China's richest announces $8bn film park
China's richest man, property developer Wang Jianlin, raised the curtain on a planned 50 billion yuan ($8.17bn) "motion-picture city", which he described as the biggest-ever single investment in the movie and television industry.
Property developer Wang Jianlin, 58, founder of Dalian Wanda Group, was surrounded by Hollywood stars John Travolta, Nicole Kidman and Catherine Zeta-Jones on Sunday as he launched his most ambitious project yet in the picturesque coastal city of Qingdao.
When completed in 2017, the Oriental Movie Metropolis will boast 20 sound stages, including the world's first underwater studio, a massive convention and exhibition complex, a sprawling shopping mall with an indoor amusement park and seven resort hotels.
The project also will include a yacht club with 300 berths.
"The Oriental Movie Metropolis is a major step in China's strategy to become a global cultural powerhouse," Wang said.
It was not only crucial to the development of Wanda's entertainment business, he added, but also an important step for building China's cultural brand.
For Wang, who was named by Forbes as China's richest man with personal wealth of $14bn, the Qingdao project also represents the latest move by Wanda Group to parlay its real estate and shopping mall development into a leisure and entertainment empire.
Wanda Group, which is privately held, has invested in 72 Wanda Plazas across China, along with 40 five-star hotels. The company also owns 6,000 movie screens, 62 department stores and 68 karaoke centres.
More recently, the company has turned to offshore markets to expand its real estate and leisure investment. Last year, Wanda closed its $2.6bn buy-out of U.S. cinema chain AMC Entertainment. Wang this year also announced a $1.57bn British investment that included the purchase of Sunseeker, Britain's largest luxury yacht maker by sales.
The Wanda chairman told Reuters earlier this month that he could afford to spend as much as $5bn every year to buy foreign firms or assets.
In an interview on the sidelines of Sunday's ceremony, Wang said that he expected Wanda Group revenue to increase to $30bn this year, and to continue to increase by $10bn every year.
Wanda Group says it has total assets of $49.01bn and annual revenue for 2012 of $23.15bn.
"We will have more than $50bn in revenue two years from now," he said. "In 2020, we will have at least $100bn, even by conservative estimates."
Offshore hotel investment is a major focus of the company's strategy. "In the next eight to ten years, we will build high-end hotels in major cities around the world," he said.
To reach the site of Oriental Movie Metropolis, which is planned as a 376-hectare, eight-phase development, it's necessary to drive about one hour from downtown Qingdao past rows of upscale apartment complexes that appear partially occupied.
Wang, who started his own film production company in recent months that has met with mixed success, explained that movies were a "sunrise industry" in China. He expects Wanda to be among the world's leading 20 entertainment companies by 2016.
He declined to discuss financing for the new project, although he has not ruled out the use of partners or of debt.
Japan's gaming market: a world apart
The latest version of blockbuster videogame Grand Theft Auto may have stoked a worldwide buying frenzy, but the ultra-violent offering is likely to be a minnow in Japan's vast gaming market.
Shoot-em-up offerings from abroad often struggle to gain traction in the multi-billon-dollar Japanese videogame sector where fantasy-style games reign supreme and sell in the millions - though many in the West have not heard of them.
They include the hugely popular Monster Hunter franchise, which has sold 23 million copies and counting since its debut a decade ago.
"But most of them were sold in Japan even though we did make an English version," said a spokeswoman for game creator Capcom.
Language translation problems and cultural differences were among the reasons cited for the struggles of foreign game operators in Japan, a rift that was apparent as gamers flocked to the Tokyo Game Show this week.
Over 600 games titles were on offer at the four-day extravaganza that wraps up Sunday.
Though Japan once dominated the worldwide market with the likes of Super Mario and Sonic the Hedgehog, the country appears to be looking increasingly inward.
"The main trends of the videogame market in Japan are divided into two categories: major worldwide successes like Pokemon, Final Fantasy or Biohazard, and games that are specifically designed for core Japanese gamers," said the Asia Trend Map institute, pointing to the "overwhelming dominance of games made in Japan".
