Macau Business Daily, August 5, 2013 by Business Daily

MOP 6.00 Vitor Quintã

acau may play a more active role in the development of neighbouring Hengqin Island after local political heavyweights were named for the special economic zone’s advisory body, a political observer believes. The list of advisors includes former chief executive Edmund Ho Hau Wah, Macau Chamber of Commerce president Ma Iao Lai and University of Macau rector Zhao Wei. Liu Bolong, a political scientist at the University of Macau says the appointment of high profile local voices to one of Hengqin’s three guiding committees will be “beneficial” to Macau, giving it “a more active role and bargaining power over Hengqin policies”. More on page 3

1 BNU bright banking spot in CGD’s dull results Page 2

Slowest airport traffic growth in six months Page 4

Estate agent law boosts July property gloom Page 8

www.macaubusinessdaily.com

Year II

Number 341

Monday August 5, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Macau may get bigger say over Hengqin April 19, 2013

No demand for more Taiwan flights: airline

I SSN 2226-8294

Hang Seng Index 22270

There is no demand for more flights between Macau and Taiwan despite a call from the Taichung city mayor, says an executive of an airline running operations to the island. “…I see no particular commercial need to increase the [MacauTaiwan] flights,” said an executive from a Taiwan-based airline, who asked to not be identified due to company policy. Page 2

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Fiscal reserve takes risks – and losses

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The fiscal reserve’s riskier investment strategy could mean more short-term losses like the one registered in June, the Monetary Authority of Macau warned. The government’s reserve lost 246.4 million patacas (US$30.8 million) that month, according to an update on the fund’s performance published by the regulator last week. It was the first monthly drop since the reserve was created in February last year. Page 5

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Architect calls for public master plan Macau is in urgent need of an urban master plan – made available to the public – that determines what can be built and where, says the vice-president of the Architects Association of Macao, Jonathan Wong. In an interview with Business Daily, Mr Wong said the government had so far only published disjointed urban plans for specific areas. The government intends to have a fourth link built between the peninsula and Taipa, but the architect says a fifth is needed. Pages 6 & 7

August 2

HSI - Movers %Day

HUTCHISON WHAMPO

4.50

CHINA OVERSEAS

4.23

CHINA RES LAND

3.71

BELLE INTERNATIO

1.94

BANK EAST ASIA

1.87

CHINA LIFE INS-H

-0.85

COSCO PAC LTD

-0.90

GALAXY ENTERTAIN

-1.09

CATHAY PAC AIR

-1.52

CHINA RES POWER

-1.78

Source: Bloomberg

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August 5, 2013

Macau not have begun serving this route for commercial purposes,” he said. The executive said air services between Macau and Taichung had begun in April last year for “political reasons”. Mr Hu said better promotion could fill empty seats. The airline executive retorted that the airlines “have already done loads of work” on promotion.

Scheduled charters

Direct flights to Taichung began in April last year

Little demand detected for more Taiwan flights An airline executive says the market is not governed by commercial considerations alone Tony Lai

tony.lai@macaubusinessdaily.com

Taiwan airline executive sees insufficient demand for more flights between the island and Macau, despite what the mayor of the Taiwan city of Taichung says. The mayor of Taichung, Jason Hu Chih-Chiang, said last week that more flights between Taiwan and Macau were needed to increase trade and other exchanges. The Taiwan airline executive said: “Since the beginning of direct flights between the mainland and Taiwan in 2008, I’ve seen no particular commercial need to increase flights.” The airline executive asked to not be identified, owing to his employer’s company policy. “Passengers are now fewer in number than before” the executive

told Business Daily. Official data show over 210,500 visitors from Taiwan arrived at Macau airport in the first half of this year, 9.2 percent fewer than a year earlier and one-third fewer than in the first half of 2007, when Macau still served as a staging post between Taiwan and the mainland. Mr Hu said in particular that two or three more daily flights between Macau and Taichung were needed. At present, Eva Air, TransAsia Airways and Mandarin Airlines together have 16 flights a week between the two cities. The airline executive rejected the mayor’s suggestion, saying “only around 50 percent” of the seats on flights between Macau

210,500

Visitors from Taiwan in 2013H1 and Taichung were used. He said most passengers on the route were tourists, unlike passengers on the routes between Macau and Taipei and between Macau and Kaohsiung, a larger proportion of whom were business travellers. “So the ticket price for the Macau-Taichung route is cheaper and, honestly, the airlines would

BNU bright banking spot in CGD’s dull results T

BNU – profits close to 200 mln patacas in first half

he expansion of Banco Nacional Ultramarino SA’s (BNU) business here has been rewarding for parent Caixa Geral de Depósitos SA (CGD), one of Portugal’s biggest financial services conglomerates. BNU was the best international contributor for the state-owned bank’s results in the first half, according to a report released on Friday. BNU, one of the two banknoteissuing banks here, had a first half profit of 18.7 million euros (198.4 million patacas), CGD told

He said the market for passengers between Kaohsiung and Macau had been shrinking in the past few years. “The number of flights between Kaohsiung and Macau has fallen by 35 to 40 percent as current demand is not enough to support so many flights,” he added. “Luckily, there have been more Macau people interested in going to Taiwan in recent years, so the decline is not as big as we initially feared.” Eva Air, TransAsia Airways and Air Macau together have 32 flights a week between Kaohsiung and Macau, according to the Macau airport website. The airline executive said people from Taiwan and the mainland had made up 90 percent of passengers before 2008, but that now Macau passengers made up about 20 percent. Mr Hu said the aviation agreement that Taiwan and Macau signed in 1995 and last updated in 2005 should be reviewed. The Civil Aviation Authority of Macau told Business Daily in a written statement that the aviation agreement “can still keep up with the current air traffic demand between the two places”. The authority said the agreement had been extended but not altered. The airline executive said the agreement did not cover flights between Macau and Taichung. This, he said, meant these flights “are called scheduled charters, and they should be up for approval by the aviation regulator on a monthly basis”. The Civil Aviation Authority “can terminate the scheduled charters at any time”, he said. As for Mr Hu’s call for a review of the aviation agreement, the executive said: “Political considerations, particularly Beijing’s opinion, play a major role in whether any new content can be included.”

the Portuguese Securities Market Commission. Loans granted by the bank here increased by 97.1 million euros, up by 6.7 percent from the end of 2012. BNU’s profit grew by 0.5 percent last year to 327.1 million patacas (US$40,9 million), the bank said the report. Its ratio of loans to deposits went down from 52.9 percent in 2011 to 45.6 percent last year. Asia and some emerging markets in Africa are among the major contributors to CGD’s net results. But those contributions were not enough to offset the losses the bank had in Europe, especially in Spain. CGD had losses of 181.6 million euros in the six months to June 30, it said on Friday. Almost half of the losses, 90.4 million euros, were recorded in Spain, where its operations are being restructured, the state-owned bank said. The institution as a whole is currently going through restructuring. It has plans to selloff its insurance arm, Companhia de Seguros Fidelidade Mundial SA, which also has a branch here. T.A.

August 5,2013 2013 April 19,

Macau

Macau gets bigger say over Hengqin

opinion

Two political heavyweights and a university rector will sit on an advisory committee

The Candy Man who can

Tony Lai

tony.lai@macaubusinessdaily.com

Michael Grimes

michael.grimes@macaubusinessdaily.com

Edmund Ho is joining the Hengqin Island advisory body

acau can play a more active role in the development of Hengqin Island now that two of the city’s political heavyweights are joining the island’s advisory body, a political analyst believes. The Hengqin authorities announced last week the names of the 20 members of the advisory committee on development that will be established “soon”, the official China News Service reported. The list includes the former chief executive of Macau, Edmund Ho Hau Wah, Macau Chamber of Commerce president Ma Iao Lai and University of Macau rector Zhao Wei. The director of the bureau of communication and cooperation of the Hengqin New Area Administrative Committee, Liu Yang, said last month that the advisory committee, together with an administrative committee and a decision-making committee, would form a “unique” system. The three bodies would “form a mechanism of decision, execution and supervision” for the island, Mr Liu said. According to the Hengqin New Area’s regulations, the advisory committee will be asked for its opinions on policy, and it can look into any issue it deems relevant. The administrative committee must report to the advisory committee every year on the island’s progress towards development. The advisory committee will tell the outside world what is happening on the island.

Bargaining power “In the past, I have not seen much participation by Macau in setting policy for Hengqin,” said a political scientist at the University of Macau, Liu Bolong.

“It was not so different from other special areas in the mainland, even though it was regarded as an area specifically for Macau,” Mr Liu told Business Daily. He believes the appointment of Macau figures to one of the island’s three committees will be beneficial to Macau, giving it “a more active role, and bargaining power in Hengqin policymaking”. He added: “The Macau members can lobby for some land resources on Hengqin for social infrastructure, like homes for the elderly, as Macau lacks land for development.” The University of Macau has already taken over 1.09 square km of the island for its new campus. Asked whether the appointment of Macau figures to the advisory committee would turn out to be simply a gesture of good will, Mr Liu said it would depend on how the committee performed. “I believe they really want to involve more voices from Macau;

I believe they really want to involve more voices from Macau; if not, they would not have invited members from Macau Liu Bolong, University of Macau

if not, they would not have invited members from Macau.” A Guangdong newspaper, the Southern Metropolis Daily, quoted unidentified sources as saying Mr Ho will probably head the advisory committee.

