1. Art and Diseño

MOP 6.00
Closing editor: Luís Gonçalves
A six-figure problem
M
Year III
Number 720 Monday February 2, 2015
Publisher: Paulo A. Azevedo
OP100,156. A number to remember. Last year, Macau breached a psychological
barrier in terms of square metre real estate prices. Property prices went up 21pct,
while transactions plunged 36 pct. Flats under construction were 50 pct more expensive
than completed ones. Prices in December dropped well below the 2014 average. But the
average net floor area of flats shrunk to 69 square metres from the 74 square metres of
2013. The most expensive flats were in Coloane, followed by Taipa and the Peninsula
PAGE
6
Packaged tourists
Gaming revenues might be in the doldrums.
But tourists are far from deserting Macau.
Take package tours, for example. They’ve
doubled from half a million in 2009 to 1.2
million in 2014. In 2014, package tour
visitors increased 25 pct from the previous
year to 12.3 million. With Chinese visitation
skyrocketing 34 pct
Sri Lanka blocks three
casino projects
PAGE 11
University of Saint Joseph
to slash tuition fees
PAGE 7
A third of Macau imports
come from Mainland
PAGE 6
PAGE
4
Chinese New Year
January figures
budget up by a quarter disappoint
MGTO is sponsoring its biggest parade yet for CNY. Macau
Government Tourist Office has announced it will spend MOP23
million on the third day (February 21) and tenth day (February
28) of Chinese New Year. Some 25 pct increase on last year.
Famous Hong Kong artists and a grander event are cited for the
hike in costs for the ‘Parade for the Celebration of the Year of
the Ram’
HSI - Movers
January 30
January factory data shrank surprisingly. In
a month that traditionally returns positive
outcomes. Analysts consider this is one more
step towards government action. Even the
service sector failed to make the grade.
PAGE 4
Interview
“Consulgal bid was the best option
for the Light Rapid Transit”
www.macaubusinessdaily.com Brought to you by
You win some, you lose some. Consulgal head Rogério Monteiro
Nunes clearly believes his engineering JV deserved to pick up
the LRT contract. He tells Business Daily about his company’s
ambitions to expand to Guangdong. And his pride in projects
like the automated solid waste collection in Areia Preta. Nunes
identifies the difficulties of working here - with its “distorted
labour market” - but still believes the company’s 13 years in
Macau was a good move, with many ‘emblematic’ projects to
show for it
Page
13
Name
%Day
Hengan International
3.89
Tingyi Cayman Island
3.24
Cheung Kong Holdings
2.13
BOC Hong Kong Holdin
2.06
New World Developm
1.54
Tencent Holdings Ltd
-1.93
China Overseas Land
-1.97
China Resources Ent
-2.30
Sands China Ltd
-2.93
Galaxy Entertainment
-3.08
Source: Bloomberg
I SSN 2226-8294
Brought to you by
PAGE 8&9
Guangdong to bring opportunities to Macau, says CE | PAGE 5
2015-2-2
2015-2-3
2015-2-4
13˚ 20˚
14˚ 21˚
15˚ 21˚
2 | Business Daily
February 2, 2015
February 2, 2015 Business Daily | 3
4 | Business Daily
February 2, 2015
Macau
Government to splash out
MOP23 million on CNY parade
T
h e
M a c a u
Government Tourist
Office (MGTO) is to
spend some MOP23 million
(US$2.88 million) to hold
a parade celebrating the
Chinese New Year (CNY) on
the third day (February 21)
and the tenth day (February
28) of CNY, Director Maria
Helena de Senna Fernandes
announced on Friday.
The budget of the
parade - titled ‘Parade for
the Celebration of the Year
of Ram’ - represents an
increase of 5 million patacas
over that of last year for
the event. Ms. Senna Fernandes
explained that the hike in
the budget is because the
government has invited
famous artists from Hong
Kong to perform, and the
scale of the event is larger.
Nevertheless, she said she
believes the event would not
run over budget.
Meanwhile, she predicted
that the CNY parade will
attract 10 to 15 per cent
more spectators than
the 68,000 who watched
last year.
A total of 1,288 performers
from 25 local groups, as
well as 9 groups outside
the city, from Mainland
China, Hong Kong, Italy,
Japan and Portugal, will
participate in the two-day
parade, featuring 14 floats.
The parade will begin from
Macau Science Centre at
8:00 pm, winding up at Sai
Van Lake Square at 11:00
pm, followed by a fireworks
show, according to MGTO.
Secretary for Social
Affairs and Culture Alexis
Tam Chon Weng will be
heading for Siem Reap in
Cambodia from February
3-5 to attend the first World
Conference on Tourism and
Culture, in conjunction with
MGTO officials headed by
Director Maria Helena de
Senna Fernandes. The event,
organised by the World
Tourism Organisation and
United Nations Educational,
Scientific and Cultural
Organisation (UNESCO),
will receive ministers, official
delegates and company
representatives from nearly
40 countries who are
gathering to discuss cultural
preservation, cultural travel
and urban regeneration
through cultural tourism.
December package tour visitors double in five years
Sara Farr
[email protected]
F
rom 489,400 in 2009 to
875,800 in 2013 and 1.19
million in 2014. That’s by how
much the number of visitor arrivals
on package tours have increased over
the last five Decembers.
Official figures released on Friday
by the Statistics and Census Service
(DSEC) reveal that for the month
of December alone, the number
of visitors travelling to Macau on
package tours increased significantly
by 35.8 per cent over that of the
previous year. Of these, 991,000
were visitors from mainland China,
representing a 51.5 per cent jump
year-on-year.
Visitors from mainland China
made up the majority of hotel guests
at 63.2 per cent, followed by those
from Hong Kong at 12.1 per cent,
Taiwan at 3.2 per cent and South
Korea at 1.9 per cent.
For the whole twelve months of
2014, visitors travelling on package
tour arrangements totalled 12.3 million,
up 26.3 per cent. This also represents
almost a quarter of all 31.5 million
visitors Macau welcomed last year.
Overall, the number of visitor
arrivals on package tours from
South Korea decreased by 2.6 per
cent to 160,000 for the whole of last
year, while those from Hong Kong
decreased slightly by 0.5 per cent
to 416,900. The overall number of
tourists from Thailand travelling on
package tours to Macau dropped
most, by 24.3 per cent, to 145,400
for the whole of 2014.
For the month of December alone,
the number of visitor arrivals on
package tours from Taiwan dropped
6.3 per cent, while those from Hong
Kong dropped another 23.2 per cent,
and South Korea dropped 8.6 per cent.
Macau residents travelling
outbound using the services of travel
agencies increased by 5.7 per cent
in December alone, with mainland
China remaining the primary
destination, receiving 87,900 visitors
and representing a 21.6 per cent
increase over that of the previous year.
South Korea, however, saw a 17.9
per cent decrease in the number of
visitor arrivals travelling under travel
agency arrangements in December to
4,800. Upon analysing the whole year,
this same number increased by 22.5
per cent to 56,300 over that of 2013.
Outbound residents to Taiwan also
registered a 20.5 per cent increase for
the whole year to total 185,700 in 2014.
The number of outbound residents
choosing to travel to Thailand using
travel agency services dropped
significantly by 47.2 per cent for the
whole year of 2014 to 40,800. This
same number dropped by 21 per cent
to 3,100 in December alone, versus
the same period last year.
Business Daily | 5
February 2, 2015 Macau
Guangdong to bring Macau
more opportunities, says Chui
Chief Executive Chui Sai On recently met with Guangdong party chief Hu Chunhua,
with both sides discussing more innovative co-operation projects between the two regions
Joanne Kuai
[email protected]
C
hief Executive Chui
Sai On said that the
SAR Government
attaches great importance to
the development of the Free
Trade Zone in Guangdong
and expects the project to
bring more opportunities to
Macau. He expressed his hope
of putting the topic on the
agenda of the GuangdongMacau Co-operation Joint
Conference later this year.
Chui made the comments
when meeting with Guangdong
Province Communist Party
Secretary Hu Chunhua and
Guangdong Governor Zhu
Xiaodan on Friday evening
at Guangzhou Zhudao
Hotel. The Macau delegation
also included Secretary for
Economy and Finance Lionel
Leong Vai Tac, Secretary for
Transport and Public Works,
Raimundo Rosario plus other
Macau officials.
The Chief Executive said
that the Free Trade Zone
in Guangdong would be
advantageous for Macau,
as well, especially in terms
of liberalising trade and
innovating the system. He
hopes both sides can enhance
co-operation in Hengqin
in Zhuhai, and Nansha
in Guangzhou, as well as
exploring new opportunities in
the Free Trade Zone in Zhuhai.
