Macau Business magazine l July 2024

By José Carlos Matias – Director

We often hear the saying: you can’t have your cake and eat it too. Regional integration is indeed a two-way street, or perhaps more aptly, a multiple-entry boulevard. Just as globalization brings broader economic and societal benefits through the increased mobility of people, goods, services, and capital, it also creates winners and losers. Successful integration hinges on a gradual approach, supported by measures to cushion its side effects.

In recent weeks, mainland authorities have implemented several measures to address this balance. These include extending the stay for mainland Chinese individuals holding business visas for Macau, introducing a new multiple-entry visa arrangement for package tours between Macau and Hengqin, adding eight mainland cities to the individual visit scheme for the SARs, and increasing the duty-free allowance for arrivals from Hong Kong and Macau.

In a further step towards enhanced northbound mobility, non-Chinese permanent residents of Macau and Hong Kong will now enjoy a multi-entry travel permit of up to five years for mainland entry—a much-welcome development.

While these gifts from the central government are significant steps to support the city’s business development, is the SAR government doing enough locally to counter the impact of domestic consumption outflows and address the socio-economic challenges faced by numerous SMEs?

Some measures have been adopted. For instance, in mid-June, the SAR announced an extension of the repayment period for interest-free financial assistance provided to local small and medium-sized enterprises (SMEs) and young entrepreneurs. This was an absolutely necessary move.

However, the lifeline needs to be extended further for these companies. Despite encouraging tourism and gaming figures (though the latter have seen some recent slowdown), data, business surveys, and naked-eye observation are crystal clear: you can’t sweep it under the rug. Food and beverage establishments, especially those outside integrated resorts and tourist hotspots, various types of retailers, particularly supermarkets, and watch-clock-and-jewellery shops, have seen year-on-year double-digit declines, sometimes by as much as one-third. A number of these businesses are being left with no option other than closing for good.

Local consumers have cited as significant advantages the better value for money and superior customer service obtainable across the border, which may seal the fate of many small businesses here. Who can blame them?

A handful of pressing questions arise: How do we cope with this? How can we increase competitiveness? How do we lower fixed costs, such as commercial property rentals and labour, and improve service quality to stem the outflow of local consumption and attract visitors, especially to residential areas?

Any suggestions? How about rolling out an e-consumption voucher scheme modelled on those used during the pandemic? Or perhaps, even bolder, consider transferring part of the cash handout to a local consumption voucher plan? True, giving a man a fish will feed him for a day, while teaching him to fish feeds him for a lifetime, but the clock is ticking, and there is a need to do both at the same time at this stage.

We often hear the Government say: there’s only so much we can do. Is that really the case? Besides policymaking, is there a deeper issue—one related to the mindset in the local business sphere?

In any case, it seems clear that while a number of local companies and businesspeople are venturing into Hengqin or other areas of the Greater Bay Area, encouraged by existing incentives, there is a need to ensure that the small businesses remaining local—the lifeblood of the city’s way of life—have a future, one that younger generations can feel confident about.

One hopes the current and the incoming government (and socio-economic actors) will have the ability, determination, and conditions to effectively make the cake bigger and more inclusive, ensuring that SMEs aren’t left to live on crumbs. And, by the way, it would be wise to ensure that the lion’s share is not seized by the entrenched interests that hinder our city’s modernization.

Major stock markets mostly dropped Thursday as Europeans gears up for key elections, the US awaits inflation data and Japan contemplates measures to strengthen the yen.

The Japanese currency edged up against the dollar after hitting a 38-year low Wednesday, putting investors on alert for a possible intervention by Japanese authorities.

The Japanese unit’s latest retreat came as uncertainty surrounded the Federal Reserve’s timetable for cutting interest rates, and the Bank of Japan’s caution in tightening monetary policy.

Traders sold equities as tech firms face pressure amid concerns that a long-running rally in the sector may have been overdone.

Investors were meanwhile awaiting outcomes in French and British general elections due over the next week.

“Today sees the US economy come into sharp focus, with the final GDP and core durable goods orders data released ahead of tomorrow’s crucial core PCE inflation release,” noted Joshua Mahony, chief market analyst at Scope Markets.

“Signs of weakness in the jobs market have started to spread through alternate areas of the economy, with yesterday’s new home sales figure falling to a 2024 low.”

A forecast-busting read on the PCE index, the Fed’s favoured gauge of inflation, could push back expectations for a rate reduction and put further upward pressure on the dollar.

In Japan, vice finance minister Masato Kanda said this week that authorities were keeping a close eye on movements in foreign exchange markets and were ready to step in with yen support 24 hours a day.

Their determination was put to the test after the yen fell to 160.87 per dollar late Wednesday — its weakest since 1986 — as US Treasury yields spiked.

Analysts say it is possible traders will keep pushing the envelope to see at what point the government will act, with some saying the unit could hit 170.

In Europe, France’s political future was up in the air with the far right surging in polls but other forces fighting to the end three days before a high-stakes parliamentary vote.

It comes ahead of a UK national vote on July 4, with the right-wing Conservatives led by Prime Minister Rishi Sunak on course to lose power to the centre-left Labour party.

Key figures around 1100 GMT –

London – FTSE 100: DOWN 0.3 percent at 8,202.55 points

Paris – CAC 40: DOWN 0.5 percent at 7,570.40

Frankfurt – DAX: UP 0.2 percent at 18,181.83

EURO STOXX 50: DOWN 0.1 percent at 4,913.02

Tokyo – Nikkei 225: DOWN 0.8 percent at 39,341.54 (close)

Hong Kong – Hang Seng Index: DOWN 2.1 percent at 17,716.47 (close)

Shanghai – Composite: DOWN 0.9 percent at 2,945.85 (close)

New York – Dow: FLAT at 39,127.80 (close)

Dollar/yen: DOWN at 160.46 yen from 160.73 yen on Wednesday

Euro/dollar: UP at $1.0704 from $1.0680

Euro/pound: UP at 84.60 pence from 84.57 pence

Pound/dollar: UP at $1.2651 from $1.2625

Brent North Sea Crude: UP 0.5 percent at $85.66 per barrel

West Texas Intermediate: UP 0.4 percent at $81.20 per barrel

Macau Business magazine l June 2024

By José Carlos Matias – Director

The recent seven-day visit of Xia Baolong, Beijing’s top official in charge of the SARs, was no ordinary “inspection”.

It was the second tour of its kind in one year, mirroring Xia’s visits to the neighbouring Hong Kong SAR. And for Macau it carried a different tone, substance and context compared to the one in May 2023. A key takeaway was the focus on “polishing the golden business card of Macau as an international metropolis”. While those less enthusiastic might suggest this sounds like “old wine in new bottles”, we believe that Xia’s message, with such emphasis at this juncture, carries special significance.

It brings to light unfinished tasks and serves as a mobilising and encouraging factor in the drive to meet targets and swiftly implement policies. Government and key economic and social actors are required to rise to the challenge. We need to get this right. The city’s “internationalisation” bar has just been raised by the central authorities – a much-welcome development.

As suggested by the Director of the Hong Kong and Macau Affairs Office, leveraging the SAR’s advantages is of paramount importance. These advantages are closely intertwined with Macau’s distinctive features, which can be turned into a maximised competitive edge. This may sound self-evident, but some in the local elite need to be constantly reminded of the fact.

It’s all about making up for lost time, speeding up and improving ongoing initiatives, and stopping the dragging of feet in key areas. At the risk of sounding like a “broken record”, we reiterate: bold measures are more advisable than a piecemeal approach.

A polished international metropolis implies stronger efforts in welcoming more highly skilled professionals from around the world. That metropolis should have the ambition to compete with peer hubs such as Singapore, Hong Kong and Dubai in attracting top-notch talent in designated areas. The talent attraction scheme, launched last year, was presented as the missing tool to level up the city’s attractiveness. It was certainly a key step, but is it yielding results quickly and broadly enough given the intense competition from metropolises in Greater China and the Asia-Pacific region? The case for recalibrating and expanding this mechanism is growing stronger.

On the visitation front, while tourism recovery gains steam, there remains a gap between the pace of recovery of overall visitors and that of foreign arrivals. As we move forward, one expects that gap to gradually close, hopefully as a result of the intense promotional roadshows recently held in Southeast and Northeast Asia. Additional moves are expected in this respect. Here, the expansion of multilingual customer service surfaces as a key direction, which also implies further opening the imported labour door, in addition to better equipping the local workforce.

An issue – a rather embarrassing one – that has been plaguing visitor experience and annoying locals is the same old taxi woes. Old habits die hard, right? The long-awaited additional 500 licences to be awarded may be a step forward, but it’s likely to be too little, too late. Tackling the taxi lobby’s vested interests head-on is a must, as is implementing thoughtful arrangements allowing ride-sharing services and platforms, which are tested and well-functioning elsewhere (starting in the neighbouring Greater Bay Area cities).

All this can leverage the important “tourism+” strategy, which emerges as a key pillar in polishing Macau’s international allure. This is reflected in the “City of Performing Arts” and “City of Sports Events” directions. While there has been much focus on developing the city’s concert economy – more international acts are highly desirable in this respect – sports events are also a key direction, as elaborated in this issue’s special report. As we are one year away from being one of the host cities of the National Games, this is, as we point out, “an opportunity that cannot be missed” for Macau, nearly two decades after the SAR was home to the East Asian Games, the first of three multisport international events held between 2005 and 2007.

All in all, with the bar raised and higher stakes, it’s time to jump higher and shift gears.

Macau Business magazine l May 2024 l 20th anniversary edition

By José Carlos Matias – Director

Inverting a famous quote by Tomasi de Lampedusa, if one wants things to change, things will have to stay as they are.

On the occasion of the 20th anniversary of this magazine and the group to which it belongs (Project Asia Corp.), we outline 20 changes this city has witnessed (we could easily have named another 20), along with features that have remained basically unchanged, in this issue’s special report.

Issue Number One of Macau Business, published back in May 2004, stated it clearly: “The Time is Now”, as we were “standing on the verge of an economic revolution”. A few days later, in that same month of May, the opening of Sands on the Macau peninsula – the Region’s first post-liberalisation casino – heralded what was to come. And yet even those expectations were surpassed in the ensuing years by a gaming-driven boom that transformed a once (somewhat derogatively labelled) “sleepy enclave” into what then became widely branded as the thriving “Las Vegas of Asia”. This breakneck growth brought a windfall of revenue and robust job creation, growth and development, but it also generated side-effects which still linger today and have yet to be tackled. It was a winning streak that ran unabated until the COVID-19 pandemic struck hard, and now we see the city regaining ground under a restructured model.

Taking stock of 20 years is no easy task. Macau, in many ways, lives up to the “Smoke Dragon” title of João Aguiar’s novel: its reality is ever-changing, and the past cannot be relived. That being said, preservation of our collective memory is essential, and journalism serves as “the first draft of history”.

In this magazine’s 241 issues to date, we have captured the ‘spirit of the times’, expressing our voice while also serving as a platform for a wide range of perspectives, upholding editorial independence, and cherishing transparency and social responsibility. That has been our raison d’être. We believe this city needs and benefits from a diverse and pluralistic environment, one where criticism is seen as helpful and is not met with thin-skinned reaction. 

In this magazine, we’ve always strived to go beyond the figures, and official rhetoric, delving deeper into issues, while bringing businesses and people’s stories to the fore.

Having weathered the pandemic storm, Macau is now racing against the clock to meet the expectations of its people, of economic actors, and of the central authorities. Our current decade is a pivotal one, and it’s nearly halfway gone already. 

At Macau Business we remain highly motivated to explore what lies ahead, here in this special city, the wider Greater Bay Area and beyond, from multiple perspectives and through local and cosmopolitan lenses.

This has been a fascinating journey, one that began 20 years ago with a small-step-big-leap taken by this publication’s founder – a pioneer in English-language publishing in the SAR – and the Chairman of our group, Paulo A. Azevedo. All that has been achieved has its foundation in the essential role he has been playing, in the talent and hard work of our team members and contributors, and in the loyalty of our faithful readers and valuable partners, suppliers and customers who have joined and remained with us on this two-decade journey.

We look forward to another 20 years and beyond: aggregating value, embracing change and staying who we are.

Macau Business Editorial |April 2024 |  By José Carlos Matias – Director

An uneven recovery pattern has emerged in Macau with ever-widening disparity among the fates of many local small businesses. It’s something this publication has already addressed, and it is now a pressing concern. Shops in residential areas such as the Northern district are struggling, while those in the city’s tourist spots thrive.

The Easter holidays only heightened the trend’s stark contrasts, with hordes of residents eschewing local options and crossing the border to enjoy the mainland’s wide range of shopping and dining options with better value for money. Shop owners and analysts alike point to the Northbound Travel for Macau Vehicles scheme as a significant contributor to this phenomenon, and a similar pattern has been observed in neighbouring Hong Kong.

Representatives from the Industry and Commerce Association of the Macau Northern District and the Macau Catering Industry Association have expressed serious concerns over the impact this trend is having on local small enterprise, citing a wave of business closures with numbers exceeding those during the pandemic in some areas. The predicament is easily understood as the result of an increase in commercial rents plus a decline in custom, particularly during weekends and holiday periods. But who can blame those northbound travellers? And what can be done to tackle the woes of the small, local shops serving residential zones? The first question may be rhetorical, but the second warrants serious thought and a nuanced approach.

The Northbound Travel for Macau Vehicles programme could have been rolled out more gradually, but now there’s no going back, despite the double-edged sword it presents to local residents and businesses. The government appears to be aware of the problem, having launched important initiatives aimed at boosting the attractiveness of residential areas and of consumption there, which include revitalisation projects undertaken in tandem with gaming operators in order to break the monopolisation of tourists’ time by the integrated resorts and major tourist zones. These initiatives may not yield immediate sound results, however. Effective outcomes may only materialise in a future that may be too late for the number of small shops already running on borrowed time.

A pure, supply-and-demand, free-market approach requires local shops to adapt or perish, to adjust and innovate or fade into obsolescence. And while it’s true that market rules will prevail and these businesses must strategize, the fact remains that for a number of them it will be a challenge in some ways tougher than the pandemic. They simply won’t make it unless “shopping small” in Macau is afforded an adequate level of support and protection.

When Ho Iat Seng returns for a Legislative Assembly Q & A later this month, these issues will likely be foremost among the legislators’ and community representatives’ concerns. One hopes the Chief Executive won’t downplay these worries but will instead provide additional tools, even life jackets, if needed, for those fighting to keep heads above choppy water. That sinking feeling is a recipe for disengagement.

Macau Business Editorial |March 2024|  By José Carlos Matias – Director

Macau ushered in the Year of the Dragon in style and with a bang. Tourist arrivals came close to equalling pre-pandemic levels, and gaming revenue remained solid in February, even if slightly down on January’s number. The city’s macroeconomic figures continue to shine, with gross domestic product jumping 80.5 per cent year-on-year in 2023. Projections show another double-digit increase in the cards for 2024 (a per cent in the low teens), one that will bring the city’s economic output to 90 percent of pre-pandemic 2019 levels. 

Yet we mustn’t let the torrent of good news wash away those hard-earned miles we put between us and the ‘good-old-heyday-when-the-sky-was-the-limit’ way of thinking. Not to dampen the upbeat atmosphere, but it’s easily to see not all is well in paradise. There has been a lot of recent focus on “telling the good stories”, but the storytelling from the news media and journalism is not fairy tales; we should strive for fair, balanced reporting ever in pursuit of accuracy, public interest, and editorial independence. In an increasingly global polarised environment, we seem to find ourselves being forced to take sides – to choose between gloom and doom and everlasting sunshine and rainbows. Reality is far more nuanced than that.

While last year’s results bode well for Macau’s economic recovery, geopolitical and nationwide uncertainties remain key factors. The mainland’s post-pandemic rebound has fallen short of expectations. And beyond the official figures, goings-on at street level, too, are cause for concern. Central authorities acknowledged this fact just prior to the opening on March 4 of this year’s “Two Sessions” – meetings of the country’s top legislative body (NPC) and advisory body (CPPCC). While sceptics foresee China struggling to escape the so-called “middle-income trap”, others put things in perspective, comparing the Chinese economy to major powerhouses around the world and indicating that the mainland’s property market and youth unemployment woes are being addressed, with a new economic model emerging grounded in high-quality development.

Should these challenges be tackled through demand-side economics or a supply-side approach? What might the right mix be? 

Recent months have seen the Central Bank roll measures out including cutting the reserve requirement ratio for commercial banks, an adjustment aimed at boosting lending and injecting liquidity into the market. Some observers, however, make the case for bold, rather than piecemeal, moves, citing the need to massively spur consumption and prevent potential deflationary spirals. While it’s not yet known if or when a massive stimulus package will come to fruition, Beijing has named reversing capital outflows and attracting a fresh influx of foreign direct investment as fundamental tasks. The new visa scheme designed to facilitate foreign tourism and business visitation is certainly a welcome measure, alongside other (re)opening-up policies. But does all of this go far enough? 

And can Macau remain insulated from it all? Hardly. An increasingly robust economic recovery in the mainland, one that must remain sound, is key. It’s true that Macau has been enjoying a windfall of visitation and spending from across the border, but the city’s property market continues to stagnate, and concerns over current and future disposable income have not been put to rest. Against this backdrop, the impossibility of harnessing externalities notwithstanding, the right domestic public policies could make a difference in our city. While continuous support from the Central Government is an absolutely necessary condition, will it be enough, if the local government and bureaucratic and business elites fail to live up to the highly demanding tasks facing the SAR in years to come? The course is set, measures are being adopted, but of paramount importance is actually going beyond slogans and injecting more substance into the buzzwords.

Our city can navigate that course, aligned with national and regional development strategies, without losing its own voice – one of diversity, one that speaks for both citizens and businesses. That share of voice will certainly be heard, and it will be heeded –up North and right here, down-to-earth.

Macau Business Editorial | February 2024|  By José Carlos Matias – Director 

The last time it was the Year of the Dragon (2012), Macau’s Jockey Club (MJC) generated MOP356 million in gross gaming revenue (GGR). That was already half what it was in 2005, but it’s nine times the meagre figure (MOP40 million) reported last year. To put things in perspective, while the take at the track in 2005 was just 1.38 per cent the amount of casino GGR, by 2023 that had been decimated to just 0.021 per cent. For the MJC’s operator you could say the writing was on the wall and plain to see. It’s noteworthy to highlight that back in 2018 when its operating concession was renewed for an eyebrow-raising 24-year term, revenue had already dwindled to MOP101 million.

The termination of the MJC’s concession contract sees the city bid farewell to yet another gambling activity, six years after the closure of the Canidrome spelled the end for dog racing (a wise move and long-overdue in the case of the greyhounds). Remaining forms of gambling such as lotteries and sports betting are dwarved by the overwhelming hegemony of casino games of fortune. Within the gaming activities sector, diversification is a figment.

Beyond gaming, the MJC saga invites present discussion of the contract extension that was granted in the past and what use will be made of the site’s precious land in the future. Both are addressed in this issue of Macau Business and will most likely see relevant developments in the not-so-distant future. 

