Macao Rising

Regional progress gains speed with gaming industry as its fuel

SKYSCRAPERS: Two of Macao's landmarks--the Bank of China Tower and the Lisboa Hotel Macao, November 16, 2009 (XINHUA)
 
Over the 10 years since Macao's return to the People's Republic of China in 1999, the former Portuguese colony has witnessed nothing less than an economic miracle. Macao's gross domestic product (GDP) tripled during that period and reached MOP171.87 billion ($21.48 billion) in 2008, growing at an average rate of nearly 15 percent per year. The 2008 per-capita GDP of Macao, which lies west of the Pearl River and is China's second special administrative region on the southeast coast of the country, stood at $39,036, a figure that ranks it second in Asia behind only Japan.

With government coffers expanding from growing tax revenues collected from the gaming industry, the social welfare system in the region, which is home to 549,200 residents, has also improved dramatically in recent years. Beginning in the fall of 2007, the Macao Special Administrative Region (SAR) Government began offering 15 years of free education from kindergarten to senior high school.

The Macao SAR Government initiated a "wealth share" handout program in 2008 to allow the public to benefit from its strong budget surplus. Under the program, residents were given MOP5,000 ($625) per person in 2008 and MOP6,000 ($750) per person in 2009. In both years, non-permanent residents received half of that sum.

In October, Macao announced a plan to open individual retirement accounts in the central savings regime for the residents of Macao. The government immediately injected MOP3.3 billion ($412.5 million) into the new system, which amounted to MOP10,000 ($1,250) per account. The money was allocated from the MOP25.1 billion ($3.14 billion) budget surplus recorded in 2008. Money in the accounts for all residents 22 years old and higher can be withdrawn once the beneficiary reaches the age of 65. The government calls this measure a new form of retirement social security for Macao's residents.

Speaking at the Legislative Assembly in his final official meeting with the local parliament on November 19, Macao's Chief Executive of 10 years, Edmund Ho Hau Wah, said he estimated that 2009 would see a surplus of more than MOP10 billion ($1.25 billion), according to the Macao News Agency.

"Next year, the government will continue to implement measures for exemption and reduction of taxes that it has adopted over the last few years, with the aim of helping companies and citizens to face the pressures and difficulties resulting from the international financial crisis," he said.

Celebrations of the 10th anniversary of Macao's return to its motherland included a December 4 seminar in Beijing on the 10th anniversary of the implementation of the Basic Law of the Macao Special Administrative Region, where China's top legislator, Wu Bangguo, delivered a speech reviewing progress made in Macao over the past decade. On December 11, a photo exhibition on Macao's achievements in the last 10 years opened at Beijing's Capital Museum.
 
New era

Late Chinese leader Deng Xiaoping first put forward the concept of "one country, two systems" in the early 1980s to achieve China's reunification. Deng envisioned the main part of the country continuing under socialism while areas such as Hong Kong, Macao and Taiwan having their own capitalist economic and political systems. Under Deng's framework, SARs were established in Hong Kong and Macao respectively, and SAR governments were allowed to exercise a high degree of autonomy.

"While giving Macao a lot of support whenever there was a major setback, such as the outbreak of severe acute respiratory syndrome and the international financial crisis, the Central Government has strictly followed the "one country, two systems" policy and the Basic Law of the Macao Special Administrative Region. It has never interfered with the SAR Government's administration of Macao's own affairs," said Macao's Ho.

IT'S BACK: A grand hand-over ceremony between the Government of the People's Republic of China and the Government of the Republic of Portugal is held at the Pavilion of Gardens at the Macao Cultural Center on December 20,1999 (XINHUA)
 
The region's residents are enthusiastic about their society's political affairs, a feeling that has surged compared with a decade ago. In February 2008, the Macao SAR Government consulted the public on proposed revisions to the Chief Executive Election Law, the Electoral Law for the Legislative Assembly and the Voter Registration Law in Macao. It took less than three months for the government to collect more than 7,400 suggestions from the public. "Ordinary citizens are very enthusiastic about participating in revising the law, which was an impossibility when Macao was under Portuguese colonial administration," said Florinda da Rosa Silva Chan, Secretary for Administration and Justice of Macao SAR Government. She said some of the suggestions were adopted by the final revision.

"The greatest change to Macao's administration since its return to China is that a bureaucratic government has been replaced with a people-oriented government," said Chan. According to her, government departments are being encouraged to get ISO certification to improve the quality of their management and to launch user-friendly services such as e-government and one-stop initiatives. She added her department drafts detailed regulations requiring civil servants to wear name tags at work and answer phone calls by first telling people his or her name and title.

Lau Cheok Va, President of Macao's Legislative Assembly, said after Macao's return to China, members of the Legislative Assembly have become more active in participating in legislative affairs and voicing their opinions, which he believes is a positive phenomenon. "Residents now think of themselves as Macao's masters and are more willing to make suggestions to Legislative Assembly members," said Lau.

"Macao's society has achieved unprecedented progress in its politics, legal system, education, cultural causes, social security systems and economy. Although civil servants and ordinary citizens still have some complaints about the government because people cannot share the fruits of social progress absolutely equally, the achievements predominate," said Ieong Wan Chong, Director of the Center of Studies of One Country, Two Systems at Macao Polytechnic Institute. He suggested that Macao SAR Government enhance its efforts to help the region's disadvantaged groups.

In a public poll on core social values conducted by Ieong's center in April and May 2009, the largest number of respondents voted for the slogan "Loving China and Loving Macao," with 49 percent approving it. Others chose "fair competition and equal opportunities" (42 percent) and "safeguarding human rights" (41 percent).

Gaming-fuelled economy

From 1996 to 1999, Macao's economy shrank, causing a rise in the unemployment rate to 6.3 percent in 1999.

