Macau Business Daily, August 19, 2013 by Business Daily

MOP 6.00

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Soccer back on TV as govt promised

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www.macaubusinessdaily.com

Year II

Number 351 Monday August 19, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

April 19,warns 2013 of VIP credit risks Fitch

LRT delayed until 2018: contractor

he completion of the city’s Light Rapid Transit railway could be delayed by up to three years, until 2018, says one of the contractors. Top Builders International Co Ltd claimed in a press conference the cause is government mismanagement. Public spending watchdog the Commission of Audit last year criticised the government after the railway budget topped 11 billion patacas (US$1.38 billion); almost three times above first forecasts. Top Builders International is currently appealing against 180,000 patacas (US$22,500) in government fines for allegedly being absent from project meetings. The Transportation Infrastructure Office accused the contractor of “trying to amend the construction proposal to not follow the tendering requirements”. Top Builders has worked on other major public and private projects including the city’s Gongbei Gate bus terminal and The Venetian Macao. More on page 2

No cheap gas for electricity this year

Private home approvals up 75 pct in 2nd quarter

The city’s locally based electricity supplier will have to wait longer to use liquefied natural gas to produce cheaper power. The energy regulator said that there would not be enough imports of natural gas this year for Companhia de Electricidade de Macau SA (CEM), one of Macau’s power generators and the city’s only electricity distributor, to generate electricity. Mainland generators supply most of the city’s power needs. Page 3

The number of new private sector residential construction projects approved by the government rose 74 percent yearon-year in the second quarter, according to data from the Statistics and Census Service. The gross floor area for newly approved residential schemes rose 69 percent year-on-year in the same period. Some legislators cite delays in government approvals for new private residential developments as worsening the city’s housing shortage. Page 5

Brought to you by Zung Fu Motors (Macau) Limited

Hang Seng Index 22670

22600

22530

22460

22390

22320

August 16

HSI - Movers Name

Productivity boss says quality labour needed The director-general of the Productivity and Technology Transfer Centre, Shuen Ka Hung, is lobbying to keep Macau supplied with suitable workers. Until April last year Mr Shuen was head of the Labour Affairs Bureau. There he was required to implement policies including a one-for-one (one local for every outsider) rule on construction labour. Mr Shuen told Business Daily it’s a matter of quality of workers, not quantity. Pages 6 & 7

%Day

LENOVO GROUP LTD

2.07

WANT WANT CHINA

1.32

GALAXY ENTERTAIN

1.27

TINGYI HLDG CO

1.24

CHINA LIFE INS-H

1.11

WHARF HLDG

-2.05

PETROCHINA CO-H

-2.59

CHINA RES ENTERP

-2.63

BELLE INTERNATIO

-2.80

CHINA RES LAND

-3.35

Source: Bloomberg

I SSN 2226-8294

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August 19, 2013

Macau

LRT running 3 years late, says contractor Construction association says govt indecision is delaying construction work Tony Lai

tony.lai@macaubusinessdaily.com

ne of the contractors building the Light Rapid Transit (LRT) elevated railway has said the project may be finished only in 2018, three years late. Top Builders International Co Ltd has blamed the delay on government mismanagement and indecision, and warned that the already bloated cost of the project could swell even more. The government countered by accusing Top Builders, a Macau-based firm, of not being fully committed to the construction schedule. Earlier this month the government acknowledged that the construction work faced delays, blaming them on rain and the complexity of the infrastructure underground. The Macau Construction Association, having talked to the contractors and made its own observations, estimates that the five parts of the project now under construction on Taipa are between seven and 11 months behind schedule. These five parts are three stretches of railway line, a transport hub near the Macau Jockey Club and the railway depot in Cotai. The Top Builders project director for the depot, Ip Kin Wa, told a press conference on Friday that one-third of the time allotted for construction had passed but that only 1 percent of the work had been completed. Mr Ip said the depot was “about seven months behind schedule”. He said the depot site was on reclaimed land, and that building heavy structures on it might be unsafe. “But the government has still not agreed to consolidation work,” he said.

An LRT contractor and the government are trading barbs over the project

Mr Ip implied that the government was reluctant to agree for fear of adding to the cost of the project. A report last year by the Commission of Audit criticised the government for allowing the cost to rise above 11 billion patacas (US$1.38 billion), almost three times its initial forecast. Top Builders senior commercial manager Calvin Pang said a

consulting company had advised the government to solve the site problems but that nothing had been done. Mr Pang said the problems could be solved “within one year.” But the work could be delayed longer if the government “continues to avoid the problems or does not tackle them directly”, he said. “My rough estimate is that the Taipa part of the railway will be delayed for at least two or three years,” he said. The chairman of the Macau Construction Association, Lo Kai Jone, criticised the Transportation Infrastructure Office, which is in charge of the project. “No-one can make up their minds, and there is no immediate decision, so those problems have been dragging on for a very long time,” Mr Lo said. The Transportation Infrastructure Office retorted in a press release issued later on Friday that unlike Top Builders, “other contractors responsible for the LRT work have adopted an active attitude”, striving to make up lost time. “There is still room for the project to get back on schedule,” the office said.

No guarantee

Contractor appeals LRT fines

op Builders International Co Ltd, one of the Light Rapid Transit (LRT) contractors, has appealed to the court over fines of 180,000 patacas (US$22,500) imposed by the government. Calvin Pang, Top Builders’ senior commercial manager, stressed on August 16 they were fined for being absent from meetings with officials over the railway depot. “There were two or three times in

January and February this year that our project managers failed to show up for the meetings (…) but we sent other representatives,” he told media. The Transportation Infrastructure Office said in a press statement on Friday that the Top Builders project managers “had been absent from the meetings for a month leading to many technical issues which could not be resolved on time.” The fines were not connected to any delay in the works, Mr Pang stressed. “Many contractors, as far as I know, have received letters from the government saying it plans to or reserves the right to penalise them for delays,” he added. T.L.

Mr Pang said the costs of the parts of the LRT project that Top Builders was involved in “have already increased significantly” because the price of construction materials had surged. He said his company was entitled to more money if the increase in costs was not its fault. Mr Ip said another cause of delay in building the depot was disagreement over the type of cement to be used. He said the government wished Top Builders to use cement that would last for over 100 years. This type of cement “was invented only in April this year, but our construction work began in September last year”, he said. The material was new and no cement maker could guarantee it, he said. Top Builders has asked for

permission to use another type of cement. The Transportation Infrastructure Office accused Top Builders of trying to avoid doing what it was contracted to do. “Its request has been denied,” the office said. Top Builders said another part of the LRT project it was involved in, the transport hub, was 11 months behind schedule. The Top Builders project manager for the transport hub, Roy Chan Sze Leong, said half of the time allotted for construction had passed but that only 7 percent of the work had been completed.

Route indecision “The biggest reason for the delay is that the government has given us only half of the site needed for construction,” Mr Chan said. He said the Transportation Infrastructure Office and the Transport Bureau had failed to coordinate the diversion of traffic from the other half of the site, near the Windsor Arch housing project. The Transportation Infrastructure Office said diverting the traffic “would severely prevent residents from going out and could not meet the conditions for rescue in the event of an emergency”. Mr Chan said there was no alternative to diverting the traffic. Macau Construction Association figures indicate that only 15 of the 325 pillars that will carry the railway line on Taipa have been erected or are in the process of being erected. At least 38 percent of the time allotted for construction of the three stretches of line there has passed. The association also criticised the government for failing to make up its mind about the route the railway should follow in the NAPE district. The Commission against Corruption suggested in July last year that the railway should run along the coast rather than through the middle of NAPE.

August 19, 2013 April 19, 2013

Macau

Insufficient LNG for electricity this year

editorial

The government is waiting for the natural gas importer’s long-term supply proposal Tony Lai

tony.lai@macaubusinessdaily.com

acau’s power company will have to wait longer to use liquefied natural gas (LNG) to produce electricity more cheaply and cleanly. The Office for the Development of the Energy Sector has said there will be insufficient natural gas imported this year for Companhia de Electricidade de Macau SA (CEM), the city’s only electricity distributor, to generate electricity with it. This is despite the recent reopening the natural gas pipeline from Hengqin Island. CEM says this leaves it without the option of generating electricity more cleanly and economically by burning natural gas. The Office for the Development of the Energy Sector, Arnaldo Santos, said on Friday that electricity could be generated this way only if sufficient natural gas was available. “It will not happen this year, as there is not enough gas in the upstream source,” Mr Santos said. The pipeline from Hengqin, with capacity to carry 520 million cubic metres of natural gas a year, resumed supplying Macau on July 23. The pipeline was closed in June 2011 to allow construction work, including blasting, on the island. Sinosky Energy (Holdings) Co Ltd is the city’s sole gas importer. Mr Santos said: “We are now waiting for Sinosky to submit a longterm supply proposal.”

A spokesperson for his office told Business Daily on Friday that it had given Sinosky no deadline. “The market for getting natural gas is now very competitive, so it may need time to secure a long-term source,” the spokesperson said. Business Daily asked Sinosky to comment but we had received no reply by the time we went to press. CEM has been importing more electricity from the mainland for the past two years because it has no natural gas. CEM spokesperson Cecilia Nip told Business Daily: “So far this year, imports of electricity have accounted for 90 percent of the electricity supplied, the same as last year.” Government data show that in

We are now waiting for Sinosky to submit a long-term supply proposal Arnaldo Santos head Office for the Development of the Energy Sector

Time needed Mr Santos’s office said the proposal should cover technological aspects, business development and the price.

