Macau Business Daily June 30, 2016

MGM and Venetian lose Tourism Tax tussle Courts Page 6

Thursday, June 30 2016 Year V Nr. 1076 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Joanne Kuai Gaming

www.macaubusinessdaily.com

Commodities

Vietnam locals could gamble in country

by July 1 Page 7

Public investors

China gradually increasing aluminium output, stoking trade tensions Page 9

People’s Bank of China world’s top sovereign asset holder Page 10

CCAC Absolves Macao Foundation Corruption

The Commission Against Corruption has concluded their investigation into the donation of RMB100 million (MOP120 million) by the Macao Foundation to Jinan University. Finding no ‘transfer of interest’. The complainant found the response ‘disappointing’.

Claiming the Commission sided with the government. Page 3

Going to the dogs

Canidrome Greyhound racetrack management company Yat Yuen’s profit plunged 82 pct y-o-y to MOP4.8 mln in 2015. Local animal concern group Anima say the land would be more valuable used for other purposes. Page 6

Nippon uncertainty

Policy tools The Japanese Prime Minister has pledged to use all available policy tools. To keep the wheels of the economy turning. As financial markets were gripped by uncertainty in the wake of Britain’s shock vote to exit the European Union. Page 11

Less crowded Package tour visitors dropped more than a third y-o-y in May to 541,000.

And hotel occupancy rates dropped 0.6 pct to 79.3 pct. Meanwhile, residents seem to have less appetite for travel.

With Mainland China visitors dropping 33.6 pct to 259,400.

HK Hang Seng Index June 29, 2016

20,436.12 +263.66 (+1.31%) Worst Performers

Tingyi Cayman Islands

+4.31%

Bank of East Asia Ltd/The

+3.19%

Bank of Communications

-4.56%

Sands China Ltd

+0.40%

CLP Holdings Ltd

+3.59%

Sun Hung Kai Properties Ltd

+3.01%

Industrial & Commercial

-3.85%

China Mengniu Dairy Co Ltd

+0.62%

Belle International Holdings

+3.50%

Want Want China Holdings

+3.00%

Hengan International Group

+0.08%

China Unicom Hong Kong

+0.64%

Cheung Kong Property

+3.47%

Link REIT

+2.96%

China Overseas Land &

+0.22%

Galaxy Entertainment Group

+0.67%

Henderson Land Develop-

+3.28%

Sino Land Co Ltd

+2.96%

CITIC Ltd

+0.36%

Ping An Insurance Group Co

+0.75%

28° 31° 28° 31° 28° 30° 28° 31° 28° 31° Today

Source: Bloomberg

Best Performers

Fri

Sat

I SSN 2226-8294

Sun

Mon

Source: AccuWeather

Tourism Page 3

2    Business Daily Thursday, June 30 2016

Macau GGCT

Macau residents not affected by Turkish airport explosions

information gathered through the Office of the Commissioner of the Ministry of Foreign The Tourism Crisis Management Affairs of the PRC in the Macau Office (GGCT) issued a statement SAR, there is no indication that any Macau resident has been yesterday afternoon saying affected. It’s advised that if that it is closely monitoring the necessary Macau residents can developments of the situation call the 24-hour Tourism Hotline following the explosions in on (853) 2833 3000. the airport in Turkey. From the

Tourism

Inbound and outbound travel to Mainland drops

Package tour visitation down 34.2 pct Mainland China still the origin of most visitors at 419,700, with 29,000 from Taiwan.

Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

V

isitors on package tours declined by 34.2 per cent year-on-year for the month of May, totalling 541,000, according to the latest data released by the Statistics and Census Service (DSEC) yesterday.

Of the inbound visitors on package tours, those from Mainland China accounted for approximately 419,700, amounting to a 36 per cent drop yearon-year for the month of May. Visitation on package tours from Hong Kong, Taiwan, South Korea and Malaysia also tumbled for the month, as visitation fell by 42.4 per cent, 40.9 per cent, 29.6 per cent and 45.8 per cent year-on-year, respectively.

Package tours from Thailand and Japan, however, increased by 27.5 per cent and 2.8 per cent, respectively.

The second-highest country of origin for visitation after Mainland China was Taiwan, at 29,000, with South Korea taking third with 25,600 visitors on package tours throughout the month.

Poorer hotel occupancy

The average length of stay for visitors during the month of May amounted to 1.4 days, with the average occupancy rate of hotels and guesthouses for the month seeing a 0.6 percentage point drop to 79.3 per cent. For the

first five months of the year, average occupancy stood at 78 per cent, a 1.4 per centage point drop, with the average length of stay for the same period seeing a 0.1 point drop in the number of nights staying - to 1.4.

A 9.2 per cent year-on-year increase was registered in the overall number of guests checking into hotels and guesthouses, totalling 932,000, for the month of May, while for the first five months of the year a 12.1 per cent year-on-year increase was seen

with 4.51 million guests registered during the period.

Of these guests those from Mainland China accounted for 63.5 per cent, at 591,900, while those from Hong Kong comprised 13.8 per cent of the total, at 128,800.

The number of visitors from Taiwan registering in hotels and guesthouses in the month of May saw a 34 per cent increase, to 36,200, while guests originating from Japan, Hong Kong and Malaysia also registered increases of 19.7 per cent, 14.3 per cent and 2.7 per cent, while guests from India fell 1.4 per cent.

Meanwhile 4-star hotels saw the

highest average occupancy rate for the month of May, at 84.5 per cent, followed by 3-star at 82.7 per cent; 5-star hotels saw their occupancy fall by 3.1 percentage points yearon-year to 78.2 per cent, while 2-star hotels (65 per cent occupancy) and guesthouses (54.6 per cent occupancy) also saw a 1.4 percentage point drop and a 5.4 percentage point drop year-on-year, respectively, for the month.

Outbound residents posted drops in visitation to Mainland China and Malaysia of 36 per cent and 39.5 per cent, while visitation to Thailand and South Korea fell 14.5 per cent year-on-year. Visitation to Japan and Taiwan increased by 43.7 per cent and 17.8 per cent year-on-year for the month. For the first five months of the year Mainland China received the most outbound residents - 259,400 - a year-on-year decrease of 33.6 per cent.

79.3 pct Average occupancy rate of hotels and guesthouses in May

Trade Hong Kong still main export destination

Imports down 21.9 pct y-o-y Both exports and imports increased slightly in May on a monthly comparison but decreased from the same period of last year.

Nelson Moura nelson.moura@macaubusinessdaily.com

The merchandise trade deficit totalled MOP4.57 billion (US$571.8 million) in May, a 23.3 per cent decrease from the same period in 2015, the most recent data from the Statistics and Census

Services (DSEC) reveals.

On a month-to-month basis, total exports increased 9.3 per cent to MOP832 million from April, while imports increased 10.8 per cent to MOP5.40 billion.

The total external trade and exports/ imports ratio rose 1.7 percentage

points to 15.4 per cent in May. In the first five months of 2016, merchandise exports fell by 5.5 per cent year-onyear to MOP4.28 billion.

Domestic exports and re-exports declined by 13.6 per cent and 3.8 per cent to MOP688 million and MOP3.60 million, respectively, in the first five months of this year. From January to May, merchandise imports dropped by 21.9 per cent to MOP28.04 billion when compared to the same period last year.

Exports of electronic components rise

Exports in May decreased 5.1 per cent year-on-year.

Electronic components were the biggest contributor to total export revenue in May with MOP109.10 million and the only export sector with a registered increase from last year, with a 46.4 per cent rise.

The second biggest export sector in Macau - machines, apparatus and parts - suffered a 32.2 per cent decrease from May last year to MOP56.80 million.

The third biggest export sector, textiles and garments, saw a 30.7 per cent decrease to MOP40.60 million when compared to May last year.

Hong Kong was still the biggest buyer of Macau products in the first five months of 2016, representing 59.7 per cent of total export

destinations.

Mainland China grew by 5.6 per cent to MOP711 million from the same period last year.

Imports decrease all around

Imports to Macau in May decreased 21 per cent year-on-year, with all merchandise import categories suffering decreases.

Food and beverages represented the biggest amount of imports, with MOP809.10 million, and registering a 13.3 per cent decrease from May last year.

The second biggest imported products, fuel and lubricants, decreased 27.4 per cent year-onyear in May to MOP490.50 million.

Motor cars and motorcycles imports suffered the biggest year-on-year decrease, with a 51.2 per cent drop to MOP106.80 million.

Imports from Mainland China in May decreased 9.9 per cent yearon-year to MOP4.53 billion.

In the first five months of 2016 Mainland China continued to be the main source of imports to Macau from last year, with 36.9 per cent of imports originating from the region, followed by Hong Kong with 9.1 per cent.

France surpassed Italy as the third biggest source of imports to Macau in the last five months, with 7.7 per cent of the import share .

Business Daily Thursday, June 30 2016 3

Macau

Over 1,000 protested over Jinan University donation in May

Corruption RMB100 million donation ‘will only be paid after reaching an agreement

CCAC investigation into Jinan contribution finds no wrongdoing Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

T

he investigation launched by the Commission Against Corruption (CCAC) into the donation of RMB100 million (MOP120 million) by the Macao Foundation to Jinan University found that there was no sign showing the involvement of ‘transfer of interest’ claimed in the letter, submitted by Macao Youth Dynamics to the CCAC on 12th May, and discounted wrongdoing by the institution and government officials.

Th e CCAC n o t es that Ji n a n University ‘being a public institution […] possesses the quality of public legal person whose financial resources should be allocated to public education works according to law,’ notes a press release released by the group yesterday. ‘The grant given to Jinan University by the Macao Foundation conformed to the objects and statutory procedures of the Foundation and has not violated the legal stipulation of recusal,’ states the release.

The report further states that ‘the Chief Executive and those members of the Board of Trustees cannot be considered as “representatives” of Jinan University,’ given that ‘it is not their duty to act as representatives of the university on external matters

and ‘were not authorised to represent the university when making the application to the Macao Foundation’, meaning that ‘there was no situation in which recusal was necessary for avoiding conflict of roles and interests,’ the report found.

With regard to the Foundation’s use of funds outside of Macau, in particular for a Mainland entity, the CCAC stated that given the semantics of the provision in the Basic Law stating that financial reserves of the SAR should not be “handed over” to the central government, the CCAC sees this wording as meaning a ‘compulsory act of a local government to pay, as required by law, financial revenues generated within a particular period of time to the Central People’s Government,’ stating that ‘the bodies of Macao Foundation have the decisionmaking power regarding whether or not to approve the funding’ and ‘therefore it did not violate the provision under Article 104 of the Basic Law,’ and ‘did not contravene the law.’

