Macau Business Daily 2016-3-14 by Business Daily

David Chow: Mulling Fisherman’s Wharf project’s height limit. BUSINESS Page 4 www.macaubusinessdaily.com

Monday, March 14 2016!YEAR IV NR. 1000 MOP 6.00 PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR JOANNE KUAI

‘LACK OF DIVERSITY’ MAJOR RATINGS ISSUE ECONOMY On standby for a possible credit rating downgrade. Moody's has placed Macau's Aa2 rating on review for just such a scenario. Declaring it will evaluate the territory’s credit rating over the next quarter in the same light as other one-trick pony economies such as oilrich Abu Dhabi. A ‘lack of diversity’ and fall in casino revenues is prompting the rethink. The rating agency prophesises a long-term ‘decline in gaming revenues’ attributable to the fall in the number of Mainland tourists – ‘for whom Macau's casinos are the primary attraction.’ Page 5

Property loans plummet P R O P E RT Y B u m p i n g along. Local banks approved MOP3.2 bln in new residential mortgage loans in January. Representing a 35.8 pct m-o-m drop. Commercial real estate loans in the same month totalled MOP5.3 bln, a 10.4pct y-o-y drop. Page 3

Topsy turvy legal wrangle continues GAMING It was supposed to be a done deal. But Las Vegas Sands has convinced the Nevada supreme court to throw out a US$70 million case awarded against them. The original finding went Richard Suen’s way in 2013 for allegedly helping the gaming operator land its Macao licence. The judge cites a lack of evidence and says a new trial is needed. Page 5

Trusting to growth

Transcendental architecture Established in Macau three years ago. And promoting a fair architectural environment. Architecture Sans Frontieres say this is the overriding objective of the global non-profit organisation. Local branch president Dominic Choi tells Business Daily they are on a parallel mission, too. To preserve the city’s historic architectural skills and nature. Meanwhile, the branch is working on humane construction projects within and beyond Macao’s borders. INTERVIEW Page 6&7

14° 17° 16° 18° 18° 21° 19° 22° 19° 22° TODAY

CHEONG KAM KA

Chinese authorities discard massive layoffs. Page 8

TOURISM

Slowdown in tourism compared to post-SARS outbreak. Page 2

Pac On Ferry Terminal opening possibly postponed to 2017. Page 3

HK Hang Seng Index March 11, 2016

WED

GAMING

SOCIETY

20,199.60 +215.18 (1.08%)

CITIC Ltd

+9.22%

China Overseas Land &

+2.79%

AIA Group Ltd

+2.26%

New World Development

-1.51%

China Resources Beer Hold-

+3.71%

Cathay Pacific Airways Ltd

+2.52%

Tencent Holdings Ltd

+2.14%

Tingyi Cayman Islands

-2.09%

Galaxy Entertainment Group

+2.86%

PetroChina Co Ltd

+2.46%

CLP Holdings Ltd

-1.45%

Belle International Holdings

-7.92%

THU

FRI

Forefront of Macau Gaming predicts lay-offs. Page 4

Bloomberg / Google

CHINA

TUE

I SSN 2226-8294

AccuWeather

ECONOMY Major stimulus isn’t needed to support growth. So says People’s Bank of China Governor Zhou Xiaochuan. Even as the latest batch of economic indicators suggest otherwise. Latest data highlights the challenge Zhou and the Party leaders have in achieving the growth ordained by Premier Li Keqiang. Page 8

2 Business Daily Monday, March 14 2016

MACAU SOCIETY

LOCAL ADOLESCENTS BELIEVE IN HAPPIER FUTURE THAN HONG KONG PEERS

High expectations

Macau awarded Best International Leisure Destination

The late boom of the Macau economy, in contrast with the maturity already achieved in Hong Kong, helps explain the difference, a study suggests. João Santos Filipe jsfilipe@macaubusinessdaily.com

LDER adolescents in Macau have a stronger sense of hope and have more optimistic expectations of the future when compared with adolescents in Hong Kong. This is one of the conclusions of a study titled ‘Economic Development and Subjective Well-being: A Comparative Study of Adolescents in Hong Kong and Macau’, which was published last week in the journal ‘Child Indicators Research’. ‘Older adolescents in Macau are associated with a stronger sense of hope, while the opposite holds [true] for those in Hong Kong’, says the study, written by academics Mathew Wong and Wing Hong Chui, from the University of Hong Kong and City University of Hong Kong, respectively. ‘Summarising the results, it can be seen that hope is higher among older adolescents in Macau; the same goes for future expectations. On the other hand, those from Hong Kong

have less certainty about the future’, they added. Among the reasons for the differences between the two regions is the fact that Macau experienced a late boom, fuelling optimism by local adolescents in contrast with the economic moment in Hong Kong. ‘Growing up in an early developer and a mature economy with less perceived social mobility, adolescents in Hong Kong are always under pressure to be competitive in order to survive in the future’, the report notes. ‘On the contrary, Macau’s recent growth leads to an increasing expectation for young people to be able to do well, resulting in the stronger belief in their future, (i.e.) hope and purpose in life’, they posited.

Competitive society

Competition in Hong Kong society has been identified in the research

TOURISM

paper as one of the causes for teenagers from the neighbouring region to be less optimistic about their future. ‘As a mature economy, it is high time for leaders and policymakers in Hong Kong to reconsider whether it is still valuable to maintain the rhetoric of economic competitiveness, especially at the expense of wellbeing. Competitiveness, by itself, carries very little intrinsic value’, they assert. Still regarding the former British colony, the view is that competition is undermining the feeling of the younger generations. ‘This article argues that the constant need to remain competitive comes at great social cost’. For this study, the academics surveyed a total of 4,591 individuals, of whom 1,830 were from Hong Kong, while the remaining 2,761 interviews were conducted in Macau. All the students were aged between 10 and 22 years.

The International Council of Pacific Area Travel Writers Association (PATWA) awarded Macau the ‘Best Destination – Leisure’ for 2015 last Thursday at the ITB convention held in Berlin. Macao Government Tourism Office (MGTO) Deputy Director Cecilia Tse was present to receive the award. The government tourist office participated in the 50th edition of the world’s largest travel show with a 63 square metre booth, promoting Macau as a destination for events, festivals and cultural heritage. More than 180 countries and territories joined 6,000 media at the fair, which attracted more than 175,000 trade visitors last year. The award received honours Macau for its efforts in promoting the city as a tourism destination and is judged by a secret jury comprising PATWA members, officials and travellers. The awards are distributed three times yearly at ITB Berlin, WTM London and the Safari India Awards, New Delhi. Award categories include individuals, professionals, destinations, hotels, airlines, cargo, cruise & rail, airports, and travel service providers. B.L.

TOURISM

Slowdown in tourism compared to post-SARS outbreak The city is facing another low tourism season akin to the slump seen following the outbreak of the SARS virus in 2003, Ms. Chu Meng Ha, president of Macau Tour Guide Promotion Association, told local TV broadcaster Teledifusão de Macau (TDM). Chu considered causes for the slowdown as conflicts between tourists and guides in Hong Kong and the political environment including recent clashes between citizens and authorities - claiming these incidents caused a serious shock to tourism in this city. Ms. Chu added that package tour groups visiting from the Mainland had dived 50 per cent since October 2015, with the decrease reaching 80

per cent during Chinese New Year (year-on-year). Ms. Chu claimed that up to 10 per cent of tour guides have changed jobs. Chu urged the government to provide subsidies for guides or increase promotional activities to attract more tourists from the Mainland. Lei Man Hou, Director of the Macao Tourist Guides Union, also told TDM that some foreign tourists came to Macau only when they travelled to Hong Kong. Mr. Lei urged the government to increase the number of direct flights to the city. Lei also suggested that the foreign media be invited to Macau in order to increase promotion in addition to launching bundled travel itineraries encompassing the Mainland and Macau. B.L.

Business Daily Monday, March 14 2016

MACAU PROPERTY

RESIDENTIAL MORTGAGE LOANS DOWN 16 PCT Y-O-Y IN JANUARY

Bricks and mortar take a tumble Equitable mortgages registered a sharp increase of 141.9 per cent year-on-year in first month of 2016. Bami Lio bami.lio@macaubusinessdaily.com

EW approvals of residential mortgage loans by local banks decreased by 16.2 per cent year-on-year in January, with granted equitable mortgage increasing 141.9 per cent as compared to January last year, reveals the latest data on Mortgage Loans Statistics from the Monetary Authority of Macau (AMCM). In January, the local banking sector approved a total of MOP3.2 billion-worth (US$400 million) of residential mortgage loans, 95.1 per cent of which were granted to local residents. The loan value represents a 35.8 per cent drop compared to the MOP5.0 billion approved in December 2015. In addition, residential loans to residents and non-residents registered a month-on-month decrease from December 2015 to January 2016 of 35.3 per cent and 44 per cent, respectively. Newly approved residential mortgages collateralised by uncompleted flats increased by 32.5 per cent to MOP0.8 billion from MOP0.6 billion in December last year. Some 94.4 per cent of the total loans were extended to residents, of which the value increased by 38.1 per cent from December 2015 to January 2016. Newly approved commercial real estate loans in January registered a slight

increase of 1.3 per cent month-onmonth, amounting to MOP5.3 billion, increasing 10.4 per cent year-on-year. According to the monetary authority, 99.7 per cent of commercial property loans in January were granted to residents. In terms of value, commercial property loans to residents increased by 8.4 per cent from December 2015 to January this year while those to non-residents dropped 96.2 per cent.

Outstanding balances

The end of January 2016 saw the local banking sector with an outstanding value of MOP174.0 billion on residential mortgage loans, an increase of 12.7 per cent year-on-year, or 0.4 per cent month-on-month. Local residents accounted for 93.8 per cent of total outstanding value. The outstanding value of commercial real estate loans increased 30.1 per cent from January 2016 to January 2016, and 0.9 per cent from the end of December 2015, amounting to MOP164.5 billion. Residents accounted for 88.7 per cent of the loans. Meanwhile, the delinquency ratio for residential loans in January was 0.08 per cent, down 0.01 percentage points compared to the previous month. The ratio for commercial property loans remained virtually unchanged from December’s at 0.02 per cent, down 0.04 percentage points from a year ago.

