Business Daily #1290 May 8, 2017

Beijing and Tokyo closer on trade to fight protectionism Co-operation Page 8

Monday, May 8 2017 Year VI Nr. 1290 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Loans

SME Aid Scheme amounts drop 27 pct in April, down to MOP15.66 mln Page 6

Telecom

CTM offers one-off compensation to 30,000 users affected by Internet interruption Page 7

www.macaubusinessdaily.com

Virtual reality

New game highlights MSAR’s readiness for virtual reality applications Page 7

Real estate

Trump’s son-inlaw’s sister in search of investment in China Page 8

Land of opportunity Companies

The number of newly incorporated companies in the MSAR increased nearly 32 pct y-o-y in April, with 1,472 new companies.

Registered capital was up 27 pct y-o-y to MOP155.4 mln, while 78 pct of new companies had capital under MOP50,000.

The majority of capital came from Macau and Mainland China, with 89 pct of pan-Pearl River Delta capital from Guangdong.

Wholesale and retail and business services were the main sectors represented. Page 3

Eat, Sleep, Rave, Repeat

After a full-house to see him perform at Pacha Macau, the renowned DJ and producer Fatboy Slim spoke exclusively to Business Daily about how real DJs are staying ahead of machines, touring sober, being selective in where to play, merchandising and protecting his main asset.

Crammed in

Population The city’s population went up 18 pct from 2011-2016, during which time the city’s elderly population increased 49 pct and the city’s youth population, aged 0 to 14, increased 18 pct.

Overall, women make up 52 pct of the population.

The number of households living in social housing increased 109 pct in the same period, while those in economic housing went up 34 pct. Page 6

Growing reserves

DJ | Interview Pages 4 & 5

HK Hang Seng Index May 5, 2017

24,476.35 -207.53 (-0.84%) Worst Performers

China Mobile Ltd

+0.72%

Tencent Holdings Ltd

Galaxy Entertainment Group

-4.59%

China Life Insurance Co Ltd

-2.55%

Geely Automobile Holdings

+0.39%

Cathay Pacific Airways Ltd

-0.18%

China Shenhua Energy Co

-3.46%

AAC Technologies Holdings

-2.55%

Power Assets Holdings Ltd

+0.35%

CLP Holdings Ltd

-0.24%

China Resources Land Ltd

-3.37%

PetroChina Co Ltd

-2.42%

HSBC Holdings PLC

+0.23%

Cheung Kong Property

-0.27%

China Mengniu Dairy Co Ltd

-2.85%

Kunlun Energy Co Ltd

-2.01%

Belle International Holdings

+0.00%

Swire Pacific Ltd

-0.34%

China Petroleum & Chemical

-2.75%

Bank of Communications

-1.87%

+0.00%

24° 27° 24° 27° 24° 28° 24° 27° 25° 28° Today

Source: Bloomberg

Best Performers

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Fri

Source: AccuWeather

Forex Mainland’s FX reserves grew again last month, with the figures beating expectations.

Reserves climbed US$20.45 billion to US$3.03 trillion, the People’s Bank of China said yesterday.

The State Administration of Foreign Exchange said that more balanced capital flows and appreciation of other currencies against the U.S. dollar helped shore up the reserves. Page 16

2 Business Daily Monday, May 8 2017

Macau In Brief Money laundering

Clear stance

The Monetary Authority of Macau states its regulations on anti-money laundering have ‘always’ been clear to financial institutions in the territory.

The Monetary Authority of Macau (AMCM) released a statement noting it ‘has always made it clear’ that all financial institutions in the MSAR have to abide by laws and regulations such as the ‘Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Guideline’.

According to the release, the AMCM stated that it is ‘concerned’ about a report relating to suspected money laundering, without however specifying which report it was referring to.

The AMCM added that all financial institutions authorised to operate in Macau have to ‘identify any unusual transaction patterns and make a suspicious transaction report to the Financial Intelligence Office (GIF)’. N.M. Travel

MSAR Passport holders granted visa-on-arrival entry to the Republic of Malawi Holders of MSAR Passports can acquire visas upon their arrival when visiting the Republic of Malawi, for a maximum stay of 30 days, according to the Identification Services Bureau, as confirmed by the Embassy of the Republic of Malawi in Beijing.

Currently, a total of 130 countries or territories have inked agreements with the MSAR Government to grant visa-free access or visa-on-arrival status to MSAR Passport holders.

According to the latest Passport Index by global financial advisory firm Arton Capital, the MSAR Passport is ranked as the 32nd most powerful when compared to other passports worldwide. C.U.

Hotel

Beijing Imperial Palace Hotel could owe affected parties almost MOP100 mln The affected parties have jointly filed a lawsuit against the hotel license holder and the offshore company Cecilia U cecilia.u@macaubusinessdaily.com

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ome 20 companies and individuals affected by the closure of the Beijing Imperial Palace Hotel have jointly filed a lawsuit against the former hotel license holder, Macau Hotel Developers Ltd, as well as the offshore company that took over the ownership of the hotel - Victory Success Holdings Limited. The group is claiming amounts owed of over MOP99 million (US$12.35 million) in down payment of unfulfilled contracts.

The group stated their request to the Court during a press conference last Friday, at which they also declared that the transfer of hotel ownership as the form of a settlement in lieu of a debt was invalid.

Earlier this year, the former license holder of Beijing Imperial Palace Hotel, Macau Hotel Developers Ltd, announced that it had returned its license of the property to the authorities.

The company stated that it was ‘forced to return its current hotel license to the Macau Government Tourism Office (MGTO)’ due to the expiration of the hotel’s temporary closure period on January 22 this year, as well as its inability to complete renovation works by the deadline.

Last week, Hong Kong-based news outlet East Week reported that Alvin Chau Cheok Wa, the boss of local junket operator Suncity Group, is allegedly the owner of the offshore company – Victory Success Holdings Limited – which took over ownership of Beijing Imperial Palace Hotel in 2015.

The hotel operator posted a notice in Chinese language newspaper Macao Daily a year ago regarding the transfer of ownership, stating that the transfer of the property ownership was in the form of a settlement, in lieu of some MOP1.5 billion (US$187.23

million) of debt.

Meanwhile, the statement made by the group also revealed that they had reported and appealed the case to the Public Prosecutions Office (MP) in September last year, suspecting that the hotel operator had committed deliberate fraud.

Despite the report to the MP happening eight months ago, the group has yet to receive any outcome from the Office, it stated.

“We hope that the government will pay attention to the case and the interests of the victims,” stated Andy Wu Keng Kuong, president of the Macau Travel Industry Council and the spokesperson of the group. “[We hope that] the government will come up with a reply as soon as possible.”

When asked if MGTO had offered any support, Mr. Wu replied that the department considered the case to be

Greek Mythology Casino investors lost millions

On the other hand, a group of self-proclaimed investors of the casino inside the hotel - Greek Mythology Casino - said they have lost millions since the shutdown of the casino at the beginning of 2016, initially for renovation purposes.

a commercial dispute, leading to the request for the MP to step in.

However, given that eight months since the initial report to the MP, no reply has been received, Mr. Wu said the group has now pooled finances to resort to collective legal action.

Paul Chan, the convenor of the group, revealed that there are more victims being affected by the case, saying that lawsuits filed by other victims against the former hotel license holder would not be ruled out.

The group also reminded the related hotel operator, the representative of the owner, public departments as well as potential investors, to pay close attention to the group’s updates on the litigation so as to prevent unnecessary losses and legal disputes.

Last year, representatives from the Travel Industry Council revealed that up to 200,000 rooms (room number multiplied by the number of nights) had already been sold by the hotel – for an amount of over MOP100 million for the next two years.

As such, around 30 local travel agencies may be affected by the closure of the hotel.

One of the investors, surnamed Zhang, said after the press conference that they had sought assistance from the police, but were asked to refer the case to the Court instead.

Currently, the group of casino investors is still considering its next step, including whether to seek legal action.

Fine cuisine

The best in Asia Macau’s Robuchon au Dôme, a French restaurant located on the top floor of the Grand Lisboa Hotel, placed in sixth position on a list of the world’s 100 best restaurants of 2017 compiled by Elite Traveler, reported Viva Lifestyle & Travel.

The restaurant, led by Chef Julien Tongourian, was the only one in Asia listed among the top ten. It is also the only restaurant from Macau to be included on the full list, compiled ‘based on a massive poll of [Elite’s] customers.’

The Basque restaurant Azumerdi, located in the city of Larrabetzu, Spain, took the top spot. Five of the top ten restaurants that made the Elite Traveler list are located in the United States.

Robuchon is one of two three-Michelin-starred restaurants in Macau. The other is The Eight, also located at the Grand Lisboa Hotel.

As of May 2017, Macau had a total of 19 Michelin-starred restaurants. S.Z.

Aviation

From Indonesia with love AirAsia will open new international flights between Jakarta and Macau starting August 7 AirAsia Indonesia will open new international flights from Jakarta to Macau and Mumbai, India, as part of a strategy to attract more Chinese and Indian tourists, newspaper The Jakarta Post reported.

Ac c o r d i n g t o t h e n e w s p aper, starting from August 7, the

Indonesian subsidiary of low-cost carrier AirAsia will start operating direct flights between Jakarta and Macau three times per week until September 1, when the frequency will change to four times a week.

“The growing number of Chinese and Indian tourists coming

to Indonesia boosts our spirit to launch the new routes,” the AirAsia group chief executive for Indonesia, Dendy Kurniawan, stated as reported by the Indonesian newspaper.

According to the report, between August 7 and June 5 of 2018, the flight tickets from Jakarta to Macau will start from a promotional fare of IDR888,000 (MOP534/US$66.6), with the new flight service being made by an Airbus A320-200 airplane capable of accommodating 180 passengers. N.M.

Business Daily Monday, May 8 2017 3

Macau Companies

More companies incorporated in Macau in Q1 The number of registered companies at the end of the first quarter of 2017 totalled 57,921, an increase of 3,943 from a year earlier Sheyla Zandonai sheyla.zandonai@macaubusiness.com

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31.8 per cent year-onyear increase in the number of newly incorporated companies was registered in the first quarter of this year, with 1,472 new companies, while the registered capital of the companies also increased by 26.6 per cent to MOP155.14 million, compared to the same quarter last year, according to the data released by the Statistics and Census Services (DSEC) early last Friday evening.

The number of companies registered with capital under MOP50,000 amounted to 1,141, or 77.5 per cent of the total, with the total value of the capital of these companies amounting to MOP30 million, or

19.6 per cent of the total for the quarter.

A total of 26 new companies were registered with capital of MOP1 million or over, with a total capital value of MOP84 million.

In terms of origin of capital, the DSEC noted that the majority came from Macau, at MOP72 million, and from Mainland China, at MOP46 million. In addition, capital from the nine provinces of the Pan-Pearl River Delta Region totalled MOP22 million, of which 88.8 per cent originated from Guangdong province.

