Business Daily #1195 December 15, 2016

MSAR, US ink anti-tax evasion deal Taxation Page 3

Thursday, December 15 2016 Year V Nr. 1195 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Gaming trend

Banking

Spectrum: local mass major driver in 2017 Page 6

www.macaubusinessdaily.com

Chinese property market

Local ATM density second highest worldwide Page 3

Developers & investors capitalize on rise in “coworking” spaces Page 9

M&A

Asahi’s acquisition of SABMiller makes it third largest brewer in Europe Page 11

City Master Plan Mauled Urban planning

Developing the city into a ‘beautiful home’.

The ultimate mid-term goal for the MSAR. According to the new Urban Development Strategy Plan (2016-2030) unveiled yesterday. The lack of public involvement, detail, or consideration of human resource needs drew sharp criticism. Page 3

E-commerce shake-up

The shell game

The former Prosecutorgeneral continues to refute the allegations. Saying he had never directly approved contracts for ten shell companies. Believed by prosecutors to be related to him.

Yesterday’s hearing lasted only one morning due to the failing health of the ex-official.

Legislation Adopt the United Nations Commission on International Trade Law Model Laws. For the sake of e-commerce development. So says trade law expert João Ribeiro.

Adding the city should keep up with peers in the region on its commercial arbitration law. Page 4

Buying it up

Ho Chio Meng case Page 5

HK Hang Seng Index December 14, 2016

22,456.62 +9.92 (+0.04%) Worst Performers

Li & Fung Ltd

6.30%

HSBC Holdings PLC

1.02%

Belle International Holdings

-2.23%

Industrial & Commercial

-1.05%

PetroChina Co Ltd

4.51%

China Mengniu Dairy Co Ltd

0.51%

China Shenhua Energy Co

-1.40%

Sands China Ltd

-1.02%

China Petroleum & Chemical

3.38%

China Mobile Ltd

0.31%

Power Assets Holdings Ltd

-1.19%

Want Want China Holdings

-1.01%

AAC Technologies Holdings

2.99%

Tencent Holdings Ltd

0.27%

China Resources Power

-1.12%

Ping An Insurance Group Co

-0.95%

China Life Insurance Co Ltd

0.23%

China Resources Land Ltd

China Overseas Land &

-0.92%

Kunlun Energy Co Ltd

1.72%

-1.09%

12° 19° 13° 16° 16° 17° 18° 21° 18° 23° Today

Source: Bloomberg

Best Performers

FRI

SAT

I SSN 2226-8294

SUN

MON

Source: AccuWeather

Loans Robust demand for mortgage loans on the Mainland.

Setting the tone for record borrowing as new loans hit RMB794.6 bln in November. Beijing is fanning the economy even as cooling measures seek to avoid property bubbles. Page 8

2 Business Daily Thursday, December 15 2016

Macau Appointment Incumbent chief Lok Kit Sim will step down to be an advisor

Secretary Office for Economy and Finance appoints new chief

A dispatch by the Secretary, Lionel Leong Vai Tac, yesterday in the Official Gazette appoints the Office’s current advisor Teng Nga Kan to take up The Chief of the Office of the Secretary for Economy and Finance, Lok Kit Sim, will step down the post of Office Chief from next Tuesday. from the position after her current tenure expires The new Chief-to-be joined the government in next Monday and will become the Office’s advisor 2002 as a senior officer in the Labour Affairs Bureau. Prior to joining the Secretary Office in afterwards, the Office announced yesterday.

November 27 this year, she had served in the The announcement claimed that the transfer city’s Public Prosecutor’s Office, returning to the of positions of Ms. Lok is based upon her own Labour Affairs Bureau as a Deputy Director. willingness.

Legislation

Public consultation period of the bill finished yesterday Waters law consultation report to be released next quarter

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he Legal Affairs Bureau is planning to release the conclusion report on the city’s territorial waters management framework law during the first quarter of next year, it said in a press release yesterday.

The bill was announced by the Executive Council last month, while its 30-day public consultation period ended yesterday.

Without revealing the total number of public opinions it had received, the Bureau said public opinions on the bill primarily focused on the use of local waters to diversify the

local economy, the protection of the marine environment, the control of water quality and the planning and supervision of local waters.

The Bureau said the legislative works of the bill would start once the opinions collected are organised and analysed.

The territorial waters law proposal includes an outline for a planned exploration of MSAR water resources including: perfecting existing legislation for maritime areas, establishing maritime zones, promoting the environmentally friendly exploration of water resources and the sustainable development of a diversified local economy.

The city’s territorial waters, occupying 85 square kilometres, was granted by the central government at the end of last year.

Bird flu

Live poultry trade suspended The ban was announced early yesterday morning after the city confirmed its first human H7N9 infection on Tuesday.

Th e M SA R G o v e r n m e n t h a s suspended the sale of live poultry for at least three days starting from early Wednesday morning following a poultry trader confirming positive for H7N9 strain on Tuesday.

The Civic and Municipal Affairs Bureau (IACM) and Health Bureau told reporters in a joint press briefing at 1:00am yesterday that a poultry sample from the city’s wholesale market had been tested positive for bird flu, while a 58-year old poultry trader was confirmed infected by the virus.

The authorities said around 10,000 live poultry in the city’s wholesale market would be destroyed, adding the supply from the suspected source of the bird flu virus will also be halted.

IACM is conducting comprehensive

cleansing and disinfection of local municipal markets as well as the three bird stalls in the wholesale markets.

Meanwhile, the infected trader, who has not yet displayed symptoms of the virus, is now quarantined in Hospital Conde de São Januário with his wife.

IACM Director José Maria da Fonseca Tavares said in the briefing that the public should consider replacing live chickens with frozen ones.

Asked about the current progress of carrying out regulations to increase the sale of frozen poultry in the city, Mr. Tavares said it is subject to the market and public acceptance.

IACM is gradually allowing more stalls in municipal markets to sell frozen poultry to enhance public acceptance, the official added. A.L.

Smoking ban

Smoking violations in casinos reach 585 by November Some 585 smokers were prosecuted for violating the smoking ban in local casinos between January and November this year, according to official data released by the Health Bureau.

These smoking ban violators were caught during the Bureau’s 455 inspections of local gaming venues in the period. The lawbreakers were primarily tourists, amounting to 461, accounting for 78.8 per cent of the total, while local residents totalled 121, representing 20.7 per cent of those prosecuted.

Currently, the city’s tobacco control law bans smoking on the mass gaming floors of casinos, as well as all local indoor venues such as

restaurants, bars, karaoke parlours, discos and saunas.

The Bureau claimed that it had conducted 1.26 million inspections in the city during the eleven months, prosecuting 37,305 individuals.

Of the total, local residents accounted for 61.5 per cent at 3,787, followed by tourists at 2,110, representing 34.3 per cent of the total whilst 257 non-resident workers were also prosecuted for violating the city’s smoking ban in the period.

In addition, the Bureau received 2,932 phone calls regarding the policy in the period, of which 2,077 were complaints, 840 were enquiries, and the remaining were opinions, according to its release.

Business Daily Thursday, December 15 2016 3

Macau Urban planning

Master urban plan for 2016-2030 released But members of the Urban Planning Committee complain about the plan’s lack of detail Annie Lao annie.lao@macaubusinessdaily.com

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he MSAR Government introduced a new Urban Development Strategy Plan (2016-2030) to the city’s Urban Planning Committee yesterday.

The new strategy plan covers the future orientation of Macau’s urban development, development goals, basic strategies, transportation strategies, marine strategies and functional zoning for the future direction of the city’s development.

The Chief Advisor to the Governmental Policy Research Office, Professor Mi Jian, introduced the master plan at the meeting yesterday saying that the future orientation of the city’s urban development strategy is divided into three parts: national orientation, regional orientation and self-positioning.

“The ultimate goal of this plan is to develop Macau into a ‘beautiful home,’ which means to internationalise Macau, to enhance its livability.

At the same time, it aims to create a city appropriate for doing businesses and tourism,” Professor Mi said.

in the future.

The report also proposes the development goal for the Macau Peninsula, Taipa and Coloane.

The development goal for the Macau Peninsula will focus on promoting the traditional and historic to showcase its characteristics, improving public services, creating a business centre and transforming current industry into a more diversified local economy.

The development of Taipa will focus on formatting a functional area, optimising facilities and creating a centre for cultural and sports activities, entertainment and gaming.

Meanwhile, the future development of Coloane will focus on its ecosystem, tourism and cultural heritage.

The plan also proposes the construction of the fourth space in Macau, utilising the city’s maritime territory, with the objective of diversifying the city’s economy.

“This fourth space is what the Central Government wants Macau to develop by using the sea areas in Macau as a medium and long-term plan from 2016 to 2036,” Professor Mi said.

“Macau can use Coloane as a starting point to develop with the nearby west Mainland islands to form a golden sea triangle,” he added.

Disagreement

However, the majority of the Urban Planning Committee reckons the plan lacks actual measures to implement the goals set out in the Urban Development Strategy Plan.

Paul Tse - Chairman of the Macau Developers Association and a member of the Committee - commented

that the public was not consulted about this plan thus making it lack practicability.

“It is important to know that what the city needs most is human resources, which can in turn help develop our city. For a master plan like this, it should have reached a mutual agreement through a public consultation with the public,” Mr. Tse claimed.

Leong Chong In, president of the Architects Association of Macau, also questioned how the term ‘beautiful home’ in the plan can fit the characteristics of Macau.

“Macau is now being developed as an international leisure tourism city and I think it is in conflict with the meaning of ‘beautiful home’,” Leong commented.

Mr. Leong also argued that Coloane should not be used for reclamation for the development of the fourth space in the future.

“The fourth space should instead be developed in areas near the airport and Zone A,” he suggested.

Professor Mi claimed that the development strategy plan only seeks to give a future direction of the city’s development, indicating details will be added later.

Master plan

The foundational strategy is to make a rational and maximum utilisation of the city. It also outlines the design of the external transportation system, the future use of territorial waters, and the development of urban zoning

Agreement

Banking

MSAR, US ink inter-governmental agreement

MSAR ATM density second highest in world

The MSAR Government signed an inter-governmental agreement (IGA) with the US yesterday, which is expected to facilitate compliance with the US Foreign Account Tax Compliance Act (FATCA) by financial institutions in the city, said the Monetary of Authority of Macau in a press release.

According to the announcement, the two parties signed the second model of the IGA, which essentially requires financial institutions to report the relevant account information of US taxpayers to the Internal Revenue Service (IRS) of the US directly.

