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Tuesday, September 28, 2004

Another gem wisdom from Bush

From this site:
 
 

Serious Quotations Entirely and Totally without any Sense of Irony

Read this White House press conference (9/23/2004) transcript and weep for the country that would re-elect this president who said things like:

"Our strategy is to help the Iraqis help themselves. It's important that we train Iraqi troops. There are nearly 100,000 troops trained.  The Afghan national army is a part of the army.  By the way, it's the Afghan national army that went into Najaf and did the work there." 

"We know that dictators are quick to choose aggression, while free nations strive to resolve differences in peace."

"It's hard work in Iraq. Everybody knows that. We see it on our TV."

"See 9/11 changed everything. September the 11th meant that we had to deal with a person like Saddam Hussein." 

"I think that the Iraq theater is a part of the war on terror.  That's what the prime minister said as well. He believes the same thing. He understands what's going on there; after all, he lives there."

"I'm not the expert on how the Iraqi people think, because I live in America where it's nice and safe and secure.  But I'd talk to this man. One reason I'm optimistic about our ability to get the job done is because I talk to the Iraqi prime minister."

That man is unqualified and incompetent to be the president of the most powerful nation on earth; if anything, he is the greatest menace to peace on earth.  How can someone who can't tell between Afghans and Iraqis be the commander-in-chief of the greatest military power?

The Taiwanese Foreign Minister calls Singapore lam pa (爛疤)!

 
The Taiwanese Foreign Minister calls Singapore lam pa (爛疤)!
 
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Foreign minister slams Singapore

HARSH LANGUAGE: Mark Chen used a rude colloquialism to blast his Singaporean counterpart for criticizing Taiwan
By Melody Chen
STAFF REPORTER
Tuesday, Sep 28, 2004,Page 3

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Minister of Foreign Affairs Mark Chen (陳唐山) yesterday blasted Singapore Foreign Minister George Yeo (楊榮文) for telling the UN that actions by Taiwan's independence groups could lead to war with China.

"Singapore holds China's lam pa (爛疤) with its hands, if I may use these ugly words," a fuming Chen said.

In the Hoklo language (also known as Taiwanese), lam pa means "testicles"; saying that someone holds another's lam pa means that he is fawning over that person.

Chen was speaking during a meeting with a pro-independence group which had requested that the Ministry of Foreign Affairs change the name of Taiwan's representative office in Japan to better express Taiwan's sovereignty.

Chen lamented Taiwan's status in the international community, saying "even a tiny garden country like Singapore, which only has 3 million people, can criticize us."

"Singapore is a country only as big as a piece of snot," he added.

The minister, who returned from the US yesterday, was clearly irritated by Yeo's speech in the 59th session of the UN General Assembly in New York last Friday.

Minister of Foreign Affairs Mark Chen gestures while discussing Singapore during a meeting with a pro-independence group yesterday.
PHOTO: CNA
Yeo told the General Assembly that "the push towards independence by certain groups in Taiwan is most dangerous because it will lead to war with mainland China and drag in other countries ... At stake is the stability of the entire Asia-Pacific region."

Taiwan's 12th bid to join the UN failed earlier this month.

Quoting Yeo's statement to the pro-independence group yesterday, Chen said people in Taiwan need to persevere if they want to survive.

"Where is justice in the world? This world has no justice," Chen said. "When [Singaporean Prime Minister] Lee Hsien Loong (李顯龍) visited us two months ago, we treated him very well. He came under tremendous pressure [from China] after the trip."

China's pressure influenced Singapore to make the speech in the UN, but "Yeo's remarks went too far," the minister complained.

But Chen said Yeo had done at least one good thing by delivering the UN speech.

"Yeo mentioned that some people in Taiwan want independence," Chen said. "Many countries probably didn't know there are people in Taiwan desiring independence before Yeo talked about it."

Thanks to Yeo's statement, these countries would now "realize our ambition" to achieve independence, he said.

The independence group had appealed to Chen to change the name of the Taipei Economic and Cultural Representative Office in Japan by replacing the word "Taipei" with "Taiwan." The group said the name downgraded the country's status as a state. It asked the ministry to negotiate with the Japanese government about the name change as soon as possible.

