Macau Business Daily November 17, 2016

Angolan general owns ‘illegal’ business in MSAR Politics Page 2

Thursday, November 17 2016 Year V Nr. 1175 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Hotels

The 13 opening in Q1 Page 4

www.macaubusinessdaily.com

Online doctor

Reform

Electronic medical services extend reach to packed Chinese hospitals Page 8

Chinese authorities announce creation of bank to hold northeastern provinces Page 16

Debtor Database Breakthrough VIP Gaming

A shared debtor database, proposed by local junket promoters.

And nodded through by the local gov’t. for operation by 2017, reveals Kwok Chi Chung, Chairman of the Macau Junket Association.

Kwok contends the system complies with local personal data law.

And is currently undergoing trials. Page 5

Doubling retail space

Strong mid-term outlook

Retail The gov’t plans to increase the city’s current retail space. Targeting double the current 190,000 square metres by 2025. All down to surging demand, Chief Executive Fernando Chui Sai On told the Legislative Assembly. Page 3

The MSAR economic outlook remains strong. At least for the medium-term. So says the International Monetary Fund after visiting the MSAR for 12 days. The Fund notes the city has started an important transition.

Numbers on target

China’s economy Premier Li is confident that the country will reach its objectives.

However, his comments indicate the cautious stance Chinese authorities have on the global economic environment. Page 8

HK Hang Seng Index November 16, 2016

22,280.53 -43.38 (-0.19%) Worst Performers

AAC Technologies Holdings

+2.79%

Hengan International Group

China Overseas Land &

-3.30%

CLP Holdings Ltd

-1.67%

Tencent Holdings Ltd

+1.92%

PetroChina Co Ltd

+0.97%

Sino Land Co Ltd

-2.44%

Link REIT

-1.63%

CNOOC Ltd

+1.78%

China Resources Power

+0.94%

China Shenhua Energy Co

-2.18%

Lenovo Group Ltd

-1.46%

China Life Insurance Co Ltd

+1.52%

Sands China Ltd

+0.88%

Hang Seng Bank Ltd

-2.18%

China Construction Bank

-1.27%

Galaxy Entertainment Group

+1.36%

Want Want China Holdings

+0.63%

MTR Corp Ltd

-1.97%

China Merchants Port Hold-

-1.12%

+1.10%

23° 26° 23° 26° 22° 25° 23° 25° 24° 26° Today

Source: Bloomberg

Best Performers

FRI

SAT

I SSN 2226-8294

SUN

MON

Source: AccuWeather

Economy Page 5

2 Business Daily Thursday, November 17 2016

Macau Politics

Angolan general accused of ‘illegal’ business in Macau Minister of State and head of the Angolan President’s Security House opens a consultancy firm in Macau considered by website makaangola.org as ‘unconstitutional’ Alex Lee alex.lee@macaubusinessdaily.com

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ngolan state minister and chief of the President of Angola’s Security House, has been accused in an online article of creating a company in Macau to conduct private business, which ‘violates’ the African country’s constitution.

Maka Angola, a website dedicated to ‘the fight against corruption and to defend democracy in Angola’ - as it pledges - was created by well-known journalist and activist Rafael Marques de Morais.

The journalist, who lends his name to the article, argues General Manuel Hélder Vieira

Dias Júnior, also known as ‘Kopelipa’, should not be allowed to be involved in private business operations during his time as a state official. “ Wh o sti p u l at es thi s duplicity of functions as unconstitutional is the Office of the Attorney-General of the Republic, whose political l o y a l t y t o th e r egi m e, however, runs counter to its zeal for legality,” accuses Rafael Marques de Morais.

Documents obtained by Business Daily confirm the registration of the firm in Macau with capital of MOP25,000 divided between Manuel Hélder Vieira Dias Júnior and Luísa de Fátima Giovetty, both of them registered in the company

documents as single, with different addresses in the capital of Angola, Luanda, but referred to in the article as being a married couple.

Baía Consulting Limited, the consultancy agency registered in Macau under the number SO 60367 started operating on January 26 of this year.

‘To conclude the incorporation of the company, the general and his wife issued a powerof-attorney on behalf of a Macau lawyer, Barry Shu Mun Cheong,’ explains the site makaangola.org. The address of the consultancy agency coincides with the lawyer’s office address on Praia Grande Avenue.

“Due to increasing Western

Manuel Hélder Vieira Dias Júnior

pressure on tax havens, there have been significant financial movements in recent years, which transfer money from hiding places in the Caribbean, Switzerland and elsewhere to Macau and other destinations in Asia,” says the journalist.

According to his sources, says Rafael Marques, “the ‘consulting services’ provided

by the Minister of State and head of the PR Security House go largely to the creation of front companies involved in the money laundering casinos business.”

‘General Kopelipa enjoys a privileged relationship with the Chinese government and business groups in this country [Angola] resulting from the period in which he headed the National Reconstruction Office and controlled Chinese credit and involvement in the rehabilitation of various country infrastructures,’ the article claims.

In response to Business Daily question in g, th e Consulate General of the Republic of Angola in Macau stated that it does not have any information on the issue raised by Maka Angola, adding it did not know if the source of the information was well founded or credible, as well as whether it was originally from the Consulate.

Trade

MSAR-China trade slumps in first nine months In the period, China approved more local investment projects in its territory compared to one year ago Kam Leong kamleong@macaubusinessdaily.com

Total trade between the MSAR and China plunged by 27.9 per cent yearon-year to US$2.57 billion (MOP20.6 billion) for the first nine months of the year due to exports and imports from and to the city both registering notable declines, the latest official data released by the Chinese Ministry of Commerce reveals.

For the nine months, China’s exports to the MSAR plummeted

28.1 per cent year-on-year to US$2.5 billion whilst imports from the city also fell 22.9 per cent year-on-year to US$110 million.

For September alone, total trade between the two parties represented a decrease of 26.8 per cent year-onyear, amounting to US$340 million.

However, on a month-on-month comparison, the amount grew by 23.1 per cent.

Of the total trade in the month, the country’s exports to the MSAR amounted to US$330 million, down

27.3 per cent year-on-year but up 24 per cent month-on-month whilst China’s imports from the city went down 10.3 per cent year-on-year, and up by 1.5 per cent month-on-month, accounting for US$10 million.

Investment

During the first nine months, Mainland authorities approved 565 investment projects of local businesses in the Mainland, surging 84.6 per cent year-on-year. Total capital used for these projects, however, decreased 12.5 per cent year-on-year to US$660 million.

Of the total approved local projects in the country, 124 were given the green light in September, down 49.2 per cent month-on-month. Total

capital for these projects amounted to US$37 million, down 45.5 per cent month-on-month.

On the other hand, data from the Ministry indicates China’ s nonfinancial investment in Macau totalled US$420 million in the nine months, building the country’s a c c u m u l a t i v e n o n -f i n a n c i a l investment to US$2.14 billion as at the end of September.

Meanwhile, Mainland Chinese firms were contracted for 24 projects in the MSAR in the three quarters worth a total of US$830 million, with sales reaching US$1.23 billion.

Sino-Luso

Macau and Luso food product pavilion set up in Changsha A pavilion for food products from Macau and Portuguese-speaking countries has opened in Changsha, the capital city of Hunan Province, according to the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries (Forum Macao).

The pavilion - named the Macao and Portuguese-speaking Countries Commodities Exhibition Centre - will display more than 200 types of food products from Lusophone countries at the Hunan Gaoqiao International Commodity Exhibition and Trade Centre inaugurated last week.

The 23,000 square metre Trade Centre supports 11 sections for exhibitions, while the Macau-Luso pavilion will present food products from Angola, Brazil, Cape Verde, Guinea Bissau, Mozambique, Portugal and East Timor.

The exhibition pavilion rpresents part of a series of agreements signed earlier this year by the Macau Trade and Investment Promotion Institute (IPIM) and two business associations establishing a Macau-Luso Exhibition Centre for Raw Materials; and exhibitions and pavilions for food products in the Mainland - namely, Changsha, Shanghai, Chongqing and Haining in addition to Guangdong Province. N.M.

Business Daily Thursday, November 17 2016 3

Macau Politics

More retail space necessary The Chief Executive explained yesterday that the intention to build more integrated retail complexes as proposed in the Policy Address is because demand for such space is expected to nearly double in a decade Kam Leong kamleong@macaubusinessdaily.com

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he MSAR Government expects the city to need an extra 360,000 square metres of retail space by 2025, said Chief Executive Fernando Chui Sai On yesterday at the Legislative Assembly in a Q&A session on the 2017 Policy Address.

Thi s d e m a n d, acc o r di n g t o the official, is the reason the government aims to carry out ‘clear policies’ to boost the development of budget hotels, theme parks and shopping complexes in the 2017 Policy Address.

Asked by legislator Tommy Lau Veng Seng how exactly these ‘clear policies’ would be favourable to the development of these projects, the top official said the policies would ensure local SMEs have priority in participating in the developments.

“The integrated complexes are

Property cooling measures dropped when appropriate

Meanwhile, the top official stressed that the government has certain mechanisms to monitor the city’s property market, claiming the authorities will

expected to house local brands and display local cultural creative products and other food products,” the Chief Executive said.

“The favourable policies we are to carry out aim to help local SMEs have the priority to participate in the development projects, and the contribution to Macau being a World Centre of Tourism and Leisure,” he further explained.

Diversification

He also highlighted the importance of the MSAR building more budget hotels and theme parks.

“As at the end of 2016 this year, 5-star hotels accounted for 64 per cent of the city’s total hotels, which is double the 32 per cent of 2005.

Due to the low proportion of other types of hotel, it is urgent for us to develop,” he said.

“As a World Centre of Tourism and Leisure, we receive different types of tourists, such as MICE visitors,

certainly release cooling measures if the market deviates from its healthy development. He added that these measures would not be announced in advance but when they are announced they would be effective immediately.

Chief Executive Fernando Chui Sai On

and other individual tourists; thus, we need to have different kinds of hotel,” the official perceives.

Meanwhile, he believes the development of theme parks will, in particular, help attract family visitors, in addition to providing more leisure and entertainment spaces for local residents. “ D es p i t e th e ci t y r eachi n g several achievements as a tourism destination, in order to be the World

No Pearl Horizon resolutions before court ruling On the other hand, the Chief Executive said the government could only resolve the current problems of Pearl Horizon when the city’s top court delivers a final ruling on the case.

Criticised by legislator Si Ka Lon that the government lacks policies to help the affected homebuyers in the case, the top official said his government had done “many works” regarding the concerns of homebuyers.

Centre of Tourism and Leisure we need to expand our tourism scope,” he said, indicating international visitors would be one of the major focuses due to the segment’s current low ratio of total tourist numbers.

Mr. Chui noted that the government would also provide the “strategic support” of land resources for the development of related projects in order to sustain the development of the local tourism industry.

“Without any ruling from the court, how can the government make any promises? We can only propose [resolutions] after the final ruling in order to provide our best and biggest support,” Mr. Chui said.

“It’s not we don’t care . . . But due to the current lawsuits, we understand the independence of the judicial bodies and we should obey the law,” he added.

“This is not about I want to do or not, but whether I am able to do it or not”.

4 Business Daily Thursday, November 17 2016

Macau Hotels

The 13 interim net loss narrowed in fiscal H1 The opening date for the company’s luxury hotel project The 13 is slated for the first quarter of 2017 Nelson Moura nelson.moura@macaubusinessdaily.com

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he 13 Holdings Ltd. has registered a year-on-year decrease of 30 per cent in revenue for the first half of its fiscal year ended September 30, at HK$3.01 billion (US$380.8 million) compared to HK$4.3 billion one year ago.

According to the company’s interim results filed with the Hong Kong Stock Exchange on Tuesday night the fall in revenue is due to a decrease of “work orders in Macau”.

However, the company currently developing its own luxury hotel project The 13 in Coloane - saw its loss attributable to owners of the company narrowed by 81 per cent year-on-year to HK$28.3 million from HK$148 million.

The group’s gross profit, meanwhile, recorded a slight increase of 1 per cent yearon-year to HK$113 million for the period.

The company explained in the filing that the marginal growth in the gross profit was due to ‘one-off provisions made in last period for the lead-in-water incident under certain construction projects,’ in addition to fewer ‘one-off pre-opening expenses’ for The 13 project.

The 13 opening in Q1

The filing also indicated that the opening date for the luxury hotel project is slated for the first quarter of 2017. In September, a press release announcing the delivery of the company’s Rolls-Royce limousines referred to ‘early 2017’.

‘Construction of the hotel is nearing completion and undergoing the process of

various government inspections in anticipation of obtaining an occupation permit by the end of the fourth quarter of 2016,’ the company wrote in Tuesday’s filing.

The project, at a reputed cost of over US$7 million per room, was originally slated for opening in February this year, then ‘in late Summer 2016’ and then the ‘fourth quarter of 2016’.

According to the release, the hotel under development assets was valued at approximately HK$7.2 billion as at the end of September, which is a 17 per cent increase in value from the same period last year.

Currently, the number of staff for the hotel property in development is 300, the filing says.

‘Despite the anticipated volatile market conditions, the Group feels that its niche strategy of targeting a global clientele of high net worth aspirational spenders with a uniquely rare and remarkable product is well positioned to compete in a slow market

and is a business model that will prove to be highly resilient even in a market

downturn,’ the group wrote in the filing.

The company added that it expects the city to eventually ‘return to long-term moderate growth’ given the new supplies of transportation infrastructure and hotel rooms, coupled with the development of Hengqin.

Results

Emperor Entertainment H1 gaming revenue down 11.1 pct But the group saw the occupancy in its two local hotel properties increase as average room rates decreased Kam Leong kamleong@macaubusinessdaily.com

Hotel and casino operator Emperor Entertainment Hotel Ltd. posted a year-on-year decrease of 11.1 per cent in its gaming revenue amounting to HK$657.6 million (US$82.2 million) for the six months ended September 30 due to “challenging conditions in Macau’s gaming market,” it informed Hong Kong Stock Exchange yesterday.

The company operates a gaming business in its flagship project on the Peninsula, Grand Emperor Hotel, under a licence held by Sociedade de Jogos de Macau, S.A, For the six months, the company’s revenue derived from the mass gaming floor, comprising 67 tables, totalled HK$405.4 million, down 13.8 per cent year-on-year. Meanwhile, that generated by VIP business with 10 tables reached HK$232.6 million, a drop of 7.8 per cent year-on-year.

