Macau Business Daily Feb 24, 2016

MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo

Australia’s education sector fuelled by Chinese students Page 11

Delta Bridge Road-to-Air Option Mulled

Year IV

Number 987 Wednesday February 24, 2016

Gov’t: Rentals of circuit service reduced in 2013 and 2014 Page 2

China’s January forex sales executed by banks decrease Page 8

A cross-boundary road-to-air service. Possibly available to transfer passengers from the Mainland and Hong Kong to take flights from Macau International Airport. Exempting passengers from usual border checks. Once the Hong Kong-Zhuhai-Macau-Bridge opens to traffic. In addition, Hong Kong’s Transport and Housing Bureau is quoted as saying their gov’t was “holding talks on cross-boundary bridge facility operations for the transfer of travellers.” The MIA operator said the impact on local aviation has yet to be estimated Page 5

Uber up Macau recently ranked 7th top region. For Chinese Uber users hailing rides overseas in 319 global markets. The number of Uber users from Mainland China using the app to hail rides in other countries and regions increased 882 pct this year visà-vis 2015 CNY. With the total number of trips taken up 973pct

HSI - Movers February 24

Name

%Day

China Shenhua Energy

+1.75

CNOOC Ltd

+1.60

PetroChina Co Ltd

+1.37

Henderson Land Devel

+1.30

New World Developme

+0.95

Lenovo Group Ltd

-2.06

Wharf Holdings Ltd/Th

-2.10

Hang Seng Bank Ltd

-2.68

Want Want China Hold

-5.11

Tingyi Cayman Islands

-6.32

Source: Bloomberg

I SSN 2226-8294

Page 2

Inflation rebound The Composite Consumer Price Index increased 3.81 pct y-o-y to 107.36 in January 2016.

Higher than the 3.73 pct growth of December. The increment was attributable to soaring prices of vegetables, dearer charges for eating out, and rising rentals for dwellings and parking spaces www.macaubusinessdaily.com

Page 3

Shifting habits Chinese tourists are gradually modifying their travel behaviour. Cultural sites are replacing shops as the main attractions for Mainlanders. As evidenced by visitors to Japan, Hong Kong and Australia

Page 10

Macau loves locals

A hefty 20 pct off non-gaming offers for residents. A ‘Macau Loves Local’ campaign has been launched by all six gaming operators at their prosperities across town. Secretary Lionel Leong says the gov’t supports such initiatives.

Promoting the non-gaming sector of the city, supporting SMEs, and giving back to the community

Page 7

Gaming

Profit halved SJM posted gaming revenue of HK$48,590 mln in 2015. A decrease of 38.7 pct from the previous year. EBITDA dropped more than half y-o-y to HK$2,465 mln. The company claimed 21.7 pct market share.

While declaring its Cotai protect is on track for completion by end-2017

Page 3

2016-2-24

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2 | Business Daily

February 24, 2016

Macau Government recovers illegally occupied land in Lam Mau Avenue

Local Uber drivers receive 7th most orders from Mainland Chinese over CNY

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he total number of Uber rides hailed by Mainland Chinese users shows that the city was the seventh top overseas destination for Mainland Chinese of 319 cities globally for the recent Chinese New Year (CNY) between February 5 and 19, according to the 2016 Chinese

New Year Cross-Border Travel Report released yesterday by Uber China.

The global taxi-hailing mobile application claimed in its latest report that Hong Kong was the top city where local Uber drivers received the highest number of trips taken by

users from the Mainland during the two weeks, followed by Taipei, Los Angeles, Singapore and New York.

Without disclosing the related figures, the application said that the total number of Uber trips taken by Mainland Chinese users soared 973 per cent year-on-year for the twoweek CNY period, whilst a jump of 882 per cent was posted in the number of overseas rides hailed by Mainland Chinese.

The top six cities of origin where Uber users hired rides outside their homes were Shanghai, Beijing, Guangzhou, Shenzhen, Hangzhou and Chengdu, the report says.

In addition, Uber users from 330 cities across 64 countires took Uber rides in Mainland China during the same period, whether travelling as tourists or visiting relatives over the New Year.

The application currently runs in 400 cities across 68 countries despite legal disputes. At the beginning of this year, it teamed up with China’s biggest payment service company Alipay to launch a new cross-border payment function – which allows Chinese Uber users to pay their trips in Hong Kong and Macau by their Alipay account and be billed directly in renminbi.

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esterday, the government reclaimed a 1,524 square metre plot of land in Lam Mau Avenue that had been illegally occupied. This land will now be used to construct around 100 public housing units.

According to official information, the eviction of the occupants of the plot took place yesterday in order to avoid delaying the process of building the public housing.

‘Considering that part of the land was surrounded by fences, that there were many slum houses built with wooden materials inside, and a large portion of sand and many vehicles were kept on this plot the government decided to proceed today [yesterday] with the eviction process’, according to a statement issued by the Land, Public Works and Transport Bureau (DSSOPT).

The expenses of this process were charged to the illegal occupants, but the amount involved was not revealed.

The government explained that prior to the eviction all the occupants were told to leave the land in May 2015, according to the legal proceedings.

In the end only one of the occupants co-operated and abandoned the plot.

According to DSSOPT, since March 2009 the local government has recovered 58 plots of land illegally occupied, totalling more than 236,000 square metres.

Rentals of circuit service reduced in 2013 and 2014 A telecommunications industry source recently accused CTM of charging overly expensive rentals for its circuit service. DSRT disputes this, saying that the price has already been cut twice in recent years

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he rental of circuit service charged

by Companhia de Telecomunicações de Macau (CTM) is too expensive, Business Daily reported earlier this week, quoting a telecommunications industry source.

However, in a written email reply to Business Daily’s inquiry received yesterday, the Bureau of Telecommunications Regulation (DSRT) said that both in 2013 and 2014, CTM had reduced the prices for this service.

‘Since the full market liberalisation of telecommunications services in 2012, the same company [CTM] has decreased, in 2013 and 2014, the tariffs for renting local and international

circuits’, DSRT said.

‘Together with the joining of a new operator for the fixed public telecommunications network, we believe that the effect of interaction between the governmental inspection and the strength of the market will increase the competition regarding tariffs and quality of services’, the Bureau added.

DSRT is addressing the accusation that other operators in the telecommunications market feel the tariff to rent CTM’s circuit services is too expensive for them to make a profit while CTM is exempted from competition.

Different situation

Our industry source has told us that in some cases the tariffs for the use of

the circuit service are ten times more expensive than in Hong Kong. However, on this point DSRT said that a fair assessment of the prices couldn’t be done in an applewith-apple comparison.

‘Regarding the prices for the telecommunication services, it cannot be assessed, in an objective way, through a direct comparison of the amounts alone, as it is necessary to take into consideration the different social situations between the different regions as well as the size of the markets’, DSRT explained.

As the company managing the telecommunications public concession assets, CTM provides the rented circuit service to other players in the market. This circuit is used to transmit communication

information and is essential for the operators to function.

In providing this service, CTM charges a tariff, which is approved by the government.

Inventory list received

The Midterm Review of the Concession Agreement of Public Telecommunications signed by the government and CTM stipulates that until the end of 2011 the Macaubased company had to send an inventory with detailed information of concession assets, defined in the contract as ‘the whole of the facilities assigned to the provision of the public telecommunications services’ including ducts, copper, cables and so on.

In early January of this year, legislator Chan Meng Kam delivered a

written interpellation in the Legislative Assembly requesting the government clarify if the inventory had already been delivered.

DSRT confirmed yesterday that the inventory list had been received, as the company had told Business Daily before.

‘CTM followed the Midterm Review of the Concession Agreement of Public Telecommunications and presented to the government the inventory, where the concession assets are included in order to be assessed and approved’, DSRT said.

The details of these assets are essential for the MSAR as by the end of the concession CTM is required to hand these assets back to the government.

Business Daily | 3

February 24, 2016

Macau

Consumer prices up 3.81 pct in January The month’s inflation rate rebounded slightly from the 3.73 pct of December 2015 Kam Leong

kamleong@macaubusinessdaily.com

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he city’s inflation rate stood at 3.81 per cent year-on-year in January, driven by higher housing and parking rentals, as well as dearer charges for eating out, according to the latest data released by the Statistics and Census Service (DSEC).

Last month, the composite consumer price index (CPI) rose to 107.36 from 103.41 one year ago. The month’s inflation rate represents a rebound from December’s prices growth of 3.73 per cent year-on-year - which is the lowest rate since September 2010.

Official data indicates that the price index of Alcoholic Beverages & Tobacco registered the most significant increase in the month, surging 39.11 per cent year-on-year, as prices of tobacco soared by some 67 per cent from the same month of 2015.

In addition, higher tuition fees drove the price of Education up by 8.91 per cent year-on-year, while the

price index of Household Goods & Furnishings and Transport also climbed some 5.96 per cent and 5.95 per cent year-on-year, due to rising wages of domestic helpers and higher rents for parking space, respectively.

By contrast, the price of Clothing & Footwear posted a year-on-year decline of 2.23 per cent, in addition to the drop in Communication charges of 1.26 per cent yearon-year in the month.

Monthly hike

On a month-on-month comparison, the composite CPI increased 0.04 per cent in January following rises in the price index of Alcoholic Beverages & Tobacco, Health and Food & Non-Alcoholic Beverages, which are up some 1.03 per cent, 0.88 per cent and 0.54 per cent, respectively.

The monthly increases in these prices are on account of the dearer price of tobacco, increased charges for inpatient services and eating

out, as well as the higher prices of vegetables due to the extremely cold weather.

Moreover, the average costs of Housing & Fuels rose by 0.34 per cent month-onmonth in January although there was a slowdown in rental growth. DSEC said the price climb was attributable to increased property management fees.

But prices of Clothing & Footwear were down 2.08 per cent year-on-year because of the seasonal sale of winter clothing. Charges for recreation & culture, meanwhile, fell 1.8 per cent as well due to cheaper package tours.

For the 12 months ended January 31, the city’s average inflation was 4.48 per cent compared to the previous period. The jump in overall prices was caused by the 20.6 per cent increase in the price of Alcoholic Beverages & Tobacco, as well as the 7.39 per cent hike in the cost of Housing & Fuels, according to DSEC.