A blockbuster offering based on the popular comic book "Shonen Jump" reflects a common theme in which many Japanese games are centred around a character well known in multiple media platforms, from so-called manga cartoons and movies to music and television series.
Namco Bandai's AKB 1/149 Renai Sosenkyo, a popular dating simulation game, is the kind of title known to most at home but with little name familiarity abroad -- AKB48 is the name of a well-known girl band.
"The title isn't suited to foreign markets," said Namco Bandai spokesman Toshiaki Honda.
Even Japanese giant Sony is releasing its PlayStation 4 abroad before its hits store shelves in Japan -- a first -- with executives saying that titles expected to be hits at home won't be ready in time.
Eiji Araki, senior official of mobile social game maker Gree, added: "We've learned that characters and visuals favoured in the United States are different from those in Japan."
For some, the unique character of Japan's gaming market encapsulates the country's so-called Galapagos Syndrome in which firms concentrate almost solely on the domestic market.
The take up in Japan on Apple's iPhone and Samsung's Galaxy smartphones trailed huge sales abroad as many mobile carriers focused on homegrown flip-phone offerings.
While iPhone is now selling well in Japan, a ride on the Tokyo subway underscores another unique aspect of the nation's gaming market -- a love of handheld gaming devices.
Commuters on the city's vast transportation network are frequently seen thumbing away on portable devices to pass the time while, at home, consoles outpace the rising popularity abroad of playing games on personal computers
For one official at Japan's Computer Entertainment Rating Organisation, the love of fantasy and role-playing games in low-crime Japan stands in stark contrast to Grand Theft Auto's brutal depictions of urban violence.
"Japanese consumers prefer family-use games to those with violent, anti-social or extreme expressions of sexuality," she said.
A report by Internet firm GMO Cloud characterises the difference as "self-escapism versus self-expression".
True or not, Grand Theft Auto is undoubtedly violent, especially when compared to Nintendo's award-winning "Animal Crossing: New Leaf" in which players take on the role of a mayor running a rural community.
By contrast, past versions of Grand Theft Auto have included simulated sex with prostitutes and drunken driving, along with profanity-packed dialogue. Carjacking, gambling and killing are the staples of a game in which players take on the role of a psychopathic killer in fictional Los Angeles.
When Grand Theft Auto IV was released five years ago it blew away videogame and Hollywood records by taking an unprecedented $500m in the week after its release, and it shows few signs of slowing with the game's fifth incarnation released days ago.
Despite its foreign pedigree, Hisakazu Hirabayashi, of Tokyo-based consultancy firm InteractKK, said he still expects the newest Grand Theft Auto to have relative success among Japanese consumers, at least "for a Western game".
Jail terms over internet piracy
Spain can jail for up to six years the owners of websites that link to pirated content under a measure it approved on Friday as it tries to keep off a US list of countries where copyright is violated most.
Countries on the watch list could face trade sanctions from Washington. Spain was in danger of finding itself back on after dropping off last year.
The amendment to the penal code, approved by the government, will affect only those trying to make money from sites by linking to copyrighted material provided illegally by third parties.
That includes making "direct or indirect profit" - for example from advertising, the government said.
Spain previously only had the means to punish those who copied and distributed copyrighted material but it did not pursue sites that linked to providers of pirated music, films and television shows.
Users of the link-hosting sites will not face any punishment under the new regulation.
Peer-to-peer file sharing sites and search engines are exempt from the rules and will not face legal action.
"This is a real balance between protecting copyright and new technologies," Spain's Justice Minister Alberto Ruiz-Gallardon said at a news conference after a weekly cabinet meeting on Friday.
Foreign investment in Myanmar surges
Myanmar has approved more foreign direct investment in the past five months than all of last year, but companies setting up operations in the hot frontier market face a growing problem: Southeast Asia's highest office rental rates.
Myanmar has approved FDI projects worth more than $1.8bn from the start of the fiscal year on April 1 to the end of August, compared with $1.4bn in the whole previous fiscal year, Aung Naing Oo, a director general at the Ministry of National Planning and Economic Development, told Reuters.
But he said he fears potential foreign investors will be turned away by a severe shortage of office rental space.
