MOP 6.00 Closing editor: Joanne Kuai
Mainland banks search for funding beyond national borders
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Year IV
Number 938 Thursday December 10, 2015
Publisher: Paulo A. Azevedo
IPIM to better co-ordinate MICE subsidy scheme Page 5
Beijing to remove some steel export taxes in 2016
Infrastructure Rebooted
Finally, the dates. Secretary for Transport and Public Works Raimundo Arrais do Rosário has pronounced on the city’s two mega projects. The Taipa section of the city’s Light Rail Transit (LRT) system is to be operational in 2019. Civil works for the section are slated for completion next year. But no bottom-line costs are offered for the project. Meanwhile, Pac On Ferry Terminal will be operational by mid-2016. With police, Customs and Marine and Water Bureau facilities fully installed, Mr. Rosário said Page
One way street Trade between Macau and the Mainland soared 32 pct y-o-y for the first ten months, to US$3.95 bln. But Mainland imports accounted for 96 pct of the total. In October, China approved 23 investment projects by Macau firms, down 4.2 pct from September. Capital employed soared 114 pct to some US$90 mln
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Survey lauds Macau
Deflationary pressures
China’s consumer inflation picked up in November. Although flagging producer prices still exerted deflationary pressure on the economy, new data showed yesterday. CPI grew 1.5 pct y-o-y in November, from a rise of 1.3 pct in October
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Macau ranked second. As most distinguished tourism city in China. Following Lhasa in Tibet. It’s third best city for preserving cultural heritage. And sixth safest, according to China Institute of City Competitiveness. Overall, the MSAR ranked 14th most competitive city in the nation this year
December 9
Name
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%Day
China Resources Land L
+2.08
Cathay Pacific Airways
+1.84
CNOOC Ltd
+1.45
China Overseas Land &
+1.12
Tencent Holdings Ltd
+0.67
Industrial & Commerci
-1.73
Bank of East Asia Ltd/T
-1.82
New World Developme
-1.91
China Merchants Holdi
-2.18
Hong Kong Exchanges
-2.60
Source: Bloomberg
www.macaubusinessdaily.com
Society
Delta bridge delay
I SSN 2226-8294
All parties are liable. So says a Hong Kong official apropos the delay in the Hong Kong-ZhuhaiMacau Bridge construction. The HZMB Authority and three governments are currently evaluating progress. A new completion schedule is to be submitted to the central government
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2 | Business Daily
December 10, 2015
Macau
Macau-China trade soars 32 percent for ten months The strong growth has been boosted by China’s exports to the city Kam Leong
kamleong@macaubusinessdaily.com
T
rade value between the Special Administrative Region and the Mainland soared 32 per cent year-on-year for the first ten months of the year, driven by the significant increase in the country’s exports to the city despite the reverse trade posting a decrease, the latest
data released by the Chinese Ministry of Commerce reveals. As at the end of October, trade activities between the two parties generated some US$3.95 billion (MOP31.6 billion). Of the total, US$3.79 billion, or nearly 96 per cent, was accounted for by China’s
exports to the city, which surged 34.6 per cent compared to the same period last year. However, the city’s exports to the country dropped 10 per cent year-on-year, totalling some US$160 million. In October alone, trade value between the two parties registered a year-on-year increase of 12.6 per cent, amounting to US$390 million. Nevertheless, on a month-on-month comparison, the amount represents a decrease of 17.1 per cent from September. Export value from the Mainland to Macau accounted for US$380 million of the total in October, up 13.4 per cent year-on-year but down 17.4 per cent from September. In addition, the country saw imports from the Special Administrative Region drop by 9.4 per cent year-on-year, or 5 per cent month-on-month, to just US$10 million.
More capital invested
During October, China approved 23 investment projects by Macau firms, down by 4.2 per cent from the
previous month. The actual capital used for these projects soared 114 per cent month-on-month to some US$90 million. For the first ten months of the year, 329 local investment projects were given the green light by the Chinese authorities, growing 11.2 per cent year-on-year. Meanwhile, total actual capital used for these projects registered an 80.4 per cent increase year-on-year to US$850 million. Cumulatively, a total of 14,161 local investment projects were approved in the Mainland, injecting some US$12.75 billion of capital into the country. The amount, however, only accounted for 0.8 per cent of the total foreign investment that the Mainland attracted. On the other hand, Mainland firms were contracted a total of 33 projects in Macau for the first ten months of this year, the sales of which totalled US$950 million. As at the end of October, some 119,137 Chinese labourers were working in the territory, the Ministry said.
Gov’t okays 33-storey building beside Liaison Office
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he government has given the green light to developer Companhia de Desenvolvimento Predial Sunnyville Limitada to redevelop land beside the Chinese Liaison Office into a 33-storey residential and commercial complex, the Official Gazette announced yesterday. The plot, located in Avenida Dr. Rodrigo Rodrigues on the Macau Peninsula, occupies a total area of 2,789 square metres. The new project on the plot will include a residential area of 36,648 square metres, a commercial area of 1,070 square metres and a car park of some 13,700 square metres. In addition, five of the storeys will be basement levels.
According to the official dispatch, the developer will have a 60-month term to redevelop the plot for a land premium of MOP447 million (US$55.9 million). In addition, the company will need to pay rent of MOP27,870 per year to the government during the term. Located in front of Guia Hill, the height of the project’s façade facing the hill will be limited to 60 metres or less, while the other side facing the street is set at or below 90 metres, according to the urban condition plan issued by the Land, Public Works and Transport Bureau (DSSOPT). K.L.
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December 10, 2015
Macau City’s fiscal reserves reached MOP346.4 billion in October Macau’s fiscal reserves stood at MOP346.4 billion (US$43.4 billion) as of October 31, representing nearly 41 per cent rise when compared to the same period a year ago, data released by the Monetary Authority of Macau (AMCM) in the Official Gazette shows. Regarding the reserves recorded at end-October, most were held as bank deposits, with about MOP131.9 billion held in basic reserves, carved out for the city’s emergencies; another MOP210.7 billion were held as extraordinary reserves.
Rosário: Light Rail Transit Taipa section operational in 2019 The year 2016 will be the time the government speeds up completion of the much‑delayed LRT project and Pac On Terminal, and re-launches an open tender for public housing projects Stephanie Lai
sw.lai@macaubusinessdaily.com
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he Taipa section of the city’s Light Rail Transit (LRT) system can be operational in 2019 as the government seeks a relaunch of the open tender for the depot of the transit system and completion of the civil works for the section next year, Secretary for Transport and Public Works Raimundo Arrais do Rosário revealed at the Legislative Assembly yesterday. “The civil works of the 9.3 kilometre-long section [for the LRT Taipa route] can be completed in 2016, and in 2017 the track and the other mechanical parts can be installed,” the Secretary told legislators during the debate session of the Policy Address. “In the second quarter of next year we’re also launching the open tender for the LRT depot. So the Taipa section for the transit system can run in 2019,” Mr. Rosário predicts. The LRT Taipa section, with 11 stations covering the Cotai area and Lotus Border checkpoint, has had its operational date pushed back from the originally scheduled 2016 as the construction of the superstructure of the LRT depot has encountered serious delays. Mr. Rosário briefed legislators that the government has already cancelled the contract with the original builders of the depot, and is re-launching the open tender for the depot in the second quarter of next year. “By next year-end, we can also launch the open bid for the construction of the LRT station for Barra [on the Macau Peninsula], which will be the point connecting the transit system of Taipa to Macau,” said the Secretary.
“The Barra station, which is part of a transport hub, will be a difficult project that requires many phases and some co-ordination works with the transportation on the roads in that district,” he added. Yesterday, the Secretary did not mention any updates on the overall cost for the construction of the LRT Taipa section. He told the Legislative Assembly in April that the Taipa section had already cost the government MOP9 billion. The delay in the depot construction has resulted in changes to the contract with the LRT cabin supplier Mitsubishi involving an additional payment of MOP700 million, head of the Transportation Infrastructure Office (GIT) Ho Cheong Kei informed legislators. The payment covers the storage and maintenance of the cabins, Mr. Ho noted.
Stalled projects
Another much-delayed project, Pac On Ferry Terminal in Taipa, will be operational by the middle of next year with the police, Customs and Marine and Water Bureau stationed there by then, Mr. Rosário said. The new Pac On Ferry Terminal, located near Macau International Airport, was originally scheduled to be operational by 2009. By the time it is fully commissioned, the terminal will have 19 berths and a helipad; the new terminal can handle about 40 ferries an hour. Legislator Chui Sai Cheong has criticised the Pac On Terminal project as a “big elephant”, where the gross floor area of the project has already tripled to 360,000 square metres from the original design. Mr Chui has
questioned whether the expanded size is necessary and if the government could plan a better use of the terminal space. Responding to Mr. Chui, the public works Secretary noted that the government would only focus on completing the ferry terminal project. “The priority for us now is to resolve the existing problems [with Pac On Terminal],” said Mr. Rosário,
Gov’t has secured one plot of idle land so far The government means to take back 22 plots of land that it adjudges the landholder to have failed to develop as intended. But the government has so far only been able to secure one of these 22 plots, the Secretary told the Assembly. However, despite having said that he was clearing out the site, the landholder has still not relinquished the right to sue the government over the ownership of the plot, the Secretary added. He did not identify where this particular site was located but stressed that the process of taking back idle land has always involved time-consuming lawsuits against the landholder. No application for public housing units next year Responding to legislator Ng Kuok Cheong’s question, the Secretary said the government had no reason to launch the application for public housing units next year. “Now we have no vacant lands that are ready for building public housing immediately,” he told the legislator. “For the parcels
“The original design was that the terminal will house 18 berths, three of which can accommodate ferries with a loading capacity of 1,200 passengers. But what we learn now is that this kind of ferry does not exist anymore.” The Secretary, however, did not cite an updated price tag for the new Pac On Ferry Terminal. Apart from speeding up the project of the light rail transit and the new ferry terminal, the government will relaunch an open bid for the construction of the public housing in Mong Ha and Toi San, both districts situated in the northern Macau Peninsula. Both public housing projects have encountered construction delays. “An open bid for the Mong Ha [social housing] project can be launched within the first half of next year,” the Secretary said. “While the open bid for the Toi San public housing project can only be launched by next year-end.” The big changes to be introduced to the design Toi San public housing project are the reason why an open bid for it can only be launched then, the Secretary explained. Soft soil and the impact of the basement construction of the project on neighbouring buildings has been cited as the main reasons for the project delay, he added.
of land where we have intended to build more than 4,000 public housing units, we have also encountered various problems.” While the government is not accepting any applications for public housing, the Secretary noted that it will decide next year a new type of public housing that can be sold to buyers here who cannot afford a private unit but are unable to apply for a subsidised housing unit. New Ilha Verde Border construction to start in Q3, 2017 The construction of a new border crossing checkpoint between Macau and Mainland China located in Ilha Verde is expected to start in the third quarter of 2017, the Secretary told the Assembly. The new border crossing is located near the fresh food wholesale market operated by Nam Yue Group. According to the Secretary, Nam Yue will finish the construction of a new wholesale market by the end of next year, and demolish the old one by the middle of 2017. The government will discuss the design of the new border crossing with its Guangdong counterparts, he said.
