Macau Business Daily, January 2, 2013 by Business Daily

Year I Number 190 Wednesday January 2, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP $ 6.00

42 hit with casino smoking fines

in first few hours www.macaubusinessdaily.com

MICE: Macau needs the right marketing Injecting more government subsidies might help develop Macau’s exhibition and convention industry. But insiders suggest what’s most needed is a clear marketing strategy to allow the sector to compete with regional rival conference destinations. That in turn will help the government in its stated aim of diversifying the economy beyond gambling.

Pages 6 & 7

total of 42 casino visitors were given no-warning, on-the-spot fines of 400 patacas (US$50) each for smoking in non-designated areas in the first 19 hours of the new policy, the Health Bureau confirmed last night. “From 12am to 7pm today, 42 people were fined for violating the new [partial] ban [on smoking],” a Health Bureau spokesman told Business Daily.

Of those, 21 were mainland tourists, nine were from Hong Kong, four are locals, and eight are tourists from other regions. The fines were issued right away, without giving any warnings or advice,” the spokesman stated. “The first day of the law’s enforcement has been smooth overall. No conflicts have been encountered and no cases required police support.” Page 16

I SSN 2226-8294

HANG SENG INDEX

Stronger local opposition good for Beijing: academic

22690

22668

22646

A possible candidate for this year’s Legislative Assembly elections says a stronger opposition to the city’s government would actually be good for Beijing as well as Macau. Bill Chou Kwok Ping, associate professor of political science at the University of Macau, says there’s currently little local pressure on the administration to deliver much-discussed diversification.

22624

22602

22580

December 31

Page 8

HSI - Movers Name

Guangzhou–Gongbei railway opens, hikes fares The Guangzhou-Zhuhai Intercity Railway’s final section to the Macau border gate at Gongbei is now open. The 23-kilometre segment connects to a high-speed rail route stretching 2,000 km to Beijing. It’s been hailed as potentially reducing Macau’s dependence on same-day visitors. But some fares on existing stages are surging by up to 50 percent.

Page 9

A year in the news A

s 2013 begins Business Daily looks back at a year in the life of Macau and our new role in reporting on the world’s biggest casino city by gambling revenue. What happens in Macau isn’t only about the gamblers. Politics – via the central government in Beijing and via the needs of the local community – plays a key role.

Gaming industry review for 2012 MB Daily’s timeline on politics and economy Chui Sai On pledges deeper mainland ties Pages 2 to 5, 9

%Day

CHINA LIFE INS-H

3.05

WANT WANT CHINA

2.50

CITIC PACIFIC

2.48

PING AN INSURA-H

1.88

CHINA RES POWER

1.44

CHINA UNICOM HON

-0.96

KUNLUN ENERGY CO

-0.98

ESPRIT HLDGS

-1.29

HENDERSON LAND D

-1.35

COSCO PAC LTD

-2.13

Source: Bloomberg

Brought to you by

2013-01-02

2013-01-03

2013-01-04

12˚ 18˚

13˚ 17˚

11˚ 15˚

2 |

business daily January 2, 2013

macau

2012

in review

January Citywide smoking ban introduced Nam Kwong (Group) Co. announces the acquisition of bus operator Transportes Colectivos de Macau SARL – TCM

February The Gaming Inspection and Coordination Bureau issues technical standards for electronic gaming machines Companhia de Telecomunicações de Macau SARL – CTM’s wireless network has a big breakdown, leaving thousands of subscribers without a 3G connection Construction of the Light Rapid Transit elevated railway begins on Taipa

March Macau Cable TV asks arbitrators to award it 500 million patacas (US$62.5 million) in compensation from the government for losses arising from violations of its exclusive contract Wong Chi Hong replaces Shuen Ka Hung as the director of the Labour Affairs Bureau

April Business Daily publishes its first issue Ao Man Long’s third trial starts. He is accused of taking bribes when he was a government secretary in charge of infrastructure projects Two multi-millionaire Hong Kong developers, Joseph Lau Luen Hung and Steven Lo Kit Sing, are accused in a corruption case stemming from Ao Man Long’s third trial Sands China Ltd opens the first phase of its multibillion-dollar casino resort, Sands Cotai Central Construction of the phase two of the Galaxy Macau begins

May Wynn Macau Ltd is granted land in Cotai and says the casino resort it will build there will cost US$3.5 billion to US$4 billion The government proposes political reforms, including the addition of two directly elected seats and two indirectly seats to the Legislative Assembly, and the addition of 100 members to the committee that elects the chief executive

June

October

Ao Man Long is convicted in his third trial and is sent to prison for another six months

Amid fear of a property bubble, the government announces stricter limits on mortgage lending, expands the special stamp duty on property sales and says it will build more public housing

Sands China abandons its effort to get the courts to uphold its claim to Parcel 7 and Parcel 8 in Cotai A vigil in Largo de São Domingos marks the 23rd anniversary of the Tiananmen Square crackdown The Legislative Assembly approves the political reforms proposed by the government, though some members vote against and walk out of the chamber

The government says João Manuel Costa Antunes, the director of Macau Government Tourist Office, will leave his post December 19 MGM China Holdings Ltd and SJM Holdings Ltd get land on Cotai to develop Gaming revenue is 27.7 billion patacas in October, the most in any single month

July

November

Leung Chun Ying takes over as HK’s chief executive

The minimum age for admittance to a casino is raised to 21 from 18

Ferry operator North West Express Ltd suspends its services between Macau and Tuen Mun in Hong Kong when the authorities confine its last ferry to port Melco Crown Entertainment Ltd says it will invest up to US$580 million in a Philippine gaming resort in a deal with property and leisure company Belle Corp The government freezes an increase of 23 percent in what it pays the bus operators to ply their routes

The Commission of Audit criticises the “wasteful” continuing education system and calls for “full and serious” revision of education subsidies Chief Executive Fernando Chui Sai On announces in his policy address that the government will spend over 9.77 billion patacas on social allowances in 2013, including cash handouts

The government puts back to April 2016 the deadline for Sands China to complete development of a plot of land in Cotai

The new chief of the Chinese Communist Party, Xi Jinping, who is expected to replace President Hu Jintao in March 2013, is appointed to party’s Politburo Standing Committee

A cave-in occurs at the construction site of the underwater tunnel that will link the city to the University of Macau’s new campus on Hengqin Island

Gaw Capital Partners decides to invest between HK$3 billion and HK$4 billion in an upmarket housing project adjacent to the Macau Jockey Club

August The government takes back the land for La Scala, an upmarket housing project of Chinese Estates Holdings Ltd, which is owned by one of the accused in a corruption case, Joseph Lau Luen Hung The Legislative Assembly passes the political reform bill Casino and hotel operator Macau Legend Development Ltd says is HK$5 billion (US$645 million) expansion of Fisherman’s Wharf is on track after the government grants it extra land

September

Artur Chiang Calderon, former right-hand man of the ex-boss of the 14K gang, Wan Kuok Koi, is remanded in custody with three other suspects in an alleged murder plot

December Wan Kuok Koi, also known as Broken Tooth is released after nearly 15 years in prison The government admits that it will fail to keep its promise to build 19,000 homes in public housing by the end of 2012 The Maritime Administration says that it has cancelled the licence of indebted ferry operator Hong Kong North West Express Ltd

Hong Kong North West Express Ltd surrenders its licence to operate ferries between Macau and Hong Kong

The unemployment rate drops to 1.9 percent, the lowest ever

A subsidiary of Chinese Estates contests the government’s seizure of land meant for La Scala

Li Gang is appointed as the deputy director of the Liaison Office of the Central People’s Government here

The government decides to scrap the tax code draft. The Financial Services Bureau says it will make “a complete and detailed review” of the tax system

The trial of Joseph Lau Luen Hung for bribery is postponed until January 2013

CTM’s network crashes again, leaving thousands of subscribers without a 3G connection for more than two hours

Sands China opens the world’s biggest Sheraton Hotel as part of the second phase of Sands Cotai Central

The Macau and Guangdong governments announce a new border crossing on the peninsula for pedestrians

Las Vegas Sands Corp.’s chairman Sheldon Adelson announces a US$2.5 billion project for Parcel 3 in Cotai, including a half-scale Eiffel Tower

The Executive Council sends to the Legislative Assembly the urban planning bill

January 2, 2013 business daily | 3

MACAU Beijing’s new policy toward Growing pains Macau and Hong Kong

José I. Duarte

Economist

Sonny Lo

Head of the Department of Social Sciences, Hong Kong Institute of Education

he 18th Party Congress in the People’s Republic of China (PRC) revealed a new emphasis in Beijing’s policy toward both Macau and Hong Kong, namely external intervention in the two territories would have to be prevented, disallowed and denounced. While Hong Kong commentators have worried about the likelihood of Beijing’s tightening of its policy toward Hong Kong, the reality is that the central government had long changed its relatively chaotic and non-directional policy toward Hong Kong to a more assertive and interventionist one after the protests of half a million people on the streets of Hong Kong on July 1, 2003. In 2009, Macau saw the swift formulation and enactment of Article 23 of the Basic Law that outlaws secession, sedition, treason and theft of state secrets. In a sense, Beijing is far more concerned about external intervention in Hong Kong affairs than in Macau, which to the central government does not constitute a security threat to its national security and sovereignty interests. Arguably, Beijing is keen to envisage the enactment of Article 23 of the Basic Law in Hong Kong sooner or later. But the crux of the issue is when will be the politically ripe time for the Hong Kong government to follow the Macau model without undermining the legitimacy of the Hong Kong leadership. While the 18th Party Congress report delivered by President Hu Jintao was brief on both Macau and Hong Kong, it actually highlights the fact that both Macau and Hong Kong are the political models for Beijing to appeal to Taipei for political dialogue in the coming years. Reaffirming the importance of the 1992 consensus [a meeting between PRC and Kuomintang officials recognising the ‘one China’ principle], the Congress report stresses the use of the “one country, two systems” principle to tackle Taiwan’s political future. Obviously, sensing the possible danger that the Kuomintang would not be the sure winner in the 2016 Taiwan presidential election, Beijing is extending its olive branch to Taipei for political dialogue in hope that a peaceful settlement would be reached as soon as possible. That’s in order to preempt the political instability that could be triggered by a return to power after 2016 by Taiwan’s pro-independence Democratic Progressive Party.

Office changes The personnel changes following the 18th Party Congress have not really altered Beijing’s policy toward Macau and Hong Kong. Beijing announced the end of Li Gang’s service as Deputy Director of the Central Liaison Office in Hong Kong, and appointed him the Deputy Director of Central Liaison Office in Macau. Beijing also appointed Zhang Xiaoming, an official from the Hong Kong and Macau Affairs Office, as the new

director of the Liaison Office in Hong Kong to succeed the current director Peng Qinghua. On December 20, remarks on Macau were made by both the director in the Macau Liaison Office, Bai Zhijian, and the new deputy director, Li Gang. Interestingly, while Mr Bai emphasised the need for the Macau government to deal with economic development creatively and to tackle livelihood issues more assertively, Mr Li stressed the importance of Macau adhering to the central government’s “one country, two systems” and powers. It appears that Mr Li was not too familiar with Macau’s urgent needs for economic diversification and social livelihood issues, and that he will need some time to adapt to Macau’s circumstances. Mr Bai’s comments, however, indicate that the Macau government does need to develop Hengqin Island creatively so as to reduce its reliance on casino capitalism on the one hand and to improve the livelihood of ordinary citizens on the other. In fact, Mr Bai’s brief comments raise a challenge to the Macau government’s handling of Hengqin’s development. So far, the developmental plans concerning Hengqin, including how the Macau public and private sectors cooperate with the Zhuhai government, remains relatively non-transparent. Occasionally, the Hong Kong media report on Hengqin’s developmental path carved out by both Zhuhai and Macau in a more detailed manner than the Macau Chinese media – a perhaps abnormal situation reflecting the need for the Macau media and public to perhaps look into the details of the Macau-Zhuhai cooperation. Perhaps the Macau government will have to release more information on Hengqin’s development to the Macau public. Doing so in a more regular and timely manner might help to prevent any impression that secrets are being kept.

The new Liaison Office leadership, with Li Gang as the new deputy director…will play a crucial role in overseeing the economic, social and electoral developments of Macau in the years to come

It is in the interest of the Macau government and the Macau people to participate more in the developmental plans and projects of all aspects of Hengqin, which will provide the necessary geo-economic space for Macau to grow further as a very unique gambling hub and tourist city in south China.

