Macau Business Daily, August 12, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Monday August 12, 2013 Number 346 Year II

April 19, 2013

Casinos, hotels brace for more expensive water

Uneasy antenna deal could crumble before it begins Page 3

Firms probed for exchanging junket chips Page 4

asinos, hotels, saunas and golf courses could have to pay more for water supply as soon as next year, as the authorities plan to reduce subsidies, including for the households that use the most water. These special users pay 5.8 patacas (US$0.73) per cubic metre of water supplied, with the administration subsiding a further 0.7 patacas. But with water supply costs having little impact on these companies, that subsidy could be fully cancelled. The government wants to encourage households and companies to save water. High-consumption households could also have to pay more, though any increase would be below inflation. More on page 2

www.macaubusinessdaily.com

I SSN 2226-8294

Hang Seng Index 21810

21792

21774

21756

Property sales plunge in June

Caesar sells golf course at a loss

With the new law regulating sales of unfinished flats coming into force, the number of property transactions dropped in June, led by residential units. But the sales value has remained a rising trend so far this year, pushing up average prices. Industrial units, which are not covered by new restrictions introduced last year, recorded the fastest growth. Page 3

United States casino operator Caesars Entertainment Corp has effectively given up on obtaining casino-operating rights here, after agreeing to sell its Cotai golf course. Macau-based firm Pearl Dynasty Investments Ltd is buying it for US$438 million (3.5 billion patacas), US$140 million less than what Caesars Entertainment paid six years ago. There is little information, however, on the buyer or its future plans for the land. Page 5

Macau needs real housing policy

21738

21720

August 9

HSI - Movers Name

%Day

CHINA COAL ENE-H

10.29

CHINA RES ENTERP

7.76

CHINA SHENHUA-H

6.14

CITIC PACIFIC

3.69

KUNLUN ENERGY CO

3.56

CHINA MOBILE

-0.54

GALAXY ENTERTAIN

-0.60

MTR CORP

-0.68

HANG LUNG PROPER

-0.99

SANDS CHINA LTD

-1.40

Source: Bloomberg

Instead of uncoordinated reactions to people’s gripes, the government needs to implement a proper housing policy that includes planning and market regulation, says Agnes Lam Lok Fong. The University of Macau professor and candidate in next month’s elections to the Legislative Assembly says more legislators with no ties to economic groups are needed to better monitor the city’s development. Pages 6 & 7

Brought to you by

2013-08-12

2013-08-13

2013-08-14

27˚ 33˚

26˚ 32˚

25˚ 30˚

August 12, 2013

Macau Court rejects Sands’ Cotai trademark The Court of Second Instance has again prevented gaming operator Las Vegas Sands Corp from registering a trademark that uses the words “Cotai Strip”. In a July judgement but made public only Friday, the judges said Sands cannot register “Cotai Strip Cotai Expo”. The court sided with the objections raised by rival operator Melco Crown Entertainment Ltd, saying that allowing a company to have exclusive rights of a geographical designation could lead to “unfair competition”. The judges stressed that Cotai was “an area fought over in competition by other companies and gaming operators”.

Melco Philippines posts loss over resort building Melco Crown (Philippines) Resorts Corp recorded losses of 1.01 billion pesos (US$ 23.2 million) in the first half of this year, with no revenues. The unit of Macau gaming operator Melco Crown Entertainment Ltd said in a regulatory filing last week that they expected “losses to continue to increase until we commence commercial operations with the planned opening of the project” in mid-2014. Melco has teamed up with Philippines leisure firm Belle Corp to build a US$1.3-billion (10.4 billion patacas) resort with 950 hotel rooms and 240 gaming tables in Manila Bay.

High-consumption households may have to pay more for the water they use

Casinos, hotels facing higher water charges The government intends to stop subsidising the water that special users consume Stephanie Lai

sw.lai@macaubusinessdaily.com

Xiamen Airlines eyes Dalian route Mainland carrier Xiamen Airlines Co Ltd will launch flights between Macau and the northeastern city of Dalian via Fuzhou, along with a new route to Zhengzhou. Both routes will begin next month, Peng Xiaogang, general manager of the airlines’ Tianjin branch, told media. The Civil Aviation Authority of Macau was not immediately available for comment on the Dalian route yesterday, but it has previously said it “is still reviewing” the Zhengzhou application. The carrier re-launched flights between Macau and Tianjin on Saturday, a route it had dropped in 2008.

Macau ‘highly alert’ over new H7N9 case The government is “highly alert” and in constant communication with the neighbouring jurisdictions and the World Health Organisation after the first H7N9 bird ‘flu case was confirmed in Guangdong province last week, said the Health Bureau. Lam Chong, the bureau’s coordinator for communicable diseases, told media over the weekend they did not rule out the occurrence of bird ‘flu cases here. The territory is prepared for this possibility, he said. The bird ‘flu scare has reignited after an outbreak limited to eastern China earlier this year.

asinos, hotels, saunas, golf courses and builders of public infrastructure may have to pay more for their water as soon as next year. The Marine and Water Bureau said on Friday that the government might stop subsidising the water consumed by such businesses, which it calls special users. The bureau said it would also consider reducing water subsidies for high-consumption households. The bureau told Business Daily that it cost 6.50 patacas (US$0.81) per cubic metre to import water from the mainland, treat it and pipe it to consumers. Special users pay 5.80 patacas per cubic metre, so the government subsidises their water by 0.70 patacas per cubic metre. The government subsides the water that other businesses, schools, hospitals and government bodies consume by 1.23 patacas per cubic metre. It subsidises the water that households consume by between 1.23 patacas and 2.15 patacas per cubic metre. “As the government has shouldered part of the water supply cost, everyone thinks that the price they pay is inexpensive,” Marine and Water Bureau water resources management head Wong Man Tou said. “But we think that financially capable users should gradually adapt to supporting the entire water supply cost,” Mr Wong said. He said the government wished to prod households and businesses to save water by gradually reducing their subsidies. The bureau said only the

subsidy for special users would be abolished altogether. The bureau announced last week that the price per cubic metre it pays to import water would rise next year from 2.07 yuan (2.68 patacas) to 2.30 yuan. But it said it would not pass the increase on to consumers. The bureau will come up with a new water tariff in the first half of next year.

Academic idea It did not say exactly what changes it would make to the water tariff or when the subsidy for special users would be abolished. In 2011 the government began charging high-consumption households more for their water. The water consumed by households that use 57 cubic

Financially capable users should gradually adapt to supporting the entire water supply cost Wong Man Tou, Marine and Water Bureau water resources management head

metres or more every two months is subsidised by only 1.23 patacas per cubic metre. Business and government consumers pay one rate, however much water they use. The Marine and Water Bureau said it would consider a suggestion by the University of Macau that it increase the water rate for highconsumption households. The bureau said any increase would be smaller than the rate of consumer price inflation. A survey by the University of Macau found that water rates had “little impact” on business consumers. Nearly 38 percent of the 28 special users surveyed said water accounted for under 2 percent of their operating costs. They said they were unlikely to take special steps to reduce consumption if the water rate rose. The government spent nearly 100 million patacas on water subsidies last year. It spent nearly 60 percent of the money on subsidising the water consumed by households. It spent 15 percent on subsidising the water consumed by special users. It spent the rest on subsidising the water consumed by other business or government users. Mr Wong said the amount of water consumed by businesses would soon match or even exceed the amount consumed by households. Households consumed 16.4 million cubic metres of water in the first half of this year. Special users consumed 10.04 million cubic metres. Other businesses consumed 10.30 million cubic metres.

August 12, 2013 April 19, 2013

Macau

Property sales plunge in June editorial But the prices paid, notably for industrial space, keep rising in the first half Tony Lai

tony.lai@macaubusinessdaily.com

he number of property sales – particularly sales of housing – dropped in June, after the law on the sale of unfinished flats came into force, official data show. But the prices paid for real estate maintained their upward trend in the first half of this year. Statistics and Census Service figures published on Friday show the number of homes sold in June was 783, half as many as in May or a year earlier. The number of homes sold was the lowest in any month since February last year, when 560 were sold. Since June 1 the law has allowed the sale of unfinished flats only once the foundations of the building that will contain them are complete and the flats have been registered individually. Sales of other sorts of property also fell in June. The number of shops sold was 117, 7.9 percent fewer than in May and half as many as a year earlier. The number of office premises sold was 38, 17.4 percent fewer than a year earlier. The number of industrial premises sold was 20, about the same as a year earlier.

Estate agents expect the number of sales of homes to remain low in the first few months of the law on the sale of unfinished flats and in the first few months of the law regulating estate agents, which came into force last month. Centaline (Macau) Property Agency Ltd said sales of homes and shops had been nearly 50 percent lower last month than a year earlier because the market was unfamiliar with the provisions of the law on estate agents. Centaline said in a review this month that estate agents were hoping that after the summer – usually a low season for property sales – “home owners and buyers will return to the market and contribute to a rebound in the transaction volume”.

Industrial growth While the number of homes sold in the first half was 3.2 percent lower than a year earlier, the buyers paid a combined 45.3 billion patacas (US$5.66 billion) for them, 42.8 percent more. The average price of a home rose to 5.92 million patacas in the first half from 4 million patacas a year earlier.

Jones Lang LaSalle (Macau) Ltd said last week it expected housing prices to increase by between 3 percent and 5 percent in the second half because supply was limited and interest rates low. The number of industrial premises sold in the first half was 156, nearly double the number sold a year earlier, and together they cost 1.33 billion patacas, 140.7 percent more. Centaline senior regional sales director Roy Ho said in April that the price of industrial property was rising faster than the price of other sorts of property “as the price for such units is still relatively low and it is not covered by the latest curbs”. The government expanded last October the special stamp duty on sales of housing to cover sales of offices, shops and parking spaces – but not industrial property. The special stamp duty is a levy of 20 percent on the sale of a property if it is sold within a year of being purchased, or of 10 percent if it is sold between one and two years after being purchased. The average price of each office premises sold in the first half rose to 9.56 million patacas this year from 6.48 million patacas last year.