The wave of investment comes as Myanmar's quasi-civilian government implements political and economic reforms, initiated two years ago by President Thein Sein, a former general who led the country out 49 years of military rule and global isolation.
The European Union agreed in April to lift all sanctions on Myanmar, while the United States suspended sanctions in May last year and allowed U.S. companies to invest through a general license. Some American executives have urged Washington to go further and lift sanctions entirely.
Most of the approved FDI came from other Asian nations, said Aung Naing Oo.
"Malaysia, which brought about $500m for manufacturing Nissan cars, is the biggest investor during this fiscal (year) in terms of size followed by Hong Kong and South Korea, who injected funds in the garment industry," he said.
Nissan Motor Co plans to start a complete knock down production of its cars in Myanmar with a Malaysian partner Tan Chong Motor Holdings Bhd, the Japanese automaker said on Friday, becoming the first major global carmaker to be assembling cars in the Southeast Asian country.
The rising tide of foreign investment is fuelling a property boom in the commercial capital Yangon with the increasing demand for rental space feeding the highest office rental rates of any Southeast Asian city, according to real-estate firm Colliers International, which opened a branch in Yangon in July.
Colliers put the average rental rate in Yangon at nearly $80 per square metre, compared to about $25 in Bangkok and $30 in Hanoi. At about $70 per square meter, even the affluent city-state of Singapore doesn't match Yangon, it said.
Scipio Services, a Yangon-based firm that helps foreign companies establish themselves in Myanmar, puts prime office rental rates even higher. According to their survey, commercial spaces in the few business towers available jumped from $50 per square metre in mid-2011 to as much as $90 by May this year.
Skeletal
Some companies choose to rent houses and villas in lieu of office space, said Brett Miller, Scipio Services' managing director. But residential rates have also shot up, with villas ranging in price from $4,000 per month to $25 000, he said.
As a result, some companies "are coming in with a small footprint," stationing only skeleton staff in the country, he said.
Other companies base executives in neighbouring Thailand and fly them to Yangon where they stay at hotels, said Tony Picon, Colliers' managing director in Myanmar. "I call them the 'half-pats', spending around half their time in Yangon," he said.
Aung Naing Oo said the government is taking measures to increase the supply of rental space.
"To solve the problem of the shortage of hotel and office apartments, we are now encouraging investors in these sectors by approving their proposals very speedily," he said.
Drastic rises in property prices are being driven partly by land speculators. Miller at Scipio Services said the government could implement a "holding tax" that would encourage landowners to either build on a property or sell it to a developer.
Picon, however, was sceptical the government could enforce compliance.
"For tax on unused land, the owner could build something small and say the land is being used," he said. "Overall I find using tax often counterproductive especially when you have limited capacity within government to enforce laws."
EU, Singapore take step towards free trade deal TOWARDS FREE TRADE DEAL
The European Union and Singapore were set to bolster their economic relationship on Friday, by initialling the bloc's first trade agreement with a South-East Asian country.
"We are pleased to present today one of the most comprehensive free trade agreements ever negotiated, and to submit it to our respective authorities for approval," the parties' chief negotiators, Rupert Schlegelmilch and Keith Tan, said in a joint statement.
On the European side, the deal still needs to be endorsed by EU governments and the European Parliament.
Singapore's Foreign Minister K. Shanmugam addressed that parliament at a session in Strasbourg this month, and stressed Singapore's position as a "significant investment and trading partner of the EU," the ministry said.
Singapore is the EU's largest trading partner in the Association of South-East Asian Nations (Asean), with bilateral trade totalling $70.1bn in 2012.
The EU has said the free trade deal would boost its exports to Singapore by some €1.4bn over a decade, while Singapore could see its exports to the bloc increase by around €3.5bn.
"This is also the first step towards closer economic ties between the two major integrated regions in the world, Asean and the EU, and their 1.1 billion citizens," the negotiators said.
The deal, first agreed in December, is the EU's first in South-East Asia.
Shanmugam said it "could act as a pathfinder for the EU's deeper engagement" in the region, his ministry said.
The 28-member EU is also pursuing free trade agreements with Malaysia, Thailand and Vietnam. The bloc ultimately hopes to merge them into a single agreement with the entire 10-country Asean.
