Shun Tak to open shopping mall in Nova City in 2019 Retail Page 3
Thursday, June 23 2016 Year V Nr. 1071 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Joanne Kuai Finance
Kingston Financial’s annual profit grows ‘significantly’ Page 6
www.macaubusinessdaily.com
Own indices
Lawsuit
Baidu will use its technology to create its own batch of Chinese economic data Page 8
Disney sues Chinese company for ‘Cars’ characters plagiarism Page 16
Top court quashes Moon Ocean appeal
Courts
Moon Ocean Ltd, the developer of luxury residences La Scala, has failed in its final attempt to overturn the gov’t decision to take back five plots of land on which its home project was to be built. The MSAR Gov’t said yesterday it respects and welcomes the decision. The land will be a ‘priority’ for public housing development. Page 2
Local travel agencies say the summer holidays haven’t boosted revenues. Because fewer people are travelling. Or choosing cheaper destinations in the faltering economy. Korea, adjudged ‘cheap and safe’, is among Macau citizens’ top picks. Travel Page 5
Macau Legend gets thumbs up
Macau Legend Cape Verde prosecutors have found no case to answer. A probe into Macau Legend’s US$282.3 mln gaming and tourism resort in the country has concluded. Following several months of investigation, authorities say they’ve found no trace of illegality in the project. Page 7
Referendum result on knife edge
Brexit deadline Britons have entered their final day of campaigning. With opinion polls and financial markets at odds over the likely outcome of the referendum on European Union membership. Polls say the race is too close to call. Less than 24 hours before voting booths open today, both sides say there’s all to play for. Pages 14 & 15
HK Hang Seng Index June 22, 2016
20,795.12 +126.68 (0.61%) Worst Performers
China Shenhua Energy Co
+6.18%
Lenovo Group Ltd
+1.90%
China Construction Bank
-4.42%
Power Assets Holdings Ltd
-0.20%
Tencent Holdings Ltd
+2.43%
China Overseas Land &
+1.74%
Link REIT
-1.88%
Cheung Kong Infrastructure
0.00%
Industrial & Commercial
+2.10%
PetroChina Co Ltd
+1.69%
Cheung Kong Property
-0.72%
China Mobile Ltd
+0.12%
Tingyi Cayman Islands
+2.06%
Galaxy Entertainment Group
+1.50%
CK Hutchison Holdings Ltd
-0.33%
Hang Seng Bank Ltd
Wharf Holdings Ltd/The
-0.33%
Hong Kong & China Gas Co
Hong Kong Exchanges and
+1.91%
AIA Group Ltd
+1.11%
+0.15% +0.30%
26° 32° 26° 32° 28° 31° 28° 31° 28° 31° Today
Source: Bloomberg
Best Performers
Fri
Sat
I SSN 2226-8294
Sun
Mon
Source: AccuWeather
Outbound travel woes
2 Business Daily Thursday, June 23 2016
Macau La Scala Top court turns down Moon Ocean’s appeal
Moon Ocean loses La Scala plots in court battle The developer has officially lost its battle trying to stop the government from recovering five plots for which land grants were declared void in 2012 as related to the corruption case of former Secretary Ao Man Long. Kam Leong kamleong@macaubusinessdaily.com
M
oon Ocean Ltd., the developer of luxury residence La Scala, has failed in its final attempt to overturn the government’s decision to take back the five land plots on which its home project was to be built. Yesterday, the city’s Court of Final Appeal turned down the company’s appeal against the decision of the
Court of Second Instance last June that the plots of land should return to government possession. According to the verdict released by the top court, the company, controlled by Hong Kong billionaire Joseph Lau Luen Hung, argued that Chief Executive Fernando Chui Sai On had exceeded his power by announcing the invalidity of the land concession for the five plots in 2012, claiming this should be in the exclusive domain of the local courts. But the judges of the case - Song
Joseph Lau
Man Lei, Justice Sam Hou Fai and Viriato Manuel de Lima - did not agree with the company’s position. ‘The transfer of the land concession of the five land plots involved in the case was made on the premise that the former Secretary for Transport and Public Works [Ao Man Long] had accepted the bribes. This unavoidably led the procedure of the transfer and the final approval of the transfer [to be] defective then ineffective,’ presiding judge Song Man Lei wrote in the verdict. In 2006, Moon Ocean was approved by the SAR Government to acquire the five plots opposite Macau International Airport for MOP1.37 billion (US$162 million). These plots were previously granted to five companies primarily owned by the then-Portuguese government, Macau International Airport Company Ltd. (CAM) and Sociedade de Turism Diversões de Macau, S.A. In 2012, the MSAR Government dispatched the invalidity of Moon Ocean’s acquisition of the five plots in 2012 as they are linked to the corruption case of ex-Secretary Ao Man Long.
Illegal from the start
The Hong Kong-based company also claimed that the procedure of transferring the land concession of the plots was fully and objectively legal while the government’s dispatch of voiding the land concession had delayed the public interest. But the top court held the opposite to be the case, finding that the whole procedure had broken the city’s laws
Gov’t welcomes top court’s decision
The MSAR Government said yesterday that it respects and welcomes the decision of the top court, according to a statement released by the Government Spokesperson’s Office. The announcement adds that Chief Executive Fernando Chui Sai On had already dispatched the Secretary for Transport and Public Works Raimundo do
from the beginning. ‘The procedure of selecting a grantee [for the transfer of the land concession] violated the related regulations and the legality standards from the beginning due to the bribery-taking of former Secretary for Transport and Public Works Ao Man Long,’ the verdict reads. ‘The concession is ineffective not solely due to the crimes committed by Ao Man Long but also the crimes committed by the defendants [themselves]. Lau Luen Hung and Lo Kit Sing paid HK$20 million (US$2.5 million) to bribe Ao Man Long to get the land concession,’ the court wrote. In addition to the five plots, Moon Ocean was awarded another eight land parcels in 2011 for the La Scala project – the land grants of which were declared void in 2013 for the same reason whilst the company had filed an appeal against the decision as well. A dispatch signed by the incumbent Secretary for Transport and Public Works Raimundo do Rosario this March indicated that the city’s courts had not yet made a definite ruling on the appeal. The two Hong Kong businessmen have been found guilty of corruption and money laundering by local courts for bribing the former Secretary in 2005 in exchange for successfully bidding for the five land parcels. Although they were sentenced to five years and three months in jail, neither of the two men is currently behind bars as there is no extradition agreement between the two Special Administrative Regions.
Rosario to immediately initiate preparing works for planning the use of the land plots. ‘The MSAR Government will execute its administration promises that the related land plots will be used for public purposes, with the priority being developing [them] into public housing projects,’ the Office wrote. The government expects that the land plots could accommodate more than 4,000 residential units.
Business Daily Thursday, June 23 2016 3
Macau Land
Gov’t claims two idle land plots on Peninsula
da Tercena and a 220 square metre plot in Rua de Santo Antonio. Two adjacent areas The government has claimed two idle plots close to the claimed land plots, totalling of land in the Macau Peninsula, according 448 square metres, will be rented by the government for the construction of a sixto dispatches published in yesterday’s floor building with the purpose of turning Official Gazette. The dispatch approved it into a 2-star hotel. Also, two adjacent by Secretary for Transport and Public land parcels occupying 98 square metres Works Raimundo do Rosario states that the government has claimed the property will be integrated into state property to be used as a public road. rights of a 324 square metre plot in Rua
Joint venture Shun Tak and HIP company join hands
Shopping mall in Nova City in 2019 Upon completion of the translation, Shun Tak group will receive a consideration of approximately HK3.15 bln for the sale of 50 pct interest in the shopping mall to HIP.
A
shopping mall in Phase 5 of Nova City is expected to open in 2019, according to a press release issued yesterday by Shun Tak Holdings Limited. Shun Tak announced that it has entered into a sale and purchase agreement with HIP Company Limited (‘HIP’), a wholly-owned subsidiary of the Abu Dhabi Investment Authority (‘ADIA’). The partnership seeks to establish a 50/50 joint venture partnership to jointly invest in a shopping mall as part of Phase 5 of the Nova City project in Taipa, Macau. Upon completion of the transaction, the Group will receive a consideration of approximately HK$3.15 billion (US406 million /MOP3.24 billion) for the sale of 50 per cent interest in the shopping mall to HIP.
The property is a large-scale lifestyle retail complex occupying over 655,000 square feet, which will sit beneath the eight residential towers of Phase 5 of Nova City, comprising approximately 1,700 residential units. Under the current plan, it will house a diverse range of tenants including a Cineplex and a supermarket. In addition, it will also offer an array of lifestyle brands and dining options, ‘bringing a new dimension of convenience to residents of Nova City, as well as fulfilling unmet demand for the entire Macau local community,’ reads the press release. It offers 609 car parking spaces, with the location close to the future light rail station. The mall is expected to open in 2019. Ms. Pansy Ho, Managing Director of Shun Tak Holdings Limited, said in the written statement, “Macau has long
Pansy Ho, Managing Director of Shun Tak Holdings Limited
been lacking a quality shopping mall that focuses on the needs of the local community, and we are delighted to offer this as part of our Nova City development . . . Building upon 20 years of local knowledge in creating the most comprehensive residential
community in Taipa, we look forward to bringing new dimensions of global insight and experiences from HIP to join us in fulfilling this vision. The newest phase of Nova City is poised to become the focus of life and play for the whole of Macau.”
