MOP 6.00 Closing editor: Joanne Kuai
BRICS bank signs final papers before operating Page 10
Year IV
Number 990 Monday February 29, 2016
Publisher: Paulo A. Azevedo
Some 909 MICE events held in Macau in 2015 Page 7
Yuan foreign exchange night session sees poor activity Page 10
Former Prosecutor-general held for suspected corruption The city’s former Prosecutor-general has been accused of corruption. Ho Choi Meng, his Office chief, and an advisor to the Office, are accused of pocketing kickbacks of no less than MOP44 mln. Emanating from some 2,000 public works contracts over a decade. The scheme involved 10 shell companies plus a “non‑disclosable” number of local businessmen. Two of whom were relatives of the Prosecutor’s Office’s former leader. The anti‑corruption watchdog says the three suspects have allegedly committed ‘fraud’, and benefited from ‘unlawful economic advantage’, ‘abuse of power’ and ‘document forgery’ under the Penal Code Pages 4-5
Endorsed projects progressing 12 Macau-funded projects. Worth 9.65 bln yuan, dispersed across 330,000 square metres. In the Guangdong-Macau Co-operation Industrial Park. The first will be completed in 2018 Q2. Secretary for Finance and Economy Lionel Leong said of 33 projects recommend by the SAR Gov’t 19 have already signed co-operation agreements
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HSI - Movers February 26
Name
Unemployment rate stable www.macaubusinessdaily.com
G20 talks Chinese policymakers got into a huddle on Friday. Sketching out the country’s economic policies and reform agenda. Thus clarifying to the world that the gov’t has numerous policy tools. To combat downward pressure, in particular, as G20 financial leaders gathered in Shanghai
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Tingyi Cayman Islands
+7.49
Kunlun Energy Co Ltd
+5.82
China Petroleum & Che
+5.73
Cathay Pacific Airways
+5.08
Want Want China Hold
+4.94
Swire Pacific Ltd
+1.07
Industrial & Commerci
+0.78
China Shenhua Energy
+0.73
Interview
Hengan International
-0.08
Caution name of the game
China Resources Beer H
-2.51
A stable unemployment rate. Registering 1.9 pct for the three months spanning November 2015 to January 2016. Macau’s total labour force amounted to 397,900, of which 390,300 were gainfully employed. Down 2,800 from the previous period. Some 181,415 non-resident workers were registered as at end-January
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What a difference a year makes. Casino operators are more prudent in their hiring. Proactively following up on references and qualifications. And exercising ‘discretion’ in the award of bonuses. While other sectors are pulling in their horns, as well. The economic downturn is rewriting the employment rules, Las Rodrigo, Head of Recruitment at Links Recruitment Consultants (Macau) Ltd., tells Business Daily. The emphasis is on retention of good, experienced personnel. While the age of the social mediameister has arrived, with experts commanding high salaries and benefits
Pages 8&9
Source: Bloomberg
I SSN 2226-8294
2016-2-29
2016-3-1
2016-3-2
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2 | Business Daily
February 29, 2016
Macau 11 shuttle bus routes cut by gaming operators Gaming operators have cancelled 11 shuttle bus routes and optimised 10 routes, said Lam Hin San, Director of the Transport Bureau (DSAT), in a February 11 written reply to legislator Chan Meng Kam’s enquiry. Lam said gaming operators have cut some of the shuttle bus routes between Cotai and Taipa districts, with routes rearranged according to peak, non-peak hours, weekdays and weekends. Many operators have merged routes for Macau Taipa Temporary Ferry Terminal and the adjacent Macau International Airport.. Lam also said the government will launch a trial run to limit the traffic between Barra and Lam Mau Tong, following which some public bus routes will be amended.
Projects in Guangdong-Macau Co-operation Industrial Park begin construction The first batch of Macau-funded projects, worth 9.65 billion yuan are expected to be completed starting in 2018 Q2 Annie Lao
annie.lao@macaubusinessdaily.com
A
dozen Macau-funded projects in the Guangdong-Macau Co-operation Industrial Park represent an aggregate investment of 9.65 billion yuan (HK$11.47 billion). The first one of them is expected to be completed by the second quarter of 2018, said Secretary for Economy and Finance Lionel Leong Vai Tac at the groundbreaking ceremony of the projects on Hegnqin Island in Zhuhai on Friday. These 12 opening projects comprise initiatives related to the tourism leisure industry, cultural and creative industries, information technology, logistics and other trade services scattered across Hengqin Island occupying 330,000 square metres. The Industrial Park is a 4.5 square kilometre site on Hengqin exclusively reserved for the 33 recommended Macau investment projects based on the Guangdong-Macau Co-operation Framework Agreement signed in March 2011. Only 16 of these 33 Macau investment projects have acquired land plots. Some 12 of 16 projects met construc-
tion requirements, including four projects signed for Land Lease Agreement by the Hengqin Administrative Committee head Niu Jing last Friday at the ceremony. The four projects are a Sino-Portuguese business and trade services centre; Hengqin World project comprising business service, travel facility and duty free shopping mall; Nam Kwong HQ with office building, hotel and high-end shopping mall; and The West Meets East project which comprises a world platform for the creativity of cultural products and small and medium-sized enterprise centre.
Favourable opportunities
The 33 projects endorsed by the Macau Government include 19 projects that have already signed relevant agreements. Mr Leong said that information on other projects will be released soon. The existing co-operation arrangements – such as the annual Zhuhai-Macau Co-operation Conference, and the Zhuhai-Macau co-operation mechanism regarding the China (Guangdong) Pilot Free Trade (FTZ) Zone of Hengqin Area of Zhuhai – have allowed the government to further tighten co-operation ties with its Guangdong and Zhuhai counterparts, added Mr. Leong. The Secretary said the Industrial Park provided favourable business opportunities for small and medium-sized enterprises (SMEs), professionals and young entrepreneurs from both Macau and Zhuhai. The Industrial Park also contributes to a closer co-operation between the two sides, as do other inter-regional projects such as the Hong Kong-Zhuhai-Macau Bridge and the development of the FTZ in Guangdong, he added.
Dianping senses O2O market opportunities in MSAR The Chinese mobile life information and trading platform considers itself a userfriendly tool for Mainland tourists travelling to Macau
F
irst time travellers to Macau may not be very familiar with the local terrrain but a Mainlander with a smartphone may be tempted to resort to Dianping - a popular life information and trading platform operated by a Chinese mobile Internet company. In addition, many tourists complain of the unfavourable exchange rate offered by some local shops, Dianping charges in renminbi and can thus solve
the problem for Mainland tourists, said guest speakers at a workshop held last Friday by Macao Trade and Investment Promotion Institute (IPIM) and the E-Commerce Association of Macau (ECAM) for SMEs. Online to offline (O2O) platform works to deliver information about local companies to tourists via word-of-mouth, said Jiang Yueping, vice president of Dianping, a Shanghaibased restaurant review and
coupon website. He added that the O2O platform comes after online shopping channels from portal websites, search engines, and online shopping platforms like Taobao.
Win-win
Travelling apps like Dianping backed by big data and designed for leisure lifestyles can bring benefits to the customer and merchants at the same time, said Acen Jiang, general manager of
Macao e-Media Development Company Limited. Mr. Jiang said Macau has a small market but lots of tourists. As the O2O market is quite developed in the Mainland it can play to Macau’s advantages as it’s a suitable business model for small and medium-sized businesses (SMEs). Companies join the platform to maintain the quality of their own goods and products, while the platform pulls online customers to
consume offline. He also pointed out that many tourists complain about the payment method and exchange rate offered by some souvenir shops. He said the payment method offered by Dianping is more userfriendly as it charges directly in renminbi. He added that to date around 100 middle to highend companies from Macau have joined the Dianping platform. B.L.
Business Daily | 3
February 29, 2016
Macau Novo Banco to cut 500 jobs but MSAR employees safe Novo Banco Ásia generated a profit of MOP4.77 million in 2015; the CEO told Business Daily that layoffs will not be implemented in the territory
T
he parent company of Novo Banco Ásia, Novo Banco, is planning to lay off 500 employees this year. However, the Chief Executive Officer of the Macau arm of the bank, José Morgado, told Business Daily that the subsidiary will not be affected by these measures and that local jobs are secure. “Novo Banco Asia will not be affected by the plan of the bank to lay off employees. We’re following the situation in Portugal but we are a subsidiary of Novo Banco and we have certain autonomy in relation to such policies”, José Morgado told Business Daily. “Besides, in Macau we haven’t been contacted by the board of the bank about the necessity of making staff cuts. We’re talking about a situation that doesn’t involve our subsidiary”, he added. According to the Portuguese media, the CEO of Novo Banco, Eduardo Stock da Cunha, announced on Thursday the intention of cutting 500 jobs, which is
part of a plan to cut 1,000 positions. From those, a total of 500 workers have already left the bank by mutual agreement, while the remaining are to be made redundant this year. For his part, the CEO of Novo Banco Ásia clarified as well that the subsidiary
is following its own policy for the territory, which may include increasing bank staff. “At this moment we have a certain autonomy to the point that if we feel we can increase our value by hiring extra personnel we have the authorisation to do it”, he explained.
In 2015, Novo Banco Ásia generated a profit of MOP4.78 million in the territory, which represented an increase of 99.2 per cent in comparison t8 the previous year, when the profit of the bank stood at MOP2.40 million. Novo Banco Ásia -
formerly known as Banco Espírito Santo do Oriente (BESOR) - is the Macau subsidiary of Novo Banco, which was created from the ruins of the collapse of its parent company Baco Espírito Santo, in Portugal, during the Summer of 2015. J.S.F.
