Thu, 26 January 2017 | 6pm 8 pm | Terrazza, Galaxy Macau
The 13 will have 30 Rolls-Royce Phantoms Luxury hotel Page 16
Friday, January 20 2017 Year V Nr. 1218 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro Markets
HKEX considers opening a new board Page 8
Card terminals
Illegal transactions using UnionPay terminals skyrocket Page 6
Heritage
www.macaubusinessdaily.com
More historical buildings gain government protection Page 16
Results
Luk Fook sales maintain a downward trend Page 6
Spring Festival
Chinese New Year starts to impact liquidity Page 10
Helping hand Subsidies
The amount of subsidies granted to local firms increased remarkably last year, official sources show. Figures from the Macao Economic Services indicate that bank loan interest payments also increased slightly. The economic department approved total subsidies worth MOP397.5 million in 2016. Page 3
Impact from the Mainland
“Personal club” visit The corruption case against Ho Chio Meng reached new heights yesterday when Deputy Chief of the Prosecutor’s Office, Wu Kit I described the facilities on the 16th floor of the Hotline Building. Saunas, massages tables and a variety of luxurious furnishings filled the rooms, one of them named “the corrupted room”.
Real estate The Head of Research at real estate firm Jones Lang Lasalle forecast yesterday that Chinese measures to curb capital outflows will affect the property market in the city. However, he said that the policy will not last too long, as Beijing intends to globalize the use of the RMB. Page 4
Trump Day One
U.S. President Everyone’s eyes are on Donald Trump, who today becomes president of the United States of America. The time to know if his threats and promises will become reality has arrived. In the territory, the head of the American Chamber of Commerce seems to be sure that the change in the office will not deteriorate the business relations between both parties. Pages 7, 9 and 15
Beijing trusts its reserves
Ho Chio Meng trial Page 2
HK Hang Seng Index January 19, 2017
23,049.96 -48.30 (-0.21%) Worst Performers
Want Want China Holdings
+2.86%
Kunlun Energy Co Ltd
+0.33%
Cathay Pacific Airways Ltd
-3.88%
China Merchants Port Hold-
-1.67%
China Resources Power
+1.03%
Bank of China Ltd
+0.28%
China Shenhua Energy Co
-2.70%
Henderson Land Develop-
-1.61%
Ping An Insurance Group Co
+0.74%
AIA Group Ltd
+0.21%
Sino Land Co Ltd
-2.16%
New World Development
-1.55%
China Life Insurance Co Ltd
+0.46%
Industrial & Commercial
+0.21%
Hengan International Group
-1.94%
China Petroleum & Chemical
-1.46%
HSBC Holdings PLC
+0.39%
Sands China Ltd
+0.14%
AAC Technologies Holdings
-1.92%
Li & Fung Ltd
-1.43%
12° 17° 12° 17° 13° 18° 14° 18° 14° 17° Today
Source: Bloomberg
Best Performers
SAT
sUN
I SSN 2226-8294
Mon
Tue
Source: AccuWeather
FX Regulator China’s State Administration of Foreign Exchange says that the country’s FX reserves are ample enough. The regulator added that it also has plans to curb capital outflows, despite the strong pressure it is facing. Page 8
2 Business Daily Friday, January 20 2017
Macau Trial
Ho Chio Meng resting area a personal club Current Deputy Chief of the Public Prosecution’s Office described the resting area on the 16th floor of the Hotline Building as a “personal club” Cecilia U cecilia.u@macaubusinessdaily.com
existence of the resting room during her investigation into the services.
he Deputy Chief of the Public Prosecution’s Office Wu Kit I took the witness stand at yesterday’s trial of the corruption case against former prosecutor-general Ho Chio Meng, describing the resting area on the 16th floor of the Hotline Building as a “personal club”. Instead of finding a place with facilities relating to the provided services, Wu revealed that she was shocked when she entered one of the rooms on the 16th floor and found a place with a dining table, television and bar. Ac c o m p a n i e d b y c u r r e n t prosecutor-general Ip Son Sang and Chief of Office Tam Peng Tong, Wu said they had discovered that the resting room consisted of another inner room with many luxury items such as rosin wood decorations and jade sculptures as well as antique Chinese furniture. Inside the inner room was also found an exercise bicycle and a rowing machine. Aside from the two major rooms, guest rooms were also found by the workers during the refurbishment. Wu indicated that the worker reported to her saying that he had found these rooms behind secret doors, describing one of the rooms as a “corrupted room” due to the presence of a sauna and facilities for massages. The former prosecutor-general complained during Wu’s delivery of her testimony, criticizing her constant use of the term “corrupted room” to refer to the room in question. He said that Wu had made up the term. Wu said that Ho suddenly appeared when she was inspecting a number of envelopes with Ho’s name as the receiver. On his arrival to the resting room, Ho claimed twice that all the items belonged to him, adding that they would soon be removed from the room, according to Wu. Following a request to obtain the latest information about the rented properties by the Prosecution’s Office, the Deputy Chief of the Office said she had discovered that Wang Xiandi, the former consultant at the Prosecution’s Office, was one of the five owners of the rooms on the Hotline Building’s 16th floor. Wu said she only discovered the
The reappearance of rosin wood decorations
T
In the wake of finding the rosin wood decoration in the resting room, Ip requested Ho to return it as Ho was suspected of having confiscated the lost rosin wood decoration that had previously been seized by Customs. According to Wu’s testimony, Ip showed Ho pictures of the rosin wood decoration and requested he return the items. He said the decorations had been moved to his office at the 6th floor, but the former prosecutor-general showed a piece that was not the same as the one found in the resting room.
‘The former prosecutorgeneral complained about the use of the term "corrupted room"’ Wu said she told Ho that she would follow him back to his home to retrieve the rest of the items after he proclaimed that they were at his place of residence. She advised Ho not to make things difficult for them. However, Ho said he was busy and commented that it would be difficult to move the things around. He added that he needed to go to the 14th floor, according to Wu. Ho defended his actions, saying that he had needed to meet the commissioner of the Commission Against Corruption (CCAC) that day, so he was not able to go home and retrieve the wood. Later that night, after his meeting with Ip and Wu, Ho indicated that he had retrieved the wood and returned it to the 5th floor of the Hotline Building. He said during the trial that he had signed proof of having returned the wood, adding that it was different from Wu’s testimony and indicating that the wood appeared mysteriously outside the document room. Meanwhile, Judge Lai Kin Hong questioned Ho’s right to access items
from a smuggling case, criticizing Ho’s unauthorized actions when he was not the in charge of the case. Ho said he had the right since he was the head of the Prosecution's Office. However, Judge Lai denounced Ho for his ignorance of the law, stating that one should provide a written record to examine items from any case.
Overly expensive services
During the second part of yesterday’s hearing, Wu revealed the comparison in the prices between the current service contracts and the ones that were ongoing during Ho’s tenure. Wu said the former 24 types of services have been reduced to seven, noting that some of these services are now being delivered by companies that were previously sub-contractors. “We are now following the law by asking three different companies to provide the services,” said Wu. She explained that, for instance,
the previous company which was providing maintenance services for air-conditioners quoted MOP62,000 (US$7,759) per month, which is 67 per cent higher than the current contract price. Meanwhile, Prosecutor Chan presented evidence of the official cancellation of four firms created by Wong Kuok Wai and Mak Im Tai within two days of the end of their contracts with the Prosecution’s Office. Ho declared that he had received a letter about the company that has now been awarded the contract to refurbish the current Prosecution's Office, stating that the company was formerly operating a business selling decorations and furniture. He claimed that the letter revealed that the director of the company had close relations to one of the high level officials in the Prosecution's Office. Prosecutor Chan indicated that the letter was nowhere to be found in Ho’s office. The trial will continue today.
Politics
Guangdong: enhanced co-operation with MSAR The acting governor of Guangdong Province, Ma Xingrui said the province undertook in-depth measures last year regarding the co-operation framework agreements between Macau and Hong Kong, broadcaster TDM Radio reported yesterday. These measures aim to deepen the free trade of services, provide innovative customs clearance systems, as well as advance the construction works for the borders for the Hong Kong-Zhuhai-Macau Bridge (works picture) between the two cities, according to Mr. Ma
The official was speaking during the fifth meeting of the twelfth National People’s Congress (NPC) of Guangdong Province. He added that this year would be an important year for the country’s thirteenth Five-year Plan. The provincial acting head also pointed out that the province’s GDP amounted to RMB7.93 trillion (MOP9.25 trillion/ US$1.16 trillion) last year, an increase of 9 per cent year-on-year, and predicted that the province’s GDP annual growth would narrow to 7 per cent this year. A.L.
Business Daily Friday, January 20 2017 3
Macau
Financial aid
Bank loan interest subsidies slightly up in Q4 For the whole year of 2016, the total amount of subsidies granted by the MSAR government to local private firms recorded a significant increase of nearly 36 pct y-o-y Kam Leong kamleong@macaubusinessdaily.com
M
acaoEconomicServices (DSE) granted a total of MOP113.1 million (US$14.1 million) to subsidise bank loan interest payments of local companies during the fourth quarter of the year, a slight increase of 1.62 per cent from MOP111.2 million for the previous quarter. According to the latest official data
released by DSE, it received a total of 34 applications for such subsidies and gave green lights to 28 requests during the quarter. The subsidies were approved under the Bureau’s “Interest Subsidized Scheme on Bank Loans to Enterprises”. The scheme, implemented in 2003 and updated in 2009, aims to provide a maximum of 4 per cent interest subsidies for local enterprises’ bank loans of between MOP300,000 and MOP10 million, while the maximum subsidized
period is four years from the date of loan repayment.
Annual amount soars
For the whole year of 2016, the economic department approved total subsidies of MOP397.5 million via the scheme, an increase of 35.8 per cent compared to MOP292.8 million for the whole year of 2015. A total of 104 applications were filed with the department for the aid during the year, while DSE approved 98 requests. The utilization rate of the approved subsidies, meanwhile, reached 66.3 per cent for last year, a growth of 17.5 percentage points from that of 48.8 per cent for 2015. In terms of sectors, 28 companies engaged in the transport and
warehouse industry received subsidies of some MOP75.5 million during the year, accounting for 19 per cent of the total, making the sector the biggest beneficiary of the scheme. In addition, some 13 firms engaged in wholesale businesses were granted some MOP69.5 million last year, occupying 17.5 per cent of the total, followed by 14 companies running restaurants and hotels, who were given some MOP59.9 million in subsidies, accounting for 15.1 per cent of the total. Other major beneficiaries of the scheme were those engaged in construction and public works, and retail businesses, which were awarded some MOP45.7 million and MOP43 million in the year, representing 11.5 per cent and 10.1 per cent of the total, respectively. F u r th e r m o r e, si x l o c a l manufacturers of food, beverages and cigarettes were approved subsidies of some MOP37 million, accounting for 9.3 per cent of the total.