‘Groundless accusation’

With regard to the overall validity of the Macao Foundation’s funding of Jinan University, the CCAC noted that the foundation’s Administrative Committee submitted the amount proposed in the application by the

university to the Board of Trustees upon finding it ‘reasonable and feasible’ reads the report as the amount exceeded its authority. The board then discussed and agreed to fund the ‘construction of a media studies centre of Jinan University in 2016 and that the funding amount would be RMB50 million; and funding Jinan University in the construction of other development projects on the campus, with the upper limit not exceeding RMB50 million in 2017,’ the report notes.

CCAC points out that ‘according

Complainant: Case sets bad and profound example

CCAC’s response came as a disappointment to Macau Youth Dynamic, the group that had submitted the complaint letter.

“CCAC didn’t present much investigation results; instead, it was taking sides with, the Chief Executive and the Foundation… the point that CCAC made where it says there was no reason for recusal would set a really bad example for Macau society and have a long-term negative impact,” Lei Kuok Keong, Director of Macau Youth Dynamic, told Business Daily.

Claiming it’s not just a matter

to the statement of the person-incharge of the Macao Foundation, although the Board of Trustees accepted the application for funding, and Jinan University has submitted all documents related to the funding […] since the details of implementation relating to the funding are still under discussion, therefore the amount will only be paid after reaching an agreement.’

The CCAC reports that ‘given that there was no evidence showing that the procedures and decisions concerning the funding given to Jinan University by Macao Foundation were against the above legal stipulation or showed the signs of criminal offences, the allegations made in the letter were groundless,’ and the Commission has archived the case.

of one group complaining but concerns the general public of Macau, Mr. Lei said that CCAC concluding and archiving the case in one month and a half seems “hasty” and that the report is “full of flaws” with “all four points raised by CCAC all up for dispute”.

“I found CCAC is being rather arrogant and impolite,” Mr. Lei added. “CCAC came to this conclusion that the donation granting process was legit and described it in a way that it was done so well. But even Macau Foundation representatives themselves have said that there is room for improvement. This is ridiculous.”

Transport

Easing traffic at Border Gate New tour bus drop-off zone will be operational in August at Border Gate Square.

Annie Lao annie.lao@macaubusinessdaily.com

The government has introduced new drop-off areas and surrounding traffic planning on the east side of Border Gate Square.

The new tour bus drop-off area is expected to be used in August and will allow about 60 tour buses to take and drop off passengers, as Kuok Keng Man, the convener of the Transport Advisory Committee said after the committee meeting held yesterday.

Tour bus companies need to apply through the Transport Bureau (DSAT) for a permit to be able to park their tour buses on the east side of the Border Gate Square, according to Mr. Kuok.

After the implementation takes place, the Bureau will supervise the length of parking time by the tour

buses in order to prevent any prolonged parking to occur, Mr. Kuok said.

With regard to the length of time allowed for tour buses to park, Mr. Kuok said that currently there is no fixed time but DSAT will communicate with the industry to find the appropriate slot times for parking and introduce related penalties for

any violation.

Some part of the east side of Border Gate Square will be designated solely as a bus parking station in order to cope with the reworking of the underground bus terminal in the future, Kuok added.

“We want to remove all the tour buses from the basement floor to the ground floor so that there will be an empty space for public buses to operate,” Chang Cheong Hin, director of Traffic Management Department of DSAT, said.

Currently, casino shuttle buses are allowed to use the basement floor but in the future the space may only be used by the travel agency buses and buses that operate between Macau and Mainland China, according to Mr. Chang.

The project is still under renovation in its second phase. Once completed, DSAT will then discuss with the industry regarding the future approach of management.

New petrol policy

The new policy on the usage of unleaded petrol and light diesel for cars was discussed at the meeting yesterday.

The new standard - effective July 14 – permits a 180-day trial to give drivers some time to adjust to the change. By the beginning of January next year, the new policy will be fully implemented, according to Ip Kuong Lam, deputy director of the Environmental Protection Bureau. ‘‘It aims to improve the air quality in the city and ensure a healthy environment for local residents,’ Mr. Ip said.

Mr. Ip said that the effect of the price change in switching to unleaded petrol and light diesel for cars is not significant, with only a 1 per cent increase in price difference.

4 Business Daily Thursday, June 30 2016

Macau Infrastructure

Opinion

Main span of superbridge positioned

consumed for the main route - a 6.7-km undersea tunnel and a 22.9-km bridge - enough to build 60 Eiffel Towers, according to construction chief Wei Dongqing.

Work began in December 2009 in Zhuhai. The Y-shaped bridge will eventually be 55 km long, starting from Lantau Island in Hong Kong with branches to Zhuhai and Macau.

Once in operation, the four-hour drive from Hong Kong to Zhuhai will be reduced to less than an hour.

All Pearl River Delta cities will then be within a reasonable commuting radius of Hong Kong.

Fidelidade profit soars 38.6 pct

revenues falling 34.3 per cent, the non-life insurance market in the city grew 6.1 per cent in 2015, reaching a total value of insurance premiums of MOP2.1 billion.

The insurance company branch changed to a local law registered society in October 2015, stating the change hasn’t affected its financial performance for the year’s last three months of the year.

In 2014 Fosun International, C h i n a’ s l a rg e s t p r i va t e conglomerate, acquired 80 per cent of Fidelidade Seguros S.A. for US$904 million. N.M.

Work to connect the main part of the superbridge linking Zhuhai in Guangdong Province with Hong Kong and Macau was completed yesterday according to state media Xinhua News Agency. Steel girders closed the last gap in the final arch and the structure is now ready to be paved. The bridge and tunnel system spanning the Pearl River estuary is an important milestone in the integration of Hong Kong, Macau and Guangdong. More than 400,000 tonnes of steel have been

Ashley Sutherland-Winch Uber Convenient When Uber descends on a new city, there are always complications but once the dust settles most cities have been able to compromise to allow the transportation company to operate within its area. Our city saw the first signs of Uber in October of last year but to date the app is not fully operational in town. On Tuesday, Uber patrons who opened the app on their smart phones found a pop up screen asking ‘Want Uber in Macau? Click here to send an email to Secretary Rosario (Secretary of Transport) in support of the company operating in Macau’. Uber is making a big push to win over Macau after successfully establishing itself globally and in Mainland China but will it win its bet with Macau?

Let’s look at the pros of ride sharing companies that customers love: cheerful customer service, scheduled pick-ups, cash free transactions, pick-up and drop-off at specific locations, and receiving fare estimates prior to ride. Cons for the company fall into the realm of long time taxi drivers’ earnings could decrease, job regulation could come into question and the possible threat of illegal workers is at stake.

Weighing all of the pros and cons, is Uber good or is it ‘uber’ bad? Macau’s Transport Bureau (DSAT) has a great digital application for our bus transit system and I think that a taxi app could be equally well received.

If we look at the pros of a ride sharing app like Uber, we could provide these services with public or at least government approved transit. We could absolutely provide scheduled pickups and we could even use a financial interface using WeChat or Facebook that could facilitate payments by credit card. Ultimately, Macau could provide a strong compromise for consumers.

Looking at other similar cities that rebelled against Uber; Las Vegas’ taxi driver union blocked Uber for the better part of two years but in the end allowed the company to exist. The inherent issue is that international tourists and locals, familiar with the conveniences of Uber desire the ease of use in all of their cities of travel and residence. I believe that we should evaluate our transport options to provide the best for our visitors.

Regardless of timeline; as an international city, we should have better options for transportation so that getting around our city is ‘uber’ convenient.

Ashley Sutherland-Winch is a Marketing and Public Relations Consultant and frequent contributor to this newspaper.

Insurance

T

he Macau branch of Portugal’s largest insurance company - Fidelidade Seguros S.A. - registered a 38.6 per cent annual profits increase in 2015, to MOP8.11 million (US$1.01 million) last year from MOP5 million in 2014, a group statement in the Official Gazette reveals.

The Macau branch registered total active assets of MOP599 million, with MOP165 million representing

liquid assets.

When compared to 2014, active assets registered by the Fidelidade Macau Companhia de Seguros, S.A. branch grew 48.5 per cent, with the branch occupying 6.11 per cent of the Macau insurance market quota last year.

In the release, the insurance company branch stated that even with Macau’s economy contracting 20.3 per cent and gross gaming

Retail

Local Moiselle outlets’ annual revenue drops 22.7 pct Moiselle International Holdings Ltd. saw a year-on-year drop of 22.7 per cent in annual revenue from its five local retail stores in the city, amounting to HK$41.44 million (US$5.34 million), as announced yesterday on the Hong Kong Stock Exchange.

The group attributed the slowdown for the fiscal year ending March 31 to ‘Mainland China’s slowing economy’ as well as ‘government measures to advocate frugality’ which the group states as having ‘spilled over into Macau’s retail market’.

The group notes that its local operations ‘remained profitable’, as attributed to the low operation costs of its retail outlets.

Th e M o i s e l l e g r o u p , w hi ch engages in design, manufacture, retail and wholesale of fashion apparel and accessories noted a HK$56.5 million loss for the year, with a HK$62.3 million loss from the group’s operations, as compared to the HK$11.33 million recorded in profit and HK$6.64 million in operations recorded in the previous fiscal year.

Operations for the group are c o n c e n t rat e d i n H o n g K o n g, which saw revenue amounting to HK$211.13 million, posted a loss of HK$25.22 million. Operations

outside Hong Kong, encompassing Mainland China, Taiwan, Singapore and local markets, reached a revenue of HK$185.65 million, yet recorded a HK$47.8 million loss. The group’s Mainland China operations yielded

its largest revenue from external customers, amounting to HK$60.13 million, with its local operations contributing the second-highest revenue from external customers for the fiscal year. K.W.

Business Daily Thursday, June 30 2016 5

Macau Corruption

U.S. Prosecutor: Chinese officials involved in Ng Lap Seng scandal Assistant U.S. Attorney claims evidence of Chinese officials’ involvement in UN conference centre and South-South News.

Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

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prosecutor on the bribery case involving real estate mogul Ng Lap Seng stated on Monday that Chinese officials were involved in the scandal, including the development of the United Nationsfocused news outlet South-South News that was used to funnel money from the billionaire to the former United Nations General Assembly president John Ash, who passed away last week, reports Reuters.