However, revenue from slot machines grew 14 per cent year-on-year to HK$19.6 million.

According to the filing, the gaming revenue of the company accounted for 83.8 per cent of its total revenue amounting to HK$784.5 million for the period, a decrease of 10.2 per cent year-on-year.

Net profit attributable to owners

of the company reached HK$105.1 million, a decrease of 5.7 per cent year-on-year from HK$111.5 million.

In addition to Grand Emperor Hotel, the company operates Inn Hotel Macau in Taipa.

The hospitality business of the two

hotel properties brought the group’s total revenue to HK$126.9 million, down 5 per cent year-on-year.

However, both Emperor Hotel and Inn Hotel saw their occupancy rate increase, reaching 92 per cent and 95 per cent in the six months, as average room rates decreased 23.4 per cent and 22.3 per cent year-on-year to HK$1,044 per night and HK$383 per night, respectively.

‘The Group is cautiously optimistic about the long term prospects

of Macau, riding on its solid fundamentals and long-withstanding position as a premier global gaming and entertainment destination,’ the company wrote in the filing.

Conceding that the local gaming industry is still ‘susceptible to headwinds,’ the company said it would remain ‘committed to driving operational excellence through optimising gaming mix, maximising table utilisation and improving operating efficiency’.

Business Daily Thursday, November 17 2016 5

Macau Gaming

Junkets: Shared-debtor database expected in 2017 The city would see its first legal shared-debtor database next year if the current trial runs work Cecilia U cecilia.u@macaubusinessdaily.com

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he junket-proposed shared debtor database is expected to start running from 2017, with its machineries and systems currently undergoing trials, revealed Kwok Chi Chung, chairman of the Macau Junket Association during a summit at the MGS Entertainment Show yesterday.

“The entire system follows the law [Personal Data Protection Law],” Mr. Kwok claimed during the talk. “All loan contracts [for debtors] issued by the junkets will include a statement approving the debtors’ information to be saved in the database and to be used for references by members [of the database].”

The junket group president believes the database can help VIP promoters prevent overlapping lending, thus reducing the risk of bad debts.

Asked if the database will connect with overseas databases, Mr. Kwok

said research on the issue is still undergoing, while adding the Association does not plan to connect the database with other regions.

He pointed out that connecting the database to those from other regions would be challenging due to the limitation of the city’s Personal Data Protection Law. The shared database was proposed by local gaming promoters earlier this year to the MSAR Government.

Meanwhile, speaking to Business Daily on the sidelines of the summit, Mr. Kwok said the shared database, supported by the Gaming Inspection and Co-ordination Bureau (DICJ), will be operated by the industry itself.

Stricter audits

Meanwhile, Charlie Choi, chairman of the Macau Gaming Information Association (MGIA), says local junkets welcome the MSAR Government’s enhanced supervision of the industry such as conducting special audits on the promoters’ financial

accounts, as announced in the 2017 Policy Address.

“Local junkets, as well as the Macau Junket Association, have long established close contact with DICJ,” said Mr. Choi during the summit. “With the current regulations, we believe a positive outcome will be visible next year.”

Mr. Kwok of the Macau Junket Association perceives that the government’s supervision is good for the development of VIP operations in the city, believing these regulations will, in fact, strengthen the city’s gaming credit culture.

“The more an industry is regulated, the better the industry will develop” opined Mr. Kwok.

VIP stabilising

Meanwhile, Mr. Choi perceives the local VIP market is stabilising and proceeding to a healthy growth, which reveals the presence of new investors in the VIP market.

“With the future establishment of supporting facilities, new casinos plus the readjustment of junkets, I believe the business has reached its bottom,” Mr. Choi said.

He also indicated that local junket operators have ceased to seek opportunities outside the MSAR, adding that most junkets see their business in Macau to be the most important.

Meanwhile, Grant Govertsen, an analyst from Union Gaming, echoed Mr. Choi’s view that the local VIP market is stabilising.

However, speaking to Business Daily on the sidelines of yesterday’s gaming show, the analyst sees the VIP business will still post a decrease in revenue as the mass market continues to grow. He added that local regulations such as the smoking ban would further dampen the business performance of the VIP market.

Economy

IMF: MSAR mid-term outlook strong The Fund, visiting the MSAR for 12 days, agrees with the MSAR Government’s direction in diversifying the local economy Kam Leong kamleong@macaubusinessdaily.com

The International Monetary Fund (IMF) expects the city’s mediumterm outlook to remain strong following the MSAR economy is moving towards less volatility, observed a press release by the Fund on Tuesday.

A team from the Fund, led by Geoff Gottlieb, visited the MSAR between November 3 and 14. According to the release, the visit sought to conduct discussions on the review of the city’s economy with the Monetary Authority of Macau.

“The medium-term outlook for Macau SAR remains strong,” said Mr. Gottlieb at the end of the visit.

“Although the economy will contract for a third consecutive year in 2016, external demand has begun to recover with three consecutive months of positive gaming revenue growth.”

He added that the city is well positioned for stable and sustainable growth in the low to mid-single digits.

“The Macau SAR economy has started an important transition […] the authorities have embraced the opportunity to move towards an economic model with less volatile and more sustainable sources of income,” he added.

The IMF officer also noted the MSAR

Government is correct in its FiveYear Plan to diversify “from VIP to mass market gaming, from gaming to non-gaming tourism and from tourism to financial services exports”.

“With respect to tourism, the single biggest priority is ensuring that public sector infrastructure investment is adequate in both quality and quantity to accommodate further increases in external demand: the move from VIP to mass market tourists inevitably requires additional capacity to achieve the same amount of growth,” the officer said.

On the other hand, the Fund notes the MSAR Government needs to do more “granular work” to establish

the extent of the city’s current competitive advantage, in addition to policy chances, especially those relating to offshore activities such as leasing and wealth management, to succeed.

“Attracting the necessary nonresident investors and professionals may require considerable cuts in tax rates and substantial increases in supervision,” the officer said.

“To increase the likelihood that such costs are merited, the authorities should seek to maximise spill-over benefits to local employment with well targeted government training programmes and educational investment,” he said.

On price correction in the housing market, the officer advised the authorities to facilitate additional housing supply at market price rather than subsidised prices.

“The authorities could also explore the scope for tighter loan-to-value ratios on second home purchases if speculative demand is of concern,” he said.

In Brief Government

CCAC re-appoints Deputy Commissioners Two Deputy Commissioners of the Commission Against Corruption, Ms. Hoi Lai Fong and Ms. Lam Chi Long, have had their contracts with the anti-graft body renewed, according to a dispatch published in the Official Gazette.

The contracts have been extended a further two years, beginning December 20.

The CCAC has been actively investigating corruption cases in the MSAR since its founding in December 20, 1999, the day of the handover of Macau from Portugal to the Mainland. Recent major investigations by the CCAC relate to public car park management by the Transport Bureau and the land swaps originating from the Iec Long Firecracker Factory. K.W. M&A

Lenovo investing in tech startups Lenovo Capital and Incubator Group have made a ‘strategic investment’ in virtual reality content provide SoReal, a startup backed by Chinese director Zhang Yimo, according to China Money Network.

The tech startup currently operates out of Beijing but is planning expanding to Macau, Taiwan, Singapore, South Korea and Japan.

Augmented reality, virtual reality and mixed reality will be “the next great technology changing the world,” comments Yang Yuanqing, Chief Executive Officer of Lenovo, commenting that “these are also our key investment focuses going forward.”

Lenovo launched the incubator in May and invests in core technology and Internet-related segments around the world. Startup SoReal was launched in March of this year. K.W. Theme parks

Lionsgate looks further than Hengqin In line with the 22,000 square metre ‘Immersive Experience Cen’ being developed in Hengqin’s Creative Culture City project, film company Lionsgate is partnering leisure centre specialist Parques Reunidos to develop facilities based around Lionsgate brands, according to Variety publication. The brands will include The Hunger Games; Saw; Now You See Me; Orange is the New Black; and Nashville, notes the industry publication.

“This agreement enables us to continue growing by using one of the strongest tools for international expansion, leisure centres in shopping malls and high-traffic shopping areas; and we are doing this hand in hand with Lionsgate, one of the most successful film and television production companies in the world,” said Parques Reunidos’ CEO Fernando Eiroa.

At least 10 to 15 attractions of the Hengqin project are expected to pull from six Lionsgate brands including Now You See Me, the Hunger Games and The Divergent series. K.W.

6 Business Daily Thursday, November 17 2016

Macau Opinion

Ashley Sutherland-Winch* Equality in Taiwan While the past week has been filled with endless arguments in favour of or in protest against the United States Presidential election, Taiwan has been focusing on gender and marriage equality. Samesex marriage and gender equality are very important to President Tsai Ing-wen’s political agenda; and it is anticipated that the Taiwanese Parliament will soon vote to legalise same-sex marriage.

In October, MPs from Taiwan’s new ruling party, the Democratic Progressive Party, introduced a bill that would eliminate gender from the national constitution’s definition of marriage, opening it up to any two people regardless of gender. President, Tsai Ing Wen, Taiwan’s first female head of state, has vocally supported marriage equality in the past, and recent polls show that almost three-quarters of the Taiwanese people may favour it as well. Associated Press cites Tseng Yen-jung, spokeswoman for the Taiwan LGBT Family Rights Advocacy group: “About 80 per cent of Taiwanese people between the ages of 20-29 support samesex marriage”.

“It’s a big step forward for the history of human rights”, said Yu Mei-nu, a ruling Democratic Progressive Party lawmaker, who is sponsoring the same-sex marriage bill now in line for the parliamentary debate, telling Associated Press, “If Taiwan can get this passed . . . it will give other Asian countries a model”.

On Tuesday, President Tsai expressed Taiwan’s commitment to the fight for gender equality during her speech at the opening ceremony of the International Council of Women (ICW) Executive Committee Meeting in Taiwan. Hosted by the National Council of Women of Taiwan, Republic of China (NCWT), the four-day event is organised under the theme ‘Transforming Society through Women’s Empowerment’ and includes a conference examining women’s roles in decision-making, local communities and workplaces.

Tsai presented that gender equality had become a mainstream idea in Taiwan, but it had yet to manifest itself in all areas of life. She cited that the wage gap and work-life balance are areas of difficulties still faced by women in Taiwan, Tsai said that women’s participation in the workplace must be a priority for the country. Tsai vows to promote gender equality in Taiwan and abroad, stating that “Taiwan’s own experiences promoting gender equality could help further the global gender equality movement”.

It will be interesting to watch how equality unfolds in Taiwan, and if other countries in Asia - and specifically the MSAR - will follow suit. *Marketing and Public Relations Consultant and frequent contributor to this newspaper.

Crimes

U.S. charges two Chinese ex-diplomats over construction scheme A US criminal complaint shows the two provided illegal private contracting work, including for a residence on Long Island matching the one owned by local businessman Ng Lap Seng

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wo former Chinese diplomats working at a construction company are facing U.S. charges that they schemed to force employees who received visas to perform work only at China’s U.N. mission and other facilities to instead provide private contracting work.

A criminal complaint against Dan Zhong and Landong Wang made public on Tuesday in Brooklyn federal court said the sites that received private contracting work included a Long Island residence matching the description of one tied to a U.N. bribery case.

That US$10 million (MOP1.25 million) mansion was owned by a Chinese associate of Ng Lap Seng, a Macau billionaire accused of bribing a U.N. diplomat who was questioned by the FBI about the homeowner’s intelligence ties, according to court records.

Zhong, 46, was ordered held without bail at a court hearing on Saturday. It was unclear whether Landong Wang was in custody.

A spokeswoman for the U.S. Attorney’s office in Brooklyn declined comment. Zhong’s lawyer did not respond to requests for comment.

According to the complaint, Zhong was the principal of a Chinese construction company’s U.S. operations, while Wang was a manager. Both were former diplomats of China, it said.

The complaint said their company hired Chinese workers who received visas solely to perform construction work at China’s U.N. mission or other diplomatic facilities.

They instead were forced by physical restraint, threats and abuse to perform contracting work at private sites, the complaint said, including

the Long Island residence and a home owned by a Chinese-born airline worker.

Prosecutors did not name the airline employee or the owner of the Long Island residence.

But their descriptions matched those of Ying Lin, an ex-Air China Ltd employee, and Qin Fei, who Ng has said was a consultant to his real estate company.

FBI agents last year interrogated Ng about Qin, asking if he was connected

to foreign intelligence, court records show.

Prosecutors have accused Lin of assisting military personnel at China’s U.N. mission to smuggle packages out of the United States and helping Qin abscond to China amid an FBI investigation.

Lin has pleaded not guilty. Her lawyer did not respond to requests for comment. Qin, who has not been charged, did not respond to requests for comment.

Ng is scheduled to go on trial in January 2017 on charges that he bribed a former U.N. General Assembly president to support a Macau-based conference center his company would develop. He has pleaded not guilty.

Reuters

Sino-Luso

Diplomat: Sino-Portuguese trade “best period ever” Chinese companies have so far invested 6.5 billion euros (MOP57.2 billion/US$7.2 billion) in Portugal, said the Chinese ambassador in Portugal, Cai Run, who considers business exchanges between the two countries are experiencing “the best period ever”.

The Chinese ambassador said in Lisbon that the “mutual political confidence” has allowed “more business deals and business trips” between the countries.

According to the ambassador, one of the examples is the recent 17.5 million euro deal made by Macau-based

company KNJ Investment Ltd. owned by businessman Kevin Ho King Lun in Global Media Group, acquiring 30 per cent stake in the Portuguese group.

Mr. Cai said another remarkable deal between the two countries is the acquisition of Espirito Santo Investment Bank (BESI) – the investment arm of former Portuguese bank Banco Espirito Santo – by Hong Kong-listed Haitong International Holdings Ltd. for 379 million euros.

He also noted that a deal by Chinese investment group Fosun Industrial Holdings Ltd. acquiring 16.6 per cent

stake of Portuguese bank Banco Comercial Português SA is ongoing, the stake in which may increase to 30 per cent in the future.

The Chinese ambassador also indicated that trade between China and Portugal has registered an increase this year despite a challenging economic environment worldwide.

