MB 73 | May 2010 by Macau Business

CLEANING HOUSE CASINOS PREPARE FOR A PROBING OFFICIAL AUDIT

ISSN 1812-6855

WAY OF THE DRAGON

Steve Wynn bets big on Macau

PLOT PLAN

Move to grab unused land BLAME GAME

Gas boss burns officials over supply

Not working Labour policy mess turns nasty

THE BIG PICTURE

Investment chief looks beyond gaming Macau MOP 35 Hong Kong HK$ 40 Mainland China RMB 35

MAY 2010

ENERGY

26 The great gas puzzle Officials blamed for supply delays

TRANSPORT

30 On track Confident Bombardier 32 Over budget Probing the LRT 34 Shrunken fleet Air Macau contract woes

TRADE & INVESTMENT 36 The big picture Investment chief casts new net

AUDIT

40 Eternal struggle Reporting money laundering 41 Hands off As you were for mortgages

MB FILES

45 Banking and Finance Â

LABOUR

54 58 60 62 64

No-one happy New law hits problems Job not done Call for labour study Taxing times The non-resident levy Foreign bodies Tempers fray Jobs, jobs, jobs Future bright: study

PROPERTY

68 70 73 74

Strong momentum Home values hold No manâ&#x20AC;&#x2122;s land Develop or lose it Industrial revolution Making way for social housing House rules Regulation welcomed

MAY 2010

120 GAMING 76 77 78 86 90 94 114 117

Billions race Happy Golden Goose Yet more casino records Chasing the dragon One-on-one with Steve Wynn Keeping it clean Debut audit on cards If the cap fits Casino stockwatch Ties that last Orbis on slots Only in Singapore Sands China in bullish mood Big bay, big future Marina Bay sands goes large

ESSENTIAL

97 Fashion Your guide to indulgence

120

SHANGHAI EXPO SPECIAL

ARTS and CULTURE 146 Finding your muse Art for all hits town

THE FROZEN SPY 151 No-one is safe

OPINION 10 21 24 61 66 113 145 150

The Stockholm Syndrome The making of China’s trade deficit Exchange rate disorder Contract killings Protection racket No time for trade war Up in the air Achieving a US-China strategic understanding

The Stockholm Syndrome The Macau government has sometimes been held hostage to several special interest groups and, apparently, still can’t live without them. Even worse, the government seems to have developed a Stockholm Syndrome in relation to its captors. The long and winding story of what must be one of the silliest labour disputes in history is a good example. In order to tackle unemployment rates of less than three percent, the government yields to the slightest pressure from specific groups, who exploit the situation to raise issues that seldom have anything to do with the legitimate rights of workers. It’s true that several thousand unqualified workers have lost their jobs due to the relocation of traditional industries to the mainland. It is equally true that they fear the loss of their life and family-sustaining salaries due to lack of protection. It’s even more true that in the construction industry the unemployment rate is far more than three percent. The government itself estimates a massive 28 percent unemployment rate. But it is also the case that many of today’s unemployed construction workers were not previously from this specific industry and they lack qualifications. In many cases, plenty of them – like many MAY 2010

other Macau residents - believe they have the right to any job even without the necessary qualifications. Instead of introducing effective social support schemes and self-help programs – perhaps with a tax on employers - the government allows itself to be fooled by certain people that prey on the ignorance and natural aspirations of residents who haven’t been fortunate enough to achieve professional qualifications. As a result, these few people are able to impose their miserably populist political agendas. This blind policy allows blackmail by them to continue, while undermining the creation of new companies and damaging investor trust. What the government must not forget is that there are no jobs without investment and companies. And they should also never forget that the brilliant new formula of having one resident worker for each imported worker is only feasible for some jobs and at certain periods of time. In other areas, Macau simply doesn’t have the workers, qualified or otherwise. Elsewhere, residents simply don’t want the jobs, and there are hundreds of examples which officials stubbornly refuse to recognise as being real. It is the small and medium-sized

“As long as our growth s hamstrung by a few blackailers, opportunists and incompetents, no one will be happy’’ enterprises that suffer most from this policy-void and lack of courageous political action. Macau’s economic growth has created a dubious miracle: few local workers believe they are not suitable to be general-managers or CEOs, at least. They also want: to work close to home (as if Macau was a real metropolis); a work schedule that suits them perfectly; and the salary of a Wall Street financial guru. Anything less is unthinkable. Even in the civil construction sector - an area that has created all sorts of difficulties for other industries because of its intrinsic role in labour issues - any unjustifiable restrictions are seen as impractical. We understand the government’s temptation to transfer unemployed workers to construction sites - as if a former shoemaker was actually qualified to work in construction, unless he was only required to do simple and hard manual labour. It is also understandable that construction workers would like real estate projects – residential buildings, hotels and casinos - to start one at a time, so that they

can transfer from one to another and have a guaranteed job. However the acceptance of these demands is tantamount to preventing the launch of projects when market conditions and investors require them, and sends out a dreadful message at a time when Macau needs to consolidate its growth. But do not let yourself be fooled. The result of this ‘conversation of the deaf’ is not those May 1st demonstrations by lots of people with legitimate expectations, and many others who had little reason to be there at all - a protest where water cannons were used by a police force who need to upgrade their skills and training, or else risk bringing Macau into the international news for all the wrong reasons. Those demonstrations will always happen, sometimes for good reason, sometimes not so. The government should not be tackling the demonstrations – which are part of the freedoms and rights of expression that Macau protects - but instead the fact that the overall need for qualified workers, in so many areas, is being overshadowed by other specific problems. The government cannot confuse the trees with the forest. Otherwise, our growth will be hamstrung by a few blackmailers, opportunists and incompetents. And that will make no one happy. MAY 2010

VOL.1 Nº73

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

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MAY 2010

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Contributing Editors Carlos Picassinos, Catarina Morgado, Christina Yang Ting Yan, Derek Proctor (Bangkok), Emanuel Graça, 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 Advertising Bina Gupta binagupta@macaubusiness.com

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Art Director Connie Chong

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Photography António Falcão, António Mil Homens, Carmo Correia, John Si, Nuno Calçada Bastos, MSP Agency, Agencies

Xu Yu, Irene

Illustration G. Fox, Rui Rasquinho

Agencies AFP, Lusa

irene@bizintellingenceonline.com

Translations Stephanie Chu, PROMPT Editorial Services

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

MAY 2010

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MAY 2010

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43 Av. Infante D. Henrique 643 Av. da Praia Grande 3 Av. Dr. Mário Soares 221 Alm. Ribeiro 271 Alm. Ribeiro 317 Alm. Ribeiro 327 Alm. Ribeiro 7b Lrg. do Senado 17 Lrg. do Senado 31 Lrg. do Senado 13 Rua de S. Domingos Rua de Horta e Costa 27A Cheng Chong Kie Rua de Coelho de Amaral Av. do Dr. Rodrgo Rodrigues 30C Rua de Entre Campos 54 Rua da Barca Iong Vai Bldg. 5 Estrada de Adolfo Loureiro 73 Rua de Almirante Costa Cabral Av. do Ouvidor Arriaga Rua do Francisco Xavier Pereira Rua do Almirante Costa Cabral Av. do Sidónio Pais Alm. Dr. Carlos d’Assumpção Mei Kui Koung Cheong (Phase I) Vai Choi Garden Block C KIOSK - Mandarin Oriental Hotel NEWSSTANDS AND SUPERMARKETS (Taipa)

BOOKSHOPS

Rua de Bragança (Mei Keng Garden Blk. 1 Taipa) Est. Gov. Albano de Oliveira (Mercearia Fruta Man Yip Taipa) Av. Dr. Sun Yat Sen (Mercearia Fruta Man Yip Taipa) Rua de Seng Tou (Supermercado Pou Ip Taipa) Av. Dr. Sun Yat Sen (Seng Cheong Supermarket Taipa) Hyper Gourmet - Ocean Garden

BOOKSHOPS Portuguese Bookshop- Largo do Senado BOOKACHINO- NAPE, Macau TIMES Bookshop- Shop 2526, 2200 The Grand Canal Shoppes Venetian Macao Culture Plaza Bookshop - Rua do Campo BLOOM Bookshop- Weng Seng Bldg.

Aberdeen Marina Holdings Ltd. Ah Lo Magazine Co. Bookazine Ltd - Canton House Bookazine Ltd - Far East Finance Bookazine Ltd - Jardine House Bookazine Ltd - Prince’s Building Bookazine Ltd - Shui On Bookazine Ltd - Tsim Sha Tsui Chaip Coin Co Ltd Cham Kee Cosmos Book Co Cosmos Nathan Road The Commercial Press - Jordan The Commercial Press - King Road The Commercial Press - Sha Tin The Commerical The Commercial Press - Yee Woo Nobletime Ltd (c) DFS - Int’t FC (c) DFS - Prince’s Building Exchange Mall Great Food Hall Hong Kong Book Centre - City Plaza Hong Kong Book Centre - On Lok Yuen Hits Media Centre Jumbo Grade - City Plaza II Jumbo Grade - Grand Century Jumbo Grade - Int’l Finance Ctr Jumbo Grade - Pacific Place II Jumbo Magazine House Kelly & Welsh Ltd Kelly & Walsh - Exchange Square Kwong’s Mandarin Hotel Mannings New Mall - Discovery Bay Page One - Time Square Page One - Central Page One - Kowloon Tong Page One - TST Park’n Shop Swindon - 370 Ocean Centre Swindon - Lock Road Tung Son Magazines Co Variety Worldpac Ltd Y.M.C.A. of Hong Kong Dymocks

Restaurants

MAY 2010

Alipay and MasterCard target Macau

The world’s largest online payment company, Alipay.com has begun offering payment services in Macau, Hong Kong and Taiwan in partnership with MasterCard Worldwide. Online shoppers from Macau can use MasterCard to pay for goods purchased from Alibaba’s e-commerce website, Taobao.com, and 460,000 other merchants using Alipay as their preferred payment platform, Xinhua reported. Alipay is the world’s largest online payment company in terms of registered users, surpassing PayPal in 2009, although most of its clients are in the mainland. The company linked up with Visa in 2009 to offer similar services in Macau, Hong Kong and Taiwan.

