mb 104 | december 2012

A disenchAnted middle clAss

feels the city’s quAlity of life

is dropping

A disenchAnted middle clAss

feels the city’s quAlity of life

is dropping

stuckin the middle

stuckin the middle

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Economy & Finance 24 Slowdown warning GDP growth slows down in the third quarter

Politics 30 Little to change Policy address for 2013 brings no surprises

MB Report 34 Leadership change China’s new leadership takes the reins of the all-powerful Communist Party

Property 44 Deep freeze The government’s latest restrictions on the property market have scared off homebuyers

Transport 52 Waiting to take off Sky Shuttle hopes for reforms in the mainland to expand its business

Special 55 Challenging times Special on the 13th anniversary of the establishment of the Macau SAR

Gaming 72 Playing by the rules Experts discuss casino industry regulatory issues 74 Not welcome anymore The new regulations on slot-machine parlours are stricter than offi cials previously let on 76 Forget myrrh, bring gold Casino operators are hoping Santa Claus will bring them sleigh-loads of gamblers 78 Know more, play smarter A pilot scheme to promote responsible gaming starts this month 80 Big splash Wynn Macau revamps its fountain shows 82 In growth mode Transcity’s business in Macau is expanding fast, says its managing director 84 Bureaucratic nightmare The MGM Grand Ho Tram Beach casino resort in Vietnam is facing bureaucratic delays

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Hospitality 87 Know your guest A study says the kind of hotel a visitor chooses depends on the purpose of the visit 91 Beefi ng up Morton’s steakhouse chain has plans to further expand in Asia

Feature 99 The French recipe France steps up its Macau business presence

Business 112 Retailing alfresco Hawkers are still a part of Macau’s way of life but they are disappearing fast

Technology 114 Engineered for men A study says there is a big disparity between the sexes in science and technology in Macau

Luxury 118 Three-pointed star shines Mercedes-Benz wants to increase its share of the market here

Arts & Culture 122 Classically Scottish The Cultural Centre welcomes the Royal Scottish National Orchestra

Corporate Social Responsibility 124 Golf for hope The sixth Annual Macau Business Charity Golf Tournament was a great success

Opinion 14 From the publisher’s desk Paulo A. Azevedo 16 Editorial Emanuel Graça 33 Crumbling edifi ce Bill Kwok-Ping Chou 39 China’s growth challenge Paola Subacchi 42 Xi Jinping’s Singapore lessons Michael Spence 64 Playing with numbers José I. Duarte 69 The connectivity paradox Keith Morrison 93 The wisdom of Yoda Gustavo Cavaliere 134 China’s coming growth tests Yu Yongding

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Editorial CouncilPaulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça

VOL.1 Nº104

Founder and PublisherPaulo A. [email protected]

Editor-in-ChiefEmanuel Graç[email protected]

Assistant Editor-in-ChiefAlexandra [email protected]

Senior AnalystJosé I. [email protected]

Art DirectorsConnie Chong, Luis [email protected]

Hong Kong BureauMichael Hoare (Chief), Anil [email protected]

Special CorrespondentMuhammad [email protected]

Beijing CorrespondentMaria João [email protected]

Manila CorrespondentMax V. de [email protected]

Assistant to the PublisherLaurentina da [email protected]

Offi ce ManagerElsa [email protected]

PhotographyAntónio Mil-Homens, António Leong, Carmo Correia, Greg Mansfi eld, Gonçalo Lobo Pinheiro,John Si, Manuel Cardoso, MSP Agency, Agencies

IllustrationG. Fox, Rui Rasquinho

Contributing EditorsChristina Yang Ting Yan, Dennis Ferreira, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Ferreira da Silva, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lia Carvalho, Lois Iwase, Luciana Leitão, Michael Grimes,Sara Farr, Sara Silva Moreira, Sofi a Jesus, Xi Chen, Yuci Tai

Regular Contributors Bill Kwok-Ping Chou, Branko Milanovic, David Cheung, David Green, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Gustavo Cavaliere, Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfi eld, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang

AdvertisingXu Yu, [email protected]

Advertising AgentsBina [email protected]é [email protected]

Media Relations

GRIFFIN Consultoria de Media Limitada

TranslationsPROMPT Editorial Services, Poema Language Services Ltd,TLS Translation and Language Services

AgenciesAFP, Lusa

ExclusivesGambling Compliance, Project Syndicate

Printed in Macau by Welfare LtdPublished every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects

Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8to US$1 for the purposes of illustration only.

Letters to the [email protected]

[email protected]

Address: Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No. 679 Av. do Dr. Francisco Vieira Machado, Macau Tel: (853) 2833 1258 / 2870 5909 Fax: (853) 2833 1487 Email: [email protected]

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SEPTEMBER 2012

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DECEMBER 2012

[email protected]

from the publisher’sdesk

PAULO A. AZEVEDOFOUNDER

AND PUBLISHER

In 13 years, Macau has gotten rid of Portuguese

politicians who turned up to fi ll their

suitcases with cash to pay for electoral

campaigns in Portugal. They have

been replaced with our own miniature clones of Bo Xilai

tentacles than an octopus. Its arms reach Macau, where there are still foreign managers in the gaming industry that are willing to breach the law to satisfy their shareholders, and many more people from outside the industry who believe they are above decency, ethics and the law.

Those people will shortly realise that getting their hands on parcels of land at ridiculously low prices, thanks to dubious contracts, is going to cost them dearly. It will happen sooner than they think.

Recently, a handful of investigators from the Commission Against Corruption went to Beijing. I wonder what new guidelines to tackle corruption were offered by the leadership.

Turning pointIf everything goes as forecast – which is seldom – the public will notice that a notorious leader of the 14K triad, recently released from jail, will not be the only person enduring a silent exile.

There are more as-yet undiscovered “friendship notebooks” – the name investigators gave to the notepads recording the millions in bribes taken by the former secretary for transport and public works Ao Man Long. The notebooks may no longer be in paper form, but they can be detected on computer hard discs.

Over the past 13 years, we have witnessed Macau losing its soul, while the government earned

amounts of money so huge it needs specialist investment experts to manage it.

We have witnessed the triads coming out of shady gaming halls to openly run businesses that are envied by Las Vegas tycoons, who long for the days when the United States was home to the world’s casino capital.

Las Vegas went through the same process when the Sicilian mafi a decided to upgrade its operations. They listed and the businesses’ images were overhauled, thanks to the hard work of Wall Street stockbrokers in spacious New York offi ces.

In 13 years, Macau has gotten rid of Portuguese politicians who turned up to fi ll their suitcases with cash to pay for electoral campaigns in Portugal. They have been replaced with our own miniature clones of Bo Xilai.

Today’s money fl ow is measured in cash-fi lled containers. These billions have fi nally attracted Beijing’s attention. It has realised not all is well in Macau.

Corruption – deemed by the outgoing Chinese President as “galloping” and a priority for the newly appointed leader – has more

CHALLENGING THIRTEEN

15

bizintelligenceonline.com macaubusinessdaily.com

goldfi shmacau.com

In just 13 years, Macau has forgotten that handing out money to the public is no way to promote development. It has also forgotten that the government and its bureaus need to be transparent and accountable.

In 13 years, Macau has become the world’s gaming capital. Along with the casinos has come glamour, top hotels and shopping malls to rival New York, Paris and Tokyo.

But the quality of education, for instance, has not improved as fast as the stream of multi-million pataca grants to the city’s private universities would suggest. The results of these handouts are unknown. Apparently the donors do not require reports or results. What are these generous gifts in return for?

This is the good and the bad of Macau, 13 years after the handover.

Those who were well-off before are now better-off, while the less fortunate have seen little change. Inequality and social disparity have increased exponentially.

In the face of that fact, the hypocrisy of public and private speeches is shocking.

The public has waited 10 years for news of a new public hospital, while a complex to house two pandas was built in record time for MOP80 million (US$10 million). That amount is enough to provide public housing to more than 100 families. What an insult.

Macau should have progressed more. Mentalities, even more. The city does not invest in knowledge or bringing in knowledgeable people to face the gangs of incompetents that control parts of the city and some businesses, via the dark side of guanxi.

In spite of the problems, gaming revenue keeps rolling in, at least until Beijing tightens the rules to control illegitimate behaviours that have surpassed reasonable limits.

It is up to all of us to make Macau a legitimate jurisdiction. The public must understand that it is better to slow down and earn a little less, than it is to fi ll our pockets but face disruptions in a few years’ time.

The new leadership in Beijing may prompt self-awareness, but old habits die hard.

Place your bets.

NOVEMBER 2012

RUNNING ON EMPTY

[email protected]

education. Increases in allowances for students were announced, but there were no measures to ensure the quality of their education – a big issue.

It all comes down to opportunity cost, as economists call it. The government’s detractors say it is not putting its surpluses to the best use to achieve the highest return possible from each pataca invested. This has a hidden cost in the form of potential benefi ts forgone, the value of which cannot be fully expressed in mere patacas and avos.

Missed chanceAwareness of opportunity cost should play an important role in ensuring that scarce resources are used in the most effi cient way. But the government here is not compelled to regard public money as a scarce resource, because it has huge reserves. So it continues to squander cash on populist measures without caring about opportunity cost.

Last month’s policy address was probably the last suitable occasion for Mr Chui to reshuffl e his cabinet before his current term ends. He missed the chance. With just two more years to go, Mr Chui is now unlikely to reshuffl e his cabinet unless some big contretemps obliges him to do so.

This means that three of the fi ve secretaries in the government will have been in offi ce for 15 years. Mr Chui himself was secretary for social affairs and culture for 10 years before becoming chief executive. Not even in the mainland do leaders have such long tenures.

Does this explain why, year by year, the policy address becomes emptier of any sort of vision? Have offi cials run out of ideas? The opportunity cost of allowing this to continue may soon be too high to bear.

Having too much money can be a burden, as the government is discovering. Because of the government’s sound fi nances,

Chief Executive Fernando Chui Sai On’s cabinet is constantly pressed to improve its performance, as money is not a problem.

That happened again last month, after the government delivered its Policy Address for 2013. The lack of foresight shown by offi cials frustrated those expecting far-reaching initiatives to tackle infl ation or cool the overheated property market. Instead, Mr Chui and his team mostly extended sweeteners introduced previously, simply increasing the amounts.

In most countries, especially those battered by the international fi nancial crisis, this would be good news. In Macau, things are more complicated.

The health of the government’s fi nances contrasts with the ailments affl icting several other aspects of the city, ranging from its infrastructure to its healthcare services. Although such ailments are normal, given the dramatic changes Macau has undergone in the past decade, the government must treat them rapidly before they get worse.

Handing out cash indiscriminately is no remedy. It just contributes to the growth of inequality.

Certainly, even sceptics welcome some of the measures announced last month. For instance, it is worth applauding the increase in the old age pension to MOP3,000 (US$375) a month from a measly MOP2,000. But even this has a bittersweet taste. The social security system has yet to be revamped to make it sustainable in the long run. Raising pensions just emphasises the need for reform.

The same can be said about

editorial

EMANUEL GRAÇAEDITOR-IN-CHIEF

Handing out cash

indiscriminately is no remedy.

It just contributes

to the growth of inequality

I.T. USAGE RATE DROPSIN BUSINESS SECTOR

The rate of information technology usage in the business sector went down last year, according to the “Usage of Information Technology 2011” report, released by the Statistics and Census Service. Last year, the IT usage rate in the business sector stood at 46.9 percent, down by 1.8 percentage points from 2010. The only sector that

has fully embraced IT is gaming, with an adoption rate of 100 percent for some years already. Less than one third of restaurants here and only 42 percent of companies engaged in wholesale and retail trade were using IT solutions as of last year.

ANNOUNCED MACAU-ONLY LAND AUCTION IN HENGQINThe Zhuhai Land and House Property Exchange Centre will auction a 40-year lease on a plot on Hengqin Island, in a tender open exclusively to Macau companies. According to an announcement, the asking price is around 250 million renminbi (MOP320 million). The plot lies to the east of the Hengqin Border Terminal and is for commercial use only. Interested parties can deliver their proposal until December 19.

GOVT REACHES FULL-YEARPUBLIC REVENUE TARGET

The government has already met its public revenue budget target for full 2012. According to data released by the Financial Services Bureau, public revenue up to October stood at MOP104.7 billion (US$13.1 billion), above the MOP101.9 billion forecast for the full year. Most of the public revenue – MOP88.2 billion – came from direct taxes

on gaming. In regards to expenditure, it is a whole different story: the government had only used 57.5 percent of the MOP65.9 billion it budgeted to spend in full 2012.

SMES FEAR TIMES AHEAD

NEW PARTNERThe circulation of Macau Business continues to grow and so does our network of partners. The latest to join is the Sheraton Macao Hotel. Your magazine of reference is now available at the biggest Sheraton in the world, at Sands Cotai Central.

One third of local SMEs expect the business environment to worsen next year

A report published by the Small and Medium Enterprises (SMEs) Association and the University of Macau says one quarter of local SMEs expect the business environment to worsen in the next 12 months.The association surveyed 1,127 local businesses with fewer than 100 employees.Only 16.5 percent believed the situation would get better. The remainder, more than half of all enterprises, forecast the business environment would remain unchanged.SMEs say their most pressing problems are increases in prices of raw materials and rents, fi erce competition and a shortage of suitable workers.

DECEMBER 2012

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DECEMBER 2012

GREEN FUND APPLICATION PERIOD EXTENDED

2G MOBILE SERVICESEXTENDED UNTIL 2015The Bureau of Telecommunications Regulation has postponed the 2G mobile service phase-out until June 2015. The bureau said in a statement that the postponement was due to the need for more time to study the timetable for the introduction of new mobile services, such as 4G services. It added the postponement was also a way of offering more time to residents to prepare for the service transition. The 2G mobile service was due to be terminated by the year-end. This is the second time the 2G mobile service phase-out date has been pushed back. The previous phase-out date was to have been July 9.

AIRPORT TO REACH RECORD REVENUEMacau’s airport is likely to rake in record annual revenue for 2012. According to Deng Jun, chairman of the Macau International Airport Company Ltd, which manages the airport, total revenue is likely hit MOP3.4 billion (US$425 million), a new all time-high, beating last year’s MOP3-billion record. That represents a year-on-year growth rate of 13.3 percent.

CTM FINED MOP180,000 FOR SERVICE BREAKDOWNTelecommunications provider CTM was fi ned MOP180,000 (US$22,500) for a two-hour breakdown of its 3G mobile service, the Bureau of Telecommunications Regulation said last month. An investigation by the bureau found that the service disruption, which took place in May, was caused internally by CTM. The service crash affected about 35,000 subscribers. In June, CTM was fi ned MOP800,000 for another service breakdown, which took place in February. The government is still investigating two other service outages impacting Hutchison Telephone (Macau) Co Ltd’s mobile services.

The application deadline for the government’s MOP200-million (US$25 million) environmental protection fund has been extended to 2013-end. The previous deadline was the end of this month.The fund’s purpose is to subsidise the acquisition of environmentally friendly technology, equipment and products by companies and associations. The fund

Interested parties can apply for grants until the end of next year

offers grants of up to 80 percent of the cost, to a maximum of MOP500,000 per grant, but it does not cover construction, installation or refurbishment costs.By September-end, the fund had received more than 1,300 applications. Over 500 had been approved, worth around MOP52 million, according to our sister publication Business Daily.

DECEMBER 2012

AICEP’S NEW HEAD IN MACAU APPOINTED

The new director for Macau and Hong Kong of Portugal’s AICEP – Trade & Investment Agency has been appointed. Her name is Maria João Bonifácio, according to public radio broadcaster Rádio Macau. Ms Bonifácio already worked in Macau in

the 1990s. She will replace Mariana Oom, who has been here for two years but will return to Portugal by year-end.

CITY’S TOP EARNERS PAYWORLD’S LOWEST TAXESMacau has the lowest combined income tax and social security rate of the world for top-earners, according to a report from global accounting fi rm KPMG. If a worker earns MOP800,000 (US$100,000) a year or above in Macau, they will pay an effective income tax rate of 4.6 percent, the lowest of the 114 jurisdictions covered in the fi rm’s “Individual Income Tax and Social Security Rate Survey 2012”, our sister publication Business Daily reported. As for the social security fund, employees here are only obliged to pay a MOP15 monthly contribution.

GOVT LAUNCHES MICE PORTALThe Macao Trade and Investment Promotion Institute last month launched the Macao MICE Portal (www.mice.gov.mo). The website is aimed at promoting the image of Macau’s meeting and convention industry and providing related

information services. Entities cooperating with the Macao MICE Portal include the Macao Convention and Exhibition Association, the Macao Fair and Trade Association and the Association of Advertising Agents of Macau.

MACAU TO LOSE EU TRADE BENEFITSThe new system will take effect from 2014

Macau has been removed from the list of countries and territories entitled to reduced- or zero-import tariff rates for the European market, under the European Union’s import preference scheme, known as the Generalised Scheme of Preferences, for developing countries most in need.Last month, the bloc issued a revised list of countries and territories entitled to receive benefi ts to the European market, featuring fewer benefi ciaries. Macau was removed because

the city has been listed for the last three years by the World Bank as a “high income” economy.More than 80 countries and territories will no longer benefi t from the scheme starting 2014.The value of Macau’s exports to the European Union has fallen by 90.4 percent in the last fi ve years. In the fi rst nine months of this year, it accounted for less than 4 percent of all the city’s exports.

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ALL-TIME RECORDFOR NEW COMPANIESA total of 992 new companies were incorporated in the third quarter of 2012, up by 16.7 percent year-on-year, information from the Statistics and Census Service shows. It was the highest fi gure since the bureau started collecting data in 2001. The majority of new incorporations were operating in wholesale and retail (340), business services (204) and real estate (154).

RETAIL SALES SHOWSTRONG MOMENTUMThe value of retail sales for the third quarter of 2012 totalled MOP12.45 billion (US$1.6 billion), up by 13 percent year-on-year, according to offi cial data. Retail sales of watches, clocks and jewellery led, amounting to 28 percent of total. After removing the effect of price changes, the value of retail sales for the third quarter increased by 9 percent year-on-year.

EXPENSES OUTPACEREVENUE IN LOGISTICSThe growth of total expenditure in Macau’s logistics sector outpaced that of revenue last year. According to data released last month by the Statistics and Census Service, total expenditure of the city’s transport and storage sector in 2011 rose by 15.9 percent year-on-year to MOP13.9 billion (US$1.7 billion). Revenue also grew at a double-digit rate for the same period, albeit at a slower pace: 14.2 percent. Overall, the city’s logistics sector raked in MOP14.9 billion in revenue last year. In 2011, there were over 2,110 companies engaged in transport and storage.

Smoking gunsThe number of fi nes handed out under the ban on smoking in public venues,

enacted on January 1, keeps on increasing fast. Starting next month, the ban will be extended to casinos, which can designate up to half

of their gaming fl oors as smoking areas. In contrast, no smoking is allowed anywhere in restaurants and cafes.

6,979The number of smoking offences detected by the Macau authorities

from January to October. Offenders are liable to a maximum fi ne of MOP600

33.5%The percentage of the total number of offenders who were tourists

5,698The number of smoking-related fi nes that had already been paid

as of October-end, amounting to 81.6 percent of the total

210,482The number of on-site inspections conducted by the Health Bureau

in the fi rst 10 months after the ban was enacted

5The daily average number of smoking offences detected inside cyber-cafes. These are the venues where the most number of cases have been detected

44.2%The percentage of total smoking offences that were detected

in the Areia Preta area. In over 400 cases, the police had to be called in to provide support for the Health Bureau inspectors

SOURCE: HEALTH BUREAU

DECEMBER 2012

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DECEMBER 2012

SLOWDOWN WARNING

JOBLESS RATE LOWEST EVERThe unemployment rate was 1.9 percent in the three months

ended October 31, or 0.1 percentage points less than in the three months ended September 30.

The fi gure is the lowest since the Statistics and Census Service began collecting data on unemployment in 1992.

The number of people unemployed decreased by 300 to 6,700. The number of people in work rose by 2,400 to 346,600.

Economic growth is slowing and may slow even more once the wave of development in Cotai ends

Economic growth has slowed for the second consecutive quarter, offi cial data shows. One analyst

warns that the economy may shrink in three years from now, owing to its de-pendence on gaming.

Statistics and Census Service data shows the annual rate of growth in gross domestic product was 5.1 percent in the third quarter. In the second quarter it was 7.8 percent.

The third-quarter growth rate was the slowest since the second quarter of 2009, when the economy was 9.9 percent smaller than it had been a year before, because of the international fi nancial crisis.

The third-quarter slowdown was due mainly to the poor performance of the

gaming industry. Casino gross gaming revenue grew more slowly than at any time since the second quarter of 2009.

Almost all the main components of GDP grew more slowly in the quarter ended September 30 than in the quarter ended June 30. Only merchandise ex-ports grew more quickly.

GDP grew by 10 percent in the fi rst nine months of this year. The gaming industry’s performance in the fi rst 11 months suggests that the annual rate of economic growth this year will be less than 10 percent, much slower than the growth rates of 21.9 percent last year and 27.5 percent in 2010.

Economist Albano Martins fore-casts that growth will just exceed 2 per-cent in the fourth quarter. This implies

Economy & Finance24

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DECEMBER 2012

an annual rate of growth of 7.8 percent to 9 percent this year, Mr Martins told the Portuguese news agency Lusa.

Gaming revenue actually contracted in the third quarter after adjusting for infl ation, and may contract more in the fourth, he said. Until new casino resorts open, gaming revenue will probably grow by less than 10 percent, leaving real growth at a standstill, Mr Martins forecasts.

Secretary for Economy and Finance Francis Tam Pak Yuen said last month that annual growth in casino gross gam-ing revenue would stabilise at less than 10 percent next year.

Crucial CotaiLusa quoted Mr Martins as saying the

transfer of power to a new set of leaders in the mainland, the emphasis put by the central government on countering cor-ruption, and Macau’s already large gam-ing revenues made it “extraordinarily diffi cult” for casino revenue growth here to rise above 10 percent in the short run.

More casino resorts are due to open in Cotai in 2015 and 2016. Mr Martins said that if these casinos failed to give momentum to growth in gaming reve-nue, a recession would be likely, because foreign direct investment would drop once the casinos were up and running.

“Gross fi xed capital formation [a gauge for investment] has been growing well, possibly at around 13 percent for this year, and it is likely to continue ex-panding. That has toned down the nega-

tive impact of the gaming revenue’s one-digit nominal growth,” he said.

“But once gross fi xed capital forma-tion disappears, things will get compli-cated.”

Mr Martins said the economy was likely to begin shrinking within three years.

“Unless there are big changes in the mainland, [it is] likely Macau’s casino revenue will only grow by one digit, which will lead to a contraction of the economy,” he said.

“There are factors pushing up GDP growth, but it is very hard, if not tech-nically impossible, for Macau to grow at double-digit rates without the gam-ing sector expanding at the same pace,” Lusa quoted Mr Martins as saying.

35%30%25%20%15%10%5%0%

-5%-10%-15%

GDP YEAR-ON-YEAR REAL CHANGE

Source: Statistics and Census Service

2005 2006 2007 2008 2009 2010 2011 2012Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3Q4 Q4 Q4 Q4 Q4 Q4 Q4

25

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GDP growth

There has been a lot of speculation about the gross domestic product growth rate for full-2012. Even if growth falls to almost zero in the fourth quarter, the annual GDP will still increase by almost 8 percent year-on-year. This is a respectable fi gure for an economy that has grown by around 130 percent over the past eight years.

The GDP fi gures for the three months ended September signal a clear slowdown in economic growth.After peaking at 33 percent in the second quarter of 2010, GDP growth has been dropping. This was expected, since it was impossible to maintain that high level of growth in the long run.From 2004 to last year, GDP grew at an annual average rate of 15 percent. But the trend was never very stable, either on an annual or on a quarterly basis.

The GDP’s volatility is partially associated with investment.Investment, as measured by gross fi xed capital formation, is recovering after having dropped to negative terrain between 2008 and 2010. But its growth rate is now more moderate in comparison with the period between 2004 and 2007.Private and government consumption also showed some oscillations between 2004 and 2011, but these are comparatively milder.

The service exports, which include the gaming sector, are particularly signifi cant for the GDP performance. They account for the biggest share of the city’s economy. Any change here has a strong impact on GDP.

GRAPH 1

GRAPH 2

GRAPH 3

Economic Trends by José I. Duarte

GRAPH 1 - GDP year-on-year real change

GRAPH 2 - GDP year-on-year real change, selected components

GRAPH 3 - GDP year-on-year real change, selected components

-40%

25%

0%

20%

-20%

0%

10%

5%

15%

20%

30%

80%

60%

40%

0%

20%

- 20%

- 40%

- 60%

60%

40%

2004

2004

2004

2005

2005

2005

2006

2006

2006

2007

2007

2007

2008

2008

2008

2009

2009

2009

2010

2010

2010

2011

2011

2011

2012 (Q1-Q3)

2012(Q1-Q3)

2012(Q1-Q3)

Service exports Goods imports Service importsGoods exports

DECEMBER 2012

Government fi nal consumption expenditure Gross fi xed capital formationPrivate consumption expenditure

100,000

80,000

60,000

40,000

20,000

MOP

mill

ion

MOP

mill

ion

27

Foreign direct investment

An important factor for Macau’s economic performance is foreign direct investment. The FDI boom in the fi rst post-handover years, as well as the most recent rebound, is associated with the construction of casinos.

Macau has benefi tted from a steady growth in FDI stock, which increased by over 280 percent between 2004 and 2011.FDI infl ows rose fast from 2004 to 2008, but in absolute terms the highest annual infl ow took place in 2010.

The main FDI driver over the last decade was the casino sector. But last year, Macau recorded a negative FDI infl ow in gaming for the fi rst time since 2004.Since a new wave of casino resort construction is underway, FDI infl ows are set to increase again.

Gaming is the biggest FDI provider to Macau. It represented 57 percent of the total FDI stock as of 2011-end. Banking is a distant second, with a 19-percent share.

GRAPH 5 - FDI infl ows by industry

GRAPH 6 - Inward FDI stock by industry

GRAPH 4 - Inward FDI

GRAPH 4

GRAPH 5

GRAPH 6

120,000

25,000

20,000

15,000

10,000

0

-10,000

5,000

0

-5,000

Construction Wholesale and retail Gaming BankingTotal

2004

2004

2005

2005

2006

2006

2007

2007

2008

2008

2009

2009

2010

2010

2011

2011

FDI infl owsFDI stock

DECEMBER 2012

Gaming57%

Others15%

Wholesale and retail9%

Banking19%

28

DECEMBER 2012

GDP at current prices

GDP in chained prices

GDP per capita at current prices

GDP per capita in chained prices

Domestic loans to private sector

Resident deposits

Foreign exchange reserves*

Infl ation rate (full year)

Exports

Imports

Trade balance

Total revenue

- Direct tax revenue from gaming

Total expenditure

Balance

Water

Electricity

Gasoline

Liquefi ed Petroleum Gas

Natural Gas

Licensed vehicles

- Automobiles

- Motorcycles

Mobile telephone users

Internet services subscribers

Unemployment rate

Median monthly employment earnings

Employed population

Labour force participation

Non-resident workers (end-balance)

MOP 86.1MOP 75.0

-- --

MOP 183.9MOP 343.9MOP 132.7

5.2%

29.1 20.726.2 18.0

27.722.743.2

2.5

41.5 44.9 29.7

--

5.15.59.35.3

-52.4

4.95.54.5

20.622.7

6.29.27.40.7

-100

5.26.83.9

18.79.8

15.315.621.212.2

0.2 41.2

--

21.618.1

--

11.85.1

-- --

15.426.2

-- -1.6

Economic output

Money and prices

External merchandise trade

Public accounts

Utility consumption

Transport and communications

Employment

2011

2011-end

2011

2011

2011

2011-end

Oct - Dec 2011

Year-on-year change (%)














Latest

Latest

Latest

Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Notes

Notes

Notes

Q3 2012Q3 2012

-- --

Sep 2012Sep 2012Sep 2012Oct 2012

Jan-Sep 2012Jan-Sep 2012Jan-Sep 2012

Jan-Oct 2012Jan-Oct 2012Jan-Oct 2012Jan-Oct 2012

Jan-Sep 2012Jan-Sep 2012Jan-Sep 2012Jan-Sep 2012Jan-Sep 2012

Sep 2012Sep 2012Sep 2012Sep 2012Sep 2012

MOP 292.1MOP 273.1

MOP 531,723MOP 497,219

MOP 161.9MOP 291.6MOP 272.4

5.8%

MOP 112.7MOP 99.7MOP 49.0MOP 63.7

70.53,857

81.742,908

73.6

206,34995,151

111,1981,353,194

209,223

55.43,219

65.332,165

--

212,99299,822

114,1701,532,619

224,663

MOP 104.7 MOP 88.2MOP 37.9MOP 66.8

MOP 7.0MOP 62.3

- MOP 55.3

MOP 6.1MOP 52.5

- MOP 46.3

2.1%

MOP 10,000

339,80072.9%

94,028

1.9%

MOP 11,700

346,60072.3%

109,541

-0.6

11.1

5.51.5

24.0

-0.6

17.0

2.7

-1.0

20.1

billionbillion

billionbillionbillion


billionbillionbillionbillion

million m3

million kWhmillion Ltonsmillion m3

million m3

million kWhmillion Ltons

billionbillionbillionbillion



billionbillion

So

urce

: Sta

tistic

s an

d C

ensu

s S

ervi

ce a

nd F

inan

cial

Ser

vice

s B

urea

u

percentage points

percentage points

percentage points

percentage points

percentage points

percentage points

Aug-Oct 2012

Jul-Sep 2012

Aug-Oct 2012

Aug-Oct 2012

Oct 2012

* A new fi scal reserve system was introduced in January 2012, impacting the way foreign exchange reserves are accounted for

Statistical Digest

29

DECEMBER 2012

30

DECEMBER 2012

30 Politics

Ph

oto

: Lu

ís A

lmo

ste

r

31

DECEMBER 2012

Little to changeThe policy address for next year brings no groundbreaking initiatives

PUBLIC REVENUE TO GO UPThe government expects public revenue to reach MOP134.8 bil-

lion (US$16.9 billion) next year, up by 17 percent in comparison with this year’s budget. The data is included in the proposed 2013 Macau SAR budget.

Offi cials only forecast a 6.7 percent year-on-year increase in expenses, to MOP82.6 billion.

The government is expecting direct taxes from gaming to reach MOP92.4 billion in 2013, up by 6.3 percent. Mr Chui’s cabinet is forecasting to end 2013 with a MOP52.2-billion budget surplus.

The Macau government is historically very conservative in its yearly budget estimates.

Increased sweeteners but few for-ward-looking plans – last month’s policy address speech by Chief Ex-

ecutive Fernando Chui Sai On brought no surprises for 2013.

