Macau Business Daily January 18, 2016

MOP 6.00

Supported by

Closing editor: Joanne Kuai

Macau ‘Australia Day’ Cocktail Fri, 29 January 2016 | 6pm - 8pm | Terrazza, Galaxy Macau More information at www.austcham.com.hk

Taiwan’s new government faces economic and political headwinds Pages 10&11

Year IV

Number 963 Monday January 18, 2016

Publisher: Paulo A. Azevedo

AIIB officially opens doors as signs global economy rebalancing Page 10

Macau’s forex reserves increase to US$18.89 billion by end-2015 Page 4

Police Officers Netted in Corruption Swoop

Macau’s security chief has expressed “deep concern”. In the wake of the arrest of a group of police officers accused of running an extortion racket. The scam – believed to have run for four years – was linked to the illegal entry into the territory of big-spending gamblers. Four officers from the criminal intelligence unit of the city’s Public Security Police and one from its immigration service were arrested in addition to a retired police officer on Thursday. Charges relate to corruption, running a criminal organisation and misconduct in public office Page

5

United Notions

Netflix competition

From next week. Yuan clearing banks will need to set higher reserves for yuan deposits. Thus, China’s central bank is trying to curb speculation in the RMB following a turbulent start to the year

Page 16

Brought to you by

HSI - Movers January 15

Name

%Day

MTR Corp Ltd

+0.41

CLP Holdings Ltd

+0.40

Link REIT

0.00

Tencent Holdings Ltd

-0.07

Hong Kong & China Gas

-0.27

Lenovo Group Ltd

-4.02

Belle International Ho

-4.24

CITIC Ltd

-4.38

Interview

China Petroleum & Che

-4.50

Communing with the market

Kunlun Energy Co Ltd

-5.21

Video-streaming service Netflix - launched in the SARs earlier this month at a low-end monthly fee – is challenging Macau Cable’s pay TV supremacy. Macau Cable says it’s impossible to recoup its investment regarding the gov’t requirement to complete 60 pct of network coverage by end-2017

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www.macaubusinessdaily.com

U.S. prosecutors have secured their first conviction in a sweeping probe of corruption at the UN. Heidi Hong Piao pleaded guilty to bribing former president of the UN General Assembly John Ashe.

Macau billionaire Ng Lap Seng and Francis Lorenzo, former deputy ambassador to the UN for the Dominican Republic, have pleaded not guilty to the charge

More reserved yuan

Solid-wood furniture. And customers who understand that ‘you get what you pay for’. This is the launch pad for Singaporean design furniture brand Commune, newly established in Macau. Franchise partners Sunny Chang and Wensie Lao tell Business Daily that their business model is working. With middle-class quality-conscious clients seeking them out despite the economic downturn. A new outlet is on the horizon in Macau, with another branch to open in Hengqin. Aided and abetted by marketing and promotional initiatives designed to reach the customer in their comfort zone

Pages 8&9

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Source: Bloomberg

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2 | Business Daily

January 18, 2016

Macau

Transmac’s new public concession contract effective since Saturday Unlike fellow bus operators Macau New Era and TCM, Transmac does not have a ‘subsidy cap’ imposed upon its public concession contract Stephanie Lai

sw.lai@macaubusinessdaily.com

P

ublic bus operator Transportes Urbanos de Macau SARL (Transmac) signed its public concession contract with the government on Saturday, on terms that mean it comes without the government subsidy cap for the transport services rendered.

The public concession contract, which expires on July 31, 2018, is a switch from the service provider contract that the government previously signed with the city’s three bus operators following a damning report issued by the Commission Against Corruption in November, 2013. The report said at the time that the service purchase format, which stipulated that the bus companies do not keep the bus fare but get

a regular service charge from the government, resulted in a ‘poor use of public money’.

Transmac is the last operator to change its contract into a public concession agreement with the government following fellow bus operators Macau New Era Public Bus Company and Transportes Colectivos de Macau SARL (TCM).

Under the public concession format, the bus operators will follow a new payment plan by which they will receive subsidies from the government for their operation as well as keeping fares that passengers pay. The subsidies are calculated from the deduction of the estimated operation cost from fares revenue.

In the case of Macau New Era

IH Retail’s Macau interim revenue up nearly 17 pct

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ong Kong-listed International Housewares Retail Company Ltd., known for its Japan Home Centre shops, saw its revenue derived from Macau for the six months ended October 2015 grow by 16.6 per cent year-on-year to HK$18.7 million (US$2.4 million), according to the retailer’s interim report for the financial year 2015/16.

In the period, International Housewares Retail ran eight Japan Home Centre shops in Macau. The company has achieved a comparable sales growth of 2.5 per cent in the territory in the interim period, albeit a slower growth pace compared to the 3.7 per cent achieved a year ago.

The household products retailer said it remains positive about the

group’s mid to long-term business prospects and plans to expand operations, including in Macau.

But the company has actually seen its interim net profit drop by more than half to HK$21.1 million as a result of higher operating costs, weaker consumer sentiment in Singapore and Malaysia as well as exchange loss arising from depreciation of yuandenominated fixed deposits.

International Housewares Retail’s group-wide revenue have grown by 6.6 per cent to HK$960 million.

The retailer ran a total of 368 stores in Hong Kong, Macau, Mainland China, Singapore, Malaysia, Cambodia, Indonesia, Saudi Arabia and New Zealand in the interim period.

S.L.

and TCM, whenever the revenue generated from fares and other assets deal exceeds the bus operator’s expenses by 3 per cent to 4 per cent, they are bound to returning the subsidies they received in excess to the government.

But this subsidy cap does not apply to the contract signed with Transmac, the Transport Bureau said.

“This is because Transmac is not going to apply to adjust its service value in 2016 [but will when] their contract expires in 2018. The service value means their operation expenses,” a Bureau spokesperson explained to Business Daily.

“And as the bus company is going to maintain its estimated fare revenue and the service value until

the contract expires, the resulting subsidies they receive will be pretty static, at about MOP43.2 million (US$5.38 million a month,” the spokesperson added.

But like Macau New Era and TCM, the subsidies Transmac receives from the government can be affected by less than satisfactory service quality.

Every year, the government conducts two assessments of the bus operator’s service quality. The bus operators will see their subsidies reduced if their assessment scores fall below 60 points, the Bureau explained in a statement issued on Thursday.

Currently, Transmac runs 23 of the 72 local bus routes, the secondlargest share following the 32 routes run by Macau New Era.

Business Daily | 3

January 18, 2016

Macau

Netflix entry a challenge to Macau Cable TV The entry of Netflix adds another challenge faced by the city's sole pay TV service provider, which is still struggling to lay an underground cable network Stephanie Lai*

sw.lai@macaubusinessdaily.com

T

he fresh entry of videostreaming service provider Netflix Inc. into Hong Kong and Macau looks set to challenge the business of local pay TV service provider Macau Cable Television Company Ltd., still burdened by the sluggish progress of laying underground cable network to transmit TV signals, the cable television company’s boss told Business Daily.

“We’re very well aware of the entry of Netflix here and the potential competition it could bring,” Macau Cable TV’s chief executive officer Angela Lam In Nie told Business Daily. “But at the moment there’s nothing we can do because we still have a lot of operational hurdles to overcome.”

On January 6, Netflix announced the launch of its service in more than 130 new markets, including Hong Kong and Macau. With the new addition, Netflix is offering customers a localised version of its streaming service in a total of 190 countries, although Mainland China is not included amongst them.

The rolling out of Netflix’s overthe-top (OTT) service here comes at a competitive offer of as low as US$7.99 (MOP64) a month for streaming unlimited movies and TV shows. OTT refers to the delivery of services over the internet that bypass traditional distribution channels from telecommunications, cable or satellite network operators.

Just as in Hong Kong, Netflix provides three plans in Macau with monthly fees of US$7.99, US$9.99 and US$11.99 respectively, under which users can enjoy the streaming of videos on laptops, TVs, mobile phones or tablets.

The basic monthly fees for subscribing to Macau Cable TV’s service range from MOP58 to MOP168, a cost that has not yet included decoder installation charges.

“For us, the entry of Netflix is just like the emergence of the Xiaomi Internet TV box,” said Ms. Lam. The Internet TV box of the Chinese consumer electronics brand Xiaomi, also known as the ‘set top box’, works on the Android operation system that is also used on smart phones. Users can plug the box into their television, connect to the Internet and select the application for iCNTV, which offers content from Mainland video websites.

“It’s impossible for us to be compared to Neflix, because they don’t need licensing here to run the business,” Ms. Lam said. “But we are running under the [pay TV] licence and are under government regulation.

And by the licensing we also have to fulfil many government requests.”

Ms. Lam explained that her company is now faced with the slow progress of laying the underground cable network for transmitting TV signals. Macau Cable TV, the incumbent sole pay TV service provider in the city, must ensure 60 per cent of network coverage by the end of 2017 – as required by its five-year pay TV licence from the government which expires in 2019.

“We’re talking about over MOP300 million-worth of investment in the network coverage works,” Ms. Lam said. “With our income level now it’s impossible to recoup the investment made.”

Blocking proxy access

In an announcement that comes just a week after it went live in the SARs,

Netflix said subscribers will no longer be able to use proxies to watch content not available in their home country.

Subscribers often resort to proxies, or servers that facilitate access to Internet content not available locally, to watch popular Netflix shows such as House of Cards. That show is officially unavailable in Hong Kong and Macau, as are other popular series including Sherlock.

“If all of our content were globally available, there wouldn’t be a reason for members to use proxies or unblockers,” David Fullagar, Neflix

It’s impossible for us [Macau Cable] to be compared to Neflix, because they don’t need licensing here to run the business Angela Lam In Nie, CEO at Macau Cable TV

vice president of content delivery architecture, wrote in a blog.