99.7 Per cent Commercial property loans granted to locals in January

INFRASTRUCTURE

RETAIL

Pac On Ferry Terminal opening possibly postponed to 2017 The Pac On Ferry Terminal may start operating only during the year of 2017, according to Portuguese language newspaper Jornal Tribuna de Macau (JTM), which quotes replies reg a r d i n g t h e d ev e l o p ment of the project both from the Infrastructure Development Office (GDI) and the Marine and Water Bureau (DSAMA). According to GDI, the main construction works have already been completed and the facilities are now being

inspected. After this stage, GDI will hand the facilities to the competent authorities, so that they can prepare the required systems and test them. Construction on the Pac On Ferry Terminal started in 2005, when it was expected to take little more than a year to complete. The initial budget was fixed at MOP583 million (US$72.95 million) while the latest prediction is that the construction works have already cost MOP3.2 billion.

China leads way for TSL jewellery With a new focus on ‘younger generations’ – through campaigns including its most recent ‘Finger Language’ – where ‘belief’ replaces ‘love’ as the traditional theme, TSL Jewellery posted ‘satisfactory growth’ during the holiday seasons, opening 29 new stores between December 2015 and February 2016, says their March Investor report. The Group predicts an ‘upward trend’ based on its franchising in the Mainland – total franchised stores in the Mainland have reached 83, as compared to 187 self-operated stores – while remaining

‘cautious’ to the retail performance in Hong Kong over the next 12 months. The group cites an ‘adjustment phase’ in Hong Kong’s retail industry and hopes to create a ‘price correction’ on rents it sees as being at a ‘relatively high level’. The group plans to concentrate on stores in ‘areas where traffic is more stable’, choosing a higher quantity of shops in non-prime areas as well as launching ‘self-served ring try-on stations’. The group also cites a slowdown in China’s growth, the devaluation of the RMB

and other ‘unforeseen global economic circumstances, coupled with the sluggish retail market’ contributing to uncertainties for the retail market ahead. The group plans to strengthen promotion and focus on younger consumer groups while expanding e-commerce business platforms. TSL currently has 305 stores throughout Asia, with three located in Macau, 270 in the Mainland, 28 in Hong Kong, three in Malaysia and one in Japan. The group listed authorised share capital of HK$375 million on 1.5 billion shares priced at HK$0.25 each at the end of February. K.W.

4 Business Daily Monday, March 14 2016

MACAU GAMING

GAMING

Gaming operators urged to assume greater social responsibility

Forefront of Macau Gaming predicts lay-offs

Employee benefits and improvement in work shift rosters are some of the main concerns.

Vice-President of the association says that gaming operators will adjust their human resources once the mid-term review is completed.

Annie Lao annie.lao@macaubusinessdaily.com

SSUES revolving around increasing numbers of non-resident workers, the retirement system and suggestions for the Gaming Mid-term Review were discussed during a meeting with the Secretary for Economy and Finance Lionel Leong Vai Tak, initiated by Stephen Lan, the President of Power of the Macau Gaming Association, together with legislator José Coutinho on Friday afternoon. “We cannot have too many non-resident workers taking locals’ jobs,” José Coutinho told reporters. “Although the gaming industry has showed a decrease in revenue, it is still generating a profit. So far, by now, only one gaming operator has increased its employees’ salary, whilst the other five operators have not increased their workers’ salary yet, which is unfair,” he said. “ O v e r 1 5 y e a r s, t h e

Power of the Macau Gaming Association meet with Lionel Leong

employees have sacrificed a lot in terms of the work scheduling shifts. According to one European report, it proves that 24-work shifts do the most damage to employees’ wellbeing. Without any compensation, it is very unfair from the very beginning,” he said.

Better training and retirement scheme urged

Mr. Lan from the Power of the Macau Gaming Association holds an optimistic view for the gaming sector in Macau and urged operators to increase the amount of training provided to the workers as well as job promotion opportunities. “The Gaming Interim Review should closely observe the details of operations of the six gaming companies in terms of local worker

promotion opportunities and internal transfer work opportunity within the companies,” Mr. Lan told reporters after attending the meeting. In addition, the retirement system was discussed in the meeting. “While the Gaming Interim Review is in working progress and gaming revenue shifts, workers should not only rely upon the Social Security Fund. Casino companies offer Provident Funds to their employees but it will not be guaranteed once the workers are sacked,” Mr. Lan added. He also revealed that Mr. Leong said the Gaming Mid-term Review would be adjusted accordingly, primarily looking into whether the six operators’ compliance with their contract is met, meanwhile adding relevant suggestions to the review if necessary.

HE Vice-President of local association Forefront of Macau Gaming (FMG), Lei Kuok Keong, is expecting the sector to lay off more workers during the current year. “There could be more people fired during this year and mainly at the end of the year”, Lei Kuok Cheong told Portuguese language newspaper Jornal Tribuna de Macau (JTM). “The gaming operators are afraid of big changes for now because the government is still working on the mid-term review of the sector”, he said, before explaining that after the mid-term review the operators will adjust their labour forces in harmony with their real needs. According to Lei Kuok Keong, the trend for the industry to cut the number of workers has been more evident since the third quarter of last year, when the operators stopped providing training programmes for dealers. At the same time, the VicePresident of FMG told JTM that since last year, the managers

of the operators are putting more pressure on their workers, with some fired already following the annual review of the workers’ performance, which took place before the Chinese New Year.

Resorts failing to attract tourists

Lei Kuok Keon also admitted that the new resorts in Cotai, namely Broadway and Studio City, have contributed to absorbing the excessive labour force of the sector. However, he says that these resorts have failed to attract many tourists thus the other operators have decided to delay the opening of their resorts. “Both Broadway and Studio City opened last year and we don’t see them attracting many tourists”, he said. Regarding the decline in gaming revenues, Lei Kuok Keon considers that the situation is still complicated in comparison to the revenues achieved in 2014. “If we compare the data with the results of 2014, we realise that the gaming sector is still going through a difficult time”, he said. J.S.F.

BUSINESS

David Chow: Mulling Fisherman’s Wharf project’s height limit The government is still evaluating the height limit of casino operator Macau Legend Development Ltd.’s new hotel. A third party will be invited by the government to conduct an environmental impact report on the project, according to David Chow Kam Fai, Co-chairman and Chief Executive Officer of casino service firm Macau Legend Development. “Building a 90 metre tall hotel is still within the legal legislation. However, if the government suddenly requires [us] to lower the height to 60 metres I would think that it is difficult to develop in Macau,” said Chow on

David Chow

Friday, as reported by local broadcaster TDM Chinese Radio, adding, “We will reconsider if we are going to develop the project.” David Chow added that he wants the project to be considered fairly as the whole process was filed in accordance with law and “if the final decision is based upon populism, it would be the government’s choice”. A.L.

CORPORATE

Charitable McDonald's show for Special Olympics students

To enhance interactive communications between intellectually challenged children and the local community, McDonald’s Macau hosted a Charitable Ronald Show on Saturday at Castel Son Tat McDonald’s, a newly opened restaurant with seating for 144, for 14 Special Olympic Students

and 20-plus McFun Club Families. The activity programme was enriched with games and a magic show. Ronald warmed up the atmosphere leading to all the participants self-introducing themselves in games. Throughout the games, everyone happily interacted with each other, increasing the self confidence of the Special Olympics Students.

Business Daily Monday, March 14 2016

MACAU ECONOMY

GAMING DOWNTURN COULD AFFECT CREDIT RATING

Moody’s: Macau’s Aa2 rating ‘on review for downgrade’ The city is compared to oil exporters based on ‘lack of diversity’. Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

CREDIT review by Moody’s Investors services, set to be completed in three months, could downgrade Macau’s current Aa2 rating by ‘most likely […] one notch’ if the review ‘were to conclude that the government's fiscal and external strengths will deteriorate relative to similarly rated peers, as the [economic] downturn progresses.’ The review would compare Macau to ‘oil exporters such as Abu Dhabi, Saudi Arabia, UAE, Kuwait and Qatar’ based on a ‘lack of diversity and a sharp fall in the key source of government revenues over the past year’ presenting ‘credit risks’. Moody’s expects a long-term ‘decline in gaming revenues’, which it attributes to the ‘fall in the number of tourists from the Mainland, for whom Macau's casinos are the primary attraction,’ specifying the ‘ongoing anti-corruption drive in China’ due to which it sees a ‘prolonged downturn’ in the industry.

Moody’s places positive value on Macau’s fiscal and current account surpluses but says ‘the shock to the mainstay of its economy has resulted in a considerable erosion to these buffers’. It places the current fiscal reserves at MOP430 billion (US$53.8 billion) at end-February 2016, which it says ‘amount to over 5 years of central account expenditures for 2015’. These funds ‘could dwindle over the medium-term,’ if used to fund ‘deficits beyond 2017,’ it claims.

pressures, as well as the scope and potential impact of efforts at economic diversification’. Other factors affecting the potential downgrade include ‘a larger than anticipated deterioration in the fiscal position, pressure on the currency board exchange rate and foreign currency assets, or stresses in the banking system’. Such a downgrade

would ‘most likely be limited to one notch’. However, if the ‘mitigating impact’ of the government’s response is seen as ‘insufficient to prevent a more marked deterioration in the SAR's credit profile,’ then a larger downgrade could be in the works. If the rating review were to conclude that ‘the SAR's intrinsic credit strengths are strong enough

to nullify the negative impact from the ongoing macroeconomic shock,’ then the rating could be a ‘stable or negative outlook’. These credit strengths include ‘financial buffers’ from gaming revenues and ‘policy response’ to diversifying and strengthening the economy and government balance sheet. The result of the rating could also take into account ‘change in the outlook for China’s Aa3 rating to negative,’ says Moody’s, given the ‘close financial, institutional and political linkages’ with the Mainland given Macau’s ‘direct exposure’ to its economic and political changes through gaming and tourism.

Financial buffers

The report will also evaluate the government’s ability to ‘implement policies that would support its credit profile’ such as ‘the government's fiscal response, the authorities' ability to navigate external and financial

5 Number of years fiscal reserves can handle central account expenditure (based on 2015 expenditure)

GAMING

Sands gets US$70 mln verdict over Macau permit thrown out Nevada Supreme Court throw out a jury award won by Richard Suen Las Vegas Sands Corp. for a second time persuaded the Nevada Supreme Court to throw out a jury award won by a Hong Kong businessman who claimed he helped the casino company win permission to operate in Macau. The state’s highest court said Friday there wasn’t sufficient evidence to justify the US$70 million in damages a jury awarded Richard Suen in 2013 and that a new trial was needed. Suen claimed a meeting he arranged between Sands Chairman Sheldon Adelson and Chinese government officials in Beijing was instrumental in Macau’s decision to include Sands among the foreign casino operators that were given licenses in 2002. He had won a US$43.8 million verdict when his claims first went to trial in 2008. That damages award was previously overturned by the Nevada Supreme Court.