Father figure Mr Ho and Mr Ma were not immediately available for comment. Business Daily also tried to contact Mr Zhao, but we had received no reply by the time we went to press. The vice-president of the Macau Chamber of Commerce, Vong Kok Seng, told Business Daily: “It is good that two people who know Macau very well are listed as on the committee.” Mr Vong said Mr Ma, as president of the chamber, had been “like a father to the business sector here”, and that Mr Ho had not only been chief executive of Macau but also vice-chairman of the advisory Chinese People’s Political Consultative Conference. Mr Vong believes the appointees will bring to the attention of the authorities on Hengqin Macau’s views on the rules for investment there. Two weeks ago the chairman of the Macau Small and Medium Enterprises Association, Stanley Au Chong Kit, said the rule requiring an enterprise investing there to have minimum registered capital of 100 million yuan (130 million patacas) was “too high”. The Hengqin advisory committee will also include figures such as Hong Kong Executive Council member Bernard Chan and Nobel Prizewinning economist James Mirrlees of the University of Macau. The members will hold their seats on the committee for three years.

ho would be an informal banker in China? When it goes well, everyone wants to be your friend. To borrow a lyric from Sammy Davis Jr, you’re the Candy Man – the one that helps out factory owners and small businesspeople with the loans the state-owned banks don’t want to make because their rigid bureaucracies and lack of appetite for risk get in the way. You’re potentially the one that helps money – backed by liens on property over the border – flood into Macau’s VIP gaming rooms in the form of player credit. When it goes wrong, you can lose your liberty, or even your life. On July 12 businessman Zeng Chengjie was executed by firing squad in Hunan province for illegally raising 3.4 billion yuan (4.4 billion patacas) in capital for loans, even though his family said his assets more than covered his debts. The term ‘underground banking’ when applied to China is vague and covers a wide range of nonofficial lending activities. As former mainstream Hong Kong banker Joe Zhang points out in a recent book, many of the institutions in the mainland’s informal banking sector are actually licensed and supervised by officials there. It’s just that the bureaucrats tend to stack the rules in favour of the state-owned banks by limiting the size of individual loans the informal outfits can make. They also tend to clamp down fastest on the informal lenders when the central government decides to cool credit expansion. It might be useful when international observers talk about Macau junket rooms and ‘underground banking’ to remember what happened with construction capital in Las Vegas in the 1970s. Back then, Wall Street wouldn’t touch ‘Sin City’ with a very long silver-tipped barge pole. So where did some Las Vegas casino entrepreneurs go when they were looking for capital for new ventures? They went to the International Brotherhood of Teamsters, then as now, one of America’s biggest labour unions. It’s on public record that back then elements of the Teamsters had connections with American mafia families. As Steven Fischer points out in his book ‘When the Mob Ran Vegas’, in 1976 Allan Glick, for a while owner of The Stardust casino, was introduced to the head of the Milwaukee Mob, Frank Balistieri as a potential backer. The meeting was brokered by Del Coleman, then the unofficial representative in Las Vegas of the Teamsters Union and the Chicago mafia. It took at least 15 years of concerted action by Nevada and the federal authorities to clear the Mob out of the Las Vegas casino business. So perhaps we shouldn’t get in too much of a tizzy that convicted Macau gangster Wan Kuok Koi wants to get back into the Macau junket room business. We should perhaps take a step back and look how the Macau industry is trending, rather than focus on the individual incident. Jay Chun, chairman of the Macau Gaming Equipment Manufacturers Association, told this newspaper last week that junkets are “not the mafia”. How the city deals with Mr Wan’s desired comeback as a junket shareholder will be an interesting test of that claim.

It took at least 15 years to clear the Mob out of the Las Vegas casino busines

August 5, 2013

Macau

Slowest airport traffic growth in six months

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Xiamen Airlines will launch new route to Tianjin on August 10

One game show

Tony Lai

tony.lai@macaubusinessdaily.com

The website of the Gaming Inspection and Coordination Bureau reports gross gaming revenue from 21 casino games. None brings in nearly as much revenue as baccarat. Most bring in very little. The least lucrative games for casinos last year by were mahjong pai kao, which brought in 4.7 million patacas (US$588,313), and tombola, which brought in 1.4 million patacas. The 15 least lucrative games together generated about 1.5 percent of casino gross gaming revenue. Some games are likely to disappear from casinos, just as other low-earning games have disappeared before them. The casino industry’s revenue is coming from fewer and fewer games.

Casinos made more than 90 percent of their gaming revenue in the past three years from VIP baccarat and mass-market baccarat. VIP baccarat typically brings in about 70 percent of the total. The proportion of revenue that VIP baccarat brings in seems to have diminished a bit lately. But this may be because some revenue from baccarat is now counted as revenue from premium mass-market baccarat, a new category that makes the proportions of revenue from other categories appear smaller. The next four biggest gaming revenue earners – slot machines, cussec, blackjack and roulette – now bring in just over 7 percent of the total, having brought in over 10 percent in 2008. The figures for the first half of this year confirm the general pattern and trends that developed over the preceding five years. J.I.D.

91.3 %

Proportion of gaming revenue from baccarat in the first half

he growth in the number of passengers at the airport slowed to a half-year low last month, even though there were more passenger aircraft movements during the summer holidays. Macau International Airport Company Ltd (CAM) said on August 2 that it handled over 440,000 passengers in July, a five percent increase year-on-year. The monthly expansion is the lowest since January’s 3.5-percent rise. January’s modest year-on-year performance was probably due to a high base 12 months earlier. In 2012 the Lunar New Year holiday fell in January, but in 2013 it was in February.

In July aircraft movements – takeoffs and landings – increased by 15 percent year-on-year to more than 4,200. That implies a drop in the seat occupancy rates on aircraft – also known in the industry as the load factor. In its statement CAM gave no reason for the slower passenger growth relative to aircraft movements. It said only that travel demand from residents and tourists during the summer holiday lagged growth in capacity. Mainland China and Southeast Asia – the airport’s two dominant markets – performed particularly well, the operator added. In the first seven months of 2013,

the airport passenger volume grew by 13 percent to over 2.8 million while aircraft movements rose by 20 percent to over 27,000. CAM’s statement also revealed that Xiamen Airlines would launch daily flights from Tianjin to Macau via Xiamen on August 10. There will be “more Northern China routes to be launched in the near future,” the company said without giving more details. Th e c i t y ’ s o w n c a r r i e r A i r Macau Co Ltd has so far launched three new mainland routes this year. Its chairman Zheng Yan has also expressed interest in flying to Zhengzhou, capital of Henan province. The Civil Aviation Authority of Macau told Business Daily in an e-mailed reply that it was “still reviewing” an application from Zest Airways to run services. The Philippines low-cost carrier wants to fly three times a week from Manila starting on October 15, the regulator said. Currently two carriers – Cebu Pacific and Philippines Airlines – fly between Macau and the Philippines, the airport website shows.

10 %

Difference in July passenger growth v. plane movement growth

Chui Sai On to meet legislators on Aug 15 C

hief Executive Fernando Chui Sai On faces a three-hour question and answer session from legislators on August 15. It’s one of three such events held each year. This month’s session could be lively as some existing legislators look to impress voters. A total of 14

directly elected seats – including two new ones – are due to be contested in elections in the city next month. “The chief executive pays close attention to the communication with the Legislative Assembly,” the Government Spokesperson Office said in a short statement. On August 15, Mr Chui is expected to face inquiries on topics ranging from the social welfare programme to housing and economics. Other possible subjects are the construction schedule for the light rapid transit railway and the budget overruns on the construction of the Taipa ferry terminal. Officials where questioned by the media a fortnight ago on whether the city’s Light Rail Transit system

– also known as the elevated railway – would be operational as planned in 2015. They were unable to give guarantees that it would. This will be the second time Mr Chui goes to the assembly this year. In his April 25 appearance, Mr Chui gave a speech on human resources, warning that Macau’s labour shortage will worsen further in the next few years after the completion of several Cotai gaming resorts. The chief executive also attends the assembly every November, to give the administration’s policy address, setting out initiatives for the following year. In the past few years that has included revelations on cash handouts to permanent and non-permanent residents.

August 5, 2013

Macau

Fiscal reserve must bear losses after taking risks ‘Exceptionally volatile’ financial market hurting city’s rainy-day fund Vítor Quintã

vitorquinta@macaubusinessdaily.com

he fiscal reserve’s riskier investment strategy could mean more short-term losses like the one registered in June, the Monetary Authority of Macau warned. The government’s reserve lost 246.4 million patacas (US$30.8 million) that month, according to an update on the fund’s performance published by the regulator last week. It was the first monthly drop since the reserve was created in February last year. In an e-mailed reply to Business Daily, the authority stressed that the decrease was “marginal” given that the fund has 166.09 billion patacas. The drop was due “a very volatile international financial-market environment” in June, the regulator said. The market was concerned over “modification of quantitative-easing monetary measures in advanced countries as well as a slowdown in growth of emerging-market economies”. United States Federal Reserve chairman Ben Bernanke said in June that the country’s central bank might start reducing its bond-buying

of Macau said. The regulator cautioned, however, that short-term losses could become far from exceptional. After the January transfer of the 2011 fiscal surplus, almost 64 billion patacas, the authority adopted “an investment strategy that aims to achieve a higher return in the long term”. That “would inevitably require a higher toleration of fluctuation in short-term returns by relevant international experiences,” the regulator stressed. For instance, the annual return of the Exchange Fund of Hong Kong had ranged from minus 5.6 percent to plus 11.8 percent between 2002 and 2011, the Monetary Authority of Macau said in its first annual review of the fiscal reserve, published in March. In June the regulator also had less money to play with following May’s wage increase for civil servants. That meant a transfer of almost 950 million patacas from the special reserve, which is for investment, to the basic reserve. The latter is kept for emergencies. Business Daily asked the authority if the transfer to the basic reserve was connected to the fund’s June loss. The regulator e-mailed an acknowledgement but chose not to comment.

The government’s fiscal reserve lost 246.4 million patacas in June

programme this year and end it entirely in mid-2014. Meanwhile the International Monetary Fund cut its growth forecast for developing countries this year to five percent, down from an

annual average of 6.6 percent during the past decade. The “exceptionally volatile” market environment “impacted almost all classes of financial assets worldwide,” the Monetary Authority

0.14 %

Percentage of present fiscal reserve lost in June

August 5, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Connections aplenty Being connected to a mobile phone network or the Internet is something we hardly think about any more. We assume that everybody is connected. Of course, not everybody is connected – but almost everybody is. If we take Macau’s figures for telecommunications at face value, they show that more than all its people are connected in one way or another. The number of mobile phones and Internet connections has risen by over 40 percent in the past three years, making this city one of the most wired in the world.