4 Business Daily Friday, January 20 2017
Macau Opinion
Pedro Cortés*
The Mountain Pioneer I had the opportunity to attend the opening of the Banco Nacional Ultramarino (BNU) Branch on Hengqin Island last Wednesday. It is, as well pointed out by Mr. Pedro Cardoso, CEO of BNU, the first Macau bank to have a presence there, the first one to be authorized to trade in Chinese yuan and the first international bank to have a presence in the Free Trade Zone of Hengqin. The establishment of the bank will help, first, the Macau companies and individuals who already have their accounts with BNU (around one third according to Mr. Cardoso), as well as other players of the Portuguese-speaking countries. It is an outstanding achievement of the Portuguese bank, which is having a tough time with its parent bank’s management. Nonetheless, BNU in Macau is synonymous with excellence, and the expectations are that this will continue to be the case on the other side of Cotai. For those who have never visited Hengqin, it is important to understand that the new development area will have sustainability, space, well-designed and managed traffic, and a new concept of a green city. Everything that Macau should have been after 2002 is there as an example. It is never too late to take on best practices, and the hope is that Macau officials will understand that in time to make our city great. It is extraordinary that for the banking business, we have people with the vision of the Executive Committee of BNU in the person of Mr. Cardoso, who, after a few years in the office can speak fluent Mandarin, something that all of us should take as an example. Language is still a barrier for some of our residents, and that should change with future generations. Initiatives such as those of BNU give value to the Portuguese State, the sole shareholder of Caixa Geral de Depósitos, who in turn is the owner of BNU. For the Monetary Authority of Macau, it seems that this pioneer will have followers, as there might be more institutions in the pipeline to open an office on our neighboring island. The integration of 2049 has started and Macau residents and corporations will perceive that and look to Hengqin as a new opportunity that will not come again in their lifetimes. Are their minds prepared for it? Well, the Government will provide the conditions for it to be a success, the same way the Mainland Government seems to. *lawyer and frequent contributor to this newspaper.
Joe Zhou, the regional director and the Head of Research of Jones Lang Lasalle (JLL) in China Real estate
JLL: capital controls to pressure local property market The regional director and Head of Research of JLL in China expects the city’s property market, among other sectors, will be affected most by this recent policy Kam Leong kamleong@macaubusinessdaily.com
C
hina’s capital control policy may give headwind to the recovery of the city’s property market, even though the policy is expected to only be a short term one, said Joe Zhou, the regional director and the Head of Research of Jones Lang Lasalle (JLL) in China. Recently, Mainland Chinese regulators announced the implementation of several measures to monitor the purchase of overseas properties by the country’s institutions. “I think the residential sector [of the Macau market] is going to be affected the most [by the policy], because there is a certain percentage of home buyers in Macau actually from Mainland China,” said Mr. Zhou. The JLL regional head was the key speaker at a luncheon presentation entitled “The effects of Chinese investments on Macau property market” jointly organised yesterday by the American Chamber of Commerce in Macau (AmCham), the French Macau Business Association (FMBA) and the British Business Association of Macao (BBMA). Speaking to reporters on the sidelines of the event, the property agent said the impact of the policy is already being seen in overseas markets. “We [have] actually [heard] people from Mainland China complaining now that it’s really difficult to make a transfer of money [to outside the country], so now it’s impacting not only Macau, but it’s also impacting Hong Kong, it’s impacting U.K., and it’s impacting the U.S,” he said.
Short-term policy
Nevertheless, he believes the policy will not last for long given the fact
that the country ultimately aims to internationalise its currency, the renminbi. “In the long-term, the Chinese government still wants the RMB to be internationalised. So it still wants to encourage Chinese investors to go overseas. This is the target,” the JLL research head claimed. “In the short-term, because of the pressure of RMB depreciation, as well as to manage the currency, that’s why they have stopped capital from flowing outside,” he added. “But in the long term, we can still expect Chinese buyers to be active globally.” In fact, during his speech, Mr. Zhou pointed out that the slowdown in China’s GDP may also put the city’s property market recovery at risk. In addition to the capital controls, economic volatility, uncertainty regarding China’s other policies and expected increases in interest rates this year will also affect the local real estate market, the property agent said. However, he added that it is not all bad news, pointing out that the city’s solid underlying fundamentals, its further integration with the region after the completion of the Hong Kong-Zhuhai-Macau Bridge, as well as driven demands from equity instead of debt will all be tailwinds for the recovery of the property market.
Hengqin market
Asked by Business Daily whether the policy would instead shift the capital of investors to Hengqin, which is deemed the “back garden” of the MSAR, Mr. Zhou, however, pointed out this is not likely to happen. “Actually we’re seeing most of
the capital chasing the very limited assets in tier-one cities. Overall speaking, Zhuhai or Hengqin, as two-tier or tier-three cities, we are seeing investors trying to get away [from] because of the rising risks,” he pointed out. The lack of support for Hengqin island’s massive supply and the changes in buyers’ attitudes can explain why, the regional head said, indicating that a lot of Chinese realestate buyers are still more interested in the markets of tier-one cities due to the much bigger size of their economies and markets. “Overall speaking, I think people are now not really chasing hot picks but fundamentals. If we look at the fundamentals of Hengqin at the moment, it’s not particular good,” he said. “Especially when GDP starts to calm down, people are more rational in investment and they would again look at the fundamentals, instead of speculations based on some news and policies,” the agent added, predicting that capital is not likely to end up in Hengqin.
Land auctions
During the presentation, in response to a question from the chairman of the Amcham Macau, Paul Tse See Fan, Mr. Zhou stated that if Macau was to hold future public land auctions, this would certainly attract more capital to the MSAR. “If they open up land auctions, this will definitely attract a lot of capital from the mainland and developers. They are keen to diversify their investments into Hong Kong, into Macau and into other overseas markets,” Mr. Zhou told reporters on the sidelines of the event. On the other hand, he added that this would also drive up the city’s housing prices. “I think [these] capital will drive the prices of the land. It is probably not good for the local housing market and local people will complain about housing prices rising so fast.”
Business Daily Friday, January 20 2017 5
Macau Markets
Standard Chartered Bank listed in Hong Kong
Kong Stock Exchange, according to the company’s filing with the Exchange on Wednesday. The permission British multinational came into effect yesterday. banking and financial services company Standard The company made the Chartered PLC announced application for an initial that the company has been fixed rate of 7.75 per cent as granted permission to deal a debt issue to professional investors only. A.L. in securities on the Hong
Gaming
Baccarat deals
G
aming t e c h n o l o g y d ev e l o p e r S c i e n t i f i c Games Corporation has acquired Canadian gaming technology company DEQ Systems Corp, according to a company release. “The addition of DEQ’s
player-favorite and high-performing library of table games, table progressives, and random bonusing systems, including EZ Baccarat and Progressive Pai Gow Poker, will enhance our recurring revenue base,” stated Scientific Games’ Group Chief Executive of Gaming, Derik Mooberry.
In a previous release in September of 2016, the company announced that it had reached a definitive agreement for DEQ’s purchase for a cash payment of C$0.38 (MOP2.28) per share. According to the company release, DEQ finished the whole of 2016 with generated revenue of C$9.5 million, and gross profit of C$8.1 million. The company representative also noted that one valuable asset was the purchase of EZ Baccarat, a baccarat
brand for live and digital tables, which is stated as being present in over 800 table games in 150 casinos internationally. Scientific Games has four representative offices in the MSAR, the only region in Asia-Pacific where the company is present. The group develops proprietary table games, table progressives, electronic table systems and utility products for casinos. N.M.
Leasing
18 social-housing shops open tender for leases A total of 18 shops located in the social housing project Ip Heng building in Seac Pai Van will be opened for leases through a public bidding process on March 14, according to a press release published by the Housing Bureau yesterday.
One of the shops will be for the purpose of installing and maintaining gas stoves and the sale of ancillary equipment. Three others will be used for restaurants, while two others could be rented out to takeaway eateries.
The other 12 shops are set aside for the purpose of retail and service industries. According to the Bureau, the leasing contracts will be awarded to bidders offering the highest bids on the bidding day.
The largest shop in the tender occupies about 134 square metres, with a base price for bidding set at MOP42,000 (US$5,257) per month, while the smallest shop only occupies some 36.5 square metres, with a minimum monthly rent set at MOP6,000. Applications can be submitted until February 28. A.L.
Gaming
Retail
Delta Corp granted license to operate Sikkim casino
Asia Pacific boosts Burberry’s Q3 revenue
The company is ready to start its casino operations Delta Corp Ltd, a listed Indian monopoly gaming company, is planning to open a new casino in the north-eastern state of India, Sikkim, after successfully receiving a license to operate casinos, according to a report published by GGRASIA yesterday. The company was granted a provisional license from the Indian government in July to operate casinos, according to the company’s filing with the Bombay Stock Exchange on Tuesday. The company now plans to open its casino facility inside the Denzong Regency Hotel located in the capital city of Sikkim. According to the company’s filing dated July 26, 2016, “with reference to issue of a provisional gaming license for Sikkim, we would like to inform you that the company … has been issued a license for operations of a casino in Gangtok, Sikkim, under
the Sikkim Casino (Control & Tax) Act, 2002,” The company said it is ready to begin its casino operations immediately. The company also announced before that it would operate the new casino as a “live gaming casino” in Sikkim, and expected to create about 150 gaming related jobs from the project. At the moment, Goa and Sikkim are the only two states in India where gaming venues and casinos are allowed to operate. According to a report published by consulting company Global Market Advisor LLC (GMA), there are currently two casinos in Sikkim and 15 gaming venues in Goa. The company reported previously that its consolidated income from July to September last year amounted to US$18.5 million (MOP148 million), an increase of 45.8 per cent yearon-year. A.L.
British luxury retailer Burberry Group Inc said its total retail revenue jumped by 4 per cent year-onyear to 735 million pounds (HK$7 billion/US$905.6 million) for the three months ended December 2016, attributable to improvements in the Asia Pacific market. According to a filing with the London Stock Exchange on Wednesday, the global retailer’s overall comparable sales registered an increase of 3 per cent year-on-year during the quarter. In particular, it said acceleration in Mainland China and improvements in Hong Kong were seen during the
period. According to the filing, its comparable sales in Mainland China reached a ‘high single digit percentage growth’ for the quarter, while Hong Kong’s comparable sales also improved to ‘a low single-digit percentage comparable sales decline.’ The company’s comparable sales in Europe, the Middle East and Africa also registered double-digit percentage growth, with those in the U.K. surging by around 40 per cent year-on-year. However, sales in the Americas dropped by a single-digit percentage, the filing reads. K.L.
