MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo Number 745 Tuesday March 10, 2015
Construction site safety record worsens
M
Year III
ore accidents on Macau worksites. And mostly on Cotai projects. Several incidents have been fatal. Machinery handling issues, overwork and lack of stringent internal safety check-ups are blamed. And laid at the feet of the main contractors on casino-resort construction sites. An industry representative suggests the gov’t clarify legal responsibilities. And better guarantee worker safety. Some 900 workers were injured last year, while seven fatalities occurred PAGE
3
Sands China to increase salaries PAGE 6 Genting HK expects to gain US$218 mln from disposal of cruise business PAGE 7 NPC mull easier business processes PAGE 9
Yuan internationalization nearer PAGE 10
Bridge over troubled waters
HSI - Movers March 9
A Guangdong official says maybe 2020. The projected completion date of the Hong Kong-Zhuhai-Macau Bridge. But still a “difficult target” he says. He conceded, too, that the mega project’s current HK$132.9 billion has been blown out of the water. More updates in October. A new schedule for the bridge is expected to be revealed then following “an assessment” PAGE 2
Ruling out the copycats
Rumour mill
Stricter laws for electronic commerce. The Chinese government wants to prevent the sales of imitations. This, in the wake of talks with Alibaba’s Jack Ma on a very hot potato
Just rumours. And they should be ignored, says Liaison Office head Li Gang. He was referring to speculation on the interim review of the gaming industry in Macau. He acknowledged, however, that the MSAR had entered a period of middlespeed development. And that regional gaming competition is affecting the territory. He also touched on tourism numbers. Saying they cannot grow without limit
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Name
%Day
Li & Fung Ltd
2.15
Ping An Insurance Gr
1.70
China Construction B
1.29
Belle International
1.23
China Life Insurance
1.13
HSBC Holdings PLC
-1.77
Power Assets Holding
-1.84
Hang Seng Bank Ltd
-1.91
Lenovo Group Ltd
-1.96
Galaxy Entertainment
-2.25
Source: Bloomberg
I SSN 2226-8294
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2 | Business Daily
March 10, 2015
Macau Four incumbent telecom operators win 4G licences In a statement released yesterday, the Bureau of Telecommunications Regulation (DSRT) announced that the four mobile operators have won licences to run fourth-generation wireless (4G) telecommunications services: they are Companhia de Telecomunicações de Macau SARL (CTM), China Telecom (Macau) Company Ltd., Hutchison Telephone (Macau) Company Ltd., and SmarTone - Comunicações Móveis, S.A. The result means that the new entrants China Mobile Hong Kong Company Ltd. and start-up telecoms venture Yu Hong have lost their bids. As required by the government, the licence winners have to launch a 4G mobile broadband service covering 50 per cent of the city by the end of this year, with 100 per cent coverage in 2016.
Hong Kong-Zhuhai-Macau Bridge: Completion now in 2020 Luís Gonçalves
Luis.goncalves@macaubusinessdaily.com
L
ike the Light Rail Transit (LRT) the main infrastructure project here in the next ten years and a central axis in turning Macau into a worldwide tourist destination is the Hong Kong-ZhuhaiMacau Bridge. However, it will cost much more than originally envisaged and will likely be ready four years after the already revised schedule. Li Chunhong, director of the Guangdong Development and Reform Commission, has admitted that the Hong Kong-Zhuhai-Macau Bridge will cost more than the current HK$132.9 billion estimation. The significant delays to the project and additional outlay will put more pressure on the government finances of the three cities. On the sidelines of the National People’s Congress in Beijing, Mr. Chunhong said that “the delay will have an impact on the cost, and we’re still making an assessment,”
the South China Morning Post reported. “The extra cost will be settled based on agreement between the three places.” Last month, Hong Kong authorities confirmed that the project will be completed by next year. Now, however, Li admits that the new completion date is 2020 or even after. The Guangdong official underlined that even 2020 was a “difficult target” due to technical difficulties in laying sections of tubes on the seabed and joining them to make a tunnel. In October, a new schedule for the bridge will be revealed following an assessment. The 30-kilometre bridge linking the three cities will have dual 3-lanes, a 6.7-kilometre tunnel and two artificial islands. It will connect the two shores of the Pearl River Delta, linking Hong Kong to Gongbei in Zhuhai and A Perola in Macau. The total cost of the project is now
fixed at HK$132.9 billion, according to official data, with Hong Kong paying the largest portion of HK$83 billion, including a new island off the airport. Last month, the Hong Kong Government asked the Legislative Council to inject another HK$5.46 billion into the project to cover cost overruns.
A new headwind For Macau, the delay is set to be a new headache for the government and another headwind for the gaming industry. If the estimation of the Guangdong official is right, the new bridge will be completed three years after all the new casinos in Cotai are open. The LRT project is also facing ballooning costs with the completion date now slated for 2018, and only for the Taipa line. The LRT project on the Peninsula still has to go to public tender.
A Guangdong official says the cost of the massive project will surpass the expected HK$132.9 billion due to “significant delays” with the three cities splitting the financial burden
The first signs of new delays in the bridge project surfaced last month, when Hong Kong’s Secretary for Transport and Housing, Anthony Cheung Bing-leung, said it is challenging for all of the three parties - Macau, Hong Kong and Mainland China - to complete the construction of the Hong KongZhuhai-Macau bridge by 2016. He even stressed that “Hong Kong is not the only one encountering problems in the progress of the construction. Macau and Guangdong are facing the same challenges,” according to Radio Television Hong Kong (RTHK). The Secretary said he believed that the construction of the Hong Kong Border, as well as the link to the Main Bridge, may not be finished by the end of 2016, claiming that the Highways Department of Hong Kong was still evaluating the date of traffic using the Bridge.
Business Daily | 3
March 10, 2015
Macau
Overwork, lack of stringent checks blamed for increasing work-site accidents Stephanie Lai
sw.lai@macaubusinessdaily.com
W
hile the city is busy with construction works in the Cotai casino-resort sites and other public infrastructure projects, the number of construction-related injuries and deaths are on the rise. This is due to overworking to meet completion schedules and because of the lack of stringent checks on work safety, a contractors’ trade chamber and a labour union maintain. From January to September last year, a total of 890 people were injured at work on construction sites a jump from the 789 in 2013 and 564 in 2012, according to Labour Affairs Bureau (DSAL) data published by the Chinese language Macao Daily News yesterday. Meanwhile, seven deaths were recorded last year, attributable to alleged violations of local safety rules of construction works, representing a rise from the two deaths of 2013 and four deaths in 2012, according to DSAL data. The Macau Construction Association and labour group General Union of Macao Construction Industry believe that the mishandling of machinery on work sites is a common cause of construction-related accidents.
“When you look at these industrial accidents, which mostly happen on casino-resort construction sites, many of them were due to machinery handling issues,” the honorary chairman of the contractors’ trade chamber Macau Construction Association, Lo Kai Jone, told Business Daily. The Director of the General Union of Macao Construction Industry, Cheong Man Fun, also told us that his group has identified several construction accident cases last year related to a mishandling of lifting machinery at sites. “You have workers on these sites that always have to work extra shifts on top of their 8-hour regular shifts,” Mr. Lo said, “They’re tired and their rest is sacrificed by rushing to meet the
completion time of a project, which also results in the fact that they are more prone to making mistakes in handling machinery.” The most recent fatal constructionrelated accident occurred on Friday on the MGM Cotai building site, where a Mainland Chinese worker was reportedly hit by a concrete pump whilst pouring cement. Another accident occurred not long before on a neighbouring construction site at the Melco Crown Entertainment Ltd. City of Dreams Macau retail arcade expansion project, where a local construction worker operating a lifting appliance on the second floor of the expansion site fell to his death on January 20. An alleged overlifting of the appliance the worker had been
using was a suspected cause of the accident, according to DSAL at the time. “There’s still a lack of stringent internal safety check-ups by the main contractors on these [casino-resort] building sites,” Mr. Lo remarked, “DSAL, on the other hand, is very burdened as the only government unit to conduct a close check at all of these construction sites in the city, where the employees operating at the sites are often not very well-coordinated.” The Labour Affairs Bureau identified the lack of safety measures compliance regarding working at height as a common violation of the local construction safety rules, Macao Daily News reported yesterday. The Bureau is currently drafting a bill to increase existing fines for the violation of the construction safety rules, which is a set of rules implemented in 1991, the Chineselanguage news outlet said. But Macau Construction Association and General Union of Macao Construction Industry suggested that the government also clarify the legal responsibilities a work-site safety officer has plus the rules on check-ups of machinery on construction sites.
4 | Business Daily
March 10, 2015
Macau
Macau braces for 39 million tourists by 2017 If the number of tourists continues to increase at last year’s rate, the city will receive an extra 8 million visitors annually when all the Cotai casinos are completed in 2017. Mainland tourists are expected to increase 40 per cent in three years if no control measures are taken, official data states Luís Gonçalves
Luis.goncalves@macaubusinessdaily.com
I
t’s the hot topic in Macau nowadays. How to balance the quality of life of residents without disrupting the expectations of millions of new Mainland tourists willing to visit the city and casino operators who have invested billions of dollars opening up 10 new resorts by 2017. In this troika of challenges, some advocate a cap on the number of tourists via visa restrictions (or an “optimization” according to Secretary for Social Affairs and Culture Alexis Tam) while others, such as the tourism authorities, say Macau can still accommodate ever more visitors. From historical statistics, two things are certain: the Macau visitation profile doesn’t suffer from any major monthly peaks through the year, but in 2014 the number of tourist arrivals has doubled since ten years ago. And it’s increasing. Fast. According to Business Daily calculations using data from the Statistics and Census Bureau and Deutsche Bank, if the visitation growth rate parallels last year’s (a 7.5 per cent hike) Macau will welcome 39.1 million tourists by 2017. That’s an extra 8 million more than now or 20,000 new tourists per day. Last year, the city logged 31.5 million visitor arrivals, official data says. If the city is set to accommodate almost 40 million visitors in 2017, this means that tourism inflow here will be four times greater than in 2003 (11.8 million tourists) and almost two times more than in 2006 (21.5 million) – not to mention more than 20 per cent more than last year.
