MOP 6.00
Beijing relaxes rules for HK’s accountants to audit Chinese firms
Closing editor: Luís Gonçalves
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Air Macau to acquire A320 aircraft from Air China Page 2
Gov’t to pay MOP8.8 mln for public housing design project
Macau Legend to invest MOP1.6 bln in Cape Verde casino Page 6
Year IV
Number 839 Tuesday July 21, 2015
Publisher: Paulo A. Azevedo
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Social Security Fund Dwindling It’s the rockbed of the community. The city’s Social Security Fund supports pensions and allowances. But expenses for 2014 outstripped revenue almost threefold. The Fund is far from sustainable under its own steam. Receiving 90 pct of its revenues from the gov’t. Which in turn uses tax transfers plus an extra injection of MOP5 billion. The International Monetary Fund warns of the lack of a long term strategy given the ageing population Page
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Gradually graduating Graduate education. Macau features a local style but has achieved much in 20 years. But it falls down on ‘internationalisation’ and ‘academic ambience’, says researcher Yongqian Li of the College of Management of Jinan University. In terms of its education system, the city is closer to Taiwan than HK, it’s maintained
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Green Light Ads. The Macau Gov’t is a believer. And will pay outdoor ad company JC Decaux (Macau) Ltd. MOP2.88 million (US$360,733) this year and next to lease the city’s bus shelters. And the posting of gov’t advertising on LED backlit lightboxes on the shelters
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www.macaubusinessdaily.com
Politics
Electoral changes Making progress. Secretary for Administration and Justice Sonia Chan Hoi Fan has a tough portfolio. A preliminary proposal amending the current Electoral Law for the Legislative Assembly (AL) will be completed by the end of this year. Hopefully coming into force by the next AL election in 2017. Electoral transparency is also on her to-do list
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Rebooting Sales
There’s been a non-stop decline in trade. But Chinese companies are now appreciating electronic commerce as a way of getting the message across. Slowing trade is also affecting the core business of several important banks
Pages 8&10
Brought to you by
From Russia with Love
Three casinos in three jurisdictions. Local gaming entrepreneur Lawrence Ho is diversifying investments outside Macau. On August 28 Stanley Ho’s son launches a new casino-resort project in the Russian Far East worth US$172 million. Tiger De Cristal, located in Vladivostok, will not only target the Chinese. Gamblers from Russia, Japan and South Korea are in his sights. A junket promoter from Macau is tipped to be managing the VIP business
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HSI - Movers July 20
Name
%Day
China Resources Land
+1.53
Tencent Holdings Ltd
+1.24
Li & Fung Ltd
+1.14
BOC Hong Kong Holdin
+0.94
CITIC Ltd
+0.88
Tingyi Cayman Islands
-1.26
Hong Kong Exchanges
-1.45
China Unicom Hong Ko
-1.62
Lenovo Group Ltd
-1.67
Belle International Ho
-3.54
Source: Bloomberg
I SSN 2226-8294
2015-7-21
2015-7-22
2015-7-23
26˚ 29˚
26˚ 30˚
26˚ 30˚
2 | Business Daily
July 21, 2015
Macau Air Macau to acquire A320 aircraft from Air China Air Macau is to buy one A320 aircraft from its mother company Air China for 267.8 million yuan (MOP344.3 million) after the decision was approved yesterday by the Board of Directors of the Mainland company. The capacity of the A320 can vary from 150 to 190 seats and Air Macau already has two models similar to this in its fleet. Currently, 14 planes comprise the fleet of Air Macau. The company owns seven A321s, two A320s and five A319s. As the deal is completed, the number of planes will increase to 15.
Gov’t to pay MOP8.8 million for public housing design project
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he government is to pay MOP8.8 million to P & T Architects and Engineers Macau Branch for the architectural design of the public housing in Avenida Marginal do Lam Mau. The decision was published yesterday in the Macau Official Gazette. The payment will span four years starting in 2015, finishing in 2018. During this year, the Macau Government will pay MOP5.2 million and another MOP2.6 million in 2016. No payment is planned for 2017 but in 2018 the treasury will pay around MOP1 million to the Hong Kong-based company. The design of the project will focus on Blocks A to F of the public housing. This is not the first contract awarded by the Macau Government to this company. In 2012, the Macau branch of P & T Architects and Engineers was awarded a MOP6.8 million contract for the
design of the public housing in Rua Choi Long, in Taipa. In September last year, P & T Architects and Engineers was also part of the consortium awarded
the design project for the border checkpoint of the Hong Kong-Zhuhai-Macau Bridge. The contract was worth MOP71 million and the other partners
were JPC Consultadoria de Arquitectura and BLA Consultores de Arquitectura. Hong Kong-based P & T Architects and Engineers is a multinational founded in
1868 and besides the Special Administrative Regions is represented in Mainland China, Vietnam, Malaysia, Vietnam, Singapore, Dubai and Abu Dhabi.
Gov’t to pay JC Decaux IPIM: Macau MOP2.88m for LED Migrant schemes lightbox advertising help attract talent
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he Macau Government is to pay outdoor advertising company JC Decaux (Macau) Ltd. a total of MOP2.88 million (US$360,733) this year and next for the leasing of the city’s bus shelters and posting of government advertising on the LED backlit lightboxes of the shelters, a dispatch published in the Official Gazette said. JC Decaux (Macau), a joint venture
between France’s JC Decaux SA and Macau-based HN Group, has had a presence in Macau for over 13 years. The company was granted a 20year street furniture advertising concession in 2001 by the Macau Government. In 2003, the company was officially granted the Macau International Airport advertising concession – a contract that expires in 2018.
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resident of the Macau Trade and Investment Promotion Institute (IPIM) Cheong Chou Weng says the current two entrant schemes for foreigners applying for local residency will benefit Macau in attracting the talent that the city lacks, and does not intend to halt these schemes as urged by legislator Elle Lei Cheng I in a written interpellation. In her interpellation, the legislator urged the government to suspend non-residents applying for residency through the scheme of the management or technical personnel and the scheme of investment plan or major investment, as they lack transparency in evaluating standards, and attract only capital, respectively. However, Mr. Cheong indicated in his reply that the aim of these two migrant schemes is to attract talent, which will help sustain the city’s development and boost the diversification of the local economy. “[The management or technical personnel scheme] has public transparent evaluation standards,
targeting talent that Macau is short of. Meanwhile, [the investment entrant scheme] is not only targeting attracting capital but helping diversify Macau’s economy and boosting the city to develop as ‘One Centre and One Platform,” the IPIM president wrote. Believing the government should fully review the two migrant schemes, Ms. Lei also enquired whether the government had studied the impact on Macau following the Hong Kong Government’s suspension of its Capital Investment Entrant Scheme for non-residents since the beginning of this year. The IPIM president, however, perceives that Hong Kong’s remaining admission schemes for talent, professionals and entrepreneurs is similar to the two migrant schemes of Macau. “As such, we can see that no matter the Hong Kong Government, local government or different places of the world are still interested in attracting talent that can benefit the local economy,” Mr. Cheong concluded. K.L.
Business Daily | 3
July 21, 2015
Macau
Social Security Fund’s expenses grow almost three times faster than income Last year, the Fund experienced a faster increase in its expenses supporting the city’s pension and allowances, while income has seen more sluggish growth due to the slowdown in gaming revenue Stephanie Lai
sw.lai@macaubusinessdaily.com
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he city's Social Security Fund, which supports the pension and several allowances here, has seen its expenses for 2014 increase at a pace that is almost three times that of the revenue it received as the growth in gaming income has slowed during the year. According to the 2014 annual report of the Fund, its revenue increased 8.61 per cent year-onyear to MOP14 billion (US$1.79 billion) while expenses spent mostly on supporting the pension and allowances increased 22.8 per cent totalling MOP2.85 billion for the year. Nearly 42 per cent of the overall revenue the Social Security Fund registered for 2014 was from the government's appropriation from the city's gaming income, which grew by only 2.58 per cent year-on-year to MOP5.88 billion, as Macau has seen the onset of a gaming slump since June of last year. This appropriation from the city's gaming revenue grew an annual 50 per cent for 2013. The Social Security Fund has remained hugely reliant upon the government's financial support, as gaming income, the reservation of 1 per cent of the 2014 fiscal budget as well as an extra injection of MOP5 billion in the year, have together occupied about 90 per cent of the Fund's total income. From 2013 to 2016, the MSAR Government plans to inject an extra MOP37 billion into the Social Security Fund, a move that the Fund's president, Ip Peng Kin, noted in early 2013 was to prevent the Fund from going bankrupt after 50 years – given that the contribution by employers and employees here is minimal.
Regarding this special injection programme, the International Monetary Authority expressed concern last year, questioning MSAR's long-term strategy to support the pensions here when the population over the age of 65 is set to double in the next decade and grow more than fourfold by 2030. For the whole of 2014 until present, there has been no consensus between the employer and employee parties in the Standing Committee for the Social Co-ordination of Social Affairs regarding how to enhance the current contribution from 45 patacas to 90 patacas, an increase that would be important in helping sustain the Fund. As shown in the 2014 annual report, the contribution by employers and employees here has only increased by 2.32 per cent year-on-year to MOP184.34 million, a segment that accounts for only 1.32 per cent of the Fund's total income. The size of this contribution amount is even smaller than the income derived from the tax on employing non-resident workers here: this tax, which is levied on employers at MOP200 per non-resident worker employed, contributed a total of MOP309 million to the Fund last year, representing a year-on-year increase of 28.6 per cent.