Thirst for transparency

n a land so parched of any hint of public accountability, last week’s announcement that the government would start this year informing the Legislative Assembly of any “important budget changes” to big infrastructure projects came as a welcome shower. But the refreshment quickly evaporated as it become obvious that the legislators will be allowed only to “discuss” changes, not vote on them. It is far from enough. The new assembly, to convene after next month’s elections, will have 14 members directly elected by Macau permanent residents. No matter how much we question their economic interests or the manner of their courting votes, they will be the true representatives of the people. As such, they should be able, at least, to express their binding disapproval of the numerous and huge overruns in the cost of big infrastructure projects. The estimated cost of the Pac On ferry terminal on Taipa has ballooned from 583 million patacas (US$73 million) in 2005 to 3.2 billion patacas now. It is just the latest such case. The reasons usually given by the government for budget overruns – inflation and unforeseen circumstances – are growing too hoary. It is eye-opening to notice how the gaming companies have been able to put up huge casino resorts, with bigger budgets but fewer big overruns. Construction costs are definitely increasing. There are always unpredictable factors. So what makes the difference between private and public projects? It is the government’s incompetence in drafting remotely accurate infrastructure budgets and contracts that safeguard public money. Macau’s political weakness when dealing with state-owned builders does not help, either, especially when it comes to preventing shoddy construction, as already seen in new public housing. But what if allowing the assembly to vote on budget overruns would block the construction of essential infrastructure? This is always a possibility but, setting aside the government’s crippling paranoia about losing control, there is little to fear. After all, Chief Executive Fernando Chui Sai On will have the power to appoint seven legislators and the unwavering support of many indirectly elected ones. Allowing the assembly to vote on budget changes would increase transparency and act as a deterrent to lazy – or incompetent – government officials in charge of big infrastructure projects.

Estate agents are hoping home sales will rebound after the summer

Cable TV threatens to cancel antenna deal

acau Cable TV Co Ltd has threatened to cancel the cooperation deal it signed with the public antenna firms last week but the government warned the company not to “complicate” the situation. Cable TV agreed to allow 14 antenna firms to relay its television signals through their networks, after the courts ruled in June the antennas had to stop their illegal activities. “The agreement and the recent

remarks from different parties are unfair to Cable TV,” said chief commercial officer John Chiang Kwong Io yesterday in a debate hosted by public broadcaster TDM. He added Cable TV have been “mistreated” and “pressured” over this issue. Facing boos from the audience, Mr Chiang added: “If this situation continues, in order to safeguard our interests we do not rule out calling off the cooperation with

the antenna firms after consulting with [our] lawyers.” Lawrence Tou Veng Keong, director of the Bureau of Telecommunications Regulation, told media also yesterday: “We do not think Cable TV needs to complicate the issue at this time.” “The government will not be threatened by anybody,” he warned, adding that the administration was prepared for any changes in the situation.

Yeung Ka Ke, spokesperson for the 14 antenna firms, told Business Daily yesterday they were “in a passive role”. “The public can judge the matter by themselves,” he added. The residents have reacted badly against the agreement as the deal cuts the number of channels provided by the antenna firms to one-third. TDM Sports and TDM HD are among the channels removed. T.L.

August 12, 2013

Macau

Public Prosecutor probes junket chip ‘fraud’

Brought to you by

HOSPITALITY

Those under scrutiny allegedly offer to cash VIP chips for ‘tax’ commission and claim govt letter of authority

Moving tourists The ability of Macau to accommodate an increasing number of visitors depends largely on its transport. Public transport also has to serve a growing population. The number of motor vehicles of the types that tourists use – taxis, buses, and tourist light vehicles and tourist buses – has been rising continuously. The statistics on tourist vehicles for the first half of this year suggest that growth in their number will accelerate this year.

The number of taxis, buses, tourist light vehicles and tourist buses grew by 30.1 percent between 2008 and the end of June this year. Growth slowed last year, but seems to be picking up speed again this year. In the first half of this year the number grew by 4.4 percent, having grown by 5 percent last year. The number of taxis grew by 7 percent last year and by 11 percent in the first half of this year, having stopped rising completely and inexplicably until 2011. But the number of taxis will probably grow more slowly in future. Although there is great demand for more taxis, the government has shown great reluctance to grant new taxi licences. The number of buses declined in 2009 and 2010, only to jump by 71 percent in 2011. A third operator began running bus services in 2011. Since then the number of buses has grown only slightly. Most of the growth in the number of vehicles of the types that tourists use has been in dedicated tourist light vehicles and tourist buses. The number of tourist light vehicles and tourist buses grew by 24 percent in the period under review. Growth in the number of tourist light vehicles was the fastest, being almost 35 percent. J.I.D.

2,442

Tourist vehicles on the road in the first half

Michael Grimes

michael.grimes@macaubusinessdaily.com

he Public Prosecutions Office says it is investigating two purported companies that are allegedly offering to cash Macau VIP gamblers’ junket chips in exchange for a ‘tax’ commission. No arrests have been confirmed so far. The office said the people allegedly involved claim to be representatives from organisations referred to as ‘Golden Island International Group’ and ‘Flamingo International Group’. The office said it has been receiving complaints and enquiries over the two organisations’ operations since July last year. They have allegedly approached Overseas Chinese VIP gamblers – typically ethnic Chinese from places such as Malaysia, rather

than from the mainland or Taiwan. Representatives of the organisations have shown the high rollers what are claimed to be letters of authorisation from the Public Prosecutions Office and from the Macau courts showing that the chip cashing process is approved. The office confirmed to Business Daily the documents are false and have not been issued by it or by the Macau courts. It adds there is no system in Macau whereby VIP chips can be cashed in exchange for payment of a tax. Under Macau’s existing regulations junket chips are what are known as ‘non-negotiable’ or ‘NN’ chips, meaning they cannot be exchanged directly for cash. Under the normal rules of the local casino industry, NN chips can only be

converted to cashable chips when a player wins. But VIPs who make only infrequent trips to Macau – typically Overseas Chinese based a long way from the city – may be left with a lot of NN chips at the end of their visit and may not wish to wait until the next trip to play them and then cash any winnings. An industry source told Business Daily: “It may not technically be legal, but within the junket sector it’s common for people who are not the gaming promoters and not the casino operators to offer to cash players’ junket chips in return for a commission. Perhaps the problem here is that they are trying to do it with a ‘letter of authority’”. With Stephanie Lai

Okada wants criminal charges against his own team Japanese businessman says US$40 mln Philippines payments ‘illegal’ and ‘damaged’ Universal Entertainment Michael Grimes

michael.grimes@macaubusinessdaily.com

azuo Okada’s Universal Entertainment Corp says it is pursuing criminal charges – including possibly “fraud, breach of trust and misappropriation of funds” – against company managers allegedly involved in “illegal flow of funds totalling [US]$40 million” (320 million patacas). In late July the Philippine Department of Justice said investigators there had recommended filing criminal cases against Mr Okada and 25 others for putting up dummy companies to acquire land for a planned US$2 billion Manila casino. Officials in that country also told Business Daily the entrepreneur could lose his Manila provisional casino licence if any bribery were proven in relation to how it was acquired. The latest filing to Jasdaq by Universal Entertainment refers to

unnamed third parties saying the US$40 million was connected to ‘a payment linked to the Philippine business’. It is the only mention of the country – or what the funds were supposedly for – in the twopage filing. The document adds a special committee set up by the firm had found “illegal payments” were made by “some managers who had ignored the company’s existing rules and regulations”. The filing added the transactions had “inflicted damage on the company”. It did not name the alleged culprits. But a lawsuit filed by Universal Entertainment on August 20 last year in Tokyo claimed Mitsuo Hida – then president of Universal subsidiary Aruze USA Inc’s Japan branch – made an “unauthorised” debit of US$5 million from the company’s Bank of Tokyo-Mitsubishi UFJ account in May 2010.

Payments in the US$40 million tranche of money are being investigated by law enforcement agencies in the United States as well as the Philippines. Pachinko machine manufacturer Mr Okada – who has also branched out into casino equipment – is a former investor in Wynn Resorts Ltd. He was ejected as a shareholder of Wynn Resorts and as a board member of Wynn Macau Ltd in February last year. It followed the filing of a Wynn-commissioned report that found Mr Okada was “unsuitable” as a partner and a threat to the casino company’s Nevada licence because of the way he was pursuing the Manila casino deal. U.S. dollar billionaire Mr Okada strongly denies any wrongdoing and has filed several lawsuits in Nevada and one in Japan, to defend his position.

August 12, 2013

Macau

Caesars sells golf course, gives up on Macau But there is little information on the buyer’s identity or plans for the land Vítor Quintã

vitorquinta@macaubusinessdaily.com

Dynasty can extend it for a month, in exchange for a further deposit of US$8 million. Caesars Entertainment can keep 10 percent of the purchase price, US$43.8 million, if the deal collapses. The gaming operator disclosed little information on Pearl Dynasty. In fact the sales agreement specifically requires Caesars Entertainment to refrain from disclosing the identity of the buyer’s “capital provider”.

More than golf

nited States casino operator Caesars Entertainment Corp has agreed to sell its golf course here at a loss, effectively giving up on obtaining casinooperating rights. The Las Vegas-based company will pocket about US$438 million (3.5 billion patacas), which it will use to fund investments elsewhere or reduce its outstanding debt, it said in a filing on Friday. Caesars Entertainment, the largest owner of American casinos, is currently saddled with a gaming industry-high US$23.7 billion of debt, according to its interim results announced on July 30. The company had bought the Cotai land for US$578 million in 2007 with the intention of waiting for government approval to build a hotel-casino complex. Caesars Entertainment last year decided to sell the land and booked a US$101 million decrease on the value of the land. The 70-hectare (175-acre) golf

Caesars is selling its Cotai golf course six years after entering Macau

course is being sold to Pearl Dynasty Investments Ltd, a Macau-based company registered in the British Virgin Islands, Caesars Entertainment said. According to the deal, which was reached last week, Pearl Dynasty had already paid US$65.7 million

in deposits. The buyer has 90 days to complete all procedures. Caesars Entertainment said it expects the completion of the sale to be completed in the fourth quarter. If that period is not enough Pearl

There is no hint of Pearl Dynasty’s plans for the land. The filing does say, however, that “further actions may be required to use the property for any purpose other than a golf course”. “It will be up to the buyer what he wants to do with the site,” Steven Tight, president of international development for Caesars, told Business Daily a fortnight ago. “Right now it is entitled as a golf course and only a golf course. If they’re interested in using it for other purposes, they will have to have it re-entitled,” he added. After the deal is closed, Pearl Dynasty will have 60 days to change the name of the golf course “to ensure that there is no confusion as to the fact that the property is no longer affiliated with the Caesars group”. Investors welcomed the deal, with credit swaps tied to the debt of Caesars falling 1.1 percentage points to 54.2 percent upfront, according to data provider CMA. With Reuters/Bloomberg News

August 12, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Fewer but bigger Between 2008 and last year the number of new motor vehicles put on the road in Macau was nearly 125,000. Motorcycles make up a bit over half the vehicles on the road. But in the past five years annual sales of motorbikes have declined, reducing the proportion. Of the new vehicles registered between 2008 and last year, just over 50,000 or 40 percent were motorcycles. This trend points to a change in the buying habits of motorists. They are buying fewer motorcycles and more cars. And those that are still buying motorbikes are buying motorbikes of different sorts.