4 Business Daily Thursday, June 23 2016
Macau Opinion
Ashley Sutherland-Winch Blue Card Kids & Immigration Australian tourists rejoiced this week with the news that Macau’s security departments had successfully identified a new process of expedited immigration clearance for residents of Australia; granting preregistered travellers entry via Macau’s Automated Passenger Clearance System e-Channel at our ferry terminals and borders. Macau residents over the age of 16 will also be offered similar clearance in Australia via the country’s automated system, termed SmartGate. While this new process is great for adults and kids over the age of sixteen, this benefit excludes a very large demographic, the ‘blue card kids,’ a child who has parents who live in Macau via a work visa. These kids (12 years old and under) are too young to have their fingerprints taken to utilise the resident Immigration Customs ‘Fast Pass’ line at Immigration and do not qualify for the resident lane at Customs. In some cases, these children’s parents might even be Australian. Under the new provisions, an Australian tourist can now receive an expedited wait time at Immigration but parents of children under the age of twelve who live and work in Macau cannot. On a busy day in the week, a ‘blue card kid’ and parent entering Macau via Hong Kong can experience wait times of over 30-40 minutes standing in the visitor’s lane at Immigration. This is a long time when you consider that a) the child may have lived in Macau for much if not all of their life and b) perhaps their parents are in residency limbo - meaning that they have applied for a ‘white card’ allowing residency in Macau but since the process can sometimes take years before final approval is given, they are caught in the middle. It is great that Macau and Australia are working together to improve the tourist immigration experience but is it possible to create a better alternative for long standing ‘blue card’ families in Macau? In large regard, these families invest in Macau schools, participate in community outreach and work hard in their respective fields but are caught in the middle of residency and live in Macau on a work visa. In the meantime, could we look at ways to expedite our temporary residents’ immigration process when they are travelling with young children? While it is so important to highlight Macau immigration on the international tourism scene, we should continue to look for ways to show value and respect for those living and working in Macau and their offspring. Ashley Sutherland-Winch is a Marketing and Public Relations Consultant and frequent contributor to this newspaper.
Economy
EIU: GDP may grow in 2017 A report by the Economist Intelligence Unit predicts that Macau GDP could grow 5.3 per cent next year, while the fall in investment will slow down.
M
acau’s gross domestic product (GDP) could increase 5.3 per cent in 2017, despite decreasing 5.9 per cent this year, according to estimates by the Economist Intelligence Unit (EIU), Portuguese-language newspaper Tribuna de Macau reports. The EIU, an economic research group belonging to financial news entity The Economist Group, believes Macau GDP will return to positive numbers after a 0.9 per cent and 20.3 per cent decrease in 2014 and 2015, respectively. With regard to gross fixed capital formation (GFCF), which measures
Transport
the level of investment, the report posits the territory will see a 3.3 per cent decrease in 2017, better than the 19.7 per cent decrease in investment registered this year. The report mentions how in recent years investment registered high growth in 2014, with a 37.7 per cent increase, mainly due to the construction of major hotel and gaming resorts, with that investment growth rate going down to 0.9 per cent in 2015, until investment started decreasing this year, Tribuna reports. The conclusion of most of the gaming operators projects in the Cotai area and the reduction of government public investment by falling gaming
revenues and consequent fiscal reserves decrease, is deemed one of the reasons for the GFCF fall.
Key Points GDP to grow 5.3pct in 2017 Investment to decrease 3.3 pct next year Public expenses will represent 10.8 pct of GDP in 2017 The EIU report also predicts that the percentage of GDP comprising public expenses will continue to contract moderately from 12.2 per cent this year to 10.8 per cent in 2017, after it represented 25.1 per cent and 14.1 per cent in 2014 and 2015, respectively. The report also states the service trade balance will continue to have a surplus from 2016 to 2017.
Green-bus operator generates MOP13.2 mln in yearly profit
New Era out of the red Local bus operator Macau New Era Public Bus Co. Ltd. has posted MOP13.2 million (US$1.65 million) net profit for 2015, compared to a net loss of MOP1.456 million for 2014, according to the company’s annual report published in the Official Gazette yesterday. “Due to the company’s increased revenues as a result of two new bus routes in 2015, as well as fuel prices
dropping by 13 per cent year-on-year to MOP11.69 per litre for 2015 which lowered our fuel cost, we recorded a profit after tax of MOP13.2 million for 2015,” the company’s general manager Daniel Fong wrote in the report. The company report, however, did not show the total revenue that it generated for last year. New Era acquired bankrupt Reolian
Public Transport Co. Ltd’s bus services in the middle of 2014. As at the end of 2015, the bus company was operating 33 bus routes, which accounted for 44 per cent of the total bus routes in the SAR. F o r thi s y ea r, th e c o m p a n y said it is planning to invest some MOP20 million to introduce 25 n e w b u s es, i n c l u di n g t w e n t y 12-metre long vehicles and five minibuses, which will make the total number of buses owned by the company 305. K.L.
Business Daily Thursday, June 23 2016 5
Macau Travel
Summer holiday not stimulating sales of outbound tours Local travel agencies say sales of outbound package tours during the Summer holiday are posting a slight decline compared to last year. Annie Lao annie.lao@macaubusinessdaily.com
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ith t h e c i t y ’ s economic downturn continuing, local travel agencies have witnessed a decrease in the number of outbound traveler bookings from July to August. “About a 10 per cent drop in tour bookings by outbound traveller in the city,” Andy Wu Keng Kuong,
president of Macau Travel Industry Council, told Business Daily in a phone interview yesterday. The total number of outbound Macau residents using the services of travel agencies reached 401,919 during the first four months of this year, down 16.7 per cent compared to 482,759 for the same period last year, according to the latest official data of the Statistics and Census Service (DSEC). Of all outbound travel destinations,
Korea is the most popular during the Summer holidays, especially for families, says Wu. Local travel agencies have seen the city’s outbound travellers turn to cheaper tours this Summer. “Due to the affect of the economic slowdown, more outbound travellers have chosen to join cheaper tours such as travelling to Korea instead of Japan,” Sabrina Iong Ut Iong, general manager of EGL Tours (Macau) Co. Ltd., a local travel agency, told Business Daily.
Outbound tours down
Local travel agencies have also found it hard to cut the costs of outbound tours to attract more travellers in the city to sign up. The main reason is that flights departing from Macau during the Summer have not shown any reduction in price. Therefore, most outbound travellers from Macau have even chosen to depart with cheaper flight tickets available in Hong Kong. “Hong Kong has more airlines to compete so that there are more promotions offered by airlines for cheaper air tickets during the Summer. However, when compared to Macau, there are less airlines available; as a result, there is no discount on the air tickets during the Summer holiday here,” Iong explained. Most flights flying from Hong Kong to Southeast Asia and Mainland China are generally cheaper than flying from Macau, with a price difference of about MOP1,000 (US$125), she says. In addition, hotel prices in these destinations have remained the same with no special discounts offered during the Summer holiday since there will be more people travelling
during this time from other countries, mostly tourists from Mainland China, says Iong. Sales of outbound tours are still low for local travel agencies, even with advance promotions launched to attract locals.
“Due to the affect of the economic slowdown, more outbound travellers have chosen to join cheaper tours such as travelling to Korea instead of Japan,” Sabrina Iong Ut Iong, general manager of EGL Tours (Macau) Co. Ltd
“Overall, our profit is down during the Summer holiday. We did some promotion for booking outbound tours in advance before but it did not boost our sales,” Candy Leng, general manager of Multinational Youth Travel Agency Limited, told Business Daily. She also said Korea is still the most popular travel destination for families as it is a safe place to travel. Meanwhile, outbound tours to Thailand have posted the greatest decline, as people are concerned about safety and security given the tragedy of a recent terrorist attack, she explained.
6 Business Daily Thursday, June 23 2016
Macau In Brief DSPA
Four bid for Wastewater Treatment Plant operation A public tender was opened for the contract of operation and maintenance of Macau Peninsula Wastewater Treatment Plant yesterday. The Environmental Protection Bureau (DSPA) received four tenders. The future new operators will need to replace the aging equipment for an operational period of two years. Regarding the optimisation of the sewage treatment system and the improvement of Areia Preta shore’s sewage problems, DSPA said that these issues are not included in the contract and further research will be conducted later to find solutions. Previously, some tender entities appeared in court for conservation measures. As a result, the public tender opening was delayed for two weeks. DSPA said the case had gone through legal procedures and based on the law the open tender proceeded accordingly. DSAT
Temporary traffic arrangements around Taipa Stadium A roundabout area at Taipa Stadium up to the old town will have several temporary traffic arrangements starting from Saturday, according to a press release published by the Transport Bureau (DSAT) yesterday. The arrangement is to coordinate with the lifting of the light rail viaducts for installation at the Light Rail Transit (LRT). The arrangement is expected to last 100 days. The roundabout area at Taipa Stadium, between Taipa Stadium Road and Governador Albano de Oliveira Road will be closed. Some sections of the neighbourhood will be changed in order to direct traffic, including changing the original double line into a single line on the road. According to DSAT, 21 bus routes need to be diverted, with traffic temporarily affected.
Profit alert
Kingston Financial’s annual profit grows ‘significantly’
I
nvestment holding company Kingston Financial Group Limited, which also runs a hotel and gaming business in Macau, expects its yearly profit will jump notably for the past fiscal year. ‘The Group anticipates reporting a significant increase in its profit attributable to owners of the Company for the year ended 31 March 2016 as compared to the year ended 31 March 2015,’ it announced in a filing with
the Hong Kong Stock Exchange on Tuesday after trading hours. The Hong Kong-listed firm is the operator of Casa Real Hotel and Grandview Hotel in Macau. It claimed in Tuesday’s filing that the increase in net profit was primarily driven bits income from securities brokerage, underwriting and placements, margin and IPO financing business. For its 2014/15 fiscal year, the company’s net profit surged 63.4 per
cent year-on-year to HK$1.26 billion (US$156.8 million) whilst its casino revenues generated from Macau slipped 4.5 per cent to HK$660.2 million. As at September, the company operated 59 mass gaming tables, 14 VIP tables and 134 live baccarat machines in its two local hotel properties under the gaming licence of Sociedade de Jogos de Macau SA (SJM), according to its previous interim report. K.L.
Immigration
Registry for e-Channel added at airport In order to co-operate with the newly rolled out policy granting preregistered Australian passport holders entry via Macau’s Automated Passenger Clearance System e-Channel, a registration service point was added in the Macau International Airport Arrival Hall on Tuesday, according to a press release issued by the Department from the Public Security Police (CPSP). The newly established facility and service seeks to better serve eligible nonresidents so that they can use the self-service immigration clearance system right away when arriving in Macau by air. CPSP added that the registry service operates daily from 8:00am to 12:00am.
