MOP 6.00 Closing editor: Luís Gonçalves
DOMAINfest arrives in Macau The city will host the first DOMAINfest in Asia in September. Famous among its peers, the event travelled from the US to Europe. And now it’s Asia and Macau’s turn. Over the years, Domainfests have attracted several high profile guests. Such as Steve Wozniak, co-founder of Apple, Biz Stone, co-founder of Twitter, and social media star Kim Kardashian
Year IV
Number 820 Wednesday June 24, 2015
Publisher: Paulo A. Azevedo
Page 6
The Good Earth When is ‘idle’ land not idle? The majority of the 16 plots of land considered ‘idle’ by the gov’t until recently are linked to some of Macau’s most high profile names. ‘King of Gambling’ Stanley Ho and long-serving lieutenant Ambrose So. Legislators Angela Leong, Chui Sai Cheong and Vitor Cheung Lup Kwan also appear on the list. Melco Crown’s Studio City and Angela Leong’s theme park occupy the largest parcels. While at least two plots are controlled by Sociedade de Turismo e Diversões de Macau (STDM) Pages
Beyond connected Almost here. Most of the city’s telecom operators will launch network coverage to provide fourth-generation wireless (4G) telecommunications services. Beyond 50 pct of the city within this year as required by the gov’t. CTM, China Telecom, SmarTone and Hutchison plan to invest big. A combined MOP1.28 billion within four years to launch services and related upgrades
2&3
Mainland malaise More visitors, but fewer from China. The city saw a marginal in crease of 0.9 pct total visitor arrivals in May y-o-y. To nearly 2.55 million visitors. But for the third consecutive month the number of Mainland Chinese tourists declined. A segment responsible for twothirds of all tourist arrivals. Despite the 0.5 pct drop, the territory welcomed 1.69 million Mainland visitors in the period
Page 5
Page 5
HSI - Movers
Sour note
June 23
Back it comes. The Court of Second Instance of Macau has ruled in favour of the gov’t. The plot of land selected for luxury residential project La Scala shall return to gov’t possession. Thus Hong Kong billionaire Joseph Lau loses the land concession. Having been found guilty of bribery and money laundering in relation to the acquisition of this land
Name
%Day
China Resources Powe
+3.83
China Mobile Ltd
+3.15
BOC Hong Kong Holdin
+3.10
Li & Fung Ltd
-0.90
China Construction B
-3.14
Link REIT/The
-4.33
Source: Bloomberg
Page 4
www.macaubusinessdaily.com
Moderate tone China’s June factory results. Revealing that the falling pace is moderating. Indicating, in turn, a stabilisation trend that authorities have been seeking via monetary and fiscal tools
Page 8
I SSN 2226-8294
2015-6-24
2015-6-25
2015-6-26
25˚ 30˚
26˚ 31˚
26˚ 31˚
2 | Business Daily
June 24, 2015
Macau
Non-recoverable ‘idle land’ linked to Macau’s major business names Upcoming project Studio City is one of the 16 ‘idle’ plots of land that the government plans to recover. The list revealed yesterday links plots to legislators Angela Leong, Chui Sai Cheong and Vitor Cheung Lup Kwan João Santos Filipe*
jsfilipe@macaubusinessdaily.com
T
he land where integrated resort Studio City is sited and Angela Leong’s theme park are the two largest parcels considered idle land which the government has decided not to reclaim. The Executive revealed yesterday the 16 plots excluded from the recovery list: they are related to some of the most important and influential persons in Macau, and some of the plots are already being developed. Occupying an area of 140,798 m2, the land where Studio City is being built is the largest plot of land on the list. Initially, in 2001, this parcel of land was granted to a subsidiary of Hong Kong Group Lai Sun, named East Asia - Televisao por Satelite for the purpose of developing
a cinema production hub and tourism resorts. However, in 2012, the East Asia company was renamed Studio City Development as the gaming operator Melco Crown acquired a 60 per cent share in the project, which is on course to be completed in the third quarter of this year. Angela Leong’s theme park, which totals 106, 015 m2, is also on the list. The land was first awarded to the company Macau Theme Park and Resort, which was represented by the legislator and Chui Sai Cheong - brother of the Chief Executive of Macau – plus Anthony Kwok Ho On. It is currently owned by Angela Leong, who stated earlier this month that she is awaiting government approval to start developing the
theme park project, which will include hotels and family-friendly entertainment facilities.
Stanley Ho
From the list announced at least two plots are controlled by Sociedade de Turismo e Diversoes de Macau (STDM), which was founded by Stanley Ho. While the contract signed for plot number three in ZAPE with the government was directly signed by the company, plot number 10, near the Jockey Club, was signed by Sociedade Hoteleira Macau-Taipa Resort in 1997. According to the Official Gazette, STDM was the major shareholder of the company in 1996.
Studio City
The name of Stanley Ho is further mentioned in another two plot contracts, which are located near Macau Jockey Club. The ‘King of Gambling’ is described as General Manager of Jockey Investment Company, which controls plots number 11 and 12. Initially, these parcels were awarded to Macau Jockey Club but in 1998 were handed to Jockey Investment Company, whose headquarters were located in Hotel Lisboa at that time. According to the dispatches of the Macau Official Gazette the connection of the ‘idle land’ with key figures of SJM Holdings also involves Ambrose So. In addition to signing the contracts involving STDM and Jockey Investment Company, the CEO of the company is also mentioned as representative of Sociedade de Fomento Predial Omar, which controls the land where the highend residential project the Carat is being built. In terms of legislators linked to the 16 idle plots, Angela Leong and Chui Sai Cheong are not alone. Vitor Cheung Lup Kwan signed the contract in the name of Great China Company for a land parcel that occupies 38,363 m2 and which according to the Official Gazette was worth MOP21.6 million in 2004. Bus operator Transmac Transportes Urbanos De Macau is also linked to two plots in Ilha Verde and Pac On which combined occupy 7,835 m2. The contracts were signed in 1988 and 1989 to develop bus terminals but the Ilha Verde project also included industrial areas. *with J.K. and S.L.
Process Nr.
Owner
Location
Purpose
Area
1
Transmac
Ilha Verde
Bus terminal and parking space / industrial area
4 081 m2
2
Sociedade Hoteleira e de Turismo S. Tiago, Limitada (Controlled by SJM)
Estrada da Penha
Hotel
1 452 m2
3 4 5 6 7 8 9 10 11 12 13 14 15 16
Value
8.48 million
Parking space / Commerce / 1 295 ,2 44.65 million Offices / Hotel Commerce / Offices / Parking Hio Keng Van S.A.R.L. Nam Van 4 169 m2 space Sociedade de Fomento Predial Omar (Ambrose So Residential / Commerce / Parking NAPE (The Carat) 6 480 m2 and Anthony Chan) space Macau - Obras de Aterro Limitada (Zhuo Rongliang Hotel / Commerce / Residential / NAPE 6 480 m2 and Yang Panchao) Parking Space Transmac Pac On Bus Terminal 3 754 m2 Pun Wai Man Estrada da Ponte de Pac On Residential 1 669 m2 35 million Sino-Macau Cargo Centre Limited Pac On / Friendship Bridge Warehouse / Office 5 549 m2 5.5 million Sociedade Hoteleira Macau-Taipa Resort Limitada Jockey Club Hotel 15 823 m2 74 milliom Residential / Commerce / Parking Jockey Investment Company Jockey Club 13 517 m2 50.8 million space Jockey Investment Company Jockey Club Residential 8 124 m2 10.3 million East Asia - Satellite TV - Controlled by Lai Sun Movie Studio / Office / Restaurant Cotai (Studio City) 140 789 m2 23.3 million Garment - and Studio City / Parking Area / Residential Commerce / Parking Space / Gas Great China / Vitor Cheung Lup Kwan Rotunda do Dique Oeste 38 363 m2 21.6 milliom Station / Recreational Associação Unida das Três Religiões, Confuciana, Cemetery Hau Si Cemetery Expansion 4.3 million Budista e Tauísta de Macau Macau Theme Park and Resort Coloane Termic Station Theme Park / Hotel 106 015 m2 231 million (Anthony Kwok Ho On and Chui Sai Cheong) Sociedade de Turismo e Diversoes de Macau
Source: Official Gazette
ZAPE
Business Daily | 3
June 24, 2015
Macau Legislator: Gov’t “careless” in dealing with idle land While the government concedes it is to blame for ‘letting go’ of 16 plots of land that it planned to reclaim, a legislator slams the administration for being “careless” and criticises the flagrant inefficiency Joanne Kuai
joannekuai@macaubusinessdaily.com
for any land development under the city’s law; although awardees submitted enquiries or applications for development the government failed to respond in time; the government failed to process the administrative procedures resulting in delaying the development of the plots of land. According to the legislator, the government said they were helpless with regard to these situations due to too much workload and being shortstaffed.
Legislator Ho Ion Sang
T
he government has released information on the 16 plots of land that it plans to reclaim from awardees following a closed-door meeting with the Legislative Assembly’s (AL) Committee on Land and Public Concessions yesterday. President of the AL subcommittee, Ho Iao Sang,
told reporters after the meeting that although the government said each case rested on its own merits, three main reasons were offered by the government. Namely, these are that the government failed to timely provide the alignment plan, which states the area, size and purpose of the land use, and is mandatory
New land law fails
Legislator Ho Ion Sang said that they [the legislators] have urged the government to reflect on their inefficient administrative procedures and criticised it for being “careless”. He said he and his fellow legislators are also concerned that the new land law may have failed to serve its purpose.
“There are nine principles of the new land law which include enhancing transparency and improving administrative efficiency,” said Mr. Ho. “We need to review whether the law is working properly.” The new land law includes changes designed to strengthen the transparency of land concession procedures, something society has long demanded. The revision of the threedecades old Macau land law started in 2008. The amended law was passed in August 2013 and was put into effect in March 2014. The legislator added that the amended land law also suggests that concessions last no longer than 25 years and that some concessions for the 16 plots are about to expire. When asked whether the concessions would be renewed, the legislators said the
government hasn’t indicated the follow-up for those plots and that the committee would have more meetings with the government with regard to the relevant issues.
