Macao to diversify its economy
Updated: 2016-10-11 09:46
By Feliks Cheang(HK Edition)
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The SAR aims to reduce its reliance on the gaming industry as it rolls out first 5-year plan. Feliks Cheang reports in Macao.
The clock has been ticking on Macao's first gaming license renewal since market liberalization in 2001. Yet, it is high time the government diversified the economy, noted Antonio Ng Kuok-cheong, a local lawmaker.
A former Portuguese enclave, Macao unveiled the final version of its first five-year development plan in September, after almost one year of preparation. The city formally embraced a long-term policy to diversify its gambling-focused economy by accelerating growth of its convention and exhibition industry, cultural and creative industries, traditional Chinese medicine and trade in services.
But to Ng, economy diversification in Macao is not something "as new as the five-year plan".
A golden opportunity arises with several gambling concessions likely to be coming up soon for renewal negotiations. One of the main criteria for the assessment of casino operators will be development of non-gambling facilities.
The licenses are government's "high stake" to call for not only non-gaming elements, but also conventions and exhibitions, cultural and creative, as well as traditional Chinese medicine collaborations in the casino and hotel establishments.
The six operators are all eyeing the license renewal, an eagerness that can be seen from their exponential investment despite the falling gaming revenue and a volatile economy, said Ng.
The lawmaker urged the government to seize this chance and encourage the casino operators to incorporate events, creative and traditional Chinese medicine sectors in their resort hotels.
"Expecting fewer gaming tables and more non-gaming elements, operators can offer more spaces with lower rents to local creative and cultural units and companies," Ng suggested. "For traditional Chinese medicine, health tourism is also a plausible investment goal."
It is not without precedent that the Macao SAR authority uses casino concession to boost other industries. Las Vegas Sands won its license in 2002 for its pledge to develop the convention sector in Macao, an edge the company has at its Venetian on the Las Vegas Strip, according to the local lawmaker.
"They invested in the event industry even before the government did so," he added. "It is a spin-off from the gaming industry. Operators here with luxury resorts and hotels wanted a share of this big market."
Boasting more than 35 casinos, Macao has surpassed Las Vegas to claim the status as the world's No 1 gambling city. However, at a meeting with Macao's Chief Executive Fernando Chui Sai-on in 2013, President Xi Jinping urged the city to accelerate diversification away from the casino industry.
The Macao government itself has long been growing uneasy about the SAR's heavy reliance on the gambling industry.
"The SAR government never wanted to make gaming the only industry of Macao," said Agnes Lam Iok-fong, president of the local group Macao Civic Power. Also an assistant professor of the Department of Communication at the University of Macau, Lam said former chief executive Edmund Ho Hau-wah aimed at using gaming as a "dragon-head industry" to "lead the body".
"After the handover (in December 1999), the plan was that tourists and gaming revenues could help boost cultural and creative, as well as other industries in the city," she said. "Without a complete plan, the government spent a rather long time to explore the possibilities."
Challenges ahead
As the Macao government formally pledged to diversify its economy, Alexandre Ma Iao-lai, president of the Macao Chamber of Commerce, said the government has weathered many challenges and a more diversified economy is dawning.
Addressing a recent reception in celebration of the 67th anniversary of the founding of the People's Republic of China, he commented that the six casino operators had massively invested in non-gaming elements and collaborated with small and medium-sized enterprises to diversity the city's economy, under the central government's support.
Human resources still remain a critical challenge in diversifying the mono-economy in Macao, said Lam, lamenting the fact that there is limited international marketing expertise and contacts to international buyers in terms of events and creative industries.
Davis Fong Ka-chio, director of the Institute for the Study of Commercial Gaming at the University of Macau, is also worried about the dearth of expertise and contacts. He believed the government should seriously consider which industry is worth developing.
"The goal of Macao's development is a 'happy and peaceful livelihood.' We shouldn't diversify the economy for the sake of it," said Fong. He considered a diversified economy is about building up a "portfolio management, rather than three pillar industries".
"The government is looking to diversify the economy to avoid the pitfalls that can come with putting too many eggs in one basket," he said. "It is all about a sustainable, healthy development."
Nonetheless, many are still looking forward to more plans and policies by 2020. "Gaming revenue has long been easy money, and we have spent decades trying to nail down a plan of economic diversification," Lam said. "But once you start, you cannot stop it."
Contact the writer at [email protected]
(HK Edition 10/11/2016 page4)