Macau Business Daily December 4, 2015

MOP 6.00 Closing editor: Oscar Guijarro

Japanese oil companies to merge in optimization push

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Page 11

Year IV

Number 934 Friday December 4, 2015

Publisher: Paulo A. Azevedo

China services sector slower in November Page 8

Asia Development Bank revises up China’s growth

Tam on board

A smorgasbord of tourism initiatives. Boat trips from the Peninsula to Taipa and Coloane, like the good old days. Diversified tourism products. An expanded, revamped Grand Prix Museum. Restaurants, esplanades and shops for the Taipa Museum houses and Nam Van Lakes. And a new museum. All parts of the World Centre of Tourism and Leisure jigsaw the government is striving to put together. Yesterday, Secretary for Social Affairs and Culture Alexis Tam unveiled an ambitious plan to move the whole scheme forward Page

Law of unintended consequences

3

A rent control bill. Now in the reading stage but worrying realtors. Who fear it will shrink the local leasing market. The intention of the bill is to control commercial rents as well as residential. To help local SMEs deal with surging rents. But unintended consequences could ensue, it is claimed

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Jamboree over for junkets A collapse in high roller numbers. Followed by liquidity constraints for Macau’s junkets. Forcing them into the role of loan collector.

A task fraught with peril as the practice is forbidden on the Mainland. Where most of the debtors hail from

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Brought to you by

HSI - Movers December 3

Name

%Day

Tingyi Cayman Islands

+1.60

Silver lining

China Shenhua Energy

+1.12

New World Developme

+1.03

China Merchants Holdi

+0.98

A “good opportunity”. So says Yao Jian of the China Liaison Office in Macau. Referencing the breather the changing profile of declining visitor arrivals represents. The administration should plan tourism resources and build supporting infrastructure, he suggests

CNOOC Ltd

+0.79

China Resources Powe

-1.29

Swire Pacific Ltd

-1.49

China Petroleum & Che

-1.63

China Unicom Hong Ko

-1.65

Henderson Land Devel

-2.04

Source: Bloomberg

www.macaubusinessdaily.com

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Team China A new generation of young Chinese entrepreneurs. Joining communities offering greater opportunities to develop their own projects. The environment fosters teamwork. And a sharing culture

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2 | Business Daily

December 4, 2015

Macau

UM Rector clarifies Portuguese elective classes controversy

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he Rector of the University of Macau (UM), Wei Zhao, said yesterday in the Legislative Assembly that the institution will not stop investing in Portuguese language education. The clarification was requested during the

Policy Address, after the intervention of Legislative Assembly member José Pereira Coutinho.

“We will continue to invest in the Portuguese classes,” Mr. Wei Zhao said, “and we are committed to having these classes

available in minor and major degrees. To this end, I have been involved in hiring more Portuguese teachers for the institution”.

The controversy over the Portuguese language education in UM ignited following news reports

Macau-Zhongshan free yachting still targeting year-end

I

mplementation of the ‘Free Yacht Travel Scheme’ between the city and Zhongshan in Guangdong is still expected by the end of this year, the director of the Marine and Water Bureau, Wong Soi Man, told reporters yesterday.

According to Ms. Wong, the joint Customs inspection building for the scheme in Zhongshan has already been completed. She said the construction project is still pending an acceptance check as it relates to joint-inspection work of different departments at the border.

In fact, the free yacht travel scheme between the Special Administrative Region and the Chinese city was first scheduled for implementation in the middle of this year. The opening date was later postponed to the end of September and once again to the end of this year.

The head of the Shipping and Seafarers Department told reporters recently that the delay was due to the governments still organising border and Customs issues although all maritime affairs had been basically settled.

K.L.

Corporate Galaxy wins Best Hotel & Tourism Development award The company was awarded Best Hotel & Tourism Development Silver recognition by MIPIM (Marché International Professionnel de l’Immobilier, or International Professional Market of Real Estate), a property leaders’ summit in Asia Pacific and a significant platform for leading industry professionals.

The MIPIM Asia Awards aim to reward innovation and achievement in a variety of fields across the regional property industry, with a focus on project developments. The rigorous judging process involves selection by an elite jury panel and a vote by MIPIM Asia delegates.

In winning the MIPIM Asia Best Hotel &

Tourism Development Silver Award, Galaxy Macau demonstrated excellence amongst a strong group of finalists representing 13 countries. “We are extremely proud to be taking home such esteemed recognition,” said Baschar Hraki, Director of Project Development of Galaxy Entertainment Group. “This prestigious win underpins the amazing offerings at Galaxy Macau and Broadway Macau, including our tropical Grand Resort Deck, expanded to over 75,000 square metres in May; the new Broadway Theatre showcasing up-close-and-personal performances; and The Promenade, Macau’s luxury shopping destination.”

on Wednesday that the institution would end elective Portuguese classes.

This decision was confirmed and criticised by the head of the Portuguese Department of the institution to TDM Radio, justifying the decision with the need to

make better use of existing resources.

After the news generated a big controversy in the Portuguese language media the Dean of the Faculty of Arts and Humanities, Jin Hong Gang, denied the termination of the classes.

Business Daily | 3

December 4, 2015

Macau

Alexis Tam reveals cultural plan to boost tourism industry The Secretary for Social Affairs and Culture has revealed plans to increase the tourism offer of the city as well as the overnight stay rate of visitors João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he creation of ferry boat trips from the Peninsula to Taipa and Coloane in a revival of the old days before the creation of the Nobre Carvalho Bridge. This was part of the plan introduced yesterday

by Alexis Tam Chong Veng to the Legislative Assembly to revolutionise the tourism offers in the territory and increase the overnight stay of visitors.

“The A-Ma and Inner Harbour docks were used in the past for people to take boats to Coloane and Taipa.

We are trying to revive these areas in order to offer ferry tours for tourists to Taipa and Coloane”, Alexis Tam said during the first of two days discussing the Policy Address for the areas of Social Affairs and Culture. “In places like Europe and even in Zhuhai these ferry trips are popular. In Macau we need to do the same and use our coast to attract more tourists”, he said.

Mr. Tam presented an ambitious plan to diversify tourism products, which is part of the strategy to transform the territory into a World Centre of Tourism and Leisure.

“I’ve spent a lot of time assessing the tourism policies of other territories,” he said. “The general trend is to increase tourism products in the region, which is something Macau has been doing and achieved good results. Our goal is to have people spend more time in Macau, in terms of overnight stay”, he explained about the strategy.

“The Grand Prix is already 60 years old, which shows its importance. We need to use this fact to bring more visitors to Macau. We’re going to have in the reformulated museum statues of Ayrton Senna and Lewis Hamilton”, he said. “We know this is the most

dangerous circuit in the world and we want people to know it and spend time in its museum”.

Opportunities for private sector During his speech, the Secretary introduced other innovations such as to the Taipa Museum Houses, which will have restaurants and esplanades focusing on Portuguese culture plus the culture of Portuguese-speaking and European countries. This area will feature art displays and food offerings.

“The heritage of the Portuguese administration has a lot of cultural resources. We can use this to make our tourism stronger. At the same time we can use the Taipa Museum Houses with the restaurants, esplanades and shops to show the European culture to our tourists”, he added.

While the plan was generally well received by Legislators, a Legislative Assembly member asked that the government not invest alone in these projects, stressing that it was important for the private sector to also participate.

“The initiatives of the government will create commercial opportunities for the industry. It may work very well but there is also the possibility that it will not end up working so well. However, the government has to guarantee that private entrepreneurs will also carry their burden in terms of investment. The government has been carrying the burden of private entrepreneurs for too long”, he said.

The plan also includes moving the Wine Museum to the Institute for Tourism Studies (IFT), the creation of esplanades on Nam Van Lake in front of Government Headquarters, and a new museum dedicated to Chinese musician Xian Xinghai.

Blue Sky to revamp schools The Secretary for Social Affairs and Culture announced a plan yesterday to revamp 15 public schools in Macau to improve conditions for the territory’s students. This plan – named Blue Sky - will involve schools that are installed in building podiums that do not enable students to see the sky.

“In 2016, Blue Sky will start to be implemented in order to enable our students to see the sky. In the next twenty years there will be plans for the short, medium and long term that will improve the conditions of the schools installed in the podium of buildings”, Mr. Tam said.

“When we think about the quality of the education system, our concerns have to go beyond to ensure that there are school vacancies for everybody. We also need to give to students a proper environment that will enable them to develop their capabilities”, he said.

War on illegal package tours and hotels The Macau authorities wish to increase the co-operation between Macau Government Tourist Office (MGTO) inspectors and the police in operations tackling illegal accommodation. In order to achieve this, the government is working to change the existing law, Alexis Tam revealed yesterday during his first day of the Policy Address for the Social Affairs and Cultural areas.

“The inspectors always act in co-

operation with the police force.

These operations to tackle illegal accommodations are always joint procedures and we want to change the law in order to increase this cooperation”, he said. “Tourism inspectors never undertake these operations alone because we don’t want them to risk their safety. That’s why it’s very important to send the police with them”.

The Secretary for Social Affairs and Culture also reiterated that the efforts to tackle free package tours offered to tourists that force them to shop and consume in Macau will continue.

Simplifying subsidy procedures for private schools The Secretary for Social Affairs and Culture said yesterday that the document defining the requirements for the Education and Youth Affairs Bureau (DSEJ) to give subsidies to private schools has to be simpler, Alexis Tam told journalists when answering questions about subsidies handed over without any proof of usage.

“Some schools complain that the documents where the procedure to present the required documents is not clear enough. We’re going to analyse this and change it. We want all schools to follow the procedures”, he said.

The Secretary for Social Affairs and Culture also said that the documents that private schools failed to present to DSEJ as proof of use of funds during 2012/2013 had already been delivered.

