep economic interdependence has done nothing to alleviate strategic mistrust. Given the recent deterioration of Sino-Japanese relations – a decline that accelerated in 2012, when Japan purchased the disputed Senkaku Islands (Diaoyu Islands in Chinese) from their private owner to prevent Japanese nationalists from taking control of them – the mere fact that Abe will attend the summit is a major step. A meeting between Abe and Xi – their first since either came to power – would offer concrete grounds for hope. The Japanese government has made significant diplomatic efforts to orchestrate a meeting, with former Prime Minister Yasuo Fukuda visiting Beijing in July to try to ease tensions. According to some media reports, in order to secure China’s agreement to participate in a meeting during the APEC summit, Abe even agreed to acknowledge that Japan’s claim to the Senkaku Islands is disputed.

Now, as Japan’s economic recovery stalls, the country’s business sector seems to be pressuring Abe’s government to work harder to mitigate the impact of its deteriorating relationship with China

Given that such a move would imply that China’s claim to the islands may have some legitimacy, Abe’s possible concession on this point is no trivial matter; it could even mean that he will agree with China to restore the status quo ante. In that case, one hopes that Xi will follow Deng Xiaoping’s counsel and allow the issue to be “shelved for some time” so that the “wiser” next generation can “find a solution acceptable to all.” That now seems to be a realistic possibility. Indeed, lately

Xi seems to have softened his tone, if not necessarily his diplomatic line. For example, he allowed Li Xiaolin, the daughter of a former Chinese president, to meet with Abe, with whom she watched a performance by a visiting Chinese dance troupe in Tokyo. And Chinese Prime Minister Li Keqiang shook hands with Abe at the recent Asia-Europe Meeting in Milan. One reason for Abe and Xi’s newfound flexibility may be domestic political shifts in both countries, which have created a more equal balance between conservative, nationalist groups and more internationally-oriented business interests. With both leaders having spent the last two years overcoming domestic opponents and consolidating their power, they may have gained confidence in their ability to compromise. In Japan, Abe has satisfied his conservative supporters with cabinet resolutions to allow for expanded self-defence. Despite domestic opposition to Japan’s new security doctrine, no politically influential group was able to organize an effective challenge to Abe’s approach. Now, as Japan’s economic recovery stalls, the country’s business sector seems to be pressuring Abe’s government to work harder to mitigate the impact of its deteriorating relationship with China. According to a Chinese government report, in the first half of 2014, Japanese direct investment in China was almost 50% lower than during the same period last year – a clear sign that Japanese business leaders fear for the future in Japan’s second largest market. Meanwhile, in China, Xi has gained considerable confidence through his massive anti-corruption campaign, with the punishment of top military officers indicating that he has solidified his control over the People’s Liberation Army (PLA). As a result, Xi may believe that

he now has more space to address the country’s economic slowdown, including by lessening the damage wrought by weakening ties with Japan. If this assessment is accurate, the obvious next question is how much further Abe and Xi can move toward détente, thereby appeasing their business sectors, without losing the backing of nationalists, who tend to view the bilateral relationship as a zero-sum game. For Abe, the choice is whether to tone down his nationalist rhetoric and moderate his position on contentious historical issues. This would include halting visits to the controversial Yasukuni shrine (which honours, among others, 14 Class A war criminals who were executed after World War II) and abandoning revisionism regarding the Korean “comfort women” who were forced to provide sexual services to the Japanese Imperial Army. How Abe decides is likely to depend on his confidence in his political position. Similarly, if Xi remains confident enough in his control of the PLA and truly follows China’s official policy of “peaceful development,” he will be able to take the kind of prudent approach that Deng advocated. This would entail recognizing and trying to assuage the fears that China’s rise is causing among its neighbours, as Otto von Bismarck did after German unification in 1871. Observers might then read his recent efforts to improve relations with Japan, not to mention Vietnam, as a genuine strategic shift, rather than a temporary tactical adjustment. In this uncertain context, the APEC summit could shed much-needed light on the intentions of Abe and Xi, thereby providing crucial insight into the trajectory of Sino-Japanese relations – and thus the future of East Asia. Project Syndicate

November 6, 2014

Closing Slowing power growth may reflect structural changes China’s largest oil tanker puts to sea Growth in China’s power consumption is expected to halve to between 3.5 percent and 4 percent in 2014, the China Electricity Council forecast, marking the slowest growth in at least a decade. The marked deceleration comes as economic growth in the world’s second-largest economy has slipped to its lowest level in five years, growing by 7.3 percent in the third quarter. But while electricity consumption rates seem to indicate a sharp slowdown in growth, analysts said the real economy was still robust, as government efforts to rebalance the economy in recent years means growth is now less-reliant on energy-guzzling sectors.

China’s largest oil tanker, with vessel displacement 7 times that of the country’s only aircraft carrier “Liaoning”, was delivered yesterday in south China’s Guangzhou City. The 333-meter tanker “Kaigui” was built by Guangzhou Shipyard International Co. Ltd. for the China Merchants Energy Shipping Co. Ltd., which is China’s largest offshore oil shipping firm. The vessel, with a dead weight of 320,000 tonnes, can circle the equator without refuelling. It can accommodate helicopter take-off and landing and is equipped with automatic control system, which can enable unmanned navigation.