New chapter Mr Bai’s comments also touched on the increasing participation of young people in Macau politics – an important phenomenon neglected by many observers. In recent years, many young Macau people have developed a stronger sense of Macau identity, trying to participate in social and political discourse and to push the government to democratise the political system further. However, the 2012 political reform plan approved by the Legislative Assembly and Beijing appeared to disappoint these youngsters, who demanded that Macau deserves a more democratic system than just adding two directly elected seats and two other indirectly elected seats to the Legislative Assembly while increasing the number of members of the Election Committee of the Chief Executive from 300 to 400. As such, we can anticipate that more young people will try to participate in the upcoming elections to be held for the Legislative Assembly this year. This election will have several significant implications for Macau. First, the casino-related interest groups will try to grasp as many directly and indirectly elected seats as possible so as to enhance their bargaining power vis-à-vis the Macau government prior to the expiry of the casino franchises in 2020. Second, the Macau democrats will see a younger generation participating in direct elections, for many of them are dissatisfied with the pace and scope of democratic reforms. Third, the new legislature will oversee the process and procedures in which the Macau government will consult the members of the public on the review, renewal and perhaps retendering of the casino franchises well before 2020. Hence, the new Liaison Office leadership, with Li Gang as the new deputy director – and perhaps in future as the director succeeding Mr Bai according to some rumours – will play a crucial role in overseeing the economic, social and electoral developments of Macau in the years to come. In short, Beijing has adopted a slightly new policy toward both Macau and Hong Kong, preventing the two territories from being influenced by external forces. This renewed emphasis is in line with the modification of Beijing’s policy toward Hong Kong since 2003. In a nutshell, the 18th Party Congress and its resultant personnel changes among the Beijing officials administering Macau have opened a new chapter in the central government’s policy toward not only Macau but also Hong Kong and Taiwan.

s the year ends, tradition binds us to take stock of what it has brought us. The point of the endeavour is not so much to come up with a complete record of what happened but rather to identify the main trends and constraints that will frame the city’s future, the opportunities and challenges that may come its way. Typically this type of exercise begins by assessing the rate of economic growth but let us leave that for later. I venture the most noteworthy indicator of the year just ended is the unemployment rate. It fell to 1.9 percent, the lowest level reached since statistics on unemployment were first collected 20 years ago. Macau is, for all practical purposes, at full employment. The rate of underemployment is similarly at a record low. The implication is growth cannot be pursued by relying mainly on the homegrown workforce. To compound concerns, the dynamics of the city’s demographics are unfavourable. The population is ageing. The number of young people entering the labour market compared to workers nearing retirement is shrinking. The supply of labour is stretched as never before and is becoming a constraint to growth.

Growth woes Growth has slowed and forecasts for this year suggest a rate of growth that will be about half of last year’s – or less. That raises some concerns but perhaps more concerns than are justified. There are several reasons why one might expect growth to moderate. Growth rates in the past two years have probably been abnormally high. Remember that 2008 and 2009 were the years of the credit crisis and uncertainty. Those circumstances led to the postponement of investment decisions and a precautionary contraction in consumption. As expectations improved, there was over-compensation for the next two years. That rapid rise had to subside sooner or later, and the past record shows that growth has

been prone to volatility. The annual rate of growth for last year will probably only be known at the end of the first quarter of this year. It will look small in comparison to the benchmark of the past two years but it will be high by most other standards. More worrying is growth is unbalanced. Last year’s annual statistics are likely to confirm an evergrowing reliance on the city’s gambling “monoculture” and that will heighten worries about the economy’s resilience.

Setting targets In any case, the city’s future growth will rely mainly on imported labour. As plans are laid out for the development of Cotai, concerns will mount about the costs the expansion of the gaming sector imposes on economic activity and on the public’s livelihood. In the absence of a clear policy framework, each of the city’s casino operators has an imperative to develop their projects quickly. That will accentuate the strain on infrastructure, not to mention increases in traffic congestion and pollution, and add more pressure to an already unbalanced residential market. Persistent inflationary pressures compound each of these stresses. Conditions such as these suggest a slowdown in growth would be welcome. There is a need for a sound urban development plan based on reasonable growth targets for the economy and the population. The supply of affordable homes – deficient for those who actually work and live here – is an issue that must be rapidly addressed. The correction of market distortions that cause or accentuate price pressures need careful consideration. In sum, the city’s evolution last year strongly suggests that palliative measures will prove to be increasingly inadequate, as time cannot help heal these problems. The tradeoffs associated with the city’s current economic model should be evaluated and discussed openly, as kicking the can down the road will become increasingly risky and eventually result in hitting the wall.

4 |

business daily January 2, 2013

macau

A year in the life…of the world’s biggest casino market Business Daily looks back at our 2012 gaming coverage – starting from our first editions in April Michael Grimes

michael.grimes@macaubusinessdaily.com

as Vegas Sands Corp. made plenty of headlines again in 2012 – many for reasons related to business development in Macau. That was in contrast to 2011, where often the headlines were concerned with legal troubles of one

kind or another – many relating to the fallout from the sacking of former Sands China Ltd president Steve Jacobs in July 2010. But it wouldn’t feel like a year in the life of modern Macau if there weren’t at least one headline about a

lawsuit relating to one of Macau’s Las Vegas-based operators. As I. Nelson Rose, a California-based visiting law professor at the University of Macau told Business Daily earlier this year: “Wherever U.S. companies go in the world you know that litigation won’t

be far behind. It’s the culture.” So let’s start with an exclusive story we published on June 4. “Two subsidiaries of Sands China Ltd have given up their legal rights to Cotai land Parcels 7 and 8 – and in return SCL will be allowed a

Year of Cotai 2.0 and end of two eras As new casino schemes hit the headlines, we said goodbye to under-21 gambling and all-smoking casinos

n one of Business Daily’s earliest editions following the newspaper’s launch on April 2, we reported some better news for the Las Vegans. That was the opening of LVS’s Sands Cotai Central Phase I – after several years of delay linked to the global financial crisis. The opening ceremony is now famous for Mr Adelson’s appearance in tuxedo and sunglasses – a photo that has been reprinted many times – often as an accompaniment to less than flattering copy on LVS. But when on safer ground talking numbers earlier in the day of the launch, Mr Adelson had stated Sands Cotai Central’s cost would be US$5 billion once completed this year [2013]. Set against that is its potential to build the company’s Macau market share at a time when there will be no new casinos opening on Cotai until 2015.

Towering ambition On August 10 we had another exclusive about LVS. This time it was the plans for a scale replica of France’s most famous landmark the Eiffel Tower, as the centrepiece of Sands’ plans for Lot 3, next door to The Four Seasons Macao. Three days earlier on August 7 we exclusively revealed the entry ages for customers and workers at Macau casinos were to be raised to

21 with effect from November 1. The ‘Eiffel Tower’ story was confirmed at the opening of Phase IIA of Sands Cotai Central on September 20. Some more details emerged. It will cost US$2.5 billion, with an equity contribution from LVS which will be “somewhere between US$750 million and US$900 million depending on the final costs of the building,” said Michael Leven, the firm’s president and chief operating officer, adding it would take about 30 months to build. On the final day of the year, Macau said goodbye to a longstanding tradition – ‘smoke anywhere’ gaming floors. At the stroke of midnight on December 31, a partial smoking ban came into effect. Casinos now need government permission to operate smoking zones. They can only do so in a maximum of 50 percent of their casino floor space. Anyone smoking outside the smoking areas faces a maximum on-the-spot fine of 400 patacas (US$50). Government inspectors will also from now on randomly check air quality across the floors of the casino properties. A report from Praveen K Choudhary, managing director of Morgan Stanley in Hong Kong just before Christmas, suggested the new measures could reduce total gross gaming revenue growth expectation by three to four percent.

Piling work at Galaxy Macau Phase 2 (Photo: Manuel Cardoso)

The April to October period was also busy for news regarding the other planned new Cotai resorts. On April 27 we reported Galaxy Entertainment Group – one of two Macau casino operators founded exclusively by local Chinese entrepreneurs – had pulled off a coup. It won the race to be first of the six Macau concessionaires to start building work on the next round of development on the Cotai Strip. Galaxy - founded by Hong Kong building materials tycoon Lui Che Woo - plans to invest about HK$16 billion (US$2.1 billion) in the second phase of its Galaxy Macau resort,

adding as many as 500 gaming tables and 1,300 extra hotel rooms according to a regulatory filing. Phase one cost HK$16.5 billion and opened on Cotai in May 2011. It helped more than triple the group’s profit in 2011. But by December 20, Galaxy Macau ‘Phase 2’ was overshadowed by news of an even more ambitious addition to the firm’s Cotai real estate. It’s going to spend HK$50 billion (US$6.5 billion) to create a 4,500-room resort next door with 1.3 million square feet of retail space and eventually up to 1,100 gaming tables. M.G.

January 2, 2013 business daily | 5

MACAU completion date extension on Parcel 3 and to sell apartments in its Four Seasons Macao development, Business Daily has been told. The latter is a long cherished dream of the company, dating back to the Four Seasons’ completion in 2008,” we reported. On this occasion the litigation was in the Macau courts and was heading for a happy ending. LVS was giving up something – the right to develop Cotai land plots known as 7 and 8 – which the government said in December 2010 was “not approved”. In return LVS stood to get a big compensatory prize – the ability to turn the mothballed Four Seasons apartments into cash. The deal could have netted SCL at least US$1 billion net in sales of access rights to apartments according to analysts. In the end, only the time extension on Cotai Parcel 3 was actually granted by the government.

Events, events The expected happy outcome evaporated four days after our Four Seasons apartments revelation. The Wall Street Journal published the so-called ‘smoking gun’ e-mail said to be from Leonel Alves – an outside legal adviser to Sands China Ltd and member of Macau’s Executive Council. The 2009 e-mail relayed a message from an unnamed Beijing contact seeking a US$300 million (2.4 billion patacas) payment to mediate on two problems faced by LVS. One was the legal roadblock created by the Macau government over the right to sell on rights to the apartments. The other was a lawsuit by Taiwanese businessman Marshall Hao who accused LVS of improperly terminating a 2001 agreement to make a joint bid for a Macau casino licence. There is no suggestion from

Business Daily that Mr Jacobs himself or his lawyers supplied documents to the WSJ or that the WSJ was aware of the significance of the timing of its story. Nonetheless the implication of the story – that a Sands China external adviser had suggested to the company it might wish to pay money to a Chinese official to solve a business problem – a move that could have seen Sands China fall foul of the U.S. Foreign Corrupt Practices Act – made it politically impossible for the Macau government to authorise the Four Seasons apartments sales or indeed LVS to accept such a proposal.

No interest There is no suggestion that either Sands China or LVS at any time considered taking up the ‘offer’ and Mr Alves denies any wrongdoing. Macau’s Chief Executive Fernando Chui Sai On also said he had been given an explanation by Mr Alves and he “accepted’ it. Nonetheless the publicity brought fresh international scrutiny on Macau in general and LVS in particular, as we reported in our follow-up story on July 18. And along with unwelcome headlines out of Macau, Mr Adelson’s multi-million dollar backing for Republican presidential candidates in the United States did not go unnoticed by the media there – especially the more liberal wing of the Fourth Estate. That debate trundled on – inflamed by a claim in a court filing by Mr Jacobs in his Nevada lawsuit for wrongful termination that LVS chairman Sheldon Adelson had approved a “prostitution strategy” at the casino operator’s Macau properties. Mr Adelson and the company strongly deny the allegations. On August 9 Bloomberg News reported Mr Adelson was suing the National

Wynn, MGM, SJM join Cotai party – Studio City ‘re-joins’ via Melco Crown

VS already has land for The Parisian – so now it’s just the small matters of the money and getting the Macau government to sign off on the plans. Three Cotai projects that were still waiting for their land concessions – Wynn Cotai, MGM Cotai and SJM Holdings Ltd’s long-awaited expansion beyond its traditional heartland on Macau peninsula – received good news this year. Wynn’s came in late spring, as we reported on May 3. Wynn chairman and founder Steve Wynn said in an interview with Business Daily’s sister publication Macau Business magazine that the scheme – featuring 500 gaming tables, 1,000 slots and 2,000 hotel rooms – was likely to cost more than the US$2 billion to US$3 billion discussed in previous company

earnings calls with analysts. “[It will be] US$3.5 billion, US$4 billion,” Mr Wynn said in response to a question on the budget. “We will build it like we did Encore [Macau]; out of cash flow and if we need any help, the banks are all there for us.” Asked if he planned to issue fresh equity to fund the Cotai venture, he replied: “I have no plans of doing that.” MGM Cotai and SJM’s Cotai scheme received their land grants within 24 hours of each other – MGM’s on October 18 and SJM’s the following day. The US$2.6 billion scheme from MGM China Holdings Ltd – a venture between local businesswoman Pansy Ho Chiu King and Las Vegas-based MGM Resorts InternationalInc.–willincludearesort with 1,600 hotel rooms, 500 gaming tables and 2,500 slots built on a 71,833

