Macau Business Daily April 11, 2016 by Business Daily

Values of properties for sale and rent to be expressed in MOP Real Estate Page 2

Monday, April 11 2016 Year V Nr. 1019 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Taxis

Cabbies to protest again today in escalating resistance to new transport bureau proposals Page 2

Economic barometer

www.macaubusinessdaily.com

A Bank of Communications report detects signs of improvement in the Mainland economy Page 9

GMOs

Chinese citizens protest ChemChinaSyngenta deal Page 8

Las Vegas Sands Settles SEC Account Gaming

Under investigation since 2011. But the U.S. Security and Exchange Commission has settled on a sum with Las Vegas Sands Corp. The probe into alleged violation of anti-bribery laws revolving around paying a consultant to do business in China and Macau has been closed. Subject to a settlement of US$9 mln by the gaming behemoth. Page 5

Putting the Macau into Myanmar Lots happening in the new frontier economy of Myanmar. Tim Wong, Secretary General and Deputy Director General of the Macau Myanmar Friendship Association, tells Business Daily that now is the time to invest. New democratic leadership is opening up vast opportunities. From hospitality to gaming to infrastructure, says Wong, following a recent fact-finding visit to the country with local entrepreneurs. Interview Pages 6&7

Prescription Banker changed may snitch E-pharmacy The incipient online drugs market might skyrocket in China. If legislation opens up the way medicines are prescribed. Such is the conclusion of the Boston Consulting Group. The PRC’s online pharmacy business has grown from virtually nothing five years ago to more than 7 billion yuan in 2014. Pages 8-9

Heist One of the largest bank heists in modern history. A Philippine bank manager has been accused of helping launder US$81 mln spirited from Bangladesh’s foreign reserves. A way out presents itself: turn state witness. Page 7 I SSN 2226-8294

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Macau MACAU

TRAVEL

Macau and Armenia enter into visa exemption agreement

and Justice Chan Hoi Fan and Armenian Ambassador to China Armen Sargsyan Macau SAR passport holders and Macau in February at Macau Government headquarters. Currently, a total of 120 SAR Travel Permit holders are now officially exempted from having to apply countries or territories have agreed to grant visa-free or visa-upon-arrival for visas upon entering Armenia for a access to Macau passport holders, while maximum of 90 days, according to a notice in the Official Gazette. This comes 11 countries have agreed to grant Macau travel permit holders visa-free access to about following an agreement signed their territory. between Secretary for Administration

WORKER SAFETY

Some 112 cases of work safety violation logged last year

CONSUMER SURVEY CONSUMER CONFIDENCE GENERALLY ON THE RISE

Consumer confidence in local economy waning Annie Lao annie.lao@macaubusinessdaily.com

OCAL consumers are wavering in their confidence in the local economy, as the Consumer Confidence Index registered an 84 of the potential 200 points, a study conducted by the Macau University of Science and Technology (MUST) released on Friday reveals.

The value indicates a 1.65 per cent drop from the same quarter last year, when the index registered a value of 85.41. However, it does show a recent improvement in the form of a 1.64 per cent rise compared to the final quarter of 2015. Index scores below 100 indicate a lack of confidence while scores over 100 imply a degree of positive outlook. The six sub-indices of the study comprise the local economy, employment, living standards, purchase of residential property, price levels and stock investment. The only segment of the study to register a drop compared to the previous quarter was that of the local economy.

Going up

By contrast, the purchase of residential property sub-index increased by 6.59 per cent from the previous quarter, scoring 68.63 – the lowest-ranking of the sub-indices - indicating that although Macau consumers don’t

have much faith in purchasing a property, conditions are improving. The consumer confidence index in employment unsurprisingly remains the highest at 98.33, showing a slight 0.43 per cent increase compared to the previous quarter. The ‘price levels’ sub-index increased 6.23 per cent from the previous quarter, scoring 75.74, while the living standards sub-index stood at 96.07 - slightly increasing 0.55 per cent compared to the previous quarter, indicating a slight easing of consumers’ concerns about inflation. In addition, the consumer confidence index in stock investment posted a 1.17 per cent increase, scoring 76.58. The survey was conducted from March 7 to 13, and consisted of interviews with 1,016 Macau residents over 18 years of age via phone calls. The Institute for Sustainable Development at MUST has released the index every quarter since 2009.

Last year, violations of the Occupational Safety Card system for the construction industry amounted to a total of 112 cases, revealed official data from the Labour Affairs Bureau (DSAL) according to a report by local TDM Chinese Radio on Saturday. Of the violations, 102 cases involved employees with 10 cases of employers breaching work safety standards. The number of cases, however, does not represent a serious need for concern regarding worker safety, according to DSAL. “In some of the cases, the employees forgot to renew their Occupational Safety Cards after five years, thus three hours of re-taking the course is needed,” DSAL Director Wong Chi Hong said. Mr. Wong pointed out that many construction sites currently have stringent requirements in place for workers to have their Occupational Safety Cards checked before being allowed to enter the work sites. Amendments to the Occupational Safety and Health statutes are still under discussion with the Macau Social Workers Association (MSWA), Mr. Wong told the broadcaster, saying that DSAL have now collected opinions from the construction industry. Additionally, feedback related to the labour relations from MSWA concerning the end of last year has been collected, although DSAL has yet to set up a timetable for amending the regulations, said Wong. A.L.

REAL ESTATE

TAXIS CABBIES TO PROTEST AGAIN TODAY

Only patacas permissible

Taxi infractions more numerous than those of illegal transport vehicles

Real estate agencies must express all prices in MOP, according to a recent revision of the Code of Practice announced by the Macao SAR Government Consumer Council. All Hong Kong dollar amounts are ‘for reference only’, states their revised rules. Additionally, all information relating to the promotion and advertising of real estate properties must be up-to-date and correct, state the revised rules. To further improve consumer rights, the rules state that there must be ‘clear indication’ of whether the

referred space is the gross floor area or the usable floor space. Additionally, for any legal transaction involving the purchase or rental of a property the owner or landlord must provide written evidence from the land registry. The rules also state that in the case of advance payment, unless otherwise stated both owner and renter have ‘the obligation to pay a part of the commission to the real estate agent,’ and that this amount is non-reimbursable, with any remaining amount to be liquidated at the time of sale. When closing the deal both the owner and the tenant “should pay the commission to the real estate agent r e n d e ri n g th e respective service, under the terms of the contract signed.’

Since the beginning of the year 1,277 taxi and illegal transport vehicle cases, such as Uber, have been logged by the PSP. The Public Security Police Force (PSP) has logged 1,277 cases of taxi and illegal transport vehicles infractions as a result of a surveillance operation conducted by the PSP and the Transport Bureau, TDM reported. Of these infractions, 472 involved refusal to transport passengers, while the remaining 462 were due to overcharging customers. The information comes after members of the Taxi Drivers Rights Association protested the harsher punishments introduced by the Transport Bureau for taxi violations.

The proposed increase in fines to as much as MOP12,000 (US$2500) for overcharging or refusing passengers, installation of recording equipment in taxis, and the suspension of licences for those who break the law more than eight time were opposed by taxi drivers who recently took to the streets in protest. Taxi drivers have announced that they plan to organise another protest today, with drivers meeting at 10:00am in the Portas do Cerco area and beginning their protest at 10:30am, reported TDM. The taxis will go from Portas do Cerco to the Transit Services Bureau headquarters in Estrada D. Maria II near CEM. The organisers predict 50 to 100 taxis will participate in the protest. Registered cases for illegal transport, including the Uber service, have amounted to 93 since the beginning of 2016. N.M.

Business Daily Monday, March Business Daily Monday, April14 11 2016 2016 3

Macau MACAU FINANCE

MINIMUM WAGE

Hopes pinned on March for fiscal reserves recovery Drops in fiscal reserves for first two months due to fluctuating markets Annie Lao annie.lao@macaubusinessdaily.com

Initial estimates expect losses in the territory’s fiscal reserves for the first two months of the year due to investments, said Anselmo Teng Lin Seng – head of the Monetary Authority of Macao (AMCM) - on Saturday, according to local Chinese radio TDM. Mr. Teng told the broadcaster that stock market movements have been active in the first quarter, with large currency fluctuations both for developing and developed countries. “In March, it may recover a bit,” said Teng. “The data of the first quarter will be released in two weeks’ time.” Financial reserves involving investment projects in Guangdong Province have yet to get off the ground, according to Teng, who told the broadcaster that negotiations are ongoing with the Guangdong Provincial Government, with a final decision yet to be reached. Major concerns involve information safety, certainty of returns and public opinion concerning the efforts – which Mr. Teng says are being taken into consideration. More time is needed, he said. When queried about any recent developments concerning the Panama Papers and whether Macau elements are being investigated by the AMCM due to their potential involvement in offshore activity Mr. Teng declined

to comment claiming a lack of new information regarding the topic

Developing other financial services

AMCM is currently considering how to promote financial leasing and developing asset management in Macau, reported TDM. In a written request to the AMCM head, Legislator Chan Meng Kam questioned Macau’s innovative ability in attracting financing from foreign banks in setting up investment funds and in the debt and equity trading markets.

Teng responded that currently Macau can benefit most from utilising unregulated controls of foreign exchange and the freedom of capital flow by concentrating on developing these as well as financial leasing and asset management. AMCM is currently looking into the legal regulations related to the financial industry, Teng told TDM explaining that local financial institutions should actively attract more Mainlanders to use the wealth management services offered by Macau’s financial institutions.

Gov’t to implement Universal Minimum Wages Act by 2018 The bill will be handed to the Macau Social Workers Association for discussion within the year. The Universal Minimum Wages Act will be implemented by December 31 2018 and will be passed to Macau Social Workers Association (MSWA) for discussion as soon as possible, said Labour Affairs Bureau (DSAL) Director Wong Chi Hong, according to a report by local TDM Chinese Radio on Saturday. Currently, DSAL says that it will pass the bill for the wages act to the MSWA for discussion this year and upon conclusion it will be opened up for public discussion, according to Mr. Wong. Complete implementation of the bill is expected by 2018. So far, beneficiaries of minimum wage implementation have involved cleaners and security guards from the property management sector, who are entitled to receive minimum wages starting from January 1 this year, Mr. Wong said. The basic salary rate is set at MOP30 per hour or MOP240 per day, taking into account the whole month equalling MOP6,420, reported Business Daily. DSAL have received five complaints from cleaners and security guards from the property management sector so far this year, including six employees over 65 years old, involving compensation issues, he added. A.L.

