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
Literary Festival kicks off March 5
Hong Kong Stock Exchange prepares terrain for foreign issuers Page 8
Year IV
Number 967 Friday January 22, 2016
Publisher: Paulo A. Azevedo
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Mainland developers plan to acquire more land outside primary market Page 10
CA Blasts Government’s Blasé Budget Control
Six gov’t departments. 81 projects. MOP120 million. An Audit Commission (CA) report reveals that some departments are granting public money over and above the limit of their jurisdiction. Awarding projects without opening public tender. And abusing the exemption of legal proceedings. Or misusing the laws and regulations. The gov’t should not use excuses such as outdated systems, procedures too complicated, or techniques are too complex, the Audit Commission railed. This only tries to conceal the ‘incompetence of its own self-management and inefficiency of the executive’ Page
5
Hard luck story Macau is facing the inevitable. The low future retention of Mainland tourists. According to CLSA, only 8 pct of PRC visitors plan to return. Add more hotel rooms, improve non-gaming entertainment offerings and infrastructure, says the firm. If Macau really does want to become one of the world’s leading tourist destinations
The annual Davos powwow. Featuring luminaries like IMF head Christine Lagarde and other world leaders. Exchanging ideas on this occasion with Mainland delegates about the Chinese economy. Improved communication with markets was identified as a must-do initiative. Lending transparency to the complicated process of China’s transforming economy
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HSI - Movers
Tangled web of corruption
January 21
Name
A New York official has pleaded guilty. Admitting she helped funnel almost US$1 mln in bribes from sources in China. To the former president of the United Nations General Assembly. Macau billionaire Ng Lap Seng is also charged with others but pleaded not guilty
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Transportation
www.macaubusinessdaily.com
Davos on China
Descending airline passengers Up to 5.95 million passengers. Macau International Airport forecasts handling this volume of pax this year. Taking into account a milder growth rate in Mainland Chinese visitors to Macao. And witness the significantly slower increase in Mainland Chinese visitors who arrived by plane last year
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%Day
Cathay Pacific Airways
+3.65
Belle International Ho
+1.01
China Petroleum & Che
+0.77
Hengan International
+0.30
China Shenhua Energy
+0.19
New World Developme
-4.39
Cheung Kong Property
-4.82
China Overseas Land &
-4.84
Henderson Land Devel
-6.10
China Resources Beer H
-14.11
Source: Bloomberg
New low
Inflation for December 2015 was 3.73 pct. The lowest since September 2010. The city’s annual inflation rate slowed to 4.56 pct for 2015 compared to a growth rate of 6.05 pct in 2014
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2 | Business Daily
January 22, 2016
Macau
Airport operator anticipates slower passenger growth for 2016 Official data shows that the city saw a much milder rise in Mainland Chinese visitors travelling by plane to visit Macao during last year
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ith the objective of handling some 5.95 million passengers for this year, airport operator Macau International Airport Co. Ltd. (CAM) is actually expecting a slower year-on-year passenger growth rate after the city saw a much milder rise in Mainland Chinese visitors arriving by plane last year. In a statement released to media, CAM said they are targeting handling 5.95 million passengers this year, which would represent a 2 per cent year-on-year growth compared to the 5.83 million passengers handled last year. The growth of passenger volume the airport operator saw last year was 6.4 per cent year-on-year. The statement was issued following a meeting of CAM’s board, which also sought to see aircraft movements total 57,500 and freight volume achieve 30,659 tonnes for this year. Currently, 30 airlines operate 44 flight routes to and from the city, according to CAM. That figure follows an addition of 9 new airlines that launched their services here last year with 8 new destinations. The modest target the airport operator has set for passenger volume growth this year follows
the city seeing a significantly slower increase in Mainland Chinese visitors travelling here by plane in the first eleven months last year, and comprising 55 per cent of the overall inbound passengers handled by the local airport.
In the January to November period last year, the airport registered 1.02 million visitor arrivals, representing a growth rate of only 2.3 percent year-on-year – much lower than the 17 per cent increase seen in the same period the previous year, according to
data from the Statistics and Census Service (DSEC). During the period, the airport also saw a reduction in visitors from most Southeast Asian and European countries, census data reveals. S.L.
Uphill job to convince tourists to return Only eight per cent of the Mainland tourists that have been to Macau plan to return, according to a recent CLSA report on Mainland travellers
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acau is facing the problem of the low future retention of Mainland tourists, as only eight per cent of PRC visitors plan to return. According to the report on Chinese Tourists in 2016 from brokerage firm CLSA, Macau is losing its appeal for Chinese travelers, who are becoming more daring in experiencing different destinations. “Slightly concerning is the low future retention rate. In our Chinese tourists survey, only 8 per cent of those who visited Macau plan to return vs. 37 per cent for Japan, 26 per cent for South Korea, 32 per cent for Thailand and 25 per cent for Hong Kong”, the study by analysts Aaron Fischer and Marcus Liu notes. For the study, interviews were conducted with a total of
401 “experienced” Mainland travellers from 25 Chinese cities. From these interviews, the bad news for Macau is that as a future travel destination it has dropped out of the top 20 choices. Currently, the territory only occupies 21st place, while South Korea is the top choice and Hong Kong takes 5th place. According to the CLSA report, in future Macau will have to rely more on Mainland tourists from provinces other than neighbouring Guangdong in order to achieve good results. “The penetration rate of Macau by Mainland tourists is around 1.5 per cent. However, Guangdong is reasonably high at 9 per cent with China excluding Guangdong at only 0.9 per cent. Clearly, we see greater opportunity in these
provinces”, the analysts concluded. Attracting visitors from other provinces, however, will require the industry to be able to increase the overnight average stay for tourists in order for it to be worth their while to travel so far. However, one of the problems related to this, as perceived by visitors, is the room rate in Macau.
Hotel rooms needed
“Clearly, there are problems with hotel room prices with 61 per cent saying hotel room prices are too high and 48 per cent of those who didn’t stay overnight saying it was because of the high room rates.” At the moment, an average of 1.5 days is spent in Macau by tourists, while in Hong
Kong it is 3.3 days, with 3.6 days in Singapore and 3.2 days in Las Vegas. In relation to this problem, the study stressed that Macau “needs to add more hotel rooms; and improve its non-gaming entertainment offering and infrastructure to support its drive to become one of the world’s leading tourist destinations.”
Chinese outbound to reach 200 million
In 2020, CLSA expects the number of Chinese outbound tourists to reach 200 million. The brokerage firm expects a 9 per cent compound annual growth rate in terms of outbound tourists from the Mainland until 2020. However, for Hong Kong and Macau the compound annual growth rate is expected
to stay at 3 per cent, while all the other destinations will grow at 16 per cent. The impact on the number of visitors to the Chinese Special Administrative Regions has much to do with the increasing competition from other destinations as well as internal problems. “We are structurally negative on Hong Kong due to a lack of new attractions, increased competition, the strengthening Hong Kong dollar and negative attitudes towards Mainlanders. While Macau is doing more to improve its tourist offering, it still faces challenges to attract nongamblers. As a result, places like Japan, Australia, South Korea and the USA will see more Chinese arrivals,” Aaron Fischer and Marcus Liu note. J.S.F.
Business Daily | 3
January 22, 2016
Macau
Inflation eases to 4.56 pct in 2015 In December 2015, it was 3.73 per cent, the lowest recorded since September 2010 Kam Leong
kamleong@macaubusinessdail.com
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he city’s annual inflation rate slowed to 4.56 per cent for 2015, compared to a growth rate of 6.05 per cent in 2014, whilst that for the last month of the year dropped to 3.73 per cent year-on-year – the new lowest growth rate since September 2010, according to the latest data released yesterday by the Statistics and Census Service (DSEC). Last year, the average Composite Consumer Price Index (CPI) reached 105.72. The growth in the average price index in the territory was contributed to by higher rentals for housing and parking spaces, as well as dearer charges for eating out, which together pushed up the annual inflation rate by 3.7 percentage points from 2014, the government department said. In terms of sector, the price index of Alcoholic Beverages & Tobacco registered the most notable increase in the year, up 17.33 per cent year-on-year on average. In addition, costs for Housing & Fuels jumped 8.06 per cent year-on-year in 2015, despite prices for Liquefied Petroleum Gas plunging 14.2 per cent year-on-year.
Meanwhile, charges for Communication and average prices for Clothing & Footwear both registered slight decreases of 0.26 per cent and 0.08 per cent yearon-year in 2015, respectively.
New lowest
Last November, the city’s inflation rate dropped to below four per cent for the first time since 2011, which is also the lowest since the third
quarter of 2010. Inflation for last December continued the downward trend, decreasing a further 0.04 percentage points from November’s 3.73 per cent. The increase in CPI for the last month of 2015 was driven by the notable growth in prices for Alcoholic Beverages & Tobacco, which surged 37.85 per cent yearon-year, following the hike in tobacco tax.
In addition, higher tuition fees and the rising wages of domestic helpers boosted the price index for Education and Household Goods & Furnishings by 8.93 per cent and 6.31 per cent year-on-year, respectively. Average prices for Clothing & Footwear and Communication registered year-on-year decreases in December 2015, down 2.99
per cent and 0.79 per cent, respectively. On a month-on-month comparison, the composite CPI for December 2015 grew 0.25 per cent. Monthly inflation was attributable to the higher prices of winter Clothing & Women’s Footwear, increased charges for package tours and cultural services, as well as rising rentals for parking spaces, according to DSEC.