Also taking centre stage this month are the city’s birth rate, fertility and overall demographic trends. Macau’s famous “dragon babies”, born in an auspicious 2012 with 7,315 live births, will celebrate their 12th birthdays this year. It’s a figure that has seen a steady decline, down year-on-year with the exception of 2014, with births in 2022 at just 60 per cent of the 2012 Dragon Year’s total. This issue’s special report delves into the multifaceted repercussions of a declining birth rate – a problem shared by a number of highly developed economies and one that is becoming an increasingly persistent challenge both here and over the border. The matter is now ensconced on the city’s agenda, as evidenced by exchanges between legislators and the government, but so far any response has been piecemeal. While there’s no magic elixir, due attention could be paid and an integrated package of measures and long-term policies adopted – not just to boost the birth rate but also to better address the city’s ageing population, with Macau (thankfully) ranking second in the world for life expectancy (just behind Hong Kong).

In his New Year Message for the Year of the Water Dragon, 2012, then Chief Executive Chui Sai On pledged to “take the necessary initiatives to realise the ‘world centre of tourism and leisure’ project, committing to consolidating existing advantages and promoting the appropriate diversification of the economy”.

A similar, more emphatic message was conveyed by the current SAR leader, Ho Iat Seng, in his address for this year.

In this Year of the Wood Dragon, 2024, will we hold our horses – or release the dragons?

龍馬精神! · Happy Chinese New Year of the Dragon! · Kung Hei Fat Choi!

Macau Business Editorial | January 2024 |  By José Carlos Matias – Director 

“Has gaming in Macau become ‘that which must not be named?'”, someone asked at a conference elsewhere in the Asia-Pacific region last year. 

While it might be overstating things to give it taboo status just yet, the question does reflect a perception around the broader issue of the 2022 gaming public tender’s non-gaming focus and the magnitude of the operators’ commitments on non-gaming investments under the new gaming concessions. 

At some point, a couple of years ago, some voices even speculated about whether the authorities’ endgame might involve phasing out casino gaming in the mid-to-long term. After all, how could the industry continue to shine with the near extinction of junkets (and the significant funds they brought in) and the screw-tightening from new gaming-related regulations and measures being implemented locally and across the border?

One year into the gaming industry’s ‘new era’ has shown us those concerns – though understandable at the time –are thankfully not holding water. Macau’s resilience combined with its persistent allure, especially for those hailing from mainland China and Hong Kong, resulted in sound recovery for gross gaming revenue (GGR) in 2023 (MOP183 billion), which despite being just 62 per cent of pre-pandemic levels is way beyond the most optimistic guesses hazarded a year ago. More importantly, year-end GGR figures (December) recovered to 81 per cent of 2019 levels.

Some analysts are already belittling the Government’s MOP216 billion GGR forecast for 2024 as “easily surpassed”. As our readers will know, we are not in the habit of jumping on the crystal ball bandwagon: we neither bought into astronomic sky’s-the-limit predictions during the last decade’s heyday nor foretold of the “coming collapse” at the low-ebb of COVID-19, particularly in 2022. What is crystal clear, though, is that the pace of recovery bodes well not only for Macau’s economy but for the new gaming revenue structure that emerged in the post-pandemic part of last year. The much-anticipated rise to supremacy of mass-market GGR is now a reality (with late 2023 levels outpacing 2019 levels), and VIP-generated revenue has taken a back seat. Nevertheless, as we explore in this issue’s special report, the junket sector’s near-demise was not an extinction event for high rollers. Far from it. Experts in our special report reveal they can still be found in company-direct VIP rooms and on gaming floors – as premium-mass customers.

What this suggests is that post-COVID pent-up demand and management by authorities on both sides (SAR and mainland) have been key factors, the latter reflecting an essential political dimension that warrants deeper analysis. Add to that the operators’ ability to adjust to an evolving and more sophisticated clientele, and this is where we find an integrated, organic intertwining of gaming and non-gaming: namely through providing new experiences for visitors in terms of shows, performing arts, entertainment, sports events, dining, retail, and so on. Indeed, “diversification” is no longer just a buzzword; it’s now also the keyword. And we’re already seeing results. Yet it’s only early stage in the 10-year concession period, and there is still a long way to go to reach the ambitious targets set by both government and operators.

It would be a disappointment to see the city resign itself to its massive Greater China market comfort zone, failing to live up to the World Tourism and Leisure Centre mantra. Yet with the tourism authorities showing themselves increasingly proactive in promoting the SAR abroad, alongside the “Big Six” and other players, it’s within reason to hope for a much-needed boost in international visitation this year. To that end, more flights, easier mobility and skilled multilingual professionals will be key.

Meanwhile, the laudable focus on Macau’s urban revitalisation and its “City of Performing Arts” and “City of Sports” ambitions is being delivered in a de facto “public-private partnership” between the government and gaming concessionaires. But therein lies an important duty to fine-tune those arrangements and keep an eye out for dysfunctions.

Rather than ‘that which must not be named’, the history of Macau has shown gaming to be the ‘Chosen One’. And while addressing its side effects, a focus on maximising the gaming industry’s contribution for the greater public good while fostering diversified, inclusive, and sustainable economic development stands as the quintessential undertaking for the SAR in this decade. What awaits us further down the road hinges on getting this leg of the journey right.

Macau Business Editorial |December 2023 | By José Carlos Matias – Director 

What a difference a year makes. Last year, just as we were finally glimpsing the light at the end of the ‘zero-COVID’ tunnel, there was a sudden – somewhat unexpected but absolutely necessary and overdue – departure from pandemic restrictions. We all tend to somehow bury that three-year period in our memory – suspended as a sort of alternative timeline – and then bridge from late 2019 straight to early 2023.

But we all know it’s not that simple. Unsurprisingly, we were never going to emerge from those years unscathed, coinciding as they did with heightened geopolitical tensions globally and transformations in the SARs internally.

Nevertheless, as those who refused to hear the mantra of ‘the end is nigh’ stressed, ‘We will always have Macau,’ and whoever is long on Macau reaps benefits. Despite lingering problems, what we have witnessed in 2023 conspicuously validates that sentiment.

Still, no matter how unique this place is, we do not live in a bubble. The SAR is undoubtedly impacted by domestic, national and global developments.

The fourth quarter of the year has brought an important reminder that global interdependence mandates a return to a managed (cooperation and rivalry) model that ‘sets the floor’ for relations between the two top powerhouses of our era – China and the United States – as indicated when the leaders of both countries met in mid-November. A few days earlier, the visit by Australia’s Prime Minister to China embodied a much-welcomed change of tone and substance in relations between Canberra and Beijing.

While thorny issues remain, the prospect of a ‘stabilizer’ is prerequisite to finding a way forward. Still, we all know that risks loom large, and in that respect, the world in 2024 is poised for pivotal political events, among them January’s elections in Taiwan, the European Parliament elections in June and the US presidential vote in November. All of this will take place against the backdrop of ongoing armed conflicts in Ukraine and the Middle East, with the engines of growth in the international economy struggling to gain steam. According to the International Monetary Fund (IMF), the average growth rate of advanced economies is forecast to slow to 1.4 per cent in 2024.

Macau, with its idiosyncratic economic structure, is set to continue its stellar expansion of gross domestic product (GDP): from 74.4 per cent estimated for this year to 27.2 per cent in 2024. It’s worth noting, however, that if the IMF’s prediction is met, the city will still only have recovered to 88 per cent of pre-pandemic (2019) levels by next year.

As we are aware, the lion’s share of the SAR’s GDP is related to exports of services: gaming and tourism. In this respect, the recovery trend seems sound, though one should keep an eye on the pace of economic growth in the region’s major source market of visitors, mainland China, and how disposable income will expand alongside the approach to capital (out)flows. The impact of the recent stimulus measures adopted by the Central Government and the prospect of additional, perhaps bolder, moves in early 2024 will determine not only China’s growth rate but also how it will contribute to offsetting the sluggish performance of advanced economies. Macau would obviously benefit from the spillover effect of a larger-scale stimulus package, as seen in the aftermath of the 2008 financial crisis. In any case, the spectre of a mammoth hot money bundle like the one we saw back then understandably haunts policymakers.

With the local economy in sound recovery mode, the case for a more expansionary budget may seem counterintuitive, but we would call it necessary. In that respect, while it was wise and key to continue key social welfare policies and resume others, including a salary hike for civil servants, maintaining the pandemic-era cuts to public service expenditure is questionable and out of sync. One mustn’t forget that procurement of goods and services by the Administration can be critical for local SMEs, which deserve to be stimulated alongside an integrated – not piecemeal – set of measures. It would be wrong and a mistake to sweep these woes under the rug.

Being the last year of Ho Iat Seng’s first term and a year filled with momentous milestones, namely the Chief Executive election, the appointment of high-ranking officials for a new term, the 25th anniversary of the establishment of the Macau SAR, and the sixth Forum Macau ministerial conference, effective management of time and allocation of resources in 2024 will be key to making up for the lost time during the pandemic and meeting important development targets in the SAR and in Hengqin’s In-depth Cooperation Zone, which is set to take a more centre stage position in the concrete steps and results. Hopefully, all in time for the anticipated visit of President Xi Jinping, expected to be held around December 19/20.

A year can make a difference, but time flies in the blink of an eye.

Macau Business Editorial |November 2023 | By José Carlos Matias – Director 

“A goal without a plan is just a wish,” Antoine de Saint-Exupéry tells us in The Little Prince.

Thankfully, Macau has no shortage of plans charting paths towards its multiple goals. Just the last two years have brought us the General Plan for building a Guangdong-Macau In-depth Cooperation Zone in Hengqin [September 2021], the Second Five-Year Plan for Economic and Social Development (2021–2025) [December 2021], and the Development Plan for Adequate Economic Diversification of the Macau SAR (2024–2028) [just launched].

These blueprints converge on a pivotal a direction: towards a more diversified and sustainable economic structure that is less reliant on gaming, articulation and coordination with the development of Hengqin and the wider Greater Bay Area, and integration of the city into the national development processes.

A formula has been emerging, one that now takes centre stage in the newly announced diversification blueprint: “1+4”. This sum represents integrated Tourism & Leisure being supplemented by the four “emerging” industries of Big Health (with a focus on Traditional Chinese Medicine), Modern Finance, High & New Technology, and the Conventions & Exhibitions, Sports and Commercial & Trade Industries. A closer look at two primary, overall goals – namely decreasing gaming’s share of the overall economy and lessening the government’s reliance on taxes from gaming in the total tax revenue mix – reveals two different measurements of attainment. While the Plan aims to bring the proportion of gaming’s gross added value down to about 40 per cent by 2028 (from 51 per cent in 2019) – an ambitious goal – its target for the reduction of dependence on gaming revenue amounts to merely “attaining a lower level than in 2019”. How do we make sense of this? Is there something to unpack in this apparent disparity?

Achieving a level of tax revenue reliance on gaming simply lower than the 84.8 per cent rate recorded in 2019 is a goal that is not just vague but easy to reach. It goes without saying that 2019 saw the city’s peak reliance on gaming taxes for the recent period (at least since 2014, judging from the detailed information available at the Financial Services Bureau website). This indicates a sparing approach on the part of authorities when quantifying this goal.

And that may well be understandable, given that taxation on gaming is entirely different from that levied on other industries. However, it suggests there is low confidence in a significant reduction of the SAR’s reliance on gaming for current revenue.

On the other hand, increasing non-gaming’s economic share from 49 per cent (in pre-Covid 2019) to around 60 per cent (by 2028) seems a more daring aim. Is it achievable? While t will certainly depend on a number of factors, it may not be a bridge too far. In 2016, for instance, non-gaming reached 53.6 per cent. 

One should underline here the relevance of listing 81 priority projects within the “1+4” framework. Nevertheless, the Blueprint tends to be somewhat vague concerning more specific and quantifiable targets for the “emerging” industries, opting for the phrase “improvement from previous levels.” While this qualitative assessment allows for goals to be achieved, for anyone anticipating a plan with a comprehensive set of concrete objectives, it falls short of the mark.

Still, there are notable exceptions in the Blueprint indicating less guarded optimism, such as the heightened numbers for tertiary education programs, MICE events in general and internationally accredited and professionals involved in the convention and exhibition sector. Other encouraging targets concern high technology, with the Government pledging a substantial MOP 5 billion in accumulated investment in research and development. The focus on enhancing overseas ties and attracting startups and innovation companies from abroad, namely from Portugal and Brazil, is a forward-looking policy that can solidify the city’s Sino-Lusophone platform and bring new value to both Macau and Hengqin. 

In the background, everyone will understand that support from the Central Government is absolutely crucial, and that recovery of the gaming industry to steady healthy levels – like those seen in the latest figures – is a key pre-requisite to all these financial resources and investments being able to move forward.

It has been said before – and local officials have mentioned it too, to a degree – but let us reiterate: pragmatism, realism, flexibility, wise public policies and government guidance, and perhaps most importantly a market-oriented attitude will be crucial to converting wishes into tangible goals. To this recipe we add: avoidance of both wishful thinking and the temptations of hubris.

In the end, beyond the visionary plans and quantitative and qualitative goals, the proof is in the pudding.

All aboard? The “adequate” diversification train is departing, destination 2028. 

Best wishes!

Outside the box

Beyond the specific “1+4” box, a more ambitious approach to attracting foreign direct investment in general could well be embraced. An improvement of investment laws and regulations, coupled with an upgrade of the status of imported top executives and skilled professionals (beyond that set out in the newly established talent attraction scheme), would be highly beneficial. 

In this respect, the proposals put forth at the latest seminar held by the Portugal-China Chamber of Commerce and industry for Macau to become a hub where multinationals can set up their Asia headquarters deserve attention. 

Li Keqiang

The first time I had the chance to take a closer look at Li Keqiang was in October 2007, when I was in Beijing as a reporter covering the 17th Congress of the Communist Party of China (CPC) in Beijing. Back then, all eyes were on two leading figures of the fifth generation, as it was then known, who were promoted to the Standing Committee of the Politburo of the CPC: Xi Jinping and Li Keqiang. Shortly thereafter, Li would become Vice Premier and then in 2013 Premier of the State Council, a position he held for 10 years until March of this year. 

The second time was in Macau, in 2016, when Li presided over the opening of the Ministerial Conference of the Forum Macau. Li’s three-day visit to the SAR was filled with announcements of measures to support the city’s economy and its function as a Sino-Lusophone hub, along with visits to tourist spots where he was warmly greeted. The role of the mild-mannered premier, who was trained as a legal expert first and then went on to earn a PhD in economics, was highlighted in the official obituary. Among other achievements and contributions, he “consistently advanced the reforms to develop the socialist market economy and struck a proper balance between the government and the market”.

In his later years, one of his signature quotes was “The Yellow River and Yangtze River will not flow backward”, indicating that “China’s reform and opening-up will continue to move forward”.

His sudden passing at the age of 68 in late October came as a shock. Li Keqiang’s legacy of public service to the nation and contributions to global development will endure.

Macau Business Editorial |October 2023| By José Carlos Matias – Director 

Confidence is a quintessential yet somewhat elusive concept and factor in economics. One thing is certain: “confidence is a self-fulfilling prophecy”. In other words, if consumers and businesses lose confidence in the future, they are less likely to spend and invest, and that ultimately leads to the economic stagnation they feared in the first place. Conversely, when consumers and investors are confident about the economy, they tend to increase consumption and investment based on an assumption those investments will yield real returns. Thus, confidence and expectations are intrinsically linked.

What we are witnessing in Macau is indeed encouraging: a robust economic recovery with major indicators showing clear improvement, led by the city’s core industries (tourism and gaming) which naturally serve as “head of the dragon”. However, the trickle-down effect for some of the region’s other business activities has not been immediate, and a conspicuously uneven recovery pattern has emerged.

On the small enterprise front, while those operating in tourist spots have reaped the benefits of the impressive resurgencein visitation other businesses in residential areas are faced with a much less optimistic picture. Many small shops are still struggling to regain their footing.

The impact of the double-edged sword that is the Northbound Travel for Macau Vehicles policy is certainly being felt by many of these small businesses.

Looking ahead, the authorities’ emphasis on community tourism is wise and is set to yield positive results as the revitalization projects for old neighbourhoods – conducted jointly between the Government and the six gaming operators – begin to take shape.

In terms of investment, overall business investor confidence and investment in real estate are closely intertwined, making the result of a land auction for two parcels in Taipa of considerable concern: just one company came forward to bid on the two plots. Considering this is the first land auction to be held in the SAR since 2008, this undoubtedly represents an undesirable development. Persistent nationwide property-sector woes combined with global economic uncertainty and a high interest-rate cycle to make the environment far from conducive for a successful tender.

The Chief Executive acknowledged this, stating the Government would give the private property sector time to recover before the next land auction. It would be unfortunate indeed to witness another missed opportunity at instilling investor confidence.

Promised (is)land

Ahead of the 2024 Policy Address and Budget, Ho Iat Seng also announced that existing social welfare measures will stay in place and that civil servants will see a salary increase. These are important moves towards ensuring social stability and consumer confidence, which should be accompanied by bold and innovative measures to support SMEs. Indeed, improving people’s livelihood was identified as one of four key priorities for elevating the city’s development highlighted by Chief Executive Ho Iat Seng at the reception commemorating the National Day of the People’s Republic of China, alongside a focus on safeguarding national security, expediting “appropriate economic diversification” and promoting the development of Hengqin island.

In addition to the upcoming Policy Address, all eyes will be on the soon-to-be-announced economic diversification blueprint expected to outline concrete steps towards appropriate (we assume pragmatic and market-oriented) diversification.

This process is closely intertwined with development of and integration with the Guangdong-Macau In-depth Cooperation Zone in Hengqin.

The forthcoming new customs management model, to operate under a “first-line, second-line” system designed to streamline the movement of goods across the border, is a key step along with various other important measures, as detailed by Hengin’s Economic Development Bureau Director António Lei in an interview for this issue of Macau Business.

The way forward: expedite these steps to bring results closer to expectations. Doing so will eliminate the need for a leap of faith, instead providing the confidence to partake in that promised (is)land lying just a stone’s throw away.

Macau Business Editorial |September 2023| By José Carlos Matias – Director  

There is a famous quote from Deng Xiaoping, late leader and visionary architect of China’s remarkable era of opening up and reform: “If you open the window for fresh air, you have to expect some flies to blow in”. And, while flies are a natural part of our environment that mustn’t be eradicated, too many flies indoors can be a nuisance to say the least. Does that mean we ought to swiftly close the window again? Absolutely not. Our current leaders are hopefully aware of the grave mistake in making such a move.

Nonetheless, the three-year closure brought on by the pandemic has provided a setback to openness. And despite repeated commitments and moves to embracing an effective return to normalcy, substantial results have yet to materialise in some ways. On a macro level, not only do the oft-heard “de-coupling” and “self-reliance” mantras offer no viable solutions for a more balanced international political economy, they entail a multitude of risks.

In our city, the current Zeitgeist (spirit of our times) is palpable, even as we undo the pandemic’s closures and endeavour to reverse their effects. As a small and open economy, Macau is susceptible to a wide array of exogenous factors that make forecasting and planning a formidable challenge. Nevertheless, there is a perplexing apparent contradiction between the wisdom and vision of the five-year plans and long-term blueprints handed down, and the often short-term, reactive approaches adopted by the local authorities to some matters.

Tangible results will require bold strategies, not a piecemeal approach, and the sooner, the better. Though Macau has indeed experienced a remarkable post-pandemic recovery surpassing even the most optimistic of expectations, business as usual without innovation is simply not a viable option for the longer term. It’s a sentiment that has been made explicit or at least implied by the government on multiple occasions.