"I think the group made the right appeal," Chen said. "Many of us are not clear what our national title is. Even I, as foreign minister, often forget the names of our overseas representative offices. This is ridiculous."

Chen was referring to the various names Taiwan's overseas representative offices have been forced to adopt to prevent political pressure from China being applied on those countries.

Meanwhile, the minister also said that the arrest of Donald Keyser, the former US deputy assistant secretary for East Asian and Pacific affairs, would not affect Taipei-Washington relations. Chen stressed that Taiwan wanted to maintain good ties with the US.

"Taiwan has no reason to steal classified information from the US," he said.
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Wednesday, September 15, 2004

BBC: Disaster in Cayman Islands

Cayman Islands banks survive Ivan
Power lines down across a street in Georgetown, Grand Cayman
The power is out, but much of the offshore finance keeps working
The fifth largest financial centre in the world is still functioning - despite being hit by Hurricane Ivan.

The Cayman Islands is home to 5,000 funds, almost 400 banks and tens of thousands of companies.

A loss of power across most of the islands means locally-based staff are out of action till electricity returns, planned for 20 September.

But thanks to the offshore nature of the Caymans' financial services, many firms are operating almost unhindered.

With sensitive data routinely backed up elsewhere, many law firms, company agents and banks have simply told clients to contact offices in London, the Bahamas, the US or elsewhere.

The experience, experts say, is a prime example of the virtual nature of modern finance.

The rest of the islands' life, however, has been hit hard by the hurricane.

Few of their 43,000 inhabitants have mains electricity or water supplies, and there is significant damage to homes and businesses.

Communications are also suffering, with most landlines cut off during the day and little mobile phone coverage.

Haven

The Caymans are most widely known as an offshore financial centre - colloquially termed a "tax haven".

The islands' financial industry accounts for the vast majority of their $1.3bn gross domestic product.

The banks - most of which are subsidiaries of major international groups and do not have a physical presence there - hold more than $1 trillion.

The Cayman Islands, a semi-independent overseas territory of the UK, has many more companies than it has people.

Many of these firms exist as shells, functioning as part of complex systems by which companies and rich individuals can manage their tax and financial affairs.

As such, they do no business in the Caymans themselves and are routinely run remotely, experts say.

For years, the territory was seen as a honey-pot for crooks and money launderers.

International regulators such as the Paris-based Financial Action Task Force now say it has substantially cleaned up its act.

 

Cayman Islands 'devastated' by Ivan
Aerial view of the Caymans after Hurricane Ivan
Debris from destroyed homes was scattered about the Caymans
A curfew is in place in the Cayman Islands after Hurricane Ivan tore through the British territory causing extensive damage and flooding.

The scene in the capital, Georgetown, is one of utter devastation, according to local residents and reporters.

Winds of over 250km/h (150mph) pounded the islands on Sunday night, demolishing buildings, including official shelters.

The centre of the category five hurricane passed within 30 miles (48km) of Grand Cayman, home to some 45,000 people.

A British naval ship, HMS Richmond, docked at the largest of the three islands, Grand Cayman, on Tuesday to offer supplies and aid relief efforts, the UK Foreign Office said.

Uninhabitable

HMS Richmond had to wait for stormy seas to calm down before it docked at Grand Cayman. The boat has been following in the hurricane's wake, delivering relief to Grenada and Jamaica.

HMS Richmond, in the Caribbean during Hurricane Ivan
Sailors aboard HMS Richmond prepare supplies for the Caymans

Waves as high as six metres (20ft) in places crashed into the sea wall at the port in Georgetown, Grand Cayman, while floodwaters swept away trucks, cars and boats.

"The winds ripped the apartments like matchsticks - the whole island has taken a battering. Cars and trucks were floating away like toys," a Citadel Radio reporter said from Grand Cayman.

Tourism director Pilar Bush told the Associated Press (AP) news agency that up to half of the 15,000 homes on Grand Cayman were badly damaged and uninhabitable.

Police said on Monday night that they could not confirm reports of any casualties.

The UK Foreign Office said 95% of homes in the Cayman Islands had suffered damage to their roofs while some 25% of Grand Cayman was submerged.

Power and sewage networks have stopped working and the territory's governor has called for plastic sheeting and water purification equipment to be delivered.

