Macau Business Daily, Feb 12, 2015 by Business Daily

MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo Number 728 Thursday February 12, 2015 Year III

Macau Legend unveils Harbourview Hotel Open at last, attended by Macau’s leading luminaries. Macau Legend Development Ltd. has hosted a grand opening ceremony for its new US$180 million hotel. The 4-star Harbourview kicks off the Macau Fisherman’s Wharf redevelopment project. With 5-star establishments Legend Palace Hotel and Legendale Hotel to follow in 2016 and 2017. CEO David Chow has high hopes for possibly 500 gaming tables for the complete project. And believes that diversifying source markets is the way to go. “I don’t believe it is good for Macau to focus too much on the China market”, he said PAGE 3

Buses and taxis get moving

New licences for tender. Secretary for Transport and Public Works, Raimundo Rosario, has announced purely on-call taxi licences. With open bidding to be launched in the first half of this year. He also said ‘contract transform’ negotiations with the bus operators were underway, with one likely to be signed within this year PAGE

Macau Foundation subsidies total MOP217mln in 4Q2014 PAGE 5

S. Korean airport to lure Chinese with Singapore-style resort PAGE 7

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HSI - Movers February 11

China State advancing They’re on a roll. China State Construction International Holdings Ltd. has announced big numbers. New contracts awarded in Macau totalled HK$5.4 billion in January alone. The company is building a residential and commercial development project here for Shun Tak Holding’s subsidiary Nova Taipa Urbanization Ltd.

Name

Suncity to inaugurate Wynn operation

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%Day

Cathay Pacific Airwa

1.87

Cheung Kong Holdings

1.28

Galaxy Entertainment

1.06

Lenovo Group Ltd

1.01

Sands China Ltd

0.93

Tingyi Cayman Island

-1.86

Belle International

-2.08

HSBC Holdings PLC

-2.23

China Resources Land

-2.50

Kunlun Energy Co Ltd

-3.56

Source: Bloomberg

www.macaubusinessdaily.com

I SSN 2226-8294

Xi Jinping plans first U.S. state visit The September trip marks Xi’s first to the U.S. as head of state. The world’s two biggest economies seek to boost co-operation. Including on economic fugitives. In addition to smoothing tensions in territorial disputes between China and its neighbours.

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It’s one of the city’s biggest junket operators. Suncity Group is expected to take some of Wynn Macau’s revamped VIP gaming area. Possibly by this weekend, according to Union Gaming Research Macau Ltd. Neptune is already operating its portion of the new VIP space. The analysts said this represents the property bringing back 40 gaming tables. Half of which will be allocated to premium mass, it is anticipated

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February 12, 2015

Macau Air Macau to decrease fuel surcharge Air Macau issued a statement yesterday regarding its fuel surcharge updates. The company says all Air Macau tickets, originating from Macau to inland China, the Taiwan area, Thailand, Japan, Korea and Vietnam, issued on/after 16 Februrary 2015, including children’s and infants tickets, will be subject to new fuel surcharges. The new price is US$30 per sector - a 21 per cent decrease compared to the old price of US$38 per sector.

New on-call taxi licence tender in first half of year The Secretary for Transport and Public Works, Raimundo Rosario, has announced that in the first half of this year the open bidding for 100 to 150 new licences for purely on-call taxi services would be launched

he government is going to reopen the bidding process for the ‘special taxi services’ licence, namely taxis that provide services via call bookings. A total of 100 to 150 licences would be handed out. The announcement was made by the Secretary for Transport and Public Works, Raimundo Rosario, yesterday after meeting with legislators of the special committee on land and public concessions. The authorities pledged that after the new taxis are put into service they would try to guarantee that the number of taxis in operation

on a daily basis in the SAR would be around 1,200 to 1,300, which is higher than the number of black taxis and yellow taxis (previous oncall taxis) before. The Secretary also revealed that the authorities would continue negotiating a ‘contract transform’ with the bus companies. This follows a report issued by the Commission Against Corruption in November 2013. The report said that it is illegal for the government to sign a contract based on ‘providing services’ with the bus companies; rather, contracts should be established on

a ‘public project and public service concession’ basis. Mr. Rosario said that the SAR Government has been negotiating with regard to the new contracts with TCM and Transmac. He added that the discussion with TCM is almost finished and that the new contract is expected to be signed within this year. The discussion process with Transmac is relatively slower and more details would be released in due course. With regard to the adjustment of bus service charge, Mr. Rosario said the government would talk with the three bus companies together.

Gov’t keeps mum over idle land plots

he government said it could not disclose further information about the land grants of 48 plots in the city that have been left unused for years at the moment as the legal procedures involved in determining the validity of the land grant were still ongoing. The statement was issued by director of Land, Public Works and Transport Bureau Li Can Feng in response to a written enquiry filed by legislator Ng Kuok Cheong in December last year, who was seeking an answer on the land grant details of the 48 idle land plots – including size, location and identity of land concessionaires. Since 2011 the government has confirmed that 48 parcels of land here might be held accountable for the delay in land development – of which 12 were located on the Macau Peninsula, and another 36 in Taipa. So far, however, only 22 of the land parcels had seen the government announce the procedure of losing land grant validity. “As to the party held accountable [for the delay in land use], whether it was due to the government’s delay in approval [of land use] or the changes in urban planning, or that it was due to the speculation of the land concessionaires,” Mr. Li wrote in his reply, “it still required some time to analyse and determine.” “If we announce the land grant information [of the idle plots] before the result of the legal questions involved is out, it could impact the concessionaires’ reputation,” Mr. Li said in defending the government’s conservative position, “And this would also invite lawsuits.” S.L.

Sports Development Fund handed MOP5.6 million for Badminton Grand Prix

he Fund for Sports Development has handed MOP5.6 million to the Badminton Federation of Macau for the organisation of the Macau Open Badminton Grand Prix Gold, it was announced yesterday in the Official Gazette. The payment for the tournament that took place from 25 to 30 November involved two different installments and was approved on November 17. The first installment totalled MOP113,800, while the

second amounted to MOP5.5 million. In total, the Fund for Sports Development has supported local institutions with MOP42.5 million during the last quarter of last year. More than 180 institutions or individuals received the subsidiaries from the government. In addition to the subsidy for badminton federations another five bank cheques of over MOP1 million were made out on behalf of private

individuals or institutions during the third quarter. Macau Dance Sport Association received the second largest payment for the organising of Musical and Latin and Open Dances Soiree (Sarau Musical e de Danças Latina e de Salão 2014) that took place in December. The organisers received MOP3.6 million for the purpose. The Automobile General Association of Macao-China received MOP1.88 million for the 61st Macau

Grand Prix, while the Swimming Association of Macau was paid MOP1.82 million for the rental of installations, it was explained in the Official Gazette. For the same purpose, the Wushu General Association of Macau received MOP1.25 million. In the fourth quarter the fund also handed MOP1 million to the Veterans Football Association of Macau for it to organise the 14th Veteran Football Tournament.

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February 12, 2015

Macau

Macau Legend opens Harbourview Hotel The grand opening of the US$180 million hotel was officiated by Fernando Chui Sai On, amidst general celebrations. David Chow, the CEO of Macau Legend, however, is already focused on the future developments of the Fisherman’s Wharf project João Santos Filipe

jsfilipe@macaubusinessdaily.com

arbourview Hotel is now officially open, after Macau Legend hosted the Grand Opening ceremony yesterday afternoon, at Fisherman’s Wharf, for the US$180 million (MOP1.4 billion) 4-star project. The event was officiated by the Chief Executive of Macau, Fernando Chui Sai On, in company with the Secretary for Economy and Finance, Lionel Leong, and the President of the Legislative Assembly, Ho Iat Seng. “In 2014, there were around 31.5 million visitors to Macau, a 7.5 per cent increase on the previous year. We believe that there will be continuous demand for quality hotel accommodation and peripheral leisure tourism services”, the Co-chairman and Chief Executive Officer of Macau Legend, David Chow, said during the event. “With the opening of the first new hotel at the Macau Fisherman’s Wharf, we expect our expanding hotel portfolio will increase revenue contributions and economies of scale benefits to our company,” he added. Harbourview is the first of three hotels to open in Macau Fisherman’s Wharf theme park. The building design Is based on the 18th Century Prague, occupies 68,300 square metres, and has nine floors. In addition to the accommodation zone, it also has retail areas, restaurants and entertainment facilities. “We have an allotment. Our company will handle the construction costs well. For instance, for Harbourview, we have only invested around US$180 million and it has nearly 450 rooms. The earning from the Landmark Macau should be sufficient for our constructions,” David Chow added. While Harbourview is a 4-star hotel, the other two hotels that are part of the project will be 5-star. While Legend Palace Hotel is expected to open in 2016, Legendale Hotel will start operations in 2017. “The foundation for Legend Palace is almost ready. Before April we should have granted the construction correctly so in March or June next year the

David Chow: Macau Legend conditions suitable for gaming licence

construction will be ready. As for Legendale, we believe that one year and a half can be enough to complete the construction”, he said. As part of the future development of the Fisherman’s Wharf project, a larger marina will be added plus a convention centre aimed at complementing the Science and Technology Museum and Cultural Centre.

