Quickfolio FranciscoCordeiro (PDF)

Quickfolio

Francisco Cordeiro

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Poster for RUTZ:
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Australia Day
celebration event
poster at Blue Frog bar

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Seven Deadly Sins party
at Sky21 poster proposal

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LinesLab Summer
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Macau Fashion Link 2013
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Engagement present
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Editorial

Business Daily newspaper
layout re-design

Dealers’ discounts push
car sales on Mainland

Online real estate firms in
Mainland gaining momentum

Tokyo and Shanghai markets join
world’s worst performers in 2016

AUTOMOTIVE SECTOR Page 10

PROPERTY Page 9

STOCK EXCHANGES Page 16

Wednesday, May 11 2016 YEAR V  NR. 1040  MOP 6.00  PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR KELSEY WILHEM
POLITICS

Coutinho calls new
proposals for Legislative
Assembly election
“political persecution” Page 3

GAMING

www.macaubusinessdaily.com

Bernstein analysts
predict 6 pct to 8 pct
decline in gaming
revenue for May Page 7

Tuesday, March 29 2016 YEAR IV  NR. 1011  MOP 6.00  PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR JOANNE KUAI

Friday, April 29 2016 YEAR V  NR. 1032  MOP 6.00  PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR JOANNE KUAI

www.macaubusinessdaily.com

TREASURY

PRESIDENTIAL ELECTION

Duterte claims big
Philippines win and hints
at sweeping parliamentary
changes Page 11

Fiscal surplus falls
31.2 pct to MOP11.6 bln
as at end-March Page 4

MGTO COURTS
INTERNATIONAL
TOURISM MARKET

The Tailor
of Panama

Luso countries tourism
professionals intern in Macau
TOURISM Page 2

www.macaubusinessdaily.com

TAP

Tuesday, May 17 2016 YEAR V  NR. 1044  MOP 6.00  PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR JOANNE KUAI

MONETARY POLICY

GREYHOUNDS

Bank of Japan stands pat
in latest meeting, refuses
to deploy more stimuli Page 11

Portuguese lawyer
connected with Stanley Ho
under investigation Page 5

Global campaign
launched to end
transportation of
dogs to Macau Page 4

Asian low-budget
airlines integrate
services, announcing
alliance Page 16

BAD LOANS

Chinese central bank
to investigate accuracy
of non-performing
loans data Page 8

WHALE WATCHING
EXCLUSIVE INTERVIEW Greener on the other side. Especially when it comes to splashing
the greenbacks. Imperial Pacific drops its Macau operations and food business to focus
on its Saipan Integrated Resort. Which made US$3.2 bln from a ‘temporary’ casino in
April, CEO Mark Brown tells Business Daily in an exclusive interview. The winning
formula involves three-to-five hour international commutes, VIPs but no fixed junkets
(so far), a strictly regulated gaming environment plus yachts and villas. Page 5

Cops in
firing line

PANAMA PAPERS High profile local residents’ company details have also been exposed.
Legislator and lawyer Vong Hin Fai and auditor Leong Kam Chun number among
those named as the International Consortium of Investigative Journalists posts the full
database of Mossad Fonseca leaks. Revealing 25 offshore companies, 342 officers, 16
intermediaries and 299 addresses that tie the British Virgin Isles to the MSAR. Page 6

www.macaubusinessdaily.com

BUDGET CARRIERS

SECURITY The Security Forces Disciplinary Committee
(CFD) has received 73 complaints about the city’s security departments. Up 65 pct
y-o-y, according to its 2015
report. Most complaints target the Public Security Police
Force (PSP), especially the
traffic department. Page 3

PROTEST International Workers Day. To be
celebrated this Sunday. With local labour unions staging demonstrations per well established
tradition. According to police, ten groups plan to
march from several venues on May 1 demanding
local workers’ job security, compensation for unpaid
holidays, work related injuries and demands for a
non-smoking working place. Page 6

TEN GROUPS TO
MARCH ON MAY 1

Page 4

Page 7

PERSONAL DATA Page 5

Feels like home

TODAY

THU

BD-2016-May-11.indd 1

FRI

SAT

SUN

Source: Bloomberg

Source: AccuWeather

REAL ESTATE Commercial properties
throughout the SAR located in residential
areas performed better in Q1. And were
in higher demand than those in tourist
areas, says Centaline Macau. Page 4

25° 28° 25° 28° 25° 28° 25° 28° 24° 30°

Problematic gambling gaining ground
The Social Welfare Bureau has
observed a growing number of
gambling disorder cases. Particularly in
the last three years. Research is trying
to cope with the problem and better
allocate social services resources.

