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You are here: Página InicialPublications Issue 75 – Dec. 2019 FOCUSTwo decades down the road to prosperity, Macao marches on

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Two decades down the road to prosperity, Macao marches on

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Macao has excelled in transforming its economy since its return to China 20 years ago

Over the last 20 years, Macao has excelled in transforming itself into a World Centre of Tourism and Leisure. In December 2019, Macao celebrated the 20th anniversary of the establishment of the Macao Special Administrative Region (SAR) when Portugal returned the city to China. To many, the appeal of Macao lies in the entertainment provided by its gleaming modern resorts, the charm of its heritage from a past era, and its vibrant culture, including its cuisine which comes from various origins.

This is the result of years of restructuring the economy, spurred by the economic boom in Mainland China, in the view of Mr Ma Iao Lai, President of the Macao Chamber of Commerce. “Macao has experienced drastic improvements in its economy and society since the handover,” Mr Ma said in an interview with Macao Image.

The Government of the Macao SAR has concentrated on developing tourism in the city since 1999. In 2001 the Macao SAR Government heralded the introduction of competition in the Macao gaming market by inviting bids for new gaming licences in an international public tender. It granted the new licences the year after, and the licences are still held by the six present concessionaires. “Liberalisation of the gaming sector was a milestone on the road to the golden age of Macao,” Mr Ma said.

Tourism was given another fillip in July 2003, when the Mainland China authorities began issuing visas for some Mainland Chinese to visit Macao and Hong Kong as individuals instead of only as members of tour groups, so increasing the flow of visitors.

That year, Macao and the Central People’s Government concluded the Closer Economic Partnership Arrangement (CEPA), which made trade between Mainland China and Macao freer and so helped increase their trade in goods and services.

Gleaming integrated resorts have been springing up around the city since 2004, offering not only entertainment but also diversions other than gaming, including shopping in high-end shopping centres. The purpose is to attract tourists from places other than Mainland China. The new resorts were the basis of the rapid growth in the economy that followed, and which has persisted.

Official data indicate that the gross domestic product of Macao leapt to MOP444.67 billion in 2018 from MOP53.94 billion in 2000.

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“Macao should leverage its distinctive characteristics as a place to link Guangdong, Hong Kong and Portuguesespeaking Countries, stepping up collaboration not only in industry but also regarding legislation, accounting and finance, in order to play a more active role as a platform.” Mr Ma Iao Lai, President of the Macao Chamber of Commerce

Role as a platform

In April 2016 the Government of the Macao SAR published the “Five-Year Development Plan of the Macao SAR (2016-2020)”. The purpose of the plan is to ensure the Macao economy keeps growing steadily, improve the industrial structure of the city, increase exchanges and co-operation between Macao and Mainland China and increase exchanges and co-operation between Macao and the rest of the world.

The “Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area”, announced in February 2019, also gives Macao a special role to play, identifying it as one of the four core cities in the Greater Bay Area. The plan envisages Macao as an important engine for transforming the Greater Bay Area, into a global hub for innovation and high technology, and a cradle for emerging industries. The plan envisages Macao becoming two things: what is officially called a World Centre of Tourism and Leisure, meaning a draw for tourists from around the world and a Commercial and Trade Co-operation Service Platform between China and Portuguese-speaking Countries.

 

For the common good

“Macao should leverage its distinctive characteristics as a place to link Guangdong, Hong Kong and Portuguese-speaking Countries, stepping up collaboration not only in industry but also regarding legislation, accounting and finance, in order to play a more active role as a platform,” Mr Ma said. He said Jiangsu, Guangdong, Zhejiang, Beijing and Chongqing were among the places in Mainland China that trade with Portuguese-speaking Countries. “Macao can fill the gap with our Chinese-Portuguese bilingualism, low taxes and freedom from foreign exchange controls,” he said.

The Outline Development Plan for the Greater Bay Area calls for Macao to make use of its advantages in the business of finance accorded by the “One country, two systems” principle.

Mr Jacky Yuk-Chow So, BNU Chair Professor of Finance at the Faculty of Business Administration at the University of Macau, told Macao Image that these advantages gave Macao a competitive edge in some aspects of finance, such as wealth management. “Investment options are scarce here, and most people keep their money in the bank. That’s all you’ve got,” Professor So said. “We need to have a greater variety of investment assets to push the economy forward.”

The Greater Bay Area plan calls for a securities market in Macao that is priced in renminbi and the clearing is done in renminbi, allowing entities in the area to raise funds in the city. The Macao SAR Government has commissioned international consultants to study the feasibility of such a securities market. “We have a favourable tax regime and credibility among investors,” Professor So highlighted.

Green bonds are another option Macao is trying. The Macao branch of the Bank of China issued its first green bonds in 2019. “Gaming companies are also joining the rush to raise funds through green bonds,” Professor So said. “One casino issued green bonds in the currency of Macao with a tenor of three years, with the purpose, I believe, of paying for construction projects.”

 

Base of traditional Chinese medicine

The Greater Bay Area plan envisages smoother flows of capital and labour across internal borders, so money for scientific research can be moved around easily. One classic outcome of such arrangements is the State Key Laboratory of Quality Research in Chinese Medicine at the University of Macau. “The Chinese traditional medicine industry is gaining traction,” Mr Ma said. He believes the State Key Laboratory of Quality Research in Chinese Medicine and the World Health Organization Collaborating Centres for Traditional Medicine will be a great help in modernising Chinese traditional medicine and making it acceptable around the world.

“Macao could connect better with the Portuguese-speaking Countries, with its prowess in Chinese traditional medicine and its function as a China-Portuguese-speaking Countries Platform,” Mr Ma said.

