ANZAC Day observance in Macau Tue, 25 April 2017 │ 7:30am - 9:30am │ MGM Macau C DAY ANZA
Followed by breakfast from 8:30am
IMF pronounces positive outlook on MSAR and China’s economy Forecast Pages 4 & 9
Thursday, April 20 2017 Year VI Nr. 1279 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm City
Urban development committee not yet ready to present findings, says Secretary Rosário Page 3
Elections
Electoral Commission to supply 36 polling stations this year and promote online Page 3
www.macaubusinessdaily.com
Environment
Greenpeace report unveils figures of wasted green energy in Mainland Page 9
Labour market
Chinese government pledges support as mass unemployment risks grow Page 16
Very Important Progress Gaming
The high rollers are back. With a near 17 pct y-o-y uptick in VIP gaming in Q1, hitting MOP35.5 bln. The sector made up 56 pct of overall gaming revenue during the period, while mass market increased 8.5 pct y-o-y for MOP28 bln. Betting on horse and greyhound racing continued to decline with the sector comprising less than 4 pct of total revenues for the quarter. Page 6
The telecom operator assumes “full responsibility”. For a software malfunction resulting in 30,000 users left without Internet for about four hours on Tuesday. An ‘unusual surge of traffic’ led to two of the city’s six servers being overloaded. Causing shutdowns ‘scattered around the city’ and generating about 3,000 complaints the same day. No compensation is yet on the table for those affected.
Telecom Page 2
HK Hang Seng Index April 19, 2017
Keeping them in check
Elections|Gaming The Gaming Inspection and Co-ordination Bureau says it will support the Electoral Commission. In preventing unlawful promotion of Legislative Assembly member candidates in gaming venues. Although it has yet to provide guidelines to the oversight body. A responsible gaming kiosk has been inaugurated in The Parisian, adding to the 24 recording over 2,800 log-ins during Q1. Page 5
Relaxing outflow control
Currencies Banking sources say Beijing is loosening its grip on cross-border capital outflows. Following several months of strict measures controlling capital escape. Chinese authorities feel pressure on currency diminishing. Page 8
23,825.88 -98.66 (-0.41%) Worst Performers
Geely Automobile Holdings
6.42%
China Mengniu Dairy Co Ltd
0.27%
Want Want China Holdings
-3.04%
Sun Hung Kai Properties Ltd
-1.69%
AAC Technologies Holdings
5.08%
Cheung Kong Property
0.09%
China Merchants Port Hold-
-2.67%
New World Development
-1.64%
Cheung Kong Infrastructure
1.26%
Belle International Holdings
0.00%
Sands China Ltd
-2.47%
China Petroleum & Chemical
-1.43%
Tencent Holdings Ltd
0.96%
Wharf Holdings Ltd/The
0.00%
Galaxy Entertainment Group
-2.42%
PetroChina Co Ltd
-1.24%
Link REIT
0.91%
Power Assets Holdings Ltd
-0.15%
Hang Lung Properties Ltd
-2.18%
Kunlun Energy Co Ltd
-1.23%
23° 27° 19° 27° 19° 22° 20° 21° 23° 24° Today
Source: Bloomberg
Best Performers
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CTM: ‘We apologise’ (again)
2 Business Daily Thursday, April 20 2017
Macau Communications Company CEO says it will ‘comply’ with any requests
by the Electoral Commission to remove contents deemed illegal
Mea Culpa
CTM assumes “full responsibility” for the Internet crash that affected 30,000 local Internet users on Tuesday, with possible compensation only to be discussed once the issue is completely resolved Nelson Moura nelson.moura@macaubusinessdaily.com
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ocal telecom operator Companhia de Telecomunicaçōes de Macau (CTM) assumes “full responsibility” for the Internet access breakdown on Tuesday but is leaving any talk of possible compensation until after the issue is resolved, said company CEO Vandy Poon Fuk He yesterday. “We apologise to our customers.
Removing content
Mr. Poon stated that the company would “have to comply” with any request by the city’s Electoral Commission to remove content deemed to contravene Electoral Law. “CTM has and will always follow the law. In case we receive any of these requests we will operate lawfully. So far we haven’t received any requests from the Commission,” he added. Last week, the Electoral Commission for this year’s Legislative Assembly (AL) elections stated that communications operators could
The issue was a software malfunction but we should have been able to mitigate it,” Mr. Poon said. On Tuesday a software malfunction left 30,000 users in the city without Internet access for almost four hours, after an ‘an unusual surge of traffic’ led to the overload of two of the company’s Internet access servers, the company declared. Currently, the company uses six servers, responsible for 170,000 online users, with the two affected being responsible for the Internet
be requested to remove content infringing the Electoral Law. In March, the Commission warned that local media could incur ‘infractions’ if its coverage was considered propaganda, defined by the Electoral Law as ‘activities that directs the attention’ of citizens disproportionately or reports that lead residents to vote for particular candidates. However, Mr. Poon said that in the case that requests involve content providers such as chat application WeChat or social media platform Facebook the content removal request has to be directed to these companies.
access of 55,000 users; the company says only 30,000 users ‘scattered around the city’ were affected, and that the telecom operator had received 3,000 complaints on the day of the malfunction. The shutdown was said to not have impacted telecommunications services or local companies since the breakdown did not affect fixed Internet addresses - normally used by business entities - and occurred between 7.30pm and 11.35pm when ‘most businesses were already closed,’ according to the operator. The malfunction was said to have affected mainly ‘residential
Returning cells
According to CTM’s Corporate Communications Officer, Eliza Chan, the company has maintained its policy allowing customers to return a malfunctioning cell phone up to seven days after purchase. “We maintain our own policy and clients will still be able to return their phones except if they have
consumers’ with CTM vowing to solve [the problem] and update the servers by April 22 but with Mr. Poon conceding that issues might still appear until the “bug” is removed. When questioned about possible compensation for clients, Mr. Poon stated that “discussing a repayment for customers will only be possible after the problem is resolved.” “We apologise to our customers (…) This the first time a similar issue has happened. We had a major incident in 2012 but since then we’ve focused on ensuring network functioning. In 2016, we didn’t register any incidents,” the company CEO told the press.
acquired Apple products - which has its own return policy,” Ms. Chan told Business Daily. Last week the city’s Consumer Council revealed that the Macau Mobile Phones Sellers Association had decided to stop fulfilling its ‘7-day return’ policy to consumers, after negotiations related to changes on the Code of Practice had failed.
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Crime
Ho Chio Meng returns to dock Ho Chio Meng, the former Prosecutor-general, responded yesterday to accusations involving Wang Xiandi, a former consultant to the Public Prosecutor’s Office (MP), and identified by the prosecution as an intimate friend of the former Prosecutor, TDM reported. During the trial that resumed yesterday at the Court of Final Appeal, Ho Chio Meng explained that Wang had been hired to assist in investigations that involved Mainland China officials, one of which concerned the candidacy for Chief Executive in 2009, according to the broadcaster. The prosecution said that Wang was hired under an individual contract, different from other employees working in the MP office, and that she received benefits and money from the Office. The prosecution claimed that Wang was first hired as an ‘expert’ and later, between 2010 and 2014, as a ‘mediator’ - a position not defined within the typical public service hiring hierarchy. Part of her job consisted of using an alleged network of contacts in
Mainland China to get privileged information without having to show any identification as an employee of the same office. Wang was only identified as such an employee in official visits, TDM reaffirmed. Of her work as an ‘informant,’ one of the cases raised by the prosecution is said to have involved big casinos and political leaders on the Mainland, which had been treated in a way to meet peaceful solutions instead. Another case brought up by the prosecution was the recouping of nearly MOP400 million from the United Kingdom linked to the former Secretary for Land, Public Works, and Transport in Macau, Ao Man Long. S.Z.
Elections
Elections: Allegations of ‘soft coercion’ The project and website set up by activist Jason Chao - Project Just Macau - has received three complaints allegedly regarding individuals in schools being pressured into signing nomination forms, according to a release by the group. The incidents of ‘soft coercion’ were ‘claimed to have happened in school settings’ and were divided into two types – one in which ‘mid-level management asked teachers to sign
a form’ and one in which ‘forms with some other names were distributed’. The activist notes that by signing the forms citizens are demonstrating their preferred candidate while also limiting the donations the citizens can make legally to the candidate they sign up with. ‘In Macau, most citizens are unaware of the significance of putting your name on a nomination form,’ notes the release.
Business Daily Thursday, April 20 2017 3
Macau Elections
36 polling stations for this year’s election
disclosed that the promotion of the election will commence gradually in early May to mid-June. Promotions will encompass videos, banners and posters as well as online promotions such as the adoption of Google search words, Google multimedia and YouTube videos.
Mr. Tong revealed that the Commission had preliminarily decided upon 115 locations for the outdoor promotion of the election, 35 more compared to the last election. He also said videos will be taken to remind voters to update their information. “In the beginning, we will use videos to remind voters to update their address if they have moved so as to inform voters about the nearest voting station on Election Day,” Mr. Tong declared. The Chairman said voters can update their details by approaching the Electoral Commission or through self-service machines. Voters will receive a notice regarding the arranged polling station, and can also make enquiries about their assigned polling station by telephone. However, voters may find themselves directed to an alternative station closer to their residences than those in the previous elections, said the Chairman, explaining that such arrangements are to avoid the overcrowding of specific polling stations.
buildings in Areia Preta or Avenida Almirante Lacerda, and the question being raised is how to re-use these buildings, which no longer serve industrial purposes but which are not necessarily abandoned, so that they can serve other purposes,” said the Secretary. Secretary Rosário did not rule out
the possibility of re-adapting such buildings for housing use, but said that so far there is no conclusion on the matter since the attendant working group is still examining the case. Questioned about the land plots in Wai Long, Mr. Rosário said the issue was not a topic on yesterday’s plenary session agenda.