Chinese Focus Authorities focus on Mainland tourists for two main reasons. First, they’re the main driver of visitation here, and second, they’re easy to control through visas. In recent years, Macau, rather than becoming an international tourism destination attracting travellers from all over the world, has become mainly a destination for mainlanders, with the industry increasingly dependent upon Chinese tourism. In 2014, the number of Chinese tourists grew at double the pace of the overall figure, while visitors from all other major regions registered drops. Hong Kong visitation decreased 5 per cent, Asia (excluding China and
Visa restrictions: 8 measures since 2008 June 2008 Guangdong limits individual visas to visit Macau from twice a month to once a month July 2008 Guangdong limits individual visas to visit Macau to once every two months. August 2008 Chinese passport holders permitted to stay 7 days (cut from 14) before heading on to a third destination
Mainlanders accounted for 67 per cent of all tourists in Macau in 2014 and could reach 81 per cent in 2017
Hong Kong) went down 1.4 per cent, followed by the Americas and Europe. Last year, Mainlanders accounted for two thirds of all tourists here (67 per cent) and could extend their dominance to 81 per cent in 2017 if the current trend continues, according to Business Daily calculations. Measures to control Mainland tourism through visa restrictions is also not new here. Since 2008, eight measures have been launched by the government to this effect (see box). The much talked about cap is one more restriction, despite authorities not having explained how they’re going to apply it. The government wants to distribute the number of tourists throughout the year but the
Year-on-Year Visitation to Macau (%) Year
Overall
Mainland
2009
-5.1
-5.4
2010
14.8
20.4
2011
12.2
22.2
2012
0.3
4.6
2013
4.4
10.2
2014
7.5
13.9
Average
5.7
11.0
Source: Deutsche Bank / Business Daily
problem is that the Macau market is already well “optimized”. Statistics reveal that in terms of monthly figures the number of tourists is more or less the same throughout the year, without any major peaks. Even if New Year, Labour Day and Golden Week attract millions in a single week, the rest of the month is rather quiet.
Myths Historically, August is the busiest month in Macau, followed by December. Employing data from 2003 to 2014, Deutsche Bank discovered that the seasonality in Macau is far from high with the difference between the slowest and the busiest month being only 2.4 percentage points. In 2003 and 2014, June captured 7 per cent of yearly visitation, while August captured 9.4 per cent. Despite the boom in recent years the trend hasn’t changed. In 2014, August was the month posting most tourists (3 million or 9.8 per cent of the year total) and June with 2.4 million or 7.7 per cent of the year total. For gaming operators, the big question is how the government will manage its ambition of capping the number of tourists at 31 million per year (according to Alexis Tam) while assuring the profitability of the new pipeline of multibillion casino resorts ready to open in the upcoming three years. If all ten new projects in the pipeline open as expected by 2017, Macau will by then have 60 per cent more gaming tables and 50 per cent more hotel rooms than today, Union Gaming says. If the tourist cap is approved, that’s a new supply of 14,500 rooms and 8,600 tables for the same number of tourists as today. Among investors, the expectation for Cotai 2.0 (the new casino inflow until 2017) has already been downgraded with doubts that Macau can become a US$100 billion market by 2020.
September 2008 Mainland Chinese residents with entry-exit permits for travelling to and from Macau and Hong Kong are no longer permitted to enter Macau from Hong Kong October 2008 Guangdong limits individual visas to once every three months September 2009 Guangdong permits residents to apply for a Macau visa once a month (versus once every three months) October 2009 Guangdong tightens visas to visit Macau to once every two months July 2014 Chinese passport holders permitted to stay 5 days (cut from 7) before heading on to a third destination
Seasonality Month as a % of year Month
2003-2014
2014
January
8
7.9
February
8
8.1
March
8.3
8.3
April
8.2
8.4
May
7.9
8
June
7.5
7.7
July
8.7
8.7
August
9.4
9.8
September
7.8
7.6
October
8.6
8.4
November
8.6
8.9
December
9
8.1
Source: Deutsche Bank
Business Daily | 5
March 10, 2015
Macau
Li Gang: Everything rumours before interim review Kam Leong
Liaison Office head Li Gang said none of the rumoured news regarding the gaming licences is true before the review. In addition, he claimed that tourist numbers cannot grow without limit
kamleong@macaubusinessdaily.com
D
irector of the Liaison Office of the central government in Macau, Li Gang, says that all the news regarding the gaming industry, such as the number of licences to be issued in the future, are just rumours. The director told reporters yesterday in Beijing that all the information circulated in the market were only be rumours as the interim review of the gaming industry has not yet started, local broadcaster TDM Radio reported. Asked by reporters whether it is true that the government will issue one more gaming license for a Chinese-subsidised company, Mr. Li said he did not receive any related orders, or discuss the issue with anyone. Meanwhile, the Chinese official indicated that the gaming industry of the Special Administrative Region had entered the period of middle-speed development as the growth rate of the Macau economy had dropped to between some 10 and 12 per cent from the 40 per cent during the high-
speed development of the gaming industry. He perceived that the slowdown in the development is a result of the self-adjustment of the industry. In addition, as many neighbouring regions are also developing gaming businesses, Mr. Li said that they are certainly affecting the gaming industry in Macau. However, he said that the level of influence is dependent upon the ability of the local gaming business, reckoning that there will not be a big loss for the gaming industry here if they can handle the competition well.
“Tourist number cannot grow without limit” Meanwhile, the Liaison Office director remarked that the tourist number of Macau cannot grow without any limits because it would affect the quality of life of Macau residents. Asked about the tourism capacity in Macau, Mr. Li said
there is no confirmed data related to the capacity. However, he reckons that how much the city can afford depends on whether it can increase its resources for tourists. In addition, he indicated that it is a miracle that the city - occupying only 34.4 square kilometres – could receive some 30 million tourists every year. Regarding the Macau Government’s suggestion to improve the current Individual Visit Scheme (IVS) for Chinese tourists, Mr. Li perceives that the government should first decide the scale of tourism development by consulting public opinion. He indicated that only after setting the scale could the government make decisions on whether it should expand, tighten or stay with the current IVS policy. On the other hand, Mr. Li said it is necessary for Macau and the Mainland authorities to sign the agreement on the criminal judicial co-operation sooner, so that the two governments can repatriate
Li Gang
criminals mutually. He denied that Macau and Hong Kong are the key destinations for the Chinese government to pursue corrupt officials that flee from Mainland China.
6 | Business Daily
March 10, 2015
Macau Brands
Trends
Here comes Spring Raquel Dias newsdesk@macaubusinessdaily.com
Sands China increase salaries and wins trademark case
S
ands China announced yesterday that it is increasing the salaries of 26,000 eligible full-time team members by 5 per cent. The hike is effective from March 1, 2015. In a press release, the parent company of Las Vegas Sands, said that the wage increase follows the recent payment of a bonus last
month. “Sands China is very pleased to reward its team members for going above and beyond in delivering excellent customer service and world-class experiences to our guests,” Rob Goldstein, President and Executive Director of Sands China said. “It is their commitment and dedication that
S
pring is on our doorstep and even in grey Macau there are the occasional sunny days accompanied by a nice light breeze. Just before the humid and ultra hot summer arrives, it’s really nice to enjoy a nice day. Designer brands are also getting that Spring feeling ready. It seems this will be a year of light shades, a lot of pastels, neon tones and yes, flowers. You need only take a look at Armani Exchange’s Spring 2015 Collection to see what I mean. The brand claims it has been designed for the active woman to wear at the weekend. The season’s top trends are all here from nautical notes to graphic elements to denim, and colour blocks in soft shades. If you do appreciate the shades but are looking for a more vintage look, you need only visit Coach. Sunset colours inspire the pallet, and you’ll see a lot of soft oranges and mellow yellows. However, the design was definitely lifted from the 70’s. You’ll find everything from bellbottom trousers, killer platforms and yellow toned sunglasses and bangs. Award-winning artist Gary Baseman was commissioned by the brand to create illustrations for the collection. His touch gives the collection the ultimate goofy yet sophisticated touch, perfect for the confident and carefree lady.
allows us to strive for excellence in everything we do.” Sands also won a US$2.2 million (MOP17.6 million) judgment against Asia-based trademark infringers, according to Courthouse News Service, an American website specialising in news for lawyers. However, the problem for the parent company of Sands China is that the infringers will only have to pay if they are identified and that may not happen. So far, U.S. District Judge James Mahan’s ruling identifies the infringers First Cagayan Leisure & Resort, Wann Yichen, and Qing Wan Leng but there are still unknown registrants of 54 websites. The judge ruled that the infringers pay US$2 million (MOP16 million) for using the Sands trademarks and another US$150,000 (MOP1.6 million) for violating copyright. The complaint of Las Vegas Sands was first submitted on 27 June last year to the District Court of Nevada. The American company complained that these websites were using Sands trademark in order to create a false affiliation with the company. The same court had decided before to stop these websites but the identification of the registrants may remain unknown because of the privacy policy of the companies that host these websites. Sands stressed in its complaint that it opposes legalisation of Internet gaming in the United States and is a ‘strong supporter’ of the Coalition to Stop Internet Gambling.