GAMING

Adelson testified during the second trial that Suen, a friend of Adelson’s younger brother Lenny, had “zero” to do with helping the company obtain a concession in the former Portuguese colony. According to Adelson, the Macau government made its decisions independent of the central government in Beijing, which is legally prohibited from intervening in the city’s internal affairs. Suen testified that in 2000 he alerted Adelson, Sands’ founder and controlling shareholder, to the possibility that Macau would end the gambling monopoly casino mogul Stanley Ho had enjoyed in the enclave since 1962. Suen claimed the goodwill created with Chinese officials through the meetings he helped arrange in Beijing led to the selection of Sands. The judge overseeing the trial added US$31.6 million in interest to the jury award, making the total Sands would have had to pay Suen US$101.6 million. John O’Malley, a lawyer for Suen, declined to comment on the ruling. Ron Reese, a spokesman for Sands, said the company “has consistently maintained that whatever service Mr. Suen claims to have provided was only of nominal value and was wholly unrelated to the company earning its operating rights in Macau.” The case is Las Vegas Sands Corp. v. Suen, 64594, Nevada Supreme Court. BLOOMBERG NEWS

Sands China: Robert Goldstein replaces Michael Leven on Capital Expenditure Committee Robert Goldstein replaced Michael Leven as Chairman of Sands China Capital Expenditure Committee last Friday, the company announced in a filing with the Hong Kong Stock Exchange. Besides being a Non-Executive Director of Sands China, Robert Goldstein is President and Chief Operating Officer (COO) of Las Vegas Sands Corporation, the parent company of Sands China. Michael Leven is a member of the Board of Directors of Las Vegas Sands and will continue to act as a member of Sands China’s committee, on which he is a Non-Executive Director. The Capital Expenditure Committee, also known as CAPEX Committee, is responsible for reviewing and approving or rejecting non-budgeted capital expenditure projects with a value of over US$1 million (MOP7.99 million) but not exceeding US$10 million. Also on Friday, in another filing with the Hong Kong Stock Exchange, Sands China announced more changes to its governance bodies. Iain Bruce resigned as Independent NonExecutive Director and as member of the remuneration, nomination and

audit committees. Mr. Bruce joined the company in October 2009, with his departure explained as being due to “other business commitments that require his full time attention”. In addition to the changes in governance structure of the company Sands China announced that the record date for the final dividend regarding the fiscal year of 2015 is June 3 of this year. The dividend - proposed by the board of Sands China, and still to be approved at the Annual General Meeting on May 27 - amounts to HK$1 per share. The dividend will be paid on June 24 of this year. J.S.F.

6 Business Daily Monday, March 14 2016

MACAU NGO

INTERVIEW

‘Balance needed between social development and nature, and historic architecture preservations’ Dominic Choi Chi Iok, president of non-profit organisation Architecture Sans Frontieres Macau (ASF Macau), perceives that the city should preserve its nature and the skills that have built our historic architecture. He told Business Daily that these are his organisation’s major missions in Macau, in addition to carrying out humane architectural projects both within and beyond the boundaries of the territory. Kam Leong kamleong@macaubusinessdaily.com

Why did you bring Architecture Sans Frontieres (ASF), an international non-profit organisation, to Macau in 2012? A few architects and I reckoned Macau’s external support was not really that much at the time, by which I mean physical support as the city’s external donations are always high. In 2012, the Portuguese branch of ASF approached us, asking whether we were interested in developing ASF in Macau. After we got to know what ASF primarily does, we agreed that Macau needed this kind of association. The city had the resources needed to run this organisation; people here are quite generous, coupled with our quite good economic environment. As such, we thought Macau had the conditions to help people in our nearby regions. What does ASF aim to do for Macau or local people? For the city itself, we target preserving historic architecture, particularly the [construction] skills required. A lot of local architecture has 400 or 500 years of history. It has very special characteristics affected by the Portuguese style and that from other places. These cultural characteristics, however, usually disappear gradually as a place develops. As such, we want to preserve it, we want to protect it while these [structures] are still here - especially when Macau has its own World Heritage, with preservation supported by the local government and cultural heritage protection law. We want to keep and pass these old architectural skills on to our next generations. How many members do you currently have? We have some eight core members, or say founding members. Our members come from different backgrounds – teachers, engineers and

lawyers as well as architects. We aim to recruit professional individuals but our basic requirement is that they are passionate and willing to spend their time to make a contribution. We don’t have many people but everyone we have is willing to spend their private time on our work. Do you think the city’s awareness of your organisation’s objectives is high? In fact, most of the people didn’t know what we do in the beginning. They may wonder why we seek donations for the same project at different times. People here in Macau don’t usually ask what their donations are to be used for as they are so used to making donations to people outside Macau despite they don’t really know where the donations go. That’s why our operation is a bit different from others. We serve the people in need ourselves and we are the unit that actually works on the projects that we collect donations for. As such, we are always able to tell our donators where their money will go or has gone. Is it hard to collect donations from local people as ASF is rather new in the city? We never seek donations for ourselves but for the projects we do. In fact, when you try to collect donations for a project, it doesn’t matter whether you are a big or small organisation, people are willing to donate if they agree with your aims. So, for us the only difficulty we have is whether people will give us a chance to introduce our project.

PRESERVING SKILLS AND NATURE How do you preserve local architectural skills that may be lost? We currently have a programme called Lost Skills in Macau. As I mentioned, many architectural [structures] in Macau have a few hundred years of history and are full of Western and Chinese cultural elements. However, the skills to build such architecture has already been lost in Macau. We

Architecture Sans Frontieres The international non-profit organisation was first launched in France in 1979, while ASF Macau was founded in December 2012 by Dominic Choi Chi Iok and several others. According to Mr. Choi, the founding architects of ASF in France aimed to promote the concept of a fair construction environment, hoping every single individual, no matter rich or poor, could enjoy their basic human rights – a basic condition to live. ASF Macau is actually the second branch of the organisation in Asia, following the establishment of one in India. Meanwhile, ASF Nepal has also been set up recently. Currently, the global organization has 28 branches worldwide.

don’t have such techniques anymore. But they still exist in the Mainland and other places. As such, when we repair historic architecture, we always need to learn from the Mainland. For those old skills that are still in Macau, we hope we can learn them before they disappear. We plan to train local architects and construction workers about these to-be-lost skills by holding some workshops. After all, these skills are not only for repairing old buildings as they can also be injected into new projects. And we hope we can gain support from the government for these workshops, such as providing subsidies or venues. ASF also focuses on preserving the city’s nature. How do you see housing projects that may encroach upon Coloane? From the angle of urban planning, an ideal city’s green spaces should occupy around 60 to 70 per cent of its total territory. For example, in Hong Kong, despite its high density the coverage of its green spaces amounts to some 65 per cent. A natural environment is always good for people. Nothing can replace nature. The only natural environment left in Macau is Coloane. I feel it would be a pity if this were to disappear. Macau is a city with a very high density in that 70 per cent of our land is covered by buildings instead of green spaces. This is certainly not a good thing that our green spaces only amount to some 30 per cent. We now have our own coastal waters and new reclamation zones. Should we make the best use of them to increase our green spaces? Think about our next generation; I don’t want them not to be able to see any green thing. I would like people to think what would be a better environment for them – a high density living environment or one with better quality. It’s very easy to build a residence, but it’s impossible to recover nature even if we want to. Would you say there should be a balance between the preservation of nature and social development? Yes, I do think so. To reach that balance, we may consider developing underground space or re-developing our old districts. In fact, many old districts in the city are very far away from our World Heritage [sites] so we can reconstruct them into high buildings. Yet, due to ownership or laws they still await re-development. Should we amend our laws or should we negotiate more in order to make better use of these old districts? Why do we need to put aside things that are already here and develop something new from nothing? More importantly, there have already been transportation networks in these districts that we don’t need to add to, and may only increase the current traffic pressures we have.

PROJECT YOLANDA ASF Macau’s first project – Project Yolanda – is in the Philippines. Why is that? The country was affected by a [massive] typhoon in 2013, and there were

‘It’s very easy to build a residence but it’s impossible to recover nature even if we want to’ still many problems in the region one year after. We received a letter from a priest urging us to help build a church there. After that letter, we kicked off our study of the case, such as directly flying there to see the actual situation, and whether they really were in need of help. After that, we decided to focus on building two classrooms for a school, besides helping another four. Meanwhile, we wanted to make the whole thing more meaningful. Frankly, collecting donations is not a difficult thing. But we wanted to involve the participation of local students and residents – to spread the message that they can also help people outside Macau. And we contacted the Macau Anglican College, which vice principle Robert Alexander has supported a lot. We also promoted our project in other education institutes. And we really like the participation of local schools as it is a very great opportunity to cultivate our next generation [regarding] humane knowledge. We hope students can pass these messages to their parents as well. Are the expenses for this project all from donations? Yes. They are mostly donated by individuals and companies in Macau, while individuals and schools actually occupy bigger proportions. The public always wants to have a clear picture of the amount of donations that you spend on helping others and administrative fees… Yes, exactly. I can tell you that we have collected around some MOP350,000 for Project Yolanda, and we have already spent some MOP300,000 on it. Meanwhile, we don’t really have administrative expenses as we don’t hire

Business Daily Monday, March 14 2016

MACAU EDITORIAL

Edition 1,000

CHEONG KAM KA

Macau Anglican College biggest supporter

During the interview, the ASF Macau president addressed the help he has received from Macau Anglican College for the organisation’s first project – Project Yolanda in the Philippines. The vice principal of the international school, Robert Alexander, told Business Daily that it all began from the benefits he saw the project might bring to his students. “We [can] teach our students to care about and for others, to share their gifts, talents and resources with those who do not have [them]. Through our work with ASF, our students are given the opportunity to do that,” Mr. Alexander said in an e-mail to us. To support the non-profit organisation’s overseas project, the vice principal of the international school has started a recycling a programme of English reading books, textbooks, stationery and writing anyone. Everyone participating in our organisation is a volunteer. And that’s also the reason why we want to keep our scale small as it is quite unavoidable to spend on some administrative expenses if the scale is big.