JETCO mulls cross-border P2P service in Macau The ATM operator recently announced that their Pay P2P service is soon to be launched in Hong Kong where money transfers can be enabled by merely inserting the recipient’s mobile phone number
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TM operator Joint Electronic Teller Services Ltd. (JETCO) hopes to launch its peerto-peer (P2P) platform by which users can transfer their money via smartphones in Macau, a move that is still under negotiation with the Monetary Authority of Macao, Hong Kong’s Chinese language newspaper Sing Tao Daily reports. Business Daily has asked JETCO about the intended cross-border P2P payment transfer service for Macau, but had not received a reply by the time the story went to press. JETCO, which operates more than 3,000 ATMs in Hong Kong, Macau
and Mainland China, announced on Wednesday a partnership with 12 banks in Hong Kong offering the JETCO Pay P2P service, by which customers of participating banks can transfer money to any individual with a bank account via a smartphone application. The transfer of money is enabled by merely inserting the recipient’s phone number, according to the JETCO announcement. “We will continue to work closely with our member banks and the industry to raise awareness of the use and benefits of P2P fund transfer among consumers. In the medium to long term, we are looking to develop
our P2M (person to merchants) and bill payment services as part of our mobile payment offerings,” JETCO chief executive officer Angus Choi was cited as saying in the announcement. The 12 co-operating banks on the P2P platform comprise: Bank of China (Hong Kong), Bank of Communications, Bank of East Asia, China CITIC Bank International, China Construction Bank (Asia), Citibank, Dah Sing Bank, DBS Bank, OCBC Wing Han Bank, Shanghai Commercial Bank, Standard Chartered Bank and Wing Lung Bank.
The Pay P2P Service is expected to first be launched in Hong Kong in the second quarter of this year, Hong Kong media reports. JETCO is currently in talks with Hong Kong’s Hang Seng Bank and the Hongkong and Shanghai Banking Corporation to join the P2P platform. The transfer limit for the P2P application is HK$3,000 within two days. Accounts of banks that have not joined JETCO’s P2P platform can only receive money from others within two days, according to Hong Kong media reports. S.L.
4 | Business Daily
January 22, 2016
Macau
San Miguel Hong Kong reaches agreement with Shepherd Neame The Hong Kong arm of the Philippines beer brand is introducing the products of the oldest brewery in England to the Macau market João Santos Filipe
jsfilipe@macaubusinessdaily.com
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an Miguel Brewery Hong Kong has reached an agreement with the English Brewery Shepherd Neame to distribute the English beer products ‘Spitfire’, ‘Whitstable Bay Pale Ale’ and ‘Whitstable Bay Blonde Lager’ in Macau and Hong Kong. The contract was announced on Tuesday and is effective until the end of 2018, according to information released by the Hong Kong arm of the Philippinesbased multinational. ‘The company believes that the distribution arrangement allows it to broaden its product brand portfolio and benefit from a growth in revenue in addition to the sales of the company’s own San Miguel products’, the board of the Hong Kong company explained. Shepherd Neame is one of Great Britain’s oldest brewers. In spite of being an independent company, it exports beer to more than 35 countries under
different brand labels with a production of around 281,000 brewers’ barrels a year. For San Miguel Hong Kong, this is only one of the first deals to distribute products from other renowned international beer brands in Macau and Hong Kong. ‘The Company is also currently in talks with other imported international premium/craft brands for the distribution of their products’, the Board of the company explained. This initiative by San Miguel Hong Kong comes as part of a strategy to offset the net loss of HK$14.6 million (US$1.87 million) recorded for the first six months of 2015, justified by the termination of the distribution agreement with Anheuser-Busch InBev International, the company that sells beer products under the Budweiser, Corona and Stella Artois brands.
Remy Cointreau sales beat estimates on China, U.S. demand The company says Mainland China is driving the return to growth in the region, while Hong Kong and Macau remain in decline
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rench distiller Remy Cointreau SA reported third-quarter sales that beat estimates as appetite for cognac grew in the U.S. and rebounded in China. Sales rose 3.2 per cent on an organic basis in the three months through December after a first-half decline, the Paris-based company said in a statement Thursday. Analysts expected a 2.3 per cent increase, according to the median of 16 estimates. The stock rose as much as 5.4 per cent in Paris, the biggest gain in the stock in more than three months. Mainland China is driving the return to growth in the region, while Hong Kong and Macau remain in decline, Chief Financial Officer Luca Marotta said on a call with investors.
The timing of the Chinese New Year, which is 11 days earlier in 2016 than in 2015, also probably boosted sales ahead of the holiday, according to Hermine de Bentzmann, an analyst at Raymond James. “Overall good numbers from Remy and the positive commentary on China is very welcome given the recent market concerns,” wrote Jonathan Fyfe, an analyst at Mirabaud. The maker of Remy Martin cognac has changed distributors in China amid a government crackdown on graft that has dented sales of high-end spirits. It’s also been trying to shore up growth of its partner brands after losing a distribution contract for Piper and Charles Heidsieck champagnes in the U.S. Remy Martin continued an “excellent” performance in the Americas and Europe, helped by a new marketing campaign. The company reiterated it expects a return to growth in full-year adjusted operating profit, excluding currency shifts. Total revenue reached 298 million euros (US$325 million), compared with the estimate of 294 million euros. Remy Cointreau said last year that it intends to become the global leader in spirits sold for US$50 a bottle or more -- an US$18 billion market which is growing at more than twice the pace of lower-priced alcohol. Bloomberg
Business Daily | 5
January 22, 2016
Macau
Audit Commission slams government outsourcing abuse Some 81 projects undertaken by six government departments were found to be questionable, involving an amount of MOP120 million Joanne Kuai
joannekuai@macaubusinessdaily.com
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overnment departments were found to have a “misunderstanding of the laws” in respect of granting financial aid and outsourcing public works without open tender, negotiating for fair prices, or even not signing contracts, an Audit Commission report said in a study released yesterday. Some 81 projects involving around MOP120 million (US$14.9 million) were found to be questionable. The projects in question were granted by six government departments; namely, the Panda Foundation, Macau Foundation, Labour Affairs Bureau (DSAL), the Land, Public Works and Transport Bureau (DSSOPT), Transport Bureau (DSAT), and Environmental Protection Bureau (DSPA). ‘The departments should not bypass standard procedures, abuse special ways, forgo laws, regulation and the principals of safeguarding the interests of the SAR Government for the sake of convenience,’ said the supervisory body in a statement issued by the Audit Commission, which had monitored the procedure of grants over three and a half years. From the beginning of 2010 to mid-2013, the Audit Commission oversaw 65 government departments granting 1,514 projects related to consultancy, study and survey services or of a similar nature, involving over MOP1.4 billion. The Commission says that according to some standards set for this audit, they targeted ‘280 projects at high-risk’ and found 81 of them questionable. ‘The audit results show that currently public departments have a lack of recognition of regulations of managing finance and accounts and even a shortage of knowledge of their own structural rules,’ added the supervisory body. ‘The government should not use excuses such as the system is out-dated, the procedures are too complicated, or the techniques are too complex to
cover the incompetence of its selfmanagement and insufficiency of executive ability.’
‘For the sake of convenience’
Among the findings of the Audit Report, 30 projects were found to have been awarded without public tender, or consultation on price or price report on paper, with only a single service provider contacted by the government. There are seven cases from DSSOPT, including a study on Macau Urban Land Use and Nam Van Zone C & D Urban Planning environmental impact evaluation, involving MOP7.51 million; nine cases from DSAT, primarily on bus network studies and the investigation of car park needs, involving MOP31.45 million; and 14 cases from DSPA, focusing mainly on air quality issues in Ka Ho in Coloane, involving MOP29.95 million. These departments gave the explanations that ‘the project is urgent’ and ‘this company is professional, experienced and familiar with the project’, but the Commission says such excuses do not justify the qualified service provider as being the most suitable one and such practices don’t comply with the law. The Macau Foundation is also accused of bypassing laws and regulations by granting subsidies without signing contracts, merely signing a private agreement or using excuses of urgency. A total of 18 questionable projects were identified, involving MOP36.71 million. Despite each project costing less than MOP500,000 the service provision period exceeded six months, which meant they fell under the scope of supervision and thus contracts should be signed.
‘Misuse of laws’
In addition, the Panda Foundation was accused of authorising financial aid over the prescribed limit, involving
The government should not use excuses such as the system is outdated, the procedures are too complicated, or the techniques are too complex to cover the incompetence of its own self-management and insufficiency of executive ability Audit Commission
MOP1.16 million on three studies of co-operation with the Mainland on panda conservation. Citing one example, MOP325,000 was granted for a study where the amount the Foundation was allowed to spend was MOP16,250. The Panda Foundation explained that its internal structural laws indicated that any expenses under MOP500,000 could be granted without consultancy on prices or reporting the price on paper, but the Commission pointed out that such cases fall under the scope of management regulations of the Administrative Regulations of the SAR Government, hence such grants are deemed as a ‘misunderstanding of laws and regulations’ and urged public departments to have a better awareness of the rights and limits given. Moreover, both DSAL and DSAP were found to be employing people by signing contracts of buying services instead of hiring them as official employees in order to circumvent the procedures of recruiting public servants or dealing with retired personnel.