500 gaming tables capacity For the time being, Harbourview Hotel has no gaming facilities. However, the resort is close to one of the two casinos of the company, which is also located In Fisherman’s Wharf: Babylon. “Now that the first hotel is open we have 35 gaming tables placed In

Babylon. When the second and third hotels open we will gradually apply for more. We believe that once the project is fully developed we will have the capacity for 500 gaming tables”, Mr. Chow added. “We hope that Babylon can accommodate at least 100 tables. But we’re going to do a gradual application”, he said. Babylon currently has 35 gaming tables, while Pharaoh’s Palace houses another 150, amounting to 185 in total. The CEO of Macau Legend also told the press that the strategy for the company is to go after the premium mass and mass markets, while diversifying its source of clients from regions other than Mainland China. “I don’t believe it is good for Macau to focus too much on the China market. So we’re using a different

The CEO of Macau Legend said yesterday that it would be good for Macau if the government increased the competition in the gaming market by handing out more licences. “I don’t know if things are going to change. But the government needs to understand that it would be better for Macau if instead of protecting the six casino concessionaires there was more competition in the gaming industry. I think it would be fairer for the people who really want to support Macau”, he said regarding the possibility of a gaming licence that has been linked to Macau Legend. “Macau Legend has the condition to have a licence. But it is not only we. A lot of people already bring customers to Macau and they have hotels and casinos. These people are supporting Macau already and they have experience in the industry, such as Chan Meng Kam and Golden Dragon. I hope everybody has a chance”, he said. Concerning Gross Gaming Revenue decline, David Chow said that it was good for the market to stabilise. He also said that he opposes the full smoking ban on casinos, where he thinks smoking lounges should be allowed. “It’s not fair for those who smoke. At least leave some rooms for them, as happens in airports”, he said.

approach. There are many markets that haven’t opened yet to Macau like Indonesia, Malaysia, Cambodia, Korea and even the Middle East. We want to attract clients from those locations”, he said.

Macau Foundation disburses MOP217mln in 4Q2014 Sara Farr

sarafarr@macaubusinessdaily.com

he Macau Foundation handed out s ubs id ie s totallin g MOP217 million in the fourth quarter of last year, the latest data published yesterday in the city’s Official Gazette reveals. The majority of the subsidies went towards 130 scholarships for the first semester of the 2014/2015 school year. These combined totalled MOP15.5 million. In addition, MOP4.68 million is attributable to 72 students who graduate from high school in the 2014/2015 academic

year so that they may continue their studies in Portugal. Some local associations also received subsidies for celebratory activities related to the 15th anniversary of the Macau handover to China in December last year, with subsidies ranging between MOP200,000 and MOP2.7 million . These activities included exhibitions, religious blessings, soccer friendlies and the publication of books on the subject. There were also subsidies

for activities related to the 65th anniversary of China’s National Day. These ranged between MOP40,000 and MOP150,000. The Macau Millennium College also received MOP2.5 million, while the Portuguese school foundation received MOP9 million for the partial running of the Portuguese School, and the Catholic foundation for tertiary education received MOP19 million to help cover expenditure for the 2014/2015 academic year. A large number of local

associations also received subsidies of around MOP23,600 to help cover the costs of a venue to stage a Chinese Opera show. In addition, the Macau Association of Retailers & Tourism Services received MOP5.85 million to host the 5th Macau International Gastronomic Festival. Around MOP33.65 million served as the first instalment to cover the expansion works of the kindergarten that belongs to the Sacred Heart School.

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February 12, 2015

Macau

VFS Global appointed Macau Tourism Office in India Last year, around 167,000 tourists from India visited Macau but MTGO wants to increase this number by targeting New Delhi, Mumbai, Bengaluru, Chennai and Ahmedabad João Santos Filipe

jsfilipe@macaubusinessdaily.com

acau Government Tourist Office has appointed VFS Global to represent the Office in India. The Deputy Director of MGTO, Cecilia Tse, announced the decision during the inauguration of the representation office in New Delhi. “We’re looking forward to rolling out customised travel packages to Macau for Indian tourists with our new representative, VFS Global. Leisure, MICE, and especially the wedding segments, are our key focus areas for this year. We are keen on hosting gala Bollywood events in Macau,” Cecilia Tse said. Concerning the promotion of Macau as a tourist destination in India, MGTO will also open an

office in Mumbai, as part of its strategy to target New Delhi, Bengaluru, Chennai and Ahmedabad. “By the end of September 2015, we aim to host a Macau Symposium wherein

leading tour operators selling Macau will get to network with key trade partners of MGTO. We will also be considering more virtual platforms such as webinars to reach out to a

wider audience and educate them about the various tourism facets of Macau,” said Arzan Khambatta, India Head of MGTO. Last year, some 167,216 Indians visited Macau, an increase of 4.5 per cent over 2013 when 160,019 Indians visited the Special Administrative Region. However, Cecilia Tse said this market has huge growth potential and that a strategy will emphasise both trade and consumer segments. The key trend in the Indian market in recent years has been the increasing arrivals of families and group travellers, focusing on gaming with an average stay exceeding 2.6 nights accompanied by a good amount of average spend, said Tse.

Government: 646 violations of smoking ban in January

n January, there were 646 perceived violations of the smoking ban in Macau and a total of 23,759 inspections, the government has announced. On average, the Special Administrative Region authorities made 766 inspections a day. The majority of the persons punished for breaking the law were male (595 / 92.1 per cent), while females accounted for 51 cases (7.9 per cent). The majority of offenders were Macau residents (411/63.6 per cent), while tourists accounted for 32.7 per cent (211) of the offences. Non-resident workers were responsible for 22 offences (3.7 per cent). A total of 444 offenders (68.7 per cent) have already paid the fine for breaching the law, the government revealed.

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February 12, 2015

Macau

Analysts: Suncity to inaugurate Wynn operations by weekend Sara Farr

sarafarr@macaubusinessdaily.com

ne of the city’s biggest junket operators - Suncity Group Ltd. - could open its VIP room in Wynn Macau by the weekend if analysts’ predictions are correct; the gaming company has refurbished its VIP section on the west side of the casino. The latest note to clients by analysts at Union Gaming Research Macau says that while Guangdong Club (Neptune) ‘has begun operating its portion of the new VIP space having vacated some of its prior space, […] we expect Suncity to inaugurate its operations at Wynn Macau by the end of this week.’ In last week’s conference call after announcing the company’s 2014 fourth quarter results, Gamal Aziz, president of Wynn Macau, said “we’ve eliminated the weaker junket operators and […] we saw safety and security by dealing with only the strongest operators financially.” “We’ve given our two new rooms to Guangdong and to Suncity. And Suncity is financially probably the most powerful of the junket operators,” he added. ‘While Guangdong [Club] is not new to Wynn Macau, Suncity is, and the Suncity space, along with newly refreshed premium mass space, will represent the property bringing back online about 40 gaming tables that had been offline for most of 2014,’ the analysts note reads. These tables represent a 10 per cent increase in the number of gaming tables being used, and analysts expect that at least half of these will be allocated

to premium mass, ‘while the balance will be VIP.’ Where once was the old Guangdong space, and which is now behind a construction partition, “is likely to become home to a smaller junket that will be relocating within the Wynn Macau property,” analysts said, adding that “timing is to be determined.” Late last week, Alvin Chau Cheok Wa, owner and chairman

of Suncity Group, said that the closures of some VIP rooms in Macau was to be “expected” but claimed that the mass market could not replace the VIP sector. The junket head said in an interview with local Chinese media outlet Macau Asia Satellite Television Company (MASTV) that it was to be expected that the market would eliminate weaker contenders whilst the strongest would survive.

Seoul searching by local SMEs

Ham Junghoon, Managing Director of Korean Franchise Association

acao Trade and Investment Promotion Institute (IPIM) recently joined hands

with the Korean Franchise Association (KFA) to organise a training seminar on the ‘Best Practices of Branding,

Marketing and Human Resources Management of Korean Enterprises’ for Macao SMEs at IPIM’s Macao Business Support Centre, with the aim of encouraging participants to learn about the marketing, promotion and management strategies of overseas enterprises. The seminar attracted over 160 representatives from business associations and SMEs in different sectors. The organisers hoped that by arranging such events it would better meet SMEs’ need for sustainable development and influence their business capacity, thus building a stronger foundation to

According to MASTV, the chairman of the junket operation perceives that the VIP business in Macau only loans money for gaming. As such, following the anti-graft policy of the central government, as well as some junket operators with bad debts, the closure of some of the VIP rooms could have been foreseen. He indicated that this model of business in the VIP industry in Macau is also a reason leading to the slowdown.

establish their brands. IPIM will also organise a series of events suitable for SMEs in the next few months, including a seminar on the ‘Guangdong Pilot Free Trade Zone’, E-commerce workshop as well as presentations on business opportunities in Portuguesespeaking countries. The seminar speaker was Hahm Junghoon, Managing Director and Policy Team Manager of KFA. During the seminar, Mr. Hahm addressed various topics such as the Korean franchise industry development and trends, shop and human resource management, technology applications and case sharing. Two major Korean brands, Kim Ildo, CEO and founder of 1℃ Family Restaurant and Bae Myoungsook, International Business Director of Korean

restaurant brand Namzatang shared the pains and gains encountered during their brand development. During the question and answer session, participants sought advice from the speakers on issues such as franchise operations, training, shop location strategy and financial management. A study trip to Seoul will be organised by IPIM in the second quarter of the year. The course contents and itinerary of the study trip will be planned by KFA, including site visits to Korean franchise brand stores. The delegation will consist of Macao SME representatives from different industries and it is hoped that this will further enable Macao SMEs to learn from the successful management and operations of Korean enterprises.

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February 12, 2015

Macau Brands

Trends

To a heart’s content Raquel Dias newsdesk@macaubusinessdaily.com

earts for Valentine’s Day may seem as predictable as flowers in Spring, and yet both combinations are simply timeless. Clichés often become so for a reason, usually because they work. Probably the creative people at Graff agree with me, otherwise they would have shied away from doing an entire presentation of their best heart-shaped diamonds for the upcoming celebration. If for nothing else, it is great to have a look and admire their unique craftsmanship and gem quality. The brand is careful to explain the long tradition of heart gifting, one that goes back to mediaeval times. The outline of a heart and its association with love and romance dates back, in fact, to the 13th Century, where in the French manuscript Le Roman de la Poire (The Romance of the Pear), a kneeling lover offers a heart to a damsel. This image then became the epitome of love and romance. So, for the fast approaching February 14th why not bet on a winning combination? Diamonds, hearts and tradition. Either option presented by Graff is stunning and captivating in its uniqueness and grandeur. Both the Graff diamond necklace set with heart shape rubies, a piece best saved for grand evenings and occasions, and The Graff Sweethearts, a lovely set of earrings, are true masterpieces. The latter were found at the Letšeng Mine in the Kingdom of Lesotho. After many months of careful analysis the exceptionally rare stones were deemed a matching pair. A lengthy and meticulous process of cutting and polishing revealed an extraordinary triumph - two perfectly matching, flawless heart-shaped diamonds exceeding 50 carats each.

