Macau Business Daily, Dec 18, 2014 by Business Daily

MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo Number 691 Thursday December 18, 2014 Year III

he 2015 Budget. No surprises. But there’s a lot to contend with these days. The gov’t estimates it will rake in some MOP155 billion next year. Budgeted expenditure totals MOP83.7 billion. The bill was passed unanimously. Some legislators oppose the article regarding expenditure, however. They say it’s high time the Legislative Assembly was allowed to fully supervise the Administration’s budget Page 2

NIMBY’s prevail

5 per cent of monthly salary contribution, vesting scale preferred for provident fund

No family hostels in Macau in the near future. This per a Macau Government Tourist Office survey. Some 60 pct of Macau residents embrace the concept of family hostels. But ‘Not In My Back Yard’, thank you. Respondents cited security, house prices, traffic and regulatory factors as issues of concern

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PAGE 5

Chinese state-owned aerospace giant seeks private partnership PAGE 16

HSI - Movers December 17

EDF dispenses largesse

Name

It’s a lifeline for some. The Education Development Fund handed out MOP50.85 million in Q3. The Premier School Affiliated to Hou Kong Middle School received the lion’s share. Some MOP45 million to expand and update its facilities. In all, thirty private institutions or persons received financial aid

%Day

Bank of Communicatio

3.54

Bank of China Ltd

2.73

PetroChina Co Ltd

2.36

Industrial & Commerc

1.92

China Unicom Hong Ko

1.58

Li & Fung Ltd

-2.70

Lenovo Group Ltd

-4.15

China Mengniu Dairy

-4.17

Sands China Ltd

-6.18

Galaxy Entertainment

-8.20

Source: Bloomberg

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Hot under the collar Trade talks between the U.S. and China in the city of Chicago. Should be good news but perhaps not. The Americans have imposed duties penalizing imports of solar products made by Chinese and Taiwanese enterprises

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Black Wednesday More doom and gloom. Casino stock prices tumbled on reports of a further crackdown. Top level meetings between mainland and Macau officials are fuelling fears of more restrictions on high rollers. Some analysts say it’s warmed over news, while the market has reacted otherwise

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2 | Business Daily

December 18, 2014

Macau

Legislative Assembly passes 2015 Budget In addition to the budget for the coming year, the Legislative Assembly passed the anti-foreign official bribery bill and a bill requiring construction and urban planning professionals to acquire qualifications Kam Leong

kamleong@macaubusinessdaily.com

Although the bill was unanimously passed by the Assembly, legislators António Ng Kuok Cheong and Au Kam San opposed the expenditure on the third Article of the bill. “I would like to remind here again that before the implementation of amending the budget framework law, we are not able to fully supervise the budget of the government…. I hope that the future budget framework law can regulate that the budget of government departments, their increases in the budgets, even their expansion of their [administrative] structures, will all have to be passed to the AL for open discussion, in addition to the budget of infrastructure,” said Mr. Ng, who had raised similar reservations before. The 2015 budget includes all the similar ‘fruits’ sharing polices of this year, such as the cash handout of MOP9,000 to permanent residents, MOP7,000 deposits in the personal provident fund of residents as well as deducting or waiving some taxes. In addition, it also suggested increasing the salaries of public servants from the current MOP74 per point to MOP79.

Two other bills

he Legislative Assembly (AL) passed the final readings of three bills yesterday in their last plenary session of this year. These bills are the 2015 Budget, antiforeign official bribery bill as well as a bill regulating the registration and qualification system of construction and urban planning professionals. The 2015 Budget estimates that the total revenue of the government in the coming year will reach some MOP155 billion, up just 0.7 per cent year-on-year, while the budgeted total

expenditure is some MOP83.7 billion, a year-on-year increase of 7.8 per cent. The very slight growth in the revenue of 2015 is due to the government’s expectations that there will be zero-growth gaming revenue for the city, which accounts for 83.5 per cent of the total revenue of the SAR, legislator Chan Chak Mo, who chaired the second standing committee of AL, said during his presentation of the sub-committee’s report on the budget. In addition, the general integrated

budget of public expenditure for 2015 had increased MOP13.1 billion compared to that at the beginning of 2014, reaching a total of some MOP93.1 billion. Mr. Chan said the growth was due to the suggestion of Increasing the salaries of public servants in the budget. The legislator also claimed that salary-lift suggestions plus other factors are translating into government expenditure on human resources jumping 18.5 per cent year-on-year, amounting to MOP2.9 billion.

The anti-foreign official bribery bill was also passed yesterday. The bill was expected to extend the city’s anti-corruption prevention and sanctioning scope to foreign public officials and officials of public international organisations. The bill is seen to be in compliance with the United Nation’s Convention Against Corruption, which came into effect in February 2006 in China, Hong Kong and Macau. In addition, it authorises Commission Against Corruption (CCAC) to investigate any corrupt acts related to external trade. The bill will come into effect on January 1, 2015. On the other hand, the bill regulating the registration and qualification system for construction and urban planning professionals will only come into force on July 1, while a review will be conducted two years after its effective day.

Corporate Mandarin Oriental Executives honoured at Hoteliers Awards Mandarin Oriental’s director of marketing communications, Ada Chio de la Cruz, was crowned Marketing & Communications Hotelier of the Year at the Hotelier Awards China 2014, which is the first accolade in the country honouring hotel industry professionals. Ivy Leong, the hotel’s executive housekeeper, won runner-up CSR Hotelier of the Year, according to a company statement. Ada Chio began working with Mandarin Oriental in 2000. With solid communication skills and highly regarded creativity in designing marketing initiatives, she has played an important role in both the re-launch and opening of several Mandarin Oriental hotels throughout China and Taipei. “I’m thrilled to be recognised in China’s first-ever hotelier awards,” she said. “Being lucky to do what I truly love, I’ll continue my commitment to Mandarin Oriental, and help the group grow talent with my passion and experience.” Ivy Leong has over 17 years of experience in leading housekeeping teams in Malaysia and Macau. As an environmental enthusiast, she chairs the hotel’s Corporate Responsibility and Sustainability Committee.

Ada Chio

Education Development Fund awards MOP50.85 mln in 3Q

he Premier School Affiliate to Hou Kong Middle School has received MOP45 million from the Education Development Fund, it was revealed yesterday in the Macau Official Gazette. This payment is the second installment handed to this private institution in order for the school to expand its facilities. In total, the Education Development Fund handed out during the third quarter some MOP50.85 million to support 30 institutions or professionals related to the education sector. After the Premier School Affiliate to Hou Kong Middle School, Dom Luís Versíglia School received the second largest slice of the pie. The school received during the third quarter of the year a total of MOP3.36 million for tasks such as organising various

courses, promoting the development of the school during 2013/2014 and promoting the improvement of the school environment. As for São José de Ká Hó School, it received MOP947,000 from the total MOP50.85 million awarded by the Education Development Fund during the third quarter of the year. Of the MOP947,000, some MOP807,000 was handed out as an extraordinary subsidy for the promotion of the school’s development during the 2013/2014 year. In 2007, the administration established the Education Development Fund to support and promote projects with good development prospects in non-tertiary education, meaning education until the completion of the secondary level. J.F.S.

Business Daily | 3

December 18, 2014

Macau

Family hostels:

Yes, but not in my neighbourhood A study initiated by the Macau Government Tourist Office reveals that people in Macau are not against family hostels. However, they do not want them in their own districts. The legalisation of this kind of accommodation is not going to be implemented in the near future João Santos Filipe

jsfilipe@macaubusinessdaily.com

ver 60 per cent of Macau people support the idea of creating family hostels in the Special Administrative Region. However, only the population living in the districts of Cathedral Parish and Coloane are available to accommodate them, a study on the feasibility of family hostels presented by the Macau Government Tourist Office (MGTO) has revealed. “At this moment, there’s not enough support from the population to continue to introduce this kind of accommodation in Macau. Sixty per cent of the population say they believe it would be feasible to implement this kind of accommodation but they do not want it in their neighbourhood”, the Director of MGTO, Maria Helena de Senna Fernandes, said following the presentation of the study. Public security issues were cited by respondents as their main concern. However, their concerns also include the surge in flat prices, traffic problems

and regulatory issues. Family hostels are accommodation where people can rent out a bed or room inside their own place. On the other hand, locals believe that such hostels would make accommodation cheaper and attract different kinds of tourist. However, the analysis of this kind of accommodation in regions like Japan, Taiwan and Hong Kong demonstrate that prices are not likely to be much cheaper. “The majority of the population believes this will provide cheaper

accommodation. And it may be a little cheaper. However, the examples of Taiwan or Japan show that this model is not a real economic alternative to existing accommodation”, Ms. Senna de Fernandes explained. The results of the study will delay the implementation of this model until the second wave of casinos is opened in Cotai. “I do not think there will be another public consultation in the coming two years. Many hotels will open in the future and they may provide less expensive prices in Macau”, she said. “We’ll wait to see how things are going to change and then consider the options”. According to the Deputy Director of MGTO, Cheng Wai Tong, the study cost less than MOP500,000 and was conducted by the Centre for Macau Studies of the University of Macau. The research included opinion polls, case analyses from different regions and a legal analysis.

Lately, MGTO has been advised to explore the religious side of the territory as a way of attracting visitors. However, Maria Helena de Senna Fernades explained that these campaigns are not going to focus on the mass market. “We are targeting the religious market in countries like the Philippines. But these are not campaigns for the mass market but very specific; for example, such campaigns have to be addressed to religious associations, or groups”, she explained. The religious aspect of tourism, however, has been targeted by MGTO. “We have been working to raise awareness within the hospitality industry for the needs of different religions. For example, many tourists coming from Indonesia are Muslim and we want the hotels in Macau to provide the conditions for them to feel welcome and comfortable”, she said.

