Business Daily #1313 June 8, 2017

Queen's Birthday Celebration Poolside BBQ Lunch Sat, 10 June 2017 │ 11:00am - 2:00pm │ The St. Regis Macao Join us in this relaxing and lighthearted get-together at a poolside BBQ lunch.

Bring your swimmers, and slip, slop & slap!

HK-MSAR cargo trade up 76 pct in Q1, y-o-y Trade Page 7

Thursday, June 8 2017 Year VI Nr. 1313 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Heritage

Property

“We share UNESCO’s concerns,” says IC head, noting urban planning would have resolved current issues Page 5

The Lux Mansions debut, with 120 standard flats measuring 3,500 square feet Page 6

www.macaubusinessdaily.com Telecom

Conflict

Alibaba struggles to overcome Tencent in mobile arena Page 10

Gulf crisis intensifies as U.A.E downplays quick fix Page 14

Seeking Smart City Slickers Technology

Up to MOP500,000 in financial support for each candidate.

Providing solutions and applications for developing the MSAR into a Smart City. Macau Science and Technology Fund is seeking projects involving transport, tourism, medical treatment and gov’t. Proposals are expected to harness the Cloud, mobile apps, e-commerce, mobile payments and the Internet of Things. Page 3

Prime site gets green light

Treasuring time

Local entrepreneurs Keith Law and Felix Kelson Lam tell Business Daily the advantages of basing a company in the MSAR. And participating in start-up competitions.

Declaring local entrepreneurs need positive mindsets, as many potential investors are already here.

Land Three plots comprising 3,876 square metres abutting Golden Lotus Square in ZAPE have been green-lighted by the gov’t. For construction of a 21-storey building for residential, commercial and parking. The project, previously rejected by the Urban Planning Committee, will utilise land currently housing hotel signage and construction equipment. Page 2

May FX reserves rise more than expected

Startup Focus | Interview Page 4

HK Hang Seng Index June 7, 2017

25,974.16 -22.98 (-0.09%) Worst Performers

AAC Technologies Holdings

+13.66%

China Petroleum & Chemical

+1.09%

Sino Land Co Ltd

-1.85%

BOC Hong Kong Holdings

-0.85%

Galaxy Entertainment Group

+3.84%

Kunlun Energy Co Ltd

+1.03%

Sun Hung Kai Properties Ltd

-1.69%

Bank of China Ltd

-0.77%

Want Want China Holdings

+2.53%

Belle International Holdings

+1.00%

China Construction Bank

-1.52%

Industrial & Commercial

-0.75%

Sands China Ltd

+1.89%

Hang Lung Properties Ltd

+0.73%

Hang Seng Bank Ltd

-1.39%

Wharf Holdings Ltd/The

-0.70%

CITIC Ltd

+1.61%

China Merchants Port Hold-

+0.66%

Geely Automobile Holdings

Henderson Land Develop-

+0.01%

-0.99%

27° 30° 27° 30° 27° 31° 27° 31° 26° 31° Today

Source: Bloomberg

Best Performers

FRI

SAT

I SSN 2226-8294

SUN

MON

Source: AccuWeather

Forex The Mainland’s foreign exchange reserves rose in May for a fourth consecutive month. And by more than markets had expected.

As stringent capital control measures and a weakening dollar helped staunch outflows.

Page 8

2 Business Daily Thursday, June 8 2017

Macau Construction The total value of the area is estimated at MOP136.1 million

Building permit STDM has been authorised by the government to use a 3,876 square metre area near Lotus Square for 21-storey housing and commercial building Nelson Moura nelson.moura@macaubusinessdaily.com

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he government has allowed Sociedade de Turismo e Diversões de Macau (STDM) to build on three land plots located at Rua de Luís Gonzaga Gomes occupying a total land area of 3,876 square metres, an Official Gazette release announc yesterday.

Combining the three land plots which have an estimated value of MOP136.1 million (US$17 million) located near Lotus Square at the ZAPE (Zona de Aterros do Porto Exterior) district, will allow STDM to develop a 21-storey building in the area for housing, commerce and parking.

The release also states that four parcels occupying 492 square metres from the original land plots will revert to public domain for pedestrian use.

The approval for the STDM project comes after the Urban Planning Committee had rejected the development proposal last year due to concerns by Committee members that the development would not provide pedestrian areas and would block the view of

the Guia Lighthouse.

Concerns were mitigated, however, after the Land, Public Works and Transport Bureau (DSSOPT) revealed extra information on the planned pedestrian areas and that a 60 metre height limit would be applied to the

development.

The concession for the three land plots was conceded to STDM in December 1994, with the concession contact set to finish in December 2019.

According to the contract, in the event that the land plots’ development was not concluded before the expiration of the concession a fine of 0.1 per cent of the total MOP136.1 million estimated value of the area would be imposed for each day of delay, with the amount doubling after 180 days of delay.

The release also announced that the annual rent for the use of the

land plots is set at MOP30 per square metre, for a total of MOP116,280.

After the development of STDM’s planned project, the annual rent will change to MOP10 for each of the 31,458 square metres used for housing, MOP15 for each of the 4,527 square metres used for commerce and MOP10 for each of the 11,406 square metres used for parking.

Currently, the three land plots are occupied by construction machinery and equipment, being surrounded by fences with signage from the Lan Kwai Fong Hotel, a hotel operated by China Star Entertainment Limited.

Elections

Electoral Commission: Repeat signatures under scrutiny After receiving eight applications for independent electoral parties, the Electoral Commission for this year’s Legislative Assembly elections found 14 people had repeated signatures Nelson Moura nelson.moura@macaubusinessdaily.com

The Electoral Commission for the 2017 Legislative Assembly (AL) elections has received eight applications for independent electoral parties, finding 14 people signed more than one candidacy list.

“The committee requested the government contact the people that signed their name more than once to know what happened and what candidacy they actually support.

So far, of those involved, we have contacted seven individuals,” Commission Chairman and judge of the Court of Second Instance, Tong Hio Fong, said yesterday.

Mr. Tong said the process of analysing if the electoral parties’ applications possess all legal requirements to be authorised is still ongoing, with each electoral candidacy only able to get a legal certificate if it has the required number of signatures.

According to MSAR Electoral Law,

any resident not in a political association can form an independent electoral party, with the minimum number of signatures collected being set at 300 and the maximum 500.

All members that are part of the candidacy have to present their MSAR Resident Identity Card (BIR), with one member designated party representative.

All applications for electoral parties have to be submitted by June 20, with the electoral committee having to decide up to eleven days after that date if the application is considered legal, and notify its representative.

After being notified of any issues found in the candidacy, the representative has five days to resolve them, after which the application will be refused.

Electoral party representatives can also appeal to the Court of Final Appeal for the refusal to be revoked.

any legal consequences for the people with repeated signatures, Mr. Tong only said “all data about the cases” still had to be analysed before coming to any decision.

The Commission chairman denied that there was failure in informing residents of the election’s relevant legislation and regulations, stating information of the matter had started being divulged one or two months before the Electoral Commission was created in January of this year.

“The person responsible for collecting the necessary signatures should pay attention to these matters,” he

Should have known better

When questioned if there would be

Construction

Conventions

Plans for Sino-luso Services Complex delayed

New representative

During an update on the public tender for the construction of the Services Complex for Trade C o - o p e rati o n b et w e e n Chi n a and the Portuguese-speaking Countries, the Land, Public Works and Transport Bureau (DSSOPT) announced yesterday that it would need extra time to conclude the first phase of the evaluation of proposals.

The Bureau explained that the additional time is due to the large amount of documents received as

added.

The Commission Chairman also stated that no complaints by gaming operators’ workers, involving requests by employers to sign applications of electoral parties, had been received.

In May, the Electoral Commission met with the Gaming Inspection and Co-ordination Bureau (DICJ) to warn about any possible support by gaming operators towards election candidates, with the Commission Chairman requesting the “impartiality” of gaming companies before the elections scheduled for September 17.

well as the complexity of the content under scrutiny.

It claimed, however, that the first phase of evaluation would be concluded soon.

The Bureau added that information on the ‘costs of works’ and the launching of the second phase of the public tender will be divulged soon.

Twelve companies have submitted proposals for the construction of the complex, to be developed near Nan Van Lake.

Vong Man Chong appointed new Macao Customs Service representative on Committee for Development of Conventions and Exhibition The government has appointed Vong Man Chong as the representative of the Macao Customs Service (SA) in the Committee for the Development of Conventions and Exhibitions (CDCE), an Official Gazette release informed yesterday.

The new appointee will replace the current Customs representative at the CDCE, Vong Kuok Chong, effective today and until August of 2018.

The CDCE was created in 2010 to support the MSAR government’s planning strategies, measures and policies to develop the meetings, incentives, conferences and exhibitions (MICE) sector in Macau.

The department was under the management of the Macau Economic Services (DSE) until 2016, when it passed to the Macau Trade and Investment Promotion Institute (IPIM). N.M.

Business Daily Thursday, June 8 2017 3

Macau Technology

Take me down to Smart City Projects for turning the MSAR into a Smart City could receive financial support of as much as MOP500,000 from the Macau Science and Technology Fund Nelson Moura nelson.moura@macaubusinessdaily.com

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he Macau Science and Technology Fund (FDCT) will provide financial support reaching MOP500,000 (US$62,278) for candidates presenting viable applications and solutions for the development of Macau as a Smart City.

“Our past experience indicates that we will probably receive between 20 to 30 applications, with previous plans having had a success rate of 40 per cent in the past” Frederico Ma Chi Ngai, President of the FDCT Administrative Committee

In a press conference held yesterday, the FDCT stated that local individuals, companies and research

institutions would be able to apply for the support between June 15 and September 15 of this year.

The projects seeking financing should be related to societal sectors such as transport, tourism, medical treatment and government.

The execution of the projects should not exceed 18 months and the proposed solutions should involve cloud systems, mobile applications, e-commerce online platforms, mobile payments, Internet of Things (IoT) or improving the performance of existing solutions.

In the event of approval for financial support of an amount of up to MOP500,000, half will be provided for the initial planning stages with the second half only provided once the project application has proved viable.

The project’s feasibility will be evaluated taking into account the application capacity of the applicant; possible market business possibilities; level of innovation; potential practical application and the ratio between expenses and budget.

Practical solutions

According to the President of the FDCT Administrative Committee, Frederico Ma Chi Ngai, a similar support plan was provided last year with a greater focus on proposals by research institutions, with this year’s plan focusing more on receiving proposals from individuals and small and

medium enterprises (SMEs).

“Our past experience indicates that we will probably receive between 20 to 30 applications, with previous plans having had a success rate of 40 per cent in the past,” he added.

Mr. Ma also stated the department had not yet defined a ceiling for the amount of subsidies to be granted in the plan, but that at least five projects would be approved, with a possible maximum amount of investment of MOP2.5 million.

“We don’t want theses that will just stay on paper but projects that are viable, practical and can be applied. We want to use all resources available from society” Chan Wan Hei, one of the members of the FDCT Administrative Committee, said yesterday.

The FDCT representatives said

the support plan is in line with the MSAR’s Five-Year Development Plan, which includes the goal of developing Macau into a Smart City by 2020.

Last year, the FDCT announced it had created a taskforce that would co-ordinate with different government departments on a framework for the development of a Smart City, revealing an overall plan by the end of this year.

