Business Daily #1278 April 19, 2017

ANZAC Day observance in Macau Tue, 25 April 2017 │ 7:30am - 9am │ MGM Macau C DAY ANZA

Followed by breakfast from 8am

China unveils list of attendees at New Silk Road meeting Summit of the year Page 16

Wednesday, April 19 2017 Year VI Nr. 1278 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Consumption

Chinese consumers activate change of economic model Page 8

Energy

Electricity tariff index reduced to MOP30 cents/kWh Page 4

MICE

Hong Kong product fair attracts 150,000 visitors Page 2

www.macaubusinessdaily.com Academic

Trade

U.S. professor writing book about MSAR casinos Page 4

MSAR can benefit from China’s position as global export giant Page 6

Doubling Up

Property

More residential units were purchased and sold last month.

Even though home prices were more expensive. According to Financial Services Bureau data. Which reveals total housing transactions exceeded 1,100 last month. Nearly double those of a year ago.

And double those of a month earlier.

Page 3

Post-Easter blues

Gaming revenue is running higher this month. But analysts anticipate a minor deceleration for the rest of the month.

The Easter holiday increased traffic from Hong Kong to Macau.

In general, April’s revenue growth is still projected at around mid to high teens.

Space race

Environment Shoulder to shoulder.

Every square kilometre of the city needed to be shared among 21,400 persons last year. Some 300 more than 2015.

Vehicle density also increased during the year. Although air quality slightly improved. According to the Statistics and Census Services. Page 2

China’s direct investment falls

Gaming Page 7

HK Hang Seng Index April 18, 2017

23,924.54 -337.12 (-1.39%) Worst Performers

Want Want China Holdings

+1.45%

Geely Automobile Holdings

-0.19%

China Resources Power

-4.27%

Wharf Holdings Ltd/The

-2.52%

Cheung Kong Infrastructure

+0.48%

Cathay Pacific Airways Ltd

-0.37%

China Unicom Hong Kong

-4.14%

China Resources Land Ltd

-2.42%

Galaxy Entertainment Group

+0.35%

Hengan International Group

-0.51%

Sino Land Co Ltd

-2.82%

China Mengniu Dairy Co Ltd

-2.26%

Belle International Holdings

+0.00%

Hang Seng Bank Ltd

-0.58%

Hang Lung Properties Ltd

-2.65%

China Life Insurance Co Ltd

-2.17%

AAC Technologies Holdings

-0.05%

MTR Corp Ltd

-0.67%

Hong Kong & China Gas Co

-2.53%

CNOOC Ltd

-2.01%

23° 27° 23° 26° 19° 26° 19° 21° 21° 22° Today

Source: Bloomberg

Best Performers

THU

FRI

I SSN 2226-8294

SAT

SUN

Source: AccuWeather

ODI China’s non-financial outbound direct investment fell in Q1, official data reveals. Mainland firms invested in 2,170 overseas enterprises in 129 countries and regions in the first three months, said the Ministry of Commerce. Page 8

2 Business Daily Wednesday, April 19 2017

Macau Environment

A congested city There were more people, and more vehicles in the MSAR last year Sheyla Zandonai sheyla.zandonai@macaubusiness.com

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he city’s population density increased to 21,400 persons per square kilometre in 2016, as compared to 21,100 persons per square kilometre in 2015, the latest Environmental Statistics report released by the Statistics and Census Services (DSEC) yesterday reveals.

Meanwhile, the lane length of public roads available in the SAR totalled 427.4 kilometres in 2016, with vehicle density increasing to 586 vehicles per kilometre in 2016 vis-a-vis 583 vehicles per kilometre recorded a year earlier.

Despite the slight increase in vehicle density, DSEC noted that all five stations monitoring air quality in Macau registered an increase in the number of days with ‘moderate’ air quality.

The worst air quality standards were found in the densely residential area of the Northern district of the Macau Peninsula, which recorded the highest number of days with

‘poor’ air quality, 19 days, followed by the densely residential area in Taipa and the Concordia Industrial Park in Coloane, which both recorded 17 days of ‘poor’ air quality in the year.

The Environmental Protection Bureau received 489 cases of air pollution complaints in 2016, down56 cases when compared to 2015, the survey shows.

Of these, complaints about the

emission of exhaust gas and smell from local eateries accounted for 44.6 per cent of the total (or 218 cases) whilst those about the smell from commercial establishments accounted for 16.2 per cent (or 79 cases).

Water consumption

Water consumption was also on the rise throughout 2016, reaching 86.7 million cubic metres, a 2.1 per cent

increase year-on-year as all sectors in the MSAR used more water during the year.

The greatest growth was evident in the business sector, which consumed 44.17 million cubic metres of water during the year, a 2.4 per cent increase. Local households, meanwhile, used 36.97 million cubic metres of water, up 1.8 per cent yearon-year, while water consumption of the MSAR Government rose by 1.5 per cent year-on-year to 5.55 million cubic metres.

According to the survey, the city’s five Waste Water Treatment Plants treated an average of 229,521 cubic metres of waste water per day, up by 18.9 per cent year-on-year. In particular, the average daily volume of waste water treated by the plant on the Macau Peninsula increased 21.3 per cent year-on-year to 161,145 cubic metres.

The increase in the population residing in Coloane also drove up the average daily volume of waste water treated by the Coloane sewage plant by 22.7 per cent year-on-year to 35,223 cubic metres, DSEC notes.

Likewise, the volume of domestic garbage collected during the whole year of 2016 rose 5 per cent year-onyear to 239,993 tonnes, of which that from the business sector increased by 10 per cent to 137,949 tonnes.

The volume of construction waste transported to landfills was, however, down to 3,269 tonnes, representing a significant decrease of 32.4 per cent year-on-year.

MICE

Hong Kong product fair attracts 150,000 visitors The 2017 Hong Kong Brands and Products Expo, Macau attracted some 150,000 visitors, thanks to the Easter holiday and the prolonged duration of the event, organiser Chinese Manufacturers Association of Hong Kong (CMA) told Business Daily.

The event, held between April 13 and April 17 at Macau Fisherman’s Wharf Convention and Exhibition Centre, saw the number of participants increase 50,000 compared to last year as its duration increased to five days from three days one year ago.

According to CMA, 160 exhibitors showcased Hong Kong products in 230 booths, but it did not reveal the amount of sales and the number of transactions made during the event.

This was the second time the

exhibition had been held in Macau, exposing Hong Kong brands and products to MSAR residents and visitors. The organiser said it

Tourism

believes the event could become an annual fixture in the city.

The exhibition is a spin-off of the Hong Kong Brands and Products

Expo - an outdoor exhibition held yearly in Victoria Park in the neighbouring SAR, of which its latest edition generated around HK$800 million (US$102.9 million) in sales, the South China Morning Post reported. N.M.

Tourism

Visitor arrivals jump 5.6 pct over Easter MSAR passport-holders granted visa-free access to St. Kitts and Nevis Visitor arrivals totalled some 427,900 during the Easter holiday period spanning April 14 to April 17, increasing 5.6 per cent as compared to the same period last year, according to data released yesterday by the Macao Government Tourism Office.

Of total visitors, those from the Greater China region amounted to some 384,000, a growth of 5.1 per cent year-on-year, with those from

Mainland China and Hong Kong increasing 6.5 per cent 4.1 per cent, respectively. While tourists from other markets increased by 10.9 per cent year-on-year, visitors from Taiwan decreased 10.3 per cent, the Office noted.

Meanwhile, over 2.15 million border crossings were recorded at the city’s different checkpoints during the Easter holiday, the Public Security Police Force told Business Daily. C.U.

Holders of the MSAR passport can now travel visa-free to the Federation of Saint Kitts and Nevis, a two-island country in Central America, the city’s Identification Services Bureau announced yesterday. Local residents with an MSAR passport

are granted a maximum stay of one month for tourism purposes, the notice reads. Currently, 129 countries or territories have agreed to grant visa-free access or visa-on-arrival to Macau SAR passport holders, the Bureau said.

Business Daily Wednesday, April 19 2017    3

Macau

Real estate

Home sales up notably in March Residential unit transactions soared by nearly 90 per cent year-on-year last month Kam Leong kamleong@macaubusinessdaily.com

H

ousing prices in the MSAR surged 26.2 per cent year-on-year to MOP91,801 (US$11,475) per square metre in March. But the increase did not stop homebuyers from purchasing residential units - total transactions surged nearly 90 per cent from a year ago.

According to the latest official data from the Financial Services Bureau, some 1,120 home units were purchased and sold last month, not

only representing a year-on-year increase but more than double the growth from 546 transactions in February.

Home prices, on a month-onmonth comparison, grew 3.8 per cent from MOP88,440 per square metre.

The majority of transactions were made on housing units in the Macau Peninsula, at 832, a growth of 74.8 per cent year-on-year, or an increase of 94.8 per cent month-on-month.

The Islands registered even higher increases in the number of transactions. In particular, Coloane saw the number of housing transactions

soar 185.2 per cent year-on-year, or 120 per cent month-on-month, totalling 77whilst home transactions in Taipa reached 211, rising 140 per cent year-on-year, or 151.2 per cent month-on-month.

Housing prices increase

Meanwhile, housing prices in Taipa recorded the highest year-on-year growth in the month, up 28.9 per cent to MOP95,775 per square metre, representing an increase of 1.1 per cent month-on-month.

Residential units on the Macau Peninsula sold for MOP87,528 per square metre on average, up 23.8 per cent year-on-year, or 37.1 per cent month-on-month.

Home prices in Coloane climbed 28.3 per cent year-on-year to

MOP120,229 per square metre. But compared to February this year, this average cost dropped 13.7 per cent compared to MOP139,374 per square metre.

By type of unit, 973 of the month’s housing transactions were made on completed units, up 79.5 per cent year-on-year, whilst the other 147 were made off-plan, triple that of a year ago.

Off-plan sales cost MOP131,439 per square metre on average in the month, which grew 43 per cent year-on-year, or 6.74 per cent month-on-month.

Meanwhile, the average price of completed units increased 21 per cent year-on-year to MOP85,425 per square metre, representing an increase of 3.8 per cent month-onmonth.