The government says there will not be enough natural gas for CEM

the first quarter of 2011, before the natural gas supply stopped, 39.3 percent of Macau’s electricity was generated domestically. In the first quarter of this year only 10.9 percent was produced here, most of it by diesel generators. “With the supply of natural gas, it would be much easier for us to carry out economic dispatch,” Ms Nip said. Economic dispatch is the optimal output to meet the system load at the lowest possible cost, while supplying power reliably.

Price question Ms Nip declined to estimate what effect the insufficiency of the supply of natural gas would have on her company’s earnings. “There are too many conditional questions and the gas price has not even been set yet,” she said. Sinosky and the government have been negotiating an increase in the price Sinosky charges for natural gas. The company’s latest annual report says it bought natural gas for 4.60 patacas (US$0.58) per cubic metre but that its 15-year concession contract allows it to sell gas for only 2.74 patacas per cubic metre. Sinosky made a loss of 28.63 million patacas last year, bringing its accumulated losses to 119.5 million patacas. The Office for the Development of the Energy Sector said that the current supply of natural gas was enough only to meet demand from the public housing in Seac Pai Van, the Hengqin campus of the University of Macau and the operators of some of the buses that run on natural gas.

A problem overlooked A

fter battering the northern Philippines, Typhoon Utor took aim at Macau last week. The storm brought the city to a virtual standstill as it moved towards the mainland. But more than that, it tarnished Macau’s image as an international tourism city. People stranded at the border for several hours, scrummages to get on public transport and taxi drivers grabbing the chance to profiteer show how far the city is from meeting international standards. On Thursday, Chief Executive Fernando Chui Sai On said the government would review the arrangements at the border with a view to accommodating visitors arriving during severe weather. This promise was in response to criticism of the lack of transport when a typhoon hits the city. “Under severe weather conditions, the most important thing is to ensure the safety of tourists, not help them to reach their destinations,” Mr Chui said. “We should not encourage them to move around, as this would be dangerous.” They were wise words, but the government has to do a lot more than that to ensure the safety not only of tourists but also of the people that live here and have to report for work during typhoons. As usual, taxi drivers – the ones that chose to continue working at their own risk – were asking immoral prices to take passengers to their destinations. Mr Chui said we must not encourage tourists to move around town in severe weather. But he should have also clarified the government’s position on whether taxis should be out and about during typhoons, or at least have emphasised the need to discourage taxi drivers from profiteering – during typhoons, or at any other time. Even during normal weather some taxis put up their “unavailable” signs and cruise around looking for passengers prepared to do a deal – a practice inconceivable in other modern cities. The problem is not that the taxi business is unregulated. There are rules, but lax enforcement allows taxi drivers to operate as if they were above the law. The complaint process should be simplified and there should be stricter vetting of taxi drivers. Repeat offenders should face heftier punishment and ultimately be banned from plying their trade. The Transport Bureau could set a standard surcharge that taxi passengers must pay drivers working during typhoons. This is a reasonable proposal that would be welcomed by associations of taxi drivers. But more oversight and accountability should complement it. After all, it is the city’s international image that is at stake. We still have much to prove.

There are rules, but lax enforcement allows taxi drivers to operate as if they were above the law. The complaint process should be simplified and there should be stricter vetting of taxi drivers

August 19, 2013

Macau

Fitch warns of VIP credit risks

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Shadow banking crackdown might hit high roller gambling but buffers exist, says rating agency

HOSPITALITY

Tiago Azevedo

Lighter ferry traffic Most people that come to Macau by sea arrive from Hong Kong. There are six ferry routes: between Hong Kong Island and the Outer Harbour or Taipa; between Kowloon and the Outer Harbour or Taipa; and between Hong Kong International Airport and the Outer Harbour or Taipa. Between 2010 and 2011 ferries ran between Macau and Tuen Mun, but that service stopped last year. Over four-fifths of ships coming to Macau come from Hong Kong. This proportion has decreased slightly in the past three years. On current trends, it may be drop below four-fifths this year.

From 2010 to the end of the first half of this year just under 70 percent of return sailings from Hong Kong were from Hong Kong Island. About 21 percent were from Kowloon. A little over 8 percent were from Hong Kong International Airport. The number of sailings has been declining. From 2010 to last year, the annual number of sailings from Hong Kong Island, Kowloon and the airport decreased by 5,700, or by 15 a day. The biggest decrease was in the annual number of sailings from the airport, which declined by over 3,000. The decrease in the annual number of sailings from Kowloon was smaller. The only increase was in sailings from Kowloon to Taipa, which almost fully made up for fewer sailings to the Outer Harbour. The figures for the first half suggest that this year’s pattern will be similar to last year’s.

tiago.azevedo@macaubusinessdaily.com

itch Ratings has raised its forecast of annual growth in Macau’s gaming revenue, but warned of potential risks for VIP gaming. “There is potential for credit tightening and shadow banking restrictions to affect VIP gaming revenue growth, although it may take time to filter through,” the rating agency wrote in its latest report on the casino industry here. China’s broadest measure of new credit fell to a 21-month low in July as the government extended a campaign to curb a record expansion of lending. Aggregate financing was 808.8 billion yuan (US$132 billion), the People’s Bank of China said on August 9. Chinese policymakers are persisting with a crackdown on shadow banking following a government-engineered cash crunch in June that was allowed happen despite a two-quarter economic slowdown. In its report, Fitch says VIP gambling volume “remains healthy” despite the release of data suggesting the Chinese economy’s lower reliance on shadow banking. The latter is a general term commonly used in China to describe a wide range of financial

There have been no signs of this as yet, and we believe there are mitigants [sic] to this risk Fitch Ratings

VIP gaming ‘remains resilient’, Fitch says

the casino operators’ healthy balance sheets that can back-stop junket lending mitigate some of the concerns over pressure on the shadow banking system,” it added. Moreover, adds the report, “Macau remains capacity constrained relative to demand, which provides a buffer and should allow operators to resegment capacity toward the mass market or VIP business backed by stronger junkets”. Other analysts have written on the issue, saying they see no negative effect on the Macau gaming industry. “We believe the strong run rate at the beginning of August is the result of the summer holiday peak season. Also, it seems more obvious that the liquidity tightening in China has no material impact on Macau,” Kenneth Fong, an analyst at J.P. Morgan in Hong Kong, wrote in a report last week.

Improved outlook

J.I.D.

7.7 % Decrease in sailings from Hong Kong, 2010-12

activities – some state-regulated and some not – that occur outside of traditional banking managed by the state-owned banks. “Junkets may be funded through the shadow banking system, so there is a risk of liquidity pressure and/or credit tightening among the junket system; however, there have been no signs of this as yet, and we believe there are mitigants [sic] to this risk,” Fitch says. “The potential for some of the weaker junkets to consolidate with larger, financially stronger ones and

Despite the potential risks, Fitch has again raised its forecast of annual growth in gaming revenue to 14 percent from 11 percent as VIP gaming “remains resilient”. “This is the second time this year we are raising our 2013 revenue outlook due primarily to better-thanexpected VIP performance,” it said. Fitch increased its forecast after total gaming revenue in the first seven months grew by 16 percent yearon-year, with mass-market gaming revenue up by 31 percent and VIP gaming by 11 percent. Cumulative total revenue for

the year to July 31 is now 200.93 billion patacas (US$25.2 billion), with a year-to-date growth rate of 15.9 percent. Fitch sees a favourable outlook for mass-market revenue in the medium term and beyond. “The mass-market segment has higher margins and is less reliant on macro credit policies and will benefit from additional infrastructure improvements,” it says. The rating agency also mentions concession renewals, since Macau government officials recently indicated the possibility of starting the concession renewal process in 2015, “which is earlier than anticipated”. Secretary for Economy and Finance Francis Tam Pak Yuen said late last month that 2015 “will be the proper time for us to discuss with the gaming operators the form to renew gaming concessions”. “There are many choices for the government on the renewal terms: the government could negotiate a short-term contract renewable every five years, or launch an open bid [for gaming licences],” Mr Tam stated. “We believe there is little risk concessions will not be renewed (current expiration dates are 20202022), assuming concessionaires remain compliant with laws and regulations,” Fitch says. “Also, there is very little likelihood of any additional U.S. entrants and low probability of any competitive disruption at all if the market continues to function favourably and stably.”