4 | Business Daily
February 29, 2016
Macau
Former top prosecutor arrested for alleged corruption Ho Chio Meng and two colleagues allegedly granted nearly all public contracts of the Public Prosecutor’s Office to their business friends and relatives for a decade, with returns totalling no less than MOP44 million (US$5.5 million) Kam Leong
kamleong@macaubusinessdaily.com
Commissioner Against Corruption André Cheong Weng Chon at a press briefing held yesterday at CCAC Headquarters
T
10 corrupt officials busted by CCAC in 2015 Since the Commissioner Against Corruption André Cheong Weng Chon took office in December 2014 the bureau have busted 10 corrupt public officials involved in seven cases (see chart). The CCAC head noted that this recent case involving the former Prosecutorgeneral has something in common
with other public official corruption cases that the graft watchdog busted last year – the officials used their privileged position to grant contracts to businessmen close to them, bypassing laws, and using illicit means to falsely report urgent situations or those pertaining to security reasons.
André Cheong added that CCAC always bases its cases on facts ant not rumours, and appealed to the public to report to the graft buster any suspected cases of corruption. He stressed that all cases are treated in accordance with the law, and will not target some, while releasing others.
Cases involving corrupt public officials busted by CCAC in 2015
Announced by CCAC
Involved Department / Bureau
Suspect Details number
March 6, 2015
Macao Prison
1
A chief officer surnamed Wong received who advantages from an inmate returned the favour by offering special help and turning a blind eye to the inmate’s illegal acts in the prison.
March 28, 2015
Marine and Water Bureau
2
One vice director and one department head accused of receiving bribes by CCAC. Vong Kam Fai was the Bureau's only deputy director then.
April 21, 2015
Civil Engineering Laboratory (LCEM)
2
An engineer surnamed S. and a laboratory technician surnamed Tam allegedly accepted bribes of MOP40,000 offered by individuals from an engineering company in return for assistance in making false soil test reports.
April 23, 2015
Transport Bureau
2
One chief and one staff member allegedly received bribes of some MOP16 million in return for helping three management companies secure public car park service contracts worth MOP68 million.
June 9, 2015
Macao Prison
1
Another prison guard is suspected of accepting bribes from the same inmate in the March case.
December 14, 2015
Macao Customs Service
1
A Customs inspector allegedly accepted bribes to facilitate the release of an incoming visitor who was intercepted carrying cash exceeding the statutory amount.
December 14, 2015
Marine and Water Bureau
1
Another chief of the Marine and Water Bureau allegedly committed passive corruption to perform illicit acts and abuse of power under the Penal Code.
he city’s former Prosecutorgeneral, Ho Chio Meng, has been arrested for allegedly awarding some 2,000 public contracts of the Public Prosecutor’s Office (MP) to several local businessmen by illicit means between 2004 and 2014, the Commissioner Against Corruption André Cheong Weng Chon said yesterday. The Commission Against Corruption (CCAC) first announced on Saturday that more than one senior staff of the Prosecutor’s Office had been found colluding with several businessmen by awarding most of the Office’s projects and services to their controlled companies throughout the decade. The granted contracts to these companies were worth more than MOP167 million, whilst the suspects in the case made at least MOP44 million in profits as a result, according to the anti-corruption body. Mr. Cheong, the city’s top antigraft agent, confirmed to reporters at a press briefing yesterday that the graft case involves three former MP officials; namely, the previous Prosecutorgeneral, his Office chief and an advisor to the Office. In addition, the scandal involves a “non-disclosable” number of local businessmen as the case is still undergoing investigation, which has determined that two were relatives of the Office’s former leader.
Former Prosecutor-general
Despite the CCAC agent declining to exactly name the MP suspects, Ho Chio Meng is the only former Prosecutor-general of the Special
Business Daily | 5
February 29, 2016
Macau Ho Chio Meng Ho Chio Meng was born in Macau in 1955. He embarked upon his career as a public servant in 1983 as an assistant judge. He later served the then-Portuguese Government as a co-ordinator of the High Commission Against Corruption and Administrative Illegality – which is the former body of the Commission Against Corruption. In 1995, Mr. Ho was promoted to Deputy High Commissioner of the then anti-graft body and appointed several times as the acting leader of the department. In 1999, nominated by the city’s first Chief Executive Edmund Ho Hau Wah, Mr. Ho was appointed the first Prosecutor-general of the Macao Special Administrative Region. From then he led the Prosecutor’s Office until December 2014, when the incumbent CE Fernando Chui Sai On enacted a major reshuffle of his cabinet for his second term. Ho was once tipped as a possible challenger to incumbent Chief Executive Fernando Chui Sai On before Chui sought re-election in 2014. However, stepping down from the Prosecutor’s Office does not mean Ho left the government. Last February, the 61-year old was appointed as co-ordinator of the Committee on Criminal and Legal Studies, with a tenure of two years. According to the Official Gazette, the Committee is under the supervision of incumbent Prosecutor-general Ip Son Sang.
Administrative Region. He oversaw the Prosecutor’s Office from the city’s handover until December 2014. Saturday’s press release indicated that the three former public servants have allegedly committed offences of ‘fraud’, ‘unlawful economic advantage’, ‘abuse of power’ and ‘document forgery’ under the Penal Code. Meanwhile, the city’s graft watchdog said yesterday that the three MP suspects have been taken into custody, restricted from departing Macau and suspended from public duties. He added that the Commission did not exclude the possibility that more individuals are linked to the corruption case.
2,000 contracts in a decade
Preliminary investigation of the case shows that the three ex-officials had allegedly awarded more than 2,000 project contracts or services to some ten shell companies controlled by the businessmen involved. These shell companies primarily engage in construction, security, cleaning or advising service, according to Mr. Cheong. “The current laws allow official bodies to directly award public contracts to companies without inviting public bids if it is for urgent situations or due to security reasons. By falsely reporting such situations [the suspects] awarded the Office’s contracts of projects and services to these shell companies controlled by [their] close businessmen or relatives,”
Former Prosecutor-general Ho Choi Meng
the top anti-graft agent said. Mr. Cheong said these shell companies would later subcontract the granted projects to other companies that actually did the work. “By subcontracting the contracts they were rewarded; these businessmen gained a rather high ratio of profits,” he said. The CCAC leader claimed that the corruption body had found no evidence supporting the necessity of the Prosecutor’s Office to directly grant the project or service contracts for security reasons during the decade. On the other hand, he claimed that the bribery amount of some MOP44 million should not have been received by only one individual as the corruption was run by “both inside and outside.”
Reported by the Office itself
Meanwhile, Mr. Cheong revealed that the graft case was initially reported by the Prosecutor’s Office during the first half of last year. He claimed that the investigation is highly supported
and co-ordinated by the Office. “I believe such incident happening inside the Office is unfortunate…But the case does not involve the judicial operations of the Office or affect the justice and fairness of its jurisdiction,” he stressed, adding CCAC had not found any other MP officials or government officials involved in the case.
One arrested as leaving for HK
Yesterday’s media reports indicated that the former top prosecutor was arrested by CCAC upon leaving the city for Hong Kong at the Outer Ferry Terminal. The senior anti-graft agent confirmed at the press briefing that one suspect in the case was arrested trying to leave Macau from the Ferry Terminal on Friday noon. Without identifying the suspect arrested, he claimed the suspect was the same person detained on Saturday night by judiciary bodies. According to Mr. Cheong, the suspect was arrested by CCAC agents after he had finished the Customs
check at the Ferry Terminal and had been stopped by local police. Declining to comment where exactly the suspect was heading or whether the suspect showed signs of running away, the top corruption agent only said “the suspect was not shopping” and “he was quite cooperative with the arrest.” Mr. Cheong also told reporters that his department had had contact with the suspect in its investigation of the case before the arrest. This is the second biggest corruption case related to the city’s high-ranking officials. The former Secretary for Transport and Public Works, Ao Man Long, was sentenced to jail for 28.5 years in 2009 after being convicted of corruption. During yesterday’s press briefing, the head of CCAC said he had already notified Chief Executive Fernando Chui Sai On at once upon receiving reports of the case. But he stressed that the investigation by the antcorruption body has been and will be totally independent.
6 | Business Daily
February 29, 2016
Macau CE to attend NPC plenary session in March Chief Executive Chui Sai On is scheduled to attend the opening of the Fourth Session of the Twelfth National People’s Congress (NPC) on 5 March in Beijing. During his visit to the capital from 3-6 March, Mr. Chui will meet with leaders of the Ministry of Foreign Affairs and the General Administration of Customs. The Chief Executive will also meet with leaders of the Guangdong Government to discuss further co-operation opportunities between Guangdong and Macau. During Mr. Chui’s absence, the Secretary for Administration and Justice, Ms. Chan Hoi Fan, will serve as Acting Chief Executive.
Unemployment rate hovers at 1.9 pct as at end-January
T
he unemployment rate of the Macao Special Administrative Region remained at 1.9 per cent for the three months from November 2015 to January 2016, the latest data released by the Statistics and Census Service (DSEC) shows. During the three months, the city’s total labour force amounted to 397,900, of which the totally employed accounted for 390,300, a decrease of 2,800 from the previous period. DSEC explained that the decrease is due to the decline in the
number of workers in the construction field for the three months, despite employment in Restaurants & Similar Activities seeing an increase. Local underemployment for the three months was thus down 0.1 percentage points to 0.4 per cent. Moreover, the labour force participation rate was down 0.6 percentage points period-to-period to 72.6 per cent. Meanwhile, the number of unemployed in the territory registered a period-to-period increase of 200,
with fresh labour force entrants searching for their first job accounting for 9.9 per cent of the total, down 0.9 percentage points.
Most in recreational, cultural and gaming
In terms of industry, 23.8 per cent of the city’s employed manpower was working in recreational, cultural, gaming and other services during the three months, whilst some 14.8 per cent were hired by Hotels, Restaurants & similar activities.
The Construction field accounted for 12.4 per cent of the total employed of the territory, followed by Wholesale & Retail and Real Estate & Business Activities, at 11.1 per cent and 7.5 per cent of the total, respectively. On a year-on-year comparison, the unemployment rate increased 0.2 percentage points from 1.7 per cent. Meanwhile, the labour force participation rate decreased 1.7 percentage points from 74.3 one year ago, although the underemployment rate stayed unchanged. K.L.
