MOP 6.00 Closing editor: Joanne Kuai
Yuan’s stabilization a major target for 2016 Pages 10-11
Year IV
Number 953 Monday January 4, 2016
Publisher: Paulo A. Azevedo
SJM announce up to two-month bonuses for workers Page 4
Chinese businessmen become best ambassadors Pages 10-11
Macau gambling take tumbles for second year in row Gambling revenue in the SAR fell for the second year in a row in 2015 as a prolonged anti-corruption campaign and slowing economic growth battered the world’s largest casino hub. Gambling revenue fell 34.3 per cent to MOP230.84 billion (US$28.93 billion) last year, government data showed. December revenue dropped 21.2 per cent from a year earlier to MOP18.3 billion, the 19th straight month of declines – although the smallest year-on-year drop since last January Page
5
Due duty Financial Services B u re a u (D S F ) said transactions on Pearl Horizon units made after the land concession expiry date are also obligated to pay stamp duty. Tax refund could only start if a court verdict says the government wins its reclaiming the land plot as indicated by Secretary for Administration and Justice previously. So far, more than MOP600 mln have been collected on Pearl Horizon transactions
Page 2
China’s manufacturing purchasing managers’ index came in at 49.7 in December, up from 49.6 in November, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. Far away yet from the expansion border of the 50 mark, but it does offer a hint of fresh air amid the global downward trend
Page 8
HSI - Movers December 30
Legal experts
Name
The office of the Secretary for Economy and Finance, Lionel Leong, has hired António Lobo Vilela, a Portuguese lawyer specializing in Macau gaming law, as his adviser on gambling issues and he’s due to start in the new year. It follows a November appointment of former assistant public prosecutor-general Paulo Chan as the new head of the gaming regulator to help further strengthen oversight of the industry
Page 3
Interview www.macaubusinessdaily.com
Little fresh air
%Day
China Resources Beer H
+4.14
Bank of East Asia Ltd/T
+3.04
China Resources Land L
+2.73
China Overseas Land &
+1.87
Tencent Holdings Ltd
+1.19
Hang Lung Properties L
-1.12
PetroChina Co Ltd
-1.17
Cheung Kong Property
-1.18
Sino Land Co Ltd
-1.39
CNOOC Ltd
-1.59
Source: Bloomberg
Photo-opportunity
I SSN 2226-8294
Gaming industry has provided other sectors with great opportunities, even in a time of some dismay said Nuno Veloso, CEO of Visual communications company Core Productions. The photographer who recently launched a new studio said their business has actually grown in the last two years and is now eyeing for an even bigger picture. Despite some challenges like human resources, Mr. Veloso believes being a bit ‘aggressive’ may help to thrive in this small market
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2016-1-5
2016-1-6
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2 | Business Daily
January 4, 2016
Macau
DSF: over MOP600 mln stamp duty received on Pearl Horizon transactions Meanwhile, Pearl Horizon flat owners found a proprietor union and call for Monetary Authorities’ intervention in mortgage payback in order to lessen burdens of some homeowners
F
inancial Services Bureau (DSF) said it has received 3,477 cases of property transaction stamp duty declaration on the Pearl Horizon units and it has collected an amount totalling MOP601,772,964, with the latest payment made on 17 December 2015, according to a press released issued by the bureau during the weekend. Over 3,000 of these units have already been sold via off-plans before any brick was laid on the ground, according to the government’s earlier disclosure. DSF indicated in the press release that one unit could be transacted several times. The bureau further quoted article 52 of the stamp duty regulation that even if the paperwork or act of certain transactions are deemed invalid, stamp duty cannot be exempted. Hence, transaction of the units made after 25 December on which the land concession expired, taxpayers still have to declare and pay for the stamp duty. However, the bureau added that as Secretary for Administration and Justice Sonia Chan Hoi Fan said on a December 7 press conference, if the government won the lawsuit and the land concessions are deemed invalid resulting in the contracts signed by the developer and the homeowners not able to be fulfilled, the government will return the paid stamp duty to the homeowners in accordance with
law, as well as providing free legal consulting.
Sensitive time
Pearl Horizon, sitting on a site known as lot-P of Areia Preta in Macau peninsula, is designed to house 18 towers of a total of 5,000plus residential units. However, the government has announced the decision to take back the 68,000 square metre site in the beginning of last month, saying that the developer Polytex Corporation Ltd has failed to complete the land use before the land concession expiry date which was 25 December 2015. Polytex said they have already filed lawsuit against the government and sued it over delays in issuing the requisite approvals for the construction of the residential project. The developer still eyed a completion date for Pearl Horizon in 2018 if it won the lawsuit. Polytex is a member of the Hong Kong-based developer Polytec Group. The group owns 80 per cent of interest in Pearl Horizon; it also owns 80 per cent of interest in another residential project located near the Pearl Horizon site, known as lot-T and T1 in Areia Preta. This residential project, sitting on an aggregate site of 17,900 square metres, is to be developed into upscale residential blocks and shopping area, according to the
group’s interim report. The 25-year temporary concession for the property project on lot-T and T1 is expiring in mid-2017. According to TDM Radio’s report, homebuyers are now getting more and more cautious on off-plan sales. “Before the Pearl Horizon incident, people seldom paid attention to land concession expiry date,” said Cheong Lai Wa, Senior Regional Sales Director of Centaline Macau, as quoted by TDM. “They still show great interest in buying properties. But clients would ask about this kind of issue now. They are getting much more cautious on off-plan sales.” Ms. Cheong said regarding the other plot in Areia Prera on lot – T and T1, since it’s a sensitive period, they’ve stopped promoting such units. She also disclosed that the transaction on unfinished-units has dropped to 10 to 20 per month recently from the usual 40 to 50.
United homeowners
On the first day of 2016, hundreds of claimed Pearl Horizon homeowners have staged a protest and walked around the construction site where the works have already been suspended, according to local Chinese media TDM Radio’s report. “All we wanted is to have the flat,” said one of the participants Ms. Wong as quoted by TDM. “All the
politics involved and other changes are irrelevant to us.” The homeowners said they had established a new proprietor association. One main purpose of the union is to negotiate with banks to ease the burden of homeowners who have already paid the full flat price with a mortgage. They call on the Monetary Authority (AMCM) to intervene and lend a helping hand to more than one thousand proprietors facing this situation. “We are in talks with the Macau Association of Banks regarding the mortgage adjustments. It’s a piece of useless land now and the government said it’s taking it back. We are helpless. The economy is taking a downturn and the incomes are not great. We would like to see if there could be some room for adjustment of the interest rate,” said Kou Meng Pok, president of the newly established Pearl Horizon proprietor association. Mr. Kou added that last year during the Handover day protest, some individuals of the Pearl Horizon homeowners protested and caused conflicts. The united group wish to have a more rational approach to deal with the government, developer as well as the media and hope to solve the matter in a peaceful manner also as soon as possible. The flat owners said more than 400 of them came out, while the police say there were 150 protestors.
Business Daily | 3
January 4, 2016
Macau
New gaming adviser Portuguese Lawyer António Lobo Vilela has been hired as a senior legal adviser for the Cabinet of the Secretary for Economy and Finance
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ntónio Lobo Vilela is the new adviser of Secretary for Economy and Finance, Lionel Leong. A senior legal adviser for the Legal Affairs Bureau from October 2000 until August 2003, Mr. Vilela, who holds a degree from the Faculty of Law of the University of Lisbon, joined Macau’s Gaming Commission in 2003 to be part of the team lead by Jorge Oliveira, that draft the gaming legislation that would allot the semi-liberalisation of gaming in Macau, with three concessionaires and three sub-concessionaires. In 2010 Mr Vilela joined, as partner, Macau Gaming Consulting Limited and in 2012 LVT Layers. Both positions terminated prior to joining Lionel Leong’s team. Specialized in Macau gaming law, Mr. Lobo Vilela is expected to help the secretary on gambling issues. The Gaming Inspection and Coordination Bureau (DICJ) has a new director.
Former prosecutor Paulo Martins Chan replaces Manuel Joaquim das Neves who use to be advised by David Green’s New Page on matters related to gambling. The new head of DICJ has said he intends to reform the law on gaming. “On the basis of the midterm review of the gaming industry here, I’ll fully examine gaming-related laws and the internal guidelines for VIP gaming promoters,” Mr Chan said after being sworn in as director of the bureau. This year is considered an important one for gaming operators, since the government said it will announce the results of the gaming review early this year. The review examines the progress of the six casino operators since the liberalisation of the gaming market in 2002. Each of the concessions they hold will expire between 2020 and 2022. A.L.
António Lobo Vilela is the new adviser of Secretary for Economy and Finance, Lionel Leong
CE: concerted efforts to help enhance Macau’s economic competitiveness The Chief Executive reckoned that participation in the nation’s development strategies would be one of the effective ways for Macau to diversify its economy
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he Chief Executive, Mr Chui Sai On, said the Government – helped by the concerted efforts of Macau’s people – would strive to improve the city’s economic competitiveness and would endeavour to overcome any challenges. In his New Year Message, Mr Chui stated that participation in the nation’s development strategies would be one of the effective ways for Macau to diversify its economy – and to improve the livelihoods of its people – during the ongoing adjustment period for the gaming industry.
In 2016, the Government would step up efforts to create more favourable conditions for living and working, and for transport, travel and entertainment, said Mr Chui. Macau would also use its unique advantages in order further to contribute to policies for national advancement, such as the Silk Road Economic Belt and the 21st Century Maritime Silk Road (collectively known as the “Belt and Road” Initiative). Such a contribution was also a way for the Government to boost Macau’s economic development, Mr Chui stated.
Mr Chui noted there was room to improve the effectiveness and efficiency of public administration. He added the Government would continue to implement the principles of “One country, two systems”, “Macau people governing Macau” and Macau’s enjoyment of a high degree of autonomy, in full compliance with the Basic Law. He said the Government would use its best efforts in supporting the organisation of the 5th Ministerial Meeting of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking
Countries, an event to be held in Macau this year. The year 2015 was a remarkable period for Macau, Mr Chui said. Important milestones included: the clarification of Macau’s administrative responsibilities arising from the updating – by the State Council – of Macau’s administrative division map; and the initiation of a top-level planning system to manage Macau’s development over a five-year period, with a focus on transforming the city into a world centre of tourism and leisure. He said his cabinet would spare no effort in maintaining respectively the people’s welfare, sound public finances, and the Government’s investment proposals, in the ongoing adjustment period of the gaming industry. Regarding the people’s wellbeing, the Government is committed to pressing ahead with long-term mechanisms for social security, healthcare, housing, education and talent cultivation, he added. The achievements and development of Macau were attributable to the full support received from the Central Government and the joint efforts of the residents, Mr Chui further stated.