August 19, 2013

Macau

Private home scheme approvals up 75 pct in Q2 Previous pace of government processing was cited as contributing factor in city’s homes shortage Michael Grimes

michael.grimes@macaubusinessdaily.com

he number of new private sector residential construction projects approved by the government rose 74 percent year-on-year in the second quarter, according to data from the Statistics and Census Service. The gross floor area for newly approved residential schemes rose 69 percent year-on-year in the same period. According to the figures compiled by the statistics service based on returns from the Land, Public Works & Transport Bureau, the Financial Services Bureau, the Notary Office and private notaries, the number of residential projects approved for construction in the April to June period reached 1,159, compared to 666 a year earlier. Gross floor area for new approvals rose to 105,480 square metres (1.14 million sq. feet) from 62,297 sq. ms in the same period in 2012. The number of new commercial and office schemes approved rose by a more modest six percent, to 17, from

16 a year earlier, although gross floor area for new commercial schemes rose 18 percent during the period. Some legislators have cited the time taken by the government to approve new private residential

developments as a factor in the city’s housing shortage. Ronald Cheung Wat Fai, chief executive of Midland Realty (Macau) Ltd says some of the second quarter approvals may be re-starts of

Approvals rise on private home building in Q2

Corporate

New Mercedes-Benz S-Class goes on sale The new Mercedes-Benz S-Class is already on sale at Zung Fu, the exclusive retailer of Mercedes-Benz in Macau and Hong Kong. Mercedes has again used its flagship sedan to stay ahead of the pack with many modern technologies. The range has two hybrid models: the S400 Hybrid and the S500, the latter with a 455-horsepower V8 engine. The S400 Hybrid comes with a small electric motor that aids its gasoline-powered V6 to the tune of 306-horsepower. The S400 Hybrid costs HK$1.3 million (US$170,000) and the S500 has a price tag of HK$1.5 million. The engines of both meet the Euro VI emissions standards, as the S-Class promises to be one of the most efficient cars in its segment. “Within ten years Mercedes-Benz, by realising ‘Efficient Technology’, has almost halved fuel consumption in the 150 kW output category to 4.4 litres per 100 kilometres,” Mercedes-Benz said in a statement. The German carmaker is also making a complete switch to LED technology. “The new S-Class is the first vehicle in the world whose interior and exterior do without a single light bulb, and sees Mercedes-Benz building on its pioneering role in the lighting sector,” it said. The S-Class includes an optional technology, based on cameras and sensors, which detects potential dangers and allows the driver a 360-degree view of the road. The new model will also have incorporated the ‘Attention Assist’ system as a standard, which can warn of inattentiveness and drowsiness and notify the driver of their current state of fatigue and the driving time since the last break.

previously stalled projects. “I think it’s related to a policy change that occurred a few years ago,” Mr Cheung told us. “The government tried to get hold of [unused] land and to push some policies to make sure every land [concession] owner develops their land. If the landlords don’t do anything about their land, they may risk having it taken back by the government,” he added. Jeff Wong Chi Wai, head of residential and a director of Jones Lang LaSalle in Macau, told Business Daily that on large projects – whether residential or commercial – the work is often split into phases, with each phase being counted as a new approval. “Approvals are usually given in phases,” Mr Wong said. “For example with One Oasis [a residential development on the Cotai-Coloane border] it was split into four or five phases. It may be known to the public as a single project, but for the public works department records still, it will be classified as five different projects,” he explained. The average price of pre-owned residential units changing hands in the second quarter was 63,130 patacas (US$7,904) per square metre, up by six percent quarteron-quarter. The average price of new pre-sold residential units increased by 12 percent quarteron-quarter to 108,903 patacas per square metre. The average price of office units stood at 64,544 patacas per sq. m., and the price of industrial units was 34,225 patacas per sq. m., up by two percent and 20 percent quarter-on-quarter.

August 19, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Awash with money Most money is never found in wallets or safes. People usually carry only small amounts of money, to cover anticipated expenses and small, unexpected or variable ones. And they usually keep relatively small amounts of cash at home, compared with their total income or wealth. Coins and notes make up a small fraction of the supply of money. People tend to keep their means of payment – their money – in financial institutions, usually banks. This means much of their money is held in the form of bank deposits. Most common are deposits that can be easily converted into cash immediately or at short notice. One common measure of the amount of money in an economy is the M2 aggregate, which includes money in current accounts – which is equivalent to cash – and money in savings accounts and time deposits, which is easily converted into cash.

CPTTM chief keeps up fight against scarcity of workers The director-general of the Productivity and Technology Transfer Centre (CPTTM), Shuen Ka Hung, is persisting with his struggle to keep Macau supplied with suitable workers. Until April last year Mr Shuen was head of the Labour Affairs Bureau, which has a say in labour policy. The CPTTM and the Labour Affairs Bureau have the same aim: to support the growth of small and medium enterprises and so develop Macau’s economy. Mr Shuen told Business Daily in an interview that solving the problem of the scarcity of labour was a matter of the quality of workers, not the quantity. Luciana Leitão leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

The amount in savings accounts and time deposits, taken together, makes up the biggest proportion of the money available in Macau. For the past five years, on average, about 30 percent of M2 has been in savings accounts and about 55 percent in time deposits. Since 2010, time deposits have been the fastest-growing component of the money supply. In each of the past two years M2 rose fast, by over 20 percent. The figures for the first four months of the year suggest that money supply growth is now slowing. J.I.D. The content of this column is the work of Business Daily’s journalists.

108.8 % Time deposit growth, 2008-12

What is the CPTTM’s main goal? The main goal wehad aim to achieve Banco Weng Hang the is12tobranches increasehere theatcapability of endcity’s of June the small and medium enterprises and to help them transform and embrace new technologies. We want to train their staff so that they can be more efficient in performing their tasks, and also introduce some IT to these companies, in order to reduce their reliance on manpower. This is our main objective. Are you satisfied with the work done so far? Partly. The CPTTM cannot do everything, but we try our best. We cannot say we have achieved our goal, because the work is never completed. We have to work year after year to solve this problem. Still, SMEs here face a lot of problems. Taking into account issues such as the lack of human resources and rent increases, how exactly is the CPTTM helping them? We are supposed to focus our

efforts on the entertainment, tourism and leisure sectors, so our courses target these areas. For example, we have apparel technology, hairdressing, makeup and window-dressing courses. We have a lot of ISO courses to help them improve their management skills, as well as English, Mandarin, Portuguese, French, German, Korean and Japanese language courses, and IT courses. But are there tangible results showing the CPTTM’s progress? We don’t have any statistics about this, but we can see that sometimes we have very good results. For example, we introduced some IT to a coffee shop, and by introducing this kind of technology it solved a lot of problems, and the owner was very satisfied. Today that shop has no need for a bigger labour quota from the Human Resources Office, because the system helped improve its operations. We also have web design courses and a lot of young people are after this course, which provides tools for web design and management. After the training course some of our students set up small or medium enterprises.

We are watching the development of society, particularly economic growth. If there are new things, we will try to introduce them – new techniques to match the development of society. For example, we are thinking of introducing the cosplay 3D image program. We have apparel technology, makeup, so we can do this. Maybe after attending this course, they can have their own shop. The CPTTM proposes to retrain part of Macau’s labour force, but some voices continue to complain about the quality of local labour. Is something missing? Our training courses are not equivalent to a university degree, as we focus on vocational training. Most of our training courses are for offices -- white-collar staff, not basic workers. Training can increase their working ability. If their working ability increases, then one person can take care of two people’s jobs in future. If we also introduce technology, maybe one can do three people’s work. We are not talking about quantity, but quality. We can increase the quality of our workers to solve part of the problem.

August 19, 2013 April 19, 2013

Macau

But the complaints are also about the quality. Is the CPTTM being successful in training the labour force? We increase the quality of their work. Of course, we have had some success, otherwise the government would not support our operations. But I cannot judge the degree of our success. For years you were the head of the Labour Affairs Bureau, which dealt with the human resources issue. You were transferred to the CPTTM last year. Do you see it as a demotion? As I am a civil servant, the government can assign me to any position, and I must accept it. Actually, I am very happy here, performing this task with my colleagues. The CPTTM focuses mainly on creative occupations. Do you feel there are creative minds in Macau? Yes, I think so, particularly among young people. Our students joined in the WorldSkills Competition and, particularly in the creativity part, they had very good results. But how is the CPTTM helping them turn their creativity into a business resource? Is it through such competitions? Yes, through our local competitions we can send them to join international events, like the WorldSkills Competition. For the apparel technology section, for instance, this year we got fifth position. Also, we had a lot of achievements in past years in web design. A lot of young people in Macau can do a lot of things, but they need us to give them a chance. Through our centre we can help them reach their dream. Should there be a bigger, overall collaborative strategy, involving the CPTTM, but also schools and universities, to make such creativity blossom? I can only speak of our method. I cannot say what schools and universities should do. Government support is most important. For instance, they needed to go to the United States to participate in the WorldSkills Competition, and the government paid the transport costs. Is it a question of money or strategy? Both. Macau is a small city, but we have a lot of young people and we can have a lot of good results around the world in competitions.

In the latest WorldSkills Competition, we joined in 10 skills competitions and we got seven medals, so the number in proportion to Macau’s population is very high. Yet Macau is taking a very long time to nurture creative industries. Why is that? It should be something done step by step. If, in one year, we have a local who becomes a famous designer, it could go faster, but if everything goes normally, we need to do it step by step.

Our training courses are not equivalent to a university degree, as we focus on vocational training

Fashion design is one of the main areas the CPTTM focuses on, yet we are still a long way from having a fashion business in Macau. Considering it is the only body doing anything on this regard, should the CPTTM restructure its course? Our course follows international standards. Every two years we have competitions, and I don’t think our standards are too low. But I’m concerned about marketing. Our fashion designers can do the design very well, but they need to hone their marketing techniques more. So we also have the marketing course for them. Is it just a question of marketing? What is lacking here that prevents Macau from developing a fashion industry? Paris, London, Tokyo also worked hard for many years to build their reputations. We need to build up our reputation in the fashion world, and we need to work on it for several years. What we need is time.