The Electoral Commission is also planning to promote the election via YouTube videos and Google Cecilia U cecilia.u@macaubusinessdaily.com
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he Electoral Commission has decided that a total of 36 polling stations will be provided for this year’s Legislative Election, according to statements by Commission Chairman Tong Hio Fong yesterday at a press conference. While 36 are to serve for the direct election of legislators, five are to function for indirect election, and will be located at the Macao Polytechnic Institute, as per the last election. One of the 35 locations will accommodate two polling stations. “Next week, we will visit and inspect the new locations […] to
understand and to see if there are any problems [with the selected locations],” said Mr. Fong. The Chairman added that the stations that have been chosen are close to residential areas, saying that most stations will be handicap-accessible. Meanwhile, the Commission
Urban affairs
Work in progress Sheyla Zandonai sheyla.zandonai@macaubusiness.com
There is no schedule yet for the presentation of conclusions of the Urban Renewal Committee to the government, according to comments by the Secretary of the Land, Public Works, and Transport Bureau (DSSOPT), Raimundo Arrais do Rosário, at the end of the Committee’s 3rd Plenary Session yesterday. During the meeting, government representatives and the Committee’s three specialised working groups discussed aspects that cover their respective assignments: the creation of a plan for temporary housing and other measures for urban renewal; the re-utilisation of industrial buildings and ways to promote urban renewal; the mandatory percentage of consenting owners needed for reconstruction of buildings and
reinforcing the financial support plan of the Building Maintenance Renovation Fund. “The topics are complex and they require time [to be studied],” stated Secretary Rosário. “The role of the three working groups is to report in the plenary the state of affairs of the works being conducted, so that only once a conclusion is reached [can] they bring it to the plenary, after which the decision-making will follow and is then sent to the government,” Mr. Rosário explained, noting that consensus is needed for this to go forward and cannot be rushed. Replying to Business Daily questions related to the revitalisation of industrial buildings, the Secretary said that the main concern is the ways such buildings can be renovated to serve new purposes. “There are several industrial
Land plots
Gov’t revises two land concession contracts The government has revised two contracts of land concessions on the Macau Peninsula, according to dispatches released yesterday in the
Official Gazette. The first plot, located near Rua dos Mercadores, is granted for the construction of a commercial building
Hengqin
Improving guarantee method for Free Yacht Scheme Gongbei Customs has introduced 10 policies to support the economic development of Hengqin, one of which relates to the improvement of guarantee methods for the Macau-Zhongshan Free Yacht Scheme, reported TDM Radio News. A Gongbei Customs official said that yachts from Macau are required to pay large amounts as a deposit when entering the Mainland, putting
significant financial pressure upon yacht owners. Chinese Customs is currently exploring new guarantee methods including changing policies so that the deposit and legal responsibilities can be undertaken by industry associations or a third party. Currently there are no specific decisions for the method of implementation or the amount of deposit. C.U.
with six floors, with the dispatch noting that the commercial building can only be under the ownership of one individual rather than multiple
owners. Meanwhile, the other land plot, located at R. dos Cavaleiros, will be used for the construction of a five-floor residential and commercial building. The new building will apply the multiple ownership system, as stated by the dispatch. C.U.
4 Business Daily Thursday, April 20 2017
Macau Opinion
Ashley Sutherland-Winch* Macau’s dangerous drivers There was an awful incident in Taipa last week in which the driver of a seven-seat vehicle hit a three year-old child with his car. The child was walking across the road at a designated zebra crossing, holding his father’s hand. The impact from the accident sent the child 30 feet across the road, causing him to be hospitalised with a skull fracture and bleeding to the brain. This is certainly not the first time something like this has happened and sadly it may not be the last, but it is time to draw public attention to pedestrians’ safety in town. In Macau, I believe activities involving motorised vehicles embody the Darwinian theory of evolution – ‘survival of the fittest’. Drivers must contend with a variety of issues and obstacles - like people stopping their cars in the middle of roundabouts, taxi drivers stopping at random to pick up customers . . . There is often a general disrespect for others on the road, driving always seems like a fight. In addition to driver etiquette, road construction is another constant disruption. The driving situation in Taipa has become complicated in recent months due to road construction with many twoway roads becoming oneway roads. In addition to dealing with other Macau drivers, we must also contend with drivers from Mainland China, who have completely different driving patterns. For instance, on the Mainland, drivers drive on the opposite side - and bring the habit to Macau! Zebra crossings are located in both places, but who truly has the right of way - the pedestrian or the driver? Logic and reason suggests that we should all give way to vehicles but drivers must be ever cognisant of pedestrian safety and if the driving rule is to stop at zebra crossings then this rule must be enforced. For the whole of 2016, DSEC reports 15,342 traffic accidents, down 2.9 per cent year-on-year. These accidents resulted in some 4,600 injuries, nine of which were fatal. While these numbers may have improved from previous years, even one accident is too many, especially when they harm children and adults. Pedestrian safety was not a priority last weekend in Taipa, and in my opinion, not frequently enough in Macau. Plenty of attention is drawn to issues involving taxi drivers and public transport, but there is much less written about our chaotic car drivers and bike riders. Pedestrian safety must take a front seat in Macau starting now. *Marketing and Public Relations Consultant and frequent contributor to this newspaper.
Outlook
IMF predicts 2.8 pct GDP growth this year The figures come after a 4 per cent year-on-year decrease in GDP last year, and show a less optimistic outlook than that expressed in a 2017 macroeconomic forecast released in January by UM’s Department of Economics Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
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he MSAR’s gross domestic product (GDP) is expected to undergo a 2.8 per cent year-on-year change this year, according to a report by the International Monetary Fund. Expectations are that growth will continue in 2018, with a 1.7 per cent year-on-year growth, notes the report. The figures come after a 4 per cent year-on-year decrease in GDP last year, and reveal a slightly less optimistic outlook than that expressed in a 2017 macroeconomic forecast released in January of this year by the University of Macau’s Department of Economics. The report predicted a 3.2 per cent year-on-year increase in GDP, hedged for figures between a ‘pessimistic forecast’ of a negative 6.9 per cent rate to ‘an optimistic rate’ of 13.2 per cent. The wide range was noted as being due to the fact that gross gaming revenues are ‘highly influenced by government policies and may adjust greatly throughout the year.’ Local economist and contributor to Business Daily, Albano Martins, noted that this year GDP could grow as much as 4.2 per cent, or sit within a range of “3.5 to 4.5 per cent,” noting that “forecasts will be an even more ‘artistic’ exercise in 2017” given the unpredictability of American politics under U.S. President Donald Trump. While the Statistics and Census Service (DSEC) shows that real GDP, the measure also used by the IMF in its calculations, only fell 2.1 per cent year-on-year during 2016 and that nominal GDP (given that it is not adjusted for inflation) fell just 1.2 per
cent year-on-year, the consensus – as well as that highlighted by the IMF – is a 4 per cent year-on-year reduction. The DSEC notes this is ‘mainly due to the weakening of total demand.’ For last year, the statistics authority notes that GDP reached MOP358.2 billion and that per capita GDP was MOP554,619. Growth in real GDP predicted by the IMF for 2022 in the MSAR is expected to hit 3.8 per cent yearon-year, the highest yearly increase since 2013’s 11.2 per cent year-onyear increase, the year before the central government crackdown on corruption. Consumer prices are also expected to increase this year and next year, with IMF predictions placing a 2.0 per cent year-on-year increase for this year, followed by a 2.2 per cent year-on-year increase in 2018. Estimates for 2022 place consumer prices increase at 3.0 per cent yearon-year following a 2.4 per cent increase last year.
Global outlook
The turnaround in the economy experienced in the MSAR during the second half of the year, which the DSEC classified as a 5.7 per cent GDP ‘rebound’ compared to the previous year, was also experienced around the world, according to the IMF report. Globally, the ‘economic upswing that we have expected for some time seems to be materialising,’ notes the IMF report, raising predictions from 3.4 per cent to 3.5 per cent for GDP increases this year compared to 2016. The forecast for 2018 ‘holds steady’ at a 3.6 per cent hike. The group notes that the ‘expected’ growth improvements in this and next year ‘are broadly based,
although growth remains tepid in many advanced economies, and commodity exporters continue to struggle.’ The IMF points out that ‘one salient threat’ is a rising ‘turn toward protectionism, leading to trade warfare’. This is prominent ‘mainly in advanced economies’ as evidenced by U.S. President Donald Trump’s ‘America First’ policy. The trend has sprung up in the wake of ‘lower growth’ since the financial crisis of 2009 as well as ‘even slower growth of median incomes, and structural labour-market disruptions’ which the group notes as having ‘generated political support for zero-sum policy approaches that could undermine international trading relationships, along with multilateral co-operation more generally.’ However, a ‘notable surge in growth in the number of emerging markets and developing economies’ has been witnessed. Additionally, technological changes have contributed to ‘global trends in inequality’ related to trade; suggestions are for governments to ‘follow trade policies consistent with maximum productivity, supplementing those with other policies that better distribute the gains from foreign trade internally, improve the skills and adaptability of their workforces, and smooth the process of adjustment for those adversely affected by the need for economic reallocation.’ ‘We could be at a turning point,’ notes the IMF, ‘but even as things look up, the post–World War II system of international economic relations is under severe strain despite the aggregate benefits it has delivered - and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards and costs within countries.’ In order to handle the changing environment the authorities suggest that ‘policy must address these disparities head-on to ensure the stability of an open, collaborative trading system that benefits all.’
Business Daily Thursday, April 20 2017 5
Macau Gaming
Paulo Chan: DICJ will fully support Electoral Commission Cecilia U cecilia.u@macaubusinessdaily.com
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he Director of the Gaming Inspection and Co-ordination Bureau (DICJ), Paulo Martins Chan, declared yesterday that the Bureau will fully support the Electoral Commission in monitoring any possible violation of the Electoral Law in the lead-up to this year’s Legislative Assembly elections. “If any guidelines are announced [by the Electoral Commission] we will appoint staff to monitor [in order to prevent the promotion of any candidates for the election at the gaming venues],” said the Director on the sidelines of an event yesterday. The Chairman of the Electoral Commission, Tong Hio Fong, said on Tuesday that gaming operators are requested to remain neutral in their stances towards the election, as reported by TDM Radio News. Legislator José Maria Pereira Coutinho had previously raised concerns about the promotion of candidates in employee rest areas in casinos during a period in which the campaigning is prohibited. This period occurs between the announcement of the confirmed list of candidates and the official commencement of the election campaign, while any activity that can divert the attention of the public to certain candidates, or that directly or indirectly
Left to right: Wilfred Wong - President and COO of Sands China, Vong Yim Mui - President of IAS, Paulo Martins Chan Director of the DICJ and Davis Fong – Director of the Institute for the Study of Commercial Gaming
leading voters to cast their vote for or against certain candidates, would be deemed as campaigning, based upon the new electoral law. However, the DICJ head said it has not received any guidelines yet from the Commission sofar. The head of the gaming regulator also reiterated that the proposed debtor database system will be managed by the Macau Association of Gaming and Entertainment Promoters, and that the Association will be responsible
for contacting related departments for the launch of the system. Meanwhile, Director Chan said the DICJ has not received any application for gambling tables from The 13 Holdings Limited for its property in Coloane. The comments came at the kickoff ceremony for the Responsible Gambling Information Kiosk 3.0, held at The Parisian Macao. The Director of the Institute for the Study of Commercial Gaming,
Davis Fong Ka Chio, reported that 2,869 log-ins were recorded by the 24 current kiosks during the first three months of 2017, while the three Responsible Gambling Information stations registered 523 log-ins. Recorded data indicates that the frequency of use of the stations is more than four times higher than that of the kiosks. The three stations are located in Studio City, Galaxy and Wynn Palace, respectively.
