Business Daily #1192 December 12, 2016

Overseas casinos clean up despite China’s cash curbs Saipan Page 11

Monday, December 12 2016 Year V Nr. 1192 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Reforms

Chinese authorities committed to continuing structural changes in 2017 Page 12

WTO

China face hurdles from trade partners to gain market economy status Page 16

www.macaubusinessdaily.com

Gaming

Politics

Chinese Embassy to offer consular assistance to Jack Lam Page 11

Public happier with the 2017 Policy Address Page 2

Cotai connection necessary Gaming

To drive the mass market to the Cotai strip, properties will first need to think about how to allow visitors to more easily get from one property to another, opines the Director of the Institute for the Study of Commercial Gaming Davis Fong. Speaking to Business Daily, the expert believes visitors will want to stay longer in the territory once there’s a connection within Cotai, like on the Vegas Strip.

Overnighters are always better than day-trippers, he says. Pages 4 & 5

No impact from new withdraw limits

Ho pleads not guilty

The graft case of the city’s ex-top prosecutor kicked off last Friday. Denying part of the nearly 2,000 accusations heard in the first trial, the former official, after being in custody for the last nine months, was still able to defend himself, arguing that the court did not grant enough time for his team to read through a 10,000-page indictment that included “many complex facts”.

The trial continues today.

Monetary Secretary for Economy and Finance, Lionel Leong says the new Chinese bank card withdrawal limits per transaction at local ATMs does not target the gaming industry and will have no impact on the sector. The new changes are aimed at maintaining the legality of capital flows, he says. Page 3

Inflation confirms momentum

Bribery Page 4

HK Hang Seng Index December 9, 2016

22,760.98 -100.86 (-0.44%)

China Unicom Hong Kong Sun Hung Kai Properties Ltd Cheung Kong Property Li & Fung Ltd New World Development

Worst Performers

+2.11% +2.04%

MTR Corp Ltd

+0.78%

Sands China Ltd

-7.87%

Tencent Holdings Ltd

-1.41%

HSBC Holdings PLC

+0.61%

Galaxy Entertainment Group

-7.04%

Wharf Holdings Ltd/The

-1.33%

PetroChina Co Ltd

-1.27%

+1.83%

CK Hutchison Holdings Ltd

+1.78% +0.80%

+0.60%

China Resources Power

Ping An Insurance Group Co

+0.59%

CITIC Ltd

-1.50%

AIA Group Ltd

-1.24%

Link REIT

+0.56%

Belle International Holdings

-1.48%

China Mengniu Dairy Co Ltd

-1.23%

-1.71%

19° 23° 18° 23° 14° 22° 13° 17° 13° 17° Today

Source: Bloomberg

Best Performers

Tue

Wed

I SSN 2226-8294

Thu

Fri

Source: AccuWeather

Chinese Economy China’s producer price index beat market expectations to reach a five-year high in November.

Factors including rising prices of coal and steel might lead to continuous rises in PPI, analysts pointed out. The consumer price index was also up mainly because of increases in food prices. Page 12

2 Business Daily Monday, December 12 2016

Macau Public services

Health Bureau’s administration building relocated

Januário, says the announcement. The original location of the administration The administration building of the city’s building was at Estrada do Visconde de S. Januário. All the administrative Health Bureau has been relocated to departments in the original building 339 Rua Nova à Guia, according to a have already been moved into the new press release published by the Bureau building, while the auditorium of the on Saturday. The move is to cope with old building is now closed. However, the construction of the Infectious Diseases Building next to the city’s local the contact numbers of all departments public hospital, Hospital Conde de São remain unchanged. A.L.

Politics

More satisfied with the 2017 Policy Address Polls show more local residents were satisfied with the Policy Address than last year Annie Lao annie.lao@macaubusinessdaily.com

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ore local residents are expressing a positive view on the recently presented Policy Address for next year, according to the results of a survey conducted into residents’ satisfaction levels with the 2017 Policy Address by the Association of Macao New Vision.

The survey shows 30.8 per cent and 1.58 per cent of 822 interviewees claimed they were ‘satisfied’ or ‘very satisfied’ with the Policy Address respectively, which together increased by 7.93 per cent compared to the same survey last year.

Meanwhile, some 8.03 per cent and 2.8 per cent of the respondents were ‘dissatisfied’ and ‘very dissatisfied’ with the Policy Address, with the majority, 53 per cent, saying they have no opinion on the 2017 Policy Address.

The survey was conducted through telephone interviews between November 27 and December 1.

Nevertheless, 25.8 per cent of the respondents showed dissatisfaction with the work done in the area of transport and public works.

Better work performance

On the other hand, the poll shows interviewees averagely scored the performance of the city’s Chief Executive at 60.5 points, an increase of 1.91 points, up from 58.61 points last year.

Secretary for Security, Wong Sio Chak had the highest score of the secretaries with 63.8 points, up by 2.36 year-on-year. Secretary for Social Affairs and Culture, Alexis Tam scored 60.87 points, down by 1.1 year-on-year.

Secretary Tam was also the only Secretary who experienced a decrease in his score from last year.

Secretary for Economy and Finance, Lionel Leong received 60.68 points, up by 1.29 points, while Secretary for Administration and Justice, Sonia Chan Hoi Fan had 58.98 points, an increase of 1.04 points.

Secretary for Transport and Public Works, Raimundo do Rosário received the lowest points of all at 54.84 points, but compared to one year ago, this was still an increase of 1.4 points.

Among the city’s policies, the highest satisfaction from residents was with urban safety, which reached 47.7 per cent. The second highest was

medical improvement at 29.59 per cent, followed by the construction of Portuguese platforms at 17.52 per cent.

Meanwhile, 14.2 per cent, 7.8 per cent and 4.3 per cent of the interviewees said they were satisfied with policies of employment protection, the FiveYear Development Plan and election Law, respectively.

However, respondents showed dissatisfaction with the construction of the Light Rail Transit (LRT) system and public housing in the city.

The highest negative satisfaction level was scored for the LRT project at 65.94 per cent, with public housing scoring negative satisfaction at 21.66 per cent.

Increased satisfaction

Regarding the satisfaction level with the work presented by each secretarial field, social security was ranked first place with 39.66 per cent, followed by social affairs and culture at 31.99 per cent. Meanwhile, 23.5 per cent of the interviewees said they were satisfied with the work presented for the economy and finance, with administration and justice at 12.7 per cent.

Nuclear safety

MICE

Guangdong- Macau nuclear safety notification on the way The MSAR has reached a consensus with the mainland to set up a Guangdong- Macau nuclear safety notification scheme Annie Lao annie.lao@macaubusinessdaily.com

The MSAR Government is working on the establishment of a nuclear safety notification mechanism between Guangdong and Macau, Secretary for Security Wong Sio Chak said yesterday.

The secretary said authorities in the mainland have already approved the mechanism agreement.

Currently, the MSAR Government is keeping in close contact with officials in Guangdong Province to carry out relevant procedures to get the agreement signed as soon as possible, Secretary Wong said.

Regarding a rumor that the Guangdong Daya Bay Nuclear Power Station (GNPS) had experienced a leak, the Secretary claimed he had personally called the central nuclear

power department to understand the current situation and that relevant parties had clarified that no leakage had happened at the nuclear power station.

Asked his opinions about an officer

Secretary for Security Wong Sio Chak

from the Macao Customs Service who was arrested for his involvement in a fake credit card syndicate, Mr. Wong reiterated that there are problems in every government department, however, the security authority continues to take rectification measures to ensure all government departments are clean of corruption.

Last week, a retired officer from Macao Customs committed suicide.

Mr. Wong said that the officer had been retired for more than ten years. The Secretary claimed the government would offer more welfare channels to retired security officers in order to provide better support for their daily life, health and emotional support.

IPIM promotes 2017 MIECF in Beijing, Portugal Macao Trade and Investment Promotion Institute (IPIM) has launched a series of promotional activities to promote the 2017 Macao International Environmental Co-operation Forum and Exhibition (MIECF) to the environmental protection agencies and enterprises in Portugal and Beijing.

According to a press release from the Institute last Friday, the government department and representatives from the Environmental Protection Bureau (DSPA) had visited the capital city and Portugal earlier this month to promote the MICE event.

It is hoped that these activities will enhance the effectiveness of the 2017 MIECF and promote Macau as a platform for co-operation and exchange in the environmental protection industry, in the Pan-Pearl River Delta Region for the European Union, Mainland China and Portuguese-speaking countries.

The theme of the 2017 MIECF is ‘Green Innovation for a Sustainable Future’. The event will take place from March 30 to April 1 next year. A.L.

Business Daily Monday, December 12 2016 3

Macau

Monetary

Leong: new withdrawal limits per transaction will not affect gaming Chinese bank card withdrawal limits per transaction at local ATMs have been tightened to MOP5,000, while daily limits and annual limits stay the same Kam Leong kamleong@macaubusinessdaily.com

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he Secretary for Economy and Finance, Lionel Leong Vai Tac said the city’s new withdrawal limits per transaction for Mainland Chinese bank cards would not have any impact on the gaming industry.

Speaking to reporters yesterday, the Secretary noted the new measure aims to maintain the city’s monetary stability and the legality of capital flows.

The Monetary Authority of Macau (AMCM) tightened the withdrawal limits of Mainland Chinese-issued bank cards at local ATMs to MOP/ HKD5,000 per transaction (US$625) from last Friday, while daily limits remain unchanged at RMB10,000 (MOP11,583/US$1,448).

The announcement followed a South China Morning Post report on the same

day saying the MSAR government would reduce China UnionPay card’s daily ATM withdrawal limits to MOP5,000 per day.

The monetary authority said in its statement that both the daily limit and the annual withdrawal limit of RMB100,000 for Mainland bank cards remains unchanged, and that changing the limits per transaction is to ‘further strengthen the measures to regulate Mainland bank card cash withdrawals’.

‘The above measure is not expected to have any impact on day-to-day ATM cash withdrawals through ATMs by Macau residents, nor will normal overseas cash withdrawals

by Mainland bank card holders be affected,’ the Authority wrote in the announcement.

‘No Impact’

Meanwhile, analysts also stated that this new withdrawal measure

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Y

Smoking ban

CM

Health Bureau: seeking legal advice after room violation Cecilia U cecilia.u@macaubusinessdaily.com

The Director of the Health Bureau, Lei Chin Ion, said that the Bureau is seeking legal advice after a violation of smoking lounge regulations at one non-smoking area at the Venetian Macao, local broadcaster TDM Radio reported.

Speaking on the sidelines after attending TDM Radio programme ‘Macao Forum’ last Friday, the director said that the Bureau had recently received a complaint about a suspected smoking violation in the Venetian Macao – where the structure of one smoking area does not meet the requirements.