4 | Business Daily
December 10, 2015
Macau Jeju Air operating scheduled flights for Macau-Jeju route Budget airline Jeju Air will be changing its regular chartered flights for the Macau-Jeju route to two flights per week with effect from December 14, the marketing director of Macau International Airport Company Ltd., Eric Fong, told Business Daily. Currently, only flag carrier Air Macau has been operating scheduled flights for the Macau-Jeju route, according to the official website of MIA. T’Way Air, another budget airline from South Korea that started operating the Macau route last month will maintain its current schedule of running five flights per week for the Macau-Seoul route, Mr. Fong added.
Delay of HK-Zhuhai-Macau Bridge “not only due to Hong Kong”
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ong Kong is not the only party facing delay in constructing the Hong Kong-ZhuhaiMacau Bridge (HZMB), its Under Secretary for Transport and Housing Yau Shing-mu told legislators there yesterday. According to the Hong Kong official, as the Mainland authority and the Macau
Government are having delays in their construction of the bridge the infrastructure would not be able to be completed by the end of next year as scheduled, Hong Kong media reported. Last month, the Hong Kong Highways Department put off the estimated completion date for its part of the construction of the bridge to late 2017
due to ‘the unstable supply of materials, shortage of labour, restrictions on airport height, constraints in environmental protection requirements and slower than expected consolidation performance of reclamation works.’ Mr. Yau indicated yesterday that the HZMB Authority and the three governments were currently
evaluating the progress of construction, claiming they would report the new estimation to the central government prior to any public announcement. Business Daily asked the Infrastructure Development Office (GDI) about the progress of local construction for the bridge yesterday; however, there was no reply
MOU on civil aviation accident and incident investigation inked
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he Judiciary Police (PJ), the Public Security Police Force (PSP) and the Civil Aviation Authority (AACM) have completed the drafting of the text for co-operation on civil aviation accident and incident investigation. The relevant Memorandum of Understanding (MOU) was signed yesterday and became immediately effective. In accordance with the ‘Memorandum between the Civil Aviation Authority and Judiciary Police/Public Security Police Force on Civil Aviation Accident and Incident Investigation’, the three parties agree that from now on in the course of investigation into a relevant subject the investigation into the cause should be independent from criminal investigation.
The three parties will collaborate with each other by providing evidence and factual information to ensure that investigations are conducted effectively. Aspects of co-operation include access to the accident or incident site by investigators, the prevention of evidence from being
removed, the provision of autopsy examination reports of the deceased and the drug examination results of personnel, the invitation to attend training held by each entity and so on. The signing parties will keep all information obtained confidential.
from the Office by the time this story went to press. The bridge, on which construction started in 2009, was originally budgeted at 15.73 billion yuan. The bridge includes a 29.6-kilometre dual 3-lane carriageway and an immersed-tube tunnel of about 6.7 kilometres, in addition to two artificial islands. K.L.
Furthermore, AACM can allow authorized representatives from other countries or areas to take part in the investigation under the control of their investigator-in-chief. It is possible that an accident or an incident may be caused by a number of factors before the conclusion is drawn; the investigation may therefore involve the participation of various government entities. Ever since the effective implementation of Law No.2/2013 – ‘Civil Aviation Accident and Incident Investigation and Aviation Safety Information Protection Law’, the PJ, PSP and AACM have considered the need to establish a co-operation framework to ensure independence and effectiveness of investigation; they started discussions on co-operation in the fourth quarter of last year. The signing ceremony was held yesterday in AACM’s multi-function room. The signatories were the Director of the PJ, Chau Wai Kuong, the Director of the PSP, Leong Man Cheong and the President of AACM, Chan Weng Hong.
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December 10, 2015
Macau MSAR ranked 14th most competitive city in China
IPIM to subsidise MICE events “more accurately” With the subsidy amount remaining stable next year, authorities vow to better screen candidate programmes
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acao Trade and Investment Promotion Institute (IPIM) will co-ordinate all tasks with regard to promoting the Meetings, Incentives, Conference, and Exhibitions (MICE) industry starting next year. Irene Lau Kuan Va, Deputy President of the Administrative Committee of IPIM, said the total subsidy amount will remain stable next year but made in a more “accurate manner”, local media TDM reported.
Attending local Chinese radio talk show TDM Forum yesterday morning, Ms. Lau said the transfer of the work on MICE from other government departments to IPIM would be made “seamlessly”. She added that IPIM is aware of the difficulties the sector is encountering and is studying relevant measures to be adjusted in accordance with the actual situation in order to help the local MICE industry grow healthily. “We will focus on some programmes with potential, that would have a positive impact on promoting Macau’s
economy and, most importantly, helps with the development of local small and medium-sized enterprises (SMEs),” said Ms. Lau. “We will reduce the subsidies to those events with irregularities or flaws, or stop subsidising them at all.” Starting from January next year, IPIM will take over the work of subsidising MICE industry schemes which used to fall under the scope of Macau Government Tourist Office (MGTO) and Macau Economic Services (DSE). The move is a bid to integrate MICE resources, improve services and enhance work efficiency, the government recently announced. Ms. Lau said IPIM would better coordinate the agenda of MICE events in town as according to international conventions MICE events of the same nature should not be held within the same day or same week, otherwise it would be a ‘loss’ for visitors, exhibitors and organisers. She added that visitors to local MICE events had decreased but on a small scale, although the professionalism of the events has been enhanced and the authorities aim to help with local events to have more expertise and focus.
THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design
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he city is ranked 14th most competitive city in China this year, falling from last year’s 12th position, according to research released yesterday by the China Institute of City Competitiveness. Analysing the economy, society, environment and culture of different Chinese cities, the Institute awarded 4796.37 points to the Special Administrative Region for its comprehensive competitiveness, somewhat lower than last year’s 4875.56 points. Meanwhile, Shanghai, scoring 15,017 points, tops the ranking for the third consecutive year, followed by Hong Kong and Shenzhen, Beijing and Guangzhou. In terms of tourism, the city is ranked second for most distinguished tourism city in the nation, scoring 91.88 points in another ranking of the Chinese research house, following Lhasa in Tibet, which topped the list with 92.97 points. In addition, the city is ranked third best city in terms of preserving its cultural heritage this year. For security, Macau is the sixth safest city in the country this year, said the Chinese institute, anointing Hong Kong the safest. K.L.
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6 | Business Daily
December 10, 2015
Macau KEY POINTS Cartier watch sales dwindled as jewellery stays buoyant Many luxury brands suffering from China slowdown Cartier particularly exposed to China Analysts look for new innovation, marketing for watches Vigneron to take the helm in January
Cartier’s watches lose their sparkle in China Watch revenues of the brand have dwindled relentlessly while jewellery sales have boomed
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he gold and diamonds of Cartier jewellery are so popular with women that the brand founded in Paris in 1847 is finding it difficult to market watches to men. The world’s biggest jewellery and watch brand in terms of combined sales generates more than two thirds of profits for Swiss parent Richemont, but watch revenues have dwindled relentlessly while jewellery sales have boomed. Like other high-end watchmakers Cartier is suffering from a drop in demand in big markets such as Hong Kong, Mainland China, Russia and the United States. But some of
Cartier is facing a relatively subdued luxury market, like the bulk of the other megabrands. Additionally, Cartier is suffering from the step back in the Chinese watch market / gifting practices. You could argue Cartier has not been the strongest innovator in recent years Luca Solca, analyst at Exane BNP Paribas
Cartier’s problems are specific to the brand, setting up a challenge for Cyrille Vigneron when he takes over the leadership next month. Improving Cartier’s image as a watchmaker in China, where wealthy women love its red boxes but men prefer pure watch brands such as Rolex, Patek Philippe or Vacheron Constantin, may be top of his to-do list. “Cartier is popular among fashion-focused customers in Hong Kong. Consumers will regard it as a piece of jewellery when they hear the brand, it is particularly popular among ladies,” said Lam Tung-hing, general manager of the Hong Kong retail operations of Oriental Watch Holdings Ltd. “For men, first time luxury watch buyer will choose to buy Rolex, which is practical and good looking.” Cartier and Richemont declined to comment on the brand’s strategy to improve watch sales. Richemont said last month that watch sales were down mid-single digits in the six months to September, dragged down by its biggest markets, Hong Kong and the United States. It had already stated a similar decline for Cartier watches in the full year to March. Shares have fallen over 12 per cent this year. Comparisons with competitors are hard to make. Rolex is privately owned and at LVMH, watch and jewellery sales rose 10 per cent during the first nine months but it does not give a separate watch figure. Swatch Group shares have fallen 18 per cent, partly due to competition from smartwatches and the drop in demand from China. Watch exports from Switzerland, where Cartier and other watches are made, fell 3.2 per cent during the first ten months of 2015 with shipments to Hong Kong down 22.7 per cent and rising just 0.1 per cent to the United States. Pierluigi Fedele, who is responsible for watchmaking at the Swiss union Unia, downplayed any talk of a crisis.