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Macau MACAU HEIST JOINING WITNESS PROTECTION PROGRAMME COULD SIDESTEP CRIMINAL CHARGES

Banker at centre of US$81 million heist may turn state’s witness

HE Philippine bank manager accused of helping to launder US$81 million stolen from Bangladesh’s foreign reserves may turn state witness and aid the investigation into one of the largest bank heists in modern history. Rizal Commercial Banking Corp. branch manager Maia Santos Deguito may seek protection under the Philippine government’s Witness Protection Program “at the right time,” her lawyer, Ferdinand Topacio, said in an interview on Friday. “We invoked my client’s right against self-incrimination very sparingly at the last Senate hearing because we want to help the government get to the bottom of this,” Topacio said. “She isn’t part of the grand conspiracy.” Investigators are seeking to track down hackers who attempted to steal almost US$1 billion from Bangladesh’s central bank in February. While authorities blocked most of the illicit transfers, US$81 million ended up in Rizal Bank in the Philippines, wired to remittance company Philrem Service Corp. before being sent to casinos where the money

trail has gone cold. Almost all of the US$81 million is still missing.

Closed-Door Testimony

Central to the probe is Deguito, who’s facing possible money-laundering charges after she allegedly allowed the funds to be withdrawn on Feb. 5 and Feb. 9 despite requests from Bangladesh to halt the transfers. The banker gave closed-door testimony on the case to senators on March 17, but has declined to discuss the transfers at previous public hearings to avoid incriminating herself. The Department of Justice is currently investigating whether there is

“[I am] a pawn in a high-stakes chess game played by giants in international banking” Maia Santos Deguito, Branch Manager for Rizal Commercial Banking Corp.

enough evidence to charge Deguito with money laundering. The country’s Witness Protection, Security and Benefit Program encourages anyone who has witnessed or participated in a serious felony to testify before a court or investigating body free from the risk of legal reprisals. The government will drop criminal charges against those who become state witnesses, Topacio said. Deguito told senators on April 5 that she was just “a pawn in a highstake chess game played by giants in international banking.’’ Topacio said his client’s testimony has been corroborated by Kim Wong, the casino junket operator who claimed to be an interpreter for two Chinese nationals linked to the stolen funds. Wong testified that he had introduced Deguito to some people who wanted to open bank accounts where the stolen funds were later deposited, Topacio said. Wong has denied any wrongdoing in the case.

Funds Returned

Wong has turned over US$5.46 million to regulators since March 31, which he said he received from the

two Chinese nationals. He has promised to return another 450 million pesos within the month that he received from one of the men as repayment of a debt. Deguito’s closed-door session with the senators helped the investigating committee connect the dots of the money laundering scheme, leading some lawmakers to call her a “credible witness,” the lawyer said. Topacio said that those behind the heist had compartmentalized various portions of the plan, meaning that his client didn’t know that the accounts, opened in May 2015, would later receive stolen funds from Bangladesh. “I was cynical at first when she said she didn’t get a penny,”’ Topacio said. “But she told me that as a banker who was earning 2 million pesos (US$43,000) a year, she didn’t need the money.” The lawyer said his client expects to earn 30 million pesos more in the next 15 years, an amount that would exclude profit-sharing and bonuses, adding that she said “I’m not the breadwinner and my husband is gainfully employed. Will I dare to bring shame to my family?” BLOOMBERG

LUXURY GOODS

China weakness drives Prada quarterly profit down 27 pct Italian luxury goods maker Prada SpA reported a 27 per cent fall in quarterly profit on Friday, hit by lacklustre sales in China which have waned alongside slowing economic growth and a crackdown on extravagance among public officials. Prada said there was still uncertainty in the international luxury goods market because of a volatile financial environment and heightened political tensions in many regions. “These conditions are still present and 2016 is again set to be affected by instability which makes any short term forecasts uncertain,” it said in a statement to the Hong Kong stock exchange where the company’s shares are listed. Prada reported net income of 95.8 million euros (US$108.9 million) in the three months to January 31, down from 131.4 million euros a year earlier. A weaker yuan and a shift in consumer tastes to more affordable

brands discouraged purchases by mainland Chinese tourists in Hong Kong, a traditional shopping hub. In the year ended Jan. 31, Prada reported net income of 330.9 million euros, down from 450.7 million euros a year earlier. Annual sales, which were published in February, were virtually flat at 3.55 billion euros in the year to Jan. 31 due to weakness in Greater China where economic growth is softening and consumers have been shunning extravagant purchases. Prada’s shares have slumped 42 per cent over the past year, underperforming the benchmark Hang Seng Index which has fallen 23 per cent in the same period. Growth in the luxury goods sector has fallen to low single digits from more than 10 per cent four years ago, as customers hunt for bargains and favour more affordable labels such as Furla, Longchamp and Kate Spade & Co. REUTERS

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Macau MACAU

GAMING SETTLEMENT ENDS SEC PROBE STARTED IN 2011

Las Vegas Sands pays US$9 million to end SEC

AS Vegas Sands Corp agreed to pay US$9 million to end the U.S. Securities and Exchange Commission’s more than five-year probe into whether it violated a federal anti-bribery law by paying a consultant to help it do business in China and Macau. Thursday’s civil settlement resolves charges that the casino operator run by billionaire Sheldon Adelson violated the Foreign Corrupt Practices Act by failing to properly authorize or document more than US$62 million of payments to the consultant, known within the company as a “beard,” between 2006 and 2011.

Payments to the ‘Beard’

The SEC said the consultant served as a middleman to conceal Las Vegas Sands’ effort to buy a team in the Chinese Basketball Association, which forbade gaming companies from ownership, and part of a Beijing building despite China’s casino gambling ban. Las Vegas Sands also failed to properly document transactions involving

62 Million USD Amount paid to consultant known as “beard” between 2006 and 2011

The Securities and Exchange Commission (SEC) said that LVS had improper controls over and insufficient records of payments made to a frontman helping it conduct the basketball and land deal. “Despite concerns by some employees that the real estate purchase was solely for political purposes, approximately US$43 million in payments were made to the consultant without research, analysis, or proper approval,” the SEC said. In addition, it noted large payments for “property management fees” when no property management services were performed, and US$1.4 millon for “arts and crafts” when no art was ever bought. Although the consultant was not identified, widespread reports from 2009-2012, when

its Macau operations, the SEC said. Publicly traded companies “must have appropriate financial controls in place to ensure that expenses are paid for bona fide services,” Andrew Ceresney, head of the SEC enforcement division, said in a statement. Las Vegas Sands also agreed to retain an independent compliance consultant for two years. It did not admit wrongdoing, and said there was no finding of corrupt intent or bribery.

Nothing to do with Jacobs’ case

The probe stemmed from a breachof-contract and wrongful termination

allegations of bribery first came out, identified the company’s key China agent as the well-connected businessman Yang Saixin. The SEC, which began investigating the case in 2011, said the fine was for failing to implement adequate controls over payments. The company stressed in a statement that it did not admit or deny the probe’s findings, but agreed to the fine and to strengthen internal controls and recordkeeping. “The SEC made no finding of corrupt intent or bribery by Las Vegas Sands,” it said. “The projects were orchestrated through a consultant whose activities under a former company president and other former employees were not sufficiently monitored,” it added. AFP

lawsuit against Las Vegas Sands by Steven Jacobs, who once led its Sands China unit and claimed he was fired in retaliation for complaining about its activities. Las Vegas Sands said his claims formed no basis for the SEC’s findings, which it called consistent with those found by its internal audit committee. In a statement, Adelson said Las Vegas Sands is committed to having a “world class” compliance program. The US$9 million penalty represents less than two days of profit for the company. Todd Bice, a lawyer for Jacobs, said he was unaware of another company licensed to do gaming in Nevada having agreed to oversight by a federal monitor like the consultant. “To say this had nothing to do with what Mr. Jacobs raised is silly,” he said in a phone interview. Jacobs’ trial is scheduled for June 27. Adelson, 82, was not accused of wrongdoing. He is worth US$27.8 billion according to Forbes magazine, and is a major donor to Republican political candidates. Las Vegas Sands’ properties include the Venetian and the Palazzo in Las Vegas, the Venetian and the Four Seasons in Macau, and the Marina Bay Sands in Singapore, among others. REUTERS

CORPORATE

ICBC (Macau) ‘Based in Macau, Serving Macau’

ICBC (Macau) CEO Mr. Wu Long told the media at a dinner at L’Arc Hotel Macau on Friday that by following the business theory of ‘Based on Macau, Serving Macau’ the bank had overcome the difficulties caused by the deep economic adjustment of the SAR, the slowing growth of Mainland China’s

economy, and the complicated changes in the international situation. This left the bank at the end of 2015 with an increase of total assets, deposits and loans of 8.24 per cent, 7 per cent and 6 per cent over, respectively, for the precious year. The CEO added that ICBC (Macau) hopes to maintain a close relationship and continue co-operation with the media and that ICBC will, in association with all sectors of Macau society, meet the new challenges posed by international and domestic situations, leverage the opportunities brought by the 13th FiveYear Plan for the National Economic and Social Development of China, and contribute to the social harmony, economic development and financial stability of Macau.

Wynn Palace organises three-day ‘Experiential Day’

Running from 5th to 8th April Wynn offered its Macau team members a preview of its new Cotai property Wynn Palace by offering participants a walkthrough of an exhibition area detailing aspects of the new property. Some 3,000 team members from the gaming division participated in the event, complete with

canapés and prizes awarded in a quiz session. The exhibition introduced the hotel rooms and suites, restaurants, retail and meeting spaces, spa and salon facilities, Performance Lake, SkyCab and floral structures. In addition, it introduced facilities and services for Wynn Palace team members including a dining area, tailored uniforms, medical services and a learning centre.