MGTO to train officials from Portuguese-speaking countries
M
acau Government Tourist Office (MGTO) will conduct a training programme with government officials from the Portuguese speaking countries of Cape Verde, Guinea-Bissau and East Timor. The training programme is part of the co-operation of MGTO with the Supporting Office to the Permanent Secretariat of the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries.
In total, 18 tourism government officials will visit Macau in March, April and May for training and undertaking internships at MGTO. According to the Tourist Office, the programme ‘aims to facilitate the trainees to understand the development of Macau’s tourism industry and the daily operation of MGTO, and to reinforce mutual learning and exchange’. The first six trainees will start their training on 16 March, which will last
Corporate GUCCI shop opens in Macau Gucci Timepieces & Jewellery have announced the opening of their first watch and jewellery standalone Shop-in-Shop located in The Venetian in Macao. The new setting is exclusively dedicated to the house’s timepieces and jewellery offering creations that express a luxurious palette of precious collections and sophisticated design. Guests were invited for a private cocktail party in the store and experienced a true atmosphere of luxury, showcasing the newest collections. To celebrate this new opening, a ribbon-cutting ceremony featuring representatives of Gucci Timepieces & Jewellery and The Venetian Macau alongside Charlie Young was organised to mark the official opening of the store. This new location will also debut the latest advertising campaign featuring renowned South Korean actress Gianna Jun. Shot in London by Sølve Sundsbø, the portraits evoke a strong yet minimal aesthetic true to Gucci’s codes of luxury and fashion authority, and completes the atmosphere of the store. The store showcases the latest ranges of timepieces, including the Horsebit, Guccissima and Interlocking collections. Customers will also enjoy the iconic jewellery lines such as Horsebit and Diamantissima. These watch and jewellery art works are the highest manifestation of Gucci’s longstanding tradition of personalised luxury, honouring artisan skills whilst pushing forward the boundaries of modern craftsmanship.
until 27 March. MGTO expects that the training will reinforce mutual learning and exchange between Macau and Portuguese-speaking countries in the tourism area, as well as assist in training tourism professionals from these three countries. MGTO signed the Memorandum of Understanding for co-operation in tourism with Cape Verde, GuineaBissau and Mozambique in 2010, and with East Timor in 2013.
Business Daily | 7
March 10, 2015
Macau
Secretariat for health system infrastructure committee dismissed
T
he secretariat for the follow-up committee of the health system infrastructure has been dismissed from today with its original tasks assumed by the Health Bureau, as suggested by the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, and approved by Macau Chief Executive Fernando Chui Sai On. According to the Official Gazette released yesterday, the CE signed a dispatch to amend that all administration and technical support for the committee will be provided by the Health Bureau from today. Meanwhile, all the staff previously working for the secretariat on non-permanent contracts will be transferred to the Bureau. A press release by the Office of the government spokesperson claimed that the dismissal is due to the Secretary perceiving that it is more appropriate for the Health Bureau to offer administration and technical assistance to the committee
following his evaluation of the work of the committee for a period of time. Meanwhile, according to TDM Radio, the Office of the Secretary says that the dismissal is to fulfill the CE’s policy of simplifying the administration structure. Mr. Tam perceives that the
cancelling of the secretariat will push the construction of medical facilities more effectively. The follow-up committee is to coordinate, follow up and evaluate public investment regulated inside the Health System Infrastructure Improvement Project, which includes the construction of the new Taipa hospital, which Mr. Tam is confident can be finished in 2017 as scheduled. In fact, the committee was originally directly under the CE, but a reshuffle in January made Mr. Tam the president of the committee. In addition, the Secretary for Transportation and Public Works left the committee following the reorganisation. Last month, the secretariat of the urban planning committee was dismissed, arousing suspicion by the public. The Executive Council had to clarify later in a press briefing that the dismissal of the secretariat would not change the function or position of the committee. K.L.
Ho Iat Seng: Tourist numbers will become more even
Parent company of Novo Banco Ásia loses MOP4.1 billion
P
N
resident of the Legislative Assembly (AL) Ho Iat Seng said in Beijing yesterday that Macau’s tourist numbers will be more even per day, following the Mainland authorities’ implementation of the paid-leave system per the Chinese labour law, according to TDM Radio. Mr. Ho, who is a member of the National People’s Congress (NPC), told reporters that the Macau representatives of the NPC and The Chinese People’s Political Consultative Conference (CPPCC) had met with the National Tourism Administration, which is studying the adjustment of Chinese holidays so that they are not all at the same time. This follows Prime Minister Li Keqiang’s suggestion of deepening the paid-leave system in China in his recent work report. The AL president perceives that no place in the world can manage the number of Mainland tourists if they take their holiday at the same period. He also claimed that it is not [enjoyable] travel for tourists if traffic, hotels and sightseeing sites are crowded. Meanwhile, asked by reporters if there is a possibility for Macau to see movements similar to Hong Kong’s Occupy Central, Mr. Ho replied that “Macau does not have a Central,” TDM quoted the AL head as saying. K.L.
ovo Banco, the parent company of Macau-based Novo Banco Ásia, has registered a net loss of 467.9 million euros (MOP4.1 billion) since its creation, in 4 August 2014, to 31 December, the bank announced yesterday. ‘Provisions reached the amount of 699.1 million euros [MOP6 billion], which jointly with the impact accounted in taxes related with the change of the income tax rate, have pressured the results of Novo Banco’, the Portuguese bank explained. However, it was stressed in the results of Novo Banco sent yesterday to the Portuguese Securities Market Commission that deposits recovered by 4.2 billion euros (MOP36.5 billion) in the fourth quarter, which according to the bank underlines ‘the customer’s confidence’ and ‘a return to normality’. In February, the Chief Executive of Novo Banco, Eduardo Stock da Cunha, had already announced that the results would show the difficult period that the bank is going through. Novo Banco was created in August, after Banco Espírito Santo was rescued and split into two. Novo Banco was created with the ‘good’ assets from BES and it controls Novo Banco Ásia, which before was Banco Espírito Santo do Oriente (BESOR). At the moment, Novo Banco is going through an open tender to be sold, with the winner expected to be announced by the end of the first half of the year. J.S.F.
Genting Hong Kong offloading Norwegian Cruise Line shares for MOP2.5 billion
G
enting Hong Kong is going to sell its shares in Norwegian Cruise Line Holdings (NCLH) to UBS Securities for US$316.9 million (MOP2.5 billion), the cruise and resort operator announced yesterday in a filing with the Hong Kong Stock Exchange market. In total, the number of shares of Genting Hong Kong in NCLH was 6.25 million accounting for 2.7 per cent of the company listed in Nasdaq. ‘The Board considers the offering as a good opportunity for the Group to realize profits with cash inflow from partial realization of its investment in NCHL. The Directors believe that the terms of the offering are fair and reasonable, and in the interest of the Company and its Shareholders as a whole’, the Board explained with regard to the decision to accept the offer.
Genting Hong Kong also explained that with this operation the company will gain US$218.2 million (MOP1.7 billion). Last year, NCLH registered a profit of US$338.4 million (MOP2.7 billion), which more than doubled (233 per cent) in comparison to 2013, when the profit was US$101.7 million (MOP813 million). Norwegian Cruise has a net asset value of US$3.25 billion (MOP26 billion). At the same time, UBS Securities also acquired another 6.25 million shares (2.7 per cent) of NCLH from the US private equity firm TPG. Genting Hong Kong has been very active in the market, and last week the company agreed to pay US$550 million (MOP4.4 billion) to Nippon Yusen Kabushiki Kaisha (NYK) for the acquisition of Crystal Cruises in order to enter the high-end cruise market. J.S.F.
8 | Business Daily
March 10, 2015
Hong Kong
Hong Kong protests against day trippers as China mulls action
H
ong Kong protesters rallied against traders who snap up goods in the city to sell in the mainland, as the governor of China’s second-most populous province sought to discourage people from going to the city to buy milk powder. Scuffles broke out between police and protesters at the Tuen Men and Tsim Sha Tsui neighborhoods yesterday, leading to the arrest of six people, the government said. Hong Kong residents are demanding controls on traders, who cross the border to buy necessities in the city to resell in China. The traders are exploiting concerns about safety of products such as milk powder in China, while the protests reflect anxiety that the Chinese are overwhelming Hong Kong and skewing the the cost of goods for locals. It was the fourth week in a row for rallies in areas with transportation links to the Shenzhen border. “The massive influx of day
trippers has created a lot of public outcry,” Kevin Lai, a Hong Kong-based economist at Daiwa Capital Markets, said by phone today. “In many ways the day trippers have also crowded out some of the better, higher spenders.” An influx of Chinese visitors has prompted the city’s government to consider curbs on tourist arrivals. Instead of rich Chinese flying in, the city is seeing an increasing number of visitors with big luggages hoarding up space in its subways, on its buses and on the pavements as they buy shampoo, groceries and medicine. Retail sales in the city fell 14.6 per cent in January from a year ago, with expenditure on luxury items down 21.4 per cent.