In regards to the combination of shareholders, there were a total of 873 new firms established solely

by Macau shareholders, while 335 constituted joint ventures between shareholders from Macau and other countries or regions. By sector, most of the newly created companies

were operating in the wholesale and retail trade (413) and business services (369).

In particular, companies incorporated with capital from the nine provinces of the Pan-Pearl River Delta Region were operating mostly in wholesale and retail (46.4 per cent) and construction (40 per cent).

The DSEC further reported that

companies in dissolution totalled 223, up by 27 when compared to last year, with the value of registered capital of such companies increasing by 7.3 per cent year-on-year to MOP56 million.

The number of registered companies at the end of the first quarter of 2017 totalled 57,921, an increase of 3,943 from a year earlier.

Politics

From Commissioner to Commissioner The Commissioner of the Hong Kong Independent Commission Against Corruption visited the MSAR on Friday to discuss anti-corruption initiatives The Commissioner of the H o n g K o n g I n d e p e n dent Commission Against

Corruption (ICAC), Simon Peh Yun-lu, led a special delegation for a one-day

visit to the MSAR on Friday, an ICAC release stated.

The delegation met with

Macau’s Prosecutor-general, Ip Son Sang, and the Commission Against Corruption (CCAC) Commissioner, André Cheong Weng Chon, to discuss the latest development of anti-corruption initiatives in the two SAR’s.

According to the South China Morning Post, this was only the second time

in five years that the Hong Kong Commissioner had visited Macau.

The delegation also included the ICAC Director of Investigation (Government Sector), Ricky Yu Chuncheong, and the department’s Chief Investigator of the Operations Department, Raymond Kong Yimkwan. N.M.

4 Business Daily Monday, May 8 2017

Macau

Photo by: Joana de Freitas

Interview | DJ

Eat, Sleep, Rave, Repeat In an exclusive interview with Business Daily, the legend behind the decks - with hits including Praise You; Eat, Sleep, Rave, Repeat; Right Here, Right Now and Weapon of Choice – Fatboy Slim, aka Norman Cook explains the importance of the DJ profession, taking time to appreciate memorable moments, touring and being choosy about which gigs to play Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

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ow essential is merchandising to continuing with the branding?

Merchandising? Nothing.

When I started in this business I was in a band called the Housemartins and we sold a lot of merchandise. As my career has gone on, I’ve sold less and less merchandise. I mean people they go to nightclubs and they want to wear nice clothes, they don’t want to wear a tour t-shirt with the dates on the back.

So the actual merchandising is quite unimportant to me.

I mean we do it, because you have to.

Rock bands, that’s half their income sometimes, but with DJs we don’t really sell merchandise.

But it’s a great logo, it’s a shame because we do some sh*t-hot merchandise, but it just doesn’t sell a lot.

change the whole set at the last minute. Also, because I play sound files, now I can do my own re-edits and that’s quite important to me because there’s so many records you really like, but you hate the middle or the breakdown. Or it’s really difficult to get in and out of because the intro’s too short. And so each DJ can do their own re-edits, so everyone plays in a slightly different way to everybody else, whereas before you’d always hear exactly the same version. Now you get to hear people either doing it live using the loop button – I like to do it first [beforehand]. But then also I can burn visuals, I make my own visuals and I burn them into the edit. It’s a lot less carrying around, makes for a lot more flexibility and

you can just do a lot more with the music.

Some of the things we do now, if I was doing that 20 years ago, people would just sh*t their pants, just be like “How the f**k is he doing that?”

– the visuals and everything.

In terms of the technology-side of things, are you still using a lot of hardware or have you transitioned more into digital?

I’m sort of making the transition into digital, but what I’ve been doing in the meantime is not making any records (laughs).

I’m sort of trying to make the transition. At the moment I’m getting my sample library off floppy disk into Ableton [a digital audio workstation

Do you think you’ll ever get tired of touring?

Yes I will. But I’m determined to squeeze as much out of it, because I love doing it. I still love doing it more than ever. But I just have to be more careful about looking after myself.

I’m 53 now, there will come an age where I just can’t do the late nights and the travelling. That’s probably one of the reasons why I’m not making so many records, because before, six months of the year I’d be in the studio and six months I’d be out [on tour]. Now I spend most of the year out on the road.

Do you miss the studio side?

Nah, not really. It’s not so much fun with a laptop as it was playing with hardware. And also because I don’t drink anymore and I don’t live that life, so I’m not so inspired to make crazy music, but I really still enjoy playing other people’s crazy music and watching them get crazy.

“I’m more choosy about the gigs I do.

In certain countries I’ve just given up on it” The music scene has evolved from those who curate music – and have to carry it around on vinyl records to play – to being able to download hundreds of songs and stick them on a USB. Has that changed how you play music at all?

From my point of view, it means I haven’t got one arm longer than the other [from carrying a bag of vinyl].

It’s quite nice when you’re about to go abroad to the other side of the world. Before you could only kind of carry one box, I’d take two boxes, and you’d really agonize about what tunes, because you can’t think what it’s going to be like.

Now you have everything on your laptop and then I can get here, I can

– DAW – used for producing and remixing music as well as live performance]. But for that I’ll do about an hour a day. It’ll take me about two years I think.

I haven’t worked on it, actually fired up the Atari [sampling and music production hardware] in anger. But then again, I’ve only made about three records in the past three years.

I’m kind of gone to that [digital realm] now, you have to, begrudgingly. I’ve even got e-mail and WhatsApp now.

I even got Instagram now!

Photo by: Joana de Freitas

The traditional role of the DJ has been to curate music, however given how much debatably good or bad music is getting produced on a daily basis, what does that mean for established artists and upcoming artists with actual talent?

It’s the only reason that I’ve still got a job. When I started DJing you were the one who bothered to buy all the records. If you didn’t physically have the records you couldn’t play. You couldn’t just download stuff. And people couldn’t hear the things – they used to phone radio stations to request a tune because that was the only way they could hear it. Or they’d go and watch a DJ just because they knew that he’d play certain tunes that they liked or that they haven’t got.

So there was a sort of rarity thing in it. And then the skills of mixing, that was a big thing. All of that has been completely replaced by machines now.

Business Daily Monday, May 8 2017 5

Macau So the only thing left that DJs do is curate. We spend all week listening to all the sh*t stuff so you don’t have to. And we try and find the good tunes and we take out that [sifting through bad music] side of it. And hopefully put some of our personality into it as we play it to you.

“Each DJ can do their own re-edits, so everyone plays in a slightly different way to everybody else, whereas before you’d always hear exactly the same version” But that’s the only reason that we still have DJs. Because so many other parts of the music industry have been completely replaced by technology or by the Internet. There’s certain professions, like hairdressing – hairdressing can never be replaced. You can’t download a hairdresser. And DJing I thought at one point “we are replaceable”, the machines can mix the music for you – there’ll be algorithms and it can intuitively mix.

Some DJs rely on the machines to do the mixing anyway [nowadays].

So all we’ve got left: the curating and the performance – are the two things that the machines can’t do for us. They’re the bits that I enjoy the most and are the reason probably that I’m still here, that I haven’t been laid to rest.

You’ve played some huge shows, you continue to have a massive music career. Do you look back on it as high points, as phases, as sections of your life?

Just now it’s a series of high points, I don’t remember the low points. There have been low points over the years.

I just remember the high points and think “Christ yeah!” I mean a lot of it, during my drinking years, a lot of it I’m like “Was that a dream?”

And then someone goes “No, that really happened”. And there are certain things – some pretty fantastic things happened like when I went and played Woodstock.

There’s times when during gigs I actually stopped, near the end, and I’d think “right” and I’d try and take a mental snapshot, a mental photo, of how good it feels to see that amount of people having so much fun in a beautiful, moody, evening in Glastonbury, or on Brighton Beach. There’s certain gigs where, sometimes you’ll see me do it. Again, in my drinking days, I’d walk to the front of the stage, to the limit of the stage, and I’d just stand there and just go “I hope I remember all this”. It’s all in there somewhere [points at head].

That’s me just taking 30 seconds off work, 30 seconds off concentrating and just me enjoying it. Because most of the time it’s all about me trying to make them enjoy it. It looks like I’m having fun, but I’m not, all I’m doing is concentrating and thinking “how do I let them have fun”.

No performer ever wants to say that there is a performance aspect to it, but are there some nights where you feel like you have to perform, to give the audience the energy level that they’re expecting?

Yeah. Often.

It depends. Less and less because I’m more choosy about the gigs I do. In certain countries I’ve just given up on it. Certain countries it’s really hard work, really hard work to try and get you [the audience] to understand what we’re trying to do here. And what I did for a while is, for a while I kind of ignored America, and I was

Fatboy Slim performing in Macau, photo courtesy of Pacha Macau

in Brazil and Japan and places like that. And then America started getting good, so I went back to America.

There’s certain countries that I think will never get it. And so what I tend to do is, I’ve got to the point now where whereas my manager is like “we’ve got to go and break that market open, teach them”. And I’m like “you know, I’m done teaching.” People nowadays they can watch Youtubes of me performing, they know what to expect.

And so I don’t have to drill it into them. And so you just got to find the places where people appreciate that.

And it’s weird, you go to some countries where you wouldn’t expect it and they’re just like “we SO get it” – we understand each other, we don’t speak the same language but we [enjoy it].

“So all we’ve got left: the curating and the performance – are the two things that the machines can’t do for us.

They’re the bits that I enjoy the most and are the reason probably that I’m still here, that I haven’t been laid to rest” How does China fit into that whole spectrum?

Local, Mainland China I’ve done a few things. To be honest most of the stuff I’ve done there’ve been very few locals there, it’s mainly expats. From the very first time I played there, I played Shanghai about 15 years ago and I don’t think there was one Chinese person there. It was just like “what’s the point of just going to play to the expats.” So I haven’t played much in Mainland China.

China has not been open to certain bits of our culture, it’s not been encouraged outside maybe Shanghai.

And it’s just not in people’s nature.

You really have to teach them, you really have to drill it into them like “all you have to do is forget all the rules, forget the rules of your job, of your life, anything like that – just for four hours you can go mad and just be stupid, hedonistic, sexy, drunk, high”. And for Chinese people sometimes that’s quite hard.

Things like Instagram are obviously the necessary evils in the whole profession. What’re your views on social media? Do you have to use it?

Do you want to use it?

I personally don’t really use it. It’s a necessary tool for communication

within my job, but it is just a job thing, I don’t put anything personal on it.

I don’t use any personal social media. I text my friends – WhatsApp. The Fatboy Slim side of it is purely a promotional way of just getting our communication across. But, to be honest, I can’t keep up. I live this really exciting life and there’s never time to be, you know, recording it like everybody else, because I’m too busy doing it.

It’s like when you look out and you see all these people grooving and dancing and one person in the middle is going like that [standing still and filming].

Just enjoy the moment, enjoy the moment. You don’t have to share it with everybody else, just enjoy it.

