Macau Business Daily, Dec 16, 2014

MOP 6.00 Closing editor: Joanne Kuai Year III

Number 689 Tuesday December 16, 2014

Publisher: Paulo A. Azevedo

More of Ao’s assets recovered

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K$80 million of illegal assets have been recovered. The Public Prosecutor’s Office transferred the money back to Macau on December 5. This follows HK$360 million recovered from several Hong Kong banks in 2009. But disgraced former Macau official Ao Man Long has a lot more stashed away. CCAC put his total unknown-origin-of-assets in 2007 at 850 million patacas. Legal barriers in different jurisdictions are hampering full recovery PAGE

3 New electronic gadgets shopping mall to open

Universal suffrage protest on Saturday

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Local telecom operators’ licences extended to June 2023

It’s protest time again. Local democrat group New Macau Association has announced its planned demonstration on Saturday.

During President Xi’s visit to Macau for the handover anniversary. NMA is once again appealing for universal suffrage. The group leadership denies knowledge of Occupy Central activists planning to join the demo

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Paul Phua sports betting raid FBI tactics questioned by legal team

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Brought to you by

Target: Europe European firms are squarely in their sights. The financial sector in China is targeting northern hemisphere companies in their Merger and Acquisition strategies.

Portuguese bank Banco Espirito Santo de Investimento is a prime example

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HSI - Movers December 15

Gloomy outlook

Name

Analysts remain sceptical. Predicting Macau’s gaming revenue is unlikely to grow in 2015. Opening new hotels is not enough to offset negative market growth, they say. Asia Pacific - dependent upon the VIP segment - is also at risk. Meanwhile, rising stock prices could represent a potential headwind

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%Day

PetroChina Co Ltd

1.98

CNOOC Ltd

0.80

Kunlun Energy Co Ltd

0.42

China Construction B

0.33

China Resources Ente

0.26

Ping An Insurance Gr

-2.03

China Overseas Land

-2.17

China Resources Land

-2.31

China Merchants Hold

-3.00

China Unicom Hong Ko

-3.95

www.macaubusinessdaily.com

Source: Bloomberg

Touching moments

I SSN 2226-8294

The A & P budget has been approved.

Macau Government Tourist Office will spend MOP31.3 million to promote the territory overseas. Japan, Australia and New Zealand get the biggest slice of the advertising and promotional cake. Most forms of media will be employed

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2 | Business Daily

December 16, 2014

Macau

Broadway Centre as gadget shopping complex CSI Properties said the first and second floors of the centre, dedicated to electronic products shops, can be operational by Q2 next year Stephanie Lai

sw.lai@macaubusinessdaily.com

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small retail complex in downtown Macau, the Broadway Centre, will be turned into a shopping space primarily engaged in the sale of computer and mobile phone-related products following a refurbishment of the centre’s first and second floor, Hong Kong-listed property investment company CSI Properties Ltd told Business Daily.

CSI Properties, which notes Macau as a new growth market for its investments, acquired the first and second floor of Broadway Centre for about HK$240 million (US$31 million) for its over 26,000 square feet of floor space two months ago, the company’s director and head of Macau office Barry Ho told us. The centre, situated on Rua do Campo is close to the tourist-favoured S.

Domingos District, and now houses a supermarket and stationery outlet on the first floor and a book shop in the basement.

According to the company, the two floors of the centre will be primarily for shopping space for computer and mobile phone-related accessories and other electronic products, for which some 3,000 to 4,000 square feet of space has already been reserved for Hong Kong’s Apple smartphone reseller 1spot.

“We’ve seen other malls in here that have not performed so well,” Mr Ho remarked. “But for Broadway Centre we’ve had a very specific design, which is to primarily sell electronics products.”

“In the centre, we’ll have about 2,500 square feet of space for a cafe, and another 2,500 square feet for

Agile Property’s Chen Zhuo Lin returns to chairman’s duties

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r. Chen Zhuo Lin resumed his duties as chairman, executive director and president of Hong Kong-listed Chinese property developer Agile Property Holdings Ltd from yesterday, the company told the Hong Kong Stock Exchange.

Mr. Chen had been required to stay in a ‘designated residence’ since September 30, his spouse and a non-

computer-related products,” the CSI Properties’ Macau office head said, noting that the remainder would be reserved for retailers selling mobile phones or related accessories.

The company is now inviting retailers to set up in the centre while the refurbishment of the two floors is underway; it is expected to be finished by the end of March. The new shops in the centre should be operational by the second quarter of next year, Mr. Ho noted.

Earlier this year, CSI Properties completed a strata sale of 32 shops of the basement floor of Ginza Plaza, a mall located on Rua de Pedro Nolasco da Silva in the S. Domingos District, for a consideration of HK$288 million, the company noted in its interim report.

Following the acquisitions

of shop spaces in small-scale malls here, Mr. Ho said that the company is now searching for further investment opportunities in both commercial and residential properties in the city.

The most recent Macau-related possible acquisition that CSI Properties has shown interest in are the four plots of land adjacent to Lan Kwai Fong Hotel, as in late November a company holding 51 per cent had entered into a legally binding letter of intent with Hong Kong-listed China Star Entertainment Ltd for the purchase of the plots at a consideration of HK$2.23 billion.

Although acquiring the four plots for a mixed residential and commercial project, Mr. Ho said that his company was not acquiring the Lan Kwai Fong Hotel.

MGM China to invest in non-gaming project in Hengqin

executive director of the company Fion Luk Sin Fong said in an October 10 announcement referring to a notice from the Kunming City People’s Procuratorate of Yunan Province.

The latest announcement from Agile Property notes that Mr. Huang Feng Chao also resumed his duties as an executive director of the company and regional head of Hainan and Yunnan regions from yesterday.

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he Chief Executive Officer of MGM China, Grant Bowie, said on Sunday that the gaming operator is to invest in a non-gaming project in Hengqin. The plot of land where the project will be sited is pending approval by the Chinese authorities.

According to Chinese-language newspaper Macao Daily, Mr. Bowie said the Group’s project in Hengqin will be different from that of Shun Tak Holdings Ltd, of which executive director of MGM Pansy Ho Chiu King is managing director.

At the beginning of the year, Shun Tak announced that it had formed a joint venture with a Singapore property developer to develop a plot of land on Hengqin Island that the Hong Kong-listed group bought last year. The project will include offices, a

hotel, commercial spaces and serviced apartments.

Although declining to reveal more details about MGM’s Hengqin project, Mr. Bowie told the Chinese newspaper that MGM emphasises future cooperation with Hengqin, saying it would outsource some of the services of the new project for regional cooperation.

In fact, MGM is not the only gaming operator in Macau eyeing the island. SJM Holdings Ltd announced in April that it is investing in a project named Hengqin Tourism and Transportation Services Centre inside the Guangdong-Macao Co-operation Industrial Park. In addition, another rival of MGM, Galaxy Entertainment Group, is to build a hotel resort project in Hengqin next year.

K.L.

Business Daily | 3

December 16, 2014

Macau Public Prosecutor’s Office recovers HK$80 mln from Ao Man Long

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he Public Prosecutor’s Office announced yesterday that it had recovered more than HK$80 million of illegal assets that disgraced former Secretary for Transport and Public Works Ao Man Long. The assets had been saved to the account of the SAR on December 5.

This is the second time that the Office has successfully recovered illegal assets of the former officer. In 2009, the Office recovered HK$360 million of illegal deposits from several banks in Hong Kong, either in his or his family’s names or the names of their companies.

In 2008, Mr. Ao, as one of the first Secretaries in the Special Administrative Region, was convicted of bribery, money laundering and committing property crimes of unknown origin. He was consequently sentenced to 28 years’ Imprisonment, with all illegal assets confiscated.

The total unknown source of assets that Mr.

Mobile phone operator licences extended until 2023 João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he Government of Macau has decided to renew the licences of the four mobile phone operators acting in the territory in order to secure the stability and development of the telecommunications market.

The licences of Companhia de Telecomunicações de Macau, S.A.R.L., Hutchison - Telefone (Macau), Limitada, Smartone – Comunicações Móveis, S.A. and da China Telecom (Macau) Limitada have been extended until June 2023.

However the four companies operating in Macau under the names CTM, 3, SmarTone and China Telecom will have to implement new services for their clients next year.

Starting in January, operators will have to inform clients about their quantity of mobile data usage. The operators will have to detail their daily usage of data in receipts if clients request it.

Also, from April on, operators will have to provide a service that once the limit of the plan for mobile data usage has been reached, it will only allow extra usage of data if the client confirms his or her willingness to do so.

Finally, in June, mobile operators are requested to provide information on data usage in real time. In case of delays in providing such information, no extra costs can be charged to clients.

Also, yesterday the government announced its intention to continue to have 2G services running in the Special Administrative Region. This

intention was justified with the number of tourists arriving in Macau that are mainly using 2G services while in the territory. The Telecommunication Bureau (DRST), however, will only reveal more information on the way on which this service will continue to run next year.

These licences do not include 4G services as there is at this moment an open tender to award the first four licences for it. The result is expected to be known during the first quarter of next year. Companhia de Telecomunicações de Macau S.A.R.L. (CTM), Smartone – Comunicações Móveis S.A., China Mobile Hong Kong Company Limited, U Hong Comunicações Limitada, China Telecom (Macau) Limitada and Hutchinson – Telefone (Macau) Limitada are the companies participating in the tender.

Ao had amounted to some 850 million patacas, according to one of the three principal investigators of the Commission Against Corruption (CCAC), Fong Pak Ian, in 2007.

In fact, the Office said in its announcement yesterday that there are still barriers to the seizure of Ao’s foreign assets as the legal system of Macau is different from those of the related regions. In addition, it claimed that the Office had been following the current laws to adapt any viable ways to freeze and recover all the illegal assets that Ao owned overseas.

In May 2010, according to a judgment by the Court of Second Instance, the government had asked the United Kingdom for cooperation to retrieve Ao’s illegal assets there. Mr. Ao and his wife deposited some 275 million patacas (US$34.4 million) in British bank accounts in 2006 as well as a flat in London that they bought for some 60.2 million patacas.

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December 16, 2014

Macau

Political Protest slated Lingering concerns for December 20 opinion

José I. Duarte Economist

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conomic diversification is an issue that has been almost continuously on the political agenda for the last 20 years, if not longer.

Of course, the specific problems and solutions people had in mind over time may not always have been exactly the same. But this feeling that the structure of the economy should somehow be diversified has been with us for almost as long as one can remember.

Its rationale stems essentially from the premise that an economic fabric highly dependent upon a single sector of activity is susceptible to some kind of devastating economic and social crisis, should that main sector face seriously unfavourable conditions. In the case of Macau that has meant, naturally, the gambling sector, which for its prosperity depends on a steady flow of people and funds arriving from other places.