Force closures A group of protesters first went to the Sheng Shui district before heading to Tuen Mun, the South China Morning Post said today. Some people rushed into a
jewelry shop and shouted at customers, forcing its closure, the SCMP said. Some pharmacies also shut because of the disruption, the newspaper said. “They shoved police officers at scene, caused disturbances to road users and shops, threw rubbish bins, and attempted to block the road with mills barriers,” the police said in a statement. About 150 people took part, the police said. Protesters chanted “Combat illegal parallel trade” and “Buy mainland goods if you are really patriotic,” according to footage from Hong Kong Cable TV. A second group of about 80 protesters also caused disruption around the Tsim Sha Tsui area, the police said. On Saturday, the governor of China’s Shandong called on those from the province not to go to Hong Kong for milk powder, which is popular with Chinese tourists concerned about food safety that it’s sparked anger among
Hong Kong residents who say local supplies are being sapped.
Creating pressure Guo Shuqing told a meeting of Shandong delegates to the nation’s legislature that he didn’t want to see too many tourists from the coastal province visiting Hong Kong. Shandong was China’s second-most populous province in 2013 with 97.3 million people, according to government data. “Shandong has a big population and we don’t want to see too many individual tourists creating pressure for Hong Kong,” Guo said Saturday. “Especially we don’t want to see Shandong people running to Hong Kong to buy milk powder. We promise Shandong people won’t go there scrambling for milk powder.” Chinese shoppers have favored milk powder from abroad after contaminated baby formula killed at least six infants and sickened
thousands of others since 2008. In 2013, Hong Kong imposed a limit of two 2-pound cans apiece on outbound travelers. Hong Kong’s Chief Executive Leung Chunying said Friday that China would look into the impact of visitors on the city. On Saturday, Chinese Commerce Minister Gao Hucheng said the government is aware of “new problems” with crossborder visits and will optimize its Hong Kong tourism policy, at a briefing during the National People’s Congress in Beijing. Tourists from mainland China rose 16 per cent to 47 million in 2014 from a year earlier, according to the Hong Kong Tourism Board. Day trips accounted for a record 60 per cent of these, compared with 38 per cent in 2006. Public discontent over the rising number of Chinese tourists have boiled over in the past, as when Hong Kong newspapers referred to mainland Chinese as locusts. Bloomberg
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Greater China
More efficient business system to stimulate market
Industrial Bank plans to buy brokerage Huafu
Statistics show individual businesses and private firms have created more than 250 million job opportunities
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hina will continue to reform its business system to ease government regulations for companies and inject vitality into the market, Zhang Mao, minister of the State Administration for Industry and Commerce (SAIC), said yesterday. “Chinese authorities will continue to streamline administration, delegate more powers to lower levels so as to give the market and society more play in economic development, and ease regulations for businesses,” Zhang said at a press conference on the side-lines of the national legislature annual session. China this year will further simplify the process for entrepreneurs to register or nullify their businesses, give companies more decision-making power to choose their business scopes, he said. China needs to develop “twin engines” to drive development, popular entrepreneurship and mass innovation, paired with increased supplies of public goods and services, Premier Li Keqiang said in the government work report at the National People’s Congress annual session. Although China’s broader economy is slowing, entrepreneurs are driving a wave of start-ups that
Zhang Mao, Chinese Minister of the State Administration for Industry and Commerce, answers questions during a press conference on the sidelines of the ongoing Third Session of the 12th National People’s Congress
become a bright spot for the economic landscape and an important engine for future growth. China’s economic growth slowed pace to 7.4 percent in 2014, its weakest annual expansion
since 1990. Amid the government reforms to cut red tape and simplify approval procedures, about 10,500 new enterprises are registered every day, a spike from the number of nearly 7,000 before the business system reform kicked off in March 2014, Zhang said, adding that 94 percent of the newly registered enterprises are individual businesses or private firms. SAIC statistics showed that individual businesses and private firms have created more than 250 million job opportunities. Moreover, the newly registered foreign-funded companies snapped the declining trend for two consecutive years to post a solid increase in 2014, and about 78 percent of the newly registered companies last year were in the tertiary sector, evidence of the improvements of economic restructuring, he said. Zhang also stressed efforts would be laid this year on establishing a credit system for companies, setting up a system to blacklist market rules offenders and enhancing information sharing between market watchdogs, to create a fair environment friendly to competition. Xinhua
Developer Kaisa’s haircut proposal avoids worst scenario The company said it would propose amendments to its offshore loans
China’s Industrial Bank Co. plans to acquire brokerage Huafu Securities Co., people familiar with the matter said, as the securities regulator considers allowing lenders into the industry. Industrial Bank has submitted its proposal to the State Council, the people said, asking not to be identified as they aren’t authorized to speak publicly. Huafu’s Communist Party committee has moved its office into the lender’s headquarters in Fuzhou city in Fujian province, two of the people added.
Taiwan faces deflation as CPI contracts
They recorded deflation for two consecutive months this year, a similar pattern to the annual price declines of 2009 during the global financial crisis, Taiwan’s statistical agency said yesterday. The Consumer Price Index (CPI), a core measurement of inflation or deflation, dipped 0.19 percent year on year in February, following a year on year decline of 0.94 percent in January. For the first two months of 2015, the CPI fell 0.56 percent year on year, according to the agency. Meanwhile, the Wholesale Price Index (WPI) recorded its deepest decline in almost 65 months in February.
Adviser see no need for stimuli China should not roll out big stimulus measures to spur the slowing economy and the government cannot rely too heavily on monetary policy, a central bank policy adviser said yesterday. Qian Yingyi, a member of the central bank’s monetary policy committee, said during the annual meeting of the country’s parliament that the use of short-term stimulus could exacerbate distortions in the economy.
Umesh Desai
Glaxo workers laid off to protest
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debt restructuring plan put forward by Chinese developer Kaisa Group Ltd has steered away from a doomsday scenario for creditors painted in an earlier report, offering an implied haircut that is severe but not too far off current market prices. Mired in crisis after the local government in its home base of Shenzhen blocked sales at some of its projects last year, Kaisa needs to get bondholders to agree to its proposals or risk becoming the first Chinese property company to default on offshore debt. Two interest payments are due this month. Failure to secure an agreement as planned by end March could also scupper its main lifeline - a proposed takeover by rival developer Sunac China Holdings Ltd, which has set a July 31 deadline. Under Kaisa’s plan for US$2.5 billion of its offshore and convertible debt, the maturity on six sets of bonds due each year through to 2020 would be extended by five years and coupons would be slashed. There would, however, be no reduction in principal. For example, US$800 million of bonds originally due in 2018 would
now be due in 2023 and the coupon would be cut to 5.2 percent from 8.875 percent. “This is potentially a good outcome for the sector,” said Charles Macgregor, Asia head at credit research firm Lucror Analytics. “Indications are that the haircut will be limited to 50 percent rather than almost 100 percent as suggested by Deloittes.” A report by advisory firm Deloitte Touche Tohmatsu, which was hired by Kaisa, concluded that offshore creditors in a liquidation scenario would only receive 2.4 percent of what they were owed. “We should not expect more generous terms than this for offshore creditors given that there is no collateral and these bonds are structurally subordinated,” said Eric Liu, investment manager at Aberdeen Asset Management. His fund does not own Kaisa bonds. Kaisa has also offered an additional 50 basis points coupon incentive for all the bonds if more than half of the holders of its straight bonds and 66 percent of the holders of its convertible bonds agree to the proposal. The company said it would propose
amendments to its offshore loans, although details were not revealed. But some fund managers said the proposal was not a best case scenario either and developer’s bonds slipped 4-8 points on Monday. Its shares fell 1.2 percent to HK$1.61. They have lost 16 percent since resuming trade in early February after being suspended for more than a month. China’s government has not explained why sales have been blocked in Shenzhen but the Kaisa case has been linked to the country’s crackdown on corruption, according to newspaper reports. Liquidity constraints came to the fore when Kaisa missed a deadline for a US$26 million coupon payment in January. It narrowly dodged default by making the payment within a 30day grace period. The two coupon payments are due this month are US$16 million on its 2017 bond and US$35.5 million on a 2018 bond. Kaisa said it had “unrestricted cash” of 566 million yuan (US$90 million) at end 2014 versus debt of 29.8 billion yuan due in the coming year. Reuters
GlaxoSmithKline employees who were laid off in China last week plan to protest their removal, according to a statement issued by the workers. At least 135 employees dispute the London-based drug maker’s decision to fire them and about half plan to take their complaint to Chinese labour authorities, said Li Kunhua, one of the workers. Glaxo on Friday said that it took disciplinary action against employees for misconduct that had taken place before mid-2013 in China. At least 110 workers were fired in the Asian nation, people with knowledge of the matter said.
More China-Milan flights Chinese and Italian Airlines will increase flights between China and Milan ahead of the World Expo 2015, slated to be held in the Italian city from May 1 to October 31. Air China has increased flights to Milan to 14 times per week, with planes taking off from Beijing and Shanghai each day. The Airbus A330-200 flights are numbered CA949/50 and CA967/8, respectively. Starting May 1, Alitalia Airlines will launch a new flight linking Milan and Shanghai until the end of the Expo.