Of China’s three main trading partners in the Lusophone world, Portugal was the only one to register an increase in the first nine months of 2016, increasing 23.5 per cent yearon-year to 3.7 billion euros. N.M. with Lusa

Business Daily Thursday, November 17 2016 7

Gaming Problem gaming

Awaiting the flop

Singaporeans with probable pathological gambling disorders spend, on average, US$313 (MOP2,504) per month on bets, according to the most recent data referenced by the city state’s Minister for Social and Family Development Chan Chun Sing, according to The Online Citizen publication.

The data is pulled from the Survey on Participation in Gambling Activities Among Singapore Residents, commissioned by the National Council on Problem Gambling. The diagnostic criteria for the data is also used in Hong Kong, Macau and the United States and collects respondents’ self-professed behaviour; it does not represent a clinical

assessment of gambling disorders, as the survey is based on face-to-face interviews.

This style is similar to the annual reports by the MSAR’s Problem Gambling Prevention and Treatment Division – The Resilience Centre – the face-to-face counselling services of which helped 34 victims of problem gambling last year. Among these, 32 ‘personally suffered from problem gambling’. A total of 144 counselling and interview sessions were held, with primarily white collar, married, male individuals aged 31-40.

Sufferers overwhelmingly play Baccarat, accumulating debts mostly ranging from MOP100,000 to MOP500,000. K.W.

Cyprus

First Cyprus casino building by end-2017

T

he consortium led by Melco International Development Limited which won the right to build and run the first integrated casino resort in Cyprus may open the doors of its first facility as soon as end-2017, according to World Casino Directory.

In an address, the country’s Minister for Energy, Commerce, Industry and Tourism, Giorgos Lakkotrypis, noted that with regard to the guidelines for the project: “We have set the bar very high and we seem to be getting there,” as quoted by Cyprus Mail.

“I believe that you will be impressed by the plans, which we will present to you at some point shortly,” commented the Minister.

The deal undertaken by Melco, led by Lawrence Ho, Hard Rock International and Cyprus Phasouri (Zakaki) Limited is to build and operate a full US$538 million (MOP67.3 million) permanent facility to be constructed on the Lady’s

Mile Beach near Limassol harbour – featuring a 500-room luxury hotel, 1,000 slots and 100 gaming tables. The

consortium will receive a 30-year licence, with 15-year exclusivity clause, and the group has noted that

it also plans to open smaller satellite casinos in the country’s capital Nicosia and elsewhere.

The Minister noted that casinos could bring in around 300,000 tourists a year and employ 4,000 locals during the construction phase alone.

The first building to open, slated for end-2017, will be a temporary training venue for staff. K.W.

Politics

House of cards Adelson, Wynn named Trump’s “finance vice chairs” of Presidential Inaugural Committee Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

Local casino operators Sheldon and Miriam Adelson and Steve Wynn will join Las Vegas casino billionaire Phil Ruffin on President-elect Donald Trump’s Presidential Inaugural Committee, as announced on Trump’s official website on Tuesday.

The committee is charged with the ‘planning and co-ordination of all official events and activities surrounding the inauguration’ of both Trump and future Vice-president Mike Pence.

The committee is to be chaired by equity real estate investor Thomas J. Barrack Jr., who served in the U.S. Department of the Interior as Deputy Secretary during the administration and currently acts as an economic and national security advisor to Trump.

Steve Wynn had previously announced his decision to not back Trump’s campaign for the presidency during a trip to Macau earlier this year for the opening of the US$4.2 billion (MOP33.6 billion) Wynn Palace in Cotai, telling the Financial Times “I’m craving a more substantial conversation, politically and publicly, about the economy of the US and what it really takes to make a better life for its citizens.”

Wynn is a long-time friend and business rival of Trump’s, with Trump even mentioning him in a February rally as an advisor.

“I’m a friend of Donald and if he asks me questions, I answer them,”

Sheldon Adelson

Wynn told the publication, noting that “I’m friendly with Bill and Hillary Clinton and I have to say the same thing about them. I’ve contributed to neither campaign.”

Sheldon Adelson had previously announced the possibility during Trump’s campaign of contributing up to US$100 million to pro-Trump groups, ending up splitting a US$40 million donation in two – going to super PACs backing Republican congressional candidates, notes the New York Times.

Long list of the super rich

Steve Wynn

Trump’s list of Finance Vice Chairs includes two former United States ambassadors: Ambassador Mel Sembler and Ambassador Ron Weiser.

Sembler is a shopping centre developer and Weiser is the founder of real estate investment company McKinley Associates Inc. Also included is Brian Ballard, who

formerly backed Jeb Bush’s run for presidency until Bush’s comments against Senator Marco Rubio, after donating US$20,000 to a pro-Bush super PAC, notes NBC. Also included is co-founder and Chairman of ABC Supply, the self-proclaimed ‘largest wholesale distributor’ of roofing and house products, Diane Hendricks – who’s self-made worth is estimated by Forbes at US$4 billion and is number 1 on Forbes’ list of America’s self-made women. In addition, joining Trump’s committee is New York Jets owner Woody Johnson.

Regarding future appointments Trump’s website notes that ‘additional announcements regarding Presidential Inaugural Committee leadership will be forthcoming’.

No official comment had been released by either Wynn Macau or Sands China by the time this went to print.

8 Business Daily Thursday, November 17 2016

Greater China In Brief Research

Authorities cautious about digital currency plan China is accelerating research work into digital currency as the country hopes to use new techniques to digitize paper currency and make transactions more transparent and efficient. Since China floated plans for a legally-backed digital currency in 2014, two rounds of revisions have been made to the original plan while further research is still underway, according to Yao Qian, the central bank official leading the digital currency research centre. China will first introduce the currency in certain money markets and promote its use in a gradual and cautious way, Yao said, without giving a specific timetable.

M&A

Minsheng Fin eyes expansion in Europe China Minsheng Financial Holding is scouting for acquisitions of financial services companies including banks in Europe, a top executive said. The investment arm of China’s largest private fund, China Minsheng Investment Group, however, sees Chinese acquisitions in the United States in the near term taking a pause due to uncertainty about the policies of the administration of President-elect Donald Trump. China Minsheng Financial’s planned push into the European Union’s financial sector comes against the backdrop of some countries looking for investors to bail out their stressed banks, and Beijing’s push to bolster trade ties with Europe.

Global outlook

Premier Li sure to meet full-year economic targets Policy makers are now turning attention to reining in excesses spurred by public stimuli

C

hina is confident it will achieve its major full-year targets and tasks, Premier Li Keqiang said at a seminar in Beijing, according to state media reports late Tuesday. China should stabilize and improve macro policies and will expand aggregate demand moderately, Li said. He called for steadying employment and promoting innovation.

“Uncertainties have increased abroad. Regions and industries have diverged at home. Both pose relatively big challenges to the economy”

debt risks and surging home prices in major cities.

“With real economic activity now better stabilized in general and the government still concerned about the need for financial and macro risk controls, October’s property strength may induce a further tightening of property policies,” economists led

by Wang Tao at UBS Group AG in Hong Kong wrote in a recent note.

“We see no change to benchmark interest rates through 2018.”

Donald Trump’s election victory has complicated China’s policy outlook, with threats to slap tariffs of

up to 45 percent on imports from the nation and label China as a currency manipulator.

“Uncertainties have increased abroad. Regions and industries have diverged at home. Both pose relatively big challenges to the economy,” Li was quoted as saying.

Authorities may allow slightly more yuan depreciation as the U.S. dollar strengthens post election, Wang at UBS and her team wrote.

A weakening yuan, while offering no sustained boost to exporters in the face of tepid global demand, has at least cushioned the blow on their local currency earnings. Meantime, four years of factory deflation has also abated, boosting industrial profits. Bloomberg News

Li Keqiang, China’s Premier

The economy’s stabilization this year has come on the back of easy monetary policy and a ramp up in fiscal support, ensuring the government’s full-year growth target of 6.5 percent to 7 percent will be met. Policy makers are now turning attention to reining in excesses spurred by such stimulus, including

eServices

Mainland embraces online medical services

Trading

Hartree setting up Mainland JV Privately owned Hartree Capital is setting up a commodities trading joint venture in China with Wanxiang Resources, owned by the world’s largest auto parts maker, as it pushes to expand into the country’s mammoth markets for industrial materials, a person familiar with the matter said.

The venture will be based in Shanghai and is expected to be up and running this year, handling physical commodities and derivatives, said the person. The step comes as Hartree has been looking to branch out from its core energy markets into base and ferrous metals, coal and agricultural commodities.

Currency

BMO wins approval to quote C$ against yuan Bank of Montreal (BMO) said it had been named the first and only Canadian bank approved by the People’s Bank of China to quote the Canadian dollar against the yuan as a market maker in the China Foreign Exchange Trade System. “The launch of direct trading between CAD and CNY promotes the use of Chinese and Canadian currencies in cross border trade and investment settlement,” C.J. Gavsie, MD & CoHead, Global Fixed Income, Currencies & Commodities & China Capital Markets at BMO Capital Markets, said.

We Doctor app sees an average of 31,000 appointments made each day Trying to see a doctor in China’s public hospitals can be a painful experience, often involving queuing overnight just to get a consultation lasting a few minutes.

A Chinese Internet firm is attempting to address the problem by providing Chinese patients online access to licensed doctors in more than 2,400 hospitals across the country.

The Wuzhen Internet Hospital based in Wuzhen, a riverside town in eastern China’s Zhejiang Province, was founded in December 2015 to provide services via an app it has developed called We Doctor.

Zhang Guimin, marketing director of the company, described the firm as the medical version of Uber, where patients can describe their illness and arrange appropriate doctors.

“Doctors can pick up orders on their own and confirm an appointment for an online diagnosis when they have time,” Zhang said.

The medical service is the online equivalent to a hospital outpatient service. Users can get prescriptions and pay bills on their smartphones, and have medicines delivered afterwards.

They can also make face-to-face

appointments with doctors through the app.

“It is better to see a patient in person in the case of a serious illness,” said Chen Aiguo, head of the surgical department at Tongxiang No.3 People’s Hospital, Zhejiang. “The app is very helpful for making appointments and conducting further consultations.

You can just do it with your phone.”

Zhang is among 26,000 doctors registered on We Doctor. The app sees an average of 31,000 appointments made each day.

“The app helps connect wellknown doctors with patients from not only major cities but also rural areas,” Zhang said. “It helps balance unevenly distributed medical resources.”

Home to the world’s largest online community, 710 million people as of June 2016, more than 95 per cent of China’s cities, towns and villages now have broadband.

Wuzhen Internet Hospital set up a branch in southwest China’s Sichuan Province in October to facilitate remote diagnosis services in the poverty-stricken Liangshan Yi Autonomous Prefecture.

Qiu Jipo, 47, lives in the mountainous

Qiaodi Township and was among the first to use the service. Suffering from femoral head necrosis and arthritis, Qiu has a five-hour walk to the nearest clinic that can treat him.

Through a remote video system set up by We Doctor’s Sichuan branch, Han Sijing, a veteran doctor from 416 Hospital in Chengdu, capital of Sichuan, is able to diagnose Qiu, and supervise a local specialist in the township’s clinic to treat him.

“The app is very helpful for making appointments and conducting further consultations.

You can just do it with your phone.”

Chen Aiguo, head of the surgical department at Tongxiang No.3 People’s Hospital, Zhejiang.

“Seeing a doctor outside the town or a doctor from a top-level hospital had been unthinkable before,” Qiu said.

Besides the Internet hospital in Sichuan, Wuzhen Internet Hospital has branches in 16 cities and provinces, including Beijing, northwest China’s Gansu Province and southwest China’s Guizhou Province.

The Internet firm plans to set up 100 branches over the next three years, providing online medical consultations and e-prescription via cell phones or remote video systems.

Xinhua

Business Daily Thursday, November 17 2016 9

Macau

Race Preview Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup

Generational Conflict

I

T was a rough winter for the Macau Grand Prix Formula Three race. The former co-organiser of the race, Barry Bland, left, leaving a lot of criticism and pessimism behind. The FIA took over the reins of the organisation and promoted the race to ‘World Cup’ status. Formula Three has a long history and the Macau Grand Prix Formula Three got famous worldwide for being the highlight of the season for young guns. It only arrived in Macau in 1983 but it was created by the FIA in 1950 as a stepping stone for young drivers aiming to reach Formula One one day.

Some 29 drivers from 14 countries, representing 12 teams, will compete for Formula Three’s highest singleevent honour on the Guia street circuit this year. And for the first time ever, the race will have three former winners fighting for glory - Felix Rosenqvist, António Félix da Costa and Dani Juncadella. Winner of the 2014 and 2015 Macau Grand Prix, 24 year-old F3 veteran Rosenqvist, returns to fight for an unprecedented third consecutive win!

The FIA F3 European Champion and new Williams F1 Team driver Lance Stroll won’t race this weekend but anyone who believes the old

school drivers will have life easy is mistaken. None of the three former winners drove the Dallara F3 car this year, apart from a two-day testing in Austria. Luckily, Pirelli took over Yokohama as official tyre supplier of the race, opening a new window of uncertainty for all in the field.

In better position is another Formula Three veteran, Nick Cassidy. Off the back of a 2015 All-Japan Formula 3 Championship, New Zealand native Cassidy placed fourth in the European series this year, with one pole position, one race win and eight podiums. Cassidy will look to improve on his third place in the 2014 Macau Grand Prix. BMW Factory GT Driver and third in last year’s races, Briton Alexander Sims is another reputable veteran but he only did one Formula Three race this year and struggled to match the pace of the season contenders.

The presence of the ‘old school’ brigade will give extra motivation to the younger generation. This upcoming generation of fierce competitors will certainly want to shine at Macau against the established names as it will help the cause of putting their names themselves on the world map of motor racing.

Joining Rosenqvist at Prema

Powerteam is 2016 FIA F3 European Championship first runner-up Maximillian Gunther. This year, the 19-year old German Gunther has had seven pole positions, four race wins and 13 podiums to his name.

FIA F3 European Championship third placer George Russell, with seven podiums in the series, will make his Macau Grand Prix debut after a last minute driver change in 2015 saw the 18-year old miss his first run at the circuit.

Teaming up with Da Costa is 2014 CIK-FIA World Junior Champion and 2015 British F4 Champion Lando Norris, who will make his highly anticipated Macau Grand Prix debut, and the Brazilian and Red Bull Junior Team racer Sérgio Sette Câmara, the Guia circuit lap record holder.