LOCAL PROJECT & RESTRICTIONS Are you engaged in any project in Macau at the present? We are going to help Cradle of Hope Association to repair part of their residential [property]. Through a recent gala dinner, we collected some MOP68,000 in donations. We will spend some MOP50,000 on the local project, whilst the remaining part will be allocated to Project Yolanda. As Cradle of Home accommodates homeless children aged six years old, we do think this project is an urgent necessity for them. The project is not that big, but we hope it can benefit the children there. Have you tried to seek donations from local big-scale companies or the government? We’ve tried. However, it’s quite sensitive for the government to support a humane project outside of Macau. Meanwhile, we’ve also tried with big-scale companies, but it didn’t go smoothly as they don’t understand why they need to donate for the same projects at different times. Only after the rejection of big-scale companies

books in his school, which were later shipped to the five schools that ASF is helping in the Southeast Asian country. “My visits to these areas highlighted other educational needs which we as a school could also address. The lack of basic resources like writing books, stationery, and reading books was alarming.” he claimed, adding his school has sent four shipments of boxes to these five schools, while they are also completing the fifth shipment. “Our aim is to create libraries in each school. In order to do so, bookshelves were needed. Through our fundraising, we raise money to cover shipping costs and provided all the schools with bookshelves. This recycling programme is an ongoing one, which we will continue doing and hopefully move on to other needy schools,” he said.

did we start to seek donations from ordinary local individuals and businessmen and schools, for which the gain is even bigger. I always think that the meaning of donation is not about its amount but how people give such donations to you. As a non-profit organisation, of course it would be a good thing if you can have support from the government or big-scale companies, but it’s even more meaningful if you are supported by local residents.

‘For the city itself, we target preserving historic architecture, particularly the [construction] skills required’ Construction costs in Macau are ranked second highest in Asia. How does this restrict your help for Cradle of Hope? There are restrictions due to high construction costs. But local projects have their own advantages, such as you can receive more support from local people. Although our work for Cradle of Hope is a volunteer project it’s hard not to involve construction costs as

we have a contractor and workers. Luckily, some suppliers are very willing to provide us with materials at a discount after knowing this is a charity project, one of whom was even willing to give us some materials free if they had stock. Yet, we still need to pay construction workers. In the economic downturn local people are more cautious about their expenses; has your organisation felt the impact in terms of donations received? More or less there will be an impact although we haven’t started our new collection of donations. But as an architect, you can notice local companies are more cautious about their expenses and their investments. And I believe the case for donations will be similar. However, as I said, the most important part is not the amount of donation you gain, but the process itself - whether you can educate local people; this is more important. An economic downturn doesn’t affect this perspective. What are the plans for the near future? We’d like to do more for Macau in the short term. We have more members joining us shortly. They will continue executing our humane projects in the Philippines and our upcoming project in Nepal. And we hope we can successfully hold workshops within this year.

We have reached edition number 1,000. It has not been easy. It remains difficult. The economic downturn has led to considerable loss of income for thousands of local SME’s and the vaunted support we hear of is nothing more than mere demagogy. The devastating advertising cuts might have led anyone to think that the biggest companies in Macau lose money. But that is far from true. The major moneymakers have just been accustomed to doing much more and immediately decided to cut in order to maintain major profit margins. An understandable decision but a damaging one, nevertheless. In addition, the lack of a coherent policy to support the local press, by the government, creates even more difficulties. Outdated legislation and a clear discrimination by some government bureaus in their campaigns for the local population aggravate the challenges of the media who do not get, unlike the remaining media, financial support. If this situation is to persist, at the very least the Chief Executive should stop referring to the government's support of the media. This was not true yesterday and continues not to be so today. But enough whining. While we can we will continue to nurture the journalism that has brought this group its enviable reputation. No matter the obstacles. And we have reason to face the future with some hope. The circulation of this newspaper continues to increase and the online version could not show more satisfactory results: in the number of pages read, new readers, and average time per session. Business Daily - which next month enters its fifth year takes the opportunity of this 1,000th issue to refresh its design. Lighter, more functional, and better reading. And soon with other products in order to strengthen the position it has succeeded in garnering over these first four years: uncompromised journalism, in search of the truths that explain the facts that shape the city and the lives of its citizens.

8 Business Daily Monday, March 14 2016

GREATER CHINA BANKING

MONETARY POLICY

Regulator warns of risks from overcapacity sectors China's policymakers have taken aim at overcapacity in sectors such as coal and steel production. China's banking regulator asked jointstock banks and city commercial lenders to control exposure to industries suffering overcapacity by boosting risk assessments and collateral valuations, according to two separate notices seen by Reuters. The country's lenders have seen their non-performing loans more than double in 2015 from the previous year as economic growth slowed to its weakest rate in more than two decades. In a notice recently circulated to joint-stock banks, the China Banking Regulatory Commission (CBRC) asked lenders to assess the credit risk and potential asset losses that loans to borrowers in sectors with overcapacity posed. A joint-stock lender is a bank whose equity is held by a number of different investors, which can be

government-connected or private. In the first notice, the CBRC also asked banks to accelerate their disposal of non-performing loans, investigate innovative ways to handle bad debt and diversify their methods. At the same time, the CBRC will encourage some joint-stock banks to start investment pilot projects and asset securitisation among other things in order to improve cash flows, the first notice said. In a separate notice seen by Reuters, the CBRC also encouraged city commercial banks to tighten control of risks connected to industries suffering from over-supply. China's policymakers have taken aim at overcapacity in sectors such as coal and steel production, believed to be responsible for much of the country's corporate debt overhang. The second notice encouraged city commercial lenders to list domestically or abroad and introduce qualified investors to raise funds. It also suggested such banks set up liquidity funds. The CBRC did not immediately respond to requests for comment on either notice. REUTERS

PBOC flags stimulu restraint but says p should be flexible The central bank is trying to keep liquidity flush to support an economy undergoing the most significant structural reforms in two decades.

HINA'S central bank won't resort to excessive stimulus to bolster growth but will keep a flexible stance in the event of an economic shock - domestic or global, Governor Zhou Xiaochuan said while reiterating the authority's prudent monetary policy. Under the banner of prudent policy, the Chinese central bank has cut interest rates six times since November 2014 and has also reduced the amount of cash that commercial lenders must hold as reserves. The last policy easing was on February 29 when the People's Bank of China (PBOC) lowered the reserve requirement ratio. The central bank is trying to keep liquidity flush to support an economy undergoing the most significant structural reforms in two decades. But officials, including Zhou, have warned against excessive policy loosening that could intensify downward pressure on the yuan and spur capital outflows. "The current monetary policy is prudent with a slight loosening bias," Zhou told to reporters at a scheduled news conference in Beijing on Saturday on the side-lines of the annual parliament session. "We also want to stress that monetary policy should be adjusted dynamically depending on the judgment towards

the economic situation," he added. Zhou outlined the PBOC's five monetary policy stances as "loose", "appropriately loose", "prudent", "appropriately tight" and "tight", with flexibility on either side of each. China adopted an "appropriately loose" policy after the 2008 global crisis before shifting to a "prudent" stance in 2011. "We would adjust our monetary policy on a real-time basis. If there are big changes in the domestic and global environment, we will keep the flexibility in monetary policy to counter shocks," Zhou said. Zhou said China does not need to use currency policy to boost trade, reaffirming Beijing's stance that it will not rely on yuan depreciation to drive exports. Jin Zhongxia, executive director for China on the International Monetary Fund's policymaking board, said at a conference in New Delhi on Saturday he did not expect a "very dramatic" depreciation of yuan.

Economic pulse

Yi Gang, a vice central bank governor, told the same briefing that he expected China to achieve its annual economic growth target this year. "It's not necessary to take excessive stimulus to achieve the (growth) target," Zhou said.

EMPLOYMENT

Regulator says restructuring will not lead to mass layoffs Sources have told Reuters that China is expecting to lay off 5 million to 6 million state workers over the next two to three years. China's economic restructuring will not lead to the kind of mass layoffs that took place in the 1990s, the country's state assets regulator said on Saturday. China will focus on mergers and restructuring, not bankruptcies, Xiao Yaqing, the head of the State-owned

As s e t s S u p e r v i si o n a n d Administration Commission ( S A S AC ) , t o l d a n e w s conference. As it tries to rejuvenate its economy, China aims to reduce the number of central government-managed enterprises and launch pilot programmes that will allow

more private investment in state-dominated sectors. It is also trying to slash overcapacity in the labour-intensive coal and steel sectors. Reform plans have prompted fears that the country would face its fiercest unemployment pressures since the late 1990s, when about

28 million people were made redundant. "The situation in the 1990s was completely different," Xiao told reporters. "The foundations we have now are much stronger than before." "Protecting the interests of workers is an important aspect of the next stage of reforms, and there will be more mergers and restructurings, and as few bankruptcies as possible." Sources have told Reuters that China is expecting to lay off 5 million to 6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution. According to official estimates, layoffs from the coal and steel sectors alone are expected to reach 1.8 million as the country works to

tackle price-sapping overcapacity and shut down socalled zombie enterprises loss-making firms that cannot afford to continue operating but are propped up by local authorities. Xiao said 12 central government-run firms had been merged, bringing the total number of enterprises controlled by SASAC to 106. Profits at the firms fell 6.7 percent last year to 2.3 trillion yuan. Xiao said the main reason for the decline was the collapse in the prices of oil and steel. China has about 150,000 state-owned enterprises that manage more than 100 trillion yuan (US$15.40 trillion) in assets and employ more than 30 million people, according to the official Xinhua news agency. REUTERS

â&#x20AC;&#x153;The foundations we have now are much stronger than beforeâ&#x20AC;? Xiao Yaqing, Head of the Assets Supervision and Administration Commission

Business Daily Monday, March 14 2016

GREATER CHINA

us policy Rapidly easier credit conditions could also stoke the country's property market, which is showing signs of heat in the big cities, and put upward pressure on consumer inflation. Banks have followed the central bank's cues, slowing their lending from January's record splurge, central bank data released on Friday showed. Net new yuan-denominated loans fell to 726.6 billion yuan (US$111.80 billion) from 2.51 trillion yuan a month earlier and significantly undershot economists' expectations of 1.2 trillion yuan. Meanwhile, data released on Saturday showed continuing weakness in other key parts of the economy. China's manufacturing output in January and February grew at its weakest pace since 2008, according to data released by the National Bureau of Statistics. Retail sales, a gauge of domestic consumption, rose at the slowest rate since May 2015. However, fixed-asset investment, a crucial driver of the economy, gained 10.2 percent in the first two months from a year earlier. "Fixed-asset investment growth picked up due to stronger real estate investment," said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai. "The economy still needs support from loose monetary policy and expansionary fiscal policy going forward. Apart from the expansion of the (budget) deficit to implement tax

People’s Bank of China Governor Zhou Xiaochuan

IN BRIEF MARKETS

No more circuit breaker soon China will not reintroduce the circuit breaker mechanism to its stock markets in the next few years, Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), told reporters in Beijing on Saturday. A circuit breaker mechanism introduced in January by Liu's predecessor Xiao Gang was dismantled after only a few days. The mechanism was blamed by investors for worsening a sharp selloff in Chinese stocks. China's Shanghai and Shenzhen stock markets slumped as much as 40 percent in just a few months last summer. DEBT

Huarong supports debt-to-equity swaps

cuts, the central government needs to maintain infrastructure investment."