4 | Business Daily

December 4, 2015

Macau Landing Intl. subscribes HK$960 mln to investment fund

opinion

Oliveira, Jorge Costa Oliveira

H Pedro Cortés

Lawyer* cortes@macau.ctm.net

M

r. Jorge Costa Oliveira, a former Gaming Commissioner of the Macau Special Administrative Region, not to mention a columnist of Macau Business magazine, was recently appointed the new Secretary of State for the Internationalisation of the Portuguese Government.

For those who arrived in Macau after 2010 the name may mean little or nothing, unless they have read old newspapers.

However, Macau has a lot to thank this man for who, together with his outstanding team, helped construct the legal infrastructure for the gaming industry in 2001.

In January of this year, following a kind invitation from Portuguese daily Jornal Tribuna de Macau, I had the opportunity to comment as follows ‘We should take our hats off to people like Jorge Oliveira, António Vilela and Carlos Lobo (…) whom I think are being underutilised by the MSAR Government.” I maintain the same view.

Macau needs the best, the more competent and capable the better, and the team put together by Mr. Oliveira made possible the liberalisation of the gaming industry in 2001-2002, the sub-concessions, the IPO’s of the gaming concessionaires and subconcessionaires plus the traditional financing of the mega projects we now have in Macau.

They even made it possible to have Mr. Wynn sign a concession contract, and Galaxy and its management company (called… Venetian Macau – Sociedade Gestora, S. A.) to settle their disputes after the former had been awarded a concession. Or even to have some tycoons alleging that he and Mr. Wynn were making his life terrible.

Professional meetings with Jorge and his team were really challenging and those that had the opportunity would surely understand that they were in the presence of someone with a helicopter view and with a vision that, unfortunately, was lacking in some of our governors and public servants.

Maybe Macau was and is too small for people like him and others who started their careers in the former Portuguese Territory, like the new Assistant-Minister, Mr. Eduardo Cabrita.

With Jorge as Secretary of State, Macau as a platform for the Portuguese-speaking Countries may, finally, be something real, palpable, and existent.

It is also a great opportunity to have more Macau and Mainland entrepreneurs invest in Portugal and vice-versa. And - why not?

- to possibly consider new gaming and entertainment projects in, to date, the best country in the world one can find to live in or have holidays for so many reasons that I would need an entire newspaper to engrave my diffident thoughts. However, I’m sure my dear readers have more things to concern them than to read me, especially that one who will, by now, be sending me an Italian e-mail message. Am I correct, my dear Jack? * Lecturer at the Chinese University of Hong Kong

Junket Iao Kun’s profit plummets 68 pct in December

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unket Iao Kun Group posted a 68 per cent year-on-year rolling chip turnover in November of US$0.33 billion (MOP2.63 billion) from US$1.05 billion, the company revealed in a filing with NASDAQ. For the first eleven months of the year, the turnover was US$6 billion, which represents an average of US$0.55 billion per month. This means a decline of 62 per cent yearon-year from US$15.92 billion, and an average of US$1.45 billion per month, recorded between January and November one year ago.

The turnover of the company follows the general decline of the

VIP segment, which has been driven by the decline of revenues from VIP baccarat. According to Gaming Inspection and Coordination Bureau (DICJ) data, during the first three quarters of the year total revenue from VIP baccarat declined 41 per cent year-on-year to US$12.31 billion from US$20.85 billion.

Iao Kun is operating in Macau, where it has five VIP gaming rooms in Galaxy, StarWorld, Sands Cotai Central, City of Dreams and Le Royal Arc, and is also currently conducting ‘trial operations’ in Perth and in Melbourne, Australia.

ong Kong-listed casino developer Landing International Development Ltd. has committed to subscribe about HK$960 million (US$124 million) to an investment fund, the company told the Hong Kong Stock Exchange yesterday.

The lock-up period for the fund is 12 months from the subscription date of December 2, according to the filing. The company is to pay an annual management fee of 1.5 per cent per annum of the net asset value of the fund payable monthly in arrears.

The fund invests primarily in companies located in China, Hong Kong, Macau and Taiwan, Landing International said in the filing without specifying the type of businesses the fund is investing in.

‘Looking at the investment portfolio and objective of the fund, the track records of the fund manager and the expected positive development of the economics of Greater China and Singapore with growth in the respective stock market the directors are confident that the investment will generate a higher rate of return than [from a] time deposit account,’ Landing International said.

The Hong Kong-listed casino and property developer has joined hands with Genting Singapore Plc to develop a casino resort project on Jeju Island in South Korea called Resorts World Jeju. The US$1.8 billion casino resort project is slated to open progressively from 2017.

Corporate Macao Water Customer Liaison Group discuss water quality The Customer Liaison Group (CLG) of the Macao Water Supply Company Limited (Macao Water) held its second meeting of 2015 at JW Marriott yesterday. Presentations of performance included a review of water supply & quality improvement, water quality testing on private estates in Macau, customer support survey of 2015 and other activities.

Nacky Kuan delivered a welcome speech, stating that “the company had recently submitted the water supply guiding programme for the next five years to the government. Our pilot project will be the establishment of Sec Pai Van Water Treatment Plant in Coloane. The first phase of the construction with a daily capacity of 100,000 cubic metres is expected to be completed by 2019.”

Ms. Kuan also explained that the completion of the fourth raw water pipeline to Macau, a collaborative project between Guangdong and the Macau SAR Government, will take Macau’s water supply stability and safety to the next level in the future

Business Daily | 5

December 4, 2015

Macau

Realtors: Rent control to negatively impact property market Meanwhile, an academic believes the policy has the possibility of lowering housing costs Kam Leong

kamleong@macaubusinessdaily.com

T

he implementation of rent control will drag down the supply of leased units in the city’s property market, local realtors perceive. They say that the government should not intervene in the free market operation of the real estate sector.

On November 12, the Legislative Assembly passed the first reading of a bill on a new rental regime enabling the Chief Executive to set a cap on rent increase rates based on a coefficient scheme, in addition to establishing an arbitration body to mediate conflicts between landlords and tenants.

Jane Liu, managing director of Ricacorp (Macau) Properties Ltd., told Business Daily in a phone interview yesterday that she believes the bill will force landlords to refrain from leasing their units.

“In the rental market, the return rate is the major consideration of landlords in leasing out their properties. If the return rate is not high of course they’ll consider keeping their property from lease. In fact, the city’s rental return rate is not high compared to other cities. As such, if the rent control provisions are implemented, the supply in the rental market will worsen,” she predicts.

Jeff Wong, head of residential at Jones Lang LaSalle Macau, also agrees that rent control will negatively affect the local real estate market.

“Investors will turn negative when they cannot see incentives for leases in the market. For the long term, they will invest less in their properties in terms of maintenance and management. Such negative effects would not be immediately seen but they will be apparent in one or two years after the implementation [of rent control]. A similar situation has already happened in other countries where there is rent control,” he told Business Daily yesterday.

Don’t intervene in the free market

In fact, both local realtors reckon that the government should not impose

administrative measures to control the natural development of the property market, as the market will adjust based upon market conditions.

Ms. Liu indicated that the property market, without the intervention of the government, already naturally adjusted in the last year.

“At the beginning of last year, to rent a T2 flat in One Central cost some MOP36,000 (US$4,500) per month. Following the downturn of the gaming industry, the rent for a T2 flat in the high-end residence has dropped to some MOP16,000,” she said, adding that the average housing price has plunged by more than 30 per cent from the early 2014 peak of some MOP18,000 per square foot for a new property unit.

The bill on rental regimes, jointly proposed by nine legislators and backed by Chief Executive Fernando Chui Sai On, does not only suggest controlling the growth of rent in the residential segment but also the commercial property market, in order to help local SMEs deal with surging rents.

But the Ricacorp managing director indicated that many landlords, given the current economic adjustment, have reduced their rent for tenants to encourage them to stay.

“Commercial tenants quitting their rental may not necessarily be due to high rents. Dropping business is another factor. For instance, in NAPE shop rents were very high in the past as business there was good. But following the downturn in the gaming industry the business of many shops has been affected, while most landlords are willing to decrease rents for their tenants,” Ms. Liu claimed.

Mr. Wong, meanwhile, indicated that administratively controlling the real estate market is not scientific.

He warned that the control would only increase market uncertainty while further pressuring the rental return rate.

The local property market is too small. We will need to see whether the policy can show its effects on the market Rose Lai Neng, professor of finance, University of Macau

market following landlords’ leasing sentiment being affected.

“As a tenant, of course they will support the policy, as at least they can know the growth rate of rents.

But for landlords, if the housing prices are going up, they would ask why they could not raise their rents.

For the long term, the immediate consequence is that the supply of rental will decrease,” she said.

“Although I tend to support a free market, we may need to ask whether it is good for the market to be fully controlled, especially when the fluctuation is that high,” Ms. Lai concluded.

Cap defined by affordability “We need to note that the property market is not a single one. For example, even in such a small city as Macau, demand and supply are varied in different areas,” the realtor said.

“The market can make immediate adjustments reflecting changes in the market. After all, adjustments are all about supply and demand. Thus, the government should not worry too much,” Mr. Wong thinks.

Academic: Housing prices could drop

Meanwhile, Rose Lai Neng, professor of finance at the University of Macau, told Business Daily that the rent control bill may drag down the city’s housing prices in addition to rent itself.

“The effects of the bill on the rental market may be translated into the housing market, as fair values of property are affected by their cash flows, which are rents,” she said. “The local property market is too small.

We’ll need to see whether the policy can show its effects on the market.”

In the professor’s opinion, the bill is certainly beneficial for tenants.

However, she agrees that the policy would affect the supply in the rental

The draft of the bill suggests the Chief Executive set the cap based upon the city’s consumer price index (CPI) plus the prevailing conditions of the real estate market. Ms. Lai believes that the government should put the affordability of tenants as the major consideration.