If we are to move beyond merely paying lip service to lofty slogans, there must be true commitment manifested in concrete actions. When it comes to the new talent-attraction scheme, ensuring mobility between Macau and Hengqin and addressing the needs of local SMEs and Macau’s youth, there is little room for failure.

Ho Iat Seng’s next Policy Address is therefore of paramount importance, as it will be the first delivered from steady, post-pandemic ground and the one that will encompass the last year of his first five-year term.

On the human resources front, we would do well to note the more ambitious line pursued by Hong Kong authorities. The difference in size of the two SARs’ economies notwithstanding, their official figures are impressive: as of last May – already six months into Hong Kong’s new Top Talent Pass Scheme – authorities had already approved 49 thousand applications out of the 84 thousand received. Why doesn’t our city take bolder, more assertive steps to ensure its attractiveness to top talent on a global scale?

Don’t get me wrong; Macau is a pearl, a unique place where many non-locals can have a fruitful and unforgettable life experience. But there is still a huge cache of untapped potential to exploit, if the city can get this right. The truth, no matter how self-evident, remains: it’s all about striking a balance between local and imported labour, between economic growth and sustainable development, between security and openness and innovation. 

So throw the windows open and don’t panic about the flies; we need that big breath of fresh air.

Macau Business Editorial | August 2023| By José Carlos Matias – Director 

Now, more than half a year since Macau’s reopening, the outlines of a “new normal” are coming into focus. Gross gaming revenue has been hovering around MOP 15–16 billion per month since May, with July recording the city’s best post-pandemic performance yet at MOP 16.6 billion.

Assuming that such monthly average does persist through the remainder of the year, not only will it comfortably exceed the government’s full-year MOP 130 billion forecast, it may also mean authorities can stop dipping into the city’s rainy-day fund. What a difference a year makes, considering last summer’s uphill battle under strict zero-COVID restrictions.

Quarterly results indicate operators now mostly find themselves on steady positive EBITDA ground or even returning to profit. It’s a sunny recovery to bask in, having endured three challenging years of massive losses. Now these concessionaires are facing a new kind of challenge related to drafting and getting the government’s green light for their blueprints for economic diversification in line with the terms of their new 10-year concession contracts.

What we’re witnessing is in fact a new dynamic in the government–operator relationship, one that sees concessionaires required to perform tasks formerly in the domain of government departments. Yet this has not been as smooth as public statements would have us believe. Even if this “tall order” was already in the cards given the extensive non-gaming requirements outlined in the recent public tender, filling it successfully – as plans turn to implementation – will require a flexible approach that avoids casting too wide a net.

Therein lies the heart of the issue: the roles of the government and gaming operators in the drive for moderate economic diversification.

Moving forward from the visionary, top-down design of the “1+4” formula, a realistic, pragmatic, adaptable approach will be key to avoiding the disappointment of a capability–expectations gap. 

What might we reasonably expect in terms of outcomes in the short, medium and long term? 

The newly launched consultation paper on the much-expected blueprint “Development Plan for Appropriate Economic Diversification of the Macau Special Administrative Region (2024-2028)” elaborates on the existing strategy and sets a number of key targets for the upcoming five-year period. 

Experts have pointed out that we must first focus on the start of the formula – the “1+” stands for “Tourism+” – and capitalize fully on this strategy’s potential. This approach is already taking shape and is expected to yield sound results in the short term. Integrating the other “4” components into the existing infrastructure and human capital will follow on from these efforts.

“Vertical” diversification within city’s core industries (gaming/tourism) has been a recurring topic over the years. Now, the long-awaited momentum needed to achieve that reform at the highest level is finally building. As we’ve emphasized before, human resources, customer service and infrastructure have critical parts to play. On the transportation front, the authorities’ failure to address the city’s taxi woes in recent months is regrettable, especially with the SAR welcoming the return of mass tourism. Swift action is needed, but how exactly might the issues be resolved? Through a rapid and significant increase in the number of taxi licences, the introduction of Uber-like (or Didi-like) ride-sharing platforms, and enhanced oversight. There are abundant possibilities for improvement, provided these concerns do not continue to fall on deaf ears.

For “horizontal” diversification in sectors other than tourism, attracting fresh foreign direct investment in the designated areas of high-tech, modern finance and big health is the way forward and certainly also the authorities’ aim. That entails ambitious efforts to lure world-class players in these fields and then retain them with a compelling business environment case. Would Macau be punching above its weight? One can argue it’s an ambition that is simply essential to making any strides, and that the effective upgrade of the city’s economic structure hinges on it. Meanwhile it pays to bear in mind that the “horizontal” approach to diversification is more of a long-term endeavour.

Transparency

The controversy over the MOP 42-million plan to build a new Chinese deity statue in Coloane reminds us that expectations of transparency might still be a bridge too far in some cases. The government’s decision to halt the controversial project in response to resident opposition was the right move, as well as the explanations eventually provided by authorities and commitment to heed citizens’ views. However, questions linger over why the whole MOP 1.4-billion multi-functional youth activity compound plan was introduced in July without a public consultation.

Understandably, this case has struck a chord with local citizens, who rightly expect both transparency and accountability. One hopes a valuable lesson was learned.

Macau Business Editorial |July 2023| By José Carlos Matias – Director 

In 2022, a report by the United Nations Development Program warned of global disparity in post-pandemic economic recovery threatening to widen inequalities across Asia and the Pacific. More recently, in February 2023, the UN Commission for Social Development again highlighted “widening inequality gaps and crises in the labour market exacerbated by the COVID-19 pandemic.”

The view from here, in July 2023, shows Macau in undoubtedly a much better place, as the city enjoys a robust recovery fuelled by unflagging pent-up demand. Even earlier, during the pandemic, the SAR’s affluent reserves shielded it from certain dire social circumstances experienced by many other countries and regions around the world.

The restoration of cross-border mobility and the revival of tourism have been a boon for the city’s economy across the board. Measures such as the recent Northbound Travel for Macau Vehicles policy have opened doors to unprecedented connectivity. This has sparked enthusiasm among many residents who eagerly spend their weekends and their money in the mainland, relishing the amenities and shopping and dining options available in the neighbouring province. This is a welcome move that provides local residents with first-hand knowledge and a better understanding of the remarkable developmental strides that have been achieved in the Greater Bay Area.

In spite of these positive developments, however, the recovery map has begun to reveal disparities, showing this measure to be something of a double-edged sword. While integrated resorts and shops located in tourist spots reap abundant benefits from increased visitation, small businesses in specific sectors such as retail or food service operating in residential districts face a different reality, with sudden loss of income, as depicted in two features published in this issue of Macau Business. One can argue this is an expected outcome of increased mobility and competition and that small businesses must adapt and innovate.

While that is true, there is also a case to be made for assisting and protecting the local SME fabric. It’s important to ensure a win-win and not a zero-sum game. How could that be achieved? Perhaps, through a mixed package that combines direct and indirect stimuli targeted at local consumption with an assistance plan to equip these businesses with value-added tools, such as savvy usage of mainland social media platforms. Bolder moves to redirect visitor flows within the city from highly congested areas to some of the other, older neighbourhoods and residential zones would be critical, as well. The government, society and the business community need to acknowledge these uneven recovery patterns and together seek ways to ensure a balanced business environment alongside employment security and stability.

The roll of the MICE

The city’s economic recovery is evident not only in the influx of visitors, but also in the resurgence of robust MICE (Meetings, Incentives, Conferences and Exhibitions) activities, set to flourish even more in the second half of the year. The return of international trade shows like G2E Asia, taking place this month in a mixed format alongside the newly launched Asian IR Expo, and the magnitude of this year’s Macau International Travel (Industry) Expo and International Infrastructure Investment and Construction Forum, both held in June, bode well for numerous additional international events.

In all of this, the ever-expanding people-to-people links, enhanced by deeper involvement from the gaming concessionaires, networks and exchanges, bring added value with anticipated long-term ripple effects. After all, within the “1+4” diversification strategy, MICE serves as a pivotal pillar offering the city greater opportunities to make immediate, tangible leaps forward.

Macau Business Editorial | June 2023 | By José Carlos Matias – Director 

The choice between new wine in an old bottle or old wine in a new bottle is as much about substance as it is style. Ideally, you want the best of both worlds, but there is much more to navigating this dilemma and striking that balance than meets the eye.

While we explore the wine list, let’s take a deep dive into what’s lending Macau’s recovery some momentum, and into what might come next. The process of reopening post-COVID provides a fresh opportunity to upgrade the city’s visitor experience and shape perceptions. The roadshows currently being held in Southeast Asia, with more planned for East Asia, which – along with the resumption of Macau Weeks on the mainland – are key to projecting a renewed city image in core domestic and foreign markets. These efforts are being driven by the tourism authorities but also have the support of some important private stakeholders: the six gaming/integrated resort operators, whose mission is now more closely aligned with the government’s broader strategies and the Region’s development over all. With these boats now sailing in the same direction, more substance can be injected into the concept of Macau as a World Centre of Tourism and Leisure (WCTL).

At the core of this WCTL concept lies the “Tourism+” approach, which situates tourism in tandem with MICE (Meetings, Incentives, Conferences, and Exhibitions), sports, e-commerce and culture & creativity, in a cross-sector dynamic that has seen development, particularly in the last couple of years, and is now visible to international audiences. This strategy and the momentum continuing to drive Macau’s reopening bode well for the SAR.

In this context, improved infrastructure, international connectivity and human resources have key roles to play in bringing about a more diversified, cosmopolitan and sophisticated visitor experience. And all these fronts require swift action on the city’s part to make up for the protracted period of pandemic restrictions and face up to the fierce competition emerging on all sides: both in tourism & entertainment hubs overseas and across the border on the mainland.

In terms of connectivity, what’s required is a rapid proliferation of airline routes (existing operators are speeding up plans), while opportunity knocks in a few months’ time with an end to the exclusivity of Air Macau’s local air services franchise and the chance to make the most of much-needed liberalisation. All eyes await the bill, to be unveiled soon, that might pave the way to a process one hopes will translate into more routes and better service.

Nevertheless, bringing more people from more distant and more diverse source markets is not the be-all and end-all. When those visitors do arrive, the city’s transportation service must be ready to deliver as pleasant an experience as possible – an aim that today is not always achieved, particularly when it comes to the taxi industry. The return of mass tourism has also revived the regrettable practices of certain rogue cabbies who give the city a bad name. Even if old habits die hard, we must find a way to stamp the bad ones out, once and for all.

This decade will likely be make-or-break in the city’s ambitions for better connectivity, smart tech development and overall competitiveness outside its core “golden egg” resources.

As the liberalisation of the gaming industry revealed two decades ago, when a place has a business case with a compelling competitive advantage it can attract top-tier international investment. Now, the six gaming concessionaires’ new multi-billion non-gaming projects, mostly in line with the Government’s “Tourism+” strategy, represent an upgrade one hopes will only make Macau stronger, as predicted by American Gaming Association head Bill Miller in his interview in this issue of Macau Business. Additional, fresh flagship investments from abroad (both mainland China and overseas) would certainly also help animate the market’s “animal spirits”. Allocation of land is key; the dozens of long-idle plots held by the government must at last be put to good use: for much-needed social infrastructure and added-value private investment.

And there’s a pretty strong case, by the way, for a significant expansion of hotel-room capacity.

Then, there are the people. The importance of nurturing local talent and the local workforce with not just jobs but opportunities to gain skills and climb the corporate ladder cannot be understated. The same goes for establishing a new, more open and less bureaucratic approach to imported labour, something we have called for repeatedly in this publication. In terms of attracting highly skilled professionals, a litmus test will come with the long-awaited New Legal Regime for Recruiting Qualified Staff, which comes into effect in July.

Forming the background to this conversation is adherence to a cherished goal, one ranking high on the Central Government’s nationwide economic agenda and stressed even more since the last Two Sessions held in Beijing: high-quality development. Realising such an aim certainly requires loyalty, but that alone is not a sufficient condition. The set of necessary conditions for successfully achieving these plans also includes skill, competence, and vision.

Having perused the list in the course of this discussion, the dilemma remains the same: old, new, substance, style. It’s all about striking the right balance. So, without further ado, in the words of Tang Dynasty poet Li Bai let me “Bring in the Wine” (將進酒).

Macau Business Editorial | May 2023 | By José Carlos Matias – Director 

Macau’s core industry is bouncing back quicker than most anticipated, with gross gaming revenue (GGR) in April hitting 60 percent of the last full pre-COVID month on the heels of returning mass tourism.

The SAR came late to the post-pandemic party but swiftly stole the limelight, with much-touted pent-up demand – primarily from the mainland and Hong Kong – able to slingshot the city’s GGR past not just the Las Vegas Strip but the whole state of Nevada for the first quarter of 2023.

And, make no mistake, all this was achieved with little contribution – perhaps one tenth – from the fat cat junkets that, at one point in 2013, made up some two thirds of total gaming revenue.

Should this trend continue, the government’s full-year MOP130 billion gaming revenue target will be not only met but comfortably surpassed. We could even attain a level (between MOP15 and 16 billion average monthly GGR) at which dipping into the fiscal reserves to balance the government’s 2023 budget would no longer be needed. Nevertheless at this stage, the sudden injection of bullish sentiment notwithstanding, we’d be wise not to count our chickens before they hatch.

While it is heartwarming to watch our “comeback kid” welcome the new mass influx of visitors, we mustn’t merely stand by, mesmerised – a call-to-action is due. Here, we reiterate that to really get it right, Macau 3.0 requires a fresh approach to importation of labour, transportation and social infrastructure. Addressing these issues might sound like Groundhog Day – again – but getting Back to the Future, allow me to stress that our pandemic winter has been followed by a Phoenix-like spring, and we’ve been given another chance to hit the nail on the head. How? I’m not talking about pulling a rabbit from a hat, but in some aspects at least one might humbly venture: it doesn’t take a rocket scientist.

On the labour front, as detailed in this month’s issue of Macau Business, industry insiders caution that the city needs to tackle red tape and the sluggish approval process for hiring non-resident workers. Well-coordinated efforts with mainland authorities are seen as key to helping close the supply-demand gap amid this fast-paced economic recovery, particularly in hospitality and the tourism-related sectors.

Authorities have an understandable balancing act with respect to prioritising locals, but there’s a common-sense limit to protectionism. A destination’s reputation relies heavily on word-of-mouth, so it would be most regrettable to witness the deterioration in customer service provided to visitors that a labour crunch scenario might engender.

Flexibility, adaptability and openness are crucial in this regard, as the government should be aware. It’s a matter of nailing it.

Turning 19 (and counting) 

Our Macau Business magazine and publishing house De Ficção – Multimedia Projects celebrate their 19th anniversary this month against a fortunate background of sound economic recovery. We couldn’t be more pleased to see reality proving the doomsayers wrong, as the pandemic-induced protracted period is behind us, and the city is sailing towards a brighter shore. 

We would like to wholeheartedly thank the talented, hardworking team members, our faithful readers, and the valuable partners, suppliers, and customers who have joined us on this journey.

Macau Business Editorial | April 2023 | By José Carlos Matias – Director 

So often, politics and the economy – not to mention life in general – present us with a capability–expectations gap: that shortfall between what actually is or can be accomplished and what is proclaimed and consequently hoped for. As we thankfully swiftly emerge from the Covidian era on a road to rapid economic recovery, a challenge of another sort arises – though it’s one we’ll gladly face compared to being stuck in a hopeless 2022.

Worries that the city might have lost its allure have been laid to rest with visitor arrivals climbing steadily and the one-day tourist count set to hover around 100,000, if the past weeks’ trend holds true. In light of these recent developments, high hopes for the upcoming Cheng Ming/Easter holidays and even higher hopes for the May Day Golden Week are certainly justifiable.

A quick look at the latest statistical details lets us single out interesting trends and extrapolate where the city’s visitor tally might be headed. In February alone Macau saw around 1.59 million tourist arrivals, a figure just over half that of the last full month pre-Covid, December 2019 (though the comparison is obviously partly skewed by difference of season and length of month). Interestingly, the proportion of mainland visitors dropped from 67% to 62%, whereas numbers from Hong Kong jumped from 21% in December 2019 to 32% in February 2023. (Now, visitation from the neighbouring SAR has already reached 80% of pre-Covid levels.) This is telling, given what industry insiders were predicting last year: that reopening to Hong Kong would be a game-changer. With mainland visitation still with plenty of room to grow, international visitation is also set to surge, fuelled by the re-establishment of flight connections and the expected impact of promotional activities conducted by both the local tourism authorities and the integrated resorts.

Faced with ongoing pent-up demand, the question then rests on the host’s ability to provide the expected quality of service, and that puts manpower squarely at the crux of the matter. While it’s reasonable for authorities to insist that employers prioritize jobs for local residents, a fine balance needs to be struck, ensuring that as we edge closer to ‘technical’ full employment a more open, flexible arrangement takes shape. This is something essential to ensuring hospitality and tourism operators can rise to meet tourists’ expectations. With so much talk and focus devoted to quality in tourism and the swift return of visitors, it would be a pity if the city were to fail to live up to the expectations of those who seek meaningful experiences here. Again, we echo calls for an overhaul of Macau’s labour importation policies in order to cut red tape, ensure our city’s competitiveness and avoid a ‘labour crunch’ situation.

We have been here before. We must prevent inflexible policies and greedy practices from jeopardizing the road to a robust recovery. In an increasingly competitive environment where tourist destinations vie for talent and quality tourism, we must never lower our guard or take our eye off the ball. We stand at a critical juncture: poised to return our city to its heyday, yet this time embracing a higher-quality, more sustainable model. We mustn’t waste time but instead seize this ‘golden’ window of opportunity.

Leap outwards 

Ho Iat Seng’s visit to Portugal this month is especially meaningful. Not only is it the Chief Executive’s first post-pandemic visit abroad; it follows precedent set by his predecessors, who also chose Portugal for their first overseas trips. As Macau emerges soundly from the three-year pandemic and the corresponding hiatus in international relations, this visit provides an opportunity for the city to maximise its yet-to-be-fully developed potential for bilateral cooperation with Portugal, both in terms of reopening the door to skilled professionals and enhancing the across-the-board cooperation that is allowed under the Macau–Portugal framework agreement. 

With both the 20th anniversary of the Forum Macau and the expected ministerial conference set to be held in Macau in the fourth quarter of 2023, it’s high time to further elevate Macau’s profile, not just symbolically, but also with a stronger focus on a pragmatic, hands-on and business-oriented approach, one that effectively follows up and follows through on the agreements, official discourse and Memoranda of Understanding.

At the end of the day, it’s all about bridging the capability–expectations gap.

Macau Business Editorial | March 2023 | By José Carlos Matias – Director 

When in December 2015 the Central Government authorised Macau to manage 85 square kilometres of territorial waters around the SAR, the local Government pledged to “manage, utilise and develop the waters well.”

In the words of then Chief Executive Chui Sai On: Beijing’s decision provided “new conditions and opportunities for Macau to thrive from the sea.” It was high time to envision the development of maritime tourism and a blue economy, putting those valuable water resources to use in support of the city’s sustainable development. Yet, more than seven years on, progress has been all but a drop in the ocean.

Let’s take a deep dive into these surrounding waters – sink or swim. The time has come to finally start making the most of this natural asset across the board. So, what exactly has the Coordinating Commission for the Management and Development of Maritime Jurisdiction Areas, established in 2017, been doing to that end? The last meeting, held in mid-2022, indicated that authorities would carry out public consultations on a law to govern the use of maritime areas and the zoning of surrounding waters, creating a blueprint for development of the 85-square-kilometre territory. 