181,415 non-resident workers registered
A
s at the end of January Macau employed 181,415 workers from abroad, a slight reduction compared to December but an increase in annual terms, official data released last week reveals. According to data from the Public Security Police (PSP) available on the website of the Office for Human Resources the imported labour-work universe suffered a slight contraction in January of
minus 231 employees in the month for the second consecutive month. However, in an interval of one year, the labour market gained 9,353 non-resident workers, or an average of 25 per day, up 5.4 per cent compared to January 2015. Mainland China remains the main source of workers recruited from abroad, with 115,688 (63.7 per cent of total), keeping a wide distance from the Philippines, which
ranks second (24,935) followed by Vietnam (14,989). Hotels, restaurants and the like continue to absorb imported manual labour (48,283) followed by the construction industry (42,755). The number of nonresident workers surpassed 100,000 for the first time in the history of the SAR in September 2008. That number was again exceeded in May 2012.
At the end of 2000, Macau had 27,221 non-resident workers; 39,411 in 2005; 110,552 in 2012; 170,346 in 2014 and 181,646 in 2015. Non-resident workers holders of so-called ‘blue cards’ - can only stay in Macau with valid employment contract, having no right of residence. Although they represent more than a quarter of the population of Macau (28 per cent of the 646,800
inhabitants estimated at the end of 2015) nonresident workers do not have, for example, a formal representative or immigrant association within the Social Affairs Co-ordination Committee that discusses issues between the employers and employees. The labour side has a seat but the situation of non-resident workers is different and regulated by a specific law. Lusa
Business Daily | 7
February 29, 2016
Macau
Some 909 MICE events held in 2015 While the number of events increased 14.63 pct y-o-y, the number of participants and attendees dropped 4 pct
F
or the whole year of 2015, a grand total of 909 Meetings, Incentives, Conventions, and Exhibition (MICE) events were held in Macau, an increase of 116 or 14.63 per cent year-on-year, according to data released last Friday by the Statistics and Census Service (DSEC). However, DSEC indicates that the number of exhibitions decreased by 9 to 78 in 2015, making the total number of participants and attendees at MICE events 2,481,650, a drop of 4.0 per cent year-on-year. The average duration of MICE events was 2.2 days, while total occupied floor area used for the events was 752,059 square metres.
Exhibitions appeal
DSEC says that according to information collected from the organisers of 77 exhibitions in 2015, receipts of the exhibitions amounted to MOP232 million (MOP28.97 million) with MOP127 million or 54.5 per cent coming from financial support from the government or other organisations. The expenditure of the exhibitions totalled MOP305 million, of which production, construction & decoration accounted for 23.1 per cent, and
Source: DSAT
publicity & public relations 18.9 per cent. The official data also shows that the 77 exhibitions attracted 5,607 exhibitors, of which 38.6 per cent came from Macau and 23.6 per cent from Hong Kong. Professional visitors totalled 144,866, with 52.3 per cent
coming from Macau. Moreover, information from 2,093 interviewed exhibitors in 2015 indicated that sales of products accounted for 97.0 per cent of the receipts, while rental paid for exhibition booths was 58.2 per cent of the expenditure.
Cyprus shortlists three bids for first casino
C
yprus has short-listed three bidders who will compete in the final phase to open the first casino on the eastern Mediterranean island, local media reported on Saturday. ‘Politis’ newspaper said an official announcement on the three bidders, who all come partly or wholly from the Far East, will be made next week. However, it quoted a source as saying that the committee handling the issue had reached a decision on Wednesday to proceed with the three best offers which were submitted by a consortium comprising Hard Rock of Las Vegas and Melco of Macau, Bloomberry of the Philippines, and Naga of Cambodia. The newspaper said the three best offers, of a total of eight submitted in December, were chosen in that order of success, but in the final phase of the contest to start soon they will be invited to submit final bids which will be evaluated from scratch. The framework legislation for the casino provides for an establishment of at least 500 luxury hotel rooms, 100 gaming tables and at least 1,000 gaming machines. The bidders will be required to submit detailed plans for the project and their choice of location. Xinhua
8 | Business Daily
February 29, 2016
Macau Links Int’l: Experienced sales, marketing managers still in high demand While the city has been experiencing a gaming downturn and economic contraction, casino operators become increasingly prudent in their hiring process and bonus payout. Meanwhile, the demand for sales and marketing professionals, especially at managerial level, is still high this year with employers willing to offer big pay rises to retain talent, says Head of Recruitment at Links Recruitment Consultants (Macau) Ltd. Las Rodrigo Stephanie Lai
sw.lai@macaubusinessdaily.com Photos by Cheong Kam Ka
In the 2016 Salary Snapshot report, experienced store managers and retail area managers are still in particular demand this year.
Yes, but the majority are for juniors. We’ve seen an increase for managerial level within retail actually. And the reason for this is that it requires an interesting skill set, and it is quite difficult to find that sometimes.
In what respect? And what does local labour still fall short of?
I think for retail a lot of the international companies here base their standards on international - so not just Hong Kong but within Europe and America as well. I think what they find over the years is that the standards in Macau probably fall short of those particular standards. So that’s where the skill gap is perceived to be lacking.
And for the local population you’re referring to it’s not only the frontline staff but also the managerial people? Yes, absolutely.
You mentioned a gap in terms of what the company wants the local staff to deliver. What happened to training? Why haven’t they been able to meet the standards?
There’s an element of two points, from my perspective. There is a high level of turnover here, as opposed to Hong Kong and certainly as opposed to Europe. So I think anybody starting in a company - to understand the culture and really understand the training - normally takes six months. A lot of junior frontline staff probably don’t actually get to six months. So if you always have that retention problem in terms of retaining staff you’re never going to have a strong base in terms of training and development because the message kind of gets lost, and it doesn’t really get delivered in the way that it should be. Another reason may be - and I get this from candidates as well that we interview at all levels - it’s actually with the training that’s delivered and the way it’s delivered as well. When somebody is delivering a message and it’s going out company-wide, normally they get a trainer from Hong Kong or from the West. But to get that message across consistently over a certain time cannot be delivered over one day. You can’t have somebody coming from Hong Kong saying, “Right, we need to do this. It needs to be done in this way. Go away and do it.” It needs to be shown. And that consistency is probably lacking as well because there’s clearly a time element.
One of the key factors they’re willing to offer this pay rise is retention, because they cannot afford to lose good people
So we find that message is also probably not as strong as it should be because they don’t have the time to deliver that, or they haven’t invested the time to deliver that.
The Snapshot Report mentions a higher percentage of respondent employers saying they’re willing to offer employees a 10 per cent pay rise or a 6 to 10 per cent pay rise. Who are these employers and why are they willing to offer such a sizable pay rise? We got this information as a median average from the clients that we have worked with, a majority of whom are from retail.
One of the key factors they’re willing to offer this pay rise is retention because they cannot afford to lose good people. A lot of these companies actually have good training plans in place, which definitely helps in the good progression plans for these particular individuals. It’s predominantly the manager level getting these pay rises.
The report also says Macau employees, namely in the segment of marketing and retail, received large percentage increases in salaries in 2015. How big are these increases?
Prior to the increase this year, they got [a pay rise of] between 6 per cent to 10 per cent plus last year. It’s not been anything huge – that might be the odd case where somebody is going to cross for 20 per cent [increase] because maybe they are headhunted, or there’s been a direct approach. As employees get more competitive, they have to try to keep people. But obviously the danger with that is that if you keep paying more then these individuals will be priced out of the market. Then you’ll have a false economy. You have a real problem. To an extent money does talk here. But I don’t believe it’s a total driving factor in Macau. If you get the element of training and
Business Daily | 9
February 29, 2016
Macau in many different ways. In the past, a bonus and right to a bonus has always been seen as, okay, one full month. But when things change in times of downturn, that’s when the word ‘discretionary’ is used even more so. From what the companies say we don’t necessarily mean a bonus as in one month, but that it might be less, or might be a percentage. I think as long as the employee is being given notice of that, then they have to accept that. Of course, it causes discontent. When people are used to that, it’s like war. But if the word ‘discretionary’ is used the companies’ senior management has the right to exercise that especially in times of downturn. There’s an argument that these companies are still making a lot of money, but still they need to protect that.
development right, staff retention will become less of an issue.
Nearly half of these marketing and retail employees are expecting year-on-year salary increases of 10-15 per cent this year, the report said. Is it affordable for the employers?
Employees see it as an employer’s responsibility. There’s a real belief that they own that, they deserve that. Forget any downturn. The locals know this is a tough market as well. Macau is unique in its proposition. And they also know that local talent is hard to come by as well. Strong self-worth. So why not?
But for these staff, the extent of pay rise that the companies can afford to give is less than 10 per cent?
Yes. The ways the companies manage that: whether they stagnate, whether they look into their half-yearly reviews, whether they offer other benefits – it’s just not all about salary nowadays, there are other benefits to consider. Whether the companies are offering more holidays or early finishes sometimes. It’s just the way that these packages are presented to employees. That’s becoming more and more prevalent nowadays. The active use of sabbaticals for long service, if they want to partake in that . . . Holidays are the big thing here. Employees value time off. If it’s not going to be salary enhanced, it’s time off.
Has the economic contraction alleviated the high turnover issue?
Yes, because the performance [of employees] in particular is being measured and managed now. A lot of companies have been managing that very closely, especially with junior staff. A lot of junior staff think, “Well, I’ll just go across the road and get a bit more money with less stress”. But in three to six months’ time that problem might manifest itself again. That’s an issue that has to come to an end at some point. But you always have that turnover at junior level and the way to address it is engagement right from the start.
So these problems are not only happening in the retail sector?
No. We’ve seen it with retail but we also see it with the casino operations. And that’s probably not having to do with the training element with the casinos, it’s just
because they could go from one to another – it’s purely moneydriven. If you get somebody on the [gaming] floor working for one company, they can quite easily be offered 20 to 25 per cent increase to go to another.
What other sectors are in need of experienced managerial personnel here?