The measures announced for next year failed to satisfy the majority of the population, according to a General Union of Neighbourhood Associations survey. Almost 47 percent of the 959 respondents said Mr Chui’s proposals were lacklustre at best. Nearly 9 percent were unhappy with the measures put forward.

The bulk of the speech was a repeti-tion of generic goals previously stated.

The usual jargon was used when mentioning the need to diversify the local economy or develop new tourist markets.

Mr Chui said preparation works for the new border checkpoint between Macau and the mainland continue and are “on schedule”. He didn’t announce any sched-ule or budget for the project, which is still awaiting Beijing’s approval.

The new checkpoint will be located where the Nam Yuen wholesale market now is, and will be for pedestrians only.

Mr Chui confi rmed that the com-pleted Taipa Ferry terminal will only be ready in the fi rst half of 2014. The terminal was fi rst intended to be up and running by 2007.

No shockersThe government agenda didn’t include any shockers for the gaming sector.

31

32

DECEMBER 2012

There were no additional measures to cool the real estate market, although Chief Executive Fernando Chui Sai On admitted the private property market is “overheated”

Mr Chui just said the government wants casino operators to better fulfi l their so-cial role and further promote responsible gambling.

He added the government expects gaming concessionaires to offer oppor-tunities for Macau residents to climb the corporate ladder into management posi-tions. “Some operators are already do-ing it,” he said.

Mr Chui highlighted that he was confi dent operators would be able to establish smoking areas before the forthcoming ban on smoking in casinos comes into effect on January 1.

In addition, Secretary for Economy and Finance Francis Tam Pak Yuen again said there is a need for more non-gaming attractions here. “Casino opera-tors have to include other amenities in their properties, such as more entertain-ment and theatre shows, to attract more visitors that do not want only to gam-ble,” he said.

One of the key pieces of news of the policy address was Mr Chui vowing to build homes for residents-only in the new reclaimed land areas, following a similar initiative in Hong Kong. But he provided no more details on this plan.

There were no additional measures to cool the real estate market, although Mr Chui admitted the private property market is “overheated” and prices are

“high”. He downplayed the situation, saying market fl uctuations must be seen as normal.

“We shouldn’t use radical measures, like freezing the real estate market,” Mr Chui said. “If we use heavy-handed policies, there will be negative conse-quences.”

He meanwhile announced that the government would recommence accept-ing applications for home-ownership scheme housing and public rental hous-

ing in the fi rst quarter of next year.Mr Chui also announced the launch

of an interest-free loan plan for young entrepreneurs who want to set up their own business. The plan will have a maximum ceiling of MOP300,000 (US$37,500) and a maximum loan ten-ure of eight years.

The government will also maintain the increase in profi t tax allowance from MOP32,000 to MOP200,000.

Money for allThe cash handout programme will con-tinue in 2013, handing even more money to both residents and non-residents. Per-manent residents will receive a record MOP8,000, while non-permanent resi-dents will get MOP4,800.

This year’s cash handout was MOP7,000 for each permanent resident while non-permanent residents received MOP4,200.

Next year, permanent residents will also enjoy MOP600 worth in healthcare vouchers, an increase of MOP100 in comparison with 2012.

Mr Chui announced a 30 percent reduction in personal income tax for all employed citizens, from 25 percent this year, with the basic allowance set at MOP144,000. The government will also offer a rebate of 60 percent in personal income tax paid for 2012, subject to a ceiling of MOP12,000 and to be rebated in 2014.

During his policy address speech, Mr Chui urged employers to increase wages in 2013. The government has con-fi rmed it will raise salaries for civil serv-ants, but has not yet put forward a formal proposal.

The government also extended sev-eral sweeteners introduced previously, increasing their amounts. The annual elderly subsidy will be increased in 2013 from MOP6,000 to MOP6,600, while the monthly elderly pension will be raised to MOP3,000 from MOP2,000.

Mr Chui also announced another in-jection of MOP6,000 into each individu-al account of the central provident fund.

Education-related grants will go up next year. Several subsidies for disadvan-taged families will also be increased.

Politics

33

DECEMBER 2012

Crumbling edifi ce

The Sin Fong Garden building made headlines in October. A pillar in the car park gave way, rendering the

building unsafe, at risk of collapsing, obliging the people living there to move out permanently.

With the nearly 200 households displaced now accommodated elsewhere, the focus has shifted. The important task is to identify those responsible for Sin Fong Garden’s unexpected deterioration and to make them pay the moving expenses of the households displaced and other claims for compensation.

The government has commissioned experts from the University of Hong Kong to undertake an independent survey of Sin Fong Garden. Their preliminary results indicate that the concrete used in constructing the building was substandard.

This hints that during construction some parties cut corners. It also suggests negligence by the Lands, Public Works and Transport Bureau, which is responsible for overseeing private construction and issuing permits to occupy new buildings. It seems that in this case the bureau failed to monitor the quality of the work strictly enough.

Whatever the reasons for Sin Fong Garden’s sudden degradation, the government should take immediate action and pursue those responsible.

If only...If the Sin Fong Garden affair had happened in Hong Kong, it would probably have set off a completely different chain of events.

The Independent Commission Against Corruption would have stepped in swiftly, inviting a few people to help them with their inquiries. Among them would have been the developer and contractor, and also the offi cials in charge of inspecting the building and issuing its occupation permit. If the graft-buster had found suffi cient evidence of any crime, it would have had the suspects prosecuted.

Even if there were insuffi cient evidence of a crime, the civil servants involved would have been subject to disciplinary proceedings to determine

private buildings, such inspections are not compulsory. And Sin Fong Garden is not very old. It was built in the early 1990s. Assuming that the construction was fl awless and that the structure was not impaired by construction work on sites nearby, there is no reason for the building to suddenly be in danger of collapse.

The comments made by several leading fi gures in the pro-Beijing camp can be interpreted as an attempt to shift responsibility for Sin Fong Garden’s problems onto the shoulders of the occupants. The purpose is to absolve the developer and civil servants involved of any responsibility.

Don’t forgetThis kind of attitude does nothing for the safety of the city’s buildings. It also lets down the people that supported the pro-Beijing camp in elections to the Legislative Assembly and in other instances.

The government has so far refused to disclose the identity of those in charge of inspecting Sin Fong Garden. Yet Legislative Assembly member José Chui Sai Peng, a civil engineer and a relative of Chief Executive Fernando Chui Sai On, has said publicly that the Sin Fong Garden affair hints at incompetence on the part of those that issued the occupancy permit.

Macau lacks a proper system for certifying engineers. But the city boasts about having top professionals. If so, why do cases like the Sin Fong Garden affair occur again and again?

If developers keep cutting corners, and if the government keeps burying its head in the sand when confronted with suspected jerry-building and dereliction of offi cial duty, what can we expect?

Senior members of the central government have repeatedly urged the government here to nurture clean public administration. They have also called on the pro-Beijing camp to support this aspiration. But the way Mr Chui’s cabinet has been dealing with the Sin Fong Garden affair and the dubious statements made by leading fi gures in the pro-Beijing camp suggest they have all forgotten the central government’s exhortations.

BILL KWOK-PING CHOU ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF MACAU

THE SIN FONG GARDEN BUILDING IS IN DANGER OF COLLAPSE, EXPOSING GRAVE SHORTCOMINGS IN THE GOVERNMENT

whether they had been negligent or incompetent or both in ensuring that the building had been properly constructed.

Even if the developer and contractor were found to have done no wrong, the case would at least have served as a warning to the property development and construction industries. It would have had a deterrent effect, helping to reduce jerry-building and to protect property owners.

That is what would have happened in Hong Kong. Macau dances to a different tune, unfortunately.

Their own faultFirst, we do not have an effi cient anti-corruption agency. Some weeks ago I visited the Commission Against Corruption to deliver a petition requesting an investigation of the Sin Fong Garden case. I have yet to hear anything about the graft-buster taking any action.

Second, even the pro-Beijing camp is resisting calls for a proper investigation. Pivotal members of some of the city’s largest pro-government associations quickly blamed Sin Fong Garden’s degradation on insuffi cient inspections and poor maintenance by its occupants.

However, while the government recommends regular inspections of

34

DECEMBER 2012

34

mbreport CHINA’S NEW LEADERSHIP

XI JINPING RAISES HOPES, BUT CHINA’S REFORM OUTLOOK REMAINS CLOUDY

STEADY AS SHE GOESBY KELLY OLSEN*

35

DECEMBER 2012

35

36

DECEMBER 2012

mbreport PROPERTY

hina’s new Communist Party boss Xi Jinping has raised hopes with a straight-talking debut, but observers say he may struggle to pull off a cru-

cial revamp of the economy and satisfy growing calls for reform.

Mr Xi’s ascent comes at a crucial time, with the global economy increas-ingly reliant on the Asian giant and its ability to accelerate out of its own growth slowdown – which could also imperil the party’s legitimacy.

Mr Xi took the reins of the all-pow-erful party last month as head of its elite seven-strong decision-making body, af-ter intense speculation over how years of factional wrangling would shape the selection. In an assured performance after striding into the Great Hall of the People, he told China’s citizens that he understood their aspirations and leaders should no longer be “divorced from the people.”

“To meet their desire for a happy life is our mission,” he said, in plain language free of the usual Communist jargon that many saw as a refreshing de-parture from the wooden performances

THE ‘PRINCELING’ NEW LEADERWith a revolutionary hero for a father

and a pop star for a wife, China’s new leader Xi Jinping has impeccable political pedigree but has given few clues about how he will govern the country. Whether Mr Xi, 59, has the conviction or political weight needed to force through policy after he is elevated to the position of national president in March is uncertain.

He rose to the top of the secretive party by presenting himself as a com-promise candidate – acceptable to out-going leader Hu Jintao, still-infl uential former president Jiang Zemin, and other power-brokers. But since he has largely kept his policy leanings to himself, how he will address China’s challenges remains unclear – even though he takes over at an uncertain time, with growth slowing as public expectations and scrutiny rise.

As the son of the late Xi Zhongxun, a respected Communist elder, he is part of the “princeling” generation – the privileged offspring of hallowed fi gures who played key roles in the revolution that brought the party to power in 1949. Despite this pedigree, Mr Xi was “sent

down” to the Chinese countryside to live and work alongside peasants, as were many young educated Chinese during Mao Zedong’s 1966-76 Cultural Revolution.

While labouring in the poor northern province of Shaanxi, Mr Xi joined the Com-munist Party and in 1975 moved to Beijing to study at the prestigious Tsinghua Uni-versity. He oversaw some of China’s most

economically dynamic and reform-minded areas, the eastern provinces of Fujian and Zhejiang, before briefl y taking the top post in the commercial hub of Shanghai in 2007 – earning a reputation as a supporter of economic reforms and an effective manager.

He created a stir during a 2009 speech in Mexico by scoffi ng at “for-eigners with full bellies and nothing to do but criticise our affairs”, but he has unusually deep U.S. links for a Chinese leader. As part of a research trip in 1985 he spent time in Muscatine, Iowa, deep in the Midwest, and paid his host family a return visit in February while on an offi cial visit to the United States, where his daughter is a student at Harvard.

His extended family have business interests worth hundreds of millions of dollars, according to an investigation by the Bloomberg news agency earlier this year, which said there was no indication of wrongdoing on his or their part.

Mr Xi’s public persona is given a sprinkle of glamour by his wife Peng Liyuan, who holds the rank of army general and sings songs praising the party.

of other political leaders. “Our responsi-bility now is to rally ... in making contin-ued efforts to achieve the great renewal of the Chinese nation,” he added.

But Mr Xi takes command of the world’s number two economy at a dif-fi cult time, with calls to revolutionise a growth model that is too reliant on ex-

ports, and demands for transparency growing louder in the Internet era.

More conservativeWhile Mr Xi’s sentiments and style were generally well received, analysts said that the lack of fi gures with reform cre-dentials on the new Politburo Standing

AFP

37

DECEMBER 2012

THE AFFABLE FUTURE PREMIERLi Keqiang stepped up to number two

in China’s Communist hierarchy last month, but despite his seniority and af-fable manner he may struggle to exert real power as the country’s next premier. Vice Premier Mr Li is expected to take over as premier from his boss Wen Jiabao in March, holding the reins of day-to-day government in the world’s second-largest economy.

His rise is said to have been bro-kered by President Hu Jintao as part of a behind-the-scenes deal to bolster the in-fl uence of the Communist Youth League, where both men made their name. But despite his high rank on the Politburo Standing Committee, analysts say Mr Li does not have a power base of his own – and risks being isolated.

A bureaucrat who speaks fl uent English, Mr Li, 57, has an easy smile and a more youthful bearing than his stiff party peers. He has sought to nurture a reputa-tion as a careful administrator and has voiced support for the kind of economic reforms many experts say China sorely needs.

As party boss in Henan province, Mr Li took fl ak for the handling of an HIV/

AIDS epidemic stemming from a tainted government-backed blood donation pro-gramme. Entire villages were infected, but his provincial government responded with a clampdown on activists. At the na-tional level, a stream of health scandals have also happened on his watch.

There are parallels with Mr Li’s cur-rent superior Mr Wen, who also strug-gled to force through policies as he bat-

tled with factions in the upper reaches of the party and offi cialdom in the provinces and ministries, say analysts. Similarly, Mr Wen cultivated an image as the friendly face of the Communist Party, voicing qualifi ed support for political reform, comforting disaster victims and condemning corruption.

Mr Li, a native of eastern China’s poor Anhui province, worked as a man-ual labourer before gained a law degree from Peking University and a doctorate in rural economics, then rose through the ranks of the Youth League. He became the party leader in Henan, in central China, and Liaoning province in the northeast, both of which prospered under him, before being promoted to Mr Wen’s deputy.

As China’s second most important decision-maker on the economy, Mr Li has been praised for helping to steer the country through the global fi nancial cri-sis relatively unscathed. But a top prior-ity for him will be to boost the country’s economic growth, which is currently export-led and sagging because of weak demand for manufactured goods in Europe and the United States.

NEXT LEADERSHIP CLUES ALREADY ON SHOW

Committee took some of the shine off the rhetoric.

“The consensus is that the compo-sition of the standing committee ini-tially appears more conservative than was hoped for,” says Andrew Polk from the Conference Board China Centre for Economics and Business. He adds that

the failure of Wang Yang – seen as a leading reform fi gure from Guangdong province – to win promotion was “par-ticularly disappointing”.

Mr Xi, who is due to be formally appointed president in March, takes control with signifi cant authority after promptly taking charge of the military

also last month, unlike previous transi-tions that were more staggered. Howev-er, he is seen as a compromise candidate who must balance pressures from com-peting factions in the consensus-based world of Chinese politics.

Steve Tsang, professor of contem-porary Chinese studies at the University

Even as Xi Jinping was unveiled as China’s new leader, clues on who

will take over from him a decade down the line in the long-planned Communist succession system were already being revealed. Analysts say the front-runners for 2022 are Hu Chunhua, a literature graduate who cracked down on protestors in Tibet, and Sun Zhengcai, who spent time as an agricultural researcher in the British countryside.

The two men, both 49, were named to the all-powerful 25-strong Politburo, the nation’s second most powerful committee, after last month’s pivotal Communist Party congress. Many

believe they are now headed, in fi ve years’ time, for the inner circle of Chinese politics, the seven-member Politburo Standing Committee, which Mr Xi is expected to lead for the next decade. Mr Xi’s own ascension had been expected since 2007, when he was given a position on the standing committee.

Aside from Mr Xi and number-two Li Keqiang, the Politburo Standing Committee’s other members will have to step aside at the next congress in 2017 after they reach retirement age, clearing the way for the next generation to step up.

AFP

DECEMBER 2012


of Nottingham, says it is unclear wheth-er Mr Xi’s emergence as a consensus choice will ultimately constrain or bol-ster reform.

“Perhaps it means he can persuade more to follow him,” Mr Tsang says. “But this takes time and means continu-ous compromise and horse-trading.”

Mark Williams, chief Asia econo-mist for Capital Economics, says that “success is not certain” for a power grouping which may not be able to agree on the pace and focus of reforms, and overcome any opposition.

“Disagreement remains on the role the state should play in the economy and on how quickly China needs to change. Vested interests stand in the way,” he says.

Political infi ghtingAfter a decade-long economic mira-cle that has lifted hundreds of millions out of poverty, China’s expansion has slowed and there is wide agreement it must move away from a high-growth model relying on sales to overseas mar-kets fuelled by cheap labour. However, the revamp could have serious human costs in terms of job losses, which could in turn fuel social unrest – outcomes

which would undermine the party’s claim to legitimacy.

In a farewell speech to the party last month, Mr Xi’s predecessor, Presi-dent Hu Jintao, called for more focus on private enterprise and consumer de-mand. But in a sign of the diffi culties in achieving that goal, he also emphasised the seemingly contradictory need for a continued strong role for the state and said China should make its exports more competitive.

Political infi ghting for infl uence within the upper echelons of the party could also be a distraction for reform efforts. Even though Mr Xi has barely begun his decade-long tenure, there is already speculation over his eventual successor, who will likely be known in 2017.

“The new group must fairly soon deal with who is to be anointed, raising the possibility that the next fi ve years will see more political jockeying than serious policy initiatives,” Derek Scis-sors and Dean Cheng of the Heritage Foundation said in a report. “For those expecting major policy initiatives, and certainly those hoping for economic or political liberalisation, it is likely to be a frustrating period.” * AFP

Xi Jinping takes command of the world’s number two economy at a diffi cult time, with calls to revolutionise a growth model that is too reliant on exports, and demands for transparency growing louder in the Internet era

DECEMBER 2012

38

DECEMBER 2012

China’s growth challenge

Throughout last month’s 18th Congress of the Chinese Communist Party, ubiquitous television screens in trains and metro stations broadcast a live feed of the Chinese

assembly. Beijing’s busy people, however, seemed not to pay close attention: for them, it was business as usual.

The Chinese public’s indifference to the country’s ceremonial transition of power is hardly surprising. All critical decisions were taken well ahead of the congress, behind closed doors, with very little input from outsiders. This apparently seamless transition, however, is widely expected to usher in a complex and potentially diffi cult decade for China – and for the rest of the world.

China is at a turning point. With more than 100 million people still below the offi cial poverty line and per capita income currently just over US$6,000 (MOP48,000) in nominal terms, robust economic growth must be maintained. Outgoing President Hu Jintao indicated that China’s total gross domestic product and per capita income should double by 2020, which will require 7.5 percent average annual growth. Is this feasible?

Recent improvements in data for industrial production, fi xed investment and retail sales suggest that the Chinese economy, which had slowed in recent quarters, may already be on the mend. But the authorities remain cautious, given that China’s economic outlook depends heavily on uncertain external conditions. However, as things stand, most independent economists expect 7 percent to 7.5 percent annual GDP growth in 2013-2017, while the International Monetary Fund forecasts a more optimistic 8.2 percent to 8.5 percent rate during this period.

Shifting paradigmAs we heard repeatedly during the congress, China’s leadership reckons that its biggest policy challenge in the coming years will be the shift from export-led growth to an economic model based more fi rmly on domestic consumption. This has now become a matter of urgency, as the United States and Europe are unlikely to provide much support to Chinese exports.

Indeed, China is now expected to undershoot its 10 percent growth target for trade in 2012, even though exports to emerging-market economies were up by more than that in the fi rst nine months of the year.

Income growth and a lower household savings rate are essential to the shift in China’s growth model, and each presupposes key reforms. For example, improving the provision of healthcare, education and care for the elderly, and bringing it into line with the needs and expectations of the emerging middle class should encourage more households to allocate a larger share of their income to consumption.

At the same time, as China proceeds along the path toward a market-based economy established more than 30 years ago by Deng Xiaoping, policymaking has become more complex. The economy needs to be steered in the desired direction without triggering instability, making correct sequencing and coordination of policy measures essential. As some Chinese colleagues told me, the success of reforms in the next decade will depend more than ever on good design.

Greater fairness neededIn particular, the new leadership will have to attend to the linkages between the real economy and the expanding fi nancial sector as it overhauls state-owned companies and liberalises the banks. From commodities to fi nancial assets, price formation should become more market-based and transparent, while capital allocation should become more effi cient and the scope for rent seeking and corruption should be reduced. Moreover, as the renminbi’s internationalisation continues at a steady pace, domestic liberalisation should occur in tandem with deeper global integration.

In the coming years, the key issue, refl ected in Mr Hu’s congress-opening speech, will be the relationship between the state and the market. But reforms will continue to be top-down and gradual, especially in the fi nancial sector, where most efforts will be concentrated in the next decade.

Many Chinese seem to believe that market discipline will bring fair competition and contribute to closing the widening gap between rich and poor. China’s income distribution has become highly skewed: at 0.438, the Gini coeffi cient, which measures income inequality, puts the country closer to the United States than to northern Europe’s egalitarian societies (with the exception of the United Kingdom). And the unjust allocation of resources, which has enriched so many politically well-connected individuals and families, has become more diffi cult to bear.

A key question for the next decade, therefore, is whether the Chinese authorities’ growth targets will be enough to preserve social cohesion as further economic and political reforms are gradually implemented. As the economic pie grows less rapidly, greater fairness will be crucial to social stability. This much seems clear to the new leadership. Whether they will be able to engineer the necessary institutional shifts remains to be seen.

PAOLA SUBACCHI RESEARCH DIRECTOR OF INTERNATIONAL ECONOMICS AT THINK TANK CHATHAM HOUSE

A KEY QUESTION FOR THE NEXT DECADE IS WHETHER THE CHINESE AUTHORITIES’ GROWTH TARGETS WILL BE ENOUGH TO PRESERVE SOCIAL COHESION

39

China is at a turning point. With more than 100 million people still below the offi cial poverty line and per capita income currently just over US$6,000 (MOP48,000) in nominal terms, robust economic growth must be maintained

40

DECEMBER 2012


The new leadership in Beijing is expected to have little impact on Macau’s gaming industry, ac-

cording to several analysts. The end of the transition period to Xi Jinping and his team could actually stimulate growth in the stagnant VIP segment.

“It is generally assumed that there will be little, if any impact on the Macau gaming industry with the recent change in leadership,” Gaming Market Advisors

principal Andrew Klebanow says.“As for what the new leadership

can do differently, the easing of visa restrictions, allowing visitors from the mainland to visit more frequently, would be ideal. However, it is unlikely that will change in the near term. What casino operators really seek is stabil-ity and the absence of uncertainty,” Mr Klebanow says.

Macau and Hong Kong affairs are

currently part of Mr Xi’s portfolio as vice president of the People’s Republic of China. He is due to be formally ap-pointed president in March, after be-coming China’s new Communist Party boss last month.

“If nothing else, I expect the new leadership will keep the status quo: maintain access to Macau, no gaming in other parts of China, no new entrants into the market,” Union Gaming Re-search Macau managing partner Grant Govertsen says. “I don’t see any down-side,” he adds.

“On the upside, they could liberal-ise access. They already allow migrant workers to apply for access to Macau from their new [host] cities. It’s all going to be gradual but positive,” according to Mr Govertsen.

In the near term, there should be some uptick in VIP gaming revenue, he forecasts. “Some VIP customers have cut back. Nobody wanted to stick their heads out in a way that could get them into trou-ble [ahead of the leadership transition].

BEIJING’S LEADERSHIP CHANGE IS UNLIKELY TO HURT CASINO INDUSTRY, ANALYSTS SAY

GOOD NEWS FOR MACAUBY MUHAMMAD COHEN

Xi Jinping during a 2009 visit to Macau

DECEMBER 2012

You can’t measure it, though.”Tony Tong, director of investment

for Tak Chun Finance Ltd, part of the Macau VIP room operator Tak Chun Group, has a similar opinion. “People are optimistic that the new government will ease up liquidity and ease up indi-vidual travel,” he says.

Positive prospects“There’s been a lot of caution, but people kind of know what they’re getting now,” China Market Research Group associate principal Ben Cavender says. The focus on corruption highlighted at last month’s Communist Party conference may con-tinue to dampen VIP revenue, but other mainland trends will benefi t Macau.

“China’s economy can’t be export-driven anymore, so it needs more con-sumers spending more,” Mr Cavender notes. “Some consumers will spend in Macau.”

U.S.-based brokerage fi rm Sterne Agee says China’s “orderly” transition of power is positive for Macau. “Barring

signifi cant economic disruption, we do not expect major fi scal adjustments such as substantial monetary easing or stimu-lus in China, though there is still the po-tential for small policy easing to ensure its gross domestic product ‘recovery’,” analyst David Bain wrote in a note.

“The structural transformation of China will continue in the coming years,” Jorge Godinho of the University of Macau Faculty of Law agrees, “espe-cially the move from rural to urban ar-eas, the increase in affl uence and more fl ows of Chinese tourists to Hong Kong, Macau and overseas.”

Luis Melo, a partner at Macau law fi rm MdME, expects little impact from China’s new leadership and cautions against rosy scenarios about the growth of mainland tourist numbers. “The thing you have to ask is whether Macau has the infrastructure to cope with more visitors.”

Analysts were speaking on the side-lines of last month’s Asian Gaming and Hospitality Congress at Galaxy Macau.

“If nothing else, I expect the new leadership will keep the status quo: maintain access to Macau, no gaming in other parts of China, no new entrants into the market,” Union Gaming Research Macau managing partner Grant Govertsen says. “I don’t see any downside,” he adds

41

42

DECEMBER 2012


Xi Jinping’s Singapore lessons

China is at a crucial point today, as it was in 1978, when the market reforms launched by Deng Xiaoping opened its economy to the world – and as it was again in the early

1990s, when Mr Deng’s famous “southern tour” reaffi rmed the country’s development path.

Throughout this time, examples and lessons from other countries have been important. Mr Deng was reportedly substantially infl uenced by an early visit to Singapore, where accelerated growth and prosperity had come decades earlier. Understanding other developing countries’ successes and shortcomings has been – and remains – an important part of China’s approach to formulating its growth strategy.

Like Singapore, Japan and South Korea in their fi rst few decades of modern growth, China has been ruled by a single party. Singapore’s People’s Action Party remains dominant, though that appears to be changing. The others evolved into multi-party democracies during the middle-income transition. China, too, has now reached this critical last leg of the long march to advanced-country status in terms of economic structure and income levels.

Singapore should continue to be a role model for China, despite its smaller size. The success of both countries refl ects many contributing factors, including a skilled and educated group of policymakers supplied by a meritocratic selection system, and a pragmatic, disciplined, experimental and forward-looking approach to policy.

The challenge of corruptionThe other key lesson from Singapore is that single-party rule has retained popular legitimacy by delivering inclusive growth and equality of opportunity in a multi-ethnic society, and by eliminating corruption of all kinds, including cronyism and excessive infl uence for vested interests. What Singapore’s founder, Lee Kwan Yew, and his colleagues and successors understood is that the combination of single-party rule and corruption is toxic. If you want the benefi ts of the former, you cannot allow the latter.

Coherence, long time horizons, appropriate incentives, strong “navigational” skills and decisiveness are desirable aspects of continuity in governance, especially in a meritocratic system managing complex structural shifts. To protect that and maintain public support for the investments and policies that sustain growth, Singapore needed to prevent corruption from gaining a foothold and to establish consistency in the application of rules. Mr Lee did that, with the People’s Action Party supplying what a full formal system of public accountability would have provided.

China, too, most likely wants to retain, at least for a while, the benefi ts of single-party rule, and delay the transition to “messier” governance infl uenced by multiple voices. In fact, a pluralistic system is already evolving under the umbrella of the Chinese Communist Party – a process that may eventually lead to citizens gaining an institutionalized voice in public policy.

For now, however, those representative elements that have been added incrementally are not powerful enough to overcome the growing corruption and excessive infl uence of vested interests. To maintain single-party legitimacy – and thus the ability to govern – those narrower interests must be overridden in favour of the general interest. That is the challenge that China’s new leadership faces.

Progressive agendaIf China’s leaders succeed, they can then have a sensible and nuanced debate about the evolving role of the state in their economy, a debate on the merits. Many insiders and external advisers believe that the state’s role must change (not necessarily decline) to create the dynamic innovative economy that is key to navigating the middle-income transition successfully. But there remain many areas in which further debate and choice are needed.

Mr Lee in Singapore and Mao Zedong and Mr Deng in China gained their peoples’ trust as founders and initial reformers. But that trust dissipates; succeeding generations of leaders do not inherit it completely and must earn it. That is all the more reason for them to heed the lessons of history.

China’s new leaders should fi rst reassert the Party’s role as defender of the general interest by creating an environment in which narrow interests, seeking to protect their growing infl uence and wealth, do not taint complex policy choices. They must demonstrate that the Party’s power, legitimacy and substantial assets are held in trust for the benefi t of all Chinese, above all by fostering a pattern of inclusive growth and a system of equal opportunity with a meritocratic foundation. And then they should return to the task of governing in a complex domestic and global environment.

There are times when muddling through – or, in the Chinese version, crossing the river by feeling the stones – is the right governing strategy, and there are times when a bold resetting of values and direction is required. Successful leaders know what time it is.

Feeling the stones may seem like the safest option for China’s next president, Xi Jinping, and China’s other new leaders; in fact, it is the most dangerous. The only safe option is a radical realignment of the Party with the general interest.

The issue, then, is whether the reformers who carry the real spirit of the 1949 revolution will win the battle for equitable and inclusive growth. The optimistic (and I believe realistic) view is that the Chinese people, through a variety of channels, including social media, will weigh in, empowering reformers to push through a progressive agenda.

Time will tell. But it is hard to overstate the outcome’s importance to the rest of the world. Virtually all developing countries – and, increasingly, the advanced countries as well – will be affected one way or another as they, too, struggle to achieve stable and sustainable growth and employment patterns.

MICHAEL SPENCE NOBEL LAUREATE IN ECONOMICS AND PROFESSOR OF ECONOMICS, NEW YORK UNIVERSITY

FEELING THE STONES MAY SEEM LIKE THE SAFEST OPTION FOR CHINA’S NEXT PRESIDENT, XI JINPING; IN FACT, IT IS THE MOST DANGEROUS

43

DECEMBER 2012

44

DECEMBER 2012

44 Property

DEEP FREEZE

The revamped housing policy seems to have scared off homebuyers without making a dent in sky-high pricesBY ALEXANDRA LAGES

45

DECEMBER 2012

Winter has descended on the red-hot housing market. The period between Christmas and the Lunar New Year is usually the slowest season for home-buying, and this

year it looks like it will be glacial.In less than two months, the government’s latest restrictions

on the property market have reduced sales of residential and com-mercial property. Estate agents hope the market will rebound in the middle of next year, but do not expect the number of homes sold this year to exceed 17,000 as it did in 2010 and last year.

Centaline (Macau) Property Agency Ltd sales director Noe-lle Cheung says the market has “slowed down a lot” since the government’s new curbs came into effect in October. The number of homes sold is 80 percent lower now than it was before, Ms Cheung told Macau Business. The number of prospective buyers asking to view homes has plunged by 60 percent.

Ricacorp (Macau) Properties Ltd executive director Jane Liu says the curbs have reduced sales considerably – particularly sales of homes costing more than MOP8 million (US$1 million).