Faster increase in expenses
The higher spending on the city's pension and several allowances, as well as higher salaries for civil servants working for the Fund, has supported the 22.8 per cent increase in the Fund's expenses for 2014, the Social Security Fund said in the annual report.
The total expenses spent on pensions and the several allowances here increased 18.9 per cent yearon-year to MOP2.6 billion last year, the report said. A bulk of these social expenses, about MOP1.24 billion, have been spent on the advance withdrawal of pensions from the city's beneficiaries. Beneficiaries aged 60 but below 65 years old can withdraw their pensions in advance. This group increased by
Business Awards of Macau announces judging panel and partners
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he Business Awards of Macau organisers announced yesterday the list of judges for the 2015 edition. The 30-member panel for the programme, now in its third year, includes returning judges from the previous years’ panels, as well as notable new additions to the high-profile group. The judges include business people, academics and professionals from different sectors of Macau’s economy. The 2015 Business Awards honour commission, advisory board and judging panel comprise: Vong Kok Seng, Paul Tse, Terry Sio ,Paula Ling, José BrazGomes, Henry Brockman, Rutger Verschuren,
Some members from last year’s Business Awards of Macau panel of judges
nearly one-fifth to 44,358 people in 2014, the fund noted. Some 96,809 beneficiaries received pension and allowances from the Fund last year, which is 9.2 per cent more than 2013. Of these beneficiaries, nearly 80 per cent asked for pensions. For 2014, the Social Security Fund registered a surplus of MOP11.16 billion representing an increase of 5.5 per cent.
Paulo A. Azevedo, Lau Pak Hung, Albano Martins, Frederico Rato, Filipe Cunha Santos, Alexandre Correia da Silva, António Conceição Júnior, Anabela Ritchie, Oscar Chan, James Chu, João Francisco Pinto, Jacky Yuk Chow So, Mary Ho, Manuela António, José I. Duarte, Pedro Cortés, Larry Sou, Donald Shaw, António Felix Pontes, João Rodrigues Monteiro, Pawin Sriusvagool, Alice Costa and Bruno Ascenção The judging process will take place in October, with the judges’ scores combined and averaged to determine winners for each category. Winners will be announced on 26th November 2015 in the Grand Lisboa’s Grand Ballroom. The organisers also announced that MGTO will for the third consecutive year be the platinum sponsor. MOME Media & Marketing, a Macau-based company, is the exclusive mobile visual media partner.
4 | Business Daily
July 21, 2015
Macau Management for Wastewater Treatment Plant car park receives 6 bids
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he government opened a tender for the management and operation of the public car park at the Peninsula’s wastewater treatment plant yesterday, with a total of six bids received. The winning bidder will manage 276 parking spaces for cars and 452 parking spots for heavy-duty vehicles for six years. Meanwhile, on the sidelines of the bidding session, the acting department chief of transport management at the Transport Bureau, Mok Soi Tou, revealed that parking fees at 11 of the city’s public car parks will be increased from between September and October this year.
Higher Education: Macau lacks Hong Kong’s academic environment
UM rector delivers speech stressing UM’s role in AULP
Education in the territory is behind Hong Kong in terms of academic ambience but features a distinct local style praised by researcher Yongqian Li of Jinan University
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raduate education in Macau features a local style and has achieved much in 20 years. However, when it comes to internationalisation and academic ambience it is lagging Hong Kong, according to Yongqian Li, a researcher at the College of Management of Jinan University. The article titled ‘Exploration of Hong Kong, Macau and Taiwan Graduate Training Mechanism’ published in the Creative Education Journal’s July edtion analyses the different systems of the territories to suggest the application of the different strengths of each system to Mainland education. “Comparing the graduate education in Hong Kong, Macau
and Taiwan, Hong Kong features deeper internationalisation and academic ambience. The training mechanism in Macau and Taiwan features a distinct local style”, the author finds in the conclusions. The research paper also explains that Macau’s higher education system is much closer to Taiwan than to Hong Kong, which is portrayed as a positive aspect, as according to the author the most important thing is for each system to adapt to its local characteristics. “The key is to form a training institution meeting local conditions. The degree and graduate education in Hong Kong focuses on academic patterns. Graduate education in Macau and Taiwan closely
focuses on social reality. The graduate training mechanism can facilitate innovative talent to show themselves”, he stressed. Yongqian Li also praises the support of the government of the three regions to students. However, when it comes to the support system of the Macau Government, the author stresses it as “famous”, after explaining it in detail. “Hong Kong, Macau and Taiwan belong to the areas with developed higher education. People’s education level is relatively high. The three areas provide a lot of policy support to the graduate education, and guarantee the healthy development of graduate education”, he said.
Drafted AL electoral law amendments expected this year
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ecretary for Administration and Justice Sonia Chan Hoi Fan said a preliminary proposal for amending the current Electoral Law for the Legislative Assembly (AL) will be completed by the end of this year, with hopes the amendments to the law can come into force before the next AL election in 2017. The Secretary told reporters yesterday that the amendments to the law will focus on enhancing the competition of indirect elections and strengthening the fairness of the whole election. Co-operating with the city’s graft watchdog, the
Commission against Corruption, on the amendments, Ms. Chan said the proposal will also consult public opinion. Regarding two members of legislator Chan Meng Kam’s electoral campaign for the 2013 AL election being found guilty of bribery by the Court of First Instance last week, Ms. Chan said the amendments to the law will also study the issue. Meanwhile, Ms. Chan claimed that the draft for the bill regulating regional judicial co-operation on criminal matters is basically finished. However, she claimed that the
government still needs to adjust the draft in detail as it involves the judicial co-operation between Macau and the Mainland, as well as Hong Kong. She said she would try her best to send this bill to the AL for discussion within this year, as scheduled. The Secretary also said that she hopes to sign the agreements on judiciary co-operation with the Mainland and Hong Kong within this year, indicating the discussion on such co-operation with Taiwan has not yet been initiated. K.L.
niversity of Macau (UM) Rector Wei Zhao stressed in his speech that UM has been an active participant in the Association of Portuguese-speaking Universities’ (AULP) work over the past 28 years and now serves as its president. He noted that Portuguese is one of the official languages of Macao, and that UM is the strongest of all higher education institutions in Asia in terms of the presence of the Portuguese language. He added that as the president of the AULP, UM will continue to promote communication among AULP members and will work with other members in promoting the development of teaching in the various institutions as well as the popularisation of the Portuguese language worldwide.
Science and Technology Committee secretariat dismissed today
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he Secretariat for Science and Technology Committee is to be officially dismissed today, the Chief Executive (CE) Fernando Chui Sai On dispatched in the Official Gazette yesterday. The dispatch indicates that the original budget granted to the secretariat will be transferred to the Science and Technology Development Fund, which will offer administrative assistance to the Committee. The proposal to disband the Committee was announced last Friday by the Executive Council. This is the fourth official secretariat to be dismissed this year, thereby fulfilling the CE’s policy of ‘streamlining administrative structure’.
Business Daily | 5
July 21, 2015
Macau Las Vegas Sands second quarter results announced The American gaming operator announced yesterday that it will reveal the results for the second quarter of 2015 on July 23 (Macau time), after the market closes on the New York Stock Exchange. The conference call concerning the results will take place around 4:30 a.m. Last year, Sands reported an operating income for the second quarter of US$961.5 million (MOP7.7 billion), which at the time represented a 23.2 per cent year-on-year increase from US$780.6 million (MOP6.2 billion), mainly attributable to the results of its Macau operations.
Lawrence Ho’s Russian casino beckoning more than Chinese
Genting half-year profit exceeds MOP16.8 billion
Gaming boss Lawrence Ho’s new casino-resort project in the Russian Far East is due to open by the end of next month. The management of the project said Russians, Japanese and South Koreans are targeted customers in addition to Chinese Kam Leong
kamleong@macaubusinessdaily.com
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ocal gaming entrepreneur Lawrence Ho Yau Long’s casino-resort project Tiger De Cristal in Vladivostok, Russia will not only target Chinese gamblers but also those from Russia, Japan and South Korea, the Corporate Finance and Strategy Director of the Ho-controlled Summit Ascent Holdings Ltd. Eric Landheer said. The senior management of Ho’s company responsible for the Russian project told Chineselanguage newspaper Hong Kong Economic Journal in an interview that the company is not worried that their gaming business in Russia will be affected by the 13 consecutive monthly drops in Macau’s gross gaming revenues. “We won’t rely on one single source of gamblers. We have conducted advanced registration for Russian gamblers, which shows that the Russians’ demand [for casinos] is very high,” the newspaper quoted Mr. Landheer as saying.
The US$172-million Tiger De Cristal project, slated to open on August 28, will provide 25 gaming tables for high-rollers. According to Mr. Landheer, a junket promoter from Macau will be managing the VIP business for the new casino. “A few junket operators have expressed interest. However, as the number of gaming tables is not high, we will pass all the VIP tables to a top junket operator from Macau,” he said, without revealing the profile of this junket.
Japanese and South Koreans
Despite facing competition from casinos in South Korea for the Chinese North Eastern market, the company believes that the new Russian project will fulfil the local demands of South Korea for casinos. “Only one casino in South Korea is open to locals. The gaming revenues of this casino, meanwhile, are higher than the accumulative gaming revenues generated by all those only opening to foreigners, which suggest
that the potential demand in Korea is very high,” Mr. Landheer perceives. Meanwhile, for the Japanese market, he claimed that it is good to see the Japanese authorities had not yet legalised gaming in the country. “It’s good news [for us] as Summit Ascent will own the unique advantage of being a forerunner in Northeast Asia for a longer time,” he said, noting the Russian casino will need between three and six months to ramp up. Mr. Landheer revealed that the second phase of the Russian project will occupy a larger area than the first phase by 70 per cent, with an estimated investment of US$500 million. Phase two of the project will comprise one 4-star hotel and one 5-star hotel, offering some 500 slot machines and 170 gaming tables. The senior management of the company said that Summit Ascent may increase its investment amount in the new phase, if the performance of Phase One is better than expected.