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Masters Ad for BD Thursday April 20th 2017 - outlined.indd 1
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6 Business Daily Thursday, April 20 2017
Macau Gaming
VIP back in the game Revenues provided by VIP gaming in the first three months of 2017 increased by 16.8 per cent year-onyear to reach MOP35.49 billion, with mass market hiking 8.5 per cent yearly to MP27.98 billion Nelson Moura nelson.moura@macaubusinessdaily.com
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evenue from VIP gaming in Macau casinos increased by 16.8 per cent year-onyear in the first quarter of the year, at MOP35.49 billion (US$3.8 billion), compared to the same period in 2016, according to official data released by the Gaming Inspection and Co-ordination Bureau (DICJ). The data provided by the DICJ indicates VIP sector revenues via the results of VIP baccarat during the
quarter. Between January and March of this year, the VIP sector represented 55.9 per cent of total gaming revenue from games of chance in the territory, going up by almost 2 percentage points from the same period last year. The sector showed a considerable improvement in 2017, after registering a 42.1 per cent year-on-year decline in VIP baccarat numbers in the first three months of 2016. In terms of mass market gross gaming revenue in the first three months of the year - including mass table games, slots and live multi games - the data
released shows an increase of 8.5 per cent to reach MOP27.98 billion. The MSAR gross gaming revenue, not including horse and greyhound racing, lotteries and sports betting, reached MOP63.48 billion in the first three months of the year - a 13 per cent year-on-year increase from the same period last year - increasing by 5.4 per cent quarter-to-quarter from the last three months of 2016. The VIP market saw a 6.4 per cent uptick quarter-to-quarter from the MOP33.33 billion registered in the last three months of 2016, with the mass market sector growing by 3.1 per cent.
with the major opening in that period being that of casino hotel Legend Palace by local gaming operator Macau Legend Development Ltd. Slot machine revenue between January and March of this year went up by 13.3 per cent year-on-year to MOP3.23 billion, with the number of slot machines in the Macau market increasing by 12 per cent year-onyear to 16,018. When compared to the last three months of 2016, revenue from slot machines went up by 5.8 per cent, with 2,192 slot machines added during the January-March period of this year.
Tables and slot machines up
Running less
which will be awarded separately this year under the electronic table games (ETG) segment and the slot machines segment. Mr. Pereira also noted that a couple of changes have been integrated in the coming awards based on last year’s experience. These include shifting the focus from companies to products in the (non-gaming) product suppliers’ category, and incorporating nominations for specific areas within Integrated Resorts such as VIP areas or non-smoking lounges – rather than the whole
property, in the Best Gaming Area Design category. “We realised the change was necessary because we cannot expect several new casinos to emerge every year to be nominated for the awards,” commented Mr. Pereira. The Asia Gaming Awards, noted the MD, will focus mostly on companies, but also on some individuals, operating in 22 jurisdictions in the Asia Pacific region, spanning India and Sri Lanka to Northern Asia and Australasia, including some of the Pacific Islands such as the Marianas. S.Z.
their uniforms – only have verbal contracts with the ‘broker’ in China who arranged their recruitment and have neither formal contracts nor verbal agreements with the end employer, notes the publication. The territory’s Governor’s Office issued a statement saying it was
monitoring the situation and that “The Governor has met with Imperial Pacific, the airline industry, and relevant stakeholders to tell them this practice is not permitted and is to the detriment of the CNMI (Commonwealth of the Northern Mariana Islands) economy”.
At at the end of March this year, the number of gaming tables in town stood at 6,423, an increase of 136 tables from the last quarter of 2016,
Revenue from greyhound racing bets maintained its continuous decline, seeing values in the first three months of 2017 falling 16.6 per cent quarter-to-quarter to reach MOP10 million, representing 0.01 per cent of the total gaming revenues in this period. In 2016, the local gaming regulator, Macau (Yat Yuen) Canidrome Co., saw its annual revenue drop by 43 per cent year-on-year from MOP125 million in 2015 to MOP71 million, according to DICJ data. Horseracing betting revenues between January and March of this year reached MOP31 million, MOP1 million less than in the previous quarter. In total, revenue from non-casino related games of fortune such as sports betting, horse and greyhound race betting and lotteries, amounted to MOP2.26 billion, representing only 3.5 per cent of total gaming revenues in the first quarter of 2017.
Gaming
Rewarding gaming services Nominations are now open for the second edition of the Asia Gaming Awards taking place on May 16 during the first evening of the Global Gaming Expo (G2E) Asia, at The Parisian. Luis Pereira - Managing Director of Asia Gaming Brief (AGB), the producer of the awards - explained that the most important innovation this year includes the creation of
two new categories, for a total of 12 awards to be distributed across operators, regulators, suppliers, and service providers in both land-based and online gaming operations. One of the new categories, the Best Gaming Property, seeks to include the region’s smaller non-IR operations. The second new category, notes Pereira, is a breakdown of the previous gaming supplier category,
Protest
New batch of workers protest in Saipan A third group of construction workers, hired under subcontractors to work on Hong Kong-listed gaming company Imperial Pacific’s new Imperial Pacific Resort hotel/casino project on the island of Saipan, has staged a protest over unpaid wages, according to the Saipan Tribune. The workers, promised pay of RMB300 (US$43) per eight-hour working day, had not been paid for work from February 27 to April 2, and have “no longer been working since April 3,” according to Wang Feng Kai, one of the workers, as quoted by the publication.
The construction workers, around 80 in number, had come to the island on tourist visas knowing that they would be working illegally, and had been informed by their contacts on the Mainland not to ask questions, talk to anyone and only do what they were told on the construction site, notes the publication. The workers - although demanding the employer pay the hourly rate for work done as well as returns on expenses deducted from payrolls, provide a return ticket home and refund a US$50-US$100 deposit on
Corporate
Unified Tee-off for 6th Special Olympics Golf Masters
The first day of the TCG Special Olympics Golf Masters, held at Caesars Golf Macau, kicked off yesterday welcoming over 100 athletes, guardians and coaches from 26 countries and regions. The event will continue until April 21, with beginner level athletes competing in the first two levels of the event, while the world’s best golfers with intellectual disabilities will compete in Level 5 for two 18-hole rounds. Athletes are joined by Guardian Players from
the local society to support and challenge the participants to show their innate golfing skills. The event is supported by local businesses with this year’s title sponsor the Tak Chun Group. The event - streamed live on Facebook page @ specialolympicsmacaugolfmasters - culminates with the TCG Masters Championship in which the best players will compete with their coaches at Caesars Golf, terminating in a celebration at the Prize Giving Ceremony and Gala Dinner, held on the evening of April 21 at the Sheraton Grand Macao Hotel.
Business Daily Thursday, April 20 2017 7
Macau Opening
S.Korea set to open lavish casino as missile spat scares off Chinese gamblers Joyce Lee and Farah Master
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outh Korea’s first casino resort has been unlucky with the timing of its grand opening this week as a diplomatic spat scares off gamblers from neighbouring China who usually account for about half of Korea’s foreigner gaming revenue. The country’s largest casino operator, Paradise Co Ltd , and Japanese slot machine maker Sega Sammy Holdings Inc open Paradise City today, 5 minutes’ drive from Seoul’s Incheon International Airport, just 329 kilometres (204 miles) across the Yellow Sea from China.
Key Points Paradise, Sega Sammy to open S.Korea’s first casino resort Opening comes as Beijing bans tours to S.Korea Ban to protest Seoul’s new missile defence Chinese make up half of S.Korea foreigner gaming revenue Paradise, Sega Sammy to tap S.E.Asia, Japan gamers But blunting the benefits of proximity is a ban on Chinese travel agents selling tours to South Korea to protest a planned anti-North Korea missile defence outside Seoul. To offset any revenue drop, Paradise and Sega Sammy said they will target consumers in Japan and Southeast Asia.
“It’s a pity that, because of the missile issue, there might be fewer Chinese mass customers at first than expected,” said analyst Yoo Seung-man at HMC Investment & Securities, referring to non-VIPs. “But it’s Northeast Asia’s first such resort so it could draw customers that wouldn’t otherwise visit South Korea.”
Travel ban
South Korean casinos have benefited from Chinese policies for over two years, as a campaign against shows of wealth by public officials triggered an exodus of high rollers from Macau, China’s only legal casino hub. But after South Korea secured land for its missile system in February, Chinese government officials gave travel agents a “7 point” verbal directive to cease tours to the country, showed a South Korean document
seen by Reuters. Publicly, state media called for a boycott of all things South Korean. Chinese visitors to South Korea subsequently fell 39 per cent in March from a year earlier, after an 8 per cent rise in January and February, South Korean data showed. Paradise said many big-spending Chinese hold multiple citizenships so can easily visit the country regardless of the diplomatic situation. But its March revenue still fell 11 per cent from a year prior to 39.3 billion won (US$34.54 million). “There are concerns about the Chinese market,” Paradise said in a statement. “But we don’t expect the missile issue to continue in the long term.” Meanwhile in Macau, overall gaming revenue rose 18 per cent in March, exceeding analyst forecasts. Casino
executives and junket operators attributed the surge to the diplomatic row.
Chinese reliance
To lessen any blow at such a critical time, Paradise and Sega Sammy said they would also market Paradise City’s hotels, convention halls and other non-gaming amenities to South Koreans who cannot enter the casino - as most casinos in the country are foreigner-only. A Paradise spokeswoman said the resort will also offer exclusive space for junkets to boost junket income, which it expects to make up 5 to 10 per cent of initial casino revenue. “Casinos’ reliance on Chinese visitors is still on the high side,” said analyst Kwon Yoon-gu at Dongbu Securities. “So (Paradise’s share price) can’t but be sensitive.” Reuters
8 Business Daily Thursday, April 20 2017
Greater china Outflows
Beijing relaxes some cross-border capital curbs Premier Li Keqiang said on Tuesday that market confidence in the yuan has significantly improved
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hina’s central bank has relaxed some of its curbs on cross-border capital outflows put in place just months ago to shore up the yuan currency, banking sources said yesterday. The first loosening of the curbs comes as China’s leaders and financial markets feel more confident that pressure on the yuan and the country’s foreign exchange reserves has diminished, thanks largely to a pullback in the surging U.S. dollar. The yuan slumped around 6.5 per cent against the dollar last year, but has firmed nearly 1 per cent in 2017, defying -- for now -- many analysts’ expectations of further depreciation. With less incentive for capital flight and the economy on steadier footing, the country’s foreign exchange reserves have clawed back above the closely watched US$3 trillion level. Premier Li Keqiang said on Tuesday that market confidence in the yuan has significantly improved, Xinhua news agency reported. As of last week, the People’s Bank of China (PBOC) is no longer demanding that banks match outflows with equal inflows, the sources said. The South China Morning Post first reported the relaxation of the capital controls earlier yesterday. There was no immediate comment
from the People’s Bank of China when contacted by Reuters. The State Administration of Foreign Exchange (SAFE) did not have an immediate response to Reuters’ questions on the SCMP report. While the world’s second-largest economy still has the largest stash of forex reserves by far, it had burned through over half a trillion dollars since August 2015 trying to support the yuan. The government reacted by intensifying capital controls late last year, making it harder for individuals and companies to move money out of China. Those measures are credited with quashing speculative outflows and helping to stabilise the currency, but have also hampered legitimate outflows as China Inc goes more global. Chinese businesses have complained that the curbs were damaging their plans for overseas investments
and acquisitions, while foreign firms have been more reluctant to invest in China for fear of having trouble repatriating profits.
