Macau Business Daily, Jan 21, 2015 by Business Daily

MOP 6.00 Number 712 Wednesday January 21, 2015

Publisher: Paulo A. Azevedo

Closing editor: Luís Gonçalves

AL to monitor costs of major public works

Year III

he chickens are coming home to roost. And accountability is in the air. The CE is mulling the drafting of a law enabling the Legislative Assembly to monitor mega infrastructure projects, citing the example of Hong Kong. Chui Sai On is disturbed by the findings of an Audit Report on the First Phase of the Light Rail Transit System. Two and a half years’ delay and triple budgeted costs are unacceptable. Chui asks Macau population to give Raimundo Rosário time to resolve the situation PAGE 5

CoD works suspended A local construction worker has had a fatal accident. Using a lifting appliance on the retail expansion site at City of Dreams, the man tragically fell to his death. The Labour Affairs Bureau has ordered a suspension of works. The gov’t has confirmed a full investigation will be held into the incident PAGE 2

HSI - Movers January 20

Name

%Day

China Life Insurance

4.22

Ping An Insurance Gr

2.96

Bank of China Ltd

2.63

China Resources Ente

2.45

Industrial & Commerc

2.39

CNOOC Ltd

-0.19

Sands China Ltd

-0.42

Hong Kong & China Ga

-0.45

China Resources Powe

-0.73

Power Assets Holding

-1.14

Source: Bloomberg

I SSN 2226-8294

Crouching tiger, hidden dragon Once known as the Celtic Tiger. Now Ireland wants to reboot its economy by “looking East”. Irish Minister of State at the Department of Finance has met with Sonia Chan to discuss deeper co-operation. Agriculture, education, hospitality and tourism are common links. While the gateways to major world markets China and Europe have something to offer both parties

Chinese GDP data confirms it. The economy is progressing along moderate lines. Last year’s growth was better than expected by analysts. Cutting a break for Asia markets.

First David Group. Now junket operator Gold Moon Group has shut down one of its five VIP rooms. This one is located in Sands Cotai Central. SJM CEO Ambrose So remains serene. VIP room closures not a new trend, in his opinion

Page 8,9&15

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‘New normal’ is here

www.macaubusinessdaily.com

VIP closures continue

City Chain turnover down 3 pct

Revenue decline not linked to Gaming shuttle buses anti-graft campaign, says Beijing need more regulation PAGE 5

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2 | Business Daily

January 21, 2015

Macau Suspension order Ho Ion Sang: follows fatal industrial Regulate gaming accident at CoD A local construction worker using a lifting appliance on the retail expansion site at City of Dreams has fallen to his death. The government said it would further investigate the cause

shuttle buses

Stephanie Lai

sw.lai@macaubusinessdaily.com

n industrial accident occurred on the retail arcade expansion site of City of Dreams yesterday morning resulting in the death of a local construction worker. A suspension order has been issued for the works at the site by the Labour Affairs Bureau, Business Daily has learnt. At around 10:00 am yesterday, a 29-year-old local construction worker operating a lifting appliance on the second floor of the expansion site – at a height of about 10 metres off the ground – fell to his death, the Labour Affairs Bureau and the police have announced. The fatal fall was due to the alleged overlifting of the appliance that the worker had been using at the time, the Labour Affairs Bureau said. The accident took place near Gate No. 3 of the retail arcade expansion project site of City of Dreams in Cotai. The gross floor area of the expansion site occupies 17,000 square metres, according to the main contractor of the project, Chun Wo Development Holdings Ltd. In a press statement issued yesterday evening, the Labour Affairs Bureau said that it has already ordered the contractor ‘to immediately suspend the use of all lifting appliances’ on the accident site. ‘The Bureau has also requested a full examination of the lifting

procedures and equipment at the site...’ the press statement reads. ‘The Bureau will continue to investigate the cause of the accident, and to pursue the legal responsibilities of relevant parties.’ The Labour Affairs Bureau also told Business Daily that a suspension order has already been issued to the City of Dreams retail arcade expansion site. An analysis report of the industrial accident and updated measures of compliance to safety standards have to be submitted before work can resume at the site, according to the Bureau. In previous company statements, the operator of City of Dreams, Melco Crown Entertainment Ltd., noted that the retail arcade was anticipated to be operational in 2016. The retail expansion project, which started in March last year, is expected to be completed in September this year, Chun Wo noted on its official website and company filing. Business Daily asked Melco Crown Entertainment for a comment about the fatal industrial accident but had not received a reply by the time the story went to press. Aside from the retail arcade expansion at the City of Dreams casino-resort, Melco Crown is currently building a fifth hotel tower at the site, which is scheduled to open in the first half of 2017, according to previous company statements.

egislator Ho Ion Sang has urged the government to implement polices to adjust the number and routes of gaming shuttle buses, indicating that the high frequencies of such buses are pressuring the traffic in Macau. “Nearly every gaming corporation has a fleet of [buses], of which the number has been increasing while the frequencies of such buses to different borders are high. However, the government has not conducted related supervision and regulations of such buses, exerting pressure on the traffic in the city,” the legislator wrote in his latest interpellation. “Society has been asking the government to regulate these gaming shuttles… However, the government claims there is no law to regulate them and that it would negotiate with the gaming corporations. Although [the government] has been repeating that it would study and improve the current law and regulations…no actual regulations have been drafted

in these years,” he added. The legislator also slammed the government’s policies as favouring the gaming industry, by comparing gaming shuttle buses and normal tour buses. “Many residents have reflected that the number of tour buses is no more affordable for the bus terminal at the Border Gate. Many serious traffic jams inside the terminal have also been caused by such tour buses. However, for gaming shuttles buses, they are allowed to park inside the temporary parking lot of the Border Gate. In addition, a plot of land near the border has been granted for gaming buses to park. This proves that the policies of the government favour the gaming industry,” Mr. Ho claimed. As such, the legislator urged the government to review the necessity of its favouritism of the gaming industry, indicating that the unhealthy situation should not endlessly continue. K.L.

Business Daily | 3

January 21, 2015

Macau China Southern Airlines mulling Macau-Wuhan flights China Southern Airlines is considering launching flights between Macau and the Chinese city of Wuhan at the end of March this year, Macau International Airport Company Limited (CAM) said yesterday. The Chinese airline is planning to provide two or three flights per week for the new route, which will be the first route of the airline connecting to Macau. In addition to the Macau-Wuhan route, the Chinese airline expressed its interest in commencing flights between Macau and Hainan Province, according to CAM.

Gold Moon closes Sands Cotai VIP room, Ambrose So doesn’t anticipate new trend Hard on the heels of David Group, junket operator Gold Moon Group has also shut down one of its five VIP rooms in the city located in Sands Cotai Central. Nevertheless, SJM CEO Ambrose So says he does not see such closures of VIP rooms becoming a new trend Kam Leong

kamleong@macaubusinessdaily.com

nother junket operator in the city - Gold Moon Group – shut down its VIP room in Sands Cotai Central from yesterday, while four other VIP rooms of the Group remain in operation. According to the operator’s official website, its VIP room in Sands Cotai Central had a total of 16 gaming tables and had been operational since April 2012. Other Gold Moon VIP rooms, located in Altira, Galaxy Macau, Wynn Macau and the Landmark Hotel will continue their junket operations. These four VIP rooms have 35, 14, 12 and 9 gaming tables, respectively. Gold Moon is the second junket operator to announce the closure of VIP rooms within a week. David Group, one of the biggest junket promoters in Macau, announced

last week that three of its seven VIP rooms, located in L’Arc, MGM Macau and Four Seasons Hotel, will shut down from January 31. David Group said in a statement released last Saturday that it is to expand its overseas markets. According to the statement, it is to start VIP operations in the Philippines, Vietnam and South Korea this year. In addition, it plans to expand its businesses in Australia and Europe. Despite two junket operators shutting their VIP rooms in the Special Administrative Region, SJM Holdings Chief Executive Officer Ambrose So said he did not see the closures of VIP rooms becoming a trend, Hong Kong Chinese-language newspaper Hong Kong Economic Journal reported yesterday. “The industry would not jump on the bandwagon of closing VIP rooms.

[Closures] will depend on the financial statement of individual enterprises,” Mr. So told the newspaper. Meanwhile, as David Group is closing its VIP room in L’Arc one of the members of the gaming corporation - the CEO of SJM told the Chinese newspaper that such closure would only affect SJM slightly. However, he perceives that other VIP rooms of David Group would still

develop stably. Meanwhile, Mr. So conceded that he had heard VIP rooms in the city were facing operating difficulties. He indicated that it is currently very hard for both VIP rooms and casinos to attract high rollers to buy rolling chips. As such, the CEO predicted that the gaming revenues from the VIP sector will continue dropping by double digits in the first half of this year.

4 | Business Daily

January 21, 2015

Macau

Ireland and Macau to strengthen co-operation Irish Minister of State at the Department of Finance, Simon Harris, has met with Sonia Chan to discuss deeper co-operation in agriculture, education, hospitality and tourism Joanne Kuai

joannekuai@macaubusinessdaily.com

think there’s huge potential for our people in Ireland to develop a foothold in Macau, as well. We have offered a lot of entrepreneurial talent. I hope they have the opportunity to sell their goods and services and ideas to Macau.” “I also hope that the people in Macau experience tourism in Ireland. Vice versa, I want the people in Ireland to have an opportunity to experience tourism in Macau. Therefore, I think tourism, agriculture, high-end quality goods are the three areas of opportunity for our business communities,” added Mr. Harris.