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enting Hong Kong has generated a profit of over US$2.1 billion (MOP16.8 million), according to a profit announcement submitted to the Hong Kong Stock Exchange. The cruise and resort company increased its profit in comparison to the first six months of the previous year almost 14 times from US$142.2 million (MOP1.1 billion). The results are justified with the gains related to the disposal of shares in the cruise operator NCLH (Norwegian Cruise Line Holdings), revaluation of financial assets and depreciation of foreign currencydenominated bank balances against the US Dollar. In addition, it is also explained that in spite of a ‘softer overall gaming performance arising from weakness in the regional gaming industry’, there was an improvement in the cruise business. The results of the company for the first half-year ended June 2015 are only expected to be announced in August, the company revealed.
Corporate
Promoting social integration of able-bodied and disabled persons
Interactive communication between mentally disabled children and local community
Macau Special Olympics (MSO) hosted its ‘2015 CESL Asia & MSO Bocce Game Event’ at the MSO headquarters last Saturday. The event was planned in the hope that through the bocce game mentally-challenged people and students with special education needs would be motivated to participate in sport activities, which are believed to be beneficial to their physical and mental health. In an expression of their enthusiasm
McDonald’s Macau hosted an activity on Sunday to enhance interactive communication between mentally disabled children and the local community. The aim of this activity was to support the Special Olympics Macau in raising public awareness of mentally disabled children in the hope that they will be treated equally and cared for as normal children. All children are precious to us regardless of their
to foster social integration of able-bodied and disabled persons, volunteers from CESL Asia – Investments & Services, Limited also participated in the bocce game and participated with the players. The activity attracted around 100 participants, including mentally-challenged individuals from special schools, sheltered workshops, caring centres and residential homes as well as their parents.
appearance or background. Three mentally disabled children from Special Olympics Macau aged 9-10 were transformed into ‘Angels’ appearing in McDonald’s restaurant at Avenida Horta e Costa, handing out balloons and little gifts to customers accompanied by a McDonald’s Customer Service Ambassador. Nearly 100 customers including children and their parents were very happy to interact with the ‘Angels’.
6 | Business Daily
July 21, 2015
Macau Brands
Trends
Men in Spring Raquel Dias newsdesk@macaubusinessdaily.com
Beijing relaxes rules for Hong Kong accountants auditing Chinese firms The central authority has relaxed rules for HK accountants auditing Chinese firms seeking listing outside the Mainland Stephanie Lai
sw.lai@macaubusinessdaily.com
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ichael Kors has just launched its men’s collection for Spring 2016. We might still be a long way from then, but that’s how fashion works, always thinking ahead. What we have to say is this - Spring 2016 will be quite comfortable. Loose linen clothing, baggy trousers and mostly mute colours will put you in that holiday mood. The inspiration was the island life. Like when you travel to those exotic places and your day-to-day clothing seems too formal to wear, and you quickly change into something comfortable. Gentleman can be cool and comfortable. Nothing wrong with linen suits and leather sandals; the trick is in how to combine your pieces. Michael Kors lookbook lends inspiration. All the options seem quite fluid and natural. Most outfits seem too comfortable not to wear the entire day. The brand itself uses terms like ‘bathrobe cardigan’, ‘pyjama bottoms’ and ‘Noveau Chino’ to describe the collection. To oppose the died-down colours there are a few pops of bold stripes and all black outfits. Another must for the season is the man-purse. Although ladies everywhere have mixed feelings about this, one thing is for sure: no man has any excuse to ask us to carry his things in our handbags anymore.
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provisional measure implemented by Beijing since the beginning of this month has dispelled Hong Kong accountants' fears of the central authority's original proposal to ban overseas auditors from working on the books of Mainland Chinese companies, Hong Kong media has reported. In May last year, China's Ministry of Finance proposed that Hong Kong-based accounting firms link up with one of the top 100 accounting firms on the Mainland and use the partner company's employees to audit businesses outside the Mainland with significant operations there. However, this new rule can be exempted if th Mainland company seeking to list overseas has at least half their shares owned by Hong Kong, Macau or Taiwan investors, according to the provisional measure implemented by the Ministry starting from the beginning of this month.
For companies failing to meet this threshold, Hong Kong auditors will still need to team up with a Mainland accountancy firm. But the rules have been relaxed so that auditors can now choose any firm with more than 25 certified accountants, instead of the largest 100 accounting companies. The Hong Kong Institute of Certified Public Accountants welcomes the provisional measure from Beijing, and reckons that the new measure has shown a relaxation of the rules suggested in Beijing's proposal last year, removing the worry that Beijing was banning Hong Kong accountants from working on Mainland Chinese companies' books, Hong Kong's Chinese-language newspaper Oriental Daily reported. The new measure also means that when partnering Mainland accounting firms to audit listing Mainland companies the accounting
firms from Hong Kong, Macau and Taiwan can lead the division of the audit businesses and the allocation of interests. The new measure implemented by the Ministry is designed to curb the practices of overseas companies that had been illegally auditing on the Mainland, the Ministry explained on its official website. But while Hong Kong accountants can still enjoy the said special treatment under the new rules, they are still prohibited from using temporary licences to work on the Mainland. Also, Hong Kong auditors are still banned from taking audit work documents out of the Mainland, as this is linked to the broadly defined state secrets, Oriental Daily reported, quoting Edward Chow Kwong Fai, the former president of the Hong Kong Institute of Certified Public Accountants.
Macau Legend to invest MOP1.6 billion in Cape Verde casino The company is expected to sign the agreement for the resort with local authorities this week João Santos Filipe
jsfilipe@macaubusinessdaily.com
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acau Legend is to invest around US$200 million (MOP1.6 billion) in a luxuryintegrated resort on Cape Verde, according to the Hong Kong Economic Journal. The Macau-based company is supposed to meet Cape Verde officials this week. The project is an ‘old’ dream of Co-chairman and CEO of the gaming company, David Chow Kam Fai, but because of a study on the environmental impact of the construction it has been put on hold. However, the construction of the project is now expected to start next year, as the main agreements related to it are to be signed this week,
according to Cape Verdean newspaper A Semana. The resort will be constructed on the islet of Santa Maria, near the capital of the African country, Praia, and will ostensibly include high-end hotels, casinos, conference centres and yacht berths, among other facilities. According to Cape Verde law, gaming venues must be integrated into resorts. Tourism activities are one of the main bets of the Cape Verdean Government to develop the country. In 2014, it accounted for 40 per cent (MOP5.3 billion) of the Gross Domestic Product of the country. However, the sector’s contribution
to GDP is expected to increase to 49.4 per cent (MOP10.2 billion) in 2025. If the signing of the agreements with local authorities in Cape Verde is good news for Macau Legend, the company reported last week to the Hong Kong Stock Exchange that it is expecting losses during the first six months of 2015. These results are justified by the overall decline of the gaming industry in Macau, an increase in operating expenses related to staff costs and depreciation and amortisation charges related to the Harbourview Hotel, which began to operate in February, and the VIP club New Legend.