Junket Jimei Int’l Macau junket deal delayed once again
Deal delayed Jimei International Entertainment Group has announced that the target date of concluding a deal that would allow the group to participate in a VIP gaming promotion business in Macau has been pushed back again for another six months. In a filing with the Hong Kong Stock Exchange on Monday after trading hours, the company chaired by renowned local junket operator Jack Lam Yin Lok said that the
negotiation of the terms of cooperation with a concessionaire are still in progress. ‘The VIE (variable interest entity) Parties intend to enter into the definitive VIE Agreements only after such terms of co-operation with the concessionaire is substantially finalised so that the Promoter could commence business immediately after establishment of the VIE Structure,’ reads the filing. Not only the deadline has been pushed to the end of 2016; the filing also marks the fifth time the deadline
has been extended on the VIE agreement with New International Club. In February 2015, Jimei International said it had signed an agreement with New International Club to ‘indirectly participate in the gaming promotion business in Macau’. New International Club Ltd. and its sole shareholder Carlos José Lok received a gaming promotion licence in December 2014 to operate in Macau, according to information from the Gaming Inspection and Coordination Bureau (DICJ).
Business Daily Thursday, June 23 2016 7
Macau Macau Legend
David Chow project in the clear
Green light for Macau Legend’s Cape Verde resort The Cape Verde General Prosecutor’s Office has closed the case on an illegality probe into Macau Legend’s US$282.3 million gaming and tourism resort in the country. Nelson Moura nelson.moura@macaubusinessdaily.com
T
he Cape Verde General Prosecutor’s Office (Cape Verde MP) has found no sign of illegality involving the gaming and tourism resort planned by Macau Legend Development Ltd. in the country, news agency Lusa has reported.
The probe into the US$282.3 million (MOP2.25 billion) integrated resort project in Cape Verde was initiated due to a petition by the former chairman of the Cape Verde Architects Order, Cipriano Fernandes, one day before the project started construction in February. The former Cape Verde Architects Order chairman demanded the Cape Verde MP suspend the resort construction, claiming the
Gaming
Macauslot’s yearly profit up 13.7 pct The city’s sports betting operator Macauslot - Sociedade de Lotarias e Apostas Mútuas de Macau saw its annual profit for 2015 jump 13.7 per cent year-on-year to MOP138.5 million (US$17.3 million) from MOP121.8 million, according to the company’s report released in the Official Gazette yesterday. The company, however, did not explain the reasons driving the increase in net profit. According to the official data of the Gaming Inspection and Co-ordination Bureau (DICJ), the company generated some MOP673 million in revenues for 2015, down 8.6 per cent year-on-year compared to MOP736 million. DICJ data also shows that with football betting, Macauslot’s gross revenue totalled MOP503 million in 2015 vis-a-vis MOP598 million in 2014 when the World Cup was held
in Brazil. By contrast, gross revenue generated with basketball betting increased to MOP170 million in 2015 from MOP138 million in 2014. ‘Since, in 1998 and 2000, respectively, we launched sports betting in football and basketball (NBA), the company has promoted the game as a form of entertainment . . . popularity has increased,’ said the company in the report, which points out that last year improvements were made in the quality of service and diverse types of sports betting. The company, founded by gaming tycoon Stanley Ho Hung Sun, has held a local monopoly for non-racing sports betting (including an online portal for use only in Macau) in the city that has remained unchallenged. At the beginning of this month, the government extended the company’s sports betting concession until June 5, 2021. K.L.
project did not comply with legal requirements.
Not everybody’s cup of tea
The Cape Verde MP stated in a release that its investigation had found no trace of illegality in the project following a ‘pondered analysis’ of the project’s documents and information, requested after Cipriano Fernandes petition. The case would then become an ‘archived law suit’ since there was no basis for suspension of the resort construction. Cape Verdean activist group Korrenti di Ativista has previously staged protests on the island where the project is under construction, claiming the project will
serve mainly to bring “money laundering, prostitution and sexual tourism” to the country, Lusa reported.
Small island, big project
The project promoted by Macau Legend CEO David Chow Kam Fai will be located in the Cape Verdean capital of Praia on Santiago Island, occupying a land and sea area of 119,200 square metres, as well as a beach area of 33,500 square metres, Business Daily reported previously. The resort will include gaming facilities, hotels, retail, dining, convention centre, a marina and other facilities, and is set for completion in 2019. The tourism and gaming project will be the biggest in the small Portuguese-language East African island country, with an investment equivalent to 15 per cent of the country’s gross domestic product (GDP), creating an estimated 2,000 jobs, according to Lusa. At the opening ceremony in February David Chow stated that he hoped the new project would boost economic and cultural exchanges between the Macau Special Administrative Region and the island, while Cape Verdean President Jorge Carlos Fonseca said his country would fully support the gaming operator’s new project, perceiving it would benefit the island’s economic development. Macau Legend, which operates The Landmark Macau and Macau Fisherman’s Wharf in Macau, was granted a 75-year land concession for the project by the Cape Verde Government; while CV Entertaiment Co., a group subsidiary, received a 25-year gaming concession exclusive to Santiago Island. The gaming operator was also granted an exclusive 10-year gaming licence for online and sports betting for the whole country, Lusa reported.
8 Business Daily Thursday, June 23 2016
Greater China ‘Baidu will focus on the anonymous data of users collected from 3,000 business and shopping centres and districts as well as 2,000 industrial parks across China’ Indices revolution
Baidu creates own indexes to paint picture economy Those include its own employment index, and a consumer spending index. David Ramli
B
aidu Inc. is using its own trove of data to measure China’s economy, devising new gauges that may paint a better picture than the government’s. The country’s leading search engine has begun using location and search information collected from its more than 600 million users to create indicators and indexes it says could shed light on what’s happening with the world’s second largest economy. I n v est o rs a n d a n a l y sts hav e long questioned the veracity and
methodology of China’s governmentissued statistics. An example is jobless data, with an unemployment rate staying between 4 per cent and 4.3 per cent in every quarter since the end of 2002, through a domestic boom, the global financial crisis and now an economy growing at its slowest pace in 25 years. “The economy is slowing down but the unemployment rate published by the government remains steady about 4 per cent,” senior data scientist Wu Haishan said. “So a lot of people are suspicious about that data.” As a company that handles 70 to 80 per cent of all online searches in China,
Baidu amasses enormous quantities of data - information it now wants to put to use commercially and scientifically. The company is among the country’s leaders in artificial intelligence and big data application and it hopes to employ that to further its lead in the domestic internet arena. Baidu’s Big Data Lab will use its tracking of people across the country to help produce new measures of China’s economy. Those include its own employment index, and a consumer spending index that will be issued monthly starting late June or early July alongside additional measures tracking key consumer segments. More advanced versions of the data could be sold to investors willing to pay for that extra edge. “Machine-learning algorithms are utilized to identity the employee, consumer and passers-by,” he said. Starting from simple location data and gradually adding other clues such as search destinations and keywords, Baidu says its data scientists can make pretty accurate estimates about everything from a shopper’s purchasing intent to staffing levels in a factory. The Chinese search service handles more than 25 billion location requests from some 700 million users daily, with that data stored on servers, Wu said. Data from general internet searches will be combined in future to boost accuracy. While other companies such as e-commerce leader Alibaba Group
Holding Ltd. and payments network UnionPay run indexes off their own data, Baidu has experience handling valuable information beyond banking and shopping transactions. Baidu will focus on the anonymous data of users collected from 3,000 business and shopping centres and districts as well as 2,000 industrial parks across China. The accuracy of information is difficult to verify but Wu said the search giant will run spot checks of falls in staff levels at industrial parks to make sure they matched fluctuations in the Baidu Employment Index. It can resort to sources such as media reports about job losses, or falls in the amount of users. The Baidu Consumer Index will track visits to everything from shops to cinemas and restaurants. It will then use this to infer how much Chinese people are splurging on retail therapy. This goes well beyond a purely academic exercise: Baidu says its indexes and data can have real business implications. Baidu says it can infer demographic details such as gender, ages and wealth of people in any given area. By blending that with search queries and comparing it to existing demand, say for coffee shops, chain stores like Starbucks can decide where to place their next outlet for maximum profit, Wu said. As an experiment, in late 2015 it worked out the optimal location to plant a cafe, and by January 2016 the U.S. brand had opened a store just 200 meters away. “We can measure how many people visit the Apple store in China and by this we can predict their revenue for the next quarter,” he said. Bloomberg News
M&A
McDonald’s gets bids for stores in mainland an As part of the deal, McDonald’s is offering a 20-year master franchise agreement to buyers. Denny Thomas and Saeed Azhar
McDonald’s Corp has received more than half a dozen bids for its China and Hong Kong stores, including offers from Beijing Tourism Group, Sanpower and ChemChina, in an auction that could fetch up to US$3 billion, people familiar with the matter said. Buyout firms including Bain Capital, TPG Capital and Carlyle Group too are participating in the auction with a view to teaming up with Chinese strategic bidders, they said. The U.S. fast food company had announced in March it was reorganising its Asian operations by bringing in partners who would own the restaurants within a franchise business. Competitor Yum Brands is also restructuring its China operations by spinning it off ahead of a likely IPO next year. The planned sale of China units by McDonald’s and Yum indicates they are seeking local partners who could help ward off growing competition from domestic rivals and also better manage public perception in the wake of food-safety scares that hit the two fast-food giants in the last few years. “Given the difficulties Western chains have had recently with public
perception, local players have become a serious competitive threat,” said Elizabeth Friend, consumer foodservice analyst at Euromonitor International. Oak Brook, Illinois-based McDonald’s has hired Morgan Stanley to run the sale of about 2,800 restaurants in China, Hong Kong and South Korea, Reuters previously reported. The sale in South Korea is being run separately and it was not known if the same parties have expressed interest in that sale, the people added. As part of the deal, McDonald’s is offering a 20-year master franchise agreement to buyers, with an option to extend it by another 10 years. It has stipulated that private equity firms remain a minority partner in any bidding consortium, restrictions that discouraged some buyout funds from participating in the auction, the people added. Among those who were preparing to place first-round bids ahead of the June 20 deadline were Beijing Capital Agribusiness Group, which is McDonald’s current China partner, and GreenTree Hospitality, the people added. It was not immediately clear if they made the bids. McDonald’s will now draw up a
Business Daily Thursday, June 23 2016 9
Greater China Currency internationalization
In Brief
Beijing opens first RMB clearing bank in South America During Chinese Premier Li Keqiang’s visit to Chile in May 2015, the presidents of the two countries’ central banks signed an agreement that paved the way for the opening of the CCB branch. China Construction Bank (CCB) has opened the first clearing bank for transactions in renminbi (RMB) in South America in Chile’s capital Santiago, the CCB said. The branch was inaugurated Monday night, after receiving all the needed permits from Chile’s banking authorities. More than 200 guests attended the inaugural ceremony. Guo You, president of the CCB’s Supervisory Council, expressed his appreciation for the support the entity received in the South American country. The South American branch of the CCB, one of the world’s top 10 banks, will not only help boost economic and trade exchanges and financial collaboration between China and Chile, but also help the bank expand its services in Latin America, said Guo. Initially, the branch will provide corporate banking services and actively promote cross-border RMB transactions, which will help facilitate trade, Guo said. “The inauguration of this bank in Chile is a fundamental milestone in
nd Hong Kong shortlist of bidders for the next round in the coming weeks.
