MOP 6.00 Closing editor: Joanne Kuai
Science Centre fire damage evaluation to be announced
Year IV
Number 925 Monday November 23, 2015
Publisher: Paulo A. Azevedo
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Taiwan exports forecast still gloomy
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Grand Prix Spectacle A Resounding Success
The 62nd Macau Grand Prix. Concluded after four days of fast and furious competition. The FIA F3 Intercontinental Cup remains the headline draw. But this year the event also staged the first-ever FIA GT World Cup. Outsiders won in various car and motorcycle categories - as well as traditional favourites. Cheered on by over 80,000 spectators. The Grand Prix remains one of the pivotal attractions in Macau’s bid to become a centre of world tourism and leisure. With sweeping changes in the wings for its further development Pages
7-10
Interview
A life on the ocean wave
One more step
Getting closer. Complicated and lots of work. But the Jiuzhou Channel section of the Hong Kong-Zhuhai-Macau bridge has been completed. With most of the underwater tunnels finished and all of pilings of the bridge done. Construction of the main body of the bridge is expected to meet the 2017 target
Google plans to resume activity in China next year
A four decades-old Chinese shrimp junk. More than a pleasure boat, says its owner. One of only two of its type in the world, it is also a repository of Macau’s maritime tradition, Macau-born David Kwok tells Business Daily. Still feeling its way, Macau Sailing represents both leisure and educational opportunities, he says. With hotels and a university having already put out to sea with the concept. The local market might be immature at the moment. But the MSAR Gov’t could take valuable pointers from Hong Kong’s more adventurous approach to such initiatives, he says
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Giant scam scuttled Rumbled. Chinese authorities have unearthed a giant underground banking operation. Running a US$64 bln business in illegal foreign exchange transactions. Ten companies were established in Hong Kong from 2013. To transfer more than 100 billion yuan via so-called non-resident accounts
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HSI - Movers November 20
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Belle International Ho
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China Shenhua Energy
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Pages 4&5
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www.macaubusinessdaily.com
OK with Alipay The overseas payment services company has been declared legit. As it is co-operating with authorised financial institutions in Macau. Macau Monetary Authority recently clarified the situation regarding Chinese online payment company Alipay. Its QR code payment is available in 107 merchants throughout the MSAR
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Source: Bloomberg
I SSN 2226-8294
2015-11-23
2015-11-24
2015-11-25
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2 | Business Daily
November 23, 2015
Macau Some 4,300 realtors haven’t applied for official licence As at October 20 this year, the Housing Bureau has issued 1,495 official licences for real estate agents, but more than 4,300 realtors with temporary permits haven’t yet applied for the official licence to operate in the SAR, according to a statement issued by the Bureau yesterday. The temporary permits are expected to expire on June 30 next year. The Housing Bureau has appealed to temporary permit holders to finish the relevant courses, complete their secondary education and get the degree in order to meet the requirements of the authorities to conduct real estate agent business in the MSAR.
HKZM Bridge: Jiuzhou main section completed
T
he construction of the Jiuzhou Channel section of the Hong Kong- Zhuhai-Macau Bridge, codenamed CB05 section, was completed yesterday, according to Xinhua News Agency. The bridge - some 55 kilometres long and linking Hong Kong, Macau and Zhuhai - comprises three main projects, including maritime bridge, underwater tunnel and artificial island. The main body of the bridge is expected to be completed in 2017. The 6.653 kilometre CB05 section is the most complicated, causing most work of the three sections of the maritime bridge, according to the Xinhua report. As it is close to Zhuhai and Macau airports, high limits restrained work on the main tower as well. According to state media, 22 sections of 33 underwater tunnels have been placed and all pilings of the bridge have been completed as well. The bridge is expected to shorten the driving time between Hong Kong and Macau to 30 minutes. Once built, it will be the longest cross-sea bridge in the world.
Science Centre fire damage evaluation to be announced
M
acau Science Centre, on Avenida Dr. Sun Yst-sen, caught fire on Friday. According to the Fire Services Bureau, it received a report at 14:18 on the afternoon of November 20, 2015, and arrived at the scene within four minutes. The fire was on the top floor of the Exhibition Centre, adding difficulties to the operation, but was brought under control around 16:11 and extinguished at 17:47. Around 300 people, including residents, visitors, workers and
service contractors were evacuated during the fire incident. No-one was reported injured or trapped. The fire was caused by a renovation project at the Centre during welding. Macao Science Centre Limited issued a notice saying that the Centre is now evaluating the impact of this incident upon its facilities and exhibits and possible losses incurred. The results are expected to be announced this week, according to TDM Chinese Radio reports. ‘While the Centre inspects the
fire protection facilities regularly to ensure proper function, staff members from all departments are required to participate in fire drills and are familiar with fire emergency procedures,’ the company said in a statement. The company added that in order to ensure the safety of visitors, the Exhibition Centre and Planetarium will close until further notice. The Convention Centre, the lobby exhibition gallery and the restaurants in the lobby were unaffected by the incident and will open to the public as usual.
Tender invitation for LRT depot in second quarter of 2016
T
he Government expects to invite tenders for the construction of the Light Railway Transit (LRT) depot in the second quarter next year, said the Secretary for Transport and Public Works, Raimundo do Rosário last week. The Secretary told reporters that he would disclose further details of a cancellation agreement reached between the government and the current contractor on the depot project when he introduces his portfolio’s policy programme for 2016 at the Legislative Assembly on 9 and 10 December. Mr Rosário also briefed reporters regarding the construction of the Islands District Medical Complex, which will have seven buildings in total. Construction has began on the foundations for two of the buildings. Foundation work for a further two might be initiated this year or early next year, he said. Regarding a proposal for a fourth cross-harbour passage between Macau and Taipa, the Secretary said his team would disclose more information later, including data supporting the case for a bridge rather than for an alternative structure.
4 | Business Daily
November 23, 2015
Macau
“The local market is not mature enough for sailing-related business” David Kwok, the owner of a 40-year old Chinese shrimp junk, recently started providing private cruise services in the territory under the flag of Macau Sailing. In an interview with Business Daily, Mr. Kwok said the local market for this kind of business has yet to mature to deliver profit, claiming his major objective is to promote the cultural values of the vessel and its history Kam Leong
kamleong@macaubusinessdaily.com
What’s so special about your vessel?
My vessel is the only one of its type left in Hong Kong and Macau. The boat originally came from my grandfather then he passed it on to my dad, and later my dad passed it to me. It’s gone through three generations. Historically, it is vary valuable so we want to preserve it and give it some new meaning. We want to let people see what is left from the [fishing] industry in the region. The boat was built in Macau although it has been sailing in Hong Kong where it had a licence.
Why do you provide cuisine charter services in Macau rather than Hong Kong?
I was born in Macau and I finished my primary school here. Hence, I want to offer people here the opportunity to see this type of boat. Well, our main idea is
not only about providing charter services. For many years we’ve been thinking about bringing this back to Macau as there’s no such kind of vessel in the city anymore, and it belongs to Macau’s history. By coincidence, I met a Portuguese from Macau. After chatting, we both thought it would be good for promoting tourism and Macau’s own culture if the boat could be offered here for entertainment. After all, it could be a ‘landmark’ if it sails here. So we decided to give it a try. The Portuguese I met is in charge of organising people to join our tours. We’re very familiar with the related sea routes and we wanted to see whether the idea could work here in Macau.
What are preservation and maintenance costs like?
The costs are very high. The renovation work for this junk such
Macau Sailing Macau Sailing offers private cruises on its 40-year old-plus Chinese shrimp and fishing junk in and outside Macau waters. The service was only launched in the city three months ago. The vessel, which can carry a maximum of 40 people, offers different kinds of tours to customers such as full-day tours and sunset tours plus sailings business meetings and teambuilding activities. The value of the vessel is its uniqueness. According to owner David Kwok there are only two of this size and type left in the world. The other one is now in England and is already badly damaged. However, the owners are considering restoring the historic junk and offering it to a local museum.
as wood changing and painting is much more complicated than for other kinds of boat. Every year, the money we spend on maintenance amounts to at least HK$300,000. In addition, it’s difficult to get people to do the maintenance works due to its historic value. Luckily, there are many ports in the South China Sea which we are familiar with so we can always find appropriate people from different places.