Jewish Democratic Council in the U.S. for allegedly asserting the claims as facts. Mr Adelson didn’t entirely corner the market in hostile publicity during 2012. Steve Wynn, founder and chairman of Wynn Resorts Ltd and its local unit Wynn Macau Ltd, made a strong showing with his legal battle against former “best friend” Kazuo Okada, a Japanese businessman who was a key backer of the Wynn business for a decade. The struggle between the two men has at times resembled a scene from a television wildlife documentary where a crocodile and buffalo are locked in combat – each trying to drown the other – while the other animals of the savannah stand around chewing the cud while registering a mixture of alarm and fascination. What’s spurring both men on is the perception the other party has committed a betrayal. According to a Wynn Resorts filing Mr Okada pursued a plan for a Philippine casino resort in contravention of a non-competition agreement and by methods that put Wynn’s Nevada gaming licence in jeopardy. Mr Okada contended in an open letter to Wynn shareholders in September that the board’s decision in February unilaterally to cancel Mr Okada’s near 20 percent shareholding – valued then at US$2.7 billion – at a 30 percent (US$800 million) discount – was really about Mr Wynn shoring up his own position as a minority owner of the company he founded. Mr Okada further suggested it was revenge for him asking awkward questions about the 1.1 billion patacas donation made to the University of Macau Development Foundation – a bequest announced at a time when Wynn Macau was seeking Macau government approval to develop a casino on Cotai.

square metre plot, the statement said. It will take up to 36 months to build, the company said. SJM told the Hong Kong Stock Exchange after trading closed on Friday October 19 that it had agreed to pay the government 2.15 billion patacas (US$269 million) to develop 70,468 square metres of land near the intersection of Avenida do Aeroporto and Rua de Tenis, close to the Macao Dome. SJM said it would apply for about 700 gaming tables, 1,000 slot machines and 2,000 hotel rooms in its development there. Studio City – a Cotai project long stalled by a dispute between the original investors – re-joined the party this summer when the new majority owner, Melco Crown Entertainment Ltd, restarted construction. The problem is, no one apart from the contractors and MPEL management is quite sure when. In contrast to the Las Vegas operators – that rarely miss a chance to build a mountain out of a project milestone molehill – MPEL was discreet to the point of shyness about the resumption of construction work on the US$2.9 billion scheme, which the firm says is “on track to open around mid-2015”. Whether that shyness is connected to the fact there’s as yet no mention in the Official Gazette of a casino for the scheme, time will tell. No sensible commentator seriously believes MPEL would spend nearly US$3 billion on a ‘casinoless’ holiday resort. But the local media do detect a distinct divergence of opinion – at least in public statements – between Francis Tam Pak Yuen the Secretary for Economy and Finance, and Lau Si Io, the Secretary for Transport and Public Works, whose department must sign off on all the construction permits. M.G.

Old school ties Two junket room figures from the days of Stanley Ho’s monopoly stirred memories of the 1990s Last but not the least, the second half of the year brought a glimpse of the ‘bad old days’ of the Macau gaming market – the violence associated with the 1990s prior to the territory’s handover to China. That began in late June with the savage beating at the New Century Hotel, Taipa, of Ng Wai, also known as Ng Man Sun or Kai Tze [‘Market’] Wai. As we reported on July 3, it was not the first time Mr Ng had been the subject of a violent attack. In the end, most troubles in the world come down to money – who has it and who doesn’t. It’s possible that rule applied in this case. As we revealed on September 12, the annual report for year ending March 31 2012 of Amax Holdings Ltd – a Hong Kong-listed investor in Macau junkets in which Mr Ng has a 24 percent stake – mentioned HK$2.06 billion (US$258 million) in bad debts racked up by Amax. The amount represents combined losses on loans made by an Amax subsidiary to another company, AMA International, an aggregator of junkets that used to be the main investor in VIP play at Melco Crown Entertainment Ltd’s Altira property in Taipa. The filing said AMA used the money to provide gambling credit to agents and casino players.

Broken Tooth On December 1, Wan Kuok Koi, aka ‘Broken Tooth’ – one of Mr Ng’s fellow junket operators from the monopoly days of Stanley Ho Hung Sun – emerged from a different kind of confinement; namely a prison cell. He had served nearly 15 years for being a triad gang member and leader, for money laundering and involvement in loan sharking. Mr Wan’s release created some nervousness in the city, especially among those who remembered his ‘heyday’ in the 1990s. But as we reported – when revealing exclusively on November 13 that casinos had been put on alert to report any attempts to organise a homecoming party – the convicted gangster had been warned by mainland authorities not to attempt a violent ‘comeback’. “Now the ‘big guys’ are different people. If you want to do business in China – including Macau – you have to have a good relationship with the central government,” was how one commentator explained it to us on December 3. Here’s to an incident-free Year of the Snake for Mr Wan and a happy New Year to all our readers. M.G.

6 |

business daily January 2, 2013

macau

MICE industry calls for marketing drive Injecting more money may help develop the MICE industry but, above all, the industry needs a clear strategy, say people that work in it Luciana Leitão

leitao.luciana@macaubusiness.com

or the meetings, incentives, conventions and exhibitions (MICE) industry to grow faster, Macau needs to be marketed as a place for MICE events, say people working in the industry. Only then will the industry’s importance to economy grow enough to help it compete with its neighbours, they say. Statistics and Census Service data show that in the third quarter of last year 223 MICE events were held here, 13 fewer than a year before. The number of people attending, however, increased by 34 percent to 699,805. In the first nine months of last year 738 meetings and conferences were held here, 45 fewer than a year before. But the number of participants grew by 29 percent to 991,602, most of whom attended exhibitions, according to official figures. The government decided last month to help nurture the MICE industry by subsidising it to the tune of about 40 million patacas (US$5 million) this year, more than the amount it allocated to the industry last year. The government will also begin subsidising the promotion, translation and logistics costs of MICE events. Bruno Simões, the executive director of smallWORLD Entertainment Ltd and managing director of DOC DMC, two companies that organise MICE events, believes the industry could grow at a much faster pace. “It’s not a problem of lack of money. I think the government is doing very well in promoting and injecting money into the industry, but there is a lack of strategy,” Mr Simões told Business Daily. Patricia Cheong, managing director and owner of MM Marketing Communications Consulting Ltd, said there was no shortage of space for MICE events. Ms Cheong said that what was important was to pitch for the right event. “In other countries or regions,

governments subsidise heavily if it is the right event for the city – not only with money, but with connections, venues and logistic support,” she said.

Statistics questioned Ms Cheong said the right strategy should be adopted. “Only money it is not enough,” she said. Success, she said, requires “the right team to pitch for the right projects”. The vice-chairman of the Macau Convention and Exhibition Association, Alan Ho Hoi Ming, said that more important than money was choosing events that would benefit Macau and had growth potential. “High-quality buyers and trade visitors who come to Macau spend more money than ordinary visitors,” Mr Ho said. Despite what the official statistics show, Ms Cheong feels that the number of MICE events here has not been growing. “Based on my company’s experience, the industry has not been diversifying. My company has two main gaming-related events, which are Global Gaming Expo Asia and iGaming Asia Expo, and these have remained the same over the years and I don’t see any additional conferences coming to town,” she said. Mr Simões questions how the government compiles its figures on MICE events.

991,602 Participants in MICE events in the first nine months of 2012

“There is some difficulty in knowing the statistics of all the events in Macau. MICE is not only those more public and visible events, but also the private ones,” he said. The government reallocated official responsibilities last year, transferring oversight of the MICE industry to the Macau Economic Service from the Macau Government Tourist Office.

Stuck in hotels Mr Simões said this change had had a “negative impact” on the industry. “In every country in the world, MICE is of the responsibility of the tourism department,” he said. He said it had created confusion and hindered the development of the industry. Mr Simões said it was more important at this stage is to improve the experience visitors had when they came. “We don’t have a real positioning of MICE in Macau and, mainly within the government, there are a lot of details that could be improved for Macau’s offering to have more quality,” he said. He complained that MICE organisers were not allowed to hold events in public and historical places. “We’re always stuck inside hotels, because we cannot host events in public venues,” Mr Simões said. He believes new infrastructure and transport connections are always welcome, as the city’s present infrastructure and transport connections are insufficient. He said the ferry service to Hong Kong International Airport should be improved for the convenience of visitors. “When they arrive in to Macau, the event organisers already have a bad impression,” Mr Simões said.

Infrastructure smokescreen Charlie Greco, executive director of conferences and exhibitions for MP

International Ltd, thinks “little effort” is being made in the MICE industry and that it attracts insufficient “real investment activity”. Is development of the MICE industry just a question of building the right infrastructure? Mr Greco does not think so. “There is always a lot of talk about infrastructure: we need a bridge first and we need to expand into a truly international airport, the ferries are not enough, we are not getting a lot of drive-in from Zhuhai, there not enough buses. But close to 30 million people somehow make it into Macau,” he said.

Govt venue idea divisive Is there a need for the government to build a public convention and exhibition centre? Most people in the meetings, incentives, conventions and exhibitions (MICE) industry that Business Daily has spoken to say there is no need because there is already enough space in the hotels and resorts here. But not all agree. The vice-chairman of the Macau Convention and Exhibition Association, Alan Ho Hoi Ming, believes there is a need for public infrastructure to meet the needs of some companies. “The Macau government needs to have a plan to build a new exhibition and convention centre,” he said. “Some of the event organisers may need to choose a venue without casino facilities.” Mr Ho says a government-built centre would have to be near the city’s hotels. In contrast, Paul Kwok Sai Kit, the general manager of the Grand Hyatt Macau, said another venue would suck up scarce labour. Mr Kwok said a public MICE centre would also cause logistical problems. “Hotels are so big. If you are creative, you can make things interesting,” Mr Kwok said.

January 2, 2013 business daily | 7

MACAU “I have always thought of this discussion about infrastructure as a smokescreen,” he said. He believes the development of the MICE industry is a question of the right marketing. “I don’t think Macau is being marketed like any other major city in the U.S., Europe or even in Asia. In those cities, you tend to see visitors bureaus, which spend a lot of time bringing people in from all over the place, to entertain those people in their city.” Zhuhai is just across the border and Mr Greco believes it may be a tough competitor if the government here fails to change its approach. “There are new facilities being built [in Zhuhai]. Things are not going to get easier, but they are going to get harder,” he said. He said another obstacle to the development of the MICE industry here was the preference of hotels to reserve rooms for gamblers. Mr Greco believes the MICE industry can become a significant contributor to the economy only when Macau follows Las Vegas in letting MICE replace gaming as its priority.

MOP 40 mln

Govt subsidy for MICE industry planned for 2013

MM Marketing’s Ms Cheong said that within the MICE industry, conference organisers seemed to be doing “quite well” but that exhibition organisers seemed to be having problems.

Look at Singapore Official data show that in the first nine months of last year Macau held 738 meetings and conferences but only 35 exhibitions. Ms Cheong said Macau should set up a task force to develop the MICE industry and market the city as a place to hold MICE. “For instance, in Singapore they have a team really focusing on assisting the private sector to bring in events,” she said. One of the associations of MICE companies says the industry has been thriving. Mr Ho, the vice-chairman of the Macau Convention and Exhibition Association, said business last year had been “very good”, contradicting the official figures and the picture painted by MICE organisers. He said the industry had been growing, in part because of facilities in the new resorts in Cotai. He said there had been good omens for the industry. Mr Ho said that last year two incentive meetings had been held, one in September and the other in November, each attended by more than 10,000 people. “It’s a very good sign that Macau can organise large meetings and largesize exhibitions,” he said. But he said not all was perfect, as there were still problems in the peak season, usually between September and November, when hotel rooms could be in short supply. “If we need to rent 1,000 rooms, it is difficult to find,” Mr Ho said.

Heritage key to future for MICE, say casinos Luciana Leitão

leitao.luciana@macaubusiness.com

sually, people who want to organise meetings, incentives, conventions and exhibitions (MICE) choose the destination first and only after that find their venue, say event organisers. This means that to get ahead in the competitive MICE industry, Macau needs to promote itself as a culture and heritage destination rather than focus on infrastructure. Outside gaming, MICE is the second “most fundamental part” of Sands China Ltd’s business, says Brendon Elliott, vice president of sales and resort marketing at the Venetian Macao casino resort. The growth in MICE is “critical” for the company’s long-term sustainability, says Mr Elliot, adding that the company has 264 meeting room options and the “largest integrated facilities” anywhere in Asia. The executive believes it is important for Macau to evolve towards becoming a final destination with multiple offerings, instead of being seen as a stopover for tourists within the region.

First steps When Sands China Ltd opened it in 2007, the Venetian Macao saw a “particular rise in demand” from the MICE industry. “There was nowhere else in Asia that had 3,000 rooms and the facilities we offered at the time,” says Mr Elliot. In 2009 a growth slowdown due to the global financial crisis impacted on the industry, but it picked up again in the two following years. “In 2010/2011 we increased over 20 percent, and so far for 2012, we’re on target for about a 30 percent growth. Looking at the last two years, we would have increased 50 percent in our group business,” he says. Mr Elliott says the second phase of Sheraton Macao, which is expected to open in the first quarter of this year, will enable Sands China to offer more than 9,000 rooms and suites and 1.3 million square feet of meeting and convention space. “Our strength is that we actually have over 250 meeting rooms, and also we provide the venues with networking accessibility, the ability to be contained. That’s important when the groups come together,” he says.

People come to Macau firstly because we have the supply to meet the demand and secondly because of its heritage and culture Brendon Elliott, vice-president of sales and resort marketing, Venetian Macao

of luxury cars and yachts, but guests are also staying here,” says Mr Kwok. Grand Hyatt Macau’s general manager has no concerns about competition. “In the end, all properties on Cotai benefit from development and different offerings,” he says.