Flat inflation
CHINESE CPI China’s consumer price index
grew 2.3 pct y-o-y in April. Flat from the
previous two months, new data revealed
yesterday. Growth remains at its highest
level since July 2014 for a third month. Page 8

HK Hang Seng Index May 10, 2016

20,242.68 +85.87 (0.43%)

China Mobile Ltd

+1.64%

Power Assets Holdings Ltd

Cathay Pacific Airways Ltd

+1.49%

China Overseas Land &

+1.44%
-1.32%

Want Want China Holdings

-2.72%

Lenovo Group Ltd

-8.25%

I SSN 2226-8294

HK HSI March 24, 2016
20,345.61 -269.62 (1.31%)
Tingyi Cayman Islands

+0.67%

Hengan International

+0.32%

Hong Kong & China Gas

+0.28%

Power Assets Holdings Ltd

+0.19%

Cheung Kong Infrastruc-

+0.07%

Li & Fung Ltd

0.00%

China Resources Power

0.00%

New World Development

-3.68%

China Life Insurance Co

-3.93%

PetroChina Co Ltd

-4.28%

17° 20° 19° 22° 19° 23° 19° 23° 20° 23°
WED

THU

FRI

SAT

GAMBLING DISORDER Page 6

BD-2016-March-29.indd 1

COMMERCE Page 3

28/03/2016 22:21

CHEONG KAM KA

Bye bye, Sin Fong
The Sin Fong saga is coming to a close.
With DSSOPT greenlighting demolition of the
decrepit residential building. According to
Jiangmen Communal Society - who pledged
to help - rebuilding will take around two years.

TOURISM Some
564,000 visitors on
package tours visited
Macau in March. Representing a slump of 36.2
pct YoY. Occupancy
rates for local hotels and
guesthouses dipped 0.9
pct to 76.5 pct. Page 2

SOCIETY Page 2

Notice Due to the holiday on Sunday May 1, 2016, Business Daily will not be published on Monday. We will be back on Tuesday May 3, 2016 and wish all our readers a very enjoyable holiday.
HK Hang Seng Index April 28, 2016

I SSN 2226-8294

10/05/2016 21:40

profits announcement
revealing. Highlighting the heavy weight of
bad loans on Mainland
books. ICBC confirms
joining Bank of China in adopting looser
stance on reserve ratio.
Pages 10&16

-3.18%

China Merchants Holdings

TODAY

Bad debt
Package
accumulating tour visitors
RESULTS Chinese banks dropping

Pioneering entrepreneurs
Young entrepreneurs from Portugal want to
tap into the China market. A week-long trip to
different cities will whet the appetite from May 1.
With cultural understanding the bedrock of
business opportunity.

+1.83%

MTR Corp Ltd

21,388.03 +26.43 (0.12%)

PetroChina Co Ltd

+1.89%

Sino Land Co Ltd

+1.79%

Galaxy Entertainment Group

-2.54%

China Petroleum & Chemical

+1.82%

China Unicom Hong Kong

-1.49%

Cathay Pacific Airways Ltd

-4.84%

BD-2016-04-29.indd 1

22° 25° 23° 26° 24° 27° 24° 28° 24° 28°
TODAY

SAT

SUN

MON

TUE

I SSN 2226-8294

28/04/2016 21:32

23° 25° 24° 27° 24° 27° 24° 28° 25° 28°
TODAY

WED

BD-2016-May-17.indd 1

THU

FRI

SAT

Source: Bloomberg

Page 5

Macau businesses
shortlisted for
Laos casino

Source: AccuWeather

GAMING

Taipa transport
interchange hopefully
completed this year

Source: Bloomberg

INFRASTRUCTURE

US$59 million
‘Life Science Park’
in Zhuhai in 2018

Source: Bloomberg

FTZ

CAPEX Mainland firms reduced capital expansion this
quarter. This, according to a
private poll. The survey also showed that firms hired
fewer people. While just 33
pct increased expenditure.
Pages 8&9

Source: AccuWeather

Hide and seek
Restructuring. The Personal Data Protection Bureau tries to
keep up with the paperless times. Cross-border information
sharing. Junket player blacklists. Communicating information
for medical and banking purposes. And how to properly and
efficiently create legislation that helps citizens is all part of the
Bureau’s remit.

