MOP 6.00 Closing editor: Joanne Kuai
South Korea to ratify bilateral Free Trade Agreement on November 26
Page 15
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Year IV
Number 922 Wednesday November 18, 2015
Publisher: Paulo A. Azevedo
Stanley Ho paid MOP43 million to avoid trial Page 5
Chinese central bank researcher calls for an electronic IMF currency basket
‘Retread’ Policy Address Panned
Chief Executive Chui Sai On delivered his second Policy Address for his second term at the Legislative Assembly yesterday. Gross gaming revenues for 2016 are calculated at MOP200 bln. Or MOP16.6 bln per month. “The adjustment will not affect our social benefits for residents or our basic infrastructure,” said Chui. Several legislators lambasted the CE’s lack of innovation. Urging more concerted measures, new ideas and better execution by the administration. With an accountability mechanism high on the wish-list Pages
3&4
Step by step for SJM A narrowing decrease. SJM CEO Ambrose So’s prediction vis-a-vis Macau’s gaming revenues in October and November. Hoping improved market trends deliver a better Q4 performance. The company’s Lisboa Palace Cotai project is on schedule, he says. And voiced confidence in the new DICJ head. Saying Paulo Martins Chan’s legal background would help the industry to be better regulated
www.macaubusinessdaily.com
Name
%Day
CNOOC Ltd
+3.21
China Mengniu Dairy C
+3.00
Li & Fung Ltd
+3.00
China Overseas Land &
+4.52
Kunlun Energy Co Ltd
+2.71
China Life Insurance Co
+0.36
Hengan International
+0.25
CITIC Ltd
+0.15
Bank of Communicatio
0.00
Tingyi Cayman Islands
-1.51
I SSN 2226-8294
Linking London
Page 20
November 17
Source: Bloomberg
Page 2
Not a “copycat” scheme. A London Stock Exchange Group executive was speaking of the proposed link between the City and Pudong exchanges. And alluding to the landmark Hong Kong-Shanghai Stock Connect initiative, now one year old
HSI - Movers
New low
That sinking feeling. In Q3, average residential unit prices decreased 11.5 pct q-o-q to MOP84,342 per sq. metre. Pre-sale residential units dropped at a similar pace to MOP113,857 per sq. metre. Transactions plunged 24.7 pct, while values plummeted 30.7 pct on a quarterly basis
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2 | Business Daily
November 18, 2015
Macau
Real estate prices hit 2015 low The number of transactions decreased by 24.7 per cent, while value diminished 30.7 per cent on a quarterly basis
T
he local real estate sector has posted another weak quarter, matching the global mood and highlighting a domestic downward trend triggered last year. Figures mark the lowest point in 2015 and the worst since the decline started in 2014. A report issued by the Statistics and Census Service (DSEC) showed the average price of residential units decreased 11.5 per cent quarter-onquarter to MOP84,342 per square metre, while pre-sale residential units also dropped at a similar pace to MOP113,857 per square metre. Taipa, Coloane and the Macau Peninsula fell by 9.2 per cent, 4.5 per cent and 1.7 per cent, respectively. DSEC released real estate figures for the July-September quarter, indicating Coloane, Novos Aterros da Areia Preta (NATAP) and Guia were the places with more sales and purchases. The average price was MOP105,786, MOP103,619 and MOP103,210 respectively per square metre. The price of existing residential units decreased 6.2 per cent quarteron-quarter to MOP76,711 per square metre, with those in Coloane, Taipa and the Macau Peninsula dropping 9.1 per cent, 8.8 per cent and 4.9 per cent, respectively. Baixa da Taipa, NATAP and Areia Preta & Iao Hon hit an average price of MOP86,647, MOP90,408 and MOP72,851 per square metre, respectively.
Regarding office units, the DSEC report stated that the average price per square metre decreased 13.0 per cent quarter-on-quarter to MOP102,967, while that of industrial units dropped 9.1 per cent, at MOP50,205. In the third quarter of 2015, some 2,734 real estate sale contracts were signed, involving 2,747 properties, up 8.6 per cent quarter-on-quarter; meanwhile, 2,949 mortgage contracts were signed, involving 3,989 properties, down 0.9 per cent, the report said.
Fewer transactions
According to the report, the number of transactions decreased 24.7 per cent, while value diminished 30.7 per cent on a quarterly basis per stamp duty records. The DSEC said that pre-sale residential units dropped by over 40 per cent in both number and value terms. Figures show 2,323 building units and parking spaces were purchased and sold for MOP12.49 billion in the third quarter. Residential unit purchases and sales totalled 1,537 at MOP8.62 billion, down 17.5 per cent and 26.6 per cent, respectively quarter-onquarter. Of these, the transaction of pre-sale residential units totalled 246 at MOP2.34 billion, down substantially by 46.1 per cent and 47.7 per cent, respectively; existing residential units dropped 8.3 per cent to 1,291 with total value falling 13.6 per cent to MOP6.29 billion.
SJM expects better, stable fourth quarter
A
mbrose So Shu Fai, Chairman of the Board of Directors of SJM Holdings Ltd., commented that, in general, the pace of decrease of revenues in the gaming industry would narrow in October and November. Thus, the company hopes the market will gradually stabilize. “In the third quarter, we’ve set
aside some money for investment in the stock exchange market. The performance of the third quarter is not very satisfactory. We hope in the fourth quarter, with the trend of a slowing drop, that everybody will have better results,” said Mr. So. Ambrose So added that the progress of the Lisboa Palace that is being built in Cotai is on schedule
and is slated to be completed in the fourth quarter of 2017. With SJM’s strong foundation on the Macau Peninsula, he is looking forward to participating in the competition in Cotai. He also expressed confidence in the newly-appointed head of the Gaming Inspection and Co-ordination Bureau (DICJ), saying the new director’s legal
background will push forward the regulation and healthy development of the gaming industry at a faster pace. Assistant Public ProsecutorGeneral Paulo Martins Chan will be the new director of DICJ from December 1. In response to reporters’ questions regarding the Court of Second Instance’s rejection of issuing an injunction to suspend the government’s order to reclaim land plots filed by some developers, including some subsidiaries of SJM, Angela Leong, Managing Director of SJM, refused to answer, saying “Don’t ask questions that make things awkward”. She and Ambrose So were speaking on the sidelines of the official media address for Sociedade de Jogos de Macau, S.A. (‘SJM’) and Theodore Racing ahead of the 62nd Macau Grand Prix. SJM is the title sponsor of the SJM Macau GT Cup – FIA GT World Cup. Also, SJM has once again partnered with Theodore Racing as the team’s title sponsor and welcomes ICBC (Macau) as the promotion partner of the team. J.K. with J.S.F.
Business Daily | 3
November 18, 2015
Macau
Chui: Gaming revenues down to MOP16.6 bln per month in 2016 The Chief Executive has lowered the public budget for 2016 in general as the government estimates the gaming industry, its major source of income, would not recover from the current ‘new normal’ downturn Kam Leong
kamleong@macaubusinessdaily.com
C
hief Executive Fernando Chui Sai On anticipates that the local gaming industry will continue to undergo an adjustment next year, forecasting that annual gross gaming revenues will drop further to some MOP200 billion (US$25 billion). Regarding the public account, however, he believes that a fiscal surplus will still be posted. Delivering the second Policy Address for his second term at the Legislative Assembly yesterday, the city’s chief officer proposes in the 2016 budget plan decreasing both the revenues and expenses of the government. According to the budget, the government expects to take in MOP103.3 billion next year, some 3.25 per cent less than this year’s estimated MOP106.8 billion. In particular, revenues from direct taxes, more than 92 per cent of which devolve from gaming, is expected to drop to MOP79.5 billion next year from this year’s forecast of MOP92.7 billion, down 13 per cent.
LRT Depot dispute with contractor resolved The Chief Executive revealed at the press conference that the government had reached agreement with the contractor yesterday to terminate the contract for the construction of the Light Rail Transit (LRT) depot in Taipa. The contractor in charge of the construction is Mei Cheong Construction. The CE expects the tender for the construction to be re-opened next year. In addition, the government suggests building a bridge rather than an undersea tunnel for the city’s fourth cross-sea passageway connecting the Peninsula to the Islands.
The reason, according to the CE, is due to the government’s expectation that gaming revenues would not rebound next year, with values dropping for seventeen consecutive months as of October this year. “For the gaming industry, we expect gross gaming revenues will total some MOP200 billion for the whole year of 2016, which is averagely MOP16.6 billion per month,” Mr. Chui told reporters in a press conference following the Policy Address delivery. “We estimate that the local gaming industry will still go through an adjustment next year. However, the adjustment will not affect our social benefits for residents or our basic infrastructure. The adjustment phase of the industry, for sure, will last for a certain period of time. Hence, we have lowered our economic expectations as we did for this year,” he explained. The CE added these are just “conservative” estimates of the government. “When we draw up our budget, we follow the principle of keeping expenditure within the limits of revenue, striving to reach a fiscal balance and achieve a fiscal surplus,” he said. Decreasing public expenses for next year to MOP85.04 billion from this year’s budgeted MOP87.9 billion, the government seeks to reach a fiscal surplus of some MOP18.2 billion for 2016, down by some 3.15 per cent from this year’s set target of MOP18.8 billion.
Mixed elements
Describing the adjustment phase of the gaming industry as “normal”, the Chief Executive perceives there is still room for the industry to develop in the coming years. “The combination of gaming elements and non-gaming elements in the new integrated projects in Cotai has been effective. We will continue supporting the combination of two thirds of gaming [elements] and one-
“Candy distribution” principally unchanged Although the city is in the throes of an economic downturn and the government is tightening budgets for next year, major social benefits remain for 2016. The cash handout scheme will continue with the distribution of MOP9,000 for permanent residents and MOP5,400 for non-permanent residents. In addition, permanent residents will receive medical coupons worth MOP600. Qualified residents will be given MOP10,000 to initiate their public provident fund accounts automatically, while those with the account opened will have another MOP7,000 injected. Moreover, residents will continue receiving subsidies for ongoing education, worth MOP6,000.
Same tax relief polices In addition, major tax relief polices will be the same as this year’s, which includes deducting 30 per cent of professional tax,
third non-gaming [elements]. In fact, we think that there’s still room to boost the development of the industry further,” he said. To support the industry, the CE indicated that the government would strengthen its regional cooperation and diversify the economy. “We’ve seen high growth in the hotel industry, the retail industry and the construction sector. We hope the nongaming elements could surge higher,” he claimed, adding the government will also support local SMEs and young entrepreneurs.
Financial infrastructure
Meanwhile, the Office of the Secretary for Economy and Finance is to boost the city’s financial infrastructure this year. According to the Policy
waiving all operation tax and refunding 60 per cent of the 2015 professional tax to all taxpayers who had paid their tax.
Subsidies up for elderly and disabled Further, the government proposes increasing its subsidies for the elderly and disabled. It is proposed that subsidies for the eligible elderly increase to MOP8,000 per year while pension remains at MOP3,350 per month. Meanwhile, it is proposed that ordinary subsidies for the disabled increase to MOP8,000 per year, with special subsidies to MOP16,000 per year.
Salary hike for public servants The government also suggests increasing the salary of public servants to MOP81 per salary point from the current MOP79 per point from next year, claiming it would submit the proposal to the Legislative Assembly.
Address, a Renminbi Real Time Gross Settlement (RMB RTGS) system will be established as soon as the first half of next year. The system willl allow local banks and foreign banks to open renminbi settlement accounts with the city’s clearing bank by joining the system. The system has already been operational in Hong Kong since 2007. In addition, the government seeks to establish an electronic system for the clearing of negotiable instruments during the third quarter of 2017. Moreover, an establishment of a central credit reference agency is also planned. The system will collect information of indebtedness and borrowers’ credit history for credit providers.