How about human resources? Is it hard to recruit a crew?
Currently, I’m the captain while my wife is the crew member. In addition, a few Portuguese from Macau are in charge of taking care of our passengers. In general, we use our own people for the current stage.
Any difficulties in getting passengers?
Business Daily | 5
November 23, 2015
Macau
In fact, our operation is not really a business yet. To turn ourselves into a business model, it requires a lot more. At the current stage, we only offer charter services for people to gather. Our operating cost requires a certain number of people on the boat every time. So we can only provide services order by order.
Beginning stage By taking passengers out sailing, is it hard to get a local licence?
At the current stage, our operation model doesn’t need one. As I said, we still have a long way to go before we really need a licence to turn our operation into a full business model. The fees we charge for [the charter services] are only enough to support our operating costs and maintenance fees. We cannot make any profits out of it at the moment. But of course, if we really plan to earn money, we will need to apply for a licence from the government. Although the money we receive now is only enough for raising the boat, it makes me happy. In the past, I had been taking out money myself for the boat. It belongs to me, so I had to do that.
Why don’t you want to get a licence to make your operation profitable?
Macau isn’t ready yet for this type of business. The local market is small and there’s not enough customers to support the business operation. We’re not a big company thus we’re unable to support that kind of operation. As we sail between Hong Kong and Macau, we provide services in both regions as long as we receive bookings.
What do you think about Macau’s upcoming free yachting scheme with Zhonshang? The policy is very new. No-one would be able to estimate the results of the policy - whether it could be effective. Not even the government could predict how the policy will turn out eventually.
Are you planning to launch services related to the scheme? Well, it will depend upon the scheme itself, whether it will be convenient in terms of Customs declaration and other possible charges. These elements would be very crucial. Honestly, if the
government only seeks to gain profit from the scheme by serving rich people, I don’t think the market can grow much after a decade. The government needs to make its policies more massfriendly, as in Hong Kong where the government offers many auxiliary facilities to boost the development of the industry. For example, providing public berths for boats, and countryside parks around the berths for people to enjoy the environment. Only by offering more auxiliary facilities can the market mature. In fact, from what I’ve observed the market in Hong Kong is the most mature compared to Macau and Mainland China. The Mainland Chinese market is not that mature.
don’t need to rush. The aim is only to promote the culture and the history behind it. If we relied on it for a living, frankly it could never let us survive.
What are your prospects?
If our major aim is to preserve the vessel for society, we cannot calculate its results and the money we may need to spend on it. We can only do things that we are capable of. After all, this is our own plan; we cannot only ask the government to do this or to do that. For the future, if the government realises this could be good for Macau and worth preservation, it will naturally conduct measures for that.
For us, we’re still exploring more values that the boat can bring to meet market demand such as posting ads for big companies or offering sightseeing tours for tourists to explore Macau. We may implement all these plans step by step.
Are you confident in reaching these goals?
Of course. My junk is special. It represents the history of Macau as a fishing harbour. It’s like if you are Chinese you are forever Chinese. The most important thing is, as I said, this type of boat was there when Macau and Hong Kong were open for trade. This is our culture. We want to preserve it.
Long way to maturity What is lacking in Macau to develop sailing-related businesses?
Macau is a really good place but it seems there are not many encouraging policies here. The government is slow to warm up for new things. It won’t bring up new issues or new ideas for discussion. In a way, the government is very traditional. As I mentioned, the Macau Government could take Hong Kong’s experience for reference. The Hong Kong Government is openminded to this type of business. It has set a scope for boat owners and their passengers for what they can do and what they cannot do. As such, as long as you don’t go beyond that scope, it encourages the development of the industry very much. Besides, they have many auxiliary facilities to support development.
So Macau Government’s support is not enough?
We can’t say whether it supports us or not, or whether it can support us. As I said, the whole market is not mature at all. In addition, for us, we have only started the idea which is still at a very initial stage. We don’t have people doing the same thing as we’re doing now. Hence, we will need to see what’s next.
How do you promote such a new idea to residents?
In my opinion, as long as we spend time and effort on it, people can see. After all, our vessel is unique and special - people will realise its existence very soon. For me, we
Local operation Although the boat is primarily booked for special celebrations, in the company’s eyes it is also perfect for boosting the city’s educational and cultural tourism. “Since the start, we’ve been doing some private cruises for hotels, and once the boat was used as a floating venue for the University of Saint Joseph’s Institute of Science and Environment to do a conference about the local biodiversity and environment,” the managing director of the company, Henrique Silva (Bibito), told Business Daily. According to Mr. Henrique, the company is planning to bring another 55-foot sailing boat to the city to offer sailing classes and provide private charters. “We would like to have both vessels based in Macau to deliver a better and more diversified service…[We] want to co-operate with people with the same interest in preserving history… and we’re also interested in working with companies for teambuilding, companies with great social
responsibility understanding,” he claimed. Nevertheless, hardware facilities in the city may be a limitation for the company. “Macau Yacht Club’s Lamau Marina is full and, in my opinion, it doesn’t have the conditions that a tourism destination like Macau deserves. Macau Fisherman’s Warf has amazing conditions and advanced equipment; it’s definitely at the same level as the best international marinas worldwide, although unfortunately it isn’t yet open for public use,” the company’s managing director remarked. In addition to preserving the historic shrimp fishing junk, the company wants to offer more to the city’s residents and tourists. “We’ll definitely keep on promoting sailing activities in Macau as we’ve been doing until now and, as far as possible, turn Macau Sailing services’ main focus on environmental care into a sustainable and outstanding leisure option for local residents and visitors,” he said.
6 | Business Daily
November 23, 2015
Macau
AMCM: Alipay legal in MSAR The Monetary Authority has clarified that Alipay is currently co-operating with an authorised financial institution in Macau and that the co-operation has been duly approved by it, hence it does not violate any regulations in Macau
I
t is legal for residents or institutions in Macau to use Alipay accounts for payments, according to a statement issued by the Monetary Authority of Macau (AMCM) on Friday, following the company’s announcement of launching its services in the MSAR. ‘Although the reported payment services company (Alipay) is not an authorised institution engaging in payment activities in Macau, it is currently co-operating with an authorised financial institution in Macau for the launch of its payment services to merchants,’ the AMCM statement reads. ‘Their co-operation has been duly approved by this Authority and doesn’t violate any regulations in Macau.’ Last week, Chinese online payment company Alipay’s parent company Ant Financial announced that Alipay’s QR code payment is now available in 107 stores in the city. According to the company, more than 51 local brands and companies have introduced the payment method in their stores, including local restaurant chain operator Future Bright, electrical appliances retailer Royal Electronics Square and local shopping mall New Yaohan. The payment method enables transactions
by scanning the QR code in users’ Alipay. While some have raised doubts that the company’s legitimacy of running its business in Macau as in accordance with Articles 2 and 17 of the Macau Financial System Act approved by Decree-Law no. 32/93/M of 5 July, the provision of payment services and issuance and management of payment instruments are subject to prior authorisation; moreover, in accordance with Article 12 of the Foreign Exchange Regime approved by Decree-Law no. 39/97/M of 15 September, any fund transfers from or to other places for trade settlement or for other funding activities should only be conducted by authorised credit institutions in Macau. The city’s monetary authority issued a statement to clarify that overseas payment services companies can apply for authorisation to establish an institution to conduct payment activities in Macau. On the other hand, AMCM added, authorised financial institutions in Macau, upon obtaining approval of AMCM, can co-operate with overseas payment services companies to launch overseas payment services or products in the local market, with such services or products provided directly by those
authorised financial institutions to their customers. ‘Under such circumstances, the overseas payment services companies
co-operating with authorised financial institutions in Macau are not required to obtain authorisation by themselves,’ said AMCM.