“There is no real crisis in the Swiss watch industry today. Exports are down a bit, but probably still above 20 billion Swiss francs for the whole year,” he said.
No more Chinese gifts
But he noted the subdued Asian market was causing problems for some companies and a few had laid off staff. Cartier said last year it introduced shorter working hours for some employees and would not say if the measure was still in place. Some analysts estimate that the high-end watch market in Mainland China is down 60 per cent since its 2012 peak. This is partly due to the government’s crackdown on the tradition of gifts-for-favours which often involved watches. Richemont also highlighted difficulties in Macau where the casino industry is suffering from the crackdown on corruption, the weak yuan and Chinese government restrictions on travel. The strong franc has made Swiss exports more expensive while Tiffany & Co forecast a bigger fall in fullyear profit than previously expected as a strong dollar kept tourists from spending in its showpiece U.S. stores. Last month’s terrorist attacks in Paris are also expected to further dent tourists’ travels to Europe to buy luxury goods during the preChristmas period which, for some brands, represent up to a quarter of annual sales.
New ideas
But for Cartier, whose sparkling creations adorned royal heads around the globe in the early 20th century and more recently Kate Middleton’s at her wedding to Prince William, the challenges are bigger than for most. Exane BNP Paribas analyst Luca Solca said Cartier is particularly exposed to China. “Cartier is facing a relatively subdued luxury market, as the bulk of the other mega-brands. Additionally, Cartier is suffering from the step back in the Chinese watch market / gifting practices.
You could argue Cartier has not been the strongest innovator in recent years,” he said. Lack of innovation has been a problem and Vigneron, who replaces Stanislas de Quercize, a 25-year Richemont group veteran who stepped down last month, will need to focus on this. Many of Cartier’s new watches have been based on existing versions with innovation focussed on the most expensive models. In January, Cartier unveiled its first new model in eight years, the Clé watch, but so far only gold models costing more than 10,000 euros are available. According to a person close to the Richemont group who declined to be named, about 90 per cent of buyers of Clé since its launch have been women. “The way to be successful is, first of all, with product innovation because in a subdued environment that is the way you can maybe get the consumer to buy a new watch,” said Bernstein analyst Mario Ortelli. The company is also a relative newcomer in “in-house” watch movements, the mechanisms that make a watch tick and are beloved of collectors. When Swatch Group, the world’s largest watchmaker, started phasing out delivery of watch movement components to the rest of the industry, competitors were forced to develop their own manufacturing tools, now an important part of the prestige of high-end watches. Lam says in China Cartier chased the mass market on the Mainland and paid less attention to the top technical design required by buyers in Hong Kong. “Many local collectors will have a question mark as the design appeared as not as good,” he said.
More soccer, less polo
In marketing as well, Cartier could do with a few fresh ideas. While Omega’s name is omnipresent at the Olympic Games and each new James Bond movie and Rolex cultivates its image as a sports brand, Cartier relies on its signature panther and other more traditional attributes. It has sponsored polo for more than 30 years but competitors such as Hublot have been a bit more adventurous by doing deals with soccer teams and ski schools in resorts such as Courchevel. Richemont thinks Vigneron, a music composer and guitar player who was rehired at Cartier after heading LVMH’s operations in Japan, is the right man to lead Cartier back to growth. “He is known for thinking out of the box,” said one Cartier employee based in London. “I think a lot of people have high hopes for him.” Reuters
Business Daily | 7
December 10, 2015
Gaming Charles Zehren, a spokesman for Apollo at Rubenstein Associates Inc., Kristi Huller, a spokeswoman at KKR, and Chris Hardman, a representative for Education Management, declined to comment. Jan Jones Blackhurst, a spokeswoman for Caesars, didn’t immediately respond to an e-mail message seeking comment.
Worried investors
Caesars among firms pushing to curb lender protection Apollo, which controls Caesars along with TPG Capital, could then lose its stake entirely in the casino giant
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aesars Entertainment Corp. and Education Management Corp. have been stymied in their efforts to influence Congress to change a Depression-era law that’s designed to protect lenders, according to people with knowledge of the matter. The casino company owned by Apollo Global Management LLC, and the for-profit college backed by KKR & Co., tried last month to insert an amendment into an early version
of the landmark U.S. transportation bill that would’ve rolled back part of the 1939 law known as the Trust Indenture Act, said the people, who asked not be identified discussing the actions because they haven’t been made public. Without the changes, the companies may find it harder to win creditor lawsuits claiming actions they took to revise their debt violated parts of the act. Caesars has said it will probably have to join its bankrupt subsidiary
in Chapter 11 if it loses the suits, which are over actions the company took to shuffle debt before the unit filed for court protection. Apollo, which controls Caesars along with TPG Capital, could then lose its stake entirely in the casino giant. Education Management may have to pay out junior creditors who didn’t go along with its out-of-court debt reorganization, hurting the investment value of KKR, which is among the company’s largest equity holders.
Although they were unsuccessful, some investors are worried that the companies could try to insert another version of the amendments into the U.S. government’s spending bill that needs to be passed by Dec. 11, the people said. The companies’ “sole aim is to overturn several federal district court decisions that were not in their favor,” Andrew Milgram, managing partner of Marblegate Asset Management, said in a statement Monday. His firm won a court case against Education Management and could be affected by a change in the rules. The U.S. Court of Appeals for the Second Circuit has agreed to hear the company’s appeal of the ruling. “We strongly urge Congress to leave out the erroneous Trust Indenture Act provision in the omnibus bill,” he said. The proposed amendments would’ve killed two key provisions in the existing law that limit what companies can do to modify their debt without having creditors demanding to collect on it, said Julia Winters, a legal analyst at Bloomberg Intelligence. The changes would have made it more difficult for minority bondholders to challenge actions companies take in restructurings, according to a Dec. 4 research note by Winters and Bloomberg Intelligence analyst Philip Brendel. Under the proposal, creditors would be protected by law only if a company reduced principal amounts, interest rates or maturity dates, according to a copy of the draft amendment published by Politico. If a company changed those attributes, bondholders would have the right to get paid back in full. The Wall Street Journal reported earlier on Caesars’ lobbying efforts. Bloomberg
Corporate
Wynn welcomes the season of giving The International School of Macau (TIS) Crescendo Choir presented the gift of music in the lobby of Wynn Macau to kick-start the festivities of the holiday season and celebrate the success of the Wynn employee (WE) charity gift drive – WE Share. The charity initiative received overwhelming support from Wynn employees, with more
than four hundred gifts collected, which will benefit underprivileged children through help from Caritas Macau. Mr. Pun Chi Meng, Secretary General of Caritas Macau, attended the event and accepted the gifts and handmade greeting cards from Mr. Thomas Lau, Director of Human Resources of Wynn Macau.
CEM visits in-patient children in Kiang Wu Hospital With the approach of the Christmas season, more than 20 CEM Ambassadors paid a visit to Kiang Wu Hospital to celebrate this special season with nearly 40 in-patient children. Accompanied by several professionals of Kiang Wu Hospital, CEM staff visited nearly
40 in-patient children aged up to 6 years old from different units. CEM Ambassadors spent some time with the children, wishing them a quick recovery and sung Christmas carols for the enjoyment of the children, whilst Santa Claus distributed presents to each of them.
8 | Business Daily
December 10, 2015
Greater China
November inflation edges up, but deflation risks dog economy Economic growth dipped to 6.9 percent in the third quarter Sue-Lin Wong
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hina’s consumer inflation picked up slightly in November but remained well under the government’s 2015 price target of 3 percent, raising concerns that the world’s no. 2 economy could be sucked into a Japan-style deflationary trap. With the economy sputtering after years of double-digit growth, analysts predict Chinese consumer prices are unlikely to pick up significantly in the near future due to crumbling commodity and energy prices, overcapacity and weak demand.
The data has increased calls from some economists for more stimulus and interest rate cuts to spur growth and prices, even though the November consumer price index (CPI) surprised on the upside, rising 1.5 percent on-year from 1.3 percent in October. A Reuters poll had tipped a 1.4 percent rise. “With corporate confidence already at a six year low, persistent deflation might also put the economy at risk of a downward spiral,” said HSBC economists in a note to clients. “More aggressive policy easing still holds the key to
stabilise growth in the coming months.” Yesterday’s release from the National Bureau of Statistics (NBS) also showed factories were plagued by producer price deflation, with the producer price index (PPI) down 5.9 percent in November from year earlier, in line with expectations and flat from October’s drop. It marked the 45th straight month of declines in the index. NSBO economists in Beijing estimated that inflationadjusted lending rates are as high as 10.7 percent when calculated using PPI, seen as inhibiting fresh investment. On a monthly basis, consumer prices were flat, compared with a 0.3 percent fall in October.