Chui Sai On also pointed
out that the two regions
are like ‘brothers’ and that
Guangdong has always
supported Macau, especially
in the essential needs of
Macau’s residents, such as
in water, electricity and food.
He said that last year the
objectives of the Guangdong
Macau Co-operation
Framework Agreement and
the Joint Conference were
met and hoped that this year
more could be achieved.
When speaking to
reporters after the closeddoor meeting, Chui indicated
that the two governments
could step up efforts on
environmental protection
issues such as processing
non-recyclable construction
waste and unwanted vehicles
to make best use of space in
landfill areas. More measures
are to be announced this year.
Guangdong party chief
Hu Chunhua said that last
year the province enjoyed a
7.8 per cent growth in gross
domestic product (GDP) plus
a 13 per cent increase in fiscal
tax income. He also revealed
that the tertiary sector of the
economy (service industry)
has surpassed the secondary
sector (manufacturing) in the
neighbouring region.
Hu added that such
indicators show that
Guangdong Province is
enjoying a good development
mode and that this year the
province will follow the central
government’s instruction
to continue developing
steadily. The top official of
the province believes that this
year the general economy of
the province will maintain
the healthy momentum of
last year.
Chui Sai On indicated
that Macau is undergoing
some adjustments to its
economy. He believes that
this year Macau’s economy
may not enjoy as fast a growth
rate as the past decade but
remains confident in Macau’s
long-term vision of building
the territory into a world
tourism leisure hub as well
as a platform for China and
other Portuguese-speaking
countries. Chui reiterated to
provincial leaders that Macau
is going all out in terms of
economic diversification,
regional co-operation and
cultivating talent.
6 | Business Daily
February 2, 2015
Macau
Housing prices up 21 pct,
transactions plunge 36 pct
Official data reveals that the real estate bubble in Macau
continued to inflate last year as prices per square metre
breached the MOP100,000 barrier, while the number of sales
plunged almost 40 per cent
Kam Leong
[email protected]
China
main origin
of imports
The great majority
of imported goods into
Macau originate from
mainland China, while
the primary export
destination remains
Hong Kong
M
H
ousing prices continued to
surge last year, racking up
MOP100,156 (US$12,519)
per square metre - a growth of 21
per cent compared to the average
cost of MOP82,776 per square metre
in 2013, the latest data released last
Friday by the Financial Services
Bureau (DSF) reveals.
According to DSF, total transactions
in 2014, by contrast, plunged 36 per
cent year-on-year, reaching only 7,218
transactions compared to the 11,306
transactions of 2013.
Of all transactions, those on the
Macau Peninsula accounted for the
largest proportion at 5,752 of the
total. Residential flats in Taipa and
Coloane accounted for 1,151 and
315 of the total, respectively.
In fact, although buyers had to
pay more for a flat in 2014, it did
not mean that they could upscale.
According to DSF data, the average
net floor area of the flats purchased
in 2014 shrunk to 69 square metres
from the 74 square metres of 2013.
Housing prices of December
lower than year average
Meanwhile, the average housing
price in December 2014 reached
MOP96,411 per square metre. Despite
being lower than the average price of
the whole of 2014, it had increased by
5 per cent compared to the average
housing cost of MOP91,737 per
square metre in November 2014.
In addition, the number of
transactions, which rebounded in
November, dropped by 12 per cent
month-on-month in December,
reaching only 418.
Furthermore, the buildings that
are still under construction cost more
than the completed ones in the month.
Flats under construction cost on
average some MOP145,444 per square
metre while completed buildings cost
MOP83,037 per square metre.
In terms of area, housing in
Coloane is the most expensive, topping
MOP138,587 per square metre,
followed by Taipa at MOP119,941
per square metre. Residential flats
on the Peninsula are, on average,
the cheapest, costing MOP85,263
per square metre in December 2014,
according to DSF.
ainland China continued
to be the main origin of
imported goods into Macau,
accounting for one-third of all imports.
The latest official figures released
by the Statistics and Census Service
show that 33.2 per cent of all imported
merchandise originated from
mainland China, followed by Hong
Kong at 10.3 per cent, Switzerland
at 9 per cent, France at 8.4 per cent
and Italy at 6.9 per cent.
Total merchandise imported
expanded by 10.3 per cent to MOP.99
billion for the month of December
2014 compared to the same period
a year earlier. The import of mobile
phones alone increased by 55.5 per cent
year-on-year, although when analysed
annually the import of mobile phones
grew by 21.5 per cent for the whole of
2014 over that of the previous year.
The fastest growing imported goods
were construction materials, which
totalled MOP3.47 billion for the twelve
months ended last December, up 25.5
per cent year-on-year.
Overall, food and beverages
accounted for the largest portion
of the merchandise imported into
Macau, totalling MOP11.67 billion
last year for an annual increase of
21.8 per cent.
The import of handbags and
wallets, however, witnessed a 6.6
per cent decrease to MOP3.5 billion
in 2014 over that of the previous year.
Merchandise exports reached
MOP984 million in December last year,
up 7 per cent compared to that of the
previous year, while for the whole of
2014 exported goods increased by 9 per
cent year-on-year. The value of the latter
totalled MOP9.91 billion, of which the
value of re-exports increased by 11.4
per cent to MOP7.89 billion, while that
of domestic exports reached MOP2.02
billion, a slight increase of 0.7 per cent.
Hong Kong remained the primary
destination of exports, receiving as
much as 58.6 per cent of the total
merchandise shipped from Macau,
followed by mainland China at 15.7
per cent, the United States at 3 per
cent and Japan at 1.7 per cent.
The value of exported electronic
components dropped significantly by
31.6 per cent to MOP657.9 million
for the whole of 2014. Knitted and
crocheted garments exported totalled
MOP254.8 million last year, down by
13 per cent compared to 2013. Overall
textile and garments also dropped by
7.7 per cent to MOP781.3 million in
2014 over that of the previous year.
Meanwhile, the value of exported
clocks and watches jumped 85.2 per
cent to MOP872.2 million compared
to the whole of 2013. In the fourth
quarter of last year alone, the value of
exports of clocks and watches totalled
MOP200 million.
Merchandise trade deficit was
MOP80.04 billion in 2014, while
for the month of December alone
the merchandise trade deficit was
MOP8.01 billion.
S.F.
Business Daily | 7
February 2, 2015 Macau
Emperor Jewellery warns of substantial profit decline
Hong Kong-listed Emperor Watch & Jewellery Ltd. announced in a filing on Friday that it
anticipated a ‘substantial decrease’ in the profit attributable to owners of the company for
the year 2014, a result that the company blamed on an increase in rental costs and weakened
consumer sentiment in the second half of the year. The jewellery and luxury watch retailer, which
also runs stores in Macau, has already posted a 28.2 per cent year-on-year decline in its net
profit to HK$290 million (US$37.4 million) for the year 2013.
Jimei’s former
University of S. Joseph
HK-listed body posts mulls lower tuition fees
HK$17.74 mln loss
P
for 2014
rivate Macau university the
University of Saint Joseph
is considering downwardly
adjusting the tuition fees for its
undergraduates in the new academic
year of 2015/2016, which will start
in September.
A backing by government
funding would support the current
tuition fees for the university’s
local undergraduates to be lowered
from the current MOP50,000
(US$6,262) to about MOP40,000
for the new academic year, local
public broadcaster TDM quoted the
university’s rector Peter Stilwell as
saying on the sidelines of its Open
Day on Saturday.
The rector added that the university
would also consider downwardly
adjusting the tuition fees for local
postgraduate students – a measure
that would be subjected to inflationary
F
ollowing an approved name
change, Jimei International
Entertainment Group Ltd. –
formerly known as Sinogreen Energy
International Group Ltd. and now
controlled by Macau veteran junket
investor Jack Lam Yin Lok – has
reported a loss of HK$17.74 million
(US$229 million) for 2014, its latest
filing reads.
In its announcement of 2014
results filed with Hong Kong
Stock Exchange on Friday, Jimei
International Entertainment posted
a loss of HK$17.74 million for
2014 compared against the profit of
HK$344 million of the previous year.
In the financial years mentioned,
the company noted that its operating
segment at the time only included the
trading of ‘chemical products, energy
conservation and environmental
protection products’.
‘The loss was mainly attributable
to the absence of a one-off gain for
the year ended December 31, 2014,’
Jimei International Entertainment
concluded in its Friday filing.
In the financial year 2013, the
former body of Jimei International
Entertainment, Sinogreen Energy
International achieved a profit
attributable to shareholders of
HK$344.31 million – a result that
the company noted as a boost by
a one-off gain of about HK$359.4
million following a successful lawsuit
in Hong Kong that was related to the
unwinding of a television technology
business that Sinogreen Energy
International had previously acquired.