China State projects valued at HK$167.5 bln in January In Macau, the company is building a residential and commercial development project for Shun Tak Holding’s subsidiary company Nova Taipa Urbanization Ltd. Sara Farr

sarafarr@macaubusinessdaily.com

hina State Construction International Holdings Ltd. has announced that new contracts awarded for construction projects in Macau totalled HK$5.4 billion in January this year alone. In a filing with the Hong Kong Stock Exchange yesterday the company announced that new construction contracts awarded in Hong Kong were valued at HK$2.88 billion last month, while those in mainland China were valued at HK$50 million. The combined total value of new contract awarded projects was HK$8.33 billion in the first month of the year. ‘The group recorded an accumulated new contract value of HK$8.33 billion in the month ended 31 January 2015, and hence achieved a 12.3 per cent completion of the full year target of 2015 (which should be no less than HK$68.00 billion),’ the filing reads. Among the major new contracts awarded last month are the projects for Hong Kong’s MTR exhibition station and the western approach tunnel of the Shatin to Central link. The project will be conducted by a joint venture between the company and Leighton Contractors (Asia) Ltd. and is valued at HK$5.87 billion. ‘As the group has 49 per cent in the joint venture, the contributable contract value to the group is about HK$2.88 billion,’ according to the filing. The project is expected to be completed in 71 months. In Macau, China State is constructing a residential and commercial development project for Nova City Phase V, the client for which is Nova Taipa Urbanization Ltd., a subsidiary of Shun Tak Holdings. The development project is expected to be completed in 38 months and includes the construction of eight residential buildings. Currently, the company has cash construction and related projects in progress underway in Macau valued at HK$3.77 billion plus a backlog valued at HK$2.58 billion. In Hong Kong, its projects are valued at HK$19.35 billion, while in mainland China

its projects are valued at HK$660 million. Also, in mainland China the backlog of projects in progress is HK$370 million, while in Hong Kong that figure is HK$29.77 billion. In addition, infrastructure investment in affordable housing for projects in progress is HK$49.93 billion, while infrastructure alone is valued at HK$31.89 billion. The backlog for both these categories is valued at HK$50.1 billion for affordable housing projects and HK$15.26 billion for infrastructure. The total value of projects in progress by China State is HK$167.47 billion at the end of January, of which

Corporate First 3D museum in Macau Co-organised by Hong Kong 3D Museum and Ponte 16 Resort in Macau, the first largescale 3D museum in Macau – Ponte 16 Macau 3D Museum - will open to the public mid-2015. Ponte 16 Macau 3D Museum is located at Ponte 16 Resort in Macau. The approximately 18,000 square foot museum provides over 150 photography points in six theme zones, offering visitors an opportunity to pose for interesting photos with various exhibits and 3D paintings. Ponte 16 3D Museum is Macau’s first 3D Museum and also the world’s first museum featuring 4D paintings. The Museum brings visitors a brand new sensory experience through 4D elements such as lighting effects, analogue sound and props. Ponte 16 Macau 3D Museum is a platform for creativity. Unlike traditional art museums, visitors here can be part of the art piece and change the formation of the painting via their participation. Every visitor is the director of his or her own photos in this 3D universe.

the company’s backlog was HK$98.51 billion. This, the company said in the filing with the Hong Kong Stock Exchange, is ‘equivalent to 3.6 times the group’s audited revenue of 2013.’ These figures include the company’s ‘Far East global’ projects in progress although figures for these are only updated quarterly and not monthly, thus the data taken into consideration for the calculation of the total value of projects in progress is that at December 31, 2014. This figure will be updated in the company’s March operating information, when China State also announces figures for the first quarter of the year.

Business Daily | 7

February 12, 2015

Macau

S. Korean airport to lure Chinese with Singapore-style resort An airport company official said the government wants to build a cluster of integrated resorts near the airport that will resemble Macau

ncheon Airport, the gateway to Seoul, is planning a tourism project to emulate Resorts World Sentosa in Singapore that aims to lure Chinese with a new casino, shopping mall and hotels. The project may cost 5 trillion won (US$4.6 billion) to 6 trillion won, Lim Byung Kee, an official at Incheon International Airport Corp., said in a phone interview. The airport is looking to receive proposals to build the facilities and sign deals this year, he said February 9. “We have benchmarked Resorts World Sentosa in Singapore for the integrated resort project here,” Lim said. “We want to attract more visitors from China, taking advantage of the close distance.” Incheon Airport, about two hours by plane from Shanghai or Beijing, is competing with Singapore and the Philippines to woo China’s growing middle classes. It also hopes to draw gamblers who have helped make Macau the world’s largest casino hub and who are now looking for alternative gaming markets as China’s anti-graft campaign drives away bettors. If all goes as planned, the Incheon Airport project could be ready by 2019, said Lim, executive director of the airport’s city development division. The casino will only allow foreigners; only one casino in Korea is currently open to locals.

South Korea’s government expects to draw 10 million Chinese visitors a year by 2020, up from 6.13 million last year, according to data from Korea Tourism Organization. The country has allowed construction of two more integrated resorts this year to attract tourists even as Japanese lawmakers are trying to legalize casinos and new venues are opening in the Philippines.

Second terminal Resorts World Sentosa, the Singapore gambling resort run by Genting Singapore Plc, has a convention center, hotels and the Universal Studios theme park. A second casino, Marina Bay Sands, is in the city’s Marina Bay area. Together, the two projects opened in 2010 have helped attract more tourists to the city state. The integrated resort at Incheon will be developed on 809 acres of empty land near the construction site for a second passenger terminal, Lim said. Local and overseas companies have expressed interest in investing in the project, he said, without naming them. “It will be very important to make integrated resorts into attractive landmarks to bring in tourists, like what was done in Singapore,” said Song Hak Jun, a professor in the

world’s top airport by sales at dutyfree shops last year.

Macau’s troubles

There are some operators in Macau that seem to be interested in investing in Incheon because of the growth limitations Lim Byung Kee, Incheon International Airport Corp

hotel and convention management department at Pai Chai University in Daejon, South Korea. “It can’t just be about casinos.” Three integrated resorts are being built near the airport near Seoul. The Incheon project, which will be built on a man- made island 52 kilometers (32 miles) from the capital, would be the fourth resort. Opened in 2001, Incheon was the

OCBC Q4 profit up 11pct, misses forecasts on Wing Hang-linked costs

versea-Chinese Banking Corp, Singapore’s second-biggest lender, posted an 11 percent rise in quarterly profit on back of strong loan growth and fee income, but missed analysts estimates due to higher costs linked to its newly acquired Hong Kong unit. OCBC said operating expenses rose 29 percent from a year earlier, while provisions for soured loans and other assets doubled, in part due to the consolidation of Wing Hang Bank. OCBC said net profit for the

October-December period came in at S$791 million, below an average forecast of S$862 million from six analysts polled by Reuters. It reported a net profit of S$715 million a year earlier. The result came after DBS Group Holdings, Singapore’s biggest bank, on Tuesday posted a 4.5 percent rise in core fourth-quarter net profit, but missed analysts’ estimates due to higher bad debt provisions linked to China. Reuters

Last March, a venture between Las Vegas-based Caesars Entertainment Corp. and Lippo Ltd. won approval to build South Korea’s first foreign-owned casino near Incheon. Separately, Sega Sammy Holdings Inc. and Paradise Co. will open an integrated resort in 2017, Lim said. Paradise shares climbed as much as 2.7 percent before trading at 1 percent higher as of 9:40 a.m. in Seoul trading today. “The government wants to build a cluster of integrated resorts near the airport that will resemble Macau,” Lim said. “There are some operators in Macau that seem to be interested in investing in Incheon because of the growth limitations.” Macau casinos have seen a sharp decline in play by high rollers in recent months. China last week started a crackdown to stop foreign casinos from luring its citizens to gamble overseas, as the government extends its campaign against corruption. “We don’t want to just focus on high rollers, but we also want mass consumers to visit the integrated resort,” Lim said. “We want to use the resort to help create more traffic into the airport.” Bloomberg

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February 12, 2015

Greater China Vale’s mega-ships get green light China has amended rules around ships it will allow to berth at mainland ports, paving the way for Brazilian miner Vale to ship iron ore in its giant 400,000 deadweight tons (DWT) carriers. Vale’s mega ships, the world’s biggest bulk ore carriers, have been barred from China since January 2012 due to rules which disallowed ships of more than 250,000 dwt in capacity. An internal circular issued last week by the Ministry of Transport and seen by Reuters on Wednesday said it would now recognise ships with capacity of 400,000 dwt. It suggests that ports able to accommodate such large ships can now apply for permission to receive them, analysts said.

Xi Jinping plans first state visit to U.S. in September

The trip will mark the first time Xi visits the U.S. as a head of state, as the world’s two biggest economies seek to boost cooperation and CNR expresses intereste smooth tensions such as territorial disputes between China and its in buying foreign neighbors that are U.S. allies in the Asia-Pacific rail technologies China CNR , one of the country’s top trainmakers, said it was interested in buying foreign rail-linked technologies as China seeks to export its high-speed trains and rail expertise. “We are interested in rail-related technologies and have been in touch with some foreign companies,” the state-backed firm’s vice-president incharge of overseas business, Yu Weiping, told Reuters on Yesterday. Yu, who was speaking during a government-organised visit to one of CNR’s factories in Tangshan city in north-eastern China, declined to comment further.

Fraud: Insurance firm boss given suspended sentence The former manager of a private insurance firm in east China’s Shanghai on Wednesday was sentenced to death with a two-year reprieve after being found guilty of fraud. The Shanghai Number One Intermediate People’s Court convicted Chen Yi, former general manager of Shanghai Fanxin Insurance Agency Co. Ltd, and the firm’s consultant Jiang Jie, of fraud. Jiang was sentenced to life in prison. All the personal assets of both were confiscated.