Special
62 MACAU GRAND PRIX ND
Felix Rosenqvist has become only the second driver in history to achieve back-to-back victories on Macau’s unforgiving streets. His achievement was witnessed by more than 80,000 people over the course of the four-day competition João Santos Filipe
jsfilipe@macaubusinessdaily.com
8 | Business Daily
November 23, 2015
Felix Rosenqvist takes back-to-back victory after big scare on Sunday
Felix Rosenqvist arriving the pits after conquering another success in Macau’s streets
Swede storms to second victory in Macau to match Edoardo Mortara’s record of victories, thanks in part to Lady Luck dealing him a good hand at Melco Hairpin on Sunday
Y
esterday, Felix Rosenqvist (Dallara-Mercedes) became the second driver to win backto-back victories in Macau in the
FIA Formula 3 International Cup CLASSIFICATION 1 2 3 14
DRIVER FELIX ROSENQVIST CHARLES LECLERC ALEXANDER SIMS ANDY CHANG WING CHUNG
Formula 3 race, matching the record set by Edoardo Mortara (2009/2010). The Swede, who was competing in Macau for the sixth time, completed the 19 laps of the Guia Track in 16:23:07.848 minutes. “It gets better every time. However, I don’t see a difference compared to my previous win, because this race is always so hard to win. But I was always confident; even when Charles [Leclerc] passed me, I felt I could overtake him and get away”, Rosenqvist said at the end. Starting from pole position, the Swede was overtaken by Leclerc at Lisboa Corner. While he retook the lead on the second lap at Mandarin
CAR DALLARA-MERCEDES DALLARA-VOLKSWAGEN DALLARA-MERCEDES DALLARA-MERCEDES
Oriental Bend, he lost it again before Lisboa Bend. At that point the race was suspended due to a crash at the end of the pack. On the restart, Rosenqvist passed Leclerc to take the victory. However, things could have been quite different for the 24-year old Swede when in the qualifying race he almost hit the wall at Melco Hairpin. “I had some problems with the locking on the rear during the qualifying race. I was very lucky to miss the wall at the Hairpin. I just closed my eyes, turned the wheel and hoped for the best”, he explained on Saturday.
TIME 16:23:07.848 16:23:09.016 16:23:12.923 16:23:40.639
Charles Leclerc took the second position at the Macau Grand Prix following a big fight with the winner. The Monaco driver ended the race being pushed by Briton Alexander Sims. To secure last place on the podium, Sims relied on Sam Macleod hitting the wall whilst running third. Nevertheless, Macleod, after pitting due to the collision with the wall, went on to set the lap record for the circuit (2:10:210), which had previously belonged to Mortara, who in 2009 completed a lap in 2:10:732. Local hero Andy Chang secured 14th position, saying he was satisfied with the result because on the first day of practice he was not able to do more than six laps of the track.
Maro Engel wins first FIA GT World Cup behind safety car Maro Engel in a Mercedes-Benz won the FIA GT World Cup after dominating the race from the beginning to the end. The German driver became the winner of the first edition of the FIA GT World Cup. This was the second victory for the German driver in Macau, as in the previous edition he had won the GT race. While the race was shortened from 18 to 16 laps due to a crash when the safety car was on the track the leadership of Engel was only threatened at the start. However, the German managed to keep in front of the pack to cross the finishing line in front of René Rast in the Audi and Stefan Mucke in the Aston Martin. “It’s unbelievable and I’m so happy and proud to be the first winner. I’m also very proud of my team because I made a huge mistake in qualifying [he crashed] and I thought that my weekend would be over. Winning today is really amazing”, Engel said.
The end of the race was controversial as the German only managed to reach the podium position after the winner of the qualifying race, Stefan Mucke in the Aston Martin, hit Renger Van der Zande in his Mercedes, who at the time was lying second. After being hit, the Dutchman ended up being overtaken by Edoardo Mortara, René Rast and Stefan Mucke. Although Mortara crossed the finish line in second he was later penalised for a false start with a 20-second penalty. This meant that Mr. Macau would finish the race in sixth position. Local driver André Couto in the McLaren finished in the 11th position after starting at 20th. The Macanese, however, was one of the drivers involved in the crash behind the safety car that put an end to the race. This was his second crash in two days, after hitting a wall in the qualifying session.
Maro Engel racing to his second victory in two years in front of the whole GT pack
FIA GT World Cup - Race CLASSIFICATION 1 2 3
DRIVER MARO ENGEL RENÉ RAST STEFAN MUCKE
CAR MERCEDES-BENZ AUDI ASTON MARTIN
TIME 33:28.832 33:31.732 33:32.522
Business Daily | 9
November 23, 2015
Peter Hickman secures Motorcycle Grand Prix win The 28-year old displayed great maturity in managing the degradation of his tyres, going on to secure his first victory here
Leong Ian Veng (Mitsubishi Lancer EVO 9) won the Macau Road Sport Challenge on Saturday, after tak ing 33:08.040 minutes to complete the nine laps of the Guia track. The Macau driver, starting from pole, finished 0.839 seconds ahead of Japanese driver Mitsuhiro Kinoshita (Nissan GTR 34) to complete the race in 33:08.879 minutes. Lo Kai Fung, driving a Mitsubishi Lanc er EVO 7, achieved the last place on the podium of the Macau Road Sport Challenge 5.343 seconds behind the winner. The local resident completed the race in 33:13.383 minutes.
Sin Ling Fung fastest star of the weekend Peter Hickman howls past the grandstand on his way to snatching his first victory in Macau
managed to pull away. It’s fantastic to be in Macau and winning”. For his part, Jessop, starting from pole position, was after his first victory in the territory but was unable to catch the winner after being overtaken. In the end, the second position was the most he could achieve. “I was hopeful the pace I had would be enough to go from start to finish but it didn’t quite work.
Motorcycle Grand Prix - Race POSITION 1ST 2ND 3RD
NAME PAUL HICKMAN MARTIN JESSOPP MICHAEL RUTTER
BIKE BMW BMW BMW
TIME 2:24.940 2:25.271 2:26.662
Comini first TCR International champion Stefano Comini (Seat Leon) yesterday took the first TCR International title after winning the second Guia Race 2.0T. The Swiss had a fierce battle with Pepe Oriola (Seat Leon) in the fight for the title before coming out on top. “It’s really special to win the championship and the race in Macau”, Comini said. “The last race was hard because Pepe was pushing me all the time. I think he was too stressed being in second position”. The second TCR race was full of action, and right at the first corner Robert Huff (Honda Civic) and Gianni Morbidelli (Honda Civic) collided taking another six cars with them, including Macau driver Henry Ho Wai Kun (Honda Civic). As a result, only nine cars restarted the race. When the action went back to the Guia Track Oriola did all he could to overtake the Swiss driver, including hitting Comini multiple
Hong Kong driver Paul Poon Tak Chun (Peugeot RCZ) won the CTM Touring Car Cup in a race dominated by the French manufacturer. Paul Poon (39:40.572) snatched victory from Samson Frung Man Wai, some 7.841 seconds behind. Local driver Chou Keng Kuan, also in a Peugeot, secured third position, 8.421 seconds behind the leader.
Leong Ian Veng victorious in Road Sport Challenge
S
tarting from the third position on the grid, Peter Hickman (BMW) won the 49th edition of the Motorcycle Macau Grand Prix on Saturday, taking 2:24.940 minutes to complete the 12 laps of the Guia Circuit. Hickman achieved victory on only his second outing on the circuit. Initially, the Briton followed countryman Martin Jessopp (BMW) in the lead, but after managing his tyres more successfully was able to go on full-attack, cutting down the distance before overtaking the leader. “It’s fantastic to win here,” said Hickman. “I knew we were on different tyres and that I would be in better shape in the second part of the race. At the end of the first lap he really did a very fast time but after two laps he was no longer getting away and I realised I had a chance . . . I passed him straight away, when I got close to him, and
Peugeot dominates podium in CTM Touring Car Cup
times. However, the Spaniard could not pass the Swiss and he had to retire with technical problems, which immediately meant that he had lost any chance of winning the TCR International title. With regard to the second race, Italian Andre Belicchi (Seat Leon)
The tyres got worse and worse, and Hickman just got closer and closer. Not quite the result I wanted”, Jessop concluded. The third position was taken by seven-times winner in Macau Michael Rutter (BMW). The veteran never showed the pace through the race to run with the men in front. But it was enough to secure the last place on the podium, totally dominated by BMW, following a fierce battle with John McGuiness and Gary Johnson. “I was in fifth or six before the last couple of laps and decided on a big push. In the end, I trusted the tyres a bit more because I felt that everything else was good but for the traction. Eventually, it worked well”, Rutter said.
was second, while Russian Mikhail Grachev (Volkswagen Golf) took the last place on the podium and local driver Rodolfo Ávila (Seat Leon) secured fifth position. Briton Robert Huff won the first race to take his eighth victory in the territory, after being in the front from start to finish. Jordi Gené (Seat Leon) took second place and Comini and Oriola were third and fourth, which at the time kept the title hopes of both intact for the second race. In the first race, Rodolfo Ávila took 12th position, while Henry Ho was forced to retire after struggling with technical problems.