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December 18, 2014

Macau PRC New Year’s holiday from Feb 18 to 24 The Chinese New Year vacation for mainland Chinese will commence on the day of Lunar New Year’s Eve, which is February 18, and lasts until February 24, China’s State Council announced on Tuesday. The latest announcement from the authority also shows that Chinese nationals will have a consecutive three-day holiday for New Year’s Day (starting on January 1), Ching Ming Festival (starting on April 5), Labour Day (starting on May 1) and Dragon Boat Festival (starting on June 20). The seven-day ‘Golden Week’ National Day holiday, the peak season for domestic and outbound mainland travellers, runs from October 1 to 7.

Sam Woo sees interim profits rise 4 pct

he recently Hong Konglisted constructor Sam Woo Construction Group Ltd, which is engaged in piling works for three projects here, saw its interim profit

rise by a year-on-year 4 per cent, the company noted in its latest filing. For the six months ended September 30, Sam Woo’s revenue from foundation works and ancillary

services reached HK$255.8 million (US$33 million) and HK$262.1 million in Hong Kong and Macau, respectively. The total interim revenue at HK$517.9 million represented a year-on-year rise of nearly 30 per cent. The interim profit of the constructor, which listed in Hong Kong mid-October, was HK$115.9 million, a rise of 4 per cent when compared to the same period last year. Sam Woo said in its prospectus that it was engaged in the piling works of a hotel casino complex and a hotel tower in Cotai; the company also noted that it was engaged in the piling works of a ‘composite development project’ in the reclaimed Areia Preta

in the northern district of the Macau Peninsula. The works for the ‘composite development project’ - which Sam Woo did not elaborate upon – is only expected to carry on into the next financial year as the company obtained the construction permit in August and granted the quota for importing labour in November. Total bank borrowings of Sam Woo at the end of the interim period stood at HK$426.1 million, nearly HK$90 million more than when compared to March; the company attributed this to the acquisition of machinery and equipment. SL.

Macau and Hong Kong to sign juridical assistance agreement

acau and Hong Kong are set to sign an agreement on mutual juridical assistance early next year, the Hong Kong Secretary for Justice Rimksy Yuen Kwok-keung said yesterday during the 15th anniversary of the Macau Public Prosecutor’s Office’s academic symposium. “What remains to be processed are some written descriptions. The legal systems of Macau and Hong Kong are different. We hope to avoid some uncertain areas in some legal concepts”, Mr. Yuen said on the sidelines of the event. During the event, the Prosecutor General of Macau, Ho Chio Meng, explained that such an agreement would resolve the problem of enacting a sentence in one SAR after it had been delivered in the other Special Administrative Region. In March, Hong Kong businessmen Joseph Lau and Steven Lo were sentenced by a Macau court to more than five years in prison for

corruption. However, it was reported that they are unlikely to spend any time behind bars because Macau does not have an extradition treaty with Hong Kong. When asked if a Hong Kong court could carry out this sentence based on the upcoming agreement, Ho Chio Meng only said that it includes mutual recognition of court sentences and either side’s obligation to implement them. “I don’t give examples of concrete cases. However, the agreement itself solves the confirmation of the behaviour after the crime is committed in the two regions, as well as the implementation of the sentencing. Problems in this area would be solved,” he said. Three principles in juridical cooperation were emphasised by Ho Chio Meng - implementation according to the laws of the local region, focusing on efficiency during the cooperation, and protecting the legal interests of each party.

Business Daily | 5

December 18, 2014

Macau Social Security Fund release report on Provident Fund Stephanie Lai

sw.lai@macaubusinessdaily.com

f the nearly 400 opinions that the government collected regarding the build-up of a provident fund system, aimed to serve as a new layer for residents’ pensions, most support the option whereby employers and workers each pay 5 per cent of the latter’s monthly pay to contribute to the scheme, and the proposal that suggests a vesting scale for the scheme. A conclusion report based on the opinions collected in public consultation was published by the Social Security Fund yesterday. It noted that over 60 per cent of the 399 opinions collected supported the proposal of the employer and worker each contributing 5 per cent of the latter’s basic monthly wage to the provident fund, a pension system that the government aims to foster on a non-compulsory basis first. The legislation process of the provident fund system is expected to start next year, the president of the Social Security Fund (FSS), Ip Peng Kun, told media in October. Following the legislation, the government intends to run the provident fund system for three years before deciding whether or not to make it a compulsory practice. As the opinions collected by the FSS show, doubts have been expressed

over the 5 per cent contribution of monthly pay by both employer and employee as being insufficient to serve as retirement protection. Some of the opinions expressed, citing the experience of Hong Kong’s Mandatory Provident Fund, suggest a higher contribution ratio of 8 per cent to 10 per cent from the basic monthly salary for employer and worker to be paid to the fund each should be applied. The government proposes the non-mandatory provident fund scheme to first apply to those earning between 6,500 patacas (US$813.9) to 30,000 patacas a month, noting that it would review the income range and the contribution ratio on a regular basis following the scheme’s implementation.

Vesting scale Of the consultation, the government also noted in its report that over 70 per cent of the nearly 400 opinions collected opt for a vesting scale to apply for the provident fund scheme. The vesting scale means that the amount of accrued benefits derived from the employers’ contributions that can be vested in the employees, is based on their years of serving

in the company. It is a preferred proposal over the so-called ‘hedging mechanism’, whereby bosses can use their contribution to the provident fund to compensate workers for dismissal. Under the proposed vesting scale system, for those that work for three years or more but less than four years, employees can obtain 30 per cent of the accrued employers’ contributions for the provident fund; this ratio increases by 10 per cent more per each year that the employee continues to serve at the company until he or she can obtain 100 per cent of the accrued contributions upon serving the company for 10 years. While the vesting scale proposal is a preferred option for the scheme, there are opposing opinions that argue that the option does not favour employees who work a shorter employment period, such as those working in the construction sector. Some residents suggest that employees participating in the scheme should be able to obtain 10 per cent of the accrued employers’ contributions after serving in the company for a year; then the employees can get an additional 2.5 per cent of the accrued contributions every three months upon serving in the same company.

Residents can withdraw their accrued contributions from the provident fund when they are 65 years old, or make the withdrawal when 60 upon reporting to the authority as a retiree. The FSS noted in its conclusion report that it may not be choosing annuity as the form of issuing the accrued contributions to the retirees. Citing opinions from fund management entities, the FSS said that the annuity option may not be feasible as the current provident fund system has not taken the life expectancy of residents here into account; and that the annuity payment, which requires a stable and large capital to operate, is more subject to the fluctuations of interest rates. The FSS also said that it would, in tandem with the Monetary Authority, study whether to establish a default fund for the provident fund scheme’s members.

6 | Business Daily

December 18, 2014

Macau Brands

Trends

A Ferrari for Christmas

Healthcare sector shake-up Prof. Mason Fok, Dean of the Faculty of Health Services at the Macau University of Science and Technology, says training is key to alleviating pressure on the Macau healthcare sector

Raquel Dias newsdesk@macaubusinessdaily.com

t is after all the Christmas season and men can be hard to shop for. That’s why the talented people have come up with a genius idea like this. If you dream about driving a red hot Ferrari but lack the means to do so, don’t worry. Thrustmaster, the innovative PC and console accessory brand, has the ultimate racing solution – the Ferrari F1 Wheel Integral T500. It is a wheel replica of the Ferrari 150 Italia with a pedal set. The one of a kind controller was released by Thrustmaster under official Ferrari licence, meaning it’s the real deal. Compatible with PC and PlayStation 3, the package includes a racing wheel, a powerful base containing the racing wheel’s motor and a pedal set to help you close the fastest laps ever recorded. The Ferrari F1 Wheel Integral T500 rises to the challenge with a built-in industrial-class engine (150 mNm torque, 3000 rpm, 65 W, Ø 52) delivering impressive force feedback effects. Its wide internal dual belt combines smoothness and flexibility. The device’s built-in H.E.A.R.T (Hall Effect Accurate Technology) offers extreme precision along with a constant, longlasting 16-bit resolution. A gamer’s dream and an aficionado’s must-have, I’m sure this little gadget will be in a lot of Christmas stockings this year.

acau’s medical check-up culture is severely wanting. Since 2007, Macau’s medical labour force has been haemorrhaging workers, as have other sectors, with the croupier orbit sucking in personnel, while local labour laws, which might have been expected to step up to the plate to remedy matters, remain unchanged. In addition, Macau is facing a spike in local population needs as well as a barrage of travellers impacting medical facilities. There has hardly been any room to breathe for the Health Bureau. Government hospital Conde São Januário – and even private hospitals like Kiang Wu and the Malo Clinic – are hard

put to keep pace. The outcome is predictable: a flow of Macau residents to Hong Kong, Thailand or Singapore for advanced medical treatment. Enter Professor Manson Fok Dean of the Faculty of Health Sciences at the Macau University of Science and Technology (MUST), who has familiarised himself with surgical techniques in Hong Kong and the United Kingdom and practiced medicine for over 30 years. “We’ve been bringing together Macau’s entire medical community for training with some of the world’s finest doctors,” Prof. Fok tells Macau Business. “From Doctor Susan Briggs at Harvard Medical

to Doctor Changqing Gao, Asia’s father of robotic heart surgery and the head of PLA 301 Hospital in Beijing”. “Macau’s frontline healthcare providers need this training because we’re such a small community. We don’t have a medical board here like they do in Hong Kong. They [Macau healthcare workers] are under enormous pressure in all sectors, so we provide them with free training at our medical skills training lab at MUST’s Faculty of Health Sciences”, he explains. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands or online at www.magzter.com