According to the official, the smoking area had been closed for a period of time for non-smoking use

MY

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CMY

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before resuming its function.

The Health Bureau director encouraged the public and workers to provide information and file complaints if they discover suspected smoking violations in casinos.

Meanwhile, speaking on the radio show, Mr. Lei claimed that the suggestion to charge residents for public medical services - as announced by the Secretary for Social Affairs and Culture during the policy address debate earlier this month - was in response to remarks by several legislators about medical expenses.

But the director noted that the idea to charge residents for public medical services still has to be discussed with the general public, pointing out that the current policy of medical services remains unchanged.

targeting Mainland Chinese will not have any significant impact on the city’s gaming industry.

‘We believe the planned change would not have any discernible impact on gaming demand or spend,’ JP Morgan said in a note released following the AMCM announcement.

‘Even with regards to player psychology, we don’t think such a change would be seen by gamblers as a sign of “capital control” or “potential monitoring by the government”, hence virtually no impact either directly or indirectly,’ the firm added.

But the analysts at the brokerage, led by DS Kim, note the new change could result in ‘an overhang on the stocks & sentiments in the near term, as the market has painfully learned again how vulnerable this sector

could be to China policy change.’

Grant Govertsen from Union Gaming holds a similar opinion, pointing out the new measure should not target the gaming industry as both the MSAR and the Chinese government ‘want to support the ongoing mass market recovery rather than implement policies that might derail it’.

‘Instead, we think the new ATM policy stems from a significant recent uptick in overseas ATM usage as a means for not-so-wealthy mainlanders to convert RMB to HKD due to ongoing RMB weakness,’ the analyst wrote.

‘Importantly, the funds withdrawn from ATMs by those simply trying to hold HKD rather than RMB are not being used for gaming purposes (hence our belief that this new policy is not intended to hurt gaming),’ he added.

The opinion is also echoed by Bernstein’s analysts, who wrote in a note following the AMCM announcement that: ‘the effect of this new change would have no material impact on Macau GGR’. But the firm added that these limits may change in the future.

4 Business Daily Monday, December 12 2016

Macau Interview | Development

Transforming Cotai Director of the Institute for the Study of Commercial Gaming, Davis Fong sits down with Business Daily to talk about the future of the Cotai Strip, the various industries that will be affected by changes in infrastructure, and the plans for growth announced in the five-year plan, as well as why the full ban on gaming workers from casinos is a good initiative.

Kelsey Wilhelm Kelsey.wilhelm@macaubusinessdaily.com

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nfrastructure projects have dominated the Cotai scenery for a long time. Do you think that once the LRT is completed it is going to be a significant driver for the mass market to the Cotai strip?

No. I don’t think it’s because of the light railway system. The major differences comparing the Vegas strip and Cotai strip are the willingness of the tourists to move around. Looking at the Vegas strip, every day more than 100,000 people move from one property to another, around and around. Almost a two-hour ring, around 40 casinos.

Looking at Macau: I can see some of the people now that are willing to move – since August. Check the selfie pictures before and after August. And you can see before August, it was so rare to find people moving around.

But after that the people move: from the Venetian to Four Seasons, Parisian and Studio City, and back and forth.

And sometimes they just go to CoD – this ring.

The light railway system actually can move the people the first time.

Move them, let’s say, from Gongbei terminal up to the door of the casino.

That’s fine.

However this is not the right strategy or the only strategy.

We should connect all the properties together in a proper way so that we can help the people to move from one property to another. To prolong the duration of stay: stay longer and spend more. This is the main purpose.

Why is this the most important? First – Macau is very small. We can’t have 50 million or 60 million day-trippers, but we can have 30 million – two days or three days – no problem. So this is the most important, but how do we make it happen?

This is a good time for the six operators to sit down together and think about the connectivity. To make a so-called all-weather 24/7 connection – all the casinos together at the Cotai area.

My plan is two circles – connecting all the Cotai area, walking, 24 hours a day, with air conditioning – this is the most important. Because we have rainy days, summer and most important: humidity.

Do you think that future political changes in the MSAR could drastically change the outcome of casinos in the city?

I don’t think that the new bench of the Legislative Assembly would change the overall attitude towards the casinos. Because the government has announced the five-year plan already. Based on my memory, the government announced it in September and from the report,

Director of the Institute for the Study of Commercial Gaming, Davis Fong

the government may take 20 years to achieve the ‘World Centre of Tourism and Leisure’. This is the most important position of Macau and this is confirmed by the central government. So that’s why no matter who the parties are inside the legislative assembly, I don’t think we can change, because the five-year plan is confirmed already.

The growth rate already has a wide range of consultation processes, and everybody agrees with it. And then I don’t think the new bench may be against it.

“We should connect all the properties together in a proper way so that we can help the people to move from one property to another” The most important here is that: the five-year plan is confirmed, the 20-year target is confirmed, but how to achieve it? In more details, year-by-year, step-by-step. This is

even more important, not just an announcement, not just a mission, but also a strategy, tactics. And then achieve it year-by-year.

To do that, they need to actually get in touch with the elements of the local business community. But it doesn’t appear that that has happened, right?

You’re right. That’s why I’m looking forward to 2017 because the tourism office may announce the most important 10-year master plan for tourism. Which is actually the project of a company in Hong Kong, it’s not local. It’s a big project, a very big project. It’s a very famous consultancy company in Hong Kong and helps lots of tourism destinations to develop their master plans. So next year, the master plan will be announced and from that particular master plan I anticipate they will provide a more detailed strategy as to what the role of the private sector is, what’s the role of the public sector. So how to cooperate with the big companies, the small companies to achieve such a world tourism and leisure centre.

I’m looking forward to this.

Recently the Cultural and Creative Industries Committee added representatives of the concessionaires and sub-concessionaires to the committee. Why do you think that is?

Important – I think this is the most important thing here in Macau. If you’re talking about the cultural and creative industry, look at the experience in Japan, look at the experience in the UK. These two places we can learn a lot from. Most important is that there must be a very big industry or economic set-up to support. Even South Korea is the

Business Daily Monday, December 12 2016 5

Macau same. So for South Korea we call it the modern cultural and creative stuff – supported by what? By television, by the mobile, by cosmetic companies, backed up by them. Japan same, UK same – backed up by the industry.

Here in Macau we don’t have a long history, a famous history of cultural and creative products. We’re starting from an infant stage. How can I make them have high awareness so that finally it becomes a business? We need help from the most competitive industry we’ve got – the casino industry here. Because the casino and tourism industry brings in 30 million tourists. Only then can it bring in competitiveness and help the creative industry to push up the high awareness of the product and then demonstrate the product in front of the tourists. So this is I think doing the right thing – the same idea as mine talking about connectivity. If we connect them and then let all the creative and cultural industry along the connectivity, the bridge or no matter what it is, and most of the tourists can experience this and finally they can understand ‘oh this is a product from locals, from local cultures here, a new product’. So there’s a synergy effect – so I think it’s a good move.

Do you foresee the granting of licenses for individual performances expanding to the Cotai strip?

I hope. I hope that they can create cluster effects. Because from the experience in Hong Kong, if you develop so many attraction points for tourists in different places in the city, it will mess up the whole city management. And tourists are very hesitant or haven’t found a good transportation network here in Macau. It’s not like Tokyo or other places, even Hong Kong – you go to the MTR and then you can go anywhere you like, there’s more convenience.

The network is so well developed.

But here in Macau this is very tough,

even taxis have become a very heavy problem in Macau already. So I’m not encouraging the government to put so many attractions around the city and move the tourists just back and forth, back and forth. I don’t think that’s a good idea.

“It’s not like drugs or smoking where you kill yourself, gambling you kill your family” Can you see a lot of tourists moving around by themselves? No. So types of (small, un-clustered) attractions would only attract local people, rather than tourists. So if the tourist office would like to develop for the tourists, I would rather say – cluster effects. Putting there, just in the Cotai area – and then let them to move around (within Cotai) – no problem.

However, if you move them to downtown or even St. Paul’s church, it could lead to transportation and maybe other issues.

I understand some of the local residents may need the government’s help, especially for small businesses and the old part of Macau and the downtown area, but in the end, if you move too many tourists around the downtown area it may not be a good idea.

What about with the new bridge coming in? And then the travel companies themselves will try and spread those tourists across Macau.

Will that mean that it just continues to get worse?

The airport brings in VIP, it brings in conventions, they’re not bringing in

day-trippers or the regular gamblers.

The Hong Kong-Zhuhai-Macau Bridge, the connection with the Hong Kong International Airport. Who flies to Hong Kong International Airport and then shows up in Macau?

Nowadays if you’re talking about the major cities – Shanghai, Beijing and even some major cities in provinces on the east coast – we have direct flights to Macau International Airport already. If the VIP flies here I don’t think they need to fly to Hong Kong.

Also nowadays, Macau International Airport’s capacity is not that big, so the airfares are very high compared to Hong Kong. So maybe some of the second rank of the VIPs may take flights to Hong Kong and then take the bus or the turbojet to show up in Macau, maybe. Because maybe 1,000 to 2,000 difference in airfare. So this is second tier, not first tier. The first tier is no problem, because the VIP is the VIP, their airfare is not a problem.

So second tier VIPs may take that.

Secondly – who may go to the HKIA? The convention guests. If we take the convention centres, if we invite guests from around the world, there’s no way for them to go to Macau International Airport because we don’t have many direct flights. Okay, so they go to Hong Kong and then take the bridge here. So this is the second group, I guess.

The third group – long haul. Not convention, not VIP gamblers, but certainly they found Macau or Hong Kong a good trip, one trip multiple destinations. So this group of people may dominate the major source of guests using the bridge.

Do you think that’s going to be a lot? I assume no. The majority still use two ways to come here: Gongbei terminal and the new Taipa ferry terminal.

Because the new ferry terminal is huge, huge. So I anticipate in the near future the government may use the Taipa ferry terminal a lot because it’s in the Cotai area, so no traffic congestion with the near downtown area. So use it, short to Cotai area, no problem at all.

So these two sources – the ferry terminal and Gongbei will still be the major sources.

So would that mean that the nongaming sector will be the one that would benefit most from the bridge?

I think so, especially convention guests.

And do they gamble?

Yes and no. One thing to understand is the norm of human gambling behaviour. If you talk about gambling behaviour across the world – U.S., Europe or even Southeast Asia - it’s around 50 per cent. Fifty per cent of the people did gamble in the last 12 months. No matter what type of country you are talking about. Could be online, could be social gambling, could be football betting. No matter what it is, 50 per cent.