The company said it would clamp down on such proxies or unblockers in a few weeks. “[We] have a ways to go before we can offer people the same films and TV series everywhere,” Fullagar wrote. “Over time, we anticipate being able to do so. For now, given the historic practice of licensing content by geographic territory, the TV shows and movies we offer differ, to varying degrees, by territory. In the meantime, we will continue to respect and enforce content licensing by geographic location.”

While customers who use Netflix may gripe about not being able to watch certain shows, Netflix said the move fits with its long-term strategy to create a uniform content library. Netflix would like to offer the same movies and TV shows in every territory, eliminating the need for people to use VPNs (Virtual Private Networks).

It will take years for Netflix to create a universal library because of media companies’ tendency to sell rights piecemeal. Most of Netflix’s content is still produced by other studios. Analysts estimate original shows and films will account for less than 20 per cent of the US$5 billion Netflix will spend on programming in 2016.

“We’re dealing with a system that’s very fragmented,” Chief Executive Officer Reed Hastings said in an interview last week. “We have been licensing just for France or just the U.S. Now we’ve started the movement. It’s probably five to 10 years before the catalogues really come together.” *with Reuters/Bloomberg

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January 18, 2016

Macau

Foreign Exchange Reserves increase 4.9 pct in December

M

acau’s foreign exchange reserves increased 4.9 per cent in December to MOP150.8 billion (US$18.89 billion) from MOP143.8 billion in November, the Monetary Authority of Macau announced on Friday.

Year-on-year, during December Macau’s foreign exchange reserves increased 14.8 per cent per cent to MOP150.8 billion from MOP131.4 billion, the value at the end of December 2014.

According to a government press release, at the end of December local foreign exchange reserves accounted for 13 times the currency in circulation.

Regarding the trade-weighted effective exchange rate index, used to compare the exchange rate of Macau against the exchange rate of its major trading partners, the pataca rose 0.15 points month-to-month and 5.66 points year-on-year to 107.29 in December 2015. This means that during the course of last year the pataca appreciated against the currencies of Macau’s major trading partners.

Wynn results see profit falling in MSAR, growing in Vegas The gaming operator sees fourth quarter operating income in Macau at US$75 mln to US$83 mln

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n Friday, Wynn Resorts Ltd. said income from its Macau operations in the fourth quarter could be half of what it was in the previous year but the casino company sees growth in Las Vegas, reversing recent declines.

The company preannounced its figures for the quarter ended 31 December, saying that in Macau, in the fourth quarter of 2015, net revenues are expected to be in the range of US$552 million to US$560 million, compared to US$761.2 million generated

in the fourth quarter of 2014.

Operating income for the fourth quarter of 2015 is expected to be in the range of US$75 million to US$83 million, compared to US$157.6 million for the fourth quarter of 2014. Adjusted property EBITDA is expected to be in the range of US$156 million to US$164 million in the fourth quarter of 2015, compared to US$241.2 million for the fourth quarter of 2014.

However, the Vegas strip has some good news as in the quarter net revenues are expected to be in the

range of US$387 million to US$395 million, compared to US$376.8 million generated in the fourth quarter of 2014.

Operating income for the fourth quarter of 2015 is expected to be in the range of US$56 million to US$64 million, compared to US$51.6 million for the fourth quarter of 2014. Adjusted property EBITDA is expected to be between US$123 million and US$131 million for the fourth quarter of 2015, compared to US$111.2 million for the fourth quarter of 2014.

Macau operation

Taking a closer look at its Macau operation, for the three months ended December 31 2015, VIP turnover decreased around 36.89 per cent to US$13.03 billion from US$20.65 billion for the same period of last year.

Mass market drop, which includes the amount of cash deposited in a gaming table’s drop box plus cash

chips purchases at the casino cage, also dropped 10.9 per cent to US$1.19 billion from US$1.33 in the fourth quarter of 2014.

The milder suffering of the mass market can be credited to table allocation, as from the data provided by the gaming operator the average number of table games was 192 at VIP and 249 at mass market in the fourth quarter of 2015; the 2014 number indicates that 244 were placed at VIP and 202 were places at mass market.

Moreover, slot machines dropped 4.7 per cent yearon-year to US$1.07 billion for the three months ended December 31 2015 from 1.12 billion. Slot machine wins were down 9.8 per cent at US$50.37 million.

In addition, hotel occupancy suffered a 2.3 per cent drop to 96.3 per cent at an average daily room rate of US$323, which is 9 per cent cheaper than US$332 priced in the same period of last year.

Shares jump

Wynn Resorts Ltd. rose 13 per cent in New York after the casino owner reported fourth-quarter preliminary results that beat analysts’ estimates.

In Macau, EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) will be US$156 million to US$164

million, the company led by Steve Wynn said on Friday in a statement. The high end exceeded the US$162 million average of analysts’ estimates, Deutsche Bank’s Carlo Santarelli said in a note on Friday. In Las Vegas, Wynn earned US$123 million to US$131 million, compared with the US$111 million consensus estimate cited by Santarelli.

“We expect the announcement to serve as a positive catalyst in a difficult market today,” Santarelli said.

Wynn rose to US$58.37 at the close. The company, like other casino operators in the Chinese enclave of Macau, has been hit hard by a slump in betting, particularly from high rollers. Its shares declined 53 per cent last year.

Securities regulations prohibit executives from talking about earnings and buying and selling shares in the so-called quiet period before the results are released.

By announcing preliminary earnings, Wynn Resorts freed its executives to resume open-market purchases of the stock, according to Harry Curtis, a Nomura Securities analyst.

The company is expected to announce its full results at the end of the month or early in February, spokesman Michael Weaver said in an e-mail. with Bloomberg

Business Daily | 5

January 18, 2016

Macau

Six police officers arrested for facilitating gambling by illegals The Secretary for Security has urged the city’s police forces to take this case as an example and called for internal practices to be improved João Santos Filipe

jsfilipe@macaubusinessdaily.com

S

ix police officers suspected of running a scheme to take illegal entrants from Mainland China to gamble in Macau casinos were arrested on Friday, according to Judiciary Policy (PJ). The six persons involved in the case are accused of abuse of power and involvement in illegal activities.

Of the six suspects, four are officers from the Public Security Police Force and another was serving as a member of the Immigration Services. According to the information released by the authorities during a press conference, the other suspect is a retired police officer.

According to the PJ spokesperson, the suspects have been formally accused of soliciting individual payments of MOP70,000 (US$8,719)

to ‘aid and abet’ illegal entry to Macau. In addition, the gamblers were charged MOP80,000 for transportation and protection and another MOP70,000 to facilitate their ‘safe’ exist from the territory.

All in all, persons who illegally entered the territory to gamble in Macau paid the local group around MOP220,000 per entry.

The scheme, which is believed to have been running for the past four years, is estimated to have resulted in profits amounting to more than MOP1.8 million.

According to Hong Kong newspaper South China Morning Post, the same group of officials was also behind an extortion racket targeting VIP junkets in a major unidentified

casino in Macau. The same source reported that at least six more officials were initially arrested but were released without charge pending further investigation.

During the press conference held on Friday, the PJ refused to confirm if this group was involved in the extortion racket. The PJ also dodged a question about whether other suspects were involved in the scheme.

The authorities also announced that the six arrested suspects will be held in custody pending trial.

Wong Sio Chak orders full investigation

After the case was announced, Secretary for Security Wong Sio Chak issued a note expressing ‘great concern’ about the case.

According to the note, Wong

has ordered a full investigation into the matter.

‘The Secretary ordered the Commissioner of the Public Security Police Force to review internal controls and supervisory measures to prevent a reoccurrence of similar incidents’, the note read.

“The government will not tolerate any criminal behaviour and will take resolute action against any member of the public security forces found guilty of misconduct”, Mr. Wong warned his own staff.

According to the note, the Secretary for Security has urged the services under his supervision to see this case as an example and reference for the necessity of improving the discipline and management practices of the city’s police forces.

6 | Business Daily

January 18, 2016

Macau Inner harbour ferries to Wanzai suspended Zhuhai authorities have announced that the structure of the shacks at the inspection point in Wanzai Port are in dire need of repair. Due to safety concerns, the port has been out of operation since yesterday, without a definite reopening date. Macau Marine and Water Bureau says that the port used to run 33 ferries daily and facilitate the transportation of around 2,000 people between Wanzai in Zhuahi to the Inner Harbour area in Macau near the Ponte 16 casino.

Lui Che Woo buys four housing units from own company The Hong Kong billionaire paid HK$13.89 million for the residential units in downtown Jiangmen João Santos Filipe

jsfilipe@macaubusinessdaily.com

L

ui Che Woo (pictured) acquired four housing units for RMB11.78 million (HK$13.89 million) from K. Wah International Holdings Limited, a company which he founded. The information was revealed on Friday in a filing by the company with the Hong Kong Stock Exchange.

The house units are part of the residential project developed by the company in the city of Jiangmen, in Guangdong Province, named ‘The Summit’.

Every unit occupies a total of 315.95 square metres in terms of gross floor area and costs HK$3.47 million.

“The Directors consider that the sales are a good opportunity to realise the development of Property Units in The Summit” the company said regarding the disposal of the four residential units.

Still according to the filing, the four units were considered to be worth between RMB11.70 million (equivalent to approximately HK$13.79 million) and

RMB11.60 million (equivalent to approximately HK$13.68 million) by ‘two independent international professional valuers’, respectively, although the company sold them to its own Chairman for around RMB11.78 million.

‘Subject to audit, it is expected that the group will record a gain of not more than RMB2.5 million (equivalent to approximately HK$2.9million) as a result of the sales. The proceeds generated from the sales will be used as general working capital of the group’, the filing reads.