In progress
Chief Executive Fernando Chui Sai On said last week that the government is the party liable for the 16 parcels of land in the city being left undeveloped, suggesting that this is the reason why the government has decided to eliminate these idle plots from the list of 48 plots that it plans to reclaim. However, the Secretary for Transport and Public Works, Raimundo Rosario, reiterated to reporters after meeting legislators that 16 of 48 idle plots in the city that the government had earmarked for repossession had failed to be legally recognised as ‘idle land’ prior to him assuming office.
4 | Business Daily
June 24, 2015
Macau
La Scala land plot returns to Government hands
T
he Court of Second Instance of Macau has ruled that the plot of land selected for the development of luxury residential project La Scala shall return to the government’s possession. This means that Hong Kong billionaire Joseph Lau loses the land concession, after being found guilty of bribery and money laundering in relation to the acquisition of this land. The story was published yesterday by Portuguese-language newspaper Ponto Final, according to which the decision was taken on Thursday. However, the same source explains
that as at Monday the parties involved in the process had not yet been notified. The case pits the Moon Ocean company, controlled by Joseph Lau, against the government. In 2006, the company acquired the plot of land for MOP1.3 billion. Five years later, Moon Ocean paid an additional MOP642 million after the contract was revised and at a time when Macau authorities were already investigating the operation. Local authorities found Joseph Lau and his partner Steven Lo guilty of corruption and money laundering;
they were sentenced to five years and three months in jail. The two were accused of paying a bribe of MOP20 million to the former Secretary of Public Works, Ao Man Long. However, Moon Ocean attorneys say that if the company is to give back the plot of land they should be compensated MOP2.7 billion from the previous owners. The plot originally belonged to CAM – Macau International Airport and then in a second phase was distributed among five different companies, in which the Macau Government held a majority position.
Fitch affirms stable outlook for Tai Fung, ICBC Macau and OCBC Wing Hang
T
ai Fung Bank, Industrial and Commercial Bank of China (Macau) Ltd. and Banco OCBC Weng Hang, SA are all on stable outlook as the ability and propensity of support from their respective parents remains unchanged, according to Fitch Ratings’ Issuer Default Ratings (IDRs). Fitch Ratings has affirmed the IDR of Tai Fung Bank at ‘BBB/ F2’, ICBC Macau at ‘A/F1’ and OCBC Weng Hang’s Macau unit at ‘A+/F1’. The stable outlook for Tai Fung (at the Viability Rating of ‘bbb-’) is based on Fitch Ratings’ view that the bank will maintain adequate intrinsic strength, moderate loss-absorption capacity and satisfactory profitability. ICBC Macau’s IDRs and Support Rating (SR) reflect Fitch’s view that its 89.3 per cent-owner Industrial and Commercial Bank of China has an extremely strong propensity to support the Macau unit. The state-
owned bank parent has shown evident group support in plans for ICBC’s upcoming capital injection of US$360 million. For Banco OCBC Weng Hang, Fitch is of the view that the Macau unit is of strategic importance to its wholly-owned parent OverseasChinese Banking Corp. (OCBC). The assessment of the Macau unit has taken into account its high integration with its direct Hong Kong-based parent OCBC Wing Hang Bank Ltd. in terms of business operation, risk controls and liquidity management. Fitch said it maintains a onenotch difference between Banco OCBC Weng Hang and OCBC’s IDRs (AA-/Stable), as stronger operational support, business synergies and the effect of future secondments are likely to take more time to become fully effective. S.L.
editorial
When values’ real name is money
T
he recent case of the violent aggression against an elderly lady in a wheelchair perpetrated by her own daughter, filmed in the middle of the city and published in social media, chillingly shows the gradual and inexorable loss of values in Macau. The assault, now being handled by the Public Prosecutor’s Office, says so much about the lack of sensitivity and follow-up procedures by the responsible official authorities. According to information released by the media, the daughter had reached a psychological breaking point. If the reports are confirmed, then the momentary loss of reason is comprehensible, even if the insane act itself is unforgivable. The daughter had quit her job to take care of her elderly invalid mother and a mentally handicapped brother. Any one of us can imagine the tremendous pressure the daughter must have been under and that disaster was only a matter of time, since no-one was available to detect and properly follow up on the situation. No-one detected the problem, despite the fact that the family’s situation was known to the Social Welfare Bureau (IAS). The Bureau must be convinced that all it takes is to throw money at problems and they’ll magically be sorted, which is quite a materialistic and rather insidious logic that has been gaining currency in this small city. The explanation from one of the IAS officials couldn’t have been more disheartening: the IAS was giving money to the family. Now that the evil deed was done, the IAS will pay them more attention. From time immemorial, that’s been the mantra of many Macau Government officials: guaranteeing that they’ll take into consideration the negative results of audits and that they’ll be more attentive but only after the cases are made public. Apparently, no-one is capable of anticipating these sorts of problems. If the IAS doesn’t have capable people, then hire competent staff wherever they may be. If the current IAS leadership does not have the ability to perform as expected, then they should resign or be fired. This strategy of subsidising families and ‘forgetting’ to provide around-theclock professional and personal psychological support if necessary is a complete regression of the values that presided over the creation of the institution - and the services it is expected to provide to the community.
Business Daily | 5
June 24, 2015
Macau
Mainland Chinese visitor arrivals continued to decline in May While the overall number of visitor arrivals slightly increased last month, the number of Chinese visitors continued to drop in tandem with weaker growth seen in IVS travellers Stephanie Lai
sw.lai@macaubusinessdaily.com
M
acau saw a slight increase of 0.9 per cent year-onyear in the visitor arrivals registered in May, the third consecutive month where the number of Mainland Chinese visitors has dropped, according to data published by the Statistics and Census Service (DSEC) yesterday. Last month, the city received a total of nearly 2.55 million visitors, of whom about half were same-day visitors. The number of same-day visitors, mostly those from Mainland China and Hong Kong, had increased by 2.6 per cent more than the same month last year. The number of Mainland Chinese visitors, a major source of the city’s tourists occupying around 66 per cent of overall visitor arrivals, continued to decline last month at a year-on-year rate of 0.5 per cent - to 1.69 million – although the drop had already narrowed from the two previous months.
While the month of May started with a three-day Labour Day holiday for the Mainland, the number of Chinese visitors travelling here under the individual visit scheme (IVS) increased by 3.5 per cent to 752,982 – significantly less than the 21 per
cent increase seen in the same month last year, according to DSEC data. The number of visitors from Hong Kong, the second major source for the city’s visitors, grew by 5.1 per cent year-on-year to 522,532 last month. Meanwhile, visitors from South
Korea who came here in May has posted a rapid increase of 31.4 per cent to 52,298, a figure that greatly outpaces the number of visitor arrivals from other Asian countries. Long-haul visitors from the United States (15,949) and the United Kingdom (5,117) registered year-onyear increase last month, while those from Australia (7,624) and Canada (6,289) both declined. The average length of stay of visitors inched up 0.1 day to 1.1 days in May. In the first five months of this year, visitors declined by 2.7 per cent yearon-year to 12.5 million, with those from Mainland China (8.35 million) and Hong Kong (2.63 million) decreasing 3.1 per cent and 0.7 per cent, respectively. The decrease in the overall visitor arrivals in the first five months of this year is also attributable to the decline in long-haul visitors from the United States, Australia, Canada and the United Kingdom, DSEC stated.
Most local telcos to exceed required 4G network coverage this year The four 4G licence awardees – CTM, China Telecom, SmarTone and Hutchison – plan to invest a combined MOP1.28 billion within four years to launch the services and related upgrades Stephanie Lai
sw.lai@macaubusinessdaily.com
M
ost of the city’s telecommunications operators will launch network coverage to provide fourth-generation wireless (4G) telecommunications services beyond 50 per cent of the city within this year as required by the government, although the timeframe for when the 4G services can come online has yet to be announced. As announced by the Official Gazette yesterday, the city’s dominant telco Companhia de Telecomunicações de Macau SARL (CTM), Chi-
na Telecom (Macau) Company Ltd., Hutchison Telephone (Macau) Company Ltd. and Smartone – Mobile Communications (Macau) Ltd. have been approved to provide 4G services to the city under a licence that is valid for eight years. In setting up the Long Term Evolution (LTE) network for launching the 4G services, as well as the related network expansion and upgrade that follows, the city will see a total of about MOP1.28 billion investment committed by these four
operators for 2015-2018, according to the information published by the Official Gazette. To Business Daily’s understanding, successful 4G licence awardees CTM, China Telecom and Hutchison Macau will exceed 50 per cent of network coverage within this year. The government requires the telecom operators to achieve half of the city’s network coverage for 4G services within this year, and a 100 per cent coverage in 2016. CTM, which said before
that it plans to achieve 90 per cent of network coverage upon launching 4G services this year, is the telco with the biggest committed investment in setting up an LTE network and other related enhancements that amount to MOP485 million for 2015-2018, closely followed by China Telecom at a committed investment of MOP471 million for these four years.
Fast as you can
But CTM is the only telco that adopts both the frequency
division duplex (FDD) technique and time division duplex (TDD) technique for launching the 4G services, according to the Official Gazette. The adoption of both techniques by CTM can support a download speed that can top up to 300 Mbps and an upload speed of 75 Mbps. Before casting its bid for a 4G licence, the vice president of network services at CTM, Declan Leong, told media in September that the telco expected that the service charges for 4G services would not be more expensive than for 3G services. Upon Business Daily’s enquiry, the four telecom operators said they will announce the exact timeframe for launching the 4G services this year plus related tariff. As required by the government, the 4G licence awardees must practise the alert service to users when they exceed a prescribed monthly data volume. The operators must also compensate their users in event of accidents that largely affect network operation and other related services, the Gazette stated.
6 | Business Daily
June 24, 2015
Macau Gov’t acquires special PSP vehicles for MOP67.6 million The Government of Macau has signed two contracts worth MOP67.4 million with Xin Kang Cheng – Auto Services, Investment and Trade, Import and Export Limited to acquire special vehicles for the Public Security Forces Affairs Bureau. The first contract for special vehicles and its equipment is worth MOP52.6 million and has an extension of two years, while the second concerns a shielded vehicle with a portable ram for MOP14.8 million.