4 | Business Daily

February 24, 2016

Macau

Future Bright warns of HK$45.9 mln loss for 2015

continuous slowdown in the city’s gaming business are the factors Future Bright blamed on its diminished earnings – Future Bright operates several Japanese, Western and Chinese restaurants in Macau’s casino-resorts.

Future Brght issued the negative profit warning as it posted losses from its food souvenir business and bleaker operating results from its restaurants in Macau

Challenging Macau

Stephanie Lai

sw.lai@macaubusinessdaily.com

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ong Kong-listed restaurant operator Future Bright Holdings Ltd. warned of an unaudited loss of HK$45.9 million (US$5.9 million) for the financial year ended December 2015. The firm has suffered losses in its food souvenir business as well as a slowdown in the performance of its restaurants in Macau.

Future Bright notified the Hong Kong Stock Exchange of its negative profit warning on Monday, which starkly contrasted with the firm’s net profit of some HK$168.8 million earned for the year of 2014.

Accounting for the unaudited loss, Future Bright said it was attributable to its food souvenir business, and a loss from three restaurants, the recently closed food court and the food souvenir shops located in Huafa Mall in Zhuhai.

A decrease in fair value gains of the company’s investment properties and the slowdown in the performance of the company’s restaurants in Macau also contributed to the likely loss of HK$45.9 million for Future Bright in 2015, the firm noted in its Monday filing.

Sluggish Q4

In the filing, which also contained the company’s

fourth quarter earnings, Future Bright noted a 7.6 per cent year-on-year decline in its overall turnover of HK$210.1 million, although its gross operating profit margin was up 1.6 per cent to 18.5 per cent.

In the quarter, the company has seen a 12 per cent decline in its core business of food and catering, which generated a turnover of HK$189.1 million. Fewer visitors coming to Macau during the period and a

Throughout the whole of 2015, Future Bright’s overall turnover went down by 4 per cent year-on-year to HK$824.2 million, in which the core business of food and catering decreased by 8.8 per cent to HK$748 million, according to the filing. The gross operating profit margin of food and catering business for the full year was down 12.9 per cent to 19.1 per cent.

‘The overall operating environment of the group remained competitive and tough during the year as the group’s food and catering business in Macau have continued to suffer slowdown, [while] its restaurants in Huafa Mall have improved slowly,”’ Future Bright stated in the filing.

The restaurant operator said, however, that it has been successful in improving the sales of its food souvenir business run under the brand of Yeng Kee Bakery by ‘enhancing operating cost efficiency’ and ‘operating more sales channels’.

Esprit turnover in MSAR dips 12.7 per cent year-on-year

NWS maintains ‘cautiously optimistic’ outlook on duty-free biz

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The ‘promising’ growth potential of duty-free trade at Macau International Airport and a successful duty-free trade concession at the ferry terminal has encouraged the optimistic outlook

sprit turnover in Macau declined 12.7 per cent year-on-year to HK$56 million (US$7.21 million) from HK$ 64 million during the first six months of the fiscal year 2015/16, according to the interim report of the group.

The American group also explained that during the calendar year of 2015 there was a decrease in net sales in Macau amounting to 20.3 per cent.

During the same period, the American clothing company cut the number of directly managed stores in the territory to four from five, the filing sent yesterday to the Hong Kong Stock Exchange reveals.

Regarding the results of the whole group, whose main markets are located in Europe and Asia, there was

a net loss of HK$238 million, down from the profit of HK$47 million recorded during the first six months of the fiscal year 2014/2015.

In terms of the group’s overall turnover, it declined 13.1 per cent year-on-year to HK$9.32 billion from HK$10.72 billion. This was explained by the group as being mainly because of the operations in the Asia Pacific region.

‘The underperformance of Asia Pacific was partly attributable to a combination of unfavourable macroeconomic factors: volatility in the financial markets, the economic slowdown in China and the devaluation of renminbi significantly dampened consumer sentiment and reduced tourist flow in the region’, Esprit explained in the filing.

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he Chow Tai Fook conglomerate’s infrastructure and services flagship NWS Holdings Ltd. has seen reduced profit contributions from its facilities management business as its dutyfree retail trade has dwindled in the interim period ended December 2015.

Nevertheless, the firm said it remains ‘cautiously optimistic’ on the sales outlook despite retail headwinds.

The facilities management arm of Hong Kong-listed NWS Holdings Ltd., which includes duty-free retail business in Macau Ferry Terminal and Macau International Airport, generated a revenue of over HK$3.51 billion (US$451.8 million) for the interim period, according to the company’s latest filing. But the attributable operating profit of the facilities management segment has declined by nearly 19 per cent yearon-year to HK$369.5 million – a business segment that contributes about 40 per cent of the company’s overall attributable operating profit.

NWS Holdings runs its duty-free trade under the banner of Free Duty shops in Hong Kong and Macau, and also at Macau International Airport under the joint venture company Sky Shilla Duty Free Ltd., formed with South Korea-based Hotel Shilla Co., Ltd. The duty free concession NWS Holdings runs at the Macau airport is a five-year concession starting from November 7, 2014.

‘A reduction in the number of highspending visitors from Mainland China and the continued contraction of inbound tourism have negatively impacted Free Duty’s business. Coupled with rising operating costs, the profit contribution from this business declined,’ NWS Holdings stated in the filing.

‘However, in light of the promising growth potential at the Lok Ma Chau terminal and the Macau International Airport, and the successful renewal of concession contracts at Macau Ferry Terminal and China Hong Kong Ferry Terminal to 2018, the Group remains cautiously optimistic on the sales outlook despite the headwinds,’ the company noted.

Group-wide, NWS Holdings’ attributable operating profit for the interim period reached HK$2.4 billion, representing a year-on-year increase of 6 per cent. Macau contributed to 8 per cent of the attributable operating profit of NWS Holdings in the interim period, up from 3 per cent in the prior-year period.

Apart from its duty-free business in Macau, NWS Holdings has a controlling interest in the city’s sole water supplier Macao Water with joint venture company Sino-French Holdings (Hong Kong) Ltd. In the interim period, the sales volume of Macau Water Plant grew slightly by 1 per cent, with a tariff hike of 4.3 per cent coming into effect on October 2015.

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Business Daily | 5

February 24, 2016

Macau

MSAR to offer road-to-air service to transfer passengers from delta bridge The local airport operator has told us that the service will exempt such passengers from usual border checks as they will be transported directly to the city’s airport for their flights Kam Leong

kamleong@macaubusinessdaily.com

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cross-boundary road-to-air service could be available to transfer passengers from the Mainland and Hong Kong to take flights from Macau International Airport (MIA) once the Hong KongZhuhai-Macau-Bridge opens to traffic, Business Daily has learned.

A spokesperson for local airport operator Macau International Airport Co. Ltd. (CAM) confirmed to Business Daily that an operation model of “one checkpoint, two Customs” will be applied to passengers arriving in the territory from the super bridge for local flights.

Transit travellers thus need not face the city’s Customs checks as they would be taken directly to the local airport for boarding upon arrival.

“When passengers get out from the Mainland or Hong Kong, they will be checked once [by the Customs of] their home region and get on the bus to the restricted area of MIA,” the spokesperson explained.

On Tuesday, Hong Kong news outlet South China Morning Post reported that Hong Kong could allow transit air passengers to enter and leave its airport without Customs checks in order to facilitate connections to the cross-region bridge.

It quoted a spokeswoman of Hong Kong’s Transport and Housing Bureau as saying that the government “was holding talks on cross-boundary bridge facility operations for the transfer of travellers.”

Similar seaborne

Currently, a similar sea-to-air or air-to-sea service called Express Link is provided by MIA. The service exempts transit passengers from normal immigration checks by local authorities when they travel from Hong Kong Ferry Terminal to the local airport or vice versa.

Likewise, Hong Kong International Airport (HKIA) has been providing such sea-air services for transit air passengers travelling from certain ferry terminals in Macau, Nansha in Guangzhou and Shenzhen Airport.

The local airport operator perceives, however, that it is still “too early” to estimate the possible benefits of the new road-to-air or air-to-road policies as the bridge connecting the Pearl Delta Region is

expected to be completed no earlier than the end of next year.

The completion was initially scheduled for the end of this year.

Despite the Hong Kong-ZhuhaiMacau Bridge Authority anticipating last week that the bridge could meet the standards for traffic next Summer, Hong Kong’s Highways Department stressed later in the same week that its part could only be completed by the end of 2017.

6 | Business Daily

February 24, 2016

Macau opinion

Perceptions

Macro perspective for new ISO standards New standards emphasis more on risk management and instructions from top management of evaluated companies

José I. Duarte Economist

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ealing with perceptions is always tricky. They can be justified or less so, fair or unfair: but perceptions influence our judgments and behaviour. To determine if perceptions are true may require time, resources or information that may not be readily accessible. In many situations, more than difficult to establish hard facts, perceptions will be the main pillars upon which we build our decisions. For many, perceptions are, in fact, the only available truth.

In government, the effects of perception issues are compounded because they are intertwined with credibility – and together they shape expectations about the actions and consequences of government actions.

As many students of political matters soon realise, credibility is at the heart of government effectiveness. Very well thought out and designed policies may easily flounder if the intended targets do not believe in the effective power, ability or commitment of the authorities to carry them out.

It is pointless to declare sound principles and strong determination where the common mean and woman sees (or perceives) weak rationale, conflicting approaches or half-hearted commitments. Consequently, how authorities state their understanding and opinions on this or that issue, how they react to or comment on this or that event is seldom, if ever, irrelevant.

They help to build the perception people develop about the real intentions and values of the authorities and, consequently, the way people will deal or adapt to them.

All these considerations come to mind in a week when several small bits of news, mostly or apparently unrelated, seem to share a common denominator. They convey the perception that the implementation of the law, in general - and specific laws, in particular - may be less thorough that we are usually assured. Further, that the guarantees often made concerning the respect for the rule of law are not fully congruent with the way the administration actually approaches or implements it.

The extraordinary rendition of people to the Mainland without due legal process has come again to the fore, brought up by the recent events in Hong Kong. Did the authorities grab the opportunity to reaffirm their strong commitment to the laws and their respect for the decisions of the courts? That is not the perception one gets from statements on the issue. Hiring non-resident workers is an agony for many companies, especially smaller companies. Control and screening are said to be rigorous. Then we find out that gamblers can apparently ‘buy’ blue-cards that allow them to come anytime to place a few bets.