The deal was inked yesterday by the city’s Secretary for Economy and Finance, Lionel Leong Vai Tac, and the Consul-General of the US to Hong Kong and Macau, Kurt Tong.

Under the IGA, financial institutions in the city need to register and conclude separate individual agreements with the IRS, according to the release.

In addition, these institutions will need to seek the consent of their account holders who are US taxpayers for reporting their account information to the US IRS annually.

The Authority believes the new agreement will reduce reporting burden and facilitates compliance with FATCA by financial institutions in the city.

The due diligence and reporting requirements under FATCA target specified US taxpayers including US citizens, US resident individuals, and specified entities established in the US or controlled by US persons, according to the announcement.

The Special Administrative Region has the second highest density of ATMs in the world, according to the latest Financial Access Survey (FAS) conducted by the International Monetary Fund (IMF).

The Survey, released earlier this year and based on 2015 data indicates that the Macau SAR has 254 ATMs per 100,000 adults, substantially up from 154 in 2011 and 217 in 2013, as stated in previous publications by the same institution.

The Republic of Korea tops the list, with 278 ATMs per 100,000 adults.

Canada comes third with 220, followed by the Russian Federation, with nearly 173 ATMs per 100,000 adults.

According to the Monetary Authority of Macau (AMCM), the total number of ATMs in the city stands today at some 1,300 while the number of ATMs in Hong Kong is 3,200, as identified by FAS.

The data suggests that the density of ATMs in the neighbouring SAR is five times lower that that in the local territory, at 49 per 100,00 adults.

Currently, 29 licensed banks are operating in the city, of which ten are locally incorporated (including the postal savings office) and nineteen are branches of overseas banks, according to AMCM. In its seventh annual edition, the Financial Access Service provides information on the availability and use of financial products ranging from deposit accounts and loans to insurance policies by individuals and firms worldwide.

The information compiled by the IMF is based on administrative data collected from both traditional financial service providers such as commercial banks and microfinance institutions as well as from providers of digital financial services such as mobile money. S.Z.

4 Business Daily Thursday, December 15 2016

Macau Opinion

Ashley Sutherland-Winch*

Social media shopping Online shopping is trending and with the success of Single’s Day and Cyber Monday reaching into the billions, companies are looking for the best way to have their products noticed by consumers.

One way that is growing in popularity, especially in South East Asia, is shopping via social media. A new study published in the Wall Street Journal by Bain & Co., reveals that social commerce comprises nearly a third of all online shopping transactions in the region with Facebook and Instagram the most popular shopping platforms.

The study also suggests that 30 per cent of all online sales in the region occurred on social networks in 2016, much higher than the 7 per cent of Americans using social media for shopping, according to Global Web Index. The Bain & Co. study found that South East Asian social media users spend up to five hours a day online; with smartphone business booming this is a recipe for great online shopping potential.

Social networks are racing to add features to allow for and improve online shopping within their platforms. Instagram and Pinterest have recently added click-to-buy features and in June, Facebook launched ‘Shop’ where Facebook pages can build shops for products and services.

While WeChat dominates the Chinese market, its full spectrum of features is lost on those who cannot speak Chinese.

WeChat’s loss is Facebook and Instagram’s gain in the South East Asia market. Facebook pages with a shop have the ability to highlight ‘featured products’ on their pages and the capability of adding messaging buttons to products as a way of facilitating sale negotiations or starting a dialogue with the consumer directly. On the near horizon, Facebook is also beta testing ways to include purchase transactions within the network much like WeChat.

Shoppers across the South East region discover products on Facebook or Instagram, then typically reach out to the seller via mobile messaging apps such as Facebook Messenger, Line or WhatsApp to complete the purchase. Nadia Tan, head of Facebook’s small-medium business unit in Southeast Asia, believes that Facebook Messenger is a key reason why ecommerce by social media is booming in the region, saying: “The platform allows shoppers to haggle, and communicate in real-time with sellers – often small-and medium-sized retailers – directly. Tan revealed that users in Thailand send twice as many Facebook messages to businesses each month as the global average.

I believe that social network shopping is definitely an exciting trend to watch in the New Year.

*Marketing and Public Relations Consultant and frequent contributor to this newspaper.

Legislation The 2016 UNCITRAL Emergence Conference concluded yesterday

E-commerce law updates deemed necessary An international trade law expert says the MSAR should update its legislation regulating e-commerce and international commerce supervision in accordance with the United Nations Commission on International Trade Law legal frameworks Nelson Moura nelson.moura@macaubusinessdaily.com

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acau should adopt the United Nations Commission on International Trade Law (UNCITRAL) Model Laws to update its current legislation on e-commerce in addition to conducting more regulations on electronic international contracts and international commerce supervision, perceives João Ribeiro, Regional Head of UNCITRAL Regional Centre for Asia and the Pacific.

“The organisation works mainly on business to business (B2B) issues and currently provides international standards helping to harmonise and modernise e-commerce legislation,” Mr. Ribeiro told Business Daily yesterday.

The international trade law expert believes the city has the opportunity to become a hub of legal services and knowledge sharing in the field of international trade law, especially for Lusophone jurisdictions.

Mr. Ribeiro previously worked as a legal advisor to the Secretary for Social Affairs and Culture of the MSAR Government and was a Senior Lecturer for the University of Macau (UM).

Fixing up e-commerce

According to Mr. Ribeiro, although the city has adopted the UNCITRAL Model Law on Electronic Commerce as the model for its legislation on electronic documents enforced in 2005 the legislation did not adopt the model’s “entirety.”

Indicating regulations in the field are “in constant need of updates” the guru said he would like to see local government make some legislative fix-ups or request the Mainland Chinese government to implement the framework in its entirety.

Adopted in 1998, the UNCINTRAL Model Law on Electronic Commerce establishes rules for the formation and validity of contracts concluded by electronic means, for the acknowledgement of electronic receipts and

Future problems

Corporate

Wynn donates to Tung Sin Tong for 11th consecutive year

In response to Tung Sin Tong’s annual fundraising campaign, Wynn Macau has made a donation of MOP500,000 to the charity in support of their poverty alleviation efforts and provision of social welfare services. A cheque presentation

for determining the time and place of dispatch and receipt of data messages.

The regional head would also like to see the local government ratify the United Nations Convention on the use of Electronic Communications in International Contracts, he said.

“The UN convention for electronic communications in international contracts is already in use in Mainland China and Australia is getting ready to sign it. It will have an essential role in harmonising basic legislations for international trade and e-commerce,” Ribeiro said.

The Convention adopted in 2013 seeks to ensure contracts concluded and other communications exchanged electronically are as valid and enforceable as their traditional paper-based equivalents.

On the other hand, the expert hopes the Macau Government can keep up with Asia Pacific when it comes to applying the Model Law on International Commercial Arbitration that aims to offer a unified legal framework for international commercial arbitration.

“In 2002, only 15 countries of 56 in the Asia Pacific region had legislation based on our model law for commercial supervision. Now there are 21 countries that have changed their legislation and brought it up to international standards,” he stated.

ceremony to mark the contribution was held earlier this week at Wynn Palace.

Mr. Ian Michael Coughlan, President and Executive Director of Wynn Macau, and other representatives presented the cheque to a delegation from Tung Sin Tong including President Mr. Chui Sai Cheong and Director Ms. Deborah Vong.

The statements were made on the sidelines of the 2016 UNCITRAL Emergence Conference on ‘Regional Perspectives on Contemporary and Future Harmonization Agenda in International Trade Law’ co-organised by the UM and the UNCITRAL Regional Centre for Asia and the Pacific.

“The Conference is an annual event with the purpose of promoting academic research in emerging issues of commercial and international law. It focuses on very recent issues still in the primary stages of investigation in order to predict future legal obstacles for international trade,” Mr. Ribeiro told Business Daily.

Some of the research presented at the conference held between December 13 and 14 focused on innovative topics such as commercial law in space, artificial Intelligence for commercial agreements; and disputes between investors and world states.

Business Daily Thursday, December 15 2016 5

Macau

Graft

The trial continues on Friday

Ho: ‘No knowledge about outsourcing of services’ Former Prosecutor-general Ho Chio Meng again denied the accusations of approving projects for alleged syndicates Cecilia U cecilia.u@macaubusinessdaily.com

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ormer Prosecutor-general Ho Chio Meng said yesterday he has no knowledge of the ten shell companies claimed by prosecutors to be related to him - using the 16th floor of the ‘Hotline’ building in NAPE for their operations.

The bribery trial of the former official continued yesterday at the Court of Final Appeal but the hearing was called to a halt at noon due to the unstable health of the ex-official.

During yesterday’s session, prosecutors attempted to prove that Mr. Ho was using the Public Prosecutor’s coffers to rent commercial units in the ‘Hotline’ building for the illicit operations of shell companies involving some MOP3.3 million for nine years’ tenure.

Denying the accusation, the ex-top prosecutor said that he had not signed any contracts directly appointing any of these shell companies to provide microform services, adding that he had never visited the units in question in the past decade.

“I know about the rent [of those units] but I don’t know about their exact usage,” said the former Prosecutor-general.

In order to prove the connection between Mr. Ho and the ten shell companies on the 16th floor, Prosecutor Kuok Un Man presented a printed CCTV image showing Mr. Ho’s brother, Ho Chio Shun, who is accused of founding the shell companies, present at the location in 2014. The image also shows other defendants in the case, including the brother-in-law of Mr. Ho and his driver, appearing at the location.

In addition, the prosecutor presented phone call records revealing Ho Chio Shun had phoned Ho’s mobile on the same day by landline from one of the alleged companies.

But the former top official did not acknowledge to whom the phone number belonged, stating he was unaware that his brother had visited the floor previously or what his brother was doing in the building.

The former chief official also questioned whether the prosecutors had solid evidence proving his visits to the units such as by a CCTV record.

Another prosecutor, Chan Chi Keng, queried why his brother, who is unrelated to the Prosecutor’s Office, would visit a place that is related to the Office in the absence of the former official.

Sauna and supper together

On the other hand, the accusations stated the ex-Prosecutor general had approved the increase of rents for one of the units, pointing out that the official had a close relationship with one of the owners of the rented units named Fong Bin. The former top prosecutor claimed at first that he did not know about the owners of the units but later admitted he knew one surnamed Fong.

“Yes, I know him but we just had a very ordinary relationship, we aren’t close,” Ho claimed.

Following the denial, prosecutor Kuok presented another CCTV record showing the former Prosecutorgeneral, Fong and another defendant in the case, Mak Im Tai, present at a sauna, claiming the trio even had supper until two in the morning.