8 | Business Daily
July 21, 2015
Greater China
Businessmen turn to e-commerce As foreign trade dropped 6.9 percent year on year to 11.53 trillion yuan in the first six months of 2015
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s foreign trade slows, entrepreneurs are turning to online sales to push their products across borders. “We are selling our products on both aliexpress.com, a subsidiary of Alibaba, and eBay, with online sales revenue accounting for 20 percent of our total output in 2014,” Bao Chengbin, deputy manager of Chinahanji Power Co., Ltd., a manufacturer of diesel engine parts in southeastern Fujian Province, told Xinhua over the weekend. The company’s turnover surpassed 200 million yuan (about US$33 million) last year with exports accounting for about half, said Bao. “Social networks, including apps and online chat tools like Wechat, have helped us communicate promptly with customers abroad and cut costs since we don’t have to make overseas phone calls as we did before,” said Bao. As more companies seek to expand their presence in foreign markets through e-commerce, new business
I believe the boom for cross-border e-commerce is around the corner, thanks to concerted efforts from both the government and the private sector Wu Hairui, deputy chief, Putian’s Bureau of Commerce
opportunities have emerged for companies like ISoftStone, an online service provider that helps small- and medium-sized enterprises (SMEs) do cross-border business. “We aim to bring SMEs together to improve their ability to bargain with foreign customers on price and ask banks to provide better service,” said Wang Shaokai, general manager of IsoftStone Fujian. The local government is also encouraging companies to strengthen themselves through opportunities in cross-border e-commerce, said Wu Hairui, deputy chief of the Bureau of Commerce in Putian, a city in Fujian Province. More than 200,000 companies are running cross-border e-commerce businesses in China with more than 5,000 online shopping platforms, Wu said, quoting official data. The trade volume for China’s cross-border e-commerce pilot cities surpassed 3 billion yuan by the end of 2014, the GAC data
showed. E-commerce exports totalled 2.04 billion yuan in 16 pilot cities, including Shanghai and Beijing, in the 18 months starting in July 2013, while imports totalled 1.01 billion yuan. Cross-border e-commerce has grown substantially since the GAC established a pilot program offering preferential policies in 2012 to import businesses in seven Chinese cities, including Shanghai, Chongqing, Hangzhou, Guangzhou and Shenzhen. GAC spokesperson Zhang Guangzhi said at the start of this year that the authority was promoting a national unified system for e-commerce trade clearance to improve efficiency and cut costs. Alibaba Group has already prepared payment platforms for cross-border transactions and the local government of Putian is drafting a plan to help local enterprises take advantage of the platforms, according to Wu, who had just returned from a business trip to the e-commerce giant’s Hangzhou headquarters. Cross-border e-commerce, which brings the Internet together with foreign trade, will help expand consumption, promote the upgrade of the export-oriented economy and create new economic growth, according to a statement released by the Chinese cabinet. Although the market is promising, bottlenecks still exist. More talent and capital are needed and the efficiency of customs should be improved, said local entrepreneurs in Fujian. China will improve customs clearance processes, offer tax reductions and exemptions, and encourage cross-border electronic payments to boost the industry’s development, the State Council announced in a statement in June. Xinhua
Former HK chief recommends new statistics Tung Chee-hwa said yesterday that as economy enters the mode of “new normal” the interpretation of traditional statistics should also get improved
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ung, vice chairman of China’s top political advisory body, who is also a former chief executive of China’s Hong Kong Special Administrative Region (HKSAR), made the remarks in his keynote speech at the opening ceremony of the Future China Global Forum in Singapore. Pointing out that managing a soft landing and achieving a new normal is never easy to such a huge economy, he stressed that it is “particularly difficult” as the global economy is still suffering from the aftereffects of the economic crisis of 2008 and 2009. As the “new normal” takes hold, traditional calculation of statistics does not work anymore, one example is the employment rate, he said. “There has been concerns over whether employment would be affected as the
economy entered the new normal,” Tung said, however, he stressed, with GDP growing at 7 percent,
“every dollar the GDP produced by the service sector, one third more jobs would be created as
Tung Chee-hwa, vice chairman of China’s top political advisory board
compared to jobs created by manufacturing sector.” “This is the say, even though as the whole economic growth is to drop from 10 percent to 7 percent, the employment should stay,” he said. He further explained his point with the latest economic data. According to the statistics released last Wednesday, 7 million new jobs have been created in the first half of 2015, which Tung said “indeed help to prove the contention to be correct.” “The new normal is well underway to create 10 million jobs as planned annually, or indeed even more,” he said, adding that under the new normal, many economic pattern has to be interpreted carefully to draw conclusion. In his speech, Tung also highlighted that as China enters the state of new normal, problems also
emerged, including the disparity between industries and enterprises. “Those regions eager to restructure and upgrade their economies will maintain a stable growth while those slow in action will suffer badly,” he said, adding that new industries such as IT, high-end equipment manufacturing, new energy and e-commerce would go faster, becoming the new engine of economy. Despite the difficulties, Tung remains optimistic about the future of China’s economy. Since 1949, from a impoverished, war-time country to the second largest economy in the world, it has not been an easy ride for China, he said, adding that a large economy integrating into a greater world is also much more complex. Xinhua
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Greater China
First green bond to spur interest for future deals
Cattle deal with Australia Australia has agreed a deal with China to export live cattle to the Asian country, the country’s Agricultural Minister said yesterday. A deal for the export of live cattle was agreed in principal last year but had been held up by Chinese concerns over the potential risk from Bluetongue virus, threatening its national sheep flock. But after months of talks between biosecurity experts in the two countries, a protocol to minimise the risk of the disease had been agreed, Australia’s Agricultural Minister Barnaby Joyce said.
Currently about 70 per cent of the US$200 billion China spends each year on environment-related projects comes from loans made mainly by state-owned banks Umesh Desai
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hina’s first green bond has raised US$300 million after pricing last week, as the world’s largest emitter of greenhouse gases seeks new funding sources to help raise about US$1.6 trillion over five years to help fix its environmental problems. China is scrambling to lift environmental standards in a country where only eight out of 74 cities met air quality minimum standards and only 25 percent of drinking water achieved national quality standards, according to latest government data. Green bonds are certified to show that funds raised will be used for environmental projects and are a popular tool for socially responsible investment. For issuers, they can offer a new investor base to raise funds. “We see activity around green bonds in a number of different places, but signals out of China are very strong,” said New York-based Manuel Lewin, Head of Responsible Investment for Zurich Insurance Group. Wind energy firm Xinjiang Goldwind Science & Technology said it will use proceeds from the first green bond issue for general working capital and refinancing purposes for its group companies. The US$300 million deal received orders of US$1.4 billion. China’s debut green bond comes at a time when the country is opening up its debt markets to global investors.
2015 FDI inflows to quicken in 2015
Earlier this month, China relaxed rules for some long-term foreign investors to participate in its interbank market. A taskforce under the leadership of the People’s Bank of China has recommended setting up a green financial system to help contain the cost of pollution. Currently about 70 percent of the US$200 billion China spends each year on environment-related projects come from loans made mainly by state-owned banks, some with implicit government backing. Analysts say, private sector investment is needed to meet China’s new ambitious targets. The task force estimates that achieving environmental goals under the five-year plan over 2016-2020
would require an annual investment of at least US$320 billion. “From an environmental point of view, China would be able to make very good use of green bonds as a financial tool,” said Beijia Ma, London-based BofA Merrill Lynch strategist. Global issuance of green bonds has flattened after tripling last year. Investors see more issuance in China, although it was too early to predict the pace of growth. “The emergence of green bonds in China will initially not raise extra money but different money,” said Simon Zadek, Senior Fellow at the Global Green Growth Institute. Reuters
Tangshan prepares new pollution penalties In order to comply with the new emissions standards, 29 steel enterprises will have to upgrade facilities
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hina’s top steel producing city of Tangshan will punish firms if they fail to meet tough new pollution standards over the next three months, according to new industry guidelines, a move that could force closures and help ease a severe capacity glut. China is using tougher environmental rules to help tackle a severe glut of steel capacity that has depressed prices and saddled much of the sector - the world’s biggest - with crippling debt. Already struggling with record low prices and rising environmental compliance costs, firms could now have their power prices tripled if they fail to pay for the work required to meet the new standards, analysts estimated. The new measures, dated July 1 and circulated over the weekend by traders and analysts, target big industrial coal and water consumers in Tangshan, including coal-fired power plants, cement manufacturers and steel producers. The measures, reviewed by Reuters, also ban the sale and utilisation of low-grade coal. As a result, billet prices in Tangshan
have risen by as much as 60 yuan per tonne, according to analysts at Xiben New Line E-Commerce, a steel trading platform in Shanghai. “With the industry now facing severe losses, and with more and more steel mills cutting output, the unusual price movements in Tangshan will raise confidence among traders in other regions and see an increase in prices across the board,” the analysts said in a note. In order to comply with the new emissions standards, 29 steel enterprises will have to upgrade a total of 104 blast furnaces, 182 converters and 22 sintering plants by the end of October, the document said. Enterprises that fail to do the work in the stipulated time will face higher power prices. Tangshan, which is located around 150 kilometres from the capital Beijing, produced around 90 million tonnes of crude steel last year, more than the whole of the United States. It is regularly listed among China’s most polluted cities, and it is under pressure to shed at least 28 million tonnes of capacity over the 2013-2017 period.
New measures, dated July 1 and circulated over the weekend by traders and analysts, target big industrial coal and water consumers in Tangshan
Growth in China’s foreign direct investment (FDI) is expected to quicken to around 4 percent in 2015 from the previous year on government efforts to improve its investment environment, the country’s Commerce Ministry said. China’s FDI may hit an all-time high of US$125 billion this year barring no sharp changes in the external environment, the official Xinhua news agency quoted Vice Minister of Commerce Wang Shouwen as saying. FDI in China rose just 1.7 percent in 2014, the slackest pace since 2012, even if the investment value hit a record high of US$119.6 billion.
HKEx aluminium price-fixing claims settled Hong Kong Exchanges & Clearing Ltd said it had settled two class-action lawsuit complaints against itself and subsidiary the London Metal Exchange (LME) over allegations of anti-competitive and monopolistic behaviour. The lawsuits, brought by small aluminium manufacturers in the United States, accused banks and traders of hoarding metal in LME warehouses, driving up the prices of industrial products from soft-drink cans to aeroplanes. Of 26 lawsuits filed against LME, 24 were consolidated into three complaints according to type of user: “first-level” purchasers that buy primary aluminium, consumer end users and commercial end users.
Huawei first half revenue up Chinese telecoms equipment giant Huawei said yesterday that revenue surged 30 percent year-on-year in the first half, helped by “solid” sales of smartphones and growth in other business areas. Huawei said in a statement sales reached 175.9 billion yuan (US$28.8 billion) on an unaudited basis in the January-June period. “Huawei’s midrange and high-end smartphones... have made solid progress, helping us guarantee quality and sustainable growth in the consumer business,” Huawei chief financial officer Meng Wanzhou said. Huawei will release figures for its smartphone business later this week, a company spokesman said.
First Pacific aborts deal to buy Cocoaland Tangshan is the top steel producing city in Hebei province, which is aiming to shed 60 million tonnes of steel production capacity over the 2013-2017 period. Chinese steel mills have already been facing rapidly rising environmental compliance costs at a time when demand is slowing and steel prices are the lowest in more than 20 years. Reuters
Cocoaland Holdings Bhd, a Malaysian snack and candy company, said yesterday that Hong Kong-listed First Pacific Co Ltd had aborted a plan to take over its business. The move comes more than six weeks after First Pacific, an investment firm with holdings in telecommunications, consumer food products and resource companies, proposed to buy Cocoaland for 463.32 million ringgit (US$121.7 million), or 2.70 ringgit per share.