Key Points First relaxation of capital controls comes as yuan steadies Sources say relaxation started last week Cross-border settlement for legal, compliant business “guaranteed” - source Capital flow curbs derailed some Chinese overseas investments On Tuesday, China reported that its non-financial outbound direct investment (ODI) slumped 30.1 per cent in March from a year earlier as authorities kept a tight grip on
outflows. In the first quarter, it fell nearly 49 per cent. 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. The sources did not spell out what criteria would still be applied to outflows. “Actually, it’ll be the same as SAFE’s previous policy stance emphasizing that cross-border settlements for legal and compliant business are guaranteed,” said one of the sources, who declined to be identified. While the Federal Reserve is still widely expected to raise interest rates two more times this year, which could revive the drooping dollar against emerging currencies, a string of disappointing U.S. data in recent weeks has reduced prospects of a rate hike until later this year. Reuters
Financial industry
Shadow bank industry back in full swing The most popular forms of shadow banking, according to PBOC data, are so-called entrusted loan agreements and trust loans China’s shadow banking is back in full swing, an unintended side effect of the government’s campaign against financial leverage, which has curbed traditional lending and squeezed bond financing. Data from the central bank Friday showed that off-balance sheet lending surged RMB754 billion (US$109 billion) in March, taking the first quarter’s total increase to a record RMB2.05 trillion. Efforts by the People’s Bank of China to curb fresh lending may have prompted borrowers, especially real estate developers, to resort to alternative forms of financing, said Xu Gao, chief economist at Everbright Securities Co. Since late last year, the PBOC and regulators have taken steps to rein in risks to China’s financial system, including raising short-term interest rates, clamping down on leverage in the bond market, and curbing funding for property speculation. The measures have sent debt-reliant borrowers scurrying to shadow financing, an industry Moody’s Investors Service estimates is worth about US$8.5 trillion, and another area where regulators are trying to reduce risk. “You must tread a fine line,” said Everbright’s Xu. “Choking the bond market to death doesn’t mean the financing needs will be curbed as well. Instead, it will drive funding to areas that are more unreachable for the regulators. At the end of the day, risks may be declining in the bond market, but in the overall financial system, they would be rising.” The following charts illustrate the
measures the government introduced to deleverage the economy, which have contributed to the rebound in shadow banking: The PBOC in January ordered the nation’s lenders to strictly control new loans in the first quarter of the year, putting a particular emphasis on mortgage lending to contain runaway home prices. The move saw banks extending RMB4.22 trillion of new loans in the first quarter, 8.5 per cent less than the same period in 2016. It was the first year-on-year decline since 2011. The government is trying to contain the possibility of a shock emanating from the property and construction industries, which contribute about 25 to 30 per cent of China’s economic output, Moody’s estimates. The increasing role of shadow banks as providers of finance is among characteristics that have raised the financial system’s vulnerability to a
property-related shock, Moody’s said in a March report. In a move to curb shadow banking, financial regulators are working together to draft sweeping new rules for asset-management products, people familiar with the matter said in February. Net corporate-bond financing in China was negative for three consecutive months through February before logging a positive RMB32 billion last month, PBOC data showed. The negative streak, during which more bonds matured than were issued, is unprecedented for data going back to 2002, and came amid tighter rules on issuance for companies in certain sectors and a December bond-market rout. If companies can’t raise funds from the bond market, they have to turn to shadow financing, said Lu Zhengwei, chief economist at Industrial Bank Co. The most popular forms of shadow banking, according to PBOC data, are so-called entrusted loan agreements and trust loans. Under the former, a company lends money to another firm with the bank as the middleman, while for the latter, banks use money raised from wealth-management
products to invest in a trust plan, with the proceeds eventually going to a corporate borrower. Banks’ reliance on overnight repurchase contracts contributed to an unprecedented bull run in the bond market last year, prompting the PBOC to start offering longer-term agreements in August in a bid to curb market volatility. Those contracts, which typically carry higher rates, saw borrowing costs rise, putting lenders off the repo market and prompting some off them to plug short-term funding needs with shadow financing.
“Choking the bond market to death doesn’t mean the financing needs will be curbed as well” Xu Gao, chief economist at Everbright Securities The overnight repurchase turnover, a barometer of how heavily investors are using borrowed funds to finance their bond investments, amounted to RMB40.5 trillion last month. While it’s risen the past two months, that’s still 23 per cent lower than the record RMB52.3 trillion logged in August. The percentage of such borrowing among total pledged repo transactions was 81 per cent in March, compared with an all-time high of 91 per cent in November 2015. The contribution of shadow banking to the nation’s economy has risen in recent months: Off-balance sheet funding accounted for 15.7 per cent of the country’s total corporate financing by the end of March, up from 15 per cent at the end of last year, PBOC data show. Bloomberg News
Business Daily Thursday, April 20 2017 9
Greater China Greenpeace
In Brief
Renewable power waste in Mainland worsens in 2016 China produced 12.3 billion kilowatt-hours of solar power in the first quarter of 2017 The amount of electricity wasted by China’s solar and wind power sectors rose significantly last year, environment group Greenpeace said in a research report published yesterday, despite government pledges to rectify the problem. China promised last year to improve what it called the “rhythm” of construction of power transmission lines and renewable generation to avoid “curtailment,” which occurs when there is insufficient transmission to absorb the power generated by the renewable projects. But Greenpeace said wasted wind power still rose to 17 per cent of the total generated by wind farms last year, up from 8 per cent in 2014. The amount that failed to make it to the grid was enough to power China’s capital Beijing for the whole of 2015,
it added. Wasted wind generation in the north-western province of Gansu was 43 per cent of the total generated last year, it said. Solar curtailment rates across China rose 50 per cent over 2015 and 2016. More than 30 per cent of available solar power in Gansu and neighbouring Xinjiang failed to reach the grid. In an earlier report Greenpeace said total solar and wind investment between now and 2030 could reach as much as US$780 billion. But, rising levels of waste had cost the industry as much as RMB34.1 billion (US$4.95 billion) in lost earnings over the 2015 to 2016 period, it said yesterday. China produced 12.3 billion kilowatt-hours (kWh) of solar power in the first quarter of 2017, up 31 per
cent year-on-year but accounting for just 1.1 per cent of total generation over the period, according to official data on Monday. Wind rose to 62.1 billion kWh, 4.3 per cent of the total, but was dwarfed by the 77.9 per cent share occupied by thermal electricity. Grid construction has fallen behind, with China focusing on expensive ultra-high voltage cross-country lines, which are better suited to large-scale power generation projects, including large hydropower facilities in the southwest. “Upgrades to the system are urgently needed, including a more flex-
‘Greenpeace said wasted wind power still rose to 17 per cent of the total generated by wind farms last year’ ible physical structure of the grid, efficient cross-region transmission channels and smart peak load operation,” said Greenpeace climate and energy campaigner Yuan Ying. Many regions have used wind and solar only as back-up electricity sources during peak periods, and much of it falls idle when power use drops. According to official data, the renewables base of Zhangjiakou, north of Beijing, has more than four times the wind and solar installations than the local grid can handle, and capacity is still set to increase rapidly. Reuters
GDP forecast
IMF raises Mainland growth outlook The Fund raised its forecast for global growth for 2017 to 3.5 per cent from 3.4 per cent The International Monetary Fund on Tuesday raised forecasts for China’s economic growth in 2017 and 2018, citing expectations of continued policy support, but warned of potential disruptions in the medium term unless the country reduces its reliance on rapid credit growth. The IMF upgraded its estimate for China’s 2017 growth to 6.6 per cent from 6.5 per cent, which it made in January. It also raised its forecast for growth next year to 6.2 per cent from the previous 6.0 per cent.
‘The IMF upgraded its estimate for China’s 2017 growth to 6.6 per cent from 6.5 per cent’ While higher, the IMF estimates would equate to a significant slowdown from recent growth rates. China’s economy grew by a faster-than-expected 6.9 per cent in the first quarter of this year, fuelled by robust bank lending, higher government infrastructure spending and a housing market that is showing signs of overheating. The IMF said China has made some progress in reducing its industrial production overcapacity, but noted that the economy continues to rely on government stimulus and rapid credit expansion to maintain growth.
The report cited China’s “policy preference for maintaining relatively high GDP growth”, but warned of the consequences of unbalanced growth in the medium term. “The resulting persistent resource misallocation, however, raises the risk of a disruptive adjustment in China in the medium term,” which could be exacerbated by continued capital outflows, the report said. Despite vows from policymakers to rein in financial risks and pursue more sustainable growth, China continues to depend heavily on debt and public spending to drive growth. Total new credit to the economy, which includes bank lending as well as other forms of credit, increased by a record RMB6.93 trillion in the first quarter, data showed last week. . The Bank for International Settlements in September warned
excessive credit growth in China is signalling an increasing risk of a banking crisis in the next three years. “The longer the wait before fiscal consolidation occurs, the sharper the fiscal consolidation may have to be,” IMF chief economist Maurice Obstfeld told a news conference in Washington. He said that while current data shows strength, the IMF believes that China’s efforts to rebalance its economy toward domestic consumption-based growth will be more sustainable with reforms to constrain the budgets of state-owned enterprises, rein in domestic credit growth and upgrade China’s financial regulation. China’s debt-to-GDP ratio rose to 277 per cent at the end of 2016 from 254 per cent the previous year, with an increasing share of new credit being used to pay debt servicing costs, according to an estimate from UBS. The IMF raised its forecast for global growth for 2017 to 3.5 per cent from 3.4 per cent but left its estimate for 2018 growth unchanged at 3.6 per cent. Reuters
Christine Lagarde, head of the IMF
Banks
Beijing expands bad loan securitisation scheme China is set to allow some mid-sized banks to issue asset-backed securities (ABS) with bad loans as underlying assets this year, providing them with a new channel to offload troubled debt, the official Shanghai Securities News reported yesterday. The banks will include China Minsheng Banking Corp , China Everbright Bank, China CITIC Bank Corp, Industrial Bank and Bank of Beijing, the newspaper reported, without providing its source of information. Chinese banks are under pressure to accelerate write-offs and disposals of more sour loans as the government looks to contain risks in the financial system after years of debt-fuelled stimulus. Real estate
Property destocking in smaller cities to persist Clearance of the housing overhang in many of China’s smaller cities is likely to persist, a senior economic planner was quoted as saying on Tuesday, suggesting that smaller centres may continue to prosper from intensifying property curbs in bigger cities. Ning Jizhe, National Development and Reform Commission (NDRC) vice chairman, made the remarks on Tuesday just hours after China reported an acceleration in home price growth in March on a monthly basis. Authorities will continue to fend off bubble risks in bigger cities by taking measures from both “the supply and the demand side”, Ning said. Auto industry
BMW expects sales growth in Mainland BMW Group expects sales in China to grow around 10 per cent this year while global sales are likely to climb 5 per cent to 5.5 per cent, BMW board member for sales and marketing Ian Robertson said at the Shanghai auto show yesterday. Asked what growth rates he expects for BMW Group, which includes the Mini brand, in China this year, Robertson said, “Overall we think it will be 10ish per cent.” Robertson also said he expected pricing to remain stable in China this year as the carmaker prepares to produce a sixth model locally. Protectionism
U.S. slaps duties on hardwood plywood The U.S. Department of Commerce said on Tuesday it had made a preliminary finding of subsidies in imports of hardwood plywood products from China and will impose countervailing duties ranging from 9.89 per cent to 111.09 per cent. The investigation follows petitions from six privately owned U.S. plywood producers into the imports, which are used in wall panels, kitchen cabinets, table and desk tops, and flooring. In 2016, imports of hardwood plywood products from China were valued at an estimated US$1.15 billion, Commerce Secretary Wilbur Ross said in a statement.