Mr. Ho explained that it was Mak’s idea to ask Fong to accompany them, claiming this can be proved from phone records.

The prosecutors later cited more documents consisting of a list of named persons attending two personal family events of the former official, saying Fong as well as other accused associates were on the list. In addition, the list for the 90th birthday banquet of Mr. Ho’s father shows several defendants in the case were sitting on the same table as Fong.

According to prosecutor Kuok, the list of names was found in the personal computers of the brother of Mr. Ho’s subordinate and his nephew.

The ex-official refuted that the Fong on the list for the family gathering was the same person as the unit owner as the two Fongs had different Chinese characters for their given names despite the same pronunciation.

“I never saw this list,” stated the former top official, adding that the Fong the prosecutors were talking about – the unit owner – was not present during his father’s birthday celebration, saying the banquet was not held in Macau.

Outsourcing companies

Meanwhile, Justice Sam Hou Fai, President of the top court, presented

the allegations of Mr. Ho outsourcing 930 projects, many of which, in fact, did not provide any services in the end. It is believed that the former official approved the projects for the shell companies that he and his associates had created.

The accusation states that some 1,300 projects were taken by Ho’s syndicates, of which 930 were directly approved by Mr. Ho whilst the rest were examined by either

former office chief Lai Kin Ian or others.

The former Prosecutor-general claimed he had never appointed any particular companies to provide services for the Office, noting that it is unnecessary and impossible for him to directly make such appointments.

He explained that many stages and complicated procedures are required for the approval of outsourcing, adding a contract with a contractor would be terminated whenever there was a complaint.

Not explaining the reason why some awarded companies failed to provide services in the end, Mr. Ho claimed he could not remember all the projects that he had approved.

The trial resumes on Friday.

6 Business Daily Thursday, December 15 2016

Macau Gaming

Spectrum: Local mass to drive industry in 2017

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esearch firm Spectrum Gaming Group predicts the city’s mass market will dominate the gaming industry next year whilst the share of VIP revenue will decline to less than 50 per cent for the first time.

Th e p r o j ecti o n i s f r o m th e 13th annual list of Most Important Gaming Trends for 2017 by the

New-Jersey-based firm released on Tuesday.

‘Macau will again become a growth story as gross gaming revenues continue to climb and new integrated resorts open,’ the firm wrote in a press release. ‘The mass market will dominate and VIP play will decline to less than 50 per cent of GGR for the first time since Macau reverted

Results

Mass reliance Month to date average daily rates for the first 11 days of the month saw a 10 per cent increase month-on-month in December, reaching MOP626 million (US$78.3 million) in gross gaming revenue, according to data from analyst firm Bernstein. The results also indicate a 20 per cent increase year-on-year, which the analysts note could be due to a ‘good VIP hold rate’.

They continue to lament the breakdown between VIP and Premium Mass, noting that the ‘overall gross gaming revenue number needs to be taken with a bit of scepticism.’

Assumptions are for an average daily rate of about MOP650 million to MOP670 million for the month of December, leading to a year-onyear monthly increase in revenue estimated to hit 12 per cent to 14 per cent, amounting to MOP20.6 billion or MOP21 billion for the month.

Month to date gross gaming revenue calculated by the analysts during the first 11 days of the month hit MOP7.55 billion.

to China.’

Listing the trends in the order of prominence, the research house points out the first trend for 2017 will be that: ‘significant expansion opportunities are expected to arise as legislation is crafted in Brazil, India and Japan.’

The city’s gaming revenue has recorded four consecutive months of

year-on-year growth since August this year following a slump of 26 months.

For the first three quarters of the year, local gaming revenue derived from the VIP market amounted to some MOP85.6 billion (US$10.7 billion), accounting for about 52.6 per cent of the total revenue of MOP162.8 billion. K.L.

M&A

The improvements in infrastructure in the city are expected to improve the main driver of the Cotai Strip, the mass market, set to primarily benefit operators such as Sands China, with its ‘advantaged interconnected properties’ being its ‘key value driver’.

Galaxy, note the analysts, continues to ramp up its Phase Two and to ‘successfully realign to a mass focus’, which so far has seen it extend ‘its market share in mass to record high levels while keeping its leadership position in VIP’. If continued, this could ‘provide an upside catalyst to the stock’. However, if VIP rebounds quicker than expected ‘it would disproportionately benefit the company’ given its strong retention of a VIP network and product offering.

Regarding recent announcements by the Monetary Authority of Macao vis-a-vis the reduction in Union Pay ATM withdrawal limits per transaction but not per day the group notes that ‘we believe the effect of this new change would […] have no material impact on gross gaming revenue.’ K.W.

Wynn sells almost half of Las Vegas retail operation Gaming operator Wynn Resorts, parent company of Wynn Macau, has announced that it is selling a 49.9 per cent stake in its Las Vegas retail operations. The sale will be conducted by real estate developer Crown Acquisitions, based out of New York, and will include the creation of a joint venture.

Crown Acquisitions will form a joint venture with Wynn Resorts, paying the gaming company a total of US$472 million (MOP3.78 billion) in two tranches. The first instalment is expected to arrive in early 2017, amounting to US$292 million, while the remaining instalment, amounting to US$180 million, will be paid when Wynn Plaza opens next year.

The joint venture undergone by the two companies will allow it to own 88,233 square feet of retail space at Wynn and Encore Las Vegas, already

developed and in use. In addition, it will have the right to 72,851 square feet in Wynn Plaza, currently under construction, note analysts at Telsey Advisory Group.

‘We view the news as a modest positive […] due to the unlocking of value and the incremental cash to reduce leverage,’ note the analysts, ‘given that the current leverage of the company is elevated with the completion and opening of Wynn Palace in Macau.’

Analysts at Deutsche Bank also hold a positive view of the exchange, noting: ‘We believe the transaction is a modest positive from a balance sheet perspective, given a healthy cap rate and prior retail monetization activity in the space has been well received by investors.’

Wynn Resorts will maintain a 50.1 per cent stake in the venture. K.W.

Business Daily Thursday, December 15 2016 7

Gaming

Gaming

A bribe or a sting Two officials from the Philippine Bureau of Immigration have been accused of extorting local businessman Jack Lam in exchange for the release of arrested illegal Chinese workers Nelson Moura nelson.moura@macaubusinessdaily.com

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wo Philippine officials are accused of extorting Jack Lam for the release of over 1,300 illegal workers discovered in a raid on the local gaming tycoon’s casino property Fontana Leisure Parks and Casino on Luzon Island, reports South China Morning Post.

According to the newspaper, the country’s Bureau of Immigration initiated an investigation into two of the Bureau’s Deputy Commissioners, Al Argosino and Michael Robles, regarding extorting 50 million pesos (MOP8 million/US$1 million) from the local businessman to secure the

release of the arrested workers.

The two Philippines Bureau of Immigration officials held a press conference denying the accusations, claiming they were “set up.” They declared that despite receiving the money from Mr. Lam it was only a “ploy” used in a sting operation, not a bribe, Philippine newspaper The Standard reported.

The officials added that the sting operation had revealed a “corruption link” involving Mr. Lam, two of his interpreters and a Philippine Immigration intelligence chief and a former police official.

The raid on the Fontana Leisure Parks and Casino was the tipping point for Philippine President Rodrigo Duterte to authorise the arrest

of Mr. Lam based on the charges of economic sabotage and bribery on November 29.

In addition, the property’s certificate of registration and tax exemption were suspended, as were to the gaming boss’s land-based and online

casino operations.

However, according to the Philippines website Inquirer, although the Philippine Government had shut down a hotel, convention centre and casino at the 300-hectare casino resort, some other facilities such as the golf course, water park and several villas are still being managed by Fontana Resorts Country Club Inc., an affiliate of a company owned by the businessman.

The arrest order came after the chairman of junket operator Jimei International Entertainment Group Limited fled the country. With Mr. Lam’s whereabouts currently unknown, President Duterte has said the businessman could possibly return to the country if he pays due taxes and negotiates his gaming licence with the country’s gaming commission, Philippine Amusements and Gaming Corporation (PAGCOR).

The junket operator’s contract was reached with the country’s former President Benigno Aquino III, providing a 1 per cent tax rate for the businessman’s gaming operations in the country, less than the 10 per cent tax charged to other gaming operators.

8 Business Daily Thursday, December 15 2016

Greater China Loans

China bank lending on track for record as Nov new loans rise to 794.6 bln yuan

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hinese banks extended RMB794.6 billion (US$115.10 billion) in new yuan loans in November and look set to extend a record amount of credit this year as Beijing boosts the economy to meet growth targets despite worries about the risks of prolonged debt-fuelled stimulus.

Analysts polled by Reuters had expected new lending to have risen to RMB720 billion from October’s RMB651.3 billion.

Key Points China loan data show continued robust mortgage demand Nov new loans RMB794.6 bln (f’cast RMB720 bln, Oct RMB651.3 bln) M2 money supply +11.4 pct y/y, vs f’cast +11.5 pct Nov TSF at RMB1.74 trln, vs RMB896.3 bln in Oct New bank loans rose to a record RMB11.6 trillion in the first 11 months of the year, according to Reuters calculations based on central bank data.

Continuation

Lending continues to be driven heavily by robust mortgage growth despite a series of measures rolled out by the authorities to cool surging

home prices and avoid property bubbles.

M i d-t o l o n g-t e r m l o a n s t o households, primarily mortgages, rose to RMB569.2 billion, or 71.2 per cent of all loans, up from September’s 66.5 per cent.

Broad M2 money supply (M2) grew 11.4 per cent from a year earlier, central bank data showed on Wednesday, slightly below forecasts.

Outstanding yuan loans grew by 13.1 per cent by month-end on an annual basis.

Outstanding loans had been forecast to rise 13 per cent, while money supply was seen up 11.5 per cent.

China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, rose to RMB1.74 trillion in November from RMB896.3 billion in October.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offers, loans from trust companies and bond sales.

Liquidity

China’s central bank said recently that it will maintain ample liquidity in the economy while taking steps to prevent asset bubbles, adding that the balance between stabilising growth

and preventing bubbles has become more challenging.

China’s economy expanded at a steady 6.7 per cent in the third quarter and looks set to hit Beijing’s full-year target, fuelled by stronger government spending, a red-hot property market and ample credit that are adding to its growing pile of debt.

China’s overall debt has jumped to more than 250 per cent of GDP from 150 per cent at the end of 2006, the kind of surge that in other countries has resulted in a financial bust or sharp economic slowdown, analysts say. Reuters

Economy

Economy defies prophets of doom as 2017 risks loom China has ended the year with its old growth engines roaring and new drivers like consumption in robust health, defying the prophets of doom yet again. Now, it confronts 2017 with fresh questions over the debt and stimulus used to underpin that stabilization.