Contact with island authorities was proving difficult, the Foreign Office said.

Emergency flights

An AP reporter who viewed the island from a chartered plane said some houses were reduced to piles of splintered wood.

Many hotels were damaged, with roof tiles torn off. The second floor of the Divi Beach Club Colony Resort was torn away completely, he said.

Debris was everywhere.

Animals could be seen gathering on higher ground, to avoid floodwaters. Trees had been stripped of their leaves, the reporter said.

The island's airport has now reopened for emergency aid flights, but other planes are being turned away.

Hurricane Ivan is one of the strongest Atlantic hurricanes on record and has killed more 60 people on its journey across the Caribbean.

It lashed the west coast of Cuba before moving towards the Gulf of Mexico on Tuesday.

Sunday, September 12, 2004

Pu Du at Ling Hoon Din Temple at Lor27A Geylang - Photos

At Victor's request, I have quickly uploaded some photos of today's session. 
 
Cheers,
Wee Cheng
 

Geylang - Ling Hoon Din Temple - 12 Sept 04

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The medium possessed          
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Dispensing blessings
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The medium in front of the puppet stage
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In front of the puppet stage, with paper offerings thrown everywhere!  Looks like the traditional New York style tickertape parade!  And it's very loud too!
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Thursday, September 02, 2004

Chinese Tourists: China prepares to see the world

 

China prepares to see the world
By Alexandra Harney
Financial Times

Published: September 1 2004 21:31 | Last updated: September 1 2004 21:31

When Zhang Huili and her boyfriend Li Yunpeng got married earlier this year, the groom's parents gave them an entirely new kind of gift: a honeymoon in Europe.

Ms Zhang, who works as an assistant computer engineer in Beijing, has been reading up on Paris, the first stop in a three-country tour arranged by her travel agent.

“It's a pity that we have to stop there first,” she says. Her friends have inundated her with orders for French perfume and chocolate, and she has bought an extra suitcase in anticipation. “We'll have so much stuff to bring with us for the rest of our trip that we'll be exhausted just carrying it around.”

Ms Zhang will not be alone on her honeymoon. Starting this week, mainland Chinese tour groups will be allowed to visit 27 European countries that were previously off-limits to all but business travellers. Overnight, countries such as France, Italy,Switzerland, Spain, Belgium, Sweden, and Greece will gain Beijing's imprimatur as “approved destinations”.

The opening of Europe is the most dramatic since China began loosening restrictions on international travel in the early 1980s. Industry analysts believe it could set the stage for further liberalisation, whetting the popular appetite for overseas travel and widening the door to the outside world for hundreds of millions of Chinese.

“They have never opened more than 20 countries at one time,” says Zhang Wenjia, chief representative for Switzerland Tourism in China. “It is a big milestone.”

And this is just the beginning. The World Tourism Organisation forecasts that, by 2020, China will send 100m tourists overseas, making it the world's fourth largest source of tourists after Germany, Japan and the US. Last year, the number of mainland Chinese travelling outside the country rose 21 per cent to 20.2m, surpassing the number of Japanese tourists - previously Asia's most avid travellers - for the first time. This year 24m Chinese will travel abroad, according to DPS Consulting, a Beijing-based group. An explosion in Chinese tourism has big implications for the world's hotel, airline, retail and travel industries. Anecdotal evidence already suggests that Chinese tourists are not shy about opening their wallets. Mainland Chinese spend more in Hong Kong than visitors from any other country.China's relaxation of rules on travel to the territory, which started last summer, has helped lift per capita spending for overnight visitors to HK$6,018 (US$772, €634 or £428) in 2003. Americans, by comparison, spent HK$5,477. Even though the UK is not an approved destination, mainland Chinese tourists spent £127m ($227m, €188m) there last year, according to Visit Britain, the UK's tourism body.

Globe-trotting tourists from Asia are not new. Camera-toting Japanese took the world by storm starting in the 1980s, forcing hotels around the world to stock yukata robes and green tea and encouraging retailers and restaurants to hire Japanese-speaking staff.

“It's exactly the same thing we experienced with the Japanese 20years ago and we experienced with the Russians since 1999, but with a big difference: the size of the market,” says Serge Ragozin, executive senior vice-president for international support at Accor, the Paris-based hotel chain.