The statement was made at a hearing in a Manhattan federal court

by Assistant U.S. Attorney Daniel Richenthal, who also claimed that Ng’s legal representative, a lawyer named Tai Park, could create a potential conflict in representing Ng in the case due to his previous work with the Chinese Government, the agency reports.

Ng was charged last year for bribing John Ashe, a former ambassador of Antigua and Barbuda to the United Nations General Assembly from 2013 to 2014 through intermediaries, including Francis Lorenzo - former deputy UN ambassador from the Dominican Republic who also: ‘cofounded the company [South South News] in 2010 and has served as its honorary president ever since,’

according to a press release by the news outlet in February, reported Business Daily.

J o h n Ash e, w h i l e a w a i t i n g Monday’s trial, was found dead last Wednesday from injuries resulting from lifting a barbell while on a bench, according to the Westchester, New York, medical examiner’s office, CNN reported. The barbell reportedly fell on the former ambassador’s neck inflicting laryngeal fractures and causing traumatic asphyxia. The complete autopsy report will not be available for about 16 weeks, notes the publication.

Bribery

The lawyer (Daniel Richenthal) contending Tai Park’s work for the Chinese Government said that evidence showed that Chinese officials were involved in talks with Ng regarding the development of a UN-sponsored conference centre, for which Ng had bribed Ashe in order to gain his support, noted Reuters; the centre was to be located in Macau.

Richenthal also stated that Chinese officials were involved in developing South-South News – a publication focused on the UN and development issues – as well as discussing what agenda could be advanced by the publication, notes the news agency.

Prosecutors said Ng funded SouthSouth News and used it as a conduit

Shipyards

Lai Chi Vun shipyards remain in doldrums Legislator Si Ka Lon urges the government to announce an overall plan for Lai Chi Vun shipyards in Coloane to the public.

Annie Lao annie.lao@macaubusinessdaily.com

Legislator Si Ka Lon has submitted a written enquiry urging the government to publish the overall plan for Lai Chi Vun shipyards in Coloane being turned into a cultural and creative centre. The government has recently closed some shipyards claiming safety concerns.

Mr. Si asked the government in the enquiry to provide specific recommendations for repairs and safety standards to the owners, saying the government should fulfill the obligation to repair shipyards and renew expired contracts for some affected owners so that they can resume works at the shipyards again.

The legislator pointed out that in 2012 the government conducted the

Coloane Old Urban Area Lai Chi Vun Planning Research but no actions have been taken since. Meanwhile, many owners of the shipyards have been seeking to renovate the area, according to Si. The government plans to create a cultural and creative centre platform at the shipyards with the aim of boosting the elements of tourism and leisure in Macau. However, some owners said the reclaiming of the shipyards by the government would affect their livelihood.

Mr. Si also asked the government to protect the interests of the owners during the process of renovating the shipyards. If the owners were willing to do the repairs on the old shipyards themselves on the basis of protecting historical sites, the government should facilitate the legal contract to allow them to do so, he said.

to funnel funds.

China’s response to the claim by Richenthal came via Chinese Foreign Ministry spokesman Hong Lei, who claimed he did not “understand” anything about the investigation, reported the agency. “But we want to point out that the investigation should take the facts as its foundation and not act on hearsay,” Hong told reporters.

“It’s not just the conference centre,” Reuters quoted Richenthal as saying.

“It’s bigger.”

The issue regarding Ng’s legal representation will be discussed in a hearing next month, with Tai Park calling the claim “interesting”, yet noting that Ng’s other legal representative, Hugh Mo, did not have such a conflict of interest.

Tai Park came on board Ng’s legal team following the unexpected

Ng Lap Seng

departure of Ng’s former lawyer Benjamin Brafman on 13th April.

Two weeks after Brafman’s departure Ashe’s legal representative Hervé Gouraige stated in a letter to the judge on the case that he wished to abandon the case, given that Ashe: ‘has been unable to pay’ Brafman’s firm’s legal invoices, noting that ‘he [Ashe] has already exhausted all his available financial resources,’ Business Daily reported.

Ashe was among seven people, including Ng, charged since October for a scheme in which Ashe collected US$1.3 million (MOP10.4 million) in bribes from Chinese businessmen, including US$500,000 (MOP3.99 million) from Ng for the conference centre and a US$2,500 (MOP19,980) per month job for Ashe’s wife at South-South News, notes Reuters.

The job was arranged by Francis Lorenzo, who pleaded guilty in April to charges; South-South news denies knowledge of Lorenzo’s activities yet its accreditation status is under review by the UN following the allegations, states the agency.

6 Business Daily Thursday, June 30 2016

Macau

Canidrome Greyhound racetrack returned MOP4.8 million profit last year

Canidrome’s annual profits plummet 82 pct y-o-y Animal rights activists continue demanding the closure of the greyhound racetrack citing its low profitability as one of the primary reasons.

Nelson Moura nelson.moura@macaubusinessdaily.com

A

nnual profits from the greyhound racetrack, managed by Companhia de Corridas de Galgos Macau (Yat Yuen) S.A., decreased 82 per cent to MOP4.8 million (US$600,600) in 2015 from MOP26.7 million (US$3.3 million) in 2014, according to the company’s financial statement in theOfficial Gazette.

Over the last five years the racetrack profits have decreased annually, with MOP103.3 million posted in 2011, MOP85.2 million in 2012, and MOP70.4 million in 2013, according to the financial statements of the company published on the website of the Gaming inspection and Coordination Bureau (DICJ).

In recent years, animal rights groups in Macau, led by local group Anima (Society for the Protection of Animals) have vowed to force the closure of the track, using its low

financial income as one of the main levers in their argument.

“This financial statement means that such a big space like the Canidrome only making MOP4.8 million a year doesn’t make any sense. Renting that space would probably make more money for the government,” economist and president of Anima, Albano Martins, told Business Daily.

Unpaid debts

The financial statement reveals that MOP410.7 million of the total MOP632.5 million in active assets, comprises loans given to associates that have not yet been repaid, while the amount of unpaid debt by the Canidrome is MOP25.6 million.

For Professor of Accounting at the School of Business of the Macau University of Science and Technology (MUST) Lin Zhijun this “may imply that a significant amount of current year revenues has not been realised, or that collectability may be a concern.”

The 2015 financial report also shows

no change occurred in the MOP29.6 million amount of debts owed by shareholders from the group from 2014.

“Such a big space like the Canidrome only making MOP4.8 million a year doesn’t make any sense.

Renting that space would probably make more money for the government” Albano Martins, economist and president of Anima “No information is available to explain the split between shareholders or to the associates, so it is difficult to judge whether or not the loans to the associates are too high. A total

loan of 29.6 million over the total assets of 632.8 million is about 4.7 per cent, which may be useful to make a judgement,” Lin told Business Daily.

According to Albano Martins, the Canidrome’s financial statements “lack transparency” in the amounts of debt and loans to shareholders and associates, considering it a “typical way in Macau to avoid taxes.”

“They also don’t provide an exploration account like other casinos publish, making it impossible to check their phone betting results,” Martins told Business Daily.

Awaiting decision

The 50-year Canidrome licence, owned by operator Macau (Yat Yuen) Canidrome Co., part of Stanley Ho’s gaming group Sociedade de Turismo e Diversões de Macau (STDM), expired last year, with the government choosing to extend it for another twelve months.

A final decision was postponed until a study by the University of Macau, focusing on the importance and influence of the Canidrome on the territory as a World Centre for Tourism and Leisure. The study was delivered to the DICJ for assessment with a decision expected to be made in July. Business Daily contacted SJM and the DICJ regarding the Canidrome’s financial statement and the decision on the racetrack but no response had been received by the time this newspaper went to press.

Tax

Court rules against MGM and Venetian MGM Grand Paradise, S.A. and Venetian Macau, S.A. are to pay tourism tax they owe, according to

a statement by the courts. The cases follow the Galaxy being ruled by the courts to pay back their tourism tax.

The statement reads that MGM Macau was notified by the director of the Financial Services Bureau

(DSF) to pay back around MOP6.75 million (US$844,600) owed for the year 2009; Venetian was told to pay back around MOP14.09 million owed for the year 2011.

Both companies appealed to the Chief Executive and the Secretary for Finance and Economy to no avail. They then appealed to the Court of Second Instance but were ruled against. They later filed the case with the Court of Final Instance (TUI).

Yesterday’s statement by the courts reads that the TUI ruled that they had failed again based on the first Article of the law on tourism tax (Law no.

19/96/M) which defines that only the complementary services related to telecommunications and laundry are tax-exempt.

No more details were given regarding MGM or Venetian’s case. However, the court said that previously, in 2011, Galaxy Entertainment Group decided not to pay tourism tax on the sales of ferry, air shuttle and flight tickets, paid parking space, transportation, rental of equipment, mail services and sale of newspapers provided in the company’s StarWorld Hotel.

Galaxy also lost their legal battle, involving a payment of MOP2.57 million.

Business Daily Thursday, June 30 2016 7

Macau Gaming Greek Mythology refuses to provide financial information to shareholders

Amax International suffers HK$48.97 mln loss Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

A loss of HK$48.97 million (US$6.31 million) was attributed for the financial year ending March 31 to Amax International Holdings, an investment holdings company engaged in gaming and entertainment operations including a stake in Greek Mythology, as announced on the Hong Kong Stock Exchange yesterday. The results did not include the financial information of Greek Mythology, which the group notes to have a ‘significant impact’ on the annual results.

The group noted in the statement that: ‘the management of Greek

Mythology did not co-operate with the management of the Group and denied the Group’s access to their books and records.’ The group additionally noted that they’ve been ‘unable to determine the Group’s share of Greek Mythology since the year ended 31 March 2010,’ as ‘no audited financial statements of Greek Mythology’ were available to them from that date.

The group’s interest in the Greek Mythology operations amount to HK$1.19 billion as of March 31 and the group currently seeks to recover HK$84.76 million due to the company; however, the results did not include provisions for the impairment of the amount. The group recorded revenue

of HK$4.8 million as being received from Greek Mythology for the 2015 fiscal year.

Beyond Macau

Noted in the statement is a desire for ‘expanding its core business beyond Macau, aiming to generate long-term value for shareholders,’ while in the ‘opinion of the directors’ the group has ‘sufficient working capital for its current requirements,’ with expectations to ‘remain as a commercially viable concern’.

However, the group, in addition to planning to dispose of its Mainland operations ‘in the coming fiscal year’, noted that its ‘current liabilities exceeded its current assets’ by

HK$163.37 million for the year, stating ‘this condition indicates the existence of an uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern.’