6 Business Daily Friday, January 20 2017
Macau UnionPay
UnionPay loses MOP11.38 mln from illegal use in 2016
T
he value of illegal transactions through portable UnionPay terminals in Macau reached MOP4.99 billion in 2016, according to figures provided by the Judiciary Police (PJ) to news agency Lusa. The value, four times higher than in 2015 (MOP1.22 billion), is linked to 25 investigations opened by the PJ over the course of the year, of which 20 were sent to the Public Prosecutors Office (MP). The other five did not go to the MP due to “lack of proof”. The operations in question are
illegal when conducted in Macau through POS (Point of Sale) machines from UnionPay China or provided by third parties, meaning that UnionPay International doesn’t detect whether the percentage to which the transactions are limited is correct, outside of Mainland China. According to the PJ, 53 suspects – 46 men and seven women – were passed over to the MP, of which 14 were local residents, 38 were from the mainland and one was from Hong Kong. The illegal transactions resulted in losses for UnionPay International of
about MOP11.38 million in 2016, as compared to the MOP2.29 million in losses the previous year, according to the data. According to the PJ, in the majority of cases detected last year, men from the interior of China would approach tourists in casinos or nearby to “offer them an illegal money withdrawal service through a POS machine,” but also “some cases were in pawn shops and jewellery stores” which “to reduce expenses and save money, would take advantage of the POS machines from China to also provide
this service illegally,” notes the PSP. The PSP specify that: “some of these shops work in a hectic and more hidden manner, recruiting intermediaries to instigate conversation with the players in the casinos and offer them their money withdrawal services for low fees”. “Once confirming the service, the players are brought inside a vehicle parked outside the casino or next to the shop where one of the POS machines was installed,” note the authorities. Over the course of last year, 66 POS machines from the mainland were confiscated. On January 5, the PJ and the Monetary Authority of Macau (AMCM) announced the first case in 2017 involving illegal transactions through portable terminals, concluding with the dismantling of the “first shop” where the modified machines were located. Afterwards, a series of raids on shops located in different areas of the city yielded 10 POS machines, receipts of transactions conducted, notebooks and HK$7.5 million from eight establishments. During the operation, the authorities found a machine-modifying ‘shop’ inside a jewellery store. According to the PJ, the machines were brought from China to Macau, altered in the ‘shop’ for personal use or for sale, and other shops followed the same illicit practice. The 23 detained – 12 men and 11 women – have been presented to the MP for computer forgery and theft as well as criminal association. Lusa
The filing didn’t reveal any financial figures for sales during the period. Meanwhile, the company’s mainland business experienced a 5 per cent increase year-on-year in samestore sales in the same three-month period, a small recovery after a 23 per cent year-on-year decline in the period between July and August. As of now the group operates 138 shops and 1,325 licensed shops in Mainland China, with the group
having opened nine new self-operated shops and 29 licensed shops in the region. For the three months, the retailer’s overall same-store sales also recorded a year-on-year decrease of 10 per cent, with gold and gem-set jewellery sales falling by 11 per cent and 4 per cent, respectively.
group to suffer declines in the last three months of 2016, with Chow Tai Fook seeing its Hong Kong and Macau operations shrink by 2 per cent yearon-year, as the MSAR operations fell by 7 per cent. The drop in sales was mainly caused by a 17 per cent year-on-year fall in sales of gem-set jewellery in the two special administrative regions, despite an 8 per cent jump in gold sales.
Jewellery
Losing sparkle Luk Fook sees shop sales in Hong Kong and Macau drop 11 per cent year-on-year in the last three months of 2016
Declining luster
The company is not the only jewellery
Hong Kong-listed jewellery company Luk Fook Holdings (International) Ltd. saw its retail business self-operated shop sales dropped 11 per cent year-on-year in Hong Kong and Macau for the three months ended December 31 of 2016, it informed the Hong Kong Stock Exchange yesterday. Between October and December of 2016, the retailer’s same-store sales of gold fell by 12 per cent year-on-year in the two Special Administrative Regions, while that of gem-set jewellery dropped by 5 per cent year-on-year. The company was operating 10 shops in Macau and 47 shops in Hong Kong as of December 31, with no new shops opened in that period, but with one location closed in the MSAR.
Public Tender
Gaming
28 bids for Cotai vehicle inspection center renovation
Another path
The government has received 28 bids for the renovation project of the vehicle inspection centre in Cotai. The works will cover the second to the fifth floors of the building. According to the Land, Public Works and Transport Bureau (DSSOPT), the construction area of the works will occupy a total of 7,500 square metres.
The project includes the addition of a document storage room, a multi-purpose conference room, as well as a reserved area for the inspection centre. The government has mandated the maximum construction period should be no longer than 150 working days. The project is expected to create about 100 job opportunities. A.L.
The executive director, chief financial officer and company secretary of local junket operator Neptune Group Ltd., Stephen Chan Shiu Kwong has resigned from the position he occupied for more than 10 years in order to: ‘pursue a different career path’, according to a Hong Kong Stock Exchange filing. The CFO’s departure was announced in a previous company statement that also detailed
that Lam Yick Man would step in as company secretary and financial controller taking effect from February 1 of this year. The local junket operator posted a HK$202.1 million (US$25.2 million) net loss attributable to owners for the fiscal year ended June 30 of 2016, on the Hong Kong Stock Exchange, on the same day it informed of the CFO’s resignation. N.M.
Business Daily Friday, January 20 2017 7
Macau
Mr. Trump threatening to call China a currency manipulator
Politics & trade
The next four years An AmCham China report details the market in China is tight for American businesses, even before the presidential shuffle Kelsey Wilhelm Kelsey.wilhelm@macaubusinessdaily.com
‘
A
n increasing majority of respondents feel less welcome in China than before’. So reads a report compiled by the American Chamber of Commerce (AmCham) China entitled ‘China Business Climate Survey Report’, which surveyed its members working in around 900 companies and hailing from the U.S., Europe, Australia and Asia. The report, launched just days before the inauguration of President-elect Donald Trump, points out that the ‘majority’ it refers to is 81 per cent, a figure the Chinese Foreign Affairs spokesperson has questioned the accuracy of, stating that U.S. investment in the country increased 52.6 per cent in 2016, year-on-year, and ramming home Xi Jinping’s recent statements at the World Economic Forum (WEF): that China remains open for business. ‘China will keep its door wide open and not close it and hopes that other countries will also keep their doors open to Chinese investors,’ stated the spokesperson, highlighting an earlier statement by Xi about a trade war.
“No one will emerge as a winner in a trade war” Xi Jinping, President of the People’s Republic of China
“Pursuing protectionism is like locking oneself in a dark room,” said the leader at the WEF. “While wind and rain may be kept outside, so are light and air. No one will emerge as a winner in a trade war.” With Trump threatening to call China a currency manipulator and continually promising to bring back jobs to the United States that he insinuates were ‘lost’ to the country, the report focuses on one point Trump hasn’t brought up often: U.S. companies operating in China and the challenges they are already facing. ‘China remains an important market for most multinationals,’ mentions the AmCham report, ‘there is a clear sense that companies are doing what they can to make the most of the situation’. A situation which for
American companies, points out the report, was difficult even before Trump. ‘U.S. companies operating in China know that now they need to fight as hard or harder for sales and profit as they do in other parts of the world,’ facing barriers such as a lack of transparency, investment restrictions and ‘discriminatory barriers to foreign-invested companies,’ notes the report. ‘83 per cent of respondents expect bilateral relations to remain the same or to deteriorate in 2017. The big question for many member companies as 2017 dawns is how the bilateral relationship may affect their business and what steps both governments will take to ensure a positive business environment,’ adds the report.
Futures
Chairman of the American Chamber of Commerce in Macau, Mr. Paul Tse, tells Business Daily that the long-built stability of U.S.-China relations will not be easily upset by one change in office, even for such a high position. “A regional economic co-operation framework comprising bilateral and multilateral arrangements will continue to be viewed by both U.S. and China to be of benefit to the economic progress and stability of the region,” notes Tse, pointing out that “AmChams in the region have worked and will continue to work in the direction of fostering such relationships.” Just last Tuesday, the central government issued a circular notifying its attempt for “a new economic system in China”, with the state council notifying that ‘the government decided to push forward its opening-up policy […] allowing local governments to form favourable policies to support foreign-invested projects that can facilitate employment, economic development and technology innovation, and reduce the costs for the investment and operation of foreign-invested enterprises.’ Joe Biden, vice-president of the United States, speaking at the World Economic Forum noted that: “the impulse to hunker down, shut the gates, build walls, and exit at this moment is precisely the wrong answer. It will not resolve the root causes of these fears – and it risks eroding from the inside out the foundations of the very system that spawned the West’s historically unprecedented success.” With companies surveyed by AmCham China predicting a 6.1 per cent rise in China’s Gross Domestic Product
for next year (as compared to the 6.5 per cent consensus), and facing ‘unclear regulations, inconsistent enforcement, and rising labour costs,’ and China pushing for increased globalization and ‘win-win cooperation’, Trump must figure out how ‘to unite, to prosper, to become stronger’ and create ‘an America that WINS again’ (according to his website) – if China doesn’t stand to win also.
“There is no change to the “One China” policy” Consulate General of the United States in Hong Kong and Macau
One China
According to a recent report by the U.S. China Business Council, quoted by the foreign ministry spokesperson, “bilateral trade with China creates more jobs in the U.S., improves U.S. citizens’ livelihood and secures U.S. edge in the global value chain”. Luckily not all is up in the air, notes Paul Tse, as policy is not determined by one man, noting: “the conduct of U.S. foreign policy is also managed by the U.S. State Department which consists of career diplomats with profound knowledge and a deep understanding of the geopolitical and economic intricacies of the China-U.S. relationship.” These diplomats, so far, are sticking to tradition, with representatives of the Hong Kong & Macau Consulate General of the United States affirming to Business Daily that: “There is no change to the “One China” policy.” For now, regarding potential changes, however the body notes: “we can’t speculate on possible policy changes or their effects”. John Kirby, spokesperson for the U.S. Department of State, reiterated the same message earlier this month, noting: “nothing’s changed” in regards to the policy “or the United States’ support for it”. But regardless of policy, the shifting away of American companies from China has already begun, with ‘a new low of 56 per cent’ of respondents to AmCham China’s survey noting that China was no longer among their top three priority markets for investment, particularly in the Industry and Resources segment, a percentage which has been dropping since 2012. ‘Slower growth, protectionism and decreased dependency’ haunt U.S. companies in China, notes the report, with 53 per cent of respondents stating that foreign companies are treated unfairly verses local companies on
the mainland. Thirty-one per cent of respondents see the investment environment deteriorating: ‘this is the least optimistic member companies have been since we started asking the question in 2011,’ notes the report. Another 24 per cent of respondents in the Technology and R&D sector have a pessimistic outlook for business for the next two years, while only 1 per cent were optimistic. However, of the companies surveyed, if they planned to move 37 per cent of them said they would choose North America as their destination, with only 20 per cent sticking around in ‘Developed Asia’ (including Korea, Japan, Taiwan, Australia) and 50 per cent heading to ‘Developing Asia’ (including India, Vietnam, Thailand, Indonesia etc). Factors such as poor air quality, high cost of living, domestic competitors being more attractive and slowing growth in China’s economy are all affecting surveyed companies when they try to employ or retain talent in China, and 42 per cent of surveyed companies found that finding, hiring and onboarding the right talent was their main concern. So, does Trump really need to start a ‘trade war’ to get what he wants? Fifty per cent of respondents believe that bilateral relations between the U.S. and China will remain the same, while 33 per cent think they will deteriorate. Coupled with the difficult conditions and just 34 per cent of respondents noting that they think China is committed to further opening up it’s market to foreign investment in the next three years, many companies may not need their decisions made for them.