‘Lost decade’ concerns
While entrenched PPI deflation is hurting companies, economists are more concerned about falling consumer inflation, fearing that if prices slip further,
China may face a Japanesestyle ‘lost decade’. “China has entered a deflationary era,” Liu Li-Gang and Louis Lam, economists at ANZ, wrote in a research note. “More alarmingly, the GDP deflator, a broader measure of price changes in the economy, declined 0.7 percent y/y in Q3, indicating that China has entered a deflationary era.” The risk that Chinese consumption might sink is not only a major risk for domestic policy makers but also for foreign firms who have invested heavily on the assumption that Chinese spending would help offset weak demand elsewhere. There are already signs that China is slowing its purchases of imported wine, which looks to hit profit forecasts at importers like Suntory Beverage & Food Ltd. While official retail sales figures have been a rare bright spot in a faltering economy,
Beijing offers stricken steelmakers lifeline with export tax cut Chinese steel mills have cut shipments of both products since 2008 when duties were raised to current levels Ruby Lian and Manolo Serapio Jr
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hina will cut export taxes on steel billet and pig iron from the start of 2016, the finance ministry said yesterday, the latest move by the world’s top steel producer to erode a domestic glut and offer a lifeline to the stricken industry. Exports of the two products are relatively modest, but the move will likely fuel concerns that the world’s
biggest consumer of industrial raw materials is exporting its excess output to a saturated global market, accelerating a price rout. “This kind of strategy is aimed at redirecting this oversupply in China to other countries,” said Helen Lau, analyst with Argonaut Securities in Hong Kong. As part of a raft of measures aimed at boosting economic growth in the
world’s second-largest economy, the ministry said it will cut the 25 percent export tariff on billet and pig iron to 20 percent and 10 percent respectively from January 1.
As part of yesterday’s statement, the government said it would also eliminate export tariffs on phosphoric acid and ammonia and cut taxes on some energy raw materials
private sector surveys have shown consumer sentiment plumbing record lows in recent months. Chinese manufacturing has been stagnating for more than three years, with wholesale prices sliding continuously as legions of small companies compete desperately to stay above water. China’s finance ministry said yesterday the country would revise import and export taxes for some products in 2016 to promote economic development. In a bid to avert a sharper economic slowdown, China’s central bank has already cut interest rates six times since last November and reduced the amount of cash that banks must set aside as reserves. The government has also eased restrictions on home buying to boost the sluggish property market and is trying to ramp up infrastructure spending. Reuters
The move underscores the deepening crisis in the world’s biggest steel industry as the country’s economic growth slows, leaving stricken mills to struggle with plunging prices, waning demand from real estate to shipbuilding, and tight credit. Many have gone bankrupt or cut output. Chinese steel mills have cut shipments of both products since 2008 when duties were raised to current levels. In January-October, China exported 141,659 tonnes of pig iron and 5,367 tonnes of steel billet, said Kevin Bai, analyst at CRU in Beijing. Preliminary customs data on Tuesday showed China’s shipments of steel products topped 100 million tonnes for the first time in the first 11 months of the year. Two exporters in China said the tariff cut was too small to help boost exports, but it will likely escalate trade tensions with Europe and the United States, which have accused the country’s mills of deliberately dumping surplus production. Market participants were surprised by the move, coming just weeks after authorities hit back at criticism from abroad about its support for the industry and saying Beijing did not set out to encourage steel firms to boost exports. As part of yesterday’s statement, the government said it would also eliminate export tariffs on phosphoric acid and ammonia and cut taxes on some energy raw materials, but it did not identify which materials would be subject to the cut. It kept tariffs on naphtha, jet kerosene, diesel, fuel oil, ethylene/ propylene, propane and benzene unchanged. It also kept base metals and nickel pig iron tariffs unchanged. Reuters
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December 10, 2015
Greater China Postal Savings Bank raises US$7 bln from stake sale to 10 investors
Rural subsidies for passenger vehicles
UBS and JPMorgan said in separate statements they would undertake strategic cooperation with China Postal, leveraging their global commercial and investment banking networks, as well as providing services to China’s increasingly affluent population
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hina’s Postal Savings Bank said it had raised US$7 billion from a 17 percent stake sale that attracted 10 strategic investors, including UBS Group AG and JPMorgan ahead of an initial public offering planned for next year. The deal values the bank, China’s sixth-biggest by assets but the largest by customers and number of branches, at US$41 billion. The bank said in a statement that the sale was the single biggest private fund-raising in China’s financial industry. Other foreign investors include Canada Pension Plan Investment Board, DBS Group, and the International Finance Corp, the World Bank’s private sector development arm. China Life Insurance Co., Alibaba’s Ant Financial unit, Tencent Holdings, and China Telecom Corp were among domestic investors. China Postal, with more than 40,000 branches nationwide and nearly 500 million customers, is preparing for an IPO which could raise between US$12 billion and US$15 billion next year, bankers pitching for an underwriting role have said.
FTA with S. Korea to be implemented on Dec. 20
Company president Lu Jiajin declined at a briefing yesterday to provide a timeline for the lender’s IPO or its likely size. UBS and JPMorgan said in separate statements they would undertake strategic cooperation with China Postal, leveraging their global commercial and investment banking networks, as well as providing services to China’s increasingly affluent
population. The bank reported after-tax profit of 32.57 billion yuan (US$5 billion) in 2014, according to a stock exchange filing by China Life late on Tuesday. China Life said it will pay 13 billion yuan for 3.342 billion subscription shares. Canada Pension Plan Investment Board said it has invested 3.2 billion yuan. Reuters
Banks that need over US$600 billion in new debt go abroad Chinese lenders are struggling with the biggest pile of bad loans since 2008 as the weakest economic growth in a quarter century fuels defaults
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hinese banks, already the largest issuers of bonds to build capital buffers, are looking beyond the savings of the nation’s 1.4 billion people for more funds as they grapple with mounting bad loans. The nation’s banks may account for about half of at least US$100 billion in dollar notes sold by Asian lenders to meet new capital rules over three to five years, according to Barclays Plc. China’s lenders need to sell as much as US$222 billion of notes in any currency that comply with Basel III rules and US$379 billion of securities that meet rules unveiled by the Financial Stability Board last month, Commerzbank AG estimates. The banks will face pressure in the near term to issue more so-called Additional Tier 1 funds that count toward the new capital rules as they grapple with “on-going balance-sheet growth and slowing profitability,” Fitch Ratings said in a December 7 report. International issuance could entail higher financing costs. Bank of China Ltd. sold perpetual notes that count
China plans to introduce a round of subsidies for auto purchases by rural residents that will cover passenger vehicles with engines smaller than 1.6 litres, according to people familiar with the matter. The planned subsidies will also cover mini-commercial vehicles and light pickup trucks, said the people. The incentives will be the second round of nationwide funding since a program ended in 2010, the people said. China last introduced a nationwide subsidy program for rural auto purchases in 2009 in the depths of the global financial crisis to help prop up economic growth.
as Tier 1 capital at home in March with a coupon of 5.5 percent. That compares to a 6.75 percent rate on securities sold internationally last year. The four largest lenders by assets are from China and since the beginning of 2014 the country is also the biggest producer of bonds that count as capital under global banking rules established after the 2008 global financial crisis.
Biggest issuers
Lenders in the world’s second biggest economy sold the equivalent of US$146 billion of such securities since January 1, 2014, more than all the securities sold by French and U.S. lenders combined in the same period, respectively the second and third biggest issuers of Basel III compliant notes, Bloomberg data showed. About 90 percent of these bonds were sold in the local market, which is now the second largest in the world at about US$5.6 trillion. Even that may not be enough to absorb all the upcoming issuance, according to Barclays and Commerzbank.
Four Chinese lenders will be required by 2025 to sell bonds that can be written down in case of bankruptcy adding up to 16 percent of their risk-weighted assets, the FSB ruled last month in its rules on total loss-absorbing capacity. That would require them to raise at least US$500 billion in new bonds, according to the estimates of bank capital-focused hedge fund manager Algebris Investments Ltd. Bloomberg News
South Korea and China agreed to implement the bilateral free trade agreement (FTA) on Dec. 20, Seoul’s foreign ministry said yesterday. The two nations continued negotiations to rapidly implement the FTA after Chinese Premier Li Keqiang and South Korean President Park Geun-hye shared views of the implementation within this year on Oct. 31 when the two leaders met in Seoul on the side-lines of the trilateral summit meeting with Japanese Prime Minister Shinzo Abe. Under the deal, Seoul and Beijing will eliminate tariffs on more than 90 percent of traded goods each within 20 years after the implementation.
President to attend World Internet Conference Chinese President Xi Jinping will attend the upcoming second World Internet Conference in the river town of Wuzhen in east China’s Zhejiang Province, an official announced yesterday. Xi is expected to deliver a keynote speech at the opening ceremony of the conference, which is scheduled to be held between December 16-18, said Lu Wei, minister of the Cyberspace Administration of China, at a press conference.
Railway Construction team wins bid for Pakistan highway China Railway Construction Corp. said yesterday it has secured a 9.38 billion yuan (US$1.46 billion) contract jointly with a Pakistani company to build a highway in Pakistan. The company said that its unit, China Railway 20th Bureau Group Co, and Zahir Khan & Brothers Engineers & Constructors won the bid to build a 1,152 km section of a highway between Karachi and Lahore in Pakistan. Earlier this year, Pakistan and China signed energy and infrastructure deals worth US$46 billion, under the framework of what is called the China-Pakistan Economic Corridor.
Public libraries allowed to be named after donators China is crafting a law to allow its public libraries to be named after their donators, according to a draft released yesterday. The draft law was published by the Legislative Affairs Office of the State Council in order to seek public opinion. The draft stipulates that special literature collections at public libraries can also be named after the donators. Under the new draft, people who build or donate toward the building of public libraries will be offered tax preferences or other supportive policies. The authority will provide financial support for libraries which are owned by universities, scientific research institutes or government and open to the public, it said.