4 | Business Daily
January 4, 2016
Macau
SJM announce up to two-month bonuses for workers
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ocal gaming operator Sociedade de Jogos de Macau, S.A. (SJM) announced to distribute bonuses to its workers this year, according to an internal notice posted by gaming union Forefront of Macau Gaming. The internal announcement shows that the company’s workers whose monthly salaries are MOP20,000 (US$2,500) or below will be able to receive bonuses equivalent to their two-month salaries, while those receiving higher wages will be distributed bonuses equivalent to 1.5 months of their salaries, or MOP40,000. This bonus scheme is called “living subsidies” by the operator and is divided into “new year subsidies” and “summer subsidies”. According to the notice, “new year subsidies” have been distributed to SJM workers on January 1 while summer subsidies will only be issued on July 1 this year. K.L.
Lippo: Uncertainties still cloud Korean casino-project
H
ong Kong-based property developer Lippo Ltd. said its joint gaming project with US-based gaming operator Caesars Entertainment Corp. in Incheon, South Korea is still clouded with “uncertainties”, indicating the company is unsure whether the project will be granted a final licence for operation. On December 21 last year, the company said in a filing that the consortium of Lippo and Ceasars, which obtained a conditional deal to acquire a land plot for their Korean gaming project with the vendor MIDAN City Development Co. Ltd in 2014, had not mutually agreed on all the conditions in their conditional land sale and purchase agreement,
which was due to expire on December 31, 2015. A filing by Lippo with Hong Kong Stock Exchange last Thursday updated that the parties eventually failed to reach consensus on their land deal as at the contract expiry date. Claiming the consortium is still in discussion and negotiations with the plot seller, Lippo said ‘there is no assurance that such discussions and negotiations will result in any agreement, in which case the project will not proceed.’ The consortium for the Korean gaming project, named LOCZ Korea Corp., comprises Lippo’s wholly owned subsidiary Lippo Worldwide, partly-owned OUE International and Caesars Entertainment’s
subsidiary Caesars Korea. The joint venture was given the green light by the Ministry of Culture, Sports and Tourism of the Republic of Korea to design, develop, construct and own the gaming project in Incheon in March 2014.
José Manuel Braz-Gomes
In loving memory of a life well lived This coming Wednesday, January 6th, when José Manuel Braz-Gomes would celebrate his 70th anniversary, a mass for the soul of our beloved friend will be celebrated at Macau Cathedral at 6pm.
Nevertheless, in addition to the uncertainties for the land deal, Lippo said the project itself is also full of uncertainties, such as, whether the members of the consortium would agree and finalise the investment and
its form in the project, as well as whether the parties will enter into definitive agreement governing the project on mutually agreeable terms. ‘The preliminary review approval [from the South Korean authorities] is conditional and accordingly there is no certainty as to whether the final licence will be granted,’ Lippo wrote in Thursday’s filing. The consortium planned to invest 743.7 billion won (HK$4.92 billion/US$61.3 million) in the first phase of the project by 2018 and a total of 2.3 trillion won for the whole project, which will include a foreigner-only casino, hotels, residential buildings, convention centres and shopping malls.
Business Daily | 5
January 4, 2016
Macau
Casino fortunes hit 5-year low, lead on Vegas narrows Gambling revenue fell 34.3 pct to MOP230.84 billion last year. December revenue dropped 21.2 pct from a year earlier to MOP18.3 billion, the 19th straight month of declines
M
acau casino revenue sunk to the lowest level in five years as Chinese high-rollers stayed away in 2015, narrowing the world’s largest gambling hub’s lead on Las Vegas. Gross gaming revenue fell 34.3 per cent to MOP231 billion (US$29 billion) last year, according to data released by Macau’s Gaming Inspection and Coordination Bureau. That compared with the median estimate of a 35 per cent decline from nine analysts surveyed by Bloomberg. While casino takings dropped 21.2 per cent in December -- falling for the 19th straight month -- that represented the smallest yearon-year decline since last January. Macau’s six gambling houses have seen about US$45 billion in market value wiped out this year amid a free-fall in casino receipts, as China’s corruption crackdown scared off high-stake players and a slowing economy hurt mass-market gambling. Stricter government policies and key personnel changes, including a new regulator and adviser to oversee gambling, could further impact the hard-hit industry. "Macau has seen much greater pain in 2015 than everyone expected at the beginning of the year," Aaron Fischer, head of consumer and gaming research at CLSA Ltd., said before the data was released. “It would be difficult for the first half of the year for sure because there’re not so many catalysts to drive a rebound.”
Narrowed gap
Macau’s casino industry, which raked in gambling revenue about seven times more than the Las Vegas Strip in 2014, has seen its lead on the U.S. casino district narrow to about 4.6 times in the first 11 months of last
year amid the slump. The Nevada gaming regulator will publish Vegas’ December figure in the new year. The high-valued punters known as VIPs, typically measured via their favorite card game baccarat, have led the downturn. VIP revenue, which accounted for more than half of Macau’s total gambling receipts, saw a 41 per cent drop in the first nine months of 2015 compared with a year ago. Macau’s VIP gambling segment is set to fall another 13 per cent in 2016, compared with a 6 per cent rebound for the mass market, according to the median estimate of analysts surveyed by Bloomberg. High-stakes gambling will only recover in 2017, rising by 1 per cent versus 11 per cent growth for the mass market the same year, the survey showed.
Junket operators
Analysts are forecasting another 5 per cent decline in 2016 before rebounding 7 per cent in 2017. A continued liquidity squeeze in the junkets industry -- middle-men operators who bring in high-rollers and lend them money to gamble with -- is expected to cause further pain to the VIP segment. The case of an alleged theft in September by an employee of junket operator Dore Entertainment prompted some investors to withdraw funds from the company and other junkets, causing a liquidity shortage and curbing high-rollers, according to Nomura Holdings Inc.’s Richard Huang. The analyst said he cut his 2016 revenue estimate to a 9 per cent drop from a 5 per cent growth as weakness in the VIP segment may persist. “Conversations with casino operators don’t give us confidence
that junket volumes improve in the New Year,” Union Gaming Group LLC analyst Christopher Jones said. “Most seem preparing for further moderation in junket VIP in 2016.”
New properties
Potential bright spots could come from new casino resorts by three Las Vegas-based operators due to start in 2016, after projects opened by Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd. last year. Wynn Macau Ltd. will have a new resort surrounded by cable cars and Sands China Ltd.’s features a halfsize Eiffel Tower replica, while MGM China Holdings Ltd. designed one to look like a stack of jewelry boxes. While Melco’s October opening of the Hollywood-themed Studio City hasn’t translated into much of a boost for the industry, Fischer said he sees the addition of more new resorts helping improve customer traffic to Macau, with individual owners gaining market share when their projects start operations. Any recovery could still be hampered by stricter government policies, such as tougher restrictions
KEY POINTS 2015 revenue US$28.9 bln compared to US$44 bln in 2014 Wynn, Sands to open new Macau resorts in 2016 High roller VIP segment likely to continue declining
on smoking, junkets and gaming tables, as well as closer scrutiny on the use of China UnionPay Co. debit cards. The cards are commonly used by patrons to purchase luxury items in exchange for cash to gamble with. There could be further shakeup in the industry next year. Macau is in the midst of reviewing operators’ performance and contributions to the city in the past decade, the result of which will be used to help the government map out the industry’s future development. The operators’ 20-year concession contracts will come up for renewal from 2020 to 2022.
Legal experts
Times have changed. Macau, which offered favorable policies to gambling houses to help boost the economy when it liberalized the market in 2001, may become stricter with gaming rules, said Carlos Siu, an associate professor of gaming research at Macao Polytechnic Institute. This can be achieved with the help of those with legal experience in the industry, he said. Lionel Leong, the city’s Secretary for Economy and Finance, in November appointed former assistant public prosecutor-general Paulo Chan as the new head of the gaming regulator to help further strengthen oversight over the industry. Leong’s office has also hired Antonio Lobo Vilela, a Portuguese lawyer specializing in Macau gaming law, as his adviser on gambling issues and he’s due to start in the new year, according to a person who asked not to be named because the person isn’t authorized to speak to media. Vilela was charged with drafting the gaming legislation and concessionaires’ contracts when the city opened up the gaming market. Requests for comment from the department had yet to be answered by the time of this article’s publication. “There are few people who are familiar with gaming law” in Macau, said Siu who has a decade of experience in gaming research. “An experienced adviser can help the new director have a more thorough understanding about Macau gaming history before he evaluates how to amend to law to balance interest of all parties.” Bloomberg
6 | Business Daily
January 4, 2016
Macau
“Casinos diversify local demands to photography” Visual communications company Core Productions has recently launched a new photography studio - Core Studio. Its CEO, Nuno Veloso, told Business Daily in an interview that the city’s gaming industry has actually offered many opportunities for the photography industry to grow, with the major market demands coming from weddings. For his business, human resources are one of the difficulties as it is hard to fight with casinos and the government for good talents Kam Leong
kamleong@macaubusinessdaily.com Photo courtesy: Core Productions
Why would you have the idea to launch a photography studio?
First of all, Core Productions is the main company of the [studio] project. Core Productions is a visual communications company that works for videos and provides consultation on marketing and branding strategy, as well as everything else related to images and visual communications. If we have a production house, we can help other teams in Macau or outside Macau to have photo shoots in the city as we can provide support to them. For example, we have recently assisted a team from Shanghai. In addition, the headquarters of Core Productions is here, so I thought why don’t I open a studio myself. After all, my day-by-day work is in the studio shooting. So I thought – Let’s open the studio and bring some life here.
How long did the preparation take?
It was quite short as I had four studios before, two in Portugal and two in London. Every one of them had their own identity.
What has brought you back to Macau?