Let there be a new light A local energy management and lighting solutions company will roll out a second factory after six successful years of operation

fter just six years, Yatron Energy Group, a local company providing energy management services and lighting solutions, is about to open a new factory in mainland China. It will triple its current manufacturing unit capacity as the business expands from Greater China to Southeast Asia. In an exclusive interview, Kenneth Chan Chio Hong, chairman and chief executive officer of the firm, tells Macau Business how he started a business with MOP10,000 (US$1,250) and grew it into a US$15 million-revenue conglomerate. Yatron is a diversified organisation providing energy management and

lighting solutions to utilities and energy-intensive industries, including commercial, healthcare, data centres and transportation. The company uses General Electric Company (GE) technology and Yatron is GE’s sole authorised switchgear panel builder and distributor here, opening its factory in Zhuhai in 2010. “In November, we will move into a new plant and our capacity will triple. I had to increase our manufacturing unit’s capacity in order to meet our clients’ demands. With our business setting foot in Southeast Asia, the market is very big,” Mr. Chan says, adding that “our aim for 2015 is for revenue to be around US$25 million. This year,

the target should be US$15 million,” the local businessman says. The company’s main clients are located in Macau, followed by Hong Kong and Taiwan. It also has clients in Southeast Asia now. “In Macau, our major client two years ago was the government. The government’s requirements are very high and we are making high-end products and solutions. Then, fortunately, we started doing casino projects two years ago, like Sands China Ltd, Galaxy Entertainment Group and Melco Crown Entertainment Ltd,” he says. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands or online at www.magzter.com

Business Daily | 7

December 18, 2014

Macau

New China crackdown: Black Wednesday Gaming operators’ stocks lost millions in Hong Kong yesterday as shares dropped an average 6 per cent on news of a new China crackdown on illicit money flowing through casinos here. Credit Suisse says it’s not new news but the market thinks otherwise

acau casino stocks plunged between 5 to 8 per cent in Hong Kong trading after South China Morning Post (SCMP) reported yesterday that China would start cracking down on illicit money channelled through the city’s casinos. China’s Ministry of Public Security is shepherding the move, the newspaper reported. SCMP also cited documents it saw which confirmed the government action and which it said were sent to Macau’s banks late yesterday by the city’s monetary authority. The Chinese ministry had held a meeting in November with Macau regulatory and police units to discuss ‘criminal activities’ related to mainland bank cards and point of sale machines, according to a government statement. The report translated into yet another dark session this year for Macau casino shares. Galaxy Entertainment fell 8.2 per cent. Wynn Macau, part of Wynn Resorts, dropped 4.9 per cent. MGM China, a subsidiary of MGM Resorts, retreated 7.5 per cent, while Sands China, part of Las Vegas Sands, was down 6.2 per cent. Melco Crown’s Hong Kong listed shares fell 4.6 per cent. A senior casino industry insider told SCMP: “This is big; they’re calling it the ‘new normal’ here in Macau. This is direct control over transactions by the Ministry of Public Security. It’s serious and key people are going to be scared.” The report came just two days prior to Chinese President Xi Jinping’s visit to Macau for the 15th anniversary celebrations of the former Portuguese enclave’s return to China’s sovereignty. Macau has recorded six months of decline in casino revenue as

Xi’s campaign against lavish spending by officials continues to discourage gambling by high rollers. The city is also bracing for the first annual decline in revenue for 2014.

Six feet under Since the beginning of the year, stocks from the biggest operators here have lost an average of 30 per cent in value. According to several analysts, together with Xi’s anti-graft campaign, another main factor this year driving the plunge of revenues in Macau has been China’s slowing economy and the record drop in credit on the Mainland. Less credit has exposed junkets to difficult times with smaller operations forced out of the business. With business shrinking, VIP gamblers, a lot of them owners or managers of companies, are deciding to gamble here less. Recent data from Morgan Stanley reveals that high rollers are betting only a fifth of what they used to. Stocks have also been on a rollercoaster as headwinds mount in Macau and investors grow increasingly pessimistic. World Cup diverting gamblers, visa restrictions, declining monthly revenues, and the introduction of a smoking ban are just some of the negative factors to surface this year. Mainland payment services provider China UnionPay, Macau’s monetary authority and the city’s six major casino companies couldn’t immediately comment to Bloomberg. The Public Security Ministry did not answer a faxed request for comment. The crackdown will impact Macau’s casinos “potentially profoundly, depending upon the

extent to which this is enforced,” said Philip Tulk, a Hong Kong-based analyst at Standard Chartered Plc, in a telephone interview with Bloomberg. “We’re aware a lot of the VIPs working with junkets use various means to get funds into Macau and if these methods are deemed illegal, then they’ll stop and it will impact,” he said. Junket operators are middlemen who arrange gambling trips and money for the high-stakes Chinese gamblers who account for about two-thirds of the city’s billion-dollar gambling revenue. They are increasingly taking these high rollers to places like South Korea, the Philippines and Vietnam to gamble.

Xi’s direction Credit Suisse reacted with scepticism. ‘While we don’t rule out that there may be new measures in the future, judging from what we hear, this seems to be old news’, the bank wrote in a note to clients. CS’ analysts underlined that they checked with several sources including banks, pawn shops and casinos and none of them had heard about the notice and the new measures. The bank also reiterated that Union Pay is an expensive way to transfer a large amount of money out of China and that VIPs prefer to use the credit junkets extend to gamble. “If the authorities really want to target the big and suspicious monetary transactions or the ‘tigers’ mentioned in the article, UnionPay may not capture those. “The sector will be under great pressure going forward,” said Lantis

Li, an analyst at Capital Securities Corp., adding investors are awaiting Xi’s comments on Macau this week and for any signs of his future direction for Macau. High rollers have historically avoided travelling to the territory when the President visits, and this will lead to another weak month for Macau’s gambling revenue in December, he said. The new government drive will give the Public Security Ministry’s Economic Crimes Investigation Bureau electronic access to all transfers through state-backed UnionPay’s bank payment card in order to identify suspicious transactions, the Post reported today, citing people it didn’t identify. The Bureau also plans to secure the repatriation of corrupt party officials who have fled overseas and funnelled illicit money out of the country, the newspaper said.

Gambling overseas At the Bureau’s November 20 meeting with UnionPay, Macau’s judiciary police, monetary authority, and Public Prosecution and finance intelligence offices discussed the use of bank cards and machines and money laundering issues, according to a November 21 statement from the Monetary Authority of Macao (AMCM). On November 28, China’s Public Security Ministry also met with representatives from 18 provinces and cities across the country to discuss steps to crack down on crimes related to gambling overseas, the ministryrun China Police Daily reported on December 1. The Macau Government has curbed money flows to the world’s largest gambling hub by restricting the use of UnionPay’s debit cards at casinos. The Macau Monetary Authority ordered jewellery stores and pawnshops operating on casino floors to remove their UnionPay card terminals, making it harder for bettors to buy expensive items that they exchange for cash to gamble with. China previously also cracked down on the use of UnionPay handheld card swipers within casino resorts as concerns had been raised that illegal funds were being taken out of the mainland into Macau. L.G. with Bloomberg

8 | Business Daily

December 18, 2014

Greater China

China paves the European side of th

JD.com in partnership It would create a new investment fund of US$3 billion (2.4 billion e with Intel and eastern Europe, seeking to strengthen its foothold in the region E-commerce giant JD.com Inc. yesterday signed a framework agreement with European Union Intel Corp. to set up a joint innovation laboratory to explore “real sense” shopping online. According to the strategic cooperation agreement, the two Nasdaq-listed firms will develop applications such as 3D product display and visual fitting rooms for Jingdong’s retail website JD.com. Other collaborative projects in the pipeline for the next two years include smart hardware as well as plans to develop tailor-made servers for corporate customers to help them promote online sales of their products.

Li Ning plans share issue to fund growth Chinese sports brand Li Ning Co Ltd said it planned to raise up to HK$1.69 billion (US$218 million) in an open offer of shares to support its next stage of growth and optimise its capital structure. “Next year will mark the beginning of the group’s growth phase,” founder and chairman Li Ning said in a statement. The share issue will help the group develop new products, boost its competitiveness and “improve overall retail operational capability”, he added. Li Ning plans to issue up to 651.9 million shares.

Chinese bank to lend to African bank The West African Development Bank (BOAD) is set to receive a loan of 100 million euros (about US$125 million) from the China Development Bank, a source from the regional bank’s headquarters in Lome said. BOAD is a financial institution for the eight West African nations that make up the West African Economic and Monetary Union (UEMOA). The credit line was approved by BOAD administrators during the bank’s administration council’s 95th ordinary session. In 2011, the same Chinese bank gave BOAD a credit line of 60 million euros.

Baidu confirms investment in Uber Chinese Internet giant Baidu Inc. confirmed yesterday it is buying a stake in fast-growing international car-hailing service Uber as the pair chase growth in one of the world’s largest transportation markets. The companies didn’t disclose how big a stake Baidu is taking, nor how much it is paying for the investment, announced jointly in Beijing. Baidu and Uber said they would collaborate to expand Uber’s presence in China, where it lags far behind Kuaidi Dache and Didi Dache, two domestic car-hailing apps backed by Baidu’s rivals Alibaba Group Holding Ltd and Tencent Holdings Ltd, respectively.

Bank issues delay projects in Iran Seven major steel projects in Iran that are dependent on billions of euros of investment from China have been delayed by financing issues, Iranian stateowned mines and metal holding company IMIDRO said. The Iranian Mines and Mining Industries Development and Renovation Organisation (IMIDRO) said it was working with China Metallurgical Group Corp (MCC), itself a state-owned enterprise, to resolve the issues which involve the Chinese central bank. Local press reports in Iran said the MCC Group has secured 1.8 billion euros of funding for the projects.