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December 10, 2015
Greater China
Today’s O2O ‘unicorns’ risk becoming tomorrow’s ‘unicorpses’ O2O has found particular traction in China through a combination of widespread smartphone use, a booming mobile payment sector and cheap migrant labour Paul Carsten
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he Beijing offices of Shequ001, a start-up delivering supermarket goods booked via smartphone, stand almost deserted. Leaflets lie scattered on the floor. Nearly 400 former employees, of a workforce that in March topped 2,000, have joined a social network clamouring to get their unpaid wages. Zhang, who gave only his family name, is one of fewer than three dozen workers left at a company that last year was worth 2 billion yuan (US$312 million). “We just wanted to build the market, so we burned through our money,” he said, adding he hasn’t seen the firm’s CEO since March. In China’s hottest tech sector, hundreds of “online to offline” (O2O) start-ups like Shequ001, which draw mobile users to local physical stores and services, have failed as skyrocketing valuations deter investors and put the brakes on fresh funding. Many more are expected to fall by the wayside, or be driven into mergers in what executives and investors say is a market bubble. Lured by a potential 10 trillion yuan (US$1.57 trillion) market for app-based, on-demand, logisticsheavy businesses, venture capitalists and others piled in, throwing billions of dollars at firms that often need only cash and a working app to enter the fray. China now boasts 21 ‘unicorns’ - private start-ups valued at over US$1 billion - says CB Insights. But now, those inflated valuations - for companies that rarely make any money - are proving too much for investors and new funding is drying up. Investors who helped fund the O2O sector now warn of a bubble, fuelled in part by backers’ own willingness to keep handing over cash. Having spent billions on their chosen champions, some are unwilling to admit defeat, signalling a war of attrition in the hope of backing the next Facebook or Alibaba. “The number of ‘unicorpses’ will soon begin to catch up with the number of unicorns,” said Gary
Rieschel, Shanghai-based founder and managing director of Qiming Venture Partners. O2O has found particular traction in China through a combination of widespread smartphone use, a booming mobile payment sector and cheap migrant labour. Entrepreneurs developing O2O apps - for firms offering anything from ride hailing and food delivery to group discounts at shops, restaurants and cinemas - have had easy access to money from technology giants Baidu, Alibaba and Tencent, as well as from venture capitalists, private equity, sovereign wealth funds and state-owned enterprises. Start-ups backed by venture capital raised US$9.6 billion in JulySeptember alone, four times the level of a year earlier, according to a KPMG and CB Insights report. “The whole O2O concept is getting too expensive,” said Han Weiwen, head of Bain & Co’s private equity practice in China. “The valuation is very, very high. There’s no traditional way to look at the valuation ... because they don’t have revenue.”
“Arms race”
Driven by China’s competitive ferocity, companies such as Didi Kuaidi, Uber, Meituan-Dianping, Nuomi and Ele.me battle each other across multiple sectors, often armed with seemingly endless cash from their big technology backers. “It’s an arms race,” said Hurst Lin, co-founder and general partner of DCM Ventures. The fierce competition and high spending drives start-ups back to their investors for frequent cash injections, pushing valuations higher. But as the financing roller-coaster has slowed, many start-ups have struggled to afford the subsidised discounts they need to keep users. In O2O, user numbers, whether from inflated demand or not, are a key metric to attracting fresh investment. “This kind of craziness can’t go on forever,” said Liu Jun, a Baidu vice president and member of the board of its food delivery service. Liu also
sits on the board of Uber’s China unit. “Enough is enough.”
“Irrational market”
“O2O is an irrational market,” said Liu Bo, formerly head of human resources at Koala Bus, an on-demand bus service acquired by ride hailing firm Didi Kuaidi. “There are too many subsidies. It’s becoming more expensive to get new customers.” Some companies, like Didi Kuaidi, Uber and Ele.me, say they have either ended or are reducing subsidies - but that risks killing off demand, and that’s not just a Chinese phenomenon. In July, Homejoy, a U.S. startup offering house cleaning services through mobile apps, folded, leaving some top-tier private equity backers out the US$35 million or so they had sunk into the company. With a minimum hourly rate of US$25, Homejoy offered an initial 2.5-hour house cleaning for just US$19, leading to too many one-time-only customers. A spokesman for Didi, though, says it has matured from a growthdriven firm to one that can now focus on innovating and improving user experience for its platform of 250 million registered users, and some 10 million registered drivers.
“Crazy hot to insanely cold”
The slowing pace of investment has left many start-ups unable to support themselves and struggling to find fresh funding. “In the first half of the year, the market was crazy hot, but in the second half it’s been insanely cold,” Lei Jun, a high-profile investor and CEO of private smartphone maker Xiaomi Inc, itself valued at US$46 billion, told a technology conference in October. “There are some very depressed start-up founders.” Some investors note that start-ups and their backers are happy to see valuations inflate. One venture capitalist, who declined to be named, said: “My peers, most of them are saying: ‘Get big, get a lot of users and figure out how to monetise later, that’s for the later-stage guys’.”
KEY POINTS Hot O2O sector has seen funding roller-coaster Valuations of private start-ups have skyrocketed Now investors are pulling back, leaving firms exposed Heavy spending on discounts inflate user numbers
“And the later-stage guys are saying: ‘You still don’t need to be profitable, that’s for the public investors, the mutual funds, or the mom and pops when they buy (the stock). That’s for them to figure out’.” For some start-ups, consolidation is the answer. Didi Kuaidi and Meituan-Dianping were both formed after investors tired of the cost of companies - in each case with one side backed by Tencent and the other by Alibaba - competing against one another. Alibaba is looking to offload its Meituan-Dianping stake, not so much to cash in on lofty valuations but to focus on its own in-house contender, Koubei. Investors will push their firms to consolidate until one company dominates, said Jixun Foo, managing partner at GGV Capital. “The market will go through a phase of consolidation to figure out if, through that, they will ever make money.” Baidu’s Liu Jun, DCM’s Lin and others say the O2O sector has the makings of the dot.com bubble that burst in 2000, and some expect investors to write down what could amount to big losses. “(When) raising capital gets harder, then you find out who’s naked, and who doesn’t really have a business model,” said Qiming’s Rieschel. Reuters
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December 10, 2015
Asia
S.Korea 2016 growth forecast revised slightly down While November sales at top department stores were set to rise for a third straight month
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n influential South Korean government think tank revised down its economic growth forecast for next year with weak exports expected to continue hobbling expansion, it said in a biannual report yesterday. The Korea Development Institute (KDI) said growth in Asia’s fourthlargest economy is expected to rise 3.0 percent next year, tweaked down from its 3.1 percent growth projection made in May. “Domestic consumption is expected to improve as real household income will rise on low interest rates and low oil prices as well as a boost in construction on positive housing transactions,” the think tank said in a report. However, weakness in exports will persist as growth in other emerging economies slows while the competitiveness of South Korean exports softens, it added. The comments are broadly in line with those made by the central bank and finance ministry in recent months. Also in the report, the KDI advised the government to focus its efforts on reforming how it spends money and expanding tax revenue sources. It also said monetary policy in South Korea should retain its current accommodative stance to support the ongoing economic recovery. The Bank of Korea has cut interest rates four times to a record-low of 1.50 percent from 2.50 percent last year, with the most recent rate cut taking place in June. This year, the KDI said the economy would grow 2.6 percent, down from its previous forecast of 3.0 percent. This was lower than forecasts made by the BOK and the
finance ministry, which see this year’s growth at 2.7 percent and 3.1 percent, respectively. Although the think tank is run by the government, it formulates its own economic forecasts separately from the government. The finance ministry will announce its revised forecasts next week.
Department stores sales up
On the other hand, November sales at South Korea’s top department were set to rise for a third straight month in annual terms while sales at discount stores likely fell, preliminary government data showed yesterday. Combined sales last month at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co rose 4.1 percent, the finance ministry said in a monthly report. The same preliminary data showed sales at major discount-store chains in November fell 0.6 percent.
The central bank is expected to make no change to interest rates at its policy meeting today ahead of the U.S. Federal Reserve’s pending rate hike
The finance ministry data is watched as a gauge of retail sales for the entire month, which the trade ministry will follow up in greater detail in a few weeks. Yesterday’s estimates followed finalised data from the trade ministry that showed department store sales rose 11.4 percent in October from a year ago while discount store sales slipped 0.5 percent over the same period. In an assessment of the economy included in the report, the finance ministry said domestic consumption is on the mend, but pointed out risks such as sluggish exports, a slowdown in China and the pending U.S. Federal Reserve rate hike remained. The report added that exports, which have been falling throughout this year, have been slowing down the recovery in production and investment. Reuters
Economists trim Singapore 2015, 2016 growth forecasts With core inflation was expected to come in at 0.5 percent in 2015
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conomists have revised their economic growth forecasts for Singapore for 2015 and 2016 down from their projections three months ago, a central bank survey showed yesterday. The median forecast of 22 economists surveyed by the Monetary Authority of Singapore (MAS) was for gross domestic product (GDP) to expand 1.9 percent this
year, down from 2.2 percent expected in the previous MAS survey published in September. The MAS survey showed that economists expect GDP growth in the fourth quarter to come in at 1.4 percent year-on-year, down from 2.3 percent expected in the previous survey. In 2016, GDP growth is seen likely to come in at 2.2 percent, compared to
2.8 percent expected in the September survey. Economists also trimmed their inflation forecasts for next year, according to the median forecasts in the MAS survey. The headline consumer inflation rate was seen at 0.5 percent in 2016, down from 1.1 percent in the September survey, while core inflation was expected at 1.0 percent, down from 1.3 percent.