Have you ever been, do you continue to be, worried about things like ear problems and tinnitus (ringing in the

ears that never goes away)?

I’ve got away with the tinnitus bit thus far, really knock on wood here.

I had my ears tested – I’m a little worse than a man of my age should be, but the doctor said “I’ve been to your gigs”. But it’s not as bad as a rock band – they have to play loud because the drums make a certain amount of noise, so then the bass player has to be as loud as the drums and then the guitarist turns up – and it ends up really, really loud.

But a DJ, you don’t have to play that loud. Some DJs like to. But we don’t get what the crowd are getting out front. You turn your monitor off sometimes and the booth goes completely quiet. So I monitor as quietly [as I can], just enough for me to feel into it, but I don’t get off on extreme volume. And I’m aware that these ears are an asset to me and that I need them for my job.

6 Business Daily Monday, May 8 2017

Macau Opinion

Sheyla Zandonai*

Hot commodity Last week, the government announced that the average daily wages in Macau had increased during the first quarter of 2017. In addition, it said that construction workers with resident status make more money per-hour-worked than skilled and semi-skilled labour. Laws of supply and demand. Apparently, Macau doesn’t need doctors; it needs builders.

The government’s fiscal surplus for the whole year of 2016, which was also disclosed last week, likewise posted an increase of 9 per cent year-on-year, amounting to MOP12.82 billion – hard to claim the need for ‘austerity’ measures on that one.

Thanks to the invisible hand of VIP rolling, Macau’s rich economy is retrieving its means to keep growing richer.

As the hottest commodity in town – money – resumes being generously poured into the local economy, all sectors tend to react accordingly. Including real estate.

Or, mainly, real estate, to be precise.

Following the series of figures the government released last week, there is enough reason to believe the property market is on the rise again.

For one, overall residential prices during the first quarter of 2017 increased 4.7 per cent when compared to the previous quarter. In tandem, commercial transactions of residential units dropped.

While 2,201 units changed hands in December 2016, nearly half that amount, or 1,041, was traded in January 2017, and only 841 in February 2017.

There is a tantalizing correlation between the return of robust VIP activity and the surge in real estate. Macau’s recent history has shown that they often go hand in hand and that there is enough smoke up in the air now stirring people’s worst fears, that the real estate beast is just around the corner, waiting to assail town. Please, call the fire brigade.

It is here already.

Topping a week of public announcements, the city’s economic services communicated that it is reducing the credit line for those wishing to acquire a second residence in Macau, residents and non-residents alike, while first-buyer residents will continue to have access to the largest mortgage loan ratios.

In other words, first-buyer residents will still get the same credit ratios as before, but property available on sale will also be more expensive, given the recent trends.

For those that will agonize over a lifetime mortgage commitment, the question to ask is how effective the latest government policy to attempt to curb real estate speculation will be. *scholar and contributor to this newspaper.

SME

Local SMEs received MOP15.66 mln in direct funding in April Applications for intellectual property up 18 pct y-o-y Cecilia U cecilia.u@macaubusinessdaily.com

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MEs (small and medium enterprises) in the city received some MOP15.66 million from the MSAR Government via the SME Aid Scheme in the month of April, according to official data released by the Macao Economic Services (DSE).

The amount disbursed in April indicates a drop of 26.4 per cent month-on-month.

There were 55 applications for the Aid Scheme last month, 41 of which were approved.

The SME Aid Scheme, implemented in 2003 and updated in 2012, aims to provide interest-free business loans with a maximum value of MOP600,000 per applicant for different financial purposes,

with a repayment period of up to eight years.

Up until the end of April, SMEs engaged in the retail industry had received the greatest allocation of the Scheme, taking up 33.6 per cent of the total amount granted or MOP26.02 million, followed by the construction and public projects sector, accounting for 15.8 per cent, or MOP12.27 million, of the total.

Beneficiaries engaged in businesses involved in personal services such as vehicle maintenance, and hair and beauty salons, received the third-largest level of support, with a total of MOP9.54 million, or 12.3 per cent of the total.

The government, meanwhile, approved two applications for subsidies under the DSE’s Credit Guarantee Scheme for Special Projects, granting a total amount of MOP2 million

in April. However, there were no applications filed under the Credit Guarantee Scheme during the month.

1,110 applications for intellectual property registration in April

The DSE received a total of 1,110 applications for intellectual property registration in the month of April, the Bureau’s official data indicates.

The number of applications in April registered an increase of 17.7 per cent when compared to the same month of 2016. On a monthly comparison, the number of applications dropped by 12.7 per cent.

Of the total, 1,062 applications were filed to register trademarks in the MSAR, accounting for 96 per cent, while 35 applications were filed for the extension of invention patents, nine for industrial designs or models, and four for invention patents.

There were no applications for utility patents or establishment names and emblems in the month of April.

Population The number of households living in social housing went up by 108.8 per cent in five years

Sardines in a can The MSAR saw its population grow by 17.8 per cent between 2011 and 2016 reaching a total of 650,834 people, as the population density reached 21,340 persons per square kilometre Nelson Moura nelson.moura@macaubusinessdaily.com

The city’s population reached 650,834 as of August last year, an increase of 17.8 per cent compared to the number recorded in 2011, according to the detailed results of the Statistics and Census Bureau’s (DSEC) Population By-census, presented on Friday.

According to the report, the most rapid population growth was

observed in the five-year period between 2011 and 2016, mainly due to a substantial increase in the number of non-resident workers living in the MSAR and a rebound in the birth rate in that period.

The local population, excluding non-resident workers and foreign students, was set at 537,018 as of August of last year - 618 more than announced previously in the preliminary results - having registered a 10.7

per cent increase from 2011 to 2016.

As of August of last year, the city’s male population had reached 314,018 or 48.2 per cent of the population, with the female population accounting for 51.8 per cent with a total of 336,816.

The elderly population above 65 years of age increased by 48.6 per cent between 2011 and 2016, reaching 59,383, with the large rise caused by the aging of immigrants who arrived in the 1970’s and 1980’s, the results noted.

Meanwhile, the number of newborns registered between 2011 and 2016 led to considerable increases in the youth population - people aged from 0 to 14 years of age - by 18.2 per cent to 77,847.

Social housing on the rise

The number of households as of August last year reached 188,723, an increase of 10.5 per cent compared to 2011, with the average household size being 3.07 persons.

The number of households living in social housing rose by 108.8 per cent in the 2011-2016 period to reach 12,223, while the amount of households inhabiting economic housing went up 34.2 per cent to 22,096.

Meanwhile 81.7 per cent of total households were living in private housing as of August of 2016.

The total land area of Macau amounted to 30.5 square kilometres in August of 2016, having registered an average annual increase of only 0.4 per cent in the past five years, with population density growing by 15.5 per cent from 2011 to 21,340 persons per square kilometre last year.

Business Daily Monday, May 8 2017 7

Macau Banking

Green light for Novo Banco Asia The Monetary Authority of Macau has approved the purchase of Novo Banco Asia S.A. by Hong Kong company Well Link Group Holdings Limited Nelson Moura nelson.moura@macaubusinessdaily.com

T

he Monetary Authority of Macau (AMCM) has approved the purchase of Novo Banco Asia S.A. (Novo Banco Asia) by Hong Kong incorporated brokerage firm Well Link Group Holdings Limited, local broadcaster TDM reported.

In early August of last year, Novo Banco Asia agreed to the sale of its Macau unit to the Hong Kong company, however the transaction was not completed due to a refusal

by AMCM, Business Daily reported previously.

In January of this year, TDM reported the Ma family made a 175 million euro (MOP1.5 billion/US$183.9 million) joint bid with Well Link for the

unit, proposing that the Hong Kong company would acquire 51 per cent of Novo Banco Asia, while the Ma family was to acquire 24 per cent.

However, Portuguese newspaper Jornal de Negócios reported on Friday that the Hong Kong group will hold a 90 per cent share of Novo Banco Asia, with the Portuguese bank keeping a 10 per cent share of the unit.

According to Jornal de Negócios, Novo Banco S.A. has been selling some of its international subsidiaries and holdings as part of a strategy to focus more on the Portuguese and Spanish markets.

Novo Banco Asia, finished the 2016 fiscal year with MOP1.03 million (US$128,465) in profits after registering revenues of almost MOP45.9 million, according to company data released in the Official Gazette.

Novo Banco Asia succeeded Bank Espírito Santo do Oriente after Portuguese Bank Espírito Santo (BES), its parent company in Portugal, collapsed in 2014.

At the end of March, the Portuguese

central bank – Bank of Portugal (BoP) – announced that a 75 per cent share of Novo Banco S.A. would be sold to American private equity firm Lone Star Funds for a total of 1 billion euros.

VR

Communications

Virtually exploring Macau

Breakdown compensation

‘Now You See Me: Back to Macau’ launched as the first major hidden-object video game designed specifically for virtual reality (VR) Nelson Moura nelson.moura@macaubusinessdaily.com

With ‘Now You See Me: Back to Macau’ being launched as the first major hidden-object video game designed specifically for virtual reality (VR), a local VR developer believes the same technology can be used to develop games with the city as a background.

The game, based on the ‘Now You See Me’ film franchise owned by Lionsgate, was developed by the United States mobile VR gaming developer Side-Kick VR, and made available on Samsung Gear VR, with plans to make the game available later this month on two Google developed headsets - Google Cardboard and Daydream.

For Fernando Pereira, Operations Director of Virtualmente - a digital studio based in Portugal and Macau - mapping the city’s geography virtually could be used in the future to develop games that allow the exploration of the city.

Virtualmente is currently developing an immersive VR tourist guide for Macau, a concept promoted by the Macao Government Tourism Office (MGTO), with Mr. Pereira saying the project could “still take some months”.

“We’ve found some technical difficulties in the video development, but it’s progressing. We haven’t decided if it will be a stand-alone project or if we can make a partnership with Andrew Scott from High Life and World Gaming Magazine (WGM) to maybe do a collaboration, since he also wanted to develop a Macau guide.

His company has already developed an application to find attractions in Macau, while ours is focused more on exploring the city before visiting,” Mr. Pereira told Business Daily.

According to a report by Statista, the market for head-mounted VR displays is estimated to generate sales of US$5 billion (MOP40.07 billion) in 2017.

Tourism

China and India conquerors The increase of Chinese and Indian tourists will be a “disruptive force of transformation” to the worldwide hospitality sector, local businesswoman Pansy Ho Chiu King said at the World Travel & Tourism (WTTC) Global Summit 2017 in Bangkok, Thailand.

“As these hundreds of millions of travellers have travelled out of their regions, yearning to see and experience cultures they now know from social media and the Internet,

the question therefore is how to anticipate and prepare for their needs and interests,” Ms. Ho, the Secretary-General of the Global Tourism Economy Forum (GTEF), added.

Ms. Ho stated that different behaviour and demands from Chinese and Indian tourists could “enhance the traditional and current mindset of hospitality standards,” in what she described as a “win-win scenario”.