45

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: Lu

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46

DECEMBER 2012

“The second-hand market dropped by 50 percent. In the market for new hous-ing, sales fell by up to 40 percent, partly because there are not many units avail-able,” Ms Liu says.

The government tightened the re-strictions on mortgage lending, reduc-ing the amounts residents are allowed to borrow from the bank to buy upmar-ket homes. The buyer of a home worth more than MOP8 million can now bor-row a maximum of only 50 percent of that sum.

Rush to buyThe government reduced by even more the amounts non-residents are allowed to borrow to buy homes of any kind. Non-residents and corporations must now also pay stamp duty of 10 percent on purchases of residential property.

Estate agents say the tighter restric-tions on mortgage lending have made would-be investors in property hesitate. “The buyers don’t have enough cash to support the down payment and are looking for the prices to go down,” says Ms Cheung.

But prices have not gone down. They have risen by up to 3 percent since the government announced its new curbs, she says.

In its latest property market review,

Midland Realty (Macau) Ltd says its own data indicates that the number of sales dropped by 40 percent after the curbs came into force, but that prices increased by between 3 percent and 5 percent.

Many would-be buyers used the two weeks between the announcement of the curbs and their coming into effect to plunge into the market. This meant the number of homes sold in October was almost 1,900, 55 percent more than in September. Many were high-end homes, so the average price per square metre rose in October to a record MOP72,770 (US$9,096), MOP10,000 more than in September.

Offi cial data shows that in the fi rst nine months of this year non-residents bought about 9 percent of all homes sold, or nearly 120 a month on average. Ms Liu says the extra stamp duty has scared away non-residents. “Transac-tions for non-residents dropped by 99 percent,” she says.

Reluctance to sellThe government’s new curbs on the property market also include the ex-pansion of the special stamp duty, in-troduced in June last year for sales of housing, to cover commercial and offi ce premises and parking spaces.

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“The buyers don’t have enough cash to support the down payment and are looking for the prices to go down,” says Centaline (Macau) Property Agency Ltd sales director Noelle Cheung

Property

47

DECEMBER 2012

Sellers now have to pay a levy of 20 percent of the price if they sell property within a year of buying it, and a levy of 10 percent if they sell property within two years of buying it.

Jones Lang LaSalle’s managing di-rector in Macau, Gregory Ku, says this has meant a “huge” fall in sales of com-mercial property. “The market is very quiet. Most of the potential buyers are expecting transactions to drop and push prices down on the way,” he says.

Mr Ku forecasts that sales of com-mercial premises will decrease by 50 percent in the next six months. He pre-dicts that prices will also fall by at least 20 percent.

“Transactions have dropped by 30 percent in the commercial segment. Most owners don’t want to sell because of the stamp duty,” says Ms Liu.

Sole optionEstate agents are unsure whether the market will rebound any time soon. Ms Cheung says the government im-posed its new curbs only recently. She says a clearer picture of their effect will emerge only in the months after the Lu-nar New Year.

LAND GRANT REFORM LOOMS

Ms Cheung says the new limits on mortgage lending make a big difference. “People cannot afford 20 percent to 40 percent down payments,” she says.

Ms Liu forecasts a home sales re-bound will depend on the global econ-omy in the second half of next year. But she predicts no drop in prices, even if sales continue to drop.

Mr Ku is more optimistic. He be-

lieves the market will have adapted to the new curbs by the second half of next year.

In the meantime, the way to make money out of property is to let it. Ms Liu expects rents to continue rising as demand increases, especially demand from non-residents. “As things are, it is harder to buy a house. Everyone can only rent now,” she says.

The bill amending the 32-year-old law on land grants is ready. The Legisla-

tive Assembly is set to start discussing it this month.

The bill, fi ve years in the making, spells out more clearly when the gov-ernment would have to call for tenders for plots of land. It would change the way land premiums are calculated, and heavily punish squatting on public land.

The bill would allow the government to grant land without a public tender process only if the land is for civil serv-ice housing or for projects that are in the public interest. If there is no public tender process, the government would have to make the details of the project

public before it made the grant.The new way of calculating land

premiums would take into account infl ation and the prices of previous land grants, to “better refl ect the market price”, according to the government.

Land grants would no longer be renewed automatically if the land granted is not developed. But the chief executive would be allowed to authorise a 10-year extension of a grant. Develop-ers that fail to develop land granted to them would be liable to pay a fi ne of up to MOP15 million (US$1.9 million).

The bill would increase the maxi-mum fi ne for illegal occupation of public land to MOP3 million.

48 Property

The head of the Policy Research Offi ce, Lao Pun Lap, is in favour of a 40-percent ceiling on how much of a household’s income should go towards the housing mortgage monthly payments.In Macau, the maximum limit for the debt-servicing rate is currently set at 50 percent.The Policy Research Offi ce is a government-sponsored think tank.In an article made available by

STRONG RENTAL GROWTHFOR THE WATERSIDERental growth at The Waterside luxury residential complex remains strong, according to owner Macau Property Opportunities Fund. “Latest effective rents achieved for standard and special units increased 17 percent and 9 percent year-on-year respectively, with average net yields standing at 2.4 percent per square foot,” the fund said in a press release. Occupancy currently stands at 84 percent. The Waterside is a 59�apartment, for lease-only, tower located in One Central. Sniper Capital Ltd manages the Macau Property Opportunities Fund.

TWO IN EVERY FIVE HOMESCOST MOP4 MILLION OR MORETwo in every fi ve residential transactions in Macau have a price tag of MOP4 million (US$500,000) or above, data from the Financial Services Bureau shows. In September, over 490 home transactions at MOP4 million or above were recorded here, representing 39.2 percent of the total. From January to September, residential transactions valued MOP4 million or above accounted for 38.4 percent of the total.

LOWER CEILING FOR MORTGAGE PAYMENTS PROPOSED

GAW CAPITAL SECURES LOANFOR LUXURY HOUSING PROJECTHong Kong property investment company Gaw Capital Partners secured a syndicated loan of HK$2.1 billion (US$270.9 million) to build high-end housing adjacent to the Macau Jockey Club. The agreement was signed last month with the Industrial and Commercial Bank of China (Macau) Ltd and four other large banks from Hong Kong and Macau, our sister publication Business Daily reported. The fi rm aims to create a small, low-density residential zone, comprising detached and terraced houses and a high-end clubhouse. The project is still to get government approval.

the Government Information Bureau, Mr Lao warns that the current low interest rate environment may reverse after 2015. That, associated with other risks, may push mortgage monthly payments up in the long term, he wrote.Mr Lao argues that a 40-percent cap still provides leeway to families in case of an upward revision of mortgage monthly payments.

Government think tank is in favour of a 40-percent cap on the maximum debt-servicing ratio

DECEMBER 2012

49Property | Market Watch

Source: DSEC

Source: DSEC

(MOP)

(MOP)

2011 2012

AVERAGE TRANSACTION PRICE PER SQUARE METRE OF RESIDENTIAL UNITS BY DISTRICT AS PER STAMP DUTY RECORDS

AVERAGE TRANSACTION PRICE PER SQUARE METRE OF OFFICE UNITS BY MAIN DISTRICT AS PER STAMP DUTY RECORDS

Notes:1. The above information covers building units with stamp duty paid in the reference quarter2. Including residential units that were exempt from the payment of stamp duty~ No fi gure provided/confi dential data

Notes:Only covers offi ce buildings with ten storeys or higher~ No fi gure provided/confi dential data

District

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Macau 27,078 27,700 36,618 34,011 38,404 40,362 47,767 49,245

ZAPE 32,046 27,393 35,277 23,937 34,674 39,520 39,598 37,774

NAPE and Praia Grande Bay reclamation area 27,802 30,819 37,909 35,200 39,068 41,283 50,784 52,760

Downtown Macau 25,801 ~ 32,506 32,004 37,662 36,006 47,413 43,730

Praia Grande and Penha ~ 19,649 31,391 35,023 37,549 44,969 ~ 40,164

District

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Macau 33,397 38,261 44,269 36,345 41,519 45,453 55,427 58,305

Macau Peninsula 29,664 37,159 42,296 35,416 39,228 41,266 47,461 51,662

Ilha Verde 27,365 40,402 44,075 37,154 34,363 39,520 53,011 47,599

Tamagnini Barbosa 27,819 26,959 34,159 31,614 30,563 30,276 40,011 42,983

Areia Preta and Iao Hon 22,519 28,581 32,586 31,455 32,246 34,454 40,951 41,740

Areia Preta new reclamation zone (NATAP) 32,314 43,266 51,255 43,308 45,984 47,446 52,276 67,636

Móng Há and Reservoir 26,495 30,706 33,789 32,225 36,135 35,428 39,438 41,253

Fai Chi Kei 24,072 28,762 37,637 35,682 33,401 37,690 45,077 46,402

Lamau Docks 4,437 36,867 35,081 39,655 38,787 46,543 60,767 58,544

Horta e Costa and Ouvidor Arriaga 29,111 32,437 32,889 34,592 38,461 35,943 48,889 48,433

Barca 21,853 25,714 30,370 27,438 27,574 29,132 35,055 39,387

Patane and São Paulo 21,387 23,271 27,901 28,945 29,676 28,885 31,064 38,919

Conselheiro Ferreira de Almeida 23,371 27,004 30,460 29,030 33,714 29,877 39,443 37,162

Guia 27,565 26,267 54,703 38,596 57,699 59,312 56,944 52,187

ZAPE 24,399 28,915 30,228 30,410 31,196 32,537 36,957 37,479

NAPE and Praia Grande Bay reclamation area 51,835 67,891 76,634 60,393 61,126 63,534 76,876 79,246

Downtown Macau 20,742 27,878 27,862 29,745 28,197 30,503 35,733 40,881

Barra / Manduco 27,491 30,973 36,663 30,180 32,085 30,292 39,231 40,100

Praia Grande and Penha 37,988 35,151 34,709 36,672 32,470 37,189 41,408 48,245

Taipa 39,876 33,402 42,457 38,162 45,057 48,107 66,804 67,579

Ocean Gardens and Taipa Pequena 28,837 35,102 45,435 36,629 36,115 41,319 42,510 48,183

Downtown Taipa 41,527 31,750 38,869 36,733 45,243 45,305 57,363 68,036

University and Pac On Bay 22,054 26,991 34,566 37,502 41,668 37,899 41,044 43,071

Pac On and Taipa Grande 56,702 82,688 73,898 68,090 66,910 83,346 103,267 91,129

City and Jockey Club 27,596 27,346 28,948 27,588 35,360 36,659 42,552 46,549

Coloane 64,398 67,484 70,098 61,893 64,063 83,173 78,197 81,928

2010

2011 20122010

DECEMBER 2012

50 Property | Market Watch

Note: L/F - Low fl oor; M/F - Middle fl oor; H/F - High fl oor

District Property Price per sq.ft. (HK$)Sale price (HK$)Floor area (sq. ft) Unit

Type Property Price per sq.ft. (HK$)Rent price (HK$)Floor area (sq. ft) Unit

Source: Midland Realty (Macau) Ltd

Note: L/F - Low fl oor; M/F - Middle fl oor; H/F - High fl oor

Notable residential property rentals - 01/11 to 30/11, 2012

Macau One Central Block 4, M/F, unit B 2,588 50,000 19.32

Macau L’Arc H/F, unit C 3,557 48,000 13.49

Macau L’Arc H/F, unit E 2,243 40,000 17.83

Taipa One Grantai Block 5, M/F, unit S 3,041 35,000 11.51

Taipa Nova City Block 9, L/F, unit D 2,503 22,000 8.79

Macau Lake View Tower M/F, unit D 1,443 20,000 13.86

Macau Lake View Tower M/F, unit D 1,497 20,000 13.36

Taipa Nova Taipa Block 25, M/F, unit D 1,880 18,000 9.57

Macau One Central Block 1, M/F, unit D 654 17,000 25.99

Taipa The Buckingham L/F, unit D 1,080 14,500 13.43

Taipa Nova City Block 8, L/F, unit E 1,314 13,500 10.27

Taipa Nova City Block 4, L/F, unit D 1,049 12,000 11.44

Taipa Hung Fat Garden Block 2, L/F, unit O 1,180 9,800 8.31

Macau The Praia Block 1, M/F, unit E 1,239 9,500 7.67

Taipa Hoi Yee Garden Block 2, L/F, unit M 1,050 7,500 7.14

Notable residential property transactions - 01/11 to 30/11, 2012

Macau The Paragon M/F, unit E 2,178 24,841,000 11,405

Macau The Paragon M/F, unit G 1,241 12,359,000 9,959

Macau One Central Block 7, H/F, unit H 1,176 11,300,250 9,609

Macau The Paragon M/F, unit I 1,154 10,632,000 9,213

Taipa Nova Taipa Block 11, L/F, unit C 1,971 9,700,000 4,921

Macau Pearl Horizon Block 5, H/F, unit A 1,853 9,588,000 5,174

Macau Pearl Horizon Block 13, H/F, unit D 1,302 8,957,000 6,879



Macau Pearl Horizon Block 13, M/F, unit D 1,302 8,497,000 6,526

Coloane One Oasis Cotai South Block 8, L/F, unit D 1,782 8,464,500 4,750

Macau Pearl Horizon Block 13, M/F, unit D 1,302 8,457,000 6,495

Macau La Baie Du Noble Block 1, M/F, unit A 1,650 8,450,000 5,121

Macau Pearl Horizon Block 5, H/F, unit B 1,462 8,433,000 5,768


Macau The Paragon M/F, unit H 880 8,196,000 9,314

Macau Pearl Horizon Block 5, H/F, unit B 1,099 7,717,000 7,022

Macau Pearl Horizon Block 7, H/F, unit E 1,141 7,700,000 6,748



Macau Pearl Horizon Block 13, L/F, unit G 1,183 7,378,000 6,237

Macau Pearl Horizon Block 13, H/F, unit F 952 6,816,000 7,160





Macau Pearl Horizon Block 13, M/F, unit E 938 6,416,000 6,840

Macau Pearl Horizon Block 13, M/F, unit F 952 6,331,000 6,650

Macau Magnifi cent Court Block 3, L/F, unit P 1,450 6,100,000 4,207

Macau Pearl Horizon Block 13, L/F, unit E 938 6,056,000 6,456

Macau One Central Block 1, M/F, unit D 654 5,960,000 9,113

Macau Villa de Mer Block 4, M/F, unit G 829 5,460,000 6,586

Macau Pearl Horizon Block 13, H/F, unit H 767 4,975,000 6,486

Macau Villa de Mer Block 4, H/F, unit F 821 4,800,000 5,847

Macau Pearl Horizon Block 13, L/F, unit H 767 4,585,000 5,978

Taipa Hung Fat Garden L/F, unit S 1,170 4,540,000 3,880

Macau Edf. U Wa Block 13, L/F, unit B 859 3,532,900 4,113

Macau Edf. U Wa Block 13, L/F, unit C 816 3,273,200 4,011

Source: Midland Realty (Macau) Ltd

DECEMBER 2012

51

Building units completed

- Residential

- Commercial and offi ces

- Industrial and others

Building units started

- Residential



Macau

- Macau Peninsula

- Taipa

- Coloane

Under MOP1 million

MOP1 million to MOP1.9 million



MOP4 million or above

Total units transacted

- Residential

- New building

- Old building

Resident buyers (as percentage of total buyers)


Resident buyers (as percentage of total buyers)


Total value of total units transacted (2)

- Residential

- New building

- Old building



2,499

2,404

81

14

1,110

1,059

37

14

-69.4

-73.0

-45.9

67.6

148.2

162.9

8.9

100

21.6

32.9

1.4

6.4

-46.8

-13.4

4.7

15.6

62.5

-6.7

-4.5

26.8

-20.7

-1.8

13.7

-12.6

-17.5

34.4

28.1

41.0

5.4

93.0

10.9

-24.4

-17.5

-28.2

-8.2

3.9

-23.6

4.5

-40.8

5.4

-2.2

-11.9

22.7

35.5

--

131.8

197.2

-63.0

-72.0

-32.6

-32.5

-43.0

7.7

16.3

25.5

3.5

-4.0

-50.3

-34.0

-17.8

-0.1

9.0

Construction - private sector

Average transaction price of residential units (3)

Transaction price of residential units (1)

Transactions (1)

2011

2011

2011

2011







Month-on-month change (%)


Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Oct 2012

Oct 2012

Oct 2012

Oct 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

1,387

1,099

231

57

2,159

2,053

86

20

27,624

17,176

7,783

9,393

87.1

3,128

81.5

7,320

MOP76.3

MOP58.9

MOP41.4

MOP17.5

MOP12.7

MOP4.7

MOP45,027

MOP43,569

MOP41,501

MOP68,208

2,690

4,628

3,162

1,818

4,878

MOP72,770

MOP70,985

MOP75,406

MOP87,247

1,150

2,654

2,251

1,570

4,749

18,203

12,374

5,032

7,342

91.2

2,009

91.3

3,820

MOP69.7

MOP51.5

MOP33.3

MOP18.2

MOP13.1

MOP5.2

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

/m2

/m2

/m2

/m2

/m2

/m2

/m2

/m2

So

urce

: Sta

tistic

s an

d C

ensu

s S

ervi

ce a

nd F

inan

cial

Ser

vice

s B

urea

u

(1) The data covers transactions with stamp duty paid during the reporting period, including transactions exempted from stamp duty(2) Figures are rounded, therefore they may not add up exactly(3) The data covers transactions with stamp duty bill issued during the reporting period, including transactions exempted from stamp duty

percentage points

percentage points

percentage points

percentage points

Property Statistics

DECEMBER 2012

52

DECEMBER 2012

BY YUCI TAI

Waiting to take offSky Shuttle wants to open more mainland routes but is still waiting for airspace restrictions to be relaxed

The mainland restrictions on the use of low-altitude air-space are impacting the expansion plans of Sky Shuttle Helicopters Ltd. The sole operator of helicopter serv-

ices connecting Hong Kong, Macau and Shenzhen has been waiting for reforms but these have yet to come, says chief ex-ecutive Cheyenne Chan.

“We look forward to the opening up of the airspace, as soon as possible,” says Ms Chan. “[After that], we hope to be in a position to add more regular fl ights to more cities.”

The mainland air traffi c authorities have pledged to relax a ban on the use of low-altitude airspace across the country starting next year. A series of reforms will be carried out in the coming 10 years to create an independent airspace market,

Zhu Shicai, an offi cial with the state air traffi c control com-mission, said in August.

Since the Pearl River Delta airspace is divided into three different areas, with different jurisdictions, the development of helicopter services is made even harder. Ms Chan says talks between the Hong Kong and the mainland authorities to allow for more helicopter routes have dragged on for several years with few results.

Once low-altitude airspace restrictions in the mainland are relaxed, Sky Shuttle’s priority will be to set up a base at the Guangzhou airport. “We see it as something functional, which can allow passengers from all around the country to transfer to Hong Kong or Macau by helicopter,” Ms Chan says.

Pimp your copterMs Chan says relaxed airspace usage rules in the mainland will also open a new market niche for Sky Shuttle: servicing and maintenance of private helicopters.

“Once the mainland opens up its low-altitude airspace, we believe many Chinese millionaires will purchase their own private helicopter. But they might not have the resources to repair and maintain their aircrafts,” Ms Chan says.

“This means a big and yet sustainable business opportu-nity for us.”

She acknowledges the opening of the low-altitude airspace in the mainland will likely attract several competitors. But Ms Chan is confi dent that Sky Shuttle’s track record will give it a competitive advantage. According to her, the company has the highest daily fl ight frequency in the world and has never been involved in a fatal crash.

Transport52

53

DECEMBER 2012

Flights between Macau and Hong Kong decreased 6 per-cent year-on-year to around 12,500 for the fi rst 10 months of 2012, while those between Macau and the mainland were down by 5 percent to less than 2,850, Macau Customs Service fi gures show. Ms Chan says she is satisfi ed with the fi gures.

“In 2011, the passenger traffi c was relatively high thanks to the ideal weather conditions, with the ratio of fl yable days reaching 82 percent,” she says. “In 2012, the proportion of fl y-able days for the fi rst nine months stood at 75 percent.”

Ms Chan forecasts Sky Shuttle will transport around 86,000 passengers in 2012, a fi gure similar to 2010, but below last year’s 100,000-plus.

Sky Shuttle raised fares earlier this year to face increased operational costs but that has had little impact on passenger volume, Ms Chan says. A trip between Macau and Hong Kong costs MOP3,700, 28 percent more than one year ago, with a peak surcharge of MOP200.

High-end focusMs Chan is not worried that the Hong Kong-Macau-Zhu-hai bridge, to be completed in 2016, will hurt Sky Shuttle’s bottom line.

“As we focus on high-end leisure tourists and busi-ness travellers, we think that the upcoming Hong Kong-Macau-Zhuhai bridge and the high-speed-rail links in the mainland will only have a slight impact on the helicopter

“We look forward to the opening up of the airspace, as soon as possible,” says Sky Shuttle’s chief executive Cheyenne Chan

business. The ferry service will be more affected.”Ms Chan says Macau’s expanding economy has provided

Sky Shuttle with a steady stream of business customers travel-ling between Macau and Hong Kong. The company also co-operates with several hotels here to offer packages bundling transport and accommodation together.

Sky Shuttle is continuing to negotiate with the city’s of-fi cials about the government plans to relocate the company’s Coloane maintenance base. Offi cials fi rst told Sky Shuttle of their intention in 2006.

“The government has yet to come up with a new location and a compensation plan deemed suitable by both parties,” Ms Chan says. “For this reason, we hesitate to invest in the current premises. That not only hinders the company’s development, but also puts pressure on our operations.”

Sky Shuttle was launched in 2008 but has been operating since 1988, when it was established as East Asia Airlines Ltd. The service between Hong Kong and Macau commenced in 1990. The Shenzhen route was added in 2002.

The fi rm is owned by Chan Un-chan, the ‘third wife’ of casino magnate Stanley Ho Hung Sun.

The company has a fl eet composed of Agusta Westland AW139 helicopters with 12 seats. According to its website, Sky Shuttle currently operates 54 fl ights a day, with fl ights departing every 30 minutes between Macau and Hong Kong, and 12 fl ights a day between Macau and Shenzhen.

54

DECEMBER 2012 NOVEMBER 2012

54

SEPTEMBER 2012

December

Date: 4th – 6th

Event: Advanced Anti-Corruption Compliance StrategiesVenue: Ritz Carlton Beijing, Beijing, ChinaOrganiser: Beacon EventsAddress: 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong KongTel: (852) 2219 0111Fax: (852) 2219 0112Website: www.AntiCorruptionChinaBJ.comE-mail: [email protected]

Date: 7th – 9th

Event: 6th own Auto FairVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: Venetian Macao-Resort-HotelAddress: Estrada da Baía de N. Senhora da Esperança, s/n, Taipa, MacauTel: (853) 2882 8800Fax: (853) 2882 8880Website: www.venetianmacao.comE-mail: [email protected]

January

Date: 14th – 18th

Event: 15th World Federation of Tourist Guide Associations International ConventionVenue: Galaxy Macau, MacauOrganiser: Macau Tourist Guide AssociationAddress: No 20, Travessa dos Algibebes, MacauTel: (853) 2878 3134Fax: (853) 2836 7545Website: www.wftga2013.orgE-mail: [email protected]

Date: 29th

Event: Compliance XChange ForumVenue: Hong Kong Convention & Exhibition Centre, Hong KongOrganiser: Beacon EventsAddress: 0/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong KongTel: (852) 2219 0111Fax: (852) 2219 0112Website: www.ComplianceXChange-Forum.comE-mail: [email protected]

: A Macau Business partner event

February

Date: 5th – 7th

Event: ICE Totally Gaming 2013Venue: ExCel Centre, London, United KingdomOrganiser: Clarion EventsTel: (44) 020 7384 8121Website: www.icetotallygaming.comE-mail: [email protected]

March

Date: 12th – 14th

Event: iGaming Asia Congress 2013Venue: Grand Hyatt, MacauOrganiser: Beacon EventsAddress: 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong KongTel: (852) 2219 0111Fax: 852) 2219 0112Website: www.igamingasiacongress.comE-mail: [email protected]

Date: 12th – 14th

Event: Annual Corruption & Compliance Asia Summit 2013Venue: Andaz Shanghai, Shanghai, ChinaOrganiser: Beacon EventsAddress: 0/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong KongTel: (852) 2219 0111Fax: (852) 2219 0112Website: www.corruptionandcompliance-asia.comE-mail: [email protected]

Date: 21st – 23rd

Event: 2013 Macao International Environmental Co-operation Forum & ExhibitionVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: Macau GovernmentTel: (853) 8798 9675Fax: (853) 2872 3322Website: www.macaomiecf.comE-mail: [email protected]

Date: 29th – 31st

Event: 4th Macau International Real Estate FairVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: Macau Decheng International Media Co LtdTel: (853) 6288 3333Fax: (86) 756 511 3333Website: www.v-8.cnE-mail: [email protected]

If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: [email protected]. In the subject bar, type in “List me as an event”.

55

DECEMBER 2012

Challenging timesMacau faces a disenchanted middle class and fears that the city is losing its identity

56

DECEMBER 2012

At the age of 33, Noel Lam still lives with her parents, even though she is a well-established

human resources manager. She has been saving money to buy her own apartment, but the thriving real estate prices and soaring infl ation keep on impacting her plans.

“I try [to save money] but every-thing is so expensive and my savings are worth less and less.”

She feels her quality of life is dropping. “Prices are getting higher, specially dining out and clothing.”

Eric So, 34, says he is more for-tunate. The engineer already owns an apartment, where he lives with his wife, and his company factors in infl ation while reviewing salaries. But he also says his quality of life is going down.

“I’m not working in a casino,” he says. “My salary increases did not fully compensate for infl ation, and life is get-ting tougher.”

Ms Kam, a civil servant in her thir-

Caught in the middleThe post-handover boom has given Macau a burgeoning middle class. But rising infl ation is now putting it in distressBY ALEXANDRA LAGES

ties, says daily necessities are getting more expensive. She notes her purchas-ing power is not coping with infl ation. “The value of my bank deposits and my personal assets is also shrinking.”

She is currently paying a home mortgage loan, with the monthly instal-ments accounting for almost 30 percent of her salary. Due to the new mortgage rules introduced by the government in October, which increased the down payment for mid- and up-market apart-ments, she says it is now harder for her to move into a bigger home.

Hard to measureAfter the establishment of the Macau SAR, the ranks of the city’s middle class soared on the back of the 2002 gaming industry liberalisation. Bet-ter paid jobs and a booming economy favoured its expansion.

There are no offi cial estimates on the size of Macau’s middle class. The Policy Research Centre, a gov-

ernment-sponsored think tank, has recently proposed it should include all residents earning between MOP12,000 (US$1,500) and MOP78,000 a month.

As of September-end, the median wage in Macau stood at MOP11,700, up by 17 percent year-on-year, according to offi cial data. This is the highest it has ever been.

However, a signifi cant part of the middle class income increase has been dented by infl ation. Prices here rose by an average 6.39 percent in the 12 months ended September.

The dean of the University of Macau’s Faculty of Business Adminis-tration, Jacky So Yuk-Chow, has long urged the government to put forward measures to protect the middle class.

“Those people fi nd the government has so much money but only helps the less well-off. Infl ation, high housing prices and traffi c jams are common problems for the middle class,” he says.

Mr So says middle-class families

58

DECEMBER 2012

policy. But they “won’t help a number of professionals who earn around MOP12,000 and are paying rents that go up to MOP10,000”.

She stresses the government needs to draft policies on education, child and elderly care tailor-made for the middle class.

“Those people who earn up to MOP15,000 per month are not enjoying a good standard of living. We need to ensure there is enough room for them to climb up the wealth ladder and help them to improve their skills.”

Left wanting moreMr Lao says there is a growing discon-nect between middle class taxpayers and the government. “They don’t get special benefi ts or social welfare from the government, but need to pay taxes ... [while] they see the government getting wealthier and wealthier,” he says.

“Low-income groups can apply for public housing but the middle-class families cannot. Those households are facing diffi culties in getting a home due to rising property prices, but they don’t get any help from the government because their income stands above the [public housing] eligibility threshold,” Mr Lao adds.

Middle-class families are entitled to several government ‘sweeteners’ that are distributed to all residents. Those include the cash handout programme, the healthcare vouchers scheme and electricity subsidies. But Mr So says that is not what middle-class people are looking for.

“They can afford that. They look for mid- and long-term policies,” he says.

Housing and traffi c management are Noel Lam’s main concerns. “The government should control housing prices, just like in Singapore, and pay more attention to the city’s traffi c plan-ning,” she says. “I just want the govern-ment to use the money in the right way to improve the city’s quality of life, instead of only giving it away.”

Eric So agrees. He calls on offi cials to put more money into environmental protection, as he worries pollution here is “getting worse”.

Ms Kam urges the government to better monitor food imports and increase social welfare benefi ts. She is worried about wages keeping up with the cost of living and asks for measures to control real estate prices.

account for the biggest share of the population. He stresses any defi nition of middle class shouldn’t be too narrow or too broad; otherwise, it could harm the effectiveness of policies put forward based on it.

Some experts say the government should divide the middle class into dif-ferent segments. This would allow of-fi cials to implement selective measures for each group.

A home, a car and dreamsJoey Lao Chi Ngai, chairman of the Macao Association of Economic Sci-ences, says the middle class is very important for the overall society. He calls on the government to direct more resources to this group.

According to a 2011 study by his association, the city’s middle-class accounted for about 23 percent of the population. Mr Lao says this study defi ned middle class as being those households that owned one apartment, had their own car and that were able to afford going on vacations overseas once or twice a year.

“The middle class group is still increasing because the average salary in Macau is still going up,” he says.

Agnes Lam Iok Fong, chairwoman of the Macau Civic Power, an associa-tion that gathers middle class residents from several fi elds, says the number of degree holders and white-collar profes-sionals is increasing.

“The middle class is obviously

growing. It’s a good time to start devel-oping policies to help them,” she says.

The government has so far just proposed tax breaks and refunds. Observers welcome these measures but say they are not enough. They call for long-term policies.

Ms Lam says tax breaks are a good

EMPLOYED POPULATION BY MONTHLY EMPLOYMENT EARNINGS

Source: Labour Affairs Bureau - Second quarter of 2012

MOP3,500 to MOP5,99910.5%

MOP6,000 to MOP7,99913.9%

MOP8,000 to MOP9,99911.6%MOP10,000 to MOP14,999

22.9%

MOP15,000 to MOP19,99915.6%

MOP20,000 to MOP29,99912.2%

MOP30,000 to MOP39,9993.7%

MOP40,000 to MOP59,9992.1%

MOP60,000 to MOP79,9990.4%

MOP80,000 or above0.6%

Below MOP3,5006.5%

Some experts say the government should divide the middle class into different segments

60

DECEMBER 2012

Booming” has been an adjective often used to describe Macau’s development in recent years. The

thunderous growth is expected to con-tinue, at least demographically.