GUIA RACE 2.0T RACE 1 CLASSIFICATION 1 2 3
DRIVER ROBERT HUFF JORDI GENÉ STEFANO COMINI
CAR HONDA CIVIC SEAT LEON SEAT LEON
TIME 32:52.232 33:00.064 33:01.282
CAR SEAT LEON SEAT LEON VOLKSWAGEN GOLF
TIME 40:07.354 40:09.087 40:33.903
GUIA RACE 2.0T RACE 2 CLASSIFICATION 1 2 3
DRIVER STEFANO COMINI ANDREA BELICCHI MIKHAIL GRACHEV
Sin Ling Fung took victory in the Celebrity Race on Saturday morning. The Hong Kong driver completed the ten laps in 31:24.823 minutes in a Lotus Elise, which all racers used in this competition. The Hong Kong star stayed in front of Vicentn Chao Wai Yew (31:30.026), who took second place. Last place on the podium was occupied by fellow Hong Kong driver Kevin Liu Chun Ki (31:38.772) Mak Ka Lok was the only non-Hong Kong participant in the Saturday race. The Macau resident finished in fifth position some 30.580 sec onds behind the race winner.
Ho Hon Keong takes victory in Chinese Cup
Local driver Ho Hon Keong was the winner of the Macau round of the Chinese Cup, a competition in which all drivers used the Senova 70 model of the BAIC Motor manufacturer. The Macau resident was 9.239 seconds ahead of Mainland Chinese Chi Yue, who took second position. The last place on the podium was taken by Hong Kong driver Lo Ka Chun, who was 15.599 seconds behind the race winner. Regarding the remaining Macau drivers, Ip Un Hou took 11th posi tion, while technical problems sabo taged Helder Assunção’s prospects.
Tom Mchale hospitalised on Friday morning
During the second qualifying ses sion of the motorcycle race, the Briton fell at Mandarin Corner and had to be hospitalised. While his condition was stable, the extent of his injuries are yet to be known. McHale suffered multiple trauma, including Spine C1 and C7 fracture, maxillary fracture, with seven ribs and left clavicle fractured. Tom McHale was the second rider re quiring hospitalisation, following Rus sell Mountford’s crash on Thursday. Regarding the car drivers, Choi Kei Lei (Mitsubishi) had to be transport ed to hospital following an incident during his race. The local resident was discharged some hours later.
10 | Business Daily
Felix Rosenqvist was euphoric after the race and instead of walking he jumped to the podium
The Melco Hairpin is the slowest corner on the Guia Circuit
November 23, 2015
More than 80,000 watched the races over the four days
The Pit Babes always manage to attract visitors and photographers at the Grand Prix
Motorcycle Grand Prix record winner Michael Rutter tries to give the competition the slip
Business Daily | 11
November 23, 2015
Greater China Google aims to launch Google Play in Mainland next year
Building materials sector remains weak
Chief Executive Sundar Pichai and other top brass have made no secret that the company wants to get back into China, and Google Play would likely be its first foray
G
oogle aims to launch the China version of its Google Play smartphone app store next year, according to people familiar with the matter, its first major foray in the market since ending localised product support in 2010. The Google Play app store would be set up specifically for China, and not connected to overseas versions of Google Play, two of the people said.
They said Google intends to comply with Chinese laws on filtering content that might be viewed as sensitive by the ruling Communist Party, and laws requiring the company to store the app store’s data within China. A Singapore-based Google spokesman declined to comment. The U.S. company would use a successful app store as a launch pad to place other products and services
in China, said two people familiar with Google’s thinking. The U.S.-based firm is hoping to launch Google Play in China some time after Chinese New Year in February next year, and before early summer, that person said. Another person at a company in China that works with Google said the store will go live in 2016. The company hopes the app store will include as payment options Alipay, the online payment service from Alibaba Group Holding Ltd’s finance arm Ant Financial Services Group , and Tencent Holding Ltd’s WeChat Payment, said the person familiar with executives’ thinking. Rather than requiring explicit approval from China’s government to launch the app store, Google just needs to comply with Chinese laws including those governing data storage and content filtering, the person added. Last month, Google said it would take a minority stake in Beijingbased artificial intelligence firm Mobvoi as part of a US$75 million fundraising round, as the U.S. search giant tries to rebuild its presence in China. Reuters
After SUV boom carmakers face falling prices Meanwhile sales growth is expected to slip to 11 percent next year, according to IHS Automotive
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armakers coming late to China’s craze for sport-utility vehicles (SUVs) this year may find it tougher to make money from a party that’s overcrowded and already winding down. With Chinese growing wealthier and often restricted to one vehicle purchase in major cities, SUVs have been a rare bright spot for an auto market sapped by the country’s slowest economic growth in decades. In the year through October, sales surged 46 percent year-on-year in a broader market that grew 1.5 percent. Carmakers have chased the rainbow with some 32 new SUV models expected in China for 2015, according to Automotive Foresight, including some being showcased at the Guangzhou auto show. But with competition already squeezing prices, and sales growth seen weaker next year as demand becomes saturated, cashing in on SUVs may prove elusive. Prices dropped 3.4 percent in the first nine months of this year, outpacing the 1.2 percent decline for passenger vehicles overall, according to the National Reform and Development Commission, China’s top planning body. Meanwhile sales growth is expected to slip to 11 percent next year, according to IHS Automotive.
That reflects an ever-higher base of sales and the market growing more saturated, yet opportunities remain for SUVs that fill market gaps, Automotive Foresight’s Zhang said. While SUVs in China now skew toward small m o d el s b u i l t o n s ed a n frames, Ford’s Everest and Great Wall Motor Co’s Haval H7 will meet niche demand for larger SUVs, for example.
China’s building materials sector continued to be depressed as the recovery of the property market fails to materialize, latest statistics from the country’s top economic planner suggested. Cement output fell 4.6 percent year on year to 1.9 billion tonnes in the first 10 months, in contrast to the 2.5-percent gain seen during the same period last year, the National Development and Reform Commission (NDRC) said on its website. Output of flat glass dropped 8.3 percent, compared with the 3.5-percent rise in the same period last year. The data came as the property sector is suffering a nationwide oversupply, especially in third-tier cities.
State firms’ profit decline worsens Profits at China’s state firms fell 9.8 percent in the first 10 months of this year, the Ministry of Finance said on Friday, with commodities-linked companies bearing the brunt of the pain. The near double-digit fall in profits in January-October from a year earlier was worse than the 8.2 percent drop in the first nine months of the year. Combined profits of state-owned enterprises totalled 1.88 trillion yuan (US$294.51 billion) in the January-October period, the ministry said in a statement published on its website.
Zinc smelters pledge 20 pct output cuts China’s major zinc smelters said on Friday they will slash output by 500,000 tonnes next year, almost a fifth of their output as the industry tries to boost prices languishing at six-year lows. A joint statement by ten of the world’s top zinc producers on the Shanghai-based consultancy SMM’s website said the move was aimed at controlling overcapacity. The benchmark zinc price on the London Metal Exchange jumped more than five percent to US$1,620.50 a tonne in early London trade.
Premier Li submits proposal for peace in South China Sea
Market fragmentation also means top selling models are no longer being bought in the same profit-boosting volumes: China’s top 10 best-selling SUVs only accounted for 34 percent of the market as of September, compared to 64 percent in 2010. New SUVs will have a tougher time commanding fat profit margins they may have enjoyed in recent years, analysts at Fitch Ratings wrote in a note last week. Reuters
Chinese Premier Li Keqiang yesterday raised a five-pronged proposal to uphold and promote peace and stability in the South China Sea, calling on countries outside the region to refrain from taking actions that may cause tension in the region. First, all countries make the commitment to observing the purposes and principles of the UN Charter, defend the outcome of WWII and post-war order, cherish hardwon peace and jointly safeguard peace and stability in the world and the region, including in the South China Sea, said Li.