4 | Business Daily
November 18, 2015
Macau
Legislators: Nothing new in Policy Address Several legislators criticised the Chief Executive’s Policy Address as lacking innovation. They urged more practical and concerted measures plus an accountability mechanism for government officials Joanne Kuai*
joannekuai@macaubusinessdaily.com
are low, no matter how right your policy and orientation is you won’t achieve the goals. How to enforce the policies and put them into practice is our greatest concern”.
Economic stimulus
N
o sincerity. No innovation. That’s the impression of several legislators who attended the Legislative Assembly for the Chief Executive’s 2016 Policy Address. “Today, the feeling I got is that hearing the report is like hearing nothing. There is nothing innovative. Moreover, they’ve mentioned nothing of importance, including a principal officials’ accountability mechanism,” said directly-elected legislator Ng Kuok Cheong. “Despite the economic downturn, we still have fiscal surplus. But the government seems to have lost its confidence and just wants to hold on to the status quo.” The legislator gave one example of the Light Railway Transit (LRT) project that was supposed to be completed this year. He said that the government just changed a number of government officials but hasn’t come up with any concerted measures to improve the situation. “Looking back, no-one is being held accountable. Looking forward, there is no timetable.” “The impression I got is that the administration doesn’t have much
confidence. They don’t want anything new, but would rather stick to past practices. And they don’t want to make any promises - just struggle to make the things as they are,“ added Mr. Ng. The legislator pointed out that despite the economic downturn the government would still have a fiscal surplus and that “there are still plenty of things that the government can do.” He said that as a legislator he could still ask government officials to come to the Legislative Assembly to question them and ask for a timetable but he said that ordinary residents must feel really helpless. “They [the government] should have the mindset of governance and take the initiative to explain and answer for the problems under their administration. I will remind them tomorrow.”
Execution
Another directly-elected legislator shared the same concerns. Ho Ion Sang praised the government’s intention of giving more attention to vulnerable groups but criticised that many policies hadn’t touched on the core issues.
“In terms of land, housing and transportation, there is basically nothing new in this year’s Policy Address. These issues remain at a ‘studying’ or ‘planning’ stage. These policies and administration hasn’t adjusted to the reality of Macau society. It hasn’t met the residents’ needs and expectations. It doesn’t really address the fundamental livelihood problems of residents,” said Mr. Ho. Mr. Ho further addressed the Five-Year-Plan mentioned by the Chief Executive, saying that the government has made many longterm plans, but without concerted measures and enforcement nothing is progressing. “We have doubts about the execution of the administration of the civil servants and principal government officials. An appraisal and accountability system should be established in order to assure the enforcement of policies,” added Mr. Ho. Appointed legislator Sio Chi Wai seconded the opinion, saying, “If the execution rate of the government and the efficiency of the administration
Macau’s economy has been undergoing downturn. Directly-elected legislator Kwan Tsui Hang said that in such sensitive times the Chief Executive had failed to introduce new measures to stimulate the economy but had rather stuck to old practices. Ho Ion Sang said he was also hoping for some new ideas but the government seems to have run out of them, dwelling on MICE and Traditional Chinese Medicine, which has been mentioned time and time again. Indirectly-elected legislator Jose Chui Sai Peng, however, does see a silver lining. “For exhibitions, the cultural industry and also the Chinese medicine, they are now announcing there will be new scientific methods. If you’re really going to make industries out of these three things, I think this is a very important step to have a statistical calculation to really report on the progress of the three sectors,” said Mr. Chui. “I think those are good and important measures to give a better and more transparent picture of the development.” Mr. Chui was not particularly concerned about the economic turbulence in Macau when addressing unemployment and GDP per capital, saying, “Compared to a lot of countries, we are still the forerunner”. He also added that he spotted something new in the Chief Executive’s speech. “It’s the first time they mentioned Latin-speaking countries as regional co-operation targets. I think this is a new idea that hasn’t been brought up too often. That will be a new point for us to think about.” *with K.L
Corporate
MGM China sponsors Special Olympics Macau
Wynn Macau President joins EHL
This November, MGM China joins hands with Special Olympics Macau to present the Art Program of “Penz13 BMW Motorrad by MGM China and Special Olympics Macau”. Over 30 athletes from Special Olympics Macau were invited to join the program to create colorful designs for the two sponsored Penz13 BWM
Ecole hôtelière de Lausanne (EHL) hotel school has appointed Gamal Aziz, President and Executive Director of Wynn Macau Limited, to its International Advisory Board (IAB). The IAB is composed of international hotel, education and hospitality leaders, who provide EHL with important industry insights and market trends to support the
racing motorcycles. Two designs drawn by Sin Kei Cheong and Tam Chan Kit were chosen among 80 beautiful and creative drawings. Their designs were debuted as works of art on the Penz13 BMW Motorrad Motorcycles at MGM MACAU before they hit the circuit at the Macau Grand Prix 2015.
development of its academic programs. The EHL Group Management and IAB Presidency rejoice at this nomination and look forward to a continued relationship. “It is a great honor to have someone of Mr. Aziz’s caliber join EHL’s International Advisory Board,” said Dr. Fabien Fresnel, Dean of EHL.
Business Daily | 5
November 18, 2015
Macau
L’Occitane interim profits dive by nearly half The retailer’s net sales in Hong Kong and Macau posted a year-on-year drop of some 12 per cent Kam Leong
kamleong@macaubusinessdaily.com
Asia. Travel retail sell-through was affected by the lagging effects of MERS in Korea and a material traffic drop in Hong Kong and Macau,’ the retailer claimed. As at the end of September, the retailer had a total of 35 stores and 3 stores in Hong Kong and Macau, respectively.
Growth on the Mainland
F
rench cosmetic retailer L’Occitane International S.A. registered a decrease of 47 per cent in its profit attributable to equity owners of the company for the first half of its fiscal year ended September 30, it told Hong Kong Stock Exchange on Monday. For the six months, the company’s net profit totalled 19.4 million euros (MOP166.2 million/US$20.8 million), which is a drop of some 17.2 million euros compared to 36.6 million euros for the same period of last year. Nevertheless, the net sales of the company jumped 12.5 per cent yearon-year to 546.7 million euros. The increase was 5.7 per cent at constant exchange rates.
The retailer’s business in Hong Kong and Macau posted a drop of 12 per cent in net sales at constant exchange rates for the six months, amounting to some 58.1 million euros, posting a negative contribution of 23.4 per cent to the company’s overall growth. In terms of business segments, the company’s sell-out sector in the two cities registered a drop of 14.3 per cent year-on-year while same stores sales growth posted a year-on-year decline of 16.2 per cent. The company said the decreases are due to ‘weak market sentiment and sharp decrease in Mainland Chinese tourists’ ‘Business environment for sellin segment was also challenged, in particular travel retail business in
Meanwhile, the company’s net sales in China surged by 20.4 per cent year-on-year at constant exchange rates, totalling 51.4 million euros for the six months. According to the filing, the market’s strong growth had contributed 26 per cent to overall growth of the company. ‘China had the highest growth of the Group, mainly driven by the quality new stores which have been opened during last and current financial years and sales to T-mall,’ the company remarked. ‘In the second half and beyond, the Group expects to drive sustainable growth endorsed by a committed management team with investment in business platforms, marketing and product innovations. The Group will continue to roll out refined format stores selectively in quality locations, especially in Asia, to replace those in weaker locations and positions,’ the company declared.
Int’l Elite extends solution service term with Hutchison
I
nternational Elite Ltd., a customer relationship management outsourcing service provider, announced yesterday that it would provide customer relationship services solutions to telecommunications operators Hutchison Telecommunications Holdings Ltd. and Hutchison Global Communications Ltd. for their businesses in Macau and Hong Kong for five more years. The parties have been co-operating with each other since International Elite’s two subsidiaries, International Elite Ltd. - Macau Commercial Offshore and Guangzhou China Elite Info Co., Ltd. entered managed services agreements with the Hong Kong-based telecommunications operators in March 2005 for an initial term of five years. According to International Elite’s filing with the Hong Kong Stock Exchange yesterday, the parties agreed to extend their current term of agreements to March 31, 2020. Meanwhile, the filing indicated the company is going to provide the handling of an inbound customer services hotline, order entry service and inbound telesales to the two telecommunications operators conducting telecommunications, telesales and value-added services businesses in the two cities. Hutchison Telecommunications owns Hutchison Telephone Macau in the Special Administrative Region. The subsidiary operates under the 3 Macau brand in the territory and was recently rewarded by a licence by the local government to operate 4G mobile communication (LTE) network services.
Stanley Ho paid MOP43 million to avoid trial João Paulo Meneses in Portugal newsdesk@macaubusinessdaily.com
F
our companies associated with STDM and Estoril Casino, owned by Stanley Ho in Portugal, paid around MOP43 million (5 million euros) to avoid facing trial on a false invoices case. According to the latest edition of Expresso newspaper (Lisbon), the companies have ties with STDM and have paid the overdue corporate income tax so they wouldn’t have to face trial for tax fraud, said the Portuguese Financial Bureau. This month alone, 108
individuals and companies were charged with tax evasion in Portugal. The false invoices scheme involved exaggerated costs, thus reducing profits and respective taxes. In July 2008, Judiciary Police raided several companies of the EstorilSol group as part of an investigation into money laundering, false invoices and other financial crimes. At the time, an Estoril-Sol spokesperson confirmed the raids and said that Estoril-Sol had nothing to hide.
K.L.
