MB 104 | December 2012

A disenchanted middle class feels the city’s quality of life is dropping

Stuck in 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 officials 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

bizintelligenceonline.com DECEMBER 2012

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DECEMBER 2012

118 Hospitality 87 Know your guest A study says the kind of hotel a visitor chooses depends on the purpose of the visit 91 Beefing 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

DECEMBER 2012

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 edifice 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

Photo: Carmo Correia

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Editorial Council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder and Publisher Paulo A. Azevedo VOL.1 Nº104

pazevedo@macaubusiness.com

Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com

Assistant Editor-in-Chief Alexandra Lages

Contributing Editors Christina 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, Sofia Jesus, Xi Chen, Yuci Tai

michael.hoare@macaubusiness.com

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 Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang

Special Correspondent Muhammad Cohen

Advertising Xu Yu, Irene

info@muhammadcohen.com

irene@bizintellingenceonline.com

Beijing Correspondent Maria João Belchior

Advertising Agents Bina Gupta

alexandra@macaubusiness.com

Senior Analyst José I. Duarte jid@macaubusiness.com

Art Directors Connie Chong, Luis Almoster design@macaubusiness.com

Hong Kong Bureau Michael Hoare (Chief), Anil Stephen

maria_belchior@yahoo.com.br

bina@macaubusiness.com

Manila Correspondent Max V. de Leon

jreis@macaubusiness.com

José Reis

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Assistant to the Publisher Laurentina da Silva ltinas@macaubusiness.com

Office Manager Elsa Vong elsavong@macaubusiness.com

Photography António Mil-Homens, António Leong, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro,John Si, Manuel Cardoso, MSP Agency, Agencies Illustration G. Fox, Rui Rasquinho

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

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: editor@macaubusiness.com DECEMBER 2012

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SEPTEMBER S SE EP E PTEM TEM MBE BER B ER 20 E 2 2012 012 12 2

pazevedo@macaubusiness.com

PAULO A. AZEVEDO FOUNDER AND PUBLISHER

from the publisher’s

desk

CHALLENGING THIRTEEN

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

DECEMBER 2012

ver 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 mafia 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 offices.

In 13 years, Macau has gotten rid of Portuguese politicians who turned up to fill 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 flow is measured in cash-filled containers. These billions have finally 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

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 point If 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.

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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 multimillion 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 fill our pockets but face disruptions in a few years’ time.

The new leadership in Beijing may prompt selfawareness, but old habits die hard.

Place your bets.

bizintelligenceonline.com

macaubusinessdaily.com

goldfishmacau.com

emanuel.graca@macaubusiness.com EMANUEL GRAÇA EDITOR-IN-CHIEF

editorial

RUNNING ON EMPTY

H

Handing out cash indiscriminately is no remedy.

It just contributes to the growth of inequality

NOVEMBER 2012

aving too much money can be a burden, as the government is discovering. Because of the government’s sound finances, 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 officials frustrated those expecting far-reaching initiatives to tackle inflation 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 financial crisis, this would be good news. In Macau, things are more complicated.

The health of the government’s finances contrasts with the ailments afflicting 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

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 benefits forgone, the value of which cannot be fully expressed in mere patacas and avos.

Missed chance Awareness of opportunity cost should play an important role in ensuring that scarce resources are used in the most efficient 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 reshuffle his cabinet before his current term ends. He missed the chance.

With just two more years to go, Mr Chui is now unlikely to reshuffle his cabinet unless some big contretemps obliges him to do so.

This means that three of the five secretaries in the government will have been in office 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 officials run out of ideas?

The opportunity cost of allowing this to continue may soon be too high to bear.

GOVT REACHES FULL-YEAR PUBLIC 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.

I.T. USAGE RATE DROPS IN BUSINESS SECTOR

SMES FEAR TIMES AHEAD

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

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.

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, fierce competition and a shortage of suitable workers.

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DECEMBER 2012

ANNOUNCED MACAU-ONLY LAND AUCTION IN HENGQIN

The 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.

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SEPTEMBER 2012

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GREEN FUND APPLICATION PERIOD EXTENDED Interested parties can apply for grants until the end of next year

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

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.

CTM FINED MOP180,000 FOR SERVICE BREAKDOWN

Telecommunications provider CTM was fined 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 fined 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.

2G MOBILE SERVICES EXTENDED UNTIL 2015

The 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.

DECEMBER 2012

AIRPORT TO REACH RECORD REVENUE

Macau’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.

GOVT LAUNCHES MICE PORTAL

The 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.

CITY’S TOP EARNERS PAY WORLD’S LOWEST TAXES

Macau has the lowest combined income tax and social security rate of the world for top-earners, according to a report from global accounting firm 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 firm’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.

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.

MACAU TO LOSE EU TRADE BENEFITS The 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 benefits to the European market, featuring fewer beneficiaries. 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 benefit from the scheme starting 2014.

The value of Macau’s exports to the European Union has fallen by 90.4 percent in the last five years. In the first nine months of this year, it accounted for less than 4 percent of all the city’s exports.

DECEMBER 2012

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Smoking guns

The number of fines 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 floors as smoking areas. In contrast, no smoking is allowed anywhere in restaurants and cafes.

ALL-TIME RECORD FOR NEW COMPANIES A 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 figure 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 SHOW STRONG MOMENTUM

6,979

The number of smoking offences detected by the Macau authorities from January to October. Offenders are liable to a maximum fine of MOP600

33.5% 5,698

The percentage of the total number of offenders who were tourists

The number of smoking-related fines that had already been paid as of October-end, amounting to 81.6 percent of the total

210,482

The number of on-site inspections conducted by the Health Bureau in the first 10 months after the ban was enacted

5

The 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

The 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 official 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 OUTPACE REVENUE IN LOGISTICS The 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.

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Economy & Finance

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

conomic growth has slowed for the second consecutive quarter, official data shows. One analyst warns that the economy may shrink in three years from now, owing to its dependence 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 financial crisis.

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

E

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 exports grew more quickly.

GDP grew by 10 percent in the first nine months of this year. The gaming industry’s performance in the first 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 forecasts that growth will just exceed 2 percent in the fourth quarter. This implies

JOBLESS RATE LOWEST EVER

T

he 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 figure 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.

SLOWDOWN WARNING 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 inflation, 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 gaming revenue would stabilise at less than 10 percent next year.

transfer of power to a new set of leaders in the mainland, the emphasis put by the central government on countering corruption, and Macau’s already large gaming revenues made it “extraordinarily difficult” 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 revenue, a recession would be likely, because foreign direct investment would drop once the casinos were up and running.

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

Crucial Cotai Lusa quoted Mr Martins as saying the

tive impact of the gaming revenue’s onedigit nominal growth,” he said.

“But once gross fixed capital formation disappears, things will get complicated.”

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 technically impossible, for Macau to grow at double-digit rates without the gaming sector expanding at the same pace,” Lusa quoted Mr Martins as saying.

GDP YEAR-ON-YEAR REAL CHANGE 35% 30% 25% 20% 15% 10% 5% 0% -5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2005

2006

2007

2008

2009

2010

2011

2012

-10% -15%

Source: Statistics and Census Service

DECEMBER 2012

Photo: Luís Almoster

25

26

Economic Trends by José I. Duarte GDP growth

GRAPH 1 - GDP year-on-year real change

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 figure for an economy that has grown by around 130 percent over the past eight years.

30%

25% 20%

GRAPH 1

15% 10%

5% 0% 2004

2005

2006

2007

2008

2009

2010

2011

2012 (Q1-Q3)

The GDP figures 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.

GRAPH 2

GRAPH 2 - GDP year-on-year real change, selected components Private consumption expenditure

Government final consumption expenditure

Gross fixed capital formation

80% 60% 40%

The GDP’s volatility is partially associated with investment.

Investment, as measured by gross fixed 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.

GRAPH 3

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

20% 0% -20% -40% 2004

2005

2006

2007

2008

2009

2010

2011

2012 (Q1-Q3)

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

Service exports

Goods imports

Service imports

60% 40% 20% 0% - 20% - 40% - 60% 2004

2005

2006

DECEMBER 2012

2007

2008

2009

2010

2011

2012 (Q1-Q3)

27

Foreign direct investment

GRAPH 4 - Inward FDI FDI stock

FDI inflows

120,000

100,000

GRAPH 4

80,000 MOP million

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

Macau has benefitted from a steady growth in FDI stock, which increased by over 280 percent between 2004 and 2011.

FDI inflows rose fast from 2004 to 2008, but in absolute terms the highest annual inflow took place in 2010.

60,000 40,000

GRAPH 5

20,000

0 2004

2005

2006

2007

2008

2009

2010

2011

The main FDI driver over the last decade was the casino sector. But last year, Macau recorded a negative FDI inflow in gaming for the first time since 2004.

Since a new wave of casino resort construction is underway, FDI inflows are set to increase again.

GRAPH 6

GRAPH 5 - FDI inflows by industry Total

Construction

Wholesale and retail

Gaming

Banking

25,000

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.

20,000

MOP million

15,000 10,000 5,000 0 -5,000 -10,000 2004

2005

2006

2007

2008

2009

2010

2011

GRAPH 6 - Inward FDI stock by industry

Others

15% Wholesale and retail

9%

Gaming

57%

Banking

19%

DECEMBER 2012

Statistical Digest

Economic output

Year-on-year change (%)

2011 GDP at current prices

MOP 292.1 billion

GDP in chained prices

MOP 273.1 billion

GDP per capita at current prices

MOP 531,723

GDP per capita in chained prices

MOP 497,219

Employment Oct - Dec 2011

29.1 20.7 26.2 18.0

2.1%

Median monthly employment earnings

MOP 10,000

Employed population

339,800 72.9%

11.1 5.5 percentage 1.5 points

Unemployment rate

Labour force participation Non-resident workers (end-balance)

94,028

2011-end Domestic loans to private sector

MOP 161.9 billion

Resident deposits

MOP 291.6 billion

Foreign exchange reserves*

MOP 272.4 billion

Inflation rate (full year)

MOP 75.0 billion

---

5.8%

External merchandise trade 2011

Jul-Sep 2012

346,600 72.3%

17.0 2.7 percentage -1.0 points

109,541

20.1

Year-on-year change (%)

27.7 22.7 43.2 percentage 2.5 points Year-on-year change (%)

MOP 62.3 billion - MOP 55.3 billion

2011

Year-on-year change (%)

- Direct tax revenue from gaming

MOP 99.7 billion

Total expenditure

MOP 49.0 billion

Balance

MOP 63.7 billion

Utility consumption 2011 Water Electricity Gasoline Liquefied Petroleum Gas Natural Gas

Notes

MOP 11,700

Imports

MOP 112.7 billion

--

Aug-Oct 2012

0.2 41.2 --

Total revenue

--

1.9%

MOP 7.0 billion

Public accounts

Q3 2012

-0.6 percentage points

Exports Trade balance

Q3 2012

Year-on-year change (%)

Latest

24.0

Money and prices

Notes

11.8 5.1 ---

MOP 86.1 billion

Year-on-year change (%)

-0.6 percentage points

Year-on-year change (%)

Latest

41.5 44.9 29.7 -Year-on-year change (%)

70.5 million m3 5.1 3,857 million kWh 5.5 81.7 million L 9.3 42,908 tons 5.3 73.6 million m3 -52.4

Latest

Aug-Oct 2012 Aug-Oct 2012 Oct 2012

Year-on-year change (%)

Notes

5.2%

15.4 26.2 -percentage -1.6 points

Latest

Year-on-year change (%)

MOP 183.9 billion MOP 343.9 billion MOP 132.7 billion

MOP 6.1 billion MOP 52.5 billion - MOP 46.3 billion

Latest

21.6 18.1 -Year-on-year change (%)

MOP 66.8 billion

15.3 15.6 21.2 12.2

Latest

Year-on-year change (%)

MOP 104.7 billion MOP 88.2 billion MOP 37.9 billion

55.4 million m3 6.2 3,219 million kWh 9.2 65.3 million L 7.4 32,165 tons 0.7 --100

Sep 2012 Sep 2012 Sep 2012 Oct 2012

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

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

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

Transport and communications 2011-end Licensed vehicles - Automobiles - Motorcycles Mobile telephone users Internet services subscribers

206,349 95,151 111,198 1,353,194 209,223

Year-on-year change (%)

4.9 5.5 4.5 20.6 22.7

Latest

212,992 99,822 114,170 1,532,619 224,663

Year-on-year change (%)

5.2 6.8 3.9 18.7 9.8

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

Notes Sep 2012 Sep 2012 Sep 2012 Sep 2012 Sep 2012

Source: Statistics and Census Service and Financial Services Bureau

28

29

DECEMBER 2012

Photo: LuĂ­s Almoster

30

Politics

DECEMBER 2012

31

Little to change The policy address for next year brings no groundbreaking initiatives

ncreased sweeteners but few forward-looking plans – last month’s policy address speech by Chief Executive 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 repetition of generic goals previously stated.