Recently crowned All-Japan F3 Champion Kenta Yamashita will race for ThreeBond with T-Sport, driving a Dallara Tomei.

The Japanese driver swept all three races in the final round of the Championship to hold off rival Nissan protégé and SonyPlaystation GT Academy star Jann Mardenborough, who will race for B-Max Racing on his debut in the streets of Macau.

Mainland China is getting its own space in the motor racing world.

Unsurprisingly, the country will have two drivers on the grid. Ye Hong Li and Ferrari Driving Academy’s rising star Guanyu Zhou will be hoping for a place in the Top 10.

They will be joined by 19-year old Andy Chang Wing Chung from the Macau SAR. Chang attended the last two rounds of the 2016 FIA F3 European Championship before entering the Macau Grand Prix for the British outfit ThreeBond with T-Sport. Driving a Dallara NBE, Chang failed to impress in the races at Imola and Nürburgring but he has competed in the Macau event for the last three years and this experience will stand him in good stead for the challenge ahead.

Apart from finishing the race, in order to keep Macao Government racing overseas support, Chang needs to finish in the first 70 per cent of the field.

FIA Director of Circuit Competition Frederic Bertrand said the grid assembled for this edition of the race represents the best in the sport.

“This field offers a fantastic mix of experience and raw talent. It is such a diverse grid, with so many stories to be told. I don’t know if I’ve ever seen an entry list with so much potential right throughout the grid.”

The Formula Three race has two races over the weekend; one on Saturday to determine Sunday’s grid,, and the decisive Sunday 15-lap race.

FIA F3 WORLD CUP FAST FACTS Drivers Teams Countries represented Engine Manufacturers Chassis type FIA titles Engine Horsepower Weight Top speed Start Qualification race World Cup race Winner Prize Money

29 12 14 Six (Mercedes, Volkswagen, Tomei, Toda, NBE, Toyota) One (Dallara) Two: - FIA F3 World Cup for drivers - FIA World Trophy for engine manufacturers

2.0-litre N/A I4 240 565kg 275km/h Standing 10 laps 15 laps – 91.8 kilometres USD 12,000 Ayrton Senna, Michael Schumacher, Famous Macau Grand Prix winners David Coulthard, Ricardo Patrese, Ralf Schumacher, Takuma Sato, André Couto

10 Business Daily Thursday, November 17 2016

Macau

Race Preview Suncity Group Macau Motorcycle Grand Prix - 50th Edition

Golden Jubilee Party

W

ithout half of the glamour and media spotlight than the world series of MotoGP and World Superbike Championship, road racing is all about racing motorcycles on public roads. This is what happens in Macau every November and helped to make the legendary Macau Motorcycle Grand Prix the local spectators favourite race and by far the most dangerous one. The irresistible mix of exciting newcomers and seasoned professionals holds the promise of another superb race that everyone that matters seems to have been invited.

The 28-riders entry list for the 50th edition includes five riders who have each conquered the unforgiving 6.2 km Guia street circuit on two wheels: defending champion Peter Hickman; eight-time winner and the undisputed ‘Two Wheel King of Macau’ Michael Rutter; four-time winner Scotsman Stuart Easton; 2013 winner Ian Hutchinson; and champion in 2001 and multiple-podium finisher, Isle of Man TT legend John McGuinness.

Peter Hickman, 29, is to return to defend his title. The Louth rider convincingly won the high profile event last year and is bidding for a repeat performance this year. “It will be the first time I have jumped on a BMW since I won the race in Macau last year”, he says. Hickman will join Michael Rutter and Stuart Easton in Robin Croft’s SMT BMW super squad after his current team GBmoto Kawasaki declined to contest the last big road race of the year in the last minute.

17 years since his first win at Macau, the veteran star Rutter is again looking strong on a race bike. “The Blade” was third last year and his results throughout the season show he is on top form.

GRAND PRIX FAST FACTS Riders Teams Nationalities Manufacturers Engine Weight Horsepower Top Speed Start Grand Prix Race Winner Prize Money

28 23 7 7 (EBR, Bimota, BMW, Ducati, Kawazaki, Yamaha, Suzuki) 1000cc 4-stroke/naturally aspirated 200kg 198hp 280km/h Standing 12 laps – 73,44 kilometres HKD 32,000

Third team member now is Easton who has had a year to forget in the British SuperBikes series but with four previous wins to his name at Macau, including three in a row between 2008 and 2010, he cannot be ruled out.

One of the sport’s most dazzling talents and the man who rode into legend with a fairytale win on these streets after two years of rehab following injury, Ian Hutchinson arrives in town off the back of a spectacular year which saw him take a hat-trick of victories at the Isle of Man TT in

the summer. Loyal to Tyco BMW Superbike, Hutchinson also added to his trophy cabinet with wins at the North West 200 and the Ulster Grand Prix, and made an impressive debut in the British National Superstock 1000 Championship.

John McGuinness is not only a road racing legend, but a formidable force everywhere else he races, especially on the Guia Circuit. He missed out on a podium finish last year to friend and rival Rutter, and is joined on the Honda Racing team this year by 30-year-old Manx rider and 2009 second place finisher Conor Cummins.

Another hot contender to take victory in the Golden Jubilee edition is Briton Martin Jessopp. A four-time podium finisher here, runner-up on three occasions, the 31-year-old is also a regular front-runner at the TT and North West 200 and Riders Motorcycles BMW seems desperate to get that win.

According to the specialized press, the highest profile newcomer though is this year’s leading rookie in the British SuperBike Championship – Glenn Irwin, having previously excelled on Supersport machines at the North West 200 and Ulster Grand Prix.

Unfortunately, there is not a single Asian rider on the grid. Since the lost of popular TT riders Jun Maeda and

Yoshinari Matsushita, the Japanese seem detached from road racing and none of the Macau or Hong Kong riders have the minimum qual­ifications to participate in the race although South African star Allann-Jon Venter will ride a Yamaha from the local outfit CF Racing Team 32.

A bit of history*

First run in 1967, when a mammoth 30-lap Motorcycle Grand Prix was introduced for the 14th running of the Macau Grand Prix, the Guia circuit has seen 27 different riders take victory in the 49 editions of the Grand Prix run so far. Forty-four year old Rutter’s eight victories between 1998 and 2012 make him the most successful rider in the history of the event.

Another Briton, Ron “Rocket” Haslam, took six wins between 1981 and 1987. He still holds the record for wins from starts, having taken victory in all six Macau Motorcycle Grands Prix he entered. Scotsman Easton, 33, is next on the roll of honour, with four wins between 2008 and 2014, while two riders hold the distinction of three Macao titles: Japan’s Sadeo Asami, with victories between 1978 and 1980 and the late Steve Hislop, who won in 1990, 1993 and 1994.

Japan’s Hiroshi Hasegawa holds a special place in the history books of the race, not only for being the winner of the first Macau Motorcycle Grand Prix in 1967, but for taking a second win the following year, becoming the event’s first double champion. The next winner on the list, taking victory in 1969, is John MacDonald, the only man ever to have won Macao’s two-wheel showpiece as well as the Macau Grand Prix and the Guia Race.

Half a century since motorcycles were first introduced to the programme, the Macau Motorcycle Grand Prix has become a legend in the world of pure road racing. *text provided by Sports Bureau of the Macau Special Administrative Region Government and Macau Grand Prix Organizing Committee

SJM Macau GT Cup – FIA GT World Cup

The forgotten hero After Ayrton Senna’s historic win in the Macau Grand Prix in 1983 – pole position, winner of both heats and fastest lap – the following year saw a young, relatively unknown Danish driver, one John Nielsen take the honours in Macau.

Nielsen had taken victory in the German F3 Championship in 1982 but did not head for Macau that year, as many title winners did; we asked him why.

“I was racing for VW Motorsport”, he recalled, “and they were only geared for national racing at that time. But as I was both the boss and the driver we decided to raise our game from ’83, so we could take the step and do the European series as well as Macau”.

The 1984 win by Nielsen in Macau generated offers for Formula One, as Senna had received after 1983 and Mauricio Gugelmin in 1985, but John Nielsen didn’t make it into F1: “There were offers and we actually did a deal with Ken Tyrrell but unfortunately the little sponsorship that I had to bring to the party didn’t materialise and I was then offered a drive by Ron Tauranac for his F3000 Ralt team.

“Any racing driver starting his career wants to be a Formula One driver. I’m sure I had the talent but it just didn’t materialise, for lots of reasons. When I realised that F1 would not happen I focused my attention on sportscars and made my career there”.

Sportscars

Although Nielsen made the move to sportscars, he made two more appearances in Macau, but with limited success.

“In 1985, I was racing F3000 and the Macau race for Eddie Jordan was a side deal - we quite simply didn’t prepare well enough. But as I said, if I wasn’t able to put together a career in Formula 1, I still wanted to be a professional racing driver and make my living from it. Sportscars did that for me.

“I raced with some of the best drivers around, including Mike Thackwell and Martin Brundle. We won Le Mans in 1990 for Jaguar, with Brundle and Price Cobb. Winning Le Mans was almost unbelievable! “It’s like all other forms of sport where you have the big ones; in tennis, it’s Wimbledon, cycling the Tour de France, in golf

The Masters. In your field these are the ones you want to win. Winning the 1990 Le Mans 24-Hours with Jaguar was very special and a lifetime achievement, - but also to be the first Dane ever to win this great race was also very special”.

John Nielsen subsequently raced with privateer Thomas Bscher, but did he consider this a step backwards as Bscher was never a top driver?

“Thomas was a good amateur driver when I met him during our racing in Italy, running the Maserati Barchetta Tropheo Championship. We became friends and started to plan our racing future together. Winning the 1995 World BPR series in our McLaren F1, we had a great time and Thomas developed into a very good amateur driver. It was teamwork and that’s what brings you your goals.

“Having won the BPR title in ’95, McLaren was approached by a Mr. Goh of Japan. He wanted the F1 sportscar in the Japanese GT500 Championship and a deal was made with McLaren to run two factory cars in the series. Having done nearly all the development work for McLaren, working with Gordon Murray (the F1’s designer), I was the best choice, so I signed a contract with McLaren and became a works driver for them in ’96”.

Great Memories

“The greatest moments are always when they happen, whether that’s Macau or Le Mans. It’s nice to have had many of them. I’ve been lucky.

Today, I’m working in motorsport in Denmark. In other words, I make my living from what I achieved in my active career.

“For the past six years, I’ve been a television commentator for TV3 doing the F1 World Championship.

I manage a Danish touring car team, and am an instructor on lots of track days on our circuits here in Denmark, working for BMW on their driving experience days and doing lots of speeches around the country. So I’m very busy and very happy to be able to do what I love and always have motor racing.”

Business Daily Thursday, November 17 2016 11

Macau

Interview

The local comeback kid

three, and Macau is almost the only place where there’s only one pilot running. Maybe that throw off some Japanese teams, but I don’t’ think the race in Macau is very important in their schedule, they prefer the 12 and 24 hour competitions in other countries. Probably the main reason is a lack of resources to participate in the race. We have a super GT1 race happening in Macau and there’s a short period for everything to be prepared in terms of logistics.

Now racing for Lamborghini in the Grand Prix GT Cup, local golden boy Andre Couto will again attempt a shot at the winning glory he achieved in 2000 in the Macau F3 Grand Prix

P

ROBABLY the best known Macau driver, Andre Couto’s only home success came upon winning the 2000 Ma­cau F3 Championship Grand Prix driving for Opel Team BSR, the first time a Macanese driver took the trophy in the city’s competition. The Grand Prix GT 300 champion in the Super GT championship in 2015, Cou­to will now take part in this year’s FIA GT World Cup with FFF Racing Team, alongside Mirko Bortolotti. Business Daily spoke with the local driver to understand his expectations for this year’s GP, the lack of financial support for local drivers, and his plans for the future.

category because the balance of performance counts a lot, some car brands are better in one year and worse in another. The organisers have the balance of performance rule and sometimes give advantage to some cars and sometimes give it to another.

The team this year has great people and capacities and there’s a big support from Lamborghini. We just need to see if the car is competitive enough to compete with a team like Mercedes

-You ran with the FFF Racing Team last year when they represented McLaren. Now with Lamborghini, do you believe that the FFF Racing Team has the technical capabilities and resources to work with the Audi, Mercedes AMG and Porsche factory teams?

I don’t really see it, nothing, zero.

There’s also not a lot of Macau pilots running. Companies seem to be more interested in financing initiatives with the government than the pilots themselves.

Last year, the team already had those capacities. The GP3 is a weird

-You have sponsors who have been loyal to you over the years, like CTM. How do you see the opening of Macao companies to support motor racing and local drivers?

-What are your expectations for the FIA GT World Cup?

It will depend of how the car performs.

Suncity races

2. What is the impact of the Grand Prix on Suncity and on Macau?

As an enterprise rooted in Macau, Suncity Group is proud of the Macau Grand Prix for its international image. The long history of the race and the legendary stories behind it is a fascinating part of Macau’s history, and we are proud to make our humble and lively effort to pass on this Macanese legacy.

3. How has the Grand Prix evolved since Suncity became the main sponsor?

Suncity Group has a wide range of diversified business. One of our affiliated companies – Sun

There was no interest for this year.

The GT category normally has two pilots running by car, sometimes even

-Have you ever wondered what you will do when you decide to wear the helmet one day?

No, I haven’t thought of it. If they need me in Macau and think I could be of help, why not?

17th to 20th NOVEMBER 2016

17th November (Thursday)

As the main sponsor of the event again this year, with an investment of MOP20 million, VIP gaming consolidator Suncity Group gave Business Daily some of its views on the race and the group’s role in it

Suncity Group is honoured to be the title sponsor of the Macau Grand Prix for the third consecutive year and to be part of this splendid ev e n t . O n c e a g a i n , S u n c i t y Group has long supported many developments like local sports events, and promoted the culture and creative spirit of Macau, which we believe goes hand in hand with the diversification of the city’s economic development, attracting visitors from all over the world to experience the unique excitement and glamour of Macau.

-You have made a career in Japan and you know the motorsport of Japan as few. These two years represented a team in the Super GT Championship - Team Gainer which has a Nissan GT3 that could run in the FIA ​​World GT Cup in Macau but does not. How about the lack of interest of Japanese builders and Japanese teams in the FIA ​​World GT Cup for now?

