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Friday, October 27 2017 Year VI Nr. 1411 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor OSCAR guijarro
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Wnow now
Good times. And knockout timepieces. Macau pulls out all the musical stops, and showcases some cool chronometers Consigliere Page 11 Friday, October 27 2017 Year VI Nr. 1411 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro Logistics
Zhuhai unveils transportation hub plans Page 8
Subsidies
Culture industry defends its corner Page 9
www.macaubusiness.com
Environment
Casino operators go green to shuttle punters around town Page 5
Consumption
Retailing in the MSAR stable during Golden Week Page 4
Driving ambition
Transport
Fancy driving on the Mainland? The Traffic Consultant Council mooted it yesterday. Locals would be able to drive in Mainland China after passing an exam, according to the proposal. Mirroring similar features unveiled in Hong Kong in 2004. Page 5
Intellectual hurdles IP A legal expert analyses difficulties in the registration process of intellectual property in the city. Asserting that current IP policy acts against normal protection. Page 6
Star-studded city
Busted flush
Data from Macao Government Tourism Office registers an uptick. In the city’s hotel occupancy in September. Room prices rose across the board with the exception of 5-star properties. Hospitality Page 4
HK Hang Seng Index October 26, 2017
28,202.38 -100.51 (-0.36%) Worst Performers
China Mengniu Dairy Co Ltd
+2.59%
Link REIT
+0.91%
Geely Automobile Holdings
-2.14%
Hengan International Group
CK Asset Holdings Ltd
+1.40%
Bank of East Asia Ltd/The
+0.58%
Sands China Ltd
-1.99%
China Unicom Hong Kong
-1.06%
WH Group Ltd
+1.28%
AIA Group Ltd
+0.51%
Tencent Holdings Ltd
-1.42%
China Construction Bank
-1.02%
Want Want China Holdings
+1.28%
AAC Technologies Holdings
+0.44%
China Life Insurance Co Ltd
-1.38%
Bank of China Ltd
Lenovo Group Ltd
+1.10%
Hang Seng Bank Ltd
+0.37%
China Shenhua Energy Co
-1.38%
Galaxy Entertainment Group
22° 28° 20° 27° 20° 26° 21° 26° 22° 26°
-1.18%
-1.01% -0.94%
Today
Source: Bloomberg
Best Performers
Sat
Sun
I SSN 2226-8294
Mon
TUE
Source: AccuWeather
Gaming James Packer concedes Crown Resorts’ global plans failed. Retreating from multiple projects beyond Australia’s borders. Packer denied allegations of tampering with slot machines. Page 10
4 Business Daily Friday, October 27 2017
Macau Infrastructure
Taipa Ferry Terminal Post Office 11:00 am to 6:00 pm, while Western Union Service will be provided from operational next month The Post Office branch at Taipa Ferry Terminal (pictured) will be operational starting November 9, the Macao Post and Telecommunications Bureau (CTT) has announced. Located in the Terminal’s Arrival Hall, the new branch will provide postal services from Monday to Saturday,
Monday to Friday, 11:00 am to 5:00 pm. Head of the Marine and Water Bureau (DSAMA) Wong Soi Man had previously revealed that more retail stores and restaurants are expected to be opened by the end of October, while larger scale restaurants are only expected to be operational by year-end. C.U.
Hotel
September sweetens hotel occupancy Hotel room prices remained almost the same when compared to the prices asked last year Cecilia U cecilia.u@macaubusinessdaily.com
D
espite the end of the holiday months, the city saw a general growth in its hotel occupancy rate, posting a slight increase of 2 percentage points month-on-month and 3.9 percentage points year-on-year to 90 per cent. According to the latest information posted by Macao Government Tourism Office (MGTO) 3-star hotels had the highest occupancy rate at 92 per cent, registering an increase of 2.4 percentage points when compared to 89.6 per cent recorded a year ago. The occupancy rate of 3-star hotels in September posted month-on-month growth of 1.2 percentage points. Hotel properties that are 4-star and 5-star had an occupancy rate of 90.9 per cent and 89.3 per cent, respectively, up 2.8 percentage points and 4.6 percentage points.
Unchanged hotel prices y-o-y
The average price of a hotel room this September was MOP1,268.1 (US$157.8), representing a growth of 0.1 per cent from MOP1,266.8 recorded last September. Rooms in 4-star properties posted the highest year-on-year price change, up 8.5 per cent to MOP790, while 3-star hotel rooms cost MOP793.4 in September, up 5.9 per cent compared to MOP749 in September 2016. By contrast, a drop of 2.4 per cent was registered in the price of rooms offered by 5-star hotels, from
MOP1,594.6 in 2016 to MOP1,556.2 this year.
Positive 2017
From January to September 2017, the occupancy rate reached 88.3 per cent, indicating an increase of 4.6
percentage points year-on-year, of which the rate for 5-star properties posted the highest growth of 5.4 percentage points to 87.4 per cent. For the prices in the past nine months, the average price dropped 1.7 per cent to MOP1,257.5, with room
prices of 3-star hotels registering the biggest drop of 3.2 per cent to MOP802.5. Data released by the Tourism Office was gathered from the Macau Hotel Association, which includes some 41 3-star to 5-star hotels.
Construction
Economy
DSAL issues 5 suspension orders to construction sites in October
Sales stable during October Golden Week
The Labour Affairs Bureau (DSAL) issued five suspension orders to construction sites for the month of October, in the wake of the inspections conducted of some 541 construction sites in the city. Being the second inspection this year, DSAL aims to check the safety conditions of construction sites after harsh weather.
The Bureau made 231 improvement suggestions to constructors of problematic sites and penalised 48 areas not passing safety standards. Issues that appeared in sites are mostly related to collective protection measures and working at height. DSAL reiterated the continuation of enhancing safety awareness in construction via inspection and education.
Some 43 per cent of interviewed stores revealed that their sales during Golden Week remained the same compared to normal days, although 50 per cent of the shops said the volume of visitors had increased. Macao Economic Services (DSE) interviewed some 1,230 retail and food & beverage stores about their business performance during the National Day Golden Week in the first week of October. ‘Interviewee’ store were mainly located in areas near the Border Gate, the Three Lamp Districts (Rotunda de Carlos da Maia), Rua de Pedro Nolasco da Silva, Avenida do Conselheiro Ferreira de Almeida, Avenida de Almeida Ribeiro, Nam Van District, Taipa and shopping centres in Cotai. According to DSE data, 40 per cent of interviewees said sales had increased
compared to normal days, posting an increase of 23 per cent on average, while 17 per cent of the stores, on the other hand, claimed that business had dipped during Golden Week. Industry-wise, sales improved in stores selling clothing and shoes, commodities, food & beverage, gold jewellery and watches. Among
which, stores selling clothes and shoes posted the highest increase in sales, up 11 per cent compared to normal days. Shopping centres in Cotai, as revealed by DSE, posted the highest sales during Golden Week, up 22 per cent. In overall terms, sales increased an average of 4 per cent when compared to normal days.
Business Daily Friday, October 27 2017 5
Macau Travel document
Macau SAR passport powers up
The Macau SAR passport ranked 32nd in the Passport Index released by the Global Passport Power Rank this week, with a 120 visa-free score. The city’s travel document climbed two positions when compared to last year. The rank measures the ‘strength’ of passports worldwide by considering their total visafree score. The Singapore passport was considered to be the most ‘powerful’ worldwide, scoring 159, ahead of Germany (158) – which ranked first in 2016 – and
Sweden and South Korea (158), both occupying third position. According to the index, Paraguay removing visa requirements for Singaporeans has propelled Singapore’s passport to the top of the rankings. The Hong Kong SAR passport made 16th position worldwide, dropping one slot from a year before. Historically, the top 10 most powerful passports in the world have mostly been European, with Germany leading for the past two years. Other Asian passports in the top 20 include Japan and Malaysia. S.Z.
Transportation
Driving around the country on single licence Traffic Consultant Council discusses mutual recognition of driving licence by Macau and Mainland in light of growing integration of cities in Greater Bay Area Cecilia U cecilia.u@macaubusinessdaily.com
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he Traffic Consultant Council meeting yesterday discussed the potential implementation of mutual recognition of driving licences between the city and Mainland China. Director of the Transportation Bureau (DSAT) Kelvin Lam Hin Sang remarked after the meeting that Macau drivers could obtain car licences from the Mainland without the need to take any examination, while Mainland drivers would be allowed to drive in Macau with Mainland driving licenses and a stay permit. “The scheme would only be applicable to driving, not driving for work,” said Lam, adding that illegal driving performed by non-resident workers would be prevented. The DSAT head said the majority of Council members support the scheme but that some raised concerns regarding road accidents. “A similar scheme has already been conducted by a neighbouring city since 2004 with no big issues arising,” said Lam, adding that less than 1 per cent of accidents involved non-resident drivers in the city. Meanwhile, Lam reported that the number of Macau citizens obtaining driving licences issued by the Mainland had increased by around 1,000 every year. “In 2014, over 3,000 Macau residents took exams to obtain a Mainland driving licence; in 2015, there were over 4,000 and in 2016 the number reached 5,000,” revealed the DSAT Director. “For the first half of 2017, the number has already reached 3,000.” By contrast, the number of Mainland drivers obtaining a driving
licence in Macau is declining, he said. Lam indicated that the scheme would have greatly benefit young people working within the Greater Bay Area. When asked whether the different driving requirements between the two regions would pose a danger on
the road, the DSAT head said driving tests on the Mainland are getting stricter, with more drivers penalised for violating the traffic law. On the other hand, with the Hong Kong-Zhuhai-Macau Bridge to be unveiled soon, Lam said shuttle drivers for the Bridge will take the test for
a licence that will be recognised by the three regions, although licensed bus drivers cannot drive beyond the borders of them. Regarding the traffic capacity of the city, Lam said traffic in the city has improved while citing that the number of vehicles on the road is experiencing negative growth. He added that it is necessary to provide options for foreigners to travel around the city.