Hiring less

Source: AccuWeather

TOURISM

Newly launched flights between Macau
and Fukuoka. The Southern Japan tourist
market is ripe for development, says MGTO.
With the Macao Government Tourism
Office expressing high hopes for more
international visitors overall. Page 3

HK Hang Seng Index May 16, 2016

Home on
the range

Nothing
personal

REAL STATE Chinese just
became the main foreign
buyers of U.S. property.
Mainlanders are splashing out on residential and
commercial real estate. Last
year took their five-year
investment total to more
than US$110 billion. Page 9

GAMING Gaming consultant David Green says
it’s just business. Not a
lack of confidence in the
market. James Packer’s
sale of shares in Melco
Crown is a strategic move
back to home turf and
Vegas, says Green. Page 6

19,883.95 +164.66 (0.84%)

Want Want China Holdings

+4.55%

Lenovo Group Ltd

+3.40%

China Resources Power

-0.79%

Belle International Holdings

+3.43%

Wharf Holdings Ltd/The

-0.72%

China Construction Bank

-0.87%

I SSN 2226-8294

16/05/2016 21:36

Editorial

Business Daily newspaper
layout re-design
4 Business Daily Wednesday, May 18 2016

14 Business Daily Tuesday, May 17 2016

MACAU

INTERNATIONAL

OPINION

BANK CARDS

UnionPay International, a subsidiary of the state-backed
UnionPay card brand, claims that the transaction
volume of overseas-issued UnionPay cards accounted
for about half of UnionPay’s total international business
as at the end of the first quarter of this year, compared
to 27 per cent as at the end of 2013. In particular, the

transaction number of overseas-issued UnionPay cards
in Mainland China jumped 30 per cent year-on-year.
Nevertheless, the card issuer does not indicate related
figures in its latest press release. It said over 55 million
UnionPay cards have been issued in 40 overseas
countries and regions, of which Hong Kong, Macau,
Japan and South Korea are major regions for UnionPay
card-issuance outside the Mainland.

Words matter
Last week, I raised questions
about the usage of the word
‘eugenics’ in the Five-Year
document under public review. (Reminder: the document states, on page 55 of the
Portuguese version, as part
of the demographic policy,
the government’s intention
to ‘incentivise couples to
have more children applying
the concept of eugenics’.)
Eugenics is a politically and
historically charged word,
even if we leave the Nazi
connotations aside.
The Portuguese language
newspaper Ponto Final approached the department in
charge and got some answers.
They failed, however, to allay
the concerns and added a
couple of them. What did they
say? First, that the intended meaning of the Chinese
expression was - I quote - to
“improve the health of newborns through medicine and
prenatal care.” Second, that
a Portuguese-Chinese dictionary (unidentified) and the
Encyclopedia Britannica both
supported such (neutral?) interpretation and made no link
to Nazi-era policies.
I cannot check and comment
upon the undisclosed dictionary, obviously. But Britannica
is easily accessible. The first
paragraph of the related online
article starts by declaring that
‘Eugenics [is] the selection of
desired heritable characteristics in order to improve future
generations, typically in reference to humans’. And ends
by saying ‘it ultimately failed
as a science in the 1930s and
’40s, when the assumptions
of eugenicists became heavily
criticised and the Nazis used
eugenics to support the extermination of entire races’.
Therefore, the justification
(or dismissal) fails patently
on both counts. The status
and pedigree of the idea are
fully explained in the first
paragraph. Nowhere is there
any reference to perinatal care. They also claimed
the characters used in the
Chinese version have a different meaning. Maybe. My
Chinese skills, or lack thereof, prevent me from going
too far down that road. It
still mystifies me that all the
Chinese dictionaries I could
find online that include the
word translate it, consistently, as ‘eugenics’.
We must conclude that, at
the very least, the concept, as
used in the plan, is fuzzy, not
fully defined. It would be wiser, may I suggest, dropping it.
And improving perinatal care,
a worthy and desirable aim,
should be better dealt together
with health topics.
Words matter, ideas matter:
what the government actually means and what are
the policy implications of
the wording choices are not
trivial matters. Proper use
of words - and the clarity of
ideas and purpose that comes
with it – does matter.

EXPO G2E ASIA KICKS OFF, RUNS UNTIL THURSDAY

Gathering of the Asian
gaming industry
Striding into the 10th
edition, G2E Asia kicked
off with 180 exhibitors.
The three-day event
anticipates 12,000 visitors.
Joanne Kuai
joannekuai@macaubusinessdaily.com

G

LOBAL Gaming Expo (G2E)
Asia kicked off yesterday
at The Venetian Macao
casino resort. The threeday event, co-organised
by Reed Exhibitions and the American Gaming Association (AGA), welcomed 6,500 pre-registered visitors
from 95 countries, according to the
organisers, who previously revealed
they are expecting 12,000 visitors for
this year’s edition.
“The Asian gaming industry is currently undergoing a transformation
that is presenting numerous exciting
opportunities,” said Hu Wei, President of Reed Exhibitions, Greater
China, at the opening ceremony of
the event yesterday. “G2E Asia is the
perfect place for industry professionals to meet and discuss business
opportunities.”
The tradeshow debuted in 2007,
defining itself as the premier show
for the Asian gaming entertainment
industry. According to the organiser,
all casinos in Asia have a presence
at the event. The co-organiser also
expressed strong confidence in the
market.
“We have more exhibitors here than
ever before. More buyers here than
ever before. Interest is at its peak.
This market continues to have great
potential. When you look at China,

the penetration within China is still
quite minimal. The sky, the potential here, is enormous,” said Geoff
Freeman, President and CEO of the
American Gaming Association, on the
sidelines of the opening ceremony.