“If the government is really to implement such regulations, it should emphasise the component of livelihood, such as analysing the affordability and income of residents.

It cannot only base on one or two general numbers, like the CPI, the percentage of which may not be relevant [to the economic capability of residents],” suggested the associate dean of Faculty of Finance and Business Economics of the University.

“For instance, the government sets the cap based on the medium income but all those whose salary reach the level have their own properties; the cap would not relax the rent pressure for those who earn less than the medium level,” she explained.

The bill still needs an article-byarticle approval by legislators before taking effect. Despite being subject to intensive discussion in the Legislative Assembly last month the draft was initially approved with 28 votes, while one legislator abstained.

6 | Business Daily

December 4, 2015

Macau Imperial Pacific generates US$1.63 bln of VIP rolling chips from Saipan Imperial Pacific International Holdings Ltd. said the VIP table games’ rolling chips at its ‘temporary casino’ on the island of Saipan reached US$1.63 billion (HK$12.65 billion) last month, according to its filing with the Hong Kong Stock Exchange yesterday. The operator launched the VIP gaming operation on November 1 and officially opened the casino on November 27, following a soft opening in July. The casino property has around 45 gaming tables and 106 electronic gaming machines. The operator said in a filing that it would continue announcing its monthly VIP table games’ rolling chips generated by the Saipan business.

Beijing rep: Slight fall in visitor arrivals positive for Macau Representative says growing number of ‘post-80s’ and ‘post-90s’ generation from the Mainland - most of whom are inclined to travel here on the individual visit scheme (IVS) - will stimulate the tourism business

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he slight fall in the city’s visitor arrivals for the first three quarters of this year and the structural change in their profile is not a negative but rather presents a “good opportunity” for the administration to plan tourism resources and build supporting infrastructure, the vicedirector of the China Liaison Office in Macau, Mr. Yao Jian, remarked on Wednesday.

Talking to state-run media stationed in Macau at a gathering, Mr. Yao said that the city’s existing

transport facilities and human resources engaged in the tourism sector can no longer cope with the growth of visitor arrivals, brought about by the rapid increase in the tourism business in the past years since the handover in 1999.

The slight fall seen in inbound visitors so far this year, mostly from Mainland China, actually presented a “good opportunity” for the government’s structuring of tourism resources, building more supporting infrastructure and making plans to introduce more talent

to work here to foster a more sustainable development for the tourism business, Mr. Yao remarked.

The change in the Chinese visitors’ profile is also a positive for the local tourism business to diversify its service mode, the Beijing representative said.

The growing number of ‘post-80s’ and ‘post-90s’ generation from the Mainland, most of whom are inclined to travel here on the individual visit scheme (IVS), will stimulate the tourism business here to adjust and diversify its services, Mr. Yao explained.

He also believed that the increasing hotel room inventory opening in the city in the second wave of casinoresorts would be advantageous to attracting more mass customers as room rates will be driven to a more reasonable range. Their stay in Macau will also likely be lengthened, the Beijing representative posited.

Mr. Yao, who assumed the post as one of the vice-directors of the China Liaison Office here, is a former spokesperson of China’s Ministry of Commerce.

S.L.

Business Daily | 7

December 4, 2015

Casino middlemen squeezed

by Mainland delinquent debtors With the junket business illegal in China, middlemen are forced to conduct their business covertly in the mainland or work from Macau Daniela Wei and Annie Lee

M

acau’s gaming promoters, who loan money to Chinese high-rollers for gambling in the city’s struggling casinos, increasingly find themselves in a new line of business: debt collection.

The so-called junket operators, who use personal connections to lure high-stakes players to the city’s baccarat tables, are collecting only 20 percent to 30 percent of their debts, said Kwok Chi-chung, president of Macau’s Association of Gaming & Entertainment Promoters. In 2013, 70 percent of loans were repaid promptly, he said.

That was before China introduced curbs on illicit money flows and began a campaign against corruption that deterred VIP players, setting Macau’s casino industry on an 18-monthlong downward spiral. High-rollers’ wagers have plummeted at least 70 percent to about HK$200 billion (US$25.8 billion) a month since 2013, according to Kwok, reflecting a plunge in VIP numbers and a diminishing junket cash pool from which they can borrow.

“Getting the money back is a bigger challenge now for junkets than before,’’ Kwok, 60, said in a November 23 interview from his 15thfloor office in Macau, which offers unblocked views of the city’s casinos.

“With a longer payback period, junkets have less money to lend to new customers, and the business size is shrinking accordingly.”

Under pressure from the government in China, authorities in Macau have imposed tougher smoking restrictions in casinos and plan to make junkets adhere to stricter accounting standards, including a requirement to submit monthly financial records and to carry out background checks on senior finance staff.

Stolen money

The changes follow incidents that exposed flaws in the uniquely Macanese industry. Junket operator Dore Entertainment said in September that some of its customers may have been cheated by a former cage manager who is suspected of stealing at least HK$100 million from it. Last year, the disappearance of a Macau middleman left investors struggling to recoup more than HK$10 billion.

The events prompted some investors to withdraw funds from junkets, said Tony Tong, co-founder of Pacific Financial Services Ltd., a Hong Kong-based firm whose services include debt-collection and risk management.

It’s now harder for VIPs to borrow cash for betting with, and for those who don’t repay their loans, junkets have no legal avenue to recover the money in China as gambling debt is illegal on the mainland, he said.

Junkets are now waiting a year to 18 months to get their money, compared with one to six months in the past, according to Tong, who had previously invested in junkets.

‘Begging and hassle’

“It’s very difficult for junkets to collect debt in China,” Tong said, estimating that as much as 50 percent

of all credits to high-rollers are not fully paid when they’re due, and collection often requires “a lot of patience, begging and hassle.”

To cut their losses, junkets are now trying to come up with creative solutions, including packaging bad debts and distressed assets and selling them to third-party financial investors at a discount, he said.

Dwarfing the strip

With 36 licensed gambling halls, the former Portuguese colony supported a gaming industry about five times larger than the Las Vegas Strip in the first 10 months of the year.

Junkets, and the high-rollers they lure, have been integral to that growth. Offering returns of as much as 36 percent a year, these businesses are financed by corporate investors and wealthy residents of Macau and mainland China, providing cash that’s lent at high interest rates to VIP customers for gambling in the city’s casinos. Commissions are earned from casinos as a reward for bringing them high-stakes bettors.

Covert operations

With the junket business illegal in China, these middlemen are forced to conduct their business covertly in the mainland or work from Macau, where they can obtain a license to work legally. The territory had 183 licensed gaming promoters as of the beginning of 2015, down from 218 last year, according to the Gaming Inspection and Coordination Bureau.

Long reliant on personal connections and opaque networks to obtain business, junkets are renowned

It’s now an adjustment period for junkets…

More VIP rooms will be shut. Quality will become the priority when it comes to lending, rather than quantity Kwok Chi-chung , president, Macau’s Association of Gaming & Entertainment Promoters

for eschewing paper trails and transparent accounting in providing discreet services.

Junket services can extend to arranging private jets and limousine transfers, to booking five-star hotel rooms, according to Suncity Group, Macau’s biggest junket operator, according to its website.

To stem ballooning debts, the Association of Gaming & Entertainment Promoters has called for the Macau government to authorize the dissemination of a

blacklist that members could use to identify bad debtors, said Kwok. A law graduate, he joined the Macau Judiciary Police in 1985 and managed its gaming-related crimes, economic crimes and anti-money laundering divisions until his retirement from the force in August 2010.

Credit bubble

Junket operators may have themselves to blame for their debts. In previous years, some of them extended gaming credit to less credit-worthy players, Vitaly Umansky, a gaming analyst with Sanford C. Bernstein wrote in a November 24 report. That created a bubble that’s now burst.

Casinos have shuttered or removed 30 up-scale rooms dedicated to highstakes gamblers over the past four months alone, Kwok said. “It’s now an adjustment period for junkets,’’ the association leader said. “More VIP rooms will be shut. Quality will become the priority when it comes to lending, rather than quantity.’’

The test will come in February, he said, when Chinese celebrate Lunar New Year -- a time when people traditionally settle debts.

“If there’s still much debt uncollected, the liquidity will be too tight for some junkets to survive and we’ll see more closures,” Kwok said.

“Macau won’t return to the heyday.”

That might not be a bad thing, according to Bernstein’s Umansky.

“Longer term, we believe the consolidation in the junket industry would actually be helpful, as it would create more liquid and professional junket operations,” he said.

Bloomberg News

8 | Business Daily

December 4, 2015

Greater China

Standard Chartered shuts down RMB solutions team in the West Standard Chartered formed its RMB solutions group in 2013 as part of a concerted push to create strategies for a range of investors including central banks, sovereign wealth funds and multinational companies Saikat Chatterjee

S

tandard Chartered PLC has shut its renminbi (RMB) solutions group in the United States and Europe, according to a person with knowledge of the matter, as part of major restructuring that has forced the lender to take an axe to one of the industry’s fast-growing businesses.

The move to cut the department comes at a time of growing prospects for the Chinese currency in global international trade and as other financial institutions jostle to build up their Chinafocused franchise in the West.

“RMB business is one of the top priorities for Standard Chartered as recently highlighted by our Group Chief Executive and we continue to invest in our RMB capabilities,” the bank said in an emailed statement to Reuters.

“We have the right people in the right markets to ensure we offer our clients, including those in Europe and in the United States, a full suite of RMB solutions from trade settlement and clearing, to FX trading and hedging, to offshore CNY debt raising,” it said, referring to Chinese yuan (CNY), an alternative name for the renminbi.

In a landmark move this week, The International Monetary Fund admitted the yuan into its benchmark currency basket, in a victory for Beijing’s campaign for recognition as a global economic power.