Volatile earnings
McDonald’s does not break out country-by-country revenue details but industry data shows it is China’s No. 2 fast food chain behind Yum, which operates the KFC and Pizza Hut chains. McDonald’s China and Hong Kong business posted about US$200 million in earnings before interest, tax, depreciation and amortisation for fiscal 2016, and could be sold for about 15-16 times its core earnings, taking the deal value to about US$3 billion, one of the people said.
ties between the two countries,” former Chilean President and current Senator Eduardo Frei told the opening ceremony. While Chile-China ties have been close, Chinese investment in the country has lagged behind, said Frei. Opening a bank branch in Chile is the most important Chinese investment in the country to date, he said. “It’s going to be the first renminbi clearing bank not just for Chile, but also for South America,” said Frei. During Chinese Premier Li Keqiang’s visit to Chile in May 2015, the presidents of the two countries’ central banks signed an agreement that paved the way for the opening of the CCB branch, recalled Frei, underscoring the importance of having a banking entity in Chile capable of carrying out direct transactions in the Chinese currency. “The financial losses from currency exchange operations were significant, and carrying out operations directly in China’s currency, the RMB, is going to particularly benefit Chile and China’s small and medium-size companies,” said Frei.
Key Points McDonald’s offering 20-year master franchise agreement Private equity firms bid, looking to partner strategic buyers McDonald’s is China’s No. 2 fast food chain behind Yum But the earnings have been volatile, jumping from US$65 million for 2015, which is likely to weigh on how some of the suitors could value the business, the people added. Some sources said the sale is likely to fetch around US$2 billion. Officials at China National Chemical
The CCB, said Frei, is one of the world’s largest companies and by establishing itself in Chile, it is demonstrating not just the high level of ties between the two countries, but also its trust and confidence in Chile’s development, and in becoming an economic platform for all of Latin America. Chilean Economy Minister Luis Felipe Céspedes said the CCB’s entry into Chile was a reflection of the country’s robust business climate.
“It’s going to be the first renminbi clearing bank not just for Chile, but also for South America” Eduardo Frei, former Chilean President and current Senator The branch, said Céspedes, “allows us to tighten and strengthen ties between the two countries, which today are strong because China is our leading trade partner and, with the establishment of the bank, we can raise the financial channels and investment in our process of integration with the world.” Rodrigo Vergara, Chile’s central bank chief, stressed the importance of the 2015 monetary agreement that facilitated the use of the RMB in Chile, and allowed Chilean investors to invest in China’s stock market. Chinese ambassador to Chile Li Baorong said: “The opening of the branch is not just about a Chinese bank expanding operations abroad, but also about the deepening of substantial cooperation between the two countries, and of the confidence that Chinese financial institutions have in the future of our sister country, which is Chile.” In 2015, Chile and China celebrated the 45th anniversary of diplomatic ties, while 2016 marks the 10th anniversary of their free-trade agreement. “Over this period, bilateral trade has grown fourfold,” said Li. Xinhua
Corp (ChemChina) and technology and real estate firm Sanpower were not immediately available to comment, while Beijing Tourism said it did not know about the matter. An official at Beijing Capital Agribusiness said the company did not participate in the bidding. A spokeswoman for GreenTree said the company was not bidding currently. Bain, Carlyle and TPG declined to comment. The sources declined to be identified as the sale process is confidential. A McDonald’s spokeswoman said the company was “making progress” in the sale process. “As no decisions have been made, it would be premature to speculate further,” she said in an email. Reuters
Mercer survey
Hong Kong becomes world’s costliest city Hong Kong has overtaken Angola’s capital to become the costliest city in the world for expats, Mercer’s annual survey said yesterday. After topping the Cost of Living report for three consecutive years, Luanda was pipped by the Asian city in 2016, owing to a stronger Hong Kong dollar. The survey by the Mercer consulting group compares the cost of over 200 items in over 200 cities, including housing, food, transport and entertainment. It takes New York as its base for comparison and measures currency movements against the dollar, which has appreciated significantly over the past year. Regulator
Mutual insurance associations allowed China’s insurance regulator has approved the establishment of three mutual insurance associations, the first time such associations have been set up in China, the regulator said at a press conference yesterday. China has become the world’s third largest insurance market, with insurance premiums reaching 2.4 trillion yuan (US$364.29 billion) and total assets reaching 12 trillion yuan in 2015, according to data from the insurance regulator. The Chinese government passed a new regulation in February 2015 allowing the establishment of mutual insurers. Term expires
IMF deputy managing director Zhu to leave Fund The International Monetary Fund said on Tuesday its third highest ranking official, Deputy Managing Director Min Zhu, will leave the Fund when his five-year term expires in late July. Zhu, a former central banker at the People’s Bank of China is one of four IMF deputy managing directors. He had focused on jobs and growth issues that have risen in prominence at the IMF as global growth has waned, along with fragile, small and lowincome countries. The IMF said a search for his successor was already underway and “further announcements will follow in due course.” Investment
Li Ka-shing leads new funding for German firm Li Ka-shing is backing the expansion of German mobile financial services firm Number26, a darling among Berlin’s technology startups, which has ambitions to become a pan-European bank. Number26 offers cash withdrawals, deposits and overdraft services and has attracted more than 200,000 mobile phone users in eight countries since launching its smartphone-based banking app early in 2015, the Berlin-based company said on Tuesday. Li’s venture capital firm, Hong Kongbased Horizon Ventures Ltd, is leading the new financing, a US$40 million investment round with the co-founders of Zalando, Europe’s top online retailer, and Silicon Valley’s Peter Thiel.
10 Business Daily Thursday, June 23 2016
Greater China
Private poll
Asia sentiment hits year high as mainland’s economy steadies Rising corporate debt in China and its potential to handicap long-term growth was, however, the most-cited risk to companies’ outlooks. Randy Fabi
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entiment at Asia’s biggest companies climbed to its highest in a year in the second quarter of 2016, helped by signs that China’s economy was slowly steadying, a Thomson Reuters/INSEAD survey showed. During the quarter, China reported a marginal decline in May imports that was far less than market expectations, reflecting a pick-up in domestic demand as the government raises spending on infrastructure projects to support growth. The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the six-month outlook of 139 firms, rose to 67 for AprilJune versus 65 three months prior - continuing a rebound from a fouryear low of 58 in December. A reading over 50 indicates a positive view. In China, corporate sentiment is at its highest in almost a year, with respondents including China Jo Jo Drugstores Inc producing a subindex of 75, up from 71 in the previous
survey. “What we are seeing today relative to the past two quarters is that Chinese risk has gone down. People are a little bit less worried about the possibility that something sudden will happen in China,” said Singapore-based economics professor Antonio Fatas at global business school INSEAD. Rising corporate debt in China and its potential to handicap long-term growth was, however, the most-cited risk to companies’ outlooks, which also included volatile oil prices, central bank policies and terrorism. Indonesia recorded the quarter’s biggest rebound in sentiment with a 22-point jump in its sub-index to 64, also helped by government spending on public works. “We are very much affected by the slowdown of the global economy, especially from China,” said Corporate Secretary Agung Wiharto at statecontrolled cement maker PT Semen Indonesia (Persero) Tbk. “But we are confident things will be better in the second half, mainly because of the (Indonesian) government’s
infrastructure spending.” Sentiment also improved in the Philippines, which logged the highest sentiment sub-index for the fourth consecutive quarter. The business mood was weakest in Japan, Asia’s second-biggest economy, plummeting 31 points to a surveylow of 46 as companies worried about stagnating consumption. Japanese firms also feared further appreciation in the yen, echoing concerns from policymakers who have said yen strength could be exacerbated if Britain votes to leave the European Union.
Retail, leisure firms upbeat
By sector, companies engaged in retail and leisure were the most upbeat with a sub-index rising to 82 from 77, as the majority of respondents reported an increase in business volume over the past three months. Sentiment fell the most in the household, food and beverage sector, by 33 points to 67, while construction and engineering firms yielded the survey’s lowest sub-index - falling to a neutral 50 from 70 three months prior. Both sectors mentioned the state of China’s economy among their biggest concerns. Thomson Reuters and INSEAD polled companies from June 6 to 18.