Bullish outlook

With regard to the gaming revenue
downturn, the AGA President, despite the worries, claims that uncertainty exists in every market and
that despite short-term decisions the
investments made here are for the
long run. He also expressed faith in
non-gaming developments and that
of the region in general.
“The market in Macau is stabilising.
We are seeing that. The number is
still quite strong. This is still a US$27
billion market, the largest market in
the world. I know there are members that are here - they are making
investments for the long-term. They
intend to be here for many, many
years to come and they are very optimistic about the future,” said Mr.
Freeman.
“Macau is already generating billions of dollars in non-gaming revenue. Different properties have a different emphasis here,” said Freeman.
“In Macau, there is a bright future for
non-gaming. It has great potential.
But it has to move in concert with the
customers. It’s what the customers
are interested in. It’s developing here
in Macau. People should feel very
good about the development that’s
already happening on the non-gaming front. We’re very excited for what
they would do in the future.”
“We have 1,000 casinos in the United States. There is plenty of room for
growth across Asia. Japan is obviously
a market that people are interested
in. Korea is doing some new things.

There is plenty of room for Macau
to grow and other markets to grow
simultaneously,” he added.

A decade of networking

Striding into the 10th edition this
year, G2E Asia kicks off with 180
exhibitors, representing a 12 per cent
increase from the previous edition,
with over 40 per cent of them joining
for the first time, and 80 per cent
from overseas. The exhibition area
has also tripled in size since it started 10 years ago to more than 9,200
square metres now. The organiser is also expecting more than 800
VIPs and buyers, and around 4,000
conference delegates, in addition to
over 12,000 visitors from all major
gaming operators and regulators in
Asia and beyond.
One of the highlights of this year’s
showcase is the fast-growing iGaming Zone which has more than
doubled the number of exhibitors
since 2015. Over 65 per cent of those
are new companies. The zone gives
the growing iGaming community
direct market access and a networking platform with over 50 iGaming
exhibitors showcasing their latest
solutions and products from Asia
and abroad.
Today, Macau’s gaming regulator,
Paulo Martins Chan, Director of the
Gaming Inspection and Co-ordination Bureau (DICJ), is expected to
deliver a talk on ‘Transformation in
Changing Conditions’ and will also
attend the 1st Gaming Regulators
Networking Luncheon with his counterparts from Asia and beyond to
exchange views, share updates and
export co-operation opportunities
at a time when the gaming market
in Asia is fast-changing and rapidly
growing.

BD-2016-May-18.indd 4

Brazil’s interim president,
Michel Temer, said in a
televised interview Sunday
that he hopes to reduce
unemployment and bring
economic and political calm
to Latin America’s biggest
country. Temer, a centrist
who took over as interim
president last week after
Brazil’s senate voted to
suspend Dilma Rousseff
and try her for irregularities
in the government budget,
said his government would
cut public spending where
possible and that a reform
of Brazil’s pension system
was essential. Repeating
a pledge made last week,
Temer said the cost-cutting
would not affect popular
social programs.
STOCK MARKETS

Philips eyes almost billion
euro windfall in IPO
Dutch electronics giant
Philips announced yesterday it would float 25 percent of its shares in a highly
anticipated IPO set for May
27 which could raise almost one billion euros. The
Amsterdam-based company
said it would release some
37.5 million shares - with an
option of releasing more if
the offer is over-subscribed
- aiming at raising between
694 million euros to 970 million euros (US$784 million
to US$1.09 billion). Philips in
September 2014 announced
it was selling off its core
lighting business - a mainstay of its income for more
than a century - to focus
more on medical equipment.
EU ANTITRUST

Google faces record 3
billion euro fine
Google faces a record antitrust fine of around 3 billion
euros (US$3.4 billion) from
the European Commission
in the coming weeks,
British newspaper The
Sunday Telegraph said. The
European Union has accused
Google of promoting its
shopping service in Internet
searches at the expense of
rival services in a case that
has dragged on since late
2010. Several people familiar
with the matter told Reuters
last month they believed that
after three failed attempts
at a compromise in the past
six years Google now had no
plans to try to settle the allegations unless the EU watchdog changed its stance.