"With their expanding middle class, the dynamically growing ASEAN economies are key markets for Europe's exporters," said the European Commission, the EU's executive.
France to cut fossil fuels by 30% by 2030
France will reduce use of fossil fuels by 30% by 2030 as part of a strategy to halve overall energy use by 2050, President Francois Hollande announced on Friday.
"I propose that we set a goal of reducing consumption of fossil energy by 30% by 2030," Hollande said at a national conference on the environment in Paris.
"We can make savings of $27 to 67bn in our energy bill by 2030," he said.
Hollande said that easing France's dependence on fossil fuels was a core element of a plan "to reduce our overall energy consumption by 50% by 2050."
But, he said, "let's not be dogmatic about this -- if we are little bit off the mark, it won't be disastrous."
Hollande outlined several measures to help reach these goals, including a reduction from 10 percent to five percent in value-added tax (VAT) to spur energy efficiency in homes.
A draft law on "energy transition" will be put to parliament in the first half of 2014, he added.
Madrid pushing for mega casino
Madrid put pressure on Spain's central government on Thursday to push ahead with a mega gambling resort outside the capital after delays caused by US casino operator Las Vegas Sands seeking exemption from a national smoking ban as a condition of a deal.
Madrid desperately wants the Eurovegas resort - slated to include six casinos, 12 hotels and shops - to be built in the region to create employment in a country with one of the highest unemployment rates in Europe.
"We must do everything in our power to prevent a deal like Eurovegas slipping through our fingers," Madrid President Ignacio Gonzalez told Onda Cero radio.
The deal has encountered delays because Sheldon Adelson, chief executive of Las Vegas Sands, wants smoking to be allowed in the casinos to prevent gamblers taking cigarette breaks outside which lowers takings for the operator.
"From what we understand from Adelson, there are still some outstanding commitments from the Spanish government to be resolved," Gonzalez added, without elaborating.
Las Vegas Sands declined to comment on the matter on Thursday.
Gambling industry mogul Adelson told analysts in a presentation in London on Wednesday that the company was waiting for a smoking ban in Spain to be overturned before going ahead with the project.
The Spanish government is not keen to scrap the anti-smoking law which came into force in January 2011 and prevents smoking in all public places including bars, discos and workplaces.
Health Minister Ana Mato said on Wednesday that the government had to protect the health of citizens, although she added that it was also a government priority to create jobs.
UK watchdog proposes pensions shake-up
A UK watchdog has unveiled proposals to shake up the £275bn ($439bn) defined-contribution pensions market, parts of which offers poor value for money for up to 5 million savers.
The Office of Fair Trading (OFT) has stepped in to increase confidence in workplace pension schemes and bolster efforts by the British government to get more people to save for retirement, relieving pressure on taxpayers.
Concerns over value for money, the ability of pensions to provide meaningful retirement income and whether employers and trustees are choosing the right pensions for staff, have discouraged many workers from parting with their cash.
Now, the OFT and the Pensions Regulator have agreed to address these issues and look at which trust-based schemes, currently managing around £10bn of pensions savings, could be failing members in these ways.
They are also looking into high fees charged to members of older contract and bundled trust schemes with around £30bn pounds of savings. The OFT estimates that members in pre-2001 schemes pay annual management charges some 26% higher than members of schemes launched after this date.
"We have found problems in relying on competition to drive value for money for savers in this market," OFT chief executive Clive Maxwell said in a statement. He said the OFT had worked with government, regulators and industry to agree a set of measures to help to ensure that savers get a better deal.
The OFT also found employers often lack the experience or incentive to assess value for money when deciding which pension scheme to choose for their employees.
This problem could grow as a government-sponsored auto-enrolment initiative, aimed at solving the country's retirement savings timebomb, rolls out across Britain in the coming months, the OFT said.
To tackle these concerns, the Association of British Insurers has agreed to an audit of bundled trust schemes and to help to set up independent governance committees to increase scrutiny of pension schemes on behalf of members.
"It is important to remember that the level of contribution and how long someone works remain the most important factors in determining an individual's overall retirement income," ABI chief executive Otto Thoresen said.