The number of active mobile phone numbers issued by the city’s telecommunications carriers has been above 1.5 million since last August, and was over 1.6 million briefly last December. Although the number of mobile phones declined a bit in the first half of this year, Macau still had 2.6 mobile phones per inhabitant in June. But the idea that the average person in Macau routinely uses two or three mobile phones is probably wrong. Many of the mobile phones were for prepaid accounts, so some may not be used regularly. It is difficult to guess how many are active. The number of active Internet connections may give a more accurate picture of how many are being used. Macau had one Internet connection for every 2.4 inhabitants in June, which suggests that most households are connected. The city had 1.4 Internet connections for each of the households counted by the compilers of the latest census data. J.I.D. The content of this column is the work of Business Daily’s journalists.

240,952

Number of Internet accounts in June

Architect calls for fifth Taipa link Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

he peninsula is in urgent need of an urban master plan that determines what can be built and where, says the vice-president of the Architects Association of Macao, Jonathan Wong. In an interview with Business Daily, Mr Wong said the government had come up with only a few disjointed urban plans for specific areas, instead of a plan for the whole city. He said that until such a plan was made, developers and architects would be uncertain about what they could build. He believes there are huge problems with the connections between the peninsula and Taipa. The government intends to have a fourth link to the island built, but Mr Wong said a fifth was needed.

What are the main problems affecting Macau’s urban development? We are lacking a general city plan for the whole of Macau. I’m talking about the Macau peninsula, plus Taipa, Cotai, Coloane. Every time we hear about any plan from the government, it is for one zone. Recently they did something of the sort for Coloane but, still, it is just one zone. Every time they tackle the planning issue, they focus on small areas. They may have done something internally for the whole of Macau, but when they want to announce something to the public, they just show one piece from time to time. Without this overall plan, the government is maybe the only entity that knows which areas should be built in and what should be built in them. This is not very clear for developers from outside and architects from Macau. The Legislative Assembly is now discussing an urban planning bill, which may tackle this issue. Will it be enough? It is a very good start. Legislators will be re-elected this year and they

are trying as much as possible to pass laws within this term, before the term expires. If they don’t pass them, they will have to discuss them almost all over again in the next term. It is good that the government will at last update the rules. Also being discussed at the assembly is the bill on cultural heritage protection. Yet it is being finalised eight years after the United Nations Educational, Scientific and Cultural Organisation first hinted that Macau needed such legislation. Has it taken too long? Macau is actually very small, and it has a very long history, especially with Western trade. They did not expect this kind of city to be built after 500 years. Land became very precious. The government has a difficult time in balancing World Heritage preservation and the interests of developers and outside investors. All I’m saying is that it’s not an easy decision, so I guess that could be one of the reasons why it was held up.

What issues would you like to see the law on cultural heritage protection address? First of all, it should make a list of the World Heritage sites and also maybe another list – of buildings, area or zones that they can foresee applying for heritage status later on, when the time comes, or when the facilities are ready. It would be a secondary list. They should list all their requirements, particularly the maintenance requirements. Some heritage buildings may be owned by private entities, so maybe they need to figure out that, as well. Some people will complain if they own a heritage building, because they are not allowed to redevelop it. They have to keep it, so instead of putting the burden on them, maybe there is a way to exchange it. If you don’t do a good management job, why not let the government do it? Then, in exchange, the government could give a potential development site in another area.

August 5,2013 2013 April 19,

Macau The land law is also being reviewed. How important is it to ensure all this legislation is coordinated? The land law is fundamental, as it affects developers and local people as well. It talks about how to calculate the price of the land. The method is quite outdated, and it is urgent to update it. Also, some interests of the locals have to be protected. There is some clamour about the government selling the land too cheaply, so now it is quite urgent to address that. All these three laws are very important. Maybe somehow the land law might be kind of related to the urban planning law, so they cannot just approve one and still be discussing the other. They are more or less interconnected in some way.

The government has a difficult time in balancing World Heritage preservation and the interests of developers and outside investors

The land law is meant to make the land concession process more transparent. Do you think this will happen? To start with, it is much better than before. Before, it was not very transparent. Now, at least they have some kind of procedure. The formula has been updated and they have a lot of regulations and steps for people to follow. Once these bills are passed, will anything change in Macau’s urban development? It will, mostly for urban planning and the World Heritage. Now, if you are close to a heritage zone, the cultural heritage department will be concerned. It will look at your drawings and make comments on your solution. Also, citizens will be more aware and will give more respect to the World Heritage. With this legislation going through, is it really that urgent for Macau to have a master plan? These will be laws. But I’m talking about a drawing, a map of Macau, Taipa, Coloane, discriminating between commercial use, residential use. It’s this kind of master plan. Maybe the government is working on it, maybe they’ve hired someone to study it and are not ready to announce it. Eventually this will have to come out. There will be five areas of reclaimed land, and the central government has promised them to Macau in the next 20 years. Three to four years have already passed. Last year there was an exhibition at the Macau Science Centre, showing a plan of what they intend to do with these areas of land, where the government buildings, housing

areas, green areas and Light Rapid Transit stations will be. Every time, they just give you plans bit by bit. The quality of that plan was quite good. It was illustrated with nice coloured plants, a lot of descriptions, the use of space underground, and also transport and green areas. But that kind of spirit has to be carried on, not only for the small islands. Is it possible to present a plan for the five areas of reclaimed land without considering the rest of Macau? It is not possible, because this is an extension of the city. It must create a very good relationship among them. If you look at it graphically, the reclaimed land will all be in the shape of islands. It looks like you’re separated by water, and it is a separate place. In fact, it’s not. With the University of Macau being situated on Hengqin Island, after they’ve completed the buildings and handed it over to Macau, the University of Macau will still be considered part of Macau. The water will be supplied by Macau and the people there will use the same telecommunications company, CTM. So even though, graphically, it looks as if they are separated by water, it is, in fact, still Macau and it must be closely connected. Furthermore, there is one thing missing. We have three bridges now and they are planning a fourth link, which may be a tunnel or a bridge. Right now, they have designated the old bridge for taxis and buses only, and then they have designated one of the lanes of Sai Van Bridge for motorbikes. They really need to make more connections between Macau and Taipa. There will be another six big casinos in Cotai, and also a lot of affordable housing has been built and will be built over there. The population of Taipa and the number of tourists has increased a lot. Also, with the development of Hengqin Island, there will be more amusement parks and more business going on there. Taipa was thought of as an island, and maybe 10 to 15 years ago that was correct, but right now Taipa and Coloane are not really islands, they are more like cities. The government is even building a new hospital there, which will be much bigger than the one in Macau. The only thing lacking is a big library and a big market. They really need to think about the connections. With the Hong Kong-Zhuhai-Macau Bridge and the Light Rapid Transit coming, is it possible to move forward without a master plan? The sooner they can finish one, the better. All this big infrastructure has to be considered together with the land. Everything is supposed to be integrated. There is much big infrastructure being built in Macau within a relatively short period of time. Is it sustainable to keep building at this rate? You can’t just keep increasing the number of tourists and people living in Macau indefinitely. There must be a limit. Right now, the LRT is needed for public transport and so is the bridge. And they should consider a fifth link – a tunnel connecting Reclamation Area B [in front of the Nape district] to Taipa. If you go to some European cities like Paris, and look at the river running through, or to London where there is also a river, they have a lot of bridges. Macau only has three bridges and you are not allowed to drive on the oldest one, so you have only two

choices – one on the east side and one on the west side. On the second bridge, casino buses occupy one lane and then, with all the motorbikes in one lane, all you are left with is one lane. So the only choice is the third bridge. That’s why I think they really should think of a fifth link. The fourth one is not going to help because it is so far away, even further from the second one. It is on an island outside the ferry terminal. They tend to solve problems in a very small way. They tackle the problem only superficially. Do you see reasons for concern over the way the city is being developed, when it comes to environmental protection? You can look at their planning proposal for the five pieces of reclaimed land. I remember they reserved more than 50 percent of the land for green areas and transport. If you look at the model, they have boulevards with trees on both sides, a wider sidewalk and a waterfront. If they really do something like that, it will increase the green atmosphere. But if you talk about the existing city fabric, I can see developers building more green space, building more clubhouses. Right now developers are recruiting professionals from Hong Kong, landscape architects, to do a very good job and dress it up very nicely, so I think they are more aware that greenery has a market. If you go to the Galaxy, they have lots of plants surrounding the resort. In the private

sector, residential and casino developers are thinking of increasing the greenery. As for the government, at present, for example, it has some plans for a pedestrian connection to the Guia Hill that will include greenery. They are aware of this. They are doing it, slowly, bit by bit. For the old city fabric, we have to be more patient to see this happen.

You can’t just keep increasing the number of tourists and people living in Macau indefinitely. There must be a limit

August 5, 2013 April 19, 2013

Macau

Estate agent law adds to July property gloom Centaline says agents and buyers still need educating on the new rules Stephanie Lai

sw.lai@macaubusinessdaily.com

more complicated contract terms involved,” Ms Cheung stated. “So a majority of the home owners have stayed put and only very few mediation contracts were signed in the first half of July,” the director noted. “In the second half of the month the home transaction [volume] has shown a gradual rebound, but as too little supply was available in the market the final transaction volume for the month has drastically dropped,” her report adds.

Transactions down

new estate agent law in force from last month contributed to a near-50 percent contraction in home and shop sales in July, says Centaline (Macau) Property Agency Ltd in a report. Centaline’s figures for July are based on unofficial market returns, as the government’s numbers for the period are not expected until the end of this month. Housing sales volume first collapsed in June, dropping 45 percent yearon-year. Many home deals depend on forward purchase of unfinished units. Another new law in force from June 1 tightened the rules on that. Macau’s estate agent law, in effect since July 1, sets out for the first time the professional qualifications for agents and the legal obligations of agent and seller. “In the beginning of the law’s enactment, the market operation is in a chaos as both the sector and the public did not have a sufficient understanding of the provisions,” Centaline’s regional sales director Noelle Cheung wrote in a report.

Macau’s estate agent law in effect since July 1

The law says agents and property sellers have to sign a mediation contract. It binds both sides to the sales process and prevents other agents offering to sell at lower commission, or the vendor from independently finding an alternative buyer willing to pay more.