Housing overhang

Despite the pickup in property investment, Zhou said on Saturday that China's housing market on the whole is facing major oversupply issues. His comments are in line with the government's willingness to tolerate surging prices in the country's biggest metropolises as Beijing takes steps to flush out a huge inventory overhang in smaller cities. To boost the housing market, China has cut downpayments for first- and

second-time home buyers and lowered transaction taxes for some home buyers. In contrast, authorities in China's biggest cities have already announced measures to cool their markets in response to strong sales and prices, state media reported this month, citing Housing Minister Chen Zhenggao. Prices in the southern industrial city of Shenzhen surged nearly 52 percent in January from a year earlier. "Banks should also make their own judgment to review clients' ability to pay and their financial risks," Zhou cautioned. REUTERS

The chairman of China's biggest manager of distressed debt wants access to more capital to help resolve the country's growing volume of non-performing loans and would support debt-to-equity swaps to help prevent the spread of financial risk. Lai Xiaomin, chairman of China Huarong Asset Management, said in an interview late on Thursday that additional financing channels for the country's big asset managers would help reverse the sluggish market for bad loans. Such channels include the issuance of subordinated debt, securitization, reduction of the government's 12.5 percent capital adequacy requirements for companies that handle non-performing loans.

ECONOMIC DATA

Weak activity figures auger more stimuli Retail sales, a gauge of domestic consumption, rose 10.2 percent in the first two months. China's activity data remained weak in the first two months of 2016, with factory output growth hitting the weakest since the global financial crisis, keeping pressure on policymakers to do more to avert a sharper showdown in the world's second-largest economy. Factory output grew 5.4 percent in January and February from a year earlier, data released by the National Bureau of Statistics (NBS) showed, slowing from a 5.9 percent rise in December to the weakest since November 2008. Economists polled by Reuters had expected factory output to grow 5.6 percent in the first two months from a year earlier. Retail sales, a gauge of domestic

consumption, rose 10.2 percent in the first two months - the weakest since May 2015, versus expectations of a 10.8 percent rise. However, fixed-asset investment, a crucial driver China's economy, rose

Key Points đƫJan-Feb factory output +5.4 pct y/y, vs forecast +5.6 pct đƫJan-Feb fixed-asset investment +10.2 pct, vs forecast 9.5 pct đƫJan-Feb retail sales +10.2 pct, vs forecast 10.8 pct

10.2 percent in the first two months from a year earlier, beating expectations of 9.5 percent. The government reports combined January and February growth figures for the factory output, investment and retail sales, to smooth out seasonal distortions caused by the long Lunar New Year holiday, when most companies shut down. A spate of soft data points to further weakness at the start of the year as Beijing struggles to cushion the slowdown. Top leaders have already pledged "supply-side structural reforms" to tackle excess factory capacity and are also expected to step up policy support to help avert an economic hard landing. China's economy expanded an annual 6.9 percent in 2015, its slowest pace in 25 years. REUTERS

COMMODITIES

Authorities to boost nuclear fuel reserves China will expand its strategic uranium reserve as part of its "five-year plan" for 2016-2020, with the aim of ensuring it has enough fuel to supply a massive programme of new nuclear reactors. Beijing, which began stockpiling uranium in 2007 and is estimated by the World Nuclear Association to have 74,000 tonnes of inventory or about nine years of current demand - does not disclose details of its reserves. However, demand is expected to outstrip domestic supply in coming years and a move to increase reserves could give a boost to depressed global prices. FOREX

Regulator says cross-border outflows easing Cross-border capital outflows from China have started moderating in recent months, the country's top foreign exchange regulator said on Saturday. Pan Gongsheng, head of the State Administration of Foreign Exchange, made the remarks at a news conference on the sidelines of the annual parliament session. China's foreign exchange reserves fell US$28.57 billion in February, slightly less than expected and easing from January's slump, suggesting the central bank is scaling back its interventions to support the yuan as capital outflows slow.

10 Business Daily Monday, March 14 2016

GREATER CHINA RATINGS

Moody's cuts Hong Kong's rating outlook on risks The move prompted swift response from Hong Kong officials who defended the territory's policy frameworks and economic fundamentals. Key Points đƫMoody's cuts outlook on Hong Kong sovereign credit rating đƫCites risks from policy interference from mainland China đƫFollows cut to mainland debt rating outlook this month đƫHong Kong official says Moody's comments are speculative

Secretary John Tsang said financial regulatory regime, resilient banking sector and strong fiscal position would support the economy

OODY'S downgraded its outlook on Hong Kong's sovereign credit rating on Saturday, citing risks from China's growing political influence over the financial hub and linkages with mainland's slowing economy. The change follows the ratings agency's cut on the outlook on Chinese government debt to "negative" earlier

this month on the back of uncertainty over the mainland's capacity to implement economic reforms, rising government debt and falling reserves. Moody's downgraded its outlook on Hong Kong's long-term debt and issuer ratings to "negative" from "stable" and affirmed the Aa1 senior unsecured rating. The ratings house said in a report the strong political linkage embedded

in the "One Country, Two Systems" policy creates the risk that Hong Kong's institutions will lose some of their independence as China's influence grows. This, it said, would negatively affect policy effectiveness and credibility in Hong Kong and weaken its institutional strength relative to China's. "Hong Kong's economic and financial linkages with China also give rise to potential negative spillovers from China in case of a rise in financial stress and, ultimately weaker growth, as such developments could adversely affect Hong Kong's economy and financial sector," it said. The move prompted swift response from Hong Kong officials who defended the territory's policy frameworks and economic fundamentals.

A Hong Kong government spokesman described Moody's comments about interference from the mainland in the city's policy formulation as speculative and subjective. "There has been no evidence of mainland interference in Hong Kong affairs or Hong Kong institutions losing independence over time," the spokesman, who was not named, said in a statement from Financial Secretary John Tsang's office. In the same statement, Tsang said the city's sound economic fundamentals, financial regulatory regime, resilient banking sector and strong fiscal position would support the economy. "Those strengths, together with the Linked Exchange Rate system, will provide Hong Kong with strong buffers to deal with near-term challenges, while laying the foundation for steady growth and healthy job creation in the medium-term," Tsang said. The mainland economy contributed 43 percent of world trade growth and 35 percent of global economic growth in 2014, according to statistics from the International Monetary Fund. Hong Kong is a special administrative region of China that returned from British to Chinese rule in 1997 under a "one country, two systems" framework that guarantees broad freedoms and autonomy. In 2015, 43.6 percent of Hong Kong's exports of domestically-produced goods and 53.8 percent of its re-exports were shipped to China. In addition, 77.3 percent of tourist arrivals were from China, up from 63 percent five years ago. The economy expanded 2.4 percent in 2015, in line with the government's estimate. It is expected to expand 1-2 percent in 2016. REUTERS

Business Daily Monday, March 14 2016

ASIA Reserve Bank of India Governor Raghuram Rajan

INDIA

Reserve Bank Governor wants global rules of conduct for central banks Rajan has been a vocal critic of easing policies, saying central banks are ignoring the impact of their actions on the global economy Rajesh Kumar Singh and Rafael Nam

ESERVE Bank of India Governor Raghuram Rajan called on Saturday for global central banks to adopt a system for assessing the wider impact of their actions, including unconventional monetary policies now in use. Rajan proposed that a group of academics should measure and analyse the "spillover" effects of monetary policies and indicate which should be used and which avoided. He suggested a traffic light system, grading policies green, orange or red.

The monitoring system could be implemented through an international agreement along the lines of the Bretton Woods currency accord or via the International Monetary Fund. Rajan's speech was the highlight of a three-day International Monetary Fund event in New Delhi, attended by IMF chief Christine Lagarde and Indian Prime Minister Narendra Modi, at which worries about the global economy were front and centre. "The international community has a choice," Rajan said. "We can pretend all is well with the global financial non-system and hope that nothing goes spectacularly

wrong. Or we can start building a system for the integrated world of the 21st century." Rajan's speech came days after the European Central Bank eased monetary policy further by cutting all its main interest rates, expanding asset purchases and launching a loan programme which could see it pay banks to lend to firms and households. The Bank of Japan has also taken interest rates into negative territory for the first time while the U.S. Federal Reserve is expected to tighten monetary policy only gradually after years of near-zero rates and quantitative easing. Rajan has been a vocal critic of such policies, saying central banks seeking to fulfil

“We need new rules of the game, enforced impartially by multilateral organisations, to ensure countries adhere to international responsibilities” Raghuram Rajan, Reserve Bank of India Governor

domestically focused mandates are ignoring the impact of their actions on the global economy. Saturday's speech was the most comprehensive given on the subject by Rajan, who is widely credited with having predicted the global financial crisis that began in 2007. The former IMF economist, tipped by local media as a potential successor to Lagarde, also called on the Fund to take a lead role in ensuring policies adopted by its members do not have "beggar-thy-neighbour" consequences.

Rajan's policies

When Rajan became RBI Governor in September 2013, India was in the midst of its worst currency crisis in more than two decades as fears the Fed would begin tightening policy exposed the country's weak finances and big current account deficit. India eventually stabilised the rupee, partly by building up its foreign exchange

reserves, but his ringside view of the crisis has made him a strong critic of the kind of stimulus measures adopted by developed economies in recent years. On Saturday, he warned that such policies spook people into fearing "calamity is around the corner", leading them to save rather than to spend and thus diminishing any benefits. Rajan has stated India will not follow other countries and devalue its currency, a view endorsed on Saturday by Prime Minister Narendra Modi, who ruled out 'beggar thy neighbour' policies. Early in his tenure, Rajan raised interest rates to tackle double-digit inflation but the RBI cut by 125 basis points last year as consumer prices eased, to help boost an economy growing fast by global standards but below its potential. Markets expect another 25 bps cut in the next month after the government stuck to its fiscal deficit target for the year starting in April. That pledge was praised on Saturday by Rajan, although he declined to comment on whether it would affect the central bank's monetary policy stance. REUTERS

IMF

Lagarde urges Asia to take bigger role guiding global economy Broadening access to health and financial services is essential to unlocking the potential of the region’s 4.4 billion people, she said Asia needs to take a leadership role in the global economy that reflects the continent’s growing clout, International Monetary Fund Managing Director Christine Lagarde said. Asian officials should keep monetary policy supportive, while using fiscal policy to boost growth and macro-prudential measures to protect financial stability, Lagarde said in a speech Saturday in New Delhi.