In the next 25 years, Macau’s total population may increase by close to 50 percent, bringing in over 260,000 more people to the city. The forecast is from the Statistics and Census Service and raises concerns among analysts.

According to the bureau’s latest population projections, released in Oc-tober, Macau’s total population by 2036 will be somewhere between 680,000 and 840,000 people. The standard scenario puts Macau’s total population at 760,000.

As of September-end, Macau had fewer than 577,000 people.

Experts from several fi elds warn that the city may not be able to cope with the upcoming demographic changes. Infrastructure is insuffi cient to

Crowded cityMacau’s population is set to grow signifi cantly in the coming 25 years. Experts are doubtful the city can cope

BY ALEXANDRA LAGES

service so many people, and the terri-tory is not equipped to handle an ageing population. The government must focus on long-term planning, they say. And the time is now.

Help from Hengqin“Macau is not ready for such a large population increase, given its current infrastructure. Without a fundamental adjustment and expansion of infra-structure, including housing, transport, recreation, medical and all the other re-lated public facilities, it will be a mess for such a small city to host so many people,” says Henry Lei Chun Kwok, assistant professor of business econom-ics at the University of Macau.

He reminds that Macau is already one of the most congested cities in the world, and has the highest population density on the planet.

Mr Lei says that with such a big infl ux of people, prices will continue to

rise fast, due to increased demand. The scholar expects the biggest impact to be felt on housing and daily necessities, pushing infl ation up.

More land is key to easing pressure from the population growth, he says. While land reclamation is part of the solution, it may not be “good enough” to provide the city all the space it needs to grow sustainably. Regional coopera-tion is a possible a way out.

“The government needs to tighten cooperation with Guangdong and Zhu-hai, to consider reallocating part of the new population to Hengqin Island,” Mr Lei says.

He suggests “building a satellite city to host non-resident workers com-ing from the mainland”.

He suggests building a “satellite city” there to host non-resident workers coming from the mainland.

The Statistics and Census Service population projections hint that the number of imported workers will likely reach over 200,000 by 2036. But less than 101,000 are forecast to be living in Macau in the worst-case scenario; the remaining will commute daily from the mainland and are not included in the overall population projections.

Although the recent demographic growth has been largely fuelled by im-ported labour, the report says residents will account for most of the population increase for the upcoming decades.

Not enough landBeijing gave the green light in 2009 for Macau to start a massive 3.5 square km land reclamation project, to be divided in fi ve parcels. However, the programme has barely made it off the drawing board. Of the fi ve areas to be reclaimed, only one is now dry land.

A public tender for the reclama-tion of the biggest of the fi ve reclaimed zones, with an area of 138 hectares, east of Areia Preta district, was only launched earlier this year. The govern-ment expects that reclamation process

In the next 25 years, Macau’s total population may increase by close to 50 percent

“

62

DECEMBER 2012

to be complete by mid-2015.Offi cials have pledged that no land

in the new reclaimed areas will be granted for gaming purposes. Accord-ing to the master plan for these areas, construction of housing, community facilities and green areas would be the main focus.

Last month, Chief Executive Fernando Chui Sai On vowed to build homes for residents-only in these new reclaimed land areas. But he failed to provide more details on this new policy.

The fi ve new tracts of land are ex-pected to accommodate up to 120,000 people. But urban planner Francisco Vizeu Pinheiro says that won’t be enough.

He says Macau “has no capacity” to cope with the increase in population forecast by the Statistics and Census Service. “The territory has limited infrastructures and narrow streets.”

Mr Vizeu Pinheiro says border checkpoints between Macau and the mainland should open around-the-clock in order to facilitate people commuting from Zhuhai. That, he believes, would allow more people to work here but live in the neighbouring city.

Mr Vizeu warns that if Macau wants to be an international city, it also needs to ensure high standards of qual-ity of life. He urges the government to make room for more green areas and preserve the existing ones, limit the number of cars on the road and invest in green transportation.

Old problemsMacau’s population is not only forecast to get bigger, but also older. According to the Statistics and Census Service projections, senior citizens will account for over 20 percent of the population by 2036. The report says the number of people aged 80 years or more will see a four-fold increase in the next 25 years.

“In the face of this demographic change, the immediate issue our soci-ety will face is the increase in demand for social services, pensions, health-care and long-term care, such as homes or healthcare centres,” says Dicky Lai Wai Leung, associate professor of social work at the Macau Polytechnic Institute.

“In the past few years, the govern-ment has given more money to the elderly. But we need long-term poli-cies,” Mr Lai says. “The existing model is not suitable to tackle the [projected]

2016

2016

2016

2021

2021

2021

2026

2026

2026

2031

2031

2031

2036

2036

2036

2011

2011

2011

900,000

850,000

800,000

750,000

700,000

650,000

600,000

550,000

500,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

MACAU POPULATION PROJECTIONS

CHILD POPULATION VERSUS AGED POPULATION - PRINCIPAL PROJECTION

MACAU RESIDENTS WORKING HERE BUT LIVING IN THE MAINLAND- PRINCIPAL PROJECTION

NUM

BER

OF P

EOPL

ENU

MBE

R OF

PEO

PLE

NUM

BER

OF P

EOPL

E




High variant projection Principal projection Low variant projection

Aged under 15 Aged 65 and above

63

DECEMBER 2012

increased demand for social services.”Mr Lai says suggests the creation of

a citywide health insurance programme run by the government.

“In younger ages and before retirement, we should make monthly contributions to this health insurance. Contributions would come from em-ployees and employers, as well as from the government,” he says. The insur-ance would cover healthcare treatment for retirees.

The scholar says the same could be done to ensure people have access to elderly homes and homecare services when reaching retirement age.

“Under the existing model, the government pays subsidies to non-governmental organisations [to provide those services]. I suggest long-term care insurances, following Germany, Japan and other countries. People make small [monthly] contributions while they are young, that will eventually pay for the services” when those people become elderly, he says.

Social security overhaulThe Social Security Fund also needs to be revamped, Mr Lai argues.

According to the scholar, the monthly contributions people make to the fund should be indexed to their earnings. “If the employee contributes 2 percent [of their wage] and the em-ployer 4 percent, in the long-term the fund will be more sustainable,” he says.

The value of the monthly contri-butions to Macau’s Social Security Fund currently stands at MOP15 for workers and MOP30 for employers. According to a 2010 report by Watson Wyatt Worldwide commissioned by the government, if no changes are made in

the amounts each party contributes, the system’s assets will run out in less than 30 years.

Offi cials have said they are eyeing to increase the monthly social security contributions both employees and em-ployers have to pay.

The monthly elderly pension amount, says Mr Lai, should be indexed to Macau’s median monthly earnings of the employed, at a rate of around 30 to 40 percent.

Macau’s median monthly earnings of the employed stands at MOP11,700, according to the latest data available. The government has pledged to raise the value of the elderly pension in 2013 to MOP3,000 from the current MOP2,000.

In addition, the government should promote active ageing, by encouraging preventive healthcare, elderly participa-tion in the labour market and senior education.

“This has a positive impact, because if the elderly can work, it will decrease the demand for social services and pensions. If they can maintain good health, there will be less demand for healthcare services,” says Mr Lai.

Macau’s population is not only forecast to get bigger, but also older. Senior citizens will account for over 20 percent of the population by 2036

64

DECEMBER 2012

The government has acknowledged that it is issuing work permits to non-residents in increasing numbers. It has reached the twin conclusions that the economy cannot grow

without more workers from outside and that they do not “steal” jobs from residents.

This is a welcome development. Many have been saying the same thing for a long time, while offi cials persisted with a restrictive policy that was both unsustainable and detrimental to broad sectors of the economy.

It means this policy, still not formally rescinded, has been recognised as dead. Its demise was already obvious to anyone reading the demographic and labour market fi gures.

A simple plot of the number of non-resident workers in recent times would be enough to illustrate the policy reversal. But it is always undesirable, for the sake of transparency and of the confi dence of economic actors, to have situations where there is a wide gap between the offi cially stated policy and what the government actually does.

At any rate, the door has been thrown open to imported labour. This is a good thing.

There is, however, a difference between opening a door and letting everyone in. We need to know who is being admitted and under what conditions. On this level, not much has been clarifi ed.

The only thing we may say with certainty about the government’s thinking is that it expects the labour force to increase by up to 10 percent a year, as stated by top offi cials. Certainly, it is positive that the government has put forward an estimate of the future growth of the labour force.

Unfortunately, the assumptions behind the forecast are not elucidated, which limits the force, not to say the authority, of the statement. But at least we have a broad idea of how the government sees the future.

Flogging a dying horseLet us build on this estimate and try to work out what it may mean for the economy and Macau as a whole. If the labour force grows by 10 percent per year, it will number about 470,000 in just three years from now. That is, it will have an additional pool of 120,000 workers.

Where will those workers come from? There is apparently an expectation by offi cials that half of the additional labour force

will be residents. There are solid grounds for doubt that this is possible.

The economy has virtually full employment. The latest unemployment rate, 1.9 percent, means there is little more you can expect from the present pool of workers. We are talking about fewer than 7,000 workers and, even assuming all can actually be employed, they are too few to meet expected demand, based just on the projects announced for Cotai.

The domestic demographic situation is also unlikely to lead to a real alternative to labour imports. The slowdown in fertility in the late 1980s and 1990s means the number of young people entering the labour market each year will decrease in the next few years, as the number of the old people leaving it increases. This is an inevitable outcome of the age structure of the population.

Data made available by the Statistics and Census Service suggest that in the years to come some 9,200 residents will be entering the labour market each year, on average, while more than 6,600 will be leaving it. Therefore the domestic net contribution to the growth of the labour force can hardly be a big one.

Frightening alternativeMore residents could be brought into the labour market – the retired, students, housewives, and so on. But even assuming they have the required skills, this is unlikely to happen.

The labour force participation rate – that is, the proportion of the population older than 16 that is willing and able to work – is already quite high. And it is showing some signs of being unsustainable, possibly because the population is ageing. Unless wages go through the roof and entice loads of people to join the labour force, it is unlikely that non-participants will be a signifi cant source of additional labour.

The door will have to be opened much wider to imported labour than the government cares to admit if the labour force is to grow at an annual rate of 10 percent. Even at half the forecast rate, we may be talking about over 20,000 newly imported workers every year in the years to come.

That cannot happen without consequences. The city is already under strain on multiple fronts.

Its infrastructure is under stress. Some roads are getting congested and simply walking in several parts of the city centre is a challenge because of the mass of pedestrians.

Prices in the housing market are going ballistic and food costs keep rising. Pollution is getting visibly worse and basic public services are having increasing diffi culty in coping with rising demand.

In such circumstances, it would be appropriate if the government made clear not only the basis for its forecast of growth in the labour force, but also its evaluation of the possible consequences and how it plans to address them. Otherwise, that growth of 10 percent may be the harbinger of severe social tensions.

Playing with numbersTHE LACK OF DATA TO SUPPORT THE GOVERNMENT’S ESTIMATE OF THE FUTURE GROWTH OF THE LABOUR FORCE RAISES EYEBROWS

If the labour force grows by 10 percent per year, it will number about 470,000 in just three years from now. Where will those workers come from?

JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - [email protected]

66

DECEMBER 2012

Ms Song and Ms Leong were both born in the mainland. But they do not feel connected to

their homeland to the same extent.They are part of the 46.2 percent of

the Macau population that was born in the mainland, according to data from the 2011 population census. Mainland natives outnumber the people born here, who account for just 40.9 percent of the city’s population.

Ms Song, 28, was born in Anhui province. She moved to Macau fi ve years, initially to study at the University of Macau. Now, she has a job here and no plans to return to the mainland.

“I fell in love with Macau when I was a student. I’ve spent fi ve precious years of my youth here, growing up together with Macau. I would love to go on working here and contribute to society,” she says.

Still, Macau does not feel like home

Identity crisisMacau’s increasing integration with the mainland is threatening the city’s unique cultureBY ALEXANDRA LAGES

for Ms Song. Only parts of the city and its culture are familiar to her. Other fea-tures, like the Cantonese dialect and the territory’s history, are not.

Ms Leong, 32, was born in Guangdong province but her family moved to Macau when she was two years old. She regards herself as a fully-fl edged Macau citizen.

“I have spent much of my life here,” she says. When she visits the mainland, people there also regard her as a Macau native.

“Macau is very different from the mainland. The education system is very different and I am grateful that I was brought up in a much more open-mind-ed, free and friendly environment,” says Ms Leong.

Changing timesThirteen years after the handover, Macau is now a very different place. The chang-

es are not only physical and economic, but also in terms of identity.

The city’s unique features are being impacted by the rapid boom, researchers say. Some warn that, as regional integra-tion deepens, Macau’s identity may fade away.

In his book “The Chinese of Macau – A decade after the handover”, published last month, researcher Jean Berlie analy-ses the evolution of identity here. He high-lights that the increasing regional integra-tion threatens Macau’s distinctive culture. The problems start with the growing number of Putonghua speakers fl ocking to Macau.

The Hong Kong Institute of Educa-tion scholar argues the Cantonese dialect is pivotal to defi ning the city’s identity. Authorities should ensure its preservation as the main form of communication here, and also support related cultural features

Feast of the Drunken Dragon

67

DECEMBER 2012

like the Cantonese Opera, he says.“Macau tries, but it’s diffi cult. [With

the pressure coming from the gaming industry,] it is not easy.”

Nothing newWhen she fi rst arrived in Macau, Ms Song was surprised that Chinese culture was so well looked after here.

“Several Chinese traditional rituals are very well preserved, and are passed on from generation to generation. They all look so charming. They stopped in the mainland after 1949 [when the Peo-ple’s Republic of China was established] but are still kept here,” she says.

Ms Leong highlights the city’s unique background. Macau has a rich history as a meeting point between the Portuguese and Chinese cultures, and both co-existed peacefully here for over four centuries. “Macau’s European in-fl uence is found in its architecture and even in its unique cuisine,” she says.

The 2002 gaming industry liber-alisation brought many challenges, says anthropologist Cathryn Clayton. A re-searcher at the University of Hawaii, she is the author of a 2009 monograph on

had an immense infl uence on Macau,” Ms Clayton says.

“Perhaps it’s becoming more vis-ible, more palpable to a bigger part of the local population, but it’s certainly nothing new.”

She argues Macau is not undergoing an identity change nor is it set to become a characterless Chinese city. “It may seem that Macau’s identity is changing at lightning speed. But I’m not sure it is so much ‘change’ as it is ‘intensifi cation’ of certain features that were already there.”

Ms Clayton stresses identity build-ing is an on-going dynamic process. “It’s entirely possible for Macau to both become closer to the mainland and to maintain a sense of its uniqueness.”

Adapt to surviveThe Macanese community has managed to adapt to the post-handover changes, says community leader Miguel Senna Fernandes.

Macanese is the name given to Macau’s Eurasian population: people whose ancestors came from Portugal, Chi-na or former outposts of the Portuguese

Macau’s identity following the handover.She says one of the biggest changes

has been the infl ux of mainland visitors to Macau. This has led to an increased use of simplifi ed Chinese characters here, instead of traditional Chinese. The use of renminbi to acquire goods and services also has become widespread.

“Some people may think that the ‘real’ Macau is sinking under the weight of all that mainland infl uence, but the mainland, in various ways, has always

Play in Patuá

68

DECEMBER 2012

empire such as Goa and Malacca. That combination created a distinct social and cultural identity, with its own creole, Patuá – a mixture of archaic Portuguese, Malay, Sinhalese and Cantonese, spiced with infl uences from other languages.

“There is an increasing awareness of the Macanese identity and of its rel-evance,” Mr Senna Fernandes says. De-spite some people initially being pessi-mistic about the community’s role after the handover, the Macanese have suc-cessfully adjusted to the post-1999 real-ity, he adds.

Mr Senna Fernandes says the inter-national fi nancial turmoil in Europe and in the United States has even triggered the return of a signifi cant number of Ma-canese living abroad, “looking for better living conditions” here.

This year, the Macanese cuisine and theatre plays in Patuá were included on the city’s offi cial intangible cultural her-

itage list. Mr Senna Fernandes says this is proof that authorities recognise the importance of the Macanese community to Macau’s identity.

However, he is concerned about the misuse of the Portuguese language, which is the mother tongue for many Macanese. He says some government bureaus often disregard it, despite it be-ing an offi cial language.

Fears of ‘mainlandisation’Gary Ngai Mei Cheong, former vice president of the Cultural Affairs Bureau prior to the handover, is not happy about the changes Macau is undergoing.

In the 1990s, he wrote a paper on Macau’s identity, highlighting that the city was different from neighbouring Hong Kong and Guangzhou due its Por-tuguese heritage. He is worried this is changing fast.

“More migrants [from the mainland]

will dilute Macau’s identity. We will be-come more ‘mainlandised’,” he says.

Mr Ngai states the debate over the city’s identity is still an unresolved mat-ter for most of the people living here. “Many still don’t understand why we have to be so closed to Latin countries and not to the United States or European countries.”

He stresses the problem doesn’t spur from the central government, which often highlights Macau’s cultural uniqueness and the need to preserve it. “Macau’s identity is in danger because of the short–sightedness of people here, against the will of Beijing,” Mr Ngai says.

In the face of regional integration speeding up, Mr Ngai calls for more to be done to preserve Macau’s identity.

“We have to keep our identity, not duplicate what Hong Kong and Guangzhou are doing. We have to fi nd our own position in the Pearl River Del-ta. Part of this is by linking ourselves more closely businesswise with the Lat-in countries,” he says.

Also pivotal to preserving the city’s identity is education, Mr Ngai says. “Schools don’t teach the history of Macau in primary education. This is completely wrong.”

Cantonese Opera

Researcher Jean Berlie argues the Cantonese dialect is pivotal to defi ning the city’s identity. Authorities should ensure its preservation as the main form of communication here

69

DECEMBER 2012

We hear a lot about how we live in a connected age. The information technology revolution has

brought us all closer together. Real-time communication with friends and relatives around the world is available at the touch of a button. The intensity and density of electronic communication have increased at runaway rates in recent years.

Macau is no exception. The International Telecommunication Union says that last year the city was the world leader in the number of mobile phone subscriptions per 100 inhabitants. Internet use is rising here more steeply than in many countries.

Evidence of connection is all around us. Walk down any street and what do you see? People glued to their mobile phones, and drivers making calls and holding up traffi c by doing so.

Go into any restaurant and what do you see? The family is all there, but they are busy playing on their mobiles, leading separate lives while sitting together.

Public areas here are not meeting places but somewhere to bark into your phone. Public gardens are now electronic communication centres.

Public meetings now provide a new diversion in the form of ring tones sounding off for our entertainment. Public transport in Macau should hold the world record for the most people shouting into their phones in a confi ned space.

The city has a new sport: how to walk slowly in a straight line while talking into a mobile phone, speaking to your companion, holding a cigarette and shopping. The ability to ignore real-time, real-presence neighbours is staggering.

Shopping malls have brought us a new contest called “dodge the dawdling mobile user”. Street corners are now safe zones for police offi cers to play with their phones. Pavements are social science research sites for the study of how thousands of people can ignore those next to them, pretending that nobody is around to hear them, and behave as solo individuals living on their own personal islands.

Pandora’s phoneMobile phones have created a new game called “decide your priorities”. This is

The connectivity paradoxPEOPLE IN MACAU EXCEL AT BEING CONNECTED ONLINE WHILE BEING DISCONNECTED FROM REAL LIFE

how to play: fi rst, arrange a meeting with one or more people. Second, ensure that somebody calls you during the meeting. Third, interrupt the meeting to take the call. In some countries this would be considered the height of rudeness, but here the mobile trumps all.

We live in a connected age, yet the more connected we have become, the more disconnected we are from the people living around us.

Interdependence and technological connectedness have brought great disparities in benefi ts rather than benefi ts for all. Connectedness ignores huge social and economic inequalities. Conscience and behaviour seem to have become disconnected in many sectors of society, in the economy, in politics, in communities and among individuals.

It is little wonder that the International Monetary Fund commented in 2007: “The main factor driving the recent increase in inequality across countries has been technological progress”. It said the propensity of technological change to increase inequality was up to fi ve times greater than the globalisation of trade and fi nance combined.

Weak moral signal Here is the paradox: the more connected we have become, the more disconnected we have become from each other and within ourselves. Our consciences have become disconnected

from our actions. Also, the more connected we have become, the more individualistic rather than collective we have become, and the more neglectful we have become of each other.

It begins at an early age. The results in 2003 of the Programme for International Student Assessment, a worldwide study by the Organisation for Economic Co-operation and Development, showed that Macau students felt disconnected from their schools. In only three out of the 40 countries and territories surveyed did a lower proportion of pupils regard school as a place where they felt they belonged.

For adults and young people here, the connected age has meant more disconnection, social exclusion, inequality and poverty. At a time of increasing interconnectedness, some important aspects of behaviour – individual, communitarian and societal – show a rash of signs of disconnection. These include inequality, impoverishment, rampant consumerism and materialism, commodifi cation of human life, greed, envy, acquisitiveness, disregard for others, profi t, wealth, environmental destruction and exploitation.

Whatever happened to conscience? It seems to have become disconnected from action. People really need to connect with each other, with humanity and with their moral sense.

KEITH MORRISON AUTHOR AND EDUCATIONIST - [email protected]

70

DECEMBER 2012

What better way to celebrate the anniversary of the return of Macau to China than to

breathe in the city’s multicultural atmos-phere? That is what the Cultural Affairs Bureau is proposing for December 20, with an event called “Parade through Macao, Latin City”.

The parade adds a festive dimension to celebrations that usually take the form of suit-and-tie offi cial commemorations. Residents and visitors alike are invited to celebrate in the streets the diversity of Macau, and its heritage as a meeting point of Asian and European cultures.

Dancin’ in the streetsMacau will celebrate the anniversary of the handover with a carnival highlighting the city’s unique cultural mix

At the same time, the carnival-like event is meant to spur creativity among per-forming groups here.

Several government departments are getting together to organise the event, and various associations are sup-porting it. The organisers of this year’s cultural extravaganza forecast that it will attract even more spectators than last year’s inaugural event. In 2011, cele-brations brought thousands of people out into the streets. Many more watched on television, here and in Hong Kong.

The ceremony to start the celebra-tions will take place at 4pm in front of

the Ruins of St. Paul’s. The parade will be led by 100 dancers, warming up the spectators for performers from various corners of the world, who will share the limelight with artists from Macau.

The route this year will differ slight-ly from last year’s. The parade will go past St. Anthony’s Church, along Rua de D. Belchior Carneiro and through the São Lázaro district, ending up in Tap Seac Square.

The foreign performers belong to nearly 20 groups from as far away as Latin America and Europe. Joining them will be performers from 40 groups

71

DECEMBER 2012

in Macau, ranging from the Macau Chi-nese Orchestra to the Macau Handbells Association. The organisers estimate that altogether 2,000 performers and supporting crew will take part.

Upbeat hairdosThe Cultural Affairs Bureau has de-signed an offi cial mascot for this year’s parade. It is named Viva, and is meant to be a symbol of life and energy. Viva will take part in some of the performances during the parade.

The bureau will distribute paper models of Viva to shopkeepers along the route and ask them to decorate the models as they see fi t, for display in their shop windows. Other shops around the city are also welcome to take part. All businesses displaying specially decorat-ed Viva mascots may apply to compete for special awards for the best works.

There are plenty of new diversions this year. Rua de S. Paulo will be trans-

formed into a puppet playground. A magic show will take place in St. Antho-ny’s Square. A musical hair salon will be set up on Companhia Square, where Spanish artists, working to the accom-paniment of a musical soundtrack, pro-pose to give patrons various creative hairstyles.

Bollywood dancers will take over Rua de D. Belchior Carneiro. Artists on stilts will be posted at Rua de Sanches de Miranda for the amusement of spec-tators. Several performing groups will gather in the São Lázaro district to present a colourful cultural medley of Portuguese drums, Chinese Dunhuang and Brazilian samba dancing, coupled with guqin performances, while painters will create paintings on the spot.

Gift of sightIn Tap Seac Square, a giant Viva will welcome performers and spectators to the parade’s grand fi nale. A special mul-

timedia performance will bring the cel-ebrations to a close. The giant Viva will remain in the square until December 26.

Information and souvenirs and will be available along the parade route. All the proceeds from the sale of Viva souvenirs will go to the charity Orbis, which endeavours to prevent and treat blindness worldwide.

The Cultural Affairs Bureau has re-cruited nearly 500 Viva ambassadors for the celebrations. The bureau will put up big outdoor screens in several places to show live coverage of the parade.

The organisers of the celebrations will arrange a series of related activi-ties, including a photography contest and a competition among players of a special mobile phone game, which can be downloaded, with prizes for the win-ners. Public broadcaster TDM will cover the celebrations live and Hong Kong’s TVB Jade will air a one-hour television special on December 22.

4pm Opening ceremony and performances at the Ruins of St. Paul’s and Companhia de Jesus Square6pm Performances on Tap Seac Square

Streets on the parade route will be temporarily closed to traffi c on the parade day. The organisers advise spectators to walk to the parade venues or use public transportation

72

DECEMBER 2012

BY MUHAMMAD COHEN

Playing

Casino panel cautions on U.S. law violations, diversifi cation and licence expiry

A U.S. criminal conviction would af-fect the “suitability” of a Macau gaming operator. Duarte Chagas, a

legal advisor to Macau’s Gaming Inspec-tion and Coordination Bureau made that assertion during last month’s Asian Gam-ing and Hospitality Congress at Galaxy Macau.

Citing the slogan “What happens in Vegas stays in Vegas”, Mr Chagas said, “It’s time to rethink that.”

He noted that the gaming regula-tor here focuses only on the “suitability and fi nancial capacity” of Macau licen-sees. “[But] if a licence holder’s director or shareholder is convicted [in the U.S.], that would have an impact on suitability. If there was a loss of licence, that would have a bigger impact.”

He added: “It would also affect the fi -nancial capacity of the licence. There are all kinds of implications for the contracts written in Macau.”

Wynn Resorts Ltd and Las Vegas Sands Corp, parent companies of local op-erators Wynn Macau Ltd and Sands China Ltd respectively, have reported they are under investigation for possible violations of American laws linked to their opera-tions in Macau, including alleged offenses under the U.S. Foreign Corrupt Practices Act that bars payments to foreign govern-ment offi cials.

According to Mr Chagas, convictions in the U.S. would however not necessar-ily trigger immediate action in Macau. “It would not be automatic. We would have to look at the circumstances of every case.”

Mr Chagas spoke as part of a panel on casino industry regulatory issues in Macau, including smoking restrictions due to take effect next month, age restrictions and exclusion rules, plus gaming licence expiration. Jorge Godinho of the Univer-sity of Macau Faculty of Law, and Su Guo-jing, chairman of non-profi t organisation Asian Responsible Gaming Alliance, also participated in the panel.

Diversifi cation driverBeijing may demand greater steps toward economic diversifi cation to lessen Macau’s reliance on gaming in the next round of casino licences, expected when the current gaming concessions expire in 2020 and 2022, panellists noted.

“The central government has always been concerned about diversifi cation of Macau’s economy,” Mr Su said, noting that he was expressing a personal opinion. “I’m pretty certain that the [new] leadership is going to insist on the diversifi cation path.”

by the rules

Gaming

73

DECEMBER 2012

“Diversifi cation could be included in new licensing requirements,” Mr Godinho agreed. “In 2002, there was no requirement to diversify. Singapore learned from our experience.”

When the Lion City tendered its casino licences, it insisted on so-called integrated resorts with strict limits on casino size and requirements on non-gaming elements. But Mr Godinho doesn’t expect Macau to be so stringent.

Recent land grants and construction approvals for current gaming concession-aires should meanwhile not be viewed as an indication that renewal of their licenc-es is imminent, Mr Godinho cautioned. “We don’t know. The signs that have been coming out are that no earthquake will happen. But it’s a political decision.”

Look back, see aheadRather than trying to read tea leaves or current events, Mr Godinho suggested looking to the past. “History shows that concessions wind up getting renewed,” he said.

Tai Heng Company, holder of the fi rst gaming monopoly for 25 years, originally received a two-year licence, he recounted. Similarly, Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SARL initially re-ceived an eight-year concession that ul-timately lasted for 40 years.

“Macau has had long periods of stability [of gaming licences] with mo-ments of rapid change,” Mr Godinho concluded, adding however “ground-shaking movements do occur.”

A big change is due on January 1, when casinos will have to designate at least 50 percent of their space as non-smoking areas.

“The industry has reacted in a very strong way to the restriction,” Mr Cha-gas said. “We have to have good sense here and the Health Bureau [which will implement the regulations] has to have good sense.”

Casinos have great leeway in decid-ing where to place the non-smoking ar-eas. “The Macau market has particular characteristics. For example, smoking can be allocated to the VIP rooms,” Mr Chagas pointed out. “In some casinos, where the mass market is more impor-

“The central government has always been concerned about diversifi cation of Macau’s economy,” says Su Guojing, chairman of non-profi t organisation Asian Responsible Gaming Alliance

“Diversifi cation could be included in new licensing requirements,” says Jorge Godinho of the University of Macau Faculty of Law. “In 2002, there was no requirement to diversify. Singapore learned from our experience”

tant, there can be more allocation of smoking in those areas.”

Time of the signs?The law raising the minimum casino ad-mission and employment age from 18 to 21 has drawn a great deal of attention in the mainland as well as Macau, accord-ing to Mr Su. He questioned enforce-ment of the law, enacted last month.

“In Singapore, you have to show your passport or ID to get into the ca-sino. Here, you’re still not checked.”

Signage about the new minimum age is “hard to fi nd and small” and of-ten away from the casino, Mr Su added. “We’d like to see more obvious signs at the casino entrances.”

The new law doesn’t specify the standards for size and placement of signs, Mr Godinho said. He added that while the change in the casino admis-sion age has been widely publicised in Macau, most of the casino visitors are from outside the city and so may not be aware of the change.

The same law allows individuals to request exclusion from casinos. Violat-ing an exclusion order is a criminal of-fense, subject to imprisonment or a fi ne, Mr Chagas explained. The rules also en-able families to request exclusion for a family member, subject to the approval of the excluded person.

“Self-exclusion and family exclu-sion has been very common for many years in the U.S. and elsewhere,” Mr Su said. “Macau may be a little behind, but it’s trying to catch up.”

He suggested that “direct relations” such as parents, children or spouses should be able to fi le an exclusion appli-cation without the approval of the per-son to be excluded. Macau should also consider requiring casino marketing ma-terial to include information on how to apply for exclusion.

Mr Godinho took issue with the criminalisation of exclusion violations. “If a person realises he has a problem and takes the responsible action of ex-cluding himself, then loses control, this person has a legal problem,” he said. “It could result in a prison term, it could give him a criminal record. It gives the person an even bigger problem.”