There are two major reasons – first of all, I want to have a family. I want to have kids and I have two already and they were born in Macau. I don’t think London is a good place to raise a family. Meanwhile, the second reason is the lack of light in London. I’m a photographer and I need lights, not just the studio lights and the flash lights. I need sunlight, while there is no sunlight at all in London. Before I came to Macau, I thought about Brazil because of the language and the people there, as well as Angola as people were talking about it as an ex-colony [of Portugal] at that time. But I said no - I know Macau which is part of my childhood. And there is a casino market, while Hong Kong with the fashion market is just nearby. After all, I don’t come to Macau for fashion.
The market environment of Macau, compared to London, should be very different for a fashion photographer, how did you manage to adapt to these differences?
I left Macau when I was 17 years old. When I arrived back to the city, it felt like my home again. For fashion photography, it is all about context as you need to go to meet people, show people about your work then people would decide whether they want you or
Nuno Veloso Nuno Veloso, growing up in Macau, is a fashion photographer. Before he moved back to the city in 2010, he had worked in Portugal and London, where he opened a total of four photography studios. Bringing back his career to the Special Administrative Region where local demands to fashion photography is not that high, Mr. Veloso worked with gaming operator Sands China for more than two years. He then left the company and launched Core Productions two years ago with two partners. Meanwhile, the company officially launched its new project Core Studio last month.
not. I think this is the same the world over. As such, I do basically the same here, visiting people’s doors, introducing myself and showing my portfolio to them. But I did feel a bit difference when I worked for Sands China for two and a half years. I was the art director and chief photographer of the group then. At that time, I needed to wear my suit and my tie, sitting in the office explaining what photography is. That was a bit more difficult for me but I would not say it is due to the local market, or Chinese or Macanese, but because of dealing with people of different nationalities, such as locals, Australians etc. It was actually easy to adjust my way of working and dealing business and relationships with clients and colleagues. I think it is pretty natural for you to adjust when you understand you are in a different market.
Who are the major customers?
For Core Productions, the major clients are casinos, restaurants and fashion brands. For casinos, we are talking about different clients inside the casinos, for example, the corporate itself, the F&B part and the gaming team. As such, one casino client may actually involve many other clients. It is also divided into two segments – the first is below the line, which is internal advertisement for the brand, such as the pictures on a menu of a restaurant. Besides, we have another service facing more market communications, for example, developing or producing a campaign for the resort itself to attract people. For Core Studio, it is a studio
Nuno veloso
for shooting that aims at private customers from different areas. For example, we can provide portrait shooting if some clients want professional portraits for their profile. Or we can photo shoot people with their pets or only their pets. We can also shoot about couples, people with friends and families. Meanwhile, we also target professional clients, such as actors, dancers, models and clients who need image to be in whatever industry.
How about weddings?
In fact, the demands for photography in Macau are majorly from weddings. However, we don’t advertise that we do weddings [photo shoots] as there already are like thousands of photographers there doing weddings. We can do. We have probably the best photographers for [shooting] the weddings, but it’s not our market and it’s not our targets. If people come to us, asking us for wedding photography, it is still fantastic for us as this is another job. But we don’t market as a wedding photography company.
Why?
For me, one photographer can handle the wedding photography. But I don’t work as one photographer, I have a company and I will need to do it by company-scale so we will do it differently. Besides, there are many good people doing that. I can say the best wedding photographers are probably from Macau. As such, we provide business-to-business service. Apart from casinos, we can work with the government, education institutes, for example we have worked with the University of Saint Joseph before. That is the core business of Core Productions.
Would you agree that the gaming industry has actually offered a lot of opportunities to local photography industry?
Yes, definitely. I don’t know very much about the market but I know personally that there are around 10 to 12 professional photographers in Macau who make a living on photography or on photographyrelated business. I’m sure that if we don’t have all these casinos,
Business Daily | 7
January 4, 2016
Macau
this number of 10 to 12 that can make living on photography will be drop to 3 or so, while the others will all be doing wedding photography, as the major demands for photography here are from weddings. Although casinos are definitely very good clients, they could do more. When you work with casinos, it would be very tough for you to have a right meeting with right people for producing the right things. Sometimes you fail to produce what they want, but it is not just fault but due to their [internal communications] so things can be a bit tricky sometimes.
When you work with casinos, it would be very tough for you to have a right meeting with right people for producing the right things
Do you think the introduction of non-gaming elements will even provide more opportunities to photography industry?
I think so and I hope so. In the past, everything was about the gaming revenues. They had a lot of money and they would invest to do this and do that. They are now creating another system for creating profit. When they are successful, they would invest in visual communications for sure. In addition, non-gaming entertainment will be more interesting and challenging. For me, frankly, I would prefer to shoot
a family than to shoot a player. Besides, there are so many things you can do. We have another arm called Core Education, which is working on some internship projects with some universities. We will have more courses on the way.
What are the difficulties of running a visual communications company or studio in Macau, like human resources?
There are certainly difficulties in human resources. I have three people working full time now but it took me almost one year to have the third one. Macau is very small. The unemployment rate is not high, whilst casinos and government offer many big opportunities. As such, as a small-medium company, you are unable to compete for human resources with the government or the casinos. We usually stay with the “leftovers”. But most of these “leftovers” would prefer opening their own businesses or being an independent photographer. For me, I need to offer salary as high as casinos or government do, in order to recruit good people working for me. Otherwise, I don’t have people good enough working with me. So I decided to invest.
What do you think about the demand and supply in the local market?
The demands are huge. Unfortunately, we still need to deal with competition from Hong Kong. For example, my company is a visual communications company. It thus cannot do the job as an advertisement company. When casinos hire an advertisement agency to create
a campaign, they would usually hire those from Hong Kong. And these agencies, when they need photographers, will hire those from Hong Kong instead of Macau. From my observation, half of the photography jobs are granted to photographers outside Macau while the other half are for local photographers.
How do you see the prospect of your business?
I think it would be perfect. For example, our studio has only been opened for one month and we have done a few photo shoots already. For Core Studio, it still needs some time to grow. For Core Productions, the number of clients is increasing. Although the scale of projects is smaller, the budget is higher. We don’t really feel the crisis that people have been talking in the past two years. We have actually grown.
There are four more casino resorts to be opened this year…
Yes, and [the offer] is more than the four casinos, imagine each casino has 10 restaurants - there will be 40 new restaurants in total, plus other entertainment shows, the offer is very huge. However, in my opinion, as the local market is small, we need to be a bit more aggressive by being well-prepared, with good knowledge and by knowing how to be in the market. Sometimes I am very upset that some photographers offer prices lower than the market average in order to get a job. This is very wrong as clients would not care about qualities but only prices. When everyone’s prices are similar, people will choose photographers depending on the quality, which is healthy for the market to grow.
What are the future plans for your company?
We have a few ideas in mind. But maybe it’s a bit too early to reveal as Macau is still small. I can only say that we have new ideas for the business-to-business market as well as the individual market. Certainly, there will be more “Cores” coming.
8 | Business Daily
January 4, 2016
Greater China
Grim factory activity in December keeps d
The central bank is widely expected to cut interest rates and banks' reserve requirement
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hina looked set for a soggy start to 2016 after activity in the manufacturing sector contracted for a fifth straight month in December, suggesting the government may have to step up policy support to avert a sharper slowdown. While China's services sector ended 2015 on a strong note, the economy still looked set to grow at its slowest pace in a quarter of a century despite a raft of policy easing steps, including repeated interest rate cuts, in the past year or so. The world's second-largest economy faces persistent risks this year as leaders have pledged to push so-called "supply-side reform" to reduce excess factory capacity and high debt levels. The official manufacturing Purchasing Managers' Index (PMI) stood at 49.7 in December, in line with expectations of economists polled by Reuters and up only fractionally from November. A reading below 50 suggests a contraction in activity, while a higher one indicates an expansion. Still, economists seemed to find some comfort that there were no signs of a sharper deterioration which has been feared by global investors. The slight pick up in the manufacturing PMI "suggests that (economic) growth momentum is stabilising somewhat ... however, the sector is still facing strong headwinds, said Zhou Hao, China economist at Commerzbank in Singapore.
"In order to facilitate the destocking and deleveraging process, monetary policy will remain accommodative and the fiscal policy will be more proactive." Weak demand from at home
and abroad has weighed on China's factories, exacerbating the problem of excess capacity and forcing them to cut prices of their goods, eating into their profits and adding to deflationary pressures in the economy.
President Xi vows to push reforms while expanding global role Leaders are seeking at least 6.5 percent annual growth in coming years and they plan to increase the deficit
Total new orders - a proxy for both domestic and foreign demand - rose to 50.2 in December from November's 49.8, the PMI survey showed. But export orders shrank for the
people in difficulties as much as we can. Let’s make our ‘circle of friends’ wider and wider.” The coming months will clarify the extent of Xi’s success in managing the country’s economic deceleration, amid efforts to streamline bloated state-owned enterprises and confront a rapidly aging workforce. Delivering robust economic growth has been a key source of the party’s legitimacy for more than three decades, and any further erosion of faith in the ability to maintain that pace risks prompting a more direct challenge to its rule.
The economy
We need to pave the way toward a moderately prosperous society Xi Jinping, President of China
Chinese President Xi Jinping
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hinese President Xi Jinping stressed the need for stable growth and to press ahead on political and economic reforms in 2016, as the world’s second-largest economy expands its role on an international stage. Xi used his annual New Year’s Eve speech to again emphasize how the country must open up its markets while lifting the lot of its 1.3 billion people, despite an economy growing at its slowest pace in a quarter-century. “We need to keep pushing forward structural reform as well as opening up, and keep promoting
social fairness,” Xi said in the speech aired by China Central Television, adding the need to build a harmonious political environment. “We need to pave the way toward a moderately prosperous society.” The address marked the end of Xi’s most challenging year since taking power in November 2012. While the Communist Party chief racked up wins such as the yuan’s designation as a global reserve currency, his handling of the stock market crash and the slowing economy raised questions about whether the government was committed to the choices necessary
to guide growth lower and ease the economy’s dependence on debt.