Mr. Ma said yesterday that the FDCT was currently waiting for a ‘Smart City Programme Deck’ - a framework of areas to be developed - created by Barcelona-based strategic consultancy Doxa Innova & Smart.

These recommendations will then be added to the overall plan, with the FDCT not revealing if the plan will be able to be presented by the proposed deadline. advertisement

4 Business Daily Thursday, June 8 2017

Macau

Precious time Startup name: Phantoms Lab Industry: Luxury fashion Elevator Pitch: We bring luxury designer tourbillon watches to an affordable price for mechanical watch lovers Interviewee: Keith Law - Founder Felix Kelson Lam – Co-founder Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

it was a great way to test the water.

W

What do you see as your primary markets for your products?

We focus a lot on the Asian market; online is definitely the way to go for us to reach early adopters.

hat opportunities were brought about after winning the StartUp Macau Forum?

The most important thing that brought to us was the people who also participated in the StartUp Macau Forum. We became friends with some of them, potentially collaborating together to start some new ventures.

“There’s always meaning behind our products” What advantages did the Web Summit in Portugal bring about for your business and in what areas?

I would say we learned a lot at the Web Summit in Portugal and we met a lot of friends and networked. We saw a lot of world-class, top-notch innovators as well as investors. It was a great experience to learn.

Will you continue using Kickstarter campaigns for future products?

Yes, definitely. I would say Kickstarter is one of the best ways for us. It reaches people who believe in innovation and reward truly innovative creators.

How much was made in the initial Kickstarter fund and how in line was that with your expectations?

We didn’t make a lot of pure profit from the first Kickstarter campaign because a lot was invested in research and development; there are many costs that we had to bear but

Are you considering launching other, non-watch products under the same brand?

We will launch more products later, when we are great at making watches. We love accessories that we would be able to use ourselves such as sunglasses, belts, or anything that we think is cool.

There’s always meaning behind our products.

Do you think that entrepreneurs from Macau will find more success here or further abroad?

Overall, entrepreneurs in Macau lack vision; they lack the broader picture. There are many investors who would invest but entrepreneurs need to be true visionaries to seek the opportunity.

“We focus a lot on the Asian market; online is definitely the way to go for us to reach early adopters”

Do you think the entrepreneur5a3 environment in Macau is healthy?

The entrepreneur5a3 environment is very healthy in Macau despite the fact that there’s a small population - but I feel like there are many potential investors in Macau.

Which countries in particular are you focusing on?

We focus a lot on Hong Kong and Singapore and, of course, Macau.

These three places in Asia are particularly wealthy/high in GDP per capita. We want to focus on wealthy people who can spend money on luxury goods, as well as the early adopters who don’t simply want a mainstream product on their wrists.

What conditions would make your job as entrepreneurs easier within the MSAR? I would say it is the government support that makes it easier for start-up entrepreneurs to survive.

How did you go about finding investors for the project?

We find investors through our network; we need to be able to show investors what we are capable of, and gain their trust.

What is the story behind your products, how did you get started and where do you want to go?

We wanted to create something cool, something meaningful, something we will forever be remembered for. Watches are something very meaningful, especially the watch we designed. It has a signature time-coffin shaped watchcase, once time has passed, it will be forever gone. Treasure what you have at the moment and never waste time. We definitely want to send this message to anyone who wears our watches.

Have you taken advantage of any of the young entrepreneur or SME funds made available by the government?

We have applied for some funding

for exhibiting our booths in Macau.

What other areas would you like to explore in business?

We will be having our own physical shops in Macau soon. That would be something new, and a risk for us to take.

How much time do you currently spend in Macau?

We spend 40 per cent of the time in Macau, 40 per cent in Hong Kong, and the rest in other countries.

How many total products do you plan to offer and how do you avoid stretching yourself too thin?

We’ll have a total of 20 SKU [units] by the end of this year, and we will keep producing more and more.

Where do you source the components of your products from and where are they assembled?

The components are from China, and they are all assembled in China.

“We wanted to create something cool, something meaningful, something we will forever be remembered for” What tax advantages do you enjoy by operating from Macau?

The low corporation tax rate is definitely the best, compared to the 17 per cent taxed in Hong Kong.

So, we love it - and we have no complaints at all!

Business Daily Thursday, June 8 2017 5

Macau Environment A financial plan to support the removal of two-stroke

engine motorbikes has received 4,400 applications so far

Willing and able

The financial support plan implemented on February 15 to help remove two-stroke engine motorbikes has received more than 4,400 applications to date, a release by the Environmental Protection Bureau (DSPA) announced yesterday.

As a method to reduce emissions in the MSAR, the DSPA implemented a financial subsidy which offers MOP3,500 (US$438) to residents who successfully apply for the scheme before June 30 and whose

motorcycles meet the criteria.

Motor vehicle owners who possess licences that have been renewed since September 1 of 2014 are not entitled to apply for the scheme, in order to prevent motorbike owners who have cancelled their licences from re-registering after applying for the new scheme.

In the release, the department appeals to resident owners of two-stroke engine motorbikes to not lose the opportunity to apply before the scheme ends. N.M.

Property

Sky Oasis unveils The Lux Mansions The chairman of the developer of Sky Oasis The Lux Mansions was positive about the demand for the rare luxury flats Cecilia U cecilia.u@macaubusinessdaily.com

O

ne Oasis The Lux Mansions, a new residential project located within the One Oasis complex on the southern part of the Cotai Strip, is ready to begin official sales this Saturday, June 10.

Developed by a joint venture between property developers - Hong Kong-based ITC Properties, Nan Fung Group, Success Universe Group, ARCH Capital and Macau-based Linkeast Investments - the new project will introduce 120 standard flats with gross floor area of approximately 3,500 square feet.

Edwin Cheung, chairman of the consortium, said potential local and overseas investors had paid a visit to the new flats yesterday morning.

“Many real estate agents and clients like our flats and they show great interest in buying,” asserted the chairman.

Given the rareness of local projects that provide large-scale flats, comprising at least three bedrooms, Cheung perceived that there will be some demand in the local market, adding that these kinds of large flat are necessary despite not being “commodities for everyone”.

“There are some 20,000 residential units in Macau; I believe less than 1 per cent are over 3,000 feet, most are less than 2,500 feet,” said Cheung.

The chairman cited that around 4,000 local couples get married every year with some 6,000 newborns every year.

As such, the city will need some 1,000 flat units every two to three years to support the new families.

“When looking at the real estate market the demand in Macau is huge; as long as the economy is good, the demand for flats will always be there,” he said.

In terms of price, a 4-bedroom flat costs HK$12,000 per square foot (US$1,540).

However, the price would be reduced to some HK$10,000 per square foot when investors choose one of the two payment methods offered by the developers, which involve discounts of between 10 to 20 per cent.

Meanwhile, in April the average transacted house price in Coloane, according to the Financial Services Bureau (DSF), stood at MOP145,208 per square metre, with 101 units sold during the month.

The chairman anticipates that primary buyers would be locals in Macau, adding: “We produce the best living environment: as good as possible at affordable price for local people”.

But Cheung stressed that discounts will be offered to both local and overseas buyers.

“Impact [from new mortgage regulations] will be minimal”

Despite the MSAR Government rolling out new mortgage regulations last month, Cheung expressed no concern about the new housing policy.

“I think the impact will be minimal,

having the mortgage allowance changed from 50 to 40 per cent, I believe those who want to buy these flats wouldn’t need a mortgage,” he remarked, while saying that the difference would not be significant even if buyers did apply for a mortgage.

In response to enquiries about the potential increase of the U.S. interest rate, Cheung also expressed little concern.

“I think the problem of the likely growth of the interest rate has faded; I believe the rise will be slower than their calculations,” commented Chueng, also perceiving that a slight growth in the rate would lead to a healthier economy in Macau.

“I think the rate is the lowest for the past twenty years; therefore I personally think it will have a very limited

impact upon the desire to invest,” Chueng stated.

Future plans

Having used most of the land granted to the developer, Cheung expressed interest in seeking other land plots to develop.

“Our company is firmly rooted in Macau [...] definitely we will keep developing, we will continue to work on public land,” Chueng said.

The chairman also commented that the land price in Macau “is more stable” when compared to that of Hong Kong, since “the market in Macau is relatively smaller”.

When asked if the developer would consider other types of property, Cheung affirmed that the consortium will continue to develop residential properties.

“I think we’ll stick to developing residential flat units or the attached commercial mall; we’re not that interested in other [projects] such as office or industrial buildings.”

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Opinion

Ashley Sutherland-Winch* Warning!

Google blocking ads Does your company have Internet ads that pop up unexpectedly, play loud blaring music, or cause the browser to wait ten seconds before it can see content on your site? If so, you may want to reconsider your marketing strategy or risk your ads being blocked by Google. Google announced a new Chrome feature to protect users of its market-leading Chrome web browser from intrusive ads with a plan that could improve the web browsing experience for millions of people across the globe, but also raises questions about Google’s ever increasing market power.

The new Chrome feature, scheduled to debut next year, won’t interfere with all ads but will block ads that Google considers particularly intrusive. Google is publishing guidelines to help site owners understand which ads are likely to be blocked and hopes that most publishers will drop the most annoying ad formats from their sites, improving the browsing experience for everyone.

“The industry needs to do better at producing ads that are less annoying and that are quicker to load. I think we need to do a better job of that as an industry,” said Google CEO Larry Page in 2015.

Google recently ran a worldwide survey created by the Coalition for Better Ads, an industry organisation dedicated to improving online advertising. The Coalition conducted extensive research on consumer preferences for online ads to identify what ads annoyed people the most. The Coalition also helped Google draft the ad quality standards that Google will be enforcing. Ads found to be the most annoying were those which interrupted, distracted and cluttered the browsers’ experience.

This new Chrome feature raises antitrust concerns, as Google is privately held and arguably the biggest company in the advertising business. This new standard of control on the Internet could actually be a bit of a gray area in ominous territory. Ultimately, most regulatory agencies may overlook this enhanced control, since Google is working to improve the Internet experience, but this has yet to be seen.

With all of the theories to the negative, Google is trying to influence standards across the Internet in a positive way. In the past, they have rewarded websites with higher Google search results that have more content than ads, those that load quickly, and sites that use the secure SSL encryption standard.

I encourage all companies to analyse their ad practices or risk getting ads blocked in the quest for their site to reach the elusive top search result in the Google universe. *Marketing and Public Relations Consultant and frequent contributor to this newspaper.

6 Business Daily Thursday, June 8 2017

Macau Opinion

José I. Duarte* Tackling car emissions If everything goes according to plan, in less than one month new regulations on vehicle emissions will come into force. This is a relevant piece of legislation that addresses or tries to address some of the most upsetting environmental hazards we face, those arising from the bad quality of the air we breathe increasingly more often. More stringent standards may help and, if enforced properly, contribute to slowing down the observed degradation of air standards.

With the rise in the number of vehicles, tourists and population, the levels of congestion, noise and air pollution have increased. They have also made it more difficult to blame the air quality issues only, or mainly, on pollution imported from the Mainland.

The worst days we have been through in recent months (or years) were in no small part very much locally ‘made’.