To add to its risk profile, the sector is increasingly dependent upon a single source of players, the mainland.

In the past, diversification has meant several things. From the logistics hub to the health service centre many suggestions or ideas have been floated. Meanwhile, circumstances have changed so much that the rationale for most of those suggestions has lost relevance or their feasibility harmed. The path since 2004 has been one of increasing focus on the relentless growth of the gambling sector, mostly regardless of the consequences elsewhere.

Deepening concerns failed visibly to translate into effective action. That may signal several things: incapacity to change the trend of things; or insufficient commitment; or actual unwillingness; or a combination of the foregoing. Certainly, that most factors are ‘external’ – and almost by definition, beyond the region’s control or influence – does not make any policy easy or guarantee its success, should there be one. That is a fact of life that only highlights the vulnerability of the economy to external shocks. A SARS-like health crisis, political instability in neighbouring regions, changes in policy priorities set by the central government, changes in the behaviour and expectations of Chinese visitors, and the like, all can powerfully impact residents’ livelihood.

Let’s engage in no fantasies here, the situation will not change shortly. Gambling is, and will be as far as is reasonably foreseeable, the main pillar of the economy. But different paths and priorities are conceivable; there are alternative models for growth, other than the current one.

This debate received renewed visibility with the fast-approaching new CE mandate and the changes occurring in the composition of the main bodies of the administration. They got a special wake-up call with ‘suggestions’ by mainland officials that the continuous growth and rising reliance on the sector were not in the national interests of China, indicating it was imperative to diversify the economic fabric – as strong a signal and rebuke of the status quo as one might conceive.

Ten years ago the new casino boom started.

One could say nobody knew, nobody expected, no-one was prepared to deal with that. Today, it is hard to justify that no serious attempt was made to assess the impact, direct and indirect, of that path, to measure its costs and benefits, and how they were to be borne by different segments of society. The later we attempt to find a more balanced growth path, the more difficult and painful any adjustment will be.

As everyone seems aware of that, the failure to conduct a proper debate or set up coherent policies – other than doling out some money now and then here and there – is somewhat baffling.

That’s not a failure one can lay at the door of the gambling sector. It is not for the casino operators to set limits to their growth beyond those related to the feasibility and profitability of their business endeavours, subject to their resources and risk sensitivity. The setting of development boundaries and aims falls squarely in the political realm. Its absence is a failure of the political regime. Entangled in its inner contradictions, it seems unable to create viable channels for social and political dialogue with society at large, and to create a common narrative that helps set in motion a more sustainable growth path.

The New Macau Association plans to stage another demonstration this year - this time on the anniversary of the handover. Timed to coincide with President Xi’s visit to the city, the NMA is pressuring the CE to set out a timetable for political reform Kam Leong

kamleong@macaubusinessdaily.com

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he New Macau Association announced yesterday that it is to stage a demonstration this Saturday afternoon - the anniversary of the handover – urging the government to initiate political reform in order to set a timeframe and direction for universal suffrage apropos the post of Chief Executive and composition of the Legislative Assembly.

The protest, which is the seventh consecutive demonstration that the democratic association has held on the anniversary of the handover since 2007, will depart from Tap Seac Square at two 2:00pm on Saturday afternoon and end at Jardim da Penha, followed by an assembly in the garden.

This year, the protest is being assisted

by Macao Youth Dynamics.

The Association president, Sulu So

Ka Hou, expects the demonstration to go smoothly despite the two groups not receiving any information from the Civic and Municipal Affairs Bureau (IACM) since informing them about the protest on November 28.

“We were only asked by the police whether we would submit a petition, [but] they said they were processing other things [about the protest].

However, according to the laws regulating demonstrations . . . only information [to the authority] is needed to hold a demonstration . . . If there’s no response from the government it means there is no restriction. Hence, I expect that the demonstration will run smoothly on December 20,” said the Association leader.

According to the young pan-democrat, the two associations are planning to

Forex reserves dip in November

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acau’s foreign exchange reserves dropped slightly at the end of November to MOP127.9 billion (US$16.02 billion).

The latest official preliminary figures released yesterday by the Monetary Authority of Macau (AMCM) show that reserves decreased 0.7 per cent from the revised value of MOP128.8 billion for the month of October.

The monetary authority also advised that the amount of exchange reserves at the end of November represented 12 times the money in circulation in Macau, also known as M2, that aggregates all notes and coins plus bank deposits and savings.

Foreign exchange reserves at the end of November also represented 102.8 per cent of the patacas in circulation compared to the end of October.

Earlier this year, Macau’s foreign exchange reserves dropped in March to the lowest level since its separation from the fiscal reserves. At the time, the money in international currencies held by the central bank fell MOP7.8 billion in one year and half a billion in one month. The March reading was also the lowest figure since February 2012 when the government separated the fiscal and exchange reserves and started to manage them separately.

submit a petition although they had not yet decided the exact time and location to submit it. Mr. Sou declined to predict the number of participants.

The theme of the demonstration this year is to ‘reach a political reform for change and real universal suffrage’. For starters, the association is requesting the CE submit a report on the reform to the Standing Committee of the National People’s Congress.

Regarding some Hong Kong Occupy Central protestors planning to join the demonstration in Macau as President Xi Jinping will be in town Mr. Sou declared that his association had not received any information from any Hong Kong groups.

Petition to President today by two democratic legislators Meanwhile, the Association’s two legislators, António Ng Kuok Cheong and Au Kam Sam, are to submit a petition to the government for President Xi Jinping on political reform as well today at noon outside government headquarters.

During a press briefing about the protest yesterday, Mr. Ng complained that Chief Executive Fernando Chui Sai On and the Legislative Assembly did not effectively reflect the opinions of society to the central government, claiming Mr. Chui is shirking his responsibility of initiating political reform.

On the other hand, Mr. Sou said yesterday that he had been monitored and stalked by two unidentified middle-aged men since last Friday night. Claiming that members of the Association were used to being monitored every year before the handover anniversary, Mr. So said that the two men did not look like local police officers but could not confirm where they were from.

Business Daily | 5

December 16, 2014

Macau

Tourism Fund invests MOP31.3 million to promote Macau abroad The Tourism Fund will pay MOP31.3 million for the promotion of Macau in 16 different territories. In addition to this investment there will be an advertising campaign about Macau costing MOP4.02 million João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he Government of Macau has approved a budget for next year of a total of MOP35.32 million to be invested for the Macau Tourism Fund in the promotion of the territory, it was published yesterday in the Official Gazette. From the MOP35.32 million, MOP31.3 million will be spent on promoting Macau in foreign territories, while MOP4.02 million will fund an advertising campaign.

From the MOP31.3 million spent in foreign countries, the largest slice will be paid to Mile Post Consultants, Inc., which will receive MOP4.8 million to promote Macau in Japan. The budget awarded to the company for this service for next year is the same as this year.

According to the Statistics and Census Services (DSEC), the number of tourists visiting Macau from Japan decreased 26.61 per cent from 2012 to 2013 from 395,989 to 290,622.

For the first three quarters of 2014, however, there was an 8 per cent year-on-year increase in Japanese tourists, from 211,994 to 228,031.

The second largest slice of the MOP31.3 million budget was handed to the Australian and New Zealand markets. The two regions combined received MOP3.54 million, which was paid to World Trade Travel Pty Limited, an increase of MOP170,000 relative to the MOP3.37 million paid last year. The number of Australian tourists slightly decreased from 113,295 in 2012 to 109,566 in 2013. In the first three quarters of the year, there was a year-on-year increase of 486 Australian tourists from 78,480 to 78,966. In relation to New Zealanders, from 2012 to 2013 there was an increase of two tourists from 14,399 to 14.401.

However, in relation to the first three quarters of this year there was an increase of 1.5 per cent year-on-year from 10,607 to 10,771.

The top three is completed with the money paid to Urban Media Limited for the promotion of Macau Tourism in Hong Kong. The company received MOP3.57 million, an increase of MOP250,000 relative to this year when this company received MOP3.32 million. Hong Kong visitors are the second main source of tourists to Macau, after Mainland China. A total of 6.77 million Hong Kongers visited Macau last year, which is a decrease of 4.45 percent in comparison to 2012 (7.08 million).

Of the countries represented in the different dispatches signed by the Chief Executive, Malaysia was assigned MOP2.8 million, Korea MOP2.6 million, the United States MOP2.7 million and Taiwan MOP1.7 million.

In addition to the MOP31.3 million invested for the promotion of Macau in different countries, the government will invest MOP4.02 million for an advertising campaign about Macau. The money will be paid by the Tourism Fund to the Oriental Press Group Limited.

In spite of these investments to promote Macau as a tourism destination, Mainland China is still the main source of tourists, with numbers continuing to increase. From 2012 to 2013, there was an increase of 10.23 per cent year-on-year from 16.9 million tourists to 18.6 million.

In relation to the first three quarters of this year, there was an increase of 13.3 per cent year-on-year visitors from the Mainland - from 14 million to 15.8 million.

Accor, China Lodging form alliance The French hotel operator has formed a strategic alliance with China Lodging Group to seek an edge in the fast-growing Chinese hospitality market Stephanie Lai

sw.lai@macaubusinessdaily.com

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rench hotel operator Accor announced a strategic alliance with China Lodging Group on Sunday to create a major new player in the fast-growing Chinese domestic travel and hospitality market.

Under the terms of the deal, Accor’s economy and mid-scale hotel brands will become part of China Lodging Group’s network. These brands include Grand Mercure, Novotel, Mercure, Ibis and Ibis Styles, for which China Lodging Group receives the exclusive rights as a master franchisee in mainland

China, Taiwan region and Mongolia.

China Lodging Group plans to open 350 to 400 new hotels under these economy and mid-scale Accor brands in the next five years, the companies jointly announced.

For the luxury and upscale brands of Sofitel, Pullman, M Gallery and The Sebel, China Lodging will become a minority shareholder in a joint venture that operates these hotels in the Pan-China region.

The partnership “will leverage the strengths of Accor’s global brands with a leading player in Chinese

hospitality,” Accor chairman and chief executive Sebastien Bazin said in a statement.

The existing member of the Accor group in Macau is the hotel brand Sofitel at casino Ponte 16 in the Inner Harbour district. For its economy hotel chain Ibis, which has actually registered its trademark here, Business Daily received no further information from the group regarding whether there was any plan for the brand in the city.

Upon closure of the deal, China Lodging will issue common shares

to Accor, which will represent up to 10 per cent of China Lodging’s total outstanding shares after the issuance; Accor will also have a seat on the board of China Lodging.

Travel and tourism companies are seeking new opportunities in China’s developing market for domestic leisure travel.