Ms. Ho, also co-chairman of MGM China, added that the hospitality sector, together with business leaders and investors, should be committed to achieving Sustainable Development Goals.

The GTEF is an international exchange platform created in 2012 in Macau with the purpose of promoting the sustainable development of the global tourism industry, with a special focus on China. The organisation will host its 6th edition in Macau this year between October 16 and 17 at The Venetian. N.M.

CTM offers 15 per cent discount on monthly Internet charges for users affected by service breakdown on April 18 Nelson Moura nelson.moura@macaubusinessdaily.com

Companhia de Telecomunicações de Macau SARL (CTM) announced it would pay compensation to clients affected by a four-hour Internet access breakdown on April 18, a company release stated.

According to the company, although ‘this was an unpredictable incident caused by a software bug’, CTM decided to offer ‘a once-off 15 per cent discount on Internet monthly service charge for potential affected Internet customers’.

‘The relevant customers will be automatically entitled to a once-off discount of 15 per cent on Internet monthly service charge of April, the discounted amount will be shown in the customers’ June service bill,’ the release informed.

On April 18, a software malfunction left 30,000 users in the city without Internet access for almost four hours, after an ‘an unusual surge of traffic’ led to the overload of two of the company’s Internet access servers, the company said last week.

At the time, the company reported that of the six servers used to serve

170,000 online users, two servers responsible for 55,000 users were affected, with CTM conducting an upgrade project on the two servers on 20 and 21 April, respectively.

CTM had to submit a report on the incident to the Macao Post and Telecommunications Bureau, with the department saying it may conduct administrative procedures against the operator if the latter is considered to be responsible for the incident. N.M.

8 Business Daily Monday, May 8 2017

Greater China Co-operation

Beijing to boost financial ties with Japan amid protectionist Both countries do agree on the need to respect free trade, which they see as crucial to Asia’s trade-dependent economies Tetsushi Kajimoto

J

apan and China agreed to bolster economic and financial cooperation, Japanese Finance Minister Taro Aso said on Saturday, as U.S. President Donald Trump’s protectionist stance and tension over North Korea weigh on Asia’s growth outlook.

Chinese Finance Minister Xiao Jie, who missed a trilateral meeting with his Japanese and South Korean counterparts on Friday for an emergency domestic meeting, had flown in for the talks with Aso, seeking to dispel speculation his absence had any diplomatic implications.

report the outcomes at the next talks, which will be held in 2018 in China.

They did not discuss issues such as currencies and geopolitical risks from North Korea’s nuclear and missile programme during the dialogue, held on the side-lines of the Asian Development Bank’s (ADB) annual meeting in Yokohama, eastern Japan, Aso said.

Relations between Japan and China have been strained over territorial rows and Japan’s occupation of parts of China in World War Two, though leaders have recently sought to mend

ties through dialogue.

Still, China’s increasing presence in infrastructure finance has alarmed some Japanese policymakers, who worry that Beijing’s new development bank, the Asian Infrastructure Investment Bank (AIIB), may overshadow the Japan-backed ADB. Shortly before the bilateral talks on Saturday, Xiao voiced hope that the ADB will boost ties with China’s high profile “One Belt One Road” infrastructure development initiatives.

“China hopes the ADB ... strengthens the strategic ties between its programmes and the One Belt One Road initiative to maximise synergy effects and promote Asia’s further development,” Xiao told the ADB’s annual gathering.

Japan and China do agree on the need to respect free trade, which they see as crucial to Asia’s trade-dependent economies.

Finance officials from Japan, China and South Korea agreed to resist all forms of protectionism in Friday’s trilateral meeting, taking a stronger stand than G20 major economies against the protectionist policies advocated by Trump.

China has positioned itself as a supporter of free trade in the wake of Trump’s calls to put America’s interests first and pull out of multilateral trade agreements.

Japan has taken a more accommodative stance toward Washington’s argument that trade must not just be free but fair. Reuters

Key Points Aso, Xiao hold first bilateral finance dialogue in 2 years Dialogue involves finance ministry, central bank officials No discussions on North Korea, currencies - Aso Next finance dialogue to be held in 2018 in China “We actively exchanged views on economic and financial situations in Japan and China and our cooperation in the financial field,” Aso told reporters after the meeting, which included senior finance ministry and central bank officials.

“It was significant that we reconfirmed the need of financial cooperation between the two countries while sharing our experiences in dealing with economic policies and structural issues,” he added.

The two countries agreed to launch joint research on issues of mutual interest - without elaborating - and to

Chinese Finance Minister Xiao Jie (R), shakes hands with his Japanese counterpart Taro Aso (L) prior to their meeting in Yokohama, near Tokyo, Japan, on Saturday. Lusa

Pitch

Family of Trump son-in-law solicits Mainland investment Kushner Companies were also due to pitch for investment in Shenzhen and Guangzhou next weekend White House senior advisor Jared Kushner’s family business is courting wealthy Chinese to buy stakes in real estate through a controversial government program that offers U.S. residency in exchange for investment.

Kushner’s sister Nicole Kushner Meyer was in Beijing Saturday, seeking US$150 million in investment in a luxury apartment complex project in New Jersey, according to U.S. media reports.

Jared Kushner, 36, is a senior adviser to U.S. President Donald Trump with far-reaching influence over domestic and foreign policy, and stepped down from the family company in January to serve in the administration.

However, eyebrows have been raised as the Chinese investment sought by his family is to be funnelled through the U.S. EB-5 visa program.

The program offers foreign nationals permanent residency -- commonly known as a green card -- in exchange for investments of at least half a million dollars in a U.S. business that must also create 10 American jobs.

The New York Times reported that the family business’ investment drive is also “highlighting their ties to Mr. Kushner as they court investors”.

Speaking before more than 100 investors at Beijing’s Ritz-Carlton Hotel, Nicole Kushner Meyer said the project “means a lot to me and

my entire family”, and mentioned her brother’s former role as chief executive of Kushner Companies, the report added.

Photographs of the event showed promotional posters bearing the slogan: “Government supports it; Celebrity property developer builds it.”

Kushner Companies were also due to pitch for investment in Shanghai and in the southern Chinese cities of Shenzhen and Guangzhou next weekend, according to the events’ organiser QWOS, a Chinese

Jared Kushner (R) with father-in-law Donald Trump (C). Lusa

government-approved immigration agency.

The EB-5 program was created in 1990 to help stimulate the U.S. economy through job creation and capital investment from foreign nationals, but detractors say it puts citizenship up for sale.

‘The Chinese investment sought by his family is to be funnelled through the U.S. EB-5 visa program’ Nearly 90 per cent of EB-5 visas were issued to Chinese nationals in 2014, when the program reached its quota of 10,000 visas.

Last week, federal agents in California raided two homes and a business allegedly connected to a US$50 million visa fraud scheme that benefited up to 100 Chinese nationals.

Authorities said the key suspects in the case helped wealthy Chinese obtain U.S. residency visas in exchange for bogus investments. AFP

Business Daily Monday, May 8 2017 9

Greater China M&A

In Brief

ChemChina clinches landmark takeover of Syngenta The agreed offer is for US$465 per share

Vice Premier stresses tight control of property development Chinese Vice Premier Zhang Gaoli stressed tight control of land, property development and neighbouring regions as well as protecting historical and cultural heritage and the ecological environment while developing the Xiongan New Area. The government should plan well before taking action and make steady efforts in planning construction of the Xiongan New Area, Zhang said after an inspection trip to the region on Saturday. On April 1, China announced the plan to create the Xiongan New Area in Hebei and aims to help phase out some non-capital functions from Beijing.

Michael Shields

ChemChina has won more than enough support from Syngenta shareholders to clinch its US$43 billion takeover of the Swiss pesticides and seeds group, the two companies said on Friday.

The deal, announced in February 2016, was prompted by China’s desire to use Syngenta’s portfolio of toptier chemicals and patent-protected seeds to improve domestic agricultural output. It is China’s biggest foreign takeover to date.

It is one of several deals that are remaking the international market for agricultural chemicals, seeds and fertilisers.

The other deals in the sector are a US$130 billion proposed merger of Dow Chemical and DuPont, and Bayer’s plan to merge with Monsanto. The trend toward market consolidation has triggered fears among farmers that the pipeline for new herbicides and pesticides might slow. Regulators have required some divestments as a condition for approving the Syngenta deal.

Based on preliminary numbers, around 80.7 per cent of Syngenta shares have been tendered, above the minimum threshold of 67 per cent support, the partners said in a joint statement.

The transaction is set to close on May 18 after the start of an additional acceptance period for shareholders and payment of a special 5-franc dividend to holders of Swiss-listed shares on May 16. Holders of U.S.-listed depositor receipts will get the special dividend in July.

Syngenta shares will be delisted from the Swiss bourse and its depository receipts from the New York

Xiongan

Stock Exchange.

Chief Executive Erik Fyrwald played down the transition from publicly listed group to becoming part of a Chinese state enterprise, stressing that Syngenta would remain a Swiss-based global company while under Chinese ownership.

Key Points ChemChina has won enough support to clinch Syngenta takeover China’s biggest foreign takeover to date Deal set to close on May 18 “It is very important to understand that this is a financial transaction,” he told broadcaster CNBC in an interview.

He saw two major changes: giving Syngenta a long-term shareholder to

accompany it during the 12 years it typically takes to discover and launch new products, and helping to overhaul Chinese agriculture, which he called very much behind the global standard.

He said he expected the acceptance rate to easily surpass 90 per cent, with a squeeze-out of remaining shareholders to follow if needed in June.

Funding for the acquisition was clear and irrevocable, while refinancing the company after the transaction closed was still being discussed.

“I am very confident we are going to have a strong balance sheet as agreed,” he said, with an investment-grade rating that would let it pursue market share growth, investments, capital spending and acquisitions.

Syngenta sells its products in more than 90 countries under such brand names as Acuron, Axial, Beacon and Callisto. It sells seeds such as cereals, corn, rice, soybeans and vegetables.

Investment

Beijing to let firms tap stock markets for new Silk Road projects China will allow firms to tap domestic and overseas stock markets to finance projects related to the “One Belt One Road” initiative, a senior securities regulator said. Chinese President Xi Jinping has championed the “One Belt, One Road” (OBOR) initiative to build a new Silk Road linking Asia, Africa and Europe. China will develop direct financing to meet huge funding needs for the OBOR programme, which has been relying on China’s policy banks and big commercial banks, Fang Xinghai, a vice head of the China Securities Regulatory Commission, said.

Reuters

Internet

Russia blocks WeChat Taxes

VAT cut may throw lifeline to money losing soy crushers Soybean processors are suffering under their longest run of negative margins in more than two years Naveen Thukral

China’s upcoming reduction of the value-added tax (VAT) on imported soybeans could extend a lifeline to unprofitable soybean crushers that are losing more money than at any time in the past eight months, two trade sources said this week.