Plans for ‘Smart Transportation’
Yesterday’s meeting also discussed a trial for plans of ‘Smart Transportation’, with one relating a system that could calculate the volume available on buses and the other a provision of traffic data for drivers. The first plan allows bus passengers as well as bus operators to check the available volume of buses for better time management and operation. The other plan involves GPS information collected from some 900 public buses and almost 100 radio taxis to provide instant traffic conditions for drivers to avoid traffic. Lam disclosed that GPS details from casino shuttle buses would also be connected to the public system. Meanwhile, the DSAT head divulged that a total of 682,000 bus passengers had been recorded on October 6 alone. “We will roll out more plans to improve bus services to meet the high demand,” stated the director.
Water gates for T8 or above
Director of the Transportation Bureau (DSAT) Kelvin Lam Hin Sang
Lam said yesterday’s meeting also discussed and came to a common consensus on installing and implementing water gates in public car parks located in low-lying areas. Lam said that there are around 13 public car parks in these kinds of zones. “We advised opening water gates at the entrance of car parks when Typhoon Signal 8 is hoisted after an hour, which means no vehicles can enter or exit those car parks,” said Lam. He claimed that the revision of regulations relating to public car parks would be completed before the next typhoon season.
Environment
Tourism
Shuffling the electric shuttle
Flying high
All gaming operators in the MSAR have vowed that at least 15 per cent of their shuttle bus fleets will be electric by May 2018
With 5.2 million passengers registered this year as of September, local airport seems poised for another record-breaking year
The six gaming operators in Macau have jointly announced that they have made a commitment to the Transport Bureau (DSAT) that at least 15 per of their passenger buses will be propelled by electric energy by May 2018. The announcement stated a trial run for the new electric energy shuttle bus services had started from September 19, with operators paying ‘close attention to the operation and reviewing it regularly’. In November of last year the city’s six major gaming
operators started joint shuttle bus services connecting the Border Gate with their Macau Peninsula and Cotai properties. This joint shuttle bus service - named the Cotai Connection route - will see the trial run of the new electric vehicles, the release informed. According to previous information provided by DSAT, as of February of this year some 454 casino shuttle buses were running on Macau roads, providing a total of 62 routes. N.M.
Macau International Airport received more than 5.2 million passengers in the first nine months of this year, an increase of 5.1 per cent yearon-year, official data reveals. According to statistics made available on the Macau International Airport Co. Ltd. (CAM) website, in the month of September alone some 547,565 passengers were registered, a 9.5 per cent rise from the same month of last year. Macau International Airport closed the whole year
of 2016 with more than 6.6 million passengers, an increase of 14 per cent from the previous year and a record for its 21 years of operation. In addition to Mainland China, with 20 routes available, Macau International Airport accommodates flights to and from Taiwan, as well as to different destinations in Japan, the Philippines, Vietnam, Thailand, Malaysia, Cambodia, Singapore and Russia, according to data available from the CAM website. Lusa
6 Business Daily Friday, October 27 2017
Macau Opinion
Pedro Cortés* Is this the end of the system? This will be the last time you will have to read me in this paper. The future of communication is happening at a speed that we cannot control. It is good for the environment that this happens in, as trees will not be needed to produce paper. The pleasure of reading a newspaper while smoking a cigar and drinking a glass of wine will be things of the past. Well, I am referring to the reading of a newspaper. Hopefully, cigars and glasses of wine will continue into eternity . . . Since the advent of the Internet we have witnessed two revolutions. The first one, when all was new and without sense. And the second one, the so-called digital revolution. Where all is not new, but makes, sometimes, less sense. Being part of this revolution is a challenge for all, particularly those as at Project Asia Group who always wanted to produce and give real news with a sense of rigor and public interest, with the exception, of course, of your Friday columnist! I’m sure this new challenge will allow us to continue to read real news and not stories or fake news. Being a reader in present times is difficult, as we need to censor ourselves to distinguish what may be true and what is surely false. A place can only evolve peacefully where we have serious media with serious projects, even if politicians tend to not understand that and see the media as the source of all evil. What we see today is an avalanche of news, which makes it difficult for the aforesaid differentiation. We are spammed and bombed every single day with information. Sardonically, the more information humanity has the less informed it seems to be. New generations have access to media sources infinitely bigger than our parents had and we had. It still seems not to be enough. In this sense, serious and sober media projects are very difficult to find. Being part of this project is an honour and surely will continue to be. The last words on paper I offer to my dear readers, especially Jack and Henry: thank you for all your support and hopefully you will continue to follow us on your computers and smartphones. *Lawyer and frequent contributor to this newspaper.
Intellectual property
Securing business assets While awareness of the scope of IP should be enhanced, the handling of applications by legal advisors could act to diminish the number of failed cases, expert claims Sheyla Zandonai sheyla.zandonai@macaubusiness.com
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he main problem in filing applications for intellectual property (IP) protection in the Macau SAR is to be found in the procedure currently supported by the Macao Economic Services (DSE) which regulates such matters, according to a legal expert. Speaking to Business Daily, Bruno Nunes explained that DSE ‘considers that applications can be filed by any permanent local resident when the correct understanding of the law should be that applications are to be filed by local licensed attorneys.’ The lawyer, a specialist on intellectual property and gaming, further explained that the outcomes ensuing from DSE’s interpretation on the question are acting against the very enhancement of IP protection in the city. Among some of the loopholes considered and pointed out by Mr. Nunes are the lack of review of applications before filing, and thus an increase of rejections and opposition raised against ill-prepared applications, in addition to the lack of support and advice throughout the process of the application. Overall, he claimed that these end up by ‘diminishing or eliminating the value of one of the most important assets of any venture: its intellectual property rights.’ On the other hand, the lawyer acknowledged that DSE ‘has been increasing the level of online services that they allow, making filings easier and less costly.’
To Nunes, what is important to keep in mind is that IP registrations (IPR) are ultimately business “assets.” “[They] are being used internationally by companies to leverage their financing using their IPR as collateral, increasing their revenue through licensing agreements and collecting royalties, tax planning,” he observed.
Lacking IP protection
One particular field still lagging behind in protecting IP is the cultural and creative industries, according to Mr. Nunes, who claimed it has somewhat frustrated expectations. ‘As Macau has been promoting creative industries for so long we feel that such support has not translated into an increase in Designs & Models applications to protect the shape of the products being created,’ he said. Yet, attempts to stop that gap is in the mandate of the Institute of European Studies of Macau (IEEM), claimed its President, José de Sales Marques. “We have organised seminars and also several training actions in partnership with IPIM [Macao Trade and Investment Promotion Institute] in the past, mainly for small and medium-sized enterprises (SMEs), but not only. Naturally, there is a big will to foster the creative and cultural industries in Macau, and the only way to protect creativity by law is through the intellectual property system,” he told Business Daily. IEEM is holding a series of events, including a workshop (the Intellectual Property Law School, in its 14th
edition) and a seminar dedicated to the topic of intellectual property starting on October 30. A training section per the Hong Kong Intellectual Property Department is also on the institution’s schedule, on November 8. Speaking to us by phone, Mr. Sales Marques explained that these types of initiative usually cater to a “specialized public” who are mostly law practitioners, but also graduate students, civil servants from Hong Kong, and “sometimes from Macau, such as Customs.” Following on from his previous comments, Mr. Nunes added that the fact that intellectual property matters are more often than not dealt with by legal specialists ensues from the fact that “agents that do not have a legal background” encounter difficulties in filing “applications without review and then vanishing when rejections or oppositions are raised against their applications.”
Localising IP
Mr. Sales Marques points out that software design is a “very important area, closely related to gaming companies, with a lot of value,” which is still lacking local input. Traditionally, most IPR in the city related to this area are “extensions” of applications first registered in Beijing, according to Mr. Sales Marques. “The contrary is not viable. We cannot register a trademark in Macau and extend it later to Beijing or other localities in Mainland China. The [original] jurisdiction ends up very often not being Macau, while the activity is also very intense in Hong Kong,” he said. As for the types of intellectual property applications filed in the city, Mr. Nunes highlighted that the majority of trademarks fall into the category of casinos and the hospitality industry, while the few patents registered often relate either to gaming or pharmaceuticals. “These are being filed essentially by overseas companies either providing services here or with a local presence,” said Mr. Nunes, underscoring Mr. Sales Marques’ comments.
Travel
MSAR visitors only 1.75 pct of total HK 2016 visitation Only 1.75 per cent of the visitor arrivals in Hong Kong during the course of last year were by Macau residents, according to the latest statistics published by the neighbouring SAR’s Statistics and Census Department. The data shows that 995,000 arrivals of local residents
to Hong Kong were registered in 2016, the overwhelming majority of which were by sea, at 848,000. Of the total arrivals by sea, 4.68 million, 18 per cent were by Macau residents, according to the data. Both air and land travel by residents to Hong Kong registered much lower
values, with arrivals by land by local residents accounting for just 0.15 per cent of the 38.56 million visitor arrivals registered during the year. Arrivals by air by local residents to the HKSAR made up 2.6 per cent of the 13.39 million registered over the twelve-month period. Visitors from Mainland China were dominant in all three of the modes of arrival, with 35.9 million visitors arriving by land, 1.8 million by sea, and 5.03 million by air during the year, according to the data.