More credit guarantees for SMEs

Officials are set to raise the ceiling of the credit guarantee scheme for small and medium sized enterprises (SMEs) from MOP200 million to MOP500 million. The SME Special Credit Guarantee Scheme cap will remain at MOP100 million. The goal is to support local SMEs, said the spokesperson for the Executive Council, Leong Heng Teng. The scheme also aims to promote technical transformation and improve the operations of SMEs.

MAY 2010

India mulls tax evasion pact

India will soon begin negotiations for information exchange with nine tax havens - including Macau - to combat evasion. Other jurisdictions involved are Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Netherlands Antilles, according to the Indian media. “The agreements will allow exchange of information for prevention of evasion or avoidance of income tax and assistance in collection of income tax with these territories,” a finance ministry official said. India became able to officially initiate information exchange with the nine tax havens after New Delhi approved the notification of these areas as “specified territories.” The inclusion by the Indian authorities of Hong Kong in the “specified territories” group is also under process.

MAY 2010

New water rates regime Moves are underway to push forward a system of differentiated water rates in Macau in a bid to promote water saving. A final government proposal should be ready for public consultation by June. Officials hope the new system will be in place this year, according to the director of the Maritime Administration Susana Wong Soi Man. At present, Macau has a single standard water rate of MOP4.39 per cubic metre. The new system will charge households based on the amount of water used. In the business sector, water rates will take consumption and the type of industry into account.

CTM profits rise 5 percent

The profits of local telecom operator CTM increased 5 percent year-on-year in 2009, to MOP741 million, mainly due to operational cost reductions. CTM’s gross revenue remained stable in comparison with the previous year, at MOP2.436 billion. For the coming three years, the company’s estimated capex (capital expenditure) investment will be around MOP1 billion, including projects like the upgrading of the mobile network to 4G and the local and international network capacity, and also to build a home fiber-optic broadband network. In 2009, CTM’s mobile phone customers increased by 19 percent, to 523,141 (including pre-paid cards) and the company saw a fivefold increase in its 3G customers. CTM also reported a three percent year-on-year growth in internet users to nearly 128,000.

Portuguese utility company “available” to increase CEM share

Portuguese EDP is “available” to acquire a majority position in local electricity utility Companhia de Electricidade de Macau (CEM), but only in cooperation with Chinese partners. “EDP is not interested in leaving CEM; actually, we are available – and not more than available – to reinforce our position as shareholder,’’ João Marques da Cruz, the company’s head for the Asian market, told Lusa. He said EDP’s availability can only go forward “in a background of partnerships with Chinese entities in order to elaborate a long term strategy for CEM”. Two main groups of shareholders hold, together, 84 percent of CEM’s shares: the Sino-French group (with 42 percent) consisting mainly of Suez Environment and NWS Holdings Limited and the Sino-Portuguese group (with 42 percent) in which the biggest shareholder is EDP. China Power International Holding Ltd hold 6 percent, the Macau government holds 8 percent and the remaining 2 percent is distributed among eight hundred local shareholders.

Millenium bcp seeks onshore license

The local offshore subsidiary of Portuguese bank Millenium bcp is waiting for a license to operate as a retail bank this year. The request for an onshore license reveals Millenium bcp’s confidence in the local economy, the manager of the subsidiary João Pãosinho Pãosinho said. The bank plans to focus on the corporate market, providing loans to companies, institutions or individuals that plan to do business in African countries such as Angola or Mozambique,” Pãosinho told the Macau Post Daily. Millenium bcp is the biggest private Portuguese bank, with 4.3 million customers and 900 branches around the world. MAY 2010

BESOR profits up 65 percent

Macau-based bank Banco Espírito Santo do Oriente (BESOR) ended 2009 with a net profit of MOP27.85 million, a year-on-year increase of 65 percent. BESOR is 99.75 percent owned by Portuguese banking group Banco Espírito Santo (BES). BESOR is mainly focused on corporate and investment banking. The bank has been operating in Macau since 1996 and has been linked to several financing deals in the gaming sector and tourism.

MAY 2010

Macau to strengthen green credentials

the Venetian. He said the government would “continue to cope with our policies to reduce the emission, under the common but differentiated responsibility in combating the climate change’’. “Without doubt, the development of low carbon economy and the promotion of clean production are driving forces for the recovery and sustainability of the world economy,” Chui added. The Kyoto Protocol has been applicable to Macau since the beginning of 2008.

Photo: Luís Almoster | MSPagency.org

Chief Executive Fernando Chui Sai On said last month that the Macau government will strengthen its commitment to protect the environment. The commitment would be made by improving infrastructures as well as upgrading the quality of the environment in order to turn Macau into a sustainable city and global leisure centre for tourism. Chui was speaking at the opening of the 2010 Macau International Environmental Co-operation Forum and Exhibition which took place at

Tam wants regional co-operation on MICE Secretary for Economy and Finance, Francis Tam Pak Yuen, has called for further co-operation on the exhibition and convention industries between Guangdong, Hong Kong and Macau. Speaking at a forum on the future of the Pearl River Delta, Tam said Macau had to add more high-end and attractive elements to its industrial portfolio, mostly made up of gaming, in its drive to become a global leisure and tourism hub. He said Guangdong, Hong Kong and Macau

had their unique advantages in developing exhibition and convention industries, and the three should fully maximise the benefits provided by the Closer Economic Partnership Arrangement (CEPA). He suggested that the three make agreements to enhance co-operation in the MICE industry, and Macau would focus on exhibitions on entertainment, consumption, arts, regional acclaimed products and small and medium conventions.

Income subsidy to continue in 2010

The government announced it will maintain the income subsidy for one more year. The scheme was introduced in 2008 and delivers a subsidy to employed permanent residents who are 40 and earn no more than MOP12,000 per quarter. The subsidy amount targets to raise their quarterly income until it reaches MOP12,000. In 2009, 8,716 residents benefited from this scheme.

Government to create salary guarantee fund

The preparation of a law to create an independent salary guarantee fund to which employees of insolvent companies can apply is in its final stages, said Secretary for Economy and Finance, Francis Tam Pak Yuen. Usually, the aim of salary guarantee funds’ is to ensure employees their due salary, compensation and other legally recognised benefits. Tam said that, by law, a portion of the taxes paid by gaming concessionaires is already destined for such a fund. At present, the accumulated contributions amount to MOP600 million, a figure considered sufficient by the government to start this new scheme, said Tam. One of the goals of the law proposal in preparation is to create a sustainable guarantee fund, noted Tam. MAY 2010

Closer to Taiwan

Chief Executive, Fernando Chui Sai On, met the Vice President of Kuomintang, Tseng Yung-chuan last month. Tseng is also the President of the Friends of Hong Kong & Macau Association. They exchanged views on enhancing the exchanges and co-operation on trade, tourism, education and culture between the two places. They discussed the establishment of a formal communication mechanism Chui also announced that the government has plans for a visit to Taiwan in the second half of the year and hold promotional activities in Taiwan with the business sectors. Tseng said more than 20,000 Macau people are living in Taiwan.

FAN GANG PROFESSOR OF ECONOMICS AT BEIJING UNIVERSITY AND THE CHINESE ACADEMY OF SOCIAL SCIENCES

The making of China’s trade deficit CHINA REGISTERED A MONTHLY TRADE DEFICIT OF $7.2 BILLION IN MARCH 2010, ITS FIRST SINCE APRIL 2004. AND YET, AT AROUND THE SAME TIME, THE UNITED STATES CONGRESS ISSUED ITS LOUDEST CALL EVER TO CLASSIFY CHINA AS AN EXCHANGE-RATE MANIPULATOR, ACCUSING CHINESE LEADERS OF MAINTAINING THE RENMINBI’S PEG TO THE DOLLAR IN ORDER TO GUARANTEE A PERMANENT BILATERAL TRADE SURPLUS. China’s March trade deficit indicates, first of all, that it is incorrect to claim that Chinese economic growth depends mainly on exports. Exports are an important part of the Chinese economy, and any global market fluctuation or external shock will certainly have an impact on overall growth. But, like any other large economy, China’s economy is driven by domestic consumption and investment. Indeed, China’s exports fell by 16% year on year in 2009, owing to the global financial crisis and recession. Nevertheless, annual GDP grew by 8.7%, thanks to 16.9% growth in consumption (measured by gross sale of consumer goods) and a 33.3% surge in fixed-investment demand. Moreover, although China’s “trade dependency” is now reckoned to be 70% of GDP, that figure is greatly distorted by the fact that Chinese exports require massive imports of materials and parts. The net value added of total Chinese foreign trade accounts for only about 15% of GDP. Thus, net exports contributed 10.8% to China’s overall GDP growth rate, or only about 1.1 percentage point of 9% growth in 2008. Compare that figure to Germany, where net exports accounted for 64% of growth in 2008. Similarly, the figure was 33% in Japan, 28.6% in Korea, and 20% in the Philippines. Clearly, China is nothing special in this regard. To be sure, China’s domestic consumption is not as high as it should be, standing at 49% of GDP in 2008, with household consumption accounting for only 35%. Such figures have led many observers to believe that overall domestic demand must be low, leaving China dependent on external markets for growth. But domestic demand, which determines imports, consists not only of consumption, but also of fixed-asset investment. Indeed, rapid growth in investment may translate into high import growth and trade deficits. That is exactly what is happening in China now. Some people may argue that investment growth without consumption growth will result in overcapacity and eventually lead to recession. Perhaps. But we need to remind ourselves that housing investment accounts for about 30% of China’s total fixed investment, with much of the rest directed toward infrastructure – that is, long-term, durable public infrastructure investments – including subways, railways, highways, urban public facilities, and the national water system. Moreover, one can easily imagine that import demand would soar further if the US and the European Union lifted their bans on exports of high-tech products to China. In that case, the trade deficit recorded in March could be at least 40% higher. The renminbi’s exchange rate, then, is really a secondary factor in China’s external account. Put another way, the global