China plans to lower its VAT on an array of product imports, including soybeans, to 11 per cent from 13 per cent, starting from July 1, the sources said. That reduction was confirmed in a notice from the Ministry of Finance dated April 28 and posted to its website on May 3.

China, which imports more than 60 per cent of the soybeans traded worldwide, is forecast to buy a record 88 million tonnes in 2016/17, almost

6 per cent more than last year’s 83.23 million tonnes, according to the U.S. Department of Agriculture estimates.

The VAT reduction, flagged earlier last month by the cabinet, is part of on-going reforms to simplify the country’s tax structure and stimulate growth as the world’s second-largest economy slows.

“The main aim seems to be to lower the cost and boost consumption,” said one of the sources, a veteran oilseed trader with direct knowledge of the matter. “It will also help improve crushing margins.”

Soybean processors are suffering under their longest run of negative margins in more than two years.

Crushers in Shandong province are losing RMB211 per tonne processing imported soybeans this week.

The lower VAT may prompt some buyers to delay cargoes to arrive after July 1, but it is unlikely to have a major impact on overall soybean trade flows.

“We might see a slight drop in imports towards the end of June, as buyers will try to ask the ships to slow down or wait before arriving on the coast,” said the second source, who works at an international trading company which runs crushing plants in China.

Key Points VAT reduction to 11 pct from 13 pct seen improving crush margins Buyers may delay imports to take advantage, major impact unlikely Both sources declined to be identified as they were not authorised to speak to the media.

China’s soybean imports in May and June are estimated at between 8 and 9 million tonnes per month, propelled by strong domestic demand for soymeal and a rapid post-harvest movement of cargoes from Brazilian ports boosting shipments, they said.

“Vessel loading at Brazilian ports has been very fast, so ships will arrive earlier than expected. Buyers will not be able to cause too much delay,” said the veteran oilseed trader.

China imported 6.33 million tonnes of soybeans in March, a record for the month. That is up 3.8 per cent from a year ago and is 14.3 per cent higher than February’s 5.54 million tonnes, its General Administration of Customs reported. Reuters

Russia has blocked access to Chinese social media app WeChat, developed by Tencent Holdings, for failing to give its contact details to the Russian communications watchdog. Access to China’s most popular social media platform has been restricted since May 4, according to information posted on the Russian regulator’s website. Last year, Russia blocked U.S. social networking site LinkedIn, owned

by Microsoft, for violating a law that requires data on Russian citizens to be stored on Russian servers. Tencent told Reuters it was checking the status of WeChat in Russia and was in talks with the relevant authorities.

Deals boost

Private equity investment surges in April China witnessed a sharp increase of private equity (PE) investment in April, boosted by big deals in the medical and IT sectors, said a latest industry report. The combined investment in 42 PE deals made public was US$8.4 billion in April, much higher than the US$466 million registered in April last year, according to the report

by China Venture, an industry information provider. In comparison, the combined investment volume in 160 venture capital (VC) deals stood at around US$2 billion last month, less than the US$2.6 billion in April last year.

10 Business Daily Monday, May 8 2017

Greater China

A 1963 Ferrari 250 GTO Berlinetta

Fraud case

Ferrari supercar fight leads to Mainland embezzlement lawsuits The supercar case is running at the same time as a lawsuit in Texas over money and diamonds Charlotte Ryan

S

ome of the rarest cars in the world are at the heart of a London lawsuit embroiling an associate of one of China’s wealthiest men.

Zhao Hua Chen, who court filings say works for Chinese aluminium billionaire Zhongtian Liu, has accused Eric Po Chi Shen of buying real estate, rare red diamonds and super cars with money he embezzled while acting as his financial adviser, according to court documents filed in London’s High Court.

At stake in the case is ownership of two classic cars that could be worth as much as US$87 million. Chen says his former business associate falsified his financial reports and lied about how much he spent on property deals, before using the spoils to buy a 1998 McLaren F1 and a 1963 Ferrari 250 GTO Berlinetta. He is asking a judge in the British capital to order the cars to be sold or handed over to him.

The case, which was filed in September and is being heard in the U.K. because the cars are in storage outside London, is running at the same time as a lawsuit in Texas over money and diamonds. Chen alleges that Shen bought red diamonds with further embezzled funds, claiming he has the diamonds in his possession in Hong Kong.

“The cars involved in the suit are of extraordinary economic value but they are also of extraordinary interest in themselves,” Robert Dougans, a lawyer for Chen at the Bryan Cave law

firm, said in an interview. There are only four or five other similar Ferraris worldwide, co-counsel Charles Pok said.

Colourful past

The 1963 Ferrari 250 GTO Berlinetta is likely worth around US$25 million, according to John Collins, a classic Ferrari dealer at Talacrest. The model is a Series 2, he said in a telephone interview, with the Series 1 fetching at least US$40 million. Both parties in the lawsuit say it is worth much more than that, with Shen saying it could fetch as much as US$72 million.

“The cars involved in the suit are of extraordinary economic value but they are also of extraordinary interest in themselves” Robert Dougans, a lawyer for Chen at the Bryan Cave law firm

The car has a colourful past, with previous owners including English TV and radio personality Chris Evans, a one-time host of the BBC’s Top Gear program, and car collector Jean Pierre Slavic, according to the

Berlinetta website.

Only 39 of the Italian brand’s 250 GTOs were ever produced, one of which sold in 2013 for a record US$52 million.

The McLaren, estimated to be worth as much as US$15 million, has also seen its fair share of action. Court filings detail how Shen took it to Italy in May 2014 to participate in the McLaren Owners’ Tour of Italy, before crashing it into a tree on the first morning of the event. Mr. Bean star Rowan Atkinson was one of the first to come to Shen’s aid, according to press reports at the time.

Chen has chosen to make a claim to the cars rather than asking for money because of the significance of the vehicles themselves, Dougans said. The cash value of Ferraris has soared in recent years. The Hagerty Ferrari Index of 13 models has more than doubled since 2013, and a 1962 GTO 250 sold for US$38.1 million in a 2014 auction, the most ever.

Death threats

If the case goes to court, Chen’s lawyers will aim to prove that the cars were bought with money stolen from their client and the two sides will also debate whether a debt certificate signed by Shen was completed under duress.

Shen denies committing fraud and alleges that he only signed the debt certificate after he was repeatedly threatened by Zhongtian Liu, one of China’s wealthiest men and the owner of aluminium firm Zhongwang Holdings. Liu is worth an estimated US$2.54 billion, according to Bloomberg’s Billionaires Index.

On one occasion, Liu allegedly told Shen that “someone might come up

behind you with a needle and you might find yourself in a container,” Shen’s lawyers said. Shen says he believed Liu “could and would follow through on his threats” as he “believed that Mr. Liu had very substantial financial links to powerful figures” in China, the filing said.

Shen’s lawyers declined to comment on the case beyond what is in the filing, saying it had not been possible to reach their client. A spokesperson in China for Zhongwang said Mr. Liu “vigorously denies such allegations and believes them to be fabricated by an individual in the midst of litigation.”

Rarity value

The dramatic lawsuit seems unlikely to reach a speedy resolution, with Justice Marcus Smith saying in the most recent filing that he had “grave concerns” about the pleading of the case and allowing Chen another chance to sufficiently prove the ownership of the cars.

Meanwhile, the elite vehicles are being stored at the site of an old airport in Suffolk and Chen’s lawyers plan to pursue the claim.

“It’s not as if it was just property or stocks and shares held around London and New York and Singapore, it’s tangible assets that are of real interest to people and real rarity value,” Dougans said.

It’s not the first time a lawsuit has been brought over the Italian brand. A 17-year legal battle over a Ferrari worth $15.4 million was finally settled last April after descending into chaos, with lawsuits and counter-suits going four ways and ownership claims from Paraguay to Switzerland. Bloomberg News

Business Daily Monday, May 8 2017 11

Asia Real estate

India’s new property law seeks to protect home buyers Buyers’ money will have to be deposited in an escrow-like account and can only be used for the property they are investing in Megha Bahree

I

n 2010, Neena Nagpal and her husband spent their life savings on a flat outside Delhi that was never built. Now, a new law seeks to protect thousands of home buyers like her from unscrupulous property developers.

“The entire experience has been painful,” says the 54-year-old, whose husband recently died, leaving her to take care of their partially deaf son alone in a two-room house in a run-down part of the Indian capital.

“When you don’t walk what you talk, it really hurts us.”

From the mid-2000s onward, millions of middle class Indians eager to own their own homes poured cash into new building projects on the outskirts of major cities as a property boom took hold across the country.

Many were young workers in the burgeoning IT sector eager to break away from the traditional joint family set-up.

But the industry was riddled with problems and buyers were almost always the victims.

“What was shown and what was delivered was always different,” said Gulam Zia, executive director at real estate consultancy Knight Frank India.

“Developers got away with whatever they wanted and consumers always got a raw deal. Now a developer can’t hide anything and he can’t go back to his old habit of taking the consumer for a ride.”

Developers could face jail sentences of up to three years and substantial fines under the new law, which took

effect on May 1 and applies to on-going as well as new projects.

State governments will be responsible for keeping tabs on developers’ progress and ensuring they stick to their plans for everything from the number and size of apartments to the construction schedule.

Buyers’ money will have to be deposited in an escrow-like account and can only be used for the property they are investing in -- not to launch the developer’s next project.

If the flats are not delivered on time, the developer will have to pay the monthly interest on the buyers’ bank loans.

The Confederation of Real Estate Developers’ Associations of India, a trade body, welcomed the new law saying it had been calling for better regulation.

“This will go a long way in restoring consumer faith in the real estate sector,” said its president Jaxay Shah.

Thousands of cases

The road from Delhi to the satellite city of Noida provides ample evidence of the problems, lined as it is with half-built apartment buildings, most behind schedule.

Among them is Lotus Panache, where Nagpal and her family were hoping to make a home.

The 3C Company sold the development as “an enviable blend of sheer luxury and suburban lifestyle”, touting ambitious plans for a creche and 12,500 square-metre sports and leisure centre.

The reality -- rows of unfinished shells -- is a far cry from that.

Although every buyer has paid at

least 90 per cent of the price, only about 800 of the 4,200 promised apartments have been delivered so far and the project is nearly four years behind schedule.

The promised sports and leisure facilities amount to some workout equipment in one of the empty flats, a small swimming pool and some swings for kids on a brown patch of land.

About 600 buyers have filed a case against the developer in a consumer court demanding the homes they paid for and fair compensation for the delay.

But the slow pace of India’s overburdened judicial system means they are still waiting.

One couple borrowed two million

rupees (US$44,000) to buy an apartment on the 19th floor of a development being built on the outskirts of Delhi by Supertech.

It was not until they had paid 95 per cent of the purchase price that they discovered the company only had permission to build 12 storeys.

They have taken the company to court, but are still having to repay the loan at 20,000 rupees a month as the case continues.

“In the past, contracts signed were typically in favour of the developer and they could wriggle out of them.