Exchange

rish Minister of State at the Department of Finance, Simon Harris, met with Macau Secretary for Administration and Justice Sonia Chan Hoi Fan yesterday morning as part of his trip to Hong Kong and Macau. Simon Harris is the first Irish Minister to visit the region since the Irish Consulate General to Hong Kong and Macau opened in August 2014. Mr. Harris said during his

meeting with Sonia Chan that they had had an opportunity to explore and discuss potential opportunities for co-operation of mutual benefit to both Macau and Ireland, including what Ireland can offer. “I think our agriculture project has a lot to offer. We produce in Ireland a lot of high-end goods, something I believe there is a market for here in Macau, in China and the wider Asian market”, said Mr. Harris. “I

City Chain Q3 turnover drops 3pct

atch retailer City Chain reported a turnover drop of 3.3 per cent in the three months ended December 31, 2014 to HK$561.9 million from HK$581.1 million a year earlier despite opening more shops during that period. Optical retail Optical 88 also saw its turnover drop to HK$283.4 million from HK$291.4 million, down 2.7 per cent in the fourth quarter of last year from that of a year earlier. But unlike City Chain, the number of Optical 88 retail shops dropped from 235 to 226 in this period. Meanwhile, optical retail eGG reported a 64.7 per cent jump in three-month turnover to HK$25.7 million from HK$15.6 million a year earlier. The three retailers’ parent company Stelux reported overall wholesale decreases of 6 per cent in its Greater China and Southeast Asia regions to HK$103.6 million from HK$110.2 million, according

to unaudited operational results filed with the Hong Kong Stock Exchange yesterday. The group’s turnover also dropped 2.4 percent to HK$974.6 million, while the number of shops increased from 652 to 666. In the six months September 30, 2014, “the group achieved satisfactory turnover growth driven by our Greater China watch and optical retail businesses, particularly our operations in Hong Kong and Macau as our SEA business was affected by the poor retail climate,” Stelux chairman and CEO Joseph Wong said, adding that in the three months ended December 31 “we have seen a sudden slowdown in Hong Kong and Macau.” Looking ahead into the first quarter of this year, Mr. Wong said he expects consumer confidence to remain soft in all regions where the group operates. S.F.

Minister Harris noted that Macau and Ireland are very different but share a lot of similarities at the same time, such as being small as a part of larger China and Europe, respectively, and their colonial past. And both regions put a lot of emphasis on tourism, making Ireland and Macau ideal partners as gateways into Europe and China, respectively. Education may be a good starting point. “I think we both have similar determination that we want to increase our tourism sector. The administration of Macau has made it very clear that they want to further enhance their tourism offering,” said Harris. “We’ve seen over the last few years a number of educational courses developed in Ireland very successfully in the area of hospitality, event management, tourism among others. I would like to see our educational institutions engaging with Macau. Likewise, we can also learn from Macau, and it’s a two-way exchange.” The Consul General of Ireland to Hong Kong and Macau, Peter Ryan, echoed the suggestions, saying that they would very much like to see some student exchange programmes between Macau and Ireland. He said that the key to strengthening ties at this stage lies in information and communication. “We’re going to try to build our understanding, working very close hand in hand with our community. One of the things is to really educate ourselves. It’s a great start today that we have an Irish minister visiting the region. It’s the beginning,” said Mr. Ryan. “Maybe we are late at the party but sometimes it’s good to arrive late at a party because you see what’s really going on. We’re very small. We don’t need to be dominating. We’re never going to dominate, we are small. We are flexible. We are adapting. We’re very sensitive to cultural nuances here. We want to understand the place. We want to build a relationship that would last 50 or 100 years.” “What we love to do is, on the Irish end, to see if we can facilitate the visit by cultural groups from Macau to Ireland. We’re trying to get just basically people to people links, and let’s see what happens. Because I think people with good will and good faith coming together, great things

can happen,” said Mr. Ryan.

Gateway The Irish Chamber of Commerce of Macau Chairman, Niall Sean Murray, said that since Macau’s market had opened in 2002, a number of Irish people have come to Macau to work in different capacities. Mr. Murray said they have been trying to get Irish companies to start “looking East” and have confidence in the market. Starting getting dialogues going between the governments, starting getting Irish companies realising Macau is on the map, would be the beginning of showing what they have to offer as a country. “We created the Irish Chamber because we realise there are a lot of bids for casino contacts and when there are products and services being offered in the market there are huge numbers of representatives from all the European countries but very few from Ireland,” he said. “We’ve been very passionate and are trying to increase awareness of Macau to Irish companies, to let them know this is potentially a wonderful market, especially in hospitality, goods and services.” As the first Irish Government minister to visit Macau, Simon Harris viewed his visit as a signal that they want to do more. He said they are very proud of the Irish community they have in Macau - small in number but which very much makes up for it in its passion and influence. According to the latest data from the Statistics and Census Service, in the first eleven months of 2014, the total trade volume of imports and exports between Macau and Ireland reached MOP551.6 million (US$69.07 million), which is an 71 per cent increase year on year.

Engagement Simon Harris also joined the 8th Asian Financial Forum that kicked off in Hong Kong on Monday, representing an Irish presence in the event for the first time. He participated in a panel discussion on ‘stability versus growth’. “Ireland has come through a major economic crisis, just like much of the global economy and indeed the Euro zone as a whole. In fact, the Irish economic recovery is one that shows you can’t consolidate your economy, you can’t drive down your debt while at the same time creating jobs,” said Mr. Harris. “We now have an economy that was the fastest growing in Europe last year, and predicted by European institutions to be the fastest growing economy this year. Last year, we had the fastest employment growth not only in Europe but also in the whole OECD (Organisation for Economic Co-operation and Development). The government now expects we will have full employment by 2018.” Harris, who serves at Irish Minister of State with special responsibility for International Financial Services, pointed out the significance of Ireland’s presence at the Asian Financial Forum. “We believe there are opportunities for Asian firms to invest in Ireland. As the only English-speaking country in the Euro zone, we think that’s an environment which many Asian investors may feel comfortable in. We look forward to building on that. We also look forward to the potential significant opportunity for stock connect.” The Irish minister was to meet representatives from the Hong Kong Stock Exchange yesterday. He indicated he looked forward to further communicating with the neighbouring SAR about the interests of Irish firms and industries benefiting from stock connect once there is clarity on various legal issues.

Business Daily | 5

January 21, 2015

Macau

Public Works: Chui Sai On may give

monitoring powers to Legislative Assembly

The Chief Executive says he is concerned about the cost and the two and a half-year delay of the LRT system but has asked residents to give Raimundo Rosário time to resolve the problem João Santos Filipe

jsfilipe@macaubusinessdaily.com

he Chief Executive of Macau said yesterday that he is studying the possibility of drafting a law which will allow the Legislative Assembly to monitor the costs and development of major public works. “The government is studying the possibility of taking the necessary procedures so that the Legislative Assembly will have the power to monitor the costs of these large public works, as already happens in Hong Kong”, Fernando Chui Sai On said on the sidelines of the grand opening of the new headquarters of the Federation of Trade Unions (FAOM). “However, this will take some time”, he added. The Chief Executive of Macau was asked about the Third Special Audit Report on the First Phase of the Light Rail Transit System, which was published on Monday by the Commission of Audit (CA). According to the report, the project, which has already been delayed more than 800

days, is ‘seriously lagging behind’ and the budget is expected to surpass the Transportation Infrastructure Office’s (GIT) projected costs. Initially GIT calculated, in 2007, that the project would cost around MOP4.2 billion. In 2013, the estimated costs increased to MOP14.3 billion, an increase of

Beijing delegate: Multiple reasons for gaming revenue decline The Director of the Central People’s Government Liaison Office said GGR is being driven down by many factors, including local competition. He denied that Beijing had hardened the campaign against corruption last year

he Director of the Central People’s Government Liaison Office in Macau denied yesterday that the anti-graft policy adopted by President Xi Jinping was the main driver of Macau’s gaming revenue decline. “Various reasons have been driving the decline in Gross Gaming Revenue, including the slowdown of the Mainland economy, the antigraft policy, increasing regional competition with the development of other casinos, tightened Immigration control and adjustments to the gaming industry in Macau”, Li Gang said on the sidelines of the grand opening of the new headquarters of the Federation of Trade Unions. “They [corrupt officials] do not come here so they are contributing to the fall. But they are only a few, only a few. The anti-graft policy is related to the fall of revenues but it is not the main cause. However, I agree with the view that revenues will stabilise during the second half of this year”, he said. The Director of the Central People’s Government Liaison Office also said he rejected the idea that the Central Government has been tougher

on corruption since last year than in previous years. “It has always been our policy to stop corrupt officials from using public money to gamble in Macau. We have never relaxed on this and so we are not going to say we have been stricter now”, he said. Macau’s gaming revenues have been declining since June and at the end of last year dropped 2.6 per cent year-on-year to MOP352.7 billion. “Since the 18th National Congress [November 2012, when Xi Jinping came into power] the Government in Beijing has reinforced its antigraft measures. For instance, the phenomenon where Mainland unlawful UnionPay terminals have been brought to Macau had to be cleared because these devices were illegal”, he added. “We are not trying to suppress the development of gaming. We are only trying to develop it healthily, while diversifying the local economy”, he explained. In relation to the renewing of the gaming licences of Macau operators, which is set to begin within this year, Li Gang stressed the importance of hearing a variety of opinions. J.S.F

roughly MOP10.1 billion. However, the CA also criticised GIT for failing to update the estimated costs of the LRT system. Phase I of the project is now scheduled to be completed in September 2017. “We have to take this report very seriously because the whole population

is paying attention to the price of the construction and to the completion date of the project. I am very focused on these two issues”, Mr. Chui said, before adding that he had already signed a dispatch for the Secretary for Transport and Public Works, Raimundo Rosário, to force the GIT to adopt the recommendations of the report produced by the Commission of Audit. “At this time, the Secretary is applying his best efforts to these problems but he needs time for this task”, Mr. Chui concluded. Raimundo Rosário previously said that he was ready to handle the LRT project, which he defined as a ‘hot potato’, before assuming his position in Chui Sai On’s cabinet. “Everyone knows that there are some problems in some of the large public works, such as the cost and the time it takes, like the Chief Executive said. However, we will try our best to find a solution for it”, he said.