For this year, economists see the all-items consumer inflation rate at -0.5 percent, down from their previous expectation for -0.2 percent. Core inflation was expected to come in at 0.5 percent in 2015, unchanged from the previous MAS survey. Economists expect the Singapore dollar to trade at S$1.4300 against the U.S. dollar at end-2015, and at
S$1.4700 at the end of 2016, the MAS survey showed. In November, the citystate softened its growth outlook for 2015 amid sluggish global demand, even as data showed that Singapore’s economy grew much faster than initially estimated in the third quarter thanks to a better performing services industry. The government now expects full-year growth for this year to be “close to 2.0 percent”, while growth in 2016 is seen at 1.0-3.0 percent. Against a backdrop of low inflation and weak global growth, Singapore’s central bank has eased its exchangerate based monetary policy twice this year, most recently in October. Reuters
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December 10, 2015
Asia
Open but not trading: Myanmar launches fledgling bourse Delays in confirming underwriting companies have pushed back the timeframe for initial public offerings
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yanmar officially launched its first modern stock exchange yesterday, but without a single stock to trade, as the nation’s latest drive for economic revitalisation struggles to take flight. Aung San Suu Kyi’s pro-democracy party swept elections last month, boosting confidence in the former junta-run nation’s reforms. Myanmar’s launch of a bourse of its own marks an ambitious new stage in efforts to ignite investment. Crowds gathered yesterday outside the elegant newly restored colonialera building in the heart of Yangon to witness the stock market’s official launch. But they were not listening for the toll of a trading bell because the exchange has yet to list a single firm. Delays in confirming underwriting companies have pushed back the timeframe for initial public offerings. “It will take time to be up and running, maybe two or three months,” said Tin May Oo of Myanmar’s Securities and Exchange Commission, lauding the benefits of a transparent trading system. Officials expect a clutch of local firms to kick-start the stock exchange when it is fully operational. Businesses, stifled for years under the economic mismanagement of the
former junta, have welcomed the chance to raise funding through the market. “I can save money from my salary at the end of the month but it’s not enough to run my own business so the stock exchange will be my hope,” said graphic designer Lin Aung. “I will watch their transactions and processes for a few months to learn
about stock markets, and then I hope I will have a chance to participate,” he told AFP. The bourse has been decades in the making in Myanmar, one of only a handful of nations without a modern stock exchange. “Every country needs a capital market and ours will bring new investment opportunities,”
Aung Tun Thet, an advisor to the president’s office, told AFP recently. In 1996 Japanese firm Daiwa Securities and a state bank set up the Myanmar Securities Exchange Centre, but this allowed over-thecounter sales of shares in just two firms, a Myanmar timber company and bank. Official media has said stateowned Myanma Economic Bank will own a controlling 51 percent stake in the Yangon Stock Exchange (YSX), with the remainder divided between Japanese partners the Japan Exchange Group and Daiwa Institute of Research, the research arm of Daiwa Securities Group. Myanmar was under the thumb of the military for more than 50 years. A once-buoyant economy was dismantled by bungled statecontrolled policy and heavy sanctions imposed by western nations for major human rights abuses. But reforms since 2011 have seen the door creak open to a potential consumer market of 51-million people. The nation still faces major challenges including rampant corruption, poor legal protections for businesses and dismal infrastructure.
Yangon Stock Exchange website screen shot
AFP
East Asia Pacific ageing faster than anywhere else in history Industrialised East Asian nations such as Japan and South Korea have already experienced decades of ageing populations
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he East Asia Pacific region is ageing at a faster rate than any other place in history, the World Bank warned yesterday, a demographic shift likely to cramp public services and economic growth. The region, which spans from Myanmar and China’s western borders as far east as Japan, Papua New Guinea and the Pacific islands, is now home to a third of the world’s over 65s -- some 211 million people. That lurch towards older populations will have a significant impact on
economic growth in a area of the globe that has been financially booming for much of the last two decades, according to the study. The report is titled “Live Long and Prosper: Aging in East Asia and Pacific” -- a reference to the so-called Vulcan salute from the Star Trek sci-fi series. Sharp falls in birth-rates and a rise in life expectancy will likely heap pressure on public services while economies will struggle to fill the shortfall of workingage employees. The region “has undergone the most dramatic
demographic transition we have ever seen”, said Axel van Trotsenburg, regional vice president of the World Bank’s East Asia and Pacific Region. “All developing countries in the region risk getting old before getting rich.” Much of the swing towards a greying population is taken up by China -- home to 130 million over 65s -- but other middle income nations like Thailand, Vietnam and Indonesia are also swiftly ageing. Industrialised East Asian nations such as Japan and South Korea have already
experienced decades of ageing populations. Poorer nations such as Laos, Cambodia and the Philippines will not start to see a significant swing towards an older demographic for another two decades or so. The report’s authors warn most East Asian health systems are not prepared for the demands on healthcare and pensions posed by an ageing populous, compounding the impact of a shrinking workforce. Calling for “a comprehensive policy approach across the life cycle”, the report urged nations to build and invest
in childcare, education, healthcare and pensions to off-set the demographic time bomb. The report recommends a range of reforms such as encouraging more women to join the labour force, a policy Japan’s Prime Minister Shinzo Abe is currently pushing with limited success. Industrialised nations like Japan and South Korea also need to open their labour markets up to immigrants, something both nations are historically reluctant to do. Middle income nations like China, Vietnam and Thailand should also remove incentives in pension systems that often encourage workers to retire early or increase the retirement age, the bank said. The report’s authors estimate that unless reforms are implemented, South Korea’s working age population will decline by 15 percent by 2040. China, Japan and Thailand will see a 10 percent reduction over the same period.
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 13
December 10, 2015
Asia Japan’s SMEs too weak to carry Abe’s ‘trickle-up’ wage plan Economists say that is because many SMEs are unprofitable “zombies” kept alive by cheap financing Stanley White
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apan’s government hopes that raising the minimum wage will ‘trickle up’ into a broader rise in pay and consumption, but the smaller businesses who account for most Japanese jobs are in no shape to square that virtuous circle. Since taking office in late 2012 Prime Minister Shinzo Abe has badgered companies to raise wages to help end decades of deflation and stagnant growth, but only the largest employers have responded. Last month he took matters into his own hands, pledging to raise the minimum wage by about 3 percent a year for the next five years or more. Big companies raised wages an average 1.8 percent in 2013, 2.3 percent in 2014 and 2.5 percent this year, the Keidanren business lobby said. Government data shows that has not filtered down to the 65 percent of people who work at small and medium-sized enterprises (SMEs), where wages fell 0.4 percent in 2013 and rose only 0.4 percent last year. Around 70 percent of companies that filed taxes in fiscal 2013 booked a loss, according to the most recent data, and profit growth even among SMEs that do make money is slowing. “Big companies are raising wages, but SMEs are falling behind because they cannot keep up with labour costs,” said Hiromasa Matsuura, economist at Mizuho Research Institute. “It is possible this policy could push up unemployment.” On the face of it, Abe’s plans appear modest; the national average minimum wage is 798 yen per hour - the same as in the United States but around 20 percent less than in Britain and only half as much in France, OECD data show. He wants to raise it to 1,000 yen in about five years, which implies a 3 percent increase each year.
Only about 3 percent of the employed earned the minimum wage last year, so the number affected initially looks small, but a further 6 percent are hovering 40 yen or less above that level. And as it increases 3 percent every year, still more will be brought within range. Toshikazu Funakubo, president of Showa Seisakusho Co, a maker of precision parts for cars, turbines and medical devices, says that could make things tough for many companies. “Eventually, the atmosphere could change, and more companies could start looking for ways to keep their wage bill down,” he said from a plant in a gritty factory district on Tokyo’s south side.
Sri Lanka refuses agreement with India
KEY POINTS Govt call to raise wages not filtering through to SMEs Raising minimum wage could help low-income households Higher labour costs a threat to Japan’s struggling SMEs Government worried consumption is not strong enough
Economic sideshow
The initial economic rewards for the policy appear negligible against such risks. The government estimates a 3 percent minimum wage hike could add 70 to 90 billion yen to wages, but that is at best only a 0.04 percent boost to Japan’s total wage bill of around 210 trillion yen. Economists say that is a sideshow to Japan’s real structural obstacles to growth, like its shrinking workingage population, which has been in decline since the mid 1990s. “Raising the minimum wage is OK, but this is second tier compared to the real issue of demographics,” said Masamichi Adachi, senior economist at JP Morgan Securities. “The measures the government is pushing to promote growth are not sufficient.” The opposition Democratic Party of Japan (DPJ) floated a similar plan to push the minimum wage to 1,000 yen when it was in power from 2009 to 2012, but abandoned it in the face of stagnant growth. This time, the timing is more propitious, given a tight labour
market and unemployment at a 20year low of 3.1 percent. But that in part reflects the strength of Japan’s biggest companies, the top exporters, who have benefited from monetary easing policies that have weakened the yen. But at the other end of the scale, where companies fear Japan’s declining population will weaken domestic demand, a higher minimum wage could have unintended consequences. “We would all be lucky to get higher pay, but my company would find a way of making us pay more out of our own pockets by reducing benefits,” said Yumiko Tanaka, 36, a receptionist at a rental office who earns Tokyo’s minimum wage of 907 yen ($7.38) per hour, which would buy a bowl of ramen noodles. “It’s tough when you work as a contractor. Any time you ask for better benefits you are pressured into quitting.” Reuters
The Sri Lankan government yesterday insisted that it will not sign an economic partnership agreement with India. Prime Minister Ranil Wickremesinghe told Parliament that Sri Lanka will not sign the Comprehensive Economic Partnership Agreement (CEPA) which was discussed between the former Sri Lankan government and India. He said that the Sri Lankan government is negotiating a new economic and technology agreement with India. The prime minister said that the government hopes to sign a similar agreement with the Chinese government as well.
Thai Chamber of Commerce to set up “Durian Institute” The so-called Durian Institute will be set up by the Thai Chamber of Commerce to see to it that the “King of Fruit” will still live up to quality standards, said a leading executive of the chamber yesterday. The Durian Institute project is primarily designed to provide business consultations as well as quality control guidelines for all durian dealers, especially those in the eastern provinces of Chantaburi and Rayong -- the country’s largest durian producing area, according to Pratchaya Samalabha, head of the Thai Chamber of Commerce’s Eastern Economic Development Committee.
Australia ranked poorly in climate index Australia has finished ahead of only Saudi Arabia and Kazakhstan among 58 countries listed in a Climate Change Performance Index released at the Paris climate summit. The index measures emission levels per capita, the trend in emissions projections, the use of renewable energy and climate change policies of each of the 58 countries. Denmark finished on top of the rankings, followed by Britain, Sweden, Belgium and France. But because the judges felt “no country is doing enough to prevent dangerous climate change”, there was no award for first to third places.
