SEX, LIES, MONEY COMPELLING REPORT ON THE NOT-SO-SECRET SEX INDUSTRY AUGUST 2011
A WELCOME OVERHAUL Changes to hotel ratings and bar licensing promise tourism boost but rattle status quo
Macau MOP 35 Hong Kong HK$ 40 Mainland China RMB 35
INFLATION RATE SET TO INTENSIFY
OFFICE RENTS UP AS CASH FLOWS IN
HSBC CHASES NEWLY WEALTHY
MORE PROBLEM GAMBLERS SEEKING COUNSELLING
Photo: Carmo Correia
Economy & Finance 24 Top offer HSBC Macau wants to tap into the territory’s affluent upper class 27 Fingertip finance Weng Hang introduces the first mobile app offered by a Macau bank 28 No slowing down Inflation is likely to intensify, says monetary authority 30 Gaps in the hedge Macau government not considering selling iBonds 32 Northern exposure Locals investing more in mainland securities than in Hong Kong securities 34 Taxes deciphered Macau to finally have a tax code 35 Macau story-selling Trade institute sets up the city’s first display centre for “Made in Macau” products and brands
The grass is greener The mainland’s economic growth is making it harder to attract labour from across the border AUGUST 2011
44 Learning to compete Differing views emerge on the continuing education fund’s likely effect on the city’s workforce quality
Transport 50 New flight path Airport masterplan recommends increasing the terminal area
Politics 53 Ties that bind Macau and Taiwan boost bilateral relations
MB Report 54 Sex, money and family The lure of quick money is fuelling a sizeable and shadowy sex industry
Property 64 Market watch Residential property transactions fall almost one third as new special stamp duty bites 67 Office rush Rents and capital values going up for offices
Illustration: Rui Rasquinho
Gaming 70 Billions race Gross gaming revenue passes the MOP24 billion bar again 74 Stock watch Macau gaming stocks manage an appreciable rebound in July 77 Good as new Transcity Asia bullish on its repair business 78 Running on empty More pathological gamblers are seeking counselling 84 Shuffle cheat Police break up hi-tech casino racket 86 Wheel of fortune Interest in casino construction in Japan hasn’t waned 88 Pendulum swings back Yingluck Shinawatra’s victory renews speculation about casino legalisation in Thailand 90 Green light Genting closer to adding Vietnam to its gambling portfolio
Business 92 Time and taste Davidoff looking to increase revenues in Macau
Essential 97 Golf Your guide to the gentlemen’s game
Tourism 114 Raising the bar The government proposes revised rules for bars, restaurants and hotels 117 Watching the washing Hotels and casinos use RFID technology to boost efficiency in uniform laundry
Arts & Culture 120 Silver reward The Macao International Music Festival celebrates its 25th edition 122 Blue moods “Casa Azul” pays a dance tribute to Frida Kahlo
Entertainment 124 Party time for United States AmCham Macau celebrates U.S. Independence Day
Opinion 6 From the publisher’s desk Paulo A. Azevedo 10 Editorial Emanuel Graça 39 Who minds the gap? Keith Morrison 49 Silly seasoning José I. Duarte 91 More is not better David Green 96 Asia’s BRICs hit the wall Jaswant Singh 113 Are you living the life? Gustavo Cavaliere 125 Navigating the road to riches Otaviano Canuto
Irresponsible and costly IT IS TIME TO END THE IRRESPONSIBLE behaviour of the government – or at least that of some of its agents – in allowing undeveloped pieces of land granted to one developer that didn’t follow his contracted responsibilities, to be sold to another for huge profit. It is costing the public coffers billions of patacas. It is time for the government officials who make decisions and those who oversee the technicalities, to be called into check, and to face public scrutiny if not brought to justice, in cases of negligence and where they have insulted the common good. ‘Accountability’ must not become a word that goes missing in the lexicon of those who manage the public interests. There must be consequences resulting from this latest scandal. Throughout the years, the government has witnessed, with a frequently passive and complacent attitude, the development of a tale of pure greed, that of Macau Studio City. The land was granted in 2001 for the construction of film production facilities but the deal lacks any qualification as no guarantees were sought from the developers. As time went by, it became nothing more than a treasure hunt that ended, as in many previous cases, hurting Macau’s interests and those of its people. The scandalous Studio City case is a heartbreaking ensemble of irresponsible
and incompetent behaviour. What the Macau government was advised to do – and what it should have done – was to take back the land when the project reached an impasse through a lack of financing, resulting in a courtroom conflict between the shareholders. By then, everyone understood that the initial reasons for the land grant no longer existed. That had already become obvious in 2007, when the shareholders submitted to the government several modifications to their initial project, including a casino.
Sum of fears Last year, in what was clearly a publicity stunt, the Lands, Public Works and Transport Bureau threatened to take back the plot. The threat was in vain because those who owned the land knew full well they were sitting on a goldmine. Handing back the land, although morally right, would have also opened Pandora’s box because of the way many concessions have been awarded over the years. Finally, what many had feared would happen, recently came to pass. Hong Kong-listed eSun Holdings Ltd. and Singapore government-linked developer CapitaLand Ltd. sold their 40 percent and 20 percent share in Studio City. They should not have been permitted to do so. The government should have taken back the land and then sold it to Melco
Apparently, anything goes in Macau - from buildings that are miraculously approved to have 30 more storeys than initially allowed, to downtown properties sold for more than a 2,000 percent profit despite never being built in the first place
Crown Entertainment Ltd., pocketing the US$260 million (MOP2.1 billion) the gaming operator paid to eSun and CapitaLand. Instead of taking back the land, the government allowed people who had impeded the development of a large portion of Cotai to rake in a huge profit, worth several hundred times their initial investment. You may ask, ‘which government – the former or the current one – is to blame for each step of the process?’ We could not care less. It should not matter who is in office; any government should act in the best public interest, regardless of who the people in the decision seats are. Once again, the lesson learned here is that, unfortunately, what seems to matter the most, is to grab a valuable piece of land and refrain from developing it as you said you would, just as long as you maintain the power of persuasion over those who might decide. Then, you have to wait a few years for someone to buy it from you for an amazing amount, thus pocketing a huge profit. Lawrence Ho, Melco Crown’s boss, has followed through on what he told Macau Business exclusively last year: that he was keen to buy Macau Studio City’s land. We see it as a good bet, especially coming from someone who has provided enough back-story to suggest he is in Macau to invest and contribute to the city’s development, while scoring points for his already powerful group. We are in favour of this important investment by Mr Ho. What we regret is that the US$260
million paid for the stake controlled by eSun and CapitaLand did not end up in the public coffers, as it should have. It is not Mr Ho’s fault. Nor should eSun and CapitaLand be blamed, actually. The fault lies with those who continue to allow such things to happen.
Accountability, now We have lost count of the number of strange transactions that have taken place in this city. Among the most amazing deals was the sale of the Orient Golf Club land to United States gaming operator Caesars Entertainment for an incredible US$578 million. At the time of the deal they were known as Harrah’s Entertainment and considering the land initially cost less than US$30 million, someone got an amazing deal. Does no one else think it is unusual to allow these deals to take place? No one has investigated the circumstances surrounding this land grant or the fact that such a glorious transaction was made possible without a single cent ending up in the public coffers. Apparently, anything goes in Macau - from buildings that are miraculously approved to have 30 more storeys than initially allowed, to downtown properties sold for more than a 2,000 percent profit despite never being built in the first place. Life in Macau continues, happy and cheerful. The same can be said for those who have allowed these deals to happen, rewarding anyone who had the keen sense to ask at the right time - and possibly the right people - for land. All they had to do was sit on top of it and wait for the ideal proposal.
Better late than never ANYONE NEW TO MACAU WOULD NOT BE aware of the years-long frustration that stems from trying to change the mentality of some government officials. Their thinking apparently crystallized long before Confucius went school. This old-fashioned mentality may explain why a lack of planning is the source of several of Macau’s problems. The territory has the money and technical expertise – or the ability to hire skilled professionals from abroad – and there is no longer any doubt about the city’s economic health. However, decision makers who were supposed to have anticipated problems beforehand, are instead trying to solve them ‘a posteriori’. For more than a decade – yes, a decade – the city’s leadership has been warned that the number of vehicles on the road has to be reduced. That does not necessarily mean car imports need to be cut directly. Measures could be introduced to reduce the number of older vehicles. Taxes on luxury cars and on people owning more
Why is it that only now the government says it will study a plan to create measures to discourage the private acquisition of vehicles, to be implemented only in four years’ time?
than one vehicle could also be launched. For years, the government has avoided the subject, arguing that we live in a free market and officials should not intervene directly in it. Curiously enough, that has not been the approach in the gaming industry. Is it a bad thing to be interventionist? Not necessarily, if it is for the common good. Why is it that only now the government says it will study a plan to create measures to discourage the private acquisition of vehicles, to be implemented only in four years’ time? The answer is negligence, the inability to decide and a complete lack of political courage. The same reasons explain why the government is not able to face the taxi industry lobby and introduce more licenses. To hell with the common good and the need for more taxis. Let people walk or buy a private car, since measures to restrict the number of vehicles in circulation are still down the road. I ask myself, ‘how long will it take for the government to finally act?’ Probably, the same length of time it is taking the light railway to be built – an eternity. In a place where traffic police are a mirage and where drivers are largely ill-trained – when will driving schools be made accountable, I wonder – what are officials waiting for?
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Media Relations GRIFFIN Consultoria de Media Limitada Translations Stephanie Chu, PROMPT Editorial Services, Poema Language Services Ltd Agencies AFP, Lusa Exclusives Gambling Compliance, Hoje Macau, Project Syndicate Printed in Macau by Welfare Ltd Published every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects
Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8 to US$1 for the purposes of illustration only. AUGUST 2011
Emanuel Graça Editor-in-Chief
Blind, deaf, dumb THE SEX TRADE HAS BEEN AROUND FOR AGES. As the sayING goes, prostitution is the world’s oldest profession. As you can read in a special report in this issue of Macau Business, Macau boasts a sizeable sex industry. Although its true extent is hard to assess, it is there. What is not so clear is the government’s position on prostitution. The law does not prohibit prostitution itself but bans practices typically associated with it. It is illegal to solicit in a public place, to operate a brothel or to pimp, making it difficult to engage in prostitution without breaking any laws. The problem is with law enforcement. It is public knowledge that apart from brothels, there are saunas and massage parlours in town where sex is for sale. The government prefers to look the other way, but it cannot say it is not aware. Otherwise, why is it that the Health Bureau periodically organises blood tests for non-resident workers engaged in the “entertainment industry” or that it promotes AIDS prevention among these workers? No other kinds of imported workers are subjected to blood tests. Unfortunately for chief executive Fernando Chui Sai On and his government, prostitutes are seen and talked about in Macau. One needs only to look at the leaflets distributed on the street,
The present state of affairs does the city little good, although it does wonders for those who run saunas and massage parlours where sex is on offer. They need worry neither about the law, as enforcement is weak, nor about giving their sex workers the minimum labour and health benefits AUGUST 2011
the newspaper ads or the neon lights outside saunas – or stroll around the vicinity of a casino. Sometimes, sex workers make the news because residents dislike having brothels in the buildings where they live. At other times, prostitutes are victims of assault. Occasionally, some are arrested and deported.
Two ways Nevertheless, the government continues living in never-never land. And the city’s officials make themselves the object of ridicule, so obvious is their hypocrisy. Let us be straightforward. There are two ways to handle the local sex industry: either enforce the law fully, which means facing up to some very powerful lobby groups; or regulate prostitution, as some other countries do, to protect both the sex workers and their customers. The authorities could also mount campaigns among the customers to reduce demand. It is hard to say whether regulating prostitution would be an improvement. Some argue that it would only create a parallel, underground sex industry. Besides, it could turn Macau into a leading destination for sex tourists. Probably, it would be hard to convince sex workers to register. Most come from the mainland, where their families have no idea of what they are doing in Macau. Mainland prostitutes are likely to want to keep it that way and so would be reluctant to leave any record of their occupation. Even so, the present state of affairs does the city little good, although it does wonders for those who run saunas and massage parlours where sex is on offer. They need worry neither about the law, as enforcement is weak, nor about giving their sex workers the minimum labour and health benefits. Instead, they rake in handsome profits. The three wise monkeys see no evil, hear no evil and speak no evil. The maxim is meant to induce good behaviour. When it comes to prostitution, the government has taken the maxim to its extreme. It closes its eyes, covers its ears and shuts its mouth and the result is inaction.
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The price to pay Recently I read a well-written piece in your magazine, raising some very pertinent questions about the motivation and effect of introducing the new measures to curb property market speculation (Editorial “My kingdom for a house”, July 2011). Your writer correctly points to one of the most basic of economic tenets: demand vs. supply. In the end this will determine prices, thus any housing policy needs to address any imbalances, and in our case here in Macau, to increase supply. This will be far more effective in the long run, as it addresses the cause, not the symptom. With regards to the latest measures, I would first of all question whether property market ‘speculation’ is a problem in Macau. To explain this, what your writer has missed are two further economic factors that need to be taken into account: Macau’s fixed exchange rate and inflation. Inflation is high and rising in Macau, with mounting inflationary pressure from the mainland and Hong Kong playing their part. The demand for services in Macau is increasing strongly, and under normal circumstances, this would lead to a rising exchange rate. As our currency is pegged to the U.S. dollar however, which has weakening rather than strengthening tendencies, this means that the imbalances will need to right themselves by other means. In particular, this means via inflation. And not just inflation in goods and services which we are already seeing (e.g. in the increased prices of meat and vegetables, rising local salaries and also in asset price inflation). That is what is driving rising property prices in Macau: market forces and the laws of economics. It is the price we pay for our success and the flip side of having an open economy that benefits from strong foreign investment. Henry Brockman
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In our July issue, one of the charts in the Property Market Watch report on pages 30 to 32, misstated the total value of residential transactions in Macau in the first four months of this year as MOP32,658. The correct figure should be MOP32.66 billion. In the same issue, within the G2E Asia 2011 postevent special, the article “Game changer” on pages 62 and 63 incorrectly stated the German company Giesecke & Devrient was working with JCM to develop a prototype note sorter attached to a gaming table under the working title of Project 8. JCM is working with Japanese company Fujitsu to develop the prototype. Finally, in the Calendar, pages 116 and 117, G2E Las Vegas’ date was incorrect. The event will take place between October 3 and 6, not from September 3 to 6. We offer sincere apologies to our readers and the companies involved.
The new Beijing man The central government has appointed Hu Zhengyue (photo) as the new commissioner of the Ministry of Foreign Affairs in Macau, Xinhua announced, quoting a press release. Mr Hu takes the place of Lu Shumin, who has served as commissioner in the Macau since 2008. Born in Zhejiang province in February 1953, Mr Hu has been the Assistant Minister of Foreign Affairs since 2008.
Graft buster with deadlines The government has introduced a bill to limit the Commission Against Corruption’s probing period. Currently, the graft buster doesn’t need to comply with any deadlines for criminal case investigations. The draft bill states deadlines of six months when a suspect is detained and eight months if not in prison.
Franchise Expo sees rise in visitors The Macao Franchise Expo 2011 registered a 65 percent year-on-year increase in visitor numbers, to more than 12,200. According to the figures collected by the organizers, improvements were registered in all areas when compared with the previous edition. The number of exhibitors increased by 27 percent, to 156. The Macao Trade and Investment Promotion Institute and several trade and business associations jointly organized the Macao Franchise Expo 2011. The event took place from July 8 to 10, at the Venetian Macao. Next year’s edition is tentatively schedule to take place from July 6 to 8.
Money needs Government to inject MOP3.6 billion in public budget he government wants to add MOP3.62 billion (US$452 million) more to the 2011 public budget. The increase is explained by the need to support the implementation of additional subsidies like the extra cash-handout announced in April, the new continuing education programme (see Labour section) and the setting up of an environmental protection and energy conservation fund, among other projects. The budget increase needs to be approved by the Legislative Assembly. If so, the 2011 public budget will reach MOP61.59 billion.
Macau and Australia ink agreement on tax A ustralia has become the latest partner to sign an agreement with Macau that will assist both governments in preventing offshore tax avoidance and evasion. The consul-general of Australia, Les Luck, last month signed the Tax Information Exchange Agreement with Macau secretary for economy and finance, Francis Tam Pak Yuen. This is the 12th such agreement that Macau has inked with other countries or regions, “which is the minimum necessary to meet the international standards of transparency and exchange of tax information,” the Macau
government said in a statement. This agreement provides a legal basis for Macau and Australia to exchange taxpayer information. “Australia recognises Macau’s commitment to operating financial regulatory systems that meet the highest international standards in order to combat money laundering, terrorist financing and other financial crimes,” Mr Luck said. The agreement will enter into force when the relevant domestic requirements have been completed in both Australia and Macau.
Nansha first in line
The first Guangzhou-Macau Co-operation Meeting was held last month in Nansha, a district of Guangzhou city, where focal points of the next co-operative working phases were discussed in detail. During the meeting, both sides confirmed that Nansha was an important platform to enhance bilateral co-operation, a press release from the Macau government said. The Guangdong and Macau Co-operation Framework Agreement signed in March, stipulated a co-operative programme between Macau and Nansha but so far very few details have emerged. The secretary for economy and finance, Francis Tam Pak Yuen said that the creation of a culture industry park and a marina would be the first co-operation projects to be implemented in the Nansha district, but he gave no timelines.
Cotai to face long construction works at roundabout The construction work at the roundabout near City of Dreams and Venetian Macao is expected to continue for at least one more year. The government last month started the excavation of a tunnel that will run under the roundabout. The main excavation works alone are earmarked to take around one year, according to the Infrastructure Development Office. The long timeline is due to the rocky soil and the existence of several utilities’ pipelines in the area, it was explained. In the meantime, some traffic changes will be introduced. The tunnel is expected to relieve traffic congestion in the roundabout area. AUGUST 2011
No comments on Hengqin expropriations: govt The spokesperson for the Macau government, Alexis Tam Chon Weng, last month said that the way expropriation of land is taking place on Hengqin Island is not an issue related to Macau authorities. Even so, he admitted that the latest events were “regrettable”. Portuguese language newspaper Hoje Macau reported that Zhuhai authorities have allegedly been forcing farmers to leave Hengqin Island on fixed compensation packages, without giving them the chance to negotiate. These actions have spurred a number of protests. With the support of Beijing, Macau and Guangdong are currently working on several cooperation projects to develop Hengqin Island.
Show me the money Macau is South-East Asia’s 11th largest recipient of FDI, survey finds acau was South-East Asia’s 11th largest recipient of foreign direct investment (FDI) last year, according to the latest World Investment Report published by the United Nations and released last month. The mainland and Hong Kong lead the regional ranking, which includes 27 economies. Last year, FDI in Macau reached a US$2.56 billion (MOP20.48 billion) inflow – a 7.7 percent decrease over 2009. The territory moved in the opposite direction of most of the South-East Asia economies. In 2010, FDI inflows to the region rose 24 percent to US$300 billion, nearly one fourth of the global total. Most FDI inflows in Macau are directed to the gaming industry. “Global FDI has not yet bounced back to pre-crisis levels, though some regions show better recovery than others. The reason is not financing constraints, but perceived risks and regulatory uncertainty in a fragile world economy,” said Ban Ki-moon, secretary-general of the United Nations. The U.N. report predicts FDI will recover to pre-crisis levels over the next two years.
Pansy Ho buys shares in Shun Tak from father
Illegal workers busted at govt project
Stanley Ho Hung Sun last month sold 1.67 percent of his stake in Shun Tak Holdings to daughter Pansy Ho Chiu King. The deal was estimated to be worth HK$177.4 million. Ms Ho’s stake in Shun Tak is now 12.67 percent, according to an announcement. Mr Ho remains Shun Tak’s executive chairman while his daughter will continue as managing director. In November, Mr Ho already reduced his participation in Shun Tak to 8.72 percent from 20.27 percent, in an off-market transfer to a company controlled by some of his children, including Ms Ho.
Local authorities last month busted 35 illegal workers at the construction site for the new Taipa ferry terminal, a government project. Three illegal boats allegedly used to transport the workers were also seized. The case had already been brought to the public eye by legislator Chan Meng Kam.
CTM performing strongly Local telecommunications company CTM continues to post good results in the mobile segment, its controlling shareholder Cable & Wireless Communications said last month. “Mobile continues to perform strongly benefiting from higher levels of in-bound roaming,” Cable & Wireless Communications said in a press release. “Strong demand for smart phones, particularly the iPhone4, has continued boosting handset revenues. The buoyant Macau economy has helped maintain a healthy level of enterprise revenues.” According to Cable & Wireless Communications, by the end of June, CTM had 402,000 active mobile subscribers, 134,000 broadband clients and 177,000 fixed line customers.
Cross-strait Yellow Pages alliance signed Directel Macau, Taiwan’s Chunghwa Yellow Pages, Shanghai Bell Atlantic Yellow Pages and Hong Kong’s PCCW jointly announced last month in Taipei the signing of a cross-strait memorandum of understanding to form a strategic alliance to promote Yellow Pages business in the Greater China region. As part of this strategic cooperation, the telecom services providers will launch a new portal in the fourth quarter this year. The website will combine business databases from Macau, Taiwan, Shanghai and Hong Kong, allowing users to search information about businesses in these places.
Exports further down
Consumer complaints plunge The Consumer Council handled 842 complaints during the first half of this year, the body announced. That represents less than half of the complaints received one year ago, when the bankruptcy of low cost airline Viva Macau generated a peak in the number of people complaining. Most of the complaints in the first half of 2011 were related to telecommunication services, telecommunication equipment and supplies, and food and beverages.
In the first half of the year, the total value of merchandise exports decreased by 6.3 percent year-onyear to MOP3.40 billion (US$425 million). Meanwhile, the total value of merchandise imports increased by 37.3 percent to MOP27.94 billion, the Statistics and Census Service said. The merchandise trade deficit for the first half of 2011 widened by 46.8 percent year-on-year to MOP24.54 billion, while the export/import ratio dropped by 5.7 percentage points year-on-year to 12.2 percent.
Loans growing faster than deposits In May, domestic loans to the private sector increased 2.5 percent on a monthly basis to MOP149.6 billion (US$18.7 billion), according to statistics released by the Monetary Authority of Macau. On the other hand, external loans rebounded 3.1 percent to MOP150.9 billion. Resident deposits grew 1.0 percent from the previous month to MOP264.2 billion. Concurrently, non-resident deposits grew 3.7 percent to MOP92.2 billion, and public sector deposits with the banking sector increased slightly by 0.1 percent to MOP22.0 billion. As a result, total deposits with the banking sector grew 1.6 percent from a month earlier to MOP378.4 billion.
Forex reserves on the rise The monetary authority announced that the preliminary estimate of Macau SARâ€™s foreign exchange reserves amounted to MOP225.7 billion (US$28.2 billion) at the end of June 2011. The reserves rose by 4.6 percent from the revised value of MOP215.8 billion for the previous month. When compared with a year earlier, the reserves have increased by MOP62.0 billion or 37.9 percent.
Economy & Finance
TOP OFFER HSBC SHARPENS ITS FOCUS ON THE TOP-END OF TOWN WITH ITS NEWLY LAUNCHED PREMIUM BANKING OPTION BY EMANUEL GRAÇA PHOTOS BY CARMO CORREIA SBC Macau wants to grow its retail banking operations with the territory’s affluent upper class. The bank has recently introduced HSBC group’s global wealth management solution to Macau targeting the city’s well-offs and expatriate workers. The entry mark for HSBC Premier is at least MOP1 million (US$125,000) in assets. The service began in March. The service is already offered by HSBC group in several countries where it has operations. At the end of last year, it had 4.4 million customers across 47 markets. HSBC Premier is the bank’s latest move to grab a greater share of Macau’s personal banking market. The company has spent two years focusing on building the business here, says HSBC Macau chief executive Teddy Kwong Tat Tak. “We feel very positive about the general economy in Macau. We have had record-breaking inbound of tourists over the past couple of years and also, in terms of the GDP growth, Macau has been on the top among all Asian economies,” says Mr Kwong. HSBC is betting such growth will continue. The newer focus on the premium segment of the retail
banking market does not mean HSBC is pulling back from mass-market retail banking. “The mass market plays a key role in the banking sector. It generates a good volume for the deposit balances for us to conduct both the corporate and the personal lending,” Mr Kwong says. Customers “have become more and more sophisticated and they know quite well what they require,” he adds. He says clients in Macau have access to a lot of information and admits they like to shop around for the best banking offers. “We cannot just push the products to the customers without looking at their needs,” he says.
Crisis, control Part of that awareness from customers is a result of the postglobal financial crisis that rocked the world in 2008. “The impact from the financial crisis strengthened the awareness about the suitability of investment and strengthened the awareness of customers about the potential risks of investment products,” says Mr Kwong. “Clients are [now] in general more conservative.”
Right lever to pull H
SBC Macau is not expecting its residential mortgage business will be dented by government measures to curb real estate speculation. “My view is that it is making the market healthier,” says HSBC Macau chief executive Teddy Kwong Tat Tak. Since April, the maximum loan-to-value ratio for equitable mortgage loans granted to Macau residents and non-Macau residents was capped at 70 percent and 50 percent respectively. “All along the lending banks here have already been quite conscious about the transactions,” he says. “From our angle, we find that the market is still quite healthy, not adversely impacted by the issuance of these guidelines.” According to Mr Kwong, most of HSBC Macau’s residential mortgage loan clients are homebuyers. “We don’t have many transactions with the property investors or the speculators.” AUGUST 2011
Customers “have become more and more sophisticated and they know quite well what they require,” says HSBC Macau chief executive Teddy Kwong Tat Tak
Economy & Finance
“We are quite positive about the growth in our business here. The outlook is positive,” says Mr Kwong Macau banks, he continues, have also changed. Under the supervision of the monetary authority, new specific regulatory guidelines for the sale of financial products were introduced after the global financial crisis. The new set of rules are “doing good to the industry as a whole and also to the customers”, he says. “We find the way we interact with the customers is [now] better structured. The guidelines are quite realistic. They are not imposing some unreasonable difficulties in terms of banking operations.” The drive to improve the personal banking business is in addition to the bank’s traditional strength in corporate banking. “We have a deep rooted history in trade financing” in Macau, Mr Kwong says. “Our branch was set up in 1972. It is quite well connected within the business community here. Of course, we are also a strong international bank, particularly in Asian countries.” The bank’s corporate customers come from a diverse base, both in geographic terms and in their businesses. Some are looking to invest locally while others use the territory as a springboard for investment in the mainland, says Mr Kwong.
Secure your people B
anking is among the industries suffering a “brain drain” to the city’s casinos. “It is a challenge in Macau but we are working hard on addressing the situation,” says HSBC Macau’s chief executive Teddy Kwong Tat Tak. “We are quite aware of the [labour] situation in Macau because of the gaming industry. We cannot just focus on financial rewards. We have different kinds of people initiatives. We try to beef-up the professional knowledge of our people and try to make them aware that banking is a long-term career.” HSBC has also created a 30-month-long programme to attract graduates with up to three years’ working experience. The course will expose them to a number of key business areas in the bank. HSBC group has announced it plans to axe 30,000 jobs worldwide by the end of 2013. Macau should be one of the regions least affected by the staff layoff program, according to the global banking giant. HSBC has four outlets in Macau and a team of about 200 staff. AUGUST 2011
Last year, HSBC Macau reported a pre-tax profit of MOP200.9 million, a year-on-year drop of 22 percent. According to the bank, that was due to the low interest rates environment and instability in the financial markets. The bank’s results contradicted the remainder of the sector. Data from the Monetary Authority of Macau shows banks’ profitability increased by 10.7 percent to MOP3.9 billion last year. Mr Kwong expects a rebound. “We are quite positive about the growth in our business here. The outlook is positive,” he says. The key drivers for growth will come from regional connectivity, he says. That includes all the major regional infrastructure projects in the pipeline, the growing interaction with the mainland in terms of trade and capital flows and the rising number of regional tourists. “These kind of cross-border activities are becoming stronger and stronger; be it a local bank or an international bank like us, we do have the chance to get involved in one way or the other,” he says. Although competition “is still quite keen in Macau,” with 28 banks in-market, Mr Kwong says it remains at a “healthy level”. According to him, HSBC still has room to increase its current client base.
Fingertip finance Weng Hang Bank introduces the first mobile app offered by a Macau bank BY EMANUEL GRAÇA
anking in Macau expanded beyond the teller’s window years ago. First it was phone banking, then Internet banking. The next phase appears to be mobile banking, after Weng Hang Bank introduced what is believed to be the fi rst mobile app offered by a Macau bank last month. The service allows customers to get market information, trade securities and manage their finances, all from their mobile phones. The app is available for iPhone, Android or Symbian powered smart phones, and can be used on any mobile network. “We had studied mobile banking three years ago. At that time, the technology was not secure enough for us to comfortably introduce mobile banking,” says the director and general manager of Banco Weng Hang S.A., Lee Tak Lim. “Right now, with the popularity of smart phones as well as the technology available for mobile banking, we think it is the right moment to introduce this service to our customers.” Mr Lee is bullish about the prospects for attracting new customers with the product, as it is “more convenient” than Internet banking. “We are confident that customers will grow
at a faster speed than without this mobile banking,” he says, although he would not reveal any targets. The service “is best for securities trading customers who need instant market information and trading platform access”, Mr Lee says. Mobile banking is a growing trend worldwide, especially in Asia. “Branch usage has dropped by 27 percent on average across Asia between 2007 and 2011, while usage of the Internet and mobile banking have increased by 28 percent and 83 percent, respectively,” says a recent report by global consulting firm McKinsey and Co. Weng Hang’s mobile banking app required approval from the Monetary Authority of Macau before it could be introduced. The bank has not disclosed how much it has invested in the app. Innovation is part of the bank’s effort to compete. “We will keep on enhancing our electronic platforms,” Mr Lee says. “Competition has been more intense than in the past.” Weng Hang has 12 branches and is the fifth largest bank in Macau. Last year it made a net profit of MOP242.1 million (US$30.2 million), 8.5 percent more than a year before.