The Policy Address for 2023 reiterated that such a task would be carried out as soon as possible. But how soon is that? It’s evident that the previous administration dragged its feet on this front, and the current one has yet to embrace this agenda.

While in the midst of the pandemic emergency, that these matters were kept on the back burner is understandable, but now that all that’s behind us it would be a mistake for the government to continue to side-line the project as an afterthought.

Development of maritime tourism was enshrined as one of several non-gaming focus areas in the recent tender for the gaming concessionaires’ new 10-year term. One can hope this might incentivise real results, but there are obstacles to be addressed and lessons to be learned. Take the failure of the Zhongshan–Macau Free Yacht Scheme for example. Successfully developing the maritime tourism industry could potentially make waves in the local economy.

The city’s territorial waters could also be exploited for renewable energy, as proposed by experts in this issue’s Special Report. Furthermore, from an urban planning perspective the city’s coastal zones remain to a great extent underutilised considering their potential. The SAR’s Master Plan comprises a “Historical Touristic Coastal Area Belt” and points to the need to develop coastal zones to maximise leisure space and green space while protecting the local ecosystem. It is imperative that these principles are not merely lip service but translate into concrete actions.

Any talk of developing Macau’s maritime assets presupposes fluent collaboration between us and our neighbours in Zhuhai and Hengqin and Guangdong authorities as a whole.  After all, the shared Guangdong-Macau In-depth Cooperation Zone is never more than a skipping stone’s throw from the water’s edge. Recent weeks post-pandemic have seen plenty of activity aimed at accelerating the Zone’s development, with newly-announced important measures including a financial stimulus package incentivising Macau businesses to set up shop in the neighbouring island and financial connectivity arrangements promoting integration. Other steps that would facilitate mobility are said to be in the pipeline, as well.

Of undeniable importance are moves towards seamless connectivity and hassle-free border crossing and towards adopting an inclusive approach aimed at attracting Macau-based talent of all sorts (locals, non-locals, foreigners) to join the process and contribute to and benefit from Hengqin’s development. But beyond that, an improved legal framework, assured capital mobility and flagship foreign investments would boost confidence and could create a much-needed virtuous circle. With the pandemic behind us, it’s high time to put Hengqin’s development back on track and take a more market-driven, pragmatic approach to meeting the targets set by authorities.

At the end of the day, no one needs to walk on water to deliver results. The talk has been talked; now it’s just about walking the walk.

Macau Business Editorial | February 2023 | By José Carlos Matias – Director 

Among the most intriguing and inspiring creatures in the menagerie of myth is the Phoenix. A bird of fire for the ancient Greeks, able to rise reborn from its own ashes, it represented renewal, resurrection. In Chinese traditional culture, the Phoenix is typically portrayed as a majestic bird with the body of a deer, the tail of a peacock and the head of a pheasant. This Fènghuáng is seen as a symbol of good luck, prosperity, renewal and virtue.

As Macau “emerges from the pandemic fog”, to borrow Chief Executive Ho Iat Seng’s turn of phrase, the city has demonstrated Phoenix-worthy signs of revival. This was particularly evident during the Chinese New Year holiday period and has continued in days hence.

With cross-border mobility restored, a tide of hundreds of thousands of visitors from the mainland entered Macau joined by the long-awaited return of tourists from Hong Kong, constituting a recovery to about 40 per cent of the visitation volume recorded for 2019’s Lunar New Year Golden Week, before the pandemic. This presages even rosier tourist arrival numbers once mainland package tours resume and the city effectively restores its international flight links.

On the gaming revenue front, January 2023 showed a proportionally higher recovery than did visitor foot traffic, with MOP11.58 billion (US$1.4 billion) amounting to 45 per cent of February 2019’s takings (the last Chinese New Year month before COVID-19). It should be noted that this figure was achieved even after the near demise of the SAR’s junket sector and its attendant VIP segment. While we mustn’t celebrate too soon –the new post-pandemic, second-term-concession market still warrants observation – these figures do give cause for hope and confidence.

This new impetus comes as well with a need to rise to new challenges. Here, as elsewhere, a swift, post-restriction revival has been met with apparent labour shortages for key roles, notably in the hospitality industry.

The new phase we find ourselves in will require an agile, flexible approach on the part of labour authorities – unlike in the past – to prevent a bottleneck in human resources, as we brace for a rapid absorption of available local manpower.

The “Tourism+” concept – leveraging synergies between the tourism industry and MICE, culture, e-commerce and sports – is a key strategy and one likely to yield significant results. To retain Macau’s allure in a competitive market it’s important to continuously innovate and upgrade visitor experiences. Hats off, therefore, to the pedestrianization pilot project for San Ma Lo, the city’s prime downtown thoroughfare, a definite step in the right direction enthusiastically received by both residents and tourists. It’s worth mentioning here the strong-as-ever case for a long-overdue revitalization of the Inner Harbour area. The overall ambition should be an integrated plan to unlock the city centre’s immense potential for new tourism concepts, street performances and art.

With visitor figures from mainland China and Hong Kong already encouraging, the next step – one to take sooner rather than later – is to increase international visitation. Before the pandemic, overseas tourists accounted for 8–10 per cent of total visitor volume. The goal could be to increase this share to 20 per cent in the mid-term, but achieving that requires enhanced expansion of the Macau International Airport – which is already in the works- and conditions conducive to airlines’ establishing regional hubs there. To that end, liberalization of Macau’s passenger airline concession system is a must.

At this juncture the city’s main stakeholders – feet still on the ground – should aim to spread their wings and soar.

Macau Business Editorial | January 2023 | By José Carlos Matias – Director 

The auspicious date of January 8 saw the dismantling of basically all the travel restrictions and other control measures that remained in Macau from nigh on three years of strict pandemic management. This heartily welcomed policy shift finally clears the path to much-needed economic recovery. At last, there is a way forward, one of hope, mobility and development.

The pages of this magazine in the past year, namely in recent months, have borne repeated suggestions for a departure from the severity of the zero-COVID policy, pointing to what might be learned from the reopening of other countries and economies the world over, our neighbours in particular. What most of us never anticipated, though, was the suddenness and the sharpness of the turn in both policy and narrative. Don’t get me wrong: the case for swift reopening truly is strong. We’ve been reiterating just how urgent it was to move in this direction.

But the problem lies in what has appeared in the last few weeks to be a lack of preparedness or a well-thought-out plan on the part of the authorities. This has caught many of us by surprise – yours truly included – and has come as a disappointment following the health authorities’ track record over the past couple of years, highly regarded across many segments of society.

The city was neither expecting nor prepared to face the shortage of medication in pharmacies, the overwhelming of hospital facilities or the human cost, among other predicaments, despite measures adopted by health authorities. And yet persevering through it all, the tireless effort of the health professionals, civil servants, social workers, volunteers and many other sectors – spanning the full three years but unflagging during the past weeks’ mass infections – deserves our deepest admiration and gratitude. The same goes for the countless people and businesses that have endured hardship during this period.

At this stage, a number of questions loom large. Did it really need to be like this? Were local authorities caught off-guard by the policy shift? Couldn’t and shouldn’t this have been done last summer? What was the rationale behind continuing to adhere to all those harsh restrictions and lockdowns, when other countries around the world including neighbours in the region had moved past? Was there a scientific justification? Shouldn’t there have been a more open environment for sensible and well-informed views to be effectively considered allowing for a policy shift at an earlier stage? What about all the financial resources allocated to mass testing, to the management of strict pandemic controls, isolation and lockdowns – certainly important and necessary early on, of course, but in many ways highly questionable over the past year?

These and other questions remain in many people’s minds. And while they won’t stop us gladly moving forward post-pandemic, they are issues that deserve consideration, and lessons should be learned.

Now that the reopening has been set irreversibly in motion, confidence is returning and the road to recovery lies ahead. Though it won’t be without some bumps along the way, as business representatives predict in this issue of Macau Business.

The return of mass tourism from mainland China is essential for reviving the economy. Other supportive measures from Central Government are in the pipeline, and the SAR is set to ride a nation-wide wave of reopening. This is already coming to fruition.

On the other hand, Macau’s reopening to overseas destinations will take more time to yield results, given that international air routes can’t be expected to reconfigure and relaunch overnight. Devising an effective strategy for attracting international visitation will also be key. Local tourism authorities will play a pivotal role in this respect, having indicated as early as last November that overseas promotion is on their agenda for 2023.

Reopening is not just about the return of quarantine-free travel (though that is an absolutely necessary condition). It must be embraced as an attitude, at the heart of public policy and by private players: reopening to visitors who, if welcomed and treated to quality service, will be our best word-of-mouth ambassadors with the message “Macau is back”; reopening to the investment and the professionals from abroad, lost by the city during COVID; reopening and attracting new talent. In sum, reopening in a holistic way.

It’s an endeavour that can benefit greatly from the gaming firms that ushered in their new ten-year concessions along with the New Year. The operators’ new strategies and plans, announced in line with government guidelines and new gaming tender terms, bode well for the SAR’s development. In the right conditions and a suitable environment – predicated on a sustained bounce back of casino revenue– the deep involvement of gaming and integrated resort companies in a combined MOP108.7 billion in investments in MICE, business tourism and entertainment, in the promotion of Macau to international customers overseas, in gastronomy, culture and support for SMEs and innovation, among other fields, can pave the way for an effective upgrade and the promised transformation of the city into a world tourism and leisure hub.

Wishful thinking? Time will tell, but we have seen Macau bounce back from crises and shine, time and again. We look forward to witnessing that once more.

In rising to this challenge, at this juncture, there is little, if any, room to fail. It’s time to roll up the sleeves and get this right.

Happy New Year (2023). Happy Chinese New Year of the Rabbit!

Macau Business Editorial | December 2022 | By José Carlos Matias – Director

The last couple of weeks proved to be an accelerator of history, as authorities finally moved to gradually wind the hitherto strict Zero-COVID approach and pave the way towards an effective reopening. The new situation now requires the undertaking of additional tasks and a sound transition plan for the city’s re-emergence on the international travel map.

For sure, a number of preventive and monitoring measures will remain in place for the time being, but it’s finally clear now: the train has left the station, bound for last stop “0 + 0” and an economy hopefully destined to bounce back fuelled by the pent-up demand waiting over the border and the return of international visitors. The local economy’s reanimation hinges on this quintessential condition.

The current situation puts the Government to another litmus test; it must now abandon a rather strict, bureaucratic modus operandi in favour of adaptability and flexibility. Now that the light at the end of the tunnel is no longer just wishful thinking, the government, society and businesses can all sail in the same direction, hopefully buoyed by the right policies, towards reopening. But make no mistake. We have an uphill climb before us. And this slope is just one feature in a new landscape where Macau will face fierce competition both from regional and international jurisdictions that have edged ahead in terms of luring gaming business and tourist visitations, and from mainland cities competing for top talent.

As was pointed out in the latest MBtv Debates series on “Modern Finance and Talent Development”, to push for added-value industries the city needs, on the one hand, to retain human capital and prevent any further deterioration due to brain drain and, on the other hand, to become attractive – much more attractive – to first-class national and international talent. Labour import policies’ lack of flexibility, particularly when it comes to bringing highly skilled professionals to the city, poses a major obstacle and must be addressed. There are numerous stories of companies hitting a brick wall as they see their requests rejected, even when seeking to fill positions for which Macau currently has virtually no available manpower. On a separate note, the recent news that former Hong Kong Stock Exchange chief Charles Li won approval to set up a financial assets exchange in Macau for the micro enterprises financing platform he co-founded is most welcome and could well spark a virtuous cycle for modern finance development.

Will the SAR be late in the game? Perhaps, but the city can catch up quickly if it gets this right. Does it mean “lying flat”? Not at all, as Andrew Phua of the Singapore Tourism Board recently explained. It’s about learning how to live with the virus (namely the weaker Omicron variant) and maintaining a minimal number of serious cases and fatalities, without, as health experts indicate, lowering our guard against the possible resurgence of a troubling new variant.

You could say that Macau – despite having lost ground to those who took first mover’s advantage – has had the opportunity to observe and learn from the experiments in practice of countries and jurisdictions around the world.

Additionally, local authorities have been developing a promising concept that may yield sound results in a diversified economic landscape: the “Tourism +” strategy. This translated, means a cross-sector project integrating “Tourism + MICE”, “Tourism + Cultural and Creative”, “Tourism + E-Commerce” and “Tourism + Sports”. The potential is there. And on the culinary front, for instance, the efforts taken in the five years since Macau became a UNESCO-designated Creative City of Gastronomy deserve kudos and further development, as highlighted in this issue’s Special Report.

That the renewed gaming concessionaires must align themselves with this overall direction was made clear in the requirements for the new tender, and in the non-gaming investment pledges the incumbent operators reportedly made to win it. While that may sound good on paper, the reality is that gaming will still need to be the revenue propeller that drives those projects, which in turn also need to have a viable business case, as much as possible. If you build it, they will come? That worked following the liberalization of the gaming industry as the floodgates opened and mainland tourists and gamblers flocked. But we all know there’s no going back to 2004. We’re faced instead with a simple math problem. In order to meet the MOP130 billon gross gaming revenue (GGR) estimate inscribed in the Government’s budget for next year, the average monthly GGR required will be MOP10.8 billion, and that’s three times the 2022 average. Will just reopening be enough, or will the city need a Midas touch to multiply its golden eggs?

How on earth?

The sacrosanct presumption of innocence notwithstanding, based on what transpired in the Public Prosecution’s indictment and on what has so far surfaced in court during high-profile trials of erstwhile all-powerful junket bosses and former Public Works Bureau heads alongside prominent developers – as reported in some of this issue’s in-depth features – two simple (some would say naive) questions come to mind: How on earth could that have gone “unnoticed” for so long? Were the authorities and watchdogs at the time sleepwalking?

Macau Business Editorial | November 2022 | By José Carlos Matias – Director

Our neighbouring cities are rolling up their sleeves, with ambitious plans to lure back talent and attract investment as fuel for a much-needed rebound. Despite being impacted still by a number of COVID-19-related restrictions, Guangdong and Hong Kong are ratcheting up their game.

Hong Kong’s Chief Executive John Lee directed a message at the world’s top-level global banking and finance leaders, making the case for Hong Kong being back in business with a maiden Policy Address that included a number of incentives for industry players.

In Guangdong, Provincial authorities adopted the “Regulations on the Protection of the Rights and Interests of Foreign Investment in Guangdong Province”. Attracting fresh, private foreign direct investment is a must, and along with that comes providing for senior managers and highly-skilled professionals. Guangdong’s Department of Commerce announced key measures for Encouraging Multinational Companies to Establish Regional Headquarters in the Province. These include adding eligible senior management and other talent employed at a regional headquarters, along with their spouses and children, onto the Guangdong Superior Talent Card System, granting them the right to “the same treatment as local residents.”

Are the Macau authorities taking note of what our neighbours are developing?

We can see that despite its merits, the dynamic Zero-COVID policy creates a bottleneck situation for government and businesses. But we can’t just sit on our hands and channel virtually all our public policy-making impetus into pandemic-related relief measures – of paramount importance though they are. The key here is to rapidly equip the city to play the post-pandemic, new-normal game. While hoping for a swift and safe end to existing pandemic restrictions (should wisdom prevail in central authorities’ strategizing an exit from the current situation), one must also devise a plan of action, taking best practices as a reference (the ones next-door may be quite useful) and making the most of the city’s free-port status. In an interview published in the previous issue of Macau Business, the CEO of BNU, Carlos Cid Álvares, set forth an ambitious and truly interesting aim: to attract multinational companies to set up their regional headquarters in the city and to roll out a solid scheme to lure skilled manpower that will drive economic modernisation and diversification.

To that end, one needs to focus on maximising the SAR’s advantages. The One Country Two Systems policy – which importantly was emphasised by President Xi Jinping in the 20th Communist Party Congress as a “policy that must be adhered to over the long term” – is a quintessential element to be leveraged and perfected in a new package of sustainable, business-friendly measures. As we’ve said here before, it’s within the local communities, chambers of commerce and professionals that the Government can find ideas, proposals and a reservoir of energy with which to resuscitate the city’s economy and gradually build – not just top-down, but bottom-up and collaboratively – the sorely needed restructured economic model. And it must be a model that does not alienate the talent and investment already accumulated over the past couple of decades.

There is risk that an increasingly inward-looking bureaucratic mindset will end up stifling innovation and entrepreneurship. That is surely not what best serves the SAR’s and the nation’s interests. With the Policy Address for 2023 just around the corner, a new opportunity surfaces for the introduction of a reinvigorated strategy to lead us out of the current crisis. It will be neither easy nor quick, but we badly need to grow the pie again and let what economist John Maynard Keynes called the market’s “animal spirits” rejuvenate the economy.

Voice(s)

Jorge Neto Valente will bid farewell to the presidency of the Macau Lawyers Association (AAM) after over 20 years at the helm of this pivotal institution. Over the past couple of decades, Neto Valente played a crucial role in the defence and promotion of the SAR’s distinctive legal system and community. He has actively and constructively stood up for the core values of a system that has faced a number of challenges.

He gave us wise and meaningful words in his last address, at the opening of the SAR’s new Judicial Year. Our city “needs people with talent and courage, to discuss, criticise and come up with solutions; and not only applaud what has been done and impose their ideas on others while silencing disagreeing voices and disregarding others’ ideas,” he said, hitting the nail on the head.

It would be highly detrimental for the city’s development to find itself in a ‘one-voice chamber’.

Macau Business Editorial | October 2022 | By José Carlos Matias – Director

In the past two years, amid the pandemic, the MBtv/FRC Debates Series has become something of a household name for those seeking a free flow of views on the city’s economy and current affairs. It is something we’re particularly proud of, and it’s especially meaningful given its success during a period of relative contraction of the city’s public sphere. We therefore express our deepest gratitude to the guest speakers and to our partner in the project, the Rui Cunha Foundation.

The latest installment in the MBtv Debates Series was not only an interesting exchange on the way forward for the SAR’s economy; it also served as a constructive contribution to a much-needed path towards recovery. In a nutshell, three words sum it up: reopening, reopening, reopening. Reopening borders – quarantine-free – with the world, safely but as soon as possible; reopening attractors to fresh foreign direct investment; and reopening the city to top-notch international talent who can then transfer their expertise to local society and economy and revive the city’s cosmopolitan fabric. One mustn’t downplay how far Macau is lagging behind other developed jurisdictions in the post-pandemic race to attract investment and lure professionals. Of course, none of this should be done at the expense of local labour, sorely in need of a recovered economy for job and wage security. With the right policies in place, the fallacious notion of a zero-sum game between local and imported skilled labour must be put to rest. The only attractive zero sum here is the hoped-for “0+0” quarantine-free arrangement as early as possible in 2023.

Speaking of the coming year, preparing the budget for 2023 will be no easy endeavour – for the SAR Government or any private company, for that matter. The crux of the matter is, unsurprisingly, the gaming revenue estimate. For the past two years the Government has fallen well short of its MOP130 billion forecast. So far this year – counting the first nine months of 2022 – gaming revenue stands at just MOP31.8 billion.