Benefits for the Elderly
MACAO SAR BUDGET - REVENUE AND EXPENSES FOR 2016 OVERVIEW REVENUE ITEMS
Proposed budget for 2016 REVENUE ITEMS General integrated budget of public expenditure 93,070,245,300.00 79,456,698,600.00 4,473,083,400.00 1,875,848,100.00 1,726,800,800.00 4,197,203,000.00 2,456,300.00 1,236,741,000.00 101,414,100.00
RECURRING REVENUE
Direct tax Indirect tax )HHV ¿QH DQG RWKWHU PRQHWDU\ SHQDOWLHV Asset revenue Transfer Sale of durable items Sale of labour and non-durable items 2WKHU UHFXUULQJ UHYHQXH
Proposed budget for 2016 1,759,040,900.00 152,245,300.00 21,000.00 424,691,000.00 1,150,655,500.00 31,428,100.00
CAPITAL REVENUE
Disposal of investment assets Transfer Financial assets 2WKHU FDSWLDO UHYHQXH 5HIXQGV QRW GHGXFWHG IURP SD\PHQWV
General integrated budget of public revenue
94,829,286,200.00
Revenue of special organisations 6WDWXWRU\ LQFRPH DQG WUDQVIHU IURP WKH 06$5 EXGJHW Income from sales and provision of services ,QFRPH IURP ¿QDQFLDO LQYHVWPHQWV 2WKHU LQFRPH
EXPENSES ITEMS
22,231,705,200.00 229,830,000.00 3,561,685,900.00 99,931,100.00
Total revenue of special organisations
26,123,152,200.00
Adjustment Grand total
17,700,915,400.00 103,251,523,000.00
Proposed budget for 2016 EXPENSES ITEMS General integrated budget of public expenditure
0DFDR 6$5 *RYHUQPHQW 2I¿FH RI WKH &KLHI ([HFXWLYH ([FFXWLYH &RXQFLO 2I¿FH RI WKH 6HFUHWDU\ IRU $GPLQLVWUDLWRQ DQG -XVWLFH 2I¿FH RI WKH 6HFUHWDU\ IRU (FRQRP\ DQG )LQDQFH 2I¿FH RI WKH 6HFUHWDU\ IRU 6HFXULW\ 2I¿FH RI WKH 6HFUHWDU\ IRU 6RFLDO $IIDLUV DQG &XOWXUH 2I¿FH RI WKH 6HFUHWDU\ IRU 7UDQVSRUW DQG 3XEOLF :RUNV 0DFDR (FRQRPLF DQG 7UDGH 2I¿FH LQ /LVERQ 0DFDR (FRQRPLF DQG 7UDGH 2I¿FH WR WKH (XURSHDQ 8QLRQ LQ %UXVVHOV 2I¿FH RI WKH 0DFDR 6$5 LQ %HLMLQJ 0DFDR (FRQRPLF DQG 7UDGH 2I¿FH WR WKH :RUOG 7UDGH 2UJDQL]DWLRQ 2I¿FH IRU 3HUVRQDO 'DWD 3URWHFWLRQ ,QIUDVWUXFWXUH 'HYHORSPHQW 2I¿FH 2I¿FH IRU 'HYHORSPHQW RI WKH (QHUJ\ 6HFWRU 7KH 6XSSRUWLQJ 2I¿FH WR WKH 3HUPDQHQW 6HFUHWDULDW WR WKH )RUXP IRU (FRQRPLF DQG 7UDGH &RRSHUDWLRQ EHWZHHQ &KLQD DQG 3RUWXJXHVH VSHDNLQJ &RXQWULHV )LQDQFLDO ,QWHOOLJHQFH 2I¿FH +XPDQ 5HVRXUFHV 2I¿FH 7UDQVSRUWDWLRQ ,QIUDVWUXFWXUH 2I¿FH 7KH 0DFDR 6$5 *RYHUQPHQW 3ROLF\ 5HVHDUFK &HQWUH 0DFDR (FRQRPLF DQG &XOWXUDO 2I¿FH 3URWRFRO 3XEOLF 5HODWLRQV DQG ([WHUQDO $IIDLUV 2I¿FH 3XEOLF $GPLQVWUDWLRQ DQG &LYLO 6HUYLFH %XUHDX (GXFDWLRQ DQG <RXWK $IIDLUV %XUHDX Statistics and Census Service %XUHDX RI 7HOHFRPPXQLFDWLRQV 5HJXODWLRQ )LQDQFH 6HUYLFHV %XUHDX 3HQVLRQ DQG UHWLUHPHQW FRPSHQVDWLRQ *HQHUDO H[SHQVHV 7HUWLDU\ (GXFDWLRQ 6HUYLFHV 2I¿FH 7UDI¿F $IIDLUV %XUHDX /DZ 5HIRUP DQG ,QWHUQDWLRQDO /DZ %XUHDX ,GHQWL¿FDWLRQ %XUHDX 0DFDR (FRQRPLF 6HUYLFHV %XUHDX 0DFDR 3ULVRQ 0DFDR &XVWRPV 6HUYLFH 0HWHRURORJLFDO DQG *HRSK\VLFDO %XUHDX *RYHUQPHQW 7RXULVW 2I¿FH *RYHUQPHQW ,QIRUPDWLRQ %XUHDX 8QLWDU\ 3ROLFH 6HUYLFH *DPLQJ ,QVSHFWLRQ DQG &RRUGLQDWLRQ %XUHDX 0DULQH DQG :DWHU %XUHDX 3XEOLF 6HFXULW\ )RUFHV $IIDLUV %XUHDX /DERXU $IIDLUV %XUHDX Judicial Council
19,752,200.00 296,879,300.00 32,182,800.00 36,855,600.00 45,523,800.00 32,121,500.00 188,719,700.00 31,679,800.00 11,656,900.00 4,923,100.00 22,900,200.00 13,423,200.00 63,856,200.00 66,712,200.00 37,433,500.00 157,696,900.00 27,210,600.00 56,851,900.00 80,393,100.00 49,897,300.00 16,396,700.00 89,504,600.00 408,292,700.00 5,495,290,200.00 196,917,400.00 169,864,100.00 464,037,100.00 7,941,200.00 16,809,186,300.00 243,242,700.00 1,662,557,200.00 52,086,400.00 272,984,200.00 208,363,500.00 525,179,100.00 719,228,600.00 107,051,200.00 317,680,800.00 122,823,100.00 40,537,700.00 255,121,500.00 1,115,549,900.00 4,313,106,900.00 354,976,200.00 605,800.00
Proposed budget for 2016
&DUWRJUDSK\ DQG &DGDVWUH %XUHDX -XGLFLDU\ 3ROLFH (QYLURQPHQWDO 3URWHFWLRQ %XUHDX /HJDO $IIDLUV %XUHDX /DQGV 3XEOLF :RUNV DQG 7UDQVSRUW %XUHDX 0DFDR 6SRUWV 'HYHORSPHQW %RDUG &XOWXUDO $IIDLUV %XUHDX Investment projects 'HVLJQDWHG DFFRXQWLQJ LWHPV GHVLJQDWHG DSSURSULDWLRQV VKDUHG DOORFDWLRQV DQG WUDQVIHU EXGJHW 6WXGHQW :HOIDUH )XQG +RXVLQJ /RDQ )XQG Industrial and Commercial Development Fund Tourism Fund 6RFLDO :HOIDUH %XUHDX -XGLFLDU\ 3ROLFH :HOIDUH $VVRFLDWLRQ 3XEOLF 6HFXULW\ 3ROLFH )RUFH :HOIDUH $VVRFLDWLRQ &RIIHU RI /HJDO $IIDLUV *RYHUQPHQW 3ULQWLQJ %XUHDX 0DFDR 3ULVRQ )XQG +RXVLQJ %XUHDX &LYLO $YLDWLRQ $XWKRULW\ 0DFDR 7UDGH DQG ,QYHVWPHQW 3URPRWLRQ ,QVLWLWXWH &RPPLVVLRQ $JDLQVW &RUUXSWLRQ +HDOWK %XUHDX 8QLYHUVLW\ RI 0DFDX 0DFDR 3RO\WHFKQLF ,QVWLWXWH Sports Development Fund Culture Fund Consumer Council Institute for Tourism Studies 0DFDR 3XEOLF $GPLQLVWUDWLRQ :HOIDUH )XQG )LUH 6HUYLFHV :HOIDUH $VVRFLDWLRQ Commission of Audit 3XEOLF 3URVHFXWLRQV 2I¿FH 2I¿FH RI WKH 3UHVLGHQW RI WKH &RXUW RI )LQDO $SSHDO /HJLVODWLYH $VVHPEO\ &LYLF DQG 0XQLFLSDO $IIDLUV %XUHDX &XVWRPV :HOIDUH $VVRFLDWLRQ 6FLHQFH DQG 7HFKQRORJ\ 'HYHORSPHQW )XQG :HOIDUH &RPPLWWHH RI 0DULQH DQG :DWHU %XUHDX )LVKHULHV 'HYHORSPHQW DQG 6XSSRUW )XQG 3URSHUW\ 0DLQWHQDQFH )XQG (GXFDWLRQ 'HYHORSPHQW )XQG *LDQW 3DQGD )RXQGDWLRQ (QYLURQPHQWDO 3URWHFWLRQ DQG (QHUJ\ &RQVHUYDWLRQ )XQG &XOWXUDO ,QGXVWU\ )XQG General integrated budget of public expenditure
80,558,800.00 857,795,500.00 333,639,200.00 252,089,000.00 458,886,900.00 179,834,200.00 445,463,200.00 11,068,782,000.00 17,698,915,400.00 429,328,100.00 43,128,100.00 784,422,400.00 870,268,400.00 2,967,808,400.00 7,520,800.00 32,710,900.00 220,664,600.00 85,976,500.00 6,398,100.00 445,973,100.00 77,165,300.00 660,920,700.00 353,144,800.00 7,075,154,800.00 2,340,705,800.00 749,879,100.00 816,754,000.00 538,097,500.00 39,382,400.00 414,859,800.00 49,590,600.00 6,970,000.00 209,135,700.00 418,340,800.00 541,062,500.00 183,914,500.00 2,607,202,800.00 3,598,500.00 269,433,200.00 2,727,600.00 90,853,100.00 78,446,200.00 915,408,200.00 7,383,600.00 149,530,100.00 244,948,200.00 91,359,968,300.00
Expenditure of special organisations 0DFDR 3RVW 3RVWDO 6DYLQJV 2I¿FH 0DFDR 3HQVLRQ )XQG 6RFLDO 6HFXULW\ )XQG 0RQHWDU\ $XWKRULW\ RI 0DFDR $XWRPRELOH DQG 0DULWLPH 6HFXULW\ )XQG
355,510,000.00 43,835,800.00 2,013,894,400.00 4,467,831,200.00 1,563,637,400.00 8,410,000.00
0DFDR )RXQGDWLRQ 'HSRVLW 3URWHFWLRQ )XQG Total expenditure of special organisations Adjustments Grand total
2,922,743,700.00 3,125,000.00 11,378,987,500.00 17,700,915,400.00 85,038,040,400.00
Budget balance & estimated surplus for this year &HQWUDO EXGJHW EDODQFH (VWLPDWHG VXUSOXV RI VSHFLDO RUJDQLVDWLRQV
3,469,317,900.00 14,744,164,700.00
Budget balance & estimated surplus of the year Total expenditure, budget balance and estimated surplus of the year
18,213,482,600.00 103,251,523,000.00
(TRANSLATED VERSION)
Major Policies on Various Areas Promote transformation and upgrading of traditional industries;
We adhere to the administrative approach of “perfecting the legal system, streamlining structure and administration, and increasing efficiency”; support the “one centre and one platform” development approach set out for Macao; improve and optimise administrative plans and projects in line with new economic developments; and respond actively to the expectations and demand from society for sustainable development. Public administration Continue to implement the first-phase civil service structural reform, push forward with the study of establishing a municipal organisation that is not an organ of political power, and improve the function and operation of consultative bodies;
Take part in and support the Belt and Road initiative, and seize the opportunities arising from free trade zones and CEPA; Collaborate to ensure success of the fifth Ministerial Meeting of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries (Macao);
26.9
15 000 15 000
27.5
21.3
20.0 15.0 10.0 5.0
14.4
12.6
4 920
4 822
4 658
6.3 5.7 6.8
6.4
2.9
8.9 4 672 6.3
4 801 6.0
5 773
5 167 8.6 4.9
8 000
14.3
8 500
8 000
3.8
3.2 3.4 3.0
1.7
3.5
2.8
12 000 10 000 8 000
2.6
6 000
10.7
9.1 4.1
12 000
10 000
7 000
0.0 -5.0
9 000
11 300
16 000 14 000
13 300
25.0
4 000 2.0
1.8
1.7
1.7
1.8
2 000 0
-0.4
-2 000
-2.4
-4 000 -10.0
-6 000
-15.0
-8 000 -10 000
-20.0
-12 000 -25.0 -30.0
Set up a dedicated department to build online and offline “One platform, three centres”, establish a new Portuguese food product exhibition centre, and plan the establishment of service counters in Portugal and Brazil; and
-24.5 -26.4
1999 2000 2001 2002 2003 2004 -2.4 5.7 2.9 8.9 12.6 26.9 6.3 6.8 6.4 6.3 6.0 4.9 4 920 4 822 4 658 4 672 4 801 5 167
Growth rate (%)
2005 8.6 4.1 5 773
2006 2007 2008 14.4 14.3 3.4 3.8 3.2 3.0 7 000 8 000 8 000
Unemployment rate (%)
2009 1.7 3.5 8 500
2010 2011 2012 2013 2014 1ºT/2015 2ºT/2015 27.5 21.3 9.1 10.7 -0.4 -24.5 -26.4 2.8 2.6 2.0 1.8 1.7 1.7 1.8 9 000 10 000 11 300 12 000 13 300 15 000 15 000
-14 000 -16 000
Median monthly income from employment (Patacas)
Economic growth rate in real term, median income, and unemployment rate (1999-2015)
Launch an import, export and re-export credit insurance system.
Implement in an orderly way the five-year plan of e-Government, increase efficiency and optimise services to offer convenience to the public;
Foster innovation and vitality Build a platform for better cooperation between the Government and the community, optimise the business environment, and promote community economy;
Implement the new regulations of centralised recruitment, the dual-track revamp of the civil service system, and the comprehensive review of civil servant ranking system; Continue to organise various training courses to raise allround legal expertise and professionalism of civil servants;
Push forward with planning and research on industrial development, and improve the statistical benchmark system for adequate economic diversification;
Patacas
%
30.0
Public Information Gallery
Incorporate third-party evaluation into public official performance review, and extend the same to various levels and areas of public service;
Optimise administrative services, and foster a quality and well-regulated business environment that offers convenience to both businesses and the public; and Implement various measures to support and assist small-and-medium sized enterprises as they seek innovative development and maintain ethical business operation, and further support youth entrepreneurship with the principle of “Teach a man to fish instead of give him a fish”.