"I remember back then that people with a job worked very hard to keep it while unemployed people were desperate because it was almost impossible for them to find one," recalled Vivian Wong, an editor at Macao Monthly.

While Macao's economy started to grow again the first year after its return to China at an encouraging 5.7 percent in 2000, the real boom occurred after the SAR Government's liberalization of its gaming industry and the acceptance of new gaming concessions in 2002. The change to Macao's gaming industry, which has a long history in the area that can be traced back to the 16th century, put an end to the decades-long monopolization of the business by casino magnate Stanley Ho. Now Macao is home to six companies with casino licenses, which operate more than 30 gaming establishments. In 2002, they contributed roughly 30 percent of Macao's GDP and employed more than 10,000 residents. In 2006, Macao surpassed Las Vegas in total revenue to become the gaming capital of the world. In 2008, those numbers swelled to more than 60 percent of Macao's GDP and 60,000 jobs.

The region's Chief Executive Ho said that the liberalization of the gaming sector had resulted in a string of social problems, but gave a boost to development in other industries and improved both citizens' access to jobs and their standard of living.

"Its development has caused many social problems, but I believe the pros overweigh the cons," said Ho.

However, Ho said Macao's future relies on cultivating a more diverse industrial structure that includes the growth of new industries like non-gaming tourism, the conference and exhibition industry, retailing, investment-related services and the creative industry.

Macao's manufacturing industry, which peaked in the 1980s and 1990s, has shrunk steadily amid fierce competition within the global quota system for the textile industry that came to an end in the new century. "Macao's manufacturing industry was predominantly engaged in processing foreign goods," said Sou Tim Peng, Director of Macao Economic Services. Sou said it is important for Macao to maintain a manufacturing industry, as it could diversify the region's economic structure and create job opportunities.

Sou said the rejuvenation of the local manufacturing industry has benefited from the Mainland and Macao Closer Economic Partnership Arrangement, or Closer Economic Partnership Arrangement (CEPA) for short. The arrangement is an economic agreement between Macao SAR Government and the Central Government that was brought into effect in October 2003 and has been reinforced with annual supplements with further liberalizations. As of this July, the agreements have eliminated the Chinese mainland's import tariffs on 1,156 items originating from Macao.

Central Government's support

The potential of Macao's tourism market was unleashed by a 2003 policy created by the Central Government, which allowed travelers from the mainland to visit Hong Kong and Macao on an individual basis. Prior to this "individual visit scheme," residents of some provinces and cities on the mainland could only travel on business visas or with group tours. In 2003, the Chinese mainland for the first time surpassed Hong Kong to become Macao's No.1 source of tourists. In 2007, amid a rise of gambling-related crimes, the Central Government restricted the visa arrangement for mainland residents traveling to Macao by limiting their trips to Macao in a year. In 2008, 11.6 million mainland residents visited Macao, comprising nearly 51 percent of all tourists to the area. More than half of mainland tourists traveled under the individual visit scheme.

BRIDGE TO FORTUNE: The West Bay Bridge, which stretches 2,200 meters, is Macao's third that links the Macao Peninsula to the region's Taipa Island, on December 17, 2004 (XINHUA)
 
"China's overall fast economic growth and improvements in living standards over the last 10 years have strongly boosted Macao's economic growth, with more and more mainland residents traveling, shopping and investing in real estate in Macao," said the chief executive.

In an effort to shore up Macao's gaming-centered economy in the face of the global financial crisis, the Central Government added Supplement VI to CEPA, which was signed this May. The annex cleared the way for mainland residents traveling to Taiwan with group tours to enter Macao in transit.

In January, the National Development and Reform Commission issued its 2008-20 plan for the Pearl River Delta, involving nine cities in southern Guangdong Province and the SARs of Hong Kong and Macao. The plan states that cities in the delta area will cooperate with each other to build "a highly dynamic area in the Asia-Pacific region" by 2020. Macao will become a world-class recreation and tourism center as part of the plan.

"The release of such a development plan has provided Macao with an opportunity to intensify its cooperation with Guangdong and Hong Kong," said Fernando Chui Sai On, Macao's next chief executive, who will take office on December 20. Chui said the new administration would promote Macao's cooperation with Guangdong and Hong Kong in logistics, traditional Chinese medicine, the creative industry and tourism to diversify its economic structure.

With a land area of less than 30 square km, a lack of space has created a bottleneck for Macao's development. In a June press conference, the SAR chief executive announced Macao had received a "generous gift" from the Central Government, which gave its approval for the University of Macau (UM) to build a new campus on a piece of land that had been leased on Hengqin Island. The island belongs to neighboring Zhuhai City in the mainland province of Guangdong.

Zhao Wei, Rector of the Macao SAR Government-funded university, said the problem of land scarcity that has hindered his institution's development would be solved with the construction of its new campus. In June, the Standing Committee of the National People's Congress passed a bill that authorized Macao SAR to incorporate the new campus on Hengqin Island under its jurisdiction.

"When it is completed in three years, we will finally have a real campus and be able to set up our long-needed biological department," said Zhao. He said the new campus will be built on approximately 1 square km of land, which is 20 times larger than UM's current home.

In November, the State Council approved the Macao SAR Government's 3.61-square-km land reclamation project, which will increase the region's land area by more than 12 percent. A Macao SAR Government statement said the new project would create more public facilities and green spaces, along with setting aside plots of land for public housing projects and the development of business parks.

Macao in Figures (2008)

Population: 549,200

Land Area: 29.2 square km

Per-capita GDP: $39,036

Gaming Industry Income: MOP111.1 billion ($13.89 billion)

Total Visitor Arrivals: 22.9 million

Source: Macao SAR Government Portal