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Greater China
International payments system ready The system was expected to be launched in 2014 but was delayed by technical problems Michelle Chen and Koh Gui Qing
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hina’s long-awaited international payment system to process cross-border yuan transactions is ready and may be launched as early as September or October, three sources with direct knowledge of the matter told Reuters. The launch of the China International Payment System (CIPS) will remove one of the biggest hurdles to internationalising the yuan and should increase global usage of the Chinese currency by cutting transaction costs and processing times. The system, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of networks and allow hassle-free renminbi transactions. “The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks,” said a senior banking source who is involved in the matter. “The official launch will be in September or October, depending on the results of the testings and preparation,” the source said. A second source with direct knowledge of the matter said authorities want to launch the first phase of CIPS before December. “It’s not a plan but we are trying our best to have the first phase (of CIPS) online before the end of this year,” said the source, who declined to be named because he is not authorised to speak to the media. “If it’s all smooth, (the launch) will be in September or October. If there is a need for a bit more time, we are still confident about (rolling
KEY POINTS China looking at launching in Sept or Oct Twenty banks selected to test system Expected to increase global yuan usage
it out) before the year-end,” he said. The system was expected to be launched in 2014 but was delayed by technical problems, with most market participants anticipating it would not come on stream before 2016. Currently cross-border yuan clearing has to be done either through one of the offshore yuan clearing banks in the likes of Hong Kong, Singapore and London, or else with the help of a correspondent bank in mainland China.
The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through. China’s yuan became one of the world’s top five payment currencies in November 2014, overtaking the Canadian dollar and the Australian dollar, according to global transaction services organisation SWIFT. Global yuan payments increased
by 20.3 percent in value in December compared to a year earlier, while the growth for payments across all currencies was 14.9 percent for the same period, SWIFT said. China has accelerated the pace to internationalise its currency in recent years. The central bank assigned 10 official yuan clearing banks last year, bringing the total number to 14 globally that can clear yuan transactions with China. Reuters
Online commerce to be strictly regulated Alibaba executive chairman Jack Ma met with Minister Zhang on January 30, drawing a line under the quarrel by mutual concession
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hina’s market regulator said yesterday the government will strictly regulate online commerce, amid a heated public dispute over China’s largest online shopping platform Taobao.com which was found to match-make transactions of a great number of shoddy commodities. E-commerce platforms have to take “key responsibilities” for promoting “credibility and integrity,” Zhang Mao, minister of the State Administration for Industry and Commerce (SAIC), said at a press conference on the side-lines of China’s annual parliamentary session. Underlining that the Internet is not a “lawless heaven,” Zhang said government regulators would take more measures on protecting the legitimate rights of online shoppers, including proposing new legislative bills and building up online database for stricter supervision over e-commerce. Results of a SAIC sample test released on January 23 showed that only 37.25 percent of surveyed
commodities sold on Taobao.com were authentic, lower than a 58.7-percent average of major online shopping platforms. The U.S.-listed online business giant Alibaba, which runs Taobao, butted heads with the SAIC over product quality after the release of
the findings. “The reason why there are so many market violations is that the cost of breaking rules is too low,” Zhang said when taking a question on the Taobao dispute, adding that the market will fundamentally improve if companies find such costs unaffordable.
China’s online sales volume surged 50 percent year on year to reach 2.79 trillion yuan (about US$450 billion) in 2014, accounting for about 10 percent of the country’s total retail sales. Zhang admitted that the SAIC should take a new approach to regulate booming sectors such as online commerce. The SAIC will communicate with e-commerce and ICT firms in a better way, Zhang said. “Listen to them, provide guidance for them and demand their self-discipline.” He also said companies and the regulators should cooperate more, adding that the SAIC and some e-commerce firms have agreed that the market must be regulated so that online shopping could continue developing. According to its financial report, Alibaba registered a 40-percent growth in its fourth-quarter revenue to reach 26 billion yuan. Sales on its Tmall and Taobao reached 787 billion yuan in the same period. Xinhua
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Asia Bank of Japan headquarters
Japan’s growth revised down Business investment drops keeping Bank of Japan pressured Stanley White
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apan’s economy grew much less than initially thought in the fourth quarter as capital expenditure declined in a worrying sign that a rebound in consumer spending is not encouraging business investment. The revised fourth quarter data joins a mixed batch of indicators over recent months that underscore a fragile recovery from a recession, which analysts say could pressure the Bank of Japan to inject fresh stimulus later this year to meet its inflation goal and beat back years of falling prices. The economy grew an annualised 1.5 percent in October-December, Cabinet Office data showed yesterday, down from a preliminary reading of an annualised 2.2 percent expansion and below the median estimate for 2.2 percent growth. Consumer spending in the fourth
KEY POINTS Q4 GDP revised to annualised +1.5 pct vs prelim +2.2 pct Capex -0.1 pct vs preliminary +0.1 pct Data confirm escape from recession, but challenges abound for BOJ
quarter was revised up, showing some parts of the economy are improving. However, weak capital expenditure suggests Tokyo’s policy mix of fiscal and monetary expansion and structural reforms have so far failed to generate a virtuous cycle of higher consumption driving corporate earnings, wages growth and business investment. “One reason for the disappointing capex is the shift in production overseas that has been happening for the past few years,” said Norio Miyagawa, senior economist at Mizuho Securities. “I still expect the economy to continue to grow, but the virtuous economic cycle that policymakers have been talking about really hasn’t fallen into place yet.” On a quarter-on-quarter basis, the economy grew 0.4 percent in the fourth quarter, compared with a preliminary
reading of 0.6 percent increase and expectations of 0.6 percent. Fourth quarter GDP growth was mainly undermined by weak business investment and inventories. Capital expenditure fell 0.1 percent from the previous quarter, less than a preliminary 0.1 percent increase and less than the median estimate for a 0.3 percent expansion. The immediate outlook for capex may not look rosy either, as a Reuters poll forecast machinery orders to have fallen 4.1 percent in January from the previous month, after having risen 8.3 percent in December, the fastest pace in six months. Consumer spending, which is crucial to achieving policymakers’ aim of spurring sustainable economic growth, rose 0.5 percent, more than a preliminary 0.3 percent increase. Other data this year on consumer spending has been less convincing, and there are lingering doubts whether the BOJ can achieve 2 percent inflation sometime around next fiscal year starting from April. Economic growth is expected to accelerate in the current quarter to a 2.4 percent annualised expansion, according to a Reuters poll, but some economists have doubts whether this pace can be sustained. Reuters
New Zealand wants to avoid rate rises New Zealand Reserve Bank will keep the official cash rate unchanged according to a survey Tracy Withers and Matthew Brockett
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ew Zealand’s central bank is probably investigating new tools to slow housing demand because it is unable to raise interest rates in a low-inflation environment, Prime Minister John Key says. The Reserve Bank said last week it was seeking views on how to define property investment loans, adding to signs it may tighten rules in an attempt to cool surging house prices. Key said he hadn’t been briefed on the issue by the RBNZ while a spokesman for the central bank declined to comment.
“It’s clearly trying to ensure there’s not a bubble emerging in the housing market,” Key told reporters in Wellington yesterday. “It’s doing so in such a way that it’s not having to lift interest rates.” The central bank, which introduced limits on low-deposit mortgage lending 17 months ago, has said it’s concerned about Auckland’s housing market, where a shortage of properties saw prices soar 13 percent in the year through February. It has refrained from raising borrowing
costs as a slump in oil prices and a 2.2 percent gain last year in the New Zealand dollar on a trade weighted basis have pushed inflation below its 1 percent to 3 percent target band. “Given you’ve got inflation at 0.8 percent, and I think potentially lower, then I think you’ve got a scenario where it’s not an option for the bank to raise interest rates, so it does have to find other ways” to curb housing demand, Key said. Governor Graeme Wheeler will keep the official cash rate unchanged at 3.5 percent on March 12, according
It’s clearly trying to ensure there’s not a bubble emerging in the housing market John Key New Zealand’s Prime Minister
to 14 of 16 economists surveyed by Bloomberg News. Two forecast a cut. Consumer prices rose 0.8 percent in the fourth quarter from a year earlier. “There doesn’t appear to be any upward pressure in inflation,” said Key. “I wouldn’t be surprised, with everything I see, that inflation is lower. Look at oil prices.” Bloomberg News
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Asia S.Korea growth slower than expected South Korea’s export growth is weaker than the government had expected, its finance minister said yesterday, adding more efforts were needed to boost the fledgling recovery in Asia’s fourth-largest economy. “The economy is getting better but the speed and strength are weak,” Finance Minister Choi Kyung-hwan told reporters after a visit to a highway construction site in Seoul. “We need structural reforms to escape this weakness as the problems stem from structural problems that have accumulated over time, but additional efforts to bolster the recovery should also go in hand.”
Modi’s US$1 trillion plan revives tax-free rail debt While India’s infrastructure has improved over the past decade, more work is needed
Myanmar president to visit Malaysia Myanmar President U Thein Sein will pay a state visit to Malaysia soon, said an official announcement yesterday without giving specific date of his trip. It will be the first visit of a state leader of Myanmar to the Southeast Asian member nation in decades at the invitation of Malaysian King Almarhum Sultan Badlishah. In March 2012, Malaysian Prime Minister Najib Tun Razak visited Nay Pyi Taw with the two sides then reaffirming their commitment to consolidate the existing bilateral relations and strived for greater cooperation between the two countries in strategic areas of mutual interest.
New Zealand wine exports rise Wine exports jumped by 8.2 percent last year to total NZ$1.37 billion (US$1.01 billion), the New Zealand Winegrowers (NZW) industry body announced yesterday. Wine was now New Zealand’s sixth biggest export, up from eighth in 2013, NZW chief executive office Philip Gregan said in a statement. Demand was strong in key markets and the dry southern summer looked set to produce a high-quality 2015 vintage. The 2014 grape harvest was up 29 percent on the previous year to 445,000 tonnes, NZW announced in June last year.