Dim sum bond sale in Hong Kong on November 26 China will sell 10 billion yuan (US$1.57 billion) worth dim sum bonds via the Hong Kong Monetary Authority’s Central Moneymarkets Unit platform next Thursday, the city’s de-facto central bank said on Friday. Four tenors are available for institutional investors, including 5 billion yuan three-year piece, 3 billion yuan five-year piece and 1 billion yuan each for 10-year and 20-year, the HKMA said in a statement. In addition to the institutional tranche, China’s Ministry of Finance (MOF) will sell dim sum bonds worth 2 billion yuan each to foreign central banks/regional monetary authorities and retail investors.
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November 23, 2015
Greater China
Police crack US$64 billion underground bank Authorities freeze over 3,000 bank accounts, according to Xinhua
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hina said it cracked the nation’s biggest “underground bank,” which handled 410 billion yuan (US$64 billion) of illegal foreign-exchange transactions, as the authorities try to combat corruption and rein in capital outflows that have hit records this year. More than 370 people have been arrested or face lawsuits or other punishment in the case centred in eastern Zhejiang province, the official People’s Daily reported on Friday, citing police officials. The case brought the total for underground banking and money-laundering activities to 800 billion yuan since April, the newspaper said. The probe began in September last year and the police took almost a year to sort through more than 1.3 million suspicious transactions, the state-run Xinhua News Agency reported separately.
Global flows
The case highlights the nation’s struggle to control capital outflows that have helped to send real-estate prices soaring from Vancouver to Sydney -- even when Chinese citizens are officially limited to converting US$50,000 of yuan per year. Some people may be moving the proceeds of corruption, while others may be concerned about the outlook for the economy and the potential for the yuan to weaken.
The government wants to stem outflows and stabilize the yuan’s exchange rate, but the outflows cannot be stopped unless people change their expectation on yuan depreciation Xi Junyang, finance professor, Shanghai University of Finance & Economics
China’s capital outflows may have climbed to a record US$194 billion in September before cooling to US$62 billion in October, according to a Bloomberg gauge which also takes into account decisions by exporters and direct investment recipients to hold funds in dollars.
‘Smurfing’
The tactics used by Chinese citizens to defeat the controls include so-called
smurfing, where large sums are moved by breaking them down into a series of smaller transfers using the bank accounts and foreign-exchange quotas of a range of individuals. In the Zhejiang case, a suspect identified as Zhao Mouyi used a different method, setting up more than 10 companies in Hong Kong from 2013 and transferring more than 100 billion yuan through so-called non-resident accounts, which are used by offshore companies in China when they are transferring money abroad, according to the newspaper’s report. Taking advantage of a “loophole” relating to non-resident accounts -which has since been filled by banks -- Zhao circumvented the capital controls by directly transferring yuan overseas and then exchanged the money into foreign currencies at banks including HSBC Holdings Plc in Hong Kong, the People’s Daily said. Zhao then allegedly transferred it to his clients’ accounts, the report said, citing the local police.
Suspicious transactions
HSBC declined to comment on the report. The Hong Kong Monetary Authority also declined to comment on the specifics of the case, while saying that banks in the city have “stepped up their internal controls to report suspicious transactions.”
Methods of bypassing China’s currency controls include: - making transfers using Hong Kong money changers - carrying checks from underground banks across the border to Hong Kong - smuggling cash through customs - making payments abroad using credit or debit cards and then returning merchandise for cash - getting an overseas mortgage based on savings held within China The underground banking crackdown is “an attempt to reduce the capital outflow pressure,” said Hou Wei, a banking analyst at Sanford C. Bernstein & Co. in Hong Kong. The government is “determined and very serious” about defending its currency reserves and the exchange rate, the analyst said.
Taiwan, Australia
In another case highlighted by the People’s Daily on Friday, an investigation of an underground bank in Fujian this year uncovered a network spanning Hong Kong, Taiwan, Australia and Saudi Arabia -- and a senior executive at a stateowned enterprise who allegedly tried to move 18 million yuan abroad, the newspaper said. The authorities have made a series of moves to control legal and illegal capital flows, including capping withdrawals at overseas automated teller machines. The People’s Bank of China has given verbal guidance to onshore lenders to stop offering cross-border financing to offshore banks, people familiar with the matter said this week. The monetary authority has also told overseas banks to halt onshore bond repurchases, two of the people said. Bloomberg News
Taiwan export orders fall for 7th month Orders are seen as a leading indicator of demand for Asia’s exports J.R. Wu and Faith Hung
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aiwan’s export orders contracted for a seventh consecutive month in October, with orders to near neighbours China and Japan sharply down on year ago levels. Orders fell 5.3 percent year on year in October, better than the 5.82 percent slide predicted in a Reuters poll. Orders declined 4.5 percent in September. “Demand for iPhone 6S components contributed to export orders for a second month in October, sending the value of information and telecommunication orders to a record level,” said Kevin Wang, an analyst of Taishin Securities
Investment Advisory in Taipei. Orders from China in October were down 10.6 percent from a year earlier, and 24 percent down from Japan. Orders from Europe were down 2.1 percent, but orders from the United States were 5.6 percent up. Among major sectors, orders for electronics goods fell 4 percent. Taiwan’s economics ministry said the increase in information communication orders, which jumped 11 percent year on year, was bolstered by a major smartphone brand, without specifying which one. The latest orders number
will give the trade-reliant economy some encouragement going into the final quarter, when the year-end shopping would usually pick up. Taiwan’s export orders are seen as a leading indicator of demand for Asia’s exports and for hi-tech gadgets, as they typically lead actual exports by two to three months. Many Taiwanese tech companies supply components that make up Apple gadgets, including contract electronics maker Hon Hai Precision Industry Co and camera lenses module maker Largan Precision Co. Taiwan Semiconductor Manufacturing Co, the world’s
largest contract chip maker and an Apple supplier, told Reuters on Thursday it aims to boost capital expenditure next year. “We won’t be conservative,” the company’s co-chief executive, C.C. Wei, said.
Downside risks
Looking ahead, the economics ministry warned the outlook for the global economy was unclear. “There are still a lot of uncertainties. The downside risks (for the global economy) could still increase,” said Yang Kuei-hsien, deputy director of statistics department. Taiwan still faces the
prospect that its economy contracted in the third quarter. Earlier this month, Taiwan reported actual exports shrank 11 percent in October from a year earlier. It was the ninth month running to show a fall. Separately, Taiwan’s thirdquarter current account surplus rose to US$19.67 billion from US$15.16 billion in the yearago period, the central bank said. The balance of payment surplus also jumped to US$5.69 billion from US$4.18 billion during the same period, the central bank added, with exports down 13.8 pct and imports falling 21.4 percent. Reuters
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Business Daily | 13
November 23, 2015
Asia
Sri Lanka targets a jump in 2016 revenues to finance public investment
India unveils tax modification road map India has unveiled details of its plan to phase out some tax exemptions for companies as the government looks to simplify tax laws and make them transparent before it lowers the tax rate. Over four years, the government plans to lower the corporate tax rate to 25 percent from 30 percent, Finance Minister Arun Jaitley said in his budget speech in February. During that period, exemptions and deductions will be phased out. Profit-linked, investment-linked and area-based deductions will be phased out for both corporate and non-corporate tax payers.
Slowing global growth and capital flight to industrialised nations has turned investors away from smaller frontier markets like Sri Lanka Shihar Aneez and Ranga Sirilal
The coalition government’s formation in August helped complete a peaceful political transition after a long civil war. Pictured President Maithripala Sirisena.