Live chicken imports expected to rise in HK One thousand live chickens from the Chinese mainland are made available for sale at Hong Kong’s wet markets on Wednesday, marking the end of a 21-day suspension of poultry imports from the Chinese mainland. Ma Ping-lung, vice-chairman of Poultry Dealers and Workers Association, said he believes the move was mainly for testing cross border procedures. Ma expected the chicken supply to increase gradually in the next few days. He said the wholesale and retail prices haven’t changed on Wednesday.

China holds Maritime Silk Road seminar A two-day international seminar on beefing up maritime trade infrastructure in Asia opened on Wednesday in southeast China’s Quanzhou City.Over 280 academics and experts from 30 countries have been invited to discuss proposals to build a “21st Century Maritime Silk Road”. The event is themed “collectively building the 21st Century Maritime Silk Road and creating a community of common destiny”. It will involve three round table meetings covering the topics of “the values and significance of the 21st Century Maritime Silk Road initiative”.

resident Xi Jinping will pay his first formal state visit to the U.S. in September after he accepted an invitation from Barack Obama during a phone call yesterday. During the conversation, the two leaders agreed to make “full preparations to ensure the success of the trip,” the official Xinhua News Agency said today. The two leaders discussed issues ranging from China’s market reform to thornier topics such as cybersecurity, according to the White House. The trip will mark the first time Xi visits the U.S. as a head of state, as the world’s two biggest economies seek to boost cooperation and smooth

tensions such as territorial disputes between China and its neighbors that are U.S. allies in the Asia_Pacific. In June 2013, Obama hosted the newlyminted President Xi in Sunnylands, California in an informal, shirtsleeves summit. During the call, Obama “encouraged” China to continue to move toward consumer-led growth and a market-determined exchange rate, and called for “swift work” to narrow differences between two countries on cybersecurity issues, according to the White House. The two leaders also agreed to work together on other security issues, including nuclear negotiations with Iran.

Obama also expressed appreciation for China’s contributions to seeking to contain the Ebola crisis in West Africa and making a commitment to reduce greenhouse gas emissions. Xi’s busy international schedule for the year includes going to Moscow in May to attend the World War Victory Day celebrations hosted by Russian President Vladimir Putin. Obama, also invited, won’t attend the Moscow celebrations, the TASS news agency cited U.S. deputy national security adviser Ben Rhodes as saying on Feb. 9. Xi is also poised to make a state visit to the U.K. later this year, according to the Foreign Office there. Bloomberg

Brother of China’s premier steps down as deputy head of tobacco monopoly

hinese Premier Li Keqiang’s brother stepped down yesterday as deputy head of a powerful tobacco monopoly, removing a potential conflict of interest as the world’s largest tobacco user battles a major health crisis. Li Keming, a vice director at the State Tobacco Monopoly Administration, has “been removed” from his position, the Ministry of Human Resources and Social Security said in a statement on its website, listing several other officials who were also stepping down.

The tobacco monopoly wields extraordinary power because it provides an estimated 7-10 percent of government revenues - as much as 816 billion yuan (US$130.72 billion) in 2013. Li Keming is the younger brother of Li Keqiang and had been in the post at the monopoly since 2003. The family lives of top leaders are generally a forbidden subject for public discussion in China. His position had become a target for accusations from antismoking activists who suggested the

government was too cosy with the State Tobacco Monopoly Administration, which controls 98 percent of China’s vast cigarette market. There is, however, no indication that the government is prepared to weaken the tobacco monopoly. Li had been appointed to a new post as chairman of a supervisory committee focused on large stateowned enterprises, the ministry said, without elaborating. The tobacco monopoly drew fire from anti-smoking activists last year when its intense lobbying resulted in the weakening of legislation that aimed for a total ban on tobacco advertising, sources told Reuters. Smoking is a major health crisis for China, where more than 300 million people have made cigarettes part of the social fabric, and millions more are exposed to second-hand smoke. Last year, a health official said China was considering raising cigarette prices and taxes. The State Council, China’s cabinet, has issued a draft regulation to ban indoor smoking, limit outdoor smoking and end tobacco advertising. The director of the State Tobacco Monopoly Administration has taken aim at anti-smoking efforts, saying they should not take an “absolutist” or “expansionist” direction because the habit had hundreds of years of history behind it. Reuters

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February 12, 2015

Greater China

Alibaba ‘Isn’t too big to fail,’ Ma tells China regulator

ack Ma told the Chinese government that Alibaba Group Holding Ltd. isn’t too big to fail, as Asia’s richest man sought to assure regulators he was addressing corruption on the company’s e-commerce sites. Ma said during a speech at the China Securities Regulatory Commission in Beijing that he knows Alibaba must pay closer attention to employee behavior as it grows, according to a transcript posted on Sina.com. The Alibaba chairman and founder even alluded to ousted Politburo members Zhou Yongkang and Bo Xilai -- both taken down for graft -- to show how seriously he takes the issue. “Alibaba definitely isn’t a company that is too big to fail,” Ma said during a speech and question session that lasted more than two hours. “Those big in China who failed: Politburo members, standing members. Which company can say it’s too big to fail -- that’s rubbish.” The visit was at least Ma’s third meeting with regulators since the State Administration for Industry & Commerce issued a “white paper” last month, accusing Alibaba’s online malls of accepting bribes and peddling knock-offs. The company, which was founded in Ma’s apartment 15 years ago, faces increasing oversight in the Communist Party-run country as it expands into everything from taxihailing applications to online lending. Chinese authorities are reviewing rules governing drone flights after

He cited the Yu’E Bao online money market fund and the creditscoring system set up by Alibaba affiliate Zhejiang Ant Small & Micro Financial Services Group Co. as examples of how the two sides could work together. Alibaba wanted to “let trustworthy businessmen become wealthy,” Ma said, according to the transcripts. “Only if we do this, can our company complement the finance industry, and not compete with them.”

Sesame Credit concluding that Alibaba violated regulations with a promotion this month to deliver goods remotely, people familiar with the matter said Tuesday.

‘Trustworthy Businessmen’ “A lot of areas are so innovative, the company’s development could easily come into confrontation with regulators,” Alex Wang, a Beijingbased analyst at Internet consulting firm IResearch, said Wednesday by phone. “Ma Yun wants to improve the communication channels it has with authorities to avoid what happened with the SAIC,” Wang said, using Ma’s Chinese name. Melanie Lee, a spokeswoman for Alibaba in Hong Kong, said she couldn’t immediately comment on Ma’s remarks. Alibaba’s shares have fallen 16

Let trustworthy businessmen become wealthy Jack Ma

percent in New York trading this year, compared with a 0.7 percent rise for the NYSE Composite Index. During his visit to the CSRC headquarters, Ma also said that the country’s state-run banks had nothing to fear from new services offered by Alibaba’s financial affiliate.

Sesame Credit Management Co., which Ant Financial started in January, analyzes data from more than 300 million people and 37 million small businesses that use Alibaba’s platforms to help them borrow money. The company plans to focus on those with little history with traditional credit agencies. Ant Financial’s Paypal-like Alipay has more than 800 million registered users. Its mobile application handles 45 million transactions a day, the company said in October. Ma, who has a net worth of US$34.6 billion, according to the Bloomberg Billionaires Index, told the CSRC that Alibaba still had much growing to do. “We are big, but not strong,” Ma said. “Other people have very high expectations for us, and we lack a clear understanding of ourselves, as well.” Bloomberg

Central Bank vows to support growth, avoid “pumping out” too much cash

hina’s central bank made clear on Tuesday it is ready to fight any downturn in the world’s second-largest economy as it warned of strong headwinds to growth and likely anaemic global demand. But at the same time the central bank acknowledged concerns about rising debt levels in China by saying said it would avoid any excessive credit stimulus that could stoke financial risks. The People’s Bank of China reiterated in its fourthquarter monetary policy report that it would keep policy prudent to ensure it is neither too tight nor too loose. “The economy still faces relatively big downward pressure amid the process of economic restructuring,” the central bank said. “Looking ahead, it’s hard to see any big improvement in external demand. Some industries with excess capacity are still increasing capacities at a great speed, which could increase downward pressure on prices, especially industrial prices.” Smarting from a sagging property market, erratic export growth and a

government-led slowdown in investment, the Chinese economy suffered its worst cooldown in 24 years last year when annual growth fell to 7.4 percent. To spur demand, the central bank loosened policy outright twice in three months by cutting interest rates and reducing the amount of deposits that banks must hold as reserves.

Climbing Debt “We will make appropriate and timely

adjustments when there are relative big changes in basic conditions...to prevent the economy from sliding, but (we will) also pay attention to avoid ‘pumping out’ too much money,” the central bank said. It vowed to fine-tune policy in a timely manner, keep the liquidity level appropriate and credit growth reasonable. It also promised to prevent any systemic risks in the financial system. Climbing bad debt levels are a growing risk in China

as its economy stutters. Bad debt levels across Chinese banks jumped to a five-year high of 1.6 percent at the end of 2014, government data showed in January, and signs of rising financial stress emerged again on Tuesday. Singapore’s DBS Group Holdings reported that its China bad debt provisions quadrupled in the latest quarter, as its chief executive warned of other unexpected surprises on the back of the country’s anti-graft campaign and debt woes

in certain corporate sectors. China’s public and private sectors are grappling with substantial debt levels. A state audit showed local governments owed about $3 trillion in debt at the end of June 2013, while Standard and Poor’s estimated last year that non-financial Chinese companies have chalked up about US$12 trillion in debt. That leaves China with a debt burden of around 150 percent of its 2014 gross domestic product. Reuters

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February 12, 2015

Greater China

Tesla CEO threatens firings after dismal China sales Electric-car manufacturer, led by billionaire Elon Musk, said that the vice president of communications at its China operations has already left the automaker after less than a year on the job. Musk indicated other country managers who are not meeting targets may lose their jobs

esla Motors Inc Chief Executive Elon Musk is prepared to fire overseas executives, people with knowledge of the matter said, after weak Chinese sales of the company’s luxury electric cars cast doubt on his ambitious global expansion plans. Tesla sold about 120 cars in China last month, one of the sources told Reuters, well below the company’s aggressive targets. Musk has previously said he expected China sales could rival those in the United States as early as 2015. June Jin, vice president of communications, is no longer with the company, Tesla’s China spokesman Gary Tao said by telephone to Bloomberg. Jin’s departure follows the automaker’s China President Veronica Wu quitting in December. Musk indicated other country managers who are not meeting targets may lose their jobs, the sources said. Last

month, CEO explained that sales in China have fallen because of concerns consumers in the country have over charging its electric vehicles. Tesla shares slumped 7 percent on Jan. 13 after Musk said China sales were “unexpectedly weak” during the fourth quarter. “We’ll fix the China issue and be in pretty good shape probably in the middle of the year,” Musk added at the time. He was more blunt in an internal email to managers in late January, threatening to fire or demote country managers if they are “not on a clear path to positive long-term cash flow,” according to two people who have seen the email. Reuters did not view the original email, but was provided with a written transcript of several key passages by one of the sources. A second source confirmed the authenticity of the email. Tesla did not have an immediate comment on Tuesday.