Economy & Finance
No slowing down Inflation will probably get worse before it gets better, the monetary authority warns
ising prices are the main economic headache for Macau’s population and things are set to worsen in the near term, says the Monetary Authority of Macau, the city’s de facto central bank. “Inflation is likely to intensify” for the remainder of the year, it says. In its latest Monetary and Financial Stability Review, published last month, the monetary authority says it expects annual inflation to be slightly above 5.0 percent. Inflation for the first half of 2011 increased by 5.13 percent over the same period of 2010. The monetary authority says up-
ward pressure on prices in the domestic economy persist as aggregate demand continues to increase swiftly. “Favourable job prospects and rising household income would underpin future consumption growth,” it says. Furthermore, upward pressures on import prices “are likely to stay firm”, with rising prices for food globally and the strengthening of the renminbi. And that is not all. Uncertainty about the political situation in the Middle East and North Africa could cause another upsurge in energy prices, the monetary authority warns. Electricity distributor CEM has already an-
nounced an across-the board increase of MOP0.01 per kilowatt-hour for its tariffs for the third quarter. The monetary authority says the fundamental ways to curb inflation are to manage demand and expand supply. Last month the government announced an agreement with the province of Anhui to cooperate in opening up new sources of food for the city. Inflation is “the only noteworthy concern for macroeconomic developments in Macau” in the short term, says the monetary authority. It expects real gross domestic product growth to exceed 15.0 percent this year. Official GDP
Eyes wide open T
he Monetary Authority of Macau is worried about the impact that the European debt crisis may have on the city’s banking system. “Against the backdrop of the traditional exposure of Macau banks to certain European countries in economic and financial trouble, it is of great importance to monitor closely the balance sheets of local banks which might be potentially affected by the vulnerabilities highlighted in the European sovereign debt markets,” the monetary authority says in its latest Monetary and Financial Stability Review. It adds that “in view of the strong credit expansion in the past year, it is crucial for local financial institutions to adopt a more prudent attitude towards loan extension, in consideration of credit risk control and support for the authorities’ macro-prudential measures” on home mortgages. The monetary authority expects low interest rates to persist for the remainder of this year but says they are likely to trend upwards early next year.
Listen to Moody’s O
nce again, the Monetary Authority of Macau mentions in its periodical Monetary and Financial Stability Review, the need to diversify the city’s economy. It quotes Moody’s rating agency to support its case. “The local economy, with a very concentrated structure, is potentially vulnerable to external shocks,” the monetary authority says. “High dependence on one single industry also acts as a primary constraint on Macau’s further upgrade of its credit rating, notwithstanding the SAR’s exceptionally strong fiscal and external positions, as mentioned in a recent report by Moody’s.” Moody’s said in June that the outlook for its rating for Macau’s debt remained stable. Its rating for Macau is Aa3, the fourth highest of the agency’s 21 ratings. Although Moody’s recognises that the Macau government is unique in having no outstanding debt and large financial assets, the agency argues that its less-than-top-notch rating is justified by the city’s narrow economic and revenue base.
(%) 7 6
4 3 2
2.57 1.82 1.1 0.19 0.37
Consumer Price Index (CPI) (4/2008-3/2009) -- Composite CPI -- Overall index (Point) -- Same period variance
data for the first half of the year will be released by the end of this month. The growth will be due to the increase in gross gaming revenue and a boost to public and private investment alike.
Mad money Even with public spending on large infrastructure projects in the pipeline, such as the Zhuhai-Hong Kong-Macau Bridge, developments on Hengqin Island and the light rail transit system, a record fiscal surplus is forecast for 2011, beating last year’s MOP41.88 billion (US$5.2 billion). Public revenue is growing at a much faster pace than expenditure.
In the first six months of 2011, total public revenue has risen by 44.9 percent year-on-year to MOP51.45 billion due to noticeable increases in the revenue from direct taxes on gaming. Total public expenditure was MOP15.24 billion. Casino revenues are projected to keep growing in the second half, albeit at a slower pace than in the first six months of the year. Still, the monetary authority expects the gaming sector to post double-digit growth this year. First-half casino gross gaming revenues amounted to MOP124 billion this year, 44.6 percent more than a year before. Merchandise exports are expect-
ed “to lock into a downtrend, though increased reliance on intra-regional trade and non-textile trade could tender some support,” the monetary authority says. The employment outlook is set to remain favourable (for the workforce) for the remainder of this year, owing to rising demand for labour and limited supply, it says. It expects the number of nonresident workers to continue to increase to about 100,000, and the unemployment rate to edge down to about 2.5 percent, which would be a record low since the handover. The unemployment rate is currently 2.7 percent. AUGUST 2011
Economy & Finance
Gaps in the hedge The government is not considering following Hong Kongâ€™s lead in selling inflation-linked bonds to residents BY KIM LYON
he Hong Kong economy, like Macauâ€™s, is troubled by inflation. The government there has issued HK$10 billion (US$1.28 billion) worth of inflation-linked retail bonds, called iBonds, to provide an inflation-free hedge against inflation. Macau does not plan to follow suit. iBonds are a three-year bond with semi-annual interest payments linked to average annual inflation, with a minimum annual interest rate of 1.0 percent. The principal will be repaid in July 2014. The first coupon, due in January, may be 5 percent, Credit Agricole estimates. Bloomberg reports Hong Kongâ€™s annual inflation may reach 4.5 percent next year, the median of estimates from surveys of economists. Only Hong Kong identity cards holders could apply for the iBonds. The subscription period was from July 11 to
July 19. The bonds were issued on July 28 and secondary trading began on July 29, whereupon they became open to all investors. It is a strategy that is not being considered for Macau, a spokeswoman for
the secretary for economy and finance said. She said the authorities here have a different approach to inflation, having taken a series of measures to ease upward pressure on prices. These measures range from programmes for the most
Investing in Hong Kong iBonds Pros
Safe investment: The Hong Kong government has a strong, investment-grade credit rating Easy access: Retail investors can buy iBonds directly; bonds are usually not directly available to the general public, making it necessary to use a bond fund, which means paying charges to fund managers and relying on their competence in maintaining the portfolio High interest: Retail bonds currently carry higher interest rates than Hong Kong dollar time deposits of similar maturities
Interest rate risk: The market value of iBonds may decrease if Hong Kong dollar interest rates increase Exchange rate risk: Investors may get higher returns from bonds denominated in currencies that are strengthening against the Hong Kong dollar Liquidity risk: There may not be an active secondary market for iBonds and it may not be possible to sell them before maturity, or the sale price may be lower than the amount initially invested
31 vulnerable groups in society to subsidies that benefit everyone, like a second cash handout, to be distributed in the second half of the year, and the MOP180 electricity bill monthly subvention. The measures do not have the same kind of effect as iBonds. The bonds are considered a safe investment, allowing wealth preservation. Professor Jacky So Yuk Chow, dean of the faculty of business administration at the University of Macau and an expert on finance, suggests the government would do well to issue iBonds. “The iBond, with a liquid
technic Institute, doubts that iBonds would be appropriate for Macau. The bonds would be beyond the means of those on low incomes, on whom inflation weighs most heavily, he says. “Buying shares and bonds is not popular or common among people in the street in Macau and it is considered middle or upper-middle class economic behaviour,” Mr So says. He also thinks the overheads of an iBond scheme in Macau would be disproportionate to the small size of the market. Some Hong Kong analysts have
criticised iBonds, saying they are another way for the government to hand out subsidies to those with cash to spare while letting low-income households fall behind. Even so, iBonds have generated considerable interest as a lowrisk investment. Equities may give better returns, but are riskier. Wendy Tsang, deputy general manager of Bank of China (Hong Kong) Ltd, suggests that most iBond subscribers were elderly, retired or middle class – in other words, the more conservative kind of investor.
Professor Larry So, a public policy expert at the Macau Polytechnic Institute, doubts that iBonds would be appropriate for Macau secondary market, will provide investors a good alternative to shield their savings against inflation,” he says.
Poor get poorer But establishing a liquid secondary market could prove a stumbling block, as the number of potential investors in Macau is small. This could force many to hold their bonds until maturity, even if they need the cash. Mr So points out that Hong Kong is already an international financial centre with an economy far bigger than Macau’s, so developing an iBond market is easier there. Jonathan Galaviz, managing director of Las Vegas consulting firm Galaviz & Co, agrees that the major doubt is whether Macau would be able to develop a sufficiently liquid secondary market for iBonds. He says it is important to help residents protect their savings from inflation but points out that iBonds do not solve the main problem of sharp increases in prices. “Inflation in the mainland, Hong Kong and Macau will not subside until the U.S. Federal Reserve begins increasing interest rates,” Mr Galaviz says. Professor Larry So Man Yum, a public policy expert at the Macau PolyAUGUST 2011
Economy & Finance
Northern exposure Mainland securities overtake Hong Kong securities for the first time as preferred destination for Macau investment
t about the same time as the mainland became the world’s second biggest economy last year, Macau residents were investing more in mainland securities than in Hong Kong securities for the first time. Chinese securities listed in the mainland and on overseas exchanges accounted for 20.5 percent of the market value of all investments by Macau residents outside the territory, according to the 2010 Coordinated Portfolio Investment Survey (CPIS). The total invested in mainland securities reached MOP25.7 billion (US$3.2 billion) by the end of last year, a 26.3 percent increase
over the previous year. More than 85 percent was invested in equities. Investment by Macau residents in Hong Kong securities amounted to MOP24.5 billion, or 19.5 percent of the market value of their external portfolio. Even so, Hong Kong remained the favourite place for Macau residents to do business. Securities listed on the Hong Kong Stock Exchange “remain popular investment targets for Macau residents,” the CPIS report says. The survey, conducted jointly by the Monetary Authority of Macau and the Statistics and Census Service, collects information about investment by Macau
residents in securities issued by unrelated non-residents. For the purposes of the survey, Macau residents include individuals, the government and other legal entities but exclude the managers of Macau’s foreign exchange reserves. At the end of last year, investment by Macau residents amounted to MOP125.7 billion at current market value, 8.1 percent more than a year before. This was the highest value since the survey’s inception in 2002.
Equity appetite Not all markets benefited from Macau’s appetite for securities. Among the biggest
33 Chart 1
Macau residents’ portfolio investment Major geographical distribution 25%
2009 20.5% 20.2%
8.8% 8.3% 7.7% 8.1% 5.7%
5.0% 5.2% 4.3% 5.1%
0% Mainland China
United Kingdom United States Cayman Islands
Country / Region Chart 2
Macau residents’ portfolio investment Distribution by type 100%
Equity securities (including mutual funds and investment trust units) Short-term debt securities Long-term debt securities
Geographical distribution of Macau residents’ portfolio investment Equity securities* Ireland Bermuda 3.5% 7.4%
Mainland China 31.6%
United Kingdom 8.1% Luxembourg 9.1%
Cayman Islands 10.3%
Hong Kong 21.3% * Including mutual funds and investment trust units
losers was Europe. “The sovereign debt crises in some European countries inevitably exerted negative impacts on the investment sentiment on securities issued by European entities,” the CPIS report says. Investment in European securities accounted for 26 percent of residents’ overseas portfolios at the end of last year, a fall of 3.5 percentage points year-on-year. Britain continued to be a favoured destination, attracting MOP10.4 billion in investment. Australia gained favour as the Australian dollar strengthened, with MOP6.6 billion invested – a 13.8 percent annual increase. “With global interest rates staying at historically low levels in 2010, Macau residents had a stronger preference for equity securities to debt securities,” the report says. The amount invested in equities – including mutual funds and investment trust units – reached MOP69.6 billion, 13.9 percent more than a year before. Equities accounted for 55.4 percent of external portfolio investment by Macau residents, 2.9 percentage points more than a year before. Investment by Macau residents in long-term debt securities amounted to MOP51.7 billion at market value, 3.6 percent more than a year before. Their investment in short-term debt securities amounted to MOP4.4 billion, 16.9 percent less. This was because banks, Macau’s biggest investors in short-term debt, reduced their holdings of all kinds of securities by 10.9 percent to MOP24.0 billion, or 19.1 percent of all external portfolio investment by Macau residents. The reduction was due to a strong demand for loans, driven by the buoyant property market and expansion projects by the gaming operators, which lowered the amount of funds available to banks for investment in securities. Although there were two licensed securities firms operating in Macau last year, investors still preferred to manage their portfolios, especially their equities, through the banks. Investment in securities by Macau individuals and non-bank enterprises that used banks as custodians or middlemen amounted to MOP56.0 billion by the end of last year, of which 92.0 percent was invested in equities. AUGUST 2011
Economy & Finance
Taxes deciphered Macau is closer to getting a tax code BY LUCIANA LEITÃO
fter years of trying to make sense out of the tax system, taxpayers may soon have their lives simplified. The government has presented a bill to create Macau’s first tax code. The bill has been sent to the Legislative Assembly but there is no schedule for debating and enacting it. Its 384 articles include no new taxes. The government says it will serve only as the skeleton of the tax system, allowing for better coordination. “The government hopes Macau’s tax system can be improved through this code, allowing that the public administration, taxpayers, courts and even the professionals from the auditing, accounting and legal sectors all follow clear rules,” says the secretary for economy and finance, Francis Tam Pak Yuen.
Lawyer Bruno Nunes, a specialist in tax law and tax litigation, argues a tax code is important for boosting investor confidence. “It will raise Macau’s tax system to the international taxation standards,” he says. It will also help bring the city’s tax system up to date. However, Mr Nunes thinks there are gaps in the bill. It fails to make some transgressions – including embezzlement – a crime, treating them only as administrative offences. “It’s the first time that everything about tax procedure will be systematised in only one code,” says former government legal expert João Janela da Silva, who helped to draft the bill. Mr Silva says the code sets out several principles. It makes it clear that residents are obliged to pay tax locally on
all their income, wherever in the world it comes from. “It’s important because that will allow Macau to justify the different information exchange and double-taxpaying system agreements the government has been signing with other jurisdictions,” he says. The code would allow for the submission of tax forms electronically and, in special cases, for the payment of taxes in instalments. Mr Silva says the tax code should be accompanied by reform of the tax system. He says there are several taxes – like the professional tax, industrial tax or property tax – that could be replaced by simple income tax. More important than the code itself is “a competent tax administration to apply it,” Mr Silva says. “Training sessions should be organised,” he adds.
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Photos: Gonçalo Lobo Pinheiro
Macao Ideas is a cohesive first step to promoting locally made merchandise BY JOANA FREITAS
n any given marketing strategy book, brand and product awareness are among the fundamentals for creating a successful venture. To help local companies promote their merchandise and look for business opportunities, the Macao Trade and Investment Promotion Institute has set up the city’s first display centre for “Made in Macau” products and brands. Located on the ground floor of the Tourism Activities Centre, near the Polytechnic Institute, Macao Ideas opened three months ago. The 595-square metre centre boosts about 500 products from 90 companies, for exhibition purposes only. It has already received more than 6,300 visitors, including tourists. The goal of the centre “is to give the public an idea of the most famous Macau brands, designed, made and created in Macau and by local people, and to get them exported or franchised,” explains Echo Chan Keng Hong, the trade institute’s executive director. Macao Ideas also provides on-site professional business-matching services.
There have been no deals yet but the feedback has been positive, says Ms Chan. “There are definitely interested companies,” she says, adding “it takes time to negotiate”. All Macau services and products are competitive internationally, Ms Chan stresses. “They have value, quality and [good] price.” Before reaching the exhibition floor, the merchandise is inspected by a team of experts from the institute and the Finance Service Bureau to ensure they are free of copyright breaches. Additionally, Macao Ideas also acts as a sole distributorship for products from Portuguese-speaking countries. Some, like Cabo Verde or Mozambique, are represented in Macao Ideas with traditional coffee and handcrafted wood decorations.
Region’s outreach Ms Chan says Macao Ideas goes beyond displaying products and it tells a story – Macau’s story. “Since we started thinking about this project last year, we were trying
to understand how we could pack all Macau’s products and brands under one roof, showing our culture and the city’s atmosphere while at the same time promoting them commercially.” The solution found was to design the centre in a way inspired by the microcosm of the city, with exhibition shelves with Sino-Portuguese characteristics or individual themes. In Ms Chan’s opinion, this not only increases the value of the products but is also attracts the general public to the centre. “We are promoting a region. We have to be creative and we’ve been well received because the way we present the products is different.” For now, the institute is looking at boosting Macao Ideas’ profile within the business community. There are also plans for special activities and exhibitions. In the longer term, it is possible that similar centres could be created elsewhere to promote Macau products. If the concept proves to be successful, the institute will look at expanding as early as the end of the year, says Ms Chan. AUGUST 2011
Economic Trends by José I. Duarte Filling the green gap
GRAPH 1 - Total green area
Environmental concerns are so deeply embedded in public discourse that the facts are often taken for granted. Seldom do we look into actual data that may give an indication about how Macau fares on this important topic. This analysis adds data to the debate. With much construction going on and a growing population in an already densely populated area, the evolution of the city’s green areas is an important environmental indicator. The data published by Macau’s statistics department raises important questions.
GRAPH 2 - Green areas: geographical distribution Cotai
14,000,000 12,000,000 10,000,000
The first graph immediately suggests two concerns. First, the missing data for 2005 is neither a mistake nor a design error. It just does not exist. The Statistics and Census Service did not have the resources to estimate green space that year due to the then ongoing construction work. Also of note is the overall growth in the past three years, in which the total green area in Macau more than doubled and, in particular, in the last year, where a 60 percent growth took place. The data suggests, and the change in sources indicated seems to confirm it, extensive modification in the way green areas are accounted for and aggregated. GRAPH 2
8,000,000 6,000,000 4,000,000 2,000,000 0 2000
GRAPH 3 - Gardens and parks: geographical distribution Cotai
If we look at the geographical distribution of Macau’s green areas as shown in the second graph, some puzzling figures emerge. It is difficult to identify where in Coloane a 36 percent increase in green areas spanning the past three years might have taken place. The increase is the equivalent of more than 200 soccer fields. Likewise, it is hard to account for the more than three- and five-fold increases in green areas in Taipa and Cotai between the end of 2007 and 2010. The same can be said about the 150 percent growth of green areas on the Macau Peninsula last year. Somewhat surprisingly, total green areas in the rest of the territory exceeded those in Coloane last year, which history shows us would have to be a first. GRAPH 3
Here the evolution of Macau’s gardens and parks is plotted. In theory, it is the biggest single component of the city’s green areas. The figures further raise grave concerns about the consistency and comparability of the published data.
5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2000
Air quality, acid rain
GRAPH 4 - Months in which the respirable suspended particulate matter were below standard 2000
Air quality is a relatively easily quantified measure of the health of the environment. For this analysis, we are mostly concerned with respirable suspended particulate matter, airborne particles that are less than 10 micrometres in diameter generated naturally or by human activity. Inhaled particles this size can penetrate deep into the lungs, irritating the respiratory system, causing discomfort and shortness of breath. The Statistics and Census Service provides information when belowstandard figures are recorded and the number of days when that happened. The figures are also liable to fluctuate between sampling stations.
6 4 2
The densely populated area north of the peninsula appears to be the sampling location with the least amount of fluctuation over the past 11 years. Charted in this graph, data from this location shows air quality standards have been regularly exceeded in most years during the late autumn and winter. It also appears that summertime and rain are good for our lungs.
GRAPH 5 - Air Quality Index and respirable suspended particulate matter days below standard Respirable suspended particulate matter
Air Quality Index GRAPH 5
The fifth graph compares the number of days per year when levels of respirable suspended particulate matter were below health guidelines and the number of days per year when the Air Quality Index was rated poor, very poor or severe. Although the data does not reveal how the daily records match each other, the graph shows a reasonable correlation between the two indicators. Both rise in the period between 2003 and 2008, the period of the most recent construction boom, which is likely to have created an increase in suspended particles and a reduction in air quality.
35 30 25 20 15 10 5 0 2000
GRAPH 6 - Acid rain: Yearly lowest pH value registed and respective month of occurrence (Note: No data available for 2004, 2005 and 2006) 2000
Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan 3.2
The data for rainfall acidity, another important indicator of environmental health, also suffers from limitations. It reveals months where extreme pH levels were recorded but nothing else. The data also appears to suffer from issues of consistency and reliability. The values for Taipa Grande data collection point, which are illustrated in Graph 6, are not available for three years between 2004 and 2006. The bureau says the equipment malfunctioned. Recordings from a second collection point, Ka Ho, disappeared around the middle of 2006. Again, the bureau blamed equipment malfunction. There was no reference to the location in the data from last year. The data which is available reveals values that are quite low, indicating there is a significant level of acidity. Rainfall is considered acidic once its pH falls below 5.6. By comparison, lemon juice typically has a pH of about 2.0. The trend before the break in data shows a rise in acidity levels that has not continued since measurements resumed.
Economic Trends by JosĂŠ I. Duarte
Output and expenditure (*) 2010 GDP current (in MOP)
Consumption (in MOP)
17,496 27,727 17,496 - 42,676 164,086 207,194
Investment (in MOP)
Government (in MOP) Trade balance: goods (in MOP) Trade balance: services (in MOP) GDP constant (2008) (in MOP)
million million million million million
31.4 9.8 - 13.6 9.3 21.5 54.2 26.2
60,995 13,896 5,636 3,369
-12,397 50,490 56,498
million million million
28.9 26.2 -21.3 -3.3 60.0 100.0 21.5
Q1 Q1 Q1 Q1 Q1 Q1 Q1
Money and prices M1 (in MOP) M2 (in MOP) Credit (in MOP) Deposits (in MOP) IPC/Inflation rate (**) AMCM base rate
34,721 million 243,247 million 130,677 million 237,627 million 104.25 base - 2008 0.50 %
13.4 14.6 29.2 14.6 2.81 --
36,051 million 267,801 million 141,813 million 261,524 million 109.46 base - 2008 0.50 %
13.4 23.5 38.1 23.5 5.19 --
April April April May June
2010 Population Labour force Median wage rate (in MOP) Unemployment
522,300 330,900 9,000
-1.9 0.5 4.7 - 0.1
556,800 334,000 9,600
0.8 3.4 6.7
Q1 Q1 Q1 April, var
Construction 1,835,174 Finished 1,271,509 Cement (Apparent consumption) 214,166 Transactions/Commercial (in MOP) 6,580 Transaction/Residential (in MOP) 45,939
m2 m2 tons million million
- 19.8 - 9.6 - 22.6 117.0 113.0
712 5,494 19,783 1,496 7,902
m2 m2 tons million million
-80.7 -97.9 0.4 204.3 84.5
May May May May
Gaming 2010 Gross revenue (in MOP) Casinos Tables Machines
189,588 33 4,791 14,050
57.0 2 0.4 2.2
24,405 34 5,237 15,098
42.2 1 546 1,048
May Q2, var, ytd Q2, ytd Q2, ytd
24,965,000 Average expenditure (in MOP) 1,812 Average stay 0.90 Hotel rooms 20,091 Occupation rate 79.8 % Average hotel stay 1.54 nights Visitors
15.0 0.3 - 0.2 4.3 8.43 0.04
2,296,000 1,516 0.90 days 20,148 81.9 % 1.44 nights
May 7.2 Q1 7.0 Q1, var -- days April 3.0 April, var 0.94 April, var --
%var - % change on homologous period; var - absolute variation; ytd - % change, year-to-date; x - discontinuous series
2010New base: 2008) (*) Important note: Values for 2009 revised. The methodology and reference period for the real GDP calculation hasAPRIL changed. (**) Important note: The infl ation base period has changed ( New base: April 2008 to March 2009 = 100) JULY JUNE2011 2011 JANUARY MARCH MAY 2011
Sources: DSEC (Statistics and Census Service), AMCM (Monetary Authority of Macau), DICJ (Gaming Inspection and Coordination Bureau)
39 KEITH MORRISON AUTHOR AND EDUCATIONIST - firstname.lastname@example.org
Who minds the gap? A WIDENING EARNINGS GAP BETWEEN SOCIETY’S RICHEST AND POOREST INDICATES A GAP IN POLICY STRATEGY
he publication last year by Daniel Rigney of “The Matthew Effect: How Advantage Begets Further Advantage” rehearses a familiar concept traceable back to the biblical reference in the gospel of St Matthew. In updated English, the Matthew Effect states that to those who have, more shall be given in abundance, and from those who have not, more shall be taken away, even what they have. In other words, the rich get richer and the poor get poorer: the “law of cumulative advantage”. There is a widening gap between rich and poor, and “advantages are self-amplifying,” writes Mr Rigney. He adds: “By almost any measure we care to examine, economic inequalities in the United States have tended to widen substantially in recent decades.” Robert Merton’s seminal paper on the Matthew Effect in 1988, “The Matthew Effect in Science”, states: “The concept of cumulative advantage directs our attention to the ways in which initial comparative advantages ... make for successive increments of advantage such that the gaps between the haves and the havenots ... widen until dampened by countervailing processes.” What then of Macau? Look at the difference in median monthly earnings between the highest and the lowest earners from 2006 to the first quarter of this year in the graph – that is, between legislators, senior officials, directors or managers of companies and unskilled workers. The difference in their earnings increases over time; the gap widens (see the double-headed arrows in the graph). The graph shows the median monthly earnings of four occupational groups in Macau over the given period. The line showing the increase in earnings for the highest-paid workers has the steepest gradient, and the gradient becomes progressively less steep as we go down the occupational hierarchy until, for unskilled workers, the line is almost flat – indeed, if we were to control for inflation, it would slope downwards. From 2006 to the first quarter of 2011, the median monthly earnings of each group rises thus: - For legislators, senior officials, directors or managers of
companies, from MOP14,255 (US$1,780) to MOP27,000, an increase of MOP12,745 or 89 percent; - For clerks, from MOP8,515 to MOP13,000, an increase of MOP4,485 or 53 percent; - For services and sales workers, from MOP5,450 to MOP7,400, an increase of MOP1,950 or 36 percent; and - For unskilled workers, from MOP3,675 to MOP5,000, an increase of MOP1,325 or 36 percent. The more money you started off with, the greater has been your increase: an 89 percent increase for the highest paid and a 36 percent rise for the lowest paid. The Matthew Effect is alive and well in Macau. In early 2006 the monthly difference between the highest-paid and the lowest-paid groups was MOP10,580. By the end of the first quarter of this year the difference was MOP22,000. In his book “Equality” in 2007, Stuart White shows that if we allow unchecked inequality in income, provided that it maximises output, then this raises average income but that of the lowest paid falls below the poverty line. If we introduce a minimum wage then it reduces average income slightly but keeps the lowest paid out of poverty. If we check income inequalities so that they bring the greatest benefit to the least advantaged (the “trickle down effect” in John Rawls’s “redistributive” theory of justice), then average income falls a little more but that of the lowest paid rises above the poverty line. This option brings the greatest benefit to the lowest paid. For Macau, the unchecked inequalities of income in the data here do not benefit the lowest paid. While a minimum wage may help, if we are really to improve the lot of the lowest paid, a much more interventionist social, educational and economic policy is required to counter the Matthew Effect. Robert Merton, as we saw earlier, says cumulative advantage widens “until dampened by countervailing processes”. Where are the Macau government’s dampening “countervailing processes”? They are hard to detect. But, of course, many of its legislators are business people.
THE GAP IN EARNINGS BETWEEN HIGH AND LOW PAID WORKERS HAS ACCELERATED OVER THE PAST FIVE YEARS 28,000
Group 1 Legislators, senior officials, directors or managers of companies
Group 2 Clerks
Group 3 Services and sales workers Group 4 Unskilled workers
2011 Source: Statistics and Census Service
The grass is greener A short time ago mainland Chinese longed to come to Macau in the hope of finding a cushy job and easy money. Improving wages and a stronger currency have turned the tables BY SARA FARR
he strong renminbi is not doing Macau any favours. The city relies heavily on labour imported from the mainland and the Chinese currency appreciation is making it harder for companies to hire talent from across the border. Factor in the mainland’s notable economic growth in the past few years and rates of pay - there have been substantial increases in some sectors - and it seems it is more attractive for workers to stay on the other side of the border. This is taking a toll on businesses in Macau, particularly small and medium enterprises or SMEs, warns Kenneth Lei of the SME Association. Even so, the government’s Human Resources Office says it has received no complaints from companies about difficulty finding labour to import. The office says the main principle of the policy on imported labour is that residents are given priority. “Despite its population, the mainland itself is also experiencing a manpower shortage at all levels due to its fast-growing economy,” says the managing director of MSS Recruitment and hello-jobs.com, Jiji Tu. University of Macau professor Jacky Hong Fok Loi agrees that apart from the regulatory hurdles faced by business, another reason it is hard to import labour from the mainland is the robust economic development across the border. He says there is “a narrowing of the wage gap between the mainland and Macau”.