Big companies disclose too little on operations abroad While there were six Chinese companies among the 10 worst performers, U.S. firms also figured

he world’s biggest companies disclose little or no financial details about their operations abroad, according to a report by Transparency International which singled out Chinese firms but also U.S. tech giants like Amazon and Google. The Berlin-based anticorruption watchdog named Bank of China, Honda Motor, Bank of Communications, Agricultural Bank of China and Russia’s Sberbank as the five least transparent companies. Bank of China could not be reached for comment on the report, while the other four firms declined to comment. “We need more transparency from multinational companies, whose power in the world economy closely rivals the biggest countries,” said Transparency International chairman Jose Ugaz. “By not responding to people’s demands for greater transparency and accountability, companies risk harming their brand and losing customers,” he warned.

Bank of China is one of the five least transparent companies in the world according to Transparency International watchdog

Around three quarters of the 124 firms assessed do not disclose the taxes they pay in foreign countries and nearly half publish no information on revenues abroad, the report said. The companies were ranked based on their reporting of their measures to prevent corruption, information about subsidiaries and holdings and information about financial

operations abroad. By these criteria, European companies performed best with Italy’s Eni, Britain’s Vodafone and Norway’s Statoil at the top. “We are committed to providing as much information and insight as possible to support informed public debate on issues such as corporate governance, anti-corruption programmes and corporate taxation,” said

a spokesman for Vodafone. While there were six Chinese companies among the 10 worst performers, U.S. firms also figured. Warren Buffet’s conglomerate Berkshire Hathaway was ranked the sixth least transparent multinational and the report said major tech companies also performed relatively poorly. “Surprisingly, the

sector that makes greater transparency possible is one of the least transparent,” said Transparency, adding that Amazon, Apple, Google and IBM all scored less than three out of 10. The U.S. firms cited were either unavailable when asked for a reaction by Reuters or declined to comment. Some firms did not want to respond until they had seen the complete report. A spokesperson for Japan’s Nippon Telegraph and Telephone Corp, which was also among the bottom 10, said: “We want to continue to work towards appropriate disclosures.” Transparency said the world’s biggest oil, gas and mining companies were not yet ready for transparency rules that would enter into force across the European Union from July 2015. These regulations require extractive companies to report payments such as taxes to governments on a countryby-country and project-byproject basis. In the United States, similar measures are planned, but implementation has been delayed.

Toyota on track for record profit

Province promotes local investment

Thailand stands pat on rate cuts

oyota yesterday said it was on track to book a record US$17.5 billion full-year net profit, as the company also lifted its revenue estimate, citing a weak yen and cost cutting. The world’s biggest automaker also revised up its fiscal year net profit forecast to 2.0 trillion yen from an earlier 1.78 trillion yen, and said full-year revenue would come in at 26.5 trillion yen, from a previous 25.7 trillion yen estimate. Full-year operating income would be 2.5 trillion yen, it added, although the automaker said it expected to sell 9.05 million vehicles in the year to March, down from an earlier 9.1 million units. The upgraded forecasts came as Toyota booked a 1.13 trillion yen net profit for the six months through September, up from 1.00 trillion yen a year ago. Half-year revenue rose 3.3 percent to 12.94 trillion yen, Toyota said. The results come a day after rival Nissan said its half-year net profit rose 25 percent to US$2.3 billion. AFP

uangxi province is offering a cash payment to companies that invest money raised abroad locally as it seeks to meet its annual growth target without taking on new debt itself, officials familiar with the matter said. The southern Chinese region’s government circulated a document last month offering to pay companies 0.2 percent of any yuan-denominated loan organized overseas, to a maximum of 3 million yuan (US$490,800), so long as the money is invested in Guangxi, the people said. An official who answered the phone at the responsible Guangxi government department said she didn’t have any information about the order. Several regions are struggling to meet growth targets this year amid a broader national slowdown, with China’s economy forecast to expand at the slowest pace since 1990. Guangxi’s gross domestic product in the first nine months of the year was 8.3 percent, down from 10.2 percent a year earlier, regional government data show. Its 2014 growth target is 10 percent. Bloomberg News

Reuters

hailand’s central bank left its benchmark interest rate unchanged yesterday, as expected, but said there was still room to cut rates if needed as economic growth slows. The Bank of Thailand (BOT) said it would cut its economic growth forecasts this year and next, but noted exports were poised to gradually pick up next year with the global recovery. The BOT’s monetary policy committee (MPC) voted 6-1 to hold the one-day repurchase rate at 2 percent for a fifth straight meeting. One members opted for a cut. “The committee projects sustained economic recovery in 2015, and deems that the current monetary policy is sufficiently accommodative and does not hinder the on-going recovery,” the MPC said in a statement. Mathee Supapongse, committee secretary, told a news conference that the central bank did not expect a big impact from the Bank of Japan’s bond buying programme on Thailand and it had measures to cope with any effects. Reuters