We suppose, given the seriousness of the issue for our quality of life and the repeated expressions of concern and commitment to those matters, that the Administration has reliable information on the sources and levels of air pollution in the region. We need to know how much of our local air quality problems are due to local factors and, among those, the vehicle emissions, and we need a baseline to monitor and measure the real impact of regulations.

Moreover, we have to think about other impacts of the enforcement. For instance, are there any estimates on how many of the current fleet will be knocked off the road, and what effect that will have on our transportation system? Inevitably, a lot will depend upon the intensity and methods of enforcement. Assuming the norms will be widely and fairly enforced, what are the policy targets?

Not long ago, we had an almost perfect example of how not to make and enforce supposedly ‘environmentally friendly’ regulations.

Based on producers’ declared standards, some of which we know today were cheating when supplying the data, many vehicles were sold with significant tax deductions. Good for the sellers and buyers. But the net outcome of that policy was possibly increased congestion and pollution, as bigger numbers of big cars with bigger engines made it to the streets at subsidised prices.

Did the soon-to-be-enforced regulation learn from that experience, or is there a risk that its main outcome will be to induce higher sales of cars, with a less-than-noticeable effect upon air quality? *Economist and permanent contributor to this newspaper.

Heritage affairs

Public works playing catch-up The Cultural Affairs Bureau claims to be diligently working to amend heritage preservation problems recently raised by UNESCO’s heritage arm.

But hints that progress in urban planning might have saved them the extra pain Sheyla Zandonai sheyla.zandonai@macaubusiness.com

U

rban Planning in Macau should abide by the Cultural Heritage Protection Law. The statement was made twice by President of the Cultural Affairs Bureau (IC) Leung Hio Meng, and the Chief of IC’s Cultural Heritage Department, Leong Wai Man, in a press conference held yesterday.

The cultural bureau called the meeting to clarify its position and current preparations for the 41st session of the World Heritage Committee (WHC), to be held in Krakow, Poland in July.

It was further aimed at responding to issues raised in a recent report by the WHC, which slammed China, the State Party, and the Macau SAR Government for underperforming in protecting Macau’s Historic Centre.

“The agenda of the coming session of the World Heritage Committee is more concerned about the question of

Cultural and Marine Bureau

Regarding the controversial shipyards case, the IC President clarified that no date had been defined for starting the structural consolidation of the site.

But he added that the government would “soon start the fencing work” to protect the shipyards during the typhoon season.

“As for the listing project [initiative], our intention is very clear,” he concluded.

In the meantime, Business Daily

Sites under scrutiny | WHC 41st session

Both the President of the Cultural Affairs Bureau and the Chief of the Cultural Heritage Department will join the State Party’s delegation as Macau representatives in the WHC

urban planning in Macau. If it [planning] was done, we would not have to worry about matters such as building heights,” stated the President.

“We are serious”

Leung Hio Meng explained that the Cultural Affairs Bureau, like the WHC, is also worried about the overall urban planning situation and the plan for safeguarding the Historic Centre of Macau.

“We share UNESCO’s concerns and we will do our best to protect Macau,” he said.

In response to questions raised by the press, claiming IC’s approach to WHC considerations is “normal” the group downplayed the “graveness” of WHC’s remarks.

“The National State Administration [of Cultural Preservation] says the procedure is normal. It is different from being put ‘in danger’ and we are going to comply with the WHC decision,” he said.

When asked why the Protection and Management Plan (PMP), which should have been delivered in 2015,

reached out to the President of the Lai Chi Wun Villagers Association, David Pinto Marques, who said that the fencing work had already started this week, having been conducted over “a couple of days at most.”

“I talked to an official from the Marine and Water Bureau who was on the site [yesterday] who told me that they were assembling the bamboo fences to protect the site from typhoons and to ensure the safety of villagers,” he explained. meeting in Krakow.

A hundred items, including sites, monuments, and ensembles, will be analysed by the Committee during its 41st session.

Five items on the list are located in China, with Macau housing one of them.

has not yet been sent to the WHC, the Chief of the Heritage department said that the delays came about due to the elaboration of the new Cultural Heritage Preservation Law, only effective in early 2014.

Mr. Leung further explained that the PMP should be delivered next year.

“We hope to be able to deliver it to WHC by mid-2018,” he stated.

What now?

In order to complement the plan, which the cultural authorities say has been “divided into phases,” the Bureau will conduct a second public consultation.

“The first phase included a public consultation conducted in 2014, of which the results have already been compiled and published in 2015.

The second public consultation will take place this year, and WHC has been informed about it,” Ms. Leong explained.

President Leung added that the second phase foresees “the development of the management plan” that will be submitted to WHC in 2018, and that this will require them to “act as soon as possible.”

As for the upcoming WHC meeting in July, Mr. Leung announced that China, acting as the State Party for Macau, has asked the government to provide them with all available information.

He also said that IC sought comments last week from the State Administration of Cultural Heritage – the official China representation within UNESCO – when he and Ms. Leong visited Beijing (from June 4 to 6), and that heritage experts from China would visit Macau to assess the situation.

What is Fisherman’s worth?

Asked about the decision for height limits on construction at the Fisherman’s Wharf site – identified by the WHC in its report – the President of the Cultural Affairs Bureau said that “there is still no final decision” and that they “need to hear the position of experts from the State Administration [of Cultural Heritage] first.”

As for current protection strategies for Penha and Guia Hill in regard to height limitations on constructions in surrounding areas, and in order to protect the visibility of the sites, Ms. Leong said that they had already sent a proposition to China, but were still awaiting a reply.

Courtesy of: David Pinto Marques

Business Daily Thursday, June 8 2017 7

Macau Trade

Macau’s imports from Hong Kong surged in Q1

C

argo shipped to Macau from Hong Kong during the first three months of the year posted a 76.3 per cent year-on-year increase, according to the latest data released by the Hong Kong Census and Statistics Department. In total, 1.27 million tonnes were shipped during the three months, leading the amount shipped to the United States and Japan, at 1.21 million tonnes and 1.11 million tonnes, respectively.

During the same period, outward cargo shipped to the Mainland by sea saw an 80.3 per cent year-on-year rise, reaching 2.45 million tonnes, according to the data.

Cargo coming by river from the Pearl River, Mirs Bay and Macau and other inland waterways through Guangdong and Guanxi, saw a 24.8 per cent year-on-year increase, reaching 11.2 million tonnes.

Imports from the territories along the river to Hong Kong were primarily stone, sand and gravel, which saw a 67.1 per cent increase year-onyear to 5.26 million tonnes, while

imported machinery posted a 5.9 per cent increase yearly, while bricks, ceramic tiles and refractory construction materials fell 30.1 per cent year-on-year.

Exports along the territories linked by the river to Hong Kong

saw an overall increase, with those of stone, sand and gravel up 11 per cent to 4.69 million tonnes, and that of pulp and waste paper up 41.2 per cent year-on-year, to 1.05 million tonnes.

According to the MSAR’s Statistics

and Census Service, for the first quarter of this year exports from Macau to Hong Kong were worth MOP1.94 billion (US$241.24 million), equating to 67,622 tonnes, an increase of 15.3 per cent and 117.9 per cent year-onyear, respectively.

M&A

Melco lottery business sale transaction confirmed The transaction for the sale of 40.65 per cent of the issued shared capital of MelcoLot Limited to 500.com Limited, a lottery business operating in Mainland China has been completed, according to a joint announcement released to the Hong Kong Stock Exchange.

MelcoLot is principally engaged in

the provision of services and solutions for the distribution of lottery products and the trading of lottery terminals.

The agreement, first announced on May 29, 2017, was closed for a total consideration of HK$322.23 million (US$ US$41.34 million/MOP331.89 million), according to recent reports.

Pursuant to the announcement, Lawrence Ho Yau Lung’s Melco International Development Limited, the parent company of MelcoLot, will no longer have interests in the latter.

In its previous filing, Melco International noted that the sale of MelcoLot was a ‘good opportunity for the Group

to divest its non-core investments so that management can focus on the Group’s core operations and other business initiatives with more dynamic growth potential.’

In the most recent filing, the board of MelcoLot further announced that it had appointed Huang Lilan as its Chief Financial Officer, effective June 6. Mrs. Huang previously served as the Financial Director of a subsidiary of 500.com since 2011. S.Z. advertisement

8 Business Daily Thursday, June 8 2017

Greater china Forex

China May FX reserves rise more than expected on weaker dollar, capital controls It was the first time since June 2014 that reserves climbed for four months in a row, and the biggest gain since reserves moved back above the closely watched US$3 trillion level in February Yawen Chen and Kevin Yao

C

hina’s foreign exchange reserves rose in May for a fourth consecutive month and by more than markets had expected, as stringent capital control measures and a weakening in the dollar helped staunch outflows.

Reserves rose US$24 billion in May to a seven-month high of US$3.054 trillion, compared with an increase of US$21 billion in April to US$3.030 trillion, central bank data showed on Wednesday.

It was the first time since June 2014 that reserves climbed for four months in a row, and the biggest gain since reserves moved back above the closely watched US$3 trillion level in February.

Economists polled by Reuters had expected reserves to rise US$10 billion.

A weaker U.S. dollar boosted the value of other currencies and non-dollar assets held by China in May, the State Administration of Foreign Exchange (SAFE) said in a statement explaining the rise.

Foreign exchange supply and demand was basically balanced in the month, it added.

In May, the dollar recorded its largest monthly percentage loss against a basket of major currencies since January.

Tighter restrictions on taking funds out of the country imposed in recent months continue to keep a lid on capital outflows, said Zhou Hao, a Singapore-based analyst at Commerzbank.

“From their perspective, they have done a very successful job.”

Apart from valuation effects, Capital Economics’ Julian Evans-Pritchard said China’s central bank may also have been purchasing small quantities of foreign currencies again in May after having sold forex to shore up the sagging yuan for 18 straight months.

“This a major shift in policy that has been achieved thanks to an easing of capital outflows,” he said.

“Given our forecast for China’s May trade balance (due out on Thursday), today’s figures still point to capital outflows of around US$10 billion last month. But this is down from US$30 billion in April and US$65 billion at the end of last year.”

Turning the tide?

In April, net foreign exchange sales by the People’s Bank of China (PBOC) fell to the lowest in nearly two years as capital outflows eased in the face of strict regulatory curbs and a pause in the dollar’s rally.

The forex regulator said last month that China’s current cross-border capital flows are stabilizing, but debt risks and signs of slowing economic growth have forced policymakers to keep a tight leash on outflows.

China burned through nearly US$320 billion of reserves last year but the yuan still fell about 6.5 per cent against the dollar, its biggest annual drop since 1994.

After steadying early this year, the yuan suddenly bolted to near seven-month highs in recent weeks after the central bank changed the way it

calculates its official daily reference point to quash expectations of further depreciation and outflows as the U.S. raises interest rates.

The uncharacteristically rapid appreciation engineered by Chinese authorities were also seen as a show of strength and a warning to speculators after the country’s credit rating was downgraded by Moody’s on May 24.

The moves have prompted some investment banks to scale back views of yuan weakness this year, with some now saying it could end 2017 relatively unchanged.

In further evidence that Beijing remains concerned about a resurgence of outflows, the foreign exchange regulator announced last Friday that Chinese banks would be required to report daily on bank card holders’ overseas transactions exceeding RMB1,000 (US$147).

To be sure, veteran China watchers have cautioned that Chinese companies and individuals would find ways around the capital controls eventually.