The proportion of Macau’s imported workers that come from the mainland Source: Human Resources Office
No place like home Even though gaming revenue records have been set regularly throughout the year and gross domestic product increased by 26 percent last year, the territory’s median monthly earnings increased by only around MOP600 (US$75) to MOP9,600 in the 12 months to March. In the mainland, pay has tracked economic growth more closely, making it easier for workers to remain there. It is the case with skilled and unskilled labour alike. It is a problem exacerbated by exchange rates. With the pataca indirectly pegged to the United States’ dollar, the currency is losing buying power as the renminbi gets stronger. “Currency is an important factor” in deterring mainland workers from coming to Macau, says Ms Tu. Other factors include the demand for unskilled workers in big cities in the AUGUST 2011
mainland, some improvement in social welfare and a better quality of life in general. In Macau, mainland workers usually have a blue card, a document that gives them the right to work in the territory but little else. For the most part they are not entitled to social welfare. Macau now has close to 49,000 workers from the mainland, about 15 percent of the city’s labour force. The figure increased by 16 percent in the first half of this year, growing more swiftly than the overall number of non-resident workers. However, local companies are increasingly complaining about difficulty in attracting mainland employees. The SME
Photo: Luís Almoster | mspagency.org
Association’s Mr Lei says besides exchange rates and higher pay in the mainland, the high cost of living in Macau deters mainlanders from working here. “Workers from the mainland will also consider their career opportunities in working in Macau,” Mr Lei adds. It applies to the gaming and non-gaming sectors alike, he says. To those with an eye to developing a career, staying in the mainland holds greater promise. The rules governing imported labour are another deterrent. They make it hard for non-resident workers to change jobs to further their careers without having to sit out a sixmonth waiting period.
Mr Lei observes one solution to the city’s labour shortage may be to grant residency rights to workers who have completed seven consecutive years in Macau. The president of the Macau Federation of Trade Unions, Chiang Chong Sek, says the lack of a minimum wage makes it harder to attract workers from overseas, not just from the mainland but also other countries such as the Philippines and Vietnam. “In 14 provinces in the mainland, the governments have increased the minimum wage,” Mr Chiang says. He argues that a future minimum wage in Macau should cover all workers, not just residents. In Shenzhen, wages have risen four percent this year AUGUST 2011
to an average of RMB3,326 (MOP4,130) a month. In April, Shenzhen raised minimum pay by 20 percent to RMB1,320. In Shanghai, minimum wages were hiked by 14 percent, to RMB1,280. Beijing stipulated in its Five Year Plan for 2011 to 2015 that the minimum wage should grow by at least 13 percent annually, with a minimum 20-percent a year rise in more affluent provinces such as Guangdong.
Learn and live Mr Lei says that for SMEs to survive, the Macau government should open the doors to more workers. However, not everyone accepts that companies are having a tougher time recruiting workers from the mainland. MSS Recruitment’s Ms Tu says if SMEs lowered their requirements and offered a greater range of job opportunities, the situation would be different. A further suggestion to ease manpower shortages is to allow mainland students to stay on in Macau once they graduate. Mr Lei and Mr Chiang agree this may help curb the shortage
of labour. But there is resistance to the idea among some local students, who say they face enough difficulty finding jobs and who argue that mainland graduates often have better career prospects across the border anyway. The same goes for low-skilled workers, especially in the tourism and gaming sectors. Many mainland employees, mainly less-skilled waiters and housekeepers, are choosing to go back to their home towns when their job contracts end “because they believe they can have a better living standard there nowadays,” the University of Macau’s Mr Hong says. He argues that increasing pay and giving out more perks to imported workers is only a short-term solution “and will definitely put the local SMEs in a more difficult situation”. He wants a more active role from the government. “It is important to establish focused and tailor-made policies, targeting different segments of imported labour,” the scholar says. So far the government has tended to treat all imported workers the same, notes Mr Hong. “Now it is time to have a supply-driven approach, and more research on the competitiveness of the Macau labour market is warranted.”
The weakest link T
he lack of proper support from the government for workers from the mainland and beyond leaves them unprotected and vulnerable to unscrupulous bosses, warns lawmaker Kwan Tsui Hang. Last month the Commission Against Corruption announced it had uncovered a case involving around 70 imported construction workers whose recruiter or employer allegedly charged them illegal “entry fees”, taking illegal deductions from their wages and bonuses. Altogether they were allegedly fleeced of about MOP700,000 (US$87,500). Six suspects, two from Hong Kong and four from the mainland, were arrested. One of them was a manager at a Macau construction company. AUGUST 2011
Ms Kwan, who is also a member of Macau Federation of Trade Unions, says the Labour Affairs Bureau and labour groups have received similar complaints from several imported workers, and not only workers in the construction industry. Ms Kwan says this is a longstanding problem. She stresses it shows the weaknesses of the rules on importing labour and the weaknesses of the government’s enforcement of the rules. The Labour Affairs Bureau has previously acknowledged having difficulty in dealing with labour problems at large construction sites, where there is usually an intricate network of contractors and sub-contractors. The government says it is reviewing the issue. More than 80 percent of the city’s imported construction workers come from the mainland.
AUGUST 2011 For more information visit macaubusiness.com or write to email@example.com
he government is granting MOP5,000 (US$625) to each Macau resident to allow them to take courses to make them more employable. Some applaud this. Others have misgivings. Chief executive Fernando Chui Sai On proposed the creation of the Continuing Education Development Fund, from where the money will come, in November but only now is it being established. Officials are presenting the MOP5,000 grant as a way to remedy Macau’s shortage of quality labour. The government expects to spend up to MOP500 million. But employers and labour representatives have differing views on the fund’s likely effect on the workforce. Lionel Leong Vai Tac of the Macau Chamber of Commerce fully supports the fund. “Macau is becoming an international city
and we have to face international competition, so we need to upgrade ourselves,” Mr Leong says. The businessman, who is also a member of the Executive Council, says the programme “is really important, especially to the middle class, because it is an opportunity for them to increase their quality of life”. He does not expect instant results. “Changes may not immediately appear today, but later on we will definitely create a learning society.” Employers must also play their part, he says. It is important that “bosses think about what they can do to offer more flexible working hours” so people can attend the courses they are interested in. Angela Leong On Kei, managing director of casino operator SJM Holdings, one of the city’s biggest employers, applauds the fund’s estab-
Learning to compete Can the new Continuing Education Development Fund help Macau’s workforce become more competitive? Employers are guardedly hopeful; others are downright sceptical BY ALEXANDRA LAGES
45 lishment. But Ms Leong, who is also a legislator, says course timetables should be flexible, to allow gaming industry employees to take part.
Making sense Another legislator, property developer Mak Soi Kun, is not convinced the fund will be an unalloyed success. He advises the government to first study the trends in Macau’s social development so subsidised courses can match these trends. Labour representative Kwan Tsui Hang of the Macau Federation of Trade Unions, who is yet another legislator, has deep misgivings. Ms Kwan says MOP5,000 per person until the end of 2013 may not be enough to pay for technical and advanced courses. She says the likelihood of the fund achieving its purpose is therefore questionable. “I cannot see any obvious cause-effect
relation. Currently, even driving classes, amateur and interest-oriented courses are included in the programme. Thus it appears to be difficult to make sense of the scheme’s objective.” Even so, the Macau Federation of Trade Unions is submitting a proposal to the government to organise some vocational skills training, from event and retailing management courses to English language and jewellery courses. The president of the pro-democracy New Macau Association, Jason Chao, believes the fund is a “quite good” measure. Mr Chao’s association is among the strongest advocates of protection of local workers and strongest opponents of unfettered imports of labour. “We hope Macau people can make progress in different fields with this programme,” he says. Mr Chao’s main concern is the potential for abuse. “This kind of programme was also launched in Hong Kong and we have heard about many irregularities involving associations who organised sponsored courses.” In Hong Kong, where the maximum grant per applicant is double that in Macau, the government has warned the public to be aware of unscrupulous marketing by course providers.
Back to school
Labour representative Kwan Tsui Hang of the Macau Federation of Trade Unions, says MOP5,000 per person until the end of 2013 may not be enough to pay for technical and advanced courses
To avoid the same problem in Macau, Mr Chao suggests that the government control the quality of courses. “Residents should have the right to file complaints and the government should conduct surveys to listen to the opinions of those who attended the courses.” Mr Chao recalls that the Education and Youth Affairs Bureau instituted a continuing education subsidy scheme in 2007 but he says it was tainted by irregularities. The bureau itself says the scheme achieved the expected results. Legislator José Pereira Coutinho also urges the government to keep a close eye on the quality of courses. “It takes a lot of supervision to avoid throwing away the money,” Mr Coutinho says. “There must be some monitoring of the programme. How can the government make sure that such sums of money will be used correctly?” He thinks the fund is a symptom of the government’s lack of a long-term strategy. “This programme shows that the government doesn’t know how to solve the daily problems of the population and tries to find indirect ways to lessen problems.” Mr Coutinho argues that the best way to increase the abilities of the workforce is to invest more in schools. “This is not the right policy to improve the population’s education. That is only possible if the government targets secondary schools and puts more money into the learning of languages, school materials and innovation.” AUGUST 2011
The director of the University of Macau’s Educational Research Centre, Teresa Vong Sou Kuan, has doubts as to how the fund can boost the quality of the workforce. “We need to see if the criteria of courses’ approval will match the future development of Macau. Of course, we also need to see if the government has any expected profile for the future development of the territory,” Ms Vong says. She is also not impressed by the amount of money on offer. “I don’t see how this programme will directly enhance the quality of Macau’s manpower because the lump sum, MOP5,000, is for two and a half years.” That means an average subsidy of MOP167 per month.
And she is another advocate of more money for schools. “The government should invest more money in the education system and have more long-term policies to develop a ‘learning community’ in order to empower the human capital of this small city.”
Need for clear rationale Zenon Udani, an expert in human resources and management at the University of Macau, says the fund is inadequate in its present form. “It should be founded on a clear and solid rationale or philosophy, addressing both present and long-term needs of the enclave. It should also bridge the gap between the people’s
current level of knowledge, skills and quality of aptitudes and the manpower needs,” Mr Udani says. He says the government must pay attention to the standards of the instructors and be strict in accrediting courses if the fund is to be successful. Mr Udani thinks school dropouts should be encouraged to go back to school, and more conventional scholarships should be offered to residents. These should include scholarships for those that wish to undertake graduate studies abroad, offered on condition that once their studies are complete they return to work in Macau for an appropriate time, he says.guese.
ABCs of continuing education R
esidents can start using their MOP5,000 (US$625) each from the new Continuing Education Development Fund from the middle of this month. The Education and Youth Affairs Bureau is overseeing management of the fund. The bureau will establish an individual education account for each eligible candidate – all permanent and non-permanent residents aged 15 or older – and the MOP5,000 will be credited to this account. People can use the money to pay the fees for approved courses only. These include tertiary education programmes, continuing AUGUST 2011
education courses or courses for certification examinations. The courses may be offered by institutions either in Macau or abroad. They must be completed before the end of 2013. Candidates will not handle the MOP5,000 themselves. For courses in Macau, the education bureau will pay the fees directly. For courses abroad, candidates must pay the fees in advance themselves and then apply for reimbursement. The initial list of approved courses will be announced by the middle of this month. More details about the fund are available at the Education and Youth Affairs Bureau, in Chinese and Portuguese.
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Silly seasoning A COLUMN IN SEARCH OF THE PERFECT MACAU SILLY SEASON TOPIC his time of the year is usually referred to in the media as “the silly season”, and not without reason. Of course, there is a fair amount of what one might call a kind of “ethnocentrism” in this expression. First, it assumes that most readers are in the northern hemisphere and that they take summer vacations. Then, that they keep reading newspapers and magazines in August. And, last but not least, that nothing really relevant can occur when those fitting the above profile are away from their usual posts. It is quite a set of assumptions but let us assume they apply in Macau. In that case, our readers, no matter how few they might be, are not in the mood to deal with high-minded topics or to delve into the details of overly challenging subjects. Therefore, we will not discuss the European debt crisis, the odds of the property bubble bursting in the mainland, the budget woes of United States President Barack Obama or the like. We respect our readers and their right to a proper rest, whatever their longitude and latitude when this magazine reaches them. We must go for something lighter. Nonetheless, it would also be inappropriate to surrender completely to the season’s mood. Hence, let us have no gossip about celebrities, of the royal or any other kind; no talk about summer soccer transfers; no grumblings about the travel inconveniences of the season or the weather prospects for the holidays. That would be too light and not befitting this column or, God forbid, this publication. As you may have already guessed, I am at a loss. Some might call it the season’s misery. What should one write about when readers – at least for the time being – are of such a dismissive disposition? What is required is something that is neither too solemn nor too light – and yet still appropriate for this magazine, its patrons and advertisers.
A pinch of this
Of course, as a rule, it must be about Macau – what else? But then, when the imagination seems to wander in search of nicer surroundings, only the usual suspects pop up.
We respect our readers and their right to a proper rest, whatever their longitude and latitude when this magazine reaches them. We must go for something lighter
Should we talk about the amazing revenues from gambling, and examine the drivers (seldom, if ever, properly analyzed)? Would readers bear a discussion of the dynamics of the Chinese financial markets and monetary policies, or their effects, present and future, on the local economy? If one were to go for a simple “Gambling revenues defy gravity” without further elaboration, that might be seen as less than a decent effort. If one were to focus on a more serious “Easy money: will it ever end?” there would be a serious risk that you would flip to another page, I fear. Alternatively, one might settle for labour issues, another favourite. But, again, none of the topics that come to mind seems to fi t the bill. “Get a Macau ID card, work less, earn more” seems too cheeky. “Labour policies killing diversifi cation”, on the other hand, would fall too much on the gloomy side. You might even close the magazine immediately, which would be unfair for all the other contributors to this issue.
A dash of that
Then, we have the linked issues of the development of Hengqin Island, regional cooperation and Macau’s economic diversification. These topics have a very high potential. But until more is known, I cannot think of headlines other than “Macau trips on the mountain” or “New Zhuhai presented with a special gambling zone”. Probably none of these headlines would be taken seriously, and they might even discomfit a few. It is better not to follow that path. Someone has just suggested housing policy. So ambitious are the plans for construction of economic housing that it is probably difficult to be wrong-footed there. We may just hope that soon most of us will be poor enough to fit the expanding eligibility criteria. Or that the government goes one step further and the next voucher we get is for a flat, possibly with a view of One Grantai. Now that would be a real way to join in the property boom. But these can also be regarded as sensitive topics, so I am told, and may not suit the season’s mood. So they are no-go areas, at least for now. It is probably wise to avoid the light rail theme, as well. It could surely provide plentiful elements for an interesting reflection on projects with seemingly never-ending gestations and ever-bulging budgets. But, be reassured, there is still enough slack in the public finances to cover future surprises, so we do not need to worry about it – at least, not until actual construction starts. So, it is not newsworthy, not at this time of the year.
Alas, I am still stuck with no topic for the August issue. The good news, I have just realised, is that I have already reached the required length for this article. And I dare to hope that my comments so far are not completely lacking in sagacity. The editor may even accept them for publication (and if you are reading this, it means he has done so). Consequently, let me just wish you a wonderful summer retreat. See you in September, publisher allowing. Cheers. AUGUST 2011
New flight path
Photo: LuĂs Almoster | mspagency.org
Airport masterplan to be delivered this month recommends increasing the terminalâ€™s area
he new masterplan for the Macau International Airport recommends increasing the terminal area by 150 percent. It also suggests the creation of more parking spaces for private jets and smaller planes to meet growing demand. The government commissioned the
long-term strategy plan to French airport consultancy ADP Ingenierie for MOP3.28 million (US$400,000). The Civil Aviation Authority aims to announce the findings this month. A draft of the masterplan was unveiled last month at a media lunch. The budget for the expansion has
51 not yet been made public but the redevelopment will be implemented in stages and include a 1.15-square-kilometre land reclamation programme. Part of the reclaimed land will accommodate an enlarged runway. According to ADP Ingenierie’s forecasts, passenger traffic at the airport could jump to 15 million as early as 2030. That is about triple its current capacity. The plan will also propose building a new transport hub in Taipa, integrating the airport and the future Pac On ferry terminal. The hub would allow
passengers in transit to make a direct connection without going through immigration.
handling 18 airlines and 26 routes by the end of June. There are also plans to reintroduce direct flights to Australia, a route previously handled by the now bankrupt Viva Macau, and to forge new routes to India. But the prospects of establishing either are considered slim. More promising is an agreement between Macau and Japan to increase weekly flights from Tokyo. Both governments signed an agreement last month that will see Air Macau increase weekly flights from a current maximum of three, to seven from next summer. All Tokyo capacity restrictions will be eliminated from the 2013 summer season onwards, after expansion works at Narita Airport are completed. Passenger throughput between Macau and Japan increased from less than 22,000 in 2007 to 93,000 last year.
Numbers down The expansion plan comes at a time when the airport’s passenger numbers are declining. Passenger numbers faced a year-on-year drop of 8 percent in the first half of the year, to 1.92 million. The Macau International Airport Company Ltd. says it expects numbers to rebound. Passenger traffic volume and flight movements increased by 5 percent year-on-year in June and the company estimates the upward trend will continue throughout the summer. The airport has been also looking at new markets to turn around shrinking passenger numbers. In the first half of the year, four new airlines and two new routes were introduced. The airport was
The expansion plan comes at a time when the airport’s passenger numbers are declining. Passenger numbers faced a year-on-year drop of 8 percent in the first half of the year, to 1.92 million AIRPORT EXPANSION Terminal area
Capacity after expansion
No. of aircraft stands
No. of aircraft stands for business aviation
Source: Macau International Airport Master Plan, Civil Aviation Authority
THE MASTER PLAN’S TRAFFIC FORECAST Baseline forecast
Annual passenger traffic
Annual cargo traffic (in tonnes)
24 - 28
Departure passenger traffic
Arrival passenger traffic
Annual movements for business aviation Busy day peak hour (per hour)
No. of Movements
Source: Macau International Airport Master Plan, Civil Aviation Authority
mote cooperation in several fields, including tourism, education and crime fighting, according to Mr Tam. Data from Taiwan’s National Immigration Agency shows that during the 2011 academic year 2,012 students from Macau were admitted to Taiwanese universities. Taiwan is the third biggest source of tourists to Macau, after the mainland and Hong Kong, with 600,000 visitors in the first half of the year. Bilateral trade last year was worth MOP1.25 billion (US$156 million), according to government data.
Ties that bind After more than a decade of silence, Macau and Taiwan boost bilateral relations
t took more than 10 years after the creation of the Macau SAR until the first high-ranking, official visit to Taiwan. But since last September’s trip to the island by secretary for social affairs and culture Cheong U, ties between the two have become increasingly close. The latest steps were taken last month, with the Macau government announcing it would set up an office in Taiwan by the end of the year. Meanwhile, the Taipei Economic and Cultural Centre, Taiwan’s unofficial representative office in Macau, was renamed and won a boost in recognition from the government. Besides the renaming of the office, the Macau government agreed to give
staffers the same preferential treatment enjoyed by Macau-based foreign officials. In Hong Kong, the government there also announced the establishment of an office in Taipei and the representative office was also renamed. Macau government spokesman and point man for relations with Taiwan, Alexis Tam Chon Weng, said a deal on the establishment of a Macau office in Taipei had been made after several months’ discussion between both sides. The office, to be named the Macau Economic and Cultural Office, will assist Macau residents in Taiwan with study, employment, business and emergency issues. It will also work to pro-
Taiwan President Ma Ying-jeou considered the name change for Taiwan’s representative offices in Macau and Hong Kong as positive. Talking in his capacity as chairman of the Kuomintang, the island’s ruling party, Mr Ma said that historically Taiwan has not had many official contacts with either Macau or Hong Kong. He added things started to change as Taiwan and the mainland began improving their relationship over the past three years. “The changes are the result of [warming] cross-strait ties,” said Mr Ma. “The changes are beneficial to Taiwan, Hong Kong and Macau.” He also stressed the name change had upgraded Taiwan’s status and upheld Taiwan’s dignity. Taiwan’s mainland affairs minister, Lai Shin-yuan, reinforced the boost in Macau-Taiwan relations by presiding at a ceremony to rename the island’s de facto consulate in the territory. The next step may be the possibility of visa-free travel between Macau and Taiwan. Ms Lai said the island’s authorities would further study this issue. In Macau, Ms Lai did not meet any local high officials. In Hong Kong she was greeted by the secretary for constitutional and mainland affairs Stephen Lam Sui Lung at the ferry pier.
mbreport PROSTITUTION 54 54
SEX, MONEY AND FAMILY A NIGHT ON THE STREETS WITH THE CITY’S SOCIAL WORKERS REVEALS THE LURE OF QUICK MONEY IS FUELLING A SIZEABLE AND SHADOWY SEX INDUSTRY BY LUCIANA LEITÃO PHOTOS BY LUÍS ALMOSTER
mbreport PROSTITUTION 56 56
obody wants to be a sex worker,” says Ms Chen, fidgeting on her chair. For the 31-year-old prostitute, it is a way to make more money and create a better life than she enjoyed in the mainland. She sits in a small, untidy room in one of the oldest hotels in town, in the Avenida Almeida Ribeiro district, usually known by its Chinese name, San Ma Lou. From outside in the hall, about two dozen other women peek in, suspicious to see a reporter. They are all waiting for customers. The hotel is the first stop on the weekly route of the outreach team of the Association of Rehabilitation of Drug Abusers of Macau. Every week the team go around the city dispensing condoms and giving health advice to sex workers, especially on HIV prevention. The women warmly welcome the outreach team and are especially eager for their free condoms. Women inside the rooms rush out to get their share. Unlike condoms, the presence of a reporter is not appreciated. When asked for an interview, most run to their rooms, while the rest refuse outright. Discreetly, only Ms Chen (not her real name) agrees to chat in a secluded room. She wears a revealing outfit and bright red lipstick. Coming straight from a small village in Sichuan, she exchanged a life surrounded by poverty for what she thought would be a better one in Macau. Ms Chen was not duped. She understood she was coming to the city to become a sex worker. She followed a friend’s advice and took up the offer. It is a matter of money. In a typical month, entertaining about five men a day, Ms Chen can earn close to MOP20,000 (US$2,500). In her hometown, her best prospect would be finding a part-time factory job, earning only a fraction of that. “I could not really support my family,” she says. It is all she will say about her relatives. Questioned further, she tenses up. “If they knew what I do here, they wouldn’t let me come back.” Ms Chen comes and goes from Macau on tourist visas. She always stays AUGUST 2011
at the same hotel when working. “In the street is more dangerous,” she says. She adds that abusive customers sometimes come to the hotel but so far she has been lucky. “Some customers get violent. I saw a girl with finger marks on her face.” As the interview continues, Ms Chen becomes emotional. Eventually, with her eyes swollen and close to tears, she says: “The biggest problem I have is to be a sex worker, to face the reality and make a living. [But] I have no time to be upset.”
Hard numbers Macau is well known for its sex industry. Prostitution is not illegal but several related activities are. Soliciting is a crime but the law states prostitution is allowed as long as an individual engages in it in a private place. Organised prostitution is illegal. Anyone managing a brothel is committing a crime. Even so, there are plenty in Macau, as well as saunas and massage parlours where sex services are within easy reach of customers, both locals and tourists. In one brothel shut down by the police last month, it was common for prostitutes to charge customers from MOP600 to MOP1,000. They would receive MOP200, the rest going to the madam or “mama-san”. Estimates place the annual revenue generated by prostitution globally at close to US$180 billion. China is considered the world’s biggest market. The shady way Macau’s sex industry operates makes it hard to assess how much money it makes. There are no studies or statistics on its economic value. To count the number of people it involves is also hard. In 2007, the Judiciary Police identified almost 2,000 sex workers, among them two minors under the age of 15 and about 200 between 15 and 18. Some estimates put the number of sex workers in Macau at 5,000. The prices also vary widely, from MOP50 in the city’s poorest neighbourhoods up to MOP1,500 at the city’s fivestar hotel-casinos. The government has a laissez-faire approach to the sex industry. It has taken no measures to reduce demand by targeting customers. The police have been accused of turning a blind eye to criminal practic-
es, although recently the authorities have been more active in raiding brothels, getting their phone numbers from flyers distributed in the streets.
Filial piety The outreach team of the Association of Rehabilitation of Drug Abusers continues on its rounds. They visit five hotels and guest-houses in the San Ma Lou area, distributing condoms to dozens of women. The team is familiar with the prostitutes, as they enter only those places where they are welcomed. But they obey one rule: when a customer stops by, the team has to leave discreetly. It is a similar scene at all five hotels. Between 10 and 20 women of various ages watch television, chat or paint their fingernails in a common area, waiting for customers. In general, they wear revealing clothes and heavy make-up. In the more upmarket places, some are elegantly dressed. One of the hotels in San Ma Lou is distinguishable by its fashionablelooking women. As soon as the outreach team steps in, the women sitting in the reception area jump up excitedly to receive their condoms. Among the two dozen or so women, all from the mainland, are two particularly striking examples, Ms Chow and Ms Lee. They agree to be interviewed, but on one condition: that they get extra condoms. Ms Chow (not her real name) is 23. She refuses to say where she is from, other than “from a farm village, in the mainland”. She first arrived in Macau a few months ago and since then has been coming back and forth on tourist visas. Following the recommendation of a friend, she always stays in the same hotel. “I don’t like to go from here to there,” she says. She explains that her family is one of the reasons she is here. She sends them money regularly but she has never told them how she earns it. Ms Chow says the money to help her family makes her work worthwhile. “Depending on the number of customers, I get up to MOP20,000 per month.” Dealing with an average of 10 customers a day, Ms Chow has met men from all walks of life. “I’ve had bad clients who didn’t want to pay after the service and got violent,” she recalls. “If I can’t get the money, I just ask the client to go.”
mbreport PROSTITUTION 58 58 Asked why she does not call the police, she hesitates, then says assertively: “I would like to have more protection from the Macau authorities when these things happen.” There is a clear lack of trust between sex workers and the police. Prostitutes fear arrest and deportation, since most are not residents. And there have been reports of police officers collecting protection money.
Just a job Everything about Ms Lee (again, not her real name) is carefully thought out, from head to toe. Her hair is flawlessly combed, covering her eyes, and she wears a black and white dress that follows the curves of her body. She smiles but reveals very little. Like Ms Chow, she will not say where she comes from. She says she became a prostitute in Macau because it was difficult to find a decent job in her hometown. But unlike Ms Chow and Ms Chen,
she came to Macau without knowing she would become a sex worker. She was aware there were big casinos in Macau, so she hoped it would be easy to find a job in the gaming industry. But things did not go her way. When the opportunity came, she did not hesitate to join the sex industry. “It’s also an occupation. It is not a shame,” she says confidently. “The customers have needs. They give me money and I give them sex.” Ms Lee says she too, needs to support her family in the mainland. “My parents were working hard and now they can rest a little bit. I send them some money.” She declines to say how old she is or how much she earns. She adds she has never encountered violence in the course of her work. The outreach team leaves San Ma Lou and heads to the north of the peninsula. “Usually the team only goes to small hotels and the streets,” says the president
of the Association of Rehabilitation of Drug Abusers, Augusto Nogueira. “We don’t enter the saunas and massage parlours. We leave that work to Zi Teng, because I think they have a better communication scheme with them.” (See the story in this MB Report). The association focuses mostly on sex workers from the mainland because there is no language barrier. The outreach team arrives in the Iao Hon district, where the poorer sex workers are usually to be found, in narrow, dark streets, concealed between tall buildings. Tonight, they are hard to locate. “There are a lot of policemen in the area. I think they are hidden,” says one of the team. Before finishing their rounds, the team passes through the ZAPE area. Again, there are few sex workers on the street. The only one that the outreach team approaches rebuffs them. “You’re disturbing me,” she says abruptly and heads off to approach a potential customer.
Street of happiness P
rostitution is far from new to Macau. The city’s historical link to the sex industry is reflected in some of the old street names. Rua da Felicidade means, in English, Happiness Street. What is today one of Macau’s most visited streets originally earned its name from what used to go on there from the second half of the 19th century up until the late 1940s: prostitution. Rua da Felicidade was Macau’s red light district, lined with AUGUST 2011
brothels and seductively clad sex workers announcing their services. Half a century ago the government started work to preserve this historic area and what was once a place for singing, gambling and sex is a now tourist haven. The sex industry, however, has not moved too far away. In the vicinity of Rua da Felicidade there are still brothels and guest-houses where prostitutes ply their trade.
RESISTANCE TO INSISTENCE THE USE OF CONDOMS IS FAR FROM STANDARD PRACTICE AMONG THE CITY’S SEX WORKERS, RESEARCH SAYS BY LUCIANA LEITÃO
rostitutes working at the low end of the market in Macau are more likely to have sex without insisting their customers wear condoms, research shows. They are often ignorant of the risks posed to their health. A study by the Chinese University of Hong Kong in cooperation with the Macau Health Bureau found female sex workers in Macau were “very vulnerable” in the face of the refusal of customers to use condoms. When clients offer to pay a higher price for sex without a condom, they are more likely to accept, the study found. The investigation focused on the health problems faced by non-resident female prostitutes in Macau in 2007 and 2008. Although already three years old, this research remains one of the few available studies about the city’s sex workers. Researcher Susanne Choi Yuk Ping says the study used data from a survey of 491 female sex workers from Russia, Vietnam, Thailand and the mainland, all self-employed and working for the least return. The survey found that sex workers from the mainland and Thailand were the most disadvantaged. On average, they were older, less educated, most likely to be from rural areas and more likely to be divorced. Russian sex workers were mostly from urban areas, the youngest and best educated. Sex workers from Vietnam had the lowest levels of knowledge about sexual health in general and the need for condoms. Among the most concerning findings, the study said customers that were unwilling to use condoms may use force to get their way. “Especially among Chinese female sex workers, there is an alarmingly high rate of violence perpetuated by clients,” Ms Choi says. “There is neither enough protection [for workers] nor health education [for customers].” Mainland prostitutes typically enter Macau on two-week tourist visas, which do not allow them to work. They are afraid of reporting problems with customers to the police. In contrast, some of the sex workers – especially non-Chinese – employed by clubs or saunas have valid work permits. “By having this dual system, the government, inadvertently, is putting the female sex workers from the mainland at a disadvantage,” Ms Choi says. “Russians, Thais and Vietnamese usually work in casinos, saunas and nightclubs, while the mainlanders work in small hostels, hotels and on the street.”
Dangerous delusion Although sex workers in Macau have various cultural backgrounds, most maintain regular contact with their relatives, sending remittances frequently, the study found.