If we have the time, what is needed for the city to develop this industry? Can the design be made here and then factories in the mainland be relied on for production? Would there be enough production? We have a few local factories. Paris, London and Tokyo also don’t have many garment factories. All the garment factories are in China or in Southeast Asia. They are not related. Still, we have some garment factories in Macau and these can do things very well.

Along with your vocational course in fashion design, would it be necessary to have an institution of higher education teaching it? We think so. Maybe in the future we can cooperate with some universities. Some of the universities outside Macau welcome our graduate students to go there and take fashion courses. Some of our secondary students also go to Taiwan to study fashion design and get a degree there.

August 19, 2013 April 19, 2013

Macau Sands China bad debt provision up 33 pct Bad debt provision rose 33 percent year-on-year at Sands China Ltd in the first half of 2013 says the firm’s results for the six months to June 30. “Provision for doubtful accounts” increased to just under US$31.95 million (255.18 million patacas), from nearly US$24.02 million in the same period a year earlier. Such entries on a casino operator’s accounts usually refer to aged debts owed by gamblers. It is however merely an estimate of accounts that may not be paid, can also be a function of growing betting volume, and does not necessarily reflect the eventual outcome of collection.

English Premier League on TV as govt promised But Macau Cable TV warns it is not sure the move is legal Stephanie Lai

sw.lai@macaubusinessdaily.com

ost of Macau’s households were able to receive freeof-charge a selection of season-opening football matches from the English Premier League on Saturday night. Macau Cable TV Co Ltd accepted the government’s orders to relay to public antenna firms the channels TDM Sports and TDM HD, both produced by the public broadcaster TDM. They carry the EPL games. But, in a press statement issued on Saturday afternoon, Macau Cable TV admitted it is not entirely sure of the legality of the action. “We only received an assurance from the Bureau of Telecommunications Regulation at 10pm on Friday saying they had already cleared the copyright issues for us to do the relaying work,” Macau Cable TV chief commercial officer John Chiang Kwong Io told Business Daily. “We agreed to do it as the government has requested so,” Mr Chiang added. “And, as we have said in the press statement, we will not bear any liabilities if anything wrong happens.” The regulator’s director Lawrence Tou Veng Keong told media two weeks ago that due to copyright issues, TDM HD and TDM Sports would be “temporarily unavailable” for households served

by the public antennas. The issues were “too complicated” to be resolved in the short term, he added. The potential football blackout was originally a sub-plot to a bigger story. That was a deal signed two weeks ago between Macau Cable TV and 14 public antenna companies

that prevented a total television blackout for about 70 percent of the households. The deal became necessary after the Court of Second Instance in June gave the government 90 days to stop the antenna companies from illegally relaying cable television transmissions. But the soccer sub-plot became almost as important in the

New English Premier League matches were back on air on Saturday

Catholic church eyes Cheoc Van monastery Application still waiting on environmental assessment Stephanie Lai

sw.lai@macaubusinessdaily.com

he Catholic Church will not have to pay any land premium for its project to build a Trappist monastery at Estrada de Cheoc Van, in Coloane. The Macau diocese requested the direct land grant in April 2009, said Jaime Carion, director of Land, Public Works and Transport Bureau, during a public hearing on Friday. As the applicant is a Macau-based

religious entity, the land grant is exempted from open bidding and premium payment. And that will not change even with the new land law, which will become effective on March 1 next year, Mr Carion noted. “We need not worry and say this project has to get its land grant approved before the revised land law comes into force,” he told media.

There is still no date for when the land grant might be approved, the official said on the sidelines of the hearing. The new land law maintains the open tender and premium payment exemptions for religious or charitable institutions, as long as they do not change the land use or transfer it to another party. “Or else the government will

news. Two weekends ago Mr Chiang was heckled at a public debate on the cable versus antenna row.

Sudden change Due to “contract restrictions”, Mr Chiang told us he could not reveal how much Macau Cable has paid for the cable broadcast rights for the English Premier League football matches since 2001. Hong Kong’s Cable TV spent about HK$1.8 billion (US$232 million) in 2009 to buy the rights to broadcast the matches in the region over the course of three seasons. The Macau government is going to pay Macau Cable TV Co about 12 million patacas to cover the extra costs of relaying some of its channels to the public antennas. “It is inevitable that we will be having [further] costs by complying with this government request,” said Mr Chiang, referring to the football matches. He declined to estimate the added costs incurred. Macau Cable TV operations director Ricky Tam Mong Peng said two weeks ago the amount his company would receive for relaying programming to the antenna firms “is much smaller than our actual costs”. “Despite our losses, now we see the government is determined to obey the court order and create a healthier environment for the TV market,” said Mr Chiang. “We just comply with the government’s request the best we can,” he added. “The cost for broadcasting the matches has rapidly surged in the past nine years, as you can see from the intense competition between Hong Kong’s NOW TV and Cable TV,” said Mr Chiang. Mr Tam added yesterday that the company was still assessing the additional costs of relaying TDM HD and TDM Sports.

take back the granted plot,” Mr Carion pledged. The new land law requires that all direct land grants be announced in the form of a public notice before getting approved by the chief executive. The monastery project is planned for an area of 10,943 square metres located at the intersection of Estrada de Cheoc Van and Rua de António Francisco. The monastery complex, with a construction area of just 3,413 square metres, will be combined with an existing retreat house and holiday camp, the diocese’s request reveals. The monastery project is still waiting for the opinion from the Environmental Protection Bureau, Mr Carion mentioned. The project will “avoid big digging works” on the hill, the bureau director said, quoting the project’s engineering company PAL AsiaConsult Ltd.

August 19, 2013 April 19, 2013

Greater China

Shanghai trading error hits world’s worst equities Two-minute buying spree dampens confidence in China stock market

he biggest swing in China’s benchmark equity index since 2009 threatens to further erode confidence in the nation’s stock market after it lost more money for investors than any in the world during the past four years. China’s shares were roiled Friday by a trading error at Everbright Securities Co that spurred a 53 percent surge in volumes and a swing of more than 6 percent in the Shanghai Composite Index. The gauge jumped from a loss of as much as 1 percent to a gain of 5.6 percent in two minutes during the morning session, then ended the day with a 0.6 percent drop. Erroneous buy orders from Everbright’s proprietary trading group sparked the early rally, the securities regulator said. The Chinese stock index has tumbled 40 percent from its August 2009 high, erasing about US$644 billion in market value, as the world’s second-largest economy slowed and investors emptied more than 2 million equity trading accounts. “The timing was not good for trading errors in China,” Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said.

Erroneous buy orders from Everbright trading group sparked the early rally

“There are already a lot of skeptics out there and an event like that can erode some people’s confidence.”

‘Going nuts’ About 15.3 billion shares of Shanghai Composite companies

changed hands Friday, versus the 30-day average of 10 billion, data compiled by Bloomberg show. Sixteen of the measure’s 20 biggest companies by weighting rose by the 10 percent daily limit during the morning session. “I thought the market was going

nuts and someone was coming to manipulate the market,” said Yao Lina, a 33-year-old accountant working for a food company in Shanghai. “I have no confidence in the market because there are lots of speculators playing in it.” Everbright Securities, the nation’s ninth-largest brokerage by assets, disclosed its trading error in a statement filed to the Shanghai exchange. “The timing is bad” for big market swings given low levels of investor confidence, said Ronald Wan, a committee member at the Hong Kong Securities & Investment Institute. Friday’s surge in stocks was caused by “sizable” buy orders from Everbright’s proprietary accounts, the China Securities Regulatory Commission said in a statement. The Shanghai Stock Exchange said operation of its trading system was normal and trades will be settled as usual, according to a statement on its official microblog. “I haven’t seen things like this for ages,” Chen Shide, a Guangzhoubased money manager at GF Fund Management Co, said by phone. “The market sentiment will continue to remain weak.” Bloomberg News

HK raises growth outlook on Q2 spurt City’s economy expands by 3.3 pct, buoyed by consumer spending

ong Kong’s economy expanded more than estimated in the second quarter on consumer spending and investment, prompting the government to raise its forecast for the full-year expansion. Gross domestic product rose 0.8 percent in the April-June period from the previous three months after a 0.2 percent gain in the first quarter, the government said Friday. The median estimate in a Bloomberg News survey of 10 economists was for a 0.5 percent increase. The government said that growth this year would be between 2.5 percent and 3.5 percent, after in May estimating a gain of between 1.5 percent and 3.5 percent. “The risk is still pretty much the external environment and that includes the Chinese economy, because Hong Kong depends on them in terms of exports of goods and services,” Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong, said before the release. “Hong Kong will do better

because we’re looking for a continued recovery in the U.S. economy and the bottoming out in the Chinese economy.” The economy expanded 3.3 percent from a year earlier in the second quarter, the government said, from a revised 2.9 percent pace in the first three months. Household spending rose 4.2 percent from a year earlier, while investment rebounded, partly because of infrastructure projects, the government said. Merchandise exports were “lacklustre,” while the property market “cooled off” after measures to curb demand. Consumer spending will remain vibrant during the rest of the year, partly driven by the increasing number of mainland visitors, said Xie Guoliang, head of economic research division with the Bank of China in Hong Kong. Home prices have more than doubled since the start of 2009 because of near-record low mortgage rates and an influx of Chinese buyers. Bloomberg News/Xinhua

Hong Kong’s domestic demand expected to remain vibrant this year

10 10

August 19, 2013 April 19, 2013

Greater China Beijing probing IBM, Oracle, EMC China’s Ministry of Public Security is preparing to investigate IBM Corp, Oracle Corp and EMC Corp over security issues, the official Shanghai Securities News said on Friday. The report follows revelations by former US spy agency contractor Edward Snowden of widespread surveillance by the National Security Agency. Documents leaked by Mr Snowden revealed that the agency has had access to vast amounts of Internet data from companies. “Many of our core information technology systems are basically dominated by foreign hardware and software firms, but the Prism scandal implies security problems,” the newspaper quoted an anonymous source as saying.