Improving the offering

Growth in the MICE industry will continue as long as the government continues to focus on exhibitions and secures more events that are beneficial to Macau, he added.

Highs and lows How do you choose which events to pitch for? It depends on the organisation and how to maximise the strengths of integrated resorts, with factors such as rates and size coming into play. There are seasonal peaks and troughs that make it imperative to choose wisely. “Sometimes we don’t even have the facilities to cater for the demand, particularly if we’re looking into January and mid-October/ November,” says Mr Elliot. So when there are capacity constraints, casino resorts usually have to pick the best events, which normally means the type of business that entails the longest length of stay in Macau. “Normally, [we choose] those groups that stay two nights instead of just one night, those who are coming for the purpose of meetings versus those just for incentives,” he says. Paul Kwok Sai Kit, the Grand Hyatt Macau’s general manager, says people choose a place for a MICE event more for the destination than for economic reasons. The Grand Hyatt is part of Melco Crown Entertainment Ltd’s City of Dreams complex. Melco Crown is another casino operator betting on MICE events as a way to diversify its business. Mr Kwok says there is a wide variety of offerings in the MICE market. Mr Elliot believes Macau’s biggest competitors are Hong Kong, Shanghai and Singapore. Mr Kwok believes the development of the MICE industry will be helped by the new Guangzhou-Zhuhai highspeed railway and the Taipa ferry terminal. With an annual increase of 10 percent since 2010 in the number of MICE events it holds, the Grand Hyatt Macau, given its size, aims more for small events. This limits the size of the exhibitions it holds. “Because of the size of our facilities, we cannot host certain events. In the Venetian, you can have exhibitions

Mr Elliot of the Venetian Macao says people choose Macau for what it has to offer. “People come to Macau firstly because we have the supply to meet the demand and secondly because of its heritage and culture,” he says. He says heritage and culture is the city’s weak point. Mr Elliot says Macau struggles to cope with large groups. He says the city’s infrastructure disappoints people when they arrive. “Yes it’s a bad experience, but once you meet with colleagues and peers that’s quickly forgotten,” he says. He says that given the transport projects planned for the coming years, such as the bridge linking Hong Kong, Zhuhai and Macau, the light rapid transit elevated railway and the new Taipa ferry terminal, he believes there will be adequate infrastructure to support the growth of Macau from 2016 onwards. “That will take another two years for the world to go, ‘Wow’.” Mr Elliott says he expects Macau to be the largest convention centre in Asia by 2020, holding big events. The Grand Hyatt Macau is wants a different slice of the MICE market. Until last year, it tended to hold small meetings, with those taking part staying in various hotels but gathering in the Grand Hyatt Macau, says Mr Kwok. MICE events are a priority for the hotel, he says. “Although our venue is not one of the biggest in Macau, it is within our Asia- Pacific division,” he says. The hotel has 791 rooms and 15 function areas. The Grand Hyatt Beijing is the Hyatt that holds the most events. The Hyatts in Hong Kong and Macau are close behind it. Mr Kwok believes the Grand Hyatt Macau will keep improving what it has to offer the MICE market as Macau will become more marketable as a destination city in the years to come.

In the end, all properties on Cotai benefit from development and different offerings Paul Kwok Sai Kit, general manager, Grand Hyatt Macau

8 |

business daily January 2, 2013

macau

Beijing not happy with Macau, says academic The mainland Chinese authorities have repeatedly warned Macau to diversify its economy but little has been done, says Bill Chou Kwok Ping, associate professor of political science at the University of Macau. Mr Chou, who is pondering whether to run for the Legislative Assembly, said in an interview with Business Daily that a stronger opposition is needed to keep the government in check. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

he central government is not happy with Macau’s political andeconomicdevelopment,says Bill Chou Kwok Ping, an associate professor of political science at the University of Macau. Mr Chou said several issues concerned Beijing, starting with the economy’sover-relianceonthegaming industry. He said that since the early 2000s the mainland Chinese authorities had beensayingMacau’seconomyneeded to diversify. While officials here often echoed the warning, until recently the Macau government had not seemed willing to act. “Right now, it seems they are quite serious and this shows that they have probably received new instructions from Beijing,” Mr Chou said in an interview with Business Daily. He said Beijing also had concerns aboutlandreclamationprojectsandthe possibility of money being laundered through casinos here. Statements from sources close to the mainland authorities – along with reports in the media last month of Macaujunketoperatorsbeingarrested – gave the impression that the central government had stepped up scrutiny of the casino industry since a new set of Chinese leaders began taking over in November. Investors in casinos had already reacted to reports that recent arrests were linked to money laundering connected to disgraced mainland politician Bo Xilai. “It seems the Macau government is not being very active in dealing with this issue,” Mr Chou said. He said the central government

believed political power here was concentrated in the hands of too few people, businesses and associations. Beijingwouldliketoseeitdispersed, particularly given the fallout from the convictions of the former secretary for transport and public works, Ao Man Long, for bribe taking.

Fledgling candidate Mr Chou became known for outspoken public protests last year, particularlyduringtheannualcharity event Walk for a Million, on December 9, when he was detained by the authorities for allegedly entering a restricted security zone. Hewascallingformoretransparency in the way the Macao Daily News Readers’ Foundation, the organiser of the event, and other establishment associations use the charitable donations they collect. After being detained in such circumstances, he spoke of running for the Legislative Assembly in this year’s elections. “From time to time I do something I am not interested in, like protesting. I don’t like to protest, but if you don’t do it, the decision makers will think what they do is correct,” Mr Chou said. Healsoprotestedthisyearagainstthe coverage of political reform by public service broadcaster TDM’s Chineselanguage channel, and he maintains that it was “immoral and biased”. Hesaidthepoliticalreformprocess had been “bad”, as it had been more of an “opinion mobilisation” than a real public consultation, leading to a poor outcome. Theprocessledtotheadditionoftwo indirectlyelectedandtwodirectlyelected

seats to the Legislative Assembly, and of 100 more members to the committee that elects the chief executive. Mr Chou said these changes were not enough. He said the assembly should have been given more directly elected seats and fewer seats filled by appointees of the chief executive. As for the committee that elects the chief executive, he said that given that universal suffrage was not yet permissible, he expected it to have more directly elected members, at least in the interim.

New faces Mr Chou said he expected to see some new faces in politics as the city geared up for this year’sLegislative A s s e m b l y elections. Hesaidyounger people in the pro-democracy camp, which he classifies as the opposition,would run for seats. But there might be also some new blood from elsewhere, especially young people “claiming to be democrats” in the pro-establishment camp. Such people had similar lines of argumenttothoseofthepan-democrats, which might confuse the public. “There are some people I know who

are preparing to run in the election, and these people are pro-government. What these people say – the tone, the content–issimilartothedemocrats,but they are not democrats,” Mr Chou said. Hesaidtheirfundingcamedirectly or indirectly from the government, through their associations. So he does not believe they can truly act as a genuine opposition. “Macauneedsastrongeropposition in order to improve the quality of governance,” he said. He expects the pan-democrats to gain at least one more seat in the assembly. “I hope Jason Chao can get elected,” he said. Mr Chao is the leader of the New Macau Association. Although Mr Chou is still pondering whether to run for a seat in the assembly, he said there were other battles that still needed to be fought, such as putting pressure on the government for more democracy, and the promotion of civil freedoms. He said the high price of housing andtheconcentrationofpoliticalpower in a few hands were subjects that he would take up in his campaign, should he decide to run.

From time to time I do something I am not interested in, like protesting. I don’t like to protest but, if you don’t do it, the decision makers will think what they do is correct

January 2, 2013 business daily | 9

MACAU Home prices down in November

New mainland pass for residents

Home prices in November dropped by 9.4 percent in comparison with the previous month, data from the Financial Services Bureau show. The average price per square metre of residential space went down to 65,949 patacas (US$8,244) in November, after a temporary peak in October. There were 1,272 residential transactions in November, 618 less than in the previous month.

China’s Ministry of Public Security will start issuing a new pass for Macau and Hong Kong residents to use while travelling to the mainland. Only residents who are also Chinese nationals are eligible for the pass. Starting today, residents can apply for the new pass, according to a statement from the ministry on Sunday, quoted by official news agency Xinhua.

Guangzhou–Gongbei railway opens But fares among most expensive for train travel in mainland China Tony Lai

tony.lai@macaubusinessdaily.com

he Guangzhou-Zhuhai Intercity Railway’s final section to the Macau border gate at Gongbei opened on the last day of 2012. The 23-kilometre so-called ‘missing link’ in a high-speed rail route stretching 2,000 kilometres to the Chinese capital Beijing has been hailed as potentially reducing Macau’s dependence on same-day visitors. But there’s a premium attached. Some fares on existing stages of the Guangzhou to Gongbei route are surging by 50 percent it was announced on Monday’s launch day. But the service has been welcomed by Macau’s business leaders. “This route expands the transportation network connecting Macau to other places… and can be an effective driving force for the growth of tourists and their spending in Macau in 2013,” Ieong Tou Hong, president of Macau Economic Promotion Association told reporters just before Christmas. But even before the price rise announcement on 31 December, a number of analysts had pointed out that prices per kilometre were not significantly lower than for air travel. And even travelling at the top speed of just under 300 kilometres per hour

(184 mph) it still takes eight hours from Beijing to Guangzhou compared to about two-and-a-half hours by air. Although it now only takes 72 minutes to travel the 117 kilometres between Guangzhou South and Gongbei by railway, compared to at least two hours by bus, the fares might put off the lower end of the mass market. The ticket prices to different destinations have increased by in some cases more than 50 percent according to Monday’s announcements. A second-class ticket from Guangzhou South to Zhuhai North for example went up 54 percent from 36 yuan (45.7 patacas) to 55.5 yuan. The price for the new route, Guangzhou South-Gongbei, is set as 90 yuan for first-class seats and 70 yuan for second-class. Each train contains eight carriages, carrying up to 654 passengers. The media in Zhuhai reported the fare was even more expensive than the Guangzhou-Shenzhen route – nicknamed “China’s most expensive railway”. The price for GuangzhouShenzhen Railway is about 0.55 yuan per kilometre but 0.6 yuan per

Gongbei’s new railway

kilometre for Guangzhou-Zhuhai Intercity Railway, according to Chinese-language media. Guangzhou Railway (Group) Corporation – operator of the new Gongbei service, told media on Monday that “tariff adjustments” had taken into consideration affordability for the public, and operational and investment costs. “In our opinion, the efficiencies brought by the Guangzhou- Zhuhai

Intercity Railway will be a notable contributor to Macau’s mass market story next year from both the standpoint of incremental visitors and length of stay in-market,” said Union Gaming Research Macau in a note to investors. Union Gaming added that a representative had travelled on the route on the opening day and found carriages on the Guangzhou to Zhuhai section were at “40 percent plus capacity”.

Deeper Macau-mainland ties T promised by Chief Executive

Like-minded – the CE meets Xi Jinping in Beijing

he territory’s Chief Executive, Fernando Chui Sai On, pledges the administration will work on setting up “long-term mechanisms” and deepening trade ties with mainland China in 2013. Mr Chui said in a New Year statement released on December 31 the government would put “developing the economy and improving the residents’ welfares as the focuses of policies”. The administration would also prepare long-term policies in areas including social welfare, health care, education, housing and traffic, the note said. He added the city “will deepen its ties in business and trade, as well as cooperation and exchanges in other areas, with the mainland to promote appropriate economic diversification and to raise the competitiveness of Macau”. He admitted “there are still different problems and requests in the society” and the administration still had room to improve its policies. The Liaison Office of the Central People’s Government in Macau and the Office of the Commissioner of the Ministry of Foreign Affairs of China in Macau also published New Year statements pledging they would help Macau to develop under the principle of “one country, two systems”. Commissioner Hu Zhengyue stressed they would “resolutely prevent and curb external forces from interfering with the affairs of Macau”.

10 |

business daily January 2, 2013

GREATER CHINA

Manufacturing shows third straight expansion Two separate surveys show similar signs of strength

ctivity in China’s vast manufacturing sector hit its fastestpaceinDecembersince May 2011, a survey of private factory managers showed, with a sub-index for new orders pointing to continued strength in the new year. It showed a third month of expansion. The Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China FederationofLogisticsandPurchasing said yesterday in Beijing. A reading above 50 indicates expansion. The official report, along with a separate manufacturing gauge on Mondayshowingthefastestexpansion in 19 months, reflects increased infrastructurespendingthat’shelping drive a rebound from a seven-quarter slowdown as a new generation of Communist Party leaders takes the nation’s reins. Li Keqiang, set to succeed Wen Jiabao as premier in March, is championing urbanisation

Factory sector strongest since May 2011

to put economic growth on a more sustainable path. “Most data points, especially the industrial earnings, have been pointingtoanimpressiverecovery,”Lu Ting, chief Greater China economist at Bank of America Corp. in Hong

Kong, said in a note. At the same time, “investors should be wary of getting too optimistic in coming months,” he said. The final December reading of a purchasingmanagers’indexreleased on Monday by HSBC Holdings Plc

Hu pledges to support global growth

and Markit Economics was 51.5, the highest in 19 months, after a 50.9 preliminary reading and a final 50.5 in November. The HSBC index focuses more on smaller businesses.