A clearer picture of a path towards “new normal” for the city’s core industry may surface in November, with the announced return of mainland package tours and electronic visas. It’s a measure that has injected some (mild) optimism into the market – a much needed sign as we enter the crucial phase of the tender to award the six new gaming concessions, with newcomer Genting-backed GMM throwing its hat in the ring and joining the six incumbent firms. It’s high time for authorities to vigorously revert the industry’s downward spiral, considering the many challenges the industry is facing, as addressed in another important panel discussion, also featured in these pages, jointly held by the France Macau Chamber of Commerce and Macau Business in September.

In terms of a revenue stream, land auctions will return after a 14-year hiatus. The Government’s dozens of idle land plots do constitute a reserve that could be used to secure fresh income, given the structural deficit (covered only by the fiscal reserve) that the SAR must continue to endure in the near-term and possibly beyond. One hopes these auctions will not only bring in the earnings the city needs but will also lay foundations for added-value investments. Resorting to land auctions, however, has its limitations.

So at this stage, the only realistic way to effectively ensure employment and socio-economic stability, as well as sustainable public finances, is to prop up the gaming (and tourism) industry and allow other economic activities to benefit from the spillover effect.

Macau Business Editorial | September 2022 | By José Carlos Matias – Director

Late August brought us two encouraging signs. The first is entry without prior authorization for foreigners visiting Macau from 41 countries, arriving from Hong Kong, Taiwan and overseas. It’s a key step that paves the way to gradually bringing back international tourists, though the “7+3”quarantine and “self-health management” requirements persist for now. As long as the quarantine remains in place this move will most likely favour a segment of business travellers and not so much tourists.

Should we see this as a glass half-full or half-empty? The former, if it’s followed through in the short-term with a further reduction of mandatory medical observation to “3+4” (as in Hong Kong) and “0+7”, with the ultimate goal  (the sooner the better) of safely attaining an entirely quarantine-free arrangement.

The absence on the list of 41 countries of some Southeast Asian nations and some Portuguese-speaking countries (with only Portugal and Brazil included) has raised a few eyebrows. One expects a rapid expansion of the list to include those countries absent from the list with which the city has strong social, economic and historic ties.

This is expected to unfold in the coming months as a gradual reopening with a healthy flow of visitors (from the mainland and overseas) allowed through the borders, provided there is an evolution in the dynamic zero-COVID policy.

In the meantime, the resumption of quarantine-free mobility between Macau and Hong Kong would be the much-needed game changer for local businesses. In an interview in this issue of Macau Business, Hong Kong’s Convenor of the Executive Council, Regina Ip, hints at the formula: once our neighbouring SAR has established a suitable border-crossing model with Shenzhen, we can expect Macau to follow suit. The ways Macau and Hong Kong have handled the COVID-19 pandemic indeed make for A tale of two SARs, with the city across the estuary adopting its own way of fighting the pandemic. To be expected, surely, given how widely the SARs’ features differ –not least their economic structures and levels of reliance on the Mainland market. Still, local communities and businesses badly need the authorities in both SARs and the Mainland to find that model quickly. To that end, the newly proposed Hong Kong–Shenzhen “reverse quarantine” arrangement might just be the first of several steps needed to swiftly restore long-sought resumption of full mobility across the whole of the Greater Bay Area. (Note that Hong Kong visitation accounted for 18 per cent of Macau’s pre-COVID arrivals.).

Mobility is really the key word here, and our second of late August’s two encouraging signs has to do with Macau–Hengqin mobility for the SAR’s non-Chinese residents. The Commissioner of the Ministry of Foreign Affairs of the PRC in the Macau SAR, Liu Xianfa, announced that, as of September 1, foreign nationals holding a Macau permanent resident identity card are eligible for 5-year, multi-entry visas for the neighbouring Guangdong-Macau In-depth Cooperation Zone in Hengqin, with non-permanent residents also eligible for a multi-entry permit, valid for the same term as their ID card. This crucial, most welcome move signals an attitude of inclusivity towards the thousands of non-Chinese Macau SAR residents who can play an important role in contributing to the future development of Hengqin. As we mark the first anniversary of the Zone’s establishment and the announcement of the master plan for the joint development of the neighbouring island, local and international business communities are also looking forward, beyond the end of pandemic-related restrictions, to additional favourable measures and policies that will inject confidence through increased mobility of capital and an improved legal framework.

A missed opportunity

The Macau Chamber of Commerce (ACM) – the city’s leading and most influential business group – issued a valuable document presenting relevant suggestions for lending businesses and citizens struggling to make ends meet a helping hand. In it, the ACM suggested the Government to approve a new round of cash handouts for residents, along with consumption vouchers of MOP3,000 each for non-residents, as part of a second, much-needed MOP10-billion COVID-19 pandemic relief package. The Chamber of Commerce also recommended that individuals and entities that had not been covered by one-off subsidies in the first MOP10-billion package should receive grants under this new round of relief.

The proposal to include the SAR’s 158,000-strong non-resident workforce (blue card holders) in the relief package, by way of an e-consumption voucher, was not only sensible, humane and fair, it was also pragmatic. Unfortunately, shortly after the ACM’s proposal was made public, we saw voices within the local community –lawmakers included – opposing the measure, citing the alleged “social tensions” it would engender. These views flirt with populism and protectionism and do not serve the city well. More disappointing was seeing the Chief Executive eventually rule the ACM’s proposal out.

Non-resident workers live and labour side-by-side with those holding resident status and contribute every single day to the city’s development. Many of them are in vulnerable situations. The measure put forth by the ACM had no potential to neglect residents’ needs; on the contrary, it was a wise, well-thought-out and mutually beneficial proposal that prioritized locals while at the same time signalling inclusivity of migrant workers, one that lived up to the city’s history and social fabric of our society. What’s more, the approximately MOP474 million needed for the MOP3,000 e-consumption voucher for blue card holders would have accounted for less than 5 per cent of the overall MOP10-billion package and was money that would have been injected directly into the local economy (mostly local SMEs).

Let’s hope, next time, the Government won’t miss an opportunity like this to get it right.

Macau Business Editorial | August 2022 | By José Carlos Matias – Director

Looking out on Macau, in this summer of ’22, you’d be forgiven for thinking the city’s emblematic, neon-realist, “sky’s the limit” fairy tale belonged to some galaxy far, far away. In fact, it was real, and it was right here, just a few years ago. Macau was poised to overtake Qatar as the wealthiest economy on earth (in terms of GDP per capita). And back then, the notion that all that abundance could be built on sand was already well entrenched. There were those more down-to-earth, realist voices at the time who were not so convinced – but as the hustle and hype of our “Las Vegas of Asia” enjoyed the spotlight, was anyone going to take these canaries in the coalmine and their two cents of scepticism seriously?

It’s human nature to ride the high. At the peak of an economic cycle “experts” hold onto assumed perpetual prosperity, advancing rosy forecasts grounded mostly on wishful thinking. Though no one on earth could have specifically anticipated the devastating impact a pandemic like COVID-19 and ensuing restrictions would have, our recent two-year trek has nevertheless led us crashing and careening all the way from boom to doom. And the last few weeks have dragged the whole economy and society along with it into terra incognita. Quo vadis Macau? Where do we go from here? Does it all add up to the perfect storm we’ve all been fearing?

At this juncture it’s crucial to come to terms with reality, though without indulging in cynicism or nihilism.

Reality bites hard, and the city is now well into a multi-layered socio-economic crisis for which the extent of contraction in demand and value creation is yet to be properly assessed. Added predicaments such as those affecting mental health and wellbeing, while less quantifiable, must not be swept under the rug. Swift action is needed.

As the city wakes from 45 days of partial lockdown and pandemic-related restrictions, many are wondering how they’ll manage should they be asked to stomach yet another dose of the same bitter medicine. At time of printing, the SAR has maintained a hard-won tally of zero cases, and the quarantine requirement for crossing the border with Zhuhai has been lifted. The gradual relaxation that is now planned should wind us back to the situation pre-June 18 and allow for partial resumption of a certain level of business activity along with activation of the first of two MOP10 billion financial aid packages, the second slated for just weeks later. These are important, necessary steps, but they’re not sufficient considering the longer-term view.

The fact of the matter is that the local economy risks living on borrowed time indefinitely, should the city keep having to dig into its rainy-day fund with no end in sight.

A roadmap, therefore, is essential. It’s ill-advised to keep kicking the can down the road when it comes to answering key questions on the business environment one can expect in the coming few years. Even if uncertainty has become the new normal, with support from mainland China and articulation with its entities, the SAR should be able to find a path through this, one that allows it to straddle inner circulation within China’s economy and outer circulation between it and the rest of the world – with both feet on the ground. The approach can be incremental but should be swift and decisive.

The blueprints and masterplans that have been devised, wisely, for the city’s involvement in grand regional and national development projects only make sense against a backdrop of openness and modernization. 

It’s true that COVID-19 is not going away any time soon and we are not yet quite ready to perform a post mortemon this pandemic, but much has been learned about the virus and from the way various other countries have safely managed their transitions away from severe restrictions. Rekindling the economy versus protecting public health should not be seen as a zero-sum game. 

There’s a need for reconnection between the stated policy aims and actual measures on the ground.

For instance, the Government’s having made it a priority to attract international visitors in its newly launched public tender for gaming concessionaires is laudable, indeed, but such a target only makes sense in tandem with a clear roadmap to reopening the city to foreign tourists and a bold promotional strategy signalling Macau’s readiness to welcome them. Concrete measures to tout the city’s international visitor-friendliness and a smart and effective way to broadcast that message overseas should be put in the pipeline as soon as possible. In doing so the city can mobilize both ideas and resources and reopen its talent pool to fresh blood. Macau does in fact have the financial tools not only to alleviate current economic and social pains but also to invest in value creation and reap the benefits in future.

Can it be done? Where there’s a will, there’s a way, and it seems the stakes have never been so high. One expects both local and central Governments will find a way forward and be able to shed light on the future.

Some might say it sounds like what’s needed here is a leap of faith, but history has shown it’s a mistake to write Macau off.

As Mark Twain would have said: reports of Macau’s demise are greatly exaggerated.

Macau Business Editorial | July 2022 | By José Carlos Matias – Director

The last couple of weeks have seen Macau in an unprecedented situation, one that was perhaps inevitable, even telegraphed considering the outbreaks elsewhere of the now predominant Omicron variant of COVID-19, particularly in Shanghai and Hong Kong. As this issue of Macau Business was going to press, the number of confirmed cases in the community outbreak that erupted on June 19 had already passed 1,000 and showed signs of further increase. 

These weeks have witnessed, once again, our health professionals, civil protection teams, volunteers, reporters and many others working tirelessly, round the clock, fulfilling their invaluable roles to the best of their ability. Government, society and businesses are in the same boat, making sacrifices as the city preserves its enviable near zero-fatality record. 

Given the ongoing “Dynamic Zero-COVID” strategy, we could still need to endure a weeks-long period of restrictions. Chief Executive Ho Iat Seng made it crystal clear the priority is fulfilling the requirements for reopening borders with mainland China, an approach is easily understood taking into account Macau’s across-the-board cross-border reliance. 

Implementing this strategy, however, has obvious, broad, severe social and economic implications, the cost of which has yet to be truly measured. They need to be taken at face value, nonetheless, and swiftly addressed. At this juncture, one can say the city finds itself between a rock and a hard place. 

Against this undeniably challenging backdrop, it is only normal that fatigue, frustration and hopelessness take hold. These must not become despair.

In the immediate term, bringing this outbreak effectively under control and drastically cutting the number of infections is a must. Maintaining zero new infections thereafter remains the stated goal, but is that a realistic, feasible target in light of the other examples abroad of how Omicron spreads?

Where do we go from here? While the newly announced MOP10.3 billion relief package for workers, professionals and firms is welcome and will bring some respite, further action will likely be needed soon to inject more money into the economy. Looking further ahead, a fresh and sustainable balance between pandemic-control strategies and the resuscitation of business activity will need to be struck. 

The prospect of the city reopening to the world would shed a beam of hope; a roadmap to that end is sorely needed.

Under the current framework there seems to be no magic bullet, and crossing the river by feeling the stones is a sensible move. Still, we mustn’t forget that, to move forward, one needs to walk on two legs.

Macau Business Editorial | June 2022 | By José Carlos Matias – Director

“Long run is a misleading guide to current affairs. In the long run we are all dead,” wrote John Maynard Keynes, one of the most influential economists of the 20^thcentury, in his 1923 book A Tract on Monetary Reform. The famous quote should not be mistaken, however, for shortsightedness or short-termism. Rather, it’s a call to action, highlighting the need for timely government intervention to kick start the economy, instead of relying on long-term equilibrium models.

Given that here, in Macau, as we are still in the midst of a contraction – as reflected in the first quarter’s 8.9 per cent year-on-year decline in Gross Domestic Product – the case for bolder intervention on both the supply side and the demand side is pretty strong.

Notwithstanding the important and laudable measures adopted recently by the Government to boost consumption and incentivize the employment of jobless citizens, one has to bear in mind the fundamentals. There seems to be no quick fix for the city’s macroeconomic and social woes, and a lasting remedy will depend primarily on a mix of an evolution of the pandemic situation and the national policies on the economy, improved local public policies, and finding the path towards gradually and safely, but effectively, reopening the borders to foreign visitors. How long that will take, and how much longer the city’s main employers can continue to dig deep into their own pockets, is anyone’s guess. There have been other relevant steps taken in recent weeks that are worthy of note, from the entry scheme for domestic helpers to the borders being opened to non-resident Portuguese nationals (a meaningful measure). The gradual expansion to other nationalities and to other professional fields – as has already begun for teachers – is not only most welcome but sorely needed and certainly the way ahead.

Likewise, the recent relaxation of the nucleic acid test requirement for Guangdong arrivals (from 72 hours to seven days) – provided it’s not reversed due to another outbreak – will hopefully lead to an influx of much-needed visitors from the mainland.
We’ll need time to monitor how the whole situation plays out: how China’s dynamic clearing policy evolves, what the effectiveness of the newly launched national-level stimulus package will be and at what pace quarantine requirements and border restrictions are relaxed.

Time is a rather scarce commodity, though, for the number of big, medium and small-sized companies and merchants “burning money” every single day. As authorities prioritize stability, the looming social and economic risks must not be underestimated.

What is critical here is to avoid getting carried away by fixating on a top-down, rigid approach and to instead embrace dynamism, flexibility and adaptability. Diversification is a judicious and much-needed long-term project, but dealing a deadly blow to satellite casinos, for instance, was perhaps not the best strategy at this juncture (as now seemingly recognized in the Government’s partial U-turn on the matter). The immediate priority must be to ensure that the local employment situation does not deteriorate further (and improves) and that those sectors that contribute the lion’s share of government revenue – gaming and tourism – get back on their feet. Businesses and people from all walks of life will benefit from a more pragmatic, flexible and adaptive approach to public policies.

Seeking the truth from facts and coming to terms with reality – with an open mind – may not be sufficient conditions in themselves, but they are absolutely necessary. 

Macau Business Editorial | May 2022 | By José Carlos Matias – Director

The famous adage “sell in May and go away” is informed by the typical underperformance of stocks in the six months May to October. According to conventional wisdom, investors should cash in and divest in late spring, then re-invest in November.

That aside, in these atypical times shaped instead by the pandemic and geopolitical factors, the markets remain cowed by that bête noir of all investors: uncertainty. Yet notwithstanding the prevailing doom and gloom – admittedly a reflection of the real economy – financial markets have yet to take a nosedive like they did during the US-originated Global Financial Crisis. In recent months the Hang Seng Index reached a six-year low, but that is nevertheless a far cry from the collapse of 13 years ago. 

A main driver of recovery after 2008/09 was the 4-trillion-yuan Chinese economic stimulus plan, whose impact was global. It was crucial to the uplift of growth worldwide, while carrying with it hot-money side effects. That was the trade-off back then. We now sit at a fundamentally different juncture marred by relentless pandemic woes aggravated by the war in Ukraine, a heating up of existing global trade frictions, inflation and an interest rate hike cycle. 

For China, trying to meet this year’s 5.5 per cent GDP growth target is of paramount importance. The most recent COVID-19 lockdowns had an impact on supply chains, and central authorities have launched a number of key measures aimed at finding a way forward in terms of demand as well as supply. The State Council and Politburo meetings held in April both pointed to the need to boost consumption.

Here in Macau, the Government launched a new round of consumer e-voucher cards valued at MOP 8,000 per resident, injecting some MOP$5.88 billion into the local economy between June and December. Welcome as that is, the move doesn’t go far enough according to business representatives featured in this issue of Macau Business, who propose additional measures such as employment and rental subsidies for SMEs struggling with overhead. The authorities might do well to emulate some of the best pandemic practices adopted elsewhere – overseas and right next door in the mainland and Hong Kong, such as the latter’s Employment Support Scheme, which provides wage subsidies to employers to help them retain their staff (subject to suitable and fair criteria) through particularly harsh months.

Returning to the demand side of the equation, consumption stimulus could go beyond handouts to residents. While those are important and have greatly helped both consumers and businesses through the past couple of years, why not include non-resident workers in the package or roll out a new type of consumption scheme for tourists? That would inject additional money into the economy, and through visitors it could boost recovery of the city’s bread-and-butter sector: tourism. Alongside private consumption, public procurement of goods and services could be boosted as a way to extend a helping hand to SMEs.

There are surely other concrete, impactful measures that can be considered by the authorities for possible adoption within the scope of the SAR Government’s public policies to help the city navigate the coming months’ uncertain waters and likely ongoing unfavourable external factors. Recently announced moves indicate the authorities are, at least partially, receptive to societal concerns. The pilot scheme to allow the importation of domestic workers from the Philippines and the plan to allow foreign professionals in specific, underrepresented fields to enter the local work force are steps in the right direction in response to human resource woes. We will no doubt need more in that vein in the form of great strides forward, and on many fronts, lest we neglect the needs of the most vulnerable groups and the looming mental health challenges.

Faced with our real economy, the Government could turn the old saying on its head and find a new rhyme for the times: “Invest in May to keep the crisis at bay”.

Turning 18

Macau Business  turns 18 this month with a sense of pride, fulfilment, gratitude and duty.

What started out in May 2004 as the SAR’s first English-language news publication, launched and developed by our founder Paulo A. Azevedo, has evolved into the multimedia group Project Asia Corp., which has kept on aggregating value, from the launch of our Chinese-language sister publication, 商訊(Business Intelligence),and our lifestyle outlet, Essential Macau, Business Daily, the MB.tvvideo platform and our round-the-clock online news hub, Macau News Agency– not to mention a number of other creative endeavours and events.

None of this could have been achieved in these 18 years without our talented, hardworking team members, our faithful readers and the valuable partners, suppliers and customers who have joined us on this journey. It is because of you and all of them that we continue to tell the fascinating Macau story and communicate relevant regional, national and international developments, ever striving to uphold the publications’ hallmarks: quality journalism, editorial independence and our focus on transparency and social responsibility.

Despite the recent challenging times we all live in, we have been able to move forward, unflinching, by forging even stronger ties with our readers and partners. With this silver lining in mind and confidence in the future, we sail on and express to you all our deepest thanks.

Macau Business Editorial | April 2022 | By José Carlos Matias – Director

Lately sometimes it feels like we’re stuck in Groundhog Day, the 1993 US film that sees a weatherman (Bill Murray) relive the same day over and over, waking up to find he’s right back where he started the previous morning. 