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Greater China
Bank district in Hong Kong. HSBC and Standard Chartered headquarters to the right
Shrinking trade weighing on banks The value of China’s monthly imports and exports dropped to US$337 billion in June from a peak of US$405 billion in December Chanyaporn Chanjaroen
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he business of financing China’s trade is shrinking, curbing what had been a fastgrowing revenue stream for banks in Hong Kong and Singapore over the past decade. Since reaching a peak of about US$145 billion in June last year, the value of trade loans provided by lenders in the two financial hubs has tumbled 20 percent due to the slowing Chinese economy and a slump in commodity prices, central bank data show. The slide raises concern that Singaporean banks such as OverseaChinese Banking Corp. (OCBC) and global lenders like Standard Chartered Plc and HSBC Holdings Plc, which have been financing trade in Asia since the mid-19th century, may face lower earnings growth. The companies have profited from the 10-fold surge in trade loans since China’s 2001 entry into the World Trade Organization. “Loan growth at banks is definitely coming down as trade finance has been a driver,” said Matthew Phan, a Singapore-based analyst at CreditSights LLC. “There will be some small negative impact on banks’ overall profits as net interest margin from this business is usually thin.” Trade-related borrowings booked by banks in Hong Kong and Singapore fell in each of the three months through April to a two-year low of US$110.6 billion, data from the cities’ monetary authorities show. The figure rose to US$116 billion in May.
Loan growth at banks is definitely coming down as trade finance has been a driver Matthew Phan, analyst, CreditSights
Among the reasons for the decline in trade finance are China’s slowing economy and lower commodity prices, according to Mike Vrontamitis, Standard Chartered’s Hong Kongbased head of trade products.
Chinese trade
The bank reported April 28 that its first-quarter operating income from trade finance dropped 9 percent from a year earlier. That figure had grown about 20 percent in the five years through 2014, annual reports show. The London-based lender gets a 10th of its operating income from the business globally and doesn’t disclose trade-finance revenue for Asia. The value of China’s monthly imports and exports dropped to US$337 billion in June from a peak
of US$405 billion in December, government data show. Meanwhile, a commodities slump that has dragged oil prices down by about 50 percent and copper by 22 percent in the past year has cut the dollar value of transactions involving China’s imports of raw materials. While most banks don’t break down their trade-finance businesses by country, a Greenwich Associates study indicated that Standard Chartered and HSBC play a leading role in Asia. Some 36 percent of large companies in the region used Standard Chartered for trade loans, surpassed only by HSBC’s 42 percent, according to a 2014 survey by the research firm.
Lower forecasts
HSBC’s Asian gross loans and advances to customers in international trade and services shrank 8.6 percent in the first quarter from a year ago, exchange filings show. Joanna Fargus, a spokeswoman for the London-based bank in Hong Kong, declined to comment on the reasons for the drop. OCBC’s bills receivable, which incorporate trade finance, slumped 12 percent in the first quarter and represent about 7 percent of its gross loans, filings show. Larger rival DBS Group Holdings Ltd.’s trade loans contracted 4.5 percent in the period and account for almost 15 percent of interest-bearing assets, the bank’s quarterly report shows. Mizuho Securities Asia analyst Jim Antos cut his 2015 net income forecasts for OCBC by 9.4 percent and
DBS by 4 percent in a June 17 report, citing trade-finance exposures. “The continuing weakness in the Chinese economy tends to support this view,” Hong Kong-based Antos wrote in a July 10 e-mail.
Strong prospects
Four interest-rate cuts by the Chinese central bank since November to revive growth have also narrowed the premium of onshore borrowing costs to those in Hong Kong and Singapore, giving mainland companies less incentive to seek loans overseas, according to Geoffrey Heenan, the International Monetary Fund’s Singapore representative. The premium of the three-month Shanghai interbank offered rate over the Singaporean benchmark fell to the lowest since 2010 in June. Still, long-term prospects for trade finance “remain strong” as commodities trading volumes will continue to grow, Standard Chartered’s Vrontamitis said in a July 7 e-mail. OCBC will continue to deepen its “market penetration” in China, Clara Hang, the Singaporean lender’s head of global trade finance, wrote in a June 29 e-mail. “The reason why we have 600 to 700 Chinese customers is because we have trade finance,” DBS’s Chief Executive Officer Piyush Gupta said July 10. “That allows us to build on the relationship. The fact that we’ve used trade finance as a beachhead to go in, it really pays off.” Bloomberg News
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Asia
Aussie banks must set aside more capital for mortgage losses Last week, the regulator said the banks will need an additional 2 percentage points of capital to be ranked among the world’s safest
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ustralia’s biggest lenders will have to set aside more capital against potential losses on home loans, the nation’s banking regulator said yesterday in its latest move to bolster the financial system. Under rules coming into force on July 1, 2016, the average risk weight on residential mortgage exposures will rise to at least 25 percent from about 16 percent, the Australian Prudential Regulation Authority (APRA) said in a statement. That will increase the capital requirements of the biggest four banks by about A$12 billion (US$8.9 billion), according to Goldman Sachs Group Inc. and Morgan Stanley. The regulator is forcing banks to shore up their capital after a government review last December recommended they should rank among the top 25 percent of lenders globally. It’s also seeking to ensure the financial system could cope with
any downturn in the housing market, which has seen a 43 percent increase in Sydney home prices in the past three years. Australia & New Zealand Banking Group Ltd. Commonwealth Bank of Australia, National Australia Bank Ltd., Westpac Banking Corp. and Macquarie Group Ltd. will be affected by the new rules, which equate to increasing minimum capital requirements by about 80 basis points, APRA said. The 2-percentage point increase would see the nation’s largest lenders having to hold at least A$28 billion in extra capital, Goldman Sachs and Credit Suisse Group AG said last week.
Dividend reinvestment
T.S. Lim at Bell Potter Securities Ltd. said he expects the banks to meet the additional capital needs through retained earnings and dividend
reinvestment plans, under which shareholders swap all or part of their dividends for new stock. The increase is “consistent with the direction of work being undertaken by the Basel Committee on Banking Supervision on changes to the global capital adequacy framework for banks,” APRA said. The measure “will enhance the resilience” of the affected banks and the broader financial system, it said. Westpac said it would need an additional A$3 billion to lift its capital ratio toward the top of its preferred range. While the lender is well placed to meet the new rules, customers and investors may need to bear the cost, it said in a statement to the ASX.
Banks react
Commonwealth Bank said it expects the amount of common equity Tier 1 capital required for residential
mortgages to rise by approximately 95 basis points due to the new rule. National Australia said the new rule would bring its common equity Tier 1 ratio back into a range of 8.75 percent to 9.25 percent, instead of the 10 percent ratio it had expected after a A$5.5 billion capital raising earlier this year. ANZ Bank said it would need to allocate an additional A$2.3 billion to its Australian mortgage lending book. Macquarie said the increased capital requirement for mortgages would be met from its existing capital surplus and retained earnings. Lim said he didn’t expect the requirements to “significantly slow mortgage growth” as they weren’t a surprise to the banks. “It may probably force them to raise rates or reduce discounts on mortgage rates,” he said. Bloomberg News
The timing and magnitude of today’s announcement should come as no surprise. However, the approximately one-year timeframe is shorter than we would have expected Andrew Lyons and Yu Chuan Leong, analysts, Goldman Sachs
Goldman Sachs estimates Commonwealth Bank and Westpac will need A$4 billion each, while ANZ Bank and National Australia will require about half that
N. Zealand PM slams 'desperate' claims about Chinese investors Labour opposition claim Chinese comprise 40 per cent of house buyers in Auckland
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ew Zealand Prime Minister John Key yesterday accused the opposition Labour Party of "desperate" tactics in blaming Chinese investors for rising house prices in Auckland. Amid concerns that houses are becoming unattainable in New Zealand's largest city, Labour released data last week purporting to show
that 40 percent of buyers in Auckland were Chinese. The information was based solely on whether the surname of buyers appeared to be Chinese and critics, including Race Relations Commissioner Susan Devoy, accused Labour of scapegoating an ethnic group. Key stopped short of calling Labour racist but said the opposition was
deliberately misleading the public on the reasons for rising prices in Auckland. "It's desperate in my view," he told Radio New Zealand. "They know the information is wrong and misleading... they know the vast bulk of people on that list who have Chinese surnames will be either (New Zealand) residents or citizens."
The conservative leader also accused his centreleft opponents of betraying their commitment to multiculturalism with the claims about Chinese investors. "The Labour Party that I've known for the last 13-and-a-half years that I've been in politics is the one that's talking about an open, multicultural society," he said. "So what they did last week was so out of character and so desperate it's hard to believe they even believe it themselves." Labour leader Andrew Little has rejected allegations of racism, saying the impact of foreign ownership in Auckland was a difficult topic that needed to be debated. House prices in Auckland soared 26 percent to an average NZ$755,000
26 pct house prices increase in Auckland NZ$755,000 on average (US$510,000) in the year to June, while prices outside the city were steady and averaged just NZ$340,000. The Reserve Bank moved to cool the market in May, warning a property bubble posed a significant risk to the entire economy, but demand remains strong. AFP
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Asia
Raghuram Rajan boosting Indian bond intervention Draining excess cash is one of the Reserve Bank of India’s priorities for controlling India’s inflation Kartik Goyal
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banking system flooded with cash is proving the latest challenge in Indian central bank Governor Raghuram Rajan’s inflation fight. Higher government spending and credit growth near the slowest pace since 1994 has boosted money supply at lenders, driving interbank borrowing costs to a 2010 low. That’s threatening to exacerbate price pressures in Asia’s third-largest economy, where consumer-price gains accelerated to a nine-month high in June amid risks of deficient monsoon rains. Nomura Holdings Inc. predicts that the Reserve Bank of India will sell 500 billion rupees (US$7.9 billion) of sovereign bonds via open-market auctions this year to drain excess funds. That’s after the monetary authority conducted the first such sale last week since December, raising 82.7 billion rupees. Increases in debt sales by the RBI will “disrupt” the government’s borrowing plans and can hurt demand for existing notes, according to PNB Gilts Ltd. “The open-market sale suggests the RBI is worried that excess liquidity might hurt its resolve to
Net average bankingsystem liquidity was in a surplus of about 130 billion rupees as of July 11
slow inflation,” said Himanshu Malik, a strategist at HSBC Holdings Plc in Hong Kong. “It’s likely to sound more concerned over the inflation outlook and keep rates on hold” at the August 4 monetary policy review, he said.