Lui Che Woo is not only the founder but also the Chairman and Managing Director of K. Wah, which is primarily involved in the property industry.

In addition, the billionaire is the Chairman of Galaxy Entertainment Group.

As for The Summit, the project is situated in downtown Jiangmen and has a total of 327 housing units with total gross floor area of 35,000 square metres.

Jimei International hires Imperial Pacific appoints Andy Tsuy as Executive Director new head of legal

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unket operator Jimei International Entertainment has appointed Andy Tsui Kin Min as an Executive Director and member of the Anti-Money Laundering Committee, the company has announced in a filing with the Hong Kong Stock Exchange.

Mr. Tsui is 45 years old and previously worked for slot machines

seller Entertainment Gaming Asia (EGT), an indirect majority-owned subsidiary of Melco International Development Limited. At EGT, Andy Tsui served as Vice President of Finance and Chief Accounting Officer.

Tsui Kin Min signed a three-year contract with Jimei for a remuneration of HK$140,000 per month. The contract came into effect last Friday.

H

ong Kong-listed casino operator Imperial Pacific International Holdings Ltd. has announced that Mr. Choi Fan Keung Vic has been appointed as the chief compliance officer and head of legal for overseeing legal and compliance matters. Choi was a former head of compliance of HSBC Bank

(China) Co. Ltd., responsible for handling regulatory compliance and prevention and control of financial crime in Mainland China, Imperial Pacific stated in its appointment filing with the Hong Kong bourse. Imperial Pacific official opened its ‘temporary casino’ on Saipan in late November.

Business Daily | 7

January 18, 2016

Macau

Alan Ho accused of interviewing prostitutes

A

t least four prostitutes claim that Alan Ho (pictured centre), the nephew of magnate Stanley Ho, attended interviews granting them rooms in Hotel Lisboa for their sexual services.

The testimony of 50 prostitutes was read out at the Court of First Instance on Friday, according to public broadcaster TDM, during another hearing of the case involving the alleged prostitution ring at the property.

According to the prostitutes’ testimonies as quoted by TDM, they learned about the job via the Internet or middlemen and had then to present themselves at the Hotel Lisboa reception. There, they were asked to queue and attend an interview conducted by Senior Manager of the property Kelly Wang. In these interviews, the women

were instructed on how to dress and told the rules of operation and maintaining a room in Hotel Lisboa.

Alan Ho is among the six suspects arrested by Judiciary Police (PJ) in January last year regarding the alleged running of a prostitution ring in Hotel Lisboa, an operation which police described at the time as the largest prostitution ring to be busted since the handover in 1999. At least 96 sex workers, mostly from Mainland China, were found in the hotel when the six suspects were arrested.

However, in a previous hearing, Alan Ho’s lawyer, Jorge Neto Valente, offered a different version from those of the four sexual workers, saying that his client was not involved in any plans to exploit prostitution services.

The next hearing of this trial is scheduled to take place this coming Thursday.

U.S. secures first guilty plea in U.N. bribery case linked to Ng Lap Seng Prosecutors have charged the Macau billionaire, who allegedly paid US$500,000 in bribes to a former U.N official through intermediaries

A

former finance director at a New York foundation accused of participating in a scheme to bribe a former United Nations General Assembly president on Thursday became the first defendant to plead guilty in the case.

The guilty plea by Heidi Hong Piao to five counts, including bribery and money laundering, is a major break for U.S. prosecutors examining an alleged conspiracy to bribe John Ashe, the former General Assembly president.

Piao, 52, who was also known as Heidi Park, agreed to cooperate with authorities as she admitted to having agreed with others to funnel illegal payments to Ashe, who was also the U.N. ambassador from Antigua and Barbuda.

"The monetary payments were made with the intent of influencing John Ashe, including in his official capacity," she said in Manhattan federal court.

Piao, who was finance director at the Global Sustainability Foundation,

was among six people charged in the case last October.

Prosecutors allege that Ashe, the U.N. General Assembly president

UN headquarters building, New York

from 2013 to 2014, accepted US$1.3 million of bribes from Chinese businessmen to support their interests within the U.N. and Antigua.

Those bribes included over US$800,000 from three businessmen that were arranged through Piao and Sheri Yan, who was the Global Sustainability Foundation's chief executive, prosecutors said.

Prosecutors have also charged Ng Lap Seng, a billionaire developer from Macau who allegedly paid US$500,000 in bribes to Ashe through intermediaries.

Those intermediaries included Francis Lorenzo, a now-suspended deputy U.N. ambassador from the Dominican Republic, and Jeff Yin, Ng's assistant, prosecutors said.

Ashe, Lorenzo, Ng, Yin and Yan have pleaded not guilty.

In court, Piao, who pleaded guilty to charges including bribery and money laundering, said Ashe received payments to attend a conference in his official U.N. capacity.

That admission mirrored a claim by prosecutors that Ashe received US$200,000 to attend a conference hosted by a Chinese real estate developer.

Piao also said payments included money intended to pay officials in Antigua to, among other things, enter into a contract with a foreign company.

Ashe, 61, has only been charged with tax fraud, as prosecutors have said diplomatic immunity may preclude any bribery charges. But prosecutors have said they were examining the issue and likely would bring further charges.

Ashe's lawyer did not immediately respond to requests for comment.

Reuters

8 | Business Daily

January 18, 2016

Macau

“Local consuming ability for good furniture unaffected by downturn” It has been four months since Singaporean design furniture brand Commune established itself in the territory. The bosses of the local branch, Sunny Chang and Wensie Lao, told Business Daily that their business - featuring middle to high‑end wooden furniture, performs better than they had expected given the economic downturn. The two young entrepreneurs credit their customers with understanding the philosophy of “you get what you pay for” Kam Leong

kamleong@macaubusinessdaily.com Photos by: Rui Borges

Why did you bring Commune to Macau?

Sunny Chang: One time my

family and I were looking for [solid-wooden] furniture in Macau. We spent a lot of time looking for such kind of furniture but failed to find anything that we liked. We eventually bought this kind of furniture in Hong Kong. We realised at that time that there was not much [solidwooden] furniture in Macau.

Meanwhile, coincidently, a Singaporean friend of mine and his family have engaged in the ODM (Original Design Manufacturing) business for some 50 years. After graduating from design in Australia, he established the brand Commune two years ago. The brand has developed to own some 30 sales outlets.

When we visited him in Singapore, we saw his furniture, which all looked very nice. We remembered our difficulties in looking for such good furniture in Macau, and thought it would be nice if we could be the franchisee of the brand in the city, while my friend also thought it could be a good idea.

Sunny Chang (L) with partner Wensie Lao, says: “We provide customers with a package of interior design, renovation and furniture”

How was the preparation in the city?

SC: After we had the idea of

franchising the brand in Macau, I only saw my friend again after a month. Then we started to look for space for the shop, which actually took us two months. It took us a total of six months from when we started the negotiations [of bringing the brand to Macau] to officially launching the store.

A furniture firm usually requires much space. Was it a challenge to look for an appropriate shop for the business like the one you have right now on a street front near the city centre?

SC: Yes, it was quite difficult for

us to find a suitable place for our operation. At first, we thought about shops in Taipa, where the average shop size is bigger. [In addition] our business actually targets people who live there, as we aim at the middle-class customer.

But shop rents in Taipa are too expensive. A furniture firm usually requires some 1,500 square feet of space.

Rents in Taipa for such sized shops, however, amount to more than MOP100,000 (US$12,500) per month. We realised that such a high rent would increase our financial pressure so we gave up on the idea of opening the store in Taipa.

How about industrial buildings?

Did you consider that option?

SC: We did. However, as a

franchisee of the brand, we need to follow the brand’s requirements [for opening an outlet]. For example, all the franchised stores need to be located in either street shops or in shopping malls. In addition, the design and renovation of the franchised stores needs their nod. They are very strict on these standards. And they will inspect the venue from time to time.

After some four months of operation, have you seen your targeted customers being your major customers?

SC: Yes, it did meet our expectation that middle class customers are our major customers. Our products are made of solid wood imported from North America. The parent company of Commune, which is in charge of manufacturing the furniture, has a great amount of storage of solid wood, which

make our product prices very competitive.

Does the local outlet of Commune provide a design service?

SC: Yes, we do. For example,

all of our sofas are custommade. Customers can choose the materials of the sofas, either fabrics or leather. Meanwhile, we have many different styles of fabrics and three kinds of leather for them to choose from. In addition, we are co-operating with a local design house called 615 Interior Design. Through this cooperation, we provide customers with a package of interior design, renovation and furniture.

What are the advantages for Commune compared to other local furniture firms?

SC: First of all, we have our own crew for the whole production from design. The Singaporean parent company has different designers and they will release

new furniture every season.

Moreover, in terms of samequality products, ours can be one-third cheaper than the others as the brand is supported by the Singaporean wood manufacturer, whose wood storage is very big.

Is competition in the industry intense?

SC: We don’t feel that. After

all, our targeted market is quite differentiated from most of the other furniture companies here.

Many customers have told us that they had searched for our kind of furniture for a long time. Before, people might have to go to Hong Kong for such wooden products, which is quite complicated. After all, from what I’ve observed, many local residents chase for the quality of products.

Last year, transactions in both the new and used housing property market were quite calm.

Has this influenced local demand for furniture?

Business Daily | 9

January 18, 2016

Macau SC: When we launched our store

last year, in the adjustment phase of the property market, we were also worried that our business might be affected by the downturn.

It has been some four months since the opening; the results, however, are very good, and even better than what we had expected. We were concerned about whether such kind of furniture would be accepted by the local market. But it shows that many young residents and middle-class customers like it and accept it very much.

So, what’s the next step?

SC: The good performance in

these four months has given us the confidence to launch our second store in May, as well as our first store in the shopping mall of the Sea of Dreams project in Hengqin in August. In addition to Macau, we have been granted the franchise right for Commune in Zhuhai as well.