Business Daily Friday, October 27 2017 7
macau Theme refurbish
Sands to invest US$1.1 billion in London-themed local remodel Confirming information published by Business Daily in August 21, Las Vegas Sands Corp. said the company will spend US$1.1 billion renovating its properties in the city, including turning the Sands Cotai Central into a London-themed resort.
Chief driver
T
he property will be rebranded as the Londoner Macao and feature attractions tied to some of the English capital’s most recognizable landmarks, the company said Wednesday in a statement. The remodelling will add an additional 1.7 million square feet of space, and the resort will accommodate more overnight guests than the Venetian and the Parisian combined, said billionaire founder and CEO Sheldon Adelson. The Four Seasons Macao will get 295 new suites in a separate tower. “Having three iconic must-see European-themed destination resorts, with a broad range of amenities, will strengthen our marketing and customer-service capabilities and position us to grow faster than the Macau market,” Adelson said on an analysts call on the results. Sands has already invested over US$13 billion in the region since it was the first U.S. company to open
and the casinos’ winnings at the tables and slots generally frequented by casual gamblers increased 8.7 per cent to US$512 million. However, casino shares slumped in Hong Kong. Sands China Ltd. slipped 2 per cent for the second-biggest decline on the benchmark Hang Seng Index. Wynn Macau Ltd. lost 0.7 per cent, while MGM China Holdings Ltd. fell 1.2 per cent. Earlier in New York, Las Vegas Sands shares jumped 1.9 per cent in after-hours trading. Morgan Stanley analysts wrote in a note that Sands China’s mass and slot revenue growth was slower than the overall market expansion on a quarter-over-quarter basis.
a casino there in 2002. Sands and its rivals have been looking for vindication for their bets on expensive new properties after withstanding a Beijing-led corruption crackdown that stalled growth in the territory for three years. Overall gambling revenue in the region rose 22 per cent to 67 billion patacas (US$8.34 billion) in the third quarter, the fifth in a row of year-over-year growth. Macau SAR accounts more than half of Sands’ sales. The city is seeing a return of VIP players even as new resorts such as Sands’ Parisian lure more middle-class gamblers. Sands’ investments underscore its bet that long-term growth will come from attracting mainstream Chinese visitors.
“The company remains focused on a broad range of non-gaming amenities, which is ultimately what will drive visitation and put the company in a better position to remain a strong operator in the dynamic market,” said analyst Chad Beynon at Macquarie Bank Ltd. Sands’ appeal to casual gamblers, tourists and families continue to pay off as the company’s third-quarter results topped analysts estimates. About 89 per cent of local profit in the quarter was generated from mass gaming tables, slot machines and non-gaming offerings. Visits from mainland Chinese visitors gained 15 per cent from a year ago, the company said. The visitors increased the length of their stays,
Las Vegas Sands reported profit rose to 77 cents share excluding some items, beating the 68-cent average of analysts’ forecasts. Sales grew 7.7 per cent to US$3.2 billion, exceeding Wall Street projections of US$3.13 billion. In the city, Las Vegas Sands’ earnings before interest, taxes, depreciation and amortization rose 3.8 per cent to US$652 million, beating the US$641.3 million average of estimates compiled by researcher Consensus Metrix. The Parisian Macao, which opened in September 2016, continued to be a chief driver of results, with increased gaming wins from casual gamblers and betting volume, according to the company. The property’s adjusted Ebitda climbed 27 per cent from the second quarter, the company said. Profit in Singapore, Sands’ second-largest market, climbed 13 per cent to US$442 million. Ebitda in Las Vegas fell 12 per cent to US$76 million. Sands is the first of the major Macau casino operators to report third-quarter results. With Bloomberg News
Day 1 - 14 November 2017 (Tuesday)
Belt & Road, Smart City, Smart Economy Day 2 - 15 November 2017 (Wednesday)
Mobile Game Entrepreneur Alliance & E-Sports Association Sina Asia Esports Session Day 3 - 16 November 2017 (Thursday)
Next Generation of Gaming
Caesars Palace resort
8 Business Daily Friday, October 27 2017
Macau
Transport
Efficient roads the path to success The neighbouring city of Zhuhai is enforcing measures to improve its passenger and cargo transport systems, with a transport hub system connecting three logistics parks and eight logistics centres in the city to be developed and new safety rules favouring non‑motorised road users to be put in place Nelson Moura nelson.moura@macaubusinessdaily.com
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huhai will udergo a major urban tran s port o v e rhaul, with new guidelines to benefit motorless vehicles and pedestrians, and a with a new interconnected transport hub system, the Chinese city government announced yesterday. Ac c o r d i n g t o th e
Zhuhai Government portal, a ‘two-centre three-level’ passenger and cargo transport hub system connecting three logistics parks and eight logistics centres in the city will reinforce the local connection with Macau and its role in the Greater Bay Area transport network. This network will cover 1,723 kilometres throughout Zhuhai, with the city’s Housing & Urban-Rural Planning & Construction
Bureau currently holding a public consultation on the job. The Zhuhai Government will also initiate a railway system connecting Guangzhou, Zhongshan and the future Macau Light Rail Train (LRT) system, with the MSAR Government having previously announced the Taipa section of the LRT was expected to be concluded in 2019 but with no deadline for the construction of a Macau Peninsula network yet provided.
From Hengqin to the world
The cargo transportation side of the plan involves the development of a Hengqin transportation hub with a ‘one belt-three strips’ structure and connecting the Shizimen Central Business District and Hengqin Port.
Meanwhile, works will integrate the two artificial islands included in the Hong Kong-Zhuhai-Macau Bridge, with the planned transport network. The passenger transport hub involving the Bridge will include seven first-level, 12 second-level, and 29 third-level hubs, with the first-level to include Hezhou, the Zhuhai North Railway Station, the two artificial islands, Jiuzhou Port, Gongbei Port, Hengqin Port and Zhuhai (Jinwan) Airport hubs. The second stage of the plan would service downtown Zhuhai, with the third-level to form transport cluster hubs in the city. A multi-dimensional international arterial line airport and an international air cargo hub is also to be created to be included in the Chinese national high-speed
rail network connecting the Jinwan and Zhuhai (Jinwan) Airport hubs.
Conquering the streets
Meanwhile, Zhuhai’s Housing & Urban-Rural Planning & Construction Bureau has released new safety and efficiency rules for its roads to benefit non-motorised street users. The new guidelines include decisions such as enlarging refuge islands at busy intersections to accommodate more pedestrians during rush hour, while suggesting right-of-way for motorless vehicles in right-turn lanes at crossings in residential or leisure areas. The measures were said to be needed to shift the focus from motor vehicles to other road users while making Zhuhai’s transportation more efficient.
Property
Wait for it Having not yet received government permission to start developing a luxury residential building on Nam Vam Lake waterfront, Capital Estate Ltd. has announced that it has received HK$90 million in repayments from a company related to a failed development in Coloane Nelson Moura nelson.moura@macaubusinessdaily.com
permitted gross floor area of approximately 55,800 square metres.
Capital Estate Ltd., a company chaired by local businessman Sio Tak Hong, is still awaiting government approval to develop a luxury project near Nam Vam Lake, the company’s latest interim report informs. The information of the filing first reported by local news broadcaster TDM reveals that the group still owns a 5 per cent interest in land located at Avenida Commercial de Macau through ‘an investee company’, with Capital Estate planning to develop a luxurious residential building on the waterfront of Nam Van Lake, with a maximum
Getting paid
The group also revealed in the filing that it has received HK$90 million (US$11.53 million) in repayment installments from Kong Kei Construction Limited as of September 30, related to the loss of property development rights of a 9,553 square metre land plot in Nossa Sra. de Ka Ho in Coloane. Capital Estate owned the land through its wholly owned subsidiary Sun Fat Investment and Industry Company Limited, and states in the filing that it has submitted application and development plans regarding the plot to the relevant Macau
Government authorities since 2007, having not received government approval to start construction until the concession expired in March 2014. The group’s plans for the land plot initially involved the construction of a steel-casting factory, with a proposal made in 2012 to develop a low-density development of luxury villas occupying an area of 4,400 square metres, which was refused by the MSAR Government. In August 2016, Sun Fat received a notification from the Land, Public Works and Transport Bureau (DSSOPT) announcing that the valid period of the land grant had expired, with the land reverting to the MSAR Government with no compensation provided to the company. A judicial appeal to the Court of Second Instance of Macau and a statement of objection with the Chief Executive made by Sun Fat failed to reverse the decision, with another judicial appeal having been filed in September last year. After Sun Fat’s land title was deregistered in July 2016, the group entered into deeds of settlement with Kong Kei - which sold Capital Estate the equity rights for Sun Fat - reaching an agreement for the
HK$298 million repayment. The filing states that Sun Fat still ‘continues to seek legal advice as to the possible steps that can be taken’. Capital Estate is expected to receive HK$298 million from Kong Kei and a warrantor in three installments, with HK$60 million having been paid in 2016, and HK$120 million to be repaid by December 31 of this year, plus HK$118 million more by December 31, 2018. The received HK$90 million helped Capital Estate register HK$60.3 million in profits, after posting HK$133.6 million in losses in the same period of last year.
Hotel operations
Capital Estate also owns at a 32.5 per cent interest in Hotel Fortuna through Tin Fok Holding Company Limited, with the group saying the property maintained a high occupancy rate of almost 90 per cent and saw HK$216.4 million in turnover in 2016. The group’s registered gross proceeds decreased by 42.5 per cent yearly to reach HK$124.9 million in the financial year ending July 31, with 66 per cent contributed by hotel operations.