Gauge unchanged The fact that the official gauge was unchangedfromNovemberreflectsthat the “recovery is still relatively weak,” ZhangLiqun,aresearcherwiththestaterunDevelopmentResearchCentre,said inthefederation’sstatement.“China’s economy is entering a stable growth zone with a growth rate hovering between 7 and 8 percent.” The statistics bureau said the PMI for large enterprises in December was 51.1, down 0.3 from November; the level for mid- sized companies rose 0.2 to 49.9; and the index for small businesses advanced 2.0 to 48.1. China’seconomicgrowthprobably accelerated to 7.8 percent in the fourth quarter from a year earlier, up from a three-year low of 7.4 percent in the previous period, according to the median estimate in a Bloomberg News survey of 34 analysts last month. The government will release its report January 18. Profits at Chinese industrial companies rose for a third month in November, statistics bureau data showed on December 27. Bloomberg News/Reuters

leaders have pledged to abandon extravagance, cut down on lavish receptions and live more frugally, amid a broader push to stamp out corruptionandwinbackpeople’strust. Hu’s speech didn’t indicate how China,settocompleteitsonce-a-decade leadershiptransitioninMarch,plansto manage an economy that’s estimated to expand 8.1 percent this year.

Monetary policy

Chinese president vowed to step up efforts domestically Hu Jintao

hinawillworktowardbolstering global economic growth in 2013, President Hu Jintao said in a New Year’s Eve address, amid optimism that a recovery in the world’s second-biggest economy is gaining traction. The nation will “step up efforts to promote strong, sustainable and balancedgrowthintheworldeconomy,” Mr Hu said in the speech broadcast

by state radio and television. China achievedstableeconomicdevelopment in 2012 and will seek to do the same this year while making restructuring of its growth model a focus, he said. MrHu’slastNewYear’sEveaddress before he steps down as president in March signalled Chinese leaders’ confidence the economy may be rebounding after a seven-quarter slowdown. A recovery may facilitate

the transfer of power to Xi Jinping, appointed head of the Communist Party in November and set to become president,asauthoritiesseektoassuage discontent sparked by corruption and a widening income gap. TheChinesepeoplearenowuniting around the leadership of Mr Xi to work toward building a “well-off society,” Mr Hu said. China’s new Communist Party

People’s Bank of China Governor Zhou Xiaochuan, in a separate New Year’s Eve statement posted on the central bank’s website, said the nation willmaintain“prudent”monetarypolicy and deepen financial reforms in 2013. Policy makers will seek to effectively prevent financial risks and keep prices basically stable, he said. In another statement on the PBOC website, Mr Zhou said the nation’s management of its foreign exchange reserves had seen stable growth in returns during the “past few years”. The global economic situation will remain “complicated” in 2013 and China’s management of its reserves will face “relatively large” challenges, he said. China’s foreign exchange reserves increased to US$3.29 trillion at the end of September from US$3.18 trillion at the end of 2011, according to central bank data. Bloomberg News

HK protesters demand Leung step down T housandsofHongKongresidents tooktothecity’sstreetsyesterday to demand the resignation of Chief Executive Leung Chun Ying, who they say misled the public about illegal renovations at his home. Protesters marched through the city with signs calling Leung a “liar” and saying he had lost credibility. OppositionlawmakerswillonJanuary 9 introduce a motion calling for an

investigationintoMrLeung’shandling of the discovery of unauthorized construction on his property. Yesterday’srallyincreasespressure onMrLeung,whosepopularityislower than that of his two predecessors in their first six months in office. The chief executive, who has received the backing of China’s Communist Party GeneralSecretaryXiJinping,alsofaces growing disquiet over air pollution,

responsiblefor3,000prematuredeaths a year in Hong Kong, and over the world’s most expensive home prices. Opposition groups want to show “Leung has no real support among the people of Hong Kong,” said Michael DeGolyer, a political scientist at the Hong Kong Baptist University. They are using “this demonstration as a means to effectively pressure the incoming administration in Beijing.”

Mr Leung, who took over in July, is scheduled to unveil his government’s agenda in his first policy speech at the Legislative Council on January 16. The city needs “strong and sustained” economic growth to tackle problems including housing, poverty and an aging society, he said at a public consultation forum for his policies on December 11. Bloomberg News

January 2, 2013 business daily | 11

ASIA

Singapore 2012 GDP grew 1.2 pct Growth rate implies a contraction in the last quarter from the previous three months Kevin Lim

Kingfisher Airlines loses licence

Singapore’s expansion eased to a three-year low in 2012

ingapore’s economy grew by 1.2 percent in 2012, Prime Minister LeeHsienLoongsaid,indicating the city-state slipped into a recession in the last three months of the year. Credit Suisse economist Michael Wan, in a note to clients, estimated that 1.2 percent growth for the year implies the economy “contracted sequentially by 2 percent quarteron-quarter annualised in the fourth quarter”. “Following the minus 5.9 percent quarter-on-quarter seasonally adjusted and annualised rate in the previous quarter, we think that the economy has likely entered a technical recession,” Mr Wan added. His estimates assumed no revisions to data for the first three quarters.

Singapore, whose trade is around three times GDP, has been badly hit by the weakness in Western economies that has crimped demand for many of its exports. The citystate’selectronicmanufacturershave also failed to tap surging demand for smart phones, unlike rivals in South Korea and Taiwan. For the first 11 months of 2012, electronicsproductionfell11.1percent compared with the same period last year,underscoringtheweaknessinthe exportmarkets,accordingtoindustrial production data released last week. Mr Lee, in his New Year message, said “growth was slower this year, at 1.2 percent”. “The weak U.S., European and Japanese economies dampened our

growth, but some industries have also had difficulty hiring the workers they need to grow.” Looking ahead, the Singapore prime minister said the economy will likely expand by 1 to 3 percent in 2013, reiterating an earlier government forecast. “In our new phase, we must expect slower growth than we have become accustomed to,” Mr Lee added, referring to government efforts to raise productivity rather than rely on low-cost foreign workers to boost economic activity. Singapore’s economy grew by 4.9 percent in 2011 and the government’s latest forecast for 2012, just made in November, had been for expansion of around 1.5 percent. The 1.2 percent growth cited by Mr Lee was, however, slightly higher than the 1.1 percent estimate of most economists in a Reuters poll. Credit Suisse’s Mr Wan said the governmentmeasurestomakeitharder for firms to hire cheap labour from abroadwillcrimpSingapore’seconomic performance in the near term. “We expect less productive companies to start to get weeded out in 2013 as restructuring bites... Businesses that have not made the necessaryadjustmentstosurviveinthe island-state’s high-cost environment will choose to relocate, or throw in the towel completely,” he said. RisingrentsandthestrongSingapore dollar have made the city-state more expensive, and people are doing more oftheirshoppingwhentheyareinother countries or buying off the internet, the retailers said. Reuters

N. Korea leader vows ‘radical’ shift

South Korea exports slide more than expected US$2.1 billion in December from a year ago, the ministry said. Imports fell 5.3 percent from a year earlier in December, the ministry said. The trade surplus was US$2 billion after a US$4.4 billion excess in November. Shipmentsabroadfacetheheadwind ofastrengtheningwon,whichadvanced 7.7 percent last year, top among Asia’s 11 most-traded currencies. The won gained 0.2 percent against the dollar to 1,070.53 at the close on December 28 in Seoul. “Agradualglobaleconomicrecovery will boost overseas shipments of most products, including machinery and information and technology goods,” the ministry said in yesterday’s statement. Headwinds include a “continuedglobalfiscalcrisis,spreading trade protectionism and the won’s appreciationduetoquantitativeeasing steps in advanced countries.”

North Korean leader Kim Jong-Un called yesterday for a “radical turnabout” in the impoverished country’s economy in a rare New Year’s address that also appeared to offer an olive branch to South Korea. Mr Kim’s speech, broadcast on state television, was the first of its kind for 19 years, since the death of his grandfather and the North’s founding president Kim Il-Sung. The year 2013 will be one of “great creations and changes in which a radical turnabout will be effected”, he said, adding that “the building of an economic giant is the most important task” facing the country. Praising the success of the country’s space scientists in launching a long-range rocket last month, Mr Kim said a similar national effort was now needed on the economic front. “The entire party, the whole country and all the people should wage an all-out struggle this year to effect a turnaround in building an economic giant and improving the people’s standard of living,” he said. But he offered no specifics for how this might be achieved by the isolated state, which is already under multiple sanctions and relies on its sole major ally China for 70 percent of its foreign trade. The address will be closely scrutinised in South Korea, which has just elected its first woman president, the conservative Park Geun-Hye, who has signalled a desire for greater engagement with Pyongyang. Mr Kim’s tone was conciliatory as he urged a scaling down of tensions between the two Koreas who remain technically at war. “An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the North and the South,” he said.

Bloomberg News

AFP

Sales declined in December after two straight months of expansion

outh Korea’s exports unexpectedly fell for the first time in three months, suggesting that tepid global demand and gains in the won are sapping economic momentum as a new president prepares to take office. Overseas shipments dropped 5.5 percentinDecemberfromayearearlier, after a revised 3.8 percent increase in November, the Gwacheon-based Ministry of Knowledge Economy said in a statement yesterday. The report on sales that make up about half the nation’s economy is the first since Park Geun Hye won the December 19 presidential election. Gross domestic product may expand as much as 3.8 percent this year as overseas demand improves and Park boostsspendingonwelfare,according to HSBC Holdings Plc, a rate that compareswiththe2.1percentfor2012 estimated by the Finance Ministry. “Wemayseesomemoreturbulence ahead before a full-force recovery in

the second half,” led by exports, Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul, said before therelease.“Thenewgovernmentand central bank will try to support the economy for the time being with more spending and low borrowing costs.” The ministry said in a statement that exports declined as last month had three fewer working days than December 2011. Average exports on working days rose 7.6 percent to

US$2 bln South Korea’s trade surplus in December

India’s troubled Kingfisher Airlines Ltd has lost its permit to fly after a deadline to renew its suspended licence expired, the national aviation regulator said yesterday. The news is a fresh blow for the debt-laden carrier whose operations have been grounded since October after employees went on strike over unpaid wages. “Kingfisher’s flying permit has lapsed,” Directorate-General of Civil Aviation chief Arun Mishra told AFP. “They failed to provide additional details on the funding of operations,” Mr Mishra added, referring to Kingfisher’s revival plan submitted to the DGCA last month. But the airline said there is no “cause for concern” as the rules allow for the renewal of a permit within two years of expiry. “Kingfisher is confident of securing approval from the regulator on the restart plan, licence approval and reinstatement of its operating permit,” its spokesman Prakash Mirpuri said in a statement late on Monday. Kingfisher, controlled by liquor baron Vijay Mallya, owes millions of dollars to banks, airports, fuel suppliers and its staff and has been looking for a foreign investor to inject fresh funds. The firm has been the worst-hit of India’s airlines in 2012, with the industry plagued by high jet fuel prices, fierce competition, price wars and shabby airport infrastructure. The carrier was India’s second-largest until a year ago but its share shrank to just 3.5 percent before operations stalled completely. Kingfisher said it was in talks with foreign investors including Abu Dhabi-based Etihad Airways after the government cleared investment by foreign airlines in the key transport sector.