So if I invite a guest say to join our convention, I can say one out of two did gamble in the last 12 months. If we had some product we may attract them to try it, based on our statistics, 40 per cent of tourists did gamble before they left, in Macau. No matter what it is (day trippers, two day etc).

40 per cent. So what does that mean – even the convention guests, I can use the same number – 40 per cent.

But their affordability is very high, because they’re convention guests, their income is very high, they’re company representatives. So we may say they gamble more than just a normal gambler.

B u t a r e t h o s e a si g n i f i c a n t contributions to the mass market?

It depends on what strategy the government is using as well as the casino operators. Look at Vegas – Vegas as a convention centre of the U.S., with the 10 biggest convention centres in the U.S. attracting millions of guests. That’s why if the six operators and the government work together, this is also a policy address – the most important thing. Li

Keqiang came here – one of the most important things – he supports Macau to develop an international wellknown convention industry – his message. And then it worked together to develop Macau into a convention centre, it may be a significant income from tourism. Number one – from Monday to Thursday hotel rooms, because now the room rate is very low in order to keep the occupancy rate. If we can attract convention guests, the room rate will be higher so that it will push up the EPR (earnings per room) ratio of the concessionaires and sub-concessionaires here.

Number two: of course the synergy between the convention and other parts. The convention is part of life, they also need fine dining, shopping, gambling. So the second one is much more important – to push up the gross gaming revenue, the EBITDA (earnings before interest, taxation, depreciation and amortisation). And this is most important, I would say, the government understands it, some operators understand it – but not all.

They’re trying to do new things, such as Galaxy wanting to develop Phase Three purely as a convention house, purely convention hotels.

They’re proposing a full ban on casino workers going to casinos when they’re not working. Do you think that will be effective?

If it did happen, I think it would be effective.

Number one – because from our study, not just the study, from the facts, for how many people seek help, we have a database provided by the social welfare bureau. From the statistics we understand that around 30 per cent of real cases are from gaming employees. They’re the risky group.

Number two – only Macau people can be dealers. This policy will not change in the next five years, because the government announced it, again.

So that means that even 3 per cent more tables every year is still 3 per cent more employees. Local people.

Number three – not just the gaming employees but we also are talking about the families. Because it’s not like drugs or smoking where you kill yourself, gambling you kill your family.

“The five‑year plan is confirmed, the 20-year target is confirmed, but how to achieve it?”

Number four – the nature of the product, meaning the gambling table.

This is the major, major risk factor.

Because in Vegas a slot machine – if the machine has some problems, turn it on, turn it off and solve the problem mechanically. How about the table games? You’re eight hours inside there, in a game, gambling with the guests together, simultaneously. So that’s the most risky thing. Our brains are actually dominated by most of the gambling activities every day, eight hours a day. And it may become a part of your brain. Very risky.

Number five – looking at the news, facts again, criminal activities in the last three years reported by the police department: borrowing money, cheating. Most of them involve staff crimes. Looking at the details, the reason behind most of them are gambling related.

So the evidence is here, the theory is here, the survey is here and proving that they are a risky occupation.

And one more, before the handover, the old STDM actually prohibited their staff from gambling inside the casino.

This is not new! But after the casino liberalisation, the government forgot about changing the rules! Because at that time there was only one casino, but now it’s six!

So for me, I think I would support it, I would support it to protect them.

6 Business Daily Monday, December 12 2016

Macau Opinion

Sheyla Zandonai*

Mala fide Since the beginning of his presidential campaign, Donald Trump has advocated for a tougher attitude towards China. After the United States President-elect sent state representatives and diplomats into a panic on December 2, when he spoke over the phone with Taiwanese President Tsai Ing-wen, the sense of political unease grew.

Whereas Mr. Trump’s flirtation with Taiwan gave reason for many people to rejoice across the strait, it further strained bilateral relations with China. The White House was quick to say the episode doesn’t change America’s position towards the world’s second largest economy. For now, indeed, it could not: Mr Trump has yet to take office.

It is hard to know if the coming president will maintain this position once he steps into the Oval Office. Though he has proposed to increase tariffs on the import of Chinese goods, and suggested the world should refrain from doing business with China, Mr. Trump has been outsourcing the manufacture of several of his companies’ products, from apparel and perfume to hotel items, to lowwage countries in East Asia, including China. So his call to fight China on trade being a core goal of his economic platform may be deceiving.

A history of pursuing legal action in trademark disputes with that country isn’t a cheerful sign either.

If Mr. Trump’s private business dealings overlap with his political role, there may be reason to worry.

Already in 2011, the tycoon-turned-politician had requested help from the Obama administration to fight a trademark case bearing his name, which involved a company in Macau: Trump Companhia Limitada registered the trademark “Trump” in 2006 under the category of restaurant services. After Macau Economic Services accepted the requests filed by Trump (the Donald) in 2012, Trump (the company) took the case to the Court of First Instance, which concluded that the local “Trump” trademark was valid under the category in which it had been registered.

The decision was then reversed by the Court of Second Instance to favor Mr Trump. It was never proved, however, that the Macau company had acted in bad faith. *scholar and contributor to this newspaper.

Ho Chio Meng case Trial continues today

Crimes and Misdemeanours After a three-hour reading of the indictments, more information was provided regarding the nearly 2,000 charges against the city’s former top prosecutor Ho Chio Meng Nelson Moura nelson.moura@macaubusinessdaily.com

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he first trial of the bribery case of the city’s former prosecutor-general, Ho Chio Meng kicked off last Friday morning, revealing that the former top official had allegedly diverted a total of MOP76 million (US$9.5 million) from the pocket of the Public Prosecutor’s Office through diverse illicit means.

The case was heard by the President of the Court of Final Appeal, Justice Sam Hou Fai and fellow judge Song Man Lei, as well as the President of the Court of Second Instance Lai Kin Hong. Prior to the hearing of the 1,970 charges of the ex-prosecutor-general, the three judges had spent a total of three hours reading the indictments against the former official.

According to the indictments, Mr. Ho had allegedly led a criminal group since 2000 with his brother, Ho Chio Shun and brother-in-law, Lei Kuan Pun, in addition to other associates, for the purpose of earning illicit gains from the granting of public contracts

of services and procurements from the Public Prosecutor’s Office.

The group created a total of 10 shell companies and received around MOP50 million in benefits from the Office’s public contracts between 2006 and 2014. These contracts included the purchase of printers for the Office, H1N1 virus prevention and clearing services, and white ant extermination services.

The contracts were awarded with values 10 per cent to 50 per cent higher than market value, with some not being fulfilled at all.

In addition, the prosecutors found tens of millions were transferred to Mr. Ho’s brother’s bank accounts, to purchase apartments and parking spaces, in addition to a MOP9 million investment in a junket operator named in the proceedings as Sociedade de Promoção de Jogos Seng Ou Limitada.

One of the accusations also states that Mr. Ho and his wife failed to declare around MOP20 million worth of properties to the authorities with no justification.

During the trial, the former

Lawyer of Ho Chio Meng Leong Weng Pun

Public money for private travel

northern Europe. Accompanied by his wife and nephew, the extop prosecutor however travelled to all Scandinavian countries, the Netherlands and Germany, racking up travel expenses totaling MOP796,965 paid for by public money.

A friend in hand

received MOP4.2 million between 2012 and 2015 in salary and subsidies, with a personal government vehicle transporting her to her Zhuhai residence on occasions.

One of the accusations relates to a trip by the ex-prosecutor to Copenhagen, Denmark.

According to the indictment, the official claimed he was attending a prosecutor’s conference in

The former prosecutor is also accused of hiring a Mainland Chinese woman with no qualifications for a legal position. The woman allegedly

prosecutor challenged that the judges should describe the crimes related to contract awards in detail, but the top court president responded that it would “take 1,000 years” to do so.

Pleading not guilty, the ex-official also complained during the trial that he wasn’t able to exert his right as a defendant to consult all the accusing documents while he was in custody, adding there were “many complex facts” stated in the nearly 10,000-page indictment.

Massages and rosin wood

In addition, Friday’s trial also revealed that the former prosecutor had illegally rented the 16th floor of the ‘Hot Line’ building in NAPE as a “resting room” for the Office, which was equipped with karaoke, table tennis, as well as a sauna and massage parlour.

According to the accusation, the area was unknown to the other MP employees, who weren’t allowed to enter the area, and phone lines to the rooms were not listed on the internal contact list. The rental of the venue cost the Office at least MOP7.5 million.

But the official rebutted that the accusations “weren’t true” and the venue was not exclusively used by him.

He said the current prosecutorgeneral Ip Song Sang entered the venue in January last year without asking for the key, claiming some CCAC documents of other cases he processed in the area “disappeared” afterwards.

He also explained some of his belongings in the venue – such as baby cradle and valuable vases were left there during a period when he was moving from his official residence when he left the position as prosecutor-general.

The former prosecutor also argued that the “resting room” had been used to receive representatives from Mainland China and other officials, and that he could provide 10 witnesses to testify on this matter.

Another issue dominating the first trial last Friday was the alleged appropriation of contraband rosin wood, confiscated by Macau Customs in 2013 at the Gongbei border.

According to the indictment, the former Prosecutor ordered the city’s Customs to move the wood to the “resting room” venue, but it was later found at his residence in Coloane.

Denying the accusations, the former prosecutor said he hadn’t ordered the rosin wood to be moved.

The former top official, in the role between 1999 and 2014, is accused of 13 types of crimes, 646 instances of fraud, 434 instances of illegally sharing economic benefits and 434 instances of abuses of power.

The trial of the high-profile case continues today.

Business Daily Monday, December 12 2016    7

Macau

All roads lead to MacaU

Film industry heavyweights are in town for the International Film Festival & Awards Macao (IFFAM).

A privileged guest list of celebrities from around the globe attended the debut edition, which kicked off on 8 December.

The six-day celebration of cinema will close tomorrow with a glittering awards ceremony.

There are still a number of world and regional premieres not to be missed today.

IFFAM image ambassador Chinese actress Zhang Ziyi

8 Business Daily Monday, December 12 2016

Greater China

IFFAM’s Industry Hub held between 9 and 11 December

12 filmmakers pitch their projects at IFFAM’s Crouching Tigers Project Lab Top directing names participated in a pitch forum launched as part of the festival’s Industry Hub. At the Crouching Tigers Project Lab, filmmakers tried to find finance and co-production prospects.