Russia’s Sberbank lowers
rates on consumer loans
Russia’s top bank Sberbank
said yesterday it had lowered the interest rates it
charges on consumer loans
to below the level they
were at before an economic
crisis and that it saw higher
demand for such loans. “In
our opinion the economy in
general is ready for a lowering of rates, since inflation
has slowed and is continuing to slow,” Sberbank said
in a statement. The bank, a
dominant player in Russia
with around a third of total
banking assets, lowered rates
on its main line of consumer
loans by between 1.1 and 4.1
percentage points, it said.

17/05/2016 18:30

BD-2016-May-17.indd 14

Business Daily Friday, May 13 2016

15

OPINION
BUSINESS WIRES

Reserve Bank of India Governor Raghuram Rajan

BRAZIL IMPEACHMENT

The Times of India

Interim government says
jobs, confidence priorities

BANKING

José I. Duarte is an economist
and permanent contributor
to this newspaper.

11

ASIA

IN BRIEF

UnionPay: Overseas-issued cards
contribute half int’l business

José I. Duarte

Business Daily Monday, March 14 2016

The government may have plugged the
tax loophole in the double-tax avoidance
agreement (DTAA) with Mauritius and
Singapore, but it may need to amend the
treaty with Cyprus and the Netherlands
to ensure that all gaps are filled to ensure
that companies pay tax at least in one
jurisdiction. Tax consultants said that the
current tax treaty with Cyprus provides
for exemption from payment of capital
gains tax. But being a non-cooperative
tax jurisdiction, there is a 30% withholding tax on certain income. Cyprus
is one of the tax havens which investors
globally tap.

INVESTMENT TREND

Central bankers’ wisdom faulted
as gold holdings surge

Philstar

Gold is the best-performing major metal this year after silver amid rising
concern over negative rates in Europe and Japan.
Ranjeetha Pakiam

T

HE great gold rush of 2016
is gathering pace. Holdings
in exchange-traded funds
have now surged by a quarter, with investors taking
advantage of lower prices over the
past two weeks to enlarge stakes on
rising concern about central bank
policy making worldwide.
The holdings have increased to
1,822.3 metric tons, the most since
December 2013, according to data
compiled by Bloomberg, after bottoming at a seven-year low in January. In the past two weeks, as prices
lost 1.6 percent, ETFs swelled 63.2
tons, rising every day.
Gold is the best-performing major metal this year after silver amid
rising concern over negative rates
in Europe and Japan and whether
the Federal Reserve will be able to
tighten further. Demand jumped to
the second-highest level ever in the
first quarter, according to the World
Gold Council, and billionaire hedge
fund manager Paul Singer has said
gold’s rally may just be beginning.
Investors are being driven to gold
on a structural shift in investment
demand, according to Bernard Aw,
a strategist at IG Asia Pte.
“Firstly, the negative interest rate
environment and quantitative-easing
policies are reducing the pool of suitable investment options, and making
gold less costly to hold,” Aw said by
e-mail yesterday, adding that while

there may be more U.S. rate hikes in
the pipeline, prevailing rates remain
very low. “Second, lingering fears of
competitive currency devaluations
and potentially fresh bouts of market volatility encourage safe-haven
demand.”

Rates outlook

After the Fed raised rates in December, investors have been scaling back
expectations of further increases
amid concern about the strength of

“Lingering fears
of competitive
currency
devaluations
and potentially
fresh bouts of
market volatility
encourage
safe‑haven
demand”
Bernard Aw,
Strategist at IG Asia

the U.S. recovery. The chances of a
hike at next month’s policy meet are
just 4 percent, down from 75 percent
at the start of the year, according to
Bloomberg data. Higher U.S. borrowing costs typically hurt gold prices
while boosting the dollar.

INDIA

Bullion for immediate delivery has
rallied 21 percent this year, gaining to
US$1,303.82 an ounce on May 2, the
highest price since January 2015. The
metal traded at US$1,281.43 an ounce
at 2:51 p.m. in Singapore, according
to Bloomberg generic pricing.
Among bulls, Singer - whose firm
Elliott Management Corp. oversees
about US$28 billion - told clients in
a letter last month that if investors’
confidence in central bankers’ “judgment continues to weaken, the effect
on gold could be very powerful.”
Stan Druckenmiller, the billionaire
investor, said this month that while
the bull market in stocks is exhausted,
gold is his largest currency allocation.