Speculators pressure cafe market Vietnamese speculators are stashing away bags and bags of robusta, a caffeine-rich bean used in instant coffee and blends. The hoarding, the scale of which traders have never seen before, has cut exports and threatens to deepen a global deficit. People in the market say that in recent weeks speculators - ranging from traders in fertiliser and petrol to government employees with idle funds - have been stocking up on beans whenever prices dip below psychologically key levels. The hoarding may cut Vietnam’s international robusta shipments in March for the second consecutive month, worsening a wider shortage.
BOJ must act if oil falls The Bank of Japan must ease monetary policy further if oil price falls hamper its efforts to ramp up inflation expectations, its deputy governor said, stressing the central bank’s readiness to top up stimulus to hit its ambitious inflation target. But Hiroshi Nakaso also said oil price falls alone will not immediately lead to further action because the BOJ is focusing on whether inflation is accelerating as a trend backed by a solid economic recovery.
India’s railway network needs deep changes
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ndia’s decision to allow tax-free bonds after a 12-month hiatus should cut borrowing costs for a US$1 trillion development push. Finance Minister Arun Jaitley said in his budget speech last month that tax-free bond sales to individuals for rail, road and irrigation projects will be permitted from April 1. While issuance wasn’t banned as such this fiscal year, offerings halted because no quotas were allocated. Asia’s third-largest economy plans to spend about 8.5 trillion rupees (US$137 billion) upgrading its antiquated rail network over the next five years, budget documents released in New Delhi show, as it seeks to support economic expansion as fast as 8.5 percent next year. A second international airport for Mumbai is in the works, as is a dedicated rail transport corridor for freight between Delhi and Mumbai, the nation’s two largest cities.
500 billion rupees. India is ranked 87 out of 144 nations by the World Economic Forum for infrastructure quality, below war torn Ukraine and 25 spots below Kazakhstan, which has roughly the same land mass.
Lower coupons Other measures have been introduced to help spur infrastructure spending too. The Reserve Bank of India eased rules for banks in July to make it easier to sell longer-dated debt whose proceeds will be used for affordable housing. The central bank also exempted bank bonds maturing
Tax-free quotas Spending on infrastructure will increase by 700 billion rupees in the coming fiscal year, Jaitley said, part of a US$1 trillion plan to improve India’s highways, harbours and power plants between 2012 and 2017. Prime Minister Narendra Modi’s government forecast a wider budget deficit than projected on February 28 and said better infrastructure will be key to achieving growth of 8 percent to 8.5 percent in the coming fiscal year. Indian Railway Finance, the funding unit of Asia’s oldest rail network, had a tax-free bond sale quota of 100 billion rupees in the 12 months ended March 31, 2014. State-owned companies raised at least 400 billion rupees via tax-exempt debt that year, when the government of former Prime Minister Manmohan Singh set a quota for companies of
The government’s thrust is on building infrastructure and it wants to raise money through all possible avenues Vibha Batra head of financial industry ratings ICRA - Moody’s Investors Service
in seven years or more from reserve requirements so long as sale proceeds are for highways, harbours and power plants. Indian Railway Finance last sold tax-free notes in February last year. It paid an 8.19 percent coupon for the notes due March 2024, versus a weighted average fixed coupon on all its rupee-denominated debt of 8.33 percent, according to data compiled by Bloomberg. NTPC Ltd., which operates power plants that supply state electricity boards, also sold taxfree notes in February 2014, raising 5 billion rupees via a three-part sale. It’s also paying an 8.19 percent coupon for 10-year debt, 98 basis points less than similar maturity securities it sold in September. Other issuers of tax-free bonds have included Cochin Shipyard Ltd., a boat builder in India’s south, New Delhibased Housing & Urban Development Corp., which helps finance urban infrastructure projects, expressway builder National Highways Authority of India, and Rural Electrification Corp., which funds power projects. Yields on top-rated 10-year corporate bonds have fallen 23 basis points this year to 8.36 percent, Bloomberg-compiled data show. The rupee has appreciated 1.4 percent against the dollar, making it Asia’s best-performing currency. Modi unveiled plans in July last year for a high-speed bullet train between Mumbai and Ahmedabad, a main city in the neighbouring state of Gujarat. Bigger airport terminals for New Delhi and Mumbai have already been completed, as has an upgraded highway between Delhi and Agra, home to the Taj Mahal. Borrowing costs should drop further after the RBI eased last week, Rural Electrification’s Agarwal said. Governor Bloomberg News
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Asia
Robot panel aims to give drone industry an edge in Japan Teppei Kasai
The Japanese have been using drones in the farming industry since the 1980s
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he government of Japan, a country with a proven track record in electronics and robotics, is looking to fast track industry-friendly regulation to give its drone sector an edge over the United States. Companies from motorcycle maker Yamaha Motor to security firm Secom Co are readying drone technology and services, as advisers to Prime Minister Shinzo Abe drive a regulatory overhaul. The Robot Revolution Realization Committee, an advisory panel appointed by Abe, will review existing radio and civil aeronautics laws and set up industry-run best practice for drones. Another panel is asking companies for ideas on how to open up new special economic zones in Tokyo and other big cities to drones on a test basis. The Fukushima area, blighted by the 2011 tsunami and nuclear disaster, could also become a “field test zone” for robots and drones, largely free of regulation. “We want to keep an eye on the world’s drone market, starting with the United States, and consider Japan’s way of doing things,” said Tamotsu Nomakuchi, who heads the robot panel. “It’s not about copying other markets, but learning about them and creating something better.”
“Year one” The only aviation regulations covering drones in Japan require that they fly below 150 meters and at least 9 kms away from airports.
We want to keep an eye on the world’s drone market, starting with the United States, and consider Japan’s way of doing things Tamotsu Nomakuchi robot panel head
Drones used in agriculture need two operators, with precautions for the surrounding environment. Japan has been using drones in its farming industry since the 1980s, when an unmanned Yamaha R-50 helicopter took to the air to spray pesticide on rice crops. Today, more than 2,500 agriculture drones are in operation. Yamaha is now looking to adapt its drone technology for patrolling Japan’s borders or for checking oil and gas pipelines, spokesman Kinji
Ootsuki told Reuters. Secom will this month launch a service for small businesses that includes having a surveillance drone that can be scrambled to take photos of an intruder when an alarm sounds. Spokeswoman Asuka Saito said the company also wants to pitch its security drones for use at the 2020 Tokyo Olympics. And Ricoh Co Ltd, an office equipment maker, has been testing its digital cameras on drones to monitor
Koreans change BMWs for Maseratis Imported luxury vehicles were relatively scarce in S. Korea before a trade deal which took effect in 2011
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lashy Maseratis and Bentleys are fast becoming the cars of choice for young, moneyed South Koreans, eclipsing German luxury brands now so commonplace that some in Seoul’s upscale Gangnam district jokingly refer to a BMW 5-series as a Hyundai Sonata. Driving the sales of sixfigure plus cars is a growing acceptance of conspicuous
consumption in the conservative home of Hyundai Motor Co, where more younger, affluent Koreans are turning their backs on their parents’ frugal ways. “While our parents saved a lot in the past, younger people nowadays spend on things they can enjoy,” said chef-restauranteur Song Jihoon, who last year sold his Mercedes-Benz CLS to buy a Maserati Ghibli.
Last year, the Seoul dealership of Volkswagen unit Bentley Motors was the top global seller of Flying Spur sedans, which start at just under quarter of a million dollars. The outlet, in Gangnam, ranked second in overall sales behind one in Dubai. South Korea is also the seventh-largest market for Fiat Chrysler’s Maserati, which saw sales increase
crop growth in field tests, said new business development manager Wataru Ohtani. Partly due to the lack of regulations for outdoor test flights, Ryo Konomura, one of the founders of Tokyo University’s Phenox Lab, developed an indoor drone with artificial intelligence capability. Japanese drone industry supporters have dubbed 2015 “Year One of the Era of the Drone.”
five-fold last year to a record 723 cars after the brand introduced its Ghibli sports sedan, which starts at around US$90,000. Imported luxury vehicles were relatively scarce in South Korea before a trade deal which took effect in 2011 unleashed an influx of highend mainstream German cars from the likes of BMW , Audi AG, and Daimler AG’s Mercedes-Benz. While South Korea is the 11th largest car market, it ranks in the top four for certain top-end models such as Audi’s A8 and the Mercedes-Benz S Class line, according to the companies. Sales of imported vehicles priced above 100 million won (US$91,100) grew by a third in 2014 from a year earlier to 14,975, the Korea Automobile Importers and Distributors Association says, a figure that excludes Maserati, Lamborghini and Ferarri, which are not association members. Sales of foreign brands priced 150 million won (US$136,339) and above nearly doubled last year, as more wealthy drivers sought “ultra-premium” cars to flaunt their status, a trend mocked and celebrated in Psy’s 2012 hit song “Gangnam Style”. “There is a strong me-
Reuters
too-ism in Korea. People follow what other people are buying,” said Andy Bae, senior analyst at automotive research firm IHS, which expects South Korea’s ultraluxury car market to grow 45 percent by 2017. South Korea’s overall car market grew 8 percent last year. The number of South Koreans with assets exceeding 1 billion won doubled to about 167,000 in 2013 from five years earlier, according to KB Research. This rising wealth, coupled with younger peoples’ desire to stand out in a traditionally conformist society, is encouraging luxury automakers. Koreans are also marrying later and often rely on parents for housing, leaving many with the means to splash out on flashy purchases. Some ultra-luxury cars owners, however, prefer discretion. A businessman in his 40s, who did not want to be identified, said he bought a blue Ferrari 355 Spider to enjoy on weekends. He also owns a Porsche and a Maserati, but drives a Hyundai SUV to work every day. “People are looking at my cars,” he said. “But my employees do not know.” Reuters
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International Bank of France cuts growth forecast The French economy is on course to grow 0.3 percent in the first quarter, the Bank of France said in its latest business survey yesterday, revising down its forecast from an earlier 0.4 percent. The central bank’s business sentiment indicator showed a slight cooling in February to 96 from 98 in January, while sentiment in the services sector rose to 92 from 91. “Business leaders expect a more marked increase in industrial activity in March,” it noted, adding that they also saw a strengthening of activity in services this month.