Standard Chartered formed its RMB solutions group in 2013 as part of a concerted push to create strategies for

November services index slows to 51.2 Business confidence crept up slightly from October’s record low but remained historically weak

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ctivity in China’s services sector expanded at a slower pace in November, a private survey showed yesterday, as new orders weakened.

The Caixin/Markit Purchasing Managers’ Index dropped to 51.2 in November from a three-month high in October of 52.0.

A reading above 50 points signifies growth on a monthly basis, while one below that points to a contraction.

New business rose at a slower pace of 51.1, down from 52.9 in October, showing weaker domestic and external demand while employment in services

rose only marginally, with the smallest increase in three months.

Business confidence crept up slightly from October’s record low but remained historically weak.

There was a third consecutive contraction in prices charged, even though input prices increasing, with the survey noting reports of greater competition for new business.

With services now contributing more to the economy than old drivers such as manufacturing, Chinese authorities have hoped the sector will more than offset persistent contraction in factory activity.

KEY POINTS Nov Caixin services PMI slips from Oct’s 52.0 New business sub-index at 51.1 vs 52.9 in Oct Employment in services increases only marginally

a range of investors including central banks, sovereign wealth funds and multinational companies who were seeking opportunities to profit from the opening up of China’s capital markets.

To further that initiative, Carmen Ling was appointed as global head for the RMB solutions group in 2013 based out of Hong Kong.

Caroline Owen was appointed regional head of the Americas and Alexandra Gropp was appointed executive director in Europe. Both, along with two other employees in that group, have left the bank in the last three months, according to the person, who was not authorised to speak publicly on the matter and so declined to be identified.

Standard Chartered was one of the early movers in this space, helping McDonald’s Corp raise 200 million yuan (US$31.26 million) in 2010 which opened the offshore market for foreign issuers borrowing in the Chinese currency.

It was also part of a series of other landmark deals such as the U.K. government with its inaugural dim sum issue which was the first issuance ever by a non-Chinese sovereign.

Last month, the bank said it planned to axe 15,000 jobs and raise US$5.1 billion by selling new shares as its new chief executive set out a plan to restore profitability after three years of falling profits and strategic mistakes.

Reuters

Indeed, a composite Caixin PMI reading combining manufacturing and services turned positive for the first time in four months in November.

“This shows that the macro economy has moved further toward stable growth and the economic structure is improving,” He Fan, chief economist at Caixin Insight Group, said.

“Future fiscal and monetary policies must be coordinated and large-scale stimulus should be avoided as much as possible.”

On Tuesday, China’s official services survey showed on growth in the sector improved with the nonmanufacturing PMI up half an index point to 53.6.

China’s official PMI for manufacturing, also released on Tuesday, showed factory activity hitting a 3-year low in November, fuelling concerns about the country’s weak economic expansion.

Reuters

Business Daily | 9

December 4, 2015

Greater China

ADB revises forecast for 2015 economic growth higher The Manila-based lender maintained its growth projections for developing Asia at 5.8 percent in 2015 and 6.0 percent in 2016

The region’s growth is supported by vibrant private consumption in China and expanded industrial production in India and other countries Shang-Jin Wei, ADB chief economist

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he Asian Development Bank has raised its 2015 economic growth forecast for China slightly, supporting expectations the world's second largest economy will avert a hard landing this year.

China's economy is now expected to clock growth of 6.9 percent in 2015, up from a previously expected 6.8 percent, the ADB said in its outlook update released yesterday.

The agency maintained its 2016 forecast for growth at 6.7 percent.

"Despite an on-going housing overhang and excess industrial capacity, China's economy has remained resilient, supported primarily by private consumption and services," ADB said in a statement,

adding fiscal and monetary stimulus measures should continue to provide support.

The Manila-based lender maintained its growth projections for developing Asia at 5.8 percent in 2015 and 6.0 percent in 2016, a testament to the region's resilience to continued weakness in advanced economies.

"The region's growth is supported by vibrant private consumption in China and expanded industrial production in India and other countries," said ADB chief economist Shang-Jin Wei. The region, which groups 45 countries in Asia-Pacific, grew 6.2 percent in 2014.

The ADB kept its growth forecast for India unchanged at 7.4 percent for this year and 7.8 percent for next year.

It lowered its growth outlook for Central Asia to 3.2 percent from 3.3 percent for 2015 and 3.7 percent from 4.2 percent for 2016, but maintained estimates for East Asia and South Asia.

Southeast Asia is still seen growing 4.4 percent this year and 4.9 percent next year even as the ADB downgraded its growth forecast for Indonesia, due to slow government spending and weak exports.

Inflation in developing Asia in 2016 is now forecast to be slightly lower at 2.7 percent, compared with the 3.0 percent seen in September.

Reuters

Evergrande extends buying spree with US$2 billion deals A recovery in China’s residential property market prompted Evergrande to raise its 2015 sales target 20 percent in November after sales jumped

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wholly-owned subsidiary of Evergrande Real Estate Group Ltd. has agreed to buy 13.5 billion yuan (US$2.1 billion) of assets from a unit of New World China Land Ltd., capping a multi-billion dollar shopping spree by the Chinese developer this year.

The Evergrande unit will buy a project and loans in the provinces of Hainan, Guangdong and Hubei, according to statements from the developers to the Hong Kong stock exchange.

Evergrande, China’s third-largest developer, has been an aggressive investor, announcing US$6.8 billion worth of acquisitions this year, according to data compiled by Bloomberg. The developer paid a record US$1.6 billion last month for Mass Mutual Tower in Hong Kong, and diversified into insurance with the purchase of a 50 percent stake for

US$610 million in Great Eastern Life Assurance Co.’s Chinese joint venture.

“Evergrande’s sales are strong this year and they would need to replenish their land bank,” said David Hong, a Hong Kong-based director of China Real Estate Information Corp.

“Buying these landbanks at such costs will definitely be less expensive than bidding at government auctions.”

A recovery in China’s residential property market prompted Evergrande to raise its 2015 sales target 20 percent in November after sales jumped, becoming the first among domestic peers to do so. Evergrande shares have doubled this year.

‘Scarce resources’

The Evergrande unit will buy a project and loans associated with it in Haikou, the capital of the island province of Hainan, for 8.6 billion yuan; a development and loans in Huiyang

in Guangdong province for 1.1 billion yuan, and two projects and debt in Wuhan in Hubei province for 3.8 billion yuan, according to statements from the developers to the Hong Kong stock exchange.

The existing properties and land in Haikou are “scarce resources,” located in a high-end residential area in Haikou City, while the Huiyang project is focused on the high-end consumer groups in Shenzhen, Evergrande said in its statement.

Property prices in Shenzhen, which borders Hong Kong, have led gains nationwide this year.

New World China estimates it will make a net gain of HK$2.9 billion (US$374 million) from selling the Wuhan projects, HK$77 million from the Huiyang disposal and HK$3.6 billion from the Haikou deal, it said in its statement.

Bloomberg News

Beijing plans internationally competitive agricultural firms China will aim to establish a number of internationally competitive agricultural firms by 2020, the State Council said on Tuesday. It released a guideline on land reclamation reforms saying, “By restructuring reclamation areas and innovating in the operation mechanisms of farms, China aims to build a number of large-scale agricultural groups that are effectively managed and adaptable to the market economy.” The guideline also encouraged Chinese reclamation firms to step out of the country through establishing joint ventures with foreign firms or conducting mergers and acquisitions, and stressed the importance of introducing advanced technology and management mechanisms to domestic firms.

First self-built cruise liner A Chinese company is planning to build China’s first cruise ship, tapping booming tourist demand in the country.

Shanghai Waigaoqiao Shipbuilding Co., Ltd. said on Wednesday that it will build the ship with technical support from Italian shipbuilder Fincantieri, with construction starting in 2017 and hopefully completing in 2020. Parent firm China State Shipbuilding Corporation along with the China Investment Corporation will set up a joint venture with 2.6 billion British pounds with America’s Carnival Cruise Lines to purchase the vessel.

Former Yunnan official sentenced for taking bribes Shen Peiping, former vice governor of Yunnan Province, was sentenced to 12 years in prison for accepting bribes worth around 16 million yuan (US$2.5 million), a Beijing court announced yesterday a guilty verdict. Two million yuan of Shen’s personal assets will be confiscated, according to the ruling of the Beijing Municipal No. 1 Intermediate People’s Court. Shen’s real estate property has already been seized, the court said. Shen pleaded guilty, saying not to appeal.

Geely wades into ride-hailing services

China’s automaker Geely has plans for its own app to join the scramble for China’s ride-on-demand services. The Hangzhou-based auto firm, which owns formerly Swedish carmaker Volvo, has set up a new firm to develop a ride-hailing app that is currently on a trial run in the eastern Chinese city Ningbo, which will soon expand to include Shanghai, Hangzhou and Kunming. Unlike competitors Didi and Uber, which use private cars, Geely is planning a fleet of its own vehicles.

Several similar services are building their own fleets to swerve around regulatory uncertainties in the use of private cars.

10 | Business Daily

December 4, 2015

Greater China

Young entrepreneurs plunge into sharing economy In China’s most recent five-year plan for economic development, officials have highlighted the sharing economy as a way to help the country navigate a tricky path from export-led growth to consumption

Internet ubiquity has unchained an explosion of sharing services all over the world

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wo decades ago, Tyler Xiong and his parents had to live in a commune guided by the strict socialist teachings of Mao Zedong.

Today Xiong, a 28-year-old tech entrepreneur, voluntarily lives among 500 people in a co-sharing community near Beijing’s Silicon Valley. Xiong has two pairs of shoes and fewer than 10 outfits. He has no use for a car and uses Didi Taxi, a local Uber equivalent.

His philosophy: if you can rent it, why own it.