For investors, the Industry Hub offered good networking opportunities, Village Roadshow Pictures Asia representative says Cláudia Aranda

T

he Industry Hub held during the six-day 1st International Film Festival & Awards Macau (IFFAM) gathered film industry professionals between 9 and 11 December. Movie directors such as Nicolas Winding Refn from Denmark, Lu Chuan from Mainland China, Yu Lik-Wai from Hong Kong and João Pedro Rodrigues, João Rui Guerra da Mata and João Botelho from Portugal met with film industry executives including Los Angeles’ Fox International Productions chief Tomas Jegeus and New York’s Ivanhoe Pictures’ Katherine Lee at the first edition of IFFAM’s Crouching Tigers Project Lab, as part of the festival’s Industry Hub. Twelve projects had been selected to participate in the pitching forum, intended to act as a place where filmmakers can find finance and co-production opportunities. Fox International Productions will present three cash awards of USD20,000, while Ivanhoe Pictures and China’s Huace Media will each donate USD10,000 to outstanding projects.

“I think the festival provides a lot of great opportunities for a company like Village Roadshow in Beijing to come here. They [the festival] want people to participate as much as possible and to meet and support these projects they have selected.

It’s all about making connections very specifically for these projects they are supporting. Everything that happens besides that I think is an additional opportunity on top of these projects they want us to help.

It’s an equal give and take opportunity”, Village Roadshow Pictures

Asia (VRPA), Development and Marketing Manager, Fan Huang, said in an interview with Business Daily on the first day of the event, aimed at creating business opportunities for members of the industry.

Village Roadshow Entertainment Group is an Australian company, established in Melbourne, which operates a Los Angeles-based film production and distribution business, as well as a new branch created in 2011 to pursue opportunities in Asia. The company that Fan Huang represents, “has a particular focus on the Chinese Film Industry” and undertakes development, production financing, marketing and production of films for Greater China, he explained. Key releases by VRPA include the movie “Hide and Seek”, which is one of the 12 films in IFFAM’s competition.

Macau festival needs to gain its own identity

“The Macau film festival would become absolutely important if there is something that the festival can offer that is different,” said Village Roadshow Pictures Asia (VRPA), Development and Marketing Manager, Fan Huang.

“Everybody knows that the Hong Kong International Film Festival is well-established, there are plenty of festivals in China. There is a booming industry of festivals, everyone is trying to do one and if you don’t have anything to offer, if you don´t have an identity that makes you different from Hong Kong, Shanghai and Beijing, then what’s the point?” the marketing expert alerted.

Adam Smith, Director of "Trespass Against Us"

“The Australian owner realised that China was a growth market, a good market to get into. We are a foreign company that is trying to understand the culture well enough so we can invest in good projects and support local filmmakers. Our primarily market is China, we leave the blockbusters for our Los Angeles’ colleagues”.

Village Roadshow Pictures Asia was one of the 12 Mainland China film production and distribution companies invited and sponsored by the festival organisers to be present at the Industry Hub that took place over the last weekend. Mainland China film investors were also present, such as Fosun Group and Cultural Industry Investment Fund.

Over the three-day event, the Macau Science Centre was the meeting point for investors, film festival

For the festival to carve its own niche and gain a foothold “is all about the projects it supports and what film identity it wants to bring in. Fan Huang believes that, for someone who lives in Beijing, like him, Macau can become a preferential destination to watch films that are not available in Mainland China - that could be a sign of distinctiveness.

According to Fan Huang, former IFFAM festival director, Marco Müller, “did quite a lot as a programmer. He is one of the most significant festival programmers and organisers in the film industry world. Hopefully, the excellent groundwork he laid is kept into the future,” he stressed.

programmers, distributors, producers and sales agents from all over the world.

“I´m here for the projects and for the side meetings,” highlighted Fan Huang, who came from Beijing, which is the mainland centre of the Chinese Industry.

VRPA is targeting three projects: “River Town”, a US and China project directed by one of China’s most celebrated younger film directors, Lu Chuan. In 2015, he released “Chronicles of the Ghostly Tribe”, a 3D action adventure film which made US$106 million at the Chinese box office. “He is a significant director in China and ‘River Town’ is very different from his previous projects. It is a true story of a journalist who comes to China as an English teacher in the 1990s, a sort of very arty festival film, which is different from those fantasy movies that makes hundreds of millions of RMB,” he explained.

Lu Chuan would normally “find funds for his projects without leaving Beijing,” said Fan Huang. But, “for this kind of project that engages a protagonist who is an American, which will involve a lot of English dialogue and may not get a huge theatrical release in China, contacts done within the festival framework looking for outside and international funding seems to be a smart way to go”, he added.

Another project VRPA is interested in is “A Means to an End”, directed by the Hong Kong filmmaker Yu Lik-Wai, and promoted by a French producers François da Silva and Isabelle Glachant, based in Mainland China. The movie is set in Macau. Fan Huang is also eyeing “The Avenging Silence”, by the Danish director Nicoas Winding Refn. “Within the arthouse cinema he is a very major director, and in this next movie he wants to set it in Japan, which is very interesting for us. That would be a setting we normally don’t work in, but we now have the chance to know more about the project and you don’t want to let this opportunity go”.

Business Daily Monday, December 12 2016 9

Greater China

The inaugural edition kicks off

IFFAM gathers film industry heavyweights in Macau The International Film Festival & Awards Macau (IFFAM) brings members of the local and international film community together to create opportunities for cultural, creative and business collaboration The inaugural International Film Festival & Awards Macau (IFFAM) officially opened on 8 December with the Asian premiere of “Polina”, a film by Angelin Preljocaj and Valérie Müller, starring Anastasia Shevtsova, Niels Schneider, Guskov Aleksei and Juliette Binoche. The directors and some of the cast members, including the protagonist Anastasia Shevtsova, attended the red carpet event.

Secretary for Social Affairs and Culture of the Macau SAR Government, Mr. Alexis Tam was present at the opening ceremony. Guests were greeted by IFFAM president of the organizing committee and Acting Festival Director Ms. Maria Helena

de Senna Fernandes, who is also the Director of the Macau Government Tourism Office (MGTO), and by the festival’s organizing committee executive vice-president Alvin Chau, casino tycoon and owner of Sun Entertainment Culture Limited.

Held at the Macau Cultural Centre, one of the festival’s key venues, the opening ceremony and screening was attended by a number of international film industry heavyweights.

Other guests who attended the opening ceremony included the IFFAM Competition Jury, headed by jury president Shekhar Kapur, with jury members Jung Woo Sung, Makiko Watanabe, Stanley Kwan and

Secretary for Social Affairs and Culture Alexis Tam with Maria Helena de Senna Fernandes and Alvin Chau

Giovanna Fulvi.

Grasping their moment to shine on the red carpet was IFFAM image ambassador, Chinese actress Zhang Ziyi; IFFAM talent ambassador, Korean actor Jang Keun Suk; and actors and actresses Jessica Sooyoun Jung, Rosamund Kwan Chi Lam, Zhang Jin, Kara Wai Ying Hung, Celina Jade, Ludi Lin, Lisa Lu, Sakuraba Nanami and Vanessa Yeung.

Directors and festival ambassadors

IFFAM Jury

Film premieres not to be missed today

Best of fest Panorama

Competition Section

UK’s “Jackie”, by Pablo Larraín - 12 December, 22h, UA Galaxy Cinemas.

Macau’s “Sisterhood”, by Tracy Choi - World Premiere, 12 December, 19h30, Macau Tower.

“Sisterhood”, starring Hong Kong actress Gigi Leung, is the first feature film by local up-andcoming movie director 28-yearold Tracy Choi.

Argentina’s “The Winter”, by Emiliano Torres - Asian Premiere, 12 December, 17h, Macau Tower.

After years of working on an ‘estancia’ (an Argentine rural property) in Patagonia, the Old Foreman is forced to retire and a younger man takes his place. Each one must survive the oncoming winter.

Acclaimed Chilean director Pablo Larraín focuses on Jacqueline Kennedy the 34-year-old First Lady, who was sitting next to President Kennedy when he was assassinated. Natalie Portman reportedly gives the performance of her career, and is on course for a second Oscar.

USA’s “Indignation”, by James Schamus - Asian Premiere, 12 December, 21h30, Macau Cultural Centre.

James Schamus’ feature directorial debut “Indignation” is based on Philip Roth’s late novel and takes place in 1951.

Japan’s “Survival Family”,

by Shinobu Yaguchi - World Premiere, 12 December, 22h, Macau Tower.

UK’s “Lady Macbeth”, by William Oldroyd - Asian Premiere, filmmakers in attendance, 12 December, 19h, Macau Cultural Centre.

One day, the world loses all electrical power all at once.

Heading all the way to the west on a journey looking for a way to survive, a family meets difficulties from place to place.

Based on Nikolai Leskov’s 1865 novella “Lady Macbeth of Mtsensk”, this tale about a young lady rebelling against a stifling marriage tells of domination and love.

Choi Dong Hoon, and Clemens Klopfenstein - also the subject of a special presentation of two of his films – Korean director Kim Jee Woon and Chinese director, Lu Chuan, were also in attendance.

Top international tycoons were also present at the ceremony including President of Fox International Productions Tomas Jegeus; from Hong Kong, China Star Entertainment Group’s Charles Heung and his wife Tiffany Chen, and Albert Yeung of Emperor Entertainment; Toronto Film Festival Director Cameron Bailey; Rotterdam Festival Director Bero Beyer; Sabrina Baracetti, of Far East Film Festival, Italy; Edinburgh International Film Festival Director Mark Adams, and Busan Festival Director and Chairman Kang Soo Hyun and Kim Dong Ho. Around 300 journalists had been accredited up to IFFAM’s opening day, and more were expected to come.

Local broadcaster Teledifusão de Macau (TDM) and FOX TV broadcast the red carpet and opening ceremony.

IFFAM’s first edition’s budget is set to be about MOP55 million, with 20 million coming from the Macau Government Tourism Office and the remaining being provided by the Macau Film & Television Productions and Culture Association (MFTPA), presided over by Alvin Chau. Casinos and hotels are also sponsoring the festival, providing facilities for the events and accommodation to the guests. C.A.

Crossfire Section France’s “A Cop” (“Un Flic”), by Jean-Pierre Melville, with Alain Delon - 12 December, 19h30, UA Galaxy Cinemas.

France’s “The Umbrellas of Cherbourg” (“Les Parapluies de Cherbourg”), by Jacques Demy 12 December, 15h, Macau Cultural Centre.

Hidden Dragons Section Mexico’s “1974”, by Victor Dryere - Asian Premiere, director and cast in attendance, 12 December, 21h30, UA Galaxy Cinemas.

Actress in Focus section China’s “Forêt Debussy” (“De Bu Xi Sen Lin”), by Kuo ChengChui - 12 December, 20h30, UA Galaxy Cinemas.