To be improved
In reply to the audit report, the Secretary for Economy and Finance, Lionel Leong Vac Tai, said he has instructed departments under him to carefully study the report, especially all the relevant procedures and legal proceedings in order to enhance the accuracy of administration. Lionel Leong added that he hopes that the Financial Services Bureau (DSF) can also learn from the report and better monitor the budget and budget execution in order to prevent such similar cases from recurring. In addition, the Panda Foundation said it has adopted the opinions of the Audit Commission and vows to ensure that all expenses are executed in accordance with the law, according to a press release issued by the Civic and Municipal Affairs Bureau (IACM).
6 | Business Daily
January 22, 2016
Macau opinion
Union, Drugs and Rent ’n’ Roll
Pedro Cortés
Lawyer* cortes@macau.ctm.net
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he intelligence of the city confined in the Nam Van Lakes area has decided for the seventh time in a row not to authorise unions in Macau, despite being a requisite of the Basic Law. In addition, they have approved a law that strengthens combating drug addiction and smuggling. Finally, they have warned the government about the excessive rent paid for public services to operate. Well, for the first one it seems that the legislators continue to speak publicly about the respect of the Basic Law principles but when it comes to their pockets such respect is disregarded. It is a shame that on 22nd January 2016 Macau does not have a union law and that employers can continue to dictate their discretionary judgements without the possibility of their employees fighting against abuses and for their rights through the medium of a strike. I am of the view that Macau will have the harmony that all speak of when bosses think more about their workers than about their pockets. It is a matter of respect for the other that, unfortunately, tends not to exist in this city. As for the drugs, the law speaks for itself. It is proven that this is not the way. But the government and legislators would rather continue committing the same mistake than be advanced in their policies on behalf of the population. They could take the good examples of Portugal. But no; let’s put more young people in jail and give more powers to the police. I am fully for the total decriminalization of drug-taking and drug smuggling. That would make our world much better, as the governments would control the production and distribution of drugs. But I may be advanced for my time. Finally, and for the good, some legislators called the attention of the government to the payment of rents by public services in commercial spaces. It is, of course, a consequence of the small city we have, where everyone knows each other and benefits from that relationship. If we look to what is today the Judicial Base Court, we understand that only the will to keep the status quo can permit justice to be done under such conditions. I do not know who is/are the landlord(s) of the units where the Court is sited. But it is not difficult to link the names and understand why plenty of people still work there and why Macau does not have a true ‘Justice Complex’. It is a very good start that legislators Song Pek Kei, Ella Lei and Chan Meng Kam have voiced out their concerns about the amount taken from the public coffers to install public services. *Part-time Lecturer at the Chinese University of Hong Kong
New Chapter in Literary Festival in March Now in its fifth edition, the Festival will maintain a similar budget to previous years, with a new line-up of around 40 guests from around the world
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he Script Road – Macau Literary Festival returns for its 5th edition, and is scheduled to last from March 5 to 19, 2016, with its base at the Old Court Building. The Festival - founded by local newspaper Ponto Final in 2012 as the first grand meeting of literati from China and Portuguese-speaking Countries ever to be organised anywhere - is bringing more than 40 renowned guests to town – comprising writers, filmmakers, actors, visual artists and musicians. “The budget for this year’s event will remain similar to the previous editions, at around MOP2.3 million”, revealed Festival Director Ricardo Pinto at a press conference introducing the event held yesterday morning. “Within the amount, around MOP1.4 million will be subsidised by the government.”
For the first time, the Festival will pay tribute to two writers from the past. On the 400th anniversary of his death, Tang Xianzu is remembered as one of the first Chinese authors to have made contact with foreigners in Macao, a city he visited in 1591. Tang, a very famous playwright in the Ming Dynasty and the author of The Peony Pavilion, wrote a number of poems about Macau, immortalising the city in his works. Portuguese poet Camilo Pessanha is the other author deserving of the Festival’s special attention, some 90 years after his death. The author of Clepsidra, who lived and died in Macau, left a valuable legacy still being very much studied today. The Script Road is inviting some of the most renowned scholars specialised in Pessanha’s works to join the
programme this year – notably, Paulo Franchetti, Daniel Pires and Pedro Barreiros. “The full programme will be ready one month before the event kicks off, which means you can read all about it on February 5,” said Vice Director of the Festival Hélder Beja. “The line-up of this year’s guests is quite international with a local touch. We’ve also invited guests who have been with us before to invite other authors in order to celebrate this ‘milestone’ fifth year.” The line-up includes renowned authors Chan Koonchung, Zheng Yuanjie, José Pacheco Pereira, Luiz Ruffato and many other writers, visual artists, filmmakers and musicians. Pulitzer Prize winner Junot Díaz is the biggest international highlight.
Business Daily | 7
January 22, 2016
Macau
Anonymous complaint prompted investigation into alleged prostitution ring in Lisboa Hotel An anonymous complaint about Kelly Wang charging RMB150,000 started the investigation in the case involving Alan Ho João Santos Filipe
jsfilipe@macaubusinessdaily.com
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he investigation by Judiciary Police (PJ) into the alleged prostitution ring operating from Hotel Lisboa started in April 2014 following an anonymous complaint about Kelly Wang, the Senior Manager of the property. According to public broadcaster TDM, the revelation was made yesterday by the PJ officer in charge of the investigation during the third hearing of the case, which involved Alan Ho, a nephew of magnate Stanley Ho. The complaint stressed that Wang was receiving protection fees paid by the prostitutes working in Hotel Lisboa. It was only after this complaint that the PJ started telephone tapping
the main defendants in this case. According to the PJ officer, Kelly Wang was the person in charge of the prostitution ring and she was the person claiming the RMB150,000 (US$22,800) fee from the prostitutes working in Hotel Lisboa. According to the PJ official, Kelly Wang was working in the ring in concert with the prostitutes’ agents. The same official also said that when Wang was on sick leave, the management of the prostitution ring working in the property was assumed by Alan Ho and Peter Lam, the former operations manager of the hotel. However, it is also in one the phone call records that a prostitute
complained to Alan Ho about the fee of RMB150,000. The same sex worker asked the Executive Director of the property to look into the issue as in her view the hotel was losing money through this. According to TDM, the record of phone calls has been the main proof used by the investigation so far to build the case. It was also due to the records that the PJ were prompted to check Kelly Wang and her husband’s bank accounts in Mainland China. For their part, Mainland China authorities provided the PJ with the required information, which is now being challenged by the defendants’ lawyers.
N.Y. foundation CEO to plead guilty in U.N. bribery case Ashe, Francis Lorenzo and two others charged in the scheme, including Macau billionaire Ng Lap Seng, have pleaded not guilty to the charges
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he head of a New York-based foundation accused of participating in a scheme to bribe a former United Nations General Assembly president is expected to plead guilty on Wednesday, a person familiar with the matter said. Sheri Yan, who was Global Sustainability Foundation's chief executive, would become the second defendant to plead guilty in connection with an alleged conspiracy to bribe John Ashe, the former General Assembly president, the person said.
The expected plea by Yan, 57, comes less than a week after the former finance director at the foundation, Heidi Hong Piao, pleaded guilty and agreed to cooperate with authorities in their continuing investigation. Both women were arrested in October by the Federal Bureau of Investigation as prosecutors unveiled charges over a multi-year scheme to pay more than US$1.3 million in bribes to Ashe, who was also the U.N. ambassador from Antigua and Barbuda. A spokesman for
Manhattan U.S. Attorney Preet Bharara declined comment. His office earlier Wednesday issued an alert that use language indicating that a plea was expected in the case, without specifying which defendant would plead guilty. A lawyer for Yan, who faced charges including bribery and money laundering, did not immediately respond to a request for comment. Prosecutors allege that Ashe, the U.N. General Assembly president from 2013 to 2014, accepted
US$1.3 million of bribes from Chinese businessmen to support their interests within the United Nations and Antigua. Those bribes included over $800,000 from three businessmen that were arranged through Yan and Piao, prosecutors said. Prosecutors have also charged Ng Lap Seng, a billionaire developer from the Chinese territory of 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 and Yin have pleaded not guilty. 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. Reuters
Corporate Wynn Macau introduces Japanese culinary arts
Melco Crown showcases career opportunities Melco Crown Entertainment Limited and its business partner Dragone invited a group of 32 teachers from the Macau Conservatory to get up-close-and-personal with its water-based extravaganza The House of Dancing Water last Thursday, showcasing potential career opportunities for the next generation of performing art talent. With The House of Dancing Water, Melco
Crown Entertainment has brought a team of world-renowned artists and experts to Macau, providing local talent with opportunities to work and learn from the best of the best. The Macau Conservatory is one of the public institutions in Macau that provides formal training for the performing arts, nurturing the best-in-class talent.
Wynn Macau’s Japanese restaurant Mizumi has launched an unprecedentedly unique experience by collaborating with three Michelinstarred chefs; each heralded in a Japanese culinary tradition – Sushi, Tempura and Teppanyaki - in one remarkable restaurant. In collaboration with the Mizumi team, the three Michelin-starred chefs from Japan have created in Macau the greatest Japanese dining experience outside of Japan. In addition to the tradition of serving authentic Japanese food at the counter by a chef for a more intimate and interactive experience, the master chefs have specially designed signature dishes to be served in a perfect state in our beautiful main dining area for larger parties of guests.