It can always be, I like to run whenever there’re good opportuni­t ies with teams that have a winning project. I liked the season I had in the Audi Cup, I had a lot of fun and it was all well organised. Of course its not as fun as Super GT, but GT championships are growing in China, with good professional pilots. If it doesn’t coincide with Super GT, my priority, of course I would like to participate.

PROGRAMME SUNCITY GROUP 63rd MACAU GRAND PRIX

Q&A

1.The Suncity Group will be the main sponsor of the Macau Grand Prix for the third consecutive year.

Why does the group put so much on the Grand Prix?

I’m used to run, I do championships in Japan, and in every race there’s always expectations that everything will go well. We hope to have a car that can reach pole position and then if everything goes okay and hope for the best

-You had an experience in Chinese motor racing in 2014, in the Audi R8 LMS Cup, where you were runnerup. Do you believe that your future as a driver will be able to pass through the main championships in Mainland China?

Entertainment Culture – produces and distributes TV and film productions, and many well-known artists are signed under the umbrella of this brand, so when we became the title sponsor, we invited these artists to participate in the Grand Prix to draw more media attraction in order to promote the event. To add in more attention, we also organised the Suncity Lotus Celebrity Cup Race last year along with the Macau Grand Prix Organizing Committee, and it proved to be a huge success.

4. What are the main benefits of the Grand Prix to the city, local business and tourism, and the Suncity Group?

Every year in November, a huge number of international racers, team members, motor racing enthusiasts and tourists visit Macau because of this great motor Grand Prix. The fact that all the hotels in this small former Portuguese colony have been experiencing high room occupancy during this period is a good indication of how the event benefits Macau’s tourism industry – not just the hotel industry, but also the catering and retail industries, providing more employment opportunities. Suncity Group has established business in tourism, food & beverage and luxury goods retailing. Relatively speaking, the increase in the number of tourists obviously benefits the group as a whole.

06:00 06:30 - 07:00 07:30 - 08:30 08:50 - 09:20 09:35 - 10:11 10:30 - 11:10 11:25 - 11:55 12:30 - 13:00 13:20 - 14:00 14:20 - 15:00 15:45 - 16:30 18:00

Circuit Closed Circuit Inspection Suncity Group Macau Motorcycle Grand Prix - 50th Edition - Practice Suncity Group Chinese Racing Cup - Practice Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - Practice Suncity Group Macau Road Sport Challenge - Practice Suncity Group Macau Guia Race 2.0T - Practice SJM Macau GT Cup – FIA GT World Cup - Practice CTM Macau Touring Car Cup - Practice Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - Qualifying Suncity Group Macau Motorcycle Grand Prix - 50th Edition - Qualifying Circuit Opened

18th November (Friday) 06:00 06:30 - 07:00 07:30 - 08:15 08:40 - 09:10 09:35 - 10:15 10:40 - 11:10 11:35 - 12:05 12:30 - 13:00 13:55 - 14:25 14:55 - 15:25 15:55 - 16:35 18:00

Circuit Closed Circuit Inspection Suncity Group Macau Motorcycle Grand Prix - 50th Edition - Qualifying Suncity Group Chinese Racing Cup - Qualifying Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - Practice SJM Macau GT Cup - FIA GT World Cup - Practice Suncity Group Macau Road Sport Challenge - Qualifying Suncity Group Macau Guia Race 2.0T - Practice CTM Macau Touring Car Cup - Qualifying SJM Macau GT Cup - FIA GT World Cup - Qualifying Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - Qualifying Circuit Opened

19th November (Saturday) 06:00 06:30 - 07:00 07:30 - 08:30 09:00 - 09:50 10:20 - 11:10 11:20 - 11:40 12:10 - 13:10 13:50 - 14:40 14:40 - 15:05 15:30 - 16:30 18:00

Circuit Closed Circuit Inspection Suncity Group Macau Guia Race 2.0T - Qualifying Suncity Group Macau Road Sport Challenge - 10 laps Suncity Group Chinese Racing Cup - 10 laps Suncity Group Macau Motorcycle Grand Prix - 50th Edition - Warm Up SJM Macau GT Cup - FIA GT World Cup - Qualification Race 12 laps Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - Qualification Race - 10 laps Parade Suncity Group Macau Motorcycle Grand Prix - 50th Edition - 12 laps Circuit Opened

20th November (Sunday) 06:00 06:30 - 07:00 07:00 - 07:30 08:30 - 09:30 10:00 - 12:00 12:55 - 14:15 14:15 - 14:40 15:10 - 15:25 15:30 - 16:30 18:00

Circuit Closed Circuit Inspection Safety and Rescue Cars - Testing laps CTM Macau Touring Car Cup - 12 laps Suncity Group Macau Guia Race 2.0T - 2 Races of 10 laps each with 15 minutes break between races SJM Macau GT Cup - FIA GT World Cup - 18 laps Parade Lion Dance Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup - 15 laps Circuit Opened

12 Business Daily Thursday, November 17 2016

Macau

SJM Macau GT Cup - FIA GT World Cup

Suncity Group Formula 3 Macau Grand Prix - FIA F3 World Cup and competitive races. But of course we are also present in all sorts of single-seater championships as well, from Formula 4 to Formula 1, not to mention GP2 and GP3. So to complete this ladder of talent, F3 was the next logical step, particularly at such a prestigious venue such as the Macau Grand Prix, which has been won by drivers like Ayrton Senna in the past. It all forms part of a very rich tapestry of motorsport engagement and success.

Pirelli has a strong presence in single seaters from Formula 1 to GP2 and GP3 but it hasn’t been involved in Formula 3 at top level for a long time. Given that the Macau Guia street circuit is tough on tyres and very unpredictable, what is Pirelli’s expectation and preparation?

Interview – Paul Hembery

“

W

e look at motorsport as being our biggest r e s e a rc h a n d d ev e l o p m e n t

laboratory” With much surprise Pirelli has been appointed by FIA as exclusive tyre supplier to the prestigious Macau Grand Prix for the first time this year, equipping both the FIA Formula 3 World Cup and the FIA GT World Cup. Pirelli now succeeds Yokohama in the most successful Formula 3 race in Far East, completing the Italian firm’s renowned ladder of talent that can take young drivers all the way from karting, through Formula 4, and right up to Formula 1.

While the FIA Formula 3 World Cup is a brand new venture for Pirelli, the FIA GT World Cup – which acts as a showcase for GT3 manufacturers and drivers all over the world – was previously supplied by Pirelli during its debut last year, featuring the best GT racers in the sport. Pirelli has a

long time tradition in GT racing, having already its mark in this part of the globe. Business Daily caught up with Paul Hembery, the Pirelli Motorsport Director.

First of all Paul, why did Pirelli decide to extend its participation at the Macau Grand Prix?

PH: Pirelli supplies nearly 300 championships worldwide these days, on both two and four wheels.

Among all of those championships, GT is definitely one of the fields in which we are strongest, thanks to our direct strategic link with the leading prestige car manufacturers in the world, who regularly invest in GT racing and are present all over the world, in series such as the Ferrari Challenge, Lamborghini SuperTrofeo, Blancpain GT Series, Pirelli World Series, Bathurst 12 Hours, British GT, Trans Am and Australia GT, to name but a few.

These series promote our road to track message extremely effectively, with our tyres contributing to close

PH: We’ve got very good knowledge and know-how when it comes to making single-seater tyres for all types of cars and conditions. And we know the Macau circuit as well thanks to our experience in GT racing. Over the last few weeks the teams have been testing our tyres as we tailormake our product to suit the specific requirements of the demanding Macau circuit. We’re confident that we’re in for an exciting race, which will allow our tyres to showcase both their performance and durability.

But of course, Macau is the sort of place where anything can happen, so beyond that it’s hard to make any detailed predictions!

Motorsport has more than 60 years history in Macau but it is quite a new sport in Mainland China. Do you believe that motorsport can help directly or indirectly boost Pirelli’s road tyre market share in Mainland China?

PH: Definitely: we look at motorsport as being our biggest research and development laboratory. As a result we take motorsport very seriously, not only as a brand awareness tool,

but also as a showcase for our Italian technology and our ability to be a true partner of the sport, driving forward technical research that ultimately benefits the everyday motorist. Motorsport is also a way to demonstrate how you manage new technology as a company, as well as the capacity to react to varied and changing extreme situations.

This approach of course supports our strategy in Asia and in China, where we are expanding.

What’s Pirelli motorsport plan for the coming year in the region?

PH: We’ve been supplying the Ferrari Challenge and Lamborghini SuperTrofeo in Asia for a number of years. In 2016 we started supplying the brand new China GT series, which has proven to be extremely successful from the very beginning.

In 2017 we will supply the new Blancpain GT Series Asia, and we’re very excited about this new challenge that will expand our cooperation with the promoter, SRO, in the Asia-Pacific region as well. And we have more plans for the region in the future: So watch this space, basically.

Pirelli has extended its involvement in Formula 1 racing. Formula 1 is a great platform in Europe but how useful is it to promote Pirelli in this part of the world?

PH: Formula 1 is the biggest motorsport platform in the world and the best way for us to convey our technological capabilities. If you look at where Formula 1 is now in terms of international profile, it’s where every other motorsport championship in the world would like to be. And its evolution over the last few years has brought the sport to countries in which top-level motorsport was either a minority interest or not present at all before.

This is good for the sport itself and it also extends the interest in Pirelli to some new territories. In some countries the sport’s popularity has taken off faster than in others, but the effect is always positive and we are very happy with the impact that our presence in Formula 1 has brought to our company so far, in every region of the world.

Business Daily Thursday, November 17 2016 13

Greater china

Financing

Another red flag rises with loans on track to top deposits A nine-year credit expansion meant to protect economic growth has prompted numerous warnings of impending financial trouble

A

dd another credit indicator to the financial warning signs flashing in China.

The adjusted loan-to-deposit ratio, which includes a range of off-balance sheet items and is an indicator of the banking system’s ability to weather stress, climbed to 80 per cent as of June 30, according to S&P Global Ratings. For some smaller lenders, the ratio has already topped 100 per cent, S&P estimates.

S&P’s adjusted measure is rising much faster than the official loan-to-deposit ratio as banks pile into off-balance sheet lending, sidestepping government efforts to rein in credit. At the current pace, overall credit could surpass deposits on an adjusted basis within a few years a level that would give China little leeway to stave off financial turmoil, S&P says.

“The next two to three years is a crucial window for China to rein in the ratio, or we will be in serious trouble,” said S&P’s Beijing-based director Liao Qiang. “Reaching 100 per cent doesn’t mean a crisis will ensue immediately, but it shows China’s entire deposit base is used up and any loss of confidence from savers will severely destabilize the banking system.”

Even after S&P’s adjustments, the ratio in China remains lower than in many other countries. Yet the country’s rapid loan growth, diminishing return on credit and rising bad debts combine to make deposits a particularly important buffer against future financial distress, according to Liao.

Cap abolished

Deposit-taking has formed a cornerstone of China’s banking system as it expanded in tandem with the economy, providing lenders with a stable, low-cost funding base to fuel credit growth. Chinese households and companies hold US$22 trillion of bank deposits, more than anywhere else in the world. That cushion has made lenders less dependent on short-term wholesale funding than banks elsewhere.

For two decades, China imposed a cap that limited loans to a maximum 75 per cent of deposits as part of measures to contain risks. That ceiling was abolished in October 2015, in part because it was seen as a blunt tool that encouraged illicit deposit-hoarding and moving loans off balance sheets. The official loan-to-deposit ratio among Chinese lenders stood at 67 per cent at the end of September,

up only slightly from 66 per cent when the cap was lifted.

But that measure has become less relevant as Chinese banks - especially small and mid-sized ones - have stepped up shadow lending and sales of savings-like offerings called wealth management products, which don’t get carried on their balance sheets.

The shift is captured in S&P’s adjusted ratio, based on the country’s 50 largest banks, which stood at 70 per cent in 2013 and rose by 10 percentage points over the following two years.

Adjusting ratio

S&P came up with its adjusted ratio by treating all loan-like assets and corporate bond investments on banks’ balance sheets, as well as corporate credit made off-balance sheet, as loans. On the other side of the equation, it added wealth management products to deposits.

Jonathan Cornish, Hong Kong-based head of bank ratings for North Asia at Fitch Ratings, said adjusting the loan-to-deposit ratio to capture items like interbank borrowing, wealth management products and other assets can contribute to “a more comprehensive assessment of liquidity across the system and for individual banks.” Fitch doesn’t calculate its own adjusted ratio, he said.

A nine-year credit expansion meant to protect economic growth has prompted numerous warnings of impending financial trouble. China’s debt-to-gross domestic ratio reached 247 per cent after expanding at the fastest pace among Group of 20 nations, according to economists Tom Orlik and Fielding Chen at Bloomberg Intelligence; such sharp increases have been known to trigger crises in other countries, they say.

The Bank for International Settlements in September used data comparing credit and GDP to warn of looming risks in China.

“Targeting economic growth and continued heavy reliance on credit to support growth means that economic leverage is unlikely to abate soon,” said Cornish. “This will increase the risks for the financial sector.”

Wholesale funding

When loans exceed deposits, banks are forced to rely on wholesale funding that can quickly vanish during market dislocations, Cornish said.

In such an event, the central bank - which sets benchmark rates for deposits as well as loans - would be forced to raise interest rates to draw in deposits, according to Liao. That, in

turn, would make it harder for companies coping with slower economic growth to repay loans, putting further stress on banks, he said.

The fragile nature of interbank funding was revealed in June 2013, when a credit crunch drove the oneday repurchase rate to a record and the central bank was forced to inject cash amid rumours of lenders missing payments. The episode exposed “deficiencies” in commercial banks’ liquidity management, the chairman of the banking regulator said at the time.

Some banks are already pushing into danger territory. Bank of Jinzhou

Co.’s adjusted loan-to-deposit ratio stood at 153 per cent at the end of 2015 and the lender got 43 per cent of its funding from interbank borrowings last year, S&P estimates. At mid-sized Industrial Bank Co., the broadly adjusted ratio was 115 per cent while 39 per cent of its funding came from the interbank market, according to S&P. Industrial Bank declined to comment. A press officer at Bank of Jinzhou didn’t respond to phone calls.

Wang Tao, head of China economics at UBS Group AG, in April compiled her own adjusted loan-to-deposit ratio for China and came up with an estimate closer to 90 per cent.

