As Macau enters its last full year under Portuguese administration there is growing unease about its over-dependence on gambling an industry whose proceeds still contribute up to 60 per cent of government revenues. These worries are overshadowing what is expected to be a relatively smooth transition to full Chinese cover eignty in 1999 with none of the political confrontation that marked the months leading up to the Hong Kong handover.
Last year was bad for tourism, when visitor numbers to Macau dropped due to a post-Hong Kong handover slump and coinciding with more than 25 triad-related killings in the enclave. Visitors from Hong Kong and Japan accounted for up to 87 per cent of visitors to Macau in the early 1990s ?a figure which fell to 66 per cent in the first eight months of last year.
Gambling monopoly
While the decline in Hong Kong is a concern, the killings over activities peripheral to the gambling scene may be more serious. It is unclear whether a new law combating organised crime introduced last August will be effective, as perpetrators of the murders are hard to track down, especially when they disappear back over the border into China.
The violence is bad for Macau's image, both in its attempt to encourage more diversified tourism and its bid to develop other high valued-added service indus-
Macau is internationally famous for its motor racing and since the early 11950s has held an annual Formula Three Grand Prix race each autumn. Formula Three cars and motorbikes race around the narrow streets of the Macau peninsula. Regular horse and greyhound races are also held.
Other notable events include international music and fireworks festivals, Portuguese bull-fighting in October and an arts festival in the spring. Chinese fesj tivals include a dragon boat festival in May and the A-Ma festival in April held in honour of the goddess of seafarers from whom Macau is said to derive its name.
The Tourism Activities Centre houses recently opened museums dedicated to wine and the Macau Grand Prix. The latter contains state-of-the-art virtual reality tries dependent upon the rule of law.
Macau's last Portuguese governor General Vasco Rocha Viera is clear about the problem. "For too long Macau has been promoted through casinos, gambling and nightlife which are associated with negative things such as loan sharks, prostitutes and triads… we are trying to diversify," he comments.
Talk of diversifying the Macau economy must inevitably start with tourism. In 1996 the territory attracted more than 8.1m overseas visitors ?nearly 20 times the resident population of 425,000. Tourism generated US$3.3bn (43 per cent of GDP) that year and employed close to one-third of the enclave's workforce. Recent setbacks should disguise the growth of the territory's tourist trade during the 1990s, especially from east Asian countries. Visitor arrivals from mainland China grew more than eight-fold between 1991 and 1996 to reach 600,000. In the same period the number of Taiwanese visitors grew by 366 per cent (620,000 in 1996) and those from South Korea more than doubled.
With gambling banned on the main-land and restricted to horse racing in Hong Kong, Macau enjoys something of a regional monopoly on the industry. The gambling monopoly will survive the handover period. Dr Stanley Ho, the head of Sociedade da Turismo e Diversoes de Macau (STDM) which has enjoyed an exclusive gambling franchise in the enclave for the past 35 years, has already motor racing simulators giving a vivid impression of the thrills of twisting negotiated with Beijing an extension of his franchise to the year 2001. But Macau officials are aware that this situation continuing beyond then is not a good long-term bet. While there is no guarantee that gambling will never be permitted on the mainland, Macau also faces growing competition from Vietnam and the Philippines as well as the occasional gambling ship.
Financial services
This uncertainty underlines the need for diversification and explains why Macau's tourist authorities are increasingly stressing other tourist attractions apart from gambling (see box). Particularly promising and potentially lucrative is the meetings, incentives, conferences and exhibitions (MICE) segment of the tourist market. A number of new facilities such as the Tourist Activities Centre and the Macau World Trade Centre have been built to enhance the attractiveness of Macau to MICE event organisers. In addition, a new convention and exhibition centre is under construction on reclaimed land off Taipa island with completion expected in 1999.
In 1996 the number of attendees at the 685 MICE events held in Macau grew by more 70 per cent over the previous year to reach 36,000. Disappointingly, figures for the first half of 1997 showed a sharp drop in the number of Macau-based events.
Offshore services are another potential opportunity for Macau and since 1991 have exceeded the value of exported goods. But here the shadow of Hong Kong looms large as a competitor in services such as accountancy, law, finance and other China investment-related activities. Despite the high liquidity of the Macau financial 6.1km Guai circuit. The maritime muse-um is perhaps the best place to learn about the seafaring origins of the Portuguese enclave. There is also the Taipa House Museum which gives an impression of the architecture and interior decor of the home of middle-class Macanese families in the early part of this century.