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4 Business Daily Wednesday, April 19 2017

Macau Opinion

José I. Duarte*

Separation of waters The president of the Legislative Assembly has talked to the media. His comments on various issues received extensive coverage in the Portuguese language newspapers. Some of these observations were quite general, as befits the post; but they deserve further reflection and are worth a wider debate. I will focus here only upon a particular topic, related to the overall structure and functioning of our political system – the participation of legislators in the Executive Council.

On that subject, the opinion expressed could not be clearer.

With softer words than these, the understanding is that there are too many legislators in that Council – and that it is not good. Indeed, as pointed out, there is no legal conflict – but a smaller ‘representation’ would be welcome.

The approach is diplomatic and, if anything, less ambitious than it might be. The Executive Council does not exist only to provide advice to the CE on the ‘big affairs of state,’ as it were. No, it discusses current affairs and previews and filters legislative proposals. In a way, its role is closer to a Council of Ministers albeit a diminished one, than to a ‘state advisory body’. In such circumstances, it is arguable that there are apparent conflicts of interest at play and, therefore, there should be no legislators sitting in the Executive Council.

Its existence weakens a proper separation of powers. It blurs the distinction between the executive activities, on which the Council is expected to have an influence, and the representative and monitoring tasks assigned to the Assembly. That devalues the Assembly function, overall; and diminishes the role of those legislators who are not also members of the Executive Council, creating somehow two different categories of legislators.

The suggestion advanced that their number should be reduced to two (or three, at most) is understandable; and would mean an improvement, a movement in the right direction. However, prudent as the president’s position may be, that solution does not go far enough in dealing with the essence of the matter.

The formal representation of the Legislative Assembly is incumbent upon its president, as the representative of that (independent) branch of government. And can be complemented by the communication channels, formal or informal, which both institutions, government and Assembly, see fit and decide to set up conjointly.

A neater separation of roles would clarify institutional relations and remove the conflicts of interest the current arrangements inevitably create. *economist and permanent contributor to this newspaper.

Energy

CEM reduces electricity tariff index

T

he T a r i f f C l a u s e Adjustment (TCA) will be reduced by MOP3 cents per kWh in the second quarter to MOP30 cents per kWh, local sole power distributor CEM – Companhia de

Electricidade de Macau announced yesterday. The electricity supplier said the reduction is attributed to the decrease in Renminbi exchange rate and local power generation – ‘in which the increase of natural gas power generation reflects

the importance of local power generation and the advantage of selecting the best energy mix,’ it wrote. According to CEM, the adjustment will be applied to the company’s Tariff Group A, B and C customers.

Customs

Guangdong seizes RMB13mln-worth of rights infringement goods from SARs The Guangdong Customs seized over 200,000 goods from Hong Kong and Macau that infringed intellectual property rights in 2016, valued at over RMB13 million (MOP15.1 million/US$1.89 million), the Mainland authorities said on Monday.

According to the Customs, it confiscated the goods during 421 actions last year, saying in a press briefing that the three regions have long established co-operation in combating the circulation of goods infringing intellectual rights, such as the establishment of a special liaison mechanism as well as the exchange of information between the different Customs jurisdictions.

The head of the Guangdong Intellectual Property Office, Ma Xianming, disclosed that the Chinese office has

had a meeting every two years with the Intellectual Property Department of the Macao Economic Services.

The exchange of information between the parties includes Intellectual Property (IP) patents and trademarks of the regions, said Mr. Ma.

Macao Economic Services (DSE) received 1,272 applications for intellectual property registration in the MSAR last month, up 38.7 per cent from 917 applications a month earlier, as more people requested to register trademarks. C.U.

Addiction

Professor to explain gaming and addiction behaviour in new book Academic and author David Courtwright is writing a book that seeks to answer the question ‘Why are there so many casinos in Macau?’ – in addition to examining the global history of addictive behaviour including gaming and technology, according to the Florida Times Union.

The author has published a series of books focused on addiction - in particular, the ‘Dark Paradise: A History of Opiate Addiction in America,’ which examines the history of 19th Century opiate addiction ‘from respectable upper class matrons to lower class urban males, often with a criminal record,’ according to the author’s website. Courtwright’s primary focus in his publications so far has been on drug-related addiction.

Courtwright is a professor of United States history a well as medical, social and legal history at the University of Florida.

The author describes the new project he’s currently working on as “a book about pleasure and capitalism in the modern world.”

The gambling participation rate of Macau residents last year was 51.5 per cent, according to ‘A Study of Macau People’s Participation in Gambling Activities 2016’ conducted by the University of Macau’s Institute for

the Study of Commercial Gaming and commissioned by the Social Welfare Bureau (IAS).

The findings indicate that a 60 per cent increase was found in the average monthly amount spent on gambling by respondents since the last study, in 2013, reaching MOP808 (US$101).

‘Except for ‘Social Gambling,’ which was generally regarded as a form of entertainment, ‘the desire to win money’ was the major reason for participation in other forms of gambling,’ reads the IAS-commissioned report.

Primary demographics indicate that those aged 25 to 34, born in Macau or having migrated to the MSAR ‘at younger ages’ and in ‘employment and with higher monthly personal income were more likely to participate in gambling activities,’ reads the report. K.W.

Business Daily Wednesday, April 19 2017 5

Macau Nuclear

Taishan nuclear power plant readied for ‘hot test’ Operation date for Unit 1 already pushed back to second half of this year, with Unit 2 to go online in the first half of 2018 Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

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he nearby Taishan nuclear power plant, located in neighbouring Guangdong Province, is being readied for its ‘first loading of nuclear fuel,’ according to a filing with the Hong Kong Stock Exchange.

The power plant is jointly run by China General Nuclear Power (CGN) and Electricité de France (EDF), with an initial opening date of the first half of the year since being pushed back to the second half of this year for Unit 1 of the facility. Unit 2 is expected to become functional only in the first half of next year, according to a previous company filing.

‘Taishan Unit 1 has completed inspection from the relevant regulatory authorities of the State, and entered into the key stage of hot functional test,’ notes the filing, clarifying that the ‘Hot functional test is the last overall performance testing before the first loading of nuclear fuel’ and covers ‘the whole pressure and temperature range for reactors from halt to normal operation.’

According to the group’s first quarter results, it saw a 12.4 per cent

increase in the power generated by nuclear plants operated and managed by the group for the first three months of the year when compared to the same period last year.

In total, the group generated 29,427.8GWh (gigawatt-hours) through its six subsidiary operations and one ‘associate’ operation.

Nuclear neighbour

The group’s closest producer of electricity is the Yangjiang Nuclear Power Station, also located in Guangdong Province and approximately 200 kilometres from the MSAR. The facility, which currently operates four reactors, the most recent of which was ‘qualified for commercial operation’ on March 15 of this year, produced a total of 5,494.24GWh in the period, a 9.67 per cent decrease year-on-year. Two more reactors at the site are scheduled to enter operation next year.

In addition to the Taishan and Yangjiang facilities, the CGN group operates three other nuclear power stations in Guangdong Province; namely, the Daya Bay station, Ling’ao station and Lingdong station.

The group’s largest power output, aside from that provided by

Urban renewal

A long wait The city’s old neighbourhoods are still facing many issues for their redevelopment How long do we have to wait? The government keeps giving us hope that it is going to happen,” said Ah Mei, an old woman in her seventies living with her husband in one of seven residential blocks in Bairro Iao Hon. What she longs for is the redevelopment of these buildings, which have been completed for nearly five decades, just like the government promises.

After more than a year of discussions, the Urban Renewal Committee - a government-appointed council established last year to advise the authorities on urban renewal policies - reached a preliminary consensus in March that the approval percentage of flat owners needed to redevelop a building could be lowered to facilitate the rejuvenation of old districts such as Iao Hon and some other areas on the Macau Peninsula.

Describing the preliminary

“

consensus as “a breakthrough,” U Kin Cho, vice co-ordinator of a sub-body of the Committee, said in March that they had initially agreed the percentage approval required for buildings of 30-40 years of age would be cut to 90 per cent, while it would be lowered to 85 per cent for buildings aged 40 years or more. In the event of major public interest or the buildings being demolished, the approval ratio could be changed to as low as 80 per cent, he said. Under the present legal framework, any redevelopment of a building must get the approval of all owners of a building.

Acknowledging the importance of protecting residents’ right of private property, Lok Wai Tak, president of the Real Estate Development Chamber of Commerce, said the dilapidated state of some old buildings could affect the public interest. “Requiring approvals from all owners for reconstruction simply makes the process almost impossible,” said Lok, who also sits on the Urban Renewal Committee. “There is also a consensus in society that such a ratio should be lowered.”

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands or online at www.magzter.com

subsidiaries – which amounted to 25,723.79GWh in the quarter – was from a facility in Fujian Province, Ningde Nuclear Power Station, which saw a 67 per cent increase in output year-on-year, reaching 6,907.42GWh in the quarter.

The group also operates nuclear power stations in Guanxi and Liaoning provinces.

The MSAR’s overall power consumption reached ‘another record high’ last year, according to local

electricity supplier Companhia de Electricidade de Macau (CEM), hitting 5,255GWh. CEM supplied just 15 per cent of the total power consumption in the year, importing 4,306GWh from the Mainland, a 6.2 per cent year-onyear increase. However, the resumption of natural gas supply at Coloane Power Station B late last month ‘will lead to an expected rise in the proportion of local power generation,’ CEM notes.

6 Business Daily Wednesday, April 19 2017

Macau

Trade

Benefits of being ‘Greater’ The MSAR can benefit from China’s status as top exporter, leveraging the One Belt, One Road initiative for trade and development in the Greater Bay Area Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

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s the first month of this year saw a 1.6 per cent year-on-year increase in imports from Mainland China to the MSAR, the current second top economic superpower has been named the world’s largest goods exporter as well as the second largest importer, according to the World Trade Organization (WTO).

The value of goods imported to the MSAR from the Mainland in February reached MOP1.64 billion (US$200 million), according to data from the Statistics and Census Service.

This marks the eighth consecutive time the country has ranked as the top goods exporter globally, with the WTO estimating that this year worldwide trade could grow by about 2.4 per cent, coming off 2016 in which it shrank 3.3 per cent year-on-year to US$15.46 trillion.