“U.S. companies operating in China know that now they need to fight as hard or harder for sales and profit as they do in other parts of the world” AmCham China, China Business Climate Survey Report Gaming operators in the MSAR contacted by Business Daily did not provide comment by the time this newspaper went to print. Trump’s inauguration will take place at 5pm UTC on the 20th (3:00am on the 21st in Macau). The day will be marked by the ‘Women’s March Macau’, a local chapter of a protest in Washington set to be one of America’s largest. The march will take place at the Venetian.
8 Business Daily Friday, January 20 2017
Greater China Outflows
Beijing says FX reserves ample Despite holdings of U.S. Treasury debt in November fell the most since December 2011 Kevin Yao
C
hina’s foreign exchange regulator said yesterday the country’s forex reserves were ample and it has plans to deal with cross-border capital flows, even as bank forex sales in December climbed to their highest in nearly a year. “In the future, we believe China’s foreign exchange reserves have conditions to fluctuate up or down within a reasonable range,” State Administration of Foreign Exchange (SAFE) spokeswoman Wang Chunying said at a news briefing. China’s foreign currency reserves, by far the world’s largest, fell almost US$330 billion in 2016 to end the year at just over US$3 trillion as authorities struggled to stem capital outflows and shore up the yuan. Chinese banks’ net sales of foreign currency rose in December to their highest since January 2016, according to SAFE data released yesterday, indicating capital outflows remained strong as the yuan hit lows not seen in eight years. Commercial banks’ net sales of foreign currency totalled US$46.3 billion in December, compared with net sales of US$33.4 billion in November, data showed. Net sales were US$54.4 billion in January 2016. For the January to December period, net forex sales stood at US$337.7 billion, down from US$465.9 billion net sales in 2015, SAFE said in a statement on its website.
Pressure on cross-border capital outflows eased somewhat in 2016, SAFE spokeswoman Wang said, adding that SAFE has existing contingency plans to deal with capital outflows. “When the pressure is big from inflows and when the pressure is big from outflows, we have a series of contingency plans... Even if we have plans, we will conduct prudent assessment before we implement them,” said Wang. China holdings of U.S. Treasury debt in November fell the most since December 2011 to US$1.049 trillion, according to data from the U.S. Treasury Department on Wednesday. The pace of China’s selling of
Treasuries is unprecedented. Over the six months through November, China had shed US$194.66 billion of Treasuries and over the previous 12 months, had sold US$215.11 billion. Both are records.
Watching the Fed
SAFE is closely watching the impact from the U.S. Federal Reserve’s expected rate hikes and the dollar’s strengthening, Wang said. The yuan fell around 6.5 per cent against the dollar in 2016, the biggest annual drop since 1994, and expectations for further weakening remain high in the face of a strong dollar. That said, the yuan has strengthened somewhat since the start of 2017 after an abrupt tightening of yuan liquidity in Hong Kong, which traders believe was orchestrated by
Chinese authorities to squeeze investors shorting the Chinese currency. Wang reiterated a long-standing government line that there is no basis for yuan depreciation in the medium and long term.
Key Points China has contingency plans to handle outflows - SAFE Banks’ net forex sales highest since Jan 2016 Forex reserves ample, will fluctuate in reasonable range - SAFE China’s central bank sold a net US$46.1 billion worth of foreign exchange in December. Reuters
Markets
HKEX proposes new board to list companies with different voting rights They are also considering creating a Nasdaq style private market where delisted companies would effectively be tracked Michelle Price
The Hong Kong stock exchange is proposing to launch a new listing venue that would allow companies with different voting rights to go public in the city, in a bid to remain a global listings powerhouse. The proposal comes amid a long debate on Hong Kong’s attractiveness as a listing destination and on corporate governance norms, sparked by Chinese e-commerce giant Alibaba Group’s decision two years ago to make its record US$25 billion IPO in New York, much to Hong Kong’s disappointment. Charles Li, CEO of Hong Kong Exchanges and Clearing Ltd (HKEX), unveiled the proposals at the exchange’s annual media lunch on Thursday. Li said HKEX was exploring a range of issues regarding a potential new board including different shareholding structures: “Is there anyway for us to include those into Hong Kong, and if there is anyway, how do we include that in the new
structure?” Li said the exchange has submitted a draft proposal for the third board to the authorities. HKEX’s previous efforts to allow companies with different voting rights to list on its main board failed to get support from Hong Kong’s securities regulator, the Securities and Futures Commission.
Key Points HKEX has submitted new board proposal to authorities CEO Li says weighted voting rights issue was not settled HKEX considering Nasdaq-style private market to track delisted firms
But Li said regardless of the outcome of the recent debate on the so-called weighted voting rights for stock listings in the city, he has never been explicitly told to keep anything off
the table. “As far as I’m concerned it has not been decided.” Hong Kong, which was the world’s biggest IPO venue last year, has been struggling to attract new economy companies with the bulk of the listing companies concentrated in property and financial sectors. The potential new board proposal is being considered alongside a review of GEM, delisting rules, handling of share suspensions and back door listings.
HKEX is reviewing the holiday trading arrangements for stock connect schemes, with a view to reduce trading risk and increase market liquidity. Li said the exchange was hoping to launch a holistic consultation covering all these issues, but this was yet to be decided. L o n g e r t e r m H K EX i s a l s o considering creating a Nasdaq style private market where delisted companies would effectively be tracked. Reuters
Business Daily Friday, January 20 2017 9
Greater China Health system
In Brief
Wanda considers deeper health-care push with hospitals The number of private hospitals in China surpassed that of public ones for the first time last year Billionaire Wang Jianlin’s propertyto-entertainment conglomerate is weighing a push into private health care in China, tapping into a rapidly growing multi-billion dollar industry in the country. The chairman of Dalian Wanda Group Co. is considering setting up a chain of hospitals, he told Bloomberg News Editor-in-Chief John Micklethwait Wednesday during a panel at the World Economic Forum in Davos, Switzerland. The comments suggest Wang may dive deeper into health care than the partnership his company announced with International Hospitals Group last year, when Wanda said it would invest RMB15 billion (US$2.2 billion) to build three hospitals. The number of private hospitals in China surpassed that of public ones for the first time last year, providing an opportunity for Wanda to leverage the commercial properties it already owns. Wang said people in China are pursuing healthier lives and Wanda has the capability to tap into the emerging private health-care industry. “Our biggest advantage is owning a chain of hundreds of commercial complexes, which means our team has the capability,” Wang said. Wang said a change of Chinese policies have allowed private enterprises to enter the health-care
sector. The government aims to expand the health-services industry to more than RMB8 trillion by 2020. Revenue from China’s private hospital industry will probably triple to US$90 billion by 2019, according to estimates by market research firm Frost & Sullivan. China has encouraged private investment since at least 2009 to complement its overcrowded public system, and in recent years the government has provided more concrete policy support such as freeing up doctors from
public-hospital jobs, and treating private and public outfits equally in terms of licensing, insurance coverage and academic research.
Digital access
Wang also highlighted his onlineto-offline business -- called FFan -- which brings digital access to brick-and-mortar merchants. Unlike the current e-commerce businesses that thrive as traditional retailing declines, FFan will let traditional merchandisers grow after linking them with the internet, he said. Wanda had 150 million active members and signed partnerships with almost 1,800 large commercial centres, and many other small merchants, movie theatres, hospitals and hotels, according to a statement from the company. Wang said he expects the business will make profit next year. Bloomberg News
U.S. Commerce nominee critic with Mainland trade stance Ross said that state-owned enterprises in China were a particular problem that needed to be dealt with Billionaire investor Wilbur Ross, U.S. President-elect Donald Trump’s choice for commerce secretary, voiced sharp criticism of China’s trade practices on Wednesday, telling senators he would seek new ways of combating them. In his confirmation hearing, Ross also said that renegotiating the North American Free Trade agreement with Mexico and Canada would likely be the Trump administration’s first priority, calling it a “very, very early topic.” Ross, who made his fortune turning around troubled companies in steel, auto parts, textiles and other industries, called China the “most protectionist” country among large economies, with high tariff and non-tariff barriers to imports. The 79-year-old billionaire vowed to level the playing field for U.S. companies competing with Chinese imports and those trying to do business in China. Chinese officials, he said, “talk much more about free trade than they actually practice. We would like to levelize that playing field and bring the realities a bit closer to the rhetoric.” Ross said that state-owned
Legendary Entertainment CEO steps down Thomas Tull, the founder and chief executive of Legendary Entertainment has stepped down, the firm said in a statement to Reuters yesterday, a year after the Hollywood studio was bought by Chinese conglomerate Dalian Wanda for US$3.5 billion. Dalian Wanda insider Jack Gao will for now take the helm at Legendary, the producer behind hit movies like “Jurassic World” and the Batman “Dark Knight” trilogy, putting the Chinese firm more directly in control of the U.S. studio. Bitcoin
BTCC says operating normally The head of major Chinese bitcoin exchange BTCC said yesterday the platform was operating normally and that it had stopped offering margin loans last week alongside its competitors Huobi and OkCoin. Chief Executive Bobby Lee also told Reuters that the company had yet to receive any official document from China’s central bank, amid state media reports that the People’s Bank of China (PBOC) had found “hidden risks” in the BTCC exchange after a probe. The central bank launched spot checks on BTCC, Huobi and OkCoin on Jan. 11 to look into a range of possible rule violations.