The OFT has also recommended that the Department of Work and Pensions increase transparency and comparability of pension scheme costs and quality in order to make employers' selection process easier.
Adrian Boulding, Pensions Strategy Director at Legal & General has called on the government to introduce a cap on the charges payable by pensions savers in both new enrolment schemes and legacy workplace pensions.
"We firmly believe that no employees saving in a workplace pension scheme should have to pay more than half a per cent a year of their retirement savings pot whatever the size of the scheme and that low charge should be available for legacy pension scheme members too," Boulding said.
Lee Hollingworth, partner at consultant Hymans Robertson said he hoped planned reforms on how to improve quality of advice to savers wouldn't be lost in a debate on fees.
"At the moment the system relies too heavily on savers engaging with their scheme, but the majority of people are not equipped or interested in becoming their own pension adviser," Hollingworth said.
He said savers needed clear information on what income they can expect to retire on along with more hands-on direction on how to reach their retirement target.
Last October, the government introduced automatic enrolment, requiring employers to pay into a workplace pension scheme for all staff unless they opt out. Automatic enrolment is being introduced over the next six years.
Defined contribution schemes are those where the size of the pension pot is linked to the contributions made by the individual in their working life, the costs of the scheme and the performance of the investments.
Onion prices sting India's central bank
The aroma of frying onions from the Britannia restaurant might not penetrate the office of India's central bank governor Raghuram Rajan a block away, but like the eatery's customers, he can't escape the soaring price of the pungent vegetable.
The price of onions has added to Rajan's already full plate as the new head of the Reserve Bank of India (RBI) wrestles over how to help stabilise the rupee currency and tackle inflation without further dampening economic growth.
A former IMF chief economist, Rajan took over at the RBI on Sept. 4 in the middle of India's worst economic crisis in 20 years. He will announce his first monetary policy review on Friday.
The US Federal Reserve's surprise decision on Wednesday not to wind down its massive monetary stimulus just yet helped the rupee to a one-month high on Thursday, so inflation may have now moved up on his list of priorities.
In August, the cost of onions was 245% higher than a year earlier, while other vegetables shot up 77%, driving headline inflation to a six-month high. Onion prices have risen even further in September, prompting the government to take steps to limit exports.
Eaten raw as a side dish, or blended into a vast array of curries, onions play a prominent role in Indian cuisine and public anger rises quickly whenever prices spike.
Price pinch
In Britannia, the pinch is being felt by customers who include employees of the Reserve Bank, who drop by to lunch on steaming plates of its famous Parsi berry pulav rice.
"Instead of one person eating one plate, two people are splitting. And three people are dividing two plates," said Boman Kohinoor, the 91-year-old co-owner of the restaurant.
Much remains unchanged in Britannia, which was founded in 1923, 12 years before India's central bank was set up. But the prices keep on rising.
The restaurant raised prices on its menu by between 30 and 50 rupees ($0.50-$0.80) earlier this year - a fragrant plate of rice-based chicken biryani now costs 350 rupees - and Kohinoor said the soaring costs of ingredients may force him to hike prices again by April.
With overall food prices up an annual 18% last month, Kohinoor's new neighbour at the Reserve Bank will probably be careful not to stoke inflation in other areas, despite calls from industry to cut interest rates and lower borrowing costs.
But in reality there is little Rajan can do to prevent the volatility.
Erratic prices for perishable goods are routine in India, partly because the majority of farms depend on the variable monsoon for rains. This year, a drought followed by too-heavy rain affected supplies.
Consumers are also hostage to inadequate storage facilities and transport bottlenecks - that together cause up to 30% of fresh produce to rot before it reaches the market - and a distribution network in which many layers of middlemen take cuts, forcing prices higher.
Whatever the causes, onion prices have political consequences in India - in the 1998 New Delhi elections the Bharatiya Janata Party (BJP) was booted out of office by the Congress party after prices touched 60 rupees per kilo.
The significance will not be lost on Prime Minister Manmohan Singh, whose Congress party faces national elections by May. The Congress party local government in Delhi and its rivals the BJP have been trying to out-do each other selling the vegetable at below market rates from the back of trucks in the city.