imbalance could be corrected more efficiently by addressing other, more fundamental factors. The fundamental factors underlying the US external imbalance are large fiscal deficits and low household savings, owing to excessive financial leverage. The fundamental factors on the Chinese side are high corporate and household savings, together with some distortion of resource/utility prices. Indeed, the current situation indicates that a significant adjustment in exchange rates may not be needed at all in order to redress global imbalances. If that is true, and China shouldn’t worry about the renminbi’s exchange rate, should it worry about its economy overheating? After all, its previous trade deficits in the era of reform – such as in 1992-1996 and 2003-2004 – all occurred at times of overheating.

“Many oberservers believe that overall domestic demand must be low, leaving China dependent on external markets for growth’’ But there are differences between now and those earlier periods. For example, when rapid investment growth in 2004 led to overheating, world markets were booming. At that time, both domestic investment and exports required immediate tightening. Today, by contrast, although domestic investment is growing very strongly, external demand has not recovered to its previous levels. The result is the March trade deficit, caused mainly by exceptionally high annual import growth (65%) coupled with relatively low export growth, which reached a nominally impressive 24% only because of the sharp decline recorded in the base period. Such a single-factor situation is easier to deal with than the double-factor situation of 2004, and because the high investment demand has been mainly stimulus-related this time, policymakers can handle it in a more timely fashion if they perceive a problem. That said, the ratio of capital formation does require careful monitoring. The last time China saw such high growth in domestic investment, the savings rate was not as high as it is now. The problem currently is that a trade deficit has emerged at a time when the national saving rate is as high as 51%. That means that investment is extremely high – and that, despite the high share of infrastructure investment, there is an urgent need to manage the potential risks. MAY 2010

More competitive Macau has jumped from 15th to 13th in the latest report on the overall competitiveness of China’s cities. The 2010 annual report on China’s urban competitiveness is the eighth of its kind released by the Chinese Academy of Social Sciences after a comprehensive survey of almost 100 Chinese cities. The report released that the top ten competitive cities are Hong Kong, Shenzhen, Shanghai, Beijing, Taipei, Guangzhou, Tianjin, Kaohsiung, Dalian and Qingdao. Of them, three are from the Pearl River Delta, one is from the Yangtze River Delta, two are from Taiwan, three are from around the Bohai Sea region and one is from north-eastern China. In terms of subcompetitiveness factors, Macau’s economic efficiency was ranked in 6th place overall. Macau took second spot in the ranking regarding economic levels.

Forex reserves up again The preliminary estimate of Macau’s foreign exchange reserves amounted to MOP156.2 billion (USD19.53 billion) at the end of March. The reserves rose by 4.3 percent from MOP149.8 billion (USD18.73 billion) for the previous month, the Monetary Authority of Macau said. This is an increase of MOP21.8 billion or 16.3 percent on last year. Macau’s foreign exchange reserves at end-March 2010 represented 29 times the currency in circulation or 254 percent of patacas M2 at end-February 2010. The trade-weighted effective exchange rate index for the pataca, a gauge of the domestic currency’s exchange rates against the currencies of Macau’s major trading partners, rose by 0.25 points month-to-month but fell by 2.73 points year-on-year to 90.53 in March 2010.

Adelson’s pay goes up Las Vegas Sands chairman and CEO Sheldon Adelson got a raise in his pay package last year. He was paid US$5.58 million (MOP44.64 million) in 2009, according to an Associated Press analysis of a regulatory filing. The pay package included a US$1 million salary and US$2.73 million in perks - including US$2.45 million for security for Adelson and his immediate family – besides stock awards, option awards, car and driver and US$100,000 for the reimbursement of professional fees. Adelson got US$3.4 million in 2008, but this did not include roughly US$2.1 million for security.

Prices rising The composite Consumer Price Index (CPI) for March 2010 increased by 1.88 percent year-on-year, attributable to increases in the price of food and nonalcoholic beverages. Price indices for transport and clothing and footwear rose by 8.40 percent and 5.51 percent respectively, on account of expensive gasoline and the arrival of new Spring clothing. The composite CPI for March 2010 decreased by 0.25 percent month-to-month. The average composite CPI for the first quarter of 2010 increased by 1.52 percent year-on-year. For the 12 months ending March 2010, the average Composite CPI rose by 0.74 percent over the preceding period.

TV switch off Six public antenna companies gave up broadcasting four TV channels starting April 19. The TV channels are Celestial Movies and Thailand’s “TrueSport” 1, 2 and 3 channels. The Telecommunications Regulation Bureau (DSRT) director Lawrence Tou Veng Keong welcomed the decision and said it will have “positive effects”. Tou stressed the move “is part of a process, not an isolated action” and added the government will continue negotiations with the public antenna companies in order to gradually remove other channels which Macau Cable TV allege abuse copyright breaches. Tou added that the government will maintain conversations with both Cable TV and public antenna companies in order to solve the conflict, without affecting the public interest. The public antenna companies are accused by Macau Cable TV of providing TV signals for American and European content without license or authorisation from respective copyright owners.

MAY 2010

Tax break for green cars Macau is preparing to launch a tax-reduction scheme for purchases of environmentally-friendly vehicles. The scheme is to be put forward still this year – after a period of public consultation - according to the Environmental Protection Bureau (DSPA) director Cheong Sio Kei. Hong Kong announced a similar scheme last year to encourage “green driving”.

Zaia show to stay Cirque du Soleil’s Zaia show has no plans to leave Venetian Macau, the senior vice-president for resident shows, Jerry Nadal, told Macau Daily Times. “As far as we’re concerned, we have eight more years to run on our contract with the Venetian,” he said, adding there had been no discussions about scrapping the show. Nadal admits audience numbers have been far from what were expected, but claims things are changing. He also revealed that early-stage conversations have been held with the Venetian about entertainment possibilities for other properties under construction.

Green hotels unveiled The third Green Hotel Awards winners have been announced and they are: The Grand Waldo Hotel, Hotel Golden Dragon, Sands Macau Hotel, Hotel of Taipasquare, MGM Grand Macau, Wynn Macau and Hotel Guia Macau. The awards are effective for three years. A total of 19 hotels have been awarded as Green Hotels since 2007, which covers about 40 percent of hotel rooms in Macau. The award is organised by the Environmental Protection Bureau in collaboration with the Macau Government Tourist Office and supported by several local associations. It is designed to leverage the importance of environmental management within the sector, and honour hotel establishments that have committed to environmental management.

Imports up for four months February this year became the fouth month in a row to register a rise in imports, up by 9.2 percent year-on-year to MOP2.89 billion. However exports continued to decline, down by 24.5 percent yearon-year to MOP461 million, according to official data. A trade deficit of MOP2.43 billion was recorded for February 2010. Exports to Hong Kong in the first two months of 2010 increased by 6.4 percent year-on-year to MOP479 million, while those to the mainland, the USA and the EU decreased by 26.5 percent, 62.1 percent and 48.5 percent respectively.

BUSINESS&INDUSTRY

Slight pay cut for Steve Wynn Wynn Resorts CEO Steve Wynn was paid US$8.39 million (MOP67.1 million) last year. Wynn’s renumeration was down less than one percent year-on-year, according to an Associated Press analysis of a regulatory filing. Wynn received US$2.95 million in salary, plus a US$4.06 million cash bonus. He also got US$1.37 million in perks, mostly for personal use of a company aircraft.