Macau Business now comes to your inbox with free daily updates from our newsroom

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74 Gaming

Five years after it announced its intention to ban slot-machine par-lours in residential areas, the gov-

ernment promulgated last month new regulations for such businesses. The reg-ulations are stricter than offi cials previ-ously let on.

The new rules require that fi ve of the 11 slot-machine parlours that operate independently of casinos must close or move. These slot-machine parlours have one year to do so.

The Gaming Inspection and Coordi-nation Bureau says that among them are the Yat Yuen Canidrome Slot Lounge and the Treasure Hunt Slot Lounge, both run by SJM Holdings Ltd. The company runs a third slot-machine parlour in the Macau Jockey Club.

The other slot-machine parlours that must close or move are the Mocha Lan Kwai Fong, Mocha Marina Plaza and

Not welcome anymoreThe new rules on slot-machine parlours turn out to be stricter than expected

Mocha Hotel Taipa Best Western, run by Mocha Clubs, a subsidiary of Melco Crown Entertainment Ltd, the gam-ing regulator told our sister publication Business Daily.

Offi cials had hinted previously that the regulations would mean that only the Yat Yuen Canidrome Slot Lounge and the Mocha Marina Plaza would have to close or move.

The regulations are subsidiary leg-islation, and thus needed to be approved only by the chief executive, and did not need to be passed by the Legislative As-sembly.

First drafts of the regulations would have banned slot-machine parlours more than 500 metres from a casino, accord-ing to offi cials. However, they would have been allowed inside casinos, hotels or commercial buildings. The regula-tions promulgated, however, ban slot-

machine parlours unless they are inside fi ve-star hotels, in non-residential build-ings within 500 metres of a casino or in resorts that are “not integrated in a densely populated area”.

The subtle changes were enough to put three extra slot-machine parlours on the list of those impacted by the regulations.

First stepsExecutive director of SJM Holdings An-gela Leong On Kei says her company is considering other places to put its slot-machine parlours that are getting the boot. She says no employee of an SJM Holdings slot-machine parlour will be laid off. But she admits that the regula-tions will have “an impact which would not be small on SJM Holdings’ business”.

SJM Holdings’ Yat Yuen Canid-rome Slot Lounge is in Fai Chi Kei, one

DECEMBER 2012

A GAME OF PERCENTAGESThe new regulations promulgated last month govern not only where slot-machine parlours are allowed, but also the slot machines themselves. The regulations say that slot machines must pay out between 80 percent and 98 percent of their takings.As of next month all new slot machines must pay out this proportion of their takings. Gaming concessionaires have until the middle of next May to replace or adjust all old machines that do not.Slot-machine operators must inform the Gaming Inspection and Coordination Bureau at least 20 days before they program a machine to pay out a new jackpot or linked jackpot.The regulations also open the way for the use of wireless telecommunications networks for gambling, but only in areas authorised by the bureau.

of the city’s most densely populated ar-eas. The Fai Chi Kei District Welfare and Mutual Help Association welcomes its imminent demise.

The director of the Yat On Patholog-ical Gamblers Counselling Centre, Kam Suet Mei, says the regulations may help reduce problem gambling. “It means that the slot parlours must be away from residential areas,” she told public broad-caster TDM.

“We can see that the government is devoted to solving the problem of gam-ing getting inside communities.”

A government-appointed member of the Legislative Assembly, Ho Sio Kam, regards the removal of slot-machine par-lours from residential areas as only the fi rst step. Ms Ho, an educator, says there are still several sports betting shops, which the regulations do not cover, in densely populated districts. Macau Slot – Sociedade de Lotarias e Apostas Mú-tuas de Macau Lda runs the city’s sole sports betting operation.

Mocha Clubs had yet to comment on the effect of the regulations on its business by the time Macau Business went to press. The company runs 10 slot-machine parlours, some of them inside casinos.

Ticking clockUnion Gaming Research Macau esti-mates that the closure of three Mocha Clubs slot-machine parlours could re-duce Melco Crown’s earnings before interest, tax, depreciation and amortisa-tion (EBITDA) in 2014 by US$12 mil-lion (MOP96 million) to US$15 million. The consulting fi rm says the closure is unlikely to reduce Melco Crown’s earn-ings next year because operators of slot-machine parlours have until the middle of next November to comply with the regulations.

Union Gaming Research says it is hard to estimate the reduction in SJM Holdings’ earnings that complying with the regulations would cause, because the gaming operator gives no fi nancial de-tails of its slot-machine parlour business. But it thinks that the closure of two SJM Holdings slot-machine parlours “would impact less than 100 basis points of the company’s 2014 consensus EBITDA of HK$9.4 billion [US$1.2 billion]”.

The estimates assume that the op-erators will close slot-machine parlours that do not comply with the regulations. But SJM and Mocha Clubs could simply move them.

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76

DECEMBER 2012

Gaming

BY LUCIANA LEITÃO

It is not as important for casinos here as October’s Golden Week, but the Christmas holiday season is a strong season for gaming. It is little wonder, then, that casino operators

are investing in ice-skating rinks, huge Christmas trees and abundant Christmas lights, hoping Santa Claus will bring them sleigh-loads of gamblers and sackfuls of cash.

December is usually among the peak months here for ca-sino gross gaming revenue.

U.S. brokerage fi rm Sterne Agee expects casinos to rake in around MOP26.2 billion (US$3.3 billion) in revenue in De-cember this year, 11 percent more than a year ago. That would make this month the second-best month this year for casino gross gaming revenue. The best month so far in 2012 was Oc-tober, when revenue amounted to MOP27.7 billion, the most ever in any single month.

The Christmas holidays also boost non-gaming revenue. For the past three years December has been among the three best months for visitor arrivals.

The Christmas holidays last year were Galaxy Macau’s fi rst since it opened, and the average occupancy rate of its ho-tels exceeded 90 percent. Its restaurants and bars also pulled in more customers than usual.

“It proved to be very successful,” says Galaxy Macau’s vice-president of marketing communications, Jane Tsai. “Our performance last Christmas refl ected growth with high oc-cupancy rates and strong visitor numbers across the resort’s many offerings.”

Ms Tsai says many guests came to the casino resort, owned by Galaxy Entertainment Group Ltd, for a Christmas “getaway break”.

Star in the southThis year, Galaxy Macau has a range of seasonal promotions, including special deals on rooms and festive menus. It will have what it calls “Christmas Dreamland” in its East Square,

Forget myrrh, bring gold

where visitors can admire the special decorations, watch pa-rades and free shows, and sample gourmet chocolates. “We are expecting more visitors from overseas and more guests from the local community, too,” Ms Tsai says.

Across the road, Sands China Ltd’s Venetian Macao will be holding its “Winter in Venice” carnival, which is supported by the Macau Government Tourist Offi ce. The carnival will revolve around a giant Christmas tree and an ice rink, and in-clude special performances, festive food and drink, and a free light and sound show, which will be put on daily at the front of the resort. The “Winter in Venice” carnival was introduced in Las Vegas last Christmas by Las Vegas Sands Corp, the parent of Sands China.

“We believe this iconic event will drive increased visita-tion to Macau and to Cotai, as we continue to attract a wider demographic of people,” says Brendon Elliott, the vice-presi-dent of sales and resort marketing of Venetian Macau Ltd, a subsidiary of Sands China.

Some of the Venetian Macao’s restaurants will have holiday menus and its hotel will offer special deals on rooms. The Na-tional Ballet of China will perform the Christmas classic “The Nutcracker” at the property’s theatre from December 21 to 25.

MGM China Holdings Ltd is arranging an array of Christ-mas holiday activities. It has decked out the Grand Praça at the MGM Macau casino hotel to resemble a European Christ-mas market, with stalls offering gingerbread and other bakery products. The property is presenting seasonal holiday per-formances and its restaurants will have special menus.

“We believe this enchanting Christmas programme can draw in traffi c to our property”, MGM China said in a written reply to questions from Macau Business.

SJM Holdings Ltd and Wynn Macau Ltd say they are also preparing special menus, Christmas hampers and seasonal decorations. Melco Crown Entertainment Ltd gave no infor-mation about its plans for the Christmas holidays.

Casino resorts are ushering in the Christmas season with special events, hoping to make more money

MGM Macau Galaxy Macau

77

DECEMBER 2012

BALLY ANNOUNCESLEADERSHIP TRANSITION

U.S.-based gaming supplier Bally Technologies Inc announced that Ramesh Srinivasan will become president and chief executive offi cer effective December 31, as part of the company’s

succession plan. Current chief executive offi cer Richard M. Haddrill will become chairman. Bally’s Asia-Pacifi c operations are headquartered in Macau.

HSBC bank is bullish on Macau’s gaming sector for next year. In a report issued last month, senior gaming analyst for Southeast Asia Sean Monaghan reaffi rmed his forecast for a gross gaming revenue growth rate of 13 percent in 2013, based on a mass revenue increase of 25 percent and a

VENETIAN DATA PROBE READY EARLY NEXT YEARThe probe on whether Venetian Macau SA, a subsidiary of Sands China Ltd, breached Macau’s law on personal data protection will be completed by early next year, the Personal Data Protection Offi ce head said. Venetian Macau could be fi ned between MOP8,000 (US$1,000) and MOP80,000 if it is found guilty. The probe is related to information transferred to the U.S. that was stored on the Macau offi ce computers of former Sands China chief executive Steve Jacobs. The data was moved to Las Vegas a few days after he was fi red, in July 2010.

ASIA CHAMPIONSHIP OF POKERSETS NEW APPT RECORDSPokerStars Macau set new records for players and prize pools on the Asia Pacifi c Poker Tour with the completion of the 2012 Asia Championship of Poker. The competition was held at Grand Waldo from October 26 to November 11. It drew a total of 2,757 players and awarded over HK$46.2 million (US$6.0 million) in prize money.

HSBC POSITIVE ONMACAU GAMING

gradual recovery in VIP revenue with annual growth of 7 percent.Mr Monaghan wrote that 2013 should be another “great year” for Macau casino stocks, with the mainland economic recovery providing the sector a positive backdrop. He added that Cotai’s construction wave is likely to focus investor attention on new project value and cause a sector rerating through 2013.“We believe 2013 will also see Macau companies announcing new non-gaming leisure developments on neighbouring Hengqin Island that could further enhance the growth potential of their Macau gaming resorts,” Mr Monaghan wrote.Meanwhile, Citigroup analysts, led by Anil Daswani, wrote in a client note that they maintain their Macau casino gross gaming revenue growth estimate for 2013 at 10 percent year-on-year, or US$41.5 billion (MOP332 billion).

Mainland economic recovery should provide a positive backdrop for the sector in 2013, the bank says

Interactive kiosks ar e being set up in casinos this month to fi ght problem gambling

78

DECEMBER 2012

Know more, play smarter

Six responsible gaming kiosks will begin operating in six casinos on December 15, each run by one of

the six gaming concessionaires. The ki-osks are part of a pilot scheme by the University of Macau’s Institute for the Study of Commercial Gaming, which promoters hope will help decrease prob-lem gambling.

The kiosks will have interactive features and information on responsible gaming. They will have a game simi-lar to the television game show “Who Wants to Be a Millionaire?” Players are asked questions about gambling. If their answers are correct, they are awarded discount coupons for food and drink outlets and free admission to museums.

The Institute for the Study of Com-mercial Gaming is spending MOP1.3 million (US$162,500) on the pilot scheme. It will run until the middle of March. The Social Welfare Bureau and the Gaming Inspection and Coordina-tion Bureau are funding the scheme.

The institute is training about 80 volunteers from non-government or-ganisations who will act as responsible gaming ambassadors during the trial. They will help gamblers with gambling troubles.

“Ambassadors can help the general public to understand the casino environ-ment, as well as the symptoms of some-one who may be getting into trouble,” says Davis Fong Ka Chio, who heads the Insti-

tute for the Study of Commercial Gaming.While the responsible gaming ki-

osks will be available around the clock, the ambassadors will only be on duty eight hours per day.

Education is crucial for the preven-tion of problem gambling and patho-logical gambling, Mr Fong says. The purpose of the kiosks is to increase awareness among players of the perils of gambling. “We hope that with the imple-mentation of the kiosks, there will be a downtrend of problem gambling behav-iour,” he says.

Canadian ideaMr Fong says knowledge about gambling among people that live here is limited,

BY ALEXANDRA LAGES

Know more, play smarterInteractive kiosks ar e being set up in casinos this month to fi ght problem gambling

Gaming

79

DECEMBER 2012

the kiosks is satisfactory, the institute will propose installing more of them, depending on the size of each casino or the number of slot machines and gaming tables it has.

If the ambassadors prove effective, the institute will consider getting togeth-er with non-governmental organisations to employ them full-time.

In pursuit of normalityResearch by the University of Macau has found that the gambling participation rate here – the proportion of residents that gamble in casinos or slot parlours or bet on sports – dropped from a peak of 67.9 percent in 2003 to 55.9 percent in 2010. Of the residents surveyed in 2010, 2.8 percent were considered pathologi-cal gamblers and 2.8 percent problem gamblers.

Mr Fong says percentages of prob-lem gamblers and pathological gamblers are still high. “We consider it normal if 1 percent to 2 percent of the population is suffering from pathological behaviour,” he says. “We hope to bring Macau to a normal situation.”

Mr Fong is hopeful that the percent-ages of problem gamblers and patho-logical gamblers are going down, in part because the gambling participation rate is dropping. He estimates that the rate is now about 50 percent.

He says the rate of awareness of what constitutes responsible gaming is “very high”. A survey by his institute last year found that around 48 percent of residents knew the expression “responsi-ble gaming”. Mr Fong forecasts this pro-portion to surpass 50 percent this year.

He expects the chances of casino employees becoming addicted to gam-bling to fall, now that the government has raised the minimum age for admis-sion to or employment by a casino to 21 from 18. However, Mr Fong would like the government to consider ban-ning all casino employees from gam-bling, just like it bans all civil servants from casinos.

Casino staff are barred from gam-bling win properties run by their em-ployer, but they can still gamble in casi-nos run by rival operators.

“There are issues like crimes re-lated to gaming employees that, frankly speaking, are rooted in problem gam-ing behaviour,” Mr Fong says. He urges casinos to oblige their staff to undergo responsible gaming counselling every year or two.

despite the city being the world’s casi-no capital. “We would like to use these kiosks to educate people about what gambling is, what the house advantage is, what the probabilities for games like Sic Bo are, how gaming rules affect the winning probabilities, what type of con-trol behaviours exist, etcetera.”

In putting responsible gaming ki-osks inside casinos, Macau is following Canada’s example. The Ontario Respon-sible Gambling Council set up similar kiosks seven years ago. The kiosks there have proven effective.

The idea has spread to other Cana-dian provinces. Ontario has also put re-sponsible gaming information centres in casinos alongside the kiosks.

“We want to prevent a normal gam-bler from becoming a pathological gam-bler. That’s the evidence from Ontario, because there was a downward trend of problem gambling behaviour after the implementation of the kiosks and infor-mation centres,” Mr Fong says.

When people interact with the ki-osks, all data are collected in a database. The Institute for the Study of Commer-cial Gaming will get statistics daily on what information is most in demand and what aspects of gambling people are most ignorant about.

After the trial, the institute will re-port to the government, which will de-cide what to do next. Mr Fong says that if the number of people interacting with

“We hope that with the implementation of the kiosks, there will be a downtrend of problem gambling behaviour,” says Davis Fong Ka Chio, who heads the Institute for the Study of Commercial Gaming

80

DECEMBER 2012

80 Gaming

Wynn Macau has just revamped its fountain shows to include new water dances to the ac-

companiment of traditional Chinese music. The goal is to make the hotel ca-sino’s outdoor Performance Lake more attractive to visitors.

The Performance Lake’s new fea-tures include LED lighting, more water projection and new water dances, per-formances of which start this month.

The fountain shows, which also include fi re effects, are part of Wynn Macau’s regular programme of free en-tertainment. Also in the programme are indoor displays entitled “Dragon of For-tune” and “Tree of Prosperity”, which combine sculptural art, music, video and light. The “Tree of Prosperity” display is one of the city’s most popular free per-formances among mainland tourists.

The Performance Lake was built by WET Design of the United States. The company also helped renovate it.

WET Design chairman and chief executive Mark Fuller says the revamp substituted all the conventional light bulbs for 1,500 LED lights. The LED lights are more energy-effi cient and brighter, and their colours are “richer”, says Mr Fuller.

The Performance Lake holds 3 mil-lion litres of water. It now has more than 300 water nozzles, about 50 percent

BY LUCIANA LEITÃO

Big splashWynn Macau has renovated its Performance Lake to accommodate mainland tastes

more than before. These include “fan oarsmen”, devices which emit twisting, fan-shaped sprays of water to add to the repertoire of water dances.

“Instead of just having a string of water that goes up, we have this fan that can do a lot more different types of mo-tion,” Mr Fuller says. Because the fan oarsmen are highly precise, the fountain shows can use a wider area of the lake, spraying water nearer to its edges.

The revamp introduced several pieces of traditional Chinese music to accompany the dances. “Before, the pieces we did here were primarily West-ern show tunes,” Mr Fuller notes.

The human touchWET Design’s collaboration with Steve Wynn, the chairman and chief execu-tive of Wynn Macau Ltd, began with the fountain show that opened in 1998 at the Bellagio, in Las Vegas, a property

conceived and developed by Mr Wynn. When he obtained a gaming licence here, WET Design was called in to set up an outdoor fountain show at Wynn Macau.

Over 170 people from WET Design were involved in the Performance Lake project, ranging from designers to musi-cians to optical engineers. Setting up the show was a complex process, says Mr Fuller.

WET Design staff and Mr Wynn began by listening to hundreds of pieces of music. Then it was up to the choreog-raphers to synchronize the water and fi re effects with the music selected.

“Sure, a computer can do that, but it would look boring,” Mr Fuller says. “Our choreographers will listen to each piece of music several times, to dissect it and decide where to put the emphasis.”

Once the choreography for each piece was written, everything was put into the computer that runs the show. The show is performed automatically, with no human intervention. Even ad-justments to compensate for wind speed and direction at the lake are automatic, Mr Fuller says.

This allows Wynn Macau to put on performances every day from 11am to midnight, with 15-minute breaks between each. Each performance lasts about three minutes.

The Performance Lake holds 3 million litres of water. It now has more than 300 water nozzles, about 50 percent more than before

Gaming80

81

DECEMBER 2012

ALL-TIME HIGH FOR GAMING WORKERSMacau’s gaming companies employed a total of 80,200 workers at September-end, the Statistics and Census Service announced last month. The number of gaming workers topped the 80,000-mark for the fi rst time in Macau’s history. In the third quarter, the gaming industry accounted for a record high of 23.3 percent of the employed population.

FITCH CONCERNED OVER COTAI’S NEXT PHASEFitch Ratings warns that a “primary risk factor” regarding Cotai’s next wave of development “is the potential for signifi cant capacity to enter the market in a relatively short period of time”. The rating agency notes that all gaming operators are looking to open a casino there by 2016-end. Fitch says this suggests around 3,200 additional live gaming tables over the next three to four years. Another potential obstacle for the Cotai projects “is the government’s imposed limitation on foreign workers,” Fitch says.

SMOKING BAN MAY HURT GAMING REVENUEThe ban on smoking in casinos is likely to lower the 2013 Macau casino gross gaming revenue estimates by “several” points, Nomura says. The ban comes into effect on January 1. Nomura recalls that smoking bans in U.S. states caused an average 20-percent decline in gaming revenue. The brokerage house expects the impact here to be lower, since casinos can designate up to half of their gaming fl oors as smoking areas. Nomura adds there is no easily accessible alternative market for the majority of players who come to Macau.

The plan for a boutique casino hotel in Cotai, next to One Oasis residential project, is one step closer to becoming a reality. The investors are set to inject the project into Hong Kong-listed construction and property management company Paul Y. Engineering Group Ltd, PYE for short, and use it as a platform to raise capital.According to a PYE stock fi ling, there is already an agreement to buy the land needed for the project from the

BOUTIQUE CASINO HOTEL TO COST HK$6 BILLIONPromoters already have agreement to buy the land from One Oasis’ developers

developers of the One Oasis complex.The estimated cost of the project is HK$6 billion (US$774 million), including the cost of the land.The boutique casino hotel is projected to have 66 live gaming tables. Construction could start early next year in order for the property to be ready by 2016.The government has not yet given permission for the inclusion of gaming facilities in the project, our sister publication Business Daily reported, quoting a person with knowledge of

the situation. PYE has not disclosed under which gaming operator’s licence the casino would operate, but a 2009 prospectus unveiled by Macau Daily Times names Melco Crown Entertainment Ltd.Also last month, it was announced that a joint venture between PYE and Yau Lee Holdings Ltd was awarded a HK$10-billion construction contract for the Studio City casino resort, a project controlled by Melco Crown.

82

DECEMBER 2012

More than two years have passed since Australia’s Transcity Group arrived in Macau. Its

business here is now expanding fast, says Chris Rogers, managing director of the group’s Macau subsidiary, Transcity Asia Ltd.

“All areas of business have grown considerably,” Mr Rogers says. “There are a lot of opportunities in gaming in Macau and in the region. We are deal-ing in Cambodia, Laos and all across the region. As those markets grow, our busi-ness will grow as well.”

Privately owned Transcity Group

was established in 1996 in Melbourne. It specialises in gaming-related service and support solutions, repair services, and sales and supply of gaming devices and spare parts.

It established Transcity Asia in 2010 and set up its own workshop here, cov-ering 400 square metres. The workshop is the only government-approved facility in Macau for maintaining and repairing gaming devices.

It took more than one year for the company to equip the premises and train its staff. Now it is reaping the harvest. Mr Rogers says most of the gaming con-

cessionaires here are customers. Several suppliers of casino equipment use its services for big installations.

Transcity Asia provides support services to casino operators elsewhere in East Asia. It is involved in fi tting out the Solaire Manila Resort and Casino being built by Bloomberry Resorts Corp of the Philippines. The casino is scheduled to open next year. It is also helping to fi t out the MGM Grand Ho Tram Beach casino being developed in Vietnam by Asian Coast Development Ltd.

“Our fi rst year and a half was re-ally a building phase,” Mr Rogers says.

BY ALEXANDRA LAGES

In growth modeTranscity’s business in Macau is growing fast, and the company means to expand elsewhere in Asia

Gaming

83

DECEMBER 2012

“There are a lot of diffi culties in Macau in building what we’ve built in terms of skill sets, because it was basically non-existent, particularly for the workshop. We had to train a lot of people.”

Where’s that techie?The past 12 months were the fi rst of “true business”, Mr Rogers says. “We’ve grown in people, in revenues and also geographically.”

Mr Rogers says monthly revenue has more than doubled to an average of around MOP1 million (US$125,000). He forecasts that next year will be rela-tively quiet for Transcity Asia’s busi-ness as there are few new casinos due to open in East Asia. Even so, he expects revenue from repair work to increase by up to 15 percent and revenue from sup-port services to climb by 30 percent to 40 percent.

Mr Rogers predicts that sales of equipment, on the other hand, will jump by 100 percent. He says his company is close to signing an agreement with a new supplier, which will let it offer a wider range of spare parts.

He stresses that although revenue growth has strong momentum, there is room to increase it. Transcity Asia is eyeing to get into e-commerce and ex-tend the range of products and services it offers.

Mr Rogers says that as new casinos open here there will be an increasing need for top-level technical knowledge. Since the end of 2010 the city has added around 3,000 slot machines to its inven-tory, bringing the total to more than 17,000.

But gaming companies have a hard time fi nding technicians with exper-tise in slot machines. So Transcity Asia means to persuade them to save toil and money by outsourcing the servicing of their slot machines.

Hive of activityThe company also intends to become the distributor here for more suppliers of gaming equipment and parts. “Instead of a company coming to Macau and setting up an offi ce, they can employ us. It saves them a lot of money and helps them with the casinos, because the operators know us,” Mr Rogers says.

He expects the degree of regulation of the gaming equipment market here, including the technical support market, to increase, and considers this a good thing. “The government is doing a good

job,” he says. “There is a lot more control coming the operators’ way.” Last month, a new set of rules for slot machines was enacted.

Although its revenue is strong, Tran-scity Asia’s costs are high, Mr Rogers notes. It cost the company US$250,000 just to set up its workshop and get it li-censed.

Even so, he says Transcity Asia makes money. “In the next few years, we will be much more profi table due to the fact that we will have more products and better skill sets as technicians get better at repairing.”

The company’s facilities here are set to become its regional technical service centre. “We’re starting to look at how we can bring repairs from other mar-kets into Macau, repair them here and export them back home,” Mr Rogers says. “We’ll be using Macau as a service hub, also training staff here and sending them to other gaming jurisdictions to as-sist in installations there.”

Transcity Asia is considering pro-ducing betting terminals here, as its par-ent company does in Australia. “There are challenges to get space and people. But we think it’s a good move,” Mr Rog-ers states.

The company is also thinking about moving into fi elds other than gaming sup-port. “Gaming is our core business, but there are also other non-gaming things we can repair, such as in retail,” he says.

Tentacles spreadingTranscity Asia has 17 employees here. To get around shortage of suitable man-power, the company is getting together with institutions of tertiary education and the government to come up with a training programme.

“It’s hard to fi nd people. Employ-ment in Macau is tough no matter what business you’re in, but we get a lot of in-terest from people,” Mr Rogers says.

“The challenge to building a busi-ness here is the average wages are going up signifi cantly every year. Small busi-nesses like us have to compete for talent with the big casinos,” he says. Retaining staff is another problem, Mr Rogers adds.

Transcity Asia has an offi ce in Cam-bodia with three staff. It recently took on its fi rst employees in the Philippines, where it means to set up a branch. Mr Rogers says the company is also planning to open an offi ce in Laos for the Indo-chinese market and considering having a presence in Singapore or Malaysia.

“There are a lot of opportunities in gaming in Macau and in the region. As those markets grow, our business will grow as well,” says Chris Rogers, managing director of Transcity Asia

Ph

oto

: Car

mo

Co

rre

ia

84

DECEMBER 2012

Gaming

BY MARTIN JOHN WILLIAMS*

* GAMBLINGCOMPLIANCE

The MGM Grand Ho Tram Beach casino resort in Vietnam is at risk of a construction shutdown be-

cause of bureaucratic delays and blocked bank credit, according to the project’s minority investor.

Developer Asian Coast Develop-ment Ltd (ACDL) may be forced to sus-pend construction of the MGM Grand Ho Tram Beach casino resort because a syndicate of Vietnamese banks blocked a credit facility to complete the fi rst phase, said U.S.-based Pinnacle Enter-tainment Inc, a minority shareholder of ACDL. In a quarterly fi ling to the New York Stock Exchange last month, Pinna-cle said the syndicate is withholding the money until the Vietnamese government issues an amended and updated invest-ment certifi cate.

ACDL, which plans to open the fi rst phase of the Ho Tram resort in the fi rst quarter of 2013, is “currently in default of the deadlines set out in the offi cial letter for completing the fi rst phase of the fi rst resort and golf course,” the fi ling said.

The “offi cial letter” refers not to a central government commitment but a provincial government letter that had already extended a deadline in the cen-tral government’s investment certifi cate. But the fi ling said the already-breached deadline granted by the “offi cial letter” from the Ba Ria-Vung Tau provincial government is yet to be included in the investment certifi cate.

Bureaucratic Building work facing suspension at MGM Grand Ho Tram Beach

“ACDL and [subsidiary Ho Tram Project Company Ltd] have applied to amend the investment certifi cate to in-corporate the deadlines ... and to extend further the deadlines for completing the fi rst phase ... which would, if approved, remedy the fault,” the fi ling said.

No credit lineUncertainty about the status of the in-vestment certifi cate prompted a syndi-cate of Vietnamese banks to block more than half of a US$175 million (MOP1.4 billion) line of credit, the fi ling said.

“The Vietnamese banks have sus-pended funding under the credit facility until the amendment to the investment certifi cate has been granted,” it said.

Without this or alternative funding, “construction at the project site will like-ly cease in the near term,” the fi ling said.

Nonetheless, Lloyd Nathan, chief executive of ACDL, insisted to Gam-blingCompliance that construction is on-going. “Construction is continuing as it has been all year. We are completing the fi nal fi t out, and expect to complete handover of the building to MGM on schedule,” he said last month.

Philip Falcone, founder and prin-cipal of U.S.-based Harbinger Capital Partners LLC, the majority investor in ACDL, also dismissed concerns. “The fi nancing of the project remains on pro-gramme,” he said in a statement.

Michael Barker, a spokesman for

MGM Grand Ho Tram Beach, declined to clarify the status of construction when contacted by GamblingCompliance.

MGM Resorts International Inc, the parent of Macau-based MGM China Holdings Ltd, is not itself a capital inves-tor in MGM Grand Ho Tram Beach. The U.S.-based gaming operator has an agree-ment with ACDL to provide development assistance, brand equity and to operate the fi ve-star property upon completion.

MGM Grand Ho Tram Beach was the fi rst of a hoped-for wave of luxury casino resorts to receive support from moderates in the Vietnamese Communist Party apparatus as well as local business and politicians. But hard-line opposition to local access to gambling has seen sev-eral projects cancelled and major foreign investors such as Las Vegas Sands Corp, the parent of Macau-based Sands China Ltd, balk at entering the market. The fate of resort proposals in Quang Nam and Quang Ninh provinces, which once at-tracted the interest of Genting Malaysia Bhd, is now unclear.

Other designated zones for casino de-velopment, including southern Phu Quoc island, continue to languish as investors turn away. Analysts said that the govern-ment’s draft gaming law of last August, which confi rmed a ban on gambling by Vietnamese nationals and set a minimum investment capital threshold of US$4 bil-lion, has only reinforced this trend.

nightmare

84

85

DECEMBER 2012

PERMIRA SELLSSTAKE IN GALAXYPrivate equity company Permira Advisers LLP last month sold its remaining holdings in Galaxy Entertainment Group Ltd. Permira sold its 5.94 percent stake through a private placement for HK$6.78 billion (US$875 million), a source with direct knowledge of the deal told Reuters. Permira had bought a 20 percent stake in Galaxy Entertainment in October 2007. In September last year, it started to sell off its holdings in the company.

LEIGHTON TO BUILDWYNN COTAIA subsidiary of Australian-based Leighton Holdings Ltd has been chosen by Wynn Macau Ltd as the preferred proponent to design and build its maiden property in Cotai. Among the Macau projects in which Leighton has been involved are Wynn Macau, Wynn Encore, Macau Fisherman’s Wharf and City of Dreams. The contract’s value was not disclosed. According to Leighton, Wynn Cotai’s construction is scheduled to begin this month and the expected completion date is in early 2016.