More than two years have passed since the unprecedented global COVID-19 pandemic emerged, sending shockwaves across the globe and putting the resilience of governments and societies through a tremendous stress test. 

The national-level “dynamic zero-Covid” strategy has produced remarkable results in terms of swiftly and successfully bringing outbreaks under control and thus avoiding a death toll like those registered elsewhere in the world. However, as the highly contagious yet milder Omicron variant continues its rapid spread and vaccination rollout expands, the case for adjusting that strategy grows stronger. Macau has fortunately not faced a wave of infections like those in Hong Kong or Shanghai, but that’s no reason to lower our guard: it’s likely more a matter of when (and on what scale) than if. Local health authorities have been ramping up their efforts to prepare for such a scenario. The coming months will be critical in this respect, not only in terms of people’s health and the city’s health infrastructure, but also in terms of people’s livelihoods and the city’s economy. A stroll through the city centre is enough for the naked eye to perceive the hardship faced by small businesses, who bear the brunt of this prolonged crisis due to associated tourism blues.

Recent gaming revenue figures (MOP 3.6 billion in March, the lowest since September 2020) offer a cautionary tale, showing what the city must steel itself for in the short-term: a climate demanding swift, sound measures to prevent the onset of an even deeper crisis resulting from more business closures and higher unemployment. What is desirable is a multi-track, coordinated approach comprising short- and mid-term measures coupled with both inward and outward dynamics.

The case for immediate relief is unassailable. Secretary for Economy and Finance Lei Wai Nong has revealed a new round of consumer e-voucher cards in the pipeline: a welcome move that one hopes will be followed up with a bold, integrated package, in line with the ones rolled out by the Government over the past couple of years, but more substantial this time.

Chief Executive Ho Iat Seng’s scheduled attendance at a Legislative Assembly Q&A this month should provide the right opportunity for announcing measures and expressing a vision for the coming months. Amendments to the 2022 budget are likely needed, with government revenue thus far falling well short of the forecast. Take the first three months of the year for example: gaming revenue stood at MOP17.7 billion, yielding a monthly average (MOP 5.9 billion) that is just 54 per cent of the monthly average (10.8 billion) for the Government’s MOP130 billion full-year estimate. Another dip into the city’s MOP600+ billion rainy-day fund appears inevitable. 

Even if the SAR is blessed with abundant financial reserves, businesses and society need to glimpse a light at the end of the tunnel. It would be fair to expect a gradual and partial re-opening of the city in a few months, provided the situation ahead allows for a safe and steady relaxing of the “dynamic zero-Covid” approach. Nevertheless, one simply cannot overestimate the broader impact of restriction fatigue. 

Along those lines, in addition to looking after the local population’s well-being (the priority), authorities should also address the pandemic-fuelled brain drain featured in this issue of Macau Business, lest there be an insurmountable deficit of the skilled foreign workers who play such an important role in Macau’s social and economic development and who under current travel and labour importation restrictions cannot be replaced. 

The loss of such human capital risks damage to the city’s competitiveness in the mid-to-long term, such that it would behove the Government to consider further alleviating quarantine requirements whenever possible (without jeopardising public health, of course) and look at implementing a fast-track talent importation scheme for sectors with particularly pressing skill voids, such as Education and those key industries the SAR hopes will drive future economic development and diversification. New “business-visa” channels could also be opened to maintain foreign investor interest in the SAR. There are more judicious and innovative solutions that could be found in coordination with the mainland authorities and taking into account the views and needs of businesses and people from all walks of life. 

The time to act is now – so tomorrow won’t be another Groundhog Day. 

Macau Business Editorial | March 2022 | By José Carlos Matias – Director

Early March marks the fifth anniversary of Premier Li Keqiang’s landmark report, delivered at the opening of the National People’s Congress plenary session in Beijing, in which the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) featured prominently. It was heralded as a regional development project that would allow the nation to “give full play to the distinctive strengths of Hong Kong and Macau and elevate their positions in China’s economic development and opening up”.

The outline development plan, released in February 2019, detailed ambitious immediate (by 2022) and long-term (before 2035) goals: as of this year, “a city cluster with a reasonable division of labour, complementary functions and coordinated development should basically be established”, while 2035 should see a “highly connected area, with very effective and efficient flow of various resources and factors of production”. The ultimate end: that “an international first-class bay area for living, working and travelling should be fully developed”. One should note that the GBA’s economy is already similar to the Gross Domestic Product (GDP) of countries such as South Korea and Canada. 

Five years on, with the special report published in this month’s issue of Macau Business we take stock of the achievements, the possibilities and the challenges inherent in this crucial regional and national endeavour.

Macau’s function, to be One Centre (for global tourism and leisure), One Platform (for trade cooperation between China and the Portuguese-speaking countries), One Base (for cultural exchange), heralds a promising role for the SAR, one to be cherished. While a number of steps have been taken in that direction, looking beyond the project’s wise top-down design reveals obstacles on the ground that have hindered the development pace spelled out in the blueprint. The COVID-19 pandemic has not helped with moving closer to some objectives, while other challenges stemming from institutional discrepancies between the Bay Area’s constituencies and mobility impediments will need to be sagely addressed in order to give full play to each side’s strengths while maintaining and highlighting their distinctive features.

Of the GBA’s eleven cities, Macau is one of the four core cities– alongside Guangzhou, Shenzhen and Hong Kong – and the one with the highest GDP per capita (pre-pandemic). However it is also the smallest and the most reliant on a single type of industry (gaming/tourism). This is both a strength (gambling monopoly and tourism appeal) and a vulnerability (exposure to adverse conditions affecting its core industry, such as those imposed by the pandemic). The Guangdong-Macau In-depth Cooperation Zone in Henqgin, launched in September 2021, is therefore a key asset in the SAR’s ability to fulfil its function.

Against the current economic backdrop – even with all the potential a project like the GBA holds for the city – the local population can’t really be faulted for having a narrow, day-to-day preoccupation with the city’s uncertain economic outlook as opposed to a proactive, forward-looking approach to opportunities that are waiting to be seized just next-door. The fact of the matter, however, is that we mustn’t lose sight of the goals set by the Central Government with respect to the GBA and Hengqin, and more needs to be done by authorities and economic actors to ready Macau for the greater GBA game in the mid to long-term. 

For instance, an ambitious and feasible strategy to attract (both mainland and foreign) investment and professionals – in key areas that support Macau’s One Centre, One Platform, One Base function, as well as key areas for the city’s economic diversification – is pivotal. In the meantime, the pandemic-fuelled brain drain of highly skilled expats should be addressed. There are practical obstacles that can be removed by considering suggestions put forth by professionals, firms and chambers of commerce. 

Connecting wealth 

Also noteworthy is the fact that over the past five years, a number of initiatives and incentives that have been rolled out are yielding results. There are new mechanisms and programmes for cooperation designed to assist local entrepreneurs with venturing out into neighbouring Guangdong cities.

A concrete example in the realm of financial services is the recently launched cross-border Wealth Management Connect (WMC) pilot scheme. As reported in this issue, it’s an arrangement that is attracting an increasing number of participants – customers and banks – in Guangdong, Macau and Hong Kong. The scheme’s first phase has exhibited a stronger uptake in Northbound business, with RMB-denominated financial products holding great appeal for those in the SARs. Unsurprisingly, Hong Kong’s products are leading in the Southbound market.

For local banks this poses both an opportunity – to tap into an extensive network and customer base – and a challenge – to differentiate themselves within a crowded field. It is high time for Macau’s banking and financial sector to up its game.

Macau Business Editorial | February 2022 | By José Carlos Matias – Director

When the COVID-19 pandemic erupted two years ago many thought it would be over in a matter of six to nine months, as happened back in 2003 with SARS – also a coronavirus. But now, on entering year three of the “Covidian Era”, a number of lessons have been learned and the path towards the post-COVID new normal is gradually taking shape, still with hiccups, across most of the globe.

Here in Macau, as we usher in the Year of the Tiger in an enviable COVID-free environment, the economy is still facing headwinds that – while not a ‘perfect storm’ (we hope) – are blowing in from all around the compass rose. On the horizon are transformations, brought on by the situation but whose ultimate cause may to some extent be structural. The COVID-19 pandemic’s sustained impact on the local economy will remain a key feature this year despite the prospect of a gradual recovery through 2022 forecast by experts in the form of double-digit economic growth. A Greater Bay Area travel bubble to include Hong Kong is still months out, and resumption of international travel in the Year of the Tiger – with safe, quarantine-free arrivals for foreign tourists – is hard to see taking place from where we currently stand.

In tandem with the pandemic’s impact on businesses and employment, the city’s core industry, gaming, has undergone watershed developments in the past few months. The near-demise of VIP gaming promoters – from the arrest of top junket heads on suspicion of illegal cross-border gambling activities, organized crime and money laundering to the closure of most VIP rooms in casinos – and the transformational impact of the gaming bill, approved at first reading, are paving the way to a new regulatory landscape, one the local authorities stress will both foster the industry’s healthy and sustainable development and spur economic diversification. 

Unsurprisingly this new era will mean a number of new strings attached to operators, imposing tighter supervision and enhanced social responsibility. 

The bill was welcomed by the gaming concessionaires and several of the proposed changes were greeted by some social groups; others, not so much, instead raising eyebrows and concerns. It must be said the Government listened during the consultation period, heeding opinions and dropping certain measures that were met with particular scepticism, such as the introduction of Government delegates to the concessionaires or authorization requirements for dividend distribution. Other matters, however, remain to be clarified and fine-tuned, an outcome, one would hope, of the article-by-article review currently underway in the Legislative Assembly. 

The Year of the Tiger should therefore be one of building, on foundations laid in the latter months of the Year of the Ox, with respect not just to gaming legislation reform but also to concrete measures for speeding up construction of the Guandgong-Macau In-depth Cooperation Zone in Hengqin. Launched in September 2021, the Zone has emerged as an unmissable opportunity for the SAR, one that pandemic woes have thus far prevented from truly taking centre stage. While making leapfrog advancements in the short-term might not be easy, programmes like the proposed financial support measures for Macau residents and companies working and operating on the neighbouring island might just do the trick. 

In his Chinese New Year Message, Chief Executive Ho Iat Seng pledged that the SAR would not lower its guard, continuing to ensure epidemic prevention and control, promoting economic recovery and diversification, focusing on safeguarding people’s livelihoods, deepening public administration reform, giving impetus to the Hengqin project and enhancing the city’s role in national development. All that may sound like a tall order, but it’s an order that can be filled with the right policies to tackle employment and SME woes, the wise allocation of resources, open-mindedness, a proactive approach to an ever-changing pandemic situation, effective coordination with mainland authorities and a favourable external environment.

Macau’s economy will surely rise again, phoenix-like, in the future. The question today is whether we’ll see it come roaring back this Year of the Tiger. While that might not be a sure bet, perhaps at least some of what we’ve witnessed of late will prove a blessing in disguise with hindsight. All of this requires vision – the eye of the tiger.

Happy Chinese New Year! Kung Hei Fat Choi!

Macau Business Editorial | January 2022 | By José Carlos Matias – Director

Macau’s recently issued Second Five-year Plan on Economic and Social Development (2021–2025) is a worth reading 100-page (in its Portuguese version) blueprint that signals the city’s overall direction. As expected, it elaborates on the paramount importance of developing adequate tools to bring about Macau’s long-sought and much-touted economic diversification and its further integration and participation in broader regional, national and global strategies – namely the joint development of Hengqin, the realization of the Greater Bay Area, and Macau’s supporting roles in the Portuguese-Speaking Countries platform and Belt and Road Initiative.

On the domestic front, the plan also maps out improvements to livelihoods, well-being and public governance. Together, the points raised, the aims it sets out and the vision it reveals indicate steady progress on a clear path and deserve constructive and proactive social engagement.

Less conspicuous, perhaps, but certainly noteworthy is a line in the chapter on improving the system of governance based on the rule of law, in which the Government pledges, in accordance with the law, to guarantee freedom of the press, freedom of edition and freedom of expression, enhancing the public opinion’s capacity for criticism, suggestion and monitoring. Interestingly, there was no such reference in the previous (the SAR’s First) Five-year Plan.

Welcome as this reiteration of the Government’s commitment to these highly cherished values is, one can’t help but notice the recent shrinking of the public sphere and a narrowing of the effective practice of some of the above-mentioned freedoms, rights and guarantees, particularly over the past year. This is a trend not exclusive to Macau – it is unfortunately rather a global phenomenon – and surely both pandemic and external factors are at play. However, a reasonable number of people – many of whom tend to stay away from publicly expressing their views – are struck by the disproportionality of this trend here and worried about the resulting situations.

This problem should not be underestimated, or cast aside through indulgence in whataboutism. Atrophy of the public sphere – in the face of real and perceived constraints – has an adverse, knock-on effect not just on individual rights but also on overall governance and on sound conditions for a creative and innovative ecosystem. This city’s tolerance, inclusivity and plurality are points of pride for many locals. Nurturing those assets is key. Hopefully, the Government’s commitment can be taken at face value. Why else would the reiteration of such a pledge be added to the new Five-year Plan?

In the chips

Among the key aims singled out in the new Five-year Plan is development of a robust high-tech scene, and though we’re arguably still at an early stage in that journey, it’s important to recognize successes along the way and share inspiring stories.

It has gone relatively unnoticed but merits resounding applause: Macau is home to world-class expertise in the field of microelectronics thanks to a decades-long nurturing of talents, driven primarily by the University of Macau. As recounted in this edition of Macau Business, a local semiconductor design firmisnow dedicated to assisting China in the production of its own microchips. It’s one of a growing number of tech start-ups rising to the challenge, adding value and making the most of the mutually beneficial Macau–Hengqin dynamic.

Macau Business Editorial | December 2021 | By José Carlos Matias – Director

“If we want things to stay as they are, things will have to change”. The famous quote from Giuseppe Tomasi di Lampedusa’s novel Il Gattopardo has been widely used to refer to situations where the best recipe for maintaining the status quo is embracing managed change. 

That being said, these days in Macau the status quo – business as usual – is seemingly no longer the endgame in many ways, and the gaming industry is a case in point. Recent developments – detention of the head of the SAR’s top junket and the key final verdict in the Dore case – are likely to result in substantial changes along with the external, mid-to-long-term impact of a still unpredictable COVID-19. 

Those with the upper hand may identify in this critical juncture a window of opportunity for what is seen as a much-needed and long-overdue restructuring and remediation. In the same thread, this may be the moment to make Macau less of the “Enfer du jeu (gambling hell)” of Jean Delannoy’s 1939 film and more of the family-friendly Entertainment Heaven (and why not haven?) set out in the One Centre(World Centre of Tourism and Leisure) component of the master plan for the city and region.

Since, as we all know, attaining such a desirable goal will take time, perhaps this crossroads can be turned into the birthplace of an Accelerator of History? On the other hand, what if – perish the thought – things get out of hand? 

One should bear in mind that the post-handover Pax–  social contract –  has been to a great extent grounded on sound prosperity and stability.

How much of what we are experiencing is transitory, and how much will be translated into permanent fixtures?

Uncertainty reigns at this stage – pretty much across the board and all around the world. These are not the best of times for people in the crystal ball business. While authorities will need to keep their options open, holding their cards too close to their chest for a prolonged period of time might not be the best option. The Chief Executive has hinted at the possibility of extending the current concessions and sub-concessions, should there be insufficient time to complete the gaming law revision and prepare a public tender on time ahead of the June 2022 expiration of the casino concessions. For the key players, anything that unclouds the horizon would be most welcome.

In the meantime, of paramount importance is addressing the critical issues arising from a tougher job market, higher underemployment, the collapsing of small businesses and shrinking household incomes, among other social woes.

The Policy Address for 2022 does include a number of key supportive measures, but the Chief Executive has acknowledged the likely need for additional moves given the current background and the example of the last two years, not to mention the longer-term structural challenges looming ahead.

And though the city’s rainy-day fund, combined with the support and long-term vision provided by Beijing and the local population’s own deeply ingrained pragmatism, will offer protection against the headwinds, these strengths alone, while indispensable, may not necessarily be sufficient to weather the storm.

While we badly need the city’s winning streak to return, governing the SAR these days requires a great deal of both perspiration and inspiration. Ho Iat Seng and his cabinet surely know this all too well. 

Meanwhile, one could invert Tomasi’s quote: “If we want things to change, a number of things things will have to stay as they are (were)”.

Macau Business Editorial | November 2021 | By José Carlos Matias – Director

At the end of October, Macau hosted two worthy events which shone a spotlight on innovation and youth entrepreneurship and rekindled Macau’s key Sino-Lusophone link. At the “928 Challenge” – the first competition for university start-ups to be held among the Portuguese-speaking countries and China – and the “Innovation and Entrepreneurship Competition (Macao) for Technology Enterprises from Brazil and Portugal” a whiff of hope, inspiration and return to normalcy hung in the air. Young startuppers and students trotted out solutions and business models that put the environment, public health and sustainability centre stage.

Against the background of prevailing low spirits arising from the COVID-19 conundrum we find ourselves in, events like these serve as a reminder we must look beyond the present need to extinguish the pandemic-induced economic fire. The point: Macau should aim to develop an ecosystem truly attractive to start-ups. The 2016 Startup Macau Forum was a step in the right direction, as were the Macao Young Entrepreneur Incubation Centre, the Macau Envision Accelerator, 10 Fantasia – A Creative Industries Incubator, the Macau Start-up Club and the Macao-Hengqin Youth Entrepreneurship Valley (Inno Valley HQ), alongside other initiatives. Still more must be done.

A bolder, more sustained and open-minded strategy, one with real consequences, will need to be embraced if we are to nurture a vibrant start-up hub in the city and make the most of future ties with the newly launched Guangdong-Macao In-depth Cooperation Zone in Hengqin, as well as the Greater Bay Area regional market. The overall direction is rightly and wisely addressed in both the Hengqin Master Plan and the SAR’s new Five-Year Plan, which is under consultation. Concrete policies along with market conditions – domestically and externally – will determine the success of an innovation-driven dynamic. The ability to attract top talent and events is requisite to creating a virtuous cycle of modernization and establishing a startup ecosystem. 

Competitions, startup weekends and tech fairs will keep momentum going. Next month’s inaugural edition of Macau’s BEYONDInternational Innovation Expo could pave the way for a new generation of innovation and tech-themed events. In addition to government support, private venture capital and angel investors play a key role in the success of a startup ecosystem.

There are a number of obstacles, however, impeding the city’s climb up the innovation ladder, from ineffective public policies to the short-sighted, rent-seeking mindset still prevalent among local traditional elites. Moving forward, this should give way to a more free-thinking, inclusive and less risk-averse critical mass. An open and welcoming spirit is indeed the key. 

While addressing the dire needs of the local economy and society at this critical juncture, we mustn’t downplay the importance of building and retaining human capital and broadcasting a sense of hope and vision for the future. 

Over the last couple of years, many highly skilled imported professionals have left the city. The human landscape is changing and – while other countries and regions stay a step ahead with preparations for the post-Covid world economy – Macau cannot afford to be left behind, found wanting in terms of the skilled manpower required to fuel the new economy. Remember: cosmopolitan, creative cities are destined to succeed. 

If we remain stuck in this challenging pandemic loop, we risk failing to see the forest for the trees. Shall we take a step back and take the longer view?