6 | Business Daily

January 21, 2015

Macau

Battle of the budget There are only about 17 offerings from Macau on Airbnb but the territory is already listed as one of the top five destinations with the most expensive apartments

crolling through Airbnb, you can see 17 apartments listed in Macau, from prices that vary per night from US$60 (about MOP479) for a single bedroom to US$400 (about MOP3,196) for a two-bedroom apartment, revealing some of the most expensive offerings in this genre in the world. Of homes in 150 cities listed on the Airbnb acommodation website, Macau ranks as the fifth-most expensive, according to GoEuro website. The most expensive offerings are homes in the north American city of Boston. The website also reveals that in the market for all types of accommodation for holidaymakers, including hotels and the like, Macau is the third most expensive of the 150 cities surveyed, while New York requires the deepest pockets. Fábio, Agnes and Lara ( fictional names) are some of people who rent rooms through Airbnb to guests from all over the world prefer to remain anonymous, primarily because they are not sure of where the law stands on this particular issue. “The house is rented, so I try to keep it in accordance with the law — that’s why there are no transactions in Macau currency”, says Fábio. “Without transactions being made in Macau currency, there is no illegality. Airbnb charges fees and does the transaction through Paypal; from there the money is transferred to an international account”. In a written note to Macau

Stem cell banking Macau doesn’t have any stem cells banking services; however, people here are looking into Hong Kong as a lifeline to the future

Business, Macao Government Tourist Office (MGTO) provided a dubious answer. ‘MGTO does not exclude the possibility that accommodation booking on websites may allegedly violate the law on Prohibition of Providing Illegal Accommodation in Macau. However, we are not able to confirm yet whether the aforementioned situation is considered provision of illegal accommodation up to now’, the note says. “At this moment, there’s not enough support from the population to continue to introduce this kind of accommodation in Macau”, said Macau Government Tourist Office (MGTO) Director Maria Helena de Senna Fernandes, in reviewing a recently concluded feasibility study on the concept of family hostels in Macau. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at magzter.com

here may not be a big number of Macau people seeking stem cells banking companies, but those that are need to look to Hong Kong. A professor at the Faculty of Health Sciences, University of Macau, Gregory Cheng – an expert in haematology – explained that Macau citizens can currently have their child’s cord blood stem cells collected at birth through private companies and sent to Hong Kong for processing and storage. He named at least two companies from the neighbouring region operating in Macau, with an office in the territory; namely, Cordlife and HealthBaby Biotech (Macau) Co., Ltd. In both cases, storage and processing is undertaken in the neighbouring region. In addition, a third company from Hong Kong, called Cryolife, which has no office in the territory, provides a pick-up service on a 24-hour basis. None of the companies has a laboratory in Macau, as “the volumes stored so far are not large enough for a private

Birmingham Int’l trading suspension continues The owner of the soccer team is also going to hold an AGM to propose new directors and the removal of chairman Cheung Shing Sara Farr

company to set up a storage centre”. The advantage of using such private services is that “there’s always a readily available source of stem cells should the child need a stem cell transplant”. Still, he warns that even with a child that has its cord blood preserved the number of stem cells stored “may not always be sufficient for transplant” purposes. Storing the umbilical cord may increase the number of stem cells stored by 10 to 20 per cent, but again “that may not be sufficient for successful transplantation, particularly when the transplantation is required 10 or 20 years later, when the child becomes an adult”. Mr. Cheng explains that cord blood transplantation is an established therapy for patients with haematological diseases such as leukaemia, lymphoma, and aplastic anaemia, citing a success rate of over 50 per cent. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.

Corporate Galaxy and HK construction sector kick off friendlies

sarafarr@macaubusinessdaily.com

irmingham International Holdings Ltd., owner of English soccer team Birmingham City, has suspended trading and shares until further notice, the company said in a filing with the Hong Kong Stock Exchange. Carson Yeung Ka Sing, found guilty of money laundering at a trial in Hong Kong, resigned as executive director and chairman in February last year. Mr. Yeung, 53, Blues’ owner since 2009, remains the club’s major shareholder. The company named executive director Cheung Shing, 60, as the new chairman and Mr. Yeung’s brother-in-law, executive director Ma Shui Cheong, 52, as vice chairman, according to a filing dated February 2014. The company is now looking to hold an extraordinary general meeting, the request for which was made by two shareholders on December 23 and December 24, 2014, asking that Mr. Cheung be removed as chairman with immediate effect. In addition to seeking the

immediate removal of Mr. Cheung, it has been requested that two other board members be removed – Ma Shui Cheong, vice-chairman and executive director, and Chen Liang, an executive director. Mr. Cheung would be replaced by Wang Man Li, while Ma Shui Cheong would be replaced by Li Wen Jun, and Chen Liang would be replaced by Arjun Kumar Gurung, according

to the requisitions in the filing. ‘The board is also very concerned about the concerted efforts of [Carson Yeung and U-Continent Holdings Ltd], their actual relationship and reasons behind the requisitions and has raised its concerns with the Stock Exchange and the Securities and Futures Commission, and the regulatory authorities are currently looking into the issues’, yesterday’s filing reads. Should Mr. Yeung and U-Continental hold the extraordinary general meeting without the board’s prior approval (which is pending further explanation from both parties), ‘the board will resist vigorously in order to protect the shareholders’ rights as a whole’, the company said in the filing. Carson Yeung currently holds 2.7 million shares in the company, representing 27.9 per cent of the issued shared capital, while U-Continent Holdings Ltd. holds 1.5 million shares, representing 15.5 per cent of the company’s issued share capital.

The Staff Social Club of Galaxy Entertainment Group held friendly soccer matches with the Hong Kong construction sector to encourage staff members to exercise more, increase team spirit and strengthen positivity in the community. The event was the GEG Soccer Team’s first match in 2015 and serves as a warmup to the upcoming second annual GEG Lunar New Year Soccer Cup. Participants brought their family members and friends to cheer them on the sidelines while enjoying a lively afternoon. Divided into two matches, the event consisted of GEG Soccer Team, formed by team members and executives, playing against the Hong Kong construction sector’s Elite Team and Elderly Team. Regardless of the friendly nature of the matches, each participant in the Workers Stadium gave it his all and exerted their best performance in scoring. After two intense competitions, the GEG Soccer Team emerged as winner in both matches.

Business Daily | 7

January 21, 2015

Gaming

Caesars bankruptcy plan dealt setback by Federal judge Gary Loveman, CEO Caesers Entertainment

judge dealt Caesars Entertainment Corp.’s bankruptcy reorganization a possible fatal blow in ruling that the company violated federal law when it shuffled assets and refinanced debt as part of an alleged scheme to protect itself from lower-ranking creditors. The ruling came in a related lawsuit in Manhattan on the same day that the casino company sought bankruptcy protection last week in Chicago for its Caesars Entertainment Operating Co. unit. U.S. District Judge Shira Scheindlin rebuffed an attempt by the unit to dismiss the suit, which had been filed by noteholders. Scheindlin said their allegations about the transfer of valuable properties away from the unit in August -- and the parent’s removal of guarantees for creditors -- amount to a violation of the federal Trust Indenture Act of 1939. The judge found that the company’s alleged elimination of the guarantees was “an impermissible out-of-court restructuring” that is “exactly” what a provision of the 1939 law “is designed to prevent,” according to her ruling. Because Scheindlin’s opinion didn’t completely dispose of the lawsuit, Caesars can’t appeal now unless the judge gives permission. The company said in an e-mailed statement that it disagrees with the ruling, “which was based simply on

the plaintiffs’ allegations” and which “we believe is inconsistent with the provisions of the Trust Indenture Act.” “Given the size of the claims at issue and our strong defenses, we do not expect the ruling to impact the planned reorganization,” spokesman Stephen Cohen said in the statement.

August Transactions The August transactions underpin the proposed bankruptcy reorganization laid out in agreements in which first-lien noteholders would receive a 92 percent recovery while junior noteholders could take home no more than US$549 million for their US$5.24 billion in secondlien notes. The operating unit filed its Chapter 11 petition on Jan. 15, three days after second-lien noteholders filed an involuntary bankruptcy petition in Delaware against Caesars Entertainment Operating Co., the largest of the Caesars operating companies. Those filings followed months of negotiation and litigation over how best to reduce the billions of dollars of debt assumed in a 2008 buyout that was arranged by Leon Black’s Apollo Global Management and David Bonderman’s TPG Capital Management. The dissident creditors

have accused Apollo and TPG of trying to create a “good Caesars” to hold the valuable properties and a “bad Caesars” to owe most of the debt.

Two Bankruptcies Except for non-controversial permissions to operate the casinos as usual, the two bankruptcies are effectively frozen until the Delaware judge decides which of the two courts will preside over the reorganization effort. While the judge put her ruling on hold for Caesars Entertainment Operating Co., as is required during bankruptcy proceedings, Scheindlin said she was free to issue her opinion regarding the non-bankrupt parent company. The holders of notes issued in 2005 and 2006 sued in September, seeking to set aside transactions the month before in which Caesars’ main operating unit transferred assets to related entities the noteholders couldn’t reach, and the parent canceled its guarantee of the debt. The noteholders alleged that Section 316 of the Trust Indenture Act barred the unit from altering its obligation to pay the bonds without 100 percent consent from holders. Scheindlin described the complaint as alleging that Caesars’ “ultimate

plan” was to put the main unit “into bankruptcy while protecting Apollo Management LP and TPG Inc. from CEOC’s creditors.”

Valid Lawsuit The company contended in its bid for dismissal that the noteholders didn’t have a valid lawsuit even if the facts in the complaint were true. The noteholders couldn’t sue because there has been no payment default as yet, the companies said. Scheindlin rejected the company’s arguments, including its claim that individual bondholders are barred from suing. The judge relied on a previous case which says that transferring away assets and eliminating guarantees to backstop the debt, even though there’s been no payment default, is a violation of the Trust Indenture Act because it “constitutes an impairment of the right to sue for payment.” Scheindlin was deciding two lawsuits. She allowed one to stand in its entirety. She ruled that the other was flawed because the noteholders hadn’t sufficiently alleged that Caesars controlled how some other noteholders had voted in favor of the August transactions. She gave that plaintiff until Jan. 29 to file a revised complaint. Bloomberg

8 | Business Daily

January 21, 2015

Greater China

The slowest growth in 24 years opens the “

A series of modest support measures from the government over the year helped stave off Kevin Yao and Pete Sweeney

hina’s economy grew at its slowest pace in 24 years in 2014 as a cooling property market weighed on demand and is expected to lose more momentum this year, keeping pressure on policymakers to head off a sharper downturn. But analysts said a slightly betterthan-expected performance in the fourth quarter could temper Beijing’s policy response, if the government and central bank believe the strains on the world’s second-largest economy are starting to ease. China’s economy grew 7.4 percent in 2014, official data showed yesterday, barely missing its official 7.5 percent target but the slowest since 1990. It expanded 7.7 percent in 2013. Fourth-quarter growth held steady at 7.3 percent from a year earlier, marginally better than expected, though it cooled from the previous three months. Few had expected China to meet its 7.5 percent full-year target, but the performance was better than feared at one point when credit collapsed, bad loans spiked and key activity indicators fell to multi-year lows. A series of modest support measures from the government over the year helped stave off worries of a more dramatic slowdown, without fuelling a sharp rise in China’s mountain of debt which the country’s leaders are trying to avoid.