Ivana Sekularac

hina sees central and eastern Europe as a potentially lucrative market and bridgehead to the wider EU, drawn by relatively low wages, educated workforces and scope for development on the fringes of the bloc. Chinese investments in the region usually come in the form of loans financed by China’s state-owned banks for projects carried out by Chinese companies, particularly in the sectors of infrastructure and energy. Chinese Premier Li Keqiang, however, addressing a summit in Belgrade with leaders of 16 central and eastern European countries said China was open to “new models of financing and investment”. During the three-day visit, Li is expected to ratify a deal with Hungary and Serbia for Chinese construction of a high-speed rail link between Belgrade and Budapest. “On the Chinese side we can create a new investment fund with a total value of US$3 billion,” Li told the summit, in remarks translated into Serbian. “We expect new ways of cooperation through private-public partnership, various leasing arrangements and that will make our cooperation more efficient, more productive, and by doing that all desires of EU member states for respecting of their rules will be fulfilled,” he said. Li’s host, Serbian Prime Minister Aleksandar Vucic, also alluded to the need to find new ways of financing, reflecting concern over debt levels

Chinese Premier Li Keqiang gestures during a joint press conference with Serbia’s Prime minister

in the region. “Of special importance is diversification of the system of financing between interested parties, taking a step towards financing investment projects through concessions or private-public partnership,” Vucic said. In 2012, China announced a US$10-billion credit line for a region

comprising some of the EU’s newest members and others in the Western Balkans that are not yet part of the bloc but trying to get there. Today Li will inaugurate a 170-million-euro Chinese-built bridge completing a highway ringroad around Belgrade. He said on Tuesday he hoped the high-speed rail link to Budapest would be completed

China approves Syngenta’s genetically m

Syngenta said on Friday it was expecting China to clear imports soo

uthorities have informed some agriculture industry officials the government has approved U.S. imports of a type of genetically modified corn developed by Syngenta AG, according to reports from AgriPulse and Bloomberg. However, three sources at large Chinese importers told Reuters they had not received notice about an impending approval, instead suggesting a sudden big order of U.S. distillers grains, a corn by product, had fuelled expectations of a breakthrough. The sources said that even though China’s bio-safety committee had cleared the strain from a food safety standpoint, the agriculture ministry needed to give its stamp of approval. “The final decision will probably come in January or February next year,” said one of the trading sources at a stateowned trading firm. China’s Agriculture Ministry declined to comment and a Syngenta spokesman said in an email the firm would make an

announcement on the import approval of Agrisure Viptera corn, known as MIR 162, when it receives official documentation. The timing of Beijing’s approval of the MIR 162 corn strain is sensitive for industry participants as Beijing has rejected more than 1.2 million tonnes of U.S. corn in the past year due to commingling of the unapproved variety in

1.2 mln tonnes of U.S. corn rejected by China last year

shipments. Global grain handlers Cargill Inc. and Archer Daniels Midland Co, along with dozens of U.S. farmers, have sued Syngenta for damages over rejections. They claim the seed company misled the farm industry about the timeline for approval by China, a major importer. The issue has also created turmoil in the U.S. distillers’ grain (DDGS) market, as import restrictions of the product in July led Chinese orders to grind to halt. However, industry sources said unexpected import orders of DDGS from Chinese buyers was a sign that an approval was imminent. Chinese firms last week bought as much as 900,000 tonnes of DDGS from the United States, the China National Grain and Oils Information Centre (CNGOIC), a state think-tank, said. Industry sources said a majority of the cargoes were purchased by state-owned COFCO, which could have been tipped off about an imminent approval of MIR 162 corn. Reuters

Business Daily | 9

December 18, 2014

Greater China

he Silk Road U.S. slaps hefty duties on solar euros) targeting central goods from China and Taiwan n as a door to the wider

The move is set to deal a heavy blow to China and Taiwan’s solar panel shipment to the U.S. market, Chinese solar industry officials say Krista Hughes

Aleksandar Vucic (unseen)

within two years. The projects fit with China’s plans to expand its presence in Greece’s main port of Piraeus, where Chinese global shipping carrier Cosco won a 35-year concession in 2009 to upgrade and run two container cargo piers, as a gateway to the Balkans and on into central Europe.

modified corn

Reuters

he United States confirmed steep import duties on solar products from China and Taiwan, in a decision that could inflame trade tensions between the two countries. Anti-dumping duties for Chinese goods were set as high as 165.04 percent as the U.S. arm of German solar manufacturer SolarWorld AG seeks to close a loophole that let Chinese producers sidestep duties imposed in 2012. Taiwan producers face anti-dumping duties as high as 27.55 percent, according to the final Commerce decision, which SolarWorld said raised average duties for Chinese producers but cut them for Taiwan. Producers in China face separate anti-subsidy duties. “These remedies come just in time to enable the domestic industry to return to conditions of fair trade,” said SolarWorld Industries America President Mukesh Dulani. Readying for the decision, some Chinese firms have been preparing to set up factories overseas to sidestep the duties. “In the next few months, we are expected to see some changes in the industry. Some companies will set up plants in southeast Asia or south America,” said Jessica Jin, solar analyst at IHS in Shanghai. The U.S. decision, which will affect companies including China’s Trina Solar Ltd and Suntech Power and Taiwan’s Motech Industries Inc., may sour the mood at annual U.S.-China trade talks in Chicago, which started on Tuesday. China’s Commerce Ministry expressed “serious concern” yesterday and vowed to protect its interests in the WTO framework and the U.S.

judicial system. “This abuses trade remedy measures, damages the legitimate rights of Chinese companies and violates the United States’ duty to respect World Trade Organization rules,” an unnamed official said in a statement posted on the ministry’s website. In August, China suspended imports of polysilicon, a raw material

US$1.5 bln

2013 U.S. imports of solar products from China

used in solar panels, in response to surging imports. The Solar Energy Industries Association, which represents makers and installers of solar panels, said it would continue working for a negotiated solution. “It’s time to end this costly dispute,” said President Rhone Resch. Solar manufacturers have recovered over the last two years from a battering caused by an influx of products from China and a cut in European subsidies. U.S. imports of solar products from China were worth US$1.5 billion in 2013, half the 2011 level, while imports from Taiwan more than doubled to US$657 million, Commerce data show. Many solar panel installers have warned the duties will push up prices. The duties must still be confirmed by the U.S. International Trade Commission, which will make its final decision by January 29. Reuter

Auto dealers group pushes to end carmaker sales targets Competition for customers has intensified as automakers announce ambitious expansion plans and more brands enter the world’s largest vehicle market

hina’s auto dealers are proposing that the government prohibit automakers from dictating the number of cars they sell and extend the duration of distribution contracts to stem losses in the industry. The recommendations were made by the China Auto Dealers Chamber of Commerce in response to a request for feedback from the Commerce Ministry, which is reviewing industry rules that were first implemented in 2005. Two calls to the ministry’s press office weren’t answered, while the dealer group didn’t immediately return a call seeking comment. “The existing rules are no longer suitable for today’s conditions, given

the shift from a market where demand outstripped supply to one where there’s insufficient demand and an excess of capacity,” the group said in its submission to the ministry, a copy of which was obtained by Bloomberg News. While China’s vehicle sales continue to expand and are forecast to exceed 23 million units this year, competition for customers has intensified as automakers announce ambitious expansion plans and more brands enter the world’s largest vehicle market. Unsold stock on dealer lots rose to the highest level last month since August 2013, according to data from the China Automobile Dealers Association.

Dealers are cutting prices to reach targets set by automakers to qualify for year-end bonuses that account for more than half of their annual profits from selling cars, the chamber said this month. Among the chamber’s recommendations to the ministry, manufacturers should bear the cost of recalls if they are at fault and compensate dealers if they withdraw distribution rights in the absence of a contractual breach. Distribution contracts should be automatically renewed for five years after the initial period to allow for better business planning, it said. Bloomberg News

10 | Business Daily

December 18, 2014

Asia S.Korea producer prices fall South Korea’s producer prices in November fell for a fourth straight month and at a quicker pace compared to the previous month in annual terms, central bank data showed yesterday, as global oil prices tumbled. The producer price index for November fell 0.9 percent from a year ago, the Bank of Korea said, quickening from a revised 0.8 percent decline seen in October. This matched a 0.9 percent fall seen in February earlier this year. The drop in producer prices was due to a fall in industrial products, which have the heaviest weighting on the scale.

Japan to cut new bond issuance Japan will reduce new government bond issuance for the third straight year in next fiscal year’s budget as an economic recovery boosts corporate tax revenues, media reports said yesterday. A decrease in new bond issuance will underscore Prime Minister Shinzo Abe’s resolve to continue efforts to restore Japan’s finances, even after his decision to postpone next year’s planned sales tax hike by 18 months. The government is seen selling around 40 trillion yen (US$342 billion) in new bonds in the next fiscal year beginning in April 2015, down from 41.3 trillion yen for the current year.

Sansiri sees Thai housing sales up Thailand property developer Sansiri PCL said yesterday it expected housing sales to rise about 8 to 10 percent in 2015 as the sector should recover in line with the country’s improving economy. The company is developing condominium projects worth a combined 30 billion baht (US$908.82 million), which it aimed to book as revenue when the units are transferred to buyers over the next three years, Uthai Uthaisangsuk, Sansiri’s senior executive vice-president for business development, told reporters. Sales of the overall property sector are expected to rise 6-8 percent next year.

Formation 8 adds Singapore partner Formation 8, the venture-capital firm known for backing virtual-reality company Oculus VR, said it was beefing up its Asian operations by adding a partner in Singapore, investor Joel Sng. By hiring Sng, Formation 8 hopes to stand out from the pack of U.S.-based venture capital firms by bringing more deals in Asia to Formation 8 portfolio companies, most of which are in the United States, said partner Brian Koo. Formation 8 was founded three years ago and has just raised its second fund of US$500 million.

Telstra in talks to acquire Pacnet Australia’s largest telecom services provider Telstra Corporation Ltd on Tuesday said it was in talks with the owners of Pacnet Ltd to buy the undersea cable operator. Earlier Bloomberg had reported, citing a source, that the two companies were nearing an agreement, in a deal that would give Telstra ownership of more than 46,000 kilometres (29,000 miles) of submarine cable between Asia and the United States.