Next year
Xi also established the Asian Infrastructure Investment Bank and worked with U.S. President Barack Obama to forge a global deal to fight climate change. He executed several high- profile state visits including a U.K. tour during which he showed a more-relaxed side. “China won’t be absent from international affairs,” Xi said. “China will always keep its arms open to the world and will lend a hand to
Economic data should soon confirm whether China achieved the government’s growth target of about 7 percent, the slowest expansion in 25 years. Leaders are seeking at least 6.5 percent annual growth in coming years and they plan to increase the deficit, raising concerns that China still isn’t prepared to confront debt estimated at 280 percent of gross domestic product. In 2015, Xi widened an ideological clampdown on government critics, even those among the party’s 88 million members. A revised code of conduct for cadres was released in October, that prohibits “improper discussion” of party policies and principles. In last year’s address, Xi stressed the need to continue an anti-corruption campaign that’s netted more than 100,00 officials, foreshadowing progress on several high-profile case. Guo Boxiong, a retired top general of the People’s Liberation Army, was expelled from the party in July pending prosecution on corruption allegations, while former security chief Zhou Yongkang was jailed for life in June after a secret trial. Bloomberg News
Business Daily | 9
January 4, 2016
Greater China
downward trend
t ratios further this year
KEY POINTS Dec factory activity shrinks for 5th month but services pick up Official factory PMI 49.7 vs f’cast 49.7, Nov 47.6 Official services PMI 54.4 vs 53.6 in Nov Readings suggest economy needs more support measures in 2016
end of the year was tight for factories, putting relatively large pressure on manufacturers.
A challenging 2016
15th straight month, albeit at a less severe pace. The sub-index inched up to 47.5 from November's 46.4. The National Bureau of Statistics (NBS) said that although oil prices were very low at present, cash at the
China's economic growth is expected to cool from 7.3 percent in 2014 to 6.9 percent in 2015, the central bank said in a recent work paper, its slowest pace in 25 years. It said growth could ease further to 6.8 percent in 2016. Some China watchers, however, believe real growth levels are already much weaker than official data suggest. Leaders at the annual Central Economic Work Conference last month pledged to make monetary policy more flexible and expand
the budget deficit in 2016 to help underpin growth and reforms. Indeed, China could run its biggest budget deficit in half a century this year as leaders turn to more government spending to arrest the slowdown in the economy, policy advisers say, after disappointing returns from a year of policy easing. The PBOC has cut interest rates six times since November 2014 and reduced banks' reserve requirement ratios (RRR), or the amount of cash that banks must set aside as reserves. The government has also stepped up spending on infrastructure projects and eased restrictions on home buying to boost the sluggish property market. The central bank is widely expected to cut interest rates and banks' reserve requirement ratios further this year. A similar official survey on the services sector showed activity there quickened in December, again helping to ease fears of a hard landing for the economy this year. The services sector has been the lone bright spot in the economy in the last few years, helping to offset prolonged weakness in the vast manufacturing sector, though financial markets tend to focus more closely on factory readings. The official non-manufacturing Purchasing Managers' Index(PMI) rose to 54.4, from November's 53.6, according to the NBS. The services sector has accounted for the bigger part of China's economic output for at least two years. A private gauge of Chinese manufacturing Caixin/Markit PMI, which focuses more on small-tomedium-sized private firms, will be released on Jan.4. China is set to release fourth quarter and full-year GDP data on Jan. 19. Reuters
Taiwan opposition leader says managing risk key in economic ties with Mainland
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state-backed Tsinghua Unigroup to partly acquire three Taiwanese chip companies, the plans were unlikely be approved. The deals are still awaiting approval by regulators and company shareholders. Tsai has tread carefully in discussing how she will engage China if the DPP returns to power. The party has historically favoured the island’s formal independence and says it believes only Taiwan’s people can decide its future. Beijing takes this to mean it wants independence. Defeated Nationalist forces fled to Taiwan after losing the Chinese civil war with the Communists in 1949. Beijing has never renounced the use of force to bring what it deems a renegade province under its control. Relations have improved since the ruling Nationalist Party’s Ma Yingjeou became Taiwan president in 2008, and the two sides have signed a series of landmark trade and tourism deals. China’s Taiwan Affairs Office chief, Zhang Zhijun, said in his new year greeting to the people of Taiwan
China’s large and medium-sized steel mills suffered losses of 53.1 billion yuan (US$8.18 billion) in the first eleven months of 2015, according to China Iron and Steel Association (CISA). Of the 101 steel mills tracked by the CISA, the total sales revenue stood at 2.66 trillion yuan, down 19.3 percent from the previous year, according to the CISA report cited by the China Securities Journal. Steel prices have fallen from nearly 6,000 yuan per tonne to 1,600 yuan per tonne in the past two years, quite a painful experience for the steel producers, said analyst Zhang Yichen.
Crude oil output up China’s crude oil output edged up 2 percent year on year to 195 million tonnes in the first eleven months of 2015, new data from the country’s top economic planner showed. The National Development and Reform Commission (NDRC) said that China refined 436 million tonnes of crude during the period, up 3.1 percent year on year. Output of refined oil products gained 3.9 percent to 274 million tonnes, while consumption of refined products rose 1.1 percent to 253 million tonnes.
Crackdown on food and drug safety crimes Chinese authorities have recently unveiled measures to facilitate coordination between administrative and judicial organs in handling food and drug safety cases. A document to the effect was jointly issued by China Food and Drug Administration, the Ministry of Public Security, the Supreme People’s Court, the Supreme People’s Procuratorate as well as the executive office of the food safety commission under the State Council, China’s Cabinet. In the past, problems, such as ambiguous standards in case transferring or undefined responsibilities of different authorities in investigation, have hampered China’s effort to combat food and drug safety crimes.
Bombardier gets firm order from Express Airlines
Chairwoman of the Democratic Progressive Party has to tread carefully in discussing how she will engage China if her party returns to power anaging risk is a key to economic and trade ties with China, Taiwan’s opposition leader said on Saturday in a debate among presidential candidates, just two weeks before the country’s next election. The comments by Tsai Ing-wen, chairwoman of the Democratic Progressive Party (DPP), come weeks after she called a plan by Chinese state-backed technology group to invest around US$2.6 billion in Taiwan a “huge threat” to the island’s semiconductor industry. “The DPP has never excluded economic and trade exchanges with China,” Tsai said in the debate, which was televised live. “But we pay attention to the management of the risks.” Tsai said the DPP, which leans toward independence for Taiwan, hopes to continue in the “spirit” of using risk management and control to manage Taiwan’s economic and trade exchanges with China. Last month, Tsai said until doubts were resolved over plans by China’s
Steel firms report loss in 1st 11 months of 2015
Canadian plane maker Bombardier Inc said it received a firm order from China Express Airlines for 10 CRJ900 jets for about US$462.6 million based on the list price of the aircraft. China Express, a private regional airline based in Guizhou province, has ordered 38 of these aircraft of which 20 have been delivered to date, Bombardier said. Up to Wednesday’s close shares of the company, which competes with Embraer SA, had fallen nearly 69 percent this year on the Toronto Stock Exchange.
Beijing to work with neighbours to improve water quality Taiwan's 2016 presidential election candidate of Democratic Progressive Party's, DPP, Tsai Ing-wen
that “complex changes” lie ahead in ties. People on both sides of the Taiwan Strait should remain alert to “pro-independence, separatist” forces, he said. Tsai is one of three presidential contenders, which also include Nationalist chairman Eric Chu and James Soong, chairman of the People First Party. Taiwan votes for a new president and parliament on January 16. Reuters
Beijing, Tianjin municipality and Hebei Province will work together to address water pollution through the construction of a unified water monitoring network by the end of 2017. The three jurisdictions in northern China will improve their water monitoring systems, warning mechanism, information sharing and emergency response to prevent water pollution, according to a plan the Beijing municipal government released this week. Beijing, Tianjin and Hebei are working toward integrating their industries, transportation networks and measures to curb pollution so that they can achieve balanced, coordinated development in the region.