Business Daily | 9
January 22, 2016
Gaming
Atlantic City considering bankruptcy filing, mayor says Mayor Don Guardian's comments come after New Jersey Governor Chris Christie rejected state legislation that would have helped the city financially
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tlantic City is considering a bankruptcy filing after New Jersey Governor Chris Christie vetoed legislation aimed at shoring up the finances of the distressed casino resort. Mayor Don Guardian said he expects to call an emergency meeting for next week to discuss the city’s options. He and Council President Marty Small spoke to reporters in Trenton after an hour-long meeting with Assembly Speaker Vincent Prieto. Lawmakers are considering a state takeover of the city as well as ending its four-decade casino monopoly in New Jersey. Christie, a second-term Republican running for president,
didn’t sign bills that would have diverted some gambling funds to the city and prevented tax appeals that strain its finances. The rejection came after the Democratic-led legislature complied with changes he suggested. The governor declined to act because the city hasn’t dealt with its “structural budget issues and excessive spending,” said Kevin Roberts, a Christie spokesman. “The Governor is not going to ask the taxpayers to continue to be enablers in this waste and abuse,” Roberts said Wednesday in an e-mailed statement. Once the second-largest U.S. gambling market, Atlantic City has seen its key industry crumble as day-
trip patrons shift to newer, closer casinos in nearby Pennsylvania and New York. While state aid helped plug a gap this year, the city of 39,000 faces a shortfall of US$90 million next year, a third of its budget. Guardian said bankruptcy would allow the city to emerge with a “clean slate,” renegotiate union contracts and write off about US$40 million of its debt. The city, which he said has about US$240 million of bonds outstanding and owes US$161 million in tax appeals, would need state approval to file. “It would be good from a financial point for Atlantic City,” Guardian said. “But it’s not good news for the rest of the state and we’ve said
Caesars bankruptcy may hinge on releasing probe results, says U.S. judge The examiner's report is considered a major hurdle for Caesars to gain the support of bitter bondholders for its restructuring plan, which envisions splitting the bankrupt unit into a casino operator and a property company
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U.S. judge on Wednesday opened the door to dismissing the US$18 billion Caesars bankruptcy case unless parties find a way to make public results of a probe into whether the casino operator transferred its most profitable properties to new owners before filing to reorganize under Chapter 11. If Caesars insists that the report remain sealed, U.S. Bankruptcy Judge Benjamin Goldgar said
he might dismiss the bankruptcy case, or convert it from Chapter 11 reorganization to a Chapter 7 liquidation "which would be a hoot." In March, Goldgar ordered an independent investigation into creditor accusations that Caesars Entertainment Corp had stripped its casino operating unit of its best assets. As the investigation nears its close, a lawyer for examiner Richard Davis said in court on Wednesday that
Caesars and its unit had asked for the report, which contains some 7 million pages, to be filed under seal. Goldgar was furious. "You can't have a bankruptcy process dependent on an examiner's report (...) on the theory that the report will then allow everyone to walk away smiling and holding hands and then object to it ever being released," Goldgar said. He agreed to allow a redacted
that before. A bankruptcy filing by Atlantic City would mean that every other community could file.” Prieto, after his meeting with city officials, said he’s open to discussions on their next step. “Everybody wants to avoid bankruptcy," he told reporters. “When you do that, your bond rating really goes down and your creditors get less money. If you can avoid that, it would be the right thing to do.” New Jersey, which has some of the most aggressive policies among states to steer local government from financial disaster, hasn’t had a municipal bankruptcy since Fort Lee in 1938, according to the Pew Charitable Trusts. When Camden filed for bankruptcy in 1999, its case was dismissed because the city wasn’t authorized to do so by the state, said James Spiotto, a bankruptcy specialist and managing director at Chicago’s Chapman Strategic Advisors LLC, which advises on financial restructuring. Lawmakers last week agreed on a plan to ask voters in November to expand gambling to northern New Jersey and share the revenue with Atlantic City. Senate President Steve Sweeney, the highest-ranking Democratic legislator, said the city should declare bankruptcy if the Legislature doesn’t quickly approve a plan he has introduced that would put the state in control of city government for 15 years. “My goal is to save Atlantic City and to avoid bankruptcy,” Sweeney said Wednesday in a statement. “State intervention is the best way to bring the city’s finances under control.” Without the measures that were rejected this week, the city will run out of cash in April, according to a report released Friday by Kevin Lavin, the emergency manager appointed by Christie. “That was like taking a knee in the fourth quarter -- he’s running out the clock,” Small said of Christie, promising to fight takeover attempts. “We were counting on that money.” Bloomberg
version of the report, which could be ready by the end of February, to be filed temporarily alongside a public summary, but told the examiner to go back to the drawing board for a procedure to release the full report. Junior bondholders allege that the pre-bankruptcy transfer of valuable casinos and properties was designed to create a "good Caesars" that would keep returning profits to its private equity owners and a "bad Caesars" that was doomed to bankruptcy. Caesars has denied the allegations. The examiner's report is considered a major hurdle for Caesars to gain the support of bitter bondholders for its restructuring plan, which envisions splitting the bankrupt unit into a casino operator and a property company. So far, holders of about US$12 billion, or two-thirds, of first-lien bank and bond debt, have signed on to the plan. Caesars has said it would seek court approval of its bankruptcy plan 60 days after the filing of the examiner's report. Reuters
10 | Business Daily
January 22, 2016
Greater China
Hong Kong exchange to pave way for foreign issuers in Mainland The exchange will begin building a spot commodity trading platform on the mainland, to develop credible pricing benchmarks Michelle Price
KEY POINTS Plans include creating spot commodities market in China Initiatives to be launched by 2018
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ong Kong Exchanges and Clearing (HKEx) will start new initiatives including an onshore China commodities platform and a way for foreign companies to launch offerings in the mainland via the Hong Kong-Shanghai Stock Connect program, its CEO said. The initiatives will be launched between 2016 and 2018, Charles Li told a media briefing yesterday, and form part of the exchange operator’s strategy to increase its China focus
and offer more products and services in an attempt to boost returns. HKEx will explore how to “allow international issuers through the Connect model to make offerings into China” and vice versa, Li said. At the same time, it will review its listing requirements for overseas companies. The exchange will begin building a spot commodity trading platform on the mainland, to develop credible pricing benchmarks, Li said.
“We will explore creating a spot commodity trading and financing platform in mainland China, most likely across the border in Shenzhen. We think we are very well placed to fill a gap in the market,” he said. Longer term, it is developing a scheme to connect the Hong Kong bourse more directly with the LME. It will start by opening avenues for HKEx participants to trade and clear LME products. It is also assessing new precious and ferrous metals products as well as other products in the base and steel supply chains in London and Hong Kong. Among its new initiatives, Li said HKEx will add exchange-traded funds
and listed bonds to Stock Connect, offer more yuan currency, onshore interest rate derivative products and A-share index futures and also LME products in adjacent commodities. Li’s comments followed a brutal day’s trading in the financial centre on Wednesday, which saw the Hang Seng Index close at its lowest level in more than three years amid fears over capital outflows, a slowing global economy and crumbling oil prices. HKEx, which enjoys a monopoly over stock trading in the city, has long held a special status as China’s preferred partner to help open up its capital markets, a unique position that the bourse has been trying to exploit through a series of ‘China Connect’ initiatives including a landmark Hong Kong-Shanghai trading link. Analysts have expressed concern that the HKEx has become too exposed to the China slowdown and mainland market interventions. Yesterday, Goldman Sachs downgraded HKEx from neutral to a sell on the weaker macro-economic environment in China and expected lower trading volumes. Reuters
Profit squeeze spurs builders to buy land outside auctions The bigger, listed developers have been concentrating on larger cities in the past two years to drive sales Clare Jim
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hinese real estate developers plan to acquire more land outside the primary market purchasing from other companies and through redevelopment - as escalating land costs crimp profit margins. China’s property market bottomed late last year with prices recovering in the biggest cities such as Beijing, Shanghai and Shenzhen, but costly land prices are spoiling the party for developers who must find new ways to ease the squeeze. In a game of survival, developers are also forming ventures to jointly bid at government auctions to strengthen their chances of securing prime plots of land. “If you buy in the public market it’s expensive, so we prefer mergers and acquisitions,” said an executive of Greentown China who spoke on anonymity as he was not authorised to speak to the media. “Business partners and local governments are more willing to talk to us because of our (bigger corporate) background.” Prices for residential land
continued to accelerate in the fourth quarter, the land ministry said last week, and the trend will likely persist in the first quarter as the housing sector recovers. Some developers say they will bid for land using more joint ventures going forward as cooperation helps to raise the bargaining power of builders and lowers competition. Others said they would build up land banks via acquisitions and urban redevelopment, rather than through the primary market. The bigger, listed developers have been concentrating on larger cities in the past two years to drive sales, as demand and inventory levels in these regions have been healthier. Residential land in first-tier cities rose 10.9 percent in the fourth quarter from a year earlier, faster than 2.9 percent in second-tier cities and 2.5 percent in third-tier cities.