Discount site Groupon offered onions at 9 rupees per kilogram earlier this month, a discount of as much as 90%, advertising the deal with the image of an onion in a jewellery case. Demand was so high its site crashed.
But Rajan, who had a lucky break on Wednesday when the US Fed decided not to reduce the flow of cheap dollars that help drive investment flows to emerging markets such as India, might soon be in for another reprieve.
Strong rains in the current monsoon season mean some are predicting a bumper onion crop this year - and farmers are forecasting prices will drop sharply over the next few weeks.
"Onion prices to ease in 2-3 weeks as fresh output arrives from Maharashtra, other states," agriculture minister Sharad Pawar posted.
Italy seeks to lure back foreign investors
The Italian cabinet on Thursday is set to unveil tax incentives, consulting services and faster start-up rules for foreigners doing business in Italy, the first step in a drive to lure more foreign investment to the euro-zone's third-largest economy.
The measures will be contained in a draft programme called "Destination Italy", drawn up by ministries with input from businesses including oil giant Eni SpA and intended to form the basis for legislation later this year.
"Predictability on tax issues, authorisations and business rules is what we want to give foreign investors," said Fabrizio Pagani, an economic adviser to the prime minister who helped draft the measures.
Recession coupled with more deeply-rooted problems, such as high corporate taxes and a labyrinthine justice system, have slowed foreign investment.
Some $9.6bn was invested last year, down from an annual average of $36.6bn in 2005-2007, a period that is considered a good indicator of pre-crisis flows according to the United Nations Conference on Trade and Development, a multilateral organisation that promotes international trade.
The government hopes to help foreign investors by concentrating all commercial lawsuits involving non-Italian firms into three cities - Milan, Rome and Naples - rather than have cases scattered across the country.
It also hopes to introduce fast-track tax consulting for foreign companies and to reduce the amount of time it takes businesses to obtain the paperwork needed to build factories.
Prime Minister Enrico Letta's left-right coalition government has been paralysed by infighting as it seeks to address Italy's worst postwar recession.
As an example of the challenges foreign investors face, the draft cites a World Bank survey ranking Italy at 103 in the world in terms of how easy it is to get construction permits.
More specific measures include making it easier and cheaper for small firms to access capital other than through bank loans, which have dwindled over the past years, and tax breaks to encourage more smaller companies to seek stock market listings.
It also confirms the government aims to provide, by the end of October, a list of planned privatizations and reiterates a pledge to lower the tax burden for companies.
"Too slow"
"Italy is too slow in giving the green light to foreign investments, while uncertainties in the way fiscal rules are applied and the length of judicial trials also keep foreign investors away," said Sandro De Poli, head of General Electric in Italy and a member of the advisory committee together with Eni.
GE has been one of the relatively small number of major foreign investors in Italy since 1994 when it acquired Nuovo Pignone, a specialist in machinery for the oil and gas industry. Last year, it bought the aviation unit of Italian aerospace supplier Avio for $4.3bn.
Other companies have not been as successful. Energy giant British Gas, for example, left the Italian market last year after having spent 10 years in a fruitless effort to win a licence to build a regasification plant in southern Italy.
Spain attracted $28bn in 2012, three times the volume of Italy's foreign investment. Despite Spain's crippling economic downturn and high unemployment, economists say the country has embarked on more ambitious structural reforms, particularly to its labour market.
The World Bank ranks Spain 44th in the world in terms of the ease of doing business, compared to Italy's 73rd ranking. Germany ranks 20th and France 34th. One result: French retailer Fnac plans to open 12 new stores in Spain by 2015, with an investment of €100m, while it sold its Italian stores last year.
Car companies Renault-Nissan, Ford, Iveco and Seat have all announced big investments for their Spanish plants, according to ICEX, the Spanish institution that support foreign investments.
Luca Manzella, former CEO at British Gas Italia, now senior adviser at Arthur D. Little, says the new measures envisioned by the government are a start but there is a long road ahead in convincing investors back to Italian shores.
"Dedicated desk and courts for foreign investors are a good idea over the short-term, but it won't be enough," he said.