Exports don’t give Abe a break Exports to the United States rose 6.8 percent in the year to November, while shipments to China rose just 0.9 percent Tetsushi Kajimoto

apan’s exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen, maintaining economic policy pressure on Prime Minister Shinzo Abe days after his ruling coalition’s big election win. The 4.9 percent rise in exports was much weaker than a 7.0 percent gain seen by economists in a Reuters poll, slowing from a 9.6 percent gain in October, Ministry of Finance data showed. Weakness in exports could compound April’s sales tax rise that pushed the economy into a recessionary second quarter of contraction through September. Falling oil prices add to the murky outlook, prompting a warning from a top government spokesman about a possible risk aversion spreading to financial markets. Analysts say the slowdown followed a jump in October exports from oneoff factors such as the delivery of ships to Singapore, arguing that exports should remain steady - backed by a U.S. recovery that helps boost output in Asia and Japan. “Exports are still seesawing,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Falling oil prices will benefit importing nations, but we should also be aware of the fact that they stem from anxiety over the global outlook.”

The data followed the Bank of Japan’s key tankan survey, which showed business confidence barely improved in the fourth quarter, suggesting a slow climb out of recession despite gains in share prices and a steep fall in the yen. The BOJ is expected to stand pat at a monetary policy meeting on Friday. Exports to the United States rose 6.8 percent in the year to November, while shipments to China rose just 0.9 percent, slowing sharply from an annual 7.2 percent gain in October. Exports to Asia, which account for more than half of Japanese shipments, grew 5.8 percent in the year to November, slowing from a 10.5 percent jump in the previous

month. EU-bound exports fell 1.3 percent, the first fall in 18 months. Overall imports fell 1.7 percent in the year to November due to falling oil prices, versus a 1.7 percent gain expected. That helped trim a trade gap by 31.5 percent from a year ago to 891.9 billion yen (US$7.64 billion), but still marking a record 29-month run of deficits. Export volume fell 1.7 percent in the year to November, the first annual drop in three months. Japanese shipments have struggled to pick up because companies have moved much of their production overseas, limiting the gains from a weak currency. Reuters

India leads Asian business A poll shows 51 percent of business surveyed gave a positive outlook Tommy Wilkes

usiness sentiment among Asia’s top companies rebounded in the fourth quarter to the secondhighest level in almost three years, a Thomson Reuters/INSEAD survey showed, helped by a stronger U.S. economy and a plunge in oil prices. The Thomson Reuters/INSEAD Asian Business Sentiment Index increased to 72 in the fourth quarter from 66 in the previous three months. The result was only slightly below the 74 reading of the second quarter that was the highest since early 2012. A reading above 50 indicates an overall positive outlook. Indian businesses provided the biggest boost to the index, with companies reporting a maximum score of 100 for the third consecutive quarter as they look to new Prime Minister Narendra Modi to speed up economic recovery. Corporations in China, where worries about a slowdown in economic growth persist, were among the least positive with a reading of 50, coming in below Japan, which is stuck in recession, at 56. U.S. unemployment fell to a sixyear low in November, a signal that the world’s biggest economy and a key

export destination for Asian companies is healthier and its consumers are growing in confidence. “The U.S.’s economic leadership is influencing expectations across the world, and the U.S. is really becoming stronger,” said Antonio Fatas, a Singapore-based economics professor at INSEAD. “Asia is a region where there is not massive uncertainty related to political risk. This is a region that grows with the world.” The rosier picture in the United States coincided with oil prices falling to five-year lows, boosting Asian economies dependent on imports of crude. Fatas cautioned that uncertainty remained, not least in China where investors and companies are “sitting and waiting for data” to indicate how dramatically growth in Asia’s largest economy is slowing. Global economic uncertainty remained the biggest concern for Asian businesses during the quarter, the survey showed, as well as rising costs and other risks such as regulatory change. “I am surprised that the U.S. and oil prices seem to have outweighed

concerns about China and Europe. The downside risks to China’s growth are significant, especially related to real estate and shadow banking,” said Dariusz Kowalczyk, a senior economist at Credit Agricole. Companies participating in the survey included Japanese drugs maker Daiichi Sankyo Co Ltd, South Korea’s Hyundai Heavy Industries Co Ltd and Indian real estate developer DLF Ltd. The poll, by Thomson Reuters in association with INSEAD, a global management and business school, was conducted from December 1-13. Of the 116 companies that responded, 51 percent gave a positive outlook, while 42 percent reported a neutral outlook and 7 percent were negative.

Australia, Taiwan up, Japan stays weak Oil prices plunged during the quarter as supplies flooded the market while economic growth and energy demand were limited. Frederic Neumann, co-head of Asian economic research at HSBC, said the fall was a “big relief for many Asian manufacturing exporters” and

Business Daily | 11

December 18, 2014

Asia

ADB trims growth forecasts for developing Asia Southeast Asia is expected to grow slower than previously thought in 2014 and 2015

he Asian Development Bank slightly trimmed its growth forecast for developing Asia for this year and next, but said sliding prices for oil should help economies in the region push through with growth reforms. In its update to the 2014 outlook, ADB said yesterday developing Asia was now expected to grow 6.1 percent this year, a tad below its 6.2 percent forecast in September. Growth in 2015 was seen at 6.2 percent, from 6.4 percent previously. “While growth in the first three quarters of this year was somewhat softer than we had expected, declining oil prices may mean an upside surprise in 2015 as most economies are oil importers,” said ADB Chief Economist Shang-Jin Wei. The ADB cut its 2014 and 2015 growth forecasts for China to 7.4 percent and 7.2 percent, respectively, from the 7.5 percent and 7.4 percent estimates made in September, due to falling property prices and the spill over effects on the construction sector. Reforms brought by Indian Prime Minister Narendra Modi will help his country grow 5.5 percent this year and, if they are extended,

should lift growth to 6.3 percent next year, the ADB said. Southeast Asia is expected to grow slower than previously thought in 2014 and 2015 due to a slackening in economies in the region. The region is seen growing at 4.4 percent in 2014, down from a previous estimate of 4.6 percent, and 5.1 percent in 2015 instead of 5.3 percent. “Falling global oil prices present a golden opportunity for importers like Indonesia and India to reform their costly fuel subsidy programs,” Wei said. “On the other hand, oil exporters can seize the opportunity to develop their manufacturing sectors as low commodity prices tend to make their real exchange rates more competitive.” Since June, Brent crude has fallen 49 percent to below US$60 a barrel, which means big savings for Southeast Asia’s large oil-importing economies - Thailand, Philippines and Indonesia. Inflation in the region in 2014 is now forecast to be lower at 3.2 percent in 2014 and 3.5 percent in 2015, compared to the 3.4 percent and 3.7 percent seen in September. Reuters

GDP Growth, pct

Actual

Subregion/ Economy

2013*

CENTRAL ASIA

6.5

Forecast 2014

2015

DEC

SEPT

JULY

DEC

SEPT

JULY

5.1

5.6

6.3

5.4

5.9

6.1

EAST ASIA

6.7

6.6

6.7

6.5

6.7

China

7.7

7.4

7.5

7.2

7.4

SOUTH ASIA

4.7

5.4

6.1

India

4.7

5.5

6.3

SOUTHEAST ASIA

5.0

4.4

4.6

4.7

5.1

5.3

5.4

Indonesia

5.8

5.1

5.3

5.6

5.8

Malaysia

4.7

5.7

5.3

Philippines

7.2

6.0

6.2

6.4

Singapore

3.9

3.2

3.5

3.9

Thailand

2.9

1.0

1.6

5.8

5.7

Vietnam

5.4

5.6

5.5

5.8

5.7

THE PACIFIC

4.5

5.4

5.3

5.2

13.4

13.2

Developing Asia

6.1

6.2

6.4

INFLATION, pct Subregion/ Economy

Actual 2013*

Forecast 2014 DEC

SEPT

2015 JULY

DEC

SEPT

JULY

CENTRAL ASIA

6.0

6.8

7.6

6.8

7.0

EAST ASIA

2.4

2.2

2.4

2.6

3.0

2.9

China

2.6

2.2

2.4

2.6

3.0

SOUTH ASIA

6.2

5.5

6.1

6.3

5.6

5.9

6.1

India

6.0

5.0

5.7

6.0

5.3

5.5

5.8

SOUTHEAST ASIA

4.2

4.3

4.1

4.3

4.5

4.7

4.0

Indonesia

6.4

5.8

6.7

6.9

Malaysia

2.1

3.3

3.6

Philippines

3.0

4.4

4.1

Singapore

2.4

1.4

2.0

1.7

2.3

Thailand

2.2

2.1

2.2

2.3

2.6

Vietnam

6.6

4.2

4.5

5.5

THE PACIFIC

4.5

4.2

4.5

Developing Asia

3.4

3.2

3.4

3.5

3.7

sentiment revival

KEY POINTS Sentiment index rises to 72 in Q4 from 66 in Q3 Indian companies most positive; Chinese, Singaporean least Prime Minister Narendra Modi is leading the economic recovery in India

Taiwanese sentiment recovers, Australia climbs Building, property, retail sector sentiment highest Financial, shipping sectors least optimistic

probably helped outweigh continued worries about the global economy. “There are still lingering risks but the risks are probably manageable. Even though global growth is disappointing, businesses are more optimistic because they see moves

towards structural reforms,” he said, referring to policy changes in India, Indonesia and China. In Australia - this year’s chair of the Group of 20 major economies companies were more positive. The country scored 85, up from 75 in

the last quarter, while sentiment in Taiwan turned positive, jumping to 71 from 33. The Philippines suffered the steepest decline in optimism, with a drop to 67 from 83, while Japanese sentiment remained poor

as respondents worried about the domestic economy. Positive sentiment among building firms was highest, doubling from last quarter to a one-year high of 100. This was followed by property developers with a score of 87 versus 63, and retail, which jumped to 84 from 63 to its best level since the survey began in 2009. Shipping and financial companies were the least positive. INSEAD’s Fatas said the oil price fall was likely still being digested by individual Asian companies and would filter through to more positive outlooks across sectors in coming months. “My expectation is that the next quarter will be better than this one.” Reuters

12 | Business Daily

December 18, 2014

Asia Vietnam’s population over 90.4 mln As of April 1, 2014, Vietnamese population reaches over 90.493 million, with 44.62 million men and 45.87 million women, said Vietnam’s General Statistics Office (GSO) yesterday. The information was released at a conference held in capital Hanoi on Wednesday on major findings of the population and housing census of Vietnam. Speaking at the conference, Nguyen Van Lieu, deputy director of GSO said the census lays foundation for Vietnam to build socio- economic development plan during 2016-2020 period.