While Tesla sales in many overseas markets from Europe to Asia have not met expectations - and executives have subsequently been fired or demoted - results have fallen far short in China, a key market for Musk’s expansion strategy. Musk has said Tesla plans to boost annual production from a projected 50,000 cars this year to 500,000 by 2020, with the United States and China as the company’s two largest markets. In January, Musk made an even more bullish projection that production would reach “a few million” cars a year by 2025. But China sales have persistently lagged expectations, triggering an executive shuffle. The company in mid-December confirmed the departure of China chief Veronica Wu. General Manager Kingston Chang left Tesla last March. Musk in the internal email said underperforming company managers

Expanding its role in Afghanistan, Beijing to help build dam, roads

hina has promised to help build a hydroelectric power plant in a violent Afghan border region, as well as road and rail links to Pakistan, in the latest sign it is taking a more active role in Afghanistan. The assistance will include an unspecified amount of financing, an Afghan foreign ministry spokesman, Sirajul Haq Siraj, said this week after

senior Afghan, Chinese and Pakistani diplomats met in Kabul. “China agreed to support relevant initiatives for projec ts inc l u d i n g th e Kunar hydropower plant and strengthening road and rail connections between Afghanistan and Pakistan,” Chinese Foreign Ministry spokeswoman Hua Chunying told a daily news briefing in Beijing. The planned 1,500

megawatt dam on the Kunar River, was previously supported only by Pakistan, which could buy some of the electricity it generates. In 2013, Pakistan said it would also build a motorway connecting the Pakistani city of Peshawar to Kabul, as well as a railway line from Chaman, on the Pakistani side of Afghanistan’s southeastern border to the southern Afghan city of Kandahar.

in overseas markets “will be asked to leave or assume a more junior role. This has already happened in China and will likely happen in some other countries, too.” Tesla began taking orders in China in mid-2013 for its sole product, the Model S sedan, and in January 2014 said the Chinese version of the car would be priced from around $121,000, including duties and shipping costs. In an interview at the time with Bloomberg, Musk said Tesla sales in China might equal those in the United States as early as 2015. Since then, however, Tesla has encountered several speed bumps in China, including the departures of the two executives and the slowerthan-expected ramp-up of its retail network. A year ago, Wu said China was expected to contribute “30 to 35 percent” of Tesla’s global sales growth in 2014.

Kunar is one of Afghanistan’s most active battlefields, with deep valleys and forests near the Pakistan border providing cover for different factions of the Taliban. China’s involvement could speed up work on these projects, though major Chinese investments including a large copper mine and railway link near Kabul have been put on hold partly because of militant violence. Siraj said the amount of Chinese financing for the dam and other projects would be decided in later trilateral meetings. At the meeting, the diplomats also discussed ways to bring Taliban militants

Reuters

to the negotiating table, following a Chinese proposal late last year for a “peace and reconciliation” forum. “The three sides resolved to make concerted efforts in maintaining peace and stability in Afghanistan,” Pakistan said in a statement. China has growing interests in Afghanistan, which offers a possible route to the sea from China’s landlocked west. China wants the country to be stable, both to help it exploit mineral resources and to weaken Islamist militants it says operate in the far western Chinese region of Xinjiang, which borders both Afghanistan and Pakistan. Reuters

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February 12, 2015

Asia

Singapore posts first drop in visitors since global crisis Chinese arrivals were hurt by the country’s tourism law, regional socio-political issues and the plane disasters

ingapore reported its first decline in visitor arrivals since the global financial crisis, as a new Chinese law curbed tourists from the mainland while political turmoil in Thailand and aviation disasters damped travel. Visitors to the tropical island nation fell 3.1 percent to 15.1 million in 2014, the first drop since 2009, the Singapore Tourism Board

said. Tourism receipts totaled S$23.5 billion (US$17 billion), unchanged from the previous year. Weakening tourism adds to risks for Singapore, which unexpectedly eased monetary policy last month as growth slowed amid a faltering global economy. The Southeast Asian island, home to an Asian leg of the Formula One series and two casino resorts, had previously targeted 17

million tourist arrivals for 2015. “We had somewhat stormy weather,” Tourism Board Chief Executive Lionel Yeo told reporters in Singapore Wednesday. The original target for 2015 was set in 2004, before the global financial crisis, and the agency will release an updated projection for this year later, he said. The number of Indonesian visitors, who made up the

biggest group of arrivals last year, fell 2 percent to 3 million as the rupiah depreciated, while travelers from China dropped 24 percent to 1.7 million. Numbers from Malaysia, Australia, Japan and the Philippines also fell. Chinese arrivals were hurt by the country’s tourism law, regional socio-political issues and the plane disasters, the tourism board said. China’s economic growth is slowing,

adding to the impact of a new law that clamped down on cut-price shopping tours. “There’s definitely an immediate-term impact but I think if you look at it more broadly, the outbound traffic and the desire to travel in Southeast Asia is going to grow,” Mr. Yeo said in an interview after the briefing. “So that will continue to fuel tourism growth in Singapore.” Bloomberg

US airlines lose ground to Gulf carriers in SE Asia The report says the Gulf carriers could drive ticket prices down to a point where U.S. airlines could not afford to stay in certain markets, costing hundreds of jobs

.S. airlines have lost at least five percentage points of their share of flight bookings from the United States to the Indian subcontinent and Southeast Asia since 2008, due to fierce competition from Gulf carriers, according to data seen by Reuters. More recently, U.S. carriers have seen an erosion in their share of bookings to Milan, according to a report the U.S. airlines sent to the White House and the departments of State, Transportation and Commerce. The 55-page white paper is not yet public. The report says the combined share of bookings between the United States and the Indian subcontinent for Delta Air Lines , United Airlines and American Airlines has fallen to 34 percent in 2014 from 39 percent in 2008. The drop includes bookings on the airlines’ joint-venture partners, such as British Airways and Air France. In the same time, Emirates Airline, Qatar Airways and Etihad Airways

have surpassed them. The Gulf airlines’ share of that market has jumped to 40 percent from only 12 percent seven years ago, according to the report. The report sheds light on the intensifying battle between the U.S. carriers and their rivals from Qatar and the United Arab Emirates since “Open Skies” agreements authorized commercial flights between those countries and the United States more than a decade ago. The data shows that the Gulf carriers have eroded U.S. airlines’ market share even beyond the subcontinent, although bookings

to the region resulted in the largest revenue hit so far, Delta Chief Legal Officer Ben Hirst said in a telephone interview. U.S. airlines and their jointventure partners’ share has fallen to 36 percent from 43 percent of the market between the eastern United States and Southeast Asia, according to the report. The region includes Vietnam, Thailand, Indonesia, Malaysia and the Philippines. Gulf carriers, meanwhile, expanded their share of bookings to 13 percent from just 1 percent.

Cheaper fares The U.S. airlines are stepping up efforts to persuade the American government to alter or terminate the Open Skies pacts. The white paper, citing confidential financial statements from the Gulf airlines, alleged that their rivals have received subsidies from their home governments contrary to U.S. trade policy. The report says loans, tax

exemptions and other support totaled more than US$40 billion since 2004, which the Gulf carriers used to pay expenses that airlines typically must cover themselves, such as aircraft acquisitions. The report says the Gulf carriers could drive ticket prices down to a point where U.S. airlines could not afford to stay in certain markets, costing hundreds of jobs. They say government subsidies enable the Gulf carriers to buy planes and add capacity in excess of demand, forcing industrywide price cuts on certain routes. The Gulf airlines are pushing to expand their reach. U.S. carriers have lost their share of bookings from New York to Milan since Emirates announced service there in 2013 as a stopover on the way to Dubai. Emirates’ share has jumped to 19 percent since then, while the share held by U.S. airlines and their partners has fallen to 78 percent from 85 percent. Reuters

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February 12, 2015

Asia

OPEC producers cut oil prices to Asia in battle for share The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years

For the Saudis, it’s market share at any cost. Saudi is the leader in this and the others have to follow the leader John Sfakianakis, Middle East director at Ashmore Group Plc

raq and Iran joined Saudi Arabia in cutting their March crude prices for Asia to the lowest level in more than a decade, signaling the battle for a share of OPEC’s largest market is intensifying. Iraq’s Basrah Light crude will sell at US$4.10 a barrel below Middle East benchmarks, the lowest since at least August 2003, the Oil Marketing Co. said Tuesday. National Iranian Oil Co. lowered its official selling price for March Light crude sales to a discount of US$2.10 a barrel, the lowest since at

least March 2000, according to a company official who asked not to be identified because of corporate policy. The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years. The Organization of Petroleum Exporting Countries left its members’ output targets unchanged at a November meeting, choosing to compete for market share against U.S. shale producers rather than support prices. Iraq is the

second-biggest producer in OPEC and Iran is fourth. “This is an effort by some producers to protect market share,” Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone Tuesday. “It’s really straightforward; cutting prices is how you keep your foot in the door.”