It includes information about the property being sold, identifies the estate agent and the client, and states the agent’s commission. “With the mediation contract, many home owners are concerned about having their personal information leaked and disliked the

Centaline estimated that it will register a nearly 50 percent yearon-year drop in July’s home sales volume, and a 40 percent drop in shop transaction volume. The report did not specify either the number of transactions or the total value. The transactions mentioned in the July review mostly involved secondhand homes and shops, Centaline told Business Daily. The average home price fell 23.2 percent in June to 75,448 patacas (US$9,446) a square metre. “Since the home pre-sales law was introduced in June, first-hand sales [of property] has turned stagnant,” Ms Cheung wrote in the review. “The transactions further dropped as the estate agent law comes into effect.” “We hope that after the off-season ends in September, the home owners and buyers will return to the market and contribute to a rebound in the transaction volume,” the sales director added. “We’d also suggest that the government should do more promotion on the new estate agent law so that the law can be executed better, and the market can resume a normal operation,” she concluded.

August 5,2013 2013 April 19,

Greater China

Services growth picks up Faster expansion may bolster confidence that China can achieve its 2013 target

rowth in China’s nonmanufacturing sector picked up in July as Beijing’s recent support measures for small firms helped improve sentiment, though companies noted that inflation is picking up and pushing up costs, official data showed. The government’s nonmanufacturing purchasing managers’ index (PMI) rose to 54.1 last month from June’s 53.9, the National Bureau of Statistics (NBS) said in a statement. A reading above 50 indicates activity in the sector is accelerating. The services sector index followed the bureau’s manufacturing PMI on Thursday, which showed China’s factory activity was slightly stronger than expected in July. The latest data “indicate the nonmanufacturing sector is improving, with the new orders sub-index consistently staying above 50, setting a good foundation in terms of demand for a stable growth,” said Cai Jin, a vice head of the China Federation of Logistics and Purchasing, which compiles the index on behalf of the NBS. “In general, the index pointed to a good start of the economy in the second half. Although there are still challenges, China has the foundation and conditions to maintain stable economic development,” Mr Cai added. The services industry accounted for 46 percent of the Chinese economy in 2012, and overtook manufacturing as the biggest employer in 2011. China’s economic growth unexpectedly stumbled in the first half, as factory output and

investment slowed. To prevent it from slipping too far, Beijing has announced a series of targeted fine-tuning measures to safeguard growth. The politburo, China’s top decision-making body, has pledged stable economic growth in the second half as it presses ahead with reforms and restructuring to make domestic consumption the main driver of economic growth.

Economy stabilising “The services sector PMI has been doing much better than manufacturing for some time and the corporate expectations index was at its highest this year, which shows confidence is returning,” said Steve Wang, Reorient’s Hong Kong-based chief China economist. “The PMI is supposed to be a leading indicator

KEY POINTS Official non-manufacturing PMI at 54.1 in July New export orders improve Small firms supported by policy Data points to rising inflationary pressure

so we are witnessing a stabilisation and a sign the economy isn’t slowing down at a faster rate.” The government is betting on a developing services industry to absorb surplus workers to be laid off by the restructuring move. It has also announced several measures to support small firms, including scrapping business and value-added taxes for small firms, cutting red tape for importers and exporters, simplifying foreign exchange rules for the services industry and allowing small firms to issue more bonds. The PMI’s sub-index measuring new orders remained the same at 50.3 in July as it was in June, while the reading for new export orders rose to 53.1 compared with June’s 50.4. In a breakdown of sectors, growth in the tourism and telecom industries gained traction rapidly, raising the employment sub-index in the services sector to 53.0 in July, up from 50.0 in June. Although the headline figure for small non-manufacturing firms still remained below 50, the reading reversed falls in the past two months. The PMI also showed rising inflationary pressure, with the sub-index measuring input prices rising to 58.2 last month from June’s 55.0, while the reading for service charges increased to 52.4, the highest since May 2011. The input price in the official manufacturing PMI rose to 50.1 in July, ending its three-month-long contraction. Reuters/Bloomberg News

The services industry overtook manufacturing as the biggest employer

Regulator loosens grip on life insurance rates C

hina’s insurance regulator has loosened the cap on interest rates offered on life insurance policies, marking another incremental step towards liberalising interest rates throughout the financial system. The People’s Bank of China removed controls on bank lending rates last month in a long-awaited move that signalled Beijing’s determination to push on with market-oriented reforms even as economic growth slows. The upper limit of 2.5 percent on pre-determined rates for

standard life insurance products will be eliminated, according to a notice published on the website of the China Insurance Regulatory Commission. The 2.5 percent cap will remain in effect for dividend-type and universaltype life insurance products. But the new regulations also institute a new legally-mandated reserve requirement assessment rate at 3.5 percent for life insurance products, which will indirectly influence the interest rates that insurers can offer on policies.

The new regulations take effect today, but insurance policies issued before that date remain subject to the previous caps. China’s life insurance companies held assets of 6.54 trillion yuan (US$1.07 trillion) at the end of June, official industry data shows. Among the country’s top insurers are China Life Insurance Co Ltd, the world’s biggest insurer by market capitalisation, Ping An Insurance Group Co and New China Life Insurance Co. Reuters

PBOC warns against complacency on inflation Central bank promises better public communication

he People’s Bank of China (PBOC) promised to improve its communication with investors to keep market liquidity and interest rates stable, in an oblique reference to the country’s unprecedented cash crunch in June. Reiterating that China’s monetary policy would remain prudent, the central bank said in its quarterly policy report that it hopes to anchor investors’ near-term expectations on market interest rates and liquidity. China’s short-term interest rates shot to as high as 30 percent in late June after the central bank refused to increase money supply to ease a cash crunch partly caused by a seasonal spike in demand for funds. The move was widely seen as a warning to banks to crack down on risky lending practices, but triggered a rout in the money market, which shook investors’ confidence and pummelled Chinese stocks. The violent market reaction led some to criticise the PBOC for not saying early on that it would backstop the market to avoid bank failures – a vow the central bank made after the height of the cash squeeze. “We will manage and adjust liquidity in the banking system while increasing communication with the market and the public to stabilise expectations,” the central bank said. “We will guide financial institutions to operate in stable manner and urge them to improve their liquidity and risk management and internal controls.” The central bank also reiterated that strict controls on China’s frothy property market would remain in place, and did not signal any changes in its policy stance. It said monetary policy would be fine-tuned when necessary to foster stable economic growth. The bank said credit supply would be allowed to grow moderately but struck a cautious note on inflation. “We cannot be blindly optimistic on the trend for consumer prices,” the central bank said. “We should continue to guide and stabilise inflation expectations.” Wang Jin, an economist at Guotai Junan Securities in Shanghai, said although the PBOC was vigilant about price pressures, he does not expect a change in its policy stance. “They are more concerned about the economic slowdown,” Mr Wang said. “The central bank is likely to keep policy stable, but monetary conditions in the second-half of the year could be tighter than in the first-half.” Reuters

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August 5, 2013 April 19, 2013

Greater China AIG still in talks over ILFC deal U.S. insurer American International Group Inc said it was still in talks with a Chinese consortium regarding the sale of its ILFC aircraft leasing unit for about US$4.8 billion. AIG chief executive Bob Benmosche said on a post-earnings conference call that the company was also open to an initial public offering of the unit if a deal does not go through. AIG shares were up more than 4 percent at US$49.12 in premarket trading on Friday.

Steel output to hit record this year China’s steel output is expected to rise 9 percent from a year ago to a record high of about 780 million tonnes in 2013, the country’s economic watchdog said. China’s legion of steelmakers, which account for nearly half of the world’s output, have been keeping production high to shield their market share in a fragmented industry and maintain credit lines with banks. In 2012, China’s crude steel production grew 3.1 percent to 716.5 million tonnes. China’s steel exports are expected to jump 10 percent to 61.5 million tonnes this year, the National Development and Reform Commission (NDRC) said.

GM splits China from international unit General Motors Co said it has split its Chinese operations from its international unit, which will now be run by the former chief executive of Swedish automaker Volvo AB. Tim Lee, who has led the international operations unit for almost four years, was named chairman of GM China and retains his position as global chief of manufacturing. The moves will allow the company to focus more on China, as well as other fast-growing, emerging markets, GM said. Bob Socia, president of GM China, will continue to report to Mr Lee, who will have responsibility for 12 joint ventures, two wholly owned foreign enterprises and more than 55,000 employees in China.

Beijing mulls relaxing one-child policy China is studying whether to relax its one-child policy to allow more couples to have two children, the official Xinhua news agency reported, citing the National Health and Family Planning Commission. Policymakers are considering a change that would allow a second baby if either parent was a sole child, according to Xinhua. Currently both parents must be only children to qualify for a second birth. No time frame for a decision was mentioned in the report. The government is also studying whether to let all couples, regardless of whether they are only children, have a second baby after 2015, the 21st Century Business Herald reported, citing an unidentified person.

Beijing bans imports of NZ milk powder As Fonterra finds whey contaminated with botulism-causing bacteria Naomi Tajitsu

hina has halted imports of all New Zealand milk powder, New Zealand’s trade minister said yesterday, after bacteria that can cause botulism found in some dairy products raised food safety concerns that threatened its US$9.4 billion annual dairy trade. Global dairy trade giant Fonterra Cooperative Group Ltd said on Saturday it had sold contaminated New Zealand-made whey protein concentrate to eight customers in Australia, China, Malaysia, Vietnam, Thailand and Saudi Arabia for use in a range of products, including infant milk powder. Nearly 90 percent of China’s US$1.9 billion in milk powder imports last year originated in New Zealand, so a prolonged ban could result in a shortage of dairy products in China. Foreign-branded infant formula in particular is a prized commodity in the mainland given consumer distrust of Chinese brands after a series of domestic food safety scandals. New Zealand’s neighbour Australia was caught up in the ban after some of the contaminated whey protein concentrate was exported there before being sent on to China and elsewhere. “The authorities in China, in my opinion absolutely appropriately, have stopped all imports of New Zealand milk powders from Australia and New Zealand,” New Zealand Trade Minister Tim Groser told Television New Zealand yesterday. “It’s better to do blanket protection for your people and then wind it back when we, our authorities, are in a position to give them the confidence and advice that they need before doing that,” he said. On Saturday, Chinese state radio said Fonterra was notifying three Chinese firms affected by the contamination. Some of China’s biggest food and beverage companies are said to be customers of Fonterra, using its milk powder as an ingredient

Fonterra is one of the world’s leading diary exporters

in everything from confectionery to cheese on frozen pizza. Fonterra is a major supplier of bulk milk powder products used in formula in China but it had stayed out of branding after Chinese dairy company Sanlu Group Co Ltd, in which it had held a large stake, was found to have added melamine – often used in plastics – to bulk up formulas in 2008. More than six children died in the industry-wide scandal and hundreds were made sick.

