MB 75 | July 2010 by Macau Business

Smoking ban bad for casino health

ISSN 1812-6855

Global threat

Cybercrime has no boundaries. Macau is getting ready to fight back

Two truths

The (new) rise of the yuan Game on

Local junkets push Singapore’s tight rules No man’s land

Cross-border industrial zone faces criticism

Open skies Macau MOP 35 Hong Kong HK$ 40 Mainland China RMB 35

Bright future for private jets

july 2010

20-22 July 2010, Hyatt Regency, Tsim Sha Tsui, Hong Kong Discover how to increase profitability, successfully manage risk and find new opportunities in the Asia Pacific region This event follows our highly successful Betmarkets Asia 2009 and iGaming Asia 2010 and it has been fully updated to tackle high level topics including: • A full World Cup debrief and a preview of the new products and strategies for the 2010/11 sportsbetting season • The latest on in-play betting / in-running • Successfully pricing events and managing risk • New smart phone initiatives • Innovations in side bets and mini-games • Sportsbetting developments in casinos and lotteries throughout Asia • Overcoming payment and fraud issues in Asia • Case studies of sophisticated gambling in financial betting • China, India and SE Asia focus sessions

Speakers confirmed so far include: • Bill Mummery, Executive Director, SBOBET • Francis Uy, Chief Executive Officer, MEGASPORTSWORLD • Kim Heng Teo, VP Sales and Business Development, SINGAPORE TURF CLUB • Magnus Grinneback, Business Area Director, BETSSON • Tim Shepherd, COO, SILVER HERITAGE • Christian Heap, International Business Director, SPORTECH • Dennis Verrios, Director, Business Development, TOTE TASMANIA • Simon Burrell, Director, PICKSPAL UK • Todd Kurie, Head of Marketing, REGENT MARKETS • Stephen Paradiso, Sales Director, BETOPTIONS • Paul Judge, Owner / Director, REAL-TIME SPORTSCAST & RUNNING-BALL • Tony Tong, Co-Founder, PACIFICNET VENTURES • Benjamin Tin, Business Development, INDEPENDENT GAMING BUSINESS • Paulo Azevedo, Publisher & Founder, MACAU BUSINESS • Sajan Nair, Director Operations, DUSANE INFOTECH INDIA • Alan Pedley, Principal Consultant, GAMING ASSOCIATES • Maurits Bruggink, Principal, RIDENS CONSULTING

Organised by:

www.sportsbettingasiacongress.com JUly 2010

JUly 2010

july 2010

Transport

Investment

Industry

Property

24 Taxiing for takeoff Growing demand for private jets

30 Cross border blues Macau-Zhuhai industrial zone lacks lustre

Economy

34 High times Yuan’s appreciation good news-bad news 36 Big thinking A look at the future of the Pearl River Delta metropolis

MB Report

44 Confronting cybercrime How it can affect you and your business

JUly 2010

56 Buying time Chinese companies interested in Portugal

58 Bumper month Market at high levels 61 Bad medicine Report criticises mortgage subsidies 62 Cost counting Edmund Ho’s new office raises questions

MB Files

63 Construction and Real Estate Your guide to Business and Industry

Essential

81 Fine dining, wine & spirits Your guide to indulgence

july 2010

Gaming

72 The Billions Race New quarterly record 74 Stock watch Las Vegas Sands eyes Japan 78 Banning the butt Smoking ban potentially harmful 97 Hot in Asia Shuffle Master grabs a piece of the pie 98 Macau presence seen as central to Harrah’s IPO Can the casino giant get in? 100 SJM hints at softening VIP spend Uncertain future in China may affect bets 102 Here they go Macau’s junkets very own Singaporean style 104 Irresistible momentum Philippines high on private casinos 106 Church sets sights on Pagcor Filipino bishops lobbying against gaming

G2 Asia Special

108 What the exhibitors say Opinions on the gaming convention and expo 116 Game changer Variety is slowly hitting the tables 118 RGB fights back Company partners with boxer Manny Pacquiao

JUly 2010

Human resources

120 Global Management Challenge Ukraine flying solo

Arts & Culture

122 Sepia burns Crafting masterpieces with fire 124 Picture perfect The art of stone carving 126 Funny bunnies Mermaid Theatre back in town

Entertainment

128 Party On Casino staff get the night 130 Great ball! BBAM puts its dancing shoes on

Opinion

10 From the publisher’s desk 26 The role of professional management in family business governance 33 Hot off the press 43 Mission: Impossible!? 55 The new rule

july 2010

To blog the leaders The Internet allows this kind of undeniable truth: a better perception of the popular sentiment. Both for better and for worse. Amidst all the junk, the Nigerian money-making scams and a whole lot of other nonsense, the Internet is home to many valid opinions from people that have no other way of expressing themselves. A kind of mass therapy. And someone who has finally confessed herself to be closer to the problems of the residents of Macau is the former president of our own very peculiar parliament, the Legislative Assembly. In her blog – which we have mentioned several times in the past – Susana Chou engages views regarding problems that she considers important and reveals how much she did not know about Macau’s citizens during the ten years she was the SAR’s second-most important politician. It’s the old problem of being driven around in the black (official) cars. Leaders driven around with police escorts clearing the way are not able to experience the traffic problems in Macau, because they are not directly confronted by those same problems. They do not see the frustrated looks on the faces of the population because they can’t see through the tinted windows. In one of the latest entries, Ms Chou tells the story of a citizen whose life – and that of his parents – had been a constant struggle. JUly 2010

After many years, the family managed to save enough money for the downpayment on a humble MOP800,000 apartment. They felt wronged by the public fanfare surrounding the MOP80 million that will be spent to build the compound which will house the two giant pandas offered by the Central Government in Beijing. It’s not a question of the pandas being offered. It’s not even a question of the price of the special accommodation – although the figure only fails to impress certain local civil constructors and public works officials. It’s the circus surrounding the offer and its despicable show of nouveau riche-ism with public monies. It led the former head of the parliament to question the “sensibility and wisdom of certain top officials”. The criticisms were implicit and directed at the Civic and Municipal Affairs Bureau and, especially, the Secretary for Administration and Justice Florinda Chan. We cannot but agree with these criticisms. At a time when real estate speculation is rampant and inflation erodes the purchasing power of the lower classes by the month, people are asking for trouble and failing to exercise “political wisdom” when they fuel a noisy campaign over a secondary and even superfluous act – no matter how generous we consider the offer from Beijing. It’s true that we are used to these kinds of acts but thanks to the power of the Internet,

It’s not a question of the pandas being offered. It’s the circus surrounding the offer and its despicable show of nouveau riche-ism with public monies

silly events are no longer easily kept quiet and their impact can even be magnified. We do not expect our rulers to leave their official cars in the garage and start walking, returning to a healthy governing habit when rulers saluted people in the streets while hearing countless stories and problems on their way to the office. But perhaps our secretaries – or maybe their chiefs of staff – could have their own blogs, same as some Legislative Assembly members have. The heads of bureaus should follow the same path. The current process of receiving public suggestions is so unfriendly that citizens are actually dissuaded from participating.

Has anyone seen the CCAC?

It has been six months since the new government took over and we have not read a single line about the Commission Against Corruption (CCAC). Maybe it and the government are still getting acquainted? I may not be the kindest guy around but even I refuse to believe the rumours that Judge Vasco Fong Man Chong was chosen with a mandate to bring discretion back to the commission. In other words, to operate the commission on a “need to know” basis. This is all part of the fallout from the Ao Man Long scandal. Of course, the Ao case is just the beginning of something deeper, a fact that some lawyers have only just realised. Perhaps that is because they only read the Portuguese newspapers. The delay by the commission to publicly show that it’s doing something – whatever that may be – is starting to worry us. After all, didn’t this administration publicly promise to be as transparent as possible? It would be interesting

to see if Judge Fong and his team are paying attention to certain real estate-related businesses and development projects. We’re also interested to know if they will be setting priorities in order to avoid more “cases” in the highly desirable new land reclamation plans that were approved by the Central Government and will considerably increase the size of Macau. By the way, what does the commission think about projects that suffer dramatic alterations while being developed or about public assets that are not used for their intended purpose? Since the handover, the commission has lost the second half of its name which reflected – besides the fight against corruption – the fight against administrative illegalities. Sometimes, there is no corruption, just…err…ignorance that leads to attacks on administrative legality. Can we still rely on the commission to restore legality in administrative acts? Can we still count on the commission? Is anybody home? july 2010

VOL.1 Nº74

Editorial Council Paulo A. Azevedo, Albano Martins, Duncan Davidson, Edmond Ieong Man Cheong, Herman He

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JUly 2010

Contributing Editors Carlos Picassinos, Christina Yang Ting Yan, Derek Proctor (Bangkok), Island Ian, João Francisco Pinto, José Carlos Matias, Lois Iwase, Luciana Leitão, Maria João Belchior (Beijing), Marta Curto, Max V. de Leon (Manila), Ray Chan, Sofia Jesus, Steven Chan, Wu Yu Regular Contributors Branko Milanovic, David Cheung, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang

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Advertising Bina Gupta

Hong Kong Bureau Michael Hoare (Chief), Anil Stephen

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Fátima Cameira

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fcameira@macaubusiness.com

Europe Bureau Joyce Pina (Chief)

isabel.abreu@macaubusiness.com

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Paula Joyce

Special Correspondent Muhammad Cohen ecohen@aya.yale.edu

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

Photography António Falcão, António Mil Homens, Carmo Correia, John Si, Nuno Calçada Bastos, MSP Agency, Agencies Illustration G. Fox, Rui Rasquinho

Isabel Abreu José Reis

jreis@macaubusiness.com

Xu Yu, Irene

irene@bizintellingenceonline.com

Translations Stephanie Chu, PROMPT Editorial Services 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

july 2010

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Restaurants

june july 2010

New leadership team for Macau Foundation

Shuffle on the foundation’s Board of Trustees and administration team puts Wu Zhiliang in charge, replacing veteran leadership

acau’s leading supporter of cultural, scientific and philanthropic projects has a new president with the announcement that Wu Zhiliang is replacing veteran leader Vitor Ng. The transition takes place on July 11 and comes with a number of changes elsewhere in the organisation. Sociedade de Jogos de Macau director Angela Leong On Kei, Dr Stanley Ho’s fourth wife, was appointed as a councillor to the Board of Trustees, along with Legislative Assembly lawmaker Chan Meng Kam and Executive Council member Lionel Leong Vai Tac. While three new members join the board, the 15 sit-

ting members will retain their positions as councillors. There are changes to the institution’s administration as well, with Zhong Yi Seabra de Mascarenhas, a former member of the Macau Grand Prix Committee, named as a councillor. The appointments of part-time members Ho Kuai Leng and Peter Lam Kam Seng were confirmed. The role of President of the Supervisory Board remains with Chui Sai Cheong remains, with Ho Mei Va and Vong Hin Fai deputising. All appointments come into effect on the same day Mr Wu Zhiliang takes on his new duties as president. Mr Ng is leaving the post after nine years citing personal reasons.

Wealth gap expanding The European Commission, the European Union’s executive body, says the wealth gap in Macau is expanding. “Although Macau’s economy managed to weather the [global financial] crisis it remains over-reliant on the gambling industry and continues to see a widening wealth gap expand,” the European Comission wrote on its 2009 annual report about Macau, published last month. However, the European Commission “notes positively Macau’s efforts to diversify its economy, which will be beneficial for its long term stability.” For 2010, “the European Commission is keen to see progress in bilateral dialogue [with Macau] in matters such as civil aviation and taxation of savings.” “The dialogue on possible further measures [in the area of taxation of savings] which could be genuinely equivalent to those of the [European] Savings Directive will be continued in 2010,” the report added. In the political field, “the record turnout [regarding the 2009 elections for the Legislative Assembly] was a positive indicator of Macau’s political development and a sign of rising civil awareness in the territory. “The European Commission welcomes this development and believes that the increasing political maturity of Macau’s citizens provides a solid foundation for progress towards greater democracy in Macau.”

JUly 2010

Government to limit CEM’s rate of return The Macau government has indicated that the minimum rate of return on capital investment for Macau’s only electricity provider, CEM will be reduced. The goal is for consumers to enjoy a cut on their electricity bill within this year, the Macau Post Daily reported. According to the director of the Office for the Development of the Energy Sector, Arnaldo Santos, the government and CEM are currently reviewing the terms of the company’s concession contract, which expires in November. Santos said the new minimum rate of return on capital investment would be set anywhere between one and nine percent. Currently, CEM’s minimum rate of return on capital investment is 12 percent.

China-Taiwan deal good for Macau China and Taiwan last month signed an historic trade pact, the most significant agreement since civil war split the two governments 60 years ago. The Economic Co-operation Framework Agreement (ECFA) removes tariffs on hundreds of products, and can potentially boost bilateral trade between both sides. The agreement is also “positive” and “beneficial” for Macau, the government spokesperson Alexis Tam stresses. “It is a good sign of integration and regional economic and social cooperation, which will only bring benefits for China, Taiwan, Macau and Hong Kong”, Tam told the Portuguese news agency Lusa. “We are part of a region of strong development and any act of bilateral or multilateral cooperation which promotes integration and sustainable development of a vast area like China is always positive,” he said.

july 2010

ICBC positive on Macau

Still a destination for human trafficking

he US Trafficking in Persons Report 2010, published last month, continues to earmark Macau as a jurisdiction whose government does not fully comply with US Trafficking Victims Protection Act’s (TVPA) minimum standards, but adds the territory “is making significant efforts” to bring itself into compliance with those standards. In a ranking of three tiers, from full compliance with the TVPA standards (tier 1) to failing to comply with them and making no efforts to do so, Macau is placed on tier 2, the same position it has held for the past two years. Macau is “primarily a destination, and to a much lesser extent, a source territory for women and children subjected to trafficking in persons, specifically commercial sexual exploitation,” the report says. “Victims are primarily from the Chinese mainland, Mongolia, Russia, and Southeast Asia, with many of them from inland Chinese provinces who travel to the border province of Guangdong in search of better employment. There, they fall prey to false advertisements for jobs in casinos and other legitimate employment in Macau, but upon arrival, they are forced into prostitution,” it adds. Besides that, “foreign and mainland Chinese women are sometimes passed to local organized crime groups upon arrival, held captive, and forced into sexual servitude. Chinese, Russian, and Thai criminal syndicates are believed to sometimes be involved in bringing women into Macau’s commercial sex industry,” the report explains. Last year, authorities convicted one trafficking offender during the past year but “made limited progress in anti-trafficking law enforcement efforts”, the report notes. “Authorities identified far fewer victims during the reporting period than in the previous year and victim identification and protection efforts need to be further improved,” the report stresses, adding that “Macau has the resources and government infrastructure to make greater strides in combating trafficking.” The US Trafficking in Persons Report is published annually by the US Department of State. JUly 2010

The head of the Macau branch of the Industrial and Commercial Bank of China (ICBC), Shen Xiaoqi, predicts the economic development of the territory in the second semester will be even stronger than in the first half of the year. The ICBC also cast a positive outlook on the local real estate market, TDM reported. For Shen, the economic pattern of Macau is rather special: its ability to quickly recover from crisis is strong. Macau’s Gross Domestic Product (GDP) expanded by 30.1 percent in the first quarter of 2010, a year-on-year rise in real terms from 27.4 percent growth in the fourth quarter of 2009.

Getting closer Macau and Guangdong signed last month a number of agreements to further enhance co-operation, as delegates met at the Guangdong-Macau Joint Co-operation Conference. The conference, held at the Macau Government Headquarters, was presided over by the Chief Executive, Fernando Chui Sai On, and the Governor of Guangdong Province, Huang Hua Hua. Both sides agreed to strengthen co-operation by opening up Hengqin Island to tailor-make a new tourism route between Guangdong, Macau and Taiwan, strengthening international tourism promotions, and enhancing co-operation on business tourism. The two governments signed an agreement on tourism co-operation and two memorandums on further co-operation and on studying the feasibility of building research facilities to study Chinese medicine. Both sides also discussed topics such as cross-border infrastructure, transportation planning, co-operation on business, and education.

Mandarin Oriental opens doors The new Mandarin Oriental Hotel opened its doors last month. Part of the One Central mixed-use complex, it includes 213room, a 320-square-metre ballroom and two meeting rooms. The hotel also features a spa, a wide range of dining options and a fitness centre with an outdoor temperature-controlled swimming pool. Also last month, the Mandarin Oriental Hotel Group announced an agreement to brand and manage 56 residences and 36 apartments that are located above Mandarin Oriental, also in the One Central complex. With a planned opening in 2011, “The Residences & Apartments” in Macau will be the first branded Mandarin Oriental residential concept to open in Asia.

july 2010

Water tariffs to change

Government wants progressive charging for residential water consumption

he government is preparing to implement a progressive tariff for residential water consumption and two pricing categories for commercial and industrial water use, it was announced last month by the Working Group for the Establishment of a Water-Saving Society. The plan will be open to public consultation until the end of this month and the goal is to set up a new water pricing scheme from January 2011. For each market segment, the government has laid down two alternative price proposals. Progressive charging for residential water consumption will be divided into three levels. People who consume more, will pay higher water tariffs. For instance, people who consume less than 30 cubic meters of water each two months, will pay MOP4.39 per cubic meter (proposal 1) or MOP4.30 per cubic meter (proposal 2). At the highest level, for consumptions above 51

Filipino job seekers told to delay trip Filipino Labour Secretary Marianito Roque advised Filipinos trying to find a job in Macau with only tourist visas to delay their plans. In an article on the Filipino Labour Department website, Roque stressed that the hiring of foreign workers has been stalled following the passage of Macau’s new imported labour law that prioritizes local workers. “With the new legislation, it is no longer easy for foreign workers to go there and find jobs, unlike in the past when they could apply and easily fill vacancies as walk-in applicants,’’ said Roque. “Filipino workers should be wary especially against unscrupulous individuals or agencies who may entice or bring them to Macau, because at the moment there is no hiring of foreign workers,’’ he added. Based on official data from the Philippines, a total of 6,729 overseas Filipino workers were deployed to Macau in 2009, most of them employed in the tourism sector.

JUly 2010

cubic meters of water each two months, the tariff will be MOP5.27 per cubic meter (proposal 1) or MOP5.33 per cubic meter (proposal 2). As for non-residential water consumption, it has been divided into two categories. The commercial and industrial sectors, public departments, schools, hospitals and associations are labelled as “general non-residential use”. Casinos, hotels, saunas, theme parks, golf courses, construction sites and provisional water use are included in the “special consumption use” category and will pay the highest tariffs in Macau - MOP5.80 per cubic meter (proposal 1) or MOP5.78 per cubic meter (proposal 2). The current tariff stands at MOP4.39 per cubic meter. There are no price differences between residential and nonresidential water consumption. The government expects to save three to four percent of water consumption with the new tariff mechanism.

Local products on display The Macau Trade and Investment Promotion Institute (IPIM) is planning to launch a products display centre in the territory. According to the president of IPIM, Cheong Chou Weng (also known as Jackson Chang), the goal is to showcase Macau’s products and brands as well as foreign products from Macau agents, in order to facilitate commerce and trade. There is still no location for the centre, but IPIM hopes to open it by the end of this year or early 2011. IPIM will also consider establishing other display centres outside of Macau, Chang told reporters.

Thai chamber of commerce set up Thailand has just set up a chamber of commerce in Macau. The goal is to promote economic relations with China and Portuguese-speaking countries, said the Thai Trade Minister, Porntiva Nakasai, quoted by news agency Macauhub. “Creating the chamber of commerce in Macau has the main aim of promoting expansion of Thai exports to China and to Portuguese-speaking countries,” noted Porntiva Nakasai. Local businessman, Lino Ho, will head the Thai chamber of commerce.

JUly 2010

july 2010

Transport

Taxiing for takeoff Growing markets, increasing affluence and the gaming dollar have the business aviation sector buzzing, but will Macau take advantage where Hong Kong and the mainland appear to have missed out? by Muhammad Cohen

acau has a key role to play in the sky’sthe-limit potential, business aviation sector but only if there’s more room made for more facilities. That was the word from aviation executives attending the Asia Business Aviation (ABA) conference and expo last month. The one-day event at the Macau International Airport featured more than a dozen aviation manufacturers and supporting businesses, displaying 12 aircraft to a crowd that was dominated by consumers rather than big business. JUly 2010

The take-home message was about growth – and lots of it. According to one industry source, half of all business jets sold around the world last year went to Asian buyers. “I was shocked at the number of representatives here for the brands,” Asian Business Aviation Association (ABAA) chairman Chuck Woods says. His association and Reed Exhibitions organised the inaugural event.

Build for growth

As business aviation develops across the mainland, opportunities will emerge and

expand for Macau. “Macau is one of tens of big cities in China where aviation activity will develop,” said Dassault

Falcon vice-president for international sales Jean-Michel Jacob. The company has supplied charter operator Macau

25 Jet with a Dassault Falcon 2000 that can fly from Macau to anywhere on the mainland without refuelling. “Southern China will grow for private aviation,” says Jolie Howard, director of business development for TAG Aviation in Hong Kong. Across the delta in Hong Kong, limited hangar space crimps any potential growth and that could mean nothing but blue skies for Macau. “If Macau can allocate space to business aviation, it can be a good business for the airport,” Howard said. Macau’s potential as a private jet base is hampered by a lack of business jet facilities, according to Mr Woods, who also serves as CEO of charter carrier Jet Asia. “We think infrastructure is an area that should have more attention paid to it,” he says. Macau’s international reach further enhances growth opportunities. Asia Jet CEO Mike Walsh told Macau Business that his charter firm received an inquiry from a fleet owner in India about developing a strategic partnership at ABA. Last year, Hong Kong-based Asia Jet carried Bollywood stars from Bangalore for the Indian International Film Awards in Macau.

Demand is growing

“As Macau continues to expand, there will be more business jets here,” Gulfstream vice-president for international sales Roger Sperry told Macau Business aboard a G550, an airliner-sized business jet whose price runs upward of US$50 million

(MOP400 million) flown in for the ABA event. A veteran local aviation executive who asked not to be named forecast that the number of private jets based in Macau would double from the current 15 to 20 within the next 18 months. “Private jets and gaming go hand in hand,” he said. “The growth of private aviation is in parallel with the gaming business – not the tourism business, but the gaming business.” The connections between the two industries do not end there. “Macau has a direct impact on our business through the casinos,” said Bombardier regional vicepresident David Dixon. “It’s not just the casino owners but their customers. Like in our business, casinos employ very specific targeted marketing to select the people who use their jets. That experience has led to people buying their own jets, or chartering themselves.” “ABA Macau and G2E [Global Gaming Expo] Asia were deliberately juxtapositioned because gaming professionals attending G2E Asia are often either users of business aircraft or even owners of their own fleets,” said Reed Exhibitions head of global sales for aerospace and aviation Richard Thiele. “Both sectors are in strong growth mode in Asia, so there was a natural synergy between the events.” “There’s a good future in Macau for private jets,” says Embraer China customer account director Brian Wang. “Because of the casino business, a lot of rich people come here.”

Jet Asia on course J

et Asia is staying the course,” CEO Chuck Woods told Macau Business during the Asian Business Aviation event in Macau last month. Founded in 1995, Jet Asia is part of Dr Stanley Ho’s Sociedade de Turismo e Diversões de Macau (STDM). The company’s fleet of ten jets, including six new Hawkers that cost US$84 million in all, serve the public as well as bringing VIP gamblers to properties of Sociedade de Jogos de Macau (SJM), STDM’s gaming arm. Mr Woods would not comment on any possible changes in management personnel amid reports that Dr Ho’s daughters Pansy Ho and Daisy Ho have overseen Jet Asia operations since their father fell ill last year. Sources in gaming and aviation say the daughters have pressed Jet Asia to show profits, a change from their father’s position. “We’re expecting certain decisions on where to best use the assets,” Mr Woods said. He added: “For serving the gaming industry, the question is how best to do it. If 80 percent of the movements are coming from [mainland] China, does it make sense to fly empty three hours to pick up customers and three hours back?” Charter companies including Hong Kong’s Asia Jet are seeking permission to base planes on the mainland. Mainland-based jets can also get faster approvals for domestic flights because Macau and Hong Kong are classified as international destinations. Despite the limited private jet facilities in Macau, Mr Woods welcomed the arrival of rival Macau Jet. “Macau Jet is a great thing,” he said. “In business aviation, the more, the merrier.”

july 2010

analysis Simon S.M. Ho Simon Shun-Man HO, Vice Rector (Academic Affairs), University of Macau

The role of professional management in family business governance Family business is still the most important component of the global economy today, and also the most common form of enterprise in the world. Not only is it vital to the family clan that owns and controls it, but it also plays a pivotal role in the whole socio-economic order. The remarkable achievements of quite a number of listed family businesses in the Far East are universally acclaimed. The author believes that if the management models of these corporations are further improved, they may become some of the best corporate governance models in the world and worthy of being emulated by the Western markets. On the other hand however, a series of incidents or scandals concerning the corporate governance of Chinese family businesses that have occurred in recent years have made people ponder and reflect on the key factors for their success and failure. According to the relevant literature, the popularity of family business is due to several factors. These include sustaining and enhancing the value of family assets (including intangibles such as credit standing, reputation, networking, government connections, etc.) and easier execution of ownership rights. Furthermore, business founders usually wish their management philosophy, values and satisfaction to be shared and succeeded by their trusted family members rather than outsiders. Concentrated ownership could also reduce outside influences and free-riding behaviour. The major advantages of a family business are: lower agency and contact execution costs, aiming at longer-term returns, bonding family fate with corporate reputation, family members more active involvement in management, and more efficient decision making under a more centralized structure. However, there are also several disadvantages or limitations of a family business including over reliance on family networks, reservations on the appointment/retaining of outside senior executives, lower corporate transparency, less emphasis on governance structure, potential conflicts between family executives and minority shareholders, and overlooking succession issues. Clearly family businesses have both strengths and weaknesses and it is important to integrate family management and professional governance. Major governance concerns include external financing sources, potential expropriation activities of controlling shareholders, independence of board and directors, chairman/CEO duality, relationships among family shareholders, family succession, and the role of professional executives in family businesses, etc. This article focuses on the last dimension of family business governance. JUly 2010

Increased Involvement of Professional Management Chinese entrepreneurs, who started their business from scratch, like the “hands-on” approach to management, and they even attend to every detail personally. In the West, by contrast, most family businesses adopt a “hands-off” approach, once they have gained a firm foothold and are running on the right track, the controlling shareholders tend to hire professional managers to take full charge of the day-to-day operations while retreating to the Board to assume advisory and supervising duties. There are cases in the West in which the major shareholders still hold on to the management control power after the company is listed (e.g. Rupert Murdoch of News Corporation). However, the percentage of such cases is much smaller than in Asia. Of course there would be certain advantages if family enterprises lost no time distributing the management control power to family members (70% of Hong Kong listed enterprises have family members as their CEOs). It is true that many highlevel posts in family enterprises are held by family members, including the CEO, the GM, the CFO, the COO, etc. However, if the entrepreneurs’ children are not yet in a position to take over the family business due to a lack of experience, competence, interest or aptitude, the entrepreneurs can hire independent professional managers to undertake all or most of the high-level management work. This will also help foster the next generation of entrepreneurs to take over their own establishments in the future. In fact, more and more enterprises are willing to hire professional managers to achieve the transformation from traditional family businesses to modern enterprises. For example, the Hong Kong industrial giant, Yip’s Chemical Holdings Limited, has implemented a new management structure since 2003, with the Board of Directors being responsible for corporate decision-making while the Management Committee (MC) takes charge of business operations. Yip’s Executive Directors are mainly family members, whose responsibilities include making the long-term development plans and strategies, as well as supervising the operation of the MC, which consists mainly of independent professionals. This practice ensures that there is a clear-cut division of work and

More and more enterprises are willing to hire professional managers to achieve the transformation from traditional family businesses to modern enterprises independence between decision-making and its execution, as well as straightening out the collaboration between them. Furthermore, some founders of family businesses holding the post of general manager or CEO, attempt to leave their posts vacant for professionals to apply openly, with lucrative offers, showing their open-mindedness, broad vision and mettle. For example, in April 2007, the well-established Hong Kong Hysan Development Company Limited announced that its Managing Director, the heir to the founding Lee family, Michael Tze Hau Lee, after 17 years dedication to the company, was retiring from his current post at his own will. He retired right after the annual Board meeting in early May, to pursue his personal aspirations and goals, including more participation in serving the community, while remaining on the Board. Hysan invited applications for the post of new Managing Director through a worldwide open recruitment, the first open recruitment for this post since the Company was listed in 1981. Indeed such cases are uncommon among the listed familycontrolled companies in the region. The practice of openly recruiting a company CEO can reduce the company’s familytinted features, as well as help boost its image and efficiency in management. As a matter of fact, the Hysan Development Company Ltd has actively carried out reforms in its management in recent years, and most of the directors on the Board are not from the Lee clan; therefore, the Board can achieve a better balance in its decision-making.

Carefully Handling the Agency Cost of Professional Management On the other hand, hiring outside professional managers can also lead to other management problems (or agency problems), which must be handled with care. The controlling shareholder (the Principal) takes full advantage of various monitoring and incentive mechanisms to prevent the senior managers (the Agent) from acting against the interest of the company or of the controlling shareholder. If monitoring devices fail, some professional executives would probably either squander or misappropriate the corporate property, or miss good opportunities for long-term investment because they are unwilling to take strategic risks or are concerned with securing only short-term income.

Moreover, when the managers become too powerful, the company or the Board of Directors may lose control over them and corporate bureaucracy will run rampant, thus doing great damage to the company’s interest. Take the famous brewery Huanghe Group in the Chinese mainland for example. It was founded by its president, Yang Ji Qiang, in 1985. His four sons served respectively as Chairman of the Board, General Manager (CEO), Manager and the like, in its subordinate listed company, Lanzhou Huanghe. After its listing, the company attempted to openly recruit senior professional managers. This was a practice considered very rare and bold in the Chinese mainland at that time. Eventually Wang Yan Yuan, an expert in media communication, was appointed as vice chairman of the Board and deputy general manager, mainly responsible for the company’s listing. However, Wang secretly set up his own business and power after joining the company and even transferred the company’s benefits and interests to his own family enterprise. In the end he was held in detention on suspicion of violating regulations. As a result, the Huanghe Group called shareholders together for a general meeting, dismissing all the directors and top management personnel from their posts, and appointed Yang’s sons to resume the post of vice chairman of the Board of Directors and the post of general manager, and re-elected other family members as board directors. Consequently, the company returned to the situation in which the family had complete control of the enterprise. The so-called “Huanghe Incident” reflects the dilemma of family enterprises: on the one hand, they need to hire professional managers to provide assistance; on the other hand, the managers may not share the same interests with the family shareholders and may even go against the company’s interest. In addition, due to the deficiency of the legislation and legal protection, some family enterprises often waver over hiring top professional managers, and sometimes even suffer from a loss of high-caliber talent. In those family enterprises where the ownership rights and control rights are totally separate, there will also be similar agency problems. For example, several years ago, in the wellknown American computer company, Hewlett-Packard (HP), the professional management once planned to merge with Compaq but could not get support from the heirs of the HP july 2010

analysis

Many family enterprises attach great importance to employing professional CEOs, and are willing to attract and encourage them with favorable packages shareholding family. With the two sides opposing each other, the management later placed an advertisement in a number of American newspapers, quoting from one of the HP founders, Dave Packard: “To remain static is to lose ground”, suggesting that if the two founders were still alive, they would also choose to change with the times and accept the merger. However, David Packard, Dave Packard’s son, fought back by quoting another of his father’s sayings: “More companies die of indigestion than starvation”, criticizing the management for quoting a wrong saying from his father. Bill Hewlett, son of the other HP founder, Walter Hewlett, made use of the media to refute the management’s suggestion, regarding it as detrimental to the company as a whole. From these examples we can see that after the management has gained full control rights, it may go totally against the will of the shareholding family.