“This condition indicates the existence of an uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern.”

Amax International regarding the group’s liabilities exceeding its assets in 2015 fiscal year.

The group holds a 24.8 per cent equity interest in Greek Mythology, of which the Greek Mythology Casino, the group notes, is ‘currently closed for renovation’.

The group’s operations in the South Pacific island nation of Vanuata, through a 60 per cent stake in Forenzia Enterprises Limited, are expected to ‘benefit from pent-up demand’ in the region, and the group: ‘has received a letter of approval in principle from the Director of Customs and Inland Revenue of Vanuatu to commence the gaming business in Vanuatu.’ The group expects the Vanuata operations to ‘contribute significant income in the future.’

Gaming

Vietnam locals could gamble in country by July 1 Vietnam casino law could impact Cambodian border casinos.

Following the submission of the final draft of a casino law to the Vietnamese Government earlier this week - which, if passed, could lift the ban on Vietnamese nationals gambling within the country - casinos on the Cambodian side of the border with Vietnam could face further difficulties to their current struggle.

“We’ve been worried about this law for a long time and we hope that the Vietnam Government won’t let its [citizens gamble on home soil] as this would dramatically affect our business,” Lim Kem Seng, chairman of the Lucky89 Group, which operates two casinos on the Vietnam border, told the Phnom Penh Post.

“The vast majority of our players and revenue come from Vietnam, and if they continue to stop coming

to Bavet [a Cambodian town on the border of Vietnam which is home to nearly a dozen casinos] the sector will face a lot of challenges to remain profitable,” he told the publication, adding that: “It’s already not easy for Cambodian casinos here.”

So far, the draft of the bill has been kept tightly under wraps but Vietnamese media reported that opening up the legalities could lead to around US$800 million annually.

Oliver Massmann, general director of law firm Duane Morris Vietnam Llc, told the Phnom Penh post that: “Although not 100 per cent sure, [it is] likely that Vietnamese may enter casinos, but with specific conditions,” noting a recently proposed decree

by Vietnam’s Ministry of Public Security that would list casinos as a “conditional business” which would only prohibit Vietnamese nationals from playing on gaming machines. The casino decree could be issued as early as July 1, notes the publication. K.W.

8 Business Daily Thursday, June 30 2016

Greater China Currency outlook

Official media say market expectations on yuan are stable Regulators appear to be stepping up efforts to calm market sentiment and guide expectations.

D

espite the yuan’s recent w ea k n ess agai n st th e U.S. dollar there has been no panic selling of the Chinese currency and market expectations for the yuan’s value remain steady, China’s two main official securities newspapers said in front-page articles yesterday.

The articles in the Shanghai Securities News and the China Securities Journal came after the yuan fell against the dollar for three consecutive days to a five-year low, before steadying somewhat on Tuesday.

The weakness added to investors’ fears that Beijing may be considering devaluing the currency again amid global market turmoil sparked by Britain’s vote to leave the European Union last week.

Both newspapers are owned by the state news agency Xinhua, but it was not clear if the reports were orchestrated, as sometimes is the case when the authorities wants to send a message.

The yuan’s fall was exacerbated

by Britain’s vote to leave, which battered most emerging currencies, but sparked memories of China’s surprise devaluation last August and another rapid depreciation early this year.

“Although the yuan’s mid-point fell

against the U.S. dollar on consecutive days, the mood in both on-shore and off-shore markets is basically stable with no signs of panic-selling or a scramble for foreign currencies,” the Shanghai Securities News reported, citing interviews with “industry experts”.

The view was echoed by the China Securities Journal, which said in a frontpage article “expectations for the yuan’s

value remain relatively stable, and people in the market are not rushing to buy foreign currencies, indicating that players in the forex market are becoming more rational”.

Regulators appear to be stepping up efforts to calm market sentiment and guide expectations.

China’s central bank, the People’s Bank of China, said on Tuesday that despite recent fluctuations in the currency market, the yuan remains relatively stable against a basket of currencies, while expectations are steady.

Before Brexit, most market watchers polled by Reuters had already expected Beijing would allow the yuan to weaken modestly this year as the economy continues to slow.

Economists at Bank of America Merrill Lynch believe the yuan could ease to 6.80 to the dollar, from around 6.65 now.

Fears of further yuan weakness could trigger more capital outflows, potentially tightening financial conditions in China and crimping economic growth, according to a BofA Merrill Lynch Global Research report this week.

BofAML has lowered its 2016 China growth forecast to 6.4 per cent from 6.6 per cent, citing Brexit’s expected drag on global trade, investment and financial markets. Reuters

Strategic expansion

Fosun eyes UK, European opportunities after vote Company chairman Guo Guangchang, one of China’s most powerful business leaders, says now is also a good time to invest in oil and commodities.

Jason Subler

Fosun Group, China’s biggest private conglomerate, will look for more opportunities in the United Kingdom and Europe in the volatile wake of Britain’s referendum vote to leave the European Union, the company’s billionaire co-founder and chairman said at a Reuters Newsmaker event on Tuesday.

Guo Guangchang, a self-styled student of U.S. investor Warren Buffett, said the Brexit vote has created more opportunities for investors amid jumpy financial markets following last Thursday’s referendum.

“For a value investor, volatility is a friend not an enemy.

Market volatility and panic will probably bring better investment opportunities. So we are increasingly looking for development opportunities in Europe, and particularly in the UK,” Guo said.

The Brexit vote has reverberated through financial markets, sending the pound to its lowest level in 31 years despite government attempts to relieve some of

the confusion about the political and economic outlook.

“Our currency risks in the UK have been fully hedged because we used insurance funds for some investments,” Guo said, adding his company has not been affected much by the Brexit vote.

Guo, 49 and one of China’s most powerful business leaders, said now is also a good time to invest in oil and commodities.

“Oil is not trading at a high price, and Fosun has accumulated experience and learned lessons. So we will increase our investment in oil.”

Reducing debt load

Guo said Fosun will this year focus on its tourism and health interests.

Already invested in medical companies, Fosun will invest more in health management and health insurance, he said, and will create synergies among its tourism holdings, including Club Med and Cirque du Soleil.

The group is, however, adopting a “conservative” expansion strategy as it looks to gradually

Fosun’s chairman said the company will invest more in health management and health insurance

reduce its overall debt ratio, extend debt durations and lower financing costs, Guo said.

Fosun’s total debt rose by a fifth to 115 billion yuan (US$17.3 billion) last year as it borrowed more to expand its businesses.

Its net gearing ratio was 69 per cent at end-2015.

Fosun this year has issued more than 10 billion yuan in the domestic open market at an average cost of about 3.7 per cent, compared with costs of around 5 per cent last year, Guo said. “We are going to increase the liquidity of Fosun’s assets, building a more prudent debt structure by pushing individual business segments to seek direct finance from capital markets.”

Fosun plans to list U.S. property and casualty insurer Ironshore Inc “as soon as possible” this year, Guo told Reuters ahead of the Newsmaker event. Fosun International said last week it would spin off Ironshore, which it spent US$2.3 billion over two years to acquire, through a listing on the New York Stock Exchange or Nasdaq market.

While it reduces its debt load, Fosun has slowed its foreign investments - just as China’s outbound M&A deals have soared.

Deals so far this year have topped last year’s total of $106 billion, and domestic investment bank CICC has projected total overseas acquisitions could rise to US$150 billion this year.

Guo, ranked 19th on Forbes’ China Rich List last year with a net worth of US$5.3 billion, told Reuters last month that

Fosun was “working hard” to reduce debts and obtain an investment grade rating - three notches above Ba3.

In April, Moody’s restored the outlook on Fosun International Ltd’s Ba3 corporate family rating to stable from negative, reflecting Fosun’s “demonstrated ability to maintain its access to the funding markets and improve its debt maturity profile.”

Born in a rural village in the eastern province of Zhejiang, Guo studied philosophy at

Shanghai’s elite Fudan University before founding an information service company with some classmates and around US$15,0000 in capital in 1992.

Fosun first partnered with state-owned enterprises and invested in industrial assets before turning to insurance and consumer businesses.

Guo serves as a delegate to the National Committee of the Chinese People’s Political Consultative Conference, a parliamentary advisory body. Reuters

Business Daily Thursday, June 30 2016 9

Greater China Commodities

Aluminium makers boost output risking tensions China has been accused by competitors of selling metal into oversupplied global markets below market rates.

Melanie Burton

After signs China was curbing aluminium output late last year, the world’s biggest producer is gradually increasing output again, raising the risk of fresh tensions with global trading partners from any spike in exports.

The production restarts and new capacity come as local prices and demand rise, and are earlier than some experts expected. Chinese production and exports of semi-finished products (semis) hit six-month highs in May, after decade-low prices had caused widespread curtailments in December.

China denies this and says excess capacity is a global issue, but analysts say tensions could be partly alleviated

by selling more finished products such as smartphone cases.

China Hongqiao Group Limited, the world’s top aluminium producer, is on track to expand its production capacity by 1 million tonnes to around 6.2 million tonnes this year, head of investor relations Xiao Xiao said.

“We are not expecting the price to pick up quickly, but at least this year we have seen very strong demand,” she said.

ShFE aluminium prices have rebounded by nearly a third to 12,400 yuan from record lows in November.

Xiao pegged Chinese aluminium demand growth at 7 per cent, with more than 10 per cent gains from packaging, and strong orders from

consumer electronics and aerospace.

“The majority of the products will be consumed in the domestic market, but the international market is a key target market for Chinese aluminium semis,” CRU analyst Wan Ling said.

China Hongqiao does not directly export, but supplies local fabricators that serve domestic and international markets. Its production jumped by 36.8 per cent to 4.4 million tonnes in 2015, while production capacity reached 5.186 million tonnes.

Key Points China aluminium capacity to grow by 3 mln T this year - AZ China China Hongqiao on track to boost capacity by 1 mln T Chinese semis exports have created global trade friction Analysts see a move to finished products Medium term, CRU expects China’s exports of value-added aluminium products to hit more than 8 million tonnes by 2020 from around 6 million this year, partly as firms sell more to countries along the former silk road.

Exporting more finished products may help China steer through global trade tensions.

The U.S. International Trade C o m m i s si o n h a s l a u n ch e d a n investigation into the global aluminium trade after campaigns from producers such as Century Aluminum Co, which is majority-owned by Glencore PLC. Beijing-based consultancy AZ China sees 3 million tonnes of new Chinese aluminium capacity opening this year, of which one third is already on line, with more to come next year.