In late September this year, the Spanish NH Hotel Group signed a memorandum of understanding with China’s HNA Group initiating the formation of a joint venture, of which the purpose was to build a portfolio of hotel management contracts in the middle and upper-middle segments in mainland China, Hong Kong, Macau and Taiwan, owned by HNA or by third parties.

Center Parcs owner Pierre & Vacances unveiled a partnership deal with developer Beijing Capital Land on December 4 to build holiday sites at destinations including Shanghai and Beijing.

Larger French rival Club Méditerranée remains at the centre of France’s longest-ever takeover battle, pitting agreed Chinese bidder Fosun against Italian tycoon Andrea Bonomi.

With Reuters/Bloomberg

6 | Business Daily

December 16, 2014

Macau Brands

Trends

Japanese simplicity

Negativism breeding scepticism There are sensitivities to next year’s outlook for Macau’s gaming industry, primarily driven by the perception that the Chinese VIP segment is nearing a trough, leaving analysts uncharacteristically sceptical Sara Farr

Raquel Dias

sarafarr@macaubusinessdaily.com

newsdesk@macaubusinessdaily.com

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ikimoto pearls, reputedly some of the best in the world, are not only inherently Japanese but also unique. The brand itself celebrated 120 years of history in 2013. As with great brands and jewellery houses, Mikimoto has a long and interesting history. Kokichi Mikimoto, the founder of the brand, managed to culture the world’s first semispherical pearl on Ojima Island - now Mikimoto Pearl Island - in 1893. Whether or not this meant the actual invention of the process is still an issue of great debate Mikimoto did change the pearl market.

Pearls enjoy a special place in the heart of monarchs all around the world.

Their magical beauty has attracted attention for millennia from the coasts of India, China and beyond.

The great procurement of pearls in the years before by members of royal families and the great fortunes of Europe inevitably left few resources. Thus, 1893 really was the beginning of a new world for the pearl business and the first steps towards popularising these beautiful gifts of Nature. In a time that pre-dated modern diving techniques it can readily be understood how difficult it was to find real pearls. Discovering a way in which to ‘beat Nature’ was important not only for the market but in terms of sustainability.

Although the house introduces several new designs every year, one must say that the classics really are the best. Mikimoto pearls shine on their own, needing very little to stand out.

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ew development properties opening in Cotai in the second half of next year may not be enough to offset the negative market growth expected for 2015.

Analysts at Wells Fargo Securities, LLC said in their latest note to clients that trends are still ‘decelerating sequentially’ making it unlikely that the gaming market in Macau will grow in 2015.

‘We and other long-term bulls still believe incremental hotel rooms will drive demand in 2015. However, if trends continue to decelerate, the expected improvement in demand from the incremental 3,000 hotel rooms from Galaxy and Studio City in the second half of 2015 (13 per cent growth) may not be enough to offset the negative market growth we expect in the first half of 2015,’ analysts said.

So far this month, initial results have been disappointing and based on checks of the average daily revenue casinos raked in gaming revenues could fall anywhere between 23 per cent and 27 per cent versus prior estimates of a 22 per cent drop.

A number of negative trends have led analysts this year to revise down estimates for the territory’s gaming revenues. The rising Shanghai Index could be another headwind for Macau after rising 22 per cent since November 1, when it was first connected to the Hong Kong Stock Exchange.

‘While some believe this may be a positive for Macau, we believe rising stock prices could be a potential headwind,’ analysts said, adding that ‘instead of investing with junkets and shadow banks, investors looking for more profitable investments may turn

to the stock market.’

Analysts from Wells Fargo believe there is a 60 per cent negative correlation between Macau revenue growth and the Shanghai Index.

Fitch Ratings analysts also believe the main triggers for a negative 2015 outlook are the VIP segment and regional competition. In their 2015 gaming outlook for the Asia Pacific region, analysts say ‘the Chinese VIP segment is near a trough and will start to recover by the second half of 2015.’

Continued sequential declines in Macau revenues are expected, as is the worsening of Chinese microeconomic factors. These ‘may lead to a more negative view’, analysts warned.

More decrease forecast Meanwhile, analysts at Fitch Ratings forecast Macau’s gaming revenue will drop 4 per cent in 2015, primarily driven by the weakness in VIPs. ‘The weakness, which started in the second half of 2014, will persist through the first half of 2015 until the negative trends bottom out and new projects open by the second half [of the year],’ the latest note to clients reads.

China factors, such as credit lending, economic slowdown, the tightening of visas and anti-corruption campaign, will impact more than just the Macau jurisdiction of gambling. It will also take its toll on other markets in the Asia Pacific region that greatly depend on the VIP segment. One such market, analysts warn, is Singapore.

While Macau casinos are forecast to face a 4 per cent decrease in gaming revenues next year, the opposite is to be said of Australia. Analysts are forecasting the land down under

to register about 4 per cent growth in casinos gross gaming revenue in 2015. But analysts warn performance will vary given that some Australian states are experiencing changes and witnessing the VIP segment taking up between 2 to 3 per cent of the tourism market.

Also, the Asia Pacific region is set to become more competitive, gaming-wise, with the number of new properties lined up to open in the next two years. These include City of Dreams Manila and Resorts World Bayshore in the Philippines.

‘Over the long-term, we believe the gaming sector will benefit from the under-penetrated and growing middle class, and improved infrastructure,’ Fitch Ratings analysts added.

While some believe [the link with the Shanghai Index] may be positive for Macau, we believe rising stock prices could be a potential headwind Wells Fargo analysts

Business Daily | 7

December 16, 2014

Gaming

World Cup gamblers cry foul over FBI’s ruse in Las Vegas bust

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hat happened at Caesars Palace in Las Vegas on the July 4 weekend might have stayed in Vegas, until a group of Asian high rollers lost their Internet connection while watching the World Cup at the casino’s ultra- luxurious villas.

Now it’s up to a federal judge to determine whether the FBI agents played fair by manufacturing the disruption as a ruse to enter the villas occupied by Paul Phua Wei Seng and fellow guests after getting a tip from hotel employees of a suspicious gambling operation there.

If Phua, a Malaysian poker player who arrived in Las Vegas from Macau in June on his US$48 million private jet, can convince the Las Vegas judge that the government’s tactics violated his constitutional right to privacy, much of the evidence used to charge him and his associates may be thrown out.

When the FBI later raided the villas, agents found Phua, his son and another man with their laptops switched on to betting websites showing the live odds for World Cup games and instant messaging windows, while others in Phua’s group sat in adjacent villas amid clusters of computers and monitors and three large-screen televisions showing soccer matches.

Phua, his 22-year-old son, Darren, and six others were arrested in July, accused of operating an illegal online sports betting business. Four of the men and one woman pleaded guilty this week and agreed to forfeit about US$1 million, while charges against another defendant were dropped.

Phua, the alleged ringleader, and his son are set to have their first chance in court on December 15 to challenge the government’s investigative methods.

Phua’s lawyers

“This is not a close case,” Phua’s lawyers said in an October 28 request to suppress the evidence the FBI collected in its searches without a warrant. The U.S. Constitution’s Fourth Amendment “establishes a process before agents may enter and search our homes, and hotel rooms.”

The Justice Department countered that it followed the law and that judges have frequently endorsed the use of trickery and deception by law enforcement to gain access to a residence where criminal activity was suspected.

The court files offer a glimpse into the rarefied world of so-called whales, “the kind of customers anyone would love to have,” according to an FBI interview with a Caesars marketing executive. The case also reveals the dark side of international

sports wagering, a universe where researchers say hundreds of billions of dollars a year change hands.

Phua Wei Seng, who also goes by Paul Phua, Darren Phua, business associate Richard Yong Seng Chen and Yong’s son were part of a group that came to Las Vegas in June for the “One Drop” poker tournament, according to court filings.

Three villas

Phua and Yong had negotiated a US$60 million credit at Caesars Palace and they reserved three villas that normally go for US$25,000 a night. The hotel provides them free of charge to patrons like Phua who gamble more than US$1 million a day.

“The whole world would die for these customers,” the unidentified Caesar’s executive told the FBI. “What they say we do.”

Yong, a 57-year-old Malaysian businessman who organizes trips to bring high-rollers to the VIP rooms of casinos in Macau and elsewhere, is among those who agreed to plead guilty.

According to the U.S. Justice Department, Phua is a high- ranking member of the 14K Triad, a Hong Kong-based organised crime group.

Phua’s lawyers said the claim that he’s in a triad is “recklessly false” and based on one unsubstantiated sentence from a six-year-old report

by Malaysian police, according to a court filing. The attorneys cited a report by a Hong Kong-based risk consulting firm that found “with extreme confidence” that Phua isn’t associated with the 14K Triad.

happened in Macau and that it is a “very dirty story” and a “total set up,” according to the government’s records of the messages it found on the younger Phua’s phone.

Macau police “The problem is that the Chinese are very difficult and there is many centres of power sometimes in conflict between them,” Petros said to Darren Phua during the exchange. “The truth is that one centre was trying to keep Paul out of this.”

Darren Phua told Petros that his father was arrested by a “friend” with the Macau police and that HK$4 million (US$516,000) to HK$5 million was paid to get him released, according to the court filing.

Phua’s lawyers say there were no bribes paid to Macau police. The police issued their own denial in a statement filed in court by Phua’s attorneys. Tom Goldstein, a lawyer for Darren Phua, said the messages between his client and Petros are just kidding and gossip, not meant to be taken seriously.

“We think the Macau investigation is definitive and speaks for itself,” Goldstein said in an e-mail. “Paul was released on bail by the courts, along with others arrested at the same time. He was in Macau for one hour and happened to come into a room that got raided.”

Casino ledgers At Caesars, there were a total of about 25 people in Phua’s group, according to a list of the complimentary

mobile-phone numbers the hotel provided to the guests.

Yong, who organized the junket, transferred chunks of as much as US$3 million of his credit to others in the group to gamble with, according to casino ledgers.

The guests had requested additional television sets and highspeed Internet connections at the villas, saying they wanted to keep up with the World Cup, according to court filings. A technician who went to one of villas to set up some of the extra equipment reported to hotel security that the suite looked like an illegal betting shop.

Caesars contacted the FBI, which together with the Internet-service provider and the hotel concocted a plan to cut off the villas’ DSL connections so that the guests would call for technical support. The plan was designed to give a pair of undercover agents access to the villas so they could secretly film what was going on with concealed cameras.

FBI snooping This, Phua and his son say, is against the law. The FBI shouldn’t have snooped in all three villas when it only had suspicion of illegal activity in one, defence lawyers said in a court filing. Also, without a warrant, the agents had no authority to “coerce” the guests to let them in by cutting off their Internet access, the defendants’ attorneys argued.

Because the search warrant the FBI later obtained was based on observations from the initial warrantless visit to the villas, all the evidence the government collected should be suppressed, according to the defendants.