Those things will be fixed now,” said Ramesh Nair, chief executive of JLL India, a real estate company.

“Today with this act in place there’s more accountability.” AFP

Trade

Malaysia’s exports surge beating forecast Exports to China jumped 40.3 per cent from a year earlier Malaysia’s annual export growth in March slowed slightly from the previous month, government data showed on Friday, but the pace of expansion remained robust on higher shipments of manufactured, mining and agricultural goods.

Exports in March rose 24.1 per cent from a year earlier, beating economists’ forecast of a 19.2 per cent rise, but were down slightly from the 26.5 per cent increase recorded in February, the fastest annual pace in nearly seven years.

Data from the International Trade and Industry Ministry showed a new milestone in export performance, with shipments topping 80 billion ringgit (US$18.46 billion) for the first time.

Exports of manufactured products grew 22.1 per cent year-on-year, the

data showed, while shipments of mining goods jumped 36.1 per cent on higher volumes and prices of crude oil and liquefied natural gas.

Exports of agriculture goods rose 25.4 per cent on increased shipments of palm oil and palm-oil based products and natural rubber.

March imports jumped 39.4 per cent from a year earlier, the highest annual increase in seven years, and up from the 27.7 per cent increase

recorded the previous month.

The trade surplus in March narrowed to 5.4 billion ringgit (US$1.25 billion), from February’s 8.7 billion ringgit.

Exports to China jumped 40.3 per cent from a year earlier, due to higher shipments of petroleum products, electrical and electronic products, rubber and chemicals.

Key Points Mar exports +24.1 pct y/y vs Reuters poll +19.2 pct Mar imports +39.4 pct y/y vs poll f’cast +28.6 pct Trade surplus 5.4 bln rgt vs poll f’cast of 9.1 bln rgt Exports to China +40.3 pct y/y, U.S. +16.5 pct, EU +28.1 pct Exports to the United States rose 16.5 per cent on rising demand for electrical and electronic products, while those to the European Union grew 28.1 per cent. Reuters

12 Business Daily Monday, May 8 2017

Asia Monetary policy

Philippine central bank deputy gov says no need of adjustment Consumer prices are forecast to rise 3.4 per cent this year Stanley White

T

he Ph i l i p p i n e s Central Bank Deputy Governor Diwa Guinigundo said he sees no need to adjust monetary policy because concerns about overheating are not warranted and consumer prices are expected to rise at a steady rate.

The central bank’s 3 per cent policy rate may seem low, but policy settings are appropriate given that inflation is forecast to slow slightly from next year, Guinigundo said in an interview with Reuters.

The central bank is also prepared to let the peso “adjust” versus the dollar in response to U.S. Federal Reserve rate hikes, because the risk of capital flight is low and a weaker peso has less impact on inflation now than previously, he said.

“We are in a Goldilocks situation in the sense that we have high growth, and low and stable inflation,” Guinigundo said on yesterday on the side-lines of an Asian Development Bank meeting.

“Fears about overheating

are not well placed. We don’t see the urgent need to start tweaking the policy rate or adjusting other levers of monetary policy.”

The central bank will meet on May 11 to review policy. It has kept its main policy rate unchanged since it raised interest rates by 25 basis points in September 2014.

Key Points Philippine central bank next meets May 11 Guinigundo dismisses concerns about overheating Inflation well within central bank’s price target range Guinigundo is a candidate to become the next central bank governor once Amando Tetangco, the current governor, steps down in July.

Guinigundo yesterday reiterated his interest in the role but said it is up to President Rodrigo Duterte to decide.

The Philippines is among the world’s fastest growing economies, with gross

The Philippines Central Bank headquarters

domestic product expanding by 6.8 per cent in 2016, a three-year high.

The annual rate of consumer price inflation was unchanged at 3.4 per cent in April, slightly below economists’ forecast for an increase to 3.5 per cent, and within the central bank’s 2 per cent to 4 per cent target for the year.

Consumer prices are forecast to rise 3.4 per cent this year but then slow to a 3 per cent increase in 2018, showing price pressure remains

contained, Guinigundo said.

The deputy governor dismissed concerns that U.S. Federal Reserve interest rate hikes could trigger disruptive capital outflows from the Philippines and other emerging economies.

The Philippines should allow its currency to respond naturally to higher U.S. rates, partly because inflationary risks are not that high, Guinigundo said.

G u i n i g u n d o w as a l s o supportive of the Duterte

administration’s plan to increase infrastructure spending to as much as 7 per cent of gross domestic product (GDP) by the end of its six-year term in 2022 from 5.2 per cent of GDP this year.

To fund the plan, the government has asked Congress to approve a package of tax measures to raise funds, showing the government remains committed to fiscal discipline, Guinigundo said. Reuters

GDP

Indonesia’s growth edges up on higher exports Standard Chartered expects the economy to grow 5.3 per cent this year Nilufar Rizki and Hidayat Setiaji

Indonesia’s economic growth picked up a touch in the first quarter on firmer export prices of some commodities and stronger demand in major trading partners, though analysts were split on how far this momentum will carry through to the rest of the year.

Southeast Asia’s largest economy grew 5.01 per cent in the January-March period on an annual basis, the statistics bureau said on Friday, matching a Reuters poll and up slightly from 4.94 per cent in the preceding quarter.

The resource-rich country has struggled through years of slowing growth as a plunge in commodity prices hurt everything from exports to investment and people’s purchasing power.

The recovery in prices of some of Indonesia’s main commodities, such as palm oil and coal, helped economic growth pick up to 5.02 per cent last year, from 4.79 per cent in 2015.

In the first quarter, exports of goods and services rose more than 8 per cent. The head of the statistics bureau Suhariyanto attributed this

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to rising prices of commodities such as tea and shrimp.

Demand was also supported by slightly better economic growth in China, the United States and Singapore Indonesia’s major trading partners.

“This is promising and in line with growth in our export partners,” Suhariyanto told a briefing.

Key Points Q1 GDP growth at 5.01 pct y/y, vs 4.94 pct in Q4 Q1 growth q/q on a non-seasonably adjusted basis -0.34 pct Rising exports, govt spending supported growth Consultancy Capital Economics described the first-quarter performance as disappointing and Natwest Markets said it was sub-potential.

But Standard Chartered and local brokerage Samuel Sekuritas were more upbeat and suggested it pointed to a better reading in coming quarters.

“It was an external driven recovery in line with our expectation. We see growth improving in the future as the government spends more,” said Standard Chartered economist Aldian Taloputra, who expects export gains to feed through to investment and consumption.

Standard Chartered expects the economy to grow 5.3 per cent this year.

Capital Economics maintained its view that growth will likely remain stuck at around 5 per cent over the next couple of years, with senior Asia economist Gareth Leather citing relatively depressed commodity prices and soft credit growth.

During the first three months, growth of private consumption, which accounts for more than half of

Indonesia’s gross domestic product, slowed slightly, while investment remained sluggish.

But after lower state spending in the second half of 2016 had dragged on growth, the government increased spending in the first quarter.

Indonesia’s finance minister Sri Mulyani Indrawati told Reuters last month there would be no more spending cuts this year as revenue-collection was on track and 2017 GDP growth was likely to top the official target of 5.1 per cent.

Meanwhile, the mining sector swung back to contraction after growing for a few quarters, due to a decline in production at big miners like PT Freeport Indonesia and Amman Mineral Nusa Tenggara, as well as lower oil and gas output.

Improving growth in other major sectors like agriculture and manufacturing helped compensate for the mining contraction.

Most economists in a Reuters poll on monetary policy believe the central bank is unlikely to support the economy with more rate cuts this year, having cut six times last year.

“The momentum to cut is constrained by rising inflation,” said Myrtal Gunarto, Maybank Indonesia’s economist. The central bank next meets for a policy review on May 17-18. Reuters

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

Business Daily Monday, May 8 2017 13

Asia Environment

In Brief

Indonesia sues Thailand’s PTT, PTTEP over oil spill In a separate class action suit, around 15,000 Indonesian seaweed farmers are seeking more than US$152 million from PTTEP Australasia to cover damages from the spill The Indonesian government is suing Thailand’s state-owned PTT and PTT Exploration and Production for around US$2 billion for alleged damage to the environment from an oil spill in the Timor Sea eight years ago.

The Montara wellhead operated by subsidiary PTTEP Australasia caught fire in 2009, leaking hundreds of thousands of litres of oil off the northern coast of Western Australia, according

to media reports at the time.

The incident was considered one of Australia’s worst oil disasters, and PTTEP was fined A$510,000 (US$394,000) by a Darwin court after pleading guilty in 2011 to charges related to workplace health and safety and failure to maintain good oilfield practice.

Indonesia alleges, however, that the oil spill also fouled seawater

and coastal areas in the nation’s East Nusa Tenggara province, and filed a lawsuit on Wednesday in a Jakarta court against PTT, PTTEP and PTTEP Australasia, seeking 27.5 trillion rupiah (US$2.1 billion) for damages and restoration costs.

PTTEP Australasia “has not shown good intention in resolving the pollution problem of the Montara oil spill,” Indonesia’s maritime coordinating ministry said in a statement on Friday.

Besides polluting seawater, the incident also damaged mangrove forests, coral reefs and sea grass fields in East Nusa Tenggara province, the ministry said.

PTTEP said in an emailed statement that it was aware of reports about Indonesia’s lawsuit, but that it “has not been served with proceedings and has not received any notification of the substance or extent of the claim.”

PTTEP has always acted cooperatively and “in good faith” in its past discussions with the Indonesian government, and will continue to do so, it said.

PTTEP Australasia maintains its position that “no oil from Montara reached the shores of Indonesia and that no long-term damage was done to the environment in the Timor Sea,” the company said.

In a separate class action suit, around 15,000 Indonesian seaweed farmers are seeking more than A$200 million (US$152 million) from PTTEP Australasia to cover damages from the spill.

The next hearing in the class action suit is due to take place at the end of this month, according to their legal team. Reuters

Japan central bank

Governor Kuroda says yen falls not boosting exports Bank of Japan Governor Haruhiko Kuroda said on Saturday the yen’s depreciation against other currencies has not led to an increase in the country’s exports in recent years because more companies now produce goods overseas. “Textbooks say that when your exchange rate depreciates, your exports will increase and improve your trade balance,” Kuroda told a seminar. “In the case of Japan, exchange rates are affecting not much the trade balance but the corporate profit situation, through which domestic demand will fluctuate,” he said.

HR

India names new bosses for seven state-run banks India named new chief executives for seven staterun banks on Friday, at a time when regulators are trying to clean up record bad loans in the sector. The new appointments coincide with the government’s efforts to try to tackle the banking industry’s US$150 billion of bad loans, the bulk of which is on the books of state-run banks. The banks which will have new bosses include the second-largest state lender, Punjab National Bank, and Indian Overseas Bank, the lender with highest ratio of bad loans.