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Macau MACAU INVESTMENT INTERVIEW

The Myanmar Moment spells opportunities for investors The Macau Myanmar Friendship Association recently led a group of Macau entrepreneurs to Myanmar to inspect the local business environment and explore investment opportunities in the country. Tim Wong, Secretary General and Deputy Director General of the Association, as well as General Manager of China Myanmar Investment Enterprises Consulting Ltd., told Business Daily that now is the best time to invest in the country - given that its first democratically elected government in more than 50 years was installed this month. Leaders such as the iconic Aung San Suu Kyi are determined to reform and open up the country, he says. With this comes a promising future for economic prospects - and incentives for foreign investment in the country. Joanne Kuai joannekuai@macaubusinessdaily.com

The Macau Myanmar Friendship Association recently conducted a trip to the Southeast Asian nation . . . The Association led a group of 37 people on a five-day trip to Myanmar, which concluded earlier this month. The group mainly consisted of young local entrepreneurs and businessmen plus legislator Jose Pereira Coutinho and Rita Santos - members of the Overseas Portuguese committee - in order to promote the link between Myanmar and the Portuguesespeaking countries as well. The group visited the capital of Naypidaw, and the largest city in Myanmar [Yangon] as well as some other areas. The purpose was to inspect the local investment environment and explore business opportunities. Myanmar has recently undergone many historic moments, with the first democratically elected government newly coming to power. What’s the impact of this on business and foreign investment? Myanmar has had its first general election since the introduction of a civilian government in 2011. Under the military regime, Myanmar was once an isolated country that had many restrictions on foreign investment. However, as the political climate has changed and democracy pursued, a Macau Myanmar Friendship Association’s five-day business trip to Myanmar concluded earlier this month.

fairer and freer general election was conducted at the end of last year. It was won by the National League of Democracy led by Aung San Suu Kyi. It shows the wishes of the majority of the citizens. It’s time for Myanmar to widen its mutual co-operation with the international world. Ms. Suu Kyi is now in charge of the ministries of foreign affairs, education, energy and electric power. Crucially, she is also head of the Office of the President. As foreign minister, she will have a seat on the powerful 11-member National Defence and Security Council. As head of the Office of the President, she will be involved in finalising decisions on key appointments, while controlling economic and development policies. She has already met with Chinese Foreign Minister Wang Yi, and U.S. President Barack Obama also telephoned his congratulations to Suu Kyi. Personally, I think it’s a great sign. For me, she resembles the Chinese leader Deng Xiaoping, who guided the country through its far-reaching market economy reforms. In addition, the newly elected President Htin Kyaw is very well educated and has great knowledge of economics and finance. The coming into power of a new democratic government comprising leaders that have wisdom and knowledge guarantees a brighter

future will open up internationally and that reform will be implemented, with consistency in policies and scientific decision-making which will benefit the country’s people, as well as businesses in Myanmar, including foreign investment. Issues such as unstable oil supply, electricity, transportation, and Internet can be concerning to foreign investors. What’s your take on the issue? Infrastructure is one of the main concerns, but it also brings opportunities. You can see companies from China, Japan and Korea are engaged in the construction of roads and bridges. For example, in the telecommunications sector, before the country embarked upon the liberalisation of the telecom sector in 2013, mobile penetration was around 9 per cent. Within a short time span, mobile penetration has now reached more than 70 per cent. With the government opening up the telecommunications sector to foreign investment, companies like Telenor, Ooredoo, and KDDI have partnered with local company MPT for a slice of the cake. China Telecom is also said to be interested as a key potential player entering the market soon. The Myanmar Government looks to be fully committed to further liberalising the market and aims to tackle the remaining obstacles

progressively. By 2020, it targets achieving telephone access for more than 90 per cent of the population, Internet access for more than 85 per cent and high-speed Internet access for over 50 per cent. What would you perceive as some key areas for foreign investors to explore? The key sectors for foreign investment are currently infrastructure, namely roads, power plants, telecommunications and logistics, plus oil and gas; followed by manufacturing, mining, real estate development, and hotels and tourism. These are the key fields that still have lots of potential to grow. In addition, there is food processing for export, and even opportunities in the fast-food industry. The garment industry, including shoes, shirts and other clothing manufacture can benefit from the cheap labour available. Trade opportunities for tobacco and wine are worth considering as the country itself lacks variety in such products and the demand is current. These are good opportunities for Portuguese-speaking countries to explore. In addition, there are areas such as information technology, data centres, system design, security software and even the MICE (Meetings, Incentives, Conventions and Exhibitions) industry. Tourism is worth developing with lots of heritage sites and natural beauty. Macau companies should consider co-operating with local casinos. The hospitality industry has great potential to grow as now the supply is very low - the average room rate stands at around US$80 to US$100 per night for a 3-star hotel room, which is far less competitive than some neighbouring countries, such as Thailand. You’ve mentioned the gaming industry and its potential co-operation with Macau companies . . . ?

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Macau MACAU Tim Wong, Secretary General and Deputy Director General of the Macau Myanmar Friendship Association.

Gambling is legal in Myanmar. There are a handful of mainstream casino-resorts with more casinos scattered throughout the country near the China, Thai and Laos borders. I’ve personally visited some near the China border and feel like there’s still great potential for them to be developed to attract more visitors, especially wealthy Chinese. Macau has been well acknowledged as a gaming hub and pioneer in the industry that has lots of talent and experience to be shared. One can imagine some opportunities for Macau companies collaborating with local companies to better develop the sector. How are the legal framework and policies working for foreign investment? Myanmar offers two options for foreign investors who want to register a business entity in a nation blessed with rich natural resources and famed for its inexpensively skilled labour. Businesses that require substantial investment, such as manufacturing, construction, mining, hotels and tourism, agriculture and transportation, need to be registered under the foreign investment law of Myanmar. However, foreign trading companies and service providers can register under the Myanmar Companies Act (MCA). Existing laws restrict trading and services activities by foreign companies. According to Myanmar investment law, 100 per cent foreign-owned companies and joint ventures with the Myanmar Government or Myanmar nationals can be registered under the Myanmar Foreign Investment Law (MFIL). In the case of joint ventures with the Myanmar Government, such companies can enjoy the status of a local company under the Special Company Act. What are the main advantages of investing in Myanmar? Myanmar stands at a pivotal juncture amidst a slew of social, political and

economic reforms. Since the era of civilian rule, the government has launched a series of progressive reforms, focusing on the political system as well as economic and social programmes. The results are highly promising, with a general improvement in most economic and some social indicators. Moreover, Myanmar is rich in natural resources, arable land, forestry and minerals, as well as fresh water and marine resources, gems and jade. Economic reform is expected to continue in concert with political liberalisation. Labour is relatively cheap, with low-end manufacturing cost around US$100 to US$120 per person per month. In addition, many religions are practised in Myanmar, with a large majority of the population practicing Buddhism. The people there are so nice and kind that it creates a harmonious environment. These well-known advantages— its huge growth potential as the last frontier economy in Asia, a youthful workforce, and ample natural resources—hold promise for the country to become one of the region’s major successes in the time to come. What about investment incentives? There are a lot of special benefits and tax incentives for foreign investment. There is the Myanmar Investment Commission (MIC) that serves a function similar to Macau’s IPIM (Macau Trade and Investment Promotion Institute). The MIC is responsible for verifying and approving investment proposals and regularly issues notifications about sector-specific developments. Under the new MFIL, companies registering under the MFIL which have obtained MIC permits are entitled to some investment incentives. For example, exemption from income tax for up to five consecutive years for an enterprise engaged in the production

‘Myanmar is undergoing transition and times of transition come with challenges and opportunities’ of goods or services. The exemption may be extended by the MIC for a further reasonable period, depending upon the success of the enterprise. How is business exchange between Myanmar and Macau or China in general? There are Macau investments in local real estate, hotels and tourism, and trading businesses engaged in Myanmar. Myanmar also exports natural precious stones such as jade, processed products, food - like seafood products exports to Macau. The exchange is very healthy and promising with mutual benefits. To name one example, there is going to be an exhibition of jewellery from Myanmar in Macau by the end of April. In addition, China remains one of the most important foreign investors in Myanmar, with projects in manufacturing, mining, construction, hospitality, tourism, agriculture, livestock and fisheries and many other fields up and running or to be launched. Our company China Myanmar Investment Enterprises Consulting Ltd. has successfully helped Hong Kong ompany Sun Pleasure Investment Co., Ltd. focusing on industry and manufacturing to enter Myanmar. We target businesses from Macau, Hong Kong and Mainland China or elsewhere that are interested in investing in Myanmar and we provide services to set up their business such as facilitating registration, field

research, financing, local recruitment and training, property investment, legal, accounting, compliance and auditing, among other services. D u ri n g th e M aca u M y a n m a r Friendship Association’s trip to Myanmar, it’s reported that you mentioned a plan to apply for a plot of land from the local government. We intend to apply for a plot of land from the Myanmar Government to develop a comprehensive co-operation programme between the Macau SAR and Myanmar. However, everything is still in the planning stage. We don’t know the size, location, or the directions on how to co-operate yet. More details will be released in due time. Is there any investment risk and concern that you would like to advise interested parties of? I would say that the biggest obstacles lie in communication, including the language barrier and cultural differences. The country now slightly resembles China in the 1980s or early 1990s. Foreign investors really need to be patient and be aware of what they can do and cannot do. People are generally very nice and they have their constraints, such as foreign investors can only do business in exports and can’t tap the local internal consumption market unless they partner with local companies. One has to be aware of such restrictions. Some are concerned about the uncertainty of the future in Myanmar and are awaiting better timing. What’s your opinion on this? I would say now is the best timing ever. We’ve seen with our own eyes during the trip that the country is safe. And you can see the local government’s determination to open up and reform. Myanmar is undergoing transition and times of transition come with challenges and opportunities. If we don’t seize the chances now, it may be too late.

March1114 2016 8 Business Daily Monday, April 2016

Greater CHINA China GREATER DRUGS SALES

E-pharmacy eyes prescription changes for full-blo Chinese patients traditionally purchase medicines where they seek treatment.

HINA’S e-commerce businesses are expanding into pharmaceuticals as the government directs prescription drug sales away from hospitals and into retail outlets. The online pharmacy business has grown from virtually nothing five years ago to more than 7 billion yuan (US$1.1 billion) in 2014, accounting for 3 percent of all retail medicine sales, Boston Consulting Group (BCG) said in a report. The boom may be only a prelude to explosive growth to come, provided that authorities allow online pharmacies to sell prescription drugs. Thus far, sales consist mainly of over-the-counter medicine, with very slim margins. One of the key themes of the on-going reform of the medical system is to wean hospitals off the revenue that comes from drug sales, allowing patients to choose between hospitals and retail pharmacies. If online sales of prescription drugs are permitted, firms such as Alibaba and JD.com are sure to get involved. “The e-pharmacy business is changing very quickly in China with new regulations and different competitors entering the space,” said John Wong, a BCG partner, but whether that pace continues is far from certain. Last week, Alibaba scrapped a plan

to merge its online pharmacy business with its health subsidiary. Its plan to operate the country’s medical tracking system also drew the wrath of brickand-mortar pharmacies. Access to prescriptions is the key. Online pharmacies are working with hospitals and local governments on trial programs to allow patients to buy drugs online with doctors’ prescriptions. Some trials extend medical insurance to online purchases, an important incentive for patients to buy online. Analysts are cautiously optimistic, given that China’s social security system is still a set of fragmented jurisdictions, creating discrepancies in policies across the country. Another obstacle, according to BCG partner Magen Xia, is figuring out a way to cap expenditure online. Under the current scheme, the cap for insurance coverage has been maintained by the hospitals that prescribe the drugs. Regulatory challenges aside, online