Business Daily Friday, October 27 2017 9
Macau
Cultural industries
Creative funding Cultural Industry Fund says no companies it gave money to ever went bankrupt, despite the majority not having yet been able to make any profit Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
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one of the 133 companies or individuals that have received funding through the Cultural Industry Fund (FIC) has gone bankrupt, according to Ms. Davina Chu, member of the board of administration of FIC. The comments came at an event hosted yesterday by the Fund that laid out the results of its activity since 2014. Of the 377 applications received since it started, 169 were approved by the group, while 133 of the applicants proceeded to signing agreements with the Fund to receive financing. The group offers three types of financing divided into two segments. Via these three schemes FIC has disbursed some MOP263 million so far, of which MOP170 million was of the first type: ‘free financing’. ‘Free financing’ is divided into ‘project subsidies’ and ‘subsidised interest for bank loans’. The information provided during the press event yesterday demonstrates that free financing for project subsidies has reached MOP175
million so far; however, this is divided between MOP135 million conjointly attributed to project subsidies and payment of bank loans, while MOP40 million went to project subsidies conjointly with interest for bank loans. In total, MOP36 million was allocated to interest-free loans. “After signing the agreement the groups begin their activities, this takes time, meaning that up to this point we have the [project progress] reports of 70 projects,” said Ms. Chu. “Of the 70 projects, the majority of the companies – over 60 per cent – don’t make profit at this time.” This, however, is due to the fact that the funding body itself only began in 2014, and the projects are “just now opening their stores, and beginning their [commercial] activities,” she states. “In the first year, they definitely will not have profit, and for those that later begin to make profit, it’s the companies that have been in operation for two years, or that had already started their activity before applying to FIC and that are already operating their activities,” explains the board member. Whereas for Project Subsidies under the ‘free funding’ category, the group’s website in English states ‘The upper limit of assistance is equivalent to the total investment volume or operating budget that are calculated after assessment,’ Ms. Chu clarified that the group has never attributed 100 per cent of the requested funding under that type of scheme. “We only provide 15 per cent to a maximum of 30 per cent. But normally it’s 15 to 25 per cent. So in every MOP1 million they invest, we’ll only provide MOP150,000 or MOP250,000 […] For free financing, we never give more than 30 per cent for the commercial projects,” she stated.
There was a significant drop in the number of applications in the second year of FIC’s activities due to this limitation the Fund applies. Due to the available information, applicants who previously spoke to Business Daily pointed out they believed that based upon the business plans presented to FIC and required to receive funding – which require applicants to detail their sources of funding and justify the amount requested of the FIC - they had the potential to receive the full 100 per cent of the funding requested and detailed as being the amount needed to carry out their business plan. As evidenced by the most recent information from FIC, the majority of applicants resort to the fund’s other two financing options - involving loans – for the remaining funding for their projects. This year, FIC funding of companies under the schemes amounted to 26 per cent of the total funding of these companies, with private companies having invested/reinvested MOP260 million of their own capital in their companies, while MOP45 million was provided by FIC project subsidies and MOP45 million via interest-free loans (representing 13 per cent each, respectively of the total companies’ funding). Between January and September, of the MOP124 million in support to these companies, MOP90 million was for commercial projects, while MOP33.5 million was for services platforms.
Improving with time
The majority of companies signing up for the scheme this year are less than one year old, totalling 15, while 12 of the 53 total projects are from companies operating for more than nine years. Twelve of the companies have been open for between one and three years. Fifty-five per cent
of the companies this year applying employed less than five people, while only 4 per cent employed over 20 staff. Areas linked to design were overwhelmingly the largest recipients of funding this year, at 22, followed by nine approved digital media programs – for television and films. Ms. Chu notes that since design is already quite developed and popular in Macau, the group is “now going to promote an application for specific [financial] support for specific areas”, mentioning singers as well as cultural tourism products for the city’s neighbourhoods, among others. When asked whether the objective of FIC was only to create tourism products, the board member stated it was only one of the objectives. In terms of benchmarking, Ms. Chu assures that “we’re learning with other countries and regions,” specifying “South Korea, Taiwan [and] China have departments such as FIC,” and that “we have a lot of contact with them and have regularly contacted various departments to also learn from them”. “[Their feedback] is very good, because each country has its own characteristics” and the goal is “not to copy what other countries are doing, […] we have to better take advantage of our characteristics to carry out this promotion,” she clarified. According to the group’s website, the largest individual amount contributed so far by FIC was MOP9 million and went to the Macau Design Centre this year for the second phase of its development plan, following a MOP7.03 million subsidy granted to the same group, also under the project subsidy category of free financing, given out in 2014. “Of course, all of us could be better, and we’re aiming for that path,” Ms. Chu said of the Fund.
10 Business Daily Friday, October 27 2017
Macau Strategy
Packer concedes Crown Resorts’ overseas push failed He also said VIP volumes were growing, although he did not give details Sonali Paul
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ustralia’s Crown Resorts Ltd failed with its global strategy, its billionaire half-owner conceded yesterday in his first public comments on why the company had suddenly retreated from offshore over the past year. Volumes have slumped at the country’s biggest casino company in the fall-out of a decision to quit selling gambling holidays in China after 16 of its staff were jailed there. James Packer also dismissed as “a lie” recent allegations of the company tampering with poker machines at its flagship casino in Melbourne. Packer, 50, has seen his business credentials come under fire in the past year after Crown staff were imprisoned in China for marketing socalled casino tours in violation of the country’s strict anti-gambling laws. The Sydney-listed A$7.9 billion (US$6.1 billion) company promptly quit a decade-old global expansion plan involving the Asian gambling hub Macau and Las Vegas, to focus on Australia. “In terms of the list of Australian companies that have gone offshore and come back to Australia with their tails between their legs, I think we’re at the top of the list,” Packer said at Crown’s first annual general meeting since he returned to its board in August 2017, following a short stint away.
Key Points Crown heads list of Australia’s failed global expansions -Packer Problem gambling is a threat to business - Packer Crown says VIP turnover at casinos down 17 pct
James Packer during the opening ceremony of Studio City in 2015
“We didn’t succeed in the global strategy,” Packer added. At the meeting, Crown said VIP turnover at domestic casinos was down 17 per cent since the start of the financial year on July 1, partly due to declining numbers of rich Chinese punters. But Packer said VIP volumes were growing, although he did not give details. Crown was rattled a week earlier when a lawmaker tabled in parliament a video of what he said were three of the company’s former staff saying it rigged slot machines to
remove controls to prevent problem gambling, and encouraged patrons to disguise their identity to sidestep anti-money-laundering controls. The company has denied the allegations, and has taken out full-page newspaper advertisements to reject the claims. Confronted at the meeting by a shareholder who said she had been addicted to gambling, Packer said he felt sorry for her but called the allegations by an anti-gambling politician “a lie”. “But from a business perspective,
the worst thing that can happen is people like you blow themselves up in our casinos, because then there is a political backlash,” he told the shareholder. “We’re not the bad guys in this game,” he said, trying to differentiate Crown’s casinos from pubs and clubs which have most of the country’s slot machines. The allegations prompted gambling authorities in the state of Victoria, where its flagship casino is located, to say they would launch an investigation. Reuters
Las Vegas
Respectful mourning The CEO of Caesars Entertainment believes that the number of Asian players visiting Las Vegas has decreased slightly following the recent mass shooting out of respect for the mourning period of the tragedy. The head of American gaming group Caesars Entertainment Corporation stated that the carnage in Las Vegas had led to a slight decrease of Asian players to the city, newspaper Las Vegas Review reported. According to the report the CEO of Caesars Entertainment, Mark Frissora, told a group of investors in a New York meeting that it could be three to four months before visitation numbers to Las Vegas retuned to numbers registered before the
October 1 shooting that left 59 people dead. Mr. Frissora mentioned in the meeting that visitation from Asia had been particularly affected but without specifying by what amount. “Asian play has actually been less because people in Asia are very respectful of the deaths that occurred and they believe there should be a period of mourning and they [will] wait for that period of mourning before they’ll return,” Frissora added. N.M.
Corporate 文第士誕辰一百五十周年
Clube Militar de Macau to commemorate 150th anniversary of Manuel da Silva Mendes’ birth
The board of Clube Militar de Macau will organise a conference on November 9 to honour the 150 years since the birth of Manuel da Silva Mendes, a relevant cultural and historical local figure. In a release signed by the Club’s President of the Board, Ambrose So Chu Fai, it is announced that a
conference will be held in Portuguese in the Stanley Ho Ballroom on the Club’s premises, with Club member António Conceição Júnior to be the speaker. Mr. Júnior was the director of the former Luís de Camões Museum, having been a curator and promoter of the intellectual art collection that constituted a large section of the Museum’s collection. All Club members and interested
persons are invited to attend this cultural event, with the release reminding that in January 3, 1909 Manuel da Silva Mendes hosted a conference in Clube Militar de Macau - known then as Grémio Militar de Macau - about ‘Lao Tze and his Doctrine according to the Tao Te Jing’, an important document related to the knowledge of Chinese History and Culture.