We’ve got the hotel industry – I think they struggle as a whole to attract and retain talent. Casinos, generally, as well, across the board. For retail, the junior management retail level [is in demand]. You have sales, you have supervisors, and then you have the junior [management] level – there’s a skills gap because it’s normally three to four years of experience they have in managing people. Then it’s the senior manager level where they’re managing top ten people. They need this middle strata but there’s just simply not as many people for those vacancies.
For that middle strata, the local labour pool has already been exhausted? Yes; I would say that, actually. And it’s whether companies can take the risk because obviously the companies also have the responsibility to promote them. But it’s whether they feel they’re ready to be promoted from sales supervisor to junior management level. A lot of the companies that we work with are probably not ready to do that.
The process for arranging ‘blue cards’ [work permit for foreign labour] has got more difficult since last year?
Yes. It’s always been quite difficult to hire externally for the last number of years, actually. But blue card applications and people on the blue card were at an all-time high in the second quarter of last year. After that there was a significant decline in terms of applications and approvals, and also blue card renewals. I do know that they have reduced them for whatever reasons – people have come to the end of their contract, there’s a restructure in the company – so the reasons are more on the focus of the government to look at local talent to say who do we have that can fill these positions. Because there is an element of protection. So, I was quite surprised. I thought the blue card number was reducing. But they’re pretty strong, actually. I think to get a blue
Even though the casino operators are opening new casino-resorts in Cotai they’ve been a lot more prudent in hiring and screening the qualifications of candidates since last year . . .
When it comes to bonus the keyword is discretionary
card nowadays is probably more challenging now than it was two to three years ago.
You say the process for hiring foreign labour got more difficult last year. Do you believe that has to do with overall employment conditions and in particular the gaming downturn?
Yes, I believe it’s linked. But I also believe that the government is looking at companies’ internal talent procedures and ensuring that they’re fully maximising opportunities in the local market, and that’s probably being scrutinised in a lot more detail. Hence, why a lot of companies now are introducing performance appraisals. I do know there are a lot of companies, a lot of casinos, appraising staff on a number of systems now to show that they’re ready for the next level. If they’re not, they can at least show the government “we’ve got this individual in place, but they’re not quite ready yet”. They can actually show what they’re doing rather than just saying that “this person is not ready yet, that’s why we’ve brought somebody else in”. So the government, I believe, is looking a lot more closely. But it’s an ongoing issue. The [gaming] downturn, with the market at the moment, probably causes additional pressure on obvious cost-cutting.
Has the gaming downturn resulted in the fact that casino operators have got stricter in their employee appraisals, and link them to remuneration?
Yes, I believe so. I know of a case of that happening at the moment. That’s the way the companies have to save money somewhere. But as long as the process is transparent in the way they do that, I don’t think employees can have any issues with that really. When it comes to a bonus the keyword is discretionary. That’s the word that can be interpreted
Absolutely. We have certainly seen they got more stringent in interviews. There are a lot more processes. References are being proactively done. This is going to be the norm now.
Another highlight from the 2016 Salary Snapshot report says demand for skilled marketing professionals at all levels is high in 2016 in all industries. Which sectors in particular? It’s a trend we’ve seen cross from Hong Kong. We’re in the digital age now and there’s a need for digital marketing managers and online marketing managers to deal with social media. We find that a lot of companies are very interested in meeting these [digital marketing] people, even speculatively, and then something normally gets created from that. So, certainly from an online perspective there’s a need across the board for these marketing professionals.
In the context of Macau, are these digital marketing professionals available here?
No. When it comes to search engine optimisation, you’re getting quite technical; we just haven’t seen that [local] talent coming through. It’s normally people who have worked in Hong Kong or in Europe. That’s the skill set you only get ideally by working abroad. A lot of companies look to Hong Kong because it’s not far away. And actually they are looking at returning Macanese who have worked abroad. They’re actually in high demand. Because again, even if they find a really good online digital strategist from Hong Kong they have to go through the whole working visa [procedure] again. That can take a minimum of three months. Companies don’t want to wait that long, and neither do the people.
What is the range of remuneration that employers are willing to pay online marketing professionals?
In terms of salary bracket it depends on experience. Somebody with four to five years of solid experience can probably command a salary of MOP65,000-plus in Macau. If you’re a junior, then you can probably command MOP35,000 to MOP40,000. But companies are looking for the experienced, and they’re paying for the experienced - and then they’re paying for retention.
10 | Business Daily
February 29, 2016
Greater China
More yawns than yuan in late‑night forex trade
could sense the signs that state-owned banks are intervening in the market on behalf of the PBOC,” he said. Yuan/dollar quotes in the late session rarely stray more than 50 pips from the rate at 4:30 pm, regardless of what happens to the yuan traded in offshore markets, traders said. And trading between the yuan and other currencies such as the yen and euro, is nearly non-existent in the night session, they added.
Traders said that movement between the yuan and other currencies such as the yen and euro, is nearly non-existent in the night session
Wider access, slim pickings
Lu Jianxin and Pete Sweeney
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n the fast-paced, high-risk world of foreign exchange trading, where trillions of dollars change hands every day, there’s a quiet corner of the yuan market where traders can get some shut-eye, despite China’s efforts to elevate its currency to the top table. The People’s Bank of China (PBOC) extended the yuan’s trading hours to 11:30 pm in January to overlap with European hours after the International Monetary Fund (IMF) decided it would admit the yuan into its Special Drawing Rights (SDR) basket by next October, a key step on the way to becoming an international reserve currency. But there is a yawning disconnect between the currency’s new status and the level of interest in the afterhours market. “It can be really boring and lonely sometimes,” said one night trader at a bank. He said he kept an eye out for rare incoming orders but spent most of his time watching online videos to alleviate the boredom of being stuck on his own until bedtime. Other night traders who spoke to
KEY POINTS Central bank extended trading hours to 11:30 pm in Jan Move followed yuan’s acceptance for IMF’s currency basket Traders say very little trade comes in the evening hours
Reuters said they processed around five orders in the last three hours, which has led some banks not to bother staffing the shift. “One key problem is there is no corporate demand,” said a trader at a major European bank in Shanghai. “Few companies feel the urgency to follow global market movements closely.” Because of China’s capital controls and central bank efforts to curb exchange rate volatility, there is little speculation in the domestic market,
The yuan exchange rate changes little after 4:30 pm Traders say state banks step in to curb volatility traders say. Some state-owned banks are trading in the evening sessions on behalf of the central bank to keep the yuan steady, according to a trader at a Chinese commercial bank in Shanghai. “Every time when the evening rate appeared to go out of hand, you
The relatively steady exchange rate means many corporates don’t bother to hedge their foreign exchange positions during the late session because the rate tends to stay put. “The market still behaves like it closes at 4:30 p.m.,” said a dealer at another European bank, adding that his bank recently decided its night trader would end his shift at 9:30 p.m. There is also a dearth of overseas investors in the Chinese market, despite Beijing’s efforts to widen access for foreigners, partly to satisfy the IMF that the yuan was eligible for its SDR basket. In November, China allowed the first batch of foreign central banks, sovereign wealth funds and international financial institutions to register to enter the market. “Right now it’s only a trial to meet the IMF standards,” said a trader at another Chinese commercial bank in Shanghai. “We have to wait for more policies from the government to encourage market participation, such as introducing brokers and individuals to encourage competition.” A trader from a third European bank said: “I believe when the new SDR basket takes effect late this year, the evening trading may pick up, along with more reforms on the way.” Reuters
New Development Bank ready to operate The bank has an initial subscribed capital of US$50 billion to finance projects
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hina and the BRICS New Development Bank signed documents on the bank’s headquarters in Shanghai on Saturday, marking the completion of the legal procedures before the operation of the bank. Chinese Foreign Minister Wang Yi and the bank’s President K.V. Kamath signed an agreement while Shanghai Mayor Yang Xiong and Kamath signed a Memorandum of Understanding on the headquarters of the bank in Shanghai. The documents, signed on the side-lines of the G20 Finance Ministers and Central Bank Governors Meeting in Shanghai, governs the establishment of the headquarters of the bank in Shanghai and make provision for the requisite immunities, privileges and other facilities to be accorded to the bank. The bank, launched last July, is a multilateral development institution operated by the BRICS members (Brazil, Russia, India, China and South Africa) as an alternative
to the existing multilateral development bodies like the World Bank and the International Monetary Fund. The bank, with an initial subscribed capital of US$50 billion to finance, will “start appraisal of the potential projects in April,” Wang said, adding that China hopes the bank will support the development and connectivity of BRICS
countries and developing countries at large. The bank, aiming at funding infrastructure and sustainable development projects, should strive to make itself a new type of multilateral development institution, operating in a professional, transparent, efficient and green manner, Wang said. China supports India to host a successful BRICS
leaders’ meeting this year and China, as rotating chair next year, will work with other BRICS countries to promote the economic and political cooperation in parallel, Wang said. Commenting on the downward pressure faced by BRICS economies, Wang said economic slowdown is not a unique problem of the BRICS members, but a
problem worldwide. “The BRICS countries are poised for growth and increasing role in international political and economic affairs,” Wang said. Kamath said he hoped the bank would soon start operation and contribute to the development of BRICS countries and other developing nations. Xinhua
Business Daily | 11
February 29, 2016
Greater China Government talks up growth agenda at G20 China’s central bank governor Zhou Xiaochuan repeated assurances the country would not stage another devaluation of its currency
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hina sought to restore confidence in its economy as financial leaders from G20 nations gathered in Shanghai on Friday, and Premier Li Keqiang urged greater global coordination and consideration of policy spillovers. “Macroeconomic policy coordination needs to be strengthened. The global economic and financial situation may have become more grim and complex. It is time for countries to stand together to tide over difficulties,” Li said in a video message at the opening of the meeting. Several other policymakers have urged better coordination, but there was disagreement about what steps to take, making it unlikely that concrete action points will emerge from the meeting. “Talking about further stimulus just distracts from the real tasks at hand,” Germany’s Minister of Finance Wolfgang Schaeuble said, rebuffing a recommendation from the International Monetary Fund (IMF) that the G20 should start planning now for a coordinated stimulus programme. “We, therefore, do not agree on a G20 fiscal stimulus package as some argue, in case outlook risks materialise.” Overhanging the summit of major economy finance ministers and central bankers are global concerns about
China’s ability to manage its domestic markets, currency and commitment to wider restructuring reforms. Concerns about its slowing economy and confusion over its currency policy were among the factors which sowed turmoil in global markets in January. China’s central bank governor Zhou Xiaochuan repeated assurances the country would not stage another devaluation of its currency, the yuan, to support the economy. He also sought to manage expectations around the speed of China’s economic reform agenda. “China will strike a balance between growth, restructuring and risk management,” Zhou said at a conference held by the Institute of International Finance (IIF) in conjunction with the G20 meeting. “While the reform direction is clear...the pace will vary, but the reform will be set to continue and the direction is not changed.” Zhou said China had monetary policy wiggle room, a statement echoed on the fiscal side by the Chinese finance ministry.