“Online pharmacies will grow, but how fast depends on regulations on separation between prescribing and dispensing” John Wong, Boston Consulting Group partner

pharmacies cannot live by the prescription drug business alone. They need to move upstream. “Pharmacies can’t limit themselves. They have to either extend to consultations and diagnosis or find upstream partners that can refer prescriptions to them,” Xia said. Unlike the United States where brickand-mortar pharmacies like CVS and Walgreens dominate retail prescription drug sales, a lack of nationwide pharmacy chains in China puts them in a much weaker position. This creates opportunity for e-commerce to consolidate the fragmented market and, once they gain access to prescriptions, they can ask local pharmacies to become distribution channels. “Online pharmacies will grow, but how fast depends on regulations on separation between prescribing and dispensing,” Wong said. “Right now hospitals still want the money from drugs but as soon as the government says ‘stop’ you will see the industry rapidly, rapidly transform.” In late March, the government of Zibo City in east China’s Shandong Province became the latest to link e-pharmacies with government hospitals, tasking JD.com and Shandong Xinhua Pharmaceutical, a pharmacy listed on the Shenzhen Stock Exchange, to operate an out-of-hospital platform synchronized with in-hospital prescriptions. Hospitals were asked to share information with the platform allowing patients to purchase drugs easily. Chinese patients traditionally purchase medicines where they seek treatment, and these hospitals are mostly

state-owned and receive directions from local governments. Enabling patients to purchase drugs elsewhere fits right into the current government agenda, but without in-depth knowledge of where, what and how much medicine is needed,

GMO

Citizens protest ChemChinaSyngenta deal amid worries The protest comes amid worries that Beijing is losing control over the supervision of GMO technology. Niu Shuping and David Stanway

Around 400 Chinese citizens have signed a letter to protest the purchase of Swiss-based seeds and pesticides company Syngenta by state-owned ChemChina, saying the deal would eventually lead to

genetically modified crops being sown across swathes of the country. Critics of genetically modified organisms argue the technology poses risks to public health and the environment, while advocates say such fears have not been scientifically proven and that high-yielding genetically altered crops would help ensure food security as the world’s population grows. Although relatively few people signed the letter, it marks a rare example of open opposition to state-supported corporate strategy in a nation where

the government often clamps down hard on any criticism. It also underscores fears among some of the public that the government is gearing up to gradually loosen laws that prevent the cultivation of any GM varieties of staple food crops, with Beijing already permitting the import of some GMO crops for use in animal feed. The US$43 billion all-cash deal unveiled in February is the largest foreign acquisition ever by a Chinese firm as China is looking to secure food supplies for its population. Syngenta has a portfolio of top tier chemicals

and patent-protected seeds, many of which are genetically modified. “The acquisition of Syngenta and the promotion of its genetically-modified and agro-chemical agriculture in the country would destroy the country’s own agriculture and food security,” the protesters said in the letter, seen by Reuters. They argue GMO strains would contaminate Chinese staple crops.

Key Points Letter from citizens underscores debate over GMO ChemChina-Syngenta deal was unveiled in Feb Syngenta is major supplier of GMO seeds

“ChemChina must immediately stop the suicidal acquisition from causing a disaster to the Chinese nation.” Syngenta did not respond to requests for comment. A ChemChina spokesman said he had heard about the letter and that the company was waiting to learn more about it. Yang Xiaolu, one of the protesters on the list, said the letter was handed over late last month to the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), which overseas companies owned by the central government. A SASAC spokeswoman said her office had not yet seen the letter, but was looking into the matter. Yang, a long-time anti-GMO activist, is also among the three plaintiffs who were taking China’s Ministry of Agriculture to court in April last year in a bid to make public a toxicology report supporting the approval of Monsanto’s popular weed killer. Reuters was unable to verify other names listed on the anti-GMO letter. China’s commerce ministry spokesman Shen Danyang said in February that the ministry supported the acquisition which would help secure global food supply. The protest comes amid worries that Beijing is losing control over the supervision of GMO technology. Last month, agriculture minister Han Changfu admitted that GMO corn was illegally grown in some parts of the country, but found “no large areas of illegal planting” after Greenpeace said a majority of samples taken from corn fields in 5 counties in Liaoning province, tested positive for GMO contamination. REUTERS

Business Daily Monday, March Business Daily Monday, April14 11 2016 2016 9

Greater CHINA China GREATER BOCOM REPORT

oom growth

Wealth climate index rebounds as economy improves The country has taken a slew of fiscal and monetary policies to support growth, cutting interest rates and taxes on companies.

e-pharmacies are unable to supply them efficiently. By supplying data on hospital demand to market players, the pricing and delivery of medicine could be revolutionized, just like other goods and services widely marketed online. XINHUA

The Climate Index of China’s Wealth released by Bank of Communications (BOCOM) rebounded to 126 in March from 119 in January as the economy showed signs of improvement, a BOCOM report said. The index, published bimonthly, hit a five-year low of 111 in September 2015 before rising to 122 in November and then falling again. The report, which solicited opinions from well-off Chinese households on economy, income and investment, attributed the latest uptick to positive effect of government pro-growth policies. China’s economy has shown tentative signs of stabilizing, the report said, pointing to recovering demand in the property sector, robust consumption and stronger manufacturing activity. A reading above 100 indicates wealth improvement, while that below 100 represents deterioration. Three main sub-indices all rose markedly, with that for investment willingness up 8 percentage points to 119. Economic climate and income

IN BRIEF growth indices both increased 7 percentage points to 115 and 139 respectively. The report surveyed nearly 1,850 families with annual after-tax incomes above 100,000 yuan (around US$15,750) in five metropolises, including Beijing and Shanghai, and 80,000 yuan in 21 other major cities. China’s economy grew by the slowest pace in 25 years in 2015, but some indicators have picked up since early this year. Property investment accelerated in the first two months, while an official index of manufacturing activity rose in March to its highest level since last August. The country has taken a slew of fiscal and monetary policies to support growth, cutting interest rates and taxes on companies.

‘Three main sub-indices all rose markedly, with that for investment willingness up 8 percentage points to 119’ The surveyed families have become more optimistic about the overall economic picture, the BOCOM report said. Warming home sales and a recovering stock market improved the financial conditions of well-off families and raised their intention on investment in stocks, funds and real estate, according to the report. XINHUA

EASING REPAYMENT

REAL ESTATE

Shanghai to monitor mortgage lending Shanghai will increase monitoring of mortgage lending as part of stricter measures to cool an overheated property market, according to a document seen by Reuters on Friday. Banks will be required to provide details on their home mortgages to buyers, the document released by the central bank’s Shanghai branch said. Shanghai authorities released new rules last month tightening mortgage down payment requirements for second home purchases and increasing the threshold non-residents need to meet to buy homes in the city. INVESTMENT

Hedge funds in Mainland lose 7.4 pct Hedge funds investing in China lost an average of 7.4 percent in the first quarter of 2016, the fallout of a turbulent three months for the world’s second largest economy, all but wiping out all the previous year’s profits, data from eVestment showed. A slowing of China’s growth along with pressure on its stock markets, corporate borrowers and the yuan currency sent a shockwave through global financial markets in January. Public media in China lashed out at hedge fund “speculators” and regulators took a raft of measures to prevent the aggressive shorting of local markets and offshore trading of the yuan.

Sri Lanka requests Beijing equity swap for debt International trade minister Malik Samarawickrama said Sri Lanka would also like additional funds from China. Ben Blanchard

Sri Lanka has asked China to swap some of the US$8 billion it owes Beijing for equity in infrastructure projects and offered to sell stakes in its companies to Chinese ones, Colombo officials said on Saturday. The ouster of President Mahinda Rajapaksa, who steered Sri Lanka toward

China until his 2015 election defeat, was a setback for relations as his successor has reviewed projects to check if they were fair and legal. Now President Maithripala Sirisena’s government, faced with falling foreign reserves, a balance of payments crunch and few, if any, alternative investors, is heading back into China’s embrace, albeit asking for better terms. Speaking to reporters in Beijing, Sri Lankan Prime Minister Ranil Wickremesinghe said his indebted country was suffering because of global economic uncertainty. “We’ve been talking with some companies and also the government of China about the possibility of some infrastructure projects becoming public-private partnerships, in which part

Sri Lankan Prime Minister Ranil Wickremesinghe said his indebted country was suffering because of global economic uncertainty.

of the debt will become equity held by the Chinese companies,” he said. International trade minister Malik Samarawickrama said Sri Lanka would also like additional funds from China, though they had not asked for a specific amount. “We want to reduce the current debt by inviting Chinese companies, Chinese investors, to look at some of the enterprises in Sri Lanka, the state-owned enterprises, with a view to taking at least part of that equity over,” he said. “Then we can reduce the current debt that we have and open up the opportunity for us to take more funds from Chinese banks.” Sri Lanka upset China when it ordered a review of a US$1.4 billion Colombo port city project last year, citing irregularities in the awarding of the contract to state-owned China Communications Construction Company (CCCC) by the previous government. Last month, the present government, grappling with a difficult economy, ordered the Chinese firm to resume work on the project, the country’s biggest foreign investment project, that includes apartments, shopping malls and marinas. But CCCC, which had estimated that the shutdown would result in losses of more than US$380,000 a day, has sought compensation of US$125 million, according to Sri Lanka, which has said it can’t pay and wants to negotiate. “The company has asked for additional compensation in view of the fact they say there has been a delay,” Wickremesinghe said. “But I think we can talk and settle it.” Chinese projects in Sri Lanka have unnerved India, but Wickremesinghe said there was no security threat from the port. “It’s an opportunity for everyone to make money. That’s what we do in Asia.” In a joint communiqué released by China later on Saturday, both countries stressed they would increase their military and security cooperation. REUTERS

PROPERTY DEVELOPMENT

Authorities to review construction firm’s deposits China will review security deposit requirements for construction firms with a view to reducing their burden, according to a statement on the Ministry of Housing and Urban-Rural Development’s website. The country’s property developers have faced mounting pressure from a huge overhang of unsold homes, mostly in China’s third- and fourth-tier cities, which has had a heavy impact on demand for construction services. Under current rules, construction companies are required to put up deposits for items like tenders and migrant worker wages. CAPITAL EVOLUTION

Market outflows to ease in 2016

Net capital outflows from emerging markets will ease somewhat in 2016, but could increase again if China abruptly devalues its currency or the U.S. Federal Reserve raises interest rates more quickly than expected, the Institute of International Finance said on Friday. The IIF, a global banking group, forecasts that 2016 emerging market net capital outflows at about US$500 billion, down from US$750 billion in 2015.

10 Business Daily Monday, April 11 2016

Greater CHINA China GREATER RMB MARKET

Nigeria may issue Panda bonds to help fund 2016 budget Nigeria has previously asked oil companies for loans when unable to fulfil its obligations on the cash calls. Ulf Laessing and Alexis Akwagyiram

IGERIA is considering a sale of Chinese Panda bonds to help fund a record budget aimed at reviving Africa’s biggest economy as it suffers a slump in global oil prices, the finance minister said on Saturday. The OPEC member, which is Africa’s No. 1 crude producer, could also dip into cash set aside for energy investment projects to help meet the 2016 budget if tax revenue misses targets, Kemi Adeosun said in an interview. “Initially we were looking simply at the Eurobond market but then we began to explore opportunities in the renminbi market, so there is a possibility of issuing a Panda bond,” she said. China launched the market for Pandas - yuan-denominated bonds sold by overseas entities on the mainland - in 2005 but only a handful of foreign entities have raised debt there. HSBC and Bank of China (Hong Kong) Ltd did so late last year. Adeosun declined to put a figure on the size of the possible issue, saying only: “We were looking, originally, at doing about a billion dollars on the Eurobond market so may split that between the renminbi and the Eurobond.” “We’re going to see what the pricing comes out as. At the moment indicative pricing is a bit cheaper about 1.5 lower than the Eurobond,” she said. When asked about the timing,

HSBC and Bank of China (Hong Kong) launched Panda bonds last year.