Why is Hengqin the next destination for your business?

SC: Hengqin is a new area. It is

seen as a supporting platform for Macau’s development. Many residential projects are slated to be completed, which will provide some 1,000 brand new units that need furniture. As such, we think the market there has great potential as demand is huge. We’re very confident in the plan there.

On the other hand, the supply in Zhuhai is very high too…

SC: That’s true. We thought about

the competition there as well.

However, our products are not that easily replaced. After all, they are made of solid wood so the quality cannot easily be copied by other companies. Our parent company has a total of eleven factories worldwide - so they can store a great amount of wood. As such, a smaller-scale company may not be capable of producing products of the same quality.

Where will your second store in Macau be located?

SC: It will be located in Rua de

Cinco de Outubro, just a five minute walk from our current store. It will occupy some 1,500 square feet, which is bigger than our current outlet, which occupies some 1,000 square feet. The current store can only showcase one-fifth of our products. After opening the second one, I believe most of our furniture could be showcased.

Can you disclose how much you’ve invested in launching the brand here?

SC: We are three partners and have invested over MOP1 million in total.

When do you expect to see a return?

SC: Well, we’re going to invest in

our new shops . . . but if we only talk about the current store, we expect to see a return in the second quarter of this year.

As an SME, what are the challenges of operating your business in Macau?

SC: Human resource is a big issue

for us. In this short period of four months, we have already lost three staff for different reasons. They quit because they had found a government job, or went to find a government job, or to work for a gaming company. We actually invested a lot in them. We had people from Singapore teaching them about the furniture but they

After all, from what I’ve observed, many local residents chase for the quality of products Sunny Chang, partner of Commune Macau

left after learning this, which has actually created some issues for our operation and management.

How do you see prospects?

SC: We are certainly confident.

But the economic downturn may continue…

SC: We have that concern, too.

Commune Macau The design furniture brand Commune is a line under Singaporean-listed exportonly furniture manufacturer Koda Ltd. The brand was established in 2011 by designer Julian Koh, whose family founded Koda.

The brand boasts nearly 30 stores in Singapore, Mainland China, Malaysia and Indonesia. In October last year, the brand was franchised to the Special Administrative Region.

The local branch is located in an old building on Avenida de Almeida Ribeiro, facing Ponte 16 and the Peninsula Hotel.

“Although this building is very old, it has its cultural values. We spent a lot and worked a lot on the renovation as the building is

very old. We think the building can bring people the feeling of the city, where Chinese and Portuguese cultures mix. It can also show people that modern elements can be accommodated in old buildings,” the director of operations of the local branch, Sunny Chang, told Business Daily.

Unlike many other furniture firms, Commune Macau encourages its customers to try the furniture in the store, in order to meet the literal meaning of the brand’s name.

“We want to commune with customers.

So we encourage them to sit down and feel the furniture with their six senses.

We believe this can give them ideas on how they should place their furniture in their homes, too,” said Wensie Lao, the general manager of Commune Macau.

Nevertheless, our price range is very wide. For example, our tables may cost from MOP6,000 to more than MOP10,000. But I don’t think the consuming ability of local residents is affected by the downturn. For home products like furniture, they understand that they will have better quality if they are more expensive. We are also very glad local residents understand our price and our quality.

What marketing strategies are you employing to promote the brand in Macau?

Wensie Lao: First of all, it’s about

education. We need to educate our customers about the quality of our furniture and the information about the wood we use, such as

the origin of the wood. After all, many residents may only consider whether the piece of furniture matches with their homes or just pick what they like when they shop for furniture. But they may not understand the durability of good furniture and its value.

In addition, since our grand opening we have got in touch with different interior design companies and construction companies here so they can know we have imported a Singaporean brand to Macau. For the mass market, we promote our brand through Facebook and other social media.

We also co-operate with banks to advertise on their websites or on the flyers they put out with their customer statements.

In addition to expansion, what future plans do you have?

SC: We [will] co-operate with

different cultural parties after our daily operation closes.

WL: Yes. For example, we have co-operated with a wine taster to launch a wine tasting course soon.

We will offer our space for the class. Through the co-operation, it will allow students to experience our furniture as well, and they can feel the quality of our products.

SC: In addition to the wine class, we will co-operate with other local young cultural associations after we launch our second outlet. By doing this, we provide a platform for us and our co-operating parties, which may create different sparks and should be very meaningful.

We have also co-operated with design students at Macao Polytechnic Institute. We have invited them to design our flyers or advertisement materials. We have also donated some products to their recent charity bazaar supporting the elderly suffering from dementia.

10 | Business Daily

January 18, 2016

Greater China

AIIB development bank kicks off The AIIB is expected to lend US$10 billion-US$15 billion a year for the first five or six years and will start operations in the second quarter of 2016 Sue-Lin Wong

The AIIB is specifically for infrastructure so we see it as a supplement to projects in Nepal funded by the ADB and World Bank Baikuntha Aryal, joint secretary, Nepal’s Ministry of Finance

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hinese President Xi Jinping (pictured) launched a new international development bank seen as a rival to the U.S.-led World Bank at a lavish ceremony on Saturday, as Beijing seeks to change the unwritten rules of global development finance.

Despite opposition from Washington, U.S. allies including Australia, Britain, German, Italy, the Philippines and South Korea have agreed to join the Asian Infrastructure Investment Bank (AIIB) in recognition

of China’s growing economic clout.

“Asia’s financing needs for basic infrastructure are absolutely enormous,” Xi said in a speech at the launch, adding the bank would aim to invest in projects that were “high-quality, low-cost”.

In order for Asia to continue to be the most dynamic region for global growth, it needs to invest in infrastructure and connectivity, Premier Li Keqiang said, during the afternoon session of the opening ceremony.

No specific infrastructure projects would be announced “for the time being”, AIIB President Jin Liqun told Reuters on the side-lines of the launch.

Diplomatic coup

Luxembourg Finance Minister Pierre Gramegna said the establishment of the AIIB was “further proof of the rebalancing of the world economy”.

A successful AIIB that sets itself apart from the World Bank and the International Monetary Fund (IMF) would be a diplomatic triumph for China, which opposes a global financial order it says is dominated by the United States and does not adequately represent developing nations.

The AIIB will require projects to be legally transparent and protect social and environmental interests, but it will not force borrowers to adopt the kind of free-market practices favoured by the IMF, sources told Reuters in September.

By not insisting on some free market economic policies recommended by the World Bank, the AIIB is likely to avoid the criticism levelled against its rivals, which some say impose unreasonable demands on borrowers.

It could also help Beijing stamp its mark on a bank regarded by some in the government as a political as much as an economic project.

China has an initial subscription of US$29.78 billion in authorised capital stock in the AIIB, out of a total of US$100 billion. It invested another US$50 million on Saturday.

Reuters

Taiwan’s Tsai vows economic fix while keeping peace Tsai must also contend with local concerns including an economy expected to have grown last year at its slowest pace since at least 2009 Justina Lee, Yu-Huay Sun and Adela Lin

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resident-elect Tsai Ing-wen pledged to overhaul Taiwan’s flagging economy and maintain peace with mainland China, even as she called on Communist Party leaders in Beijing to respect the island’s democracy and place in world affairs.

Tsai, 59, rode on a wave of discontent with the ruling Kuomintang to become Taiwan’s first female president on Saturday, a resounding victory just four years after failing to unseat President Ma Ying-jeou. The former law professor and trade negotiator demonstrated the same cautious approach that fuelled her comeback and helped her Democratic Progressive Party capture its first legislative majority, saying in a victory speech that, “the energy of reforms will be maximized, while the volatility of reforms will be minimalized.”

The result sends shockwaves across the 180 kilometre Taiwan Strait, where Chinese President Xi Jinping watched Ma’s Kuomintang, a reliable

advocate of stronger ties, replaced by a party that officially supports independence. While Tsai promised she won’t “provoke” Taiwan’s former civil war foes, she didn’t endorse the so-called 1992 consensus that has underpinned KMT talks with the Communist Party. Under it, both sides agree they belong to the same country, even if they disagree on what that means.

“This is really bad news for China,” Shelley Rigger, a politics professor at Davidson College in North Carolina, said in Taipei. “This kind of massive landslide was not on anyone’s radar.

It’s a new outcome for them to get their minds around. It’s going to be a big shock.”

Tsai won 56 percent of the vote compared with 31 percent for the KMT’s Eric Chu, the biggest margin of victory since Taiwan’s first democratic presidential election two decades ago. The DPP won 68 seats in the 113-seat Legislative Yuan, leaving the KMT with 35 seats and locked out of power for the first time

President Tsai will probably focus on domestic issues in the first one and two years of her presidency, while cross-strait relations will just be stable with no progress

since Chiang Kai-shek fled with his government across the strait during the civil war in 1949.

Meanwhile, the emergent New Power Party, which aims to normalize Taiwan’s status as a country and improve income equality, won five seats. Even with support from such upstarts, the DPP would be well shy of the 85 votes necessary to call referendums on any constitutional changes that might assert the island’s independence.

Peter Tzeng, senior vice president for IBTS Investment Consulting

“The people want to see a government willing to listen to the people, a government that’s more transparent and more accountable, and a government that’s more capable of solving problems and taking care of the weak,” Tsai told a news conference Saturday. “They tell me

‘Grave challenges’

Business Daily | 11

January 18, 2016

Greater China GE to sell appliances business to Haier The news comes weeks after GE walked away from a deal to sell the business to Electrolux for US$3.3 billion, following months of opposition from U.S. antitrust regulators Ankit Ajmera

H

aier Group said it would buy General Electric Co’s appliance business for US$5.4 billion, the Chinese company’s latest attempt to boost its presence in the lucrative United States market.