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

I

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 schedule 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 confirmed that the completed Taipa Ferry terminal will only be ready in the first half of 2014. The terminal was first intended to be up and running by 2007.

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

PUBLIC REVENUE TO GO UP T

he government expects public revenue to reach MOP134.8 billion (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.

Officials 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.

DECEMBER 2012

32

Politics ing in the first 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 tenure of eight years.

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

Money for all

Mr Chui just said the government wants casino operators to better fulfil their social role and further promote responsible gambling.

He added the government expects gaming concessionaires to offer opportunities for Macau residents to climb the corporate ladder into management positions. “Some operators are already doing it,” he said.

Mr Chui highlighted that he was confident 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 nongaming attractions here. “Casino operators have to include other amenities in their properties, such as more entertainment and theatre shows, to attract more visitors that do not want only to gamble,” 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

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” “high”. He downplayed the situation, saying market fluctuations 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 consequences.”

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

The cash handout programme will continue in 2013, handing even more money to both residents and non-residents. Permanent residents will receive a record MOP8,000, while non-permanent residents 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 confirmed it will raise salaries for civil servants, but has not yet put forward a formal proposal.

The government also extended several 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 injection of MOP6,000 into each individual account of the central provident fund.

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

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

Crumbling edifice THE SIN FONG GARDEN BUILDING IS IN DANGER OF COLLAPSE, EXPOSING GRAVE SHORTCOMINGS IN THE GOVERNMENT he 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.

T

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 officials in charge of inspecting the building and issuing its occupation permit. If the graftbuster had found sufficient evidence of any crime, it would have had the suspects prosecuted.

Even if there were insufficient 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 flawless 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 figures 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 forget

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 fault First, we do not have an efficient 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 insufficient inspections and poor maintenance by its occupants.

However, while the government recommends regular inspections of

This kind of attitude does nothing for the safety of the city’s buildings. It also lets down the people that supported the proBeijing 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 official 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 figures in the pro-Beijing camp suggest they have all forgotten the central government’s exhortations.

DECEMBER 2012

mbreport CHINA’S NEW LEADERSHIP 34 34

STEADY AS SHE GOES XI JINPING RAISES HOPES, BUT CHINA’S REFORM OUTLOOK REMAINS CLOUDY

BY KELLY OLSEN*

DECEMBER 2012

35 35

DECEMBER 2012

mbreport PROPERTY 36 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 crucial revamp of the economy and satisfy growing calls for reform.

Mr Xi’s ascent comes at a crucial time, with the global economy increasingly 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-powerful party last month as head of its elite seven-strong decision-making body, after 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 departure from the wooden performances

of other political leaders. “Our responsibility now is to rally ... in making continued 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 difficult 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 conservative While Mr Xi’s sentiments and style were generally well received, analysts said that the lack of figures with reform credentials on the new Politburo Standing

THE ‘PRINCELING’ NEW LEADER W

ith 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 compromise candidate – acceptable to outgoing leader Hu Jintao, still-influential 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 figures who played key roles in the revolution that brought the party to power in 1949.

Despite this pedigree, Mr Xi was “sent DECEMBER 2012

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 Communist Party and in 1975 moved to Beijing to study at the prestigious Tsinghua University. He oversaw some of China’s most

economically dynamic and reformminded areas, the eastern provinces of Fujian and Zhejiang, before briefly 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 scoffing at “foreigners 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 official 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.

AFP

37

NEXT LEADERSHIP CLUES ALREADY ON SHOW

E

ven 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

Committee took some of the shine off the rhetoric.

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

believe they are now headed, in five 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.

the failure of Wang Yang – seen as a leading reform figure from Guangdong province – to win promotion was “particularly disappointing”.

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

also last month, unlike previous transitions that were more staggered. However, he is seen as a compromise candidate who must balance pressures from competing factions in the consensus-based world of Chinese politics.

Steve Tsang, professor of contemporary Chinese studies at the University

THE AFFABLE FUTURE PREMIER L

i Keqiang stepped up to number two in China’s Communist hierarchy last month, but despite his seniority and affable 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 brokered by President Hu Jintao as part of a behind-the-scenes deal to bolster the influence 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 fluent English, Mr Li, 57, has an easy smile and a more youthful bearing than his stiff party peers. He has sought to nurture a reputation 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 flak for the handling of an HIV/

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

There are parallels with Mr Li’s current superior Mr Wen, who also struggled to force through policies as he bat-

tled with factions in the upper reaches of the party and officialdom in the provinces and ministries, say analysts.

Similarly, Mr Wen cultivated an image as the friendly face of the Communist Party, voicing qualified support for political reform, comforting disaster victims and condemning corruption.

Mr Li, a native of eastern China’s poor Anhui province, worked as a manual 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 financial crisis relatively unscathed. But a top priority 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.

AFP

DECEMBER 2012

mbreport CHINA’S NEW LEADERSHIP 38

of Nottingham, says it is unclear whether Mr Xi’s emergence as a consensus choice will ultimately constrain or bolster reform.

“Perhaps it means he can persuade more to follow him,” Mr Tsang says.

“But this takes time and means continuous compromise and horse-trading.”

Mark Williams, chief Asia economist 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 infighting After a decade-long economic miracle 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 markets 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 DECEMBER 2012

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

which would undermine the party’s claim to legitimacy.

In a farewell speech to the party last month, Mr Xi’s predecessor, President Hu Jintao, called for more focus on private enterprise and consumer demand. But in a sign of the difficulties 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 infighting for influence 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 five years will see more political jockeying than serious policy initiatives,” Derek Scissors 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 * AFP frustrating period.”

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

China’s growth challenge A KEY QUESTION FOR THE NEXT DECADE IS WHETHER THE CHINESE AUTHORITIES’ GROWTH TARGETS WILL BE ENOUGH TO PRESERVE SOCIAL COHESION hroughout 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 difficult 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 official 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, fixed 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.

T

Shifting paradigm

As 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 firmly 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.

China is at a turning point.

With more than 100 million people still below the official poverty line and per capita income currently just over US$6,000 (MOP48,000) in nominal terms, robust economic growth must be maintained

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 first 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 needed

In particular, the new leadership will have to attend to the linkages between the real economy and the expanding financial sector as it overhauls state-owned companies and liberalises the banks. From commodities to financial assets, price formation should become more market-based and transparent, while capital allocation should become more efficient 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, reflected 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 financial 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 coefficient, 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 difficult 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.

DECEMBER 2012

mbreport CHINA’S NEW LEADERSHIP 40

Xi Jinping during a 2009 visit to Macau

GOOD NEWS FOR MACAU BEIJING’S LEADERSHIP CHANGE IS UNLIKELY TO HURT CASINO INDUSTRY, ANALYSTS SAY

BY MUHAMMAD COHEN

he new leadership in Beijing is expected to have little impact on Macau’s gaming industry, according 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

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DECEMBER 2012

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 stability 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 appointed president in March, after becoming 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 Research Macau managing partner Grant Govertsen says. “I don’t see any downside,” he adds.

“On the upside, they could liberalise 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 trouble [ahead of the leadership transition].

41

“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

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 individual 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 continue to dampen VIP revenue, but other mainland trends will benefit Macau.

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

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

significant economic disruption, we do not expect major fiscal adjustments such as substantial monetary easing or stimulus in China, though there is still the potential 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, “especially the move from rural to urban areas, the increase in affluence and more flows of Chinese tourists to Hong Kong, Macau and overseas.”

Luis Melo, a partner at Macau law firm 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 sidelines of last month’s Asian Gaming and Hospitality Congress at Galaxy Macau.

DECEMBER 2012

mbreport CHINA’S NEW LEADERSHIP 42

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

Xi Jinping’s Singapore lessons FEELING THE STONES MAY SEEM LIKE THE SAFEST OPTION FOR CHINA’S NEXT PRESIDENT, XI JINPING; IN FACT, IT IS THE MOST DANGEROUS hina 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” reaffirmed the country’s development path.

Throughout this time, examples and lessons from other countries have been important. Mr Deng was reportedly substantially influenced 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 first 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 reflects 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.

C

The challenge of corruption The 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 influence 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 benefits 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 benefits of single-party rule, and delay the transition to “messier” governance influenced 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.

DECEMBER 2012

For now, however, those representative elements that have been added incrementally are not powerful enough to overcome the growing corruption and excessive influence 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 agenda If 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 first reassert the Party’s role as defender of the general interest by creating an environment in which narrow interests, seeking to protect their growing influence 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 benefit 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.

43

DECEMBER 2012

44

Property

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

BY ALEXANDRA LAGES

DEEP FREEZE DECEMBER 2012

45

inter 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 commercial 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 Noelle 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).

DECEMBER 2012

Photo: Luís Almoster

W

46

Property

AUTHENTIC

PORTUGUESE CUISINE

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

The government tightened the restrictions on mortgage lending, reducing the amounts residents are allowed to borrow from the bank to buy upmarket homes. The buyer of a home worth more than MOP8 million can now borrow a maximum of only 50 percent of that sum.

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with instant confirmation www.aogramaasia.com facebook.com/ao.g.asia Prince Flower City, Rua de Coimbra, Taipa, Macau DECEMBER 2012

The 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 restrictions 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.

Official data shows that in the first 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. “Transactions for non-residents dropped by 99 percent,” she says.

Reluctance to sell The government’s new curbs on the property market also include the expansion of the special stamp duty, introduced in June last year for sales of housing, to cover commercial and office premises and parking spaces.

47 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 director in Macau, Gregory Ku, says this has meant a “huge” fall in sales of commercial 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 commercial premises will decrease by 50 percent in the next six months. He predicts 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 option Estate agents are unsure whether the market will rebound any time soon.

Ms Cheung says the government imposed its new curbs only recently. She says a clearer picture of their effect will emerge only in the months after the Lunar New Year.

LAND GRANT REFORM LOOMS T

he bill amending the 32-year-old law on land grants is ready. The Legislative Assembly is set to start discussing it this month.

The bill, five years in the making, spells out more clearly when the government 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 service 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

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 rebound will depend on the global economy 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-

public before it made the grant.

The new way of calculating land premiums would take into account inflation and the prices of previous land grants, to “better reflect 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. Developers that fail to develop land granted to them would be liable to pay a fine of up to MOP15 million (US$1.9 million).

The bill would increase the maximum fine for illegal occupation of public land to MOP3 million.

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.

DECEMBER 2012

48

Property

TWO IN EVERY FIVE HOMES COST MOP4 MILLION OR MORE

Two in every five 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.