Adeosun said: “Our objective was always to be in the market early Q3.” Later, she told a news conference Nigeria may also sell Japanese Samurai bonds. Adeosun said the government might use money set aside for funding joint-venture investment projects with private oil firms. Nigeria plans to boost tax income by 33 percent in 2016 to offset a slump in oil revenues. “If the revenue doesn’t come in we have got 1 trillion (naira) in the budget for cash calls,” she said.

Cash calls are the government’s obligations to joint venture projects between state oil firm NNPC and foreign and local oil firms - Nigeria has been late in payments which has undermined plans to boost oil output. Nigeria has previously asked oil companies for loans when unable to fulfil its obligations on the cash calls. Nigeria is expected to post budget deficits for the next two to three years, Adeosun said. In 2016, the deficit is seen at 2.2 trillion naira (US$11.6 billion), slightly less than a previously stated 3 trillion naira.

President Muhammadu Buhari has not yet signed the 2016 bill into law due to wrangling with parliament. REUTERS

Key Points Nigeria faces budget deficit of US$11.6 bln this year President wants to diversify economy with record spending Government mulling issue of Chinese, Japanese and Eurobonds

INDUSTRY REFORM

London urges Beijing to speed up on cutting steel capacity The global steel industry is suffering from overcapacity as a slowdown in growth in the national economy has reduced domestic demand. Britain asked China on Saturday to hurry up in tackling overcapacity in its steel industry, hoping to stem the flood of cheap imports into Europe which India’s Tata Steel has blamed for its decision to pull out of the United Kingdom, putting 15,000 jobs at risk. Tata put its entire UK business up for sale last month, including its flagship production plant at Port Talbot in south Wales, saying it could no longer endure mounting losses caused by increased imports to Europe from countries like China, high manufacturing costs and domestic market weakness. “I urged China to accelerate its efforts to reduce levels of steel production,”

Britain’s Foreign Secretary Philip Hammond said in a statement issued after he met with his Chinese counterpart Wang Yi in Beijing. “The UK’s focus is on finding a long-term sustainable future for steelmaking at Port Talbot and across the UK and I welcomed the potential interest of Chinese companies in investment in UK steelmaking,” Hammond said. The global steel industry is suffering from overcapacity as a slowdown in growth in the Chinese economy has reduced domestic demand. China, which produces half of the world’s steel, as well as Russia have responded by diverting more of their output to markets like Europe, sending prices plummeting.

Britain’s Foreign Secretary Philip Hammond.

Th e E u r o p ea n U n i o n opened three anti-dumping investigations into Chinese steel products in February and imposed new duties on imports after the European steel industry said thousands of jobs were at stake. China said earlier on Saturday that plans to shut steel mills over the next five years would cut capacity to an estimated 1.13 billion tonnes by 2020, which is still far in excess of the country’s needs. A statement released by China’s Foreign Ministry

about Wang’s meeting with Hammond made no mention of the steel issue. Instead it reported Wang as telling Hammond that Hong Kong’s affairs are China’s internal affairs and that Beijing is committed to Hong Kong’s government system where it is granted a high degree of autonomy under the “one country, two systems” model. Visiting the former British colony on Friday, Hammond had said a Hong Kong bookseller who disappeared from the city under mysterious

circumstances last year had been removed under duress and that the business community was “unnerved”. Wang also called for this weekend’s meeting of G7 foreign ministers in Japan, where Hammond is heading next, not to “hype up” the South China Sea issue. China has rattled nerves in the region with its increasingly assertive moves in the disputed waters, where Brunei, Malaysia, the Philippines, Taiwan and Vietnam all have competing claims. REUTERS

Business Daily Monday, March Business Daily Monday, April14 11 2016 2016 11

Asia ASIA INFRASTRUCTURE

Prime minister Turnbull pledges US$370 million for West Australia Moody’s Investors Service downgraded West Australia in February by one level to Aa2, the third-highest grade. Garfield Reynolds

RIME Minister Malcolm Turnbull’s government promised to invest A$490 million (US$370 million) in infrastructure in West Australia in the coming financial year, seeking to redress the state’s shortfall in the share it receives of the federally collected goods and services tax. The allocation follows a similar investment last year, as the state continues to receive the lowest revenue from the tax, relative to population, according to an e-mailed statement yesterday from the government. West Australia’s role as the main exporter of iron ore has hurt its share of revenue from the sales tax, as the surge that took raw materials prices to historic highs continues to have an impact on the state’s share of revenue even after the steelmaking material

dropped in recent years, according to the statement. Moody’s Investors Service downgraded West Australia in February by one level to Aa2, the third-highest grade, citing deterioration in the state’s finances and concern that the drop in iron-ore prices would lead to wider budget deficits. Iron ore delivered

to Qingdao tumbled more than 50 percent over the past year and reached US$38.30 per metric ton on December 11, the lowest since at least 2008, according to prices from the Metal Bulletin Ltd. It peaked at US$191.70 in February 2011.

Prudent budget

Turnbull said Saturday his government would hand

down a prudent budget next month, speaking less than a week after a major opinion poll showed the government trailing the opposition for the first time since he deposed Tony Abbott seven months ago. “This budget will not be about a fistful of dollars, it will be about prudence, fairness and responsibility to our future generations,” Turnbull said in a speech to

the Victorian Liberal Party conference in Melbourne on Saturday. It will “include changes to our tax system designed to generate jobs and growth; promote investment, innovation and enterprise.” The latest Newspoll survey published in The Australian newspaper on April 5 showed the Liberal-National coalition falling behind the Labour Party on a two-party preferred basis, 49 percent to 51 percent. Turnbull’s personal approval rating also slipped to a new low of 38 percent, down from a high of 60 percent last November. BLOOMBERG NEWS

“This budget will not be about a fistful of dollars, it will be about prudence, fairness and responsibility to our future generations” Malcolm Turnbul, Australia’s Prime Minister

Australian Prime Minister Malcolm Turnbull.

DUTIES INCREASE

India steel ministry may appeal over anti-dumping rules National companies accuse South Korea, Japan, Russia and China of unfairly flooding local markets with cheap products. Sankalp Phartiyal

India’s steel ministry is considering appealing to Prime Minister Narendra Modi to back a proposal to toughen up anti-dumping rules to tackle a flood of cheap imports threatening its steel industry, a government source said. India is among a number of countries and groups such as the European Union weighing up taking further measures against cheap exports from countries such as China and South Korea. Indian purchases of Chinese steel products rose 5 percent in the 11 months to February, provisional government data showed, after more than trebling in the fiscal year ending March 2015. Imports from Japan were up 39 percent, while shipments from South Korea rose 54 percent between April and February. Because of the distress in India’s steel industry, the ministry had written a letter seeking to change anti-dumping rules, said the source, who declined to be named because

“What we have been trying to explain to the user industry is that we are part of the same value chain” Seshagiri Rao, Joint managing director at JSW Steel

he was not authorised to speak to media. According to the source, the letter had asked the trade ministry to alter anti-dumping rules unchanged for two decades to reflect only the dumping margin. This should effectively raise the duty and bring India in line with the United States and Canada, while meeting World Trade Organization (WTO) rules, the source said. But the trade ministry turned the proposal down and Trade Secretary Rita Teaotia said current rules were internationally accepted and followed, among others, by the European Union. “They are asking us to amend the rules, but they are looking at only one country, the United States,” Teaotia told Reuters. The steel ministry was now considering approaching the federal planning body, Niti Aayog, or the

Prime Minister’s office to press its case, according to the government source. India’s steel secretary and Modi’s office were not immediately available for comment.

Steel sector lobbying

Indian companies accuse South Korea, Japan, Russia and especially China, which produces nearly half of the world’s 1.6 billion tonnes of steel, of unfairly flooding local markets with cheap products and undercutting them as demand slackens at home. India last week extended a safeguard import tax on some steel products until 2018 and imposed a floor price on overseas purchases in February, but companies such as JSW Steel, Tata Steel and Kalyani Steels have been lobbying for more measures. New Delhi currently takes into account the margin of dumping and the margin of injury to the industry and restricts anti-dumping duty to the lower of the two. The dumping margin is the loss for an exporter selling to another country, while the

injury margin is how much the Indian steel industry is undercut. The domestic industry also has to prove that dumped imports are causing or likely to cause injury. Indian steelmakers say a change in anti-dumping rules would prevent the steel industry from dying out and stave off the dependence of sectors such as engineering goods on imports. The government has issued notices to China, Japan and South Korea proposing a probe on “dumping” of some steel products, according to a source at the Directorate General of Anti-Dumping & Allied Duties. “What we have been trying to explain to the user industry is that we are part of the same value chain,” said Seshagiri Rao, joint managing director at JSW Steel. “If I am impacted today and you don’t support us - because it is unfair trade which is happening - the same thing will happen to you.” China’s commerce ministry did not respond to requests for comment on the impact any changes to anti-dumping rules might have on its exporters. REUTERS

12 Business Daily Monday, April 11 2016

Asia ASIA MONETARY POLICY

Singapore central bank seen on hold now Like its counterparts in Asia, Singapore’s manufacturing sector has been hit hard by a collapse in demand from major trading partners. Masayuki Kitano and Jongwoo Cheon

INGAPORE’S central bank is expected to keep policy steady at next week’s review, but a number of analysts say an easing this year remains a possibility in the face of slow growth, low inflation and depressed global demand. There has been focus on the possibility of easing by the Monetary Authority of Singapore (MAS) after the 2016 official forecast for headline inflation was cut in February, and due to a lacklustre outlook for exports and the manufacturing sector. Still, with the central bank having maintained its forecast for core inflation and fiscal spending in the government’s 2016 budget expected to help support growth, most analysts see the MAS keeping its exchange-rate based policy unchanged. The central bank’s semi-annual policy statement is due on April 14 at 0000 GMT, along with the government’s advance estimate of first-quarter gross domestic product (GDP). The MAS manages monetary policy by letting the Singapore dollar rise or fall against the currencies of its main trading partners within an