This year, the Association of Rehabilitation of Drug Abusers of Macau, in cooperation with the University of Macau, conducted another survey, on the health knowledge and behaviour of sex workers in the city. Female prostitutes that work the streets and those that work in brothels were approached. All 85 respondents, ranging in age from 18 to 35, were from the mainland. “We were not able to include in this study sex workers from other territories other than the mainland because they are in big hotel-casinos and we cannot reach them,” says assistant professor Joanne Chan Sow Hup. One of the main findings of the survey is that mainland sex workers have little understanding of HIV or AIDS and that they revealed some misconceptions about how the virus is transmitted. For instance, they are unwilling to have a meal with a person with HIV and believe kissing and hugging will infect them. And 70 percent of the survey respondents believed AIDS could be cured with medicine. The use of condoms was far from standard practice among the respondents. “They have difficulties in using condoms, because the customers don’t want to,” assistant professor Chan says. Some may warn their colleagues about an uncooperative customer but others may accept money to have sex without a condom. Considering that the respondents had, on average, 222 partners a month, and that more than half admitted they did not use condoms consistently, there are reasons for concern, assistant professor Chan stresses. AUGUST 2011
mbreport PROSTITUTION 60 60
A TWILIGHT WORLD PROSTITUTION IS NOT ILLEGAL IN MACAU BUT CRIME IS USUALLY NOT FAR AWAY BY LUCIANA LEITÃO
rostitution may not be a crime in Macau but there is panoply of illegal activities connected to the sex industry. These range from simple forgery to human trafficking to exploitation by organised criminal gangs. In May, the authorities discovered a gang that allegedly exploited prostitution. As a result, four men and 11 women, all from the mainland, were detained in a raid on a hotel in Taipa. Other suspects escaped arrest. The group allegedly recruited women from across the border, helping them with the paperwork to come to work in Macau. The Judiciary Police say the gang provided the women with fake identity cards. The authorities believe the business turned over more than MOP400,000 (US$50,000). Judiciary Police deputy director Chau Wai Kuong says that in 2009 the force detected 26 cases of crime related to the sex industry, such as falsification of identification and exploitation of prostitution. Last year there were 21 cases altogether, and in the first four months of this year there were just three. According to a lawyer who spoke on the condition of anonymity, Macau has a “hypocritical” approach to crime related to prostitution, since only petty cases are prosecuted. Considering that exploitation of prostitutes is a crime, he says there is “blatant hypocrisy” since that is what often goes on in many saunas. The lawyer says that before the 2008 law on human trafficking, sex workers often complained of being kept in sexual servitude, with their passports retained by sauna bosses. “They ended up always owing money to the agent,” he recalls. The new law has made a difference, he says. “Now they come to Macau and they already know what they are going to do.” Prostitution is not a crime, but soliciting is punishable with a MOP5,000 fine and, in the case of non-resident offenders, deportation. Pimping is also a crime. The
penalty can be up to five years in prison. The approach of the authorities reflects “a concern for fighting organised crime, instead of prostitution in itself,” explains lawyer Lei Wun Kong. Mr Lei says the law, which is quite clear, is not the problem. The problem, he says, is the way it is enforced.
Standing up in court The ultimate purpose of trafficking in human beings is often sexual enslavement. However, the Judiciary Police deputy director offers assurances that many prostitutes come voluntarily to work in Macau, whether by their own devices or with the help of middlemen. “Human trafficking cases are not frequent,” Mr Chau says. In 2006, in its maiden report on Macau, the United States State Department put the city on its blacklist for being potentially fertile territory for human trafficking. In 2008 the city was dropped from the list, after the authorities here argued for its removal. Even so, the latest report by the State Department, released in June, lists Macau as a place that does not fully comply with the minimum standards for the elimination of human trafficking. Since 2008 the authorities here have detected 39 cases of human trafficking, involving 58 victims. However, many cases were shelved owing to lack of evidence. There are many difficulties in investigating such cases, the main one being the reluctance of victims and alleged perpetrators to cooperate “because the mastermind behind the syndicate would have told them not to talk,” Mr Chau says. As for the involvement of triads, few cases make it as far as the courts. “There was a case in 2009, in which we arrested six people, four local men, one Vietnamese girl and one local woman, and we were able to prosecute for organised crime,” Mr Chau says. “But the investigation is still ongoing.”
PROSTITUTION mbreport 63 63
SMALL COMFORT MACAU HAS A SINGLE CHARITY ORGANISATION WHOSE SPECIALIST ROLE IS HELPING FEMALE SEX WORKERS BY LUCIANA LEITÃO
he Chi Tang Women Association, a branch of Hong Kong organisation Zi Teng, is the sole volunteer group in Macau that specifically supports sex workers. The other charities that work with sex workers do so only as part of their efforts to prevent the spread of HIV or help the victims of human trafficking. The association gives out condoms, and free information on health and legal matters. Its staff also perform health check-ups to detect sexually transmitted diseases. The language barrier and a lack of personnel speaking foreign languages has forced Chi Tang to focus mostly on prostitutes from the mainland. Most Thai, Vietnamese, Mongolian and Russian sex workers are beyond its scope. Even so, the association has a hard time keeping track of the prostitutes they deal with. “They have tourist visas and are always changing and moving,” says Ann Lee, a member of Chi Tang. Ms Lee explains that some mainland sex workers eventually get to stay longer by obtaining work permits with the help of relatives or acquaintances in Macau. Zi Teng has trained volunteers in Macau to work with sex workers and provided support since 2005. The Chi Tang Women Association was registered a year later. The main problem sex workers complain to Chi Tang about are customers that refuse to wear condoms or that rob, beat or rape them. “If they are hurt seriously, they call the police and go to the hospital for treatment,” Ms Lee says. If they are not seriously harmed, they will do nothing, because they are afraid the police will send them back to the mainland. “Some policemen come to the room and arrest the sex workers without evidence and for no reason,” Ms Lee adds.
Less protection In Chi Tang’s experience, many women from poorer provinces in the mainland make their own decision to come to Macau to work in the sex trade. Most arrive already knowing what kind of work they will be doing. “They earn more in Macau than doing farm work in their hometown, so they want to come here to do sex work,” Ms Lee says. Chi Tang’s outreach activities take place in hotels, private apartments and in the streets. But there are other places where prostitutes can be found. “They are doing sex work in saunas, massage parlours and casinos. Also, there are girls working in bars, but they are from Mongolia or foreign countries,” Ms Lee explains. She says sex workers in Macau are less protected than those in Hong Kong. “In Hong Kong, the legislation is different, so sex workers can take to the streets and fight for their rights. In Macau, you cannot do that.”
There are other organisations in Macau working with sex workers but mainly for the purpose of HIV prevention. That is the case with the Macao AIDS Care Association. Created in 2007, the association has a hotline, arranges health tests and, once a month, distributes condoms. “We choose small hotels or guest houses. We don’t go to saunas or big hotel-casinos because they are controlled by certain management and it’s too hard to contact them,” says the head of the association, Fátima Tsé. There is another reason for bypassing prostitutes in saunas and hotel-casinos. “Those sex workers have more money, so the chance of them using condoms is higher,” notes Ms Tsé. We’re focusing on the lower-end sex workers. Those that, if the client asks them not to use a condom, might accept.” The outreach team approaches sex workers from the mainland but non-Chinese-speaking sex workers are usually outside their scope. “We don’t have enough resources or volunteers to reach foreigners,” she says.
Peninsular mentality Ms Tsé bemoans government inaction on HIV. “The government doesn’t put much effort into prevention and promotion of health. We have very little support,” she says. Another association that may, on occasion, support prostitutes is the Good Shepherd Sisters. One of the aims of the group is to help the victims of human trafficking, and this may entail helping sex workers. The charity supports women and children that have suffered abuse. Cecilia Ho Wing Yin, a lecturer for the social work programme at the Macao Polytechnic Institute and a member of the Macao AIDS Care Association, says the government should give a greater amount and variety of support to sex workers, including those that do not speak Chinese. Ms Ho accuses the government of failing to act because it considers prostitution an occupation only for non-locals, as very few Macau residents work in the sex industry. “This kind of thinking is quite narrow,” she says. “Although the government wants the NGOs to do lots of things for education [of sex workers], it only provides leaflets; it doesn’t sponsor the staff. It means we need to recruit lots of volunteers.” Ms Ho stresses it is difficult to persuade her students to work with a group as marginalised as sex workers. In a written reply to Macau Business, the Social Welfare Bureau acknowledged that it did not provide direct support to sex workers. But the bureau said it did give money to the Macao AIDS Care Association to develop HIV prevention programmes and counsel sex workers, and that it helped victims of human trafficking, including those forced to become sex workers. AUGUST 2011
Property | Market Watch
First impact bout one-third — that was the fall in May’s real estate transactions, the fi rst full month of transactions since the government’s announcement of a new stamp duty designed to cool the property market. An analyst told Macau Business she expects a more intense drop in transactions for June. The recently released data from the Statistics and Census Service says there were 2,402 residential property transactions in May, 31 percent fewer than April. In monetary terms, May’s housing transactions fell 59 percent compared to April to MOP7.9 billion
Residential units sold as per record of stamp duty* Year
Number of Transactions 1,297 February 1,084 March 1,503 April 2,202 May 1,627 June 1,543 July 1,204 August 940 September 1,505 October 1,312 November 1,818 December 1,954 January 1,541 February 788 March 2,225 April 3,485 May 2,402
Value of residential units sold as per record of stamp duty*
February March April May June July August September October November December 2011
January February March April May
* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.
Value (MOP million) 3,140 1,995 2,806 6,180 4,281 3,319 2,642 1,889 3,687 3,421 7,569 5,010 3,790 1,918 7,704 19,244 7,902
Real estate transactions slump as special stamp duty on residential transactions bites
Average transaction value of residential properties as per record of stamp duty Value (MOP thousand) 6,000
Total number of buyers in residential transactions in the first five months of 2011:
Proportion of buyers
Jan Feb Mar Apr May Jun Jul 2010
Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2011
* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.
60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Total value of residential transactions in the first five months of 2011:
40.56 billion Proportion of buyers
Jan Feb Mar Apr May Jun Jul 2010
Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2011
* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty bill issued during the reporting month. 3. Some residential units may not be included in the data made available by the Financial Services Bureau for privacy reasons.
(US$987 million). In year-on-year terms, however, May’s home sales were up 48 percent. The Financial Services Bureau says the average price per square metre also fell 12 percent in May to MOP44,400. In year-on-year terms, home prices were up 17 percent. The drop in per-square-metre prices is partially explained by the high number of primary sales in April with the public launch of several highend projects. May saw a contraction that impacted on the price per square metre. Even so, May was the second best performing month in terms of transaction volume in the primary residential market at least since the beginning of 2008. The average price per square metre in May was also the fourth highest since the Financial Services Bureau started releasing records in January last year. Ricacorp executive director Jane Liu says the volume of residential
Chinese Holdings’ announces name
hinese Estates Holdings Limited will call its residential project near the airport La Scala, a name it says is inspired by one of the world’s top opera houses, the Teatro alla Scala in Milan. The company says it will invest more than HK$20 billion (US$2.57 billion) in the development. The project has a total gross floor area of 530,000 square metres. Phase I includes nine towers up to 31 storeys high, with 899 residential units. The completion target is the end of 2013. “La Scala is without doubt Chinese Estates’ flagship project of the year,” said Lau Ming Wai, vice chairman of Chinese Estates Holdings Limited.
Source: Financial Services Bureau
Average transaction price of residential units per square metre
transactions fell further in June, with investors and home buyers rushing to finalise deals in May before the introduction of the stamp duty in mid-June. Prices have not showed a significant downward trend and are expected to hold, she says. There are signs the market has begun digesting the government’s policy. Ms Liu expects the volume of residential transactions to return to the mean by the fourth quarter. Last month, the government implemented another measure in its campaign to improve transparency and curb real estate speculation by launching an online database listing pre-construction properties up for sale. More than 100 projects were listed on day one. However, the government said there were more than 80 pre-construction properties that had not been listed. The list is available on the Land, Public Works and Transport Bureau’s website in Chinese and Portuguese at www.dssopt.gov.mo. AUGUST 2011
Property | Market Watch Notable residential property transactions - 16/06 to 15/07, 2011 District
Taipa Taipa Macau Macau Macau Macau Macau Macau Taipa Taipa Taipa Macau Taipa Taipa Taipa Macau Taipa Macau Macau Macau Macau Taipa Macau Taipa Macau Macau Macau Macau Taipa Taipa Macau Macau Macau Macau Macau Taipa Macau Macau Macau Taipa Taipa
One Grantai One Grantai Villa De Mer One Central One Central One Central One Central Lake View Tower Ocean Gardens One Grantai One Grantai L’Arc One Grantai One Grantai The Manhattan The Residencia The Manhattan One Central One Central One Central Wan Yu Villas Nova City One Central Flower City The Residencia La Cite La Cite One Central Kings Ville Nova City Villa De Mer The Bayview The Praia The Praia La Baie Du Noble Flower City One Central Green Island La Baie Du Noble Prince Flower City The Pacifica Garden
L/F, unit P L/F, unit W Block 2, H/F, unit B Block 3, M/F, unit A Block 4, M/F, unit A Block 2, M/F, unit B Block 2, M/F, unit A H/F, unit M Edelweiss Court, M/F, unit A M/F, unit I Block 3, M/F, unit I M/F, unit D M/F, unit J Block 3, M/F, unit J M/F, unit D Block 4, M/F, unit A M/F, unit D (with two car parks) Block 7, M/F, unit B Block 7, H/F, unit E Block 7, M/F, unit B L/F, unit P Block 11, H/F, unit C Block 1, M/F, unit A M//F, unit A Block 3, H/F, unit C Block 2, M/F, unit E Block 5, M/F, unit C Block 7, M/F, unit D Block 2, M/F, unit E Block 15, H/F, unit B Block 5, M/F, unit B Block 3, H/F, unit F Block 3, H/F, unit N Block 3, H/F, unit S Block 1, M/F, unit C M/F, unit F Block 1, H/F, unit C Block 3, H/F, unit P Block 5, M/F, unit W Block 3, L/F, unit O M/F, unit D
Source: Ricacorp & Midland
Floor area (sq. ft)
Sale price (HK$)
Price per sq.ft. (HK$)
2,949 3,025 1,695 2,636 2,326 2,267 2,269 3,079 3,262 2,261 2,261 2,411 2,019 2,019 2,305 1,693 2,305 1,272 1,292 1,272 2,103 1,975 1,237 2,087 1,559 1,719 1,626 1,176 1,901 1,520 1,475 1,582 1,558 1,558 1,600 1,615 918 1,596 1,597 1,674 1,594
22,120,000 19,663,000 18,800,000 17,925,000 17,096,100 17,003,000 15,883,000 15,280,000 14,800,000 13,792,000 13,339,900 13,000,000 12,316,000 11,912,100 9,220,000 8,880,000 8,759,000 8,300,000 8,030,000 7,950,000 7,771,000 7,700,000 7,000,000 6,880,000 6,800,000 6,500,000 6,480,000 6,400,000 6,380,000 6,290,000 6,280,000 6,200,000 6,150,000 6,100,000 6,000,000 6,000,000 5,950,000 5,950,000 5,880,000 5,800,000 5,780,000
7,501 6,500 11,091 6,800 7,350 7,500 7,000 4,963 4,537 6,100 5,900 5,392 6,100 5,900 4,000 5,245 3,800 6,525 6,215 6,250 3,695 3,899 5,659 3,297 4,362 3,781 3,985 5,442 3,356 4,138 4,258 3,919 3,947 3,915 3,750 3,715 6,481 3,728 3,682 3,465 3,626
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable residential property rentals - 16/06 to 15/07, 2011 District
Macau Macau Macau Macau Macau Taipa Macau Macau Taipa Taipa Macau Taipa Macau Taipa Taipa Taipa Macau Taipa Taipa Taipa Macau Taipa Macau Macau Taipa Taipa Taipa Taipa Macau Macau Macau
Lake View Tower One Central L’Arc Lake View Tower Lake View Tower Nova City Lake View Tower Lake View Tower Nova City Nova City One Central Pearl On The Lough Nam Van Peninsula Nova City Prince Flower City Nova City Magnificent Court Nova City Nova City Edf. Jardim de Wa Bao Edf. Kam Yuen Kings Ville The Praia The Praia Nova City Edf. Jardim de Wa Bao Edf. Mei Keng Garden Nova City La Cite La Cite La Cite
L/F, unit L Block 4, M/F, unit B H/F, unit A L/F, unit L H/F, unit A Block 11, H/F, unit A M/F, unit A M/F, unit B Block 5, M/F, unit C Block 11, H/F, unit D Block 1, M/F, unit C Block 1, M/F, unit D M/F, unit A Block 13, M/F, unit D Block 1, H/F, unit A Block 5, M/F, unit B L/F, unit S Block 15, L/F, unit D Block 11, H/F, unit B M/F, unit AA M/F, unit E Block 3, M/F, unit I Block 3, H/F, unit P Block 1, H/F, unit C Block 15, H/F, unit E L/F, unit Y Block 3, M/F, unit J Block 4, L/F, unit A Block 4, H/F, unit A Block 5, H/D, unit C Block 5, H/D, unit C
Source: Ricacorp & Midland
Floor area (sq. ft) 2,045 2,585 2,261 2,045 1,507 2,500 1,511 1,531 1,973 2,500 895 2,055 3,200 1,576 1,665 1,981 1,061 1,556 1,984 2,150 1,700 1,511 1,426 1,558 1,630 1,670 2,015 1,088 1,624 1,626 1,626
Rent price (HK$) 30,000 30,000 28,000 24,000 22,000 22,000 18,000 18,000 16,000 16,000 15,000 15,000 15,000 14,000 14,000 13,800 13,500 13,000 13,000 13,000 12,000 11,500 11,000 11,000 11,000 11,000 11,000 10,000 10,000 10,000 10,000
Price per sq.ft. (HK$) 14.67 11.61 12.38 11.74 14.60 8.80 11.91 11.76 8.11 6.40 16.76 7.30 4.69 8.88 8.41 6.97 12.72 8.35 6.55 6.05 7.06 7.61 7.71 7.06 6.75 6.59 5.46 9.19 6.16 6.15 6.15
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Photo: Gonçalo Lobo Pinheiro
Office rush A booming economy is pushing up office rents and capital values BY EMANUEL GRAÇA
nvestors have commercial property in their sights. As the government acts to curb speculation in the residential market, the market for offices is expected to continue to perform strongly, analysts say. “For the second half of 2011, we expect that Macau’s office market will be able to maintain its healthy growth track with the increasing number of
companies entering Macau, on the back of the opening of new gaming facilities and the office demand from the associated service providers,” says Jones Lang LaSalle’s managing director in Macau, Gregory Ku. “The government departments will be another major source of demand as they continue to look for office space for expansion and relocation.”
Office rents have risen by 7.9 percent this year by the end of June, after rising by 1.8 percent last year, according to Jones Lang La Salle. Mr Ku says it is possible they will rise 10 percent in 2011, driven by demand for grade A offices. Vacancy rates in the first half fell to 20 percent from 24 percent last year. Jones Lang LaSalle says there was strong take-up of space in all important
Annual growth of office market Capital value
Office vacancy rates
10% -10% -15%
Source: Jones Lang LaSalle
Source: Jones Lang LaSalle
Macau has few grade A office buildings. Jones Lang LaSalle rates only the Bank of China Tower, FIT Centre, AIA Tower, Landmark and No 39 Macau as grade A. The 39 Macau building was sold in May to overseas investors for HK$970 million.
The only big office project at the moment is on Nam Van Lake Lot A6. It is due to be completed next year. It will add 37,000 square metres of grade A office space to the market. Mr Ku said the additional supply should be adequate for the next two to three years.
Photo: Gonçalo Lobo Pinheiro
grade A office buildings in the first half. The tenants are from the banking, accounting, IT, gaming and public sectors. With the rise in rents, office property is becoming a good option for long-term investment. Unlike residential property, offices are not covered by the government’s measures to cool the real estate market. After increasing by 14.7 percent last year, capital values of office property this year had increased by 15 percent by the end of June. From January to May, 367 offices were sold in Macau, 83.5 percent more than in the corresponding period last year, according to the Statistics and Census Service. These transactions were together worth MOP829 million (US$103 million). In the first quarter the average transaction price per square metre of office space was MOP27,700, 2.3 percent more than in the fourth quarter last year.
Home prices to plateau J
ones Lang LaSalle expects residential property prices to hold steady in the second half of the year but that the number of transactions will decline in the short term. “On the back of the limited supply in the upcoming months, home prices are expected to continue to hold firm,” says Jeff Wong, Jones Lang LaSalle’s head of residential property in Macau. He says that in some areas, such as Taipa, there may be mild increases. “Despite the imposition of the special stamp duty, residential properties have been and will continue to be one of the most preferred investment vehicles among the Macau people, while owner-occupiers and long-term investors will continue to be the major source of demand,” Mr Wong says. He acknowledges that the government’s massive public housing programme may eventually curb prices. “The public housing AUGUST 2011
will highly affect units with building age over 20 years but for those new developments I don’t think they will have great impact.” Jones Lang LaSalle says capital values of high-end residential property this year had risen by 15.2 percent by the end of June. In the rest of the residential property market, the increase was 10.6 percent. Mr Wong expects rents to continue to rise as the amount of imported labour is expected to increase to work on infrastructure and gaming projects. “We expect rentals for high-end and mass residential properties to rise by 10 percent in the second half of 2011,” he says. The average rent for high-end residential space this year had risen by 11.9 percent by the end of June, according to Jones Lang La Salle. In the rest of the market, the increase was 12.2 percent.
Gaming | Billions Race
July was the second strongest month on record for the city’s casinos, while Galaxy continues to gain ground
he run of record revenue for Macau’s casinos has not lost steam since May’s MOP24.31 billion (US$3 billion) peak. Last month, the casinos recorded gross gaming revenue of MOP24.21 billion, the second highest return. Also significant was the year-onyear growth of gaming revenue: 48.4 percent, the second highest this year, according to data from the Gaming Inspection and Coordination Bureau.
Total casino gross gaming revenue for the first seven months of the year was up 45.2 percent year-on-year to MOP148.34 billion. That is already far beyond the MOP119.37 billion raked in during 2009. At current pace, casinos in Macau will likely surpass the MOP188.34 billion the industry posted last year by the end of this quarter. Preliminary information compiled by Macau Business reveals Galaxy Entertainment Group continues to see its
Gaming Results: Gross Revenue
market share expand since the opening of its massive Galaxy Macau resort in Cotai on May 15. From an April market share of 9 percentage points, Galaxy reached a market share of almost 19 percent in July and is now second in the gross gaming revenue ranking. Stanley Ho Hung Sun’s Sociedade de Jogos de Macau (SJM) maintained its lead last month, enjoying a 28 percent market share. SJM’s lead has been narrowing for the past two months.
In Million MOP (1HKD:1.03MOP)
20,000 18,000 16,000
14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Gaming Results: Market Share Per Operator 2010
2011 Jul *
VIP gaming spurt The regulator has also released a detailed breakdown of the city’s gaming revenue for the second quarter – the territory’s best ever. The data doesn’t provide a breakdown of numbers by casino operator but it does reveal VIP baccarat revenue rose 50 percent year-on-year in the second quarter to a record MOP48.54 billion. It accounted for 74 percent of all casino gross gaming revenue in that period. VIP baccarat grew faster than the overall industry. Casino gross gaming revenue reached MOP65.61 billion in the second quarter, a year-on-year increase of 46 percent. Mass-market baccarat revenue rose 39 percent year-on-year, to MOP11.51 billion, accounting for 18 percent of all casino gross gaming revenue in the second quarter of the year.
Revenue from slot machines rose 39 percent to MOP2.83 billion in the same period. Macau’s 15,098 slots accounted for 4.3 percentage points of total casino gross gaming revenue. The increase in VIP market share amid spectacular overall growth served as a reminder that attempts by the government – and some gaming operators
The increase in VIP market share amid spectacular overall growth served as a reminder that attempts by the government – and some gaming operators – to shift the focus towards mass-market clientele has so far had a mixed outcome
Jul 2011 * * estimated
(Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total)
Melco Crown had a 16 percent market share, followed by Wynn Macau, with a July market share around 15 percent. Sands China is ranked fifth, with a 14-percent market share. MGM China closed the list with its share hovering around 8 percent.
– to shift the focus towards mass-market clientele has so far had a mixed outcome. While mass-market customers have increased, the industry’s exposure to VIP volatility is as pronounced as ever. Sands China leads the other operators in the mass-market segment, says Union Gaming Research Macau. According to a research note covering the first two weeks of last month, Sands China led the market with a weighted share of customers of 34 percent, followed by SJM Holdings (33.3 percent), Galaxy Entertainment (17.5 percent), Wynn Macau (6.3 percent), MGM China (4.9 percent) and Melco Crown (4.1 percent). By property, the top three shares for mass market belonged to Venetian Macao on 21.5 percent, the combination of SJM’s Grand Lisboa and Lisboa with an 18.1 percent share and Sands Macao, 12.5 percent. Galaxy Macau came in fourth, with a 12 percent market share. “This compares to its share of table games of slightly less than 9 percent, suggesting that the recently opened property is garnering more than its fair share of customers,” the report said. AUGUST 2011
Gaming Gaming | Stock Watch
Gross revenue from different gaming activities 2Q 2011
65,900 65,605 48,539 11,512 2,828 1,137 643 300 152 75 71 53 52 48 14 29 36 8 1.6 n/a 0.4 n/a 107 81 87 18 2 0.001
58,835 58,521 42,570 10,558 2,723 1,067 663 303 188 65 67 46 45 46 18 30 25 8 2 n/a 0.3 n/a 116 76 89 33 1 0.0006
55,398 55,106 40,472 9,698 2,407 947 627 265 222 57 64 43 38 38 21 24 88 7 1 n/a 0.4 n/a 98 72 92 29 2 0.0005
47,723 47,384 34,047 8,884 2,236 884 528 255 154 52 52 52 38 33 20 23 34 8 1 n/a 0.4 n/a 107 85 134 11 1 0.0006
41,248 40,951 28,761 8,024 1,948 869 594 273 135 55 48 45 39 29 28 19 19 8 2 1 0.5 n/a 124 91 52 27 2 0.0002
36,476 36,161 24,976 7,259 1,820 779 509 262 257 45 42 42 37 27 28 13 26 7 1 1 0.5 n/a 102 110 80 21 1 0.001
32,036 31,781 21,742 6,536 1,616 723 473 253 161 53 39 49 45 22 36 12 23 6 2 2 0.4 n/a 70 111 60 12 1 0.000
25,619 25,408 16,287 5,898 1,533 638 432 223 125 40 32 39 42 23 37 8 20 5 2 2 0.4 n/a 71 60 68 11 1 0.001
13.1% 13.2% 15.2% 10.5% 7.0% 11.6% 16.7% 4.2% - 47.5% 22.2% 14.3% 7.1% 5.4% 7.4% 0.0% 46.2% - 26.9% 14.3% 100.0% 0.0% 0.0% n/a 21.6% - 17.3% - 35.0% 28.6% 100.0% - 80.0%
13.9% 13.8% 14.9% 11.1% 12.6% 7.7% 7.6% 3.6% 59.6% -15.1% 7.7% -14.3% -17.8% 22.7% -22.2% 8.3% 13.0% 16.7% -50.0% -50.0% 25.0% n/a 45.7% - 0.9% 33.3% 75.0% 0.0% 150.0%
25.0% 25.1% 33.5% 10.8% 5.4% 13.3% 9.5% 13.5% 28.8% 32.5% 21.9% 25.6% 8.4% - 4.3% - 2.7% 50.0% 15.0% 20.0% 0.0% 0.0% 0.0% n/a - 1.4% 85.0% - 11.8% 9.1% 0.0% - 60.0%
- 2.4% - 2.3% - 3.2% 1.6% 0.0% - 7.1% - 11.7% 28.2% - 16.7% - 14.9% 0.0% - 11.4% 137.1% 9.5% - 28.8% - 20.0% - 16.7% - 16.7% - 33.3% - 50.0% - 20.0% n/a - 21.1% 33.3% - 5.6% - 56.0% - 50.0% - 1100.0%
Macau Patacas (Million)
Total Games of Fortune (total) VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat Texas Holdem Poker Fantan Casino War 3-Card Poker Fish-Prawn-Crab Paikao Craps Lucky Wheel Makccarat Q Poker Tombola Mini Baccarat Horse Racing Greyhound Racing Sports Lottery - Football Sports Lottery - Basketball Chinese Lottery Instant Lottery
45,219 44,902 32,368 8,310 2,028 856 541 266 161 55 52 43 41 30 24 20 22 9 0.2 0.3 0.4 n/a 110 91 102 12 1 0.001 QoQ%
Total Games of Fortune VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat Texas Holdem Poker Fantan Casino War 3-Card Poker Fish-Prawn-Crab Paikao Craps Lucky Wheel Makccarat Q Poker Tombola Mini Baccarat Horse Racing Greyhound Racing Sports Lottery - Football Sports Lottery - Basketball Chinese Lottery Instant Lottery
12.0% 12.1% 14.0% 9.0% 3.9% 6.6% -3.0% -1.0% -19.1% 15.4% 6.0% 15.2% 15.6% 4.3% -22.2% -3.3% 44.0% 0.0% -20.0% n/a 0.3 n/a -7.8% 6.6% -2.2% -45.5% 100.0% 66.7%
Source: Gaming Inspection and Coordination Bureau AUGUST 2011
6.2% 6.2% 5.2% 8.9% 13.1% 12.7% 5.7% 14.3% -15.3% 14.0% 4.7% 7.0% 18.4% 21.1% -14.3% 25.0% -71.6% 14.3% 100.0% n/a -0.3 n/a 18.4% 5.6% -3.3% 13.8% -50.0% 20.0%
16.1% 16.3% 18.9% 9.2% 7.6% 7.1% 18.8% 3.9% 44.2% 9.6% 23.1% -17.3% 0.0% 15.2% 5.0% 4.3% 158.8% -12.5% 0.0% n/a 0.0 n/a - 8.4% -15.3% - 31.3% 163.6% 100.0% -16.7%
5.5% 5.5% 5.2% 6.9% 10.3% 3.3% -2.4% -4.1% -4.3% -5.5% 0.0% 20.9% -7.3% 10.0% -16.7% 15.0% 54.5% -11.1% 400.0% n/a 0.0% n/a -2.7% -6.6% 31.4% -8.3% 0.0% - 40.0%
9.6% 9.6% 12.5% 3.6% 4.1% -1.5% -8.9% -2.6% 19.3% 0.0% 8.3% -4.4% 5.1% 3.4% -14.3% 5.3% 15.8% 12.5% -90.0% -70.0% -20.0% n/a -11.3% 0.0% 96.2% -55.6% -50.0% 400.0%
In need of people Gaming sector needs at least more 1,000 workers, says workers association he Macau Gaming Industry Employees Association, the territory’s biggest casino workers union, says the sector needs at least 1,000 more workers as new properties are set to open in Cotai in the coming years. According to the association’s head, João Bosco Cheang Hong Lok, Macau casinos are already facing manpower shortages. Mr Cheang stressed the growing job-hopping trend among dealers and supervisors, a phenomena he said has recently increased by almost one third, with employees looking for promotions and better salaries at rival gaming operators.