UM professor demands a proper housing policy

eeting demand for housing requires planning, and regulation of the market for it, says University of Macau professor Agnes Lam Lok Fong. Ms Lam told Business Daily that Macau needed a proper housing policy rather than uncoordinated reactions to people’s gripes. She said the government ought to be more open about the measures it intended to take. She argues that more independent minds are needed in the Legislative Assembly to monitor the city’s development better. Ms Lam is herself a candidate in next month’s elections to the assembly. Luciana Leitão leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso The figures indicate that newly registered motorcycles are now, on average, bigger than they were before. In 2008, 37.5 percent of newly registered motorcycles had engines of 50 cc or smaller. Last year the proportion was 17.8 percent. The most popular motorbikes have engines of 51 cc to 125 cc. Last year just over two-thirds of newly registered motorcycles were in this class, 9 percentage points more than in 2008. The class of motorbikes with the next-biggest engines, of 126 cc to 250 cc, made up 12.8 percent of newly registered motorcycles last year, almost triple the proportion in 2008. Together, these two classes accounted for 80 percent of newly registered motorcycles last year, one-third more than in 2008. Bigger motorbikes are becoming more popular, even though such bikes can cost as much as a car to buy, and the scope for using them to their full potential is limited in Macau. They made up 2 percent of newly registered motorcycles last year, having made up under 0.5 percent in 2008. J.I.D. The content of this column is the work of Business Daily’s journalists.

34.2 %

Fall in motorcycle sales, 2008-12

Imported labour should be something to solve the human resources issues in Macau, but because the government doesn’t regulate or monitor how people are using that tool, a lot of people are just abusing the law

Why are you running again for a seat in the Legislative Assembly? Last time when we ran, we decided it was not something we were doing just once. It was kind of a promise. In the past few years I have been a bit hesitant to run. It was mainly because there were a lot of attacks – not against me, but against my students and colleagues – and it made the whole the thing very bad. You can criticise my ideas, my proposals. That is fair. But if we continue to have this tendency in Macau, it will make the elections unhealthy. Last time you were not elected. Has something changed in Macau that makes you expect a better result this time? Some things have changed in Macau and other things haven’t changed a lot. We looked at the programme we presented last time and we found out that a lot of the problems we addressed last time have not been solved at all. We can still use that part of the programme, which is quite a big part. After we realised that, we had to run. Also, even though the government is paying more attention to cultural industries and cultural and education issues, it is not enough. We have realised that they are still not doing enough to preserve Macau’s history and culture. I have started to realise that a lot of people in Macau don’t even recognise how Western culture has been rooted in our life. But they should be proud of it, because it’s part of Macau. Also, it seems people are becoming angrier than they were four years ago. Some of our target voters are becoming more radical. It was the political consultation last year, and that left a lot of people in the middle class upset and annoyed. We don’t want to have a lot of street demonstrations as we want to focus on social dialogue. We don’t want to be too conservative or too proestablishment and we don’t want to use methods too radical. When we have more people becoming angrier, how can we encourage people to engage in dialogue? Your list includes people from various backgrounds. Yet, considering the main industry that moves Macau, you haven’t included anyone from the business or gaming sectors. Was that done on purpose? We have too many real estate developers and people from the

gaming industry in the Legislative Assembly, but we don’t have independent professionals. There are three types of people who are well represented in the Legislative Assembly. We have those who are more proestablishment and traditional, such as the Kai Fong. They may run for the grass-roots class as well, but they are not very clear when we are talking about class representation. They are kind of allies of the government. Then we have the major businesses in Macau. They can be there through appointed membership or indirect elections, and they can run in the direct elections as well, like Chan Meng Kam or Mak Soi Kun. Ng Kuok Cheong represents another kind of people who are pro-democracy, but who take an anti-government approach. When there are big issues, we never have enough independent professionals to speak up, and that’s a major problem. Sometimes the government is right but, even so, since everybody wants to show they are not working with the government, they say, “No”. For example, recently, the law set about regulating real estate agents, and that’s the right approach. After seeing those demonstrations, I have been reviewing the law and all the main rules imposed by the new law are reasonable. The Ao Man Long case inspired the formation of our group. If there had been no Ao Man Long case, a lot of us wouldn’t have felt the need to run for election. After that, we realised the need for greater monitoring power in Macau. If we gather those independent professionals frequently – and we know what is going on in Macau – that may help improve the situation. Why can’t we have an animal protection law? Because we have dog racing and horse racing? But even in the UK and Hong Kong they can protect the animals. These two companies need to be monitored. We need to see how they treat the dogs and the horses. One of your main concerns is housing policy. What is wrong with the current one? The problem in Macau now is that we don’t have a true housing policy. If you go to Google and you click housing policy, a lot of countries have a book saying what the regulations for public housing and private housing are.

August 12, 2013 April 19, 2013

Macau breaking the law, by naming names and then publicising the story of how they broke the law, and then you put them in jail, I’m sure that people would be more confident. At the same time, why would people want to hire foreign labour? Maybe some people complain that locals are not efficient enough and foreigners are cheaper, as they ask the same kind of pay. But you can deduct some of the pay of locals, like a tax. So, should we be more flexible in importing labour? I think so, but at the same time, if you’re not regulating how people are importing their labour, you’re not regulating their actions, nobody will go for your policy. Imported labour should be something to solve the human resources issues in Macau, but because the government doesn’t regulate or monitor how people are using that tool, a lot of people are just abusing the law. So they just don’t trust it. Quite a number of people have low confidence in the government’s policy. They think they just have a hidden agenda. They think it must be to please businessmen.

In Europe, you have rent controls as well. That is housing policy. But in Macau you just have a few regulations. Now, we can say we have a public housing policy, but it is still not a true policy. They just have some laws saying how you can buy or rent a house. If we had a true housing policy, the government would do research on a regular basis to see how many social housing units they needed in one, three, five or 10 years, and then there would be people monitoring that. At the same time, they should have some regulations regarding the private market. Housing policy now is a kind of a reaction to market developments. Why did they stop building public housing about 10 years ago? It was because, before the handover, the housing market was going down, and the government believed it didn’t need to build any more. The government should understand that our economy, our GDP doesn’t rely on building housing. We rely on gaming, but building homes or selling them is not an industry that we really rely on. If you realise that, then you don’t need to create a big market. And if we don’t rely on it, we should have a lot more tools to regulate the market. When housing prices go up and people complain, the government says they will build 19,000 units of public housing, but that may be a trick. You see the quality, the area or the type of apartments. They just need to make up the numbers. It is just a reaction to the popular clamour. We don’t have a goal in the housing sector. What kinds of tools are needed to regulate the market? We’re not using the taxation tools enough. At the same time, we’re not doing enough research. For example, now even small businesses like the noodle shops cannot survive. There was a Vietnamese noodle shop I used to go to. One bowl first cost 20 patacas [US$2.50]. Later it was 30 patacas and then 40 patacas. And then it closed. The landlord had increased the rent. Should we do something to prevent this sort of shop-space rent

We have too many real estate developers and people from the gaming industry in the Legislative Assembly, but we don’t have independent professionals

increase? Sometimes they want to double or triple the rent, just to kick you out. But can they really find another tenant in the short term? The property stays empty until somebody comes. If we had some kind of tax for all that empty space, maybe a lot of people would be willing to let it. To solve the problems of small and medium enterprises, you may need to touch on more structural issues, such as the imported labour policy. Should the government be more flexible in its policy? The government should be more flexible, but before that it should be more transparent. Why do people hate imported workers? They fear they could take their jobs. Why are they so afraid? Because that used to be true. We’ve heard stories about people being interviewed for a job where, the employer said, they only needed an identity card, not the work paying only the minimum wage. If these things happen, nobody can be very confident in the government’s imported labour policy. It is not just a problem with the policy itself. It is when you are executing that policy, you are not making it good enough. You have enough loopholes for people to abuse it and make other people hate it. If we are transparent and tell what the situation is here, and we really hit those people that are

You are also concerned about creative and cultural industries. Looking at the status of these in Macau, do you see developments in this sector? The government is actually doing it bit by bit. They help the locals to open their shops and they support some film productions. I cannot say they are not doing anything, but there are several things the government needs to understand. When we are

talking about cultural industries, eventually they will be part of the private sector, so they should be separate from the government. Actually, when it is helping people sell things in Macau, they are just an extension of the tourist office. It becomes a souvenir thing. Even for the film industry, it’s OK for the government to support it, but there should also be a scheme to help it make a movie that meets the market standards. Macau may have creative people, but we need a lot of production, and that may be in mainland China. They need to do some kind of international marketing. Also, subsidies should not be on a oneyear basis – why not on a threeto-five-year basis? If I know that, then I may quit my day job and devote myself. And the subsidy is just not enough to build an industry. Also, the education system needs to be changed. If you don’t have people interested in art, how can you build a cultural industry? Your campaign started off on the wrong foot, as one of the candidates on your ticket left because he was a newspaper director here. Are you worried that this may have affected the public perception? It affected us because we needed to find another person and revise the programme. I don’t know if it is something we did wrong. We just couldn’t help it. It’s something that we didn’t foresee. It may have affected some people’s perceptions. It happened. I just hope people will focus on what we have been doing since.

August 12, 2013 April 19, 2013

Greater China NZ ministers to visit China New Zealand’s Foreign Minister Murray McCully will visit China in about a week as the country deals with the fallout from a contamination scare at the world’s largest dairy exporter, Fonterra Cooperative Group Ltd. Prime Minister John Key will visit the country once a report into the incident is completed, Mr Key’s spokeswoman said. New Zealand’s dollar fell to a one-month low after Fonterra said that a dirty pipe at a processing plant may have tainted whey protein used in dairy formula with botulism-causing bacteria. China halted imports of some Fonterra products and the official news agency Xinhua wrote that buyers were losing faith in New Zealand’s clean image.