Macau is still a relaxing retreat compared with the skyscrapers of Hong Kong and boom towns of the Pearl River delta, containing many gardens, church-es and temples. There is still plenty of interesting colonial-style Portuguese architecture to be seen on the Macau peninsula. The cobbled square Largo do Senado featuring the Leal Senado building is among the finest, while the Bela Vista Hotel contains the most elegant of Macau's many excellent restaurants.
system it remains insignificant compared with its neighbour on the other side of the Pearl River delta. One reflection of this is the fact that more than half of the deposits in Macau's banks are in Hong Kong dollars.
Macau banks play a local role, serving retail customers and supporting investment in tourism and infrastructure facilities. For many, the hope is that an expansion of local businesses into China will provide more opportunities on the main-land. "Macau banks are not special compared with Hong Kong but they are another valuable vehicle for China trade, supporting the business activities of people in Macau who know people in China," says Mr Arduo Santos, Finance Director of Banco Nacional Ultramarino in Macau.
Hong Kong overspill
Macau officials play down the Hong Kong factor. "We cannot compete or be compared with Hong Kong," admits Mr Antonio da Paz, head of Macau's World Trade Centre. "But I believe we can reach a small market niche in China. For example, if a small-to-medium sized company from Europe or the USA wants to trade with China, I believe that it is more difficult to reach a contact in Hong Kong than in Macau."
The biggest recent success in this area was the relocation of Hutchison Telecoms' paging operations from Hong Kong, announced in October. The decision to sack 600 workers in Hong Kong to achieve this relocation was taken because of comparatively low labour costs in Macau. The average A shift of centre?
One of Macau's largest real estate developments has emerged as an offshoot of the new airport on the island of Taipa. The Macau Inter-national Airport Business City (MAIBC) is being developed by a newly incorporated company, Lei Pou Fat Development, 88 per cent owned by the Macau government and the rest held by CAM, STDM and two local investors. The commercial, retail and residential complex occupies a 436,000 square metre strip on the inland side of the airport reclamation area. The project is being developed in three zones ?developers are being sought for zones two and three and no final completion date has been set. At the heart of the development is a new 21-storey, 250-room hotel due to be opened in the second half of this year. The initial management contract for monthly wage in Macau (US$469 in 1996) was less than half the US$1,135 paid in Hong Kong.
The decision was also perhaps influenced by Macau's good existing telecoms infrastructure. Telephone capacity is now approaching 200,000 lines and the enclave became Asia's first fully digitalised network in 1993.
Attracting Hong Kong overspill in cost-sensitive services is one strategy which Macau is seeking to adopt. As well as lower labour costs, the mid-range monthly rental cost for prime office space per square metre of US$14.10 in Macau was only about one-fifth that of Hong Kong in the first quarter of last year. The purchase cost of office space in the same period was barely one-tenth this four-star hotel has been taken on by Swissotel. The hotel, complete with associated serviced apartments and retail outlets, and two adjacent office blocks will be joined to the air-port terminal by walkways.
Also included in the business city are zones dedicated to business equipped with offices, bonded warehouses and showrooms as well as an area specialising in residential apartments. While in the short term the development may appear to add to the current surplus of real estate and hotel beds coming on stream in Macau, Mr Simoes de Almeida, MAIBC executive director, believes that "the evolution of Macau means that the old town is now on one side, while Taipa [where the airport is] is in the centre". The Nam Van Lake and Cotai City developments are also contributing to this shift of centre. New road and rail links from Guangdong province will also enter Macau via Taipa island, he adds.that of the former British colony.
Despite a slump in the real estate market over the past few years, large-scale building projects such as Nam Van Lakes, Macau International Airport Business City (see box) and Cotai City are still under way on reclaimed land.
STDM is the major shareholder in the US$1.28bn Nam Van Lakes development which is still under way on reclaimed land on the south side of the Macau peninsula. The project, which includes residential, retail and hotel complexes as well as offices, recreational spaces and two artificial lakes, is expected to pro-vide a living and working environment for 60,000 people. Macau's new legislative building will also be accommodated in the new 1.5m square metre 'mini city'. While completion of the project has been delayed until 1999, it is still expected to reap about US$1.5bn in profits for the developers. Stanley Ho announced in November that the joint venture would be listed on the Hong Kong stock exchange in 1999.
Residential rental costs are only about one-third those of Hong Kong a reflection of the 30,000 vacant apartments in the enclave. With Macau's good health facilities, improving educational standards and Hong Kong being only one hour away by ferry, there is potential here for attracting residential overspill from Hong Kong. Possibly the biggest residential project on the drawing board is the Cotai City development which is planned to bc: built on reclaimed land extending on either side of the causeway linking Taipa and Coloane islands. The plan is for a relatively low density residential development with buildings being limited to six storeys. The new Guangdong rail terminus is also planned for this area, as well as schools and other public amenities.
You must log in to post a comment.