Business Daily Friday, October 27 2017 11
Consigliere
Up to t he sky, down to t he sea now presents the Ocean Commitment Exhibition at T he Pa r isia n Macao. The iconic Fifty Fathoms collection is on display at the exhibition, as are the new releases introduced at Baselworld, the vintage-inspired Fifty Fathoms Bathyscaphe 38mm timepiece attired in abyss blue. Apart from the timepieces, there are many photos for people to discover the beauty of the world under the water. The photos are divided into several themes: Help Protect The Ocean; Exploring Deep - featuring the Pristine Seas Expeditions with Blancpain and Gombessa Project supported by Blancpain; Ecosystems’ Transmit Our Passion - showcasing the Fifty Fathoms collection; and a series of photos revealing the ocean’s fragile beauty brought to us by divers and underwater photographers; Birth Of A Legend - featuring the historical moments of Fifty Fathoms collections; and Art In The Ocean featuring precious photos by commercial photographer Alan Lo. The Ocean Commitment Exhibition in Macau will open to the public from 24 October 2017 to 9 November 2017 at Champs Elysees, The Parisian Macao.
h r ou g hout the luxury watch-making industry, a successful long-lived brand is not only about quality and design. The spirit or image of the brand is just as important. For example, when you talk about motor racing, that should be Rolex; when you talk about horseracing, it will be Longines. Likewise, when talking about diving and aviation, Blancpain and Omega spring to mind. In addition to retailing the products, brands want their clients to love their unique spirit and culture. This week, two Swiss luxury timepiece brands present a time-limited exhibition in town – so, if you’re a timepiece connoisseur, don’t miss this opportunity.
Blancpain Ocean Commitment Exhibition
Luxury Swiss watch brand Blancpain has been making mechanical watches that set standards of excellence since 1735. The Blancpain Ma nu fac t u re pu rsues a rigorous quality policy designed to produce the best possible watches, designed and assembled entirely in Switzerland. Blancpain has a strong relationship with diving. In the early 1950s, the CEO of the brand was a passionate diver, and based upon his personal underwater experiences he came to understand that a diver’s life depended upon a reliable timekeeping instrument and that none existed in the marketplace. Thus, he started to encourage the
watch-ma k i ng tea m i n Blancpain to create a reliable diving timepiece. In 1953, the first Fifty Fathoms was born, and for more than 60 years now Blancpain has been raising awareness through ocean exploration. The brand believes that people can only respect and protect what they love, and can
only love what they know. To expedite this mission, Blancpain strongly supports major scientific expeditions such as Pristine Seas Expeditions (May 2011 – May 2016) and Laurent Ballesta’s Project Gombessa. To showcase its passion and commitment to the world’s oceans Blancpain
Planet OMEGA Exhibition
Meanwhile, well-known Swiss watch-maker Omega is holding its first-to-Macau Planet OMEGA exhibition at Galaxy Macau showcasing the fascination of outer space. Starting last month, this is the last week to see
this exhibition. Omega has achieved many magnificent feats. The first watch on the Moon, the official timekeeping device of the Olympic Games and the accessory of choice of the world’s most notorious spy, 007, Omega’s heritage of craftsmanship and prestige is unequalled. Featuring 40 timepieces, the exhibition showcases many precious pieces originating from a variety of museum collections, with new 2017 models as well as the brand new Omega Seamaster Aqua Terra ‘Golf’ collection. One of the highlights is the showcase that displaying various Speedmaster models inspired by sunrise and sunset in outer space. There is an interesting story behind why Omega became the reliable partner of NASA. In the past, astronauts could wear any watch to carry out their mission. When Walter Schirra went to the ‘Sigma 7’ mission of the Mercury Programme in 1962, he wore his Omega The Speedmaster ref. CK 2998. Its stable performance won official certification by NASA for all manned missions, launching it into orbit – and history. To en ha nce the experience, visitors can participate in the interactive Omega V R Moonwa l k Experience. Players can complete si x daring V R missions with the help of the Omega Speedmaster Moonwatch, all the while getting a hands-on look at the history and adventure that defines the heritage of Omega. Edwina Liu, Essential Macau Editor
Art in Autumn
Autumn weather is slowly but unceasingly descending upon local streets. And the arrival of the season invites all to enjoy our city and its cultural offerings Oscar Guijarro oscar.g@macaubusinessdaily.com
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f you were fast enough to get a ticket, the Vienna Philharmonic show is the star of the month in the 31st Macao International Music Festival. The world-class ensemble conducted by Andris Nelsons will perform works by Beethoven, Strauss and Wagner. A powerful injection of Austro-German classic and romantic music to be played at the Macao Cultural Centre Grand Auditorium at 8:00pm on 29 and 30 October, but with different programmes. The Sunday performance will include pieces by Beethoven and Strauss, while Monday’s concert will feature Beethoven and Wagner. Included in the 31st Macao International Music Festival Outreach Programme, the concert will be preceded by a talk titled ‘Timeless Beethoven’. The event will extend the information and opinions of critics and musicians about the concert. Other musical events over the next few days feature Russian pianist Lukas Geniušas performing Chopin, Ravel and Prokofiev this evening, while tomorrow the Portuguese Guimarães String Quartet
will play a ‘musical journey through the periods of classicism, romanticism and up to the 20th century’. Also on Saturday, William So with the Macao Chinese Orchestra will present popular classics. On Sunday, jazz will also feature, with gold medal winner at the Thelonious Monk International Vocal Jazz Competition Jazzmeia Horn starring. The show will run under the title of ‘A Social Call’.
Ink expression
Written expression masterpieces seize the visual arts stage of the city this month with the exhibition ‘Determined Spirit – Calligraphy and Painting of Fu Shen’, organised by the Macao Museum of Art of the Cultural Affairs Bureau and co-organised by the Chinese Cultural Exchange Association. The exhibition showcases 68 pieces/sets executed in different time
periods from the 1950s. The Chinese author is a celebrated calligrapher with an extensive scholarly background including periods spent at prestigious Western universities like Princeton and Yale. As Chan Kai Chon, Director of Macao Museum of Art, expresses in the preface to the exhibition, “by taking a contemplative approach and a multifaceted and all-round viewing towards Mr. Fu Shen, the agile-minded scholar, with a diligent practice of ink and brushwork, has earned illustrious achievements in the connoisseurship of Chinese painting, calligraphy and historical studies on fine arts. He is also equally consummate in calligraphy and painting by reason of his surpassing talents.” And visual art lovers can also enjoy ‘Affection for Lotus – Exhibition of Painting and Calligraphy for the 100th Birthday of Jao Tsung-I’, showcasing 15 sets of lotus-themed calligraphy and paintings celebrating Professor Jao Tsung-I’s 100th birthday. The exhibition includes calligraphy and paintings by the professor selected with the intention to show ‘the artistic glamour of the highly praised ‘Jao’s Lotus”.
12 Business Daily Friday, October 27 2017
GREATER china greater CHINA goals
Beijing says will not set target to double GDP from 2021 China will not set a goal of doubling its gross domestic product starting in 2021 so it can focus more on higher-quality, long-term growth, a senior Communist Party official said, in a break from past practice
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he world’s second-largest economy is well on track to hit its target of doubling GDP and per capita income by 2020 from 2010, and market speculation over new targets had intensified in the run-up to the twice-in-a-decade Communist Party congress that ended on Tuesday. While China’s pursuit of strong growth targets over the years has helped lift the global economy from recession after the financial crisis, its corporate and local government debt has soared, regional economic disparities have widened and environmental damage has worsened. Yang Weimin, vice minister of the Office of the Central Leading Group on Financial and Economic Affairs, told a news conference in Beijing yesterday that China will not solely pursue economic expansion and will emphasise the quality of its growth. The shift away from ambitious long-term government growth targets is a departure from past practice in China, and marks a new strategy for longer-term economic development. In the opening speech of the 19th party congress last week, President Xi Jinping did not explicitly mention the goal of doubling GDP by 2020. Throughout the gathering, there were also no public announcements about new economic growth targets. Instead, Xi set broad long-term goals for China’s development “in a new era”, envisioning it as a modern socialist country by 2035, and
looks to move from high-speed to high-quality growth.