Prosecutors maintain that because the Internet disruption only cut off DSL service to the villas, and not WiFi access, the guests weren’t compelled to let the undercover agents inside, according to a Nov. 10 court filing.

“Law enforcement has long been permitted to obtain consent by posing as a confederate, business associate, or service provider,” the Justice Department said. “In fact, the government uses ruses every day in its undercover operations, and consent obtained by such ruses is valid unless the deceit leaves the occupant with no choice but to consent to an entry.”

Bloomberg

Conflicting accounts There are also conflicting accounts of how Phua managed to get out of Macau in June, just days after he was arrested there, along with 20 other people, for allegedly engaging in organized crime and operating an illegal sports gambling business that had handled hundreds of millions of dollars in bets on the World Cup tournament in Brazil.

Darren Phua, who was in Las Vegas at the time of his father’s arrest, contacted a man named Petros, who according to government court filings had a both a New York and a Montenegro phone number and who, via text messages, assured the younger Phua that there was no arrest warrant for his father on the Interpol system. The elder Phua was at the time the ambassador for San Marino to Montenegro.

A few days after Phua’s arrest, Petros informed Darren Phua that he had “his friends” check out what

Notice We wish to announce that our company, Tan Heong San Enterprises Ltd., has terminated Ms. Delfina Ho’s employment contract on 30th November2013. Thereafter, any actions by Ms. Ho are of her own responsibility entirely. Furthermore, we will retain our rights to pursue lawful damages for Ms. Ho’s actions and any professional misconduct that violate our company’s interests in anyway.

Tan Heong San group, had terminated Mr. Jonathan Ho’s contract immediately. Thereafter, any actions by Mr. Ho are of his own responsibility entirely.

Tan Heong San Enterprise Limited

8 | Business Daily

December 16, 2014

Greater China US$18 bln for new road projects Economic planner has approved the construction of 112 billion yuan (US$18.1 billion) of new roads in the latest government effort to increase investment and support the slowing economy. The five projects are located in China’s southern and central region and provinces of Guangxi, Guangdong and Sichuan, the National Development and Reform Commission said on its website.

CSR wins US$275 mln deals Chinese train maker CSR Corp Ltd said it won 1.7 billion yuan (US$274.84 million) worth of orders from Argentina, as Chinese rail firms increasingly flex their muscles overseas. CSR will provide locomotive products for a railway renovation project in the South American country, the company said on its website yesterday. China has stepped up its focus on railways this year, spending 590 billion yuan (US$95.4 billion) from January to October on new domestic lines and making a concerted effort to push its so-called “railroad diplomacy” overseas.

RBNZ adds yuan to NZ dollar index The Reserve Bank of New Zealand yesterday announced changes in the way it calculates the domestic currency’s trade-weighted value to better reflect its growing trading ties with China, while cutting the share of U.S. dollars, euros and yen. As of Wednesday, the Australian dollar will comprise 21.98 percent of the index, the largest proportion and rising from 21.61 percent now, while the yuan will be added to make up 20.09 percent. The U.S. dollar will see its current 31.71 percent weighting cut to 12.34 while the euro component will fall to 10.87 percent from 26.85 percent.

3,917 villages have no electricity Despite China’s rapid economic growth, a large number of China’s rural residents are still sealed in poverty. “A total of 3,917 villages have no power supply, affecting nearly 3.8 million people,” Liu Shuwen, an official with the State Council office of poverty alleviation and development, said yesterday. “Despite being the world’s second largest economy, China is burdened with the heavy task of fighting poverty.” Rural people with an annual net income per capita of 2,300 yuan (US$374.54) or less are classified as poor. The country had 82.49 million rural people living in poverty at the end of 2013.

PBOC reveals Kazakhstan currency deal worth People’s Bank of China said a currency swap between China and Kazakhstan, signed as part of a series trade deals between the two countries, was worth 7 billion yuan (US$1.1 billion). Under the three-year currency deal, which could be extended after that time, the central banks of the two countries will exchange millions of dollars worth of each other’s currencies to help finance trade and investment deals. Separately Kazakhstan said it aimed to become an important player in the world’s potash fertiliser market after securing billions of dollars in financing from China as part of the trade deals.

More free trade parks to invigorate growth Analysts expect a trade park in Guangdong to excel in customs clearance and financial reforms due to its proximity to Hong Kong and Macau

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ust more than a year after the successful launch of the China (Shanghai) Pilot Free Trade Zone (FTZ), the government is planning several similar zones to invigorate the faltering economy.

The decision to establish three free trade parks in Guangdong and Fujian provinces, and Tianjin Municipality, was announced after a State Council executive meeting last week in hopes of replicate the Shanghai model’s success.

The new parks will focus on the experimental policies made in the Shanghai zone, but will also be allowed to add new elements according to local conditions, said the statement released after the meeting.

“This means some 70 percent to 80 percent of the plans for the three regions will be identical with those for Shanghai,” said Sun Yuanxin, professor with the Shanghai University of Finance and Economics.

The Shanghai FTZ was launched in September 2013 to test a broad range of economic reforms, including interest rate liberalization and less investment restrictions.

Apart from those experiments, analysts expect the trade park in Guangdong to excel in customs clearance and financial reforms due to its proximity to Hong Kong and Macau.

The Fujian park is predicted to have more favourable policies concerning trade with Taiwan, and the Tianjin park will centre on financial leasing.

New parks follow the path traced by the Shanghai Free Trade Zone

Although detailed plans for the three trade parks have not been made public, the market has reacted positively to the news, with stocks related to the concept increasing yesterday.

The move came as China’s growth slid to a low not seen since the 2008/2009 global financial crisis in the third quarter, dragged down by a housing slowdown, softening domestic demand and unsteady export.

In a key economic meeting last Thursday that set the tone for next year’s economic policies, Chinese leaders stressed the economy still faces many challenges and “relatively big” downward pressures. They pledged to push ahead with further reforms to give new impetus to the economy.

Differentiated competition will help explore better experiences to serve the national reform and opening-up Chen Bo, Shanghai University of Finance and Economics expert

Xinhua

Kwok brothers brace for Hong Kong bribery judgment While the case has brought scrutiny to the relationship between government officials and businesses, the judge told jurors to set aside their emotions when judging the evidence Michelle Yun and Douglas Wong

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urors in the trial of Hong Kong billionaire brothers Thomas and Raymond Kwok started deciding if the Sun Hung Kai Properties Ltd. co-chairmen conspired to bribe the city’s former No. 2 official.

Judge Andrew Macrae yesterday sent the jury of six women and three men out after concluding his summary of the 127-day trial. At least seven of the jurors have to be in agreement to reach a verdict.

Hong Kong’s highest-profile graft trial centres on whether secret payments to former chief secretary Rafael Hui were bribes or legitimate remuneration for advising the city’s biggest developer. Hui, the Kwoks and two other men accused of the conspiracy involving HK$35 million (US$4.5 million) in payments and loans have denied the eight charges.

Hui, 66, and Raymond Kwok, 61, face as long as 10 years in jail if convicted of furnishing false information. The other charges each carry a maximum sentence of seven years.

The Kwoks’ arrest on March 29,

2012, sparked the company’s biggest share plunge in 14 years. The stock tumbled 13 percent the next day to HK$88.65, erasing US$4.9 billion in market value. The five men were charged in July that year. Sun Hung Kai is now trading at HK$112.70.

‘Sweet’ payments Payments on a HK$15 million unwritten consultancy agreement had to be kept secret due to disputes within the Kwok family, the defence said. The sums were meant to keep Hui “sweet” on Sun Hung Kai, prosecutors said.

Hui testified he didn’t see a conflict of interest when the city’s pension authority, which he led from 2000 to 2003, renewed a lease at a Sun Hung Kai property while he was negotiating his consultancy contract with the Kwoks.

Hui, who was HK$7.8 million in debt before he became chief secretary in 2005, testified that he evaded taxes on some of his payments from Thomas

There are too many coincidences in this case for them to be coincidences Prosecutor speech

Business Daily | 9

December 16, 2014

Greater China

Financial firms seek control deals in outbound M&A The drive for geographic spread reflects China’s efforts to build up overseas bank outlets as the yuan currency gains a greater share of global trade Denny Thomas and Lisa Jucca

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hinese financial firms are targeting purchases of distressed banking assets coming on the market in Europe, having been urged by Beijing to expand their reach beyond emerging markets.

The first Chinese purchase of a European investment bank was announced last week, with Haitong Securities agreeing to pay 379 million euros (US$470 million) for an investment bank in austerity hit Portugal.

Banco Espirito Santo de Investimento SA (BESI) is being sold by Novo Banco, the bank carved out of Banco Espirito Santo after it was rescued in August.

For China’s second largest brokerage it’s a modest-sized deal, equivalent to just 1.5 percent of Haitong’s market value. But it demonstrates the changing character of acquisitions by Chinese financial firms.

These days they mostly seek controlling stakes, and

now they are scouting Europe for opportunities, avoiding anything too big.

“Increasingly, Chinese financial firms are seeking control deals as a way to expand their global footprint,” Mayooran Elalingam, head of Deutsche Bank’s Asia-Pacific M&A said.

“Several distressed opportunities are available in euro zone economies and we expect the Chinese financial services sector to be active in these situations,” he added.

Encouraged by Beijing Such deals can help Chinese banks gain treasured European banking licences as well as expertise, notably in debt markets, that can be transferred back home, whereas growth through opening overseas bank branches can be a slow process.

This year, the government began encouraging Chinese stock brokers and financial

Kwok, 63. Hui also spent more than he earned on extravagant meals, music records, concerts in Europe and gave at least HK$7 million to a mistress in Shanghai.

While there’s no excuse for Hui’s behaviour, “this is not a court of morals,” Edwin Choy, a lawyer for Hui, had told the court. The jury should only consider whether the lifelong civil servant abused his office, Choy said.

Rival spy?

Some payments to Hui were made circuitously with the help of Sun Hung Kai director Thomas Chan and former stock exchange official Francis Kwan to avoid upsetting the eldest brother Walter Kwok, defence lawyers said.

As Sun Hung Kai’s chairman in 2004, Walter feared Hui was a spy for rival property developer Li Kashing, and only agreed to a HK$4.5 million-a-year consultancy for Hui, the court heard.

Walter was “vilified” by the defendants, prosecutor David Perry said. Walter, who was ousted as chairman in 2008 by his younger brothers, isn’t a party to the trial.

Thomas Kwok was “untruthful and evasive” in blaming Walter for the secrecy required and invented the oral agreement, the prosecutor said. “There are too many coincidences in this case for them to be coincidences,” he said.

Walter became ill and paranoid after his 1997 kidnapping and their mother thought he was manipulated by his mistress, witnesses including Thomas Kwok told the court.

No favours Hui never did Sun Hung Kai any favours, lawyers for the defendants

firms to acquire greater international reach, according to investment bankers.