Faced with a widening wealth gap and the slowest economic growth in more than two decades, millions like Xiong find themselves priced out of the big cities and are rejecting the consumer trappings of a modern lifestyle. Instead, they’re embracing the sharing economy to a far greater degree than their Western counterparts. In a recent survey, Nielsen found that 94 percent of Chinese are willing to share, compared with just 43 percent of North Americans, making them by far the most receptive to the concept.

The historical irony of living and working in a shared community is not lost on Xiong, who says: “It’s a bit eerie, because when we were growing up we were forced to reside in stateowned communes. The difference is now I chose to be here and that’s why I’m happy.”

Xiong is one of nearly 5,000 people across China who have moved into co-living spaces called You+, a name meant to inspire young people to infinitely expand their horizons. His community, located in a shuttered school, holds business workshops, helps register companies and is now trying to create a database to match skills and relationships. About 60 start-ups call the Beijing location home — developing mobile games, services that improve sleep patterns and much more.

You+ echoes a similar movement in the West, where start-ups with

names like Common (U.S.), Nest Copenhagen (Denmark) and Sende (Spain) are selling mostly young urbanites on the co-living lifestyle.

Backed by China’s Lei Jun, founder of smartphone giant Xiaomi Corp., the You+ project will by year-end have almost 20 such communities across China, mostly in such big cities as Beijing, Shanghai and Guangzhou.

For as little as about US$500 a month, You+ residents gain access to a private room with a bathroom, co-working space that functions as an office, and entertainment facilities including a bar, disco and game room.

“Instead of working for years at a company to gain some capital, such a place allows young people to experiment with their start-up ideas at very low costs,” says Su Di, the 36-year-old You+ co-founder who lives with his wife in the same block as Xiong. “They meet new people, gain new ideas constantly, and that’s why more people are embracing it.”

As Xiong sees it, China’s communal history combined with his generation’s embrace of social and economic change, is driving the rapid growth of the sharing economy — a concept with an unsettled definition but characterized

by PricewaterhouseCoopers as a way to make money by renting out underused assets such as a parked car or temporarily vacant apartment.

Communal living slots in neatly, Xiong says.

“There’s an element of brainpower sharing when people bounce ideas off of each other in a space like this,” he adds. “In a sense the brain is the underused asset.”

The sharing economy will generate US$335 billion by 2025, up from US$15 billion today, according to PWC. China has no shortage of local champions in this sector. Didi Taxi, Uber’s largest local competitor, is currently valued at about US$16.5 billion. Tujia, a local version of

It’s a bit eerie, because when we were growing up we were forced to reside in stateowned communes.

The difference is now I chose to be here and that’s why I’m happy Tyler Xiong, tech entrepreneur

Airbnb, joined the US$1 billion dollar club in August. Equivalent services for apparel, sports equipment and even pets are popping up all over the country.

“The sharing economy is a new economic system that is entering the world stage,” says Jeremy Rifkin, an economist and author of The Zero Marginal Cost Society. “Capitalism the parent has nurtured this new child, and let it grow and find its new identity.”

Xiong’s own evolution reflects a generational shift in attitudes toward wealth, social status and well-being.

During China’s go-go years, young men and women flocked to the booming coastal cities and set about acquiring the material possessions their parents never had: apartments, cars, fancy vacations. At first, Xiong was much the same. Growing up in the heartland city of Chongqing, he moved to the coastal province of Jiangsu to study food science and engineering. He became one of the

few in his class to land a job at a multinational corporation.

But after two years working in Shanghai as a manager at chewing gum maker Wm Wrigley Jr, Xiong decided the rat race wasn’t for him.

He took off to Spain to study Austrian Economics; last year he co-founded a Bitcoin startup in Beijing.

“In the past I would always stay at five-star hotels,” Xiong says. “Now I stay in tiny places, but I don’t think this is necessarily a step back. This doesn’t define your social status.”

These days, he shares a bedroom with three others, each paying about US$300 a month. Xiong originally wanted to stay at You+ temporarily but ditched his plans of moving out after becoming good friends with his roommates. The four occasionally rent out one of the spare beds through Airbnb to earn cash and meet new people.

Despite the fact that his company generated about US$3 million worth of Bitcoin last year, his bed is a single mattress on a concrete floor, under a loft bed. He prefers to invest his money back into the start-up and the digital currency.

Near the building entrance stands a bulletin board full of pink and yellow post-its looking for service swaps — a back rub in exchange for walking a dog, for example. There are also job postings for the community’s 60-some start-ups.

“Seeking idealistic coder with passion to change our world,” one shouts. “Not a conformer of existing rules?” another says. “We want you.”

Like any communal arrangement, You+ has rules. Married couples are welcome but kids aren’t allowed because the lifestyle isn’t deemed conducive to raising a family. People over 45 are discouraged, but it’s not a hard and fast rule. Wealth is no bar; the founder of a popular restaurant chain lives in Xiong’s community and hundreds of people occasionally share hot-pot meals.

Residents are expected to cooperate and collaborate. On the door of the public kitchen at the Beijing location is a notice with a QR code inviting residents to join a group via the instant messaging app WeChat. They discuss rules, split costs and divide cleaning duties — without supervision.

Of course, living with other people can seem like fun until conflicts arise. Noisy roommates is a common complaint. That’s why a You+ project in Guangzhou now holds a semiannual election to pick the most beloved — and unpopular — residents to encourage best behavior.

“This experiment just started,” says Su, the You+ co- founder. “But you can imagine there will be real consequences for people.”

Some say the You+ concept isn’t especially new and compare it to the communal Kibbutzim that sprang up last century in Israel. Xiong says what makes it different from the communes of his parents’ generation is respect for private property and the way technology allows one to share something rather than own it outright.

“I am a person of my times,” he says. “But this is also my choice.”

Bloomberg News

Business Daily | 11

December 4, 2015

Asia

Southeast Asian businesses want details on Asean Community plan The economic integration that Asean envisions would make it a larger trading bloc than the EU Sharon Chen

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usiness leaders in Southeast Asia are seeking more clarity on the region’s march toward a common community after policy makers unveiled a new road map following missed targets for economic integration this year.

Having clear guidelines and a framework will make the 10-member Association of Southeast Asian Nations’ plan to create its Asean Economic Community go faster, Wouter Van Wersch, Southeast Asia president and CEO at General Electric Co., said at the Bloomberg Asean Business Summit conference in Bangkok.

Asean leaders adopted a blueprint for the AEC in 2007, where they aimed to create a single market that would include allowing the free flow of investments and capital across a region that is home to more than 600 million people. The group said last month it will now attempt to complete measures unfinished in an eight-year plan by the end of 2016 after missing the end-2015 goal.

“Asean is about consultation and consensus -- the governments need to take a stronger ownership of the AEC and push it through,” said Van Wersch. “What we need is stability. We need a clear framework to invest.”

The economic integration that Asean envisions would make it a larger trading bloc than the EU and a potential economic and political counter balance to China.

Signing ceremony of the Asean Community

What we need is stability. We need a clear framework to invest Wouter Van Wersch, Southeast Asia, president and CEO, General Electric

An Asean scorecard showed that as of end-October, the grouping had implemented 79.5 percent of measures committed under the AEC. Among prioritized measures, the rate was 92.7 percent. “The harmonization of the capital markets has already taken place --standardization has started in financial markets,” said Michael Zink, head of Southeast Asia at Citigroup Inc., citing the ability to easily issue bonds to all 10 countries. “It’s unrealistic to expect perfection. We just need to know what the rules are.”

The AEC will lift the region’s visibility over the next 10 to 15 years,

said Glenn Maguire, an economist at Australia & New Zealand Banking Group Ltd. Yet the experience of the European debt crisis highlights the need for strict structures around financial integration and cross-border lending, he said.

“Having a good network and government support will be crucial” in a region with diverse cultures, said Noni Purnomo, president director of taxi company Blue Bird group in Indonesia. “One of the challenges for us to go outside Indonesia is to find the right partner to develop the industry together.”

Bloomberg News

Japan’s biggest oil refiners agree to merge The new company aims for more than US$810 mln in annual savings within five years Tsuyoshi Inajima and Ichiro Suzuki

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X Holdings Inc. and TonenGeneral Sekiyu K.K., Japan’s two biggest oil refiners, said they intend to merge in April 2017 through a share swap, creating a company with control of more than half the country’s gasoline market.

The companies plan to reach a final agreement in August that will include a merger ratio, according to a statement yesterday. The new company aims for more than 100 billion yen (US$810 million) in annual savings within five years, they said.

The merger comes as Japan’s government encourages refiners to consolidate and cut processing capacity amid declining fuel demand because of a shrinking population and the shift to more energy-

efficient cars. The new company would be the biggest competitor to Idemitsu Kosan Co. and Showa Shell Sekiyu K.K., which agreed to merge last month into a company controlling about a third of Japan’s gasoline market.

“While we would pursue efficiency and rationalization, we are aware that’s not enough to compete with foreign competitors in the time range of 10, 20 and 30 years,” Yukio Uchida, president of JX Holdings, told reporters in Tokyo.

That recognition prompted the two companies to agree on a deal that would help improve their competitiveness, Uchida said.

Integration steps

By reducing the number of refiners to two major

companies, the industry as a whole would likely see better refining margins, Syusaku Nishikawa, an analyst at Daiwa Securities Co., said by phone yesterday prior to the announcement.

The companies plan to consider merging and scrapping refineries and oil terminals and integrating operations in the Kawasaki area south of Tokyo, where they have ethylene plants, according to the statement.

There will be “no sacred cows” when deciding which refinery will survive or be scrapped, Uchida said.

Demand for oil-related products will fall about 6.8 percent in the five years through the end of March 2020, according to a forecast in April by the Ministry of Economy, Trade and Industry.

The companies will determine the share swap ratio by considering factors such as the market values of the two companies and the valuations made by financial advisers, according to the statement.