GAW CAPITAL SECURES LOAN FOR LUXURY HOUSING PROJECT

Hong Kong property investment company Gaw Capital Partners secured a syndicated loan of HK$2.1 billion (US$270.9 million) to build highend 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 firm aims to create a small, lowdensity residential zone, comprising detached and terraced houses and a high-end clubhouse. The project is still to get government approval.

LOWER CEILING FOR MORTGAGE PAYMENTS PROPOSED

Government think tank is in favour of a 40-percent cap on the maximum debt-servicing ratio The head of the Policy Research Office, 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 Office is a government-sponsored think tank.

In an article made available by

DECEMBER 2012

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.

STRONG RENTAL GROWTH FOR THE WATERSIDE

Rental 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-onyear 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.

Property | Market Watch AVERAGE TRANSACTION PRICE PER SQUARE METRE OF RESIDENTIAL UNITS

BY DISTRICT AS PER STAMP DUTY RECORDS

49

Source: DSEC

(MOP) District

2011

2010

2012

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

Mรณng Hรก 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 Sรฃo 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 67,579

Taipa

39,876

33,402

42,457

38,162

45,057

48,107

66,804

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

Notes: 1. The above information covers building units with stamp duty paid in the reference quarter 2. Including residential units that were exempt from the payment of stamp duty ~ No figure provided/confidential data

AVERAGE TRANSACTION PRICE PER SQUARE METRE OF OFFICE UNITS

BY MAIN DISTRICT AS PER STAMP DUTY RECORDS

Source: DSEC

(MOP) 2010 District

2011

Q4

Q1

Q2

2012 Q3

Q4

Q1

Q2

Q3

Macau

27,078

27,700

36,618

34,011

38,404

40,362

47,767

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

~

19,649

31,391

35,023

37,549

44,969

~

40,164

Praia Grande and Penha Notes: Only covers office buildings with ten storeys or higher ~ No figure provided/confidential data

DECEMBER 2012

49,245

50

Property | Market Watch

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

Property

Unit

Source: Midland Realty (Macau) Ltd

Floor area (sq. ft)

Sale price (HK$)

Price per sq.ft. (HK$)

Macau

The Paragon

M/F, unit E

2,178

24,841,000

Macau

The Paragon

M/F, unit G

1,241

12,359,000

11,405 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, H/F, unit D

1,302

8,787,000

6,749

Macau

Pearl Horizon

Block 5, H/F, unit D

1,198

8,538,000

7,127

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

Pearl Horizon

Block 9, H/F, unit D

1,194

8,228,000

6,891

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 6, H/F, unit E

1,198

7,696,000

6,424

Macau

Pearl Horizon

Block 9, H/F, unit E

1,079

7,531,000

6,980

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, H/F, unit F

952

6,736,000

7,076

Macau

Pearl Horizon

Block 13, H/F, unit F

952

6,576,000

6,908

Macau

Pearl Horizon

Block 13, H/F, unit F

952

6,556,000

6,887

Macau

Pearl Horizon

Block 13, H/F, unit F

952

6,436,000

6,761

Macau

Pearl Horizon

Block 13, M/F, unit E

938

6,416,000

6,840

Macau

Pearl Horizon

Block 13, M/F, unit F

6,650

Macau

Magnificent Court

Block 3, L/F, unit P

Macau

Pearl Horizon

Macau Macau

952

6,331,000

1,450

6,100,000

4,207

Block 13, L/F, unit E

938

6,056,000

6,456

One Central

Block 1, M/F, unit D

654

5,960,000

9,113

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

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

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

Source: Midland Realty (Macau) Ltd

Type

Property

Unit

Floor area (sq. ft)

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

Rent price (HK$)

Price per sq.ft. (HK$)

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

DECEMBER 2012

Property Statistics Year-on-year change (%)

2011

1,387 1,099 231 57 2,159 2,053 86 20

Building units completed - Residential - Commercial and offices - Industrial and others Building units started - Residential - Commercial and offices - Industrial and others

-69.4 -73.0 -45.9 67.6 148.2 162.9 8.9 100

Transactions (1)

- Residential - New building - Old building Resident buyers (as percentage of total buyers) - Commercial and offices Resident buyers (as percentage of total buyers) - Industrial and others Total value of total units transacted (2)

percentage

81.5 7,320 MOP76.3 billion

MOP58.9 billion

- Residential - New building

MOP41.4 billion

- Old building

MOP17.5 billion MOP12.7 billion

- Commercial and offices

MOP4.7 billion

- Industrial and others

Under MOP1 million MOP1 million to MOP1.9 million MOP2 million to MOP2.9 million MOP3 million to MOP3.9 million MOP4 million or above

- Macau Peninsula

MOP43,569 /m

2

- Taipa

MOP41,501 /m

2

- Coloane

MOP68,208 /m2

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

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

Jan-Sep 2012 Jan-Sep 2012

34.4 28.1 41.0 5.4 93.0 10.9

5.4 -2.2 -11.9 22.7 35.5 --

Jan-Sep 2012

Year-on-year change (%)

MOP45,027 /m

Macau

Jan-Sep 2012

percentage Jan-Sep 2012

MOP69.7 billion MOP51.5 billion MOP33.3 billion MOP18.2 billion MOP13.1 billion MOP5.2 billion

21.6 32.9 1.4 6.4

Jan-Sep 2012

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

Year-on-year change (%)

Latest

1,150 2,654 2,251 1,570 4,749

-50.3 -34.0 -17.8 -0.1 9.0

Average transaction price of residential units (3) 2

Jan-Sep 2012

4.5 percentage points -40.8

-46.8 -13.4 4.7 15.6 62.5

2011

Jan-Sep 2012

-12.6 percentage 91.3 points -17.5 3,820

Year-on-year change (%)

2,690 4,628 3,162 1,818 4,878

Jan-Sep 2012

3.9 points -23.6

91.2 2,009

Transaction price of residential units (1) 2011

Jan-Sep 2012

-24.4 -17.5 -28.2 -8.2

18,203 12,374 5,032 7,342

-1.8 points 13.7

87.1 3,128

Notes

Year-on-year change (%)

Latest

-6.7 -4.5 26.8 -20.7

27,624 17,176 7,783 9,393

Total units transacted

131.8 197.2 -63.0 -72.0 -32.6 -32.5 -43.0 7.7

2,499 2,404 81 14 1,110 1,059 37 14

Year-on-year change (%)

2011

Year-on-year change (%)

Latest

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

Month-on-month change (%)

Latest MOP72,770 /m

2

MOP70,985 /m

2

MOP75,406 /m

2

MOP87,247 /m2

16.3 25.5 3.5 -4.0

Notes Oct 2012 Oct 2012 Oct 2012 Oct 2012

(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 DECEMBER 2012

Source: Statistics and Census Service and Financial Services Bureau

Construction - private sector

51

52

Transport

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

BY YUCI TAI

he mainland restrictions on the use of low-altitude airspace are impacting the expansion plans of Sky Shuttle Helicopters Ltd. The sole operator of helicopter services connecting Hong Kong, Macau and Shenzhen has been waiting for reforms but these have yet to come, says chief executive 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 flights to more cities.”

The mainland air traffic 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,

T

DECEMBER 2012

Zhu Shicai, an official with the state air traffic control commission, 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 copter Ms 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 opportunity for us.”

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

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

“In 2011, the passenger traffic was relatively high thanks to the ideal weather conditions, with the ratio of flyable days reaching 82 percent,” she says. “In 2012, the proportion of flyable days for the first nine months stood at 75 percent.”

Ms Chan forecasts Sky Shuttle will transport around 86,000 passengers in 2012, a figure 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 focus Ms Chan is not worried that the Hong Kong-Macau-Zhuhai bridge, to be completed in 2016, will hurt Sky Shuttle’s bottom line.

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

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 travelling between Macau and Hong Kong. The company also cooperates with several hotels here to offer packages bundling transport and accommodation together.

Sky Shuttle is continuing to negotiate with the city’s officials about the government plans to relocate the company’s Coloane maintenance base. Officials first 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 firm is owned by Chan Un-chan, the ‘third wife’ of casino magnate Stanley Ho Hung Sun. The company has a fleet composed of Agusta Westland AW139 helicopters with 12 seats. According to its website, Sky Shuttle currently operates 54 flights a day, with flights departing every 30 minutes between Macau and Hong Kong, and 12 flights a day between Macau and Shenzhen.

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

DECEMBER 2012

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

54

54

December Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

February 4th – 6th

Advanced Anti-Corruption Compliance Strategies

Ritz Carlton Beijing, Beijing, China Beacon Events 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.AntiCorruptionChinaBJ.com info@beaconevents.com 7th – 9 th

6th own Auto Fair

Venetian Macao-Resort-Hotel, Macau Venetian Macao-Resort-Hotel Estrada da Baía de N. Senhora da Esperança, s/n, Taipa, Macau (853) 2882 8800 (853) 2882 8880 www.venetianmacao.com sales@venetian.com.mo

Date: Event: Venue: Organiser: Tel: Website: E-mail:

14th – 18th

15th World Federation of Tourist Guide Associations International Convention

Venue: Organiser: Address: Tel: Fax: Website: E-mail:

Galaxy Macau, Macau Macau Tourist Guide Association No 20, Travessa dos Algibebes, Macau (853) 2878 3134 (853) 2836 7545 www.wftga2013.org register.wftga2013@xdchannel.com

Date: Event: Venue:

29 th

Compliance XChange Forum

Hong Kong Convention & Exhibition Centre, Hong Kong Organiser: Beacon Events Address: 0/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong Tel: (852) 2219 0111 Fax: (852) 2219 0112 Website: www.ComplianceXChange-Forum.com E-mail: info@beaconevents.com

DECEMBER 2012

ICE Totally Gaming 2013

ExCel Centre, London, United Kingdom Clarion Events (44) 020 7384 8121 www.icetotallygaming.com cassie.jauffret-lenzi@clarionevents.com

March Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

12th – 14th

iGaming Asia Congress 2013

Grand Hyatt, Macau Beacon Events 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 852) 2219 0112 www.igamingasiacongress.com info@beaconevents.com

Date: Event:

12th – 14th

Venue: Organiser: Address:

Andaz Shanghai, Shanghai, China Beacon Events 0/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.corruptionandcompliance-asia.com info@beaconevents.com

January Date: Event:

5th – 7th

Tel: Fax: Website: E-mail:

Annual Corruption & Compliance Asia Summit 2013

Date: Event:

21st – 23rd

Venue: Organiser: Tel: Fax: Website: E-mail:

Venetian Macao-Resort-Hotel, Macau Macau Government (853) 8798 9675 (853) 2872 3322 www.macaomiecf.com miecf@koelnmesse.com.hk

Date: Event:

29 th – 31st

Venue: Organiser: Tel: Fax: Website: E-mail:

Venetian Macao-Resort-Hotel, Macau Macau Decheng International Media Co Ltd (853) 6288 3333 (86) 756 511 3333 www.v-8.cn huashitv@163.com

2013 Macao International Environmental Co-operation Forum & Exhibition

4th Macau International Real Estate Fair

2012 :SEPTEMBER A Macau Business NOVEMBER 2012 partner event

55

Challenging times Macau faces a disenchanted middle class and fears that the city is losing its identity DECEMBER 2012

56

Caught in the middle The post-handover boom has given Macau a burgeoning middle class.

But rising inflation is now putting it in distress

BY ALEXANDRA LAGES

t 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 inflation keep on impacting her plans.

“I try [to save money] but everything 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 fortunate. The engineer already owns an apartment, where he lives with his wife, and his company factors in inflation 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 inflation, and life is getting tougher.”

Ms Kam, a civil servant in her thir-

A

DECEMBER 2012

ties, says daily necessities are getting more expensive. She notes her purchasing power is not coping with inflation.