“The government is encouraging the outbound M&A push,” a Hong Kong based M&A banker said.

Haitong’s purchase of BESI, Portugal’s biggest debt underwriting firm, will give it control of a business that earned 247 million euros in revenues in 2013, according to analysts at Daiwa Capital Markets, and a ready-made investment banking network in Europe.

“As regulators liberalize the financial industry in China, banks, insurers and securities firms would be on the lookout for asset managers, private banks and wealth managers,” said Bernard Teo, head of financial institutions group investment banking in China with Goldman Sachs.

Some M&A bankers do not rule out the possible acquisition of a European commercial bank.

Struggling Italian lender Monte dei Paschi di Siena, the worst-performing European bank in a recent asset quality review by the European Central Bank, could attract Chinese bids, according to Hong Kong-based M&A bankers.

Chinese buyers could also be interested in Novo Banco, which Portugal’s authorities hope to sell in the first half of next year, they added.

Lesson learnt Until now Chinese financial firms’ strategy has been based on organic growth and sporadic purchases of minority stakes in foreign firms, mostly in the emerging market sphere.

So far this year, they have announced US$3.2 billion worth of overseas deals, three-quarters of which were majority stake purchases, according to Thomson Reuters data.

The total spend on overseas deals is way below the record US$17.9 billion posted in 2007, but back then only 4.3 percent of the deals were for majority stakes.

In 2007, just before the global financial crisis erupted, Chinese financial firms and sovereign wealth fund bought stakes in publicly listed global financial companies, including a US$5 billion investment in Morgan Stanley.

The stock market losses from the ill-timed deals created a headache for executives back home.

“Chinese financial institutions are likely to shy away from large transformational deals as they have learnt valuable lessons from the investments made during the financial crisis,” Goldman Sachs’ Teo said. Their main goal now, Teo said, is to serve Chinese corporations expanding globally.

Reuters

said in closing arguments last month.

Prosecutors’ “total failure to prove that Rafael Hui did anything for his money rather proves that wasn’t the purpose of the money,” Chan’s lawyer Ian Winter said.

Raymond Kwok, who didn’t testify, only knew about a payment that was properly reported, his lawyer John Kelsey-Fry said. “The prosecution have had two-and-a-half years to prove their case and they haven’t,” Fry said.

The law doesn’t stipulate that a particular favour had to be identified for payments to be considered a bribe, Judge Macrae told the jury last week.

It’s rare that direct evidence, such as a video of the incident, is available, he said.

“The confidence the public are entitled to have in the fair and impartial duties of the public official is thereby eroded or destroyed” when payments of that nature occurs, he said.

Reasonable doubt Far from favouring Sun Hung Kai, Hui was responsible for destroying their bid for a West Kowloon property development, Thomas’s lawyer Clare Montgomery said. Hui also suggested the Kwoks write to the official responsible for another project, she said.

“Isn’t that a classic Hong Kong civil service move? Push any decision to someone else. That way you don’t have to do anything and nobody can criticize you,” Montgomery said.

The verdict must be not guilty “unless you are sure there was no verbal agreement, that the payments were indisputably corrupt,” she said.

Bloomberg News

Thomas Kwok, co-chairman of Sun Hung Kai Properties Ltd., arriving at the High Court in Hong Kong last May, on the trial’s first day

10 | Business Daily

December 16, 2014

Greater China

Xiaomi made US$56 mln profit in 2013 The financial impact of its business model has been a subject of long-running speculation in the technology industry Gerry Shih

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hina’s Xiaomi Technology Ltd Co made a profit of 347.48 million yuan (US$56.15 million) on 26.58 billion yuan (US$4.30 billion) in revenue in 2013, according to new Chinese securities filings, showing the razorthin margins at one of the handset industry’s fastest growing companies.

The filings also revealed chairman and chief executive Lei Jun claims 77.8 percent ownership of the company he co-founded in 2010, while unnamed shareholders split the remaining shares.

The regulatory document provides for the first time an official snapshot of a company that became the most popular smartphone vendor in China and the third-largest vendor in the world this year, thanks to a line-up of handsets that are considered highquality yet relatively inexpensive.

Xiaomi has long branded itself an “Internet company” that eschews traditional marketing and sells hardware at low prices as a distribution channel for its real money-maker: software and services. But the financial impact of its business model - and whether it can generate sustainable profits demanded by public markets - has been a subject of long-running speculation in the technology industry.

With operating profits of 485.77 million yuan in 2013, Xiaomi’s operating margins of less than 2 percent lagged far behind the two market leaders, Apple Inc. and Samsung Electronics

Xiaomi has allowed many Chinese to access high-feature devices at far cheaper prices than the top brands

Co Ltd, the filing showed.

In 2013, Samsung’s mobile division reported 18.7 percent operating margins while Apple reported 28.7 percent for the fiscal year ended in September 2013. South Korea’s LG Electronics Inc’s mobile business posted 0.5 percent operating profit margin.

Xiaomi overtook LG to claim the No. 3 spot during the third quarter with 5.6 percent of the global market share, according to Strategy Analytics.

A Xiaomi spokeswoman confirmed

the accuracy of the filing.

All but leading smartphone makers Samsung and Apple will see profitability dwindle in the coming years due to pricing pressure from companies like Xiaomi, Fitch Ratings warned last month.

Bryan Wang, an analyst at Forrester Research, said Xiaomi’s thin margins did not come as a surprise.

“They’re growing so fast and so lean, I wouldn’t be surprised even if they were losing money,” Wang said.

“Every company is trying to match the Xiaomi price,” he added. “The current market is so competitive that I don’t think it’s sustainable without consolidation.”

The financial results were included in disclosures made to the Shenzhen Stock Exchange after Xiaomi purchased a 1.3 percent stake in Midea Group Co Ltd, a publicly traded electrical appliance company, for 1.27 billion yuan.

Reuters

China, Russia pledge to strengthen cooperation Li arrived on Sunday to pay an official visit to Kazakhstan and attend the 13th prime ministers’ meeting of the Shanghai Cooperation Organization

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isiting Chinese Premier Li Keqiang and his Russian counterpart, Dmitry Medvedev, agreed yesterday to strengthen cooperation between their countries in various fields.

Beijing and Moscow have been actively implementing the consensus reached two months ago at the 19th regular meeting of Chinese and Russian heads of government, Li said when meeting with Medvedev in the Kazakh capital.

Meanwhile, he added, the two sides have been gathering momentum in the development of their comprehensive strategic partnership of coordination and bilateral cooperation in various fields.

While expressing Beijing’s readiness to expand energy cooperation with Russia, Li also urged the two sides to earnestly implement the memorandum of understanding they have signed on high-speed railway cooperation and work out a plan for the Moscow-Kazan project as soon as possible.

Li added that China is willing to increase investment in Russia’s Far East and take part in the construction of a leap-forward development zone in the region.

China is ready to explore with

China is willing to increase investment in Russia’s Far East and take part in the construction of a leap-forward development zone in the region

Medvedev shakes hands with Xi Jinping in a previous meeting

Russia mutually beneficial cooperation in non-energy sectors, especially in infrastructure construction, said the Chinese premier.

He also called for concerted efforts to support the second China-Russia expo and the international innovation industry expo to be held respectively in China and in Russia’s Yekaterinburg next year.

The Chinese side is ready to work with Russia and other parties

concerned to build the Shanghai Cooperation Organization (SCO) into a mechanism that benefits regional security and development, Li said.

China, he added, will actively support Russia in playing the role of rotating SCO chair and striving for fresh and significant breakthroughs in SCO practical cooperation.

Medvedev said Li’s latest visit to Russia has vigorously promoted the development of bilateral relations,

with cooperation on key projects advancing steadily.

Russia is ready to further enhance cooperation with China in such areas as oil and gas, nuclear energy, hydropower, finance, science and technology, innovation, aeronautic manufacturing and space technology, as well as in the development of Russia’s Far East region, he said.

He said Russia will also strengthen cooperation with China within the framework of the SCO to safeguard regional peace, stability and development.

Xinhua

Business Daily | 11

December 16, 2014

Asia

Japanese Prime Minister Shinzo Abe wipes his brow after winning a majority in the Lower House election at the headquarters of his ruling Liberal Democratic Party

Abe’s victory paves the way for more ‘Abenomic’ measures The tally was unchanged from the number of seats held by the coalition before the poll Linda Sieg and Elaine Lies

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apanese Prime Minister Shinzo Abe’s coalition has cruised to a big election win, ensuring he will stick to reflationary economic policies and a muscular security stance, but record low turnout pointed to broad dissatisfaction with his performance.

Abe’s Liberal Democratic Party (LDP) and its junior partner, the Komeito party, won 326 seats in Sunday’s election, more than the 317 seats in the 475-member lower house required to maintain a twothirds “super-majority” that smooth parliamentary business.

But LDP itself slipped slightly to 291 seats from 295.

“I believe the public approved of two years of our ‘Abenomics’ policies,” Abe said in a televised interview. “But that doesn’t mean we can be complacent.”

Many voters, doubtful of both the premier’s “Abenomics” strategy to end deflation and generate growth and the opposition’s ability to do any better, stayed at home.

Turnout was estimated to be a record low of 53.3 percent, substantially below the 59.3 percent in a 2012 poll that returned Abe to power for a rare second term on pledges to reboot an economy plagued by deflation and an ageing, shrinking population.

In a sign of the fragility of Abe’s mandate, the LDP won 75 percent of the seats in single-member districts

KEY POINTS Low turnout mars victory for ruling LDP party Markets see economic policies continuing Abe says will pursue constitutional changes that account for 295 lower house seats with just 48 percent of the vote, data in the Tokyo Shimbun metropolitan newspaper showed.

But with the mainstream opposition still weak, any opposition to Abe’s policies will likely come from his allies in the dovish Komeito party, which increased its seats to 35 from 31, and from inside the LDP itself, should the economy falter.

Analysts said the outcome would be positive for shares and negative for the yen in the near term given expectations Abe will stick to a “Three Arrows” strategy of hypereasy monetary policy, government spending and reforms.

“But medium-term, investors will be watching to see if Japan is changed structurally,” said Tsuyoshi Ueno, senior economist at NLI Research Institute.

Doubts persist over whether Abe will knuckle down on his “Third Arrow” of reforms in politically sensitive areas such as labour market deregulation and an overhaul of the highly protected farm sector. Media said he was likely to keep his cabinet unchanged.

Patchy recovery, weak opposition Hopes for Abenomics were hit when Japan slipped into recession in the third quarter following an April sales tax rise. Wage increases have not kept pace with price rises and data suggest any economic rebound is fragile.

Highlighting the patchy recovery, big Japanese manufacturers’ sentiment worsened slightly in the three months to December but corporate spending plans were strong, the Bank of Japan’s closely-watched quarterly “tankan” survey showed yesterday.