In the same month, the MSAR saw a 23.4 per cent year-on-year increase in its exports to China, hitting MOP122.47 million, according to the data, reversing a five-month downturn with double-digit drops in exports and demonstrating the first double-digit growth since March of last year.

Not quite 2.4 pct

WTO Director General Roberto Azevêdo notes that despite the official figure for world trade growth increasing 2.4 per cent year-on-year, “because of the high level of economic and policy uncertainty, we are placing this figure within a range from 1.8 per cent to 3.6 per cent.”

The head notes that targeting 2.4 per cent “assumes that governments pursue an appropriate mix of policies and that GDP forecasts will be accurate.”

This falls largely on two main economies, for varying reasons.

“The most trade-intensive components of global demand were particularly weak last year as investment spending slumped in the United States and as China continued to rebalance its economy away from investment and toward consumption, dampening import demand.”

Locally, the dampening was seen mostly in the second half of the year, after a rough first quarter

‘characterised by financial turbulence that affected China and its regional trading partners,’ notes the WTO, pointing out that ‘fears of an economic hard landing and currency depreciation increased.’

Despite the troubles, Chins’s goods exports comprised 13.2 per cent of the world’s total in terms of value, rising above US$2.1 trillion throughout the year, as compared to US$1.6 trillion in imports, according to the WTO.

New troubles

However, even as economies such as that led by U.S. President Donald Trump turn towards industrial-oriented industries such as coal mining, a new norm is emerging for worldwide trade and its workforce.

‘The fact is that the economy is changing fast — driven by technology and innovation,’ points out the WTO. ‘Eight in ten manufacturing jobs are lost to innovative technologies and higher productivity. It is estimated that 65 per cent of children entering primary school today will end up working in types of job that don’t yet exist. We have to adapt to this new reality,’ it states.

The most recent data from China’s Ministry of Commerce notes that the majority of foreign direct investment (FDI) went into the service and manufacturing areas in February, with total FDI during the month reaching RMB58.6 billion, a 9.2 per cent yearon-year increase.

In addition, some 1,850 new foreign-funded enterprises were set up in the same month, demonstrating a 33.3 per cent increase year-on-year.

Foreign firms are jumping on the bandwagon of central government policies seeking to shape the Pearl River Delta into the next Silicon Valley, riding the wave of innovation which birthed Internet company giants such as Tencent, headquartered in nearby Shenzhen.

Greater

As the WTO points out ‘ More trade integration can help make the system more inclusive - connecting new industries and smaller players to new markets.’

Such is the impetus behind the Greater Bay Area - encompassing Macau, Hong Kong and the nine neighbouring cities of Guangzhou, Shenzhen, Zhuhai, Dongguan,

Huizhou, Zhongshan, Foshan, Zhaoqing and Jiangmen.

Intimately linked is the One Belt, One Road initiative, linking manufacturing and supply chains with consumers worldwide.

At the China Import and Export Fair, held over this past weekend in Guangzhou, more than half of the foreign buyers and exhibitors were from Belt and Road countries, as noted by the initiative’s official website.

A sales manager from a tech company in Shenzhen participating in the fair, Feng Xiaoli, points out that not only does the initiative improve the scope of potential markets but “because logistics are improving, and the products go through Customs quicker our clients in these countries can receive our products faster.”

Estimates by the WTO point to a predicted 1.45 per cent gain in gross domestic product (GDP) figures by 2020 for the Mainland brought about by improved trade facilitation, resulting in a US$124 billion increase.

Exports from the country would also see an 8.83 per cent increase and a US$187 billion gain, notes the WTO. Primary elements of the WTO’s trade facilitation agreement TFA, that went into effect in February of this year, that could lead to these gains, points out the group, would include elements such as ‘Formalities connected with importation and exportation and transit; Freedom of transit’ and ‘Customs co-operation’ - elements already integrated into the incentive.

In addition, this trade openness correlates to overall productivity, notes the group in its ‘ Making Trade an Engine of Growth for All’ report.

‘A 138-country study attributed large positive productivity effects to trade openness, finding that a 1 percentage point increase in openness raised productivity by 1.23 per cent in the long run,’ notes the report, pointing to estimates that a ‘one percentage point reduction in tariffs on inputs used in a sector improves total factor productivity in that sector by 2 per cent.’

This increased productivity and potential to export further and further abroad can lead to gains near and far, with history demonstrating the possible worldwide repercussions of continued technological advancements in the Greater Bay Area.

‘As much as 15 per cent of Europe’s technology upgrading over 2000– 2007 has been linked to increased competition from China,’ notes the WTO report. However, this does not have to be one-sided, as ‘the knowledge a country’s trading partners have access to indirectly benefits that country as well.’

As such, the increased facility of trade between the MSAR and its neighbouring cities, soon to be a mega-region, could not only benefit the territory financially, but also intellectually, if the workforce can receive proper training to keep up with the endless stream of technological advancements and keep its labour close to home.

Business Daily Wednesday, April 19 2017 7

Macau Gaming

Easter hangover Analysts anticipate the gaming industry may suffer a slight deceleration following the Easter holidays, although they believe China’s travel restrictions against South Korea are still benefiting the MSAR market Nelson Moura nelson.moura@macaubusinessdaily.com

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aming analysts believe the city may experience a slight “deceleration” after the Easter holiday whilst maintaining predictions for a double-digit growth in gross gaming revenue in April.

According to Aegis Capital Corp. analyst David Bain, revenues derived from gaming tables reached MOP10.8 billion (US$1.34 billion) as of April 16, which suggests revenue growth was trending slightly above 20 per cent year-on-year.

However, the analyst noted that this growth is expected to suffer a “minor deceleration” in the remainder of the month, expecting the month could still finish with a “near or above the high-end of our estimate range” of 13 per cent to 16 per cent.

The Easter holiday is said to have benefited Hong Kong traffic to Macau. “Notably, one Macau contact told us that immigration lines from Hong Kong to Macau before the Easter holiday was [more than] 3 hours – the longest he has seen it around this part of the calendar in “years,” the analyst wrote.

He added that the recent travel restrictions enforced by Mainland China against South Korea is also

continuing to benefit “higher-end Macau patron traffic.”

Meanwhile, a gaming analyst at Telsey Advisory Group, David Katz, holds a more positive outlook for the month, citing his industry sources, saying “gross gaming revenue trends in Macau for the month of April are running up approximately 22 per cent year-on-year.”

“Indications are that VIP hold has been mixed across the properties and therefore net neutral to the result, while head counts have remained strong in both Cotai and on the [Macau] Peninsula,” he added.

If Telsey Group’s estimates are correct, it would be the first time the local gaming industry sees revenue growth jump above 20 per cent since February 2014, when a yearon-year growth of 40.3 per cent was registered.

Picking winners

On the other hand, both firms believe Wynn Resorts Ltd. - the parent company of local gaming operator Wynn Macau Ltd. - would be one of the companies to see better results for the first quarter of this year.

“With the expectation that VIP is a key driver of the growth, we believe the revenue trends favour [Wynn] and to a lesser extent [Las Vegas Sands] and MGM based on

their respective exposures to VIP business,” the Telsey analyst wrote.

“However, we consider the notion that the strength in VIP is contemplated by the market for first quarter results and all of the companies, Wynn Resorts, in particular, will need

to clear a high bar in order to move higher in direct response,” he added.

Meanwhile, the Aegis Capital Corp. analyst estimates Melco Resorts & Entertainment Limited would see positive earnings for the first three months of this year as well.

8 Business Daily Wednesday, April 19 2017

Greater china Capital curbs

Outbound direct investment slumps Merger and acquisitions involving Asian companies fell 39 per cent in the first quarter of 2017

C

hina’s non-financial outbound direct investment (ODI) slumped 30.1 per cent in March from a year earlier as authorities kept a tight grip on capital outflows to help support the yuan currency and safeguard the country’s foreign exchange reserves.

Non-financial ODI totalled US$7.11 billion last month, Commerce Ministry data showed yesterday.

For the first three months of this year, non-financial ODI tumbled 48.8 per cent to US$20.54 billion from the same period last year.

Merger and acquisitions involving Asian companies fell 39 per cent in the first quarter of 2017 to US$176 billion, the lowest level in nearly three years and highlighting a sharp pull back in overseas deals by Chinese firms, Thomson Reuters data showed. Banks’ advisory fees have taken a heavy hit as a result.

The ministry did not give the latest figures on China’s outbound property investment, but said funds mainly flowed to manufacturing, business services, software and information technology services, with manufacturing accounting for 24.7 per cent of the total.

China tightened its grip on moving funds out of the country late last year as the yuan plumbed more than eight-year lows. The currency has steadied so far this year, thanks to

the capital curbs and a retreat in the surging U.S. dollar.

While Beijing says it supports legitimate overseas investment, regulators have warned they would pay close attention to “irrational” investment in property, entertainment, sports and other sectors.

Earlier data showed foreign direct investment into China rose 1 per cent to RMB226.51 billion (US$32.91 billion) in the first quarter from a year earlier. Reuters

Key Points Outbound investment down 48.8 pct y/y in Q1 Capital outflow curbs weigh on overseas investment Outbound investment in countries involved China’s “One Belt one Road” infrastructure initiative was US$2.95 billion in the first quarter, or 14.4 per cent of the total, the ministry said.

Non-financial ODI tumbled 52.8 per cent in January-February from the same period last year, with amounts in the property and entertainment sectors down over 80 per cent.

Dealmakers have said many Chinese firms are unable to close deals because they cannot secure official permission to transfer yuan into foreign exchange.

Consumption

Big data confirm consumer rebound Consumers are helping break the economy’s reliance on investment-led growth China’s consumers led the economy to a surprisingly strong performance as the expansion accelerated for a second-straight quarter. Alternative indicators confirm momentum gained in March, even as the picture wasn’t as bright in movie theatres and auto showrooms.

Spending at luxury hotels and restaurants picked up and online sales climbed last month, according to data from the nation’s dominant bank card network and No. 2 e-commerce platform JD.com Inc. Box office activity stalled and car sales decreased in the first quarter.