12 |

business daily January 2, 2013

MARKETS Hang SENG INDEX NAME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

12.42

-0.9569378

13405852

CITIC PACIFIC

11.56

2.48227

11481125

89882395

CLP HLDGS LTD

64.85

0.07716049

1982388

26555830

CNOOC LTD

16.78

-0.3562945

12627470

1028133

COSCO PAC LTD

11.04

-2.12766

6591170

-0.3554502

4647218

ESPRIT HLDGS

10.74

-1.286765

5577768

30.8

1.315789

3043300

118.7

0.1687764

505209

PRICE

DAY %

VOLUME

30.25

-0.1650165

18488811

ALUMINUM CORP-H

3.55

-0.2808989

5722000

BANK OF CHINA-H

3.46

BANK OF COMMUN-H

5.84

0.8635579

BANK EAST ASIA

29.65

-0.1683502

BELLE INTERNATIO

16.82

AIA GROUP LTD

BOC HONG KONG HO

24.1

5476161

14.22

0.4237288

947558

CHEUNG KONG

119

0.08410429

1347639

CHINA COAL ENE-H

8.42

0.7177033

16099192

CHINA CONST BA-H

6.22

-0.3205128

107957136

CHINA LIFE INS-H

25.3

3.05499

38247833

CHINA MERCHANT

24.85

-0.6

1136000

CHINA MOBILE

CATHAY PAC AIR

NAME

HANG LUNG PROPER HANG SENG BK HENDERSON LAND D

54.7

-1.35257

2922834

69.95

0.1431639

1037000

HONG KG CHINA GS

21.15

-0.4705882

1617968

HONG KONG EXCHNG

131.9

1632012

HSBC HLDGS PLC

81.3

-0.7326007

6726128

HUTCHISON WHAMPO

80.9

-0.3694581

3273634

5.5

-0.5424955

153154421

13.68

1.183432

7138721

30.5

HENGAN INTL

90.25

9080299

CHINA OVERSEAS

23.1

0.6535948

11249865

IND & COMM BK-H

CHINA PETROLEU-H

8.78

0.3428571

18874291

LI & FUNG LTD

CHINA RES ENTERP

NAME

PRICE

POWER ASSETS HOL

66.2

0.6079027

676247

33.95

-0.7309942

2478982

SINO LAND CO

13.94

-0.8534851

2054667

SUN HUNG KAI PRO

116.2

0.08613264

2415437

SWIRE PACIFIC-A

95.85

0.1567398

560974

249

-0.4

1317565

TENCENT HOLDINGS TINGYI HLDG CO

21.55

1.411765

2561249

WANT WANT CHINA

10.68

2.495202

11401018

60.6

0.9159034

2002311

WHARF HLDG

MOVERS

7 22710

INDEX 22656.92 HIGH

22706.33

1442278

LOW

22584.44

52W (H) 22718.83

0.7207207

1610863

21.1

2258000

NEW WORLD DEV

12.02

-0.331675

8393428

CHINA RES POWER

19.78

1.435897

2014640

PETROCHINA CO-H

10.98

-0.3629764

34234941

CHINA SHENHUA-H

33.95

6064341

PING AN INSURA-H

64.9

1.88383

9372064

PRICE

DAY %

VOLUME

28.65

2.872531

11221590

YANZHOU COAL-H ZIJIN MINING-H

MTR CORP

VOLUME

SANDS CHINA LTD

27.95

CHINA RES LAND

DAY %

(L) 18056.4

22580

27-December

31-December

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.83

25084767

AIR CHINA LTD-H

6.55

1.550388

4272000

CHINA PETROLEU-H

8.78

0.3428571

18874291

ALUMINUM CORP-H

3.55

-0.2808989

5722000

CHINA RAIL CN-H

8.81

5039500

ANHUI CONCH-H

28.2

-0.3533569

3528447

CHINA RAIL GR-H

4.53

-0.8752735

6112100

BANK OF CHINA-H

3.46

89882395

CHINA SHENHUA-H

33.95

6064341

CHINA TELECOM-H

CHINA PACIFIC-H

5.84

0.8635579

26555830

4.31

1.173709

23933152

23.25

2.422907

2437800

DONGFENG MOTOR-H

11.96

-0.1669449

7548070

4.6

0.877193

19816237

GUANGZHOU AUTO-H

6.87

-0.7225434

1294533

CHINA COAL ENE-H

8.42

0.7177033

16099192

HUANENG POWER-H

7.17

-0.1392758

2506000

CHINA COM CONS-H

7.48

-0.1335113

5535889

IND & COMM BK-H

5.5

-0.5424955

153154421

CHINA CONST BA-H

6.22

-0.3205128

107957136

JIANGXI COPPER-H

20.4

-0.2444988

2844424

BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H

3.8

-0.2624672

8596500

PETROCHINA CO-H

10.98

-0.3629764

34234941

CHINA LIFE INS-H

25.3

3.05499

38247833

PICC PROPERTY &

10.86

2.45283

16367717

CHINA LONGYUAN-H

5.36

2.681992

15838305

PING AN INSURA-H

64.9

1.88383

9372064

CHINA MERCH BK-H

17.1

0.5882353

7159512

SHANDONG WEIG-H

7.71

0.7843137

3417761

CHINA COSCO HO-H

NAME

PRICE

DAY %

VOLUME

12.82

0.312989

13971916

3.05

0.660066

23153000

ZOOMLION HEAVY-H

11.42

-0.8680556

8981681

ZTE CORP-H

13.06

0.4615385

3209062

MOVERS

4 11450

INDEX 11436.16 HIGH

11439.42

LOW

11439.42

CHINA MINSHENG-H

8.96

2.283105

26691740

SINOPHARM-H

24.25

1264945

52W (H) 11916.1

CHINA NATL BDG-H

11.34

0.1766784

7770400

TSINGTAO BREW-H

45.75

0.1094092

664000

(L) 8987.76

CHINA OILFIELD-H

15.98

-0.7453416

2888290

WEICHAI POWER-H

34.4

1.925926

1013499

10600

27-December

31-December

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.8

1.449275

178108658

CITIC SECURITI-A

13.36

1.519757

157945838

QINGHAI SALT-A

26.8

-0.07457122

6711171

AIR CHINA LTD-A

2.564103

17654080

CSR CORP LTD -A

4.96

54622369

SAIC MOTOR-A

17.64

3.157895

27755914

NAME

VOLUME

ALUMINUM CORP-A

5.13

26293045

DAQIN RAILWAY -A

6.76

-0.5882353

43763163

SANY HEAVY INDUS

10.59

0.1892148

50009738

ANGANG STEEL-A

3.88

2.37467

36969956

DATANG INTL PO-A

4.03

-0.2475248

34944261

SHANDONG GOLD-MI

38.16

1.086093

14760573

ANHUI CONCH-A

18.45

0.5449591

29461632

EVERBRIG SEC -A

14.1

3.600294

37229611

SHANG PHARM -A

11.11

0.5429864

10761629

BANK OF BEIJIN-A

9.3

3.218646

79815040

GD POWER DEVEL-A

2.63

2.734375

80236471

SHANG PUDONG-A

9.92

3.441084

198451648

BANK OF CHINA-A

2.92

1.038062

43590225

GEMDALE CORP-A

7.02

4.154303

79520047

SHANGHAI ELECT-A

4.07

0.9925558

7542940

BANK OF COMMUN-A

4.94

2.277433

172774562

GF SECURITIES-A

15.42

1.581028

72782897

SHANXI LU'AN -A

21.89

0.5050505

14376248

10.66

3.094778

21925442

GREE ELECTRIC

25.5

0.3937008

27673254

SHANXI XINGHUA-A

41.66

3.118812

8094069

16.39

1.048089

25654730

SHANXI XISHAN-A

13.91

0.2883922

19100331

BANK OF NINGBO-A BAOSHAN IRON & S

4.89

0.617284

35888821

GUANGHUI ENERG-A

8.1

3.053435

32325688

HAITONG SECURI-A

10.25

1.99005

104236670

SHENZEN OVERSE-A

7.5

3.878116

69563235

20.35

5.331263

9150069

HANGZHOU HIKVI-A

31.11

-0.9235669

6333330

SUNING APPLIAN-A

6.65

-0.7462687

86603568

CHINA CITIC BK-A

4.29

2.386635

40536670

HENAN SHUAN-A

57.9

0.6956522

5058433

TSINGTAO BREW-A

33.06

1.070009

3707660

CHINA CNR CORP-A

4.51

0.2222222

52529868

HONG YUAN SEC-A

18.85

24808808

WEICHAI POWER-A

25.31

0.7964954

9021769

CHINA COAL ENE-A

7.82

0.7731959

18016612

HUATAI SECURIT-A

9.8

2.403344

31894063

WULIANGYE YIBIN

28.23

37780927

CHINA CONST BA-A

4.6

1.545254

53032365

HUAXIA BANK CO

10.35

2.171767

53961371

YANGQUAN COAL -A

14.53

2.612994

23979982

CHINA COSCO HO-A

4.41

1.146789

48793346

HUAYU AUTOM-A

11.18

2.662994

18872632

YANTAI CHANGYU-A

-1.052632

2792141

CHINA CSSC HOL-A

23.24

7.892293

25864639

IND & COMM BK-A

4.15

1.219512

110538906

YANTAI WANHUA-A

15.61

1.760104

16795647

CHINA EAST AIR-A

3.51

0.862069

27737555

INDUSTRIAL BAN-A

16.69

2.079511

87142724

YANZHOU COAL-A

18.23

1.277778

7011667

CHINA EVERBRIG-A

3.05

2.348993

161137942

INNER MONG BAO-A

37.45

0.1336898

43504504

YUNNAN BAIYAO-A

1.872659

4796239

CHINA LIFE INS-A

21.4

5.835806

39125401

INNER MONG YIL-A

21.98

4.318937

19262336

ZHONGJIN GOLD

16.63

0.7878788

28284458

13.75

6.095679

153712026

INNER MONGOLIA-A

5.4

0.7462687

55419449

ZIJIN MINING-A

3.83

0.7894737

80494853

20991209

JIANGSU HENGRU-A

30.1

0.4002668

10516851

ZOOMLION HEAVY-A

9.21

-0.861141

99337517

JIANGSU YANGHE-A

93.37

-0.4265757

4781906

ZTE CORP-A

9.75

4.055496

33828434

ZTE CORP-A

8.38

2.444988

17657199

BBMG CORPORATI-A BYD CO LTD -A

CHINA MERCH BK-A CHINA MERCHANT-A

29.89

3.068966

CHINA MERCHANT-A

10.55

1.735776

32693732

CHINA MINSHENG-A

7.86

2.077922

216576436

JIANGXI COPPER-A

23.86

3.334777

24874936

CHINA NATIONAL-A

8.24

0.9803922

35709597

JINDUICHENG -A

11.71

2.719298

19895849

CHINA OILFIELD-A

16.4

0.9230769

10583225

JIZHONG ENERGY-A

13.83

1.318681

29489730

13.14

-0.5299016

53872784

209.02

-1.544984

5191483

CHINA PACIFIC-A

22.5

5.782793

39346419

KANGMEI PHARMA-A

CHINA PETROLEU-A

6.92

1.764706

51955356

KWEICHOW MOUTA-A

CHINA RAILWAY-A

5.87

0.1706485

36139448

LUZHOU LAOJIAO-A

35.4

1.461737

17602895

2.26

142174707

CHINA RAILWAY-A

3.04

0.330033

62945391

METALLURGICAL-A

CHINA SHENHUA-A

25.35

1.971038

24294581

NINGBO PORT CO-A

2.57

0.390625

32070265

4.12

1.477833

MOVERS 246

18 2530

INDEX 2522.952

CHINA SHIPBUIL-A

4.77

3.470716

69660187

PANGANG GROUP -A

64722356

HIGH

2522.95

CHINA SOUTHERN-A

3.91

1.033592

34361646

PETROCHINA CO-A

9.04

0.780379

38199598

LOW

2444.16

CHINA STATE -A

3.9

1.298701

140478990

PING AN BANK-A

16.02

2.692308

37868419

CHINA UNITED-A

3.5

0.8645533

126831129

PING AN INSURA-A

45.29

3.378224

32981463

CHINA VANKE CO-A

10.12

166448824

POLY REAL ESTA-A

13.6

3.343465

73129483

CHINA YANGTZE-A

6.87

0.2919708

32441364

QINGDAO HAIER-A

13.4

2.997694

15462944

NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

ACER INC

25.2 -0.1980198

17857838

FORMOSA PLASTIC

78.6

0.8985879

6043596

TAIWAN MOBILE CO

107

ADVANCED SEMICON

25.2

2.857143

31601925

FOXCONN TECHNOLO

90.9 -0.7641921

8846737

TPK HOLDING CO L

513 -0.1945525

ASIA CEMENT CORP

37.35

0.6738544

3212035

FUBON FINANCIAL

35.1

2.481752

31558135

TSMC

ASUSTEK COMPUTER

326.5

1.083591

2494653

HON HAI PRECISIO

88.9 -0.1123596

21912147

UNI-PRESIDENT

53.3 -0.3738318

13 -0.3831418

49348297

HOTAI MOTOR CO

233

UNITED MICROELEC

11.7

52W (H) 2717.825 (L) 2102.135

2440

27-December

31-December

FTSE TAIWAN 50 INDEX

AU OPTRONICS COR

NAME

CATCHER TECH

144

7869384

CATHAY FINANCIAL

31.5

0.8

20657416

HTC CORP HUA NAN FINANCIA

CHANG HWA BANK

15.95

300.5

1.52027

22933965

16.8

0.9009009

9209727

YUANTA FINANCIAL YULON MOTOR CO

0.6309148

10049634

LARGAN PRECISION

778

0.6468305

806402

3995285

LITE-ON TECHNOLO

38.55

0.260078

3103970

CHIMEI INNOLUX C

15.6

-0.952381

91155427

MEDIATEK INC

323.5

-0.154321

8698178

7.6

82078014

MEGA FINANCIAL H

22.6

0.4444444

14998191

CHINA STEEL CORP

27.35

0.1831502

22223594

NAN YA PLASTICS

0.1788909

9212841

CHINATRUST FINAN

17.15

-1.152738

61111102

PRESIDENT CHAIN

155.5

-1.269841

936219

94.5

1.069519

12802464

QUANTA COMPUTER

68.3

3708967

COMPAL ELECTRON

19.55

0.2564103

12433279

SILICONWARE PREC

0.3236246

5262230

DELTA ELECT INC

106.5

1.428571

2921114

SINOPAC FINANCIA

12.45

15939372

FAR EASTERN NEW

33.1

0.3030303

8000463

SYNNEX TECH INTL

53.5

5316388

FAR EASTONE TELE

74.1

2.916667

8334470

TAIWAN CEMENT

38.9

0.1287001

4811175

FIRST FINANCIAL

TAIWAN COOPERATI

16.35

0.6153846

9827510

75.8

3015850

0.6711409

1743715

17.7

0.5681818

9915499

FORMOSA CHEM & F

2.179837

10436721

FORMOSA PETROCHE

1.415094

3097361

TAIWAN FERTILIZE TAIWAN GLASS IND

556472

75.4 -0.5277045

CHUNGHWA TELECOM

PRICE DAY %

3.097345

CHENG SHIN RUBBE CHINA DEVELOPMEN

NAME

WISTRON CORP

MOVERS

1.421801 1.464435

Volume 6562545 3941004 25705388 5943404 53452226

30.1

0.6688963

4736641

14.95

20886650

0.7326007

2909621

8 5395

INDEX 5390.93 HIGH

5390.93

LOW

5335.18

52W (H) 5621.53 5330

(L) 4719.96 24-December

28-December

January 2, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 42.9

30.6

14.4

30.4

14.2 42.85

30.2

14.0

30.0 29.8

42.8

13.8

34.2

18.4

21.2

34.0

18.2

21.1 21.0

33.8

18.0

33.6

17.8

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Feb13

91.82

1.123348018

-5.806315117

109.4300003

80.05999756

BRENT CRUDE FUTR Feb13

111.11

0.442957874

7.758703659

119.2999954

90.38999939

GASOLINE RBOB FUT Feb13

276.17

0.116005075

11.47574852

292.9699898

220.3500032

927

-0.669702652

3.488696623

1031.5

800.25

3.351

-3.401556645

-13.67852085

4.090000153

3.078999996

NATURAL GAS FUTR Feb13 HEATING OIL FUTR Feb13 Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz Palladium Spot $/Oz