New channels
Sunac China - a Tianjin-based developer whom analysts say is among companies with the most joint
ventures - announced last week it would buy 95 percent of Suzhou Xinyou, who has a land parcel of around 74,000 square meters in the eastern city of Suzhou, for 1.04 billion yuan ($158.1 million). “We need to look for channels other than the primary market to acquire land; redevelopment projects are a major part of them,” an official from state-backed China Resources Land told Reuters. The company will step up land investment despite high land prices to maintain market share, so it will team up with more partners and look beyond the primary land market, the official said. The rising cost of land has prompted developers to form partnerships, with as many as six companies working on one development. Property data provider CRIC said that among the top 10 land sales by value, 75 percent of the total amount was bought through partnership in 2015, compared with 73 percent in 2014. “Land prices will go up faster
than property prices as monetary easing and falling funding costs will encourage some developers to expand their balance sheet and compete in this segment of the market, squeezing future margins for all developers,” CLSA analyst Nicole Wong said. Net profit margins for Chinese developers listed in Hong Kong peaked in the first half of 2011 at about 14 percent and have gradually eased to around 8 percent in the first half of 2015, according to realtor and researcher Centaline Group. Wong noted that poor margins will show up on income statements in 2018 as it usually takes two years after buying land to finish building and start selling the apartments. “Getting land through urban redevelopment is one solution but it takes many years and much trouble, only big developers and state-backed enterprises can afford to do it,” Wong said. Urban renewal projects usually involve companies working closely with provincial governments. Reuters
Business Daily | 11
January 22, 2016
Greater China Government to allocate US$4.6 bln to shut 4,300 coal mines
Stock regulator says circuit breaker not appropriate
The central authorities will also ban new mine approvals for the next three years
The suspended stock market circuit breaker mechanism was not an appropriate policy for China, the deputy head of the country’s securities regulator told CNN, two weeks after the mechanism was halted. “The circuit breaker is a standard practice in a lot of Western markets, so we thought that perhaps it could work in China as well,” Fang Xinghai, the vice chairman of China’s Securities Regulatory Commission (CRSC) said in an interview with CNN on the side-lines of the World Economic Forum in Davos.
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hina will allocate 30 billion yuan (US$4.56 billion) in funds over the next three years to support the closure of small and inefficient coal mines and redeploy around 1 million workers, state media reported yesterday. The Chinese government is determined to reduce the share of coal in its overall energy mix as part of efforts to cut smog and greenhouse gas emissions, but it also looking to secure a soft landing for a sector that employs around 6 million people. Total raw coal output fell 3.5 percent to 3.68 billion tonnes last year, according to official data, the second annual decline in a row. Prices fell by about a third during the year, causing heavy losses in the industry. The Economic Information Daily, a newspaper run by official news agency Xinhua, said that the National Development and Reform Commission, China’s state planning agency, is currently soliciting opinions from the industry ahead of the release of a plan to tackle chronic overcapacity in the coal sector. It said China will aim to close 4,300 mines and cut annual production capacity by 700 million tonnes over the next three years.
Beijing reports 6.9pct GDP growth in 2015
The central government will also ban new mine approvals for the next three years, but the move is unlikely to make much of a dent in a production capacity surplus said to amount to more than 2 billion tonnes a year, over half the country’s total output. Citing the China National Coal Association, the report said China still had around 11,000 coal mines in operation by the end of 2015, with a total capacity of 5.7 billion tonnes. Analysts at Shenwan Hongyuan
Foxconn offers US$5.1 billion for Japan’s Sharp In 2012, Foxconn had offered 66.9 billion yen for a 9.88 percent stake in Sharp Tim Culpan
Securities estimate that the funds required to tackle overcapacity in the coal and steel sectors could reach 200 billion yuan, 70 percent of which would be needed for coal. According to the National Energy Administration, coal consumption amounted to 64.4 percent of China’s total energy mix in 2015, down 1.7 percentage points compared to the previous year. China aims to cut the rate to 62.6 percent this year. Reuters
products and logistics, by adding a wider array of components to its offerings. Sharp, one of the world’s largest makers of displays for smartphones and tablets, could gain more business from Apple and other Foxconn customers like Amazon.com Inc and Xiaomi Corp. “There need to be core products around which Sharp can build a market position. What those will be isn’t clear, regardless of which side they join,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. in Tokyo.
The alternatives
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oxconn Technology Group has offered about 600 billion yen (US$5.1 billion) to buy struggling Japanese electronics maker Sharp Corp., according to a person familiar with the talks, in what could mark the largest acquisition since 2009 for the assembler of Apple Inc.’s iPhones. A decision to accept or reject the bid is expected before the end of January, the person said, asking not to be identified as the discussions are private. Chu Wen-min, a spokesman for Foxconn’s Hon Hai Precision Industry Co., declined to comment Thursday. The world’s largest electronics contract manufacturer offered to invest in Sharp in 2012 but discussions foundered after they failed to agree on management control. Talks were said to have been revived in the past year after Sharp turned to governmentbacked Innovation Network Corp. of Japan, or INCJ, for funding as a new round of debt payments loomed. Foxconn is interested in expanding its business beyond assembly of
Outside of short-term speculators, most investors will stay away from Sharp’s shares until the final details are settled Mitsushige Akino, chief fund manager, Ichiyoshi Investment Management
Sharp was saddled with total debt of 791.8 billion yen as of September 30, according to data compiled by Bloomberg. The Osaka-based company has booked more than 1.1 trillion yen in losses over the past four financial years as stiffer competition from South Korean and Chinese rivals undercut its business. Apart from Foxconn, it’s now also pondering a competing bid from INCJ, the Wall Street Journal reported earlier, citing unidentified people familiar with the matter. “We’re talking with several companies about the structural improvement of liquid-crystal-display business. We don’t comment on the details of individual talks,” said Yoshifumi Seki, a spokesman for Sharp. In 2012, Foxconn had offered 66.9 billion yen for a 9.88 percent stake in Sharp. At $5.1 billion, a full takeover of Sharp would be the largest for Terry Gou’s Foxconn group since the 2009 acquisition by displaymaking unit Innolux Corp. of Chi Mei Optoelectronics Corp. for $5.3 billion plus debt. Bloomberg News
Beijing’s GDP growth was 6.9 percent in 2015 and it will maintain steady growth for the next year, the statistics bureau announced yesterday. Beijing’s GDP was about 2.29 trillion yuan (about US$350 billion) in 2015 and its growth was 0.4 percent lower than in 2014. “Although growth is among the slowest posted during the last five years, Beijing’s economy has maintained quality growth, with growth in company revenue, people’s income, tax revenue and improvement of the environment,” said Xia Qinfang, spokesperson with the bureau.
2015 lottery sales down 3.8 pct
China’s lottery sales dropped 3.8 percent year on year to 367.88 billion yuan (US$56.1 billion) in 2015, official data showed yesterday. Welfare lottery sales decreased by 2.2 percent to 201.51 billion yuan, while the sports lottery slipped 5.7 percent to 166.37 billion yuan, the Ministry of Finance announced. In December, 34.12 billion yuan’s worth of lottery tickets were sold, a year-on-year decrease of 5.6 percent. Welfare lottery sales dropped 1.8 percent to 19.21 billion yuan. However, the provinces of Henan, Fujian, and Yunnan each saw their lottery sales value rise by more than 1 billion yuan.
State grid to develop global energy interconnection The State Grid Corporation of China (SGCC) yesterday held a workshop on investment and financing for global energy interconnection (GEI). Representatives from the Chinese government, international organizations, financial and power enterprises from China and abroad discussed on the development of GEI. Liu Zhenya, chairman of the SGCC and China Electricity Council, said the main purpose of the workshop is to promote the establishment and development of GEI by gathering the strength of international financial power. GEI is a globally interconnected strong and smart grid with UHV grid as the backbone, which will serve as a platform for extensive development, deployment and utilization of clean energy globally.
12 | Business Daily
January 22, 2016
Asia
Indonesia’s 2015 FDI rises following government stimulus measures Growth in Southeast Asia’s largest economy is expected to have slowed to a six-year low below 5 percent in 2015
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oreign direct investment (FDI) into Indonesia rose almost 20 percent, in rupiah terms, in 2015 from a year ago as investment in the final quarter jumped after a series of government stimulus measures. Indonesia’s Investment Coordinating Board (BKPM) said FDI rose 19.2 percent in 2015 to 365.9 trillion rupiah (US$26.32 billion), excluding investment in banking, oil and gas sector. Growth in the fourth quarter reached 26 percent on yearly basis. The board uses its own exchange rate, which it pegs to the state budget assumption at 12,500 per dollar. That compares with 13,900 per dollar rupiah exchange rate on Thursday. In dollar terms, investment ticked up slightly last year to US$29.28 billion compared to US$28.5 billion in 2014, the board said. In the fourth quarter, FDI totalled US$7.9 billion, 16 percent more than the same quarter a year earlier. The rupiah weakened more than 10 percent against the dollar over the past year. “FDI growth was weak in the first to third quarter last year, so we have to see if this was a one-off jump. But I think some data like cement sales and capital good imports supported the view that investment activities have started to rise,” said Aldian
President Joko Widodo has said the resource-rich economy needs to significantly expand manufacturing and tourism sectors as it can no longer rely on resources alone to drive growth
Taloputra, Standard Chartered economist in Jakarta. Growth in Southeast Asia’s largest economy is expected to have slowed to a six-year low below 5 percent in 2015, as faltering commodity prices
have had a ripple effect across many areas including government revenue, private consumption, incomes and investment. President Joko Widodo has said the resource-rich economy needs to
significantly expand manufacturing and tourism sectors as it can no longer rely on resources alone to drive growth. After months of struggling to push through reforms and infrastructure projects, Widodo late last year offered a range of incentives - including moves to cut red tape. “What is interesting in 2015 is that investment in manufacturing rose 43.3 percent, much higher than 2014,” BKPM chief Franky Sibarani said, referring to foreign and domestic investment. This year, Widodo’s administration is expected to announce a relaxation to the “negative investment list” - a list specifying what businesses foreigners are barred from entering. Government officials on Wednesday said it may make the tourism and entertainment industry more open to foreign funds in the revision. In 2015, the biggest beneficiaries of FDI were mining, transportation, telecommunication and mineralprocessing sector. Singapore was the biggest source of investment in 2015, with Malaysia and Japan coming second and third. BKPM is targeting a rise of between 14-15 percent in FDI this year.