The Friday filing also showed that
Jimei International Entertainment’s
total staff costs had surged by 184
per cent year-on-year to HK$9.68
million for 2014, when the company’s
roster of employees expanded from 10
in 2013 to 25 in the next year. The
directors’ remuneration amounted to
HK$4.16 million last year, surging
127.5 per cent from HK$1.83 million
in 2013.
Macau veteran junket investor
Jack Lam Yin Lok and his associates
assumed control of 65.85 per cent of
Sinogreen Energy International in
September last year, following which
the firm then underwent a major
board reshuffle and shift of operation
focus to the gaming business.
In Jimei International
Entertainment’s Friday filing, it noted
that following the change of board
members in early November – one that
resulted in Mr. Jack Lam assuming
the position of chairman of the Hong
Kong-listed firm – the company has
been ‘actively exploring the possibility
of extending its business into the
gaming and entertainment market
to broaden its income sources’.
S.L.
factors and the university’s expenses.
Currently, some 1,300 students
study at the University of Saint
Joseph, of whom a majority are local
residents, the broadcaster said, citing
Mr. Stilwell.
The university, currently
headquartered in the NAPE
commercial district of downtown
Macau, will move to its new campus
in Ilha Verde in February next year,
the rector noted.
The new campus, which also
comprises Saint Joseph’s Secondary
School (Colégio Diocesano de São José),
occupies 38,000 square metres of floor
space and is designed to accommodate
at least 1,800 university students.
Previous media reports noted
that the new campus, inclusive of
a dormitory, was scheduled to be
completed in April this year.
SL.
8 | Business Daily
February 2, 2015
Macau
INTERVIEW
“No doubt if our LRT bid had been selected
things would’ve been different”
The Consulgal bid was one of those defeated in the quest to become the project manager of the Light
Rapid Transit (LRT) of Macau. Company head Rogério Monteiro Nunes refuses to point the finger at
the government but he says that the joint bid of Consulgal and Hong Kong’s MTR was the best option,
primarily due to the experience of both companies in developing projects like the LRT. For Consulgal, a
major challenge is the distorted labour market, while a future goal is expansion to Guangdong
João Santos Filipe
[email protected]
Consulgal has been operating in
Macau since 2002. What were
the reasons behind the decision
to expand its operations to the
Special Administrative Region?
We’ve always been aware of
the Macau situation long before
the decision to invest here. On
a personal level, I’ve known the
territory since 1974. However, in
2002 we came to the conclusion
that Macau was lacking the
new economic cycle, and that
the government was ready to
begin with a company that could
provide the services we do. After
talking to local authorities - and
as at the time we were looking to
internationalise our business - we
decided to accept the challenge.
Did the fact that Macau is a
former Portuguese enclave and
that Portuguese is one of the
official languages of the territory
contribute to the decision to set
up here?
When we decided to invest in
Macau we could have made a
different choice like many of our
competitors did and set up in Hong
Kong. But we are a Portuguese
company and the connections
between Portugal and Macau
are obvious. And, of course, the
language played a very important
role in our decision.
After thirteen years of operating
in Macau, how do you assess this
decision?
We’re very pleased with it. We’ve
been involved in many emblematic
projects for Macau, such as the
third bridge [Sai Van] connecting
Taipa and Macau, the extension of
the airport, and the management
of the construction works of the
new cargo terminal of the airport,
among many others. However,
the fact that we worked on a pilot
project of automated solid waste
collection in Areia Preta makes
us very proud. We had already
installed a similar system in Lisbon
and we decided to introduce it
to the Macau Government. The
government was open to the idea
and we are hoping to see this
system expand in Macau.
Consulgal was also involved in
the viability study for Light Rail
Transit (LRT). What was your role
in that?
The LRT is a very complex project.
We were responsible for the first
viability study conducted in
2003. Then we were asked by the
government to monitor the second
viability study which assessed
the possibility of constructing an
underground system and that was
done by the Hong Kong company
MTR. This last possibility was later
excluded because the government
decided it was too expensive.
We also participated in the open
tender to be the project managers
of the construction of the LRT in a
joint venture with MTR.
The LRT project has faced many
difficulties to a point that the
new Secretary for Transport and
Public Works, Raimundo Rosário,
called it a hot potato. What’s
your view on this project?
The construction works have
faced many difficulties. Initially it
was planned that the LRT would
be ready in 2013. However, in
Taipa the construction works
are progressing very slowly. On
the Macau Peninsula, there were
other problems that did not
permit the construction works to
begin. The LRT was projected as
an integrated system connecting
the Peninsula to Taipa and the
construction works were supposed
to start first on the Peninsula,
where the number of passengers
is expected to be higher. The fact
that part of the system is delayed
will have consequences for the
efficiency of the project.
The fact that part of the
system [LRT] is delayed
will have consequences
for the efficiency of the
project
had assumed the role of project
managers of this project?
I haven’t any doubt that if our
bid had been selected things
would’ve been different. MTR was
responsible for the subway in Hong
Kong and we were the project
managers on the light rail system
in Porto, which was a system more
complex that involved elevated and
underground tracks. So I believe
that the joint bid of Consulgal
and MTR was the best option.
But that was not the final decision
and we respect the government’s
choice. Let me add this; the LRT
project is very complex and any
entity in charge of it would face
difficulties. The state of the project
is dependent upon many decisions
that is not only explained by
the option to choose one project
manager over another.
Macau is often said to be a
business platform for Portuguese-speaking countries and
China. How did your presence in
the SAR help you?
In relation to the Portuguesespeaking countries, I cannot
say that Macau helped much
because we are a Portuguese
company. Now, in relation to
the Chinese companies I have no
doubt that Macau can actually
work as a platform to help these
companies go to the Portuguesespeaking markets. However,
in our connection with Chinese
companies, Macau definitely
played a role. Besides that,
Macau has been our platform to
work in Timor and last week we
participated in an open tender in
Cambodia. If our bid is chosen
to manage the project, due to our
location in Macau we will coordinate the operations from here.
Some months ago there was
news that companies based in
Hong Kong and Macau were in a
salary war to hire engineers. Has
this affected your operations?
Do you believe that the government would have made a better
decision if they’d chosen Consulgal and MTR’s bid for the LRT?
I do not want to criticise the
government’s choice nor am I
pointing fingers at a time when
the LRT project has become a
hot topic. The government made
a decision and every decision
has positive and negative
consequences. We respect the
decision taken. At the moment, the
government is working towards a
solution to the project and that’s
what is important.
But would the situation be
different if Consulgal and MTR
The problem is less about salaries,
and more about the lack of
qualified workers. Macau has a
huge need for qualified workers in
all areas. As the import of workers
is limited, salaries tend to increase
abnormally and this may look
good in the short term but in the
middle and long-term it is going
to bring problems for workers and
Macau.
What kind of problems are you
anticipating?
At this moment, the labour market
is distorted in Macau. As Macau
has a limit on the import of labour,
people here are privileged. It is
natural that they want to retain
these privileges but economic
cycles are a reality and when the
economic situation of the SAR
goes through more difficult times,
which eventually will happen
because this wave of construction
is not sustainable in the future,
there will be cuts in salaries. The
other option is unemployment. As
the construction industry starts
to slow down the situation will
not be sustainable for companies
because of the high salaries and
this will cause unemployment.
People have too many privileges
and in the future that will result in
unnecessary pain.
What are the main places Consulgal hires workers from for
Macau?
Mainland China is our first source
of workers. We have also hired
in the Philippines, Portugal and
Brazil. However, in recent years
there has been a bigger demand
for Chinese speakers and that is
the reason why the Mainland is our
market.
Is it common to move engineers
from Macau to other projects
where the company is involved,
such as Mozambique, Angola or
Brazil?
In theory, our workers are open to
the option of integrating into other
projects in other parts of the world.
But when you try to take them to
have a different experience that
is difficult. At this moment, we
are the project manager company
for a train terminal in the north
of Mozambique. The contractor
is a Chinese company and our
client is a Brazilian company,
named Vale. Due to the fact that
we have an office in Macau our
client hired us as they were having
communication problems with
the Chinese company and because
we have Chinese engineers.
However, when we tried to look
in Macau for Chinese speaking
engineers interested in working
there, whether in our company or
outside, we couldn’t find any.