JAI ALAI TO UNDERGO REVAMP

SJM’S COTAI PROJECT TO COST MOP20 BILLIONSJM Holdings Ltd’s casino resort in Cotai will cost around MOP20 billion (US$2.5 billion), chief executive Ambrose So Shu Fai said. Quoted by our sister publication Business Daily, Mr So said that up to 90 percent of the resort would be dedicated to non-gaming facilities.He also said SJM Holdings’ Cotai project would be different from the existing casino resorts there.The gaming operator announced in

Ambrose So says 90 percent of the casino resort will be dedicated to non-gaming facilities

SJM Holdings Ltd announced last month that it has reached an agreement to continue leasing the Jai Alai Palace complex until 2016-end, where it operates a self-promoted casino. The gaming operator also plans to revamp the run-down property. Angela Leong On Kei owns the Jai Alai

complex. She is also an executive director at SJM Holdings. SJM Holdings’ chief executive, Ambrose So Shu Fai, said the redevelopment project would cost up to MOP700 million (US$87.5 million). He added the project would start “soon” and be completed next year.

October that it had formally accepted a proposed draft land concession contract from the government, to develop a casino resort on 70,500 square metres of land in Cotai.SJM Holdings plans to develop a casino resort with up to 700 gaming tables and 1,000 slot machines, pending government approval. The resort will have approximately 2,000 hotel rooms and suites.

86

DECEMBER 2012

Gaming Statistics

Gross gaming revenue

Gaming tables

Slot machines

Number of casinos

SJM Holdings Ltd

Galaxy Entertainment Group Ltd

Sands China Ltd

Wynn Macau Ltd

Melco Crown Entertainment Ltd

MGM China Holdings Ltd

Greyhound Racing

Horse Racing

Chinese Lottery

Instant Lottery

Sports Betting - Football

Sports Betting - Basketball

Roulette

Blackjack

VIP Baccarat

Baccarat

Fantan

Cussec

Paikao

Mahjong

Slot machines

3-Card Poker

Fish-Prawn-Crab

3-Card Baccarat Game

Craps

Texas Holdem Poker

Lucky Wheel

Live Multi Game

Stud Poker

Casino War

Fortune 3 Card Poker

42.2 10.714.3

1

-37

-2-1--

-1

-12.60.2

--56.5-4.78.9

16.518.444.639.415.334.332.6

105.932.645.0

-45.228.3-7.4

28.29.4

103.323.543.329.4

2.113.5-1.1

32.81.8

10.3-28.6

205.911.2

4.2-45.528.6-2.83.0

--191.0

7.0-1.737.8

1-3--2--1

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---71.436.9-11.8

7.92.27.1

1

Casino gaming

Market share per casino operator*

Gross revenue from other gaming activities

Gross revenue from casino games

2011

2011

2011

2011






Month-on-month change (%)



Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Nov 2012Sep 2012Sep 2012Sep 2012

Nov 2012Nov 2012Nov 2012Nov 2012Nov 2012Nov 2012

Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012

Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012Jul-Sep 2012

MOP 267.95,302

16,056 34

29%16%16%14%15%10%

MOP297MOP440

MOP6MOP0.0036

MOP362 MOP86

MOP50MOP90

MOP2MOP0.0002

MOP115MOP15

MOP783MOP2,712

MOP196,126MOP48,669

MOP211MOP4,774

MOP114MOP70

MOP11,425MOP190

MOP51MOP281MOP151MOP277

MOP35MOP311

MOP1,309MOP225MOP141

MOP193MOP746

MOP51,166MOP16,805

MOP56MOP1,398

MOP20MOP52

MOP3,149MOP50

MOP6MOP90MOP35MOP69MOP10

MOP259MOP368

MOP57MOP51

28%16%21%12%14%10%

MOP 24.95,497

17,02935

billion

casinos

millionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillionmillionmillionbillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillion

billion

casinoscasino casino

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: Gam

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Insp

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sour

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* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent

percentage points

percentage point

percentage points

percentage points

percentage points

percentage point

percentage point

percentage points

percentage point

87

DECEMBER 2012

Being a successful hotel manager means understanding that not all guests are the same. The results

of a study by two Macau academics add emphasis to this observation. The re-searchers point to their conclusion that the kind of hotel a visitor here chooses depends on the purpose of the visit.

Visitors travelling independently – what the researchers call free and in-

dependent travellers (FITs) – make up a growing proportion of hotel guests here. Statistics and Census Service data show that only one-third of visitors in the fi rst nine months of this year were on pack-age tours.

Ruth Yeung Mo Wah of the Institute for Tourism Studies and Wallace Yee of the University of Macau surveyed more than 2,700 visitors travelling independ-

ently that stayed in hotels here. The fi nd-ings of the survey are contained in their study report, entitled “What matters when FITs choose a hotel in Macau?”, which was unveiled at an international conference on tourism and hospital-ity in the Australian city of Melbourne this year.

The researchers say an independent visitor’s choice of hotel depends on the purpose of his or her visit. “A clear vision of tourists’ reasons for selecting a hotel is vital for the future development of the hotel sector,” their study report says.

“The tourism and hospitality indus-try is required to move towards diversi-fi cation, i.e. to provide accommodation ranging from budget to ultra-luxury hotels in order to capture different tour-ist segments,” the report says. But it acknowledges that Macau is a unique place and that visitors come for a variety purposes, to the extent that they cannot be divided neatly into business travellers and tourists.

Know your guestA study fi nds that visitors travelling independently tend to stay in the kinds of hotel that best suit their purposes

LOW-COST HOTELS GET WEBSITEA new website for Macau’s low-cost hotels began operating last month. The pur-

pose is to make them more competitive.The Macau Budget Hotels Site, www.macau-budgethotels.org, is run by the

Hoteliers and Innkeepers Association, with the support of the Macau Government Tourist Offi ce.

The website has versions in traditional Chinese, simplifi ed Chinese and English. It provides details of the city’s low-cost hotels and travel information.

Visitors can book rooms online in eight of the hotels, which together have over 500 rooms. Guests that book online pay when they check in. The developers of the site expect it to be able to accept online payments soon.

Low-cost hotels include two-star hotels and guesthouses. The city has 13 two-star hotels and 33 guesthouses, which together have nearly 1,500 rooms.

Hospitality

88

DECEMBER 2012

Hospitality

Ms Yeung and Mr See say that to increase their room occupancy rates and sustain the increase, hoteliers should draw up marketing plans so that their hotels suit the needs of the kind guest they wish to attract.

Online guidanceThe results of their study indicate that over one-third of visitors travelling in-dependently to Macau come primarily

to see the sights. Only about 12 percent come primarily to gamble. The study found that how much a hotel costs to stay in, which chain it belongs to and where it is, are the three most important considerations for independent visitors in choosing a hotel.

Price matters a lot, but it is not the deciding factor in the choice of some visitors. The room rate is the main con-cern of visitors travelling independently who come to see the sights, try the food, go shopping or visit friends. Business travellers are more concerned about where in town the hotel is. Gamblers tend to be guided by hotel brands.

One result of the study highlighted by the researchers is that recommenda-tions, including reviews found online, carry more weight when a visitor choos-es a hotel than the facilities the hotel has to offer. So Ms Yeung and Ms Yee advise hoteliers to make good use of the Inter-net to promote their establishments.

Chain

Chain

Chain

Room rate

Room rate

Room rate

Room rate

Room rate

Room rate

Chain

Chain

Chain

Recommendations

Recommendations

GAMBLING

GOURMANDISING

VISITING FRIENDS

SIGHTSEEING

SHOPPING

DOINGBUSINESS

Situation

Situation

Situation

Situation

MAIN FACTOR IN CHOICE OF HOTEL BY VISITORS TO MACAU TRAVELLING INDEPENDENTLY,

DEPENDING ON THE PRIMARY PURPOSE OF THE VISIT

0% 5% 10% 15% 20% 25% 30% 35% 40%

PRIMARY PURPOSE OF VISITORS TO MACAU TRAVELLING INDEPENDENTLY

Gourmandising23%

Shopping14%

Doing business6%

Other2%

Gambling12%

Sightseeing36%

Visiting friends7%

Chain

Room rate

Situation

Recommendations

Facilities

Advertising

Availability

Others

MAIN FACTOR IN CHOICE OF HOTEL BY VISITORS TO MACAU

TRAVELLING INDEPENDENTLY

PERC

ENTA

GE O

F ANS

WER

S

30%0% 5% 10% 15% 20% 25%

How much a hotel costs to stay in, which chain it belongs to and where it is, are the three most important considerations for independent visitors in choosing a hotel

89

DECEMBER 2012

GET MARRIED

HOTELS AND RESTAURANTSIN NEED OF 4,800 PEOPLEThe hotel and restaurant sector was in need of 4,800 workers as of September-end, data released by the Statistics and Census Service shows. Of those, close to 2,600 were needed in hotels. Even so, the number of vacancies was down by 18 percent from six months before. At the end of September, the hotel and restaurant sector employed almost 67,500 people, up by 6.7 percent from six months before. Two out of every three of these worked in a hotel.

TOURIST SATISFACTIONGOES UP SLIGHTLYTourist satisfaction in Macau went up in the third quarter, according to the latest results of the Macao Tourism Satisfaction Index, released last month. The index for the third quarter stood at 70.7 out of a highest possible score of 100 points. This was slightly better than the 69.5 points recorded in the previous quarter. The Macao Tourism Satisfaction Index is compiled by the Institute for Tourism Studies’ Tourism Research Centre.

ARRIVALS DOWN FORSIX MONTHS STRAIGHTThe number of visitor arrivals in October decreased by 1.2 percent year-on-year to 2.35 million, offi cial data shows. Not even the National Day Golden Week helped to revert the downward trend, with visitors from the mainland decreasing by 1.4 percent year-on-year. Visitor arrivals have been dropping for six months straight, since May. From January to October, Macau welcomed a total of 23.2 million tourists, up by a mere 0.8 percent year-on-year.

The Macau Government Tourist Offi ce launched a new Wedding Incentive Scheme last month. The bureau aims to promote “Macau’s multi-faceted tourism image and to attract couples, wedding planners and companies to choose Macau as a destination for overseas weddings,” it said in a statement.To apply for the scheme, the wedding should have a minimum of 50 non-local guests with two consecutive nights of stay in Macau’s hotels. The scheme will provide support to wedding-related

The government’s new wedding incentive scheme is aimed at diversifying tourist sources

IN MACAUactivities in Macau, offering tourist information kits, welcome gifts and facilitating liaisons with other relevant government entities.A maximum of MOP300 (US$37.5) will be granted per non-local guest for their activities in Macau, based on actual consumption.The Tourist Offi ce also increased the amount of the Student Excursion Incentive Scheme. Each non-local student will now be eligible to receive up to MOP300 instead of the previous MOP200 limit.

90

DECEMBER 2012

Tourism statistics

Total

- Same-day visitors

- Overnight visitors

Average length of stay

Hotel and guest-house rooms

Hotel guests

Hotel average occupancy rate

Average length of stay

Total spending (excluding gaming)

- Non-shopping spending

- Shopping spending

Per-capita spending

Asia

- Mainland

- Guangdong

- Fujian

- Zhejiang

- Hunan

- Beijing

- Shanghai

- Tianjin

- Chongqing

Individual visit scheme

- Hong Kong

- Taiwan

- Japan

- South Korea

- Others

America

Europe

Oceania

Others

23,212,331

12,047,366

11,164,965

1.0

26,083

7,018,836

82.6

1.39

MOP 13.3

MOP 6.9

MOP 6.3

MOP 1,822

22,621,957

13,904,025

6,661,651

675,537

505,218

486,896

262,457

406,479

103,933

159,816

5,895,360

5,939,416

903,354

344,629

365,937

1,164,596

250,604

211,101

106,370

22,299

12.2

15.6

8.4

--

11.3

11.0

4.3

-0.01

20

23

16

7

12.4

22.2

131.1

164.2

140.1

191.9

185.6

159.0

151.2

166.8

20.1

1.6

-6.0

-4.2

20.2

-0.6

4.5

3.0

0.3

8.8

0.8

-2.9

5.0

0.1

16.4

11.5

-0.6

-0.13

10

13

5

12

0.7

5.2

-2.0

-10.2

7.5

14.5

3.8

6.6

41.2

18.7

8.1

-6.3

-13.1

9.1

10.9

-4.5

-0.5

3.7

2.5

11.9

Visitor arrivals

Hotels

Visitor expenditure

Visitors by place of residence

2011

2011

2011

2011









Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Oct 2012

Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jan-Sep 2012

Jul-Sep 2012

Jul-Sep 2012

Jul-Sep 2012

Jul-Sep 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

Jan-Oct 2012

So

urce

: Sta

tistic

s an

d C

ensu

s S

ervi

ce

28,002,279

15,077,119

12,925,160

0.9

22,356

8,612,127

84.1

1.53

MOP 45.3

MOP 22.9

MOP 22.4

MOP 1,619

27,287,076

16,162,747

8,196,139

932,316

575,595

533,495

314,696

471,366

100,585

172,140

6,588,722

7,582,923

1,215,162

396,023

398,807

1,531,414

310,608

251,748

127,983

24,864

days daysdays

nights

billion

billion

billion

billion

billion

billion

nights nightsnights

percentage points

percentage points

91

DECEMBER 2012

A year has passed since American billionaire restaurateur Tilman Fertitta agreed to buy Morton’s

Restaurant Group Inc. The deal, com-pleted in February, has meant no change in the chain’s plans for this part of the world, says Morton’s vice-president for operations, Mark Leach.

The chain of upmarket steakhouses regards Asia as an important growth en-gine. There are no immediate plans for a second restaurant in Macau. Instead, Morton’s is mulling opening a second premises in Hong Kong.

Mr Leach says revenue at the out-let in the Venetian Macao is increasing steadily and that the restaurant’s pros-pects are good. He predicts that demand will continue to increase with the devel-opment of new casino resorts in Cotai.

BY ALEXANDRA LAGES

The ownership of the Morton’s steakhouse chain has changed, but plans to expand have not

Beefi ng up

“We see that affecting our business in a positive way,” he says.

Macau is only the second city to have a Morton’s in a casino resort. At-lantic City in New Jersey was the fi rst.

Mr Leach says the Atlantic City res-taurant performs better than its Macau counterpart, probably because the Mor-ton’s brand is better known in the United States, having fi rst appeared in Chicago in 1978. “Here, it’s growing. We have been here for about fi ve years and every year seems to get better and better.”

Most of Morton’s customers in Macau are tourists, many of them over-night visitors, but some clients live here, he says. At fi rst, diners had to pass through the casino to reach the restau-rant’s main entrance. But last year the Venetian Macao re-arranged the gaming

fl oor so that civil servants and people under the age of 21, who are not allowed into casinos, can have front-door access to the outlet.

Important marketsMr Fertitta’s Landry’s Inc agreed to buy the Morton’s chain for US$117 million (MOP936 million) last December and took the company private this year. Lan-dry runs Atlantic City’s Golden Nugget casino.

“We’re [in] a private group now that includes restaurants, hospitality, gaming and entertainment. It is multifaceted in the hospitality business, and alone has 400 restaurants,” Mr Leach says. Lan-dry has forecast US$2.5 billion in rev-enue this year.

After Landry bought Morton’s it set

There are no immediate plans for a second restaurant in Macau. Instead, Morton’s is mulling opening a second premises in Hong Kong, says vice-president for operations, Mark Leach

Hospitality

92

DECEMBER 2012

out to modernise the chain and closed eight restaurants in the United States. But plans to expand in Asia are unchanged. “We are looking at everywhere right now. We are looking into Taipei and into a number of other cities,” Mr Leach says. “Asia is very important for us.”

Morton’s opened its fi rst restaurant in Beijing last month. The unit is smaller than most in the chain, the main dining room seating 110 people. It does have

eight private rooms to refl ect the impor-tance of secluded dining in the mainland.

The fi rst Morton’s in Asia opened in Singapore in 1998. The second opened in Hong Kong in 2000 and the third in Macau in 2007. The chain opened its fi rst restaurant in Shanghai in 2010 and intends to open another there by the middle of next year.

“It really boils down to how we continue to market the brand. We have

been doing it through social media with a tremendous infl uence in the United States. We want to try that in Asia,” Mr Leach says.

All-American brandAll the Morton’s restaurants in Asia are meant to offer the same kind of dining experience as those in the United States. The chain comprises about 70 outlets. All but seven are outside the United States.

“We’ve been seeing that the recog-nition of several U.S. brands in Asia has only helped our business as well. There is also a tremendous expatriate commu-nity in a lot of the markets. But just the economic growth that we have seen in the region has alone been infl uential in our business,” Mr Leach says.

He says the chain’s worldwide rev-enue so far this year is more than 4 per-cent higher than at the same time last year. The Macau restaurant’s revenue has increased by more than 2 percent.

Mr Leach admits 2008 and 2009 were diffi cult years, but that Morton’s is rebounding. “The worst years are be-hind us,” he says.

“We are starting to see a strong re-turn in all the Asian restaurants. This year has been good for us. We believe 2013 will be even better.”

The Morton’s chain comprises about 70 outlets. All but seven are outside the United States. The fi rst Morton’s in Asia opened in Singapore in 1998

Hospitality

93

DECEMBER 2012

In the “Star Wars” saga, Jedi master Yoda famously says: “Try not. Do. Or do not. There is no ‘try’”

The wisdom of YodaA couple of weeks ago I visited a poker room to play in a

tournament. I am an amateur poker enthusiast.A lot of other players were entering the competition,

and the staff at the registration desk were struggling to get their job done. The staff were in a stressful situation, so it was a good moment to test their performance.

I signed up for the tournament deliberately using a MOP1,000 (US$125) note to pay the entry fee. The staff should have told me that all gambling transactions in Macau are in Hong Kong dollars, but they failed to do so.

Soon after I bumped into the fl oor manager, who I happen to know quite well, and explained what had happened. I told him I would later change the bill. At the end of the tournament, I did so.

The fl oor manager came up and apologised: “We are trying, we are trying,” he said, meaning efforts were being made to train his staff to perform better.

That, unfortunately, is the problem in much of this city: there is a lot of trying but little succeeding. The government is trying a lot. So are hotel managers and even hospitality industry staff. The result is obvious: nothing is really getting done.

To say you are trying is an easy excuse for failing. And to say you are trying often obstructs the fulfi lment of your potential.

In the fi lm “The Empire Strikes Back”, part of the “Star Wars” saga, Jedi master Yoda is explaining to young Luke Skywalker how to use the Force, a supernatural power that only Jedi can control. After learning how to move some small stones around, Yoda asks Luke to retrieve his disabled spaceship from a bog where it sank, using only the Force.

Tricky wordLuke says this is impossible. Yoda insists, so Luke reluctantly agrees to “give it a try”. Yoda famously replies: “No. Try not. Do. Or do not. There is no ‘try’.”

While we are not Jedi warriors sent to save the universe, we too should drop “try” from our vocabulary.

Trying is inaction. Either we do something or we do not. To say you are trying to do something is to put less effort into doing it while looking for excuses for failure.

People can always say “I tried”. But trying does not pay the bills. Succeeding does. Either you get in shape or you do not. Either you sell more cars or you do not. Either you train your staff to perform better or you do not.

When you invite someone to a party and they reply, “I will try to make it”, do you mark them down as coming or not? In my experience, they usually will not show up.

For many, this is just a small detail, just a debate about semantics. They could not be more wrong. The repeated use of the word “trying” entangles people in a web of excuses and failures.

“Try” is a tricky word. Most people are happy using it freely, but it has an underlying negativity that holds us back. We should erase the word from our lexicon. It is a worthless term that achieves nothing. It only makes people feel better when they fail.

Be incisive. Decide either to do something or not to do it.

But do not try. Whatever you decide to do, commit yourself fully to doing it. Failure is not an option. Go for the win. Do not settle for having tried.

Fool’s paradiseDoers are people who go the extra mile to achieve things. They do not shy away from taking risks to achieve a better outcome.

Most people make statements containing the verb “try” only out of fear. They are afraid of their own success and therefore feel safer saying “I am trying” instead of using more confi dent expressions like “I am doing it”. In the event of failure, the expression “I tried” carries a built-in excuse. But it is an illusory excuse.

Anyone that has reached a demanding goal knows that it was not “trying” that achieved it. Just as trees do not try to grow or the sun does not try to shine, we are doers by nature, not triers.

To try is to be passive. To do is to be active. When we commit ourselves fully to doing something, we are ignited by passion and faith, helping us to overcome all sorts of obstacles.

We must use more assertive language if we are to become more active. It is the starting point for achieving greater things. Often, trying is just a way of avoiding taking a clear stance on something. It is a fool’s paradise. It is to procrastinate, evade and languish.

In the end, we are far better doing (or not doing) things. This requires deliberate decisions about actions, and deliberate decisions give us a motivational boost. Do or do not. But try not, Macau.

GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - [email protected]

In the “Star Wars” saga, Jedi master Yoda famously says: “Try not. Do. Or do not. There is no ‘try’”

TRYING IS A FORM OF PROCRASTINATION; SUCCEEDING IS WHAT COUNTS

94

DECEMBER 2012

Sands China Ltd. has a long-standing commitment to community

outreach and service

JOINING HANDS

Sands China Care Ambassadors with a group of 100 elderly from various elderly centres of the Macau Federation of Trade Unions

95

DECEMBER 2012

Sponsored Feature

he year just ending was yet another period of great growth for Sands China Ltd. The company expanded

its footprint with the opening of the Sands Cotai Central integrated resort, but more importantly, it strengthened its commitment to Macau, by further enlarging the scope of its corporate social responsibility initiatives.

Sands China Ltd. has a strong record of service to the Macau community. Its Sands China Care Ambassador Programme has already performed over 2,700 hours of volunteer work since its August 2009 inception. Also an active fi nancial supporter of many charitable organisations, Sands China Ltd. considers its commitment towards community outreach and service as a key aspect of its place in the Macau community.

The Macau Special Olympics has been one of the company’s

community partners since 2005, receiving annual fi nancial contributions totalling nearly MOP600,000 (US$75,000) to date. Sands China Ltd. has also devoted time and eff ort to organising and participating in a string of activities for hundreds of the Macau Special Olympics members since mid-2007. Additionally, the company employs Macau Special Olympics members in various departments.

In July, Sands China Ltd. sponsored Macau’s fi rst Special Olympics Golf International tournament that took place at Caesars Golf Macau. Senior executives from Sands China Ltd. partnered with the Special Olympics’ Macau team athletes on the rolling greens, fostering closer ties.

Sands China Ltd. also invited the participating Special Olympics athletes and their family members to visit “Ice World,” Asia’s largest indoor ice sculpture exhibition, at The Venetian Macao.

“Sands China Ltd. is an ardent supporter of the development and enrichment of Macau culture and society in all its aspects,” says Sands China Ltd. President and Chief Executive Offi cer Edward Tracy. “The work of the Special Olympics organisation is particularly praiseworthy and Sands China Ltd. is proud to be able to contribute to the important service it provides the community.”

People-oriented strategy

Pivotal in Sands China Ltd.’s corporate social responsibility eff orts is its Sands China Care Ambassador Programme. With a current membership of 370 coming together from across all the company’s properties, the group has dedicated itself to the betterment of the Macau community.

“As our volunteer force of Sands China Care Ambassadors has shown, it’s not only the community that benefi ts from

Broad reach

the company invited world-renowned sculptor Professor Sun Jiabin, the creator of the massive bronze and gold God of Fortune statue in Sands Cotai Central, to meet with a group of local academics, students and artists.

Sands China Ltd. approaches corporate social responsibility from a broad scope. Besides

providing fi nancial support to charities and organising special events for less well-off residents, the company eyes to help build the skills of local people.

Sands China Ltd. has contributed a total of MOP3.76 million (US$470,000) to higher-education institutes since the 2006/2007 academic year. Close to 600 local students have benefi ted from the scholarships and fellowships sponsored by the company.

As part of its corporate social responsibility eff orts, Sands China Ltd. has also embraced several healthcare awareness campaigns. Throughout October, visitors and guests to Conrad Macao, at Sands Cotai Central, surely noticed the accents of pink all around, a part of the luxury hotel’s support of the Hong Kong Cancer Fund’s month-long Pink Revolution, an annual global campaign seeking to raise both awareness and funds for breast cancer.

In addition, Sands China Ltd. diligently works to provide exchange opportunities between the international artists that regularly visit its properties and local creative talents. In April,

Sands China Ltd. CEO Edward Tracy presents a ceremonial cheque for the University of Macau’s scholarship fund

96

DECEMBER 2012

China Ltd.’s long-term devotion to the “One Day Volunteer” event has already brought smiles to the faces of over 300 people since it fi rst joined the initiative, in 2009.

Sands China Ltd. also organises its own community outreach activities. In July, 30 local families were invited to participate in the fourth annual “A Summer Vacation

these collaborative projects, but our dedicated volunteers themselves,” says Mr. Tracy. “Our team members have shown that they are the calibre of people that not only care about doing their best at work, but in doing their best in their community. And that’s something that we’re very proud of.”

The group annually

participates in the “One Day Volunteer” event, organised by the Macau Youth Volunteers Association. This year, 70 Sands China Care Ambassadors spent a joyful day with members of the Macau Association of Support for the Disabled and the Macao Association for the Parents of the Mentally Handicapped. Sands

Building a greener future

As part of its on-going eff orts to support sustainable development in Macau, Sands China

Ltd. this year established the Sands China Green Fund, managed by the Macau Ecological Society.

The Sands China Green Fund aims at cultivating local talent in environmental management, and also supporting and promoting green initiatives in Macau.

The fund started with a MOP900,000 (US$112,500) donation. Half of the money was raised at May’s Venetian Carnival Mardi Gras Costume

Charity Ball, with Sands China Ltd. matching dollar-for-dollar all funds collected at the event.

The fund has already announced the establishment of an education scholarship programme and a sponsorship programme for the publication and printing of materials to promote green awareness in Macau.

Sands China Ltd. is also an active participant in government and community green initiatives, participating annually in the Macau Energy Conservation Week and Earth Hour.

In addition, The Venetian Macao sponsors the annual Macau Solar Boat Challenge. An educational and community project organised by the University of Saint Joseph, the event invites primary and secondary students to develop solar-powered boats and race them on the outdoor lagoon of The Venetian Macao.

Internally, Sands China Ltd. is involved in several programmes to improve the company’s stewardship of the environment. Those eff orts were recognised with a Macao Green Hotel – Gold Award, the highest possible ranking, presented earlier this year by the Environmental Protection Bureau to The Venetian Macao.

Sands China Care Ambassadors visit elderly homes

Valuable collector’s items were put up for auction to help raise funds for the Sands China Green Fund

97

DECEMBER 2012

Sponsored Feature

Game responsibly

in Venice” at The Venetian Macao. This year’s benefi ciary was the Women’s General Association of Macau, whose services benefi t single-parent and fi nancially-deprived families.

Accompanied by 15 Sands China Care Ambassadors, dozens of families were given free access to the Football Fanatic

A signifi cant part of Sands China Ltd.’s corporate social responsibility initiatives

go to the promotion of responsible gaming in Macau. The company has donated MOP2.6 million (US$325,000) in assistance to local counselling centres to date.

Last month, Sands China Ltd. presented a total of MOP450,000 to three counselling centres. The Young Men’s Christian Association of Macau, the Macau IEF Rehabilitation Centre for Problem Gamblers, and the Sheng Kung Hui Macau Social Service Coordination Office each received a cheque for MOP150,000 to assist their efforts in providing counselling and support services for people needing help to moderate their gaming habits.

“Gaming in a responsible way is important to the community, and we’re happy to work with organisations helping to minimise the social impact of problem gambling,” says David Sisk, Executive Vice President and Chief Operating Offi cer of Sands China Ltd.

The company’s cash donations to counselling centres and academic institutions represent only

Zone at the Manchester United Experience Store and QUBE kids’ playground for two hours. Since 2008, over 100 service users of the Women’s General Association have participated in community events held at The Venetian Macao, including signature gondola rides, special buff ets and Easter-egg painting workshops.

New Year blessings

For the third consecutive year, the Sands China Care Ambassador Programme also gave its time to helping Macau’s live-alone elderly ahead of the Lunar New Year. In January, 50 volunteers spent one afternoon “spring cleaning” at 15 live-alone elderly homes, bringing with them gifts and blessings for the upcoming Chinese New Year.

The benefi ciaries of the visit were among the live-alone elderly sponsored by Sands China Ltd. to receive support from the Peng On Tung Tele-Assistance Centre. This year, the company has sponsored 130 live-alone elderly for the use of

a part of its overall eff ort toward supporting responsible gaming. Sands China Ltd. launched a self-exclusion programme in 2004, and was a pioneer in Macau in establishing its comprehensive responsible gaming programme in 2007.

The company regularly engages in off ering responsible gaming training for team members, and in academic research and social activities. For the past three years, Sands China Ltd. has been an annual participant in responsible gaming activities organized by the Social Welfare Bureau, the Gaming Inspection and Coordination Bureau and the University of Macau.

the 24-hour emergency support line for 12 months.

Also during the Chinese New Year celebrations, 100 elderly coming from various elderly centres of the Macau Federation of Trade Unions were invited for a gathering at The Venetian Macao. This was the fi fth consecutive year that Sands China Ltd. celebrated the Lunar New Year with local elderly residents.

Last month, for the second year in a row, the company joined the 43rd Caritas Macau Charity Bazaar, an annual fundraising event. The company was the only gaming operator to take part this year.

Aside from hosting a game booth to help raise funds for Caritas Macau, Sands China Ltd. elevated its support by making an additional MOP200,000 donation, bringing to MOP350,000 the company’s total donation to Caritas in 2012. Since 2004, the company has contributed over MOP2 million to support Caritas Macau’s social services.

Special Olympics athletes visit Ice World

Sands China Ltd. presents ceremonial cheques to representatives of Macau counselling centres in support

of their responsible gaming services

98

DECEMBER 2012

98

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98

NOVEMBER 2012

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99

DECEMBER 2012

FRANCE’S BUSINESS FOOTPRINT IN MACAU

IS EXPANDING, SUPPORTED BY

LUXURY GOODS EXPORTS, INVESTMENT

IN PUBLIC UTILITIES AND PRIVATE

ENTREPRENEURSHIP

THE FRENCH RECIPE

100

DECEMBER 2012

he French presence in Macau has grown swiftly in recent years as the economy here expands. The French consul-general in Hong Kong and Macau,

Arnaud Barthélémy, says Macau is also the perfect gateway to a much bigger market: the mainland.

The number of French people living here has increased by almost 10 percent to 370 in the past 12 months, according to data from the French consulate general. Mr Barthélémy says most are executives of French multinational corporations that have interests in Macau companies, people working in the hospitality and entertainment industries, and exchange students.

“There are 100 international students at the University of Macau, out of which one-third are French,” Mr Barthélémy says. He highlights an interest in greater synergy in hospitality teaching. “We want to expand the existing cooperation between universities, for instance with Nice’s tourism schools.”

Macau and Hong Kong are important markets for France for two reasons, he says. First, their economies are sound, even in the current global downturn. Second, they are gateways that give French companies access to the mainland, the world’s largest market.

French business interests in Macau include public utilities, companies trading in consumer goods and niche businesses, lead by entrepreneurs.