Sanofi probed for alleged bribery Chinese authorities have started investigating French drugmaker Sanofi SA for allegedly bribing more than 500 Chinese doctors with about 1.7 million yuan (US$277,600) of payments to raise sales, China’s Xinhua state news agency said. Xinhua cited a health bureau official as saying the team investigating Sanofi would include disciplinary authorities and the Beijing municipal health bureau, and it would look for clinical research programmes with lists of patient names and medical reports. Sanofi said this week it took “very seriously” allegations published in a Chinese newspaper on Thursday that its staff bribed more than 500 doctors in China in 2007 to raise sales.

PetroChina joins Exxon in Iraq PetroChina Co Ltd will join Exxon Mobil Corp in developing Iraq’s giant West Qurna oilfield and is in talks with Russia’s Lukoil to buy into a second project at the field, industry sources said. China is already the top foreign player in Iraq’s oilfields. A deal at West Qurna, which is around 50 km northwest of the southern oil hub of Basra, would boost its dominance and could make PetroChina the biggest single foreign investor in Iraqi oil. “PetroChina will participate in developing the field,” an industry source with direct knowledge of the deal told Reuters. The agreement would be announced in weeks, the source added.

Mainland to become biggest net oil importer China will surpass the U.S. by October to become the world’s biggest net oil importer on a monthly basis, the Energy Information Administration said. Imports by the second-biggest oil-consuming country will reach 6.45 million barrels a day, surpassing the U.S.’s 6.23 million, the EIA, the Energy Department’s statistical arm, said in last week’s ShortTerm Energy Outlook. On a yearly basis, China’s overseas purchases will surpass the U.S.’s next year. The mainland will use 11 million barrels a day of oil in October, the outlook showed. The U.S. will use 18.6 million.

Beijing to let banks sell off l New trading platform could set stage for bank bailout Heng Xie and Gabriel Wildau

hina is developing a new trading platform to enable banks to sell off loans to a wider range of investors, in a move that could pave the way for a government bailout of lenders or distressed asset sales to private investors. The trading platform, now in the testing phase, is designed to introduce banks to a new class of investors, including nonbank financial institutions and large companies. Currently, the lack of wellestablished precedents for asset disposals effectively leaves banks only two options: sell nonperforming loans in private deals, mostly with big state-backed asset management firms, or keep rolling them over indefinitely to avoid booking a loss. Most analysts believe Beijing will eventually be forced to use some public funds to help peel off bad loans from state banks, but the ability to draw in at least some private capital could reduce the cost of that bailout. The new platform could aid the effort to draw in private investors by allowing for price discovery for loan transfers, creating benchmarks that could guide future deals. Greater transparency in pricing could thus lure even more investors. The China Banking Regulatory Commission (CBRC) will introduce a so-called “credit transfer system” in the country’s interbank market,

which includes banks as well as non-bank financial institutions and large companies, three sources with knowledge of the situation told Reuters. The system would allow for the transfer of asset-backed securities (ABS) as well as non-securitised loan packages. China’s banks are struggling with an overhang of potentially bad debt from a state-backed lending binge unleashed from 2008 to 2010 in response to the global financial crisis. Market participants widely suspect that the true scale of the bad loan problem is far larger than the official, system-wide non-performing loan ratio of under 1 percent. Loans to local governments have emerged as a particular source of risk. Allowing banks to unload assets could help prevent a debt crisis that could lead to a sharp recession if asset prices tumble and credit flows to the real economy decline. It could also free up space on bank balance sheets, enabling them to support the economy with fresh credit. China is on pace for its slowest full-year growth since 1990.

Simulated trades In response to questions, CBRC appeared to confirm programme, saying that in with the leadership’s call

the the line for

Banks struggling with an overhang of potentially bad

“revitalising the monetary credit stock,” the agency was “in the midst of researching related institutional structures and methods.” The State Council, China’s cabinet, first introduced the “revitalise the stock” formulation in a policy statement in June. The establishment of a system allowing troubled assets to circulate and trade – rather than sit like deadweight on banks’ balance sheets – sheds new light on what the cryptic but oftrepeated phrase means.

Credit growth at 21-month low As government curbs shadow finance

he country’s broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added dangers to the nation’s financial system. Aggregate financing was 808.8 billion yuan (US$132 billion), the People’s Bank of China said in Beijing. New yuan loans exceeded forecasts and accounted for about 87 percent of the total, the most since September 2011. M2 money supply growth unexpectedly accelerated to 14.5 percent. Policymakers are persisting with a crackdown on shadow banking following a government-engineered cash crunch in June even after a two-quarter economic slowdown. A report showing faster gains in industrial output added to evidence that growth is stabilising after data on Thursday showed exports rebounded more than estimated. “Today’s overall outcome is a good one: Credit growth is slowing but real activity, including domestic demand and exports, are picking up,” Wang Tao, chief China economist at UBS AG in Hong Kong, said. While reduced credit may make

it tougher for Mr Li to achieve this year’s 7.5 percent growth target, it would ease dangers of a financial crisis. China’s lending surge in the past five years is of a magnitude that tipped Asian nations into crisis in the late 1990s, according to Goldman Sachs Group Inc, and the State Council last month ordered the first nationwide audit of government debt in two years. New yuan loans were 699.9 billion yuan in July, compared with the 540 billion yuan a year earlier. Aggregate financing, which includes bond and equity sales, entrusted loans and bankers’ acceptance bills, compared with 1.04 trillion yuan in June and 1.05 trillion yuan a year ago. “The implication is that money is returning to the formal banking system’s on-balance-sheet activities,” said Yao Wei, China economist at Societe Generale SA in Hong Kong. The cash crunch in June helped squeeze speculative lending and rein in what Vice Finance Minister Zhu Guangyao said were “prominent” shadowbanking risks. “We do see some negative impact of the June interbank liquidity crunch on credit availability for

the real economy as evidenced by the sharp fall in corporate bond issuance and bills,” Lu Ting, head of Greater China economics at Bank of America Corp in Hong Kong, said in a note. “But we believe the impact is muted as Premier Li Keqiang’s team has taken decisive measures to calm the interbank market and to support growth.” China is also set to revise rules on the setting up of new banks in the country, aiming to tighten requirements for foreign firms while easing regulations for local entities, a draft of revised rules published by the banking regulator showed. Foreign financial institutions that want to establish new commercial banks in China or become strategic investors in Chinese banks must meet new requirements on capital adequacy. Their regulatory capital level must meet the standards set by their home country governments and also not be below 10.5 percent, compared with the current requirement of 8.5 percent. The maximum equity stake in a Chinese bank that foreign institutions may own is still capped at 20 percent for a single foreign investor and 25 percent

August 12, 2013 April 19, 2013

Greater China

loans

following further internal discussion and a public comment period, said another source, who is close to regulators. But questions remain about who would be willing to buy risky bank assets and at what price. China set up four state-backed asset management companies (AMCs) in 1999 to buy 1.4 trillion yuan (US$230 billion) in bad from the nation’s Big Four banks. They bought the bad loans at or near face value in an explicit bailout of commercial banks. This time around, the AMCs may again step in to purchase the lowest-quality assets. In addition to the original four, the CBRC last year authorised provincial governments to set up their own AMCs to buy bad debt from smaller banks. So far only Jiangsu, a wealthy province in southeast China, has formally established one. But private investors, including brokerages, commercially-oriented AMCs, distressed debt investors, insurance companies, and pension funds, would likely require discounts to face value for all but the highest quality loans. Reuters

d debt

The new platform will be administered by the China Central Depository & Clearing Co Ltd, the state-backed clearing house that clears trades in the interbank bond market, Reuters sources said. “China Central Depository’s system is working on supporting both ABS as well as [nonsecuritised] loan transfers,” said a source with knowledge of the system. Several simulated trades occurred on the system last week, and it will be formally launched

KEY POINTS System will support loan sales, securitisation State-backed ‘bad loan’ asset managers could be big players Unclear if private investors willing to assume risk

Property investment quickens, sales cool Construction starts rose 8.4 pct in the first seven months

rowth in real estate investment in China ticked up in the first seven months of this year, official data showed, and developers remain optimistic about the market this year due to strong demand, boding well for the broader economy. Real estate investment, which affects more than 40 other sectors from cement and steel to furniture, rose 20.5 percent in the first seven months of 2013, accelerating from an annual increase of 20.3 in January-June, the National Bureau of Statistics (NBS) said on Friday. China’s property sector is one of the few bright spots in a slowing economy. The government has tried to tread a fine line between reining in rising property prices that threaten affordability for average wage earners and stifling growth elsewhere. “Developers are quickening their restocking pace due to strong sales since the beginning of this year and optimistic expectations on the outlook of the market”, said Lin Bo, head of research at China Real Estate Information Corp, a property data provider in Shanghai. Growth in revenues from property sales in the first seven months eased to 37.8 percent from 43.2 percent in January-June, though that was still higher than last year’s gains of 10 percent, according to the NBS. It only issues cumulative figures on property investment and sales. Strong home sales, ample liquidity and improved sentiment have enabled developers to replenish their land banks and quicken rates of construction. Construction starts rose 8.4 percent in the first seven months of 2013, improving from an increase of 3.8 percent in the first half, the NBS data showed.

Total land area bought by developers fell 1.4 percent in the first seven months from a year earlier, improving from a drop of 10.4 percent in the first six months. Reuters

US$1 bln misused in affordable housing push China’s state audit body found that 5.8 billion yuan (US$947 million) of funds meant to provide affordable housing for poor families in 2012 was misused, the latest problem to dog a programme meant to help those priced out of the housing market. The National Audit Office said in a report that some local governments had spent the money repaying loans or financing other projects instead of building cheap housing. The 5.8 billion yuan misused in 2012 was almost double the 3 billion yuan identified by auditors as misused in 2011. China invested 1.1 trillion yuan (US$180 billion) in building affordable homes in 2012, as the private property market continued to boom, leaving many unable to buy their own home and raising concerns over social instability. The 2012 audit also found that 38,900 units and 153 million yuan in cash was allocated to 108,400 families not qualified for the scheme. Another 11,300 families were given more than one unit or more than one cash subsidy. A total of 18,300 affordable homes were sold and another 5,333 units rented to people unqualified for the scheme, the audit office said.

RMB 699.9 bln New yuan loans extended in July

for all foreign investors. But the calculations of such stakes must now include indirect holdings by foreign institutions, according to the draft published by the China Banking Regulatory Commission (CBRC) on its website.