“The value of my bank deposits and my personal assets is also shrinking.”

She is currently paying a home mortgage loan, with the monthly instalments 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 apartments, she says it is now harder for her to move into a bigger home.

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

There are no official 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 official data. This is the highest it has ever been.

However, a significant part of the middle class income increase has been dented by inflation. 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 Administration, Jacky So Yuk-Chow, has long urged the government to put forward measures to protect the middle class.

“Those people find the government has so much money but only helps the less well-off. Inflation, high housing prices and traffic jams are common problems for the middle class,” he says.

Mr So says middle-class families

58 account for the biggest share of the population. He stresses any definition 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 different segments. This would allow officials to implement selective measures for each group.

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.”

A home, a car and dreams Joey Lao Chi Ngai, chairman of the Macao Association of Economic Sciences, 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 defined 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 association that gathers middle class residents from several fields, says the number of degree holders and white-collar professionals is increasing.

“The middle class is obviously

Left wanting more

Some experts say the government should divide the middle class into different segments growing. It’s a good time to start developing 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 MOP60,000 to MOP79,999

0.4% MOP40,000 to MOP59,999 MOP30,000 to MOP39,999 MOP20,000 to MOP29,999

12.2%

3.7%

MOP80,000 or above

2.1% 0.6%

Below MOP3,500

6.5%

MOP3,500 to MOP5,999

10.5% MOP6,000 to MOP7,999

13.9%

MOP15,000 to MOP19,999

15.6%

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

22.9%

11.6%

Source: Labour Affairs Bureau - Second quarter of 2012

DECEMBER 2012

Mr Lao says there is a growing disconnect between middle class taxpayers and the government. “They don’t get special benefits 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 difficulties 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 traffic 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 traffic planning,” she says. “I just want the government 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 officials 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 benefits. She is worried about wages keeping up with the cost of living and asks for measures to control real estate prices.

60

Crowded city Macau’s population is set to grow significantly in the coming 25 years.

Experts are doubtful the city can cope

BY ALEXANDRA LAGES

ooming” has been an adjective often used to describe Macau’s development in recent years. The thunderous growth is expected to continue, 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 October, 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 fields warn that the city may not be able to cope with the upcoming demographic changes. Infrastructure is insufficient to

B “

service so many people, and the territory 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 infrastructure, including housing, transport, recreation, medical and all the other related 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 economics 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 influx of people, prices will continue to

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

rise fast, due to increased demand. The scholar expects the biggest impact to be felt on housing and daily necessities, pushing inflation 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 cooperation is a possible a way out.

“The government needs to tighten cooperation with Guangdong and Zhuhai, 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 coming 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 imported labour, the report says residents will account for most of the population increase for the upcoming decades.

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

A public tender for the reclamation of the biggest of the five reclaimed zones, with an area of 138 hectares, east of Areia Preta district, was only launched earlier this year. The government expects that reclamation process DECEMBER 2012

62

MACAU POPULATION PROJECTIONS 900,000 850,000 NUMBER OF PEOPLE

800,000 750,000 700,000 650,000 600,000 550,000 500,000 2011

DECEMBER 2012

2021

2026

Principal projection

2031

2036

Low variant projection Source: Statistics and Census Service

CHILD POPULATION VERSUS AGED POPULATION - PRINCIPAL PROJECTION 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

2011

2016

2021

Aged under 15

Old problems

2026

2031

2036

Aged 65 and above Source: Statistics and Census Service

MACAU RESIDENTS WORKING HERE BUT LIVING IN THE MAINLAND - PRINCIPAL PROJECTION 14,000 12,000 NUMBER OF PEOPLE

Macau’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 society will face is the increase in demand for social services, pensions, healthcare 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 government has given more money to the elderly. But we need long-term policies,” Mr Lai says. “The existing model is not suitable to tackle the [projected]

2016 High variant projection

NUMBER OF PEOPLE

to be complete by mid-2015.

Officials have pledged that no land in the new reclaimed areas will be granted for gaming purposes. According 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 five new tracts of land are expected 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 quality 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.

10,000 8,000 6,000 4,000 2,000 0

2011

2016

2021

2026

2031

2036

Source: Statistics and Census Service

63

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 employees and employers, as well as from the government,” he says. The insurance 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 nongovernmental 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 overhaul The Social Security Fund also needs to be revamped, Mr Lai argues.

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 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 employer 4 percent, in the long-term the fund will be more sustainable,” he says.

The value of the monthly contributions 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.

Officials have said they are eyeing to increase the monthly social security contributions both employees and employers 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 participation 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. DECEMBER 2012

64

JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com

Playing with numbers THE LACK OF DATA TO SUPPORT THE GOVERNMENT’S ESTIMATE OF THE FUTURE GROWTH OF THE LABOUR FORCE RAISES EYEBROWS he 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 officials 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 figures.

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 confidence of economic actors, to have situations where there is a wide gap between the officially 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 clarified.

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 officials.

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.

T

Flogging a dying horse Let 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 officials that half of the additional labour force

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?

DECEMBER 2012

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 alternative More 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 significant 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 difficulty 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.

66

Feast of the Drunken Dragon

Identity crisis Macau’s increasing integration with the mainland is threatening the city’s unique culture

BY ALEXANDRA LAGES

s 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 five 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 five 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

M

DECEMBER 2012

for Ms Song. Only parts of the city and its culture are familiar to her. Other features, 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-fledged 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-minded, free and friendly environment,” says Ms Leong.

Changing times Thirteen 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 integration 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 analyses the evolution of identity here. He highlights that the increasing regional integration threatens Macau’s distinctive culture.

The problems start with the growing number of Putonghua speakers flocking to Macau.

The Hong Kong Institute of Education scholar argues the Cantonese dialect is pivotal to defining the city’s identity.

Authorities should ensure its preservation as the main form of communication here, and also support related cultural features

67 like the Cantonese Opera, he says.

“Macau tries, but it’s difficult. [With the pressure coming from the gaming industry,] it is not easy.”

Nothing new When she first 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 People’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 influence is found in its architecture and even in its unique cuisine,” she says.

The 2002 gaming industry liberalisation brought many challenges, says anthropologist Cathryn Clayton. A researcher at the University of Hawaii, she is the author of a 2009 monograph on

Play in Patuá

Macau’s identity following the handover.

She says one of the biggest changes has been the influx of mainland visitors to Macau. This has led to an increased use of simplified 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 influence, but the mainland, in various ways, has always

had an immense influence on Macau,” Ms Clayton says.

“Perhaps it’s becoming more visible, 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 ‘intensification’ of certain features that were already there.”

Ms Clayton stresses identity building 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 survive The 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, China or former outposts of the Portuguese

DECEMBER 2012

68 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 influences from other languages.

“There is an increasing awareness of the Macanese identity and of its relevance,” Mr Senna Fernandes says. Despite some people initially being pessimistic about the community’s role after the handover, the Macanese have successfully adjusted to the post-1999 reality, he adds.

Mr Senna Fernandes says the international financial turmoil in Europe and in the United States has even triggered the return of a significant number of Macanese living abroad, “looking for better living conditions” here.

This year, the Macanese cuisine and theatre plays in Patuá were included on the city’s official 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 being an official 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 Portuguese heritage. He is worried this is changing fast.

“More migrants [from the mainland]

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

will dilute Macau’s identity. We will become more ‘mainlandised’,” he says.

Mr Ngai states the debate over the city’s identity is still an unresolved matter 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 find our own position in the Pearl River Delta. Part of this is by linking ourselves more closely businesswise with the Latin 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 DECEMBER 2012

69

KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com

The connectivity paradox PEOPLE IN MACAU EXCEL AT BEING CONNECTED ONLINE WHILE BEING DISCONNECTED FROM REAL LIFE e 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 traffic 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 confined 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 officers 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.

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Pandora’s phone

Mobile phones have created a new game called “decide your priorities”. This is

how to play: first, 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 benefits rather than benefits 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 five times greater than the globalisation of trade and finance 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, commodification of human life, greed, envy, acquisitiveness, disregard for others, profit, 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.

DECEMBER 2012

70

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

hat better way to celebrate the anniversary of the return of Macau to China than to breathe in the city’s multicultural atmosphere? 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 official 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.

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DECEMBER 2012

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

Several government departments are getting together to organise the event, and various associations are supporting 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, celebrations brought thousands of people out into the streets. Many more watched on television, here and in Hong Kong.

The ceremony to start the celebrations 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 slightly 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

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

Upbeat hairdos The Cultural Affairs Bureau has designed an official 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 fit, for display in their shop windows. Other shops around the city are also welcome to take part. All businesses displaying specially decorated 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. Anthony’s Square. A musical hair salon will be set up on Companhia Square, where Spanish artists, working to the accompaniment of a musical soundtrack, propose 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 spectators. 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 sight In Tap Seac Square, a giant Viva will welcome performers and spectators to the parade’s grand finale. A special mul-

4pm Opening ceremony and performances at the Ruins of St. Paul’s and Companhia de Jesus Square 6pm Performances on Tap Seac Square

timedia performance will bring the celebrations 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 recruited 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 activities, including a photography contest and a competition among players of a special mobile phone game, which can be downloaded, with prizes for the winners. Public broadcaster TDM will cover the celebrations live and Hong Kong’s TVB Jade will air a one-hour television special on December 22.

Streets on the parade route will be temporarily closed to traffic on the parade day. The organisers advise spectators to walk to the parade venues or use public transportation DECEMBER 2012

72

Gaming

Playing by the rules Casino panel cautions on U.S. law violations, diversification and licence expiry

BY MUHAMMAD COHEN

U.S. criminal conviction would affect the “suitability” of a Macau gaming operator. Duarte Chagas, a legal advisor to Macau’s Gaming Inspection and Coordination Bureau made that assertion during last month’s Asian Gaming 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 regulator here focuses only on the “suitability and financial capacity” of Macau licensees. “[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 financial 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 operators Wynn Macau Ltd and Sands China Ltd respectively, have reported they are under investigation for possible violations of American laws linked to their operations in Macau, including alleged offenses under the U.S. Foreign Corrupt Practices Act that bars payments to foreign government officials.

According to Mr Chagas, convictions in the U.S. would however not necessarily 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 University of Macau Faculty of Law, and Su Guojing, chairman of non-profit organisation Asian Responsible Gaming Alliance, also participated in the panel.

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Diversification driver Beijing may demand greater steps toward economic diversification 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 diversification 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 diversification path.”

DECEMBER 2012

73 “Diversification 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 nongaming elements. But Mr Godinho doesn’t expect Macau to be so stringent.

Recent land grants and construction approvals for current gaming concessionaires should meanwhile not be viewed as an indication that renewal of their licences 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.”

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

Time of the signs?

Look back, see ahead Rather 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 first 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 received an eight-year concession that ultimately lasted for 40 years.

“Macau has had long periods of stability [of gaming licences] with moments of rapid change,” Mr Godinho concluded, adding however “groundshaking 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 nonsmoking areas.

“The industry has reacted in a very strong way to the restriction,” Mr Chagas 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 deciding where to place the non-smoking areas. “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-

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“The central government has always been concerned about diversification of Macau’s economy,” says Su Guojing, chairman of non-profit organisation Asian Responsible Gaming Alliance “Diversification 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”

The law raising the minimum casino admission and employment age from 18 to 21 has drawn a great deal of attention in the mainland as well as Macau, according to Mr Su. He questioned enforcement of the law, enacted last month.

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

Signage about the new minimum age is “hard to find and small” and often 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 admission 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. Violating an exclusion order is a criminal offense, subject to imprisonment or a fine, Mr Chagas explained. The rules also enable families to request exclusion for a family member, subject to the approval of the excluded person.