Home prices in Shanghai have increased 14 percent from a year earlier

Hutchison gets ParknShop bids Hutchison Whampoa Ltd has received at least seven offers for its supermarkets business, ParknShop, people familiar with the matter told Reuters on Friday. Hutchison set an asking price of between US$3-4 billion for the business, which also has stores in Macau, after a review last month. The offers came from Australia’s Woolworths Ltd, Japan’s Aeon Co, China Resources Enterprises Ltd (CRE), private equity firm KKR & Co and TPG Capital along with a partner, the people added. Mr Li plans to use the sale proceeds to expand Hutchison’s health and beauty retail operations, sources added.

L’Oreal to buy Magic Holdings L’Oreal SA, the world’s largest cosmetics maker, agreed to buy China’s Magic Holdings International Ltd for HK$6.54 billion (US$843 million) to expand in a market with strong sales growth. L’Oreal will pay HK$6.30 a share in cash for Magic, the companies said, 25 percent more than the last traded price. Magic surged as much as 21 percent in Hong Kong trading Friday, the biggest gain since its listing in September 2010. Magic is the top-selling facial mask brand in China, where beauty and personal-care product sales will expand 8 percent this year, according to Euromonitor estimates.

Home prices rise as big cities heat up Signs of govt tolerance of a stronger property market: analysts

hina’s new home prices rose in almost all cities in July, led by gains in the biggest metropolitan centres, amid expectations that the government will not further tighten property market restrictions. Prices climbed in 69 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said in a statement yesterday, matching the data in June and May. Guangzhou posted the biggest gain, rising 17 percent from a year earlier. Prices in Beijing and Shanghai increased 14 percent each. All three cities had their biggest gains since the government changed its methodology for the data in January 2011. “It’s unlikely that the government will release a new round of property curbs, even if home prices continued to rise rapidly,” said Jack Gong, a Hong Kong-based property analyst at Orient Finance Holdings (HK) Ltd. The government may release a “long-term mechanism” for stable and healthy development in about

three months, state-owned news agency Xinhua reported last week, citing Zhu Zhongyi, the deputy head of the China Real Estate Industry Association. China in March stepped up a three-year campaign to cool home prices, with only the capital city of Beijing issuing the toughest measures among 35 provincial cities.

Easing curbs Existing home prices rose 15 percent in Beijing last month from a year earlier and increased 11 percent in Shanghai and Guangzhou each, according to the data. Private data also showed rising housing values. Home prices jumped 7.9 percent from a year earlier last month, according to SouFun Holdings Ltd, the nation’s biggest real estate website owner. The value of home sales fell 17 percent in July from June, the statistics bureau reported earlier this month. Some smaller cities have already

begun easing some of the policies designed to restrain price gains. Yancheng, in Jiangsu province, suspended limits on housing prices as the supply of homes increased, the official People’s Daily newspaper reported on July 23. Wenzhou, the only city with a decline among the 70 cities the government tracked, saw new home prices fall 2.4 percent last month from a year earlier, according to the data. “A nationwide easing is also unlikely to happen soon, because price pressures in major cities are still quite big,” said Liu Yuan, a Shanghai-based researcher at Centaline Property Agency Ltd, China’s biggest real-estate brokerage. Home prices will stabilise in the second half of the year as the government focuses on the longterm development of the market rather than cracking down on it, Yu Liang, president of China Vanke Co., the country’s biggest developer on the mainland exchanges, said earlier this month. Bloomberg News/Reuters

Easier foreign investment for free trade zones Nansha could be able to offer incentives, benefit from less red-tape Cathay Pacific names new CEO Cathay Pacific Airways Ltd named Ivan Chu as chief executive, two days after Asia’s biggest international carrier reported its smallest profit in at least 15 years. Mr Chu, 51, will take over in March 2014, and incumbent John Slosar will become chairman, the Hong Kong-based airline said. Cathay last week reported first-half profit that missed analyst estimates as cargo revenue dropped and declining yields in North Asia offset gains from carrying more passengers. Mr Slosar, who took over in March 2011, cut capacity and phased out planes to revive earnings as competition increased.

hina plans to suspend some laws on foreign investment in proposed new free trade zones including Shanghai as part of Premier Li Keqiang’s drive to open up the economy to sustain growth. The changes will provide “innovative” ways of opening up the economy, remove unnecessary administration and help transform the state’s role in the economy, according to a State Council statement after a Friday meeting. China is boosting efforts to attract foreign companies after investment from abroad fell last year for the first

time since the global financial crisis. Free trade zones that will be allowed to cut bureaucracy and test financial liberalisation may offer incentives that help the government maintain economic growth of at least 7 percent a year as the export- and investment-led model of expansion runs out of steam. “Many foreign investors are concerned about the bureaucracy and lack of clarity around regulations, that’s probably the biggest concern when they come in” to China, Kent Kedl, managing director for Greater China and North Asia for risk consulting firm Control Risks, said.

While the State Council and Chinese media use the term “freetrade zone,” the meaning is more akin to a free-market zone subject to less regulation and interference rather than an area of duty-free trade. The State Council said July 3 it approved a pilot program to set up the country’s first free-trade zone in Shanghai. Guangdong is also looking at setting up a free-trade zone in its Nansha new area, the Shanghai Securities News reported July 25, citing a statement from the Guangdong government. Bloomberg News

11 11

August 19, 2013 April 19, 2013

Asia

No repeat of 1991 crisis, Indian premier says Manmohan Singh blames country’s account deficit on insatiable gold demand

Samsung to introduce watch-like phone

ndia will not repeat the economic crisis experienced in 1991, as its rupee currency is now linked to the market and foreign exchange reserves are adequate, Prime Minister Manmohan Singh said on Saturday. Asia’s third largest economy is growing at its slowest pace in a decade, while the rupee, the region’s worst performer this year, is at an all-time low, and the central bank has enough cash to pay for seven months of imports. “There is no question of going back to 1991,” Mr Singh said in a Press Trust of India report published by the Economic Times newspaper on its website, making reference to a balance of payments crisis the country suffered that year. “At that time foreign exchange in India was a fixed rate. Now it is linked to market. We only correct the volatility of the rupee.” In 1991, with just enough reserves to cover three weeks of imports, India was forced to pledge its gold in order to pay its bills and had to push through reforms to start opening up the economy. Mr Singh was finance minister at the time and is widely regarded as the man who saved the economy. The news agency report said

hiking import duties to 8 percent, banning the import of coins and medallions and making domestic buyers pay cash. India’s current account deficit stands at a record high of 4.8 percent of gross domestic product, while economic growth has slowed to 5 percent.

amsung Electronics Co will introduce the Galaxy Gear, a wristwatch-like device next month that can make phone calls, surf the Web and handle e-mails, according to people familiar with the matter. The Galaxy Gear will be powered by Google Inc’s Android operating system and go on sale this year to beat a potentially competing product from Apple Inc, the people said. The device will be unveiled September 4, two days before the IFA consumer electronics show begins in Berlin, one of the people said. It will be unveiled the same day as Japanese rival Sony Corp’s flagship Xperia smartphone, featuring imaging technology developed for its cameras and ultra-high definition TVs, according to two people familiar with the matter. Apple had a team of about 100 designers working on introducing a watch-like device this year, two people familiar with the matter said in February.

Reuters

Bloomberg News

“We seem to be investing a lot in unproductive assets,” Mr Singh said

Mr Singh acknowledged India’s ballooning current account deficit, which he blamed on large imports of gold as a contributing factor. “We seem to be investing a lot in unproductive assets,” Mr Singh said. India is trying to curb its citizens’ apparently insatiable demand for gold, through measures such as

12 12

August 19, 2013 April 19, 2013

Asia

World’s biggest jobs growth nears end in Singapore Shortage set to worsen as government aims to reduce reliance on foreign workers Sharon Chen

Choking the supply of all these low-wage foreign workers is creating difficulties for many companies, corporates and also, it is inflationary Irvin Seah, economist at DBS Group

ony Cousens spent more than S$100,000 (US$79,000) to find waiters and housekeepers for the Ramada and Days Hotels in Singapore. Months after the two establishments opened, he is still about 100 people short. Mr Cousens’s plight underscores the new reality for an economy that probably delivered the biggest employment surge among 33 advanced economies in the decade to 2014, according to data compiled by Bloomberg. Singapore’s annual jobs growth may halve in the coming years from a 2007 peak as the island widens a clampdown on foreign workers, Bank of America Corp estimates. “This tightening of the foreignlabour market won’t go away,” said Mr Cousens, general manager of the two hotels in the city that charge as much as S$320 a night. Jobs take longer to fill, “especially if you’re very demanding on the culture and the behaviour of the individuals and specifying Singaporeans,” he said. The shortage is set to worsen as Prime Minister Lee Hsien Loong pursues a four-year campaign to reduce the reliance on foreign workers, whose growing presence pushed up home prices and spurred a voter backlash. The government may tighten rules on hiring nonSingaporean medium-skilled workers after previous measures restricted cheap overseas labour, according to DBS Group Holdings Ltd, Mizuho Bank Ltd and Bank of America. An estimated 58.4 percent of Singapore’s population will be employed in 2014 compared with 49.5 percent in 2004, the largest increase among the 33 markets, according to an analysis by Bloomberg Rankings. The study divided the number of working people in each country by its population, based on data from the International Monetary Fund.