Consumers are helping break the economy’s reliance on investment-led growth, as buying by private shoppers and the government accounted for 77.2 per cent of first-quarter expansion. Shoppers are also upgrading to pricier brands from Club Med trips to Tiffany & Co. jewellery.

“There’s an upgrade in consumption patterns: more luxurious goods and services,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. Resilient income growth and the wealth effect of the housing boom have aided consumption, he said.

Still, one gauge released Monday showed retail sales face challenges.

Growth of median per-capita disposable income slowed to 6.7 per cent in the first quarter, down from 8.3 per cent last year and slower than GDP expansion for the first time since the National Bureau of Statistics began releasing the gauge in March 2014.

These charts show how consumers

are faring by various metrics: Increasingly wealthy consumers are checking in to luxury hotels, while real estate purchases have been weighed down slightly by recent measures to cool property markets, according to data from China UnionPay Co., operator the largest bank card network.

Other tracking by the card network, which can handle hundreds of millions of swipes per week for everything from home down payments to bar tabs, shows restaurant spending edged up from a post-Lunar New Year low in February, though it still hasn’t fully recovered to the giddy levels before President Xi Jinping’s anti-corruption campaign.

Another victim of that crusade, Guizhou-based distiller Kweichow Moutai Co., is recovering as top-shelf

brands in the US$115 billion baijiu industry appeal more to a growing middle class. The world’s most valuable liquor distiller said Friday that revenue rose 19 per cent last year and that it aims to boost sales by more than 15 per cent this year as consumers trade up.

Online consumption picked up from February as retailers and delivery workers returned from holidays, according to JD Finance, a unit of e-commerce platform JD.com. Data show the top items are cosmetics and personal care products as well as sports and outdoor goods.

Emma Watson and Hugh Jackman didn’t lure as many movie-goers as some domestic blockbusters during the Chinese New Year, according to Beijing-based entertainment researcher EntGroup Inc. First quarter box office revenue was little changed from the same period last year, compared with a 3.7 per cent gain in 2016 and a 49 per cent jump in 2015.

Still, lukewarm sales may get a boost this month from “The Fate of the Furious,” which is on track to be the biggest global movie opening of all time. In China, Universal Pictures’ eighth instalment of the franchise took in RMB1.3 billion (US$189 million) last weekend.

“We still need to prepare for some downside surprise in overall consumption growth in the next few quarters” Zhou Hao, an economist at Commerzbank AG in Singapore

The auto sector was a bright spot last year, with vehicle sales rising 13.7 per cent. Things aren’t so good this year as an increase in the sales tax dents demand and consumers boycott South Korean brands amid tensions over planned deployment of a U.S. missile shield. Sales of cars, SUVs and multipurpose vehicles fell 1.7 per cent to 5.56 million units in the first three months, according to the China Passenger Car Association.

“Moderation could be attributed to less preferential car purchase policies,” Zhou Hao, an economist at Commerzbank AG in Singapore, wrote in a note. “We still need to prepare for some downside surprise in overall consumption growth in the next few quarters.” Bloomberg News

Business Daily Wednesday, April 19 2017 9

Greater China Lobby report

U.S. business group urges Washington to “use every arrow” against Beijing U.S. business leaders also worry that Trump’s focus on curtailing North Korea’s nuclear and missile programmes could undercut U.S. commercial interests in China The United States should “use every arrow” in its quiver to ensure a level commercial playing field in China, a U.S. business lobby said yesterday, warning that 2017 could be the toughest year in decades for American firms in the country.

China’s policies designed to support domestic companies and create national champions have narrowed the space for foreign companies, the American Chamber of Commerce in China said in its annual business climate report.

The White House has said U.S and Chinese officials are fleshing out a

pledge by leaders Donald Trump and Xi Jinping for a 100-day plan to cut the U.S. trade deficit with China, which reached US$347 billion last year.

But the chamber said it hoped more attention would be paid to market access for American firms in China.

“Right now basically we are recommending everything you have in your quiver - please use every arrow possible, with the understanding that some of these points of leverage could be counterproductive to us,” chamber chairman William Zarit said, referring to possible backlash from Beijing.

He was speaking at a briefing on the report.

U.S. business groups want U.S. officials to take measures against Beijing on market imbalances, but not push the world’s two largest economies toward a trade war.

Nonetheless, more vociferous complaints from the American business community mark a shift from years past, when many companies eschewed the idea of forceful action

by Washington for fear of retribution

by China.

Foreign technology companies, in particular, fear what they see as Beijing’s plans to pump billions of dollars in subsidies into domestic competitors and push regulations that could force the surrender of key technology or hit competitiveness.

“With uncertainty stemming from political and economic transitions in both the U.S. and China, perceptions of a deteriorating investment environment for foreign companies in China, and a slowing economy, 2017 will likely be one of the most challenging years in decades for U.S. companies in China,” the chamber said in its report.

U.S. business leaders also worry that Trump’s focus on curtailing North Korea’s nuclear and missile programmes could undercut U.S. commercial interests in China. Last week, Trump tweeted that Beijing would get a better trade deal if it helped resolve the U.S. problem with Pyongyang.

“I’m sorry to see there is a possibility we may lose some momentum on helping to level the playing field with China in our economic relationship, due to the situation in North Korea, if there is some kind of trade-off,” Zarit said. Reuters

Buffett’s Berkshire, property website Juwai.com team up Including buyers from Hong Kong and Taiwan, the Chinese accounted for 26.7 per cent of international sales in the year ended March 2016

A real estate brokerage controlled by Warren Buffett’s Berkshire Hathaway Inc on Monday announced a marketing agreement with Juwai.com, China’s largest international property website, to attract wealthy Chinese citizens hoping to buy homes in the United States.

Berkshire Hathaway HomeServices believes the agreement will make it “much easier” for the 2 million monthly users of Juwai.com and Juwai.com/luxe to browse franchisees’ residential listings, Chief Executive Gino Blefari said in a statement.

The Chinese surpassed Canadians as the largest foreign purchasers of U.S. residential property in 2013, according to the National Association of Realtors.

Including buyers from Hong Kong and Taiwan, the Chinese accounted for US$27.3 billion, or 26.7 per cent, of international sales in the year ended March 2016, the trade group said.

“The United States is a safe, attractive investment opportunity for foreigners, especially the Chinese,” Peter Turtzo, who is spearheading Berkshire Hathaway HomeServices’ foreign push as senior vice president of international operations, said in an interview.

Turtzo said Chinese buyers spend in the “mid-$900,000s” on average for U.S. homes, triple what U.S. buyers spend, often using them as second

CEO

VW sales to grow at least 4-5 pct in Mainland German carmaker Volkswagen AG’s China sales are set to grow at least 4-5 per cent this year, the automaker’s China chief said yesterday. China Chief Executive Jochem Heizmann also said the firm was looking to quickly resolve concerns among some Chinese dealers of its Audi AG cars over a tie-up with SAIC Motor Corp Ltd. The China Association of Automobile Manufacturers (CAAM) predicted in January overall car sales would rise 5 per cent this year, slowing from the 13.7 per cent growth in 2016 due to the rollback of a tax incentive for small-engine cars.

Hollywood

CMC in tie-up with Hollywood talent agency CAA Chinese fund CMC Capital Partners (CMC), which has tie-ups from soccer club Manchester City to Warner Bros, has partnered with top Hollywood talent management firm Creative Artists Agency (CAA), the two firms said yesterday.

The companies will set up a Chinese media and entertainment joint venture called China CAA, and the Chinese fund headed by media mogul Li Ruigang will also make a “minority strategic investment” in CAA. The deal is the latest in a series of tie-ups between Hollywood and China, with Chinese investors keen to boost their presence in the United States.

M&A

Biz deal

Jonathan Stempel

In Brief

homes or to house children attending U.S. colleges and universities.

Berkshire’s HomeServices of America Inc, the second-largest U.S. residential real estate brokerage, is the majority owner of Berkshire Hathaway HomeServices. It has expanded rapidly and now accounts for about 1 per cent of its parent’s overall profit.

Juwai.com, which is analogous to U.S. portals such as Realtor.com and Trulia, hosts sites on both sides of China’s internet censorship mechanism known as the Great Firewall, making it easier to browse.

Berkshire Hathaway HomeServices also hopes the agreement will help

it benefit from Buffett’s popularity in China.

The 86-year-old billionaire, known as the “Oracle of Omaha,” recently let Coca-Cola Co put his smiling likeness on cans of Cherry Coke, which he drinks often, in China.

He is also providing real-time translation only in Mandarin for the May 6 webcast of Berkshire’s annual shareholder meeting, and Berkshire is a large investor in Chinese car company BYD Co. “There is no way our brand would be as successful without the endorsement and support of Warren Buffett,” Turtzo said. “He is iconic in China as well as in the United States, and he comes with a high level of credibility and trust. People believe in him, and we find that extremely advantageous in the marketing of our properties globally.” Reuters

Fidelity and Guaranty no longer acquired

by Anbang Fidelity & Guaranty Life (FGL), a U.S. annuities and life insurer, said yesterday it has terminated its agreement to be acquired by China’s Anbang Insurance group. Reuters reported earlier that the Chinese insurer would let its agreement to acquire FGL for US$1.6 billion lapse after failing to secure all the necessary regulatory approvals.

FGL is looking at alternative strategies and “has received interest from a number of parties,” it said in a news release. Anbang did not immediately respond to requests for comment.

Real estate

Two million units of public housing for 2017 China plans to build two million units of public rental housing this year to provide affordable homes for low-income groups, the official Xinhua news agency said on Monday. The meteoric rise of house prices in China’s major cities and the country’s household registration or “hukou” regime have left many low-income families unable to afford or access to buy their own homes. The plan is high on the agenda of the Ministry of Housing and Urban-Rural Development, vice minister Lu Kehua told Xinhua in an interview.

10 Business Daily Wednesday, April 19 2017

Greater China HR

Executive salaries at largest state firms linked to “party building” efforts New rules released on Sunday will create for the first time a “system of responsibility” to ensure appointed executives are carrying out work to promote party ideology

S

alaries of executives at China’s largest state-owned enterprises (SOEs) will be directly linked to their performance on tests by the ruling Communist Party to assess their “party building” efforts, state media said yesterday.