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Greater China
Entrepreneurs find new role – in diplomacy Aside from inking huge deals with foreign companies, Chinese entrepreneurs were also busy letting their voices be heard on the world's diplomatic stage Liu Xin, Yuan Quan, Han Qiao
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hinese entrepreneurs have accompanied state leaders on many official visits in the past year, promoting their businesses and China’s image as well. When President Xi Jinping visited the United States in September, his delegation included 15 business executives, many from the Internet sector. Selfies taken by the entrepreneurs with their American peers went viral when they were posted on the social media, adding a light tone to the high and cold diplomacy, and sparking confidence among Chinese netizens of the country’s rising economic power. Entrepreneurs were also among Xi’s entourage when he visited Britain in October. Among them was Wang Hongzhang, chairman of China Construction Bank (CCB). He witnessed the opening of a CCB branch in London. Finance is a key part of SinoBritish cooperation. China has set up an RMB clearing bank in London. Britain became the first country outside Asia to obtain the RQFII initial
Just like multinational companies the world over, Chinese enterprises are also exploring global distribution, the global value chain, and the integration of global resources Wang Zhile, head of the Beijing New Century Academy on Transnational Corporations
investment quota, the first Western country to issue RMB-denominated sovereign bond and the first major developed country to include RMB into its foreign exchange reserves. Sun Taoran, the founder of China’s e-payment service company Lakala, inked an agreement with Britain’s largest bill payment service company Allpay Limited during Xi’s visit. They will work together to establish a crossborder financial service platform. Other entrepreneurs have their shining moments as well. Wang Chuanfu, chair of Chinese electric vehicle manufacturer BYD witnessed his company signing a 660-million-pound (about US$1 billion) deal with British bus builder Alexander Dennis Limited (ADL) to introduce electric buses to the roads of Britain. China General Nuclear (CGN) and Electricite de France (EDF) signed an agreement to jointly construct and operate nuclear power plants in Britain. He Yu, chair of CGN, told Xinhua that the deal would promote the exportation of Chinese nuclear facilities to high-end markets in
Beijing seeking to sustain RMB stability amid U.S. rate hike cycle The central parity rate of the RMB has weakened to the lowest in more than four years against the dollar in recent weeks Gao Pan
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hina will seek to maintain the country’s currency renminbi (RMB), or the yuan, relative stable to a basket of currencies in 2016 as investors adjust to the start of a new rate hike cycle in the United States, U.S. experts said. The People’s Bank of China (PBOC), China’s central bank, said last Monday that it will keep the RMB exchange rate basically stable at a reasonable and balanced level as it seeks to maintain a prudent monetary policy and continue the market-determined exchange rate reform. “I think Chinese policymakers would like the environment to be stable. They don’t want to have any abrupt movements in the currency that could be destabilized,” Charles Collyns, managing director and chief economist at the Institute of International Finance (IIF), told Xinhua in a recent interview. China’s foreign exchange reserves fell by US$87.2 billion to US$3.43 trillion in November of 2015, the lowest level since early 2013, suggesting that an exodus of capital
was occurring ahead of a widelyexpected Fed’s rate hike on December 16. Collyns said it’s “a smart move” for China to release the CFETS RMB Index, a RMB exchange rate composite index that measures the currency’s value relative to a basket of other currencies, on December 11, a few days before the Fed’s decision to raise interest rates. The new index, released by China Foreign Exchange Trade System (CFETS), is calculated by comparing RMB to the average value of the 13 foreign currencies, including the U.S. dollar, euro and Japanese yen, weighted according to the trade volume with China. In explaining the reason for the index, the PBOC said it “will help guide market participants to shift their focus from the bilateral RMB/ USD exchange rate to the effective exchange rate, which is based on a basket of currencies.” The PBOC noted that valuing against a basket of currencies does not mean a peg to the basket, but it “will contribute to maintaining the
RMB exchange rate basically stable at an adaptive and equilibrium level.” “I think now they can argue that, look, we’re managing against a basket of currencies, we’re going to keep the currency broadly stable relative to the basket,” Collyns said, adding that this strategy would involve a degree of depreciation against the dollar and some appreciation against other currencies like the euro and yen. “That gives the Chinese policymakers more flexibility, because if the dollar appreciates against the euro, the RMB doesn’t have to appreciate fully with the U.S. dollar,” Collyns explained, warning that pegging to a strengthening dollar would cause further loss of competitiveness for China and hurt the exports. While the RMB has depreciated against the dollar by roughly 4 percent since the beginning of this year, it has actually appreciated by 0.87 percent against a basket of currencies as of December 25, compared with the end of 2014, according to the CFETS RMB Index. “I think it helps to avoid some of
Europe and provide opportunities for Chinese firms to get fully involved in the development of Britain’s nuclear power industry. Aside from inking huge deals with foreign companies, these entrepreneurs were also busy letting their voices be heard on the world’s diplomatic stage. At the eighth U.S.-China Internet Industry Forum where President Xi Jinping met around 30 Chinese and American Internet entrepreneurs in Seattle, Jack Ma, chair of Alibaba, was invited to speak first. Ma took the opportunity to speak as an “image ambassador” for China. His speech covered two important points: Why China’s economy is trust
the concerns that occurred this year when people were worried the RMB depreciated quite rapidly against the U.S. dollar, they lost the anchor for expectations about the exchange rates,” said Collyns, a former assistant secretary for international finance at U.S. Treasury. “I think the PBOC now establishes a new anchor, which will be helpful to stabilize the expectations.” “China’s exchange rate will no longer be dragged upwards against all other currencies by a rising dollar. But it is still likely to broadly stable against the world as a whole,” Gavyn Davies, former chief economist of Goldman Sachs and now chairman of Fulcrum Asset Management, echoed Collyns’s views. “Basically we see a broadly stable effective rate fluctuating around a rate of about 102.5 (using the authorities’ suggested base of 30 December 2014=100). The margins around this rate seem to be about 2.5
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January 4, 2016
Greater China Jack Ma is the international face of Chinese entrepreneurs
Structural reform to power stable growth The supply-side structural reform to improve all-factor productivity will help China gather future growth steam, according to the country’s finance minister. Despite heavy downward economic pressure, the Chinese economy is still resilient with generally positive fundamentals and huge potential, Lou Jiwei, head of the Ministry of Finance wrote. Labour force and capital inputs were used to power a country’s growth in the initial period, but post-industrial economic development will rely more on improvement of factors such as technology, management and labour force quality, Lou pointed out.
P2P lending almost quadrupled in 2015 worthy, and what role enterprises can play in exchanges between China and the United States. During Xi’s visit to Britain, Ma was appointed by British Prime Minister David Cameron as a business advisor. The later was impressed by Ma’s altruistic approach to business. Ma believes that in the data age, an enterprise can become stronger by helping others to be stronger. Cameron quoted Ma in his speech at a Britain-China business forum, saying the relationship between China and Britain should also follow the altruistic model. Wang Zhile, head of the Beijing New Century Academy on Transnational Corporations, said while it was not
rare for entrepreneurs to join state visits, “more private entrepreneurs were invited in 2015 year.” “This indicates that the government fully recognizes the contribution made by the private enterprises to economic development,” Wang said. “Just like multinational companies the world over, Chinese enterprises are also exploring global distribution, the global value chain, and the integration of global resources,” he said. “The entrepreneurs’ visits will give enterprises exposure to the most updated methods and patterns of their competitors,” Wang said. Zhao Yumin, deputy director of the Institute of Commodity Research of the Chinese Academy of International
Trade and Economic Cooperation under the Ministry of Commerce, said that the entrepreneurs represented more sectors this year. “The entrepreneurs [...] have a desire to go abroad since they have been equipped with sound global operation ability and international competitiveness,” Zhao said. “They hope to ensure favourable business environments thanks to the high-level visits,” Zhao said. “And for the country’s economic diplomacy, China is developing the strategy from foreign aid to business cooperation,” she said. “Thus, the entrepreneurs’ visits will benefit China’s diplomacy.”
percent either way,” Davies wrote in an analysis on his Financial Times blog, referring to the CFETS RMB Index. Tamim Bayoumi, senior fellow at the Peterson Institute for International Economics, a Washing D.C.-based think tank, encouraged China to take bold steps to formally announce a new exchange rate regime linking to a new basket, which would be in the interests of both China and the international monetary system. “Making the bold move of linking to the new basket published by the CFETS with a wider intervention band provides the potential for a smooth switch from the current system to one where one-way bets are less obvious, incentives to overborrow in dollars are curtailed, and renminbi markets are encouraged,” Bayoumi wrote in a recent article published on the institute’s website.
While moving towards a basket of currencies was probably the best thing for China, there was “a very significant psychological problem”, said Pieter P. Bottelier, a senior adjunct professor of China studies at the School of Advanced International Studies of the Johns Hopkins University. “We have to assume that in the minds of people running capital markets, the RMB-dollar exchange rate will remain very important,” Bottelier told Xinhua in a separate interview, noting that the RMB’s bilateral exchange rate against the dollar will continue to be one of the most closely watched indicators. Bottelier said “there is an additional reason to be careful with the dollar exchange rate”, given the fact the RMB
was approved by the International Monetary Fund (IMF) to join its Special Drawing Rights (SDR) basket as a fifth reserve currency, along with the dollar, euro, pound sterling and yen, on November 30, 2015. “That’s what everybody will be looking at, including U.S. Congress,” said Bottelier, who served as chief of the World Bank mission in Beijing during the 1990s. “For the next year or two, you have to be very careful with the RMB-dollar exchange rate. It’ s probably better trying to preserve relative stability.” Bottelier believed the Fed’s rate hike was potentially “a good thing” for China as it would help push forward China’s financial reforms. “With the Fed beginning to raise the interest rates and Chinese central bank trying to lower them, it’s possible that at some point in the next year or two the domestic interest rates in China and international rates will be above the same level,” Bottelier said. “Once you have that, it becomes possible for China to completely open the capital account and go to completely convertible capital system.” The PBOC approved RMB convertibility on the capital account within a prescribed limit of 10 million dollars for the Tianjin, Guangdong and Fujian free trade zones on December 11, a historic step by China to open up its capital accounts. Bottelier said China should be cautious and not in a hurry to complete open the capital account because of the risks of huge capital inflows or outflows, which are potentially disruptive. In his view, “it’s probably in China’s interests to retain at least some controls” on the capital account in the end.
If the market comes to think that the RMB is going to be very weak, then you could have very strong capital outflows that would require interventions by the PBOC Charles Collyns, managing director and chief economist, Institute of International Finance
Xinhua
Xinhua
Lending transactions via China’s peerto-peer (P2P) platforms reached 982.3 billion yuan (about US$151 bln) in 2015, up 288.6 percent from 252.8 billion yuan in 2014, an Internet financial services web portal said. China’s P2P lending platforms have cumulatively brokered 1.37 trillion yuan as of the end of December, according to an annual report issued by Wangdaizhijia.com. The report counted 2,595 P2P platforms across the country, an increase of 1,020 compared with the 2014 figure. But the number of P2P platforms will not grow substantially in the coming year as China tightens regulations over P2P lending, the report said.
Tianjin drops traffic restrictions for Teslas
New energy vehicles (NEV), including Tesla Model S, will be allowed on roads without restrictions starting Friday in Tianjin Municipality, local government said. Gas-fuelled vehicles in the city will still be restricted one out of five weekdays based on their license plate numbers. The city’s government ended the license-plate lottery for NEVs in April and has granted license plates for NEVs directly for all applicants since then. The moves are in response to a requirement by the State Council, which on September 29 asked local authorities to lift purchase restrictions and remove traffic controls for NEVs.
Mainland-Europe fast rail brings mutual benefit Trains made nearly 180 round trips between Chengdu, capital of southwest China’s Sichuan Province and Lodz, Poland, in the last two and a half years. Since 2013, three trains a week have made the 9,826 kilometre trip on the Chengdu-Europe fast rail, reaching Poland via Kazakhstan, Russia and Belarus. “Commodities are transported to Europe within 15 days,” said Xu Pingfu, vice director of the Chengdu logistics office. “It is the fastest freight railway between China and Europe.” Around 300 trains will ply the route in 2016, which will extend to Hamburg in Germany and Tilburg in the Netherlands.