10 Business Daily Thursday, April 20 2017
Greater China
Many expect Xiongan to be the Shenzhen (pcitured) of the North
Economic zone
Mainland hunt ‘once-in-a-lifetime’ deals amid Xiongan fever Chinese investors are embracing anything and everything Xiongan
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s Jiang Yunhai sees it, a random investment 14 years ago could be the most fortuitous decision he’s ever made. The Beijing resident bought the Internet domain xiongan.com in 2003 before forgetting all about it -- until two weeks ago. That’s when China unveiled plans to create a new economic zone two hours drive southwest of the capital. The area, hyped as an innovation-driven heir to Shenzhen, is called Xiongan, an amalgam of the names of the three counties that now fall within its borders. Jiang listed the website address for sale online with a price tag of RMB1.88 million (US$273,055). He says he’s received more than 1,000 messages from interested buyers. “This is a once-in-a-lifetime opportunity,” Jiang said by phone. “If the new area is developed well enough, there’s probably room for further increases in the price of this domain.” Others agree: Chinese investors are embracing anything and everything Xiongan. The government had to halt property sales in what is still primarily a farming area as wouldbe real estate moguls descended on the region after the announcement. They’ve flocked to the stock market too, with shares of companies headquartered in Beijing, the neighboring city of Tianjin and Hebei province -where Xiongan is located -- soaring since the news. Fourteen of the 20 best-performing Shanghai-listed stocks this month are
based in Beijing, Tianjin or Hebei, and five of them had to suspend trading for at least two days after surging by the daily limit every trading session after the Xiongan plans were revealed. The combined market value of the 15 top equities headquartered around the new area has surged by RMB132 billion since the announcement, according to data compiled by Bloomberg, even as the broader market falls amid a pullback in Asian equities. Buyers even ignored companies’ attempts to damp the frenzy. Baoding Tianwei Baobian Electric Co., a Hebei-based electrical equipment maker, jumped by the Shanghai exchange’s daily 10 per cent limit for six days until the shares were suspended last Thursday, even after saying it didn’t own any assets in the new area. Likewise, Tangshan Port Group Co., which is also headquartered in Hebei, jumped 33 per cent over three days despite stating it had no business in Xiongan. “This reflects a classic characteristic of the A-share market -- some investors overreact right after major news is announced,” said Ben Bei, director of Hong Kong and China strategy at CIMB Securities Ltd. “The broad advance in Xiongan-related stocks is not sustainable and there will be divergence among those names as there’s still many uncertainties ahead.” This isn’t the first once-in-a-lifetime opportunity to captivate Chinese investors. Shanghai-based firms surged amid record volumes after the
free-trade zone there was announced in 2013. The recent gains are also reminiscent of the IPO mania that took hold in Hong Kong in the late 1990s, as investors in the city rushed to buy shares in mainland Chinese companies.
Waiting Game
While buying in to the plans makes sense as the Xiongan will receive a lot of government support, investors need to be patient, says Gao Ting, head of China strategy at UBS Securities Co. in Shanghai.
“This reflects a classic characteristic of the A-share market -- some investors overreact right after major news is announced” Ben Bei, director of Hong Kong and China strategy at CIMB Securities Ltd “We won’t likely see the development reflected in related companies’ earnings in 12 months, and need to wait 15 to 20 years to see if it can be turned into a big city like Shenzhen as many investors are anticipating,” he said. Companies enlisted in the initial stages, like water services providers and steelmakers, should be the first to benefit from the new zone, followed some time later by real estate firms,
said Frank Lee, acting chief investment officer for North Asia at DBS Bank (HK) Ltd. “I’m optimistic about the firms which will play a core role in Xiongan in the coming five years,” he said. “But as this round of investment frenzy abates after the sudden surge, it would be normal to see most new zone-related stocks to drop an average of eight-to-10 per cent amid a correction.”
Pulling back
The market is already showing signs of fatigue. Baoding Tianwei Baobian fell by the daily limit of 10 per cent after resuming trading yesterday. Shares of Lingyun Industrial Corp., a Zhuozhou City, Hebei-based auto parts manufacturer, and Langfang Development Co., which has the same name as a prefecture that borders the new economic zone, have been pulling back after soaring at least 6 per cent every day between April 5 -- the first trading day after the announcement -- and April 11. A lack of follow-up detail and government efforts to curb investors’ enthusiasm is weighing on the boom. The Shanghai exchange warned on Friday that quick declines usually follow such speculative equity rallies. Jiang Yunhai, the owner of xiongan. com, is also switching to the long game. Unhappy with some of the bids he received, he’s mulling making use of the website himself. “I want to know more about the government’s plans -- I live in Beijing and I own this domain so I may be able to make some good use of it sometime in the future,” Jiang said. “I may move to Xiongan with my family one day.” Bloomberg News
Business Daily Thursday, April 20 2017 11
Asia M&A
Goldman senses buyer interest in Australia as economy diversifies Australian companies announced US$76.1 billion of cross-border mergers and acquisitions last year Brett Foley and Matthew Winkler
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ustralian companies increasingly are attracting potential acquirers as the economy diversifies and North American buyers are drawn to invest in industries like infrastructure, according to Goldman Sachs Group Inc.’s local head. Interest in the Australian market, particularly from the U.S. and Canada, is rising given the level of transparency relative to other parts of Asia Pacific, said Simon Rothery, chief executive officer for Australia and New Zealand. Goldman Sachs is seeking to double to A$5 billion (US$3.8 billion) its spending on principal investments in the country, he said. The deal-making activity comes as Australia’s economy becomes less correlated with the commodities industry, according to Rothery. “We have witnessed significant investment in sectors like health care, education and technology services,” Rothery said in an April 6 interview at the bank’s office in Sydney. Australia’s economy, which last had a recession in 1991, is close to seizing the global crown for the longest economic growth streak as the central bank’s record-low interest rates help steer the country from mining investment back toward services. Basic materials and energy targets accounted for only 6.8 per cent of acquisitions in Australia last year, the lowest level in at least a decade, compared to 40 per cent in 2011, according to data compiled by Bloomberg. Australian companies announced US$76.1 billion of cross-border mergers and acquisitions last year, with
the largest proportion involving U.S. buyers, according to the Bloomberg-compiled data. Goldman Sachs ranked fourth among advisers on such deals with a 29.6 per cent market share, behind Macquarie Group Ltd., local boutique Gresham Partners Ltd. and Morgan Stanley. That’s up from 10th place in 2015, the data show.
“Cross-border activity has remained consistent with a continued high level of inbound investment from North American acquirers who see significant long-term opportunities in Australia” Simon Rothery, Goldman Sachs CEO for Australia and New Zealand The biggest acquisitions in Australia are now targeting industrial and utilities companies. Canadian pension funds have scoured the country for stable, long-term returns in infrastructure as Australian states sell off assets to fund construction of new roads, railways and hospitals. Caisse de Depot et Placement du Quebec was part of a group that agreed in 2015 to buy an electricity network in New South Wales,
Australia’s most-populous state, for about A$10.3 billion. Canadian funds including Borealis Infrastructure Management Inc. and Brookfield Asset Management Inc. have also joined deals for the Port of Melbourne, the country’s largest container terminal, and logistics operator Asciano Ltd. “Over the past five years, the Australian market has become less correlated to the commodities sector,” Rothery said. “The interest in Australia from North America -- and particularly Canada -- is strong.” Consumer and health-care assets in Australia have also been attracting takeover interest. China’s Luye Group Ltd., Jangho Group Co. and stateowned China Resources Holdings Co. have acquired assets including private hospitals, an eye-clinic chain and a cancer therapy provider as they seek medical know-how they can take back to the world’s second-biggest economy. U.S. underwear maker Hanesbrands Inc. worked with Goldman Sachs on its purchase of Australia’s Pacific Brands Ltd. last year for about
US$800 million including debt. The investment bank also advised Melbourne-based vitamin brand Swisse Wellness Group Pty on its A$1.39 billion sale to China’s Biostime International Holdings Ltd. announced in 2015, data compiled by Bloomberg show. Goldman Sachs wants to expand its principal investment activity in Australia, where it has put money into industries including health care and education, according to Rothery. It has spent A$2.5 billion in the past four years and wants to double the amount over the next three years, he said in the interview. The firm’s investments in the country include Atira Pty, a student accommodation joint-venture with Blue Sky Alternative Investments that aims to develop and operate an A$1.5 billion portfolio of as many as 10,000 beds. Goldman Sachs also joined a funding round announced in February for Singapore data center developer AirTrunk Pte, which plans to use the proceeds on projects in Sydney and Melbourne. Bloomberg News
Aviation
Malaysia Airlines first to track fleet with satellites A new satellite network will allow it to monitor air traffic around the globe Alan Levin
Malaysia Airlines, which lost a widebody jet with 239 people aboard three years ago in one of history’s most enduring aviation mysteries, has become the first airline to sign an agreement for space-based flight tracking of its aircraft. Malaysia Airlines Bhd. reached a deal with Aireon LLC, SITAONAIR and FlightAware LLC to enable it to monitor the flight paths of its aircraft anywhere in the world including over the polar regions and the most remote oceans, according to an emailed press release from Aireon. Aireon is launching a new satellite network with Iridium Communications Inc. that will allow it to monitor air traffic around the globe. It’s projected to be completed in 2018. Most international flights are already transmitting their position with technology known as ADS-B and the signals can be tracked from the ground
or space. The U.S. Federal Aviation Administration has already installed a ground-based tracking system for ADS-B. Malaysia Airlines Flight 370 was on a flight from Kuala Lumpur to Beijing on March 8, 2014, when it turned around, flew back across
Malaysia and then turned toward the remote reaches of the southern Indian Ocean. While debris from the plane has been found washed ashore on African beaches, the main wreckage was never located despite years of searching. Whether the Aireon tracking system would have made a difference in Flight 370 isn’t clear. The plane’s location transmitter went dead, possibly because it was intentionally
shut off, and the aircraft would not have been visible to the satellite network.