Adopting structural reforms to boost competitiveness, growth and jobs will be key, she said. Lagarde, who was reappointed last month for a second five-year term, called Asia the “world’s most dynamic region,” noting it accounts for 40 percent of the world economy and will deliver nearly two-thirds of global growth over the next four years. “Asia now affects the world more than ever before,” Lagarde said, according to the text of her remarks. “By the same token, Asia is now more deeply affected by global economic developments than ever before -and must respond to them.”

Economic ‘miracles’

Lagarde, 60, said Asia’s rapid integration was one of the most striking

global developments of the past generation. Many countries in the continent pulled off economic "miracles," and several became world powerhouses, she said. Still, policy makers need to step up their response to a range of global challenges, including volatile markets and capital flows, financial tightening and low commodity prices, she said. In a speech this week in Washington, the IMF’s No. 2 official, David Lipton, warned that global growth is weakening, and called on the world to revive the “spirit of action” that followed the 2008 financial crisis. Despite Asia’s growth, income inequality has increased in 15 of 22 Asian economies since 1990, Lagarde said. Broadening access to health and financial services is essential to

unlocking the potential of the region’s 4.4 billion people, she said. Policy makers should focus social spending on the neediest, and make taxes more progressive, the IMF chief said. Barriers facing women should be removed, access to infrastructure such as water and electricity should be improved, and Asian countries should pursue greater trade integration, she said, adding that Asia has a “massive stake” in combating climate change. BLOOMBERG NEWS

“Asia now affects the world more than ever before” Christine Lagarde, Managing Director of the International Monetary Fund

12 Business Daily Monday, March 14 2016

ASIA INDIA

Defaulters to be blocked from markets and company boards The regulator also barred the defaulters from taking control of other listed companies. Neha Dasgupta

NDIA'S market regulator said on Saturday it would ban "wilful defaulters" from standing on boards of listed companies or raising fresh funds by issuing securities to the public, as part of a crackdown on bad bank loans.

Wayward borrowers would also be barred from registering with the Securities and Exchange Board of India (SEBI), its chairman U.K. Sinha told reporters after a meeting of its board in the capital. "If you are a wilful defaulter, how can I say that you are fit to launch a mutual fund, you are fit to be a

broker, you are fit to be a debenture trustee. So they will be debarred from all this," he told reporters," he added. Indian banks, already burdened with their highest ratio of stressed assets in 13 years, saw a surge in their bad loans provisions last quarter. Under Indian law, wilful defaulters

are classified as firms or individuals who own large businesses and deliberately avoid repayments. The regulator also barred the defaulters from taking control of other listed companies, though they will still be allowed to make a counter-offer if their firms were the target of a takeover. Consulting firm EY gave the changes a guarded welcome, saying they could have side effects. "Whilst cornering wilful defaulters is critical, the limitations it could inadvertently impose on asset recoveries needs to be thought through," EY's national leader for financial services, Abizer Diwanji, said. Indian banks urgently need to reduce their troubled loans, a panel of lawmakers said last month, calling for measures that include bolstering bank credit-appraisal capabilities and making public the names of the main defaulters. The new measures, due to come into effect in four to six weeks, come at a time when banks are piling pressure on Indian tycoon Vijay Mallya to repay more than US$1 billion owed by his airline, which stopped flying in October 2012. India's financial crime-fighting agency has summoned Mallya, who built his fortune with Kingfisher Beer, for questioning on March 18. A spokesman for Mallya's holding company, UB Group, declined to comment on the summons on Friday, though Mallya said in a Twitter message that he would comply with domestic laws. REUTERS

Key Points The new measures come at a time when banks are piling pressure on Indian tycoon Vijay Mallya to repay more than US$1 billion owed by his airline

đƫWilful defaulters barred from taking board positions đƫNew rules for wilful defaulters to come into effect in 4-6 weeks

MALAYSIA

Finance official set to be central bank governor Mohd Irwan was one of the candidates short-listed for the job along with other three top rank officials A top Malaysian finance ministry official is set to be appointed central bank

governor to replace Zeti Akhtar Aziz next week, the Wall Street Journal

reported, citing unidentified sources. Mohd Irwan Serigar Abdullah will replace Zeti, who steps down as Bank Negara Malaysia (BNM) governor on April 30 after 16 years at the helm, the newspaper said.

When contacted by Reuters, Mohd Irwan said in a text message he did not know if he had been shortlisted for the role. A spokesman at the Prime Minister's Office told Reuters he would not comment on speculation. A central bank spokeswoman said the bank could not comment on the matter. Zeti is widely respected, and credited for pushing

‘Current Governor Zeti Akhtar Aziz steps down on April 30 after 16 years at the helm’

Paulo A. Azevedo, pazevedo@macaubusinessdaily.com EDITORIAL COUNCIL Paulo A. Azevedo; José I. Duarte; Mandy Kuok NEWSDESK João Santos Filipe; Michael Armstrong; Óscar Guijarro; Kam Leong; Joanne Kuai; Bami Lio; Annie Lao; Kelsey Wilhelm GROUP SENIOR ANALYST José I. Duarte DESIGN Francisco Cordeiro WEB & IT Janne Louhikari PHOTOGRAPHY Carmo Correia CONTRIBUTORS James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani 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. ADDRESS Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau TEL. (853) 2833 1258 / 2870 5909 FAX (853) 2833 1487 E-MAIL newsdesk@macaubusinessdaily.com ADVERTISING advertising@macaubusinessdaily.com SUBSCRIPTIONS sub@macaubusinessdaily.com ONLINE www.macaubusinessdaily.com FOUNDER & PUBLISHER

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reforms and sound policies, as well as protecting the independence of the central bank. There has been no official word on her replacement. Market participants feared political interference in the appointment by Prime Minister Najib Razak's government especially after BNM insisted that state-owned 1Malaysia Development Berhad (1MDB) be charged for fiscal mismanagement. Mohd Irwan was one of the candidates short-listed for the job along with deputy central bank governor Muhammad Ibrahim, the minister in the Prime Minister's Department in charge of Economic Planning Abdul Wahid Omar and the ambassador to the United States Awang Adek Hussin, Reuters reported in February. A career civil servant, Mohd Irwan is Treasury secretary-general at the Finance Ministry, which is headed by Prime Minister Najib. He is also a member of the board of advisers for 1MDB. REUTERS

Business Daily Monday, March 14 2016

ASIA JAPAN

Central bank to debate exemption in short-term funds from negative rates The debate highlights the difficulties facing the Bank of Japan after its January 29 decision to push a key policy rate below zero. Leika Kihara and Sumio Ito

HE Bank of Japan's (BOJ) policy board is set to discuss this week whether to exempt US$90 billion in short-term funds from its newly imposed negative interest rate, people familiar with the matter said, after the securities industry warned that investment money would be driven into bank deposits. Some in the BOJ are sympathetic to the request, which came from the Investment Trusts Association, the sources said, because a flow from investment to bank accounts would go against a push by Prime Minister Shinzo Abe and the central bank to move more of Japan's immense savings out of deposits and government bonds and into more productive investments, to kick-start growth and defeat stubborn deflation. But other central bankers worry that granting an exemption from negative rates for "money reserve funds" (MRFs) - a low-risk product brokerages offer investors to temporarily park their cash - could create a troublesome precedent as the financial industry seeks to shield other investments from negative rates, the people say. "MRFs play an important role in fund settlement," said one of the sources.

Another said: "I think it's only natural (for the BOJ board) to debate it (at the policy meeting on Monday and Tuesday)." But another of the sources said: "This is a touchy issue ... It raises the question of whether (allowing an exemption) could lead to similar requests by banks." A BOJ spokesman said he could not comment, citing a news blackout before the policy meeting. The debate highlights the difficulties facing the BOJ after its January 29 decision to push a key policy rate below zero for the first time by imposing a 0.1 percent charge on some of the excess reserves financial institutions park with the BOJ. The decision, meant to spur lending and put to work more of Japan's 1.6 quadrillion yen (US$14 trillion) in personal financial assets, instead

â&#x20AC;&#x153;Banks could ultimately place restrictions on large corporate deposits and money trustsâ&#x20AC;? Masao Muraki and Hiroshi Torii, Analysts at Deutsche Bank

IN BRIEF prompted a sharp rise in the yen, steep falls in shares and caused many individuals to hoard cash. The board has instructed the BOJ's staff to discuss the feasibility of making MRF an exception, sources say. BOJ press representatives could not immediately be reached for comment. "We expect a heavy flow of funds seeking to avoid negative interest rates ... into bank deposits under the current conditions," Deutsche Bank analysts Masao Muraki and Hiroshi Torii said in a recent note to clients. The securities industry shows no sign of panic about outflows but has made clear it wants an exemption, given the potential drying-up of funds. "We would like to ask (the BOJ) to respond, giving full consideration to the nature of MRFs" in funds settlement, Yoshio Okubo, vice chairman of the trusts association, told a news conference on Friday. MRFs totalled 10.07 trillion yen (US$88.5 billion) at the end of February, the trusts association says, or 11 percent of Japan's investment trusts. The Financial Services Agency, the industry's main regulator, last month suspended a requirement on MRFs that had threatened to make them post losses as a result of the BOJ's negative-rate policy, a source told Reuters at the time. The funds have no explicit guarantee to protect the principal of investments, but the industry would be loath to make investors suffer losses for fear of major outflows on what are viewed as safe investments. So the FSA agreed to temporarily waive the requirement that MRFs put most of their investment funds in securities such as bonds and commercial paper, this source said. Market interest rates have gone negative as far out as the 10-year bond yield. REUTERS

INDONESIA

Retail sales grow Indonesia's retail sales in January grew 12.5 percent from a year earlier, bolstered by information and telecommunication equipment especially electronics, a Bank Indonesia survey showed on Friday. December annual retail sales growth was revised up to 11.4 percent from the previously reported 10.4 percent. The survey of 700 retailers in 10 major cities predicted slower February retail sales growth of 11.9 percent. Respondents were optimistic over retail sales in the next three months in line with higher demands ahead of and during the Muslim fasting month in June. AUSTRALIA