First Asian DOMAINfest arriving in September
T
he city will host the first DOMAINfest in Asia from September 4 to September 7. DOMAINfests are a global conference open to individuals or entities in the domain industry. Since its foundation in 2005, dozens of events have been organised around the world from Europe to the US. Now, it’s Asia and Macau’s turn. Domainfests have over the years attracted several high profile guests such as Steve Wozniak, co-founder of Apple, Biz Stone, co-founder of Twitter, and social media star Kim Kardashian. DOMAINfest co-founder Jothan Frakes told DN Journal that “many are
looking to Asia as a market of robust growth and innovation. Macau is the perfect Asian location for the DOMAINfest caravan. Providing a great experience for regional industry players is central to the DOMAINfest mission, and Macau is easy to access for our many friends in the China region, the Indian subcontinent, Japan, Korea, and south-east Asia". The publication also revealed that the Macau conference will be jointly organised by DOMAINfest, DotAsia Organisation (the operator of .ASIA registry) and China-specialist strategic communications agency Allegravita; and it
will be supported by the Internet Society of China. According to organisers, DOMAINfest.Asia 2015 is designed to serve as a
Highest bid for taxi licence: MOP1.05 mln
T
he government opened 643 tenders for 200 eight-year taxi licences yesterday. The highest winning bid was MOP1,051,888 with the lowest MOP868,008. Deputy vice director of the Transport Bureau (DSAT) Luís Correia Gageiro said that this year the competition for the 200 licences had not been as fierce, which he believes was due to increasing operation and maintenance cost of running a taxi, as well as the complicated traffic conditions in Macau. Some bidders said the average rent for a taxi licence was around MOP20,000 per month, which means
a return of about MOP2 million for eight years, which they consider a good investment, according to TDM Radio. Some casino workers bid for a licence in the hope of changing career. Some were taxi drivers that wanted to own a licence themselves, avoiding rental and increasing income. The deputy vice director of DSAT added that currently there are 13,000 licensed taxi drivers in Macau. The openings for exams for acquiring the licence are full until the end of this year. The authorities will hold two more exams in October and November so that examinees can get their licence as soon as possible.
meeting place for China and Asia’s domain name industry to network with sector leaders from around the world. Some of the guests
include DotAsia CEO Edmon Chung and Allegravita CEO Simon Cousins. DotAsia Organisation CEO Edmon Chung said, “We’re very excited to host the international domain community in Macau. I know DOMAINfest. Asia 2015 will help drive growth in domain market expansion and awareness in China and Asia.” Allegravita CEO Simon Cousins added, “China’s central importance to the global domain name business is undisputed, and we couldn’t be prouder to be bringing the world to meet China at DOMAINfest.Asia in Macau.” L.G.
Prices increased 4.93 per cent in May
A
fter two months of dropping, Macau’s inflation bounced back to 4.93 per cent, according to data released by the Statistics and Census Service (DSEC) yesterday. This compares with a higher inflation reading of 6.16 per cent in May 2014. The latest data also shows that the May composite CPI has increased 0.5 per cent compared to the previous month, attributable to higher rentals for dwellings and rising charges for eating out. In comparison with May 2014, a notable increase was observed in the price index of Housing & Fuels (+9.93 per cent); Health (+6.02 per cent); Household Goods & Furnishings (+5.43 per cent) and Food & NonAlcoholic Beverages (+5.16 per cent) on account of rising rentals for dwellings, dearer charges for eating out and out-patient services, as well as higher wages for domestic helpers. By contrast, the price index of Alcoholic Beverages & Tobacco (-2.07 per cent) showed a marked decrease. The CPI-A (105.59) and CPI-B (103.74) increased by 5.42 per cent and 3.89 per cent, respectively, year-on-year. On a month-on-month comparison, the Composite CPI for May 2015 increased 0.50 per cent. Higher prices of women’s clothing and footwear, rising wages of domestic helpers and dearer charges for out-patient services pushed up the price index of Clothing & Footwear, Household Goods & Furnishings and Health by 1.29 per cent, 0.93 per cent and 0.92 per cent. Moreover, higher prices of Liquefied Petroleum Gas and gasoline drove up the Composite CPI by 0.13
percentage points month-on-month. On the other hand, receding prices of vegetables and seafood tapered off the increase in the price index of Food & Non-Alcoholic Beverages. The CPI-A and CPI-B rose by 0.51 per cent and 0.41 per cent, respectively, month-on-month. For the 12 months ended May 2015, the average Composite CPI increased by 5.52 per cent from the previous period. The price index of Housing & Fuels (+11.31 per cent); Food & Non-Alcoholic Beverages (+5.59 per cent) and Health (+4.94 per cent) showed a remarkable increase. The average CPI-A and CPI-B rose by 6.00 per cent and 5.08 per cent, respectively. The Composite CPI reflects the impact of price changes on general households. The CPI-A relates to about 50 per cent of households, which have an average monthly expenditure of MOP10,000 to MOP29,999. The CPI-B relates to about 30 per cent of households, which have an average monthly expenditure of MOP30,000 to MOP54,999.
Business Daily | 7
June 24, 2015
Macau CE leads co-operation conference team Chief Executive Chui Sai On will lead a team to Jiangmen tomorrow for the 2015 Guangdong-Macau Co-operation Joint Conference. Chui Sai On and the Governor of Guangdong Province, Zhu Xiaodan, will review past achievements and discuss issues of mutual interest. These include the further strengthening and liberalisation of commerce; boosting the China (Guangdong) Pilot Free Trade Zone; implementing major tasks in 2015 for the Framework Agreement on Co-operation between Guangdong and Macao; promoting Hengqin in Zhuhai, Nansha in Guangzhou, Cuiheng in Zhongshan, and Daguang Bay in Jiangmen as platforms for Macao’s economic diversification.
China Aircraft Leasing shareholders voice support after missing CEO quits Air Macau is one of the clients of CALC, Asia’s only listed aircraft lessor, whose CEO disappeared after media reports linked him to a government probe into possible corruption involving one of the company’s clients, China Southern Airlines
T
he two biggest shareholders in China Aircraft Leasing Group Holdings Ltd. (CALC) said they had no plans to cut their stake in the firm after it revealed it was unable to contact its founder and chief executive, who resigned without explanation. Shares in CALC, Asia’s only listed aircraft lessor, plunged by nearly a fifth on Friday to a record low after it said CEO Poon Ho Man had quit while on leave, spooking investors in a country where senior executives have in the past vanished or quit suddenly, leaving shareholders in the lurch. Poon’s disappearance also coincided with media reports that linked him to a government probe into possible corruption involving one of the company’s clients, China Southern Airlines, which in January said its executives were under investigation for ‘job-related crimes’. On Monday, shares in CALC recouped some of their losses and were trading nearly 3 per cent higher in a broadly flat market, lifted by what some traders said was bargain hunting. State-backed financial conglomerate China Everbright Group and Hong Kong-based
Friedmann Pacific Investment Group, which Poon founded, also told Reuters they were committed to their investment. Between them they hold just over 67 per cent of CALC.
Some investors remain cautious
“To an outsider, we are not convinced. We will not take the risk,” said Alex Wong, director of Hong Kong-based investment firm Ample Finance Group. “The departed executive was very senior management of the company and we cannot predict what will happen next.” A CALC company spokesperson declined to give any further comment
KEY POINTS Two largest shareholders say have no plans to cut stake Analyst cautious; say hard to predict what will happen next CALC executive says little impact on company’s operations Hong Kong regulator declines to comment
beyond Friday’s statement, and Friedmann Pacific said it has no information on Poon’s whereabouts other than what CALC has disclosed. The Hong Kong Stock Exchange and the Securities and Futures Commission also declined to comment on CALC.
Corporate governance concerns
Friedmann Pacific, which manages about HK$15 billion-worth (US$1.9 billion) of assets, was part of a consortium that in December agreed to buy a 49.99 per cent stake in France’s Toulouse Blagnac airport. CALC, one of China’s smaller aircraft lessors, debuted on the Hong Kong Stock Exchange last year and before Friday’s 20 per cent share price plunge was worth more than HK$4 billion (US$516 million). In January, it placed a US$10.2 billion order for Airbus aircraft and has said it plans to more than triple its current fleet of 50 aircraft by 2022. Clients include Chinese carriers such as Air Macau and Shenzhen Airlines. The concerns surrounding CALC coincide with the Hong Kong regulators intensifying their scrutiny of listed firms after the high-profile collapse of stocks in Chinese solar energy firm Hanergy Thin Film Power and affiliated firms. In Friday’s Exchange filing, CALC said it had not received notice that Poon, which it said had resigned on June 17, is under any kind of investigation. It also said it had reviewed records of interactions with China Southern and found no irregularities. The company’s chief financial officer also resigned, effective June 18. On Saturday, The South China Morning Post quoted people it said were familiar with the company as saying Poon had disappeared more than a month ago amid speculation he was embroiled in a corruption probe into a company client. Reuters
Corporate
One fantastic experience at Mandarin Oriental BNU donation supports development of University of Macau Mandarin Oriental, Macau has announced the luxury-filled One Fantastic Experience, a comprehensive package that includes shopping privileges at Macau’s one and only flagship mall, One Central Macau, along with 5-star experiences in the hotel’s award-winning spa, restaurants and bars, as well as luxurious accommodation. The One Fantastic Experience package starts from MOP2,888 and includes:
One night’s accommodation in a luxurious guestroom or suite, Buffet breakfast for two in Vida Rica Restaurant, Hotel credit of MOP1,000 for dining or spa experience, and One Central Macau shopping voucher valued at MOP1,000 The One Fantastic Experience package is valid until 29 December 2015. Prices are subject to 10 per cent service charge and 5 per cent government tourism tax.
Banco Nacional Ultramarino (BNU) has recently committed a donation of MOP 10,650,000 to support the teaching and academic research of the University of Macau (UM) via the University of Macau Development Foundation (UMDF). In appreciation of the donation made, a Chair Professorship in the Faculty of Business
Administration of the UM will be named in honour of BNU. A cheque presentation ceremony was held in the UM Guest House, chaired by Wei Zhao, UM Rector, Daniel Tse, Chairman of the Executive Committee of the UMDF, Pedro Cardoso, Chief Executive Officer of BNU, and Ronald Kan, Executive Director of BNU.