Appointing Talent according to Merit Sometimes professional managers may find themselves playing an awkward role in operating a family business; therefore, it is of great importance for them to handle the relationship with the family members effectively, and possess certain personal traits. In successful cases, the professional manager is often recognized as one of the family rather than a total outsider. In other words, in order to earn the family’s trust, professional managers must get along well with the family, and be modest without losing their independent and professional stance. At the same time they must keep on offering advice in proper ways so that their own ideas can be brought into full play and their decisions fully supported. Of course, the Chairman of the Board of Directors in a family enterprise will keep a constant watch on the independent CEO, and challenge him while providing guidance, encouragement and support. In other words, to the CEO, directors have a dual role as “a cop and a coach”. In any case, as family enterprises keep on growing, and are hiring more non-family managers, they need to establish a set of standards, and a fair and transparent system of appointment, assessment and reward, in order to motivate topnotch professionals. Family members of course can work JUly 2010

in a family business, but their role should be clear. When selecting a family member or an “outsider” to assume a highlevel post, the overall interest of the company should be taken into consideration, i.e. to find the most suitable person to lead the company. Then, no matter how big a shareholder you are, if you are found incompetent or performing poorly through assessment, you will have to hand over your post to others. On the other hand, no matter whether you are a family shareholder or not, as long as you are qualified and competent, you can always earn yourself a place in the company. The appointment should be made according to one’s merits without avoidance of kinship, and competence and abilities should always be the yardstick in all matters. Family members cannot be excused their wrongdoings due to their special identity. Otherwise, this would make the management confused. If a professional manager has decision rights, other family members should respect their leadership. It is supposed that, even if the appointed independent CEO is very loyal and capable, some families are still concerned that the cost of hiring professional managers is too high. However, in reality such concerns do not seem to be justified by research statistics. As a matter of fact, family enterprises are more likely to benefit from hiring professional managers than their non-family counterparts. According to recent research done by the author on the listed companies in Hong Kong, family enterprises pay much more on average to the CEO than non-family enterprises. Although professional CEOs (accounting for about 32% in number) receive a notably higher remuneration than the family member CEOs (about 68%) in the family business, the bonuses they receive have shown a remarkable correlation with the profits gained by the enterprise. This also indicates that many family enterprises attach great importance to employing professional CEOs, and are willing to attract and encourage them with favorable packages. Some statistics also show that if the heirs of the founding family serve as CEOs in the family enterprise, they are likely to spend more on their material pursuits and comforts than the founding CEOs or professional CEOs.

july 2010

Industry

Cross border blues Three years after it opened, opinion is divided on the success of the the Zhuhai-Macau Cross Border Industrial Zone by YUci Tai and Emanuel Graça

fficially inaugurated in December 2006, the success of the Zhuhai-Macau Cross Border Industrial Zone is in dispute. While businessmen speak of a lost opportunity, the Macau government says it is achieving its goals. An investigation by Macau Business has found that 80 percent of the projected plants on the Zhuhai side of the industrial zone have been built, however, many have been shut down. On the Macau side, about JUly 2010

a third of the area is not in use, prompting some businesses to consider moving out.

Officially positive

Macau government figures are more positive. The cabinet of the Secretary for Economy and Finance told Macau Business that there are now a total of 114 companies operating in the Zone, of which 34 are on the Macau side. Of these, 26 operate on rented industrial areas in facilities built by the govern-

ment. The remaining nine projects include the construction of factories. This is far less than what was initially envisaged. In 2004, 68 applications were presented to the Macau government, 42 of which requested land leasing to build factories, adding up to more than 1.5 times the size of the entire industrial zone. After being reviewed by a special committee, in early 2005, 23 projects got the goahead on the Macau side, seven of which involved the

construction of factories on leased land.

The original goal

The 0.4 square-kilometre zone is located near Gongbei, in Zhuhai and Ilha Verde in northwest Macau, and is split 0.29 square kilometres in Zhuhai and 0.11 in Macau. The State Council approved its establishment on December 5 2003. Its original focus was to promote the sustainable development of Macau’s traditional industries, namely manufacturing.

31 cally in line with Free Trade Zone policies, while products made in the Macau area enjoy zero-tariff benefits for domestic sales in accordance with CEPA regulations. The zone’s customs checkpoint is open 24-hours. Imports and exports can be declared at one checkpoint but subsequent clearance is allowed at different customs checkpoints.

Photo: John Si

Unused space

It was also supposed to house auxiliary services like logistics, transit-trade, conferences and exhibitions. Different management systems were employed on the two sides of the zone. The Zhuhai side - an extension of the Zhuhai Free Trade Zone - operates as a Free Trade, Zone and is managed as a closed area. On the other hand, the Macau side is managed in accordance with the local laws and policies. Goods made on the Zhuhai side can be sold domesti-

Jack Chan Wai Chi, chairman of the Zhuhai-Macau Cross Broader Industrial Zone Chamber of Commerce, says the main infrastructural problem is outdated industrial positioning, which has not kept up with the development of the local economy. Chan accuses the Macau government of having no action plan to introduce new dynamics into the industrial zone, adding that the relevant government departments have never tried to find out what the real situation is on the Macau side. But the government thinks otherwise. “The Macau government sees the industrial zone as a policy instrument to promote diversification in Macau’s manufacturing sector,” the cabinet of the Secretary for Economy and Finance told Macau Business in an emailed statement. “With food and beverage manufacturers, pharmaceutical and medicine manufacturing firms, and computer components manufacturers operating in the Macau area, the Macau government believes that the development of the Zhuhai-Macau Cross Border Industrial Zone is instrumental to the future development of Macau’s moderately-diversified economy,” it added.

on the Macau side. For instance, Sociedade Industrial de Macau (SIM). The coffee production company’s site covers more than 2,100 square metres, including factory, warehouses and offices, with a total investment of MOP200 million. In 2007 Venetian Macao also leased a 190,000 square foot warehousing and logistics centre situated on the Zhuhai side of the industrial zone. The eleven-floor building was set to be used as a servicing centre to support the company’s hotel, retail and entertainment developments. The zone was even to receive a distribution centre for Portuguese products, in a partnership between Chinese group Nam Kwong and Portugal’s External Trade Institute. However, the project was dropped in 2009.

Demand for change

Another reason businessmen are complaining is the lack of preferential policies to make the industrial zone attractive. Instead, factors such as shortage of human resources, increasing payrolls and other operational costs are making business harder, they point out. “The main problem is the industrial zone’s unclear positioning and lack of innovation,” says Jack Chan, who is engaged in the warehousing and logistics businesses

on both the Macau and Zhuhai sides. Chan recalls that the initial goal of the zone was to drive the growth of the local textile and clothing industries. However, that didn’t happen, he says, with several companies eventually relocating to the mainland, leaving a large part of the Macau side empty. On top of that, the distinct management styles on either side of the industrial zone don’t make for efficient cooperation between companies, Chan says.

Grabbing opportunities

Chan insists that it is essential to re-examine the positioning of the Zhuhai-Macau Cross Border Industrial Zone, and he suggests four proposals to help do so. First, he stresses the need to establish a forward-looking positioning of the infrastructure, focusing on high-tech, capital-intensive and valueadded industries. To achieve this, he notes, it is necessary to launch preferential policies to attract companies. Secondly, the Macau government should establish a goods distribution centre in the zone, since almost all goods consumed locally are imported. This would help to reduce costs and shorten delivery times, while promoting

Success stories

There are indeed some successful companies operating july 2010

Industry

the Macau side as a logistics platform, Chan says. Finally, the businessman expects the customs agreements to become more flexible and the Macau govern-

JUly 2010

ment to put more effort into promoting the zone. The government says there are no plans for change, just studies. “A working team jointly formed by government

officials from Macau and Zhuhai is now researching the feasibility of introducing new policies into the industrial zone to develop the Zhuhai side into a modern service hub, nurtur-

ing logistics and warehousing services, and other trade-related business,” says the cabinet of the Secretary for Economy and Finance. Meanwhile, due to the industrial zone’s current situation, some community leaders have called for an end to the restrictions at its border checkpoint, in order to fully open up one more border point between Macau and Zhuhai. Currently, special permits are required to use this checkpoint and only goods vehicles owned by factories within the industrial zone are allowed to use it. Chan doesn’t oppose this, but says the government shouldn’t put the cart before the horse. Officials “should primarily solve the operational difficulties found by investors who have purchased land in the industrial zone and support their development,” he adds.

Photo: Luís Almoster | MSPagency.org

Keith Morrison Author and educationist - kmorrison.iium@gmail.com

Hot off the press Is there a new momentum for social and environmental improvement in Macau? Heard the latest? A raft of innovations has come in, heralding a new dawn of improved quality of life for Macau’s citizens. Macau will have affordable property for young and old, through a collective banking initiative to sponsor a loan scheme which will see housing loans of up to 98 percent and for a longer term, regardless of whether or not you are a first time buyer. To ensure that greedy property owners and agents don’t suddenly hike up property prices, and to reduce the pauperization of Macau because of greed, the government has set up a new independent watchdog to calculate the value of every property coming on the market, and it will be illegal to ask more than five percent above the value set by that body. Both of these will come into operation by the end of the year. In a show of good sense, Macau now has a compulsory pension scheme for all citizens, designed to yield them a living income. It is funded by a one percent tax increase for those earning more than 12,000 patacas a month, rising to a four percent increase for those earning 40,000 patacas or more a month. At last, legislation has been passed for a minimum wage of 35 patacas per hour for all full-time and part-time workers, to come into effect in July 2011. The issue of illegal workers, which fuelled a bad-tempered, violent public demonstration in May, concerning which 53.6 percent of survey respondents considered the police action to have been ‘too radical’, is all but solved. A massive injection of public money will fund a large task force of inspectors whose sole job it is to conduct in-depth, lightning spot-checks and searches of workers in construction, retail and tourist-related activities in Macau. Newspapers report that Macau is set to ‘cleanse itself’ of illegal workers. Further, a Clean Air act has been passed, and a stringent cap has been placed on vehicle emissions. All vehicles, including motorcycles and motor scooters three years old and over, must pass an annual exhaust emissions test as a condition for issuing the vehicle tax certificate. All public transport must become zero-emission within three years. Subsidies of five percent will be given to all who purchase

hybrid cars over the next three years, and a new-for-old car replacement scheme, like those in the US and the UK, will run initially for two years, starting August 2010. To crown this, a ban on smoking in all indoor public places and workplaces will come into effect in December 2010. The May Day demonstration in Macau voiced serious public concern about employment, housing and poverty. To tackle growing social unrest in Macau, particularly amongst its youth and workers, a group of local and international academics, economists, entrepreneurs and philanthropists has been formed as a new multi-disciplinary think tank. It is charged with making recommendations to the government to promote diversified employment and career opportunities for Macau’s youth, to enhance the employability of semi-skilled and unskilled workers, to reduce the gross gap between the rich and poor of Macau, and to bring all of the population out of the poverty trap. It has met twice, and will report within one year. New legislation is due to be brought to Macau’s legislative assembly concerning major reforms for energy saving. A new independent organization, the Energy Reform Group, will hold its first meeting this summer, and must make concrete proposals to the government for measuring the carbon footprint of businesses, for compulsory energy saving, for workable carbon taxation and offsetting systems, and for a carbon levy on all fuel purchases. It must also make recommendations for the long-term use of solar energy. Coupled with the concern to prevent environmental degradation and pollution, a recent study has recommended a four-year moratorium on the sale of land for private building projects in the Macau peninsula and the two islands, and the conversion of existing brown field sites into public parks. The icing on the cake is the announcement of a major new piece of legislation on transparency in all aspects of Macau’s government and its officials, with independent verification, audit and required disclosure, due to take effect in January 2011. Then the alarm clock rang and I woke up. As children’s stories say: ‘it was all a dream’. None of it was real. A fugitive moment. Macau has a City of Dreams and it is one. july 2010

Economy

Reforms aid competitiveness

he reform in the mainland’s foreign exchange regime will help increase the competitiveness of the country’s exports in the global market, Ministry of Commerce spokesman Yao Jian told Xinhua news agency. Reforms could increase pressure on mainland exporters in the short term because production goods will become more expensive. Moreover, the growing cost of manpower and the European debt crisis may affect exports. But, in the long term, exporters have to improve corporate management and expand the industrial chain to improve their competitiveness. An improvement in the balance of payments, particularly a significant drop in the trade surplus, had created a solid foundation to relax the almost two-year-old peg to the dollar. The ministry has forecast a significant fall in the trade surplus this year. During the first five months of the year, the trade surplus dropped 59.9 percent.

Appreciative applause

High times A better bottom line for the casinos and more expensive groceries are the likely outcomes of the yuan’s recent strong appreciation against the dollar; the government is prepared to move if inflation flares by Vanessa Amaro

fter its peg was relaxed, the yuan has seen its biggest daily gains against the US dollar since 2005 when the official rate was revalued. Since late last month there have been a series of new records highs and there are some analysts predicting the currency may appreciate by JUly 2010

as much as 5 percent over the next 12 months. That is a good news-bad news story for Macau according to economist José Duarte. Since the pataca is pegged to the Hong Kong dollar, which is indexed to the US dollar, the local currency will tend to depreciate in value. For most people

alaxy Entertainment Group’s deputy Chairman Francis Lui Yiu Tung is applauding the appreciation of the yuan. He believes it will lead to more spending on gaming, raising profits. Mainland gamblers currently contribute 57 percent of revenues to his casinos and he predicts that percentage will increase hand-in-hand with the rise of middle-class tourism.

Time to act

redicting higher inflation rates that will penalise Macau’s lower-income households, the vicechairman of the Union of the General Associations of Neighbourhoods of Macau Leong Heng Kao has proposed that the government begin sending cheques from the cash handout scheme as soon as possible. The Kai Fong spokesman has also argued for an increase in electricity subsidies, lower rents and for greater flexibility in importing essential goods. V.A.

35 that means a loss in spending power and increased prices for essential goods. “So, immediately, the sustained appreciation of the yuan will reflect on prices of day-to-day products, since most goods consumed in Macau are from China. To sum up, this means that prices will increase,” Duarte told the Macau Hoje daily. Price rises are “inevitable” says economist José Santos due to the high dependence on imported Chinese products. “Technically, there is the possibility that the pataca may be pegged to another currency on-level with the yuan, which could make it stronger and avoid negative impacts on the domestic market,” he said.

Ready to act on inflation

In the latest round of CPI figures, the Secretary for the Economy and Finance Francis Tam Pak Yuen said inflation rose 2.76 percent year-on-year in May, while the general CPI reached 104.06. The rise was mainly due to a 6.6-percentage point increase in transport prices and a 4.9-percentage point increase in the cost of food and non-alcoholic beverages. In the first five months of this year, the index’s average composite CPI grew 1.98 percent compared to the same period last year. The 12-month average has increased by about 0.83 percent. Duarte believes that the inflation rate may already be feeling the consequences of the yuan’s new-found power but there was not yet a reason to despair. “It’s a plausible increase when faced with the growth of the yuan. But we must not forget that inflation at this level is no concern for anyone and it’s an imported phenomenon, since there has been a slackening of domestic demand following the departure of many non-

Yuan settlement extended The People’s Bank of China, China’s central bank, announced last month that the yuan settlement pilot program in foreign trade has been expanded to cover the entire world. The People’s Bank of China (PBOC) said it had expanded where Chinese exporters can use the yuan to settle trade from the original Association of Southeast Asian Nations (ASEAN) and Hong Kong and Macau to the rest of the world. It also added 18 provinces and municipalities to the program. The move comes about one year after a trial scheme was introduced in five mainland cities. According to the official news agency Xinhua, the move is part of the government’s efforts to reduce its reliance on the U.S. dollar to avert foreign exchange fluctuations, and also to increase the yuan’s international importance.

resident workers,” he said. Tam says that “inflation remains within the control of government” and has flagged relief measures if the effects of inflation are “felt in the lives of the more underprivileged classes”.

A silver-lined cloud

The more the yuan rises, however, so do the profits from casinos, hotels and tourism. In the first quarter, 3.3 million mainlanders visited Macau out of 6.1 million visitors in total – an increase of 20.9 percent over the same period last year. With the yuan gaining in value “the Chinese get wealthier” Duarte said “and may become even more crucial for tourism. “As tourism is the basis of the local economy, the more wealthy and at leisure the Chinese are, the greater is the possibility they will come to Macau to spend money in the casinos. So, we can expect more profits, since casinos are real money-making machines which do not get affected by crisis.” Tam can also see the benefit in a rising yuan, as it will boost tourism in the region. “The appreciation of the yuan

will obviously affect the economy of Macau,” he told the Lusa News Agency. “If the pataca drops in value, more tourists will come to Macau, which will have a positive impact.” There is also the opportunity that mainland investment in Macau could become increasingly strategic. “More Chinese money will come in and the investment could rise significantly,” Santos said.

A change in tone

Until recently, the yuan has been virtually pegged to the US dollar for the past years. It is a situation the mainland’s biggest trading partners considered an “artificial undervaluation” of the currency. Ahead of the Toronto G-20 Summit the People’s Bank of China announced “more flexible exchange rates”, going some of the way towards satisfying the mainland’s trade partners. Beijing has the largest currency reserves in the world, estimated at about US$2.5 trillion and the World Bank forecasts its economy will see a 9.5 percent growth this year, up almost a percentage point on last year.

july 2010

Economy

The dream of a three-city Pearl River Delta “metropolis’’ is a long way off, but a recent forum went some way to mapping it out by Herman He

igh-level talks are underway to get Guangdong, Hong Kong, and Macau to join hands to build what is being billed as the Pearl River Delta metropolis. Details of the plan were spelled out at the third ‘Pearl River Forum and Summit on Creating a World Class PRD Metropolis - Present and Future Perspective’, which took place in Macau on April 22. With such a huge task ahead, Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, who hosted the Forum, said the ‘Framework for PRD Region’s Development and

Reform Planning’ has for the first time incorporated Guangdong-Hong KongMacau cooperation at a national level of development planning. The Framework has positioned Macau as a worldclass tourism and leisure centre, which is basically how Macau positions itself. But it is clear that diversification will be needed.

Metropolis view

While Tam spoke mainly regarding the interests of Macau, the Vice Governor of Guangdong Province Lei Yulan seemed to be taking things from a wider “metrop-

olis” point of view. She said Guangdong places great importance on promoting closer cooperation between the three places. At the opening ceremony, Hong Kong’s Chief Secretary for Administration Henry Tang Ying Yen said that Hong Kong has remained the vanguard after overcoming challenges derived from the financial crisis in the PRD region, but little of what he had to say shed any light on how the region would arrive at its “metropolis” dream.

Talks within talks

Some local academics at the forum said they were sur-

prised that the representatives of the governments of the three regions seemed to have their own talks within talks. “Co-operation between Guangdong, Hong Kong and Macau is not a new topic. Now Guangdong has proposed the goal of joining hands to build a ‘world-class group of cities’, yet Hong Kong and Macau apparently have not made direct responses. “It is doubtful how much recognition these two SAR governments will place on the issue,” said one. As Secretary Tam pointed out in his speech, the positioning of Macau lies in the

Photo: Luís Almoster | MSPagency.org

“The development of the PRD metropolis should target “gaining a stand in Asia Pacific and the world,” says Liang Guiquan, President of the Academy of Social Sciences of Guangdong Province

Economy

MICE industry (Meetings, Incentives, Conventions and Exhibitions). He said the MICE industry was a focal factor in the economic diversification of the city as well as a key element in the travel and leisure sector, not only in Macau but also across the region.

Five of the best

To this end, he proposed five expectations with respect to the regional cooperation of the MICE industry. First, he hoped that governments of the three regions would jointly promote the development of the MICE industry by entering into co-operation agreements, setting up coordination and joint promotion mechanisms, and providing guidance to regional development and work divisions of the MICE industry. Macau will focus on developing exhibitions for entertainment, consumer products, fashion, culture, arts, and regional branded products as well as small and medium-sized conventions. Second, Tam wants the government to support MICE enterprises in the three regions to organise collective exhibitions and jointly develop exhibition brands. To this end, Macau will make contributions by organising the Macau International Environmental Co-operation Forum & Exhibition (MIECF) and enhancing the Macau International Trade and Investment Fair (MIF) up to international standards. Tam also encouraged the MICE industries of the three regions to unite and JUly 2010

foster exhibition enterprises with stronger international competiveness. Departure and arrival procedures should also be improved to make it easier and cheaper for exhibitors and visitors to come. Training of MICE professionals is also a must. Finally, he called on the three regions to integrate their MICE resources and jointly exploit the market in Portuguese-speaking countries.

Global profile

Liang Guiquan, President of the Academy of Social Sciences of Guangdong Province, said that the development of the PRD metropolis should target “gaining a stand in Asia Pacific and the world”. In the coming two to three decades, the regions should participate and support the rise of an economic belt along the West coast of the Pacific Ocean and transform into a significant regional international economic centre and development hub, and a major strategic Southern area that opens China’s door to the world. Liang says in the course of developing such a metropolis, cooperation with non-governmental organisations should be enhanced. In fact, he said, the conception of jointly building a “world-class group of cities” is highly attributable to wisdom and efforts pooled from think tanks of government departments and academics in the community. Experts and scholars from Taiwan were also invited to conduct thematic discussions.

Tse Chi Wai, Director of Macau’s Research Centre for Sustainable Development Strategies of the Government of the Macau SAR, said in his closing speech that Guangdong, Hong Kong and Macau have made relatively large progress in terms of infrastructure construction and integration via the introduction of the Overall Development Plan of Hengqin, the official construction of the Hong Kong-Zhuhai-Macau Bridge, and the joint compilation of the Planning on the Coordinated Development of Infrastructures. He was optimistic about the future of the farsighted goal of developing the PRD region into “the most energetic and internationally competitive group of cities in the Asia Pacific Zone”.

Differences

For Anthony Wu, Chairman of Hong Kong’s Bauhinia Foundation Research Centre, it is most essential that the three regions consciously consider themselves a part of the PRD metropolis and jointly enlarge the market, instead of simply considering their own shortterm interests. He believes that the major problem with the cooperation between the three regions lies in their respective values, with the three regions having their own characteristics under the practice of “One country, two systems”, CEPA and the use of three different kinds of currencies. Chen Wenling, Director General of the Comprehensive Affairs Department, Research Office of the State Council pointed out that passenger transport,

logistics and capital flow and information exchange are the keys to success. Chiang Wa Fong, Deputy Director of the Research Centre for Sustainable Development Strategies of the Government held that though Hong Kong and Macau enjoy the privileges of “One country, two systems”, it is necessary for the PRD to

make full use of the principle. If it lacks a positive attitude in putting regional co-operation into practice, this privilege, to some extent, will be an obstruction to regional integration. Unless all of the above is undertaken in a serious manner, the dream “world-class PRD metropolis” will be

merely empty talk and an unreachable goal, academics said. Organisers said the forum laid down solid foundations and Liang also suggested scholars and research institutions from the three regions set up a strategic federation to provide reference for future development.

july 2010

Economic Trends by José I. Duarte Introductory note

Table 1 - Income and consumption Income

(MOP)

Disposable income

Consumption

30,000 25,000 20,000 15,000 10,000 5,000

Household income and consumption

0 2003

2008

Table 1

Table 2 - Income and consumption per capita Income

(MOP)

Every five years, the Statistical Department carries a major survey on the income and expenditure of the households. That survey is a critical foundation in the process to update the composition of the basket of goods and services used for the calculation of the Consumer Price Index. But beyond that purpose, those surveys provide a wealth of information that deserves more attention than is usually the case. It is not in the scope of this space to make a comprehensive analysis of the data. But even at a very high level of generality, a few questions and features resulting from the 2003 and 2008 survey are worth pointing out.

Disposable income

Consumption

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000

Table 1 highlights the somewhat dramatic changes in income, disposable income and consumption that took place in just five years. First, the growth in average income is striking for such a short period: about 65% for income and over 40% for disposable income. Secondly, as is implicit in the previous figures, there was a significant increase in the tax burden. Surely, the calculation of disposable income includes both direct taxes and net transfers. But as the latter are the minor and decreasing part in income, taxes must therefore explain the difference between income and disposable income, which jumps from 3.7% to 17%. Thirdly, the figures show a noticeable decline in savings, as consumption rises from about 75% of the disposable income in 2003 to more than 90% in 2008. Table 2

1,000 0 2003

2008

Table 3 - Household Income (decile group median) 2003

(MOP)

2008

avg 03

70,000 60,000

The same kind of comments could be made about Table 2, where the same variables are calculated per capita. Given that the number of members per household was very similar in both periods, the patterns observed per capita are very similar to those observed per household. Nonetheless, it is worth underlining that consumption per capita increased by 76% in the period, which signifies and yearly average growth in consumption of more than 11%. Table 3

When analyzed by deciles, the figures suggest a reduction in income asymmetries. In fact, the ratio between the top and bottom deciles decreases from 20 to just slightly over 13. At each income group, the increase in the median income is significant, varying from 40 to 100%. The bigger increases appear to have taken place in the lowest income levels, with the exception of the lowest deciles that are, comparatively, the abandoned group in the growth process.

50,000 40,000 30,000 20,000 10,000 0 d1

JUly 2010

d10

41 Income sources

Table 1 - Income sources (household)

Table 1

Transfers

(MOP)

Property

Employment

30,000 25,000 20,000 15,000 10,000 5,000 0 2003

When we look into the sources of income, we detect some interesting features. In absolute terms the biggest increase is in employment related income, which means mainly wages (Table 1). Their contribution to the average household income rises to almost 80% from just below 70%. As property-related income also increases, the weight of transfers on the average household income decreases both in absolute terms (3354 to 2511 patacas) and relative terms (22% to 8%). This is a natural and expected evolution as the average income rises, especially if it is accompanied, as appears to be the case, by a less asymmetric distribution of income. Table 2

2008

Table 2 - Income sources (quintiles)

Employment (08)

Property (08)

Transfers (08)

(MOP)

Employment (03)

Property (03)

Transfers (03)

60,000 50,000 40,000 30,000 20,000

Table 2 shows the structure of income sources by quintiles. We can see again that the inter group ratios are lower in 2008 than 2003. An exception must be made to the property-related income that, without much surprise, sees that ratio increase a little. Note a few additional features. First, in all classes, just the employment-related income is bigger in 2008 than all the income in 2003. The new prosperity is strongly driven by rising salaries. Secondly, net income transfers increase for the two lower quintiles and decrease in the others. The decrease is particularly significant in the top quintile. Thirdly, property-related income increases significantly, in relative terms, across all groups. Table 3

The last table, shows in a very simple way, the relative growth in the income components, taking 2003 as the base year. It sums up much of what is implicit in the previous ones. Income growth is driven by wages and property revenues, which rise by 87% and 112%, respectively. Transfers decrease by a quarter in the period.

10,000

Table 3 - Income sources growth Employment

(2003=100)

Property

Transfers

Total

250 200 150 100 50 0 2003

2008

july 2010

Economic Trends by José I. Duarte

Output and expenditure

2009 (in MOP)

GDP current Consumption Investment

Economic Activity

Government Trade balance: goods Trade balance: services GDP constant (2002)

169,343 million 41,601 million 31,580 million 13,739 million - 39,274 million 121,695 million 169,342 million

- 2.4 5.7 - 39.0 12.6 - 5.1 9.1 - 2.4

2009

% var

Money and prices

30,608 million

January (in MOP) February (in MOP) Credit (in MOP) Deposits (in MOP) IPC/Inflation rate(*) AMCM base rate

212,153 million 101,064 million 207,247 million 101.40 base - 2008 0.50 %

Population/Labour force

2009

Population Labour force Median wage rate (in MOP)

542,200 329,200 8,500 3.0 %

Unemployment

Construction

2009

228,874 m2 Finished 1,406,242 m2 Cement (Apparent consumption) 276,710 tons Transactions/Commercial (in MOP) 2,976 million Transaction/Residential (in MOP) 21,517 million

Major sectors

Started

Gaming

Gross revenue (in MOP) Casinos Tables Machines

Tourism

2009

23.8 11.8 10.1 11.8 1.16 --

% var

Latest (in MOP)

24.4 4.5 - 37.0 - 3.9 27.0 50.0 30.1

Latest

% var

31,452 million 215,935 million 105,283 million 210,809 million 103.68 base - 2008 0.50 % Latest

- 1.3 - 1.5 6.3 - 0.1

542,400 323,300 9,000

% var

- 57.1 40.7 - 56.9 - 1.9 - 27.7

% var

17.4 9.8 14.4 9.7 2.56 --

% var

Notes Q1 Q1 Q1 Q1 Q1 Q1 Q1

Notes March March March April May, var

Notes

3.0 %

- 0.7 - 3.0 4.7 - 0.7

March, var

Latest

% var

Notes

1,308 m2 322,267 m2 21,918 tons 282 million 6,179 million Latest

9.6 2 18.7 21.1

14,296 million 33 4,811 14,503

2009

% var

Latest

- 5.1 - 6.5 -9.8 -2.9 0.6

% var

47,402 million 10,703 million 4,353 million 2,562 million - 11,381 million 41,164 million 42,234 million

120,383 million 33 4,770 14,363

21,753,000 Average expenditure (in MOP) 1,616 Average stay 1.10 days Hotel rooms 19,259 Occupation rate 71.60 % Average Hotel stay 1.50 nights Visitors

% var

2,112,000 1,783 1.52 days 19,408 79.0 % 1.46 nights

- 91.4 117.4 - 0.3 197.7 530.9 % var

70.0 0 0.9 1.0

% var

13.1 8.9 0.13 10.4 19.98 0.14

Q1 Q1 Q1

April April April April April

Notes April

Q1, var, ytd Q1, ytd Q1, ytd

Notes April Q1 Q1 March Q4 March, var

%var - % change on homologous period; var - absolute variation; ytd - % change, year-to-date; x - discontinuous series April 2010 (*) Important note: The inflation base period has changed ( New base: April 2008 to March 2009 = 100) JUly 2010

Sources: DSEC (Direcção dos Serviços de Estátística e Censos), AMCM (Autoridade Monetária e Cambial de Macau), DICJ (Direcção de Inspecção e Coordenação de Jogos)

best practices

Ricardo Andorinho Business Developer | MB Intelligence Consultancy Limited (“MBi”) andorinho@mb-intelligence.com

Mission: Impossible!? With so many activities and roles to play in life, we repeatedly have the impression of needing a full week to accomplish the actions we have scheduled for just the next 24 hours! Such an impression is probably one of the reasons for the success of the “Mission: Impossible” sequel as it continues to bring millions of people to the theatres. The plot, the gorgeous actor playing the spy and the stunning actresses that spice up the pace of the movie, are definitely “good ingredients”, but the major determinant is, in our opinion,of the title of the sequel and the curiosity, enthusiasm and respect that such a title brings to its audience. Don´t you want to find out what the next “Mission: Impossible” is? Or, even how the double agent accomplished such an impossible mission? Well, do you remember his sophisticated plans? What about the resources involved? With so many ingredients in this sequel, you will probably forget the “plans” and the “processes” shown in each movie sequel, but they are in fact, a huge part of its success! We repeatedly feel that we are living impossible missions because most of us try to play too many different roles at the same time. A wife or a husband, a dad or a mom, a daughter or a son, a student or an employee, a member of a particular club or association, a resident or a non resident and definitely a tax payer: - theseare just common roles that concern us all! Whether we think of our lives as segments (physical, education, financial, work, family, friends, community, etc) or as a particular role or function, there are just some days that we feel close to having a nervous breakdown! The good news is that 65 percent of stress comes from the a lack of planning and setting goals. Then, what are you waiting for!? Get your planner out of the draw and start filling your time with activities. Time is nothing more than a space we can fill with activities!