The draft rules will be open for public comment until September 9. Chinese regulators typically issue final rules published within a month after the public comment period ends. Bloomberg News/Reuters

Property – one of the few bright spots in a slowing economy

10 10

August 12, 2013 April 19, 2013

Greater China

Economy stabilising, data show Small stimulus appears to have reversed slowdown in growth

actory output in the mainland grew in July at its fastest pace since the start of the year, adding to a run of data suggesting the world’s second-largest economy may be stabilising after more than two years of slumping growth. Small targeted measures from Chinese policymakers seem to have, at least temporarily, reversed a growth slowdown, according to official data. A steadying economy would be a relief to China’s leaders, who worry a further slowdown could derail their efforts to rebalance the economy away from its credit- and investment-driven growth model to one in favour of consumption. Factory output rose 9.7 percent in July from a year earlier, the fastest growth since output grew 9.9 percent over January and February, National Bureau of Statistics data showed. It followed Thursday’s surprisingly strong trade data and, given targeted measures since mid-year to support small firms and exporters, added to signals the economy may have found its base after slowing in nine of the past 10 quarters. “While we would not say that China is out of the woods yet, the recent rise in sentiment has been noticeable, and talks that economic growth will fall below 7 percent in 2013 now seems rather far fetched,”

said Chester Liaw, an economist at Forecast Pte in Singapore. The government has made clear it will accept some slowdown as it pushes through its reforms, but has also expressed confidence of meeting its 7.5 percent growth target this year – which would be China’s slowest growth in 23 years. China’s CSI300 index reversed early losses after the data to end up 0.4 percent on Friday and post its biggest weekly gain in a month. Separate data showed consumer inflation ran at a benign annual rate of 2.7 percent in July, close to forecasts. A 2.3 percent fall in producer prices, a 17th straight month of deflation, also suggested the outlook for prices was tame. Premier Li Keqiang has stressed policy would not change if economic growth held above an undisclosed lower limit, which many consider to be 7 percent, but analysts were hopeful that moderate price pressures would allow some loosening. “The muted inflation reading will provide necessary room for implementing a mini-fiscal stimulus,” Lu Ting, an economist at Bank of America-Merrill Lynch said. A Reuters poll last month found China is not expected to cut interest rates before the end of 2014, although a minority of analysts think a cut is needed to meet the 7.5 percent growth target.

Factory output rose 9.7 percent in July

Thursday’s trade data showed exports rose 5.1 percent in July from a year ago, a smart bounce from their first fall in 17 months in June, and imports jumped 10.9 percent as China shipped home record amounts of some commodities. Yet analysts warned against concluding the data over the past

two days was driven by an actual rise in final demand. They said imports were partly inflated by delayed shipments and unprocessed deals from June, firms rebuilding stocks after a lull and new companies entering the business. Reuters

China H-shares to slump 30 pct, SocGen says The gauge slumped 17 percent so far this year

hinese companies traded on the Hong Kong stock market will slide the most in five years in 2013 as an economic slowdown weighs on profits and banks curtail credit, according to Societe Generale SA. The Hang Seng China Enterprises Index will drop to 8,000 by year-end, said Guy Stear, Hong Kong-based head of Asia research at Societe Generale. That’s 16 percent below Thursday’s close and would extend the gauge’s 2013 decline to 30 percent, the biggest tumble since 2008. China’s manufacturing will contract this year, while bad loans will keep rising until late 2014, Stear said. “Short-term cyclical declines and credit pressures are the two factors which make us negative about Chinese equities,” Mr Stear said in an interview. “When nonperforming loans start to go up that’s going to be something that weighs quite seriously on the equity market.” The H-share gauge slumped 17 percent this year through yesterday as growth slowed in the world’s second-biggest economy and the government spurred a

credit crunch in June by clamping down on risky lending. China’s gross domestic product will rise 7.5 percent in 2013, which would match the government’s target and be the weakest increase since 1990, according to economists surveyed by Bloomberg. Recent manufacturing and services data showing signs of improvement in the economy is a “temporary blip in a trend which is still unfortunately going lower,” Mr Stear said. “It would be very difficult to believe that we’re having a cyclical economic recovery in the midst of the credit issue. I can’t think of a single case in any economy where that’s been the case.” Although Mr Stear is bearish on H-shares for the rest of 2013, he sees potential for outsized gains next year as attractive valuations draw investors back into the stocks. “As we get into the end of this year there’s going to be great opportunity to buy,” he said. “Many investors are fairly negative about the Chinese equity market, which means that the bounce, when it comes, could be quite impressive.” Bloomberg News

11 11

August 12, 2013 April 19, 2013

Asia HSBC names new heads in Asia HSBC Holdings Plc has named Stephen Williams as head of capital financing for Asia Pacific, a new role that encompasses all of the bank’s capital markets and deal execution capabilities for clients in the region, according to a memo obtained by Reuter. The move follows the bank’s reorganisation which saw the creation of the capital financing unit, to be headed globally by Spencer Lake and responsible for primary funding products including debt and equity as well as M&A execution. The bank has also named Justin Chan and Monish Tahilramani as its new co-heads of the Asia Pacific markets division, responsible for secondary trading, following the promotion of the previous head of that unit Gordon French to head of global banking and markets in Asia. The idea behind the restructuring is to create a ‘product neutral’ client coverage unit in order to offer better advice to those clients, the bank said at the time. That unit, called banking and headed by Russell Julius in Asia Pacific, sits alongside the capital finance and markets units inside the global banking and markets division headed by Mr French.

S.Korean companies chosen to build Myanmar airport A consortium led by South Korea’s Incheon International Airport Corp has been chosen as the preferred bidder to build a new international airport in Myanmar, South Korea’s Land Ministry said yesterday. Incheon Airport had bid to win the order worth about US$1 billion for the Myanmar airport project as part of a consortium with Kumho Industrial Co Ltd, Halla Engineering & Construction Corp, Lotte Engineering & Construction Co Ltd and Posco ICT Co Ltd, the ministry said in a statement. The South Korean airport operator plans to complete a construction of Hanthawaddy International Airport near Yangon, Myanmar’s old capital and commercial centre, by 2018 and run the airport for up to 50 years. It will have an annual passenger capacity of 12 million, the ministry said. The Incheon Airport consortium and Myanmar’s Department of Civil Aviation are scheduled to sign a final contract at the end of this year, it said. The country’s main air gateway Yangon International Airport, which is also set for expansion, currently has a capacity of only 2.7 million passengers annually and authorities warned last year that the number of arrivals was set to exceed that level.

SingTel closer to sell Australian units Singapore Telecommunications Ltd (SingTel) has received two offers for its Australian satellite business in the final round of the bidding, including one from U.S.-listed Intelsat SA, three sources with knowledge of the matter said. Both offers came in below the A$2 billion (US$1.8 billion) reserve price set for the auction and SingTel will decide at a board meeting this week whether to divest the business through an initial public offering (IPO) or ask suitors to improve their bids, the sources said. Australia is a strong contender for a listing of the business called Optus Satellite at the same US$1.8 billion valuation if SingTel decides to pursue an IPO, the sources added. SingTel, Southeast Asia’s largest telecom operator, has been seeking a sale of the satellite division of Optus since a strategic review of the asset in March. It wants to use the sale proceeds in fast-growing emerging markets. Intelsat, the world’s biggest operator of satellite services, made its offer ahead of last week’s bid deadline, sources said. The second offer came from a consortium made up of Blackstone Group LP, TPG Capital and Malaysia’s MEASAT Global, the sources said. SingTel, controlled by Singapore state investor Temasek Holdings Pte Ltd, acquired the satellite arm when it bought Optus in 2001 for US$14 billion. Optus sells TV, telephony and broadband services to more than 2 million subscribers in Australia and New Zealand.

South Korea warns of power shortages Government urges power-saving amid nuclear shut downs

outh Korea has warned of serious power shortages this week amid an expected rise in summer temperatures and as the resources-starved country struggles to keep up with demand after six nuclear plants have gone off-line. The energy ministry said it may take emergency measures such as rolling power cuts to avoid a repeat of 2011 blackouts which cut electricity to businesses and homes across the country. Separately, the ministry said some major companies, including Kia Motors Corp and Hyundai Motor Co, had not complied with energy saving regulations such as cutting power consumption during peak hours. Both automakers refused to comment on the matter. Of the country’s total 23 reactors, six units are currently off line – three for maintenance or expiry of operational approval, and the other three to replace cables supplied with fake certificates. Oil, gas and coal produce most of South Korea’s electricity, but nuclear plants generate more than 30 percent of power. “If one nuclear reactor stops its operation all of a sudden, we may have to start rolling power blackouts like we did on September 15, 2011,” Energy Minister Yoon Sang-jick told a news conference. Rolling blackouts would initially affect residential areas, minimising any impact on the country’s exportfocused businesses. The minister urged businesses, public institutions and households to reduce electric consumption during the three days from today. “We are in a very desperate

Power blackouts may hit Seoul this month

situation, where we can’t overcome this crisis without all your active support,” Mr Yoon said. South Korea’s power demand is projected to peak at up to 80,500

If one nuclear reactor stops its operation all of a sudden, we may have to start rolling power blackouts like we did [in] 2011 Yoon Sang-jick, South Korea’s Energy Minister

megawatts (MW) in the next three days while its power supply capacity is seen at 77,440 MW, the energy ministry said in a statement. With all the possible power-saving and supplying measures, the supply surplus could be raised to 1,800 MW but that would still not be enough, it added. South Korea has carried out power saving measures in the past such as encouraging offices and households to use less air-conditioning. Already the world’s secondlargest buyer of liquefied natural gas used to power electricity generators, South Korea is scheduled to receive as many as four spot LNG cargoes from Nigeria and a Peruvian shipment during the next two weeks, according to ship tracking transmissions captured by IHS Fairplay on Bloomberg. Reuters/Bloomberg News

Asiana Airlines’ losses more than double

siana Airlines Inc reported a deeper operating loss than expected after North Korean tensions hurt travel demand, with further weakness seen in the current quarter following the July plane crash in San Francisco. Its net loss widened to 80.1 billion won (US$72 million) in the quarter ended June 30, from 37.4 billion won a year earlier. Sales declined to 1.37 trillion won from 1.43 trillion won. The accident, in which three were killed and over 180 injured when an Asiana flight from Seoul crash-landed at the airport in San Francisco, has hurt the reputation of Asiana. The airline had been trying to clean up a tarnished safety record that included two other fatal crashes in its 25-year history. Uncertainty looms over the results of ongoing probes by U.S. and Korean authorities over the accident and how the accident will affect travel demand in the current quarter, analysts say. “The accident may have an impact on passenger demand

in the second half, as seasonal demand is weakening after the summer holidays are over,” said Park Sung-bong, an analyst at Hana Daetoo Securities. “The cause of the accident has not been verified yet, so it is difficult to assess compensation costs,” he said. Asiana Airlines, South Korea’s second-biggest carrier after Korean Air, reported an operating loss of 29.9 billion won in the second quarter, more than double the 12.2 billion won loss forecast on average by analysts.