Kansai reactors clear initial rules Japan’s atomic regulator gave initial safety clearance yesterdayto two reactors operated by Kansai Electric Power, the second approval under new rules introduced after the Fukushima nuclear catastrophe. Kansai, Japan’s most nuclear-reliant utility that provides power to the country’s second biggest metropolitan area, also said it hoped to hike electricity rates for a second time from April, stating that its corporate survival was “at risk.” The utility is expected to log its fourth straight annual loss this year and Kansai president Makoto Yagi told reporters in Osaka.

Myanmar strives for ASEAN Economic Community Myanmar is striving for accountable governance of ASEAN Community and anti-corruption, taking initiatives to establish a related framework in the aspect, the semi-official Global New Light of Myanmar reported yesterday. Addressing an on-going meeting in Nay Pyi Taw on the framework to be worked out, Vice President Sai Mauk Kham called on governmental departments and civil society organizations to take into consideration cultural differences and political background in developing the framework. Challenges are likely to arise in establishing a single economic community.

ILO, Cambodia against child labour The International Labour Organization’s Better Factories Cambodia (BFC) and the Garment Manufacturers Association in Cambodia (GMAC) will sign an agreement today, aiming to abolish child labour in Cambodia’ s garment industry, said a join news statement. “The agreement emphasizes collaboration between BFC and GMAC in the process of identifying and remediating any confirmed cases of child labour,” the statement said. “When workers under the age of 15 are identified, they are offered access to suitable vocational training institutes and are paid the equivalent of their average monthly factory pay until they reach 15,” it added.

Japan banks to bulk up India presence on improving ties Mizuho is hiring and will move its local headquarters in Mumbai to a bigger premises Sumeet Chatterjee and Devidutta Tripathy

aced with a shrinking economy and tepid loan demand at home, Japan’s largest banks are looking to bolster their presence in India, enthused by Prime Minister Narendra Modi’s reform agenda and improving ties between the two countries. While some European and U.S. lenders are sitting on the fence after being bruised by the country’s sharp slowdown, Japanese banks are betting aggressively on Modi’s pledge to restart growth and attract foreign investment. Standard Chartered, the biggest foreign player in India, said in October it remained watchful on the country after the slowest growth since the 1980s hit many of its corporate clients. But Japanese lenders including Mitsubishi UFJ Financial Group (MUFG) and Mizuho Financial Group Inc. plan to grow their loan books through branch openings and

offerings of new services such as corporate deposits, M&A financing and debt capital market advisory, bank executives said. They see an opportunity to expand in a sector dominated by inefficient state-owned banks and where foreign lenders control only 6 percent of total banking assets. By contrast, foreign banks control nearly a third of banking assets in Indonesia and more than a fifth in Brazil. With Japan setting a target of doubling investments in India within five years and New Delhi scrambling to attract long-term investment to shore up its creaky infrastructure, Japanese banks are trying to move quickly. “Our balance sheet is strong. We can absorb our lending exposure to our Indian clients... better than European, American banks,” Mizuho Bank India CEO Shinichiro Kashiwagi said. India is the key focus market for

Mizuho Bank in Asia, besides Japan, China, South Korea and Taiwan, he told Reuters. In a sign India is willing to boost

KEY POINTS Shrinking economy prompts Japanese banks to expand abroad MUFG, Mizuho look to open more branches, grow loan book Japanese lenders also planning to offer new services in India Lenders bet on PM’s reform agenda

OECD warns Australia not to give up austerity Falling prices for key commodity exports, sluggish wages growth and problems passing planned budget cuts have all combined to undermine government finances

he Australian government’s decision to expand its budget deficit rather than pursue austerity policies was “commendable”, the OECD said yesterday, while recommending a shift toward indirect taxes to repair finances in the longer term. The Organisation for Economic Cooperation and Development’s regular scorecard on Australia said its economy was well managed but faced risks including weakness in global commodity prices and speculative froth in the domestic housing market. It forecast economic growth would slow to 2.5 percent in 2015, from an estimated 3 percent this year, while the jobless rate would stay around 6.2 percent. “Broadly speaking, the balance of risks facing the Australian economy contains more substantial downside than upside uncertainties,” said the Paris-based agency. Given the dangers it was appropriate that the Liberal National

government had not tried to tighten fiscal policy in the short term to deal with a swelling budget shortfall. Indeed, the OECD argued that there was “no obvious virtue” in a large war chest of net public assets by pursuing budget surpluses at all costs. Treasurer Joe Hockey this week announced the budget deficit would grow to just over A$40 billion (US$32.8 billion) in the year to June, A$10 billion larger than first expected. Falling prices for key commodity exports, sluggish wages growth and problems passing planned budget cuts had all combined to undermine government finances. The deterioration has been a political weight on Prime Minister Tony Abbott who, just a year into power, is trailing badly in opinion polls. The OECD said steps to fix the budget should include a major shake up of the tax code. It recommended broadening the base and raising

the rate of the goods and services tax (GST), and increasing the use of land taxes. Australia’s banking system was in good shape and well regulated, though lending in the housing market needed “intensive monitoring” and macroprudential tools should be considered if needed, the OECD said. The main banking regulator recently outlined tougher guidelines around investment lending in property, in part to temper house price growth in Sydney and Melbourne. On monetary policy, the OECD said only that a normalisation could be on the horizon but how it might evolve was “uncertain and subject to debate.” The Reserve Bank of Australia (RBA) has kept rates at record lows of 2.5 percent for almost 16 months and financial markets are wagering there is more chance of a cut than a hike. Reuters

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Business Daily | 13

December 18, 2014

Asia

business and political ties with Japan, Modi visited Tokyo in his first major foreign visit after a landslide electoral victory in May. Mizuho, which received approval for its fifth Indian branch in Gujarat state days before Modi’s Tokyo visit, is hiring and will move its local headquarters in Mumbai to a bigger premises. Mizuho also plans to offer debt capital market services and to help Indian companies launch ‘Samurai bonds’ denominated in yen in Japan, Kashiwagi said. These bonds could be a cheap borrowing option for Indian

companies. But Japanese buyers may be reluctant to buy paper issued by Indian companies, few of which are credit-worthy. Furthermore, winning business in a market where foreign banks’ operations are tightly regulated could prove an uphill struggle, financial services consultants say. Other risks include bad debts, a factor likely to keep Japanese banks focused on big companies, rather than smaller or medium-sized ones. A tenth of India’s total loans is considered non-performing or has been restructured. Buoyed by Modi’s commitment to

Economists trim Singapore growth forecasts A tepid and uneven global recovery has tempered Singapore’s economic growth this year

conomists have cut their estimates for Singapore’s economic growth in 2014 and 2015 from three months ago and lowered forecasts for inflation, a central bank survey showed yesterday. The median forecast of 22 economists surveyed by the Monetary Authority of Singapore (MAS) was for gross domestic product (GDP) to expand 3.0 percent this year, down from expectations for 3.3 percent growth in a survey published in September and growth of 3.9 percent last year. Economists also trimmed their 2015 growth forecast to 3.1 percent from 3.7 percent previously. Such expectations are in line with the government’s forecast for growth of around 3 percent this year and 2 to 4 percent expansion in 2015. Headwinds have come from the government’s push to reduce a politically unpopular reliance on foreign workers. That has led to a tight labour market and raised business costs. The MAS survey shows that economists see core inflation at 2.0 percent for the year, down from 2.2 percent in the previous survey. They also see core inflation slipping to 1.9 percent in 2015, down from 2.5 percent in the September survey. The MAS has said it expects

3.1 percent 2015 Singapore’s growth forecast core inflation, which excludes changes in the prices of cars and accommodation and is the focus of monetary policy, to average 2-2.5 percent in 2014 and 2-3 percent in 2015. Economists also trimmed their forecast for all-items inflation to 1.1 percent this year, down from 1.8 percent in the previous survey. They expect headline inflation to come in at 1.1 percent again in 2015, down from 2.2 percent previously. The MAS has said it expects CPIall items inflation to come in at 1-1.5 percent in 2014 and 0.5-1.5 percent in 2015. Headline consumer inflation has fallen this year due to a moderation in housing costs and car prices but core inflation has stayed relatively firm on the back of wage cost pressures. Reuters

get rid of frequent power blackouts and bumpy roads, Sumitomo Mitsui Banking Corp, seeks to tap more project finance business, said Daisuke Inoue, a senior executive at the lender’s international banking unit. Rival MUFG, with a 22 percent stake in Morgan Stanley, plans to work closely with the U.S. bank to help finance an expected wave of foreign acquisitions by Indian firms. For those transactions, MUFG will offer its balance sheet and Morgan Stanley its advisory services, said Taiju Hisai, India head of Bank of Tokyo-Mitsubishi UFJ, the banking

unit of MUFG. MUFG’s ranking in the Thomson Reuters table of top arrangers of Indian syndicated loans has jumped to fifth this year - ahead of Deutsche Bank, Standard Chartered, Citigroup and RBS - from 13th last year. MUFG, whose loan book in India stands at about US$8 billion, might also consider buying a local Indian bank, Hisai said. “The Japanese government is actively supporting and promoting investments in India,” said Hisai. “I feel the momentum and I think it’s a good momentum.” Reuters

14 | Business Daily

December 18, 2014

International Itaú eyes Banamex Mexico entry Itaú Unibanco Holding SA, Latin America’s largest bank by market value, wants to enter the Mexican retail banking market and is eyeing Grupo Financiero Banamex SA as a potential way in, Chief Executive Officer Roberto Egydio Setubal said. Speaking to shareholders at an event in São Paulo, Setubal did not elaborate on Itaú’s strategy for Mexico. Earlier, his brother Alfredo, Itaú’s senior vice president for investor relations, said Itaú was in no rush to buy a rival overseas as a currency slump made foreign acquisitions more expensive.