KEY POINTS China economy grows 7.4 pct in 2014, slowest in 24 years Q4 growth slightly better than expected at 7.3 pct y/y Sends signal Beijing can tolerate slower growth economist More easing still expected, property remains key risk

Chinese government defended last year the arrival of a “new normal” age in China’s economy base left side, and Li Keqiang, Prime Minister, on the right)

“This is the best possible miss you could have from a messaging standpoint,” said Andrew Polk, economist at the Conference Board in Beijing. “The government is saying, ‘we’re not married to this specific target, we missed it and we’re okay.’ That seems to me a quite positive development.” However, Polk said the figure was difficult to square with more negative signs emerging from other parts of the economy.

China’s property market - a major driver of demand across a range of domestic industries - has proven stubbornly unresponsive to policy support, and lending data from the banking system shows enduring weakness despite policymakers’ repeated and varied attempts to boost investment. The weak property market and high funding costs remain key risks facing the economy in 2015. Policymakers also are concerned

about the potential onset of a deflationary cycle, aggravated by plummeting energy prices, industrial overcapacity and sluggish demand. At the same time, there may be a looming crisis among debt-sodden local governments which are facing strains from sliding property sales, on which they rely for much of their revenue. In another worrying sign, power output growth in China, used by some as a proxy for economic performance,

Developers seek alternative finance There is reluctance from investors and lenders to take on more debt until they see what happens to Kaisa Clare Jim

While the recent concerns over bankruptcy and corruption do adversely affect the overall sector’s performance, we believe the impact to be temporary

hinese property companies are having to turn to more expensive sources of finance as problems at developer Kaisa Group make it increasingly difficult for them to get credit in the offshore market. Kaisa’s failure this month to make an interest payment on a dollar bond has left investors worried about whether other

developers can service their debt. January is usually a busy month for developers to raise funds offshore. However no high-yield bonds or syndication loans from Chinese property companies have been seen so far, due to a reluctance from investors and lenders to take on more of this debt until they see what happens to Kaisa.

Barclays analysts comments

Officials at four property developers in the private sector told Reuters they are trying instead to get loans in the onshore market, a route that comes with higher interest rates. They are also

considering project finance - where investors finance a specific development project through a combination of debt and equity. “We had an internal discussion about this and we may resort to equity financing if we have to,” said a member of the corporate finance team at listed-developer based in eastern China. “We didn’t like to have a partner in the past because we wanted to have full control on our projects.” Local government officials blocking real estate sales and anti-corruption probes are adding to worries about the prospects of companies in China’s already highly leveraged property industry, weighing on their share and bond prices. One major concern for offshore creditors is how they would be treated if a company were to default on their debt, given that most of their assets are in mainland China and the legal route to stake a claim over them is unclear.

Developers are now trying to provide assurances to these creditors that they can easily get money to offshore investors in the event of a sudden cash call. “If we want to transfer funds offshore, there’s a lot of ways to do it,” Fantasia Holdings chief financial officer Tony Lam told investors in a call last week. Fantasia’s shares have fallen more than 12 percent in the past week, hit like other midsize developers by concerns they could face similar problems to Kaisa. Corporate finance officials at other property companies said one way they can get cash to investors outside China is by collateralising cash deposits or assets at onshore banks, and then getting a Standby Letter of Credit (SLOC) to obtain loans from offshore banks. These reassurances have been given some credence by analysts, who say some of the investors’ nerves about developers’ ability to manage their debt are now starting to look overblown. “While the recent concerns over bankruptcy and corruption do adversely affect the overall sector’s performance, we believe the impact to be temporary and, thus, provide, another potential investment opportunity,” analysts at Barclays wrote in a note on Monday. Reuters

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“new normal” era

f worries of a more dramatic slowdown

ed on an evolution to services sector and a moderate growth. (Xi Jinping, President of China, on the

posted its slowest growth rate since 1998 at 3.2 percent.

Better than expected December data posted numerous upside surprises after a weak November. Factory output rose 7.9 percent versus expectations for 7.4 percent, while retail sales rose 11.9 percent, above predictions of 11.7 percent. However, growth in fixed asset investment, a key growth driver,

eased to 15.7 percent in the whole of 2014 from the previous year, below forecasts for a 15.8 percent rise, hovering near a 13-year low. Underscoring the drag on the economy from the housing sector, investment growth in real estate slowed to a five-year low and new construction slumped, even as sales improved at the end of the year. “We think (property) sales may improve somewhat but for me, what is important is construction. I don’t

see housing starts picking up till next year ... given that there’s a lot of inventory,” said UBS economist Wang Tao in Beijing.

More easing or less? A further slowdown in China could hinder the chances of a revival in global growth in 2015, which right now is being led by what the World Bank calls the “single engine” of strong hiring and activity in the United States. With China’s growth seen cooling further to 7 percent this year or less, according to a Reuters poll, more support measures are still expected, though economists are divided over how much more will be needed. “The overall numbers lower the need for further stimulus, although there remains some room for easing as risks are still skewed to the downside,” said Dariusz Kowalczyk, economist at Credit Agricole in Hong Kong. He expected the central bank to cut interest rates again in the first quarter, after a surprise move in November, and slash banks’ required reserve ratio (RRR) by 100 basis points in the first half of 2015 to spur more lending. Others, however, think Beijing may have to get more aggressive, even at risk of reinflating asset bubbles, given the need to reduce debt burdens at Chinese companies which are inhibiting them from fresh investments. “I don’t expect monetary policy to accelerate growth, though” said Wang of UBS. “Final demand in the economy is very weak and it’s unlikely that the corporate sector will take this credit and invest in new projects, so containing financial risk and stabilising growth is the trend for this year.” Reuters

Steel output rises from to hit annual record But the China Iron & Steel Association (CISA) has said the country’s steel output was approaching its peak and flattening out

One of China’s official measures of its unemployment rate, also known as the survey-based unemployment rate, stood at 5.1 percent in 2014, the Chinese statistics bureau said yesterday. The comment followed data that showed the world’s second-largest economy grew 7.3 percent in the fourth quarter, a rate that was near a six-year low. Despite the downturn, there have been no reports of mass layoffs as occurred during the global financial crisis, However, many economists believe the few official employment readings in China underestimate the number of jobless.

Energy intensity cut by 4.8 pct China beat a key energy efficiency target in 2014, cutting its energy intensity by 4.8 percent from a year earlier, the State Council said yesterday as it tries to reduce pollution and greenhouse gas emissions. The government had aimed for a 3.9 percent cut in energy intensity after a 3.7 percent drop in 2013 in order to meet its target of cutting energy intensity to 16 percent below 2010 levels by 2015. Energy intensity is a measure of the amount of energy needed to increase GDP.

CITIC Sec denies insider trading China’s biggest brokerage CITIC Securities Co Ltd has denied engaging in insider trading after media reports asked why its biggest shareholder CITIC Limited had sold shares in the broker before a regulatory ban last week. In a statement late on Monday which it said was issued in response to unspecified media reports, CITIC Securities said that CITIC Limited was “acting in the normal course of business” when it sold shares in the broker and had only heard about the regulatory action at the same time as the public.

Regulator denies braking stock’s rally

Ruby Lian and David Stanway

Speculation that China’s regulators intentionally sought to suppress a stock rally by taking actions that led to Monday’s sharp drop in share prices “is not consistent with facts”, said Deng Ke, spokesman for the China Securities Regulatory Commission (CSRC). Deng’s denial that regulators intentionally clipped the market was carried on the CSRC website late on Monday and published on the front page of China’s main securities newspapers - China Securities Journal, Shanghai Securities News and Securities Times – yesterday morning.

hina’s December crude steel output rose from the previous month, government data showed yesterday, as steel mills resumed production after enforced cuts in northern regions. Steel output in the world’s largest producer jumped 7.6 percent to 68.09 million tonnes, the highest since August, and climbed 1.5 percent from a year ago, data from the National Bureau of Statistics (NBS) showed. NBS said in a statement that crude steel production reached a record 822.7 million tonnes over the year, up 0.9 percent from 779 million tonnes in 2013, despite weaker demand growth, hurt by a slowing economy. The cooling economy and steel overcapacity should continue to pressure steel production growth this year, analysts say. “We still expected a marginal growth in steel production this year as Beijing has sped up approvals of infrastructure construction projects,” said Sara Wang, an analyst with Masterlink Securities in Shanghai. The China Iron & Steel Association (CISA) has said the country’s steel output was approaching its peak and flattening out, and that the industry

Jobless rate at 5.1 pct in 2014

Urban population 54.77 pct of total

KEY POINTS Dec output highest since Sept. Full-year output at record high, up 0.9 pct on year

needed to speed up slashing excess capacity and improving efficiency. The NBS originally reported 779 million tonnes of production in 2013, but this year’s annual growth figures implies they have revised last year’s data by nearly 5 percent to 815.4 million tonnes, and that monthly output figures for last year have also been revised up by more than 1 percent, according to Reuters calculations. Reuters

China’s permanent urban residents stood at 749.16 million at the end of 2014, accounting for 54.77 percent of the country’s total population, new data showed yesterday. The proportion rose from a ratio of 53.73 percent at the end of 2013, the National Bureau of Statistics (NBS) said in a statement. Total population in China’s 31 provincial level regions reached 1.37 billion, up 0.52 percent from a year earlier. By the end of last year, 772.53 million people were employed, up 2.76 million, or 0.36 percent, from a year earlier, the NBS said.