US$72 mln

Asiana Airlines’ net loss in Q2

It was its third straight quarterly loss. A year earlier, it had earned an operating profit of 38.9 billion won. Shares of Asiana fell to their lowest since April 2010 following the results. “The heightened North Korean risk and the outbreak of new bird flu in China significantly decreased demand from Japanese visitors and Korean tourists to China in the second quarter,” Asiana said in a statement. It said cargo shipments also decreased as a weak global economy hurt demand for cars and liquidcrystal displays. A weaker yen has also sapped travel demand from Japanese travellers. “Demand for the lucrative Korea-Japan routes is showing little sign of recovering. The same for cargo demand,” Mr Park said. Asiana said it will enhance its competitiveness by introducing new routes to Bali and Jakarta and new aircraft such as the A330 and A321 in the third quarter. It did not give an earnings outlook. Reuters

12 12

August 12, 2013 April 19, 2013

Asia

Singapore’s Lee raises GDP forecast Economy expanded 2 percent in the first half, says prime minister

ingapore’s Prime Minister Lee Hsien Loong raised his forecast for economic growth to 2.5 percent to 3.5 percent this year as the city-state’s economy is “holding steady” amid challenges. The government previously predicted growth of 1 percent to 3 percent. The economy expanded 2 percent in the first half, Mr Lee said in a televised message. “We have made steady progress this past year,” said Mr Lee. “Our economy is holding steady amidst global uncertainties. We are attracting more quality investments. Unemployment remains low.” Southeast Asian economies such as Singapore are benefiting as recoveries in the advanced economies gather pace, offsetting a drop in demand amid China’s slowing growth. Service industries in the U.S. expanded in July at the fastest pace in five months, complementing a rebound at the nation’s factories and showing the economy is gaining traction. Singapore’s GDP probably expanded 14.2 percent in the three months through June 30, according to the median estimate of 11 economists surveyed by Bloomberg News ahead of data due today. Initial government figures released last month showed a 15.2 percent increase, the biggest gain since 2011. The first-half growth rate announced by the prime minister

means the economy expanded 3.8 percent year-on-year in the second quarter, Francis Tan, an economist at United Overseas Bank Ltd, said in an e-mailed statement, adding the forecast exceeded his estimate. The higher full-year forecast implies a second-half year- on-year growth rate of 3.1 percent to 5 percent, Mr Tan said. “This is quite strong growth but it’s within UOB’s forecast,” he said. “UOB’s forecast of 3 percent full year GDP growth remains unchanged at this stage.” A weaker Singapore dollar will also help exporters and industries such as tourism, he said, adding the bank expects the city-state’s currency to reach S$1.30 against the U.S. dollar by the end of the year. The Singapore dollar has fallen about 3.2 percent this year, with the Hong Kong dollar, Thai baht and the Taiwan dollar posting smaller declines. The Monetary Authority of Singapore stuck to a policy of allowing gradual gains in its currency in April as inflationary pressures curbed scope for monetary stimulus. Consumer price gains accelerated to 1.8 percent in June, after slowing to a 38- month low of 1.5 percent in April. The central bank cut its inflation forecast for 2013 to 2 percent to 3 percent, down from 3 percent to 4 percent, managing director Ravi Menon said last month. The current

Our economy is holding steady amidst global uncertainties. We are attracting more quality investments Lee Hsien Loong, Singapore’s Prime Minister

monetary policy stance is appropriate in containing any re-emergence of strong cost and price pressures as the economy undergoes restructuring, said Mr Menon. Singapore tightened curbs on overseas workers for a fourth straight year in February and unveiled measures that will result in higher wage costs for companies through 2015, as Mr Lee’s administration steps

up efforts to increase productivity. “We face difficult choices: We need foreign workers to serve our economy and Singaporeans’ needs, and immigrants to make up for our shortfall of babies,” Mr Lee said. “But we also worry about crowding and congestion, and maintaining our Singaporean identity. So we are feeling our way forward carefully.” Bloomberg News

13 13

August 12, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 41.5

68.6

22.60

41.4

68.2

22.46

41.3

67.8

41.2

67.4

22.32 22.18

Max 41.5

average 41.318

Min 40.15

41.1

Last 41.25

Max 68.6

average 68.462

Min 67

67.0

Last 68.55

42.9

20.1

42.6

20.0

42.3

19.9

22.04 Max 22.55

average 22.277

Min 21.95

Last 22.3

21.90

21.5 21.4 21.3 21.2 21.1

Max 42.85

average 42.245

Min 42.05

42.0

Last 42.25

Max 20.25

average 20.042

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep13

105.97

2.48549323

13.07084934

108.9300003

86.23999786

BRENT CRUDE FUTR Sep13

108.22

1.443569554

1.834948716

114.3699951

96.65000153

GASOLINE RBOB FUT Sep13

290.82

1.770716685

6.220095694

309.1700077

260.2499962

905.5

0.807124965

-0.247865602

980

832.5

3.23

-2.03215044

-10.22790439

4.517000198

3.128999949

299.35

1.220666802

319.1699982

275.5500078

Gold Spot $/Oz

1314.46

1.9293

-21.0278

1796.08

1180.57

Silver Spot $/Oz

20.5475

4.0485

-31.7586

35.365

18.2208

GAS OIL FUT (ICE) Sep13 NATURAL GAS FUTR Sep13 NY Harb ULSD Fut Sep13 METALS

Last 19.98

Platinum Spot $/Oz

1502

3.6935

-1.0377

1742.8

1294.18

Palladium Spot $/Oz

742

1.6745

6.0515

786.5

572.7

LME ALUMINUM 3MO ($)

1871

1.684782609

-9.744331886

2200.199951

1758

LME COPPER 3MO ($)

7275

1.252609603

-8.27134031

8422

6602

LME ZINC

1944

2.585751979

-6.538461538

2230

1779

14680

2.442428472

-13.95076202

18920

13205 14.60000038

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13

COUNTRY MAJOR

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

ASIA PACIFIC

CROSSES

15.19

-0.589005236

-1.395650763

16.47500038

453.25

-1.413811854

-24.42684452

665

452

WHEAT FUTURE(CBT) Dec13

647.25

-0.994263862

-21.13920195

913

643.5

SOYBEAN FUTURE Nov13

1182.25

-0.168883259

-9.249664172

1409.75

1162.5

122.9

0.696435887

-19.38340439

196.75

115.3499985

NAME

15.92999935

ARISTOCRAT LEISU

74.34999847

CROWN LTD

CORN FUTURE

Dec13

COFFEE 'C' FUTURE Sep13 SUGAR #11 (WORLD) Oct13

16.98

COTTON NO.2 FUTR Dec13

88.93

0.951248514 -0.358543417

-15.35393819

21.82999992

12.94132588

89.55999756

World Stock Markets - Indices NAME

19.8

Max 21.5

average 21.322

Min 21

Last 21

21.0

Currency Exchange Rates

NAME ENERGY

Min 19.92

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15425.51

-0.4697929

17.71478

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3660.108

-0.2457262

21.21515

3694.188

2810.8

FTSE 100 INDEX

6583.39

0.8225518

11.62432

6875.62

5605.589844

DAX INDEX

8338.31

0.2403129

9.536025

8557.86

6871

NIKKEI 225

13615.19

0.07077989

30.976

15942.6

8488.14

HANG SENG INDEX

21807.56

0.7004102

-3.748786

23944.74

19076.78906

CSI 300 INDEX

2286.01

0.4053089

-9.391456

2791.303

2023.171

TAIWAN TAIEX INDEX

7856.14

-0.6516458

2.03442

8439.15

KOSPI INDEX

1880.71

-0.1730388

-5.825597

2042.48

S&P/ASX 200 INDEX

5055.211

-0.1893066

8.738763

4640.781

0.3556186

FTSE Bursa Malaysia KLCI

1779.32

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9206 1.5498 0.9224 1.3342 96.21 7.9885 7.7558 6.122 60.8613 31.24 1.2574 29.94 43.48 10267 88.565 1.23053 0.86065 8.1904 10.6839 128.39 1.03

1.3877 -0.0774 -0.1735 -0.1273 0.1247 0.0075 0.0077 -0.0229 0.7167 0.032 0.342 0.01 0.299 0.4188 -1.2398 -0.0374 0.0755 -0.2735 -0.1095 0.2337 0

-11.2931 -4.1914 -0.7589 1.1524 -10.5083 -0.0663 -0.067 1.7739 -9.6388 -2.1127 -2.8631 -3.0294 -5.6923 -4.6167 0.8604 -1.8732 -5.2553 0.3309 -1.4367 -11.543 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3691 61.8063 31.62 1.286 30.228 44.181 10343 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8848 1.4814 0.9022 1.2256 77.13 7.9818 7.7498 6.1138 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20066 0.78128 7.8031 9.7946 95.94 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.32