President Xi Jinping has overseen a push to re-establish the party in Chinese business and institutions, stating that a “key few” loyal and talented officials should play a greater role in leading the country.

These efforts, often described as efforts to strengthen party discipline, dovetail with Xi’s war on graft, a multi-year campaign to target offenders at all levels.

New rules released on Sunday will create for the first time a “system of responsibility” to ensure appointed executives are carrying out work to promote party ideology in China’s national-level SOEs, the party’s official People’s Daily newspaper reported.

A meeting by the State-owned Assets Supervision and Administration Commission (Sasac), which appoints

top executives in SOEs and approves mergers and sales of their assets, was held in Beijing on Monday.

It was decided that the rules will link pay, appointment or dismissal and other rewards or punishments to assessments of how well individuals

carrying out “party building” work, the article said.

“We must resolutely assess party building, without tests there is no way to hold (people) accountable,” Hao Peng, party secretary of Sasac said at the meeting, according to the state broadcaster.

The party appoints party executives to top positions in SOEs, and party loyalty has always been a part of assessing officials’ performance.

Practically all large institutions and companies have a party unit.

But as China’s SOEs began to internationalize and take some entities public, the party role has waned in some organizations, with executives choosing their business role over party work, a phenomenon the new rules hope to address.

“The party committee secretary and chairman are shouldered as one; two jobs, two duties with only one person in charge; we must resolutely avoid paying attention to one while neglecting the other,” Hao Peng said, according to the People’s Daily. Reuters

Real estate

Official figures show home prices rise in more cities At least 64 cities have announced new or tougher property-buying restrictions China home prices rose in the most cities since October, suggesting buyers are trying to get in ahead of any further restrictions on property purchases.

New-home prices, excluding government-subsidized housing, gained last month in 62 of the 70 cities tracked by the government, compared with 56 in February, the National Bureau of Statistics said yesterday. Prices fell in eight cities, the data show.

Chinese authorities have pledged to enforce strict curbs in most first- and second-tier cities to prevent a housing bubble, while seeking to clear a glut of unsold homes in smaller urban centres. In a month when at least 64 cities announced new or tougher property-buying restrictions, some of the demand may have come from buyers flocking to the market in fear they’d be ruled ineligible for future purchases.

“Buying restrictions may lead to some panic buying,” said Yan Yuejin, a Shanghai-based analyst at property data and consulting firm China Real Estate Information Corp. “As more and more curbs nowadays simply rule some buyers ineligible, people will be more active to get a home in case they are barred from the market someday.”

The value of China’s home sales remained buoyant in March, according

to data released Monday by the National Bureau of Statistics. New home sales by value rose 18 per cent to 1 trillion yuan (US$145 billion) last month from a year earlier. The increase compares with a 23 per cent surge in the first two months of the year.

City prices

Home prices increased 0.4 per cent in Beijing, as the municipal government raised down payment requirements for second-home buyers. In Guangzhou, the last major city to announce

buying curbs, prices gained 2.5 per cent. Prices in Shanghai declined 0.1 per cent last month following a 0.2 per cent increase in February.

In Shenzhen, the nation’s hottest market early last year, prices fell 0.3 per cent in the sixth straight monthly decline.

Property curbs last month spread from large cities to smaller areas.

Among big cities, Guangzhou on March 30 ruled new homes can’t be resold for at least two years to rein in speculative buying and said it will scrutinize home loans to newly divorced couples amid concern some people may be separating to skirt home ownership rules.

Among smaller cities, Lianjiang

county in Fujian province, with a population of just 660,000 people, ruled people who hadn’t paid tax in the area for a year ineligible to purchase property.

Preliminary private data also showed residential prices are growing at a faster pace. Average home prices gained 0.97 per cent in March from a month earlier, Fang Holdings Ltd., which tracks prices in 100 cities, said in an April 10. Demand stayed buoyant as buyers remained con-

“Buying restrictions may lead to some panic buying” Yan Yuejin, a Shanghai-based analyst at property data and consulting firm China Real Estate Information Corp fident of future price growth, and investors turned to third-tier cities amid tougher curbs in most bigger cities, according to the report.

The property market beat expectations “in all indexes available” last month, and home sales remained upbeat in April according to early indicators, Eric Zhang, a Beijing-based analyst at China International Capital Corp. wrote in a note Monday. Zhang holds the highest industry forecast on the market, predicting home sales to gain 15 per cent in value and 10 per cent by area this year. Bloomberg News

Business Daily Wednesday, April 19 2017 11

Asia Central bank

Japan gov’t picks banker, reflationist economist for board The nominations suggest BOJ Governor Haruhiko Kuroda would have fewer opponents of his massive stimulus programme Sumio Ito and Leika Kihara

J

apan’s government nominated a reflation-minded economist and an executive from a megabank which has been critical of radical monetary easing to join the central bank’s nine-member board, in a choice seen as maintaining the status quo on monetary policy.

The nominations, presented to parliament yesterday, suggest the Bank of Japan (BOJ) will maintain its massive stimulus but with an eye on concerns held by the country’s banks that its policy of capping bond yields is hurting profits, some analysts say.

One of the nominees, Goushi Kataoka, a 44-year-old economist at Mitsubishi UFJ Research and Consulting, has been a vocal advocate of premier Shinzo Abe’s reflationist policies including the BOJ’s huge asset-buying programme.

The government also nominated 63-year-old Hitoshi Suzuki, a director for Bank of Tokyo-Mitsubishi UFJ, to join the board.

“One is an economist reflecting the government’s reflationist stance and another is a bank executive who probably dislikes excessive easing.

It’s a well-balanced choice,” said Hiroshi Shiraishi, an economist at BNP Paribas Securities.

The two would replace former market economists Takahide Kiuchi and Takehiro Sato, whose five-year terms end in July.

The nominations suggest BOJ Governor Haruhiko Kuroda would have fewer opponents of his massive stimulus programme, as both Kiuchi and Sato were openly against keeping the bank’s unorthodox policy in place for too long.

Mending strained relations

After three years of heavy money printing failed to accelerate inflation to its 2 per cent target, the BOJ revamped its policy framework last September to one better suited for a long-term battle to beat deflation.

Under the new framework, the BOJ now guides short-term interest rates to minus 0.1 per cent and the 10-year government bond yield around zero per cent via asset purchases.

An advocate of aggressive asset purchases, Kataoka has called for reigniting Japan’s economy through bold monetary and fiscal stimulus measures.

“I think he would place emphasis on getting Japan out of deflation,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

“I think he would be cautious about

Bank of Japan headquarters in Tokyo

reducing monetary easing,” said Kichikawa, who knows Kataoka well.

Little is known of Suzuki’s stance on monetary policy, though he is unlikely to rock the boat given his background as a banker from one of Japan’s top financial institutions.

Some analysts say Suzuki may serve as a counter-balance to a board dominated by reflationist-minded members, as he could be more vocal of the pain ultra-low interest rates are inflicting on banks.

Bond traders were stunned last year when Bank of Tokyo-Mitsubishi UFJ (BTMU), one of the nation’s three megabanks, said it was giving up its status as a primary dealer of Japanese government bonds.

The move was seen as the clearest and most public display yet of growing distaste over the BOJ’s negative rate policy by one of the biggest players in the government bond market.

An expert of financial markets,

Suzuki could help the BOJ communicate its policy intentions more clearly to markets in the event of an exit from its massive stimulus, they say.

Others say the choice of a bank executive may be an attempt by policymakers to mend relations between the BOJ and the banking sector - strained after the central bank’s abrupt decision last year to adopt negative interest rates.

“The nomination of Suzuki signals a return to the days an executive from a major Japanese bank always held a position at the BOJ board,” said Tetsuya Inoue, chief researcher at Nomura Research Institute.

“It’s a positive move in terms of enhancing the BOJ’s communication with markets.”

The appointments need approval by the upper and lower houses of the parliament, which are considered a near certainty as the ruling coalition holds a solid majority in both chambers. Reuters

HR

Singapore is Asia’s best in attracting talent amid digital push Japan dropped three spots to No. 22 globally, while China was ranked at 54 and India at 92 David Roman

Singapore ranks the highest in Asia in attracting and developing talent, reflecting not only its world-class education system but how it’s adapting skills in the digital era.

The city-state took the No. 2 spot behind Switzerland on the Global Talent Competitiveness Index, published yesterday by the French business school, INSEAD. Australia was the only other Asia Pacific country ranked in the top 10.

‘Australia was the only other Asia Pacific country ranked in the top 10’ The index assesses a country’s ability to enable, attract, grow and retain talent, as well as develop global knowledge and vocational and technical skills. High-ranking

countries share some key advantages: employment policies that favour flexibility, good education systems and technological competence.

Singapore’s government is seeking to build the economy into a regional high-tech hub. It’s helping small businesses adopt new technologies and supporting workers in getting re-skilled. With immigration curbs in place, the city state is pushing for automation of some low-skilled jobs, such as cleaners.

“Digital technologies will help small and exposed economies like Singapore punch above their weight by creating means for their businesses and talent to reach out to the global market,” said Su-Yen Wong, chief executive officer of the Singapore-based Human Capital Leadership Institute, which helped compile the index.

Some of Asia’s biggest economies ranked much lower on the index.

Japan dropped three spots to No. 22 globally, while China was ranked at 54 and India at 92.

“A big challenge for China and India lies in their ability to attract talent, and they both face the issue of local

higher-skilled workers leaving to live and work abroad,” said Bruno Lanvin, executive director of global indices at INSEAD and co-editor of the report. “To improve their attractiveness, the countries can further boost their regulatory and market landscapes.”

Malaysia had the highest ranking of upper middle-income countries and came in at No. 28 on the global index, beating wealthier nations such as South Korea, Spain and Italy. The Southeast Asian nation scores high because of its vocational and technical skills and being open to foreign talent, according to the study. Bloomberg News

12 Business Daily Wednesday, April 19 2017

Asia In Brief Labour market

Australia tightens rules on worker visas Australia will tighten temporary skilled migration visas, scrapping the current 457 program used by almost 100,000 people, as the country’s labor market weakens and anti-immigration sentiment spreads among developed nations. The migration system has to be “seen to ensure that Australian jobs are filled by Australians wherever possible,” Prime Minister Malcolm Turnbull told reporters in Canberra yesterday. “That foreign workers are brought into Australia in order to fill critical skill gaps, and not brought in simply because an employer finds it easier to recruit a foreign worker than go to the trouble of hiring an Australian.”