8 | Business Daily
June 24, 2015
Greater China
June factory activity shows signs of stabilisation A major headache is the reluctance of Chinese executives to invest in expansion or productivity Pete Sweeney
C
hina's factory activity showed signs of stabilising in June, with two private surveys suggesting the economy may be regaining some momentum even as many analysts expect further policy support to ensure the recovery becomes more sure-footed. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) edged up to 49.6 in June,
a three-month high, from 49.2, but remained below the 50 mark which separates contraction from expansion. New orders returned to positive territory at 50.3 and new export orders fell at a much slower pace. "The pick-up in new orders was driven by a strong rise in the new export orders subcomponent, suggesting that foreign demand may finally be turning a corner," wrote
Capital Economics analysts in a research note. "Today's PMI reading reinforces our view that the economy has started to find its footing." However, companies stepped up layoffs, shedding jobs at the fastest pace in over six years, and Capital Economics' analysts said they expect further easing measures in the pipeline. "Manufacturers continued to cut staff. This suggests companies have relatively muted growth expectations," said Annabel Fiddes, an economist at Markit, adding that she expects Beijing to "step up their efforts to stimulate growth and job creation."
Rosy beige book
However, the China Beige Book quarterly survey painted a much rosier picture, describing a "broadbased recovery" in the second quarter, led primarily by provinces in China's interior. "Among major sectors, two developments stand out: a welcome resurgence in retail - which saw
rising revenue growth despite a slip in prices - and a broad-based rebound in property," report authors Leland Miller and Craig Charney wrote, adding that manufacturing, services, real estate, agriculture and mining all saw both year-on-year and quarterly gains. "Overall, firms continue to do better than official data -and its legions of sell-side users - might suggest." Miller has recently argued that stimulus cannot solve China's economic challenges and will be unlikely to have the desired effect on investment, given weak demand. Indeed, much of the easing measures appear to have been absorbed by a stock market rally, and now the bond market - which is being force-fed a massive plate of municipal bonds to help relieve heavily indebted local governments. China cut interest rates for the third time in six months in May, in a bid to lower companies' borrowing costs and stoke a sputtering economy that is headed for its worst year in a quarter of a century. Markets expect Beijing to step up policy support. A major headache is the reluctance of Chinese executives to invest in expansion or productivity due to low returns and higher longterm borrowing costs. "Real interest rates are double digits, 11 or 12 percent. This is the real issue for the economy. You can cut nominal rates to zero and you are still seeing real rates around 5 percent. The profit margin is only around 3-4 percent," said Zhou Hao, economist at ANZ Bank in Shanghai. "We are still seeking new engines for the economy. Basically we need to deleverage first," he said. Reuters
Buyouts leaving investors unfulfilled The rush to leave U.S. exchanges comes after the Shanghai Composite Index surged the most in the world over the past year
C
hina’s largest online matchmaking site has surged 60 percent since its founder offered to take it private. Shareholder Peter Halesworth feels entitled to more. Haiyan Gong, formerly cochairwoman of Jiayuan.com International Ltd., wants to take advantage of China’s hot equity market by moving the stock out of New York to an exchange there. While she’s raised her bid to US$7.20 from US$5.37 per American depositary receipt, that’s still far short of the US$11 listing price in 2011. Halesworth, the founder of Heng Ren Investments, which invests in Chinese companies, said the offer short-changes shareholders by at least 63 percent. A record 23 companies have received offers to delist since the beginning of the year, aiming to return to China’s local exchanges to get higher valuations. While the takeover bids often lead to rallies, some U.S. investors say the offers don’t reflect the stocks’ real worth and deprive them of opportunities to benefit from the companies’ longerterm growth. This year’s go-private deals, which have a total value of US$23 billion, are offering investors a 24 percent premium over the companies’ average trading prices prior to their announcements, the lowest since 2010, according to data compiled
by Bloomberg. Sixty percent of the bids were below the targeted firms’ initial public offerings.
Shanghai surging
The rush to leave U.S. exchanges comes after the Shanghai Composite Index surged the most in the world over the past year as policy makers
U.S. investors will think companies from China, an emerging market, have a lot of risks, while for local Chinese investors, it’s easier for them to do due diligence and they have a better understanding of the risks Ingrid Yin, managing partner, MayTech Capital Management
took measures to bolster the economy and widened market access to foreign investors. While the benchmark gauge tumbled 13 percent last week, the most since 2008, it’s still up 121 percent in the past 12 months. That compares with a 30 percent gain in the Bloomberg index for the mosttraded Chinese companies in the U.S. Renren Inc., owner of a social networking website similar to Facebook Inc., received a takeover bid from two of its executives on June 10. The offer of US$4.20 per ADR was less than one-third of its IPO price four years ago. The bid was so low that it’s “embarrassing” for Renren’s shareholders, Henry Guo, an analyst
at Summit Research Partners, said by e-mail. Since then, the Beijing-based company’s ADRs have declined 6.1 percent. In his April 8 open letter to Jiayuan. com, Halesworth said he was a “longterm and patient” investor who stuck with the company even when it was struggling last year. The buyout proposal will “freeze out current minority investors from benefiting from the long-term investment opportunity,” he wrote. Companies seeking local listings in China after buying out U.S. shareholders “are being shortsighted,” Halesworth said last week. “They’re chasing valuations and have no guarantee that they’re permanent.” Bloomberg News
Business Daily | 9
June 24, 2015
Greater China Alibaba to pour nearly US$1 bln into local services start-up
25 bln yuan for water projects
Growing big in local services business can come at a heavy cost
A
libaba Group Holding Ltd and its affiliate Ant Financial will invest nearly US$1 billion in a joint venture that they hope can tap China’s fast-growing local services market, focusing at first on food delivery. Local services, also known as online-to-offline (O2O), have been booming in China, with some of the country’s most valuable startups like taxi-hailing app Didi Kuaidi operating in this area. Apart from calling cabs, these apps link smartphone users with offline businesses to offer things like delivery and nearby food and leisure deals. As more Chinese use phones for everything from shopping to booking restaurants, local services have become a key battleground for China’s internet giants Alibaba, Tencent Holdings Ltd and Baidu as they try to attract users to their platforms. The two companies will each invest 3 billion yuan (US$483 million) in Koubei and each hold a 50 percent equity stake in the business, the announcement said. Koubei will initially focus on food and beverages, with Alibaba’s food ordering and delivery business, Taodiandian, and Ant Financial’s
BoC says will cooperate with Italian prosecutors offline merchant resources becoming a core part of Koubei’s operations. Over time, Ant Financial’s merchant services in offline retail, healthcare and vending machines will be rolled into the joint venture, it said. Growing big in O2O can come at a heavy cost. Rival companies are pumping hundreds of millions of dollars into marketing schemes and subsidies in an effort to expand. Reducing the scale of that spending was a driving factor in Didi and Kuaidi’s taxi app merger last February.
Users will be able to access Koubei through Ant Financial’s Alipay Wallet app and Alibaba’s Mobile Taobao app, the announcement said. The business would be run by Samuel Fan, from Ant Financial’s payment business unit. Ant Financial Services Group is controlled by Alibaba’s Executive Chairman Jack Ma and other senior Alibaba executives. It runs China’s most popular online payment platform, Alipay, and one of the country’s biggest money market funds, Yu’e Bao. This week it will launch an online-only bank dubbed MYbank. Reuters
May sugar imports triple China allows 1.94 million tonnes of sugar imports annually at a tariff of 15 percent as part of its commitments to the World Trade Organisation
China’s fourth-largest lender the Bank of China Ltd yesterday said it would respond to any formal request for information from Italian authorities investigating alleged money laundering and other financial crimes at its Milan branch. But the bank said it had not received any formal documents from Italian prosecutors in relation to the investigation into the branch and 297 individuals, mostly Chinese living in Italy. “The bank will closely follow the development of the relevant legal proceedings and provide timely disclosure in accordance with the relevant laws and regulations,” the bank said.
Shaanxi and Shandong to auction muni bonds Shaanxi province will auction 17.7 billion yuan (US$2.85 billion) of general obligation municipal bonds on June 29, according to a notice on the website of a major bond clearing house on Friday, while Shandong province will auction 35.7 billion yuan (US$5.75 billion) of general obligation municipal bonds on June 26, according to a notice on the website of a major bond clearing house on Friday.
Ship scrapping subsidy extended
Dominique Patton
China has extended by two years a subsidy program that encourages shipping companies to scrap old vessels, in a bid to support an industry struggling to emerge from a global downturn. The Ministry of Transport said in a statement yesterday that the program - which gives shipping lines subsidies of 1,500 yuan (US$241.67) per gross ton to replace old models with newer, greener ones - would be extended to the end of 2017. There would be no changes to the program’s details, it added. The government launched the two-year scheme in late 2013.
C
hina, one of the world’s top sugar buyers, imported 520,000 tonnes of sugar in May, triple the amount a year earlier, as refiners sought to benefit from cheap global prices. The jump in volumes, which was widely expected after similar imports in April, has been spurred by tumbling global prices that hit their lowest levels in 6-1/2 years earlier this month. China’s domestic sugar prices have also recently eased on demand concerns, but remain supported by forecasts of lower output this year and government restrictions on imports aimed at protecting domestic sugar mills. Domestic sugar currently trades at premiums of about US$250 per tonne over imports, the highest level on record, traders said. S ugar im ports are set to remain strong in coming months, with the industry eyeing summer weather to gauge demand in the peak consumption season, with hotter weather boosting beverage consumption. Government restrictions, however, will keep a lid on imports. China allows 1.94 million tonnes
China’s central government will spend 25 billion yuan (US$4.1 billion) on water projects, the Ministry of Finance announced yesterday. Part of the fund will replenish capital for 29 existing projects, with the rest to be used on 143 new projects of irrigation, diversion, water saving and cleaning up lakes and rivers, the ministry said on its website. The country’s total investment on water projects reached 488 billion yuan in 2014. Vice Minister of Water Resources Jiao Yong predicted that investment would top that figure in 2015.
of sugar imports annually at a tariff of 15 percent as part of its commitments to the World Trade Organisation. Imports outside of this quota incur a 50 percent duty and must be registered through a governmentcontrolled licensing system. Beijing has been rejecting applications for such permits to help protect domestic sugar mills. China’s sugar association has also called on importers to keep total imports this year to within 3.5 million tonnes, which may push shipments down in coming months. Imports in the first five months of the year are already over 2 million tonnes, a 58 percent increase year on year, trade website Guangxi Sugar Network said, citing government data. But trade sources said the 3.5 million tonne figure may be flexible, depending on Chinese demand. A
Imports in the first five months of the year are already over 2 million tonnes
widening production deficit could increase government tolerance for higher imports. China is expected to produce about 10.5 million tonnes of sugar in 2014/15, down from 13.3 million tonnes in the prior year. Output is set to fall further in the coming season. Reuters
Maritime economy outpaces GDP growth China’s maritime output has grown at a faster pace than the country’s GDP in the past five years, the State Oceanic Administration (SOA) said yesterday. According to its report on China’s maritime development for 2015, the average annual growth rate of maritime output exceeded that of GDP by 0.22 percentage points during the 12th Five-Year Plan period (2011-2015). The report highlighted the boom of emerging maritime industries such as manufacturing of maritime engineering equipment. China took manufacturing orders valued at US$13.9 billion.