“Self-exclusion and family exclusion 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 file an exclusion application without the approval of the person to be excluded. Macau should also consider requiring casino marketing material 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 excluding 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.”

Go now to macaubusiness.com and sign up for our e-newsletter DECEMBER 2012

74

Gaming

Not welcome anymore The new rules on slot-machine parlours turn out to be stricter than expected ive years after it announced its intention to ban slot-machine parlours in residential areas, the government promulgated last month new regulations for such businesses. The regulations are stricter than officials previously let on.

The new rules require that five 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 Coordination 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

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DECEMBER 2012

Mocha Hotel Taipa Best Western, run

by Mocha Clubs, a subsidiary of Melco Crown Entertainment Ltd, the gaming regulator told our sister publication Business Daily.

Officials 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 legislation, and thus needed to be approved only by the chief executive, and did not need to be passed by the Legislative Assembly.

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

machine parlours unless they are inside five-star hotels, in non-residential buildings 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 steps Executive director of SJM Holdings Angela Leong On Kei says her company is considering other places to put its slotmachine 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 regulations will have “an impact which would not be small on SJM Holdings’ business”.

SJM Holdings’ Yat Yuen Canidrome Slot Lounge is in Fai Chi Kei, one

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

The director of the Yat On Pathological 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 broadcaster TDM. “We can see that the government is devoted to solving the problem of gaming getting inside communities.”

A government-appointed member of the Legislative Assembly, Ho Sio Kam, regards the removal of slot-machine parlours from residential areas as only the first 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 Mútuas 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 slotmachine parlours, some of them inside casinos.

Ticking clock

A GAME OF PERCENTAGES

The new regulations promulgated last month govern not only where slotmachine 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.

Union Gaming Research Macau estimates that the closure of three Mocha Clubs slot-machine parlours could reduce Melco Crown’s earnings before interest, tax, depreciation and amortisation (EBITDA) in 2014 by US$12 million (MOP96 million) to US$15 million.

The consulting firm says the closure is unlikely to reduce Melco Crown’s earnings next year because operators of slotmachine 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 financial details 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 operators 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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Gaming

MGM Macau

Galaxy Macau

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

BY LUCIANA LEITÃO

t 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 casino gross gaming revenue.

U.S. brokerage firm Sterne Agee expects casinos to rake in around MOP26.2 billion (US$3.3 billion) in revenue in December 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 October, 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 first since it opened, and the average occupancy rate of its hotels 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 reflected growth with high occupancy 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”.

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Star in the south This 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, DECEMBER 2012

where visitors can admire the special decorations, watch parades 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 Office. The carnival will revolve around a giant Christmas tree and an ice rink, and include 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 visitation to Macau and to Cotai, as we continue to attract a wider demographic of people,” says Brendon Elliott, the vice-president 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 National 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 Christmas holiday activities. It has decked out the Grand Praça at the MGM Macau casino hotel to resemble a European Christmas market, with stalls offering gingerbread and other bakery products. The property is presenting seasonal holiday performances and its restaurants will have special menus.

“We believe this enchanting Christmas programme can draw in traffic 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 information about its plans for the Christmas holidays.

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HSBC POSITIVE ON MACAU GAMING Mainland economic recovery should provide a positive backdrop for the sector in 2013, the bank says

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 reaffirmed 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

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).

VENETIAN DATA PROBE READY EARLY NEXT YEAR

The 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 Office head said. Venetian Macau could be fined 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 office computers of former Sands China chief executive Steve Jacobs. The data was moved to Las Vegas a few days after he was fired, in July 2010.

BALLY ANNOUNCES LEADERSHIP TRANSITION

ASIA CHAMPIONSHIP OF POKER SETS NEW APPT RECORDS

PokerStars Macau set new records for players and prize pools on the Asia Pacific 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.

U.S.-based gaming supplier Bally Technologies Inc announced that Ramesh Srinivasan will become president and chief executive officer effective December 31, as part of the company’s succession plan. Current chief executive officer Richard M. Haddrill will become chairman. Bally’s Asia-Pacific operations are headquartered in Macau.

DECEMBER 2012

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Gaming

Know more, play smarter Interactive kiosks are being set up in casinos this month to fight problem gambling

BY ALEXANDRA LAGES

ix responsible gaming kiosks will begin operating in six casinos on December 15, each run by one of the six gaming concessionaires. The kiosks 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 problem gambling.

The kiosks will have interactive features and information on responsible gaming. They will have a game similar 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.

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DECEMBER 2012

The Institute for the Study of Commercial 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 Coordination Bureau are funding the scheme.

The institute is training about 80 volunteers from non-government organisations 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 environment, as well as the symptoms of someone 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 kiosks will be available around the clock, the ambassadors will only be on duty eight hours per day.

Education is crucial for the prevention of problem gambling and pathological 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 implementation of the kiosks, there will be a downtrend of problem gambling behaviour,” he says.

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

79 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 together with non-governmental organisations to employ them full-time.

In pursuit of normality

“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 despite the city being the world’s casino 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 control behaviours exist, etcetera.”

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

The idea has spread to other Canadian provinces. Ontario has also put responsible gaming information centres in casinos alongside the kiosks.

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

When people interact with the kiosks, all data are collected in a database.

The Institute for the Study of Commercial 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 report to the government, which will decide what to do next. Mr Fong says that if the number of people interacting with

Research 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 pathological gamblers and 2.8 percent problem gamblers.

Mr Fong says percentages of problem 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 percentages of problem gamblers and pathological 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 “responsible gaming”. Mr Fong forecasts this proportion to surpass 50 percent this year.

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

Casino staff are barred from gambling win properties run by their employer, but they can still gamble in casinos run by rival operators.

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

DECEMBER 2012

80

Gaming

Big splash Wynn Macau has renovated its Performance Lake to accommodate mainland tastes

BY LUCIANA LEITÃO

ynn Macau has just revamped its fountain shows to include new water dances to the accompaniment of traditional Chinese music. The goal is to make the hotel casino’s outdoor Performance Lake more attractive to visitors.

The Performance Lake’s new features include LED lighting, more water projection and new water dances, performances of which start this month.

The fountain shows, which also include fire effects, are part of Wynn Macau’s regular programme of free entertainment. Also in the programme are indoor displays entitled “Dragon of Fortune” 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 performances 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-efficient and brighter, and their colours are “richer”, says Mr Fuller.

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

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DECEMBER 2012

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 motion,” 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 Western show tunes,” Mr Fuller notes.

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

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

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 musicians 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 choreographers to synchronize the water and fire 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 adjustments 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.

81

SMOKING BAN MAY HURT GAMING REVENUE

The 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 floors as smoking areas. Nomura adds there is no easily accessible alternative market for the majority of players who come to Macau.

FITCH CONCERNED OVER COTAI’S NEXT PHASE

Fitch Ratings warns that a “primary risk factor” regarding Cotai’s next wave of development “is the potential for significant 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.

ALL-TIME HIGH FOR GAMING WORKERS

Macau’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 first 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.

BOUTIQUE CASINO HOTEL TO COST HK$6 BILLION Promoters already have agreement to buy the land from One Oasis’ developers 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 filing, there is already an agreement to buy the land needed for the project from the

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.

DECEMBER 2012

82

Gaming

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

BY ALEXANDRA LAGES

ore 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 dealing in Cambodia, Laos and all across the region. As those markets grow, our business will grow as well.”

Privately owned Transcity Group

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DECEMBER 2012

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, covering 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 fitting 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 fit out the MGM Grand Ho Tram Beach casino being developed in Vietnam by Asian Coast Development Ltd. “Our first year and a half was really a building phase,” Mr Rogers says.

83 “There are a lot of difficulties in Macau in building what we’ve built in terms of skill sets, because it was basically nonexistent, particularly for the workshop.

We had to train a lot of people.”

Photo: Carmo Correia

Where’s that techie?

“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

The past 12 months were the first 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 relatively quiet for Transcity Asia’s business 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 support 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 extend 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 inventory, bringing the total to more than 17,000.

But gaming companies have a hard time finding technicians with expertise 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 activity The 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 office, 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, Transcity Asia’s costs are high, Mr Rogers notes. It cost the company US$250,000 just to set up its workshop and get it licensed.

Even so, he says Transcity Asia makes money. “In the next few years, we will be much more profitable 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 markets 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 assist in installations there.”

Transcity Asia is considering producing betting terminals here, as its parent company does in Australia. “There are challenges to get space and people.

But we think it’s a good move,” Mr Rogers states.

The company is also thinking about moving into fields other than gaming support. “Gaming is our core business, but there are also other non-gaming things we can repair, such as in retail,” he says.

Tentacles spreading Transcity Asia has 17 employees here.

To get around shortage of suitable manpower, the company is getting together with institutions of tertiary education and the government to come up with a training programme.

“It’s hard to find people. Employment in Macau is tough no matter what business you’re in, but we get a lot of interest from people,” Mr Rogers says.

“The challenge to building a business here is the average wages are going up significantly every year. Small businesses 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 office in Cambodia with three staff. It recently took on its first employees in the Philippines, where it means to set up a branch. Mr Rogers says the company is also planning to open an office in Laos for the Indochinese market and considering having a presence in Singapore or Malaysia.

DECEMBER 2012

84

Gaming

Bureaucratic nightmare Building work facing suspension at MGM Grand Ho Tram Beach

BY MARTIN JOHN WILLIAMS*

he MGM Grand Ho Tram Beach casino resort in Vietnam is at risk of a construction shutdown because of bureaucratic delays and blocked bank credit, according to the project’s minority investor.

Developer Asian Coast Development Ltd (ACDL) may be forced to suspend construction of the MGM Grand Ho Tram Beach casino resort because a syndicate of Vietnamese banks blocked a credit facility to complete the first phase, said U.S.-based Pinnacle Entertainment Inc, a minority shareholder of ACDL. In a quarterly filing to the New York Stock Exchange last month, Pinnacle said the syndicate is withholding the money until the Vietnamese government issues an amended and updated investment certificate.

ACDL, which plans to open the first phase of the Ho Tram resort in the first quarter of 2013, is “currently in default of the deadlines set out in the official letter for completing the first phase of the first resort and golf course,” the filing said.

The “official letter” refers not to a central government commitment but a provincial government letter that had already extended a deadline in the central government’s investment certificate.

But the filing said the already-breached deadline granted by the “official letter” from the Ba Ria-Vung Tau provincial government is yet to be included in the investment certificate.

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DECEMBER 2012

“ACDL and [subsidiary Ho Tram Project Company Ltd] have applied to amend the investment certificate to incorporate the deadlines ... and to extend further the deadlines for completing the first phase ... which would, if approved, remedy the fault,” the filing said.

No credit line Uncertainty about the status of the investment certificate prompted a syndicate of Vietnamese banks to block more than half of a US$175 million (MOP1.4 billion) line of credit, the filing said.

“The Vietnamese banks have suspended funding under the credit facility until the amendment to the investment certificate has been granted,” it said.

Without this or alternative funding, “construction at the project site will likely cease in the near term,” the filing said.

Nonetheless, Lloyd Nathan, chief executive of ACDL, insisted to GamblingCompliance that construction is on-going. “Construction is continuing as it has been all year. We are completing the final fit out, and expect to complete handover of the building to MGM on schedule,” he said last month.

Philip Falcone, founder and principal of U.S.-based Harbinger Capital Partners LLC, the majority investor in ACDL, also dismissed concerns. “The financing of the project remains on programme,” 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 investor in MGM Grand Ho Tram Beach. The U.S.-based gaming operator has an agreement with ACDL to provide development assistance, brand equity and to operate the five-star property upon completion.

MGM Grand Ho Tram Beach was the first 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 several 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 attracted the interest of Genting Malaysia Bhd, is now unclear.