Macau Business Editorial | October 2021 | By José Carlos Matias – Director

The conversation on diversifying Macau’s economy away from gambling is almost as old as the casino industry itself in the city. Through the decades a number of attempts to push for effective economic diversification failed to yield results. Most of them relied on launching industrial parks, which never truly attained their promised potential.

The liberalization of the gaming industry that occurred two decades ago was aimed at a particular approach to diversification: the new integrated resort (IR) model, making casino gambling part of a larger package including non-gaming elements such as retail, fine dining, F&B, MICE and entertainment. The post-liberalization operators did deliver that new IR model (some more so than others), and in doing so changed the city’s landscape beyond recognition, heralding an unprecedented era of economic growth and job creation. What was intended to be basically the “head of the dragon” multiplied severalfold on the heels of seemingly limitless demand from mainland China together with a massive increase in supply thanks to supportive measures from Beijing. And the rest, as they say, is history.

When Xi Jinping visited Macau in early 2009, then as Vice President, he brought with him two key messages that, despite not being entirely new, did carry special weight, as he was by then already regarded by many as the nation’s leader-in-waiting. Xi insisted the SAR had to diversify its economy, and that the development of Hengqin would provide the necessary room. Over the following decade Macau grew even more dependent on the gaming industry, and calls for diversification intensified. The mammoth stimulus package to assist China’s recovery from the 2008/9 US financial crisis was highly effective at lifting the country’s economy clear of any hint of recession – with the added spillover effect of cheap money flooding into not just the overheated property market but also, indirectly, the city’s gaming industry.

Mass market expanded impressively, but VIP gaming reigned supreme in those years, and jaw-dropping growth figures attained levels that would have to be reined in. The city’s casino industry, specifically the high-roller segment, could not be shielded from the knock-on effect of the anti-corruption campaign and the efforts across the board to curb massive capital outflows. Beginning in 2013/14 a number of corrections to the model were made to bring it in line with more sustainable levels.

In Macau all of us – the government, industry players, society – knew those “sky’s the limit” days could not go on indefinitely and that the risks of putting all our eggs in one basket remained high. Still, the fiscal reserve was pilling up thanks to year after year of robust surpluses, and the Government’s welfaristpolicies – doling out part of that surfeit in the form subsidies, one-off grants and other instruments – forged a social contract that held sway through the years, ensuring a satisfactory level of prosperity and stability. You could say that, back then, while plenty of lip service was given to the importance of economic diversification, the city was in fact resting on its laurels, failing to tackle that mission – to diversify – head on.

It was just three years ago, remember, that Macau was tipped to overtake Qatar in 2020 as the world’s richest jurisdiction (in terms of GDP per capita).

Then reality bit. COVID-19 emerged like a black swan soaring over the grey rhinos that had already charged into view. And while the last twenty months have been overwhelming for the whole world, the last few months here have felt like a Sisyphean loop, our recovery continually derailed by successive waves of COVID-19 cases – in neighbouring provinces and, more recently, in town. Local authorities excelled in the first year of the pandemic, making our city a “poster child” for disease control, but the same unfortunately cannot be said about the last couple of months, namely when it comes to vaccination. With mass inoculation finally gaining steam in a number of countries around the world, Macau’s vaccine rollout remains embarrassingly slow, and it’s taking a heavy toll on the economy. 

On the back of the Zhuhai authorities’ vaccination requirements for crossing the border bolder measures should be adopted locally to finally do the trick, so that our city quickly catches up with the overall national rate and finds itself on a path towards a gradual opening and lifting of restrictions. Meanwhile, a new round of financial support will be inevitable, and formulating budget and policy guidelines for 2022 against the backdrop of so much uncertainty represents a formidable challenge for the Government.

New game 

One of the authorities’ key tasks for the coming year is managing the revision of the gaming law, now in progress following the presentation of the consultation paper in September. It is certainly no coincidence that the document was announced just ten days after the Master Plan for the Development of the Guangdong–Macao In-depth Cooperation Zone was issued. “Remember, remember the month of September (2021)”, historians may one day chant when contemplating these watershed moments.

At this stage it’s still not easy to see the forest for the trees. And we come full circle to Xi Jinping’s 2009 words, which he repeated on subsequent visits, as President, in 2014 and 2019: the Two Ds – Diversify and Develop (Hengqin). The question was – and remains, to some extent – how and when. We now have a partial answer, mirrored in the two key documents announced last month. Our Destination: 2035, with Macau–Hengqin integrated and the SAR’s “adequate economic diversification basically realized”.

As the In-depth Cooperation Zone is established on a model of co-governance, with seats on management and executive committees for Macau’s top officials alongside their counterparts from Guangdong and Zhuhai, it will take wisdom and competence to live up to the high expectations. Openness and farsightedness will be key, as will detailed policies able to boost confidence among local businesses and the youth, particularly with respect to investment, mobility and the legal framework. 

Balancing act

This is indeed a golden opportunity that must not be missed. All sides will need to rise to the challenge. New blood will be required, but the contribution of those who deeply cherish Macau and have shown commitment to the city’s development in the past should be honoured, as well, including of those who were not born here. Along with the visionary and comprehensive top-down design for regional development, bottom-up contributions will be highly beneficial.

In moving forward and kick-starting a new era in the region’s development, a delicate balance must be struck to avoid throwing the baby out with the bathwater. It would serve no one’s interest to kill the goose that lays the golden eggs. Hopefully we might finally put those eggs in more than one basket and in the meantime nurture new gooses. We have to get this right.

Macau Business Editorial | September 2021 | By José Carlos Matias – Director

A recent report from the Intergovernmental Panel on Climate Change (IPCC) speaks volumes: the effects of human-induced climate change are spreading like wildfire across the globe, with some trends set in motion now irreversible. Extreme climate events are already visible to the naked eye. It’s time to brace for impact. 

It’s not yet time, though, to give up hope. The clock is ticking, but there’s still the opportunity to limit global warming and mitigate the devastating impact of climate change, so long as swift, coordinated, global action is taken to reduce carbon emissions.

This is a shared responsibility, and without doubt the major economic powerhouses play an absolutely critical role. China has set ambitious targets, with President Xi Jinping announcing the nation would strive to achieve peak CO2 emissions before 2030 and carbon neutrality before 2060. Meanwhile the nation is making great strides in the widespread use of electric vehicles, rapid expansion of solar and wind energy, tackling pollution and taking the lead in the development of green technologies. Some of these world-class best practices can be found right next door, just over the border, in the Mainland.

So where does Macau fit in all of this? It would be unfair not to acknowledge the steps taken in recent years by local authorities, but frankly speaking these have been too little – hopefully not too late. With environmental awareness on the increase particularly in the younger generation, and with the leapfrog progress being made in the Mainland, it is hard to understand why the SAR should be lagging behind – in some cases way behind, as this issue’s special report shows. We’ve had the necessary financial resources but have lacked the resolve and the effective measures necessary to hit the nail on the head and deliver those much-needed, bold “green” policies.

Take public transportation as an example. While Shenzhen converted its whole public bus fleet to electric vehicles some three years ago, here e-buses are virtually nowhere to be seen. We’re moving too slowly in the private car market, too. At the end of July there were just 1,938 electric vehicles in Macau, a mere fraction (0.8 per cent) of the 244,000 motor vehicles registered in the city. Compare that with the 2 per cent figure in neighbouring Hong Kong, for instance.

The gradual elimination of plastic bags and straws is another worthy target. The one-pataca levy on plastic bags adopted a couple of years ago was an important move in the right direction, as is the imminent ban on the import and trade of plastic straws announced in late August and due to come into effect from 1 January 2022. Still, in the absence of follow-through from a whole suite of vigorous measures, these will be seen in future as little more than “baby steps”.

The way forward? Specific timelines and targets for the phasing out of new purchases of fossil fuel-powered cars and the elimination of single-use plastics are just a few of the sensible measures that must come alongside tackling solid waste management, embracing high energy efficiency standards for buildings and infrastructure and emulating global and national best practices, as well as the laudable steps already taken by local eco-friendly hotels.

It’s time, indeed, for our special city – whose SAR flag is a deep shade of green – to bid farewell to complacency and inefficiency, become truly green and wholeheartedly embrace the concept of Ecological Civilization. 

Macau Business Editorial | August 2021 | By José Carlos Matias – Director

It’s been like this since the beginning of the year. Just when recovery seems right around the corner, a sudden COVID-19-related development derails the prospect for a sound economic bounce-back. It happened in March, in late May to June, and again more recently with a surge in the highly infectious Delta variant of the novel coronavirus beginning in the second half of July. Are we doomed to this Sisyphean cycle? Such a gloomy assertion might be uncalled for, but one could hardly be blamed for entertaining the thought.

Now, Macau itself risks being dragged into the swirling pandemic maelstrom. As this edition of Macau Business was going to print, a citywide testing drive was being launched as new cases of the Delta variant had just been detected within the city, raising the alarm over a possible community outbreak. 

It’s still too early to assess what the real impact of this development will be, but one mustn’t underestimate it. The same sense of civic duty, awareness and solidarity that surfaced locally in the early stages of the pandemic will again be crucial. 

Mainland authorities have proved remarkably efficient at bringing their outbreaks under control in a matter of a couple of weeks. Nevertheless, as has been shown across the globe, this new Delta variant poses a greater risk, with many countries forced to backtrack on their “back to normal” summer plans.

Mass inoculation in Macau is underway, but the vaccine rollout is still failing to meet expectations. And while getting the jab is absolutely necessary, it may not be sufficient to keep the virus at bay. A number of preventive measures must therefore remain in place. Against this backdrop, there’s a need for flexible, agile, determined public policies capable of swiftly responding to this ever-changing situation. That’s no easy feat, and local authorities have thus far risen to the challenge.

The health of Macau’s economy and its public finances basically still all boils down to economic activity and the revenue generated by gaming and tourism. 

Figures released by the Financial Services Bureau on budget execution data for the first semester show revenue collected by the government in the first half of 2021 currently standing at 41 per cent of the full-year budget. The simple answer being that gaming revenue – more correctly direct taxes on gross gaming revenue – had reached just 39 per cent of the full-year estimate.

Preparing a budget in such uncharted waters is a daunting task given all the unknowns and unpredictable variables of these atypical circumstances. Having said that, the local authorities’ MOP 130 billion forecast for the SAR’s gaming revenue this year did seem too optimistic back in late 2020, and it sounds even more far-fetched now. Considering where accumulated gaming revenue through July stands (MOP 57 billion), casinos would need to go on to rake in a monthly average of MOP 14.5 billion for the rest of this year. That’s a big ask: a 77 per cent jump on the monthly average over these last seven months. Highly improbable, which means a new budget amendment is likely inevitable, translating into further recourse to the city’s abundant fiscal reserves to balance accounts. 

Sooner or later additional measures, or even a whole new package may be necessary – on top of the welcome moves made earlier this year – to ensure the stability of SMEs and a steady hand at the helm in the form of subsidies and incentives to help businesses and society navigate the choppy waters stretching away to the year-end horizon.

The global and regional situation remains fluid, and in this Covidian world the crystal balls are all cloudy. Still, every cloud has a silver lining.

Macau Business Editorial | July 2021 | By José Carlos Matias – Director

Every year thousands of non-local students (the lion’s share from the Mainland) graduate from local universities. Macau allocates resources to training these youngsters, and many of them develop a strong sense of attachment to their academic home. They graduate with valuable skills that could be put at the SAR’s disposal and contribute to the city’s development, yet they run into a brick wall upon completing their studies when it comes to entering the local job market. This is indeed unfortunate. The need for robust protection of native talent is understandable, but the current system, which is obstructive to non-local fresh graduates, could be adjusted to allow the SAR to retain some of these fresh leavers at the top of key fields in which local expertise is scarce. The system would need to be carefully tuned, of course, to ensure absorption by the market of local graduates, however that shouldn’t prevent the Government from taking the long view and preparing the city for the transformed growth and development model expected in a (hopefully) more diversified post-pandemic scenario. The enhancement of human capital possible with open-minded policies is a necessity that will no doubt benefit everyone in the long term.

Alongside adjusting human resource policies is an equally pivotal need to improve management of the resources allocated to infrastructure development. The long-awaited public hospital for the islands and complete Light Rapid Transit (LRT) system are prime examples of projects plagued by budget overruns and constant delays over the past decade.

The Islands District Medical Complex – a much-needed key social infrastructure project – should have been mostly up and running by now, but even the first phase, consisting of the complex’s main buildings, may only be effectively operational by 2024. In this edition’s special report we take stock of the islands’ hospital development and of the future of the city’s healthcare industry as a whole. While acknowledging the important achievements and progress over the years, the case for an upgrade – of both hardware and software – cannot be understated. To that end, the success of the Health Bureau’s management of the COVID-19 pandemic can be expanded upon through the rest of this decade to take the city’s healthcare services to a higher level.

The imbroglio that is the LRT also calls for farsighted action. Faced with high operational costs and low passenger volume – exacerbated recently by meagre visitor figures due to COVID-19 – the LRT needs to expedite its planned expansion to the Macau Peninsula: first stop, Barra station. The existing system also lacks updating to lock step with the e-payment tools already widely in use elsewhere across the city.

In the mid to long run, articulation with Guangdong’s rapid railway system is the way forward, namely via Hengqin’s future transportation infrastructure. We will most likely have what, in many ways, will be a “through-train” arrangement between Macau and Hengqin.

Macau Business Editorial | June 2021 | By José Carlos Matias – Director

The recent new wave of COVID-19 cases in neighbouring Guangdong Province should serve as a kind of cautionary tale, for both local authorities and society at large. The Macau SAR’s enviable performance – of its government, companies and citizens – with respect to pandemic control must not be jeopardized now by complacency and a failure to rise to the next challenge posed by more virulent variants of this novel coronavirus. Over the past year, Mainland authorities have shown how effective they are at rapidly bringing small-scale outbreaks under control, but Macau also needs to redouble its efforts. The same social determination and mobilization that kept the city free of locally transmitted cases for almost an entire year can now be channelled into taking the obvious step towards herd immunity: mass inoculation. Vaccine reluctance is not exclusive to Macau, but this is our city so we must recognize the importance of raising awareness here of the urgent need to attain a vaccination rate of 60 to 70 per cent as soon as possible. 

The city’s rather embarrassing low uptake – and in light of the new cases over the border – has been a wake up call for a number of players in town. Fortunately large-scale companies – such as gaming operators, banks and other firms –chambers of commerce and universities, among other entities, are showing a laudable sense of social responsibility, rolling out events, incentives and initiatives to promote vaccination among their staff. That is indeed the way forward and will now hopefully be emulated by additional sectors including local associations and other entities, but the all-out effort has to be led by the Government which should embrace more decisive, innovative action for the promotion of mass immunization.

These are unprecedented times, and Macau has remained a safe haven amid the health crisis brought on by the global pandemic. The indicators from the last couple of months hint at a gradual but encouraging recovery reflected in the number of mainland visitors, a reviving retail industry and increased gaming revenue. Is this just a short-lived “dead cat bounce” or a bona fide silver lining lighting the way to rosier times? While surely expecting the latter, one should also prepare for the former.

(The case for) a farsighted approach

While the worst may be behind us, a reinvigorated, multipronged strategy is necessary to cope with the uncertain times we live in.

As stated above, while all stakeholders have a role to play, the Government’s public policies are of paramount importance. The latest consumption package, which came into effect in May, is a welcome move; citizens and many small businesses are certainly benefitting from it. Still missing, though, is a deeper set of measures capable of meeting the needs and assisting with the changes faced by the many Small and Medium-sized Enterprises (SMEs) that fall outside the scope of the consumption incentives. Certain sectors – the creative industries, liberal professions and service providers, among others – remain pretty much empty-handed under the trickle-down policies implemented so far. 

That being said, there is a good example of something warranting further expansion: The recent “Subsidy Scheme for Encouraging Enterprise Upgrading and Development” launched by the Economic and Technological Development Bureau. This is a step in the right direction: helping local companies be better equipped for a more competitive and demanding future environment. As China’s dual circulation economics whirl faster, the need is there for local firms to add value to their business. A new trend among mainland visitors is emerging: they are younger and more sophisticated and demand better quality and value for money.

Showing the hand

Among uncertainties brought on by the pandemic, the future of the city’s gaming industry is one that ruffles some feathers. That’s understandable. After all, we’re talking about the city’s core business. Yet though we are basically 12 months out from expiry of the current concessions and subconcessions, authorities insist on keeping their cards close to their chest. The consultation on the gaming law will be held in the second half of the year, and most observers predict concessions will be extended anywhere from one to five years, as provided for by law. Whatever the case, there is a need for a sensible move that would shed light on the future.

Macau Business Editorial | May 2021 | By José Carlos Matias – Director

Macau ushered in the 1st of May with the highest number of tourist arrivals since the beginning of the pandemic. That 44 thousand mark bodes well for a gradual recovery, one that can already be felt on the streets. It’s still one quarter of the pre-pandemic era tally – 180 thousand on the 1st of May 2019 – but we should bear in mind the incremental trend witnessed in recent weeks and take into account the fact that Macau can now only receive tourists from the mainland.

Nevertheless, there’s still a significant gap between Macau’s performance and the pace of recovery of domestic tourism in Mainland China, which reached about 95 per cent of the pre-pandemic level during the recent Qingming festival holiday in early April. Crossing the border, there’s a palpable, encouraging “near-back-to-normal” feeling in the air.

Though important efforts have been made to promote Macau as a safe destination in mainland cities, one mustn’t forget the speed of the SAR’s vaccination rate lags behind that of the mainland. This is an impediment to quickly building the herd immunity that would allow for further relaxing of the remaining entry and exit restrictions, first with the mainland and eventually with other countries and regions with whom the city will need to establish “travel bubbles”. Authorities will surely step up efforts in a citywide campaign to inoculate people of all walks of life as soon as possible. The stance of many locals – that there’s no need to speed up the process – is misplaced, as the whole of the society and the economy will benefit from comprehensive mass inoculation. Groundless scepticism should have no place here.

The right(s) side

This year’s 1st of May, like last year’s, saw no street rally to commemorate the Labour Day holiday or express labour-related demands. With respect to this year, it could have been different. In a city that has thankfully been COVID-free (of domestic cases) for several months, with appropriate measures in place it would surely have been feasible to hold a small-scale, orderly, rally that observed social distancing and other procedures. The same goes for the other assemblies, rallies, parades and outdoor events that have been cancelled or not permitted to go forward.

It’s time for a sensible relaxation of those restrictions, obviously without compromising public health.

Could this have been the last May Day in Macau without a trade union law? That’s surely the hope of the city’s workers associations and labour unions, not to mention large swathes of society. Chief Executive Ho Iat Seng has rightly pledged to move forward with the legislation, yet the matter has been dragging on. Some business interests are surely making the case for yet another postponement of the much-awaited act against the backdrop of the ongoing economic downturn. However, a sine die adjournment would be a regrettable and unwise move. As Ho Iat Seng himself once noted: Macau is the only place in the whole of the People’s Republic of China without a trade union act. A sensible and well-drafted piece of legislation is needed, and as soon as possible, fulfilling what is enshrined in the Basic Law.

What’s more, the SAR’s labour regime is in need of additional adjustments to bring about an improved and more balanced formula able to meet the rights and needs of both employees and employers. Amid the pandemic and all the travel restrictions, there is little sense in not moving ahead with a temporary mechanism to allow the hiring of imported manpower, tapping into the human resource currently available and out-of-job but unable to leave the city due to outbound travel difficulties. The disparity between supply and demand with respect to domestic helpers is an exemplary case in point. This is something Government and lawmakers should address.