Key Points Singapore c.bank decision, Q1 GDP due April 14 (0000 GMT) MAS seen likely to keep monetary policy unchanged Reuters poll: Q1 GDP +0.2 pct q/q, +1.7 pct y/y

undisclosed trading band based on its nominal effective exchange rate (NEER). “A close call in our view but no change in terms of slope, midpoint or width expected, given the reiteration of MAS core inflation forecasts and fiscal support,” said Sim Moh Siong, FX strategist for Bank of Singapore, referring to the central bank’s policy settings. Two easings in 2015 Twelve of 18 analysts in a Reuters survey said they expect MAS to keep policy steady after it eased twice last year, most recently in October and once at an unscheduled review in January 2015. The remaining six analysts expect the MAS to ease policy, with the bulk

of those forecasters expecting the central bank to reduce the slope of the policy band to zero percent. Most analysts estimate that the slope currently has an appreciation rate of 0.5 percent per year. In a separate Reuters poll on first-quarter GDP, the median forecast was for growth of 0.2 percent from the previous quarter on an annualised basis. Compared to a year earlier, GDP probably grew 1.7 percent, the poll showed. If the MAS were to hold off from easing this month, weak exports could increase the probability of the central bank easing policy in October, said Roy Teo, senior FX strategist for ABN AMRO Bank in Singapore. Like its counterparts in Asia, Singapore’s manufacturing sector has

been hit hard by a collapse in demand from major trading partners, particularly China. The city-state’s non-oil domestic exports fell 0.1 percent in 2015, the third straight annual drop. In February, the MAS and the Ministry of Trade and Industry cut their 2016 forecast for all-items inflation to between -1.0 percent and 0.0 percent, citing falls in global oil prices and a drop in the prices of car permits. The MAS, however, kept its 2016 forecast for core inflation, which it calls the most relevant indicator for monetary policy, unchanged at 0.5 percent to 1.5 percent. This reflected the smaller weight of oil-related items in core inflation, as well as the exclusion of changes in private road transport costs, it said.

Honda Motor Co and Daimler AG are among the international auto firms that have invested in the country. India in February imposed a sales levy of up to 4 percent on new passenger vehicles depending on fuel type, to help fight air pollution and congestion. Car makers, fearing a more widespread diesel ban, are looking at ways to circumvent the problem by resizing their diesel engines to below 2 litres to skirt the ban or by introducing petrol engines for their cars.

A rise in steel prices over the last three months and a slowdown in industrial activity also worry car makers, some of whom are already struggling with excess production capacity. Indian passenger vehicle sales for the year ended March 31 grew at 7.24 percent, according to SIAM, but the total capacity utilisation for passenger vehicles for car makers in the country is only about 60 percent, the trade body has said. REUTERS

REUTERS

ECOLOGIC POLICIES

India auto body slashes vehicle growth forecast Government in February imposed a sales levy of up to 4 percent on new passenger vehicles depending on fuel type. Aditi Shah

India’s main auto industry body nearly halved on Friday its growth forecast for passenger vehicle sales in the current financial year to 6-8 percent, saying demand could weaken after the country introduced new measures to curb pollution. Policy changes such as higher taxes on cars and a ban on the sale of large diesel cars in New Delhi have been abrupt and have led to lower sales expectations, said Sugato Sen, deputy director general at the Society of Indian Automobile Manufacturers (SIAM).

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SIAM originally expected sales to grow by about 12 percent this fiscal year, before cutting that to 11 percent in March. Sen said a consensus of analyst estimates showing growth was likely to be between 6-8 percent now looked right. The downgrading of growth expectations comes after Indian passenger vehicle sales grew in the last fiscal year at their fastest pace in five years, and could force companies, including international players, to re-evaluate their investment plans in the country. “The industry is not confident of growing at 11 percent. What is happening in the last few months does not promote or excite the industry,” Sen told reporters in New Delhi. In December, a top court ordered an overnight temporary ban on the sale of large diesel cars in New Delhi to curb smog in one of the world’s most polluted cities. The ban, initially until March 31, has been extended and the Supreme Court is considering imposing an additional “environment tax” on all diesel car sales. “Parent companies of global car makers are not very optimistic. They are worried about the policies,” Sen said. Toyota Motor Corp,

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Business Daily Monday, March Business Daily Monday, April14 11 2016 2016 13

Asia ASIA CURRENCY

Japan faces trouble controlling damaging yen rises Japanese authorities have stayed away from the markets since they last intervened in 2011.

Japan’s Finance Minister Taro Aso.

Leika Kihara and Tetsushi Kajimoto

APANESE efforts to stem sharp increases in the yen could face increasing opposition from other major economies, making it even more difficult for premier Shinzo Abe’s administration to reflate the world’s third largest economy out of stagnation. Senior government officials, including the country’s top spokesman, have escalated warnings to speculators against pushing up the yen too much, stressing their readiness to take “appropriate action” in the market against what they see as one-sided moves. But the jawboning has failed to stop market participants from testing policymakers’ resolve with many betting Tokyo will not intervene unless the dollar falls below 105 yen or even 100 yen. Finance Minister Taro Aso issued a fresh warning on Friday, saying that rapid currency moves were undesirable and that authorities will take steps as needed. The dollar hit a fresh 17-month low of 107.67 yen on Thursday on market expectations the U.S. Federal Reserve will exercise caution in proceeding with its interest rate hike cycle. But a Group of 20 agreement in Shanghai in February warning countries to refrain from competitive devaluation has also emboldened yen bulls. “The G20 meeting in February touched on competitive currency devaluation, which makes it difficult for Japan to intervene. Japan is also hosting the Group of Seven this year, which makes it difficult for Japan to move,” said Kentaro Arita, senior economist at Mizuho Research Institute. Japanese financial bureaucrats dismiss such a view, pointing to other parts of the G20 communiqué that reserve Tokyo’s right to intervene if the yen rises too sharply, namely a part that warns against “excessive volatility”. Still, former top Japanese currency diplomats with experience in currency policy negotiations with G7 economies say policymakers’ hands are tied as it would be extremely difficult for Tokyo to convince other nations of the need to intervene.

Japan is also unlikely to get the informal consent from its G7 peers needed to intervene without giving the impression it was engaging in “beggar-thy-neighbour” policy, said Naoyuki Shinohara, a former top Japanese currency diplomat. “I don’t think solo (yen-selling) intervention by Japanese authorities will be effective ... I would be very surprised if they act,” said Shinohara, who also served as the International Monetary Fund’s deputy head. Eisuke Sakakibara, another former top Japanese currency diplomat known as “Mr. Yen” for his foray into currency markets, also said he did not see current yen levels as alarmingly high. “I don’t know why finance ministry officials are conducting verbal intervention now,” Sakakibara said. “If I were in their shoes, I won’t try to talk down the yen at least until the dollar falls below 100 yen.”

No G7 tolerance

The yen has gained more than 10 pct against dollar so far this year, topping the euro’s 5 percent rise and the 4 percent increase in the Australian dollar, as investors sought the currency as a safe haven against risks. Japanese authorities have stayed away from the markets since they last intervened in 2011. At the time, Tokyo got G7 consent to intervene to stem a yen spike driven by speculation the devastating March earthquake would force Japanese insurers to repatriate overseas funds to pay for damages claims. Back then, G7 economies were in much better shape and had room to allow Japan to weaken its currency to help exports.

Now, patience for Japanese intervention has waned with U.S. and European economies struggling with headwinds from sluggish emerging market demand. There is also little tolerance among G20 nations against solo Japanese currency action. The BOJ’s decision in January to adopt negative interest rates drew criticism from some countries as a direct attempt to weaken the yen, officials with knowledge of currency negotiations say. Japanese nominal interest rates fell sharply as the BOJ’s negative rate policy pushed yields deeper into negative territory, widening the gap between U.S. nominal rates. However, the gap between Japanese and U.S. real interest rates - which takes the impact of inflation into account - narrowed, making the yen relatively attractive against the dollar and helping push up the Japanese currency, analysts say. Japanese policymakers, including BOJ Governor Haruhiko Kuroda, have kept to their view that the economy is recovering moderately despite growing signs it is skirting recession. Internally, however, they worry that the yen’s ascent has been quite sharp and could hurt exporters’ profits, discouraging them from boosting investment and casting doubts over the likely success of Abe’s “Abenomics” stimulus policies. For now, Tokyo may have to resort to verbal intervention and hope the dollar will find a floor. “Markets may keep testing the dollar’s lows for some time,” said Ayako Sera, market strategist at Sumitomo Trust and Banking. “Japanese authorities may not be able to do much until markets calm down.” REUTERS

LEADERSHIP TRANSITION

Vietnam government sees new faces but policy shift unlikely The new rulers takes office after a year of strong growth of 6.7 percent. Martin Petty

Vietnam completed a protracted leadership transition on Saturday, with 21 new faces in a cabinet tasked with reforming an economy seeing galloping growth but dogged by privatisation and public debt problems. Parliament approved a 27-member line-up that retains some important figures from a government credited with driving a pro-business agenda, including finance minister Dinh Tien Dung and deputy premiers Vu Duc Dam and Pham Binh Minh, who is also foreign minister. The cabinet, which was announced on state television, has one woman, Nguyen Thi Kim Tien, who keeps her post as health minister. Nguyen Xuan Phuc, 61, was sworn in as prime minister on Thursday, replacing two-term premier Nguyen Tan Dung.

Dung’s take-charge approach and pursuit of stronger U.S. ties shook up Vietnam’s often uneventful politics and won him plaudits, though his administration was dogged by a banking crisis and a graft-ridden state sector. The new government takes office after a year of strong growth of 6.7 percent for its US$200 billion economy and record figures for foreign investment and mergers and acquisitions. But it has much work to do in shoring up recovery of a fragile banking sector, boosting a sluggish selloff of stakes in state firms and managing public debt estimated at more than 60 percent of gross domestic product. It also has big changes to make to comply with a U.S.-led Trans-Pacific Partnership trade pact, including setting up independent trade unions for millions of workers in its expanding manufacturing sector.