Now, if we start discussing how to balance your time with your activities, being able to contemplate all your roles, that´s a totally different issue! Such a task requires practice! However, you can use some of the below tips: Identify a SWAT Team, where SWAT stands for “Special backup people who fill in at Home”; Identify time wasting activities and remove them from your work day; Take control over technology; As someone once said, “You don´t have to be on 24 hour call as long as you return your calls within 24 hours!”

We repeatedly feel that we are living impossible missions because most of us try to play too many different roles at the same time. A wife or a husband, a dad or a mom, a daughter or a son, a student or an employee, a member of a particular club or association, a resident or a non resident and definitely a tax payer: - theseare just common roles that concern us all! Schedule what you might schedule; And then, just give undivided attention to each task; There are four distinct types of time: focus time, flex time, free time and family & friends time! Based on such perception, make use of a planner and reserve some “time chunks” for each one of the roles or activities you have in mind! You will be amazed at the results you will get once you introduce this simple habit into your life! Your stress levels will drop 65 percent and you might even be able to stand up and say: Mission: Accomplished!

july 2010

MB Report

by Tiago Azevedo

Over the past three decades our world has changed beyond all recognition. From large mysterious machines in the bowels of governments and corporations, computers have become an everyday part of all our lives. But a new world of possibilities has opened up for criminals and Macau police are launching a comprehensive response

t’s an over-used formulation but nevertheless true, we live in an age where almost everything is just the click of a button away. The impossible has become possible, national boundaries have melted away and we can all do everything much, much quicker. But there is a downside to the technological revolution - cybercrime. Computer systems offer new and highly sophisticated opportunities for law breaking, and they also create the potential to commit traditional crime in non-traditional ways.

No boundaries

Computer crime knows no boundaries and it is always innovating, making it hard for authorities to keep up. As Chan Kin Hong head of the Economics Crimes Division of the Judiciary Police of Macau - points out, what happens in real life, happens in the virtual world with the advantage that cyber criminals can act incognito. It may not be new, but the wide ranging discussion around the subject of cybercrime rages on. There is a lack of global consensus on what types of conduct constitute a computer-related crime, on the legal definition of criminal conduct and of expertise on the part of police, prosecutors and the courts in this field, sometimes adding to the inadequacy of legal powers for investigation of and access to computer systems.

Action vital

Whatever the problems, the issue has to be tackled, as was recognised by the 11th United Nations Congress on Crime Prevention and Criminal Justice. It said: “The last few decades have seen significant changes. The development from industrial to post-industrial society, the increasing value of information in economics, culture and politics, and the growing importance of computer technology have led to legal challenges and new legal responses to information law.” Chan says Macau took a huge step forward in the fight against Information Technology (IT) crimes last year when it enacted new laws. Since June 2009, the IT-related crimes section of the Judiciary Police, which performs under the Economics Crimes Division, started to look into cybercrimes within the framework of this new law. Chan tells Macau Business that six people have been formally accused following the investigation of five cases. For the moment, the situation is not so serious in Macau says Chan: “When we comjuly 2010

MB Report

pare our crime rate in the computer field with neighboring cities, we can see there are no serious cases,” he says.

Prevention and cure

However, prevention is better than cure says Chan, adding that it is better to have a legal framework to fight computer crimes that could rise suddenly. Historically, economic value has been placed on visible and tangible assets. With the increasing appreciation that intangible data can possess economic value, it has become an economic asset that can be the target of criminals. Internationally, criminals often target banks, financial institutions and even smaller business that have adopted online banking. This is not the case in Macau says Chan, who says there is no information on companies or banks that suffered losses due to computer crimes. Fraud and defamation are the most common crimes related to computers here, said the head of the Economics Crimes Division. Local companies who deal with financial transactions are aware of the existing threats related to computer crimes, says Chan, adding that they have imposed self-protection systems.

Moving forward

If computer crime is not so serious in Macau, is there really a need to strengthen the department? Chan says yes. Apart from more staff, there is a need to restructure work methods and priorities. Besides computer forensics, the 5th section of the Judiciary Police is also charged with preventing and investigating crimes involving counterfeiting, and the use of bogus documents and credit cards, among others. That is why they submitted a proposal to the government asking to restructure IT from a section to a division, which would focus specifically on com-

puter crimes – online and hardware. “Computer forensics is very time consuming work, it requires lots of hours spent analysing data,” says the head of the Department of IT and Telecommunications Coordination of the Judiciary Police, Tou Chi Meng.

“The goal now is to increase from 20 to almost 30 officers and focus solely on fighting IT crime,” he adds. Since 2003, when the IT section was formed, the police have upped training and sent officers overseas to liaise and learn new skills from other

In 2008, in a two-month operation, law enforcement agencies across China (including Hong Kong and Macau), Indonesia, Malaysia, Singapore, Thailand and Vietnam identified and raided 1,088 illegal gambling dens, many of which were controlled by organised crime gangs. JUly 2010

47 In 2008, the international police organisation Interpol coordinated an operation targeting illegal soccer gambling across Asia resulting in more than 1,300 arrests and the seizure of over US$16 million. In a two-month operation, law enforcement agencies across China (including Hong Kong and Macau), Indonesia, Malaysia, Singapore, Thailand and Vietnam identified and raided 1,088 illegal gambling dens, many of which were controlled by organised crime gangs. Chan Kin Hong said local authorities are dedicated to combating this crime: “We have always cooperated with other jurisdictions and international enforcement agencies to fight computer crimes that represent a threat to Macau.”

Global threat

jurisdictions. The United States Federal Bureau of Investigation has even been hosted here in Macau to discuss computer crime. Future recruitment will look for people with IT related backgrounds or computer related degrees.

Cooperation pays off

Authorities are also paying special attention to illegal gambling, a crime that goes way beyond Macau’s geographical boundaries. Operation SOGA - short for Soccer Gambling - was a good example of international cooperation.

Even if the mainland, along with US, is considered one of the major countries with malicious computer activity, there are no special precautions. “IT crime is a transnational offence way beyond geographical boundaries. It’s actually a global issue that has to be tackled everywhere. There is no special fear just because we are so close to mainland China, because attacks can come from the other side of the world,” says the chief of the Economics Crime Division. All threats have to be dealt with in the same way: analysing the current trends of IT crime; identifying the kind of crimes that are being perpetrated; and stepping up measures to fight them are the normal steps taken by the Judiciary Police. That is why local authorities are constantly working with Interpol through a direct communication channel and have established a mechanism with Hong Kong and the mainland. “We are now able to maintain a direct dialog with all parts and to cooperate to prevent and combat computer crimes,” says Chan.

“Computer forensics is very time consuming work, it requires lots of hours spent analysing data,” says the head of the Department of IT and Telecommunications Coordination of the Judiciary Police, Tou Chi Meng. july 2010

MB Report

A question of evidence

Greater powers to investigate cybercrime have raised fears over human rights, but according to Macau police last year’s new laws are no reasons for panic by Tiago Azevedo

egal expert Nuno Lima Bastos says laws on computer crime need to distinguish between the accidental misuse of a computer system, negligent misuse and intended, unauthorised access to or misuse of a computer system. But above all, there should be clear restrictions to how the authorities can act during investigations. Bastos recalls an incident involving the Olympic Torch in 2008, when a man was arrested after posting a plan on a CTM forum describing how someone could steal the torch. At that time, there was no legal framework against computer crimes and worries emerged about the way the police handled the case, mainly because of the search procedures.

Unethical or illegal?

It took a little more than a year after the incident for the law to be enacted. “It shows that there was a major concern after that episode and left us wondering if the enactment of the law was really to fight computer crime or simply to better control the flow of information,” Bastos tells Macau Business. “A distinction must be made between what is unethical and what is illegal. The legal response to the problem must be proportional to the activity that is alleged,” he adds. However, such fears have no basis, according to the head of the Economics Crimes Division of the Judiciary Police. “The enactment of the law had nothing to do with the Olympic Torch incident. What happened in that case was only a rumour and the authorities acted according the existing laws,” says Chan Kin Hong. He adds that the episode was not even considered a cybercrime. Chan says: “The law was enacted because there was a loophole in our judicial system. The law tried to focus on what was not covered, like information JUly 2010

technology crimes or attacks perpetrated on the internet.”

Race against time

But concerns persist on provisions in the law that suggest special powers be given to the police to seize computer data evidence without the permission of the courts - something that caught the attention of lawmakers when the bill was discussed. But there’s no reason to panic says Chan: “Not just in IT crimes, but also in any other investigation, we will ensure that personal privacy is well protected. We will only work within the framework of the law and we won´t allow any personal information to leak out to the public,” he says. This type of “emergency situation” is also included in the Penal Procedure Code, which states that a judge has to validate a search within 72 hours. “The same provision was applied in the law against computer crimes, especially considering that computer data can be instantly changed or erased with minimal chance of detection,” says the chief of the Economics Crime Division. “The Judiciary Police will not overuse this mechanism,” he insists. Even if the authorities act without the approval of a judge, they will only

obtain the physical evidence but won´t examine it immediately. “First, we’ll get the authorisation from the judge, then we’ll move forward in examining the material we have,” Chan adds.

Control under a commission

But Bastos worries that the police can obtain evidence or search through material just to get information, without going forward with the criminal process. “That way, they wouldn’t need to go to a judge to get the search validated,” he says. Despite agreeing that Macau needs the law, the legal expert says there is no data to back up this provision: “I don’t see that we have such a serious threat in Macau that something like this is needed. The authorities should be well prepared to distinguish what is a computer crime,” says Bastos. On the other hand, to control how the police use the “urgent provision”, “a commission should be set – by legislators, scholars and judges, to regularly ask for reports from criminal authorities and also from service providers to confront all the information”. “This would be a huge step in guaranteeing the protection of the basic rights of each citizen,” adds Bastos.

july 2010

MB Report

Scams Inc

Online racketeers are constantly changing and updating their skills. A few recent cases paint an ominous picture

Rogue carbon trading

Earlier this year, an organised group of hackers got access to online accounts where companies maintain their carbon credits, according to Der Spiegel. The German newspaper said the hackers launched a phishing attack against employees of companies in Europe, New Zealand and Japan, which appeared to come from the German Emissions Trading Authority. Using the workers´ credentials, the hackers were able to hi-jack the credentials to access the companies´ Trading Authority accounts and transfer their carbon credits to two other accounts controlled by them. According to the BBC, it’s estimated the hackers stole 250,000 carbon credit permits from six companies worth more than US$4 million.

Latvian tax hacking

An unknown group of hackers said they had illegally downloaded millions of Latvian tax documents to show that Riga’s attempts to fight the economic crisis were not working. An alleged hacker using the alias “Neo” reported that over a period of three months, his group used a security loophole to download over 7.5 million documents from the State Revenue Service’s website. The massive data theft has embarrassed politicians and officials whose income and wealth – often many times the national average – has been exposed to the public at a time when Latvia is undergoing painful budget cutbacks to rebound from a severe recession.

Taking it – from ATMs

According to a federal grand jury indictment in 2008, two hackers, using bank accounts and PINs stolen over the internet, managed to steal millions of dollars from Citibank. The pair is alleged to be part of a worldwide scam that has made 9,000 fraudulent ATM withdrawals, according to court documents. ATM cards encoded with Citibank customer account information were used to withdraw the money.

Google under attack

Global media reports say computer codes used in the recent attacks on the networks of Google and dozens of other major US companies were developed by a group of Chinese hackers. Some say they were security professionals, consultants and temporary contractors, while others believe it appears to have been deployed by amateurs. Nonetheless, the computer attack made Google leave the mainland and created a firestorm between Washington and Beijing. Chinese authorities have denied any involvement and dismissed the reports that linked the attack to two local schools. Google and Beijing are still trying to reach a final solution about the company’s future in the mainland.

Large wire fraud

In 1994, Vladimir Levin accessed the accounts of several large corporate customers of Citibank via their dial-up wire transfer service and transferred funds to accounts set up by accomplices in different countries. Three of his accomplices were arrested and the interrogation directed investigators to Levin, a 23-yearold computer programmer in St. Petersburg. However, at the time, there were no extradition treaties between the US and Russia covering these crimes, but in March 1995 Levin was apprehended in London making an interconnecting flight from Moscow. Levin was delivered into US custody in September 1997, and in a plea agreement he admitted to one count of conspiracy to defraud and to stealing US$3.7 million. JUly 2010

Baidu offline

China’s leading search engine has revealed a shocking lack of security nous as its chosen domain name registrar was responsible for a prolonged outage last January. Baidu, which commands 70 percent of the Chinese search market, was offline for at least four hours. During the incident, its baidu. com home page instead showed the messaged “This site has been hacked by the Iranian Cyber Army”. China’s Baidu says in legal papers that an obvious scammer was able to con Register.com support staff into handing over the keys to its kingdom, resulting in millions of dollars in lost revenue.

Classification and solutions The Council of Europe’s Cybercrime Treaty identifies offences ranging from criminal activity against data, to content and copyright infringement. However the United Nations Manual on the Prevention and Control of Computer Related Crime gives a broader definition which includes fraud, computer sabotage, forgery, drug trafficking, unauthorised access, dealing in child pornography and even cyberstalking

Common crimes Password phishing and sniffers

Offenders often dupe new and unsophisticated Internet users into revealing their passwords by pretending to be law enforcement officials or agents of the service-provider. Password sniffers use software to identify a user’s password, which can then be used to hide their true identities and commit other crimes - ranging from unauthorised use of computer systems to economic crimes, vandalism or terrorist offences.

Spoofing

Spoofers use various techniques to disguise a computer to electronically “look” like another, so that access may be gained to a normally restricted system, and crimes committed. july 2010

MB Report

In the cyberworld there are numerous methods available to commit identity theft and other crimes. Trojan Horses and spyware are two of the most popular methods used. Fraud

Fraudulent offers have already been made to consumers in the region of electronic commerce, such as trading stocks and bonds or buying and selling computer equipment. You have to remember there is no such thing as “free money”. If anyone offers you free money, you should automatically consider them a scammer. Also, do not become a “money mule”. Cybercriminals hire legitimate bank account owners that are normally unaware that they are “mulling” stolen money, but think that they are being paid for “working from home” and other moneymaking schemes. The stolen money is transferred to his/her bank account. Later on, after deduction of his or her commission, it is again transferred to a bank account provided by the offenders.

Gambling

Online gambling has increased as commerce provides ways of establishing credit and transferring funds on the Internet. Problems have arisen in countries where gambling is a crime, or where domestic authorities require licenses. Also, fairness to players cannot be guaranteed, given the technical and jurisdictional hassles of monitoring games.

Sabotaging systems

Attacks such as “mail bombings” can send repeated messages to an e-mail address or website, denying legitimate users access to it. The mail influx can potentially overwhelm the receiver’s personal account and shut down entire systems. Although a disastrously disruptive practice, it is not necessarily illegal.

Sabotaging and vandalizing data

Intruders can access websites or databases and erase or change data, damaging the data itself and causing further harm if incorrect data is later used for other purposes. JUly 2010

Child porn

The global spread of child pornography on the Internet is huge. Exacerbating the problem are new technologies, such as cryptography, which can be used to conceal pornography and other “offensive” material being transmitted or stored.

Money laundering

Electronic commerce is expected to provide a new avenue for the electronic transfer of goods or money used to launder the proceeds of crime, especially if transactions can be concealed.

Industrial espionage

Hackers can carry out sophisticated espionage for corporations or on their own, copying trade secrets ranging from technical or product information to marketing strategies.

How do they do it?

In the cyberworld there are numerous methods available to commit identity theft and other crimes. Trojan Horses and spyware are two of the most popular methods used. A Trojan Horse program presents itself as a useful computer program, while it actually causes havoc and damage to your computer. Unlike viruses and worms, Trojan Horses cannot spread by themselves. They are often delivered to a victim through an email message where they masquerade as an image or joke, or by a malicious website, which installs the Trojan Horse on a computer. Spyware is a general term used for programs that covertly monitor your activity on your computer, gathering personal information, such as usernames, passwords, account numbers, files, and even driver’s license or social security numbers. Spyware is similar to a Trojan Horse in that users unknowingly install the product when they install something else.

How to protect yourself? The more difficult you make a cybercriminal’s job, the more likely they are to leave you alone and move on to an easier target. Here are some tips: • Keep your computer current with the latest patches and updates. • Make sure your computer is configured securely. • Choose strong passwords and keep them safe. • Protect your computer with

security software. • Protect your personal information. • Don’t share information with people that you don’t know personally. • Be aware that online offers that look too good to be true usually are. • Review bank and credit card statements regularly.

phone, cable line from your machine or disconnect your network connection. This can prevent data from being leaked back to the attacker.

What to do if you become a victim

Back up your critical information. Sensitive data may be leaked by crimeware and it may also be inadvertently destroyed or lost during the clean-up effort.

Crimeware

Consider going back to ground zero by re-installing the operating system of your

There are a series of steps you can take to respond to and recover from cybercrime. Disconnect immediately. Unplug the network cable,

Scan your computer with an up-to-date antivirus program - a program with antivirus and antispyware capabilities would be more suitable.

computer or using back-up software.

tors in case they ask for proof.

Online Fraud

Contact government agencies if any of your identification data has been stolen (ID, driver’s license, etc).

Close affected accounts immediately. In the best-case scenario, you will be able to shut down or change any credit card, bank or other online service accounts before the thief can leverage them. File a police report. Ideally this would be done in the area where the crime took place. While this may or may not provide the police enough information to bring the criminal to justice, you can use a copy of the police report or the report number as evidence with your credi-

Watch your credit card reports closely. Look for signs of identity theft. It’s natural to have your guard up after having your identity stolen. During this time, be on the look out for odd things in the mail, including credit cards you did not request and bills that you normally receive which have gone missing.

july 2010

MB Report

Challenge time Cybercrime expert Marco Gercke says Macau’s law is one of the best, in a world that faces many outstanding challenges by Tiago Azevedo

y their very nature, online offenders are always looking for new ways to commit crimes, but the degree of innovation is limited says Marco Gercke, director of the Cybercrime Research Institute in Germany. “A significant number of methods used by offenders have been known for decades. In the last few decades various counter methods and investigation techniques have been developed on an international level,” Gercke tells Macau Business Tools and training Gercke says lawmakers need to make sure that law enforcement agencies have

the right investigative tools and can provide the right training for law enforcement agencies. Even though Macau only enacted the law to fight computer crime last year, it did so in compatibility with international standards. “The Macau law is not only compatible to those standards but also reflects trends in the region. Drafting such legislation in general takes longer than drafting legislation with a focus on national demands only,” says the Council of Europe expert. . Macau seems to be ready to cooperate with other jurisdictions says Gercke, who

Marco Gercke: The legislation enacted by Macau is one of the best in the worlD JUly 2010

was involved as an advisor in the development process of law. “From what I have seen, both regional approaches as well as national approaches within the region were carefully taken into consideration. Macau in this context is very well prepared for international cooperation,” he adds.

Soaring challenges

Even though offenders have their limitations, the challenges are many, varied and global. “They range from the emerging use of encryption technology, that makes the collection of digital evidence more difficult, to the threat of powerful attacks carried out by botnets,” says Gercke, who is also a visiting lecturer for International Criminal Law at the University of Macau. There is also a need to raise public awareness of cybercrime. “Neither law enforcement nor citizens and companies are fully aware of the threat of cybercrime. The problem with regard to law enforcement is the fact that too many crimes are not reported and therefore do not appear in the crime statics. “With regard to citizens and companies, the main problem is that the awareness raising approaches have not turned out too effective so far,” says Gercke. Social networking sites, for example, have seen tremendous growth, raising concerns. “Information made available by users in social net-

works can be collected and used by offenders preparing identity-related crimes,” adds the expert. In the fight against Cybercrime, the private sector plays an important role. “While it is neither necessary nor desirable that the private sector is actively taking over the work of law enforcement, a close cooperation of law enforcement and the private sector is important,” says Gercke.

Good example

Despite only a few cases which have surfaced in Macau, legal responses should not be quantitative, says Gercke. “It is desirable that any country in the world is able to effective investigate cybercrime cases – even if only a few cases are discovered. “The legislation enacted by Macau is one of the best in the world and has already caught the attention not only of Portuguese speaking countries. It is widely seen as a very balanced approach.”

Human rights

More technical power for authorities doesn’t necessary mean that human rights will suffer, he believes. “The importance of protecting human rights and especially the privacy of internet users does not only need to be taken into consideration when technical power is created, but also with regard to the extent of criminalisation and the implementation of procedural instruments,” he says.

José I. Duarte Economist, Macau Business Senior Analyst - jid@macaubusiness.com

The new rule Changes to the fabric of the mainland have eroded a three-decade-old contract between corporate management and the political apparatus; the effect is mounting worker dissatisfaction and the solution is a rethink The media has reported several instances of labour unrest on the mainland recently. Of particular interest for our analysis are the reports that concern the involvement of the trade unions in the conflict. There are references to scuffles between trade union officials and workers, as the former tried to persuade the latter – with apparently little success – to accept minimal concessions by the company’s management and suspend industrial action. Occasionally the news is conveyed with details and elements that, by the standards prevailing in other parts of the world, are surprising – to say the least. In fact, in some cases, according to local media, such intervention was made at the express (and candidly recognised) request (or is that instruction) of the local government.

upward pressure on wages. First, no labour pool is infinite, no matter how much it may have seemed the case in the early phases of the mainland’s contemporaneous economic process. Sure enough, slower population growth and lower fertility rates in the past few decades will start to impact on the growth and structure of the workforce. Second, as the economy develops and climbs the valueadded ladder, more qualified work is required. It may not be easily available, either in absolute figures or in geographical distribution. Third, policies adopted to avoid the deepening asymmetries between the costal and the inner regions, almost by definition, reduce the incentives associated with work related migration. Taken together, these features may result in

A cosy arrangement

In itself, in the specific context of the mainland, that feature is not really surprising. What is surprising is that intervention efforts were resisted, challenged and, in many instances, not acquiesced to. The resistance was so marked that, according to some newspaper reports, mainland media received directions from the government to limit news of the industrial actions and to stick with official versions. It may be too early to say, as some have suggested, that such developments are likely to cause substantial political effects. However, they plausibly suggest that important shifts may be happening in the labour market. Should that be the case, it is likely to affect the basic development model the country has followed for the past 30 years or so. In simple terms, what was the basis of that model? It was a kind of pact between the mainland government and foreign investors, including the Chinese diaspora. The outsiders would bring in capital, technology and management, and the authorities would provide easy land, cheap and abundant labour, social stability and, above all, the workers’ conformity. For the most part it has been a win-win arrangement for the contracting parties. But it now seems it has been suffering from increased erosion, something that recent events look like confirming. Ignoring the land-related issues and disputes for convenience and brevity, let us see why.

Unrest from success

The labour market seems to be increasingly tight. Note that other neighbouring countries today offer access to cheaper labour. One has actually seen in the last years the development of a trend towards the delocalisation of labour intensive industries to mainly Southeast Asian countries such as Vietnam, Burma and Cambodia. In fact, as wages and general wealth increases – and overall expectations of improved living standards have risen – low-value added sectors that are sensitive to labour costs, have begun to be priced out of China. There are several causes that may be contributing to that and all of them put

As wages and general wealth increases – and overall expectations of improved living standards have risen – low-value added sectors that are sensitive to labour costs, have begun to be priced out of China deeper regional imbalances in the labour market and make the adjustment processes increasingly difficult. Finally, the newest generation of workers is likely to be quite different in their outlook and expectations from their parents. For one, they have no memory of the instability and poverty their parents’ generation went through. They have been raised in a period of relative stability, comparative social and political openness and rising prosperity. They are more aware of the wider world and have access to more varied sources of information and communication. It is likely they will have other ambitions and demands.

Time to think

In other words, one might venture that the time when the supply of labour could be assumed as unlimited and when millions would be willing to move hundreds or thousands of kilometres for a pittance and three portions of rice and cabbage a day, is over. Time will tell if the recent unrest and the resistance to the traditional sources of authority and control persist. Should that be the case – and it is likely that such is the case – we would have to conclude that extant mechanisms for conflict regulation are loosing their appeal and effectiveness. The time has come to start thinking afresh about a new economic development model and its social and political implications. july 2010

Investment

Buying time Portuguese leaders roll out the welcome mat for cashed-up mainland investors during the Chief Executive’s tour and there seems to be plenty of interest in Lisbon’s relatively inexpensive strategic assets by João Francisco Pinto in Lisbon

hinese companies are gearing up to invest more heavily in Portugal, an informed source told Macau Business on the sidelines during Chief Executive Fernando Chui Sai On’s official visit to Lisbon. The cheaper valuation of the Euro and worsening financial crisis have rendered Portuguese assets relatively cheap, offering deep-pocketed mainland companies an easy and inexpensive way into the European market. According to the same source, mainland companies are looking into buying local assets, such as companies or shares in strategic enterprises, or into sourcing JUly 2010

raw materials and industrial hardware produced by Portuguese companies.

Pitch for investment

President of the Portuguese Trade and

Investment Promotion Agency (AICEP) Basilio Horta told businessmen accompanying Chui Sai On that Portugal typically exported medium-technology devices and industrial equipment, but was a capa-

Amorim invests in China

ajor cork producer Amorim Group, has announced plans to build a factory ion the mainland that will multiply ten-fold its revenue there. Construction is due to start in October, with a completion date six months later. Amorim will invest 3.5 million euros in the factory, which will produce several derivatives of cork such as walls, cork stoppers for bottles and decorative pieces. The Portuguese company is already doing business on the mainland selling cork floor and enjoys a 50 -per-cent market share. Amorim’s revenue in the mainland hovers around 10 million Euros a year.

Vice-president of the China Council for the Promotion of International Trade Zhang Wei says Chinese companies want to invest in areas such as tourism, agriculture, energy and health in Portugal ble player in high-end technologies. Mr Horta added that Portugal was seeking investments in areas such as energy, natural resources, the environment and infrastructure. He urged companies to look into the Sines Harbour infrastructure development south of Lisbon, as a hub for shipping lines operating between Europe, Africa and America. Meanwhile, vice-president of the China Council for the Promotion of International Trade Zhang Wei said Chinese companies wanted to invest in areas such as tourism, agriculture, energy and health in Portugal. He stressed that the international financial crisis had triggered businessmen to start looking for opportunities outside the country.

ping, banking, real estate and energy sectors. SJM directors Ambrose So Shu Fai and Angela Leong On Kei were among the 60-member business delegation accompanying r the chief executive to Lisbon last month.

Chui in Lisbon

A six-day swing through Portugal gave Chief Executive Fernando Chui Sai On the chance to launch a tourism promotion campaign, meet government officials, and pay courtesy calls to Prime Minister José Socrates and President Aníbal Cavaco Silva. The strongest initiative out of the tour was the announcement that the two

countries would meet for the first time since signing a cooperation agreement in 2000 that called for a summit every two years. On the agenda will be cooperation between Macau and Portugal, economic issues, culture, education and tourism. On tourism, Mr Silva called for the resumption of direct flights between Lisbon and Macau as a way to pave new bilateral economic relations. After meeting Mr Chui, Portuguese foreign affairs minister Luís Amado told the media the Portuguese government wanted to improve the relationship with Macau, with a special focus on trade and investment.

A stronger relationship

Trade between Portugal and China has been on the rise. Between January and April this year, Portugal imported 734 million Euro (MOP7,202 million) of goods and services from the mainland, and recorded 166 million euro of exports – an increase of 24.3 percent and 80.6 percent respectively, compared to the first four months of last year. AICEP currently has three offices in Macau, Shanghai and Beijing but that number may rise to cope with increasingd demand from Chinese and Portuguese companies. The agency is also planning a major promotional campaign on the mainland next year, the Year of Portugal in China. The objective is to showcase the Portuguese economy as a European success story that is eager to boost cooperation with the world’s second biggest economy. Dr Stanley Ho Hung Sun is the biggest investor in Portugal with interests in gaming, tourism and hospitality, shipjuly 2010

Property | Market Watch

Bumper month

Volumes, values and demand from foreign investors at high levels shows the recovery is on track as new government reports claim Macau’s real estate is still affordable by Alan Tso

ood cheer abounds for the players in Macau’s housing market. According to the latest official statistics, April was a bumper month for home sales. A total of 2,202 residential units were sold in April – the biggest transaction volume since May 2007 – at an aggregate value of about MOP6.18 billion, which is a record high monthly figure. It is also noteworthy that the average value of each transaction in April was the highest in almost two years at about MOP2.8 million.

Foreign investment flood

A closer look at the figures reveals that April’s record-breaking sales were partly a result of Residential units sold as per record of stamp duty * NUMBER of Transactions

the influx of investor money. Foreign investors contributed to about 24 percent of the total home sales value in April - representing the return of investor demand to the pre-downturn level. Needless to say, this is an important indicator for the local property sector since robust investor demand was one of the main drivers of the local property boom before the global economic downturn. These rosy figures have come on top of record rentals at the high-end residential property, One Central. The British listed Macau Property Opportunities Fund, which has bought block six in the seven-block luxury project for HK$673 million (MOP693 million), has leased more than 10 of these units

Value of residential units sold as per record of stamp duty YEAR

Month

Value (10^6 MOP)

2009

January

299

YEAR

Month

2009

January

172

February

235

February

372

March

394

March

594

April

580

April

980

May

775

May

1,156

June

922

June

1,627

July

1,339

July

2,767

August

976

August

1,730

2010

September

1,366

September

3,161

October

1,185

October

2,130

November

1,360

November

2,643

December

2,003

December

4,057

January

1,297

February

January

3,140

1,084

February

1,995

March

1,503

March

2,806

April

2,202

April

6,180

*Note: Data includes transactions of residential units valued below MOP3 million, which are exempt from stamp duty Source: DSEC

JUly 2010

2010

Source: DSEC

A total of 2,202 residential units were sold in April – the biggest transaction volume since May 2007

july 2010

Property | Market Watch

Average transaction value of residential properties Value (10^3 MOP)

3000 2500

Solid recovery

2000 1500 1000 500 0

Jan

Feb

Mar

Apr

May

Jun Jul 2009

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar 2010

Apr

Average transaction price of residential units per square metre Value (MOP) 3000 2500 2000 1500 1000 500 0

at an average rental of HK$20 per square foot - a record high for residential rents in Macau.

Q3 2007

Proportion of buyers

12%

Non-Residents

88% Residents

Proportion of buyers

22%

Non-Residents

78%

Residents

JUly 2010

2008

2009

Q1 2010

Total number of buyers in residential transactions in the first 4 months of 2010:

8,461

Total value of residential transactions in the first 4 months of 2010:

14,122

(10^6 MOP)

Bumper sales and rentals aside, the government’s recent figures have all signalled that Macau’s economic recovery remains rock solid and industry analysts believe the upward trend in home prices is here to stay. As a recent government report points out, rising property value in Macau has not put the dream of home ownership beyond the reach of the middle class since the ratio of family income to housing prices is 1:7.01 – slightly higher than the global median ratio published by the World Bank but far lower than Hong Kong’s ratio of 1:19.8. Although some people have voiced scepticism about the accuracy of the report, the ratio nevertheless reaffirms the belief within the industry that affordability is not an issue for middle-income homebuyers. Another recently released government report argues that escalating home prices in Macau over the past year are mainly due to the low supply of mass residential properties. That problem will be redressed in the coming three to five years as 33,000 residential units are scheduled for completion in this period.