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Investors to get taste of new China via Shenzhen trading link Beijing policymakers are rushing to get the new connection in place as quickly as possible to boost the chances of having Chinese shares included in the MSCI emerging market index Pete Sweeney and Michelle Price

oreign investors eager to tap into the next generation of Chinese firms should soon be able to directly trade stocks in Shenzhen, but the high valuations and extreme volatility of the country’s second-largest exchange may limit early inflows. The debut in November of the landmark Stock Connect trading platform between Hong Kong and Shanghai, although marred by technical problems, has been hailed by foreign funds as a fundamental step in the opening up of China’s capital account. Officials at the China Securities Regulatory Commission have said creating an investment channel into fast-growing Shenzhen, which hosts China’s version of the U.S. Nasdaq and ranks in the top 10 exchanges globally by market capitalisation, is the next move. Industry insiders say an announcement is imminent of a start date for Shenzhen, which they expect in the first half of this year, although sources at the Shenzhen

stock exchange say nothing has been formally approved. “Investors would love to see Shenzhen come online,” said Nick Ronalds, head of equities at the Asia Securities Industry and Financial Markets Association. “Shenzhen is home to smaller, newer, more exciting companies.” Undeterred by the slow start of Stock Connect, Beijing policymakers are rushing to get the new connection in place as quickly as possible to boost the chances of having Chinese shares included in the MSCI emerging market index, the main benchmark for emerging market stocks. If China were to be included following the MSCI bi-annual index review due in June, billions of foreign dollars would flow into Chinese stocks from fund managers who model their portfolios on the benchmark.

Investors would love to see Shenzhen come online. Shenzhen is home to smaller, newer, more exciting companies Nick Ronalds, head of equities, Asia Securities Industry and Financial Markets Association

Reform test bed

the centre of Deng Xiaoping’s 1980s experiment with capitalism. Since then, the port city - a centre of the salt trade in imperial China has positioned itself at the bleeding edge of financial market reform, culminating in 2009 with the launch of the ChiNext growth board for highgrowth companies. The index, which boasts industrial robotics champion Siasun, movie studio Huayi Brothers and a host of dynamic biotechnology, aviation and software companies, has outperformed the Shanghai Composite Index in 11 out of 18 quarters since 2010. That could attract foreign funds wary of investing in the state-owned financial giants that dominate larger rival Shanghai, said Ding Yuan, an accounting professor at China Europe International Business School in Shanghai who also runs a hedge fund.

Treacherous

Shenzhen, a metropolis of 14 millions within commuting distance of Hong Kong, is best known for being at

Despite its attractions, the Shenzhen stock market, home

Civil servants get pay rise Lowest-ranked workers have seen their pay more than double to 1,320 yuan

hinese President Xi Jinping and the other six members of the Communist Party’s elite Politburo Standing Committee have been given 62 percent pay rises, staterun media said yesterday, as civil servants get their first increases since 2006. Xi’s basic monthly pay will go up to 11,385 yuan (US$1,832) from 7,020 yuan, the China Daily said, citing announcements by the ministry of human resources and social security. At the bottom of the scale, the lowest-ranked civil servants have seen their pay more than double to 1,320 yuan. Increasing numbers of officials are quitting over low compensation, the paper said, but it pointed out that basic salaries make up just one component of civil servants’ monthly compensation. Additional allowances are also provided based on their positions and duties, it said, though it did not provide breakdowns or amounts. Civil service work in China has long offered both prestige and official perks, as well as

Xi Jinping gets 62 percent pay rise

opportunities to accrue extra wealth through the receipt of bribes and other forms of corruption. Since becoming head of the party in November 2012 and state president in March 2013, Xi has spearheaded a crackdown on corruption within the party and government that has seen lowranking “flies” and once high-

flying “tigers” brought down for graft and extravagance. Relatives of top leaders including Xi and former premier Wen Jiabao have used offshore tax havens to hide their wealth, according to a mammoth investigation released in January last year by the US-based International Consortium of Investigative Journalists.

In 2012 The New York Times and Bloomberg News published investigations into vast wealth said to have been amassed by family members of Wen and Xi. Neither official was accused of wrongdoing. Last year, the staterun Xinhua news agency reported that Xi and China’s top leaders decided to cut

salaries and restrict expense accounts and other perks of executives at state-owned enterprises (SOEs). Xinhua provided no exact amounts at the time, but the China Times newspaper said in December that executives at most central governmentcontrolled SOEs would have their salaries cut by around 30 percent, with their pay not to exceed eight times that of average workers. The civil service pay increases are retroactive to October 1, the China Daily said, adding that future salary adjustments will be more frequent, with the ministry saying they will take place every year or two. “The adjustment is not only about the salary increase, but aims to establish a scientific wage system, which can measure employees’ duties and workload no matter whether they work for the government or a corporation,” the paper cited Yang Yansui, director-general of Tsinghua University’s Employment and Social Security Research Centre, as saying. AFP

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to some of the most speculative Chinese investors, is not for the faint-hearted. For one thing, the smaller size of most of the companies makes them intrinsically more volatile on a price basis than big blue chips -

one reason domestic speculators prefer them. This volatility is aggravated by constant rumour-mongering and “leaks” intended to manipulate the market, despite repeated crackdowns by regulators.

Chinext’s average intraday price volatility was almost twice that of the NASDAQ Composite Index in the fourth quarter. There are also bigger challenges with corporate governance in Shenzhen, said Professor Ding, because, while Shanghai’s stable of blue chip SOEs may be “boring”, their largest stakeholder is the central government. “The probability of extreme wrongdoing (in state-owned firms) is lower as well, compared with Shenzhen,” he said. The Shenzhen exchange does still features many “old economy” heavyweights, including China’s biggest real estate developer Vanke, Ping An Bank, telecommunications giant ZTE, and a slew of smaller manufacturing players in sectors such as textiles and chemicals. Beijing could restrict foreign investment to those blue chips in the first phase - as it did in Shanghai which would reduce the governance risk for foreign investors but also lock them out of the high-growth firms they are most interested in. Finally, there is the simple question of how much foreigners will be willing to pay for these growth companies, some of which are dramatically overpriced compared with their peers. The average price-to-earnings ratio for the Shanghai Composite Index stood at 14.55 at the end of last week, compared with an average PE of 21.35 for NASDAQ and 31.38 for Shenzhen’s allshare index. ChiNext’s PE was a staggering 59.85. “It’s a very exciting opportunity, but investors will be torn,” said Francis Cheung, head of China-HK strategy at asset manager CLSA in Hong Kong. Reuters

Workers decline as demographic time bomb ticks

Chinese over 60 years by 2030

Myanmar-China oil pipeline to open A crude oil pipeline and a deep sea port meant to secure an alternative route for Chinese imports overland through Myanmar are set to open at the end of January, but an affiliated refinery in China is months away from completion, sources said. The finished development should help ease China’s reliance on shipments via the narrow and potentially risky Malacca Strait. Although that route, through which some 80 percent of China’s oil imports now pass, would still be used for the vast majority of overseas purchases.

Polluted city improves by hefty investment Shijiazhuang, one of the major polluted cities in north China’s Hebei Province, saw remarkable improvement of air quality after a hefty investment last year, said the city’s mayor Wang Liang. The capital city of Hebei invested nearly 1.6 billion yuan (US$261 million) in treating air pollution, said Wang on Tuesday at the annual session of the city’s legislature. Shijiazhuang witnessed 114 days of excellent or good air quality in 2014, or 71 days more than in 2013. The number of seriously polluted days also fell by 51.

A consortium of Chinese and Nigerian firms was to revamp the Ajaokuta Steel Plant in central Nigeria with projected annual production of 2 million tons of steel within the first two years of takeover. The Chairman of Henan Taihang Quanli Heavy Industry Group, Huang Quanli, revealed this in Abuja on Monday at the public presentation of the consortium. He said a consortium, made up of Total Steel Ltd of Nigeria and Henan Taihang Quanli Heavy Industry Group, was formed to take over and deliver quick results in steel production in the long suspended plant.

350 million said, down 3.7 million from the end of 2013. The population aged 60 and over, by contrast, rose by more than 10 million to 212.4 million, or 15.5 percent of the total population. Projections show that one in four of the population -- or 350 million Chinese -- will be aged 60 or older by 2030, compared with just five percent as late as 1982. China introduced its controversial family planning policies, which limit most couples to only one offspring, in the late 1970s in an effort to rein in population growth. But an ageing -- and increasingly male -- populace is now starting to

The Gini coefficient, an index reflecting the rich-poor gap, dropped for the sixth consecutive year in China since a peak recorded in 2008, new data showed yesterday. The index stood at 0.469 in 2014, dropping for six years in a row since the index hit its 0.491 high in 2008, the National Bureau of Statistics (NBS) said in a statement. Last year, the average disposable income of Chinese residents rose 8 percent in real terms to 20,167 yuan (US$3,294), faster than a 7.4 percent economic growth, the NBS said.

Cooperation on reviving Nigerian steel plant

China’s migrant population has swelled by eight million in the past year to 253 million

hina’s working-age population continued to fall in 2014, the government said yesterday, as Beijing struggles to address a spiralling demographic challenge made worse by its one-child policy. Mainland China’s total population stood at 1.37 billion at the end of 2014, according to the National Bureau of Statistics, an increase of 7.1 million over the end of 2013. It remains the world’s largest, although India has been catching up in recent years. The working-age population -which China defines as those between the ages of 16 and 59 -- dropped to 915.8 million last year, the NBS

National rich-poor gap narrows in 2014

pose fundamental demographic challenges that officials have been trying to address. The ruling Communist Party moved to relax the rules in late 2013 to allow couples to have two offspring so long as at least one of the parents is an only child. Yet far fewer couples have applied to have a second child than expected. Nearly 116 boys were born for every 100 girls in 2014, while the sex ratio in the total population was 105 men to 100 women. China’s migrant population has swelled by eight million in the past year to 253 million, the NBS said. China’s wealth gap and population imbalances are major concerns for the ruling Communist Party. AFP

PetroChina to cooperate in Arctic extraction China’s energy giant PetroChina is willing to engage in cooperation in extracting oil and gas as well as other natural resources in the Arctic region, said a high-ranking official of the company on Monday. Sun Xiansheng, president of the CNPC Economics and Technology Research Institute, made a presentation on Monday afternoon at the 2015 Arctic Frontiers conference, which runs from last Sunday to Friday. PetroChina, which has oil and gas investment in 35 countries, has already involved itself in the Arctic through holding a 20 percent share in the Yamal LNG project, a joint venture with Russia.