“Real-time global aircraft tracking has long been a goal of the aviation community... We are proud to be the first airline to adopt this solution” Izham Ismail, Malaysia Airlines Chief Operating Officer Aireon is one of several companies trying to make it easier to find missing aircraft. Inmarsat Plc, which runs a satellite network that competes with Iridium, offers a separate service for airlines that uses traditional communication systems instead of the ADS-B transmissions. Rockwell Collins Inc.’s Airinc offers a similar service to carriers. Bloomberg News
12 Business Daily Thursday, April 20 2017
Asia WTO
Australia, NZ back Trump on possible action on Canada dairy Trump did not specify what parts of Canada’s tariff-protected dairy sector he wanted to change Benjamin Weir and Charlotte Greenfield
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ustralia and New Zealand dairy industry leaders said on Wednesday they would support moves by the United States to draw the World Trade Organization into a trade dispute with Canada, after President Donald Trump said existing
rules were unfair. Canada’s dairy farmers and processors, including Saputo Inc and Parmalat Canada, struck a pricing agreement in 2016 that industry groups in Australia, New Zealand, the European Union, Mexico and the United States say would price domestic milk ingredients for cheese-making below cost, under-cutting their exports.
On a visit to the U.S. cheese-making state of Wisconsin on Tuesday, Trump said he would “stand up for our dairy farmers” adding that “in Canada some very unfair things have happened to our dairy farmers and others”. Trump did not specify what parts of Canada’s tariff-protected dairy sector he wanted to change, nor what measures he would take to make it happen, but his remarks re-ignited calls for a complaint to the World Trade Organization.
The United States is the world’s biggest cheese exporter outside Europe. “I don’t expect there would be many countries that would do anything other than support a WTO action against Canada,” said Australian Dairy Farmers interim Chief Executive Officer John McQueen in a telephone call. New Zealand Trade Minister Todd McClay told Reuters in an email that his government was “currently assessing the WTO-consistency” of Canada’s dairy industry policy, and had raised concern with the Canadian government. “Together with other dairy exporting countries, including the U.S., we have questioned these policies at WTO Committee on Agriculture meetings in Geneva as recently as last month,” McClay said. Malcolm Bailey, chairman of the Dairy Companies Association of New Zealand, said his organisation was working with his foreign ministry to gather information for a possible WTO complaint. New Zealand, the second biggest non-Europe cheese exporter, is “quite clearly building a coalition of those prepared to make the case to the WTO”, said Bailey. “You’ve got the Americans, the Australians, the Mexicans who are concerned about this.” Reuters
Business environment
Expensive Singapore is about to get more costly for companies Higher water tariffs have generated the most debate and anxiety among Singaporeans David Roman
Businesses in Singapore are bracing for higher costs in a country that’s already among the world’s most expensive to live in. From a 30 per cent increase in water prices to higher diesel costs to a looming carbon tax, manufacturers are being forced to adjust their operations to remain competitive in an economy that’s only recently recovering from an export slump. It also signals a pick-up in inflation, an outcome the central bank flagged in its monetary policy statement last week. Of the measures announced by Finance Minister Heng Swee Keat in his February budget, higher water tariffs have generated the most debate and anxiety among Singaporeans. Having kept the cost steady since 2000, Prime Minister Lee Hsien Loong is clear why the government needs to adjust prices: as an island nation that’s water-stressed, the state needs to pay for expensive desalination plants. Higher prices will also make consumers more aware of their usage of the scarce resource. For Lee Soon Kiat, director of government relations at semiconductor maker Globalfoundries Inc., higher water tariffs -- to be implemented in two phases beginning in July -means extra costs of as much as S$5 million (US$3.6 million) a year at plants producing electrical circuits. “It’s clear that it will add to our operating costs,” said Lee, who is also a member of the executive committee of Singapore’s Semiconductor
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Industry Association. “It’s an issue that our industry will have to adapt to, and continue to pursue water saving or recycling measures in our processes.”
Competitiveness index
Singapore is routinely ranked among the top when it comes to global competitiveness, mainly because of its low company tax rates, good infrastructure and easy procedures to open a business, rather than cost effectiveness. It was placed fourth out of 61 countries in last year’s world competitiveness index -- compiled by the Swiss business school IMD -- but ranked among the lowest, at 57, on scores for cost of living. Song Seng Wun, a regional economist at CIMB Private Bank in Singapore, said the government is banking on companies accepting higher
costs in exchange for the city state’s other advantages: its reliable power and water supply, business-friendly framework, stable legal and political system and competitive tax rates. “Singapore has never been the cheapest place to do business,” he said. “Other factors have to be strong enough to keep Singapore as a very competitive place.” Having a green and healthy environment is “also a competitive advantage,” he said. The moves fit into the government’s broader goal of forcing businesses to innovate in order to boost productivity, from encouraging companies to adopt digital technologies to re-skilling workers to keep pace with global change.
Tiger Beer
At S$1.21 per cubic meter currently, water for industrial use in Singapore is already more expensive than in many other Asian countries, and several times pricier than in China,
according to Simon Powell, head of Asian utilities research at UBS Group AG in Hong Kong. That’s forcing companies that rely on significant amounts of water, such as power plants and the brewery that produces the local Tiger beer, to review their consumption needs. Tuas Power Ltd., one of the largest power generators in Singapore, had been implementing steps to save water before the cost announcement was made, said spokeswoman Michele Sit. The company will install additional meters to track unusually high consumption or wastage of water, she said. Heineken NV’s unit in Singapore, the maker of Tiger beer, had already committed to cut water usage by 20 per cent even before the planned tariff increase, according to its head of corporate affairs, Mitchell Leow. About 95 per cent of the beer is made out of water. The company is working on a water reclamation project to process waste water for non-potable uses like general cleaning and for its brewery cooling towers, Leow said. Water consumption has been reduced by 4 per cent since 2010 through initiatives such as harvesting rainwater from rooftops, he said. From the government’s point of view, the pain of higher water prices is something businesses and consumers will have to bear as part of a broader goal of conserving the environment, said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore. “The signal from the government is that they want to conserve an important resource, and that for them is a bigger consideration than others,” Paracuelles said. Bloomberg News
Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Nelson Moura; Kelsey Wilhelm; Matthew Potger; Cecilia U; Sheyla Zandonai Group Senior Analyst José I. Duarte Design Aivi N. Remulla Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors Albano Martins; James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@projectasiacorp.com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com Online www.macaubusinessdaily.com
Business Daily Thursday, April 20 2017 13
Asia M&A
Japan fund, bank mull bid with Broadcom for Toshiba chip unit Such bid would appear to be aimed at preventing technology from going to rivals in China or South Korea A Japanese government-backed fund and policy bank are considering a joint bid with Broadcom Ltd for Toshiba Corp’s semiconductor business, a move that would vault the U.S. chipmaker into the lead to buy the prized unit, the Asahi newspaper said yesterday.
‘Broadcom put in the highest first-round offer of US$23 billion for the chip business’
of bidding. People familiar with the matter have told Reuters INCJ might invest in the business as a minority partner - a move that would help the government prevent a sale to bidders it deems risky to national security. INCJ did not immediately respond to a request for comment outside business hours. Media representatives for California-based Broadcom could not immediately be reached for comment on the Asahi report. A DBJ spokesman declined to comment. A DBJ spokesman declined to comment on the report.
Toshiba is selling the memory business, which it this month spun off as a separate unit, to help cover billions of dollar in write-downs from its U.S. nuclear unit Westinghouse Electric Co, which filed for U.S. bankruptcy protection from creditors last month. Broadcom, which has partnered with private equity firm Silver Lake Partners LP, put in the highest firstround offer of 2.5 trillion yen (US$23 billion) for the chip business, while Taiwan’s Hon Hai Precision Industry Co, the world’s largest electronics contract manufacturer, offered 2 trillion yen, a person familiar with the matter has said. The other bidders are South Korea’s SK Hynix Inc and U.S. chipmaker Western Digital Corp, which has a joint venture in Japan with Toshiba’s chip unit. Reuters
A bid by Innovation Network Corp of Japan and the Development Bank of Japan with Broadcom would appear to be aimed at preventing Toshiba’s chip technology from going to rivals in China or South Korea, the Asahi said, citing an unidentified source. INCJ Chairman Toshiyuki Shiga said on Tuesday the fund was looking at the chip auction although it had not participated in the first round
Health
South Korea to keep importing eggs despite bird flu downgrade The imported eggs will be mainly distributed to restaurants and grocery stores Jane Chung
South Korea is set to keep importing eggs from overseas for the next few weeks despite downgrading the country’s worst-ever bird flu outbreak by one notch from the highest level.
The downgrade was introduced from yesterday as no new cases of the virus have emerged for about two weeks, but government sources said egg imports would keep pouring into the country as it would take time for domestic output to recover after more than a fifth of the nation’s total
poultry population was culled. An agriculture ministry official said local supply would return to normal in the second half of the year, but that in the meantime imports would continue, mainly from Australia. The official, who asked to remain anonymous, said the government was also looking to clear egg imports from Thailand. Shipments from the United States were halted after a bird flu outbreak there. Jeju Miyin Corp, a trading and distribution company, will ship in around 400,000 of Australian brownshelled eggs, or 20 tonnes, of eggs per week until local egg prices stabilise, said company head Mark Yun.