Others news suggest that some participants in public sports competitions may be working illegally. Did anyone come to the fore to explain how that was possible and guarantee that a rigorous investigation would be carried out? It is not apparent.

Other examples could be picked up from these last days’ news, but these suffice for the argument. Some may say it is mainly a matter of communication – maybe so. Others may perceive there is something else – and will take note.

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ew standards ISO 9001:2015 and ISO 14001:2015 focus more on risk management, environmental and life-cycle aspects, in addition to quality management systems, said a guest speaker at a seminar hosted yesterday by Macau Productivity and Technology Transfer Centre (CPTTM), a member of the International Organization for Standardization (ISO). ‘‘Impact on business caused by the operating system certified by new standards are not seen currently but factors in business are considered in a more macro blanket and companies can evaluate risks and opportunities in more aspects. Changes in operating systems or work flows depend very much on the decisions of top management of different companies,’’ Leung Ka Ming, Product Manager of SGS, which focuses on system and services certification, told Business Daily following the seminar.

ISO 9001:2015 was renewed

from ISO 9001:2008, a standard for quality management systems; while ISO 14001:2015 was renewed from ISO 14001:2004, a standard for environmental management systems.

Both new standards were certified on September 15 2015. Old standards would expire on September 15 2018, indicating a transition period of three years.

One of the key service areas of CPTTM is to encourage local enterprises to enhance their management systems and practices to meet international standards.

Risk management

Both of the updated standards require more consideration of risk. Companies are expected to evaluate risks and opportunities from multiple aspects such as economy, society, politics, environment, operations, technical, and business. More instructions from top management are expected because risks and opportunities are better

Jardine Schindler Group bemoans shortage of talent in local market CEO Jujudhan Jena says the company is struggling in the Asia Pacific region and Macau due to the dearth of talented engineers

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obility giant Jardine Schindler Group (JSG), which is focused on lift solutions, is positive about the growth of the Macau market. However, the group is also feeling the shortage of skilled talent in the territory, according to the Chief Executive of the company, Jujudhan Jena.

In an interview with the Singapore Business Review, Mr. Jena spoke of the prospects for the Asia Pacific region and the problems, which include the Macau market, where the company is also operating.

“More than any other factor, it is the skill, expertise and professionalism of our employees that ultimately determine JSG’s success across the markets we operate in. The pursuit

of our growth agenda requires people and the shortage of a skilled talent pool is a challenge we are facing in the markets we operate in”, the Chief Executive Officer of Jardine Schindler Group told the Singapore publication.

Lack of technology appeal

However, Mr. Jujudhan also said that the elevator industry faces problems in these markets, including Macau, to be recognised as an industry where there is a lot of technology involved, which drives away potential employees.

“Another challenge we face is the adequate recognition of our industry compared to some of the other topof-mind industries like technology, consumer products, pharmaceuticals,

evaluated by company boards. ‘‘The issue of emphasis on risk management was raised when ISO 9001:2008 was renewing from the old standard but that was not the proper timing. Now we add risk management in new standards because the framework of ‘High Level Structure for Management Systems’ has now been adopted, meaning risks and opportunities raised by co-operation with interested parties by certified companies are considered.’’ Leung Ka Ming explained when asked about emphasis on risk management in new standards.

In addition to the prevention of pollution, the new standard of ISO 14001:2015 also required commitment to the protection of the environment. It also expects companies to identify environmental impact using a life-cycle perspective, indicating evaluating problems with other stakeholders.

B.L.

etc. The innovations and the use of technology along with the solid and long term nature of our business is somehow not very well known and perhaps there’s room to better market ourselves to support our efforts in acquiring and retaining talent”, he said.

Mobility solutions

In terms of the future of operations in the company, the JSG head explained his optimism for the Asia Pacific region in the context of the growing urban population of the territories.

“Asian cities will continue to grow with vertical expansion, given the projected explosion of urban population in the next decades, and the shift in demographics where millions of educated young couples will form households, will [create] ongoing demand for what we term mobility solutions”, he said.

“However, it’s not just a matter of quantity but also quality. There is also a shift in the industry for more sustainable buildings in increasingly dense vertical cities. With our long history and a strong presence in this region, we are well-positioned to provide for the needs of our customers”, he told the publication.

Jardine Schindler Group is a joint venture established in 1974 between Hong Kong-based Jardine Matheson Group and Switzerland’s Schindler Group. The relationship between the two companies dates back to 1929 when Jardine Engineering Corporation became Schindler’s sole distributor in Shanghai.

J.S.F.

Business Daily | 7

February 24, 2016

Macau Jimei CEO Kennis Wong steps down Mr. Kennis Wong Kwok Leung stepped down from his positions as Chief Executive Officer and Executive Director for Jimei International Entertainment Group Limited on Monday, according to a filing with the Hong Kong Stock Exchange. He was appointed to those positions on February 3, 2015. However, he will remain as director for several subsidiaries of the company, the filing stated. Mr. Wong has over 10 years’ experience in the gaming industry. ‘He resigns due to his other business engagements and he has no disagreement with the Board’ reads the filing. The company says it is in the process of replacing him and further announcements will be released. Meanwhile, the existing management of the Group will perform his former role.

Casino operators to discount non‑gaming offerings for locals All six gaming operators are to support the local government’s initiative of giving back to society by promoting the non-gaming sector launch of the ‘Macau Loves Locals’ campaign Annie Lao

annie.lao@macaubusinessdaily.com

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oth permanent and nonpermanent residents of Macau can enjoy an average of around 20 per cent discount on the offers of non-gaming facilities at all hotels and resorts operated by the six resort operators in Macau by showing their IDs. The ‘Macau Loves Locals’ campaign, co-organised by Galaxy Entertainment Group, Melco Grown Entertainment, MGM China Holdings Limited, Sands China Ltd., Sociedade de Jogos de Macau, S.A. (SJM), and Wynn Macau Limited, started from yesterday and lasts until March 31, 2016.

“This joint promotion gives Macau locals the opportunity to enjoy unprecedented special offers on a wide range of non-gaming offerings which include hotel accommodation, entertainment

and dining for a limited period, rewarding them with this promotion while at the same time promoting the development of the non-gaming sector in the city,” Secretary for Economy and Finance Lionel Leong Vai Tac said at the press conference yesterday.

Mr. Leong reckons the campaign can promote diversification and reiterated the government’s appeal to the gaming sectors to better cooperate with local business, especially SMEs.

For the community

“There has been an increase of resort facilities in these two years, so it is the right time now to launch these non-gaming promotions to Macau residents; also for the local employees from the companies to enjoy these offers” the President of Sands China

Ltd., Dr Wilfred Wong, said at the press conferencing launching the campaign.

“It acts as a platform to encourage Macau residents to experience the facilities we offer as part of living in Macau in order to help promote Macau as a Macau ambassador for locals,” said Melco Crown Entertainment Chief Operating Officer Mr. Ted Chan.

“We will discuss if an additional related campaign will happen again after the initial campaign finishes,” said SJM Executive Director Angela Leong On Kei. The gaming operators indicated that the programme supported by the Macau SAR Government is a corporate social responsibility initiative by the six operators as a way of giving back to the Macau community.

SJM’s 2015 profits plummet by more than 60 pct The casino operator noted that the construction of its ‘Grand Lisboa Palace’ project on Cotai would be completed about the end of 2017

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acau casino operator SJM Holdings Ltd. said its profits fell by 63.4 per cent year-on-year for the whole fiscal year of 2015, according to its results filing with the Hong Kong Stock Exchange yesterday.

The casino operator’s profit for the year ended December 31 was about HK$2.47 billion, compared to approximately HK$6.73 billion (US$340 million) in the year-prior period.

The company noted that the stated profit amount for the full year includes an impairment loss on availablefor-sale investment in equity securities of HK$250 million, and the impairment on profit of suspension of a satellite casino of HK$143 million.

SJM Holdings’ board has proposed a final dividend of HK$0.15 per ordinary share for the year, which has yet to be approved at

the Annual General Meeting on June 16. In the prior-year period, the company paid a final dividend of HK$0.62 per share.

For the full year of 2015, SJM Holdings has seen its gaming revenue sink 38.7 per cent year-on-year to HK$48.59 billion, compared to the HK$79.27 billion generated in the previous year. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 50.3 per cent to approximately HK$3.86 billion.

The casino operator’s adjusted EBITDA margin decreased to 7.9 per cent in 2015 from 9.7 per cent in the previous year.

SJM Holdings’ flagship Casino Grand Lisboa saw revenue decline by 44.1 per cent for the full year of 2015, while its adjusted property EBITDA dropped by nearly

50 per cent. Attributable profit from the property went down by 56.1 per cent.

The occupancy rate of Grand Lisboa Hotel decreased by 10.2 per cent to 83 per cent for the whole year, while the average room rate of the hotel decreased by 12.7 per cent to HK$2,030.

In the results filing, SJM Holdings said it had maintained its ‘strong balance sheet’ with cash, bank balances and pledged bank deposits totalling HK$17.32 billion as at December 31.

Grand Lisboa Palace

SJM Holdings additionally noted that construction work on its Cotai casinoresort project, re-branded Grand Lisboa Palace, made ‘substantial progress’ last year.

‘Foundation work was essentially completed by the first quarter of 2015,

so that construction on the superstructure and basement levels is now well underway, for completion around the end of 2017,’ the filing noted.

SJM Holdings said it expected to celebrate the topping-off of the project’s superstructure around mid2016.

The casino operator has said the estimated construction cost for the Cotai project is about HK$30 billion. More than 90 per cent of the new property’s total area will be devoted to nongaming facilities, including the hotel towers bearing the insignia Grand Lisboa Palace, and the fashion houses Palazzo Versace and Karl Lagerfeld - totalling some 2,000 rooms.

‘The group is currently in discussion with commercial banks concerning the arrangement of banking facilities to finance

construction costs of the Grand Lisboa Palace. The group expects to conclude these arrangements later this year,’ SJM Holdings noted in the filing.

Apart from the Cotai project, the casino operator has noted the upcoming renovation works at Casino Grand Lisboa. In March, the renovation works on the ground floor of Grand Lisboa will begin, which upon completion by the end of this year will have expanded gaming space to accommodate an additional five tables and 31 slot machines as well as retail space.

SJM Holdings said that during last year it had a 21.7 per cent share of Macau’s gaming revenue, including 25.3 per cent of mass market table gaming revenue and 20.2 per cent of VIP gaming revenue.