Galaxy partners with UA Cinemas
VIP operator moves to Grand Lisboa
UA Cinemas and Galaxy Macau have announced a partnership for the operation of the property’s cinema complex. Scheduled to debut “later this year”, UA Galaxy Cinemas will occupy nearly 16,000 square metres, including a grand theatre with balcony boxes, four VIP houses and four traditional houses with over 1,000 theatre seats in total. All nine screens will be capable of showing 3D movies.
Junket operator Golden Way has moved to Grand Lisboa from Sands Macao. The company’s marketing manager, Kenneth Cheng, said the new location, in the city centre, was more convenient, according to Macau Post. In Grand Lisboa, the junket operator will run 21 VIP gaming tables, more than double of what it ran in Sands Macao.
Hong Kong punters spending more in Macau than at home Hong Kong people are betting more money in Macau casinos than at the neighbouring region’s Jockey Club. This is the first time such a situation has happened, according to the South China Morning Post, quoting a study by the Jockey Club. The study concluded that people from Hong Kong spent HK$22 billion in Macau’s casinos in 2009; that compares with the gross revenue of HK$21.8 billion received by the Jockey Club between July 2009 and June last year. The HK$22 billion amount was estimated from exit interviews at gambling venues, casinos’ annual reports, and investment bank reports on casinos.
Gaming | Stock Watch
Ahead of the game Gaming counters maintain their upward momentum, boosted by strong second quarter results for Sands China BY RAY CHAN
fter their price softness in June, Macau gaming stocks managed an appreciable rebound, outperforming the Hang Seng Index. The growth was on the back of yet more strong figures for gaming revenue and the positive outlook for the sector. By July 25 gaming stocks – with the exception of MGM China (2282.HK), listed relatively recently – had averaged a return of 75 percent since the beginning of this year, while the benchmark Hang Seng Index had remained in negative territory. The highlight of the month was Sands China’s (1928.HK) second-quarter results. The company doubled its net profit to US$267.4 million (MOP2.14 billion) from a year before, parent company Las Vegas Sands announced. Net revenue rose 16.3 percent to US$1.21 billion, while adjusted property earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 27.1 percent to US$382.1 million. Sands China also announced the immediate promotion of Edward Tracy to chief executive. Mr Tracy had been serving as president and chief operating officer for a year. Las Vegas Sands chief operating officer Mike Leven had been acting as Sands China’s chief executive since the company fired Steve Jacobs from the job in July last year. In a conference call, Mr Leven confirmed that the company’s development on parcel five in Cotai would open in the first quarter of next year. He said the company had struck agreements with
52-week high 52-week low
Galaxy Entertainment Group
Wynn Macau Ltd.
Sands China Ltd.
Melco Crown Entertainment
Melco International Develop.
MGM China Holdings Ltd. Amax Holdings Ltd.
Las Vegas Sands Corp.
MGM Resorts International
Hang Seng Index
SJM Holdings Ltd.
Success Universe Group Ltd.
Sands China announced the immediate promotion of Edward Tracy to CEO. Mr Tracy had been serving as president and chief operating officer for a year
Share price performance (HK$/US$)
Wynn Resorts Ltd. Genting Singapore PLC Penn National Gaming Inc. Dow Jones Indus. Avg. S&P 500 Index
75 two big hotel brands, which he did not identify, after a deal with Shangri-La Asia fell though in March. The parcel five development will have 1,800 rooms and suites, retailing areas, almost 28,000 square metres of meeting space and 11 food and beverage outlets, along with a casino and VIP gaming areas covering 9,850 square metres. “The opening of what we are calling Lot 6A, which will feature nearly 2,000 Sheraton-branded rooms, is on track for the third quarter of 2012,” Mr Leven added. Lot 6B is scheduled to open early in 2013, adding another 2,000 rooms to the complex.
Humdinger slinger Mr Leven said it was expected that there would be altogether up to about 530 gaming tables on parcels five and six – fewer than the 670 previously announced. He said Sands China had earmarked US$125 million for capital expenditure on its VIP business. This is for “a variety of projects, several of which will be completed ahead of Chinese New Year 2012,” he said.
Reading tealeaves T
he cliffhanger around the Macau Studio City development and a potential casino onsite has kept spectators in suspense. Last month, secretary for transport and public works Lau Si Io said the 2008 revised land grant for Studio City, that was not made public, does not allow for gaming facilities. Mr Lau emphasised instead the need for any development to have plenty of facilities for film production. His words failed to sway analysts. In a note to investors, Union Gaming called Mr Lau’s comments a “nuanced answer”, saying it was unlikely that Melco Crown Entertainment would have bought into Macau Studio City “without assurances from the Macau government (at the highest levels) that the project would be allowed to move forward with a casino and that table caps would not become an impediment”. Nevertheless, Melco Crown boss Lawrence Ho has become less sanguine than before. In June, he said Studio City would open with 300 to 400 gaming tables and 1,200 slot machines, assuming government approval. Last month, in a Melco Crown statement announcing the completion of its acquisition of 60 percent of Macau Studio City, the property envisaged was described as “a large scale-integrated gaming, retail and entertainment resort” but no details about the casino were mentioned. “Our plans include a variety of interactive, production-studio-derived attractions designed to captivate our target market and significantly expand Macau’s appeal as a multifaceted tourism destination,” the statement quoted Mr Ho as saying. “We look forward to working closely with the Macau government to bring this project to completion.”
Gaming | Stock Watch
Wynn Macau also posted positive results for the second quarter. The company’s adjusted property EBITDA reached US$314.3 million, 45.4 percent more than a year before. But Wynn Macau’s net profit dropped 10 percent to US$120.3 million because of a US$107 million charge reflecting the estimated present value of a charitable contribution made by Wynn Macau to the University of Macau Development Foundation. This consists of a US$25 million donation made in May and a commitment to make further donations of US$10 million every year from 2012 to 2022, making a total of US$135 million. In a conference call, Wynn Macau chairman and chief executive Steve Wynn said his company’s project for Cotai is “moving right along nicely and on schedule,” although the company is still waiting for government approval. Mr Wynn said the property will have 500 gaming tables, 1,500 rooms, restaurants, shops, and a theatre. “This project is going to justify the time it took to create it. It’s a humdinger,” he said.
Share price performance of Macau gaming sector (Rebased as HK$100) (HK$)
700 600 500 400 300 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011
Sands China Ltd. SJM Holdings Ltd. Wynn Macau Ltd. Melco International Development Galaxy Entertainment Group Ltd.
MGM China Holdings Ltd. Hang Seng Index
As of July 25, 2011
Share price performance of U.S. gaming sector (Rebased as US$100) (US$)
500 400 350 300
Still to announce their second quarter results are all the other gaming operators. Morgan Stanley expects the biggest quarterly growth in EBITDA to be achieved by Melco Crown Entertainment (NASDAQ:MPEL), seen rising 44 percent in the second quarter from the first because of a normalising VIP win rate, and Galaxy Entertainment (27:HK), seen rising 34 percent because of the opening of its new casino. MGM China is Union Gaming’s hot pick for Macau. In its maiden research note on the stock, Union Gaming said the company “is just beginning to hit
In a conference call, Wynn Macau chairman and chief executive Steve Wynn said his company’s project for Cotai is “moving right along nicely and on schedule” AUGUST 2011
250 200 150 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011
Las Vegas Sands Corp. Penn National Gaming Inc.
Wynn Resorts Ltd. Melco Crown Entertainment-ADR
its sweet spot and demonstrate the true potential of its existing asset, MGM Macau”. The note highlighted not only positive factors like the increase in VIP volume, but also the mass market and slot sides of the business. It also drew attention to EBITDA margin expansion due to greater operating efficiency and growing gaming volumes. “We think MGM Macau has the potential to break the US$600 million EBITDA level in 2011,” Union Gaming said. For now, MGM China is still waiting for a piece of land in Cotai. Chief executive Grant Bowie said the company had been working “intensively” on a blueprint for Cotai and hoped to get
MGM Resorts International S&P 500 Index
the government’s nod “soon”. Mr Bowie did not disclose much detail about the project, but said it would have aspects other than gaming. With outbound tourism from the mainland booming, the chairwoman of MGM China, Pansy Ho Chiu King, has said her company may invest in Taiwan. Ms Ho told Taiwan’s Want Daily newspaper: “The likelihood of investing in Taiwan is pretty high because now is a good time.” She was referring to Taiwan’s recent acceptance of mainland tourists travelling as individuals rather than in groups. “The investment plans will target hotels, as well as travel- and servicerelated businesses,” Ms Ho said.
As of July 25, 2011
Photo: Carmo Correia
Good as new Australia’s Transcity Group brings its slot machine maintenance and repair skills to Macau
s the number of slot machines in Macau’s casinos continues to grow, so too does the need for support and maintenance. Transcity Group from Melbourne, Australia, saw the opportunity and is expecting the volume of its repair business in Macau to soon overtake the amount of business it does in Australia. “For technical services, we see Macau within one to two years’ time surpassing our Australian operation, which is much bigger, because of the growth here,” says group managing director Geoffrey McDowell. Privately owned Transcity was established in 1996. It specialises in maintaining and repairing gaming machines. Last year, it established Transcity Asia, headquartered in Macau, with a branch office and a 400-square-metre workshop. “We went about setting up a professional environment workshop so that we would not only be able to service the
operators here but also to try to align ourselves with the manufacturers to possibly do warranty repair work for them in Asia, rather than [the manufacturers] having to send equipment back to their home bases, be it Australia, the United States or Europe,” Mr McDowell says. Transcity Asia has been working with the local casino operators, including Galaxy Entertainment Group, Wynn Macau, SJM Holdings, MGM China and Sands China. Mr McDowell says outsourcing the maintenance and repair of slot machines is a “cost-effective solution” for casinos. “Macau has limited resources available at a technical level,” he says. “It is a much easier proposition for all.”
Cautious approach One Transcity service that is in demand is maintaining and extending the lives of machines no longer covered by a warranty. The company offers other serv-
ices, such as replacing cathode-ray tube screens with liquid crystal displays. Although operating costs may be cheaper in Zhuhai, Transcity Asia is not considering moving across the border. “It is a grey legal area [and] we are dealing with a very heavily regulated industry,” Mr McDowell says. “The fact that we are based in Macau is what the operators want, what the suppliers want.” Transcity Asia is interested in other markets such as the Philippines, Malaysia and Singapore but expansion elsewhere is not an immediate goal. “We are being very cautious to not over-promise [and] not be able to deliver,” says Mr McDowell. In Australia, Transcity is also involved in manufacturing betting terminals for the horseracing industry. The company is aiming to get into this business in other countries and Macau could be the company’s service and manufacturing base for Asia. AUGUST 2011
Running on empty More pathological gamblers are seeking counselling and spiritual help when their luck runs out. Casino croupiers are among them BY ALEXANDRA LAGES ILLUSTRATIONS BY RUI RASQUINHO t is 10am but Mr Lam (not his real name) has had just one hour’s sleep. He is a dealer at a casino and this week he is on nightshift. The sleepy 32-year-old is counting down the days until he leaves the job. Working at the casino has been a nightmare for him but he has no choice. Only by doing so can he earn enough money to pay his gambling debts. Mr Lam is a pathological gambler but he keeps it a secret at work. If he speaks out, it might cost him his job. Every day, he works behind a gaming table handing out cards, pretending he can control his own gambling. Because of his dependence, he gambled away MOP2 million (US$250,000) and lost a girlfriend. Instead of big money, he won big troubles: an addiction, family problems, a MOP1-million debt and loan sharks at his heels. Mr Lam placed his first bet in a casino in 1997, “just for fun”, he told Macau Business. “Sometimes with friends, sometimes just by myself,” he says.
He was working as a chef in a Chinese restaurant. “Working there was very dull. Every day it was the same routine,” he recalls. After 10 years in the kitchen, he became a casino dealer in 2006. One year later, he realised he was addicted to gambling. “As a dealer, I started to feel that other gamblers’ bets were also my own, like I was the one that was winning the money. I was really immersed in the whole thing, even when I wasn’t gambling, just watching others to do it during my work.” The trouble is a gambler cannot always win. Paying off gambling debts became Mr Lam’s primary day-to-day concern. Even though he was making a good salary, it was never enough. The money would vanish as soon as he stepped onto a casino floor. Mr Lam spent one or two hours a day gambling. He would leave only when the money ran out. He would regularly lose MOP10,000 each session.
Mr Lam’s mother has managed to pay MOP1 million of his gambling debts for him. He still owes MOP1 million to loan sharks. “In those days, my relationship with my family was very bad. I was always losing lots of money. I lost one girlfriend because of that. Now, my mother’s emotional problems are getting better and she is not so depressed anymore,” Mr Lam says.
Change of tune Mr Ng (not his real name), 48, never thought he could spend so much money at one sitting. “I used to stay in the casino for four hours every day until I would lose it all,” he says. He started gambling 30 years ago, when he was 18 and Macau was not yet the world’s gaming capital. Between then and 2009, when he first sought help for his addiction, he lost MOP300,000. “When I started gambling, I became greedy. Every day I went to the maritime harbour to work as a porter. At night, when I got my salary, I would immediately go to
the casino to play sic bo,” he recalls. Mr Ng recognised his addiction when things at home went south. “I had no money to give to my wife and two sons. My income was very low, as well as my wife’s.” Although he realised he had a gambling disorder in 2007, Mr Lam only looked for help in mid-2009 – the same year Mr Ng did. They both turned to the Industrial Evangelistic Fellowship Rehabilitation Centre for Problem Gamblers. “I quit gambling for one year but I fell into temptation once,” Mr Lam says. He is quick to add that he has never taken chips from the casino to fund his addiction. “I’m also trying to change my lifestyle. Every day, after work, instead of going to the casino again to gamble, I work for the church and take part in
A spreading disease G
overnment agencies and charities have reported an increase in the number of problem and pathological gamblers in recent times. The Social Welfare Bureau’s Resilience Counselling Centre for Problem Gambling received 96 cases last year. That was 28 cases more than in 2009. The charitable Sheng Kung Hui Counselling Service for Problem Gamblers says it had 30 more new cases in the first five months of this year than in the corresponding period last year. The latest study by the University of Macau’s Institute of Commercial Gaming found that 2.8 percent of Macau residents aged between 15 and 64 could be categorized as probable pathological gamblers. In 2003, the figure was 1.7 percent. By 2007, it increased to 2.6 percent. The 2010-study says most gamblers struggling with a gaming addiction are not exclusively from Macau but also visitors from the mainland and Hong Kong. The director of the University of Macau’s Institute for the Study of Commercial Gaming, assistant professor Davis Fong Ka Chio, is confident the number of cases will fall in the long run as
awareness of responsible gaming increases. He says the rate of growth in pathological gambling has slowed since 2007. Bo Bernhard, the director of gambling research at the International Gaming Institute of the University of Nevada, Las Vegas, thinks Macau is still taking the first steps towards promoting responsible gaming. But he says the city should not look to Las Vegas for advice, since efforts there are also only in their early stages. “In the last five years, we started to devote some research and treatment money to problem gambling. So, in many ways, Las Vegas is actually behind some other gaming jurisdictions, like Australia and Canada,” Mr Bernhard says. He notes each jurisdiction should find solutions to problem gambling that suit the culture and size of the problem. Mr Bernhard says Macau’s recent move to increase the age for entering and working in casinos to 21 from 18 is in the right direction. “When we are 18 years old, the brain isn’t fully formed. It’s like a car without brakes. The braking system isn’t fully developed. From the problem gambling standpoint, it is a good move for Macau.”
church activities, such as cooking for my fellows,” he says. Mr Ng says he too, has fallen into temptation. “In the beginning of the rehab programme, I gambled a couple of times, because it was not easy to pass by the casino every day and deal with it.” Today, he is a building security guard working for the government. His wife controls the household income. “My wife is very tough. She has been through a lot of troubles to take care of the family. I hope my family can become united and love each other. But at least I never asked for money from anybody. I knew that if I went to the loan sharks I would be in trouble.” Mr Ng has turned to music to alleviate the withdrawal pains. “I learned how to play the guitar after I quit gambling. I compose lots of songs.”
Curiosity wanes The Macau Industrial Evangelistic Fellowship supports 200 problem and pathological gamblers. The Reverend Jimmy Tan Tien Kok says 10 people come to ask for help on an average week. Some are old faces. The rehabilitation centre has dealt
with people that have lost up to MOP5 million. However, Reverend Tan believes far worse cases pass undetected, especially among Hong Kong punters flocking to Macau’s casinos, who may have losses ranging up to MOP20 million. He says there are more addicted gamblers per head of population in Macau than there are in Hong Kong. The authorities and charities have to pay more attention to youths and women, he adds. The number of pathological gamblers in Macau continues to increase (see story in these pages). However, for the first time in four years, it looks as if efforts to encourage responsible gaming are paying off. The latest study by the University of Macau’s Institute for the Study of Commercial Gaming says the gaming participation rate, which measures the proportion of Macau residents that gamble, dropped to 50 percent last year from 65 percent in 2007. “This is a good sign for those who promote responsible gambling because it means that, in the near future, the problem gambling rate should decrease or stabilise,” says institute director assistant professor Davis Fong Ka Chio. “Macau people are adapting to casi-
nos as part of their daily lives. There is not so much curiosity when a new property opens.” He also says awareness of problem gambling is increasing. The institute started a responsible gaming project in 2007, together with the government, charities and the casino industry, and since then things seem to have improved. “Awareness of problem gambling and responsible gaming increased from 25 to 40 percent. That means that, with the promotion efforts in the past two years, four out of every 10 residents have heard about and understand the concepts of problem and responsible gaming,” he says.
Work and play Mr Lam, the casino dealer, was among those that had never heard about problem gambling. “I don’t think there are enough places in Macau able to provide assistance to problem gamblers,” he says. He found the Macau Industrial Evangelistic Fellowship on the Internet. He says he had never seen materials
Tracking disorders T
here are several ways of assessing whether someone has a gambling addiction. The “Diagnostic and Statistical Manual of Mental Disorders”, published by the American Psychiatric Association, includes a total of 10 criteria (see below). If a gambler meets three or four of them, they are classified as a “problem gambler”; if they meet more, they are a “pathological gambler”. The gambler: • Is preoccupied with gambling (e.g., preoccupied with reliving past gambling experiences, handicapping or planning the next venture or thinking of ways to get money with which to gamble); • Needs to gamble with increasing amounts of money in order to achieve the desired excitement; • Has repeated unsuccessful efforts to control, cut back or stop gambling; • Is restless or irritable when attempting to cut down or stop gambling; • Gambles as a way of escaping from problems or of relieving a dysphoric mood (e.g., feelings of helplessness, guilt, anxiety, depression); • After losing money gambling, often returns another day in order to get even (“chasing” one’s losses); • Lies to family members, therapist or others to conceal the extent of involvement with gambling; • Has committed illegal acts, such as forgery, fraud, theft, or embezzlement, in order to finance gambling; • Has jeopardized or lost a significant relationship, job or educational or career opportunity because of gambling; • Relies on others to provide money to relieve a desperate financial situation caused by gambling.
promoting awareness of problem gambling, even at his workplace – a casino. “I have many friends working at the casino that are also pathological gamblers. We live under lots of pressure, because we are too exposed and they don’t realise that. “We are not told how to release tension, so we just keep the problem to ourselves. If we talk about that, we will be kicked out of the job,” he says. Assistant professor Fong admits responsible gaming and promotion of awareness of problem gambling are still “at an initial stage”. He estimates that it will take up to three years for the gaming industry to understand how important it is to mount responsible gaming campaigns among its staff. Problem gambling destroys the employer-employee relationship, according to him. “They [the gaming companies] will understand that responsible gaming not only benefits society, but also the operators. This group of people [casino workers] is quite significant,” the scholar says.
Shuffle cheat Questions remain after police bust MOP24 million shuffling machine racket
BY MARTIN JOHN WILLIAMS*
acau police last month broke up a brazen mainland Chinese racket that installed card shuffling machines fitted with cameras, bilking at least one casino out of millions of patacas. Questions remain over the response by police and casinos to the scammers. Active since at least the beginning of the year, the gang allegedly swindled at least MOP24 million (US$3 million) on a single day in March from the casino, which police have not identified because enquiries are continuing, the Chinese-language Macao Daily News reported. That incident took place on March 28, more than two months after police were reportedly alerted to the presence of the gang’s substitute machines at the same casino. The scam came to light after a company that maintains the affected casino’s shuffling machines detected irregularities in two units in mid-January and informed police, the report said. The unidentified company, which provides maintenance services for several casinos in Macau, discovered another three “imitation” machines within two months, the report added. But it was not clarified if the machines were from the same casino, nor whether they were in fact imitations or brand machines that had been tampered with. The newspaper reported police as saying the gang may have targeted other casinos given the amount of time it was active. Seven hooded suspects aged 37 to 47 from Yunnan and Jilin provinces were shown to the media, together with the five imitation shuffling machines, cash, mobile phones and other seized items. Another local report said police are searching for at least three other suspects, and have not ruled out inside help from casino staff.
Two of the detained suspects are alleged to have been involved in a previous scam in Macau in 2005.
Hi-tech scam Police said the machines, which were fitted with small cameras and infrared transmitters, were swapped with real machines on baccarat tables while dealers were distracted. The alleged scammers would then indicate they had between MOP4 million and MOP5 million in cash and request the table for themselves, then break for a period of time while card order data was analysed remotely and relayed to them. Casino staff, thinking the suspects to be legitimate high rollers, would agree to the arrangement, the report said. It was not clear why video surveillance apparently failed to capture the swapping of machines. Macau police are yet to respond to GamblingCompliance questions on the name of the casino or its concessionaire, the brand and make of shuffling machine that was imitated or rigged, and if or when the police informed other casinos upon learning that a scam was in progress. A spokesman for Sands China Ltd declined to comment on whether any of the company’s three Macau casinos had been affected. Wynn Macau Ltd said in an emailed statement to GamblingCompliance that the “shuffler scam found on baccarat tables in Macau ... was not related to Wynn”. Wynn Macau declined to say if the police informed the company before last month’s press conference that suspect machines were in circulation. Macau’s four other concessionaires did not respond to requests for comment. * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS
Shopping for decoration Wynn Macau buys Chinese vases for Cotai property lthough Wynn Macau is still waiting for government approval to go ahead with its hotel-casino project in Cotai, the company is already investing in decorative elements. Wynn Macau paid US$12.8 million (MOP102 million) at a London auction last month for a set of four 18th-century Chinese porcelain vases. The vases were the most expensive of 50 lots at Christie’s International’s “Exceptional’’ sale in London, Bloomberg reported. Wynn Macau also acquired at the action a Chinoiserie tapestry for US$270,000. “We are delighted to be able to return these extraordinary examples of Chinese culture to the People’s Republic of China and place them on display in the city of Macau,” said Steve Wynn, chairman and chief executive officer of Wynn Macau.
Adelson to be inducted into Gaming Hall of Fame The American Gaming Association (AGA) announced it will induct Sands China chairman Sheldon Adelson into the AGA Gaming Hall of Fame. He will be officially inducted on November 1, in Las Vegas. “Sheldon Adelson truly is one of our industry’s greatest innovators. His vision has expanded and transformed the gaming experience not only in Las Vegas, but around the world,” said Frank J. Fahrenkopf, Jr., president and chief executive officer of the AGA. “Without him, the gaming industry that our customers have come to expect would not exist.”
Ponte 16 still waiting Hoffman Ma Ho Man, the deputy chief executive of Ponte 16, says he is still waiting for government approval to go ahead with a 37,000-square-metre retail complex at the property for about HK$1.07 billion. “We are now in talks with some retail operators in Japan and Hong Kong and Taiwan,” Mr Ma told The Standard. “Construction work and preservation work need a lot more fine-tuning than just opening a new shopping mall. We are hoping to get the nod within this year,” Mr Ma added. Meanwhile, he said that Ponte 16 would host an auction of oriental memorabilia in October, including notes about martial arts written by Bruce Lee and props from the movie “The Last Emperor”.
Terry Lanni passes away Former MGM Mirage chief executive officer Terry Lanni passed away last month. Mr Lanni, who stepped down in 2008 as chief executive officer of the company now known as MGM Resorts International, died at age 68, after a two-year battle with cancer. He oversaw MGM’s expansion to Macau, in a joint-venture with businesswoman Pansy Ho Chiu King.
Wheel of fortune Japan keeps its gaming bill afloat, while legislators and analysts debate the usefulness of a casino project to help economic regeneration in the tsunami-ravaged area of Sendai BY YURIKO NAGANO*
apanese lawmakers have been keeping up the momentum to legalise casinos, despite the devastating earthquake and tsunami earlier this year. But mounting challenges lie ahead. Power shortages and resolving political instability are top priorities for Japan, as it struggles to recover from a devastating 9.0-magnitude earthquake, tsunami and crippled nuclear power plant in Fukushima. Any chance, therefore, of a casino bill being submitted to the parliament by
the end of the year is unlikely, according to experts. But that does not mean interest for casino construction in Japan has waned. The casino bill has been kept alive by a group of 142 politicians known as the Committee of Lawmakers for the Promotion of International Tourism that includes various politicians from the ruling Democratic Party of Japan and the Liberal Democratic Party of Japan. Dubbed the “Kajino Giren” by the press, the one-year-old committee has recently renamed itself the IR Giren or
the “integrated resort committee”. In February, the committee picked up prominent members, all former prime ministers: Yukio Hatoyama, Taro Aso, Shinzo Abe and Tsutomu Hata. Unfazed by the unstable nuclear situation, members have held several official meetings since March 11. “If we’re able to get the casino bill ready, we would like to submit the bill during the fall extraordinary parliamentary session but we’re not sure the bill will be ready by that time,” said Toshihiko Satake, political aide to
87 wIssei Koga, chairman of the IR Giren committee. Mr Satake said the bill was being tweaked after receiving feedback from government ministries and agencies. The bill will eventually be circulated within each members’ political parties for approval. “We need to take this step before submitting the bill to the Japanese Diet [Japan’s parliament],” said Mr Satake. “There are still many questions on how to allow gambling to be privatised and how to control the industry,” he added.
Professor Yutaka Morohoshi said if a casino were to be built in the northeastern area of Japan it would need to be some distance away from Fukushima to be a real magnet for visitors
A topic that has been abuzz is the construction of a casino in the quake-stricken area to help the region in its recovery efforts. Yutaka Morohoshi, professor at J.F. Oberlin University in Tokyo, said if a casino were to be built in the northeastern area of Japan it would need to be some distance away from Fukushima to be a real magnet for visitors. “This may sound a bit radical but if we want to build in that area, constructing a casino near a top Japanese travel destination that has recently been given world heritage status — like Hiraizumi, the shrine — would work well to attract more tourism because it won’t be just the casino people will be coming for,” said Mr Morohoshi. Contrary to Mr Morohoshi’s views, a proposal to build a casino about 94 km away from the stricken Fukushima Daiichi nuclear power plant in the city of Sendai, Miyagi prefecture, does exist. However, Mr Satake said any talk of Sendai being considered as a stronger candidate compared to other Japanese cities was untrue. “Building a casino in Sendai is merely a suggestion by one of the members” of the IR Giren committee, said Mr Satake. “It’s nothing more than that. There was a press report that exaggerated the suggestion.” Experts have suggested Sendai is getting an extra push from advocates of that region. “Some organisations are seeing disaster recovery as an opportunity to develop a casino in that area,” said Kazuaki Sasaki, assistant professor at the Nihon University College of Economics. In June, Japan’s PFI PPP Association submitted to the Ministry of Land,
Infrastructure, Transport and Tourism a plan to build an integrated resort near Sendai Airport that would include a hotel, spa facility, aquarium and casino. “The plan is to develop the area east of the airport,” said a representative from the association, which represents companies involved in public-private projects. Details of the plan were sketchy at press time. Like Mr Morohoshi, Mr Sasaki rates investment efficiency to develop a casino in Sendai as “low” because of the higher levels of radioactive material in the environment compared to the rest of Japan. “If a casino is built, it’ll probably still be in a metropolitan area — be it Tokyo or Osaka,” said Mr Sasaki.