Bans, recalls Other countries also were reportedly halting imports and ordering recalls of New Zealandmade dairy products. Russia has suspended imports and circulation of Fonterra products, Russia’s ITAR-TASS news agency said on Saturday, quoting consumer watchdog Rospotrebnadzor. Media reports late on Saturday said Thailand had ordered a recall of Fonterra products imported since May. New Zealand’s Ministry of Primary Industries said five batches of follow-on baby formula marketed by Karicare, a popular brand in China, had been contaminated by the bacteria, although none had entered the retail supply chain. Those products sitting in storage

Sinopec, Weatherford close to oil service tie-up C

hina Petrochemical Corp (Sinopec) and U.S.-listed Weatherford International Ltd are in advanced talks about forming a joint oilfield service company, as the world’s top energy consumer seeks overseas expertise to help unlock its vast shale resources, said people with direct knowledge of the matter. The proposed joint venture would likely be the largest of its kind in China, aiming to marry Weatherford’s technological knowhow with the Chinese oil major’s potential to grow in a nascent shale

oil and gas sector. China, widely thought to hold the world’s largest technically recoverable shale gas resources, hopes to replicate the shale boom that has transformed the U.S. energy landscape. It wants to build on its success developing fields of easierto-extract “tight gas”, but faces technological and environmental challenges due to complex geology, a high population density and water shortages. Weatherford, valued at IS$11 billion and one of the industry’s most acquisitive firms, about a

facilities would be held back from the market, it said. Farmer-owned Fonterra is a big supplier of wholesale dairy ingredients to multinational food and beverage companies. It also markets its own consumer brands, including Anchor milk in New Zealand and Anlene and Anmum maternal milk formula, which is available in Southeast Asia and other regions. It said all of its own brands were free of contamination and that there had been no reports of any illness linked to the affected whey protein. It added that Fonterra CEO Theo Spierings was travelling to China to discuss the issue. The bacteria behind the latest scare, Clostridium Botulinum, is often found in soil. The Fonterra case was caused by a dirty pipe at a processing plant. It can cause botulism, a potentially fatal disease that affects the muscles and can cause respiratory problems. Infant botulism can attack the intestinal system. The contamination issue comes as China has started to tighten dairy import regulations to improve overall food safety. In recent weeks, Beijing has introduced regulations restricting the operations of smaller infant formula brands. Reuters

year ago started talks with Sinopec Oilfield Service Company (SOSC), a new upstream service arm of the Chinese energy giant, to explore the possibility of a joint venture. Talks have now entered an advanced stage, two people with direct knowledge of the matter told Reuters. An alliance, likely to include integrated services from drilling and well construction to well completion and equipment manufacturing, will probably be announced by the end of this year, if negotiations are successful. The joint venture would likely be controlled by the Chinese firm and would have registered capital of at least US$50 million, said one of the people, an industry executive. SOSC declined to comment, while Weatherford was not immediately available to answer questions. Reuters

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Asia

HK billionaire plans huge Australian casino Fung to invest US$3.8 bln in casino resort close to Great Barrier Reef

hinese tycoon Tony Fung has proposed to build a A$4.2 billion (US$3.8 billion) casino and resort project in Australia’s Cairns city, close to the world-heritage Great Barrier Reef, a move set to accelerate competition in the country’s gambling and tourism market. The Queensland state government said on Friday that Mr Fung’s casino proposal was declared a “coordinated project” on Thursday, the first step in the government’s approval process. “Basically it’s declared a coordinated project because of the size and complexity of it,” a spokesman for the Queensland state government told Reuters. “It’s the first step in a comprehensive assessment of the approval process. The proponent has to prepare an environmental impact statement.” Mr Fung, a billionaire son of one of the founders of Hong Kong conglomerate Sun Hung Kai & Co Ltd, is planning to build an integrated resort 13 kilometres north of Cairns that will include an “international class” casino, one of the world’s largest aquariums and a 25,000-seat sports stadium. The proposed casino will target wealthy Chinese tourists and operate 750 tables and 1,500 machines, which is slightly bigger than Australian billionaire James Packer’s Crown casino in Melbourne. But environmentalists are warning the proposed development could do more harm than good. “The concerns that we would have is about the size, the scale and the location as it is on the coast,” Felicity Wishart, Australian Marine Conservation Society spokeswoman, told Australian news agency AAP. “It’s alarming that they’re trying to create a man-made wonder of the world … while potentially damaging what is one of the great natural wonders of the world – the Great Barrier Reef,” she added.

Rendering of the Aquis resort

Australia has been building large casino resorts and other tourism attractions to lure high-end Asian spenders to compete with places like Macau and the Philippines. Mr Packer, who co-owns Macau casino operator Melco Crown Entertainment Ltd, won conditional approval for his A$1.1 billion Sydney casino resort just a month ago while Bruce Zhong, a Chinese businessman, is pushing ahead to open a A$500 million theme park that will include a full-size replica of Beijing’s Forbidden City and a nine-storey temple housing a giant Buddha. The planned Aquis resort “gives Queensland an opportunity to fend off its southern and regional competitors for the increasingly important Chinese tourism market,” Mr Fung said in an open letter published on the project website. The Aquis Resort at the Great Barrier Reef project has a targeted

Myanmar currency close to fundamental value: IMF T he sharp drop in Myanmar’s exchange rate in recent months has moved its kyat currency closer to its long-run fundamental level, the International Monetary Fund said. The drop in the currency coincides with a construction boom in the country’s commercial capital, Yangon, which is fuelling demand for dollars as builders import equipment and materials, part of a scramble by investors to tap one of the world’s last frontier markets after an easing of sanctions by Western countries. Helped by the IMF, Myanmar’s central bank introduced a managed float of the kyat in April 2012 as part of the unification of the exchange rate system. In its annual review of Myanmar’s economy, the IMF said the kyat has fallen about 13.5 percent from the start of the float until this May, closer to its long-run fundamental value. Last year, the IMF said the kyat was

opening of 2018 and could create 26,700 jobs when fully operational, according to information on Aquis’ website. The resort is also set to include 13,500 square metres of high-end retail and two 2,500-seat theatres.

KEY POINTS Aquis resort granted ‘coordinated project’ status Resort to have casino, aquarium and sports stadium Project to target high-end Chinese gamblers Company plans 2018 opening

Mr Fung, a Hong Kong based private investment banker and investor, has homes in Queensland including a house in the Noosa Hinterland. His private businesses include a cattle farm and wagyu beef breeding business and a sugar cane plantation. In an open letter published on the company website, Mr Fung said his company bought the option on a 750-acre site north of Cairns in September 2012 to lay the base for his resort project. Cairns currently has the only one casino, the Reef Hotel casino complex, which is owned by Reef Casino Trust. Reef Hotel Casino’s exclusive licence expired a few years ago, CEO Allan Tan told Reuters. “It’s not possible to comment in the absence of details,” Mr Tan said when asked about Mr Fung’s Aquis casino plan. Reuters

Defiant Hun Sen says to form govt

overvalued by as much as 40 percent. However, the IMF said the exchange rate is likely to rise again in the future due to higher revenues from natural resources and more aid inflows. A weaker currency is a welcome relief for rice farmers and other exporters. Seventy percent of Myanmar’s 60 million people live on farms, but the vast majority of them have yet to benefit from the country’s reforms. The IMF, which has a staffmonitored programme with Myanmar, praised the country’s progress, and said the short-term outlook for the economy was positive. Inflation will likely stay contained at around 6.5 percent, while gross domestic product should expand slightly to 6.8 percent in the current fiscal year, which started in April. Economic growth was 6.4 percent in the previous fiscal year, the IMF estimated. Reuters

ambodia’s long-serving Prime Minister Hun Sen said he would press ahead with forming a new government even if the main opposition party tried to block the process, after both sides claimed victory in last week’s general election. Hun Sen’s government says he was re-elected, with his Cambodian People’s Party (CPP) winning 68 seats and the opposition Cambodia National Rescue Party (CNRP) getting 55. For its part, the CNRP says it won 63 seats and the CPP got 60. At the same time it has alleged electoral fraud, saying up to 1.3 million names were missing from the electoral rolls and that the ruling party stuffed ballot boxes will illegal votes. The National Election Committee has not yet given official results and may not do so until mid-August. “We don’t need to depend on or beg another political party to attend a meeting. If somebody won’t attend a [parliamentary] meeting, it’s their right, but we only need 63 people to approve

Hun Sen has ruled for 28 years

a law and appoint a government,” Hun Sen said. That is a reading of the constitution rejected by some. A quorum of 120 out of 123 lawmakers was needed to launch a new national assembly before the approval of a new cabinet, said attorney Sok Sam Oeun, executive director at Cambodia Defenders Project, an organisation that offers free legal aid. Hun Sen maintains that a 2006 amendment would allow his ruling CPP, given the number of seats it says it won, to start the process alone without the CNRP. Sok Sam Oeun disputed that, saying the amendment does indeed allow the approval of a new government with only 63 lawmakers present but, before that stage, at least 120 had to approve the start of a new parliament. Reuters

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Asia Seoul losing patience on Kaesong talks South Korea warned the North it was “reaching the limit” of its patience over stalled talks to revive a joint industrial complex. Six rounds of cross-border meetings produced little progress and Seoul proposed “final” talks on the Kaesong industrial zone on July 28. South Korea’s unification ministry yesterday urged the North to show “responsible words and actions, instead of silence”. “The North should bear in mind that South Koreans...are reaching the limit of their patience,” the ministry spokesman Kim Hyungseok told reporters.