“Once the LDR visibly exceeds 100 per cent, banks may become more vulnerable to credit market sentiment,” she wrote in a report at the time. Bloomberg News

14 Business Daily Thursday, November 17 2016

Greater China Results

JD.com maintains revenue growth in third quarter The company in August forecast third-quarter revenue of RMB59-61 billion Catherine Cadell

J

D.com Inc, China’s second-largest e-commerce firm, said on Tuesday its third-quarter revenue grew 38 per cent from a year ago, slightly ahead of analysts’ expectations.

The results, along with fourth-quarter predictions that could potentially end a recent trend of slowing growth, sent the company’s U.S.-listed shares up nearly 10 per cent in early New York trade.

It predicts fourth quarter revenue of RMB75-77.5 billion, similar to this quarter’s near 40 per cent growth rate.

JD.com made a net loss of RMB0.64 yuan (US$0.10) per American Depository Share in the third quarter, compared with a loss of RMB0.39 a year earlier.

Finance arm restructuring

The company now plans to reorganise its JD Finance arm to make it a wholly

Chinese-owned entity.

The move would put the business in a similar position to that of Alibaba’s Ant Financial Services Group, a domestic Chinese entity still closely tied to the original e-commerce company.

JD.com CEO Richard Liu was the only planned buyer named, though the company intends for others to participate.

The move will enable it to apply for licences that Chinese law forbids foreign-invested companies from owning, such as for securities and mutual funds.

Liu, on a conference call with analysts, also cited fundraising concerns,

saying that “without a domestic structure it may become increasingly difficult to raise new capital above the previous valuation level.”

He declined to give a timeframe for the deal, but said that the company wants to “move ahead as quickly as we can.”

Afterwards, JD.com will receive 40 per cent of any pre-tax profit JD Finance makes. If Chinese regulators allow it, the e-commerce company can in the future convert its rights back into a 40 per cent stake.

In January, JD Finance raised US$1 billion from investors including Sequoia Capital China, China Harvest Investments and China Taiping Insurance and was valued at RMB46.65 billion (US$6.8 billion).

Despite the intention to become a domestic entity, JD Finance is not yet profitable and can only list in China after having been so for three years. Reuters

Key Points JD.com Q3 revenues 60.7 bln yuan vs 60.1 bln yuan estimate JD.com forecasts Q4 revenues 75-77.5 bln yuan Shares jump nearly 10 pct in early NY trade JD.com plans to reorganise JD Finance, hold no equity The online shopping firm, whose shares have fallen 26.5 per cent this year against a 10.5 per cent rise for larger rival Alibaba Group Holding Ltd, also said it aims to restructure its finance unit and hold no equity stake.

JD.com said revenue for the three months ended September was RMB60.7 billion (US$8.9 billion), just beating an average estimate of RMB60.2 billion, according to a Thomson Reuters survey of 15 analysts.

J D . c o m i n A u g u st f o r e c a st third-quarter revenue of RMB59-61 billion, amid concerns that China’s online retail sector is saturated and would be hit by a slowing economy.

The company’s net loss for the quarter expanded to RMB807.9 million from 534.9 million yuan a year earlier.

Commercial relations

Peru asks to join Beijing-supported trade deal If the country joined a final RCEP pact, it would be the only nation in the Americas in a free trade area spanning India to New Zealand Peru has started talks with China about joining a Beijing-backed trade pact for the Asia Pacific region even as it holds out hopes that U.S. Presidentelect Donald Trump might renege on his vow to scrap a rival U.S.-led deal, the government said on Tuesday.

Trade Minister Eduardo Ferreyros said he hopes Peru will someday be part of both proposed tariff-slashing deals - the Trans Pacific Partnership with the United States and the Regional Comprehensive Economic Partnership (RCEP) with China.

Peru, which signed the TPP along with 11 other countries early this year, told Beijing in September that it is interested in joining RCEP, which includes India and a dozen more members.

“The problem is that negotiations are well under way,” Ferreyros told reporters of talks on RCEP with Chinese officials. “The signal we got was ‘let us finish and then we’ll see how to incorporate new members.’”

If trade-liberalization proponent Peru joined a final RCEP pact, it would be the only country in the Americas

in a free trade area spanning India to New Zealand, possibly encouraging other TPP signatories in Latin America to follow suit.

The administration of U.S. President

Barack Obama has warned that RCEP would give China a foothold in fastgrowing export markets and allow Beijing to write trade rules unless the TPP were also in force.

“We’ll have to see how ambitious the pact is,” Ferreyros said of RCEP. “Even if it’s not as deep as other agreements, we’ll still participate.”

Trump’s surprise victory last week appeared to jettison years of

TPP negotiations during Obama’s administration.

Trump called the TPP a “death blow” for U.S. manufacturing jobs and a “rape of our country” as a candidate, and Republican congressional leaders said last week that they would defer to him on trade.

But Ferreyros said he was optimistic Trump might give the TPP a chance, urging the world not to “box in” Trump on his campaign rhetoric.

“We’ll have to see how ambitious the pact is” Eduardo Ferreyros, Peru’s Trade Minister

Family picture of TPP signatories

“Let’s let him take office and take a look at what’s on the table,” Ferreyros said.

The TPP was written so it cannot be implemented without the United States, and Peru’s President Pedro Pablo Kuczynski said last week that it could be replaced with a new deal that would instead include U.S. rivals China and Russia.

“Peru has a very open policy with everyone,” Ferreyros said. “China is our friend, the United States is our friend and everyone is our friend.”

Reuters

Business Daily Thursday, November 17 2016 15

Asia Salaries

Australian wage growth hits record low It is a setback for the central bank that left interest rates at 1.5 per cent this month in part because it was more confident inflation had turned a corner Swati Pandey

A

ustralian wages grew at their slowest pace on record last quarter, a depressant for consumer spending and a challenge to policymakers’ hopes that inflation had finally bottomed out.

The Australian Bureau of Statistics said yesterday that its wage price index rose just 0.4 per cent in JulySeptember, the smallest increase since the data series began in 1997.

growing at over 3 per cent - much faster than its rich-world peers and a downside threat to inflation that is already running at all-time lows.

The wage growth slowdown was a setback for the Reserve Bank of Australia (RBA), which left interest rates at 1.5 per cent this month in part because it was more confident inflation had turned a corner.

“The fact that we’ve had another

weaker number is important information for the RBA,” said JP Morgan Economist Ben Jarman.

“The RBA needs the economy to run red hot from here for a couple of years to drag inflation back up. The narrative about inflation recovering is very vulnerable to any faltering on the activity side.”

Underlying inflation is stuck at an anaemic 1.50 per cent but RBA Governor Philip Lowe said on Tuesday there were “reasonable prospects” that inflation will return to the RBA’s target band of 2-3 per cent.

Th e RBA’ s o p ti m i s m p a rt l y emanates from a leap in the price

of iron ore and coal - Australia’s two biggest exports.

It argued wages would increase gradually in line with an improvement in the jobs market and the end of the drag on growth from a slump in mining investment.

Yet there was scant sign of a pickup in yesterday’s report. Not a single industry from manufacturing to healthcare raised wages more than 2.5 per cent annually. Even mining has lost its Midas touch, with workers getting an annual rise of only 1.0 per cent.

“Businesses are more likely to take advantage of the adequate supply of labour and use the commodity price windfall to raise profits and boost investment rather than wages,” said Paul Dales, Sydney-based chief economist at Capital Economics.

“So while the outlook for domestic activity has improved, the era of unusually low underlying inflation isn’t over.” Reuters

Key Points Q3 wage price index up 0.4 pct q/q, misses forecasts Annual growth of 1.9 pct lowest in series history Challenges RBA confidence that inflation will turn up Annual wage growth braked to 1.9 per cent, again the lowest on record, and under already meagre forecasts of 2.0 per cent. That was less than half the wage growth rate workers enjoyed a decade ago when a mining boom boosted pay awards across the nation.

It also belies an economy that is

Cryptocurrency

Singapore to launch blockchain project for interbank payments Policymakers in the city have sought to attract investment in Fintech In a major move to explore the use of digital currency in Singapore, the city state’s central bank plans to launch a pilot project with the country’s stock exchange and eight local and foreign banks to use blockchain technology for interbank payments.

Cross-border foreign currency transactions will also be reviewed under the pilot as Singapore’s central bank looks to position the financial centre as an important Fintech hub.

The effort is supported by the R3 blockchain research lab and BCS Information Systems, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said at the Singapore Fintech Festival “Under the pilot system banks will deposit cash as collateral with the MAS in exchange for MAS-issued digital currency,” Menon said yesterday.

The consortium includes Bank of America Merrill Lynch, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Credit Suisse, DBS Bank Ltd, The Hongkong and Shanghai Banking Corp Ltd , JP

Morgan, OCBC Bank, Singapore Exchange and United Overseas Bank.

Blockchain, which originates from digital currency bitcoin, works as an electronic transaction-processing and record-keeping system that allows all parties to track information through a secure network, with no need for third-party verification.

“The next phase of the project will

involve transactions in foreign currency, possibly with the support of another central bank,” Menon told an audience of bankers and executives from technology companies.

Policymakers in Singapore have sought to attract investment in Fintech, easing regulation and setting up special departments to support the industry.

The MAS on Wednesday also finalised guidelines for a “regulatory sandbox”, which allows financial institutions and finTech players to test their new business models and products without falling foul of financial rules.

Menon also said Singapore is in the process of creating a national know-your-customer or KYC utility through a personal data platform that will have government-verified personal details of residents.

“The next phase of the project will involve transactions in foreign currency, possibly with the support of another central bank” Ravi Menon, BCS Information Systems The MAS will partner with the government agencies to expand the platform known as “MyInfo service” to the financial industry for more efficient KYC checks.

Singapore has stepped up scrutiny of its banking industry following a money laundering probe linked to Malaysian state fund 1Malaysia Development Berhad (1MDB), which cast a spotlight on one of the world’s leading wealth management centres. Reuters

16 Business Daily Thursday, November 17 2016

Asia In Brief Investigation

Sri Lanka to crack down on tax evaders Sri Lanka’s Inland Revenue Department will carry out islandwide raids on businesses to crack down on tax evasion, a local media report said yesterday. Commissioner General of the Inland Revenue Department, Kalyani Dahanayake, quoted in the media report said that the Department’s aim was to widen the tax base and get people to pay their taxes. “We will be going all over country even after office hours to get people not in the tax net to be brought in,” she told a forum on the government’s 2017 budget.

Korean crisis

Investigation into president to be delayed indefinitely South Korean prosecutors initially announced its plan to investigate scandal-hit President Park Geun-hye yesterday, but the investigation is expected to be delayed indefinitely as the president’s counsel requested it to minimize the number of being investigated. The prosecution office had claimed the need for a face-to-face questioning of President Park no later than Wednesday given that it plans to indict Park’s long-time confidante, Choi Soon-sil suspected of intervening in state affairs from the shadows, around Saturday.

Prosecutors said it can investigate President Park today, but the direct questioning looks hard to be carried out.

Central bank

Malaysia ask foreign banks to refrain from trading NDFs Malaysia’s central bank has asked foreign banks to refrain from trading in the offshore non-deliverable forwards market in the ringgit, according to a letter seen by a Reuters sent to banks. The letter, sent by onshore custodians to foreign banks, asks them to cease any transactions in any offshore Malaysian ringgit non-deliverable forwards or offshore derivatives when unwinding their positions in Malaysian markets.

Two separate sources at other banks confirmed receipt of the letter. At 40 per cent of the total outstanding bond market, Malaysia’s foreign holdings are one of the largest in Asia.

Auto industry

Australia’s new vehicle sales retreat Australian sales of new vehicles fell back in October having hit an all-time peak the previous month, though annual growth in sales still picked up a little, data out on Wednesday showed. The Australian Bureau of Statistics reported sales fell 2.4 per cent in October, from September when sales had jumped 2.5 per cent. The seasonally adjusted sales total of 97,940 was still the highest for any October on record. Annual growth in sales firmed to 1.2 per cent, from 0.8 per cent in September. Sales of sports utility vehicles cooled a touch with a drop of 1.2 per cent in October.

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Oil industry

Toilets, trade and towns; boom time for Asia’s plastic makers Plastic makers from the United States, Europe and the Middle East, such as BASF, Exxon Mobil, Total and Dow Chemical, also hope to profit from Asia’s soaring demand

F

rom India’s plan to plumb in over 100 million toilets in six years to China’s ambitious new Silk Road network and the continued movement of millions of people into cities across Asia, plastic makers face years of strong demand.

And, because they are closer to end-users and manufacturing hubs, Asian petrochemical makers are best placed to ride the boom. Their profits and share prices are rising and they’re investing in new projects to expand their business.

Chinese futures prices for PVC (polyvinyl chloride), used in products from pipes to bank cards, have risen more than 80 per cent this year.

Petrochemicals, seen as a niche business in the oil industry, are used in 70 per cent of manufactured goods - from mobile phones and yoga pants to cars and food packaging - and bring in valuable revenue for a sector otherwise battling over-supply.

Annual demand for ethylene, the most-used compound among many petrochemical products, is expected to grow at over 10 per cent in the coming decade, analysts say.

In just one illustration of how demand is set to grow, the “Clean India” programme, seeking to end open defecation by 2022, has been welcomed by the Indian Petrochemical Industry group as a “boon for the plastics industry” - requiring building hundreds of millions of toilets, waste pipes and water supply systems to bring clean sanitation to more than 700 million people.

“There is tremendous potential for petrochemical demand to go up because per capita consumption is so low. There is a plastic usage in every utility,” said B. Ashok, chairman of Indian Oil Corp, which has a petrochemical plant at its refinery in Panipat, to the north of Delhi.

“Demand is strong not only for toilets. India is short of domestic PVC supplies and has been sourcing from countries including South Korea, so Korean export volumes are growing,” said Hwang Kyu-won, analyst at Yuanta Securities in Seoul.

“Lion’s share”

China’s “One Belt, One Road” project - to build a vast rail, road, shipping and factory network between China, central Asia, Africa and Europe - will also require millions of tonnes of plastic materials, noted Luna Kim, principal consultant at Chemical Market Research Inc. This, together with the urbanisation of tens of millions of people across Asia each year, means the region will have as many as 650 million new petrochemical customers within two decades, predicts research firm IHS Markit.