The other difference is the speed at which the Chinese market has grown. Chinese companies have started to give their workers paid holidays only in the last decade. “The first headlong rush is very dramatic and occurring over a relatively short period of time compared with the Japanese,” says John Koldowski, managing director at the Pacific Asia Travel Association's strategic intelligence centre in Bangkok.

Until recently, because of Chinese government controls on the sector,the number of destinations open to Chinese tour groups was limited. In the early 1980s, Beijing began permitting groups from the southern province of Guangdong to visit relatives in Hong Kong and Macau, then British and Portuguese colonies, respectively. China gradually expanded the number of destinations to include several south-east Asian countries, Australia and Japan.

Today, Chinese travel agents can organise group tours only to countries that have signed an “approved destination status” (ADS) agreement with Beijing. These pacts control the flow of Chinese tour groups: only authorised travel agents, which have agreed to bear responsibility for scanning visa applications, can arrange trips to ADS countries. But loopholes in the system have enabled Chinese groups to visit Europe and other non-ADS countries for years on business visas. And because ADS agreements apply only to group tours, individuals have been able to apply for tourist visas to non-ADS countries.

Countries must apply to the Chinese government for approved destination status. Their application is reviewed by several government bodies and, if it is approved, Beijing and the host country negotiate an agreement. This process can be time-consuming: the UK, for example, is still waiting to sign an ADS pact. The US, widely acknowledged to be the largest potential destination for Chinese tourists, has not signed an ADS pact, although it does issue visas to Chinese tourists.

Nevertheless, the Chinese tourist is already changing the way hotels, airlines and travel agents around the world do business. Germany's Lufthansa, the leading European airline in China, has increased the number of its flights in and out of China from 26 to 41 this year, adding frequencies connecting Munich with Beijing and the wealthy southern city of Guangzhou. Chinese passengers arriving in Frankfurt and Munich are greeted by the Chinese Welcome Service, a Chinese-speaking team in dark blue uniforms that directs them to hotels, rental car services or a connecting flight.

“Chinese travellers have become an important part of the momentum driving our business, and we anticipate the demand for air travel from China will continue to grow,” Lufthansa says. China accounted for 15 per cent of the carrier's revenue in Asia last year.

In June, Nevada, home to Las Vegas, the gambling mecca, became the first US state to open a tourism office in China. Chen Hongxia, who runs the office, says more Chinese visit Las Vegas than any other city in the US.

The hospitality industry has been similarly moved. The Sheraton Park Tower in London, a five-star hotel, said last week that it now offers China Central Television, the state-owned national network, in all its 280 rooms. Accor, which owns the Ibis, Sofitel and Novotel hotel brands, is also trying to ensure its Chinese guests feel more at home: some of its three- and four-star hotels in Paris now offer Chinese tea sets and TV channels and serve white rice and soup at breakfast. When the mayors of Chinese cities visit France, Accor executives make it a point to see them. “We ask them, ‘What do you need, what do you want?'” says Mr Ragozin.

“Assign your Chinese guests rooms with twin beds,” reads a brochure entitled “Hello China” that has been distributed to hotels and tour operators in Switzerland hoping to attract Chinese customers. “The members of the group travelling together will, in general, not have known each other before starting the trip.”

China's own travel industry is gearing up for the boom. Travel agents have launched intensive advertising campaigns to promote tours to Europe, and are beefing up their overseas departments. CYTS, a leading agency, spent nothing on promoting tours to Europe last year; this year, it has earmarked Rmb1m (£67,000, $121,000 or €99,000) for these advertisements. “We have expanded our European section,” says Sun Changwei, general manager of the outbound department at CYTS. “Before, we had five staff there, now we have 12.”

Agents are focusing their efforts on France, Italy and Switzerland, which they expect will be the most popular destinations. But many of the packages on offer will take Chinese tourists to nearly a dozen countries in about as many days, shuttling them around the continent on coaches. Chinese travel industry officials are keen to ensure that tourists are not defrauded in Europe as they have been in Thailand. Tour operators there have been collaborating with agencies on the mainland to offer deeply discounted packages known as “zero-dollar tours”, in which Chinese tourists were forced to shop for goods at inflated prices instead of sightseeing.