Industrial output and fixedasset investment maintained brisk expansions in November and retail sales accelerated, data released Tuesday showed. That’s resulted in an overall expansion of about 7 percent, according to a monthly tracker from Bloomberg Intelligence.

Aside from managing its ballooning debt load, China also faces a 2017 fraught with challenges -- from potential confrontations with U.S. President-elect Donald Trump over trade and Taiwan to the possibility that rising U.S. interest rates accelerate capital outflows. As the government prepares for an annual economic work conference as early as this week, the economy -- for now at least -- is in a sweet spot that’s given

policy makers space to selectively tighten liquidity and begin to clamp down on surging property prices.

“Compared to January, when people thought China was having a hard landing and capital outflows were huge, this year is way better than expected,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “On the other hand, growth is still driven by the old economy, property. These numbers aren’t going to last forever.”

T u es d a y ’ s d ata sh o w e d a n acceleration of retail sales, with help from car sales as buyers rushed to capitalize before tax incentives on purchases expire. Online sales also quickened last month, boosted by shopping bonanza Singles Day on Nov. 11.

But state-owned firms and infrastructure investment continued to do most of the heavy lifting. Stateowned investment was up 20.2 percent in the first 11 months from a year earlier and November fiscal spending rose 12.2 percent from a

year earlier.

Meantime, exports have been cushioned by a weaker yuan and factory prices have snapped out of their deflationary funk, leaving the economy’s expansion on pace to land smack in the middle of the government’s 6.5 percent to 7 percent full-year objective.

With a crucial Communist Party Congress scheduled for late next year, policy makers are committed to providing enough stimulus to underpin a target for average annual growth of at least 6.5 percent to 2020.

The downside of that is an everincreasing debt burden, with its risks deferred to the future.

‘Property Bubble’

“Policy support was financed by more debt, which worries investors,” said Wang Tao, head of China economic research at UBS Group AG in Hong Kong. The “property rally also made domestic residents concerned about a property bubble.”

Stimulus also may be needed next year to offset the likely drag on growth from curbs on home sales.

Tom Orlik, chief Asia economist for Bloomberg Intelligence in Beijing, estimates real estate investment will slow to 1 percent in 2017 from

8 percent this year, resulting in a 1 percentage point drag on growth.

Expiring car tax breaks will weigh on retail sales, too.

A front page article in the Communist Party’s flagship newspaper People’s Daily on Wednesday used the phrase new “fangwei” -- which translates as new orientation -- to reference measures to force some zombie companies to close and warned about a period of torture if a “reform window” is missed. Still, economists expect the imperative for rapid growth to prevail again next year.

“While it calls for the reduction of supply in some sectors, it also advocates pouring a flood of statesubsidized investment into new sectors, which inevitably will generate oversupply,” said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance.

The economy’s 2016 stabilization looked far from inevitable in January, when capital outflows surged and the yuan sank as uncertainty over the nation’s exchange-rate regime roiled global markets. But instead of a hard landing, here’s what happened: While the yuan weakened and foreign-exchange reserves continued to fall, capital outflows steadied after January’s scare. Policy makers have also begun tightening controls on capital outflows Deep in a deflationary funk at the beginning of the year, factory-gate inflation rose last month to the highest since 2011 and the focus has shifted to how much inflation China may export to the rest of the world Property market collapse? Instead, property prices surged, leading to the latest in a series of attempts over several years to rein them in.

“The revival in growth has come once again from the clanking, energy-intensive industrial sector,” Orlik wrote in a report. “How long does China have in this sweet spot of resilient growth and far-sighted policy? With risks from trade, real estate and autos looming, the answer might be ‘not very long.’” Bloomberg News

Business Daily Thursday, December 15 2016 9

Greater China Co-working

In Brief

Developers, funds target Mainland demand for co-working space amid start-up boom

Infectious diseases kill 1,876 in November A total of 1,876 people died as a result of infectious diseases on the Mainland in November, official data showed Wednesday.

According to the National Health and Family Planning Commission, there were 599,559 cases of infectious diseases reported on the Mainland last month. More than 280,000 cases were classified as Class B infectious diseases under China’s Law on the Prevention and Treatment of Infectious Diseases, and they resulted in 1,868 deaths.

Viral hepatitis, tuberculosis, syphilis, gonorrhoea and bacterial and amoebic dysentery accounted for 93 per cent of cases in this category.

Category C diseases were responsible for close to 319,000 cases, and eight deaths. Foot and mouth disease, infectious diarrhoea, and influenza were the most prevalent in this category, accounting for 94 per cent of cases.

Clare Jim

Real estate developers and financial investors are capitalising on fastrising demand for leasing of “coworking” spaces in China, as Beijing encourages startups and small businesses in a bid to offset slowing growth at traditional industries.

Developers, including China Vanke, Soho China and Singapore’s CapitaLand, are renting out property space that hordes of self-employed persons or small-sized companies then share, company executives said.

The lease deals with the startups are usually short-term and are done mainly through specialised operators.

Financial investors are also jumping in on the bandwagon, amid a growing belief that shared spaces deliver greater synergies by driving up innovation and productivity.

Citic Capital, whose seven-storey shopping mall “Shanghai 189 Lane” is due to open later this month, will rent its top two floors to a co-working space operator.

“A new economy is here, we need to bring in different tenants in the past the anchor tenant may be a gym, theatre or supermarket, but now it may be co-working offices,” Citic Capital’s head of real estate group Stanley Ching told Reuters.

Co-working’s popularity is helping developers and financial investors tap new revenue sources in China and cushion the impact of the softening retail and office property sectors as the world’s second-largest economy slows. But the highly cyclical nature of the startups business model also exposes them to new risks.

The number of co-working spaces in China has grown rapidly this year, with currently over 500 sites in Shanghai and Beijing alone compared to just a few in 2015, according to real estate services firm Jones Lang LaSalle.

The segment is expected to account for a third of the office demand in the long term from around 5 per cent now, predicted UrWork, China’s largest co-working space operator in terms of number of sites, which is just a year-and-a-half old and is valued at US$800 million.

Leasing a desk for US$260-US$400 a month, landlords can often earn a higher return renting upper floors of a shopping mall to a co-working operation than to retailers, and get around a 10 per cent premium renting office space compared to traditional corporate tenants, said service provider Colliers.

As once-flourishing sectors such as steel and coal lose their lustre, China

Health

Politics

One-China principle cornerstone of peace, stability across Taiwan Strait: spokesperson

is facilitating the development of new industries and services to transform the economy. Cities such as Beijing and Guiyang in the southwest provide rental subsidies to startups, while Suzhou in eastern China plans to have 300 incubators by 2020.

“China’s freelancer market is not as mature as those of London, New York and Paris, but we have a lot of SMEs and the number is growing exponentially especially under government support, so there’s great potential,” said Mao Daqing, founder of UrWork, which aims to raise the number of co-working sites to 60 next year from 40 across 10 cities at end-2016.

Flexibility

Even some mature companies, such as HSBC, Lenovo and Alibaba’s Aliyun utilise co-working spaces. The spaces provide established firms with the flexibility to hire more contract

workers or downsize labour.

Developers and others are lining up to tap co-working’s potential.

CapitaLand announced a collaboration with UrWork this month to provide co-working spaces in its properties in China and Singapore.

Key Points Beijing encourages start-ups to drive new economy Co-working spaces in Beijing, Shanghai jump to over 500 -JLL Co-working to make up 3rd of office space demand in long run-UrWork Beijing-based Sino-Ocean Group has signed an agreement with U.S. co-working operator WeWork, while Vanke rents space to operators including UrWork, and in some cities it also operates its own co-working business.

Kailong, backed by private equity firm Warburg Pincus, bought a Shanghai three-star hotel in 2015, refurbished it into an office building, leased it to WeWork and then sold it to a fund controlled by Tianli Holdings last month for more than US$74 million.

WeWork, which earlier this year received a US$430 million funding round from China’s Legend Holdings and its private equity group Hony Capital that gave it a valuation of more than US$15 billion, has opened co-working sites in Shanghai and is expanding into Beijing.

But the co-working business also brings risks, analysts said.

“The very nature of such shortterm leasing exposes Soho to significant risk, as startups and SMEs are highly vulnerable to changes in macroeconomic conditions,” Morningstar said in a research note, commenting on Soho China’s coworking business. Reuters

Adhering to the one-China principle is the political foundation to develop ChinaU.S. ties and a cornerstone for peace and stability across the Taiwan Strait, a Chinese government spokesperson said Wednesday. An Fengshan, spokesperson for the Taiwan Affairs Office of the State Council, made the remarks at a press conference, responding to U.S. President-elect Donald Trump’s recent remarks on the one-China principle. “Healthy and steady development of China-U.S. ties will be out of the question if the basis of sticking to the one-China principle is disturbed or damaged,” An said. According to An, the Taiwan issue is about China’s sovereignty and territorial integrity, as well as China’s core interests; breach of the principle will have a serious impact on peace and stability across the Taiwan Strait. “Facts will tell these people that Taiwan independence is a dead end,” An said.

Fund

Gov’t allocates disaster relief funding The finance and civil affairs ministries Wednesday jointly allocated 5.705 billion yuan (about 826.3 million U.S. dollars) to provide living support for residents in disaster-hit regions. The fund will help solve difficulties caused by disasters, including food shortages, and inadequate clothing and heating, during winter and spring, according to a Ministry of Civil Affairs statement. It urged local governments to expedite distribution of the money and goods, ensuring disaster-hit residents receive them in timely fashion. Official figures show natural disasters, including earthquakes, low temperatures and snowstorms, affected about 465,000 people in November. They caused 880 million yuan in direct economic losses, forced 2,000 people to relocate, and destroyed more than 700 houses, damaging a further 38,500.

10 Business Daily Thursday, December 15 2016

Greater China

Cinema

Wanda’s US$150 mln ‘Great Wall’ to test the Mainland’s film boom

“

T

he Great Wall” debuts Friday in China with a lot more at stake than just the US$150 million spent to make the Dalian Wanda Group Co.-backed action-fantasy epic.

As the most expensive film ever shot in the country and the first major Chinese-American co-production, it is also a test of blockbuster demand in a cinema market that’s slipped from boom to bust. Prospects that the movie will draw audiences across continents have also raised expectations that it will be the new model for China-Hollywood collaboration.