GE sees 2015 profit pressured by oil General Electric Co gave a 2015 profit forecast range on Tuesday that barely included Wall Street’s target as the U.S. conglomerate braced for a “sluggish” oil and gas sector due to plunging crude prices. GE said it expects earnings from its aviation, power & water and other industrial units to rise at least 10 percent next year as it focuses on increasing its profit share from these businesses to 75 percent by 2016 from 55 percent in 2013. The switch is aimed at reducing GE’s exposure to its finance business.

White House aims at illegal seafood trade A White House task force issued proposals to tighten the grip on the illegal global seafood trade, which the group said causes billions of dollars in losses to the legal fishing industry annually. Under the plan, the United States would create a program to trace seafood entering its ports from the source to the shelves, to prevent illegal products from getting into the domestic market. The recommendations would implement searching, inspecting and seizing illegal seafood at U.S. ports and on sale, and prosecuting offenders as part of the wider effort to combat “pirate fishing.”

Philips expands in medical devices Philips has agreed to acquire U.S.-based medical device maker Volcano Corp for US$1.2 billion including debt, its largest healthcare acquisition in seven years and a bid to cash in on an ageing population’s need for more complex treatments. Philips said the acquisition of Volcano -- which makes equipment that allows doctors treating heart disease to see inside patients’ veins and measure blood flow -- would lead to synergies in research and development and in sales. The deal is expected to add to Philips’ earnings per share by 2017.

Hard competition for Holcim-Lafarge assets The battle for the assets cement firms Lafarge and Holcim must sell to get the go-ahead for their merger will likely be between three groups, several people familiar with the matter said. The three groups expected to hand in binding bids by a mid-January deadline are: Irish cement maker CRH; Blackstone, Cinven and Canadian pension fund CPP; a team consisting of CVC and sovereign wealth funds the Abu Dhabi Investment Authority (ADIA) and Singapore’s GIC.

EU proprietary trading ban amid quicksand With the EU legislation still in progress, a number of nations have pressed ahead on their own

he European Union’s new financial-services chief, Jonathan Hill, said he’ll press on with plans criticized by the financial industry on curbing some proprietary trading and erecting firewalls between consumer and investment banks. Hill, who became EU commissioner for financial services and stability on November 1, said the bloc’s existing regulations don’t go far enough to tame the threat posed by the collapse of a systemic lender. A proposal presented in January by Hill’s predecessor, Michel Barnier, would introduce a “narrowly defined” proprietary trading ban at about 30 of the biggest EU banks, and set thresholds for determining whether some trading activities must be moved into separately capitalized units. The European Banking Federation yesterday expressed its “disappointment” that Barnier’s bill won’t be scrapped. “The sensible thing to do is to seek to make progress quickly” on the legislation, Hill said in a December 15 interview in Brussels. Hill said he would seek a compromise on the rules, which need backing from the bloc’s 28 national governments and EU lawmakers to take effect.

‘Landing zone’ “I’m sure it will be the case, as it always is, that finding the landing zone is not going to be straightforward,” Hill said. For banks’ riskier activities, the goal is “to find a mechanism for identifying them and then taking a nuanced judgment, or a more nuanced judgment, as to what you do about them.” The proposal by the European Commission, the EU’s executive arm, has come under attack on multiple fronts since it was presented. The EBF, which represents lenders across the 28-nation bloc, said the commission’s goals in presenting the bank-structure bill “already have been addressed by new regulations imposed on the sector in recent years.” Banks have said the measure would increase their costs, inhibit lending to businesses and damage

the functioning of financial markets. The text also received a lukewarm reception from national governments and the European Parliament. The European Central Bank, while supporting the initiative, last month urged the EU to tread cautiously around any moves that might affect so-called market-making activities provided by banks.

‘Supervisory discretion’ The role of market-making is one of the “issues we need to look at closely” in the draft law, Hill said. Others are the “extent of supervisory discretion” in determining whether separation should take place and the criteria used when assessing the need for such separation, he said. Hill previously said in a private letter to Frans Timmermans, the commission’s first vice president, that while “it would be premature” to scrap the proposed law, “member states are pulling in different directions in opposition to it, so withdrawal could be an option next year if member state support does not pick up.” In the interview, Hill vowed to press on in search of a deal on the legislation.

“I’ve concluded that I am not going to withdraw it; I am going to take it ahead,” Hill said. “Had I intended to withdraw it, the honest answer is I would have.”

Trading activities The EU plan targets banks labelled as globally systemic by the Financial Stability Board, a group of international regulators. It would also capture banks that for three consecutive years have total assets exceeding 30 billion euros (US$37 billion), and that have total trading activities exceeding either 70 billion euros or 10 percent of their total assets. Exemptions would be possible for banks based in nations judged as already having equally tough rules. The EU banks in the latest edition of the FSB list, published in November, are: HSBC Holdings Plc, Deutsche Bank AG, Barclays Plc, BNP Paribas SA, Royal Bank of Scotland Plc, Banco Bilbao Vizcaya Argentaria SA, Credit Agricole Groupe, Groupe BPCE, Credit Agricole Groupe, ING Groep NV, Nordea Bank AB, Banco Santander SA, Societe Generale SA, Standard Chartered Plc and UniCredit SpA. Bloomberg News

Disasters cost US$113 billion Of the total economic losses recorded up to November 28, the bulk was caused by natural catastrophes such as extreme weather

xtreme weather and other natural and man-made disasters caused US$113 billion in economic losses in 2014, reinsurer Swiss Re yesterday. This is 16 percent less than the US$135 billion in losses recorded in 2013 and significantly below the average annual figure of US$188 billion for the previous 10 years. Insurers covered US$34 billion of the damage, down 24 percent from US$45 billion in 2013, the company said. About 11,000 people lost their lives from disaster events, down from

more than 27,000 fatalities recorded last year. Of the total economic losses recorded up to November 28, the bulk --US$106 billion of the US$113 billion total-- was caused by natural catastrophes such as extreme weather. The storms in the United States in early 2014 alone caused insured losses of US$1.7 billion, while a spate of storms across the country in May cost another US$2.9 billion. Strong winds and heavy rains in Mexico brought by Hurricane Odile

caused insured losses of US$1.6 billion, while a wind and hail storm that struck parts of France, Germany and Belgium in June cost US$2.7 billion. Elsewhere, Swiss Re said it was too early to assess the losses caused by the dry summer in parts of China, which have affected agricultural output. Likewise, it had no figures for the economic damage wrought by Typhoon Hagupit on the Philippines earlier this month, but said early estimates indicate it will be less than that caused by Typhoon Haiyan in 2013. AFP

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December 18, 2014

Opinion Business

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Leading reports from Asia’s best business newspapers

TAIPEI TIMES

After election, Abenomics to fail fair test James Saft

Reuters columnist

Academia Sinica raised its GDP growth forecast for this year to 3.42 percent, from the 3.31 percent estimated in July, citing better exports and private consumption. The pace might decelerate to 3.38 percent next year, as China’s economic slowdown could dampen external demand and government spending is set to contract further from this year, Academia Sinica research fellow Ray Chou said. China, which accounts for about 40 percent of Taiwan’s exports, might not see aggressive economic growth in the future due to an increasingly large base and continued economic reform, Chou said.

THE KOREA HERALD South Korea said yesterday it was closely watching for any fallout from the Russian risk sparked by the falling ruble and oil prices, while banks reported a safe level of market exposure. Local banks and non-bank institutions’ exposure to Russia stood at US$1.36 billion as of September, accounting for 1.3 percent of the country’s total foreign lending of $108.4 billion, according to the Financial Supervisory Service (FSS). Exposure, or market exposure, refers to the amount that an investor can lose from the risks of a particular investment.

THE PHNOM PENH POST US conglomerate General Electric will help Cambodia improve its power grid, according to a statement issued yesterday by the US Embassy. GE and Electricité du Cambodge (EdC) will sign an agreement that will see the US firm take a research and advisory role in improving Cambodia’s power grid, the statement says. “Through this contract, GE will provide electricity grid maintenance services to EdC and conduct a study of Cambodia’s electricity grid to identify ways that the grid can be improved,” the statement reads.

THE JAKARTA POST As with the four-wheel market, the sales of motorcycles also dropped in November, according to the latest data issued by the Indonesian Motorcycle Industry Association (AISI). Motorcycle sales dropped by nearly 14 percent to 583,331 units from 675,652 units in October, the AISI said. Like car sales, the motorcycle sales figure in November was also among the lowest sales recorded in 2014. Every motorcycle brand, except Suzuki and TVS, recorded a decrease in sales in November. While Honda’s sales slipped 6.1 percent, Yamaha fell 33.1 percent and Kawasaki decreased 22.6 percent month-on-month.