There is evidence to suggest that these practices may spread to Europe. Zhou Tong, general manager for overseas travel at BTG International Travel & Tours in Beijing, describes with dismay the discount packages promoted by rival agencies. “In Beijing, the current price for a trip to Europe with 11 countries in 15 days is Rmb12,000 or so. Trips that tour five countries in nine days cost about Rmb9,000. You do the maths: at Rmb12,000, after deducting the cost of the flight and 15 days' accommodation, tour guide fee and other transportation expenses, how much is left over [for profit]?” The answer: very little.

Chinese tourists may not spend as much on hotels and restaurants as the travel industry is hoping: many prefer to sleep and eat cheaply to leave money for shopping, often for luxury goods. In 2003, mainlanders visiting Hong Kong spent 12.3 per cent of their budget in hotels and 68.5 per cent of their budget on shopping, according to the territory's tourism board.

Some observers argue that the growth in Chinese outbound tourism will be constrained for other reasons. For one, despite the fact that the number of flights connecting China with the rest of the world has increased dramatically, there are still not enough seats to meet demand during peak travel seasons.

Another obstacle is the cumbersome procedure for getting a visa to go abroad as part of a tour group. Although the process will be streamlined after September 1, cutting down on the paperwork that prospective tourists must provide, travellers will still need to show evidence of financial stability such as certificates of car or home ownership. As part of China's efforts to prevent illegal immigrants to other countries, Beijing residents must also deposit Rmb30,000 with a travel agent or provide proof that they have the equivalent in a bank account to cover the cost of retrieving them if they overstay their visas, according to CYTS.

Gao Zhong, a Beijing executive who is planning a trip as part of a package tour to the UK, Switzerland and Italy, says: “They asked for certificates from my company, signed by my boss. They are too sensitive.”

A further concern is how quickly Beijing will loosen restrictions on where Chinese tour groups can go and how much they can spend. China is concerned about controlling capital flows out of the country: officially, Chinese can only take the equivalent of US$5,000 (€4,100, £2,775) outside the country. While there are easy ways around these rules - many wealthy Chinese now have overseas bank accounts and credit cards, for example - some wonder how much leakage Beijing will tolerate as the number of tourists leaving the country increases.

“[They] never want to get into the position where [they've] got a net outflow of funds due to travel,” says Mr Koldowski.

For now, however, travel agents are worried about managing the cultural differences between Chinese and Europeans. Chinese tourists are known to be boisterous, and practices considered rude elsewhere are common in China. “It is not appropriate to speak loudly, spit or throw rubbish everywhere,” says a brochure from CYTS. “It is impolite to clean [your] teeth, touch [your] belt, lift up [your] trousers and take off [your] shoes in public,” the brochure adds.

Ms Zhang of Switzerland Tourism has been coaching Swiss hotels on Chinese tourists' preferences while trying to correct misunderstandings about Europe in China. Some Chinese visitors to Europe “complain that the rooms are too small [for the price they are paying], that European lifts are too small, that they don't have a huge lobby in the hotel,” she says.

Continental-style meals with several courses have also not proved popular with some Chinese tourists, Ms Zhang adds. “In China, if you order something, in 10 minutes the table is full [of dishes]. If you order a French meal, it's three hours, with three courses. For Chinese, it's so difficult to convince them to sit there.”

Mr Koldowski, for his part, has been warning airlines, tour operators and hotels not to lose sight of the need to provide good service to their growing ranks of Chinese customers. He says: “If you are doing everything right, and this year you have 40 tour groups [from China], next year you could have 400. Are you ready for that?”

Taken for a ride in Thailand
By Amy Kazmin
Published: September 1 2004 21:31 | Last updated: September 1 2004 21:31

The building in Bangkok's gritty Huay Khwang neighborhood has blackened windows, a water-stained white facade, and nothing to identify it as a store selling medicinal snake products, ostrich-leather handbags and crocodile-skin shoes.

But the store owners are not interested in attracting casual passers-by. They cater almost exclusively to mainland Chinese tourists travelling on “zero-dollar” package tours.

Zero-dollar tour organisers prey on the Chinese lured by prospects of a foreign holiday at rock-bottom prices. The holidaymakers buy cheap package tours of Thailand - mostly paying less than the cost of an airline ticket - for what they expect to be an all-inclusive trip.