Limited room for manoeuvre
Policymakers are watching closely for signs that China is ready to tackle the imbalances they see standing in the way
HK’s largest developer may miss sales target Ratings agency S&P said this month Hong Kong developers could withstand a 30 per cent drop in prices with no impact on their credit ratings
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Reuters
KEY POINTS China c.bank chief says economy showing positive signs Says more room for monetary, fiscal policy in China Says pace of reform will depend on windows of opportunity Hopes for more global policy coordination out of G20 meeting
in the six months ended December 31, above the HK$8.46 billion in the same period last year. It reported contracted sales of HK$14.4 billion in the first half of its fiscal 2015-2016 year, HK$11.3 billion from Hong Kong. On Friday, executives said fullyear contracted sales in Hong Kong could be as much as 10 percent less than the HK$32 billion they forecast in September. The company also said it was expecting HK$5 billion of contracted sales in mainland China this year.
Price cuts, rebates and easier mortgages
Clare Baldwin
ong Kong’s largest developer reported an almost 10 percent rise in first-half underlying profit on Friday but warned it could miss its contracted sales target as the city’s property sector remains under pressure in a slowing economy. Sun Hung Kai Properties Ltd, which has long benefited from its diverse portfolio of flats and office space in some of Hong Kong’s best locations, said it may slow down the launch of its projects and sell them off in stages but it would not cut prices on its luxury flats. “The market has softened a little bit because of external factors,” Deputy Managing Director Victor Lui told reporters. “Overall there will only be a small adjustment to our sales target, not more than 10 percent.” Lui said that while he expected
of its economic sustainability. Li said China has “the confidence to handle the complex situation at home and abroad”. “We will expand aggregate demand as appropriate, and focus on structural reforms. We will press ahead with supply-side structural reform,” he said. China would cultivate an “open and transparent” capital market, adding that there was “no basis for continued depreciation of the RMB exchange rate. It will stay basically stable on an adaptable and equilibrium level”. Few in the G20, however, are underestimating China’s economic challenges. International Monetary Fund (IMF) chief Christine Lagarde said China faced an “overwhelming” agenda of structural reforms as its leaders open up financial markets and move the economy away from debt-fuelled investment. Beyond China, the Organisation for Economic Cooperation and Development issued a report on Friday calling on the world’s 20 biggest economies to step up the slowing pace of reforms to boost growth amid sluggish trade and weak investment.
stable property prices this year, they could fall 10-15 percent, “depending on circumstances.” Analysts are predicting such a fall. Two other Hong Kong developers recently reported sharp drops in earnings and difficulty selling flats. On Thursday, Hong Kong’s Development Secretary said the government was prepared to sell into a falling market and did not have a policy requiring it to obtain the high land premiums of recent years. The property sector accounts for nearly a fifth of Hong Kong’s economy, which is expected to grow 1-2 percent this year, its slowest in four years. The mainland Chinese economy to which Hong Kong is increasingly linked - is experiencing its slowest growth in two and a half decades. Sun Hung Kai reported an underlying profit of HK$9.3 billion
Other Hong Kong developers are struggling more. Hang Lung Properties Ltd, which reported earnings last month, saw its full-year profit plunge almost 57 percent and its chairman said he did not see a bottom to China’s economic weakness. New World Development Co Ltd reported this week its half-yearly profit fell 43.6 percent. Property agents say developers are offering incentives ranging from price cuts and cash rebates to easier mortgage terms. They say some are also asking the government to withdraw its cooling measures. Ratings agency S&P said this month Hong Kong developers could withstand a 30 percent drop in prices with no impact to their credit ratings, and Sun Hung Kai was among the best-positioned. Sun Hung Kai shares closed up 2.8 percent compared with a 2.6 percent rise in the Hang Seng property sub-index. Reuters
Direct trading of yuan/won agreed China and South Korea agreed on Friday to launch direct trading of their currencies within China by the end of June, saying this will expand trade and investment. The neighbouring countries began direct trade between the yuan and the won in South Korea in December 2014. Friday’s agreement was reached at a meeting between the heads of the People’s Bank of China (PBOC) and South Korea’s finance ministry on the side-lines of the G20 meeting of central bank governors and finance ministers in Shanghai.
Securities regulator says no change to ChiNext China’s securities regulator said on Friday there will be no change to the Nasdaq-style board ChiNext listing process, a day after speculation a new registration system would be introduced helped trigger a slide of over 6 percent in the main stock index. Earlier in the week, rumours circulated among market insiders that the Shenzhen-based ChiNext would halt listings from March 1, making way for a new registration process. Currently, firms have to gain regulator approval to list on both the Shanghai and Shenzhen stock exchanges.
Baidu sees revenue growth fading China’s Baidu Inc, the country’s long-dominant Internet search firm, turned in a slightly better-than-expected fourth quarter, but is now grappling with a protracted slowdown in revenue growth - one that the company expects to continue. Baidu said revenue, driven by advertising spending, grew 33 percent to 18.70 billion yuan (US$2.86 billion). That beat the 31.9 percent rise expected by analysts, but was still Baidu’s slowest quarterly growth for over seven years as room for expansion in its core Internet search business decreases.
Alibaba in talks with several banks for loan Chinese e-commerce giant Alibaba Group Holding Ltd is in talks with several banks to borrow up to US$4 billion to fund expansion plans, including acquisitions, the Wall Street Journal reported on Friday, citing people familiar with the matter. The loan is expected to be finalized next month, one of the people told the Journal. Alibaba declined to comment. The company has been picking up stakes and buying companies in China and abroad. Alibaba has also been expanding in other areas such as online video and local services as volume growth in core online shopping business slows.
Petrobras loan may help pay most 2016 debt A loan announced Friday from China to Brazil’s Petrobras is for US$5 billion to US$10 billion, can be paid in cash or oil at China’s request and may help pay the bulk of the $12 billion in debt the state-run oil company must repay this year, a source involved in debt talks told Reuters late Friday. The loan from the China Development Bank was first agreed to in early 2015, and when added to a US$5 billion CDB loan made in 2009, increases the bank’s debt exposure to Petroleo Brasileiro SA as Petrobras is formally known, to as much as US$15 billion the source said.
12 | Business Daily
February 29, 2016
Asia
Japan January core CPI flat Keeps policymakers under pressure Leika Kihara
KEY POINTS Nationwide Jan core CPI 0.0 pct yr/yr vs f’cast flat growth Tokyo Feb core CPI -0.1 pct yr/ yr vs f’cast -0.2 pct Low oil costs, weak spending to keep inflation subdued BOJ’s index excluding energy shows inflation slowing
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alling fuel costs kept Japan’s core consumer prices unchanged in January from a year earlier, well below the central bank’s 2 percent target, highlighting the daunting task policymakers face in attempting to lift Japan out of stagnation. A separate index by the Bank of Japan that strips away the effect of energy costs also showed inflation slowing, suggesting that weak consumption and falling import costs are discouraging firms from raising prices for a broad range of goods.
The data underscores the challenges the Bank of Japan (BOJ) faces, even after its shock decision last month to adopt negative interest rates, in generating a positive cycle in which rising corporate profits drive up wages and consumption. The flat growth in the core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, matched a median market forecast and followed a 0.1 percent rise in December, data from the Internal Affairs Ministry showed on Friday.
“The recent strengthening of the yen implies that prices of imported consumer goods will continue to fall. We therefore expect goods inflation to slow further in coming months,” said Marcel Thieliant, senior economist at Capital Economics. “Today’s data provide another reason for policymakers to step up the pace of (monetary) easing.” Core consumer prices in Tokyo, which is a leading indicator of nationwide price trends, fell 0.1 percent in February to mark the second straight month of annual declines, the data showed. A 10.7 percent fall in energy costs was mainly behind subdued nationwide inflation. But price rises also moderated for other items such as television sets and processed food, a sign the increase in import costs from previous yen falls was dissipating. Wholesale prices fell 3.1 percent in the year to January, marking the 10th straight month of declines. Underscoring Japan’s sticky deflationary mind-set, services prices have also barely risen and gained just 0.2 percent in January. The slowdown in price hikes of imported goods is weighing on the BOJ’s own consumer price index, which excludes the effect of fresh food and energy costs but includes processed food prices. The index, which the BOJ scrutinises in gauging the broad price trend, showed annual consumer inflation slowed to 1.1 percent in January from 1.3 percent in December. The BOJ has used the index to explain that when excluding the downward pressure from the oil rout, inflation was accelerating steadily toward its 2 percent target. It now expects inflation to hit 2 percent around the first half of fiscal 2017, a projection many analysts say is too optimistic. Reuters
Indonesia will cut spending after parliament delays tax amnesty bill Hidayat Setiaji and Gayatri Suroyo
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ndonesia’s government will have to cut some of its planned 2016 spending because parliament delayed debate of a tax amnesty bill expected to bring in extra revenue, the chief economics minister said on Friday. Parliament delay discussion of the amnesty bill - which President Joko Widodo’s government is counting on to boost revenue by 60 trillion rupiah (US$4.48 billion) this year - until after it returns from recess in early April.