City port becomes 3rd firm listed on Cambodia’s bourse
On the face of it, Japan’s Prime Minister Shinzo Abe’s plans appear modest as he wants to raise minimum wage to 1,000 yen in about five years, which implies a 3 percent increase each year
The Cambodia Securities Exchange (CSX) got the 3rd listed company yesterday when the state-run Phnom Penh Autonomous Port (PPAP) made its debut. PPAP became the third firm to list on the bourse after state-owned Phnom Penh Water Supply Authority made its market debut in April 2012 and Grand Twins International, one of the largest garment makers in Cambodia, listed in June last year. The port sold more than 4.1 million shares, representing a 20-percent stake in the company, and raised US$5.2 million, according to the PPAP’s document.
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International Kremlin criticises IMF lending decision The decision by the International Monetary Fund to soften lending rules for countries if they fail to repay official debt creates a dangerous precedent, Kremlin spokesman Dmitry Peskov said yesterday. “The precedent for us is absolutely not acceptable, and the main thing is that it is quite dangerous because we have created a dangerous precedent for permitting the non-payment of sovereign debts. The question is: what will happen after that?” Peskov told reporters.
Factory farming the next big risk for investors Factory farming could pose the next big risk for investors, following on the heels of car emissions test cheating, oil spills and bribery fines, a report by a group of investors suggests. Corporate performance on so-called environmental, social and governance (ESG)-related issues has grabbed headlines again this year, not least that of VW, whose shares slid after the German firm admitted to rigging the emissions tests of some of its cars. A study by the Farm Animal Investment Risk and Return network (FAIRR), released yesterday, said animal factory had at least 28 distinct ESG risks, many of which were currently poorly understood or hidden from investors.
Argentine official meets with debt arbitrator in U.S. Argentina’s incoming secretary of finance met in the United States on Monday with the arbitrator of the South American country’s marathon court battle with creditors over defaulted bonds, a spokeswoman for incoming Economy Minister Alfonso Prat Gay said on Tuesday. The meeting was between future finance official Luis Caputo Debt and mediator Daniel Pollack, who has been assigned by a U.S. federal judge to help reach a settlement between Argentina and creditors who rejected the terms of the country’s 2005 and 2010 sovereign bond restructuring.
U.S. judge closes SEC’s case against ex‑Enron chief A federal judge has ruled that former Enron Corp chief executive Jeffrey Skilling violated U.S. securities laws, finally closing the U.S. Securities and Exchange Commission’s 11-year-old case involving the energy giant’s 2001 collapse, the SEC said on Tuesday. The final judgment against Skilling by U.S. District Court Judge Melinda Harmon ends the SEC’s civil proceeding against Skilling, which the court stayed in 2004 until related criminal proceedings and appeals had ended. Judge Harmon also permanently barred Skilling, who is in prison, from serving as an officer or director of a publicly held company.
BlackRock plans US$2.7 bln Europe property boost on forex Record volumes of European properties are being bought by investors from North America, Asia and the Middle East to boost returns amid low interest rates
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he world’s biggest asset manager, plans to buy as much as 2.5 billion euros (US$2.7 billion) of continental European properties over three years -- more than doubling its pace of investment -- as its clients seek to take advantage of a weak euro. Record volumes of European properties are being bought by investors from North America, Asia and the Middle East to boost returns amid low interest rates, and a weak euro is fuelling further increases by making buildings cheaper. Buyers from those regions added 32.5 billion euros of commercial properties in mainland Europe in the first nine months, 53 percent more than a year earlier, according to data compiled by Real Capital Analytics. The euro has lost about 12 percent against the US dollar in the past year.
‘Value-add buildings’
BlackRock, based in New York, will focus on buildings known in the industry as “value-add” because the owner can boost the price by doing renovations or improving the tenant base. With pristine, fully occupied offices fetching record-high prices, more investors are taking the same approach. In Munich, for example, a core building in the central business district might change hands at a net initial yield of about 3.8 percent; compared with 5.8 percent for an asset of a lower quality in a less-popular location, according to data compiled by broker Jones Lang LaSalle Inc. Europa Capital profited from a value-add deal when it sold the Tour Vista in Paris to Alduwaliya Asset Management for more than 130 million euros this year. The London-based company purchased the property in 2013 for 87 million euros and refurbished the common areas, auditorium, cafeteria and five
vacant floors, in addition to finding new tenants and extending the leases of existing renters.
Growing market
In the wake of the financial crisis, many investors focused on prime properties in their hunt for reliable returns while the value-add market was dominated by private-equity firms including Blackstone Group LP and the Carlyle Group. Now, traditionally conservative investors including pension funds and insurers are taking on more risk to improve returns because yields are low for assets such as prime buildings and sovereign bonds. In the wake of the financial crisis, many investors focused on prime properties in their hunt for reliable returns while the value-add market was dominated by private-equity firms including Blackstone Group LP and the Carlyle Group. Now, traditionally conservative investors including pension funds and insurers are taking on more risk to improve returns because yields are low for assets such as prime buildings and sovereign bonds. Investors bought 19 billion euros of value-add office properties in
German exports and imports fall more than expected But business morale unexpectedly rose in November to its strongest reading since June 2014
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erman imports fell sharply in October and exports also weakened. Economists were divided on whether the drop was part of a declining trend or whether October’s figure was skewed by strong September data. Seasonally-adjusted exports edged down by 1.2 percent while imports slid 3.4 percent, the biggest one-month fall since April 2012, the Federal
Statistics Office said yesterday. Germany’s trade surplus widened to 20.8 billion euros from 19.2 billion in the prior month. Economists polled by Reuters had been expecting smaller declines in exports and imports of 0.5 percent and 1.0 percent respectively, and a trade surplus of 20.0 billion euros. ING Economist Carsten Brzeski warned against reading too much into the monthly drop in exports, saying
Europe in the first nine months of this year, up 50 percent from a year earlier, according to data compiled by Real Capital Analytics Inc. BlackRock has also benefited from refurbished European buildings in the past. In May, the firm said it sold the Illum department store in Copenhagen to Thai Central Group, fetching as much as 400 million euros, according to an estimate by Nordic Property News. The property was acquired in 2011 for about 220 million euros by MGPA, now a unit of BlackRock, then refurbished and expanded. Mueller declined to comment on the deal. The focus will be on office and retail buildings, each valued at less than 100 million euros. The firm manages US$21.5 billion of real estate assets in 11 countries in Asia, Europe and the U.S. It had about 7 billion euros of assets in Europe at the end of 2014. Mueller will also continue to invest in U.K. properties, with the pace of investment there remaining steady compared with previous years. BlackRock plans to sell assets in the country within three years of buying them because prices have risen so much that there’s a risk of getting caught by a decline. Bloomberg News
it marked a technical correction after strong data in September rather than a structural shift. But Dekabank economist Andreas Scheuerle was more cautious. “German exports are on a rollercoaster ride. A good month is followed by a bad one. If you look at the long-term development the export path is downward,” he said. Foreign trade was a drag on German growth in the third quarter, and lower-than-expected industrial output data on Monday suggested German industry was still feeling the effects of slowdowns in China and other emerging market economies. However the data runs counter to other recent indicators that have painted a rosier outlook and suggested the German economy is undergoing a tentative recovery, helped by strong demand in the euro zone, after a weak patch over the summer. Business morale unexpectedly rose in November to its strongest reading since June 2014, while the private sector continues to grow and manufacturers remain optimistic about their prospects. Reuters
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December 10, 2015
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Like anything of value, bond market liquidity should cost James Saft
Reuters columnist
BANGKOK POST Car makers have urged Thailand to join the TransPacific Partnership (TPP) agreement to ensure the country’s automotive export prospects in the long run. The agreement was signed by 12 Pacific Rim countries in early October. Any free trade agreements, bilateral or regional, would be a boon to Thailand’s automotive industry, which exports 70% of its overall production, said Pitak Pruittisarikorn, chief operating officer of Honda Automobile (Thailand). He was speaking at a seminar during the 32nd Thailand International Motor Expo 2015 at Impact Muang Thong Thani.
THE JAPAN NEWS The Japan Business Federation released Monday guidelines for the recruiting of new university graduates for 2016 that call on member companies to start interviews and other selection processes in June, two months earlier than in 2015. The country’s biggest business lobby, known as Keidanren, also called on members to set aside separate recruitment quotas for students studying abroad who are expected to be affected by the change in the recruiting schedule. Keidanren, which has some 1,300 member companies, is now set to consider its policy for 2017 and later.
THE NEW ZEALAND HERALD It seems the bricks and mortar shopping experience is still the preferred option for Kiwis looking to do their Christmas shopping. MasterCard’s annual Christmas shopping research, from an online survey of 1000 people, found although 66 per cent do regularly shop online, when it comes to Christmas shopping 70 per cent planned to purchase gifts in store this year. Country manager Peter Chisnall said those shoppers who had not been purchasing gifts throughout the year tended to head in-store in the few days before Christmas.
TAIPEI TIMES Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, is expected to increase revenues by more than 10 percent annually to US$30 billion next year, primarily on the back of new orders from Apple, market researcher TrendForce forecast. The chipmaker would again outperform its peers in the global semiconductor industry, which is expected to shrink 0.6 percent annually next year with revenues of US$329 billion, TrendForce forecast. With global demand expected to remain lukewarm next year […], Apple and Chinese chip designers are set to become the major driving forces in the industry, TrendForce said.