Targets, targets, targets
a modern socialist “strong power” with leading influence on the world stage by 2050. Obsessing less about targets could give policymakers more room to press ahead with painful, structural reforms -- in theory -- at the risk
Key Points China will not solely pursue growth, stress quality-official China will prevent risks, fight poverty, pollution by 2020 Analysts see target of around 6.5 pct in 2018, same as 2017 IMF, others have urged dropping targets to reduce debt risks
of weighing on domestic and global growth. The International Monetary Fund (IMF) and many economists have urged Beijing to do away with or lower official growth targets altogether to reduce the country’s long reliance on debt-fuelled stimulus and encourage more productive investment. The IMF warned this year that China’s credit growth was on a “dangerous trajectory” and called for “decisive action”, while the Bank for International Settlements said in late 2016 that excessive debt growth was signalling a banking crisis in the next three years. At the start of the congress, Xi said China would deepen economic and financial reforms and further open its markets to foreign investors as it
Analysts believe the government will continue to set annual growth targets through to 2020, and they expect next year’s target to again be set at around 6.5 percent. “Macro economic policies will focus more on employment, income growth and international balance of payments,” said Tang Jianwei, senior economist at Bank of Communications in Shanghai. Vice Minister Yang told reporters that the 2020 GDP target remained in place, and that the government may still set an annual growth target for next year. Yang said China will focus on preventing “major risks” in the economy, fighting poverty and pollution by 2020. It is unclear if the government will scrap its annual growth target from 2021. “What we now face is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life,” Xi at the start of the party congress. That was a redefinition of the late Chinese leader Deng Xiaoping’s socalled “principal contradiction” faced by Chinese society. Deng said in the 1980s that China’s backwardness and low productivity were in conflict with the growing material needs of its people. In his vision for China, Xi said prosperity for all would be achieved by 2050. Reuters
Monetary policy
Central bank queries demand for 2-month reverse repos China’s central bank has sent queries to some banks to gauge market demand for two-month reverse repurchase agreements, a person with knowledge of the matter said yesterday, as fresh worries about liquidity buffeted its financial markets
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hina’s 10-year treasury bond yield rose to its highest since December, 2014 earlier in the day and treasury futures fell on expectations that the central bank is sticking to its plans to gradually deleverage the economy. The People’s Bank of China (PBOC) injected a massive net RMB840 billion (US$126.70 billion) into money markets over Oct. 17 to Oct 24, but traders believe was likely a one-off during the political sensitive Communist Party Congress, and not a shift in its tightening policy. That view is keeping markets on edge about liquidity ahead of large tax payments at the end of the month and traditional year-end tightness. There were no net injections by the PBOC on Wednesday, a day after congress ended, and only minimal amounts yesterday. Some traders said they were not surprised about the new two-month reverse repos as the PBOC had implied in its latest monetary policy report that it would introduce new
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The People’s Bank of China headquarters
tenors to keep liquidity in the banking system “basically stable”. Reverse repos are the main conduit through which the PBOC manages money market liquidity and interest rates, and it generally does so via 7-day, 14-day and 28-day operations. In its second-quarter policy report, the PBOC said it would “enhance flexibility of proactive injections or
drains (and) study to enrich tenures of reserve repos” in order to prevent markets from misreading its monetary policy stance by judging the cash conditions during a certain period of time. Market had speculated that the new tenor would fit between the 28-day reverse repo and the three-month, which is one of the common tenures
of central bank’s medium-term lending facility (MLF) loans. The PBOC has shown more willingness since last year to use a combination of open market operations and the MLF to manage liquidity in the banking system and direct funds to parts of the financial system and the economy where they are needed most. It has drained funds from the financial system so far this year as part of policymakers’ efforts to reduce high levels of interbank leverage and riskier types of lending. That has pushed China’s money market and short term rates gradually higher, but also triggered periodic fears of liquidity squeezes and spikes in financing costs. While the PBOC has generally not responded as quickly to such markets fears as in the past, it has still frequently stepped in and added funds if rate moves appear too volatile. The source, who declined to be identified, said the PBOC was expected to inject funds via two-month reverse repos on Friday for the first time. Reuters
Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Nelson Moura; Kelsey Wilhelm; Matthew Potger; Cecilia U; Sheyla Zandonai Group Senior Analyst José I. Duarte Design Aivi N. Remulla Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors Albano Martins; 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 Friday, October 27 2017 13
Asia gdp
In Brief
S. Korean economy posts fastest growth in seven years South Korea’s economy clocked its fastest growth in seven years last quarter as global demand for the country’s electronics more than offset the impact of regional geopolitical strains on trade and boosted expectations of an imminent interest rate rise Cynthia Kim and Dahee Kim
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ross domestic product rose 1.4 per cent in the third quarter from the previous quarter, preliminary numbers from the Bank of Korea (BOK) showed yesterday, significantly beating the 0.8 per cent forecast in a Reuters survey and marking the biggest jump since a 1.7 per cent spike in the second-quarter of 2010. Year-on-year growth accelerated to 3.6 per cent in the third quarter from 2.7 per cent in the second quarter, also beating forecasts. The stellar numbers show Asia’s fourth largest economy riding a surge in global demand for memory chips, which has cushioned the blow to tourism and retail from diplomatic tensions between China and South Korea over a U.S. missile defence system. Wider concerns about North Korean military provocations have also hurt business sentiment. The data has also prompted several analysts to bring forward forecasts for a central bank rate hike. Kim Doo-un, an economist at Hana Financial Investment, now sees a 25 basis point hike in the bank’s next policy meeting in November. “This kind of robust growth is surely a rate-hike ingredient,” Kim said. “Shipments out of semiconductors and IT sector in general have been good, and it also seems exports of services also improved in the third quarter.” The BOK kept its policy rate unchanged at the record low of 1.25 per cent last week but one dissenting policymaker called for a hike, prompting some speculation that
Chung Kyu-il, director general of the Economic Statistics Department at the Bank of Korea (BOK), briefs on third-quarter economic growth at the central bank in Seoul yesterday. Source: Lusa
a tightening could take place at the central bank’s next policy meeting on Nov. 30. The third quarter numbers are likely to bolster this view with growth now on track to hit the central bank’s official forecast of a 3 per cent expansion. “Even if the economy contracts on-quarter, say by about 0.54 per cent in the fourth quarter, we can
achieve 3 per cent expansion this year,” Chung Kyu-il, director general for the Economics Statistics Department at the BOK said on the side-lines of a briefing in Seoul. The central bank said last week that a row with China over Seoul’s deployment of a U.S. anti-missile system could knock off 0.4 per centage points off the nation’s economic growth this year. Exports grew 6.1 per cent in the third quarter after declining 2.9 per cent a quarter earlier, while private consumption growth slowed to 0.7 per cent in the July-September period from 1.0 per cent. Exports, which account for about 40 per cent of GDP, notched a ninth consecutive month of double-digit growth in September in value terms, the longest stretch of such expansion since 2001. “It has been the semiconductors that mainly boosted production from manufacturing sector, but the third quarter also saw some extra boost from overseas sales of cars and petrochemical products,” Chung said in a briefing. South Korean chipmakers are enjoying a boom with overseas sales of memory chips posting record monthly sales of US$9.69 billion in September. While soaring global demand for Korean memory chips is boosting growth, exports of services, which include tourism, contracted 7.4 per cent on-year, after shrinking 13.6 per cent three months earlier. The drop reflects a halving in the number of Chinese tourists in the year to September, which has hurt retailers and hotels in South Korea. Reuters
Commodities
Australia notified Beijing of Adani coal mine approvals in letter Australian politicians told China of government approvals for a controversial A$16.5-billion (US$13-billion) coal mine project being built by Indian conglomerate Adani Enterprises, a panel of senators heard yesterday James Regan
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housands of people turned out across Australia this month to protest against the project in northeastern Queensland state, which Adani has battled to try and get off the ground for years in the face of political and environmental headwinds. Prime Minister Malcolm Turnbull’s government faces flak from environmental activists who say its letter to China’s powerful economic planner crossed a line in attempting to drum up funding for the mine, but the government says it stuck to facts. “The Australian government continues to welcome foreign investment that is in our national interest, including the Adani investment in the Carmichael mine project,” Attorney-General George Brandis told a Senate estimates hearing in Canberra. Turnbull’s Liberal Party, which holds federal power, and the Labor Party, which rules Queensland, have publicly supported the mine.
The government had made a representation to China “to dispel the misinformation campaign of those from the radical left,” Brandis added, without revealing the date of the missive. The letter, written by the deputy prime minister and the trade minister, described the grant of environmental approvals and government support for the mine because it could create jobs in rural Australia, he added, and provided facts, not advocacy. Adani says the project will create 10,000 direct and indirect jobs. However, the letter to China’s National Development and Reform Commission crossed the line into “lobbying by Australia to provide ground funding for the mine,” said Blair Palese, a spokeswoman for environmental activist group 350.org. Campaigners fear coal from the mine will boost global warming and climate change while the massive seafloor dredging required to accommodate hundreds of ships in
its location near the Great Barrier Reef may imperil the famed tourist attraction. Adani has said it may seek financing help from foreign and Australian lenders, without identifying any candidates, and has sought USA$900 million in Australian government loans to build a railway in Queensland to ship coal 400 kilometres to a Pacific Ocean port. Adani wants to tie up financing by March 2018 and would look to sell a minority stake in the project to help raise funds. Adani spokesman Ron Watson said he did not think it was unusual for Australian politicians to confirm the status of a major project to a foreign country. China is a large importer of Australian raw materials, including coal. The US$12-billion Sino iron ore mine in Western Australia state represents China’s single biggest overseas investment in the resources sector. Reuters
Diplomacy
Japan to propose strategic dialogue with U.S., India and Australia Japan will propose a strategic dialogue among leaders of the United States, India and Australia, aiming at counteracting China’s expansion under its “Belt and Road” policy, Foreign Minister Taro Kono told the Nikkei business daily. Prime Minister Shinzo Abe is expected to propose the idea to U.S. President Donald Trump on Nov. 6 when they plan to hold a summit meeting, said the Nikkei yesterday. The proposal is for the leaders of the four nations to promote free trade and defence cooperation across the land and sea to Southeast, South and Central Asia, and beyond to the Middle East and Africa, Kono said. Exports
Australia signs deal to export new-crop wheat Suppliers of Australian wheat have signed one of the first deals to export the crop due to be harvested in the next couple of months, helping kick off this year’s export programme after more than three months of delay. The contract to supply Vietnam with 30,000 tonnes of Australian Premium White (APW) wheat was signed at US$252 a tonne, including cost and freight, for arrival in December, said two trade sources. Exporters typically start selling Australian wheat around July for the crop to be harvested in November and December. Results
OCBC Q3 profit up 12 pct Singapore’s Oversea-Chinese Banking Corp reported a 12 per cent increase in quarterly net profit, boosted by growth in its insurance and wealth management businesses, but highlighted continued stress in the oil and gas support services sector. Kicking off the results season for Singapore banks yesterday, the city state’s No. 2 lender said its total non-performing assets rose 15 per cent in the quarter from a year earlier, led by accounts in the oil and gas support services sector which “continued to be under stress”. OCBC’s net profit came in at S$1.06 billion (US$780 million) in the three months ended September. Commodities
POSCO raises 2017 sales forecast South Korean steelmaker POSCO yesterday posted a 9 per cent rise in third-quarter operating profit as a sustained recovery in steel prices lifted earnings for overseas operations including China. The steelmaker expected a continued rise in steel demand driven by restructuring in top producer China, and revised up its consolidated sales outlook for 2017 to 59.5 trillion won (RMB$52.9 billion), from its July forecast of 59.3 trillion won. POSCO said consolidated operating profit was 1.13 trillion won (US$1.01 billion) in the third quarter.