“We have to make the state budget more efficient, especially spending on goods,” Darmin Nasution, coordinating minister for the economy, told Reuters when asked how the government would respond to the delay. In 2015, Indonesia’s budget deficit widened to 2.53 percent of gross domestic product, from the targeted 1.9 percent, because of a large revenue shortfall. For 2016, the budget calls for a fiscal deficit of 2.15 percent of GDP. On Friday
in Shanghai, Finance Minister Bambang Brodjonegoro said he is willing to consider a wider deficit. Government officials have said they will revise down this year’s revenue target, but are waiting for approval of the amnesty, which offers a low tax rate to individuals who declare untaxed wealth.
Long road ahead
The government wanted to launch the amnesty in the first quarter. The draft bill gave the biggest tax discounts to people
coming forward by March. But the bill, intended to strike tax-crime records from the books, may face a long road. Kevin O’Rourke, an analyst of Indonesian politics, said there is “ample reason to surmise that lawmakers are deliberately blocking” the tax amnesty in retribution for Widodo’s decision to delay revision of a law governing the country’s anti-corruption agency. Hendrawan Supratikno, a member of parliament,
said the legislature needs to review the bill carefully before debating it after the recess. Bahana Securities, a Jakarta brokerage, wrote in a note to clients that political wrangling may delay implementation of the amnesty programme until near the end of 2016, which “would apply pressure” on government revenue and economic growth. Slow government spending was a key reason the economy weakened sharply in early 2015. A resumption in spending helped accelerate growth towards the end of the year to above expectations. Brodjonegoro has estimated government revenue would need to be revised down by at least 90 trillion rupiah (US$6.72 billion) from the original target to take account of still-weak global commodity prices. The estimate took no account of any delays to the amnesty. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai, Bami Lio, Annie Lao GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 13
February 29, 2016
Asia KEY POINTS Jan industrial output -0.5 pct y/y vs -4.8 pct f’cast Jan industrial output +9.3 pct m/m vs -1.8 pct f’cast
Singapore factory output gets drugs boost Excluding biomedical output, industrial production fell 7.0 percent in January from a year earlier Jongwoo Cheon
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ingapore’s industrial production in January fell much less than expected in January, but the 12th consecutive month of output loss will keep policy makers focused on supporting an economy running low on momentum. Factory output dipped 0.5 percent in January from a year earlier, data from the Economic Development Board (EDB) showed on Friday. That beat a forecast fall of 4.8 percent in a Reuters poll. On a month-on-month and seasonally adjusted basis, industrial production increased 9.3 percent in January, much better than the 1.8 percent slide tipped in the survey.
The better-than-expected numbers were led by output in the volatile pharmaceuticals sector surging 34.3 percent in January on year. Production in the sector in December slid 7.6 percent. “We should not actually be fooled by the data. It’s very clear that manufacturing ex-biomed continues to contract and it will continue to do so in the coming months,” said Weiwen Ng, economist at ANZ in Singapore. Excluding biomedical output, industrial production fell 7.0 percent in January from a year earlier after tumbling 13.8 percent in December, reflecting the broad downturn in
Jan pharmaceuticals output up 34.3 pct y/y Jan marine & offshore engineering output -30 pct y/y global demand and a slowdown in China that have wreaked havoc on exporters from Brazil to Australia to Japan. In 2015, the trade-dependent city state’s exports fell 0.1 percent - the third straight year of annual declines and the first such consecutive drop on record. Data last week showed exports to China - Singapore’s top overseas market - dived 25.2 percent. The hit to exports has led to a deep contraction in the key manufacturing sector, leaving Singapore’s economy starved of growth drivers and keeping pressure on policy makers to step up stimulus. Some analysts expect the Monetary Authority of Singapore (MAS) to ease policy at its April review. The EDB data also showed marine and offshore engineering production in January slumped 29.7 percent from a year earlier, as falling oil prices hit demand for offshore drilling rigs. ANZ’s Ng said the government could unveil fiscal stimulus at next month’s budget. “You could have some measures introduced in the budget to help the economy. That could reduce the need for MAS to actually to ease,” Ng said. Reuters
India growth above 7 pct despite ‘grim’ global economy
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ndia on Friday offered a cautious forecast for economic growth to exceed 7 percent in the next financial year, as the government prepares to present its budget with clamour for promised reforms growing. The Economic Survey, a yearly report released by the finance ministry ahead of the national budget today, said gross domestic product (GDP) would expand between seven percent and 7.75 percent in 2016-17. The relatively upbeat prediction comes despite a weak global economy, with a slowdown in China that has worried investors, other major emerging markets in recession and sinking global stocks. India’s GDP likely grew 7.6 percent over the 2015-16 financial year, the government said, making it the world’s fastest-growing major economy. However, Friday’s forecast represents a paring back of expectations from last year’s survey which predicted growth would top eight percent this year. “We’ve learnt from the experience of last year. The forecast for last year went wrong, maybe it was over-optimistic,” said Arvind Subramanian, the government’s chief economic adviser. Last year’s survey did not anticipate how much weak global demand would hurt India’s exports, nor the impact of a second bad monsoon on its vast agricultural sector, he said.
Prime Minister Narendra Modi has made it a priority to boost India’s economic growth, vital for lifting millions out of poverty, since sweeping to power in a general election in May 2014. But investors have raised concerns about the pace of promised reforms needed to create jobs for India’s tens of millions of young people. Economists said the wide range of the growth forecast for 2016-17 indicated the government may be hedging its bets.
Challenges ahead
While its growth has outpaced that of powerhouse China in recent quarters, Asia’s third-largest economy still faces challenges. After cooling from previously high levels, India’s once exorbitant inflation has ticked up again over the past few months, with prices rising 5.7 percent in January. India’s main stocks index has lost a fifth of its value over the past year, private investment is weak and the rupee is trading at near-record lows against the dollar. The Economic Survey forecast consumer price inflation would ease to 4.5 to 5 percent in 2016-17. It also said India’s services sector remains one of the main engines of growth, expanding more than nine percent in the current fiscal year.
Indian government report backs hybrid seeds India should look to introduce high-yielding hybrid seeds to lift its lagging farm productivity, a finance ministry report urged on Friday, in what is being seen as government support for cultivation of genetically modified food crops now banned. Indian authorities are considering whether to allow commercial growing of genetically modified (GM) mustard, which uses a technology that could improve yields but draws strong opposition over fears of safety. Some politicians have accused Prime Minister Narendra Modi of trying to impose his government’s decision on farmers relating to an “unsafe and unproven technology”.
Samsung wins appeal in patent dispute with Apple
A U.S. appeals court on Friday overturned a US$120 million jury verdict against Samsung, finally handing the South Korean smartphone maker a significant win in its longstanding patent feud with top rival Apple. The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., said Samsung Electronics Co Ltd did not infringe Apple’s “quick links” patent, and that two other patents covering the iPhone’s slide-tounlock and auto-correct features were invalid. The court also said Apple was liable for infringing one of Samsung’s patents.
Japan to continue to buy LNG from Brunei
Services make up more than half of India’s economy although the government is pushing to increase manufacturing through its Make in India campaign. Investors will be looking to today’s budget for concrete reforms from the business-friendly government. There are hopes it will move to overhaul a complex corporate tax regime seen as off-putting to investors. The Economic Survey also said the government probably succeeded in reducing its fiscal deficit to 3.9 percent of GDP in 2015-16 as economists expect. India has in recent years successfully managed to narrow its high fiscal deficit -- the amount by which a government’s spending exceeds its income. But it still has high government debt compared with its developing country peers, with borrowings at 64 percent of GDP, according to ratings agency Moody’s. The country is also dogged by concerns over the reliability of its economic growth data, a year after the government introduced a revised formula for calculating GDP which some analysts have criticised. The government says the new method is closer to international standards. AFP
Japan will continue to buy liquefied natural gas from Brunei, although it may purchase LNG from new suppliers, a local daily quoted the Japanese ambassador as saying Saturday. According to Brunei Times, Noriko Iki told the Oil and Gas Year Brunei 2015 report that the extension of a long-term supply contract between Brunei and Japan in 2012 was proof of the commitment. The ambassador said she hoped cooperation between Japan and Brunei in new areas will strengthen and their energy relationship will remain stable at the same time.
Indonesia’s CT Corp sells stake to GIC Singapore sovereign wealth fund GIC will buy an initial 17.4 percent stake in Indonesian conglomerate CT Corp’s retail arm, Trans Retail, under a 5.2 trillion rupiah (US$387 million) deal, the Indonesian company’s executives said on Friday. CT Corp chairman Chairul Tanjung rejected speculation that the group is struggling to pay off its U.S. dollar-denominated debt after a sharp slide in the rupiah, saying that the proceeds of the sale will be used mainly to fund expansion. Trans Retail, which operates stores under the Carrefour and TRANSmart brands, could launch an initial public offering in 2020.
14 | Business Daily
February 29, 2016
International U.S. consumer spending, inflation solid U.S. consumer spending rose solidly in January and underlying inflation picked up by the most in four years, keeping Federal Reserve interest rate increases on the table this year. The upbeat data on Friday added to reports on manufacturing and the labour market in suggesting economic growth regained momentum early this year after slowing in the fourth quarter. The growth outlook was further bolstered by steady consumer sentiment in February despite a recent stock market sell-off. That should help ease fears of a looming recession and probably allow the Fed to hike rates this year.
Venezuela in advanced talks for loan Venezuela is in advanced talks for a US$5 billion loan from international banks and investment funds, the head of the central bank said on Friday, potentially providing an influx of cash for the OPEC member country, which faces heavy debt payments this year. The operation would provide US$3 billion in liquidity for the government and US$2 billion to finance a gold mining joint venture with Canada’s Gold Reserve Inc. Venezuela’s international reserves fell to a 17-year low of US$13.5 billion on Friday.
Swiss agree road map with Iran to boost ties Switzerland said on Saturday it had agreed on a “road map” for building business, financial and other links with Iran after Swiss President Johann Schneider-Ammann met his counterpart Hassan Rouhani in Tehran. “The aim is to relaunch various dialogues between Switzerland and Iran,” Switzerland’s department of Economic Affairs, Education and Research said in a statement. Foreign business delegations have flocked to Tehran since the United States, European Union and United Nations lifted international sanctions.