DAY %

YTD %

(H) 52W

303.18

0.347532519

5.807223143

333.4599972

255.6599855

1675.13

0.641

1796.08

1527.21

30.305

0.6476

37.4775

26.1513

1540.95

1.5286

1736

1379.05

704.1

0.6346

725.19

553.75

LME ALUMINUM 3MO ($)

2073

0.484730974

2.623762376

2361.5

1827.25

7931

0.557880056

4.355263158

8765

7219.5

LME ZINC

2080

1.339829476

12.73712737

2220

1745

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 Mar13

17060

-0.813953488

-8.818813469

22150

15236

15.175

-0.589584016

#N/A N/A

16.84000015

14.90999985

698.25

0.612391931

16.32653061

846.25

511

WHEAT FUTURE(CBT) Mar13

PRICE

(L) 52W

LME COPPER 3MO ($)

CORN FUTURE

20.8

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Feb13

METALS

20.9

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

1.0439 1.6276 0.9158 1.3106 87.33 7.9833 7.7507 6.2373 54.805 30.65 1.2214 29.054 41.05 9793 90.642 1.20812 0.81069 8.1751 10.554 114.46 1.03

0.5878 0.6182 -0.0437 -0.6368 -1.4085 -0.0013 -0.0013 -0.1074 0.3467 -0.2284 0 -0.0723 -0.1096 -1.1641 -1.4508 -0.053 0.5835 0.5186 -0.2236 -0.7776 -0.0097

DAY % 0.5878 0.6182 -0.0437 -0.6368 -1.4085 -0.0013 -0.0013 -0.1074 0.3467 -0.2284 0 -0.0723 -0.1096 0 -1.4508 -0.053 0.5835 0.5186 -0.2236 -0.7776 -0.0097

YTD %

(H) 52W

1.0857 1.6309 0.9972 1.3487 87.36 8.0039 7.7713 6.3964 57.3275 32 1.3006 30.329 44.35 9815 90.661 1.2199 0.8506 8.4894 10.7712 114.7 1.0314

(L) 52W

0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.2 1.2152 28.914 40.795 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

778

-0.096308186

5.994550409

948.25

652

SOYBEAN FUTURE Mar13

1409.5

-0.599435825

15.15522876

1728.25

1194.5

ARISTOCRAT LEISU

COFFEE 'C' FUTURE Mar13

143.8

-2.076949268

-39.56713518

249

141.25

CROWN LTD

PRICE

(H) 52W

(L) 52W

3.15

DAY % YTD % 0

3.32

2.16

VOLUME CRNCY 322507

10.67

0.5655042

10.75

7.95

511188

SUGAR #11 (WORLD) Mar13

19.51

0.463439753

-16.48115975

25.12999916

18.30999947

AMAX HOLDINGS LT

0.07

-1.408451

0.119

0.055

2755526

COTTON NO.2 FUTR Mar13

75.14

0.642914546

-15.10563251

98.5

66.84999847

BOC HONG KONG HO

24.1

18.18

5476161

0.265

0.335

0.204

5.99

-0.8278146

6.25

2.75

350906

CHINA OVERSEAS

23.1

0.6535948

24.25

12.066

11249865

CHINESE ESTATES

13.08

0.1531394

13.26

8.3

170500

CHOW TAI FOOK JE

12.44

0.3225806

15.16

8.4

417000

EMPEROR ENTERTAI

1.89

1.612903

1.92

0.99

1070000

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13104.14

1.283263

13661.87

12035.08984

NASDAQ COMPOSITE INDEX

3019.514

1.999822

3196.932

2604.6

FTSE 100 INDEX

5897.81

-0.4651186

5997.04

5229.76

DAX INDEX

7612.39

-0.5680601

7682.9

5817.71

NIKKEI 225

10395.18

0.6994104

10433.63

8238.96

HANG SENG INDEX

22656.92

-0.04266191

22718.83

18056.4

CSI 300 INDEX

2522.952

1.729925

2717.825

2102.135

MGM CHINA HOLDIN

TAIWAN TAIEX INDEX

7699.5

0.667982

8170.72

6857.35

MIDLAND HOLDINGS

KOSPI INDEX

S&P/ASX 200 INDEX

1997.05

0.4880872

2057.28

1758.99

4648.95

-0.4784322

4688.6

3985

4316.687

0.8133379

4381.746094

3635.283

FTSE Bursa Malaysia KLCI

1688.95

0.4532126

1688.95

NZX ALL INDEX

882.053

-0.2783446

PHILIPPINES ALL SHARE IX

3698.98

0.3224765

JAKARTA COMPOSITE INDEX

FUTURE BRIGHT

1.22

1.43

0.41

666000

GALAXY ENTERTAIN

30.35

-0.6546645

31.05

13.28

4049391

HANG SENG BK

118.7

0.1687764

120

505209

HOPEWELL HLDGS

33.25

-0.1501502

33.5

19.049

581500

HSBC HLDGS PLC

81.3

-0.7326007

58.55

6726128

HUTCHISON TELE H

3.56

1.424501

3.88

2.88

2132000

LUK FOOK HLDGS I

24.4

33.2

14.7

511000

MELCO INTL DEVEL

9.01

0.1111111

9.3

5.12

734000

14.02

14.76

9.554

1039800 2188000

3.7

-0.2695418

5.217

3.249

NEPTUNE GROUP

0.152

0.222

0.084

NEW WORLD DEV

12.02

-0.331675

13.2

6.3

8393428

SANDS CHINA LTD

2478982

33.95

-0.7309942

34.95

20.65

SHUN HO RESOURCE

1.4

1.449275

1.43

1502.09

SHUN TAK HOLDING

4.19

0.7211538

4.33

2.506

2902751

886.132

718.491

SJM HOLDINGS LTD

-0.3322259

18.36

11.973

1130938

3756.31

3009.45

SMARTONE TELECOM

14.08

-0.2832861

17.5

12.96

1353492

WYNN MACAU LTD

20.95

0.2392344

25.5

14.62

2523710

ASIA ENTERTAINME

3.06

7.368421

7.24

2.4

383224

BALLY TECHNOLOGI

44.71

1.891522

51.16

38.96

736452 9700

HSBC Dragon 300 Index Singapor

621.09

-0.67

25.14

STOCK EXCH OF THAI INDEX

1391.93

-0.3764699

1402.86

1022.04

HO CHI MINH STOCK INDEX

413.73

0.9171403

492.44

332.28

BOC HONG KONG HO

3.07

3.3

2.32

Laos Composite Index

1214.77

-0.7475979

1249.34

876.33

GALAXY ENTERTAIN

3.97

0.9535919

4.05

1.79

6232

INTL GAME TECH

14.17

3.809524

18.1

10.92

3117441

JONES LANG LASAL

83.94

1.96793

87.52

61.39

234584

LAS VEGAS SANDS

46.16

3.220036

58.3216

32.6127

6822901

MELCO CROWN-ADR

16.84

3.567036

16.98

9.13

3257440

MGM CHINA HOLDIN

1.85

1.96

1.2863

1000

MGM RESORTS INTE

11.64

1.83727

14.9401

8.83

8554930

SHFL ENTERTAINME

14.5

3.719599

18.77

11.64

330161

SJM HOLDINGS LTD

2.31

0.8733624

2.37

1.5484

6525

112.49

2.57135

129.6589

84.4902

1139968

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily January 2, 2013

Opinion The great bank debate John Vickers

Former chief economist of the Bank of England and former member of its monetary policy committee

hristine Lagarde, the International Monetary Fund’s managing director, recently said of the unfinished agenda for global financial-sector reform: “To start, we need concrete progress with the too-importantto-fail conundrum. We need a global-level discussion of the pros and cons of direct restrictions on business models.” Five years on from the start of the crisis, with the publication of the Liikanen report on European Union banking reform, that debate has finally begun. The Liikanen proposals have much in common with those made in 2011 by the United Kingdom’s Independent Commission on Banking (ICB), which I chaired. B o t h s e t s o f recommendations stress the importance of an interlocking package of measures that combine much greater lossabsorbency with structural reform. And both make the same economic case for such reforms: to insulate basic banking services from investment banking risks; to make resolution easier and thus more credible; to shield taxpayers from risks that belong in the private sector; and hence to ensure that banks’ risk-taking is subject to adequate market discipline. Moreover, both Liikanen and the ICB favour structured universal banking – legally separate entities with separate

capital, management, and so forth – rather than calling for its demise, as urged by those who want to split commercial from investment banking fully. For large banks, Liikanen would separate trading from deposit banking, while the ICB’s proposals, which are now incorporated in draft legislation in Britain, would ring-fence retail banking. This by itself is a distinction without a difference. After all, a fence to protect the deer from the lions is the same as a fence to keep the lions away from the deer. Unlike their cousin the Volcker Rule, neither Liikanen nor the U.K. approach attempts to draw a line between types of trading. Judging whether trading is proprietary might not quite require “windows into men’s souls” (which in another context Queen Elizabeth I wisely avoided), but America’s experience shows that it is difficult all the same.

Various regulations Still, the Liikanen and U.K. designs are not identical. Nor should they be. The U.K. has a much larger banking system relative to its economy’s size than does Europe as a whole – let alone the United States. The U.K.’s system is exposed to different risks, which it is in Europe’s interest to have well managed. Moreover, Liikanen is not a one-size-fits-all approach, as

it explicitly proposes powers to require wider separation, if needed, to ensure resolvability. One clear difference, though, is that Liikanen, unlike the U.K. proposals, allows securities underwriting in deposit banks. This contrasts with the U.S., even after the 1999 repeal of the Glass-Steagall Act’s ban on affiliation between banks and

Structural reform is also fundamental to the moves toward a European banking union, for a union with wellcapitalised and safely structured banks has much better prospects than one without

companies engaged principally in underwriting securities. And it sits oddly with separating trading and derivatives from deposit banking, since underwriting is akin to selling a large put option, and typically riskier than normal market-making. With underwriting on the trading side of the fence, the deposit bank could still supply the service to customers, but as a broker, not as a dealer. Underwriting belongs with the lions. A s i d e f r o m i t s implementation difficulties, there are good reasons not to introduce the Volcker rule, rather than the ICB/Liikanen proposals, in the U.K. and Europe. First, it does not do enough to shield retail banking from investment-banking risks, of which only a small share relate to proprietary trading. Second, the U.S. has a very different banking system to begin with, including various regulations on how depository institutions can relate to affiliated trading entities. This suggests that a better question is whether to introduce the Volcker rule in addition to, rather than instead of, ring-fencing. In the interest of simplicity, I would say no.