GAMING RELATED SERVICES MAY 2010

JOSÉ ANTONIO OCAMPO PROFESSOR AT COLUMBIA UNIVERSITY, FORMER UNITED NATIONS UNDER-SECRETARY-GENERAL FOR ECONOMIC AND SOCIAL AFFAIRS

Exchange rate disorder TWO TROUBLING FEATURES OF THE ONGOING ECONOMIC RECOVERY ARE THE DEPRESSED NATURE OF WORLD TRADE AND THE EARLY REVIVAL OF INTERNATIONAL GLOBAL PAYMENT IMBALANCES. ESTIMATES BY THE INTERNATIONAL MONETARY FUND AND THE UNITED NATIONS INDICATE THAT THE VOLUME OF INTERNATIONAL TRADE IN 2010 WILL STILL BE 7% TO 8% BELOW ITS 2008 PEAK, WHILE MANY OR MOST COUNTRIES, INCLUDING INDUSTRIAL NATIONS, ARE SEEKING TO BOOST THEIR CURRENT ACCOUNTS. Indeed, if we believe the IMF’s projections, the world economy’s accumulated current-account surpluses would increase by almost $1 trillion between 2009 and 2012! This is, of course, impossible, as surpluses and deficits must be in balance for the world economy as a whole. It simply reflects the recessionary (or deflationary) force of weak global demand hanging over the world economy. Under these conditions, export-led growth by major economies is a threat to the world economy. This is true for China, Germany (as French Finance Minister Christine Lagarde has consistently reminded her neighbor), Japan, and the United States. Countries running surpluses must adopt expansionary policies and appreciate their currencies. More broadly, to the extent that major emerging-market countries will continue to lead the global recovery, they should reduce their currentaccount surpluses or even generate deficits to help, through increased imports, spread the benefits of their growth worldwide. But, while that implies that emerging-market currencies must strengthen, disorderly appreciations would do more harm than good. To use an American saying, it might mean throwing out the baby (economic growth) with the bathwater (exchange rate appreciation). Consider China, which accounts for the largest share by far of world trade among emerging economies. Real appreciation of the renminbi is necessary for a balanced world economic recovery. But disorderly appreciation may seriously affect China’s economic growth by disrupting its export industries, which would generate major adverse effects on all of East Asia. China needs a major internal restructuring from exports and investments, its two engines of growth in past decades, to personal and government consumption (education, health, and social protection in the latter case). But this restructuring will tend to reduce, not increase, import demand, as exports and investment are much more import-intensive than consumption. Moreover, a sharp appreciation of the renminbi could risk domestic deflation and a financial crisis. Chinese authorities certainly seem to have that interpretation of the roots of Japan’s malaise in mind as they seek to avoid rapid revaluation. The only desirable scenario, therefore, is a Chinese economy that transmits its stimulus to the rest of the world mainly through rising imports generated by rapid economic growth (i.e., the income effect on import demand), rather than by exchange-rate appreciation (the substitution effect). This

MAY 2010

requires maintaining rapid growth while undertaking a major but necessarily gradual domestic restructuring, for which a smooth appreciation is much better suited. Now consider other major emerging markets. Here currency appreciation is already taking place, pushed by massive capital inflows since the second quarter of 2009, and in some cases it can already be said to be excessive (for example, in Brazil). These countries can, of course, resist upward pressure on their currencies by accumulating foreign-exchange reserves, like they did before the global financial crisis. The result is, of course, paradoxical: private funds that flow into these countries are recycled into US Treasury securities via investment of accumulated reserves. Why should emergingmarket countries’ central banks undertake this peculiar financial intermediation, which represents a major cost, as the yield of private funds is higher than that of reserves? The implication here is that relying on free movement of capital to achieve exchange-rate appreciation and currentaccount deficits may generate a myriad of problems, including slower economic growth and the threat of asset bubbles and financial crises of their own. So, a more orderly way to induce current-account deficits without risking disruption of emerging economies’ growth should be considered. One solution (already advocated by some, including me, and adopted to some extent by a few countries) is broader use of capital-account regulations. Surprisingly, however, this issue has been entirely absent from current global debates on financial reform. Fortunately, the IMF opened the door to discussion of this issue in a recent staff position paper. Equally important, a desirable global scenario is possibly one in which most developing countries run current-account deficits. But this requires major reforms in the global financial system to reduce the vulnerabilities that such deficits generated in the past, and that were reflected in major financial crises in the developing world. These past crises gave rise to a form of “self-insurance” among developing countries through reserve accumulation. This helped many of them weather the recent storm, but it also contributed to global payments imbalances. Recent IMF reforms are just a step in the direction of trying to create better financial instruments to help these countries. It is essential, in particular, to create reliable large-scale financing for developing countries during crises, through a mix of counter-cyclical issuance of SDRs and emergency financing without onerous conditions.

MAY 2010

Energy

The great gas puzzle Â Macau energy supplier Sinosky admits there have been delays in the supply of natural gas to the city, but the company chairman points the finger at an indecisive government BY TIAGO AZEVEDO

ll of a sudden, everybody woke up. Last month, legislator Kwan Tsui Hang requested information from the government about Sinosky Energy. She was referring specifically to supply delays and asking if there had been any breach of the agreement signed with the government in 2007. Almost immediately, a slew of news, most of which had already been revealed in a series of articles in this publication, surfaced raising questions about the gas business.

MAY 2010

Sinosky Energy (Holdings) is a consortium made up of China Petroleum & Chemical Corporation and Macau Natural Gas (Sinopec/MNG), which was granted a 15-year monopoly for importing and transporting natural gas to Macau.

Half-cocked

The supply of natural gas to Macau should have reached 180 million cubic metres in 2008 and again last year, but the numbers only reached half of what was settled with the government.

In 2008, Sinosky imported 82.55 million cubic metres of natural gas, less than half of what was planned, and last year the company supplied to Macau 93.15 million cubic metres, up 13 percent compared to the previous year, said Chang Kuo Tien, Sinosky’s chairman of the Board of Shareholders. Besides falling short on numbers, the construction of the Liquefied Natural Gas (LNG) terminal has been delayed for several years. It was supposed to be operational on a man made island last year, but is

probably only going to be ready in 3 or 4 years, said Chang. Moreover, Sinopec, one of China’s largest state-owned companies, is no longer involved in the LNG terminal construction project – although it still holds a 50 percent share in Sinosky. These are all concerns that Kwan raised in the letter she wrote to the government. The lawmaker argues that the company didn’t follow the agreement and neglected the construction of the LNG terminal, failing to supply the predetermined amount of natural gas. This

has severely harmed the public interest, she wrote.

Who fault is it?

Sinosky boss Chang acknowledges that the project is delayed, but says they are not to blame. “It is taking so long because it seems to be the government culture. Nobody does anything,” he told Macau Business. Chang says information that has been coming out is not accurate. “We are following the agreement. We are

MAY 2010

Energy

supposed to supply natural gas to the power company for the first two years – which we have been doing – and in the third year we have to build a temporary terminal, with capacity to store natural gas for seven days. “Since the first year we asked the government for a piece of land where we could build the terminal. Until today there is no land,” he explains. Additionally, the corruption cases of disgraced secretary Ao Man Long – jailed for 28 and a half years for corruption - and former president of Sinopec Chen Tonghai - accused of bribery and corruption in a US$30 million scandal involving Asia’s largest oil refinery, and responsible for signing the agreement in Macau – have also frozen the project.

Nothing to hide

“After what happened, the new secretary doesn’t want to touch the projects that started under Ao Man Long’s term. But there are no problems. We don’t have anything to hide,” says Chang. “In addition, the new general manager of Sinopec also wants to wait to see how the court rules in the case of Chen. But I had to tell them that we could not wait more, since we had signed the agreement with the government. Sinopec told us that we could go ahead without them,” he adds. Sinopec, as a partner in Sinosky, will take care of wholesale commerce in the territory. Sinopec is not going to build the LNG terminal, but MNG has already found new partners and a company called Macau Liquefied Natural Gas Holdings (MLNG) has already been established. 80 percent of this company is owned by MNG, while the remaining 20 percent will stay in Japanese hands: Chubu Electric Power Company, builder and manager of several LNG terminals in Japan, and Marubeni Corporation, that is developing projects in UK and USA, each with ten percent. “We have set up the company and informed the government. Now all we can do is wait for the approvals,” says Chang.

Wall of silence

For the past six months Macau Business has tried to get a reaction from the government on the changes in the project and the agreement. But the Office for the Development MAY 2010

of the Energy Sector says it doesn’t know anything about new developments and new partners. “If they say they don’t know that Sinopec is not going to build the terminal, they are lying. “For the big project, the offshore LNG terminal, I personally took the project to the top people in charge,” Chang explains. Once the Macau Government approves the project, it will go to the Central Government, since it’s going to be built on water, and only after their approval the company - MLNG, not Sinosky - can start construction. “At the moment, all the reports and feasibility studies are in government hands; we are just waiting around for good news,” Chang says.

Timid reaction

Macau Business tried to reach Sinopec’s representative in Sinosky, but they declined to comment. The Office for the Development of the Energy Sector and secretary Lau Si Io’s office also refused to answer any of our enquiries. Instead, the government sent out two press releases that add confusion to the gas puzzle. First, on March 24, the Office for the Development of the Energy Sector said that it had received a report from Sinosky, stating that the annual supply would rise to 180 million cubic metres this year, as previously established. In the same document, Arnaldos Santo’s office explained that the unstable energy prices between 2007 and 2009 prevented the concessionaire from getting a steady source of LNG. It was impracticable to go forward with the construction of the terminal, added the press release. Three weeks went by, and on April 15 a new press release came out, with Arnaldo Santo’s office saying that it will order Sinosky to follow the agreement. The statement was based on the same information but was released just after Kwan’s letter to the government and the news hitting the media. However, there are still a lot of doubts that have to be clarified. The government should explain its position regarding the fact that Sinopec will not be an active partner in the construction of the LNG terminal, and the choice for a man made island for the project.

Raising prices S

inosky’s chairman of the board says the supply of natural gas will be stable this year - and the final goal of 180 million cubic metres will be met. Chang Kuo Tien says: “Our supplier - China National Offshore Oil Corporation (CNOOC) - has left the problems behind and from now on the supply will be stable.