Argentine judge summons former president An Argentine judge has summoned former President Cristina Fernandez for questioning in a probe into the sale of dollar future contracts at below market rates by the central bank just months before she handed over power in December. Judge Claudio Bonadio also summoned Fernandez’s former economy minister, Axel Kicillof, and former central bank chief Alejandro Vanoli on suspicions of defrauding the public administration with the sale of US$17 billion of contracts. Under Fernandez, the central bank routinely sold dollar futures to prop up the peso.
US tax agency identifies more cyberattacks The U.S. Internal Revenue Service said on Friday an investigation into a hacking attack revealed in May found that cyber criminals had made attempts to gain access to about 390,000 additional taxpayer accounts. The tax agency said 295,000 taxpayer transcripts were also targeted but access was not successful. The agency said in May the tax return information of about 114,000 U.S. taxpayers had been illegally accessed by cyber criminals over the preceding four months, with another 111,000 unsuccessful attempts made. The IRS then revealed in August a new review had identified 220,000 additional incidents where data was breached.
Officials led by host country officials Chinese Finance Minister Lou Jiwei (front 8-L) and People's Bank of China Governor Zhou Xiaochuan (Front 9-L) pose for a family photo of G20 Finance Ministers and Central Bank Governors Meeting.
G20 to say world needs to look beyond ultra-easy policy for growth Members have agreed to inform each other in advance about policy decisions that could lead to devaluations of their currencies Gernot Heller and Adam Jourdan
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he world’s top economies declared on Saturday that they need to look beyond ultra-low interest rates and printing money to shake the global economy out of its torpor, while renewing their focus on structural reform to spark activity. A communiqué from the Group of 20 (G20) finance ministers and central bankers flagged a series of risks to world growth, including volatile capital flows, a sharp fall in commodity prices and the potential “shock” of a British exit from the EU. “The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable and balanced growth,” said the communiqué, issued at the end of a two-day meeting in Shanghai. “Monetary policies will continue to support economic activity and ensure price stability ... but monetary policy alone cannot lead to balanced growth.” Faltering growth and market turbulence have exacerbated policy frictions between major economies in recent months, and the statement also noted concerns over escalating geopolitical tensions and Europe’s refugee crisis. The reference to “Brexit” had not been included in earlier versions of the text, according a senior official who had seen various drafts, but was added after British officials pressed for it. Britons will vote in June 23 referendum on whether to remain in the European Union. “Our view is that it’s in the national security and economic security of the United Kingdom, of Europe and of the United States for the United Kingdom to stay in the European Union,” U.S. Treasury Secretary Jack Lew said after the meeting.
Volatility vs. fundamentals
The G20 ministers agreed to use “all policy tools - monetary, fiscal and structural - individually and collectively” to reach the group’s economic goals. Christine Lagarde, managing director of the International Monetary Fund, said she sensed renewed urgency among the group’s members for collective action, warning that without it there was a risk that the recovery could derail. But there was no plan for specific
coordinated stimulus spending to spark activity, as some investors had been hoping after markets nosedived at the start of 2016. Over the course of the two-day meeting in Shanghai comments by policymakers made clear the divergence of views on the way forward. Finance chiefs had agreed that “the magnitude of recent market volatility has not reflected the underlying fundamentals of the global economy”, the communique draft said. To pep up the global economy, faster progress on structural reforms “should bolster potential growth in the medium term and make our economies more innovative, flexible and resilient”, it said. “We are committed to further enhancing the structural reform agenda,” it added. Divisions have emerged among major economies over the reliance on debt to drive growth and the use of negative interest rates by some central banks, such as in Japan. Germany had made it clear it was not keen on new stimulus, with Finance Minister Wolfgang Schaeuble saying on Friday the debt-financed growth model had reached its limits. “It is even causing new problems, raising debt, causing bubbles and excessive risk taking, zombifying the economy,” he said. The G20, which spans major industrialised economies such as the United States and Japan to the emerging giants of China and Brazil and smaller economies such as Indonesia and Turkey, reiterated in the communique a commitment to refrain from targeting exchange rates for competitive purposes, including through devaluations. They pledged to “consult closely” on foreign exchange markets.
Currency concerns
Jeroen Dijsselbloem, chairman of euro zone finance ministers, said G20 members had agreed to inform each other in advance about policy decisions that could lead to devaluations of their currencies. G20 host China used the meeting to try to allay concerns about the world’s second-biggest economy, and Beijing’s ability to manage it, that have grown since a market rout and a surprise devaluation last August.
KEY POINTS G20 says monetary policy alone cannot provide balanced growth Economic risks highlighted include potential EU “Brexit” Ministers agreed to use “all policy tools” No plan to use specific, coordinated stimulus to spur growth Policymakers reiterated pledge to refrain from devaluations
“Monetary policy will probably have to be kept appropriately loose, even though people have realised that its role cannot replace fiscal policy,” said China’s Finance Minister Lou Jiwei. But there appeared to be concerns that some members may seek a quick fix to domestic woes through a weaker currency. Japan implemented negative interest rates this month to spur growth, and Bank of Japan governor Haruhiko Kuroda said he had “fully gained (their) understanding” from G20 ministers about the BOJ’s thinking with regard to negative rates as a tool for escaping the deflation that has dogged its economy for years. Japanese Finance Minister Taro Aso said he had urged China to carry out currency reform and map out a mid-term structural reform plan with a time frame. “Chinese authorities need to present a mid-term structural reform plan with concrete schedule and a package of measures to stabilise yuan, based on recognition that communication between Chinese authorities and markets has caused market volatility and capital outflows,” he told reporters. Reuters
Business Daily | 15
February 29, 2016
Opinion
Infrastructure for wires a sustainable future Business
Leading reports from Asia’s best business newspapers
THE TIMES OF INDIA
Zia Qureshi
Describing the New Development Bank (NDB) set up by the BRICS countries as a “worthwhile venture”, (Reserve Bank of India) RBI governor Raghuram Rajan on Saturday said the multi-lateral bank has gotten off to a good start raising hopes of energizing the investment and financing of infrastructure projects. “It is off to a good start. Let us all wish it a success and see where it goes. Hopefully, it energizes more investment and financing in infrastructure,” Rajan said. The RBI governor termed the setting up of the bank by BRICS members a “worthwhile venture.”
Nonresident senior fellow at the Brookings Institution and former Director of Development Economics at the World Bank
THE KOREA HERALD A consortium proposing the development of a casino-driven integrated resort on Yeongjongdo Island in Incheon has won the business license to do so, the Ministry of Culture, Sports and Tourism said Friday. The island is where Incheon International Airport is located. Inspire Integrated Resort, a special purpose company, jointly set up by U.S.-based casino operator Mohegan Sun, Incheon Airport and KCC, a leading Korean construction materials maker, won the heated bid, the ministry added. The consortium will be investing about 1.5 trillion won (US$1.21 billion) into the development.
PHILSTAR Only around one percent of last year’s national budget has not been released to government agencies, indicating faster disbursements that helped boost economic growth (in Philippines) toward the end of 2015. A total of 98.7 percent or P2.573 trillion of the P2.606-trillion outlay was deemed allotted to agencies for spending, preliminary data from the Department of Budget and Management showed. The allocation rate was higher than the previous year’s 97.1 percent. The Aquino administration was criticized early last year for persistent below-target spending that contributed to lacklustre economic performance in the first half.
BANGKOK POST The government expects to sign contracts for all 20 big-ticket infrastructure projects worth a combined 1.79 trillion baht this year. Of the contracts, 10 signed will be signed in the first half and 10 in the second half, Finance Minister Apisak Tantivorawong said after chairing a committee meeting tasked with pushing measures to stimulate the economy and investment. Budget disbursement for the second 10 projects will be next year, he said without mentioning these projects. The Orange Line electric train linking the Thailand Cultural Centre to Min Buri district is expected to seek cabinet approval next month.