Starring Matt Damon and directed

by Zhang Yimou, one of China’s most celebrated filmmakers, the “Great Wall” got underway as a project when box-office sales were surging more than 35 per cent a year. Now, years later, ticket sales have dropped for three months straight and some are asking whether movies are getting worse, audiences are getting pickier, or both.

“I know what the movie would do in last year’s market, but I don’t know what it’s going to do this December,” Peter Loehr, the film’s producer, said in an interview last week in Beijing.

“One of the reasons that the market is flat this year is movies haven’t been very strong and that people are waiting for an event movie to happen. I hope we can be that,” said Loehr, chief executive officer of Wanda unit Legendary East.

The film is also the biggest test yet for Legendary East, the China subsidiary of Legendary Entertainment, which Chinese billionaire Wang Jianlin’s Wanda Group bought earlier this year. Loehr, who came to China 22 years ago and now speaks fluent Mandarin, is an industry veteran, having produced some of the country’s first commercially successful films.

“Great Wall” tells the story of crack troops assigned to defend attacks from flocks of beasts called Tao Tie (TAO TEE-YAY), which is a symbol of greed in ancient Chinese folklore for its voracious appetite. The special effects and battle scenes involving one of China’s best known cultural artifacts have stoked expectations the film’s domestic appeal will translate globally.

As of Wednesday afternoon, “Great Wall” had pre-sold 10.2 million tickets for Friday, the opening day, according to entertainment data provider Ent Group. That’s out of pre-sales of RMB13.4 million for all films scheduled for that day, the data show.

“One of the reasons that the market is flat this year is movies haven’t been very strong and that people are waiting for an event movie to happen.

I hope we can be that” Peter Loehr, chief executive officer of Wanda unit Legendary East

Damon, who’s been nominated for Academy Awards as an actor and won one as a co-writer of “Good Will Hunting,” is seen as an anchor from drawing a U.S. audience, while Zhang, director for the Beijing 2008 Olympics opening and closing ceremonies, along with the films “Hero,” and “House of Flying Daggers,” should assure a big Chinese audience as well.

Still, these are no guarantees, said Johnson Hu, an analyst at UOB Kay Hian.

“Chinese movie-goers have become more demanding and sophisticated,”

said Hu. “They don’t necessarily buy the fame of big directors or stars now.” He predicts “Great Wall” will gross around RMB1 billion (US$145 million), the minimum to be called a hit film in China.

Co-produced by China Film Group, Le Vision Pictures, Legendary Entertainment and Universal Pictures, the film won’t be released in the U.S. until February. That leaves more than a month of reviews in other markets to help promote the film in the U.S., still the world’s biggest market for movies.

While movie-information website Imdb.com estimates “Great Wall” cost US$135 million to make, two people familiar with the matter said the figure was about US$150 million. They asked not to be named because the matter is private. A Legendary representative said they were unable to verify any investment number.

“There are a lot of expectations, as well as suspicion, over this film, over the plot, special effects and cast,” said Jane Li, head of research at Beijing iMiner Data Technology Co., an entertainment consultancy.

She expects ticket sales in China to come in at around RMB500 million.

Beating ‘Warcraft’

“Warcraft,” another big-budget Legendary title became a summer hit in China selling RMB1.47 billion in tickets, only to flop in the U.S. at US$47.2 million.

Legendary is taking fewer chances with “Great Wall.” The marketing budget is “significantly larger” than that of the video-game adaptation, said Loehr, though he declined to disclose the amount.

Distribution for the film in China will be massive. China Film and

Wanda’s distribution arm Wuzhou together work with 70 per cent of the country’s cinemas, said Loehr.

Richard Huang, an analyst at Nomura Holdings Inc., said “Great Wall,” may not match the success in China overseas, given its theme may not appeal to audiences in Europe and North America.

“Grossing RMB2 billion is possible if the film does have a good story,” Huang said. “But the majority of revenue would be coming from China, because the film doesn’t look particularly appealing to western audiences.”

“Great Wall” also gives Legendary a chance to offer Hollywood flair, while receiving a higher share of revenue than it would get for a movie shot in the U.S. At least 43 per cent of after-tax ticket sales go to the studios and distributors. By comparison, Hollywood studios can claim only 25 per cent of sales for films imported into the country.

China will need more co-productions and big event films to maintain growth now that the market is maturing, said Vincent Fischer, a partner at Eastward Entertainment.

“The truth is that 80 per cent of Chinese box office growth from the past years comes from more movie theaters being built, and only 20 per cent from Chinese films’ quality improvement,” Fischer said. “If ’The Great Wall’ works, it may encourage more capital to be put on the table for co-productions.”

The film was also the first to shoot -- and the first to obtain subsidies -- at Wanda’s Qingdao Movie Metropolis, a sprawling complex that’s still under construction and billed as the world’s largest movie studio.

Wanda’s Wang in October unveiled incentives to lure Hollywood to shoot films in the 200-hectare (494 acre) Qingdao complex. Other than Legendary, eight other studios including Lions Gate have agreed to use the facility.

Loehr said that in making “Great Wall,” he tried to steer away from the cliches of Hollywood tent-poles.

“There are no super heroes in this movie,” Loehr said. “Everything is practical and possible at the technology of the time. No one can jump off the wall, fall 100 feet and not die.”

Bloomberg News

Business Daily Thursday, December 15 2016 11

Asia M&A

Asahi advances to third-biggest in Europe on SABMiller deal Grace Huang and Thomas Buckley

A

sahi Group Holdings Ltd. agreed to buy SABMiller Plc’s central and eastern European assets from Anheuser-Busch InBev NV for 7.3 billion euros (US$7.8 billion), its biggest deal ever and one that catapults Japan’s largest brewer to third place on the continent.

Analysts, including Tomonobu Tsunoyama at Mitsubishi UFJ Morgan Stanley Securities Co., described the price tag as being on the “high side.”

Shares of Asahi fell for a second day in Tokyo after the companies announced the deal, losing as much as 4.1 per cent Wednesday to the lowest intraday price since August.

The purchase further strengthens Asahi’s foothold in Europe after the Japanese brewer agreed to pay 2.55 billion euros for AB InBev’s Peroni

and Grolsch brands earlier this year.

For AB InBev, the divestment brings it a step closer to meeting the antitrust commitments that allowed it to buy SABMiller for about US$100 billion.

“We had estimated a value between US$5 billion and US$6 billion, so the price paid by Asahi looks pretty full and great for AB InBev,” Trevor Stirling of Sanford C. Bernstein said.

The analyst estimates Asahi will account for 9 per cent of the beer sold in Europe, excluding Russia, after the deal.

Asahi expects the acquisition -- which spans five countries and includes beer brands such as Pilsner Urquell, Kozel and Tyskie -- to close in the first half of 2017, the Tokyobased brewer said Tuesday. The deal would help Asahi position its overseas business as a growth engine to transform itself into a global powerhouse, it said.

Nickel

New Caledonian miners seek to ramp up nickel ore exports to China New Caledonia’s nickel ore miners have applied to increase shipments to China after an environmental crackdown on Philippine mine supply this year has caused prices to spike, four sources familiar with the matter said this week.

Two miners, Societe Metallurgique Le Nickel (SLN), owned by France’s Eramet, and Societe des Mines de la Tontouta (SMT) have applied for permits to export more ore to China in 2017, the sources said.

China is demanding new sources of nickel ore to feed its vast stainless steel industry after the Philippines, the world’s biggest ore exporter, halted production at some mines for environmental violations. China’s steel industry has boosted production this year to meet construction demand amid a domestic property boom.

China began importing ore this year from New Caledonia for the first time since 2011, after shipments to Australia’s Queensland Nickel were diverted after the plant shut down

due to low prices, and as Philippine exports fell. The island territory is the world’s fifth-largest nickel miner, producing nickel laterite ore, a type prized by Chinese smelters.

“We are requesting an extension to sell 950,000 tonnes of laterites a year to China for two years,” said Thibaut Martelin, general manager of SMT, up from 350,000 tonnes initially allowed.

The mining company, owned by Groupe Ballande, said it had reached its quotas and was now limiting production.

“We are running out of stock space and if we had had the quotas, we could have had loaded three more ships,” Martelin said.

The New Caledonian government will review the applications next week.

With a quarter of the world’s nickel reserves, New Caledonia has resisted selling ore directly to consuming countries to smelt and refine onshore, boosting a main source of its revenue. Reuters

Asahi shares fell 1.4 per cent to 3,447 yen by the close of trading Wednesday, extending a drop of 4.6 per cent the previous day. AB InBev rose 1.7 per cent in Brussels Tuesday.

A completed sale would bring some much-needed cheer for AB InBev investors, who had seen the stock slide 15 per cent this year through Monday. In October, the brewer missed profit estimates for the sixth straight quarter, illustrating why it needed SABMiller.

The offer values the SABMiller assets at about 15 times Ebitda of 493.8 million euros for the year ended March 2016, according to Bloomberg calculations. That compares with the median of about 11.5 times trailing 12-month Ebitda for nine brewery acquisitions announced worldwide in the past five years, according to data compiled by Bloomberg. It

would be the biggest by a Japanese company, surpassing Kirin Holdings Co.’s acquisition of Australia’s Lion Nathan Pty in 2009 for US$3.4 billion including debt, according to the data.

Japan Stagnating

Deutsche Bank AG and Lazard Ltd. advised AB InBev, while Rothschild & Co. and Barclays Plc advised Asahi.

Akeel Sachak, a managing director and global head of consumer at Rothschild, said he expects to see more cross-border industry deals in 2017.

The US$21 billion Japanese beer market is stagnating, with little growth projected through 2019, according to data tracker Euromonitor. Over the same period, the global market for suds should expand by 8.2 per cent.

Asahi said its sales in Europe will jump to about 300 billion yen (US$2.6 billion), raising its revenue from overseas to 24 per cent after the deal is completed next year.

Asahi and other Japanese brewers hav e b e e n chasi n g o v e rs eas ac q u i si t i o n s t o r e d u c e th e i r dependence on a domestic market hampered by a shrinking population.

About 24 per cent of Asahi’s revenue will come from outside Japan once the deal’s done, it said. Buying the additional SABMiller brands will also help Asahi attract younger Japanese drinkers with established premium beers, said Haitong International securities analyst Nicolas Wang.

“There was also probably a lot of competition for the assets, which pushed up the price,” Wang said in an interview. “It’s possible the company views this as a strategic investment worth paying a premium for. After all, asset quality under SABMiller is very good.” Bloomberg

12 Business Daily Thursday, December 15 2016

Asia

Growth

Line to shake up messaging business to spur growth in 2017 Pavel Alpeyev

L

ine Corp. is planning to shake up its staff and business to build on the 20-plus per cent share gain since the messaging company pulled off the tech world’s biggest public offering of the year.