Haier, which made an abortive attempt in 2008 to buy the business, has a negligible presence in the U.S. white goods market, dominated by Whirlpool Corp, Sweden’s Electrolux AB and GE. The deal with Haier is unlikely to draw intense antitrust scrutiny, according to some antitrust experts, but may get a hard look from the Committee on Foreign Investment in the United States (CFIUS).

“Given the number of industry participants, a merger which combines a 5-percent market share participant doesn’t seem to me to raise significant antitrust concerns,” said Seth Bloom, a veteran of the Justice Department who now heads Bloom Strategic Counsel, a firm specializing in public policy, government relations, and antitrust analysis.

GE said the deal values the appliance business at 10 times last 12 months earnings before interest, taxes, depreciation, and amortization

(EBITDA). Whirlpool Corp is valued at 7.7 times.

The deal will give Haier ownership of a century-old business that makes refrigerators, freezers, clothes washers and dryers under brands such as Monogram, Café, Profile and Artistry.

The business reported revenue of US$5.9 billion last year.

Haier has been mostly present in the highly competitive, so-called “value segment” of the U.S. market and analysts expressed concern about the impact its bigger presence would have on the pricing dynamics.

Haier will continue to use the GE Appliances brand and retain the business’s headquarters in Louisville, Kentucky and its current management team, the companies said.

New GE

Fairfield, Connecticut, to Boston, which will give it access to the talent pool in a city that is quickly becoming a leading U.S. technology hub.

GE is also selling most of its finance arm, or about US$200 billion in assets. It has closed deals on about US$100 billion so far and announced sales of another US$50 billion.

The deal will also be subject to customary regulatory filings in China and antitrust approvals in other countries, said a person authorized to speak on behalf of Qingdao Haier Co Ltd, the Haier unit making the purchase. Haier owns 41 percent of Qingdao Haier.

Goldman Sachs was GE’s financial adviser and Sidley Austin LLP was its legal adviser. White & Case LLP was legal adviser to Haier.

Reuters

The deal is another step in GE’s push to prune its non-core assets as it transforms itself into what it calls a digital industrial company hiring more people to write complex software codes to efficiently run its jet engines, power turbines and medical equipment.

The latest move in that direction will be moving its headquarters from

This time, she focused on keeping ties intact, a position government opinion surveys shows is shared by the majority of Taiwan voters. Still, she has resisted endorsing the 1992 consensus, describing it as only “one option” for dealing with Beijing.

Tsai must also contend with local concerns including an economy expected to have grown last year at its slowest pace since at least 2009.

Unease over stagnant wages and rising home prices was a major reason why voters shunned Ma’s party in favour of Tsai, whose role in negotiating Taiwan’s entrance into the World Trade Organization helped burnish her reputation as a shrewd policy wonk.

Domestic issues

the people expect a government that can lead this country into the next generation and a government that is steadfast in protecting the country’s sovereignty.”

China’s official Xinhua News Agency said in a commentary yesterday that the result posed “grave challenges to cross-strait relations” and urged the DPP to clarify its position on the 1992 consensus.

“If someone obstinately sticks to the secessionist stance or acts as a troublemaker for regional stability, Taiwan’s stability and development would be sheer empty talk and disappointed Taiwan voters would throw out such a scourge during the next election,” the commentary said.

Any strains could quickly complicate China’s relationship with the U.S., which is obligated under a 1979 law to defend Taiwan from

attack. State Department spokesman John Kirby said the U.S. congratulated Tsai and Taiwan for “demonstrating the strength of their robust democratic system.” The U.S. and Taiwan shared an interest in maintaining peace and stability with China, he said.

‘One option’

Tsai, who holds a Ph.D from the London School of Economics, has a long history of sparring with Beijing. As a member of the KMT administration of former President Lee Teng-hui, she helped draft a policy redefining their dealings as a “special state-to-state” relationship.

She later led oversaw mainland affairs for ex-President Chen Shui-bian, of the DPP. During her campaign four years ago, she spoke of the need for “Taiwan consensus” as a basis for talks between the two sides.

Investors must also contend with a lame duck period of more than four months before Tsai takes office on May 20. Taiwanese Premier Mao Chi-kuo resigned after the election results Saturday, saying the majority party should form the cabinet. KMT cabinet ministers would all step down before the new legislative session starts February 1.

On Saturday night, Tsai’s supporters were content to reflect on her historic win. Tens of thousands gathered outside DPP headquarters in Taipei, some with tears in their eyes as they waved Taiwan flags and cheered “Hello, President!”

“I’m so proud that we elected the first female president,” said businesswoman Christina Wang, 50. “DPP morale was sluggish in 2008 after losing its power, Tsai came to rescue with her fortitude and determination. With the world, including China, facing economic challenges, Taiwan’s new forces come to rescue now.”

Bloomberg News

Premier says economy grew around 7 pct China’s gross domestic product (GDP) totalled more than US$10 trillion in 2015 and the economy grew by around 7 percent, with the services sector accounting for half of GDP, Premier Li Keqiang said on Saturday. The premier also said that employment had expanded more than expected with 900 million people making up the country’s total workforce, including 150 million skilled professionals. Consumption contributed nearly 60 percent of growth, Li said, at the opening ceremony for the China-backed Asian Infrastructure Investment Bank (AIIB) in Beijing.

JD.com finance subsidiary raises 6.65 billion yuan China’s largest online direct sales firm, JD.com, said on Saturday it will raise 6.65 billion yuan (US$1 billion) for its JD Finance subsidiary from investors including Sequoia Capital China, China Harvest Investments and China Taiping Insurance. The financing values JD Finance at 46.65 billion yuan on a fully-diluted, post-investment basis.

Following the financing, JD.com will maintain majority ownership in JD Finance, a company news release said.

The transaction is expected to be completed in the first half of 2016, subject to customary closing conditions.

Bondholders offer Kaisa another debt recast plan A group of bondholders in debt-laden Chinese developer Kaisa Group Holding, including Farallon Capital and BFAM Partners, have drawn up a debt restructuring plan even as the company pushes ahead with its own proposal, a source close to the two funds said on Friday.

The bondholders proposal, which follows one launched by the company last month, had some additional benefits for investors with respect to the coupon, conversion price for the convertible bonds, collateral and capital buffer, the source said, without elaborating.

Mainlanders circle Germany’s FTE Automotive Chinese bidders are circling FTE Automotive, a German clutch maker being readied for a sale or listing by U.S. buyout group Bain Capital, two people familiar with the matter said on Friday. Bain is pursuing a so-called dual track strategy but a sale is seen as the more likely outcome, the sources said on Friday. Bain had asked Rothschild to sound out options for FTE including a sale or initial public offering (IPO), which could take place as early as mid2016. The private equity group has also hired Goldman Sachs to help with the dual-track process.

12 | Business Daily

January 18, 2016

Greater China

Banks give back investment quotas as clients bypass the middlemen Financial institutions’ share of the quotas has dwindled to just 14 pct from 37 pct over that period Michelle Price

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lobal banks have started to hand back investment quotas used to buy Chinese stocks and bonds because alternative channels for investment in China and the sliding yuan are making this once lucrative business unprofitable.

While China’s move to open up its capital markets and allow its currency to trade more freely has created opportunities for global banks, these developments are also threatening to kill off niches where they have acted as middlemen to give previously excluded foreign investors backdoor access to the mainland.

Several banks, including Barclays, Commerzbank, Norway’s SEB and the Netherlands’ ING, handed back just over US$800 million in quota granted by Chinese authorities under the Qualified Foreign Institutional Investor (QFII) scheme between April and September 2015, public data shows.

Other banks are considering following suit, according to individuals familiar with the discussions.

The move does not reflect a waning appetite for investment in China, however, despite its slowing economy; overall quotas for QFII have quadrupled to about US$81 billion since 2010.

But banks’ share of the quotas, which they repackage into derivatives such as p-notes and sell on to investors who don’t have access to Chinese markets, a practice known as quota renting, has dwindled to just 14 percent from 37 percent over that period.

That means more foreign investors such as asset managers and index funds, the biggest users of such products, have access to China through QFII or new alternative avenues for investment such as the Hong Kong Shanghai Stock Connect scheme and the more flexible yuandenominated RQFII - so fewer need the banks as go-between.

“Renting quota allocations is a dying business due to the access available through Stock Connect,” said Brendan Ahern, chief investment

officer of New York-headquartered KraneShares, which runs an exchangetraded fund for mainland shares.

Because banks had the best access to China stocks, they were able to charge as much as 200 basis points on these synthetic products up until just over a year ago, according to investors, but this figure has plummeted to around 20 basis points in recent months as funds have gained direct access to China stocks through Stock Connect and their own quotas.

Getting worse

Things are expected to get worse when the Shenzhen stock market joins the Connect scheme sometime this year.

“The cost of warrants or p-notes to access China have come down in line with Stock Connect costs, and with Shenzhen coming online that is going to challenge the economics of that business even more,” said David MacKenzie, Asian equities product manager at investment management firm Schroders.

Securities regulator pledges to strengthen oversight China will also intensify crackdowns on insider trading and manipulation by funds

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hina’s stock market is immature and the government will take more measures to improve supervision following the

latest bout of extraordinary volatility, the head of China Securities Regulatory Commission (CSRC) said on Saturday.

“The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect

Public data and regulatory filings show that some of the biggest China index funds, including BlackRock’s US$5 billion FTSE A50 China Index ETF, are increasingly using their own newly granted QFII quotas and Stock Connect in place of synthetic products.

Barclays and Commerzbank declined to comment. A spokeswoman for SEB said the bank handed back its quota because it was more efficient to use Stock Connect wherever possible.

ING did not respond to requests for comment.