17×17

May also marks the anniversary of our Macau Business magazine. Launched 17 years ago by founder and publisher Paulo A. Azevedo, this publication has been committed to adding value to the city’s media scene and social and economic development, always with an eye on the present and on future movers and shakers. In celebration of our 17th anniversary, we shine a spotlight on 17 young local talents aged 35 and under who are already having an impact on city’s development and are set to play a prominent and key role in its future. Many others are blossoming and growing to meet the challenge. They are all part of an endless stream (川流不息): our hope for a better future.

Macau Business Editorial | April 2021 | By José Carlos Matias – Director

Just after nightfall, downtown Macau gradually empties of people. The scarcity of visitors due to COVID-19 has been a key factor for the past year, but even before the advent of the pandemic there was a hollowness to be felt strolling around the city centre after dark, except during certain festive seasons.

The neon lights of the pawnshops and casinos can’t mask the absence of a bustling nocturnal economy such as one might find in a number of cities just across the border, where bars, night markets and performances breathe life into central business districts and waterfront promenades. But there’s more to it. Why can’t Macau have museum “lates”, bookstores with extended hours, night boat tours and year-round street performances highlighting the city’s rich and diverse culture? The time for a paradigm shift is now, as visitors gradually return. They needn’t be solely funnelled into large-scale resorts. In an increasingly regional competitive environment, visitors are bound to grow more sophisticated in their demand for a meaningful experience while enjoying their time here.

In a place surrounded by water and with plenty of lakeside and riverside zones, it’s hard to understand how those areas could be so underdeveloped in terms of amenities and leisure.

The Cultural Affairs Bureau announced last September that Taipa’s abandoned Iec Long Firecracker Factory and Coloane’s Lai Chi Vun shipyards would finally be repurposed and partially reopened as cultural and leisure areas. One can only hope these projects will not remain on the backburner, as have a number of other public endeavours over the years.

Reclaiming quality

In this edition of Macau Business we delve into the dozens of land parcels that have been reclaimed by the Government but left idle and without specific development plans. The development of those parcels, while articulating with the city’s urban master plan, should be regarded as an opportunity to increase public housing supply, insisting on a higher-quality model well integrated into the surrounding environment rather than indulging apparently substandard builds of massive, less-than-liveable blocks, as was the case with some projects in the past.

Opportunity knocking next door

As the city’s job market challenges increase, local fresh graduates – and youngsters in general – are now confronted with a reality vastly different to what they would have envisioned four to five years ago when beginning their undergraduate studies. As seen in these pages, this environment is making the case for seeking new opportunities further afield in the Greater Bay Area ever stronger, as a growing amount of local talent joins the bandwagon. The trend is likely to deepen, with additional incentives for cross-border labour mobility set to be rolled out.

This may well prove a boon to Macau, especially if in the future the city can benefit from a reverse migration trend on the heels of a more diversified economic structure.

Macau Business Editorial | March 2021 | By José Carlos Matias – Director

We don’t have a “Macau’s Got Talent” TV franchise or a local version of “The Apprentice”, and to be honest, having been left out of that reality TV bonanza is nothing to cry over. That being said, there is plenty of talk about the need to nurture local talent and encourage entrepreneurship among the youth.

But when these noble and much-touted aims are raised, one can’t help wondering whether we’re hearing wholehearted commitment or mere lip service. Whatever the case, it would be unfair to downplay efforts made over the years by local authorities to cultivate talent. Former Chief Executive Chui Sai On launched the Talents Development Committee in 2014 with laudable objectives and taskforces devoted to planning and evaluation, encouraging talents to return to Macau, and training.

More recently, the Greater Bay Area blueprint indicated what the SAR’s function would be in the grand plan for regional integration. To remain relevant and play a concrete role, Macau must embrace the One Centre, One Platform, One Base formula and actively participate in the national development strategies. The crux of the matter is in making the best out of what makes this city unique, distinct and distinctive and not sleepwalking into becoming of little relevance or even simply being diluted in the mid-to-long run – something that is in neither the city’s nor the central authorities’ interest. Quite the contrary.

We do have capital, but we are somehow short on land and people. Don’t get me wrong – human capital has developed greatly in Macau since the 1980s, more so since the establishment of the SAR. What seems clear though is that we do not have yet sufficient skilled human resources needed to be up to the ambitious and visionary tasks set by the mainland authorities and hopefully embraced by the local Government, society and business elites.

We are indeed at a crossroads in this respect. Chief Executive Ho Iat Seng included the nurturing of talents to promote the prosperity of Macau as one of ten key governance bullet points in his 2021 Policy Address, and he has rightly brought this topic into the spotlight.

A formidable challenge looms in the background: economic diversification. It will take years, perhaps decades. We all know. And it should combine top-down design with bottom-up dynamics, alongside the right approach to regional integration and cooperation.

Successfully managing the pandemic is surely of paramount importance. Stability, security and safety are hard won achievements to be cherished. Nevertheless, they are not mutually exclusive with ensuring a stronger focus on modernization, innovation and openness.

We need to preserve and encourage tolerance and diversity in the nurturing of talents, while focusing on merit and expertise.

As we claw ourselves back from the Covid-induced crisis, we must maintain a Janus-faced view from the bridge: gazing at once up the Pearl River Delta and out to the vast blue ocean.

As the Chinese saying goes, all rivers run to the sea (海纳百川).

EDITORIAL – Responsibility

Macau Business magazine Editorial | February 2021 | José Carlos Matias – Director

Social responsibility has taken centre stage in the 12 months since the outbreak of the COVID-19 pandemic. The much-touted concept seemed to be for several companies more of a public relations sideshow than a wholehearted commitment in the past. Then the unprecedented public health crisis breathed an entirely new meaning into the words.

Macau Business Editorial | February 2021 | By José Carlos Matias – Director

It is incumbent upon virtually all stakeholders in our society, but it is first and foremost the Government’s responsibility towards its citizens. And though it’s been stated repeatedly, as we mark the first anniversary of the first COVID-19 cases in the city we should laud the Government’s successful management of the crisis, which put Macau in an enviable league of its own compared with countries and jurisdictions around the world.

That responsibility includes a duty to protect residents, those who remained here, without neglecting those who for whatever reason left and now want to return home. International travel these days is a daunting experience, and the authorities’ remarkable effort to bring more than 100 residents stranded overseas back to Macau deserves kudos. Risks were minimized, so that arguments against the initiative from skeptics and critics never held water. Testing positive on arrival was a single passenger who posed no threat of contagion to the community. A crisis of this magnitude surely brings out the best in us, but it can also feed fears, expressed in views or measures that are less than rational or compassionate. Memory of the public outcry last March over the evacuation of Macau residents from Wuhan, then the epicenter of the pandemic, is still fresh. Fortunately, we saw the Government do the right thing, and they were successfully brought home.

While mass inoculation is gaining traction around the world, it seems clear that the vaccine is not necessarily a panacea that will solve this mammoth crisis in the short term. Here in Macau, due to the (rather small-scale) recent outbreaks in the mainland, Chinese New Year will not bring the much-needed surge in the visitors the City’s tourism and retail industries are so desperate to welcome. Many SMEs are in agony and may close their doors for good this month; that’s on top of the thousands of firms that filed for bankruptcy last year. Though the Government seems to be taking a wait-and-see approach before the launch of any new stimulus package, that may well be the only option left to it that will ensure social stability and the relative well-being of residents and small businesses, in the short term at least. It couldn’t come too soon.

Meanwhile, against daunting odds and surely as a result of ongoing social and political factors, gaming operators have announced they will be giving staff a most welcome annual bonus in a move signalling a truly meaningful sense of corporate social responsibility after a year of historic losses.

Trade New World

Meanwhile a number of private businesses are rolling up their sleeves and embracing an innovative and burgeoning new trend, one featured in this edition of Macau Business: live-streaming e-commerce. Targeted primarily at mainland consumers, this is a market experiencing explosive growth. Virtual shopping malls are thriving in mainland China, and local firms need to grasp the opportunity and vie for their own piece of the pie, not just in streamed retail but also streamed services and hybrid online/offline meetings and events. In the time it takes international mobility to return to pre-pandemic levels, Macau should find creative ways to ride this wave.

Adelson

The early 2000s were a once-in-a-lifetime experience for those who resided or spent time in Macau, particularly for a young frontline reporter like me who’d just arrived from Portugal and was eager to be immersed in this unique and intriguing city. I was fortunate enough back then to cover gaming-related press conferences and the big announcements of new projects enabled by the liberalization of the gaming industry. At the time, one tycoon stood out from the rest: the late US mogul Sheldon Adelson, who passed away last month. When he unveiled his gargantuan-scale plans for Cotai many wondered: “How on earth will there be demand for such a massive increase in supply?” “This is a supply-driven model”, he used to say out loud. And that it was. The attractive first-class Integrated Resorts model coupled with the Individual Visit Scheme for mainland tourists did the trick. And the rest is history. An unprecedented, transformative two decades for Macau, during which Sheldon Adelson’s investments played an unquestionably crucial role.

EDITORIAL – Critically constructive

Macau Business magazine Editorial | January 2021 | José Carlos Matias – Director

Is critical thinking something to be encouraged? What might at first seem an obvious “yes” turned out to be a rather nuanced issue in the consultation document for the coming decade’s Macau Youth Policy (2021–2030).

Macau Business Editorial | January 2021 | By José Carlos Matias – Director

While the previous blueprint (2012–2020) stated the importance of fostering a younger generation with “independent thinking and a critical mindset”, the new proposed Policy, in its Chinese version, handles these qualities with a “lighter” touch, having abandoned that wording in the wake of opinions collected in favour of an expression (審辨) that resonates an “ability to examine and distinguish”.

Behind the shift is the way current education authorities regard the expression used in the previous blueprint for “critical” (批判) – seen as primarily having a negative implication. One should note that, despite having been widely used as choice of characters to translate ‘critical (thinking)’; the expression itself has been disputed by some experts.  It’s not our place here to throw the hat into the ‘linguistic discussion’ ring. Nonetheless, it’s noteworthy that the rationale behind the move stems from an official view that criticism is welcome but has to be constructive.

What might sound, at first glance, like a ‘storm in a tea-cup’ embodies a wider question.  It appears the language advocating critical thinking endorsed by local authorities a decade ago has given rise to second thoughts this time around and been redacted. Does this point to a “change of heart” over the degree to which criticism ought to be cherished? Couldn’t the current environment lead to a narrowing of the space in which youngsters are likely to freely express their points of view?

One can’t overstate the usefulness of independent-minded, critical thinking for correcting mistakes and improving decision-making.

A reduced scope for critical thinking has a negative knock-on effect on civic participation, pluralism and innovation. It may also be reflected in less-than-bold problem-solving skills and fewer breakthroughs in knowledge, science and entrepreneurship. This should not be underestimated in light of the much-touted need to nurture “local talent”, a buzzword embodying a crucial challenge for the younger generations in the coming decade as the SAR faces a more competitive environment.

It’s important to highlight that the Youth Policy blueprint does address a number of these issues and rightly sets out key objectives, while bearing in mind that a paternalistic approach is not necessarily the best way to attain these goals.

This is constructively critical and critically constructive.

Stock options

The idea has been floated before, but it gained new impetus when mainland media reported that a representative from the National Development and Reform Commission said authorities were indeed considering a plan to establish a Macau Stock Exchange in Hengqin. No specific details were provided, and as seen in these pages a number of questions have surfaced. Whatever the case, this signals a welcome determination of mainland authorities to assist Macau in its push for economic diversification and regional integration. Development of new financial services is the way forward. What’s needed now is to hammer out the many details and build a solid legal framework, attract the necessary skilled human resource and find a competitive advantage in the division of labour between Macau and its neighbours, considering the mammoth capital market of Hong Kong and the rising star that is Shenzhen. A creative approach to the functionality of a future Macau–Henqgin financial hub is needed, as is a long-term focus on developing an ecosystem that will reinvigorate the SAR’s economic structure in the coming decades by making the best of the accumulated capacity of the gaming and tourism industries and the injection of new blood from the drive for financial innovation. And by learning the lessons of imbalanced financial centres that failed to be people-centred.

Sister Juliana

Macau has been home to many foreigners who became truly distinguished citizens and benefactors. Sister Juliana Devoy, who passed away last month, was one of a kind. She leaves behind a priceless legacy of kindness, compassion, solidarity and humanity. She was an angel to countless women, victims of human trafficking and domestic violence. Her determination to raise awareness of the need to make domestic violence a public crime will forever be remembered as an inspirational gesture of selfless public service.

“It was the best of times. It was the worst of times.” The legendary opening lines of Charles Dickens’ A Tale of Two Cities recall London and Paris around the time of the French Revolution. Fast-forward to 2020, and these are most definitely not the best of times. The COVID-19 pandemic, though not exactly a revolutionary social movement, is massively disruptive, on a global scale. And while Macau is surely no Paris or London, we do have the The Parisian, and perhaps in just a couple of months we’ll have The Londoner, too.

Macau Business Editorial | December 2020 | By José Carlos Matias – Director

In many ways 2020 seems to be the epitome of an annus horribilis. It has been “the worst of times” for a great number of countries around the world. For Macau, not so much. The Government’s successful management of the pandemic has protected the city and bolstered the legitimacy of a Chief Executive who found himself in constant crisis management mode from just weeks into his first term.

As shown in this edition’s special report, approval ratings for Ho Iat Seng’s handling of the novel coronavirus emergency are considerably high, meaning his so-called “honeymoon period” as new Chief Executive has extended far beyond the usual couple of months after taking the oath of office.

In addition to the swift and effective public health measures and related policies that were locally adopted from the very earliest stages of the pandemic, and the notable sense of civic duty on the part of local firms and society, the city has also benefitted from China’s successful and impressive control of the outbreaks and – let’s face it – that lucky streak that has shielded us from turmoil, large-scale natural disasters and epidemics for centuries.

That being said, there are a number of problems that cannot simply be swept under the rug. The city’s gaming and tourism industries are making a gradual comeback on the heels of returning mainland visitors, but they have yet to gain sufficient traction. And, by the way, it is difficult to comprehend why so little about the future of the SAR’s core industry is mentioned in the Policy Address for 2021.

The prolonged plunge in demand dealt a fatal blow to a number of small businesses. Many are now closed for good, while others cling to life but remain in a precarious position. Another social problem looming large is youth unemployment. As reported in these pages, the days of the relatively easy and secure tit faahn wún (“iron rice bowl”) job for local young professionals are behind us.

The Government did roll out relief packages through the year to provide short-term respite to the SAR’s most vulnerable groups, to SMEs and to local residents in general. In a reality-check remark, Ho Iat Seng declared that a truly sound economic recovery will only be possible with the advent of a vaccine and subsequent mass inoculation. In the meantime, however, as we start to see the light at the end of the COVID-19 tunnel, there is a need for improved governance, for more effective and tailor-made immediate measures to aid firms and certain social groups, and for a longer-term vision followed through with consequential action – not just words – that can bring added value. In this respect the recent Policy Address still falls short of expectations.

Macau’s economic future surely lies in jumping on China’s “dual circulation” bandwagon. The city is situated at the nexus, in fact, of the nation’s domestic and international economic circles. The key is to capitalize on that and avoid being bypassed on the hopefully fast-paced inner circuit to national recovery.

As we celebrate this month in this edition both the 200th issue of this magazine and the 21st anniversary of the Macau SAR, the case for rolling up our sleeves has never been stronger. Will 2021 light the way back to “the best of times”? Well, the times – to join in Bob Dylan’s chorus – “The times they are a-changin’”. And as time flies, we get a bird’s eye view.

Video-Editorial:“Bigger Fish”, Macau Business magazine, November 2020.

“Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” The origin of the proverb is uncertain, though it is often attributed to the ancient Chinese sage Confucius.

Macau Business Editorial | November 2020 | By José Carlos Matias – Director

Faced as we are with such a once-in-a-lifetime crisis, there’s a need to do both those things in tandem, allowing the local society and economy both to find short-term respite and to walk on its own two feet in the mid-to-long term. The Government has made moves in the right direction, but with the stakes this high it must yet rise to the challenge. What we know of the Government’s budget proposal for 2021 thus far is welcome – it “gives a man a fish” – but should be accompanied by a longer-term strategy – “teaching a man to fish” – no easy feat in these choppy COVID-19 waters. At this stage we’re looking at two sides of the same coin: gaming revenue and the fiscal reserve. The figures for October were encouraging, with gaming revenue reaching 7.2 billion patacas, but still a far cry from the amount required to sustain public finances, more in the realm of 15 billion a month on average if taxes on gaming account for some 75 per cent of the Government’s overall revenue. The authorities predict around 130 billion patacas on the year for 2021 (a monthly average of 10.8 billion), and it’s hard to label that a conservative or an optimistic forecast. As we well know, the city is entirely dependent on exogenous factors, and our best hope for next year lies in the continued sound recovery of China’s economy on the back of its notable, enviable progress in controlling the pandemic.

And so, inevitably, the SAR will need to draw on fiscal reserves again in 2021 to make ends meet. The time has come to make good use of the city’s ‘rainy day fund’, amassed in recent years thanks to skyrocketing gaming revenue and support from the mainland authorities.

After a very challenging 2020, we are in for another bumpy ride next year, but one offering glimpses of the light at the end of the tunnel. For a number of small-to-medium-sized businesses, however, the protracted recovery may come too late. As a result, in addition to the crucial measures adopted throughout this year and those now in the pipeline, there needs to be a decisive move by the Government offering a new type of short-term relief for SMEs and paving the way to a sustainable model in the longer term. For the former, setting an example is a must, and in that respect, the Government’s approach engenders mixed feelings. While on the one hand it deserves kudos for continuing to organize events such as the Light Festival, Lusofonia Festival, Macau International Trade & Investment Fair, International Travel Industry Expo, Grand Prix and International Film Festival, on the other hand it has imposed cost-cutting measures on promotional activities and the procurement of goods and services, all of which takes a heavy toll on SMEs.

Faced with a shortfall, choices become imperative and those the authorities make signal their priorities. Chief Executive Ho Iat Seng has thankfully pledged that the 10 per cent blanket cut in public administration expenditure will not come at the expense of social welfare measures. This is of paramount importance to assuage major concerns and ensure stability. But beyond that, a more creative, swift and far-reaching approach to supporting SMEs is essential, as their survival along with the livelihoods of the many thousands they employ is on the line.

It is a daunting task, no doubt, but one that is absolutely necessary: to give fish, but also to teach to fish, bearing always in mind that there are even bigger fish to fry.

P.S. The October issue of Macau Business included a 4-page section dedicated to the World Press Photo Exhibition, held in Macau for the 12th straight year, and the article mentioned the exhibit was scheduled to run through to 18 October. However just after the magazine went to print, news surfaced that the show had been prematurely shut down. It was reported that the decision to close the exhibition, which features award-winning works of photojournalism, was taken because of certain pictures that were on display. There has been no official confirmation with regards to the allegations, but several sources point in that direction. If that was indeed the case, then we will have witnessed a truly regrettable incident, one that saddens those who cherish openness, photojournalism and freedom of expression.

Video-Editorial: “People”, Macau Business magazine, October 2020. By José Carlos Matias, director.