Bad medicine

Mortgage subsidies aren’t helping home buyers who need the most assistance, and have an “obvious influence” inflating Macau property prices, yet about two-thirds of the public supports the measures, a new report finds

study commissioned by the Housing Institute of Macau (IHM) shows that the sponsorship of mortgage operations leads to “obvious” influences on the increase of property prices, among many other factors that contribute to swelling prices. The report recommends IHM restrain from future mortgage aid so as not to encourage excessive price fluctuations in the housing market. At the request of IHM, the Institute for Sustainable Development at the Macau University of Science and Technology looked at the influence of the interest subsidy scheme on loans granted for house purchases and the Purchase Guaranteed Loan Scheme. In the analysis, the development institute conducted a case study on the prices of properties from transactions in 1996, 2000 and last year to measure “abnormal returns”. The institute chose three cases of subsidies of 4 percent. The calculations showed that the three cases of mortgage subsidies contributed an “obvious fluctuation of abnormal return rates”, proving they had an “obvious influence” on the housing market.

Short-term gains

The report indicates that in the short term the scheme boosted confidence for home ownership, market demand and contributed positively to increasing prices. But the analysis also pointed out that government policies were only one among many factors that favoured an increase in asset prices, with the increase in GDP per capita, the shortage of new land, the stream of investment capital, low interest rates, inflation forecasts and the strengthening of regional

Photo: Luís Almoster | MSPagency.org

by Kahon Chan

cooperation, all named as contributing factors. The study included a survey in which 928 residents, 21 years old or above, were contacted by telephone in late April to find out what they thought of government assistance to home buyers. Less than 10 percent of respondents had used any of the schemes. Foreign capital was seen by about 46 percent as the main “subjective factor” for the rise in property values, while the interest subsidy was considered by about 26 percent as the key “political factor” to be blamed for the increase. About 60 and 61 percent, respectively, supported the renewal of the mortgage scheme and the credibility guarantee plan, while about 21 percent remained neutral and about 18 percent were against it.

No help to the poor

In analysing the experience of respondents and their support of subsidies, the study shows that the part of the community most in need has been the least favoured by the measure. Also, married residents felt they had benefited little from the policies. The study recommended IHM take several factors into account before launching any new scheme, including: public perception, the need to help residents purchase their own homes and ways to minimise fluctuations in the market. However, Shuk Tak Holdings managing director Pansy Ho Chiu King says she is in favour of introducing more measures to promote the market’s healthy development. Speaking to TDM radio, the daughter of tycoon Stanley Ho Hung Sun disagreed that the market was overheating from speculation. Policies should be conceived for the long term while investment decisions should be made in advance she said. july 2010

Property

Cost counting An inquiry into the construction of an office for the former Chief Executive finds the tender was restricted to three companies owned by the same legislator and raises doubts over the project’s costs by Kahon Chan

taxpayer-funded office for former Chief Executive Edmund Ho Hau Wah built next to his residence has raised questions and now there are some answers, thanks to a new report. The construction of the office was planned in the middle of last year and cost MOP20 million, according to the report conducted by pro-Democracy legislator Au Kam San. The inquiry also found that the three companies invited to tender for the job belonged to fellow legislator Fong Chi Keong. Mr Au filed the report into the expenditure of the executive on June 13. Within its pages are details about the two-story building on Estrada de D. João Paulino 12-16A. Led by the Land, Public Works and Transport Bureau (DSSOPT), the building is contiguous to Mr Ho’s home, but the bureau refused to identify the JUly 2010

purpose of construction when Mr Au suggested that it might be the office of the newly elected vice-chairman of the Chinese People’s Political Consultative Conference. The bureau told the Hoje Macau daily that the project began while Mr Ho was Chief Executive and that “considerations such as security reasons” meant the bureau could not release more information.

Footing the bill

Mr Au also investigated claims that the cost had allegedly totalled MOP100 million and that the competing companies all belonged to the same group. It led him to question the agency about the restrictive tender process. The bureau admitted that a trio of companies had been invited to tender, with the Man Kan Civil Construc-

tion Company awarded the tender for MOP20 million. The company belongs to Mr Fong. There are questions if as to whether the MOP20-million cost includes all construction on the site. Mr Au said the bureau had planned to compensate the builder constructing an apartment building next to the Guia Lighthouse with “hundreds of millions of patacas” in cash and land. Mr Au was unable to identify where the land was located and the bureau declined to answer questions from the media, saying the issue was still under negotiation. Meanwhile, the tendering process to build the pavilion to house Macau’s new pair of pandas pair has also followed n the unusual path ofin consulting just “four or five companies” because of urgent need, according to the Institute for Civic and Municipal Affairs (IACM). China HKM Civil Construction (Macau) won the tender and was awarded a contract worth MOP50 million. The company is a partnership between Siemens – one of the groups competing for the city’s Light Rapid Transit rail project – and a sister company of Chon Tit Investment and Development, a unit of State-owned China Civil Engineering Construction Corporation. The winning tender was cheaper than estimates by the IACM and satisfied the criteria, says the IACM.

Business&Industry

Construction and Real Estate

Photo: Luís Almoster | MSPagency.org

Time to take stock

After a strong April performance, the real estate sector has spent two months in decline ñ in spite of positive market fundamentals. The experts say a contraction across the whole year is unlikely but there is some uncertainty ahead. A workgroup is looking at ways to spur on orderly growth and by year’s end, Macau could have a new draft set of real estate policies.

Hot issues

numbers

6,386

Building units bought and sold in the first quarter of the year. The majority, 3,884 units, were residential units worth MOP7.94 billion.

26,845

Average transaction price per square metre of usable area, in patacas, of residential units in Macau in the first quarter of the year. The most expensive units were sold in NAPE.

14,484

The number of vacant residential units in Macau at the end of last year. Of those, 11,622 were located on Macau Peninsula, 2,726 in Taipa and 136 in Coloane. Macau then had a total of 186,557 residential units.

5,700

The number of public housing units being built in Macau at the end of March. The government wants to build 19,000 units over a fiveyear period ending in 2012. Of those, 7,046 units or 37 percent are either completed or under construction.

88,000 The number of people living in public housing at the end of last year. About 17.8 percent of Macauís population, excluding nonresident workers, are living in social or economic units.

JUly 2010

Loose laws under the microscope T

he job of creating a policy to develop Macau’s largely unregulated real estate market has gone to a cross-departmental, government workgroup. The main goal of the Work Group for the Promotion of the Sustainable Development of the Property Market, created last month, is to propose real estate market-related policies to inspire the orderly growth of the sector. It will propose a series of short-, mediumand long-term policies that govern real estate brokerage, the selling of apartments in buildings under construction, the rental market, oversight, and information disclosure. The group includes eleven members from government departments and is led by the Secretary for Land, Transport and Public Works Lau Si Io. Mr Lau has said the group is to push forward more transparent, open and regulated operations in the sector. It will have to grasp related information in the market between developers, real estate agents and property buyers in order to protect the rights and interests of buyers. One area the workgroup is likely to focus on is information disclosure, say several real estate agents that Macau Business spoke to. Unlike Hong Kong, the Macau government takes at least two months to release information on transaction volume and prices. When the data is made available, it is no longer useful, agents say. They also claim the data lacks detail. Just as pressing is the need to regulate agents. In both Hong Kong and the mainland, individuals and companies need to hold a license

to work in real estate. Macau has no special regulations governing the agency business. The government has said it is finalising a proposal that will create a licensing system. The workgroup will present a preliminary report to the Chief Executive by September 30, including suggestions to promote the sector’s sustainable development. A final report is due on November 30. In its entirety, the workgroup is likely to have a three-year lifespan but that may be extended.

Dos and don’ts Share insights: Some of the most trying days as a real estate agent can provide great lessons to share with clients. Telling them about common real estate pitfalls can create a smoother home buying or selling experience. Keep contact: Do not ignore your previous clients after the deal is done. They may prove themselves to be your strongest advocates. Try to keep some kind of contact, perhaps through an online social network. Language skills: Although local buyers are increasingly dominant in Macau’s real estate market, foreign investors and expats are a niche that should not be neglected. Fluent Englishspeaking staff is essential. Good photos: A picture is worth a thousand words so a good photo can also help sell apartments. Property photos must have good lighting and be appealing to customers, helping them to understand the unit’s layout.

The retail property sector in Macau has yet to find critical mass, experts say. Until recently the territory had relatively few retail outlets. Prior to the opening of The Venetian Macao-ResortHotel in 2007, there were no enclosed, contemporary shopping malls in Macau that offered the high-quality leasing and management arrangements typically found in Hong Kong. In the three years since, new commercial developments have opened but mostly in hotel-casino complexes. One Central’s shopping mall, which opened last December, is the latest addition to the segment.

Efforts to increase the supply of small to mediumsized residential units should improve with open land auctions and measures to revitalise old industrial buildings, according to the government. Secretary for Land, Transport and Public Works Lau Si Io said a land parcel of about 2,790 square metres will soon be auctioned. The winning bidder will be allowed to construct more than 500 small and mediumsized residential units, which are only slightly bigger than the economic housing standards. The government is eager to promote the demolition of old, single-owner industrial buildings and use the land for residential developments.

The Land, Transport Public Works Bureau (DSSOPT) says more than 33,000 private residential apartments are planned or under construction, to be completed in the next five years. But some industry insiders question whether sharply increasing the supply of new apartments will have any impact on property prices. Even though building plans have been approved by the authorities, it is likely that developers will alter their construction schedules to meet market conditions, just as they did in 2008 during the global financial crisis.

Regional infrastructure development projects will boost Macau’s integration with the Pearl River Delta region. These include the Hong Kong-Zhuhai-Macau Bridge and the GuangzhouZhuhai Intercity Mass Rapid Transit, with a station at Gongbei. There is also Macau’s light railway system, scheduled to go into operation in 2014. The projects should have a positive impact on property prices in Macau, especially around the Hong Kong-ZhuhaiMacau Bridge landing point and light rail stations.

HOW THEY DO IT

A growing concern In a territory such as Macau with a scarcity of land, any new plots are a golden opportunity for developers and the real estate sector. As the government gears up to launch land reclamation projects, many new opportunities are likely to be created. The details are uncertain but the final plans will be ready next year, at the earliest. Last November, the State Council approved the government’s 3.61-square-kilometre land reclamation project that increases the territory’s land mass by more than 12 percent. The government says the reclamation project will be completed

within five years. The project will create new space for more public facilities and green spaces, as well as land for public housing, and commercial and residential neighbourhoods. No casinos will be built on the new areas. Reclamation has allowed Macau to almost double its size in just 25 years. In 1984, Macau measured 15.5 square kilometres. Last year, the total land area was 29.5 square kilometres. july 2010

need to know

Speymill high on Riviera Speymill Macau Property Company is close to selling all its units at the Riviera complex, the company announced. The Riviera is one of the real estate investment company’s main assets. It is a two tower, 518-unit residential development in the Inner Harbour area of the Macau Peninsula. Speymill owns 145 of the 296 units in Tower 1 and 114 of the 222 units in Tower 2. The total net proceeds received after deducting discounts and commissions from the sale of the units including deposits and final payments amounted to HK$687 million at the start of June. The expected total net proceeds from the sales to date amount to HK$857.6 million, net of discounts and commissions. The complex manager has been informed that the developer believes a final occupation permit from the government will come in the third quarter.

One Oasis’ successful launch The One Oasis public launch saw more than 700 units sold on the first day, including international pre-launch sales, at an average of HK$4,300 (MOP4,429) per square foot, according to the developers. The luxury development on the southern end of Cotai has five residential towers with 870 apartments, a clubhouse, shopping centre and a 6-star hotel. The development is a joint venture between ITC Properties Group, Linkeast Investment, Nan Fung Group, ARCH Capital and Success Universe Group.

Zhu Kuan Mansion sold

Four Seasons blues

Macau’s biggest office transaction since the start of the global financial crisis saw Zhu Kuan Mansion sold last month for HK$701 million. The 23-storey office tower in NAPE was sold to local investment firm Cheng Long. Macau-based Capitalsino Properties bought the building in 2007 for a price understood to be more than HK$700 million. The property was built in 1997 and has a total floor area of 45,124 square metres and 205 parking spaces. Zhu Kuan Mansion is one of the few Grade A office buildings in Macau. Supply in this segment is extremely limited and no new projects have been approved by the government recently. According to a recent Savills’ research report, “office demand in the short turn will be driven by expansion demand from government departments.” The company adds that, “in the medium term, office demand from gaming and related industries will return.”

Sands China continues to pressure the government to grant them authorisation to launch the sale of its Four Seasons Apartment Hotel Tower. Last month, Chairman Sheldon Adelson said he had an agreement with former Chief Executive Edmund Ho to sell the propertyís apartments. He made a commitment to us that, if we started parcels 5 and 6 and, if we did an IPO, then for sure we could sell [the Four Seasons apartment hotel as] strata condos, Adelson told the Sanford C. Bernstein Strategic Decisions Conference in New York City. Meanwhile, Sands China CEO Steve Jacobs announced the company may get an approval for sales under a co-op scheme later this year. However, the government was quick to stress no decision had been made. “Regarding the hotel [Four Seasons], the case will be carried out according to the law and the governmentís policies,” the Secretary for Land, Transport and Public Works Lau Si Io told reporters.

MPO secures financing for first redevelopment project Macau Property Opportunities Fund Limited (MPO) last month announced that it has entered into a credit facility arrangement for up to HK$105 million with Weng Hang Bank. The credit facility will be used to finance the redevelopment of Rua da Penha MPO’s first residential redevelopment project in Macau, and to partially refinance the original cost of acquisition of the property. With the agreement of this loan facility, Rua da Penha is now considered fully funded. Rua da Penha is a niche residential project positioned towards local Macau residents. The eight-storey apartment block will consist of about 40 units totalling 80,000 square feet. The redevelopment programme for Rua da Penha commenced in March this year. The company is now preparing for the marketing and public sales campaign expected to be launched later this year. The project’s estimated completion date is 2011. JUly 2010

The next big thing Chinese Estates is developing a big residential complex on Avenida Wai Long. According to the company’s website, the development comprises a serviced apartment tower and 25 residential towers on top of a landscaped garden podium with car parks and two clubhouses. The complex is situated near Cotai, adjacent to the Macau University of Science and Technology and the Macau International Airport. The property will be developed in four phases and, according to some real estate agents, sales may start this year, depending on approval.

expert view

Mortgage loans continue to rise Approvals of residential mortgage lending increased notably in the first quarter. On outstanding balance, residential mortgage loans (RMLs) rose at a faster pace than commercial real estate loans (CRELs).

Shun Tak on hold Shun Tak Holdings Harbour Mile development remains on hold pending a government review. The 399,500-square-metre project at the Nam Van lakefront will include a hotel, residential towers, serviced apartments, shopping mall and entertainment facilities. Shun Tak also has other projects in progress in Taipa. The company’s net profit surged 510 percent last year to HK$1.19 billion, thanks to a sharp rise in property sales at One Central and Nova City.

In the first quarter, new RMLs approved by Macau banks increased by 5.4 percent quarter-to-quarter to MOP7 billion. Compared to the same period last year, new approvals of RMLs surged by 208.3 percent. After a rise of 88 percent in the previous quarter, new CRELs approved dropped by 16 percent quarter-on-quarter to MOP5.3 billion. On an annual basis, new approvals of CRELs increased by 164.3 percent. By the end of March, the outstanding value of RMLs reached MOP48.4 billion, an increase of 9.5 percent quarter-on-quarter or 37.7 percent annually. Concurrently, the outstanding value of CRELs rose 6.3 percent from end-December or 11.5 percent from end-March 2009 to MOP39.3 billion. At the end of March 2010, the delinquency ratio for RMLs stood at 0.15 percent, down 0.04 percentage points from three months earlier or 0.09 percentage points from a year ago. The ratio for CRELs rose 0.11 percentage points from last December but was down 0.20 percentage points from end-March 2009, to 0.34 percent.

Bye, bye subsidy schemes The Macau government’s “Four Percent Home Purchase Loan Interest Subsidy Scheme” and the “Home Purchase Guaranteed Loan Scheme”, both introduced in June 2009, expired last month. Their goal was to stimulate the local real estate market. The government has yet to announce whether it intends to extend either scheme, but it is believed it won’t do so. The “Four Percent Home Purchase Loan Interest Subsidy Scheme” was a subsidy scheme for the monthly housing instalment loan. This scheme mainly provided a subsidy for the interest payments on the monthly loan instalments, with the highest subsidised rate being 4 percent per year. The “Home Purchase Guaranteed Loan Scheme” was a scheme for housing loans mainly assisting permanent residents of the Macau SAR to purchase their houses by guaranteeing the bank loan. Both schemes were only available for housing units whose bank evaluated selling price was below MOP2.6 million.

Making old new again

he future of Macau’s real estate market may rest on the renovation of its old neighbourhoods, says the chief executive of Midland Macau, Ronald Cheung. But the government must first draft a specific land resumption bill, he stresses. “It is ridiculous for a territory like Macau not to have this kind of legislation as already exists in Hong Kong and mainland China,” Cheung says. Macau’s authorities have been discussing the renewal of the territory’s old neighbourhoods for years. A special committee was appointed in 2006 to gauge public opinion, produce analyses and make recommendations to the government. It is still debating draft laws for the renewal programme for older districts, including on how to proceed with land resumptions. “The government is trying to push that task to the developers. That is ridiculous. How can you leave that job to them? It is very difficult,” says Cheung. He argues the successful renewal of Macau’s old neighbourhoods will unlock the value of old buildings and inject liquidity into the property market. “Currently, the owners of units in those buildings cannot sell them because there are no interested buyers. But if the government resumes those buildings, it will pay the owners compensation and, from there, the money will flow to other properties,” he says. Any global redevelopment of older neighbourhoods could unlock as much as MOP50 billion, according to one estimate. It may also prove that redevelopment will be beneficial for society. “I am not just talking about our company or our limited scope. We are talking about the overall local property market, by making it healthier,” Cheung concludes.

Clouds on the horizon There’s optimism in the voice of Ricacorp Macau’s Jane Liu when she talks real estate investment opportunities, but she is not oblivious to the impact that huge economic housing projects will have on the private market

ith Macau’s GDP on the rise again, gaming revenues booming and tourists flocking to the territory, the fundamentals in the property market are bullish, says Jane Liu,

executive director of Ricacorp (Macau) Properties. “Given the loud economic and financial fundamentals of Macau, it is not normal to expect a drop in the real estate

prices. We don’t expect a sharp boom, but a steady increase,” she says. Expect property prices to increase 10 to 15 percent year-on-year, Liu predicts, with no sharp rises in the

Pressing to import labour I

f you think that real estate brokerage companies are not suffering from the governmentís squeeze on imported labour, think again. “We support the governmentís goal to ensure that the local people have a job, but it should also bear in mind the difficulties of overseas investors when they come to Macau. We need some of our own overseas staff to support the company,” Jane Liu, executive director of Ricacorp (Macau) Properties, says. “We need to bring them to Macau, to train and share their experience with our local staff. “If we want to grow, we need experienced people. There should be a balance.” Over the past few weeks, several businesspeople have

JUly 2010

criticised the governmentís restrictions on imported labour. Their argument is restrictions may mean sacrifices for growing smalland medium-enterprises. Hong Kong-based real estate brokerage company Ricacorp, opened its first Macau branch in May 2005. “Right now, we have the biggest investment in the real estate sector in Macau, with six shops, we are the biggest agency in Macau,” Liu says. “We have a very good brand name and the local people have shown a strong trust in us.” The company has 80 staff but wants to expand. “We have a plan to open one more shop still this year or at least to hire more people, increasing our staff to 100 or 110 but it all depends on the market,” she says.

second half. “The market may just face some ups and downs,” she says. As for the volume of transactions, she predicts growth of 20 to 30 percent this year compared to last year. But we are not going to see a repeat of the boom of 2007, when the sales volume peaked at 21,600 residential units. In her opinion, it is impossible to go back to 2007ís numbers any time soon. “That was a special year for Macau and Hong Kong. After the financial crisis in 2008, investors are still playing it safe,” she says. And sentiment is an important part of the real estate sector. While recent restrictions to cool the mainland’s real estate sector do not apply to Macau, they still impact the local market. “Real estate investors’ sentiment both in Hong Kong and mainland China really affects the sentiment of the Macau investors,” says Liu. A month to forget “May was the worst month we have encountered so far in 2010. The market was performing quite well, especially in March and April, but then May was not a very good month. We saw a drop of around 78 to 80 percent in the volume of transactions.” The causes are easily explained. Three new projects were launched in the first quarter; the high-end condominium One Oasis, the Riviera and The Bayview. All drew a huge response. “In March and April, the transaction volume was 200 percent above usual,” she says. It is not just transaction volumes that have dropped since then. Prices are down by about 8 to 10 percent compared to March, she adds. Locals back the market Meanwhile, local buyers are becoming increasingly more important to the real estate scene, particularly to the new developments. The wealth boom that has reshaped Macau is now flowing into the market. “For most Macau people, when looking for ways to invest, property is one of their top choices,” says Liu.

“When they see a down trend, they jump into the market to buy.” Macau is an unusual place in this sense: the home ownership rate stands at close to 80 percent. “We Chinese always have the belief that we must buy our own house as soon as possible. Our first target as we enter the labour market is to gather enough money to buy our own house”, she says. That leaves the rental market dependent on non-resident workers and expatriates who make up about “90 to 95 percent”.

FEATURE

Beware the boom One of the biggest concerns in the mid-term is the effect that launching thousands of subsidised public housing units will have on the city’s private property sector. Macau’s public housing structure includes social housing for rent by low-income earners and economic housing, which is for sale. It is the latter that Liu is opposed to. “We are very supportive of public housing for rent. The government should make sure that everyone has a house to live in. But not everybody should be using the taxpayers’ money to buy a subsidised unit, at least not without a very clear set of rules regulating this issue,” she says, adding that there were cases in the past of people applying for economic units to resell them for a high profit. According to the Macau Public Housing Policy Study published in March, the rents and prices of existing flats, particularly those at the middle to lower end of the market, would probably suffer the biggest hit if the government continues with an aggressive public housing policy. The report was commissioned by the Macau Association of Building Contractors and Developers and carried out by the Hong Kong Centre for Economic Research at the University of Hong Kong and the Faculty of Business Administration at the University of Macau. It recommended that Macau’s social housing stock should increase “gradually” and added that the pricing of economic housing should be switched from construction based to market price based.

Open for business M

acau has a “semi-transparent” real estate market, according to the latest Jones Lang LaSalle Real Estate Transparency Index. Placed 44th out of 81 markets surveyed, the global real estate firm says Macau is among the most improved jurisdictions. In the last index, published in 2008, Macau was ranked 48. Two years before, the real estate market was classified as having a low degree of transparency. The company’s Real Estate Transparency Index is an attempt to highlight the important differences investors experience when transacting, owning and operating in foreign markets. The index divides markets into five tiers: high, transparent, semi, low and opaque. Australia is now the world’s most transparent market, pushing Canada into second place, with Britain in third. The traditional leading pack, Australia, New Zealand, Britain, the United States and Canada, have been caught up by a number of European markets; Sweden, Ireland and France among them. The Asia-Pacific region has shown the most broadly based improvements in transparency over the past two years. Australia and New Zealand are closely followed by Singapore and Hong Kong. However, it is in India and the mainland where the region’s greatest advances have been recorded, a trend that has trickled down to their smaller cities. The wider region also has some of the greatest anomalies, with both Japan and South Korea showing low levels of transparency relative to their high level of economic development.

Market Watch

JUly 2010

August

July

Asian Infrastructure & Property Development Summit

Date: 5th – 7th Venue: The Four Seasons Hotel Macao Organiser: Marcus Evans Address: CP21, Suite 2101, Central Plaza, 34 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: (603) 3272 6635 Fax: (603) 2723 6601 Website: www.marcusevanskl.com E-mail: angelikab@marcusevans.com

The 2nd Macao Franchise Expo (MFE) Date: Venue: Organiser: Address: Tel: Website: E-mail:

8th – 10 th Macau Tower Convention & Entertainment Center Macau Trade and Investment Promotion Institute Av. da Amizade No 918, Edf. World Trade Centre, 2o andar, Macau (853) 6212 8811 Fax: (853) 2825 7277 www.mfe.mo contact@mfe.mo

16 Asia Pacific Tourism Association (APTA) Annual Conference th

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

13th – 16th Institute for Tourism Studies & Sofitel Macau at Ponte 16 Institute for Tourism Studies Colina de Mong Há, Macau (853) 8598 3049 Fax: (853) 2855 6925 www.apta.asia iftpr@ift.edu.mo

Gaming Asia Expo Date: Venue: Organiser: Address: Tel: Website: E-mail:

15th – 16th Marina Bay Sands Singapore ComExpo 10 Bukit Batok Crescent, #08-08 The Spire, Singapore 658079 (65) 6316 1060 Fax: (65) 6316 1015 www.comexpo.com.sg gae@comexpo.com.sg

World Gaming Executive Summit, Europe

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

14th – 16th Eurostars Madrid Tower Hotel, Spain Terrapinn Ltd Wren House, 43 Hatton Garden, London, EC1N 8EL 44 (0)20 7092 1000 Fax: 44 (0)20 72421548 www.terrapinn.com/2010/gamingeu julia.wallace@Terrapinn.com

Integrated Resorts & Entertainment

Date: 19 th – 20 th Venue: Marina Bay Sands, Singapore Organiser: Marcus Evans Address: CP21, Suite 2101, Level 21, Central Plaza, 34, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: (603) 2723 6736 Fax: (603) 2723 6699 Website: www.marcusevans.com E-mail: estherw@marcusevanskl.com

Australasian Gaming Expo

8th – 10 th Sydney Convention and Exhibition Centre, Darling Harbour, NSW Australia Organiser: Gaming Technologies Association (GTA) Address: Level 34, 50 Bridge Street, Sydney, NSW 2000 Australia Tel: (612) 82160931 Fax: (612) 82160701 Website: www.austgamingexpo.com E-mail: info@gamingta.com Date: Venue:

Asia Adult Expo 2010 Date: Venue: Organiser: Address: Tel: Website: E-mail:

20 th – 22nd The Venetian Macao-Resort-Hotel Vertical Expo Services Co. Ltd Room 1101,193 Lockhart Road, Wanchai, HK (852) 2528 0062 Fax: (852) 2528 0072 www.asiaadultexpo.com aae@verticalexpo.com

GTI Asia China Expo 2010

26th – 28th Poly World Trade Expo Center, Pazhou, Guangzhou City, China Organiser: Haw Ji Co., Ltd./Game Time International Address: 2F, No. 17 PaoChing St., Taipei City 10585, Taiwan Tel: (886) 2 27607407 ext. 207 Fax: (886) 2-27623873 Website: www.gtiexpo.com.tw E-mail: robert@taiwanslot.com.tw Date: Venue:

September

PATA Travel Mart 2010

Venue: The Venetian Macao-Resort-Hotel Date: 14th – 17th Organiser: Macau Government Tourist Office | PATA Address: Unit B1, 28th Floor, Siam Tower, 989 Rama I Road, Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 2000 Fax: (66) 2 658 2010 Website: membership@PATA.org E-mail: www.pata.org

8th European Conference on Gambling Studies and Policy Issues Date: Venue: Organiser: Address: Fax: Website: E-mail:

14th – 17th Radisson SAS Palais Hotel, Vienna, Austria European Association for the Study of Gambling NL - 1006 AD, Amsterdam, The Netherlands (31) 206896418 www.easg.org conference@easg.org

The Women in Gaming Awards Date: Venue: Organiser: Address: Tel: Website: E-mail:

24th Hilton Park Lane, London, UK Clever Duck Media Ltd. Suite 105 Park Plaza, Point South, Hayes Way, Cannock, WS12 2DB, UK (44) 0 1543 57 86 89 www.gaming-awards.com/wig colin@gaming-awards.com

Sportsbetting and Lotteries Asia Date: Venue: Organiser: Address: Tel: Website: E-mail:

20 th – 22nd Hong Kong Beacon Events 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 Fax: (852) 2219 0112 www.SportsBettingAsiaCongress.com info@BeaconEvents.com JUNE 2010

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

july 2010

Gaming

The billions race

Gaming revenues top MOP44.9 billion last quarter to set a new record

acau’s gaming industry is on a winning streak; the second quarter this year has been the most profitable ever for Macau casinos. From April to June, local casinos’ gross gaming revenue reached MOP44.9 billion, almost MOP4 billion more than the previous record, set in the first quarter of this year. Macau’s casino gross gaming revenue in June increased 65 percent yearon-year, to MOP13.6 billion, according to data from the Gaming Inspection and Coordination Bureau (DICJ). However, on a month-on-month basis, June results were 20 percent down. Analysts note that

the drop may be due to the football World Cup and a lower number of weekend days. The total casino gross gaming revenue for the six months through to June rose 67 percent to MOP85.9 billion. Information compiled by Portuguese news agency Lusa indicated that Stanley Ho Hung Sun’s Sociedade de Jogos de Macau continues to lead the ranking, with a June market share of 29.5 percent, followed by Sands China with 21.5 percent, and Wynn Resorts, with a market share of about 17.5 percent. The second half of the table of the operators includes Melco Crown with a market share of about 13.5 percent,

followed by Galaxy Resorts with just over 10 percent and MGM with a market share slightly above 7.5 percent. Last month, all of the casino operators generated revenues exceeding MOP1 billion but only Dr Ho’s SJM overcame the barrier of MOP4 billion. Regarding the future, Deutsche Bank analyst Karen Tang wrote in a note to clients: “We believe July [will] see a similar temporary softness in VIP gaming as the World Cup approaches its final stages. That said, we expect market growth to resume sequentially in August which is traditionally the summer travel season.”

Gaming Results: Gross Revenue In Million MOP (1HKD:1.03MOP) 18,000

17,075

16,000 14,000 12,000 10,000 8,000

8,269

9,570

11,268

12,600

12,215

Oct 09

Nov 09

10,943

13,937

13,445

13,569

Jan 10

Feb 10

Mar 10

14,186

13,642

11,347

6,000 4,000 2,000 0 Jun 09

Jul 09

JUly 2010

Aug 09

Sep 09

Dec 09

Apr 10

May 10

Jun 10

Gaming Results: Market Share Per Operator 2010

2009 Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

SJM

30%

23%

26%

31%

32%

31%

30%

32%

34%

33%

32%

30%

Sands China

26%

22%

24%

20%

24%

21%

22%

20%

21%

20%

22%

Galaxy

12%

10%

12%

13%

10%

11%

17%

Wynn

14%

15%

13%

14%

12%

17%

13%

15%

13%

14%

16%

14%

MPEL

18%

16%

17%

13%

12%

16%

14%

13%

14%

10%

MGM

12%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

30 20 10

Jun 09

Jul 09

Aug 09

Sep 09

Oct 09

Nov 09

Dec 09

Jan 10

Feb 10

Mar 10

Apr 10

May 10

Jun 10

*Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total.

More transparency

ffective this month, the Gaming Inspection and Coordination Bureau will release the monthly casino gross gaming revenue statistics on a monthly basis through its official website at www.dicj.gov. mo. In general, the gross revenue figure of the current month will be uploaded to the official website no later than the third working day of the subsequent month. Other gaming information and statistics updates will continue to be released on a quarterly basis.