Foreigner influx “The jump in employment stems from the fact that the government essentially opened the floodgates

and welcomed foreign talent with open arms,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “I expect employment to start to slow over the next few years” as the most onerous tightening measures take effect in 2014 and 2015, he said. Singapore will probably add about 100,000 jobs annually in the coming years, down from a record 234,900 in 2007, said Chua Hak Bin, a Singapore-based economist at Bank of America. Government statistics show a 10.1 percentagepoint increase in the employment ratio for its total population from 2004 to 2012, compared with a 8.98 percentage-point gain from 2004 to 2014, based on IMF projections.

KEY POINTS Singapore curbs hiring of foreign workers Govt aims to develop local talent pipeline Annual jobs growth may halve in coming years Businesses feel pinch of labour restrictions

The Manpower Ministry said employment climbed in the past decade because of the city’s efforts to build a conducive environment for both global and local companies, which created job opportunities. “We recognise that our employment rates will not increase indefinitely,” the ministry said in an

e-mailed response to queries. “Like many developed economies, our population is ageing, which means that our local workforce will grow more slowly.” The ministry said it will upgrade workers and keep unemployment low. Malta was ranked No. 2 with an estimated 5.58 percentage-point increase in the employment ratio in the 10 years to 2014, followed by Taiwan’s 5.24 percentagepoint gain, the data compiled by Bloomberg showed. The growth in Singapore’s workforce will slow to 1 percent to 2 percent a year through 2020, from an average 3.3 percent in the past three decades, the government said in January. The prime minister is trying to steer the economy through an ageing population and the declining foreignlabour supply by prodding companies to produce more with less manpower and hire older Singaporeans, as well as increasing the birth rate. The need to address those challenges while balancing demands for affordable housing, better public transportation and assistance with living costs have often featured in his speeches.

Falling unemployment Singapore’s exports fell the least in six months in July, declining 0.7 percent from a year earlier, a report showed last week. Under the latest labour-market tightening measures announced in February, companies must pay higher levies for lower-skilled foreign employees over the next two years and cut the proportion of overseas workers in some industries. “Choking the supply of all these low-wage foreign workers is creating difficulties for many companies, corporates and also, it is inflationary,” said Irvin Seah, an economist at DBS. “They have already been shifting the focus of the tightening towards the mid-skilled foreign workers,” he said, adding it will remain the direction in coming years.

The city’s unemployment fell to a five-year low in the last quarter of 2012 as companies hired more local workers. Further tightening will lead to an “incremental increase in time to fill mid-level positions, and likely increased pressure on wages,” said Bhavya Sehgal, Asia-Pacific head of research at Frontier Strategy Group. “Many multinationals still import ‘ready-made’ mid-level professional talent rather than investing to close skill gaps in local talent.” Responding to feedback from Singaporeans that some companies are choosing to give jobs to foreigners over locals, Deputy Prime Minister Tharman Shanmugaratnam and Acting Minister of Manpower Tan Chuan-Jin met with senior management in a number of financial institutions to emphasise that they should make a concerted effort to develop a local talent pipeline, Mr Tan said in Parliament in March.

Productivity drive “In terms of addressing some of the frustrations and fears, I think it’s really the mid- and upper-mid” skilled jobs the government will target with restrictions, said Vishnu Varathan, an economist at Mizuho in Singapore. “The tightening in the low-wage and lower-skilled sector, part of it stems from their productivity drive rather than the fact that Singaporeans are hankering for such jobs.” That shift may be an obstacle for David Soon, head of a Taipei-based industrial computer manufacturer’s Singapore office, who hired foreigners this month for two sales positions he advertised in May, offering a monthly pay of S$2,600 to S$2,800. “For every one local application, we have 50-plus foreigners that are applying,” Mr Soon said. “The local graduates really feel that if they have a choice they would work for big multinational companies like Hewlett-Packard, IBM – as for the rest, they probably would not even want to bother.”

13 13

August 19, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 44.2

69.00

22.90

43.9

68.85

22.76

43.6

68.70

43.3

68.55

22.62 22.48

Max 44.05

average 43.65

Max 44.7

Min 43

average 44.347

43.0

Last 43.9

Min 44.05

Last 44.55

Max 69

average 68.714

68.40

Max 22.85

average 22.627

Min 22.25

Last 22.6

20.1

22.0

44.6

20.0

21.9

44.4

19.9

44.2

19.8

44.0

21.8 21.7

Max 20.05

average 19.947

PRICE

DAY %

YTD %

(H) 52W

Min 19.76

Last 19.98

(L) 52W

WTI CRUDE FUTURE Sep13

107.32

-0.00931706

14.51131029

108.9300003

86.23999786

BRENT CRUDE FUTR Oct13

109.68

0.072992701

3.735931145

113.6100006

96.37999725

GASOLINE RBOB FUT Sep13

298.5

0.016753225

9.025165273

309.1700077

260.2499962

938.25

-0.026638253

3.531034483

975.75

835.5

3.415

-0.116993273

-5.086158977

4.517000198

3.128999949

307.73

0.146446238

2.799398697

319.1699982

275.5500078

Gold Spot $/Oz

1360.94

1.8119

-18.2353

1796.08

1180.57

Silver Spot $/Oz

22.8255

3.7711

-24.193

35.365

18.2208

GAS OIL FUT (ICE) Oct13 NATURAL GAS FUTR Sep13 NY Harb ULSD Fut Sep13

Platinum Spot $/Oz Palladium Spot $/Oz LME ALUMINUM 3MO ($) LME COPPER 3MO ($)

19.7

21.6 Max 21.95

average 21.772

Min 21.55

1515

0.0991

-0.1812

1742.8

1294.18

755.35

1.172

7.9596

786.5

576.51

1908

0.819022457

-7.959479016

2200.199951

1758 6602

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

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9162 1.5637 0.9273 1.3335 97.48 7.9868 7.7541 6.1143 61.795 31.28 1.2703 29.921 43.63 10430 89.307 1.23657 0.85278 8.1556 10.6503 129.99 1.03

0.0437 0.3723 0.8735 0.3764 0.6873 0.0038 0.0026 -0.0213 -0.5685 0 0.0708 0.137 0.3851 -0.2013 0.6461 0.4909 -0.0047 -0.3678 -0.3728 0.3077 0

-11.7171 -3.3321 -1.2833 1.0993 -11.6742 -0.0451 -0.0451 1.9021 -11.0041 -2.2379 -3.8495 -2.9678 -6.0165 -6.1074 0.0224 -2.3525 -4.381 0.759 -1.1258 -12.6317 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3646 62.005 31.62 1.286 30.228 44.181 10453 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8848 1.4814 0.9022 1.2276 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20066 0.78191 7.8281 9.8085 97.27 1.0289

7309

-0.122984422

-7.842642794

8422

0.230179028

-5.793269231

2230

1779

14725

-1.141322591

-13.6869871

18920

13205

15.475

0.487012987

0.454397923

16.47500038

14.60000038

469.25

-0.63525675

-21.75906628

665

445.75

WHEAT FUTURE(CBT) Dec13

649.25

-0.038491147

-20.89552239

913

635.5

SOYBEAN FUTURE Nov13

1260.5

-0.395100751

-3.243139513

1409.75

1162.5

COFFEE 'C' FUTURE Dec13

125.05

0.280673617

-20.07031

200

118.1499939

NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

15.92999935

ARISTOCRAT LEISU

4.31

0.4662005

36.82539

4.63

2.49

1037261

74.34999847

CROWN LTD

13.6

27.46017

14.03

8.62

774958

3MO ($)