10 | Business Daily
June 24, 2015
Greater China
Economists see yuan band widening earlier Including yuan in the International Monetary Fund’s Special Drawing Rights basket might accelerate implementation in needed changes
C
hina’s quest to get the yuan recognized as a reserve currency is fuelling expectations that trading limits will be relaxed this year, a largely symbolic move as the government tightens its grip on the exchange rate. Of 24 analysts surveyed by Bloomberg in the past two weeks, 14 forecast the trading band will be widened in 2015, up from eight out of 22 in a January poll. While the monetary authority currently allows the currency to diverge a maximum 2 percent from a reference rate, the interbank exchange rate has stayed so close to 6.2 a dollar since March 19 that National Australia Bank Ltd. has called the level a de facto peg. The People’s Bank of China is suppressing exchange-rate swings in the yuan, the only emerging-market currency to keep pace with the dollar over the past year, as it pushes for inclusion in the International Monetary Fund’s Special Drawing Rights. The next five-yearly review is scheduled for October. The yuan failed to make the cut in 2010 as it wasn’t deemed to be freely usable, a condition for entry into the basket of official reserve currencies. “China’s vocal desire to join the SDR has changed my assessment on the timing,” said Kenix Lai, a Hong Kong-based currency strategist at Bank of East Asia Ltd. “The pace of reforms has accelerated to win inclusion, and a wider yuan band could be among them. I now see a possible move in September or
As China keeps its eyes on the SDR basket, the risks of a sharp depreciation would be low Suan Teck Kin, UOB, economist
The situation has now changed, with the yuan rising 0.9 percent since PBOC Deputy Governor Yi Gang on March 12 confirmed that officials were “actively” in talks with the IMF on SDR inclusion. The yuan’s close at 6.2095 a dollar last week is 1.6 percent off the reference rate of 6.1104. The currency, known officially as the renminbi, has stayed within 0.4 percent on either side of 6.2 since March 19 as the PBOC boosted the fixing by 0.6 percent. The currency will stay around that level through the next 12 months, according to median estimates in Bloomberg surveys.
Symbolic step
October.” She earlier hadn’t expected a change in 2015.
Narrow range
Nineteen analysts in the Bloomberg survey see the daily trading band expanding to 3 percent in the next adjustment. Six predict a move in the July-September period, while seven expect a revision in the final three months of this year. One forecasts a change before the end of June. There were 10 estimates for an expansion after 2015. The central bank last widened the range in March 2014, doubling it from 1 percent. The spot rate traded within 0.2 percent of the band’s weak end from late January to early March this year, on concern over an exodus of funds as economic growth slowed.
Any widening would be a “symbolic move” as the spot rate is unlikely to have greater price swings, said Eddie Cheung, Standard Chartered Plc’s Hong Kong-based strategist. United Overseas Bank Ltd. said it could be a “gesture for optics.” “For the purpose of SDR, China is likely to show more progress on the renminbi front and most likely before the IMF meeting in October,” said Suan Teck Kin, UOB economist in Singapore. Politics could be a hurdle, according to Bank of Communications Co. The U.S., which holds 17 percent of votes on the IMF’s executive board, will discuss China’s pursuit of a marketdetermined exchange rate at a two-day bilateral dialogue in Washington this week, according to a Treasury official. “It’s not that easy to win inclusion this year,” said Lian Ping, chief
economist at Bank of Communications in Shanghai. “The IMF would have a lot to consider and must reflect the stance and thoughts of major countries.”
Rising usage
BlackRock Inc. said last week that it’s only a matter of time before the yuan becomes a reserve currency. The IMF’s mission to China last month dropped a long-held view that the yuan was undervalued, and said that it would work with Chinese authorities on inclusion. The currency was the fifth most-used in global payments in April, behind the dollar, euro, British pound and the yen, according to the Society for Worldwide Interbank Financial Telecommunications. It overtook the euro to rank second in global trade finance in 2013. To bolster its case, China has expanded a network of yuan-clearing banks to 15 cities including Seoul, Paris and Toronto, and plans to start a cross-border payment system this year. A trial program allowing qualified individual Chinese investors to buy overseas securities is set to begin soon. “A widening of the trading band is a further step in China’s exchange rate reform,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co in Hong Kong. “The most likely outcome is a conditional yes from the IMF, meaning a final review and acceptance in 2016 on condition that the renminbi will become more freely usable.” Bloomberg News
Business Daily | 11
June 24, 2015
Asia
Singapore shipbuilders linked to Brazilian bribe scheme Under the alleged scheme that would have spanned more than a decade Sabrina Valle
S
ingaporean shipbuilders Keppel Fels Ltd. and Jurong are sinking deeper into a graft scandal that has transfixed Brazil and buffeted local oil industry suppliers. Keppel Fels and Jurong, a unit of Sembcorp Marine Ltd., were allegedly among a group of companies that paid bribes through intermediaries to win contracts for building 21 deep-water drilling vessels that cost about US$800 million each, according to testimony released Friday by a Brazilian court. The contracts were awarded by Sete Brasil, a company set up by a group of Brazilian banks and Petrobras to build deepwater rigs and then lease them to the state-controlled oil producer. Keppel and Sembcorp -which refuted participation in the scheme in February, when testimony to police identifying them was released -- didn’t respond to e-mails and phone calls seeking comment for this story. The unfolding Petrobras scandal threatens to derail Brazil’s plans to develop a domestic industry to compete with established offshore vessel suppliers in China, South Korea and Norway as Petrobras invests billions in a bid to double output from giant fields deep in the Atlantic. Sete has faced
Singaporean firms paid bribes through intermediaries to win contracts for building 21 deepwater drilling vessels that cost about US$800 million each
loan delays from Brazil’s development bank during the investigation. The allegations were made by Pedro Barusco, a former Petrobras and Sete director who has agreed to return to authorities about US$97 million that he says he earned from bribes, including payments from
The arrest of Petrobras executive Marcelo Odebrecht (C) triggered the bribery accusations
shipyards to win work with Sete.
Odebrecht arrest
Shipyard payments were cited by police and a court overseeing the case when it issued the warrant to arrest Marcelo Odebrecht, the chief executive officer of engineering and construction group Odebrecht SA. Od eb r ech t h a s d en i ed wrongdoing and a judge has yet to accept formal charges. A consortium in which Kawasaki Heavy Industries Ltd. has a participation was also cited in the testimonies used by the judge. Kawasaki partnered with companies including Odebrecht in
Estaleiro Enseada do Paraguacu, another shipyard that won contracts with Sete. The chief executive officers of Kawasaki Heavy’s partners have been detained and questioned as part of the police investigations. Under the alleged scheme that would have spanned more than a decade, political parties helped promote favoured candidates to positions of influence inside the oil producer, formally known as Petroleo Brasileiro SA. Allegedly, these executives then charged bribes for contracts and part of the proceeds went to help finance campaigns. Barusco said he collected bribes at Petrobras from 1997
Malaysian state firm plan to issue 2015 largest global Islamic bond The company is looking at a single issue bond rather than a series and has approached several banks to court proposals Al-Zaquan Amer Hamzah and Yantoultra Ngui
M
alaysia’s Tenaga Nasional Bhd plans to raise as much as 10 billion ringgit (US$2.7 billion) in an Islamic bond issue, sources familiar with the matter said - a move that comes after it agreed to buy debt-laden 1MDB’s majority stake in a power plant project. The bond by Malaysia’s national utility would be the largest sukuk globally this year, a major boost for the sukuk market after issuance fell in the first quarter to its lowest point in four years. Plans for the issue are still preliminary, two sources said. Tenaga, in which state pension fund Khazanah
is the biggest shareholder, is looking at a single issue bond rather than a series and has approached several banks to court proposals, said one of the sources. The sources declined to be identified as discussions about the bond proposal were confidential. A spokesman for Tenaga declined to comment. This month, Tenaga agreed to buy 1MDB’s 70 percent stake in 3B, a greenfield 2,000 MW coal-fired plant project for a yet to be determined sum - a sale that will help the troubled state investment fund pare down debt of more than US$11 billion.