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ri Lanka doubled a nationbuilding tax and adjusted the corporate tax structure in its budget for 2016 on Friday to finance greater government spending in health and education, and accelerate the pace of economic expansion. Finance Minister Ravi Karunanayake said the island nation's economy will grow at 6 percent this year and the aim is to achieve an annual growth of 7-8 percent during the next few years. The coalition government's
formation in August helped complete a peaceful political transition after a long and bitter civil war, but the Indian Ocean island's young government lacks a steady financial base to launch reforms. The government increased the Nation Building Tax, a levy imposed on most businesses, to 4 percent from the existing 2 percent and raised charges on the use of seaports and airports. It also restructured corporate taxes into two bands of 15 percent and 30
Malaysia, Indonesia to create joint palm council The world’s top two producers are trying to tackle various industry challenges from high stockpiles to weak prices
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alaysia and Indonesia will invest US$5 million each in the initial operations of a new joint palm oil body, whose tasks will include stabilising prices and managing stock levels, the countries announced on Saturday. The council secretariat will be located in Jakarta and its membership will be extended to all oil palm cultivating countries, including Brazil, Colombia, Thailand, Ghana, Liberia, Nigeria, Papua New Guinea, the Philippines and Uganda. “We must be able to chart the direction of the palm oil industry and, with similar objectives, the industry will continue to prosper the people and especially assist the smallholders,” Amar Douglas Uggah Embas, Malaysia’s plantation
industries and commodities minister, told a press conference after the signing of the joint council. The formation of the new joint council, called the Council of Palm Oil Producer Countries (CPOPC), took place at the ASEAN summit in Kuala Lumpur and was witnessed by Malaysian Prime Minister Najib Razak and Indonesia’s President Joko Widodo. Indonesia’s coordinating minister for maritime affairs Rizal Ramli also said both countries will coordinate their respective stock management plans in order to maintain palm’s sustainable prices, and ensure the welfare of smallholders in the industry. Creating new demand for palm through the biodiesel mandate will help maintain optimal palm stock levels, said Rizal, as the
percent from the earlier single rate of 28 percent, a move it hoped would yield greater collections. Slowing global growth and capital flight to industrialised nations has turned investors away from smaller frontier markets like Sri Lanka. Karunanayake removed a tax imposed on foreigners leasing land and set a time limit on approval for foreign proposals to 50 days in order to revive investment. "This budget will be the platform and .... ensure the planned growth levels are achieved," the budget document said. The country expects to cut the budget deficit marginally to 5.9 percent of the GDP in 2016 from a revised 6 percent this year. Karunanayake earlier expected this year's deficit to be 6.9 percent. The government is aiming a 38 percent jump in the total revenue and grants, including a 23 percent rise in tax revenue, the budget document showed. "The budget has looked to better the investment climate both domestically and for foreigners while incentives have been given for development and micro industries," said Shiran Fernando, an analyst at Colombo-based Frontier Research. Karunanayake reduced foreign holding in treasury bills to 10 percent from a 12.5 percent, to cut exposure. Reuters
vegetable oil is used for blending into biodiesel. Malaysia’s palm oil stocks rose to a near 15-year high of 2.83 million tonnes at end-October on an unexpected rise in production, while a Reuters survey estimated Indonesian inventory falling slightly to 3.025 million tonnes from 3.050 million a month ago. The ministers also announced a proposed framework for sustainable palm oil, taking into account laws and regulations related to the sustainable development of both countries. The framework, called e+POP, will be benchmarked against other international standards and addresses issues such as the legal requirements for land use and management, industry best practices and protecting the use of primary forests and peatlands from planting. Malaysia and Indonesia first announced the CPOPC in October with the aim of ensuring further industry cooperation, establishing a global framework for sustainable palm oil, stabilising prices and managing stock levels. The world’s top two producers, who supply 85 percent of global palm oil, are trying to tackle various industry challenges from high stockpiles to weak prices and a polluting haze caused by smouldering forest fires. Reuters
Malaysia, Australia agree to elevate ties Malaysia and Australia have agreed here to elevate their bilateral relations to a strategic partnership. The move came as the year 2015 marks the 60th anniversary of Australia’s diplomatic presence in Malaysia and the year 2017 will mark the 60th anniversary of Malaysia-Australia diplomatic relations. In a joint statement issued yesterday, the two countries agreed to strengthen political engagement through annual meetings of foreign ministers to be underpinned by senior official talks and a strategic dialogue and augmented by enhanced defence dialogue.
ADB, Japan to support ‘sustainable’ Asia infrastructure The Asian Development Bank (ADB) and Japan on Saturday announced a five-year, US$16 billion “partnership”, including an investment fund, to support “sustainable” infrastructure development in the region. The ADB said the first activity would be establishment of a trust fund by March 2016, to be capitalized with US$1.5 billion from the Japan International Cooperation Agency (JICA). Combined with the ADB’s own capital and that of “commercial co-financing partners”, the fund should provide financing of at least US$6 billion, the ADB said. Another US$10 billion for promoting public infrastructure will be provided in co-financing to sovereign borrowers.
South Korea’s November 1-20 exports fall South Korean exports continued to fall in the first 20 days of this month on an annual basis, but at a slower pace than they declined in October, customs data showed on Saturday. During Nov. 1-20, exports dropped 7.7 percent from a year earlier, the data showed. In October, exports by Asia’s fourth-largest economy shrank by a revised 15.9 percent over a year earlier, their worst annual decline in more than six years. For the first 20 days of October, exports dropped 16.0 percent.
India backs 2 degree global warming limit Indian Prime Minister Narendra Modi clearly backs the goal of limiting global warming to no more than 2 degrees Celsius from pre-industrial levels, a source close to French Foreign Minister Laurent Fabius said on Saturday. Leaders from 195 nations will meet from November 30 to December 11 in Paris to try to nail down an agreement after the last global climate change conference in Copenhagen in 2009 collapsed. Fabius has embarked on a three-day tour to make sure big emerging nations are on board.
14 | Business Daily
November 23, 2015
International US to negotiate insurance agreement with EU The U.S. authorities announced plans to negotiate a covered agreement on insurance with the European Union, a move it said will “level the regulatory playing field for U.S-based insurers and reinsurers.” Insurers and regulators from the European Union have long expressed frustration at U.S. reinsurance collateral requirements - they not only must comply with EU solvency rules but must also meet additional requirements when underwriting in the U.S. The EU said it would push harder to persuade the United States to free up the billions of euros in collateral it requires foreign reinsurers to set aside against policies.
ECB willing to act fast to boost inflation Draghi said the ECB would act if it concluded that euro zone inflation was at risk of falling further away from the ECB’s target Germany’s Finance Minister Wolfgang Schaeuble, who has criticised the ECB in several occasions, was also due to speak at the event.
Defending QE
GM, Ford, Fiat Chrysler labour costs rise Hourly labour costs will rise to an average of US$60 per auto worker by 2019 if proposed contracts at General Motors Co and Ford Motor Co are ratified by rank-and-file members of the United Auto Workers (UAW) union, a study said. Hourly wages account for slightly less than half of total labour costs for UAW workers, which include healthcare and other benefits. Ford’s current labour costs average US$57 per hour and GM’s average US$55 per hour, according to the study by labour analysts Kristin Dziczek of the Centre of Automotive Research and Arthur Schwartz, a private consultant.
Novartis to pay US$390 mln in U.S. settlement Novartis Pharmaceuticals Corp will pay US$390 million to settle U.S. charges that it paid specialty pharmacies illegal kickbacks in exchange for inducing patients to refill certain medications, according to an accord announced Friday. The settlement between a U.S. unit of Swiss drug maker Novartis AG, the federal government and more than 40 states concerns payments that the drug manufacturer paid between 2007 and 2012 to certain specialty pharmacies to entice them to recommend prescriptions to Medicaid and Medicare patients. The federal part of the case involved six drugs.
Argentina says economic activity grows 2.8 pct Argentina’s economic activity grew 2.8 percent on the year in September, the government said, coming in above market expectations for an increase of 2.5 percent. The monthly EMAE economic activity index, which is a close proxy for gross domestic product, showed economic activity was unchanged against the previous month. Private economists question the credibility of Argentina’s official data, particularly on inflation and growth.
Canadian govt inheriting gloomier fiscal outlook Canada’s new Liberal government said it was inheriting a significantly gloomier fiscal picture than previously expected, projecting billions of dollars of deficits despite previous Conservative forecasts of surpluses. A large portion of this worse outlook is because the Liberals, who defeated the Conservatives in last month’s federal election, lowered economic growth forecasts to levels well below the downwardly revised levels predicted by private-sector economists.