Chief Executive Officer Takeshi Idezawa is tapping top lieutenants Jun Masuda and Joongho Shin to lead the hunt for fresh growth ideas. Their new responsibilities will be announced as part of a broader revamp of the Tokyo-based company’s corporate culture at a town-hall meeting in mid-January, two people familiar with the matter said.

While it might seem strange to alter strategy so soon after July’s market debut, subscriber growth is slowing, as is revenue from games and digital stickers. Line is under pressure to come up with new ways to make people spend on what is otherwise a free messaging service.

At the same time, it’s seeking to expand its user base of 220 million in the face of competition from Tencent Holdings Ltd. and Facebook Inc. Line shares were down less than 1 per cent on Wednesday, giving it a market value of 888 billion yen (US$7.71 billion).

“We need to make sure that Line continues to produce destructive innovation,” Masuda said in an interview.

Idezawa, 43, a former life-insurance salesman, runs Line in a unusual arrangement, giving Masuda, chief strategy and marketing officer, and founder and Chief Global Officer Shin a lot of sway over the company’s strategy. Masuda is a high-school dropout, while Shin is a software engineer who created a competitor

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to Google’s search engine in South Korea. Between the three of them, they spent almost a decade trying out one idea after another -- online games, a social network and a blogging platform -- unsuccessfully until the company struck gold with Line messenger in 2011.

Expect to hear more about Shin and Masuda, who are more than just deputies to Idezawa; as a triumvirate, they jointly make all major decisions. They never vote and instead prefer to reach consensus, usually via a Line chat (with an occasional bear sticker thrown into the mix), instead of holding meetings with presentations.

“Having three people with very different backgrounds may be a really good idea,” said Parissa Haghirian, professor of management at Sophia University in Tokyo. “The main downside is that decisions you arrive at may not be very radical.”

Backgrounds

While Line might be facing challenges, they’re nothing compared to what Idezawa experienced as a young executive at Livedoor, a now defunct web portal known to just about every Japanese person because its founder went to jail for cooking the books. Idezawa, then the head of the company’s mobile division, was left to clean up the mess.

Shin, 44, is in charge of overseas markets. While Line is already dominant in Japan, Thailand and Taiwan, the company has said it won’t enter countries where it has no chance of winning top share. Line’s current target is Indonesia, a fastgrowing market that’s something of an anomaly in the messaging world because it is the only place where BlackBerry Ltd. remains No. 1.

Naver Corp., Line’s parent, bought Shin’s search company when he ran out of money and sent him to Japan to start operations there. Faced with the task of learning a foreign language, Shin spent hours a day memorizing the dictionary and watching yakuza movies. He was forced to switch to office melodramas after co-workers were shocked by the gangster talk that he was picking up. (He’s fluent now.)

“I’ve learned something useful for Line from all this: just because something didn’t work for some people, doesn’t mean it can’t work” Jun Masuda Shin is a workaholic who answers emails in the middle of the night.

He sleeps in two-hour bursts, a byproduct of Line’s explosive growth period that saw him circumvent the globe 10 times in two years. “I’m better at making things and prefer working back stage than being the front man,” Shin said.

Masuda, 39, will focus on creating new products in Japan. Line is already much more than a messaging service on its home turf, with people using the app to read the news, hail taxi rides and find part-time jobs. More breakout hits may come from its chatbot platform and services

powered by artificial intelligence.

Masuda is an eloquent public speaker and a frequent panelist at startup events. He credits his gift of the gab to an unconventional upbringing. Masuda grew up selling things, helping out with his father’s often ill-fated ventures. Dinner-table conversations at his Tokyo home would often turn to business models and strategies for selling everything from household water purifiers to solar-panel systems.

Against the grain

In a culture where a formal education is a cultural prerequisite for success, Masuda managed to drop out twice: first, he first left high school at 15 and then later Waseda University, a top college in Japan. What resulted is an eclectic resume that includes writing scripts for TV quiz shows and organizing an odd celebrity birthday party, to a job on an assembly line and a stint at an Internet policy think tank. Before joining Line in 2008, Masuda ran Japan operations for Chinese search giant Baidu Inc. “I’ve learned something useful for Line from all this: just because something didn’t work for some people, doesn’t mean it can’t work,” Masuda said.

The three executives have spent the past six months crystallizing their experiences into a set of corporate va l u es f o r Li n e’ s 1 , 000 - p l u s employees with particular emphasis on being wild, fast, embracing data and having fun. “You need to be ready to change your philosophy, your culture and your brand,” Masuda said. “All three of us believe that the good times don’t last and everything can be lost in a moment.

That’s why we’ve always remained hungry.” Bloomberg

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

Business Daily Thursday, December 15 2016 13

Asia Poll

In Brief

Asia confidence slips as firms fret about sluggish demand, political uncertainty Liz Lee

Confidence in Asia toward business conditions over the coming six months dropped in the final quarter of 2016 to its lowest level in a year as firms fretted about sluggish demand in a persistently low-growth economic environment, a Thomson Reuters/ INSEAD survey found.

Firms also flagged political uncertainty as a key near-term risk, including that brought by the election of Donald Trump to the U.S. presidency - an outcome some cited as a key risk in the same survey three months prior.

The Thomson Reuters/INSEAD Asian Business Sentiment Index , representing the half-year outlook of 118 firms, fell to 63 from 68 in the September quarter, although it remained above the 50 mark separating optimism from pessimism.

“The fall in the business sentiment index confirms what we have seen over the past few years: The world economy is growing but in a way that looks suboptimal,” said Singaporebased economics professor Antonio Fatas at global business school INSEAD. “It seems very difficult to regain a high state of confidence.”

Asian companies are particularly reliant on demand from China where slowing economic performance has been the main cause for concern over the past few years. But in recent weeks, political worries have come to the fore.

Trump has advocated more U.S.centric trade relations and the cancellation of the Trans-Pacific Partnership trade pact. He has also vowed to repatriate jobs such as in the outsourcing industry which

flourishes in the Philippines, where new president Rodrigo Duterte is known for anti-American rhetoric.

In South Korea, lawmakers have voted to impeach President Park Geun-hye over an influence-peddling scandal after weeks of protests, while in India, Prime Minister Narendra Modi abolished 86 per cent of the country’s cash overnight to tackle corruption.

Firms have to navigate such events “with the possibility of either ‘muddling through’ as we have managed to do over the last two years or hitting a wall because one of these uncertain events turns negative,” said Fatas.

Australia most optimistic

Thomson Reuters and INSEAD polled firms across Asia from Nov. 28 through Dec. 9. Of 118 respondents, just over 42 per cent were positive toward business prospects over the next six months, 41 per cent were neutral and 16 per cent were negative.

Respondents included Australia’s Transurban Group, India’s Reliance Industries Ltd, PT Telekomunikasi Indonesia (Persero) Tbk, Japan’s Asahi Group Holdings Ltd, Korea Aerospace Industries Ltd and the Philippine National Bank.

Firms in Australia were the most positive with their sub-index of 86 although that was still 2 points lower than three months prior. Only Singaporean firms were negative with a sub-index of 46, albeit an improvement from the 38 of September.

Sentiment tumbled the most in the usually upbeat Philippines, to 70 from 94. Though optimistic, the subindex compared with that economy’s

average of 91 over the survey’s sevenyear life.

Sentiment fell in China, to 80 from 90, in India to 70 from 75 and in Thailand to 60 from 72. But in South Korea it rose to 57 from 50 despite the political turmoil.

“Outside of Thailand, we expect to see a slower pace of economic growth in our main markets in AsiaPacific, including Australia, China and Singapore in the near term,” said Chairman and Chief Executive William Heinecke of Thai hotelier and retail distributor Minor International PCL.

Key Points Sentiment index at 63 in Q4 vs 68 in Q3 Firms cite sluggish demand as chief risk to six-month outlook Australian firms most positive, Singaporean least Household, food & beverage sector most positive, autos least Heinecke also said his company expected global tourism to be resilient in the current climate, and that the retail food service industry would be stable in its key markets.

By sector, the retail and leisure subindex fell to 56 in the fourth quarter from 68 in the third. Household, food and beverage firms were the most optimistic at 79, up from 72, whereas those in the autos sector were the most pessimistic at 40 from 60.

Note: Companies surveyed can change from quarter to quarter.

Thomson Reuters/INSEAD

M&A

Malaysia’s Axiata in $600 mln deal with Khazanah, Japanese firm Malaysian mobile network operator Axiata said that sovereign wealth fund Khazanah Nasional Bhd and Innovation Network Corp of Japan (INCJ) will take stakes in its telecom infrastructure services unit, edotco, as part of a US$600 mln deal. Announcing the plan on Tuesday, Axiata said it would remain the majority shareholder in edotco group.

It also said it could list edotco on the stock market, but not until late 2018 at the earliest, dismissing media reports that it was considering an IPO next year. “We will look at any plans maybe late 2018 or after,” edotco Chief Executive Suresh Sidhu told a news conference. It was not immediately clear what size stakes Khazanah and INCJ, a Japanese investment firm that is partially publicly owned, will take in edotco, which prior to this deal was 100 per cent owned by Axiata.

Exports

Vietnam’s garment, textile exports to fail to reach 2016 target Vietnam’s textile and garment exports are estimated to reach US$28.5 billion in 2016, meeting roughly 92 per cent of the set plan due to market difficulties, according to Vietnam Textile and Apparel Association (Vitas) on Wednesday.

Experts said that the textile and garment sector would continue facing challenges in 2017 due to fierce competition by other major exporters while global demand is forecast to slow down.

China remains the country’s largest export market for garment, textile in 2016 which accounts for more than half of the industry’s export value. Meanwhile, the United States, the European Union (EU), Japan, India, Brazil, Russia and Canada were also large importers of Vietnamese textile and garments in 2016.

Bonds

Superlong JGB yields skid after BOJ steps up buying Employment

Thai employment agency provides jobs for freed inmates Thailand’s Department of Employment is providing job opportunities for a large number of inmates freed under a royal pardon from prisons nationwide.

Viwat Jiraphanvanich, the deputy director general of the department, said on Wednesday there are currently some 55,300 job vacancies throughout the country, which might probably be attractive to some 30,000 inmates who have been freed under the recently-bestowed royal pardon.

Thailand’s new King Maha Vajiralongkorn granted the royal pardon to those inmates, mostly having been sentenced to no more than two years in jail, on occasion of his ascension to the throne in place of the late King Bhumibol Adulyadej.