Danamon faces funding pressure The failed US$6.5 billion acquisition bid for PT Bank Danamon Indonesia leaves the lender vulnerable to rising funding costs that may limit profitability and growth at a time when the nation’s economy is slowing. The bid by Singapore’s DBS Group Holdings Ltd, which lapsed on August 1, would have brought cheaper credit for Danamon, according to Nomura Holdings Inc and Danareksa Sekuritas. “The collapse of the deal won’t destroy Danamon but it will severely cap its growth potential,” Wilianto Ie, head of research at Nomura in Indonesia, said. “This will make the stock unattractive.”

Rudd calls Australia election for Sept 7 Economy, asylum seekers and climate change among key issues Jason Scott and Michael Heath

ustralian Prime Minister Kevin Rudd called an election for September 7, saying the five-week campaign will centre on management of the US$1.5 trillion economy as a China-driven resources boom wanes. “Who do you best trust to manage a very profound economic transition,” Mr Rudd said yesterday at a news conference in Canberra after visiting Governor-General Quentin Bryce to seek approval to hold a ballot. “Economic management will be a core determinant of this election.” Mr Rudd, 55, is betting his record as leader through the 2008-2009 financial crisis, when Australia sustained growth while much of the developed world slumped into

recession, will help Labor defeat Tony Abbott’s opposition. Since ousting Julia Gillard five weeks ago, he has closed the gap in opinion polls and sought to neutralise opposition attacks with plans to scrap the world’s highest carbon price, curb asylum seekers arriving by sea and reform his party’s leadership rules. “Rudd faces a litany of challenges, including holding the ministry together and working with colleagues, looking credible, selling the message that he’s changed his ways, and distinguishing some policy differentials from Gillard,” said John Wanna, a professor of public administration at the Australian National University in Canberra. The former diplomat heads into an

Economic management will be a core determinant of this election Kevin Rudd, Australian Prime Minister

India relaxes limits on cotton exports India has relaxed restrictions on the export of cotton by the state-run Cotton Corporation of India (CCI) in the current season to end-September as the world’s second-biggest cotton grower expects a better crop in 2013/2014. Hefty monsoon rains have encouraged farmers to plant more, and the area sown with cotton has risen to 10.85 million hectares as of August 1 from 10.11 million a year earlier. “This season CCI has sold its stocks mostly into the local market, and if they are exporting, it means they are expecting a huge crop next season and want to clear the old stock,” Prerana Desai, vice-president of research at Kotak Commodities, said.

Philippines’ SM raises US$150 mln SM Investment Corp, the flagship holding company owned by Philippine tycoon Henry Sy, raised US$150 million in a share placement with institutional investors, but it sold the stock at discount, sending its share price tumbling. SM sold 7.25 million shares at 900 pesos (US$20.7) each, underwriter UBS AG said, representing a 6.4 percent discount from its previous closing price. The shares fell 5.9 percent to trade at 905 pesos, compared with a 1 percent decline for the broader market. Proceeds from the share sale will be used to refinance some of company’s obligations and for general corporate purposes.

election with a weakening economic outlook that’s prompted the central bank to cut interest rates to a record low.

Chinese boom Australia’s growth is slowing and unemployment is rising as a spurt in mining investment to meet demand from China wanes. The government announced on Friday that the budget deficit will blow out to A$30.1 billion (US$26.8 billion) this fiscal year. It also cut the 2013/14 GDP growth forecast to 2.5 percent from a previous 2.75 percent. “With the end of the China resources boom, we can no longer afford to have all our eggs just in one basket,” said Mr Rudd. “For the future we must broaden the economic base, diversify the economy.” Mr Rudd is trying to frame the election as a battle between austerity from the opposition and his own programme that allows the deficit to widen as he prioritises jobs and economic growth. Labor says Mr Abbott’s Liberal-National coalition will have to cut A$70 billion to maintain the government’s updated budget position and fund the opposition’s own proposals. To raise receipts, Mr Rudd’s government plans to increase tobacco taxes by A$5.8 billion; save A$1.8 billion by tightening tax breaks for business car use; target A$827 million of unpaid tax and pension savings; and charge banks a fee for deposit insurance. “It is plain that this government has no plan to manage our economy,” Mr Abbott, 55, told reporters in Canberra yesterday after the prime minister set the election date. “No plan whatsoever.” Polls indicate the switch back to Mr Rudd has boosted Labor. A Newspoll published July 23 showed Labor trailed the opposition 48 percent to 52 percent on a two-party preferred basis, designed to gauge which party is most likely to form a government, from a 14 percentage point gap when Ms Gillard was at the helm. The two parties are split 5050, according to a Galaxy poll published in the Sunday Telegraph newspaper on July 28. Bloomberg News

Indonesia grows at lowest pace in nearly 3 years Pace declined for a fourth straight quarter

ndonesia’s economy grew at its slowest rate for almost three years in the second quarter, adding to concerns that one of Asia’s most vibrant economies is losing some of its steam. The statistics bureau announced that GDP growth in the April-June period was 5.81 percent, its lowest since the third quarter of 2010 and below a Reuters poll of economists, which predicted a 5.95 rise from a year earlier. The latest quarter was the fourth straight in which the growth pace slipped. It adds to a string of discomforting data, including inflation running at a 4-1/2 year high, persistent trade and current account deficits and a slump in the rupiah, which has slid 6.3 percent this year to become emerging Asia’s second worst performing currency after the Indian rupee.

The declining growth pace shows the economy is moderating, “clearly signalling the drag created by the weakening of the rupiah, which we think has affected investment growth,” said Oversea-Chinese Banking Corp Ltd economist Gundy Cahyadi. Fixed capital formation increased an 4.7 percent in the latest quarter from a year earlier, compared with 5.9 percent in January-March. In the first quarter, Southeast Asia’s largest economy had annual growth of 6.02 percent. The government is targeting 6.3 percent this year, but the central bank last month trimmed its own forecast to 5.8-6.2 percent from 6.2-6.6 percent. Compared with the first three months of 2013, GDP growth in April-June was 2.61 percent. Exports continue to drop as

major markets slow and prices decline for commodities – the mainstay of Indonesia’s trade with the outside world. Meanwhile, inflation has become a major headache, due to a sharp hike in fuel prices from June and surging costs for some basic foods. “It seems to us that not only is economic growth softening more sharply than the official numbers suggest, but the consensus will continue to be surprised on the downside in coming quarters,” said Robert Prior-Wandesforde, Credit Suisse Asia economist. “This bodes badly for the rupiah, unless the current account deficit improves much more than we expect it to do, while we suspect the earnings expectations of equity analysts are generally too high in economically sensitive sectors,” he wrote. Reuters

13 13

August 5,2013 2013 April 19,

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 66.2

41.8 41.5

23.4 23.3

66.0

41.2

23.2 65.8

40.9

Max 41.8

average 41.420

Max 43.1

Min 40.75

average 42.95

Last 40.9

Min 42.55

Last 42.75

23.1

40.6

Max 66.2

average 65.979

20.3

42.95

20.2

42.80

20.1

42.65

20.0

42.50

Max 20.25

average 20.042

Min 19.92

Last 19.98

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep13

106.94

-0.880526462

14.1058472

108.9300003

86.23999786

BRENT CRUDE FUTR Sep13

108.95

-0.538616031

2.521878235

114.3699951

96.65000153

GASOLINE RBOB FUT Sep13

299.47

-1.112798838

9.379451404

309.1700077

260.2499962

GAS OIL FUT (ICE) Sep13

925.5

-0.349932705

1.955384192

980

832.5

NATURAL GAS FUTR Sep13

3.347

-1.180986123

-6.976097832

4.517000198

3.329999924

307.14

-0.813795776

2.602304994

319.1699982

275.5500078

Gold Spot $/Oz

1312.03

-0.9026

-21.1738

1796.08

1180.57

Silver Spot $/Oz

19.8963

0.8638

-33.9213

35.365

18.2208

Platinum Spot $/Oz

1449.25

0.7298

-4.5133

1742.8

1294.18

731

-0.0274

4.4793

786.5

572.7

LME ALUMINUM 3MO ($)

1809

-0.165562914

-12.73516643

2200.199951

1758

LME COPPER 3MO ($)

7005

0.085726532

-11.67570294

8422

6602

LME ZINC

1865

0.566190348

-10.33653846

2230

1779

14000

0.755667506

-17.93669402

18920

13205

NY Harb ULSD Fut Sep13

Palladium Spot $/Oz

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

15.8

-0.346893724

2.564102564

16.47500038

14.60000038

463.75

-0.695931478

-22.67611505

665

462.5

WHEAT FUTURE(CBT) Sep13

660.5

0.37993921

-18.15365551

905.75

648

SOYBEAN FUTURE Nov13

1181.5

-0.922431866

-9.307234696

1409.75

1176.25

COFFEE 'C' FUTURE Sep13

118.25

2.292387543

-22.43358478

196.75

115.3499985

NAME

15.92999935

ARISTOCRAT LEISU

74.34999847

CROWN LTD

CORN FUTURE

Dec13

SUGAR #11 (WORLD) Oct13

16.79

COTTON NO.2 FUTR Dec13

-0.237670826

84.98

-0.526747044

-16.30109671

22.31999969

7.92481585

89.55999756

World Stock Markets - Indices NAME

19.9

Max 23.4

average 23.185

Min 23

23.0

Last 23.15

22.4

22.1

21.8

Max 22.3

average 21.616

Min 21.5

Last 21.65

21.5

Currency Exchange Rates

NAME

METALS

65.6

Last 66

43.10

Commodities ENERGY

Min 65.65

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.8905 1.5294 0.9291 1.3276 98.94 7.9892 7.7563 6.1298 61.095 31.26 1.2718 30.036 43.63 10333 88.101 1.23419 0.8683 8.1052 10.5464 131.34 1.03

-0.7025 0.8573 0.2045 0.3249 -0.1011 -0.005 -0.0052 0.0098 -1.066 0.1599 0.0393 0.0366 -0.1261 -0.6 0.6118 -0.1823 0.4676 0.0777 0.2342 -0.4188 0