-2.262443

37.14285

4.63

2.49

VOLUME CRNCY 1258733

13.26

0.5307051

24.27366

13.75

8.49

788754

AMAX HOLDINGS LT

1.21

0.8333333

-13.57143

1.72

0.75

3052275

BOC HONG KONG HO

24.95

0.4024145

3.526969

22.85

5093739

CENTURY LEGEND

0.325

22.64152

0.42

0.22

2500

CHEUK NANG HLDGS

6.52

8.848084

6.74

3.07

10000

CHINA OVERSEAS

23.7

3.043478

2.597401

25.6

17.28

19567044

CHINESE ESTATES

16.8

0.2386635

49.39245

16.98

7.824

208400

CHOW TAI FOOK JE

9.9

0.2024291

-20.418

13.4

7.44

1226350

EMPEROR ENTERTAI

2.7

42.85714

3.07

1.35

1140000

2.21

-0.896861

82.3393

2.76

1.033

1248000

GALAXY ENTERTAIN

41.25

-0.6024096

35.91433

44.95

19.64

5259426

HANG SENG BK

122.4

0.4101723

3.117105

132.8

109

1231145

HOPEWELL HLDGS

24.5

-0.8097166

-26.31579

35.3

23.047

1133500

HSBC HLDGS PLC

FUTURE BRIGHT

84.75

0.5934718

4.243539

90.7

65.85

6319695

HUTCHISON TELE H

3.63

1.966294

4.66

2.98

5943000

LUK FOOK HLDGS I

22.5

1.351351

-7.786884

30.05

16.88

726000

MELCO INTL DEVEL

16.6

1.715686

84.23973

18.18

5.54

4702020

7050.05

MGM CHINA HOLDIN

22.3

2.293578

67.94345

23.65

11.27

4458323

1770.53

MIDLAND HOLDINGS

3.13

0.3205128

-15.40541

2.68

800000

5249.6

4261.2

NEPTUNE GROUP

0.178

17.10527

0.23

0.131

7093500

7.507928

5251.296

3978.078

-0.2980993

5.350662

1826.22

1590.67

968.009

-0.1986729

9.744992

998.487

3918.63

-0.1256512

5.938121

4571.4

NEW WORLD DEV

0.1821494

-8.48586

15.12

9.38

7406384

42.25

-1.400233

24.44771

43.7

23.7

9999962

SHUN HO RESOURCE

1.48

4.225352

5.714288

1.67

1.06

162000

796.908

SHUN TAK HOLDING

3.8

1.333333

-9.307877

4.65

2.72

4199750

3411.69

SJM HOLDINGS LTD

19.92

12.24016

22.382

14.77

3670780

SMARTONE TELECOM

11.18

0.1792115

-20.59659

17.38

11.1

1752700

WYNN MACAU LTD

-1.408451

0.2386598

26.5

16.92

3207360

ASIA ENTERTAINME

4.09

3.02267

45.30944

4.7647

2.4835

31790

-0.0135925

64.52695

74.26

43.16

396861 11533

SANDS CHINA LTD

HSBC Dragon 300 Index Singapor

617.29

0.5

-0.61

STOCK EXCH OF THAI INDEX

1432.25

-1.030294

2.896693

1649.77

1207.53

HO CHI MINH STOCK INDEX

500.62

0.4817149

21.00162

533.15

372.39

BALLY TECHNOLOGI

73.56

Laos Composite Index

1338.91

-1.348354

10.21922

1455.82

1003.17

BOC HONG KONG HO

3.16

2.931598

3.6

2.99

GALAXY ENTERTAIN

5.34

-0.2987304

34.50882

5.77

2.5

3200

INTL GAME TECH

19.31

0.5205622

36.27382

20.25

11.19

1884315

JONES LANG LASAL

87.84

-0.6447234

4.646173

101.46

69.56

585862

LAS VEGAS SANDS

56.13

-1.005291

21.59879

60.54

36.3606

2419989

MELCO CROWN-ADR

26.36

-0.1515152

56.53207

26.6

10.22

1704431

MGM CHINA HOLDIN

2.92

1.74216

66.82937

2.98

1.4381

1000

MGM RESORTS INTE

17.25

-1.372213

48.19587

17.67

9.15

7230808

SHFL ENTERTAINME

22.77

0.04393673

57.03448

23.08

12.35

347857

SJM HOLDINGS LTD

2.6

14.15445

2.9481

1.9818

300

138.13

-0.9465758

22.79314

144.99

92.9122

703590

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

35.7

1.854494

13355042

ALUMINUM CORP-H

2.49

2.469136

8382500

BANK OF CHINA-H

3.17

0.3164557

162533482

BANK OF COMMUN-H

5.06

0.7968127

15784703

BANK EAST ASIA

30.5

0.8264463

1983464

11.46

1.058201

12982400

BELLE INTERNATIO

NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD CNOOC LTD

PRICE

DAY %

VOLUME

11.8

2.253033

74185528

8.7

3.694875

8320650

64.2 -0.07782101

1773837

NAME

PRICE

DAY %

POWER ASSETS HOL

69.65

-0.1433692

833861

SANDS CHINA LTD

42.25

-1.400233

9999962

SINO LAND CO

VOLUME

10.8

3605433

103.2

0.4868549

2400793

92.1

-0.1084599

480200

TENCENT HOLDINGS

357.4

0.2805836

2325997

0.8645533

31833459

COSCO PAC LTD

10.94

1.48423

2196675

SWIRE PACIFIC-A

ESPRIT HLDGS

13.58

0.443787

3807432

SUN HUNG KAI PRO

BOC HONG KONG HO

24.95

0.4024145

5093739

HANG LUNG PROPER

24.9

-0.9940358

4880000

TINGYI HLDG CO

19.44

1.355579

2150400

CATHAY PAC AIR

14.18

1.721664

1260001

HANG SENG BK

122.4

0.4101723

1231145

WANT WANT CHINA

10.36

3868000

CHEUNG KONG

114.5

2.415027

3888151

HENDERSON LAND D

47.95

1.053741

1420942

WHARF HLDG

68.8

1.25092

2610271

4.61

10.28708

113036995

HENGAN INTL

88.15

1.147447

759774

CHINA COAL ENE-H CHINA CONST BA-H

5.64

0.7142857

85195155

HONG KG CHINA GS

-0.2493766

3474622

CHINA LIFE INS-H

18.52

1.31291

15204553

HONG KONG EXCHNG

119.4

-0.5

2080047

CHINA MERCHANT

23.8

0.8474576

3073277

HSBC HLDGS PLC

84.75

0.5934718

6319695

82.55

-0.5421687

10112655

HUTCHISON WHAMPO

91.65

0.05458515

5089251

CHINA OVERSEAS

CHINA MOBILE

23.7

3.043478

19567044

IND & COMM BK-H

4.97

0.4040404

135798768

CHINA PETROLEU-H

5.63

0.7155635

50452493

LI & FUNG LTD

10.3

0.9803922

8143015

29.2

-0.6802721

664305

0.1821494

7406384

CHINA RES ENTERP

25.7

7.756813

9073080

MTR CORP

CHINA RES LAND

22.1

1.843318

5138000

NEW WORLD DEV

CHINA RES POWER

17.6

2.564103

6030724

PETROCHINA CO-H

8.87

0.5668934

43071833

CHINA SHENHUA-H

23.35

6.136364

27833957

PING AN INSURA-H

49.55

0.1010101

7907116

MOVERS

2 21890

INDEX 21807.56 HIGH

22000.94

LOW

21588.84

52W (H) 23944.74 21580

(L) 19076.78906 7-August

9-August

14 14

August 12, 2013 April 19, 2013

Classifieds Mountain Villa For Sale in Koh-Samui

Bruno Beato Ascenção

Price: HK$ 16 million

3 x King Bed en-Suites, 1 x King Bed basement Suite, 2 x 2 Single Bed, Spacious Living area and fully furnished kitchen, Swimming pool - children / adult, 2 levels Maid’s quarter, Fully Furnished, Balcony, Terrace / Patio, 2 x Outside Salas, Barbecue, 2 x Parking Spaces, 7-seater SUV included. Contact Ms Chan - Sarah@clever-cloggs.com.hk Tel: 2861-3317

Lawyer

Avenida da Praia Grande, no. 409, China Law Building, 11th floor. Tel:28785795 Fax:28785797 Email:bascencao@gmail.com

Recruitment

Marketing and Advertising Coordinator

Translations

Duties

Inês Dias

Highly reputable media company is looking to hire a full-time Marketing and Advertising Coordinator with competitive salary. • Plan and implement various promotions, costumer communication and company’s events • Coordination of different marketing teams • Implementing strategic quarterly plans and meeting clients

Languages English, Portuguese and French

Requirements

• 3 years of relevant experience • Good spoken English, Mandarin and Cantonese • Proficiency in written English and Chinese • Degree in Marketing or equivalent • Immediate availability.

Contact now for a quote: inezfernandesdias@gmail.com

Send full resume to classifieds@macaubusinessdaily.com

4 APARTMENTS BUILDING IN LISBON Price: HK$ 17,000,000

Reach a wider audience

2 Apartments T3 (1st and 2 floor), 1 Apartment T2 (3rd floor), 1 Apartment T0 (top floor), garage for 4 cars + laundry and storage area. Location: Close to RPC embassy classifieds@macaubusinessdaily.com Mobile: +351910836655

Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden

Do it yourself!

140 sq metres with Mezzanine

Choose number of modules and place your message. Maximum number of modules: 6

Price: HKD 12 million classifieds@macaubusinessdaily.com

Price per module: MOP 200.00 Size per module: 4.6(W) x 3(H) cm Call: 2833 1258 classifieds@macaubusinessdaily.com

LIKE NEW Year: 2007 30,000 Km Very good condition Price: MOP88,000

classifieds@macaubusinessdaily.com

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

Business Daily is a product of De Ficção – Multimedia Projects 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 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

15 15

August 12, 2013 April 19, 2013

Opinion China’s worst nightmare wires is turning Japanese Business

Leading reports from Asia’s best business newspapers

William Pesek

Bloomberg View columnist

Asahi Shimbun Japan’s total national debt exceeded an eye-watering 1 quadrillion yen (US$10.39 trillion) at the end of June for the first time, the Finance Ministry said, up about 17 trillion yen from three months earlier. The figure, equivalent to every man, woman and child in Japan being indebted to the tune of 8 million yen, is basically twice as much as the country’s annual gross domestic product (GDP) of around 500 trillion yen.

Korea Herald A U.S. trade panel ruled that Samsung Electronics Co infringed on two of Apple Inc’s patents in making some smartphones and tablet PCs, largely older models. In its final ruling, the International Trade Commission (ITC) placed a ban on the imports of those devices manufactured by the South Korean firm, accepting Apple’s complaints filed in 2012. It is subject to a 60-day presidential review period and it will take effect if approved by the Obama administration.