S.L.

8 | Business Daily

February 24, 2016

Greater China

Banks’ January net forex sales fall to US$54.4 billion Outflows have increased since China’s surprise devaluation of the yuan last August

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hinese commercial banks’ net sales of foreign exchange fell to US$54.4 billion in January from US$89.4 billion in December, data from the foreign exchange regulator showed yesterday, indicating less capital outflows from the banking sector.

Commercial banks sold a net 454.8 billion yuan (US$69.7 billion) in foreign exchange on behalf of clients in January, while banks bought a net 98 billion yuan via their own currency trading, according to the data released

by the State Administration of Foreign Exchange.

Earlier data showed China’s central bank sold a net 644.5 billion yuan worth of foreign exchange in January, easing back from a record amount the previous month, but signalling persistent capital outflows as economic growth slows.

Outflows have increased since China’s surprise devaluation of the yuan last August, and have been fanned by concerns about its economic slowdown and expectations of U.S. interest rate rises.

KEY POINTS Banks sell net 454.8 bln yuan in FX for clients in Jan Banks buy net 98 bln yuan via own currency trading Data shows less capital outflows from banking

China’s foreign exchange reserves fell US$99.5 billion in January to US$3.23 trillion, the lowest level since May 2012. That followed a record US$512.66 billion drop in 2015.

But Chinese officials have played down the risk of capital outflows, pointing to a rush by Chinese companies to repay foreign debt, rising outbound investment by local firms and overseas spending by Chinese tourists.

Reuters

Mainland buyer for Australia’s largest dairy farm business Bidder Lu Xianfeng also owns an Australian window blind maker and founded a Shenzhen-listed engineering company

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Chinese investor was yesterday given the green light to buy Australia’s largest dairy farm company, with the finance minister saying he welcomed foreign investment “not contrary to our national interests”.

The sale of farmland to foreigners including to Australia’s biggest trading

partner China has been a sensitive issue, with Canberra in November blocking the sale of one of the world’s largest cattle estates to Chinese companies.

Chinese businessman Lu Xianfeng, who owns an Australian window blind maker and founded a Shenzhen-listed engineering company, made a A$280

million (US$202 million) bid for the Tasmanian-based and New Zealand-owned dairy business in November.

Australian Treasurer (finance minister) Scott Morrison said the Tasmanian Land Company (TLC) Group -- which owns the 190-year-old dairy business Van Diemen’s Land Company -- had always been held by foreigners.

“I am satisfied that the Moon Lake proposal to purchase TLC is not contrary to the national interest,” Morrison said in a statement, referring to Lu’s company.

“It will ensure increased

I am satisfied that the Moon Lake proposal to purchase TLC is not contrary to the national interest Scott Morrison, Australian Treasurer

employment and investment in an important industry sector in Tasmania, while the safeguards we have put in place will ensure they pay their tax.

“Australia continues to welcome and support foreign investment that is not contrary to our national interests.”

Van Diemen’s current owner, New Zealand’s New Plymouth District Council, welcomed the approval.

Lu said in a statement he was committing to expanding the business, which owns and operates 25 dairy farms including some 30,000 livestock, and increasing its workforce.

Some independent politicians had opposed the sale to Lu, saying prime dairy land should be in Australian hands.

Federal Independent MP Andrew Wilkie from Tasmania said the decision was “disappointing and not in the public interest”.

“Today’s news just confirms the fact that the government either doesn’t understand or doesn’t care about the importance of Australian ownership of strategic assets,” he said in a statement.

Australia’s TasFoods Limited had made a failed bid for the company, while a Tasmanian businesswoman had also expressed interest.

AFP

Business Daily | 9

February 24, 2016

Greater China

Diesel dogfight: Huge national exports dent Asia margins China accounted for 12 percent of Asian diesel exports in the month of December Jessica Jaganathan

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hina’s emergence as a major oil product exporter is depressing oil refining margins across Asia as favourable domestic fuel policies encourage Chinese refiners to keep output high and flood regional markets with surplus supplies.

The surge in Chinese shipments has been felt the most in the diesel market, where benchmark Asian margins recently slumped to 6-year lows following an almost 80 percent jump in Chinese exports in 2015.

The world’s No.2 diesel producer had until last year been only a modest exporter of the fuel, as the country’s large mining, power generation and trucking industries used up most of its diesel output.

But as China’s industrial engine slowed, refinery run rates remained high to meet still strong demand for gasoline and jet fuel, used for transport. That led to a surplus of diesel that was steered on to regional markets with increased aggression over the course of 2015.

Average monthly exports over the second half of 2015 were 865,000 tonnes, compared to 329,000 tonnes a month over the first half.

“As independent refineries in China have increased access to crude, this positively affects their run rates.

In turn every additional barrel in the already oversupplied middledistillates market has a negative effect on the gasoil margins,” said David Wech, managing director of research institute JBC Energy.

Additional export quotas for independent refineries along with export-linked incentives for refineries owned by state-owned oil giant Sinopec Corp are expected to lead to higher shipments in 2016. January exports eased back from December levels, but were more than 10 times higher than the same month in 2015.

China’s net surplus of diesel could more than double to 220,000 barrels

per day or about 10.8 million tonnes in 2018 from 100,000 bpd in 2015, Wech said.

“The sizable diesel supply glut created by an upsurge in Chinese exports of diesel ...(will) remain intact, leading diesel prices in Asia to underperform diesel prices in Europe and North America over 2016 to 2020,” said BMI Research’s Asia oil analyst Peter Lee. While China’s increased exports have slashed Asian diesel margins - from roughly US$16 a barrel a year ago to around US$10 now the impact has been partly offset by tumbling oil prices, which have kept other refiners profitable.

Competitive threat

Chinese refiners have also been protected by a domestic floor price that is above international rates and provides a buffer for competitively priced exports.

On a monthly basis, China has already overtaken Japan and Taiwan to become Asia’s fourth-largest diesel exporter after South Korea, Singapore and India.

China accounted for 12 percent of Asian diesel exports in the month of December, 2015, up from just four percent nine months earlier, according to trade data and a Reuters analysis of ship loadings in the region.

South Korean and Japanese refiners say they are confident of holding their own in Asia where long-term demand is expected to catch up with the supply surplus, but concede that Chinese refiners have an advantage in new markets.

“We haven’t lost any market share to the Chinese but in terms of expanding our business, it’s more difficult especially in the Southeast Asian market,” a source with a South Korean refiner said.

“Their domestic fuel pricing system is very favourable for them

so they can secure huge margins, which means they can offer the diesel cargoes at cheaper prices, which are difficult for us to compete with.”

Expanded reach

Globally, China is expected to become the world’s eighth biggest diesel exporter by 2018, up from 20th place in 2015, JBC’s Wech said.

Its top exports are to Singapore, as Chinese refiners take a bigger position in the Asian benchmark pricing system and store diesel in the region’s trading hub, but its reach extends as far as Africa and Argentina.

New refineries in China are also able to meet more stringent specifications required by developed countries such as Australia, where the closure of ageing refineries has boosted import demand.

“I think the immediate attraction for them is Australia and maybe to some extent Africa, but I’m sure they will want to expand their reach to Europe and the United States,” said a source with a Japanese refiner.

Reuters

KEY POINTS China to be world’s 8th largest diesel exporter by 2018 Triples market share in Asia, overtakes Japan and Taiwan Competitive edge in new markets by undercutting prices

Consumption growth will remain fast in 2016 Consumption in China will continue to grow at a quick pace in 2016, Minister of Commerce Gao Hucheng told a news conference yesterday. China’s economic slowdown has caused jitters in global financial markets as it seeks to rebalance its economy towards consumption-led growth from a traditional reliance on exports and investment. Consumption accounted for 66.4 percent of China’s GDP growth in 2015, the statistics bureau said in January. Business surveys have shown resilient growth in the services sector even as activity in “old economy” sectors such as heavy industry contracts.

ICBC plans bond issue through Dubai branch Industrial and Commercial Bank of China (ICBC), the country’s largest bank by assets, is planning to issue a U.S. dollar-denominated bond of benchmark size through its Dubai office, sources aware of the matter said on Monday.

It would be the second bond issue by ICBC through its office in Dubai’s financial free zone, underlining the bank’s growing business in the Middle East as trade and investment ties between China and the Gulf expand rapidly. In May, ICBC raised US$500 million through a five-year debut bond after garnering orders in excess of US$3.5 billion from investors.

Social financing up 13.1 pct y/y at end-Jan China’s outstanding social financing was at 141.57 trillion yuan ($21.7 trillion) at the end of January, up 13.1 percent from a year earlier, the central bank said yesterday. That included local-currency loans of 95.29 trillion yuan for the real economy at the end of January, which was up 14.9 percent year-on-year, the central bank said in a statement on its website.

Heavy investment in river control Northwest China’s Shaanxi Province has earmarked 9 billion yuan (US$1.38 billion) to clean up the river that runs to Yan’an, the “red cradle of the Chinese revolution.” The investment will be allocated to flood prevention, pollution control, and landscape projects along the Yanhe River, a major branch of the Yellow River. “In five years, the revolutionary base will become a green resort,” Shaanxi Governor Lou Qinjian said at a conference on the project on Monday, adding that 5 billion yuan will be spent over the next five years as the first stage.

Beijing to limit construction in air corridors Construction of high-rise buildings in planned ventilation corridors in Beijing will be strictly limited, authorities said yesterday. “Within the sphere of the planned corridors, the height and density of buildings will be strictly controlled,” said He Yong, deputy director of the planning research department of the Beijing Municipal Institute of City Planning and Design, which was tasked with researching the corridors. There are many high-rise buildings and crowded building blocks along the corridors, obstructing air flow. Some of the out of date buildings will be demolished over time, He said.

10 | Business Daily

February 24, 2016

Greater China

Last year, they’d come in around five or 10 buses, park right nearby, and shop in groups. But that’s been rare this year Katsuhito Takahashi, assistant manager, Yodobashi Camera shop

Nation’s tourists changes its shopping habits Retailers Japan, Sydney and Hong Kong have seen Chinese tourists turn more budget conscious Kwiyeon Ha and Yiyuan Wang

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hinese tourists spent less in Tokyo shops during the Lunar New Year holidays compared with a year earlier, retailers said, as a stronger yen and slower economic growth at home discouraged the kind of “explosive buying” that became a buzzword in 2015.