Aboriginal landowners approve mine expansion Australia's South32, the world biggest producer of manganese, has reached an in-principle agreement with traditional indigenous land owners at Groote Eylandt, in the Gulf of Carpentaria, over the expansion of a mine there, a company spokeswoman said. The expansion plan has not received the required government approval, but a South32 spokeswoman told Reuters the plan could extend the lifespan and expand the scale of Groote Eylandt's GEMCO manganese mine, a joint venture in which South32 holds a controlling 60 percent stake and Anglo American holds the remaining 40 percent. JAPAN

Government mulls next Post Bank CEO Japan's government is considering appointing Japan Post Bank Co President Masatsugu Nagato as the successor to head the bank's parent company, Japan Post Holdings Co, local media reported on Saturday. Reuters reported earlier this month that Japan Post Holdings Chief Executive Taizo Nishimuro is set to resign in coming weeks amid speculation over the 80-year-old CEO's health following his hospitalisation nearly a month ago. The government, which still owns more than 80 percent of Japan Post Holdings, is in the final stages of selecting Nagato, Sankei newspaper reported, without citing sources. SRI LANKA

Approves Chinese-backed port works resumption

Japan banks experiencing below zero rates

Sri Lanka has granted approval for a US$1.4 billion Chinese-backed real estate project in Colombo to resume construction, ending a year-long delay, Xinhua reported. President Maithripala Sirisena's government suspended the project in March last year citing various irregularities including a lack of proper permits and approvals. Sri Lanka's international trade minister, Malik Samarawickrama, was quoted by Xinhua as saying the cabinet had granted approval for the project, which is funded by China Communication Construction Company and locally handled by CHEC Port City Colombo.

14 Business Daily Monday, March 14 2016

INTERNATIONAL IN BRIEF BRAZIL

Rousseff allies to decide fate of coalition President Dilma Rousseff of Brazil could lose the support of the biggest party in her ruling coalition when the leadership of the Democratic Movement Party votes next month on its relationship with the government. The motion discussed in the PMDB’s national convention Saturday sets a deadline of 30 days for the party to re-evaluate its alliance with Rousseff’s unpopular administration, including the option to leave the coalition and step down from six ministries. Under another proposal, the party would retain its ministries but allow its legislators to vote as they wish, including in favour of impeachment. FINLAND

Fitch cuts rate to AA+ Finland had its credit grade cut to AA+ by Fitch Ratings, which cited a limited potential for a pickup in economic growth. “Economic performance remains weak,” Fitch said in a statement Friday announcing the reduction to the second-highest credit grade. Finland had a triple-A rating from Fitch since 1998. The company changed its outlook to negative in March 2015, five months after Standard & Poor’s lowered the nation to AA+. The lower credit rating hasn’t hurt the country’s ability to borrow. Since the S&P downgrade, 10-year government bond yields have fallen 0.44 percentage point. U.S.

Government to deploy digital trade experts The U.S. Commerce Department said it would begin deploying digital trade experts in overseas markets as part of a pilot program intended to help U.S. businesses navigate foreign Internet regulations when selling digital products or transferring data abroad. The digital attachés will rely on "on-the-ground expertise" to provide export assistance to firms trying to understand and comply with another country's Internet policies, such as data localization requirements, U.S. Commerce Secretary Penny Pritzker told Reuters in an interview. "This is a new area that needs more specialized attention," Pritzker said. PERU

Central bank will not likely hike reserve deposits Peru's central bank said it does not expect to raise commercial banks' local currency reserve deposit requirements again following a 25-basis-point hike this month. Central bank Chief Economist Adrian Armas said the previous level of 0.75 percent was "exceptionally low." The increase to 1 percent likely withdrew some US$50 million from the economy, according to the central bank. "For now, no new adjustments are in the works. The conditions of the monetary market would have to change," Armas said on a conference call with reporters.

LUSA

Osborne during his visit to China last year UNITED KINGDOM

Chancellor of Exchequer to cut spending further Many economists have warned that cutting spending too quickly now might aggravate the slowing of Britain's economy

RITISH finance minister George Osborne said he would announce deeper cuts to public spending this week in order to protect his plan to eliminate the budget deficit from a weakening of the economy. In a newspaper article published yesterday, Osborne warned that China's slowdown, the oil price fall, interest rate changes in some countries and political instability in the Middle East meant the world was facing its most uncertain time since the financial crisis. "In short, the hopes of a stronger global recovery have evaporated," he wrote in the Sun yesterday. Osborne also said a decision by

Britain to leave the European Union in a referendum in June would add to uncertainty. He said his annual budget statement, which he is due to announce on Wednesday, would include action to ensure Britain stuck to his plan to fix its still weak public finances. "So we're going to need to look for more savings in the public spending, so the country lives within its means," he said, going a bit further than a previous comment that he might have to cut spending further. Osborne is considered a leading candidate to replace Prime Minister David Cameron as head of the Conservative Party and has sought to affirm his commitment to

fiscal discipline with his plan to turn Britain's budget deficit into a surplus by the end of the decade. But that plan appears to have been knocked off course by a slowdown in Britain's economy which grew by 2.2 percent in 2015, weaker than growth of 2.4 percent pencilled into Osborne's budget plans late last year. Many economists have questioned the need to aim for a budget surplus and have warned that cutting spending too quickly now might aggravate the slowing of Britain's economy. Capital Economics, a consultancy, said last week that Osborne might announce spending cuts for the later part of the decade so as not to hurt growth in the short term. REUTERS

UNITED STATES

Weak world picture to mark Federal Reserve meeting IMF Deputy Managing Director David Lipton called on central banks to keep monetary policy loose and governments to spend more to boost growth. Paul Handley

Federal Reserve policymakers will hold their finger away from the ratehike trigger when they meet this week, analysts say, but chances are it could move a bit closer. Meeting after the European Central Bank cut interest rates Thursday in the face of weakening eurozone economic growth and inflation, the Fed is expected to heed caution even as it sees good signs of strength in the US economy. Those signs though, analysts say, increasingly point to June --or possibly even April -- for the next increase in the federal funds rate, the Fed's short-term benchmark, after December's hike to 0.25-0.50 percent. "Given faster-than-expected job growth in February coupled with another quarter of disappointingly slow productivity growth in Q4, the case for tightening is arguably stronger now than in December," said an analysis by economists at FTN Financial.

Markets will focus on how optimistic the Federal Open Market Committee (FOMC) is in its policy statement at the end of the two-day meeting on Wednesday. An improved outlook is not certain. The Fed is caught between crosscurrents and needs to wait to see how those develop. One is the strength of the US economy. Job creation and consumer spending both remain strong and promise to keep driving domestic activity, after a winter slowdown. Inflation though is still very weak. But Fed Vice Chair Stanley Fischer said on last Monday that he expects the negative drag on growth and inflation from the collapse of the oil market to disappear as oil prices bottom out. After that, the economy will see more clearly the result of strong job gains and consumer pocketbooks fattened by cheap gasoline prices, he said. And that could justify higher interest rates. But the other current is the slowdown in growth in the rest of the

world. Recent dire warnings by the International Monetary Fund over this counsel the Fed to be cautious about tightening policy. IMF Deputy Managing Director David Lipton said that there is an increasingly "dangerous" view that policymakers worldwide have exhausted their options for boosting growth or have simply lost their will. In recent months, he said, "risks have increased further, with volatile financial markets and low commodity prices creating fresh concerns about the health of the global economy." He called on central banks to keep monetary policy loose and governments to spend more to boost growth. That view was reflected in recent speeches by Fed governor and FOMC member Lael Brainard, who has focused on the volatility in global markets and weak emerging market economies as signals the Fed should hold off and not risk more damage. "Given weak and decelerating foreign demand, it is critical to carefully protect and preserve the progress we have made here at home through prudent adjustments to the policy path," she said on last Monday. Fischer though said he sees inflation picking up soon, suggesting he could be biased towards tightening policy sooner to prevent price gains from getting ahead of the central bank. "We may well at present be seeing the first stirrings of an increase in the inflation rate -- something that we would like to happen," he said. AFP

Business Daily Monday, March 14 2016

OPINION BUSINESS WIRES

THE KOREA HERALD The World Trade Organization has ruled in favour of South Korea in its suit against the United States over its anti-dumping duties on the country's washer manufacturers, the government said Saturday. The WTO Panel has found that the 2013 U.S. measure was taken in breach of WTO rules, according to the Ministry of Trade, Industry and Energy. The panel circulated a related report to the member states of the WTO the day. The U.S. has 60 days to decide whether to appeal against the decision.

TAIPEI TIMES An annual parade launched by a coalition of more than 60 groups opposed to nuclear power was held in Taipei on Saturday. Noting the anniversary on Friday of Japan’s Fukushima Dai-ichi nuclear disaster, the National Nuclear Abolition Action Platform said many people in Japan have been forced to move away from their homes due to radioactive contamination, and it does not want a similar situation in Taiwan. The theme for the parade was “farewell nuclear power and facing nuclear waste,” with activists demanding a nuclear-free nation and a fair solution to nuclear waste disposal.

Trade in a time of protectionism A

LUSA

PHILSTAR The Bureau of Internal Revenue (BIR) warned taxpayers to file income tax returns electronically and pay the necessary taxes or face penalties and undergo a dreaded tax audit. “People are complaining that paying taxes is very tedious. Now that we are doing this, we hope they will follow and support us,” BIR commissioner Kim Henares said in a recent phone interview. In a notice on its website, the BIR said it would impose a surcharge of 25 percent of the tax due and P1,000 penalty per return for qualified taxpayers who will not use its electronic Filing and Payment System (e-FPS).

BANGKOK POST Thailand is targeting Iran as its key export market in the Middle East following the lifting of international sanctions against the country. Deputy government spokesman Werachon Sukondhapatipak was speaking after Iranian Foreign Minister Mohammad Javad Zarif paid a courtesy call on Prime Minister Prayut Chan-ocha (pictured right) at Government House on Friday. He said the action plan on economic and trade cooperation between Thailand and Iran took effect on January 16 this year, which paves the way for the two countries to work together on a wide range of issues, including trade, investment, energy and transport.