Improve multi-level communication and dialogue channels to foster effective interaction and communication among the Government, community groups and the public; and Implement a complaint handling mechanism with regard to civil servants, and continuously provide civil servants in need with supplementary financial subsidy.
Justice
Continue to collaborate with community groups to organise a series of programmes to promote the Constitution of the People’s Republic of China and the Basic Law of Macao, tailored to different members of the public; and
With a forward-looking spirit in law enforcement, we will continue to implement the principle of putting people first, strengthen our vigilance, and actively understand our citizens’ concerns. By combining the power of the public security forces, relevant departments and all Macao residents, we join hands in our pioneering and progressive effort to improve our ability in law enforcement, prevent and combat crimes, and maintain stable development of society as well as the freedom and safety of residents and tourists.
Revise the Chief Executive Election Law and the Legislative Assembly Election Law to enhance the competitiveness of indirect election and the impartiality of election.
Improve abilities and enhance law enforcement
Gradually implement a coordinated legislative mechanism incorporating decision-making, coordination, drafting and consultation; establish a medium-to-long term legislative plan; and work towards building a strengthened team of law drafters; Attach high importance to the improvement of fundamental laws; intensify legislative work with regard to the people’s daily lives; push forward with the revision of laws and regulations;
The people’s daily lives Enhance both active supervision and law enforcement with regard to food safety; further improve the relevant standards and guidelines; continue to promote food safety and risk education, and increase regional exchange and cooperation regarding food safety management and the relevant skills; Determine the final policy and work schedule of replacing live poultry supply with chilled and frozen poultry supply, based on consultation results; and Upgrade community services, optimise municipal facilities, and further improve urban greening and hygiene.
Adjust law enforcement practices for comprehensive crime prevention and focused crackdown on crimes and efficiently investigate serious crimes to safeguard public security and order; and Strengthen police forces through technology and enhance police operational training to further optimise the operational efficiency and ability of police forces, and improve security mechanisms to strengthen disaster relief capacity.
Improve systems and facilitate reforms Begin preparatory work on establishing a cyber security centre and conduct studies on personnel systems, and design a new system for promotions to higher ranks; and Support legislation to jointly promote legal reform and implement the Government’s policies on streamlining administrative structures.
Uphold discipline and improve management We will strengthen the foundations for maintaining stable development, promote employment and safeguard the people’s well-being, seek structural enhancements and expedite diversification, foster innovation and vitality, join hands with all sectors in overcoming challenges and seizing opportunities, and promote development through adjustment, thereby maintaining stability and fostering Macao’s sustainable development. Strengthen foundations to maintain stable development
Implement policing concepts to promote a modern policing model and sustain alertness and uphold strict discipline in police forces; and Improve monitoring mechanisms and strictly implement hard management while putting officers first to boost morale and introduce a flexible organisational culture.
Initiate collaboration and maintain close relationships
The public security authorities effectively prevent and combat crimes, ensure safety of local residents and tourists, and maintain stable development of Macao society
Improve legal system and industry regulations to further refine and strengthen the gaming industry to achieve orderly development, and urge gaming operators to increase non-gaming elements;
Innovate in police cooperation, safeguard community safety through concerted efforts and raise the efficiency and effectiveness in crime prevention in different areas; and
Encourage gaming operators to lead smaller businesses to create synergy with SMEs and micro enterprises; and
Enhance the production of TV programmes that promote police-community relations to boost public cooperation, initiate diverse publicity channels to promote interactions between police and citizens and to promote mutual understanding and enhance efficiency of cooperation between police and the media.
Maintain fiscal and financial stability, optimise budgeting and taxation systems, and save on administrative expenses.
Promote employment and safeguard the people’s well-being Safeguard local citizens’ employment opportunities and strengthen the regulation of non-resident workers; Encourage occupational training and professional accreditation among local citizens to foster lateral or upward mobility; Enhance publicity and law enforcement regarding occupational safety and health; and Monitor goods prices and widen sourcing channels to protect consumers’ rights and interests.
Seek structural enhancements and expedite diversification Nurture new loci of economic growth by fostering the development of nascent industries spanning exhibition and convention, financial services, Chinese medicine and electronic commerce;
Optimise border-crossing facilities and maintain a positive image Optimise border-crossing facilities, enhance human resources of the police forces and initiate courtesy training to boost efficiency of border-crossing services to help build a tourism and leisure centre; and Make good preparations for administering Macao waters in future.
Promote and provide assistance on rehabilitation Foster cooperation between various parties to promote construction of a new prison and provide diverse counselling on social rehabilitation to help offenders return to society; and Maintain strict internal supervision to strengthen prison management and press ahead with the merger between the Reformatory for Juvenile Delinquents and the Macao Prison.
(TRANSLATED VERSION)
Major Policies on Various Areas
The Government will keep striving to improve residents’ livelihoods, intensify medical system reform, pragmatically promote the principle of “letting Macao thrive through education”, support the underprivileged, and boost the establishment of long-term mechanisms. The Government will also explore new tourism markets, tourist sources and diverse products, and fully leverage synergies by promoting cooperation among tourism, culture and sports sectors for the benefit of the public. Healthcare Cope with the risks of new infectious diseases, enhance overall ability of disease control and rescue services; Strengthen chronic disease prevention and control, improve elderly healthcare services, and enhance the community healthcare services network; and Implement sound medical services management system, train medical professionals and enhance specialist healthcare.
Complete the review of the Legal System on Light Rental Vehicles (Taxis) Passenger Transportation; Complete the issuance of special taxi licences; Adjust the charges for public car parking spaces, provide additional public car parking facilities, and optimise the electronic payment system; and Strengthen coordination of road works.
Housing Progressively promote public housing planning; Implement allocation and management of public housing; Complete research on the initiative concerning new public housing categories; and Conduct an overall review of the Public Housing Law.
Environmental Protection Promote legislation on a construction waste management system and restrictions on the use of plastic bags; Deepen cooperation with Guangdong province on expediting projects regarding scrap vehicles; Construct sorting facilities for inert construction and demolition materials in landfills; and Commence a public consultation on the environmental impact assessment system for construction projects.
Communication session with youth – a variety show to celebrate Macao’s return to the motherland
Education and youth Perfect the laws and regulations on tertiary education and develop plans for nurturing talented people; Expedite implementation of the ten-year development plan, promote the “Blue Sky Project” to reduce the number of schools operating on podiums and improve the environment for talent cultivation; Strengthen talent training and deepen education on morality, civic awareness and the nation’s situation; and Advocate Chinese culture and raise the sense of nationalism and patriotism among young people.
Social work and social security Protect the underprivileged and strengthen cooperation between the Government and the community; Increase quotas of services, implement the ten-year development plan for elderly and rehabilitation services, and improve the social services system; Optimise subsidy schemes, promote professional certification, restructure and expand service scopes; and Implement the two-tier social security system, and enhance service quality.
Tourism Deepen the planning of tourism development, develop e-Government services and improve tourism service quality; Promote “smart travel”, develop innovative and diverse tourism products, and optimise tourist sources; and Seize opportunities arising from the Belt and Road initiative, and promote cooperation, innovation and joint development within regional cultural tourism.
Culture Implement cultural heritage protection and promote relic conservation; Support the nurturing of cultural and arts talents, popularise art education, and expedite development of cultural and creative industries; and Develop Macao’s cultural tourism facilities through inter-departmental cooperation, and create a fascinating cultural expo area.
Sports Provide more favourable conditions for young people and the public to participate in sports activities; Improve sports training mechanisms to nurture talented athletes; and Organise successful major international sports events and fully leverage Macao’s strength in sports tourism.
Transport and public works are closely related to people’s daily lives. Apart from overall urban planning, major livelihood projects - such as transportation, housing and environmental protection - have already been and will continue to be our policy priorities. Urban planning
Action against graft Monitor areas of public administration considered prone to corruption, and corruption in the private sector, in order to maintain a corruption-free social environment; Make good use of the CCAC’s resources to improve anti-corruption strategies, and strengthen up-to-date technical support in order to raise the enforcement standard; Enhance professionalism and skills of investigators, and strengthen their investigative capability; Review legal systems related to the CCAC’s functions, and provide recommendations regarding improvements to these systems; and Enhance efficiency of cross-border cooperation, and ensure that joint investigation of cross-border cases are carried out smoothly.
Complaints to the Ombudsman Review the current workflow, and apply simpler and more efficient methods to handle complaints to the Ombudsman; Conduct special investigations into public services or administrative procedures that are closely related to people’s livelihood, and provide improvement recommendations on administrative operations and legal systems; Enhance the private sector’s performance in corruption prevention, and strengthen cooperation with the private sector by providing corruption prevention guidelines; and Strengthen the use of information technology, optimise the management of work concerning complaints to the Ombudsman and enhance staff’s investigative ability.
Publicity and education Intensify integrity education amongst civil servants, heighten their awareness of conflicts of interest, and raise the standards of self discipline; Strengthen the promotion of the Law of Prevention and Suppression of Bribery in the Private Sector, in order to advocate integrity in governance and business ethics; and Continue to promote integrity and moral education among teenagers and the public, and further develop social networks, in order to create a social atmosphere against corruption.
In 2016, the Commission of Audit will continue to adopt a pragmatic approach, exercise its right of supervision independently and in accordance with the law, uncover problems of dereliction of duty in government departments, and strengthen audits of major projects and those related to people’s livelihoods, and highlight the major problems in order to achieve improvement and prevent risks. The Commission will also encourage government departments to provide active and serious support, and understand the solemnity and importance of auditing work, in order to improve administrative efficiency and optimise management system.
Support strategic research for urban planning and promote preliminary work on formulating overall urban planning; Commence tender processes for the planning of New Urban Zone Area A, Area B and Area E1; Commence the design of the fourth Macao-Taipa crossharbour passage; Continue combating illegal occupation of government land; Handle and follow up on land cases according to the Land Law; and Strengthen maritime management of Macao waters.
Public works
In 2016, the Commission Against Corruption (CCAC) will act in accordance with the law, give first priority to combat corruption, and continue to perform its function to handle complaints to the Ombudsman.
Audit and computer-assisted audit
Pac On Ferry Terminal, Taipa
Re-commence suspended public works and speed up delayed construction projects; Complete construction of the main structure of LRT Taipa line, and follow up on the design of Seac Pai Van line; Expedite construction of public housing; Achieve progress in the layout and design of new border checkpoints; Complete construction of the Taipa Ferry Terminal, and deliver it to various operational units for trial operations in phases; and Ensure orderly progress with construction of the Islands District Medical Complex.
Transportation Commence the preliminary work on formulating Macao’s transportation legislation framework; Review private vehicle taxes and raise standards for vehicle inspections; Press ahead with the policy of putting public transport first, and improve bus services;
The Commission of Audit will continue to adopt a risk-based audit methodology, which will be adjusted in high risk projects with reference to existing and potential problems that often appear in such accounts; The commission will conduct research and make appropriate deployment according to actual need and with consideration of the government’s fiscal reserve and investments and the preparation and introduction of the new Budget Framework Law; and The commission will also improve the On-site Audit System and enhance its data analysis function.
Performance audit and special audit The commission will carry out performance audit and special audit according to existing plans, and assist departments to understand clearly their power and obligations, and implement the concept of performance in the execution of work, in order to enhance public service quality; and The commission will also apply continuous audit and other audit approaches to motivate its audit subjects to use public funds prudently, strengthen management and plug loopholes.
Auditing team The commission will enhance training to improve quality and efficiency of its audit teams. Professional training courses will be arranged systematically to equip all audit team members with professional knowledge up to international standards.