Key Points Demand driven by “Clean India” sanitation programme ... ... and China’s “One Belt, One Road” projects Asian urbanisation also needs petrochemicals Plastic futures, petrochemicals margins soar Mark Eramo, vice president for global chemical business development at IHS Markit, said the Asia Pacific region will “have the lion’s share of the total investments” in petrochemicals until 2025, adding another 100 million tonnes of basic chemical production, including ethylene.

“Ethylene and its related product supply will remain tight over the next 12 months,” Japanese bank Nomura

said in an investor note.

The demand boom is showing across markets, with IHS Markit expecting overall 2016 Asian ethylene margins of US$600 per tonne, up from below US$400 last year.

In Thailand, PTT, Thai Oil and Siam Cement all reported strong profits in the last month, citing the performance of their petrochemical divisions.

Advantage Asia

To be sure, plastic makers from the United States, Europe and the Middle East, such as BASF, Exxon Mobil, Total and Dow Chemical, also hope to profit from Asia’s soaring demand, but those closer to that demand should benefit most from lower transit costs and cheaper feedstock prices.

“Asian petrochemical makers can be winners over U.S. petrochemical makers,” said Jae-sung Yoon, analyst at Hana Financial Investment in South Korea.

Asia’s leading refiner Sinopec Corp has announced a joint venture with Taiwan’s Dynamic Ever Investments to build a petrochemical complex in China’s southeastern Fujian province, while Korea Petrochemical Industry Corp and Malaysia-based Lotte Chemical Titan plan to expand next year. In the Philippines, JG Summit has also said it plans to expand.

Malaysia’s state-owned energy firm Petronas has a US$27 billion refining and petrochemical complex due to come on stream in 2019.

Asian petrochemical makers are also at an advantage in that they largely use the fossil fuel naphtha as a feedstock, while the main feedstock in the United States is natural gas.

“By using natural gas as a feedstock, U.S. ethane crackers can only obtain ethylene. However, Asian naphtha crackers can also produce other byproducts like butadiene and propylene,” said Yoon at Hana Financial.

This feedstock flexibility has helped Lotte Chemical, Formosa Petrochemical and India’s Finolex Industries outperform share price gains at manufacturers based in other regions. Reuters

Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Nelson Moura; Annie Lao; Kelsey Wilhelm; Matthew Potger; Cecilia U Group Senior Analyst José I. Duarte Design Aivi N. Remulla Web & IT Janne Louhikari Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@‌projectasiacorp.‌com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@‌macaubusinessdaily.‌com Subscriptions sub@‌macaubusinessdaily.‌com Online www.‌macaubusinessdaily.com

Business Daily Thursday, November 17 2016 17

Asia Prices

India’s cooling retail inflation bolsters rate cut hopes Food inflation was 3.32 per cent, lower than 3.96 per cent recorded in September

I

ndia’s retail inflation eased for a third straight month in October, helped by smaller rises in food prices, boosting the chances of an interest rate cut by the central bank next month.

Consumer prices rose by an annual 4.20 per cent last month, their slowest pace in 14 months, government data showed on Tuesday.

The figure matched the median consensus in a Reuters’ poll of economists. Retail prices were up 4.39 per cent in September on the year.

The data comes days after Prime Minister Narendra Modi ordered the withdrawal of large denomination banknotes from circulation, in a shock “demonetization” drive to fight tax evasion, corruption and forgery.

The sudden move to cancel old 500-rupee and 1,000-rupee banknotes, which accounted for 86 per cent of the cash circulating in Asia’s third-largest economy, has caused

huge disruption to daily life, depressing consumer demand.

People struggling to get new bills are holding back on spending, except for immediate and urgent needs. The price of fresh produce has collapsed in food markets, leaving farmers and traders sitting on rotting stocks.

Once the initial shock wears off, the formal economy is likely to expand at

the expense of fly-by-night traders who deal in cash. That in turn may improve the efficiency of markets and make it easier for the Reserve Bank of India’s (RBI) to hit its medium-term inflation target of 4 per cent.

“The ‘black money’ drive will increase the pace of deceleration, specifically in the service sector, which has a lot of cash transactions,” said Soumya Kanti Ghosh, chief economist at State Bank of India.

“I expect a rate cut in December and that won’t be the end.”

The RBI’s recently formed monetary policy committee (MPC) is due to review rates on Dec. 6 and 7.

The monetary panel cut the repo policy rate by 25 basis points last month to a near six-year low of 6.25 per cent.

While the odds have increased for another rate cut, some analysts reckon an impending interest rate increase in the United States could force a status quo until February.

The Federal Reserve is widely expected to raise interest rates at its meeting on Dec. 13-14, the first hike in a year.

There is also a worry that the demonetization drive could hit winter crops as farmers are facing problems in buying seeds and fertilizers.

“The situation is fairly fluid in the early days (of) post-demonetization,” said Aditi Nayar, senior economist at ICRA. “The MPC may choose to observe the evolving growth-inflation dynamics and defer a rate cut till the February 2017 policy review.” Reuters

GDP

Political hurdles can’t stop Philippines surging Consumer spending makes up about 70 per cent of the economy Karl Lester M. Yap

Neither Donald Trump’s protectionist ambitions nor Rodrigo Duterte’s rants against the U.S. are proving to be enough to derail the Philippine economy’s momentum as one of the fastest-growing in the world.

That’s according to economists surveyed by Bloomberg News, who see growth exceeding 6 per cent until 2018. Gifted with a burgeoning middle class and backed by US$50 billion of revenue from remittances and outsourcing, the Southeast Asian economy is getting an additional boost from President Duterte’s US$160 billion- infrastructure plan.

Political risks “haven’t transpired into concrete policies,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore.

“We should pay more attention to hard data, which point to very robust growth prospects for the Philippines, given strong domestic demand.”

While the Philippines hasn’t been immune to the financial market rout since Trump’s shock win in the U.S. election, strong domestic growth drivers have made it more resilient to global shocks compared to export-dependent Asian nations from Singapore to South Korea. Consumer spending makes up about 70 per cent of the economy.

A government report today will probably show gross domestic product expanded 6.7 per cent in the third quarter from a year ago after

climbing 7 per cent in the previous three months, according to the median estimate of 15 economists surveyed by Bloomberg. Polled after Trump’s victory, economists forecast the economy will grow 6.6 per cent this year, 6.3 per cent in 2017 and 6.5 per cent in 2018.

Investors have dumped Asian emerging-market assets after Trump’s victory, concerned that a rise in protectionism will curb global growth and trade. Indonesia and the Philippines have been among the worst-hit in Southeast Asia, with the peso falling near levels last seen during the 2009 global financial crisis.

Low debt

Even before the U.S. elections, financial markets were under pressure as investors worried about Duterte’s inflammatory attacks against the U.S. - including his call for a “separation” from America - and his violent anti-drugs crusade that’s killed more than 3,000 people. The American Chamber of Commerce, and businesses in the outsourcing and electronics industries, are among those that have raised concern that Duterte’s comments may harm the investment outlook.

At the same time, Duterte has pledged to ramp up spending on roads, airports, seaports and railways to lure investors and create jobs. The Philippines has one of the lowest government debt ratios in Southeast Asia, at 40 per cent of GDP, giving it

room to boost spending.

“With foreign investors favouring emerging markets less, the Philippines is one of the better positioned

to withstand the selloff,” said Joseph Incalcaterra, a Hong Kong-based economist with HSBC Holdings Plc. “The government has increasing scope to pursue fiscal stimulus and infrastructure build-up while private consumption will power growth.”

Reuters

18 Business Daily Thursday, November 17 2016

International In Brief Oil crisis

IMF urges further Kuwait subsidy reforms Kuwait must enact further subsidy reforms to trim its budget deficit resulting from low oil prices despite political sensitivity, the International Monetary Fund has said.

Posting its first budget shortfall of US$15 billion last fiscal year following 16 years of surpluses, OPEC member Kuwait has adopted a series of austerity measures raising the prices of fuel, power and water. The emirate liberalised diesel and kerosene prices last year and recently hiked the cost of petrol, causing a political crisis that led to parliament being dissolved and calls for a snap election.

Monetary policy

Barclays CEO sees ‘political pressure’ on Fed The election of Donald Trump as the next U.S. president could signal a period of heightened pressure on the Federal Reserve to ease its accommodative stance, Barclays Chief Executive Jes Staley told a banking conference in London yesterday. “You’ll see political pressure on the Fed to be much less accommodative...influence on the Fed is going to be a significant consequence of the election,” Staley said. Staley also said that John Taylor, the influential Stanford University economics professor whose ‘Taylor rule’ describes how banks should raise interest rates in response to inflation, could become the next chairman of the Federal Reserve.

IEA

Investment penury risks new oil shock After peaking at US$780 billion in 2014, investment in exploration and production dropped by US$200 billion last year Martine Pauwels

T

he lack of investment in new oil projects risks creating a new market upheaval in several years, the International Energy Agency warned yesterday.

“We estimate that, if new project approvals remain low for a third year in a row in 2017, then it becomes increasingly unlikely that demand... and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the industry,” the IEA said in its annual World Energy Outlook report.

The oil market has been plagued for the past couple of years by oversupply, with the price of a barrel of oil plunging from over US$100 in mid-2014 to under US$30 at the beginning of this year.

As a result, oil companies have slashed investment into new projects.

After peaking at US$780 billion in 2014, investment in exploration and production dropped by US$200 billion last year, and should drop by

another US$140 billion this year, according to the IEA. It said in 2015 the approval of the development of new conventional crude projects was the lowest since the 1950s.

As it takes between three and six years to get new conventional oil fields producing, without a rebound in investment there is a risk of a mismatch between supply and demand, the IEA said.

The IEA estimates that US$700 billion per year in investments in exploration and production are needed, and US$80 per barrel the price to balance supply and demand of oil in 2020. Brent crude was trading around US$46 per barrel on Tuesday.

OPEC cartel made a similar warning last week.

“While the recent oil market environment has been one of oversupply, it is vital that the industry ensures that a lack of investments today does not lead to a shortage of supply in the future,” the cartel said in its annual report on long-term market trends.

Both the IEA and OPEC see demand

LinkedIn bid

Microsoft offers EU concessions Microsoft has offered concessions to EU antitrust regulators over its US$26 billion bid for social network LinkedIn, the European Commission said yesterday, as the U.S. software company seeks to allay concerns over its largest ever deal. The move came after the EU competition enforcer expressed concerns about the deal at a meeting with Microsoft executives last week. The Commission, which will rule on the deal

by Dec. 6, did not provide details. It is expected to seek feedback from rivals and customers before deciding whether to accept the concessions, demand more or open a full investigation.

France vote

Macron campaign throws election open France’s presidential election campaign jolted into life yesterday as young ex-minister Emmanuel Macron prepared to launch his bid and polls showed a new rival eroding the lead of favourite Alain Juppe from within his own camp. Juppe has fought his campaign so far on a centrist platform to the left of his main competitor for the centre-right ticket, Nicolas Sarkozy, who has sought to appeal to the populist end of the voter spectrum. Polls until this week showed 71-yearold ex prime minister Juppe winning the primaries of the Les Republicains party and its centre-right allies which begin on Sunday.

for oil continuing to grow through 2040.

The IEA’s baseline scenario is premised on nations implementing their pledges to cut planet-warming greenhouse gases following the entry into force this month of a worldwide pact to battle global warming.

Dubbed the Paris Agreement, it is the first-ever deal binding all the world’s nations, rich and poor, to a commitment to cap global warming caused mainly by the burning of coal, oil and gas.

Industry can’t ignore risks

Yet even with full implementation of Paris Agreement pledges, the IEA sees a 30 per cent rise in global energy demand due to economic development, driving an increase in consumption of all modern fuels.

However demand for oil will see only a tiny gain, from around 92.5 million barrels per day last year to over 103 million barrels per day by 2040, or roughly a 0.4 per cent gain per year.

The IEA, which advises advanced market economies on energy policy, sees natural gas use jumping by 50 per cent as nations try to meet increasing demand for electricity and reduce use of heavily polluting coal.

However, countries could go further than the Paris pledges to limit the rise in global temperatures to 2 degrees Celsius and the IEA said the impact on oil would be considerable, as demand would return to the levels of the late 1990s, under 75 million barrels per day.

Although it acknowledged the challenges are immense just to attain the 2C target, the IEA said “the fossil-fuel industry cannot afford to ignore the risks that might arise from a sharper transition”.

The agency said a “fully fledged policy drive to decarbonise the energy system will have important consequences for future revenues of fossil-fuel companies and exporting countries”. AFP

Private report

Tax havens should be ‘quarantined’ from global economy Ecuador, which estimates that an amount equal to 30 per cent of its gross domestic product is hidden off-shore, has called for the United Nations to take on the problem Hugh Bronstein

Countries that fail to clamp down on tax havens should be cut off from the global financial system, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday, four months after quitting the panel set up to probe the Panama Papers scandal.

He and Swiss anti-corruption expert Mark Pieth quit the investigation in August, claiming that Panama’s government would not promise to make its report public, whatever the findings.

So Stiglitz and Pieth published their own report and presented the findings in Brussels.

A leak in April of more than 11.5 million documents from the Panamanian law firm Mossack Fonseca, dubbed the Panama Papers, sparked outrage by showing how the rich go offshore to avoid paying taxes while working families are required to pay theirs.

The report by Stiglitz and Pieth

says regulators should treat secrecy havens like the carriers of a disease.

“We know what to do with dangerous contagious diseases: quarantine.

And so too for the secrecy-havens.

They should be cut off from the global financial and economic system,” it says.

They call for making it illegal for anyone in co-operative countries to have an account in a non-cooperative jurisdiction, or for someone in a cooperating country to be a shareholder in a corporation in a non-cooperative one.

The Panama Papers showed money was hidden in ways that law enforcement could not detect. The purpose of the secrecy jurisdictions was not only tax evasion, according to the report, but money laundering for a wide range of criminals.

“One client of the Panamanian law firm was the alleged ringleader of a child prostitution ring in Russia, whose members kidnapped, raped, and sold orphan girls,” the report said.

“Secrecy havens could be viewed as co-conspirators in these crimes.”

Panama is expected to publish its own findings this month and says they will be released to the public.

Ecuador, which estimates that an amount equal to 30 per cent of its gross domestic product is hidden off-shore, has called for the United Nations to take on the problem.