LUSA

s China’s economy slows and growth in the developed world remains anaemic, governments across Asia are working to keep their economies on an upward trajectory. In Sri Lanka, where I am Prime Minister, the challenge is to find a way to accelerate our already steady economic growth. One thing is clear: We cannot expect the rest of the world to welcome our economic ambitions the way it once opened its arms to China’s rapid rise as an economic power or – in earlier decades – cheered on the growth of Japan and the so-called Asian Tigers, including South Korea. Today, we Asians are witnessing, on an almost daily basis, fierce political assaults on the tools and policies that have helped lift hundreds of millions of our citizens out of poverty. Indeed, this year, free trade appears to be the scapegoat of choice among the world’s assorted populists and demagogues. In the United States’ presidential election campaign, for example, the leading candidates in both the Republican and Democratic primaries have questioned the wisdom of seeking greater openness in world trade. In the United Kingdom, eurosceptics campaigning for the country to leave the European Union denigrate the benefits of the single European market. Elsewhere in Europe, populists are demanding that the drawbridges of trade be raised. Open trade is under attack even in parts of Asia. Japanese Prime Minister Shinzo Abe had to drag some of his country’s special-interest groups kicking and screaming into the Trans-Pacific Partnership. Similarly, Indian Prime Minister Narendra Modi has been unable to convince state governors to lower trade barriers within the country. And in Sri Lanka, the “economic and technology agreement” that my government recently planned to sign with India, in order to bring about greater economic integration, has come under ferocious political attack. For the most part, however, Asia’s political leaders retain a very positive view of the benefits of open trade. After all, much of the past four decades of robust growth can be attributed to the fact that world markets were receptive to Asian goods. All we needed to do to get our economies growing, it seemed, was to identify our comparative advantage, produce quality goods at competitive prices, and then export as much as we could. For decades, this model worked extraordinarily well, and China, Japan, South Korea, and the countries of Southeast Asia benefited greatly from it. Even today, with world trade in the doldrums, regional trade remains a key component of these countries’ growth strategies. In South Asia, however, we have been much slower to take advantage of the opportunities that can arise from more open trade – with regrettable consequences: The region is home to 44% of the world’s poorest people.

Ranil Wickremesinghe Prime Minister of Sri Lanka

We have an obligation to try to use trade to lift our people out of poverty. But with free trade rapidly becoming a global bugbear, the window for generating growth by tapping into world markets appears to be closing quickly. If trade is to become a key driver of growth in Sri Lanka or elsewhere in the region, we will most likely have to generate it ourselves – by transforming South Asia from one of the world’s least economically integrated regions into one of its most integrated. Today, intra-regional trade accounts for just 5% of South Asia’s total trade, compared to 25% for the Association of Southeast Asian Nations. This vast untapped potential presents the region with an opportunity for growth that does not rely on the strength of the world economy. Last year, the World Bank estimated that annual trade between India and Pakistan could jump from US$1 billion today to US$10 billion – if tariffs and other barriers were slashed to levels recommended by the World Trade Organization. Tariffs and other needless restrictions hobble trade among all South Asian countries. These obstacles were supposed to be swept away with the establishment of the South Asian Association for Regional Cooperation, the largest of all the world’s regional trading blocs, with close to two billion people. But SAARC’s reliance on bilateral negotiations has slowed the process to a crawl, keeping the region much poorer than it needs to be. If SAARC is to succeed, a new multilateral mechanism for cooperation will be needed. As climate change takes its toll, the stakes will only get higher. Our still largely agrarian countries, with much of their territory in low-lying coastal regions, are dangerously exposed to rising sea levels and violent weather. Receding Himalayan glaciers will disrupt the lives – and livelihoods – of some 600 million people in Pakistan, Nepal, and northern India. The political obstacles to effective action will be stiff. Indeed, there is political opposition to greater regional economic integration in every SAARC country. But the scale of the challenges facing the region should impel all of SAARC’s members toward greater cooperation. It is time for SAARC’s member governments to rise to the challenge. By working together, we can lay the foundations of a regional economy as dynamic as that of our neighbours to the east.

“WE HAVE AN OBLIGATION TO TRY TO USE TRADE TO LIFT OUR PEOPLE OUT OF POVERTY”

PROJECT SYNDICATE

16 Business Daily Monday, March 14 2016

CLOSING accounting standards yesterday. That compares with an average estimate of 17.9 billion yuan in net income, according to 14 analysts surveyed by Bloomberg. Revenue Vanke profit gains after property curbs eased China Vanke Co., the developer in the middle of a tug-of- grew 34 percent to 195.5 billion yuan, it said. China has loosened property curbs since November 2014 to boost war for its control, posted a 15 percent increase in fullyear profit after the Chinese government eased property sluggish real estate development that has weighed curbs to prop up demand for homes. Net income rose to on economic growth. Sales in the 14 cities where the 18.1 billion yuan (US$2.8 billion), or 1.64 yuan a share, from company derives most of its revenue, including Beijing 15.7 billion yuan, or 1.43 yuan a share, a year earlier, Vanke and Shanghai, “rebounded significantly” last year, China’s biggest listed property developer by value said. BLOOMBERG NEWS said in a Shenzhen exchange filing based on Chinese RESULTS

REAL ESTATE

Blackstone seals hotel deal with Anbang for US$6.5 Billion The transaction marks a deeper push into U.S. hotels for Beijing-based company Hui-yong Yu

LACKSTONE Group LP agreed to sell Strategic Hotels & Resorts Inc. to China’s Anbang Insurance Group Co. for about US$6.5 billion, just three months after it purchased the U.S. luxury-resort company, according to people with knowledge of the matter. The price is about US$450 million more than Blackstone paid for Strategic in December. The New York-based private equity firm had been planning to sell individual properties in the portfolio before Anbang made a pre-emptive offer for the entire company, said the people, who asked not to be named because the transaction is private. Christine Anderson, a spokeswoman for Blackstone, declined to comment, as

did Philip Yee, a managing director at Anbang’s North American unit. The transaction marks a deeper push into U.S. hotels for Beijing-based Anbang, which last year purchased N e w Y o r k’ s l a n d m a r k Waldorf Astoria. It would rank as the largest U.S. real estate purchase by a buyer from mainland China, according to data compiled by Bloomberg. Strategic owns 16 properties across the U.S., including the Four Seasons resorts in Scottsdale, Arizona, and

Jackson Hole, Wyoming; Ritz-Carltons in Half Moon Bay and Laguna Niguel, California; San Diego’s Hotel del Coronado; and Manhattan’s JW Marriott Essex House. Luxury and ultra-luxury properties have been among the most sought-after lodging types in recent years, partly because their locations and construction costs make them hard to replace. Demand for trophy hotels remains strong even as the U.S. lodging industry faces the latter stages of a six-year

recovery, with slowing growth in room rates and occupancy. “U.S. trophy assets continue to be in high demand by offshore investors, both Asian and Middle Eastern,” said Gilda Perez-Alvarado, a managing director at commercial broker Jones Lang LaSalle Inc. “This is being driven by global market volatility, the continued strength of the U.S. dollar and increased allocations for commercial real estate in an effort to diversify investment portfolios.”

Chinese investors have been buying foreign properties amid slowing growth at home and a desire for the perceived safety and value of U.S. real estate. Anbang in February 2015 paid a record US$1.95 billion for the Waldorf Astoria on Manhattan’s Park Avenue. Th e s e l l e r w a s H i l t o n Worldwide Holdings Inc., which was majority-owned by Blackstone at the time. Anbang also has purchased or agreed to buy office buildings in New York and Canada. BLOOMBERG NEWS

“U.S. trophy assets continue to be in high demand by offshore investors, both Asian and Middle Eastern” Gilda Perez-Alvarado, Managing director at Jones Lang LaSalle Inc.

Anbang in February 2015 paid a record US$1.95 billion for the Waldorf Astoria on Manhattan's Park Avenue

ART MARKET

LAW ENFORCEMENT

TECHNOLOGY

Rare Ming dynasty Buddhas sold at auction for US$6.9 million

Mainland judges pledge greater effort against financial crime

South Korean Go player beats Google program

A set of three Buddha sculptures from the 15th-century Ming dynasty went under the hammer in France on Saturday for more than 6.2 million euros, over 10 times the estimated sale price, the auction house said, in a flourishing market for Chinese art. An Asian collector snapped up the three gilded bronze pieces, which had initially been expected to fetch between 400,000 and 600,000 euros. The three seated Buddhas were offered for sale along with other pieces from a private collection originating in China and Tibet between 1910 and 1925, the auction house in Bordeaux, south-western France, said. "These works of great rarity aroused much interest from... international collectors including many Chinese," it said. "They were acquired for a sum of 6,292,000 euros (US$6.9 million) by an Asian collector who was present at the auction," it added. In June 2015, an 18th-century Chinese scroll attributed to the painter Gu Quan sold for 5.5 million euros at Christie's in Paris. In April 2013, a 17th-century painting on Chinese silk was sold by Briscadieu for 3.3 million euros. AFP

China’s judicial authorities vowed to do more to combat financial crimes in the coming year, as the economy slows and leaders remain concerned that financial risks might lead to higher unemployment and social unrest. Chief prosecutor Cao Jianming said in his annual report to the country’s top legislature on Sunday that his department would prioritize investigations into finance, securities and insurance to "guarantee a healthy development of capital market." The Supreme People’s Procuratorate plans to tackle financial crimes involving illegal fundraising to protect the public and focus on contract fraud crimes to establish a "fair and orderly environment of market competition", he said. People’s Supreme Court President Zhou Qiang said in a separate report to the National People’s Congress in Beijing that the top court would strengthen oversight of financial crimes involving the Internet. Chinese courts last year handled 1.4 million cases involving peer-to-peer lending worth 821 billion yuan (US$126 billion), Zhou said. More than 72,000 people were convicted for crimes involving illegal fundraising and P2P lending. BLOOMBERG NEWS

South Korean Lee Sedol won his first match against a computer program developed by a Google subsidiary yesterday in the ancient board game Go, denying a clean sweep for the artificial intelligence in a five-match series. Lee, one of the world's top players and a holder of 18 international titles, recovered from three consecutive losses against the AlphaGo program developed by DeepMind. "This win is invaluable and I would not trade it for anything else in the world," a jubilant Lee told reporters after the match, thanking fans for their support. The 33-year-old professional player has admitted to underestimating AlphaGo's skills but also said the program was not perfect, asking supporters to keep watching the contest. DeepMind founder Demis Hassabis told reporters the loss was a valuable learning tool and would help identify weaknesses in the programme that his team needed to address. "It's a real testament to Mr Lee's incredible fighting spirit and he was able to play so brilliantly today after three defeats," Hassabis said. REUTERS