Abe decided last month to put off a second tax hike to 10 percent until April 2017, raising concerns about how Japan will curb its huge public debt, the worst among advanced nations.

“Between now and the delayed tax increase, we need to revive the economy and find a path to fiscal rebuilding,” said LDP lawmaker Shinjiro Koizumi. “If you think about it in that way, even though we have won, there is no room here for celebrating.”

Abe, whose support has now sagged well below 50 percent, called the election after just two years in office to strengthen his grip on power before tackling unpopular policies.

That includes restarting nuclear reactors taken off-line after the 2011 Fukushima disaster and a security policy shift away from post-war pacifism.

The LDP-led coalition victory could ease Abe’s path to re-election in a party leadership race next September, boosting the likelihood, but by no means guaranteeing, that he stays in power through 2018 and becomes one of Japan’s rare long-term leaders.

The main opposition Democratic Party of Japan (DPJ) won 73 seats, largely due to voters’ memories of a 2009-2012 rule plagued by policy flip-flops, infighting and three premiers in three years.

DPJ leader Banri Kaieda, criticised by many in his own camp for lack of charisma, lost his seat. The party’s limp performance has raised concerns Japan is returning to one-party dominance that characterised politics for decades - although some analysts said the poor showing of rival miniparties suggested the opposition could begin to coalesce around the DPJ. The Japan Communist Party won 21 seats, more than double its strength before the election, gaining support from protest voters loath to back the Democrats.

Reuters

12 | Business Daily

December 16, 2014

Asia S.Korea revised Nov exports fall South Korean exports in November fell 2.1 percent from a year earlier, revised customs data showed yesterday, slightly worse than a provisional 1.9 percent decline reported earlier. Shipments to the United States jumped 20.8 percent from a year earlier, while those to China edged down 3.3 percent and shipments to the European Union fell 6.8 percent, the data showed. Following are South Korea’s revised foreign trade figures for November, released by the Korea Customs Service.

Newcrest eyes staged project Australian gold miner Newcrest Mining Ltd said yesterday it was planning to split the development of its massive Golpu deposit in Papua New Guinea into two stages as it seeks to reduce spending and improve returns. Newcrest, which jointly owns the project with South Africa’s Harmony Gold Mining Ltd, said it had approved a feasibility study to first develop the higher value portion of the ore body at an initial capital spending cost of US$2.3 billion. Since peaking above US$1,900 an ounce in 2011, gold prices have slid to as low as US$1,131.85 per ounce last month.

Myanmar president claims joint development

Bank of America, CLSA top 2014 Asia brokers UBS Group AG was third in Greenwich’s brokerage ranking Alfred Liu

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ank of America Corp. and CLSA Ltd. were named the year’s top equity brokerages in Asia as they won the most business from fund managers in the region, according to Greenwich Associates.

Bank of America, the secondbiggest U.S. bank by assets, captured 9.8 percent of Asian equity trading adjusted by commissions, while CLSA had 9.6 percent, according to the report e-mailed to news organizations yesterday. The market share of the top 10 brokerages has fallen to 76 percent from an estimated 83.5 percent in 2007, the report showed.

“Over the coming years, foreign banks will face tougher competition in Asia from emerging banks,” said Andrew Clarke, director of trading at Mirabaud Securities Asia Ltd. in Hong Kong. “Chinese, Hong Kong, Singaporean, Malaysian and Australian firms are all out for more Asian business and they will get it.”

Bank of America and Hong Kongbased CLSA, a unit of Citic Securities Co., led their rivals in a year where

Japanese and Hong Kong trading volumes have faltered as China’s economy slows and optimism over Japan’s stimulus policies fades.

Average daily volumes for 2014 on the Nikkei 225 Stock Average are down 33 percent from a year earlier, while those on Hong Kong’s Hang

Commodity slide taints Australia’s budget Myanmar President U Thein Sein yesterday called on the people of riot-hit western Rakhine state to join hands with the central government in development efforts of the region. In his message on the occasion of the 40th anniversary of the Rakhine State Day, U Thein Sein said the violence, that broke out between the two communities in the state, has remained stable, stressing the imperativeness to work with the government for the all-round development.

Rakhine was designated as a state under the 1974 state constitution.

Indonesia acting in the bond market Indonesia’s central bank said yesterday it is intervening in both the bond and foreign exchange markets to stabilise prices as the rupiah fell to its lowest level since 1998. “Bank Indonesia has always been in forex market and today we are in the bond market as well to stabilise (bond prices),” Bank Indonesia’s senior deputy governor, Mirza Adityaswara, told Reuters. The yield on the 10-year government bond rose to 8.203 percent yesterday from 8.087 percent on Friday.

The rupiah touched a low of 12,695 per dollar, its lowest since August 1998, according to Reuters data on Monday.

Just a year into office, Prime Minister Tony Abbott’s government has suffered record low approval ratings Wayne Cole

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ustralia’s government expects its budget deficit to balloon to A$40.4 billion (US$33.2 billion) in the year to June as falling prices for key resource exports and sluggish wage growth blew a gaping hole in tax revenues.

Releasing his midyear budget outlook yesterday, Treasurer Joe Hockey predicted the economy would grow by 2.5 percent in 2014/15 before picking up to 3.5 percent over the next few years, while unemployment was likely to peak at 6.5 percent.

“While there are positive signs of the Australian economy strengthening and transitioning towards broaderbased drivers of growth, there is still much work to be done and budget repair will take time,” said Hockey.

Just a year into office, Prime Minister Tony Abbott’s government has suffered record low approval ratings, with the economy running into strong external headwinds.

The update was delayed for over an hour as the government reacted to a hostage siege that has diverted media coverage from the budget update.

The deficit for 2014/15 had been forecasted at A$29.8 billion in the May budget, while the 2015/16 shortfall was now put at A$31.2 billion, instead of A$17.1 billion.

Hockey predicted tax receipts would be A$31 billion less than first hoped in the four years to 2017/18, due largely to a slide in the price of iron ore, Australia’s biggest export, which has fallen to A$60 a tonne from A$92 a tonne in May. The government has also faced problems getting unpopular cost cutting and revenue raising measures through the Senate, which Hockey said cost another A$10.6 billion.

Still, the budget deficit for 2014/15 of 2.5 percent of gross domestic product (GDP) is relatively

small by international standards, as is government debt, which is seen peaking at 17 percent of GDP in 2017.

Ratings agency Standard & Poor’s said the budget update had no impact on Australia’s AAA rating.

Bond investors also seem sanguine, with yields on 10-year government debt near the lowest since mid-2012 at 2.95 percent and not far from an all-time trough.

That has allowed Hockey to avoid the sort of austerity policies that have done so much economic harm in Europe.

“Appropriately, the government will not seek to introduce significant new spending cuts or tax measures in the near term to counteract the effects of the lower terms of trade, as this would be self-defeating, producing an even weaker economy,” said Ivan Colhoun, chief markets economist at NAB. Reuters

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luciana Leitão, Luis Gonçalves, Michael Armstrong, Sara Farr, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Business Daily | 13

December 16, 2014

Asia Seng Index have dropped 1.3 percent, data compiled by Bloomberg show.

The MSCI Asia Pacific Index lost 4 percent this year, poised for its first annual drop since 2011.

These rankings do matter to some brokers as their bonus depends on it Andrew Clarke, Mirabaud Securities Asia, director of trading

Top brokerages UBS Group AG was third in Greenwich’s brokerage ranking with a 9 percent market share, followed by Credit Suisse Group AG’s 8.3 percent.

Morgan Stanley was next with an 8.1 percent share, while Goldman Sachs Group Inc. rounded out the top six brokerages with 7.6 percent.

The study was based on interviews with 238 Asian equity fund managers and analysts, 110 traders, and 35 users of equity derivative products at institutions based in Asia.

“These rankings do matter to some brokers as their bonus depends on it,” Mirabaud’s Clarke said.

For Asian equity research and advisory services, Hong Kongbased CLSA won 9.3 percent of the commission-weighted vote from survey respondents, the Greenwich report showed. Bank of America had 9.1 percent.

“As attractive as the Asian equity business appears, attempting to crack the ranks of leading brokers at this point is a daunting task requiring sizable outlays just to enter a playing field already crowded with entrenched competitors,” Greenwich said in the report.

The firm was started in 1972 and provides research and advisory services to the financial services industry.

Bloomberg News

India’s rapidly cooling inflation leading to rate cut Businesses have been pleading for a cut in interest rates

I

ndia’s wholesale price index showed no increase in November for the first time in near 5-1/2 years as oil prices tumbled, building a case for the central bank to start lowering interest rates early next year to help prop up economic growth.

Asia’s third-largest economy is recovering from the slowest phase of growth since the 1980s, having lost momentum in the last quarter which has raised calls from industry for more support.

The wholesale price index (WPI) was flat in November against a year earlier, its lowest since July 2009, government data showed yesterday.

That compared with a 1.41 percent rise forecast by economists in a Reuters poll.

Inflation dropped to zero mainly driven by a sharp decline in fuel prices, which fell an annual 4.91 percent last month - their first yearon-year fall since November 2009.

Yesterday’s data comes days after India reported consumer price inflation in November had dropped to 4.38 percent, its lowest level since the government started releasing the data in 2012 and well below the Reserve

Bank of India’s (RBI) 6 percent target for January 2016.

Consumer goods output has grown in just two of the last 22 months. It fell an annual 18.6 percent in October, leading to the sharpest contraction in industrial output in three years.

Bolstering the rate cut prospect is a nearly 40 percent fall in global crude prices since July which has brought inflation down, lowered the import bill and reduced government spending on fuel subsidies.

Economic growth slowed to 5.3 percent in the July-September quarter from a 2-1/2-year high of 5.7 percent in the quarter ago, signalling it would be some time before the economy recaptures the 8 percent growth levels needed to create enough jobs for a rapidly expanding workforce.

Reuters

Japan’s business mood clouds Abe’s triumph Both manufacturers and non-manufacturers expect conditions to worsen ahead, highlighting the patchy recovery Leika Kihara and Tetsushi Kajimoto

J

apanese business confidence barely improved in the fourth quarter and is seen worsening, giving premier Shinzo Abe a grim reminder of the challenges he faces in reviving a recession-hit economy a day after his big win in Sunday’s vote.

While corporate capital spending was strong, the Bank of Japan’s quarterly “tankan” survey yesterday also underscored prevailing doubts among businesses about Abe’s strategy to spark durable economic growth.

“With the election out of the way, Abe must shift his policies from those simply aimed at boosting sentiment to those that can actually change the way companies act. Otherwise, the benefits of Abenomics won’t trickle down,” said Kyohei Morita, chief Japan economist at Barclays Capital.