Barclays exits from cash equities in Asia Barclays will shutter its investment banking businesses in countries including Australia, Indonesia, Malaysia, Philippines, Russia, South Korea, Taiwan and Thailand Anshuman Daga and Lawrence White
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arclays has embarked on a fresh round of job cuts to its investment banking business worldwide on Thursday which would result in a complete exit from cash equities in Asia, an internal memo showed, as new Chief Executive Jes Staley wields the axe in a bid to slash costs and boost returns. The harsher-thanexpected cuts are among the most sweeping worldwide culls by an investment bank
in recent years, as Staley in common with peers at other European lenders moves to reduce costs amid a tough global environment for banks. Barclays will shutter its investment banking businesses in countries including Australia, Indonesia, Malaysia, Philippines, Russia, South Korea, Taiwan and Thailand, the memo said, with those markets to be covered from financial hub cities in their
respective regions. A spokesman for Barclays in Hong Kong declined to comment on the cuts because they are not public. With 10 of Europe’s biggest lenders announcing 130,000 job losses since June, bank chief executives are looking to cut in businesses where they lack scale to focus on more profitable markets. The reduction in jobs are also in response to the turmoil in global equities and commodities markets,
which is making it harder for investment banks to make money in the traditional business lines. The cuts in the Londonheadquartered bank were announced to staff in meetings on Thursday across the Asia-Pacific region, according a source with direct knowledge. “Asia is bearing the brunt,” the source added. The total number of jobs to be shed in the latest Barclays reduction is unclear,
Reuters
but a source with direct knowledge of the matter said the Asian equities cuts alone could total about 200 people. A separate source with knowledge of the cuts said the Asia total would be 450 people. The Financial Times previously reported that Barclays would shed as many as 1000 jobs worldwide in the latest cull. Barclays is also exploring the sale of its global precious metals business, the memo said, as well as shuttering cash equity sales across Central Europe, the Middle East and North Africa, the memo showed. The lender will also end its onshore markets coverage in Brazil. Reuters on January 5 reported the cuts in the Asia investment banking business and exits from South Korea and Taiwan, as Barclays retreated from peripheral Asian businesses to focus on hubs including Hong Kong and Singapore. Reuters
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Business Daily | 13
January 22, 2016
Asia South Korean trade falters at start of 2016 As demand from its main customers softens, South Korea is aiming to boost exports to other countries, making its closest target Iran Christine Kim
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outh Korean exports and imports in the first 20 days of January both fell, extending the slump that began last year and adding urgency to government efforts to reduce reliance on China, its biggest trade partner. Exports for the January 1-20 period fell 8.9 percent from a year earlier to US$22.28 billion while imports dropped 18.1 percent to US$20.86 billion, the Korea Customs Service data said without elaborating. South Korea is the first country in the world to publish trade data every month, acting as a gauge for global demand. Full-month figures will be issued by the trade ministry on February 1. Finance Minister Yoo Il-ho said after the data came out that South Korea needed to diversify export markets, a sentiment quickly reiterated by the trade ministry on yesterday. “South Korea must reduce its exports reliance on China and diversify export markets, and Iran, where a huge
burden has been lifted regarding export ties, will serve as a new opportunity,” the trade ministry said. Although South Korea’s exports are widely expected to remain weak in January, yesterday’s data showed the weakness may be less severe than in December when exports in the December 1-20 period last year fell 13.6 percent when adjusted for working day discrepancies. “Oil remains a big uncertainty but exports will likely hit their bottom
during the first quarter, although recovery thereafter will only be slow,” said Park Sang-hyun, chief economist at HI Investment & Securities.
Iran eyed
As demand from its main customers softens, South Korea is aiming to boost exports to other countries, making its closest target Iran. Yoo said South Korea aims to double exports Iran in two years, with construction and shipbuilding firms seen to benefit from the recent lifting of international sanctions on Iran. The trade ministry said South Korea will sign a US$2 billion trade insurance financing deal with Iran while the country will be made eligible for its aid loan fund. The ministry added it will push for a joint venture in automobile assembly with Iran while a government-level meeting in Tehran will be held in late February this year. The government will also continue to enforce measures that will boost South Korea’s competitiveness against countries that are already doing business with Iran, including China and India. South Korea’s exports to Iran accounted for 0.7 percent of total shipments in 2015. Reuters
Foreign purchases of Singapore homes hits 7-year low Foreigners including the Chinese have cut their purchases of Singapore private homes to the lowest since the global financial crisis, leaving the market to depend on local buyers at a time when domestic interest rates are on the rise. Foreigners, including permanent residents, bought 499 homes in the fourth quarter of 2015, according to data compiled by consultancy DTZ. That accounted for about 16 percent of total transactions versus more than 30 percent in the third quarter of 2011 just before an additional stamp duty was imposed to cool the market.
Thailand’s total domestic car sales are expected at 720,000 in 2016, down 10 percent from 2015, Toyota Motor Corp’s Thai unit said yesterday. Toyota, which commands about a third of the Thai market, sees a 9.8 percent fall from 2015 in its annual automotive sales in the Southeast Asian nation to 240,000 in 2016, it said at a news conference. Kyoichi Tanada, president of the Toyota Thai unit, said the reason for the fall in both domestic car sales and Toyota’s own car sales were a weak global economy and a new Thai excise tax.
Speculation is growing in markets that the BOJ may expand stimulus as early as its rate review next week Leika Kihara
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South Korea’s central bank said yesterday that its foreign exchange reserves are sufficient enough to withstand external shocks, in response to a Japanese media report that the country may face a shortfall in reserves. “South Korea’s foreign reserves are at a sufficient level to withstand external shocks and there are absolutely no problems in the assets’ liquidity and safety,” said the Bank of Korea in a statement. South Korea currently has the world’s sixth-largest reserves, which stood at US$367.96 billion at the end of December.
Thailand’s auto industry sales declining
Bank of Japan governor says no plan to adopt negative rates now
ank of Japan Governor Haruhiko Kuroda said he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme. “There are pros and cons of adopting negative interest rates ... The Federal Reserve didn’t adopt negative interest rates and yet, its policy succeeded in stimulating the U.S. economy,” he told parliament yesterday. Speculation is growing in markets that the BOJ may expand stimulus as early as its rate review next week, as slumping oil costs push inflation further away from its 2 percent target and global stock market falls dampen business confidence. However, Kuroda has maintained his optimism on Japan’s economy, saying that it continues to recover moderately and is helping keep inflation on a broad uptrend. But he identified the recent global market rout as among risks to Japan’s economic outlook, stressing the central bank’s readiness to expand
S.Korea’s c.bank says FX reserves sufficient
monetary stimulus if needed to ensure achievement of its 2 percent inflation target. “We’ll continue to watch carefully how recent market moves could affect Japan’s economy and prices,” Kuroda said. The BOJ has kept monetary policy steady since expanding its massive stimulus programme in October 2014. But slumping oil prices and
soft household spending have pushed core consumer inflation to almost zero, keeping the bank under pressure to do more to achieve its 2 percent inflation target. The central bank is set to cut its rosy inflation forecasts at its rate review next week, although it is uncertain whether Kuroda will opt to deploy a fresh round of stimulus. Reuters
Philippines Q4 farm output shrinks The Philippines’ agricultural output in the last quarter of 2015 contracted 0.96 percent from a year earlier as a severe dry spell and a strong typhoon damaged crops and fisheries, the government said yesterday. The sector’s full year 2015 output grew a marginal 0.11 percent, the Philippine Statistics Authority said in a report issued ahead of fourth quarter GDP data due later this month. Agriculture accounts for about a tenth of the country’s overall output. Gains were recorded in livestock, with output up 3.72 percent in the fourth quarter, while poultry production rose 4.17 percent.
S.Korea to unveil details of omnibus accounts South Korea plans to announce details next week of an omnibus account system for foreign investors as part of efforts to help get its stock market included in the MSCI’s advanced market index, the financial regulator said yesterday. A statement from the Financial Services Commission cited Chairman Yim Jong-yong as making the comment during his meeting with market experts including executives from a few leading stock brokerage houses operating in the country. South Korea has been striving to have its stock market reclassified into the MSCI’s advanced market index.
14 | Business Daily
January 22, 2016
International UK employers remain cautious in early 2016 British employers have remained cautious as they set pay offers going into 2016, according to a survey yesterday that underscores why the Bank of England is in no hurry to raise interest rates. XpertHR, an online human resources firm, said the median pay deal offered by employers for 2016 so far represented an increase of 2 percent, the same as in 2015, and companies predicted it remain at that level throughout this year. “Employers are not showing any signs of wanting or needing to award higher pay rises in 2016,” Sheila Attwood, XpertHR’s pay and benefits editor, said.
Citigroup cuts global economic growth forecasts U.S investment bank Citigroup cut its growth forecasts for the world economy yesterday, and said that risks of a global recession were increasing. Citi cut its forecasts for global economic growth for 2016 to 2.7 percent from 2.8 percent, citing pressures from disinflation. “Risks to our growth forecasts probably remain to the downside, with increasing risks of global recession,” Willem Buiter, global chief economist at Citi, wrote in a research note. World stock markets have slumped since the start of 2016, as a slide in the price of oil has rattled investors.