Isetan Mitsukoshi Holdings said its stores served around 50 percent more international duty-free shoppers during February 7-13 compared with the same holiday week last year due to a spike in customers from mainland China, but each spent 15 percent less than a year ago.

In 2015, visitors from mainland China doubled to five million from 2014, helping Japan’s overall tourist numbers reach nearly 20 million - a target the government had hoped to achieve by 2020.

Shopping by Chinese tourists at department stores and electronics shops in 2015 created a buzzword, “bakugai”, or explosive buying, and came as a boon for Japanese retailers smarting from decades of sluggish demand from domestic consumers.

But China’s economic growth fell in 2015 to a 25-year low and stock

markets slumped in the middle of the year, raising uncertainty about the outlook for the economy - impacting Chinese buying abroad this year.

Retailers in Sydney and Hong Kong have also seen Chinese tourists turn more budget conscious.

“Last year, they’d come in around five or 10 buses, park right nearby, and shop in groups. But that’s been rare this year,” said Katsuhito Takahashi, assistant manager at electronics store Yodobashi Camera in Shinjuku, a large shopping, entertainment and business area of Tokyo.

Obama recognises necessity for Mainland to change growth model He said the United States had made clear China needed to have an orderly market-based currency system Roberta Rampton

U

.S. President Barack Obama on Monday said China recognized it could not sustain an export-driven growth model indefinitely but that it would take time to change.

Speaking to state governors at the White House, Obama urged them to press the U.S. Congress to approve the Trans-Pacific Partnership trade pact to boost U.S. exports in a region where China is “the 800-pound gorilla.”

Obama said it was tempting for China to try to solve its short-

term problems by dumping statesubsidized goods into the U.S. market but said his administration had made clear to China that would not work, Obama said.

“They recognize that they can’t forever sustain an export-driven growth model, but it’s going to take some time and it’s tempting for them to solve short-term problems by just dumping a bunch of state-subsidized goods into the U.S. market,” Obama said in response to a question raising concerns about China’s exports of iron ore.

“We’ve been very clear with them about the fact that that’s not going to work, and we’re going to put in place tools to make sure it doesn’t work,” he said.

Obama also said the United States had made clear China needed to have an orderly marketbased currency system that did not advantage its companies over their U.S. counterparts.

“Right now, frankly, their intervention is to prop up their currency rather than to devalue it, because a lot of people have been

He said the store’s sales during the Lunar New year holidays fell around 25 percent from a year earlier, although Chinese customer numbers were more or less unchanged.

J.Front Retailing, which operates Daimaru department stores, said Chinese customers increased from a year earlier but sales per customer fell by a double-digit percentage.

“We did see customers trying and buying cosmetics, and purchasing children’s clothing and other necessities for the family,” but sales of jewellery and watches declined by double digits, a J.Front spokeswoman said.

Mizuho Research Institute chief economist Hajime Takata said the “bakugai” trend may be waning as China’s economic slowdown, the stock market fall and yen strength in January impacted buying.

“These factors may be leading to less spending per person,” he said.

In addition to shopping, Chinese tourists may be increasingly interested in experiences such as visiting museums or exploring Japan’s countryside, he said.

Yang Jiao, a 28-year old from Dalian in northeast China who was shopping in Shinjuku, agreed, saying she looked forward to buying cosmetics, but shopping wasn’t her main purpose.

“The quality of Chinese products meets our everyday needs,” she said. “As a young person, I think travelling is for gaining experience and knowledge, not merely for shopping.”

Reuters

nervous about the Chinese economy,” he said.

Election roils TPP debate

Obama told the governors he was “cautiously optimistic” that Congress ultimately will back the 12-nation TPP trade pact, which labour unions oppose because of what Obama called “emotions” about job losses from past trade deals.

“Our concern there was that China was the 800-pound gorilla. And if we allowed them to set trade rules out there, American businesses and American workers were going to be cut out,” he said.

Obama said he would have to rely on votes from “a set of strong pro-trade Democrats” in Congress as well as Republicans.

But Obama acknowledged that Republicans have also “some concerns along the margins” of the TPP, such as provisions affecting tobacco, and said the campaign for the Nov. 8 presidential election has “roiled” the debate in both parties.

Senate Majority Leader Mitch McConnell, a Republican, has said he has “some problems” with the TPP and does not think it should be pursued before the election.

Reuters

Business Daily | 11

February 24, 2016

Asia

Australia’s education boom a boon to economy In June, there were 374,566 student visa holders, up 10.2 percent from a year earlier Ian Chua and Jarni Blakkarly

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ustralia's official population clock this month ticked past 24 million, several years sooner than expected, thanks in part to a booming education industry drawing students from all over Asia.

Growing numbers, particularly from China and India, are feeding an industry that in 2015 surged 17 percent to be worth A$20 billion (US$14.22 billion), cementing its position as Australia's most valuable service-sector export.

Education is a bright spot for Australia's A$1.6 trillion economy as the end of a decade-long mining investment boom bites, slowing growth to a sub-par annual pace of 2.5 percent.

As income levels rise in Asia, families seeking good education for their children "are sending them to places like Australia", said Craig James, chief economist at brokerage CommSec. "We've had good growth up to now and likely to see good growth in the future."

In a bid to draw attention to Australia as a study destination, about 3,000 international students flocked to Sydney's Bondi Beach this month to set a world record for the biggest English lesson.

Net overseas migration, which reflects the flow of incoming international students, accounted for 53 percent of Australia's population growth in 201415, according to the statistics office.

Two-stage process

In June, there were 374,566 student visa holders, up 10.2 percent from a year earlier.

China and India together accounted for more than one-third, according to the Department of Immigration and Border Protection.

Student visa applications increased by 4.6 percent in

2014-15 from a year earlier, a fifth consecutive year of growth.

Many enter the country, which has the world's fourth lowest population density, on student visas and later take up residency, in effect remaining in the population count.

Amber Wang, a communications student at Melbourne University who came from China in 2014 on student visa, hopes to stay.

"I'm trying to make the most of the time I have and get a job here that will let me stay for longer," the 23-yearold said.

Nick Parr, professor of population and workforce planning at Macquarie University, said migration to Australia is a two-stage process for many.

"People arrive on temporary visas, student or temporary work visas and then later transfer to permanent residence."

Attractive exchange rate

Fuelling the industry, analysts say, are a simplified student visa application process and the weakening of the Australian dollar in recent years. The Aussie, worth nearly US$1.11 in

Education was a US$14.2 bln industry in 2015 Sector growth likely to stay solid - economist Weak currency helps lift Australia’s appeal

Hopes for additional fiscal spending loom even as Japan is struggling to rein in a public debt that is the biggest among major industrialised economies Leika Kihara

J

Reuters

KEY POINTS

Japan’s finance head won’t rule out more fiscal stimulus

apanese Finance Minister Taro Aso did not rule out the possibility of compiling a supplementary budget at the start of the year beginning in April, suggesting that additional fiscal stimulus could be forthcoming to support an ailing economy.

His remark came as Bank of Japan (BOJ) Governor Haruhiko Kuroda said accelerating the pace of money printing alone won’t boost expectations of future price rises, acknowledging the limits of what monetary policy can do to revive growth.

“We’ll obviously act flexibly on fiscal policy as needed, looking at how the economy performs,” Aso told parliament on Tuesday.

2011, was below 70 cents early this year.

Preliminary estimates from the Department of Foreign Affairs and Trade showed that education accounted for about 30 percent of US$62.8 billion in services exports in the fiscal year ended June 2015.

While the education boom has been good for the economy, it has spawned some problems and challenges for authorities.

In December, adult college group Vocation Ltd collapsed two years after getting a share-listing, leaving some 12,000 students adrift with incomplete courses. This month, Global Intellectual Holdings Pty Ltd, which has 20 campuses around the country, filed for bankruptcy protection.

Retail chain 7-Eleven last year came under fire after local media reported widespread underpayment and abuse of workers, many of them are international students, by franchise owners.

The publicity sparked a Senate inquiry and forced the resignations of three senior managers of the Australian franchise.

“That will depend on economic conditions,” he said, when asked whether the government may consider compiling a supplementary budget early next fiscal year.

The government usually refrains from offering hints of an extra budget until the full budget for next fiscal year passes through parliament. It is aiming to get parliament sign-off for the full budget by the March end of the current fiscal year.

But some ruling party lawmakers have called on premier Shinzo Abe to compile a fresh fiscal stimulus package soon, as the economy skirts with recession on weak consumer spending.

KEY POINTS Aso says extra budget will depend on economy Lawmakers heightening calls for fiscal stimulus Kuroda says base money expansion alone won’t lift prices

Such calls for fiscal spending may heighten if G20 finance leaders gathering in Shanghai this week agree on the need for major economies to take additional steps to stave off fears of a global recession.

A senior U.S. Treasury official said Washington will call on G20 countries this week to use fiscal policy to boost global demand.

Hopes for additional fiscal spending loom even as Japan is struggling to rein in a public debt that is the biggest among major industrialised economies.

The BOJ’s decision last month to add negative interest rates to its aggressive asset-buying programme has done little to arrest a damaging yen rise or brighten business sentiment.

Kuroda said expanding base money won’t immediately boost prices toward the BOJ’s 2 percent target, but would help stimulate the economy by pushing down real borrowing costs.

“The main transmission channel of our current quantitative and qualitative easing (QQE) policy with negative interest rates on the economy is through declines in real interest rates,” Kuroda told the same parliament session.

Aso also said aggressive money printing alone won’t work because companies are wary of borrowing from banks, instead preferring to use their own cash-pile for capital spending.

Reuters

12 | Business Daily

February 24, 2016

Asia KEY POINTS MAS, MTI cut 2016 all-items CPI forecast to -1.0-0.0 pct Forecast lowered due to falls in prices of oil, car permits Core inflation forecast kept unchanged at 0.5-1.5 pct January core CPI +0.4 pct y/y, highest in 4 months

Singapore downgrades headline CPI forecast

All-items CPI -0.6 pct y/y vs -0.4 pct forecast

The all-items consumer price index fell 0.6 percent in January from a year earlier Masayuki Kitano

S

ingapore sharply lowered its headline inflation forecast for this year after a collapse in global oil prices, suggesting that authorities might have to further ease monetary policy soon, especially if economic growth continues to disappoint.