WPP enjoys strong January Britain’s WPP, the world’s biggest advertising company, said it had seen strong trading in January after reporting 2014 results broadly in line with forecasts due to strong growth in North America and Britain. WPP said like-for-like net sales in January were up 3.9 percent, ahead of the 3.3 percent growth it recorded for the full 2014 year. For 2015 it said it would target net sales growth of over 3 percent.
Brazil secures car quota extension with Mexico Brazil has negotiated the renewal of its car quota treaty with Mexico, Brazil’s foreign ministry said, trumpeting a deal designed to protect its struggling automotive sector. The original 2012 treaty imposed tariffs of up to 35 percent on exports above an annual limit of about US$1.5 billion, with free trade of vehicles allowed after its expiration on March 19 this year. The two countries have now agreed to renew the treaty for four years, a Brazilian foreign ministry spokesman said, adding that the quota amount and other details will be released in a press briefing with authorities from both countries.
Berlusconi breaks with Renzi over reforms Italy’s four-time ex-Prime Minister Silvio Berlusconi confirmed his party would not support the government’s proposed constitutional reforms as he sought to hold his party together and reclaim his leadership of the centre-right. On Tuesday the lower house of parliament, where Prime Minister Matteo Renzi commands an ample majority, is scheduled to vote on a proposal to shrink the Senate and remove its power to block laws. The measure, aimed at streamlining the law-making process and creating more stable governments, is one of two main reforms Berlusconi had been supporting.
Air travel “safer” in 2014 Last year was by some measures the safest in the history of commercial aviation, despite two high-profile crashes involving Malaysia Airlines aircraft in which hundreds of people were killed, a leading industry body said yesterday. While more people died in air accidents in 2014 than the average in recent years, the number of fatal accidents compared with the total number of flights was a record low, according to the International Air Transport Association (IATA).
Germans fuel economy with spending spree German unemployment is now at 6.5 percent, its lowest rate since reunification in 1990
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ales of new kitchens are up more than 10 percent already this year at German kitchen maker Haecker. For those who would rather someone else did the cooking, roasted monkfish and turbot with truffles are flopping onto plates at Berlin’s Michelin-starred restaurant Fischers Fritz. A blizzard of corporate good news shows that famously frugal Germans are now snapping up soccer shirts from Adidas and electronics from retail chain Media-Saturn. With interest rates on savings low, unemployment falling, oil prices sliding and pay rises outpacing inflation, economists say German consumers have finally woken up and are likely to keep on spending through 2015. Markus Sander, marketing head at Haecker, a family firm with more than 1,200 employees, said Germans were now splurging on high-end kitchens - many costing more than a new car because low interest rates made saving unattractive and loans cheap. At Fischers Fritz, where main courses set diners back up to 90 euros, turnover soared by 10 percent last year. Head chef Christian Lohse said people hosting events were now ordering delicacies like trout caviar, not staples like sausage.
Frugality still prized Frugality is still a prized national trait, and Germans still saved 9.2 percent of their disposable income on average last year. But while that figure is high by global standards, it was Germany’s second lowest since 2000. There are many signs that spending could increase further still this year, welcome news to struggling countries across the euro zone who have long complained that Germans hold back the rest of the bloc’s growth by buying less than they make.
German workers have secured the highest negotiated wage increases in two decades. A dramatic drop in energy prices is putting more cash in pockets too. Household spending’s contribution to growth in Europe’s largest economy rose at its strongest rate in three years in 2014 and it made up more than half of Germany’s national output last year. Along with resurgent investment it has eclipsed Germany’s legendary exports as the main driver of growth. The government expects the economy to expand by 1.5 percent this year, but others say that is an understatement. Insurer Allianz has raised its forecast to 2.1 percent from 1.6 percent, which would see Germany motoring ahead of the wider euro zone. Bundesbank President Jens Weidmann has described the fall in global energy prices as a small economic stimulus package freeing up cash for consumers to spend on other items. Last month IG Metall, Germany’s biggest trade union, secured an inflation-busting 3.4 percent wage increase that will likely benefit 3.7 million workers. Retail sales posted their biggest monthly increase in seven years in
KEY POINTS Normally frugal Germans splash out on kitchens, dining Consumers boosted by job market, high wages, cheap oil Morale among shoppers highest in more than 13 years January and industry association HDE expects them to increase for a sixth consecutive year in 2015, with 1.5 percent growth. Consumers are shelling out on bigticket items such as cars, furniture and appliances like refrigerators, televisions and dishwashers. Others are treating themselves to smartphones, long-haul trips and cruises or renovating their homes. The surge in spending is likely to outlast weak oil prices due to low joblessness and expectations of bigger pay checks, said Christian Odendahl, chief economist at London’s Centre for European Reform. Reuters
U.S. crude prices to drop to S$40 a barrel Goldman said that Brent prices would also come under renewed pressure
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il prices will reverse their recent gains as global crude inventories begin to increase again, with U.S. crude likely to drop as far as US$40 a barrel in the nearterm, Goldman Sachs said. Oil prices rose by almost a third between January and February on the back of Middle East supply disruptions, strong winter demand and high refinery margins. That followed a rout that had seen price falls of around 60 percent between June 2014 and January this year. But Goldman said that “the activity pull is sequentially weakening” and that global crude inventories would therefore rise, pushing West Texas Intermediate (WTI) crude to US$40 a barrel, levels last seen at the peak of the global financial crisis in late 2008, early 2009. “While we continue to forecast a strong demand recovery in 2015,
KEY POINTS Strong build in U.S. stocks at Cushing surprised -Goldman Brent prices will also come under renewed pressure Weakening Asia demand will drag on Brent OPEC disruptions are main upside risks to outlook we believe that sequentially weaker activity, the end of winter and the end of potential restocking demand, will lead to a sequential deceleration in demand-growth as we enter the spring,” the bank said.
The bank said that it expected “OECD Asia demand to decline in 2015 as stronger industrial production is offset by the continued switch to LNG (liquefied natural gas) for power generation and the impending startup of the two Sendai nuclear reactors in Japan”. A two-thirds drop in Asian LNG prices is making the fuel cost competitive against oil in the industrial power sector. In Japan, the regulator has given approval for several reactors to be restarted this year. All its 48 reactors were taken offline after the meltdowns at the Fukushima Daiichi plant following an earthquake and tsunami in 2011. In the United States, Goldman said that “the build in U.S. inventories has surprised to the upside, especially in Cushing”. Reuters
Business Daily | 15
March 10, 2015
Opinion Business
wires
A fair hearing for sovereign debt
Leading reports from Asia’s best business newspapers Joseph E. Stiglitz
THE KOREA HERALD
Nobel laureate in economics, is University Professor at Columbia University
Despite growing pressure for a rate cut, South Korea’s central bank is expected to hold steady on growing concerns over household debt and delay any move until next month when it releases the latest economic outlook, analysts said yesterday. Fourteen of the 18 analysts surveyed by Yonhap Infomax, the financial news arm of Yonhap News Agency, projected the Bank of Korea (BOK) to keep the base rate unchanged at its policy meeting scheduled for Thursday. If the forecast is on track, it will extend the BOK’s wait-and-see approach to a fifth consecutive month.
Martin Guzman
Postdoctoral research fellow at the Department of Economics and Finance at Columbia University Business School
VIETNAM NEWS Credit activities have developed strongly in the first months of the new year, a positive sign for the economy’s recovery, independent market observers have said. The economy’s credit growth as of February 24 rose by 0.96 per cent compared with the figure recorded late last year, according a source from the Ministry of Planning and Investment. Meanwhile, another source said the credit grew by 1 per cent by February. Analysts said these were surprising changes because the country showed negative credit growth in the first few months of previous years.
THE TIMES OF INDIA The Union Budget proposes to take away regulatory power of the Reserve Bank of India over secondary market trading in government securities and move it to the Securities and Exchange Board of India. This is in addition to ending RBI’s role as the government’s merchant banker by creating a Public Debt Management Agency. These measures and other proposals such as amendment to Foreign Exchange Management Act to shift regulation-making power on equity-related capital flows to the government leave the RBI with a much smaller turf.
THE AGE The number of job advertisements grew for the ninth consecutive month in February, according to Australia and New Zealand Banking group, but actual jobs are probably still being shed in industries such as mining and manufacturing. ANZ said yesterday its latest survey of online and newspaper employment ads grew 0.9 per cent in February in seasonally adjusted terms. Year-on-year growth is running at 9.8 per cent, although the rate of growth has slowed from the previous two months. Online advertising grew 0.7 per cent month-on-month, and 10.7 per cent for the year, according to ANZ.