Japanese Prime Minister Shinzo Abe speaks as President of the ruling Liberal Democratic Party (LDP) during a news conference following the landslide victory in the Lower House election

he salient fact in the Japan election wasn’t the big victory for Prime Minister Shinzo Abe or the record low voter turnout, but that it is all happening in a country with fewer and fewer people. That demographic reality means that the reflationary economic policies of the Abenomics project now has more runway but perhaps still not enough power to get off the ground. Abe’s coalition’s victory with more than a two-thirds majority makes likely not only more expansionary monetary and fiscal policy in the next year, but smoothes the way for his likely victory for another term in September 2015. This ensures a fair try for the first two components of Abenomics: monetary policy to cheapen the yen and stimulate exports as well as creating inflation, and fiscal policy, including the delay of a consumption tax, to try to give the effort support. With fewer and aging people and little immigration, Japan’s ability to capitalize on this is in doubt, even if labour reforms to bring more women into the workforce eventually succeed. “Japan needs more people, not more debt, and not more money. An aging and declining population is reducing aggregate demand. A shrinking workforce is reducing Japan’s potential production. Fiscal stimulus cannot fix this,” economist Carl Weinberg of High Frequency Economics wrote in a note to clients. “Since demand falls faster than supply when both the population

and the labour force go down together, deflation is inherent in this forecast, regardless of fiscal deficit spending or monetary conditions.” This view was reinforced by the Bank of Japan’s Tankan quarterly business conditions survey, which showed companies not only forecasting falling sales but falling prices also. It has proved extremely difficult to bring Japanese businesses and consumers out of a deflationary mind-set. That’s perhaps in part because, though the BOJ has successfully driven prices up 2.9 percent from a year ago, this is a rise of just 0.9 percent when you strip out the effect of April’s consumption tax hike. Even worse, wages have not kept pace with even this mild inflation, dropping on an inflation-adjusted basis for the 16th straight month in October to stand 2.8 percent lower than a year before. So, while Abenomics can move its targets towards its goals, its ability to create a self-sustaining economic recovery is in doubt. Meanwhile Japan’s public debt position worsens, raising the stakes of the gamble.

Globalization and the cult of shareholder value One of the other problems with Abenomics thus far is its puzzling failure to ignite an export-led revival. The thinking was that if you could lower the value of the yen, exporters would win market share at newly profitable levels. To take advantage of this they would invest in new

While Abenomics can move its targets towards its goals, its ability to create a self-sustaining economic recovery is in doubt

equipment and capacity, hiring new workers in the process. Those capital expenditures and wages would circulate in the economy, raising economic growth and sustaining rising prices. That is not how it has worked out, at least so far. While the dollar now buys about 20 percent more yen than it did before talk of Abenomics began in 2013, exports have expanded at a far slower pace, forecast to be up 7 percent in November. Exporters have seen their margins fatten, but have yet to decide that argues for much higher production in Japan. “Put simply, one might say Abenomics has made exporters richer, but not yet busier,” Barclays

economist Kyohei Morita wrote to clients. In part, this may be because Japanese industry quite sensibly decided long ago to diversify its manufacturing base, building plants elsewhere in the world. A Japanese executive, then, is not simply competing as a yen-based manufacturer. If he decides to try to up production in Japan, he may simply be shifting demand away from his other operations elsewhere, making them less profitable. Morita of Barclays observes that since 2002 despite wide swings in the value of the yen, the price tags of Japanese goods have hardly fluctuated, implying that prices are the result of a more globalized, highly integrated manufacturing sector. One other potential explanation for Japan’s failure to take advantage of the weak yen is the cult of shareholder value, a U.S. idea only slowly and fitfully imposed upon Japanese companies over the past 15 years. Believers in shareholder value maximization, the idea that a corporation’s sole aim is the creation of profit for owners, might argue that it is better for Japan, Inc. to take the cheap yen as a windfall, banking the now fatter margins while keeping capital expenditure at a minimum. If this can be done while giving out below-inflation raises, then so much the better, our globally educated Japanese manager might believe. Abenomics may well fail, but after the election it looks as if it will be given a robust test. Reuters

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December 18, 2014

Closing China’s game market hits US$18.5 billion

Thailand’s tourist arrivals up 2.5 pct on year

China’s game market experienced robust growth this year with revenues for the sector surging 37.7 percent year on year, said a report yesterday. Game sales have reached 114.5 billion yuan (US$18.5 billion) this year, according to a report released by China Audio-video and Digital Publishing Association at the annual meeting of the country’s game industry held in Haikou, capital of the southern island province of Hainan. The growth was driven in particular by strong sales of mobile games. Sales of games developed by domestic game companies reached 72.7 billion yuan, posting strong growth of 52.5 percent.

The number of tourists arriving in Thailand rose for the second straight month in November, up 2.53 percent from last year, when political tensions began, suggesting the country’s pivotal industry continues to recover from the unrest. Tourism, which accounts for about 10 percent of the Thai economy, suffered its biggest fall in tourist numbers in June this year. The military took power on May 22 in a bid to restore stability and confidence. Overall foreign tourist numbers were about 2.44 million in November, Department of Tourism data showed. That compared with 2.18 million in October.

Chinese state-owned aerospace giant seeks private partnership National commercial development of space sector lags behind the United States

n a move to spur innovation, state-owned China Aerospace Science and Technology Corp. (CASC), the major contractor for China’s space program, invited 1,300 private enterprises to a forum it cohosted in the eastern city of Ningbo. The 2014 China (Ningbo) international forum on advanced aerospace materials and commercialization, which ended yesterday, signalled a shift in the once restricted sector to a moreopen working style that encourages collaborative practice with private entities. The CASC’s ice-breaking initiative aims to foster development in the Chinese manufacturing sector, said head of the CASCaffiliated China Academy of Aerospace Systems Science and Engineering, Wang Kunsheng. Wang Yongru, vice president of Ningbo Jintian Copper Co. Ltd., one of the largest copper processing companies in China, said that for the private sector, the opportunity to collaborate with state-owned entities

would advance the practical application of innovation already in use by other sectors. China’s commercial development of its space sector lags behind the United States. For example, innovation resulting from the Apollo Project drove development in the private sector, said Ba Risi, CASC chief engineer. Private enterprises have capital but lack concrete application, the combination of space innovation and the private economy will cultivate a fertile market for the Chinese manufacturing industry, said Ba. Jintian is among five local private enterprises to sign technical service agreements with CASC. Ningbo is a major new material manufacturing base with an annual new material output of 100 billion yuan (US$16 billion). Wang Yongru hopes to develop functional materials that could be used in the manufacturing of magnetic materials through the cooperation with CASC. China has independently developed a number of

Saudi to continue ‘massive’ spending despite oil fall

world-level new material technologies during its space exploration research, including artificial crystal materials that are expected to have a market demand of 5 billion yuan and superstrength steel that will have an annual output value of 100 billion yuan by 2020, said Wang Kunsheng. The partnership with private sector can also benefit research in space technology,

said Sun Yantang, deputy head of the Xi’an Aerospace propulsion Institute, another CASC affiliate. The CASC has offered 30 areas to the private sector for developmental partnership, including high-performance metal, organic polymer and electronic information. In the future, it will also promote the commercialization of satellite application, clean

energy, energy conservation and high-end equipment technologies. CSAC was established in 1999. It has a number of subordinate entities which design, develop and manufacture a range of spacecraft, launch vehicles, as well as strategic and tactical missiles. It also provides international commercial satellite launch services. Xinhua

Asia to become world’s largest e-commerce market

EU shines light on dirty money with central registers

audi Arabia will continue massive public spending despite a 50 percent drop in the price of oil which provides the bulk of the kingdom’s revenue, the finance minister said yesterday. Ibrahim bin Abdulaziz Al-Assaf commented after completing the 2015 budget, which will be presented to cabinet “in the near future”, the official Saudi Press Agency said. Financial analysts expect the budget to be approved as early as next Monday. The kingdom is the largest economy in the Arab world, and OPEC’s biggest crude producer. Assaf said the budget comes during “challenging” global economic conditions but surpluses and reserves built over many years have given it “depth and a line of defence that come in handy in times of need”. He said this policy will continue, enabling the government “to implement massive social projects” in health, education, social services and development as well as state security. This spending, combined with private sector activity, is expected to bring positive economic growth, he said, without giving a figure.

sia is set to surpass North America and snatch the title of the world’s largest e-commerce market this year, said the Economist Intelligence Unit (EIU). According to a report published in Beijing by the EIU, an advisory company under the Economist Group, it is estimated that retail sales in Asia will grow by an average 4.6 percent on a volume basis to 7.6 trillion U.S. dollars, compared with 2.5 percent in North America and 0.8 percent in Europe in 2015. Report editor Laurel West said that the Asian consumer market was largely driven by the rising independence and economic power of Asia’s women, and female consumers in Asia are showing an unprecedented enthusiasm for online shopping. The report is based on a survey of 5,500 women across major cities on the Chinese mainland, Hong Kong, Taiwan and Macao, as well as countries including India, Japan, Singapore and the Republic of Korea. Among the survey respondents, 43 percent were in managerial, executive or professional services jobs.

AFP

Xinhua

he European Union has agreed rules to stamp out tax evasion and stop dirty money from criminal gangs or terrorism finance being channelled through anonymous companies. EU states and the European Parliament struck the agreement on Tuesday evening to update the bloc’s antimoney laundering rules, a statement from parliament’s economic affairs committee said yesterday. The aim is to stop anonymous or shell companies being used to finance terrorism, launder money from criminal activity or evade taxes. Central registers would be set up listing the beneficial owners of companies, trusts and other legal entities, giving the name, month and year of birth, nationality and residency of the people who own and profit from them. Banks, accountants, lawyers, real estate agents and casinos would also be required to be more vigilant about suspicious transactions made by customers. “Creating registers of beneficial ownership will help to lift the veil of secrecy of offshore accounts and greatly aid the fight against money laundering and blatant tax evasion,” said Krisjanis Karins, an EU lawmaker who helped to negotiate the deal. Reuters