Draghi said the strength of the euro zone's recovery was modest
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he European Central Bank is ready to act quickly to boost anaemic inflation in the euro zone, its president said, offering the strongest hint yet that the bank will unveil fresh stimulus measures at its December 3 meeting. Mario Draghi highlighted changes to the ECB’s asset purchase programme and deposit rate as possible tools to stop inflation from falling further below its target of just under 2 percent. Draghi said the risk had increased that the ECB would miss that target. “If we decide (on December 3) that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible,” he told a conference in Frankfurt. Draghi said the strength of the euro zone’s recovery was modest and the global outlook for demand, particularly in emerging countries, had worsened significantly in recent months. His views appeared likely to meet some objections on the ECB’s decisionmaking Governing Council, which includes the bank’s executive board members and the governors of the bloc’s 19 central banks.
KEY POINTS Draghi says recovery modest, global demand has worsened Adds ECB ready to act on QE, deposit rate if needed Bundesbank’s Weidmann makes case for waiting Euro dips, then recovers after Draghi comments Speaking at the same event, the Bundesbank’s president Jens Weidmann, one of the most prominent critics of the ECB’s ultra-easy policy, struck a more upbeat tone on the economy and made the case for waiting before taking new policy steps. “I see no reason to talk down the economic outlook and paint a gloomy picture,” Weidmann said. “We should also not forget that the monetary policy measures already taken still need time to fully feed into the economy.”
The ECB has bought 60 billion euros (US$64 billion) a month of mostly government bonds since March to help revive inflation, but prices rose just 0.1 percent in October. Draghi defended the ECB’s quantitative easing (QE) asset purchase programme, noting it had brought down borrowing costs for euro zone companies. He said the scheme could be expanded and extended and its composition changed to provide further stimulus while the deposit rate could be cut again to boost the impact of QE. The ECB’s deposit rate is currently -0.20 points, meaning banks are charged to park cash at the ECB, giving them an added incentive to lend, rather than pile reserves at the central bank. Some questioned the benefits of ultra-low rates, with Deutsche Bank’s Co-Chief Executive Juergen Fitschen telling the same conference that the ensuing increase in bank lending volumes might not be enough to offset the hit to margins the policy had also caused. Markets were already expecting further ECB action on Dec. 3, most likely including a further cut to the deposit rate and an extension of the asset purchases beyond their scheduled end in September 2016. The ECB will get updated inflation forecasts from its staff at the December meeting and has already said conditions have worsened since its latest estimates were published in September. Reuters
Fed may need permanently big balance sheet The Fed’s balance sheet swelled to more than US$4 trillion after the 2007-2009 financial crisis
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he U.S. Federal Reserve and other global central banks may need to consider new tools in a world of permanently lower interest rates, including keeping big balance sheets or using negative interest rates to combat shocks, a top Fed official said. With the so-called natural interest rate in the United States now near zero, and equilibrium rates in other countries around the world also lower than in the past, central banks have “significantly less room to manoeuvre” in the face of recessions, San Francisco Fed President John Williams said at a conference at University of California Berkeley’s Clausen Centre. The natural interest rate is the rate at which an economy can maintain its balance, with full employment and stable inflation. Central banks
traditionally aim to cut interest rates below that level to stimulate their economies, but have less room to do so when the natural rate is low. The Fed’s balance sheet swelled to more than US$4 trillion after the 2007-2009 financial crisis and recession as the U.S. central bank bought up bonds in order to push down borrowing costs and stimulate investment and hiring. Most observers, and Fed officials themselves, believe the central bank will eventually trim the balance sheet back to pre-crisis levels at around US$800 billion. But in the context of low natural interest rates worldwide, Williams said, large balance sheets could effectively give central banks a bigger interest-rate buffer with which to combat crises.
Central banks may also want to consider using negative interest rates in some situations, he said, an option that several central banks in Europe have already tried. One other possible central banking tool would be to loosen policy by targeting higher inflation rates, Williams said, although the effectiveness of such a move is unclear given stubbornly low inflation rates worldwide and the inability of many central banks, including the Fed, to reach even their current inflation targets. Because lower worldwide natural rates mean central banks are potentially less effective than before, fiscal policymakers should also consider new approaches, Williams said, including perhaps putting in place automatic tax cuts that could go into effect if the jobless rate surges. Reuters
Business Daily | 15
November 23, 2015
Opinion Business
wires
The Fed’s dollar distraction Gita Gopinath
Leading reports from Asia’s best business newspapers
Professor of Economics at Harvard University
THE KOREA HERALD The South Korean economy is expected to expand around 3 percent in 2016 from this year unless external uncertainties worsen further, local economists predicted Sunday. In a survey conducted by Yonhap News Agency, the heads of six major economic think tanks forecast Asia’s fourth-largest economy will grow moderately next year on the back of recovering domestic demand. Their prediction is slightly lower than the government’s estimate. The finance ministry has predicted Asia’s fourthlargest economy to grow 3.3 percent on-year in 2016, with the Bank of Korea forecasting a growth rate of 3.2 percent.
PHILSTAR The Bangko Sentral ng Pilipinas (BSP) managed to trim its losses in the first nine months of the year on the back of higher revenues, particularly from interest income as well as gains on foreign exchange fluctuations. Latest data from the central bank showed the net loss of the BSP fell 43.2 percent to P3 billion from January to September this year compared to the P5.28 billion loss in the same period last year. The BSP reported its revenues grew 19.4 percent to P43.19 billion in the first nine months of the year.
THE TIMES OF INDIA Former RBI governor Dr C Rangarajan said he expected the country’s economy to improve this financial year. He expected the economy to register a growth rate of 5.75% by the end of March 2016. He said though signs of economic revival were evident, it was important for productivity of capital investments to remain high for growth to take place. The economist said the growth rate was likely to be spurred by the industrial sector. He pointed out that the government was moving in the right direction to bring about economic growth.
TAIPEI TIMES People First Party presidential candidate James Soong opened his campaign headquarters in Taipei yesterday with a rally, with the former Taiwan Province governor labelling the current government as “incompetent,” adding that government policies pander to the interests of business conglomerates, while most people suffer under economic stagnation. PFP Chairwoman Hsu Hsin-ying, in wrapping up the rally with a speech outlining the party’s vision for the nation, promised to deliver hope and a brighter future to the people. With political pep talks and slogans such as “Let’s Win Taiwan Back,” the joint cross-party ticket had over 10,000 bannerwaving supporters.
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n its September policy statement, the US Federal Reserve took into consideration – in a major way – the impact of global economic developments on the United States, and thus on US monetary policy. Indeed, the Fed decided to delay raising interest rates partly because US policymakers expect dollar appreciation, by lowering import prices, to undermine their ability to meet their 2% inflation target. In reality, while currency movements can have a significant impact on inflation in other countries, dollar movements have rarely had a meaningful or durable impact on prices in the US. The difference, of course, lies in the US dollar’s dominant role in the invoicing of international trade: prices are set in dollars. Just as the dollar is often the unit of account in debt contracts, even when neither the borrower nor the lender is a US entity, the dollar’s share in invoicing for international trade is around 4.5 times America’s share of world imports, and three times its share of world exports. The prices of some 93% of US imports are set in dollars. In this environment, the passthrough of dollar movements into non-fuel US import prices is one of the lowest in the world, in both the short term (one quarter out) and the longer term (two years out), for three key reasons. First, international trade contracts are renegotiated infrequently, which means that
dollar prices are “sticky” for an extended period – around ten months – despite fluctuations in the exchange rate. Second, because most exporters also import intermediate inputs that are priced in dollars, exchange-rate fluctuations have a limited impact on their costs and thus on their incentive to change dollar prices. And, third, exporters who wish to preserve their share in world markets – where prices are largely denominated in dollars – choose to keep their dollar prices stable, to avoid falling victim to idiosyncratic exchange-rate movements. What little impact import price shocks have on US inflation is highly transitory, with most of the effect tapering off after just two quarters. A sharp 10% appreciation of the US dollar, for example, would reduce inflation for non-fuel imports by 4.4% cumulatively over the next 2-3 quarters, but would have only a negligible impact on inflation after that point. If one accounts for consumer goods expenditure on imports, that 10% appreciation would lower inflation, as measured by the consumer price index (CPI), by just 0.5 percentage points in the first two quarters. And that is likely to be an upper bound, because it assumes that US retailers will pass through to consumers the full amount of any increase in import prices. In practice, they are more likely to increase retail markups and lower cost pass-through. The estimated price pass-through for
While currency movements can have a significant impact on inflation in other countries, dollar movements have rarely had a meaningful or durable impact on prices in the US
imported manufactured goods, which would better represent what enters the consumption bundle, is even lower than that for all non-fuel imports. Although these factors insulate the US from the inflationary pressures stemming from exchange-rate fluctuations, they increase the vulnerability of other countries, especially emerging economies. Because the dollar prices of most of these countries’ imports are not very responsive to exchange-rate movements, the pass-through of those movements into import
prices denominated in their home currencies is close to 100%. The impact of exchange-rate movements on inflation in most countries is thus 3-4 times larger than in the US. A 10% depreciation of the Turkish lira, for example, would raise cumulative CPI inflation by 1.65-2.03 percentage points, over two years, all else being equal. Despite this imbalance, the US dollar’s dominance as an invoicing currency is unlikely to change anytime soon – not least because bringing about a shift would require coordination among a huge number of exporters and importers worldwide. The euro might seem like a strong contender, given the volume of trade among eurozone countries; but, outside Europe, the currency is not used nearly as widely as the dollar. In deciding when to normalize interest rates, the Fed has placed considerable weight on the weakness of inflation, and its global underpinnings. But while it is true that some global developments – especially falling commodity prices, and perhaps also slowing emerging-economy growth and rising financial volatility – may push down inflation, dollar appreciation will not, at least not in any meaningful way. A stronger dollar thus is not a legitimate reason to delay the normalization of US interest rates. Project Syndicate
16 | Business Daily
November 23, 2015
Closing Intensified efforts urged to conclude RCEP talks by 2016
Chinese authorities discipline 4900 violators of frugality rules
Enhanced efforts were called for to conclude the Regional Comprehensive Economic Partnership (RCEP) talks next year at the on-going 27th ASEAN leaders’ summit and related meetings. “Substantial progress” had been made at the RCEP talks with many fundamental issues resolved, said a joint statement issued at the summit yesterday. Launched in November 2012, the RCEP talks involved 10 ASEAN member states and six dialogue partners - China, Japan, South Korea, Australia, New Zealand and India - with an aim to facilitate expansion of regional trade and investment and were scheduled for completion in 2015.