Indeed, French investment bank Natixis said in a report that its capital flow tracker for China showed outflows for the second quarter will rise somewhat, reversing the trend in the first quarter.

But while moves to stabilise the yuan may have reassured China’s financial markets, they have come at a price.

Persistent depreciation fears along with China’s tighter capital controls and currency interventions have dealt a setback to Beijing’s ambitions to make the yuan a global currency.

The yuan has slipped to the seventh-most actively traded currency for global trade finance, transaction service provider SWIFT said.

Some Western firms have also been concerned about their ability to remit profits and dividends from China.

The value of gold reserves fell to US$75.004 billion at the end of May, from US$75.019 billion at end-April, data published on the People’s Bank of China website also showed. Reuters

Automotive

Ford offering new China price discounts, as sales fall in May China’s auto market, the world’s largest, faces slower growth this year as a tax incentive for small-engine cars is rolled back Jake Spring and Norihiko Shirouzu

Ford Motor Co said on Wednesday its China sales fell 3 per cent yearon-year in May, the third decline so far this year, and indicated it would offer local customers discounts to help boost sales of its ageing lineup of cars.

Sales in May fell to 87,733 vehicles, while they fell 11 per cent to 436,961 in the January-May period, the U.S. automaker said.

Despite the weak May figures, Ford

sales are “on track” to grow for the second-quarter overall, said Peter Fleet, Ford’s Asia Pacific sales chief, in a written statement.

“We’ve strengthened our marketing plan in China for the second quarter, with new and exciting customer promotions for Ford-branded vehicles,” Fleet said.

The plan includes a “realigned Kuga (sport-utility vehicle) customer offer,” the statement said, without elaborating. In the automotive industry, “promotions” and “offers”

generally indicate price discounting.

China’s auto market, the world’s largest, faces slower growth this year as a tax incentive for small-engine cars is rolled back, with sales rising 4 per cent for the market overall in the first four months of the year, according to the latest data available from the China Association of Automobile Manufacturers.

Sales at Ford’s U.S. peer General Motors have also fallen this year, while Japanese rival Toyota Motor Corp’s sales growth has slowed.

Fleet is set to become Asia-Pacific and China chief for Ford on July 1 in a global management shake-up after the dismissal of Chief Executive Mark Fields as the company’s sales come under increasing pressure globally.

James Hackett, a former office furniture executive heading Ford’s self-driving car unit, was named CEO last month with a slate of other leadership posts also set to change hands.

Several key models are reaching the end of their life cycles and dragging on sales, including the Kuga and EcoSport in China’s fastest growing sport-utility segment as well as the Ford Focus sedan, said Yale Zhang, Shanghai-based managing director for consultancy Automotive Foresight.

Key Points May sales -3 pct; Jan-May sales -11 pct New sales promotions put Ford on track for Q2 growth -statement Car models reaching end of life cycle drag on sales - analyst Sales of all three models have fallen by double-digits year-on-year for January to May. “From the second half and into next year they will launch some newer generation products and the situation will be better,” Zhang said.

A new version of the Ford EcoSport will launch later this year in China, a Ford spokeswoman said. Reuters

Business Daily Thursday, June 8 2017 9

Greater China Exports

In Brief

Taiwan’s May exports expand for 8th month, but momentum may slow Shipments in May to its two biggest markets, China and the United States, were strong, up 6.4 per cent and 12.9 per cent from a year earlier Faith Hung and Roger Tung

Taiwan’s exports in May expanded for the eighth straight month as factories churned out supplies for Apple Inc’s new iPhone, bolstering the island’s growth outlook even though momentum is likely to cool in the second half of the year.

Exports rose 8.4 per cent from a year earlier, slowing from a 9.4 per cent gain in April, the finance ministry said on Wednesday, but better than the 7.2 per cent pace forecast in a Reuters poll.

The data bodes well for the trade-reliant economy and reinforces expectations the central bank will leave its key policy rate steady for the fourth quarter in a row this month.

“There is no urgent reason for the central bank to raise interest rates this year. The current CPI (consumer price index) level remains low and export momentum could drop off in the second half of the year,” said Kevin Wang, an analyst of Taishin Securities Investment Advisory in Taipei.

While expectations for Apple’s iPhone 8 and other tech products are

high, the ministry cautioned against early optimism.

“It is difficult to predict the momentum for new products like highend smartphones,” said Beatrice Tsai, a ministry official. “Exports for the second half of the year can be expected to slow down, in part because of a higher base last year.”

The government has raised its 2017 economic growth forecast to a threeyear high, as exports improve on strong global demand.

Taiwan is a major link in the global manufacturing supply chain and its export trend is a key gauge of worldwide demand for technology gadgets.

The island’s export industries traditionally experience a slow season in the second quarter.

Shipments in May to its two biggest markets, China and the United States, were strong, up 6.4 per cent and 12.9 per cent from a year earlier, respectively.

Imports rose 10.2 per cent versus a forecast 11.4 per cent gain. That produced a trade surplus of US$3.46 billion in May, slightly more than economists’ expectations of US$3.315 billion.

Taiwan’s trade surplus with the United States was US$628 million in May, expanding to US$1.648 billion from January to May, the ministry said. That remained below one of the thresholds that could trigger punitive trade talks by the U.S. Treasury.

“We haven’t gone over the red line,” Tsai said.

Taiwan appeared again alongside China, Japan, South Korea, Switzerland and Germany on the latest watchlist of countries that the United States would monitor as potential currency manipulators.

Key Points Export momentum in H2 could slow Shipments to China +6.4 pct y/y, U.S. +12.9 pct Trade surplus with Unite States at US$1.6 bln in Jan-May The Taiwan dollar is one of the region’s best-performing currencies, up around 7 per cent against the U.S. dollar so far this year. Its central bank has refrained from weakening the currency through market intervention, as a precaution against being labelled a currency manipulator by the U.S. Treasury. Reuters

City planning

Chinese architect plans “garden city” in new economic zone All infrastructure in the zone, including transport, water and electricity, will be built underground to make room for green spaces and pedestrians Yawen Chen and Ryan Woo

The chief architect of China’s latest special economic zone said he expects to submit to the government by the end of this month a detailed proposal including plans for a high-tech garden city in one of the country’s most polluted provinces.

The idea of developing the Xiongan New Area, about 100 kilometres (60 miles) southwest of Beijing, was announced on April 1. The planned zone in Hebei province has been touted as having the same national significance as the Shenzhen Special Economic Zone that helped launch China’s economic transformation in 1980.

“We estimate the proposal would be submitted to the central government for review by the end of June,” Xu Kuangdi, chief adviser for the planning of the Xiongan economic zone, said at a forum on regional development in Beijing.

All infrastructure in the zone, including transport, water and

electricity, will be built underground to make room for green spaces and pedestrians, Xu said on Tuesday.

Inter-city transport would be “ultra-convenient”, with the commute between Xiongan and Beijing a mere 41-minute ride by high speed rail, he said.

There are, however, still challenges, such as securing water supplies in

such a dry area, reviving the ecology of the Baiyangdian lake, and ensuring the city is so smart and high-tech that it would “still be advanced in 100 years”, a requirement set out by President Xi Jinping.

“President Xi’s words have given us lots of pressure,” Xu said.

Xu said he was inspired by the planning of Paris, saying it was similar to the ideal envisioned by Chinese experts for Xiongan.

Xiongan’s core area will be about 100 square kilometres and an “expanded area” of 1,000 square kilometres. Reuters

Forex

China should reform FX system to promote yuan flexibility - c.bank adviser China should urgently reform its foreign exchange rate system or risk impeding the economy and plans for the yuan to play a larger role on the global stage, a central bank adviser said on Wednesday. Huang Yiping, a member of the central bank’s monetary policy committee, told a forum in Beijing that an inflexible foreign exchange rate would limit the opening of the economy and yuan internationalisation. Efforts to promote the yuan on the international stage have actually “gone backwards”, in some respects, as a result of inflexibility and efforts to stop capital outflows, he said.

Reforms to the exchange rate system were “a relatively urgent matter”, he said without elaborating Officials at the People’s Bank of China reiterated through different channels over the past few months that the country would continue to promote yuan internationalisation, which was a long-term strategy.

Cost of living

Hong Kong steals Tokyo’s crown as priciest Asian city for expats Hong Kong overtook Tokyo as the most expensive city in Asia-Pacific for expatriates, and is second globally, according to consultancy firm ECA International. Thanks to the pound, London is now cheaper than Bangkok. Hong Kong climbed to its highest position ever on the rankings.

Tokyo maintained its No. 7 spot globally while Singapore fell to 24th place. London, at 132nd, is now cheaper than Thailand’s capital, Rio de Janeiro and Buenos Aires. Luanda in oilrich Angola climbed to the top spot. “Over the past few years, the Hong Kong dollar has appreciated against most major currencies, owing to its peg to the U.S. dollar, which has pushed up the price of goods and services relative to those in locations whose currencies have weakened against the greenback,” Lee Quane, a regional director for Asia with ECA, said in a statement Wednesday.

Espionage

China labour activists suspected of sending “industrial secrets” abroad Three labour activists in China who scrutinized a company making Ivanka Trump-branded shoes are being investigated on suspicion of providing industrial secrets to a foreign organisation for money, state media reported on Wednesday. China on Tuesday rejected a call from the U.S. State Department for the release of the activists saying they were being investigated on suspicion of interfering with a company’s “normal operation and production activities” and the illegal use of “professional surveillance equipment”. The Paper, a Shanghai city government-backed newspaper, reported that police had found that the three got into “a certain factory” in Ganzhou city by applying for jobs there, after “receiving another person’s prompting”.

10 Business Daily Thursday, June 8 2017

Greater China

Mobile

Alibaba falters in bid to wrest mobile phone control from Tencent Talks reflect the inability of a once-vaunted initiative to forestall Tencent’s dominance in the mobile arena, secured through the utility of WeChat Lulu Yilun Chen

A

libaba Group Holding Ltd.’s six-year-old excursion into mobile operating systems is faltering in China, casting doubt over software that bears billionaire-founder Jack Ma’s name and was once touted as key to countering Tencent Holdings Ltd. China’s largest e-commerce company debuted YunOS in 2011, a system that underpins search, shopping and browsing that its executives last year said could attain as much as 25 per cent domestic market share by the end of 2016 -- surpassing Apple Inc.’s iOS. Six years on, YunOS’ slice of China software installations stands at just 2.2 per cent while its share of 2016 shipments was 10 per cent, researchers Canalys and Counterpoint estimate, respectively. Alibaba disputes those numbers.

Alibaba managers have grown increasingly unhappy with its sluggish adoption and have begun an internal debate around the software’s future, a person familiar with the matter said.

No conclusions have been reached, the person said, asking not to be named discussing a confidential matter. Yet the talks reflect the inability of a once-vaunted initiative to forestall Tencent’s dominance in the mobile arena, secured through the utility of WeChat -- a universal app that melds messaging, payments, media, shopping and on-demand services.

“Apart from Meizu, none of the

other large mobile phone makers are working with them closely,” Jia Mo, a Shanghai-based analyst at Canalys said by phone. And “Alibaba can only attempt to expand its mobile operating system in China. It could run into all sorts of IP issues if it tried to go overseas.”

Meizu Technology Corp. is backed

by Alibaba.