The cabinet has three new deputy prime ministers, including former supreme court judge Truong Hoa Binh, and Vuong Dinh Hue, who was chief of the Communist Party’s economic committee. Le Minh Hung was appointed as central bank governor, replacing Nguyen Van Binh, who in January joined the party’s 19-member politburo, Vietnam’s core decision-making body. Even with the influential Dung out of the picture, the new government is expected to stick to the same strategy. “Though Dung has been the public face of many of Vietnam’s major economic reform initiatives and the development of stronger ties with Washington, these policies enjoy strong support among Vietnam’s leaders,” U.S.-based advisory firm Albright Stonebridge Group said in a research note. REUTERS

IN BRIEF INSURANCE CLAIMS

Austalian insurer got it wrong on heart attacks The head of Australia’s largest bank said its insurance business, CommInsure, had used an out of date and discredited definition of a heart attack to deny some claims from clients and he would apologise to any customers adversely affected. “I am saddened and disappointed by the handling of these cases,” Ian Narev, chief executive officer of the Commonwealth Bank of Australia, said in a statement on Saturday. “I will personally write to the customers concerned to apologise and offer to meet with them face to face,” he said. INDUSTRY DATA

Japan’s Feb machinery orders seen falling Japan’s leading capital spending indicator was expected to show its first fall for three months in February after a surprise one-off factor jump in January, a Reuters poll found. Core machinery orders, a highly volatile data series regarded as a useful leading indicator of capital spending in the coming six to nine months, was expected to fall 12.4 percent in February from the previous month, the poll of 18 economists found. Core machinery orders rose 15.0 percent in January but were inflated by large orders from the steel industry. RETAIL

S. Korea dept store sales seen up Sales at South Korea’s top department stores rebounded in March from a decline in the previous month, preliminary data from the finance ministry showed on Friday. Combined sales at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co were up 4.8 percent on-year in March, according to data from the finance ministry. Department store sales fell 1.9 percent in February due to distortions caused by a holiday then. Discount store sales dropped 7.0 percent in February and they are seen falling again by an estimated 1.4 percent onyear, the data showed. FINANCIAL MARKETS

Indonesia wants more derivatives traded Indonesia’s financial authorities are finalising several measures to encourage transactions of promissory notes and other money market derivatives between banks to deepen the country’s financial market, the central bank governor said on Friday. Governor Agus Martowardojo said the authorities, including Bank Indonesia, the Financial Services Authority (OJK) and the finance ministry, will issue regulations to boost interbank trade of promissory notes with one-, three-, six- and 12-month tenures. Although current rules allow lenders to use promissory notes, banks stopped trading them and other derivatives in the money market after the Asian financial crisis in 1997-98, he said.

14 Business Daily Monday, April 11 2016

International INTERNATIONAL IN BRIEF ECONOMIC LINKS

Egypt, Saudi Arabia agree US$16 bn fund Egyptian President Abdel Fattah al-Sisi and Saudi King Salman agreed to set up a US$16-billion investment fund Saturday and settled a long-standing maritime dispute as the monarch continued his rare visit to the country. A day after Salman announced a plan to build a bridge over the Red Sea to Egypt, the heads of state met at the historic Abdeen Palace in Cairo to oversee the inking of a string of agreements Egypt hopes will help boost its battered economy. In one of the most high-profile announcements, Cairo said it had agreed to demarcate its maritime borders with Saudi Arabia, officially placing two islands in the Straits of Tiran in Saudi territory.

PANAMA PAPERS

David Cameron publishes tax details as he seeks to move on Panama Papers are also causing problems for Argentine President Mauricio Macri.

DATA OUTLOOK

U.N. body says Latin American economies to contract A United Nations body has cut its modest economic growth projection for Latin America in 2016 and is now forecasting an average contraction in regional gross domestic product of 0.6 percent. The Santiagobased Economic Commission for Latin American and the Caribbean, citing low commodities prices and financial market volatility, cut its prior call for 0.2 percent average economic growth in a statement late on Friday. Last year’s trend of a diverging path between the relatively stronger performance of Mexico and Central America, with their closer U.S. ties, and the commodities-based economies of South America would continue, the U.N. commission said.

AUTOMOTIVE INDUSTRY

Argentine auto production seen holding steady Argentina’s auto production will hold steady or drop slightly this year as sales are hit by the steep recession in main trading partner Brazil, the ADEFA association of vehicle makers said on Friday. “The external situation will remain complicated,” the president of ADEFA, Enrique Alemany, said in a statement published online. “There are no prospects for a Brazilian recovery.” Brazil is the No. 1 buyer of Argentine car exports. Alemany underscored measures taken by Argentina’s new, business-friendly government to improve the sector’s competitiveness such as cutting taxes on new cars and letting the peso float, resulting in a weaker and more competitive exchange rate.

U.K. Prime Minister David Cameron.

.K. Prime Minister David Cameron published details of the tax he has paid since 2009 as he sought to draw a line under the furore over his personal finances, which culminated in him admitting on Thursday that he profited from an offshore fund set up by his father. The four-page document, prepared by a firm of chartered accountants and published yesterday, shows Cameron’s salary as prime minister, income from a house he rents out in London and interest paid on his savings. “As the prime minister said last week, he saw no issue with Prime Ministers and Leaders of the Opposition publishing the information that goes into their tax returns,” Cameron’s office said in a statement. The documents represent “a summary and explanation of the prime minister’s tax affairs going back six years. These cover his final year as Leader of the Opposition and all years as prime minister.”

Cameron also announced a task force to probe documents leaked from Panama law firm Mossack Fonseca as he sought to regain the initiative after being forced to acknowledge he once held shares in an offshore fund linked to his father, Ian, which was mentioned in the papers. He was accused of hypocrisy by the opposition Labour Party and protesters outside Downing Street on Saturday, because he has repeatedly condemned companies and individuals who avoid paying tax. The task-force will be made up of tax, fraud and criminal authorities and will pursue leads from the documents, Cameron said, a day after accepting blame for the way in which he was forced - in five separate statements over four days - to acknowledge his links to an offshore fund. Her Majesty’s Revenue and Customs, the U.K. tax authority, has already tracked down 2 billion pounds (US$2.8 billion) from tax dodgers since 2010, and is chasing 700 leads relating to Panama, according to a statement on

Sunday from the Treasury. HMRC will lead the probe with the National Crime Agency, with Cameron committing initial funding of 10 million pounds. Investigators and analysts from the Serious Fraud Office and the Financial Conduct Authority will also assist. Cameron is seeking to boost his government’s record on cracking down on tax avoidance, a subject he has repeatedly returned to in meetings with governments and multilateral bodies around the world. “The U.K. has been at the forefront of international action to tackle the global scourge of aggressive tax avoidance and evasion, and international corruption more broadly,” Cameron said in the statement. Cameron said he would publish details of his tax affairs following his acknowledgment on Thursday that he sold about 30,000 pounds (US$42,000) of shares in his father’s fund shortly before he became prime minister. He said he had paid all tax due on the shares. The data show the prime minister earned 795,766 pounds in salary for the 6 tax years through April 2015. Over the same period, he incurred 56,451 pounds in taxable expenses on items including travel and clothing, and earned 215,400 pounds from his 50 percent share in renting out his and his wife’s London home. In the year 2013-14 he received 6,681 pounds in interest from savings in “a U.K. high street bank,” the documents show, suggesting substantial cash deposits at a time when the Bank of England base rate was 0.5 percent. “Don’t blame Number 10 Downing Street or nameless advisers, blame me,” he said, to applause from the Conservative Party’s Spring Forum. “I know that I should have handled this better, I could have handled this better; I know there are lessons to learn and I will learn them.” Cameron isn’t the only prominent figure to be dragged into the controversy stemming from the leaked papers. It has already forced the Icelandic prime minister and two European banking executives to resign. It is also causing problems for Argentine President Mauricio Macri, who said this week he will put his assets in a blind trust after a prosecutor said there were grounds to investigate him following revelations of his involvement in two companies listed in Panama. More than 20 nations have announced probes and the Organization for Economic Cooperation and Development will host a meeting on April 13 to discuss cross-border tax compliance issues stemming from the leaks. The U.K. task-force will report back to the government “later this year,” the Treasury said. BLOOMBERG NEWS

GOVERNMENT PLAN

Egypt has high hopes for tourism despite grim statistics More than 14.7 million tourists visited Egypt in 2010, dropping to 9.8 million in 2011.

GYPT is confident of luring back millions of foreign visitors and putting a smile on their faces, according to its new tourism minister, despite heavy first quarter losses and setbacks including a bomb that brought down a Russian passenger plane. The most populous Arab nation aims to attract 12 million tourists by the end of 2017 with a six-point

plan, he said. Egypt tourism revenue has taken a heavy hit since a Russian plane crashed in the Sinai last October, killing all 224 people on board in what President Abdel Fattah al-Sisi called an act of terrorism. Islamic State said it planted a bomb on board. Egypt’s tourism industry, a cornerstone of the economy and critical source of hard currency, has

been struggling to rebound after the political and economic upheaval triggered by the 2011 uprising that ended Hosni Mubarak’s 30-year rule. More than 14.7 million tourists visited Egypt in 2010, dropping to 9.8 million in 2011. Egyptian tourism has survived hard times in the past. In 1997 Islamic militants killed 58 tourists and four Egyptians at a temple in Luxor, on the Nile. Yehia Rashed, new tourism minister of Egypt seemed optimistic. He said the new six-point plan to boost tourism would include increasing the presence of national carrier EgyptAir abroad, working with low-cost airlines and the improvement of services. REUTERS

Business Daily Monday, March Business Daily Monday, April14 11 2016 2016 15

Opinion OPINION BUSINESS WIRES

Philstar The Australia and New Zealand (ANZ) Banking Group now expects the Bangko Sentral ng Pilipinas (BSP) to raise interest rates in the fourth quarter instead of the third quarter this year as inflation remained well anchored. In their latest research note, ANZ economists Glenn Maguire and Eugenia Fabon Victorino said inflation is expected to remain within the two to four percent target set by BSP for this year and next year. Philippine inflation rose in line with market expectations to 1.1 percent in March from 0.9 percent in February.

Taipei Times Former president Chen Shui-bian’s lawyers confirmed that he has been summoned to appear at the High Court on May 13, as the court reopens a trial into corruption charges against Chen over alleged misuse of the state affairs fund. The news was revealed by Democratic Progressive Party (DPP) Legislator Tsai Yi-yu, who claimed that President Ma Ying-jeou was behind the court’s decision to summon Chen. The move comes at “a sensitive time when there are renewed calls by some in the pan-green camp for the former president to be pardoned,” Tsai wrote on Facebook.

The Korea Herald The number of Korean-bred cattle is continuing to fall, adding to speculation that the prices of prized local beef, known as hanwoo, will keep soaring, showed data released Friday. A total of 2.6 million head of hanwoo cattle were being raised on domestic farms in the first quarter, down 63,000, or 2.4 percent, from the same period last year, according to Statistics Korea. It marks a 3-percent decline from the previous quarter. The number of Korean cattle stood at 2.93 million in 2012 but fell to 2.8 million in 2013, 2.67 million in 2014 and 2.56 million last year.

LUSA

Japanese Prime Minister Shinzo Abe (R) greets guests at a cherry blossoms viewing party hosted by the premier at Shinjuku Gyoen National Garden in Tokyo.