“If they can’t ship semis because of WTO intervention, before long they will be selling more finished aluminium goods,” managing director Paul Adkins said. Reuters

In Brief HK markets

Finance Ministry sells 14 billion yuan of bonds China’s sale of sovereign debt in Hong Kong drew strong interest as demand for the city’s higher yields and limited supply overshadowed yuan depreciation concerns. The Ministry of Finance sold 14 billion yuan (US$2.1 billion) of yuan-denominated notes in Hong Kong yesterday, according to the Hong Kong Monetary Authority. A total of 7 billion yuan of threeyear notes was issued at 2.9 per cent, compared with the secondary market yield of 2.56 per cent in Shanghai and an average rate of 3.1 per cent at the previous auction in November.

Going public

China Logistics Property launches HK IPO China Logistics Property Holdings Co Ltd (CNLP), which is backed by private equity firms RRJ Capital and Carlyle Group, launched an initial public offering in Hong Kong worth up to US$435 million, IFR reported yesterday. The IPO consists of 1.04 billion shares with an indicative price range of HK$2.55 to HK$3.25 each, said IFR, a Thomson Reuters publication. CNLP did not immediately reply to a Reuters request for comment on the IPO terms.

Technology production

Taiwanese supplier says Apple conservative on orders Taiwanese chip firm Advanced Semiconductor Engineering Inc said on Tuesday that its biggest customer, Apple Inc, was being more conservative in placing orders compared with last year, according to the Nikkei. The business daily reported in May that component suppliers in Taiwan would receive fewer orders from Apple in the second half of 2016. Apple usually launches its flagship iPhone in September. Earlier this month, Goldman Sachs lowered its price target on Apple’s stock on worries about slowing growth in the smartphone industry.

Shipping probe

EU to accept liners antitrust offer World No.1 container liner Maersk, Swiss peer MSC and 13 other shipping firms are set to escape possible penalties as EU antitrust regulators plan to accept their offer to end a five-year probe, three people familiar with the matter said. The European Commission is likely to announce its decision next month, which means no fine or finding of wrongdoing against the companies, the sources said. The other 13 firms are CMA CGM, Hapag Lloyd and Hamburg Sud, Taiwan’s Evergreen Marine, COSCO, China Shipping, OOCL, South Korean Hanjin and Hyundai Merchant Marine, Japan’s Mitsui OSK Lines and Nippon Yusen Kaisha, UASC and Israeli company Zim.

10 Business Daily Thursday, June 30 2016

Greater China

People’s Bank of China headquarters Sovereign assets

PBOC tops global public investor table despite slump Global central bank gold holdings rose 22 per cent in value terms to US$1.36 trillion in the year to the end of April.

C

hina’s central bank, the People’s Bank of China (PBOC), has remained the world’s biggest sovereign asset holder, with more than US$3.4 trillion on its books, despite suffering a 12 per cent slump in the value of its assets in 2015, a new report showed on Tuesday.

The annual report - compiled in its third year by the Official Monetary and Financial Institutions Forum (OMFIF) and to be released in full today - looks at asset management performance by public investors such as central banks, sovereign funds and public pension funds.

The highlights of the report showed that total assets under management

of the 500 largest public investors fell by 2.9 per cent or US$855 billion to US$28.99 trillion in 2015.

The decline was driven primarily by central banks, which saw their assets shrink by 6.1 per cent due to low oil prices, a fall in gold prices and rising capital outflows from emerging market economies.

Meanwhile public pension funds saw assets fall by 0.6 per cent, while those of sovereign funds grew at 0.04 per cent - their slowest pace in at least a decade, said OMFIF. The list of the 10 biggest investors showed little change from the previous year, the report found, with Asian institutions continuing to dominate the ranking. Within the top 10, the

biggest climb was by the China Investment Corporation, Beijing’s sovereign wealth fund, which rose to number five after its assets under management increased by 14.4 per cent.

The move displaced the Saudi Arabian Monetary Agency (SAMA) - the kingdom’s central bank - which registered a more than 15 per cent fall in its assets under management, the greatest loss in the top 10.

The report also found that central banks’ net gold purchases accelerated to the highest ever annual rate last year.

Low interest rates, which reduce the opportunity cost of holding non-yielding bullion, as well as an increased perception of country risk and rising geopolitical uncertainty all helped boost appetite for the metal.

Global central bank gold holdings rose 22 per cent in value terms to US$1.36 trillion in the year to the end of April, driven by further buying

and a rise in gold prices of a similar magnitude.

‘Central banks saw their assets shrink by 6.1 per cent due to low oil prices’ Acquisitions in recent years have chiefly been driven by China and Russia, as well as Kazakhstan, with purchases by other central banks dwindling.

Gold is becoming more attractive as a freestanding asset not issued by any government or state, at a time when asset managers are querying whether yields are sufficient to cover country risk, the OMFIF report found. Reuters

Robotics expansion

Kuka and Midea sign investment agreement Kuka said that both its management and supervisory boards recommended the Midea offer.

German robotics maker Kuka has signed an investor agreement with Chinese bidder Midea that includes a long-term commitment to keep its existing headquarters, factories and jobs, Kuka said in a statement

on Tuesday.

Under the agreement which is for 7-1/2 years, Midea has committed not to embark on any corporate reorganisation of Kuka.

The Chinese company has also

promised that it will not take any action that would lead to a delisting of Kuka, the German company said.

Midea made a 4.5 billion-euro (US$4.97 billion) bid for Kuka last month, which caused a furore among German politicians. Midea has since said it would allow Kuka to operate independently and help it to expand in China.

The offer makes Kuka the biggest German industrial technology

company to be targeted by a Chinese buyer in a wave of deals in recent months.

Kuka said in a separate statement that both its management and supervisory boards recommended the Midea offer and viewed the 115 euros-a-share offer as “fair”.

Key Points Investment agreement is for 7.5 years Kuka will remain German company - CEO Both management and supervisory board support offer “Together with Midea we will be able to translate our strategy even better. At the same time we will remain a German company,” Chief Executive Till Reuter said in the statement.

It is not clear what Kuka’s main shareholders will do.

Last week sources close to the deal said that German mechanical engineering group Voith was selling its 25.1 per cent stake in Kuka, although a spokesman for Voith said at the time that no decision had been taken.

Another Kuka investor, Friedhelm Loh, had signalled in a newspaper interview that he might be willing to accept.

Loh has not said directly that he plans to sell his 10 per cent stake in Kuka to Midea but told German newspaper Handelsblatt: “You have to ask yourself what an investment brings if you don’t have a blocking minority at least.” Reuters

Business Daily Thursday, June 30 2016 11

Asia Funds provision

Japanese PM Abe urges central bank to ensure market liquidity Companies asked the central bank to loan them US$1.47 billion in its regular dollar-supplying operation on Tuesday.

Tetsushi Kajimoto

J

apanese Prime Minister Shinzo Abe yesterday urged the central bank to provide ample funds to the market to ensure liquidity and keep the wheels of economy turning in the wake of Britain’s shock vote to exit the European Union.

“A sense of uncertainty and worry about risks remain in the markets,” Abe told a meeting between the government and the Bank of Japan (BOJ) to discuss market developments after the Brexit vote rocked global financial markets.

It was the second meeting between Abe and the BOJ following the referendum and more are expected as Tokyo looks to put in place safeguards against potential instability in financial markets after Britain’s messy EU divorce.

Abe worries Brexit could spread financial turmoil and trigger an unwelcome spike in the yen, hurting the export-reliant economy as a July 10 national election draws near.

The rush of money to safe havens such as the yen has been stoked by fear Brexit would adversely affect Britain’s economy, and undermine already fragile growth in the EU, causing more disruption in global investment and trade.

“I want the BOJ to support financial intermediary functioning by

providing ample funds to help Japanese firms operating in Britain and other companies in need of funds,” he said.

Companies asked the central bank to loan them US$1.47 billion in its regular dollar-supplying operation on

Tuesday. That was far greater than its last operation before Britain’s vote, but still less than the tens of billions of dollars the BOJ supplied in operations after the 2008 collapse of Lehman Brothers BOJ Governor Haruhiko Kuroda told reporters after the meeting that the dollar-supplying operation was a backstop and the central bank stands ready to provide dollars as much as possible when necessary.

“At the moment Japanese banks are equipped fully with dollars and foreign currencies. In that sense, the scale (of the dollar-supplying operation) was small and I don’t think there’s any problems at all with Japanese banks’ dollar funding.”

At the meeting, Abe also called on Finance Minister Taro Aso to keep close watch on currency and financial market moves, and respond flexibly to economic and market developments in close coordination with Group of Seven advanced economies.

The government was ready to mobilise all policy tools to support Japan’s economy and small firms, Abe added. Reuters

Central bank Governor Haruhiko Kuroda said that the dollar-supplying operation was a backstop and the central bank stands ready to provide dollars as much as possible when necessary.

M&A

Singapore Exchange, Baltic Exchange extend exclusive sales talks A Baltic spokesman said Britain’s vote to leave the European Union had no bearing on the extension of the talks.

Jonathan Saul and Saeed Azhar

Singapore Exchange Ltd (SGX) and London’s Baltic Exchange have extended by two months exclusive talks which may lead to a sale of the British company at the heart of global shipping, the two firms said on Tuesday.

Founded in 1744, the privately-owned Baltic Exchange is no longer a forum for chartering vessels but owns benchmark indexes for global shipping rates and provides a trading platform for the multi-billion dollar freight derivatives market.

On May 25, the two sides said SGX was in exclusive talks to buy the Baltic, which were due to expire on June 30. They said on Tuesday the exclusivity period had been extended to August 31.

“Over the past weeks the Baltic Exchange and SGX have together met with Baltic Exchange shareholders, members and panellists as well as the wider stakeholder community to discuss the potential transaction and

have made good progress in consultations,” the Baltic said.

“The extension to the period of exclusivity allows this dialogue to continue.”

SGX reiterated on Tuesday there was no assurance of a deal.

Sources have previously valued the sale at US$100 million.

A Baltic spokesman said Britain’s

vote to leave the European Union had no bearing on the extension of the talks.

The Baltic’s daily benchmark rates and indices are used to trade and settle freight contracts as well as data used in the freight derivatives or FFA market, which allow investors to take positions on freight rates in the future. The data is collected each day from market players known as panellists.

Competitive Ship Brokers Limited (CSBL), a recently-founded association of smaller players in sector, said it objected to signing exclusivity for the

data they contributed as panellists, which is seen as a key requirement for a deal.