“For the next three years I think 180 million cubic metres of natural gas is more than enough for Macau.” Chang says the joint-venture registered a financial loss of MOP9.2 million last year, taking the total accumulated losses to MOP21.37 million. The Sinosky boss attributed the continuing losses to the rising value of the renminbi over the past year and the repeated damage by typhoons on the offshore gas station of CNOOC, which affected the gas supply volume and led to losses. Taking all this into account, Sinosky is seeking a price increase: “We have

already talked with the government and they will accept that we increase a little bit the price, trying to get a balance with our costs,” Chang told Macau Business. However, there are still no figures. Despite the losses, Chang says the company will increase the investment in Macau this year, including MOP12 billion for the LNG terminal that will be built on a man made island, 6.2 kilometres off Coloane. Still, the budget might go up approximately 10 percent, says Chang. “Everybody is doing new construction and looking for sand. If we want to

build an island we need sand. We will possibly have to pay more,” he explains. According to the schedule, it will take two years to build the island and one more year for the assembly. “After three years we will be able to supply 1 million tons of LNG. In the second year we will raise the capacity to 2 million tons. After 5 years we will have capacity to supply 5 million tons,” says Chang. The deal to import LNG was signed last year with BPMigas, and the Indonesian party committed to supply gas to Macau at the end of 2013.

MAY 2010

Transport

On track

Bombardier vice-president for Asia Pacific has high hopes for Macau’s Light Rapid Transit tender. David Allen is not worried about the competition and says that the project will change peoples lives BY TIAGO AZEVEDO

he construction of Phase 1 of the Light Rapid Transit (LRT) system will have a significant impact the city’s future. The project is right on track and the open tender for the supply of rolling stock and systems for Phase 1 has attracted major players. Bombardier, a leader in the rail transportation and aerospace industry, has been eyeing Macau for a long time and has joined hands with China Road and Bridge Corporation to form BT CRBC LRT Consortium, one of three bidders that presented a proposal to the Transportation Infrastructure Office (GIT) last month. BT CRBC LRT Consortium is running against Siemens – CCECC Consortium and Mitsubishi Heavy Industries. The three tenders received were all accepted, with the basic proposal lumpsum ranging from MOP4.5 billion to MOP6.2 billion, the less expensive from Bombardier and its Chinese partner.

High hopes

Does this mean that the Canadian trains

manufacturer is confident of winning? Not for now, but it definitely has high hopes. Vice-president Asia Pacific David Allen says Bombardier has done all that it can to present the best proposal. “We feel that our proposal is the best, but this is an evaluation process GIT goes through and they make the decision,” Allen told Macau Business. Though there are other two bidders, Allen doesn’t seem worried. “We compete with the same people the world over. We believe we worked very hard to present a very good proposal,” he said. “We have 35 years of rubber-tire people moving business, all around the world. Beijing Airport was one of our projects and the one we next plan to put in operation in China is in Guangzhou. They are all very similar rubber-tire systems from the Automated People Mover (APM) family,” he adds.

Low-noise and not small

The Government has chosen the rubber-tire option for Macau, a large project, a technology normally used in

Local footprint Bombardier has 3,000 employees across Asia, and the strategy is the same for the whole region. “Macau is one part of it and we have the same strategy everywhere we do business, which is to make sure that our footprint is local,” says company vicepresident David Allen. The Canadian manufacturer’s hunt for new projects is ongoing: “In July we are going to open a project in Korea; we are in the process of supplying extra vehicles and extra systems to Kuala Lumpur. “We have the Guangzhou LRT under construction, the APM project in Kuala Lumpur and we are in the closing process of a major project in Taiwan. “The industry knows we have submitted an express of interest for a Light Rapid Transit system in Gold Coast, Australia,” says Allen. The Bombardier vice-president left out the mainland, India and Thailand, but they are potential markets. “We are always looking for new opportunities and we’ll make a decision based on whether we think we have the right technology and the resources,” he adds.

MAY 2010

short length systems at airports. “Contrary to what many think, the rubber-tire technology is also quite adequate to an urban environment operation, as we have in many other projects around the world. Rubber tires means relatively low noise and a small footprint, and makes it easier to snake through the city, which is perfect for Macau,” says the Bombardier vice-president. Bombardier proposes to assemble the rolling stock in Zhuhai. “It’s close to Macau and we see that representing a cost improvement. If we win and the customer wants to visit the production site it’s just a car ride away. It also brings work into the region” says Allen.

Photo: John Si

“Anytime I put a plant up or work with someone who has a plant I have a concept in my head that that plant can supply elsewhere. This time is no different, the intention is to have the Zhuhai manufacturing site supplying other Bombardier projects in the region” he adds. Bombardier - the world’s largest equipment and systems manufacturer in rail transportation - is looking beyond Macau. However, even if it develops numerous projects at the same time, the commitment to each and every one of its clients doesn’t change. “I am interested in bigger places and projects. But I can’t ignore the smaller ones. Bombardier does have a history in Europe, North America and China in

some very large projects. While those big projects get all the headlines, that only occupies a portion of Bombardier Transportation,” the vice-president explains.

Interesting challenge

Phase 1 of the project is an interesting challenge, and the rubber-tire system fits easily in the city, the company say. “We have built over 60 systems around the world. According to our experience the Macau project can be built in three and a half years, so we find the 47 months being requested by GIT achievable. At this respect, the production in Zhuhai can contribute to further reduce the delivery times,” Allen says.

This process is slightly different from others because the civil work hasn’t been tendered for yet. “This case needs to be like that given the different requirements of each rolling stock type that can be selected. But it’s only a matter of planning, once selected all will be as usual and the civil contractors will be the ones driving the schedule. If they slip we are forced backwards as well,” he explains. “There will be some noise and inconvenience. But it does tend to be the civil work that disrupts, by the time we come along the guide way is up and we just run the trains,” he adds. But, as in any change, there is a period of adjustment. MAY 2010

Transport

Over budget

Officials are to luanch a probe into the accounts surrounding the budget for the long-awaited light rail system

he initial government estimates for the building of the crucial light railway transport system have gone over the original budget. The lowest price in bids

to supply the system and materials for the first phase of the project exceeds the initial budget by 30 percent. Officials from the Transport Infrastructure Bureau (GDI) say they will investi-

No timetable for lightrail

There is still no starting construction date for the Macau Light Rapid Transit System (LRT), the government says. Only after the bidding for “supply of rolling stock and systems” is completed will the Transportation Infrastructure Office (GIT) lay down a schedule. The project has suffered major delays, as it was originally expected to start in 2008. MAY 2010

gate what happened with the accounting of three companies vying for the tender. Bid discrepancies The lowest bid came in at MOP4.567 billion and was presented by the BT CRBC LRT consortium, established between the Canadian group Bombardier and the China Road and Bridge Corporation. The joint venture’s bid was only accepted after it finally presented an updated certificate of its commercial registration.

Siemens and the stateowned China Civil Engineering Construction Corp consortium made the highest bid, MOP6.281 billion. In the middle was Mitsubishi Heavy Industries, whose bid was MOP4.688 billion. The discrepancy between the figures submitted by the bidders and the initial government budget has already led the GTI to take a stand. GTI coordinator Lei Chan Tong said the process will be monitored by the

Government to improve internal checks Audit Commissioner Ho Veng On says audit trails on public projects are to be introduced as early as next year. They will track different phases of big projects instead of just after they are completed. “An audit trail aims to block loopholes in a timely manner and to avoid wasting resources and public resources when we can still remedy the problems,” Ho explained. He refused to say if the light railway project will be covered by this system.

New ferry terminal to grow

Zhen Hwa Harbour Construction has won the MOP1.58 billion contract for the expansion of the new permanent ferry terminal on Taipa. The award has been confirmed in the Official Gazette. Zhen Hwa Harbour Construction is partly owned by Sociedade de Jogos de Macau, with a 49 percent share, while state-owned China Harbour Engineering holds a majority stake. The new ferry terminal is still under construction near the airport. It is due to be completed by 2013.

Transmac posts profit

Bus operator Transmac made a profit of MOP5.76 millions in 2009. The company’s revenue was MOP274 million. Transmac said the profit hike was due to an increase in bus fares in December 2008 and lower fuel prices. It posted losses of MOP4.7 million in 2006, MOP6.3 million in 2007 and 11.98 million in 2008. This year Transmac expects an increase of 5-6 percent in passenger traffic.

Commission Against Corruption (CCAC) after news reports of an alleged case of access to privileged information. “The GTI will make every effort to coordinate the various works with the CCAC and raise the integrity awareness of both its own employees and the workers of adjudicating companies,” said a GTI statement. Lei said that the bureau hás also carried out an update of the investment and construction for the first phase of LRT from the middle of last year to the present, which took into account the global economic situation. He said bidders will have to take on the risk of future price fluctuations which will be “more than five percent”. MAY 2010

Transport

Shrunken Fleet

Air Macau seems to have breached its contract with the MSAR government leasing 5 of its 16 planes from Air China, but executives say this is part of a plan to save the company BY KAHON CHAN

roubled Air Macau’s franchise contract requires that it have a fleet of 12 planes, but the company only has 11 because five of them are loaned from its parent company, Air China. The Civil Aviation Authority (AACM), however, allows these planes to be considered as part of Air Macau’s fleet. The agreement also allows the government to negotiate the end of the concession with Air Macau, under unspecified conditions. Also, under a ‘minimum standard of service’, the airline must retain a fleet of at least 12 planes, from the year 2000 onwards, unless it gets government approval. Air Macau leases 5 of its 14 passenger planes from its largest shareholder, Air China, including the maintenance and cabin crews. The Macau carrier therefore has nine passenger aircraft to make use of, plus two cargo planes, making a total of 11 aircraft, with an average daily operation of nine hours per plane. Allegedly, before June 2009, Air China had only two Air Macau aircraft at its disposal, according to a provisional report. Air Macau’s capacity to carry passengers has been dwindling over the past two years. According to Air China’s annual reports, the Macau company was operating 13 passenger aircraft and one freighter as of June 30, 2008, a number that fell to 10 passenger planes and two cargo planes in late 2008, and dwindled even further to the current nine passenger planes and two cargo planes.