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Asia
South Korea export tumble caps dismal 2015 They are the world’s sixth-largest exporter and the first major country to publish December trade figures Christine Kim
KEY POINTS Dec exports -13.8 pct y/y; imports -19.2 pct y/y 2015 exports, imports post worst performance since 2009 Govt attributes weak trade in 2015 to oil price decline Busan’s harbour in South Korea
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outh Korea’s exports fell for a 12th straight month in December, capping its worst yearly trade performance since the 2008-2009 global financial crisis, and the government warned there was no quick turnaround in sight. Low oil prices, slowdowns in China and other emerging economies and weakness in Europe sent global trade plunging this year, dealing a sharp blow to trade-reliant Asian countries which rely heavily on exports of manufactured goods such as petrochemicals and electronics. South Korea’s exports in December
fell 13.8 percent in dollar terms from a year earlier, while imports slumped 19.2 percent, the Ministry of Trade, Industry and Energy said on Friday, both lagging forecasts in a Reuters poll and weaker than declines of 4.8 percent and 17.6 percent in November. Exports for all of 2015 dropped 7.9 percent - the worst since a 13.9 percent decline in 2009 - but are expected to rise 2.1 percent in 2016, the ministry said, while adding there were downside risks to the forecast. “Sluggish growth in China, sustained low oil prices and stunted growth in emerging economies due to
Govt forecasts exports +2.1 pct, imports +2.6 pct in 2016
higher rates in the U.S. pose risks to exports this year,” the ministry said in a statement. South Korea is the world’s sixthlargest exporter and the first major country to publish December trade figures. Its sales to China dropped 5.6 percent in 2015, sales to the European Union fell 6.9 percent and shipments to the United States slipped 0.6 percent. The three markets take nearly half of South Korea’s total exports.
Oil-related products accounted for 64 percent of the decline in South Korean exports this year, the trade ministry said. Asia, which accounts for more than one-third of global exports by dollar value, saw a 7 percent drop in exports in the first nine months of 2015, against a 13 percent fall in global exports, World Trade Organisation data showed. Data on Friday showed activity in China’s vast manufacturing sector contracted for a fifth month in a row in December, reinforcing fears the world’s second-largest economy may be stuck in a protracted slowdown despite a flurry of stimulus measures. In December alone, South Korea’s shipments to China dropped 16.7 percent on-year in their worst fall since May 2009. In 2016, exporters of household electronics, semiconductors, ships, steel products and flat screen displays are all likely to suffer, according to the ministry’s forecasts, but oil product exporters could see sales pick up from weak 2015 levels. “Considering recent data, fourthquarter growth will probably be worse than the Bank of Korea’s expectations while first-quarter growth is also unlikely to be rosy,” said Park Sanghyun, chief economist at HI Investment & Securities. Still, Park believed the central bank will keep interest rates on hold at a record low of 1.50 percent throughout 2016, albeit with a slight easing bias in the first quarter. Concerns about high household debt levels and corporate debt pressures in the face of rising interest rates abroad could stay the Bank of Korea’s (BOK) hand, Park said. The BOK cut rates four times between Aug. 2014 and June 2015 by a total of 100 basis points. The BOK currently sees 2015 growth at 2.7 percent. Reuters
Sri Lanka eyes closer ties with China in 2016 The country’s tourism industry which suffered a severe blow following decades of conflict, became the number one foreign exchange earner, largely due to the increase in Chinese and Indian tourists
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ri Lanka is seeking to further cement its relations with China in the year ahead, a senior government minister told Xinhua. A high-level delegation led by Sri Lankan Prime Minister Ranil Wickremesinghe is expected to visit China this year amid efforts to strengthen ties, said the minister, who asked not to be named. Wickremesinghe’s visit will come at a time when Sri Lanka resumes all its development projects which were suspended by his government earlier last year.
The projects include a multi-billion-dollar port city project funded by China in the capital city and other leisure facilities. “During the visit, several key areas are expected to be discussed by both sides including the resumption of the suspended projects. China is a key partner for Sri Lanka and this government is committed to further boosting ties,” the minister said. President Maithripala Sirisena, who defeated former strongman Mahinda Rajapaksa in a presidential election in January last year,
himself visited China in March -- his second official visit since winning the presidency. Although there were immediate reports that relations between the two countries soured with the suspension of the Chinesebacked projects, Sirisena has expressed his will to seek further improved ties between the two countries. The SirisenaWickremesinghe administration has also announced that it would resume all suspended projects in Sri Lanka by early this year.
In December, Sri Lanka’s Finance Minister Ravi Karunanayake said that the government was happy with the environmental impact assessment (EIA) report for the Colombo Port City project and therefore had cleared the deck for the project to continue. The absence of a proper EIA was cited as a major reason for pulling the US$1.4 billion project on hold. Late last year, the government also announced that it wanted to attract more Chinese investment and expressed willingness
to create a special hub in the south of the island nation for this purpose. According to statistics from the Central Bank, so far, China is Sri Lanka’s biggest contributor of foreign direct investments. With many challenges lying ahead for Sirisena, who will complete one year in power this month, Sri Lanka is looking to strong ties with China and fresh projects to achieving the government’s vision of developing the nation in the coming years. Xinhua
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January 4, 2016
Asia India’s Jaitley: next parliament session can break tax deadlock Indian Finance Minister Arun Jaitley said on Saturday the upcoming budget session of parliament would be crucial for the passage of the proposed Goods and Services Tax (GST) that has been blocked in two successive sessions. The GST reform is long overdue and should have come much earlier, Jaitley told an event in New Delhi according to the finance ministry’s Twitter feed. The new indirect tax would create a single market and boost commerce in India’s US$2 trillion economy. However, it has been languishing in parliament for want of political support.
ANA airline in billiondollar Airbus deal A traffic police man stands at traffic lights wearing a pollution mask during the first day of the implementation of the odd-even scheme for the vehicles in New Delhi, India, 01 January 2016
Workers brace for 12-hour days as Delhi battles pollution India’s Central Pollution Control Board has also asked three states adjoining Delhi to take measures to reduce pollution Anindya Upadhyay and Abhishek Shanker
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or the next two weeks New Delhi resident Saurabh Sanyal will work for more than 12 hours every other day. Sanyal isn’t alone. Manoj Sharma, chief executive of Mindpie, an event management company, is also doing the same. It’s not work pressure that’s prompting them to stay in office longer but the city administration’s plan to bench half of the Indian capital’s 2.8 million private vehicles daily. Sanyal, who has an even-numbered car, will reach office before the measures take effect at 8 a.m. and leave after 8 p.m. when all vehicles will be allowed on the roads. The measure by Delhi Chief Minister Arvind Kejriwal is the most concerted effort by the government yet to reduce the number of exhaustbelching automobiles in the world’s most polluted metropolitan area as discontent among the city’s 16.8 million residents grows. New Delhi joins Beijing as capitals of the two most populous nations struggle to control runaway pollution brought on by decades of economic growth and lax environmental laws. “These are emergency actions and we must support and make this work,” said Anumita Roychowdhury, executive director of research at advocacy group Centre for Science and Environment. “People will be forced out of their comfort zones and would have to think of options like carpooling or taking the public transport or reaching their destination before 8 a.m.” The campaign was largely successful on its first day, with lean traffic reported across the city, Kejriwal told CNN-IBN television. At major intersections, volunteers handed out rosebuds to violators in a bid to coerce them and spread awareness. The success so far was also partly due to the new year holiday in many city offices.
“The fact that there are not many violators shows that people have accepted it,” Kejriwal said. “There are no plans to extend this scheme beyond 15 days.” India’s Central Pollution Control Board has also asked three states adjoining Delhi to take measures to reduce pollution. The agency directed Punjab, Uttar Pradesh and Rajasthan on Tuesday to stop open-air burning of garbage, use of kerosene and coal for cooking and control dust pollution at construction sites.
and billboards at city’s major intersections and tapping children in schools to sensitize them about the need for a cleaner environment. Volunteers assisted policemen at city’s main traffic intersections to spot violators, some of whom were fined 2,000 rupees (US$30), NDTV 24x7 television showed. To ease the citizens’ woes, the Delhi government increased the frequency of the services on metro rail and run additional buses, Transport Minister Gopal Rai said.
Hazardous levels
Car pool
The city was the world’s most polluted measured by PM2.5 -- tiny, toxic particles that lead to respiratory diseases -- with an annual average of 153 micrograms per cubic meter, according to a 2014 World Health Organization database. A reading of 25 or lower is considered safe. The reading was at 376.9 micro grams per cubic meter, classified as hazardous, at 9 a.m. on Friday, according to the U.S. Embassy in New Delhi. Delhi’s local government has been running advertisements in newspapers
The city was the world’s most polluted measured by PM2.5 with an annual average of 153 micrograms per cubic meter
Ministers including Kejriwal and Rai will travel to their offices using the car pool, according to India Today TV. Tourism Minister Kapil Mishra rode a motorbike, exempt from the restriction, to work. Sanyal, who is the secretary general of the PHD Chamber of Commerce and Industry, a Delhi-based industry lobby, says government will need to do more to curb the pollution. “Other culprits like construction activities that are bigger contributors to Delhi’s pollution” needs to be checked, he said. The Delhi government describes the odd-even restrictions on vehicles as an experiment that will run for 15 days to gauge its efficacy. For now, the move has been endorsed by India’s top court which banned registrations of diesel-engine vehicles of 2 litres or more last month. The curbs on vehicles will exclude motorcycles, scooters and essential services as well as women driving alone or with children. “It isn’t a big deal of change to my schedule to put in long working hours,” said Sharma of Mindpie, who drives about 30 kilometres daily from Noida, a Delhi suburb. “If this continues for a longer period, then I will have look at an alternative.” Bloomberg News
Japan’s All Nippon Airways is buying three Airbus A380s in a billion-dollar deal, business daily Nikkei said Friday, making it the first Japanese carrier to own the superjumbo jet. The Japanese airline plans to introduce the double-decker planes on flights to Hawaii and other overseas destinations, in an effort to boost its international business. The company paid about 150 billion yen (US$1.23 billion) for the three A380 planes, which have 500 seats, more than double the number of spots on ANA planes that currently fly to Hawaii, the business daily said.
N. Korea leader opens “Sci-Tech Complex” in Pyongyang North Korean leader Kim Jong-Un has opened a science and technology complex in Pyongyang, the North’s state media said Saturday, adding another building to the impoverished country’s showcase capital. His attendance at the ceremony on Friday marked his first public appearance since his New Year address, when he vowed to raise living standards in the struggling one-party Stalinist state. Inspecting the complex, he said it was “a great centre” open to everybody for study and “for disseminating [the] latest science and technology in which the party’s plan has been materialised”, Pyongyang’s KCNA news agency reported.
Over 60,000 visit Myanmar’s Shwedagon pagoda A total of 63,664 foreign tourists visited Myanmar’s world-known Shwedagon pagoda in December alone, according to the pagoda’s Board of Trustee on Saturday. The earning from foreign tourists amounted to over 385,000 U.S. dollars during the month. Shwedagon pagoda is usually crowded with visitors from home and abroad during the opening season. It accommodates hundreds of colourful temples, stupas, and statues that reflect the architectural era spanning almost 2,500 years.