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

Dec13

SUGAR #11 (WORLD) Oct13

17.23

COTTON NO.2 FUTR Dec13

92.3

0.232693426 0.55561608

-14.10767697

21.82999992

17.22123444

92.54000092

World Stock Markets - Indices NAME

21.5

Last 21.8

1959.5

LME ZINC

22.20

Currency Exchange Rates

NAME

METALS

Last 68.5

44.8

Commodities ENERGY

Min 68.45

22.34

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

15112.19

-1.470042

15.32379

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3606.117

-1.721213

19.42708

3694.188

2810.8

FTSE 100 INDEX

6483.72

0.005861176

9.934368

6875.62

5605.589844

DAX INDEX

8355.55

-0.2476037

9.762501

8557.86

6871

NIKKEI 225

13650.11

-0.7476947

31.31192

15942.6

8488.14

HANG SENG INDEX

22517.81

-0.09512295

-0.6139818

23944.74

19076.78906

CSI 300 INDEX

2304.144

-0.7508692

-8.672692

2791.303

2023.171

TAIWAN TAIEX INDEX

7925

0.4784932

2.928761

8439.15

7050.05

KOSPI INDEX

1920.11

-0.1975144

-3.852686

2042.48

S&P/ASX 200 INDEX

5113.86

-0.7473652

10.00032

4568.654

-2.486057

FTSE Bursa Malaysia KLCI

1788.24

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

VOLUME CRNCY

AMAX HOLDINGS LT

1.16

-0.8547009

-17.14286

1.72

0.75

882150

BOC HONG KONG HO

24.95

-0.2

3.526969

22.85

10629208

CENTURY LEGEND

0.355

1.428571

33.96227

0.42

0.22

61000

6.4

6.844745

6.74

3.08

14000

CHINA OVERSEAS

24.7

-0.6036217

6.926405

25.6

17.28

27064098

CHINESE ESTATES

16.34

-2.038369

45.30194

16.98

7.987

38000

CHOW TAI FOOK JE

10.18

-0.9727626

-18.1672

13.4

7.44

5156800

EMPEROR ENTERTAI

2.73

0.3676471

44.44445

3.07

1.35

390411

FUTURE BRIGHT

2.23

83.98943

2.76

1.053

516000

GALAXY ENTERTAIN

43.9

1.268743

44.6458

44.95

20.45

6584060

CHEUK NANG HLDGS

DOW JONES INDUS. AVG

JAKARTA COMPOSITE INDEX

Macau Related Stocks

126.3

0.3974563

6.402699

132.8

109

1181576

HOPEWELL HLDGS

25.4

-23.60902

35.3

23.047

2797830

HSBC HLDGS PLC

HANG SENG BK

86.15

-0.1738123

5.965556

90.7

65.85

11183142

HUTCHISON TELE H

3.61

0.2777778

1.404496

4.66

2.98

3996066

LUK FOOK HLDGS I

24.3

0.621118

-0.4098345

30.05

16.88

2323437

MELCO INTL DEVEL

0.7109005

88.67924

18.18

5.77

2833000

MGM CHINA HOLDIN

22.6

-0.2207506

70.20278

23.65

11.346

3044014

1770.53

MIDLAND HOLDINGS

3.29

0.9202454

-11.08108

2.68

996888

5249.6

4261.2

NEPTUNE GROUP

0.175

15.13158

0.23

0.131

2520000

5.837041

5251.296

3978.078

NEW WORLD DEV

11.52

-0.3460208

-4.159737

15.12

9.38

8192178

-0.2215142

5.878803

1826.22

1590.67

SANDS CHINA LTD

44.55

-0.1121076

31.22238

45.5

25.1

6909509

SHUN HO RESOURCE

1.48

-2.631579

5.714288

1.67

1.06

66000

961.579

-0.3616322

9.016011

998.487

799.651

SHUN TAK HOLDING

3.83

-0.5194805

-8.591887

4.65

2.72

4410550

3974.93

-0.6036403

7.460164

4571.4

3411.69

SJM HOLDINGS LTD

19.98

0.2006018

12.57824

22.382

15.145

3314380

SMARTONE TELECOM

11.16

-1.413428

-20.73864

17.38

10.92

1618000

WYNN MACAU LTD

21.8

-0.9090909

4.057275

26.5

16.92

1935736

ASIA ENTERTAINME

3.92

-1.507538

39.26968

4.7647

2.4835

131174

-1.916376

63.6994

75.01

43.16

567240 11050

HSBC Dragon 300 Index Singapor

610.35

-1.02

-1.73

STOCK EXCH OF THAI INDEX

1444.6

-0.5829038

3.783949

1649.77

1207.53

HO CHI MINH STOCK INDEX

507.79

-0.08460903

22.73463

533.15

372.39

BALLY TECHNOLOGI

73.19

Laos Composite Index

1367.39

0.5988597

12.56369

1455.82

1003.17

BOC HONG KONG HO

3.21

-2.134146

4.560263

3.6

2.99

GALAXY ENTERTAIN

5.55

-0.3590664

39.79849

5.77

2.735

2000

INTL GAME TECH

18.81

-1.104101

32.74524

20.25

11.51

1931681

JONES LANG LASAL

84.79

-1.70415

1.012625

101.46

70.02

364027

LAS VEGAS SANDS

56.64

-0.07057163

22.70364

60.54

37.0463

3158852

MELCO CROWN-ADR

26.53

-0.9335325

57.54157

26.945

10.82

2621948

MGM CHINA HOLDIN

2.92

66.82937

2.98

1.5327

1000

MGM RESORTS INTE

17.14

-1.267281

47.25085

17.67

9.15

6750872

SHFL ENTERTAINME

22.76

-0.08779631

56.96552

23.08

12.35

736568

SJM HOLDINGS LTD

2.57

-1.153846

12.83728

2.9481

1.9818

2000

139.08

-0.7776272

23.63766

144.99

93.1279

956620

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

DAY %

VOLUME

36.25

0.9749304

11744213

CHINA UNICOM HON

2.7

-0.7352941

20178422

CITIC PACIFIC

BANK OF CHINA-H

3.36

0.5988024

424850478

BANK OF COMMUN-H

5.45

0.9259259

39379217

BANK EAST ASIA

31.9

-1.085271

1702450

BELLE INTERNATIO

11.82

-2.796053

13018051

ESPRIT HLDGS

BOC HONG KONG HO

24.95

-0.2

10629208

HANG LUNG PROPER

CATHAY PAC AIR

14.24

-0.6973501

2846379

HANG SENG BK

CHEUNG KONG

115.2

0.6113537

1833850

HENDERSON LAND D

4.88

-1.014199

70589384

HENGAN INTL

AIA GROUP LTD ALUMINUM CORP-H

CHINA COAL ENE-H CHINA CONST BA-H

PRICE

NAME

PRICE

DAY %

VOLUME

12.1

-1.305057

23002219

POWER ASSETS HOL

9.2

-0.2169197

10761794

SANDS CHINA LTD

CLP HLDGS LTD

64.35

2945054

CNOOC LTD

14.78

0.6811989

86560596

11.3

-0.3527337

3132678

SWIRE PACIFIC-A

13.12

-0.7564297

9571241

25.8

-0.9596929

126.3

0.3974563

48.65

0.6204757

2067327

WHARF HLDG

87.45

-0.4553216

1317637

COSCO PAC LTD

VOLUME

70.9

-0.5610098

2045399

44.55

-0.1121076

6909509

11.16

0.3597122

3348791

104.8

-0.6635071

2500964

-0.2680965

1145593

TENCENT HOLDINGS

366.6

-0.3804348

4873008

5783479

TINGYI HLDG CO

19.62

1.23839

8585196

1181576

WANT WANT CHINA

10.74

1.320755

7298198

69.3

-2.04947

3823006

0.1683502

272698872

1.11336

43149836

-0.2079002

1974870

CHINA MOBILE

83.7

-0.4756243

19593379

HUTCHISON WHAMPO

91.7

5482730

CHINA OVERSEAS

24.7

-0.6036217

27064098

IND & COMM BK-H

5.31

0.3780718

344808246

CHINA PETROLEU-H

5.87

-0.8445946

100621486

11.88

1.020408

65802731

HONG KG CHINA GS

20.15

-0.4938272

5905146

HONG KONG EXCHNG

126.2

-0.2371542

3070279

HSBC HLDGS PLC

86.15

-0.1738123

11183142

LI & FUNG LTD

DAY %

SUN HUNG KAI PRO

5.95

CHINA MERCHANT

PRICE

SINO LAND CO

19.98

CHINA LIFE INS-H

NAME

MOVERS

HIGH

22686.39 22326.16

CHINA RES ENTERP

24.05

-2.631579

6826537

MTR CORP

29.45

0.6837607

2996233

LOW

23.05

-3.354298

10785198

NEW WORLD DEV

11.52

-0.3460208

8192178

52W (H) 23944.74

CHINA RES POWER

18.7

-1.058201

5827787

PETROCHINA CO-H

9.04

-2.586207

203302509

24.85

-0.7984032

20987307

PING AN INSURA-H

54.9

18487909

3 22690

INDEX 22517.81

CHINA RES LAND CHINA SHENHUA-H

(L) 19076.78906

22320

13-August

16-August

14 14

August 19, 2013 April 19, 2013

Classifieds Mountain Villa For Sale in Koh-Samui Price: HK$ 16 million

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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.

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15 15

August 19, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Korea Herald Despite the breakthrough in Kaeseong, the two Koreas face a series of tough talks to sort out differences over the industrial park’s internationalisation. The core of the consultations will be done by a joint committee to run the factory zone based on consensus, which will also discuss compensation for firms and ways to improve passage, communications and customs. By housing foreign companies in Kaeseong, Seoul officials are hoping to reform regulations and safeguard against another suspension of the park.

Taipei Times Taiwan’s central bank is likely to raise interest rates in late December, since the currency may weaken against the U.S. dollar as the economy lags behind its peers, the Australia and New Zealand Banking Group Ltd said. ANZ expects Taiwan’s export-focused economy to grow 2.3 percent this year, weaker than its neighbours, because of soft external demand. The central bank may temporarily keep the benchmark interest rates unchanged, but raise them by 12.5 basis points at the end of the year as the economic recovery strengthens, ANZ said.