Generating revenue

Air Macau’s balance books have been in the red since 2005 and passenger traffic has dropped from 2.47 million in 2006 to 1.88 million in 2008, but the company says that their business performance has improved since mid-2009, following a reduction in the losses registered that same year. An AACM spokesperson said the MAY 2010

rental agreement is standard practice aiming to “generate revenue for Air Macau” and the use of the whole fleet will improve as a result. According to the spokesperson, the leased aircraft are “still regarded as part of the Air Macau fleet” because they are “technically under the operational control of the Air Macau Air Operator Certificate (AOC) [...], which means that these aircraft remain under the safety supervision of the AACM”. Joy Gong, marketing director for the company, admits that the lease agreement for the five airplanes is a relief measure from the major shareholder to help Air Macau out of a bad situation and to contribute to the development of Macau. “It’s good for us and we can reclaim the planes when we need them. Not only is Air China our largest shareholder, but it also supports Air Macau’s mission to help further the development of Macau,” Gong told Macau Hoje Daily , refusing however to provide any statistics on flight delays and/or cancellations, saying it would be unfair to judge the airline solely from this data, since flights are sometimes cancelled due to external factors. Neither the AACM nor the Macau International Airport were willing to provide the statistics on cancellations and delays. The only reference to these numbers recently published was an AACM document released by Viva Macau on April 2nd. The document showed that the percentage of flight cancellations by Air Macau for the last two quarters of 2008 had been 15.6 percent (Viva Macau: 4.6 percent; Air Asia: 4.7 percent) and that, in the first quarter of 2009, such numbers had declined to 9 percent (Viva Macau: 4 percent; Air Asia: zero percent).

Decisive factors

Cancellations and delays are not mentioned in the requirements outlined in the contract binding the franchise, al-

though they may be decisive factors in terms of the airline’s reputation. The remaining part of the annex to the franchise agreement establishes some conditions under which the Government may transfer the rights of Air Macau to a third party, “possibly by force”. Articles 2 and 5 of the annex make it clear that Air Macau may be required AIR MACAU’S RESULTS Since 1999 (MOP)*

+ 51 557 879.51 + 96 475 870.93 + 68 428 828.51 + 66 643 614.49 – 145 633 877.00 + 64 296 480 .35 – 31 734 201.70 – 62 310 938.76 – 109 502 650.80 – 416 350 285.36 – 200 000 000.00 Source: IO, Air Macau and TDM Radio * Data prior to 1999 is not available on the Net. ** Approximately

Airport back on track

Macau International Airport (MIA) handled a total of 1.07 million passengers in the first quarter, a year-on-year increase of 3.9 percent. In the same period, the airport dealt with 9.412 aircraft movements and handled a total of 13,330 tonnes of cargo. The figures still don’t fully reflect the impact of Viva Macau’s air operator certificate revocation, which only took place on March 28. CAM-Macau International Airport Company Limited forecasts that Macau International Airport will handle 4.35 million passengers in 2010, 55, 000 tonnes of cargo and deal with 43,500 aircraft movements.

Viva Macau files lawsuit

to transfer its concession rights to a third party through subcontracts if the government “deems” that the company is unable to meet the demands through its operation of charter flights, or is unable to operate intercontinental flights, or does not have the ability or desire to operate scheduled flights and cargo flights. Lawmaker Kwan Tsui Hang, and director general of the Macau Public Utility Companies Consumer’s Association Leong Kam Chuen, , requested the cancellation of the franchise agreement earlier this month because they consider that if more companies in Macau could enter the market in new ways, Macau could reposition itself as a centre for low cost airlines carriers.

How to terminate?

According to the fifth chapter of the contract, the franchise may be revoked in a number of ways, including “salvage”, “execution” or “termination by agreement”, before its expiration deadline in 2020.

Article 31 of the contract allows for the possibility of an outcome where the franchise is totally or partially cancelled, where the consequences can be negotiated by the government and Air Macau, but the measures defined do not favour any unilateral action by the government. The contract may be terminated if Air Macau changes the objective of the services it renders; if it fails to meet normal demand; if it is not sufficiently equipped to render its services; if it undertakes a sub-concession without government approval; or if it goes bankrupt. Notwithstanding, Air Macau can always retain the right to initiate judicial proceedings for whatever reason. The government may also “salvage” the franchise within a six month deadline, paying back the value of the company’s assets after depreciation, as well as compensation equal to the annual profit of its best recorded period (see chart) multiplied by the years remaining until the end (2020 minus the current year) of the franchise contract.

Secretary for Economy and Finance Francis Tam Pak Yuen confirmed last month that Viva Macau has started legal action against the government for compensation as a result of the authorities cancelling their Air Operator Certificate. The grounded budget airline filed a lawsuit in the Court of Second Instance. Meanwhile, Tam stressed once more that the Industrial and Commercial Development Fund will demand Viva Macau to repay the MOP200 million loan made by the government to the budget airline. According to the loan contract, Viva Macau has to pay back to government an initial installment of MOP40 million by July 1, 2010.

Portuguese carrier offloads Air Macau stake

SEAP (Serviços, Administração e Participações), a consortium led by TAP Air Portugal has sold its stake in Air Macau to Air China. The sale took place last month, the Portuguese news agency Lusa reported, quoting an unnamed source close to the deal. TAP has a 75 percent stake in SEAP, with Banco Nacional Ultramarino – part of Portuguese banking group Caixa Geral de Depósitos – holding the rest of the capital in the consortium. Lusa contacted Air Macau and TAP but both refused to comment. Macau’s civil aviation authority said it had not been informed. SEAP’s stake in Air Macau was reduced last year from 20 percent to 0.1 percent after a financial restructuring. The consortium opposed it because it was not willing to pour more money into the company without any changes in strategy, it said. MAY 2010

Painting the big picture Jackson Chang has led the Macau Trade and Investment Promotion Institute since February this year. His job is to convince investors there is more to the city than just gaming - no easy task BY PAULO A. AZEVEDO AND EMANUEL GRAÇA

Photos: John Si

MAY 2010

conomic diversification has topped Macau’s political agenda for some time now, but there have only been a few successes to celebrate. Although the new president of the Macau Trade and Investment Promotion Institute (IPIM), Jackson Chang admits gaming will still rule in the near future, he tells Macau Business he hopes to turn the tables. The MICE industry is one of the keys with which Chang hopes to unlock the diversification door. But the sector still relies heavily on government subsidies - around

Trade & Investment half of the MICE events held in Macau have some kind of official support - according to Chief Executive Chui Sai On. “In the beginning [of any industry], the government needs to give it a lot of support”, admits Chang, explaining “it takes time” to achieve a maturation point. Less clear is the strategy to promote economic diversification through cultural and creative industries. IPIM’s president notes Chui’s team is pushing towards this goal, but doesn’t go into details on how that can be achieved.

Let’s talk about business

For now, one of the IPIM president’s priorities for promoting investment in Macau, is to get closer to the local business community. “There are a lot of business associations that seem to not know much about IPIM,” he admits. That is why Chang wants to boost promotion about the services the institute offers, especially among local Small and Medium Enterprises (SMEs). “In the future, we will try to provide a tailor-made service to SMEs,” he adds. “What the local companies really want is business opportunities,” Chang explains. Business matching is therefore an area in which IPIM will focus more attention. Local SMEs are not just relying on IPIM. Some companies are already eyeing the development of Hengqin Island - about one third of the more than 100 project proposals received by Zhuhai officials until February came from Macau. IPIM’s president applauds the move, but suggests local SMEs should partner among themselves or with mainland companies. Size matters for Zhuhai officials and most of Macau’s projects are small, including restaurants, although there are also proposals for factories, namely from the pharmaceutical industry, according to Chang.

Taiwan dreams

IPIM’s attention will continue to be focused on Macau’s traditional partners – Portuguese speaking countries, Europe and the United States – but Asian markets, namely Taiwan are now on the new president’s map. “Starting last year, we began to have more contact with Taiwan,” says Chang. In November 2009, a cooperation agreement was signed between IPIM and Taiwan External Trade Development

Residency on hold There is still no news regarding a potential resumption of the residency scheme for property purchases, the president of Macau Trade and Investment Promotion Institute (IPIM), Jackson Chang tells Macau Business. The government will study the issue, Chang says, stressing that a potential resumption is mainly a political decision. Earlier this year, Chief Executive Fernando Chui Sai On considered the residency scheme for property purchases “outdated.” This policy, launched in the late 1990’s, allowed more than 50,000 property investors to obtain a Macau ID. Chui added that the government is to study an overall makeover on the population and immigration policies in order to attract major investment projects and talent lacking locally. The residency scheme for property purchases has been suspended since April 2007. There were over 4,000 applications lodged before the closing date of the policy, which are still being processed. Although the temporary residency applications for fixed property are suspended, business investors still have a right to a Macau ID card, as do qualified professionals from outside Macau. In 2009, a total of 549 applications for temporary residency for managerial personnel, technical and professional qualification holders were approved. IPIM also received 31 applications related to major investments, an increase of 11 compared to 2008, and approved a total of 17. MAY 2010

Trade & Investment

Council (TAITRA) and, in March this year, the institute organised a local business delegation to attend the 11th Taipei International Chain & Franchise Exhibition – Spring Show. Taiwan will also have a pavilion of its own in the next Macau International Trade and Investment Fair – from September 21-

24, 2010 - for the third time since 2008. The mainland is also on IPIM’s radar. According to Chang, a framework agreement on Macau-Guangdong cooperation is due to be inked very soon between both governments, similar to the one signed last month between Hong Kong and Guangdong.