The Stiglitz/Pieth report calls for international agreements that would pull the licenses of banks and lawyers involved in the off-shore economy, estimated in the trillions of dollars.

“If there is any pocket of secrecy, funds will flow through that pocket.

That is why the system of transparency has to be global” Stiglitz/Pieth report “If there is any pocket of secrecy, funds will flow through that pocket.

That is why the system of transparency has to be global,” the report said. “Information exchange under bi-lateral tax treaties has not been adequate to stem the leakage.” Reuters

Business Daily Thursday, November 17 2016 19

Opinion

What America’s economy needs from Trump

Business Wires

The Times of India Amid indications of a stormy winter session in Parliament (pictured), the government has listed its legislative agenda which includes bills for rollout of goods and services tax (GST), maternity benefit (amendment) and the surrogacy regulation. The government is keen to push the passage of the three legislations related to the main GST bill early on in the session. Parliamentary nod for these bills will facilitate GST roll-out from the target date of April 1, 2017.

The government has listed nine bills for introduction, consideration and passage, while it has also listed 10 pending bills in both houses.

D

onald Trump’s astonishing victory in the United States presidential election has made one thing abundantly clear: too many Americans – particularly white male Americans – feel left behind. It is not just a feeling; many Americans really have been left behind. It can be seen in the data no less clearly than in their anger. And, as I have argued repeatedly, an economic system that doesn’t “deliver” for large parts of the population is a failed economic system. So what should President-elect Trump do about it?

Over the last third of a century, the rules of America’s economic system have been rewritten in ways that serve a few at the top, while harming the economy as a whole, and especially the bottom 80 per cent.

The irony of Trump’s victory is that it was the Republican Party he now leads that pushed for extreme globalization and against the policy frameworks that would have mitigated the trauma associated it. But history matters: China and India are now integrated into the global economy. Besides, technology has been advancing so fast that the number of jobs globally in manufacturing is declining.

The implication is that there is no way Trump can bring a significant number of well-paying manufacturing jobs back to the US. He can bring manufacturing back, through advanced manufacturing, but there will be few jobs. And he can bring jobs back, but they will be low-wage jobs, not the highpaying jobs of the 1950’s.

If Trump is serious about tackling inequality, he must rewrite the rules yet again, in a way that serves all of society, not just people like him.

The first order of business is to boost investment, thereby restoring robust long-term growth. Specifically, Trump should emphasize spending on infrastructure and research.

Shockingly for a country whose economic success is based on technological innovation, the GDP share of investment in basic research is lower today than it was a half-century ago.

Improved infrastructure would enhance the returns from private investment, which has been lagging as well. Ensuring greater financial access for small and medium-size enterprises, including those headed by women, would also stimulate private investment. A carbon tax would provide a welfare trifecta: higher growth as firms retrofit to reflect the increased costs of carbon dioxide emissions; a cleaner environment; and revenue that could be used to finance infrastructure and direct efforts to narrow America’s economic divide. But, given Trump’s position as a climate change denier, he is unlikely to take advantage of this (which could also induce the world to start imposing tariffs against US products made in ways that violate global climatechange rules).

A comprehensive approach is also needed to improve America’s income distribution, which is one of the worst among advanced economies. While Trump has promised to raise the minimum wage, he is unlikely to undertake other critical changes, like strengthening workers’ collective-bargaining rights and negotiating power, and restraining CEO compensation and financialization.

Regulatory reform must move beyond limiting the damage that the financial sector can do and ensure that the sector genuinely serves society.

In April, President Barack Obama’s Council of Economic Advisers released a brief showing increasing market concentration in many sectors.

That means less competition and higher prices – as sure a way to lower real incomes as lowering wages directly. The US needs to tackle these concentrations of market power, including the newest manifestations in the so-called sharing economy.

America’s regressive tax system – which fuels inequality by helping the rich (but no one else) get richer – must also be reformed. An obvious target should be to eliminate the special treatment of capital gains and dividends. Another is to ensure that companies pay taxes – perhaps by lowering the corporate-tax rate for companies that invest and create jobs in America, and raising it for those that do not. As a major beneficiary of this system, however, Trump’s pledges to pursue reforms that benefit ordinary Americans are not credible; as

“

Taipei Times Taiwanese who commit aggravated fraud overseas are now to be subject to punishment in Taiwan after the Legislative Yuan passed an amendment to the Criminal Code yesterday. The amendment to Article 5 of the Criminal Code added “aggravated fraud” to the list of offenses committed “outside the territories of the Republic of China” to which the Criminal Code will apply, making it easier to prosecute suspects in Taiwan. The revision is to take effect when it is promulgated by the president, a formality that usually takes about two weeks.

Viet Nam News The housing market will continue to develop, especially the mid-range apartment and townhouse segments, thanks to the improved quality of the country’s economic growth, experts told a conference in HCM City yesterday.

Lê Anh Tuấn, head of research at Dragon Capital Group Limited, told the conference titled “Real-estate: Building the future” that Việt Nam is among top emerging markets in terms of GDP growth. Furthermore, its quality of growth is good as seen from the reducing credit growth and inflation in 2015-16 compared with 2004-11. Private consumption has also surged, he said.

The Korea Herald South Korea’s Internet banking service rose at a fast clip in the third quarter with both the number of users and daily transactions reaching record highs, central bank data showed yesterday. In the three months ended Sept. 30, the number of Internet and mobile banking service users came to 120.7 million, up 1.4 per cent from the previous quarter, according to the data from the Bank of Korea. The number is the sum of all registered users of 16 Internet and mobile banking service providers in South Korea, including commercial banks.

Joseph E. Stiglitz a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute.

usual with Republicans, tax changes will largely benefit the rich.

Trump will probably also fall short on enhancing equality of opportunity. Ensuring preschool education for all and investing more in public schools is essential if the US is to avoid becoming a neo-feudal country where advantages and disadvantages are passed on from one generation to the next. But Trump has been virtually silent on this topic.

Restoring shared prosperity would require policies that expand access to affordable housing and medical care, secure retirement with a modicum of dignity, and allow every American, regardless of family wealth, to afford a post-secondary education commensurate with his or her abilities and interests. But while I could see Trump, a real-estate magnate, supporting a massive housing program (with most of the benefits going to developers like himself), his promised repeal of the Affordable Care Act (Obamacare) would leave millions of Americans without health insurance. (Soon after the election, he suggested he may move cautiously in this area.)

The problems posed by the disaffected Americans – resulting from decades of neglect – will not be solved quickly or by conventional tools. An effective strategy will need to consider more unconventional solutions, which Republican corporate interests are unlikely to favour. For example, individuals could be allowed to increase their retirement security by putting more money into their Social Security accounts, with commensurate increases in pension benefits. And comprehensive family and sick leave policies would help Americans achieve a less stressful work/life balance.

Likewise, a public option for housing finance could entitle anyone who has paid taxes regularly to a 20 per cent down-payment mortgage, commensurate with their ability to service the debt, at an interest rate slightly higher than that at which the government can borrow and service its own debt. Payments would be channelled through the income-tax system.

If Trump is serious about tackling inequality, he must rewrite the rules yet again, in a way that serves all of society, not just people like him

”

Much has changed since President Ronald Reagan began hollowing out the middle class and skewing the benefits of growth to those at the top, and US policies and institutions have not kept pace. From the role of women in the workforce to the rise of the Internet to increasing cultural diversity, twenty-first century America is fundamentally different from the America of the 1980s.

If Trump actually wants to help those who have been left behind, he must go beyond the ideological battles of the past. The agenda I have just sketched is not only about the economy: it is about nurturing a dynamic, open, and just society that fulfils the promise of Americans’ most cherished values. But while it is, in some ways, somewhat consistent with Trump’s campaign promises, in many other ways, it is the antithesis of them.

My very cloudy crystal ball shows a rewriting of the rules, but not to correct the grave mistakes of the Reagan revolution, a milestone on the sordid journey that left so many behind. Rather, the new rules will make the situation worse, excluding even more people from the American dream. Project Syndicate

20 Business Daily Thursday, November 17 2016

Closing Commerce Ministry

Retail sales in China more than RMB48 trillion by 2020

and cut overcapacity in industrial sectors, amid stubbornly weak external demand.

The plan laid out nine “major tasks” to achieve China’s retail sales would reach about RMB48 the growth targets, such as pushing bricks-andtrillion (US$6.99 trillion) by 2020, with average mortar businesses to transform and innovate, and annual retail sales growth at 10 per cent, the modernising traditional sectors such as agriculture. country’s Commerce Ministry said yesterday.

Domestic consumption will contribute significantly E-commerce trade volume is also projected to more to China’s economic growth during 2016grow at an average annual rate of about 15 per 2020, the Commerce Ministry said in a statement. cent in 2016-2020, according to a five-year plan China’s total retail sales stood at RMB30.1 trillion for the country’s domestic trade posted on the (US$4.38 trillion) by 2015, with an average growth ministry’s website.

Beijing has pledged to transform the economy into rate for the 2011-2015 period at 13.8 per cent, the ministry said. Reuters one more reliant on consumption than exports,

Reform drive

Beijing calls for new private bank to rejuvenate northeast At least one new regional bank would be established by the end of June next year

C

hina has called for a private bank to be established in the country’s struggling northeast as part of a new plan published yesterday to support economic growth in the region.

Th e g o v e r n m e n t w i l l a l s o strengthen policy propaganda and beef up the way it monitors public opinion to prevent negative voices from undermining confidence in the three north-eastern provinces of Liaoning, Heilongjiang and Jilin, China’s cabinet said in the policy document.

new transportation infrastructure and encourage new high-tech industries in the three provinces, but critics have said China’s strategy has done little to ease the region’s dependency on the state.

The State Council said local governments will be responsible for drawing up new policies to develop the private economy in the region, which has long been dominated by powerful state-owned firms.

At least one new regional bank would be established by the end of June next year, and a “financing guarantee system” would also be set

up to support small- to mediumsized enterprises, it said.

China will also look into developing new industries in resource-depleted cities in the northeast to create jobs, and will accelerate construction of infrastructure projects.

The central government will provide special financial support for north-eastern cities suffering from recession and resource depletion, the plan said, naming Jixi and other struggling coal cities in Heilongjiang, where protests against unpaid wages have been common.

Chi n a has i ss u e d s ev e ra l directives this year outlining new infrastructure projects and other investments in a bid to boost growth in the region, home to the

only province whose economy is in recession.

It said in August that it would launch 127 new large-scale transportation, energy, water and urban construction projects over the 2016-18 period to “cultivate new momentum” in the northeast economy.

According to official data, the economy of Liaoning went into recession in the first half of this year, falling 1 per cent after a 58 per cent drop in fixed asset investment.

While the province has not published economic data since August, a report published by the 21st Century Business Herald yesterday estimated that Liaoning’s GDP fell 2.2 per cent in the first three quarters as a whole. Reuters

Key Points At least one new regional bank to be set up by next June Govt to correct negative, false reporting about northeast Local govts tasked to develop private economy in the region Govt will provide financial support to cities in recession It said it would work to prevent the dissemination of opinions that “talk down” the northeast and respond quickly to correct negative and false reporting about the region.

China’s efforts to “rejuvenate” the northeast began in 2003 as the central government tried to bring stability to an old industrial region hit by layoffs, strikes and organised crime.

It has since spent billions of yuan to regenerate shantytowns, build

China will accelerate construction of infrastructure projects

Results

Graft crackdown

Currencies

Tencent’s profit climbs as more advertisers lured

China’s most wanted fugitive returns

Mainland commercial banks’ forex sales ease

Tencent Holdings Ltd. posted a 43 per cent rise in third-quarter profit as its ability to attract Chinese gamers and social media mavens fuelled advertising growth.

Net income climbed to RMB10.6 billion yuan (US$1.5 billion) in the three months ended September, the Shenzhen-based company said yesterday.

That compares with the RMB10.7 billion average of analysts’ estimates compiled by Bloomberg.

Adjusted earnings-per-share were 1.24 yuan, compared with the 1.26 yuan average of estimates.

Tencent’s bottom line depends on its effectiveness in engaging a Chinese internet population now 710 million strong, and advertising has become a major source of sales growth. The operator of messaging apps WeChat and QQ increased ad space and attracted big brands to a video-streaming service where users spend hundreds of millions of hours monthly. It’s also been scooping up popular content and fleshing out its mobile games slate, adding hits like King Glory and Legacy TLBB while acquiring Clash of Clans studio Supercell Oy. Sales rose 52 per cent to RMB40.4 billion, compared with estimates for RMB39 billion. Bloomberg News

China’s most wanted graft fugitive Yang Xiuzhu, who has been on the run for 13 years, finally returned to China yesterday and turned herself in to authorities, according to the Communist Party of China’s disciplinary watchdog.

Yang, 70, a former deputy director of the construction bureau of eastern China’s Zhejiang Province, fled China in April 2003 after graft inspectors began investigating her for embezzlement, according to the Central Commission for Discipline Inspection (CCDI).

She was number one on a list of China’s top 100 fugitives released in an Interpol “red notice.” Yang is the 37th person on the list to return.

Yang had been hiding in several places, including China’s Hong Kong Special Administrative Region, Singapore, France, the Netherlands and Italy.

She had applied for asylum in both France and the Netherlands, but was rejected before fleeing to the United States to seek asylum in May 2014. China requested Yang’s repatriation and provided the United States with evidence of her crimes. The U.S. authority then put her in custody. Xinhua

China’s commercial banks sold a net US$14.6 billion of foreign exchange in October, down from September’s US$28.4 billion as capital outflows eased, the foreign exchange regulator said yesterday.

“The pressure on cross-border capital outflows eased somewhat in October,” the State Administration of Foreign Exchange said in a statement on its website.

China’s cross-border capital flows are expected to stabilise over the medium- and long- term as the economy shows increased signs of steadying, it said.

For the January to October period, commercial net forex sales stood at US$258 billion, the regulator said.

Earlier data showed China’s central bank sold a net US$39.2 billion worth of foreign exchange in October, easing from an eight-month high hit in September but still indicating continued official interventions to support the yuan.

China’s foreign exchange reserves fell US$45.7 billion in October to US$3.121 trillion, the biggest monthly decline since January.

Expectations that the U.S. Federal Reserve will raise interest rates in December has boosted the dollar, weighing on the yuan which has fallen nearly 5.5 per cent so far this year. Reuters