For banks, declining client demand has been compounded by the depreciation of the yuan, which has lost about 5 percent against the dollar since August.

This is because QFII is denominated in dollars, which are exchanged onshore for yuan and then back into dollars when holders want to sell up.

In the past, banks generally benefited from the appreciation of the Chinese currency, but are now exposed to currency risk amid expectations the yuan will decline further.

In a bid to help cover the currency costs, some banks are now renting out QFII free of charge to big clients, according to two people with knowledge of the banks’ businesses.

Some of the biggest providers of synthetic China access products, including HSBC, UBS, Credit Suisse, Citi and Macquarie, declined to comment for this article.

Handing back quota might once have put Beijing’s nose out of joint, but the government looks unlikely to raise strenuous objections under the changed circumstances.

“The Chinese authorities understand the issues, so banks don’t need to worry so much about offending the authorities,” said Keith Pogson, senior financial services partner at EY in Hong Kong.

trading system and inappropriate supervision mechanisms,” Xiao Gang said in an annual meeting.

His remarks were published on the CSRC website.

Xiao said the stock market rout has highlighted the problems facing CSRC’s regulatory mechanisms, adding the authority will learn from this year’s problems and strengthen supervision to avoid risks and promote healthy and sustainable development in capital markets.

The CSRC instituted a flurry of blunt measures in 2015 including halting short selling and banning share sales by major shareholders in order to stabilise markets after major indexes plunged more than 40 percent last summer.

Indexes had rebounded about 25 percent late last year from their August lows, but have plunged back into bear market territory in early 2016, alarming investors worldwide.

Reuters

Xiao warned that fresh falls in global equities, together with increasing global uncertainties, stronger expectations of a weakening yuan and rising debt default risks will bring more regulatory challenges for China’s capital markets.

The securities watchdog said it will improve supervision in margin trading and program trading to seek stability in the stock market, and step up supervision of account ownership.

China will also intensify crackdowns on insider trading and manipulation by funds and curb speculation in equities and futures market.

However, China will further open up its capital markets to attract more investment and push forward to improve the new thirdboard system as well as a registration-based system for stock market flotations, Xiao said.

Reuters

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Business Daily | 13

January 18, 2016

Asia

India’s Modi launches US$1.5 bln fund to support start-ups Months ago Modi had made a whirlwind tour of Silicon Valley Himank Sharma

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ndian Prime Minister Narendra Modi launched a number of initiatives on Saturday to support the country’s start-ups, including a 100 billion rupee (US$1.5 billion) fund and a string of tax breaks for both the companies and their investors.

India, which already has a handful of new generation success stories, is seeking to encourage more cutting edge technology and other startups - supporting new businesses in a country which badly needs to accelerate a still sluggish economic recovery and create millions of jobs as the workforce expands.

Modi’s high-profile event in New Delhi - attended by hundreds of investors and entrepreneurs, including the founder of taxi-hailing app Uber, Travis Kalanick - promised a shot in the arm for the sector, with exemptions from tax and compliance inspections for three years.

“I urge all entrepreneurs to create companies that solve India’s problems and create jobs,” he told a packed auditorium in New Delhi, speaking in Hindi.

Online companies such as e-commerce marketplaces Flipkart

Myanmar sees good prospects for tourism and Snapdeal, along with ride-sharing company Ola, have highlighted the potential for home-grown technology successes in a country best known for capitalising on cheap engineering talent as the world’s back office.

However, the push by Modi’s government is the first time Indian policymakers have announced an agenda directly aimed at promoting start-ups and entrepreneurship.

Modi unveiled plans for a new 100 billion rupee fund: a structured fund of funds that will invest in venture capital funds over a period of four years, financed by the government and the state-owned Life Insurance Corporation (LIC).

He also said start-up companies would benefit from cheaper and faster patent applications, enjoying 80 percent rebates on the cost of patents. A mobile app would allow companies to be set up within a day, he promised.

Moreover, they will be exempt from income tax for the first three years in which they make a profit.

Their investors could also benefit: recognised funds of funds could see exemptions from capital gains tax, Modi said.

The announcements, at a government-organised conference on start-ups in New Delhi, come months after Modi made a whirlwind tour of Silicon Valley, meeting the chief executives of Facebook Inc, Google Inc and Apple Inc. India, with a rapidly expanding population of Internet users, is seen as one of the world’s fastest growing start-up hotspots. Venture capital funds including Sequoia and Tiger Global have raised multi-billion dollar funds for their Indian investments in recent years.

The National Association of Software and Services Companies estimates the number of new companies launched in India grew by 40 percent in the last year.

Earlier on Saturday, Japan’s Softbank said it would “seriously” accelerate investments in India, comparing the growth in India’s internet economy to China a decade ago. Softbank had previously said it would invest US$10 billion in India over 10 years.

WeWork, a New York-based provider of shared office space, used the conference to announce its Indian launch plans.

Reuters

Japan’s central bank governor says no plan to ease policy

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Australia’s trade minister Andrew Robb said he is frustrated the people are not aware of “what’s going on” as the demographic change in the Asia Pacific holds great opportunities for Australia’s high value products. The Asia Pacific is undergoing significant social change as the regional middle class grows from 600 million to over 3 billion within the next 35 years as the regional economies grow, according to the Organization for Economic Cooperation and Development (OECD). “We are so blessed here.

We’re a first world country amidst a whole lot of developing and emerging economies,” Robb said.

Malaysian sovereign fund 1MDB may consider redeeming some of its outstanding debts ahead of time if cash payments from a land sale can come through quickly and if market conditions improve, President Arul Kanda told Reuters. 1MDB is at the centre of graft allegations that have engulfed Malaysian Prime Minister Najib Razak and sparked investigations from Switzerland to the United States. The state fund is in the final stages of a radical land and power assets sale plan aimed at paring US$7.6 billion of long-term debt and putting a lid on its problems.

Leika Kihara

lawmaker, pushed down Japanese stocks on disappointment that no immediate monetary stimulus was forthcoming.

The BOJ is expected to cut its quarterly inflation forecasts and push back the timing for hitting its price target at a rate review on January 2829, as slumping energy costs weigh on price growth. Core consumer prices rose just 0.1 percent in the year to November.

Some market players speculate the BOJ may expand stimulus this month, though many analysts polled

by Reuters expect the bank to wait until later this year.

Kuroda, a former head of the Asian Development Bank, offered a sanguine view on China’s economy, saying that the world’s secondlargest economy will likely sustain stable growth as policymakers still have room to deploy more stimulus measures.

Australians not aware of emerging Asian middle class

1MDB may tackle debt mountain early

Governor Kuroda says central bank will look at effect of oil price falls on inflation, easing policy only if economic conditions worsen

ank of Japan (BOJ) Governor Haruhiko Kuroda said on Friday he had no plan to expand monetary stimulus now, blaming sharp declines in oil costs for keeping consumer inflation distant from the bank’s ambitious 2 percent target.

While he maintained his optimistic view of the economy, Kuroda stressed his resolve to ease monetary policy further if risks threaten achievement of the BOJ’s price target.

“The underlying price trend is improving steadily,” Kuroda told parliament, expressing hope that record corporate revenues and a tightening labour market will gradually push up wages.

“I don’t have plans for further monetary easing at the moment. But we’re ready to adjust policy without hesitation if there is any change in the broad price trend,” he added.

The remarks, made in response to a question by an opposition

Myanmar is seeing good prospects in tourism industry in 2016, with increasing number of tourists to be expected during the year. Tourists arrivals, as of the end of November last year, reached more than 4.2 million. The Ministry of Hotels and Tourism estimates that the number will rise to 5 million by April 2016. Myanmar attracted 2.64 billion U.S. dollars’ foreign investment in 47 projects in the sector of hotels and tourism in 2015, up 1.5 billion dollars from 2011’s 1.14 billion dollars in 36 projects.

But he warned that recent falls in commodities prices were causing market disruptions, and could dampen Japanese corporate and household expectations that prices will rise ahead.

“Oil price falls are positive for Japan’s economy as they boost corporate profits and households’ disposable income,” Kuroda said.

“But ... we’re carefully watching how oil price falls could affect Japan’s inflation expectations.”

Kuroda has said the BOJ will look through the effect of oil price falls on inflation, and ease policy only if economic conditions worsen enough to discourage firms from boosting wages and capital expenditure.

Household and corporate inflation expectations have sagged, suggesting growing scepticism about the BOJ’s ability to accelerate inflation with its huge money printing.

Reuters

Modi becomes 2nd most followed in India on Twitter Indian Prime Minister Narendra Modi is now the second-most followed Indian on micro-blogging site Twitter, said local media yesterday. Modi currently is followed by 17,371,600 people and he is just behind legendary Bollywood actor Amitabh Bachchan who has close to 18.9 million followers on Twitter, said local TV channel NDTV. In fact, the Indian prime minister’s online followers have been increasing by nearly a million every two months. Modi, who joined Twitter in 2009, is also the most followed politician in India, and the second-most followed politician in the world, after U.S. President Barack Obama, the report said.

14 | Business Daily

January 18, 2016

International Greek workers protest pension reform Greek workers marched through the streets of Athens on Saturday to protest against the leftist-led government’s planned pension reform, which the country’s international creditors have demanded as part of its third bailout. About 3,000 public and private sector workers, pensioners and students rallied peacefully outside parliament.

They held banners reading “You cannot bargain with social security” and chanted “Your hands off our pensions!” “We will fight to protect our rights and force the government to withdraw this monstrous plan that it calls a reform,” the secretary-general of the private sector union GSEE, Nikos Kioutsoukis, told Reuters.