The Monetary Authority of Singapore and the Ministry of Trade and Industry said their 2016 forecast for all-items inflation has been revised down to -1.0 percent to 0.0 percent, from their previous forecast of -0.5

percent to 0.5 percent.

They said the downward revision was due to “the significant step-down in global oil prices in recent months” and larger-than-expected falls in the prices of car permits, or COE premiums, at the start of the year.

Singapore’s core inflation gauge, however, posted the fastest annual rise in four months, increasing 0.4 percent in January from a year earlier. Still, the overall economic picture pointed to risks of an easing in monetary policy, some analysts said.

“I think markets are starting to price in higher probability of MAS easing, given that inflation continues to look pretty soft,” said Jeff Ng, an economist for Standard Chartered.

Indeed, with China’s cooling economy and faltering global momentum hammering the city state’s exports, analysts are now placing a higher risk of an easing at the central bank’s April review.

“Expectations for MAS easing could escalate over the next few weeks. However, we don’t expect

any easing at the moment,” Ng said, noting that core inflation was still trending higher, albeit gradually.

The MAS kept its 2016 forecast for core inflation unchanged at 0.5 percent to 1.5 percent. This reflected the smaller weight of oil-related items in core inflation, as well as the exclusion of changes in private road transport costs, it said.

The all-items consumer price index fell 0.6 percent in January from a year earlier, posting the 15th straight month of year-on-year declines, dragged down by a slide in global oil prices as well as falls in housing rents and private road transport costs.

Leong Wai Ho, an economist for Barclays, said the outlook for economic growth will be key in determining whether the MAS eases policy.

“The battleground will be on growth, not inflation. So it’s different from last year,” he said.

The central bank eased policy twice in 2015, including in an unscheduled review in January of that year.

Reuters

Philippines aims to award road project before Aquino steps down The Laguna Lakeshore Expressway Dike project involves construction of a 47 kilometre expressway and a 45 kilometre dike

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he Philippine government hopes to evaluate bids and select the winner for a 123 billion peso (US$2.6 billion) toll way and dike project before President Benigno Aquino (pictured) steps down on June 30, a senior official said yesterday.

Rogelio Singson, public works and highways secretary, told ABS-CBN News Channel that bidevaluation “should not be too difficult” for what is planned as one of the country’s largest

infrastructure projects.

The secretary said the bid submission date, which has been postponed twice, has been fixed as March 14.

There will be a maximum of three bids, he said, as that’s the number of consortia that pre-qualified for the publicprivate partnership (PPP) project.

The three groups are: San Miguel Corp, via its San Miguel Holdings Corp unit; Trident Infrastructure and Development Corp., also known as Team Trident

composed of Ayala Land Inc, SM Prime Holdings Inc, Aboitiz Equity Ventures Inc and Megaworld Corp ; and Alloy Pavi Hanshin LLEDP Consortium, comprising Malaysia’s MTD Group, South Korea’s Hanshin Construction Co Ltd and the family of former Philippine Senator Manuel Villar Jr. The Laguna Lakeshore Expressway Dike project involves construction of a 47 kilometre expressway and a 45 kilometre dike that will mitigate flooding

in communities along Laguna Lake.

Another part is the reclamation of around 700 hectares of land south of Manila.

Some bidders had sought more time to prepare offers, prompting the government to postpone the bidding several times.

“Among the issues that they raised was the timing as well as some concerns about government proclamation on the land that will be reclaimed,” Singson said.

The proclamation is being worked out by the Office of the President and multiple concerned agencies, and the Department of Environment and Natural Resources, he said.

“What we’re working out is to make sure that all of these documents are issued before March 14,” Singson said.

Since launching the PPP programme in 2010, the government has awarded nine projects worth 130 billion pesos.

Reuters

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Business Daily | 13

February 24, 2016

Asia India’s gold imports lowest since 2013 Given the uncertainty on taxes and prices, India’s purchases this month will mainly be in the form of “dore”, an alloy of gold and silver Rajendra Jadhav

I

ndia’s overseas gold purchases are likely to hit a more than two-year low in February, as rising prices and hopes for a cut in import taxes keep buyers away, industry sources said.

While lower purchases by the world’s second-biggest consumer could dent the current rally in global bullion prices, it would mean relief for the Indian government which has been struggling to curb gold imports that cost the country US$36 billion in 2015.

India’s imports of the metal are expected to drop to 25 tonnes in February, according to a median of estimates from five industry participants, including bank dealers and traders.

That would be about 67 percent below month-ago levels and the lowest since September 2013, when arrivals were hit by a government mandate to export a fifth of all gold imports.

“Banks and trading agencies have scaled down imports. They are being forced to offer heavy discounts (to global prices) to clear inventory,” said Bachhraj Bamalwa, director at All India Gems and Jewellery Trade

Federation, pointing to weak demand.

Global spot gold prices hit a one-year peak of US$1,260.60 an ounce this month amid volatile financial markets, and are currently at US$1,216. Prices have risen 15 percent over two months, their biggest such rally since August 2011.

Dealers in India are offering record high discounts of up to $50 an ounce to the spot benchmark to lure buyers, but there are no takers, the industry participants said.

Jewellers and retail consumers are delaying purchases in the hope prices will correct and that India will cut its import duty by 4 percentage points in this month’s budget, said Sudheesh Nambiath, a senior analyst at consultancy Thomson Reuters GFMS. Budget hopes; more dore India imposed a record high duty of 10 percent in 2013, but instead of curbing imports, the duty revived smuggling networks that brought an estimated 175 tonnes of gold into India in 2014 - or about a fifth of total annual arrivals.

Industry groups, which have been urging a tax cut, are now eyeing the 2016-17 Indian budget on February 29 to see if any reduction will come through.

Domestic gold prices swung into deep discounts before the previous budget as well, but the government surprised the market with no cut in duty.

Given the uncertainty on taxes and prices, India’s purchases this month will mainly be in the form of “dore”, an alloy of gold and silver that is refined to get pure gold, Nambiath said.

India charges a lower import duty on dore than pure gold.

Dore purchases, together with rising supply of scrap as people sell coins and bars bought when gold was cheaper, are further cutting India’s need for pure gold imports.

Already, rural gold demand, which accounts for about two-thirds of India’s total consumption of the metal, has suffered a setback as the first back-to-back drought in nearly three decades has crimped farming incomes in the country.

“Consumers are not sure about price trends. They are waiting for prices to stabilize before making purchases,” said Bamalwa.

Reuters

KEY POINTS India’s February gold imports to hit 25 tonnes - median estimate Dealers in India offer record high discounts to lure buyers Buyers hope for 4 percentage point cut in import tax – source

BHP Billiton slashes dividend, posts US$5.67 bln net loss Standard & Poor’s cut BHP’s credit rating to ‘A’ from ‘A+’ this month and warned it might downgrade again if the company failed to take more steps to preserve cash and review its dividend policy

T

op global miner BHP Billiton slashed its interim dividend by 75 percent yesterday, abandoning a long-held policy of steady or higher pay-outs as it braces for a longer-than-expected commodities downturn.

The end to BHP’s so-called progressive dividend policy came as the world’s biggest diversified miner slumped to a net loss of US$5.67 billion for the six months to December 31, its first loss in more than 16 years.

“We need to recognise we are in a new era, a new world and we need a different dividend policy to handle that,” Chief Executive Andrew Mackenzie said on a media call, warning of a prolonged period of weaker prices and higher volatility.

The dividend cut to 16 cents was more severe than market expectations for a pay-out as high as 35 cents. BHP pledged a minimum 50 percent payout of underlying profit going forward.

Mackenzie said the shift was part of a broader strategy to help BHP Billiton manage volatility.

Mackenzie also announced a revamp of BHP’s corporate structure in a bid to simplify operations, creating U.S. and Australian mineral divisions in a move that will see its iron ore chief Jimmy Wilson and petroleum head Tim Cutt depart.

Profit miss

Underlying attributable profit plunged to US$412 million from US$4.89 billion a year earlier, missing analysts’ forecasts for around US$585 million, as commodities prices plummeted to multi-year lows.

“While the miss looks big in percentage terms, the numbers are quite frankly disappointingly low anyway,” said Shaw’s O’Connor, pointing to BHP’s $100 billion asset base.

Despite the tough outlook, Mackenzie said BHP was still generating EBITDA (earnings before interest, tax, depreciation and amortisation) margins of 40 percent, which is ahead of the reported figure of around 34 percent for Rio Tinto.

At today’s spot prices, the company would expect to generate US$10

Thai govt approves loans to help farmers Thailand’s military-led government yesterday approved about 87 billion baht (US$2.43 billion) in loans to help farmers who have been hit hard by falling commodity prices and widespread drought.

The scheme is aimed at developing the farming sector, Finance Minister Apisak Tantivorawong told reporters after a weekly cabinet meeting. The junta has introduced several measures to help the ailing rural economy since seizing power in May 2014 to end months of street protests. But billions of dollars in public spending have failed to reach farmers.

Australia is sending its first trade mission to Cuba Australian mining and agricultural companies will join the country’s first official trade mission to Cuba, which leaves for Havana today. In 2015, Australia-Cuba trade totalled only A$14.1 million (US$10.20 million), less than 1 percent of Australia’s total trade. “Several countries are looking at Cuba in order to leverage new opportunities,” Special Trade Envoy Andrew Robb said in a statement, citing opportunities in tourism and medical service sectors.

“In this regard Australia is an early mover.” Robb’s office declined to name the companies joining the trade mission.

Noble Group to book US$1.2 bln impairment Singapore-listed Noble Group warned yesterday it would report a net loss for the fourth quarter, when it also expects to book US$1.2 billion of non-cash impairments and one-off items due to the slump in coal and commodity prices. Noble, one of the world’s biggest traders of commodities from coal to iron ore, has been trying to boost investor confidence after a bruising accounting dispute. It said it also expects to report a net loss for 2015. Noble is due to posts results on Thursday.

Qantas posts record H1 profit

KEY POINTS BHP slashes interim dividend Posts first loss in 16 years Sees prolonged period of weak commodity prices billion in operating cash flow for the year, he said.

BHP’s results included an after tax charge of US$858 million following a dam disaster in Brazil at its Samarco joint venture with Vale, which killed 17 people in that country’s worst environmental disaster.