Increasing Competition Middle Eastern producers are increasingly competing

with cargoes from Latin America, Africa and Russia for buyers in Asia. Oil prices have dropped about 45 percent in the past six months as production from the U.S. and OPEC surged. The International Energy Agency said Tuesday that the U.S. will contribute most to global growth in oil supplies through 2020 as OPEC’s attempts to defend its market share will hurt other suppliers including Russia more. “If they go out and sell at a higher price, they won’t sell much,” John Sfakianakis,

Middle East director at Ashmore Group Plc, a London-based investment manager, said in an interview in Dubai Tuesday. “For the Saudis, it’s market share at any cost. Saudi is the leader in this and the others have to follow the leader.” Iran’s output rose to 2.78 million barrels a day in January from 2.77 million a month earlier as Iraq boosted supply to 3.9 million from 3.7 million, according to a Bloomberg survey of oil companies, producers and analysts. Production in Saudi Arabia climbed 220,000 barrels a day to 9.72 million last month. Saudi Arabia won’t balance global crude markets by itself even as prices fall “too low for everybody,” Khalid Al-Falih, the chief executive officer of Saudi Arabian Oil Co., said at a conference in Riyadh on Jan. 27. The kingdom’s Oil Minister Ali Al-Naimi has said producers outside of the group should trim their output first. “This is a global market that’s oversupplied,” Emerson said. “Late March and early April are in normal times a period of weak demand, so you have to be rather aggressive now if you want to sell your oil.” Bloomberg

IMF standby program only one option for Mongolia, Premier says

ongolia sees a standby program as only one of several options for International Monetary Fund support to help its faltering economy and looks to a new trade deal with Japan as essential to boost its economic and security role in Asia, Prime Minister Saikhanbileg Chimed said. “There are four or five options that Mongolia has to cooperate with the IMF,” Saikhanbileg said in an interview with Bloomberg TV Mongolia in Tokyo. “Wanting cooperation from the IMF does not necessarily have to mean standby. That is an open option among many,” he said after signing the new trade deal. The IMF offers standby programs to quickly aid countries with loans of no longer than 36 months. “No official talk has been made on

currency has slid by almost a third. In a move to attract more investment into the country Saikhanbileg signed the trade deal with Japan. Mineralrich Mongolia has resources needed by Japan to help power its economy, including rare-earth metals, copper and coking coal. entering an official bailout program, but there is a need to consult the policy changes with the IMF and other international organizations such as World Bank,” Saikhanbileg said. The IMF sent a mission to Mongolia this week after the government requested support to combat a slump that more than halved a world-leading economic growth rate of 17.5 percent in 2011 to about 7 percent. Inbound investment has fallen more than 85 percent in the past two years and the

Commodity Slump Mongolia is seeking new markets for its goods after three years of slowing economic growth triggered by the slump in commodity prices and disputes with investors, including Rio Tinto Group, which controls Mongolia’s biggest mining venture, the Oyu Tolgoi copper mine. The Economic Partnership Agreement “will help increase trade, investment, service flow and human collaboration between the two

countries and is essential for Mongolia to keep track with regional and global economic integration,” Saikhanbileg said at a meeting with counterpart Shinzo Abe in Tokyo Feb. 10. Part of the agreement includes approval of a loan of 36.8 billion yen ($308 million) to finance the construction of a new international airport in Ulaanbaatar, Abe said in his statement. The agreement with Japan will also aid Mongolia’s efforts to assume a greater role in regional security issues. Mongolia styles itself as a linchpin nation that has good relations with regional neighbors including North Korea and Japan. Mongolia has hosted talks between the two countries, whose relations have been strained over North Korea’s kidnapping of Japanese in the 1970s and 1980s. Bloomberg

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

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Business Daily | 13

February 12, 2015

Asia

Brokers trade US$100,000 salary for Vietnam riches

Mexico’s Cemex could sell part of Asia business

The Vietnamese stock market is booming. At least five brokerages in the US$57.7 billion market are seeking to hire managers from outside the country, and five others have filled positions with foreigners in the past eight years last year, versus $8.9 billion in Hong Kong, data compiled by Bloomberg show. Foreign inflows of US$136 million into Vietnam in 2014 compared with $3.76 billion for Indonesia and US$1.25 billion for the Philippines. A smaller market also means lower compensation levels, which can be a challenge for local firms seeking to hire brokers from overseas, according to VNDirect’s Giang. Foreign candidates typically ask for salaries of about US$100,000 a year, more than double the rate for locals, he said.

Foreign limits

fter six years trading stocks in New York and Hong Kong, Patrick Mitchell decided he’d had enough. The 30-year-old left the long hours and shrinking commissions behind in 2013 to join a firm that most of his colleagues had never heard of: VinaSecurities Joint-Stock Co. in Ho Chi Minh City. He’s now head of institutional sales at the company, living in a villa at least five times the size of his Hong Kong studio and helping to handle an influx of foreign investment that propelled Vietnam’s stock market to a third straight year of gains in 2014. “I wanted to be a bigger fish in a smaller pond,” said the Chicago native, who previously worked at Cantor Fitzgerald & Co. and Reorient Financial Markets Ltd. “There are 100 other expat brokers running on the same hamster wheel I was in Hong Kong, making enough to survive in a high-velocity city but not really saving any money.” Mitchell is poised to get more company in Vietnam. At least five brokerages in the US$57.7 billion market are seeking to hire managers from outside the country, and five others have filled positions with foreigners in the past eight years. The push for overseas talent reflects the growing influence of international investors, who have added to their Vietnam positions for nine straight years and may get increased leeway to boost holdings as the government considers easing limits on foreign shareholders.

New market Brokers from Western countries tend to form better connections with overseas money managers because of their fluent English and shared culture, said Nguyen Lam Dung, the chief executive officer of VPBank Securities, which hired a foreigner to replace its Vietnamese head of institutional sales about seven months ago. “Vietnam’s stock market is still very new compared to other markets,” Dung said from Hanoi. “Although there are good local candidates, they usually lack experience. Candidates who have worked in more developed markets have competitive advantages.”

There are 100 other expat brokers running on the same hamster wheel I was on in Hong Kong, making enough to survive in a highvelocity city but not really saving any money Patrick Mitchell, foreigner broker in Vietnam

“That’s too much,” said Giang, who offers stock options to help bridge the gap. “We are willing to pay high salaries, but they will not be as high as the foreign standards they may expect, because liquidity here in no way compares with other markets.” Inflows into Vietnam will probably pick up as the country relaxes restrictions on foreign investment, said Dang Tran Hai Dang, the head of research at Maritime Bank Securities in Hanoi. Vietnam’s policy makers are revising a recommendation to lift the foreign cap on voting shares of some listed companies to 60 percent from 49 percent, Vu Bang, chairman of the State Securities Commission, said in December. A draft measure posted on the commission’s website last month proposes that foreign investors be allowed to make “unlimited” investments in non- voting shares.

Nights out VNDirect Securities Corp., the country’s fourth-largest brokerage, has been looking for a foreigner to run its institutional sales for more than seven months as the firm seeks to boost the proportion of revenue from institutions to 20 percent in the next two years from 5 percent in 2014. “We like foreign brokers because they are usually more professional and have more experience and exposure,” said Nguyen Hoang Giang, VNDirect’s Hanoi-based chief executive officer. “Management of institutional portfolios has never been a simple matter.”

Low volume Vietnam’s benchmark VN Index has climbed 5.3 percent this year, extending its gain since the end of 2011 to 63 percent. That compares with a 26 percent advance for the MSCI Frontier Markets Index and a 45 percent increase for the MSCI World Index of developed-nation shares. The Vietnamese gauge rose 0.7 percent at the midday break on Wednesday. While Vietnam’s stock market has outperformed, volumes are still dwarfed larger peers. The average daily value of shares traded on the Ho Chi Minh exchange was about 2.2 trillion dong (US$103 million)

At MB Securities, a unit of the nation’s fifth-largest bank by market value, trading commissions are already increasing as stocks rally. Revenue from brokerage services surged to 120.5 billion dong last year from 6.9 billion dong in 2013, according to a financial statement posted on its website. The firm hired a foreign broker to head institutional sales in Ho Chi Minh City last year and is looking for another to run its institutional sales team in Hanoi, Chairwoman Cao Thi Thuy Nga said. For Mitchell, lower compensation levels in Vietnam are more than offset by the country’s cheaper living costs and the growth prospects of a stock market that’s smaller than 14 of 16 Asian peers tracked by Bloomberg. While a night out in Hong Kong used to set Mitchell back by US$200, he spends closer to US$20 in Ho Chi Minh City. The former British colony ranked as the world’s third-most expensive city in Mercer’s Worldwide Cost Living Survey in July 2014, versus 131 for Hanoi, the capital of Vietnam. “The overall compensation isn’t comparable to the six- figure salaries in the more developed markets,” Mitchell said. “But anyone playing the frontiers is placing a bet on the future development of the country’s economy.” Bloomberg

Mexico’s Cemex could sell part of its business in northern Europe, the Mediterranean and Asia as it seeks to pay down debt, the cement giant’s CEO told Reuters on Tuesday. Fernando Gonzalez said the firm could also sell 5 to 10 percent of its subsidiary Cemex Latam Holdings, and set aside half of its earnings from asset sales to lower its debt burden. The company announced a plan last week to cut costs and sell assets to boost its finances and cut liabilities, in a bid to regain its investment grade rating.

Malakoff to soon launch US$1 bln IPO Malaysian power firm Malakoff Bhd is expected to launch a long-delayed $1 billion initial public offering as early as this month as it has offered a shares to indigenous investors, people with direct knowledge of the matter said on Wednesday. Offering shares to bumiputra investors is a government-mandated prerequisite for most companies seeking IPOs. The sources said Malakoff had offered the indigenous investors 550 million shares.