But once in Thailand, the tourists, most of whom speak only Chinese and have never been abroad before, are pressed into paying for expensive activities and excursions and buying products at inflated prices from shops closely linked to the tour operators. Visitors who leave the stores empty-handed or who resist paying for extra activities - such as sex shows and parasailing excursions - can be subjected to strong-arm tactics. Chinese tourists have been threatened with abandonment on highways and denied hotel room keys at night, according to Suwat Jutakorn, director of the Beijing office of the Tourism Authority of Thailand. In February, tourists from China's Yunnan province protested by refusing to board their return flight for nearly 24 hours.

Of the nearly 5m Chinese who have travelled to Thailand since 1997, the overwhelming majority went on zero-dollar tours, Mr Suwat says. China's outward-bound travel agencies are believed to be well aware of what awaits those who buy cheap Thai tours. Chinese agencies even collect fees from Thai tour operators to place visitors on such trips, according to people in Thailand's tourism industry.

The Chinese central government has pledged to crack down on zero-dollar tours but officials in the provinces - who license and regulate the outward-bound tour companies - have been slow to act, Mr Suwat says. The Thai authorities have also failed to crack down on unscrupulous local players, who have structured the operations so that they fall into grey areas of the law. The driving force behind the zero-dollar tours is a handful of big Thai gem companies that sell jewellery and gemstones. They also own the coaches that carry the tourists, the shops to which the visitors are taken and even some of the hotels where they stay, according to Wirot Sitaprasertnand, president of Thailand's Professional Tourist Guide Association.

Suparerk Soorangura, president of the Association of Thai Travel Agents, estimates that at least half the Chinese visitors to Thailand in recent years have travelled with Thai tour operators fronting for the gem companies. The schemes have put pressure on more professional tour operators to lower prices, driving down standards for the inward-bound Chinese tourist market.

Thailand's image has taken a beating recently in the Chinese media. Chinese arrivals to Thailand fell to around 600,000 in 2003 from around 800,000 in 2001, and dropped another 14 per cent in the first quarter of this year.

To reverse the decline, Thailand's tourism industry has launched promotions and advertising campaigns aimed at educating Chinese tourists and pointing them towards more reputable, but expensive, tour operators. Prospects for massive growth in the number of Chinese visitors, Thai authorities insist, remain bright.

“We see the Chinese not just as friends but as relatives,” says Juthamas Siriwan, head of the Tourism Authority of Thailand. “It seems that when they come, they come to visit us as their cousins.”

'Approved' Europeans expect Chinese tourist groups
By Alexandra Harney in Hong Kong
Published: August 30 2004 03:00 | Last updated: August 30 2004 03:00

A wave of Chinese tourists is expected to hit European cities this week as Beijing lifts its restrictions on group travel to nearly 30 countries.

China's designation of most of Europe as an "approved destination", taking effect on Wednesday, is expected to trigger a flood of tour groups to the region. Until now, only business travellers and individuals who were able to obtain visas were able to travel there.

The number of Chinese travelling overseas is expected to swell in coming years as Beijing relaxes rules on foreign visits, creating a substantial new source of business for the world's hotel, airline and travel industries.

The World Tourism Organisation estimates that by 2020 the number of Chinese tourists will reach 100m. Last year, there were 20.2m tourists. "International travel is no longer something that's once in a lifetime," says John Koldowski, managing director of the Pacific Asia Travel Association's strategic intelligence centre. "Travel is a part of [Chinese people's] lives."

China and 27 European countries have agreed to set up a system for handling Chinese tourists, allowing the European countries "approved destination status". The countries include Belgium, Denmark, France, Greece, Italy, the Netherlands, Ireland, Spain and Switzerland. The UK has negotiated but not signed an approved destination pact.

The first flight to Europe carrying Chinese tour groups will leave Beijing for Paris at noon on Wednesday. Travel agents expect the most popular destinations to be France, Italy and Switzerland.

Chinese tour groups are currently allowed to visit 26 countries, including much of south-east Asia, Australia, New Zealand and South Korea and Japan.

Hong Kong, which returned to Chinese sovereignty in 1997 but is still considered an overseas destination, the former Portugese colony of Macao and Thailand have historically attracted the largest number of Chinese tourists.