14 Business Daily Friday, October 27 2017
International In Brief
ECB
Eurozone lending growth edges up in September Consumption
U.K. retail sales plunge at fastest pace in eight years U.K. retail sales are falling at the fastest pace since the depths of the recession in 2009 and worries about the housing market could exacerbate the weakness in consumer spending seen this year. The Confederation of British Industry said its measure of sales plunged to minus 36 in October -- the lowest since March 2009 -from a positive 42 in September. Sales for the time of the year were slightly below the usual seasonal rates, it said. Faster inflation has put the squeeze on shoppers this year, and a separate report yesterday suggests a cooling housing market could further dampen consumers’ enthusiasm for spending. Data sharing
EU privacy regulators increase pressure on WhatsApp Privacy regulators rapped WhatsApp on the knuckles for not resolving their concerns over the messaging service’s sharing of user data with parent company Facebook, a year after they first issued a warning. The popular messaging service changed its privacy policy last year to start sharing users’ phone numbers and other information with Facebook. That drew widespread regulatory scrutiny across Europe, and WhatsApp subsequently suspended the data sharing for EU users. In a letter sent to WhatsApp the group of EU data protection authorities said the company had still not resolved its concerns about getting user consent for the data sharing. Crown prince
Saudi Aramco IPO on track for 2018 Saudi Aramco’s initial public offering is on track for next year and the national oil giant could be valued at more than US$2 trillion, Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters in an interview. The sale of around 5 per cent of Aramco next year is a centrepiece of Vision 2030, an ambitious reform plan to diversify the Saudi economy beyond oil which is championed by Prince Mohammad. Saudi officials have said domestic and international exchanges such as New York, London, Tokyo and Hong Kong have been looked at for a partial listing of the state-run firm. Results
Hilton revenue jumps 26.1 pct Hotel operator Hilton Worldwide Holdings Inc yesterday reported a 26.1 per cent rise in quarterly revenue as more people booked its rooms at higher prices. Net income attributable to Hilton stockholders was US$179 million, or 55 cents per share in the third quarter ended Sept. 30. The company’s net income in the year-ago quarter was US$187 million, or 57 cents per share, reflecting US$103 million from discontinued operations. Excluding items, Hilton earned 56 cents per share in the quarter. Revenue rose to US$2.35 billion from US$1.87 billion.
Businesses and households in the eurozone borrowed more in September, figures from the European Central Bank showed yesterday, suggesting that the institution’s easy money policy is filtering through to the real economy
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redit to the private sector grew by 2.7 per cent year-on-year last month, adjusting for some purely financial transactions, up from 2.6 per cent in August. Lending growth is seen as an important indicator of the effectiveness of the ECB’s unconventional stimulus measures -- designed to boost growth and inflation with cheap credit. Looking in detail at the figures, lending to households accelerated by 2.7 per cent last month, the same pace as in August. Borrowing by non-financial companies meanwhile picked up from 2.4 per cent in August to 2.5 per cent in September. The latest lending data come ahead of a closely watched press
conference by ECB president Mario Draghi later yesterday, where he is expected to shed light on the fate of the bank’s ultra-loose monetary policies. With cheap loans to banks, record low interest rates and monthly bond purchases of 60 billion euros (US$71 billion), policymakers have sought to pump cash through the financial system.
Lending to households accelerated by 2.7 per cent last month
As growth in the 19-nation eurozone has picked up since the introduction of the extraordinary measures, the ECB is now expected to announce a major reduction in its bond purchases from next year. But with inflation in the single currency area still stubbornly low, analysts predict the Frankfurt-based institution will leave open the end-date for the scheme. Also yesterday, the ECB said the eurozone’s overall money supply, known as M3, increased by 5.1 per cent in September, compared with August’s 5.0 per cent rate. The ECB regards M3 money supply as a barometer for future inflation. Inflation in the euro area stood at 1.5 per cent in September, far below the ECB’s target of just under 2.0 per cent. AFP
M&A
Pfizer to launch consumer health sale in November The process is expected to heat up early next year as bids come in and a deal could be sealed around the middle of 2018 Pamela Barbaglia, Martinne Geller and Ben Hirschler
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fizer plans to kick off an auction process for its consumer healthcare business in November, paving the way for a potential US$15 billion-plus sale of the headache pill to lip balm business, sources close to the matter told Reuters. Several global companies, including GlaxoSmithKline and Reckitt Benckiser, have expressed interest in bidding for the unit, which had sales of about US$3.4 billion in 2016. The prospective sale, which is being led by Centerview Partners, Guggenheim Securities and Morgan Stanley, was first mooted on Oct. 10, when Pfizer said it was considering strategic options for the unit. But preliminary discussions with interested parties including Reckitt have already taken place, one of the sources said, adding the U.S. drug maker wants to get the ball rolling before the end of this year. GSK Chief Executive Emma Walmsley confirmed on Wednesday she would look “carefully” at the business. Three people familiar with the situation said the British drugmakers had hired Citi to represent it in the auction. GSK declined to comment while Citi was not immediately available. Other possible bidders could include Procter & Gamble, Sanofi, Johnson & Johnson and Nestle, several sources said. Pfizer plans to send out financial information about the consumer unit to prospective buyers in around three weeks time, one of the sources said. The process is expected to heat up early next year as bids come in and a deal could be sealed around the middle of 2018, the source said. Germany’s Merck KGaA is also looking to divest its consumer health business and has hired JP Morgan to sell the unit, best known for making Seven Seas vitamins. Some banking and industry sources said Merck could put the divestment on hold since the sale, estimated to be
One source said Pfizer believed keen competition would allow it to raise at least US$20 billion from the sale of the business worth around US$4.5 billion, risked being eclipsed by the Pfizer auction. One source said Pfizer believed keen competition would allow it to raise at least US$20 billion from the sale of the business, whose wellknown brands include painkiller Advil, Centrum multivitamins and lip balm Chapstick. As aging populations and health-conscious consumers drive demand for self-medication, the consumer health sector has proved a fertile ground for deal-making in recent years. But the industry remains fragmented and GSK’s Walmsley said she expected more merger activity, with GSK in a strong position to act as a “consolidator”.
Although consumer remedies sold over the counter have lower margins than prescription drugs, they are typically very long-lasting brands with loyal customers. Pfizer Chief Executive Ian Read said he was considering the sale of consumer healthcare because it was not integral to the core prescription drug business and might be worth more outside the group. GSK has taken a different view, opting to retain a diverse portfolio in which consumer health offers a hedge against riskier prescription drugs. For Reckitt, meanwhile, over-thecounter medicines offer higher-margin growth than its household business. Chief Executive Rakesh Kapoor, who last week announced plans to separate Reckitt into health and home and hygiene divisions, said he would weigh a bid if Pfizer’s strategic review resulted in a sale. Nestle could also enter the fight and use the Pfizer consumer business as a platform to expand the intersection of food and healthcare, sources said. The Swiss group has previously identified consumer healthcare as a sector of interest. Reuters
Business Daily Friday, October 27 2017 15
Opinion
Japan decides it wants another round of Abenomics Noah Smith, a Bloomberg View columnist
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apan ’ s long - ruling L iberal Democratic Party has figured out a novel and interesting way to stay in power -govern pragmatically, focus on the economy and give people what they want. Prime Minister Shinzo Abe and his party have been returned to power in decisive fashion in an early election. It’s not difficult to see why -- the Japanese economy is doing better than it has in at least a decade. The Pew Research Center finds that since Abe took office in 2013, optimism about the economy has exceeded the peak it attained in the mid-2000s under Abe’s mentor, Junichiro Koizumi. Why are people so positive? One big reason is that essentially everyone in Japan who wants a job now has a job. Unemployment has been conquered: Unlike in the U.S., where much of unemployment’s fall after the Great Recession came from workers exiting the workforce, Japan has managed to raise labour force participation. Most of this has come from bringing women into the Japanese workforce en masse. As might be expected, this has led to significant economic growth: What’s more, growth isn’t just being driven by big company profits. Small and midsize businesses, a mainstay of Japan’s middle class, have been doing well under Abe: It’s hard to argue with this record of success. Declarations that Abenomics has failed continue to pop up in the media from time to time, but that thesis is looking increasingly dubious. Japan’s economy hasn’t been this good since the 1980s, and the strong performance corresponds with Abe’s term of office. What’s more, Japan’s recovery probably isn’t due to a rise in external demand as Chinese growth slows and Europe and the U.S. remain sluggish. Policy -- the success of Abenomics -- is the most plausible explanation. This is a big win for people who believe in the power of monetary policy. The Bank of Japan’s unprecedented program of monetary easing hasn’t generated sustained inflation, but it has provided easy credit that has facilitated Japanese corporate restructuring. It has also caused the yen to depreciate, giving exports a boost. Meanwhile, policies like the new corporate governance code, agricultural reform and support for women in the workforce are probably also having a salutary effect, while a rapid inflow of foreign workers has helped fuel business expansion. But much remains to be done. Japan may have improved a lot under Abe, but it’s starting in a very deep hole -- rapid aging presents a powerful headwind for productivity, and population decline discourages companies from investing in the
country. To keep growing, Japan needs to continue improving the productivity of Japanese businesses. It also needs to figure out how to make growth more inclusive -- wage growth has been inconsistent, there is still a gulf between good full-time jobs and dead-end part-time jobs, and poverty remains a problem. In other words, the work of Abenomics is far from complete. It’s time for Round 2. To keep productivity rising, Japan needs to reform its labour market. One important change is to do away with long, unproductive work hours and encourage companies to reward efficiency and results. Though a few companies are already implementing such systems, the government wants more to make the shift. One idea is to eliminate overtime pay for white-collar workers, which some believe promotes spending too much useless time at the office. A more dramatic intervention would be to simply cap the overtime hours that employees are allowed to work. The Abe administration is working on both of these things. Another needed change is midcareer hiring. Japanese companies and policy makers are trapped in a bad equilibrium -- companies don’t hire employees midcareer because they have a bunch of workers they can’t fire, but the government is afraid to let companies fire workers because it’s so hard for them to find another job. The Abe administration briefly tried making it easier to dismiss employees, but was stymied by stiff opposition from unions. A better tactic would be
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Japan’s government has its problems, but overall it’s being much more proactive and smart about helping its citizenry than many other rich-country governments
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to incentivize companies to put systems in place for the regular hiring of midcareer employees. There are a number of other structural reforms Abe could adopt in order to boost productivity. The country lacks fossil-fuel resources, and nuclear power is politically contentious for obvious reasons, so Japan needs to focus on renewable energy. Japan’s government should give tax breaks and other incentives to keep the solar industry growing, while deregulating hydroelectric power. The country should also consider supporting the development of business schools, to help teach the next generation of managers how to change the cultures of the corporations they work in. On the issue of economic equality, Abe is already taking some important steps. After winning the election, he vowed to make both preschool and college free. He has also been pushing for rules to equalize hourly pay between full-time and parttime workers -- a move that would be especially important for women and young people, who are often hired for part-time positions. Abe also wants to reform the tax system to stop penalizing dual-income households, and to reduce the tax burden on low-paid, part-time workers. So Abenomics is rolling onward. Although Japan has many daunting challenges ahead, its leadership is still pushing for needed reform on a large number of fronts. Japan’s government has its problems, but overall it’s being much more proactive and smart about helping its citizenry than many other rich-country governments. The U.S. and the ruling Republican Party could afford to take some lessons from Abe’s success. Bloomberg view
16 Business Daily Friday, October 27 2017
Closing M&A
China U.S. buying spree prompts move to toughen deal reviews The Defense Department has raised concerns about Chinese investors financing American start-ups that are developing leading-edge technology David McLaughlin, Saleha Mohsin and Billy House
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rising tide of Chinese deal making in the U.S. is spurring Congress to propose tighter measures to restrict investments that are increasingly viewed as a threat to America’s national security. Lawmakers in Washington are moving to broaden the government’s authority to scrutinize overseas investment in the U.S. with bi-partisan legislation set to be proposed in the coming days, according to people familiar with the matter. The proposal follows a drumbeat of concerns from lawmakers about recent Chinese deals in U.S. technology, agriculture and financial services. Chinese acquisitions and minority investments in the U.S. peaked in 2016 at US$45.9 billion, up from US$17.7 billion in 2015, according to Bloomberg data. Chinese deals in 2017 so far are behind 2016’s pace at US$23.6 billion.