Protectionism
David Lawder
Strategy
enterprises in China were a particular problem that needed to be dealt with, charging that up to one-third have never made a profit and this has fuelled overcapacity that has led to dumping of products such as steel and aluminium. “They’re being kept alive by stateowned banks. To me that looks and feels and tastes a lot like artificial subsidies,” he said, adding that the Commerce Department will be “very scrupulous” in identifying unfair subsidies that require countervailing duties. Ross did not specifically mention Trump’s threats to levy punitive tariffs on Chinese goods imported into the United States but said countries that dump products below costs or fail to provide a fair trading field should be “severely punished.” He said he would pay particular attention to sectors in need of anti-dumping tariffs, including steel and aluminium. The Commerce Department may initiate some anti-dumping and anti-subsidy cases on its own, rather than relying on private companies to build the cases, to shorten the processing time, he said. Ross also was critical of moves by Chinese firms to buy control of U.S. entertainment and distributors when
Beijing was denying such opportunities to U.S. firms in China. Trump has criticized China’s trade practices and NAFTA, accusing both of causing millions of manufacturing job losses in the United States. The president-elect has pledged to renegotiate NAFTA to be more favourable to U.S. manufacturers or leave the 23-year-old trade pact. The Toronto Globe and Mail newspaper reported on Wednesday that Ross had informed Canadian officials that a formal request for negotiations would be sent within days of Trump’s inauguration on Friday, with rules of origin a priority. Ross said it was possible for the U.S. economy to grow faster than the Obama administration. It could achieve about 3 per cent growth by adopting Trump’s proposals to roll back some business regulations, expand domestic energy production, reduce U.S. trade deficits and rebuild crumbling domestic infrastructure, he said. Ross also said more wireless telecommunications spectrum, sales of which are managed by the Commerce Department, was needed by the private sector. He pledged to press government and military agencies that control it to release what they do not need. “I am not anti-trade. I am protrade,” Ross said. “But I am pro-sensible trade, not trade that is to the disadvantage of the American worker and to the American manufacturing community.” Ross disclosed on Tuesday that he would sell investments valued at up to about US$300 million, including his stake in his private equity firm, to avoid conflicts of interest as commerce secretary. The position’s responsibilities range from trade enforcement and economic data publication to telecommunications auctions and weather forecasting. Reuters
Commerce
Alibaba’s Ma says no chance of trade war China and the United States are not about to be drawn into a trade war, Alibaba Executive Chairman Jack Ma said on Wednesday at the World Economic Forum (WEF) in Davos. “China and (the) U.S. will never have a trade war. Give Trump some time. He’s open minded,” Ma told a panel at the meeting of business and political leaders in the Swiss Alps. Ma met U.S. President-elect Donald Trump last week and laid out the Chinese e-commerce giant’s new plan to bring one million small U.S. businesses onto its platform to sell to Chinese consumers over the next five years.
Trade
U.S. finalizes finding of dumping from China The U.S. Commerce Department said on Wednesday it had made a final finding of dumping of certain imports of carbon and alloy steel cut-to-length (CTL) plate from China. The department said in a statement that it has set a final dumping margin of 68.27 per cent for Jiangyin Xingcheng Special Steel Works Co Ltd, the only respondent in the case, “for the China-wide entity’s failure to cooperate.”
10 Business Daily Friday, January 20 2017
Greater China
Spring festival
Mainland sees fierce pre-holiday liquidity scramble Households and companies usually withdraw large amounts of cash from banks ahead of the week-long New Year holiday
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hort-term funding costs in China shot to their highest in nearly 10 years yesterday on fears that liquidity was sharply tightening heading into the long Lunar New Year holidays. The sudden surge in funding rates ahead of one of the heaviest cash demand periods of the year has forced traders with short positions against the yuan to bail out of their positions. That has led to a solid strengthening in the beleaguered currency this week, though it dipped yesterday on signs that state banks may be offering some additional yuan supplies and after an overnight bounce in the U.S. dollar. Spot yuan was trading at 6.8556 to the dollar by midday, 124 pips weaker than the previous close and only 0.02 per cent stronger than the midpoint guided by the central bank. But it is up more than half a per cent so far this week, on course for its best week since July. It has firmed around 1.2 per cent so far this year as Chinese authorities try to cool market expectations of further declines. “The market has calmed down slightly. (But) we have U.S. President-elect Donald Trump’s inauguration in two days and that may create volatility again,” said a trader at a Chinese bank in Shanghai. Households and companies usually withdraw large amounts of cash from banks ahead of the week-long New Year holiday, which starts on
Jan. 27. This year, the holiday also extends over the month-end, when corporate cash demand increases and some tax payments are due, adding to heavy demand. While liquidity always tightens in China ahead of the holiday, and the People’s Bank of China (PBOC) routinely steps up its money injections ahead of the break, traders were spooked when the central bank unexpectedly decided not to rollover maturing medium-term lending facility (MLF) loans on Wednesday. The onshore overnight implied deposit rate for yuan touched a high of 22.099 per cent in early trade yesterday, compared with the previous close of 22.035 per cent. Levels are now the highest since data became available in April 2007. On Tuesday, the rate ended at 4.357 per cent. The volume-weighted average rate of the benchmark seven-day repo traded in the interbank market, considered the best indicator of general liquidity in China, was 2.5115 per cent at midday, compared with the previous close of 2.7607 per cent which was the highest since July 2015. The official midpoint was fixed at 6.8568 per dollar prior to the market open, 43 pips weaker than the previous fixing of 6.8525. Analysts said yesterday’s fixing was set at a firmer level than their models had suggested.
Chinese authorities are widely believed to have been involved in a sharp spike in offshore yuan funding costs earlier this month to keep the currency from breaching the psychologically important 7 to the dollar level. But it is still trading at more than eight-year lows. The unexpectedly sharp onshore cash pinch comes despite central bank injections of a net RMB1.035 trillion (US$150.87 billion) through open market operations so far this week, nearly 10 times the amount it injected last week.
‘Traders said the crunch could extend past the holiday, noting more open market repos will mature in early February’ “Companies’ quarterly payments starting Jan.16 and seasonal cash demand are the key factors draining money out,” said a liquidity trader at a Chinese bank in Shanghai. Some market players said the support by the central bank was barely meeting increased demand in the market. “The PBOC’s injection is not enough,” said Gu Weiyong, chief investment officer at bond-focused hedge fund Ucom Investment Co. Gu added that the situation was not being helped by perceptions that regulators would not mind seeing
a rise in financing costs this year if it encourages debt-laden Chinese companies to reduce their heavy debt burdens. The absence of a MLF rollover on Wednesday has also “caused a certain impact”, CITIC Securities said in a note yesterday. Two batches of medium-term lending facility loans were maturing on Wednesday and yesterday totalling RMB216.5 billion, according to Reuters calculations. “We hope the central bank will roll over the maturing MLF loans, but no one knows whether it will do it or not,” said the liquidity trader. Traders said the crunch could extend past the holiday, noting more open market repos will mature in early February. Adding to the squeeze, state banks have sold large amounts of dollars and bought yuan in recent months to help shore up the falling currency, draining funds out of money markets. Commercial banks’ net sales of foreign currency rose in December to the highest since January 2016, the foreign exchange regulator said yesterday. The central bank sold US$46.1 billion of foreign exchange in the same month. In offshore markets, the yuan was 0.3 per cent firmer than onshore at 6.833 per dollar. Highlighting investors’ strongly bearish views on the yuan, offshore one-year non-deliverable forwards contracts (NDFs) traded at 7.105, 3.5 per cent weaker than the midpoint. NDFs are considered the best available proxy for forward-looking market expectations of the yuan’s value. Reuters
Business Daily Friday, January 20 2017 11
Asia Employment
Australia jobless rate ticks up The Reserve Bank of Australia has highlighted uncertainty over the labour market as a key concern for 2017 Wayne Cole
A
ustralian employment rose moderately in December as full-time jobs increased for a third straight month, though the unemployment rate still ticked up to its highest since June as more people went looking for work. Yesterday’s data from the Australian Bureau of Statistics showed employment rose a net 13,500 in December, just topping forecasts of 10,000 and a third month of gains.
The Reserve Bank of Australia has highlighted uncertainty over the labour market as a key concern for 2017. A slowdown in hiring might just be one of the few developments alarming enough to justify another cut in interest rates. So far, futures markets have all but priced out the chance of another easing and instead imply a one-in-three chance rates might be hiked at the end of the year.
Leading indicators of labour demand are generally positive. The government’s measure of job vacancies has been on the rise, hitting the highest since mid-2001 in the three months to November. Vacancies were up almost 9 per cent on a year earlier at 182,000, with even the mining sector showing signs of life. Other sectors enjoying jobs growth have been construction, transport, communication, finance education and, notably, healthcare. The latter is now the biggest employer accounting for 13 per cent of Australia’s 12 million jobs and is only set to expand as the population ages.
That trend, however, has exacerbated a shift away from full-time work given that almost half of all health jobs are part-time, the biggest share of any sector. “It is symptomatic of the cost control focus of both the private and public sectors,” said Michel Workman, a senior economist at CBA. “It also shows up in the 20-year low in national wages growth of just under 2 per cent a year.” “One of the consequences is the relatively weak household income growth that produces subdued consumer spending growth, especially in parts of retailing.” Reuters
Key Points Employment +13,500 in Dec vs forecast +10,000 Jobless rate edges up to six-month high at 5.8 pct Full-time work extends welcome comeback The unemployment rate edged up a tenth of a percentage point to 5.8 per cent, though that remains within the tight range that has held for the past year. One bright spot was that full-time jobs rose another 9,300 on top of November’s hefty 38,400 jump, bringing gains made since September to a healthy 95,000. That went some way to reversing a shift to part-time work that bedevilled the labour market for much of last year.
Energy
Indonesia overhauls system for future oil, gas contracts The first contract under the new scheme was signed on Wednesday Indonesia has adopted a new scheme for future oil and gas production sharing deals so that contractors shoulder the cost of exploration and production, rather than being reimbursed by the government. Under the shake-up, flagged late last year, contractors will retain a bigger portion of the oil and gas they recover in return for paying more upfront costs. The shift, designed to ease the
burden on Jakarta’s budget, will only apply to new contracts and will not disrupt existing agreements using the current cost-recovery system. Big global firms such as Chevron, Exxon Mobil and Total operate in Indonesia, but the country has struggled to attract fresh investment and to develop new fields. Speaking at a press conference late on Wednesday, Energy Minister Ignasius Jonan said the base split for
gas production would be 52 per cent for the government, with the rest going to a contractor. For oil output, the government will get 57 per cent. Contractors could be awarded a bigger share of production if conditions make working on a field more difficult and expensive, he added. Under the previous system, the government received a share of 70 per cent for gas and 85 per cent for oil. The first contract under the new scheme was signed on Wednesday with PT Pertamina for the Offshore North West Java (ONWJ) block, in which the government gets 37.5 per
cent of any gas and 42.5 per cent of oil. “This gross split (mechanism) means all expenses would be the responsibility of the contractor, no longer burdening the state budget,” Jonan told reporters. Pertamina’s chief executive Dwi Soetjipto said the increased split for the ONWJ block would not cover its costs, but that he hoped to retrieve them by “making efforts on efficiency”.