Bangladesh tea prices drop amid political unrest

Tea prices in Bangladesh declined for the second straight week at a weekly auction this week due to sluggish local demand amid political unrest that disrupted supplies. Bangladesh has been racked by political violence since anti-government protests turned violent last month over a disputed election a year ago. More than 80 people have died and hundreds have been injured, most of them in firebomb attacks on vehicles, amid a violent nationwide transport blockade by the main opposition party aimed at toppling the government.

Myanmar sees trade deficit Myanmar registered a trade deficit of more than four billion U.S. dollars in the first ten months (April-Jan) of the fiscal year 2014-15, according to the Ministry of Commerce on Wednesday. With its total foreign trade amounting to US$23.5 billion dollars during the period, its export stood at US$9.65 billion dollars while its import took US$13.87 billion dollars. Of the total export, border trade accounted for US$3.57 billion dollars.

Philippine car sales up 19.3 pct in January Sales of cars in the Philippines went up by 19.3 percent on year to 18,662 units in January, the Chamber of Automotive Manufacturers of the Philippines, Inc. ( CAMPI) said on Wednesday. CAMPI President Rommel Gutierrez said the organization projected a 15 percent growth for the entire year with more new product launches and promotion packages throughout 2015.

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International Halliburton announces job cuts on oil price collapse Halliburton Co., one of the world’s largest oil-field services companies, said Tuesday it will cut 5,000 to 6,500 jobs to cope with the falling crude prices, the latest in a string of oil-field layoff announcements. The Houston-based company made the announcement in a statement released Tuesday. The cuts amount to 6.5-8 percent of its global workforce of 80,000 employees. The reductions will affect “all areas of Halliburton’s operations,” the company said. Halliburton is the biggest hydraulic fracturing company in the United States, and the secondbiggest oil-tool provider in the world after Schlumberger.

Shifting goal posts on employment may signal slower Fed rate hikes The shift in unemployment calculation may not delay the timing of the Fed’s first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on

Brazil needs to build more dams Brazil needs to resume dams building, Vicente Andreu, president of the National Waters Agency (ANA), which regulates water distribution and other related matters, said this week. According to Andreu, Brazil stopped building dams for several reasons, including ‘absolutely environmental reasons’, but must resume in order to tackle the current water crisis. Not building more reservoirs, Andreu said, puts more stress on the existing dams and reduces crisis management capacity. Water shortage has affected the northeastern region recently, where many rivers are intermittent, and the southeastern region is also afflicted by a severe drought now, with the three most populated states in the country facing the possibility of water rationing.

ARM profits up by 25 pct ARM Holdings, the British company behind the processor in Apple’s iPhone 6, reported a better than expected 25 percent rise in profits on Wednesday, and predicted its royalty income was set to get a big boost from smartphones. The company, whose designs were used to produce some 3.5 billion chips in the previous quarter, reported a pretax profit of 118.9 million pounds (US$182 million). Revenue, up 19 percent at 225.9 million pounds, was split evenly between licensing and royalties. Analysts had on average been expecting a pretax profit of 113 million pounds, according to Thomson Reuters data, and Citi said the results were better than expected on both the top and bottom lines.

Sky’s shares plunge with stratospheric soccer bill Shares in Sky fell more than 4 percent on Wednesday after the pay-TV group agreed to pay a record 4.2 billion pounds (US$6.4 billion) to retain its dominance of Premier League soccer broadcasting rights in Britain. Analysts had expected Sky to pay about 40 percent more than the 2.3 billion pounds it shelled out for the current three-year contract. Instead, under pressure from fierce rival BT, Sky offered an 83 percent increase to secure the new contract running from 2016 to 2019. Sky, 39 percent-owned by Rupert Murdoch’s 21st Century Fox and synonymous with top-flight English soccer, will show 126 live games a season under the new deal.

Maybe the natural rate is lower...That it is five (percent) or even lower Jerome Powell, Fed governor

ederal Reserve officials are debating a historic shift in one of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels. According to interviews with half a dozen current and former Fed policymakers and staff, the concept that the economy can produce far lower levels of unemployment without stoking inflation is being built into Fed models and becoming increasingly entrenched in the central bank’s views. That shift may not delay the timing of the Fed’s first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on to bring as many people as possible back to work and to push inflation

back up to the Fed’s 2-percent target. Fed policymakers’ December projections show most expect the Fed’s benchmark rate to rise to 2.5 percent or above by the end of 2016 from the 0-0.25 percent range now. On Monday, Fed governor Jerome Powell became the latest of policymakers to suggest the “natural” rate of unemployment, also referred to as a level of full employment, had fallen. “Maybe the natural rate is lower...That it is five (percent) or even lower,” Powell said. That would be significantly below current unemployment rate of 5.7 percent and the 5.2 percent to 5.5 percent range Fed officials have recently estimated as the level of unemployment at which inflation is likely to increase. For months, Fed policymakers

have been puzzling over how the accelerating economy kept adding jobs but failed to spur wage and price increases that would cement the recovery and allow them to winddown crisis era policies. Now, there is growing sense that the point where the job market tightens enough to start pushing up wages and prices may be further away than earlier thought. The U.S. central bank has no official target for full employment - generally expressed as the unemployment rate that is consistent with stable prices. But accurately estimating it is critical for the Fed, given its mandate is to safeguard economic conditions that allow maximum employment consistent with stable prices that the bank defines as 2 percent inflation. Reuters

China says “knows nothing” about aid offer for Greece

hina’s Foreign Ministry said yesterday it had no knowledge of any offer by Beijing for aid to Greece after Greece’s deputy foreign minister said China had offered economic support even though Athens had not requested it. Nikos Chountis, who also holds the European Affairs portfolio, told Greek radio that Russia had also offered Greece help, while Greek Defence Minister Panos Kammenos said that if Athens failed to get a new debt agreement with the euro zone, it could always look elsewhere for help, including possibly China. “There have been proposals, offers I would say, from Russia, recently after the election, for economic support as well as from China, regarding help,

investment possibilities,” Chountis said, adding: “We have not asked for it.” China’s Foreign Ministry spokeswoman Hua Chunying said she had seen the reports but had “no knowledge” of the matter. “We are willing to keep deepening cooperation and exchanges in all areas with the new Greek government on the basis of the principle of mutual respect and win-win to push the continued development of Sino-Greek ties,” she told a daily news briefing. “As for the detailed situation you mentioned, I know nothing about it.” China said last month it was closely monitoring the new Greek government’s policies after Athens said it would stop the sale of a majority stake in Greece’s biggest port.

The Greek government last year had short-listed China’s Cosco Group as a potential buyer of a 67 percent stake in Piraeus Port Authority. Kammenos is the leader of Independent Greeks, a nationalist anti-bailout party that is the junior coalition partner of Prime Minister Alexis Tsipras’ radical-left Syriza party. Greece is seeking a new debt agreement with the euro zone that will allow it to shake off much of the austerity that has been imposed by a European Union/International Monetary Fund bailout since 2010. China sees Greece’s strategic location as a portal into both Europe and Africa for the distribution of Chinese products. Reuters

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February 12, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The Greek austerity myth Daniel Gros

Director of the Center for European Policy Studies

The Times of India The power distribution companies operating in Delhi, owned by the Reliance Group and the Tatas, may feel the heat after the Aam Admi Party’s (AAP) landslide victory in Delhi elections. CAG officials are learnt to have visited the offices of these firms again on Tuesday to conduct audit, which was ordered in January 2014 by the earlier AAP government that lasted 49 days. The distribution companies saw their share prices plunge over the last five days ever since opinion and exit polls predicted an AAP victory on fears that the new government will expedite CAG audit and reduce power tariff rates by up to 50 percent, as promised in its election manifesto.

The Japan News The Environment Ministry and a local diving association have confirmed the discovery of one of the nation’s largest single-species colonies of coral. The coral, which was discovered in Nagura Bay west of Ishigakijima island, Okinawa Prefecture, measures about 70 meters in circumference and is about 10 meters high. Located two to three kilometers off the coast of Ishigakijima island on a slope seven to 13 meters underwater, the Pavona clavus coral colony has an oval shape and is between 17 meters and 24 meters wide. Local divers say the water in Nagura Bay is somewhat murky, and the coral in the area was not well known.

The New Zealand Herald SkyCity Entertainment Group has increased its December half-yearly profit slightly, making AUD$66.6 million normalised net profit after tax, up on its previous $66.4 million. Group normalised revenue including gaming GST rose 9.2 percent to $510.0 million for the half-year to December 31, 2014, the company told the NZX. Normalised EBITDA was up 3.1 per cent to AUD$154.4 million and normalised and the NPAT of AUD$66.6 million was only up marginally on the previous corresponding period. The result was in line with expectations from research analysts Adrian Allbon of Craigs Investment Partners and Mark Wilson of Deutsche Bank said in their interim results earning preview that the result would contain good and bad new

Inquirer Business After logging more than one million safe man-hours or “zero accidents” since the start of construction, the Balingasag Thermal Power Plant of Minergy Coal Corporation (Minergy Coal) in Misamis Oriental is now 42.1 percent complete and set for its targeted inauguration in 2017. Composed of three 55MW coal-fired power units, the project will feed the power requirements of Cagayan de Oro Electric Power and Light Corporation (Cepalco), whose franchise area covers the City of Cagayan de Oro and adjacent municipalities. Minergy Coal is 40 percent owned by Vivant Integrated Generation Corporation (VIGC) together with Mindanao Energy Systems, Inc. (Minergy). VIGC is a wholly owned subsidiary of Vivant Energy Corporation which, in turn, is 100% owned by publicly-listed Vivant Corporation.

ince the anti-austerity Syriza party’s victory in Greece’s recent general election, the “Greek problem” is again preoccupying markets and policymakers throughout Europe. Some fear a return to the uncertainty of 2012, when many thought that a Greek default and exit from the eurozone were imminent. Then as now, many worry that a Greek debt crisis could destabilize – and perhaps even bring down – Europe’s monetary union. But this time really is different. One critical difference lies in economic fundamentals. Over the last two years, the eurozone’s other peripheral countries have proven their capacity for adjustment, by reducing their fiscal deficits, expanding exports, and moving to current-account surpluses, thereby negating the need for financing. Indeed, Greece is the only one that has consistently dragged its feet on reforms and sustained abysmal export performance. Providing an additional shield to the peripheral countries is the European Central Bank’s plan to begin purchasing sovereign bonds. Though the German government does not officially support quantitative easing, it should be grateful to the ECB for calming financial markets. Now Germany can take a tough stance on the new Greek government’s demands for a large-scale debt write-off and an end to austerity, without fearing the kind of financial-market turbulence that in 2012 left the eurozone with little choice but to bail out Greece. In fact, both of the Greek government’s demands are based on a misunderstanding.