Reserve Bank Governor wants global
rules of conduct for central banks
Rajan has been
a vocal critic of
easing policies,
saying central
banks are ignoring
the impact of their
actions on the
global economy
Rajesh Kumar Singh and Rafael Nam

Bankers buying

While central bank policies may have
contributed to gold’s gains this year,
some countries’ banks - notably in
China, Russia and Kazakhstan - have
also been substantial and consistent buyers. The World Gold Council
estimates that nations are expected to buy 400 to 600 tons this year,
compared with 566.3 tons in 2015,
according to Alistair Hewitt, head
of market intelligence.
Even some the of leading bullion
bears have had to backpedal this year
as prices advanced and expectations
for U.S. rates shifted. Goldman Sachs
Group Inc. and Singapore-based
Oversea-Chinese Banking Corp.
beefed up their price forecasts last
week, though both said they maintained their bearish views. BLOOMBERG NEWS

R

ESERVE Bank of
India Governor
Raghuram Rajan
called on Saturday
for global central
banks to adopt a system for
assessing the wider impact
of their actions, including
unconventional monetary
policies now in use.
Rajan proposed that a group
of academics should measure
and analyse the "spillover"
effects of monetary policies
and indicate which should be
used and which avoided. He
suggested a traffic light system, grading policies green,
orange or red.

The monitoring system
could be implemented
through an international
agreement along the lines of
the Bretton Woods currency
accord or via the International
Monetary Fund.
Rajan's speech was the
highlight of a three-day
International Monetary Fund
event in New Delhi, attended by IMF chief Christine
Lagarde and Indian Prime
Minister Narendra Modi, at
which worries about the
global economy were front
and centre.
"The international community has a choice," Rajan
said. "We can pretend all is
well with the global financial
non-system and hope that
nothing goes spectacularly

wrong. Or we can start building a system for the integrated world of the 21st century."
Rajan's speech came days
after the European Central
Bank eased monetary policy
further by cutting all its main
interest rates, expanding asset purchases and launching a
loan programme which could
see it pay banks to lend to
firms and households.
The Bank of Japan has also taken interest rates into
negative territory for the first
time while the U.S. Federal
Reserve is expected to tighten
monetary policy only gradually after years of near-zero
rates and quantitative easing.
Rajan has been a vocal critic
of such policies, saying central banks seeking to fulfil

“We need new rules of the
game, enforced impartially
by multilateral organisations,
to ensure countries adhere to
international responsibilities”
Raghuram Rajan, Reserve Bank of India Governor

domestically focused mandates are ignoring the impact
of their actions on the global
economy.
Saturday's speech was the
most comprehensive given on the subject by Rajan,
who is widely credited with
having predicted the global
financial crisis that began in
2007.
The former IMF economist, tipped by local media
as a potential successor to
Lagarde, also called on the
Fund to take a lead role in
ensuring policies adopted
by its members do not have
"beggar-thy-neighbour"
consequences.

Rajan's policies

When Rajan became RBI
Governor in September 2013,
India was in the midst of its
worst currency crisis in more
than two decades as fears the
Fed would begin tightening
policy exposed the country's
weak finances and big current account deficit.
India eventually stabilised
the rupee, partly by building up its foreign exchange

reserves, but his ringside
view of the crisis has made
him a strong critic of the kind
of stimulus measures adopted by developed economies
in recent years.
On Saturday, he warned
that such policies spook people into fearing "calamity is
around the corner", leading
them to save rather than to
spend and thus diminishing
any benefits.
Rajan has stated India will
not follow other countries
and devalue its currency, a
view endorsed on Saturday
by Prime Minister Narendra
Modi, who ruled out 'beggar
thy neighbour' policies.
Early in his tenure, Rajan
raised interest rates to tackle
double-digit inflation but the
RBI cut by 125 basis points
last year as consumer prices eased, to help boost an
economy growing fast by
global standards but below
its potential.
Markets expect another 25
bps cut in the next month
after the government stuck
to its fiscal deficit target for
the year starting in April.
That pledge was praised on
Saturday by Rajan, although
he declined to comment on
whether it would affect the
central bank's monetary policy stance. REUTERS

British banking giant Hong Kong and
Shanghai Banking Corp. (HSBC) and
Dutch financial conglomerate ING Bank
said they expect Philippine economic
growth rebounding in the first quarter
of the year on the back of robust private
consumption and higher investments.
HSBC economist Joseph Incalcaterra
said growth likely accelerated in the first
quarter to above seven percent from 6.3
percent in the fourth quarter of last year.
“We think growth may exceed seven percent year-on-year in the first quarter – its
best performance in nearly three years,”
he said.