Key Points Contractors to shoulder costs on new oil, gas deals But will retain more output from fields Shift will not apply to existing deals Move was flagged late last year Last year, oil and gas contractors operating in Indonesia asked for more than US$11 billion reimbursement for costs, much bigger than the US$8.4 billion initially planned. Indonesia’s crude oil output peaked at around 1.7 million barrels per day in the mid-1990s. But with few significant oil discoveries in Western Indonesia in the past 10 years, production has fallen to roughly half that as old fields have matured and died. The industry is a vital part of the Indonesian economy, but its contribution to state revenue has dropped from around 25 per cent in 2006 to an expected 3.4 per cent this year, according to data compiled by consulting firm PricewaterhouseCoopers. Reuters
12 Business Daily Friday, January 20 2017
Asia Scandal
Samsung chief staves off arrest The office has accused him of paying multi-million dollar bribes to President’s confidant Joyce Lee and Ju-min Park
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South Korean court yesterday dismissed an arrest warrant against the head of Samsung Group, the country’s largest conglomerate, amid a graft scandal that has led to the impeachment of President Park Geun-hye. But the reprieve for Jay Y. Lee, 48, may only be temporary, as the special prosecutor’s office said it would pursue the case. Lee, who has led Samsung since his father, Lee Kun-hee, suffered a heart attack in 2014, was still likely to face the same charges of bribery, embezzlement and perjury, legal analysts said, even if he is not detained. Lee left the Seoul Detention Centre carrying a white shopping bag and
climbed into a car without talking to reporters, having been held overnight as the court deliberated whether to grant the arrest warrant. The special prosecutor’s office said it would be continuing its probe but had not decided whether to make another arrest warrant request, and the setback would not change its plans to investigate other conglomerates. Spokesman Lee Kyu-chul said the prosecution was unconvinced by the Samsung chief’s argument that he was a victim of coercion due to pressure from Park. The spokesman also said Samsung Group Vice Chairman Choi Gee-sung had been classified as a suspect on suspicion of bribery, but did not elaborate further. Two other Samsung officials, Choi’s deputy Chang Choong-ki and Samsung Electronics
executive Park Sang-jin, were also under investigation. The office has accused Lee of paying multi-million dollar bribes to Park’s confidant, Choi Soon-sil, the woman at the heart of the scandal, to win support from the National Pension Service for a controversial 2015 merger of two Samsung Group affiliates. The merger helped cement Lee’s control over the smartphones-to-biopharmaceuticals business empire. He has denied wrongdoing. The judge said in a statement on his ruling that an arrest was not necessary - for now. “After reviewing the contents and the process of the investigation so far ... it is difficult to acknowledge the necessity and substantiality of an arrest at the current stage,” he said. Lee Jung-jae, a lawyer and former prosecutor, said he didn’t think the special prosecutor would push for Lee’s detention again. “They probably already have as much evidence as they could gather,” he told Reuters. “They will indict him eventually, but without detention.” Samsung said in an emailed statement that it appreciated “the fact that the merits of this case can now be determined without the need for detention”. The group’s flagship, Samsung Electronics, is the world’s biggest maker of smartphones, flat-screen televisions and memory chips.
Stripped of powers
Lee Jae-yong, vice chairman of Samsung Electronics Co., gets into his car to leave a detention centre south of Seoul yesterday. Lusa
Making its case for an arrest warrant on Monday, the special prosecutor’s office accused Lee of paying bribes totalling 43 billion won (US$36.70 million) to organisations linked to Choi to secure the 2015 merger of Samsung C&T Corp and Cheil Industries Inc. Park, 64, was impeached last month by parliament over the influence-peddling scandal. If the decision
is upheld by the Constitutional Court, she will become South Korea’s first democratically elected leader to be forced from office early. Both Park, who remains in office but stripped of her powers while the court decides her fate, and Choi have denied wrongdoing. The special prosecutor’s office said on Tuesday it had evidence that Park and Choi shared profits gained through bribery payments, but did not elaborate.
Key Points Korean court turns down arrest warrant for Samsung chief Lee had been accused of bribery, embezzlement, perjury Samsung says it is pleased Lee does not have to be detained Key Samsung shares open higher after ruling This week, the special prosecutor indicted the chairman of the National Pension Service, the world’s third-largest pension fund, on charges of abuse of power and giving false testimony in relation to the deal. Yesterday’s court ruling angered many, including members of the leftwing opposition Democratic Party, which said the decision ran counter to public sentiment. Samsung and its leader have been dogged by protests in recent weeks as the graft probe advanced, with some calling for Lee’s immediate arrest. “The law is not equal for all,” one South Korean remarked on web portal Naver. “The only thing that has changed is that he won’t be detained now,” commented Park Jung-hoon, a fund manager at HDC Asset Management, adding that uncertainties were likely to linger. Reuters
Debt
Strong demand lets Australia have record bond sale Around 70 per cent of the new paper was sold in the country Cecile Lefort
Australia sold a record A$9.3 billion (US$7 billion) of debt this week thanks to strong demand, with investors unfazed by risks the nation might lose its triple-A rating due to protracted budget deficits.
“We had not seen that in a while and shows their interest for the five-year part of the curve” Robert Nicholl, chief executive of the Australian Office of Financial Management With around 60 investors on board, the five-year offer received more than A$15 billion in bids at the final price, allowing the government to pay a margin at the lower end of the marketing range. The issue was priced at 23 basis
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points over the yield implied by 3-year bond futures, and the initial spread was 22 to 25 basis points. The bonds mature on Dec. 21, 2021. “We thought A$7 billion to A$8 billion would be a reasonable size, so it was a good outcome,” Robert Nicholl, chief executive of the Australian Office of Financial Management (AOFM) said yesterday. AOFM, the federal government’s funding agency, hired ANZ Bank, Citi,
UBS and Westpac to jointly manage the sale. The offer even beat the government’s A$7.6 billion 30-year bond debut in October, then a record. Around 70 per cent of the new paper was sold in Australia, the AOFM said. By type of investors, banks accounted for more than half, fund managers took 28 per cent of the total issue and hedge funds 12 per cent. Nicholl said he was particularly pleased with participation of foreign central banks, which took 4 per cent of the book. “We had not seen that in a while
and shows their interest for the fiveyear part of the curve,” he said.
Still attractive
About 30 per cent of the bonds were sold offshore, with Asia taking the lion’s share, followed by Europe, the UK, North America and Japan. Supporting demand was the issue’s attractive yield of 2.24 per cent, far above sub-zero returns in Japan, Germany and France and just 0.5 per cent in the UK. James Alexander, head of fixed income at Nikko Asset Management, said the issue size showed investors shrugged off the danger of a sovereign ratings downgrade. Last year, S&P Global Ratings warned of a downgrade to Australia’s coveted triple-A credit rating if the government couldn’t put its fiscal house in order by May, when the annual budget is unveiled. “Even if it is downgraded to double-A plus, it is a minor difference,” Alexander said. “Australia is still an attractive place to invest with a strong and diverse economy, the rule of law and a good institutional framework.” Alexander, who manages A$11 billion in fixed income, said he thought it likely the rating would be cut after May. Australia has A$466 billion of debt outstanding and is one of only a dozen countries rated triple-A by S&P and Moody’s. Reuters
Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Nelson Moura; Annie Lao; Kelsey Wilhelm; Matthew Potger; Cecilia U; Sheyla Zandonai Group Senior Analyst José I. Duarte Design Aivi N. Remulla Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors Albano Martins; James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@projectasiacorp.com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com Online www.macaubusinessdaily.com
Business Daily Friday, January 20 2017 13
Asia In Brief Monetary policy
Indonesia’s c.bank holds key rate Indonesia’s central bank yesterday held its benchmark interest rate unchanged, as expected, saying it is guarding against global risks and rising utility prices at home. Bank Indonesia (BI) left the 7-day reverse repurchase rate unchanged at 4.75 per cent, as all 22 analysts in a Reuters poll had predicted. The central bank also held steady the two other rates, which act as the floor and ceiling of the overnight interbank money market, at 4.00 per cent and 5.50 per cent, respectively. BI trimmed its benchmark six times during JanuaryOctober 2016 by a total of 150 basis points. Oil industry
Japan extends UAE crude storage deal
Malaysia’s central bank head quarters
Monetary policy
Malaysia central bank stands pat Prior to July’s unexpected easing, the rate had been held steady for seven years at 3.25 per cent Malaysia’s central bank kept its key rate unchanged at 3.00 per cent yesterday as policy makers elect to sit tight in the face of a fragile ringgit currency and uncertainty around U.S. policies under incoming president Donald Trump. Bank Negara Malaysia (BNM) said in a statement that private sector activity will underpin the economy, and latest indicators point to continued growth in the fourth quarter of 2016. “Going forward, private sector activity will remain the key driver of growth,” the bank said in the statement. “Overall, the economy remains on track to expand as projected,” it said. All 11 economists polled by Reuters forecast BNM to hold its key rate steady. Investors worry a destabilising fall in the currency could knock the economy just when it has started to pull ahead after slowing for well over a year. That anxiety has been fed by a recent flight of capital out of Malaysia and other emerging markets on bets a Trump administration will boost fiscal spending and accelerate U.S.
interest rate increases. The ringgit tumbled to 19-year lows at the start of this month, so Thursday’s on-hold policy decision came as no surprise to markets as a cut to follow BNM’s July easing would have exposed the ringgit to more pressure. BNM said the ringgit has seen reduction in volatility since the sharp adjustments experienced towards the end of 2016. H o w ev e r, g l o ba l e c o n o m i c uncertainties may trigger “bouts of volatility” in regional financial and foreign exchange markets, it said.
‘Wise move’
“Clearly, the BNM opted for a more prudent choice despite low inflation on the face of a more hawkish Fed, expected higher inflation and an improving commodity cycle, helping export revenue,” said Trinh Nguyen, senior economist for investment bank Natixis based in Hong Kong. “As Malaysia has high exposure to foreign portfolio investment, especially in fixed income, it was a wise move to hold and watch how
external conditions unfold,” she said. BNM said headline inflation averaged 2.1 per cent in 2016 and is expected to average higher in 2017, amid the prospect of higher global oil prices. Malaysia’s economy has been hobbled over the past couple of years by slumping oil and gas prices, slowing demand from top trade partner China, and a financial and political scandal at state-fund 1Malaysia Development Berhad (1MDB).