A total of US$6.1 billion of exceptional items included an impairment charge of US$4.9 billion against the carrying value of its U.S. onshore oil and gas assets and US$390 million for global taxation matters Reuters

Australia’s Qantas Airways Ltd yesterday posted a record first-half profit as the lower oil price shrank its biggest single overhead, and wooed investors with a second straight A$500 million (US$361 million) share buy-back. Qantas said pretax profit, its most closely watched measure, was A$921 million for the six months to December 31, more than double its A$367 million result the previous first half.

It added that it would stick to its tactic of buying back shares as an alternative to paying an interim dividend.

Tata Motors renames hatchback Zica as Tiago India’s Tata Motors Ltd said on Monday it has renamed its Zica hatchback as Tiago.

The carmaker had said it would have a new name for the car, showcased at the New Delhi motor show this month, after the outbreak of the Zika virus. Tata Motors is seeking an image makeover with the curvaceous hatchback, which is being endorsed by world soccer player of the year Lionel Messi. The hatchback will compete with vehicles in a similar class from Maruti Suzuki India Ltd and Hyundai Motor Co , where prices start at 400,000 rupees (US$5,830).

14 | Business Daily

February 24, 2016

International Democrats seek action on financial watchdog nominees U.S. Senate Banking Committee Democrats on Monday asked the panel’s Republican chairman in a letter to “clear the backlog” of 16 nominations by President Barack Obama to posts related to financial oversight, national security and other areas. The committee, led

by Republican Senator Richard Shelby, has “failed to carry out one of its basic duties” for more than a year, the 10 Democratic banking committee senators wrote in the February 22 letter. It is the only Senate committee that did not act on any nominees last year, the Democrats wrote.

British bosses say Brexit would hit economy The bosses of a third of Britain’s biggest companies warned yesterday that an exit from the European Union would put the economy at risk and threaten jobs. In a letter to the Times newspaper, bosses from big employers including telecoms group BT, retailers Marks & Spencer and Asda and oil firm BP joined forces to argue that access to the EU’s single market enabled firms to grow and create jobs. The letter, signed by 36 of the bosses of FTSE 100 companies, is likely to be seized on by Prime Minister to persuade Britons to remain in the EU.

Hedge fund investors back equity long-short for 2016

South Africa to ease some GM crop rules to avert food crisis The country needs to import about 1.2 million tonnes of white maize and 2.6 million tonnes of yellow maize Wendell Roelf

S

outh Africa will relax some of its tough rules on genetically modified crops so it can ramp up maize imports from the United States and Mexico to avert a potential food crisis amid a severe drought, officials said.

Almost 90 percent of maize in South Africa is genetically modified and the country bans commodities with strains not approved by the government and does not allow imports to be stored, stipulating they must be transported immediately from ports to mills.

Makenosi Maroo, spokeswoman at the Department of Agriculture, told Reuters yesterday that the government planned to permit importers to temporarily store consignments of GM maize at pre-designated facilities, to allow much bigger import volumes.

“In anticipation of the volumes expected to be imported into South Africa, the (GMO) Executive Council has approved the adjustment of a permit condition which relates to the handling requirement,” Maroo said.

“There is therefore no intention

to relax safety assessment or risk management procedures prescribed.”

The government, however, has not said when the rule changes would come into effect or whether they would be permanent.

The worst drought in a century has scorched vast swathes of croplands, affecting around 2.7 million homes in Africa’s most advanced economy where shortages of white maize - a staple food for the black majority - could reach crisis proportions by October if expected summer rains do not fall, analysts say.

The country needs to import about 1.2 million tonnes of white maize and 2.6 million tonnes of yellow maize, according to the government, based on the current conservative domestic crop estimate of 7.4 million tonnes, with only Mexico and the United States able to plug the shortfall.

South African maize producers called for much more far-reaching rule changes to cope with the situation.

Maroo said the government was also considering applications to register additional GMO varieties that would

Equity funds that can profit from both rising and falling markets and rivals betting on macroeconomic trends are expected to outperform in 2016, a Deutsche Bank survey of investors managing US$2.1 trillion in assets showed. When asked to name their three top strategy picks for the year, 40 percent of 504 global hedge fund investors surveyed backed the so-called fundamental equity longshort strategy to lead the performance charts. In second place, with votes from 35 percent of investors, was the discretionary macro strategy, which involves bets on markets including rates, currencies and commodities, the survey released yesterday showed.

S&P cuts rating on BP, Total and Statoil Standard & Poor’s cut its corporate credit ratings on BP, Total SA and Statoil ASA , citing the Europe-based oil and gas companies’ persistent weak debt coverage measures over 2015-2017. The ratings agency on Monday cut the longand short-term corporate credit ratings on BP Plc to ‘A minus/A-2’ from ‘A/A-1’ with a stable outlook. S&P lowered the long- and short-term corporate credit ratings on Total S.A. to ‘A plus/A-1’ from ‘AA-/A-1 plus’ and assigned a negative outlook. The ratings agency also cut the long- and short-term corporate credit ratings on Statoil ASA to ‘A plus/A-1’ from ‘AA minus/A-1 plus’ and assigned a stable outlook.

KEY POINTS South Africa facing worst drought in a century U.S. has significantly higher numbers of GM strains Pretoria eases handling permits to allow storage boost maize trade between the United States and South Africa.

The South African National Seed Organisation, which represents firms such as Monsanto and DuPont Pioneer, said it has six such applications pending approval.

Advocates for GM crops argue it boosts yield and productivity in tough climate conditions and pestilenceprone regions, but critics say its effects on humans and the environment remain unproven.

As U.S. crops have significantly higher numbers of GM strains, fears of contamination during handling means suspect cargoes could be rejected as illegal at South African ports due to a “zero tolerance” policy.

“We want the zero tolerance regulation changed to at least one percent; to have it relaxed and help prevent bottlenecks occurring when we need to import,” Heiko Koster, a feed mill owner and member of the maize steering committee.

Most of the maize imports could come from the United States rather than Mexico because U.S. maize is cheaper and supplies more abundant, analysts said.

Reuters

Standard Chartered profit plunges to lowest since 1998 The bank’s shares had fallen 22 percent so far this year, amid a broader 20 percent drop in European bank stocks

P

rofits at Standard Chartered plunged 84 percent last year, its worst result since 1998, sending the bank’s shares down as much as 10 percent yesterday as volatile markets, weak commodity prices and low interest rates took their toll.

The emerging markets-focused bank said its underlying pre-tax profit was US$800 million, down from US$5.2 billion in 2014. That was lower than analysts’ average

estimate of US$899 million, according to Thomson Reuters data.

The bank reported a loss before tax of US$1.5 billion after including restructuring costs of US$1.8 billion.

The profit plunge shows the scale of the task facing new Chief Executive Bill Winters, as he attempts to restore revenue growth after six successive quarters of decline.

Former JPMorgan investment banker Winters last November

announced plans to axe 15,000 jobs and raised US$5.1 billion in capital as part of a plan to restore profitability and shore up the balance sheet.

“Given current market conditions and the early stage of implementation of our strategy, we expect the financial performance of the group to remain subdued during 2016,” Winters said. “We will continue to take the necessary and sometimes painful actions to reposition the group for returns and disciplined growth.”

Standard Chartered’s problems began to emerge in 2012, when after a decade of rising profits the lender was hit by U.S. regulatory fines and the start of a prolonged downturn in emerging markets and commodity prices on which much of its fortunes depend.

Unable to reverse the downward tide, previous CEO Peter Sands was ousted in February last year.

The bank’s shares had fallen 22 percent so far this year, amid a broader 20 percent drop in European bank stocks as investors worry about slowing growth and lenders’ loans to the embattled energy sector.

Reuters

Business Daily | 15

February 24, 2016

Opinion

Governments’ bull policies for wires bear markets hurt commodities Business

Leading reports from Asia’s best business newspapers

STRAITS TIMES

Clyde Russell

Petrol companies (in Singapore) pass on around 70 per cent of cost of fuels to consumers, the Competition Commission says. The commission also said it found no evidence of price collusion between companies. In a study of price movements from January 1, 2010 to January 31, 2016, the commission found that for every 10 cent change in wholesale price of petrol, listed pump prices moved by 7 cents. It found “no significant” difference in the speed of change whether prices moved up or down.

Reuters columnist

THE JAKARTA POST The government is seeking to maintain infrastructure funding at current levels while trimming other sectors’ funding amid a cash-strapped budget in a measure lauded by analysts. Coordinating Economic Minister Darmin Nasution said that the government had to step up efficiency measures when revising the 2016 state budget. The revision will be crucial to the government’s attempt to achieve its economic targets despite a bleak outlook for expected revenue due to low tax income and slumping oil prices, which are expected to drag down other commodity prices also and reduce non-tax income.

NEW ZEALAND HERALD New Zealand’s market watchdog says investors should keep clear of two financial service providers that are not registered in this country. The Financial Markets Authority says it has received complaints from overseas customers of Fidelis International Trading, who say the business have failed to repay them in accordance with their instructions.

Another company the FMA added to the list today is Capital Market Investments, which the regulator said was claiming New Zealand registration and that it was a member of a disputes resolution scheme.

THE TIMES OF INDIA In what may come as a major relief for the highway sector, the Reserve Bank of India (RBI) is expected to allow banks and financial institutions to lend o companies even if a project turns into a non-performing asset.

Sources said the indication came during a meeting between governor Raghuram Rajan and NHAI chairman in Mumbai. The RBI governor told Chandra that the central bank has come out with a circular, clarifying that a project becoming NPA will not result in choking of fund flow and it will not translate into lenders stopping loans, sources added.

O

ne of the problems for embattled resource companies is that the legislative environment in which they exist is often no longer reflective of the reality of the current, or likely future, markets in which they compete.

In other words, government policymakers quite often have laws, taxes and regulations designed for a bull market when a bear market is in place, and vice versa.

While it’s easy to have a shot at politicians, in their defence, it can be the case that by the time they manage to go through the protracted processes of introducing new rules and regulations, the situation they envisaged has been substantially altered.

Indonesia’s minerals sector is a good recent example, but not the only one, of how even policies that were relatively well designed and had reasonable aims can backfire because the market has changed.

At the start of 2014 Indonesia implemented rules banning the export of unprocessed metal ores in a bid to encourage the construction of smelters.

At the time Indonesia was the world’s top exporter of nickel ore and China’s biggest supplier of bauxite, the mineral that is the source of aluminium.