The prime minister’s strategy to end 15 years of deflation and drive sustainable growth has had only modest success so far, driving the stock market higher and boosting profits of exporters on the back of a weak yen.

However, the muchanticipated virtuous circle of higher capital investment,

KEY POINTS Big manufacturers’ sentiment worsens slightly-tankan Big non-manufacturers’ sentiment up slightly Big firms plan 8.9 pct rise in FY2014/15 capex

rising wages, domestic demand and robust growth has yet to fully materialise.

Yesterday’s tankan embodied this slow progress, as companies retained their solid capital expenditure plans and complained of labour shortages. But sentiment among big manufacturers worsened slightly and improved only modestly among service-sector firms despite sharp rises in equities and the yen’s steep falls.

With the BOJ already pumping money aggressively

and the country’s dire financial straits leaving it with little room for additional spending, Abe’s challenge is to push through reforms to boost Japan’s growth potential, analysts say.

Glimmer of hope The headline index measuring big manufacturers’ sentiment fell one point from three months ago to plus 12, worse than a median market forecast of plus 13, the tankan showed.

While the weak yen benefitted exporters, it hurt other firms through rising import costs.

Policymakers hope that big manufacturers, which saw profits boom thanks to the weak yen and sliding oil prices, will spend more on wages and capital expenditure.

The tankan showed big companies plan to increase capital expenditure by 8.9 percent in the fiscal year ending in March 2015, more than a median forecast of a 8.0 percent rise.

Such positive signs will give the BOJ some breathing space after having expanded its massive stimulus programme in October.

The BOJ is likely to offer a more upbeat view of the economy and keep monetary policy steady this week on tentative signs of recovery, sources have told Reuters.

“Capital expenditure plans are healthy and sentiment at non-manufacturers is improving, which suggests the economy can continue to recover gradually,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

Reuters

14 | Business Daily

December 16, 2014

International Turkey’s jobless rate continues rising Unemployment in Turkey rose to 10.5 percent in September, up from the previous month’s 10.1 percent, the Turkish Statistical Institute said yesterday. Analysts attribute the upsurge in jobless rate, which had been continuing for several months, to a slowdown in economic growth. The unemployment rate stood at 9.8 percent in July and 9.1 percent in June. Turkey’s growth lost momentum due to the impact of monetary tightening, delayed effects of macro prudential measures, economic problems in EU countries and geopolitical tensions, Finance Minister Mehmet Simsek said earlier.

EU torn over power-saving rules However the regulations are popular not only with green campaigners but also with many European appliance manufacturers Barbara Lewis

Slowdown signs for US oil states

After leading the U.S. economic recovery out of recession, some of the nation’s top oil states are showing early signs of a slowdown as a result of the plunge in crude prices. In Houston, Texas, the first oil industry layoffs have been announced, with realtors there predicting a sharp decline, up to 12 percent, in home sales next year. Alaska’s 2015 fiscal year budget revenue forecast will have to be lowered by almost US$2 billion, according to Fitch Ratings, because of the sharp drop in the state’s forecast crude prices. That will widen Alaska’s budget gap.

Russia doesn’t support forced FX sales Finance Ministry said yesterday it did not support the idea of forced foreign currency sales by domestic companies. Russian lawmakers have proposed introducing a requirement that domestic firms with foreign currency earnings should sell a portion of them to support the rouble, which is down more than 40 percent against the dollar this year. The central bank is also against the requirement.

CHR to sell divisions British building materials group CRH has sold its clay and concrete activities in Britain and its clay business in the United States for £414 million, it said yesterday.

CRH has agreed to sell the divisions to funds managed by private investment firm Bain Capital for the equivalent of 523 million euros or US$650 million, it revealed in a statement. The London-listed group is selling clay businesses Ibstock in Britain and Glen Gery in the United States, as well as British concrete product firms Forticrete and Supreme Concrete.

Volvo to launch online car sales Volvo Car Corp said it will start selling vehicles online as it rolls out new models to compete with German luxury rivals such as BMW. The Swedish carmaker, controlled by China’s Geely, will gradually introduce web sales and spend more on digital advertising, it said as it outlined changes to its global marketing strategy yesterday. “The plan is to have all our car lines in all our markets offered digitally,” Volvo sales chief Alain Visser said in an interview. Few manufacturers have tried selling directly online.

Jean-Claude Juncker is facing challenges from different fronts since early stages of his term

W

hen word of an EU ban on high-power vacuum cleaners hit Eurosceptic British tabloids in August, “Hoovergate” brought home a dilemma for the bloc that goes well beyond house-proud devotees of deep-pile English carpet.

Now, fear of fuelling rage at Brussels bureaucracy, especially in Britain where critics branded the “Hoover ban” a foreign attack on consumer freedoms, is pushing new EU leaders to axe a host of planned regulations in proposals expected today.

Yet Jean-Claude Juncker’s European Commission is also under pressure to keep rolling out more laws on the “ecodesign” of appliances from kettles to hair dryers to TVs that supporters say will slash energy costs, helping consumers and the planet.

The regulations are popular not only with green campaigners but also with many European appliance manufacturers, who say such rules spur innovation and help build the market for power-saving designs.

They fear further rules could be eroded, because of Juncker’s concern over an anti-EU backlash across the bloc, particularly in Britain where Prime Minister David Cameron is offering voters a referendum on leaving the Union altogether.

“Contrary to the views presented in some media, our industry sees the ... ecodesign and energy labelling directives as having a positive, not a negative, impact on our business environment,” Reinhard Zinkann, the CEO of Germany’s Miele and head of an EU home appliance industry group, wrote to Cameron in September.

He urged the British government to back further power-saving legislation.

Britain says it supports EU energy standards where benefits to consumers or the environment are clear.

Draft EU documents seen by Reuters show the Commission is considering how prescriptive its ecodesign rules should be. Officials will

not comment on what today’s plan will contain.

Thomson Reuters data published yesterday showed a 13 percent rise this year in the number of laws passed in Brussels, to 1,497, largely under the Commission that preceded Juncker, who has pledged to cut red tape to win back the people’s trust.

Power saving He cannot stop a new wave of standards taking effect on Jan. 1 that will impose energy consumption labelling of domestic hobs and ovens and ban high-consumption boilers and fans. There is so far, however, little sign of a repeat of the tabloidfuelled rush for powerful vacuum cleaners before the EU ban took effect.

Supporters of that law, including British and other European competitors of imported Asian appliances that were marketed for their high wattage, said power consumption did not improve cleaning and so needlessly added to buyers’ fuel bills.

Commission data, collated by non-governmental organisation the European Environmental Bureau, shows just the new rules coming in next month could save 244 teraWatt/ hours a year by 2020. That is nearly 9

KEY POINTS Populist anger at EU prompts new executive to cut red tape Greens, business fear energy-saving regulations may be hit EU faces dilemma between environment and Eurosceptic challenge

percent of current EU electricity use.

As well as a desire to cut climatechanging greenhouse gas emissions, confrontation with its biggest gas supplier Russia has added impetus to long-standing EU plans to cut energy use.

“Ecodesign is one of the best examples of good regulation,” said Harry Verhaar of electrical goods maker Philips who chairs the European Alliance to Save Energy, an industry body.

The Dutch pioneer of low-energy LED light bulbs strongly supports EU regulations that have forced traditional incandescent bulbs off the market for consuming too much power.

The International Energy Agency, which groups most EU states, the United States and other rich industrial economies, says more laws to enforce energy savings are essential as more people around the world use more electrical devices.

The IEA found that last year networked devices like gaming consoles and printers wasted US$80 billion worth of electricity in standby mode. It called for new rules to encourage the kind of innovation that industry had shown in responding to previous laws to cut energy use by other appliances.

But Juncker is also preoccupied by the rise of what he calls Eurosceptic “extremists”, as evidenced by a surge at May’s EU parliamentary elections for the likes of the UK Independence Party and France’s National Front.

He has cited cutting red tape as one way of improving public perceptions of Brussels.

A draft of Commission proposals for scrapping proposed regulations says in its preamble: “This Commission is making a priority of lightening the regulatory load while keeping high levels of social and environmental protection and consumer choice ...

Where there is unnecessary red tape, we will cut it.”

Reuters

Business Daily | 15

December 16, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The year of sustainable development

Jeffrey D. Sachs

Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University

THE KOREA HERALD The number of debtors and their credits from local banks are projected to hit record highs this year amid rising household debts, industry data indicated yesterday. Some 10.5 million people took out loans from commercial banks as of the end of June, data showed, for a total amount of 487.7 trillion won (US$442.6 billion). The figure had peaked at 10.45 million people in 2012 and declined to 10.44 million in 2013. The loan total translates to individual lenders owing 46.41 million won each on average.

TAIPEI TIMES Higher smartphone sales have allowed Asustek to post better monthly revenue growth last month than its rival Acer, analysts said. However, the two companies are expected to see significant growth in their smartphone shipments next year, as they both become more aggressive in the segment, analysts added. “For the two companies’ notebook shipments, we maintain our forecast that shipments will be flat next year, but we have raised their smartphone shipment forecasts, as they both made ambitious moves in an attempt to win market share in the segment,” Fubon Securities Co analyst Arthur Liao said.

THE PHNOM PENH POST Tax service firms are seeing an increase in business as the General Department of Taxation (GDT) continues to push individuals and enterprises to register for online payments.

A partner at law firm VDBLoi said the government’s push has undoubtedly led to increased demand for professional tax services. He added that new requirements for tax agents to now be registered with the GDT had also had a positive effect on services demand.

It comes after the director general at the GDT urged to register for payments via the new online tax registration portal.

THE TIMES OF INDIA India’s top investment bankers, who have traditionally collected fat fees for matching capital with needy enterprises, were this year forced to watch from the side-lines as deals worth at least US$4 billion passed them by. They missed out on the gold rush as global private capital engaged directly with savvy local entrepreneurs.

The start-up economy has attracted billions from an array of investors, mostly new to the country. E-commerce biggies Flipkart and Snapdeal alone were involved in deal activity topping US$3 billion in 2014.

T

he year 2015 will be our generation’s greatest opportunity to move the world toward sustainable development. Three high-level negotiations between July and December can reshape the global development agenda, and give an important push to vital changes in the workings of the global economy. With United Nations Secretary-General Ban Ki-moon’s call to action in his report “The Path to Dignity,” the Year of Sustainable Development has begun.

In July 2015, world leaders will meet in Addis Ababa, Ethiopia, to chart reforms of the global financial system. In September 2015, they will meet again to approve Sustainable Development Goals (SDGs) to guide national and global policies to 2030. And in December 2015, leaders will assemble in Paris to adopt a global agreement to head off the growing dangers of humaninduced climate change.

The fundamental goal of these summits is to put the world on a course toward sustainable development, or inclusive and sustainable growth. This means growth that raises average living standards; benefits society across the income distribution, rather than just the rich; and protects, rather than wrecks, the natural environment.