“As Malaysia has high exposure to foreign portfolio investment, especially in fixed income, it was a wise move to hold and watch how external conditions unfold” Trinh Nguyen, senior economist for investment bank Natixis BNM was widely expected to deliver a second interest rate cut before the end of last year, but the sell-off in the ringgit appeared to have put paid to such a move. In November, the central bank stepped in to discourage ringgit trade in the non-deliverable forwards (NDF) market, and later introduced measures to boost onshore ringgit trade. The measures, however, could not prevent international reserves from shrinking by about US$4 billion, from US$98.3 billion in Nov. 15 to US$94.6 billion as of Dec. 30, with forex reserves being depleted to defend the beleaguered ringgit. Prime Minister Najib Razak has said he expects the economy to pick up pace this year, after a cooldown for five straight quarters was arrested in the September quarter with 4.3 per cent growth. Reuters
Japan has agreed to allow the Abu Dhabi National Oil Co (ADNOC) to store crude oil in the country for two more years, giving the nation’s second-largest supplier continued access to a depot through 2019, the trade ministry said yesterday. The agreement came during a meeting last weekend between Japan Trade Minister Hiroshige Seko and ADNOC chief executive Sultan Al Jaber in the United Arab Emirates (UAE), Japan’s Ministry of Economy, Trade and Industry said in a statement. Bancassurance
Allianz, Standard Chartered form pact in Asia German insurer Allianz and Standard Chartered Bank yesterday announced a 15-year agreement to distribute Allianz’s general insurance products in Hong Kong, Singapore, Malaysia, Indonesia and China. The deal to distribute travel, personal accident, fire and motor insurance products to Standard Chartered’s retail banking clients will start in 2017, the companies said in a joint statement. “Bancassurance is a key focus for Standard Chartered, as we continue to innovate and expand our offerings that meet the evolving needs of our clients in branches and online,” Standard Chartered’s chief executive for retail banking, Karen Fawcett, said. Trade
Thai central bank sees exports on upward trend A recovery in the global economy could spur growth in Thailand’s exports this year, beating a central bank forecast of zero growth in 2017, a central bank official said yesterday. But the bank will wait to see the new trade policies of U.S president-elect Donald Trump and Thai export data in coming months before it makes a revision in March, said the official, Don Nakornthab. “The worst should be over and exports are likely to be on an upward trend going forward,” Don, a senior director of the central bank’s macroeconomic and monetary policy department, told reporters.
14 Business Daily Friday, January 20 2017
International In Brief Currencies
Yellen speech bolsters dollar The dollar held firm against most of its major rivals yesterday after a speech by Federal Reserve Chair Janet Yellen halted its worst run in five months by promising a “few” rises in U.S interest rates this year. The greenback gained as much as 2 per cent on Wednesday after Yellen’s speech, which turned investors back to the narrative of strong growth and rising inflation, which drove the currency higher after Donald Trump’s election victory in November. A correction since late December means the currency is still in the middle of its worst fourweek performance since August. Employment
Portugal rise largest in OECD Portugal, Spain and Ireland were in the third quarter of 2016 the developed economies in which the employment rate rose the most, according to a report from the Organisation for Economic Cooperation and Development. In Portugal, the proportion of people of working age who were actually in work rose 0.7 of a per centage point in the quarter to 65.6%. In both Spain and Ireland, the same rate was up half a point, to 59.8% and 65.1% respectively, while in the euro zone as a whole, employment rose 0.2 to 65.5%.
World Economic Forum
Davos CEOs ‘go local’ on supply chain in Trump era Martinne Geller and Ben Hirschler
B
usiness leaders in Davos, traditionally the high priests of globalisation, are talking up the benefits of local production this week to shield themselves from criticism from incoming U.S. President Donald Trump. Elected on a jobs-focused “America First” platform, Trump has taken to Twitter to rebuke major companies like General Motors, Lockheed Martin and United Technologies, either for making goods in Mexico or for the price of their products. At this week’s World Economic Forum (WEF), a gathering of business and political elites in the Swiss Alps synonymous with free markets, company bosses said they were now preparing to adjust to the Trump era. “The basic message is to be more national, don’t just be global,” Richard Edelman, CEO of communications marketing firm Edelman, told Reuters. “Let’s try and pre-empt that tweet by having a long-term discussion about the supply chain.” General Motors on Tuesday highlighted moves it said would add nearly 2,000 U.S. manufacturing jobs, including a decision to shift some production of axles to an American factory, rather than have them supplied from Mexico. The automaker said it wanted to “build where we sell”.
“There is no doubt we need to adapt,” Carlos Ghosn, chief executive of Renault-Nissan, told Reuters. “All carmakers have to revise their strategy as a function of what is coming.” At the same time, companies are reviewing potential mergers and rethinking job cuts, fearing the stigma of being labelled “anti-American”. What companies have yet to spell out is the economic cost of such shifts or the extent of localisation that will be needed to keep the peace with the new White House administration.
Tax reform
Adding to the incentive to increase U.S. manufacturing is the promise of lower corporate taxes under the Trump administration. “It could mean increased investment in the U.S.,” Novartis CEO Joe Jimenez told Reuters. Vishal Sikka, chief executive of Infosys, which provides IT services to large companies including banks, said his company expected more business from helping companies localise. “The irony is that when more walls show up it is a good opportunity for services companies to help do business across those walls,” he said. The move to go local in response to Trump looks set to fuel a trend already evident in some industries, including food and fashion, which are trying to tap into consumer
demand for home-grown materials and production. Other businesses are also thinking locally to mitigate currency risks in certain markets. Food companies in Britain, for example, which have seen their costs soar after sterling plummeted in the wake of the Brexit vote, have started moving towards local suppliers where possible to keep costs down. In some cases, technological advances are helping by making it easier for companies to shorten their supply lines. “With 3D printing, for example, some of the supply chain will reshore and come back to the local economies,” said Frans van Houten, CEO of Dutch healthcare technology group Philips . “I think we will see supply chains becoming more regional.” Such tech-fuelled localisation may be a competitive advantage for multinational companies in a world of increasing geopolitical uncertainty, but it brings fresh challenges for developing economies which could lose out as jobs return to richer countries like the United States. Martin Sorrell, chief executive of WPP, the world’s largest advertising agency, said U.S. growth could come at the cost of nations elsewhere. “The issue on Trump is what you win on the U.S. swings, you may lose on the international roundabouts,” he said. Reuters
Infrastructure
China funds huge power plant The Industrial and Commercial Bank of China is going to fund US$837 million, about 85 per cent of the cost of building a combined cycle power plant in Soyo, Angola. The project, awarded to Chinese companies, is expected to cost US$985 million, to produce electricity for the national grid using natural gas in the first quarter of 2017. With an output of 750MW, the project also includes building power lines to the capital over 400 km, with 1,500 pylons. This project is fundamental to reduce the country’s energy deficiency. Brexit
Barclays chair says UK govt backs transition The British government is supportive of a three-year transition period for the financial sector once Britain leaves the European Union, Barclays Chairman John McFarlane said yesterday. “I think the government does [support it] because I think they understand the complexity of this,” McFarlane told Reuters on the side-lines of the World Economic Forum in Davos. The initial stage of divorce talks will last two years until 2019, after which a transition phase, of, say, three years, would begin. Many questions remain unanswered, however, as to how this would work in practice.
Private poll
South Africa economy poised for growth in 2017 Consumer inflation is expected to slow to an average of 5.8 per cent for this year Vuyani Ndaba
South Africa’s economy will get a boost from perkier commodity prices, a benign inflation outlook and better rains for the agriculture sector this year, a Reuters poll found yesterday. A median of 27 economists in a poll taken over the past week suggested growth in South Africa would accelerate to 1.1 per cent this year and 1.6 per cent next year. The South African Reserve Bank (SARB) estimated GDP expanded 0.4 per cent last year. “Higher commodity prices in combination with lower inflation, stable interest rates and a recovery in the agricultural sector should drive 2017 growth somewhat stronger than in 2016,” said Elize Kruger at NKC African Economics. Twelve of 14 economists bet that growth in Africa’s most industrialised nation has left the slow expansion trap seen in previous quarters.
South Africa’s growth has been choppy in the past two years, with negative quarterly performances three different times on an annualised basis since 2014. However, KPMG’s Christie Viljoen says positive growth is expected , though it will be very low.
Key Points South Africa’s economy expected to expand in 2017 Stable rates and benign inflation to boost economy Repo rate seen on hold at Jan. 24 meeting (not Jan 26) Economists back their claims with the annualised growth rate in the SARB’s leading indicator that has turned positive, but they caution about the risks that lie ahead. South Africa’s economy relies
heavily on the well-being of the euro zone, its biggest trading partner as a single region, and China, its biggest trading partner as a single country.
Stable rates
Consumption should get a boost if the Reserve Bank does not hike interest rates this year. All 27 economists expect the repo rate to be kept on hold at 7.0 per cent in the Reserve Bank’s meeting on January 24 (not 26). Medians for the rest of the year suggest no change for the repo rate after Tuesday’s policy announcement. There is just over a one-inthree chance of a cut this year. “The bank may still have a change of heart in its rate stance come the second half of this year, opening up room for it to cut policy rates later in the year,” said BNP Paribas economist Jeffrey Schultz. Still, consumer inflation is expected to slow to an average of 5.8 per cent for this year - 0.2 per centage points shy of the Reserve Bank’s top-end comfort level - and 5.5 per cent in 2018. It hit a 6.4 per cent average last year. Reuters
Business Daily Friday, January 20 2017 15
Opinion Business Wires
Viet Nam News Consumers in HCM City can now use a smartphone app to trace the origin of vegetables sold at Co.opmart, Lotte Mart, Big C and AEON supermarkets under a programme run by the city Department of Agriculture and Rural Development and the Digital Agriculture Association. Huỳnh Thị Kim Cúc, the department’s deputy director, said customers could use Zalo on Android or QR code scanning apps to scan the labels on the packages. The information they contain includes where and when the vegetables are grown, packaged and distributed and the types of pesticides and fertilisers used, she said.
The New Zealand Herald The Government has agreed to pay NZ$3.5 million towards electric vehicle projects around the country to promote the greener form of transport. Energy and Resources Minister Judith Collins announced today that 15 projects would be conditionally funded, as the Government seeks to meet its target of 64,000 electric vehicles on New Zealand’s roads by 2021. The projects include Foodstuffs using 28 all-electric delivery vans at its supermarkets; supporting Tranzit Group and Auckland Transport introducing electric buses and charging infrastructure; and Waste Management NZ converting three rubbish trucks to run on electricity.
The Star Malaysia will contribute RM10mil to assist humanitarian efforts and social rehabilitation projects for the Rohingya community in Myanmar’s Rakhine state. Datuk Seri Najib Tun Razak, who announced the assistance in his speech at the extraordinary session of the Organisation of Islamic Cooperation (OIC) Council of Foreign Ministers on the Rohingya, said the fund would be used to build infrastructure such as educational and medical institutions. “As a true and long-standing friend of Myanmar, I say this from the bottom of my heart – it is time to end this crisis,” said the Prime Minister in his keynote address.
The Jakarta Post State-owned securities paper and banknote printing company Peruri has called on the public to stop making negative assumptions regarding Bank Indonesia’s (BI) logo on new rupiah banknotes. Peruri president director Prasetio said the BI logo on the banknotes was rectoverso in design– two images that cross and fill each other -- to prevent counterfeiting. “It is a security feature; do not make negative interpretations,” Prasetio said. Previously, Islam Defenders Front (FPI) leader Rizieq Shihab was reported to the Jakarta Police by the anti-slander young intellectual network (Jimaf) over alleged incitement on comments he made about the new banknotes.