Continue to invest

Alibaba folded the YunOS operation into its cloud computing division in February, the company said in an emailed statement. The Chinese firm said it will continue to invest in the software and push its wider adoption among the Internet of Things or connected devices, and pointed to recent advances such as a YunOS-enabled car it unveiled last year alongside automaker SAIC Motor Corp.

“YunOS is an important strategic business under Alibaba Group,” it said. The company “will continue the investment into YunOS and our IoT ecosystem.”

Android remains the most dominant operating system in China.

Like Apple’s, the software serves as a gateway to Google services from maps to search. In China however, many of its apps and functions are blocked by a government that censors information.

Positioned as an important component in Alibaba’s shift to mobile, YunOS was offered in 2011 as a means to capture the time spent online by a growing population of

mobile internet users, now standing at 695 million. The company wanted to grow beyond mobile e-commerce, hoping the software could increase usage in search, music and video.

Its moniker could refer to either the cloud, a key element of the platform, or the company’s founder, whose Chinese name is Ma Yun. Despite YunOS’ less than speedy take-up, Vice Chairman Joseph Tsai pledged in 2015 to continue investing and push its adoption in a plethora of devices from set-top boxes to TVs. Executives spoke in 2016 about offering the system for a new generation of connected cars, joining a battle to control the automobile dashboard.

It wasn’t clear whether Alibaba executives were referring to installed base or shipments when they talked about their 25 per cent target, but independent research shows YunOS hasn’t caught on. The largest adopter of YunOS remains Meizu, a distant rival to Oppo, Huawei Technologies Co. and Vivo. YunOS was installed on 2.2 per cent of Chinese smartphones as of the end of 2016 and that figure could inch higher to 2.8 per cent this year, according to Canalys. The tally however doesn’t include non-branded phones, many of which do work with Alibaba in return for subsidies, Jia said.

Counterpoint Research pegged YunOS’ share of 2016 shipments at about 10 per cent and growing to 12 per cent this year. That uptick could be driven by Chinese government backing, carrier tie-ups and Meizu’s latest models, said Zhang Mengmeng, a Counterpoint Research analyst.

Disputed

Alibaba disputes those numbers, citing a report from Sino Market Research that shows YunOS

powered more than 16 per cent of phones shipped in the first quarter of 2016. A representative at the domestic consultancy declined to share more recent figures when contacted. Huawei, Oppo and Vivo’s mostly Android phones commanded more than half of all Chinese phone shipments in the December quarter, according to IDC. Apple’s share stood at 11 per cent.

More broadly, Alibaba continues to lag Tencent in mobile as people ditch computers and the smartphone becomes their primary device. The online commerce giant’s made great strides in migrating shoppers: it recorded 507 million mobile monthly active users as of March for its retail sites. But it’s made less headway beyond its bread-and-butter shopping business.

Tencent took a different approach: instead of creating its own operating system or investing in phones, it directed traffic through WeChat.

WeChat branched out to include music, videos, shopping, building an audience of more than 937.8 million.

It pioneered a service called Mini Programs, letting users access third-party apps without downloading them, akin to an OS. As of April, time spent on WeChat was more than twice that on Alibaba’s Taobao or Tmall, Kleiner Perkins partner Mary Meeker said in her internet trends report, citing data from Hillhouse Capital. Hillhouse was an early backer of Tencent.

Meizu’s own future is less than certain. Alibaba invested US$590 million in the company in 2015, betting it would help the company establish a mobile foothold. But the startup has cut about 10 per cent of its workforce since the start of the year, Caixin reported, following a 5 per cent cut in 2016. Bloomberg

Business Daily Thursday, June 8 2017 11

Asia Shipping

Robot ghost ships to extend miner’s technology drive to seas Deploying unmanned ships on the 10-day sea journey from Australia’s northern coast to China would be a logical extension of technology that currently runs from mines to ports and allows producers to respond quickly to specific customer demands David Stringer

B

HP Billiton Ltd., the world’s biggest mining company, is studying the introduction of giant, automated cargo ships to carry everything from iron ore to coal as part of a strategic shift that may disrupt the US$334 billion global shipping industry.

“Safe and efficient autonomous vessels carrying BHP cargo, powered

by BHP gas, is our vision for the future of dry bulk shipping,” Vice President, Freight Rashpal Bhatti, wrote in a posting on its website. The company, also one of the world’s largest dry bulk charterers, is seeking partners to work on technological changes in the sector, he said.

BHP, which charters about 1,500 voyages a year for around a quarter of a billion metric tons of iron ore, copper and coal, wants to deploy the technology within a decade, according to Bhatti. For the biggest miners, a move to crewless ships could deliver new savings in the US$86 billion a year seaborne iron ore market, mirroring the shift to autonomous trucks to trains that allow fewer staff to remotely operate or monitor multiple vehicles.

Deploying unmanned ships on the 10-day sea journey from Australia’s northern coast to China would be a logical extension of technology that currently runs from mines to ports and allows producers to respond quickly to specific customer demands, Emilie

Ditton, Sydney-based research director at IDC Energy Insights, said by phone.

“There has been in the last six months a really big change in the desire of mining companies to seek out opportunities for innovation,” Ditton said. “There’s a much bigger recognition that there are opportunities to innovate across the board.”

Work is underway at the International Maritime Organization, the United Nations agency in London that oversees global shipping, to consider regulation of autonomous surface ships, James Fanshawe, a former senior Royal Navy officer and chairman of the U.K.’s Maritime Autonomous Systems Regulatory Working Group, said by phone. A meeting beginning Wednesday of IMO’s maritime safety committee will consider proposals for a regulatory study on the “safe, secure and

environmentally sound operation” of autonomous vessels, according to the organization’s website.

Market reform

BHP takes the view that the dry bulk freight market is on the verge of pricing and liquidity reforms similar to those seen in bulk commodities markets over the last decade, Bhatti said in the May 30 posting. The company cut freight and transportation costs by 16 per cent to US$2.3 billion in fiscal 2016, according to filings.

The Baltic Dry Index, a measure of commodity shipping costs, fell 0.4 per cent Tuesday to 818 points, according to the Baltic Exchange in London. BHP declined 0.6 per cent to A$23.19 in Sydney trading Wednesday.

A three-year, 3.8 million euro (US$4.3 million) project backed by the European Union developed a proposal for an intercontinental bulk carrier and concluded in 2015 that autonomous technology is both feasible and likely to be adopted.

China’s Maritime Safety Administration is also working on development of uncrewed ships, according to its website.

Rio Tinto Group, which uses a fleet of about 76 driverless trucks and will fully deploy autonomous

trains in Western Australia by the end of next year, sees shipping as among the next set of processes to target with innovation, its top iron ore executive Chris Salisbury told a Perth conference last month.

Rio’s marine unit shipped 281 million tonnes of cargo in 2016 and is the largest dry bulk shipping business in the world, operating 17 vessels of its own and contracting a fleet of about 200 at any one time, according to filings.

An unmanned ocean-going vessel could be in international waters by 2035 under proposals by Rolls-Royce Holdings Plc, which has developed a virtual prototype and aims to have remotely controlled coastal vessels in testing as soon as 2020, according to its marine division. Fertilizer producer Yara International ASA said last month it will deploy an autonomous-capable container ship on Norway’s coast from next year and aims to move to remote operation in 2019 and full autonomy a year later.

“Autonomous ships will change the way transport systems are designed and operated,” Ornulf Jan Rodseth, a Trondheim, Norway-based senior scientist at Sintef, Scandinavia’s biggest science and technology researcher, said in an e-mail. If freight users, including BHP, are able to adopt the technology, “you might see that they build a new fleet of special purpose ships that puts the traditional ships and ship operators out of business,” he said. Bloomberg

Airlines

Philippines’ Cebu Air orders 7 Airbus planes, delays delivery of earlier order Airlines in Southeast Asia, including AirAsia and Vietjet Aviation JSC, have placed large aircraft orders in recent years, driven by the potential of rapid growth in the region Enrico Dela Cruz

Philippine low-cost carrier Cebu Air Inc said it has placed an order with Airbus for seven A321CEO planes worth US$812 million to meet increased capacity needs but is delaying deliveries of 32 A321NEO planes already ordered by about a year.

Cebu Air, also known as Cebu Pacific, said in a statement on Wednesday the seven A321CEO aircraft are for delivery from March 2018. The A321NEO aircraft will now be delivered between the fourth quarter of 2018 until 2022, compared to the earlier plan of deliveries beginning September 2017 until 2021, it said.

Cebu Air said it has decided to defer the A321NEO deliveries due to delays with the Pratt & Whitney engines selected to power the aircraft.

“We have decided to take a conservative approach to the introduction of the A321NEO into our operations,” Cebu Air Chief Finance Officer Andrew Huang said in the statement. “We remain confident that Pratt & Whitney will address all issues on the GTF (Geared Turbo Fan) engine.”

Pratt & Whitney, the aircraft-engine unit of United Technologies Corp, did not immediately respond to an emailed request for comment.

The US$812 million value of the latest order is based on list prices.

Aircraft manufacturers typically give discounts to list prices.

Airlines in Southeast Asia, including AirAsia and Vietjet Aviation JSC, have placed large aircraft orders in recent years, driven by the potential of rapid growth in the region.

Airbus COO John Leahy was quoted in the Cebu Air statement as saying that the airline will be able to respond to growing demand with the A321 purchases.

Cebu Air and its main rival Philippine Airlines are busy expanding their fleets, especially given favourable conditions in the domestic market amid the growth momentum for the local economy.

Cebu Air recently took delivery of two brand-new planes, an Airbus A330 and an ATR 72-600, bringing its fleet to 61. Its fleet now comprises four Airbus A319, 36 Airbus A320, eight Airbus A330, eight ATR 72-500, and five ATR 72-600 aircraft.

The carrier flies to 37 domestic and 26 international destinations, operating over 100 routes spanning across Asia, Australia, the Middle East and the United States. Reuters

12 Business Daily Thursday, June 8 2017

Asia Stocks

Top Philippine fund cuts cash as Duterte tax plan boosts stocks Gains accelerated in the second quarter amid optimism President Rodrigo Duterte will be able to push through a delayed plan to lower and, also, raise some taxes to help fund projects Ian Sayson

T

he best stock fund in the Philippines is putting its cash to work, betting the rally in local shares isn’t done yet.

The Philippines Stock Exchange Index has climbed toward a record set in 2015, rising 16 per cent this year.

Gains accelerated in the second quarter amid optimism President Rodrigo Duterte will be able to push through

a delayed plan to lower and, also, raise some taxes to help fund projects.

On the corporate profits front, more than half of the companies tracked by analysts beat projections.

“I don’t think we have seen the market’s peak yet for the year,” said Julian Tarrobago, head of equities at ATR Asset Management, which has US$1.9 billion in assets under management. “Corporate earnings look encouraging” and “the tax reform bill passed a very important hurdle and

is moving to final approval.”

Tarrobago’s ATRAM Alpha Opportunity Fund has returned 28 per cent in the past year, the most among the 220 peso-denominated funds covering all asset classes in the Philippines tracked by Bloomberg. He halved the fund’s cash holdings to 7 per cent from end-2016 as he bought more stocks, favoring infrastructure, consumer-related and bank shares.

The three sectors comprise 67 per cent of the fund, he said.