Potential risks Enforcing total separation instead of ring-fencing would provide a stronger barrier, but at a potentially

high cost, including a risk to financial stability. After all, full separation implies that resources from elsewhere in a given banking group are unavailable to address a retailbanking crisis resulting from, say, a slump in residential and commercial property prices. Such crises can happen. So the ICB concluded that its reform package for the U.K. would achieve the main aims of full separation at a lower cost, and without creating the risk to financial stability that could come from having undiversified, correlated, standalone domestic retail banking. To be sure, the success of this approach depends on the fence staying strong. That requires good initial design and constant regulatory vigilance, but so does full separation. Structural reform of banks does not solve all problems. But, at least for the U.K. and the rest of Europe, it is a key part of the overall reform package, along with much stronger capital and liquidity standards, loss-absorbent debt (including “bail-ins” by creditors), real resolvability, and so on. There is also the question of how to protect financial stability from risks arising from shadow banking, including the risk of contagion to traditional banking, which ring-fencing helps to contain. Structural reform is also fundamental to the moves toward a European banking union, for a union with well-capitalised and safely structured banks has much better prospects than one without. Otherwise, mutualisation of contingent liabilities could exacerbate the too-important-to-fail problem. Now that structural reform is explicitly on the agenda, the debate about European banking reform is entering a new phase. But, as the IMF has stressed, the debate needs to go beyond Europe. Moreover, it is more than a debate about public policy, because, in the post-crisis world, market incentives might point toward forms of separation between retail and investment banking. But market incentives surrounding various business models will remain distorted so long as taxpayers are liable for bank losses. That provides all the more reason to get them off the hook via structural and other banking reforms. © Project Syndicate

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes Newsdesk Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

January 2, 2013 business daily | 15

OPINION Sex scandals, IPOs, succession wires shaped Asia’s 2012 Business

Leading reports from Asia’s best business newspapers

Yonhap News U.S. Internet company Yahoo Inc. on Monday halted its South Korean service, pulling out of one of the world’s most wired countries after 15 years. Yahoo will halt all products, services and content of Yahoo Korea in addition to ending customer support in the country, the company wrote on its Korean Web site. In October, Yahoo announced a plan to pull out of South Korea as chief executive officer Marissa Mayer focuses more on stronger markets. “The decision is part of Yahoo’s efforts to focus its resources on establishing a stronger global business,” the company said in an earlier statement.

Jiji Press Taiwan’s Chinatrust Commercial Bank is in talks to buy Japanese regional bank Tokyo Star Bank for about 50 billion yen (US$576 million) in what would be the first acquisition of a Japanese bank by a foreign lender. Aiming to expand financial transactions in Japan, Taipei-based Chinatrust hopes to acquire almost all common shares of Tokyo Star from its shareholders, including U.S. private equity group Lone Star, Japanese lender Shinsei Bank and French financial giant Credit Agricole, according to sources.

Jakarta Post Although some debutants saw their price falling, most of the newcomers at the Indonesia Stock exchange (IDX) last year fared better than older members, giving substantial returns to investors. Of the 22 companies that listed their shares on the IDX this year, 18 firms saw their share price jump with a range of 13 percent to more than 400 percent compared to prices during their initial public offerings. The best performer was the liquefied petroleum gas refinery company PT Surya Esa Perkasa, whose shares rose by 408 percent as of December 28, the last day of trading in 2012.

Taipei Times HTC Corp, the world’s No. 5 smartphone maker, on Monday debuted a new ad in a bid to rebuild its brand image after ending prolonged patent disputes with Apple Inc. and posting record-low sales last year. “In 2013, we hope HTC can work together with everyone to move forward. We are very optimistic about the future,” HTC chief executive Peter Chou said at a press conference. HTC said during an investors’ conference call that it plans to continue marketing investment in a bid to increase its brand awareness in developed and emerging countries in Europe, the Middle East and Africa, and to regain share in the smartphone market.

William Pesek

Bloomberg View columnist

ew people are happier to see 2012 end than Hu Jintao, Yoshihiko Noda or Lee Myung Bak. It was a rocky year for the leaders of China, Japan and South Korea, who leave office with legacies in tatters. Gripes about President Hu doing little about China’s biggest challenges outnumbered the accolades. Noda’s premiership ended as ingloriously as those of the other five leaders Japan has had in the past six years. Lee’s time as president will be remembered for South Korea’s widening rich-poor divide and North Korea’s march toward nuclear-missile capability. Tensions over tiny islands meant East Asia’s three biggest economies barely spoke to one another. Hu, Noda and Lee are but a few of the notable personalities that shaped a chaotic year in Asia. As 2012 draws to a close, some awards are in order for the people, countries and trends that mattered most, for better or worse. Man Behind the Curtain Award: To Thein Sein, the unsung hero of Myanmar’s embrace of democracy, market economics and a free press. Nobel laureate Aung San Suu Kyi will always be the symbol of her nation’s opening, but President Thein Sein is the low-profile technocrat behind the scenes removing the vestiges of the dictatorship that had cut off his 50 million people from the world. Whistle-Blower Award: To Wang Lijun, the former Chongqing, China, police chief who set in motion the scandal surrounding Bo Xilai, a powerful political figure. The fallout shook up and at times overshadowed the nation’s leadership transition. Wang turned over evidence to U.S. diplomats that Bo’s wife killed a British businessman. The result was the biggest scandal China has seen in decades and a global focus on the corruption and income disparities chipping away at the Communist Party’s credibility. Stronger Than Bullets Award: To Malala Yousufzai, the 15-year-old Pakistani girl shot in the head by Taliban gunmen. The student-activist did more than defy their violence by surviving. Her story catalysed a global movement against the forces of ignorance and extremism eating away at the Muslim world. Trying to silence Malala only made her voice louder. Horsing Around Award: To Psy, for showcasing South Korea’s vibrancy. His rap sensation “Gangnam Style” and comical horse- riding

dance moves were parodied everywhere and breathed fresh life into the “Korean Wave” industry of cultural exports, which could pay economic dividends for the nation’s 50 million people. Nail That Sticks Out Award: To Carson Block, the short-seller who cast a probing light on opaque corporate governance. His suspicions about deception at Chinese companies listed in North America, such as Sino-Forest Corp., proved correct. Is he right to compare Singapore commodities firm Olam International Ltd to Enron Corp.? Stay tuned in 2013. I’m Baaaaaaaack Award: To Shinzo Abe, Japan’s new prime minister. Many reached for this horror-film dialogue mainstay as Abe’s Liberal Democratic Party rose suddenly from the ranks of the political dead. Act 1 for Abe: resurrecting technology giants Panasonic Corp., Sharp Corp. and Sony Corp., which have stumbled spectacularly. That includes acting fast to weaken a strong yen that has killed exporters. Sex and the City Award: To Singapore, site of several earthy peccadilloes. The resignation of Speaker of Parliament Michael Palmer this month over an extramarital affair came on top of multiple sex scandals and two days after the island’s largest Chineselanguage newspaper called 2012 a year of lust. Well, Singapore’s airport code is SIN. Could it be the casinos? Third Rail Award:

To Benigno Aquino, the Philippine president. His support for a “condom bill” to provide contraceptives to the poor earned the ire of the powerful Catholic Church. His backing of higher taxes on cigarettes and alcohol is running afoul of tycoons such as billionaire Lucio Tan. Taking on taboo issues to limit population growth and plug holes in the budget will win a higher credit rating. So will his peace framework with Muslim rebels in Mindanao.

Let’s Get Serious Award: To Ratan Tata, chairman of India’s largest business group, for shaming Manmohan Singh over his failure to promote growth and root out corruption. In several unusually candid critiques of Singh’s administration, the billionaire called on the prime minister to get his act together as nimbler China grabs market share. Tata is leaving Tata Sons Ltd after 20 years at the helm, and one of his greatest legacies may be cajoling the government into action.

Stealth Boom Award: To Malaysia and Thailand, two out-of-the-spotlight nations. Kuala Lumpur eclipsed Hong Kong as Asia’s initial-publicoffering centre and is poised to end the year as the world’s No. 4 IPO market. Thailand emerged as an unlikely deals powerhouse. Thai tycoons made a record US$25 billion of purchases abroad, signing more deals in 2012 than in the previous 12 years combined.

He Got Game Award: To Kim Jong Un, North’s Korea basketball-besotted leader. With the one-year anniversary of his father’s death bearing down, Kim and his generals were under intense pressure to wow the world. His successful rocket launch was the geopolitical equivalent of a 3-point shot just before the buzzer. Kim’s shot managed to ruin the holidays for many a world leader. Bloomberg View

16 |

business daily January 2, 2013

CLOSING Chow wins Hengqin land bid

Mainland visitors up 2.9 pct in Nov

Macau businessman David Chow Kam Fai has won a bid for a land plot reserved exclusively for Macau enterprises on Hengqin Island. It will be used to develop a commercial centre. The Zhuhai city government announced Mr Chow’s company Sino Perfect Investment Ltd won the rights to the 30,000-square-metre parcel. It had a reserve price of 257 million yuan (329 million patacas) – 4,200 yuan a square metre. Sino Perfect will invest 1.6 billion yuan to develop a Portuguese-themed centre including shops, restaurants and more than 20 small enterprises, said Mr Chow.

Visitor arrivals decreased by 1.8 percent year-on-year in November to 2,374,110 according to data from the Statistics and Census Service. But in the eleven months to November 30, total tourist arrivals have registered an increase – albeit a modest one of 0.5 percent, taking the year-to-date tally to just under 25.6 million. Visits from mainland Chinese were up 2.9 percent in November. Mainlanders accounted for 1.5 million visitors – around 63 percent of November’s 2.4 million total. There were 1.2 million same-day tourists in the month – half of all arrivals.

First casino smokers fined Tobacco Control teams swoop on non-compliers within hours of new policy Stephanie Lai

sw.lai@macaubusinessdaily.com

total of 42 casino visitors were given on-the-spot fines of 400 patacas (US$50) each for smoking in areas other than designated smoking zones in the first 19 hours of the new policy, the Health Bureau confirmed last night. “From 12am to 7pm today, 42 people were fined for violating the new [partial] ban [on smoking],” a Health Bureau spokesman told Business Daily. “Of those, 21 were mainland tourists, nine were from Hong Kong, four are locals, and eight are tourists from other regions. The fines were issued right away, without giving any warnings or advice,” the spokesman added. As of Monday, all of Macau’s 44 casinos have obtained the permission to set up smoking areas said the Health Bureau in an earlier statement. Under the new rules smoking is only allowed on a maximum of 50 percent of each casino’s gaming floor space. The casino floors at Sands China Ltd’s four properties have aggregate smoking areas closest to the 50 percent maximum – at 49.64 percent of the

gaming floor space. MGM Macau is next with 48.25 percent. Wynn Macau Ltd, which currently has one casino in Macau, has the lowest aggregate casino space given over to smoking, with 41.44 percent. Angela Leong On Kei, an executive director of SJM Holdings Ltd, which has 19 casinos using its licence, stated prior to the policy introduction her company was in favour of a total smoking ban across Macau’s gambling halls. Under the new system SJM has opted to have an aggregate 44.11 percent of its casino floor space for smokers. Starting from the early hours of January 1, the Health Bureau has been doing on-site inspections to check on compliance with the partial ban. “The first day of the law’s enforcement has been smooth overall. No conflicts have been encountered and no cases required police support,” said a Health Bureau spokesman last night. The inspection mainly checks whether the casinos have successfully set up the smoking areas by introducing a range of measures including either

a four-metre cordon between smoking and non-smoking zones, or an airtight wall of at least two metres high; or a transition zone with a strong ventilation system to separate smoking and nonsmoking areas. The Gaming Inspection and Coordination Bureau, the Public Security Police and the Civic and Municipal Affairs Bureau all have a

role alongside the Health Bureau’s tobacco control office, the bureau confirmed to Business Daily. “Judiciary Police stationed in the casinos will also help when smokers violate the new ban and refuse to comply with the law enforcers’ advices, which is taken as crime of disobedience,” the Health Bureau spokesman added.

U.S. Senate backdates ‘fiscal cliff’ deal But Americans – and world – still not out of trouble

U.S. Vice President Joe Biden speaks to the at the U.S. Capitol

he United States Senate moved the U.S. economy back from the edge of a “fiscal cliff” yesterday, voting to avoid imminent tax hikes and spending

cuts in a bipartisan deal. Some analysts suggested the beyond-the-eleventh-hour accord was more to do with the Republicans not wanting to take the blame for

tipping the U.S. and possibly the world back into recession than it was about any statesmanship from President Barack Obama. A lot of the legwork on the agreement appears to have been done by Vice President Joe Biden. The 70-year-old has been tapped by Mr Obama as a dealmaker before, to draw on friendships, alliances and legislative experience from 36 years as a U.S. senator from Delaware. The compromise was still facing a stiff test overnight when it was due to be debated by the Republicancontrolled House of Representatives. In a rare New Year’s session at around 2 a.m. Eastern Standard Time (0700 GMT), senators had earlier voted 89-8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in

place for a decade. But the measure did little to rein in huge annual budget deficits that have helped push the U.S. debt to US$16.4 trillion (128 trillion patacas). The agreement came too late for Congress to meet its own deadline of New Year’s Eve for passing laws to halt US$600 billion in tax hikes and spending cuts which strictly speaking came into force yesterday. But with the New Year’s Day holiday, there was no real impact felt by financial markets. The deal would hike taxes permanently for household incomes over US$450,000 a year, but keep existing lower rates in force for everyone else. But scheduled cuts in defence and other spending were simply postponed for two months. Reuters/Bloomberg News