Of 139 respondents, 46 per cent rated their six-month outlook as positive, 43 per cent were neutral and 12 per cent were negative. Respondents included Indian motorcycle maker Hero MotoCorp Lt d, Ja p a n es e e l ect r o n i cs manufacturer Panasonic Corp, Philippine conglomerate San Miguel Corp and South Korea’s Hyundai Heavy Industries Co Ltd.
Key Points Sentiment index at 67 in Q2 vs 65 in Q1 Businesses say China’s rising corporate debt is biggest risk Philippines most optimistic, Japan least Retail and leisure most positive, construction and engineering least The index started in 2009 with a record low of 45, but has largely hovered between 60 and 70 since hitting a record high of 80 at the beginning of 2011. “The economy has been going sideways for the last few years,” said INSEAD’s Fatas. “What we are seeing is what many people are calling the new mediocre state of the world economy. It is not going as low as 2009, but it is not rising to the level that we have seen in the past.” Reuters
Mixin index
Private firms’ factory activity falls to 4-month low An SME index for the non-manufacturing sector falls to a three-month low in June. An early indicator tracking China’s manufacturing sector showed activity contracted in June, indicating worsening conditions after official data for May showed signs of stabilisation. The Minxin Small and Medium
Enterprise (SME) Index dropped to a four-month low of 43.2 in June compared with the previous month’s reading of 45.8. Small, private firms continue to suffer in relation to large state firms, the survey showed, with smaller
companies having a significantly harder time getting bank loans and other types of financing. A slowdown in the private sector has policymakers worried about longer term growth prospects, and state firms have stepped up investment this year to make up for a decline in private sector growth. The Minxin SMI Index provides one of the earliest gauges of China’s
economy each month, with a specific focus on smaller firms. The data is compiled from a survey of 4,000 private companies, 70 per cent of which are small- and medium-sized firms. Some analysts say the index correlates with China’s official purchasing managers index (PMI) from the statistics bureau, due July 1, though the Minxin data has shown wider swings and has painted a gloomier picture of economic health.
‘Minxin data has shown wide swings and has painted a gloomy picture of economic health’ The Minxin index is released by the government-affiliated China Academy of New Supply-side Economics and China Minsheng Banking Corporation. As with the official PMI, readings above 50 indicate an expansion on a monthly basis, while readings below signal contraction. The index was first published in November 2014, and has been below 50 since December 2014. A similar Minxin SME index for the non-manufacturing sector fell to a three-month low in June. Reuters
Business Daily Thursday, June 23 2016 11
Asia Fiscal policy
Japan Inc backs sales tax hike delay Fifty-nine per cent of surveyed companies said Abenomics was losing momentum while another 11 per cent saw momentum had been lost altogether. Tetsushi Kajimoto
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o st Japanese firms support the government’s decision to put off a hike in the national sales tax by more than two years due to weakness in the economy, a Reuters poll showed, though corporate concern about the negative impact of the delay was also high. A sales tax hike to 10 per cent from 8 per cent is seen as crucial to curbing Japan’s public debt - the heaviest among industrial nations - and for funding ballooning social welfare costs, but worries about the impact of China’s slowing growth had mounted. Prime Minister Shinzo Abe’s decision this month to postpone the hike by two and a half years to October 2019 found favour with 61 per cent of firms while the rest were against, the Reuters Corporate survey showed. “The economy would deteriorate if the tax hike was not postponed, therefore fiscal consolidation would become out of the question,” wrote a manager at a firm in the auto sector. The survey, conducted June 6-16, showed that 26 per cent of companies thought the delay would help consumer spending and lift sales while 30 per cent thought it would help speed up Japan’s efforts to escape from deflation.
But underscoring the Catch-22 situation that Japan has found itself in, just as many cited concerns about the delay. Thirty-two per cent of firms said consumer spending could stagnate on uncertainty about social security while 26 per cent said an escape from deflation could be hindered as firms would find it harder to raise prices. Another 8 per cent said they were concerned about funding costs rising if Japan were to suffer a potential credit rating downgrade. The question about the impact of the postponed tax hike allowed multiple answers, asking companies
to choose up to two concerns. Around 240 firms in the poll of 509 big and medium-sized companies answered questions on the tax. Managers respond on condition of anonymity to the survey which is conducted monthly for Reuters by Nikkei Research. “Japanese firms must be relieved at least for the present that the tax hike was delayed. But that doesn’t mean they expect it to boost the economy and consumption,” said Taro Saito, director for economic research at NLI Research Institute. “They recognise that fiscal consolidation is an issue that can’t be sidestepped if Japan wants to eliminate the root of future anxiety.”
Brexit fears
The survey also showed that the vast majority of firms were unimpressed with the momentum for “Abenomics”
Thirty-two per cent of surveyed firms said consumer spending could stagnate on uncertainty about social security
- economic policies that have spanned monetary and fiscal stimulus but are now focused on structural reform an area in which the government has made little headway.
Key Points Many firms worry about tax hike delay impact on debt, welfare 59 pct see Abenomics losing momentum, 11 pct say momentum gone 60 pct worried about currency swings if Britons vote to exit EU Fifty-nine per cent said Abenomics was losing momentum while another 11 per cent saw momentum had been lost altogether. That compares with 66 per cent and 6 per cent respectively in October last year when the same question was asked. Less than one-third said momentum was being maintained. The survey also showed many companies were worried about a spike in the yen in the event that Britain leaves the European Union as a result of a June 23 referendum, with 60 per cent saying they were concerned about potential swings in currency rates. The safe-haven yen has recently g a i n e d s t r e n g t h, p r o m p t i n g policymakers to warn investors against pushing the yen higher. “If Britain leaves the EU, it would cause the yen to rise. We worry that a deterioration in exporters’ profits would hurt the economy as a whole,” wrote a manager of a construction firm. Reuters
European council award
Cambodia crowned World’s Best Tourist Destination Southeast Asian country welcomed some 4.8 million foreign tourists in 2015. The European Council on Tourism and Trade (ECTT) yesterday formally awarded Cambodia as the World Best Tourist Destination for 2016, citing the country’s cultural richness, natural beauty and safety. Professor Anton Caragea, president of the Bucharest-headquartered ECTT, presented the illustrious award to Cambodian Prime Minister Samdech Techo Hun Sen at a ceremony here. Some 30 countries joined the competition for the award this year, according to a ECTT report. Cambodia was named the best destination thanks to its rich cultural and historical legacy and outstanding natural beauty as well as good safety. “I’m confident that through this award, more tourists will visit Cambodia,” Hun Sen said. “Cambodia was previously famous for war and conflict, but now it is renowned for its cultural and eco- tourism.” He said the Southeast Asian country welcomed some 4.8 million foreign tourists in 2015, earning gross revenue of more than US$3 billion. Professor Anton Caragea said
the award was also bestowed in recognition of Cambodia’s efforts in protecting and preserving the country’s historical and civilization patrimony and in fostering tourism
“I’m confident that through this award, more tourists will visit Cambodia” Samdech Techo Hun Sen, Cambodian Prime Minister
Angkor Archaeological Park
and culture. “This title must be regarded as a challenge to conquer new barriers, as we are expecting Cambodia’s future contribution for the development of the world’s culture and tourism,” he said. Cambodia is well-known for two cultural sites in the UNESCO’s World
Heritage List. One is the 12th century Angkor Archaeological Park and the other is the 11th century Preah Vihear Temple. Besides, the nation has many interesting eco-tourism sites, including a 450-km pristine coastline stretching across four provinces in the country’s south-western part. Xinhua
12 Business Daily Thursday, June 23 2016
Asia RMB drive
Singapore says yuan investments to be part of FX reserves The monetary authority said it has been making yuan financial investments since 2012.
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ingapore’s central bank will include its yuan financial investments in official foreign reserves starting from June, underscoring further progress in China’s financial market reforms. “This move recognises the steady and calibrated liberalisation of China’s
financial markets, and the growing acceptance of RMB assets in the global portfolio of institutional investors,” the Monetary Authority of Singapore (MAS) said in a statement yesterday. The MAS said it has been making yuan, or renminbi, financial investments through China’s qualified foreign institutional investor and
interbank bond market schemes since 2012, but added they were not included in its official foreign reserves as there were previously restrictions on the repatriation of such funds. “Central banks’ on-going reserve reallocation, as SDR baskets and financial liberalisation adjust, could perhaps see medium-term support for the yuan,” said Christopher Wong, a senior FX strategist for Maybank. “But that depends on how the SDR basket and financial liberalisation
evolve. The pace matters too,” Wong added. The decision to include the yuan in its official foreign reserves may increase the incentive for Singapore’s central bank to boost investments in the yuan, said Becky Liu, strategist for Standard Chartered in Hong Kong. “Definitely this is a positive step, so basically providing more room for the increase of reserve investments into RMB,” Liu said.