Other designated zones for casino development, including southern Phu Quoc island, continue to languish as investors turn away. Analysts said that the government’s draft gaming law of last August, which confirmed a ban on gambling by Vietnamese nationals and set a minimum investment capital threshold of US$4 billion, has only reinforced this trend. * GAMBLINGCOMPLIANCE

85

LEIGHTON TO BUILD WYNN COTAI

SJM’S COTAI PROJECT TO COST MOP20 BILLION Ambrose So says 90 percent of the casino resort will be dedicated to non-gaming facilities SJM 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

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.

A 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.

PERMIRA SELLS STAKE IN GALAXY

Private 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.

JAI ALAI TO UNDERGO REVAMP 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.

DECEMBER 2012

86

Gaming Statistics

Casino gaming 2011 MOP 267.9 billion

Gross gaming revenue

5,302 16,056 34 casinos

Gaming tables Slot machines Number of casinos

Market share per casino operator* 2011 SJM Holdings Ltd Galaxy Entertainment Group Ltd Sands China Ltd Wynn Macau Ltd Melco Crown Entertainment Ltd MGM China Holdings Ltd

29% 16% 16% 14% 15% 10%

Year-on-year change (%)

MOP 24.9 billion

42.2 10.7 14.3 1 casino

5,497 17,029 35 casinos

Year-on-year change (%)

-3 7 -2 -1 --1

Year-on-year change (%)

Latest

Latest

percentage points percentage points percentage points percentage point

Month-on-month change (%)

28% 16% 21% 12% 14% 10%

percentage point

7.9 2.2 7.1 1 casino

1 -3 -2 -1

percentage point percentage points

Notes Nov 2012 Sep 2012 Sep 2012 Sep 2012

Notes Nov 2012 Nov 2012 Nov 2012

percentage points

Nov 2012 Nov 2012

percentage point

Nov 2012

Gross revenue from casino games MOP783 million

Roulette

MOP2,712 million

Blackjack

MOP196,126 million

VIP Baccarat

MOP48,669 million

Baccarat Fantan

MOP211 million

Cussec

MOP4,774 million

Paikao

MOP114 million MOP70 million

Mahjong

MOP11,425 million

Slot machines

MOP190 million

3-Card Poker

MOP51 million

Fish-Prawn-Crab 3-Card Baccarat Game

MOP281 million

Craps

MOP151 million

Texas Holdem Poker

MOP277 million MOP35 million

Lucky Wheel

MOP311 million

Live Multi Game Stud Poker

MOP1,309 million

Casino War

MOP225 million

Fortune 3 Card Poker

MOP141 million

Year-on-year change (%)

16.5 18.4 44.6 39.4 15.3 34.3 32.6 105.9 32.6 45.0 -45.2 28.3 -7.4 28.2 9.4 103.3 23.5 43.3 29.4

Latest MOP193 million MOP746 million MOP51,166 million MOP16,805 million MOP56 million MOP1,398 million MOP20 million MOP52 million MOP3,149 billion MOP50 million MOP6 million MOP90 million MOP35 million MOP69 million MOP10 million MOP259 million MOP368 million MOP57 million MOP51 million

Year-on-year change (%)

2.1 13.5 -1.1 32.8 1.8 10.3 -28.6 205.9 11.2 4.2 -45.5 28.6 -2.8 3.0 -191.0 7.0 -1.7 37.8

Notes Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012

Gross revenue from other gaming activities 2011 Greyhound Racing

MOP297 million

Horse Racing

MOP440 million

Chinese Lottery

MOP6 million

Instant Lottery

MOP0.0036 million

Sports Betting - Football Sports Betting - Basketball

MOP362 million MOP86 million

Year-on-year change (%)

-12.6 0.2 -56.5 -4.7 8.9

Latest MOP50 million MOP90 million MOP2 million MOP0.0002 million MOP115 million

* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent

DECEMBER 2012

MOP15 million

Year-on-year change (%)

-39.0 -20.4 --71.4 36.9 -11.8

Notes Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012

Source: Gaming Inspection and Coordination Bureau and industry sources

2011

Hospitality

87

Know your guest A study finds that visitors travelling independently tend to stay in the kinds of hotel that best suit their purposes

eing 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 researchers 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-

B

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 first nine months of this year were on package 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-

LOW-COST HOTELS GET WEBSITE A

new website for Macau’s low-cost hotels began operating last month. The purpose 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 Office.

The website has versions in traditional Chinese, simplified 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 twostar hotels and 33 guesthouses, which together have nearly 1,500 rooms.

ently that stayed in hotels here. The findings 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 hospitality 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 industry is required to move towards diversification, i.e. to provide accommodation ranging from budget to ultra-luxury hotels in order to capture different tourist 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.

DECEMBER 2012

88

Hospitality

MAIN FACTOR IN CHOICE OF HOTEL

BY VISITORS TO MACAU TRAVELLING INDEPENDENTLY

MAIN FACTOR IN CHOICE OF HOTEL BY VISITORS TO MACAU TRAVELLING INDEPENDENTLY, DEPENDING ON THE PRIMARY PURPOSE OF THE VISIT Chain

Room rate GAMBLING

PERCENTAGE OF ANSWERS

Chain

Room rate Situation

Situation Room rate

Recommendations SIGHTSEEING

Facilities

Chain Recommendations

Advertising

Room rate

Availability

GOURMANDISING Recommendations

Others

Chain

0%

5%

10%

15%

20%

25%

30% Room rate SHOPPING

PRIMARY PURPOSE OF VISITORS TO MACAU TRAVELLING INDEPENDENTLY Doing business Visiting friends 6%

Other

2%

7%

Room rate Gambling

VISITING FRIENDS

12% Sightseeing

Shopping

Chain Situation

36%

14%

Chain Situation

Situation DOING BUSINESS

Chain Room rate

Gourmandising

23%

0%

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 guidance The results of their study indicate that over one-third of visitors travelling independently to Macau come primarily

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 DECEMBER 2012

5%

10%

15%

20% 25%

30% 35%

40%

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 concern 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 recommendations, including reviews found online, carry more weight when a visitor chooses a hotel than the facilities the hotel has to offer. So Ms Yeung and Ms Yee advise hoteliers to make good use of the Internet to promote their establishments.

89

ARRIVALS DOWN FOR SIX MONTHS STRAIGHT

The number of visitor arrivals in October decreased by 1.2 percent year-on-year to 2.35 million, official 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.

GET MARRIED IN MACAU The government’s new wedding incentive scheme is aimed at diversifying tourist sources

HOTELS AND RESTAURANTS TOURIST SATISFACTION IN NEED OF 4,800 PEOPLE GOES UP SLIGHTLY The hotel and restaurant sector was in need of 4,800 workers as of Septemberend, 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 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.

The Macau Government Tourist Office 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

activities 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 Office 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.

DECEMBER 2012

Tourism statistics

90

Visitor arrivals Year-on-year change (%)

2011 Total - Same-day visitors - Overnight visitors Average length of stay

28,002,279 15,077,119 12,925,160 0.9 days

Year-on-year change (%)

Latest

23,212,331 12,047,366 11,164,965 1.0 days

12.2 15.6 8.4 --

0.8 -2.9 5.0 0.1 days

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

Visitors by place of residence Year-on-year change (%)

2011 Asia - Mainland - Guangdong - Fujian - Zhejiang - Hunan - Beijing - Shanghai - Tianjin - Chongqing Individual visit scheme - Hong Kong - Taiwan - Japan - South Korea - Others America Europe Oceania Others

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

12.4 22.2 131.1 164.2 140.1 191.9 185.6 159.0 151.2 166.8 20.1 1.6

Year-on-year change (%)

Latest

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

-6.0 -4.2 20.2 -0.6 4.5 3.0 0.3 8.8

Notes

0.7 5.2

Jan-Oct 2012

-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

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

Hotels Hotel and guest-house rooms Hotel guests Hotel average occupancy rate Average length of stay

11.3 22,356 11.0 8,612,127 4.3 84.1 1.53 nights -0.01

percentage points nights

Latest

Year-on-year change (%)

26,083 16.4 7,018,836 11.5 percentage 82.6 -0.6 points 1.39 nights -0.13 nights

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

Visitor expenditure 2011 Total spending (excluding gaming) MOP 45.3 billion - Non-shopping spending - Shopping spending Per-capita spending

DECEMBER 2012

MOP 22.9 billion

22.4 billion MOP 1,619 MOP

Year-on-year change (%)

20 23 16 7

Latest MOP 13.3 billion MOP 6.9 billion MOP 6.3 billion MOP 1,822

Year-on-year change (%)

10 13 5 12

Notes Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012 Jul-Sep 2012

Source: Statistics and Census Service

Year-on-year change (%)

2011

Hospitality

91

Beefing up The ownership of the Morton’s steakhouse chain has changed, but plans to expand have not

BY ALEXANDRA LAGES

year has passed since American billionaire restaurateur Tilman Fertitta agreed to buy Morton’s Restaurant Group Inc. The deal, completed 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 engine. 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 outlet in the Venetian Macao is increasing steadily and that the restaurant’s prospects are good. He predicts that demand will continue to increase with the development of new casino resorts in Cotai.

A

“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. Atlantic City in New Jersey was the first.

Mr Leach says the Atlantic City restaurant performs better than its Macau counterpart, probably because the Morton’s brand is better known in the United States, having first appeared in Chicago in 1978. “Here, it’s growing. We have been here for about five years and every year seems to get better and better.”

Most of Morton’s customers in Macau are tourists, many of them overnight visitors, but some clients live here, he says. At first, diners had to pass through the casino to reach the restaurant’s main entrance. But last year the Venetian Macao re-arranged the gaming

floor 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 markets Mr 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. Landry 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. Landry has forecast US$2.5 billion in revenue 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

DECEMBER 2012

92

Hospitality

The Morton’s chain comprises about 70 outlets. All but seven are outside the United States. The first Morton’s in Asia opened in Singapore in 1998 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 first restaurant in Beijing last month. The unit is smaller than most in the chain, the main dining room seating 110 people. It does have

DECEMBER 2012

eight private rooms to reflect the importance of secluded dining in the mainland.

The first 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 first 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 influence in the United States. We want to try that in Asia,” Mr Leach says.

All-American brand All 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 recognition of several U.S. brands in Asia has only helped our business as well. There is also a tremendous expatriate community in a lot of the markets. But just the economic growth that we have seen in the region has alone been influential in our business,” Mr Leach says.

He says the chain’s worldwide revenue so far this year is more than 4 percent 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 difficult years, but that Morton’s is rebounding. “The worst years are behind us,” he says.

“We are starting to see a strong return in all the Asian restaurants. This year has been good for us. We believe 2013 will be even better.”

93 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com

The wisdom of Yoda

TRYING IS A FORM OF PROCRASTINATION; SUCCEEDING IS WHAT COUNTS

A

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 floor 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 floor 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 fulfilment of your potential.

In the film “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 word Luke 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.

In the “Star Wars” saga, Jedi master Yoda famously says: “Try not. Do. Or do not.

There is no ‘try’” 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 paradise Doers 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 confident 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.

DECEMBER 2012

94

Sands China Care Ambassadors with a group of 100 elderly from various elderly centres of the Macau Federation of Trade Unions

JOINING HANDS Sands China Ltd. has a long-standing commitment to community outreach and service

DECEMBER 2012

Sponsored Feature

95 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 financial 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 financial contributions totalling nearly MOP600,000 (US$75,000) to date.

Sands China Ltd. has also devoted time and effort 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 first 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 Officer 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 efforts 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 benefits from

Broad reach

ands China Ltd. approaches corporate social S responsibility from a broad scope. Besides providing financial 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 highereducation institutes since the 2006/2007 academic year. Close to 600 local students have benefited from the scholarships and fellowships sponsored by the company.