Viwat said those job opportunities are for housemaids, cooks, drivers, shopkeepers and factory workers.

The Department of Employment is yet to obtain from the Department of Corrections the number and names of the freed inmates who may be

interested to take those vacant positions and learn to have working skills from the Department of Skill Development. Xinhua

Superlong Japanese government bond prices rose on Wednesday, sending yields skidding from recent highs after the Bank of Japan increased purchases in that zone as part of its regular buying operations. A BOJ official said the increase was aimed at steering the JGB yield curve toward what the central band deems appropriate, and that the move took into account recent rapid rises in super-long yields and the possibility of further volatility. Under its current monetary policy framework of “yield curve control” unveiled in September, the BOJ aims to guide the 10-year JGB yield to around zero percent. “It was a surprise, as generally the BOJ does not offer to buy superlong JGBs the day ahead of a 20-year auction,” said Keiko Onogi, senior strategist at Daiwa Securities.

14 Business Daily Thursday, December 15 2016

International In Brief Fund

EU launches fund to boost broadband infrastructure The European Commission and the European Investment Bank (EIB) on Tuesday announced plans to launch a fund for broadband infrastructure.

The Connecting Europe Broadband Fund aims to invest in broadband network infrastructure across underserved areas of Europe and is expected to take place mid-2017. It will lead to an investment platform which brings private and public commitments together, the Commission said in a statement.

The Connecting Europe Broadband Fund aims to initially raise at least 500 million euros(531.91 million U.S. dollars) through commitments from private and public investors, including the EIB and the European Commission. The European Commission will invest 100 million euros into the Fund from the Connecting Europe Facility. The Fund plans to invest in 20 countries by 2021 and should be the first investment platform to support broadband infrastructure under the European Fund for Strategic Investment, the heart of the Investment Plan for Europe.

Inventory

Oil prices fall on rising U.S. crude stocks, OPEC output concerns Henning Gloystein

O

il prices fell on Wednesday following a reported rise in U.S. crude inventories and an estimate that OPEC may have produced more crude in November than previously thought, potentially undermining a planned output cut.

U.S. West Texas Intermediate (WTI) crude oil futures were down 69 cents, or 1.3 per cent, to US$52.29 a barrel at 0809 GMT. International Brent crude futures were down 60 cents, or 1.08 per cent, at US$55.12 per barrel.

Traders said the price falls followed a report of surprise increases in U.S. crude inventories.

Markets were also focused on an anticipated U.S. interest rate hike that would likely boost the dollar, making dollar-traded fuel imports more expensive for countries using other currencies at home.

“Momentum continues to wane in oil markets with both Brent and WTI slightly lower overnight, following higher than expected API

inventory numbers in the United States ... (which) showed an unexpectedly large increase of 4.7 million barrels,” said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

“We expect Asia trading to have a slightly negative bias as traders trim longs into the Federal Reserves’ main event this evening,” he added, referring to the U.S. central bank’s expected decision later on Wednesday to hike interest rates.

Greg McKenna, chief market strategist at foreign exchange and futures brokerage AxiTrader said that “traders pretty much have a Fed increase of 25 basis points locked and loaded.”

Bad news

Oil traders said prices were further depressed by a report from the International Energy Agency (IEA) which said it believes that producer club OPEC pumped about 34.2 million barrels per day (bpd) of crude in November, 500,000 bpd above OPEC’s official estimate, which was already a record.

If true, that would undermine the

effort by the Organization of the Petroleum Exporting Countries (OPEC) and other producers like Russia to cut almost 1.8 million bpd of production in a bid to end two years of oversupply and cheap oil.

The agency said global oil supply rose to a record 98.2 million bpd in November, with OPEC’s production offsetting declines elsewhere.

This stands against expectations of 96.95 million bpd of global oil demand for the fourth quarter of 2016.

Key Points API reports unexpected rise in U.S. crude inventories IEA thinks OPEC produced more than it said in November Expected U.S. interest hike could also weigh on oil Extended China car subsidy could be bullish for fuel demand Despite this, the IEA said that due to firm demand increases, oil markets could show a shortfall of 600,000 bpd early next year if producers stick to their reduction plans.

Also potentially bullish for crude and fuel demand was a report that China will extend a tax cut on small-engine vehicles to 2017, rather than allowing it to expire at year’s end as planned. Reuters

Airline

Swedish airline SAS eyes cost cutting Scandinavian airline SAS is aiming at further cost cutting in the coming years, the company’s CEO said on Tuesday. “Market conditions have become more demanding and the industry continues its rapid pace of change,” SAS President and CEO Rickard Gustafson said in a year-end report. The Scandinavian air travel market and demand for more long-haul routes and European leisure routes is on the rise, he said. “We are now raising our aim for our streamlining program from 0.8 billion SEK (US$87) to 1.5 billion SEK (US$163 million) in 20172019,” Gustafson said.

Denial

Monte Paschi: ECB rejected extension of capital increase The European Central Bank officially rejected Banca Monte dei Paschi di Siena SpA’s request to extend its 5 billion-euro (US$5.3billion) capital increase into January, raising the possibility of state intervention as time runs out to attract private investors. The ECB said moving the deadline to Jan. 20 wouldn’t guarantee a more favorable market that might prompt banks to underwrite the share sale, the Siena-based bank said in a statement late Tuesday. The deadline for the capital boost remains Dec. 31. Chief Executive Officer Marco Morelli is racing to find backers for the reorganization that would clean up the bank’s balance sheet with the disposal of 28 billion euros of soured loans.

M&A

Moguls’ feud puts Berlusconi’s Italian media empire in play Daniele Lepido, Alexandre Boksenbaum-Granier and Tommaso Ebhardt Two of Europe’s most prominent media tycoons are battling for control of Mediaset SpA, with French billionaire Vincent Bollore building a stake in the broadcaster founded decades ago by his close friend, former Italian Prime Minister Silvio Berlusconi.

Mediaset surged again in Milan on Wednesday, adding to its biggest gain in two decades as both sides fueled the rise. Bollore’s Vivendi SA declared a 12 per cent stake Tuesday, saying it could raise that to as much as 20 per cent. Berlusconi’s holding company Fininvest SpA countered, saying late in the day that it bought about 3.5 per cent more of Mediaset to bring its voting stake to about 40 per cent.

Th e c o m p a n i e s h av e b e e n squabbling for months, in court and in public statements, over a botched venture that would have given Vivendi control of Mediaset’s Premium pay-TV channel and each company a stake in the other.

Premium was at the center of a plan

by Bollore to form a media alliance in southern Europe that could counter online players like Netflix Inc. and Amazon.com Inc. “When the guards are distracted,

the predator hits,” said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University. “Vivendi’s move might be interpreted also as negotiating tactic to increase its bargaining power in the controversy with Fininvest over Mediaset Premium.”

Too important

The Mediaset Premium deal, valued at about 880 million euros (US$936 million) when it was announced in April, collapsed in July after Parisbased Vivendi tried to alter the agreement, lowering the value of the unit. The dispute went to court, with executives of both companies hardening their tone. The two moguls, who have been friends for decades, failed to bridge their differences.

This week, Bollore flexed his muscles, saying Mediaset was too important to leave to the courts. It’s similar to the squeeze he’s put on previous targets, including Havas SA and Gameloft SE. “We see Vivendi’s ultimate interest as controlling Mediaset in the same way as it (and Vincent Bollore) has done with a number of other assets, i.e. acquire a large minority stake and

influence the strategic direction of the company,” Liberum said in a note to clients. “Mediaset is now likely to be seen as a potential bid target.”

Mediaset extended Tuesday’s gains and advanced as much as 8.8 per cent to 3.90 euros in Milan, its highest level since June 23, giving the company a market value of 4.6 billion euros.

That followed a 32 per cent advance Tuesday, the steepest jump since the company was listed on the stock exchange in 1996. Vivendi fell 0.7 per cent to 18.43 euros Wednesday in Paris.

Vivendi and other media companies need to compete on digital platforms and on pipelines owned by telecom companies, said Maffe, the Bocconi University professor. He said Vivendi, which owns 24 per cent of carrier Telecom Italia SpA, already possesses critical, complementary assets.

Vivendi has also held talks to sell its Canal Plus pay-TV unit or form an alliance with French telecom carrier Orange SA, people familiar with the matter have said.

The decision to scrap the purchase of Mediaset Premium was “part of a specific pattern revealed with Tuesday’s move,” Berlusconi’s Fininvest said in a statement. “To create the conditions to artificially bring down the value of Mediaset and launch a discount purchase that looks like a real hostile takeover.”

Mediaset couldn’t be notified prior to the purchases for legal reasons, a spokesman for the French company said. While the move was not solicited, it is not hostile, he said. Bloomberg

Business Daily Thursday, December 15 2016 15

Opinion Business Wires

Times of India As the government pushes for more digital payments, it is not just the metros that are seeing a substantial pickup in card transactions, even small cities and towns are witnessing a strong uptake.

“The jump in card transaction volume is consistently more pronounced in tier-2 and tier-3 cities,“ said Rajeev Agrawal, chief executive of Innoviti Payments Solutions, which manages point-of-sale ter minals for merchants. He said the increase in digital transactions at these places has been one-and-a-quarter times than in bigger cities. “There has been 150 per cent growth in tier-2 cities and 157 per cent growth in tier-3 cities,“ he said.

The Star In the waters off Malaysia, Royal Dutch Shell is finding gas quickly and cheaply to replenish depleting fields where only a few years ago geologists had lost hope of discovering any new reserves. The Anglo-Dutch group is combining the latest technology with the wisdom of industry veterans to unlock new oil and gas deposits where it already operates, usually within 20 km (12 miles) of existing platforms. The result has been a string of finds which, while modest in size, can generate cash rapidly to suit an era of drastically reduced exploration budgets across the energy industry. After a costly flop in Alaska, Shell has turned away from giant “frontier” projects, focusing instead on exploring closer to home, such as in Malaysia where it has been producing oil for more than a century. Many of its rivals are following suit.

The Straits Times Private sector economists have cut their forecast for Singapore’s economic growth for this year and the next amid a lacklustre global outlook, according to a new survey. Growth should come in at 1.4 per cent this year, down from a forecast in September of 1.8 per cent, according to economists polled by the Monetary Authority of Singapore (MAS) in its latest quarterly survey out on Wednesday (Dec 14). On next year’s prospects, the survey respondents expect the economy to grow marginally faster at 1.5 per cent, a downgrade from their prediction in September of 1.8 per cent growth. The lowered forecasts come as sectors like finance and insurance, construction and wholesale and retail trade are expected to grow at a slower pace than previously anticipated.