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Japan core inflation to slow Australian beef exports to miss forecast Australian beef exports are likely to fall short of official estimates in the year to June, with ranchers in the world’s third-biggest supplier culling fewer cows as heavy rains revive pastures scorched by a prolonged drought, analysts said. A slower slaughter rate could boost Australian cattle prices to record highs and ramp up costs for key consumers such as the United States, which is battling tight supply at home, while forcing others such as China to opt for Brazilian beef.

S.Korea tax revenue below budget South Korea’s tax revenue for 2014 is expected to lag government’s budget plan by 11.1 trillion won (US$10.29 billion), data showed yesterday, days after the central bank said fourth-quarter growth was unexpectedly hit by weak state spending. The Ministry of Finance and Strategy said in a monthly statement that last year’s tax revenue is estimated at around 205.4 trillion won. The finalised revenue number will be released in February while fourth-quarter GDP estimates will be announced on Friday.

Twitter buys Indian start-up Twitter yesterday said it will buy Indian mobile phone marketing start-up ZipDial, reportedly for US$30 million to US$40 million, as the U.S. microblogging service looks to expand in the world’s second-biggest mobile market. Bengaluru-based ZipDial gives clients phone numbers for use in marketing campaigns. Consumers call the numbers and hang up before connecting and incurring charges, and then receive promotion-related text messages. The start-up’s clients include International Business Machines Corp, Yum! Brands Inc’s KFC and Procter & Gamble Co ‘s Gillette.

Freeport may lose export permit Freeport-McMoRan could lose its permit to export copper concentrate from its massive Indonesian mine in West Papua, the country’s mining minister said yesterday, unless it can show progress in developing a new copper smelter this week. “Freeport hasn’t confirmed the location,” Energy and Mineral Resources Minister Sudirman Said told Reuters via text message, referring to the site for the proposed US$2.3-billion copper smelter, a prerequisite for the firm to be eligible to export. Under an agreement the Arizona-based miner signed in July, Freeport has until January 25 to complete the land acquisition for the 300,000-tonne-capacity smelter, the minister said.

In spite of BOJ Governor Haruhiko Kuroda also expecting wages to recover as firms benefit from a weak yen and falling commodity prices Kaori Kaneko

apan’s inflation rate is expected to slow in the next fiscal year, a Reuters poll showed, which could probably force the Bank of Japan to launch more stimulus later in the year. Japan, which has been grappling with either outright deflation or very low inflation for decades, is facing an even greater challenge than some other economies given the 60 percent plunge in oil prices over the past six months. The BOJ surprised financial markets last October by expanding an already massive asset purchase programme, but the effect on inflation has been negligible so far. The economy unexpectedly slipped into recession in the third quarter of last year, as consumption was knocked by a sales tax hike in April. “As the BOJ has said lower oil prices are positive for the economy in a medium- to long-term, our main scenario is the central bank will wait and see,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

Japan’s Prime Minister Shinzo Abe at the entrance of the official plane

“But the BOJ is expected to ease again in the latter half of 2015 when it becomes clear core inflation won’t accelerate,” said Tokuda. The core consumer price index, which includes oil products but excludes fresh food prices, will probably average an annual rise of 0.6 percent in the fiscal year starting April 1, a Reuters poll of 22 analysts taken January 9-19 found. The forecast excludes April’s tax-rise effect.

That estimate is down from 1.1 percent in a poll taken just last month and is less than half the rate the central bank is expected to reveal in its own forecast for fiscal 2015. Many in the survey expect the BOJ’s next policy move will be to expand monetary stimulus further. Six of 17 analysts said that any such expansion will come at the BOJ’s July meeting, while four each picked the April 30 and October 30 meetings, respectively.

Philippines to see sluggish growth in 2015 The country had a disappointing 5.3 percent economic growth in the third quarter of 2014

fter three consecutive years of robust economic growth, the Philippine economy, one of the fastest growing in the region, will likely slow down in 2015. In research note, the Hong Kong and Shanghai Banking Corp. (HSBC) said that Philippine economy will grow at a slower pace in 2015 in anticipation of more cautious investment spending ahead of the country’s presidential election in 2016. HSBC economist Trinh Nguyen projected that the country’s gross domestic product (GDP) growth in 2015 may decelerate to 5.4 percent from an estimated 5.7 percent in 2014. The concern among many investors now is whether the next administration would sustain the governance reforms started by the Aquino administration, Nguyen said. While lower spending costs arising from a benign inflation environment could keep private consumption robust, Nguyen said sluggish investment could drag down growth. “Fiscal spending, although expected to pick up slightly, will likely

We have to be very careful in terms of monetary policy. While it’s true that inflation is trending downwards, we have to weigh this relative to the expected tightening of the United States monetary policy Diwa C. Guinigundo, Philippine central bank Deputy Governor

fall short of the amount allotted for 2015. Therefore, we expect 2015 growth momentum to slow to 5.4 percent,” she said.

The Philippine economy grew by 7.2 percent in 2013 and 6.8 percent in 2012. While final figures are still being tallied, government economic managers have said year-round growth in 2014 could be between 6 percent to 7 percent. Socioeconomic Planning Secretary Arsenio M. Balisacan said earlier that the country’s GDP would likely expand within the lower end of government’s full-year forecast of 6.5 percent to 7.5 percent. Nonetheless, he said government would remain focused on a 7 percent to 8 percent growth rate in GDP every year, for the next two to three years. But analysts, economists and fund managers have downgraded their Philippine economic growth forecasts in 2014 to below 6 percent due to a slowdown in third quarter performance. HSBC and Maybank Kim Eng revised their full-year GDP growth last year to 5.9 percent, while ING Bank was a little more pessimistic with 5.8 percent. Xinhua

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Asia Of the balance 3, one said the BOJ will ease at its March meeting, another expects April and the third tipped sometime next year. Analysts also expect Japanese companies to increase base pay this year, seen as vital in Prime Minister Shinzo Abe’s push to foster durable economic growth and spur sustainable inflation. Fourteen of 16 economists in the poll predict Japanese firms will raise base pay at the same rate of 2014 or higher in the spring wage negotiations between labour union and companies. Two said the hikes will be less than last year’s rate. Japanese business leaders have promised Abe to do their “utmost” to raise wages and allow suppliers to pass on higher costs, while also urging the prime minister to push through labour reforms. Last year, however, smaller companies were unable to match wage increases at blue-chip firms. Japan’s real wages adjusted for inflation fell for the 17th straight month in November and logged the steepest drop since December 2009. The economy will likely grow an annualised 1.6 percent next fiscal year after an expected 0.7 percent contraction in the year ending in March, the poll showed. Those figures are largely in line with the previous poll, but analysts say lower oil prices will help the economy grow faster over time. For the current quarter ending in March, GDP will probably expand by an annualised 2.1 percent and 1.7 percent in the three months to June. Reuters

Japan and Thai firms to buy into Citic The deal will take place in two stages, with Itochu and CP Group agreeing to buy nearly 2.5 billion shares in Citic for HK$34.4 billion in April this year, and a further 3.3 billion shares for HK$45.9 billion in October

apanese trading house Itochu Corp and Thailand’s Charoen Pokphand Group (CP) said yesterday that they plan to jointly invest US$10 billion in Citic Group, China’s oldest and biggest conglomerate. Itochu and CP Group plan to contribute evenly to the investment, taking a joint stake of as much as 20 percent, as both seek to raise their exposure to the world’s second-biggest economy even as it slows from the blistering growth of the past decade. The deal comes as Citic has been broadening its investor base as part of Chinese President Xi Jinping’s reforms to state-owned enterprises. Citic completed a restructuring in August by injecting about US$36 billion worth of assets into a Hong Kong-listed unit. In December, a person familiar with the matter had told Reuters that Citic Ltd was in early talks with companies, including Itochu and CP Group, about a large share placement.

Bold bet The investment is by far the biggest made by a Japanese company into China on record, according to

Thomson Reuters data, beating a US$1 billion investment by Nissan Motor into Dongfeng Motor Corp in 2002. While deals between Chinese and Japanese companies have become more frequent in recent years, Thomson Reuters data show that most have been small. The 55 Japanese acquisitions in China last year were worth a total of around US$772 million.

It is also the biggest ever by Itochu, and comes as it is trying to expand its business interests beyond resources, an area where it spent heavily during the global commodities boom through the early 2010s. Before the Citic deal, Itochu’s biggest investment was a 156.9 billion yen purchase of two units of U.S. vegetable and fruit producer Dole Foods in 2013. Reuters

Malaysia to cut growth forecast The Southeast Asian country has been hard hit by the collapse in global crude prices as it is the world’s second largest exporter of liquefied natural gas and is also a net oil exporter

KEY POINTS Growth forecast for 2015 lowered to 4.5-5.5 pct 2015 fiscal deficit target raised to 3.2 pct of GDP Revised budget assumes world oil price of $55 instead of $100 Central bank chief says interest rates “highly accommodative” Malaysia’s Prime Minister Najib Razak

alaysia ringgit currency fell to a six-year low yesterday as the government cut its economic growth forecast, reduced its budget and widened its fiscal deficit target for 2015, to reflect lower oil and gas revenues due to plunging world prices. The government has relied on money from energy sales to spur economic growth and control its mounting debt. Announcing revisions to a 2015 budget that was presented in October before the oil market’s fall steepened into a nosedive, Prime Minister Najib Razak said Malaysia had to adjust to the loss of income, while dismissing fears of an economic meltdown. “We are not in the crisis as in the years of 1997-1998, and

2009, where we needed to roll out stimulus packages,” Najib told a news conference in Putrajaya, referring to Asian Crisis in the late 1990s, and the global financial crisis a decade later. Najib, who is also the finance minister, said that the government now expects economic growth of between 4.5 to 5.5 percent, having earlier forecast 5.0 to 6.0 percent. The once-stable economy is grappling with mounting household debt and rising costs, while low confidence among investors has resulted in the ringgit currency sliding to six year lows. Foreign investors have trimmed exposure to Malaysia, causing its bonds and stock markets to underperform in the last three months.