We’d like to expand to
Guangdong because
of the co-operation
agreements of Macau
with that region
Business Daily | 9
February 2, 2015 Macau
Profile
Rogério Monteiro Nunes is the
President and CEO of Consulgal, a
Portuguese-based company related
to engineering, project management
and environmental consultancy
services that has operated in Macau
since 2002, through its subsidiary
Consulasia. The mother company
also partially owns Sinogal, which
operates in Macau and Mainland
China, in the field of solid waste
treatment, and the Pearl River, which
operates in the Mainland in the field
of environmental services.
In addition to Macau, China and
Portugal, Consulgal is represented in
Brazil, Timor, Angola, Mozambique,
Jamaica and other regions of the
globe.
Why are people in Macau not
interested in working abroad?
As their working conditions are
good here and their salaries are
very high, they don’t have the
motivation to work abroad on
other projects, where they could
integrate with multinational teams.
In terms of professional experience,
it is their loss but they do not
understand that. However, it’s easy
to accept that living in the north of
Mozambique, which is an area that
is starting to develop now, is not as
comfortable as living in Macau.
What about the qualifications of
the engineers who graduate from
Macau universities?
There are two types of
qualification. The first is
the qualification acquired in
universities and the other is your
professional experience. In relation
to the qualification related to your
academic experience, the graduates
of Macau universities have an
acceptable level of qualification.
It could be improved if the
universities could reach the top
of the rankings. But then, there
are many universities that are
not at the top of the rankings. As
for professional experience, you
can see that qualified workers
here tend to lack ambition and
motivation to go further in their
careers. As they have good working
conditions, many tend not to feel
the need for personal improvement
and perfection. That happens in
all professions in Macau, not only
in the areas we work in. Macau’s
labour market would benefit from
more competition.
Is Consulgal planning to expand
to Mainland China?
As we’re in Macau we have that
ambition. We would like to expand
to the area of Guangdong because
of the co-operation agreements of
Macau with that region. However,
there are two problems. The first
is that despite the agreements
that give to a Macau company
the same rights as a Chinese one
in Guangdong, the market is not
fully open to this. Then, the other
problem is related to labour. Our
big advantage in comparison to
Chinese companies is the skills
and qualifications of our workers.
However, as they are not willing to
move from Macau to China we lose
our advantage in relation to local
companies there.
For some years, the economy of
Macau has relied on the gaming
industry. Is this industry pushing
out the others?
Macau has changed a lot in the
last thirty years. Many years ago,
you would easily find the textile
industry operating in Macau.
However, after the handover
the territory went through steep
changes. The region has benefited
from the gaming industry and as
casinos are more profitable than
textile factories the latter had to
move to other places as the price
of land in Macau is very expensive.
That happens everywhere. In that
sense, not only the gaming industry
but the tourism sector have pushed
out other industries.
Without a strong industrial
sector how can Macau achieve
economic diversification?
The gaming industry is reaching
its peak, and any balanced
economy needs to grow. In that
sense, expanding the tourism
offers of Macau is the first step in
diversifying the economy. But the
government can also invest in the
development of other services. If
the government creates attractive
benefits for companies of a certain
area related to services, they will
establish here. The reason why the
gaming industry came to Macau is
because they had good incentives.
Macau at your
breakfast table.
With Business Daily.
Find us in the
following newsstands
Pacapio at San Ma Lo
Opposite HKSB (Nam Van)
Beside Luso Bank Building
Wen Hang Bank at San Ma Lo
In front of Portuguese Bookshop
In front CTM at San Ma Lo
In front Daiso shop at San Ma Lo
Next to S. Lourenço Market
Next to Human Resources Dpt
Next BNU at Av. Sidonio Pais
San Miu, Av. Horta e Costa
Next to Metro Park Hotel
10 | Business Daily
February 2, 2015
Macau
Auto Italia expects to record profit
A
uto Italia Holdings Ltd. is
expecting to record a profit
for the whole year of 2014
based on a preliminary assessment
of unaudited management accounts,
the company said in a filing with the
Hong Kong Stock Exchange.
‘The group is expected to record
a net profit for the year ended 31
December 2014 as compared to an
audited loss of HK$55.7 million for
the year ended 31 December 2013,’
the filing reads.
The primary reasons for the
group’s performance is due to an
increase in car sales as well as an
‘increase in income from the provision
of pre-delivery inspection services in
mainland China’. In addition, the
group’s gross profit margin grew by
mid-single digit percentage points
following the introduction of new car
models in 2014. ‘Income contribution
of approximately HK$20 million from
financing activities comprising the
provision of financing services,’ the
filing says, also contributed to the
group’s increased profits last year.
In September, Auto Italia
announced it had posted a gross
profit of HK$130.2 million in
the six months ended June 30.
The company, whose principal
activity is investment holdings, has
subsidiaries engaged in the import,
marketing and distribution of Italian
car brands Ferrari and Maserati in
Macau and Hong Kong.
S.F.
I.T store sales
down 4.5 pct in Q3
H
ong Kong-listed clothing
retailer I.T Ltd. said its
comparable store sales had
been affected by the Occupy Central
movement of Hong Kong last year,
resulting in sales growth in the SAR
dropping by some 4.5 per cent yearon-year during the third quarter of
its fiscal year ended November 30.
‘The group continues to suffer
amidst weakened spending
momentum and increasing operating
costs. The political demonstrations
that began in late September in Hong
Kong have caused disruptions to the
Group’s performance. Due to these
factors, comparable store sales growth
of our Hong Kong businesses landed
in negative territory during the third
quarter,’ the group wrote in its third
quarter results filed with Hong Kong
Stock Exchange last week.
V
the 12 months ended March 31, up
13 per cent from that of a year ago.
In its 2013/14 annual report
filed with the Hong Kong Stock
Exchange, the company announced
total assets of HK$3.2 billion, up
10 per cent from HK$2.9 billion
last year. Vitasoy’s total turnover
was HK$4.5 billion, an 11 per
cent increase over that of 2012/13.
Macau and Hong Kong – the sales
of which are consolidated – account
for 42 per cent of the group’s total,
followed by mainland China at 34
per cent. Australia and New Zealand
accounted for 11 per cent of Vitasoy’s
K.L.
Correction
Vitasoy halts shares trading
itasoy International Holdings
Ltd. halted the trading of
company shares as of 9:00am
Friday morning. In a filing with the
Hong Kong Stock Exchange, Vitasoy
did not mention when trading is likely
to resume.
Trading will resume ‘pending the
release of an announcement in relation
to a discloseable transaction and
inside information of the company,’
the filing reads.
No further information was
available.
In July, the company reported
a gross profit of HK$2.1 billion for
Although the group has one
store in The Venetian Macao it did
not mention its sales performance
in Macau, as it did in its previous
interim report.
Meanwhile, the group’s comparable
store sales registered a decrease of 0.2
per cent year-on-year in Mainland
China during the three months; in
Japan, it posted a growth of 13.5 per
cent year-on-year.
Although comparable store
sales dropped in two of its major
markets during the third quarter,
the accumulative store sales of the
group during the first nine months
of the fiscal year still posted positive
growth, up 0.8 per cent, 2.7 per cent
and 13.1 percent year-on-year in
Hong Kong, Mainland China and
Japan, respectively.
total sales, as did North America also
with 11 per cent. Singapore accounted
for 2 per cent of total sales.
For the full year 2014/15, the
company plans to bring in ‘new
meaningful innovations’ to both soy and
tea. Soymilk will see new packaging,
while milk tea will be introduced
to expand Vitasoy’s tea offerings.
The maker of soy and plant milk,
tea, dairy milk and tofu products
distributes goods in North America,
Singapore, Australia, New Zealand,
and mainland China as well as Hong
Kong and Macau.
S.F.
In Thursday’s edition of
Business Daily (January 29,
2014), we incorrectly stated
that a student from the University of Saint Joseph had
received a MOP1.35 million
subsidy from the Science
and Technology Development Fund. Our story titled
‘Subsidies galore’ on page
4 should read: ‘The University of Saint Joseph also
received MOP1.35 million
for a principal investigator to
lead a team on the petrology and geochemistry of
igneous rocks from Macau’.
We apologise for any inconvenience caused.
Business Daily | 11
February 2, 2015 Gaming
Las Vegas betting stalls as baccarat
drops, tourists skip tables
L
as Vegas Strip
gambling shrank
by 2.1 per cent to
US$6.37 billion in 2014,
halting a four-year recovery
in the U.S.’s largest betting
hub.
Winnings from slot
machines fell slightly,
according to state data
released Friday and compiled
by CBRE Inc., a real estate
brokerage. Revenue from
table games such as blackjack
dropped 1.9 per cent, while
baccarat, a card game
favoured by Asian players,
slumped 7.1 per cent after
five years of growth.