Funding

Philippines plans to launch panda bonds The Philippines may raise around US$200 million from a maiden panda bond issue in the third or fourth quarter of this year, its finance minister said yesterday.

The government is looking at issuing 3-year and 5-year panda bonds, Finance Secretary Carlos Dominguez told reporters. Panda bonds are yuan-denominated debt sold in China by foreign firms or governments. Dominguez last month told Reuters about the planned panda bonds.

GDP

S.Korea think tank upgrades growth forecast A state-run South Korean think tank upgraded its 2017 economic growth outlook yesterday as the global economy recovers broadly, raising this year’s gross domestic growth forecast to 2.6 per cent from 2.4 per cent projected earlier. “In 2017, exports will improve... as the global economy recovers gradually,” the Korea Development Institute (KDI) said in a report. Despite the sunnier outlook, growth this year would lag last year’s 2.8 per cent expansion because of sluggish domestic consumption, it said. Next year’s GDP growth was expected to be a slightly slower 2.5 per cent.

Property

Yangon’s real estate market depends on rental The real estate market in Myanmar’s Yangon is on a downward trend with most of the developers and owners of the apartments having to depend on rental market rather than sale, local media reported yesterday. Only the houses in the areas owned

by Yangon municipal authorities are found to have deal, the official Global New Light of Myanmar reported, quoting real estate business operators. Failure to meet its criteria and the weakness of law make condominiums in the commercial city less attractive to foreigner investors, analysers said.

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US Vice President Mike Pence (L) listens to Japan’s Deputy Prime Minister Taro Aso on their way to a meeting at Prime Minister Shinzo Abe’s official residence in Tokyo yesterday. Lusa Official visit

U.S. VP Pence kicks off Japan talks Pence said in Seoul earlier yesterday the Trump administration would review and reform a 5-yearold free trade agreement with South Korea Roberta Rampton and Minami Funakoshi

U

.S. Vice President Mike Pence yesterday kicked off talks with Japan that the White House hopes will open doors for U.S. goods and attract infrastructure investment, putting Tokyo on notice that Washington wants results soon.

Pence first joined a working lunch with Prime Minister Shinzo Abe before meeting Deputy Prime Minister Taro Aso for economic talks.

U.S. President Donald Trump and Abe arranged the talks between their deputies at a Washington summit in February, soon after Trump took office.

“When President Trump agreed to this dialogue, he envisioned this as a mechanism for enhancing bilateral commercial relations between the United States and Japan, and achieving results in the near future. And I share that vision and impatience,” Pence told Aso at the start of the talks, comments that could be construed as a warning to Tokyo not to use the dialogue to kick touchy topics down the road.

Aso in turn said U.S.-Japan trade friction, which soured ties in the 1980s and 1990s, was a thing of the distant past and the allies were now entering an era of cooperation.

In a statement after the talks, the two sides said they had agreed the dialogue should produce “concrete results in the near term” adding that they had “discussed specific sectors where improved commercial relations will promote mutual economic benefits and job creation in both countries”.

Earlier, U.S. Commerce Secretary Wilbur Ross met Japan’s trade minister, Hiroshige Seko. Ross, seen as more hard-line on trade, told reporters Washington was eager to increase trade ties with Tokyo through a twoway agreement.

Pence landed in Tokyo from South Korea after a trip that included a visit to the heavily fortified border separating the North and South. He described the U.S.-Japan alliance as the “cornerstone” of regional security.

Pence’s 10-day tour of Asia is aimed

at emphasising that U.S. President Donald Trump wants to boost U.S. trade in the region even though Trump has abandoned the 12-nation Trans-Pacific Partnership (TPP) trade pact.

Advocates for the TPP, negotiated by former President Barack Obama and supported by Abe, said it would have opened markets for American exports. U.S. business groups supported the deal but U.S. labour unions argued it would hurt American workers.

Trump campaigned for office on an “America First” platform, saying he would boost U.S. manufacturing jobs and shrink the country’s trade deficit with countries like Japan.

Key Points Japan, U.S. agree dialogue should produce concrete results Pence kicks off economic talks with Japan’s Aso U.S. seeks to attract infrastructure investment from Japan U.S. Commerce Secretary Ross says eager to increase trade ties Japan had a US$69-bln trade surplus with United States last year Pence’s tour is about listening, not pivoting away - adviser Trump also vowed to renegotiate existing regional trade deals to focus on bilateral agreements. Tokyo is wary of a two-way free trade agreement (FTA), fearing it would boost pressure to open up politically sensitive sectors such as agriculture.

“It’s a little bit early to say just what forms things will take but we are certainly eager to increase our trade relationships with Japan and to do so in the form of an agreement,” Ross said when asked about a possible FTA.

Trade imbalances

Japan had a US$69 billion trade surplus with the United States last year, the U.S. Treasury Department said, expressing concern over what

it called the “persistence” of the imbalance.

Japanese officials counter that Tokyo accounts for a much smaller chunk of America’s deficit than in the past, while China’s imbalance is much bigger.

Trump has complained that Japan keeps its currency artificially low, although a Treasury Department report last week did not label Japan a currency manipulator.

Pence said in Seoul earlier yesterday the Trump administration would review and reform a 5-year-old free trade agreement with South Korea.

The Korea Automobile Manufacturers Association expressed concern about any review of the pact, which removed tariffs on auto trade between the two countries.

Trump and Abe agreed in February to have Pence and Aso, who is also Japan’s finance minister, open an economic dialogue. The two sides were expected to agree on principles and a process for further detailed discussions between ministries.

“Obviously, the first high-level talk is not going to have an immediate resolution of anything but I think we have a reasonable path forward,” Ross said.

Aso told reporters before the talks he would not discuss any bilateral free trade deal with Pence. The White House adviser said Tuesday’s talks would not prescribe a free-trade deal but talks might eventually lead to such negotiations.

Pence developed ties with Japanese business and political leaders as governor of Indiana, a state that is home to Subaru , Honda and Toyota plants, and about 260 Japanese companies employing about 60,000 residents.

“To some extent, we want to do for the United States what we did for Indiana,” the White House adviser said.

The Trump administration wants to attract more foreign direct investment, hoping to lure some with a US$1 trillion plan to rebuild U.S. roads, bridges and other infrastructure.

Pence will take that message to upcoming stops this week in Jakarta and Sydney. While no immediate announcements are expected from Tokyo, the White House expects a “handful” of investment announcements while Pence is in Australia at the weekend, the adviser said.

He is due to meet corporate leaders at each of his stops. Reuters

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Business Daily Wednesday, April 19 2017 13

Asia Minutes

RBA shines spotlight on weak Aussie jobs, strong housing market It reiterated that while headline inflation was likely to accelerate to above 2 per cent this year ..., the return of core consumer prices to the RBA’s 2 per cent to 3 per cent target would take longer Michael Heath

Australia’s central bank will focus on the performance of the nation’s labour and housing markets in coming months in an economy it said grew moderately in early 2017.

In minutes of this month’s policy meeting released yesterday, the Reserve Bank of Australia noted labour market conditions were “somewhat weaker than had been expected” and measures of underemployment “remained high.” It met two weeks ago, missing a surge in full-time employment reported Thursday; that

data also showed unemployment remained at a high 5.9 per cent.

“The board judged that developments in the labour and housing markets warranted careful monitoring over coming months,” the RBA said in a new addition to its outlook.

The central bank has kept interest rates at a record-low 1.5 per cent since August as it encourages industries outside of mining to boost investment and hiring. But that has set off a speculative spree by property investors in Sydney and Melbourne, sending home prices and household debt soaring. Meanwhile,

the labour market has remained relatively subdued and as a result, wages have stagnated.

It reiterated that while headline inflation was likely to accelerate to above 2 per cent this year due to higher oil prices, the return of core consumer prices to the RBA’s 2 per cent to 3 per cent target would take longer.

Echoing its assessment in last week’s semi-annual Financial Stability Review, the board said: “growth in housing credit continued to outpace growth in household incomes, suggesting the risks associated with the housing market and household balance sheets has been rising.”

More positively, the central bank said an improvement in global economic conditions had supported higher commodity prices, which are “expected to have provided a

significant boost to Australia’s national income in the March quarter.”

The outlook is less positive, however, as the price of the nation’s key commodity export, iron ore, has been plunging. Its downturn intensified since the central bank’s board met.

The RBA said early indications were that supply disruptions from Cyclone Debbie in the state of Queensland and floods in northern New South Wales were likely to be concentrated in coal production and some specific crops. The impact on inflation and domestic demand growth, including from repairs and rebuilding “was not expected to be large,” it said.

The RBA reiterated that holding policy unchanged was consistent with sustainable growth in the economy and achieving the inflation target over time. Bloomberg News

Loan

Cambodia borrows US$8.3 billion in 23 years The present value of public external debt to GDP is 22.5 per cent The Cambodian government has signed concessional loan agreements in a total amount of US$8.3 billion with bilateral and multilateral partners from 1993 to 2016, according to the Cambodia Public Debt Statistical Bulletin on Monday.

The bulletin, released by the Ministry of Economy and Finance, said that for bilateral partners, Cambodia has signed to borrow US$3.6 billion from

China, US$899 million from Japan, US$510 million from South Korea, US$124 million from France, US$86.6 million from Thailand, US$75 million from India, US$44.5 million from Vietnam, and US$7.8 million from Malaysia.

For multilateral partners, the Southeast Asian nation has inked to borrow US$2 billion from the Asian Development Bank, US$794 million

from the World Bank, US$87 million from the International Fund for Agricultural Development, US$70 million from OPEC Fund for International Development, and US$10.6 million from Nordic Development Fund.

The bulletin said that the present value of public external debt to GDP was 22.5 per cent, far lower than the threshold of 40 per cent.