Japan investment

Pension liabilities

Australia delays tapping world’s 7th-largest sovereign fund for six years Former Treasurer Peter Costello said that delaying the draw-down could see total assets rise to US$300 billion by 2030 Australia will delay tapping its US$130 billion Future Fund, the world’s seventh-largest sovereign fund, for at least six years to ensure it has sufficient assets to cover mounting public service pension liabilities, a newspaper said on Saturday.

“Ten or 15 years down the track, the unfunded super-liability problem would still be there...

We want the Future Fund to be able to do the job for which it was set up”

80 per cent of their final salary for life.

According to The Australian, public service pension liabilities under the schemes, which have been closed to new members, will peak in 2049-50 at US$20 billion. Liabilities are not expected to expire until 2100.

Morrison told the newspaper it made no sense to draw down on the Future Fund while it was earning 7 per cent per annum when governments could borrow to pay the pensions at 2.8 per cent.

“Ten or 15 years down the track, the unfunded super-liability problem would still be there,” he was quoted as saying. “We want the Future Fund to be able to do the job for which it was set up.”

He also said the additional debt would be incurred at a time when the

Scott Morrison, Federal Treasurer

Federal Treasurer Scott Morrison will extend the maturity date for drawing down on the fund from July 1, 2020, to at least 2026, The Australian said.

By doing so, the fund would generate sufficient assets to cover unfunded superannuation liabilities for federal public servants, who enjoy generous defined benefit pension schemes that guarantee as much as

Federal Treasurer Scott Morrison

economy was returning to surplus and net debt was in decline.

The Future Fund is Australia’s biggest investor. The move to delay drawing down on the fund, which The Australian said would be a centrepiece of the federal budget due to be released on Tuesday, would force the government to use further borrowings over the medium term to fund state pension pay-outs.

Former Treasurer Peter Costello told the newspaper that delaying the draw-down could see total assets rise to US$300 billion by 2030 and lift the taxpayers’ burden permanently.

“It will cover the cost of all unfunded liabilities and save the budget tens of billion of dollars a year,” he said.

The government is expected to reveal a faster narrowing of the yawning deficit next week in a federal budget that will also seek to appease the electorate over rising housing unaffordability.

Keeping a tight leash on expenses and encouraged by an unexpected late windfall from higher commodity prices, the government is targeting a surplus by 2021 amid lingering concerns about Australia’s prized triple-A credit rating. Reuters

ADB to back high-level technology Japan will provide US$40 million to the Asian Development Bank to promote high-level technology as part of efforts to boost quality infrastructure in Asia, Finance Minister Taro Aso said on Saturday.

“Japan has been promoting quality infrastructure in Asia in close collaboration with the bank,” Aso told the ADB’s annual gathering in Yokohama. “Enhancing quality of infrastructure in terms of lifecycle cost and environmental and social considerations is important.”

The money will be provided over a two-year period to a newly created fund of the ADB, he said.

Workforce

India, Philippines to lead Asian growth For a vivid illustration of why demographics matter so much for economic growth, take a look at the diverging trends in Asia. India and the Philippines are likely to post Asia’s fastest economic growth rates in coming years as their working-age population keeps expanding through 2020, in contrast with shrinking workforces across North Asia, Nomura Holdings Inc. estimates show. Philippines, with 31 per cent of its population currently under the age of 15, is projected to see a 1.9 per cent expansion of its 15-to65 year-old population this year, with Malaysia’s due to rise 1.6 per cent and India 1.5 per cent, Nomura economists said in a report.

14 Business Daily Monday, May 8 2017

International In Brief

Prices

Russia core inflation hits record low in April Core inflation fell to a record low in Russia in April, and headline inflation moved to within touching distance of the central bank’s target, official data showed on Friday. The data from statistics service Rosstat will reinforce arguments for the central bank to continue easing monetary policy after a 50 basis point rate cut last week. Core inflation, which typically excludes volatile items such as food and energy, fell from 4.5 per cent in March to 4.1 per cent last month, the lowest level in data stretching back to 2003.

Monetary trends

Fed’s Williams sees balance sheet as future policy tool San Francisco Federal Reserve Bank President John Williams on Saturday reiterated his view that the U.S. central bank should begin trimming its massive balance sheet later this year, in part so the Fed has more tools at the ready when the next recession hits. He was the fourth Fed official in two days to suggest the Fed may need to restart its controversial bond-buying program to help boost the economy in a future downturn.

The program, also used by central banks in Europe and Japan, was deeply unpopular among U.S. lawmakers.

Employment

U.S. job growth rebounds sharply Trump later hailed the numbers in a tweet: “Great jobs report today - It is all beginning to work!”

U

.S. job growth rebounded sharply in April and the unemployment rate dropped to 4.4 per cent, near a 10-year low, pointing to a tightening labour market that likely seals the case for an interest rate increase next month despite moderate wage growth.

Nonfarm payrolls surged by 211,000 jobs last month after a paltry gain of 79,000 in March, the Labor Department said on Friday. April’s job growth, which was broad-based, surpassed this year’s monthly average of 185,000.

Key Points Nonfarm payrolls increase by 211,000 in April Unemployment rate at almost 10-year low Average hourly earnings increase 7 cents There were hefty increases in leisure and hospitality, healthcare and social assistance as well as business and professional services payrolls.

The drop of one-tenth of a percentage point in the jobless rate took it to its lowest level since May 2007 and well below the most recent Federal Reserve median forecast for full employment.

The hiring rebound supports the U.S. central bank’s contention that the pedestrian 0.7 per cent annualized

economic growth pace in the first quarter was likely “transitory,” and its optimism that economic activity would expand at a “moderate” pace.

Wage growth lags

The U.S. economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, has vowed to sharply boost economic growth and further strengthen the labour market by slashing taxes and cutting regulation.

Trump later hailed the numbers in a tweet: “Great jobs report today - It is all beginning to work!”

In April, average hourly earnings rose 7 cents, or 0.3 per cent. However, downward revisions to previous months lowered the year-on-year increase to 2.5 per cent, the smallest gain since August 2016, from 2.6 per cent in March.

But there are signs wage growth is accelerating as labour market slack diminishes. A government report last week showed private-sector wages recorded their biggest gain in 10 years in the first quarter.

With the labour market expected to hit a level consistent with full employment this year, payroll gains could slow amid growing anecdotal evidence that firms are struggling to find qualified workers. That could also boost wages.

A broad measure of unemployment,

which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped three-tenths of a percentage point to 8.6 per cent, the lowest level since November 2007.

The employment-to-population ratio rose one-tenth of percentage point to an eight-year high of 60.2 per cent. This measure has risen for four straight months.

The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell to 62.9 per cent from an 11-month high of 63 per cent in March. It has rebounded from a multi-decade low of 62.4 per cent in September 2015, and economists see limited room for further improvement as the pool of discouraged workers shrinks.

Construction payrolls rose by 5,000 last month and manufacturing payrolls increased by 6,000. Leisure and hospitality payrolls jumped by 55,000 in April. Professional and business services payrolls rose by 39,000. Healthcare and social assistance employment increased by 36,800.

Retail payrolls gained 6,300 after two straight months of declines.

Retailers including J.C. Penney Co Inc, Macy’s Inc and Abercrombie & Fitch have announced thousands of layoffs as they shift toward online sales and scale back on brick-andmortar operations.

Government payrolls jumped by 17,000 last month as an increase in hiring by local governments offset a decline in federal government employment. Reuters

Grant

World Bank approves food aid for South Sudan The World Bank has approved a US$50 million grant to provide direct food assistance to counter starvation and prevent hunger-related deaths in famine-hit South Sudan. The World Bank said the Emergency Food and Nutrition Security Project will benefit a segment of the 4.9 million extremely food insecure population in South Sudan, who are currently facing starvation as a result of conflict and drought.

“Ongoing conflict means that households in South Sudan are reportedly relying on desperate measures such as distress sales of productive assets, putting future income streams at risk,” said Carolyn Turk, World Bank Country Director for South Sudan said.

Brexit

Germany proposed charging Britain for EU single market access German government officials have proposed giving Britain access to the European Union’s single market in return for a fee, Focus magazine said on Saturday citing a Finance Ministry report. The 35-page report on the potential costs of Brexit to Germany said Britain’s departure from the EU risked “serious economic and stability relevant consequences; effects in particular on the real economy.” The ministry officials calculated Berlin would have to pay an additional 4.5 billion euros (US$5 billion) a year into EU coffers as a result of Britain’s departure from the bloc.

Trade

U.S. Commerce chief says Canadian threats ‘inappropriate’ Canada is considering duties on exports from Oregon such as wine, flooring and plywood David Lawder

U.S. Commerce Secretary Wilbur Ross said on Saturday that threats of retaliatory trade actions from Canadian officials “are inappropriate” and will not influence final U.S. import duty determinations on Canadian softwood lumber.

“We continue to believe that a negotiated settlement is in the best interests of all parties and we are prepared to work toward that end,” Ross said in a statement issued by the Commerce Department.

On Friday, Canadian Prime Minster Justin Trudeau said his government would study whether to stop U.S. firms from shipping thermal coal from ports in the Pacific province of British Columbia in response to the lumber duties.

Canada also is considering duties on exports from Oregon such as wine, flooring and plywood, a source close to the matter told Reuters, citing

the role played by U.S. Senator Ron Wyden, an Oregon Democrat, in pressing for the lumber tariffs.

Trade relations between the United States and second-largest trading partner Canada have soured since the Commerce Department in late April imposed preliminary anti-subsidy duties averaging 20 per cent on Canadian softwood lumber imports.

The long-running dispute centres on U.S. lumber producers’ charges that lower-cost Canadian competitors benefit from an unfair government subsidy because Canadian timber is mostly grown on public lands.

Ross said in his statement on Saturday that the Commerce Department’s decision “was based on the facts presented, not on political considerations.”

“Threats of retaliatory action are inappropriate and will not influence any final determinations,” Ross added.

The Commerce Department still needs to finalize its anti-subsidy findings and the final duties must also be affirmed by the independent U.S. International Trade Commission before they can be locked in place for five years.

“Threats of retaliatory action are inappropriate and will not influence any final determinations” Wilbur Ross, U.S. Commerce Secretary

Ross said if any Canadian officials wish to present additional information in the case, the department “will consider it carefully and impartially.”

Reuters

Business Daily Monday, May 8 2017 15

Opinion Business Wires

The Korea Herald The South Korean economy has been showing some modest signs of recovery thanks to brisk exports and investment but the momentum remains weak due to flaccid private consumption, a staterun think tank said yesterday. “Exports and investment maintained high growth, signalling that economic activity has continued to expand at a moderate pace,” the Korea Development Institute said in its monthly evaluation of the country’s economic conditions. “Exports exhibited relatively high growth as semiconductors continued to do well and the delivery of vessels jumped temporarily.”

The Straits Times The policies of United States President Donald Trump are the top concern this year for retail investors in Singapore.