Photo: Luís Almoster | MSPagency.org

july 2010

Gaming | Stock Watch

Las Vegas Sands eyes Japan It is full steam ahead on all fronts says Las Vegas Sands boss Sheldon Adelson with only the government’s cap on gaming tables holding back profits

here is talk from Las Vegas Sands (LVS.US), which runs the two biggest casinos in Macau, that it is considering moving into Japan where gambling is currently illegal.

In Hong Kong last month for the Sands China annual general meeting, Chairman Sheldon Adelson hinted that Japanese lawmakers were keen to give the go-ahead for the gaming group to

open integrated resorts and destination resorts there. It was just one of the rosy take-home points from the meeting. In Macau, Adelson says his company is anticipat-

Macau Casino Stocks Performance Year-to-date versus Heng Sang Index (Base=HK$10) HK$

23000

15 14

22000

SJM Holdings Ltd. Galaxy Entertainment Group Ltd. Wynn Macau Ltd.

12 21000 11

Sands China Ltd.

20000

Melco International Develop.

9 8

19000 Dec 09

Jan 10

JUly 2010

Mar 10

Apr 10

May 10

Jun 10

Hang Seng Index

HK-listed casino operators by market capilalization Melco International Development

13%

SJM Holdings Ltd.

Galaxy Entertainment Group Ltd.

Sands China Ltd

47%

Wynn Macau Ltd.

31%

HK-listed casino operators sales breakdown Melco International Development

ing year-on-year growth of between 30 and 35 percent in the second half of the year. And he reiterated that work on Lots 5 and 6 was on schedule for completion in the third quarter of next year. The project on the Cotai Strip will add another 20,000 hotel rooms to Macau’s inventory and feature properties from Shangri-La, Traders and Sheraton hotels. “The delayed opening of sites 5 and 6 is good news, as it would allow

Galaxy Entertainment Group Ltd.

Wynn Macau Ltd.

22% SJM Holdings Ltd.

Sands China Ltd

19%

53%

Macau Casino Stocks Performance versus HIS Year-to-Date (Base=HK$10) HK$

SJM Holdings Ltd.

Galaxy Entertainment Group Ltd.

13 12

Wynn Macau Ltd.

Sands China Ltd.

Melco International Develop.

9 Hang Seng Index

8 Dec 09

Jan 10

Mar 10

july 2010

Gaming | Stock Watch

the market to digest additional capacity,” wrote Credit Suisse analyst Gabriel Chan. Galaxy Entertainment Group has a similar project under development on the strip. Its 55-hectare integrated resort will feature 2,200 hotel rooms and 600 gaming tables, the company says.

Applying the brakes

The government has again emphasised its desire to diversify the economy. It will be fairly difficulty to wean the economy off such a lucrative business model however, given that gambling profits generate about 70 percent of government revenue. The government recently announced it will cap the number of tables at 5,500 for the next three years. By the end of last year there were about 4,770 gaming tables in the city. While that may be seen as strangling the growth of the industry, Adelson is confident that the government will not limit growth because it would be a “win-win” situation not to. “I don’t want to criticise the Macau Government; they can do whatever they want. But is it best for everybody? Probably not,” he told the media. Regarding the ongoing dispute over proposed apartment sales at the Four Seasons Hotel, Sands China CEO Steve Jacobs said the company was “waiting on the government to transfer that asset into a SPV (special purpose vehicle) so we can sell shares in that vehicle”. When asked for his opinion on gaming in Singapore, Adelson said it was “too early to tell”. The Singapore business will target JUly 2010

Macau-based Casino Stocks Performance Year-to-Date HK$

6 5.5 5 4.5 4 3.5 3 2.5 2

Dec 09

Jan 10

SJM Holdings Ltd

Feb 10

Mar 10

Galaxy Entertainment Group Ltd

Melco International Develop.

Las Vegas Base Casino Stocks Performance Year-to-Date HK$

16 15 14 13 12 11 10 9 8

Dec 09

Jan 10

Feb 10

Wynn Macau Ltd

the 1.1-billion strong Indian market, especially the South Eastern Side of India, which includes Bangalore. Despite the positive talk and Beijing’s decision to drop the de facto peg to the US dollar, the Sands China share

Mar 10

Sands China Ltd

price was flat last month, up 0.87 percent month-on-month. The performance was attributed to the weak market sentiment across equity markets, where the benchmark Hang Seng index finished the month up about 5 percent.

77 By Michael J. Munoz April 19 (Bloomberg) -- Following is a summary of Macau’s gaming revenue for the first quarter, according to figures released on the Gaming Inspection and Coordination Bureau’s Web site.

1Q 2010

4Q 2009

41,248 40,951 28,761 8,024 1,948 869 594 273 135 55

36,476 36,161 24,976 7,259 1,820 779 509 262 257 45

3Q 2009

2Q 2009

1Q 2009

4Q 2008

26,252 26,019 16,828 5,804 1,533 687 489 174 150 47

24,358 24,078 15,616 5,186 1,478 654 503 182 177 42

32 44 18 21 52 10 24 6 3 4 0.5 n/a 90 45 72 55

20 45 1 13 49 9 25 6 2 7 0.5 n/a 126 53 83 17

1 0.001

2 0.000

1 0.001

-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%

7.8% 8.1% 7.8% 11.9% 3.7% 5.0% -2.8% -4.4% -15.3% 11.9% 60.0% -2.2% 1358.3%

-7.0% -7.3% -9.5% -2.7% 3.6% -9.8% -3.3% 5.8% 24.6% -12.5% 5.3% -8.2% 20.0%

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%

61.5% 6.1% 11.1% -4.0% 0.0% 50.0% -42.9% 0.0% n/a -28.6% -15.1% -13.3% 47.1% 100.0% -110.0%

-23.5% -3.9% -40.0% -7.4% 0.0% -33.3% 0.0% 25.0% -100.0% 20.0% 0.0% 59.6% 183.3% -50.0% n/a

Macau Patacas (Million)

Total Games of Fortune VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat

32,036 31,781 21,742 6,536 1,616 723 473 253 161 53

25,619 25,408 16,287 5,898 1,533 638 432 223 125 40

Macau Patacas (Million)

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

48 45 39 29 28 19 19 8 2 1 0.5 n/a 124 91 52 27

42 42 37 27 28 13 26 7 1 1 0.5 n/a 102 110 80 21

Chinese Lottery Instant Lottery

2 0.000

1 0.001

1 0.000

Total Games of Fortune VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat Texas Holdem Poker Fantan Casino War

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%

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%

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%

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

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%

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%

-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%

39 49 45 22 36 12 23 6 2 2 0.4 n/a 70 111 60 12

32 39 42 23 37 8 20 5 2 2 0.4 n/a 71 60 68 11

Macau Patacas (Million)

Source: Gaming Inspection and Coordination Bureau; Bloomberg

QoQ%

Steve Jacobs

Sands China looking for airline partner Sands China Ltd is seeking to partner with a Chinese airline flying to Macau to start lowbudget travel deals. “We are very hopeful that we will see a new carrier service coming to Macau within the next 12 months,” Chief Executive Officer Steve Jacobs said in an interview to Bloomberg. The company is also looking for partnerships with travel agents in Mainland China and may start two-to-four day package deals to Macau. Around 85 percent of Sands China’s clients are mainlanders. Speaking on Beijing’s decision to make the yuan more flexible, Jacobs said it would be positive for Sands China, since it would lift the buying power of mainlanders. Meanwhile, Las Vegas Sands (LVS) chairman and CEO, Sheldon Adelson, said that he had an agreement with the former chief executive, Edmund Ho, about the selling of the Four Seasons apartment hotel. “He made a commitment to us that, if we started parcels 5 and 6 and if we did an IPO, then for sure we could sell [the Four Seasons apartment hotel as] strata condos,” Adelson said last month at the Sanford C. Bernstein Decisions Conference. “But now the old regime is out and a new is in”, he added. According to the LVS boss, there are already several Japanese customers interested in buying a unit there. The government has stressed there is still no decision on whether Sands China will be allowed to sell units at its Four Seasons apartment-hotel. “Regarding the hotel [Four Seasons], the case will be carried out according to the law and the government’s policies,” secretary for Transport and Public Works Lau Si Io told reporters. Lau had previously stressed that the apartmenthotel is not a housing complex and is subject to regulations similar to those of hotels. july 2010

Gaming

Banning the butt

American Gaming Association’s president and CEO says the local gaming industry will blow up to 20 percent in revenue when smoking restrictions are introduced but the combined effect of the ban and losses from new regional competitors will not be enough to take the city’s No 1 rank in Asia by Kahon Chan

ny ban on smoking in Macau’s casinos could lead to a 10 to 15 percent drop in casino revenues in the long term, an American gaming industry organisation has warned. The American Gaming Association is a gaming lobby group made up of well-known corporations in the industry, including Macau players Las Vegas Sands and MGM Mirage. The association’s president and chief executive, Frank Fahrenkopf Jr, was in Macau recently, revealing the results of a survey of 21 of Asia’s gaming industry elites – including a handful of casino CEOs – and talking to the media. “There’s usually a drop of 20 percent in revenue in the first year, as witJUly 2010

nessed in former instances in the US, New Zealand and other nations. And I gather that it’ll be significantly more than 20 percent [in Macau] because I noticed that in Asia more people smoke”, Mr Fahrenkopf said. Over a sustained period of time, he said the loss in revenue might be about 10 to 15 percent, because “in almost all countries, people who like to play also like to smoke”.

Up in smoke

In both Las Vegas and Macau, smoking is currently allowed inside casinos. Nevada passed a law prohibiting smoking indoors in 2006 but exempted the casinos. The concession posed a serious

threat to the health of hospitality workers, and anti-tobacco activists vented their anger on the gaming venues. The Aria Resort and Casino, which opened in Las Vegas last year, was the first to separate croupiers and players by a moving air curtain and extraction system. But even the Aria was not spared from protesters demanding a full ban. University of Macau professor of economics Ricardo Siu suggests that the actual losses flowing from a smoking ban cannot be substantiated because clean air might attract new customers that were previously bothered by smoke. The percentage of players who smoke in Macau is also under a cloud.

Smoking to be allowed in casinos for a three-year period According to a new version of the tobacco ban bill draft, smoking will be allowed in casinos, bars, terraces and business open areas, massage lounges and dance halls for a three-year period. The government is currently preparing a second draft of the bill which will include a three-year suspension of the smoking ban for “venues for adults”, including bars. “After two years, the government says that a revision of the law should be done in order to decide if the suspension continues in the third year or not,” said Chan Chak Mo, who heads the Second Standing Committee of the Legislative Assembly, in charge of analysing the smoking ban bill.

ing more visitors to established destinations like Macau. Macau’s leadership in the Asian market was universally regarded as undisputed for the next decade but Mr Fahrenkopf said he was surprised to see Japan mentioned by eight of the respondents as the market that will emerge as Asia’s second biggest, even though the merits of the industry are still being debated there. After Japan, Singapore, the Philippines and Taiwan were regarded as the next most important markets. Mr Fahrenkopf said instability in Japan could pose a problem. “The legalisation of casinos does not do well with political instability. I think it will still take some time [until Japan has casinos],” he said. He did say there were investors poised, waiting for the doors to open. The survey indicated that 14 respondents believed that the top Asian markets would generate more revenue than all of North America’s casinos inside three to five years.

A leadership role According to media reports and a message from legislator Ng Kuok Cheong, published on Facebook, government representatives agreed to a transition period of three years before applying a definitive ban on smoking in Macau’s casinos. Fellow legislator Ho Sio Kam said she had heard nothing about the matter.

Macau and Vegas still kings

The gaming association’s survey of industry leaders concluded that Macau would not be challenged by Asia’s emerging gaming destinations inside the next decade. Instead, the competition could work in the city’s favour, attract-

In Mr Fahrenkopf’s view, limited openings of new casinos in new jurisdictions leads to more visitors and would eventually lead players to make further trips to mature destinations, where entertainment options are more established. “Las Vegas is a very special place in the gaming world and I think that people who experience Macau or Singapore will eventually want to go one day to the United States,” he said. “I think people who are exposed to what is being offered there [in Singapore] will want to come to Macau, especially when the whole [Cotai] Strip is built,” he added. Slot machines are one area where Singapore already competes with Macau. Association of Gaming Equipment Manufacturers executive director

Marcus Prater noted that earnings per machine at Genting’s Resorts World Sentosa were about US$700 (MOP5,507) a day and US$450 a day at Marina Bay Sands. In comparison, the Sands Macau earns about US$175 from each of its machines every day. While the Gary Loveman, chief executive officer at Harrah’s Entertainment says his group maintains a strong interest in entering the Macau market, Mr Fahrenkopf was wary on what space could be found for new operators. Stressing that the industry must find the right balance with the Government in building the city’s infrastructure and controlling rapid growth, he said the limits on the number of gaming tables could benefit existing operators, but additional quality facilities on a grand scale would attract more visitors and bring “fair returns” for everyone.

The ‘alternative’ Galaxy

Two massive projects in Cotai are expected to open before the end of 2012 and will have to compete for the remaining 600 tables in the quota to fill their gaming halls or, as suggested by Secretary for Economy and Finance Francis Tam Pak Yuen, transfer tables from casinos in other parts of Macau. Galaxy Entertainment Group’s deputy Chairman Francis Lui Yiu Tung has not announced if there is a need to transfer gaming tables to the Galaxy Resort at Cotai. Mr Lui gave a keynote speech at the Global Gaming Expo Asia where he detailed the thinking behind the resort. He told the lunch-time crowd that the Cotai project was built to resemble a tropical resort to take advantage of the mainland’s growing middle class market. On the same latitude as Hawaii, Cancun and the Bahamas, and with a “cultural advantage”, Mr Lui said the city would have a competitive edge attracting tourists seeking a resort-style break. july 2010

October 2010 For more information visit macaubusiness.com or write to golf@macaubusiness.com

JUly 2010

Come with us and have a French taste at MGM’s “Aux Beaux Arts” Chef Justin Quek has cooked for world stars and public figures. In Macau he shares the experience and the knowledge, with us! Cheers! Portuguese wine goes strong on the Asian market

breakdown By the Numbers

Taking everything into count!

150

The number of restaurants in Tokyo that received at least one star Michelin. The Japanese city is the most awarded in the world.

The number of Michelin stars received by Joel Robuchon, the most awarded chef in the world by Michelin.

MOP 250,000

The most expensive meal in 2009 for a group of 15 people.

MOP1,500,000

The cost of the wine list that accompanied the bill of the most expensive meal for the same group of 15 people group.

1825

The world’s oldest bottle of champagne from PerrierJouet.

1838

The year of the coronation of Queen Victoria of the United Kingdom of Great Britain and Ireland, and the first Empress of India of the British Raj.

Once again Essential has the opportunity the sit down with the most wanted restaurants chefs in the world. In this issue we discover some of the culinary secrets of Chef Justin Quek from Singapore, and the delights of the French cuisine of Antoine Perray served at “Aux Beaux Arts Brasserie”. We explore the French “savoir-vivre” with a friendly conversation with MauriceRichard Hennessy, ambassador of the cognac house Hennessy, and join him in tasting the new Opus 140 from the Hennessy X.O. Exclusive Collection. Less exclusive, but nevertheless popular, we go in search of the best places to cheer for the national teams playing in South Africa in the Football World Cup. As an exclusive opportunity for Essential, in this issue we offer our readers a feature fully dedicated to Portuguese Wines. Held at the Macau Science Centre, the Viniportugal exposition gathered 22 Portuguese producers for a wine tasting of 200 bottles that will be launched in the Asian market. At the event, Essential interviewed the man responsible for Viniportugal, Francisco Borba. As a complement to this interview we feature the main Portuguese wine producers, as well as their top choices. The cherry on top of the cake this month is shaped like sushi and served in the flesh...yes we’re talking about our sex and food section. Like you couldn’t guess....

Wine Cork

Wine Screw Top

Has a long history, it has been used as the sealing method of There should always be an alternative. choice for over 400 years. And this one is pretty good! They’re a renewable resource (the trees are not killed when the Screw caps imply environmental issues associated with the bark is stripped to make cork). They’re readily biodegradable. loss of cork farming. Not a pretty picture. And they support an entire industry of corkscrews and other corkremoval products...and some of these corkscrews are so classy! Wine corks often go bad and everyone goes bad along with them. Hail to the future! There is no danger Estimates vary depending on which figures you believe, from as they will spoil or “taint” the wine. little as 1 percent or to as much as 20 percent of all wine sold is “corked,” which is to say, damaged by a problematic cork. Wine corks can be difficult to remove, and sometimes break off It’s good to open a bottle of wine in an easy way. into the bottle...and that’s bad! Besides, no special skill is required to remove it. According to several independent surveys, wine consumers buy They are less expensive than natural corks. wine sealed with natural cork over any other method. IIt’s elegant! And sometimes a bottle of wine is all about romance Industrial touch, cheap look and totally from the opening until the last drop. lacking romantic allure!

Seven deadly sins you should avoid when going out to restaurants GLUTTONY - More, More, More. An overzealous orderer can turn a friendly dinner into a silent battleground. Nothing grates like covering the costs of Mr. Surf-and-Turf, especially if the rest of the group is on a budget. GREED - Duty Calls. And Emails. And Texts. Our connected culture creates a class of permanently “on” employees. However, people who take work-related calls over a social dinner should be relegated to a special “Cell Phone Section” similar to smoking sections. LUST - Love To Love You - In Public. Ah, the restaurant PDA (Public Display of Affection). In small doses, this phenomenon is sweet -- the young couple cuddling in the corner, the married twosome stealing a kiss over their anniversary dinner. But when passion goes overboard, and cute canoodling turns to heavy groping, everyone’s uncomfortable -- helpless waitstaff included. SLOTH - Lazy Parenting. Children shouldn’t be excluded from dining out, and their natural exuberance is refreshing, but there seems to be a new generation of permissive parents who let their

kids run wild, treating servers like free babysitters and assuming everyone in the restaurant shares their tolerance for high-pitched screaming. ENVY - Entrée Jealousy. Let’s say you’re the type of person whose default order is “Salad, with dressing on the side”. Good for you! However, once you receive your commendably healthy dish, it’s poor form to then stare down your companion’s steak until they offer you a bite, then another bite, until they finally just slice you a big hunk in order to eat in peace. WRATH - Breaking Bread & Breaking Up. If you’re going to have the breakup conversation, the savvy move is to do it in private. This way, the hysterics, sobbing, recrimination, insults, groveling, and violent outbursts needn’t be experienced by the dining public at large. PRIDE - Narcissism Gone Wild. If it’s your birthday or bachelorette party or divorce party and you’ve decided to cut loose, more power to you! However, drinking your weight in Grey Goose and dancing on tables, screaming song lyrics, and requesting body shots from the waiter are in the realm of nightclub activity.

FEATURE

Some details make all the difference!

Power and refinement, a heavenly balanced combination

Eaux-de-vie H

ennessy, the world’s leading cognac house has proudly launched its latest Hennessy X.O Exclusive Collection, Opus 140, as a tribute to its legendary eXtra Old cognac, for its 140th anniversary. To manifest the grandeur of Opus 140, each bottle is individually numbered. 140 years ago in 1870, Maurice Hennessy, the visionary grandson of Richard Hennessy, the founder of the house, created the original eXtra Old cognac in France. This subtle symphony of over 100 rare and matured eaux-de-vie (waters of life) was widely acclaimed as a work of art.

Interview with

Maurice-Richard Hennessy Born in Paris on 11th April 1950, Maurice-Richard Hennessy spent his childhood years in Cognac. A direct descendant of the founder of the Hennessy Company, he belongs to the eighth generation of the prestigious family that came to France from Ireland in 1765. 84

A delicate balance between power and refinement, Hennessy X.O is very masculine, delivering full-bodied and peppery warmth spiced with cloves, with old leather undertones softened by delicious hints of vanilla, cinnamon and candied fruits. For the past 140 years, the Fillioux family, whose ancestors have been master blenders at Hennessy since 1800, has been transmitting the secrets of creating this exceptional cognac from generation to generation. The dual-family dynasty of the Hennessy’s and Fillioux’s has played a significant part in maintaining the fine quality of Hennessy X.O. Now, as a tribute to Hennessy X.O’s 140th anniversary, Opus 140 is a magnified interpretation of the emblematic carafe which was designed in 1947. Its form was inspired by an upside down grape bunch, and decorated with the very vines from which this rare cognac was born. Whether consumed straight or on the rocks, each tasting “will reveal a whole new experience in fine cognac”, according to Hennessy. The House of Hennessy has long established its place in the exclusive world of luxury and refinement. As the International Brand Ambassador and representative of the illustrious family’s eighth generation, Mr. Maurice-Richard Hennessy continues the legacy of his name, becoming an honorary City of Dreams ambassador for style and luxury. To commemorate this perfect alliance of opulence and leisure, Mr. Hennessy presents the latest addition to the Hennessy X.O Exclusive Collection, Opus 140, a creation to celebrate the 140th Anniversary of Hennessy X.O, to be displayed at City’s of Dreams’ signature restaurant, Horizons.

Cognac is undoubtedly a part of your life. What was it like to be born into such an environment? It is true! The Cognac gene is firmly established in my DNA, but along with that I’ve nourished a love for the Charente countryside, vine-growing and fine gastronomy. Besides growing up in the ambiance of Cognac, I was trained as an agronomical engineer at the Institute for Technical and Practical Agriculture, and after several years spent doing voluntary development work in Africa, I returned to Cognac in 1975 to join my family firm. Once back to my own roots I was given an in-depth training in all the Hennessy professions, from distillation to bottling, as well as commercial and marketing activities.

Today you are the ambassador for Hennessy, meaning that you take part in most of the prestigious events on behalf of the brand. Does the travelling still inspire your work? I represent Hennessy with pride and I try to do it as elegantly as the Cognac I represent. In a most natural way, I’ve became the incarnation of the brand in the markets and I surely assume my role, being not only familiar with the history of the company but most of all with the Cognac. The places I’ve had the pleasure of visiting to promote the Hennessy brand, have shown me how universal the enjoyment of aesthetics and life’s pleasures is.

Would you say that luxury is an universal language? Yes, it is. And I am happy to see the appreciation everywhere in China now. Just take the OPUS 140’s presence at City of Dreams Horizon’s. This is and will be an appeal to luxury seekers across all of Asia.

Fine Dining We spot in Macau the right places and the right people!

Sooo French! T

here’s nothing like the charm and romance of a cosy French brasserie in Paris, where diners linger over classics like escargots and moules marniéres while sipping a glass of wine as the world passes by. Now, that experience has been created at MGM Macau, through its signature French brasserie, Aux Beaux Arts. Capturing the elegant atmosphere and casual sophistication of a 1930s brasserie, the restaurant features dark wood panelling, and cast iron coat and umbrella racks hanging over indoor tables. Completing the look and feel of the experience are the thick wooden tables around which guests enjoy authentic French cuisine showcasing well-known favorites as well as innovative, contemporary creations. MGM Macau has brought the traditions and heritage of French cooking directly to Macau through the exquisite menu at Aux Beaux Arts. Already noted in the press for its unparalleled authenticity, Aux Beaux Arts is destined for gastronomic greatness. Situated along the Grande Praça where guests and visitors mix and mingle, patio seating for afternoon tea provides diners with a relaxing way to enjoy the incredible architecture around the Grande Praça, and an opportunity to sample the spectacular dishes on offer. The evening provides a completely different and unique perspective, when the sky is dark and the candles on the tables are lit, the soft glow inside the restaurant take on a magical feel. Light and casual or romantic and elegant, the aura of the restaurant offers tables along the patio for a casual meal, special configurations for entertaining corporate clients, and quiet corners for a lovers’ tête-à-tête. Whether diners prefer the brasserie feel or the piazza dining option on the Grande Praça, the exceptional food will keep one and all lingering over the last few morsels on the plate. A phenomenal wine list with rare old and new world wines caters to even the most sophisticated gourmand’s tastes. Exquisite to the last bite, make sure to leave room for an incredible cheeseboard and selection of dessert wines. Be prepared to be wowed.

Savoir-Faire et Faire-Savoir E

ssential sits down with Chef Antoine Perray for a quick interview. Once again we are able to meet a fascinating professional serving Macau the most amazing meals in town! What’s the most important aspect of your work? The flexibility. At “Aux Beaux Arts” the cuisine is very flexible, meaning the staff can go from a small paste meal to a fine dining meal with the same focus and the same high quality standard. The ingredients we use are exceptional, whether it’s a more sophisticated fine dining meal or a more casual one. This flexibility in cooking a wide standard range of meals allows the client several options without ever having to choose one meal because of the quality of the ingredients, for that is assured! What makes your cuisine special? Besides me? (laughs) Everything! Cooking for me is an expression of Art. It has to come from the heart and that’s the only way to be involved in such work as this. We have to respect the ingredients, we have to understand how the products are to be cooked and presented to the client. This focus is vital for successful cuisine and therefore, for such a restaurant as this one. Also, the chef and his team have to be very professional, have to respect each other and be perfectly tuned. I’m glad that at “Aux Beaux Arts” we’ve reached this stage. This is not just a restaurant, “Aux Beaux Arts” has become a concept! Does being a French Chef for an Asian public mean changing many aspects of your cuisine? Well, in these types of situations, of course some changes are due. We have to adapt ourselves, adapt our cuisine to this new public. We try to adapt our most traditional ideas and roots and adapt them to the Asian point of view. For instance, trying to serve it in a different way, taking a different approach without damaging the soul of our own traditions. This is a very exciting creative exercise that allows us to show what we do best, using the clients’ parameters of knowledge and cultural understanding. Would you share one of your cuisine secrets with us? Savoir-faire at faire-savoir! To let your team understand your passion and your philosophy by sharing your knowledge is half way to making things work well!

Chef suggests To choose is never an easy task, so we’ve asked Chef Antoine Perray to pick some of the MGM Aux Beaux Arts specialities for us to make sure your choice is the best one!

Nicoise Salad

Fresh blue fin tuna, tomato confite, romance salad, soft boiled egg, French bean, anchovies, black olives and potatoes. Pairing Wine

Oliver Merlin, La Roche Vineuse 2005 Pascal Jolivet, Sancerre 2007

Foie Gras

Foie gras, French summer truffle, sauterne jelly, brioche and baby cress Pairing Wine

Domaines Schlumberger, Pinot Gris Cuvee Clarisse 2000 Paul Jaboulet, Muscat de Beaumes de Venise Le Chant des Griolles 2006

Duck

Whole French duck, Butter confite potatoes, orange sauce and sechuan pepper Pairing Wine

Robert Arnoux, Nuits St Georges Les Poisets 2004 Domaine Chandon de Briailles, Corton Les Bressandes 2001

Antoine Perray

Born and raised in Normandy, France, Antoine Perray’s fascination with learning how to cook the amazing food he ate every day took root very early on, and has led him to his position as the Chef de Cuisine at MGM MACAU’s authentic Parisian brasserie, Aux Beaux Arts. Perray has come to Macau from Paris, where he was formerly Group Executive Chef for Murano Resorts’ renowned, avant-garde restaurants in both Paris and Marrakech. Prior to taking on a regional role, Perray’s fine-tuned talents in the kitchen afforded him the opportunity to work with Jacques and Laurent Pourcel, most famous for their three Michelin star restaurant in Paris. Perray was responsible for opening the AmeriKlub restaurant in the Mediterranean town of Sète, France, an experience that showcased his culinary and managerial skills, turning the restaurant into an award-winning destination for fine cuisines. Always looking for new ways to prepare incredible dishes, Perray previously worked at a boutique, luxury hotel in Propriano, Corsica. There he learned the art of mixing and matching fresh ingredients in a whole new way – with a Mediterranean style of cooking, reflected of the Italian culinary arts. Perray began at the famous Alain Ducasse au Plaza Athénée, where he discovered Chef Ducasse’s worldrenowned talents in creating gastronomic delights. He moved within the group as Chef de Partie at the Byblos St. Tropez in the summer and Byblos Courchevel in the winter. In his early years, Perray was trained at the Hôtel de Crillon, one of Paris’ most prestigious hotels. It was here at the Hôtel deCrillon, after hard work and training at Auberge in the French countryside, that he learned the true art of French gastronomy. Perray’s journey in culinary arts is one that continues today, creating fabulous, sumptuous meals at Aux Beaux Arts, bringing his experience in the traditions and customs of French cooking to MGM Macau.

Fine Dining Enjoy

your future meal...

Star Class Dinner

Highly regarded as one of Asia’s top French cuisine master chefs, Justin Quek is well known for his creativity and his very own fusion cuisine. For a couple of days, Justin Quek stayed in Macau to showcase his excellence in culinary creativity in a very special occasion

ith over 20 years of culinary work experience, you have served some of the most important people nowadays. Can you tell us about some of those experiences?

Some celebrities and national leaders have tried my cooking, especially while I was working in the French Embassy in Singapore. I’ve cooked for the former Prime Minister of Singapore Mr Lee Kuan Yew, the former Prime Minister of People’s Republic of China Jiang Zemin, the Co-founder of Microsoft Bill Gates and Nobel Peace Prize Laureatte Dr. Henry Kissinger. However on all

of these occasions the food was not really the issue and as a chef I have to take that important detail into account. These types of dinners, are not for meal opulence, but for the guests to focus on what they are discussing and achieving, so as a Chef I kept track of this limitation. Most of these people have eaten all of the best products and the best meals with all of the mise en scene, so I chose to take a very low profile path. On these occasions I do very simple food, with high efficiency and precision. The food is not the focus of the occasion, it’s just another intervenient.

Can you tell us a little bit about this special occasion in Macau? StarWorld invited me to showcase my culinary creations to their VIP guests at the “StarWorld Star Class Dinner”. Dinners will be served at the Grand Ballroom and the menu implies an exquisite 5-course tailor-made menu. Besides the gourmet food, I’ve given also all of my attention to the fine wines choice. Macau is a very exciting city. Although there is more Chinese street food than gastronomical food it is definitely a place where you can find a mélange of cuisines, of tastes, of products and clients needs. Can you share one of your Chef secret’s with us? I always choose the best products. I’m very loyal to my suppliers and they give me the highest product quality in return! Quality and healthy food are my focus and the main points on my priorities list. Another secret is understanding the clients. I customize to what my clients want and need, so that I can balance my work with their expectations, creating an harmonious and interdependent relationship.

JUSTIN QUEK

Justin Quek was born in Singapore. His specialty is in French cuisine. He is Singapore’s most internationallyknown chef and the first Asian chef invited to participate in Lufthansa’s Star Chefs program. Quek had always wanted to travel. After his National Service in Singapore, at 20 years old, Quek managed to get a job as a steward. It was after two years as a seaman that led him to his passion of cooking. He then went on to learn the basics of cooking at the Singapore Hotel and Tourism Education Center (SHATEC) for one year. After his graduation in 1986, Quek continued his culinary training at The Oriental’s hotels in Bangkok and Singapore under chef Bertrand Langlet, who encouraged him to go to France to further his training. He returned to Singapore in 1992, taking the place of personal chef at the French Embassy, serving two high commissioners. Quek then opened Les Amis at Shaw House, Singapore. In 2004, he left Les Amis to establish a new restaurant called La Petite Cuisine in Taipei. He has since opened another French eatery La Platane, a fine-dining Chinese restaurant Villa du Lac and a restaurant named Fountain. All three are located at Xintiandi, Shanghai. He sold all his businesses in Shanghai in January 2009 and opened Just In Bistro & Wine Bar, Taipei in April 2009.