As part of its corporate social responsibility efforts, 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

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.

DECEMBER 2012

96

Sands China Care Ambassadors visit elderly homes

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

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 first 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

Building a greener future

Valuable collector’s items were put up for auction to help raise funds for the Sands China Green Fund

s part of its on-going efforts to support A 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

DECEMBER 2012

Charity Ball, with Sands China Ltd. matching dollarfor-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 efforts 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.

Sponsored Feature

97 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 buffets and Easter-egg painting workshops.

New Year blessings

Special Olympics athletes visit Ice World

in Venice” at The Venetian Macao.

This year’s beneficiary was the Women’s General Association of Macau, whose services benefit single-parent and financiallydeprived families.

Accompanied by 15 Sands China Care Ambassadors, dozens of families were given free access to the Football Fanatic

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 beneficiaries 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

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 fifth 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.

Game responsibly significant part of Sands China Ltd.’s A 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 Officer of Sands China Ltd. The company’s cash donations to counselling centres and academic institutions represent only

Sands China Ltd. presents ceremonial cheques to representatives of Macau counselling centres in support of their responsible gaming services

a part of its overall effort 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 offering 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.

DECEMBER 2012

98

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99

THE FRENCH RECIPE FRANCE’S BUSINESS FOOTPRINT IN MACAU IS EXPANDING, SUPPORTED BY LUXURY GOODS EXPORTS, INVESTMENT IN PUBLIC UTILITIES AND PRIVATE ENTREPRENEURSHIP DECEMBER 2012

100

THE FRENCH RECIPE

OPPORTUNITY KNOCKS MACAU IS A SPRINGBOARD FOR FRENCH COMPANIES LAUNCHING INTO THE MAINLAND MARKET, THE FRENCH CONSUL-GENERAL SAYS

by Luciana Leitão 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.

DECEMBER 2012

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 field 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.

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, offices, housing and tourist facilities can be developed. “Others are very attentive to all tenders to be launched in the future,” Mr Barthélémy says.

In good company

Big impression

French 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 Sofitel 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

More 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,

101 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 first nine months of this year, imports from France were worth MOP4.66 billion, only 1.2 percent more than a year before, chiefly because imports of French food and drinks fell.

Arnaud Barthélémy

Mr 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 flavour,” 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 wouldbe 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.

DECEMBER 2012

Photo: António Mil-Homens

Lust for life

102

THE FRENCH RECIPE

FRENCH STYLE FORGET ‘GANGNAM STYLE’. IN MACAU, FRENCH LUXURY GOODS, FROM FASHION TO FINE WINES, RULE THE MARKET

1.8 million

The number of litres of bottled red wine imported from France, from January to September. Most of it was fine 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 first nine months of 2012.

Imports reached close to 105,000 litres, worth MOP36 million, or 98 percent of the market value

734

The weight, in kilos, of the pieces of gold jewellery with diamonds France sold to Macau in the first nine months of 2012. They had a value of close to MOP630 million, accounting for one third of this segment in terms of value

74,987

The 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 million

The total value of make-up, cosmetics and other beauty products imported from France in the first 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

The average unit value of the 3,139 fountain pens, stylograph pens and imilar products imported from France during the first 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

DECEMBER 2012

SOURCE: STATISTICS AND CENSUS SERVICE

103

France Macau Business Association ( FMBA ) , a non-profit 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.

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!

DECEMBER 2012

104 104

THE FRENCH RECIPE

RIVERS OF GOLD HENNESSY HOPES TO DOUBLE ITS SALES IN MACAU WITHIN FIVE YEARS

by Emanuel Graça acau has a passion for cognac. The drink is among the topthree 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 five 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 figure.

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 significant 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 confident 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 DECEMBER 2012

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 pairing Established in 1765, Hennessy has a very strong position in the mainland, to where it first 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 profile, [cognac] fits 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-Pacific 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 office 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-office is where we look for synergies,” he says. “Front-office, where the brand is exposed to the consumers and takes its full expression, we work as stand alone companies.”

Affective connection Mr 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.

Bernard Peillon

“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 finer 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 first among beverage brands.

“We are first 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 wellmanaged, 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 fine 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.

DECEMBER 2012

Photo: Luís Almoster

105

106

THE FRENCH RECIPE

BUSINESS FRATERNITÉ MEMBERSHIP OF THE FRANCE MACAU BUSINESS ASSOCIATION IS GROWING AS THE FRENCH PRESENCE HERE INCREASES

by Luciana Leitão 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 influx 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 first 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 “find 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 official 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 DECEMBER 2012

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 croissants Mr 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 benefit 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 firms, but also local and other foreign companies,” Mr Willemyns says.

Still or sparkling The 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 first of the Beaujolais wine produced each year.

Franklin Willemyns

DECEMBER 2012

Photo: Carmo Correia

107

108

THE FRENCH RECIPE

MEET THE FRENCH ALMOST 400 FRENCH PEOPLE LIVE IN MACAU. WE WENT TO MEET THREE

“There is no crime [in Macau], it’s safe and it’s clean,” says David Rouault

by Luciana Leitão 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

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 easygoing”, 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

TOWERS OF BABEL

For anyone who doesn’t speak Cantonese, communication can be difficult 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 find people who could understand it. “Only in the last five 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 difficulties. His children speak English most of the time but they are now beginning to pick up French, Cantonese and Mandarin.

DECEMBER 2012

“From a business point of view, the French community is really present in Macau,” says Loïc Faulon

109 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 traffic is congested.

Mr Faulon created a design consultancy called Loco Creative Works Ltd. “With my experience in Europe, I am confident I can do something good,” says the 36-year-old.

He notes that setting up the company was not difficult, 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 office 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.

A change of course Mr 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 find 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 find 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 difficult than in Europe because of the constant need for passports and visas.

A grand design Mr 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 fit in more rapidly, he says.

An industrial designer by training, DECEMBER 2012

110

THE FRENCH RECIPE

Jazz concert by France’s Cédric Hanriot Trio last June

SOFT POWER DEMAND FOR FRENCH-THEMED EVENTS HAS SEEN ALLIANCE FRANÇAISE BOOST ITS CULTURAL PROFILE

by Luciana Leitão 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-profit institution is now moving into the cultural field 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.

DECEMBER 2012

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 confirms 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 Frenchrelated 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 time The 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

111 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 film 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 pleasure After 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-profit 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

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 five language teachers from France.

Mr Casanova says the student profile 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 official French proficiency certifications.

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.

“We will try to bring more concerts, exhibitions, conferences, cinema, an animation festival and a short film festival [in 2013],” says Alliance Française’s director Pascal Casanova

LUXURY PERSPECTIVES

Pierre Corthay shoe

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 highdefinition 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.

DECEMBER 2012

112

Business

Retailing alfresco For centuries a living part of the city’s heritage, hawkers are disappearing

BY LUCIANA LEITÃO

awkers are still a part of Macau’s way of life, but their numbers are dwindling fast. Street vendors blame the thinning of their ranks on competition from convenience stores and the difficulty in attracting new blood to the greying trade.

The city has fewer than 1,100 licensed 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 official data about the combined turnover of the remaining hawkers. Street vendors were mostly unregulated until the mid-1980s.

According to Lui Kwok Man, an academic, the decrease in the number of hawkers is related to economic growth. In

H

an article published in Macau Public Administration 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 economic boom, Mr Lui wrote, meant better-paid jobs in other occupations, making hawking 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 complaints. 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

Photos: Manuel Cardoso

The city has fewer than 1,100 licensed hawker stalls

DECEMBER 2012

public areas to display their goods, unlike 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 designated areas during important traditional festivals.

Too late to change Wong 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 afterwards I come to the stand,” he says.

He sells cigarettes, chewing gum and sweets. “The prices are fixed. I don’t

113 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 first, 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 fully recovered, Mr Wong complains. Also bad for business, was the mushrooming of convenience stores. Both 7-Eleven and Circle K convenience store chains entered 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 follow 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 newspapers 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 keep Mr 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. Opening 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 lucrative but good enough to provide for him and his family. Even so, increasing competition and rising prices are concerns.

Liu Leong Sim and his mother, originally from Indonesia, have been selling pieces of jade from a small stand in Senado Square for more than 20 years. “I sell jade because we only have a small

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 busiest areas but few people buy. Most of the customers are Filipinos, but some are from Hong Kong or even Macau. Mainland 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 newspaper stand that is always busy, selling papers in Chinese, English and Portuguese. It has been there for 30 years.

The owner, who does not wish to be identified, 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.

Most hawkers are in or around municipal markets and in busy tourist districts

DECEMBER 2012

114

Technology

Engineered for men Science and technology are still a man’s world in Macau, a study finds

BY ALEXANDRA LAGES

DECEMBER 2012

115 ccording to my culture, science is for men,” says one female university student. “Men have a better brain for maths,” says another.

Their statements reflect 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 science, technology, engineering and maths (STEM) in Macau.

Researchers Tânia Marques and Ana Correia concluded that the disparity between the sexes in the STEM fields here is “tremendous”. The report on their study, “The Gender Gap in Science, Engineering, Technology and Mathematics: Unfolding Traditional 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 significant trend where women gravitate toward nonSTEM majors”.

Fewer than 230 women were enrolled in STEM programmes in the 2010/2011 academic year, official data shows. One in 60 women students were pursuing university STEM degrees.

Women made up only 14 percent of those enrolled in STEM programmes. They made up fewer than 10 percent in engineering degrees.

Ms Marques and Ms Correia say this is a worldwide 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.

A

Old-fashioned attitude The researchers criticise officials for turning a blind eye to the under-representation of women in the STEM fields. “The government should implement a policy of gender incentives to attract and retain female students in STEM areas, where they are almost totally non-existent,” their report says.

Ms Marques calls for officials to invest more resources 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 insufficient number of women teach science in schools, and that textbooks 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 fields can help to diversify the economy. “In order to reach economic diversification, we need to create more jobs and educate people in different areas,” she notes.

The study found gender stereotypes are strong here. The researchers interviewed 12 female students 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 DECEMBER 2012

Technology

116

follow,” the report quotes one of the interviewees as saying.

Ms Correia says primary and secondary schools are also partly to blame, for failing to nurture an interest in science 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.

“Society is still too traditionalist. We need to educate parents to show them that role models have changed,” says Tânia Marques

Gaming temptation Ms 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 sciencerelated field trips. School curriculums should be changed, they argue.

School results here do not suggest 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 Student Assessment, a worldwide study by the Organisation for Economic Cooperation and Development assessing the competencies of 15-year-olds, show no significant 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-related 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

“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

STUDENTS ENROLLED IN HIGHER EDUCATION

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 pursuing careers in the STEM fields 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 fields. 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 qualifications, 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 management and tourism and entertainment [programmes], preferred for the ease in which a job can be secured,” the report adds. “As a result, families are easily tempted to encourage their boys and girls to channel their interests and efforts into fast-rewarding tracks.”

Some of the interviewees pointed out that the choice of academic specialisms here was limited. Those interested in the STEM fields are more likely to have to study abroad, thus lumbering their families with a financial burden. Ms Marques and Ms Correia urge the government to widen the range of STEM programmes.

HIGHER EDUCATION STUDENTS ENROLLED IN SCIENCE, TECHNOLOGY, ENGINEERING AND MATHS PROGRAMMES

16,000

600

14,000

500

12,000 400

10,000

300

8,000 6,000

200

4,000 100

2,000

0

0 Men

Women

Men

Women

Total number of students enrolled Students enrolled in science, technology, in higher education engineering and maths programmes

Men

Women

Life sciences

Men

Women

Physical sciences

Men

Women

Mathematics and statistics

Men

Women

Computing

Men

Women

Engineering

Academic year 2010/2011 Source: Statistics and Census Service

DECEMBER 2012

117

DECEMBER 2012

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Luxury

Andreas Binder DECEMBER 2012

119

Three-pointed star shines

BY ALEXANDRA LAGES

erman carmaker Daimler AG’s flagship marque, Mercedes-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 officer of Mercedes-Benz Hong Kong Ltd, Andreas Binder, tells Macau Business.