Belarus stick to policy of minimising interventions The Belarussian central bank told Reuters it intended to stick to its policy of minimising foreign exchange interventions this year despite the rouble currency coming under pressure. The Belarussian rouble is down almost 8 percent against the dollar since the start of the year, hurt by currency weakness in neighbouring Russia and diminishing appetite for risk on global markets. Tanking commodity prices and a collapse in the Russian rouble have pressured the currencies of many former Soviet states over the past two years.

Venezuela decrees economic emergency Venezuela’s socialist government decreed an “economic emergency” on Friday that will expand its powers and published the first data in a year that shows the depth of a recession fuelled by low oil prices and a sputtering state-led model. The central bank, which has been lambasted by critics of President Nicolas Maduro’s government for hiding statistics since the end of 2014, said the South American OPEC nation’s economy shrank 4.5 percent in the first nine months last year. Inflation soared in that period to an annual rate of 141.5 percent, the world’s worst.

Canada eyes quick-hit infrastructure projects At least part of the Canadian government’s plans to boost infrastructure spending will focus on projects that can be undertaken quickly, Finance Minister Bill Morneau said on Friday. It was Morneau’s first nod to the idea of getting an early jolt of stimulus from the infrastructure project spending to boost an economy slammed by the continued slide in oil prices. Morneau did not give specific details but one idea floated in The Globe and Mail newspaper, citing a senior official, has been to spend on retrofits to improve energy efficiency.

Argentina to issue higher denomination banknotes Argentina’s central bank said on Friday it would issue higher denomination banknotes this year and next, in the face of double-digit inflation that has gnawed away at the value of the local currency. The largest bank note in Latin America’s third biggest economy is the 100 peso bill, currently worth US$7.4 dollars. Cash machines often run out of money over long weekends because they cannot contain enough bills to satisfy demand. From mid-year, the Central Bank will start circulating 200 peso and 500 peso bank notes, and next year will introduce the 1,000 peso note.

Rouhani hails “golden page” in Iran’s history as sanctions lifted Iran ended years of economic isolation when world powers lifted the crippling sanctions against the Islamic Republic on Saturday

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resident Hassan Rouhani hailed yesterday a nuclear deal with world powers as a “golden page” in Iran’s history, and looked forward to an economic future less dependent on oil as the country emerges from years of sanctions and isolation.

But in an address to parliament he noted bitter opposition to Saturday’s lifting of economic curbs from arch foe Israel, some members of the U.S. Congress and what he called “warmongers” in the region - an apparent reference to some of Iran’s Gulf Arab adversaries.

Iran ended years of economic isolation when world powers lifted the crippling sanctions against the Islamic Republic on Saturday in return for Tehran complying with a deal to curb its nuclear ambitions.

Presenting the draft budget for the next Iranian fiscal year, which begins in March, Rouhani told parliament the deal was a “turning point” for the economy of Iran, a major oil producer which has been virtually shut out of international markets for the past five years.

“The nuclear negotiations which succeeded by the guidance of the Supreme Leader and support of our nation, were truly a golden page in Iran’s history,” he said.

“The nuclear deal is an opportunity that we should use to develop the country, improve the welfare of the nation, and create stability and security in the region,” Rouhani said.

In a dramatic move which coincided with the scrapping of the sanctions, Tehran also announced the release of five Americans including Washington Post reporter Jason

KEY POINTS Rouhani: Deal still faces opposition from Israel, others Rouhani says move is economic turning point for Iran Iran, US start prisoner swap Iranian President Hassan Rouhani

Rezaian as part of a prisoner swap with the United States.

Together, the lifting of sanctions and the prisoner deal help to ease the hostility between Tehran and Washington that has shaped the Middle East since Iran’s 1979 Islamic Revolution.

Tens of billions of dollars’ worth of Iranian assets will now be unfrozen and global companies that have been barred from doing business there will be able to exploit a market hungry for everything from automobiles to airplane parts.

More money, prestige for Iran

The end of sanctions means more money and prestige for Shi’ite Muslim Iran as it becomes deeply embroiled in the sectarian conflicts of the Middle East, notably in the Syrian civil war where its allies are facing Sunni Muslim rebels.

It is also a crowning achievement for Rouhani, a pragmatic cleric elected in 2013 in a landslide on a promise to reduce Iran’s international isolation.

Iran denies its nuclear programme

Russian Finance Minister says budget to be short at current oil price The oil price slide has also put pressure on the rouble, which is down over 50 percent versus the dollar

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ussian Finance Minister Anton Siluanov said in a television interview on Saturday that the fall in oil prices meant the Russian budget would be short of more than 3 trillion roubles (US$38.6 billion) of income.

Russia’s economy has been hammered by the collapse in global oil prices since mid-2014 as energy

sales account for roughly half of federal budget revenues.

Its current budget for 2016 was calculated based on a Urals oil price of US$50. Urals, Russia’s main export blend, traded at around US$27 on Friday.

“Therefore there is a difference of two times, and I want to say that for budget income this difference

Deal helps to ease US-Iran hostility Israel says Iran still wants nuclear bomb UN watchdog says Iran abides by nuclear deal was aimed at obtaining an atomic bomb. Washington maintains separate, less comprehensive sanctions on Iran over its missile programme.

Britain welcomed the deal’s implementation, as did France which said it would keep a close eye out to ensure that Iran’s nuclear deal with diplomatic powers is strictly respected. Japan plans to lift most of its sanctions against Iran, including a halt to fresh investments in Iranian oil and gas projects, “within a few days”, a Foreign Ministry official said.

Besides the ban on new investments in the Iranian energy sector, part of Tokyo’s asset freeze measures against Iranian individuals and groups that are involved in nuclear activities will also be lifted, he said.

Reuters

equates to over 3 trillion roubles,” Siluanov said in an interview on the current affairs programme Vesti on Saturday with Sergei Brilev.

The oil price slide has also put pressure on the rouble, which is down over 50 percent versus the dollar since oil prices started a relentless drive downwards.

But Siluanov said the rouble had weathered the worst because oil prices could not fall as far as they already have from their previous peak.

“Our main export commodity, as we have already discussed, fell in price by four times,” Siluanov said. “One can hardly expect prices to fall four times further compared to today’s level.”

He added that Russia could have to use part of its National Wealth Fund (NWF) to cover the budget deficit in 2016, if measures were not taken to bring Russia’s budget in line with the new oil price reality.

The NWF is one of Russia’s two rainy-day sovereign funds, alongside the Reserve Fund. Part of the NWF is already invested in infrastructure projects.

Reuters

Business Daily | 15

January 18, 2016

Opinion Business

wires

How to save the World Bank

Leading reports from Asia’s best business newspapers

Ngaire Woods

Dean of the Blavatnik School of Government and Director of the Global Economic Governance Program at the University of Oxford

TAIPEI TIMES After winning the presidency by a landslide, Democratic Progressive Party (DPP) president-elect Tsai Ing-wen next has to overcome a tougher challenge — fixing the nation’s anaemic economy, worsening income disparities and dimming job opportunities, especially for young people, economists said. GDP growth averaged 2.5 percent in President Ma Ying-jeou’s second term and looks softer going forward, with the world mired in “the new mediocre” and China entering the “new normal.” “Tsai must put together a competent team and shift the capital-intensive economy to a one driven by knowledge,” Yuanta-Polaris Research Institute chairman Liang Kuo-yuan said.

THE KOREA HERALD China became South Korea’s second-largest trading partner in the fourth quarter of last year, unseating Japan for the first time, data showed yesterday. According to the data by the Korea International Trade Association (KITA), South Korea’s trade with China came to US$75.6 billion in the October-December period, with Seoul’s trade with Japan reaching US$71.7 billion. The United States was Seoul’s top trading partner.

South Korea’s trade with Japan had been hovered above that of Japan, though Seoul’s exports to China surpassed its shipments to Japan in 2003.

PHILSTAR Maybank Kim Eng sees the Philippines growing faster than its neighbours in the Asia-Pacific region on the back of robust domestic demand supported by higher spending from the general elections in May. In its latest regional research entitled “Six-for-16,” Maybank Kim Eng said the country’s gross domestic product would grow by seven percent this year from the projected six percent last year. The GDP growth of the Philippines would even overtake China’s projected expansion of 6.6 percent this year due to the economic slowdown in the world’s largest economy.

BANGKOK POST The tax allowance for travel has been extended for another two years, with retroactive effect from Jan 1, says the Revenue Department says.

The move is aimed at boosting tourism revenue to offset tepid exports. The Revenue Department has agreed to the renewal of the tax break for domestic tour packages, hotel accommodation and tour guide service fees for two more years after it expired last month, deputy director-general Somchai Saengratnaneedet said. However, he said the amount of travel expenses deductible from taxable income remained under consideration.

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he World Bank is quietly sliding into insignificance, as its core fee-paying clients increasingly seek other lenders. If it is to survive, its management will need to streamline its loan approval processes and leverage the unique assets that distinguish it from its competitors.

The Bank once comfortably earned enough to be selfsustaining. Today, it is rapidly becoming welfare-dependent.

Periodic contributions from wealthy governments have propped up lending to poor countries, but these are unlikely to be increased, and some may be discontinued as donors redeploy aid budgets to refugee programs.

The problem is not that emerging economies have no desire to borrow; they desperately need funds for infrastructure and other investments. The problem is that the Bank is too slow to process loans, which has increasingly made it the last choice for many of its potential clients.

Whereas a commercial lender might take three months to prepare and disburse a loan, the Bank takes more than two years. And its efforts to speed up the process, which began in 2013, have reduced the average time only slightly, from 28 months to 25.2 months; in some regions (accounting for a third of the Bank’s lending), the wait has actually increased.

One clear indicator of the Bank’s performance is how high a premium governments are willing to pay to avoid it. A 20-year loan from the World Bank has an interest rate of about 4%, and the poorest countries can borrow for less than 1% (“International Development Association loans”).