Other notable outcomes are the establishment of two research laboratories at the University of Macau, one is the State Key Laboratory of Analog and Mixed-Signal VLSI, and the other is the State Key Laboratory of Internet of Things for Smart City and the establishment at the Macau University of Science and Technology of a State Key Laboratory of Lunar and Planetary Sciences.

 

Infrastructures inaugurated

In order to promote the city’s moderate economic diversification, since 2014 the checkpoint where the island of Hengqin is connected to Macao by the Lotus Bridge has been open around the clock to vehicular and pedestrian traffic. Mr Chui Sai Peng, member of the Macao Legislative Assembly, told Macao Image: “The move greatly improved connectivity between Macao and Mainland China and facilitated mobility not only for travellers but also merchandise.”

The Central People’s Government gave the Macao SAR Government jurisdiction of more than 85 square kilometres of coastal waters in December 2015. This allows for maritime economic activity, giving opportunities to develop the meetings, incentives, conventions and exhibitions (MICE) industry, the shipping industry and the logistics industry.

Since the establishment of the Macao SAR in 1999, Macao has passed several milestones on its way to improving its transport infrastructure. The Hong Kong-Zhuhai-Macao Bridge opened in October 2018, allowing visitors to cross the Pearl River Estuary by motor vehicle and come straight to Macao from Hong Kong International Airport in about 30 minutes, so raising hopes that wealthier visitors will come that way.

The amount of traffic using the bridge was still low a year later, but Mr Chui is bullish about the prospects. “The bridge is set to handle more traffic to Macao,” he said. He expects more permits for private cars to use the bridge to be available soon. “The hardware is here,” Mr Chui said. He thinks smoother arrangements for getting through customs will let people cross internal borders more quickly.

The Light Rapid Transit (LRT) elevated railway is set to make getting around Macao easier. In the near future, it will even allow passengers change onto the Guangzhou-Zhuhai Intercity Railway, part of the high-speed railway network in Mainland China, by crossing the Lotus Bridge. “The light rail will not only give locals and visitors another transportation option, but also help boost the city’s MICE industry,” Mr Chui said.

“We need to have a greater variety of investment assets to push the economy forward.” Mr Jacky Yuk-Chow So, BNU Chair Professor of Finance at the Faculty of Business Administration at the University of Macau

“We need to have a greater variety of investment assets to push the economy forward.” Mr Jacky Yuk-Chow So, BNU Chair Professor of Finance at the Faculty of Business Administration at the University of Macau

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“The light rail will not only give locals and visitors another transportation option, but also help boost the city’s MICE industry.” Mr Chui Sai Peng, Member of the Macao Legislative Assembly

 

MICE upgrades

The development of the MICE industry in Macao is a priority of the Macao SAR Government, for the purpose of making the economy more diverse.

Mr Fong Ka Chio, member of the Macao Legislative Assembly, thinks the industry has improved tremendously. “MICE events in 2007 received little response, owing to a lack of synergy,” Mr Fong told Macao Image. He had expected MICE business to grow in tandem with tourism, attracting foreign buyers and sellers. But official figures indicate that only 13 percent of visitors in 2007 came for business meetings or exhibitions.

The Macao SAR Government announced in 2014 that it would give “priority to conventions”, using MICE events in Macao to spur growth in tourism and other businesses. This approach began to show results soon after. Official figures indicate that 1,427 MICE events were held in Macao in 2018, 35.3 percent more than four years before.

“We’re heading in the right direction,” Mr Fong said. “We have held sizeable MICE events, attended by up to 20,000 participants. Macao has a lot of venues that are able to provide thousands of rooms for guests, so that they can return directly to their hotels after an event. This is a competitive edge for Macao.”

Mr Fong expects the Hong Kong-Zhuhai-Macao Bridge to boost the MICE industry by making it easier for high-spending visitors to attend events in Macao. “The bridge not only shortens the trip from Hong Kong International Airport to Macao, but also stimulates economic activity on the Hong Kong side,” he said. “It’s a win-win situation.”

 

Bright outlook

Two decades after the establishment of the Macao SAR, the city is set to become a financial hub, now that diversification of the economy is in full swing. But Mr Ma is cautious, saying: “It won’t be easy.” He thinks the inevitable lack of land and labour in a place as small as Macao makes it advisable for the city to make use of its current resources and strong ties to the world and its institutional advantages to sustain the growth of its economy.

Mr Ma expects the Service Complex for Trade Co-operation between China and Portuguese-speaking Countries to give trade and cultural exchanges between China and the Portuguese-speaking Countries a big shove. The centre is designed to accommodate the Ministerial Conference of the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries and exhibitions of Portuguese-speaking Countries’ products. “Macao should seize the opportunities given by the Greater Bay Area and the ‘Belt and Road’ initiative,” he said. “We should perform our strategic role as a Commercial and Trade Co-operation Service Platform between China and Portuguese-speaking Countries to lay out new paths towards a diverse economy that will be unique to Macao.”

The Macao SAR Government is speeding-up the process of making Macao a smart city, to help industries make full use of the Internet. The Government considers a suitable, well drawn-up plan for making Macao a smart city crucial if Macao is to become more competitive and have better collaboration with its neighbours.

“Macao has a lot of venues that are able to provide thousands of rooms for guests, so that they can return directly to their hotels after an event. This is a competitive edge for Macao.” Mr Fong Ka Chio, Member of the Macao Legislative Assembly

“Macao has a lot of venues that are able to provide thousands of rooms for guests, so that they can return directly to their hotels after an event. This is a competitive edge for Macao.” Mr Fong Ka Chio, Member of the Macao Legislative Assembly

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