The French presence is most obvious in public utilities. France’s Suez Environnement SA has stakes in Macao Water Supply Co Ltd, CEM – Macau Electricity Co Ltd and CSR - Macau Residue System Co Ltd. Veolia Transport RATP Asia is one of two shareholders in bus operator Reolian Public Transport Co Ltd.

In the fi eld of consumer goods, several high-end brands such as Louis Vuitton, Chanel and Cartier have outlets here. Most of the shops are within the ambit of Hong Kong subsidiaries of the companies that make these brands.

In good companyFrench individual entrepreneurs are to be found in a wide array of businesses. These businesses range from food and drinks to toy manufacturing to environmental consulting.

Outside the three main categories is Macau Catering Services Co Ltd, better known as Servair Macau, one of the biggest and oldest French ventures here. The airline catering company is a joint venture between Servair-SATS Holding Co Pte Ltd and a group of Macau companies. Servair-SATS is run by Servair SA, an Air France subsidiary, and Singapore Air Terminal Services Ltd (SATS).

Also outside the three main categories is the Sofi tel hotel chain, owned by France’s Accor SA. The chain has one hotel here, at Ponte 16.

Mr Barthélémy says there are several business opportunities for French

companies in Macau and its surrounding vicinity. He is paying close attention to progress on Hengqin Island, which is being developed jointly by Macau and the neighbouring city of Zhuhai.

Two enterprises with French pedigree are undertaking projects on Hengqin: CEM and electrical engineering company Schneider Electric SA. They are building basic infrastructure so that factories, shops, offi ces, housing and tourist facilities can be developed. “Others are very attentive to all tenders to be launched in the future,” Mr Barthélémy says.

Big impressionMore business opportunities are to be found in Macau’s burgeoning market for consumer goods. Merchandise imports from France have increased at a tremendous pace in recent years.

The value of imports from France was MOP6.3 billion (US$788 million) last year, six times what it was in 2005 and 56 percent more than in 2010, data from the Statistics and Census Service shows. In contrast, the value of Macau’s merchandise exports to France was less than MOP90 million last year, 80 percent less than in 2005.

The increase in imports from France last year was due largely to more shipments of food and drinks. French brands had a 31-percent market share by value for imported food and drinks last year. France also had 17 percent of the market for imported clothes and shoes,

OPPORTUNITY KNOCKSMACAU IS A SPRINGBOARD FOR FRENCH COMPANIES LAUNCHING INTO THE MAINLAND MARKET, THE FRENCH CONSUL-GENERAL SAYSby Luciana Leitão

THE FRENCH RECIPE

101

DECEMBER 2012

Ph

oto

: An

tón

io M

il-H

om

en

s

according to data compiled by the France Macau Business Association.

Only the mainland and Hong Kong export more to Macau than France in terms of value. “It is quite impressive,” Mr Barthélémy says. France’s importance as a source of imports is due to its leading position in the market for high-end consumer products.

The increase in imports from France is due to economic growth here, Mr Barthélémy says. “Macau is a new Asian miracle. That is why we have these results.”

But the slowing of economic growth has reduced the momentum of growth in imports from France. In the fi rst nine months of this year, imports from France were worth MOP4.66 billion, only 1.2 percent more than a year before, chiefl y because imports of French food and drinks fell.

Lust for lifeMr Barthélémy says the right approach for French exporters is to associate them with the legendary ability of the French to enjoy life. He describes the city as “the ideal platform to present French products and French ‘art de vivre’ to the many tourists” that visit. “That will appeal to more people ... interested in the lifestyle,” he says.

Mr Barthélémy says this approach will work for the gaming sector, in particular. “Casinos want to have this French fl avour,” he says.

For Macau companies considering forging links with French companies, Mr Barthélémy offers one piece of advice: “If you are to deal with the French, it’s always good to speak French.” The same applies to would-be employees of French enterprises. “French companies are extremely eager to hire local people who have had some sort of exposure to French culture and language”, he says.

Mr Barthélémy says the past 12 months have been especially successful for efforts to promote French culture here, with several cultural events having taken place. He says credit for this success should go to the “extremely active” Alliance Française, which promotes French culture internationally.Arnaud

Barthélémy

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1.8 millionThe number of litres of bottled red wine imported from France,

from January to September. Most of it was fi ne wine, which pushed the total value of imports to MOP929 million. Even so, the value

was down by one third yearly. Still, France had a staggering market share by value of 86 percent for bottled red wine

91.4%The year-on-year volume increase in sales of champagne from France to Macau for the fi rst nine months of 2012.

Imports reached close to 105,000 litres, worth MOP36 million, or 98 percent of the market value

734The weight, in kilos, of the pieces of gold jewellery with diamonds France sold to Macau in the fi rst nine months of 2012. They had a value of close

to MOP630 million, accounting for one third of this segment in terms of value

74,987The number of leather handbags “made in France” which entered Macau from January to September.

They were worth MOP490 million. Each had an average price tag of MOP6,530.

Only Italy had a better performance

MOP521 millionThe total value of make-up, cosmetics and other beauty products

imported from France in the fi rst three quarters of 2012. Among those products were close to 11 tons of French cosmetic powder products

14.5%The year-on-year increase, by value, of perfume and eau de toilet sales

by France to Macau from January to September. The total reached MOP111 million, or over 80 percent of all perfume and eau de toilet imports

MOP2,975

FRENCH STYLEFORGET ‘GANGNAM STYLE’. IN MACAU,

FRENCH LUXURY GOODS, FROM FASHION TO FINE WINES, RULE THE MARKET

SOURCE: STATISTICS AND CENSUS SERVICE

THE FRENCH RECIPE

The average unit value of the 3,139 fountain pens, stylograph pens and imilar products imported from France

during the fi rst nine months of 2012. Their aggregate value reached MOP9.3 million,

making the country a market leader in this segment, with a share of two thirds by value

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We welcome all membership renewal and early bird enrollment. If you renew or apply and pay before January 31st 2013 , you will be entitled to our Early Bird discount!

Just go to visit us at www.francemacau.com or call +853 8798 9699 for easy application!

France Macau Business Association ( FMBA ) ,

a non-profi t organization, aims to promote

and foster the interests of Business relations

and professionals between France and Macao,

and to provide a forum for networking

an access to information. Since its set up ,

FMBA has been very active in organizing

various kinds of activities for its members

such as annual dinner, visits, exhibitions

and the signature event - breakfast meetings

which always attract full house attendance.

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RIVERS OF GOLDHENNESSY HOPES TO DOUBLE ITS SALES IN MACAU WITHIN FIVE YEARS

acau has a passion for cognac. The drink is among the top-three French exports by value to the city, besting “made in

France” perfumes and champagne.Much of this thirst for the French

spirit is directed to Hennessey Cognac, the world’s number one brand. And the company behind the drink would like to double annual sales here within fi ve years.

Bernard Peillon, president and chief executive of Hennessy Cognac, explains the company’s growth in Macau is “closely linked” to the performance of the gaming industry, which is in turn dominated by VIP play. Amid a tougher year for casinos, he admits this year’s sales increase is likely to fall back to a single-digit fi gure.

Mr Peillon, who has led Hennessy since 2007, says the company has enjoyed double-digit growth here over the past six years, with top-tier products selling the best.

“But we started from a fairly low base. There was not a very signifi cant business before,” Mr Peillon says.

Things are different across the border. “We will probably do better [in 2012] in the mainland because we have room for expansion there. We are quite confi dent because there is much potential to expand geographically to second and third tier cities, which leaves plenty of room to grow.”

Cognac is a variety of brandy named

after the French wine-growing region of Cognac. It is distilled twice and aged in oak barrels. Last year alone, Macau imported more than 900,000 litres of cognac, brandy and armagnac – mostly from France.

Pretty pairingEstablished in 1765, Hennessy has a very strong position in the mainland, to where it fi rst shipped its cognacs in 1859. “It is our number one market, not so much in volume but in value,” Mr Peillon says.

According to him, Hennessy is appealing for Chinese consumers because, “from a taste profi le, [cognac] fi ts very well Chinese cuisine.”

He adds that the quality of the brand’s products and the luxury perception associated with cognac help sales. “For Chinese, it is extremely important to signify who you are through what you consume.”

Hennessy’s boss stresses the brand’s strategy is not restricted to the mainland. “We are looking at the global expansion of wealth in general,” he says. “Asia-Pacifi c is extremely important to Hennessy.”

Mr Peillon notes Macau is unique in offering a platform to put Asian consumers in contact with the Hennessy products. “Macau, more than any other market, is a window-shop for the mainland customers and to quite a few other markets.”

The sole distributor of Hennessy products here is Great Time Ltd, but the distiller recently opened a Macau offi ce to

oversee marketing and customer relations.Hennessy is part of French luxury

goods group LVMH, which owns brands including Moet & Chandon champagne, Louis Vuitton and Christian Dior. While these brands all have a footprint in Macau, Mr Peillon says each mostly works on an individual basis.

“Back-offi ce is where we look for synergies,” he says. “Front-offi ce, where the brand is exposed to the consumers and takes its full expression, we work as stand alone companies.”

Affective connectionMr Peillon says Hennessy works as a portfolio of products that, although sharing the same values, are marketed almost like separate brands.

“It is a way to ensure that each product has enough personality to assure it is relevant to its consumer target,” he says. “It is extremely important to connect emotionally to consumers.”

The Hennessy V.S.O.P cognac targets a younger audience, between 20 and 35 years old. To appeal to that consumer group, the company created the “Hennessy Artistry” concert series. Club Cubic, at City of Dreams, has hosted some of these events.

This is a worldwide programme “that provides an environment in which younger people who are totally invested in music, can have a brand experience” with Hennessy, Mr Peillon says. “That allows us to expose Hennessy V.S.O.P in terms of its mixability” with other drinks.

by Emanuel Graça

THE FRENCH RECIPE104

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“The Hennessy X.O has a different public relations platform. It is mostly for 35-plus-year olds. As you evolve your ability to appreciate the fi ner things in life, you may decide to select the Hennessy Paradis or Paradis Imperial.”

The different product range aims to lock-in the customer to Hennessy, he says. “It is a graduation. We follow our consumers from the age of 20 all the way to the time they have more disposable income.”

Hennessy was ranked as last year’s second top-performing spirit brand worldwide, just behind Johnnie Walker, in a report by the International Wine & Spirit Research and just-drinks online portal. The company sells more than 3 million cases of cognac worldwide annually.

Hennessy is also the world’s eighth most valuable luxury brand, worth US$4.6 billion (MOP36.8 billion), according to Millward Brown Optimor’s 2012 BrandZ study. Although its brand value dropped 8 percent year-on-year, Hennessy ranked fi rst among beverage brands.

“We are fi rst and foremost a brand company,” Mr Peillon says. “If we take good care of the brand, that ensures our success.”

He says Hennessy is “not obsessed” with sales. “We would rather make sure the brand is well-managed, and that we don’t go to fast.”

Mr Peillon explains that Hennessy is obliged to plan ahead, since its cognacs need long ageing periods.

“I could grow faster today. But I am capping this growth because, if I grow too fast, I will have a gap in my inventory down the road,” he says.

“My obsession is to have this fi ne balance between harmonious growth and ensuring that Hennessy will be here for another 200 years.”

According to Mr Peillon, Hennessy has the biggest inventory of eaux-de-vie available in the world. More storage facilities are currently being built. P

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he France Macau Business Association has added 17 names to its roll so far this year, and now has nearly 90 members. The increase shows that

French businesses here are thriving as the economy continues to expand.

The increase is due in part to an infl ux of French people, says the association’s chairman, Franklin Willemyns. Although most French businesspeople thinking about investing in the Pearl River Delta try their luck fi rst in Hong Kong, some are turning their attention to Macau, especially the younger ones.

Mr Willemyns says they look at Macau for simple reasons. They do so “either because they know people in Macau or sometimes because they are married to local people”. In other cases, French entrepreneurs “fi nd it too expensive to set up a business in Hong Kong”.

The France Macau Business Association helps French entrepreneurs wishing to set up here. It makes introductions and gives out information. “We try to put these businessmen in contact with people, so they can share and exchange experiences, and learn the do’s and don’ts of Macau,” says Mr Willemyns.

More than 40 French companies have offi cial operations here. They are to be found in several sectors of the economy. Some are public utilities. Others work in the world of fashion. Others yet are in the food and beverage industry. A few are in the hotel and restaurant business.

The range of businesses French companies engage in shows how important they are to the city, says

Mr Willemyns. He himself is the chief executive of CEM - Macau Electricity Company Ltd, the city’s sole distributor of electricity, which is owned in part by French conglomerate Suez Environnement SA.

Coffee and croissantsMr Willemyns says development here is giving French companies more business. “Macau is becoming more international. It is becoming more sophisticated and this also brings more opportunities of growth,” he says.

The France Macau Business Association was founded in 2008. Its purpose is to be a channel for the exchange of information between French and Macau businesses.

Its members range from individual entrepreneurs to small businesses to subsidiaries of multinationals. The number of corporate members has increased by 50 percent this year.

Membership is not restricted to French companies or individuals. The association has several members who are not French but have an interest in or connection to France. Mr Willemyns, for instance, is a Belgian who has lived in France.

The France Macau Business Association endeavours to promote Macau in France, especially among businesspeople there. “Macau is not very well known,” Mr Willemyns says. The association, the French consulate in Macau and Hong Kong, and the French agency for export promotion, all cooperate in informing French enterprises looking for partners in this part of the world about Macau and its potential.

Mr Willemyns says the France Macau

Business Association is also attracting more members because its activities are becoming more conspicuous. Among its most prominent events are its breakfast meetings. Every month a speaker is invited to give members and guests the benefi t of his or her wisdom on a particular topic.

“The idea is to talk about subjects such as the Macau law, politics and taxes – in general, subjects that may be of interest to companies working here, not only French fi rms, but also local and other foreign companies,” Mr Willemyns says.

Still or sparklingThe association arranges networking events, including cocktail and dinner parties. The highlight of each year is its charity gala dinner, to be held this year on December 14. The association also cooperates with other foreign business associations here, such as the British Business Association and the Canadian Chamber of Commerce.

The France Macau Business Association has also started to hold events to promote French products. “We organised one event for champagne, where we did some tasting and tried to explain better the different types of champagne and to increase knowledge about it,” Mr Willemyns says.

And the association works with the Alliance Française, which promotes French culture internationally. On their programme of joint events this year were the celebrations of Bastille Day, the French national day, and Beaujolais Nouveau Day, when enthusiasts gather to drink the fi rst of the Beaujolais wine produced each year.

BUSINESS FRATERNITÉMEMBERSHIP OF THE FRANCE MACAU BUSINESS ASSOCIATION IS GROWING AS THE FRENCH PRESENCE HERE INCREASESby Luciana Leitão

THE FRENCH RECIPE

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TOWERS OF BABELFor anyone who doesn’t speak Cantonese, communication can be diffi cult in Macau. The experiences of three French expatriates – David Rouault, Arnold Jacques and Loïc Faulon – differ.

When Mr Rouault arrived here, nine years ago, he tried speaking English, but it was hard to fi nd people who could understand it. “Only in the last fi ve years did I start to see more people learning English,” he says. He remarks that several restaurants now have English versions of their menus.

Mr Jacques says many people in Macau speak English, so it is not a problem to communicate. In his restaurant, he looks to his wife for help when customers speak only Cantonese. “She helps with the translation,” he says. Mr Jacques says he is sometimes surprised by customers that take the opportunity to practise their French with him.

His family communicates in three languages. He speaks French with his children and English with his wife. She speaks Cantonese with the children. Mr Jacques says this helps his children become multilingual.

Mr Faulon is unhampered by language barriers. He works with his wife, who speaks English and Cantonese, so she helps him to overcome any diffi culties. His children speak English most of the time but they are now beginning to pick up French, Cantonese and Mandarin.

THE FRENCH RECIPE

“There is no crime [in Macau], it’s safe and it’s clean,” says

David Rouault

“From a business point of view,

the French community is really present in Macau,” says

Loïc Faulon

avid Rouault, Arnold Jacques and Loïc Faulon have at least two things in common: they were born in France and are now living in Macau.

Make that three things: all agree life here is easier than back home.

The three men belong to Macau’s French community, which numbers around 370 people, according to data from the French Consulate General. Most are highly skilled, be it at a designer’s drawing board, in a restaurant kitchen or in the orchestra pit.

Mr Rouault, from west-central France, arrived here nine years ago to play the

MEET THE FRENCHALMOST 400 FRENCH PEOPLE LIVE IN MACAU. WE WENT TO MEET THREEby Luciana Leitão

trumpet in the Macao Orchestra. The 40-year-old says he was always attracted to Asia.

In the beginning Mr Rouault felt “a bit lonely”, since he knew nobody here. However, because the city is “very easy-going”, he was able to get around with the limited Cantonese he learned after arriving.

Mr Rouault soon became accustomed to the city. “There is no crime, it’s safe and it’s clean,” he says. And given the city’s Portuguese heritage, he somehow felt he still had “a foot in Europe”.

It was three years before he began meeting other French people living in

Arnold Jacques says life here is simpler

in every sense

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Macau. He expects that as the city becomes more international, more of his compatriots will move here.

Mr Rouault says that nine years ago Macau was “quite boring” on the cultural front, with little happening. Now it is very different. “The last few years, it has been developing a lot. There are several events,” he says.

All things considered, Mr Rouault feels that living in Macau is easy. But he has two complaints: the housing is poorly built and the traffi c is congested.

A change of courseMr Jacques was an engineer, in France. The 52-year-old changed his occupation when he came to Macau and is now a chef with his own restaurant, Jack’s Kitchen, which opened almost three years ago.

Mr Jacques is married to a Chinese from Macau, and the couple came here so their two young daughters could learn the language. He is something of a globetrotter, having lived in several different parts of the world.

Adjusting to the city was not easy. Mr Jacques had a good job in France, but it was hard to fi nd a similar position here. He eventually decided to open his own restaurant in partnership with his wife, since he had trained as a chef in France. “If you always do the same things in life, you feel bored.”

He says life here is simpler in every sense. The city is smaller and the red tape is less of an obstacle to setting up a business than in France, he says.

Even so, Mr Jacques says it is hard to fi nd a quiet place to relax. The weather, especially the humidity, is hard to bear for a Frenchman. And travelling in this part of the world can be more diffi cult than in Europe because of the constant need for passports and visas.

A grand designMr Faulon, born in Brittany, came to Macau after having had spells working in England and Germany. His wife is a native of Macau and he had long had a yearning to come to Asia.

The couple and their three children arrived less than two years ago. Mr Faulon says he is still adjusting. Having relatives here has helped him to fi t in more rapidly, he says.

An industrial designer by training,

Mr Faulon created a design consultancy called Loco Creative Works Ltd. “With my experience in Europe, I am confi dent I can do something good,” says the 36-year-old.

He notes that setting up the company was not diffi cult, and easier than if he had tried to do it in France. Macau has less red tape and lower taxes, Mr Faulon says, although he is worried about the increases in offi ce rents. He is also a professor of design at the University of

Saint Joseph and has been involved in design education in the mainland through the Guangdong Industrial Design Institute.

He says that during his stints in England and Germany he had little contact with other French expatriates. Here, he has plenty, in part because he wants his children to interact with other French children. “And, from a business point of view, the French community is really present in Macau,” Mr Faulon says.

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ehind many of the efforts to promote French language and culture here is Alliance Française de Macao. After focusing mostly on language teaching for years, the

non-profi t institution is now moving into the cultural fi eld and the organisation of events. And there is the promise of more to come.

Alliance Française’s director Pascal Casanova says the increased offering aims to respond to Macau’s needs. “If the city is growing and dynamic, so is Alliance Française,” he says.

Jazz concert by France’s Cédric Hanriot Trio last June

THE FRENCH RECIPE

SOFT POWERDEMAND FOR FRENCH-THEMED EVENTS HAS SEEN ALLIANCE FRANÇAISE BOOST ITS CULTURAL PROFILEby Luciana Leitão

According to Mr Casanova, despite the expanding range of entertainment offered, the public is eager for new cultural activities. “In each event, we always have lots of people joining. For us, it confi rms that we can continue to develop this kind of cooperation with Macau,” he says.

Alliance Française was created in Paris in 1883. It operates in 136 countries, with more than 1,000 centres committed to promoting both French language and culture. Each year, about 450,000 people join its language courses.

This year, Alliance Française has

helped to bring a wide range of French-related cultural events to Macau, in association with local partners. “We had exhibitions, concerts and dance shows,” says Mr Pascal Casanova. The organisation will end the year with a jazz concert in partnership with the Macau Jazz Promotion Association.

Party timeThe momentum is set to continue into next year. Mr Casanova highlights the visit to Macau of a delegation of performers from the world famous Nice Carnival.

“A cooperation between the two

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cities [Macau and Nice] allows us to bring around 15 artists from Nice. We will bring a big puppet to the parade,” he says.

Among the group, there will be also members of Nice’s Colombian community, who will provide Macau a taste of the Barranquilla’s Carnival, one of Colombia’s most colourful festivals.

“We will try to bring more concerts, exhibitions, conferences, cinema, an animation festival and a short fi lm festival [in 2013],” Mr Casonova says. Alliance Française is also mulling over whether to bring French writers to the second edition of the Script Road literary festival.

“Le French May” will have a Macau extension next year. One of the highlights will be an exhibition of furniture once owned by Napoleon Bonaparte at the Art Museum.

Organised by the Consulate General of France in Hong Kong and Macau since 1993, “Le French May” is dedicated to the promotion of French arts and creativity. Once based in Hong Kong only, the programme has recently included Macau.

Talk of pleasureAfter leading Alliance Française de Macao for more than a year, Mr Casanova says partnerships are essential in putting cultural events together, given the organisation’s small size. “Our job is to work with local networks, since we are a local non-profi t organisation,” says Mr Casanova.

The group’s main activity is teaching French. Despite a small facility with just four classrooms, the number of students is growing. This is mainly because the

Pierre Corthay shoe

organisation has been expanding the offering of external courses in partnership with other organisations.

“The demand is quite high,” Mr Casanova says, adding that Alliance Française has struck already several agreements with local tertiary institutions.

The organisation has more than 1,100 students. Of those, more than 400 come from external courses. Since its arrival to Macau, 25 years ago, Alliance Française has taught over 10,000 students, according to its website.

It has a small team of just 10 people, including fi ve language teachers from France.

Mr Casanova says the student profi le in Macau is quite different from that found in the mainland delegations of Alliance Française. “Here, they learn for pleasure, not need. If we compare with the mainland, people there are learning French to study abroad or to emigrate.”

Macau students are also interested in knowing more about French culture,like wine, Mr Casanova says.

In addition, Alliance Française de Macao provides support to residents aiming to go to France to further their studies or to do language courses. It occasionally welcomes students from the mainland, especially for exams to obtain the offi cial French profi ciency certifi cations.

Next year, Alliance Française de Macao will host 100 students from one of the top business schools in the world, France’s ESSEC Business School. They will visit the city while on a tour to Hong Kong.

A three-way partnership between Alliance Française de Macao, the One Central complex and the Charity Association of Macau Business Readers is bringing the French exhibition “Lux Inside” to Macau.

This digital art and photography project is conceived by journalist Laurence Picot, artist Ricardo Escobar, cardiologist Jean-François Paul and 3D programmer Sylvain Ordureau. The exhibition focuses on the idea of the unseen and hidden beauty within high-luxury fashion items. Using the high-defi nition 3D technology of medical imaging, several iconic objects – most of them from French brands – were scanned and manipulated to create spectacular images.

Alongside the pictures, several of the items themselves are on display, including a Christian Louboutin shoe and a Cadolle corset.

The exhibition begins on December 14 at One Central and runs until the end of the month.

LUXURY PERSPECTIVES

“We will try to bring more concerts,

exhibitions, conferences, cinema, an animation festival

and a short fi lm festival [in 2013],”

says Alliance Française’s director Pascal Casanova

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DECEMBER 2012

BY LUCIANA LEITÃO

Hawkers are still a part of Macau’s way of life, but their numbers are dwindling fast. Street ven-

dors blame the thinning of their ranks on competition from convenience stores and the diffi culty in attracting new blood to the greying trade.

The city has fewer than 1,100 li-censed hawker stalls, according to the Civic and Municipal Affairs Bureau, which licenses them. It had 1,450 in 2006. About 40 percent sell clothes and general merchandise, while around 200 sell cooked food.

There are no offi cial data about the combined turnover of the remaining hawkers. Street vendors were mostly un-regulated until the mid-1980s.

According to Lui Kwok Man, an academic, the decrease in the number of hawkers is related to economic growth. In

Retailing alfrescoFor centuries a living part of the city’s heritage, hawkers are disappearing

an article published in Macau Public Ad-ministration Magazine in 2010, Mr Lui said the number of hawkers “goes up in moments of economic contraction”, when there are more unemployed, who engaged in hawking to make money. The econom-ic boom, Mr Lui wrote, meant better-paid jobs in other occupations, making hawk-ing an unattractive occupation.

The government says it supports hawkers. In a written reply to questions from Macau Business, the Civic and Municipal Affairs Bureau said it had started revamping several hawker areas to improve working conditions and the power supply.

The move has sparked some com-plaints. In the San Kio district more than 100 shops closed for one day in August in protest. Shopkeepers complained that they were no longer allowed to use the

public areas to display their goods, un-like the hawkers.

Most hawkers are on the peninsula, in or around municipal markets and in busy tourist districts like Senado Square. They also set up temporary stalls in des-ignated areas during important tradi-tional festivals.

Too late to changeWong Chi Kan is a veteran hawker. He has worked at the same stand, near the Civic and Municipal Affairs Bureau, for more than 60 years. He is there from 7am to 6pm every day, except when storm warning signal number eight is hoisted. “I got used to this schedule. I wake up very early, do some exercise and after-wards I come to the stand,” he says.

He sells cigarettes, chewing gum and sweets. “The prices are fi xed. I don’t

The city has fewer than 1,100 licensed hawker stalls

Business

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stand. I don’t have space to sell more and different things,” he says.

Business, Mr Liu says, is not great. Their stand is in one of the city’s busi-est areas but few people buy. Most of the customers are Filipinos, but some are from Hong Kong or even Macau. Main-land visitors are not usually interested in their jade.

Mr Liu helps his mother run the stand. With his physical disability, he says there are few other options besides hawking.

“My mother is 84 and I’m disabled. It’s very hard to get employed.”

Also in Senado Square is a news-paper stand that is always busy, selling papers in Chinese, English and Portu-guese. It has been there for 30 years.

The owner, who does not wish to be identifi ed, says business has plunged by 40 percent since convenience stores began to open nearby. Closing down the stand was never an option, the owner says. “I have to raise my kids,” she says.

On hot days she enjoys the cool air wafting out of the air-conditioned shop nearby but the shopkeepers are irked by her presence.

“They complain a lot and even call the Civic and Municipal Affairs Bureau. The shop says we’re taking up too much space,” she says.

do discounts.” Although his stall is in one of the city’s busiest tourism districts, most of his customers are residents, with only the occasional tourist.

Mr Wong says his stall was well situated at fi rst, beside the Teatro Apollo cinema. “Before going to the cinema, people used to come here,” he recalls.

The Teatro Apollo building is still there but now houses a jeweller and a fashion retailer. The loss of the cinema was bad for his business, which never ful-ly recovered, Mr Wong complains. Also bad for business, was the mushrooming of convenience stores. Both 7-Eleven and Circle K convenience store chains en-tered the Macau market in 2005.

Hawking is the only occupation Mr Wong has ever known. He started when he was 16 and it is too late to change, according to him. Mr Wong has two daughters and one son. All are students. He does not believe any of them will fol-low in his footsteps.

A stone’s throw from Mr Wong’s pitch is Lai Hou Kei’s newspaper stand, in Avenida Almeida Ribeiro, known to most as San Ma Lou, its Cantonese name. The stand is open for business daily from 6am to midnight. “The news-papers come really early. Also, many tourists come here to buy,” says Mr Lai.

He inherited the business from his father, who started it. “My stand is half a century old,” he says.

Impossible to keepMr Lai complains about losing business to convenience stores but he also notes the manpower shortage prevents him from expanding. “Now, we cannot hire local people and we cannot get imported workers.”

He says that if things do not change he will eventually close his stand. Open-ing a shop is not an option because rents are so high, Mr Lai explains.

Im Fun Chi’s stall is nearby. From 9am to 6pm Mr Im sells books, most about gambling and politics, and cigarettes.

Previously Mr Im owned a fruit stall in the same area. He had to leave it to take over the bookstall from his parents. “It was impossible to keep both”, he says.

Mr Im explains business is not lu-crative but good enough to provide for him and his family. Even so, increasing competition and rising prices are con-cerns.

Liu Leong Sim and his mother, orig-inally from Indonesia, have been selling pieces of jade from a small stand in Se-nado Square for more than 20 years. “I sell jade because we only have a small

Most hawkers are in or around municipal markets and in busy tourist districts

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BY ALEXANDRA LAGES

Engineered for menScience and technology are still a man’s world in Macau, a study fi nds

Technology

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DECEMBER 2012

According to my culture, science is for men,” says one female university student. “Men have a better brain for maths,” says another.

Their statements refl ect the bias against women in science and technology. Two researchers from the University of Saint Joseph collected the comments while studying the gap between the sexes in sci-ence, technology, engineering and maths (STEM) in Macau.

Researchers Tânia Marques and Ana Correia concluded that the disparity between the sexes in the STEM fi elds here is “tremendous”. The report on their study, “The Gender Gap in Science, Engineer-ing, Technology and Mathematics: Unfolding Tradi-tional Mindsets”, says female students in university STEM programmes made up fewer than 1 percent of all students in higher education in the 2010/2011 academic year.

About 56 percent of those studying for degrees were women. But the report says: “There is a sig-nifi cant trend where women gravitate toward non-STEM majors”.

Fewer than 230 women were enrolled in STEM programmes in the 2010/2011 academic year, of-fi cial data shows. One in 60 women students were pursuing university STEM degrees.

Women made up only 14 percent of those en-rolled in STEM programmes. They made up fewer than 10 percent in engineering degrees.

Ms Marques and Ms Correia say this is a world-wide phenomenon, but that it is more pronounced in Macau than in other places. In the United States, women make up about one-quarter of all workers with STEM degrees.

Old-fashioned attitudeThe researchers criticise offi cials for turning a blind eye to the under-representation of women in the STEM fi elds. “The government should implement a policy of gender incentives to attract and retain fe-male students in STEM areas, where they are almost totally non-existent,” their report says.

Ms Marques calls for offi cials to invest more re-sources in promoting social awareness. “Society is still too traditionalist. We need to educate parents to show them that role models have changed,” she says.

The report concludes that an insuffi cient number of women teach science in schools, and that text-books do not include images of female scientists. Women should be more present in science, in order to create role models, the researchers stress.

Ms Marques says investing more resources in STEM fi elds can help to diversify the economy. “In order to reach economic diversifi cation, we need to create more jobs and educate people in different ar-eas,” she notes.