There were 93,000 cars in Macau at the end of September, official data shows. Mr Binder estimates that 6,500 of them are Mercedes units.

Established in 2006, Mercedes-Benz Hong Kong Ltd imports 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 doubled in just six years.

In 2011, Mercedes-Benz sold 656 vehicles in Macau, taking 9.7 percent of the market, Mr Binder says. “In the premium segment, we already have a substantial market share of 36 percent. Of course, we want to continue to grow,” he says.

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Few reasons to worry Mr 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 DECEMBER 2012

Photos: Carmo Correia

The new Mercedes-Benz boss for Macau wants to increase the marque’s leadership of the premium market here

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. Officials have floated 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 influence.” MercedesBenz’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 believe 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 influenced by external factors and our business will always be affected by that.”

Mr Binder highlights that the majority of the marque’s clients in Macau are private users. He says only 10 percent of the total Mercedes units sold here are for corporate use.

The pride of Asia Mr Binder became Mercedes-Benz Hong Kong Ltd’s chief DECEMBER 2012

operating officer 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-general in Serbia and Montenegro before coming to Hong Kong.

The German national says he is familiar with the mentality of the Asian consumer, although he stresses no two markets 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 Mercedes 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 first 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 Mercedes 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.

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Arts & Culture

CLASSICALLY SCOTTISH THE CULTURAL CENTRE STARTS ITS 2013 MUSIC SEASON WITH THE DEBUT IN MACAU OF THE

ROYAL SCOTTISH NATIONAL ORCHESTRA DECEMBER 2012

here is more to music in Scotland than just fiddling 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 first time.

The orchestra’s performance here will be the grand finale of its first tour of China. Before playing in the Cultural Centre, it will give concerts in Beijing, Tianjin, Guangzhou and Shenzhen.

The Royal Scottish National

Orchestra has just begun a new era, as celebrated British-Canadian musician and conductor Peter Oundjian officially 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 first 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 fulfil our international remit.”

In Macau, the ensemble will perform pieces taken from a symphonic touchstone repertoire, including

123 Mendelssohn’s “Scottish Symphony” and Stravinsky’s “The Firebird” (1919 suite). This Scottish-flavoured 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 symphony The Royal Scottish National Orchestra performs regularly all over Scotland.

It is a stalwart of the Edinburgh International Festival. In the past five years it has completed three soldout 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 final performances as the orchestra’s music director, after seven years in the job. The double album met with glowing reviews.

Critical acclaim The Diapason d’Or de l’Année award that the recording earned was not the first that the tandem of the Royal Scottish National Orchestra and Denève had won. In 2007 they won one for their first 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 Prokofiev 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 before 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.

ROYAL SCOTTISH NATIONAL ORCHESTRA WHEN: Saturday, January 5, 8pm WHERE: Macau Cultural Centre, Grand Auditorium TICKETS: Between MOP120 and MOP480, available at the Macau Cultural Centre and Kong Seng outlets INQUIRIES: +853 2870 0699 or email enquiry@ccm.gov.mo

DECEMBER 2012

124

Corporate Social Responsibility

Golf for hope

ROUND ONE Macau Golf & Country Club

Silver Heritage and Wynn Macau I teams take the big prizes at the sixth Annual Macau Business Charity Golf Tournament his year’s Annual Macau Business Charity Golf Tournament was yet another great showing of corporate social responsibility. Macau’s business 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 tournament 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 charity that works in the field of children’s welfare (www.olgaspromise.org).

Mr Shepherd went to Lalitpur, Nepal, to hand over the cheque to Olga Murray, the 87-year-old who founded the organisation 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 winners. They donated their HK$100,000 winnings 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 newspaper Jornal Tribuna de Macau to the Association of Rehabilitation of Drug Abusers of Macau.

T

Special feel A 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 Gaming, BNU, Wynn Macau, IGT Asia, Aruze Gaming, Galaxy Entertainment Group, Lusa, Bally Technologies, MGM China, Silver Heritage, Transcity Asia, AristoDECEMBER 2012

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 enjoy some great golfing moments together with Caesars’ pros. In addition, an entire Macau Special Olympics team sponsored

by Nike Golf joined the competition, offering 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 Business I team, claimed the ‘Net Score Winner’ trophy for the first 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 first 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 first round, again claiming the ‘Longest Drive’ award, sponsored by Galaxy Entertainment.

The ‘Nearest to the Pin’ trophy for round two, presented by Galaxy Entertainment 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 Olympics athlete Chan Cheang Mui, for ‘Best Performance – Putting Challenge’.

João Antunes, from the JBA Consulting Engineers team

Rashid Suliman, from the Transcity team

125 Photos by Gonçalo Lobo Pinheiro and Renato Marques

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

JosĂŠ Costa Santos and Vandy Poon, from Team Lusa

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

DECEMBER 2012

126

Corporate Social Responsibility

ROUND ONE Macau Golf & Country Club

Team Caesars I’s Eason Lee, Chan Cheang Mui and Jimmy Ling celebrate a good shot

Ian Gould, from the JBA Consulting Engineers team

Roberto Sousa, Luis Pereira and John Galati, from the Macau Business II team

James Walker, David Bonnet and Stephen Ho, from Team Sands I

Dave Williamson, Ryan Beauregard and Dennis Hudson, from Team Wynn I

Ian Farnsworth, Kurt Gissane and Andy Crisafi, from the Bally Technologies team DECEMBER 2012

Chen Ling, from Team MGM I

127 ROUND TWO Caesars Golf Macau

The traditional family photo

David Punter, Nathan Tuck and Sam McElhone, from the Aristocrat team, have fun with their caddy

Mel Hansen, from Team MGM I

Eric Wong, Kevin Lee and Marco Leong, from Team Aruze Gaming

Colin Edwards, from the Macau Business I team

Paul Temple, from Team Galaxy I DECEMBER 2012

128

Corporate Social Responsibility

ROUND TWO Caesars Golf Macau

Matt Hurst, from the Melco Crown team

Eason Lee, from Team Caesars I

Paulo A. Azevedo, from the Macau Business I team

Harold Tsakmaklis, from Team Walker Digital Gaming

JosĂŠ Braz-Gomes, from the BNU team

Jason Elton, from Team Walker Digital Gaming

Graham James, Charlie Ward and Nathan Fisher, from the Wynn II team

Jimmy Ling, from Team Caesars I DECEMBER 2012

Chris Connell, from Team Caesars II

Roy Goss, from Team WMS

129

A gala night for charity Memorabilia auction helps to raise further funds for charitable institutions roving to be more than just a golf event, the sixth Annual Macau Business Charity Golf Tournament 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 fields of sport, music and other fields of entertainment. Among the items put up for auction were a Dirk Nowitzki’s signed NBA jersey 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 exquisite Pool Loggia, at The Westin Resort. Fine wines provider Tosti and luxury cigar distributor Pacific 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, Hutchinson, Davidoff, Nike Golf and Melco Crown.

P

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

Lysa Evans

A variety of memorabilia items were put up for auction

Chris Rogers and his wife

Lusa, CTM, Jornal Tribuna de Macau and BNU made a special donation to the Association of Rehabilitation of Drug Abuse of Macau DECEMBER 2012

130

Corporate Social Responsibility

Luis Melo and José Costa Santos

Pre-dinner cocktails

Graça Couto and André Couto 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

Katharine Liu presents the ‘Longest Drive – First Round’ trophy to Mike Bolsover, from the Silver Heritage team

Kristian Passenheim presents the ‘Putting Contest’ trophy to João Antunes, Peter Greville and Ian Gould, from the JBA Consulting Engineers team

DECEMBER 2012

Eileen Stow and Brian Cheng

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 the JBA 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 Photos by Gonçalo Lobo Pinheiro

Paulo A. Azevedo presents the ‘Overall Winner’ trophy to Tim Shepherd and Mike Bolsover, from the Silver Heritage team

A packed house

Lysa Evans presents the ‘Best Performance – First Round’ trophy to Tim Shepherd and Mike Bolsover, from the Silver Heritage team

A lucky winner receives the Westin prize from Brian Cheng

Paulo A. Azevedo, Helder Santos and Colin Edwards, from the Macau Business I team, received the ‘Net Score Winner – First Round’ trophy

Lysa Evans presents the Melco Crown prize to David Punter

Melina Leong presents the ‘Net Score Winner Sam McElhone receives the Macau Golf - Second Round’ trophy to Dave Williamson, & Country Club prize from David Largent Ryan Beauregard and Dennis Hudson, from Team Wynn I

Jimmy Lim presents the Galaxy prize to Mike Bolsover

Cristina Kuok presents the MGM prize to Eileen Stow

Roy Goss receives the Galaxy prize from Terry Lee

DECEMBER 2012

132 132

Moments

Atypical Grand Prix Last 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.

DECEMBER 2012

133 Photos by Greg Mansfield

DECEMBER 2012

134 YU YONGDING FORMER MEMBER OF THE MONETARY POLICY COMMITTEE OF THE PEOPLE’S BANK OF CHINA

China’s coming growth tests THE NEXT FIVE YEARS HOLD THE KEY FOR THE COUNTRY’S FUTURE

T

he most recent official 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 inflationary impact of the strongly expansionary fiscal and monetary policies implemented during the global financial crisis, the mainland’s monetary authorities began to tighten financial 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 inflation 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 inflationary pressure but it also impeded economic growth, which had slowed steadily after peaking at 12.8 percent in the first 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 fiscal stimulus was provided, the government largely refrained from more expansionary economic policies to boost growth.

Potential perils In the last quarter of 2012, the long-expected rebound in growth finally materialised. I, for one, never doubted that it would. After all, China’s potential growth rate remains about 8 percent. Moreover, China’s fiscal 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 inflation.

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.

DECEMBER 2012

First, as China ages rapidly, the disappearance of its demographic dividend will lower potential growth significantly.

Moreover, other things being equal, the extremely rapid rise in fixed-asset investment has eroded China’s investment efficiency and capital efficiency, 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 significant benefits, it may have locked China into the lower end of the value chain, reducing its scope for future progress.

Politics matters Other 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 deficit 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 stratified society. It is easy to imagine each social group demanding a larger share of national income, which by definition is inflationary.

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 fiscal position will deteriorate – gradually at first 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 fiscal constraints, it will find that the value of its foreignexchange reserves has already evaporated.

To judge China’s economic dynamism, the key indicator is its fiscal position. When, and only when, China’s fiscal position is worsening rapidly will its economy suffer a hard landing.

The next five years hold the key for China’s future; its window of opportunity to complete a difficult process of reform and adjustment may not be longer than that.

135

SICKLY SHADE OF GREEN Chief 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 leaflets containing the highlights of the address to all households, as was done last month for the first time?

How environmentally friendly is that?

The leaflets were not even printed on recycled paper. The only thing green about them was their colour.

THAT’S ENOUGH TRANSPARENCY AROUND AND AROUND Frozen 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 first 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?

PHYSICIAN, HEAL THYSELF The police have just held a Traffic Safety Promotional Month. One of the goals was to give guidance to pedestrians and drivers about how to comply with the traffic rules.

Why did they not start the campaign in police stations?

Police officers 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 first teaching officers to respect the traffic rules and so set a good example, the police will have a hard time turning the rest of the people into model road users.

In 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.

FREEWHEELING STYLE The 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.

DECEMBER 2012

136

December 2012

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