The world economy is reasonably good at achieving economic growth, but it fails to ensure that prosperity is equitably shared and environmentally sustainable.

The reason is simple: The world’s largest companies relentlessly – and rather successfully – pursue their own profits, all too often at the expense of economic fairness and the environment.

Profit maximization does not guarantee a reasonable distribution of income or a safe planet. On the contrary, the global economy is

leaving vast numbers of people behind, including in the richest countries, while planet Earth itself is under unprecedented threat, owing to human-caused climate change, pollution, water depletion, and the extinction of countless species.

The SDGs are premised on the need for rapid far-reaching change.

As John F. Kennedy put it a halfcentury ago: “By defining our goal more clearly, by making it seem more manageable and less remote, we can help all people to see it, to draw hope from it, and to move irresistibly toward it.” This is, in essence, Ban’s message to the UN member states: Let us define the SDGs clearly, and thereby inspire citizens, businesses, governments, scientists, and civil society around the world to move toward them.

The main objectives of the SDGs have already been agreed. A committee of the UN General Assembly identified 17 target areas, including the eradication of extreme poverty, ensuring education and health for all, and fighting human-induced climate change. The General Assembly as a whole has spoken in favour of these priorities. The key remaining step is to turn them into a workable set of goals. When the SDGs were first proposed in 2012, the UN’s member said that they “should be action-oriented,” “easy to communicate,” and “limited in number,” with many governments favouring a total of perhaps 1012 goals encompassing the 17 priority areas.

Achieving the SDGs will require deep reform of the global financial system, the key purpose of July’s Conference on Financing for Development. Resources need to be channelled away from armed conflict, tax loopholes for the rich, and wasteful outlays on new

oil, gas, and coal development toward priorities such as health, education, and low-carbon energy, as well as stronger efforts to combat corruption and capital flight.

The July summit will seek to elicit from the world’s governments a commitment to allocate more funds to social needs. It will also identify better ways to ensure that development aid reaches the poor, taking lessons from successful programs such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria. One such innovation should be a new Global Fund for Education, to ensure that children everywhere can afford to attend school at least through the secondary level.

We also need better ways to channel private money toward sustainable infrastructure, such as wind and solar power.

These goals are within reach.

Indeed, they are the only way for us to stop wasting trillions of dollars on financial bubbles, useless wars, and environmentally destructive forms of energy.

Success in July and September will give momentum to the decisive climate-change negotiations in Paris next December. Debate over human-induced global warming has been seemingly endless. In the 22 years since the world signed the UN Framework Convention on Climate Change at the Rio Earth Summit, there has been far too little progress toward real action. As a result, 2014 is now likely to be the warmest year in recorded history, a year that has also brought devastating droughts, floods, high-impact storms, and heat waves.

Back in 2009 and 2010, the world’s governments agreed to keep the rise in global temperature to below 2° Celsius relative to the pre-industrial era. Yet warming is currently on course to reach 4-6 degrees by the end

of the century – high enough to devastate global food production and dramatically increase the frequency of extreme weather events.

To stay below the two-degree limit, the world’s governments must embrace a core concept: “deep decarbonisation” of the world’s energy system. That means a decisive shift from carbonemitting energy sources like coal, oil, and gas, toward wind, solar, nuclear, and hydroelectric power, as well as the adoption of carbon capture and storage technologies when fossil fuels continue to be used. Dirty highcarbon energy must give way to clean low- and zero-carbon energy, and all energy must be used much more efficiently.

A successful climate agreement next December should reaffirm the two-degree cap on warming; include national “decarbonisation” commitments up to 2030 and deep-decarbonisation “pathways” (or plans) up to 2050; launch a massive global effort by both governments and businesses to improve the operating performance of low-carbon energy technologies; and provide largescale and reliable financial help to poorer countries as they face climate challenges. The United States, China, the European Union’s members, and other countries are already signalling their intention to move in the right direction.

The SDGs can create a path toward economic development that is technologically advanced, socially fair, and environmentally sustainable. Agreements at next year’s three summits will not guarantee the success of sustainable development, but they can certainly orient the global economy in the right direction.

The chance will not come along again in our generation.

Project Syndicate

16 | Business Daily

December 16, 2014

Closing November power consumption grows 3.3 pct

China’s express delivery sector revenue up 42 pct

China’s consumption of electricity grew 3.3 percent year on year in November, reaching 463 billion kilowatt hours (kwh), the National Energy Administration announced yesterday. The figure brought total power consumption during the first 11 months to more than 5 trillion kwh, up 3.7 percent year on year. During the January-November period, power use in primary industries stood at 92.5 billion kwh, up 0.4 percent; secondary industries used 3.67 trillion kwh, up 3.8 percent; the tertiary industry consumed 607 billion kwh, up 6.1 percent. Residential power consumption grew 2 percent year on year, reaching 638 billion kwh, the data showed.

Revenue for Chinese express delivery businesses hit 182.07 billion yuan (about US$30 billion) in the first 11 months of 2014, up 41.6 percent year on year, data from the State Post Bureau showed yesterday. A total of 12.32 billion deliveries were made during the same period, up 51.8 percent year on year, the data showed. Due to promotions launched by major e-commerce giants such as Alibaba and JD.com, revenue of the sector hit 22.81 billion yuan in November, up 42.2 percent. The revenue marked a historical high in terms of monthly income.

Alibaba boss taps up Taiwan youth amid protests Young people and small businesses are particularly incensed by trade deals between Taiwan and China

A

nti-Beijing protesters chanted outside a high-level business meeting in Taiwan yesterday where the founder of China’s e-commerce giant Alibaba called on the island’s youth to start businesses on the mainland.

Trade with China is a particularly sensitive topic as fears grow over the mainland’s increased influence on Taiwan -- a factor which contributed to the ruling Beijing-friendly party’s worst-ever polls defeat at recent local elections in Taiwan.

Alibaba founder Jack Ma, who recently became Asia’s richest man, was addressing business leaders from China and Taiwan to tie in with an eight-day visit by a top Chinese envoy.

Dozens of pro-independence activists chanting “Chinese communists back to China!” and “Chinese communists are coming to trap Taiwan investors!” were held back by police barricades outside the two-day forum.

One was pushed to the ground as he tried to break through police lines

and four protesters were taken away, but later released.

“The summit is a joint effort by Beijing and the rich and the powerful of the two sides to decide the future of Taiwan’s economy. Taiwan is a democratic country, they have no right to do that,” said Lai Chungchiang, spokesman for the group.

Senior China envoy Chen Deming, who was also at the business meeting, has been dogged by protesters during his tour.

But Ma, 50, encouraged young people to “reach out” to the mainland and Alibaba itself.

“I welcome those young people from Taiwan who would like to start up their businesses in the mainland to reach out to Alibaba, either joining Alibaba or Alibaba’s business ecosystems,” said Ma. “The theme of the forum is transformation and upgrade, but (this can be done) only if everybody upgrades their mind-set and hands over the future to young people.”

He also urged Taiwan’s small businesses to sell their products to the mainland using Hangzhou-based Alibaba as a platform.

Ma, a former English teacher, started Alibaba in his apartment in 1999. He has seen his fortune balloon after a record-breaking US$25 billion initial public offering on the New

I welcome those young people from Taiwan who would like to start up their businesses in the mainland to reach out to Alibaba, either joining Alibaba or Alibaba’s business ecosystems Jack Ma Aliabab’s Founder

York Stock Exchange in September.

Young people and small businesses are particularly incensed by trade deals between Taiwan and China that they feel have been agreed in secret and not benefited the ordinary Taiwanese public.

Students took over parliament for three weeks from March to protest against a service trade deal.

Taiwan and China split in 1949 at the end of a civil war, but Beijing still claims the island as part of its territory awaiting reunification -- by force if necessary.

Yesterday’s meeting was attended by top business figures, including Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co, the world’s biggest contract microchip company.

AFP

Philippines to seek investors CITIC suit to be heard for airport projects at end of 2015

Credit line opened to Angolan state oil firm

The Philippines will offer for tender next year six airport projects worth 116 billion pesos (US$2.6 billion) under a public-private partnership (PPP) scheme to help upgrade the country’s ageing infrastructure.

The Department of Transportation and Communications (DOTC) invited investors to prequalify and bid for contracts to develop, operate and maintain airports in key cities and tourist hubs in the central and southern Philippines.

“The fact that the traffic at these airports has either exceeded their current design capacities or is nearing the design capacity levels, coupled with the anticipated influx of growing number of domestic and international passengers in years to come, make the fast and proactive development of these airports crucial,” DOTC said in a published notice.

Up for bidding next year are concession contracts to operate and expand the Davao International Airport for 40.6 billion pesos, the Iloilo International Airport for 30.4 billion pesos, the Bacolod-Silay International Airport for 20.3 billion pesos and the Laguindingan Airport for 14.6 billion pesos.

The four airports served 7.7 million passengers last year, DOTC data showed.

Hong Kong’s securities regulator said yesterday that the hearing of its suit against CITIC Ltd and five former directors for alleged market misconduct relating to foreign exchange contracts would be held at the end of 2015.

Hong Kong’s Market Misconduct Tribunal has reserved November 16 up to end-December 2015 for the hearing, but expects the proceedings to last around 30 days, the Securities and Futures Commission (SFC) said.

The SFC said in September it had begun dualtrack proceedings in Hong Kong’s Court of First Instance and the Market Misconduct Tribunal in a bid to seek HK$1.9 billion (US$245 million) in compensation for investors over alleged misconduct linked to losses on the Australian dollar in 2008.

The SFC alleges that CITIC issued a circular on September 12, 2008, that contained a false or misleading statement about CITIC’s financial position.

CITIC said in September it was seeking legal advice regarding the suit.

A spokesman for the SFC said the Court of First Instance had not yet fixed a formal date for the hearing.

Angola’s state oil company Sonangol will benefit from a new US$2.0 billion line of credit from the Chinese Development Bank to finance new projects, the state oil company said yesterday.

“This Chinese financing will support Sonangol’s plans for expansion in oil and gas,” the company said in a statement, adding that among the first projects will be a new refinery in Lobito, southern Angola, next year.

The southwest African country is China’s second biggest supplier of oil, accounting for some 40 percent of the Asian giant’s needs.

Since the end of Angola’s civil war in 2002, Beijing has extended a total of US$14.5 billion (11.65 billion euros at current exchange rates) to the former Portuguese colony, according to the latest figures from the Chinese embassy in Luanda.

Recent years have seen China help finance major infrastructure projects including roads, rail lines and new cities.

During a state visit to Angola by Chinese Prime Minister Li Keqiang in May, he and President Jose Eduardo dos Santos pledged to diversify their cooperation, currently concentrated in the construction sector.

Reuters

Reuters

AFP