Viet Nam News Tea exports in the past eleven months reached 118,000 tonnes, earning US$197 million, increasing 7.1 per cent in volume and 4.3 per cent in value compared to the same period last year. Of these, the export volume of Vietnamese tea in November is estimated at 12,000 tonnes with a turnover of US$21 million, according to the Ministry of Agriculture and Rural Development (MARD). However, the tea price for exports in the first ten months decreased nearly 14 per cent compared to the same period last year, to US$1,656 per tonne on average. According to the Việt Nam Tea Association (Vitas), export value for the whole year is expected at US$235 million, with 46 per cent from green tea and 53 per cent from black tea.

Confronting the next global health challenge

T

hanks to unpr e c e d e nt e d international cooperation, the world is making impressive progress in the fight against malaria. According to the World Health Organization’s just-released 2016 World Malaria Report, malaria mortality rates among children under age five have fallen by 69 per cent since 2000.

And this progress is not limited to malaria. Many countries have reduced new HIV infections by 50 per cent or more over a similar period, and the infection rates for other debilitating tropical diseases, such as leprosy and Guinea worm, have fallen significantly in recent years.

But while mortality rates from infectious diseases are declining, developed countries’ sedentary lifestyles, tobacco use, and poor diets are catching on in the developing world, and non-communicable diseases (NCDs) such as diabetes, cardiovascular disease, and cancer are increasing at an alarming rate.

NCDs now kill 38 million people annually, with almost 75 per cent of those deaths occurring in lowand middle-income countries. And the outlook for developing countries is dire; for example, by 2030, NCDs are expected to cause more deaths in Africa than communicable, maternal, and nutritional illnesses combined.

Beyond threatening lives, NC D s c a n d e s t a b i l i z e economies, especially in countries with limited healthcare infrastructure. The challenge for governments and global health agencies is to continue making progress against infectious diseases, while also addressing the rising NCD threat.

Fortunately, we can apply lessons from the successful fight against infectious diseases to the emerging fight against NCDs. Working with nonprofit agencies, intergovernmental organizations, and private companies, world leaders can have a profound impact on public health – even if foreign-aid budgets are strained.

For starters, we need innovation. Without the great leap forward in antiretroviral therapy in the mid-1990s, we would not have the tools we have today to control HIV. And without the artemisininbased combination treatments that also emerged in that decade, malaria death rates would still be stubbornly high. Policies that improve access to health care should also support innovation – and they must never undermine it.

Beyond innovation, we need strong partnerships to manage NCDs and ensure that patients have access to the treatment they need. Effective HIV management has transformed that disease from a death sentence into a chronic condition in most places; but, of course, we now need sustainable solutions to provide continuous, long-term care.

The private sector is increasingly committed to this approach. Novo Nordisk’s Changing Diabetes Care and Eli Lilly’s NCD Partnership are just two

“

Jörg Reinhardt Chairman of the Novartis Board of Directors

examples of how companies are collaborating with governments and health organizations in resourcelimited countries to develop scalable, sustainable, and locally driven programs to combat diabetes.

And Novartis Access, which our company launched in 2015, is a socially oriented business that works with governments, NGOs, and other public-sector customers in lower-income countries. We have two goals for the program: to expand access to affordable medicines to treat NCDs such as heart disease, type-2 diabetes, respiratory illnesses, and breast cancer; and to cooperate with local and international organizations to strengthen health-care systems. So far, we have observed that developing countries need to shift their paradigm for medicine procurement, and update their national essential-medicines lists.

A third lesson to take from the fight against infectious diseases is that political commitment is crucial. As Chatham House and other independent observers have warned, too few governments – particularly in developing countries – spend the recommended 5 per cent of annual GDP on promoting health. Even when national budgets are tight, health investments are worth it; after all, an ounce of prevention is worth a pound of cure. Lower-income countries that are heavily affected by NCDs have everything to gain from investments that will make their people healthier and more productive. As we have learned from managing HIV, investments in public health create a virtuous cycle: as people and communities begin to experience better health, they invest further in making health a priority.

Managing the rise of NCDs will require long-term thinking, and government leaders will have to make investments that might pay off only after they are no longer in office. This is a serious challenge, especially in electoral democracies; but policymakers from around the world can come together to leverage their investments and those undertaken by the private sector. And even if most countries reach the recommended spending of 5 per cent of GDP, the world will still need innovative financing mechanisms and policies to enable public-private collaboration.

Leaders from around the world must prioritize the global fight against NCDs. To this end, governments and global health agencies should apply lessons learned from the successful fight against infectious diseases. Through innovation, dynamic partnerships to strengthen health systems, and political will, the world can sustain the gains made against infectious disease, while also effectively combating NCDs.

Noncommunicable diseases such as diabetes, cardiovascular disease, and cancer are increasing at an alarming rate

”

16 Business Daily Thursday, December 15 2016

Closing Consumer prices

estimate of 17 economists surveyed South Africa inflation rises to 9-month high in November by Bloomberg. Prices climbed 0.3 South African inflation accelerated to the highest level in nine months in November, boosted by increases in food and transport prices. The inflation rate was 6.6 per cent compared with 6.4 perc ent a month earlier, Pretoria-based Statistics South Africa said on its website Wednesday. The acceleration is in line with the 6.6 per cent median

per cent in the month. Prices of food and non-alcoholic beverages, which comprise 15.4 per cent of the index, climbed 11.6 per cent from a year earlier, while fuel costs rose 5.6 per cent. “We are still seeing sticky domestic food prices,” Jeffrey Schultz, an economist at BNP Paribas Securities in Johannesburg, said by phone on Wednesday. Bloomberg

Manpower

U.K. employment declines for first time in more than a year The country’s employment fell to 31.8 mln people in the three months through October

by Jill Ward

U

.K. employment fell for the first time in more than a year in the three months through October as the labor market showed some signs of weakness.

The number of people in work fell by 6,000 to 31.76 million people, the Office for National Statistics said on Wednesday. While the decline was small, and the jobless rate was unchanged at 4.8 per cent, the statistics office said the labor market “appears to have flattened off in recent months.”

“This is the first genuine disappointment we have seen in the hard data since the Brexit vote,” said Alan Clarke, an economist at Scotiabank in London. “This has been a gradual deterioration” and “is bad news for spending growth next year.”

Single-month data showed that the unemployment rate rose to 4.9 per cent in October from 4.6 per cent in September. Unemployment fell over the three-month period, by 16,000 to 1.62 million, as the drop in the number of people in work was more than offset by those leaving the labor force. There was a 22,000 decline in the economically active population during the period.

In a worrying sign, full-time employment dropped by 51,000 between August and October.

Jobless claims, a narrower measure of unemployment, rose for a fourth month in November. The pound was little changed against the dollar after

the data were released and was at US$1.2661 as of 9:56 a.m. London time.

The figures come a day before the Bank of England announces its latest policy decision, when it’s forecast to keep its key interest rate at a recordlow 0.25 per cent. After cutting the rate in August, policy makers have

Economy

since warned of inflation risks because of the pound’s drop since the U.K. voted in June to leave the European Union.

“If job opportunities are deteriorating, we see further downside risk for confidence and activity in general,” said James Knightley, an economist at ING Bank NV in London.

“While the BOE are officially neutral on the outlook for monetary policy, we still think a rate cut is more likely than a hike next year.”

Monetary

For consumers facing the prospect of accelerating inflation -- and a potential squeeze on their incomes -- the latest labor report had some good news. Regular pay growth accelerated to 2.6 per cent, the fastest since August 2015, leaving real wage growth at 1.7 per cent for a fourth month. Still, with price growth set to quicken rapidly early next year, increases in real incomes could be eroded.

Bloomberg

Business

Indonesia’s economy expected China’s yuan funds for foreign to grow 5.6 pct in 2017 exchange continue to drop

Sinopec invites banks to advise on unit’s revamp

Indonesia is predicted to see its economy grow 5.3 to 5.6 per cent next year, driven by low rate benchmark, public and government spending and positive impacts from government’s economic reform packages.

The estimation comes from an outlook projection compiled by the Indonesian Institute of Sciences (LIPI) issued on Wednesday.

The think tank’s growth estimate for next year is higher than the assumption in the state budget which initially set the growth rate at 5.1 per cent.

Researcher at LIPI’s center of economics studies Maxensius Tri Sambodo said the moderate growth level was predicted to reach 5.45 per cent.

Sambodo said public and government spending would become major drivers to spur the nation’s growth, supported by controllable inflation estimated to reach 4 per cent throughout next year.

The low benchmark rate and sound implementation of government’s economic reform packages would eventually lead to significant improvement in investment sector, Sambodo added.

Indonesia has revised its growth estimate this year to 5.1 percent from the targeted 5.2 percent due to the ensuing global economy downturn. Xinhua

China Petroleum and Chemicals Corp (Sinopec) has invited 14 banks to pitch for a role as a financial adviser to help it revamp the corporate structure of its fuels distribution unit ahead of a planned IPO in Hong Kong, people familiar with the plans told Reuters on Wednesday.

The group of firms invited to pitch included BOC International, CITIC Securities Co Ltd , China International Capital Corp Ltd (CICC), Goldman Sachs and UBS AG, added the people, who declined to be named because information on the proposed restructuring is not yet public.

The adviser will help the unit, Sinopec Marketing Co Ltd, transition from a limited liability company, which has less than 50 shareholders, into a corporation that can have a multitude of investors and a board of directors, among other things, added one of the people.

The IPO could raise about US$12 billion next year, a separate person said, though the value is subject to market conditions at the time of the listing.

CITIC Securities, Goldman and UBS declined to comment, while Sinopec, BOC International and CICC didn’t immediately respond to a Reuters request for comment. Reuters

The Chinese central bank’s yuan funds outstanding for foreign exchange (forex) continued to fall in November weighed on by lingering capital outflow pressures amid a weakening yuan against the U.S. dollar.

The funds declined RMB382.7 billion(US$55.44 billion) month on month to RMB22.26 trillion, data from the People’s Bank of China showed Wednesday.

It is the largest monthly drop this year and marks the 13th consecutive month of declines.

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China’s trade surplus and foreign investment in the country, adding funds to the money market.

Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity.

Concerns about capital outflows had been on the rise as the economy slowed, possibility of a U.S. rate hike loomed and the Chinese currency had fallen since China revamped its forex mechanism last year.

China’s forex reserves, another indicator of capital outflow, fell for the fifth straight month in November to US$3.05 trillion, down US$69.1 billion from October levels. Xinhua