Key Points MAS to include yuan investments in official foreign reserves Singapore’s c.bank has been making yuan investments since 2012 Such investments to be included in foreign reserves from June Move recognises liberalisation of China’s markets - MAS “When they can now report them properly, that would allow them to increase their investment into RMB especially under the current low-yielding environment,” Liu added. The International Monetary Fund (IMF) said in November that the renminbi had met the criteria of being “freely usable,” or widely used for international transactions and widely traded in major foreign exchange markets, and that the yuan would be included in the Special Drawing Rights (SDR) basket from October 2016. According to a survey, members of the IMF have reported holding US$70 billion in renminbi-denominated assets in 2014, or 1.1 percent of official foreign asset holdings. Reuters
Upper house election
Abe pledges to boost economy as campaign begins Media surveys show about twice as many voters plan to vote for Prime Minister’s Liberal Democratic Party. Linda Sieg
Japanese Prime Minister Shinzo Abe began an upper house election campaign yesterday with a pledge to rev-up the economy as surveys showed his ruling bloc ahead, despite doubts over Abe’s economic growth recipe. Abe’s coalition is in no danger of losing power in the election but he needs a solid win to keep his Liberal Democratic Party (LDP) lawmakers in line and perhaps stay on another three years after his tenure as LDP president expires in 2018. Abe is casting the July 10 election for half the seats in the 242-member chamber as a referendum on his decision to delay a planned hike in an unpopular sales tax and his “Abenomics” recipe of hyper-easy monetary policy, spending and reform. “This is an election to decide whether we will forge ahead strongly with economic policies or return to an era of darkness and stagnation,” Kyodo news agency quoted Abe as saying in Kumamoto, southern Japan. The area was hit by a deadly earthquake two months ago and this week has been battered by heavy rains, leaving at least six people dead, media said. Media surveys show about twice as
many voters plan to vote for Abe’s Liberal Democratic Party (LDP) as for the main opposition Democratic Party, but also show support for Abe and his party slipping amid growing doubt that his efforts to revive the economy are working. Turnout is expected to be weak after hitting a record low of 52.6 per cent in a 2013 upper house vote. About 2.4 million Japanese aged 18 and 19 will be able to vote for the first time, but surveys suggest the turnout of this group will be lower than among their parents and grandparents. The expected victory for the ruling
Japanese Prime Minister Shinzo Abe
Key Points Campaign starts for Japan upper house poll Abe pledges to rev up economy Ruling bloc in lead, turnout seen weak “The Democratic Party is the only opposition party that has experience governing and can learn from its mistakes and change,” its policy chief, Shiori Yamao, told Reuters, adding that it was also drawing on the energy of women and the youth. “We are becoming a party that cannot only take power but govern properly, so please believe in us again.” Abe has set a target for his coalition of winning a majority of the 121 seats being contested. The premier has said the ruling bloc hopes to win a two-thirds majority with like-minded opposition parties to open the path to revising the postwar pacifist constitution, but has recently played down that target. Surveys show a majority of voters see no need to change the charter, which conservatives see as an obstacle to beefing up defence and a humiliating symbol of defeat in World War Two. Reuters
Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Joanne Kuai; Nelson Moura; Annie Lao; Kelsey Wilhelm Group Senior Analyst José I. Duarte Design Aivi N. Remulla Web & IT Janne Louhikari Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@projectasiacorp.com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com Online www.macaubusinessdaily.com Founder & Publisher
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bloc is thus more likely to be a vote of no-confidence in the opposition than a groundswell of support for Abe and his policies. “Abenomics is not working out well and Abe’s security policies are not popular. You’d think he’d be vulnerable,” said Jeffrey Kingston, director of Asia studies at Temple University’s Japan campus. “But the opposition is weak and discredited, and even though they will be cooperating, I don’t think it will make a big difference.” Some analysts, however, said the LDP could lose some of the 51 seats it held among those up for grabs, thanks to a historic move by opposition parties to join hands. The Democratic Party and three smaller parties, including the Japanese Communist Party, are
backing unified candidates in 32 single-seat districts, and have support from grassroots civic groups opposed to Abe’s hawkish security policies and drive to revise the constitution. But regaining public trust is a tough task for the Democrats after a 2009 to 2012 tenure many remember for infighting and unkept promises.
Business Daily Thursday, June 23 2016 13
Asia Monetary policy
Thai central bank stands pat Authorities keep 2016 growth forecast at 3.1 per cent. Orathai Sriring and Kitiphong Thaichareon
Thailand’s central bank kept its key interest rate unchanged yesterday, as expected, saying the current monetary policy still supports economic recovery and the economy should still grow as forecast. The Bank of Thailand’s Monetary Policy Committee (MPC) voted 6-0 to leave the one-day repurchase rate at 1.50 percent, where it has been since April 2015.
Key Points Committee votes 6-0 to keep policy rate at 1.50 pct C.bank: Current rate conducive to economic recovery 2016 GDP growth still seen as 3.1 pct Exports seen -2.5 pct this year, rather than -2.0 pct C.bank: Tourism, domestic demand help offset weak exports
“The economy would continue to recover, and inflation would return to the target band within the latter half of the year as previously expected,” the MPC said in a statement. “Meanwhile, monetary conditions remained accommodative and conducive to the economic recovery. Hence, the policy rate should be kept
on hold at this meeting.” All 27 economists polled by Reuters had predicted no policy change. The BOT maintained its 2016 economic growth forecast of 3.1 percent, as set three months ago. But it said exports this year will decline 2.5 percent, rather than fall 2 percent. Last year’s GDP growth was 2.8 percent. Thai exports, traditionally a growth driver, have declined the past three years. Krystal Tan of Capital Economics said a rate cut cannot be completely ruled out, and an August referendum on a new constitution could be a rigger but “the economy at the moment actually looks stronger than it has done for a while.”
In Brief economy. In a bid to spur growth, the junta has introduced stimulus measures and ramped up investment plans, although big infrastructure projects have been slow to get under way. Domestic auto sales grew nearly 16 percent in May on-year, their highest growth in three years, helped by government stimulus measures and investment projects. Reuters
Risks remain
Charnon Boonnuch, economist at Tisco Securities, said “We think the Thai economy is bottoming out, although headwinds will continue to drag.” The committee said government spending and tourism would continue to drive the economy while limited monetary policy space should be preserved given that “the Thai economy would still be facing risks going forward.” Benign headline consumer prices, despite recent modest rises, give the BOT leeway to keep the rate low and reduce the need for further easing. Thailand’s junta has struggled to turnaround Southeast Asia’s secondlargest economy as exports have long been weak and domestic demand has been restrained by high household debt, low farms prices and drought. Tourism, accounting for 10 percent of Thai GDP, has been a rare bright spot for Southeast Asia’s second-largest
Rising oil prices have put Indonesian fuel costs back in focus as some economists question whether President Joko Widodo will bring back budget-draining subsidies. Within three months of taking office in 2014, Widodo scrapped subsidies on gasoline and capped aid on diesel in a move supported by investors and credit-rating companies. With oil prices falling at the time, he didn’t face much protest from ordinary Indonesians either.
“It remains to be seen if the commitment will hold firm when faced with surging crude oil prices” Gundy Cahyadi, economist at DBS Group Holdings Ltd Now, with Brent crude rising 35 per cent this year to top US$50 a barrel and gasoline prices in Indonesia falling, concern is growing about whether the president - who is better known locally as Jokowi will have the political will to raise fuel costs. Macquarie Group Ltd. said in a note earlier this month that fuel prices are already at least 10 per cent below market prices and there’s only a one-third chance that Indonesia will increase costs in line with international prices.
South Korea’s exports may rebound in the second half of the year from a falling streak that has lasted more than a year, thanks to recoveries in advanced economies and rising global oil prices, a trade group report said yesterday. Exports from July to December are likely to grow 0.9 percent from a year earlier, the research arm of the Korea International Trade Association (KITA) said in a mid-year report, compared with an estimated 10.1 percent drop for the first half of the year.
Temasek’s unit issues private equity bonds
Real test on Indonesia scrapped fuel subsidy is starting
The government adjusts prices for high octane fuel every three months, basing its calculation on the international price of oil, tax and other costs. The price of 88-RON gasoline, known as premium, fell 9.8 per cent to 6,450 rupiah a litre this year. The next price adjustment is due in July. Subsidized fuel has been the norm in Indonesia since the first global oilprice shock in the 1970s. Since then, the nation’s budget has borne most of the cost differential between market and fixed energy prices. Fuel subsidies would have eaten up 13 per cent of the budget in 2015 if they weren’t removed in January, according to Oversea-Chinese Banking Corp. If Jokowi’s administration waivers in its commitment to scrap subsidies, the budget may come under additional strain. The government is already struggling to meet revenue targets as growth in Southeast Asia’s largest
South Korea exports seen rebounding
Financing
Oil prices
The government is already struggling to meet revenue targets as growth in Southeast Asia’s largest economy slows
Trade
economy slows, putting pressure on the budget deficit, which the government now sees reaching as high as 2.5 per cent of gross domestic product.
Stronger currency
Domestic fuel prices may remain unchanged until September because oil prices are higher, but still within a range the government had predicted, said Gusti Nyoman Wiratmaja Puja, director general of oil and gas at the Energy and Mineral Resources Ministry. S&P Global Ratings flagged risks related to the fuel subsidy in a review earlier this month in which it withheld upgrading Indonesia’s credit rating from junk. It said the government had “apparent hesitancy” in allowing domestic gasoline prices to fully track international prices. A stronger currency may have helped to offset the increase in oil prices, giving the government room to hold off on raising gasoline costs, said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group Ltd. in Singapore. Bloomberg News
A unit of Singapore state investor Temasek Holdings issued yesterday US$510 million worth of bonds backed by cash flows from 34 private equity funds. The bonds, which were subscribed more than eight times, were aimed at tapping investors in private equity beyond the traditional base of a select group of wealthy individuals. Demand came mainly from institutional investors, including insurance companies, endowment funds and foundations, according to Azalea Asset Management, a wholly-owned subsidiary of Temasek. About a third of the bonds were allocated to individual investors. Results
Mitsubishi announces US$1.4 bln net loss Mitsubishi Motors Corp forecast a net loss of 145 billion yen (US$1.4 billion) for this business year as it faces hefty compensation costs and falling sales in the wake of a mileagecheating scandal. The company admitted in April to overstating the mileage on four of its mini-vehicles, including two models it produced for Nissan problems it blamed on competitive pressures and poor oversight. Nissan has agreed to take a one-third controlling stake in the group, offering a lifeline for its smaller rival. The expected loss would follow a 39 percent fall in net profit. Investment
Indian state firms to revive fertilizer plants India’s cash-rich state coal, power and oil firms will jointly invest nearly US$3 billion to revive three mothballed fertilizer plants, a government official said on Tuesday, as the country aims to increase local production of crop nutrients and cut imports. India produced 24.5 million tonnes of urea in the financial year ended March 2016, but also imported 8.5 million tonnes to boost productivity at its farms, which account for about 15 percent of its US$2 trillion economy and employ threefifths of its 1.3 billion people.