Najib said the revised budget would assume a global oil price of around US$55 a barrel. The original budget was based on an oil price of US$100, whereas the price of Brent crude has fallen by more than half to levels below US$50. The fiscal deficit target was also raised to 3.2 percent of gross domestic product for 2015. The original budget had targeted a reduction in the fiscal deficit to 3.0 percent this year, from 3.5 percent in 2014. “I think the announcement is quite positive,” said Michael Wan, an economist at Credit Suisse in Singapore. “The estimate is quite sensible seeing that the deficit target would have been 3.9 percent without government interventions.” To trim the 2015 budget, Najib

said operating expenditure would be cut by 5.5 billion ringgit (US$1.53 billion), but development spending would remain unchanged at 48.5 billion ringgit. Proposals to increase electricity tariffs would be delayed he said, and state-run firms would be encouraged to invest inside the country. Najib sought to allay investors concerns over Malaysia’s shrinking current account surplus. Central bank Governor Zeti Akhtar Aziz said reserves had fallen US$18.9 billion in 2014, but said reserves had earlier been built up to provide a cushion against market volatility, that the country was now facing. Zeti went on to dismiss fears that capital outflows could get out of hand. Reuters

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January 21, 2015

International

IMF cuts global growth outlook Russia’s foreign debt falls Falling prices will also give countries a chance to reform Russia’s overall foreign debt fell by near- energy subsidies and taxes, according to IMF ly US$130 billion in 2014, central bank data showed yesterday, with total debt standing at US$599.5 billion on January 1, 2015. Foreign debt has been falling rapidly in recent months as companies pay off foreign loans without refinancing them, as their ability to borrow abroad is limited by Western sanctions imposed in connection with the Ukraine crisis. Foreign exchange reserves have also been falling rapidly, however, declining last year to US$385.5 billion from US$509.6 billion.

S&P draws line between sukuk issuers Credit rating agency Standard & Poor’s said it had updated its criteria for Islamic bonds to distinguish more clearly between issuers of sukuk and sponsors of them. Sukuk tend to be more complex than conventional bonds because they use structures designed to avoid interest payments. They often involve special-purpose vehicles (SPVs) that issue the paper and lend the proceeds on to the ultimate entity raising money, which is known as the sponsor. S&P’s new criteria describe the conditions under which it would rate sukuk at the same level as the sponsor’s rating.

Unilever posts weak fourth quarter Consumer goods giant Unilever reported lower than expected fourth-quarter underlying sales growth due to weak emerging markets, bringing a disappointing end to the sector’s most difficult year in recent memory. The maker of Ben & Jerry’s ice cream, Dove soap and Lipton tea said yesterday that underlying sales - excluding any impact from foreign exchange, acquisitions or disposals - rose 2.1 percent in the fourth quarter. Analysts on average were expecting a 2.6 percent rise. Following a dramatic weakening of emerging markets last year that made Unilever’s third quarter the weakest in five years.

Rate cut impact on Danish crown limited Denmark’s move to lower interest rates deeper into negative territory had only a fleeting effect on the Danish crown, but speculation is growing that the currency’s long-standing peg to the euro may be threatened in coming days. Most analysts expected the peg to remain, and Economy Minister Morten Ostergaard said it was not in doubt. But traders said some speculators were betting it would be abandoned, given expectations for prolonged euro weakness if the European Central Bank opts for quantitative easing, which it may do as soon as Thursday.

Trader Noble to exit cocoa biz Commodities trading house Noble Group is winding down its cocoa operations, three industry sources said, allowing its joint venture with China’s COFCO to focus on larger agricultural markets such as grains. Two of the sources said the Hong Kong-based commodities trader is expected to have liquidated its cocoa trading book by June at the latest. Noble declined to comment. The two sources also said Noble had struck a deal to offload some of its cocoa pod counting and sustainability operations to cocoa trader and processor Transmar Group.

Jake Spring

he International Monetary Fund lowered its forecast for global economic growth in 2015, and called yesterday for governments and central banks to pursue accommodative monetary policies and structural reforms to support growth. Global growth is projected at 3.5 percent for 2015 and 3.7 percent for 2016, the IMF said in its latest World Economic Outlook report, lowering its forecast by 0.3 percentage points for both years. “New factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,” Olivier Blanchard, the IMF’s chief economist, said in a statement. The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation. If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy “through other means”. The United States was the lone bright spot in an otherwise gloomy report for major economies, with its projected growth raised to 3.6 percent from 3.1 percent for 2015. The United States largely offset prospects of more weakness in the euro area, where only Spain’s growth was adjusted upward. Projections for emerging economies were also broadly cut back, with the outlook for oil exporters Russia, Nigeria and Saudi Arabia worsening the most. The drop in world oil prices, which have fallen more than 50 percent since June, is largely the result of OPEC

Olivier Blanchard, Economic Counsellor and Director of Research of the IMF

not cutting supplies, a decision that is unlikely to change, Blanchard said. “We expect the decrease in price to be quite persistent,” he told reporters at a news conference launching the report. “We expect some return, some increase, but surely not an increase back to levels where we were, say, six months ago.” The IMF predicts that a slowdown in China will draw a more limited policy response as authorities in Beijing will be more concerned with the risks of rapid credit and investment growth. Slower 2015 growth in China “reflects the welcome decision by the authorities to take care some of the imbalances which are in place and the desire to reorient the economy towards consumption and away from the real estate sector and shadow banking,” Blanchard said. The IMF also cut projections for Brazil and India. The forecasts are far rosier than World Bank predictions last week that the global economy would grow 3 percent this year and 3.3 percent in 2016. Lower oil prices will give central banks in emerging economies leeway to

delay raising benchmark interest rates, although “macroeconomic policy space to support growth remains limited,” the report said. The prospects of commodity importers and exporters will further diverge. Oil exporters can draw on funds they amassed when prices were high and can further allow for substantial depreciation in their currencies to dull the economic shock of plunging prices. The report is largely in line with remarks by IMF Managing Director Christine Lagarde last week, in which she said falling oil prices and strong U.S. growth were unlikely to make the IMF more upbeat. The euro zone and Japan could suffer a long period of weak growth and dangerously low inflation, she said. Both Lagarde and the report indicated that money flowing back to the U.S. as it tightens monetary policy could contribute to volatile financial markets in emerging economies. The US Federal Reserve is widely expected to begin raising interest rates some time this year. Reuters

More QE won’t help world economy The ex-governor of the bank of England declares the easing policy is not working

ore monetary stimulus will not help the world economy return to strong growth, former Bank of England governor Mervyn King said, days before the European Central Bank is expected to decide whether to embark on a massive bond-buying programme. In his first public speech in England since his term at the BoE ended in June 2013, King said he was concerned about a persistent weakness in global economic demand, six years on from the depths of the financial crisis. “We should worry about that,” King told an audience at the London School of Economics, where he was once a professor. Unlike the U.S. Federal Reserve and the Bank of England, the European Central Bank has until now resisted trying to boost the economy by buying government bonds with newly created money, known as quantitative easing (QE).

But months of sub-zero inflation in the euro zone mean that many economists now expect the ECB to announce this step after its first policy meeting of 2015 ends on Thursday. British finance minister George Osborne and King’s successor at the BoE, Mark Carney, have both said they would support such a move. But King doubted more stimulus would work, noting imbalances such as China’s and Germany’s large trade surpluses and Britain’s low rate of savings. “There are quite serious disequilibria both between and within economies that, for good economic reasons, are depressing demand. Simply lowering rates even further or adding more monetary stimulus is unlikely to solve that problem,” he said. Under King, the BoE bought 375 billion pounds (US$567 billion) of government bonds between 2009 and 2011. King said this was right just

Bank of England

after the crisis, but that using loose monetary policy to bring forward spending was not a long-term strategy. King also said central bank policy needed to be robust to cope with forecasting errors, and that financial regulation aimed at stopping future crises, such as the U.S. DoddFrank Act, should be kept simple to prevent bank lobbyists from secretly weakening it. Reuters

Business Daily | 15

January 21, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China 2014 growth the template for years to come

THE TIMES OF INDIA India will see a gradual growth acceleration with its GDP expected to reach 5.9 per cent this year and 6.3 per cent in 2016, the UN said yesterday while partly crediting the recovery to improved market sentiment after the new government took office and announced key reforms. “India’s economy expanded by an estimated 5.4 per cent in 2014, an improvement from growth of 5.0 per cent recorded in 2013, but still significantly below the 8.0 per cent pace of the pre-crisis period,” said the United Nations World Economic Situation and Prospects 2015 (WESP) report, launched yesterday.

Clyde Russell Reuters columnist

THE STRAITS TIMES Some 33 per cent of Singaporeans expect their standard of living to fall when they retire, far above the global average of 23 per cent who said so, a global survey has found. In Singapore, future retirees expect their savings to last just 13 out of an average of 23 years in retirement, going by the average retirement age of 60 and life expectancy here of 83 years, said HSBC in its annual Future of Retirement report. The survey polled more than 16,000 people in 15 countries, including 1,000 from Singapore.

THE KOREA HERALD Samsung Electronics Co., South Korea’s largest firm by market value, has been considering splitting its stock to lower the high price tag of its shares but will look more into the long-term effect before making any decision, a senior executive said yesterday. “(Samsung Electronics) has been looking into whether stock splits actually have a positive impact on the company’s value,” Lee Myung-jin, a senior investor relations official at Samsung Electronics, said in a meeting hosted by the Korea Exchange (KRX).