Lawmakers say the current framework for reviews conducted by the Committee on Foreign Investment in the U.S., or CFIUS, misses deals that pose national security risks because the panel focuses primarily on full acquisitions of American companies even though foreigners conduct a range of deal types in the U.S. The bill would expand the power of a national security panel to review investments by foreigners to include joint ventures and minority stakes in companies, according to documents detailing the legislation obtained by Bloomberg. “Many Chinese investments are coordinated state-driven efforts to target critical American infrastructure and disrupt our defense supply-chain requirements,” said Republican Congressman Robert Pittenger of North Carolina, one of the sponsors of the legislation. “Our bi-partisan bill strengthens and modernizes CFIUS to give the government the necessary tools to better track and evaluate Chinese investments.”
Fallen apart
The Defense Department has raised concerns about Chinese investors financing American start-ups that are developing leading-edge technology in sectors with military applications like artificial intelligence, augmented reality and robotics. Those types of investments generally avoid CFIUS scrutiny because they’re not full acquisitions.
Several Chinese deals have fallen apart this year after encountering objections from CFIUS, an interagency panel that reviews foreign acquisitions of U.S. companies for national security risks. The panel is led by the Treasury Department and includes officials from the Defense, State and Justice departments among others. While CFIUS can impose changes to deals, only the president can block them. In September, President Donald Trump blocked the sale of chip-maker Lattice Semiconductor Corp. to a Chinese-funded investment firm. In stopping the deal, the U.S. in part cited the Chinese government’s role in supporting the acquisition. Yet lawmakers remain worried that deals that pose a risk to U.S. security aren’t getting a proper vetting and that China deserves special scrutiny. Several acquisitions by Chinese buyers are in the pipeline awaiting approval. Pending deals include Ant Financial’s US$1.2 billion takeover of MoneyGram International Inc., Genworth Financial Inc.’s US$2.7 billion sale to China Oceanwide Holdings Group Co. and a bid by chipmaker Broadcom Ltd., which has headquarters in Singapore as well as San Jose, California for Brocade Communications Systems Inc. Chinese conglomerate HNA Group Co. is also trying to buy a stake in SkyBridge Capital LLC, the fund-management firm founded by Anthony Scaramucci, who was briefly Trump’s White House communications director. In a speech earlier this year at the Council on Foreign Relations, Senator John Cornyn of Texas, who is sponsoring the bill in the Senate, argued for reforming CFIUS reviews to deal
with China’s investments in American technology, which he called a threat to U.S. military superiority and the defence industry. “CFIUS has simply fallen out of date and needs to be modernized,” he said. “It wasn’t designed to handle the investment-driven transfer of leading-edge technology that China is vigorously pursuing today.”
Expanded jurisdiction
In addition to expanding CFIUS jurisdiction to include joint ventures and minority-position investments, the legislation would update the definition of “critical technologies” to include emerging innovations important to U.S. technological advantage, according to a fact sheet of the bill. The Treasury Department and Justice Department have been closely involved in drafting the bill, with Cornyn and Pittenger striving to achieve the administration’s full support before proposing the legislation, according to one of the people. “We are close,” Republican Congressman Devin Nunes of California said about the legislation’s progress. Nunes is chairman of the House Intelligence Committee and is one of the sponsors. A report this year by a Defense Department unit called the Defense Innovation Unit Experimental estimated that the Chinese share of venture financing is about 2 per cent to 3 per cent of the US$137 billion U.S. venture-capital investment market. The report recommends expanding CFIUS’s jurisdiction to include venture investing, reducing the use of mitigation agreements that allow deals to proceed, and permitting the Defense, Justice and Homeland Security departments to jointly block transactions without going to the president. The calls for revamping CFIUS have spurred others to caution against undermining the U.S.’s openness to foreign investment. Matthew Goodman, a senior adviser at the Center for Strategic and International Studies in Washington who previously worked for the National Security Council, said the U.S. has to strike a balance between protecting national security and maintaining the open investment environment that he said is critical for the country’s economic success. “I do think we have to be careful not to get caught up in rhetoric and not create a self-fulling prophecy by scaring off the Chinese,” Goodman said. “There is already a view in China that we’re hostile and trying to block them. The evidence doesn’t support that, but that’s what they think.” Bloomberg News
Portugal
Congress
Monetary policy
Waves boost town’s tourism, income
President Xi meets military in first ECB’s Draghi says ‘ample event since new leaders unveiled degree of stimulus’ still needed
The media impact of Nazare’s giant waves generated revenues of more than €10 million between 2011 and 2014, according to findings from the Gulbenkein Foundation study, released yesterday. The study analysed the impact generated by Nazare’s North Canyon, a project which lasted three years from 2010 onwards, led by the Hawaiian surfer Garrett McNamama and run by the municipal corporation, Nazare Qualifica. The idea was to promote Nazare internationally as a tourist destination for water sports. Three documentaries were filmed which registered Garrett’s McNamarar’s sport activity and the town’s daily atmosphere. The study presented at the Caloust Gulbenkein Foundation in Lisbon, concluded that without the project, income from tourism would not have exceeded €7.8 million. It also concluded that the popularity of the waves increased tourism in hotels, generating a total revenue impact of 32 per cent and 41 per cent. The impact is more visible in the franchise sales of the beaches’ brand. The town’s two stores are expected to reach €100,000 in sales this year. Lusa
Chinese President Xi Jinping met senior military leaders yesterday and pressed them on his goal of having world class armed forces by the middle of the century, his first publicly announced meeting with them since a new leadership was unveiled. Xi, who is also head of the military and the ruling Communist Party, has made military modernisation a key policy platform, with advanced new equipment like stealth jets and aircraft carriers either already in service or development. The armed forces have also been a focus of Xi’s fight against deep-seated corruption, with dozens of senior officials investigated and jailed. In his first publicly reported meeting with top officers since Wednesday’s unveiling of his new Standing Committee, a seven-man body that is the height of power in China, Xi pushed home his modernisation message. The military must ensure it is a world-class service by 2050, Xi said, in comments carried by state media, a goal he set last week at the opening of a key party congress. The armed forces must “fully recognise the bright prospects for a strong military”, Xi told them. “Put into practice one hundred per cent military construction.” Reuters
European Central Bank chief Mario Draghi yesterday said the eurozone economy still relied on “an ample degree” of stimulus, even as it took a first step towards scaling back easy money measures. While praising an “increasingly robust and broadbased economic expansion”, Draghi said price pressures remained “muted”. “Therefore an ample degree of monetary stimulus remains necessary for underlying inflation pressures to build up,” he said at a press conference following a closely-watched meeting of the bank’s governing council. The ECB has in recent years taken extraordinary measures to push up growth and inflation in the eurozone. It has set interest rates at historic lows, offers cheap loans for banks and is currently buying 60 billion euros (US$72 billion) a month in government and corporate bonds. As the eurozone economy picks up, calls have grown for the ECB to begin unwinding its ultra-loose monetary policies, as the Federal Reserve is doing in the United States. The Frankfurt institution edged in that direction yesterday when it announced it would reduce its monthly asset purchases to 30 billion euros from January. AFP