CSBL chairman Gary Weston said the extension by the Baltic was “buying them some time to see if they can improve the terms to the panellists”.

‘The Baltic’s daily benchmark rates and indices are used to trade and settle freight contracts as well as data used in the freight derivatives’ “If we don’t sign it, the Baltic will need to make a decision can they go without us,” he added.

The Baltic spokesman declined to comment when asked if extending talks was also due to resolving issues with the panellists.

In February, the Baltic confirmed it had received a number of “exploratory approaches” after SGX said it was seeking to buy it.

The London Metal Exchange, CME Group, ICE , state-run conglomerate China Merchants Group and Platts were among other potential bidders, sources told Reuters previously. Reuters

12 Business Daily Thursday, June 30 2016

Asia Shops shrink

Japan’s retail sales fall more than expected The weak reading underscores the relative fragility in Japan’s economy Leika Kihara

J

apan’s retail sales fell more than expected in May in a third straight month of annual declines, data showed yesterday, keeping policymakers under pressure for more stimulus to support a fragile economic recovery.

Retail sales fell 1.9 per cent in May from a year earlier, more than a median market forecast for a 1.6 per cent declines, data from the Ministry of Economy, Trade and Industry showed.

The weak reading underscores the relative fragility in Japan’s economy, with slow wage growth and gloomy prospects of recovery weighing on household spending.

“Consumer spending has been stagnant and the trend is likely to continue for a while due to sluggish growth in wages,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“A strong yen will push down import prices, which would be positive for consumers. But the yen’s rises would hurt exports, corporate earnings and capital spending,” he said.

The ministry maintained its assessment that retail sales were weakening as a trend.

The market turmoil in the wake of Britain’s vote to leave the European Union adds to headaches for Japanese policymakers worried about the drag the yen’s recent rises could have on exports.

“Uncertainty and risks remain in financial markets,” Prime Minister

Shinzo Abe told a meeting held yesterday morning with Finance Minister Taro Aso and Bank of Japan Governor Haruhiko Kuroda to discuss financial market developments.

Japan stepped up threats to intervene to weaken the yen after the “Brexit” vote drove the currency to multi-year highs, but the risks of a costly failure may dissuade policymakers from matching words with action.

The Bank of Japan (BOJ) is also wary of rushing into expanding its monetary stimulus, preferring to wait and see if the market turmoil lasts long enough to threaten Japan’s economic recovery, sources say.

That puts the onus on the government, which is willing to spend at least 10 trillion yen (US$97.6 billion) on a stimulus package that will include assistance for small businesses hurt by the jump in the yen. Reuters

Equities market

Recovering India’s economy outweighs Brexit Domestic funds have bought a net US$1.5 billion of shares this year.

Rajhkumar K Shaaw

Indian money managers clung to equities during the worst selloff in four months, speculating the elements that powered this year’s stocks rally are strong enough to withstand global turmoil from the Brexit vote.

Local funds bought a net 1.15 billion rupees (US$17 million) of shares on Friday, data compiled by Bloomberg show, even as the benchmark index slumped 2.2 per cent. The purchases capped the first weekly inflow in June, and fund managers said they assign greater weight to an improving economy and prospects of a strong monsoon.

“We will be concerned if the m o n s o o n t u r n s a dv e rs e, n o t

by Brexit,” said S. Naren, chief investment officer at ICICI Prudential

Asset Management Co., the nation’s second-biggest with US$26 billion in assets. “We see Brexit as a buying opportunity.”

Domestic funds have bought a net 105 billion rupees (US$1.5 billion) of shares this year as company profits recovered after declines in four of the last five quarters and data showed India growing faster than all other major economies. Increased public spending will help maintain the growth momentum and India’s record reserves will act as buffers against Brexit-fuelled turmoil, according to SBI Funds Management Ltd.

Improved macros

“Investors should use a period of heightened volatility to their advantage rather than get swayed by it,” Navneet Munot, who oversees US$16 billion in assets at SBI Funds,

“We will be concerned if the monsoon turns adverse, not by Brexit” S. Naren, chief investment officer at ICICI Prudential Asset Management

Deutsche Bank on Monday reduced Sensex’s year-end target to 27,000 from 29,000, citing increased uncertainty. Global funds sold US$85 million of shares on Friday and US$10 million on Monday, paring the year’s inflow to US$2.7 billion, still the third-highest among Asian markets tracked by Bloomberg.

“Brexit will compel a few foreign funds to lighten their positions in Indian markets as they look for dollar returns,” Nikhil Johri, chief investment officer at Mumbai-based Trivantage Capital Management India Pvt., said by e-mail.

India’s growth prospects also depend on the monsoon’s progress.

Total rainfall has been 13 per cent below average since June 1, down from 25 per cent earlier this month.

Record reserves

Finance Minister Arun Jaitley and central bank Governor Raghuram Rajan on Friday said record US$364 billion reserves will stand India in good stead. The U.K. alone accounts for 3.4 per cent of India’s exports and 1.4 per cent of imports, HDFC Mutual Fund said in a note, calling Brexit a “non-event.”

Declines in Indian equities after adverse global events such as the September 2001 terror attacks and the selloff that followed the Federal Reserve’s push toward tapering stimulus in June 2013, have proved to be buying opportunities, the largest money manager said.

The Sensex has rebounded 16 per cent from the lows reached in February and is poised for the first quarterly advance since the three months ended March 2015.

“People who missed the JanuaryFebruary opportunity should use this one to increase their equity allocation rather than wait for markets to stabilize,” ICICI’s Naren said. Bloomberg News

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said in a phone interview. “With improved fundamentals, our ability to weather such storms is relatively better.” Munot said he is bullish on consumer-discretionary companies.

The S&P BSE Sensex has risen 0.5 per cent since Friday when it slumped as much as 4 per cent. While all 30 stocks fell at when trading began on June 24, gains in companies tied to the economy, such as Bajaj Auto Ltd., helped the gauge pare losses.

Financial-services companies Max Financial Services Ltd. and Bajaj Finserv Ltd. rallied to records.

To be sure, companies with ties to the U.K. may suffer. Tata Motors Ltd., whose Jaguar Land Rover unit gets a quarter of its sales from Europe, slid 1.9 per cent on Tuesday after plunging the most since May 2012 on Friday.

Tata Steel Ltd., which has factories in the U.K. and Netherlands, halted a two-day, 7.1 per cent drop. A gauge of technology shares slid for a third day as Europe accounts for 28.5 per cent of India’s software exports.

Capital inflows

Business Daily Thursday, June 30 2016 13

Asia Statistics correction

In Brief

New Zealand revises down unemployment rate Earlier yesterday the central bank reiterated that further policy easing may be required.

Statistics New Zealand revised its seasonally adjusted first quarter unemployment rate to 5.2 per cent yesterday from 5.7 per cent after adjusting how the data is measured.

The statistics agency said it had implemented a series of changes in order to improve accuracy, in particular around identifying active job seekers.

Specifically it noted that looking at job advertisements on the Internet is now correctly classified as “not actively seeking work”.

‘The first quarter participation rate was revised to 68.7 versus the previous number of 69.0’ As a result, “fewer people will be classified as actively seeking work,

therefore the counts of people unemployed will be more accurate.”

The first quarter participation rate was revised to 68.7 versus the previously number of 69.0.

“From a capacity perspective that offsets some of that lower unemployment rate,” said ANZ Economist Philip Borkin.

Borkin said he did not expect the data to have much impact on whether or not the central bank opts to cut interest rates further in August.

The Reserve Bank of New Zealand (RBNZ) held its benchmark policy rate at a record-low 2.25 per cent in

June but indicated it could cut rates again due to low inflation.

Earlier yesterday the central bank reiterated that further policy easing may be required.

The central bank is mandated to keep annual inflation in a target range of 1 per cent to 3 per cent. Annual inflation is currently running at around 0.4 per cent.

Borkin said he doesn’t expect it to “alter the world at all for the RBNZ at all. They are still going to be a central bank that is reacting to CPI outcomes more than some indicators like this.” Reuters

Policy priority

S.Korea minister says corporate restructuring key South Korea’s Finance Minister Yoo Il-ho said yesterday he believes the no. 1 policy priority midto-long term is to facilitate corporate restructuring.

Yoo, who was answering questions from lawmakers, said the government will focus on creating jobs and new sources for economic growth next year. South Korea is currently overseeing a corporate restructuring of its massive but troubled shipping and shipbuilding sectors. The finance minister also said the government is not yet considering signing swap agreements based on the Brexit vote alone. He added, however, it may leave the door open to negotiations.

Home sales

Australia new homes sales slip Sales of new homes in Australia fell in May, a second month of declines that hinted at some slowdown in the economically important housing market. The Housing Industry Association (HIA) said its survey of largevolume builders showed new home sales fell a seasonally adjusted 4.4 per cent in May, from April when they dropped 4.7 per cent. All the weakness was in sales of detached homes which fell 6.7 per cent, while those for apartments bounced 4.9 per cent. “There is nothing alarming to a reversal in the trend for new home sales,” said HIA chief economist Harley Dale.

Consumption

S.Korea dept, discount store sales both decline

Alternative storage

Traders charter ships to store oil About 1 million barrels a day of processing capacity in Asia will be shut in October due to refinery maintenance.

Two trading houses have chartered super tankers to store oil off Singapore, taking advantage of cheap freight and crude, and as refinery maintenance crimps demand.

Clearlake, a subsidiary Gunvor, has chartered the 308,596 deadweight tonne (dwt) Very Large Crude Carrier (VLCC) Arenza XXVII at US$33,000 per day for one to four months, a Singapore-based shipbroker said.

VLCCs can hold up to 2 million barrels.

ST Shipping, Glencore’s shipping arm, booked the 300,133 dwt Plata Glory, another VLCC, for a month at US$22,000 a day and has the option to extend at US$26,000 and US$29,000 per day for the second and third month, brokers said. Both companies do not comment on commercial operations.

The moves come as traders take advantage of a contango, in which prices for delivery at a later stage

are higher than those for delivery on the spot.

After months of rising prices, spot Brent crude futures fell back below US$50 per barrel last week after Britain’s shock vote to leave the European Union just as a refined product glut threatens to erode crude demand in Asia.

However, prices for delivery towards the end of the year remain above US$51.

“Traders are trying to bottom-fish (for crude bargains) and store for one to two months before re-selling,” a trader with a western firm said.

At the same time, it has become cheaper to charter tankers, making it potentially attractive to store oil for a later sale.