-14.1935 -5.4525 -1.4745 0.652 -12.9776 -0.0751 -0.0735 1.6444 -9.9845 -2.1753 -3.9629 -3.3393 -6.0165 -5.226 1.3916 -2.1642 -6.0901 1.3855 -0.1517 -13.5298 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3742 61.2125 31.62 1.286 30.228 44.181 10333 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8871 1.4814 0.9022 1.2256 77.13 7.9818 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20066 0.78128 7.799 9.7946 95.94 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.41

0.4555809

4.49

2.33

VOLUME CRNCY 1423503

13.26

-0.5251313

24.27366

13.75

8.46

1713425

AMAX HOLDINGS LT

1.05

-1.869159

-25

1.72

0.75

166100

BOC HONG KONG HO

25.05

0.2

3.941907

22.85

11106751

CENTURY LEGEND

0.35

32.07548

0.42

0.22

CHEUK NANG HLDGS

6.33

0.7961783

5.676131

6.74

3.01

247000 34305958

CHINA OVERSEAS

23.4

4.231626

1.2987

25.6

17.28

CHINESE ESTATES

17.82

-0.3355705

46.91554

17.94

8.42

515996

CHOW TAI FOOK JE

10.04

1.006036

-19.2926

13.4

7.44

3956078

EMPEROR ENTERTAI

2.66

0.7575758

40.74074

3.07

1.35

1127000

FUTURE BRIGHT

2.06

-1.904762

69.96333

2.76

0.993

1446000

GALAXY ENTERTAIN

40.9

-1.088271

34.76112

44.95

19.22

7934851

HANG SENG BK

120.8

0.8347245

1.769169

132.8

108.4

983467

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15658.36

0.1941385

19.49171

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3689.588

0.3766312

22.19146

3689.588

2810.8

FTSE 100 INDEX

6647.87

-0.5104774

12.7176

6875.62

5605.589844

DAX INDEX

8406.94

-0.04506149

10.43759

8557.86

6621.36

HOPEWELL HLDGS

24.55

-0.203252

-26.16541

35.3

22.405

2111500

NIKKEI 225

14466.16

3.287145

39.16219

15942.6

8488.14

HSBC HLDGS PLC

88.8

0.3957038

9.225088

90.7

65.85

11615994

HANG SENG INDEX

22190.97

0.4625876

-2.056543

23944.74

19076.78906

HUTCHISON TELE H

3.64

-5.699482

2.247193

4.66

2.98

26091678

CSI 300 INDEX

2247.263

0.08457426

-10.92724

2791.303

2023.171

LUK FOOK HLDGS I

22.35

-0.2232143

-8.401638

30.05

16.88

1094000

MELCO INTL DEVEL

16.38

2.760351

81.798

18.18

5.54

6178665

TAIWAN TAIEX INDEX

8099.88

0.5419415

5.200077

8439.15

7050.05

MGM CHINA HOLDIN

23.15

0.6521739

74.34488

23.65

10.21

3905188

KOSPI INDEX

1923.38

0.137447

-3.688943

2042.48

1770.53

MIDLAND HOLDINGS

3.15

0.3184713

-14.86487

2.68

1330000

S&P/ASX 200 INDEX

5116.762

1.09201

10.06275

5249.6

4212.7

NEPTUNE GROUP

0.175

-0.5681818

15.13158

0.23

0.131

7800000

4640.781

0.3556186

7.507928

5251.296

3978.078

NEW WORLD DEV

11.4

0.5291005

-5.158073

15.12

9.38

9604209

FTSE Bursa Malaysia KLCI

1782.51

0.2638062

5.53954

1826.22

1590.67

SANDS CHINA LTD

42.75

0.94451

25.92047

43.7

23.6

6911963

SHUN HO RESOURCE

1.41

-2.083333

0.7142874

1.67

1.06

54000

NZX ALL INDEX

979.387

0.7944071

11.03494

998.487

790.156

SHUN TAK HOLDING

3.79

4.696133

-9.546541

4.65

2.62

31755552

PHILIPPINES ALL SHARE IX

3982.13

-1.75658

7.654811

4571.4

3411.69

SJM HOLDINGS LTD

19.98

0.9090909

12.57824

22.382

13.804

6244491

11.8

-3.119869

-16.19318

17.38

11.78

2591460

WYNN MACAU LTD

21.65

-1.590909

3.341285

26.5

16.92

3807674

ASIA ENTERTAINME

4.12

-0.2421308

46.37528

4.7647

2.2812

101011

BALLY TECHNOLOGI

73.12

-0.35432

63.54283

73.89

41.74

473312 4911

JAKARTA COMPOSITE INDEX

HSBC Dragon 300 Index Singapor

613.99

0.68

-1.14

STOCK EXCH OF THAI INDEX

1420.94

-1.152688

2.084148

1649.77

1186.38

HO CHI MINH STOCK INDEX

494.66

0.4528562

19.56106

533.15

372.39

Laos Composite Index

1336.87

0.8448558

10.05128

1455.82

1003.17

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

SMARTONE TELECOM

BOC HONG KONG HO

3.25

2.198044

5.863194

3.6

2.99

GALAXY ENTERTAIN

5.3499

-1.110906

34.75819

5.77

2.47

750

INTL GAME TECH

19.29

1.633298

36.13267

20.25

10.92

2629785

JONES LANG LASAL

91.68

-0.1850844

9.220869

101.46

66.82

308385

LAS VEGAS SANDS

57.49

0.506993

24.54506

60.54

35.7876

2894509

MELCO CROWN-ADR

26.19

2.105263

55.52256

26.4097

10.01

2967796

MGM CHINA HOLDIN

2.78

50.27027

2.85

1.52

9015

MGM RESORTS INTE

16.45

-2.373887

41.32302

16.99

9.12

11674658

SHFL ENTERTAINME

22.75

-0.1316945

56.89655

23.08

12.35

267874

SJM HOLDINGS LTD

2.59

13.71539

2.9481

1.8832

1354400

139.85

1.753492

24.32216

144.99

88.9234

1417369

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME AIA GROUP LTD

PRICE

DAY %

VOLUME

37.15

0.541272

16394573

ALUMINUM CORP-H

2.45

0.4098361

8281239

BANK OF CHINA-H

3.25

-0.3067485

159195578

BANK OF COMMUN-H

5.09

0.3944773

13760241

1.867572

BELLE INTERNATIO

11.58

BOC HONG KONG HO

NAME CHINA UNICOM HON CITIC PACIFIC

PRICE

DAY %

VOLUME

11.38

0.3527337

11246831

8.47

0.3554502

4283070

SANDS CHINA LTD SINO LAND CO SUN HUNG KAI PRO

CLP HLDGS LTD

64.85

0.6206362

1520848

CNOOC LTD

14.22

0.4237288

28310757

4621373

COSCO PAC LTD

10.96

-0.9041591

2605667

1.93662

7556000

ESPRIT HLDGS

13.58

4.141104

12217209

25.05

0.2

11106751

25.5

-0.390625

4415608

CATHAY PAC AIR

14.22

-1.523546

1873500

HANG SENG BK

120.8

0.8347245

983467

CHEUNG KONG

113.5

1.702509

6052682

HENDERSON LAND D

49.15

1.340206

2877919 1406768

BANK EAST ASIA

CHINA COAL ENE-H

4.16

17204293

CHINA CONST BA-H

5.79

193019794

CHINA LIFE INS-H

18.6

-0.8528785

25750263

CHINA MERCHANT

24.5

-0.203666

4470909

CHINA MOBILE

HANG LUNG PROPER

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

83.15

0.3621002

9156951

CHINA OVERSEAS

23.4

4.231626

34305958

IND & COMM BK-H

CHINA PETROLEU-H

5.79

-0.1724138

54584852

LI & FUNG LTD

HUTCHISON WHAMPO

1.635514

20.2

4114138

122.6

1.155116

2908257

88.8

0.3957038

11615994

91.65

4.503991

31019047

5.09

-0.3913894

141436843

10.52

-0.5671078

14606992

NAME

PRICE

DAY %

71.6

0.4912281

1656195

42.75

0.94451

6911963

11.16

1.086957

7544684

104.1

-0.2873563

3500944

92.7

0.2162162

1273714

TENCENT HOLDINGS

360.2

-0.1109262

3379832

TINGYI HLDG CO

19.36

0.4149378

2729900

POWER ASSETS HOL

SWIRE PACIFIC-A

WANT WANT CHINA WHARF HLDG

MOVERS

10.5

0.5747126

7104847

69.15

0.9489051

4141193

4 22270

INDEX 22190.97 HIGH

22132.68 21867.25

24.3

1.25

1349885

MTR CORP

29.4

0.1703578

1397696

LOW

22.35

3.712297

12101856

NEW WORLD DEV

11.4

0.5291005

9604209

52W (H) 23944.74

CHINA RES POWER

17.64

-1.781737

17040817

PETROCHINA CO-H

9.19

0.4371585

43990293

CHINA SHENHUA-H

22.55

10520518

PING AN INSURA-H

50.65

0.8964143

10341279

CHINA RES ENTERP CHINA RES LAND

VOLUME

(L) 19076.78906

21870

31-July

2-August

14 14

August 5, 2013 April 19, 2013

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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 5,2013 2013 April 19,

Opinion Business

wires

Japan in action

Leading reports from Asia’s best business newspapers

Jakarta Globe

Yuriko Koike

Japan’s former defence minister and national security adviser, was chairwoman of Japan’s Liberal Democrat Party

Indonesia’s economy in the second quarter expanded at the slowest pace in almost three years, compounding concerns on the Southeast Asian nation as investments ease, inflation accelerates and the currency slumps. Gross domestic product rose 5.81 percent in the April-June period from a year earlier, the Central Statistics Agency reported. GDP hasn’t been that slow since the 5.8 percent expansion rate in the third quarter of 2010. Domestic and foreign investment rose 4.7 percent in the second quarter from a year earlier.

Asahi Shimbun The falling yen helped all eight Japanese manufacturers of passenger cars post year-onyear increases in operating profits for the April-June period, according to financial results released by August 2. The weaker yen buoyed the combined operating profits of the eight automakers by more than 500 billion yen (US$5.02 billion) for the threemonth period, compared to a year earlier. Five of the carmakers booked their largest-ever operating profits for the April-June period. Seven of the carmakers, with the exception of Mitsubishi Motors Corp, saw their sales grow year on year.