The lower house of Congress passed the tax bill on May 31, and lawmakers in the senate will take it up when they return next month. Duterte has certified the bill as urgent.

That’s helped overseas investors reverse course and pour US$399 million

into Philippine stocks since April 1, pushing the stock benchmark to only 174 points away from its 8,127.48 peak in 2015. In the previous six months, foreigners withdrew US$1.02 billion.

Tarrobago expects the proposal, which promises lower personal income taxes and higher levies on oil, cars and sugary drinks, to become law this year and implemented in 2018.

In its current form, the government expects an additional 130 billion pesos (US$2.62 billion).

The bill will boost economic growth by as much as 1.1 percentage points by 2022 as the government spends the proceeds on infrastructure projects, Economic Planning Secretary Ernesto Pernia said last month.

Still, there is a possibility the bill will be watered down in the senate, said James Lago, head of research at PCCI Securities Brokers Corp. That could effect foreign fund inflows and push stocks lower. “At this stage, it’s time to take profit on the winners,” Lago said.

The rally has made Philippine stocks the most expensive in Asia.

The local stock benchmark is valued at 18.4 times forward earnings, compared with 13.8 times for the MSCI Asia Pacific Index.

ATR’s Tarrobago remains bullish.

“The Philippine structural growth story will be driven by infrastructure and consumer spending,” he said.

“Even without the tax reform, the economic growth will still be among the fastest in Asia.” Bloomberg

Defence

South Korea suspends missile shield deployment, Yonhap says During his election campaign, Moon called for a review of the deployment of the Terminal High Altitude Area Defence shield that was approved by his predecessor Park Geun-hye Russell Ward and David Tweed

South Korea’s new president is suspending the installation of remaining components of a controversial U.S. missile shield pending an environmental impact assessment, Yonhap News reported, leaving the system incomplete while North Korea steps up its missile development.

“We are not saying the two launchers and other equipment that has already been deployed should be withdrawn,” a senior official at President Moon Jae-in’s office said Wednesday, according to Yonhap.

“But those that have yet to be deployed will have to wait.”

The official said the assessment could take as long as a year, slowing down the full installation of a missile system that China opposes.

During his election campaign, Moon called for a review of the deployment of the Terminal High Altitude Area Defence shield that was approved by his predecessor Park Geun-hye. He ordered an investigation last month into how the final components of the Thaad battery arrived in the country without the defence ministry informing him.

Two of the six launchers that form a complete battery were deployed in April in Seongju county, more than

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200 kilometers (125 miles) southeast of Seoul, amid protests from residents. The remaining four launchers are needed to make the system fully operational.

Minimize effectiveness

“Only having two deployed will certainly minimize the strategic effectiveness of the system,” said Michael Raska, an assistant professor in the military transformations program at

the S. Rajaratnam School of International Studies in Singapore. “Of course, that doesn’t mean that they won’t have any coverage at all.”

U.S. Defence Secretary James Mattis said last week that Thaad was dispatched to respond to the “real problem” of North Korea, which has tested ballistic missiles nine times this year as part of its nuclear weapons program. China objects to the deployment over concerns its powerful radar would allow spying on its own missile systems.

“There is a confluence of South Korea’s domestic policy in a country that is deeply divided over this issue and Chinese pressure at play here,” said Raska. “If South Korea

accepts Thaad, it becomes increasingly dependent on the U.S., and South Korea is becoming increasingly worried about any unilateral decision by the United States against North Korea.”

China is aware of the report and is following domestic developments in South Korea closely, foreign ministry spokeswoman Hua Chunying said at a news briefing in Beijing. “No matter what happens, we are firmly opposed to the deployment of the Thaad system,” she added.

The news was featured on the home page of China’s Communist Party-affiliated Global Times, which ran a headline with two exclamation marks. Bloomberg

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

Business Daily Thursday, June 8 2017 13

Asia Nuclear

In Brief

Five workers exposed to radioactive material at Japan nuclear research facility A JAEA spokesman said the material in one of the workers’ lungs was plutonium, marking the highest such measurement for plutonium from any atomic accident in the country Five workers at a nuclear research facility in east Japan were exposed to radioactive material on Tuesday after a bag that contained it burst, the plant’s state-run operator said.

Japan Atomic Energy Agency (JAEA) said in a statement the incident occurred during a check on radioactive storage inside a “controlled” room at the facility in Oarai, with no radioactive material leaking outside.

Shunichi Tanaka, the chairman of the regulator Nuclear Regulation Authority, in a weekly news conference on Wednesday criticised JAEA for not being more careful and said the level

of exposure within the room where the accident happened was “high”.

Up to 22,000 becquerels of radioactive materials were detected in the lungs of one of the workers, JAEA said. That could potentially expose him to levels of radiation many times higher than most people over the coming decades.

A JAEA spokesman who declined to be named said the material in that worker’s lungs was plutonium, marking the highest such measurement for plutonium from any atomic accident in the country.

Another company spokesman said

measurements of radioactive materials between 2,200 becquerels and 14,000 becquerels were detected in the other four workers. He said some of this may have come from plutonium.

“The workers had no (immediate) irregularities in their health, but we cannot deny the possibility of any health impact in the future,” he said.

The workers were wearing coveralls, caps, gloves and half-masks.

Japan’s nuclear industry has been in tatters in the wake of the Fukushima disaster in 2011, with parts of the public deeply sceptical about the safety of atomic energy.

Yoshihide Suga, Japan’s chief cabinet secretary, said in a news conference that he had been told the exposure would not pose an immediate risk to the workers’ health. Reuters

Growth

Self-made US$900 mln man says India must swap hope for action Agrawal began his career as a sub-broker on the Bombay Stock Exchange in 1987, crowding inside a hall and shouting orders under the open outcry system Nupur Acharya and Tom Redmond

For India to thrive, it needs something more concrete than the optimism driving its equity market to record heights.

That’s the view of Raamdeo Agrawal, the stock picker who helped build Motilal Oswal Financial Services Ltd. into a multi-billion dollar company. From the firm’s high-rise in a fast-growing business district in central Mumbai, he has seen the benchmark index set fresh records most every other day.

“This is price to hope,” he says.

“Hope is hope. It is not real.”

Agrawal points to the congested roads below, and talks about the stalled plans for a much-needed second airport in Mumbai, India’s financial capital. The government says the project, first proposed in 1997 when Bill Clinton was U.S. president, will be partly operational by 2020.

“We have a reasonable building,” Agrawal says of his office. “But you see the roads. I can’t go and build the roads. They have to be built by the government,” he says. “We need a very high-quality airport and there’s no dearth of land or money. It is about sheer execution.”

Investors have been betting Prime Minister Narendra Modi will develop infrastructure and create jobs in the world’s largest democracy. The S&P BSE Sensex’s 17 per cent advance so far this year means it’s valued at 23 times reported earnings, among the highest in Asia. The gauge rose for a second day this week, adding 0.3 per cent at the close in Mumbai.

In this year’s federal budget, the government proposed a record 3.96 trillion rupees (US$61.5 billion) to build and modernize railways, airports and roads. In March, junior road minister P. Radhakrishnan told lawmakers that construction of highways was slowed by delays in acquiring land and environmental clearances, protests and poorly performing contractors.

‘Strict headmaster’

If anyone can smash the logjams that keep India below Namibia and Azerbaijan in the World Economic Forum’s infrastructure ranking, it’s

Modi, according to Agrawal. He says the prime minister, who took office in May 2014, still has “massive” political capital, citing the goods and services tax due to start on July 1 as a reason for hope. A thumping win for Modi’s party in key state elections in March added to optimism.

“Now we have a very strict headmaster,” Agrawal said. “India has the chaos of 60 years of leaderlessness.

You know what happens when a strict principal comes in at school?

All the chaos is over.”

Agrawal, a longtime Warren Buffett fan, was fresh back from his annual pilgrimage to Omaha for Berkshire Hathaway Inc.’s shareholder meeting. Like Buffett, the 60-year-old advocates buying only a few stocks and holding them.

Agrawal began his career as a sub-broker on the Bombay Stock Exchange in 1987, crowding inside a hall and shouting orders under the open outcry system. He worked with partner Motilal Oswal to build a US$2.5 billion company whose shares have returned an average of 19 per cent annually since going public in 2007, twice as much as the Sensex. Motilal Oswal’s asset management arm, which focuses on value investing targeting small and mid-cap stocks, oversees about US$3.6 billion.

Agrawal and his family hold 36 per cent of Motilal Oswal, according to the company. That’s worth about US$900 million, data compiled by Bloomberg show.

Agrawal, who’s seen many boom and bust cycles over three decades investing in Indian equities, says the market will correct when people least expect it. Even Modi’s shock junking of 86 per cent of the currency in November to fight graft only briefly halted the rally, he notes.

While Asia’s third-largest economy expanded 7.1 per cent in the year ended March, making it an investor favorite, India can enjoy a decade of double-digit growth if Modi accelerates reforms, Agrawal says. Within that, the key to successful investing is to back ambitious first-generation entrepreneurs like himself, he says.

Motilal Oswal’s India Opportunity Portfolio Strategy Fund holds 15 to 20 companies from industries including financial services and building materials -- sectors the money manager believes will show the fastest growth. The 24.6-billion rupee mutual fund for wealthy individuals has returned about 19 per cent a year since it started in February 2010, beating the 15 per cent annual gain in its benchmark.

Its biggest holding, Development Credit Bank Ltd., is a Mumbai-based lender whose shares have more than doubled since February last year.

Kajaria Ceramics Ltd., another top pick, has seen its stock surge ninefold in the past five years, guided by Ashok Kajaria, who founded the tile maker 28 years ago.

For all his optimism, Agrawal isn’t afraid to entertain his doubts. Despite considering Buffett a personal hero, he sold all his Berkshire shares last year after realizing the company couldn’t meet his growth criteria.

On India, he says he has both hope and some impatience.

Asked which feeling is stronger, he doesn’t hesitate.

“Hope,” he says.

Then he pauses for about 10 seconds before breaking the silence.

“We have become perennially patient,” he says. Bloomberg

Investigation

Malaysia picks former minister to probe suspension of Felda Global’s CEO, CFO The Malaysian government has appointed Idris Jala, a former cabinet minister, to look into Felda Global Venture Holdings’ suspension of two of its top executives, state news agency Bernama reported on Wednesday.The government has appointed Idris to “establish the facts of the case and recommend the way forward” regarding FGV’s decision to suspend its chief executive office, chief financial officer and two other directors, Bernama reported, citing a statement from the prime minister’s office. The board of FGV, the world’s third-largest palm oil plantation operator, suspended its CEO and CFO on Tuesday as it investigates transactions at a subsidiary. The management crisis deepened on Wednesday with the national anti-graft agency saying it will soon investigate several company officials for alleged corruption and abuse of power.

Transportation

Ride-hailing firm Grab says likely to raise funds in near future Ride-hailing firm Grab, Uber Technologies Inc’s largest rival in Southeast Asia, is likely to embark on a round of fundraising as it works to develop new offerings such as financial services, its chief executive told Reuters on Tuesday.

“I can’t specifically give a time line but I can imagine somewhere in the near future, there probably could be more money coming in. That’s probably quite likely,” Anthony Tan, group chief executive officer and co-founder of Grab, said in an interview after an event to mark the firm’s fifth anniversary.