Travel agents say Europe's different culture will prove attractive. Vivian Li, a bank treasurer from Shanghai who is planning a trip to France and Italy in September, said: "I have always wanted to realise my dream of relaxing in a sidewalk coffee shop on the Champs Elysées and watching the handsome men walk by."

 

 

 

 

Can Singapore shareholders expect happier returns?

Commentary: Can Singapore shareholders expect happier returns?
Andy Mukherjee Bloomberg News
Wednesday, September 01, 2004

The commercial success of Singapore's government-linked companies has always been something of an enigma, chiefly because experiments in state socialism have been glaring failures in China, India, and elsewhere in Asia.

To what do companies like Singapore Airlines, Asia's most profitable air carrier, owe their success, especially when International Monetary Fund researchers find no evidence that companies controlled by the state's investment arm have benefited from privileged access to cheaper bank credit, the telltale sign of political patronage?

Commercial success is just one of the many ways to judge Singapore's public sector. For companies that are now co-owned by individual and institutional shareholders, however, it certainly isn't the best measure.

A more critical question is: How do these companies fare in terms of shareholder returns?

To begin to answer that question, a CLSA researcher, Atul Goyal, looked at company annual reports and corporate Web sites.

Out of 15 companies he chose to study, as many as eight do not seem to communicate a strong commitment to shareholder returns.

For example, DBS Group Holdings, Singapore's largest bank by assets, says it is "well positioned to tap exciting growth opportunities." Is the bank as well positioned to deliver exciting shareholder returns? It most probably is, though it doesn't explicitly say so, according to CLSA.

Chartered Semiconductor Manufacturing, the world's third-biggest provider of made-to-order chips, has a mission to "provide world-class silicon wafer manufacturing." A noble goal that's of little consolation to investors who have seen the shares slump about 38 percent this year.

Or take Singapore Airlines, which thanked its management, staff, unions and the board for helping the company cope with the travel slump following the outbreak of severe acute respiratory syndrome. Shareholders who held on to their investments amid a slide in airline stocks didn't rank a mention.

"Interestingly, in the letter to shareholders for some companies," Goyal and his boss, Prabodh Agarwal, note in their study, "customers, employees and board members seem to take precedence over shareholders."

The commercial success of Singapore's public sector may have done little for minority shareholders. CLSA estimates that over the past 20 years, government-linked companies have given investors an annual return of just 6 percent. The return was minus 1.6 percent over the past 10 years, and minus 4 percent over the last five years.

By comparison, private companies in Singapore and state-owned enterprises in Malaysia have done a lot better.

Curiously, Temasek Holdings has earned 16 percent annually over the past 30 years on its investments in government-linked companies. Temasek is the Singapore government's investment arm, which controls seven of the island's 10 biggest publicly traded companies by sales.

Why did it fare better than other shareholders? Possibly because a large part of its investments was in the nature of riskier "private equity," for which it got a premium.

Now that Temasek itself is driving the companies in its stable to deliver shareholder value above all else, minority investors also can look forward to better returns.

Unlike in the past, business decisions are no longer to be made with only market share or sales growth in mind.

The new catchphrase at Temasek-linked companies is "Economic Value Added," or the profit they earn over and above the cost of capital. Some of the public sector companies have linked executive pay to EVA.

"The power of EVA," the Temasek chief executive, Ho Ching, explained in February, "is not simply the potential for staff to share the wealth creation with shareholders. It is more importantly a mind-set change toward ownership."

Returns have already started improving.

According to CLSA, Temasek-linked companies, as a group, have given an impressive 33 percent return to shareholders over the past year, and not just because the stock market has been favorable.

Will the momentum last over the next five years, or 20? Perhaps, at least for some of the companies.

Making shareholder returns a key objective is only the first, easy step. Aligning the interests of employees and shareholders is the harder part. As the following excerpt from the annual report of a U.S. company shows, it's quite possible for a management to say one thing and do another:

"We plan to leverage all competitive advantages to create significant value for our shareholders," the chairman and chief executive of the company wrote in 2000.

That was one of the last promises Kenneth Lay and Jeffrey Skilling ever made to Enron shareholders.

Bloomberg News