10 Business Daily Monday, December 12 2016

Greater China

International Film Festival & Awards Macao opening ceremony and film premieres

Glamour on IFFAM’s red carpet

Mr. Alexis Tam, Secretary for Social Affairs and Culture of the Macau SAR Government

IFFAM Organizing Committee Executive Vice President Mr. Alvin Chau, presents a souvenir to Ms. Zhang Ziyi, IFFAM Image Ambassador

Honorary Advisor Mr. Eric Tsang, joins his daughter Ms. Bowie Tsang and son Mr. Derek Tsang on the red carpet as the emcees of the Opening Ceremony

Special Advisors Mr. Stephen Hung and Ms. Deborah Valdez Hung

Ms. Maria Helena de Senna Fernandes, President of IFFAM Organizing Committee spoke at the Opening Ceremony

(From left to right) Producer Thiago Maçêdo Correia, coproducer and editor Michael Wahrmann, director and screenwriter Ricardo Alves Jr., as well as actor and co-Screenwriter Germano Melo

Competition film "Free Fire" press conference, featuring (from left to right) Actor Sharlto Copley, Director Ben Wheatley and Producer Andy Starke

The cast and crew of IFFAM’s opening film "Polina" share their filming experience with the emcees in the opening ceremony

Adam Smith, Director of "Trespass Against Us"

(From the left) Competition film "Sisterhood" actress Fish Liew, director Tracy Choi and actress Jennifer Yu

Director and actors of competition film "Gurgaon"

Director Clemens Klopfenstein and his son

IFFAM talent ambassador, Korean actor Jang Keun Suk

Officiating guests of the inaugural IFFAM take a group photo in the opening ceremony

Business Daily Monday, December 12 2016 11

Gaming Junket scandal

Chinese Embassy says ready to assist Jack Lam Mainland China has voiced its intention to offer consular assistance to the local junket operator Jack Lam. Meanwhile, the Philippine authorities have been inspecting Lam’s gaming businesses since 2014 Cecilia U cecilia.u@macaubusinessdaily.com

T

he Chinese Embassy in the Philippines is ready to offer consular assistance to local junket operator Jack Lam said the spokesperson of the Chinese Foreign Ministry, Lu Kang last week during the Ministry’s regular press briefing. Philippine President Rodrigo Duterte has ordered Mr Lam be arrested.

The arrest order for Mr. Lam, the founder of local junket group Jimei Group, was based on charges of economic sabotage and bribery. However, the Philippine leader said last week that he would allow Jack Lam to enter the Philippines and to continue his business in the country if he apologised for bribing an official and paid the correct taxes, Reuters reported.

“On the condition that he lets go of the original contract ... Just pay taxes, don’t bribe anybody,” the agency quoted the President as saying to reporters.

Mr. Lam has been operating online gambling businesses at a former U.S. air force base without a license, the justice department in the Philippines

indicated. No immediate comment was released by the junket operator after the Philippine President made the statement, and Mr Lam’s current location remains unknown, according to the news agency.

in business process outsourcing that relates to the gaming industry, such as computer data processing and inbound and outbound contact or call centre services.

Some 11 Philippine citizens and 1,456 foreigners are employed by NGOI. The president and chief executive officer of Clark Development Corp., Arthur Tugade, who is currently the transportation secretary of the Philippines, had already obtained a resolution in 2014 about authorising the

Bureau of Immigration to “blacklist unaccounted foreign nationals of NGOI” from the Subic-Clark Alliance Development Council.

Pagcor and other authorities in the Philippines have recently shut down the casino operations of Mr. Lam in Laoag City in the country.

Moreover, the businessman’s certificate of registration and tax exemption for the 300-hectare casino has been suspended by Clark Development Corp.

Looked at since 2014

On the other hand, documents obtained by Philippine news outlet The Inquirer, shows the Philippine stateowned Clark Development Corp. had been inspecting the status of an online gaming firm in Fontana Leisure Parks and Casino (FLPC) in 2014.

The 1,300 illegal Chinese workers rounded up last month were employees at the FLPC. Clark Development Corp. was initially trying to decide whether to grant the interactive gaming license to Next Games Outsourcing Inc. (NGOI) at Fontana that was distributed by the Cagayan Economic Zone Authority, or to request NGOI to obtain a new permit from the Philippine Amusement and Gaming Corp.

(Pagcor), reported the news outlet.

The founder of Jimei is not registered as a stock holder of NGOI, a subsidiary of Fontana Development Corp. which is owned by Mr Lam. The Fontana subsidiary is engaged

Saipan

Overseas casinos clean up despite China’s cash curbs Best Sunshine casino on the Pacific island can turn over US$3.9 billion a month via only 16 VIP tables

By Farah Master

For evidence of the odds stacked against China’s battle to stop the flight of cash battering its currency and draining its reserves, look no further than the tiny Pacific island of Saipan, which has hit the jackpot with a flood of Chinese money at its new casino.

Thousands of miles from the Chinese mainland, the U.S.-administered island of 50,000 people is festooned with signs written in Chinese and stuffed with Chinese supermarkets, restaurants and karaoke parlours serving the 200,000 Chinese visitors that arrived this year.

Private jets bring big spenders so free with their cash - and US$100 million (MOP800 million) credit lines - that the modest Best Sunshine casino, owned by Hong-Kong listed Imperial Pacific, wildly outperforms the top casinos in Macau, the world’s

biggest gambling hub.

Best Sunshine’s 16 VIP tables can turn over US$3.9 billion a month, while the world’s biggest, the Venetian Macao, manages about US$2.5 billion per month on 102 VIP tables, and the MGM around US$2.9 billion on 161.

“Never have I dealt with so much money in 36 years in casinos,” said one executive working in the casino, who could not be named due to company policy.

Back in Beijing, policymakers are trying to keep that money on the mainland.

Capital outflows, both legal and illegal, have dragged the yuan to eight-year lows this year, prompting China to eat through more than a fifth of its foreign currency reserves since mid-2014 and impose a series of measures to stem the outflows.

Such measures, plus an anticorruption crackdown that began in

early 2014, has dealt a blow to Macau, the self-governing Chinese territory linked by a thread to the mainland province of Guangdong.

Macau’s gaming revenues have more than halved since then, as high rollers from the mainland gave it a wide berth.

But whacking the mole in Macau has made it pop up elsewhere, where China’s writ doesn’t run; in Saipan, the Philippines, Cambodia and Australia.

Manila’s Solaire casino registered a 61 per cent increase in VIP turnover in the third quarter, while the number of junket operators bringing in foreign high rollers has more than doubled.

Half of its VIP gamblers come from China.

NagaCorp in Phnom Penh has seen a 13 per cent increase in Chinese visitors in the first half of 2016, with VIP turnover up 11 perc ent for the first nine months.

House wins

China has fought to suppress the demand, detaining marketing employees from Australia’s Crown Resorts in October for “gambling offences”, and arresting South Korean casino managers last year for “enticing” Chinese to gamble overseas.

“We have always asked that Chinese citizens leaving the borders respect the laws and rules of relevant countries, and not get involved in gambling or gamble themselves,” Chinese foreign ministry spokesman Lu Kang told a daily news briefing in Beijing.

But the casinos are getting ready for more.

NagaCorp is building additional facilities and a luxury retail complex, while Solaire, where VIPs play in opulent ocean-front rooms, is also unrolling new amenities to lure VIPs. Imperial is spending US$3 billion to build a 14-storey resort in Saipan after winning a 40-year exclusive monopoly licence.

Its towering bamboo scaffolding already dwarfs the low-rise local buildings.

The man behind Imperial’s push into Saipan, Ji Xiaobo, a one-time middleman whose company brought players to Macau, is also in discussions with nearby Pacific island Palau to set up a small resort, according to a source familiar with the deal.

Ji, who casino executives said brings VIP players to Saipan on his private jet and accommodates them on his yacht or in opulent villas, declined to comment.

Saipan’s government, desperate for revenues after the collapse of its garment industry and a decline in tourism, approved the casino in 2014, overturning longstanding opposition.

It makes it very attractive for the operator, with just 5 per cent gaming tax compared with Macau’s 39 per cent, said Mark Brown, Imperial’s chief executive, who formerly worked for U.S. casino tycoons including president-elect Donald Trump, Steve Wynn and Sheldon Adelson.

Not everyone on the island thinks Saipan gets much benefit.

Casino revenues have surged, but the government budget remains less than a sixth of what the casino produces annually, said local resident Glen Hunter, who has fought against the development.

“You have created an entity out here with so much resources and power that I think we will no longer even have a proper functioning democracy,” Hunter said.

The influx of money is already changing the nature of the place.

Chinese investment in Saipan has skyrocketed since the casino opened last year, with almost every available property bought in the last six months, say local residents.

“I’ve also had Chinese investors just knock on my door and offer to buy my house, in cash,” said Harry Blalock, who runs dive company Axe Murderer Tours. Reuters

12 Business Daily Monday, December 12 2016

Greater China In Brief Capital outflow

Regulator says won’t limit “normal” remittances China will not limit overseas remittances of foreign firms’ “normal profits”, the foreign exchange regulator said on Friday. China’s foreign exchange reserves fell for a fifth straight month in November to the lowest since March 2011, amid worry authorities are tightening controls of capital flows as the yuan slides to more than 8-year lows versus the dollar.

China will not limit legitimate and compliant international payments and transfers, including dividends, which meet approval requirements, the State Administration of Foreign Exchange said in a statement on its official microblog.

Trade

U.S. finds dumping of residential washing machines The U.S. Commerce Department said on Friday it had made a final determination that certain large residential washers were being imported from China at below fair value, and it set duties on the products of up to 52.5 per cent. The investigation followed a petition by Whirlpool Corp over imports of washers manufactured in China by two South Korean companies, Samsung Electronics Co Ltd and LG Electronics Inc. If the U.S. International Trade Commission makes a final determination that the domestic injury was harmed by the imports, the duties will become final. The commission is scheduled to make its decision on or about Jan. 23.

Going public

Meitu prices IPO at bottom Chinese photo app and mobile phone maker Meitu Inc is set to raise US$630 million after pricing its Hong Kong initial public offering at the bottom of expectations, a person with direct knowledge of the deal said on Friday. Meitu, known for its apps that let users retouch and beautify selfie and other photos, priced the IPO at HK$8.50 per share, after marketing the 574 million new shares in an indicative range of HK$8.50-HK$9.60 each, said the source, who declined to be named because details of the deal aren’t public. That would put the IPO at HK$4.88 billion (US$629 million).