The Star
A seasoned fund manager, Mark Mobius
expressed optimism that the ringgit will
improve and that issues surrounding
1Malaysia Development Bhd (1MDB) will
not have a long-term impact on Malaysia.
According to Mobius, who is the executive chairman of Templeton Emerging
Markets Group, foreign funds would
eventually return to Malaysia given the
undervaluation of the ringgit and the inexpensive valuations of Malaysia’s market. “The ringgit is so undervalued now...
a lot of companies here are doing well, so
funds will come back,” he explained at
a press conference at the Global Islamic
Finance Forum 5.0 here yesterday.

SALES STRATEGY

Algeria, Africa’s
biggest natural gas
producer, has invited
international companies
to help develop its
oil and gas fields.
Mohammad Tayseer

Algeria will supply oil and other
energy products to Jordan for the
first time under a memorandum of
understanding signed yesterday, as
the OPEC member seeks to diversify sales after years of stagnating oil
production.
The agreement with Algeria’s staterun Sonatrach Group covers crude
oil, liquefied natural gas and liquefied

petroleum gas, Hasan Hiari, head of
the natural gas department at Jordan’s
Ministry of Energy & Mineral Resources, said in an interview in Amman.
Shipments will start this year, he said.
Algeria, Africa’s biggest natural gas
producer, has invited international
companies to help develop its oil and
gas fields as Sonatrach has struggled
to raise production after a corruption
probe at the company and a deadly
al-Qaeda terrorist attack in 2013 at
the In Amenas gas field. The nation
operated 55 oil rigs in April, an increase in each month since November, according to Baker Hughes Inc.
Algeria pumped 1.1 million barrels a
day of crude in April, its output little
changed little since 2013.
“This is the first time that we are
going to get fuel and gas from Algeria,” Hiari said. “We have been
seeking this MOU with Algeria as we
are keen on diversifying our energy
sources.” Algeria is a member of the
Organization of Petroleum Exporting
Countries, while Jordan has almost

no energy resources of its own.
Jordan is also looking at solar, wind
and nuclear power for future energy
needs. By 2025, 48 percent the nation’s electricity will be generated
by nuclear reactors, up from 4 percent today, Prime Minister Abdullah
Ensour said Monday at an energy
conference in Amman. It plans to
have 500 megawatts of solar and wind
power capacity operational by the
end of this year. BLOOMBERG NEWS

“We have been
seeking this MOU
with Algeria as
we are keen on
diversifying our
energy sources”
Hasan Hiari,
Head of the natural gas department
at Jordan’s Ministry of Energy
& Mineral Resources

16/05/2016 18:51

Lagarde urges Asia to take bigger
role guiding global economy
Broadening access
to health and financial
services is essential to
unlocking the potential
of the region’s 4.4 billion
people, she said
Asia needs to take a leadership
role in the global economy that
reflects the continent’s growing
clout, International Monetary Fund
Managing Director Christine Lagarde
said.
Asian officials should keep monetary policy supportive, while using fiscal policy to boost growth and
macro-prudential measures to protect financial stability, Lagarde said
in a speech Saturday in New Delhi.

BD_2016-March-14.indd 11

Adopting structural reforms to boost
competitiveness, growth and jobs
will be key, she said.
Lagarde, who was reappointed last
month for a second five-year term,
called Asia the “world’s most dynamic region,” noting it accounts
for 40 percent of the world economy
and will deliver nearly two-thirds
of global growth over the next four
years.
“Asia now affects the world more
than ever before,” Lagarde said, according to the text of her remarks.
“By the same token, Asia is now more
deeply affected by global economic
developments than ever before -and must respond to them.”

Economic ‘miracles’

Lagarde, 60, said Asia’s rapid integration was one of the most striking

global developments of the past generation. Many countries in the continent pulled off economic "miracles,"
and several became world powerhouses, she said.
Still, policy makers need to step
up their response to a range of global
challenges, including volatile markets and capital flows, financial tightening and low commodity prices,
she said. In a speech this week in
Washington, the IMF’s No. 2 official, David Lipton, warned that global growth is weakening, and called
on the world to revive the “spirit
of action” that followed the 2008
financial crisis.
Despite Asia’s growth, income inequality has increased in 15 of 22
Asian economies since 1990, Lagarde
said. Broadening access to health
and financial services is essential to

unlocking the potential of the region’s
4.4 billion people, she said.
Policy makers should focus social
spending on the neediest, and make
taxes more progressive, the IMF chief
said. Barriers facing women should
be removed, access to infrastructure
such as water and electricity should
be improved, and Asian countries
should pursue greater trade integration, she said, adding that Asia
has a “massive stake” in combating
climate change. BLOOMBERG NEWS

“Asia now affects
the world more
than ever before”
Christine Lagarde,
Managing Director of the
International Monetary Fund