Prime Minister says Italy’s banking is ‘robust’ Italy’s prime minister said yesterday that the country’s banking system was “much more robust” than investors thought after three days of meltdown of banking shares on the Milan stock exchange. As shares recovered in early trading yesterday after plunging on fears about the country’s burgeoning toxic loan crisis, Matteo Renzi took to the pages of the Il Sole 24 Ore daily to try to reassure skittish investors. Data showing non-performing loans hitting a new record high on top of Italy’s already struggling economy undermined confidence at the start of the week.
Djibouti signs trade deals with China Djibouti has signed a series of trade agreements with China including the setting up banking and free trade zones, according to a statement from the strategic Horn of Africa nation’s president. China last month said it would build a naval base in Djibouti, the latest sign of China’s growing international security presence. The “important economic agreements” include banking deals and a proposed 48 square kilometre free trade zone, with the first section “to be operational before the end of 2016”, President Ismail Omar Guelleh said.
Wal-Mart Stores to hike pay for 1.2 mln workers Wal-Mart Stores said Wednesday that more than 1.2 million employees would get a raise in 2016, and the retailer will allow paid days off to be carried over into the next year as it aims to retain workers amid a tight U.S. labor market. The company announced plans for the raise last year as part of a two-step, US$2.7 billion investment in wages, benefits and training, although it had not disclosed details of the second phase in which it is bumping its mininmum pay to US$10 an hour, following an increase to US$9 in April.
Weak U.S. inflation lowers March rate hike chances Consumer prices increased 0.7 percent in 2015, the second smallest December-December gain in the last 50 years
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.S. consumer prices unexpectedly fell in December as the cost of energy products and food declined, offering signs of weak inflation that further diminish expectations of a Federal Reserve interest rate hike in March. Other data on Wednesday showed a drop in housing starts and building permits last month, adding to weak reports on retail sales, industrial production, exports, inventory and manufacturing surveys that have suggested a significant slowdown in economic growth at the end of 2015. Against the backdrop of renewed weakness in oil prices, which touched new lows on Wednesday, economists say the expected reversion to the Fed’s 2 percent inflation target is slowing. The Labour Department said its Consumer Price Index slipped 0.1 percent after being unchanged in November. The CPI was also weighed down by moderate increases in rents and healthcare costs. “The broad-based nature of the decline in inflation will hardly be encouraging news at the Fed, and if anything it is likely to temper their confidence in the outlook for inflation,” said Millan Mulraine, deputy chief economist at TD Securities in New York. Despite last month’s drop, the CPI rose 0.7 percent in the 12 months through December, the biggest gain in a year. That followed a 0.5 percent increase in November. Economists had forecast the CPI unchanged in December and rising 0.8 percent from a year ago. The year-over-year inflation rate is rising as oil price-driven weak readings in 2015 drop out of the calculation. The boost from the socalled base effects could, however, be limited by lower oil prices, which are near 12-year lows. Consumer prices increased 0.7 percent in 2015, the second smallest December-December gain in the last 50 years, after rising 0.8 percent in 2014.
The so-called core CPI, which strips out food and energy costs, edged up 0.1 percent in December after advancing 0.2 percent in each of the prior three months. In the 12 months through December, the core CPI increased 2.1 percent, the largest rise since July 2012, after climbing 2.0 percent in November. The Fed tracks a price measure that is running well below the core CPI.
Falling food prices
Market-based measures of Fed policy expectations assigned a probability of 29 percent to the central bank’s raising rates at the March 15-16 meeting, according to the CME Group’s FedWatch program. The Fed raised its benchmark overnight interest rate in December by 25 basis points to between 0.25 percent and 0.50 percent, the first hike in almost a decade. Last month, energy prices dropped 2.4 percent, with gasoline tumbling 3.9 percent. Energy prices had declined 1.3 percent in November, while gasoline fell 2.4 percent. Food prices fell for a second straight month, with meat, poultry, fish and eggs prices posting their biggest decline since August 1979.
Rents rose 0.2 percent after a similar gain in November. Medical care costs edged up 0.1 percent, slowing from a 0.4 percent rise in November. The costs of doctor visits were unchanged after jumping 1.1 percent the prior month. A strong dollar as well as an inventory bloat is dampening prices for some core goods. Apparel prices fell for a fourth straight month, while prices for new motor vehicles dipped 0.1 percent. In a separate report, the Commerce Department said housing starts dropped 2.5 percent to a seasonally adjusted annual pace of 1.15 million units as groundbreaking on both single- and multifamily projects fell. The boost from unseasonably warm weather was likely offset by heavy rains in some parts of the country. Starts rose 10.3 percent last year to their highest level since 2007. Building permits declined 3.9 percent to a 1.23 million-unit rate in December, pulled down by an 11.4 percent plunge in permits for multi-family buildings. Permits for the construction of single-family homes rose 1.8 percent last month. Reuters
French Prime Minister wants to avoid British exit, but ‘not at any price’ If a deal was struck next month, the referendum could take place as early as June
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rench Prime Minister Manuel Valls warned yesterday that it would be a “very bad thing” if Britain left the EU, but warned that British demands cannot be met at any price. A British EU exit “would undoubtedly be a bad thing, a very bad thing,” Valls told reporters on the side-lines of the World Economic Forum in Davos. “There needs to be a deal, but not at any price.” Valls was speaking just hours before British Prime Minister David Cameron was set to lay out his vision of Britain’s place in the world in a speech at the Swiss ski resort.
Cameron hopes to strike a deal on renegotiating Britain’s ties with Brussels at an EU summit next month, before calling a referendum on the country’s membership on the EU. He will campaign to stay in the union. An in-or-out referendum on British membership of the bloc will be held by the end of 2017, with commentators believing it could come this year if a deal is reached in February. Britain needs the backing of France and Germany, the decisive powers in the EU, for any reform deal. British Foreign Minister Philip Hammond on Tuesday said his government is willing to consider
alternatives to one of its key demands for a four-year ban on top-up benefits for low-paid EU migrants working in Britain. Critics in Europe say the proposal is discriminatory and threatens freedom of movement in the EU. If a deal was struck next month, the referendum could take place as early as June. But Hammond indicated it may not come before September if the agreement is delayed until March, as this would make organising a referendum for any earlier “very tight”. AFP
Business Daily | 15
January 22, 2016
Opinion Business
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Leading reports from Asia’s best business newspapers
Brexit and the bitter fruit of de-globalization James Saft
THANH NIEN NEWS
Reuters columnist
Vietnam’s securities regulator has asked listed companies to publish their information in both Vietnamese and English, and in accordance with international norms, saying it is an important step to attract foreign investment. Speaking at a meeting in Ho Chi Minh City on Tuesday, Nguyen Son, chief of State Securities Commission of Vietnam, said his agency has been issuing legal documents in English for the same purpose. The move is part of Vietnam’s on-going efforts to revamp the local stock market, increasing its position from “a frontier market” to “an emerging market,” Son said.
THE TIMES OF INDIA India is gradually transforming most of its taxation laws for a greater degree of stability and predictability, finance minister Arun Jaitley said on Thursday, stressing that the proposed Goods and Services Tax is a major step in this direction. “It has been our effort in India to gradually transform and change most of our taxation laws, put to rest various disputes and issues which have been pending and make sure that the scope of discretions is eliminated and there is a greater degree of stability and predictability as far as taxation laws are concerned,” Jaitley said.
THE PHNOM PENH POST Cambodia is overly reliant on developing large-scale hydro and fossil fuel-fired power stations, and should look to diversify its energy generation portfolio through cost-effective non-hydro renewable energy technologies that also offer fewer social and environmental costs, a study released on Wednesday advised. The report urged authorities to consider more investment in non-hydro renewable energy technologies, which would allow the country to pursue energy security while increasing energy access, reliability and affordability. Cambodia’s overall electricity demand has been growing by about 20 per cent a year due to economic growth.
THE JAKARTA POST House of Representatives Commission VII overseeing the energy sector has described a share value that PT Freeport Indonesia offered to the Indonesian government as unrealistic. Freeport Indonesia must explain the basis of valuation for the offering price of US$1.7 billion (Rp 23.69 trillion) for 10.64 percent of its shares to the government, said Commission XI member Ramson Siagian. “We want a realistic calculation. They must give a realistic offer, by taking into account the updated market situation,” Ramson said in a meeting with Freeport Indonesia at the legislative complex in Jakarta on Wednesday.