Inflation target
Consumer prices climbed 5.4 percent in June from a year earlier, which is below the RBI’s target of 6 percent by January but faster than its mediumterm goal of 4 percent. Below-normal
monsoon rains threaten to hurt farm output and stoke food costs that account for about half of the inflation basket. That’s adding pressure on Rajan to rein in money supply. Banks have parked about an average 30 billion a day with the RBI this month, compared with daily overnight borrowings of 18 billion rupees last quarter to meet fund shortages. Loans grew 9.26 percent in the 12 months through June 26, near February’s 8.88 percent that was the slowest pace since 1994, as the US$2 trillion economy grapples with bad loans and stalled projects. Improved funding availability caused one-month interbank borrowing costs to slide to 7.74 percent on July 7, the least since November 2010, and 102 basis points lower than this year’s high in March. The overnight call-money rate has averaged 6.95 percent in July, 30 basis points lower than the RBI’s benchmark repurchase rate. “The RBI wants to keep overnight costs near the policy rate as that’s consistent with its medium-term inflation- targeting framework,” said Vivek Rajpal, a rates strategist in Singapore at Nomura. “Liquidity
in the banking system will remain in surplus in the next three months, prompting the RBI to do more” openmarket operations, or OMOs, he said.
Dollar buying
An increase in tax revenue has enabled Prime Minister Narendra Modi to boost spending. The government’s socalled plan expenditure in April-May, including that on infrastructure, was 13.4 percent of the amount budgeted for the year ending March 2016, compared with 10.4 percent in the same period last year. Dollar-buying by the RBI has also led to a surge in rupee liquidity, according to Barclays Plc. The central bank, which has been accumulating foreign-exchange reserves to shield local markets from external shocks, bought US$35.7 billion from the spot market alone in the five months to May, helping propel reserves to a record US$355 billion last month. Net average banking-system liquidity was in a surplus of about 130 billion rupees as of July 11, compared with a deficit of 574.8 billion rupees at the end of June 27, according to estimates by Kotak Mahindra Bank Ltd.
Philippines budget surplus in May dims growth outlook Economic officials have admitted meeting the top end of the country’s 7-8 percent growth would be a challenge
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he Philippines ran a 86.4 billion pesos (US$1.91 billion) budget surplus in the first five months of 2015, more than ten times higher than a year ago, the Department of Finance said yesterday, hurting chances of faster second quarter economic growth. Having targeted a deficit of 284 billion pesos for 2015, the government is under pressure to accelerate spending after growth weakened to a six-year low in the first quarter from the previous three months. The latest data showed the government ran a 67.3 billion pesos (US$1.5 billion) surplus in May as
a result of higher revenues and spending 26 percent less than targeted. While the government spent 9 percent more in May compared to last year, and nearly 12 percent more than April, it missed its 237.1
billion pesos spending program for the month. “For growth, it means we will need to see June kicking in at stronger pace, otherwise we will continue to be disappointed with the output number owing
to mobilisation of resources still moving at timid pace,” said Emilio Neri, economist at Bank of the Philippines Islands in Manila. “At least, the spending numbers are picking up a bit compared with the first
four months of the year. It is a welcome improvement. We would have wanted to see a double digit growth number to compensate for the January to April underspending.” Budget Secretary Florencio Abad said last week he expected spending to improve in the second quarter, though he could not say to what extent or whether the increase would be enough to help cushion the impact of tumbling exports. Economic officials have admitted meeting the top end of the country’s 7-8 percent growth would be a challenge. 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.
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July 21, 2015
Asia Arrest warrant for former Aussie mining mogul An Australian court issued an arrest warrant yesterday for former mining billionaire Nathan Tinkler after he failed to appear for questioning over the collapse of his thoroughbred racing and breeding business. Court officials said Tinkler had been summoned to appear in the Supreme Court in South Australia state to give evidence about the liquidation of his beloved Patinack Farm. Judge Steve Roder agreed to a subsequent request by the liquidator, Anthony Matthews and Associates, to issue an arrest warrant for the former mogul, citing contempt of court.
Thai Bank’s NPLs hit near five-year high
Indian central bank Governor Raghuram Rajan
Vijay Sharma, executive vice president for fixed income at PNB Gilts, says the RBI would issue shorter duration cash- management bills and avoid more OMOs, which increase debt supply and can hurt demand at weekly sovereign-bond auctions.
‘Different tools’
“Continuous OMO sales will disrupt the government’s borrowing plans,” said New Delhi-based Sharma. Modi’s administration plans to borrow 6 trillion rupees in the year ending March 2016.
Benchmark 10-year bonds completed this month’s biggest weekly decline on Friday. The yield on the notes had climbed seven basis points on July 13, the most in two weeks, following the RBI’s bond sale announcement. In addition to OMOs, the monetary authority is removing excess funds by conducting more unscheduled reverse-repurchase agreements under its money-market operations. It has pulled out about 3.8 trillion rupees via reverse repos
so far in July, compared with 2.5 trillion rupees in all of June, central bank data show. “The RBI has different tools to drain structural liquidity including longer-tenor reverse repos, currency swaps and open- market sales of bonds,” said Rohit Arora, a Singapore-based interest-rate strategist at Barclays. “Recently, the preferred tool of liquidity management appears to be the OMO sales.” Bloomberg News
Indonesian tin smelters face credit squeeze over shipment failures Local tin industry has been struggling for several years with sluggish demand growth from solder in electronics and increasing competition from Myanmar
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ndonesian tin smelters are finding it harder to get credit from banks and trading houses after a Singaporebased firm failed to deliver some shipments, in a further blow to an industry reeling from a slump in prices. More than a third of Indonesia’s smelters have already shut over the past year and tougher credit conditions could hasten mergers or closures in the world’s top exporter of refined tin. “It’s not easy to get more money like it used to be,” said Agung Nugroho, corporate secretary at PT Timah, Indonesia’s biggest tin miner. A trader at a global trading house confirmed it had cut advances to firms in Singapore and Indonesia to finance tin purchases due to concerns over deliveries not being made. A banker at an Asian-based Western lender also said the firm was more cautious about lending due to low tin prices and concerns about deliveries to its customers after Singapore-based Uni Bros Metal Pte Ltd (UBM) had failed to deliver some cargoes. Asked about the issue, UBM did not directly refer to the missed shipments but said in an email that there had been an “unprecedented” fall in tin prices. Traders noted that steep falls in tin
prices can lead to a cash crunch for trading firms that haven’t sufficiently hedged against price swings. UBM, a mid-size trader in the tin industry, acted as a middle man, sourcing tin from Indonesian smelters for end-users or major trading houses. UBM failed to deliver contracted tin shipments to at least two customers in the first quarter of 2015, according to a Taiwanese smelter and a metals trader with direct knowledge of the matter. Reuters could not confirm the reasons for the non-deliveries. UBM’s failure to make the deliveries has led at least three mid-size trade houses - significant players in the small tin market - to stop advancing funds by prepaying for tin shipments from Indonesia, three sources familiar with the matter said. Prepayments are relied on by many smaller Indonesian smelters for operating capital. Smaller smelters account for more than a quarter of Indonesia’s tin exports, traders estimate. UBM had not delivered monthly 100-tonne shipments since March to Taiwan tin smelter Rui Da Hung Technology Materials Co Ltd, according to executive Martin Guo,
Non-performing loans (NPLs) at CIMB Thai Bank, a unit of Malaysia’s CIMB Group Holdings Bhd, rose to a near fiveyear high at the end of June, which the bank attributed yesterday to delays in debt repayments by some corporate clients. The NPLs rose to 3.9 percent of total outstanding loans as of end-June from 3.3 percent six months earlier, the bank said in a statement to the Thai stock exchange. The NPLs were the highest since the 8.7 percent hit in the third quarter of 2010.
Housing headed for oversupply in Australia A new analysis indicates Australia’ s housing market could be oversupplied within three years, according to new economic data. The residential building boom may already be its peak, says a report released yesterdayby economic forecaster BIS Shrapnel. It found the recent surge in home building would lead to a “ mild oversupply” by 2018. Dwelling approvals reached a record high of just more than 210,000 in the last financial year. The latest figures estimate housing stocks reached a low of 108,000 in June last year.
N.Zealand services continue strong
KEY POINTS Firm fails to deliver some shipments, say customers Indonesia’s tin smelters shrink to 22 from 37 in 2014-industry who said the firm was looking for a new supplier. The number of active smelters has fallen from 37 in 2014 to 22 at present, while many were working at less than full capacity, said Jabin Sufianto President at the Indonesian Association of Tin Exporters. London Metal Exchange (LME) tin shed a third of its value to hit US$13,600 a tonne in mid-April from above US$20,500 in December, Prices have since steadied around US$15,500 a tonne. Indonesia exported about 75,000 tonnes of refined tin in 2014, equivalent to about a fifth of global production. Reuters
Services sector maintained a healthy rate of growth last month, according to the latest performance of services index (PSI) out yesterday. The BNZ-Business New Zealand PSI for June was 58.2, up 0.1 point from May. It was also the highest overall value since July last year. Business New Zealand chief executive Phil O’Reilly said in a statement that the consistent level of expansion over the first six months of 2015 had been helped by both activity/sales and new orders remaining within a fairly tight band of expansion.