The results, along with
new visitor data, show that
the U.S. casino industry is
doing a good job of attracting
tourists but is less successful in
getting them to gamble, even
in its premier destination. A
crackdown on corruption in
China that has crimped highend betting in Macau is also
hurting Las Vegas baccarat
play, according to Brent
Pirosch, a CBRE analyst.
“If you’re Wall Street, it’s
disappointing,” he said in a
telephone interview.
It’s a different story in
terms of the city’s total visitors,
many of whom come to see
shows, eat at restaurants and
go to nightclubs. Visitation
increased every month in
2014, rising 3.7 per cent to
a record 41.1 million, the Las
Vegas Convention & Visitors
Authority said in a release.
The average daily hotel room
rate rose for the fifth straight
year, to $116.73 a night, the
report said.
The Strip is home to
some of the largest casinos
in the world including
MGM Resorts International
International’s Bellagio,
Caesars Entertainment
Corp.’s Caesars Palace and
Las Vegas Sands Corp.’s
Venetian.
Casino revenue on the
Strip peaked at US$6.8
billion in 2007. The market
Sri Lanka blocks
three casino projects
The gaming industry is one of the targets
of the economic agenda of the country’s
new government
P
rime Minister Ranil
Wickremasinghe confirmed
on Thursday that the new
government had blocked three casino
projects approved by the previous
administration, including a US$400million project by Australian gaming
mogul James Packer’s Crown Resorts
Ltd. and another by John Keells
Holdings Plc.
In response, Crown Resorts,
said it would not proceed with its
planned US$400 million development
in Sri Lanka following Colombo’s
government announcement.
Sri Lanka will not allow casinos
in planned mixed developments
in Colombo, Prime Minister Ranil
Wickremesinghe told the nation’s
parliament as the government detailed
measures in an interim budget.
Melbourne-based Crown had
proposed to construct a 5-star resort
with about 450 hotel rooms and suites,
gaming areas and restaurants at
Beira Lake in the centre of Colombo,
according to a 2013 regulatory
statement.
‘We respect the Sri Lankan
Government’s decision,’ the company
said today in an e-mailed statement.
‘On that basis, our project will not
be going ahead.’
John Keells Holdings Plc., which is
developing projects in Colombo, said
it will ‘engage’ with the government
over its decision to restrict space for
gaming activities.
Wickremesinghe was appointed
prime minister this month after
Maithripala Sirisena became president
in a surprise election victory that
ended the 10-year rule of Mahinda
Rajapaksa
Sri Lanka’s new government
announced a budget that imposed
new taxes on cash-rich firms to pay
for pay hikes for workers and tax
cuts on key commodities, hoping
to woo voters as it approaches a
parliamentary election.
Reuters/Bloomberg
began its recovery three years
later but has yet to top that
previous high, according to
Bloomberg Intelligence.
Total revenue on the Strip,
including rooms, food and
beverage, rose 5 per cent to
US$16.3 billion in the 12
months ended June 30, the
state’s fiscal year, topping the
2007 record of $15.8 billion,
according to state data from
CBRE.
Bloomberg
Corporate
Mandarin Oriental honoured
as ‘Luxury Hotel in Macau Star Performer’
Mandarin Oriental Macau was honoured as ‘Luxury Hotel in Macau Star Performer’ by
the Hurun Report in its Best of the Best Awards. The Hurun Report is China’s leading
luxury publishing group. The ceremony was held in Shanghai last week. Mandarin
Oriental Pudong, Shanghai and Mandarin Oriental, Guangzhou received the ‘Luxury Hotel
in Shanghai Star Performer’ and ‘Art Lifestyle Luxury Hotel in Guangzhou Star Performer’
awards, respectively. Michael Hobson, Chief Marketing Officer for Mandarin Oriental
Hotel Group, attended the event and received the group’s award for ‘Luxury Hotel Brand
Star Performer’.
“We are delighted to have received this prestigious award,” said Mr. Hobson. “This
recognition shows that Mandarin Oriental’s renowned brand of luxury hospitality
combined with oriental charm has set an industry benchmark in the Chinese market.”
12 | Business Daily
February 2, 2015
Hong Kong
China returns five times HK;
easy choice for investors
Nomura analysts expect Macau casino gross gaming receipts to
plunge 19.6 per cent after earlier predicting an 8 per cent drop
recovery any time soon, and have cut
forecasts for Macau casino receipts this
year. Nomura Holdings Inc. expects
gross gaming receipts to plunge 19.6
per cent after earlier estimating an 8
per cent drop, while HSBC Holdings
Plc’s projection swung to a 7 per cent
decline from a 6 per cent gain. SJM
fell 3.6 per cent this year through
Friday, with Galaxy declining 3.3
per cent.
Hong Kong’s retail sales growth by
value at the end of November was less
than a third of what it was at the start
of last year, according to the most
recent data available. Jewellery chain
Luk Fook Holdings (International)
Ltd. said same-store sales in Hong
Kong and Macau dropped 6 per cent
last quarter because of pro-democracy
protests. The city’s peg to the U.S.
dollar may also push visitors to
cheaper destinations, said JP Morgan
Asset’s Hui. Luk Fook fell 0.7 per
cent this year through Thursday.
“Some Hong Kong retailers are
struggling with a weaker consumer
market here on lower spending by
mainland tourists because of curbs
on corruption and China’s economic
slowdown,” said Louis Wong, director
of Phillip Asset Management (HK)
Ltd., which oversees about US$200
million.
Cheung Kong
T
he divide in Hong Kong’s stock
market between the city’s own
companies and those that
make most of their money in China
will only get bigger.
That’s the verdict of investors and
brokerages from JP Morgan Asset
Management to UOB-Kay Hian
Holdings Ltd., who watched the
MSCI Hong Kong Index rise 2 per
cent last year as the Hang Seng China
Enterprises Index jumped 11 per cent.
Monetary policy that has favoured
Hong Kong since 2010 – stimulus
by the U.S. Federal Reserve and
restraint from China’s central bank
– is reversing course, dimming the
outlook for everything from casinos
to developers and retailers.
“There will be much more
downside for pure Hong Kong plays
because people are buying China
on a potential rate cut and a more
stable economic outlook,” said Steven
Leung, director of institutional sales
at UOB. “We don’t see positive factors
for Hong Kong. Toward the middle
of this year there will be the risk of
a U.S. interest-rate hike, so people
will continue to underweight pure
Hong Kong plays.”
The city’s US$4.3 trillion stock
market houses local companies, which
make sales and borrow money in a
currency that’s pegged to the U.S.
dollar, and hundreds of Chinese
equities influenced by policy across
the border. Last year, the Hang Seng
China Enterprises Index outperformed
the MSCI Hong Kong Index by the
most since 2007. The city’s equities
remain more expensive, trading at
15.6 times estimated earnings as of
yesterday, compared with 8 times on
the H-share gauge, data compiled by
Bloomberg show.
Cheaper shares
“If I look at the valuations, if I
look at growth momentum, Chinese
names do offer more interesting
prospects,” said Tai Hui, chief Asia
market strategist at JP Morgan Asset,
which oversees about $1.7 trillion.
JP Morgan Chase & Co. and China
International Capital Corp. are among
those expecting more cuts to mainland
interest rates and reserve requirements
after the economy expanded 7.4 per
cent last year, the slowest pace since
1990. Gains in the H-share index
accelerated after the People’s Bank
of China delivered a surprise rate
reduction on November 21. The MSCI
Hong Kong Index climbed 0.5 per cent
Friday morning in the city, while the
Hang Seng China Enterprises Index
added 0.3 per cent.
On the opposite end of the policy
spectrum, some 45 per cent of
economists surveyed by Bloomberg
said the Fed will raise the benchmark
lending rate in June. Higher borrowing
costs would weigh on Hong Kong
property stocks, which account for
more than a quarter of the city’s
MSCI gauge, and are already facing
government efforts to cool the real
estate market by increasing the
amount of available housing.
Property curbs
“For the big constituents in the
Hong Kong market like property,
policy now is that we want to have
more supply because that’s what’s
good for the general population,” said
Joshua Crabb, head of Asian equities
at Old Mutual Global Investors (UK)
Ltd., whose parent oversees about
US$123.2 billion.
The price target set by analysts on
Sun Hung Kai Properties Ltd. was
nearly in line with the shares’ closing
price yesterday, data compiled by
Bloomberg show. For Link REIT Ltd.,
analysts expect a 4 per cent drop.
The earnings outlook for gambling
and retail shares is also weak as China’s
slower growth and crackdown on graft
continue to discourage extravagant
spending. Casinos led declines on
the MSCI Hong Kong Index last year
amid the first-ever annual drop in
Macau gaming revenue, with SJM
Holdings Ltd. plunging 52 per cent
and Galaxy Entertainment Group
Ltd. sliding 37 per cent.