Jakarta Post Indonesia’s government is preparing to see a decline in revenue from the mineral sector as the ban on the exports of unprocessed mineral ore is expected to take effect next year, a top official has said. The Energy and Mineral Resources Ministry’s coal and minerals director general, Thamrin Sihite, said the country needs to tame the overexploitation of minerals in a bid to protect its resources. “It is very crucial for us to control the current production to ensure the sector will be sustainable,” he said.

China Daily Japanese exports to China in the first half of this year decreased to the lowest level in four years amid strained ties between them as well as China’s economic slowdown. Despite the depreciation of the yen against the Chinese yuan, Japan’s exports to the Chinese mainland declined 16.7 percent year-on-year to US$61.43 billion in the January-June period. In the same period, the United States replaced the Chinese mainland as Japan’s biggest export market, the first time in five years, with exports valued at US$65.56 billion, according to the Japan External Trade Organisation.

China’s reform anxiety Yao Yang

Professor at the China Centre for Economic Research, is Dean of the National School of Development at Peking University

ince 2010, global financial circles have been obsessing about China’s slowing economy. But, while the country barely met the official target of 7.5 percent annual GDP growth in the second quarter of this year – generating significant anxiety worldwide – China’s government seemingly remains calm, showing no indication that it plans to launch yet another stimulus package. Do China’s leaders really have the situation under control? In fact, the Chinese government’s stance – based on Premier Li Keqiang’s “Likonomics,” which prioritises structural reform over rapid GDP growth – will prove to be in the best interests of China and the rest of the world. China’s structural problems – including restrictions on labour mobility, a rigid and risk-laden financial system, and excessive reliance on government investment – are threatening its stability and economic development. Given that China’s GDP growth rate remains respectable relative to the rest of the world, the need to emphasise structural reform is clear. But, despite well-intentioned statements and narrow gestures, China’s new leadership has yet to establish a concrete, bold reform plan capable of resolving the economy’s deep-rooted problems. For example, last February, the State Council announced plans to reform the hukou (household registration) system, which assigns legal residency according to a person’s place of birth. The system makes relocating

very difficult, as those who do not manage to acquire local residency permits face major hurdles in gaining access to public services when they migrate to other provinces. Indeed, their children are even prohibited from taking college entrance exams. The reform plan was supposed to improve the situation by allowing migrants in towns and small cities to acquire local residency permits more freely, while easing the requirements in medium-sized cities. But efforts to reform the system have been met with strong resistance, especially from local governments and residents, who fear the strain

that unregulated migration to their cities will have on resources, employment, and services. As a result, a genuine hukou reform strategy remains elusive. Similarly, the government has been slow to formulate and implement effective financial-market reforms. Hopes were high early this year, when the State Council announced a strategy aimed at liberalising the capital account, establishing a more flexible exchange-rate policy, and opening the financial sector to domestic private capital. But the government then heeded influential economists’ warnings of the risks of relaxing capital controls too hastily.

Substantial reform

Genuine progress depends on Chinese leaders’ willingness to address the structural flaws that are impeding the financial system’s ability to channel savings to the most promising economic sectors

In fact, the opposite should be happening. Narrow policies like the government’s recent credit tightening will make it difficult to direct financial resources to the real economy – one of the primary objectives of “Likonomics”. Genuine progress depends on Chinese leaders’ willingness to address the structural flaws – namely, the restrictions on domestic private capital – that are impeding the financial system’s ability to channel savings to the most promising economic sectors. Despite several rounds of deregulation, it remains very difficult to establish private banks in China, and rules on non-banking financial institutions are often unclear. As a result, shadow banking, which provides capital at triple the cost implied by the

official base interest rate, is flourishing – and generating significant uncertainty and risk. Although the government recently attempted to attract capital back to the official banking sector by eliminating the lending rate’s lower bound, more substantial reform is needed – and that will likely have to wait until the interest rate on deposits is fully liberalised and the financial sector is open to private banks. In many other areas, too, China’s government either remains indecisive or is offering only rhetoric and small gestures. For example, the devolution of some project-approval powers to local governments will not solve the underlying problem of excessive state intervention in the economy; on the contrary, it may even enhance the state’s role by giving local governments more freedom to carry out investment projects. China’s leaders know what is wrong with the country’s economy. But, as their efforts over the last several months have highlighted, they are uncertain as to how to go about fixing it – a fact that is generating significant anxiety in financial markets and among the general public. As senior Chinese officials gather for their annual summer meeting in Beidaihe, a coastal resort near Beijing, they must recognise the need for a bold plan for genuine structural reform. Otherwise, anxiety will eventually give rise to mistrust, making a comprehensive reform strategy even more difficult to implement. © Project Syndicate

August 19, 2013

Closing Rudd warns opposition risks recession

Crown’s James Packer eyes Japan gaming

Australia’s Labor Prime Minister Kevin Rudd yesterday warned the country faced the risk of a recession if the conservative opposition are elected at next month’s polls. Mr Rudd said opposition leader Tony Abbott, who is the frontrunner to win the September 7 election, would slash Aus$70 billion (US$64 billion) from government spending if elected prime minister. Mr Abbott has denied the figure, describing it as “simply a fantasy”, but has not yet revealed his policy costings. The economy is a key electoral battleground and the opposition has blamed Labor for Australia’s budget deficit blowout.

Australian tycoon James Packer said Friday he wants to expand his resortcasinos into the Japanese market. The mogul, an investor in Macau’s Melco Crown Entertainment Ltd, believes Japan could be “the second-biggest gaming market in the world”. “Japan is looking at the Singapore story,” he added. “With integrated resorts done well, the good outweighs the bad. Singapore is proof of that.” “Japan is two to three years before it all gets serious, which is perfect for us because we will have Macau Studio City open and the Philippines open,” Mr Packer said.

Philippine budget carrier grounded on ‘safety’ issues Zest Air was keen on launching Manila-Macau flights in October

B JPMorgan in US bribery probe over China hiring Bank hit by new controversy over hiring of officials’ children

P Morgan Chase is being investigated by United States authorities over claims the bank hired the children of influential Chinese officials to secure business in the country, the New York Times reported Saturday. The Times reported on its website, citing a confidential United States government document, that a bribery investigation had been opened to study the allegations. The paper cited one case where the bank hired the son of Tang Shuangning, a former Chinese banking regulator who was now chairman of the state-run China Everbright Group financial conglomerate. The paper reported that JPMorgan secured a succession of sought-after deals from China Everbright after hiring the son, Tang Xiaoning. The Times report said the Hong Kong office of JPMorgan had also hired the daughter of a Chinese railway official. The official in question was later arrested in connection with a bribery scandal, according to the document cited by the Times.

It said the daughter’s hiring came as The China Railway Group’s selected JPMorgan to advise it on becoming a public company. China Railway later raised a staggering US$5 billion when it floated in 2007. The civil investigation by the Securities and Exchange Commission’s anti-bribery unit had not previously been disclosed. The Times however said the government document did not show a clear link between JPMorgan’s hiring policy and its ability to secure business.

Close ties The records also did not suggest that the hired employees were unqualified, or that they necessarily helped JPMorgan secure business. The bank has not been accused of any wrongdoing, the paper added. Investment banks have a long history of employing the children of China’s politically connected. While close ties to top government officials is a boon to any banking franchise across the world, it’s

especially beneficial in China, where relationships and personal connections play a critical role in business decisions. “It’s been happening for the past 20 years,” said Ronald Wan, chair professor of Renmin University of China and a former banker. The key to the JPMorgan probe, he said, was whether these hirings had any special bonus attached or any actual corruption that could be traced. “We publicly disclosed this matter in our 10-Q filing last week and are fully co-operating with regulators,” a JPMorgan spokesman was quoted by the Times as saying. The China hiring probe comes while the bank is under intense scrutiny following the US$6 billion trading loss it suffered in the “London whale” derivatives scandal. Federal prosecutors on Wednesday brought criminal charges against two former JPMorgan traders – Javier Martin-Artajo and Julien Grout – accusing the pair of deliberately understating losses on the trades on the bank’s books. AFP/Reuters

udget Philippine carrier Zest Air was banned from flying over safety infractions, effective immediately, the country’s aviation regulator said on Friday. The small airline is suspended over incidents that compromised several flights as well as other violations of air safety rules, Civil Aviation Authority of the Philippines deputy director-general John Andrews said in a letter to operator Zest Airways Inc. The head of Zest Airways, Alfredo Yao, told the Philippine Daily Inquirer it was all a “misunderstanding”. He said he was hopeful the suspension would be raised today after a meeting with the regulator to submit a comprehensive action plan. Five Zest Air domestic flights were grounded between July 22 and August 13 due to problems ranging from hydraulic systems issues, fuel overflow, and a missing fuel coupling cap, Mr Andrews said. A Zest Air plane was also found refuelling on Wednesday while its passengers were on board, he added. Zest Air pilots, meanwhile, were found to have exceeded the flying time limit of 100 hours per month “due to (a) rise in flight operations and flight crew shortage”. Twenty-four of its pilots exceeded the monthly limit last year, Mr Andrews said. Meanwhile, the regulator said Zest Air had failed to appoint an “accountable manager” after the resignation of its previous executive on July 19. Zest Air, which operates out of Manila airport, serves the domestic market but it had also began to look abroad. The airline has applied to fly from Manila to Macau three times a week, starting on October 15, asking to fly in up to 820 people a week. With AFP