I
nfrastructure is a powerful driver of economic growth and inclusive development, capable of boosting aggregate demand today and laying the foundations for future growth. It is also a key element of the climate-change agenda. Done badly, infrastructure is a major part of the problem; done right, it is a major part of the solution. Over the next 15 years, more than US$90 trillion in infrastructure investment will be needed worldwide. That is more than twice the value of the entire stock of infrastructure today, and requires total annual investment to increase more than twofold, from US$2.5-3 trillion to above US$6 trillion. Around 75% of this investment will have to take place in the developing world, particularly middle-income countries, owing to their growth needs, rapid urbanization, and already-large infrastructure backlogs. Closing the infrastructure gap will undoubtedly be challenging. But it also represents a profound opportunity to create the underpinnings of a more sustainable future. As it stands, more than 80% of the world’s primary energy supply and more than two-thirds of its electricity are derived from fossil fuels. Infrastructure alone accounts for around 60% of global greenhouse-gas emissions. If the world follows the same old approaches in building new infrastructure, it would lock in polluting, resourceintensive, and unsustainable pathways to growth. But shifting to renewable energies and sustainable infrastructure can have the opposite impact, helping to mitigate greenhouse-gas emissions while enhancing countries’ resilience to climate change. If climate risks are factored into investment decisions, renewable energies, cleaner transport, efficient
water systems, and smarter, more resilient cities will emerge as the best bets. Fortunately, the political will to take action to mitigate climate change has never been stronger. At last December’s United Nations climate conference in Paris, world leaders reached a landmark agreement to work toward a more sustainable future, including by transforming the way infrastructure projects are developed, financed, and implemented. But agenda setting is just the first step. Delivering sustainable infrastructure at scale will require strong public policy leadership and responsive private-sector entrepreneurship. Policymakers must clearly articulate overall strategies for sustainable infrastructure investment, and embed them in comprehensive frameworks for sustainable growth and development. Here, the G20 countries can lead the way. Only with such integrated strategies can policymakers offer the level of policy coherence needed not just to maximize the effectiveness of each policy, but also to instil confidence in the private sector to do its part. What precisely should those strategies entail? While specific policy actions and priorities must be tailored to individual countries’ circumstances, the main elements of sustainable infrastructure agendas can broadly be captured under four “I”s: investment, incentives, institutions, and innovation. For starters, policymakers will need to ensure a significant increase in total investment. This requires a reversal of the broadly negative public-investment trend in the last couple of decades. Governments must allocate significantly more funds to sustainable infrastructure. But, given severe fiscal constraints in many countries, public investment alone is not
Delivering sustainable infrastructure at scale will require strong public policy leadership and responsive private-sector entrepreneurship
enough; the private sector will still have to meet more than half of the total need. Efforts to reduce policy risks and costs of doing business can help spur the private sector to scale up investment considerably. To ensure that new investment is oriented toward sustainable infrastructure, policymakers must also adjust market incentives. The elimination of fossil-fuel subsidies and the implementation of carbon pricing are particularly important; with oil prices very low, now is the ideal time for countries to implement such reforms. Pricing reform will also be needed in other industries, including water. By getting prices right and reforming regulation to correct distorted incentives, governments can put markets to work in support of public-policy goals. But more investment alone is not enough. Strong institutions are needed to ensure the feasibility, quality, and impact of that investment. Particularly important is the capacity to develop strong project pipelines and institutional frameworks for
public-private partnerships. With around 70% of total investment in sustainable infrastructure occurring in urban areas, close attention must also be paid to the quality of municipal institutions, as well as cities’ fiscal capacities. For developing economies, multilateral development banks will be a key partner in building capacity and catalysing financing. Finally, there is the fourth “I”: innovation. On one hand, technological innovation will be needed to provide increasingly efficient components of lowcarbon, climate-resilient infrastructure. That is why investment in research and development – especially in renewable-energy technologies – must also increase significantly. On the other hand, fiscal and financial innovation will be needed to capture the potential of new technologies. Specifically, the creative use of fiscal space will enable the mobilization of more financing for sustainable infrastructure. And there will be more space as carbon taxes raise substantial revenue for governments (and improve the tax structure). Meanwhile, new financial instruments and the resourceful use of development capital can leverage more private finance and lower its cost. Promoting infrastructure as an asset class could help attract more savings toward infrastructure. As it stands, assets under management by banks and institutional investors worldwide amount to more than US$120 trillion, of which infrastructure accounts for only about 5%. Today, both infrastructure investment and climate action are urgently needed. With the right approach, we can achieve both goals simultaneously, building a more prosperous and sustainable future. Project Syndicate
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February 29, 2016
Closing HSBC sees US$94 billion Gulf Arab debt crunch
U.K. tax revenue on higher priced homes increased
Gulf Cooperation Council countries may struggle to refinance US$94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC. Oil-rich GCC states have to refinance US$52 billion of bonds and US$42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of US$395 billion over the period, it said. GCC states, which collectively produce about a quarter of the world’s oil, are taking unprecedented measures as crude prices struggle to rebound from the lowest levels in 12 years.
The U.K. Treasury has netted 15 percent more tax on home purchases worth more than 1 million pounds (US$1.4 million) since reforming the levy on property transactions, analysis by the tax authorities showed. Chancellor of the Exchequer George Osborne (pictured) introduced the change in December 2014 and since then more than 780,000 homebuyers saved about 657 million pounds on so-called stamp duty, the Treasury said in an e-mailed statement yesterday. The measure, which introduced marginal rates that only apply to the portion of the price above a series of thresholds, was aimed at reducing costs for average families and increasing the levy on more expensive homes.
Frankfurt seeks to win over FinTech whizzkids Last week, Deutsche Boerse unveiled its own FinTech initiative, offering fully equipped premises to new companies and start-ups from April onwards Benoit Toussaint
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s Germany’s banking capital, Frankfurt has long established itself as one of Europe’s leading financial hubs. But the city, which has a rather staid and straitlaced image, is now vying with hipper and trendier centres around Europe to woo financial start-ups known as FinTechs which want to revolutionise the way the world of money does business. FinTechs use computer and Internet technology to develop innovative financial services and applications. They include such companies as online trader Money.Net and the automated investment service Betterment in the United States and the business financing company FundingCircle and money transfer service TransferWise in Britain.
“When people talk about start-ups, cities such as Berlin and London immediately spring to mind. But Frankfurt is also starting to have a very dynamic Internet scene of its own,” said Tarek Al-Wazir, economy minister for the regional state of Hesse, where Frankfurt is situated. The western German city on the banks of the river Main likes to style itself as “Mainhattan” with its dense cluster of glittering glass and steel skyscrapers. And its financial pedigree is certainly not in question. It is home to Germany’s mightiest financial institutions, such as Deutsche Bank and Commerzbank; stock market operator Deutsche Boerse which is again trying to merge with the London Stock Exchange; and, of course, the European Central Bank.
Traditional, new firms’ fortunes to diverge
But it has now set its sights on fostering financial startups, an area where “we want to advance very rapidly,” AlWazir told AFP. Last week, Deutsche Boerse unveiled its own FinTech initiative, offering fully equipped premises to new companies and start-ups from April onwards. The initiative would “contribute to the emergence of a lively and diverse ecosystem in Frankfurt containing various start-up centres operated by financial market players with different focuses and profiles, who can give each other various impulses,” said minister AlWazir. The city’s ambition is to “become the largest and most important” site for FinTechs and “we’re off to a good start,” Al-Wazir said.
Financial start-ups are more innovative and more agile than traditional banks and are constantly seeking out important new perspectives on the financial sector.
But rents are sky high and the armies of bankers in their uniform of black suits and briefcases can seem a little staid and off-putting to the creative whizzkids of the start-up sector.
‘Microcosm’
Coming late to the game
According to a study by consultants LSP Digital, investment in FinTechs has doubled in Germany since 2012. Nevertheless, “a FinTech sector doesn’t spring up overnight. Infrastructures are needed, as well as a microcosm of people who can share know-how, collaborate and inspire each other,” said Oliver Vins, founder and chief of Vaamo. The Frankfurt-based start-up was launched in 2013, incubated by the city’s university and now employs around 20 people. In Vins’ cramped office in the Gallus quarter of the city, a computer sits alongside a wall covered in multi-coloured post-its and a table soccer game. Vaamo enables customers to design their own personallytailored savings plans via a few clicks and a short list of questions. As Germany’s financial capital and the biggest financial services hub in continental Europe, Frankfurt is proud of its slick, cosmopolitan image and its imposing skyline of skyscrapers.
Authorities to set plan for raising Chinese retirement age
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At the same time, “one of Frankfurt’s strengths is the presence of a large number of financial companies” which can act as investor, partner and customer for FinTechs, said Peter Barkow, head of Barkow Consulting. But Udo Steffens, director of the Frankfurt School of Finance and Management, feels the city is joining rather late in the game. “In the past, Frankfurt was cut off from the innovation trend and very little was happening” in the city, he said. In June 2015, only 11 FinTechs were based in Frankfurt, out of a total of 139 in the whole of Germany, according to data compiled by LSP Digital. Unsurprisingly, Berlin, with its comparatively low rents and alternative culture, was home to 49 FinTechs. Munich hosted 18 and Hamburg 14. But it is a ranking that can change. “It’s good that there are initiatives at a political level. With the right infrastructure, things can be made more attractive than in the past,” said Vaamo’s Vins. AFP
Mainland’s sharing economy worth 1.95 trln yuan
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he performances of Chinese enterprises will diverge this year, depending on whether they are in traditional or emerging industries, according to a new report. Companies in emerging sectors will grow rapidly thanks to help from the government as it aims to create new economic engines, the China Enterprise Management Science Foundation (CEMSF) said yesterday. Sectors including robots and intelligent equipment will outpace traditional ones, and high-speed railway and nuclear power face historic opportunities, the report said. Facing the economic slowdown, China is restructuring its industries to sustain growth, encouraging new sectors and reforming the old. High-tech industries grew 10.2 percent year on year in 2015, much higher than the overall industrial increase. Emerging sectors have developed rapidly, accounting for 8 percent of GDP. China’s share of high-tech exports in 2014 hit 43.7 percent of all Asian countries, up from 9.4 percent in 2000, according to an Asian Development Bank report. However, the CEMSF forecast large companies in traditional industries will continue to struggle.
hina, whose state pension fund is under pressure to break even in coming years, will formalize a plan in 2017 to raise the official retirement age, China News Service reported yesterday, citing a senior government researcher. The semi-official news agency quoted Jin Weigang, head of research in the Ministry of Human Resource and Social Security, as saying a policy change would take about five years to phase in. At present, China’s official retirement age for most men is 60. For women, it is 55 for civil servants and employees for state enterprises, and 50 for others. The media report did not speculate on what changes might be made in retirement ages. Analysts have long warned about China’s state pension having a severe funding shortage. Some estimate the cash shortfall could rise to be nearly US$11 trillion in the next 20 years. Jin was quoted as cautioning that a retirement policy change should allow flexibility and take into account the needs of various labour groups, and “should not consider only the revenues and expenditures of the pension fund”.
rom ride-hailing business to online auctioneers, sharing economy platforms have created a market worth 1.95 trillion yuan (US$298 billion) in 2015, according to figures released by the National Information Centre yesterday. There are 50 million sharing business providers in China and they have more than 500 million consumers, according to a report by the centre. The sharing economy satisfies a variety of needs in daily life and business. In addition to taxi-hailing apps such as Didi, product, knowledge and service-based providers have mushroomed on the Internet, said Yang Yixin, deputy secretarygeneral of the China Internet Association, at a press conference issuing the report. Zhang Xinhong, with the National Information Centre’s Information Research Department, said China’s sharing economy would grow at an annual rate of 40 percent in the next five years, and would take up more than 10 percent of China’s GDP by 2020. Taxi-hailing app Didi, the result of a merger between two separate start-ups in early 2015, raised tens of billions of U.S. dollars last year from domestic and overseas investors.
Xinhua
Reuters
Xinhua