“A total of 1 million eggs are en route to South Korea and will arrive within the next three weeks” Mark Yun, head of Jeju Miyin Corp
The average retail price of 30 eggs was at 7,671 won (US$6.71) as of Tuesday, up 35.6 per cent since the first bird flu outbreak was confirmed on Nov. 18, according to data from state-run Korea Agro-Fisheries & Food Corp. The first batch of seaborne imports by Jeju Miyin was scheduled to arrive yesterday at the port of Busan, Yun said. Previously most cargoes had come by air. The imported eggs will be mainly distributed to restaurants and grocery stores. “A total of 1 million eggs are en route to South Korea and will arrive within the next three weeks,” he said, referring to imports by his company. Reuters
In Brief CPI
Malaysian inflation at highest in 8 years Malaysia’s consumer price inflation hit an eight-year high in March, but was slightly below the forecast in a Reuters poll and not expected to push the central bank to change its stance on monetary policy. Annual inflation was 5.1 per cent in March, the highest since touching 5.7 per cent in November 2008. In February, annual inflation was 4.5 per cent. A Reuters poll forecast March inflation at 5.3 per cent. Inflation in March was driven by a low-base effect and higher retail fuel prices compared to a year earlier, according to a statement by the Malaysian statistics department, which measures monthly inflation. Inflation
S.Korea producer prices rise at slower pace South Korea’s producer prices in March rose in annual terms at a slightly slower pace than February, central bank data showed yesterday, but they still gained at a far quicker pace compared to previous months, signalling possibly higher inflation ahead. The producer price index for March rose 4.2 per cent from a year ago, the Bank of Korea said, compared to a revised 4.3 per cent gain in February. February’s reading was marginally revised up from a 4.2 per cent gain reported earlier and marked the fastest growth since the index rose 4.3 per cent in December 2011. Labour market
New Zealand tightens immigration rules New Zealand said yesterday it will tighten access to its skilled work visas, just a day after the United States and neighbouring Australia announced similar restrictions on immigration. New Zealand’s immigration minister said he was taking a “Kiwis-first approach to immigration”, echoing Australian Prime Minister Malcolm Turnbull and U.S. President Donald Trump in announcing policies to ensure jobs for Australians and Americans. Migration has become a hot topic in the lead up to New Zealand’s Sept. 23 general election. “These changes are designed to strike the right balance,” immigration minister said. M&A
Siam Commercial in talks for US$3 bln insurance sale Siam Commercial Bank (SCB) has entered into exclusive talks with Hong Kong insurer FWD Group to sell its life insurance arm, which could raise US$3 billion for Thailand’s third-biggest lender, people with direct knowledge of the matter said. A successful deal would rank as the largest insurance M&A transaction in Southeast Asia, and the biggest in Asia since the merger of two insurance companies in India valued at US$3.2 billion in August 2016, according to Thomson Reuters data. FWD, owned by Hong Kong tycoon Richard Li, the youngest son of Li Kashing, entered into exclusive talks last month.
14 Business Daily Thursday, April 20 2017
International In Brief Mozambique
Govt. raises minimum wages of nine sectors A meeting of the Mozambican cabinet on Tuesday raised nine minimum wages in the country, with the hotel sector receiving the lowest rise, 5.5 per cent, and public administration, defence and security getting the biggest hike, of 21 per cent. According to the new bill, presented to the press by the Minister for Work, Employment and Social Security, Vitória Diogo, despite benefitting from the highest rise, public administration, defence and security will continue to have one of the lowest wages in the country, rising from a minimum of 3,278 meticais (€46.5) 3,996 meticais (€56.7) per month. Monetary drive
Argentine central bank says aims to increase reserves Argentina aims to bring its international reserves to 15 per cent of gross domestic product as it seeks to improve its credit rating, central bank chief Federico Sturzenegger said in a presentation on Tuesday. Reserves are currently at about US$50 billion, or 10 per cent of gross domestic product. “We have set an ambitious goal of having a level of reserves in line with those of investment grade countries,” Sturzenegger said. Last month Moody’s changed the outlook on the government of Argentina’s B3 rating to positive from stable. The rating is six levels beneath investment grade.
Legislation
Brazil waters down pension reform as protests turn violent The protest underscored the unpopularity of a reform that is at the heart of the austerity program Maria Carolina Marcello and Ueslei Marcelino
B
razilian President Michel Temer on Tuesday made new concessions to ease passage of an unpopular pension reform bill, leading police unions to try and invade Congress in the latest angry demonstration from a labour group. The watered-down proposal, which has faced pressure from skittish lawmakers, has raised doubts among investors about how close it will come to the original goal of narrowing a huge and growing budget deficit. After the details of the new proposal were revealed on Tuesday, protesting police unions clashed with congressional guards in riot gear, who used tear gas and stun grenades to disperse the demonstrators from the front doors of Congress. The protest underscored the unpopularity of a reform that is at the heart of Temer’s austerity program, which aims to rescue the Brazilian economy from its deepest recession on record.
Temer agreed to set a lower retirement age for women, police, teachers and rural workers and grant more generous transition rules for workers after allies’ concerns delayed the bill’s formal presentation in Congress until yesterday. Finance Minister Henrique Meirelles told Reuters in an interview that the changes will reduce government savings from the reform by 20 per cent to 25 per cent in the next 10 years, and by nearly 30 per cent over a 30-year horizon. Meirelles said changes to the original bill were within the government’s expectations, and he did not expect further modifications as the proposal makes its way through Congress. Some analysts have a dimmer outlook. In a note to clients, JP Morgan analysts said the changes could mean savings of just 472 billion reais, down 40 per cent from 781 billion originally. Pension reform is a contentious issue in Brazil, which has one of the world’s most generous social security systems and an average retirement age of 54. Investor concerns over potential delays to the reform have weighed
on demand for Brazilian assets in recent days. Adding to setbacks for the government on Tuesday, the lower house voted down an effort to fast-track another reform proposed by Temer to modernize labour laws, making work contracts more flexible to improve Brazil’s business environment.
‘Adding to setbacks for the government on Tuesday, the lower house voted down an effort to fast-track another reform proposed by Temer to modernize labour laws’ House Speaker Rodrigo Maia said the setback was the result of a parliamentary error, leaving open the possibility of another vote. Reuters
Tillerson
Trump orders review of lifting sanctions against Iran U.S. President Donald Trump has ordered an inter-agency review of whether the lifting of sanctions against Iran under a 2015 nuclear deal was in the United States’ national security interests, Secretary of State Rex Tillerson said on Tuesday. Tillerson said in a statement that Iran remained compliant with its commitments under the deal to rein in its nuclear programme but there were concerns about its role as a state sponsor of terrorism. He said he had notified U.S. House of Representatives Speaker Paul Ryan, the top Republican in Congress, of the decision on Tuesday and of Iran’s compliance under the deal, clinched under the Obama administration. Latam chief
World Bank ready to help Venezuela if asked The World Bank Group stands ready to assist Venezuela, a member and shareholder of the institution, if the government asks for help in dealing with a punishing economic crisis, the bank’s top executive for Latin America said. Jorge Familiar, World Bank vice president for Latin America and the Caribbean, told Reuters in an interview on Monday that the bank has had no engagement with Venezuela since it paid off past loans in 2008 under the late former President Hugo Chavez. But Familiar said the bank’s officials have been intensely watching growing shortages of food and medicine this year.
Members of police force unions in Brazil clash with police during a protest against a reform of the pension scheme proposed by the government of Michel Temer in front of the seat of the Parliament in Brasilia, Brazil 18 April 2017. Lusa
Watchdog
Lawsuit against Trump over foreign payments expands The amended complaint said Trump violates the Constitution’s “emoluments” clause Jonathan Stempel
A non-profit watchdog expanded a lawsuit accusing U.S. President Donald Trump of violating the Constitution by letting his hotels and restaurants accept payments from foreign governments. The amended complaint filed on Tuesday in the U.S. District Court in Manhattan adds a restaurant trade group, whose members include nationally known chefs Tom Colicchio and Alice Waters, and a hotel events booker in Washington, D.C. as plaintiffs. It is intended to address concern over whether the watchdog, Citizens for Responsibility and Ethics in Washington, was itself harmed by Trump and had standing to sue at all. Trump is expected to respond by April 21, and had said the original lawsuit filed on Jan. 23 had no merit. Spokesmen for the U.S. Department of Justice did not immediately respond to requests for comment on Tuesday. The amended complaint said Trump violates the Constitution’s “emoluments” clause, which bars
him from accepting various gifts from foreign governments without congressional approval, by maintaining ownership over his business empire despite ceding day-to-day control to his sons, Eric and Donald Jr. It said members of Restaurant Opportunities Centers (ROC) United Inc, which represents more than 200 restaurants and nearly 25,000 workers, have improperly lost business, wages and tips to Trump’s competing businesses.
Key Points Foreign payments to Trump hotels, restaurants challenged Restaurants, hotel booker call payments unconstitutional Trump expected to respond by April 21 Jill Phaneuf, the other new plaintiff, works for a hospitality company that books events in hotels near Washington’s “Embassy Row,” which house foreign diplomats, and claimed that Trump is costing her commissions.
The complaint said such plaintiffs are injured when foreign governments try to “curry favour” with Trump by favouring his businesses. It said this has even occurred since Trump took office, when China granted him trademark rights after he pledged to honour the “One China” policy of his White House predecessors. “When asked why defendant changed his position on the One China policy, and whether he had gotten something in exchange from China, White House Press Secretary Sean Spicer answered: ‘The President always gets something,’” the complaint said. U.S. District Judge Ronnie Abrams, an appointee of former Democratic President Barack Obama, oversees the litigation. The lawsuit seeks to “uphold one of the most basic aspects of the rule of law: no one, including the president, is above the law,” Erwin Chemerinsky, dean of the University of California at Irvine’s law school and one of the plaintiffs’ lawyers, said in a statement. The case is Citizens for Responsibility and Ethics in Washington et al v. Trump, U.S. District Court, Southern District of New York, No. 17-00458. Reuters
Business Daily Thursday, April 20 2017 15
Opinion Business Wires
The Straits Times For the first time, Singapore is tied with Germany as the country with the most powerful passport in an international ranking. Both Germany and Singapore now top the Global Passport Power Rank 2017, published by Arton Capital’s Passport Index. Holders of the Singapore passport can now get visa-on-arrival in Ukraine for up to 15 days, upping the Republic’s score by one to 159, Arton Capital said in a press release on Tuesday. Singapore was second before this change. Germany still has the edge for visa-free free travel, it said. Germans can travel to 125 countries without a visa, holders of the Singapore passport, 122.
The Phnom Penh Post Cambodian rice exports declined dramatically in March, causing the average export growth of the Kingdom’s dominant cash crop to increase by only 3 per cent during the first quarter of this year, nearly wiping out the double-digit growth seen in January and February. According to rice export data released by the Ministry of Agriculture yesterday, Cambodia exported a total of 166,678 tonnes in the first quarter this year, up from 162,220 tonnes during the same period last year. While growth in January and February accelerated greatly by 11 per cent and 17 per cent respectively, the weighted average was bogged down by a 16 per cent year-on-year decline for March exports.
Why social networks are becoming too viral
T Jakarta Globe The Walt Disney Company has denied any involvement in plans to establish a theme park in Boyolali, Central Java. “While Indonesia is a priority market for The Walt Disney Company in Southeast Asia, we have no plans to open a Disneyland in Indonesia at this moment,” Sesha Kanthamraju, executive director of communications at The Walt Disney Company Southeast Asia, told the Jakarta Globe in an e-mail on Tuesday. In Asia, the company currently operates Disneyland theme parks in Hong Kong, Tokyo and Shanghai, attracting more than 40 million visitors from the region, including Indonesians.