13/03/2016 22:16

T

HERE IS WIDESPREAD AGREEMENT ON
two facts about the Chinese economy. First,
the slowdown has ended and growth is
picking up. Second, not all is well financially.
But there is no agreement on what happens next.
The good news is that domestic demand continues
to grow. Car sales were up nearly 10% in March
over the same month in 2015. And retail spending
grew at an annual clip of 10% in the first quarter.
The most dramatic increase, though, is in investment. Real estate investment is growing again,
following its collapse in 2015. Industrial investment, especially by state-owned enterprises, has
been rallying strongly.
At the root of this turnaround is enormous credit
growth, as the authorities, concerned that the earlier slowdown was excessive, encourage China’s
banks to lend. Credit growth, known in China as
“total social financing,” grew at an annual rate of
13% in the fourth quarter of 2015 and again in the
first quarter of this year – that is, double the rate
of annual GDP growth. Since the financial crisis
erupted in September 2008, China has had the
fastest credit growth of any country in the world.
Indeed, it is hard to point to another credit boom
of this magnitude in recorded
history.
The bad news is that credit
booms rarely end well, as the
economists Moritz Schularick
and Alan Taylor have reminded
us. China’s credit tsunami is
financing investment in steel
and property, sectors already
burdened by massive excess capacity. The companies doing the borrowing, in other words, are
precisely those least capable of repaying.
The International Monetary Fund, which tends to
adopt a conservative posture on such matters (not
least to avoid antagonizing powerful governments),
estimates that 15% of Chinese loans to nonfinancial corporations are at risk. With nonfinancial
corporations’ debt currently standing at 150% of
GDP, the book value of the bad loans could be a
quarter of national income.
It still may be possible to sell off vacant apartments
for a fraction of their construction cost. It may be
possible to sell off rolling mill machinery to other
countries, or as scrap. But where the loans at risk
are concentrated – in steel, mining, and real estate
– suggests that losses will be substantial.
This is why the supposedly painless solution,
debt-for-equity swaps, will not be painless. Yes,
bad loans can be purchased by asset-management companies, which can package them up
and sell them off to other investors. But if the
asset managers pay full book value for those

“

Barry Eichengreen
Professor at the University of California, Berkeley,
and the University of Cambridge

loans, they will incur losses, and the government will have to foot the bill. If they pay only
market value, it will be the banks that incur
losses, and the government will have to repair
their balance sheets.
This leaves three unpalatable options. First, the
authorities can issue bonds to raise the funding
needed to recapitalize the banks. In doing so,
they would effectively transform the corporate
debt problem into a public debt problem. This
would place the financial burden squarely on the
shoulders of future taxpayers, which would not
enhance consumer confidence.
It also would not enhance confidence in the public
finances. Public debt in China is still relatively
low; but, as any citizen of Ireland can tell you, it
can balloon when banking crises strike.
Alternatively, the central bank could finance the
repair by providing credit. But, while the authorities relied on this approach in
1999, the last time they were
faced with a serious bad-loan
problem, running the money
printing press is not compatible with officials’ other stated
goal: a stable exchange rate. We
saw last August how investors
can panic when the renminbi
exchange rate moves unexpectedly. Currency depreciation may not only precipitate a destabilizing
spiral of capital flight; it could also destabilize the
banks, from which money leaving the country
must first be withdrawn.
The final option is to imagine that the bad-loan
problem will solve itself. The banks would be
encouraged to “evergreen” their loans: to roll
them over when repayment falls due. The fiction
that the banks are well capitalized will be maintained. Borrowers that need to be liquidated or
reorganized will instead stay alive, thanks to the
drip-feed of bank finance. The result will look
familiar to aficionados of Japan’s banking crisis:
zombie banks lending to zombie firms, which
apply artificial pressure on viable firms, stifling
their growth.
Financing bank recapitalization through bond
issuance is probably the least bad option. This
doesn’t mean that it will be painless. Nor is there
any assurance that Chinese policymakers will opt
for it. But if they don’t, the consequences could
be dire. PROJECT SYNDICATE

THE BAD NEWS
IS THAT CREDIT
BOOMS RARELY
END WELL

IMF

Algeria signs
oil, gas deal

Rescaling China’s
debt mountain

The Korea Herald
The Korean economy is facing pressure
from all sides that will make it harder to
sustain growth amid high youth unemployment, rapidly changing demographics and slow manufacturing growth. With
cash-strapped companies in conventional
industries expected to go through restructuring soon, more people of all ages
will be out of jobs and face difficulties in
finding work in a slow market. This will
increase Korea’s unemployment rate,
while growing costs for restructuring and
welfare will add burden to fiscal spending
as the country will have to finance them
with debts to maintain its socioeconomic
well-being.

BD-2016-May-13.indd 15

”

12/05/2016 19:49