Sinosteel

Banks agree debt restructuring deal Bank of China and five other Chinese banks have signed a debt restructuring deal with troubled steelmaker Sinosteel, in what is among the first significant restructuring deals involving a state-owned enterprise. As the country’s pace of growth stutters, China has made reform of its lumbering and inefficient state-owned enterprises (SOEs) a priority in a bid to kindle competitive behaviour. In a statement on Friday, Bank of China (BoC) outlined details of the agreement with Sinosteel, which could be the formula used for other major overhauls of struggling state-owned enterprises.

Business Daily is a product of De Ficção – Multimedia Projects

Inflation

Economy reflating as producer prices rise at fastest pace in 5 years Consumer inflation also picked up more than expected to 2.3 percent due to higher food prices

C

hina’s producer prices rose at the fastest pace in more than five years in November as prices of coal, steel and other building materials soared, boosting industrial profits and giving firms more cash flow to pay off mountains of debt.

The stronger-than-expected 3.3 percent surge in prices, along with upbeat factory readings from China, the United States and Europe, add to views that the global economy may be slowly reflating again thanks to a pick-up in industrial activity.

While some heavy industries such as coal mining, steel mills and metal processors saw the biggest rebound, official data on Friday showed the price recovery was also becoming more broad-based, with more sectors emerging from deflation.

Though the price gains were modest, they reinforced views that the central bank will be in no rush to loosen monetary policy again any time soon, and even fuelled speculation as to when the People’s Bank of China may start tightening conditions.

China’s central bank has not cut interest rates since October 2015,

when worries about deflation were more pressing, opting instead for regular injections of funds into the financial system and targeted infusions of cash into the weakest parts of the economy, such as rural areas.

Analysts polled by Reuters had expected producer prices to rise by a more modest 2.2 percent, up from 1.2 percent in October, while consumer prices had been expected to pick up marginally to 2.2 percent from 2.1 percent.

“Today’s data shows future (PBOC) easing is even less likely.

I don’t see any need for a RRR cut,” Capital Economics’ China economist Julian Evans-Pritchard said, referring to a cut in banks’ reserve requirements.

“With what is going on with China’s declining foreign reserves, if PBOC injects liquidity to replenish it, it is already kind of tightening without having to resort to such high-profile measures,” he said, adding that the PBOC has plenty of tools at disposal to adjust liquidity in the market.

Chinese steel and iron ore futures rose for a sixth straight session on Friday, spurred by upbeat trade data

on Thursday and worries over tighter supply as Beijing intensifies efforts to cut excess steel capacity.

Futures prices for steel reinforcement bars used in construction have surged to 31-month highs, while iron ore is at its strongest since late 2014.

How long will price recovery continue?

ANZ estimates that higher prices of metals, mainly steel, and coal account for nearly half of the PPI changes, and says prices could continue to rise well into 2017.

ANZ market economist David Qu in Shanghai said PPI will rise by 2.5 percent next year, though momentum will wane in the second half.

Qu said the government has shown that it is more determined to cut excessive capacity than people thought, and the property market, while cooling, would still support demand for a while longer.

“While (home) sales may have already cooled, construction starts and property investment will still be strong in the first half of 2017, which would continue to boost steel prices,” Qu said.

ANZ maintains the broader-based producer price index has a higher correlation with economic activity and interest rates than consumer prices, which are primarily driven by food prices and underestimate housing costs. Reuters

Financial risks

Beijing to push reforms in 2017 Premier Li Keqiang said earlier last week that China will reach its key economic targets this year China will forge ahead with supply-side reforms next year to deal with overcapacity and structural problems, while also moving to boost demand, the Xinhua news agency reported on Friday.

Top leaders are due to map out an economic and reform agenda for 2017 during an annual Central Economic Work Conference later this month.

“The economy still faces many

outstanding contradictions and problems, excess capacity and structural upgrading contradictions remain prominent,” Xinhua said, citing a statement after a meeting of the Politburo, a top decision-making body of the ruling Communist Party.

“Financial risks in some areas are emerging and some regions face relatively big difficulties. We should attach great importance to these issues

President Xi Jinping said he was certain that China would meet its key economic targets for 2016

and try to solve them.”

China will push state sector reforms and fiscal reforms, and establish longterm mechanisms to promote the healthy development of the property sector, Xinhua said.

Premier Li Keqiang said earlier last week that China will reach its key economic targets this year, which will lay a good foundation for 2017.

Growing debt and property risks have touched off an internal debate about whether China should tolerate slower growth in 2017 to allow more room for painful reforms aimed at reducing industrial overcapacity and indebtedness.

The government has said growth of at least 6.5 per cent is needed each year through to 2020 to meet a previously stated goal of doubling gross domestic product and per capita income by then, from 2010 levels.

The government aims for 6.5-7.0 per cent growth this year.

China will also further open its economy in 2017 and work to attract foreign investment, Xinhua said.

President Xi Jinping told the meeting that he was certain that China would meet its key economic targets for 2016, Xinhua said.

China’s economy has performed better than many analysts expected this year, supported by higher government infrastructure spending and a housing market boom that is starting to show signs of fatigue.

Xi also said China will also strengthen its national security. Reuters

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Business Daily Monday, December 12 2016 13

Asia Presidential crisis

In Brief

Korea’s Park impeached as voters vent anger over corruption The strength of the impeachment vote adds to pressure on Park to resign as potential candidates to succeed her stake out their turf

U

ndone by an influence-peddling scandal, South Korea’s President Park Geun-hye was impeached by parliament on Friday amid a wave of anger that could overturn the nation’s politics and increase pressure on some of Asia’s biggest companies to reform.

With hundreds of police forming a wall to hold back thousands of demonstrators outside the National Assembly in Seoul, lawmakers voted 234 to 56 in favour of impeachment, easily meeting the requirement for a two-thirds majority as dozens from Park’s own party voted against her.

Protesters singing the Christmas carol “ Feliz Navidad,” with the lyrics changed to “not Park Geun-hye,” broke into cheers in a carnival atmosphere.

The result means Park is suspended from power and the interim leadership passes to Prime Minister Hwang Kyo-ahn. The Constitutional Court now needs to ratify parliament’s decision, a process that may take as long as six months. If the judges concur, a national election would be held about two months later.

Protesters have likened Park’s allies to collaborators under dictators and called chaebol heads “accomplices,” while a mayor who compares himself to Bernie Sanders has surged in opinion polls for the next president.

Park was impeached after the market closed on Friday. South Korea’s Kospi index began to slide after her first apology for the scandal in late October, and started to bounce back last week ahead of the impeachment vote.

South Korean Prime Minister Hwang Kyo-ahn gestures the cabinet meeting after parliament passed the impeachment motion against President Park Geun-hye, at the government complex building in Seoul. Lusa

Hwang, Park’s immediate replacement, is a former justice minister who she designated as premier last year after he successfully led a court battle to dissolve a minor party her administration accused of being aligned with North Korea. In a televised speech, the 59-year-old said that his heart is “heavy” and he’ll try to ensure the government runs properly.

After weeks of protests near the presidential office, Koreans on Friday filled the boulevards around parliament in the freezing cold, demanding Park’s removal plus an end to the cosy ties between the political and business elite that were once the bedrock of South Korea’s economic miracle.

Chaebol ties

For months, prosecutors and opposition lawmakers have pursued ties between Park and her friend Choi Soon-sil, as well as the links between the president’s office and the family-run chaebol conglomerates like Samsung and Hyundai that dominate the economy. The stream of often lurid revelations swelled anger in the nation’s 50 million population amid widening income inequality, soaring household debt, youth unemployment and a slump in once-mighty steel mills and shipyards.

The economy is projected to expand just 2.7 per cent this year, the first five-year run of sub-3.5 per cent growth since the 1950-53 Korean War. An election could come soon if Park steps down. At an “informal” meeting with Cabinet members after the vote, Park said she hoped the current “confusion” is resolved smoothly.

“Once again I express my apology for this huge national confusion that arises from my mistakes and unworthiness at a time the nation faces difficulties in both economy and security,” she said, her voice trembling as she neared the end of her televised speech. Bloomberg News

Trade deal

Japan ratifies TPP despite Trump’s opposition The US and Japan are the biggest members of the massive deal Japan’s parliament ratified the TransPacific Partnership (TPP) free-trade deal on Friday, but it was largely viewed as an empty gesture owing to opposition by US President-elect Donald Trump.

‘Abe has made the TPP a pillar of his growth platform to revive exports and the world’s number three economy’ A majority of upper house lawmakers, led by Prime Minister Shinzo Abe’s ruling coalition, approved the bill, while the opposition voted against it, following last month’s passage through the powerful lower house.

Japan’s top government spokesman called the deal’s passage “a message to the world about Japan’s strong determination to promote free trade”.

“We will continue to urge signatory

countries to swiftly” pass the bill, Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo.

US President Barack Obama championed the 12-nation deal saying it would enable the United States to set the global trade agenda in the face of China’s increasing economic clout.

But Trump has strongly opposed the agreement, saying it would be bad for America and cost jobs, casting a huge shadow over its future.

Last month, Japan’s leader said the TPP would be “meaningless” without the US. The US and Japan are the biggest members of the massive deal, which encompasses some 40 per cent of the global economy. It also includes Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The deal, which has been years in the making, cannot be implemented

in its current form without US ratification.

The TPP is seen as a counterweight to China, as Beijing expands its sphere of influence and promotes its own way of doing business - seen as often running counter to largely Westernset global standards that emphasise transparency and respect for human rights and the environment.

Abe has made the TPP a pillar of his growth platform to revive exports and the world’s number three economy.

But experts say that with Trump’s election the deal is a non-starter.

Trump says he is in favour of free trade but that existing deals, such as the North American Free Trade Agreement between the US, Canada and Mexico, have not been fairly negotiated and do not serve US interests.

The White House has warned that failure to approve TPP would put billions of dollars in US exports at risk to competition from China. AFP

Growth

Vietnam’s 2016 GDP seen up Vietnam is expected to post annual economic growth of 6.3 per cent this year, slowing from last year but still topping a World Bank forecast of 6.0 per cent. Foreign exchange reserves would reach a record US$41 billion, Prime Minister Nguyen Xuan Phuc said on Friday, noting that actual foreign direct investment (FDI) inflows could reach nearly US$15 billion, also a record. Foreign investors, led by South Korean firms including Samsung and LG Display, have been pouring funds into a country viewed as a tariff-free shipments hub to major markets.