Inquirer Business The Philippines is now Southeast Asia’s main economic engine, fuelled by strong domestic demand, rating firm Standard & Poor’s said. S&P said Indonesia, Malaysia, Philippines, Singapore and Thailand were expected to grow collectively by 5.5 percent this year. This is faster than the rating firm’s 5.3-percent growth forecast for Asia Pacific as a whole. It said the Philippines would stay ahead of its neighbours in the region, given its lowest reliance on exports compared to others in Southeast Asia

China Daily Reckless expansion of cities in China has left many of them empty, according to a Chinese economic planning official. Qiao Runling, deputy director of the China Centre for Urban Development under the National Development and Reform Commission, said local governments had relied on quick urbanisation to stimulate economic growth and generate fiscal revenue. “China now has an oversupply of cities, given the number of new urban districts that we have,” Mr Qiao said.

ew words strike greater fear in the hearts of economists and politicians than “Japanization”. That spectre of chronic malaise, deflation and bad debt has driven central bankers from Ben S. Bernanke in the U.S. to Mario Draghi in Europe to flood markets with liquidity in an effort to avert their own lost decades. It should worry China, then, that experts on this dreaded scenario are turning their attention to Beijing. Take Brian Reading, whose quest to understand what the world can learn from Tokyo’s mess dates back to his prescient 1992 book “Japan: The Coming Collapse”. He recently wrote a 40-page report with Lombard Street Research Ltd colleague Diana Choyleva titled “China’s Chance to Avoid Japan’s Mistakes”. Over at JPMorgan Chase & Co in Hong Kong, investor inquiries on the similarities between China and Japan drove Grace Ng to revisit the topic. She warns that China today and Japan in the 1980s share an uncannily similar build-up in broad measures of credit to almost double their economies’ size. So, just how susceptible is China to Japanization? Very, actually, and only bold and creative action on the part of President Xi Jinping and Premier Li Keqiang can avoid it. Think of their 10-year term that began in March as China’s make-or-break period to dodge a major debt crisis.

China’s debt China is not impossibly indebted, considering it has US$3.5 trillion in currency reserves. JPMorgan reckons its debt-to-gross-domesticproduct ratio rose to 187 percent in 2012 from 105 percent in 2000, compared with Japan’s increase to 176 percent in 1990 from 127 percent in 1980. Japan’s has exploded since then and could approach 250 percent of GDP next year. That would mark a jump of 10 percent from 2012 alone in a fast-ageing nation that’s losing global competitiveness. China, also ageing, couldn’t withstand a similar jump; it must rein things in now. Japan became rich before its society became old. It had decades to build a social contract between the public and private sectors, nurture a stable of innovative companies, and open the financial system. That legwork enabled Japan to muddle along for two decades without a huge debt meltdown or social unrest. Yet Japan’s is also a tale of hubris and missed opportunities. Rather than

If several of these metropolises go bust, Detroit’s US$18 billion bankruptcy will look like small change by comparison

quickly scrapping a model based on overinvestment, exports and excessive debt, Tokyo delayed change at all costs by relying on current-account surpluses, huge budget deficits and asset bubbles. In many ways, it still is. Sound familiar? “China has so far followed in the footsteps of Japan,” Reading and Choyleva argue. “But its economy is not yet over-indebted. So there is time for China to avoid Japan’s mistakes if it changes course. “The lesson from Japan’s experience in the 1970s and 80s is that change drives change and liberalisation becomes unavoidable. But unless policy is aimed at fundamental structural reform, the temporary solutions of running current account surpluses, budget deficits and spawning bubbles will eventually run out of steam and cause growth to stall. But China is far from having twenty more years to be blowing up bubbles.” There are troubling signs that Beijing thinks it has plenty of time to deal with the problem. For every pledge to cut excess production capacity, audit government borrowings and tolerate sub-8 percent growth, there are two others assuring markets that growth won’t be allowed to slow too much. It’s that kind of doublespeak that sounds eerily familiar to longtime Japan watchers such as Marshall Mays. “Even though Xi is reputed to have consolidated power quite quickly, there is still a lot of mess to clean up in the first year of formal rule,” says Mays, director of Emerging Alpha Advisors Ltd in Hong Kong. “Li, meanwhile,

doesn’t seem to have settled on a stable programme of his own yet.”

China’s Detroits The problem is one of politics over economics. Around China, dozens of local leaders are vying to put their cities on the global map and become the toast of the Communist Party. That means more than delivering rapid GDP. It also means building huge skyscrapers, international airports, six-lane highways, five-star hotel chains, sports stadiums, universities, giant cultural centres and swanky shopping arcades punctuated with Prada and Hermes shops – all financed with fresh debt. If several of these metropolises go bust, Detroit’s US$18 billion bankruptcy will look like small change by comparison.

A continued infrastructure boom promises ever-greater riches for vested interests both locally and in Beijing. There are ways Xi and Li could defuse the debt time bomb: greater oversight, expanding the municipal bond market, letting localities refinance with direct bond sales, increased transparency. China could borrow a page from the 1980s U.S. savings-and-loan crisis and set up Resolution Trust Corp-like entities to dispose of bad debts. But to do any of this, Chinese leaders must be willing to spend political capital at levels that are at least commensurate with the epic flow of ill-gotten gains heading back to the nation’s capital. It will take some serious mettle to avoid a Japan-like funk, and it’s unclear if Xi and Li have it. Bloomberg View

August 12, 2013

Closing Greece will need extra aid: Bundesbank Ex-JPMorgan traders facing arrest Germany’s central bank expects that Greece will need additional rescue loans from its European partners by the start of 2014 at the very latest, weekly magazine Der Spiegel reported yesterday, citing a document from the Bundesbank. The report could rekindle a debate in Germany about whether Chancellor Angela Merkel (pictured) is deliberately playing down the prospects of further help for Greece before a September 22 election in which she is favoured to win a third term. The Bundesbank also criticises the approval last month of an aid tranche to Greece by the “troika” of lenders as “politically motivated”.

Authorities plan to arrest two former JPMorgan Chase & Co employees on fraud charges related to their role in a trading loss last year, the New York Times reported, citing people briefed on the matter. Javier Martin-Artajo and Julien Grout, who worked in the bank’s London office, will probably be taken into custody in coming days. They are natives of other European countries and British authorities may not be able to locate them. Prosecutors determined that the pair, who worked in a London unit that lost more than US$6 billion last year, concealed losses from their managers in New York, the newspaper said.

China urbanisation push faces opposition Planning official says local governments against plan

hina’s plan to encourage hundreds of millions of rural residents to settle in cities to boost growth faces opposition from local governments, according to Li Tie, an official with the country’s top economic planning agency. Mr Li spoke at an urbanisation forum in Beijing where officials, researchers and company executives highlighted the challenges facing the leadership’s push, including the strain on local government finances, the dangers of overbuilding and the cost of scrapping the hukou, or residence permit, system that denies migrants and their families the same welfare, health and education benefits as city dwellers. Premier Li Keqiang has championed urbanisation as a “huge engine” for growth as he seeks to shift the world’s second-largest economy toward a model that relies on consumption rather than investment and exports. “Nobody wants such a big group of migrants to be their neighbours and share their so-called civilised space. This is a conflict of interest,” Li Tie, director-general of the China Centre for Urban Development under the National Development and Reform Commission, said. “We

Hundreds of cities unable attract people

are facing rejection from the hearts of so many mayors and city elites who have enough ability to influence decision-making.” One of the thorniest issues facing policymakers is who pays for urbanisation – the cost of the physical infrastructure and the recurring annual spending on providing millions of new urbanites with healthcare, welfare and education services.

“Urbanisation isn’t only about changing people’s residency, it’s about their overall development and an improvement in the quality of their lives,” Li Lianzhong, head of the economy bureau at the Policy Research Centre of the Communist Party Central Committee, said at the forum. Ending the hukou system and replacing it with identity cards will signal the

“victory of reforms,” he said. Mao Daqing, executive vice president of China Vanke Co, the biggest developer by market value traded on the country’s stock exchanges, questioned whether China needs more towns and cities when most migration has been to China’s 70 biggest conurbations. “These big cities interest people because they have more job opportunities, education opportunities and medical resources,” Mr Mao said. “Those other 610 cities can’t attract people even though they already exist,” he said, adding “It indicates some of those 610 cities have problems or can’t survive.” More people lived in China’s towns and cities than in rural areas for the first time in the country’s history in 2011, government data show, with 691 million living in urban areas compared with 657 million in the countryside. The urbanisation rate will rise to about two-thirds by 2030, meaning about 13 million more people, equivalent to the population of Tokyo, will move to cities every year, the World Bank estimated in its “China 2030” report published last year. Bloomberg News

Fonterra scare affected NZ’s exports: Key Currency fell to a one-month low last week

ew Zealand’s entire export industry has suffered from the contamination scare that prompted China to halt imports of milk powder made by Fonterra Cooperative Group Ltd, Prime Minister John Key said. Damage from the incident would be hard to quantify as it affected all of New Zealand’s exports around the world, rather than just dairy sales to China, Mr Key said in an interview with Television New Zealand yesterday. In a separate interview, Fonterra chief executive Theo Spierings put the cost at “tens of millions” of New Zealand dollars. “Fonterra is the poster child for New Zealand’s exporting, whether we like that or not,” Mr Key said, according to a transcript of the interview. “It’s really about what is the damage to New Zealand’s reputation, both for Fonterra and for dairy products, but also for the wider products we sell into the Chinese

market and other markets overseas.” New Zealand’s currency fell to a one-month low after Fonterra, the world’s largest dairy exporter and the country’s biggest company, said on August 3 that a dirty pipe at a processing plant may have tainted whey protein used in milk powder with botulism-causing bacteria. China halted imports of some Fonterra products and the official news agency Xinhua said buyers were losing faith in New Zealand’s clean image. Fonterra also recalled about 40 metric tonnes of milk powder delivered to Sri Lanka, Mr Spierings said in the interview on Television New Zealand. The company was disputing the recall, a separate advertising ban and the Sri Lankan government’s claim that the powder contained dicyandiamide, or DCD, an agricultural chemical, he said. “With all the noise of this last week, people are connecting the dots, and that’s why this is happening,”

New Zealand’s reputation dented, says John Key

Mr Spierings said, according to an interview transcript. A report by Sri Lanka’s Industrial Technology Institute said two batches of milk powder contained DCD, and the country’s ministry of health had told Fonterra’s Sri Lanka division in a letter of its ban on local adverts, Sanath Mahawithanage, associate director of regulatory affairs at the company’s unit, said by phone.

Dairy products are New Zealand’s biggest foreign-exchange earner, accounting for 28 percent of overseas sales in an economy where exports make up about a third of output. Fonterra accounts for about a third of the world’s trade in dairy products and posted revenue of NZ$19.8 billion (US$15.9 billion) in the year through July 2012. Bloomberg News