KEY POINTS The issue would be largest sukuk globally in 2015 Plans still preliminary, single issue bond eyed- source Tenaga has said purchase of power plant stake not a bailout
until 2010 and continued the practice when he moved to Sete. He left Sete in 2013. Keppel said in a previous statement that employees are required to conduct themselves with integrity and in compliance with laws and regulations of countries in which it operates. Sembcorp Marine, which owns the Estaleiro Jurong Aracruz shipyard, didn’t make any illegal payments and the group’s policies and contracts prohibit bribery and unethical behaviour, it said in a statement in February. Kawasaki Heavy Industries didn’t respond to e-mails seeking comment. Bloomberg News
Chief Executive Officer Azman Mohd has defended the deal, saying Tenaga would not pay a premium and it was not bailing out 1MDB. Tenaga’s shares initially slid as much as 7 percent late last week on news of the planned purchase but have since regained lost ground. They were little changed in yesterday trade. 1MDB, whose board of advisers is chaired by Malaysian Prime Minister Najib Razak, won the rights to build 3B in 2014, beating out Tenaga and other bidders. But the state fund’s liquidity problems put its ability to build the plant in question. Japan’s Mitsui & Co owns the remaining 30 percent of the project. It is the first power asset to be disposed of by 1MDB, as the fund looks to unwind its businesses and repay the huge debt that has weighed on Malaysia’s currency and the country’s credit rating. 1MDB has shelved its plans for a US$3 billion IPO of its power assets, sources told Reuters earlier this month. Tenaga’s planned issuance will be the largest in the world this year, surpassing a US$2 billion sukuk by the Indonesian government last month and a US$1.25 billion sukuk by Malaysian state oil firm Petronas in March. Reuters
12 | Business Daily
June 24, 2015
Asia
Singapore May inflation aims at easing The all-items consumer price index fell 0.4 percent in May from a year earlier, after sliding 0.5 percent in April Masayuki Kitano and Jongwoo Cheon
S
ingapore’s annual core inflation in May hit a five-year low, data showed yesterday, giving the central bank leeway to ease monetary policy if economic growth disappoints in coming months. The Monetary Authority of Singapore’s core inflation gauge in May slowed to 0.1 percent from a year earlier, the lowest reading since January 2010, when it fell 0.5 percent. The drop in core inflation was mainly due to government measures in the budget that had an impact on the costs of services as well as food inflation, the MAS and the Ministry of Trade and Industry (MTI) said in a statement. “The striking decline in core inflation in Singapore will put the spotlight firmly back on the MAS, which has been arguing that underlying price pressures could tick up because of wage gains owing
At its policy review in April, the Monetary Authority of Singapore (headquarters pictured) left policy unchanged
to a tight labour market,” said Bejamain Shatil, an economist for JP Morgan in Singapore. Shatil added that the core inflation rate - which excludes costs of accommodation and private road transport - could
dip into negative territory later this year along with the headline consumer price index. Singapore’s services inflation in May eased to 0.5 percent year-on-year from 1.1 percent in April.
This was largely due to measures to reduce the concessionary foreign domestic worker levy and the waiver of national examination fees, along with a smaller rise in telecommunication services
Indonesia seeks to mend fences with wary investors in resources
N
Obstacles to reforms
them and is looking to push back a 2017 deadline banning copper concentrates exports and could ease its ban on bauxite exports.
Disputes
coal and gas, but foreign firms often complain about legal uncertainty, red tape and haphazard implementation of policies. This policy uncertainty came to a head last year when Jakarta pressed on with the ban on mineral exports, even though there was not enough smelting capacity yet to process shipments. While supporting the plans, Widodo’s government now admits there were mistakes implementing
Reuters
Still, enticing investment at a time when most commodity prices have slumped won’t be easy, particularly without co-ordinated policy making. The mining and energy ministry says it is holding regular meetings with other ministries, state-owned enterprises and industry bodies in a bid to fix this.
Foreign direct investment in mining slipped to US$4.67 billion last year from US$4.82 billion ationalistic policies imposed by Indonesia’s previous administration - including a ban on unprocessed mineral exports threw the resources sector into turmoil last year. Now, there are signs under President Joko Widodo that the government is trying to mend fences with wary investors and entice more money back into resources. Indonesia’s resources sector contributed about 12 percent of GDP last year, or about US$101 billion, but investment slipped and the ban on exporting minerals cost US$6 billion in lost revenue. The government now plans to relax parts of the ban, as well as pushing to resolve some protracted mining disputes and dealing with a backlog of expiring energy contracts that have frustrated foreign investors. Indonesia is a top producer of metals such as copper, as well as
fees, the MAS and MTI said. The MAS kept its 2015 core inflation forecast unchanged at 0.5 percent to 1.5 percent on average and headline inflation forecast steady at -0.5 percent to 0.5 percent. May’s slide in headline CPI marked the seventh straight month in which the all-items CPI fell from a year earlier, matching a similar streak from November 2001 to May 2002. Annual headline CPI has been falling since November due to a slide in global oil prices in the second half of last year as well as falls in housing rents and private road transport costs. The MAS eased its exchange-rate based monetary policy in an unscheduled policy review in January, saying the inflation outlook had “shifted significantly” due to plunging oil prices.
Widodo, who took office in October, will need to win the trust of the industry to meet a target of increasing mining revenue by about 50 percent this year to support a flagging economy. According to a source familiar with the negotiations, London-listed Churchill Mining is in talks with the government aimed at reaching a settlement in a long-running arbitration dispute over the licensing of a Borneo coal project. The government and FreeportMcMoRan also said this month that they were closer to agreeing a new contract to operate the U.S. miner’s giant Papua copper mine after earlier threats to remove its permit over a smelter dispute.
The government has also been pushing plans to overhaul Indonesia’s oil and gas sector and tackle a so-called “oil mafia” accused of skimming money in oil deals. But Widodo still faces obstacles to his policies, particularly since he lacks a majority in parliament, as well as facing legal challenges from Muslim groups such as Muhammadiyah over private participation in the oil, gas and water sectors. Nonetheless, in another sign that issues are being fixed, Indonesia last week said it would allocate Total and Japan’s Inpex a 30 percent stake in the Mahakam oil and gas block once the French major’s operating rights to the country’s top gas field expire in December 2017. The decision resolves a more than seven-year tussle over the block, and follows calls for it to be handed over entirely to state-owned energy firm Pertamina. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luis Gonçalves, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 editor editor@macaubusinessdaily.com newsroom newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
Business Daily | 13
June 24, 2015
Asia Asia dividend-paying equity funds take top spot China, India, South Korea and Australia have all cut interest rates in recent months, spurring capital flows into higher-yielding investments Muralikumar Anantharaman
A
sia dividend-paying equity funds are drawing billions of dollars that could have gone into other equity funds in the region, as investors seek out assets that yield more than bonds but are less risky than direct stock purchases. In January-to-May, dividend funds
accounted for three of the top five Asia equity funds ex-Japan with the most fund inflows, according to data from Lipper, a Thomson Reuters unit. The OkasanAM Asia Oceania Good Dividend Growth fund pulled in the most capital. Inflows jumped four-fold from a year earlier to around US$2.1
billion, compared with outflows from the region’s biggest equity funds such as the Templeton Asian Growth Fund and the Aberdeen Global Asia Pacific Equity Fund. China, India, South Korea and Australia have all cut interest rates in recent months, spurring capital flows into higher-yielding investments including dividend equity funds. Similarly in the United States and Europe, dividend-themed funds have seen strong inflows due to low interest rates. “Clearly, low interest rates have been a driver of the increased flows into equity dividend funds and the higher flows will continue at least for the next two, three years,” said Chuck Ng, CEO of Value Partners Asset Management Singapore. Other factors contributing to the growing appetite for Asian dividend funds are new investment opportunities in markets such as South Korea. A new law in South Korea taxing excess corporate cash is compelling traditionally tight-fisted companies to pay more dividends, making them attractive to incomeseeking investors. The Value Partners High-Dividend Stocks Fund, No. 4 on the top-five list, saw an inflow of US$704 million in the first five months versus an outflow of US$105 million a year earlier. Of its US$4.06 billion portfolio, 16 percent was invested in Korean stocks, with Amorepacific and Samsung Electronics among its top holdings. The portfolio’s dividend yield was at 3.8 percent at the end of May. In contrast, the average dividend yield for large- and mid-cap stocks in the Asia-Pacific region is 2.4 percent. Reuters
Australian home prices heat up Wayne Cole
A
A Sydney panorama
Average values across the state capitals rose 1 percent, from the previous week, with Sydney alone up 1.6 percent and Melbourne 1.4 percent. Annual growth in prices picked up to 9.1 percent nationally and a frothy 15 percent in Sydney. Demand was also strong with almost 84 percent of home auctions in Sydney proving successful, and 79 percent in Melbourne. Some increase in prices was always necessary to drive a much-needed revival in home building. And it’s working with approvals to build new homes at a record high, providing jobs and supporting economic growth. But speculative demand has grown so fierce in Sydney it prompted RBA governor Glenn Stevens to label it “crazy”. The central bank fears it could ultimately push prices to peaks that threaten a vicious pullback.
A group of lawmakers from Japan’s ruling Liberal Demoractic Party proposed yesterday to raise deposit limits on Japan Post’s banking unit to 30 million yen per account from 10 million yen, as the state-owned mail and financial giant prepares for IPO later this year. It remains uncertain whether the government will approve the higher limit for Japan Post Bank - the biggest bank in the country by deposits. Private-sector banks are fiercely opposed to the move as small community lenders are concerned about outflows of their deposit money to a bank indirectly owned by the government.
Indian gov’t demands punctuality of employees The Indian government has warned all its employees to be in office on time, else disciplinary action would be taken against them. “Habitual late attendance is viewed as conduct unbecoming of a government servant and disciplinary action may be taken against such a government servant,” the personnel department said in a letter issued to all central government departments. It added “It is also added that punctuality in attendance is to be observed by government servants at all levels. Responsibility for ensuring punctuality in respect of their employees rests within ministries, departments or offices.”
Sharp shareholders re-elect CEO
Prices across all the major cities rose 1.6 percent in the three months to March
ustralian house prices have risen for the 10th straight quarter led by another outsized gain in Sydney, adding to concerns about an overheating market and diminishing affordability in the city. Yesterday’s data from the Australian Bureau of Statistics showed prices across all the major cities rose 1.6 percent in the three months to March, lifting annual growth to 6.9 percent. The heat was again very much concentrated in Sydney where prices were up over 13 percent on the year, and that was before the Reserve Bank of Australia (RBA) cut interest rates to a new low of 2 percent in May. More timely data from the housing industry had hinted at a cooling down over the last month or so, partly due to the onset of winter. Yet the latest survey from property consultant CoreLogic RP Data found a sudden rebound last week.