14 Business Daily Thursday, June 23 2016
International In Brief Digital economy
OECD members seek joint strategy Representatives from over 30 countries are meeting on June 21-23 in the Mexican town of Cancun, for the 2016 Ministerial Meeting on the Digital Economy. Under the theme of “Innovation, growth and social welfare,” the meeting was organized by the Organization for Economic Co-operation and Development (OECD). The secretary-general of the OECD, Jose Angel Gurria, opened the event on Tuesday morning by saying that “the digital economy can be a source of well-being and inclusion but this requires citizens to collaborate closely with companies and governments.” Banking services
Mobile money to power Africa’s financial growth Mobile phones and rising connectivity in Africa will give rise to a new market in mobile financial services, creating explosive opportunities for business on the continent, research has found. The Boston Consulting Group (BCG) estimated that in three years, 250 million Africans without access to traditional banking services “will have mobile phones and a monthly income of at least US$500”. That could translate to projected revenues of US$1.5 billion from mobile financial services, the group said in a report released Tuesday. Governance
Brazil votes to improve state companies management Brazil’s Senate approved a bill on Tuesday that aims to improve governance and management at state companies by increasing transparency and setting competency standards for who can be appointed to run them. The “law of responsibility for state companies” is an attempt to improve corporate decision-making after corruption scandals like the one at staterun oil producer Petrobras. The measure, which now goes to the lower house of congress, would prohibit people with a union, ministerial or senior local government position from being nominated for top executive roles or a board seat at state companies.
Brexit poll time
On eve of fateful British EU referendum, rivals race for final votes Much of the debate has boiled down to two issues: the economy and immigration. Guy Faulconbridge and Michael Holden
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rime M i n i st e r Dav i d Cameron and his Eurosceptic opponents were crisscrossing Britain yesterday in a final push for votes on the eve of a close-run referendum on European Union membership. The vote, which echoes the rise of populism in Europe and the United States, will shape the future of Europe. A victory for “out” could unleash turmoil on financial markets. “It’s very close; nobody knows what’s going to happen,” Prime Minister David Cameron told yesterday’s Financial Times, with opinion polls showing the rival camps neck and neck. Today’s vote will take place a week after the murder of ardently pro-EU lawmaker Jo Cox shocked the country, raising questions about the tone of an increasingly bitter campaign. The City of London, the International Monetary Fund and the majority of British business leaders back Cameron and his Remain camp’s stance that to leave the EU would plunge Britain into recession, costing jobs and raising prices. Those supporting a “Brexit” have struck a chord with many voters by saying Britain would regain control of immigration if it cut itself loose from a bloc they regard as domineering and out of touch. Both camps have been accused of using unfounded assertions and scare tactics. In one of the last debates, London’s newly elected mayor, Sadiq Khan, accused Boris Johnson, the main leader of the Leave campaign, of exploiting fears of immigration to stoke anti-EU opinions. “Your campaign hasn’t been ‘project fear’, it’s been ‘project hate’ as far as immigration is concerned,” Khan said to huge applause from the 6,000 crowd at a live TV debate at London’s Wembley Arena on Tuesday night. J o h n s o n , f av o u r i t e w i t h bookmakers to replace Cameron if Leave wins, told the cheering audience: “This Thursday can be our country’s independence day.” Johnson, Khan’s Conservative
Debt talks
Puerto Rico, creditors don’t reach deal Puerto Rico disclosed on Tuesday that negotiations with creditors ended without an agreement to restructure some of the island’s US$70 billion debt load. The two sides remained far apart over how to resolve a debt exchange on both the General Obligation debt issued by the U.S. commonwealth and debt backed by sales tax receipts. In a statement on Tuesday night, Puerto Rico Governor Alejandro Garcia Padilla urged the U.S. Congress to take action on legislation to resolve the credit crisis, while chiding the bondholders for offering what amounted to only short-term debt relief.
Prime Minister David Cameron
predecessor as mayor of London, said the Remain camp spoke of nothing but fear and was “rubbishing” Britain. Opinion polls have painted a contradictory picture of public opinion in a deeply divided nation. But some published since Cox’s murder have suggested a slight lead for Remain, though often within the margin of error. A man accused of her murder gave his name as “death to traitors, freedom for Britain” when he appeared in court on Saturday. Cox’s husband said on Tuesday his wife had been killed because of her strong political views. Polling stations open at 0600 GMT today and close at 2100 GMT. The official result is due some time after 0600 GMT on Friday but partial results and turnout figures from 382 counting centres will be announced from about 0100 GMT.
Key Points Britain votes on European Union membership on Thursday Polls suggest Remain and Leave camps neck and neck Bitter campaign dominated by immigration and economy World leaders including U.S. President Barack Obama, Chinese President Xi Jinping, German Chancellor Angela Merkel and the NATO and Commonwealth allies have urged Britain to remain in the EU. Some have warned of the drawbacks of isolation. France’s government spokesman said yesterday Britain would lose access to the EU’s prized single market if it voted to quit and ceased paying into the common budget.
Brexit?
Cameron, who called the referendum under pressure in his own Conservative party and from the insurgent anti-EU UK Independence Party, urged voters to remain in the club Britain joined in 1973. “If we leave we will diminish our country and our ability to get things done in the world,” he told supporters in Bristol in western England. “We’ve got one day left to hammer out that message; stronger, safer,
better off. Please give it everything you’ve got in these last hours to make sure that people go out and vote tomorrow.” The prime minister’s fate hangs on the result. A vote to leave would almost certainly lead to his exit from the top job, though he has said he will stay. But even a narrow vote to remain could undermine his authority and shorten his term. The bosses of 51 of the FTSE 100 British companies, and 1,285 business leaders who together employ 1.75 million people, signed a joint letter to The Times urging voters to remain. “Britain leaving the EU would mean uncertainty for our firms, less trade with Europe and fewer jobs,” they said. “Britain remaining in the EU would mean the opposite: more certainty, more trade and more jobs.” A vote to leave could unleash turmoil on foreign exchange, equity and bond markets, lead to a political crisis in Britain and fragment the post-Cold War European order. London-based money transfer w ebsi t e T ra n sf e r w i s e sai d i t was suspending pound transfers today in anticipation of currency volatility. The EU would have to weather the exit of its No.2 economy representing US$2.9 trillion of its gross domestic product, the only European financial capital to rival New York and one of its only two nuclear powers, while Britain’s economy could stall. A vote to remain would trigger a rise in sterling and relief in Western capitals, unleash pent-up investment in Britain but still leave the country - and the Conservatives - bitterly divided, especially if the margin of victory were thin. Investment bank Citi estimated in a research note there was a 60 per cent chance Britons would vote to stay in the EU but said a “close remain” could still undermine political stability in both the United Kingdom and the 28-country bloc. “A vote to ‘Leave’ would have major repercussions in global financial markets, the economy and politics, triggering substantial downward revisions of UK and European growth forecasts,” Citi said. Meanwhile, bookmaker William Hill said about 20 million pounds had been staked on the outcome of the referendum across the industry, with two-thirds of the money staked on a vote to remain in the EU. Reuters
Business Daily Thursday, June 23 2016 15
Opinion Business Wires
Thanh Nien News South Korea’s Woori Bank expects to establish a Vietnam unit this month or in July, a bank official said on Tuesday, as part of the lender’s plans to expand its network in the expanding market of Southeast Asia. Woori Bank, South Korea’s largest bank in terms of consolidated assets as of the end of March, is awaiting approval from relevant authorities to established a whollyowned unit in Vietnam, the official said. A Vietnamese banking source said the State Bank of Vietnam, the country’s central bank, was expected to grant a licence for the South Korean lender shortly.
Members of the public take part in a ‘Remain In’ Rally in Trafalgar Square, Central London, Britain, 21 June 2016.
Brexit in context The Straits Times Contract work is attracting more professionals with specialised skills and more years of qualified experience, a survey out yesterday shows. It found that 56 per cent of contract employees here have over 10 years of qualified experience. This contradicts the traditional view that contracting is “limited to professions considered labour-intensive and at the junior level”, according to London-based recruitment consultants Page Personnel, which undertook the survey. The online study polled 1,954 managers in companies deploying temporary and interim staff, and 4,092 professionals on temporary assignments in 65 countries. In Asia, 201 managers and 141 interim staff were surveyed.
The Japan News Japan needs to beef up exports of services on top of industrial goods, the government said in an annual report on Tuesday. The share of Japan’s services exports in the economy is low compared with other major countries, although the global export market for travel, information technology, communications and other services has been expanding, according to the 2016 white paper on trade, which was submitted to the day’s Cabinet meeting by Economy, Trade and Industry Minister Motoo Hayashi. Japan’s exports, a long-time driver for its economy, have been decreasing since they peaked in 2011.
The Korea Herald South Korea’s mergers and acquisitions market is expected to take a hit from the on-going prosecution probe into Lotte Group over alleged slush funds as it has been a big player over the past years under the stewardship of a hardcharging chairman, industry watchers said yesterday. Since the prosecution opened an investigation into the group’s alleged embezzlement and slush fund creation earlier this month, investigators have raided Lotte headquarters, affiliates and houses of senior executives twice to gather evidence. Several working-level officials have been called in for questioning, with founding family members and senior executives facing summonses.