Bank of International Settlements headquarters in Basel, Switzerland
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orries about bond market liquidity illustrate little more than the fact that if you remove a subsidy, the price goes up. In this case the subsidy was from the public purse to banks, and through them to market liquidity as banks tried to make as much as they could from artificially cheap funding and easy money. As that subsidy is rightly, but painfully, removed, liquidity, the ease of buying and selling in financial markets, has become more expensive, costing something closer to its true cost and risks. That’s a good thing. Bond market worries have sent shock waves to markets around the world, notably during the “bund tantrum” of April, when 10-year German government bond yields skyrocketed almost tenfold, from just over nothing to 72 basis points in just over three weeks. Both there and in other instances, strange moves in markets are at least in part due to an unwillingness or inability of financial companies to use their balance sheets to arbitrage imbalances between buyers and sellers, according to the Bank for International Settlements, which Sunday released a study of the issue. Banks traditionally use their own balance sheets to buy and hold securities for a, hopefully, brief time when markets are out of balance. This can be profitable, but embeds risks which often are not reflected in quarterly profit and loss accounts. New tougher banking regulations make this less attractive for banks, resulting in jerkier movements in markets. “To be sure, to some extent this may reflect the fact that both funding and market liquidity
were badly under-priced pre-crisis,” said Claudio Borio of the BIS, which is often called the central bank of central banks. “We do not want to go back there. But it is also a symptom of deeper weaknesses. Remarkably, stand-alone bank ratings, which strip out official support, have deteriorated further since 2010 in major advanced economies.” We certainly don’t want to go back, which is why it is best to heavily discount the widespread complaints of banks that new regulatory burdens are impairing their ability to play their role as financiers. Also underneath the phenomenon is a desire by longer-term investors to buy insurance against the risks they face based on sharp movements in currency or sustained low interest rates. That sounds like a good idea, but not something which can be done without risk, a risk banks are now less eager to eat.
Swapping out According to the BIS the volatility in bund markets had its origin in derivative markets, where there has been very atypical movement in the cost of interest-rate swap markets, in which investors exchange a floating rate government yield for a fixed one of the same length of contract. The cost of options to buy a swap contract for a future date rose threefold from January to April 20, ahead of the bund tantrum. While this kind of price action often shows worries about the health of banks, as a swap carries with it the risk that the bank counterparty might not make good, this time the BIS thinks it may have been the
Jerky movements in derivative markets now and again will be a small price to pay for a more stable banking system, one which implodes the global economy with less damaging frequency
result of long-term investors wanting more swaps than banks had appetite to provide. “Such volatile movements in euro area interest rate derivatives markets raise questions about smooth pricing responses in the face of possibly transient order imbalances,” according to the BIS. Bizarrely, in U.S. swap markets spreads are strongly negative, implying that investors are demanding no premium for the risk of doing business with a private bank rather than a government. Here the root cause seems to be sales of U.S. Treasuries by foreign central banks, quite possibly by China seeking funds to meet currency outflows. That’s swamped banks with Treasuries, who not only don’t want to use balance sheet capacity to hold more but also aren’t happy taking the risk of arbitraging what seems a very low-risk anomaly. I’d venture that the point here is that imbalances aren’t always transient and banks should price them as if they are. Long-term investors seeking safety are asking for a valuable service, and banks need to price that service to reflect its risks. Jerky movements in derivative markets now and again will be a small price to pay for a more stable banking system, one which implodes the global economy with less damaging frequency. To be sure, illiquidity will slow economic growth, but that’s a trade-off. Banks will ultimately repair their capital, and may take more risk at reasonable rates. The post-crisis world may feature more volatility, but less volatility of the truly destructive kind. Reuters
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Closing New applications for Chinese RQDII investment scheme suspended
Taiwan, Korea bourses plan to launch chip index next year
China’s central bank has suspended new applications for the Renminbi Qualified Domestic Institutional Investor (RQDII) investment scheme, sources told Reuters yesterday. “Many Chinese institutions have made use of the RQDII channel to buy yuan bonds and certificate of deposits in the past two months,” said a source at a Chinese fund house, adding the scheme had now been suspended. China rolled out the RQDII scheme at the end of last year to allow domestic investors to buy assets in the offshore market.
The Taiwan and South Korea stock exchanges plan to launch a semiconductor index next year, two people familiar with the matter said yesterday. “The two sides need to first compile the index. Once there is consensus the technical details can be figured out next year,” one of the people told Reuters on the condition of anonymity. The Taiwan Stock Exchange (TSE) is holding a press conference Friday with its Korean counterpart to sign a memorandum of understanding for cooperation, according to an invitation sent to reporters.
Australian identified as suspected Bitcoin founder Whoever is behind it likely wants to keep their identify secret as detractors say Bitcoin’s use on the underground Silk Road website, where users could buy drugs and guns with it, could link them with criminal activity Martin Parry
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ustralian entrepreneur Craig Wright has been identified by tech publications as one of the suspected secretive founders of online cryptocurrency Bitcoin, as a home reportedly belonging to him was raided as part of a tax probe yesterday. There has long been speculation about who was behind the software written in 2009 under the Japanesesounding name Satoshi Nakamoto, with various media outlets unsuccessfully trying to find out. Technology-focused websites Wired and Gizmodo have now both suggested Wright was responsible, saying he fit the creator’s profile in nearly every detail, citing leaked documents. “The signs point to Craig Steven Wright, a man who never even made it onto any
Nakamoto hunters’ public list of candidates, yet fits the cryptocurrency creator’s profile in nearly every detail,” said Wired of its investigation. “And despite a massive trove of evidence, we still can’t say with absolute certainty that the mystery is solved. “But two possibilities outweigh all others: Either Wright invented bitcoin, or he’s a brilliant hoaxer who very badly wants us to believe he did.” Gizmodo said Wright and Dave Kleiman, an American computer forensics expert who died in 2013, were both involved in the development of the digital currency. It cited hacked emails and other documents, passed to its website, apparently showing Wright making repeated claims to being Satoshi Nakamoto over a
period of years. None of the details could be verified by AFP. Last year, Newsweek ran a cover story claiming reclusive engineer Dorian Satoshi Nakamoto was the mystery founder, but the Japanese-American denied any involvement.
Secret identity
People in the Bitcoin development community only know “Satoshi Nakamoto” as the name of the person who originated the ingenious concept and the computer coding behind it. But no one ever saw the presumably pseudonymous creator -- he, she or they only communicated on the Internet. Whoever is behind it likely wants to keep their identify secret as detractors say Bitcoin’s use on the
underground Silk Road website, where users could buy drugs and guns with it, could link them with criminal activity. Yesterday, police raided a home in Sydney reportedly belonging to Wright. The Guardian Australia said police forced open the property with staff wearing white gloves seen from the street searching the cupboards and surfaces of the garage. “The Australian Federal Police can confirm it has conducted search warrants to assist the Australian Taxation Office at a residence in Gordon, Sydney,” police said in a statement, without confirming it belonged to Wright. “This matter is unrelated to recent media reporting regarding the digital currency Bitcoin.”
The Australian Tax Office refused to comment, citing confidentiality. Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies. Its initial success has since met with a number of highly publicised setbacks. One of Bitcoin’s biggest exchanges, the Tokyo-based MtGox, shuttered last year after admitting 850,000 coins -- worth US$480 million at the time -- had disappeared from its digital vaults. Bitcoin’s reputation was also damaged when US authorities seized funds as part of an investigation into the online black market Silk Road. AFP
Japan govt plans tax breaks on China’s illicit outflows estimated FIFA, Alibaba reach Club World low-emission cars from April 2017 at US$1.4 trillion over decade Cup partnership deal
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overnment will introduce tax breaks on low-emission cars from April 2017 in a bid to accelerate a shift to environmentfriendly vehicles and to support car sales, ruling party and government sources told Reuters yesterday. The plan will be implemented at the same time the country’s sales tax rises to 10 percent from the current 8 percent, according to the sources, who insisted on anonymity because it has not been finalised. The car plan is contained in a draft of the ruling bloc’s annual tax code revision seen by Reuters. Also in April 2017, the current automobile tax will be revised and a car acquisition tax will be abolished. Under the scheme, electric cars and highly fuelefficient cars will be tax exempt, and a tax rate of up to 3 percent will be levied on car purchases depending on fuel efficiency. The new measures should produce tax revenue of around 89 billion yen (US$725 million) in the fiscal year ending in March 2018, about 21 billion yen lower than the current year’s income from the car acquisition tax, they said. Reuters
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his is the largest amount for any developing nation, as money exited the country through channels including fake documentation on trade deals. The estimate for the 10 years through 2013 was published yesterday by Global Financial Integrity, a Washington-based group researching cross-border money transfers. The study is based on data reported to the International Monetary Fund and covers money which GFI believes to be illegally earned, transferred or utilized. Money flowing out of China this year has helped to pump up property markets from Sydney to Vancouver, while prospects for a weaker yuan may drive more cash abroad. The bulk of US$7.8 trillion of illicit money that exited developing nations over the 10-year period was disguised as trade through fake invoicing, the report said. That’s a method that was highlighted in China in 2013 when the government cracked down on false documentation that was hiding money flows and distorting the nation’s trade data. While citizens are officially limited to converting US$50,000 per person a year, a range of tools exist for getting around that restriction.
IFA and Alibaba E-Auto, an “internet car” brand owned by Chinese e-commerce firm Alibaba Group, yesterday reached an eightyear presenting partnership of FIFA Club World Cup from this year’s edition of the football club competition until 2022. The agreement marked that Alibaba became the first Chinese company to have presenting partnership with the FIFA tournament and both sides vowed to promote the world’s most prestigious club football competition to a global audience through the exclusive rights associated with their cooperation. For his part, FIFA marketing Director Thierry Weil welcomed the beginning of their cooperation and expected to benefit from Alibaba’s innovation, adding FIFA is “excited to be working closely with them (Alibaba) to embark on a journey to reach fans across the world.” Alibaba E-Auto will present the Most Valuable Player (MVP) award at each match during the tournament, including the final match on 20 December, according to FIFA. This year’s edition of the FIFA Club World Cup will be kicked off in Japan’s Osaka and Yokohama from December 10 to 20.
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