Our monthly suggestion

The 2010 World Cup in South Africa is on. Macau has a world of suggestions for you to make this football journey a different one

World Soccer, the Star of the Month Until 18 July, StarWorld Macau is hosting the “StarWorld Soccer Mania” Promotion Campaign for all soccer fans and holiday-makers, offering live TV broadcasts of all matches on the indoor 855-inch mega LED screen and free flow of beer while watching the matches with all the soccer fans under one roof. Guests can also enjoy various food and beverage specials and join the lucky draws to have chances to win cash prizes and gifts such as free hotel accommodation, free dining coupons and free play vouchers. Also at Starworld, from 5 June to 15 July, guests can enjoy the “Buy-3-Get-1” promotion for Budweiser beer at the Whisky Bar, Temptations, Sensation and Lobby Lounge, as well as chances to win World Cup related souvenirs and a limited edition soccer jersey of the Brazil’s national football team. Taking a break between exciting soccer matches, guests can satisfy their taste buds at Sensations restaurant where interesting soccer themed dishes are offered, such as “MVP” (Sautéed Seafood with Capsicums in Whole Pineapple), “Golden Goal” (Deep-fried Shrimp Balls with Cheese) and “Hand of God” (Boiled Boneless Pork’s Knuckle in Black Pepper).

Color yourself blue

Soccer fever MGM is inviting every soccer fan to get close to the action and stay tuned at Veuve Clicquot Lounge for live broadcasts of the FIFA World Cup. Until the 12th of July, from 6pm to 4am special drinks will be served. Besides the traditional Carlsberg beer - the drink that from our point of view suits soccer the best - they’ve also created some inspired cocktails entitled “Goalkeeper”, “Free Kick”, “Crossbar” and “Hat Trick”. The cherry on top of the football is a sales cart set up on the terrace of Veuve Clicquot Lounge featuring South African Boerewors and condiments. Besides these promotions, MGM’s Rossio Restaurant is also serving a South African Daily Buffet Lunch and Dinner and at Lion’s Bar, the 11th of July is already anticipating the World Cup Championship Night Closing Party.

Blue Frog Bar & Grill at The Venetian will be one spot not to miss during the World Cup 2010. With a huge screen to project the matches, plus all the TV screens it will be impossible to miss the goals. Besides, just like the competing teams, Blue Frog has beers from all over the world. Western cuisine from a sensational “on-stage theatre kitchen” at which chefs prepare choice imported steaks, chops, gourmet burgers and a variety of classic brunch fare. In addition to the grill, fresh salads, sandwiches, soups, pastas, appetizers and snacks are prepared to order and served until late into the night.

Food & Sex

New lunch concept “Bento by Sofitel” is a lunch concept that Sofitel Macau at Ponte 16 has tailored for its guests by featuring a weekly refreshing menu of up to six premium main course choices, from French, South East Asian to Chinese dishes - Seafood Risotto, Indian Butter Chicken with Basmati Rice and Macanese Fried Rice, just to name a few. Accompanying it a bowl of Chinese or western soup, salad and your after-meal hot tea promise to deliver a quality yet express service, catching up with your modern lifestyle! Be it a business or casual occasion! Rolling out at the same time at Mistral is “So Healthy” lunch option. Cheer up your spirit and taste buds with the salad bar and soup whilst your eyes feast on the relaxing garden and river views at your al fresco table. The lunch promotion is currently on offer, 12pm - 3pm daily. “Bento by Sofitel” includes soup, salad, main course and hot tea (MOP 70), “So Healthy” includes soup and salad bar (MOP70).

Barbecue Night Summer Dream Sofitel Macau at Ponte 16 is welcoming Summer in the most delightful way: with a very exquisite barbecue. Restaurant Mistral has introduced an outdoor BBQ at La Terrace, embracing the breeze of the Pearl River Delta and the magnificent swimming-pool area. In La Terrace the pool side dining area, guests are having an alfresco dining experience with fresh salads, Angus & Prime beef fillets, mouthwatering lobsters and seafood and luscious desserts for satisfying their culinary hearts. Sizzling BBQ steak, fine wine under the stars, impeccable service in a luxury French hotel. BBQ dinner will be served from 7pm to 10pm on every Friday, Saturday and Sunday. MOP130 for the gourmet salad bar & à la carte dessert plus your favorite BBQ main course ranging from MOP50. It’s the perfect place to enjoy a dinner night out...believe us!

Sushi, everyone!

Saturday night, might just be a different night for a blonde...or a brunette...or even both. Ladies all around the world found a enjoyable and very different way to use their bodies: as a human sushi platter. Watch out for the birth of a new trend! Naked under two roses and a large daisy placed you-know-where, the lady lays still for more than an hour as people pluck raw fish off her body at restaurants. You might expect a drooling crowd of male hedonists, but the diners -- evenly split between men and women, and ranging in age from 20s to 50s -- are calm and curious, though they did mingle about with ear-to-ear smiles, as if each had just won the Powerball. While some people call it “naked sushi,” the models, the restaurant proprietors and the chefs prefer the term body sushi, because the models aren’t nude -- they’re wearing flowers (and raw fish, of course). In Japan, it’s called nyotaimori (Japanese: 女体盛り), meaning “female body presentation”. Contrary to the United States and Europe, in Japan the practice is stigmatised and usually only to be found in “seedy sex clubs”. When it is presented overseas, however, it is marketed as “a form of Japanese food culture”. In these meals, the sushi chefs do try their best to keep up, but as soon they replace the eaten sushi, the new stuff disappears. Promoters, eating participants, and apologists to the practice often say that nyotaimori is a form of art. This argument is rejected by some feminists, who argue that it objectifies the woman or the man doing the serving.For public health reasons, China has outlawed food served on naked bodies. If by chance you get to go to one of these meals, don’t be surprised to hear something like: “it was the best piece of salmon I’ve ever had in my life”. To us, watching that “Sex and the City” movie scene when Samantha Jones makes sushi and covers her body with it for a Valentine’s Day present was a pretty good idea. Simple and sexy. What do you think?

Featuring Portuguese Wine

Moving up

The events

Given these very satisfying numbers, Borba believes that his first time in Asia has paid off. “It was good to understand the market and the profitability of such events; to know the money we have invested has some return”, he says, adding: “I’m already going to prepare the programme for 2011.” Even though the year has not finished, Borba states that EUR400,000 are going to be invested. However at the next general

assembly of Viniportugal, the president intends to ask to reinforce next year’s budget. “I believe this market has a very big growth potential.” The money invested will be used for educational events around the region, in order to teach people how to appreciate wine.

Photo: John Si

acau’s market has potential to grow and Viniportugal president, Francisco Borba, intends to demand a bigger investment. Viniportugal is an association that strives for the promotion of Portuguese wines. Last month, it was responsible for wine tasting sessions in Beijing, Shanghai, Hong Kong and Macau. After this set of sessions, Borba was particularly happy. “Portugal grew around 16 percent in market value; the first trimester already has registered numbers close to what were the export numbers in 2009”, he declares. In fact, up to now, it’s already accounted for US$1.7 million. In an interview with Macau Business during the wine tasting at the Macau Cultural Centre, he claimed there should be a bigger investment in these types of events.

Good indicators

Usually, a wine master or a sommelier conducts the wine tasting. He presents around six wines and he drinks them together with the participants. “This is a good way to discover the characteristics of the wines, the aromas; it’s very educational, because it helps people to understand the wine and their differences”. Even though Borba does not wish to comment on particular numbers and wines, he declares: “The Portuguese wines have been contributing, in a way, to publicise the name of the country.” However, when they are able to work on an integrated production line of action, promoting wine and other products in foreign countries, “this will be healthy for all Portuguese exports”. In fact, with the numbers from the first quarter, Portugal’s AICEP business development agency already estimates that throughout 2010, there is going to be a growth of between 150 and 200 percent in Portuguese wines sales in Mainland China.

The profile

Francisco Borba is an

agronomist engineer and a man with a profound knowledge of the rural world. He spent several years of his working life in the Agriculture Ministry, working as the regional director of the Ribatejo and West regions. Also, he was a secretary of state for Agricultural Development during the third and fourth Portuguese constitutional governments. Throughout his life, he has been always an agricultural businessman, having learnt the trade with his father. He has been at the front of Viniportugal, since late 2009.

The producers

In good spirits There were 22 Portuguese producers at last month’s wine tasting event, held in Macau. Viniportugal organised the event, managing to present more than 200 bottles as well as launching in the Asian market, the international brand titled Wines of Portugal. At the Macau Science Centre, distributors, producers and potential business partners tasted the wines, while at the same time, professor from the Institute for Tourism Studies, Hugo Bandeira, and oenologist, Luís Herédia, conducted a seminar on the subject. It was the common opinion of the Portuguese producers, that Macau and China are growing markets, with great potential. However, contrary to what one might suppose, the Macau casinos and hotels are bringing fierce competition to Portuguese wines.

Among the producers, there were representatives from institutions such as Fundação Eugénio de Almeida, José Maria da Fonseca, Casa Santos Lima, Graham’s, Casa Agrícola Alexandre Relvas and Esporão. Most of them have partnerships with local distributors. The wine ambassador from Summergate (a local distributor), João Pedro Farinha, claimed that “the Portuguese wine consumption in Macau is big; even tourists that go to restaurants are usually curious about them”. However, there is a local parallel distribution market that brings some competition to the Portuguese wines. “You see many hotels and casinos opening in Macau, but that doesn’t reflect in a gain for the local distributors”, says the managing director from Enopartner (a company that exports Alvarinho wine). According to Carlos Mendes Moreira, the casinos and hotels have their own distributors and wines. Nevertheless, Viniportugal seems eager to promote wines in this part of the world. In fact, apart from the wine tasting event in Macau, the trade association also organised sessions in Beijing, Shanghai and Hong Kong, showing its interest in a market that is constantly growing: China. And there are already talks about a bigger investment.

Herdade do Esporão/Awards and wines Acquired by Finagra in the 1970’s, the Herdade do Esporão was occupied from 1975 until 1979 during the revolutionary period. Only after this, did production resume. In 1989, the first Esporão wine was considered one of the best Portuguese wines and three years later the brand Monte Velho was launched. In 2008, Esporão was voted for the second time as the Company of the Year, by the Portuguese magazine Revista dos Vinhos, mainly for its Quinta das Murças wine.

José Maria da Fonseca/Century house José Maria da Fonseca started off his business in 1834. It’s been in the same family for 200 years and it is now the oldest producer of table wines and Setubal Moscatel, in Portugal. It combines investment in new research techniques with tradition. Proof of this is the property, at Reguengos de Monsaraz, where the tradition of fermenting wine in clay pots is combined with the most modern methods of wine production.

Casa Santos Lima/Runs in the family The Casa Santos Lima was founded by Joaquim Santos Lima at the turn of the 19th century. Since then, it has passed through several generations. The first brands to be launched (in 1996) were Quinta da Espiga, Quinta das Setencostas and Palha-Canas. Currently, more than 90 percent of the production is exported to 30 countries.

Graham’s/A story of two families The brothers William and John founded W&J Graham’s, in 1820, in Porto. Seventy years later they acquired their famous property, Quinta dos Malvedos. Since then, it has already been recognized as one of the Douro Valley’s finest “river Quintas”. Ever since, a serious of Vintages were produced by Graham’s: 1908, 1912, 1924, 1927, 1945 and the exceptional 1948. However, in 1970 the company was sold to the Symington family, combining both influences.

J.Portugal Ramos/Transforming grapes João Portugal Ramos planted the first five hectares of vineyards in Estremoz, in 1990. He presented a project with the aim of transforming his own grapes, as well as grapes originating from rented vineyards and grapes bought in the scope of long-term agreements. His project is responsible for some of the most well-known wines.

Fundação Eugénio de Almeida/Wine of history Vasco Maria Eugénio de Almeida founded the Fundação Eugénio de Almeida in 1963. The purpose was to provide cultural, educational, social and spiritual assistance, in pursuit of the development of the Portuguese city, Évora. The wine production takes place in a historical place, the Adega da Cartuxa, in Évora. Nearby is the Monastery of Cartuxa, where several wines are stored in caves. Today this is one of the most recommended sights in Évora and tasting its wine is a must.

Quinta do Portal/Sweet Moscatel From special grape varietals grown in the Douro region, Quinta do Portal produces several wines. In Favaios, a village in Portugal rich in Muscats, Quinta do Portal owns vineyards to produce a dessert Moscatel. Also, for generations, Quinta do Portal has been a producer of Tawny ports, in the Pinhão valley. In total, the company has 95 hectares of vineyards in the Douro region, divided into Quinta da Abelheira, Quinta do Confradeiro, Quinta dos Muros and Quinta do Portal.

Herdade de São Miguel/Schistous is the way Right in the middle of Alentejo, a region in Portugal, in Redondo, the property owned by Alexandre Relvas has 175 hectares, 35 of which are vineyards. Named Herdade de São Miguel, the company takes preference on schistous lands. It is currently working on the development of technology to better understand the vineyard.

Featuring Portuguese Wine

Graham’s Vintage Port 2007

Marquês de Borba Red 2009 Denomination

DOC Alentejo Type

Red wine Grape varieties

Aragonês, Trincadeira, Alicante Bouschet, Cabernet Saauvignon Region

Alentejo Soil

Limestone clay, schist Harvest By hand to small cases of 15 kg

Vinification

Temperature controlled fermentation of fully de-stemmed bunches

2007 will be remembered particularly for its cool, damp summer. A nice long period of sunshine in September and October allowed ripening to proceed normally, and although a bit later than usual, the vintage took place under perfect conditions, the fruit being beautifully balanced. For the first time ever, some wines made from the Quinta do Tua vineyard were included in the 2007 blend. Wine Description

Vintage Overview An excellent Vintage in the Douro which proved one of the exceptional years where the weather, combined with the work of the viticulturists and the winemakers, produced stunning wines. General declaration. Tasting Notes

Very profound and intense deep purple colour. Rich and complex floral aromas of violets and eucalyptus from the Malvedos and Lages Touriga Franca give a very special elegance to this wine. Very attractive rich blackberry flavoured fruit with excellent texture. The sheer power, weight, complexity and balance of this wine guarantee its longevity. Food pairing suggestion and serving

14 % vol.

Graham’s 2007 Vintage Port is a fabulous way to end a lunch or dinner. It pairs wonderfully with chocolate desserts, such as chocolate mousse, but it can also be enjoyed on its own, providing a memorable moment in the company of good friends.

Total acidity

Storage

Ageing

In second year small oak barrels Alcohol

5.2 g/l

Store the bottle horizontally in a dark place with constant temperature, ideally between 12ºC and 15ºC.

Residual sugar

< 4 g/l

Wine Specifications

Tasting notes

Good aromatic concentration. Intensely fruity, aroma of berries, cassis and preserves. Smooth tannins. Good balance between fruit, acidity and tannin.

Alcohol: 20% vol (20ºC) Total acidity: 4.8 g/l tartaric acid Baumé: 4.1

Graham’s Six Grapes Marquês de Borba Reserva 2007 Denomination

DOC Alentejo Type

Red wine Grape varieties

Trincadeira, Aragonês, Alicante Bouschet, Cabernet Sauvignon Region

Alentejo Soil

Schist Harvest

By hand to small cases of 15 kg Vinification

Part of the harvest is foot trodden in traditional shallow, open marble troughs, known as lagares. The remainder is fermented in stainless steel tanks, with temperature control, with a long post-fermentation maceration. Malolactic fermentation then takes place in the barrels.

Tasting Notes

Alcohol

Dark red colour, with a seductive rich perfume of ripe plums and cherries. On the palate, complex, with a good structure and a long lingering finish.

Total acidity

Food pairing suggestion and serving

Ageing

12 months in small French oak barrels 14% vol. 5.7 g/l

Residual sugar

< 4 g/l

Tasting notes

Deep in colour. Enormous concentration of aromas. Notes of jammy red fruits and spices. Potent and elegant. Solid, vigorous, with compact and well integrated tannis. Long and distinct finish. A wine for ageing.

Six Grapes Reserve is one of Graham’s original Port blends. The distinctive depiction of grapes on the label has always been used on the barrels to identify the “Six Grapes” blend. Only grapes from first-class vineyards are used for this mark. Six Grapes is a true expression of Graham’s house style with great richness and complexity. Six Grapes is a big hearted wine. It is fruity and robust and of superb quality. It is blended to be as similar as possible to a young Vintage Port. It has often been referred to as “the everyday Port for the Vintage Port drinker”. Unique in the Port trade, Graham’s selects its “proprietary blend” ahead of its more commercial styles. All other Port shippers make a lighter style “Reserve” blend out of lots that remain after they have bottled their LBV’s.

Graham’s “Six Grapes” is delicious served at the end of a meal, for example with rich, nutty or chocolate desserts, as well as strong cheeses. Wine Specifications

Alcohol: 20% vol (20ºC) Total acidity: 4.1 g/l tartaric acid Baumé: 3.6

Couth

Altano Reserva 2007 Grape Origins

Sourced from the Symington Family Estates Grape Varieties

80% Touriga Franca 20% Touriga Nacional Vinification

The selected grapes were vinified at Quinta do Sol where the Symington family have their modern vinification centre; rigorous grape classification and careful transportation in small 20kg trays; inoculation with selected yeast; fermentation in stainless steel tanks, prolonged maceration by pumping over at a controlled temperature of 26-28ºC. Ageing

10 months in seasoned american 400L oak casks. Coopers

Tonnellerie Magneñan Consumption

Can be drunk now but this wine will continue to age superbly in bottle over the next few years. Decanting will bring out this wine’s finest attributes.

Vila Santa Reserva 2008 Denomination

Regional Alentejano Type

Red wine Grape varieties

Aragonês, Touriga Nacional, Trincadeira, Alicante Bouschet, Cabernet Sauvignon Region

Alentejo Soil

Schist in advanced metamorphosis stage Harvest

By hand to small cases of 15 kg Vinification

Part of the harvest is foot trodden in marble lagares (troughs) and the remainder fermented in wooden vats with temperature control, followed by long maceration. Ageing

Nine months in American and French oak barrels Alcohol

14% vol. Total acidity

5.1 g/l

Residual sugar

< 4 g/l

Tasting notes

Intense garnet colour. Aroma suggesting very ripe black fruits blending beautifully with the spiciness imparted by the barrels. Elegant and full bodied with soft tannins. A big powerful and full wine.

by Luís Herédia

or over twenty years I’ve been tasting Portuguese wines in Macau and noting the continuous evolution of their quality. There is no doubt that the different styles of wine produced in Portugal from north to south, particularly still and fortified wines are of the highest quality. This is not only my opinion, but also that of wine fans and the public, which is confirmed by the number of medals and prizes that Portuguese wines have been awarded in international competitions. In the recent famous International Wine Challenge held in London in April 2010, Portugal achieved a creditable third place out of 46 countries, receiving 35 gold medals. Recently, one of the most prestigious journals assigned the maximum score of 100 points to a 2007 Port Vintage, and several notes of excellence (over 95 points) to a few other Port wines. Other Douro still wines from the same vintage (2007) also received grades of Excellency, and little by little other Portuguese wines from all the regions are achieving very high scores as well. If recognition of the quality of Port wines is indisputable, in what concerns red wine is starts to be notorious from the lowest range to premium level. On the other hand, white wines are finally beginning to dare to display the fruit, acidity and elegance that enable them to obtain interesting reviews and scores. Vinho Verde, especially the Alvarinho, continues to be the most prominent among the white wines in Portugal due to its unique features of fruit, minerals and freshness. However, there is no doubt that all regions are starting to produce international standard white wines using the traditional Portuguese grape varieties, such as Viosinho, Códega, Rabigato, Malvasia Fina, Verdelho, Antão Vaz, Arinto and others. The supply is wide and goes from traditional old world style blends, to monovarietal style as the new world strongly does. There are blends of Portuguese grape varieties, blends of Portuguese and foreign varieties (especially French), blends of foreign varieties, mono-varietals of Portuguese grapes and mono-varietals of foreign grapes. All this wide range is the result of years of work by countless generations, which since Roman times have been working the land, cultivating the vines and creating the vintner Portugal. Today, in the 21st century, the high quality note is given by a new generation of Portuguese wine experts, complemented by a few French, Australian, Spanish and Italian wine makers, who share a similar passion and knowledge. Highly qualified, with a significant female presence, this generation of Portuguese oenologists dominates the selection of varieties for better adaptation to soil, exposing them to the best of the sun and other climatic factors. The vineyard is carefully looked after throughout the whole year to obtain the best fruits possible and precise technology is used for production and maturation. Nowadays, there is no region in Portugal that does not produce high quality wines. The knowledge and technology, experience and ability, and raw materials are found throughout the country. Vinho Verde, Douro, Dão, Bairrada, Tejo, Liboa, Alentejo, Algarve, Madeira and even Azores producing wines of high international standard. Portugal is the 10th wine-producing country in the world by volume, with around six million hectoliters * in 2009. Its enormous geographical and climatic diversity enables the production of virtually all types and styles of wine: sparkling, still and fortified, white, rosé and red, dry, medium dry, medium sweet and sweet. The vine growing and wine culture is rooted in the Portuguese nation, in the permanent vineyard scenery and the development of wine tourism, coupled with the varied gastronomy is an attraction to a lot of tourists. However, the biggest contribution to the quality of wines and their differentiation are the indigenous varieties. Besides the white varieties, the red varieties feature Touriga Nacional, Touriga Franca, Tinta Roriz, Tinta Barroca, Alfrocheiro, Baga, Castelao, Trincadeira, among many others. Moreover, the introduction of foreign noble varieties over the last 20 to 30 years, especially in regions farther south, has also helped to improve quality. Present in Macau for centuries, Portugal was very well acquainted with the Far East market, but never had the need nor the urge to turn to Asian markets in what concerns wine until very recently. Domestic consumption and traditional markets were more than enough for the national production. In this competitive global era, Portugal has found itself obliged to seek new markets, and of course spend more attention on China and other new Asian markets. The results of these efforts are starting to show, with export numbers already rising. There are already wine producing companies with offices or permanent staff in Macau, Hong Kong and China, the number of importers is increasing, and the press has also started to really get involved. Simultaneously, a small number of Portuguese restaurants have emerged in Hong Kong and Guangzhou supporting its evolvement. The startup has been given, and now it is necessary to continue pushing the initial efforts further by being present at the fairs, providing training, participating in the activities of the sector, and promoting Portugal with the quality it deserves. People need to taste Portuguese wines, to experience them and to be conquered by them, just as the juries of the wine competitions have been. The jurors do not know what they are drinking, but nevertheless they are awarding what’s being tasted. * Portuguese Institute of Statistics

Next month look for Fashion Grand Canal Shoppes, The Venetian Macao 5cm Abiste agnès b. Aigle Aimer Alqvimia Anteprima Apothecary Armani Exchange Arté Madrid Artini Ashworth Autore b+ab Bauhaus Belle Blancpain Blush Boucheron Boutique di Gondola Breil Brooks Brothers Butani BVLGARI Canudilo Caran d’Ache Carat Carl F. Bucherer Century Chai CHARRIOL Chevignon Choi Wai Jewellery Chopard Cirque du Soleil Boutique City Chain CK Calvin Klein Clarins Club Monaco Coach Corona Crocodile Damiani Davidoff Deicae Demandor Derain DG Lifestyle Store Diesel Dilys’ Don Gilato Dooney & Bourke Ecco Edelweiss Jewellery Elle Jewellery Elov Emphasis Jewellery Emporio Armani Emporio di Gondola Enzo EQ:IQ Expressions Fabio Caviglia Fables Fancl Fila Fiorucci Florsheim Folli Follie Fossil Francesco Biasia Franck Muller French Connection Furla Geox; Joy & Peace girls talk Giviea Glashütte Original Godiva Göessele Grossé Guess Accessory Guess Jeans H&B Medicine Shop Hatta Fine Jewelry Hearts On Fire Herborist Hogan Home of Swallows Hugo Boss Orange Label i.t innée

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Izod Izzue Jaquet Droz JC Versace Jean Scott Jipi Japa Just Gold Kaltendin Kego Kilara & Ceu Killah Lacoste Lancel Laneige Le Saunda Levi’s Links of London LLadró L’Occitane Luisa Cerano Luk Fook Jewellery Lush M Missoni Malo Clinic & Spa Manchester United Mango Marisfrolg Marjorie Bertagne Marlboro Classics Massimo Dutti Maud Frizon Paris Max&Co. Mercato Michel René Michele Mikimoto Millie’s Mirabell Miss Sixty Mocca Moiselle Montagut Montblanc Moreline Murano Murphy & Nye NaRaYa Natural Beauty Mix Nautica Next Nike Nine West Normana O’Che 1867 Omega Optica Boutique Optica Fashion Optical 88 Osim Oto Outdoor Fashion Passion Play Patchi Paul & Shark Piaget Piquadro Promod Q’ggle Rado Raffles Rayure Replay Rich Jade Richard Mille Rimowa Rockport S. Culture S.T. Dupont Samsonite Shiseido Sisley Sisley Paris Soft & Intimate Sparkling Color ST GE Staccato Stefanel Stella Luna Stone Market Sulwhasoo Swarovski Swatch Tasaki Thomas Sabo Tie Rack / Bric’s

2423 2613 2523b 2001 2433 2102a 2113 2017a 2402a 2306 2306a 2508a/ 2403 2701 2409 2210a 2425 2608a 2013c 2608 2622 2018 2636a 2630 3015 2215 2321 2619 2648 2509 2442 2650 2623 2508 2703 2621 2011 2405 2658 2438 2322 2607 2525a 2002 2639 2652 2702 2212 2128 2709 2211 2432a 2605 1020 2426c 2003a 1010 2005a 2019 2106 2120 2523a 2300b 2111a 2007 2013 2023b 2316 2216 2006a 2119b 2606a 2427 2117 1002 2708 2203 2300 1022 2527a 2017 2310 2630a 2527 K9 2612a 2319a 2421 2026 2402b 2617 2415 2426a 2101 2426b 2435

Tiffany & Co. TISSOT Tommy Hilfiger Tonino Lamborghini Tourneau Toywatch Triple Five Soul Triumph and Hom TSL Tumi U-Boat United Colors of Benetton Valente Venilla Suite Verri Vertu Vilebrequin What For Wolford Y Nan Yes Zara Zydo

2003 2411 2710 2646a 1003 2417 2436 2220 2022 2707 2426 2308 1021 2600 2703a 2006b 2623a 2205 2626 2625 2023 2313 2013b

DFS Galleria, The Four Seasons

Armani Bally Burberry Cartier Celine Chanel Chaumet Chloe Chopard Clinique Debeers Dior Dior (Beauty Zone) Dunhill Estee Lauder Fendi Folli Follie Gucci Hermes IWC Jurlique Kiehl’s The City of Dreams Lancome L’Occitane Alfred Dunhill Level 1, The Boulevard Loewe Bally Level 1, The Boulevard Louis Vuitton Burberry Level 1, The Boulevard Omega Cartier Level 2, The Boulevard Prada Chopard Level 2, The Boulevard Ralph Lauren Chow Tai Fook Level 2, The Boulevard Salvatore Ferragamo Coach Level 1, The Boulevard Shiseido Hublot Level 2, The Boulevard Swarovski Hugo Boss Level 1, The Boulevard Tag Heuer i TO i Level 1 and 2, The Boulevard Tod’s Insider Level 1, The Boulevard Tumi IWC Level 2, The Boulevard Vacheron Constatin LeSportsac Level 1, The Boulevard Van Cleef & Arpels Longines Level 2, The Boulevard PENACHE Level 2, The Boulevard Shoppes at Four Seasons Ralph Lauren Level 1, The Boulevard Rock Shop Level 1, Hard Rock Hotel Abiste Salvatore Ferragamo Level 1, The Boulevard Alain Mikli Swarovski Level 1, The Boulevard Altea Milano Tag Heuer Level 2, The Boulevard Aquascutum The Bubble Shop Level 1, The Boulevard Armani Collezioni Timeless Level 2, The Boulevard Audemars Piguet Tumi Level 1, The Boulevard Autore Valentino Level 1, The Boulevard Bottega Veneta Vivienne Westwood Level 1, The Boulevard Brioni Butani The Esplanade, Wynn Macau Canali Cerruti 1881 Alfred Dunhill 16 Chic Elegance Bvlgari 3 Coach Chanel 5 Cole Haan Christian Dior 12 David Yurman Ermenegildo Zegna 17 Diamond SA Fendi 10 Diane Von Furstenberg Ferrari 21 Dilys’ Giorgio Armani 8 Ed Hardy / Christian Audigier Gucci 25 Gieves & Hawkes Hermes 18 Giuseppe Zanotti Hugo Boss 23 Givenchy Louis Vuitton 6 GoldVish S.A. Miu Miu 11 Guess by Marciano Cigar Imporium 4 H&B Medicine Shop Piaget 9 Hugo Boss Prada 27 Jimmy Choo Sundries 13 Juicy Couture The Signature Shop 4 Kate Spade Tiffany & Co. 7 Kent & Curwen Van Cleef & Arpels 24 Kenzo Versace 26 Kwanpen Vertu 22 La Perla Lancel Grand Lapa Hotel Mango Tree Marc by Marc Jacobs Bally 13 Marni Burberry 1 Max Mara Cartier 12 On Pedder Christian Dior 11 Optica Privé Cigar Imporium 17 Renaissance Arts Gallery Alfred Dunhill 10 Roberto Cavalli Class Emporio Armani 9 and Cesare Paciotti Ermenegildo Zegna 2 Samsonite Black Label Florinda Jewelry 16 Shamwari South African Diamonds Hermes 8 Shanghai Tang Hugo Boss Orange Label 5 Shiatzy Chen Louis Vuitton 4&5 Shimansky Omega 6 St. John Salvatore Ferragamo 7 Stefano Ricci Valentino 15 Stuart Weitzman tsesay Valentino Versace

1112 1123 1110 1125 1109 1117 1101/41 1123a 1101/43 1101/22 1101/42 1120 1101/23 1106 1101/20 1102 1101/37 1108 1116 1101/44 1101/26 1101/21 1101/28 1101/25 1121 1115 1101/45 1126 1111 1113 1101/29 1101/38 1101/33 1105 1101/31 1101/39 1101/40

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Gaming

estimates Shuffle Master’s executive vice-president for Asia Andrew Macaulay, who heads the Asian subsidiary. “We are looking at both casinos [in the city] to see what we can do next,” he told Macau Business.

Time for change

Hot in Asia Asia is becoming increasingly more important for Shuffle Master. The company has seized a strong position in the new Singaporean market and new management has some big ideas that may bring more computerised, rapid gaming tables to Macau by Emanuel Graça

imes are good in Asia for gaming equipment maker Shuffle Master. Last month, the company announced profits had climbed while it has increased its footprint in Singapore. The Southeast Asian city state has emerged as a sizable new market for the company. From February to April this year, the company gained about US$3.1 mil-

lion (MOP24.9 million) in sales revenue from Singapore alone. With the grand opening of Marina Bay Sands, Shuffle Master went live with 78 rapid baccarat seats on the casino floor. It already has 133 rapid baccarat seats at Resorts World Sentosa. Currently, the company’s market share in Singapore stands at around 58 percent,

The good results came after structural changes were put in motion last year. “We changed the structure of our business. We looked at how our market had evolved and how we could best serve the needs of our customers. We tried very hard to partner with them,” says Mr Macaulay. “We opened an office in Singapore to complement the office in Macau. We broadened our distribution network in Southeast Asia and we brought in some very skilled people.” The changes have proven to be effective. For the quarter that ended April 30, Shuffle Master earned US$7.9 million, compared with US$4.4 million the previous quarter, well above analysts’ expectations. Revenues rose 12 percent to US$50.8 million. Shuffle Master provides products in four distinct categories: utility products that include automatic card shufflers, roulette chip sorters and intelligent table system modules; proprietary table games that include live table game tournaments; electronic table systems, including various e-table game platforms and rapid tables; and electronic gaming machines that include traditional video slot machines.