TonenGeneral shares rose 1.1 percent to close at 1,200 yen in Tokyo, while JX gained 2.7 percent. The benchmark Nikkei 225 Stock Average was little changed.

Bloomberg News

12 | Business Daily

December 4, 2015

Asia

Thai consumer sentiment rises to 6-month high The university said in a statement consumers still worried about economic uncertainties Kitiphong Thaichareon

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hai consumer confidence rose for a second straight month in November to its highest in six months, a university survey showed yesterday, boosted by economic stimulus steps aimed at pulling the economy out of a year-long rut.

Southeast Asia’s second-largest economy is still struggling after an army coup in May 2014 ended months of political unrest as exports

KEY POINTS Index at 74.6 in Nov vs 73.4 in Oct - university survey Sentiment lifted by govt stimulus measures Economy is recovering but still fragile – professor

remain weak and consumption crimped by high household debt.

The consumer confidence index of the University of the Thai Chamber of Commerce climbed to 74.6 in November, its highest since May. The index was at 73.4 in October the first time it rose in 10 months.

The university said in a statement consumers are hopeful the economy will be supported by recent stimulus measures, but are still worried about economic uncertainties, so spending may not pick up much for now.

In a bid to spur the economy, the junta approved various measures aimed at helping rural areas, smaller firms and home buyers.

“Consumer confidence is likely to be on an uptrend after rising for two consecutive months,” Thanavath Phonvichai, an economics professor at the university, told a news conference.

“Every index suggests the economy is getting better but the recovery is still fragile. People did not say the economy is fully in good shape but it’s still recovering,” he said.

The state planning agency forecast the economy would grow 2.9 percent this year and 3.0-4.0 percent next year. Growth last year was the weakest in three years at 0.9 percent.

“I’m relatively confident. The economy is quite stable, but I don’t know if there will be any uncertainties, so I have to be cautious,” said Patompol Panutumpon, a 34-year-old game developer in Bangkok.

“Next year I will get married and plan to have kids. I will need to save up considerably. I will have to cut my purchases but I will still be spending.”

A shopping mall in Bangkok

Reuters

EU, Vietnam sign free trade deal Vietnam exports mobile phones and other electronics, footwear and textiles, and agricultural products including coffee, rice and seafood to the EU

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he EU and Vietnam yesterday signed a free trade deal that removes nearly all tariffs between Europe and one of the world’s last communist states.

“Today’s signature is not the end of our relations but

the beginning of far more ambitious ties. The EU and Vietnam can do great things together,” said EU Commission head JeanClaude Juncker after talks with Vietnamese Prime Minister Prime Minister

Nguyen Tan Dung.

The agreement followed two and a half years of intense negotiations between the 28-nation European Union and Vietnam, whose two-way trade has grown three-fold to 28 billion euros (about

US$30 billion) in the last 10 years.

The EU and Vietnam in August reached an agreement in principle and only had a few legal hurdles to overcome to finalise the deal.

In a statement, EU Trade Commissioner Cecilia Malmstroem called the deal “a new model for trade policy with developing countries”.

The agreement, which follows a similar one with Singapore last year, was a milestone in EU ties with the 10-member Association of Southeast Asian Nations (ASEAN), which includes Vietnam and Singapore, she said.

“Our ultimate goal is to have a region-to-region

agreement,” the former Swedish politician said in August.

The EU is holding separate talks with two other ASEAN members, Malaysia and Thailand, to secure similar free trade agreements.

The agreement is the first that the EU has concluded with a developing country and will remove more than 99 percent of tariffs on goods traded between the two economies over a period of up to seven years.

Vietnam exports mobile phones and other electronics, foot ware and textiles, and agricultural products including coffee, rice and seafood to the EU. EU exports to Vietnam, meanwhile, are dominated by high-tech products including electrical machinery and equipment, aircraft, vehicles and pharmaceuticals.

The EU and Japan are also negotiating a free trade agreement. Brussels and South Korea already have a free trade agreement.

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AFP

Business Daily | 13

December 4, 2015

Asia

South Korea converts monks and priests to taxpayers

Cambodia’s construction industry attracts US$2.9 bln

In a reflection of the issue’s sensitivity, the new bill has a lengthy built-in time delay, only coming into effect from the start of 2018 Giles Hewitt

Cambodia’s construction sector has attracted a total investment of US$2.9 billion in the first eleven months of 2015, a 27-percent rise year-on-year, Minister of Land Management, Urban Planning and Construction Im Chhun Lim said yesterday. Of the investment capital this year, US$1.58 billion were invested in 56 high-rise buildings from 10 to 55 floors, he said. “It strongly appears that 2015 is the year of development in condominium and apartment buildings,” he said during the opening ceremony of the fourth construction industry expo.

Construction is one of the pillars supporting the economy.

ADB chief doesn’t expect US hike to trigger financial crisis Asian Development Bank President Takehiko Nakao said yesterday he did not expect U.S. interest rate hikes to trigger the return of a financial crisis in Asia, but the bank stood ready to lend support for countries vulnerable to “challenges”. The U.S. Federal Reserve is widely expected to raise interest rates for the first time in almost a decade at its next meeting Dec. 15-16, raising some concern about capital flows out of Asia and emerging economies. But Nakao, a former Japanese vice finance minister for international affairs, said Asia’s financial systems had strengthened since the crisis of the late 1990s.

South Korean monks

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fter a debate stretching back more than 40 years, South Korea’s parliament has approved a bill that will finally compel the country’s influential clergy to pay taxes.

The bill was passed shortly before midnight Wednesday by 195 votes to 20, with 50 legislators abstaining.

It has been a long road to legislation, with previous efforts to bring monks, priests and pastors into the national tax fold being repeatedly foiled by vehement clerical opposition and political timidity.

In a reflection of the issue’s sensitivity, the new bill has a lengthy built-in time delay, only coming into effect from the start of 2018.

Kang Seog-Hoon, a legislator with the ruling Saenuri Party, said the grace period would be used to communicate with religious groups “so that the policy can settle down without turbulence”.

South Korea has an estimated 360,000 priests and monks whose earnings will be re-classified as “religious income” rather than the current label of “honorarium”.

A sliding bracket means those earning 40 million won (34,500 dollars) or less a year will only be

Taxing religious practitioners equates religious activities with commercial activities Commission of Churches in Korea

taxed on 20 percent of their income.

At the upper end, those earning more than 150 million won will have to pay tax on 80 percent of their income.

Public opinion polls have long favoured extending tax responsibilities to religious groups, some of whom are highly secretive about their financial arrangements.

“Pastors who receive benefits and gifts outside of their monthly income and do not pay income taxes can be perceived as not doing their duties as members of the community,” said Kim Ai-Hee, secretary general of the Korean Christian Alliance for Church Reform.

Muscular religious faith

For many first-time visitors to Seoul, a common take-away memory is the surprising multitude of neon crosses glowing across the South Korean capital’s nightscape.

The theory that prosperity and socio-economic development tend to breed secularism holds little water in a country where modernity appears to have fuelled religiosity.

In the last national census to include religious affiliation, conducted in 2005, close to 30 percent of South Koreans identified themselves as Christian, and 23 percent as Buddhist.

Catholic priests have voluntarily paid income tax since the mid-1990s, and the most vocal opponents of the new policy are within the larger Protestant community which wields considerable political clout.

Some individual Protestant churches boast enormous congregations and considerable wealth, and are run like mini-fiefdoms with pastors passing control of the church and its business down to their children.

Last year, the pastor of the biggest congregation of all, at the Yoido Full Gospel Church in Seoul, was handed

a three-year suspended jail term for embezzling millions of dollars.

But the opponents of taxation insist their stance is grounded in principle rather than self-interest.

“Taxing religious practitioners equates religious activities with commercial activities,” a conservative Protestant group, the Commission of Churches in Korea, said in a statement.

A spokesman for the commission, Choi Kwi-Soo, also noted that Protestant pastors who, unlike monks and Catholic priests, generally marry and have families, would be hardest hit.

“They are different from monks or priests who can live on a relatively meagre income. That should be taken into account,” Choi told AFP.

Fears of a backlash

Attempts to tax the clergy date back to 1968 when Lee Nak-Yeon, the first head of the National Tax Service, argued they should not be exempt from what amounted to a basic civic duty.

Lee’s baton was picked up many times over the years, most recently in 2013 when the government pushed to legalise taxes but then folded in the face of strong opposition from powerful religious figures.

South Korea holds parliamentary elections in April next year, followed by a presidential vote at the end of 2017, and many observers say those events are the real reason for the tax bill’s two-year grace period.

The protestant church enjoys substantial political influence in some constituencies, and MPs from the conservative Saenuri Party fear they will be the main victims of any backlash.

Supporters of the bill are concerned that the 2018 start date leaves the policy vulnerable to political changes that could delay implementation.

AFP

S.Korea’s Q3 GDP revised up to 1.3 pct South Korea’s gross domestic product (GDP) was revised up by 0.1 percentage point to 1.3 percent, central bank data showed yesterday. Real GDP increased 1.3 percent in the third quarter from three months earlier, up from a preliminary figure of 1.2 percent, according to the Bank of Korea (BOK). It marked the highest in more than five years since the second quarter of 2010 when the economy expanded 1.7 percent. The brisk growth stemmed from upbeat housing market conditions and the government’s measures to stimulate private consumption.

Indian PM leaves for Chennai to take stock of floods

Indian Prime Minister Narendra Modi yesterday left for the southern state of Tamil Nadu’s capital Chennai to take stock of the flood situation there.

“Leaving for Chennai to take stock of the situation arising due to the devastating floods,” Modi tweeted minutes before leaving for the city. Chennai has been reeling under heavy showers and remains cut off with road, rail and air traffic, while the death toll in rain- related incidents in the state has touched 200.

The airport has been shut down, so do school and colleges in the city. Many offices have become makeshift shelters for flood-affected people.