PHILSTAR The Bangko Sentral ng Pilipinas said it is treading carefully as markets brace for a rise in interest rates in the US, which could lead to massive capital outflows from the Philippines. “We have to be very careful in terms of monetary policy. While it’s true that inflation is trending downwards, we have to weigh this relative to the expected tightening of US monetary policy,” BSP Deputy Governor Diwa C. Guinigundo said. “If there is a severe reaction to the US tightening, some cross-border outflows of capital can ensue. That can influence demand for dollars,” Guinigundo said.

he important thing from China’s economic deluge isn’t that fourth quarter growth was slightly higher than expected, or even that growth over the whole of 2014 was the weakest in 24 years. These are merely the headline grabbers. What really matters is that 2014 provided the template for what China’s economy is going to look like in the next decade. The trends that started to come to fore in the past year are likely to continue, and these include an economy less reliant on export-led manufacturing, slower growth in commodity consumption and imports and a lesser role for state stimulus spending. There will be those who bemoan the slower growth, having grown accustomed to China’s extended and rapid expansion over the past three decades. However, a gradual slowing of the Chinese growth rate has to be seen as an overall positive, lowering the risk of creating unsustainable bubbles in the economy and transitioning the world’s most populous nation from the source of the world’s cheap labour to being the engine of middle-class consumerism. Fourth-quarter gross domestic product (GDP) expanded 7.3 percent, above expectations for a gain of 7.2 percent and matching the third quarter number, according to official data released Tuesday. However, GDP for 2014 came in at 7.4 percent, down from 7.7 percent in 2013 and the

weakest number since 1990. The change in the Chinese economy can be seen in the other economic data released alongside the GDP numbers. Retail sales surprised to the upside, rising 11.9 percent, while industrial output also beat expectations with a 7.9 percent gain. However, it’s worth noting that industrial output used to be consistently in double digits, and the drop to average around 8 percent over 2014 shows this sector is slowing, while consumer spending accelerates. This dynamic also shows up in the electricity generation numbers, with power output rising 3.2 percent in 2014, the slowest growth rate in 16 years. It’s likely that in coming years, electricity generation will continue to grow at less than half the pace of GDP, given that the major power consumers are heavy industry, and the Chinese economy is trying to diversify away from this sector.

Commodity imports to keep rising Another headline-grabbing number was the rise in 2014 implied oil demand to a record 10.08 million barrels per day (bpd). This is the first time the annual figure has been above 10 million bpd. But the important thing here is that the annual growth rate was 3 percent in 2014 from 2013, again showing that oil demand is rising at pace of less than half of GDP.

A gradual slowing of the Chinese growth rate has to be seen as an overall positive, lowering the risk of creating unsustainable bubbles

Steel output also hit a record high in 2014 at 822.7 million tonnes, but again the growth rate from the prior year was just 0.9 percent. Rising steel exports last year also mean that the gain in output was shipped out of the country rather than meeting any additional domestic demand, again underlining the changing nature of the Chinese economy. The overall picture that emerges for China’s commodity imports is that the prior years of fastpaced growth will be replaced with slower growth. But the key word is still growth. Much recent commentary has

focused on how commodity producing companies and nations are going to suffer from China’s changing economy. This has been based on the rapid decline in commodity prices seen in the second half of last year, especially in crude oil and iron ore, while coal chalked up a fourth consecutive year of losses. This ignores that much of the decline in commodity prices is the fault of the producers themselves, who have ramped up supply to the point where most markets are now structurally over-supplied. They did this for a variety of reasons, ranging from the argument of major miners like BHP Billiton and Rio Tinto that their low-cost assets gave them a huge advantage, to the naive belief that China would expand at double-digit pace forever. The decline in commodity prices is largely self-inflicted by the producers, and had very little to do with Chinese demand. After all, China bought in record volumes of crude, iron ore and copper in 2014, with only coal recording a drop among major commodity imports. A Chinese economy growing in the region of 7 percent for the next few years, then easing gradually back toward 5 percent thereafter is still an economy that will require substantial and rising commodity imports. To blame China’s economy for the woes of low commodity prices is to misunderstand the dynamics at work in the market. Reuters

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January 21, 2015

Closing Angkor site attracts 2.35 mln foreign tourists in 2014 Billionaire hires former Infiniti executive to make cars Cambodia’s Angkor Wat Temple, a world heritage site, received 2.35 million international tourists in 2014, up 5 percent year-on-year, according to an official statement released yesterday. The statement, issued by the Apsara National Authority, which is in charge of protection and management of the site, said the 12th century temple earned a gross revenue of US$59.3 million from ticket sales last year, up 3 percent year-onyear. “The top three countries visiting the site are South Korea, China and Japan,” Chhoeuy Chhorn, deputy director of Siem Reap provincial tourism department, told Xinhua. 338,500 Chinese visited de temple.

Jia Yueting, billionaire founder of Leshi Internet Information & Technology, hired the former managing director of Infiniti’s China business to head an expansion into electric vehicles. The executive, Allen Lu, had worked at Ferrari before joining Nissan’s luxury unit Infiniti in 2010. He will be in charge of Leshi’s vehicle business in China and report directly to Jia, according to the company. The Leshi founder is the latest billionaire to express interest in manufacturing electric vehicles in China, which is supporting the development of alternative-energy automobiles to contain air pollution and reduce reliance on imported energy.

Taiwan 2014 export orders hit record Orders from the United States and Europe rose 12.8 percent and 9.7 percent, respectively

Dec exports orders +4.50 pct y/y vs f’cast of +1.6 pct Orders from U.S. +12.8 pct y/y; China -1.1 pct Europe orders +9.70 pct y/y; Japan orders -11.7 pct

Faith Hung and Miaojung Lin

Govt says China economic slowdown could affect petrochemical orders

aiwan export orders hit a record level in 2014 and the momentum could extend into this year on stronger demand for Apple Inc’s iPhone 6 and other consumer gadgets. But demand from its biggest trade partner China remains uncertain as economic growth cools, posing a challenge to the island’s own trade and economic prospects. Orders grew 6.7 percent last year to a record US$472.81 billion, the economics ministry said yesterday. December orders rose a betterthan-expected 4.5 percent from a year earlier, well above the 1.6 percent growth forecast in a Reuters poll, but was slower than November’s 6 percent jump. December orders for information communication goods, Taiwan export’s main driver, reached a record level, growing 14.7 percent to US$13.78 billion, the ministry said. Orders from the United States and Europe rose 12.8 percent and 9.7 percent, respectively, but orders from China slipped 1.1 percent, contracting for the second month in a row. “Orders will get a boost from the smooth shipment of handheld and wearable devices, as well as

KEY POINTS

strong demand for mid- to lowpriced smartphones from emerging markets,” said the ministry in a statement. “But the slowdown of China’s economy and increasing overseas competition could affect orders for petrochemical products.” China’s economic growth held steady at 7.3 percent in the fourth quarter from a year earlier but still hovered near the weakest pace since the global financial crisis, reinforcing

expectations that policymakers will have to roll out more support measures to avert a sharper slowdown. Taiwan’s statistics agency recently cut its 2015 forecast for exports, citing below-par growth expected for China and the European Union.

Capex increasing Taiwan, which houses component suppliers for Apple, Sony Corp and other global names, handles their

Thai cabinet approves larger budget deficit

Vietnam to build casino on southern Island

hailand’s military-led government approved a 56 percent increase in the budget deficit planned for the next fiscal year in a bid to revive an economy that lost momentum in then months of political unrest that preceded a coup in May. The junta has said it needs to invest in infrastructure projects to spur Southeast Asia’s second-largest economy. Exports have been weak, while domestic consumption has been subdued by record-high household debt and shaky consumer confidence. In the fiscal year starting October 1, the budget deficit is projected at 390 billion baht (US$12 billion), or 2.9 percent of gross domestic product, and up from the current year’s 250 billion baht, government spokesman Yongyuth Mayalarp told reporters after a cabinet meeting. Expenditure will increase 5.6 percent to 2.72 trillion baht (US$83.4 billion), he said. Of total spending, 544 billion baht will be for investment, up 21 percent from the current year’s allocation, he added. Reuters

orders in factories based in China while it exports the final goods from the mainland to consumers in the United States and Europe. Taiwan’s orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets. The release of the popular iPhone 6 and other upcoming new gadgets will give a boost to the island’s exports, though how big the strength will remain to be seen, some analysts said. “Some companies, such as those in panel and memory chip sectors, are upping their capex budget, meaning they see orders increasing,” said Tony Phoo, an economist at Standard Chartered in Taipei. Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chip maker and a chip supplier of Apple, projected last week its 2015 capex at US$11.5-US$12 billion. TSMC had said its capex expenditure was US$9.5-US$10 billion in 2014. Reuters

Year of the Goat: Luxury brands flock to China

ietnamese Prime Minister Nguyen Tan Dung has approved the development of tourism projects that include casino components on Phu Quoc Island, which is under the administration of southern Kien Giang province, local Tuoi Tre News reported yesterday. The prime minister has assigned the Ministry of Planning and Investment to coordinate with the provincial authorities and relevant state agencies to explore the details for the establishment of such projects in accordance with regulations. In its plan for developing Phu Quoc island into a special economic zone, the province has set aside an area of 30,000 square meters for building casinos with 200 to 400 roulette tables and 2, 000 gaming machines, in addition to conference centres and an international five-star hotel with 3,000 rooms. Phu Quoc Island is located off the western coast of the Mekong Delta Kien Giang province, and also situated at the heart of Southeast Asia and an economic belt between Vietnam, Cambodia and Thailand.

rom Paris to New York, purveyors of luxury goods are teaching staff Mandarin, offering traditional New Year “hongbao” gifts and flocking to social media sites as well-heeled Chinese tourists pack their bags to ring in the Year of the Goat abroad. Chinese shoppers spent around 380 billion yuan (US$61.13 billion) on luxury products worldwide last year, with spending outside China up 21 percent even as domestic sales of high-end brands dipped for the first time due to a government clampdown on excessive gift-giving, according to a report from consultancy Bain & Co yesterday. Tiffany & Co, Macy’s Inc, Prada SpA and Christian Dior SA have made moves to woo Chinese shoppers, who spend far more on luxury brands abroad than at home due to greater variety, lower prices and favourable foreign exchange rates. Top destinations include South Korea, Japan, Britain, France, Italy, Germany and the United States, a 2014 report from the World Tourism Cities Federation shows.

Xinhua

Reuters