Bangladesh’s annual trade fair kicks off The 21st version of the Dhaka International Trade Fair (DITF), biggest annual event in Bangladesh, started on Friday. Hundreds of local and foreign organizations from 22 foreign countries took part in this year’s event. There are 553 stalls and pavilions at the fair, 56 of which have been allotted to foreign countries. The foreign participants were from countries including China, India, Malaysia, Pakistan and the United States.
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January 4, 2016
International
Russia takes restrictive measures against Ukraine, Turkey Panama president urges Russian companies will be banned from hiring Turkish citizens starting from last Friday canal consortium to focus on expansion Panamanian President Juan Carlos Varela urged the Spanish-led consortium expanding the Panama Canal Saturday to leave legal disputes to the “competent authorities” and focus instead on completing its work on the waterway. The appeal came after the Dispute Adjudication Board hearing a budget overrun dispute for the project ordered the Panama Canal Authority to pay the consortium US$17 million for extra labour costs and for a strike called by workers. The appeal was made as part of Varela’s address to the Central American country as the Panamanian congress began its legislative sessions for 2016.
U.S. jobless claims rise sharply during holiday week The number of Americans filing new claims for unemployment benefits rose sharply last week, a potential signal the job market was losing steam although some of the increase might be attributed to temporary holiday factors. Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 287,000 for the week ended December 26, the U.S. Labor Department said on Thursday. That was the highest since July, although in recent months the weekly readings for claims have held near a 42-year low. Economists polled by Reuters had forecast claims rising to 270,000 in the latest week.
Swiss bank to pay US$100 mln to resolve U.S. probe Swiss private bank Lombard Odier said it would pay US$99.8 million under a non-prosecution agreement with U.S. authorities to settle an investigation into allegations it helped wealthy American clients evade taxes. “This amount has been entirely provisioned and does not affect the capital ratios of the group or of the bank, which remains among the world’s best-capitalised banks,” Lombard Odier said in a statement on Thursday. The U.S. Department of Justice confirmed the amount to be paid in a separate statement. It also said DZ Privatbank (Schweiz) AG had agreed to pay US$7.45 million.
Russian crude output hits monthly record Russia’s crude output set another postSoviet record in December, a sign that the nation’s producers are withstanding the slump in oil prices, according to Energy Ministry data. The country’s crude and gas condensate production increased to 10.825 million barrels a day last month, beating the previous record set in November by 0.4 percent, Bloomberg calculations based on the data show. Output for the year increased 1.4 percent compared with 2014, exceeding 534 million metric tons, or almost 10.726 million barrels a day, according to the preliminary information e-mailed from Energy Ministry’s CDU-TEK unit.
R
ussia has taken a series of restrictive measures against Ukraine and Turkey starting from last Friday, the first day of 2016. Russian President Vladimir Putin has signed a decree regulating transit transportation of goods from Ukraine to Kazakhstan through Russian territory. “International automobile and railway transit of goods from the Ukrainian territory to the territory of the Republic of Kazakhstan through the territory of the Russian Federation...could be carried out only from the territory of Republic of Belarus,” according to the decree. It added that all the transport vehicles carrying goods from Ukraine to Kazakh territory through Russia should be equipped with devices supporting Russia’s Glonass navigation system to track their movements. Coming into force immediately and lasting until July 1, 2016, the decree was adopted as extra measure with the suspension of Russia-Ukraine free trade zone agreement. Besides trade deals, Moscow and Kiev were in dispute over the latter’s US$3-billion debt. The Russian Finance Ministry on Friday announced that it planned to file a lawsuit in a UK court against Ukraine over debt default. “Ukraine has not made the payment of US$3.075 billion in repayment and servicing of external bonds owned by
Russian President Vladimir Putin delivers his New Year address for Russians at Moscow Kremlin
Russia during the grace period, which expired on December 31, 2015. Thus, Ukraine is in a state of default now,” the ministry said in a statement. Noting that no proposal was made by the Ukrainian side on debt restructure, the ministry still expressed readiness to examine any significant offer from Ukraine on its debt to Russia. It is also noted that the legal action does not exclude possibility of debt settlement through dialogues. Ukraine got a US$3-billion loan in the form of Eurobonds from Russia in December 2013 to shore up its economy amid financial crisis. The loan matures on December 20, 2015. The Ukrainian side stressed previously that no other terms would be provided to Moscow than the debtrestructuring agreement reached in
August between Ukraine and its other international creditors. Restrictive measures against Turkey also came into force on Friday, which were adopted by Russian side in retaliation for Turkey’s downing of a Russian Su-24 attack aircraft in November of 2015. The import of Turkish foodstuffs and other agricultural products to Russia is banned starting from Friday. According to a decree signed by Putin on November 28 of 2015, Russia would stop importing a wide range of Turkish agricultural products including fruit and vegetables, salt, poultry products and so on. While charter flights in both directions were banned, the visafree travel regime between the two countries was suspended to “ensure national security of the Russian Federation from criminal and other illegal activities.” A total of 53 entities have been exempted from the ban on hiring Turkish citizens. The exempted companies will, however, be prohibited from exceeding the total number of hired Turkish employees as of December 31, 2015. Moreover, since Friday, companies owned by Turkey or Turkish citizens were banned from providing services for state and municipal needs in Russia and participating in such areas as construction, tourism, hotel business and lumber. Xinhua
Obama may travel to Cuba as part of final year’s to-do list Separately, the U.S. expects Iran in the next few weeks to complete the work necessary to finalize the nuclear deal struck with world powers in July Del Quentin Wilber
The White House will decide within a few months whether President Barack Obama marks his final year in office with a historic trip to communist Cuba, which has been under a U.S. trade embargo for more than 50 years. Ben Rhodes, deputy national security adviser, declined on Saturday to make a commitment on an Obama visit, saying that moves need to be taken by both governments to make the opening of relations between the U.S. and Cuba “irreversible.” Rhodes spoke to reporters in Honolulu hours before Obama was due to fly back to Washington from a family vacation in Hawaii. The U.S. has taken steps to facilitate travel and commerce with Cuba for the first time in decades,
though “there is more we could do,” Rhodes said. “On the Cuban side, there are steps they could take over the course of the year that could allow them to absorb greater economic activity,” Rhodes said, adding that “nobody expects Cuba in the next year to become a multi-party democracy.” The U.S. and Cuba started to reestablish ties in late 2014. Obama and Cuban President Raul Castro met at the Summit of the Americas in Panama in April 2015, the first meeting between U.S. and Cuban heads of state since 1961.
Ballistic missiles
In a wide-ranging briefing, Rhodes also said the U.S. wasn’t shifting its position on whether to announce
further sanctions on Iran in response to recent ballistic missile launches. “We have additional work that needs to be done before we would announce additional designations,” he said. Separately, the U.S. expects Iran in the next few weeks to complete the work necessary to finalize the nuclear deal struck with world powers in July. “They still have a number of important things they need to do,” Rhodes said. “But we are on track to see the implementation of the Iran deal moving forward.” The Wall Street Journal reported on December 31 that the new sanctions may be delayed, citing unidentified U.S. officials. Lawmakers, including some Democrats, have criticized the White House for dragging its heels. Bloomberg News
Business Daily | 15
January 4, 2016
Opinion Business
wires
Feeding a flawed society
Leading reports from Asia’s best business newspapers
THE KOREA HERALD
The chief of South Korea’s financial watchdog vowed yesterday to step up efforts to ensure fiscal soundness of major lenders and financial institutes, pointing to a possible crisis stemming from a U.S. rate hike. “Risk management will be more important than ever in 2016,” Zhin Woong-seob, governor of the Financial Supervisory Service (FSS), said in his New Year’s message. Zhin said his agency’s main objective was to stop external uncertainties from leading to uncertainties or an instability in the local market.
PHILSTAR
The business process outsourcing (BPO) industry may soon overtake dollar remittances from overseas Filipinos in terms of revenues given the continued strong demand for office space, a real estate market consultancy firm said. In 2014, the BPO sector registered US$18.9 billion in total revenue and is forecast to grow between 15 percent and 18 percent for 2015. Pinnacle Real Estate Consulting Services Inc. said the industry is expected to further grow this year with revenues projected to hit US$25 billion. According to Pinnacle, revenues from call centre firms and outsourcing centres could soon grow faster than inflows from overseas Filipino workers.
TAIPEI TIMES
Taipei Mayor Ko Wen-je’s approval rating was at 69.3 percent last month, down 6.3 percentage points from August, Taipei’s Research, Development and Evaluation Commission said on Friday. The commission’s survey, conducted about a year after Ko took office on Dec. 25, 2014, showed that 19.8 percent of respondents said they were dissatisfied with the mayor’s performance. The approval rating remains above Ko’s own expectation of a 65 percent satisfaction rate, commission acting head Huang Ming-tsai said. On specific policies, 78.9 percent of respondents said they were satisfied with Taipei’s safety and security, and 58.8 percent were satisfied with traffic and transportation conditions.
THE BANGKOK POST
The government has claimed the “Shopping for the Nation” campaign, which encouraged taxpayers to spend in return for tax rebates in an effort to stimulate the economy, was successful. It was estimated that if at least one million taxpayers used the tax deduction through the campaign, the total amount circulated in the market would add up to 15 billion baht, government spokesman Sansern Kaewkamnerd said on Saturday. The campaign provided incentives that allowed taxpayers to deduct up to 15,000 baht spent on certain goods and services from Dec 15-31 from their personal income tax.