Speed is the key

Rapid products are one of Shuffle Master’s hottest lines in Asia. They combine a dealer and live game with an electronic betting interface, featuring popular games such as roulette, baccarat and sic bo.

A star addition

eteran gaming industry executive Ken Jolly has been hired to fill a sales role at Shuffle Master Asia. He has more than 17 years of experience in the industry. Prior to joining Shuffle Master last month, Mr Jolly served as executive vice-president and general manager, Australia, Asia, Africa and Europe for Aruze Gaming. He left last May, six months after taking up the post. He was previously Aristocrat Technologies’ general manager for the AsiaPacific region. “We enjoy working together. We have been colleagues for years [at Aristocrat Technologies] and we understand how to work together and maximise each others strengths,” says Shuffle Master’s vice-president for Asia Andrew Macaulay. The company has also announced the appointment of David Lopez to the role of chief operating officer and corporate officer, and the promotion of Kim Vukanovich to senior vicepresident of operations and administration. Shuffle Master is currently undergoing a management transition following the retirement of former CEO Timothy Parrott in April. He died soon after, leaving chairman Phillip Peckman fillingto fill the role in the interim. The company is now on the hunt for a new permanent CEO. E.G. july 2010

Gaming

Using individual touch screens, players place their wagers on the computerised table game layout and, once each round is completed, all wagers and cash balances are instantly resolved. A rapid system is less labour intensive, presents higher levels of security and provides for a speedier game. It also includes the human element of a live dealer, a feature that Asian players seem to treasure. “We have a very strong record in Malaysia with rapid products in Genting, namely rapid roulette and rapid baccarat. Those are very robust, proven, stable products,” he Macaulay says. He adds that those products have been enhanced to take into account player habits that are “unique to Asia,” namely Chinese-language interfaces, volatility-related features and the opportunity to track trends.

Macau rolls the dice

The trend to rapid gaming is also making its way into the local market. “We are in the process, right now, of deploying a rapid roulette system in one of the casinos in Macau. That will be a very exciting development in the territory,” saysMr Macaulay. The government’s cap on the number of gaming tables at 5,500 for the next three years may help push forward products like these. They “are certainly a good way for gaming operators to increase table play without affecting their table numbers,” he says. “The players get the perception of live play and there is an unlimited number of seats that can be attached to a rapid product installation.” However, he stresses that Macau is still predominantly a live table market, meaning that Shuffle Master’s main business here is related to providing shufflers to operators here. “There is a Shuffle Master shuffler on every VIP baccarat gaming table in Macau and some casinos run them across all their baccarat games,” he says. Again, the cap on gaming tables can be good news for Shuffle Master, even in the live tables market. “We see gaming operators looking at giving players table baccarat but ensuring more efficient ways of delivering the game,” he says. It means making better use of technology. JUly 2010

Macau presence seen as central to Harrah’s IPO New analysis from Union Gaming has identified four key obstacles to Harrah’s being able to use its recent equity for debt transfusion as the launch pad for a return to the public markets after two years of private equity ownership by Scott Longley*

n a deal announced recently, hedge fund Paulson & Co bought a near 10 percent slug of Harrah’s Entertainment for US$351 million. Union Gaming’s analyst team suggested the transaction – which saw current private equity owners TPG and Apollo Capital Management join Paulson in exchanging US$1.12 billion of debt for 15.6 percent of Harrah’s equity

– “perhaps signals a shorter timeframe to return to the public equity markets”. “This transaction is tantamount to an equity offering suggesting to us that when the gaming equity markets are ripe and a number of company-wide specific goals are met, management would feel comfortable seeking liquidity publicly again,” Union said in a research note. Still, leaving aside the jittery state

of the public markets at present, the hurdles in the way of a possible IPO remain high, according to the analysts. The first - and arguably most problematic of the issues - is the casino giant’s lack of a presence in a booming Macau. Despite owning a golf course on the Cotai Strip in Macau, Harrah’s missed the boat in terms of obtaining a licence to operate in the gambling enclave after

liberalisation in 2002. And it has since been left hanging by subsequent comments from the authorities in Macau that no more licences or sub-licences would be issued, at least for the foreseeable future. Previous Macau chief executive Edmund Ho said in April 2008 that the government had decided that though the door had not been closed on any new market entrants, there would not be any more licensees “at this stage of Macau’s development”. And new chief executive Fernando Chui reiterated in his first months in charge that that his administration would continue to control the “shape and speed” of the growth of gaming within the special administrative region (SAR). Only last month, president for Harrah’s Asia Michael Chen told the Reuters newswire that the company maintained hopes that it would gain entry into Macau at some point, suggesting the company was “patiently waiting for the next opportunity to arrive”. There has also been speculation that one route in could be via an acquisition of concession rights from a current sublicensee, such as the Crown portion of Melco Crown or the Pansy Ho-owned half of the MGM Macau operation. But the Union Gaming team suggest Harrah’s might be looking at other options, including the possibility of approaching the concessionaires that promote third-party casinos – SJM and Galaxy Entertainment – about running a Caesars Macau-branded operation. The analysts acknowledge that an existing concessionaire might view a Caesars offering as a threat, but that “the answer lies in the economics of the deal” with Harrah’s becoming a “quasi sub-concessionaire”. The other potential roadblocks in the way of a possible future Harrah’s float identified by the analysts look to be more surmountable. The poor performance of the Atlantic City market is one cause for concern ahead of any liquidity event, and although Union Gaming suggest that the Caesars and Harrah’s properties are showing signs of coming through the storm, they add that the market is continuing to suffer from competition from Pennsylvania. Operating leverage is another possible area of uncertainty, although the analysts believe that here an “inflection

point could be near”. “Although there is still not a great deal of visibility on forward bookings, most Harrah’s customers appear to be returning to their historical play levels (gaming volume).” Union Gaming estimates that by the end of this year, Harrah’s revenues will have declined approximately 20 percent from the 2007 peak and EBITDA will be down by 30 percent. The last item on the public offering wish-list would be the possibility of progress in the online arena. “We do not believe internet gambling is essential to a Harrah’s [float], although we think the company would like to have that as part of the story.... We suspect its World Series of Poker (WSOP) brand would still play well with equity investors,” they state. Before any possible moves towards a Harrah’s offering, there remains the likelihood of further asset transactions, with a sale of the Rio resort in Las Vegas frequently mentioned as a possibility. Media reports have suggested Harrah’s might be able to raise as much as US$500 million from a sale of the current home of the WSOP tournament, and Union Gaming suggest the company has recently “ramped up its efforts” to sell the property. “We estimate that the property generates about US$80 million in EBITDA, although without the benefit of Total Rewards (Harrah’s much-vaunted customer loyalty programme) and WSOP, we think the new run-rate would be closer to US$50 million to US$55 milliom. Back of the envelope math suggests multiples of 7 times to 9 times (EBITDA) would yield a value of US$350 million to US$495 million.” The recent deal between TPG, Apollo and Paulson leaves Harrah’s with around US$3 billion in liquidity and with no significant debt maturities until 2015. “Nearly all the heavy lifting with respect to amendments, debt exchanges, open market repurchases, and re-financings has been done,” say Union Gaming. “The final piece will come in the form of a CMBS (Commercial MortgageBacked Security) amendment, which we believe is forthcoming. With a clean balance sheet and significant liquidity Harrah’s can execute in part on the four-point strategy, including establishing a presence in Macau first and foremost.” *GamblingCompliance/Macau Busines july 2010

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SJM hints at softening VIP spend Macau’s most experienced VIP gaming operator, SJM Holdings, said it expected to see revenues from its wealthiest players dry up in the second half of this year as China’s property bubble deflates and players lose confidence in their economic futures by Andrew Gellatly*

Photo: Luís Almoster | MSPagency.org

rank McFadden, president for joint venture and business developments at Stanley Ho’s Hong Kong-listed Sociedade de Jogos de Macau (SJM), told that his company, which is currently Macau’s most cash-generative operator, anticipated a slowing of the spectacular revenue growth that has startled observers this year. “Our feeling is that while we will still see continued normalized growth in mass gaming we would expect to see a bit of softening in VIP gaming in the second half of the year,” he said to delegates at Global Gaming Expo in Macau. Gambling revenues in Macau swelled nearly 95 percent in May to a record MOP17 billion (US$2.1 billion), hard on the heels of a 70 percent year-on-year jump in April, when revenues hit a then record MOP14.1bn. SJM itself reported first-quarter revenues up 74 percent to HK$12.7 billion with adjusted EBITDA soaring 155 percent to HK$430 million. Much of the boost came from the VIP segment where game revenue more than doubled to HK$8.28 billion. This was after the number of VIP tables in operation also doubled to 411. McFadden noted that junkets were still pushing players to come to Macau but the problems lay in the expectations of the players. “Ample money supply in China means there is ample credit available for junket operators to warranty gamers that come over to Macau and that money supply will continue for the rest of the year,” he said. “But the high net worth players, when they are gambling in a rising market, they are more JUly 2010

Frank McFadden believes the mass market might provide some insulation for the company from a fall off in VIP revenues

101 inclined to gamble because they know their net worth is rising whether it is real estate or the stock market. As that future is now more uncertain the inclination to gamble at the same level will, we think, decrease.” In recent months Beijing has rolled out a series of tightening measures to cool the overheating mainland property market, and indications suggest many institutional investors are now exiting the market leaving individual speculators feeling vulnerable. McFadden contrasted the situation today with the last dip in Macau’s fortunes two years ago. “Unlike 2008 when the drop off in VIP was because of the lack of money supply now there is ample money supply, but the issue is the inclination of the players to gamble,” he said. “They were burnt before in 2008 when they had to hand over pledged assets at deeply discounted values to the junket operators and they don’t want to go through that again.” SJM, with 18 of Macau’s casinos - many operated under franchising agreements, controls nearly a third of Macau’s gambling market and like Las Vegas Sands also has significant exposure to the so-called mass market of non-junket funded gamblers. McFadden said he believed the mass market might provide some insulation for the company from a fall off in VIP revenues. “Counterbalancing that will be continued growth in the mass market,” he said. McFadden described SJM as a ‘peninsula-centric’ company which has so far made no moves to acquire a site for casino development in the reclaimed Cotai Strip area of Macau. However, pointing to SJM’s nearly HK$15 billion (US$2 billion) cash pile, he hinted that alignment might well change soon. “The situation in Macau is very fluid right now. The new government is looking at land that was granted eight to 10 years ago but hasn’t been developed on. If the government needs to reallocate land and if you have HK$12 billion-15 billion in cash you can get a good political solution for the government. “They want the Cotai Strip built out and it gives them the reason to give it to people who can develop it quickly.” Speculation in Macau has suggested that SJM may be eyeing the Macau Studio City site on Cotai next to the Venetian, an idea that McFadden did not comment on. “Holding cash is quite interesting for us,” he said.

*GamblingCompliance/Macau Busines

*GamblingCompliance/Macau Busines july 2010

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Here they go

Macau’s junkets extend their reach to Singapore by Andrew Gellatly*

he regulators of Singapore’s casino duopoly are facing their first real challenge as evidence grows of unlicensed junket activity on the citystate’s gaming floors. While Singapore’s two casino properties, Resorts World Sentosa operated by Genting and Las Vegas Sands’ towering Marina Bay Sands facility, have been sharing the nascent Singapore gaming market for just a couple of months, observers believe that their regulators will soon be forced to act to control the activities of VIP handlers. Unlike Macau, where junkets control a vast majority of casino play, Singapore chose to impose tight restrictions on junket operations when it drafted its casino regulations. Under Singapore’s stringent rules a junket operator looking to be licensed must consent to background checks and JUly 2010

fingerprinting and their high rolling players also must submit personal details to the authorities - conditions that the vast majority of junkets feel unable to comply with. Ben Lee, a partner at IGamiX Management & Consulting Ltd and wellrespected gaming industry advisor, confirmed that VIP player handlers had quickly been able to circumvent that restriction. “Although not a single junket has been licensed, the junket operators are already working in Singapore in a couple of ways,” said Lee at G2E Asia. “The first comes down to identification of the player- under the premium player programmes that both Marina Bay Sands and Resorts World Sentosa have there is a system whereby a person comes forward and they will clear that person through the Casino Regulatory

Authority (CRA). However, that person can be junket staff or a runner. “In terms of drawing down chips they come with cash and fill out the forms themselves or have credit markers issued to them by Genting or via operations here in Macau and they will then collect the junket chips and in turn distribute them to their friends to play with.” Singapore’s regulations as they are currently drafted contain no provision that prevents an identified player from passing on chips to friends or relatives. Lee speculated: “The CRA has been aware of this since Resorts World started operating. They are aware of it but it’s my belief that they are holding off of coming up with a response until both [casino] projects have settled down and they will come out with a regulation then.” Still, Lee noted that awareness that some of Macau’s more extreme junket operators have been going to Singapore added some political urgency to the situation. “The Singapore government is not like Macau - they don’t like vagueness and you have to believe that they will formulate a response.” Recently, Las Vegas Sands Chair-

103 man Sheldon Adelson said that 48 percent of Marina Bay Sands’ revenues had originated from VIP gamblers during the casino’s first week of opening, with high rollers coming mainly from Malaysia, Indonesia as well as Taiwan, Hong Kong and India. Also at G2E Asia, Thomas Arasi, president and CEO of Marina Bay Sands added: “We’re starting out with a pretty good balance between mass and VIPearly out it’s mostly from Singapore, Indonesia and Malaysia.” Arasi also confirmed that less than half of Marina Bay Sands’ business originated with Singaporeans who, in a bid by the Singapore Government to limit problem gambling among its citizens, are obliged to pay a $70 entrance fee. Las Vegas Sands has in the past repeatedly stressed its ambition to recruit elite players directly, for both its Macau and Singapore properties, although a recent mainland China roadshow by Sands China president and CEO Steve Jacobs was abandoned after just one presentation in Shanghai when advisors warned that the company risked breaking China’s taboo on the promotion of gambling on the mainland. “We’re going more the direct VIP model,” reiterated Arasi. “Singapore at this time is not full of a whole lot of independent rep or junket business - whether it does or doesn’t only time will tell,” he said. “We’ve got a great opportunity with the direct VIP model but it takes a little more time to build that business – it’s a direct sell and very heavily connected to the extension of credit and it takes a while to get that going, but it’s something we think we will build over time.” With around 40 percent of its 2600 rooms so far open, Arasi confirmed that Marina Bay Sands expects to open its pool areas and parts of its 300-meter high sky park and observation deck this month. He also noted that, as the property continued its build out, they would aim to accommodate far larger meetings and convention groups. Asian gaming market analyst Gary Pinge of Macquarie Securities predicted that the Singapore casino market would quickly exceed early expectations suggesting that by 2012 the market could grow to be worth between USD$4 billion - USD$4.5 billion annually, nearly double some other analysts’ estimates. *GamblingCompliance/Macau Busines

Pansy Ho in the lead as Stanley Ho’s successor: Rui Cunha Businesswoman Pansy Ho Chiu King is in the lead as Stanley Ho Hung Sun’s successor to take over his casino empire, according to Rui Cunha, a director of Sociedade de Turismo e Diversões de Macau (STDM) and of its subsidiary Sociedade de Jogos de Macau (SJM). “I am not a fortune teller, but anyone close [to Stanley Ho] has seen it will be her,” he told the Portuguese-language newspaper Jornal Tribuna de Macau. “It is desirable that [the successor] is the person with the biggest will to continue the work of a man to whom Macau owes what it is today. She has all the qualities and the energy for that,” he added. Cunha also stressed he is optimistic about STDM’s future, eventually even without Stanley Ho at the company’s helm. Pansy Ho is one of Stanley Ho’s 17 children. She is a director of STDM and owns 50 percent of gaming operator MGM Grand Paradise, in a joint venture with MGM Mirage. She is also managing director of Shun Tak Holdings. Rui Cunha has been a director of gaming operator SJM since 2001 and he is also a director of several of its subsidiaries. He has been working within Stanley Ho’s empire since 1981, and is one of Ho’s most trusted men.

Wynn hopes to break ground in Cotai next year Steve Wynn, Wynn Macau’s chairman and CEO, said last month that his company is targeting to initiate the construction of its casino resort in Cotai next year. The new casino is expected to be completed in 2014 and will feature no more than 400 to 500 gaming tables and 1,200 to 1,800 slot machines. The construction contractors are already chosen: “We’ve had a wonderful relationship with China State Construction and Leighton of Australia who built our buildings with high quality and wonderful responsible supervision,” said Wynn. Meanwhile, the Secretary for Economy and Finance Francis Tam Pak Yuen said Wynn Macau hasn’t yet presented any application for the new gaming tables the company expects to include in its Cotai project. Tam stressed that the government won’t accept any new application for gaming tables until 2013. “For any application before March 2013, the government will not accept it,” Tam said. He added that the acceptance of applications for new gaming tables after March 2013 will depend on the development of the local gaming sector at that time.

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Irresistible momentum Francisco told Macau Business that only Genuino, who has been Pagcor’s chairman and CEO since 2001, would be leaving. “It was a valid appointment. The reappointment was signed on March 9 so it is clear that we were given a new mandate,” Francisco said. He said the new government was interested only in replacing Genuino and there would be no further resignations. In meetings with staff from Mr Aquino’s administration he had been advised to continue his work. “I have no issues with the next administration. It’s only the chairman,” Francisco said, adding there had been no indication of a replacement. Francisco was confident the policies of the former leadership team would be continued.

cy in a regulatory role, he said. Pagcor has previously played both the role of operator and regulator. However, it has adopted the practice of other gaming jurisdictions such as Macau, Singapore and the United States in letting private operators of casinos to flourish. Francisco said Republic Act 9487, the law that extended the Pagcor franchise for another year in 2007, contained provisions that allowed the agency to issue licenses and enter into joint-venture agreements with private corporations to operate casinos. The old law mandated Pagcor maintain a monopoly. Francisco believes that if the liberal officials in the Aquino administration have their way and let the private casinos flourish, the Philippine gaming industry will grow quickly. “That is already tested in other countries. Gaming in the Philippines is growing but not as fast as it should be growing if we would allow the private sector to run casinos,” he said. “Private operators are usually global companies so their reach is also global. They have huge foreign markets, whereas the Philippine government will only be catering mostly to Filipinos.”

More private casinos

Pagcor shares for sale

A new government, political rumblings and a leadership spill will not stop Manila’s powerful gaming agency Pagcor as it moves to license more private casinos and push on with billion-dollar investments by Max V. de Leon in Manila

day before the constitution banned executive appointments, former President Gloria Macapagal-Arroyo signed the papers that added another year to the terms of the Board of Directors of the state-run casino operator-regulator. Extending the term of Philippine Amusement and Gaming Corporation’s chairman and CEO Efraim Genuino, president and COO Rafael “Butch” Francisco, and a trio of board members did not sit well with the then-opposition bloc that includes current President Benigno Aquino III. When the “midnight appointments” became public at the end of May, they drew strong protests.

Genuino gone, the rest remain

Apparently unable to handle the barrage of criticism, Genuino resigned effective June 30 – the last day of the Arroyo administration. JUly 2010

Pagcor would continue to allow the private sector to run casinos, with the agen-

Aside from Pagcor’s regulatory and development roles, Francisco suggested

105 Arroyo and President Aquino,” Francisco said.

Revenue stream

Pagcor is a leading source of revenue for the Philippine government and is controlled tightly by every administration. Its 2008 annual report showed that Pagcor remitted about P15.26 billion (HK$2.56 billion) to the government, with P1.35 billion (HK$226 million) going directly to the president’s office. Cities hosting casinos also get considerable funding. Pagcor’s payments to host cities in 2008 amounted to P496 million (HK$83 million). Pagcor operates 13 casinos, 28 satellite casinos, 24 VIP Clubs and four Pagcor Arcades in different parts of the Philippines. It is also licensed to operate 36 poker rooms.

the new administration would pave the way for the private sector to gain a minority share of the government-owned body. Under current laws, the government must keep a controlling 55-percent stake in Pagcor and the remaining shares could be sold to the private sector.

Manila Entertainment City a go

The US$15-billion Bagong Nayong Pilipino Manila Entertainment City development in Manila Bay will be pursued by the new administration, Francisco says, despite Genuino’s advocacy of the project. Development of the 8-square-kilometre, Las Vegas-like complex is ongoing and investors are scheduled to begin construction of the vertical structures towards the end of the year. Phase 1 of the project is targeted for completion in 2013. The project has attracted four investors: a tie-up between Philippine conglomerate Alliance Global and Genting Group, Aruze Corporation, Manila-based conglomerate SM Group and little-known Bloombury Investments. “The investors are ready and they are happy that the election is over with no major policy shift between President

Bill would have extended Genuino’s term

Before Arroyo reappointed Genuino and the other Pagcor directors, there were attempts from some lawmakers to extend their terms through legislation filed in both the upper and lower chambers. The bills sought to fix the term of office of Pagcor officials regardless of changes in the appointing power. They were not approved.

MGM Mirage changes name MGM Mirage has changed its name to MGM Resorts International. The change was approved last month by the company’s shareholders, taking effect immediately. Its goal is to emphasize the brand’s global presence. MGM Resorts owns local gaming operator MGM Grand Paradise in a joint venture with businesswoman Pansy Ho Chiu King. MGM Grand Paradise has targeted an IPO on the Hong Kong stock exchange in the third quarter of this year.

Galaxy closes HK$9 billion loan Galaxy Entertainment Group Ltd. (GEG) announced last month the closing of a six-year HK$9 billion club loan from a consortium of Asia’s banks that will fully fund the group’s Galaxy Macau development in Cotai. On 12 April 2010, GEG already announced an oversubscribed HK$8.8 billion club loan financing package for the development of Galaxy Macau. This loan was subsequently upsized to HK$9 billion. Galaxy Macau, with a total development area of 550,000 square metres, is schedule to open in early 2011. The project will have the capacity to host 600 gambling tables and 2,200 luxury hotel rooms, suites and villas.

It’s your It’sdaily your business

daily business

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Gaming “Opening another casino will open more doors for corruption and pave the way for the impoverishment of the families of the gamblers. Where the casinos operate now, we see the ill effects on the socio-moral fibre of the citizenry – the rise of criminality, the spread of prostitution and the shameless corruption of those engaged in the business.” The bishops’ letter said the recovery of lost national pride began with restoring moral values and that gaming and strong morals could not exist side by side. “Gambling breeds indolence and laziness. Gambling destroys families and corrupts people,” the letter read.

Calls to abolish Pagcor

Church sets sights on Pagcor Catholic bishops lobby Manila’s new administration from the pulpit with a broadside on the ills of gambling, demanding no more new casinos be built if Pagcor’s existing properties cannot be shut down immediately by Max V. de Leon in Manila

he Catholic Church has renewed its opposition to the operation of casinos and the existence of the Philippine Amusement and Gaming Corporation, better known as Pagcor. Observers have been expecting fresh criticism since newly elected Philippine President Benigno “Noynoy” Aquino III is from a family of devout Catholics. His mother, the late President Corazon Aquino, was also known for her close association with the bishops. Seven ranking church leaders issued a pastoral letter last month that was read at masses across the country. In the letter, the bishops called for a halt in the development of new casinos, while hinting they wanted to shutter casinos already operating. JUly 2010

Issued through the office of Archbishop Socrates Villegas, the letter covered seven cities and specifically opposed planned casino openings in the northern provinces of Pangasinan and Nueva Ecija.

Casinos, criminality and poverty

The appeal was made as the country stands “at the dawn of a new beginning for our nation, with hopes high and patriotic fervour at its best,” the letter read. “Gambling and integrity of character are opposites. Gambling and poverty have been twins for a very long time. If it is not legally possible to close all casinos immediately, we plead with the government not to open new ones.

Days later, Archbishop Oscar Cruz – a former president of the influential Catholic Bishops Conference of the Philippines and founder of the People’s Crusade Against Gambling – appealed to Aquino to abolish government-owned casino operator and regulator Pagcor. “On bended knees I would want to ask the incoming administration to get rid of Pagcor,” the archbishop said. Pagcor president and COO Rafael “Butch” Francisco said that Pagcor was dissolved during the term of the late President Aquino. “She advocated the closure of casinos but after a few months ordered their reopening. Her economic team then said we need revenues for the government, so why not just let the government take over the casinos,” Francisco said. He acknowledged some bishops were against casino operations. “But one bishop saying it does not mean it applies to the whole of the Philippines. That pastoral letter only talks about particular places,” he said. There are some areas where the bishops do not disapprove of the casinos. The Philippine Chamber of Commerce and Industry tourism committee chairman Samie Lim said the best way to appease the bishops was to restrict the locations and clientele, with gaming marketed mainly to foreign tourists. For Filipinos, only those who could afford it should be allowed to enter casino premises. “I think we should not be promoting gaming in every corner. We should not be finding casinos on our way home. If explained properly, and if we put strict restrictions, I think the bishops will understand it,” Lim said.

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G2E Asia

Exhibitors at Asia’s biggest gaming convention and expo say the quality exhibits were there, as well as new products, all the event lacked was the people to buy them by Luciana Leitão

LCD screens, 3D games, new technology, new slot machines; the best and brightest was on show by exhibitors anxious to win new contacts and clients at G2EAsia. It was just a shame that the attendance numbers at the Global Gaming Expo Asia seemed down. Ainsworth Game Technology chief executive officer Danny Gladstone was among the exhibitors at The Venetian’s CotaiExpo and was sorry for the lack of customers. “It seems a little bit quiet on that side,” he told Macau Business. As for the exhibitors, he noted new names and different products. “They’ll probably also want to see more customers here,” he added. For 3M Touch Systems gaming manager for the Americas Trent Looney “it was smaller than last year” judging by the amount of people circulating through, and the exhibition space. “The conferences are a little bit more discrete,” he says, suggesting the lacklustre global economy may have had an effect. He said the products on show were appealing, pointing to enhanced graphics and 3D video screens.

Still a global draw

Photos: Greg Mansfield

“There’s a little shortage of customers,” said Mr Antoin Linssen, associate trade show and communications specialist of WMS. The show floor, however, seemed as big as last year and he was a fan of the conference agenda, which provided useful information. AIA director of Asia operations Michael Stewart said: “It’s bigger, has a little better attendance. The traffic seems a little bit more. There’s quite a few more customers. There’s people from as faraway as Mexico.”

A worthy winner

Organisers happy While the exhibitors at the Global Gaming Expo Asia felt the attendance numbers went down, the organisers - Reed Exhibitions and the American Gaming Association – say the opposite. The event welcomed more than 4,500 gaming industry professionals, surpassing attendance at last year’s event by seven percent, according to official figures. Event attendees hailed from 55 different countries. In particular, the number of attendees from China, Japan, the Philippines, South Korea and Taiwan increased significantly. The 2010 G2E Asia show floor featured 122 exhibitors – 30 percent of which were new to G2E Asia – from 23 different countries. Returning exhibitors have already claimed 86 percent of the exhibit space for G2E Asia 2011. The conference programs at G2E Asia experienced a 47 percent increase in attendance over 2009, according to the organisers. Next year’s event is scheduled to take place from June 7 to 9 at the Venetian Macao.

JUly 2010

There was unanimous support for the Visionary Award Presentation to Aristocrat Leisure founder and current executive chairman of Ainsworth Game Technology Len Ainsworth. “He’“It’s a man of 87 years old, who has contributed a lot to the gaming sector. He has set a lot of standards in the industry”, said Mr Gladstone. The award at the beginning of the event recognised Mr Ainsworth’s contributions to the gaming industry and his role in the evolution of gaming machines during his 50year career. Known within the industry as the “Grandfather of Slots” according to Mr Steward, Mr Ainsworth is a “revolutionary guy who “started slot machines as we know them today”.

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Jon Lancaster and Lai Fatt Chiang

David Punter

JUly 2010

Atronic exhibited, as in previous years, on the stand of regional distributor RGB, and leading the line was their new Diversity Multigame product, debuting in Asia. Lancaster said, “We’re showing Diversity Multigame here to test the water because multigames traditionally do not work so well in this market. However, we have been really pleasantly surprised by the reaction. We’ve had a lot of operators who really like the game. Two or three major operators in the region have said they’re interested in trying the product out. Atronic’s new linked gaming title, Magic 5s, also made its first appearance in Asia after a successful international debut at ELA in Mexico earlier this year. It’s an eight-level progressive designed to appeal through its simplicity to players, who don’t have to enter any bonus game to qualify to win a progressive jackpot.

Aristocrat, rallying after their management shake-up of recent times, have one of the most recognisable licenses in entertainment with JAWS, and they’re making the most of it. The cabinets are gorgeous, with the movie’s dominant colour scheme and even a novel buoy on top, which chimes when the player is in a bonus feature. Adding to the success of this title – which had its first release into the Asian market with a bank of six at City of Dreams – a second JAWS game is on the way, which should have earned approval by the time you read this; Jaws: Night Hunter. Aristocrat’s General manager, Asia Pacific, David Punter explains: “We’ve put a great deal of effort into translating every aspect of the game, all the features and symbols, to give it every chance of success in this market. Not all of the company’s focus is on JAWS, of course. Punter added: “Beijing Bonanza is currently getting approval for the US market, and it will be our first foray into the community or tournament-style game. We’re trying to break away from traditional links and create highly interactive gaming products. The successful Fa Fa Fa also made an appearance, alongside its sister title Yellow Dragon, which uses the same mathematic model and can be linked to Fa Fa Fa or operate as a standalone. Aristocrat seems determined to hang on to its dominant market share in Macau, as Punter confirmed: “We’re really trying to work with operators here. We’ve got a large market share that we want to maintain and grow, and that’s hard. We have to keep pushing forward, we can’t sit still.”

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Aruze had a lot of product on show, including the exciting and energetic Jackpot Battle Royal, which has up to ten players battling it out for the big bucks. It fits in with a selection of the company’s core slot products. But the key message from Aruze, underlined by Steve Walther, is diversity. Walther told us: “We’re showing that we are not a niche provider, we run the gamut of a casino operator’s needs; especially here in the Asian market, these multi-

Gavin Isaacs

Susan Macke JUly 2010

terminal devices [G-Station] like Lucky Sic Bo, Blackjack and Baccarat, serve a purpose because they allow the operator to handle more customers without needing staff for additional tables. You have a table-oriented clientele that may not want to sit among the tables, they might want a break from that environment, and we have some side bets and the like built in to our games that might not be offered on a traditional casino table.” Other innovation from the company include Title Match, a boxing-themed four-level Mystery Progressive.