The economic policy Trump should pursue
A
s Donald Trump assumes the US presidency, a group of 35 prominent international business leaders, led by Unilever CEO Paul Polman and me, is stepping forward to defend open markets, endorse the fight against climate change, and demand a massive push against global inequality. These are the core elements of what we believe is the only viable economic strategy for the United States and the world. Recent electoral outcomes, including Trump’s election, highlight the intensifying economic grievances of many households across the developed world. In the 20 years before the 2008 financial crisis, unprecedented globalization raised incomes for just about everyone. The incomes of the poorest third of humanity rose by 40-70 per cent, and those of the middle third increased by 80 per cent. The top 1 per cent did even better – so much better, in fact, that the business elite is now facing a powerful backlash. And yet the incomes of a crucial group – lower middle-income households – barely rose at all. And, since 2008, this same group has borne the brunt of austerity. Unsurprisingly, its members feel “left behind” by globalization – and are now demanding change. Trump’s administration might be tempted to address this group’s problems in isolation, with inward-looking policies targeting specific industries, or by attempting to limit trade competition. But the problems facing these households are not isolated. Rather, they stem from the social and environmental limits now reached by the prevailing model of economic growth – and the version of globalization that this model has underpinned. Ignoring this reality and implementing narrow and nationalistic solutions would only make matters worse. Socially, the relative hardship in the US Rust Belt, where support for Trump was integral to his victory, is an unintended consequence of a rapidly expanding global labour market that leaves workers almost everywhere vulnerable – even in emerging economies whose workers have seemed like the “winners” of globalization in recent decades. Countries and regions competing to attract corporate investment make weak negotiators and weak defenders of high labour standards. On the environmental front, the evidence is dire. Human activity has already pushed the planet beyond four of its nine physical safety boundaries, including those for climate change and loss of biosphere integrity. The rapidly rising costs of environmental damage are restricting economic growth, making the relaxation of environmental protections a false economy. For example, damage to ecosystems and biodiversity caused by current practices in the food and agriculture sector alone could cost the equivalent of 18 per cent of global economic output by 2050, up from around 3 per cent in 2008. In emerging markets, especially in Asia, rapid economic expansion has brought life-threatening smog and constant gridlock to cities unable to expand their infrastructure fast enough. Tackling the world’s environmental and ecological problems, and improving the lot of those who have been left behind, will require public action, such as that which I oversaw in my roles at the World Bank, the United Nations, and the British government. But
“
Mark Malloch Brown Chair of the Business and Sustainable Development Commission
it will also demand the participation of business. In my own career, I have seen first-hand that the growth fuelled by business competition in a globalizing world can do far more to combat poverty, hunger, and disease than governmentfunded programs alone. But when that competition is not conducted responsibly, the opposite can happen – and, in many cases, it has. In seizing the opportunities of globalization, businesses have often neglected the developedworld workers they leave behind, while subjecting developing-country workers to extraordinary deprivation. Moreover, individual businesses have often lobbied against and evaded environmental protections that are indisputably in our collective interest. Today, I am encouraged to see that a fast-growing group of business leaders recognize that the greater freedoms and wealth they gain from globalization imply greater responsibility for labour and the environment. We expect our strategy to ensure continued globalization – in a revised form that is more sustainable and inclusive – to attract more such leaders to the cause. The framework of our strategy is already in place, in the form of the 17 Sustainable Development Goals that were agreed by UN member states in 2015. Achieving these goals will mean decent pay, working conditions, and safety nets for all participants in the global labour market, as well as safeguarding the environment. The SDGs also promise to provide a level playing field for growth-boosting competition. Across the four major sectors we considered in detail, we saw high-return business opportunities arising from the strategy, fuelling an increase in annual global GDP of at least US$12 trillion. Other changes we advocate – especially the creation of prices for resources that reflect their full social and environmental costs – will ensure that future economic growth protects both workers and the planet. Securing these outcomes won’t be easy, because it will require a new social contract among governments, businesses, and civil society. To succeed, all parties must view themselves as collaborators in a win-win deal, rather than adversaries in a zero-sum game. All the evidence indicates that only a more sustainable, open, and inclusive world economy can support an environmentally secure, economically prosperous, and socially just future for humanity. As for the US, this strategy aligns with Trump’s own declared priorities. Not only does it offer the most promising solution to the economic grievances of his core supporters; it also entails a surge in infrastructure spending, much like the one Trump has already promised. Instead of using fiscal stimulus in a vain effort to revive failed smokestack industries and old energy sources, Trump’s administration – and the world – should place its bets on a low-carbon future. Plenty of businesses surely would get on board. Project Syndicate
In my own career, I have seen first-hand that the growth fuelled by business competition in a globalizing world can do far more to combat poverty, hunger, and disease than governmentfunded programs alone
”
16 Business Daily Friday, January 20 2017
Closing Partnership
Alibaba becomes major sponsor of Olympics
and cloud services partner, joins a dozen other companies - including Coca-Cola and McDonald’s Chinese e-commerce - as top Olympic sponsors. company Alibaba has become a major sponsor of No financial details were the Olympics after signing disclosed. IOC sources have a deal with the International previously told Reuters that major sponsors pay about Olympic Committee (IOC) US$100 million per fourthat runs until 2028, the two parties said yesterday. year cycle, which includes one summer and one Alibaba, which becomes winter games. Reuters the official e-commerce
Heritage
Nine more Closing the lunar calendar year, the Macau Cultural Affairs Bureau has announced it is expanding the list of classified buildings and sites Sheyla Zandonai sheyla.zandonai@macaubusiness.com
T
he list of protected buildings and sites in Macau has just gained new additions, nine to be precise. The plan for the “Classification of monuments and buildings of architectural interest and the creation of a protection zone” was announced at a press conference yesterday held by the Macau SAR Government and the Cultural Affairs Bureau. The announcement followed the conclusion of the debate about the project of administrative regulations for the new plan issued by the Executive Council of the Cultural Heritage Council. Ung Vai Meng, President of the cultural bureau, and Deland Leong Wai Man, Chief of the Cultural Heritage Department of the same office, were present at the conference. The work of identifying properties with cultural interest falls under the current cultural policies within the scope of heritage protection and safeguarding of cultural heritage of the Macau SAR Government, in connection with the development of heritage protection actions. The work conducted by the Cultural Heritage Council concluded preliminary research into about a hundred properties, of which about 70 have been registered. Among them, nine sites were listed and are now included in this first new list following Macau’s handover to China and classification of the city’s Historic Centre as World Heritage. Seven sites were classified as monuments – of which four are temples – and two properties as buildings of
architectural interest. The list of properties classified as monuments consist of four temples of Foc Tac (Horta e Mitra, Rua do Teatro, Rua do Patane, Rua do Almirante Sérgio), parts of the old city walls, the old pharmacy of Chong Sai (Rua
das Estalagens), and the old residence of General Ye Ting (Rua Almirante Costa Cabral). As for the properties classified as buildings with “architectural interest,” they include the old municipal stable and the municipal dog kennel, as well as a building known as the Blue House (“Casa Azul”), located at the Estrada do Cemitério. The administrative regulation will come into effect the day after publication in the Official Gazette, which Ung Vai Meng said on the sidelines of the announcement should take a month or so. Asked about why only nine buildings of the 70 registered made the
classified list, Ung Vai Meng explained that the cultural bureau is working on a long-term basis, and that they have already started the process of identification and classification of the second phase, which should be revealed in November 2017. The Iec Long Fireworks Factory in Taipa is likely be integrated on the second list. The controversial case of a private house at Rua Manuel Arriaga no 28 was also raised. The bureau said that, because there are divergent opinions within the council, and that the owner of the property is against its renovation, the decision has been put on hold.
Pension system
Cars
IEA
Taiwan to inject funds into labour pensions
Golden wheels
OPEC oil output to come down in January
Taiwan will inject T$20 billion (US$632.5 million) a year into labour pensions starting in 2018 as part of broader reforms to ensure that workers’ pensions remain financially solvent. Vice President Chen Chien-jen told a news conference yesterday that pension reforms for teachers, civil servants and non-government employees will help delay a default in payments to retirees by a decade. Pensions for civil servants could default by 2030, teachers in 2031 and other workers in 2048, government data shows, if Taiwan’s pension system is not reformed due to years of under-funded liabilities. Reform plans for military pensions, which could default as early as 2020, will be discussed after the Lunar New Year holiday, Lin Wan-yi, deputy chief of the National Pension Reform Committee, told Reuters on the side-lines of the briefing. The government has said an urgent overhaul of the pension system is needed as large pay-outs are no longer sustainable for the export-reliant economy, with contributions crimped by slower economic growth since the 1990s and a rapidly aging population. Successfully reforming the system will be crucial for President Tsai Ing-wen, whose popularity has hit an all-time low since taking office last May. Reuters
The 13 hotel will have gold infused Rolls-Royce vehicles as the British automotive company The 13 hotel’s estimated US$20 million (MOP159.7 million) fleet of 30 luxury Rolls-Royce Phantoms will include two gold infused models with diamond encrusted badges, the company informed via press release. The gold models will be available for guests of the 13 Holdings Ltd resort, a project of entrepreneur Stephen Hung, set to open in Cotai in the first quarter of this year. The delivery, however, comes at an interesting time for the British manufacturing company: on the tail of an apology made during a court hearing in London over securing orders through offering bribes in six countries, including China, notes a report by the South China Morning Post. According to the report, the company would bribe middlemen by providing luxury cars and millions in cash, such as a £5 million (MOP49.1 million/ US$6.1 million) cash credit to Chinese airline China Eastern Airlines in 2013 to secure aircraft engine purchases. The company will now have to pay around £671 million in penalties, states the report. N.M.
Steeper cuts in OPEC oil production are likely this month as producers increasingly implement a recent key deal aimed at stabilising oil prices, the IEA said yesterday. “Initial indications are that a steeper (month-onmonth) decline may be on the way in January,” said the International Energy Agency, which analyses energy markets for major oil consuming nations. Under a landmark deal on November 30, aimed at reducing a global supply glut that depressed oil prices, the Organization of Petroleum Exporting Countries is meant to slash its output ceiling by 1.2 million barrels per day (bpd) to 32.5 million bpd, effective January 1. On Wednesday, the cartel said that its oil production fell in December but remains well above levels envisaged the deal. However, steeper cuts would come this month as Saudi Arabia and nearby producers move to implement the agreed reductions, the IEA said. Under the deal, Saudi Arabia is to cut production to 10.1 million bpd, Iraq to 4.4 million bpd, Kuwait to 2.7 million bpd and UAE to 2.9 million bpd, according to OPEC. AFP