Communist Party of China (CPC)’s top anti-graft body announced yesterday that over 4,900 officials were reprimanded for violating austerity rules in October, bringing the total punished this year to 36,600. The officials punished last month, including two provincial and ministerial level officials, were implicated in over 3,800 cases, about a fourth of which involved unapproved use of public vehicles, the CPC Central Commission for Discipline Inspection (CCDI) said in a routine report on its website. Unauthorized allowances and subsidies, lavish weddings and funerals as well as illicit gift giving and receiving were included in violations.
Is the bubble bursting for India’s online start-ups? Despite the billions of dollars invested in recent years, most of India’s online start-ups have yet to turn a profit
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undreds of layoffs at several Indian startups have sparked fears the bubble is starting to burst for the country’s e-commerce companies, amid claims by analysts that many of them are overvalued. Restaurant search website Zomato, food delivery app TinyOwl and property portal Housing.com are all letting staff go, and experts are warning of echoes of the dot-com boom which crashed spectacularly in 2000. Wealthy investors boosted by low interest rates have been lining up to lavishly back India’s booming startups, with the government hailing the sector as proof of the country’s entrepreneurial spirit. Prime Minister Narendra Modi views online start-ups as key to providing jobs to aspirational young Indians, seeking to fuel the sector through a government campaign, “Start up India, Stand up India”. In September he visited Silicon Valley calling on
stories and ignoring the failures, just like they did in the dot-com era,” Paras Adenwala, investment consultant at Capital Portfolio Advisors in Mumbai, told AFP. Adenwala is concerned that once the United States’ central bank starts moving on interest rates, as it has long been tipped to do, investors will be less generous with their cash, making the situation worse.
Dramatic scenes
deep-pocketed investors to turn their attention to India’s thriving start-up ecosystem, with large tech hubs in the cities of Bangalore, Hyderabad and Mumbai. Yet despite the billions of dollars invested in recent
India’s central bank governor defends yuan
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years, most of India’s online start-ups are yet to turn profits and investments are largely based on speculative future earnings. “Investors are not looking objectively at the sector. They are just seeing a few success
Recent events at TinyOwl, Zomato and Housing.com suggest that not all is well. There were dramatic scenes at TinyOwl’s offices in Pune, in the western Indian state of Maharashtra, earlier this month when disgruntled staff refused to leave the building after losing their jobs. They also held hostage a member of top management, who laid off 300 employees, preventing him from leaving for two days as they demanded the immediate payment of their severance deals.
ASEAN adopts declaration on community building to 2025
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TinyOwl co-founder and chief executive Harshvardhan Mandad said the redundancies had been necessary to get the start-up on a more sustainable footing. Housing.com recently fired 600 employees, according to widespread reports, and on Thursday announced there would be a “reorganising of the company”, although it declined to confirm the layoffs. Zomato, a so-called “unicorn” start-up because it is valued at more than US$1 billion, is laying off 10 percent of its 3,000-strong staff worldwide, mostly in the United States. Some signs of consolidation are already evident in the highly competitive market. Grofers, a “hyperlocal” grocery app that allows customers to order goods from corner shops online, last month made two acquisitions in a week, taking over its shuttered competitor Townrush and meal delivery service SpoonJoy. And earlier this month Mumbai-based CarTrade, a portal for selling used autos, acquired its rival CarWale for an undisclosed sum. Singhal, the Technopak chairman, sees the job cuts as part of an inevitable “evolution” of start-ups, where the early movers lacked well thought-out business models but successors will learn from their mistakes. AFP
China pledges to boost retail, health and travel sectors
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ndia’s central bank governor voiced support for the yuan’s IMF ambitions, combining a call for multilateral institutions to grant greater recognition to emerging markets with a dismissal of claims that China sparked a currency war in August, according to the South China Morning Post. It’s unfair to pin the blame on the August 11 yuan devaluation because currencies were already declining due to the “unconventional monetary policies” of some nations, Raghuram Rajan was cited as saying in an interview with the SCMP. The Reserve Bank of India is including yuan assets to diversify its holdings, he said, even as the International Monetary Fund prepares to decide on the yuan’s possible inclusion in its reserves basket. The IMF should accommodate the currencies of large economies with strong positions in global trade and finance, Rajan was cited as saying in the interview. The Washington-based lender and other multilateral institutions such as the World Bank must continue to pay greater attention to emerging markets, he said in the report, adding that the agencies need a change in governance.
eaders from the Association of Southeast Asian Nations (ASEAN) yesterday adopted a declaration on the bloc’s growth to 2025, mapping out a plan for further regional integration and community building efforts. The declaration, entitled “Kuala Lumpur Declaration on ASEAN 2025: Forging Ahead Together,” is one of the key documents issued at the end of a two-day summit, which has drawn leaders from ASEAN’s member states and their dialogue partners. ASEAN leaders welcomed the formal establishment of the ASEAN Community, agreeing that this declaration as well as the ASEAN Community Vision 2025, the ASEAN PoliticalSecurity Community Blueprint 2025, the ASEAN Economic Community Blueprint 2025 and the ASEAN Socio-Cultural Community Blueprint 2025, constitute the ASEAN 2025: Forging Ahead Together, said the declaration. The leaders decided that ASEAN member states and ASEAN organs and bodies shall implement the ASEAN 2025: Forging Ahead Together in a timely and effective manner, in accordance with the purposes and principles of the ASEAN Charter.
eijing will promote the development of the retail, health, travel and sports sectors in a bid to boost domestic consumption, the cabinet said yesterday. In a statement on its website, the State Council said it will encourage financial institutions to accept a broader range of collateral for extending loans to “lifestyle-related businesses”. Other sectors that the government highlighted are service ones related to families and the elderly, culture, law, accommodation and catering as well as education and training. The State Council said the government will also expand consumer credit, improve the system of Internet payments and study the management of credit card fees “to further reduce overall expenses” related to their use. No details were given. The government will crack down on pricegouging as well the sale of counterfeit goods, and prosecute monopolies and businesses engaged in unfair competition, according to the statement. Top leaders have flagged a “new normal” of slower growth as it tries to shift the world’s secondlargest economy to sustainable, consumption-led development.
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Xinhua
Reuters