Misconceptions “It’s very unclear if a bill in any form will be submitted any time soon because the political situation is rocky and because all efforts have been concentrated on disaster recovery,” says Tatsuya Chujo, casino marketing researcher at the Osaka University of Commerce. “The public seems to have a misconception that casinos may be linked to yakuza [organised crime gangs] and beliefs such as those need to be sorted out and dealt with first.” Mr Sasaki also feels the casino bill will only have a chance when the Fukushima Daiichi reactors are no longer critical and the political situation is resolved. “When the government is in a situation to debate on how to raise all the reconstruction money that Japan needs for rebuilding, it’s likely the public will engage in the discussion of a sales tax increase and it may be that the public will not agree to it,” said Mr Sasaki. “Instead, the Japanese public may agree, as one alternative, to have casinos built and have taxes on casinos generate the recovery funds. “A casino bill being passed in 2012 might be a possibility but one still with a question mark. I can say with almost certainty that the countdown for casinos in Japan has already begun.” Meanwhile, some local trade publications have reported that shares of Japanese public companies such as Oizumi Corp. and Sega Sammy Holdings, which would likely benefit should casinos become a reality, were on the rise. * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS AUGUST 2011
Pendulum swings back Victory for supporters of Thaksin Shinawatra in last month’s general election in Thailand renews speculation about casino legalisation BY MUHAMMAD COHEN
hailand’s general election last month may put casinos back onto the political agenda. But do not bet on anything happening quickly. The Pheu Thai party won a landslide victory in the July 3 vote under the leadership of Yingluck Shinawatra, the sister of former Prime Minister Thaksin Shinawatra. Before he was ousted in a 2006 coup, Mr Thaksin supported casino legalisation in Thailand, laying the groundwork for a national referendum on the controversial idea. Euro-Asia Consulting president and
chief executive Stephen Karoul conducted feasibility studies on casino legalisation for Mr Thaksin’s government and thought that Thailand could open a casino within five years. Mr Karoul believes that with the outcome of the election, the timetable could be “the same as before, with some initial research being done ahead of time to use as the basis for any future proposal”. He adds: “I am sure that Macau and Singapore will be also be used as models of success.” However, the five years since the ousting of Mr Thaksin have been fraught with
political trauma for Thailand, including anti-Thaksin “Yellow Shirt” demonstrators closing Bangkok’s main airport in 2008 and pro-Thaksin “Red Shirts” occupying the capital’s downtown shopping hub for two months last year, occasioning violence that killed 91 people. Though the election results look conclusive, sources tell Macau Business that the numbers mask deep political rifts. “Thailand remains in a tender position after these elections,” HSBC regional senior gaming and consumer analyst Sean Monaghan says. “The new
89 Casino operators have long hoped to enter Thailand’s market of 67 million residents and 15 million tourists a year. Advocates of casinos note that half of Thais are believed to gamble illegally. Thai players pack casinos along the country’s borders with Laos and Cambodia. Casino supporters also argue that legalisation would boost growth in Thailand’s tourism industry and its wider economy. Thailand’s powerful Buddhist establishment opposes casinos and all forms of gambling. Religious groups even oppose the listing of makers of alcoholic beverages on the stock exchange. Opponents of legalisation also contend it would exacerbate social problems associated with gambling. They suggest that finding political common ground, rather than tackling the divisive casino issue, is the key to growth for tourism and the economy. “Thailand needs stability to drive tourism,” Mr Monaghan says. But he also believes that the way forward for casino legalisation is building political and social stability. “Then devise a plan that is supported by the majority of society,” he advises. Union Gaming believes that the new government will conduct a national referendum on casino legalisation, as Mr Thaksin’s government favoured. In a postelection research report, Union Gaming analysts Bill Lerner, Grant Govertsen and Dovydas Pelegrimas pegged NagaCorp as a likely winner of a Thai gaming licence if legalisation occurs.
government may want to build on its mandate and create a period of stability before polarising policies such as casinos are promoted.” He estimates it will be five years before any moves begin toward casino legalisation.
Polar opposites Thailand, one of only three countries in the 10-member Association of Southeast Asian Nations without legal casinos, has been considering legalisation for decades. But the idea sharply divided Thais even before their politics became polarised.
Hong Kong-listed NagaCorp operates NagaWorld, the only licensed casino in the Cambodian capital, Phnom Penh, with about 125 gaming tables and more than 1,000 slot machines. NagaCorp has a 70year gaming license, with a 40-year exclusive in Phnom Penh until 2035. Last year, NagaCorp’s revenue grew by 28 percent to US$150.5 million (MOP1.2 billion), and its net profit grew by 73 percent to US$44.1 million after the company reoriented its strategy to attract mass market players. Union Gaming says links between Mr Thaksin and NagaCorp chief executive Chen Lip Keong, both advisers to the Cambodian government, give the company the inside track in the race to get a licence. Its report also suggests that supporting NagaCorp in Thailand could help ease the tension in relations between Thailand and Cambodia.
NagaCorp chairman Timothy McNally would neither confirm nor deny the Union Gaming report, saying: “The issue of casino gaming for Thailand is probably a bit premature.” In response to Macau Business questions about NagaCorp’s interest in Thailand, Mr McNally said: “We are always open to evaluate new opportunities in Indochina, including Thailand, if the situation presents itself. We are currently the best gaming and entertainment operator within Indochina and desire to continue as the best in our region. “We bring a good deal of experience and business knowledge regarding the Indochina market, so, yes, we will assess opportunities presented based upon the potential for business development and favourable conditions to operate.”
Looking south For Euro-Asia Consulting’s Mr Karoul, “NagaCorp is a good operator and could be a good fit for Thailand since they have focused their efforts on the secondary gaming markets in Southeast Asia”. He adds that the company also understands the people and the culture. Some observers rate NagaCorp as a poor choice for Thailand. They suggest the company lacks international name recognition and experience in developing a world-class integrated resort. That type of development could be very successful in Thailand, given the kingdom’s tourist numbers and infrastructure. An integrated resort, oriented toward supporting and expanding international tourism by creating new attractions, is also more likely to win approval in a national referendum. “I think countries in Southeast Asia that are contemplating [gaming] industry development should really look at the Singapore model, which appears to be among the most successful casino legalisations ever in the world,” HSBC’s Mr Monaghan says. Singapore’s government created broad criteria for its casino resort development sites, invited proposals from prospective developers and based its choice of the winners on their plans for the resort, on their records and on their levels of financial commitment. “A similar process will likely have the best opportunity for identifying the best candidates for Thailand,” Mr Monaghan believes. But first, Thais have to decide if they are ready for casino legalisation. AUGUST 2011
Genting’s Resorts World Sentosa, in Singapore
Green light Genting Vietnam venture picks up pace with land deal BY MARTIN JOHN WILLIAMS*
enting Group is moving closer to adding Vietnam to its list of global gambling interests after receiving approval to reclaim land for a US$4 billion (MOP32 billion) gaming resort in the central province of Quang Nam, according to Vietnamese media and a partner company source. The Vietnam Investment Review reported last month that Genting and local real estate developer VinaCapital Group received permission from the Quang Nam People’s Committee to develop 1,555 hectares in the district of Thang Binh, part of the Chu Lai Open Economic Zone. The Hoi An South project, which reportedly received an investment license in December, will include gambling facilities, five-star hotels, villas and 2,500 houses for rent or sale, the report said. The zone is serviced by Chu Lai International Airport and the port of Ky Ha and is located some 70 kilometres south of Danang, just south of the UNESCO-listed heritage city of Hoi An. The zone is a vanguard central government initiative targeting foreign investment, featuring 38 operational projects, many more in development and total registered capital of US$1.5 billion, according to an April report in Vietnam Business News. But the Vietnam Investment Review said the joint venture must “reclaim” the site within 12 months or the deal will be terminated, citing Nguyen Van Lua, deputy director of the zone’s management authority. This was not because zone management doubted the financial health of the joint venture, which has already transferred US$15 million to the authorities, but because “the project occupies a large area [and] slow implementation will raise questions among locals,” the review quoted Mr Lua as saying. It was not immediately clear what criteria would be used to assess timely reclaiming of the land. Le Minh Hoang, dep-
uty general director for VinaCapital affiliate Hoian South Development Ltd, told GamblingCompliance that only 300 of the 1,555 hectares are expected to be ready for development by the end of the year. He also confirmed the other details of the review report. Corrinne Ling, the Kuala Lumpur-based vice president of corporate affairs for Genting Bhd, said she could not comment on the situation in Vietnam.
A good pairing On December 21, 2010, Genting Malaysia Bhd informed the Malaysian exchange that it was exploring the Vietnamese market in conjunction with an unnamed partner. The statement offered no other details. Nguyen Minh Duc, a partner with the firm DNAS Lawyers in Hanoi, said the Hoi An South project is one of the biggest on the table in central Vietnam. “VinaCapital and Genting are a good combination to develop the real estate and resort sides and also to win [a] casino licence.” Grant Govertsen of Union Gaming Research Macau says it is “tough to speculate on the kind of cash flow [the project] might ultimately generate”. “However, given its location (not far from Hainan province, China), I suspect that the resort would target a greater proportion of mainland Chinese customers relative to the proportion of Chinese customers at [Singapore’s] Resorts World Sentosa or Genting Highlands [in Malaysia],” he said. A solid footing in Vietnam would mark the latest international expansion in gaming interests for Genting, which in recent months has moved on the U.S. market in New York, Florida and other states, as well as in the United Kingdom. Genting is also developing a gaming resort project at Manila Bay’s Entertainment City. * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS
91 DAVID GREEN GAMING CONSULTANT, NEWPAGE CONSULTING
More is not better THERE ARE FEW BENEFITS FOR THE WHOLE SOCIETY, IF ANY, FROM THE RELEASE OF TONS OF GRANULAR STATISTICS ON THE PERFORMANCE OF THE INDUSTRY BY GAMING REGULATORS
y attention was recently drawn to an article that appeared in the May edition of a rival gaming publication. It argues that the Nevada Gaming Control Board’s release of comprehensive statistics on the performance of the industry there is something that should be emulated elsewhere, apparently in the interests of investors and the public being better informed about gaming. Indeed, the author concluded that:
particularly in relation to taxation and, in Macau’s case, caps, smoking and age restrictions – of the host government is and how that might be impacted in the future by changes in the political landscape. They are concerned with understanding the possible impact of regional competition on the host market. None of this is information that can be gleaned from industry statistics, no matter how finely sliced and diced they may be.
“Nevada gaming regulators grasped this [transparency] principle long ago, and its comprehensive financial reports, freely available to the public, are a standard to which developing jurisdictions should aspire.”
Putting aside my initial outrage at the implicit characterization of the world’s largest lawful gaming jurisdiction, Macau, as a developing jurisdiction, I was put to thinking about what the role of a gaming industry regulator is. It is multifaceted; not only is it about tax and revenue assurance and the elimination of criminal influence from industry participants, but it is also about consumer protection – ensuring the fairness of games, competition amongst licensed operators and the minimization of harm to players. Overlaid on this is the imperative that regulators recognize the cost imposition they represent to those they regulate, and that they too must deliver value for money. In most jurisdictions, other than those few where the gaming industry pays the costs of its own regulation, this means that choices need to be made as to how a regulator’s resources are best deployed, taking account of risk profiling, policy drivers and host community’s expectations.
Quality, not quantity
While anyone who researches the gaming industry has benefited from the plethora of reports and analysis provided by the Nevada Gaming Control Board, is it something that should be an aspirational goal of “developing” jurisdictions? Let’s assume (unrealistically) that regulators’ budgets do not constrain their ability to replicate the coverage evident in the Gaming Control Board material. Is value really added by having a welter of historical data produced by a regulator publicly available for analysis? The fundamental underlying precept is that basically raw historical data can better educate the public and inform future industry investment and regulatory decisions. The analogy of driving a truck using only the rear view mirror comes to mind: you know where you have been, but have no idea whether the road ahead is safe to travel. Scorekeeping might assist and encourage chartists, academics and trend analysts to refine their projections, but is that a benefit worth its cost to the investment community and the public at large? The “big” questions that investors want to understand have nothing to do with granular data. They are interested in the quality of corporate governance of operators, most of whom these days are publicly listed and traded companies. Investors want to know who will succeed current management, given the industry is dominated by a handful of larger-than-life personalities, many of whom are unlikely to drive their organisations beyond this decade. That resonates particularly in Macau, because the first of the existing concessions is scheduled to expire in 2020. Investors also want to know what the policy agenda –
To some extent, granular industry information can be gleaned from mandatory reports and filings undertaken with corporate regulators. While not always user-friendly, these are the bread and butter of financial analysts, who earn their keep by understanding what they have seen in the rear view mirror and then concentrating on the road ahead. It is the analysts who drive both “buy” and “sell” decisions in the industry, as they establish price targets and use their predictive models to pick likely winners and losers. They have access to earnings calls, to management, to investors and to lenders. The importance of the latter cannot be overstated; several casino groups have driven over a precipice in the United States in the past three years, while others have had near-death experiences. None of this would be of great interest to a casino regulator, unless a covenant breach triggered lender step-in rights (which cannot happen in Macau, where the government has the right to custody of assets ahead of any lender), the entity failed to pay its gaming tax, or there was evidence of behaviour, criminal or otherwise, which might suggest that the entity and/or its close associates, is not suitable to continue its participation in the industry. So, what of the public, and its information about the industry? The public at large is unlikely to be interested in granular information, at the level of individual enterprises. Those who are, probably fall into the investor class, and can obtain much of the information they might need from professionals and corporate regulators. What the public appears interested in is high-level data, such as is published on the Gaming Inspection and Coordination Bureau website and in the press. Unlike Nevada, which is a collection of counties, each with its own constituency and competitive spirit, Macau is a homogeneous jurisdiction, with a small number of operators and a relatively small number of casino properties. The only geography worth analyzing in terms of dynamics is the peninsula versus the Cotai Strip; no one living in or visiting Macau is more than 10 km from either. I suspect that most local people who can read, or have access to a television, are well aware of the size of the industry in Macau, who the operators are, and what is coming next, in terms of new properties. Indeed, due to the IPO activity amongst Macau operators, many will be shareholders. I am not persuaded that it is an essential part of the role of gaming regulators to disseminate highly detailed information about the industry. Someone bears the cost of them doing so and in all likelihood there are multiple parties duplicating the capture and analysis of such data. Since the industry is highly globalised, and Nevada is but one jurisdiction of many with a stake in the industry, is providing such granular data really “a standard to which developing jurisdictions should aspire”? AUGUST 2011
Time and taste
Cigar brand Davidoff is focusing on markets in Greater China in the hope of catching the boom in consumption BY LUCIANA LEITÃO
onsumption of premium luxury goods is on the rise in the mainland and cigar brand Davidoff is hopeful it can dive deeper into the market. Chief executive of the Swissbased Oettinger Davidoff Group, HansKristian Hoejsgaard, who took the job in June, says Greater China is the “fastest growing market” for the brand. Macau’s strategic location means the company is looking to increase revenues here. Although Hong Kong remains by far the biggest market for Davidoff cigars in the region, Macau is the fastest growing city in the Greater China area. “Outside the mainland, became our third largest market [in Asia]
Photo: Carmo Correia
last year,” Mr Hoejsgaard says. With its new cigar lounge at Galaxy Macau, Davidoff has four stores in Macau. All are located inside hotel-casinos, close to the gaming floor. “We have to make sure that our brand is where our potential customer is,” he says. Globally, the United States is the world’s biggest market for handmade cigars and not surprisingly the company’s biggest client, accounting for about one-third of its sales. “China accounts for 15 percent on the hand-rolled cigars but for accessories, such as humidors and others, it’s 50 percent,” Mr Hoejsgaard notes. The company says that this is an
Hans-Kristian Hoejsgaard AUGUST 2011
indication of growing demand from a maturing market. The demand for accessories is much higher than in developed markets where smokers already own a humidor, lighters, cigar boxes and cutters.
‘Lifestyle driven’ In an industry tied down by health concerns and among the most heavily regulated on Earth, Mr Hoejsgaard says Davidoff is continuing to grow. He explains it is the lifestyle that attracts, not the consumption of tobacco. Davidoff’s strong brand name appears to be an asset in the mainland, where there are vast numbers of firsttime consumers, unfamiliar with luxury habits. In turn, that makes the mainland and Macau priorities for the Oettinger Davidoff Group to market its Davidoff, Camacho, Avo and Cusano cigars to. “I think when people start to get into a new category [of products], it’s very typical that they feel safe by choosing a brand they already know. The beauty of a brand is that it guarantees quality and safety,” Mr Hoejsgaard says. Davidoff’s global chain of outlets combined with duty-free sales to the growing numbers of mainland tourists that can afford overseas travel, have also helped boost brand awareness and confidence, he explains. “When you walk in Paris, New York, you see the same thing you see at home.” Another important feature for Davidoff’s success is the adjustment of products to different markets. “Americans like sweeter wines, so, surprise, surprise, they also want lighter and sweeter cigars. That’s why I see bigger similarities between the Asian and U.S. markets than with the European one,” he says. Celebrating the centenary of its first shop, in Geneva, Davidoff has launched a special anniversary cigar edition this year, to be available this month worldwide. The company is preparing another special edition, to hit the shops in October.
ISSUE 3 ON SALE
August Date: Event: Venue:
20 th - 22nd
Venue: Organiser: Address: Tel: Website: E-mail:
MIC, Milan, Italy Clarion Gaming Earls Court Exhibition Centre, London SW5 9TA, UK (44) 0 20 7370 8579 www.eigexpo.com email@example.com
Date: Event: Venue: Organiser: Address:
26th - 27th
21st - 23rd
Australasian Gaming Expo
Sydney Convention and Exhibition Centre, Darling Harbour, NSW, Australia Organiser: Gaming Technologies Association Address: Level 34, 50 Bridge Street, Sydney, NSW 2000 Australia Phone: (612) 82160931 Fax: (612) 82160701 Website: www.austgamingexpo.com E-mail: firstname.lastname@example.org
22nd - 24th
Gaming, Racing & Wagering Australia
European iGaming Congress and Expo
2nd Annual Green Tech Asia
GTower Hotel, Kuala Lumpur, Malaysia Comfori E-02-03, East Wing, Subang Square Business Centre, Jalan SS15/4G, 47500 Subang Jaya, Selangor, Malaysia (603) 5621 3630 (603) 5638 8248 www.comfori.com/greentech/ email@example.com
Venue: Sydney Convention and Exhibition Centre, Australia Organiser: Beacon Events Address: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong Tel: (852) 2531 6107 Fax: (852) 2586 1999 Website: www.beaconevents.com E-mail: cs@BeaconEvents.com
Tel: Fax: Website: E-mail:
Date: Event: Venue:
Venue: Vegas, NV, US Organiser: IAGA Address: 1930 Village Center Circle, #3, Box 501, Las Vegas, Nevada 89134 Tel: (1) 702 355.4512 Fax: (1) 702 543.6159 Website: www.theiaga.org E-mail: firstname.lastname@example.org
25th - 27th
GTI Asia China Expo
Poly World Trade Expo Center, Pazhou, Guangzhou, Guangdong, China Organiser: Haw Ji Co., Ltd Address: 2F, No. 17, PaoChing St., SongShan District, Taipei City 10585, Taiwan Tel: (886) 227607407~10 Fax: (886) 2 27420522 Website: www.gtiexpo.com.tw/cnen E-mail: email@example.com
September Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
5th Delta Inter Chamber Event
TBA Macau Business | Delta Bridges 9/F Flat H, Block C, Nam Fong Ind. Bld., 679 Av. Dr. Francisco Vieira Machado - Macau (853) 28331258 (853) 28331487 deltainterchamber.com firstname.lastname@example.org
30 th September â€“ 2nd October
International Association of Gaming Advisors Gaming Conference
October Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
3rd - 6th
G2E Las Vegas
Sands Expo & Convention Center, Las Vegas AGA | Reed Expo 1299 Pennsylvania Ave., NW, Suite 1175, Washington, D.C. 20004, USA (1) 888 314 1378 (1) 203 840 9626 www.g2e.com email@example.com
12th - 14th
Fiera di Roma, Rome, Italy Rimini Fiera Via emilia, 155 - 47921 - Rimini (RN), Italy (39) 0541 744111 (39) 0541 744200 en.enada.it firstname.lastname@example.org
95 If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: email@example.com. In the subject bar, type in â€œList me as an eventâ€?. TBA : To be advised |
Date: Event: Venue:
23rd - 27th
International Association of Gaming Regulators Conference
Cape Town International Convention Centre, South Africa, Organiser: IAGR Address: State Gaming Control Board, 555 East Washington Avenue, Las Vegas, NV 89101 Fax: (1) 702 486 2045 Website: www.iagr.org E-mail: firstname.lastname@example.org
November Date: Event:
4th China (Zhongshan) International Games & Amusement Fair
9 th - 10 th
Asian Casino and Gaming Congress
Venue: Marina Bay Sands, Singapore Organiser: Beacon Events Address: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong Tel: (852) 2531 6107 Fax: (852) 2586 1999 Website: www.beaconevents.com E-mail: cs@BeaconEvents.com
Asian Sports and Welfare Lottery Summit
Venue: Marina Bay Sands, Singapore Organiser: Beacon Events Address: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong Tel: (852) 2531 6107 Fax: (852) 2586 1999 Website: www.beaconevents.com E-mail: cs@BeaconEvents.com
10 th - 11th
Venue: Organiser: Address: Tel: Fax: Website: E-mail:
TBA American Conference Institute 45 West 25th Street, 11th Floor, New York, NY 10010 (1) 212 352-3220 (1) 212 352-3231 www.americanconference.com email@example.com
Date: Event: Venue: Organiser: Address:
14th - 16th
3rd - 5th
Complex Hall of Zhongshan Expo Center, Zhongshan, China Organiser: China Zhongshan Municipal Government/ Guangzhou Grandeur Address: 2nd Floor, No.318 Chebei Road, Guangzhou, 510660, China Tel: (86) 20 2210 6418 Fax: (86) 20 82579220 Website: www.zsgaf.com E-mail: firstname.lastname@example.org
: A Macau Business partner event
Tel: Fax: Website: E-mail:
C5 International Gaming Law Summit - US
2nd Annual Integrated Resorts
Resorts World Sentosa, Singapore marcus evans CP21, Suite 2101, Level 21, Central Plaza, 34, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia (603) 2723 6736 (603) 2723 6699 www.integratedresorts-lse.com email@example.com
96 JASWANT SINGH FORMER FINANCE, FOREIGN, AND DEFENCE MINISTER OF INDIA
Asia’s BRICs hit the wall INDIA AND CHINA BOTH NEED A RENEWED COMMITMENT TO STRUCTURAL REFORM TO SUSTAIN THEIR ECONOMIC GROWTH ndia’s democratic credentials do not impress Francis Fukuyama, who two decades ago prophesied the “end of history,” as being a catalyst for the country’s economic growth. Mr Fukuyama finds excessive “patronage politics and fractiousness” in India – flaws that stand in stark contrast to China’s speedier, though not necessarily cleaner, political system. The reality is, however, somewhat different. China’s local governments have been accumulating mountains of debt to fund their construction binges, raising serious concerns about potential defaults. Premier Wen Jiabao himself recognizes the urgent need to address the country’s inequitable growth, calling for means to be found to “share prosperity evenly,” and thus to reduce the widening gaps between “rich and poor, cities and countryside.” The economist Nouriel Roubini has predicted that China’s economy will most likely slow sometime between 2013 and 2015, the point at which its fixed-asset investments of nearly 50 percent of GDP will demand social and monetary returns. Until now, says Mr Roubini, China’s export-led growth has depended on “making things that the rest of the world wants, at a price that no other country can match,” a consequence of cheap labour and economies of scale. This cost advantage is diminishing fast. India is facing severe difficulties as well, but of a different nature. For example, outward investment by Indian companies is expanding fast. Some believe that this is a natural development for a rising power, but critics view outward investment as a reflection of the scarcity of opportunities at home. Rising interest rates, high inflation and severe policy gridlock amid a spate of government corruption scandals have impeded both foreign and domestic investment in India, thus slowing economic growth to a level that is below its potential. An unpredictable regulatory environment, inadequate infrastructure, and a sluggish, monsoon-dependent agricultural sector are adding to the economy’s problems.
Inflation alert Clearly, economic turbulence is roiling both of Asia’s major economies, the giants of the so-called BRICs (Brazil, Russia, India, and China). Consider inflation. On July 6, the People’s Bank of China raised its benchmark interest rate for the fifth time since October 2010. This has generated apprehension about property markets, and fear that local governments could default on part of their staggering debt of US$1.65 trillion (MOP13.2 trillion). In India, the government’s failure to contain rising prices, pursue structural economic reforms vigorously, attract foreign direct investment, advance infrastructure development, manage expenditure, and avoid liquidity crunches underscores the many challenges it faces. Moreover, a continued standoff between the government and the opposition has weakened political effectiveness, further undermining India’s growth prospects. Indeed, India’s core challenge remains political. With AUGUST 2011
food prices rising sharply, the poor are being hit the hardest, fuelling greater poverty, inequality, and resentment. But the same is true in China: anti-inflation protests are now roiling both countries, owing mainly to rising energy, food, and rawmaterial prices, with food accounting for one-third of household spending in China and around 45 percent in India. The fear now in both countries is that inflation shocks could turn into a self-reinforcing price spiral. As the International Monetary Fund cautions, “core inflation – excluding commodities – has risen from 2 percent to 3.75 percent, suggesting that inflation is broadening.” One reason that Indian prices are rising is that infrastructure growth remains sluggish. Progress on roads, railways and power projects – all of which could prevent food from perishing prematurely and energy and commodities from being unnecessarily wasted – is essential to stabilizing prices. China, meanwhile, finds itself at a critical juncture. Its leadership will change next year – at a time when income inequality is on the march and the Party lacks any consensus on how to stop it. Given that less than 9 percent of China’s ruling communist party members are actually “workers” nowadays, the regime’s leaders must be even more uncomfortable with growing inequality. But, in the absence of serious political reform, income inequality will widen as crony capitalism sinks its roots more deeply.
Need for structural change India and China both need a renewed commitment to structural reform to sustain their economic growth. Cheap labour and monetary management will not do the trick on their own. The credibility that both governments gained after their countries avoided the worst of the global financial crisis of 2008 is beginning to wear thin. For, as inflationary fears in the BRIC giants grow, second thoughts about the shift in the world economy’s centre of gravity are beginning to gain currency. What both countries need are short-term corrections and long-term structural changes. China needs to prepare itself for an economy whose performance is not dependent on exports and low domestic wages. India must find other drivers of economic modernization than new information technologies (as welcome as these are). Workers in both countries are now demanding better living standards – a demand that even China’s tightly controlled political system cannot ignore. India, for its part, needs to open up its economy further in order to take advantage of its continuing rapid population growth and the ongoing changes in the structure of the global economy. It must recommit itself to feeding its population – and thus to attaining its stated objective of a “Second Green Revolution” in agriculture. China and India have used very different political models to achieve their ambitious GDP-growth targets. Nonetheless, as their economies mature, both will need to embrace structural change – and to address the challenges of overdue political reforms.
THE NO. 1 CLUB MEET MISSION HILLS – THE LARGEST GOLF CLUB IN THE WORLD
A DAY WITH BUTCH LOCALS GET TECHNIQUE TIPS FROM LEGENDARY COACH BUTCH HARMON
LEARN WITH A PRO CAESARS’ CHRIS CONNELL SHARES HIS TAKE ON FUNDAMENTALS
BREAKDOWN BY THE NUMBERS
TRIVIA ABOUT GOLFING IN MACAU AND THE REGION
The number of golf clubs in Macau: The Macau Golf and Country Club, accessible from the Westin Resort Macau, and Caesars Golf Macau
Fees to play golf in Macau start at HK$1,390 and go as high as HK$2,250, depending on whether it is a weekday or weekend
In Zhuhai, just across the border, you can find places to play golf for only HK$650
The number of legal golf courses in the mainland
The estimated number of golf courses illegally built and operated across the mainland as of the end of 2010, according the People’s Daily. This is despite Beijing’s prohibition of construction of new golf courses since 2004
The number of people expected to play golf in the mainland by 2020, accounting for less than two percent of the total population
ll good things must come to an end and so it is with Essential, Macau Business’ supplement about life’s best treats. This is our last issue, after a total of 33 months. Since December 2008, Essential has been providing tips to send our readers on paths of true indulgence. Now it is time to move on, as Macau Business is gearing up to launch new initiatives. Nevertheless, the accumulated expertise and insights on the ‘dolce vita’ gained by our Essential team won’t be lost. It will only be transferred to Essential Macau, the luxury lifestyle magazine launched by De Ficção Multimedia Projects, the publisher of Macau Business, in partnership with Portuguese company Open Media. For our farewell issue, and continuing on our arduous pursuit of the finer things in life, we have prepared a special golf-themed edition. For this sportier feature, we look around for curiosities, news and options for those who happen to be living in this part of the world where, even though it is growing, golf still has a long road ahead. We feature Mission Hills, considered the largest golf club in the world, located just a ferry ride away, on the mainland. On another regional note, we head to Sentosa, in Singapore, and its two spectacular golf courses. Located in the heart of Southeast Asia, these are a great option for those living in Macau who want to spend some relaxing days golfing. In town, we ask the resident pro at Caesars Golf Macau Chris Connell, for tips on what amateurs should focus on to improve their game. Also at Caesars, some local golfers who joined a one-day clinic with world famous coach Butch Harmon talk about their experience and what they learned with Tiger Woods’ former coach. Last but not least, on the eve of yet another edition of the Macau Business Charity Golf Tournament, we talk to some of the charity organizations that have benefited from the event and find out what they did with the money donated to them by the winning teams. As you can see, even in our last issue, we chipin in style. To all those who have helped us over the years and especially to our readers, we say thank you and continue enjoying life!
GOLFING IN THE MAINLAND
GOLFING IN THE U.S.