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ast July, when United States federal judge Thomas Griesa ruled that Argentina had to repay in full the so-called vulture funds that had bought its sovereign debt at rock-bottom prices, the country was forced into default, or “Griesafault.” The decision reverberated far and wide, affecting bonds issued in a variety of jurisdictions, suggesting that US courts held sway over contracts executed in other countries. Ever since, lawyers and economists have tried to untangle the befuddling implications of Griesa’s decision. Does the authority of US courts really extend beyond America’s borders? Now, a court in the United Kingdom has finally brought some clarity to the issue, ruling that Argentina’s interest payments on bonds issued under UK law are covered by UK law, not US judicial rulings. The decision – a welcome break from a series of decisions by American judges who do not seem to understand the complexities of global financial markets – conveys some important messages. First and foremost, the fact that the Argentine debt negotiations were pre-empted by an American court – which was then contradicted by a British court – is a stark reminder that market-based solutions to sovereign-debt crises have a high potential for chaos. Before the Griesafault, it was often mistakenly assumed that solutions to sovereign-debt repayment problems could be
achieved through decentralized negotiations, without a strong legal framework. Even afterwards, the financial community and the International Monetary Fund hoped to establish some order in sovereign-bond markets simply by tweaking debt contracts, particularly the terms of socalled collective-action clauses (which bind all creditors to a restructuring proposal approved by a supermajority). But simple modifications like contract amendments will not overcome the system’s deficiencies. With multiple debts subject to a slew of sometimes-contradictory laws in different jurisdictions, a basic formula for adding the votes of creditors – which supporters of a market-based approach have promoted – would do little to resolve complicated bargaining problems. Nor would it establish the exchange rates to be used to value debt issued in different currencies. If these problems are left to markets to address, sheer bargaining power, not considerations of efficiency or equity, will determine the solutions. The consequences of these deficiencies are not mere inconveniences. Delays in concluding debt restructurings can make economic recessions deeper and more persistent, as the case of Greece illustrates. This brings us to the second lesson of the British ruling. With the stakes so high and the system so broken, debt markets have little reason to remain in the US. America has always prided itself
on the strength of its “rule of law,” a selling point that has made Wall Street host to the largest sovereign-debt market. But Griesa’s ruling, based on a peculiar – and in our view, indefensible – interpretation of certain terms in Argentina’s contract, showed that US commercial interests can dominate its courts’ decisions. The vaunted American rule of law no longer looks so robust. Perversely, it protects the strong against the weak. The
With the stakes so high and the system so broken, debt markets have little reason to remain in the US
Griesafault is only the latest of many decisions and legal changes that have revealed what one might call a symptom of “corruption, American-style,” in which lobbying and campaign contributions compromise the entire system, even when no individual official is on the take. The US would be wise to react before the sovereign-debt market migrates from New York. China should stand ready to pick up the slack. Its savings now far outstrip those of the US, and it is striving to make Shanghai a global financial centre. That ambition has become more attainable in view of the damage to the US system’s credibility in the aftermath of the 2008 financial crisis. But, if Shanghai is to emerge as a leader in sovereign lending markets, China should be aware of the shortcomings of legal frameworks elsewhere, and design a more efficient and equitable alternative. The final, overarching message of the British court’s decision is one that all countries should heed. There is an urgent need to renew the United Nations’ efforts to create a multinational legal framework for sovereigndebt restructuring. Though the US is striving to undermine these efforts, the UK ruling reminds us that America’s judges are not the world’s judges. That last revelation may not make Wall Street happy; but, for the many countries around the world that rely on sovereign debt, it is very good news indeed. Project Syndicate
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March 10, 2015
Closing Euro central banks begin buying bonds
Tesla shedding jobs in China as sales target missed
The European Central Bank announced yesterday that it and the national central banks of the euro area have started buying bonds as part of the long-awaited purchase programme to kick-start inflation in the single currency area. “The ECB and Eurosystem national central banks have, as previously announced, started purchases under the Public Sector Purchase Programme,” the ECB announced via the micro-blogging site Twitter. Earlier, a spokesman for the German central or Bundesbank confirmed that it had been “active in the market since 9:25 am (0825 GMT).” Under the programme, central banks will buy around 60 billion euros of public and private bonds each month at least until September 2016.
High-end electric vehicle maker Tesla Motors yesterday said it is cutting jobs in China under a restructuring plan launched earlier this year, after missing a sales target in the world’s biggest car market. Tesla declined to specify how many jobs would be cut, and did not comment on a report in the Economic Observer newspaper last week that it was eliminating 30 percent of its staff or about 180 of its 600 employees in China. Some positions are being eliminated while others are added, but overall headcount has gone down in a restructuring drive that was announced earlier this year, Tesla spokesman said. The changes are nearly complete, he said.
Taiwan February exports disappoint Imports fell a sharper 22.4 percent last month J.R. Wu
KEY POINTS Feb exports -6.7 pct y/y vs f’cast -1.03 pct in Reuters poll Exports to U.S. +15.2 pct y/y, China -17.3 pct Shipments to Europe -3.7 pct y/y, Japan +12.7 pct
Employees in a Foxconn factory in Taiwan
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aiwan’s exports fell more than expected last month as the Lunar New Year holiday shortened the number of working days at factories and weaker commodity prices hit trade. However, modest gains in exports of electronic goods, improving demand from key markets and the falling cost of imports are likely to support growth for the domestic
economy. The island’s exports in February fell 6.7 percent from a year earlier, exceeding a 1.03 percent decline expected in a Reuters poll. For the first two months of the year, exports were down 1.3 percent, Ministry of Finance data issued yesterday showed. Imports fell a sharper 22.4 percent last month, compared
with expectations for a near 6 percent decline. “The terms of trade are improving,” said Ma Tieying, economist with DBS in Singapore. Ma said that the falling import bill would increase corporate earnings and real income for households, which was good news for domestic demand. The island’s manufacturers have reaped from
strong global demand for smartphones, especially new models of Apple Inc’s iPhone, which drove the island’s export orders to a record high last year. A large portion of those orders tend to be sent to Taiwanese factories located in China, which are then exported from China into final consumer markets. China’s exports in February surged
Mulling harsher anti-corruption laws
Bright Food to make an acquisition in Europe
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hina’s Bright Food Group Co has started work on an acquisition in Europe and sees more opportunities in the region to expand its rapidly growing international business, the vice president of the state-owned company said. The company, which bought British cereal brand Weetabix in 2012, has started due diligence on a “project” in Europe, which could be completed by July or August, Ge Junjie told Reuters. The deal, if completed, would be the latest in a multi-billion dollar overseas acquisition spree by Bright Food, reflecting the growing buying power of Chinese companies around the world and rising demand from Chinese consumers for higher value, international products. Ge declined to give details on the country or sector that is being targeted but said the company was looking for a deal similar to Manassen, the Australian business bought in 2011 that represents both its own brands and other imported brands. The upcoming deal would, however, be cheaper than Manassen, he added. Bright bought a 75 percent stake in the firm for A$530 million.
hinese legislature is speeding up efforts to make harsher laws to fight corruption, a senior law official said yesterday. Lawmakers are considering revising the Criminal Law to modify criteria for imposing penalties on criminals found guilty of embezzlement and bribes, said Wang Aili, director of the Criminal Law Office under the Legislative Affairs Commission of the National People’s Congress (NPC) Standing Committee. Lawmakers have proposed dismissing the benchmark monetary amounts as criteria and making sentencing in accordance with three categories that pay attention to both the amount of money and the seriousness of the crime, he said. The current Criminal Law, enacted in 1997, stipulates that the penalty for corrupt officials should be meted out according to the amount of illegal money value involved, with benchmarks set at 5,000 yuan (about US$817), 50,000 yuan, and 100,000 yuan. The criteria are out of date considering the pace at which the Chinese economy and per capita income have grown in the past 18 years. Heavier penalties will be imposed on those offering bribes, Wang said.
Reuters
Xinhua
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48.3 percent from a year earlier. In Taiwan, exports of electronic goods grew 5.3 percent from a year earlier in February, and were up a stronger 8.8 percent for the first two months of the year. Trade data in the first two months of the year tend to be distorted by the Lunar New Year because the multi-day holiday can fall in either month each year. This year the holiday began in February, while it started in January in 2014. The recovery in the United States, a key market for the island, is sustaining the solid outlook for Taiwan’s economy. U.S. exports rose 11.3 percent from a year earlier for the first two months of the year, after growth improved to 15.2 percent last month from January’s single-digit gain. Exports to Taiwan’s largest trading partner China slumped 17.3 percent, those to Europe dropped 3.7 percent, but shipments rose 12.7 percent to Japan. In sharp contrast, China’s exports to Europe rose 44.1 percent from a year earlier. Reuters
Singapore’s labour market to further tighten
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ingapore’s labour market will be tightened significantly due to lower workforce growth as well as continued curb on foreign workers, the Strait Times reported, citing Manpower Minister Tan Chuan-Jin in Parliament yesterday. Tan said local employment rate will drop sharply from 95,000 in 2014 to just 20,000 per year in the last part of the decade, mainly because of the declining birth rate of younger generation and the baby-boomer generation gradually quitting the labour market. Despite the demand for workforce, Tan stressed that there will be no plan to absorb more foreign workers from the government. “Taken together with the slowdown on local workforce growth, companies must note that we will experience a significant tightening of the labour market going forward,” said Tan. In response, the government will roll out plans to expand re- employment age from 65 to 67 in “two to three year’s time”. Amy Khor, Senior Minister of State for Manpower made such remarks yesterday. Xinhua