Greece actually spends less on debt service than Italy or Ireland, both of which have much lower (gross) debtto-GDP ratios

For starters, Syriza and others argue that Greece’s public debt, at a massive 170% of GDP, is unsustainable and must be cut. Given that the country’s official debt constitutes the bulk of its overall public debt, the government wants it reduced. In fact, Greece’s official creditors have granted it long enough grace periods and low enough interest rates that the burden is bearable. Greece actually spends less on debt service than Italy or Ireland, both of which have much lower (gross) debt-toGDP ratios. With payments on Greece’s official foreign debt amounting to only 1.5% of GDP, debt service is not the country’s problem. The relatively low debt-service cost also removes the justification for Syriza’s demands for an end to austerity. The last bailout program

from the “troika” (the International Monetary Fund, the ECB, and the European Commission), initiated in 2010, foresees a primary budget surplus (which excludes interest payments) of 4% of GDP this year. That would be slightly more than is needed to cover interest payments, and would thus allow Greece finally to begin to reduce its debt. The new Greek government’s argument that this is an unreasonable target fails to withstand scrutiny. After all, when faced with excessively high debt, other European Union member states – including Belgium (from 1995), Ireland (from 1991), and Norway (from 1999) – maintained similar surpluses for at least ten years each, typically in the aftermath of a financial crisis. To be sure, one can reasonably argue that austerity in the eurozone has been excessive, and that fiscal deficits should have been much larger to sustain demand. But only governments with access to market finance can use expansionary fiscal policy to boost demand. For Greece, higher spending would have to be financed by lending from one or more official institutions. For the same reason, it is disingenuous to claim that the troika forced Greece into excessive austerity. Had Greece not received financial support in 2010, it would have had to cut its fiscal deficit from more than 10% of GDP to zero immediately. By financing continued deficits until 2013, the troika actually enabled Greece to delay austerity. Of course, Greece is not the first country to request emergency financing to delay budget cuts, and then complain that the cuts are excessive once the worst is over. This typically happens

when the government runs a primary surplus. When the government can finance its current spending through taxes – and might even be able to increase expenditure, if it does not have to pay interest – the temptation to renege on debt intensifies. It was widely anticipated that Greece would be tempted to follow this route when the troika program was initiated. Last year, the new Greek finance minister, Yanis Varoufakis, confirmed the prediction, arguing that a primary surplus would give Greece the upper hand in any negotiations on debt restructuring, because it could just suspend repayments to the troika, without incurring any financing problems. That approach would be a mistake. The practical problem for Greece now is not the sustainability of a debt that matures in 2030 years and carries very low interest rates; the real issue is the few payments to the IMF and the ECB that fall due this year – payments that the new government has promised to make. But, to follow through on this promise (and hire more employees), Greece will need more financial support from its eurozone partners. Moreover, the country’s financial system will need continuing support from the ECB. In other words, Greece’s new government must now try to convince its European partners that it deserves more financial support, while pushing for a reduction of its existing debt and resisting the austerity policies on which previous lending was conditioned. For Syriza and its voters, the political honeymoon could be short. Project Syndicate, 2015.

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Closing Mainland firm supplies Boeing 777 tail parts

Wang Yu-chi resignation has no impact

A company based in northeast China’s Shenyang City has begun to supply components for the tail part of Boeing’s 777 line of airplanes. Boeing has received the first shipment of forward torque box panels from the AVIC SAC Commercial Aircraft Company (SACC), the aircraft manufacturer said yesterday. Kent Fisher, Boeing Commercial Airplanes’s vice president, described the work of the young SACC as “a tremendous accomplishment”. He regards advanced composites manufacturing as an area of critical importance as Boeing has increased production to meet market demand.

The resignation of Taiwan’s mainland affairs chief Wang Yu-chi will not affect normalization of the cross-Strait contact mechanism, said a mainland official.Regular communication between the State Council Taiwan Affairs Office and Taiwan’s mainland affairs committee was established during Wang’s tenure. The mainland will not comment on the island government’s personnel change, Ma Xiaoguang, spokesman for the State Council Taiwan Affairs Office, said. Wang announced his resignation taking responsibility for forcing his former deputy to quit in August last year over allegations that he had leaked official secrets.

China to discuss repatriation of Chinese fugitives from the US Last year, Beijing officials said more than 150 “economic fugitives”, many of them described as corrupt government officials, were in the United States. Neither country has publicly provided a figure of how much stolen money has been smuggled Tim Reid

enior U.S. officials will meet their Chinese counterparts in August to discuss the possibility of repatriating Chinese officials who have fled to America with billions of dollars of allegedly stolen government assets, a U.S. official said. The issue is a thorny one, as no extradition treaty exists between the United States and China. That has made America, and other countries such as Australia and Canada, attractive destinations for Chinese officials fleeing the country and a haven for stolen assets. Western governments have long been reluctant to hand over suspects because of a lack of transparency and due process in China’s judicial system. International human rights groups say torture is used as a tool for extracting confessions in Chinese interrogations. Government officials convicted of corruption have been sentenced to death. Of f icials f r om b oth countries met for two days in the Philippines last month,

measures. “We are willing to stay in communication with the United States on this,” ministry spokeswoman Hua Chunying said in Beijing. Alternatives to extradition exist, U.S. officials say, including deportation for violations of U.S. immigration law. Canada, which has no formal extradition treaty with China, has recently expelled suspects wanted by Beijing, including Lai Changxing. Lai, a businessman wanted for corruption, was sent back to China from Canada in 2011 on the promise that he would not be executed. He was sentenced to life in prison. with the U.S. delegation led by David Luna, the U.S. State Department’s senior director for National Security and Diplomacy. Luna confirmed to Reuters that he attended the meetings and said talks will reconvene in August and will include law enforcement and legal experts. The countries will share specific intelligence on

suspected corrupt Chinese officials and stolen assets and will also discuss ways to send fugitives back to China. The Chinese Foreign Ministry said there was a need for new steps to be agreed with the United States to enable the recovery of stolen assets, though it declined to comment on details of the talks or any possible

Economic Fugitives Last year, Chinese officials said more than 150 “economic fugitives”, many of them described as corrupt government officials, were in the United States. Neither country has publicly provided a figure for how much stolen money has been smuggled from China to the United States.

But the Washington-based Global Financial Integrity group, which tracks illegal flows, estimates that between 2003 and 2012, $1.25 trillion of illicit cash left China. Some of that moves around the world through dummy bank accounts and other means, and once in the United States, it is often invested in real estate, making its source hard to trace. The preliminary talks between U.S. and Chinese officials were held on Jan. 27-28 in Clark, Philippines, as part of an Asia-Pacific Economic Cooperation (APEC) working group, called ACT-NET. The group, which involves multiple APEC countries, including Russia, was formed in Beijing in August to fight crossborder corruption. The talks took place amid an intensifying and farreaching anti-corruption drive in China, and a ramping up of efforts between the United States and China, including the sharing of criminal intelligence, to crack down on cross-border corruption.

Land: Australia will drastically Taiwan Grounds 29 tighten foreign ownership TransAsia Airways Pilots

Seagate to invest US$470 million in Thailand

he Australian government has moved to dramatically tighten laws regarding foreign ownership of agricultural land, claiming such a restriction is in the “national interest”. The Foreign Investment Review Board (FIRB) will now scrutinize any foreign purchase of Australian farm land worth US$11.6 million dollars, or more. Previously, that figure was 194 million U.S dollars. The move was announced on Wednesday in a joint statement released by Australian Prime Minister Tony Abbott, Treasurer Joe Hockey and Agriculture Minister Barnaby Joyce. The changes will apply to any foreign investment in agricultural land carried out after March 1. Speaking in Murrumbateman, just north of Canberra, Abbott said on Wednesday the plan to tighten the scrutiny on purchases by foreign owners was in the “national interest”. Abbott insisted, however, that foreign investment in Australia was still vital to the nation’s economy. Xinhua

aiwan ordered the grounding of 10 pilots of TransAsia Airways Corp. after a test following last week’s deadly plane crash showed they needed more training in emergency procedures, the Civil Aeronautics Administration said. A further 19 pilots, who haven’t yet been tested, also won’t be allowed to fly for now, CAA DirectorGeneral Tim Lin said today at a news conference in Taipei. The 10 pilots have been grounded indefinitely and will undergo “intensive training” on emergency procedures, he said. “Those 10 cannot fly,” he said. The airline said in response it will comply with the instructions. The 10 pilots had an average 6,905.52 flying hours of experience, the airline said in a separate statement. The results underscore the challenges the Taipei-based carrier faces in training its pilots and regaining public confidence after its second fatal accident in seven months. Bloomberg

ard-drive maker Seagate Technology Plc said on Tuesday it planned to invest 15.3 billion baht (US$470 million) in Thailand over the next five years to expand capacity at its largest facility in the country. Seagate will construct a new building, which will be operational in 2016, at its plant in Korat, some 160 miles (255 km) northeast of the Thai capital of Bangkok. The new building will expand its Korat facility, already Seagate’s largest hard drive manufacturing campus by 49 percent and add about 2,500 jobs, said Jeffrey Nygaard, Senior Vice President of Global Head Operations. Thailand is a big Southeast Asian manufacturing base for hard drives, along with China and Malaysia. In Thailand, Seagate was established in 1983 and currently has two production plants with about 16,400 employees, around 12,100 of whom are based in Korat. Reuters