Fiscal bill

Sri Lanka approves 2017 budget Sri Lanka’s coalition government on Saturday won the final vote on its 2017 budget which aims to boost revenue and cut the fiscal deficit to 4.6 per cent of GDP from this year’s 5.4 per cent with a more than two-thirds majority. The budget, which contains some long-term reforms and measures to boost revenue, was passed with 165 in favour, 55 against and 4 absent in the 225-member parliament. The government aims to boost its 2017 tax revenue by 27 per cent to 1.82 trillion rupees (US$12.36 billion) year on year, to meet a commitment given to the IMF in return for a US$1.5 billion loan in May. Consumption

Indonesia retail sales growth slows Indonesia’s annual retail sales in October grew at a slower pace of 7.6 per cent, as sales of food items slowed, a Bank Indonesia survey showed on Friday. September annual retail sales growth was revised to 10.7 per cent from a previously reported 6.5 per cent.

The survey of 700 retailers in 10 major cities predicted that November retail sales growth would barely change at 7.9 per cent from a year earlier, led by food and non-food sales. The survey showed that price pressures were expected to decrease in the next three months. It also predicted that demand will slow in January.

Steel trade

India’s minister says not in favour of protectionism India’s debt-laden steel industry should not take the government’s protectionist measures for granted and need to raise their efficiency to compete with foreign companies, the country’s steel minister told Reuters in an interview on Friday. The government has imposed various duties and quality controls on imports over the past two years to stop the inflow of cheap steel from countries such as China, the world’s biggest producer burdened with a massive oversupply. “In my view (protectionist measures) should not be there even for a month, but I have to see the overall position of the industry,” minister Chaudhary Birender Singh said.

14 Business Daily Monday, December 12 2016

International In Brief Public services

US Senate passes funding bill The U.S. Senate passed legislation on Friday to fund the government through April and President Barack Obama promptly signed it into law, after Democrats who had sought more generous healthcare benefits for coal miners stopped delaying action on the measure. Many government services and operations would have been closed or suspended at midnight, when current funding authority expired, if the Senate had not approved the bill. The vote was 63-36.

The House of Representatives passed the legislation on Thursday. Obama signed the measure, the White House said in a statement issued about 90 minutes after the Senate passed it.

Privatisation

Russia signs Rosneft deal with Qatar, Glencore Russian state holding company Rosneftegaz on Saturday signed a deal with the Qatar Investment Authority (QIA) and commodities trader Glencore to sell a 19.5 per cent stake in state-owned oil major Rosneft, Rosneft said. The privatisation deal, which Rosneft Chief Executive Igor Sechin called the largest in Russia’s history, was announced by Rosneft in a meeting with President Vladimir Putin on Wednesday. Its success suggests the lure of taking a share in one of the world’s biggest oil companies outweighs the risks associated with Western sanctions imposed on Russia over the conflict in Ukraine.

Negative outlook

Fitch affirms British debt rating The Fitch ratings agency Friday affirmed the AA longterm debt rating and negative outlook for the United Kingdom and the Bank of England, when they have been since June. In the wake of the surprise vote in June to exit the European Union, which touched off fears of slower growth, prompting a cut in the debt rating from AAA, Fitch said Friday recent political events suggested Britain likely will seek to control immigration from the EU and reject the jurisdiction of the European Court of Justice.

Italy

State could join bank rescues European Central Bank policymaker Jens Weidmann has said state involvement in the rescue of Italian banks can’t be ruled out, piling further pressure on the Rome government to bail out Monte dei Paschi di Siena.

“The participation of the state alongside investors in a crisis solution can never be excluded,” Weidmann told the Frankfurter Allgemeine Zeitung’s yesterday edition.

Weidmann, the hawkish president of Germany’s Bundesbank, did not mention Monte dei Paschi di Siena, Italy’s third-largest bank and the world’s oldest, by name in the newspaper interview.

Oil industry

OPEC, non-OPEC agree first global pact since 2001 Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time

O

P EC a n d n o n - O P EC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries.

With the deal finally signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-OPEC Russia to play ball, the market’s focus will now switch to compliance with the agreement.

Key Points Non-OPEC to cut 558,000 bpd, slightly short of target Mexico, Kazakhstan, Oman pledge output reductions Market focus to switch to compliance Saudis to shoulder largest cuts for OPEC Move seen helping to ease glut, lift prices to $60/barrel

On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd but still the largest contribution by non-OPEC ever.

Of that, Russia will cut 300,000 bpd, Russian Energy Minister Alexander Novak said. He added it would be gradual and by the end of March Russia would be producing 200,000 bpd less than its October 2016 level of 11.247 million bpd - Russia’s highest production estimate so far.

Russian output would fall to 10.947 million bpd after six months, Novak said.

Two years of pain

Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.

The plunge in oil to below US$50 per barrel - and sometimes even below US$30 - from as high as US$115 in mid-2014 has helped reduce growth in U.S. shale output.

But it also hit the revenues of

oil-dependent economies including Saudi Arabia and Russia, prompting the two largest exporters of crude to start their first oil cooperation talks in 15 years.

In April in Doha, an attempt to clinch a deal collapsed. Novak said talks between OPEC and non-OPEC had been rescued after Saudi Arabia replaced veteran oil minister Ali alNaimi with Falih, who “had fresh views and ideas”.

Apart from Russia, the talks on Saturday were attended by or had comments or commitments sent from non-OPEC members Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan.

Novak said OPEC and the nonOPEC countries at the meeting were responsible for 55 per cent of global output. Their joint reduction of around 1.8 million bpd would account for about 2 per cent of global oil supply.

Many non-OPEC countries such as Mexico and Azerbaijan face a natural drop in oil production and some analysts expressed doubts those declines should be counted as cuts.

Oman said it would cut output by 45,000 bpd and Kazakhstan said it would try to reduce by 20,000 bpd next year. Reuters

OPEC has a long history of cheating on output quotas. The fact that Nigeria and Libya were exempt from the deal due to production-denting civil strife will further pressure OPEC leader Saudi Arabia to shoulder the bulk of supply reductions.

Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time. But analysts question whether many other non-OPEC producers are attempting to present a natural decline in output as their contribution to the deal.

Monetary policy

Fed to raise rates as Trump economy looms The ratings agency Fitch said it expected US debts and deficits to rise under a likely stimulus plan There is little room for doubt that the US Federal Reserve will raise the benchmark interest rate in the coming week for only the second time in a decade.

With unemployment at a nine-year low, jobs being created at an average of 180,000 per month, the economy growing at better than three per cent in the most recent quarter and some signs of a pickup in inflation, the writing is on the wall.

Some members of the Federal Open Market Committee (FOMC), which sets the key federal funds rate, the basis for mortgage and lending rates, have even cautioned that failing to raise rates in December could harm the central bank’s credibility, given expectations set by policymakers in recent months.

With a rate hike assumed, the question remains whether Wednesday’s move will be the first in a series.

That was what central bankers thought was going to happen a year ago, when they announced the start of the “normalization” of interest rates after keeping them at zero in the wake of the 2008 financial crisis.

‘Normalization’ under Trump?

But the Fed’s efforts to turn the page on monetary stimulus with gradual tightening quickly went off track, despite forecasts for up to four rate hikes in 2016.

Seven times this year, the FOMC declined to raise rates, impeded by poor US economic data, Britain’s shock June vote to exit the European Union, and above all by fears of interrupting a fragile recovery.

And analysts said there were no guarantees 2017 would see the beginning of a tightening cycle either, given uncertainties in geopolitics and the yet-to-be-determined policies of President-elect Donald Trump, who shocked the world last month by winning the US election while offering proposals scant on specifics.

A Wall Street Journal poll of economists last week put the Federal funds rate at an average of 1.26 per cent by December 2017, implying four rate increases. A Reuters poll projects three rate increases.

Stocks have rallied since Trump’s win, with major indices repeatedly

setting records on investor expectations that Trump will cut taxes and offer fiscal stimulus, including infrastructure spending - programs the would fuel growth and inflation, and make rate hikes more likely.

The ratings agency Fitch also said it expected US debts and deficits to rise under a likely Trump stimulus plan.

“All the necessary and sufficient conditions are there” Mark Zandi, chief economist at Moody’s Analytics But William Dudley, the influential FOMC vice chair and president of the New York Federal Reserve Bank, said in a speech Monday that Trump’s victory created “considerable” uncertainty and it was too early to say whether the Fed’s plan for gradual tightening would have to be adjusted.

Fed futures do not expect a sudden rush of higher rates: the CME FedWatch tool does not foresee a 2017 rate hike before June. AFP

Business Daily Monday, December 12 2016 15

Opinion Business Wires

The Times of India The Union government’s revenue collection in April to November saw indirect tax-mop up growing at an impressive 26.2 per cent while that of direct tax came in at 15.12 per cent. Total direct and indirect tax collections at the end of November stood at Rs 9.64 lakh crore, 59 per cent of the Rs 16.26 lakh crore target for 2016-17. The government is eyeing 12.64 per cent growth in direct tax at Rs 8.47 lakh crore for the current fiscal and 10.8 per cent in indirect tax at Rs 7.79 lakh crore.

Philstar The Bangko Sentral ng Pilipinas looks set to slash the reserve requirement ratio for banks to release more liquidity into the country’s financial system next year, Standard Chartered Bank said. Chidu Narayanan, economist for Asia at SCB, said monetary authorities are likely to lower the reserve requirements for banks to 15 per cent in 2017 from the current level of 20 per cent. SCB sees inflation averaging 1.7 per cent this year amid the uptick to a 21- month high 2.5 per cent for the month of November due to higher food prices.

Economists are out, Goldman back in for Washington

The Korea Herald Borrowers are scurrying to shift to fixed rate bank loans amid growing speculation that the country’s interest rates would rise in tandem with a much-expected rate hike in the United States, with the portion of fixed-rate loans topping 40 per cent, industry data showed yesterday.

According to the sources, the portion of fixed-rate loans against total loans extended by the country’s four major banks stood at between 41.3 per cent and 45.8 per cent as of end-November, a whopping increase from the mid-30 per cent range earlier this year.

I

t looks like Gary Cohn will be leaving Goldman Sachs Group Inc., where he is president and chief operating officer, to become director of Donald Trump’s National Economic Council (NEC). This is not a unique career trajectory!

The first director of the NEC, which President Bill Clinton created in 1993 to coordinate economic policy among the sometimes-warring government agencies responsible for it, was Robert Rubin, the former co-chairman and co-senior partner of Goldman (which didn’t believe in titles like “president” or “chief executive” back in those pre-initial-public-offering days). Then, in 2002, the other half of Rubin’s Goldman-running duo, Stephen Friedman, became director of George W. Bush’s NEC. If Cohn in fact takes the job, there will have been as many former top Goldman executives in charge of the NEC as Ph.D. economists.

The continuing prominence of Goldman Sachs alumni in Washington is a remarkable thing.

In the throes of the financial crisis it seemed hard to imagine that the old Goldman-to-Washington pipeline could continue to operate.