Investment banks don’t see a
Leon Goldfeld, investment director
at Amundi Ltd., sees a bright spot
for Hong Kong’s market in Cheung
Kong (Holdings) Ltd. and Hutchison
Whampoa Ltd., among the biggest
advances this year on the city’s MSCI
equity gauge. The stocks both jumped
17 per cent as at yesterday since
billionaire Li Ka- shing announced on
January 9 a US$24 billion proposal
to merge and spin off the real estate
assets of his two main companies. The
MSCI Hong Kong index is heading for
a 5.6 per cent advance this month,
compared to a 2.1 per cent drop for
the H-share index.
Chinese shares sank Friday after
Xinhua News Agency reported a
mainland regulator was planning a
new round of checks in the marginlending businesses of brokerages.
More scrutiny will create volatility,
although it’s ultimately good for
capital markets, said Steven Rees,
global head of equity strategy at
JP Morgan Private Bank, which
oversees about US$1.1 trillion. The
Shanghai Composite Index plunged
the most since 2008 on January 19
after regulators suspended China’s
three biggest brokerages from adding
margin accounts.
H-shares discount
There is further upside for H
shares, which are trading near the
biggest discount to their mainland
counterparts since October 2011.
This will prompt investors to sell local
stocks and pick up cheaper China
shares available in Hong Kong, said
Dickie Wong, an executive director of
research at Kingston Financial Group.
“The real interest is still in the China
market rather than Hong Kong,” said
UOB’s Leung. “We will see more policy
from the government on the economy
and there is still a chance for China to
provide more liquidity through RRR
or interest rate cuts.”
Bloomberg
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok
Founder & Publisher Paulo A. Azevedo | [email protected]
Newsdesk João Santos Filipe, Luciana Leitão, Luis Gonçalves, Michael Armstrong, Sara Farr,
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GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias
Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari
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Business Daily | 13
February 2, 2015 Greater China
Factory sector jolted by January shrinkage
In the January factory Purchasing Managers’ Index, all but one of the sub-indices
in the PMI fell from December, indicating entrenched weakness.
Koh Gui Qing
C
hina’s factory sector
unexpectedly shrank for the
first time in nearly 2-1/2 years
in January and firms see more gloom
ahead, an official survey showed,
raising expectations that policymakers
will take more action to forestall a
sharper slowdown.
The official Purchasing Managers’
Index (PMI) fell to 49.8 in January,
the National Bureau of Statistics said
yesterday, a low last seen in September
2012 and a whisker below the 50-point
level that separates growth from
contraction on a monthly basis.
The December level was 50.1, and
a Reuters poll saw a better result,
50.2 for January. Only one of 11
economists in the poll predicted a
January contraction.
Most of the PMI indexes “showed
a downward trend, indicating that
current economic growth is still in
a downtrend,” said Zhang Liqun,
an economist at the Development
Research Centre, a state think-tank.
Some economists said the January
reading was especially downbeat as it
suggested that factories did not enjoy a
China’s
burgeoning
consumption
demand and service
sector will replace
traditional engines of
manufacturing and
investment to drive
economic growth
in 2015
Jing Ulrich
J.P. Morgan Chase
Asia pacific branch, managing
director and vice chairman
usual spike in business before China’s
annual Spring Festival holiday, which
falls in mid-February this year.
The poor January official PMI
fuelled bets that more monetary policy
loosening was in store in the world’s
second-largest economy.
“China still needs decent growth
to add 100 million new jobs this
year, plus China is entering a rapid
disinflation process,” ANZ economists
said in a note to clients.
“We (think) the People’s Bank of
China will cut the reserve requirement
ratio by 50 basis points and cut the
deposit rate by 25 basis points in the
first quarter,” they said.
Marred by a housing slump, erratic
growth in exports and a state-led
slowdown in investment, China’s
economy has steadily lost steam in
the last year as growth sunk to a 24year low of 7.4 percent.
Cooling services
And the downturn has also
broadened into the country’s
burgeoning services sector.
A separate official services PMI,
also released yesterday, showed
growth in the sector cooled to a oneyear low in January.
The official non-manufacturing
PMI fell to 53.7, the lowest level since
January 2014, from December’s 54.1.
Accounting for 48 percent of
China’s US$10.2 trillion economy last
year, the services sector has weathered
the growth downturn better than
factories, partly because it depends
less on foreign demand.
To revive demand, China’s central
bank unexpectedly cut interest rates
in November after unveiling a stream
of stimulus measures.
But despite the steady policy support,
analysts polled by Reuters in January still
expect economic growth to sag further
this year to around 7 percent.
In the January factory PMI, all
but one of the sub-indices in the
PMI fell from December, indicating
entrenched weakness.
Business expectations fell to 48.7,
its lowest since records for that began
in January 2013, while factory
employment dropped to its lowest
in nearly a year at 48.1, compared
with the previous month’s 47.9.
Drop in new export orders
New export orders, a proxy for
the trade industry, fell to 48.4, from
49.1 in December.
In line with recent trends, the
factory PMI showed the smallest
manufacturers which are often
privately-owned were the worst hit.
The official PMI looks more at
larger, state-owned firms that a
private one by HSBC/Markit, but
it includes small factories, which in
January was 46.4, versus 50.3 for
large manufacturers that are mostly
government run.
Underscoring the challenges faced,
data last week showed China’s factory
profits grew at their weakest rate in
two years in 2014.
China’s industrial ministry said
last week that it would aim to grow
the manufacturing sector by 8 percent
this year, down from last year’s actual
expansion of 8.3 percent.
Reuters
J.P. Morgan expects
steady Chinese economy in 2015
Ulrich forecasts economy will expand at 7.2 percent in 2015
as authorities continue targeted regulatory measures
L
eading investment bank J.P.
Morgan Chase predicted China’s
economy will maintain steady
growth in 2015, boosted by rising
consumption and the service sector.
“We are still optimistic about
China’s economic outlook in 2015,”
said Jing Ulrich, managing director
and vice chairman of the bank’s Asia
pacific branch.
She said reforms are a significant
factor in bettering the economy.
“Reform is the key word of the year
of 2015,” she said, “The government
will continue economic reforms to
improve competitiveness.”
Ulrich said China’s reforms in
finance, taxation, state-owned
enterprises and household registration,
if successful, will improve the
quality of the economy and facilitate
restructuring, preluding new growth.
China’s policy makers support
her view, confirming the country’s
economy has entered into a “new
normal” that features quality growth
and sustainable development.
“Meanwhile, China’s burgeoning
consumption demand and service
sector will replace traditional engines
of manufacturing and investment
to drive economic growth in 2015,”
Ulrich said.
In 2014, the added value from
the tertiary sector accounted for 48.2
percent of the GDP and consumption
contributed to 51.2 percent of
economic growth, both higher than
the previous year, data from the
National Bureau of Statistics showed.
“The central bank is likely to lower
interest rates in the first quarter and
cut the reserve requirement ratio twice
throughout the year,” Ulrich added.
Xinhua
14 | Business Daily
February 2, 2015
Geater China
Luxury consumption
predominantly
overseas
Chinese consumers purchase 76
percent of their luxury goods while
overseas, a report published on
Saturday said. Chinese people’s
domestic consumption of luxury goods
was US$25 billion in 2014, down by
11 percent from the previous year,
while their luxury consumption in
overseas market grew by more than 9
percent annually to 81 billion last year,
said a report issued by the Fortune
Character Institute, an organization
specializing in lifestyle studies of the
rich in China. The overall consumption
of luxury goods by Chinese consumers
registered an annual growth of 4
percent, growing to US$106 billion
last year.
Firms prepare for new tax rules
Tax specialists say companies need to be aware that China’s
tax regime is evolving
Michael Martina
Food sector edges up
China doesn’t want
to be seen as an
undeveloped country
with tax rules. It wants
to catch up to other
international players
China’s major food companies saw
combined profits up by 1.2 percent
from a year earlier to 758.14 billion
yuan (US$123.54 billion) in 2014, latest
data showed. The growth slowed from
a pace of 13.3 percent reported in
2013, the National Bureau of Statistics
said Saturday in a statement. The
drop in profit growth came amid the
slowdown of China’s economy. The
country’s gross domestic product
expanded 7.4 percent in 2014, the
slowest pace since 1990. Revenue
from the main business of food
companies rose 8 percent to 10.89
trillion yuan last year.