The Japan News More than 70 per cent of companies will hire the same number or more new graduates for spring 2018 compared to a year earlier, indicating the labour market will remain favourable for job-seeking students, according to a recent survey conducted by The Yomiuri Shimbun and Nippon TV. The survey asked 100 major companies in the nation about their hiring of students scheduled to graduate in spring 2018 from universities, graduate schools, two-year colleges, technical colleges, vocational schools and high schools.
he man who set up the most popular social network in Russia axed all of his online friends in one fell swoop on Monday. Having them, he wrote, was so 2010. That may be a sign of the times: Predictions from a few years ago that social networks would lose ground to messenger apps appear to be coming true. Pavel Durov has often been called Russia’s Mark Zuckerberg because he set up a Facebook clone called Vkontakte, which quickly beat the original in Russia because it became the medium for sharing pirated movies and music. Durov lost control of the network long ago, and the piracy is somewhat less rampant, but Vkontakte is still far ahead of the competition in its home country. Durov, meanwhile, has funded the development of a messenger app, Telegram. Based in Berlin and structured as a non-profit, the messenger has about 100 million monthly active users -- formidable yet far less than industry leaders such as WhatsApp and Facebook Messenger (who claim a billion users each). He explained his decision to purge thusly: Everyone a person needs has long been on messengers. It’s pointless and time-consuming to maintain increasingly obsolete friend lists on public networks. Reading other people’s news is brain clutter. To clear out room for the new, one shouldn’t fear getting rid of old baggage. Durov is right when he says everyone is on messengers these days. Back in 2015, messengers overtook social networks in terms of total active users. And back in 2014, when Facebook separated Messenger from its main offering, Zuckerberg himself acknowledged the trend, saying that “messaging is one of the few things people do more than social networking.” And the messengers’ growth is faster than that of social networks: Facebook Messenger’s mobile audience increased 36 per cent in the between July 2015 and June 2016, while Facebook’s grew 19 per cent, according to Comscore’s mobile app report. By measures that register actual human engagement – rather than fake accounts and bot activity -Facebook does not seem to be growing at all. In 2016, its users generated about 25 per cent less original content than in 2015. The time users spend on Facebook dropped from 24 hours in mid-2015 to 18.9 hours in February, Comscore reported. There are no reliable data on why humans are less enthusiastic about social networks today than a couple of years ago. But chances are it has to do with fatigue from living in a public cage, irritation with the growing amount of invasive advertising, perhaps belated privacy concerns
“
Leonid Bershidsky a Bloomberg View columnist
since the advertising often seems to follow browsing histories and the content of supposedly private messages. Then there’s the prevalence of low quality content and the potential of being confronted by disturbing acts of video streaming. A grisly murder video posted to Facebook on Easter Sunday is only the latest example of vaunted Facebook algorithms being powerless to police the vast network and cut off dangerous exhibitionism that, incidentally, is only a step away with what any social network addict does with his or her private life. Messengers are a safer ground: They’re about personal communication, not broadcasting. Zuckerberg, who has been touring the U.S. in what some see as a pre-presidential campaign and others as a series of focus groups to turn Facebook into a community-building tool, appears to have seen this trend coming long ago. Facebook, after all, owns the two most popular messenger apps. If the numbers keep shifting from social networks to messengers, advertisers will figure out that something is wrong with the platforms they’ve been paying. YouTube’s advertising boycott is likely just a precursor of things to come, including better analysis of usage and engagement metrics. When the ad-based social network model is challenged -or even before that -- Facebook will be forced to monetize its messenger offerings. That may undermine the quality of these products, as advertising did with the social networks. Snap, now forced to make money as a public company, may already be experiencing the fallout. Time users spend on it is declining. After having hijacked user attention and advertising money from professional content producers, social networks may be facing a reality check. As people figure out what they want from the digital revolution, there may be far less money in facilitating content sharing than in creating the content itself. Instead of submitting to the mercy of Facebook’s massive audience, traditional publishers should have faith that the public will always demand professionally crafted content, no matter where it is shared. The social networks may look like all-powerful intermediaries now, but they may not be around forever. Bloomberg View
YouTube’s advertising boycott is likely just a precursor of things to come, including better analysis of usage and engagement metrics
”
16 Business Daily Thursday, April 20 2017
Closing Treasury Secretary
Trump “absolutely not” trying to talk down dollar
U.S. President Donald Trump is “absolutely not” trying to talk down the strength of the dollar, Treasury Secretary Steven Mnuchin (pictured) was quoted as saying in the Financial Times yesterday. Trump said last week in an interview with the Wall Street Journal that the dollar was “getting too strong”, and backed away from labelling China a currency manipulator. Mnuchin had played down that comment on the dollar in an interview first published late on Monday in the FT. In a more detailed version published yesterday, he
directly rejected the idea that Trump was trying to talk down the dollar, saying “Absolutely not, absolutely not.” The dollar gained after Mnuchin’s initial remarks late on Monday. But yesterday the euro hit a three-week high as the dollar was weakened by doubts over a fiscal boost promised by the president and by the pricing out of bets on three U.S. Federal Reserve interest rates hikes this year. Mnuchin also said the Trump administration did not deem foreign countries to be manipulating their currency if they did so in a way that benefited Washington. Reuters
Labour market
Higher risk of mass unemployment in China Official unemployment rate - which only accounts for urban, registered residents - has held around 4 per cent for years
C
hina’s cabinet said yesterday that risks of mass unemployment in some regions and sectors have increased and pledged more fiscal and monetary- policy support to address the potential rise in the jobless rate. The government plans to cut further excess and inefficient capacity in its mining sector and “smokestack” industries this year, part of efforts to upgrade its economy and reduce pollution, but the move threatens
to throw millions more out of work. The State Council said China faces “intensified structural conflicts” in its current job market, but it must place employment as a top policy priority and address the new challenges to keep its employment rate stable. China’s official unemployment rate - which only accounts for urban, registered residents - has held around 4 per cent for years, despite a slowdown that has seen growth cool from the double-digits to quarter-century lows of under 7 per cent.
In a guideline post on its website that sets the policy tone on employment issues, the State Council said provincial governments in those regions should take measures such as increasing the stipend for firms under job-shedding pressures. “If new urban jobs shrink or jobless rate jumps, (China) should step up fiscal and monetary policy support,” it said. The government will continue to encourage entrepreneurship and help small enterprises thrive as key ways to create more jobs, by building more start-up industrial parks and incubation bases, along with more tax policy bonus for start-ups. University graduates and workers from sectors affected by capacity
cuts such as steel, coal, and coalfired power were identified as “key groups” that needed extra support, the guidelines said. Data from the Ministry of Human Resources and Social Security showed 7.95 million students are expected to graduate from university this year in June, 300,000 more than in 2016. Graduates will be encouraged to diversify their employment options, such as working in less-developed countryside areas and working for small enterprises. China will also appropriately reallocate affected workers, it said.
Key Points China issues guidelines to address employment issues Risks of mass unemployment in some regions, sectors have risen More fiscal, monetary support if jobless rate jumps College graduates, workers in heavy industries need most support
China created 3.34 million new jobs in the first quarter of the year and helped some 720,000 laid-off workers find new jobs last year, according to state media reports. Beijing aims to create more than 11 million jobs this year, 1 million more than last year’s target, according to this year’s government work report. Reuters
Smartphones
Pension
M&A
Xiaomi preparing for comeback
Taiwan leader calls for calm over reform chaos
Ant Financial targets brand boost in SE Asia with helloPay deal
Xiaomi’s trying to get back in the game. The Chinese electronics maker unveiled a new flagship smartphone days after Samsung’s Galaxy S8 hit stores, hoping to regain lost ground even as Apple prepares to introduce its most anticipated device in years. Xiaomi Corp. took the wraps off the Mi 6 at a college gymnasium on the outskirts of Beijing yesterday. The phone sports flourishes now familiar to users of premium devices including the S8: curved glass, virtually non-existent bezels, a Qualcomm Snapdragon 835 processor and 6 gigabytes of memory. It also features dual cameras on the back. In a nod to Apple Inc.’s latest iPhone, Xiaomi also dropped the headphone jack. The Mi6 goes on sale April 28 starting at RMB2,499 (US$363). The company has moved away from its roots as an online purveyor of cheap devices since local rivals from Oppo to Huawei Technologies Co. began to dominate the Chinese market with higher-end gadgets. Co-founder Lei Jun is going after his rivals not just with increasingly tricked-out phones, but also by adopting the nationwide store networks that super-charged the Oppo and Vivo brands. The company remains on track to open 1,000 stores within three years across China, and expects to chalk up RMB70 billion of sales through that physical network in five years. Bloomberg News
Taiwan’s leader called for calm after violent protests over pension reforms outside parliament yesterday saw scores of demonstrators scuffling with police and politicians. The rallies were staged as parliament began reviewing controversial bills which are designed to stop the struggling pension system from collapsing but are expected to hit nearly 500,000 civil servants and teachers. Several lawmakers and politicians said they were pushed, punched and had water splashed on them as they tried to enter the legislative complex in central Taipei, which was guarded by barbed-wire barricades and a heavy police presence. President Tsai Ing-wen vowed to press ahead with the changes despite a recent string of protests and said her government would not tolerate violence. “Intentionally causing conflicts will not deter the (government’s) determination for reforms... our urgent task is to bring the pension system back from the brink of bankruptcy,” she told reporters. Anger has been mounting among public-sector workers and retirees as the government unveiled draft bills aimed at reducing their pensions and phasing out a special savings rate for them which pays 18 per cent interest. AFP
Ant Financial, the payment affiliate of Alibaba Group Holding Ltd, has acquired Singapore-based payment service helloPay Group, part of the Chinese firm’s drive to boost its Alipay brand and presence in Southeast Asia. helloPay is the payment subsidiary of e-commerce firm Lazada Group, which is majority-owned by Alibaba after a US$1 billion deal in 2016, and will be re-branded as Alipay in relevant markets, including Singapore, Malaysia, Indonesia and the Philippines, Ant said in a statement yesterday. The re-branded service will remain independent of Alipay’s existing app, which has 450 million users in China and is the country’s most popular mobile payment app. Ant did not disclose financial terms of the helloPay deal. In recent months Ant Financial has invested in a string of payment firms in Asia, but helloPay represents the firm’s first foray into re-branding an acquisition under the Alipay name. It comes as Ant is trying to boost brand recognition in several markets where helloPay operates. Last week Ant announced a tie-up with Indonesia’s Elang Mahkota Teknologi (Emtek) to roll out a mobile payments service. Reuters