But while President Barack Obama clearly leaned more toward Google than Goldman, he still appointed a Goldman alumnus, Gary Gensler, as head of the Commodity Futures Trading Commission. With Cohn at the NEC and former Goldman partner Steve Mnuchin as Treasury secretary, Trump will have former Goldmanites in what for the past quarter century have usually been the two most important economic policy jobs in an administration.

So Government Sachs is back! Or maybe it never went away. This is testament to the interest in policy and public service that the firm seems to continue to inculcate in its partners. But it’s also kind of creepy - and profoundly at odds with the populist message of Trump’s campaign.

As for the Ph.D. economists, who in the 1990s and 2000s were taking over more and more top policy roles in Washington and around the world, it seems clear that the Trump era is going to be a time of much-reduced influence - as will likely be true for policy wonks in all fields. I have mixed

“

Justin Fox a Bloomberg View

feelings about this. Back near the apex of academic economists’ influence and clout, in 1999, I talked to then Treasury Secretary Lawrence Summers about why econ-doctorate-holders such as he had become so powerful: Ultimately there’s no alternative to judgment you can never get the answers out of some model.

But the reason there are many, many more good economists in positions of influence in the world is that one can understand the issues more sharply and clearly, and can pose the trade-offs and can make more accurate judgments within a clear analytic framework.

That “clear analytic framework” was probably too narrow, though.

The economists in power largely ignored risks to the financial system, income inequality, trade imbalances and other issues that didn’t really fit their worldview.

So did most other people in power, of course, and since the financial crisis academic economists have produced tons of research challenging the field’s earlier views.

Economists can be good to have around! But it’s good to have people of other backgrounds and “analytic frameworks” helping make economic decisions as well.

To some extent, that’s been the thinking all along with the National Economic Council. Even in the very wonky, credential-heavy Obama administration, only the first NEC director Summers - had an economics Ph.D. The current director, Jeff Zients, is a former corporate CEO. So clearly, there’s nothing radically different about having Cohn in the job. What will be different is all the other former business executives who will be surrounding him in the Trump administration.

I’m guessing that Cohn will sometimes find himself to be the wonkiest person in the room - and wish that there were more economists around. Bloomberg View

So Government Sachs is back!

Or maybe it never went away.

Bangkok Post New investment submitted to the Board of Investment in targeted clusters promoted by the government in the first 10 months of the year has reached 400 billion baht, according to Industry Minister Atchaka Sibunruang. That accounted for more than 70 per cent of the total investment value target of 550 billion baht this year set by Deputy Prime Minister Somkid Jatusripitak, she said.

Ms Atchaka said the Industry Ministry is working on reducing obstacles in order to help increase real investment. Of the total investment value in the first 10 months, around 138 billion baht stemmed from 144 projects in the clusters targeted by the Thailand 4.0 policy, which is intended to modernise the economy.

”

16 Business Daily Monday, December 12 2016

Closing Protectionism

China faces battle over market economy status Beijing continues to face a climate of mistrust towards its exports Patrick Baert

C

hina’s battle for recognition as a market economy that would help it avoid penalties from key trade partners has been thwarted, as a key clause in Beijing’s deal to join the WTO expired yesterday.

As China marks the 15th anniversary of its accession to the WTO, the United States, European Union and Japan are maintaining tough rules that protect them from cheap Chinese products flooding their markets.

An outraged Beijing said the failure of its major trade partners to grant China market economy status on December 11 as promised was an example of “covert protectionism” and “double standard” by the West.

Beijing highly covets market economy status, which would make it more difficult for other countries to launch anti-dumping cases against it. Dumping is when a country prices its exports below what it would charge for the same product in its home market.

When China joined the WTO on December 11, 2001 it was written into the terms of the deal that member states could treat it as a non-market

economy, allowing them to impose heavy anti-dumping duties on the basis that its low prices did not reflect market reality.

China was told all that would change by the end of 2016 when it would be upgraded to market economy status.

But rather than enjoying this trade advantage, Beijing continues to face a climate of mistrust towards its exports, with critics arguing the country has not done enough to qualify for the designation.

“China will take steps to defend its rights if (WTO) members continue this old practice of anti-dumping regulation against Chinese products after the expiration date” of the accession agreement clause, China’s commerce ministry spokesman Shen Danyang was quoted as saying by state media on Friday.

International trade experts say China will have to start a lengthy legal battle at the WTO against its trade partners in order to get recognition of its new status.

Protectionism in disguise

In a vitriolic commentary, the official Xinhua news agency said that “China would automatically move to market economy status” on December 11.

“The refusal is nothing short of covert protectionism, which runs against the trend of globalization and poisons the recovery of the global economy,” it said Friday, denouncing “another

M&A

double-standard applied by the West against China”.

But for Washington, the granting of market economy status is not automatic and other anti-dumping clauses of the accession agreement “remain intact”.

“The United States remains concerned about serious imbalances in China’s State-directed economy, such as widespread production overcapacity, including in the steel and aluminium industries, and significant State ownership in many industries and sectors,” according to a statement by the Department of Commerce.

“China has not made the reforms necessary to operate on market principles.”

Washington will therefore continue to apply “alternative” methods for calculating dumping margins, added the DoC. That is unlikely to change under a Donald Trump administration after the president-elect threatened to impose 45 per cent punitive tariffs to protect American jobs.

The position is also supported by the Alliance for American Manufacturing (AAM), who say China’s trade surplus has cost 3.2 million jobs in the US since Beijing joined the WTO. “It is no coincidence that economic pain played such a central role this election season. For 15 years our workers and makers have asked China to play by the rules, and for fifteen years Beijing hasn’t budged,”

IPO

according to Scott Paul, president of the AAM, in a statement that says over 1,000 anti-dumping cases have been initiated against China globally since 1995.

Meanwhile, Brussels is taking a somewhat different approach after the European Commission announced last month a new method to combat price dumping which doesn’t specifically target China but could apply to any country suspected of selling at a loss.

“China has not made the reforms necessary to operate on market principles” U.S. Department of Commerce statement “This avoids possible retaliation from China since everyone will be treated the same way,” said Franck Proust, a member of the European Parliament.

But any decision on China must have the agreement of the EU’s 28 member states as well as the European Parliament, something which the bloc was unable to achieve before the December 11 deadline.

“We have lost a lot of time. This date, we have known it was coming since 2001 but unfortunately this proposal won’t be enacted before the summer of 2017 at best,” Proust added, leaving plenty of time for China to appeal to the WTO’s dispute settlement body.

Japan also said it would not recognise its neighbour as a market economy.

For as long as the global trade watchdog does not deliver a final verdict on the disputed clause, “the EU and other WTO members can continue to treat China as the non-market economy it is”, said Milan Nitzschke, spokesman for Aegis Europe, an industry alliance which represents some 30 European industries. AFP

Trade

Wanda’s Wang says curbs China Great Wall enters to investment risk U.S. jobs ‘new era’ as a joint-stock firm

Commerce between mainland and the U.S. balancing

Any move to curb investment by Chinese companies in the U.S. after Donald Trump is sworn in as president could put at risk the jobs of 20,000 Americans employed by Dalian Wanda Group Co., Chairman Wang Jianlin has warned.

The Chinese property and media tycoon has asked Christopher Dodd, chairman of the Motion Picture Association of America, to relay the above message to Trump, according to the transcript of a speech delivered by Wang during a forum in Beijing on Saturday.

“I’ve invested over US$10 billion in the U.S., employing over 20,000 people,” Wang said. “If something goes wrong, these 20,000-plus people might be out of jobs. Other things aside, in the film and entertainment industry, you have to understand that English-language films are relying on the Chinese market for growth.”

Wanda is poised to become owner of the largest cinema chain in the U.S., pending AMC Entertainment Holding’s acquisition of Carmike Cinemas Inc. The Chinese conglomerate also owns movie studio Legendary Entertainment LLC and has agreed to buy Golden Globe Awards producer Dick Clark Productions Inc. In addition, the Chinese billionaire has repeatedly expressed interest in buying one of Hollywood’s six biggest studios.

The shopping spree has alarmed some U.S. lawmakers who’ve called for more scrutiny over Chinese takeovers, including deals such as those made by Wanda.

“This shows Wanda has grown more influential in the U.S., otherwise [the lawmakers] wouldn’t have named us,” Wang said. Bloomberg News

Trade between the world’s two largest economies has shown signs of improvement as the U.S. trade deficit with China, a long-term U.S. concern, narrowed significantly in October.

In October, U.S. exports to China reached a threeyear high of US$13 billion, contributing to the month’s 4.2 per cent decrease in the trade deficit with China, according to the U.S. Commerce Department.

The U.S. overall trade gap for the month grew 17.8 per cent, the biggest increase since March 2015, to US$42.6 billion from the surprisingly low September deficit, data from the department showed.

Chinese figures show that the nation’s trade surplus with the U.S. has been growing since 2000, reaching US$42.1 billion in 2002 and surpassing US$200 billion in the January-November period of this year.

The growth has slowed in recent years, with just a 0.9 per cent year-on-year increase in the first eleven months of this year.

Customs data show that China has been the world’s second largest importer for seven consecutive years, with its imports standing at US$1.68 trillion in 2015.

The nation’s total imports are expected to reach US$8 trillion in the next five years.

In the first eleven months, China’s overall trade surplus narrowed to RMB3.11 trillion (about US$457 billion), down 5.8 per cent from the previous year, latest customs data show. Xinhua

China Great Wall Asset Management Co officially launched as a restructured joint-stock firm yesterday, with an eye towards a market listing and a bigger role in tackling China’s mounting bad debt.

Great Wall is one of the country’s Big Four stateowned bad debt managers set up in 1999 to purchase non-performing loans from the country’s four biggest state-owned banks. It has handled about RMB1.7 trillion (US$246.23 billion) in bad debt so far.

The transition to a shareholding company means Great Wall, which was previously wholly-owned

by China’s finance ministry, can now sell stakes to new shareholders and list itself on a stock market.

Great Wall chairman Zhang Xiaosong said at a ceremony in Beijing yesterday the restructuring marks “a new era” for the company, which will continue to focus on bad debt solutions and asset management to help curb financial risks and support China’s economic development.

The move means it could list itself on a domestic or offshore stock market as early as the first half of next year, which would expand its capital base and allow it to take a bigger role in helping the government manage debt issues.

The newly established Great Wall joint-stock firm has a registered capital of RMB43.15 billion (US$6.25 billion).

Its biggest shareholder is China’s finance ministry, which holds a 97 per cent stake. The National Council for Social Security fund holds 2 per cent and China Life Insurance (Group) holds 1 per cent. Reuters