Nonetheless, many countries are choosing much more expensive commercial loans or bond issues.

For example, Ghana, despite being eligible for IDA loans, recently chose to raise money from the bond market, from which it received an interest rate several times higher.

No wonder emerging economies are excited by the establishment of the BRICS countries’ New Development Bank and the China-led Asian Infrastructure Investment Bank: Both institutions have promised faster lending.

If the World Bank is to survive, its management must streamline its complicated and unwieldy bureaucracy, fixing what internal reviews described over a decade ago as “fragmentation, duplication, and delay” in assurance, safeguards, and fiduciary processes. At the same time, the institution must identify what it is uniquely positioned to do. In 2013, the Bank declared a new goal – to eradicate extreme poverty by 2030. But this makes it just one of a multitude of organizations seeking to address poverty.

What makes the World Bank special is that it is made up of 188 countries and can act on behalf of all of them, rather than being beholden to one or two. Furthermore, its financial structure enables it to be more autonomous, self-sustaining, and resilient than most other multilateral institutions. These are the attributes it must leverage.

For starters, the Bank is uniquely placed to play the role of a “balancer” in the international aid system, helping to ensure that funds flow toward the countries that most need them.

Individually, governments give a lot of aid, but most of it goes to recipient countries with which they have special ties or relationships.

This “bilateral aid” is subject to the whims and trends of the aid industry, sometimes flowing only into specific sectors or to back particular approaches. The result is that some countries get more aid than they need, while others don’t get enough. According to Britain’s Department for International Development, only five of the 30 countries deserving the largest aid allocations get close to the right level.

The Bank is uniquely placed to counterbalance the caprices of individual donors and ensure a better global allocation. Until now, however, its lending has tended to follow donor fashions, rather than complementing them.

A second rationale for the World Bank is the need for “counter-cyclical” aid. At present, when the rich part of the world catches an economic cold, the poorer countries face a double contagion: Their trade earnings plummet, and flows of aid and investment from richer countries dries up. The resulting halts to projects or policies – half-built hospitals, unexpected shortages of medical supplies,

If the World Bank is to survive, its management must streamline its complicated and unwieldy bureaucracy

bridges to nowhere – play havoc with their economies. As the Bank reviews its financialmanagement practices, a more consciously counter-cyclical approach could be adopted.

A third rationale for the Bank has been its ability to share expertise and to develop and reinforce norms among the governments to which it lends. In practice, however, the Bank has struggled to do this effectively. Borrowers have often been reluctant to accept its advice, which they perceive as driven more by theory and ideology than by evidence and practice. Local officials in charge of implementation know that if the Bank’s advice proves impractical, unrealizable, or flawed in some other way, it is they, not some technocrats sitting in Washington, DC, who will lose their jobs (or the next election).

Experience suggests that the Bank’s advice has influence only if its messenger is someone who really knows the country (ideally as a resident), is an expert on the issue at hand, and has the power to get approval in Washington. Senior Bank staff deployed in regions for long periods, such as Jim Adams in Tanzania and Uganda, or David Dollar in China, have enviable track records. The Bank as a whole, however, is unlikely to succeed if it continues to attempt to become a centralized provider of solutions.

In short, the World Bank’s management and member countries need to work together to create a faster, more responsive institution, one that exploits its unique advantages to balance aid flows, provide counter-cyclical support, and offer meaningful advice. This approach could win back the fee-paying clients that comprise its self-sustaining resource base, provide it with its global reach, and allow it to continue to play a vital role in boosting economic growth and reducing poverty in developing countries.

Project Syndicate

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January 18, 2016

Closing Crowdfunding on rise amid start-up boom

Hunan turning mine pit into ice resort

Start-up businesses raised more than 11.42 billion yuan (US$1.7 billion) through crowdfunding in China last year, according to Internet finance service provider Wangdaizhijia. Crowdfunding allows people to raise money for projects online in return for giving investors business stakes, products or services. The sum raised through crowdfunding in 2015 was more than five times as much as the 2.16 billion yuan raised in 2014, following authorities’ encouragement of mass entrepreneurship to counter a slowdown. The number of crowdfunding platforms almost doubled to 283 last year.

A deserted mine pit in central China’s Hunan Province is being turned into an “ice theme park” featuring skiing, ice skating and water rides.

More than five decades of mining by a local cement producer left a pit 100 meters deep and measuring 180,000 square meters at the surface in the provincial capital Changsha. Turning the bowl-shaped industrial wasteland into a tourist destination is challenging. Given the depth of the pit, construction workers have to use a tunnel to get concrete to the bottom. The theme park is expected to open in 2018, according to the local government.

Beijing to raise offshore yuan reserve requirements for some banks Market participants suspect the planned reserve increase is intended to soak up additional liquidity in the offshore yuan

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hina’s central bank is preparing to raise the reserve requirement ratio for yuan deposits placed in yuan clearing banks from January 25 in its latest bid to stem speculation in the currency, according to three sources who have seen the document outlining the change.

The People’s Bank of China (PBOC), which had established the reserve requirement ratio (RRR) for offshore yuan participating banks in 2014, will return the rate to a normal level, the sources said, without specifying what that level would be. It had been set at zero.

The change will also apply to correspondent banks.

Market participants suspect the planned reserve increase is intended to soak up additional liquidity in the offshore yuan, or CNH, market as the PBOC tries to stem speculation of further depreciation in the currency.

In early January, the offshore yuan fell to its lowest since trading began

in 2010 -- and well below levels traded inside China -- on fears that Beijing was planning a sharp depreciation in its currency to help boost its cooling economy.

The PBOC has managed to prop the offshore yuan back up in recent weeks through state banks operating in Hong Kong, which have started hovering up the currency and hoarding it, thus tightening supply. But it weakened

sharply again on Friday.

CNH funding costs “are set to rise” as a large volume of offshore yuan is actually being deposited back into China, explained an international investment banker who declined to be identified.

“The expectation of yuan devaluation has led to massive remittance of yuan,” said China Industrial Bank’s chief economist Lu Zhengwei.

“Raising the RRR will increase of the cost of arbitrage,” Lu said, referring to the gap between the onshore and offshore exchange rates which the PBOC has been struggling to close.

“Domestic banks conducting exchanges offshore and remitting yuan to China will be further controlled,” Lu said, “pushing up the cost of offshore yuan funding.”

Mainland’s luxury shoppers increasingly going online

Survey says national growth slid to 25-year low

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Requests to China’s central bank for comment went unanswered yesterday.

Offshore clearing banks located in Hong Kong and Macao, which already maintain deposits with central bank branches in Zhuhai and Shenzhen, will be required to maintain reserves there, according to the sources.

Other yuan clearing banks will be required to maintain the reserves onshore at accounts held by parent institutions.

The People’s Bank of China (PBOC) has been under increasing pressure from policy advisers to let the currency fall quickly and sharply, after spending billions of dollars buying yuan over recent months to defend the exchange rate.

China’s foreign exchange regulator also has ordered banks in some of the country’s major import and export centres to limit purchase of U.S. dollars this month.

China suspended forex business for some foreign banks, including Deutsche, DBS and Standard Chartered at the end of last year.

Reuters

China’s 2015 power consumption up 0.5 pct annually

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P

hina recorded its lowest growth in a quarter of a century in 2015, an AFP survey has forecast, projecting a further slowdown in the world’s second-largest economy this year.

Official gross domestic product (GDP) statistics for 2015 will be announced on Tuesday, and the median prediction in the poll of 18 economists put expansion at 6.9 percent -- down from 7.3 percent the year before.

The Asian giant is a key driver of the world economy, affecting businesses and employment across the planet, and worries about its health have roiled global markets in recent weeks and months.

The figure would be the weakest growth in the People’s Republic since the 3.8 percent of 1990, a year after the bloody Tiananmen Square crackdown rocked the country and isolated it internationally.

Growth will slow further this year, the survey forecast, with the median projection for 2016 coming in at 6.7 percent.

Some analysts believe that markets have overreacted to negative factors and underestimated the fundamental resilience of China, whose official growth rates still far exceed those of the developed world.

or Chinese, online shops are quickly evolving from simply a means to get a bargain to somewhere movers and shakers can splash out on pricey clothes and accessories.

According to a study published by auditor KPMG earlier this week, Chinese buyers of luxury items are increasingly favouring online retailers over brick-and-mortar stores, which will account for half of Chinese luxury spending by 2020.

Surveying 10,150 Chinese consumers of luxury goods in 2015, KPMG found that nearly one third of their luxury spending was online.

The respondents’ average spend per luxury item was 2,300 yuan (US$350), and the averaged highest amount they said they would be willing to spending online on each order was 4,200 yuan, more than double the figure in 2014.

The best-selling luxury items online were cosmetics followed by women’s shoes, bags, leather products, women’s clothes and accessories.

Consistent with the overall development in China’s e-commerce, luxury shoppers are increasingly turning away from laptops to mobile gadgets, according to the study.

ower consumption in 2015 rose 0.5 percent from a year earlier to 5.550 trillion kilowatthours (kWh), figures from the National Energy Administration (NEA) showed.

The NEA did not break out figures for December, or for wind and solar power.

But Reuters calculations suggest that China’s power consumption stood at 500.7 billion kWh in December, down 2.1 percent on-year.

Total generating capacity rose 10.4 percent in 2015, with a 29.9-percent jump in nuclear power capacity, the administration said in a statement published on its website.

Thermal power, mainly coal, accounted for 65.7 percent of China’s total power generating capacity by the end of the year, down from 67.3 percent in 2014.

Nur Bekri, head of the NEA, said in December that coal will make up 62.6 percent of the country’s primary energy needs in 2016, as opposed to 64.4 percent last year, according to official state news agency Xinhua.

Official monthly data for power generation in December has not yet been released.

AFP

Xinhua

Reuters