Vietnam arrests 2 central bank executives Police have arrested two senior managers of the State Bank of Vietnam’s office in southern Long An province for their involvement in the misappropriation of nearly 18.41 trillion Vietnamese dong (US$829.23 million) at a Vietnamese bank, local online newspaper Thanh Nien (Young People) News reported. The arrest of Ha Tan Phuoc, 53, vice director of the Long An office, and Le Van Thanh, 52, chief inspector of the office, was confirmed by Nguyen Hoang Minh, vice director of the central bank’ s branch in Ho Chi Minh City.
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International PayPal’s debut market value tops EBay’s PayPal Holdings Inc. made its stock debut with a market value almost 1.4 times that of EBay Inc. as investors bet on bigger returns from the digital payments business than its former parent company struggling with slow growth. PayPal started trading yesterday with a market capitalization of about US$46.6 billion, data compiled by Bloomberg showed. After the spinoff, EBay’s shrinks to roughly US$34 billion. Investors are viewing PayPal as a new growth option, while EBay’s expansion decelerates amid increasing competition in e-commerce.
Schneider Electric buys Aveva France’s Schneider Electric said it would combine its software unit with Britain’s Aveva in a reverse takeover designed to create a global leader in industrial software. Schneider said it would pay 550 million pounds (US$858 million) towards the issue of new shares in Aveva, a company that designs shipping, industrial plants and nuclear power stations. The French company will own 53.5 percent of the enlarged Aveva, which will remain listed in London, with its shares worth about 1.3 billion pounds at current market prices, the companies said.
Hollande calls for stronger eurozone led by “vanguard” nations The idea of a eurozone parliament, to run alongside the current European parliament, has already been mooted by economists
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rance wants a stronger, more harmonised eurozone led by “a vanguard of countries”, French President Francois Hollande said in an interview. In the past week “the European spirit prevailed” in addressing the Greek crisis, he told the weekly Journal du Dimanche. But he stressed the need for “two cornerstones” of a tighter, more secure, eurozone, “an European economic government” and “a specific budget,” to deal with similar crises in future French Prime Minister Manuel Valls added that this vanguard should include the six founding EU countries: France, Germany, Italy, Belgium, the Netherlands and Luxembourg.
Rolls-Royce wins US$2.23 bln contracts British engineering company RollsRoyce, under pressure after successive profit warnings, said its aero-engine business won two new contracts totalling US$2.23 billion. Rolls-Royce said that it had been selected by Saudi Arabian airline SAUDIA to provide engine maintenance and servicing under a long-term contract worth US$1.3 billion. The other contract was to supply International AirFinance in a US$930 million deal. The contract wins for the Trent 700 come after RollsRoyce said earlier this month that low demand and pricing for that engine model would result in significant hits to profit in 2016.
Dassault CEO to increase Rafale production Dassault Aviation Chief Executive Eric Trappier said yesterday that he had decided to raise Rafale production in anticipation of further export orders for the fighter jet. The CEO said that the number of annual Rafale deliveries would increase from 2018, adding that the rate could at least double from 11 currently. Trappier reaffirmed that he expected to sign a contract for 36 Rafale jets with India in the coming months.
French President Francois Hollande
Both Hollande and Valls remained vague on the details of this initiative, with the prime minister, talking in the southern town of Avignon, saying that “in the coming weeks” France would have “the opportunity to take initiatives and make concrete propositions.” “We are in the process of emerging from the Greek crisis, even though it is difficult, and we must learn the lessons and go much further,” Valls insisted.
‘We cannot stand still’
Hollande was clear that member countries must do more. “We cannot stand still,” he said in the interview published alongside a profile of Jacques Delors, the former head of the European Commission. Delors, a former French economics and finance minister who turned 90 yesterday, is one of the architects of the euro. “I have proposed taking up Jacques Delors’ idea about euro government, with the addition of a specific budget and a parliament to ensure democratic control,” Hollande said. His remarks touched on what analysts have seen as a major flaw in the euro. Under the 1992 Treaty of Maastricht, countries which share a common currency must obey rules on borrowing and deficit spending. But the Greek crisis saw one of the 19 eurozone members notch up successive worsening deficits and amass a mountain of debt. The problems were only addressed by bailouts from the European institutions and the International Monetary Fund (IMF).
Survey shows growing U.S. shortage of skilled labour The National Association for Business Economics survey is the latest to suggest a tightening labour market Megan Cassella
Greek banks reopen Greeks queued outside banks yesterday as they reopened three weeks after closing to stop the system collapsing, the first cautious sign of a return to normal after a deal to start talks on a new package of bailout reforms. However limits on withdrawals will remain and payments and wire transfers abroad will still not be possible - a situation which German Chancellor Angela Merkel said on Sunday was “not a normal life” and warranted swift negotiations on a new bailout, expected to be worth up to 86 billion euros.
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.S. employers are finding it increasingly difficult to find skilled workers, according to a survey published yesterday, suggesting upward pressure on wage growth down the road. The National Association for Business Economics’ latest business conditions survey found that 35 percent of the 112 economists who participated reported their firms had seen shortages of skilled labour during the quarter ending in July.
That compared with only 25 percent in the April survey and marked a sharp pick-up from 22 percent during the July quarter last year. “The panel reports markedly increased shortages in the July survey, especially of skilled labour,” said survey Chairman Jim Diffley, who is also a senior director at IHS Economics. The NABE survey is the latest to suggest a tightening labour market. Early in July, the National Federation of Independent Business said that 44
Critics say the problem stems from a lack of centralised control over national fiscal policies, which today are jealously guarded areas of sovereignty. In 2011, Delors said the crisis facing the euro required member states either to accept greater economic cooperation or a transfer of more national powers to the European Union’s centre. Hollande did not spell out his proposals in the interview but said it was time to overhaul the euro’s governance. “Sharing a currency is far more than wanting (economic) convergence,” he said. “It’s a choice that 19 countries have made because it was in their interest. No government, by the way, has taken the responsibility of leaving” the euro since its creation, he said. “This choice calls for strengthened organisation and, among the countries which will decide it, a vanguard,” said Hollande. “France is willing to take part because, as Jacques Delors showed, the country becomes greater when it takes the initiative in Europe.” The idea of a eurozone parliament, to run alongside the current European parliament, has already been mooted by economists such as Thomas Piketty. Such a “second chamber”, according to renowned French economist Piketty, could include both members of the European parliament and members of national parliaments. AFP
percent of small businesses looking to hire that month reported few or no qualified applicants for positions they were trying to fill. Although job growth has accelerated and the unemployment rate has dropped to seven-year lows, that has not been accompanied by strong wage growth. The NABE survey found the share of companies anticipating wage increases in the next three months grew to 49 percent from 46 percent in the April poll and 35 percent a year ago. “As an economist watching the economy, we’re somewhat surprised that wages pressures have been so muted to this point,” Diffley told Reuters. The share of those reporting actual wage increases during the past three months remained at 42 percent, little changed from 43 percent a year ago but slightly down from 45 percent in April. The economists surveyed represented a broad spectrum of businesses, including goodsproducing, transportation, finance and services industries. Forty-seven percent of the firms employ more than 1,000 people. Reuters
Business Daily | 15
July 21, 2015
Opinion Business
wires
Europe’s airpocalypse
Leading reports from Asia’s best business newspapers
Julian Kirchherr
Doctoral researcher at the School of Geography and the Environment, University of Oxford
Asit K. Biswas
Distinguished Visiting Professor at the Lee Kuan Yew School of Public Policy in Singapore and co-founder of Third World Center for Water Management
TAIPEI TIMES The central bank might consider cutting interest rates this quarter if data due on Friday next week show that GDP growth was lower than 3 percent in the first half, economists said yesterday. The Cabinet on Wednesday instructed the National Development Council to recommend measures to boost exports, which contracted 7.1 percent in the first six months, worse than the 6.95 percent fall the statistics agency projected in May. The central bank was not a participant in the Cabinet’s discussions, but it might decide to step in and lower interest rates.
THE KOREA HERALD South Korea’s top financial regulator will set up a crowdfunding platform to help start-ups and small venture businesses raise funds and capitalize on their ideas and technologies more easily, its chief said yesterday. South Korea legalized the online crowdfunding business last week, under which venture start-ups can raise a maximum of 700 million won (US$608.000) per year and individuals can invest up to 5 million won per year. “A system will be established to single out potential start-ups and support their growth,” Financial Services Commission Chairman Yim Jong-yong said.
THE PHNOM PENH POST Russia is looking to up its investment in agricultural products, mainly rice and seafood, and the tourism sector in the Kingdom, after Russian Minister for Communications and Mass Media Nikolay Nikiforov met with Commerce Minister Sun Chanthol last week. Nikiforov, who led a group of business delegates to Cambodia, said Russia was looking to improve its business relationship with Cambodia and emphasised Russia’s economic areas of interest in the country. The Russian minister also met with the Council for Development of Cambodia’s secretary general Sok Chenda Sophea.