This finding emerged from more than 550 participants at a seminar on April 22, which was part of the Save & Invest Portfolio Series, hosted by SGX Academy and CFA Society Singapore. During the SGX-CFA Portfolio Construction Conference for Retail Investors, they were asked to identify their No. 1 concern among the following choices: Mr Trump’s policies (46.1 per cent), the French election, North Korea and the U.S. Federal Reserve raising interest rates.

Philstar The Philippine Stock Exchange Inc. has elected independent director Ramon Monzon, a known protege of SGV founder Washington Sycip, as its new president.

Monzon was elected during the PSE’s annual stockholders’ meeting yesterday and takes over the position of former investment banker Hans Sicat, who ended his six-year tenure to give way to his new task as chief integration officer who will consolidate the PSE and the Philippine Dealing and Exchange Corp.

(PDEX). PSE chairman Jose Pardo said Monzon is an auditor who “can sleep with numbers” and is “a protege of the venerable Washington Sycip.”

Times of India Commerce Minister Nirmala Sitharaman said the revised mid-term foreign trade policy (FTP) is to be announced few days ahead of July 1, the scheduled date for the Goods and Services Tax roll out.

After holding a meeting with various stakeholders, including exporters as part mid-term review of FTP (2015-20), the minister also said that no suggestions were made to scale down the 2020 export target of US$900 billion, including services. Given the current economic and geopolitical situations globally there are concerns that international trade may be impacted.

U.S. economic miracles, only of the wrong kind

A

merica is truly a land of miracles: high profits without investment and low unemployment without wage growth the economic equivalent of water flowing uphill.

F ri da y b r o u ght n e w s that, d es p i t e th e unemployment rate falling to 4.4 per cent, the lowest in more than a decade, average hourly earnings only inched up 2.5 per cent compared to a year before. Wages haven’t risen at a 3 per cent or better clip since 2009, and have spent the entire post-recession period below the rate needed to allow the Federal Reserve to hit its target of 2 per cent inflation.

Wages have been depressed at the very same time that profits have soared: S&P 500 index profits on sales are nearing 9 per cent, compared to an average of 5 per cent before 1997, according to figures from fund firm GMO. While economic theory holds that high profits invite investment and competition, it has been quite the opposite. Net investment among nonfinancial firms as a per centage of net operating surplus is now about 60 per cent lower than the norm which prevailed in the 1980s and 1990s, according to a recent paper.

Th es e t w o p u zz l es - l o w investment and low wage growth - are not unconnected, and not miracles. They both persist not because economic orthodoxy is wrong, but because theory supposes that firms operate in a competitive market, one in which new firms can rise up, funded by investment, to winnow away the high margins of existing ones.

This would create a demand for labour, and labour at higher wages.

Yet the new firms don’t rise up, and the existing ones skimp on investment. While about 100,000 more firms were born than died each year in the 1998-2007 period, according to Census data, since then net firm births have been just about zero.

But why would any firm pass on profitable new investment? How could they when there are so many others out there just waiting, as the business school professors tell us, to “move their cheese”?

Well, maybe not.

“We test eight alternative theories that can explain the investment gap,” Germán Gutiérrez and Thomas Philippon of New York University write in a 2016 study.

“Among these, the only ones that find consistent support in our industry and firm level datasets are decreased competition, tightened governance and, potentially, increased short-termist pressures.”

“

James Saft a Reuters columnist

Wages rise with investment

Firms aren’t investing because they face less competition, something other studies have found is due to regulations which inhibit outsiders, especially in areas like communications and defence.

Indeed, as the NYU paper finds, firms which invest less tend to be owned by institutional investors and may well be responding to pressure to keep quarterly profit figures rising, an issue which matters if you are a fund manager who gets fired if she fails to track the index but which is only weakly correlated to long-term value creation. These firms which aren’t investing and which only face weak competition are, instead of building new plants, buying back their own shares.

This may prop up share prices, at least for a while but creates only a few jobs for bankers and none for the rest of us.

It is almost certainly also inhibiting productivity growth, which should propel wages. A separate draft study by Philippon and Callum Jones of NYU finds that “Absent the decrease in competition, we find that the U.S. economy would have escaped the zero lower bound by the end of 2010 and that the nominal rate today would be close to 2 per cent.”

In other words we have part of our explanation for secular stagnation, and it is that the U.S. economy has become less competitive.

To be sure, there are other contributing causes, competition from low-cost production globally, and also, at least theoretically, technology. Yet the U.S. has always faced the one and adopted the other, and still wages rose respectably. That is until about 1997.

One of the ironies is that the Federal Reserve, which can do little to foment competition, has responded to the slack in the labour market by keeping interest rates too low and blowing serial bubbles. If there are no jobs in ‘protected’ industries which don’t face competition then we’ll put everyone to work laying marble countertops.

The U.S. needs to get to grips with industry concentration, anti-trust and a lack of competition or we’ll continue to be plagued by the twin miracles of abnormal profits and scant wage gains. Reuters

These two puzzles - low investment and low wage growth - are not unconnected, and not miracles

”

16 Business Daily Monday, May 8 2017

Closing Logistics

Mainland’s courier sector expands fast in 2016

Hangzhou.

The country plans to extend the courier network and improve computerized systems, services and China’s courier sector posted strong growth in 2016 thanks to continued efforts to boost consumption and international connections by 2020.

The target annual revenue of the courier sector will be services, according to the State Post Bureau (SPB).

RMB800 billion yuan by 2020, according to a policy The sector generated RMB397.44 billion (about US$57.58 billion) in revenue last year, up 43.5 per cent document released by the State Council last October.

A survey conducted by the China Federation of year on year, the bureau said.

A total of 31.28 billion deliveries were made last year, Logistics & Purchasing and e-commerce giant JD.com in April showed that about 80 per cent of the up 51.4 per cent year on year, the bureau said. surveyed 4,363 delivery men are satisfied with their The SPB data showed that Guangzhou was the earnings, while nearly 90 per cent of them worked for city with the most express deliveries made last eight to 12 hours due to rapid business growth. Xinhua year, followed by Shanghai, Shenzhen, Beijing and

Forex

China’s reserves rise beating market expectations China burned through nearly US$320 billion of reserves last year

C

hina’s foreign exchange reserves rose in April for a third straight month, beating market expectations, as capital controls and a pause in the dollar’s rally helped staunch capital outflows.

The April rise is reassuring news for policymakers after the yuan steadied as U.S. President Donald Trump backed away from labelling China a currency manipulator, saying the dollar was “getting too strong” and would eventually hurt the U.S. economy.

Reserves rose US$21 billion in April to US$3.03 trillion, compared with an increase of US$3.96 billion in March

to US$3.009 trillion.

The State Administration of Foreign Exchange said in a statement that the reserves rose due to basically balanced foreign exchange supply and demand and the appreciation of currencies against the dollar.

Looking ahead, the yuan would remain basically stable with cross-border capital flows becoming more balanced, which will further stabilise foreign exchange reserves, the regulator added.

Economists polled by Reuters had expected foreign exchange reserves to rise by US$11.0 billion to US$3.02 trillion in April.

China has tightened rules on

moving capital outside the country in recent months as it seeks to support the yuan and stem a slide in its foreign exchange reserves.

It 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.

The yuan’s performance against the dollar has been steady in recent weeks after the dollar lost its upward momentum.

In March, China’s central bank sold the smallest amount of foreign exchange since May 2016, supporting the government’s assertions that capital flows were becoming more balanced.

Premier Li Keqiang said last month that market confidence in the yuan had significantly improved and the

outside world had stable expectations for the yuan exchange rate.

The forex regulator said on Wednesday that China would improve macro-prudential management on cross-border flows to ward off potential risks and “optimise” diversification of foreign exchange reserves.

‘Reserves rose US$21 billion in April to US$3.03 trillion, compared with an increase of US$3.96 billion in March to US$3.009 trillion’ The Chinese currency is forecast to weaken to 7.07 against the dollar in a year, according to a Reuters poll of 60 foreign exchange strategists.

The U.S. Federal Reserve kept interest rates unchanged on Wednesday and downplayed weak first-quarter economic growth while emphasising the strength of the labour market, a sign it was still on track for two more rate rises this year.

China’s gold reserves rose to US$75.02 billion at the end of April from US$73.7 billion at end-March, data published on the People’s Bank of China website also showed. Reuters

Services

Rules

M&A

China to develop culture Mainland’s insurance regulator into pillar industry by 2020 says loopholes should be plugged

U.S. fund chases embattled Australian media empire

China is planning to develop its cultural industry into a pillar of the national economy by 2020 by upgrading its industrial structure, fostering major brands and boosting consumption, according to a government blueprint made public yesterday.

Issued by the general offices of the Communist Party of China (CPC) Central Committee and the State Council, the outline for the 13th five-year program (2016-2020) on cultural development and reform said the country will help create cultural enterprise groups with core competitiveness and high market share.

The government will promote both mergers among state-owned cultural enterprises and cross-ownership mergers and acquisitions.

Newspapers and magazine resources should also be merged or reorganized and news and publishing organizations with long-term financial and operational difficulties should be shut down or revamped, according to the outline.

China vowed to lower the threshold for private capital to access the sector and said it will boost and guide development of non-public cultural companies and support medium-, small- and micro-sized cultural enterprises that are innovative or specialized. Xinhua

U.S. private equity giant TPG Capital has made an offer to buy part of Fairfax Media, reports said yesterday, after a tumultuous week for the Australian media empire with its staff striking against job cuts.

The Australian Financial Review, a Fairfax publication, said TPG had offered the group a deal that would see it take over the newspapers as well as its lucrative Domain Group focused on property advertising.

The offer would include the Financial Review, The Sydney Morning Herald and Melbourne’s The Age, the Review said, adding that the deal could be valued at some A$2.5 billion (US$1.9 billion).

It would leave out other parts of the business, including the New Zealand arm which suffered a blow on Wednesday when the country’s competition watchdog rejected a merger between NZME and Fairfax Media NZ. The Herald said Fairfax management were meeting at the company’s headquarters in Sydney yesterday for urgent talks.

Staff at Fairfax Media walked off the job for a week on Wednesday in protest at more hefty job cuts, as the leading publisher struggled with slumping revenues. AFP

The China Insurance Regulatory Commission said yesterday that regulatory loopholes should be plugged and supervision stepped up to the overcome shortcomings.

A sound regulatory system for companies should be established and supervision strengthened over the shareholder ownership structure and the authenticity of their funds, the commission said.

In recent years, a series of problems has been identified, including lax enforcement of rules and systemic loopholes, it added.

“The insurance regulatory system needs to deeply reflect and needs to thoroughly take stock and sort things out, locate and correct the shortcomings which exist, earnestly perfect the regulatory system and improve its methods,” the regulator said.

The commission will also closely monitor where insurance funds are invested.

The bar for overseas investments by insurance funds will be raised, it added.

Insurers will have to pay more attention to the development of insurance products, and punishments will be stepped up for those who break the rules, the regulator said. Reuters