Japan’s ruling party proposes Post Bank changes
Regulators have tightened their coverage of lending standards for property investment and there are tentative signs banks are slowing growth in their mortgage books. Affordability, or rather the lack of it, has also become a political hot potato. Treasurer Joe Hockey drew much criticism this month when he advised would-be buyers in Sydney to “get a good job that pays well” as the first step to owning a home. The media is full of stories of suitcase-sized apartments fetching truck loads of cash or hundred-yearold houses going for far above the reserve price at auctions. Lawmakers have launched their own inquiry into affordability which kicks off with a public hearing on Friday seeking policies to allow all Australians to have a “fair chance” to own a home. Reuters
Sharp Corp’s shareholders re-elected CEO Kozo Takahashi and approved plans for a second bank bailout yesterday, backing the electronics company’s strategy to survive a deep downturn in its troubled display business amid fierce competition. Chief Executive Takahashi was re-elected at the end of the annual general meeting in Osaka despite disquiet among investors that his restructuring efforts, including 5,000 job cuts and the sale of its headquarters, did not go far enough. A detailed vote count was not immediately available, but support is expected to have fallen from 97 percent a year earlier.
Nissan paid CEO Ghosn US$8.4 mln Nissan Motor Co said yesterday it paid Chief Executive Carlos Ghosn 1.035 billion yen (US$8.39 million) last business year, up 4 percent from the previous year. Ghosn, one of the highest-paid CEOs in Japan, received 995 million yen in compensation in the year ended March 2014. Ghosn is also CEO of Nissan’s alliance partner, Renault SA, which paid him 7.2 million euros (US$8.17 million) in 2014. He is also chairman of the board at their Russian partner, AvtoVAZ. Top salary in Japan was Nikesh Arora, SoftBank president, who made US$135 million in roughly half a year.
14 | Business Daily
June 24, 2015
International Russia conservative about reserves Russia needs a more conservative approach towards its reserves, the central bank said yesterday, noting risks to financial stability from limited access to foreign capital, tighter U.S. monetary policy and volatile oil prices. The bank said in its Financial Stability Review that Russia was well hedged against global markets imbalances, but the rouble could weaken and higher capital flight increase if the U.S. Federal Reserve raised rates. Russia is sliding into recession this year, hit by sanctions over its role in Ukraine and last year’s steep fall in oil prices. The central bank expects the economy to shrink 3.2 percent this year.
Green shoots in gold mining sector The global gold mining industry is showing signs of life as merger activity picks up and industry veterans set up new companies and hunt for projects, taking advantage of weak prices to lay the groundwork for a rebound. Almost four years after the price of gold began tumbling, cash-starved and debt-ridden miners are selling, merging or closing shop, pushing the value of completed gold mining mergers and acquisitions in the first five months of this year to US$3 billion.
Moscovici ‘convinced’ a Greek deal will be struck The European Union’s commissioner for economic affairs said yesterday he was “convinced” that Greece and its creditors would strike a deal on Athens’ debt. “I am convinced that we will reach an agreement,” Pierre Moscovici told French radio as hopes rose that a solution to the five-month standoff between Athens and its creditors could be found. Moscovici warned however that “work remained to be done” on the question of value-added tax and pension reform.
German supermarket chain hits back at tax avoidance claims German supermarket chain Aldi angrily responded yesterday to recent insinuations from rival Wesfarmers boss Richard Goyder that it might be avoiding tax in Australia. Aldi termed the comments made Monday by the boss of the company which owns supermarket giant Coles “misinformed and factually incorrect”. In response to the attacks, Aldi has, for the first time, released some financial information about its recent performance in Australia, News Corp reported. That release showed local sales reached A$6 billion (US$4.62 billion) in the 12 months to December 2014, compared with A$5.3 billion (US$4.08 billion) in 2013.
Argentina issues more local debt Argentina raised 5.10 billion pesos (US$563.2 mln) from an over- subscribed sale of local debt on Monday, the Economy Ministry said, continuing with a policy of drumming up cash at home given rising spending and difficulty tapping global credit markets. The ministry said it had received bids worth 2.6 times the total 3 billion pesos of “Bonac” (bonds of the national treasury) notes offered, which is why it expanded the sale.
Euro zone business growth accelerates Firms, however, cut prices deeper to drum up new business in June, a survey showed Sumanta Dey
E
uro zone private businesses expanded at their fastest pace in four years this month, a survey showed yesterday, providing the clearest signs yet of a solid recovery in the region. The bright readings for the euro zone were complimented by surveys out of Germany and France, the bloc’s two largest economies, which showed both factories and services firms grew much more quickly than expected. Coming at a time when global financial markets are transfixed by the stand-off between Greece and its creditors, the data are likely to cheer the European Central Bank which is printing 60 billion euros a month to boost growth and inflation. Markit’s Composite Flash Purchasing Managers’ Index, based on surveys of thousands of companies and seen as a good growth indicator, rose to 54.1 from 53.6, matching the most optimistic forecast in a Reuters poll. It was the highest reading since May 2011. “This is a decent upturn in terms of business activity, demand and jobs growth and points to 0.4 percent economic growth in the second quarter,” said Chris Williamson, chief economist at survey compiler Markit. The PMI has now been above the 50 level that separates growth from contraction for two years and that GDP prediction matches a Reuters poll taken last week. To meet the demand firms took
on more workers and an employment sub-index only dipped to 51.9 from May’s four-year high of 52.3. The bloc’s dominant service industry contributed to most of the overall surge and a PMI covering those firms surged to a four year high of 54.4 from 53.8 in May, above all forecasts in a Reuters poll whose median forecast was 53.6. The output price sub index was 49.0, down from 49.3 in May. Consumer prices in the euro zone rose 0.3 percent year-on-year in May, driven by higher food and services costs and a weak euro. Williamson, however, added core inflation which
strips out volatile components such as energy costs is “still very weak”. A factory PMI rose to 52.5 from 52.2, its highest in over a year, while a sub index covering output, which feeds into the composite PMI, nudged up to 53.5 from 53.3. Demand from abroad for the bloc’s goods, however, didn’t pick up as fast as May’s 13-month peak due to a weak global economy and concerns a Greek debt default could break up the monetary union. The new export orders sub index came in at 52.6 from 53.2 in May. Reuters
Forecasters say global vehicle sales growth will downshift China’s auto market, the world’s largest, will grow at a 5.2 percent rate through 2018 Joseph White
T
he pace of growth for global auto demand will slow to a 2.6 percent annual rate over the next seven years, and U.S. sales could hit their peak in 2016, according to a forecast released yesterday by AlixPartners, a consulting firm that works extensively with global automakers. The U.S. market could hit a cyclical trough at about 15 million vehicles for the year in 2019 as interest rates rise and used vehicle prices fall, said Mark Wakefield, head of AlixPartners’ automotive practice in the Americas region. The firm projects U.S. sales of 17.1 million cars and light trucks this year and 17.4 million in 2016. AlixPartners forecasts annual global vehicle sales will grow to 103.2 million vehicles in 2021 from 87.9 million projected for 2015. The
annual rate of growth for the next seven years will be slower than the 3.1 percent pace from 2007 to 2014, when demand in many markets was recovering from the financial crisis. China’s auto market, the world’s largest, will grow at a 5.2 percent rate through 2018, decelerating from a 16.6 percent annual rate from 2005 to 2014, the consulting firm forecast. Low oil prices could keep sales in the U.S. above 17 million vehicles annually through 2017, AlixPartners forecast. Wakefield said low gasoline prices could cause problems for automakers, because consumers could wait nine to 13 years for fuel savings to repay the additional US$3,500 a vehicle in added costs for technology required to meet tougher U.S. fuel economy targets. “You’re fighting the consumer
now,” when the payback for technology goes beyond the six years that most consumers keep a new vehicle, Wakefield told Reuters. Wakefield said he doesn’t expect the U.S. government will back away from its target for automakers to offer vehicle fleets that average 54.5 miles per gallon in government testing. But automakers could get additional credits that could allow them to field fleets that emit more greenhouse gases, and burn more fuel, in everyday driving. Still, automakers are moving to increase the levels of electrification in cars - using hybrid power systems and technology that replaces mechanical and hydraulic brakes or power accessories with systems that operate electronically, Wakefield said. Reuters
Business Daily | 15
June 24, 2015
Opinion Business
wires
Magna Carta at 800
Leading reports from Asia’s best business newspapers
Peter Singer
Professor of Bioethics at Princeton University and Laureate Professor at the University of Melbourne
THE PHNOM PENH POST Following Cambodia’s loss of a hefty Filipino rice tender to Vietnam last week, industry insiders say logistics and production costs are hampering the competitiveness of the Kingdom’s rice exports. Cambodia lost a 100,000-tonne tender for the fourth time running after its final price of US$455.50 per tonne came in way higher than the Vietnamese company’s final US$416.85 per tonne deal, itself only marginally lower than Thailand’s US$417. The higher prices begin at the local level, said Khan Kunthy, head of BRICO, a rice miller established in 2013.
THE STRAITS TIMES The value of announced mergers & acquisitions involving Singapore companies reached US$21.4 billion (S$28.7 billion) so far this year, a 61.3 per cent fall from a strong first half period in 2014 (US$55.2 billion). Deal value fell off sharply in the second quarter of this year - amounting to US$7.8 billion, down 43.0 per cent from the first quarter of 2015 and 68.3 per cent from the second quarter of 2014. Total cross-border deal activity amounted to US$12.8 billion, a 61.8 per cent decline compared to the first half of 2014 (US$33.4 billion).
THE TIMES OF INDIA India’s economy is on the cusp of the “hockey stick” curve before take-off, and has the potential to overtake the United States within 25 years, the billionaire chairman of Japan’s SoftBank Group said, promising to back his conviction with money to make such an outcome a reality. Masayoshi Son, 57, who has pledged to invest a total of US$30 billion (Rs 1.9 lakh crore) in India so far, told that it will be India and China fighting for the number one and two.
INQUIRER.NET Most (Philippine) local oil companies reduced pump prices of diesel amid lingering pressure due to excess supply. Petron, Shell and Seaoil cut diesel prices by 25 centavos per litre yesterday. There was no movement for gasoline. International oil trends monitoring agency Platts said the gasoil/diesel refineries started to return from scheduled maintenance and were running at higher rates due to good margins. So far, total adjustments this year have resulted in net increases of 5.69 pesos per litre for gasoline and 96 centavos per litre for diesel since January.