I
do not believe that foreigners contribute usefully by issuing strong opinions about how a country’s citizens, or those of a larger unit like the European Union, should decide when faced with an important political choice. Our insights, based on international experience, may sometimes be helpful; but there should never be any confusion about the asymmetry of roles. This is particularly true of the British referendum on whether to remain in the EU. Just days before the vote, the outcome is too close to call, and there appear to be enough undecided voters to tip it either way. But, with political and social fragmentation extending well beyond Europe, outsiders may be able to add some perspective on what is really at issue. First, it will come as no surprise that, in terms of the distribution of income, wealth, and the costs and benefits of forced structural change, growth patterns in most of the developed world have been problematic for the past 20 years. We know that globalization and some aspects of digital technology (particularly those related to automation and disintermediation) have contributed to job and income polarization, placing sustained pressure on the middle class in every country. Second, Europe’s on-going crisis (more like a chronic condition) has kept growth far too low and unemployment – especially youth unemployment – unacceptably high. And Europe is not alone. In the United States, while the formal unemployment rate has fallen, large-scale failures in terms of inclusiveness have fuelled disenchantment – on both the left and the right – at growth patterns and policies that seem to benefit those at the top disproportionately. Given the magnitude of recent economic shocks, developed countries’ citizens might be less unhappy were there evidence of a concerted effort – based on genuine burden sharing – to address these issues. In the context of Europe, that would mean a multinational effort. But, for the most part – and again throughout the developed world – effective responses have been missing. Central banks have been left largely alone with objectives that exceed the capacity of their tools and instruments, while elements of the elite wait for a chance to blame monetary policymakers for weak economic performance. In the face of non-monetary policy responses that are somewhere between deficient and nonexistent relative to the magnitude of the challenges we face, the natural response in a democracy is to replace the decision-makers and try something different. After all, democracy is a system for experimentation, as well for the expression of citizens’ will. Of course, the “new” may not be better and could be worse – perhaps significantly worse. Third, the EU is confronting, in more severe form, a problem facing much of the developed world: powerful forces operating beyond the control of elected officials are shaping citizens’ lives, leaving them feeling powerless. But while all countries must deal with the challenges of globalization and technological change, important elements
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Michael Spence a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution.
of governance in the EU are beyond the reach of democratic institutions, at least those that people understand and relate to. This is not to say that local governance is problemfree. It isn’t. Corruption, special interests, and sheer incompetence are common problems. But democratic governance is in principle fixable, and institutional defences and countermeasures do exist. The situation in the eurozone is particularly unstable, owing to citizens’ growing alienation from a distant, technocratic elite; the absence of conventional economic adjustment mechanisms (exchange rates, inflation, public investment, and so on); and tight limits on fiscal transfers, which send powerful signals about the real boundaries of cohesion. Brexit is a part of this larger drama. It is primarily about governance, not economics. From a strictly economic point of view, the risks for both the United Kingdom and the rest of the EU are almost entirely on the downside. But if that was all there was to the issue, the outcome would be a foregone conclusion in favour of staying. The real issue – effective and inclusive self-governance – is not an easy one to tackle anywhere, because forces such as technological disruption do not respect national boundaries. In part, Britons are voting on whether their capacity to navigate in these turbulent waters is enhanced or diminished by continued EU membership. But a more fundamental question of political identity is also at stake – just as it was in Scotland’s independence referendum in 2014. Some Britons (perhaps even a majority), and many other EU citizens, still want future generations to think of themselves as Europeans (albeit with a proud British, German, or Spanish origin), and are prepared to take another shot at reforming Europe’s governance structures. And they are right to think that the world would be a far better place with a united, democratic Europe as a major force for both stability and change. That is my hope, though it may border on wishful thinking. Regardless of the outcome of the Brexit referendum (like many outsiders, I hope Britain votes to stay and advocates for reform from within), the British vote, along with similar strong centrifugal political trends elsewhere, should bring about a major rethink of European governance structures and institutional arrangements. The goal should be to restore a sense of control and responsibility to the electorates. That would be a good outcome in the long run. It would require inspired leadership from all corners of Europe – including government, business, organized labour, and civil society as well as a renewed commitment to integrity, inclusiveness, responsibility, and generosity. That is a tall order; but it is not an impossible one to fill. Project Syndicate
Powerful forces operating beyond the control of elected officials are shaping citizens’ lives, leaving them feeling powerless
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16 Business Daily Thursday, June 23 2016
Closing Ministry of Commerce
Belt and Road construction yields stage achievements
China’s Belt and Road construction projects are gaining steam, with various achievements and accords between China and Eurasian countries, a senior official with the Ministry of Commerce (MOC) said yesterday. Economic cooperation between China and Eurasian countries has seen rapid development, Tong Daochi, assistant minister of the MOC, told a press conference. Tong said achievements included the agreement with Russia on aligning the Belt and Road initiative with the development of the Eurasian Economic Union
(EAEU) and joint development strategies with the European Union, Kazakhstan, Mongolia and Indonesia. Direct investment by Chinese enterprises in countries along the Belt and Road amounted US$14.8 billion in 2015, up 18.2 percent year on year, and the total contract value with these countries last year rose 7.4 per cent to U$92.6 billion, said Tong. China will continue to promote construction projects along economic corridors including the ChinaMongolia-Russia economic corridor, the new Eurasia land bridge economic corridor, and the BangladeshChina-India-Myanmar economic corridor, to facilitate international logistics, according to Tong. Xinhua
Intellectual property
Cars vs Autobots: Disney sues mainland firms in copyright dispute The iconic U.S. firm faces tough competition in the market from local theme park developers, popular Chinese animations as well as counterfeits from merchandise to fake Disney hotels. Adam Jourdan
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alt Disney Co has taken three Chinese firms to court over concerns local animation “The Autobots” copied elements from Disney’s own hit movie “Cars”, as the U.S. firm looks to protect its drive into the world’s second-largest economy. A court in Shanghai held a hearing on Tuesday, a Disney spokeswoman confirmed to Reuters. The dispute was over “copyright infringement” and “unfair competition”, according to a notice on the Shanghai Pudong New Area People’s Court website. Disney is making a major push into China with the recent opening
of a US$5.5 billion theme park in Shanghai, its first on the mainland, while its animated movies including “Zootopia” and “Big Hero 6” have been big box office hits in the country. The iconic U.S. firm, however, faces tough competition in the market from local theme park developers, popular Chinese animations as well as counterfeits from merchandise to fake Disney hotels. Chinese authorities have promised to give Disney “special” trademark protection. “The Autobots” drew ire from netizens in China when it was released last year, with some pointing out similarities with Disney’s 2006 film “Cars” starring Owen Wilson and its sequel in 2011. “Cars 3” is pencilled in to be released next year.
Zuo Jianlong, the director of “The Autobots” for production company Blue MTV, told Reuters in an interview yesterday he was “relaxed” about a potential ruling. “Lots of people online have talked about plagiarism, but it seems from the legal side that the matter is quite clear - at root there is no plagiaristic behaviour,” he said. “If you put the two films side-byside to compare them, then you will know they are completely different.” Disney declined to comment further on the case. The Chinese film is about animated
racing cars including main heroes K1 and K2, while Disney’s offering follows the story of legendary racing car Lightning McQueen. The three Chinese firms involved in the suit are production company Blue MTV, media company Beijing G-Point, and online content platform PPLive Inc. An official for Beijing G-Point, who gave her name only as Ms Cheng, said the firms had hoped to reach a settlement, but Disney had been opposed to this. She added G-Point was not involved in production, but rather in the film’s distribution. Reuters could not immediately reach PPLive for comment. China’s box office hit around 45 billion yuan (US$6.8 billion) last year, and is growing fast, a lure for overseas studios to tap into the market despite a cap on imported films, censorship concerns and a rising challenge from locally made movies. Reuters
“It seems from the legal side that the matter is quite clear - at root there is no plagiaristic behaviour” Zuo Jianlong, director of “The Autobots”
Strategy
Investment
Expansion
Foxconn to close some FDI Portugal falters even of Sharp’s overseas operations as global figures surge
Thailand’s PTT plans to invest in budget hotels business
The company plans to close costly and redundant overseas operations of new acquisition Sharp Corp, and bring to market products using Sharp’s valuable patents and technology as quickly as possible, said the chief of the world’s largest electronics manufacturer. Terry Gou, who founded Taiwan’s Hon Hai Precision Industry Co Ltd, the formal name of Foxconn, made the comments on Wednesday at his company’s first annual general meeting since announcing the purchase of two-thirds of the money-losing Japanese display maker for US$3.5 billion. Gou said all legal procedures for the acquisition will be completed this month, and that new management will take charge of Sharp on July 1. “We will start overseas,” Gou said of restructuring Sharp. “Those improper, high-cost joint ventures overseas, we will close them to reduce a lot of the operational cost, which will lead to lower (product) sales prices.” The comments come as Foxconn seeks to build on Sharp’s technology and branding to strengthen its pricing power with major client Apple Inc. Reuters
Thailand’s largest energy firm PTT Pcl is in talks with three to four hotel chain operators about plans to build budget hotels at its oil service stations in a bid to boost revenue from its retail business, an executive said yesterday. State-controlled PTT aimed to set up hotels at 50 of its more than 1,400 stations over the next five years, Auttapol Rerkpiboon, senior executive vice president of PTT’s oil business unit, told reporters. The executive did not disclose which hotel operators PTT is talking to or specify how much PTT planned to invest in the budget hotels but said the investment will be excluded from a plan to invest 25 billion baht (US$709.82 million) in its oil business during 2016-2020. PTT is also studying the possibility of listing its retail business on the Thai stock market and the study should be completed in the fourth quarter, Auttapol said, without giving details about the specific listing timeframe. PTT currently operates coffee shops under the Cafe Amazon and Daddy Dough local brands at its outlets nationwide. It also has contracts with CP All Pcl to host 7-Eleven stores at its service stations. Reuters
Foreign direct investment in Portugal last year fell by more than one fifth, to its third lowest value since 2010, according to figures released by United Nations. According to the annual report of the UN Agency For Trade And Development, UNCTAD, Portugal last year had FDI of US$6.031 billion, down from US$7.614 billion in 2014, a drop of 20.7 per cent. In the current decade, only in 2010 and 2013 was the measure lower than last year, at US$2.424 billion and US$2.672 billion respectively, shows the report. It was in 2012 that Portugal’s FDI had its recent peak, of US$8.869 billion. The global trend in FDI last year was, by contrast, strongly positive: up 38 per cent to US$1.76 trillion. According to the report, that was above all thanks to an increase in mergers and acquisitions, worth US$721 billion, up from US$432 billion in 2014. FDI into developed economies almost doubled last year from the previous year, to US$962 billion, while developing economies saw a record US$765 billion in FDI, up 9 per cent on 2014, driven mainly by growth in Asia. Lusa