Bally had the usual strong presence at G2E Asia, with a broad range of product and their renowned systems on show. In such a tough market though, even a company like Bally has to have something to set it apart, and Gavin Isaacs say they have it in their staff. Isaacs told us, “One of the things that strikes me about Bally’s presence here is our team. I look around, and all of our team are local, with the exception of two ex-pats. Everyone else is young, local and innovative and they work very, very hard for their customers. It really gives us an edge, I think.” The watchword for those staff at G2E Asia was innovation, as the company presented its latest technologies to an appreciative audience. Isaacs explained: “Innovation, stability and future development are the messages we are bringing to our customers here. “We’re bringing some of the newest technologies into the market here and we’re trying to show the customers that we’re innovating, while also being localised. We have more product now in Chinese, and more things are focussed towards the Asian market.” Bally’s systems division also scored a hit with an installation that went live during G2E Asia, in the Galaxy casino, with iView now available to customers on IGT, WMS, Bally and Aristocrat games. IGT need no introduction to the worldwide gaming market, but they had not scored the same kind of success in Asia as the rest of the world – well, not until recently. According to Kurt Quartier, the company’s new Advanced Video Platform (AVP) product line has a lot to do with this. But the company is philosophical, and it’s learning – and what it’s learned has already resulted in huge market gains across Asia. Quartier told us: “If you look back three or four years when a lot of the big properties opened over here, we were actually at the end of a product lifecycle and on top of that we were coming to the market a little bit late and Aristocrat had done a phenomenal job in that time. So we may not have got Macau quite right just yet, we’re working on that, but Macau is not all of Asia. We’re working on growing a strong presence in places like the Philippines, we have 25% of the Singapore market, we have the majority of this year’s order out of Genting, we’re the largest supplier to Resorts World Manila – and we just hit double digits here in Macau. So we are getting this traction, and we’re seeing that difference from when AVP has become available.”

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114 114 explained: “We have promotional couponing live on our booth for the first time at any trade show. It’s running on IGT, Bally, Aristocrat and WMS games. It’s effectively a mini casino for people to try out. When visitors play the games they hit pre-assigned triggers we have put in to the couponing system, so you might get a voucher for a free lunch or dinner. For example, if you have bet $20HK and had a net loss of $10HK, you get this voucher, for a free drink. Or if you’ve been playing for more than five minutes and lost more than, say, $100HK you get this coupon for a free meal. It’s easy to configure. Rob Denham PromoNet has even more to offer operators, howand Fivos Polymniou ever, as Edmunds continued: “We also run promotions where if your player loyalty card is inserted, FutureLogic has had its oh-so-promising suite of you get one type of promotion, and another if you products – in particular PromoNet – dangling in front of visitors for a few years now but at G2E Asia, they took don’t. It could be used as a great incentive to get people to sign up for player loyalty programs.” it a step further with a functioning, live installation on FutureLogic’s PromoNet has been snapped up by the stand. It’s one thing to read about how something a major player in Asia for a test period, so expect to works and another entirely to see it in action. see it at a casino near you soon! John Edmunds, VP of International Sales,

Kirsten Clark and Tony Blaney

Shuffle Master must be loving the Asian market, with its proliferation of table games – though they were emphasising some slot product this year at G2E Asia, with games from their Sydney studio on the floor, with Asian themes like Lucky

JUly 2010

Panda on show. The highlight, however, was their enhanced Vegas Star product, a card game which can bring major gains for operators as it can work on a grand scale. As Shuffle Master’s Kirsten Clark elaborated, “Vegas Star is scalable with up to 100 terminals working from one result. This year, we have a new video dealer on Vegas Star, and it’s on Baccarat with ‘live’ cards, so when the random number generator determines the card value that’s actually appearing on the cards digitally. “Additionally, we have added a progressive jackpot to the game of Baccarat. It’s funded by standard outcomes in the game; if you hit certain ties, and have made that side bet, you can be eligible for an incremental progressive.” With a side bet, the Baccarat game remains true and familiar, with the added lure for players of hitting big. This innovation should do well for Shuffle Master across Asia.

Photos by Greg Mansfield

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Game changer Gamblers are looking for more variety from Macau’s gaming rooms when they hit the tables and poker is slowly making inroads, but the punter’s favourite – baccarat – still dominates the bottom line by Luciana Leitão Baccarat draws in the punters and most of the cash at Macau’s casinos but other games, such as poker, are starting to muscle in on the action – very limited action, of course. Sands Macao vicepresident of operations Pete Wu, says baccarat is played on 67 per cent

of mass-market tables and 97 percent of the VIP tables at his casino. Making up the numbers are other games such as sic bo, blackjack, Caribbean stud poker and roulette. But baccarat is still dominant in Macau. “It accounts for 89 percent of gaming revenues”, Mr Wu says.

Pete Wu JUly 2010

“Players prefer baccarat because it’s considered the table game with the best odds against the house, and also players are allowed to ‘squeeze’ (touch and reveal) the cards which makes the game very exciting,” he addsded.

A punt on poker While baccarat dominates, there is a subtle shift towards more variety on the gaming floors. The Sands has already made some adjustments to its table mix to cater for the increasing popularity of other games. “At our three properties, Sands Macao, The Plaza Macao and The Venetian Macao, we have linked our progressive Caribbean stud jackpots, which creates the biggest table game jackpots in Macau. This jackpot has gone up over HK$9.8 million and we have made many millionaires,” Mr Wu says. As for poker, its popularity is increasing with operators “adding new rooms and more tables”, he says. At The Venetian Hotel-Resort Macao it has proven to be a very “successful” move. The game still needs promotion though. Mr Wu says the best way to

do that is through poker tournaments, player promotions and perhaps most significantly by providing “great” service in a pleasant environment. “Our poker rooms have seen increasing traffic, because of the growing popularity of the game, and of course they feel comfortable in the environment, so they can focus on their game,” Mr Wu says.

A royal rumble It seems unlikely that poker will surpass baccarat as the major revenue provider in Macau anytime soon. In poker, players play against themselves – not against the house – and “the amount of revenue collected on each pot by the house is limited, while baccarat and other traditional table games are not subjected to a limit”, says Mr Wu. Poker is not the only popular “new” game in town. Over the past two years, the popularity of sic bo and electronic roulette have increased. “These dealer-less ‘e-tables’ allow each player to have their own seat and screen to play their game of choice,” he says. For players it means faster payouts.

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RGB fights back A new name and new games are key to turning the fortunes of Malaysian slot machine maker RGB; Management hope a game licensed from boxer Manny Pacquiao can knock out last year’s woes by Muhammad Cohen Penang-based slot-machine specialist RGB International plans to pick itself up off the canvas after a disappointing 2009 with the help of Philippine boxer Manny Pacquiao. The company suffered a major blow in early 2009 when Cambodian authorities ordered a crack down on gaming across the country. The company closed 26 RGBrun slot clubs, putting more than 3,400 machines out of action. Full year revenue dropped 25 percent to 170 million Malaysian ringgit (MOP423 million). But with a change of name from Dreamgate Corporation and new offerings, the manufacturer, seller and operator is looking to move on. There was an upside to the Cambodian closures says RGB executive director and chief operating officer Steven Lim Tow Boon. The changes in Cambodia forced RGB to diversify its slot operations segment – known as technical services management or TSM – that usually accounts for 70 percent of company revenue. “We came into Macau, a big coup for us,” Mr Lim told Macau Business at last month’s G2E Asia gaming expo. RGB has 871 machines at six casinos run by market leader Sociedade de Jogos de Macau (SJM), including 400 at L’Arc.

Knockout plans for growth By the end of March, RGB had redeployed more than 60 percent of the machines idled in Cambodia. Overall, it had 5,200 machines in TSM operations at 39 locations. By the end of this year, Mr Lim projects JUly 2010

the company’s Asian roots give it an advantage in developing games: “Our advantage is we understand the market better. We really focus on Asia.”

Operator power play

Manny Pacquiao

7,700 machines in operation, with just over half in the Philippines, a quarter in Cambodia, about 10 percent each in Macau and Laos, with a handful in Vietnam and on cruise ships. He expects a big hit with the new machine licensed by recordbreaking boxer Pacquiao. “We believe it will bring our machines to a different level,” Mr Lim said amid the Manny Pac-Man progressive poker machines in RGB’s G2E Asia display. “We may be able to extend Manny Pac-Man to the US through distributors, even to South America. Manny Pacquiao beats all these South Americans, so they know him.” RGB is also launching its Chinese-themed Wang Wang Wang slot this year and hopes to sign more Asian celebrities for licensed machines. Founded as a distributor in 1986, TGB began developing games in 2003, competing against bigger multinationals. Mr Lim contends

Knowing the region’s casino floors, however, may be RGB’s biggest edge. “With our experience as an operator, we believe we can come up with games that suit the market better,” MrLim said. “When Asian players play, they want to win. We’ve created features players want – free games, high volatility.” RGB’s casino operations provide a laboratory to learn via trial and error. “We test machines’ performance on our own sites for six months,” he said. “We can show figures from the floor to potential buyers.” RGB also offers operators a range of options, from sales to TSM, where the casino provides the license and floor space and RGB provides the machine, supervision and maintenance: “The only money that changes hands is what people put in the machine,” Mr Lim said. When RGB listed on Malaysia’s stock exchange in 2003, it adopted the name Dreamgate, an appealing Chinese term, according to Mr Lim, but otherwise unknown. “We’re not selling mattresses,” Mr Lim joked. At the end of May, the company became RGB International. “RGB is a name that’s known in the industry,” he said. “We want to have a global identity.” Linking up with a world champion boxer gives that ambition some punch.

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Human Resources | Global Management Challenge

Ukraine flying solo Former Soviet republic Ukraine beats hosts Russia at the Global Management Challenge International Final. Macau will welcome delegations from more than 30 countries to the competition next April by Luis Pereira in the Russian Federation

ussian pride may just be a little hurt after the latest edition of the Global Management Challenge. The Russian Federation were the defending champions, hot favourites and the hosts of this year’s edition of the world’s biggest real-time strategy and management competition. Instead of celebrating, they had the dubious pleasure of congratulating the former Soviet republic of Ukraine on their triumph. The Ukrainians were besides themselves, enjoying the taste of victory, made sweeter by a win on Russian soil in only their fourth time in the competition.

Sweet victory

Of the 25 participating countries in this year’s competition, only eight ever get a

shot at the prize. The team of university students maintained the second highest share price throughout the final decisions of the last round and enjoyed the highest profits. “We are unbelievably happy. I don’t know if there’s anyone happier in the world than we are now,” Ukraine’s team leader Markiin Serchynskyi told Macau Business moments after the results were announced in the oil boomtown of Khanty-Mansiysk. The Ukrainian GMC local organiser (see Play the Game) was no less elated. “Ukraine might not always be seen for what it is but the results of today prove the country has a bright future,” said Anna Degterev. “These young managers [competing in the local heats] are tomorrow’s leaders

Play the game T

he competition’s simulation program is EDIT 515, created by economists at the Department of Operational Research at Strathclyde University in Scotland. Their challenge, posed by the Glasgow Chamber of Commerce 36 years ago, was to create software to test a company’s strategic management decisions. In a typical challenge, participating teams receive data from the last five quarters and have to devise a business strategy. The global challenge has allowed thousands of youngsters a risk-free opportunity to experience being a top manager of an organisation and making the executive decisions that, ultimately, determine the company’s fate. JUly 2010

and they are an example to the Ukraine: that well-thought-out objectives and better results can be achieved with hard work and good decision making.” The Global Management Challenge is the world’s biggest strategy and management competition, counting more than 400,000 participating university students and junior managers throughout its 30-plus year history. Teams of up to five members run a listed company competing to achieve the highest share price in their market by making decisions in five areas: human resources, production, sales and marketing, accounting and finance.

Top performers

The challenge saw some outstanding performances. The team from Finland

Heats for the challenge are organised by a franchisee of Lisbon-based Sociedade de Modelos de Gestão (SDG) in concert with media partners worldwide. In Macau, SDG Asia holds the franchise and the competition is organised by the Macau Management Association. Sponsors include the Macau Foundation, Golden Crown Development, The Hong Kong and Shanghai Banking Corporation, CEM, Macau Government Tourist Office, the Macau Trade and Investment Promotion Institute, the Monetary Authority of Macau, BNU, CTM and AICEP Portugal. Macau Business and Business Intelligence magazines – flagship financial publications in English and Chinese published by De Ficção Multimedia Projects – are media partners of the competition. For more information, log on to www.gmc-asia.com

L.P.

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Changing perceptions L

performed strongly, losing by the slimmest of margins. The team from Turkey competed with one member short and the duo was able to secure a finals spot, beating veteran teams such as Portugal. Grinding though the five decision periods of the final, the Turks achieved the fourth highest share price of the competition. Macau and Hong Kong had very promising starts, blasting through tough opponents in the group phase. Both the Macau team – consisting of five mainland students enrolled in the Macau University of Science and Technology – and Hong Kong – featuring three mainland students from Hong Kong University of Science and Technology – entered the second and final rounds leading their respective markets. Along the way, key decisions came up short and both SARs finished in the middle of the qualifying table. The mainland, with an impressive track record of five Gobal Management Challenge wins since 1999, finished in sixth place overall.

Hello again

Macau will host the final in April. It will be the third time Macau has welcomed the competition since 2002 and there are some changes ahead. Next year’s edition of the challenge will see the introduction of a new simulator that will affect major decisions in two areas. There are changes to the way competitors manipulate share transactions and steep prices will be posted for the company’s carbon footprint. Lisbon-based company Sociedade de Modelos de Gestão, which owns and runs the global competitions, expects more than 30 countries and regions will take part, with a few first timers. “Africa is very keen to join” said president of SDG International Committee Luis Alves Costa. This year’s final was marked by Ghana’s debut as the second African country to join the competition after Portuguese-speaking Angola. The participation of the oil-rich country has prompted a wave of applications from neighbouring nations. Already in the final stages of negotiations are Ivory Coast, Benin, Burkina Faso and the East African, Portuguese-speaking country of Mozambique. Other countries already signed up and ready to compete in next year’s edition are Venezuela and Kazakhstan. Also guaranteed is Middle East participation. The members of the Gulf Cooperation Council – Kuwait, Bahrain, Saudi Arabia, Qatar, United Arab Emirates and Oman – will begin organising local and national heats next year. Costa said negotiations were continuing in Europe, where the simulation already enjoys a high penetration rate, including Norway and Sweden. Potential ventures are being explored in Chile and elsewhere in South America.

ocated in the heart of Siberia, the Khanty-Mansi Autonomous Okrug seems a bizarre choice to host an international competition of young and aspiring managers from the four corners of the globe. By May, the still freezing weather is no longer drawing the massive winter sports crowds that flock to the region for its slopes. And the city itself has little more to offer the weary business traveller than the breathtaking views of forest trails and a couple of malls in the central district. The city is an island of land surrounded by a thick forest and harsh mountains where distances to the next towns are measured in the hundreds of kilometres. The biggest avenues out here are the freezing Irtysh and Ob rivers, snaking their path to the northwest. As one organiser said: “The delegates can’t get lost here but they’re also not going anywhere.”

Hard money

Why Siberia and why Khanty-Mansiysk? Hard currency. The country is keen on changing the perceptions of the harsh, frozen steppe, with its history as a destination for party malcontents on the way to the gulag. Today’s Siberia is the hub for one of the country’s highest denomination bargaining chips: oil, gas and mineral wealth. If Soviet-era Russia was a superpower, Siberia under the Russian Federation is, quite literally, the powerhouse. Its pipelines reach beyond neighbouring countries, supplying energy-hungry Europe and fuelling a respectable chunk of the world economy. Khanty-Mansiysk might have been built to demonstrate the new power of the Russian Federation in the era of globalisation. As an administrative capital it does not house the thousands of workers from the oil and gas fields or mineral deposits. It does however feature the regional headquarters of the exploration concessionaires, housed on main square. The city’s roads are wide, the children’s parks bright, but both are empty; the infrastructure is there but underused. The airport is relatively small but modern, but there’s only one flight to Moscow a day. “It’s an abnormal city,” a Moscow-based journalist told Macau Business. It is different from other oil cities because “everything is so clean, brand new and empty” he says. Albeit remote, the city has the infrastructure required to hold international events. Recently it has hosted the Chess World Cup and the Biathlon World Championships and the European UnionRussia Summit in 2008.

Organisational talent

The organising committee of Global Management Challenge, clearly went out of their way to ensure the eclectic delegations enjoyed the event. The game’s national organiser, the government’s Academy of National Economy, the local government and patron the Russian Ministry of Industry and Trade took charge. While the level of service was generally good, smiles were few and far between in an omnipresent mix of austerity and apathy. But the Khanty-Mansiysk 2009 International Final did top most of the previous editions of the event covered by Macau Business. Aside from enforcing an almost clockwork competition, organisers showed their skills by turning some of the duller sections of the official programme into warm cultural experiences. On the other side of the spectrum, arguably to emphasise the business sense of the event, a conference of management and governance in Russia ran alongside the second and final day of competition. The Macau Management Association, the organiser of the 2010 International Final, has its work cut out for it when it hosts the 30 teams gearing to compete in the challenge next year. The association’s deputy secretary-general and head of the Macau delegation to Khanty-Mansiysk Paulina Luk promised a special experience: participants will be immersed in a “unique cultural business environment” where East first met West. Macau is definitely up to the challenge. L.P. july 2010

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Arts & Culture

Sepia burns With an electric soldering iron and deft touch, Tang Zheng takes an age-old folk art and creates sepia-toned masterpieces that have won him acclaim all over Asia. He will teach his technique at Lou Kau Mansion, off Senado Square, until the end of the month by Luciana Leitão

JUly 2010

controlled application of heated objects to the everyday, creates burn marks with their own forms, be it a butterfly, a river or a person. This is pyrography, writing with fire, and Tang Zheng is a master. Tang discovered his passion when was a young boy. “I liked to use the surface of the furniture at home,” he says, smiling. He was gripped by art as a youth. With years of practice already under his belt, he knew how his life would unfold when it came time to choose a career.

123 That’s why he moved to the Chinese Painting and Calligraphy University, looking to perfect his practical understanding of the arts with theoretical knowledge. After graduation he realised pyrography was his favourite among all the artistic disciplines and he decided to focus on it. He began practicing more and more of his craft, improving his focus, methods and tools. It led to experimentation and an explanation for why he now uses electric soldering irons instead of traditional irons. “I wanted a change from tradition,” Tang claims. Pyrography dates back thousands of years to the folk craft of pokerwork. Craftsmen created marks with soldering irons heated in furnaces on readily available surfaces such as bamboo and leather. With the invention of electric soldering irons the traditional craft grew into a sophisticated decorative art. The materials used have evolved too, with wood boards, fine-textured Xuan paper and silk fabrics being used. The modern incarnation of the art creates a depth of colours from elegant sepia tones to deep browns, and images that range from the simple to the complex.

At the school he teaches those who are interested. And he has noticed that there are more and more people interested in learning. He has two other offices, in Beijing and Shanghai, where he attends to clients from all over the mainland. His popularity is growing not only within the country but has also spread to

Southeast Asia. Still based in Suqian, he travels frequently to take care of orders and exhibitions. “I will teach a lot of people the craft. Also, it’s already under the government’s protection, being considered intangible cultural heritage,” he says, hopeful that the art will never disappear.

A leading light

Tang’s work is so highly regarded on the mainland that it is under patent protection. His works are displayed in several embassies of the People’s Republic of China, inside the Great Hall of the People in Tiananmen Square, the Diaoyutai State Guesthouse and the Japan National Institute of Arts. Tang, 54, has collected several academic positions and titles throughout his career. He teaches in Beijing, is the director of the China Calligrapher and Painter Association and regarded as a national first-class artist whose style has developed with exposure to different masters.

A bright future

As for his legacy, he is not worried. He has no fear that his technique will be lost. There is enough interest in his hometown of Suqian in northern Jiangsu province for him to open a small school, despite the fact that no one in his family is slightly interested in pyrography. His daughter is currently studying arts at university but is more interested in painting. july 2010

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Picture perfect

Capturing immense beauty in delicate lines, Lu Yuchen uses the eye of a photographer and the tools of a mason to create art captured and carved into stone. He shares his unique technique at Lou Kau Mansion all this month by Luciana Leitão

JUly 2010

125 The process is the one constant. First he hones and polishes the stone. Then he outlines the image and, finally, he creates lifelike carving using special tools that help give the intense final look.

Overseas Chinese preserve a legacy

t looks for all the world like a picture set in a perfectly polished frame. The fine lines and details are so perfect, that it must be a picture, a photograph that captured the exact moment. But the moment you hold these fine images in your hand, their weight tells you these are stones, delicately carved with vivid realism. Lu Yuchen is a master of stone carving and has been working at it for more than 30 years. It is a traditional craft that his ancestors have always been involved with. Now this intricate, painstaking tradition rests solely with him.

Art for the ages, with a twist

The tradition has been in his family for four generations. His grandfather taught his father and his father taught him. Lu started learning at home, surrounded by the tools of trade. He learned as an apprentice would, by looking at his father’s work, recreating his work, and then developed a new style that includes a blend of themes, both traditional and modern. He has applied traditional stone carving skills and added new elements to the art, such as paintings. His work now integrates photography, painting and stone carving. His artworks are in two- and three-dimensions. It is an innovation that his father still does not approve. “He doesn’t like it that much,” he says. The works’ motifs are varied. They may include carving typical themes seen throughout art from the mainland, but they also incorporate pictures, stylised images of women and men, as well as more abstract topics. The variation in his work has seen them used as murals, stele portraits and desk ornaments. And they’re becoming more and more popular. He matches stones to meet different purposes, depending on the effect he intends to create. For instance, when the details do not require additional emphasis or when he needs to paint, marble is the choice because it is the best stone to colour. If the work is three-dimensional, it has to be another stone.

Born in Suqian, Jiangsu province, Lu was 11 years old when he decided to follow the family tradition. “It’s an old-fashioned Chinese tradition. The son has to inherit the father’s business,” he says. Now 46 years old, Lu knows his only son is not even remotely interested in learning the craft and does not intend to follow the tradition. He fears the worst. “I’m afraid there is no one to continue,” he says. Although the family may not carry on Lu’s legacy, there is hope the skills of stone carving may be passed on. From his small shop in Suqian, he receives art students from Guangdong or Beijing. They want to watch and learn the craft. It makes him happy but he is not fulfilled. While other stone carvers continue to work in the mainland, very few use images. That’s why people travel to Suqian to buy his work. “Even people from different countries, such as Malaysia and Singapore,” he says, explaining how he became famous after a solo exhibition in the Lion City. This is his first visit to Macau and he is thrilled about it. For his appearance at Lou Kau Mansion until June 27 he has brought “special pieces that have foreign images” to reflect the city’s unique Portuguese heritage.

PRODUCTION OF CHINESE HANDICRAFTS Schedule

Tuesday through Friday 12pm to 7pm Weekends and public holidays from 10am to 7pm Workshops

Saturdays and Sundays from 3pm 5pm (excluding the final weekend of each show) Workshops Fee

MOP20 per session LOU KAU MANSION Opening hours

Tuesday through Sunday and public holidays from 9am to 7pm Free guided tours by resident guides

Weekends and public holidays from 10:15am to 6:30pm (guided tours in Cantonese and Mandarin available every 45 mintues) Address

No.7, Travessa da Sé Information

(853)8399 6699

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Arts & Culture

Keep the little ones happy and cool indoors with two dreamy performances of classic American bed-time tales by one of the world’s most respected puppetry troupes

tag-team performance in time to beat the heat and the school holiday blues, Goodnight Moon and The Runaway Bunny promises to take the young and the young at heart on a fantastic dream-like journey. The double-bill of bedtime story classics brings to life the writing of American Margaret Wise Brown. The stories penned in the 1940s conquered the world’s attention then and the August shows promise to entertain a new generation.

Light but written with love

The Runaway Bunny is the charming tale of a rabbit who tells his mother he wants to run away from home. As only a mother could, she promises to chase our bunny, beginning an imaginary game between the pair. No matter the shape our little bunny protagonist takes – JUly 2010

from a fish in stream to a rock on a mountainside – his loving mother makes good on her promise to find him. Along the way is calming dialogue, surreal imagery and the reassuring message of a mother’s love. The second performance, Goodnight Moon, is an adaptation of a poem of goodnight wishes from a bunny-rabbit protagonist preventing his parents from putting him to bed. Gentle and humorous, this is a wonderful story to entertain pre-schoolers and older and have parents smiling knowingly.

A class act

Both stories are firm favourites around the world and this time around the tales are told through the world-class puppetry of the Mermaid Theatre of Nova Scotia. Since 1972, this awardwinning Canadian theatre company has used imaginative de-

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sign elements, original music and challenging text to entertain more than 3 million people around the world. In this production, expect striking scenic effects and magical puppetry that introduce the performing arts and reading to its young spectators. It is a welcome return to Macau for the Mermaid Theatre who are back nine years after performing their adaptations of the classic children’s picture books The Very Hungry Caterpillar and The Very Quiet Cricket. The troupe will also be holding a behind-the-scenes workshop for inquisitive young minds. Goodnight Moon and The Runaway Bunny are part of the ARTmusing Summer 2010 festival that runs until the end of August. The double-bill runs for three performances from August 6 to 8, in the small theatre at the Macao Cultural Centre. The daytime and two early evening performances are in Cantonese and English. Tickets are on sale now for MOP120, with discounts available. july 2010

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Entertainment

The party rolls on...

The latest instalment of the Macau Business Industry Night at Club Cubic was an outrageous success. There was fun all around and the pictures are the best witnesses. After a successful launch, this party partnership has proven to be the wise choice for a great night out. We’re back at Club Cubic this month and you wouldn’t want to miss out, would you?

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Entertainment

Great ball!

For the second year running the British Business Association of Macau (BBAM) ball set the standard for fun, excitement and an amazing party! The dance floor, rocking to The Bloom Brothers, was literally packed until after midnight. Very satisfied with the service and the staff at Starworld, BBAM chairman and Executive Director, Michael Jacobson, told Macau Business that the success could not been achieved without “an amazing group of talented people on our ball committee. They found world class performers and put together an event that will be talked about until the next one!” We agree. Was a fun night and an event to be on our calendars. The Bloom Brothers

Jami Gong, Mike Jacobson and Eileen Stow

Andrew Seaton and Echo Chan

Julia Brockman and Andrea Mansfield

Sophie Lei and Paulo A. Azevedo

Bede Barry and Eileen Stow

Keith Buckley and friends

Stuart and Erica Knight with Lynn Jacobson and the wonderful staff from StarWorld JUly 2010

Topwines sponsors with committee and guests

Jeff King and Steve Wolstenholme

Archie Keswick and Henry Brockman

Bob and April Drake

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The Lobbyists: Game on

With Macau enjoying exceptional GDP growth and becoming ever more interesting, it is no wonder that we’re starting to feel the pressure from lobby groups. It is not that they weren’t here before, but nowadays there’s a lot more to earn from this city which, according to the government, grew at 30.1 per cent year-on-year in the first quarter. It has been quite interesting to follow the saga of Macau Studio City and the light railway system. The cold war between eSun Holdings and New Cotai is a must-watch. Just look at the curiosity on the faces of the dozens of improvised Sherlock Holmes sleuthing around, trying to find out who bought the 28 percent share that investment fund Passport held in eSun. It’s curious that there’s been no disclosure to the Hong Kong Stock Exchange regarding the identity of the new owners of the shares. Apparently, it’s not only Macau that has its… err… very own rules.

The Lobbyists: Royal rumble

During a lull in the guerrilla war, there was enough time for the convenient publication in Hong Kong of a sort of ultimatum from the Macau Government. It gave a deadline for the development of the Macau Studio City parcel of land and the players who may have snapped up Passport’s shares. From Angela Leong On Kei to Harrah’s and property developer David Chow Kam Fai, it’s a free-for-all arm wrestle that will continue to captivate people’s attention. This is a matter that deserves our undivided attention. A friendly word of advice to senior officials from certain government bureaus: be extra careful not to get involved in this mess.

Good Steve, bad Steve, great Steve

Now that the case is closed – and since the publisher of this magazine does not mind that Frozen Spy divulges the information (yes, Frozen Spy is an old woman of questionable morals) – here goes. In an interview ahead of the opening of Encore, Steve Wynn said he intended to move Wynn Resorts’ headquarters to Macau. Our publisher didn’t believe his ears and immediately asked for exclusivity until the next issue was out. Mr Wynn agreed. It was a masterstroke, since Macau Business would be the only local English-language publication with an exclusive from the always talkative big boss of Wynn. The following day, Mr Wynn dropped the “exclusive” to Reuters. The news was far from fresh when Macau Business published it, much to the disappointment of the staff who didn’t put the story online. Imagine our relief when, just a few days ago, Mr Wynn told The Wall Street Journal his headquarters would not be moving to Macau. Thanks, Steve.

To give and receive - Part I

Sands’ boss Sheldon Adelson has been very busy in Singapore with the recent opening of the gorgeous Marina Bay Sands. While in the city state, he publicly reminded people about an alleged promise made by former Chief Executive Edmund Ho that he could sell the Four Seasons apartments if Sands China listed and the development of Cotai Lots 5 and 6 went ahead. Mr Adelson says the promise must be fulfilled. Frozen Spy agrees, although we can’t quite understand the need for Mr Ho’s promise since Lots 5 and 6 are Sands China’s responsibility and the interruption in their development had nothing to do with Macau. Besides, listing on the exchange is a management decision and comes from a company hoping to find money. In this case, much of that capital was used to solve difficulties that the umbrella company was experiencing outside Macau. It is an example of the usual word games from grown-ups. The truth is, we would all feel much better if Sands China achieved its goals and contributed to Macau’s development.

The Lobbyists: Off the rails Despite being the first to arrive and announce their interest in building the Macau Light Rail Transit system, Siemens seems to be out of the running on the basis of price. It’s no wonder that Bombardier and Mitsubishi are now more vocal than ever. How kind they were to share their opinions regarding the frailties of the Sai Van Bridge with certain media outlets. The Transportation Infrastructure Office should get busy, paying strict attention to the small print in the proposals dealing with the weight of construction and maintenance. This is a familiar tale really, since these two multinationals have transport projects in dispute in other areas of the world.

To give and receive - Part II

In return, the Macau Government – which will have to honour the promise made by Mr Ho – has published the “transmission” rights of non-essential assets in Lots 5 and 6. We agree that it was a nice gesture and will allow the company – following Galaxy’s example – to earn millions. If Frozen Spy is not mistaken, that wasn’t the intention of the drafters of the gaming liberalisation laws a few years ago. It’s typical of Macau; take with one hand, albeit temporarily, and give with the other. All that’s required is for investors to have patience and to continuously highlight that when they come to Macau, they are also thinking of contributing to the development of the city and its residents.

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July 2010

index JUly 2010

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page 109

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Aruze Gaming America Inc

page 113

www.aruze-gaming.com

Bally Technologies

page 111

www.ballytech.com

BBAM

page 29

www.britchammacao.org

BNU

page 19

www.bnu.com.mo

Camões Restaurant

page 35

www.legendalehotel.com

City of Dreams

page 01

www.cityofdreamsmacau.com

Companhia de Electricidade

page 57

www.cem-macau.com

de Macau – CEM, S.A. Cubic

page 07

www.cubicmacau.com

IPIM

page 13

www.ipim.gov.mo

Macau Cultural Centre

page IBC

www.ccm.gov.mo

Macau Daily Times

page 49

www.macaudailytimes.com

Macau Post Office

page 32

www.macaupost.gov.mo

Macau Sports Development Board

page 17

www.sport.gov.mo

MGM Grand Macau

page 05

www.mgmgrandmacau.com

MGTO

page IFC

www.macautourism.gov.mo

MIT

page 04

www.mit.com.mo

MIT

page 25

www.mit.com.mo

Morton’s The Steakhouse

page 43

www.mortons.com

Our Dental Clinic

page 31

www.ooioc.com

Pagcor

page 119

www.pagcor.ph

Shuffle Master Asia Limited

page 117

www.shufflemaster.com

SJM

page 39

www.sjmholdings.com

Speymill Property

page 60

www.speymillmacau.com

Sports Betting & Lotteries Asia

page 02

www.sportsbettingasiacongress.com

Star City Hotel & Casino

page 09

www.starcity.com.au

Starworld Macau

page 21

www.starworldmacau.com

Zung Fu Motors – Mercedes

page 03