F
ly out of London’s Heathrow Airport and you may pass over a grassy field called Runnymede. Eight hundred years ago this month, it offered a colourful spectacle, dotted with the tents of barons and knights, and the larger pavilion of King John of England, looking like a circus top with the royal standard fluttering above. Despite the gathering’s pageant-like appearance, the atmosphere was undoubtedly tense. The purpose was to settle a conflict between rebellious barons and their king, a ruler described by a contemporary as “brimful of evil qualities.” John’s efforts to raise money to regain lost lands in France exceeded the usual taxes and levies that the nobles had accepted from his predecessors. The king seized the estates, and sometimes the person, of wealthy lords or merchants and demanded hefty payments for their release. If his years of amassing cash had led to victory, John might have got away with his arbitrary methods; but when he was defeated in France, a group of barons rose up against him and captured London. As part of a peace deal brokered by the Archbishop of Canterbury, the king accepted the baron’s demands, put to him in a document called Magna Carta, or “the Great Charter.” Magna Carta was not the first charter to be granted by an English king. A century earlier, Henry I, by issuing a Coronation Charter, had indicated that he would be more respectful of the nobles’ privileges than was his predecessor. But Henry’s successors soon returned to the arbitrary ways of kings in those times.
There is nothing in Magna Carta that prevents the enactment and enforcement of unjust laws; but it does elevate the law above the ruler’s will
Magna Carta, too, looked like it might be short-lived. It was soon annulled by Pope Innocent III, who had formed an alliance with the king. But John died the following year, and the nobles backing his successor, the nine-year-old Henry III, needed support against a rival claimant to the throne. To gain that support, Henry’s government reissued its own version of Magna Carta, which remains part of the laws of England. Copies were made and dispersed to many of the great English cathedrals. The Latin original was translated first into French, the language of the nobility, and then into English. By the end of the century, peasants were citing it in a struggle against injustice. The first printed edition was made in 1508. In the 1640s, parliamentarians saw in it a legal basis for their overthrow of King
Charles I. Later rebels, including the American revolutionaries and Nelson Mandela, have similarly justified their actions by appealing to Magna Carta. What these fighters for justice and freedom take from this 3,500-word document is the brief statements of general principles in response to John’s arbitrary seizure of his subjects’ property and person. In its 39th Chapter, Magna Carta states: “No free man is to be arrested, or imprisoned, or diseised [dispossessed], or outlawed, or exiled, or in any way destroyed, nor will we go against him, nor will we send against him, save by the lawful judgement of his peers or by the law of the land.” Chapter 40 states, concisely, another powerful principle: “To no one will we sell, to no one will we deny or delay, right or justice.” These two chapters have their modern echo in the 14th Amendment to the US Constitution, which decrees that no state shall deprive anyone of life, liberty, or property “without due process of law” or deny anyone “the equal protection of the laws.” Yet Magna Carta is not a democratic document. Although it established the requirement of common consent to taxation, that consent was to be obtained from an assembly of earls, barons, bishops, and abbots – in the age of chivalry, not even knights were invited to participate. The idea that towns such as London should be represented was voiced at the time, but it found no place in the final text. What Magna Carta shows, therefore, is that “Who rules?” is one question, and “What, if any, are the limits to political power?” is another.
Because Magna Carta attempted to set limits to political power without grounding these limits in the sovereignty of the people, it demonstrated a problem with which philosophers have grappled for even longer than 800 years. From where do the principles that constrain rulers come, if from neither the rulers nor their subjects? The tradition of natural law offers an answer that was familiar to medieval scholars, for whom natural law was knowable to us by our natural reason (as opposed to those laws that could be discovered only through divine revelation). Magna Carta’s key principles can be seen as derived from reason because the very idea of a law excludes arbitrary arrest and seizure, as well as the rendering of a verdict on any grounds other than the proper application of the law. If A is legally bound to return B’s cow when she strays onto his land, and then C’s cow strays onto B’s land in relevantly similar circumstances, B must also be bound to return C’s cow. C need not bribe the judge to get his cow back. There is nothing in Magna Carta that prevents the enactment and enforcement of unjust laws; but it does elevate the law above the ruler’s will. Unfortunately, that idea still is not accepted in many countries. Moreover, as the continued existence of the US prison camp at Guantánamo Bay shows, even among countries that trace their political institutions to Magna Carta, perceived security threats have weakened the requirement that no one be arrested except under the law of the land, and that justice not be delayed. Project Syndicate
16 | Business Daily
June 24, 2015
Closing Li Ka-shing “disappointed” by Hong Kong democracy veto China approves US$21 bln-worth of subway system projects Asia’s richest man, Li Ka-shing, said yesterday he was “very disappointed” by Hong Kong’s failure to pass a China-backed electoral blueprint that would have granted a one-man one-vote in the city but only for candidates pre-screened by Beijing. However he also said he wouldn’t be withdrawing any investment from the free-wheeling business hub. In recent weeks, other business leaders, including tycoon Lee Shau-kee, the head of Henderson Land, said a failure to back the package would hurt Hong Kong at a vulnerable time given its reliance on a slowing Chinese economy.
Top economic planner has approved two subway system projects worth 129.8 billion yuan (US$20.91 billion), according to documents published yesterday, continuing a run of infrastructure approvals as the government looks to support its slowing economy. The National Development and Reform Commission said on its website that it approved the third construction phase of a subway system in Wuhan, capital of central Hubei province, which it estimated to cost 114.9 billion yuan. It also gave the go-ahead to a revised 14.86 billion yuan plan for a urban rail system in Changchun, capital of Jilin province.
Taiwan May export order slump deepens gloom for tech demand Orders in the island are seen as a leading indicator of demand for Asia’s exports and for hi-tech gadgets J.R. Wu and Michael Gold
T
aiwan’s export orders in May fell at their fastest pace in more than two years, darkening the outlook for global technology demand that will likely hurt the island’s technology exports. The worse-than-expected
5.9 percent annual decline in May came against expectations for a 0.65 percent fall in a Reuters poll and widened from a 4 percent slide in April. May’s drop was the worst since March 2013. The weak data is unlikely to change economists’ views
Taiwan’s exports rely heavily on electronics market
that the central bank will probably stand pat on interest rates when it meets to review policy on Thursday. Taiwan is seen in no hurry to lift rates even if the U.S. Federal Reserves raises interest rates given uncertainties in Europe
from Greece’s debt woes and China’s slowdown that continues to muddy the outlook for the island’s export-related demand. “This slide was too pronounced. Nothing has been that bad in the world,” said Tim Condon, economist with ING in Singapore. Condon said oil prices like continued to play a role in depressing the value of export orders. May’s US$35.8 billion in export orders marked the second month-on-month decline in overall orders. While the ministry said the value of June orders should increase from May levels, ministry official Lin Li-jen told reporters: “We aren’t seeing a huge spike in demand.” Asia is struggling to overhaul an economic model based on exports and is confronting a patchy global recovery. It is tough to see much into the second half, said Adam
Lin, chief executive officer at Largan Precision Co Ltd, a leading Taiwanese lens manufacturer whose goods are found in cameras fitted in mobile devices. Lin, who spoke at a news conference earlier this month, said that business for the month of June for his company should be about the same as May, though it should pick up in July. Orders from China in May fell 11.6 percent, worse than the 10.3 percent decline in April, while U.S. orders rose 5.2 percent, down from 14 percent growth in April. Europe orders fell 1.7 percent in May and Japanese orders dropped 23.8 percent. Some economists estimated Taiwan’s export orders may see an annual decline for the full year compared with the bumper 2014 due to the launch of new iPhone models last year
World Bank announces US$500 million for quake-hit Nepal
Mobile gaming to generate US$7.0 billion by 2019
Japan to host G7 summit meeting next year
T
S
J
he World Bank announced yesterday it will provide up to US$500 million for reconstruction in quake-devastated Nepal which is preparing to host a major conference to increase donations. The twin quakes that struck in April and May killed more than 8,800 people, destroyed nearly half a million houses and damaged another 280,000, leaving thousands in need of food, clean water and shelter. The impoverished Himalayan nation will need around $6.7 billion, roughly a third of the value of its economy, to recover from the disaster, according to a preliminary assessment by the government. The World Bank’s assistance will include US$200 million towards rural housing and US$100 million to strengthen the banking system following a post-quake economic slowdown. An additional US$100 to US$200 million will be redirected from existing World Bank projects towards unspecified reconstruction efforts. Nepal has sent out 65 invitations, including to 36 countries, for Thursday’s one-day conference in Kathmandu which will brief donors and appeal for funds to support its reconstruction plans. AFP
outheast Asia’s mobile gaming revenues are expected to grow six-fold to over US$7.0 billion in the next five years thanks to smartphones and high-speed Internet access, an industry report said yesterday. Revenues only crossed the US$1.0 billion mark in 2014 but are expected to rise at a compounded annual growth rate of 48 percent until 2019, making Southeast Asia the fastest-growing region for the industry, business consultancy Frost & Sullivan said. The growth is being “driven by the rapid increase of broadband users, usage of smart devices and social media,” it said in a press statement. Southeast Asia’s more prosperous economies such as Singapore and Malaysia largely account for the bulk of current mobile gaming revenues, but other countries are quickly expanding, the statement added. “This is changing quickly, however, as markets like Thailand are now over 50 percent smartphone markets and Indonesia and Vietnam are also rising rapidly,” the statement said. “By 2019, we believe that smartphone usage will become mainstream in the region.” AFP
Reuters
apan will host a summit meeting of the Group of Seven industrialized nations on May 26-27 next year in the city of Shima in Mie Prefecture, central Japan, local media reported yesterday. The country will also host ministerial meetings, such as foreign affairs and finance, however the time and venue of them haven’t been decided yet, Chief Cabinet Secretary Yoshihide Suga said at a news conference, adding the Japanese government will announce relevant messages in due course. “The government will do its best for the success of the Ise-Shima Summit,” Suga said. “The period was decided as a result of coordination with other G7 members.” The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States. Japanese Prime Minister Shinzo Abe announced on June 5 that Japan will host a summit of G7 in the city of Shima in Mie Prefecture in 2016 under its presidency. Asked whether Japan is considering inviting Russian President Vladimir Putin to the 2016 summit, Suga said “nothing has been decided.” Xinhua