Promote audit culture The commission will continue organising seminars to promote audit culture for civil servants, schools and local communities, with the aims to establish and maintain a just, independent, professional and reliable image, and to educate people on the importance of treasuring public funds.
Special
62 MACAU GRAND PRIX ND
In 1954, João Antas, Júlio da Cruz, António Nolasco, Fernando Macedo Pinto, Carlos da Silva and Paul du Toit decided to organise a treasure hunt around the streets of Macau. At the time, they thought it would be a one-off event for a group of friends, but this proved to be wrong. The races became professionalized over the years and tomorrow the 62nd edition of the Macau Grand Prix kicks off…
12 | Business Daily
November 18, 2015
FIA GT World Cup expected to inject extra emotion into Macau Grand Prix consider the investment by the Tourism Fund, it amounts to roughly MOP200 million. However, the direct revenue to the Fund is around MOP50 million. So from the initial MOP200 million invested, MOP50 million is immediately covered with money from sponsors and ticket sales. This Fund comes for a big part from the tourism industry, which is benefiting from it. During race days, the revenues of this industry – namely, casinos, hotels, saunas, karaoke bars - doubles. This means that for every MOP1 invested, they are receiving MOP2 in revenue...
The new international FIA GT World Cup is the newest ‘acquisition’ of the event and is expected to generate more emotion, says the Co-ordinator of the Grand Prix Committee, João Costa Antunes, of his last GP in the driving seat
What are the results in terms of the tourist promotion of Macau? In this aspect, the investment generates a return of almost eight times its value. This figure considers the number of articles written by media professionals who attend the event, the number of minutes showing the races and naming Macau in TV, newspapers, the Internet, and so on. This means that in order to have the same promotion all over the world that we achieved with the Grand Prix, we would have to pay eight times the value of the Grand Prix. This is very important because it makes people understand that we are not spending much money on the Grand Prix.
João Santos Filipe
jsfilipe@macaubusinessdaily.com
Business Daily: The 62nd edition of the Macau Grand Prix is about to start. What are the new attractions that people can expect? João Costa Antunes: This year, we have our work recognised again by the FIA (International Automobile Federation) as eight years after introducing GT races to the Macau Grand Prix we were approached by FIA to host the World Cup. This is the main difference in relation to the previous edition. In relation to touring cars, we’re hosting the last round of the new TCR International series, which is a championship we believe has a very bright future ahead. On top of this, we will continue to host the FIA Formula 3 International Cup and receive the best road motorcycle riders. The schedule of the Grand Prix is very complete and has a lot to offer and in my view this is this best edition ever organised. How many manufacturers will be involved directly in this year’s edition regarding the FIA GT World Cup? Five manufacturers will officially be involved in this year’s edition of the race. Considering these events required a lot of planning for the manufacturers and that the conversations with the FIA started in a period that was so early this is a good number. There are other car brands involved through non-official teams. The signs we have are that next year there will be more and more manufacturers racing officially in this competition. Usually the racing programme of the Grand Prix is not decided before March of the same year of the races. However, you’re already expecting the FIA GT World Cup to have more manufacturers racing in 2016. Is this a confirmation that this race will be in next year’s programme? One of our guiding principles is that the programme of the Macau Grand Prix is defined every single year. However, we’re always expecting to host the Formula 3 International Cup, even if the contract is not signed with an extension longer than one year.
FIA approached us and wanted the FIA GT World Cup contract to run for many years, which proves they are interested in continuing hosting this race in Macau. However, for our part, due to many reasons related to legal questions, such as budget approval, among others, we have to renew the contract every year. But we believe [we have] the right conditions for the FIA GT World Cup to be hosted in the territory in the coming years. This year the World Touring Car Championship (WTCC) is replaced by the newly created TCR International Series. What were the reasons behind the decision to host this competition in Macau? There was what I consider a unilateral decision by the organiser of the World Touring Car Championship not to host a race in Macau. However, the Guia Race has a long tradition and we wanted it to continue to be a touring car race. We were approached by the TCR International organisers and because we believe this is a very well-designed championship, which allows international and regional drivers to compete under very similar conditions, we decided to accept their offer to race here. This year there is one celebrity race. One of the main sponsors of the races is known for its connection to the Hong Kong entertainment industry. Last year, on the starting grid lots of well-known Hong Kong actors and singers brought ‘glamour’ to the Grand Prix. Is this an effort to bring non-traditional audiences to the event? We’ve been trying to bring people not so familiar with motorsport to
the event for many yeas. It’s part of a strategy to attract other audiences, which in the past resulted in such people as Jackie Chan attending the event. The trend to involve different people in the races has been undertaken with the local schools for some years now. During the practice sessions, the stands have a lot of local students coming with the schools to attend the event. We are always trying to open the Grand Prix further to the local community. Many cities in Asia are following the example of Macau using motorsport races to promote their cities. In your view, is this the proof of the benefits of the Grand Prix? Sure. We’ve always said that one of the goals of the Grand Prix is to promote the city and we believe it has good results in doing so. If we
I’m very satisfied to feel that the Grand Prix managed throughout the years to gather the support of the government, and more and more of the population
There is an increase of local competition in terms of motorsport races and just recently it was announced that Hong Kong would have a Formula E race. Is this really beneficial for Macau? In our view this is a good trend. The number of visitors to the Grand Prix after Shanghai started hosting a Formula 1 race increased very significantly. All these races are promoting the sport and, at the same time creating new interest to the people living in these regions. If we’re able to offer quality races then these people will feel compelled to come to Macau. Regarding the Formula E race in Hong Kong, for many years and for many people living in Hong Kong, they have always seen the Macau Grand Prix as the Hong Kong Grand Prix. Not only because we have always welcomed them but also because of the cultural proximity of the two regions. But the fact that there is a Formula E race in Hong Kong… The Hong Kong event will be very interesting. For the past editions of the Macau Grand Prix, Hong Kong officials have followed our races and learned with us. I feel very happy if this means that Macau contributed to the Hong Kong region feeling confident about organising their race. I look forward to being there, attending the races. Regarding having a Formula E round in Macau, it is very difficult because our racing programme is very intense. We have eight races during the weekend but Formula E host their races and qualifying session on the same day. This would make the schedules of our traditional races clash with their schedule. But this does not mean we cannot do it in the future… One of the biggest challenges of the organisation is to explain the benefits of the races to the region. How do the organisers deal with this factor?
Business Daily | 13
GCS
November 18, 2015
In Macau, directly advertising the gaming industry is forbidden. Still, we are talking about the major industry of the territory. Do you think this makes it more difficult for local drivers to gather sponsors to participate in the races? The Grand Prix is part of the community and it isn’t interested in having a special status to clash with the principles of the community. Communities evolve and change. When I started organising races, advertising tobacco products and companies was common. But then it changed and today people are not able to advertise tobacco products anymore. There are restrictions to advertising the gaming industry that have to be respected. This is just an adaptation from the event to the community and there’s no problem about it.
In the future, a huge challenge to the Grand Prix will be the construction of the Light Rapid Transit (LRT) on the Peninsula… From day one there was the concern that the LRT should not interfere with the event to the point of inhibiting it. In the past, when we were building the S. Francisco viaduct, the initial project was changed. At that time, we asked for FIA delegates to come to Macau to study the project in order to maintain the Grand Prix. The construction of the LRT and of
There was what I consider a unilateral decision by the organiser of the World Touring Car Championship not to host a race in Macau
a station near the ferry terminal has been developed in the same way. There is a co-ordination effort to make it possible to continue hosting the event when the construction works start. I hope we will continue with these cooperation efforts in the future.
I cannot really talk for the Sport Development Board. But for the last months, we’ve been holding meetings to ensure this transaction is smooth and that the event next year will be even better. Regarding my departure, I feel this team is very dedicated. This is my last year as head of the Grand Prix Committee but I feel that I leave a worldclass team that is ready and able to do their work. There’s a lot of motivation and the team is ready to achieve better results in the coming years.
Next year, the Grand Prix Committee falls under the supervision of the Macao Sport Development Board. At the same time, you’ve been the Co-ordinator of the Grand Prix Committee since the 80’s and are also leaving this position. How do you expect this to affect the event?
Do you expect the Grand Committee team to continue operating as today, after all these changes? I do not know the answer to that question…
GCS
The challenge is not only to explain the benefits of the races but also to try to minimise the impact of the event on their lives. For instance, some years ago we didn’t have fast-opening gates on the track. But now we have around 123 gates to open the track up for local traffic as soon as possible. This shows how much we pay attention to the opinion of the community, how we understand their difficulties during the races and how we want to help them overcome the inconvenient side of the event. Today, as the races are completed, the track is open for public traffic in some minutes.
How do you feel about leaving this project? In life we have cycles for everything. I’m very satisfied to feel that the Grand Prix managed throughout the years to gather the support of the government, and more and more of the population. In 1988, the organisation of the event was mainly done by people living outside Macau. Since then, we’ve created conditions for the local people to organise it. Of course, we’re always open to accepting help from abroad, in terms of specialised people training our staff and bringing extra value to the race. For example, our race director is Charlie Whiting, the race director of all Formula 1 races. This is an honour and we need him. His ability to advise us on how to improve the track is very important. Maybe in the future I will miss this work but for sure I will continue to attend the races and see the improvements that will happen in the future.
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November 18, 2015
G U I A
C I R C U I T
L e ngt h 6 . 2 K M S. Francisco Hill Bend Melco Hairpin
Maternity Bend Lisboa Bend
Solitude Esses
D. Maria Bend
Lisboa Stand
Reservoir
Reservoir Stand A | B
Grand Stand A | B Mandarin Oriental Bend
GP Building
Start | Finish R Bend
Fishermenâ&#x20AC;&#x2122;s Bend
Business Daily | 15
November 18, 2015
Greater China
Central bank researcher says IMF's currency basket should go digital Growing use of bitcoin has stoked interest in the development of digital currencies Samuel Shen and Brenda Goh
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he International Monetary Fund should create a digital version of its global reserve currency that could be more widely used across the world's financial markets and payment systems, a senior Chinese central bank researcher said yesterday. Yao Yudong, head of the People Bank of China's Research Institute of Finance and Banking, said in a column in the state-backed Shanghai Securities News that the eSDR - the electronic version of the IMF's Special Drawing Rights (SDR) - would help address flaws in the current global monetary system. Additionally, the role of the SDR should be expanded, Yao said, echoing suggestions made by central bank governor Zhou Xiaochuan in 2009. His proposals include establishing a settlement system between SDR and other currencies, and promoting the use of SDR in global trade, financial transactions, commodities pricing and bookkeeping. SDRs are backed by a basket of major currencies and commonly used as the unit of denomination for financial arrangements
The opinion column comes as China looks set to win approval for the yuan to be included in the IMFâ&#x20AC;&#x2122;s currency basket
between the IMF and its members, which include development financing and emergency loans to countries with liquidity problems. Yao says the SDR basket should also include currencies of all major economies, whose GDPs should be taken into account in setting the currencies' weightings. The opinion column comes as China looks set to win approval for the yuan to be included in the SDR currency basket after years of lobbying, seen as a major
diplomatic victory for Beijing as it tries to increase its global clout. However, Yao's comments highlight a potential source of tension; while many IMF officials see SDR inclusion as driving reforms in China, Beijing sees inclusion as a step toward reforming the IMF, which some see as held hostage to the interests of developed economies. "China needs to study more closely profound issues in global economic and financial fluctuations, and be more forward-looking in terms of technological trends so as to have firstmover advantage, and to
some degree, become more proactive in setting the rules of the global game." Yao said that the current system did not reflect the rise of emerging markets, and that the supply of an international reserve currency should be detached from the economic policies of any particular country. "We think the issuance of, and continuous improvement in eSDR can help establish a new cross-border payment and settlement system using a super-sovereign currency, thus easing flaws in the traditional monetary system," Yao said. The article was co-written with Yang Tao,
a researcher at the Chinese Academy of Social Sciences. Technologies such as block chain - a decentralised public ledger of electronic transactions that underpins digital payment methods such as bitcoin - could be adapted to develop the eSDR. The authors said that issuing eSDR could help ease a liquidity gap that could open in 2017 when central banks in Japan and Europe are expected to end quantitative easing. The growing global use of bitcoin has stoked interest in the development of digital currencies, even among banks and governments. Reuters
South Korea aims to ratify FTA with China next week Seoul and Beijing signed their FTA in June after three years of negotiations
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outh Korea set a target date of ratifying the bilateral free trade agreement (FTA) with China through parliament at November 26 after a meeting between the government and the ruling Saenuri Party, according to local media reports. The government and the ruling party yesterday held an emergency meeting to discuss pending issues, agreeing to ratify the China-South Korea free trade agreement during a parliamentary plenary session scheduled for November 26. Kim Yong-Nam, spokesman of the ruling party, was quoted as saying that his party and the government will make efforts to run a consultative body with opposition parties to ratify
the free trade accord by the target date. The spokesman, however, noted that if opposition parties do not support the ratification, the ruling party and the government will consult with each other to approve the free trade deal. The Saenuri Party, which has a majority in the National Assembly, can ratify the Sino-Korea FTA though opposition parties would be against it. Seoul and Beijing signed their FTA in June after three years of negotiations. Under the deal, the two sides agreed to eliminate tariffs on more than 90 percent of traded goods each within 20 years after the implementation.