Based on the international best practice, Cambodia’s public debt remains sustainable and low risk of debt distress, it said.

According to the bulletin, over the period, the government has made debt service payment of US$885.5 million, in which US$497 million was principal and US$388.5 million was interest and other fees. Xinhua

14 Business Daily Wednesday, April 19 2017

International In Brief IMF

Greek debt must be sustainable The International Monetary Fund will not take part in a bailout programme for Greece if it deems the country’s debt is unsustainable, the international lender’s chief Christine Lagarde said in an interview published yesterday. Greece needs to implement reforms agreed by euro zone finance ministers earlier this month to secure a new loan under its 86 billion-euro (US$91.58 billion) bailout programme, the third since 2010. The loan is needed to pay debt due in July, but talks continue and the IMF has not yet decided whether to join the bailout. The fund’s participation is seen as a condition for Germany to unblock new funds to Greece.

Corruption case

U.S. judge approves fine for Odebrecht A U.S. judge on Monday sentenced Brazilian engineering company Odebrecht SA to pay US$2.6 billion in fines in a massive criminal corruption case, signing off on a plea deal between the company and U.S., Brazilian and Swiss authorities. U.S. District Judge Raymond Dearie said at a hearing in Brooklyn federal court that about US$93 million will go to the United States, US$2.39 billion to Brazil and US$116 million to Switzerland.

Odebrecht, along with affiliated petrochemical company Braskem SA, pleaded guilty to U.S. bribery charges in December.

Currency

Swiss play down inclusion on U.S. manipulation list Switzerland appeared along with China, Japan, South Korea, Taiwan and Germany John Revill

T

he Swiss government yesterday played down Switzerland’s reappearance on a U.S. Treasury watch list of potential currency manipulators, saying the status would have no immediate consequences.

“The Swiss National Bank (SNB), according to its legal mandate, follows its own independent monetary policy,” the Swiss finance ministry said in a statement.

“Their currency purchases are not aimed at devaluing the currency and raising the competitiveness of Swiss exports,” it added. “Its goal is to limit the extent of the franc’s overvaluation and prevent a strong downward push in inflation.”

Switzerland, which was also mentioned by the Treasury last October, appeared along with China, Japan, South Korea, Taiwan and Germany on the latest list which aims to curb

what the U.S. calls “unfair currency practices”.

The Swiss qualified because for years they have used foreign exchange purchases to counter persistent inflows into the safe-haven franc. The SNB has also introduced negative interest rates to make the franc less attractive.

The SNB’s foreign exchange reserves jumped by nearly 15 billion Swiss francs (US$14.93 billion) in March to 683.18 billion francs, larger than Swiss gross domestic product.

Sight deposits at the central bank, a proxy for currency interventions, showed the SNB continued to sell francs ahead of the French presidential elections starting on Sunday, according to the latest data yesterday.

The SNB was not immediately available for comment.

Instead of market interventions, Switzerland should rely more on fiscal policy and interest rates to support its economy and ward off demand

U.S. Treasury Secretary Steven Mnuchin said the Trump administration’s timetable for tax reform is set to falter following setbacks in negotiations with Congress over healthcare, the Financial Times reported on Monday. Mnuchin told the Financial Times in an interview that the target to get tax reforms through Congress and on President Donald Trump’s desk before August was “highly aggressive to not realistic at this point”. “It is fair to say it is probably delayed a bit because of the healthcare,” Mnuchin told the newspaper.

Documents leaked

SWIFT warns on vendor security SWIFT, the global bank messaging system, on Monday advised clients to pay close attention to security when selecting firms to help them access the network following the release of data that suggested the U.S. government sought to spy on their clients. “Customers should pay close attention (to) their own security and take security into consideration when selecting a service bureau and working with other third-party providers,” SWIFT, also known as the Society for Worldwide Interbank Financial Telecommunication, said in a press release published on its website.

‘Switzerland did not however have enough of a bilateral trade surplus with the United States to meet the third criteria, which could trigger bilateral talks aimed at correcting the situation’ “As long as Switzerland is only on the watch list, it isn’t a problem,” said David Marmet, an economist at Zuercher Kantonalbank. “Switzerland fulfils two of the three criteria, but it cannot be long before the trade balance means it meets all three, when it could become a problem.

“Still the Swiss will try to explain to the Americans their situation,” Marmet said. “I think the SNB would prefer not to be on the list, but I don’t think it will affect its monetary policy – what else can they do?” Reuters

Tax legislation

Mnuchin warns of reform delay

for the franc, the U.S. Treasury said in its report on Friday.

Switzerland met two of its currency manipulation criteria -- having a material current account surplus at 10.7 per cent of GDP in 2016 -- and having engaged in a “sizeable one-sided foreign exchange purchases”, the U.S. report said.

At US$13.7 billion Switzerland did not however have enough of a bilateral trade surplus with the United States to meet the third criteria, which could trigger bilateral talks aimed at correcting the situation.

Swiss National Bank headquarters

Surplus

Sweden mulls sovereign wealth fund as government debt keeps falling Finances are expected to show a healthy surplus of 0.3 per cent of GDP this year and 0.5 per cent next year Sweden could set up a sovereign wealth fund as a way of solving its illiquid bond market problem, Finance Minister Magdalena Andersson said in a Reuters interview.

The idea is to issue more government bonds -- to increase the market supply -- and put the money into the fund because it is not needed for the general coffers.

Andersson would not specify any trigger level for the state debt, but said that Sweden’s next door neighbour Norway, despite having the world’s largest wealth fund, has a debt level of 30 per cent of gross domestic product (GDP).

Swedish government projects debt falling to around 31 per cent of GDP by 2020 thanks to a surging economy.

A plan to cut the currency reserve in half over the next few years will knock roughly 5 per cent off that figure.

With euro zone countries struggling with debt levels close to 90 per cent of output on average, Sweden’s situation may seem enviable. But it brings with it problems.

With so little debt, there is a liquidity premium to hold Swedish bonds.

The concern is that investors may stay away, making it more costly and

more difficult to borrow, for example if the government needed to bail out the banks during a future crash.

“If state debt is so low that we get a problem with liquidity in government bonds, then the Norwegian solution is a possibility,” Andersson told Reuters.

‘Swedish government projects debt falling to around 31 per cent of GDP by 2020 thanks to a surging economy’ “Combining a fund with debt, so there is liquidity in government bonds, that is absolutely a possibility.”

Norway’s US$915 billion wealth fund, the world’s biggest, invests the proceeds of Norway’s vast offshore oil and gas production and owns about 1.3 per cent of all stocks listed globally.

Any fund created by the Swedish government, which recently set a target of having debt of 35 per cent of GDP, would be considerably smaller than that of its Nordic neighbour.

Were the government to borrow 5 per cent of GDP, taking debt from 30 per cent to the target 35 per cent, that would equal about 200 billion Swedish crowns (US$22.2 billion) that Sweden could put into a rainyday fund.

When it took power in 2014, the Social Democrat-led coalition government complained that tax cuts by its centre-right predecessor had emptied state coffers. But rapid growth and falling unemployment have reversed the situation.

Finances are expected to show a healthy surplus of 0.3 per cent of GDP this year and 0.5 per cent next year, according to fiscal watchdog ESV, with Sweden enjoying a Goldilocks period where the centre-left can increase spending and still meet its target of running a surplus.

The centre-left government has ruled out borrowing to finance new spending measures, but now looks likely to open the spending taps ahead an election in 2018.

“As long as we have a surplus target in the fiscal framework, state debt is going decline during the coming years,” Andersson said.

“But it is also the case that we will use the surplus we see now for spending measures.” Reuters

Business Daily Wednesday, April 19 2017 15

Opinion Business Wires

Philstar Personal remittances from overseas Filipinos in February increased by 3.3 per cent to US$2.397 billion. This growth was a slowdown from the 8.5 per cent growth experienced last month and 8.3 per cent last year. For the first two months of the year, personal remittances accumulated to US$4.794 billion, 5.9 per cent higher than last year’s level. During the twomonth period, personal remittances from land-based workers with work contracts of one year or more rose 9.1 per cent to US$3.8 billion, while transfers from seabased and land-based workers with work contracts of less than one year slumped five per cent to US$900 million compared to a year ago.

The Times of India Finance Minister Arun Jaitley (pictured) will visit the U.S. this week to attend the 2017 Spring Meetings of the World Bank and IMF before travelling to Moscow to boost military ties with Russia.

Jaitley will leave for Washington today and will attend the World Bank-IMF meetings from April 21-23, official sources said.

The meetings bring together central bankers, ministers of finance and development, private sector executives and academics to discuss issues of global concern, including the world economic outlook, global financial stability, poverty eradication, jobs and growth, economic development, and aid effectiveness.

Clock ticking on consumer-led UK recession

W The Korea Herald Health care spending of South Korean families jumped 10.7 per cent last year from a year earlier, the central bank said yesterday, due apparently to a rise in senior citizens. Health care expenses of households came to 41.03 trillion won (US$36.1 billion) last year, up 3.9 trillion won from 2015, according to data compiled by the Bank of Korea (BOK). It marked the first time that total spending surpassed the 40 trillion-won mark. The ratio of health care costs to expenses of households accounted for 5.5. per cent last year. The figure represents the highest since 1970, when the BOK began to collect related data.

ith the clock now ticking on Brexit, Britain may soon find itself in a countdown to its first recession since the Great Recession of 2008.

The stalwart British consumer, hammered by falling living standards and with a predilection for personal debt over savings, may finally be giving up the ghost, robbing the economy of its principle engine of growth.

UK March retail sales data, due this Friday, looks poised to mark an outright decline in volume in the first quarter compared to the fourth of 2016, a development which may well have been prompted by a tightening in credit by UK banks, which walked into the largest post-war recession a decade ago largely unawares.

“The significance of a downturn in retail sales to Britain’s economy cannot be overstated,” Carl Weinberg of High Frequency Economics wrote in a note to clients.

“A recession now, with Brexit uncertainty all but certain to crimp investment and economic growth - and probably eviscerate the City and its revenues from the heart of the economy - is the last thing the nation needs.”

Britain triggered Article 50 of the Lisbon Treaty at the end of March, meaning it should exit the European Union by April of 2019.