The mainland only opened its first golf course in 1984, so golf is still in its infancy across the border. But there are historical records of Chui Wan (“strike pellet”), a game similar to golf, being played in China more than 1,000 years ago.
The first 18-hole golf course in the United States was created on a sheep farm in Downers Grove, Illinois, in 1892.
Golf has been expanding at an impressive rate in the mainland. The sport’s growth could be even higher if there wasn’t an official ban on golf course construction due to land use concerns. But that hasn’t prevented courses from mushrooming just the same.
In the United States, the number of people who play golf 25 times or more per year has been decreasing, according to the National Golf Foundation.
The Chinese play golf like anywhere else in the world, with the same style, etiquette and approach to the game (minus the cultural idiosyncrasies).
The American way of playing golf is similar to the Chinese. However, the overall quality level in tournaments is much higher than in the mainland.
Chinese golfers can play almost around the clock, from dawn to 6 pm - and negotiate a bet on every stroke.
American golfers usually choose to play after work or in the morning.
Chinese golf clubs often have hundreds of workers - caddies, security guards, gardeners and the like. During the first 35 years of the PRC, golf was nowhere to be found, given the aristocratic and capitalistic connotations of the sport. Even today, golf still remains a wealthy people’s game.
The golf workers at a typical American golf club is much smaller than the average in the mainland Golf has always been welcomed in the United States, matching the American lifestyle. Only since recently, with the country plunging into financial and economic crisis has the number of golfers started to decrease.
TEN COMMANDMENTS ON GOLF ETIQUETTE 1
Never occupy another player’s tee, since it is definitely not considered good golfing etiquette.
Don’t delay your play. Make sure you are at your ball, ready to hit, as soon as your turn arrives – it is rude to leave people waiting while you play.
Golf carts exist to speed up play and not the other way around. After the tee shot, quickly drop off the player to the first ball.
Techniques such as a give-put situation should hardly ever be used, even if in strategic terms you think you might need to.
Never talk or whisper while another player is putting. Just stand still and watch.
Remove all evidence of your existence whenever you leave your bunker, giving a few extra strokes with the rake just to eliminate footprints.
Fix your ball marks and leave a smooth surface where the ball mark was.
To improve at golf you must be patient, because mastering the game does take time.
When holed out, you must say without a doubt your score as you regain the ball.
It is not acceptable to just give up or blame other golfers for your mistakes – the weather makes for a much better excuse!
Peacefully golfing S
entosa means “peace and tranquillity” in Malay. And that is what you will get as a golfer. This island resort in Singapore, alongside a two-kilometre long sheltered beach, includes two championship 18-hole golf courses. Opened in 1972, the Tanjong course, originally designed by Frank Pennick, was remodelled by course designer Max Wexler and course architect Christ Pitman in 1993. As for the Serapong course, it was designed by Ronald Fream and opened in 1982. Gene Bates and the Bates Golf Design Group revamped it in 2007. The Serapong course has received numerous awards including the
“Number 1 Championship Golf course in Asia” by Asian Golf Monthly in 2007 and “Best Golf Course in Singapore” by Golf Digest in 2009. Currently home to the Singapore Open, the course is definitely the most spectacular in the Lion City. A large lagoon contributes to the stunning views, but the course itself poses some challenges for enthusiastic golfers – the tee shots are often tight and water hazards are not far away. As for support facilities, there is a Chinese restaurant, an Italian restaurant, a lounge, a reading room and much more. Furthermore, you have caddies, putting greens and the David Leadbetter Golf Academy at your disposal. Located amidst natural tropical woodlands, Sentosa is a golf paradise minutes away from Singapore’s city centre turmoil.
Smooth ride Designed exclusively for the Top Marques Monaco 2010, the world’s greatest super car show, the Garia Edition Soleil de Minuit is the world’s most costly production luxury golf cart. Golf fans will have the chance to see it in Macau in November, at the inaugural edition of Top Marques Macau. The Garia Edition Soleil de Minuit is priced at US$52,000 (MOP416,000). Made at the same factory as the Porsche Cayman and the Porsche Boxster, the Garia was created with meticulous attention to design and luxury. Featuring a carbon roof, customised paint job, and two-coloured handstitched luxury seats, as well as alcantara roof lining and hand-made details, this is truly a unique golf cart. With a builtin refrigerator and a personalization program, the Garia also features double wishbone front suspension inspired by Formula 1 cars. The same supplier as used by Ducati builds the drive train, and the same company that supplies aluminium profiles to Aston Martin, Jaguar and Volvo makes the frame. Although it is not clear whether it will improve your game, the Garia Edition Soleil de Minuit will definitely allow you to ride in style to the green.
very golf enthusiast living in this area of the world has heard of Mission Hills and the tales of this behemoth. Offering no less than a dozen championship courses, it is the world’s largest golf complex, having overtaken the United States’ Pinehurst compound of eight courses in 2004. Spanning more than 20 square kilometres over the cities of Shenzhen and Dongguan, the US$1.5 billion (MOP12 billion) investment includes three clubhouses, 51 tennis courts, and 556 hotel rooms and suites, employing an 8,000 strong work force from 18 nations. The female caddy core – all 3,000 of them - attends to 1,500 carts running on no less then 360 kilometres of track. A weekday in Mission Hills sees an average of 2,000 rounds of golf, a figure that goes up to 3,000 on a weekend. It is a colossus, keeping up with China’s wolfing appetite for the sport. A golfer is spoiled for choice at Mission Hills: any of the 12 championship courses is a signature design from a playing legend, presenting a dignified challenge for every level of play. Just don’t let the overall number of bunkers daunt your game for a second: a mere 1,200. Depending of the course you are playing, management might suggest placing you in either the Shenzhen Club House – the original - or in Dongguan – the largest club house in the world, covering 6,000 square metres with 338 rooms and suites to choose from. There is also the Mid-Valley Club House.
Shenzhen features five courses, including the 1995 World Cup Course by Jack Nicklaus, the complex’s first, which played a pivotal role in the development of the sport in the mainland; Vijay’s (1997), incorporating the distinctive use of long sandy waste bunkers and sharp edged faces; Ozaki’s (1998), with some of the most dramatic zen-like scenery you’ll see outside of Japan; Els’ (2001), honouring his reputation as the “big easy” with grand elevations; and Zhang’s (2007), a new experience in China – an 18-hole par 3 course, featuring some of the most influential design concepts.
For all tastes
The Mid-Valley Club House services “only” two courses: Faldo’s (1999), the first stadium course in the mainland featuring one of the most spectacular island greens on the 16th hole; and Pete Dye’s (2007), providing a unique challenge with thousands of railroad ties and every kind of devilish bunker, plus undulating greens – not for the faint hearted! At Dongguan, another five courses: Annika’s (2003), one of the shortest courses – featuring six par 3, six par 4 and six par 5 holes – while demanding accuracy beyond its stunning mountain top vistas; Duval’s (2003), designed around large expanses of turf and trees in a traditional presentation; Leadbetter’s (2003), daring the player to use every club in their bag to navigate a friendly, sculptured course; Olazabal’s (2003) a treacherous course challenging golfers both in length
and shot making, as its the longest course in the complex – at 6.8 kilometres – and incorporating 180 bunkers; and Norman’s (2004), arguably one of the most demanding courses in Asia, snaking between abundant deep bunkering surrounded by thick forest. All three club houses are massive, each sporting its own spa and beauty amenities, restaurants and bars, plus arcade-sized pro shops complete with club customization from every recognizable brand, high end apparel and souvenirs. We know what you’re thinking, but don’t worry: they will be packing your brand of golf ball. The best thing about this piece of golfers’ heaven is that it is a stone’s throw away from Macau. A 50-minute jetfoil ride lands you at the Shenzhen Ferry Terminal and from then on its a 40-minute drive to the Shenzhen Club House, traffic allowing, and another 25 minutes or so to Dongguan’s. Mission Hills offers enticing packages, making it the perfect golf getaway, with group rates available up to eight rooms and 20 golfers. Plus the complex hosts some of Asia’s most competitive golfing events in the second part of the year: the Annika Invitational in August, the Mission Hills Golfathon Grand Final in October and the Mission Hills Golf Series Seasonal Final in December. So there is no excuse not to indulge in, arguably, one of the seven marvels of golf!
CORPORATE SOCIAL RESPONSIBILITY
THE ANNUAL MACAU BUSINESS CHARITY GOLF TOURNAMENT AND GALA DINNER CELEBRATES ITS FIFTH ANNIVERSARY
PUTTING FOR A GOOD CAUSE E
ven if you are not a golfer, you have probably heard about the annual Macau Business Charity Golf Tournament and Gala Dinner. Every fall, around September, the two local golf courses are booked to capacity, making way for the Macau business community to wield their clubs for charity. Senior executives from every sector of the economy come together on the greens for the largest corporate social responsibility event of its kind in the region. What started as a corporate outing to raise awareness that there is more to business than just comparing bottom lines and targeting new revenue sources, has developed into the most well-attended, comprehensive social corporate responsibility event of
the year. In its fifth edition, organizers are keen to set new records for enrolments. As usual, all prize money will be forwarded to those less favoured by Macau’s galloping development. The event’s concept is simple: to raise money for charity by gathering the business community at two rounds of golf, combined with a culinary feast and a mix of great entertainment. Organizers expect to host at least 180 players this year, competing for total prize money of HK$200,000 (US$25,000). The prize money will be split equally between the two teams with the best net and gross scores respectively. Each earns the right to name the charity to which they would like to forward their winnings. In just four editions, the event
has raised more than HK$2 million, distributed among institutions and social projects in Macau, Hong Kong and the mainland.
The rules of the game
Records are never easy to break but the organizers are striving to do so once again, with the support of dedicated corporate patrons such as major sponsor Melco Crown Entertainment, Sydney’s Star City, the Westin Resort Macau and Caesars Golf Macau. The latter will host the first leg of the tournament, on Sunday September 25. The second round takes place on the following Friday, September 30 at the Macau Golf & Country Club, followed by the Macau Business Charity Gala Dinner later that evening at the Westin Resort. The most common form of
IN JUST FOUR EDITIONS, THE EVENT HAS RAISED MORE THAN HK$2 MILLION, DISTRIBUTED AMONG INSTITUTIONS AND SOCIAL PROJECTS IN MACAU, HONG KONG AND THE MAINLAND
corporate patronage in this event is to enrol a company team of three players. For a symbolic fee of HK$20,000 companies are able to participate with members of their ranks, clients or associates of any level of play. Other tailor made sponsoring opportunities are also available catering to the unique needs of each potential patron. Supporters of the event come from a broad spectrum of business sectors, including the six local gaming operators, banks, brokerage firms, real estate developers, luxury retailers, hospitality and professional services providers, among others. The Macau Business Charity Golf Tournament follows a Texas-scramble format. Also, scoring will be calculated under the double Peoria system. Both
measures allow for veterans and newcomers to compete on a more level field. All play is closely monitored by the Macau Professional Golfers’ Association to ensure rules and regulations are observed. An array of special challenges, golfing and otherwise, will also be introduced to promote a relaxed and friendly competitive spirit. The final highlight of the charitable outing is the Macau Business Gala Dinner, the stage of the prize ceremony where non-golfers and individuals are welcome to contribute to the event’s success. Framed by the lush settings of the Westin Macau’s Pool Loggia, the Gala Dinner caters for 200 socially responsible revellers. The culinary extravaganza, specially prepared by the hotel’s resident chef will be accompanied by an
assortment of the finest wines, spirits and cigars. The evening’s program includes the traditional raffle and the very special charity auction of exceptional memorabilia from the worlds of sport, entertainment and music. Items up for bidding at past events have included guitars from rock legends U2 and AC/ DC, tennis rackets from Roger Federer and Rafael Nadal, and jerseys of football superstar Diego Maradona and World Cup winners Spain, just to name a few. The organizers are counting on everyone’s support to make this fifth anniversary of the Annual Macau Business Charity Golf Tournament and Gala Dinner a great success. To find out more please write to firstname.lastname@example.org.
CORPORATE MEET THE CHARITIES THAT HAVE BENEFITED FROM SOCIAL THE PREVIOUS EDITIONS OF THE MACAU BUSINESS RESPONSIBILITY CHARITY GOLF TOURNAMENT AND GALA DINNER
YOU GET WHAT YOU GIVE T
he International Ladies Club of Macau, Caritas, the Cradle of Hope Association and the Macau Child Development Association are four of the non-governmental institutions that have been benefited so far from the funds raised by the Macau Business Charity Golf Tournament and Gala Dinner. The event’s winning teams have the right to name the organisations to which they would like to forward their winnings. Sands China I team was the gross score tournament winner last year, forwarding their MOP100,000 (US$12,500) to Caritas’ Lar de Nossa Senhora da Penha. According to the institution’s secretary-general Paul Pun Chi Meng, the money was used to support the orphanage’s operations, as well as improve equipment. Two years before, Caritas also received MOP100,000 forwarded by another winning team from the Macau Business Charity Golf Tournament. Then, the money was allocated to providing social assistance particularly to single parent families. The Cradle of Hope Association, which cares for babies and children who have been abandoned, neglected or who are at risk, has also benefited twice from the Macau Business Charity Golf Tournament. Last year, Wynn Macau A team, the net score tournament winner, nominated the association as the recipient of MOP100,000. In the previous year, the Cradle of Hope also received MOP100,000 from the BNU winning team. “The donated money was used on monthly activities for children, their summer holidays as well as general expenses such as milk or diapers. It was also used for a piano, a guitar and swimming lessons,” says the association’s founder Marjory Vendramini. In 2009 it was the International Ladies Club of Macau’s turn to benefit. During the third Annual Macau Business Charity Golf Tournament and Gala Dinner, the winning team MBSK, the event’s only ladies’ team, donated the money to the club. As a result, the received MOP100,000 “was banked in the International Ladies Club’s charity account and used to meet the budget set for the year 2009/2010 for charity,” says the then president Andrea Mansfield. The club works with more than a dozen local charities, supporting several of its activities. The Macau Child Development Association received donations from the Macau Business Charity Golf Tournament two years in a row, in 2008 and 2009. President Eliana Calderon explains the money “was used to pay the occupational therapist, as well as to buy material for her to work with.”
elco Crown Entertainment has been a long-term patron and major event sponsor of the Macau Business Charity Golf Tournament and Gala Dinner. The event’s practice of giving the donations to charities of choice of the winning teams “ensures a variety of organizations are beneficiaries, which the company feels is a good platform,” says executive vice president of Melco Crown, Akiko Takahashi. Furthermore, it strengthens the gaming operator’s corporate social responsibility strategy, she adds, “with most of its priorities placed for the Macau community”. Because “giving is always a pleasure”, Melco Crown continues to sponsor the Macau Business Charity Golf Tournament and Gala Dinner, knowing that “it has made a difference, either to an individual or a group of individuals,” says Ms Takahashi, who is also the company’s corporate social responsibility officer. Aside from Melco Crown, all the other gaming operators in town also support the event. Also among the sponsors for last year’s tournament were the Westin Resort and Caesars Golf Macau. Caesars even offered a further MOP100,000 (US$12,500) to be donated for any hole-in-one scored during the first round of the tournament. Unfortunately, no one was that accurate!
A SELECT FEW LOCAL GOLF ENTHUSIASTS TEAMED UP AT CAESARS GOLF MACAU TO EXPERIENCE A DAY WITH RENOWNED COACH BUTCH HARMON
TRAINING WITH A LEGEND F
or an amateur golfer, a day with Butch Harmon is a dream come true. Mr Harmon is widely regarded as the best golf coach in the world - his students have combined for over 100 PGA, European PGA and Champions Tour victories while under his tutelage. Among his pupils have been the likes of Tiger Woods, Greg Norman, Davis Love III, Darren Clarke, Fred Couples, Adam Scott, Justin Leonard, and Mark Calcavecchia. For a group of lucky local golfers, the dream came true in early June, as they attended a special clinic at Caesars Golf Macau instructed by Mr Harmon. We asked them how they felt to be trained by the best coach in the game.
Name: José Carlos Angeja Occupation: CEO and airport director, ADA - Administration of Airports Ltd
he clinic with Mr Harmon was “extraordinary”. According to Mr Angeja, it is a dream come true for any amateur golfer “to have a personalized clinic with one of the most worldwide acclaimed monitors, who has worked for years with the best professionals”. Furthermore, the whole team that accompanied Mr Harmon was also very effective, because of its “objectivity” and “simplicity”. As a golfer, Mr Angeja was trying to perfect his swing. “At 51 years of age and with a 9 handicap, this can be my only ambition,” he says. And, truth-be-told, something did happen. “After the clinic, we did a front-nine round with Mr Harmon and his assistants. In nine holes, I beat the course par (two bogies, five pars and two birdies), which I can’t remember ever having done in my life, especially on a golf course where I am not a member.”
Name: Roberto Sousa Occupation: Retired
aving spent a day at the Butch Harmon Clinic, Mr Sousa really enjoyed the experience. Through the clinic and the use of video equipment, he managed to improve his swing. After the clinic, during the nine-hole game, he was really happy with what he learned. “I improved my stand and my putting,” he says. Having been excited about meeting Mr Harmon, he was also thrilled to realize “he is a nice guy”, although he is “tough”. Should there be another opportunity to repeat the experience, Mr Sousa would really like to grab it.
Name: Andrew Macaulay Occupation: Managing director of Aspect Gaming
Name: David Largent Occupation: Director of Sports Life Asia Ltd.
r Harmon focused on the “weaker points” each golf player had and it worked. For Mr Macaulay, even though everyone was “being coached for different skills,” Mr Harmon got around to explaining to each and every one of the students their weaknesses in the game, advising on how to amend them. In his case, Mr Macaulay wanted to improve his stroke. By watching a video where you can see your movements from the side and the back, it was possible to observe “a gradual improvement of the stance”. In that sense, it showed the “effectiveness” of the movements, proving to be an “immensely valuable” experience.
pending the whole day with Mr Harmon was a really “fantastic” experience. “I picked up a few tricks from him,” says Mr Largent. The renowned coach has such a different way of explaining things that he managed to show Mr Largent some new techniques mainly for his chipping. Even though the experience wasn’t completely one-onone, because there were other students, the time Mr Harmon spent with each one was “quite balanced”. A lot of the experience itself was really about getting to know Mr Harmon and spending the day with one of the golf masters. As for the technical part, Mr Largent managed to get “some hints” on how to improve.
CHRIS CONNELL, RESIDENT PRO AT CAESARS GOLF MACAU, EXPLAINS THE FUNDAMENTALS OF THE GAME AND SUGGESTS SOME OF THE LATEST EQUIPMENT AVAILABLE
GET IT RIGHT FROM THE START
ere at the Butch Harmon School of Golf Macau we do not teach a system or method, we simply work with the individual to get the most out of their individual golf swing. But one of the things we do want every golfer we see here at the school to have, is a set of rules regarding the fundamentals of the game. The swinging motion of the club and the movement of the body are directly affected by the fundamentals at the address position. Almost all swing faults will be traced back to an individual’s address position.
Chris Connell has been a qualified member of the British Professional Golfers’ Association for 23 years and came to the Butch Harmon School of Golf Macau from Europe were he was teaching for the last few years.
GRIP The way you hold the club, the way in which you position your body in relation to the ball, and the way in which you aim the clubface will all determine the outcome of every shot that you hit. A good grip is one that enables you to point your club face in the direction you are swinging it at impact, while swinging at speed. The club should be held primarily in the fingers with the hands relaxed but firm to keep complete control of the club face. Grip pressure should be four to six on a scale of one to 10, 10 being the firmest. To apply a neutral grip, the V between the thumb and forefinger of both hands should be pointing between the chin and right shoulder. A strong grip will have the effect of closing the clubface on impact with the ball. This will cause a de-lofting of the club face resulting in a lower ball flight with right to left spin and with misses to the left of target. A neutral grip will give you the best possible chance at impact of having a square club face. This will allow correct ball flight for all clubs and neutral spin keeping shots more on the target line. A weak grip will have the effect of opening the club face on impact with the ball. This will cause an increase in loft resulting in a higher ball flight with left to right spin and with misses to the right of target.
The best teaching equipment Titleist Fitting System This allows us to make sure our students are correctly fitted for their gear. The system is stored in a cart. It is made up of driver, fairway, utility and iron heads with different angles of loft and lie. The heads can be fitted with numerous different types of golf shafts from many suppliers with varying flexes, ranging from ladies to x-stiff men’s. Through our training with Titleist we can find the correct match for every golfers’ needs so allowing them every chance of reaching their goals.
SEX AND GOLF
ALIGNMENT Position the club face square to the target line behind the ball, with your stance and body alignment (feet – hips – forearms – shoulders) parallel to the ball/target line just like a railway line. BALL POSITION Maintain a consistent ball position in line with your left breast or logo of your shirt on level lies.
POSTURE This refers to the overall position of the body at address. Feet should be shoulder width apart for standard shot, with weight more on the balls of the feet, about 80 percent. The body should be in an athletic ready position, knees flexed, slight tilt forward from the hips, back straight with arms hanging vertically and the chin up clear of the chest. When you are next at the range or on the course, pay more attention to your fundamentals; they allow you to swing with more consistency. Always remember the spin factors of the ball through the air show up the weaknesses in your technique. I guarantee those weaknesses will be related to one or several areas of your address position.
Explanar This is a tool we use at the school on a regular basis. The circular steel frame acts not only as a great visual of the correct golf swing shape but, more importantly, with the use of a heavy roller with a normal golf grip it gives our students the feel of the swing. The angle of the circle can be adjusted to fit all golfers swing plane, so giving them great feel for the correct angle. It is also extremely useful for better players who have the club swinging too much under or over their ideal swing plane. For new golfers to the game, it is a great swing trainer and helps strengthen all the essential golfing muscles.
The least sexy sport
ranted, when one is thinking about the sexiest sports on earth, golf is certainly not on the top of the list. Recent studies and surveys have even concluded that it is probably the least sexy of sports. How can golf lovers change such embarrassing results? The problem with golf is that in itself it does not portray very sexy characteristics. For instance, golfers are not required to be in top shape, they keep their clothes on while playing and they usually wear baggy attire. It is not exactly comparable to beach volleyball or an athlete who practices extreme sports. Truth be told, it is equally non-sexy for both genders. Golf might be considered sexy only if you think of it as a symbol of power and stature. But, then again, women or men are usually sexually attracted to more down-to-earth characteristics. China Daily newspaper recently reported Chinese women that play golf are being urged to show their beautiful side, with brightly coloured shirts and skirts. The idea is to promote golf by showing a sexier side of the sport. At a first glance, we wouldn’t say this is the best strategy to achieve such a goal, but let’s think about it for a moment. Golf is also about the outdoors, beautiful sceneries and tanned men and women – necessarily, given the hours they spend playing under the sun. If you add to that some sexier clothing – tighter skirts for the ladies, for example – then you might have a chance at changing golf’s position on the sexy scale. Care to try for the glory of the sport?
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The Esplanade, Wynn Macau
Shoppes at Four Seasons
Alfred Dunhill Bvlgari Chanel Christian Dior Ermenegildo Zegna Fendi Ferrari Giorgio Armani Gucci Hermes Hugo Boss Louis Vuitton Miu Miu Cigar Imporium Piaget Prada Sundries The Signature Shop Tiffany & Co. Tudor Van Cleef & Arpels Versace Vertu Wynn&Co Watches and Jewellery
The Encore, Wynn Macau Cartier Chanel Piaget
Grand Lapa Hotel Bally Burberry Cartier Christian Dior Cigar Imporium Alfred Dunhill Emporio Armani Ermenegildo Zegna Florinda Jewelry Hermes Hugo Boss Orange Label Louis Vuitton Omega Salvatore Ferragamo Valentino
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113 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT
Are you living the life? STOP CHASING RESPECTABLE STATUS AND COMFORT. INSTEAD, CHASE YOUR DREAMS AND RISK FINDING HAPPINESS
magine the following situation: you are at home, sitting in your favourite chair, reading a book. Suddenly a child appears before you. You do not recognise him, but somehow the kid seems familiar. This child comes to you and says: “Hi. Do you know who am I? I’m you, you as a kid.” The child continues: “I came to you because I want to know what happened to my life, what you did with it, how much I changed as a grown-up. “I want to know what happened to those dreams and desires I had. I want to know if I kept the freshness that I once had, if I still have a smile always on my face, and if I still do not care about what others say. Do I still live my way?” The questions do not stop: “Am I being as authentic and passionate as I was? Am I still getting as much fun from life as when I was a child?” After imagining all this, answer all the questions. Who are you today? How different are you from the grown-up you once wished to be? Be honest with yourself. Are you really living the life that you dreamt of when you were a child? Or are you pretending to be happy leading a life that does not really satisfy you at all? Every day, I see people suiting up, going to work and managing their assigned tasks, but not really doing what they want to do. These people stored their dreams on a shelf a long time ago and let dust cover them.
Meanwhile, they have started living automatic lives, forgetting their initial plans. Those people exchanged the risk of chasing their dreams for the comfort of a juicy pay cheque, recognition, a nice house and maybe a convenient marriage. But their life is one empty of passion, authenticity, love or fun. All is not lost. Somewhere in those people’s minds still resides the will to fulfil their dreams, even if for now they are too scared to try.
Those people know the way they live now is not fulfilling them, but they justify and rationalise their present status instead of having the courage to live up to their true dreams. If you are one of these people, I challenge you. Turn yourself into a passionate person who dares to live his or her dreams, someone with the courage to follow his or her own individual path without being overcome by circumstances. To those who have the audacity to risk who they are for who they want to be, the constant challenge is not giving up. Most likely your life is interesting, acceptable and beautiful. But you could be living it in a different way, chipping in for a lot more.
Such change can really have an impact on those around you, too. Imagine your employees, who suddenly start seeing in you a mentor, a person that has the audacity to speak to them not only about their duties and responsibilities or how they can become better workers. Now you also talk to them about how they can improve themselves and have a happier future. Imagine yourself at home, telling your kids the importance of fighting for their dreams; moreover, supporting your children in pursuing what they really love to do, thus offering them real freedom of choice, instead of just the option of conformity to others’ expectations. Look at yourself in a mirror. Are you happy and fulfilled? Are you cheerful in your job? If the answer is negative, it is time for you to act, starting now; otherwise, like a flower, your life may wilt and wither away without you even noticing it. Without following easy recipes or utopian dreams and fantasies, meditate on what you want for yourself. Like in a company, a vision for one’s life can be a powerful guide to achieving goals. Let there be no more excuses. Start today drafting the plan for the future you dreamt of for yourself when you were a child. AUGUST 2011
RAISING THE BAR AUGUST 2011
Number of restaurants and similar establishments operating in Macau at the end of 2009, an increase of 46 year-on-year. Eateries formed the majority of the industry, 78.7 percent of the total.
he government is proposing revised rules for bars, restaurants and hotels that would ban youngsters from bars, ban bars from residential buildings and force all establishments to keep complaint books. The Macau Government Tourist Office has published the draft rules in a document, available in Portuguese and Chinese, for public consultation. The public have until the end of this month to comment. The city’s tourist bureau says the aim of the revision is to accommodate developments in Macau’s hospitality industry. The present rules are 15 years old. There is no schedule yet for making the changes. They would not require the approval of the Legislative Assembly. One of the most notable proposals is to prohibit people younger than 16 from entering bars. At present there is no age limit. Youths above the minimum age would be denied entry if they were in school uniform. In a restaurant-bar, the age limit would apply after 10pm. The penalties for establishments that fail to observe the age limit would be fines ranging from MOP50,000 (US$6,250) to MOP70,000. Oscar Ho Man Cheng, an expert on business development at the Institute for Tourism Studies, says it would be important to stipulate whether business operators would have the right to check a customer’s identity card.
GOVERNMENT PROPOSALS FOR CHANGES IN THE RULES FOR BARS, RESTAURANTS AND HOTELS EARN APPROVAL FROM SOME, AND RAISE EYEBROWS AMONG OTHERS BY LUCIANA LEITÃO
Another proposal is to ban bars from buildings designated wholly or partly as residential. This is in response to complaints by residents about noise. The draft rules do not say what would happen to bars already situated in residential buildings. Glenn McCartney, co-owner of the Miramar restaurant and the Irish Bar, which is in a residential area, says a ban on bars in residential buildings would be a “big challenge”. There are many such bars, Mr McCartney says. “Many of these bars are all small and medium-size enterprise projects, trying to succeed. How you manage this is very important.” An option suggested in the consultation document is to restrict the opening hours of bars in residential buildings to 8am until midnight, and to restrict bars to basements, ground floors or commercial podiums – and then only if they have entrances separate from those used by residents. The chairman of the United Association of Food and Beverage Merchants of Macau, legislator Chan Chak Mo, says any new rules must be crystal clear. He also argues that licences already granted should not be affected or, at least, that licensees should be given a period of grace to allow them to adapt to new rules. Yet another proposal is to make hotels, restaurants and bars keep complaint books, to be made available to customers on demand, provided that they show some identification. The availability of a complaint book would have to be advertised – in an establishment’s price list, for instance. The penalties for failure to follow these rules would be fines of up to MOP30,000 for hotels and MOP20,000 for restaurants and bars. “It would be good to have an arbitrator when there are conflicts between customers and business owners, before going to court,” says Mr Ho of the Institute for Tourism Studies. A new way of rating hotels and restaurants has also been proposed. AUGUST 2011
Number of hotels and guest-houses available in Macau at the end of May. More than one quarter, 26, are 5-star hotels.