South Korea expected the free trade accord with China to raise its real GDP by 0.95 percentage points and create 53,800 new jobs in the next 10 years
In her parliamentary address in October for next year's budget plan, South Korean President Park Geun-hye urged lawmakers to ratify the trade pact with China rapidly, saying the delayed ratification will make local exporters lose an export opportunity worth 4 billion won (US$3.5 million) on a daily basis. South Korea expected the free trade accord with China to raise its real GDP by 0.95 percentage points and create 53,800 new jobs in the next 10 years. Now, China is South Korea's largest trading partner, while Seoul is Beijing's third-biggest trade partner as a single country. Trade volume between the two nations increased to US$235.4 billion in 2014. Xinhua
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November 18, 2015
Greater China Singapore-Shanghai Financial Forum held An inaugural Singapore-Shanghai Financial Forum was held yesterday to serve as a regular platform for market participants to exchange views on topical issues and emerging trends, as well as explore strategic partnerships. Held by the Monetary Authority of Singapore and Shanghai Municipal Financial Services Office, the one-day Forum attracted over 100 senior industry experts. The forum featured five plenary sessions led by distinguished speakers from Singapore and Shanghai, who discussed latest developments in Shanghai Free Trade Zone, “Belt and Road” initiative, future growth of offshore RMB markets, asset securitization and technology and innovation in financial services.
Merchants Group in talks to acquire Sinotrans & CSC Chinese transport conglomerate China Merchants Group is in talks to acquire logistics group Sinotrans & CSC in the latest deal in the country’s state sector, financial magazine Caixin reported late on Monday. The two companies have been locked in reorganization talks, Caixin said, citing sources close to China Merchants. Officials from both companies declined to comment on the talks when contacted by Reuters yesterday. The two Hong Kong-listed units of Sinotrans & CSC informed the Hong Kong stock exchange on Sunday that their parent group was considering a strategic reorganization that involved another unnamed state-owned enterprise.
Subaru may lower mainland sales target Japanese Subaru vehicle maker Fuji Heavy Industries said it may cut its mid-term sales goals for China, seeking to avoid the worst of cut-throat competition as an economic slowdown hits the world’s largest auto market. Last year Fuji Heavy set a target of selling 120,000 cars annually in China by 2020. But it is set to sell only 46,500 in the year through March, a 13.5 percent decline from last year. “In the mid-term China is a very important market for us, but in the near term we’re not interested in the selling frenzy that’s happening there at the moment,” Fuji Heavy CEO said.
Moncler wins trademark lawsuit Luxury outerwear maker Moncler said on Monday it had won a legal battle against a Chinese company that produced and sold down jackets with the Italian group’s logo, as Beijing cracks down on counterfeits. Moncler, whose luxury down jackets can sell for up to US$2,000, said it had been awarded 420,000 euros in damages by an intellectual property court in Beijing. “This is ... believed to be the first judgment under China’s new trademark law to grant maximum statutory damages,” the company said in a note. In December 2014 Moncler sued local company Beijing Nuoyakate Gourmet.
Guangzhou Auto sees 40% growth as elite buy local brands Despite industry-wide car sales probably expanding less than 10 per cent next year Matthew Martin
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uangzhou Automobile Group Co., whose cars appeared in the Transformers 4 movie, said it expects sales of its own vehicle brand to increase by almost 40 percent next year even as industrywide growth slows in China amid a weaker economic outlook. Guangzhou Auto expects to sell about 250,000 of its Trumpchi brand of cars in 2016, up from 180,000 this year, according to Wu Song, general manager of its GAC Auto unit. The company will begin sales in the U.S. in 2017 and is targeting to sell a million cars a year by 2020, with most of those deliveries in China, he said. “We think in the future Chinese consumers will increasingly buy Chinese brands, and we will benefit from that,” Wu said in an interview last week in Dubai. “This is the example that is being set by Chinese leaders and the elite in the country.” Vehicle sales in the world’s largest auto market are projected to grow at the slowest pace in four
years, even after the government cut a sales tax to bolster demand sapped by a moderating economy and summer stock-market rout. Chinese automakers like Guangzhou Auto, which has manufacturing joint ventures with Toyota Motor Corp. and Honda Motor Co., are developing their own brands to reduce their reliance on their foreign partners.
‘Targets aggressive’
“They have achieved very strong growth this year on the back of demand for Trumpchi cars,” said Song Yang, a Hong Kong- based analyst with Barclays Plc. “Still the targets for 2016 and 2020 seem on the aggressive side, especially as it expands both in China and the U.S. at the same time.” Guangzhou Auto introduced its Trumpchi brand in 2010 and the marque was featured in the 2014 movie, “Transformers: Age of Extinction,” as part of the automaker’s plans to build awareness in the U.S.,
Wu said. The company needs to build its brand more before starting sales there, he said. Besides China, the Trumpchi brand is sold in Russia, the Middle East and South America. The Chinese market will be the focus of GAC Auto in the short term because that’s where the faster growth is, Wu said. China’s vehicle density of 54 per 1,000 people lags far behind more developed nations, compared with 531 in the U.S. and 404 in Germany. Chinese carmakers have outperformed the market this year with sales of budget-priced SUVs, boosting their share of sales by 2.1 percentage points from a year earlier to 41.7 percent in October, according to data from the China Association of Automobile Manufacturers. Industry-wide car sales will probably expand less than 10 percent next year, with luxury demand almost unchanged and some brands losing market share, Wu said. Bloomberg News
CITIC Capital to list subsidiary in Beijing's New Third Board However, there are signs that this market is getting riskier Samuel Shen and Pete Sweeney
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hina's CITIC Capital Holdings, an alternative investment management firm, plans to list a subsidiary on the country's most active over-the-counter (OTC) equity exchange, the company said. The company said it will list subsidiary CITIC Capital Equity Investment (Tianjin) Corp Ltd on Beijing's New Third Board exchange to build an exclusive platform for its yuan-denominated private equity business. A company spokeswoman said in an emailed statement to Reuters the listing would help it expand its fund raising channels and broaden its "investor base with domestic smalland-medium institutional investors and high net worth investors". CITIC Capital Holdings, which manages US$5 billion of assets mainly
for international investors, did not specify how much money its Tianjin subsidiary will seek to raise after the listing. Banned by regulators from listing on main boards, CITIC Capital Holdings will join a slew of other Chinese private equity firms trying to tap the fast-growing New Third Board. The exchange is already starting to see some fundraising transaction sizes exceed the main board IPO sizes of comparable companies. Beijing Tongchuang Jiuding Investment Management Co., for example, this year raised 10 billion yuan (US$1.57 billion) through the board and plans to raise another 5.5 billion yuan over the next few months. "There are far fewer regulatory restrictions on the New Third Board
than on the stock exchanges, and the market is more efficient," said Gu Zhipeng, Jiuding's board secretary. "Here, it takes about a month to get the green light for an additional share sale, but it would much longer on the stock exchange." Analysts and venture capitalists say the OTC market is attractive to private equity firms because it allows them to not only list but also indirectly offload stakes in stalled IPOs through listings. However, there are signs that this market, which faces less regulatory scrutiny than more mainstream listing venues, is getting riskier due to the lack of broker experience in market making in China and the possibility of insider price manipulation.
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte 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 Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 17
November 18, 2015
Asia Ho Chi Minh City maps out Special Economic Zone
Indian Prime Minister Narendra Modi (R) with Arun Jaitley, India’s Finance Minister
Indian Finance Minister trusts to pass India-wide sales tax The tax will be the main agenda item when parliament reconvenes next week Vrishti Beniwal
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ndian Prime Minister Narendra Modi has the votes to win approval for a goods-and-services tax first proposed in 2006, according to his finance chief. The tax, one of India’s biggest economic reforms in decades, could be rolled out anytime next year after it’s approved, Finance Minister Arun Jaitley said in an interview with Bloomberg TV India. Modi’s opponents have blocked the measure in the upper house of parliament, known as the Rajya Sabha. “The day it is discussed and put to vote in Rajya Sabha I have not the least doubt that it will be approved," Jaitley said in the interview in Dubai on Monday evening. “We have numbers on our side.” The tax will be the main agenda item when parliament reconvenes next week. It’s aim is to whittle down
more than a dozen state levies to create a single market among India’s 1.3 billion people for the first time. While Modi’s defeat in recent Bihar state polls makes it more difficult for him to get control of the oppositioncontrolled upper house, Jaitley said it wouldn’t affect the passage of GST. As a consumer of goods, Bihar stands to benefit from the new destination tax, he said.
‘Hide and seek’
Jaitley blamed the main opposition party Congress for “playing hide and seek" over the GST vote. Modi’s position in the upper house, where members are appointed by state legislatures, will improve after April, Jaitley said. Congress has blocked key elements of Modi’s economic agenda, including GST and a bill to make it easier to
Singapore exports down less than expected The overall picture showed some signs of improvement in October Jongwoo Cheon
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ingapore exports fell less than expected in October as sales to Europe rebounded modestly, but underlying shipments remained weak amid sluggish global demand and look set to drag on the tradedependent economy. Non-oil domestic exports eased 0.5 percent in October from a year earlier, trade agency International Enterprise Singapore said in a statement yesterday, compared with a 3.0 percent contraction forecast in a Reuters poll. In September, non-oil domestic exports edged up 0.3 percent, but shipments to major markets such as the United States and China slumped. The overall picture showed some signs of improvement in October, with
annual sales to Europe up 1.0 percent after a 2.1 percent contraction in September, but majors markets China and the United States continued to take in less goods from the city state. “Singapore is entrenched in a trade recession that will likely endure till Q1 2016 owing to the declining import intensity in both the U.S. and Chinese economies as well as dimmer growth outlook within ASEAN,” said Weiwen Ng, an ANZ economist in Singapore. Shipments to the United States declined 2.2 percent in October on-year after sliding 9.4 percent in September. Sales to China Singapore’s largest export market - slumped 8.7 percent, compared to a 12.9 percent tumble in September.
acquire land. Modi this month used executive powers to ease restrictions on foreign direct investment in 15 industries as he sought to lure investors and halt a stock sell-off that threatens to send the local currency to a record low. India has set a deadline of April 1, 2016, for nationwide introduction of GST. If the current constitutional amendment allowing the measure is passed, it needs to be ratified by more than half of India’s states. Then parliament must pass another bill to implement the GST. The overall rate, which would vary for different goods, would be set by a newly formed GST Council. “It’s a transaction tax which can get into operation as soon as the Constitution allows," Jaitley said. “Once it’s put to vote I have all the supporting legislation drafts ready."