The surrender of Japan’s peace constitution

N FEBRUARY, JAPANESE PRIME MINISTER Shinzo Abe called on the National Diet to amend Article 9 of the country’s constitution, which renounces war as a means of settling disputes. Drafted by the United States after World War II, the constitution contains “some parts [that] do not fit into the current period,” Abe said. He is particularly concerned with the constitutional provision that prohibits Japan from maintaining “land, sea, and air forces,” arguing that it seems to be in direct contradiction with the existence of the country’s Self-Defence Forces. At a glance, Abe’s proposal seems deeply unpopular. According to one poll, some 50.3% of the Japanese public objects to amending Article 9. Only 37.5% of those polled favour such action. The good news for Abe, however, is that opposition to his efforts, though broad, does not seem to run deep. Voters, it seems, are less concerned about the direction Abe is taking the country than they are about his decision to make the issue a top priority. Revising the constitution would provide stronger legal grounding for Abe’s controversial defence measures. Introduced last year, the new legislative provisions lift restrictions on deploying Japanese forces overseas and expand the definition of self-defence to include aiding an ally. These, too, are unpopular – at least superficially. Some 51% of Japanese voters disapprove of the measures, compared to 30% who support them. And yet only 38% say they would like to see Abe reverse course and repeal the legislation. To be sure, many in Japan are concerned about the implications of Abe’s agenda, feeling that it runs counter to the country’s national security and proper international stance. They worry that Abe’s defence moves will make it more likely that Japan will be dragged into war, putting an end to its post-war pacifism. Another avenue of criticism regards worries that Japan’s new defence doctrine will worsen its relationships with its neighbours. Several countries have indeed already expressed concerns. China’s Foreign Ministry spokesperson, Hong Lei, stated that Japan’s new approach was “out of step with the trend of the times featuring peace, development, and cooperation.” His counterpart at South Korea’s foreign ministry commented that his

Emily S. Chen Fellow at the Hoover Institution, a Young Leader at the Pacific Forum Centre for Strategic and International Studies.

country would “never tolerate” Japan’s exercise of the right to collective self-defence on the Korean peninsula “without the [Republic of Korea’s] request or consent.” And North Korean state media reported that Abe’s reforms were intended to “pave the way for invading other countries.” Not all of the opposition to Abe’s agenda, however, stems from substantive objections. In some cases, concern focuses on the legitimacy of the process that produced the laws. According to one poll, 67% of respondents disapprove of how the ruling coalition pushed the legislation through the Diet. There is a widespread feeling in Japan that Abe’s cabinet “did not make a sufficient effort” to explain the legislation to the public. By ignoring criticism from the majority of voters, Abe’s government allegedly discredited Japan’s democratic system. Similarly, some 51% of respondents disapproved of the laws on constitutional grounds, believing them to be in violation of Article 9 of the constitution, the provision that Abe would like to alter. These voters are less likely to support scrapping the bills; indeed, some of them may be mollified if Abe is successful in amending the constitution. There is also a simple, practical answer that explains why opponents of the laws may not be in favour of efforts to repeal them. Many in Japan would like to avoid a divisive debate that could distract the government’s attention from other priorities. Japan’s economy shrunk more than expected in the final quarter of 2015, and its stock market has been in turmoil since the beginning of this year. No matter how unenthusiastic the Japanese might be about Abe’s security bills and his attempts to change the constitution, they would prefer that the issue be relegated to a back burner. That way, the government can focus on what voters really care about: turning the economy around and saving the country’s social security programs. PROJECT SYNDICATE

“MANY IN JAPAN ARE CONCERNED ABOUT THE IMPLICATIONS OF ABE’S AGENDA”

Vietnam News Mobile electronic commerce or m-commerce is soon set to take off in Việt Nam thanks to the increasing number of mobile phones and rapid internet development, experts have predicted. According to a report by Google Viet Nam, mobile devices have driven a major shift in consumer behaviour. It said a Vietnamese on average picks up and looks at their mobile phone 150 times a day, or more than 10 times an hour. Furthermore, more people under 35 now use smartphones than computers. This has a tremendous impact on m-commerce since users are seeking specific information and content, the company said.

16 Business Daily Monday, April 11 2016

Closing CLOSING CONSTRUCTION

Dubai to build tower taller than Burj Khalifa

Dubai plans to build a tower that will stand higher than its Burj Khalifa (pictured), currently the world’s tallest skyscraper, property developer Emaar said yesterday. The viewing tower will cost around US$1 billion (880 million euros) and will be “a notch” taller than Burj Khalifa, Emaar chairman Mohamed Alabbar told reporters as he revealed details of the project. But he said that the final height will be announced upon completion, adding that his company would like to present the tower as a “gift

to the city before 2020,” the year Dubai hosts the world Expo trading fair. Designed by Spanish-Swiss architect Santiago Calatrava Valls, the tower will have observation decks, in addition to 18 to 20 mixed-use floors that will host restaurants and a boutique hotel, Alabbar said. Burj Khalifa is 828 metres high and it cost US$1.5 billion to build. It was opened in January 2010. Alabbar described the new structure as an “elegant monument” which would add value to property being developed by the company along the city’s creek. AFP

STRICTER CONDITIONS

Australia’s big banks wander deeper into regulatory quagmire The industry has already been unsettled by probes into wealth mismanagement and insurance scams. Swati Pandey

USTRALIAN banks famously rode out the 2008 financial crisis with barely a scratch, but no longer are they the exemplar of success, as a commodity rout ravages the economy and a growing storm of accusations over misconduct threatens to tar their name. Two weeks ago, Westpac Banking Corp became the second Australian lender after ANZ Banking Group to be dragged to court by regulators over suspected rigging of benchmark interest rates. Both have denied any wrongdoing, saying they would vigorously defend themselves. While increased regulatory scrutiny will eventually promote greater compliance, banks could face

medium-term financial penalties, denting earnings and shareholder returns in a sector battling stricter capital rules and higher loan losses. The industry has already been unsettled by probes into wealth mismanagement and insurance scams, and public pressure is piling on Prime Minister Malcolm Turnbull to order a sector-wide inquiry into bank conduct as he campaigns for a federal election in July. In a speech at Westpac’s 199th birthday lunch last week, Turnbull accused banks of sometimes taking advantage of customers but stopped short of seeking a high-level inquiry. In contrast, Australia’s main opposition Labour Party on Friday promised a Royal Commission into the financial sector if it wins July’s election.

“We are not denying there have been problems, we are not denying there has to be on-going scrutiny of the industry,” Australian Bankers’ Association CEO Steven Münchenberg said on Friday. “The question is do we need a Royal Commission to do that? No, we do not.” National Australia Bank’s CEO Andrew Thorburn said a Royal Commission would be a “serious distraction”. ANZ Chief Executive Shayne Elliott said such an inquiry could damage Australia’s standing among global investors. “The more immediate impact would be banks suffering some reputational damage,” Fitch ratings said last week in a note on Australia’s banks. The Big Four - NAB, Commonwealth Bank of Australia, Westpac and ANZ - are among the worst performers on the benchmark S&P/ASX200 index this year, down between 14 percent and 19 percent.

End of golden era

Until last year, the banks had boasted a decade of uninterrupted growth and delighted investors with generous dividends. When the 2008 global crisis hit, the banks sailed through with little damage, backed by a resources boom at home.

But as the commodities super-cycle plumbs new lows, the focus is falling on bank loans to Australia’s beleaguered agricultural and mining sectors. The sectors have shed jobs by the thousands, weighing on individual borrowers’ ability to pay their mortgages in an already cooling housing market. Charles Littrell, a senior executive at the Australian Prudential and Regulation Authority, told local media that the concentration of lending by the Big Four in property is a “perpetual concern”. Last year, APRA demanded the banks keep aside a bigger buffer against mortgages, forcing them to raise over A$20 billion (US$15.1 billion). The regulator is set to announce further measures to increase capital, eroding banks’ bottom line. Profit growth is set to ease to low single-digits this financial year, a far cry from the doubling of profits over the past five years. Net interest margins are expected to fall to record lows on stifling competition and higher cost of funds, while loan-loss provisions may hit their highest in five years by the next financial year, according to Thomson Reuters I/B/E/S estimates. “Credit quality is by far the biggest risk that faces the banks. It can affect earnings, dividends,” said Andrew Martin, portfolio manager at Alphinity Investment Management, which holds stakes in the major banks. “The second one is regulations, and the reason is, ultimately over time, the more regulation there is the more it will pressure returns.” REUTERS

Key Points Compliance headache latest in string of problems for banks Regulators drag Westpac, ANZ to court for rate rigging Opposition politicians call for inquiry into financial scandals Regulations may hurt earnings, returns

RUGBY PROMOTION

FOOD PRICE

China wants to host World Cup, says sport’s CEO

Mainland’s economic planner Red Cross threatened plays down pork inflation by unauthorised Panama Papers link

China has ambitions to host the Rugby World Cup, the sport’s CEO told AFP yesterday as he unveiled an Alibaba tie-up aimed at transforming the game in the world’s most populous nation. Under the new deal, Alibaba’s sports division Alisports will support a revamp of China’s grassroots rugby and competitions, and increase the sport’s visibility through its Internet platforms. World Rugby CEO Brett Gosper said a Chinese stop on the sevens world series was now a possibility - as was staging the sport’s pinnacle competition, the Rugby World Cup. Rugby is enjoying a surge in Asia, thanks to the upcoming 2019 World Cup in Japan, the popular 10-stop sevens world series and Super Rugby’s expansion to include a team from Tokyo. The prospect of a Rugby World Cup in China would come as a surprise to most observers, as the sport currently has little participation or popularity there. Under a deal announced in Hong Kong, Alisports will support a mass participation, training and education programme and broadcast exclusive World Rugby content on web platforms. AFP

Pork prices in China will continue to run high, but will not rise remarkably this year, the country’s economic planner said yesterday. This round of price hike resulted from low prices in previous years, said the National Development and Reform Commission’s website. Some farmers are reluctant to raise pigs after suffering low prices for years, even if the prices have actually been picking up, it said. Prices have been rising for about a year after almost three years of falls. Pork is China’s staple meat and its price is subject to a boom-and-bust cycle and the supply-demand relationship is expected to ease in September. The average wholesale pork price hit 25.3 yuan (US$3.9) per kg in the week ending on April 3, up 0.4 percent from the previous week, the highest since October 2011, according to the Ministry of Commerce. The consumer price index (CPI) grew 2.3 percent in February from one year earlier, up from January’s 1.8 percent. XINHUA

PANAMA PAPERS

The unauthorised use of the International Red Cross’s name by entities listed in the Panama Papers poses “enormous” risks for its operations and staff, the head of the humanitarian body said in an interview published yesterday. Peter Maurer, president of the International Committee of the Red Cross (ICRC), made the comments in Le Matin Dimanche, after the Swiss paper detailed how shell companies set up by Panama law firm Mossack Fonseca inaccurately listed the ICRC as their beneficiary. “The (risks) are enormous. If we were found, for example, to be associated with an offshore company owned by an armed group, I dare not imagine what we could be implicated in,” Maurer told the paper. “We are going to do to everything in our power to stop this abuse,” he added. According to the Swiss paper, Mossack Fonseca set up two entities -- Brotherhood Foundation and Faith Foundation - which it offered to clients as an asset holding body. AFP