Paul R. Ehrlich
Professor of Population Studies, Department of Biological Sciences, Stanford University
John Harte
Holds a joint professorship in the Energy and Resources Group and the Ecosystem Sciences Division of the College of Natural Resources at the University of California, Berkeley
V
irtually everyone in the scientific community agrees that ensuring sufficient food supplies for a surging human population, which is set to grow by 2.4 billion by mid-century, will require serious work. Indeed, we have not even succeeded at providing enough food for today’s population of 7.3 billion: Nearly 800 million people currently are starving or hungry, and another couple billion do not get enough micronutrients. But there is no such consensus about how to address the foodsecurity problem. The scientific community is split between two main approaches: “tinker with agricultural details” (TAD) and “mend societal fundamentals” (MSF). While the former approach has support from a clear majority, the latter is more convincing. To be sure, the TAD camp has identified many important problems with current food production and distribution systems, and addressing them could indeed improve food security. Yields could be increased by developing better crop varieties. Water, fertilizer, and pesticides should be used more efficiently. Maintaining tropical forests and other relatively natural ecosystems would preserve critical ecosystem services,
especially soil fertility, pollination, pest control, and climate amelioration. The trend toward rising meat consumption should be reversed. Stricter regulation of fisheries and ocean pollution would maintain the supply of marine protein essential to many people. Waste in food production and distribution should be reduced. And people should be educated to choose more sustainable and nutritious foods. Achieving these goals, TAD supporters recognize, would require policymakers to give food security high political and fiscal priority, in order to support the needed research and action. Responsibility for launching programs to distribute food more equitably would also fall to governments. But the TAD approach is incomplete. Not only would its short-term goals be extremely difficult to achieve without more fundamental societal changes; even if they were attained, they would probably prove inadequate in the medium term, and certainly in the long term. To see why, let us suppose that, in 2050, the TAD goals have all been reached. More food is available, thanks to higher agricultural yields and waste-reducing improvements in storage and distribution. Improved environmental policies mean that most of today’s forests are still standing and no-fishing zones are widely established and enforced. Ecosystems are becoming stronger, with many corals and plankton evolving to survive in warmer, more acidic water. Add an uptick in vegetarianism, and it appears that the global temperature rise could be limited to 3º Celsius. As a result, the world could avoid famines by mid-century. But, in a human population of 9.7 billion, hunger and malnutrition would be proportionately the same as they are in today’s population of 7.3 billion. In other words, even with such an extraordinary and unlikely combination of
accomplishments and good luck, our food-security predicament would still be with us. The reason is simple: Our societies and economies are based on the flawed assumption that perpetual growth is possible on a finite planet. To ensure global food security – not to mention other fundamental human rights – for all, we need to recognize our limitations, in terms of both social and biophysical factors, and do whatever it takes to ensure that we do not exceed them. Based on this conviction, the MSF approach demands that governments take steps to empower women in all areas of society, and ensure that all sexually active people have access to modern birth control, with women free to have an abortion, if they so choose. At the same time, governments must address inequality of wealth, and thus of food, not least by curbing corporate dominance. Short of bringing the global population down to sustainable levels, MSF reforms are the
Short of bringing the global population down to sustainable levels, “mend societal fundamentals” reforms are the world’s only hope
world’s only hope. But, as it stands, implementing them seems unlikely. The United States, the country that consumes the most, is moving in the opposite direction: women are struggling to hold onto their reproductive rights, wealth distribution is becoming increasingly skewed, and corporations are becoming even more powerful. If this trend continues, in 2050, governance systems will be even more poorly equipped to deal with the fundamental problems of perpetual population and consumption growth or wealth inequality. As environments deteriorate from climate change, toxification, and loss of biodiversity and ecosystem services, people will have less time and energy for governance reform aimed at reducing inequality or preserving the environment. As a result, those in power will feel less pressure to arrange systems to provide food to those who need it most. The social-biophysical system is replete with chicken-and-egg subsystems. Given that there is no obvious single vulnerable point in the system to initiate change, governments must address a range of issues simultaneously. Key starting points include purging politics of “big money”; introducing a more progressive tax system that effectively caps the income of the extremely wealthy; ensuring that policymakers have a basic level of scientific understanding; and strengthening women’s rights, including access to free contraception. Just as social and environmental problems can be mutually reinforcing, so can actions aimed at strengthening our social and environmental fundamentals. Only by focusing on these fundamentals, rather than merely tinkering with the details of food production, can intrinsic systemic linkages work to the advantage of future generations. Project Syndicate
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January 4, 2016
Closing Beijing raises work safety requirements to address hazards
Indonesia’s 2015 state budget deficit rises to 2.8 pct
Local authorities will raise work safety standards and consider banning or restricting certain industrial activities to remove dangerous and polluting industries, according to the municipal work safety watchdog. A list of banned or restricted production activities is being drawn up by the watchdog, with considerations to include the production of bulk pharmaceutical chemicals, ink and plastic film, among others. Those that fail to comply will face suspension or closure. The work safety watchdog said it had ordered 906 companies to close and another 7,778 to suspend production and improve in 2015. The city will pledge 125 million yuan (US$19.25 million) to weed out potential safety hazards and modify gasoline stations and gas and chemical pipelines.
Indonesia’s state budget was in a deficit of 2.8 percent of gross domestic product (GDP) in 2015, the finance ministry said yesterday, close to a legislated budget deficit cap of 3 percent that has created headaches for President Joko Widodo (pictured). The unaudited 2015 results statement showed a widening from the budget deficit of 2.25 percent of GDP recorded in 2014. With resource revenue tumbling, the 2015 deficit will be the largest for at least 25 years. Average crude oil lifting declined 1.9 percent to 779,000 barrels per day (bpd) from 794,000 bpd in 2014, the statement said. Gas lifting declined 2.4 percent to 1,195 thousand barrels of oil equivalent per day (MBOEPD) from 1,224 MBOEPD in 2014.
Greece defiant on pension cuts ahead of key talks with creditors Tsipras’ leftist government was forced in July to back down from its anti-austerity electoral pledges and accept a three-year rescue package from its eurozone partners Katerina Nikolopoulou
G
reece’s prime minister yesterday said his government will not give in to “unreasonable” demands as the debt-ridden country braces for critical negotiations with international creditors on the thorny issue of pension reform. The warning came just days after Athens got one billion euros under the terms of its third bailout programme. The creditors -- the European Commission, the European Central Bank, the International Monetary Fund and the ESM -- finalised a third Greek debt rescue programme in August worth 86 billion euros (US$94 billion) after Greece looked to be on the brink of crashing out of the eurozone. “The creditors have to know that we are going to respect the agreement to the letter, but that doesn’t mean we are going to succumb to
unpopular bailout reforms, losing in the process part of its majority in the chamber due to defections. In December, the government said it had established a privatisation fund and planned to sell a major stake in electricity distributor Admie, the latest reforms sought by creditors.
‘Greece’s comeback’ Greek prime minister Alexis Tsipras
unreasonable and undeserved demands,” Alexis Tsipras (pictured) told Real News newspaper. “We have no commitment to find the money exclusively from pension cuts. On the contrary, the agreement provides the option of equivalent measures, which we have already processed,” he said. He admitted though that the pension system which is
“on the brink of collapse” needs to be overhauled. The labour ministry is working on a new social security system under which state-guaranteed pensions will be reportedly cut by half -- to a minimum of 384 euros -and the rest will depend on a person’s income and years of social security payments. The government has since July pushed through parliament a number of
Experts call for more tech input into domestic robotics industry
Hong Kong’s Chan says tax raise ‘inevitable’
T
H
he Chinese robotics industry has been developing rapidly in recent years, but more must be done to make it competitive, industry analysts agree. Zhang Wenqiang, director of the Robot Intelligence Lab of the Shanghai-based Fudan University, said at a recent conference that foreign companies such as Swiss ABB, Japan’s FANUC Corp., and German Kuka account for about 90 percent of the Chinese market, with many Chinese companies commissioned to make parts for these technologically-advanced firms. Chinese companies still lag behind their foreign competitors in product design, material and system integration techniques, he said, adding that many domestic manufacturers are still dependent on foreign suppliers for core technology and parts. Besides, several industry observers pointed out that robotics research was mainly the realm of universities and research institutes, and there was little commercialization of the findings. Statistics show that the output of the global service robotics industry was US$17.1 billion in 2010, and this is expected to reach US$51.7 billion by 2025. Xinhua
Tsipras appeared optimistic for 2016 saying it “will be the year of Greece’s comeback after six year in crisis.” “We will return to growth, we will put an end to the capital controls, we will reduce the debt and we will return to the markets”, he said. Greeks however do not seem to share his optimism. According to a poll by Kappa Research for Vima newspaper on yesterday, 55.1 percent of respondents said
they believed things would get worse in 2016 while 61.1 percent said a Grexit scenario would resurface. Bank of Greece governor Yannis Stournaras meanwhile warned of the huge risks involved in case Greece fails to reach an agreement with its creditors. “A potential failure in the conclusion of the assessment of the new bailout programme will bring back memories of the negative experience of the first half of 2015,” he said in an article published in Kathimerini newspaper yesterday. “For a number of reasons the European Union is now more vulnerable and less capable of facing a new Greek crisis,” he added. Tsipras said the government aimed to conclude with the negotiations before the end of February. AFP
Iran says boosting oil exports depends on future demand
A
ong Kong will likely need to raise taxes and introduce new levies as an aging population is increasing public expenditure, according to the city’s top financial services official. “Facing a fiscal gap brought by an aging population, raising taxes is inevitable,” K.C. Chan, secretary for financial services and the treasury, said in his blog yesterday. His remarks came after the government started a six-month public consultation last month to identify ways to enhance retirement protection in the city. A structural deficit may appear over the coming 10 years if the growth of government expenses continues to outpace growth of gross domestic product and income, Chan said. Hong Kong is facing an aging population and slower economic growth, while the government’s financial situation remains sound in the short to medium term, he said. The budget for social benefits and medical expenses would increase two to three times current levels in 30 years, assuming that the 65-and-older population will double and no new subsidies and benefits are to be added during the same period, Chan said.
rise in Iran’s crude oil exports once sanctions against it are lifted depends on future global oil demand and should not further weaken oil prices, senior officials were quoted as saying. Oil Minister Bijan Zanganeh said Iran did not plan to exacerbate an already bearish oil market. “We are not seeking to distort the market but will regain our market share,” said Zanganeh, quoted by oil ministry news agency Shana. Oil prices are likely to come under further pressure this year, when international sanctions on Iran are due to be removed under a nuclear deal reached in July. Brent crude settled at US$37.28 a barrel on Thursday. Iran has repeatedly said it plans to raise oil output by 500,000 barrels per day post sanctions, and another 500,000 bpd shortly after that, to reclaim its position as the Organization of the Petroleum Exporting Countries’ second-largest producer. Oil prices fell as much as 35 percent for 2015 after a race to pump by Middle East crude producers and U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear.
Bloomberg News
Reuters