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British exit from the European Union wouldn’t just weaken the economies of both parties, but might mark a significant step back from globalization. Embedded in that idea is the prospect of the partial unwinding of a number of forces that for decades have increased economic growth and the returns enjoyed by investors. British financial markets have suffered a drubbing since the start of this year as polls narrowed on the outcome of a promised “Brexit” referendum which is now seen happening as early as June. Sterling and British shares have dropped sharply and forecasters now see the Bank of England as being in far less of a hurry to raise interest rates. A renegotiation by Prime Minister David Cameron of the terms of Britain’s membership of the EU is progressing, setting the stage for an agreement at a summit in February. Europe’s experience of mass immigration and asylumseeking has probably not helped sentiment towards the EU in Britain, and Cameron, a qualified supporter of remaining in, has good reason to want to get a vote in before fair weather brings another increase of migration to Europe’s doors. While the issue is complex, in terms of pure economic output a British exit from the 28 member group would be a negative, crimping trade, impairing growth and worsening the prospects of British sectors like finance. Bond investor PIMCO estimates an “out” vote would shave UK output by 1.0-1.5 percentage points in the first year, while French bank Societe Generale sees economic growth in this event as lower by 0.50-1.00
percentage points annually for a decade. “The economy would suffer from lower foreign direct investment, a decline in trade, and a weaker financial sector,” Societe Generale’s Patrick Legland, who sees a 45 percent probability of a vote to leave, wrote in a note to clients. “In particular, the EU is the largest export market for the UK, representing 40-50 percent of total exports over the past 18 months. Trade agreements would have to be renegotiated with the EU, but also with other trading partners.” Given that potential economic growth in Britain may be low anyway, losing a half a percent a year represents a massive impairment, and one with large implications not just in Britain. Not only would an “out” vote change and complicate the dynamics of European reform, recent polls indicate it would embolden the Scottish separatist movement, potentially leading to a radical change in the constitution of Britain itself. Trade slows The long post World War II process of the knitting together of the global economy and polity featured two huge advances: the coming together of Europe and the integration of China into the global economy. While both of these were unarguably good outcomes, both distributed their benefits unevenly. Owners of capital and those with high skills did very well, as did the mass of rural Chinese labour which was brought into the global economy. Middle and lower income people in the western world did perhaps less well, at least in the past twenty years, not sharing fully in productivity gains.
British willingness to consider leaving the EU, Scottish willingness to do the same to Britain, and Donald Trump’s popularity in the U.S. presidential election race are all partly explained by this uneven distribution of the benefits of globalization
British willingness to consider leaving the EU, Scottish willingness to do the same to Britain, and Donald Trump’s popularity in the U.S. presidential election race are all partly explained by this uneven distribution of the benefits of globalization. Since the 2007-2009 world
financial crisis there has been a marked slow-down in the growth of international trade. Last year saw global trade grow by just an estimated 2.0 percent, according to the OECD, continuing a run of feeble expansions. Global trade has grown by 2.0 percent or less annually only six times in the past and each time this has coincided with a substantial slowdown in global economic growth, but this may reflect just one more cyclical slowdown. Yet, looking at the range of political movements which seem to be backing away from globalization and its benefits, it seems possible that the object lessons taught by the global financial crisis about selfreliance and national control are having a real economic impact. China, for example, may have been more willing to speed its transition to building up its domestic consumer economy after the crisis. If Britain leaves the EU, its companies and investors will get a short and sharp lesson in the costs of backing away from globalization. Their prospects for trade will diminish and the cost of raising capital in Britain may very well rise, at least relative to growth. For companies and investors, globalization has been a great deal, bringing with it a falling share of output from labour and a commensurate rise in the fruits enjoyed by capital. But the net impact of a Britain outside the EU will be to make the operating environment for business more difficult, though it is possible that a Britain outside the EU deregulates in some respects. This may or may not be a good thing, but investors will not enjoy the process. Reuters
16 | Business Daily
January 22, 2016
Closing Capital outflows from China eased in Q4
Malaysia cuts bank reserve ratio, keeps interest rate
China has seen net capital outflows in 2015 but they eased in the fourth quarter compared with the previous three months, the country’s foreign exchange regulator said yesterday. The risk of cross-border capital flows was generally under control and the impact of capital outflows on domestic performance was also controllable, the State Administration of Foreign Exchange (SAFE) said in a statement on its website. China has not issued new measures to restrain foreign exchange purchases and sales, it said, adding that the law prohibiting individuals from transferring more than US$50,000 out of the country per year was unchanged.
Malaysia ordered lenders to set aside less cash as reserves while keeping the key interest rate steady as policy makers seek to add more money in the financial system amid weakening growth. Bank Negara Malaysia reduced the statutory reserve requirement ratio to 3.5 percent from 4 percent effective February 1, it said in a statement in Kuala Lumpur yesterday. It held the overnight policy rate at 3.25 percent, a decision predicted by all 20 economists surveyed by Bloomberg News. The country’s outlook is clouded by an economic slowdown in China and the accompanying slide in the yuan that has unnerved financial markets.
Davos’ brains analyse Chinese economic situation Beijing is urged to communicate better after turmoil
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wo of China’s delegates to the annual World Economic Forum in Davos heard calls for clearer communication on their nation’s economic policies in the wake of volatility in mainland stocks and the currency. “There is a communication issue,” International Monetary Fund Managing Director Christine Lagarde said at a panel hosted by
Bloomberg in the Swiss ski resort, referring to confusion about how China is managing a shift toward a more marketset exchange rate. “Better and more communication would certainly serve that transition better.” Gary Cohn, president of Goldman Sachs Group Inc., echoed that “the communication is really what’s important here,” and urged Chinese policy
There have been signs that China wants to have an open, free economy, an open, free marketplace, but in certain situations the Chinese have intervened in their market, making it less than a free and open market Gary Cohn, president, Goldman Sachs Group
makers to “stick with” their transition toward a greater role for markets. “We all want clarity,” he said. “You’re right we should do a better job, and we are learning,” said Fang Xinghai, vice chairman of the China Securities Regulatory Commission. “I’m here today to communicate,” he said, spurring chuckles from the audience. “Our system isn’t structured in a way that’s able to communicate seamlessly with the market.” Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing at the same time cautioned that his country’s economic challenges are “very difficult” and will take “courage” to solve. He said the nation’s growth rate, which last year reached the slowest since 1990, may decelerate further -- to 6.5 percent from 6.9 percent in 2015.
Manageable transition
China’s economic transition -- from investment and manufacturing to services and consumption -- is manageable, Lagarde said in comments that were echoed
International Monetary Fund Managing Director Christine Lagarde
by fellow panellists including Cohn and billionaire hedge fund manager Ray Dalio of Bridgewater Associates. As questioning turned to the yuan, Fang said “devaluing the currency is not in the interest of China in terms of carrying out our transition strategy” for the economy. “I understand that there’s some concern about this current year in China,” Fang said. “We can’t allow the growth rate to slow down too much” because it such a decline would create too many financial problems, so support will continue, he said, noting China has the means to do so with fiscal policies.
Two-speed growth
While China’s economy is slowing, growth is happening at two speeds. Old rust-belt industries from steel to coal and cement are in decline while new economy drivers consumption, services and technology are doing better. Services accounted for 50.5 percent of output last year, the most on record. “A bad year in China is going to be a great year in almost any other country,” Dalio said. China’s top leadership has signalled in recent months it may allow some additional slowness as officials tackle delicate tasks such as reducing excess capacity, but nothing that could threaten President Xi Jinping’s goal of at least 6.5 percent growth through 2020. Bloomberg News
Pacific trade deal to be signed off in New Zealand
Shenzhen sees drop in foreign trade in 2015
Japanese Minister to investigate corruption accusations
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he mammoth Trans-Pacific Partnership (TPP) trade deal will be formally signed in New Zealand next month, marking the end of negotiations on the agreement, officials in Wellington said yesterday. Work on the deal began in earnest in 2008 and New Zealand Trade Minister Todd McClay said the document would finally be signed in Auckland on February 4. “(The signing ceremony) will mark the end of the TPP negotiating process,” he said. “Following signature, all 12 countries will be able to begin their respective domestic ratification processes and will have up to two years to complete that before the agreement enters into force.” The entire deal must be ratified as agreed, without changes, which could tie the hands of governments and legislators. US President Barack Obama has described the deal as a foundation for “21st century trade”. However, critics have vowed to fight ratification, saying it threatens labour rights, environmental protection and access to affordable medicines. AFP
oreign trade volume in Shenzhen dropped by more than 8 percent year on year, new customs figures show. Trade volume in the southern China trade hub was 2.7 trillion yuan (about US$421 billion) in 2015, down 8.2 percent from 2014. Exports were valued at 1.6 trillion yuan, down 6 percent and imports dropped 11.1 percent to 1.1 trillion yuan, according to the latest figures. “Shenzhen was faced with a tough foreign trade situation in 2015. Customs has taken measures to help companies shift from reliance on low-cost goods to achieve more added value for exports,” said Wang Keguang, head of the customs. Last year, about 80 percent of the exports were mechanical and electric products. Companies such as Huawei, Zhongxing, TCL home appliances and Dajiang drones, which export products through Shenzhen, have been contributed to the growth of hi-tech exports, said Wang. Cross-border e-commerce has become the new growth point for foreign trade, said Wang. More than 4,000 e-commerce companies have registered in the Qianhai free trade zone in Shenzhen. Xinhua
apanese Economics Minister Akira Amari said yesterday he will investigate accusations that he and his aides took bribes from a construction company but that he was confident he had not done anything wrong. The magazine Shukan Bunshun published an article yesterday accusing Amari and his aides of accepting money from a construction company in exchange for helping that company receive government compensation for disputes over land ownership and waste removal at a public works site. The publication said an official at an unnamed construction company admitted passing 12 million yen (US$102,960.10) to Amari and his aides who then allegedly helped the company negotiate with the Urban Renaissance Agency, a government-affiliated property developer, to settle the claims. One of the aides was identified as Kenichi Kiyoshima, the article asserted. Reuters could not independently verify the claims in the article. In response to questions from Reuters, Amari’s office said Kiyoshima was not available and declined to comment further. Reuters