For restaurants, the present three categories would be reduced to two. There would be one category for luxury establishments, much as now, and a new, general category for the rest. Mr Chan of the food and beverage association concedes that this would be simpler but says that some businesses, such as coffee shops, would fall between the cracks and would therefore need their own category. For hotels and similar establishments, all would be rated from one to five stars deluxe. At present, hotels are given from two to five stars deluxe, guest houses are given two or three stars and resorts are treated separately. Mr Ho of the Institute for Tourism Studies acknowledges that changes are necessary “so that tourists, when coming to Macau, might have a better picture”. Another proposal is to stop licensing dance halls and karaoke lounges separately from bars and restaurants. Instead, bars and restaurants would have to apply for permission to offer dancing or singing on their premises. The consultation document proposes changes in the supervision of the hospitality industry. The Tourist Office would oversee all hotels, luxury restaurants, luxury bars and restaurants and bars inside hotels. The Civic and Municipal Affairs
Boots on the ground I
f the new rules drafted for bars, restaurants and hotels come into force, it is likely that the authorities will need more staff to monitor such establishments. The Macau Government Tourist Office is already seeking to employ more inspectors. Its director, João Manuel Costa Antunes, says the 12 inspectors it has now are not enough. The goal is to increase the number to 50 by the end of next year, to work in all fields in which the Tourist Office has responsibilities. Mr Antunes says recruitment has begun and that 20 new inspectors are expected to start work by the end of this year. AUGUST 2011
Bureau would be the licensing authority for restaurants and bars outside hotels. At present, the Tourist Office oversees hotels and all restaurants and bars, wherever they are situated, while the Civic and Municipal Affairs Bureau is responsible for simpler eateries. Breaking any of the new rules would be punished more severely than breaking any of the old ones.
Cleaning up The maximum fine for running a restaurant or bar without a licence would be raised to MOP150,000 from MOP30,000. Cremilde António, the owner of the Praia Grande Macanese restaurant, believes offenders scoff at fines. “People here have money to pay. Instead, criminal proceedings should be instituted and the person should, from then on, never again be allowed to open a restaurant in Macau,” she suggests. Mr Chan of the food and beverage association says the new fine would be too severe. He says some restaurants open without a licence because the waiting time to get one is too long. “They [government] have to improve efficiency before imposing such a severe penalty,” he says. Harsher penalties for breaking the hygiene rules are also proposed. An establishment would be closed down for up to six months if it harmed public health and longer if it failed to put its house in order. Mr Chan says penalties should reflect the differences between large and small establishments. The Praia Grande’s Ms António suggests naming and shaming: regular publication in all newspapers of a list of offending establishments. The Irish Pub’s Mr McCartney says too many rules may scare away small investors. “I agree with regulations that make tourism healthier but do not impede entrepreneurs,” he says. The Macau Government Tourist Office, in a written reply to Macau Business, declined to answer specific questions about the new laws, saying it did not wish to sway the outcome of the public consultation.
Watching the washing Hotels and casinos are using radio-frequency tags to track employees’ uniforms and save money but dispel charges Big Brother is watching BY SOFIA JESUS
ave you ever wondered how hard it is for a large hotel or casino to manage the thousands of uniforms worn by its employees every day? For some, it is not that difficult. The use of radio frequency identification (RFID) technology is allowing managers to track uniforms automatically, letting them know who is wearing what and when. As the city’s hospitality industry grows, the system’s suppliers are looking forward to expanding. InvoTech Systems Inc. is one supplier of the technology to track uniforms, linen and laundry. At the end of June, the United States-based company announced it would enlarge its footprint in Macau by installing its system in Sands China de-
velopments on parcels five and six in Cotai. The company says the inventory control system will track an estimated 125,000 items of uniforms for 10,500 employees serving 6,000 rooms as the apparel pieces move from uniform departments to employees and laundries. “The whole idea is to keep track of everything, know what you have, what’s your inventory, know the location of everything and manage it efficiently and automatically with RFID technology,” says InvoTech vice-president Jeff Welles. The system, Mr Welles explains, saves large Macau hotelcasinos about US$200,000 (MOP1.6 million) a year by eliminating losses, reducing purchases and lowering cleaning expenses. It also enhances labour efficiency, he adds, as hotels
The use of radio frequency identification (RFID) technology is allowing managers to track uniforms automatically, letting them know who is wearing what and when
and casinos no longer need staff to complete a manual inventory every month. The larger the property is, the bigger the cost benefits are. “The savings during the first year will pay for the system,” Mr Welles says.
Critical component The system uses RFID chips attached to items of uniform, with a unique identification number for each and every piece. Mr Welles says that on the way to or from the laundry uniforms pass by a RFID antenna, which detects and reads the chips attached to each piece of clothing. The information is compiled by a computer, allowing managers to track which uniforms are in the wash and which are already clean and have been picked up. The Venetian Macao is one of the hotel-casinos to use the system. The main benefits are that employees are made accountable, cleanliness is ensured, the workforce is more productive and inventory is kept under control, says the executive director for hotel operations, Janet Lim. Ms Lim explains savings come mainly from the mechanisation the technology allows, meaning greater efficiency and less risk of human error. “The convenience of this technology is that reports can be obtained at any given time. This is essential in a big organisation with uniformed employees, as inventory control ... is a critical component of running a successful operation,” she says. The use of RFID is far from being a novelty in Macau. However, it is normally used on the gaming floor to track casino chips. Can it be applied to track employees’ movements? “It’s more for tracking uniforms, not the employees,” says Mr Welles. He notes managers can track the uniform only when it passes by an RFID antenna. Among the usual places for antennas are laundry chutes in employees’ dressing rooms. The system also makes it easier for employees to pick up their uniforms. They just pass their ID cards in front of a reader and their uniforms are automatically found for them.
Laundry interface Other InvoTech customers in Macau are MGM Macau, Wynn Macau, Altira, Four Seasons and the Plaza Casino. At the Venetian Macao, Four Seasons and the Plaza Casino, the company’s technology tracks 165,000 pieces of uniforms for 14,000 employees. InvoTech has also deployed its technology at some big laundries that are contracted to hotels, like Shun Tak’s Clean Living (Macau) Ltd. and Tim Fung Laundry. This allows for inventory tracking even when the uniforms leave the hotel to be washed. The company also has a presence in the mainland, at the Grand Hyatt hotels in Shanghai and Shenzhen. It has partners and distributors in Hong Kong for demonstrating its systems. InvoTech started its business almost 20 years ago by using bar codes on uniforms. It began using RFID technology about eight years ago. InvoTech now operates in 20 countries, with customers in businesses that have a large number of uniformed employees – mainly hotels but also casinos, sports arenas and theme parks. “We have our installation training team deployed all over the world to install the systems and train the staff,” says Mr Welles. InvoTech is based in Los Angeles. The company headquarters offers round-the-clock customer support service for almost 500 hotels around the world. AUGUST 2011
Unleashing ideas in a world of change
Mandarin Oriental appoints resident manager
Welcome to Macau More tourists in first half of 2011
Mandarin Oriental, Macau last month announced the appointment of Leonard Mok as resident manager of the property. “In his new role, Mr Mok will be assisting Martin Schnider, general manager in the overall planning, organisation and coordination of hotel operations, as well as responsibility for communications with both internal staff and guests,” the company said in a press release. Prior to joining Mandarin Oriental, Mr Mok was the general manager of Altira Macau.
he total visitor arrivals to Macau reached 13.25 million in the first half of 2011, up by 8.3 percent year-on-year, according to the Statistics and Census Service. Visitors from the mainland (7.48 million), Hong Kong (3.72 million) and South Korea (195,000) increased by 14.9 percent, 3.9 percent and 26.0 percent respectively. In the first half of 2011, same-day visitors accounted for 54.3 percent of the total. In June, the total visitor arrivals increased by 14.5 percent year-on-year to 2.18 million.
Hotels see demand go up Macau’s hotels and guest-houses received 689,000 guests in May, up by 5.9 percent year-on-year, with the majority coming from the mainland (54.3 percent of total) and Hong Kong (18.5 percent). The average occupancy rate of hotels and guest-houses was 82.0 percent, up by 4.1 percentage points year-on-year, according to the Statistics and Census Service. At the end of May, the total number of available guest rooms increased by 9.9 percent year-on-year to 21,500 rooms, attributable to the opening of Galaxy Macau.
Prices rising faster for visitors Macau’s Tourist Price Index for the second quarter of 2011 rose by 11.43 percent year-on-year, at a pace much faster than inflation. The increment was led by hotel room rates, where prices jumped by almost 30 percent, according to information from the Statistics and Census Service. The average Tourist Price Index for the year ended in the second quarter of 2011 increased by 12.22 percent from the previous period. For the 12 months ended June, Macau’s inflation went up by 4.34 percent. The Tourist Price Index reflects the price changes of goods and services purchased by visitors.
New conflict between guide and tour group Venetian Macao launches family suites Matching the summer holidays, Venetian Macao is launching what the property dubs as “the first ever” family suites in town. “These are intentionally designed for families and are children-friendly,” Venetian Macao said in a press release. The family suites include a play corner for children, with amenities such as video game consoles, DVD player as well as a bunk bed that can accommodate up to three kids altogether. The suite comes complete with child safety measures such as wall socket covers.
A conflict between a local tour guide and a group of mainland tourists was reported last month. According to the Tourist Office, the 41 tourists said they were abandoned after the tour guide became unsatisfied with their low level of spending at a souvenir shop. The guide left them in the bus and, afterwards, the driver turned off the engine and the airconditioning. According to preliminary investigations from the Tourist Office, the tour guide did breach his duties. Eventually, the tourists resumed the trip after mediation by the local authorities. This incident follows a high profile case that took place in February, when three mainland tourists attacked a guide at the Macau Ferry Terminal. AUGUST 2011
Photo: Akira Kinoshita
Arts & Culture Vienna Philharmonic Orchestra
THE MACAO INTERNATIONAL MUSIC FESTIVAL, celebrating its 25th year, enlarges its scope and brings to town the likes of Itzhak Perlman and the Vienna Philharmonic Orchestra
unique programme. That has been the goal of the Macao International Music Festival organisers for this year as a celebration of the silver jubilee of the city’s biggest annual music event. “This was not an easy milestone to reach,” says tenor Warren Mok, who has been the artistic director of the festival for the past decade. “In its 25 years of existence, the International Music Festival has AUGUST 2011
inscribed for itself a host of unforgettable moments on the pages of Macau’s cultural history.” This year’s festival, running from October 7 to November 5, encompasses grand opera, musical theatre, symphonic, choral and chamber music and performances in the contemporary, folk, pop, fusion and jazz genres. Twenty programmes – from Germany, Austria, Portugal, Switzerland, Lithuania, the United States, Israel, Japan, Hong Kong, Macau and the mainland – will bathe the city’s stages in both ancient and modern sonic colours. The festival will also lay on master classes and other activities to accompany its shows. For the first time there will be “music festival
ambassadors” giving assistance at the exhibitions. To ensure this year’s festival is special, the budget has been boosted to MOP34 million (US$4.25 million) from the MOP27 million spent last year. “In celebration of the 25th anniversary of this splendid cultural and artistic event, we have organised a fascinating programme of unprecedented scale,” says Ung Vai Meng, the president of the Cultural Affairs Bureau, the body in charge of the festival.
Festival firsts Unprecedented, for instance, is the inclusion of Hac Sa beach as a venue for the festival programme. It will host a free Portuguese music marathon on October 29
with fado singer António Zambujo and his quintet; Rua da Saudade, a homage to the late poet José Carlos Ary dos Santos; and Ar de Rock, a tribute to the father of Portuguese rock, Rui Veloso. There is more rock at Hac Sa on November 1, as the beach welcomes Cui Jian, the father of Chinese rock, followed by Macau’s own musical hometown hero, Jun Kung, displaying his flair for composition and his drumming and singing skills. The concert is free. Before these blockbuster shows, at the opening of the festival, “Fame – The Musical” hits the Macao Cultural Centre stage between October 7 and 9. Barkley Kalpak Associates, the creative team that brought “Chicago” and
Juilliard String Quartet
Cui Jian Photo: Song Xiaohui
Photo: SteveJ Sherman
Dirty Dozen Brass Band
WHEN: October 7 to November 5 NUMBER OF SHOWS: 20 FESTIVAL WEBSITE: www.icm.gov.mo/fimm INFORMATION HOTLINE: (853) 8399 6699 RESERVATION WEBSITE: www.macauticket.com TICKETING HOTLINE: (853) 2855 5555 PRICES: Range from free to MOP1,500, with discounts available
REWARD “Guys and Dolls” to Macau in seasons past, puts on the show, performed in English, with Chinese and Portuguese subtitles. The Mandarin’s House welcomes “Rising Sun – The Musical”, from November 9 to 15. The drama recreates an intensely keen yet little known period in the life of Sun Yat Sen. Hong Kong’s SpringTime Stage Productions will collaborate with Macau’s Theatre Farmers to present this portrayal of the founder of the Republic of China. The show is in Chinese, with a synopsis in Portuguese.
Leading performances A highlight of this year’s season is Itzhak Perlman’s violin recital on October 20.
THE SOUND OF CHARITY part from its established cultural aims, this year’s Macao International Music Festival boasts a humanitarian side. The event joins hands with the international non-profit volunteer organisation Orbis for the first time, to host a charity concert honouring World Sight Day. Titled “Donde tengo el amor: the Sacred and the Profane in Mediterranean Traditions”, the show will be performed by Portugal’s early music consorts Ensemble Vocal Introitus and Sete Lágrimas. All ticket sales from the show, scheduled for October 13, will be donated to Orbis’ medical project in Nepal.
A virtuoso of the violin, he is known for his technique, direct interpretation and precision – and for playing sitting down. Also of note is the concert of the Vienna Philharmonic Orchestra, on October 10. With more than 160 years of history, it is one of the most prominent orchestras in the world. That says it all. As always, the Macao Chinese Orchestra takes to the festival stage, this time in commemoration of the founding of the Republic of China. For the “Xinhai Revolution Commemorative Concert” on October 15, the orchestra has specially commissioned new works from four distinguished composers of contemporary folk music: Liu Changyuan, Kuan Nai Chung, Hao
Weiya and Li Binyang. On the classical and contemporary chamber music programme, the focus is on the concert on October 23 by the Juilliard String Quartet, from the United States. For jazz aficionados, the festival presents the Dirty Dozen Brass Band, a music machine that has revitalised the brass band in New Orleans and toured around the world. They perform on October 28. As always, opera has a special place in the event. The festival’s production of Carl Maria von Weber’s “Der Freischütz” brings the season to a close. “Der Freischütz” runs for three nights on November 2, 4 and 5, and is subtitled in Chinese, Portuguese and English. AUGUST 2011
Arts & Culture
A dance tribute to Mexican iconoclast Frida Kahlo, “Casa Azul” injects life into the legend
ragments of a failed yet famed life will light the stage at the Macau Cultural Centre next month with the widely acclaimed “Casa Azul”, a dance tribute to Frida Kahlo. A revered figure whose paintings captured the world’s attention through the second half of the 20th century, Kahlo’s life is portrayed with fantasy touches and exotic stage design by the Donlon Dance Company, based in Germany. AUGUST 2011
The company weaves an intense performance in “Casa Azul” that mixes contemporary dance, ultra-modern staging and live Latin musical accompaniment. Irish choreographer Marguerite Donlon has recreated Kahlo’s many faces and self-portraits. The work takes its title from the blue painted house that was Kahlo’s home, a place of refuge that came to symbolise her rich, inner world
123 dancer Liliana Barros dances the role of Chavela Vargas, a female singer whose friendship with Kahlo is said to have stretched to the bedroom.
Inspired by Frida Kahlo DATE: September 21 TIME: 8pm VENUE: Grand Auditorium, Macau Cultural Centre DURATION: 80 minutes COST: Tickets MOP250, with discounts for seniors, children and supporters of the arts in Macau. Discounts for early bird and group buys are also available INQUIRIES: (853) 2870 0699 ONLINE: www.ccm.gov.mo
and is now a museum. The performance features a trio of Kahlos: Spain’s Meritxell Aumedes Molinero, Argentine Yamila Khodr and Frenchwoman Lorène Lagrenade. Musician and singer Hector Zamora has the role of Diego Riveria, Kahlo’s husband and an artist frequently regarded as one of Mexico’s greatest, and Portuguese
Frida Kahlo de Rivera was most widely recognised for her vibrant, surrealist self-portraits. Kahlo said she painted herself “because I am so often alone and because I am the subject I know best”. Her work was infused with vivid native themes and often raw depictions of a woman’s experiences – sex, rape, abortion, childbirth and infertility were all recurring motifs. The brutal honesty and black humour of her work won many fans among North American artists first, then the emerging feminist movement and finally a global audience. Hers was a life plagued by illness – including polio – and the fallout from a traffic accident while a teenager. She was run down by a bus in Mexico City aged 18 while studying to enter medical school. As she recuperated from the fractures in her spine, through her thorax and pelvis, painting helped pass the time. During the more than 30 operations she endured through her life it became more than a past-time, more of a full-time calling. Four years later, she married Rivera, 20 years her senior. He was already a heralded artist in his own right, famed for his communist political beliefs and bohemian lifestyle. Their relationship survived numerous infidelities, Kahlo’s bi-sexual affairs, poor health and inability to have a child. Their life was tormented by alcoholism, drug addiction, suicide attempts, divorce and remarriage before her premature death in 1954. With her death and subsequent greater awareness of her art, Frida Kahlo’s memory evolved into a popular iconoclast whose struggles ring true today.
Classics class It should come as no surprise that a Kahlo’s colourful life should inspire Marguerite Donlon, the artistic director and choreographer of the Donlon Dance Company. The “cheeky Irish choreographer” as she was described in leading dance
arts magazine Ballet-tanz, has created her own suite of reinterpreted classics throughout the first decade of this century. The titles suggest audiences are in for something out of the ordinary. “Carmen - Private”, “Giselle: Reloaded”, and “Swan Lake - Emerged” are awardwinning creations reinterpreting the original work. Far removed from what a modernday audience might consider “inaccessible”, her work has been acclaimed as bringing “the man on the street” back to the theatre. Critic Jochen Schmidt describes Donlon’s choreography as “the best production of Prokofiev’s ‘Romeo and Juliet’ not only in years, but in decades”. Since becoming director of the ballet at the Saarländisches Staatstheater or Saarland State Theatre in Saarbrucken, Donlon has made a mark on the German ballet and the international scene. Now with a decade behind it, her company has toured Europe, the United States, Ireland and South Korea. She has created ballet across the world. And in her wake, she has brought no small amount of fun. Donlon integrates art installations and video into her style. It is at once innovative, striking and humorous. In the version of “Casa Azul” destined for Macau next month, the audience can expect a recreation of Kahlo’s many faces. Budding dancers can also expect to follow in her footsteps with Donlon’s help. Donlon will teach the steps to “Casa Azul” and students will be able to devise their own, inspired by Kahlo’s works. The Donlon Dance Workshop will be held on the afternoons of September 17 and 18 in the Macau Cultural Centre’s 2nd floor Rehearsal Room. Dancers are expected to have a minimum of three years’ training and pay a MOP250 fee. The workshop is in English. Application forms are available online at the centre’s website, www. ccm.gov.mo, and must be returned by September 7. The less energetic might consider registering for the pre-performance talk on September 21 at the cultural centre’s conference room. The 30-minute talk, “I Paint, Therefore I Am”, is free of charge and in Cantonese only. Register by phoning (853) 2870 0699. AUGUST 2011
PARTY TIME FOR UNITED STATES What is more traditionally American than a barbecue? The answer is: nothing! No wonder then that the American Chamber of Commerce in Macau (AmCham Macau) chose to host a poolside barbecue at the Grand Lapa to celebrate the 235th Independence Day of the United States. The party, well attended by members and families of the American business community, was the kick-off to a season full of events, according to AmCham president Robert McBain. Already in the pipeline is a summer cocktail event, AmChamâ€™s participation in the upcoming Macao International Trade and Investment Fair and the Annual Gala Ball to be held on December 3. Reggie Martin, Richard Vuylsteke and guest
Charles Choy, Jean Alberti and Paul Tse
Reggie Martin welcomes Gary Chin
A cheer for the USA! AUGUST 2011
Martin Schnider and Ada Chio
Filipe Cunha Santos and family
Luciana LeitĂŁo, Luis Pereira and Kim Johnson
Frances Wong and Alan Chan
Consular section chief consul Hugh F. Williams from the U.S. Consulate General
125 OTAVIANO CANUTO WORLD BANK’S VICE-PRESIDENT FOR POVERTY REDUCTION AND ECONOMIC MANAGEMENT
Navigating the road to riches WHILE MOST COUNTRIES THAT EVOLVE FROM LOW- TO MIDDLE-INCOME STATUS HAVE FOLLOWED A FAIRLY COMMON ROUTE, THEIR NEXT STAGES POINT TO A MORE DIVERSE SET OF EXPERIENCES switchover of global growth engines is taking place. Developing economies as a whole are now the source of more than half of global GDP growth. As a result, concern has naturally shifted to a new question: Are there risks that some or many of these developing countries could fall prey to the “middle-income trap”? The “middle-income trap” has captured many developing countries: they succeeded in evolving from low per capita income levels, but then appeared to stall, losing momentum along the route toward the higher income levels of advanced economies. Such a trap may well characterize the experience of most of Latin America since the 1980s, and in recent years, middle-income countries elsewhere have expressed fears that they could follow a similar path. Does moving up the income ladder get harder the higher one climbs? In most cases of successful evolution from low- to middleincome status, the underlying development process is broadly similar. Typically, there is a large pool of unskilled labour that is transferred from subsistence-level occupations to more modern manufacturing or service activities that do not require much upgrading of these workers’ skills, but nonetheless employ higher levels of capital and embedded technology. The associated technology is available from richer countries and easy to adapt to local circumstances. The gross effect of such a transfer – usually occurring in tandem with urbanization – is a substantial increase in “total factor productivity,” leading to GDP growth that goes beyond what can be explained by the expansion of labour, capital, and other physical factors of production. Reaping the gains from such “low-hanging fruit” in terms of growth opportunities sooner or later faces limits, after which growth may slow, trapping the economy at middle-income levels. The turning point in this transition occurs either when the pool of transferable unskilled labour is exhausted, or, in some cases, when the expansion of labour-absorbing modern activities peaks before the pool is empty.
Going up Beyond this point, raising total factor productivity and maintaining rapid GDP growth depends on an economy’s ability to move up on manufacturing, service, or agriculture value chains, toward activities requiring technological sophistication, high-quality human capital, and intangible assets such as design and organizational capabilities. Furthermore, an institutional setting supportive of innovation and complex chains of market transactions is essential. Instead of mastering existing standardized technologies, the challenge becomes the creation of domestic capabilities and institutions, which cannot be simply bought or copied from abroad. Provision of education and appropriate infrastructure is a minimum condition. Today’s middle-income countries in Latin America saw
the transfer of labour from subsistence-level employment slow well before they had exhausted their labour surpluses, as macroeconomic mismanagement and an inward-looking orientation until the 1990s established early limits to that labour-transfer process. Nevertheless, some enclaves have been established in high positions on global value chains (for example, Brazil’s technology-intensive agriculture, sophisticated deep-sea oil-drilling capabilities, and aircraft industry). By contrast, Asian developing countries have relied extensively on international trade to accelerate their labour transfer by inserting themselves into the labour-intensive segments of global value chains. This has been facilitated by advances in information and communication technologies, and by decreasing transport costs and lower international trade barriers.
Getting sophisticated The path from low to middle income per capita, and then to high-income status, corresponds to the increase in the share of the population that has moved from subsistence activities to simple modern tasks, and then to sophisticated ones. International trade has opened that path, but institutional change, high-quality education, and local creation of intangible assets are also essential for sustaining progress over the long run. South Korea is a prime example of a country that exploited these opportunities to move all the way up the income ladder. As for maintaining high growth in developing countries, the remaining pool of rural-subsistence and urban-underemployed labour in low- and middle-income countries constitutes a stilluntapped source for increases in total factor productivity via occupational change. For this to succeed at the global level, middle-income countries that have already started the process must overcome the obstacles on the road to higher income, thereby creating demand and opening supply opportunities for the primary labour transfer in developing countries farther down the income ladder. Natural-resource-rich middle-income countries face a road of their own, one made wider by the apparent long-term increase in commodities prices that has accompanied the shifts in composition of global GDP. Unlike manufacturing, natural-resource use is to a large extent idiosyncratic, which creates scope for local creation of capabilities in sophisticated upstream activities, with the corresponding challenge to do so in a sustainable fashion. While most countries that evolve from low- to middleincome status have followed a fairly common route, their next stages point to a more diverse set of experiences in terms of institutional change and accumulation of intangible assets. Given advanced economies’ poor growth prospects, the world economy’s dynamics nowadays will depend on how successful country-specific steps up the income ladder turn out to be. AUGUST 2011
MAN-MAN STYLE (1)
MUG SHOOTING The Judiciary Police like to cultivate their own style of justice. Officially, they are only the city’s criminal investigation agency. In reality, they go beyond that, acting like a kangaroo court and convicting people through the media. The practice of presenting people in custody to the media with a hood covering their heads is simply unspeakable – especially because the suspects have usually not yet been formally charged with any crime. In several busts of illegal inns and brothels, the Judiciary Police have even allowed journalists to enter private premises to film or take pictures of suspects, before they are hooded. In a recent case, several alleged prostitutes were lined up outside a hotel for the amusement of the media. No hoods concealed the women’s identities. It is paradoxical that police follow such a practice, while judges restrain media from filming or taking pictures inside courts – in part, in order to protect the identity of the accused, since they are supposed to be innocent until proven guilty. Frozen Spy treasures the freedom of the press and knows some media outlets go bananas for a good crime story. There is no problem with that. The Judiciary Police should provide all relevant details as long as this does not compromise their investigations. What police officers should not do is act as avenging angels, condemning people to trial by media.
FREE FOR LUNCH Perhaps the police are quick to show suspects to the media because they are afraid they might lose them. The case of American actor Sean Penn scooting from a Macau jail because the police forgot his cell door was open is a classic. Mr Penn was arrested on suspicion of the attempted murder of a paparazzo. The episode took place in 1986 but it seems old habits die hard. A suspect taken into custody last month escaped from the Examining Magistracy because the police officer escorting him was too busy arranging lunch for his “guest”. The officer failed to notice that the suspect used a visit to the bathroom to run off. Luckily, the suspect was caught three hours later, having cleverly sought refuge in his apartment in Taipa. Frozen Spy hopes his lunch was still warm by the time he got to eat it. Oh, and according to Mr Penn’s biography, the governor eventually pardoned him.
The city administration’s easy-going style, “man-man” to use the Cantonese jargon, is widely known. But sometimes, it is just too much. The Statistics and Census Service, for example, often takes longer to post economic data than Beijing does. Want an example? Gross domestic product. The National Bureau of Statistics posted the mainland’s economic growth for the first half of the year on July 13. The Macau Statistics and Census Service says it will post the information on August 30. Frozen Spy was never very good at arithmetic. Even so, it is odd that it takes longer to get the statistics for a territory less than 30 square kilometres in area with a population of 560,000 people, than it does for a gigantic country of 9.6 million square kilometres and 1.3 billion people, which, by the way, is the world’s second-biggest economy.
MAN-MAN STYLE (2) Dear reader, Frozen Spy hopes you are ready for a surprising discovery made by our beloved officials. Here it is: Macau needs to limit the number of vehicles on its streets, the head of the Transport Bureau, Wong Wan, recently discovered. Mr Wong realised last month what everyone else has known for years. Do not get too excited. He seems to have no clear plan to ease the congestion. First, he says, we need to increase the number of public buses and taxis. Then, when the light rail transit system is finally ready, the government will introduce other measures. This will take at least four years. Meanwhile, if we are putting more buses and taxis on the streets but at the same time not taking steps to at least stabilise the number of vehicles, will it not make the traffic jams even worse? No worries, Mr Wong has a plan. He hopes to ask drivers nicely to avoid busy roads during peak hours and to hope that some will start taking the bus more often.
LOW-RISE EXPECTATIONS In a city full of skyscrapers like Macau, you may not think twice before taking the lift. But you should, two groups of engineers warned last month. This city of about 6,000 elevators and escalators has neither guidelines for their maintenance nor proper supervision of these contraptions. This is only the tip of the iceberg. There are dozens of occupations that lack proper regulation or even certification in Macau – including physicians, veterinarians and architects. Frozen Spy understands why officialdom does not seem too worried. The government headquarters is just two stories high.
EERIE SILENCE Amax Holdings has problems in its accounting department. So bad was the company’s arithmetic that its auditors said they could not verify the company’s accounts after it reported swinging from a loss to a profit of HK$1.17 billion (US$150 million) in the year to March. There were different views on the company’s stake in the Greek Mythology casino in Taipa and on Amax’s true financial health. Frozen Spy is quite aware Amax is no longer among the big boys in Macau’s gaming line-up. Even so, it seems strange that the government has kept mum on this subject. While Macau’s gaming industry is trying to make the case internationally that it is well regulated, it does no good to have one of its Hong Kong-listed players accused of cooking the books.
WOODEN RESPONSE Always ready to protect Macau to its utmost, the diligent Civil and Municipal Affairs Bureau announced last month that it had chopped down about 40 casuarinas on the Hac Sá seashore. The bureau says the trees were too old and rotten to be saved and posed a danger to the public. This is just part of a bigger plan, since the bureau aims to gradually remove all the casuarinas and replace them with something with a more tropical feel, such as palm trees, according to media reports. Frozen Spy is suspicious. Every time the Civil and Municipal Affairs Bureau announces some measure to protect Hac Sá, nothing good comes out of it. Just look at the construction work on the beach, where a huge wall is being erected, allegedly to protect the seashore. A couple of months ago a landscape architect visiting Macau could not believe her own eyes when she saw it. “A nonsense” was her verdict. Now the bureau is pouncing on Macau’s only treescape, where families and friends can have some Sunday afternoon fun. Frozen Spy knows it is a bit late now but shouldn’t the bureau have taken proper care of the trees in the first place?
PHOTO SPY This photo was taken at the car park of our very own Macau Science Centre. International city indeed!
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