Vietnam’s Ho Chi Minh City is considering the formation of a special economic zone in four of its districts, the municipal authorities announced on their website yesterday. According to the authorities, the future special economic zone will be set up in the urban district No.7 and the three rural districts, mainly to lure stronger investment as well as boost production, trade and infrastructure in the city in the coming years. It said the Ho Chi Minh City People’s Committee has assigned a working group to complete a scheme on forming the zone.
Thailand approves US$1 bln in investment projects Thailand’s investment agency has approved applications for 15 projects worth 37.5 billion baht (US$1.04 billion), mainly in aviation, farm goods and renewable energy. Thailand’s military seized power in a coup last May to end months of political unrest but has struggled to kick-start Southeast Asia’s second-largest economy as exports and domestic demand remain sluggish. Growth last year was just 0.9 percent. The junta has accelerated approvals for investment projects and offered various incentives to spur private investment to help support the economy.
Indonesia c.bank cuts statutory reserve Indonesia’s central bank will lower the rupiah statutory reserves required for banks to 7.5 percent from 8 percent starting Dec 1, its governor told a press conference yesterday. Governor Agus Martowardojo also said he sees room to loosen monetary policy, but will do so cautiously. Earlier, the central bank said it decided to keep its benchmark policy rate on hold at 7.50 percent.
Bloomberg News
A raft of Chinese data over the past week showed the world’s secondbiggest economy still stuck in low gear and in need of more stimulus. Fitful global demand and China’s cooling economy have knocked trade-reliant economies in the region, keeping pressure on policy makers to shore up growth. Singapore’s electronics sector has been underperforming neighbours such as South Korea and Taiwan due to fierce competition and Singapore’s lack of popular high-tech products such as smartphones. Annual domestic exports of electronics slid 3.2 percent, while volatile exports of pharmaceuticals jumped 44.6 percent in October from a year earlier. On a month-on-month basis, nonoil domestic exports rose 1.1 percent in October on a seasonally-adjusted basis, beating a 1.9 percent decline predicted in the survey but lower than a 2.8 percent rise in September. Analysts see few hopeful signs of a turnaround in the city state’s trade sector, noting how slow global demand has crimped activity in Singapore factories. “The underlying pictures for global demand does not suggest that we are going to see sharp improvements,” said CIMB Private Banking economist Song Seng Wun. Reuters
Bank of Korea’s Lee: U.S. rate hike highly likely The U.S. central bank is highly likely to begin raising interest rates next month, South Korea’s central bank chief said yesterday, indicating he sees Friday’s attacks in Paris as having little impact on the U.S. policy. Bank of Korea Governor Lee Ju-yeol told a gathering of business executives that the Federal Reserve’s interest rate hikes would add pressure on emerging economies with weak fundamentals and companies with heavy debt. “We have to keep bearing in mind the likelihood of some emerging economies falling into a crisis at any time after the U.S. begins raising interest rates,” Lee said.
Fast Retailing, Toray aim for US$8 bln in business Japan’s Fast Retailing Co and Toray Industries Inc. yesterday signed a new five-year partnership under which they would aim for transactions of 1 trillion yen (US$8 billion) producing high-tech clothing for the core Uniqlo brand. That would represent a jump from the 600 billion yen in business between the two during the second phase of their partnership in the five-year period to 2015. That far exceeded an initial target of 400 billion yen.
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November 18, 2015
International Investment banks’ revenue set to decline again Revenue at the world’s 10 largest investment banks is on course to decline again in 2015 by two percent to US$148 billion compared to a year ago, although a strong showing in equities will limit the fall, a survey yesterday showed. It follows a weak third quarter, when revenue slipped by 8 percent, the survey by industry analytics firm Coalition showed. Investment banking revenue has slumped in recent years, especially in Europe, as tougher regulations, litigation costs and market volatility have prompted banks to restructure, shedding staff and exiting certain business lines.
Cuba expected to see record-high foreign tourists Cuba is expected to see a record high of foreign visitors this year as 3 million people have already visited the island nation so far, according to official figures. By the end of this year, the total number of foreign visitors is set to break the record in 2014, when 3 million and 2,745 foreigners visited. Canada remains the leading source country of tourists to Cuba, with more than 1.11 million visitors, followed by Germany, England, France and Spain, said the Tourism Ministry. Tourism is Cuba’s second-largest earner of foreign exchange, reaping over US$2.6 billion a year.
Bolivia to pay Iberdrola US$34 mln for nationalizations
World leaders agree to close multinationals’ tax loopholes The OECD calculates that national governments lose US$100-240 billion every year because of the tax-minimising schemes of multinationals
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orld leaders approved a crackdown on tax avoidance by multinationals such Google, Apple and McDonalds whose rock-bottom tax bills have provoked widespread outrage. Heads of the Group of 20 top economies put their final seal on a plan to close loopholes that let some big companies shift profits to lowtax nations so as to slash their bills, leaving ordinary tax payers fuming. It comes a year after the “LuxLeaks” revelations that some of the world’s biggest companies -- including Pepsi and Ikea -- had lowered their tax rates to as little as one percent in secret pacts with tax authorities in Luxembourg. US President Barack Obama, Chinese leader Xi Jinping, and Britain’s Prime Minister David Cameron joined fellow leaders in endorsing a clampdown drawn up by the wealthy nations’ Organisation for Economic Cooperation and Development. In a joint statement delivered after a two-day summit at the Turkish Mediterranean resort of Antalya, leaders declared that they “strongly
urge the timely implementation of the project and encourage all countries and jurisdictions, including developing ones, to participate”. The OECD calculates that national governments lose US$100-240 billion, or 4-10 percent of global tax revenues, every year because of the tax-minimising schemes of multinationals. Its 15-point plan, adopted after years of negotiations, seeks to oblige multinationals to pay tax in the country where their main business activity is based.
‘Step forward’
The package represents “the first substantial -- and overdue -renovation of the international tax standards in almost a century,” the 34-nation, Paris-based OECD says. The British-based charity Oxfam said the plan was a “step forward”. “But until the G20 supports a reform process that truly tackles harmful tax competition, tax havens and multinationals will continue to gain most from this system, and the poorest countries will be the biggest losers,” Oxfam said in a statement.
The charity urged the G20 to work with the United Nations, International Monetary Fund and World Bank along with the OECD on a second generation of tax reforms to build on the crackdown. AFP
OECD SCHEME Stop companies exploiting differences in national tax rules and bilateral treaties Prevent companies from shifting profits to lower-taxation countries where their foreign subsidiaries are based, or from using technicalities to declare they are based in low-tax jurisdictions. Close loopholes that let companies shift debt within a group towards higher-tax countries, allowing them to declare lower profits there. Oblige multinationals to detail their business country by country to the tax authorities
Marriott to buy Starwood to create world’s biggest hotel chain Analysts said they did not expect antitrust objections as the combined company would hold less than 20 percent of all U.S. hotel rooms Ankit Ajmera and Mike Stone
Bolivia said on Monday it will pay Spanish utility Iberdrola US$34 million for the 2012 nationalization of its local electricity distribution subsidiaries, part of President Evo Morales’ push to put energy resources under state control. “The nationalizations are now completely consolidated,” Bolivian Attorney General Hector Arce told reporters. He said Bolivia also agreed to pay US$19 million to Britain’s Paz Holdings Ltd, which had operations nationalized. The compensation deals were reached with help from an international arbitrator. Morales has also nationalized oil, telecommunications, mining and electrical generation companies.
Greece reaches deal with lenders Greece reached an agreement with its lenders on financial reforms early yesterday, its finance minister said, removing a major obstacle holding up fresh bailout loans for the cash-starved country. Athens signed up to a new aid programme worth up to 86 billion euros earlier this year, but payment of part of an initial tranche had been held up over disagreement on regulations on home foreclosures and handling tax arrears to the state. “There was an agreement on all the milestones ... whatever was required,” Finance Minister Euclid Tsakalotos said.
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arriott International Inc will buy Starwood Hotels & Resorts Worldwide Inc for US$12.2 billion to create the world’s largest hotel chain with top brands including Sheraton, Ritz Carlton and the Autograph Collection. The combined company will have over 5,500 hotels with 1.1 million rooms worldwide, giving Marriott a greater presence in markets such as Europe, Latin America and Asia and allowing it to better compete with apartment-sharing start-ups such as Airbnb. Airbnb is expected to eat into hotels’ business as it signs up more and more homeowners, analysts warn. About three-quarters of Marriott’s rooms are in the United States. About half of Starwood’s rooms are outside North America, but accounted for nearly two-thirds of its revenue in 2014. “Our success has been driven by our ability to anticipate market shifts and meet those changes head on,” Marriott Chief Executive Arne Sorenson, who will lead the combined company, said on a conference call yesterday. The deal, one of the biggest since
Blackstone Group LP bought Hilton Worldwide Holdings Inc for US$26 billion in 2007, could spark industry consolidation. Two sources briefed on the deal said Starwood shares had rallied on media reports that the company was in talks with several potential buyers. Starwood left “no stone unturned” in its process of seeking a buyer, said the sources, who asked not to be named because they were not authorized to speak on the record.
Antitrust issues unlikely
Starwood investors will get 0.92 Marriott Class A share and US$2 in cash for each share held. They will also get about US$7.80 per share from the spinoff of Starwood’s timeshare business and subsequent merger with Interval Leisure Group Inc, announced in February. Starwood, owner of the St. Regis and Aloft hotel brands, had essentially put itself up for sale in April, when it said it was considering strategic alternatives. The sources said competing bids for Starwood comprised a mix of stock and cash worth about the same as the Marriott offer.
Starwood, with a market value of US$12.67 billion as of Friday, had reached out to InterContinental Hotels Group Plc, Wyndham Worldwide Corp and sovereign wealth funds for a possible deal since July, sources had told Reuters. Hyatt Hotels Corp had also been involved in the sale process, one of the sources said on Monday. A Hyatt representative declined to comment. Marriott estimated US$100 million to US$150 million in charges related to the deal and annual savings of at least US$200 million starting the second year after the transaction closes. Analysts said they did not expect antitrust objections as the combined company would hold less than 20 percent of all U.S. hotel rooms. Starwood shareholders will own about 37 percent of the combined company. Marriott expects to add three Starwood members to its board, bringing the total to 14, after the deal closes in mid-2016. Lazard and Citigroup advised Starwood on the deal and Deutsche Bank Securities advised Marriott. Reuters
Business Daily | 19
November 18, 2015
Opinion Business
wires
Don’t fear a rising dollar
Leading reports from Asia’s best business newspapers
Anatole Kaletsky
Chief Economist and Co-Chairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy
TAIPEI TIMES Yuan deposits at Taiwanese banks fell for the fourth consecutive month to 319.12 billion yuan (US$50.07 billion) last month, down 0.64 percent from September, as investors trimmed holdings amid depreciation expectations, the central bank said yesterday. “Yuan deposit interest weakened further last month as investors opted for redemptions or terminated contracts,” the central bank said. The decline is not surprising, given that the People’s Bank of China cut interest rates by another 25 basis points and reserve requirements by 50 basis points on October 24 to support economic growth, it said.
THE ASAHI SHIMBUN The Japanese aviation industry’s future viability is dependent on a sharp increase in orders for the Mitsubishi Regional Jet (MRJ), with less than one-sixth of its sales target achieved to date. The MRJ, Japan’s first domestically produced passenger jet, is regarded by industry insiders as the last chance for the Japanese aviation industry to grow from a parts supplier to a fully fledged plane maker amid intensifying global competition in the small-sized aircraft manufacturing market. The aircraft passed its maiden test flight on November 11.
BANGKOK POST Deputy Prime Minister Somkid Jatusripitak has instructed the Finance Ministry to study the format of the Science and Technology Ministry’s innovative development fund and apply it to a similar fund to enhance competitiveness. “Even though the innovative development fund has not been set up, its concept is good,” finance permanent secretary Somchai Sujjapongse said. The ministry plans to establish the fund to offer additional investment incentives from Board of Investment privileges to six industries believed to be essential new growth engines to help Thailand escape the middle-income trap.