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December 4, 2015

International French quarterly jobless rate reaches 18-year high France’s unemployment rate rose to 10.6 percent in the third quarter, its highest quarterly rate since 1997 and up from a revised 10.4 percent in the previous quarter, data published by the INSEE national statistics office yesterday showed. The figures will make grim reading for French President Francois Hollande before regional elections this weekend where his Socialist Party is expected to take a drubbing. He has said he will not stand for re-election in 2017 if he cannot get unemployment down. French unemployment reached a high of 11.2 percent in the first, second and third quarters of 1997.

Barclays sells Italian branches Barclays is to sell its Italian bank branches to CheBanca!, the retail arm of Mediobanca, and take a 200 million pound (US$298.52 million) loss on the deal. Mediobanca said yesterday CheBanca! would buy 89 branches with 220,000 clients, residential mortgage loans worth 2.9 billion euros (US$3.1 billion) and 620 staff. The sale marks part of plans by Britain’s third biggest bank to shed continental European retail banking operations as part of its retreat from businesses that are unprofitable or lack scale.

GE in talks to sell business part in Germany, France GE said yesterday it had signed a memorandum of understanding with Banque Federative du Credit Mutuel (BFCM) for the potential sale of its Equipment Finance and Receivable Finance businesses in France and Germany. The potential transaction, subject to approval by regulatory and anti-trust authorities, would represent an ending net investment of US$7.5 billion, the company said. In April, GE presented a restructuring plan that aims to shed most of its finance unit and return as much as US$90 billion to shareholders, thereby becoming a “simpler” industrial business instead of a hybrid of banking and manufacturing.

OECD says recovery in tax revenue no thanks to companies Governments are increasingly seeking to change the way international companies are taxed to prevent them from shifting profits to low-tax jurisdictions

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overnments’ tax takes have returned to pre-crisis levels, with households bearing a heavier burden while companies get off lightly, tax revenue data released by the Organisation for Economic Cooperation and Development (OECD) showed yesterday.

Total tax revenue averaged 34.4 percent of economic output in 2014 among the 30 OECD countries that have reported figures, the Paris-based organisation said.

Standing at 34.1 percent in 2007, the overall tax burden dropped afterwards as the 2008-2009 financial crisis weighed on economic activity and governments’ tax revenues. By 2009, the figure had fallen to 32.7 percent.

“Revenues took a hit during the crisis. They have been on a steady path to recovery since and they have now reached a point higher than they were before the crisis,” OECD tax policy and statistics head David Bradbury told Reuters.

“But when we look at the composition of the taxes being collected, there has been a decline in corporate income taxes,” he added.

Taxes on corporate income have on average remained stable across OECD countries in recent years at about 2.9 percent of GDP after falling from 3.6 percent before the crisis.

Meanwhile, taxes on personal

income have rebounded to 8.8 percent of GDP, where they were before the crisis, while consumption taxes have reached 10.3 percent, higher than the 10.1 percent they were at in 2007.

Governments are increasingly seeking to change the way international companies are taxed to prevent them from shifting profits to low-tax jurisdictions, supporting OECD proposals to that effect.

Yellen sees US economy ready for rate hike

Nigeria cuts MTN fine She said she expected an upturn in US by more than a third federal and state government spending Nigeria has cut a fine imposed on MTN Group by more than a third to US$3.4 billion would support strong growth and given the South African mobile phone operator until the end of the year to pay it, the company said yesterday. The Nigerian Communications Commission handed Africa’s biggest mobile phone company the penalty in October after MTN failed to cut off users with unregistered SIM cards from its network. Nigeria, MTN’s biggest market, has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity.

German start-up launches pan-European bank Number26 is looking to succeed where traditional lenders have struggled, by relying on mobile phones to build a true pan-European bank. The German financial services start-up is expanding into six European markets, making it the first mobile phone bank to straddle the region’s borders, it said on Thursday. Number26 is entering France, Italy, Spain, Slovakia, Greece and Ireland, the latter being a test for moving into Britain, and eventually plans to develop a continent-wide bank.

Paul Handley

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ederal Reserve Chair Janet Yellen stoked expectations of a looming rise in the benchmark federal funds rate, saying she expects the US economy will continue to grow strongly.

In a Washington speech, Yellen described conditions as nearly ripe for the first rate increase in nine years and said that domestic and international threats to US economic growth had diminished.

Moreover, she warned, after having locked the rate near zero for seven years, waiting too long could pose big risks to the economy and financial markets.

Yellen made no comment on whether the Fed will raise its benchmark federal funds rate at its next meeting on December 15-16.

But in a sign that she is ready for the momentous step, she told the Economic Club of Washington that,

after many months of the buildup to a rate increase, when it does happen, it is a day she is “looking forward to.”

Yellen said she still sees slack in the US jobs market and that inflation remains weak, both issues that have prevented the US central bank from tightening monetary policy throughout this year.

But she believes that a sustained pace of growth over the next few years will take the jobs market toward full employment and spur an eventual uptick in prices, she said.

At the same time, even if those goals are not likely to be quickly attained, Yellen warned that putting off a rate raise much longer has its own risks.

If the Fed waits too long, she said, “we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals.”

The OECD’s 2014 data showed that Denmark retained its position as the member country with the highest tax burden at 50.9 percent of gross domestic product, followed by France at 45.2 percent.

On the other end of the spectrum, Mexico had the lowest tax burden at 19.5 percent of GDP followed by Chile at 19.8 percent.

Reuters

“Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession.”

Long-awaited move

Yellen’s comments immediately heightened expectations that the Federal Open Market Committee (FOMC), the Fed’s policy board which she leads, will decide in its coming meeting to hike the fed funds rate.

The rate has sat at 0-0.25 percent since December 2008, in an extraordinary effort to bring the US economy back from the Great Recession of 2008-2009.

Analysts, though, cautioned that coming economic data, if poorer than expected, could change the mood in the FOMC. On Tuesday the ISM index for the manufacturing sector showed a contraction in November, the first such setback in three years.

On the other hand, the Fed’s Beige Book regional economic survey, released after Yellen spoke, supported her picture of a mostly healthy economy progressing steadily.

The focus is now on the November national employment report on Friday. It is expected to be moderately good, but if it surprises significantly on the downside, it could reverse expectations.

Yellen stressed that though she saw some risks to US growth, they were diminishing. The threat posed by slower global growth, including China’s downturn, has lessened since midyear, she said.

AFP

Business Daily | 15

December 4, 2015

Opinion Business

wires

The great policy divergence

Leading reports from Asia’s best business newspapers

Mohamed A. El-Erian

Chairman of US President Barack Obama’s Global Development Council

THE KOREA HERALD The Asian Development Bank cut its outlook for South Korea’s economic growth for next year to 3.3 percent from a previous 3.4 percent, citing sluggish exports. However, South Korea’s economy is expected to recover in the coming quarters, backed by strong stimulus packages and low interest rates, the ADB said in its latest outlook update released yesterday. The ADB kept this year’s growth forecast for South Korea’s economy at 2.7 percent, saying the economy is showing signs of improvement after suffering from the outbreak of Middle East Respiratory Syndrome earlier this year.

TAIPEI TIMES Chinese Nationalist Party (KMT) vice presidential candidate Jennifer Wang filed a slander lawsuit against Democratic Progressive Party (DPP) Legislator Tuan Yi-kang over allegations of illegal speculative sales of military housing units.

“Before I assumed public office [as minister of the Council of Labor Affairs in 2008,] I did make investments in real estate. However, all of my property transactions were reported in accordance with the law,” Wang said after filing the charges at the Taipei District Prosecutors’ Office yesterday afternoon. “I might not be a perfect person, but I am without doubt a law-abiding citizen.”

THE TIMES OF INDIA The venture capital industry’s culture of following successful models and the focus on money make them bank more on male entrepreneurs, said Telle Whitney, CEO and president of Anita Borg Institute, which works towards increasing the participation of women in technology. Whitney cited this as one of the reasons for fewer number of women starting up. The institute is trying to empower women through entrepreneurship.

“About 7% of venture backed start-ups in the US are founded by women, which is very low,” says Whitney adding that globally the situation is improving. In India the number is 9%, according to IT industry body Nasscom.

THE STAR After having recorded poor earnings during the third quarter (Q3), the improving investor sentiment is expected to bode well for the Q4 earnings outlook among Malaysia’s top companies. As companies on Bursa Malaysia wrapped up the Q3 earnings season this week, research houses said the overall Q3 performance pointed to a possible earnings recovery during Q4, as the negatives had been factored in during the first three quarters of the year.

BIMB Securities Research head Kenny Yee believes that the negative earnings performance of companies had been fully priced in during Q3.

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ver the next few weeks, the US Federal Reserve and the European Central Bank are likely to put in place notably different policies. The Fed is set to raise interest rates for the first time in almost ten years. Meanwhile, the ECB is expected to introduce additional unconventional measures to drive rates in the opposite direction, even if that means putting further downward pressure on some government bonds that are already trading at negative nominal yields.

In implementing these policies, both central banks are pursuing domestic objectives mandated by their governing legislation. The problem is that there may be few, if any, orderly mechanisms to manage the international repercussions of this growing divergence.

The Fed is responding to continued indications of robust job creation in the United States and other signs that the country’s economy is recovering, albeit moderately so. Also conscious of the risk to financial stability if interest rates remain at artificially low levels, the Fed is expected to increase them when its policy-setting Federal Open Market Committee meets on December 15-16. The move marks a turning point in the Fed’s approach to the economy. In deciding to raise interest rates, it will be doing more than simply lifting its foot from the financial-stimulus accelerator; it will also be taking a notable step toward the multiyear normalization of its overall policy stance.