The new rules effectively stopped the export of those two minerals, although copper ore exports continued on an exemption granted on the basis that smelters would be built.

The rules were aimed at capturing more of the value of the minerals domestically by adding value prior to export, with the additional benefit of more employment and business investment.

Indonesia wasn’t the first commodity producer to go

down this path, but the problem this time was that the changes were implemented just as prices were about to plummet.

In effect, the ban on exports was designed with boom times in mind, not the bust that was just around the corner.

What happened was that Indonesia lost its position as a major supplier of those minerals, but consumers such as China had little difficulty in sourcing supplies from rivals, such as Malaysia for bauxite and the Philippines for nickel ore.

The planned investment in smelters has also been disappointing, with low commodity prices destroying much of the economic case for investment.

Many of the smelters were also being financed by Chinese money, and this has become harder to source in recent months given the slowdown in China’s economic growth and the balance sheet pressures of many companies in the commodity space.

It’s therefore no surprise that Indonesia’s mining minister said on February 16 that the rules around the ban on exporting metal ores will be reviewed.

The exact nature of what may change is still to be determined, but it’s likely that deadlines for the construction of smelters may be extended and exemptions given to allow for the export of unprocessed ores.

Poor timing Another sector Jakarta sought to change to benefit the domestic economy was coal, where rules were introduced to force divestment of stakes in foreignowned and developed mines to locals and to alter royalty arrangements.

Once again, there was an economic logic to these

What is evident is that governments are generally too slow in responding to the dynamics of a shifting market

changes, but they came at a time when the coal price was sliding, a trend that has continued.

All that was achieved is that investing in Indonesian coal mines became a whole lot less attractive for foreigners, depriving the sector of capital for exploration and development.

In turn this has contributed to Indonesian coal producers falling behind Australian rivals in the race to cut costs and remain competitive, meaning that the Southeast Asian nation has been the one losing the most market share.

However, Australia isn’t immune to policymaking that is out of kilter with reality.

One of the most controversial decisions of the Labour Party government that ruled from 2007 to 2013 was to introduce a tax designed to capture the

so-called super profits of coal and iron ore mining companies.

At the time of its announcement, these companies were raking in cash from rising prices as the post-2008 recession spending boom ratcheted up, particularly in China.

However, the tax faced intense opposition from the mining companies, with backing from many of the workers, and was eventually watered down.

But by the time it became law, coal and iron ore prices had peaked in early 2011, and the super profits were no longer there, meaning it raised a fraction of what was forecast.

The tax died as part of a campaign promise by Tony Abbott, who won office for the Liberal Party in the 2013 general election.

What the wider public and the politicians failed to understand was that the mining tax was designed as a good times tax, one which captured strong profits but effectively disappeared when a downturn arrived.

The Labour government didn’t anticipate the end of the commodity boom and spent the proceeds of the tax before they were collected, and the Liberal Party axed the tax, rather than suspend it and re-introduce it when the good times eventually return.

What is evident is that governments are generally too slow in responding to the dynamics of a shifting market, and spend too much time on grandiose pieces of big picture legislation and policies.

They would serve the sector better by focusing on the nittygritty of micro reforms and undertaking smaller projects, but with more haste and regular re-assessments.

Reuters

16 | Business Daily

February 24, 2016

Closing China bans local governments from borrowing for land reserve

Vietnam trade revenue down by 6 pct in January

China has banned local governments from borrowing from banks to finance land purchases and preparations for property development, an official statement said yesterday. Local governments must reduce the number of institutions responsible for land reserve, whittling down the many departments to just one, according to the statement, which was jointly issued by the Ministry of Finance, the Ministry of Land and Resources, the People’s Bank of China and China Banking Regulatory Commission. Financing arms of land reserve institutions should be closed or turned into enterprises. This task should be finished before the end of this year.

Vietnam saw a year-on-year decrease of 6 percent in trade revenue in the first month of 2016, according to the General Department of Vietnam Customs yesterday. Specifically, in January, Vietnam exported some US$13.36 billion of goods to foreign markets, a decrease of 1 percent compared to the same period in 2015, the Vietnam Customs said on its website.

Meanwhile, the country spent around US$12.6 billion for imports, down by 10.7 percent year-on-year. In total, Vietnam posted US$25.96 billion in trade revenue in the first month of 2016, down 6 percent compared to the same period in 2015, said the department.

Foreign business fears further curbs with China’s online rules Lawyers and legal scholars say the regulations are likely aimed at online entertainment and educational media Paul Carsten

F

oreign businesses operating in China fear new rules on online publication may mean further curbs, as groups from across politics, business and civil society try to understand the scope of the legislation.

The regulations are the latest step by the ruling Communist Party to rein in the Internet, seeing the web as a crucial domain for controlling public opinion and eliminating anti-Beijing sentiment.

The rules say online content publishers should “promote core socialist values” and spread ideas, morals and knowledge that improve the quality of the nation and promote economic development.

The regulations, set to come into effect on March 10, will prohibit foreign

ownership and joint ventures in online publishing and stipulate that all content be stored on servers in China.

If an approved Chinese entity wants to engage in a “cooperative project” with a foreign-related enterprise, it must get approval, the rules say.

Some studying the rules worry that, broadly interpreted, they could be used to halt some foreign businesses operating in China and shut down websites, while imposing greater limits on what domestic firms can publish online.

Since coming to power, President Xi Jinping has presided over online censorship on an unprecedented scale, and sought to codify this policy within the rule of law.

“We hope this does not

Nepal lifts months-long fuel rationing

signal greater Internet restrictions,” said Ken Jarrett, the head of the American Chamber of Commerce in Shanghai, which has asked member companies and lawyers for an interpretation.

The Ministry of Industry and Information Technology, and the State Administration of Press, Publication, Radio, Film and Television, which jointly issued the rules, did not respond to faxed requests for comment.

According to the rules, online publishing includes digital work in the fields of literature, art and sciences, such as texts, images, maps, games and audio-visual reading material. Online games must receive advance approval from authorities.

Lawyers and legal scholars say the regulations

are likely aimed at online entertainment and educational media.

The country’s Internet regulator, the Cyberspace Administration of China, is also proposing broad new regulations to cover online news services.

“What’s targeted here is (Apple Inc’s online music, video and book store) iTunes and their ilk,” said Rogier Creemers, a lecturer in China’s politics and history at Oxford University.

While the regulations are meant to codify policies and practices adopted for the Internet era, “there is a small possibility the new rules were issued with an eye towards unwinding existing deals”, said Scott Livingston, a senior associate with SIPS, an IP and IT consultancy based in Hong Kong.

Samm Sacks, an analyst at Eurasia Group in Washington, said the rules appeared to revive some language on data localisation, keeping servers and data within China, that was removed from antiterrorism legislation before it was passed into law in December.

“My sense all along was that removing it from the counter terrorism law just meant it would show up in other places, and here we go. I think we will see it crop up in more industry specific regulations, too,” Sacks said.

Foreign companies in China, especially in media, face political resistance in China. The country’s military newspaper calls the Internet the most important front in an ideological battle against “Western anti-China forces”.

Many of the world’s biggest Internet platforms, like Alphabet Inc’s Google services, Facebook Inc and Twitter Inc, are inaccessible in China.

In recent years, Beijing has pursued a raft of laws and regulations, including a new national security law and a draft cyber security law, that have raised the hackles of foreign business groups fearful that China could compel companies to turn over crucial intellectual property to the government in the name of security.

Reuters

IMF hails China economy on right German business morale falls way “from quantity to quality” to lowest level in a year

N

C

epal has lifted its months-long rationing of fuel following the end this month of a border blockade by people protesting against a new constitution, officials said yesterday.

The months-long blockade caused a crippling shortage of fuel and other vital supplies in the landlocked Himalayan country.

But members of Nepal’s ethnic Madhesi community decided to call off their protest at a key border post which began last September, allowing trucks to resume crossing over from India.

The Nepal Oil Corporation said limits on sales, of five litres for motorcycles per petrol pump and 15 litres for cars, would now be lifted after supplies improved.

“A decision to remove the quota system was made Monday evening to allow vehicle owners to refill fuel according to their needs,” corporation spokesman Deepak Baral told AFP. “The supply is only still just 70 percent of our demand. The borders have opened but the blockade of fuel still hasn’t been fully lifted,” Baral said. The easing comes as Nepal’s prime minister K.P. Sharma Oli visits India to repair strained ties caused by the blockade.

The impoverished country is heavily dependent on India for fuel and other supplies.

hristine Lagarde, the managing director of the International Monetary Fund (IMF) said yesterday that IMF “does not believe that the world’s second largest economy will face a hard landing” and that China’s decision to transform “from quantity to quality” is the right way.

Speaking at the Global Women’s Forum 2016, Lagarde said China’s lower growth was “deliberate” and healthy as the government has decided to transform the country from a place of mass production to quality production and from investment to consuming.

“This is a big transition of a business model, moving from heavy manufacturing to lighter manufacturing, and also a bit less predominantly export-driven,” she said.

Lagarde added together with a new mechanism of exchange rates, with a new approach to governance “if you combine these massive transitions we move in China from double-digit growth about five six years ago to something that we see probably that we see probably at 6.3 percent and probably to 6.0 percent next year.”

While China’s new growth model “has an impact on the import of raw materials, minerals, but oil not so much actually, it is still growth,” said the IMF managing director.

AFP

Xinhua

G

erman business morale fell for a third straight month in February to reach its lowest level in more than a year, as the outlook among manufacturing firms plunged by the steepest amount since shortly after the bankruptcy of Lehman Brothers in 2008.

The data from the Munich-based Ifo economic institute pushed the euro to three week lows against the dollar and deepened concerns about the strength of Europe’s largest economy, which has suffered from a drop in demand from struggling emerging markets in Asia and Latin America.

“The majority of companies were pessimistic about their business outlook for the first time in over six months,” Ifo President Hans-Werner Sinn said in a statement. “German businesses expressed growing concern, especially in manufacturing.”

The closely-watched business climate index fell to 105.7 in February from 107.3 last month to reach its lowest level since December 2014. The drop was led by a decline in business expectations, which fell sharply to 98.8 from 102.3 in January, reflecting concern in German boardrooms about market turmoil and a slowdown in emerging markets, particularly in China. A separate index for current conditions rose to 112.9 from 112.5 last month.

Reuters