Rates for a one-year VLCC charter have fallen by almost US$20,000 since January, to between US$38,000 and US$42,000 a day last week, according to shipping services firm Clarkson. They were US$47,500 per day a year ago.

The Plata Glory is anchored off Sungai Linggi, Malaysia, while Arenza XXVII is moored in the Johor anchorage, also Malaysia, according to shipping data in Thomson Reuters Eikon. Both tankers are currently empty.

Traders said that Russian ESPO and Abu Dhabi’s Murban crudes are the most likely fuels to be stored.

The storage play also comes as refiners plan to shut for maintenance, crimping demand.

About 1 million barrels a day of processing capacity in Asia will be shut in October, according to Reuters calculations, leaving crude cargoes for loading in August unsold.

Key Points Gunvor, Glencore charter 2 VLCCs to store oil for a few months Drop in spot crude prices, freight rates prompt oil storage Asia Q3 oil demand to drop on planned refinery maintenance Traders eye higher prices in Q4 on winter demand

Still, the current contango structure is tight, making it risky to hold oil for long, traders said.

Previously, the number of tankers used for oil storage around Singapore fell to 30 this month from 40 in May, data from Thomson Reuters Supply Chain & Commodities Research showed, as price rises between January and June triggered sales of stored oil. Reuters

Sales at top South Korean department and discount stores in May both fell and were worse than initially expected, finalised government data showed yesterday, backing policymakers’ concerns over consumption softening in Asia’s fourth-largest economy.

The trade ministry said sales at department store chains run by Hyundai Department Store, Lotte Shopping and Shinsegae Co fell 2.7 per cent from a year ago. Preliminary data had shown a 1.5 per cent rise. This snapped two months of gains and strongly undershot April’s 4.3 per cent rise in annual terms.

Power efficiency

India targets US$8.9 billion energy cost savings India’s plan to replace energy-intensive appliances with more efficient designs is expected to save as much as 600 billion rupees (US$8.9 billion) a year, according to the head of the government arm spearheading the country’s drive.

The federal power ministry’s plan to replace incandescent lights with LED bulbs and use energy-efficient irrigation pumps, fans and air conditioners can cut about 30 gigawatts of peak-hour generation demand in three years, said Saurabh Kumar, managing director of Energy Efficiency Services Ltd., a joint venture of four government-run power companies.

14 Business Daily Thursday, June 30 2016

International In Brief Public pension

Brazil says can pass reform in 2016 Government aims to pass an overhaul of the public pension system in 2016 despite a delay in drafting a proposal and municipal elections looming in October, Presidential Chief of Staff Eliseu Padilha said. Padilha gave the outlook after three senior government officials told Reuters on Monday they believed the complex reform was unlikely to be approved before next year as lawmakers are reluctant to endorse the unpopular legislation before elections. Interim President Michel Temer’s plans for pension reform have drawn harsh criticism from unions in a nation that has lost nearly 2 million jobs in over a year.

Reserve Bank

S.Africa’s slowing growth to be hit by Brexit The governor of the South African Reserve Bank said that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit. Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.” Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Brexit, which sent the rand tumbling, could hurt investment flows into South Africa.

Sustainable energy push

Pressure mounts on G20 for fossil fuel subsidies deadline An open letter from 200 non-governmental organisations called for a 2020 cut-off date.

Barbara Lewis

E

nergy ministers from the Group of 20 major economies meeting in Beijing this week came under a threepronged attack on Tuesday over their failure to agree a deadline for the phasing out of subsidies on fossil fuels.

Officials from the United Nations and European Union, plus 200 non-governmental organisations, urged the G20 to end years of fruitless talks and follow the lead of the Group of Seven industrialised nations by setting a date for the end of subsidies on coal, gas and oil.

EU officials, speaking on condition of anonymity, said they were pressing for 2025 - the year already agreed by the G7 - at yesterday and today’s energy talks, which are attended by European Energy and Climate Commissioner Miguel Arias Cañete.

An open letter from 200 non-governmental organisations called for a 2020 cut-off date.

United Nations talks last year in Paris reached a global agreement on curbing climate change and said that temperature rises need to be kept below 2 degrees Celsius versus pre-industrial levels.

“Post Paris, the question has become why wouldn’t you put a timeline on it?” Rachel Kyte, chief executive of U.N. body Sustainable Energy for All, said of the subsidies proposal.

Kyte, who previously worked for the World Bank as group vice president and special envoy for climate change, told Reuters that 2025 appeared to be acceptable to most but that subsidies should be phased out as soon as possible.

“With low oil prices, it is the time to do it - and the countries who are doing it now are reaping the rewards,” she said.

Although cheaper fossil fuels make it easier for governments to remove subsidies, political complications abound.

Japan, for instance, resisted efforts

by the Organisation for Economic Cooperation and Development to phase out coal export credits, or preferential financing for companies that export coal technology, such as Toshiba, EU sources said.

The G7 nation is burning record amounts of coal for electricity generation and plans to use even more of the dirtiest fossil fuel to fill the gap after the Fukushima disaster paralysed its nuclear sector.

Key Points G7 has already set 2025 deadline Non-government organisations seeks 2020 cut-off Japan resisted OECD push for coal subsidy phase-out The 200 non-governmental organisations called for the G20 to set “a clear timeline for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020, starting with the elimination of all subsidies for fossil fuel exploration and coal production”. Reuters

ECB

Draghi sees euro zone growth affected over 3 years European Central Bank President Mario Draghi told EU leaders on Tuesday that Britain’s decision to leave the EU could reduce euro zone growth by a cumulative 0.3 to 0.5 percent compared to previous estimates over the next three years, an EU official said.

Earlier this month, before Britain’s June 23 EU referendum, the ECB estimated that the euro zone would grow in annual terms by 1.6 percent in 2016 and by 1.7 percent in 2017 and 2018. Growth would be reduced by a likely slowdown in Britain and by resulting slump in trade with the UK, Draghi said.

Trade agreements

US candidate Trump vows to renegotiate deals Republican presidential candidate Donald Trump promised to renegotiate international trade deals, withdraw from them if he is not satisfied and use executive power to remedy trade disputes with China if he wins the White House. Trump, speaking at an aluminum scrap metal factory in Monessen, Pennsylvania, said he saw no way to fix the pending 12-nation TransPacific Partnership (TPP) and that he was willing to withdraw from the decades-old North American Free Trade Agreement (NAFTA) with Canada and Mexico if it was not renegotiated to his satisfaction.

Chinese Vice-Premier Zhang Gaoli (C) delivers an address during the opening ceremony of the G20 Energy Ministerial Meeting in Beijing yesterday.

Weaker inflation

Argentine central bank cuts reference rate Policymakers hope businesses will direct more cash toward brick-and-mortar investments needed to stimulate growth.

Hugh Bronstein

Argentina’s double-digit inflation has shown signs of easing this month, the central bank said on Tuesday as it cut its 35-day reference rate for the eighth week in a row.

As part of its effort to get Latin America’s No. 3 economy out of the doldrums while containing consumer prices, the bank sliced 75 basis points off the interest rate to 30.75 percent.

In a statement announcing the cut, the bank cited “a declining tendency in inflation during the month of June.”

By lowering the rate and making local bonds less attractive, policymakers hope businesses will direct more cash toward brick-and-mortar investments needed to stimulate growth.

The cuts in the reference rate signal confidence that inflation, estimated by the government at a 40 to 42 percent annual rate in May, is easing.

After Tuesday’s reduction the rate

was 725 basis points lower than eight weeks ago when the bank started cutting.

‘The cuts in the reference rate signal confidence that inflation, estimated by the government at a 40 to 42 percent annual rate in May, is easing’ President Mauricio Macri took office in December and quickly dismantled heavy economic controls that had been implemented by his

predecessor, two-term leader Cristina Fernandez.

An easing of inflation would come as good news to low-income Argentines hit hard by Macri’s policies, including reductions in energy and transportation subsidies. Less than a week after assuming office, Macri removed currency controls, allowing for a roughly 30 percent devaluation of the local peso.

The weaker peso increased the cost of imported goods, prodding what was one of the world’s highest inflation rates even higher in the first part of this year.

The government will release first-quarter gross domestic product data today (Eastern Time). Analysts in a Reuters poll said they expect the figures to show a 1.3 percent economic contraction in the first three months of the year.

It will be the first 2016 GDP data release by the Macri administration.

He ordered a revamp of the official Indec statistics agency after years of criticism from private economists that it manipulated numbers to make the economy look better than it was under Fernández, a claim she dismissed. Reuters

Business Daily Thursday, June 30 2016 15

Opinion Business Wires

The Times Of India Gross bad loans at Indian banks may rise to 8.5 per cent of total assets by March 2017 from 7.6 per cent in March 2016 if the central bank orders them to conduct a second round of asset quality reviews, a Reserve Bank of India (RBI) report said. Meanwhile, under a “severe stress” situation, total bad loans could rise to 9.3 per cent in March 2017, the RBI said in its semi-annual financial stability report.

The RBI added that the assessments, though “stringent and conservative”, were also hypothetical.”

The Korea Herald Growth in Korea’s auto market tapered off this year despite a consumption tax cut program on passenger cars, industry data showed yesterday. Korean and foreign carmakers sold a combined 637,369 units in the first five months of this year, up 8.3 per cent from 588,541 units from the same period last year, according to the data compiled by the Korea Automobile Manufacturers Association and the Korea Automobile Importers and Distributors Association.

In comparison, a total 594,457 passengers cars were sold from September to December, up 19.1 per cent from a year earlier.

Doing well by doing good

T Bangkok Post The Energy Business Department has reaffirmed Thailand will stop importing liquefied petroleum gas (LPG) from next month for the first time in eight years because of sufficient domestic supply and falling demand, says Witoon Kulcharoenwirat, the department’s director-general. After importing LPG since 2008, Thailand will stop from next month as demand for the gas in the transport and petrochemical sectors dropped substantially. Thailand switched from being an exporter of LPG to an importer in 2008 when the government started subsidising gas prices.

The Jakarta Post State-owned energy giant Pertamina subsidiary Pertamina Gas (Pertagas) and state-owned gas company Perusahaan Gas Negara (PGN) are currently preparing their integration process, in particular the merging of their pipeline networks. “Currently we are mapping the integration of the transmission and distribution pipelines and ensuring efficiency in order to cut the gas price,” Pertamina vice president of corporate communications Wianda Pusponegoro said in Jakarta. The goal of the cooperation between the two gas companies is to make the gas price more competitive and to extend pipelines to increase access to consumers, she said.

wo years ago, Tesla CEO Elon Musk decided to open access to his company’s patents to anyone – a move that ran completely counter to traditional competitive behaviour. Why would a company give away its hard-earned designs and technology to its rivals?