In the meantime, the ECB is facing a very different set of economic conditions, including generally sluggish growth, the risk of deflation, and worries about the impact of the terrorist attacks in Paris

on business and consumer confidence. As a result, the bank’s decision-makers are giving serious consideration to pushing the discount rate further into negative territory and extending its large-scale asset-purchase program (otherwise known as quantitative easing). In other words, the ECB is likely to expand and extend experimental measures that will press even harder on the financial-stimulus accelerator.

In a perfect world, policymakers would have assessed the potential for international spillovers from these divergent policies (including possible spillbacks on both sides of the Atlantic) and put in place a range of instruments to ensure a better alignment of domestic and global objectives. Unfortunately, political polarization and general policy dysfunction in both the US and the European Union continue to inhibit such an effort. As a result, lacking a more comprehensive policy response, the harmonization of their central banks’ divergent policies will be left to the markets – in particular, those for fixed-income assets and currencies.

Already, the interest-rate differential between “risk-free” bonds on both sides of the Atlantic – say, US Treasuries and German Bunds – has widened notably. And, at the same time, the dollar has strengthened not only against the euro, but also against most other currencies. Left unchecked, these trends are likely to persist.

If history is any guide, there are three major issues that warrant careful monitoring in the coming months. First, the US is unlikely to stand by for long if its currency appreciates significantly and its international competitiveness deteriorates substantially.

Lacking a more comprehensive policy response, the harmonization of their [US and EU] central banks’ divergent policies will be left to the markets – in particular, those for fixedincome assets and currencies

Companies are already reporting earning pressures due to the rising dollar, and some are even asking their governments to play a more forceful role in countering a stealth “currency war.”

Second, because the dollar is used as a reserve currency, a rapid rise in its value could put pressure on those who have used it imprudently.

At particular risk are emerging-country companies that, having borrowed overwhelmingly in dollars but generating only limited dollar earnings, might have large currency mismatches in their assets

and liabilities or their incomes and expenditures.

And, finally, sharp movements in interest rates and exchange rates can cause volatility in other markets, most notably for equities.

Because regulatory controls and market constraints have made brokers less able to play a countercyclical role by accumulating inventory on their balance sheets, the resulting price instability is likely to be large. There is a risk that some portfolios will be forced into disordered unwinding. Furthermore, the central banks’ policy of curtailing so-called “volatile volatility” is likely to be challenged.

Of course, none of these outcomes is preordained.

Politicians on both sides of the Atlantic have the ability to lower the risk of instability by implementing structural reforms, ensuring more balanced aggregate demand, removing pockets of excessive indebtedness, and smoothing out the mechanisms of multilateral and regional governance.

The three possible outcomes of all this include a relatively stable multi-speed world, notable disruptions that undermine the US’s economic recovery, and a European revival that benefits from US growth. The good news is that the impact of the divergence will depend on how policymakers manage its pressures. The bad news is that they have yet to find the political will to act decisively to minimize the risks.

As the Fed normalizes its monetary policy and the ECB doubles down on extraordinary measures, we certainly should hope for the best. But we should also be planning for a substantial rise in financial and economic uncertainty.

Project Syndicate

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December 4, 2015

Closing Yuan-denominated payment between China and Japan doubles

Baidu builds empire with music, Amazon deals

The Chinese yuan has been increasingly used in cross-border payments between China and Japan, underscoring the currency’s growing acceptance in cross-border transactions, according to SWIFT. The Chinese currency’s share in all payments between Japan and Chinese mainland and Hong Kong doubled from a year ago to 7 percent in October, making yuan the second most active currency in cross-border payment between the two countries, SWIFT said in its monthly report tracking cross-border yuan payment.

Chinese Internet giant Baidu yesterday announced two deals linked to the entertainment industry, including a tie up with online retailer Amazon to provide it with search services.

Baidu, often described as the Chinese equivalent of Google, has been seeking to leverage its online dominance in a country where most of the US search giant’s websites are banned.

Baidu has agreed with Amazon China to become the default search engine in the country for its e-book readers and also cooperate in app distribution and video content, according to a Baidu statement.

Beijing 1MDB bid seen reaping big returns in Malaysia Chinese firms are set to vie for contracts to upgrade Malaysian ports including one in Malacca Praveen Menon and Anshuman Daga

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generous winning bid from a state-owned Chinese firm for a scandal-ridden Malaysian fund’s power assets will help Beijing find favour as it seeks more deals in the country and to extend its influence in Southeast Asia, financial

and diplomatic sources say.

China’s Southeast Asia push is widely seen as having come at a perfect time for embattled Prime Minister Najib Razak, who chairs the advisory board of state fund 1MDB and has been grappling with international

probes and public outrage over allegations of graft at the fund.

The US$2.3 billion offer from China General Nuclear Corp, a surprise winner in the bidding, and its assumption of US$1.8 billion in 1MDB debt will result in Chinese firms having pole positions as key rail, port and road projects come up for grabs, sources said.

“Increasingly, Chinese investors will be important players not only for Malaysia but also Southeast Asia,” said a person involved in the 1MDB sale process.

“They are paying good value to solve a problem. This deal will give them impetus to score big in infrastructure assets,” he said. Like other sources interviewed by Reuters, he declined to be identified due to the sensitivity of the matter.

The stakes have been high for Najib to make progress in resolving the 1MDB scandal after the Wall

Street Journal reported in July that investigators looking into the fund had found nearly US$700 million was deposited into Najib’s private bank account. Reuters has not verified the report.

Najib has denied taking any money for personal gain.

Strategically important

The biggest single direct foreign investment in Malaysia was far above a rival bid from Tenaga Nasional, banking sources said, and was announced just hours after Najib and Chinese Premier Li Keqiang ended bilateral talks in Kuala Lumpur. 1MDB President Arul Kanda told Reuters, however, there was no government involvement in the deal.

Beijing has been keen to improve relations with Southeast Asian countries as some of them, backed by the United States, object to China’s building up of artificial islands in the disputed South China Sea.

Beijing mulls congestion charge AIIB to hold opening ceremony for road users in mid-January

Last week also saw Li telling businessmen in Kuala Lumpur that Chinese firms will buy Malaysian treasury bonds to help stabilise its financial markets, and Beijing offering US$10 billion in infrastructure loans to Southeast Asia.

For China, the moves go hand in glove with its ambitions to develop infrastructure along its socalled 21st Century Maritime Silk Road, which extends through the Malacca Strait to India, the Middle East and East Africa.

Chinese Foreign Ministry spokeswoman Hua Chunying declined comment on the 1MDB case but said Malaysia was an important partner for China.

Key infrastructure projects that China has said its firms will bid for include a high speed rail project between Malaysia and Singapore that could be finalised next year.

The project, estimated by local media as being worth more than US$10 billion, is also expected to attract Japanese and European bidders.

Chinese firms are also set to vie for contracts to upgrade Malaysian ports including one in Malacca, in the south and another in Kuantan, in the east, banking sources said.

Outside Malaysia, other regional targets include a US$31 billion economic zone on China’s border with Laos, as well as rail and highway projects in Indonesia and Thailand.

Reuters

Spring Airlines to buy 60 Airbuses

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eijing is likely to trial a congestion charge on road users, the city’s traffic authority said yesterday.

“We are looking into the possibility of a congestion fee in certain areas,” said Zhou Zhengyu, director of Beijing transport commission.

Beijing will further tighten its traffic controls, and deliberate policies that will encourage companies to adopt different working hours, Zhou said.

Close to 5.6 million vehicles vie for space on Beijing’s roads. This means that vehicles have just 18.3 square meters of road each; slightly larger than a parking space.

Vehicle emissions account for 31 percent of the city’s smog sources, according to Beijing Environmental Protection Bureau.

Beijing has rolled out various policies to address air quality and congestion, such as restricting vehicles from using the roads on one out of five weekdays based upon the last digits on their license plates.

Congestion fees are charged in Singapore and London, among others.

he China-backed Asian Infrastructure Investment Bank (AIIB) is expected to hold its opening ceremony in mid-January, Chinese state media yesterday quoted the bank’s deputy head as saying.

China News Agency also quoted Chen Hun as telling a conference at least 50 percent of members will have ratified the AIIB’s constitution after India and Russia sign this month, allowing the bank to begin operations.

Chen also was quoted saying the bank, while waiting for a credit rating, will probably begin issuing unrated bonds that will be “supported” by South Korea. He said he expects South Korea to play an active role in AIIB. The bank’s president-elect Jin Liqun was recently in Seoul, during which he urged Korean institutional investors to support AIIB. An official of South Korea’s finance ministry, told about Chen’s Thursday comments, noted the Seoul government “has said it would provide support as needed in the form of encouragement or provision of information. But in any case, the support won’t be any formal one.” The AIIB, seen as a rival to the World Bank, is expected to lend US$10 billion -US$15 billion a year in its initial years, Jin Liqun said on Tuesday.

hinese budget carrier Spring Airlines said Thursday it plans to buy 60 Airbus aircraft from the A320 single-aisle jetliner family, in a deal valued at $6.3 billion based on list prices.

The order includes 45 A320 planes and 15 A321 aircraft, all with the fuel-efficient new engine option, according to a Spring Airlines statement to the Shanghai stock exchange.

China, the world’s second-largest economy, is already Asia’s biggest aircraft buyer as a growing middle class takes to the skies in ever-increasing numbers.

The Shanghai-based airline said the deal, which was signed on Thursday, sets delivery of the planes from 2019 to 2023, according to the statement.

In July, Spring announced plans to buy 21 Airbus A320 planes for 12.45 billion yuan (US$1.9 billion), citing growth in both international and domestic air travel, for delivery from 2015 to 2017.

US aircraft maker Boeing, a rival of Airbus, estimates China will add 6,330 new aircraft worth US$950 billion to its fleet by 2034.

Spring Airlines began operations in 2005 and flies more than 90 domestic and international routes, according to its website.

Xinhua

Reuters

AFP

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