THE AGE Big bank customers are predicted to face higher borrowing costs due to regulatory changes unveiled yesterday, but it is expected to happen gradually as lenders quietly tweak their mortgage pricing. The Australian Prudential Regulation Authority yesterday unveiled measures that will make mortgage lending less profitable for the big four banks and Macquarie. These giants of our financial system will be forced to set aside more capital for every dollar they lend out in home loans. Experts predict the banks will pass on some of this extra US$11 billion cost to customers.
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uropean policymakers like to lecture the rest of the world on air pollution. Asia, and China in particular, is a favourite target for criticism. Indeed, it sometimes seems as if no major environmental conference is complete without a presentation by European policymakers on their continent’s supposed “best practices,” which the rest of the world should emulate. When it comes to air pollution, however, Europe might consider doing less talking and more listening. Air pollution is a growing concern across Europe. The World Health Organization has called it the continent’s “single largest environmental health risk,” estimating that 90% of Europe’s citizens are exposed to outdoor pollution that exceeds WHO air-quality guidelines. In 2010, some 600,000 European citizens died prematurely because of outdoor and indoor air pollution, and the economic costs have been put at US$1.6 trillion, roughly 9% of the European Union’s GDP. London and Paris suffer from particularly severe airquality problems. Nitrogen dioxide levels in some parts of London regularly reach 2-3 times the recommended limit. In the United Kingdom, air pollution kills some 29,000 people a year, putting it second only to smoking as a cause of premature death. Paris may be even worse off; in March, after air-pollution levels surpassed Shanghai’s, the city imposed a partial driving ban and introduced free public transportation.
Sadly, Europe’s policymakers do not seem up to the challenge. George Osborne, the UK’s chancellor of the exchequer, has argued against British leadership in the fight against climate change. “We are not going to save the planet by shutting down our steel mills, aluminium smelters, and paper manufacturers,” he declared in 2011. Osborne is not alone. With European politicians arguing that introducing environmental safeguards will hurt the EU’s already-weakened economy, it comes as little surprise that measures to limit air pollution fall far short of the mark. The EU’s proposed standards regulating toxic emissions from coal plants are even less strict than China’s, Greenpeace reports. Yet various European politicians have called for watering them down even further, with Hungary suggesting that they be scrapped altogether. To be sure, air pollution levels in Asia are truly worrisome. The continent is home to nine of the world’s ten most polluted countries, according to Yale University’s 2014 Air Quality Ranking. New Delhi is ranked as the most polluted city on earth, with air pollution exceeding safe levels by a factor of 60. Owing to Beijing’s unhealthy air, foreign companies pay a “hardship bonus” of up to 30% to employees working there. But at least policymakers in Asia have recognized the problem and are taking steps to address it. China, for example, has declared a “war on pollution.” By 2017, Beijing – once dubbed “Greyjing” by the international media – will spend some
The EU’s proposed standards regulating toxic emissions from coal plants are even less strict than China’s, Greenpeace reports
CN¥760 billion (US$121 billion) to combat air pollution. At the heart of China’s measures are improved public transportation, green trade, and a revision of the energy mix. The government has decided to install bus stops every 500 meters in city centres, reduce tariffs to 5% or less for a list of 54 environmental goods, and decommission many out-dated and inefficient coal plants. The share of non-fossil fuels in primary energy consumption is expected to increase to 20% by 2030. These targets are likely to be rigorously implemented, given strong political support from the very top. Meanwhile, in India, the state governments in Gujarat, Maharashtra, and Tamil Nadu are about to launch the world’s first cap-and-trade schemes for particulates. India’s Supreme Court even suggested an extra charge on privately owned diesel vehicles in New Delhi. Other parts of Asia are also taking steps to improve air quality. Vietnam aims to construct eight urban rail lines in the coming years. Bangkok, which has been tackling air pollution since the 1990s, has planted 400,000 trees. And Japan is offering subsidies for hydrogen cars and creating new pedestrian-only areas. Europe, as one of the world’s wealthiest regions, ought to be at the forefront of the effort to promote environmental sustainability. When it comes to air pollution, however, Europe’s policymakers should stop preaching to others and focus on fixing their own problems. Project Syndicate
16 | Business Daily
July 21, 2015
Closing Vietnam’s growth strengthens despite mixed progress
Volkswagen China sales drop for first time since 2005
Vietnam’s economic growth has continued to strengthen during the first half of 2015 despite mixed progress on structural reforms, according to the World Bank (WB)’s latest Taking Stock report yesterday. The WB semi-annual review of the Vietnamese economy said the gross domestic product (GDP) expansion of 6.28 percent was the nation’s fastest pace in the first half of the year for the past five years, WB said on its press release issued in Vietnam’s capital Hanoi. Against a backdrop of low inflation, the State Bank of Vietnam (SBV) has gradually loosened monetary policy while adjusting the exchange rate.
The company, which counts China as its largest market, posted the first decline in first-half deliveries there in a decade as demand slowed with the economy. VW’s deliveries in China and Hong Kong fell 3.9 percent from a year earlier to 1.74 million units in the January to June period, the company said in a statement. First-half sales in China last fell in 2005, when deliveries slumped 14 percent. Auto sales have slowed this year in China after economic growth moderated, more cities capped the number of new cars, and a volatile stock market diverted funds from vehicle purchases. Demand has slowed despite increasing discounts.
Taiwan export orders fall for 3rd month Some economists cite recovering U.S. and European economies as positive signs for Taiwan orders Faith Hung and Liang-Sa Loh
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aiwan’s export orders fell for a third straight month in June on weak demand from China and other emerging markets in a worrying sign for global technology demand. Last year, strong demand for Apple’s iPhone helped power Taiwan’s exports, a factor that is missing now. June exports contracted 5.8 percent, roughly in line with a median 5.62 percent fall forecast by economists in a Reuters poll. In May, exports dropped 5.9 percent, the fastest pace in more than two years. Orders from Taiwan’s two biggest export markets were mixed; with China down 11.5 percent from a year earlier while those from the United States rose 5.8 percent, the economics ministry said on Monday. “The increase was mainly due to more orders of handheld devices by global brands,” the ministry said in a statement. “However, demand for PC and mid- to
low-end handheld devices was weak, offsetting order momentum.” The ministry said the value of overall orders in July was likely to improve over June, and some economists cited recovering U.S. and European economies as positive signs for
Taiwan orders. “We see orders hitting bottom in June-July, recovering slowly into the rest of this year,” said analyst Wang Cheng-hung of Yuanta Securities Investment Advisory, Taipei. Orders from Europe and
Japan both declined, down 7.7 percent and 6.0 percent, respectively, the ministry said. Of the seven major sectors, only information and telecommunications posted gains. Electronics, precision, chemical and three others all came in negative territory.
State margin lender delays plan CPC meeting to discuss to raise 100 billion yuan economy in October
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plan to raise 100 billion yuan via short-term bills by China Securities Finance Corp, the state-backed institution that provides margin financing and liquidity to the market, has been delayed, four sources familiar with the matter told Reuters yesterday. The state margin finance provider’s original plan was to issue 100 billion yuan of three-month bills yielding 4.4 percent mainly via China Merchants Bank Co, said one of the sources. The bills were set to be issued last week, said two banking sources, adding that they were then told to delay the issuance. The four sources did not provide specific reasons for the delay. When contacted by Reuters, the China Securities Regulatory Commission declined to immediately comment. Reuters could not reach China Securities Finance Corp for comment. China Securities Finance Corp has issued 80 billion yuan via short-term bill sales as part of the government’s efforts to stabilise China’s stock turmoil, Reuters reported in July. Reuters
Taiwan’s export orders are a leading indicator of demand for Asia’s exports and for hitech gadgets, and typically lead actual exports by two to three months. Orders for Taiwan, known as a big production base for electronics, are seen as a key reference for the global electronics sector. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, last week gave investors a downbeat thirdquarter outlook estimating July-September revenue to rise just 2.2 percent from the second quarter. U.S. chipmaker and peer Intel also cut its 2015 capex forecast a second time by US$1 billion to US$7.7 billion. Taiwan is bracing for a fall in exports this year, the first since 2009. Reuters
Mainland allocates more poverty-relief funds
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hina’s ruling Communist Party will meet in October to discuss economic development and the next five-year plan, state media said yesterday, as the government seeks ways to boost an economy that is expected to post its weakest growth in a quarter century. The decision was made after a meeting of the Politburo, one of the party’s elite ruling bodies, chaired by President Xi Jinping, Xinhua news agency said. It provided no other details. Such meetings, formally called plenums, are typically held once a year and tend to map out key policies for the years ahead. Last year’s plenum focused on the rule of law, while at the one in 2013 Xi announced ambitious economic reforms that signalled a shift of China’s economy from infrastructure- and export-fuelled growth towards a slower, more balanced and sustained expansion. China’s 13th five-year-plan will be an important document that outlines national priorities and sets targets for economic and social development.
hina’s central treasury has allocated 13.9 billion yuan (about US$2.3 billion) to support poverty reduction efforts in rural areas, the Ministry of Finance said yesterday. This was the last batch of a 46.1-billion-yuan fund designated for poverty relief from the central budget this year. The sum was 8 percent more than that of 2014, the ministry said in a statement on its website. The money will be spent to improve rural roads and homes, build better public services, give small loans to new businesses and provide free vocational education and training to young people in poverty-stricken areas, according to a plan issued earlier. Poverty reduction remains a challenging task for Chinese policymakers, with over 70 million people living below the country’s poverty line, which means an annual income under 2,300 yuan. Though the government’s poverty relief fund has nearly doubled in four years, the effect is far below expectation: Only 12.32 million people emerged from poverty last year, compared with 43.29 million in 2011.
Reuters
Xinhua