Korea Herald South Korea, China and Japan completed the second round of talks for their trilateral trade pact, adding momentum to their push for economic unity in Northeast Asia. During the four-day meeting held in Shanghai last week, the representatives of the three countries discussed key issues such as rules of origins and customs procedures, according to the Ministry of Trade, Industry and Energy. The parties also decided to invite experts on the environment, food and governmental procurement to the next round of talks in order to decide whether they should be included in the negotiation, officials said.

Taipei Times China’s service industries showed the first pick-up in growth since March, adding to signs the world’s second-largest economy may be stabilising after a twoquarter slowdown. The nonmanufacturing Purchasing Managers’ Index rose to 54.1 in July from 53.9 in June, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. An official gauge of manufacturing released on Thursday showed an unexpected expansion.

apan’s prolonged political anni horribiles – spanning more than half a decade – has ended. The Liberal Democratic Party (LDP) won a decisive victory in elections to the upper house of parliament held on July 21, bringing to an end the indecisive politics caused by the lack of an effective majority. During the previous six years, there were six prime ministers, ten defence ministers, and 14 justice ministers (ten of whom came and went during the 39 months of rule by the Democratic Party of Japan). These figures indicate just how unstable the country’s political situation had become. But anxiety about the immature DPJ government, prolonged deflation, and unprecedented challenges posed by neighbouring countries created a widespread sense of crisis among Japanese voters. It was this that motivated them to return the LDP to power, though many voters seemed fed up with the party just a few short years ago. In the recent election campaign, the LDP continued to criticise the previous DPJ government’s immaturity, but avoided attacks on other parties. Instead, the LDP highlighted the beneficial effects of Prime Minister Shinzo Abe’s reforms (colloquially known as “Abenomics”), such as increased share prices, faster GDP growth, and higher employment, all of which have created hope for a turnaround

in Japan’s prospects. Since Abe returned last December for a second stint as Prime Minister, Japanese voters have entrusted him with maintaining political stability and ensuring economic revitalisation. But, following monetary easing and fiscal expansion, it is Abenomics’ third “arrow” that will prove most important – and most politically challenging. The Abe government must implement deregulation and other structural reforms while convincing powerful interest groups to adjust to a new national and global environment in which Japan’s old economic model no longer works. Fortunately, Abe will not need to worry about elections for the next three years. With strong majorities in both houses, he should be able to secure whatever reform

Fortunately, Abe will not need to worry about elections for the next three years

legislation he needs – that is, provided that he can maintain the LDP’s internal discipline (his enormous popularity will help him). Abe’s agenda includes reform of social security in response to demographic trends, as well as gaining the agriculture sector’s acceptance of the TransPacific Partnership, the bold regional trade agreement that will unite the United States, Japan, Australia, New Zealand, and much of the rest of Asia, with the exception of China. The rigors of the TPP are bound to force significant agricultural reforms, and pushing it through will, indeed, test party discipline.

Strong footing But Abe is also pressing for change in medical research and the technology sector

by embracing long-shunned innovations such as iPS cells (artificial stem cells). He is also emphasising the development of renewable energy and power-saving innovations, which became an urgent policy objective following the accident at the Fukushima Daiichi nuclear power plant two years ago. Abe is resolved to make steady progress on each of these key issues. But Abenomics has a strategic corollary as well. Japanese diplomacy lost its footing in the unstable – and often naive – politics of the DPJ years. Thus, Abe has been travelling abroad every month since last December in an effort to demonstrate that Japan has returned as a global player, and is particularly keen to play a prominent role in recasting Asia’s security structures in the wake of China’s rise. Indeed, Abe has visited 13 countries in the last six months alone (a schedule that has helped him to cast aside any lingering memories of his previous tenure as Prime Minister, when ill health forced him from office after barely a year). Abe has placed particular emphasis on strengthening Japan’s alliance with the Unites States, which had atrophied as a result of the DPJ government’s feckless behaviour (relations with China deteriorated as well). More broadly, Abe envisages Japan’s future as that of a trading country that has assumed its rightful role in ensuring a free and open maritime order. Abe’s diplomatic whirlwind is aimed at strengthening ties with countries that share this commitment, as well as Japan’s other values, including human rights and democracy. Of course, given Asia’s size and dynamism, there are many other issues that will need to be addressed in the years ahead, including improvement of the security environment in a currently unstable East Asia and amending the country’s constitution, which the LDP has considered doing for many years. But the first priority for Abe’s second government is to revive the Japanese economy. That task has already begun, and the LDP’s recent election victory will strengthen Abe’s ability to complete it. © Project Syndicate

August 5, 2013

Closing China-Lusophone airport conference

Brazil enacts tough anti-bribery law

The 4th China and Portuguese Speaking Countries Airports Conference will be held in Macau from September 24 to 26. CAM – Sociedade do Aeroporto Internacional de Macau – the management company of Macau International Airport, is the organiser. It will have around 200 participants including airport executives from China (including Macau and Hong Kong), Angola, Brazil, Cape Verde, GuineaBissau, Mozambique, Portugal and East Timor. “The aim…is to develop interaction between airports in China and the Portuguese-speaking countries, share experiences and interchange of information, to bolster the channels of communication in the civil aviation industry”, the organiser’s website said.

Bribing a public official in Brazil could become a very onerous mistake for local and foreign businesses under a law enacted on Friday that for the first time makes companies liable for bribes paid by their employees. Companies found guilty of bribery will face fines of up to 20 percent of their gross annual revenue for the previous year or a maximum of 60 million reais (US$26.22 million). They could also be suspended from operating, have assets confiscated and even face possible dissolution. Brazil’s Congress passed the law, required by the Organisation for Economic Cooperation and Development, in record time.

U.S. employment up by 162,000 in July Retailers add most jobs in eight months

.S. retailers added 46,800 workers in July, the most in eight months, as consumers become more comfortable spending money, marking a bright spot in a jobs report that indicated uneven progress in the labour market. “You’ve got sectors of the retail universe that are doing relatively well, and it’s the retailers that are selling” necessary items, Bryan Gildenberg, Boston-based chief knowledge officer at Kantar Retail, said. “There’s some pent-up demand among shoppers.” Cons umer s pe n d ing, which accounts for about 70 percent of the economy, rose 0.5 percent in June, in line with economists’ forecasts. The Bloomberg Consumer Comfort Index has risen in six of the past seven weeks and last week reached the highest level in more than five years. That confidence is being reflected among retailers that sell discretionary merchandise as well. Clothing and accessories retailers added 4,300 jobs, a 0.3 percent increase from June. The boost likely comes from retailers who have developed strong specialty brands that are resonating more with their consumers, Mr Gildenberg said. “They’ve been expanding their physical footprint because they’ve been able to create national brands,” he added. “They’ve done a nice job of building really strong brands and layering retail on top of it.” The retail industry’s strength was a positive in a jobs report that trailed

Firms hiring but at a fairly moderate pace

economists’ estimates. The 162,000 total increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated. Nonetheless, the new jobs helped the unemployment rate to fall to 7.4 percent. That was down from 7.6 percent and is the lowest jobless rate in four years. The news adds to the picture of a slowly growing U.S. economy

and may make its central bank more likely to end its monetary stimulus programme. The Federal Reserve is currently buying US$85 billion a month in bonds which helps to keep borrowing costs low. However, there is much speculation as to when the Fed will start to rein in this stimulus programme. Fed chairman Ben Bernanke, has said that it might start cutting down the rate of bond buying by the end of

Apple iPhone patent ban overturned First White House veto of U.S. trade decision since 1987

amsung Electronics Co’s patent-infringement victory over Apple Inc turned hollow after President Barack Obama’s administration overturned an order barring shipments of some older iPhone models into the U.S. U.S. Trade Representative Michael Froman, designated by Mr Obama to review the case, said a ban on versions of the iPhone 4 and iPad 2 3G was unwarranted, based on his consideration of public-policy issues regarding patents on fundamental technology for mobile devices. Mr Froman said he based his decision on the fact that standards patents were at the core of Samsung’s case and the Obama administration

has expressed concerns that “potential harms” can result if patent holders use those as leverage against competitors. The Samsung patent covers a way data are transmitted over communications networks. It’s a feature in a widely used technological standard agreed on by the mobiledevice industry. It was the first time the executive branch has overturned an import ban ordered by the U.S. International Trade Commission since 1987, when President Ronald Reagan did so in a case involving Samsung computermemory chips. The dispute is the latest in a series of spats between the world’s two biggest smartphone

vendors, underscoring their battle for dominance of a market that was worth US$293.9 billion last year “Ultimately, this may lead to easing of patent laws and bring the lose-lose and meaningless patent war between Samsung and Apple to an end,” Lee Sun-tae, a Seoulbased analyst at NH Investment & Securities Co, said yesterday. Apple had been ordered to stop importing versions of the Chinese-made iPhone 4 and iPad 2 3G designed for networks run by AT&T Inc, T-Mobile US Inc and two regional carriers in Texas and Alaska. Apple was counting on the Obama administration’s increased interest in patent

the year and stop altogether by the middle of 2014, depending on the strength of the economy. Earlier this week, figures showed that the U.S. economy grew at a faster-than-expected annualised pace of 1.7 percent in the second quarter of the year. That was up from the growth rate for the first three months of 2013, which was revised lower to 1.1 percent from 1.8 percent. T.A./Bloomberg News

disputes to sway the president. “We applaud the administration for standing up for innovation in this landmark case,” Apple spokeswoman Kristin Huguet said. “Samsung was wrong to abuse the patent system in this way.” Samsung is “disappointed” the ITC decision was overturned, Nam Ki-yung, a spokesman at the company’s headquarters in Seoul, said yesterday. “The ITC’s decision correctly recognised that Samsung has been negotiating a licence in good faith and that Apple remains unwilling to take a licence.” Apple sold US$78.7 billion worth of iPhones last fiscal year, making up half of the company’s revenue. It doesn’t break out sales by model. It counts on older iPhone models, often given away with a two-year contract, to entice new customers. Sales of older iPhones helped Apple top analysts’ earnings projections in the fiscal third quarter. Bloomberg News