Whatever one may think of Musk, his courage must be appreciated. He is rewriting the rules of business, based on the belief that Tesla’s success depends on that of the entire market for electric cars, and that his company’s commercial interests are inseparable from the interests of society.

Musk’s unconventional strategy could upend entire industries – for the benefit of all. If Tesla’s open patents succeed in bringing other players into the sector, it could transform what is now a niche product into a mass-market phenomenon – a transformation that would significantly advance the fight against climate change.

There is no sense in asking whether Musk is trying to fight climate change or just trying to make a buck. He is doing both. And, furthermore, it is exactly this type of public-minded capitalism that will be required of successful companies in the future.

We live in an age of enormous transformation – an era in which focusing solely on near-term financial results is a prescription for extinction, and addressing societal needs is entirely compatible with long-term profitability.

While this view may seem unconventional at the moment, time will prove the pioneers right. In the years ahead, successful companies will take the lead in tackling the most urgent development challenges of our time – everything from poverty and disease to climate change.

Consider Kenya’s M-KOPA, a company that installs solar power kits and collects payments via mobile phones. By delivering electricity at lower prices than their customers would otherwise have to pay for kerosene lighting, M-KOPA has delivered solar power to more than 330,000 low-income households in Kenya, Uganda, and Tanzania. New connections are being added at a rate of 500 homes per day.

Phasing out kerosene has an immense impact on the lives of M-KOPA’s customers, their children’s health, and the environment. But the company cannot be considered a charity: its revenues are projected to reach US$60 million in 2016, having increased by 400 per cent in just two years.

Another example is to be found in Peru, where more than 30 financial institutions chose a similarly unconventional path to profitability, working together to establish Modelo Perú – a platform that provides digital financial services.

In Peru, cash transactions had been the norm. The participating companies decided that it was in

“

Ethiopis Tafara Vice President for Corporate Risk and Sustainability and General Counsel at the International Finance Corporation.

their collective interest to create a single national platform for mobile payments, and they worked with the government and four telecommunications companies to construct one. Today, the number of Peruvians with access to affordable financial services has expanded significantly. And the institutions behind the project have gained access to a much deeper pool of consumers than they would have if each had developed a separate digital platform.

My own organization, the International Finance Corporation, also knows the value of rewriting the rules. In 2006, we introduced performance standards to help our client companies mitigate risks by applying environmental and social (E&S) principles and advancing the private sector’s leadership in responsible development.

Initially, other financial institutions were sceptical of our approach; they saw the application of strict standards as a sure way to lose business and profits. Within a few years, however, major banks and development institutions came together to establish the Equator Principles based on our E&S standards.

Today, our standards are applied to project finance around the world. They have helped level the playing field within the banking industry. In addition, through the Sustainable Banking Network – an association of central banks, regulators, and financial trade associations – we are helping countries develop national policies to boost green finance. And we are seeing a growing appetite for this kind of expertise, from within governments and the private sector.

The world has the momentum – and the means – to create a mass market for sustainable finance, one in which investment decisions are driven as much by E&S and good governance criteria as by creditworthiness. Companies that have signed the UN Principles for Responsible Investment have combined assets under management totalling US$60 trillion.

A growing number of businesses recognize that today’s formula for success includes a focus on pressing societal needs. As Musk has found out, the trick is to address those needs in ways that are profitable and sustainable in the long run, and then, when a beneficial business solution is identified, to work together to facilitate its largescale deployment. With a willingness to challenge assumptions and change conventional perceptions, we can change the world for the better. Project Syndicate

The world has the momentum – and the means – to create a mass market for sustainable finance

”

16 Business Daily Thursday, June 30 2016

Closing Finance minister

Growth in Portugal may be less than expected

Mário Centeno noted that the Brexit was one alteration that had to be considered as Portugal’s finance minister, Mário Centeno, “structural in the effect on the Portuguese acknowledged yesterday that the country’s economy” because of its impact on the economy would grow less this year and that European Union and the “strong and direct relations” that Portugal has with the UK. the predictions could be changed when next year’s budget is presented in October. “The United Kingdom is our fourth largest customer for exports of our goods and is In an interview with the ‘Público’ daily paper, Mário Centeno acknowledged there in the first or second place in the export of could be a revision of the 2016 forecasts in services so we are obviously paying close attention to this. We have monitored the October, adding that he was also open to altering the requalification system for state impact of the Brexit on the Portuguese economy”, he said. Lusa sector workers.

Fighting cartels

Indonesian watchdog aims to abolish cattle import quotas The competency agency also proposed an increase in the penalty for businesses found guilty of monopolistic practices.

Eveline Danubrata and Fergus Jensen

I

ndonesia’s anti-monopoly agency has proposed abolishing a cattle import quota system and replacing it with tariffs, in a bid to break the stranglehold of local cartels blamed for surging beef prices, its chief told Reuters.

President Joko Widodo, who came to power two years ago in large part thanks to his image as a man of the people, has come under fire after beef prices shot up ahead of the Muslim celebration to mark the end of the fasting month in early July.

Widodo had told local media that he wants fresh beef to cost around 80,000 rupiah (US$6) per kg, but

the current market price is up to 50 percent higher. Yesterday, thousands of people lined up to buy governmentsubsidised beef at a district in North Jakarta.

Indonesia, which has the world’s biggest Muslim population, imports virtually all of its cattle from Australia - a trade that was worth nearly US$600 million in the last financial year. The agriculture ministry is, however, trying to curb imports as part of a national push for domestic self-sufficiency.

“The limit on imports is causing a lack of supply because it’s not balanced with the growth of the local cattle population,” Syarkawi Rauf, the head of the Indonesian

Business Competition Supervisory Commission (KPPU), said in an interview.

“The beef prices become even more excessive because there are people who take advantage of that government policy,” said Rauf, an economist who took the top position at the independent watchdog less than a year ago.

A senior government official has told Reuters that a so-called “beef mafia” has been operating for years with impunity.

In April, the KPPU imposed a total fine of 106 billion rupiah (US$8.05 million) on 32 feedlotters, which it said had collectively agreed to hold back stocks. Nearly half of those businesses are challenging that ruling in court.

Rauf said the KPPU had urged the president to replace cattle import quotas with a tariff system to limit the opportunities to stockpile livestock

Indonesia, which has the world’s biggest Muslim population, imports virtually all of its cattle from Australia

to squeeze out greater profits.

Under the proposed system, when there is a lack of supply, the government could lower the tariff and give businesses more incentive to import cattle. On the other hand, when there is oversupply, raising the import tariffs would make locally bred cattle more competitive.

“The beef prices become even more excessive because there are people who take advantage of that government policy” Syarkawi Rauf, the head of the Indonesian Business Competition Supervisory Commission To act as a deterrent, the watchdog had also proposed an increase in the penalty for businesses found guilty of monopolistic practices: a fine of up to 30 percent of the company’s annual sales, compared with a maximum 25 billion rupiah (US$1.9 million) fine currently.

Rauf hoped the proposals could be implemented this year, but said there was some resistance to the abolishment of the cattle import quota system even from within the government itself.

Nevertheless, Rauf said he would continue fighting.

“Beef is one of the main sources of protein in Indonesia. It is very important for the people, that is why we are very focused on this area.” Reuters

J.P. Morgan

Sports M&A

GDP growth

China to feel Brexit effects on currency

Timberwolves to bring first Global turmoil slows mainland NBA owner Vietnam economy

Britain’s decision to leave the European Union could have important implications for the country’s exchange rate and monetary policies, according to a senior J.P. Morgan economist.

Brexit was a major shock to the global financial market and economy, with its full impact still unfolding, J. P. Morgan China Chief Economist Zhu Haibin said in a research note.

It will lead to more volatility in the global foreign exchange market, and to avoid sharp exchange rate fluctuations, the Chinese central bank may have to fine-tune its foreign exchange policy as it maintains the current market-based exchange rate regime, Zhu said.

He forecast that the exchange rate of the yuan would weaken to 6.75 against one U.S. dollar by the end of 2016, but said this is more likely to be driven by a strong dollar rather than the depreciation of the yuan.

After Brexit, as major economies favour additional monetary easing or slower pace in monetary policy normalization, China’s monetary policy will stay neutral rather than shift towards tightening, Zhu said. China’s monetary policy could have a slight easing bias if the macro economic situation weakens again, the economist predicted. Xinhua

Lizhang Jiang is buying 5 percent of the Minnesota Timberwolves, making the Shanghai investor the first Chinese owner of a National Basketball Association team, according to a person familiar with the transaction.

Real estate investor Meyer Orbach will buy about 10 percent of the franchise. Control of the team will remain with Minnesota billionaire Glen Taylor, who bought the team in 1994.

The Timberwolves are worth US$720 million, 27th in the 30-team league, according to Forbes.

Jiang, general manager of sports marketing company Shanghai Double-Edged Sports, was also reported to have taken a controlling stake in Granada-based Spanish football club Granada Club de Fútbol earlier this month. He became the new owner of the team after paying 37 million euros (US$41 million) to Italian businessman Gino Pozzo, the Spanish news agency EFE reported June 15.

Jiang’s investments in the two clubs “are out of his personal interest, as he has a strong passion for sports after working so many years in the sports marketing business in China,” Yu Yue, a spokeswoman for Double-Edged Sports, said when reached by telephone. Bloomberg News

Vietnam’s economy slowed in the first half of 2016, official figures showed yesterday, with a severe regional drought and a spate of fish deaths adding to losses caused by turmoil in global markets.

GDP growth dropped to 5.52 percent in the first six months compared to 6.32 percent in the same period last year. The country grew at its fastest pace for five years in 2015 thanks to strong exports and a flurry of foreign investment.

“Less active global trade and investment... and unpredictable upheavals in the world financial and monetary markets have badly influenced our economy,” the General Statistics Office (GSO) said in a statement yesterday.

Domestic production was also hammered by the region’s worst drought in decades, which slammed Vietnamese rice and coffee farmers and cost the country US$681 million, according to the GSO. The economy suffered another blow from a huge loss of fish along the country’s central coast that has yet to be fully explained.

“Drought and serious salinization in Central Highlands and the Mekong Delta as well as mass fish deaths in the central coast have created a major impact on the people’s production and lives,” the Hanoi-based office said. AFP