In five years, Grab’s network has grown from 40 drivers in one country to over 930,000 across 55 cities in seven countries including Singapore, Indonesia, Vietnam and the Philippines.

The Singapore-based startup raised US$750 million in a funding round in September, which sources said valued the firm at over $3 billion.

Grab’s current investors include Chinese peer Didi Chuxing, China Investment Corp, Japan’s SoftBank Group Corp and Vertex Ventures Holdings - a subsidiary of Singapore state investor Temasek Holdings (Pte) Ltd. World record

Australian shares pare losses as Q1 GDP beats view Australian shares pared their losses on Wednesday as stronger-than-expected GDP growth data saw the resource-rich economy tie the world record for the longest period without a recession. Australia’s gross domestic product growth came in at 0.3 per cent in the first quarter from the previous three months, beating a 0.2 per cent predicted by analysts to cap nearly 26 years of continuous expansion - equal to the Netherland’s 103-quarter record. The headline GDP number and gains in consumption expenditure paint a positive economic growth outlook for the next quarter in Australia, said Ric Spooner, chief market strategist at CMC Markets.

14 Business Daily Thursday, June 8 2017

International In Brief Eurozone

ECB to nudge up growth forecasts but inflation a drag The European Central Bank is likely to nudge up its forecasts for economic growth in the euro zone but trim its estimates for inflation at its meeting on Thursday, sources told Reuters. This mixed outlook should strengthen the case for keeping the ECB’s aggressive stimulus policy of massive bond purchases and sub-zero rates in place despite growing calls from Germany for a gradual tightening. The sources said the changes will be small, in some cases as tiny as 10 basis points, reflecting an adjustment rather an overhaul of the March projections. The ECB is widely expected to keep its policy unchanged on Thursday, including its 2.3 trillion euro bond buying programme and pledge to keep rates low.

Court

UK court backs Azeri bank IBA’s petition over creditors International Bank of Azerbaijan, the energy exporting country’s biggest lender, said on Wednesday a London court had supported its request to prevent creditors pursuing legal action in the United Kingdom, giving it time to restructure US$3.3 billion in debt. A similar decision was made by a U.S. court last month.

The state-controlled bank said last month it was suspending payments on some liabilities and seeking creditors’ support to restructure more than US$3 billion of debt, mostly owed to foreign creditors, to tackle bad loans left over from an oil price slump. IBA presented a restructuring plan to its creditors on May 23 in London and infuriated them by saying they could swap its debt for sovereign bonds but some would suffer losses and have to wait longer to be repaid.

Ruling

German utilities set for multi-billion euro windfall after nuclear tax ruling Germany’s top court on Wednesday declared the country’s nuclear fuel tax to be illegal, a major victory for power firms now poised to reclaim about 6.3 billion euros (US$7.1 billion) plus interest and ease the strain on their balance sheets. Germany’s Environment Minister Barbara Hendricks called the ruling a “colossal nuisance” as well as a slap in the face for the previous coalition under Chancellor Angela Merkel that was in charge when the tax was introduced in late 2010.

The verdict marks a second success for utilities after a court ruled in December that a push to shut down all of Germany’s nuclear plants violated some of their property rights. E.ON, RWE and EnBW have been hit hard by Chancellor Merkel’s swift decision to exit nuclear power by 2022, a move prompted by the disaster at Fukushima, Japan, in March 2011.

Conflict

Gulf crisis builds as U.A.E. downplays chance of quick fix Qatar says the Saudi charges against it are a ploy for regional dominance over archrival Iran, the emirate’s ally Alaa Shahine and Zainab Fattah

T

he worst crisis in decades among the Gulf’s Arab monarchies intensified on Wednesday, with a Saudi-led alliance imposing more punitive sanctions against Qatar and a senior U.A.E. official playing down the chances of a quick diplomatic resolution.

The United Arab Emirates said it would no longer grant visas on arrival for foreigners living in Qatar, while Qatari nationals were barred from transiting through the country.

Both decisions were relayed through state-run media. U.A.E. residents who express support or sympathy for Qatar on social media could face a jail term of up to 15 years, the public prosecutor said.

Three Gulf states -- Saudi Arabia, the U.A.E. and Bahrain -- along with Egypt on Monday blocked their transport routes with Qatar, including the country’s only land border. They accuse Doha of destabilizing the region through supporting proxies of Shiite Muslim Iran and the Sunni militants of al-Qaeda and Islamic State. Qatar says the Saudi charges against it are a ploy for regional dominance over archrival Iran, the emirate’s ally.

Dispelling hopes that a solution to the impasse could be found soon, Anwar Gargash, the U.A.E. minister of state for foreign affairs, said the alliance is willing to take further measures against Qatar if it doesn’t pledge to overhaul its “subversive” foreign policy. In Berlin, Saudi Foreign Minister Adel Al-Jubeir called on Qatar to stop supporting “certain organizations,” saying, “We don’t have sufficient cooperation in this area.”

As the pressure on Qatar mounted, Kuwaiti ruler Sheikh Sabah Al-Ahmed Al-Sabah was shuttling among Gulf capitals in an effort to find a solution to a crisis that pits some of the world’s richest nations against each other. U.S. President Donald Trump on Tuesday backed the Saudi-led measures, calling it just punishment for the country’s financial support for extremists.

“For us, this a critical issue and there is no turning back to the status quo,” Gargash said on Wednesday in Dubai. “There has to be first a very clear political indication, whether it’s to the mediator, whether it’s to the GCC countries, that Qatar is changing course. You start with that.

You can’t start mediation when Qatar is in denial and I think right now we are in a phase where Qatar is in denial.”

Turkey -- which has sided with Qatar against Saudi Arabia in supporting the Muslim Brotherhood in Egypt and Hamas militants who rule the Gaza Strip -- criticized the squeeze on the emirate and offered to try to mend the rift through dialogue.

“I’d like to say that we don’t find sanctions against Qatar right,” Erdogan said in Ankara late Tuesday.

“We are ready to do everything to resolve other countries’ problems with Qatar.”

Gas Titan

With a population lower than Houston’s, Qatar is the world’s No. 1 exporter of liquefied natural gas. Its US$335 billion sovereign wealth fund owns stakes in global companies from Volkswagen to Glencore and Barclays.

But the crisis hit the Gulf country at a time when its economy was starting

to face some headwinds amid the drop in global commodity prices.

Moody’s Investor Service cut Qatar’s credit rating last month by one level to Aa3, the fourth-highest investment grade, citing uncertainty over its economic growth model.

Qatar’s ability to weather the pressure is “best measured in months, not years,” Michael Cirami, who manages about US$13 billion at Eaton Vance in Boston, said by phone. “So I am going to start to get concerned if this goes on for a month or two, not that I think they can’t weather a month or two but because that gives us an idea that this isn’t a quickly resolvable issue.”

Digging In

The main question is to what extent Saudi will succeed in pressuring the Qatari royal family to turn against the emir, Sheikh Tamim bin Hamad Al Thani, said Mokhtar Awad, a research fellow at George Washington University’s program on extremism.

“The situation has escalated to a point that it is difficult to imagine” Saudi Arabia and the United Arab Emirates “backing down without Qatari capitulation or regime change,” he said.

Qatar’s benchmark QE Index for stocks fell 1 per cent at the close in Doha. The measure tumbled more than 7 per cent on Monday, the most since 2009.

While Gargash said he hoped that “cooler heads” in Qatar would prevail to defuse the crisis, he said the allies had tools to inflict more economic pain on the fellow Gulf Cooperation Council member if necessary. He denied that the alliance was seeking regime change in Qatar.

The sanctions are meant to say to Qatar that it has chosen a route “that supports extremism, supports terrorism,” Gargash said. “You can live with it but you are not going to be part of what we want to do and so you can’t have both worlds.” Bloomberg

Business Daily Thursday, June 8 2017 15

Opinion Business Wires

Philstar Employers have expressed reservations over a bill seeking to increase the service incentive leave of employees, but aired support for another bill proposing to increase the normal work hours per day under the compressed work week scheme.

“While ECOP does not begrudge increasing the grant of service incentive leave, it is concerned that any further reduction in the number of working days particularly through additional paid leaves impacts not only on productivity but also on cost of doing business, and also on the viability of micro and small enterprises which constitute 89 per cent and 9.22 per cent, respectively, of enterprises in the formal sector,” the Employers Confederation of the Philippines said in its recent position paper submitted to Congress.

Is the Paris Accord unfair to America?

The Straits Times The Monetary Authority of Singapore (MAS) released yesterday a public consultation paper on proposals to facilitate the provision of robo advisory services in Singapore.

At least two firms - Autowealth and Stashaway/AWP - have already been approved in recent months to offer such services.

Financial institutions currently regulated under the Securities and Futures Act (SFA) and Financial Services Act (FAA) can already provide robo advisory services, and some, including OCBC Bank and UBS, have started to do so.

To make it easier for such entities to operate in Singapore, MAS intends to refine licensing and business conduct requirements.

First, digital advisers that operate as fund managers under the SFA will be allowed to offer their services to retail investors even if they do not meet the track record requirement, provided they meet certain safeguards.

Vietnam News Support provided to small and mediumsized enterprises (SMEs) will not be in cash, but rather take the form of favourable conditions in order for SMEs to grow, Deputy Minister of Planning and Investment Đặng Huy Đông has said. Đông stated that the draft Law on Support to SMEs, which was under discussion by the National Assembly and is expected to be passed next week, would focus on three programmes so as to realise the Government’s goal of doubling the number of firms to one million by 2020.

Those include support to firms converting from business households; support to start-ups and the development of the ecosystem; and support to firms involved in the global value chain.

The Asahi Shimbun In a first-and perhaps lonely-attempt in Japan, budget airline Peach Aviation Ltd. plans to let passengers use digital currency bitcoin to buy flight tickets by the end of the year.

Targeting overseas visitors to Japan, Peach Aviation said it will work with BITPoint Japan Co., a Tokyo-based company that runs a bitcoin exchange, to introduce the bitcoin-paying system for the airline’s website. The commission is expected to be cheaper than the 440 yen (US$3.93) for credit card payments.

Machines to exchange yen and bitcoin will be set up near counters of multiple airports under the plan.

Peach Aviation decided to introduce the service on expectations that more tourists will switch to the digital currency, which allows them to travel light and saves them the trouble of carrying around cash or exchanging money for the local currency.

W

hen President Donald Trump announced that the U.S. was withdrawing from the Paris climate agreement, he justified the move by saying “the bottom line is that the Paris Accord is very unfair, at the highest level, to the United States.” Is it?

To assess Trump’s claim, it is important to understand that when we ask how much countries should cut their greenhouse-gas emissions, we are essentially discussing how to distribute a limited resource. It’s as if we were discussing how to divide an apple pie when more hungry people want a big slice than there are big slices.

In the case of climate change, the pie is the atmosphere’s capacity to absorb our emissions without triggering catastrophic change to our planet’s climate. The people wanting big slices are the countries that would like to emit large quantities of greenhouse gases.

We all know one way to divide a pie: give everyone an equal slice. For the atmosphere, that would mean calculating what quantity of greenhouse gases the world as a whole can safely emit up to a given date, and dividing that by the current population of the world. That yields everyone’s per capita share of the atmosphere’s capacity to absorb our greenhouse gases, up to the selected date.