Roberta Chang
tax lawyer, Hogan Lovells
RMB deposit in HK up
Renminbi deposits in China’s Hong
Kong increased by 3 percent to 1,003.6
billion yuan (about US$160.6 billion) at
the end of December 2014, the Hong
Kong Monetary Authority announced.
The total remittance of renminbi
for cross-border trade settlement
amounted to 657.8 billion yuan in
December, compared with 532.8
billion yuan in November, according
to statistics published by the authority.
The statistics also show that total
loans and advances decreased by 0.1
percent in December. Loans for use
in Hong Kong (including trade finance)
declined by 1.0 percent, while loans
for use outside Hong Kong grew by
1.8 percent.
China Mobile
eyes 5G technology
The country’s largest 4G mobile
network operator, has began
development on the next generation of
mobile internet following the success of
4G, a senior executive of the company
said on Saturday. Xi Guohua, chairman
of the board for the telecom giant,
made the announcement during the
13th China Enterprise Development
Forum held by the Development
Research Center of the State Council.
The move suggested the company is
trying to maintain its leading position
in an increasingly heated competition
among the country’s three and only
telecom service providers. However,
Xi did not unveil more details on the
ambitious strategy.
T
he Chinese government’s
vow to increase tax scrutiny
of foreign companies has sent
firms rushing to tax advisors ahead
of the implementation yesterday of
new rules designed to rein in crossborder tax avoidance.
Tax professionals and business
lobbies alike have welcomed the move
as an attempt to bring China’s tax
regime more in line with international
standards.
But it has also caused concern
that authorities could use the policy,
which came into effect on February
1, as a political tool to put the pinch
on foreign companies, on top of
what business lobbies lament is an
increasingly tough business climate in
the world’s second largest economy.
“We’ve definitely been getting a
lot of questions from clients on how
to avoid being investigated for antiavoidance measures,” said Roberta
Chang, a Shanghai-based tax lawyer
at Hogan Lovells.
The measures, an elaboration
on China’s existing “general antiavoidance rule” or GAAR framework,
have more companies taking a hard
look at how they structure their
businesses.
Under the new policy, for example,
a firm that invests in China through
companies in Hong Kong or Singapore
to take advantage of tax benefits
that do not exist between China and
its home country could find itself
on the wrong side of Beijing tax
authorities if it cannot prove it has
substantial business operations there
or employees on the ground.
“Companies are increasingly
putting substance in their holding
companies,” Chang said.
Andrew Choy, Greater China
International Tax Services Leader
at Ernst & Young, said the GAAR
rules are a signal that companies
need to pay attention to tax planning.
“In general, people will be more
conservative,” Choy said.
Chinese regulators hit Microsoft
Corp with about US$140 million in
back taxes last November, an early case
of what could be a wave of “targeted
actions” to stop profits going overseas,
according officials at China’s State
Administration of Taxation.
With a slowing economy likely to
reduce 2015 fiscal revenue growth to
a three-decade low of just 1 percent,
according to a Deutsche Bank report,
it makes sense for Beijing to try to
boost its coffers.
Tax specialists say companies need
to be aware that China’s tax regime
is evolving, albeit as part of a global
trend to curb tax avoidance.
At a meeting of G20 leaders in
Australia in November, Chinese
President Xi Jinping endorsed a global
effort to crack down on international
tax avoidance.
“Compared to the U.S. or the UK,
China’s tax rules are still simpler.
But China doesn’t want to be seen
as an undeveloped country with tax
rules. It wants to catch up to other
international players,” Chang, of
Hogan Lovells said.
Fair and transparent?
At the forefront of evolving
international tax policy is the debate
about whether the right to tax should
be tilted towards industrialised,
capital exporting countries where
firms reside, or so-called source
countries such as China, where many
generate significant profit.
“There is a large element from a
government policy perspective that
has to do with whether China is going
to tax particular profits or some other
country,” said Jon Eichelberger, a
tax expert and partner at Baker &
McKenzie’s Beijing office.
Chinese state media has said tax
evasion and avoidance by foreign
companies costs the world’s second
largest economy at least 30 billion
yuan (US$4.8 billion) in tax revenues
each year.
Larry Sussman, managing partner
at O’Melveny & Myers’ Beijing office,
said the scope of the scrutiny could
also reach private equity firms and
M&A activity.
“Anything cross-border coming
in and coming out, for that matter,
which could implicate Chinese
investors,” Sussman said.
Despite the elaboration to the
GAAR rules, they remain loosely
defined, giving tax authorities
discretion on whether companies meet
the demands for economic substance.
James Zimmerman, Chairman of
the American Chamber of Commerce
in China, said Chamber members
welcomed an upgrade to the tax
regime, so long as the policies were
consistent with China’s World Trade
Organization obligations.
“AmCham-China is hopeful that
the Chinese government will apply
the tax laws and regulations in a fair,
uniform, and transparent manner,
and we will be monitoring China’s
enforcement record going forward on
behalf of our member companies,”
Zimmerman said.
Reuters
Business Daily | 15
February 2, 2015 Asia
South Korea exports down less than forecast
Exports were better than forecast but imports were weaker than anticipated
Christine Kim and Choonsik Yoo
S
outh Korea’s exports in
January fell less than
expected, but effects
from a plunge in oil prices,
a sustained slump in Europe
and slowdown in China
all clouded prospects for a
turnaround in global demand.
Exports in January edged
down 0.4 percent from a year
earlier to US$45.37 billion
while imports dropped 11.0
percent to US$39.84 billion
to produce a US$5.53 billion
surplus, the trade ministry
said yesterday.
A sharp drop in demand
from the European Union
and weaker prices of oil
and related products were
mainly to blame for January’s
numbers, the ministry said in
a statement.
Analysts said these factors
would continue to drag on
global trade for a while.
“Europe holds the key
for South Korean exports
because exports by many
countries including China
will eventually be influenced
by demand from Europe,”
said Park Sang-hyun, chief
economist at HI Investment
& Securities in Seoul.
Shipments to the EU
market tumbled 23.0 percent
in January from a year earlier,
the worst in three years and
KEY POINTS
Jan exports -0.4 pct,
imports -11.0 pct
Exports to EU fall 23
pct, worst in 3 yrs
Per-day exports fall
6.7 pct vs year ago
Oil price decline,
slowing China also a
concern
eclipsing a 5.3 percent rise in
sales to China, which is South
Korea’s biggest export market.
Seventh-largest
exporter
South Korea is the world’s
seventh-largest exporter and
the first major exporting
economy to report trade
data. It is also home to
some of the biggest global
export manufacturers, such
as Samsung Electronics and
Hyundai Motor.
Analysts also played down
the better-than-expected
January exports, given there
were more working days in
South Korea this year than last
year. The average export value
per working day fell 6.7 percent
in January both from a year
earlier and from December.
The three-day Lunar New
Year holiday falls either in
January or February, making
many South Korean economic
indicators during the period
subject to distortions. Last
year, the holiday started at
the end of January, and this
year it is late February.
In addition to the slump in
Europe, South Korean exports
have also been hit by effects
from the won’s appreciation
against some of the major
currencies and China’s push
to localise production of some
components.
Many analysts have said
South Korea’s central bank
needs to deliver more interest
Japanese farming reforms stiff test for Abe
To protect local farmers, high tariffs exist on dairy produce, rice,
wheat, beef, pork and sugar
Japanese Prime Minister Shinzo Abe
A
fter December’s
landslide re-election,
Japanese Prime Minister
Shinzo Abe’s programme to
revive the nation’s economy is
set to meet perhaps its stiffest
challenge, the nation’s sclerotic
farming industry.
He will soon submit
legislation to reform
agriculture, a sector where
a dwindling band of aging
farmers works tiny plots,
while conducting gruelling
negotiations to sign up for
the Trans-Pacific Partnership
(TPP), which would cut
towering import tariffs that
shield domestic farmers.
Standing in his way is
Japan Agriculture (JA), a
lobby group that controls
most aspects of pricing and
distribution through its
network of about 700 farming
cooperatives, and also
supplies feed and machinery.
It doesn’t like Abe’s plans
to clip its wings, nor the TPP.
And the JA, which has
long had close ties to his
Liberal Democratic Party
(LDP), has financial clout
- its banking business had
nearly 91.5 trillion yen
(US$780 billion) in deposits
in March 2014 - and a large
membership, which give it
influence over lawmakers in
rural constituencies.
Though agriculture is
only about 1 percent of
Japan’s economy, that defeat
worries those who fear the
government could temper
what Koichi Kurose, chief
economist at Resona Bank,
calls “a symbolic part of Abe’s
structural reforms” ahead
of nationwide local elections
in April.
At home, farmers hurt by
another plank of Abenomics loose money and a weaker yen
- are also watching closely.