The UK Visa Consumer Spending Index, released last week, showed a fall of 0.7 per cent month-onmonth in March. The data, which is adjusted for both calendar and seasonal effects as well as inflation, showed lagging sales in food, clothing and household goods.

The Bank of England (BOE) said in March that credit card debt rose to a record 67 billion pounds in February, an annual 9.3 per cent increase and the fastest rise since the financial crisis.

Unsurprisingly, banks are trying to scale back on their risks.

A BOE poll of major lenders showed that they cut credit access in the first three months of the year, and expect to cut it further in the second quarter.

The percentage of banks saying they would cut back on consumer credit in the second quarter is the highest since 2008, when banks slashed credit in a delayed and ultimately unsuccessful attempt to limit damage from the recession.

British households, which face a squeeze in real compensation due to sluggish wage growth and the inflationary effects of a weak pound, have

“

Jim Saft a Reuters columnist

used credit to smooth consumption, but that tactic is one which may have reached its limits. UK household savings rates were at all time lows last year of just 3.3 per cent.

Recession risk

“Looking ahead, it is hard to see wage growth heading back up towards 3.0 per cent. Job creation is so weak that workers have little bargaining power, despite low unemployment,” Samuel Tombs of Pantheon Macro wrote in a note to clients.

“Firms also will seek to make savings from their wage bills to pay for the apprenticeship levy — a new tax equal to 0.5 per cent of payroll, introduced this month. Accordingly, real wages look set to fall by about 0.5 per cent this year, constraining consumption.”

Credit has filled the gap, and terms have been particularly easy, a phenomenon the BOE’s Financial Policy Committee noted.

“An easing in credit supply conditions appeared to have contributed to the growth in consumer credit, with intense competition in some segments of the market,” it said in minutes of a March meeting released earlier in April.

Banks may well have noted the same phenomenon, as well as their regulator’s concern, and decided to tighten the screws themselves to get in front of any consumer-led downturn.

Britain escaped the widely expected recession in the wake of the vote last year to leave the EU, in part because consumers held their nerve and also because businesses did not move immediately to cut back on investment to the extent many expected.

But with the clock ticking now, and with huge uncertainty over the future role of London’s financial centre in its relations with Europe, a consumer slump could easily turn into the first recession since the financial crisis.

The banks may be better positioned to weather a recession but a downturn will only make an already fraught pre-Brexit period more dangerous and volatile. Reuters

A consumer slump could easily turn into the first recession since the financial crisis

Viet Nam News The central city’s Sông Hàn Incubator has launched the first ever tourism start-up programme. Deputy head of the Đà Nẵng Entrepreneurship Support Co Ltd (DNES), Lý Đình Quân, presented the programme at a press conference yesterday. He said Việt Nam has a potential resource in tourism, but the sector has not yet built up its own nationwide value chain and connections among tourism enterprises as well as foreign partners and investors.

“We aim to enrol the first ten startup businesses to join a value chain in tourism between April and November,” Quân said.

”

16 Business Daily Wednesday, April 19 2017

Closing New Silk Road

China to gather friends for biggest summit of year Beijing has dedicated US$40 billion to a Silk Road Fund Ben Blanchard

C

hina will gather its friends and allies together for its biggest diplomatic event of the year in May, a summit on its New Silk Road plan, with most Asian leaders due to attend but only one from a G7 nation, the Italian prime minister.

President Xi Jinping has championed what China formally calls the “One Belt, One Road” or OBOR, initiative to build a new Silk Road linking Asia, Africa and Europe, a landmark programme to invest billions of dollars in infrastructure projects including railways, ports and power grids.

“This is a positive, cooperative agreement, and we don’t want to politicise it” Wang Yi, China’s Foreign Minister China has dedicated US$40 billion to a Silk Road Fund and the idea was the driving force behind the establishment of the US$50 billion China-backed Asian Infrastructure Investment Bank.

Foreign Minister Wang Yi announced yesterday a list of those attending the conference, including some of China’s most reliable allies - Russian President Vladimir Putin, Pakistani Prime Minister Nawaz Sharif and Cambodian Prime Minister Hun Sen. Myanmar’s Aung San Suu Kyi, Kazakh President Nursultan Nazarbayev, Malaysian Prime Minister Najib Razak and Indonesian President Joko Widodo are coming too, all generally good partners of China.

“One Belt, One Road is to date the most important public good China has given to the world, first proposed by China but for all countries to enjoy,” Wang said.

“The culture and historical genes of One Belt, One Road come from the old Silk Road, so it takes Eurasia

as its main region,” he said, adding that representatives of 110 countries would attend.

While China says the New Silk Road is not political, it has run into opposition from India due to a section of it in Pakistan, known as the China-Pakistan Economic Corridor, where some projects run through the disputed Kashmir region.

Wang dismissed those concerns, saying the Pakistan project had no direct connection to the dispute and India was welcome to participate in the New Silk Road.

“Indian friends have said to us that One Belt, One Road is a very good suggestion,” he said.

Nevertheless, India Prime Minister Narendra Modi was not on the list of leaders attending.

Wang also made no mention of any attendance of officials from Japan, South Korea or North Korea, all countries with which China has strained ties. Nor was there mention of Australia, a strong U.S. ally that has close trade links with China.

The list included only one leader from the Group of Seven (G7) industrialised nations, Italian Prime Minister Paolo Gentiloni.

Diplomatic sources in Beijing said China had hoped for at least some senior Western leaders to attend, including British Prime

Minister Theresa May, to burnish the plan’s credentials and make it less China-centric.

British finance minister Philip Hammond will come as May’s representative, while Germany and France are having elections at the time and will send high-level representatives, Wang said.

Wang confirmed Philippine President Rodrigo Duterte as among 28 leaders coming, along with the Spanish, Greek, Hungarian, Serb and Polish prime ministers and Swiss and Czech presidents.

“This is a positive, cooperative agreement, and we don’t want to politicise it,” Wang told reporters when asked if China was upset at the absence of most major Western leaders.

“This is an economic cooperation forum, an international cooperation platform that everyone is paying attention to, supports and hopes to participate in,” he said.

Global friend

China is sensitive to any suggestion that what it sees as its benign intentions do not have a receptive global audience, especially in Western capitals.

China was privately upset in 2015 after most Western leaders rebuffed invitations to attend a big military parade marking 70 years since the end of World War Two. Western leaders were unhappy that the guest list that included Putin and wary of the

message China would send with the show of strength.

While China has portrayed the New Silk Road as a genuine effort to share the bounty of China’s economic development and to fund infrastructure gaps, many Western countries are concerned about a lack of detail and transparency in the project and are suspicious about China’s broader political intents.

Diplomatic sources said the presence of Putin and other leaders from countries with dubious human rights records, like the Philippines and Central Asian states, had contributed to a reluctance among Western leaders to attend.

Still, at a time of uncertainty about the U.S. place in the world following President Donald Trump’s pledges to put America first, China sees an opportunity to become more of a global leader and has found a receptive audience for its New Silk Road.

Leaders from countries that would appear to have little, if any, connection so far to the plan are coming to the summit, including Chile and Argentina.

“Everyone wants to be China’s friend now with Trump in office,” said a senior Asian diplomat in Beijing.

A senior Indonesian government official said China was aiming for a “spectacular” summit.

“The Chinese are gunning for ... global leadership so I think this OBOR summit is going to be huge,” the official said. Reuters

Foreign Minister Wang Yi announced yesterday a list of those attending the conference

M&A

Markets

Growth

Post to buy Weetabix from Bright Food

Shanghai crude oil futures launch expected in H2

Manufacturing and retail recovery drives solid Q1

U.S. cereal company Post Holdings Inc. agreed to buy Weetabix Ltd. from Bright Food Group Co. of China for 1.4 billion pounds (US$1.8 billion), adding the British breakfast staple to a portfolio that includes Grape Nuts and Honey Bunches of Oats.

The deal for the maker of oval-shaped cereal bricks gives Post a stronger presence in the U.K., which accounted for four-fifths of Weetabix’s 346 million pounds of revenue in the year ended Jan. 2, 2016, according to financial statements.

The purchase “continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets, bringing much-loved brands to significantly more customers globally,” Post Chief Executive Officer Rob Vitale said in a statement yesterday.

Post said Weetabix, which also owns Alpen muesli and other brands, will contribute about 120 million pounds of adjusted earnings before interest, taxes, depreciation and amortization annually before expected cost savings of roughly 20 million pounds by the third full fiscal year after closing.

The British company’s total sales dropped 1.6 per cent last year. Bloomberg News

China is looking at launching its crude oil futures in Shanghai in the second half of this year, two sources familiar with the matter said, breathing new life into a derivative that was considered shelved only months ago.

The contract is aimed at giving China, world’s second-largest oil consumer after the United States, clout in pricing crude in Asia, and a share of the trillions of dollars in oil futures trade that flow through global benchmarks Brent and West Texas Intermediate.

Shanghai’s International Energy Exchange (INE) last year was close to launching the futures contract, which was approved in 2014 after years of planning, but its plans were shelved after volatility in domestic stock and commodities markets spooked regulators.

The sources were unclear when the contract would actually start to trade.

“In the second half of this year, maybe in September or October,” one of the sources said, adding it could take place before the 19th National Congress of the Communist Party of China, where a change of guard under President Xi Jinping will take place. Reuters

A recovery in China’s industrial sector, which accounts for about one-third of the economy, drove China’s better-than-expected first quarter economic growth as export orders picked up and steel output hit a record.

Data yesterday from the National Bureau of Statistics showed the industrial sector grew 6.5 per cent in the first quarter from a year earlier, its fastest pace since the fourth quarter of 2014.

On Monday, China reported first quarter growth of 6.9 per cent, the quickest in six quarters.

Within the industrial sector, manufacturing grew 7.0 per cent compared with the first quarter last year.

Analysts credited growth in exports, in contrast to a contraction in the first three months of 2016, for providing the pick-up in the first quarter.

The other bright spot was the retail and wholesale sector, which also expanded at the fastest pace since the end of 2014. In January-March, the annual growth pace was 7.4 per cent, compared with 5.8 per cent a year earlier, data showed. Reuters