For now, Chang’s calendar is full. This year alone, IPIM has more than 50 activities listed in its schedule, from investment and trade fairs to promotion activities abroad. However, only time will tell if the diversification goal will be fulfilled by the institute’s new president.

Top five questions Jackson Chang certainly knows his way around the Macau Trade and Investment Promotion Institute (IPIM). He has been a member of the IPIM’s executive board since 2004 and was appointed president in February, replacing Lee Peng Hong, who was surprisingly sacked earlier this year. Chang has worked at IPIM since 1994. With a degree in Economics and a Master’s in Business Administration, both obtained in Canada, he entered the public administration in 1989, starting at the Economics Service Bureau (DSE), where he eventually became the substitute head of sector for Business Information of Export Promotion, before heading to IPIM. MAY 2010

Such a background makes it clear for him what the top five concerns of foreign investors are when eyeing Macau: knowing the cost of investing in the territory compared with surrounding regions; understanding the local tax system; having an overview of the educational system; knowing the main labour issues; and getting an update on the communications system, he says. For Chang, successful foreign entrepreneurs must also be able to understand that Macau’s attractiveness goes beyond its local market. The territory is visited annually by more than 20 million people and can act as a gateway to other regions, he stresses.

MAY 2010

Audit

The Eternal struggle The latest figures reveal that casinos and banks make up 99 percent of money laundering reports

ince 2007 there have been more than 2,700 reports of suspected money laundering – or suspected terrorist financing - made to the Macau authorities. Of that figure, 58 percent came from casinos and 41 percent from banks. The Macau Monetary and Foreign Exchange Authority (AMCM) administrator, António Félix Pontes, says since the enactment of the legislation against money laundering and terrorism financing in 2006, the number of complaints regarding suspicions of those crimes has increased from 725 in 2007 to 838 in 2008 and 1156 in 2009.

and insurers has been useful. On par with the casinos, from which 1,585 reports have come since 2007 to the Macau Financial Intelligence Office, the banking sector (receiving 1,101 complaints), real estate sector, pawnshops and land allocations are identified as being at higher risk of money laundering, the AMCM administrator said. Pontes believes the legislation is adequate, but there is still much to do, particularly regarding the qualification of professionals for the prevention and detection of crimes of money laundering and terrorism financing.

Greater awareness

He advocates, for instance, the compulsory declaration at the border of any pocket money carried by those who are entering Macau, along with more supervision. To more effectively combat money laundering, the Macau Institute of Financial Services, chaired by Pontes, signed a cooperation protocol with the Association of Certified Antimoney Laundering Specialists (ACAMS, the English abbreviation) for the international certification and training of local professionals from banks, insurance companies, casinos and others. ACAMS has approximately 10,000 members in 160 countries, who receive monthly training on the risks and methods of money laundering and financing of terrorism, and international standards and investigation processes.

He says this is due to a greater awareness of the dangers relating to money laundering and greater surveillance by the authorities, adding that the new rules have made customer identification mandatory. Also, the reporting of suspicious transactions by other economic professional sectors such as gaming, besides banks

Border declarations

Commitment

“This agreement is a sign of commitment by the Macau government in combating money laundering, and aims to raise the level of technical expertise of professionals in the financial sector in line with international standards”, the regional head and director of ACAMS for the Asia Pacific, Hue Dang says. The association has similar partnerships with academic institutions and associations in the financial industry from mainland China, South Korea, Singapore and Taiwan. MAY 2010

Hands off Macau’s monetary authority is happy with the way banks are dealing with mortgages BY KAHON CHAN

anks are aware of the risks they face when they trade in real estate mortgages, according to the Monetary Authority of Macao (AMCM). The AMCM believes the market is healthy and intervention on speculation is not necessary, and an international association has been working in partnership with a local institute to certify specialists in fighting money laundering. In 2009, property prices in Hong Kong rose 27.7 percent, earning the territory the top spot in The Economist magazine’s list of developed countries and cities, and increasing pressure on the government there to take action. The mainland has revealed that it will impose new restrictions on bank

mortgages to curb speculation, but nothing has been done in Macau. The chairman of the board of directors of ACMC, Teng Lin Seng, said recently that banks in Macau were “traditionally cautious” and perfectly capable of deciding how to lend money. He stressed that the mortgage market is in good

health, while adding it would not be convenient if measures were taken to cool down the real estate market. Up to February 28, the ratio of deposited loans in local banks was 47.5 percent for residents’ businesses, and 70.2 percent for non-residents’, both having witnessed increases of 2 and 3.1 percent, respectively.

The AMCM recently released the numbers on mortgages up until December 31, 2009. Unstable mortgage rates amounted to MOP44.2 billion, 9.5 percent more than the numbers for September of that same year, and 28.7 percent more than the previous year. Also, 13.8 percent of mortgages were taken by non-residents.

MAY 2010

Economic Trends by JosĂŠ I. Duarte

Demography 1

TABLE 1 - Population growth

Demography is probably â&#x20AC;&#x201C; and one might say, regretfully - the most frequently ignored of the social sciences. Among the reasons for that is possibly the fact that many demographic changes only make their effects felt in the long or very long term, which makes them poor competitors for the attention of decision makers dealing, more often than not, with matters and events that are perceived as urgent. Let us, nonetheless, take stock of some of the major demographic variables for Macau and check briefly what they can tell us about this economy and its future. First, let us review the overall population growth.

(103)

550 500 450 400 350 300 250

TABLE 1

200 1970 1972 1974 1976 1978 1980 1982 1984 1989 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

TABLE 2 - Female-Male ratio

110

As Table 1 shows, during the 70s the population declined slightly, but started to pick up again by the end of that decade. In the next 20 years it went steadily up by some 200,000 persons, and in the recent casino boom it gained an additional 100,000. This is certainly a significant change, which has mostly been fed my migrant inflows. As we will see in another table, natural growth has been comparatively modest. These patterns suggest that the social make-up of Macau has changed significantly. That change is also reflected in a socially very important aspect - the sex balance. TABLE 2

100

90 1970 1972 1974 1976 1978 1980 1982 1984 1989 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

TABLE 3 - Age structure <15

15-24

25-34

35-44

45 - 54

55 - 64

> 64

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

MAY 2010

Table 2 shows that for most of the period the female-to-male ratio has been climbing to more usual levels, correcting the very abnormal unbalance displayed throughout the 70s. It should be noted that such a trend was severely reverted during the early years of the new casino era, but appears to have picked up again. TABLE 3

Table 3 unmistakably shows that the population is aging at a relatively quick pace (available age composition data shown starts in 1990). The structure was relatively stable in the first half of the period, but since then the share of the younger generation has been contracting and the cumulative share of those classes including people over 45 years has been increasing sharply.

43 Demography 2

TABLE 1 - Natural growth Births/Pop

(%)

Deaths/Pop

Nat Growth

3 2.5

The previous tables suggest that demographic changes are not favorable to long-term growth. In particular, the effects in the labour market will be significant. TABLE 1

2 1.5 1 0.5 0 1970 1972 1974 1976 1978 1980 1982 1984 1989 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Table 1 shows that natural growth has been very modest for the last decade and has been declining since the mid80s. That means that we are reaching the point where the effects of the 80s ‘baby boom’ in the labour market will stop being felt. The number of people reaching working age will decline noticeably and the ratio between those leaving and entering the labour market will deteriorate significantly. That is, unless population inflows compensate for this trend, the demographic dynamics will start to put serious strains on economic activities and will be an obstacle to sustained growth. TABLE 2

A positive note on the social impact of the local demographic trends, is however highlighted in Table 2. Contrary to what is the case in other Chinese regions, the sex ratio at birth does not show a marked distortion and is well within the usual levels found when no discrimination bias is present. Unless caused by unbalanced immigration flows – and the migration patterns of the middle of the current decade may cause some concern – the region may be spared the social strains that are expected in other regions as a result of serious sex imbalances.

TABLE 2 - Male-Female ratio at birth

120 115 110 105 100

TABLE 3

95 90 1970 1972 1974 1976 1978 1980 1982 1984 1989 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

TABLE 3 - Marriage and divorce patterns Marriage

Divorce

600 500 400 300 200

In Table 3 we look to another indicator that suggests significant changes in values and social behaviour, reflected in marriage and divorce patterns. (We take 1990 as the reference point in this series, as again, the early 70’s have a distinct ‘out-lier’ character and, if taken as a base, might distort the analysis. The variable shown in Table 3 is a growth index). After the marriage spikes of the mid-80s and early 90s, marriage levels have mostly leveled out. Note however, that the recent boom appears to have encouraged a new spike of marriages. On its side, the number of divorces has increased steadily since 1990, with their relative frequency increasing five-fold in 20 years. It is too early however to assess how the combination of these trends will impact on fertility rates and average size of families, and ultimately, on the labour market in the longer term.