THE PHNOM PENH POST Rapid credit growth – increasingly financed by bank flows from abroad – poses significant risk to Cambodia’s economy and requires prudential policies to cool lending and reduce exposure, the International Monetary Fund (IMF) warned in a report released yesterday. “The priority is to address growing financial stability risks by stabilising and moderating the pace of credit growth to more reasonable levels, while closely monitoring the effect on growth,” the IMF concluded in a report on its latest Article IV consultation. The Kingdom’s credit market has expanded at about 30 per cent a year over the past three years.
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he US Federal Reserve is almost certain to start raising interest rates when the policy-setting Federal Open Markets Committee next meets, on December 16. How worried should businesses, investors, and policymakers around the world be about the end of near-zero interest rates and the start of the first monetary-tightening cycle since 2004-2008? Janet Yellen, the Fed chair, has repeatedly said that the impending sequence of rate hikes will be much slower than previous monetary cycles, and predicts that it will end at a lower peak level. While central bankers cannot always be trusted when they make such promises, since their jobs often require them deliberately to mislead investors, there are good reasons to believe that the Fed’s commitment to “lower for longer” interest rates is sincere. The Fed’s overriding objective is to lift inflation and ensure that it remains above 2%. To do this, Yellen will have to keep interest rates very low, even after inflation starts rising, just as her predecessor Paul Volcker had to keep interest rates in the 1980s very high, even after inflation started falling. This policy reversal follows logically from the inversion of central banks’ objectives, both in America and around the world, since the 2008 crisis. In the 1980s, Volcker’s historic responsibility was to reduce inflation and prevent it from ever rising again to dangerously high levels. Today, Yellen’s historic responsibility is to increase inflation and prevent
it from ever falling again to dangerously low levels. Under these conditions, the direct economic effects of the Fed’s move should be minimal. It is hard to imagine many businesses, consumers, or homeowners changing their behaviour because of a quarter-point change in short-term interest rates, especially if longterm rates hardly move. And even assuming that interest rates reach 1-1.5% by the end of 2016, they will still be very low by historic standards, both in absolute terms and relative to inflation. The media and official publications from the International Monetary Fund and other institutions have raised dire warnings about the impact of the Fed’s first move on financial markets and other economies. Many Asian and Latin America countries, in particular, are considered vulnerable to a reversal of the capital inflows from which they benefited when US interest rates were at rock-bottom levels. But, as an empirical matter, these fears are hard to understand. The imminent US rate hike is perhaps the most predictable, and predicted, event in economic history. Nobody will be caught unawares if the Fed acts next month, as many investors were in February 1994 and June 2004, the only previous occasions remotely comparable to the current one. And even in those cases, stock markets barely reacted to the Fed tightening, while bond-market volatility proved short-lived. But what about currencies? The dollar is almost universally
Fortunately, the market consensus concerning the dollar’s inevitable rise as US interest rates increase is almost certainly wrong
expected to appreciate when US interest rates start rising, especially because the EU and Japan will continue easing monetary conditions for many months, even years. This fear of a stronger dollar is the real reason for concern, bordering on panic, in many emerging economies and at the IMF. A significant strengthening of the dollar would indeed cause serious problems for emerging economies where businesses and governments have taken on large dollar-denominated debts and currency devaluation threatens to spin out of control.
Fortunately, the market consensus concerning the dollar’s inevitable rise as US interest rates increase is almost certainly wrong, for three reasons. First, the divergence of monetary policies between the US and other major economies is already universally understood and expected. Thus, the interest-rate differential, like the US rate hike itself, should already be priced into currency values. Moreover, monetary policy is not the only determinant of exchange rates. Trade deficits and surpluses also matter, as do stock-market and property valuations, the cyclical outlook for corporate profits, and positive or negative surprises for economic growth and inflation. On most of these grounds, the dollar has been the world’s most attractive currency since 2009; but as economic recovery spreads from the US to Japan and Europe, the tables are starting to turn. Finally, the widely assumed correlation between monetary policy and currency values does not stand up to empirical examination. In some cases, currencies move in the same direction as monetary policy – for example, when the yen dropped in response to the Bank of Japan’s 2013 quantitative easing. But in other cases the opposite happens, for example when the euro and the pound both strengthened after their central banks began quantitative easing. For the US, the evidence has been very mixed. Looking at the monetary tightening that began in February 1994 and June 2004, the dollar strengthened substantially in both cases before the first rate hike, but then weakened by around 8% (as gauged by the Fed’s dollar index) in the subsequent six months. Over the next 2-3 years, the dollar index remained consistently below its level on the day of the first rate hike. For currency traders, therefore, the last two cycles of Fed tightening turned out to be classic examples of “buy on the rumour; sell on the news.” Of course, past performance is no guarantee of future results, and two cases do not constitute a statistically significant sample. Just because the dollar weakened twice during the last two periods of Fed tightening does not prove that the same thing will happen again. But it does mean that a rise in the dollar is not automatic or inevitable if the Fed raises interest rates next month. The globally disruptive effects of US monetary tightening – a rapidly rising dollar, capital outflows from emerging markets, financial distress for international dollar borrowers, and chaotic currency devaluations in Asia and Latin America – may loom less large in next year’s economic outlook than in a rearview glimpse of 2015. Project Syndicate
20 | Business Daily
November 18, 2015
Closing Beijing plans tighter e-commerce checks
Baidu, CITIC to set up Internet bank
China will ramp up inspections of goods bought online, a regulator said yesterday, seeking to root out low-quality goods that have plagued firms like Alibaba Group Holding Ltd as well as the country’s broader image. The State Administration for Industry and Commerce (SAIC) plans to step up random quality checks for goods bought online, according to a statement on the regulator’s website. The SAIC will take into account consumer reports, and press for cooperation from e-commerce platforms. Companies like Alibaba, rival JD.com Inc and a plethora of others are frequently castigated by China’s regulators for enabling the sale of low-quality goods.
Chinese Internet search giant Baidu Inc and China CITIC Bank Corp will set up an Internet banking joint venture, the 21st Century Business Herald reported yesterday, following in the footsteps of other domestic tech firms. The report, which cited unidentified sources, did not give any further details on the planned venture. Some other Chinese media also reported on the plans. On Monday, CITIC halted trading of its Shanghai-listed shares pending the release of an announcement in relation to a proposed external investment. Even after the Baidu-CITIC joint venture is established, the new firm would still need to apply for a banking licence.
Proposed Shanghai-London link won’t copy Stock Connect Comments made as Hong Kong-Shanghai Stock Connect scheme celebrated its one-year anniversary yesterday Michelle Price and Saikat Chatterjee
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proposed link between the London and Shanghai exchanges will not be a “copycat” of the landmark Hong KongShanghai Stock Connect scheme due to differences in time-zones and investor bases, a London Stock Exchange Group executive said. Jessie Pak, managing director at index provider FTSE Russell Asia, owned by the LSE Group, told the Reuters Global Investment Outlook Summit yesterday it was too early to say what the scheme would look like but it was unlikely to take the form of the Hong Kong Shanghai Connect equity trading link. “It’s good to learn from the current Connect scheme, but a London Connect won’t be a copycat, it’s not the same market. China and Hong Kong are closer in terms of
time gap, while the U.K. and China have a seven or eight hours time difference.” In September, Britain and China agreed to carry out a
Asian Logistics, Maritime Conference opens in Hong Kong
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feasibility study for a stock exchange connect scheme between bourses in London and Shanghai, but did not provide further details.
“We have to look at what will be good for the underlying clients, because the investing behaviour will be different. The Chinese market is more retail, so what exactly are we going to attract retail investors to buy into the London market and vice versa? What exactly is meaningful to both markets is yet to be decided,” said Pak. Her comments come as the Hong Kong-Shanghai Stock Connect scheme, which allowed foreign investors to trade Chinese shares via the Hong Kong exchange for the first time, celebrated its oneyear anniversary yesterday. The scheme has been hailed as a landmark in the opening up of the China equity markets, but legal and operational difficulties have kept many U.S. and European investors on the
China’s investment in Africa down 40% on year
side-lines with investors so far using only 41 percent of an aggregate quota for purchasing Chinese shares. FTSE Russell has been closely involved in discussions with Chinese regulators over the opening up of the China equity market and the changes necessary for Chinese A shares to be included in global benchmarks such as FTSE’s Emerging Markets Index, said Pak. Pak told Reuters in September that the benchmark provider would review measures taken by the Chinese government over the summer to stem a selloff which saw benchmark indexes lose 40 percent of their value, such as caps on sales and share suspensions. At the height of the crisis in July, more than 50 percent of mainland-listed stocks were suspended, causing liquidity problems for offshore investors tracking those shares. Pak said the company had launched a consultation with clients over how to handle share suspensions in future, and was considering changing its rules depending on client feedback. Tens of billions of dollars of investor funds track FTSE’s indexes across various products and the findings could have implications on how foreign funds invest in mainland stocks. Reuters
Indonesia considers new tax incentives for employees
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he fifth edition of the Asian Logistics and Maritime Conference (ALMC) opened yesterday, bringing together global experts in the industry to discuss the new opportunities in the “Belt and Road” initiative, e-commerce and Big Data analytics. Jointly organized by the Hong Kong Special Administrative Region government and the Hong Kong Trade Development Council, the two-day meeting set its theme on China’s Silk Road Economic Belt and the 21st-Century Maritime Silk Road, e-commerce and Big Data analytics. When delivering her speech at the opening ceremony, Acting Chief Executive Carrie Lam said that logistics and trading represents about 24 percent of Hong Kong’s GDP, and over one-fifth of total employment in Hong Kong. Lam said under “one country, two systems”, Hong Kong is part of the second largest economy in the world, and at the same time enjoying high degree of autonomy, with an independent judicial system and own currency which is fully convertible. Besides, being one of world’s freest economy with an enviable natural advantage that enable it to reach all major Asian cities within four hours, all these have enabled Hong Kong’s logistics industry to flourish, she said.
nvestment in Africa fell by more than 40 percent year-on-year in the first half of 2015, officials said yesterday, as the Asian giant’s slowing growth dents its commodity demand. Natural resources from Africa have helped fuel China’s economic boom, and it became the continent’s largest trade partner in 2009. But growth in the world’s second-largest economy has slowed to its lowest rates since the aftermath of the global financial crisis, reducing commodity prices worldwide. Beijing’s direct investment in Africa slumped “more than 40 percent” to about US$1.2 billion in the first six months of the year, commerce ministry spokesman Shen Danyang told reporters. China has handed out loans and funded infrastructure across Africa in what critics branded as deals made for mining rights and construction contracts. Shen blamed the sluggish global economy and international commodity price volatility for the rapid decline. For the past decade, China gobbled up much of the goods that Africa produces, overtaking the United States to became the continent’s single largest trading partner. But its imports from Africa tumbled nearly 43 percent in the January-June period this year.
ndonesia is considering offering tax incentives for employees as part of the country’s current efforts to spur economic growth through changes to its tax regime, Coordinating Minister for Economics Darmin Nasution said yesterday. The government of Southeast Asia’s largest economy has introduced several other incentives this year. These include increasing the threshold for income tax, offering up to 25 years of free corporate tax for some investors, removing double taxation on real estate investment trusts and cutting the tax rate on asset revaluation. Nasution told reporters the government is currently looking at options to change rules on the pay-as-you-earn tax, but did not provide any details. An employee’s salaries, if higher than the new 36 million rupiah (US$2,622.95) per year threshold, is currently subject to 5-to-30 percent income tax in Indonesia. The Finance Ministry will soon offer a tax amnesty - a discount on the tax rate for undisclosed wealth - pending parliamentary approval. The ministry has also said it plans to cut income tax rate after the amnesty period.
Xinhua
AFP
Reuters