But the world is divided into sovereign states, not individuals, and there is no way to assess each individual’s greenhousegas emissions. So we need to move to allocations for each country. To do this consistently with “equal shares,” we need to multiply the per capita share by the country’s population to reach its emissions quota.

By this standard, was the Paris accord unfair to the U.S.? Hardly.

The U.S. currently has less than 5 per cent of the world’s population, but emits nearly 15 per cent of the world’s greenhouse gases. If fairness means that everyone’s slice of pie should be the same size, it is the U.S. that is being unfair, by grabbing a slice that is three times bigger than it should have.

India, by contrast, has 17 per cent of the world’s population and emits less than 6 per cent of its greenhouse gases, so it would be entitled to almost three times its current emissions. Many other developing countries use an even smaller fraction of their per capita share of the atmosphere.

Perhaps equal slices are not the fairest way to divide a pie. One obvious objection is that equal division takes no account of how much the people seeking slices really need them. Are the pie-seekers genuinely hungry, or are they already well fed and just looking for a treat?

But taking need into account does nothing to assist Trump’s case that the U.S. was unfairly treated by the Paris accord, because Americans could easily cut back on luxuries like vacation travel, air conditioning, and meat consumption, whereas less affluent countries need to industrialize to lift their populations out of depths of poverty unknown in the U.S..

A different principle of fairness arises if we consider greenhouse gases as pollution, and apply the

“

Peter Singer Professor of Bioethics at Princeton University and Laureate Professor at the University of Melbourne

principle that whoever caused the pollution should pay to clean it up. The reason that climate change is a problem now is that over the past two centuries, some countries have been putting large amounts of carbon dioxide and other greenhouse gases into the atmosphere.

No country has emitted more greenhouse gases over this period than the U.S.. That is a reason to require the U.S. to make deeper cuts now than other countries must make, especially given that the U.S. is continuing to emit greenhouse gases at a much higher per capita rate than other large emitters, such as China and India. If the older industrialized countries caused the problem, it seems reasonable to ask them to do the most to fix it.

We could also view countries’ historical contributions to climate change in terms of a per capita share over time. Other countries can claim that the U.S. has already used up its historical per capita share of the atmosphere’s capacity to absorb greenhouse gases, and they should be entitled to emit more in the future so that we will at least come closer to equal per capita shares over time. (Other countries cannot use as much as the U.S. and Europe have already used, because of global warming then exceeding 2oC, the point at which, in the view of most scientists, climate change would become unpredictable and quite possibly catastrophic.)

So on the three most plausible principles of fairness that can be applied to climate change – equal shares, need, and historical responsibility – the U.S. should make drastic cuts to its greenhouse-gas emissions.

On the equal shares principle, U.S. emissions should be no more than onethird of what they are today, and on the other principles, even less. Instead, President Barack Obama committed the U.S. to cut its emissions by just 27 per cent, relative to 2005, by 2025.

Trump’s claim that the Paris climate agreement was unfair to the U.S. does not withstand scrutiny.

In fact, the opposite is the case: the U.S. got off very lightly.

If the U.S. now fails to achieve even the very modest target it set itself in Paris, and thus fails to carry out its fair share of the reductions necessary to stabilize our planet’s climate, what should the rest of the world do? China and the European Union have already indicated that they will abide by their commitments. But we should not simply allow the U.S. to free-ride on other countries’ reductions, while burning unlimited quantities of fossil fuel to provide cheap energy for its industries. Instead, the world’s citizens should take matters into their own hands, and boycott products manufactured in a country that so manifestly refuses to do its part to save the planet.

If fairness means that everyone’s slice of pie should be the same size, it is the U.S. that is being unfair, by grabbing a slice that is three times bigger than it should have

”

16 Business Daily Thursday, June 8 2017

Closing Transportation

Electric car market goes zero to 2 mln in five years

is largely influenced by the policy environment.”

A multi government program called the Electric Vehicle Initiative on Thursday will set a goal for 30 per cent market The number of electric vehicles on the road rocketed to 2 share for battery power cars, buses, trucks and vans by million in 2016 after being virtually non-existent just five 2030, according to IEA. The 10 governments in the initiative years ago, according to the International Energy Agency.

Registered plug-in and battery-powered vehicles on roads include China, France, Germany, the U.K. and U.S. worldwide rose 60 per cent from the year before, according India, which isn’t part of the group, said last month that it plans to sell only electric cars by the end of the next to the Global EV Outlook 2017 report from the Parisdecade. Countries and cities are looking to electric vehicles based IEA. Despite the rapid growth, electric vehicles still to help tackle their air pollution problems. represent just 0.2 per cent of total light-duty vehicles.

“China was by far the largest electric car market, accounting In order to limit global warming to below 2 degrees Celsius (3.6 degrees Fahrenheit), the target set by the landmark for more than 40 per cent of the electric cars sold in the world and more than double the amount sold in the United Paris Agreement on climate change, the world will need States,” the IEA wrote in the report published Wednesday. 600 million electric vehicles by 2040, according to the IEA. “It is undeniable that the current electric car market uptake Jessica Shankleman, Bloomberg

Politics

Merkel’s cabinet backs troop pullout as Erdogan rift deepens Germany is Turkey’s biggest trading partner, with German imports expanding almost 7 per cent last year to more than 15 billion euros Arne Delfs

C

hancellor A n g e la Merkel’s government backed the withdrawal of German troops from Turkey, escalating a feud between two NATO allies and major trading partners.

Germany will seek talks with the U.S. and other allies in the coalition fighting Islamic State in Syria and Iraq to ensure a smooth transition from Incirlik to a base in Jordan, Defense Minister Ursula von der Leyen said after the German cabinet backed the move on Wednesday. Merkel said the redeployment may remove an irritant in relations and allow the two countries to focus on addressing other disputes.

“This can also lead to a situation where we don’t constantly have to engage in confrontation with Turkey on this issue,” Merkel told reporters in Berlin. “We have a whole series of shared interests with Turkey, plus close economic ties. So keeping channels of communication open is very important.”

While the immediate dispute centers on Turkey’s refusal to allow visits to Incirlik by German lawmakers, it’s only the latest flashpoint in a relationship that’s deteriorated since President Recep Tayyip Erdogan consolidated power after a failed coup in

July. Merkel has criticized Turkey’s record on human rights and press freedom, and Turkey alleges that Germany is shielding fugitives suspected of involvement in the coup.

“Turkey is sticking to its position on lawmaker visits to Incirlik” and that’s “not acceptable” to the German government, Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin.

Redeploying to Jordan will take time, including an outage of two to

Sale

three months for Tornado surveillance planes that Germany pledged to the U.S.-led coalition after the Paris terror attacks in 2015, von der Leyen said.

Germany and Turkey have a prickly relationship even though they share a web of ties. Turks make up the largest ethnic minority in Germany, and Merkel took the lead in negotiating a landmark deal with Turkey to halt refugees from entering Europe, which survives despite repeated threats by Erdogan to ditch it.

Business ties may be weathering the discord. Germany is Turkey’s biggest trading partner, with German imports expanding almost 7 per cent last year to more than 15 billion euros

Fuel

(US$17 billion), according to Federal Statistics Office data. Two-way trade increased 1.4 per cent from 2015 to 37.4 billion euros.

‘Very difficult’

While the government says the redeployment doesn’t require approval by Germany’s parliament, lawmakers may vote on a resolution to signal broad political backing.

Diplomatic tension has increased over the past year after Germany’s parliament recognized the century-old killings of Armenians by Ottoman authorities as genocide and Turkey arrested Deniz Yucel, a German-born reporter for Die Welt newspaper, in February on charges of spreading terrorist propaganda.

Turkish Foreign Minister Mevlut Cavusoglu on Monday rebuffed a last-ditch request by his German counterpart, Sigmar Gabriel, to allow visits to Incirlik by lawmakers, whose access to foreign-based troops is an important symbol of German civilian oversight of the armed forces.

Instead, Cavusoglu pressed Germany to extradite Turks who sought asylum in the country after the coup -- something Germany says is legally impossible -- and complained about the presence of Kurdish militants and followers of Islamic cleric Fethullah Gulen in Germany. Turkey views armed Kurdish groups and Gulen’s movement as terrorist organizations.

“It’s clear that dialogue with Turkey must be maintained,” said Seibert, the German spokesman. “But talks with Turkish government officials are very difficult at this time.” Bloomberg

Elections

SEC takes more time to mull Chicago Russia-China talks over new Stock Exchange’s China deal gas routes stalled - sources

London banks, brokers up staffing as polls tighten before UK vote

The U.S. Securities and Exchange Commission will take up to another 60 days to decide whether to allow the sale of the Chicago Stock Exchange to a group of investors led by China-based Chongqing Casin Enterprise Group.

The SEC, which reviews proposed mergers involving exchanges to ensure they comply with federal regulations and appropriately self-police their brokerage members, said it needed more time to make the decision in a regulatory filing dated June 6.

CHX is a niche player in the U.S. equities market, executing less than 0.5 per cent of U.S. stock transactions.

The proposed deal has drawn attention because it would be the first time a U.S. exchange has been bought

by Chinese investors. There are also U.S. investors in the group.

A long-term objective of Casin Group, a privately held company that invests in real estate development and financial holdings, is to list Chinese companies in the United States through CHX, which has locations in Chicago and New Jersey.

The Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security concerns, approved the planned sale in December, but the SEC still needs to sign off for it to go ahead. Reuters

Bankers, brokers and money managers are pulling in extra staff to handle any big market moves on Thursday night as tightening polls make the outcome of the British election more unpredictable.

Currency, bond and equity trading desks in London will be staffed as results trickle in late on Thursday and in the early hours of Friday.

With opinion polls showing Prime Minister Theresa May’s lead over the Labour opposition narrowing in the last three weeks and some suggesting her Conservatives could even lose their majority in parliament, the outcome looks much more uncertain than the landslide predicted when May called the election in April.

And after Britain’s vote last June to leave the European Union and Donald Trump’s election as U.S. President in November caught markets off-guard, traders are taking no chances.

“We’ll have increased staffing overnight to cope with potential volatility, looking particularly at the exit poll at 10 p.m. and what it could do to markets if its suggests a hung parliament,” said Neil Wilson, senior market analyst at spread betting firm ETX Capital.

“Then very much all hands on deck for the market open on Friday.” Reuters

Talks over new routes for gas supplies to China from Russia have stalled while Beijing rethinks the balance of its energy needs, including how much liquefied natural gas (LNG) it might use, two Russian sources familiar with the matter told Reuters.

Gazprom, which is already building a gas pipeline from Eastern Siberia to China - the Power of Siberia - was in talks over two more routes: the so-called western gas route and a gas pipeline from the Pacific Island of Sakhalin.

“The Power of Siberia-2 (the western route) and the Sakhalin pipeline - there are no moves. There are a lot of factors and they (China) are not yet ready to take any decisions,” a source familiar with the Russia-China energy talks said.

A Gazprom source also said there were no developments on the two pipelines, whose combined capacity, if built, is seen adding up to another 40 billion cubic metres (bcm) in possible gas supplies from Russia to China per year.

The Power of Siberia pipeline, expected to be launched by the end of the decade or in the early 2020s, should bring 38 bcm to China per year.

Gazprom managed to clinch the Power of Siberia deal after ten years of painstaking talks with Beijing. Bloomberg