For the consumer,
however, high prices and a
recent butter shortage are
the pitfalls of a closed market
for milk and dairy products,
rate cuts to keep the won from
strengthening further in the
aftermath of a spreading
global wave of policy easing
this year.
But the Bank of Korea
has maintained a firm stance
against calls for a further
policy easing, saying Asia’s
fourth-largest economy
would gradually regain
momentum this year and
that containing household
debt was as important a task.
Reuters
where output volume and
sales prices are set by the
state and a few designated
groups under the JA, while
imports are under effective
state control.
Raw milk production was
7.45 million tonnes in the
year through March 2014,
down from 8.66 million in
1997, while the number of
dairy farmers has fallen to
18,600 in 2014 from 160,100
in 1975. Cow numbers
have fallen by a third from
their peak.
Meanwhile, Japan imposes
a 360 percent tariff on butter
imports to protect domestic
farmers while maintaining an
import quota as a condition
for such high tariffs under
international rules of trade.
Abe wants to break that
system to give local farmers
or cooperatives autonomy so
they become more productive
and profitable.
Other reforms include a
scheme to encourage land
transactions so farms can
expand.
The average Japanese
farm is only two hectares.
Structural reform is critical
ahead of the TPP, which
would link 12 countries
covering nearly 40 percent
of the world economy.
Disagreement between
the United States and Japan,
the two biggest, over how
widely Japan will open up
has delayed progress.
Reuters
16 | Business Daily
February 2, 2015
Closing
New Jersey’s Revel Casino sale delayed
Anti-graft watchdog updates inspection results
A U.S. federal appeals court has delayed the sale of
the shuttered Revel Casino in Atlantic City pending an appeal by a company that ran its nightclub and boardwalk dance club. The order gives
attorneys for Revel until tomorrow to respond to
the appeal filed by IDEA Boardwalk. The company, along with several restaurants who had also
leased space inside the casino, had lost a challenge
to the sale in a January 21 federal court. The sale
to Florida developer Glen Straub, who bought Revel in bankruptcy court for US$95.4
million, was expected to be completed by February 7.
China’s anti-corruption watchdog published yesterday a detailed diagram to explain the corrective
measures taken by inspected governments and institutes after the second round of inspection. The Communist Party of China (CPC) Central Commission for
Discipline Inspection (CCDI) carried out its second
round of anti-corruption inspection from July to
September in 2014, which covered 10 provincial regions, the General Administration of Sport, Chinese
Academy of Sciences, and China FAW Group Corporation. The list of corrective measures
was first launched in October 2014 for the results of the CCDI’s first round of inspection.
Keeping the port’s management in
state hands was “a strategic move to
reconstruct the country’s productive
apparatus”, the new government said.
During the election campaign,
Syriza lawmaker Theodore Dritsas
had said “the state control of the
ports is one of the conditions of this
reconstruction”.
Dritsas is now deputy minister
of the merchant marine in the new
government.
Piraeus port U-turn
will not hurt
China investment
‘Highly concerned’
Analysts note that posturing aside,
the new Greek government is unlikely
to try to dislodge China from Piraeus
Alexis Tsipras, opposition leader and head of radical leftist Syriza party, greets supporters after the initial election results for the
Greece general elections in Athens
T
he shipping containers
emblazoned with the COSCO
logo on the quayside at Greece’s
biggest port Piraeus are a sign that
China has invested heavily here.
Even though Greece’s new left-wing
government set alarm bells ringing in
Beijing when it halted the privatisation
of the port this week, analysts say
Athens is merely posturing.
China will still be a “privileged
partner for Greece”, they say.
COSCO, through its Piraeus
Container Terminal (PCT) arm,
manages the two main container
terminals at the port -one of Europe’s
busiest- under a 35-year concession
signed in 2008.
In a logical move to extend its
control, the Chinese shipping giant
was one of the bidders for the
67-percent share in the port authority
held by the Greek state.
The tender deal was one of the key
requirements of the 240-billion-euro
EU-IMF bailout for Greece.
Winning the bid would have given
COSCO complete control of the port,
including its passenger ferry functions
used by millions of tourists every year
heading for the picturesque Greek islands.
Just days before the general
election, then-prime minister Antonis
Samaras chose the port of Piraeus
as one of the showpiece stops in his
campaign to return his conservative
New Democracy party to power.
Surrounded by visiting Chinese
officials, Samaras launched
construction work on a third
container terminal, a 230-millioneuro (US$260-million) investment
by COSCO.
Visiting Piraeus in June last year,
Chinese Premier Li Keqiang said
the port could become “a Chinese
gateway to Europe”.
But radical Prime Minister Alexis
Tsipras’s Syriza party had barely
taken power on Tuesday when it
announced it would fulfil its campaign
pledge to halt the privatisation of the
port of Piraeus and the smaller but
still important Thessaloniki docks.
China made no secret of its
displeasure at the move.
“We are highly concerned about
this,” Beijing’s commerce ministry
spokesman Shen Danyang said
Thursday, calling on Athens “to
protect the legal rights and interests
of Chinese companies in Greece,
including COSCO”.
Tsipras’ government has been
somewhat evasive since its initial
announcement, with Dritsas speaking
of a “revision of the agreements with
COSCO” and of “open horizons” for
future cooperation with China.
George Xiradakis, a consultant
in the merchant marine sector, said
COSCO’s involvement has helped lift
Piraeus out of its “lethargy” and has
“put it on the map in Europe as an
essential thoroughfare from North
to South”.
On the COSCO-run dock, new
cranes were installed to speed up the
unloading of containers.
The Samaras government had
regularly stressed that container traffic
in Piraeus had increased eightfold since
the lease was signed in 2008, under
a previous conservative government.
However, the mayor of Piraeus
had expressed misgivings about an
all-out sale of the port, and there
had been concerns that the European
Union would have found it difficult
to accept a Chinese monopoly on the
running of the port.
Obama’s prepares tax
on foreign earnings
Abbott punished
in Queensland election
Wuhan allows 72-hour
visa exemptions
P
V
W
resident Barack Obama’s budget
proposals will include a minimum tax
of 19 percent on U.S.-based companies’
future foreign earnings and a 14 percent tax
on their stockpiled offshore profits, Bloomberg
news said on Saturday, citing two people familiar
with the budget.
The planned taxes are part of a US$3.99
trillion budget plan that will be rolled out
today and is designed to help middle class
and poorer Americans by increasing taxes on
the wealthiest, Bloomberg reported. It said
the new proposals would be part of a larger
effort to overhaul the U.S. tax code and lower
the current corporate rate from 35 percent,
though few companies pay that top rate. But
Obama and the Republicans who now control
Congress disagree over how much to cut that
rate and over which tax breaks would have
to be eliminated or shrunk to offset the lost
revenue, the Bloomberg report said.
Reuters
oters dumped Queensland state’s premier in
surprise election results that add pressure
on Australia’s Prime Minister Tony Abbott
amid criticism over his leadership. Campbell
Newman, who leads the Liberal National Party, lost
his own seat in the state parliament in the January
31 ballot and his government is expected to be
ousted after a single term. The opposition Labour
Party is on course to return to office, according
to Australian Broadcasting Corp. forecasts, after
a 2012 poll defeat that left it with just 7 of the
state legislature’s 89 seats. Sydney time, with
about 71 percent of votes counted, the ABC said.
“It is unprecedented. There’s nothing that comes
remotely close to it, certainly not in Australia,”
said Norman Abjorensen, a political analyst at
the Australian National University in Canberra.
“It’s the most extraordinary comeback in political
history.” Abbott’s decision last month to grant a
knighthood to Prince Philip, Queen Elizabeth II’s
husband, drew widespread criticism.
Bloomberg News
AFP
uhan, capital city of central China’s Hubei
Province, will allow 72-hour transit visa
exemptions for foreign nationals beginning
March, local authorities said yesterday.
Foreigners will be able to visit Wuhan without
visas within 72 hours when they are en route to
a third country or region via the Wuhan Tianhe
International Airport (WTIA), which currently
allows 24-hour visa exemptions in a closed-off
area of the airport. Following Beijing, Shanghai,
Guangzhou, Chongqing, Chengdu, Dalian, Shenyang
and Xi’an, Wuhan will be the ninth city in the
Chinese mainland to embrace the policy, which is
expected to help ramp up the city’s international
access. According to the local tourist administration,
the city’s management departments, travel agencies
and scenic spots have been working on pre-arranged
plans and tailored services for the upcoming increase
of foreign tourists. Direct flights between Wuhan
and Melbourne, Chicago and Dubai are scheduled
to be opened this year, according to the WTIA.
Xinhua