The study found gender stereotypes are strong here. The researchers interviewed 12 female stu-dents pursuing university degrees in subjects other than the STEM subjects.

“Everybody starts to tell you science is for males. In Macau, we don’t have role models to

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WomenWomen WomenWomenWomen Women WomenMenMen Men MenMenMen

Life sciencesTotal number of students enrolled in higher education

Physical sciencesStudents enrolled in science, technology, engineering and maths programmes

Mathematics and statistics

Computing Engineering

Men

600

500

400

300

200

100

0

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

HIGHER EDUCATION STUDENTS ENROLLED IN SCIENCE, TECHNOLOGY, ENGINEERING AND MATHS PROGRAMMES

STUDENTS ENROLLED IN HIGHER EDUCATION

“There is an uncaring and old-fashioned

attitude among teachers, especially in schools

for girls only, that increases the divide

between boys and girls,” says Ana Correia

follow,” the report quotes one of the in-terviewees as saying.

Ms Correia says primary and sec-ondary schools are also partly to blame, for failing to nurture an interest in sci-ence among their pupils. “There is an uncaring and old-fashioned attitude among teachers, especially in schools for girls only, that increases the divide between boys and girls,” she explains.

Gaming temptationMs Marques and Ms Correia say primary and secondary school teachers need more training. They add school laboratories are poorly equipped or barely used.

The researchers note little is done to increase the exposure of school pupils to science, such as taking them on science-related fi eld trips. School curriculums should be changed, they argue.

School results here do not sug-gest that boys do better than girls in the STEM subjects. The scores in the maths and science aptitude tests in the 2009 Programme for International Stu-dent Assessment, a worldwide study by the Organisation for Economic Co-operation and Development assessing the competencies of 15-year-olds, show no signifi cant differences between the sexes in Macau.

“I teach mathematics to high school students. I see no difference in terms of scores and performance in science-re-lated subjects between female and male students,” Ms Marques says. “Still, girls choose non-STEM majors to further their studies.”

The report says the main causes of

the STEM gap between the sexes are no different in Macau from those in other places. But gender stereotypes and the bias among teachers against girls pursu-ing careers in the STEM fi elds are more accentuated here.

Macau has other peculiarities. The report says this is a small city, where people rarely, if ever, pursue careers in the STEM fi elds. More importantly, Ms Correia says, the gaming industry offers more and better career opportunities than any other.

“The possibility of engaging in several jobs, such as croupier and cage cashier, which assure desirable salaries without requiring more than secondary qualifi cations, is diverting a meaningful number of young boys and girls from universities,” the report says.

“The ones who enrol in tertiary education choose majors in line with the money-driven social atmosphere, namely the popular business manage-ment and tourism and entertainment [programmes], preferred for the ease in which a job can be secured,” the re-port adds. “As a result, families are eas-ily tempted to encourage their boys and girls to channel their interests and ef-forts into fast-rewarding tracks.”

Some of the interviewees pointed out that the choice of academic special-isms here was limited. Those interested in the STEM fi elds are more likely to have to study abroad, thus lumber-ing their families with a fi nancial bur-den. Ms Marques and Ms Correia urge the government to widen the range of STEM programmes.

Academic year 2010/2011Source: Statistics and Census Service

“Society is still too traditionalist. We need

to educate parents to show them that role models have changed,”

says Tânia Marques

Technology

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Andreas Binder

Luxury118

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DECEMBER 2012

Three-pointed star shinesThe new Mercedes-Benz boss for Macau wants to increase the marque’s leadership of the premium market here

BY ALEXANDRA LAGES

German carmaker Daimler AG’s fl agship marque, Mer-cedes-Benz, wants to increase its share of the market here. “We want to grow our business and maintain our

leadership in the [premium] market, which is very important for us,” the new chief operating offi cer of Mercedes-Benz Hong Kong Ltd, Andreas Binder, tells Macau Business.

There were 93,000 cars in Macau at the end of September, offi cial data shows. Mr Binder estimates that 6,500 of them are Mercedes units.

Established in 2006, Mercedes-Benz Hong Kong Ltd im-ports and distributes Mercedes cars, commercial vehicles and parts in Hong Kong and Macau. A wholly owned subsidiary of Daimler, it works in close cooperation with Zung Fu Co Ltd, the exclusive Mercedes-Benz dealer in both cities, which has one showroom and one service centre in Macau. Zung Fu is a subsidiary of Jardine Motors Group, which is part of Hong Kong conglomerate Jardine Matheson Holdings Ltd.

Mercedes-Benz has launched four new models in Macau this year. Last month it introduced its new A-Class, priced at MOP270,000 (US$33,750) upwards. The model is getting a “great response”, says Mr Binder. It will be launched in the mainland next year.

Although Macau’s market is not as big as Hong Kong’s or the mainland’s, Mercedes-Benz sees potential in it. “For the last few years, Macau has been growing rapidly,” Mr Binder says. Annual sales here of Mercedes cars have more than dou-bled in just six years.

In 2011, Mercedes-Benz sold 656 vehicles in Macau, tak-ing 9.7 percent of the market, Mr Binder says. “In the premium segment, we already have a substantial market share of 36 per-cent. Of course, we want to continue to grow,” he says.

Few reasons to worryMr Binder expects Mercedes-Benz to sell 20 percent more vehicles this year than last and increase its market share to more than 10 percent. “We are striving to sell more than 700 new vehicles this year in Macau, which is quite a substantial

119

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oto

s: C

arm

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amount compared with the overall market size.” He expects the rate of growth in sales to slow to between 8 percent and 10 percent next year.

Mr Binder is not unduly worried that the government will limit the number of cars on the road. Offi cials have fl oated the idea of limits, but have yet to make any proposals publicly.

“It is always a concern for us, but we have to deal with it,” he says. “This is something we cannot infl uence.” Mercedes-Benz’s experience in markets that have such limits has taught it that makers of mass-market cars suffer most.

Analysts believe rising incomes of young people here will continue to drive up sales of upmarket cars in the next few years. But competition from other expensive marques does not scare Mercedes-Benz.

“Competition all over the world is very strong,” Mr Binder says. “In Macau, competition is also very strong, but we be-lieve that with all the new models we’ve launched this year and those we will launch in the upcoming time, we will be very competitive.”

Mercedes-Benz’s main worry here is the city’s economic performance. “Luxury goods are always dependent on the economic situation,” Mr Binder says.

“At this moment, Macau’s economy is growing, which means we have a chance to grow with it. But economies are infl uenced by external factors and our business will always be affected by that.”

Mr Binder highlights that the majority of the marque’s cli-ents in Macau are private users. He says only 10 percent of the total Mercedes units sold here are for corporate use.

The pride of AsiaMr Binder became Mercedes-Benz Hong Kong Ltd’s chief

operating offi cer only last month, but Asia is not new to him. He worked for Mercedes-Benz in Singapore and Vietnam from 1999 to 2009. He did a stint as Mercedes-Benz’s director-gen-eral in Serbia and Montenegro before coming to Hong Kong.

The German national says he is familiar with the mental-ity of the Asian consumer, although he stresses no two mar-kets are the same. “People here like to show [off] their luxury goods. Here, customers are proud to have a Mercedes,” he says. “That is something we should maintain.”

In the mainland, Mercedes-Benz is losing ground to two other upmarket German marques, BMW and Audi. While sales there of BMWs and Audis are growing rapidly, sales of Mer-cedes cars in October were 3.9 percent lower than a year before.

Mercedes-Benz sold 16,000 vehicles in the mainland in October. That took the number of vehicles it sold in Greater China (excluding Taiwan) in the fi rst 10 months of this year to about 160,000, or 5.5 percent more than in the equivalent period last year.

The company’s push into the mainland has been set back by the need to recall 1,525 B180 and B200 models because of faulty fuel tank vent valves. The recall begins this month.

To regain lost ground, Mercedes-Benz is setting up a new sales organisation in the mainland. The company expects the full availability of its recently launched B-Class model to add momentum to sales there in the next few months.

Mercedes-Benz forecasts sales of vehicles around the world will increase by 5 percent this year. Last year it sold 1.28 million units, the most ever for the marque.

The company aims to double annual deliveries of Mer-cedes and Smart vehicles to about 2.6 million by 2020, the year it wants to reclaim its position as the best-selling maker of upmarket cars from the likes of BMW and Audi.

DECEMBER 2012

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DECEMBER 2012

Arts & Culture

CLASSICALLY

THE CULTURAL CENTRE STARTS ITS

2013 MUSIC SEASON WITH THE DEBUT IN

MACAU OF THE ROYAL

SCOTTISH NATIONAL

ORCHESTRA

here is more to music in Scotland than just fi ddling and Susan Boyle, as classical music lovers will discover next month. The

Cultural Centre starts its 2013 music season by welcoming the Royal Scottish National Orchestra to Macau for the fi rst time.

The orchestra’s performance here will be the grand fi nale of its fi rst tour of China. Before playing in the Cultural Centre, it will give concerts in Beijing, Tianjin, Guangzhou and Shenzhen.

The Royal Scottish National

SCOTTISHOrchestra has just begun a new era, as celebrated British-Canadian musician and conductor Peter Oundjian offi cially took up the post of music director in September. Oundjian is particularly famed for his orchestra-building skills and audience engagement.

“I feel privileged to be taking the Royal Scottish National Orchestra on its fi rst China tour and to be representing Scotland abroad, particularly at such an early point of my tenure,” he says. “The orchestra has a strong reputation overseas through its touring and extensive discography and it will be rewarding to continue to fulfi l our international remit.”

In Macau, the ensemble will perform pieces taken from a symphonic touchstone repertoire, including

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DECEMBER 2012

ROYAL SCOTTISH NATIONAL

ORCHESTRAWHEN: Saturday, January 5, 8pmWHERE: Macau Cultural Centre,

Grand AuditoriumTICKETS: Between MOP120

and MOP480, available at the Macau Cultural Centre and Kong Seng outlets

INQUIRIES: +853 2870 0699 or email [email protected]

Mendelssohn’s “Scottish Symphony” and Stravinsky’s “The Firebird” (1919 suite). This Scottish-fl avoured concert will also include Maxwell Davies’ “An Orkney Wedding, with Sunrise”, bringing to the fore the distinctive sound of the bagpipes.

The Glasgow-based orchestra was formed in 1891 as the Scottish Orchestra, became the Scottish National Orchestra in 1950 and was awarded royal patronage in 1991. The orchestra has played with many prestigious conductors, such as Neeme Järvi and Stéphane Denève, and has had extensive collaborations with soloists.

Plane symphonyThe Royal Scottish National Orchestra performs regularly all over Scotland. It is a stalwart of the Edinburgh International Festival. In the past fi ve years it has completed three sold-out European tours.

The ensemble has built a reputation for taking live orchestral music out of the concert hall and performing it in less conventional places. In September, 70 of its musicians gave two performances in the departure lounge of Glasgow airport, playing Mendelssohn’s “Hebrides Overture” and Tchaikovsky’s “1812 Overture”. Last year, the orchestra surprised passengers and airport staff in the check-in area with an impromptu rendition of Ravel’s “Boléro”, an online video of which has been viewed around the world.

The orchestra has also ventured out of the mainstream to give a taste of live orchestral music to people that might otherwise be oblivious to it. Last month, it put on a performance of selections from the soundtracks of the popular “Final Fantasy” video game series.

The Royal Scottish National Orchestra is also renowned for the quality of its recordings. Last month, the orchestra and former music director Denève received one of the most coveted annual awards for classical music, a Diapason d’Or de l’Année from French magazine Diapason, for their recording of Debussy’s main orchestral

works on the Chandos label.“Stéphane Denève Conducts

Debussy” was released in May to coincide with the French conductor’s fi nal performances as the orchestra’s music director, after seven years in the job. The double album met with glowing reviews.

Critical acclaimThe Diapason d’Or de l’Année award that the recording earned was not the fi rst that the tandem of the Royal Scottish National Orchestra and Denève had won. In 2007 they won one for their fi rst recording of the orchestral works of Albert Roussel for Naxos.

The orchestra has received eight Grammy Award nominations for its releases in the past decade. Over

200 recordings by the ensemble are available. These include the complete symphonies of Prokofi ev and Glazunov.

The orchestra has been praised by BBC Music Magazine

for presenting “shimmering strings, colourful woodwind

and swaggering brass, full of wit, colour and joie de vivre”.

One hour b efore the concert here, renowned music critic Chow Fan Fu is due to give a talk at the Cultural Centre about the Royal Scottish National Orchestra and the compositions it will perform. Chow has been writing about the performing arts for almost 40 years in the mainland, Taiwan, Hong Kong and Macau.

He will give his talk in the conference room in the Cultural Centre. Admission is free. The talk will be in Cantonese. No translation will be provided.

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DECEMBER 2012

Golf for hopeSilver Heritage and Wynn Macau I teams take the big prizes at the sixth Annual Macau Business Charity Golf Tournament

This year’s Annual Macau Business Charity Golf Tournament was yet another great showing of corpo-

rate social responsibility. Macau’s busi-ness community members responded to the call and wielded their clubs for charity once again.

After two rounds of play in October, at the Macau Golf & Country Club and at Caesars Golf Macau respectively, the Silver Heritage team was the gross score tourna-ment winner. The team, made up of Mike Bolsover, Tim Shepherd and Rodney Hall, forwarded its HK$100,000 (US$12,900) winnings to Olga’s Promise, a Nepali char-ity that works in the fi eld of children’s wel-fare (www.olgaspromise.org).

Mr Shepherd went to Lalitpur, Nepal, to hand over the cheque to Olga Murray, the 87-year-old who founded the organisa-tion as a result of a trip to the country 25 years ago.

Ryan Beauregard, Dave Williamson and Dennis Hudson, from the Wynn I team, were the overall net score tournament win-ners. They donated their HK$100,000 win-nings to Cradle of Hope, a Macau-based charity that takes care of children who have been abandoned, neglected or are at risk from physical or psychological abuse.

A special HK$48,000 donation was made by BNU bank, telecommunications provider CTM, Portuguese news agency Lusa and Portuguese-language newspa-per Jornal Tribuna de Macau to the Asso-ciation of Rehabilitation of Drug Abusers of Macau.

Special feelA total of 28 teams representing the cream of Macau’s socially responsible corporate citizens took part in this year’s edition. The patrons came from all corners of the business community, from professional service providers to gaming operators and suppliers.

Melco Crown, The Star, Caesars Golf Macau, Sands China, Walker Digital Gam-ing, BNU, Wynn Macau, IGT Asia, Aruze Gaming, Galaxy Entertainment Group, Lusa, Bally Technologies, MGM China, Silver Heritage, Transcity Asia, Aristo-

crat, WMS, Konami, TH Fine Wines and JBA Consulting Engineers were among the socially responsible corporate patrons that joined the event.

Caesars Golf Macau specially invited a group of Macau Special Olympics’ athletes to join its two squads, allowing them to en-joy some great golfi ng moments together with Caesars’ pros. In addition, an entire Macau Special Olympics team sponsored by Nike Golf joined the competition, offer-ing this year’s tournament a unique feel.

Besides the two monetary awards, there were several trophies handed out, designed by local artist James Chu Cheok Son, who heads Art For All Society.

Paulo A. Azevedo, Colin Edwards and Helder Santos, from the Macau Busi-ness I team, claimed the ‘Net Score Win-ner’ trophy for the fi rst round, presented by The Star.

Silver Heritage team’s Mike Bolsover won the Galaxy Entertainment ‘Longest Drive’ trophy for the initial leg. Ian Gould was awarded the ‘Nearest to the Pin’ trophy, also taking home the Sands China ‘Putting Contest’ award, together with teammates Peter Greville and João Antunes, from the JBA Consulting Engineers team.

The MGM Macau ‘Straightest Drive’ trophy for the fi rst round went to Dennis Hudson, from the Wynn I team.

The Melco Crown ‘Best Performance’ trophy for the initial leg of the tournament was given to the Silver Heritage team.

Going into the second round results, team Wynn I won the ‘Net Score’ trophy, presented by Sands China. Mike Bolsover repeated his success from the fi rst round, again claiming the ‘Longest Drive’ award, sponsored by Galaxy Entertainment.

The ‘Nearest to the Pin’ trophy for round two, presented by Galaxy Entertain-ment Group, was awarded to Alastair Dick, from the Nike Golf SK Support team.

Repeating her 2011 result, Fatima Hung from the WMS team won the MGM Macau ‘Best Female’ trophy.

A special award, sponsored by Sands China, was given to Macau Special Olym-pics athlete Chan Cheang Mui, for ‘Best Performance – Putting Challenge’.

ROUND ONE

Corporate Social Responsibility

Macau Golf & Country Club

Rashid Suliman, from the Transcity team

João Antunes, from the JBA Consulting Engineers team

125

DECEMBER 2012

Denise Stuart, from the Galaxy I team Tam Tsan Kit and Lenlison Lo, from the Nike Golf Special Olympics team

Raymond Bell, from the MGM II team

Colin Edwards, Paulo A. Azevedo and Helder Santos, from the Macau Business I team

Pak Hoi Chung, Chris Connell and Peter Stevens, from Team Caesars II

Tam Tsan Kit, from Team Nike Golf Special Olympics José Costa Santos and Vandy Poon, from Team Lusa

Photos by Gonçalo Lobo Pinheiro and Renato Marques

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DECEMBER 2012

ROUND ONE Macau Golf & Country Club


Ian Farnsworth, Kurt Gissane and Andy Crisafi , from the Bally Technologies team

Roberto Sousa, Luis Pereira and John Galati, from the Macau Business II team

Dave Williamson, Ryan Beauregard and Dennis Hudson, from Team Wynn I

Team Caesars I’s Eason Lee, Chan Cheang Mui and Jimmy Ling celebrate a good shot Ian Gould, from the JBA Consulting Engineers team

James Walker, David Bonnet and Stephen Ho, from Team Sands I

Chen Ling, from Team MGM I

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DECEMBER 2012

ROUND TWO

The traditional family photo

David Punter, Nathan Tuck and Sam McElhone, from the Aristocrat team, have fun with their caddy

Eric Wong, Kevin Lee and Marco Leong, from Team Aruze Gaming

Mel Hansen, from Team MGM I Colin Edwards, from the Macau Business I team Paul Temple, from Team Galaxy I

Caesars Golf Macau

128

DECEMBER 2012

Chris Connell, from Team Caesars II

Eason Lee, from Team Caesars I

Jason Elton, from Team Walker Digital Gaming

José Braz-Gomes, from the BNU team

Jimmy Ling, from Team Caesars I

Paulo A. Azevedo, from the Macau Business I team

Matt Hurst, from the Melco Crown team

Harold Tsakmaklis, from Team Walker Digital Gaming

Graham James, Charlie Ward and Nathan Fisher, from the Wynn II team

Roy Goss, from Team WMS

ROUND TWO Caesars Golf Macau


129

DECEMBER 2012

A gala night for charityMemorabilia auction helps to raise further funds for charitable institutions

Proving to be more than just a golf event, the sixth Annual Macau Business Charity Golf Tourna-ment continued its charity fund-raising activities

at the gala dinner that closed the event.Golfers and other guests bid avidly in the charity

auction of memorabilia from the fi elds of sport, music and other fi elds of entertainment. Among the items put up for auction were a Dirk Nowitzki’s signed NBA jer-sey and a pair of tennis shoes worn by André Agassi, as well as several golf-related items.

The gala dinner was held last month, at the exqui-site Pool Loggia, at The Westin Resort. Fine wines pro-vider Tosti and luxury cigar distributor Pacifi c Cigars were the special sponsors for the event, where the golf tournament winners were announced.

The evening was crowned by a lucky draw of prizes from supporters such as MGM Macau, Sands China, Wynn Macau, Galaxy Entertainment Group, Macau Golf & Country Club, The Westin Resort, CTM, Hutch-inson, Davidoff, Nike Golf and Melco Crown.

The Silver Heritage team chose the Nepali-based charity Olga’s Promise as the recipient of their winnings. Tim Shepherd went to Lalitpur, Nepal, to hand over the cheque to Olga Murray, the 87-year-old who founded the charity organisation

Dave Williamson, Ryan Beauregard and Dennis Hudson, from the Wynn I team, chose the Cradle of Hope charity as the recipient of their winnings

Lusa, CTM, Jornal Tribuna de Macau and BNU made a special donation to the Association of Rehabilitation of Drug Abuse of Macau

Lysa Evans

A variety of memorabilia items were put up for auction

Chris Rogers and his wife

130

DECEMBER 2012


Pre-dinner cocktails

Luis Melo and José Costa Santos

Graça Couto and André Couto

Eileen Stow and Brian ChengKatharine Liu presents the ‘Longest Drive – First Round’ trophy to Mike Bolsover, from the Silver Heritage team

The tournament trophies designed by James Chu Cheok Son, from Art For All Society

Dennis Hudson, from Team Wynn I, receives the‘Straightest Drive’ trophy from Grant Bowie

Kristian Passenheim presents the ‘Putting Contest’ trophy to João Antunes, Peter Greville and Ian Gould, from the JBA Consulting Engineers team

Paulo A. Azevedo presents the ‘Nearest to the Pin - Second Round’ trophy to Alastair Dick, from the Nike Golf SK Support team

Katharine Liu presents the ‘Nearest to the Pin – First Round’trophy to Ian Gould, from theJBA Consulting Engineers team

Eason Lee presents the ‘Best Performance –Putting Challenge’ trophy to Special Olympics athlete Chan Cheang Mui

Stefan Winkler presents the ‘Longest Drive - Second Round’ trophy to Mike Bolsover, from the Silver Heritage team

131

DECEMBER 2012

Paulo A. Azevedo presents the ‘Overall Winner’ trophy to Tim Shepherd and Mike Bolsover, from the Silver Heritage team

Lysa Evans presents the ‘Best Performance – First Round’ trophy to Tim Shepherd and Mike Bolsover, from the Silver Heritage team

Paulo A. Azevedo, Helder Santos and Colin Edwards, from the Macau Business I team, received the ‘Net Score Winner – First Round’ trophy

Melina Leong presents the ‘Net Score Winner - Second Round’ trophy to Dave Williamson, Ryan Beauregard and Dennis Hudson, from Team Wynn I

A packed house

A lucky winner receives the Westin prize from Brian Cheng Jimmy Lim presents the Galaxy prize to Mike Bolsover

Lysa Evans presents the Melco Crown prize to David Punter

Cristina Kuok presents the MGM prize to Eileen Stow

Sam McElhone receives the Macau Golf & Country Club prize from David Largent

Roy Goss receives the Galaxy prizefrom Terry Lee

Photos by Gonçalo Lobo Pinheiro

132

DECEMBER 2012

Atypical Grand PrixLast month’s 59th Macau Grand Prix ended with bittersweet memories. While there were stunning performances, the event was clouded by the fatalities of Portuguese rider Luis Carreira and Hong Kong driver Phillip Yau Wing-choi.There was also a huge blunder during the podium ceremony for the Formula Three Macau Grand Prix, with organisers failing to play the correct national anthem to honour the winner, Portuguese driver António Félix da Costa. After booing the gaffe, dozens of fans of Portuguese heritage both on the paddock and on the stands performed an a cappella version of the Portuguese anthem, in an emotional moment for Félix da Costa.Still on the sporting side, Michael Rutter claimed his eighth victory in the Motorcycle Grand Prix, extending his record as the rider with the most wins here. Rob Huff was crowned the 2012 champion of the World Touring Car Championship, although he didn’t win any of the two WTCC races at the Guia Circuit, which ended the season.This year’s Macau Grand Prix generated revenues of MOP39 million (US$4.9 million), up by 8 percent year-on-year. The event attracted 72,000 people, according to the organisers.

Moments132

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Photos by Greg Mansfi eld

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DECEMBER 2012

The most recent offi cial data show convincingly that the Chinese economy has bottomed out, and it is now widely expected that annual gross domestic product growth

should reach roughly 7.8 percent in 2012. This result should come as no surprise.

To rein in rising house prices and pre-empt the infl ationary impact of the strongly expansionary fi scal and monetary policies implemented during the global fi nancial crisis, the mainland’s monetary authorities began to tighten fi nancial conditions in January 2010.

Monetary tightening, administrative measures introduced by various municipal governments to stem the run-up in the housing market, and the waning effect of the government’s 4 trillion renminbi (MOP5.1 trillion) stimulus package resulted in a gradual economic slowdown. While infl ation should have eased in early 2011, rising food prices and commodity prices thwarted expectations. Annual growth in the consumer price index peaked at 6.5 percent in July 2011.

Vigorous liquidity tightening eventually mitigated infl ationary pressure but it also impeded economic growth, which had slowed steadily after peaking at 12.8 percent in the fi rst quarter of 2010. By the last quarter of 2011, annual growth had slowed to 8.9 percent, triggering a surge of bearish sentiment about the Chinese economy among foreign pundits.

Most Chinese economists, by contrast, were less pessimistic, and expected that growth would stabilize at around 8 percent in 2012. Yet, until recently, economic performance had been disappointing, owing to three factors. The impact of the slowdown in real-estate investment on the economy was stronger than expected, as was that of Europe’s debt crisis. And, though the People’s Bank of China lowered the reserve ratio in November 2011, and some fi scal stimulus was provided, the government largely refrained from more expansionary economic policies to boost growth.

Potential perilsIn the last quarter of 2012, the long-expected rebound in growth fi nally materialised. I, for one, never doubted that it would. After all, China’s potential growth rate remains about 8 percent. Moreover, China’s fi scal position remains strong: even after accounting for all sorts of contingent liabilities – such as local-government loans, large project loans and commercial banks’ non-performing loans in the event of a housing-market crash, China’s public debt/GDP ratio is still below 60 percent. Finally, the People’s Bank of China still has ample room to lower the reserve ratio and benchmark interest rate, which still stand at 20 percent and 6 percent (for one-year loans), respectively, without much fear of stoking infl ation.

The true challenges facing China lie in the medium and long term. Indeed, the current economic rebound is not an achievement worthy of much celebration, especially if it comes at the expense of further reform and structural adjustment.

First, as China ages rapidly, the disappearance of its demographic dividend will lower potential growth signifi cantly. Moreover, other things being equal, the extremely rapid rise in fi xed-asset investment has eroded China’s investment effi ciency and capital effi ciency, reducing potential output growth further. And, as China’s economy approaches full technological modernisation, its latecomer’s advantage will be exhausted and its inability to innovate and create may become an important bottleneck to further growth. Although active participation in global production networks has brought signifi cant benefi ts, it may have locked China into the lower end of the value chain, reducing its scope for future progress.

Politics mattersOther constraints loom as well. Rapid economic

expansion implies that supplies of energy and raw materials will increasingly limit potential growth. At the same time, the public’s demand for environmental protection and other basic rights will inevitably increase production costs. Similarly, the external environment may become less favourable, as the long process of global deleveraging impedes economic recovery in China’s key foreign markets.

Finally, despite China’s status as one of the world’s largest net creditors, it has been running a defi cit on its investment balance for years. If this pattern persists, China may well face a balance-of-payments constraint on growth in the future.

Compared to these economic vulnerabilities, however, the fate of political reform in China will be much more important to the country’s long-term prosperity. Everything, it is hoped, will go well. But there is no harm in envisaging a crisis scenario, so that China can prevent it from materialising.

Such a scenario can be summarised as follows. Thanks to more than 30 years of breakneck economic growth with little regard for social justice and equality, China has become a stratifi ed society. It is easy to imagine each social group demanding a larger share of national income, which by defi nition is infl ationary.

Indeed, with an increasingly lenient political regime, populism may become irresistible, while the size of the government bureaucracy may continue to bloat. Given a lower growth rate, China’s fi scal position will deteriorate – gradually at fi rst and then rapidly – with the public debt/GDP ratio eventually rising to an unsustainable level. Making matters worse, when China needs to use its savings – accumulated over two generations and packed into U.S. Treasury bills – to alleviate fi scal constraints, it will fi nd that the value of its foreign-exchange reserves has already evaporated.

To judge China’s economic dynamism, the key indicator is its fi scal position. When, and only when, China’s fi scal position is worsening rapidly will its economy suffer a hard landing.

The next fi ve years hold the key for China’s future; its window of opportunity to complete a diffi cult process of reform and adjustment may not be longer than that.

YU YONGDING FORMER MEMBER OF THE MONETARY POLICY COMMITTEE OF THE PEOPLE’S BANK OF CHINA

China’s coming growth testsTHE NEXT FIVE YEARS HOLD THE KEY FOR THE COUNTRY’S FUTURE

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AROUND AND AROUNDFrozen Spy never tires of highlighting foul-ups in public works. We had yet another last month.

The opening of the new prison in Ka Ho, construction of which began in 2010, has been postponed again. It was originally meant to be ready last year, but now the fi rst phase will open in 2013 at the earliest.

Extra work on the new prison will cost MOP30 million (US$3.75 million), pushing up the total cost to more than MOP140 million.

Why do delays and budget overruns keep on happening in public works? Why has this become the new norm? More importantly, why is nobody held accountable?

SICKLY SHADE OF GREENChief Executive Fernando Chui Sai On delivered his annual Policy Address last month, in which he laid down the government’s priorities for next year. Among these is boosting environmental protection.

Frozen Spy applauds any announcements of measures that can make Macau a more sustainable place. But Mr Chui should walk the talk.

In the Internet age, what sense does it make to mail leafl ets containing the highlights of the address to all households, as was done last month for the fi rst time? How environmentally friendly is that?

The leafl ets were not even printed on recycled paper. The only thing green about them was their colour.

THAT’S ENOUGH TRANSPARENCYIn the Policy Address, Chief Executive Fernando Chui Sai On promised several times to make the government more transparent. But he actually made it more opaque, by failing to include any legislative schedule for next year.

The inclusion of a legislative schedule was an innovation by Mr Chui in 2011. It was applauded as a way of making the government more accountable, allowing Legislative Assembly members and residents to keep tabs on the process of lawmaking.

But after the government was criticised for failing to stick to its legislative schedules last year and this year, Mr Chui has now decided to keep us in the dark.

It seems that, in his mind, if the government is unable to keep to its own legislative schedule, the fault is with the schedule, not the government.

PHYSICIAN, HEAL THYSELFThe police have just held a Traffi c Safety Promotional Month. One of the goals was to give guidance to pedestrians and drivers about how to comply with the traffi c rules.

Why did they not start the campaign in police stations? Police offi cers are among the worst violators of the rules. You do not have to wait at the kerbside long before you spot a police motorcycle failing to stop at a pedestrian crossing or a police car manoeuvring without indicating properly.

Without fi rst teaching offi cers to respect the traffi c rules and so set a good example, the police will have a hard time turning the rest of the people into model road users.

FREE-WHEELING STYLEThe motorcycle-only lane on the Sai Van Bridge opened in August. Some civil servants could not care less, as shown in the photo, depicting a government-owned car cruising along obliviously in the motorcycle lane. Talk about kings of the road.

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