100 0 1970 1972 1974 1976 1978 1980 1982 1984 1989 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

MAY 2010

Economic Trends by José I. Duarte

Output and expenditure

2008 (in MOP)

GDP current Consumption Investment

Economic Activity

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

Money and prices

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

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

million million million million million million

2008

24,727 189,785

January (in MOP)

million

million (2008)

Median wage rate

549,200 337,000 8,000 3.0 %

Unemployment

Construction

(2008) (2008) MOP (2008) (2008)

2007

228,874 1,406,242 Cement (Apparent consumption) 276,710 Transactions/Commercial 2,976 Transaction/Residential 21,517 Started

Major sectors

Finished

Gaming

Gross revenue (in MOP) Casinos Tables Machines

Tourism

m2 m2 tons million million

2007

120,383 33 4,770 14,363

million (2008) (2008) (2008)

2007

Visitors Average expenditure Average stay Hotel rooms Occupation rate Average Hotel stay

9.4 (2008) 2.3 (2008)

92,802 million (2008) 27.4 (2008) 185,385 million (2008) 2.1 (2008) 1.16 101.40 base - 2008 -0.50 % (2008) 2008

Labour force

- 2.4 5.7 - 39.0 12.6 - 5.1 9.1 - 2.4 % var

million (2008)

Population/Labour force Population

% var

2.1 (2008) 4.2 (2008) 2.5 (2008) - 0.1 (2008) % var

- 57.1 40.7 - 56.9 - 1.9 - 27.7

% var

9.6 2 (2008) 18.7 (2008) 21.1 (2008) % var

Latest (in MOP)

48,918 10,796 8,230 4,870 - 11,509 36,531 48,918

million million million million million million million

Latest

32,944 215,435

% var

19.4 6.9 - 34.8 12.7 5.5 4.7 19.4 % var

million million

21.9 10.9

102,900 million 210,412 million 103.27 base - 2005 0.50 %

13.2 11.3 2.57 --

Latest

% var

542,200 322,200 9,000

MOP

2.9 %

Latest

8,477 28,826 6,566 343 1,995

m2 m2 tons million million

Latest

13,535 33 4,811 14,503

- 1.3 - 4.5 4.6 - 0.2

% var

77.0 66.7 - 59.5 -436.0 % var

million

Latest

21,753,000 - 5.1 2,058,000 1,729 MOP (2008) 5.6 (2008) 1,807 MOP 1.10 days (2007) -1.10 days 17,490 (2008) 8.3 (2008) 19,086 71.60 % (2008) - 2.90 (2008) 78.3 % 1.44 nights (2008) 0.10 (2008) 1.48 nights

69.4 0 0.9 1.0

% var

42.4 1.0 -8.9 1.8 0.1

Notes Q4 Q4 Q4 Q4 Q4 Q4 Q4

Notes January January January January February Mar, var

Notes Q4 Q4 Q4 Jan, var

Notes February January February February February

Notes

February Q1, var, ytd Q4, ytd Q4, ytd

Notes February Q4 Q4 January Q4 Jan, 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) MAY 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)

BUSINESS&INDUSTRY

Full steam ahead It has been smooth sailing for the Macau economy since the handover in 1999, with the locomotive of gaming growth allowing the city to escape the worst of the international financial crisis. Now, the SAR’s strong economic fundamentals look to have Macau’s financial and banking sectors heading for yet more healthy results. So, what’s the secret? MAY 2010

NUMBERS

The number of banks operating in Macau - 12 of which are locally incorporated. In addition there is also a finance company - with restricted banking activities - ICBC (Macau) Capital Limited - and a nonbank credit institution - Macau Pass.

359,241

The total number of credit cards in circulation in Macau at the end of 2009. In 2008, Macau had a total of 503 automatic teller machines (ATMs), a 34 percent year-on-year increase.

293.2 BILLION

The total deposits, in patacas, within the banking sector as of February 2010, of which resident deposits make up more than two thirds – amounting to MOP204.8 billion.

99 PERCENT

The percentage of the 960 affected local investors who have come to an agreement with the Macau distributor institutions of Lehman minibonds, following a proposed repurchase arrangement.

5,475

The total number of employees working in the financial and banking sectors as of September 2009. Their average monthly earnings were MOP17,470, with bank tellers earning an average of MOP10,270. MAY 2010

HOT ISSUES

More rules on the way T

he Monetary Authority of Macau (AMCM) is preparing a set of guidelines on the sale and offer of financial products. These will be implemented as early as this year and will target the mis-selling of financial products, following the Lehman Brothers’ minibond scandal. For now, the details are not known, but a draft supervisory guideline has been rolled out for consultation with practitioners. Meanwhile, temporary measures adopted by the government to provide full cover for all deposits will expire at the end of this year. As a result of the financial crisis, in October 2008 the Macau government announced it would provide unlimited bank guarantees on deposits in banks until the end of 2010. According to AMCM’s president, Anselmo Teng, consultations are already underway for the creation of a deposit protection scheme. The purpose is to provide protection and pay compensation to depositors if a bank is unable to repay its customers’ deposits. Teng added that the authority is working closely with the Macau Banking Association to draft the new rules, which are to be ready before the end of 2010. The changes AMCM is preparing have drawn on lessons the local financial industry learned from the 2008 international financial crisis.

This is not only a local issue. A long list of reforms are on the international agenda. These include: strengthening financial institutions by requiring them to hold more capital and liquidity; changing compensation practices to discourage excessive risk taking by bankers; and reforming regulatory structures to ensure more effective supervision, especially of large and complex firms that have systemic implications. Despite the fact that the Macau financial sector was not directly and seriously impacted by the crisis, the AMCM wants local banks to remain vigilant, adopting suitable risk management processes and implementing effective internal control measures. So it is expected that in the next five to 10 years, new rules adopted either internationally or solely in Hong Kong, will also be adopted in Macau. These are likely to mean extra costs for financial institutions, potentially impacting on their profit margins.

DOS AND DON’TS BE DYNAMIC: The banking industry has been around for hundreds of years and just about everyone who needs its services already has them. This means banks must go the extra mile to lure new clients. RETAIN YOUR STAFF: Macau has a small pool of qualified workers, and talented individuals are easily lured to bigger banks, investment firms, etc. EXPECT THE UNEXPECTED: A growing trend is for unconventional companies to offer financial services. For instance, insurance companies or even apparently unconnected companies like Sony and Microsoft now offer preferred financing to customers. BE OPEN TO PARTNERSHIPS: Macau has a huge number of banking companies and in the long run more consolidation is likely. Larger banks may prefer to take over or merge with smaller operations rather than spend money on marketing and advertising to people.

Last year saw the start of RMB settlements for cross-border trade, authorising banks in Macau via the clearing bank in Macau for RMB business and/or their correspondent banks on the mainland - to handle the settlement of cross-border trade transactions denominated in RMB between Macau companies and the pilot enterprises on the mainland. The scope of RMB business for individuals has also been enlarged taking RMB business in Macau to a new level.

The local banking sector has been heavily involved in granting syndicated loans to gaming concessionaires to build up their resorts in Macau. Just last month, it was announced that several local banks were taking part in the syndicate that granted Galaxy Entertainment Group a six year HK$8.8 billion club loan to finish its Galaxy Macau resort in Cotai. However, the number of such new syndicated loans is likely to fall in the near future, after the government announced it won’t approve any new casino projects.

All the predictions for Macau’s economy in the near future are sunny. Recently, the Secretary for Economy and Finance, Francis Tam, said that the government is expecting positive economic growth in 2010. Alongside an expansion in gaming revenues in 2010, the Monetary Authority also projects a growth in investment and in the property market. Meanwhile, the unemployment rate should continue at low levels, around 3 percent or below. This is all good news for the local banking and financial sectors.

E-trading and online customer services are becoming key differentiators in personal banking. However, some local banks are not up to speed in this area. The services they provide online cannot be compared to the industry’s benchmark. It is likely that banks which provide better, more diverse and user friendly online services will continue to expand. Those that do not keep up with the times will find themselves having difficulty to attract and retain clients, especially among tech-savvy young adults.

HOW THEY DO IT

Keeping the customer The expression “everyone enjoys a gift” could have been made for Macau, with bank clients rushing to cash in all the “goodies” they can get from financial institutions. Such market conditions oblige Macau banks to devise strategies that specially reward – and thereby retain - their best clients. There are many strategies to ensure customer loyalty, and research shows almost all of them include the offer of tangible benefits. The big issue for financial institutions is how to assess the value of a customer. The volume of business is one factor, but there are others

like the revenue provided. Another question is how to use rewards in order to influence customer behaviour positively and profitably, for instance by providing incentives for customers to make more transactions through Internet banking, something that involves lower costs for the bank than traditional transactions. Strategic rewarding can bring several advantages. It pushes forward profitable products, encourages repeat purchases and seasonal sales, accentuates high business volumes and increases customer tenure/loyalty. The challenge is doing it the right way. MAY 2010

NEED TO KNOW

THE LAW The primary legislation regulating Macau’s financial industry, the Financial System Act, was promulgated in 1993, and focuses on measures to strengthen risk management. In accordance with the Financial System Act, the Chief Executive may, on an individual basis, approve the registration of credit institutions in Macau, the establishment of branches of overseas credit institutions, the setting-up of branches or representative offices outside Macau by locally registered credit institutions, and the establishment of financial intermediaries and other financial institutions in the territory, after considering the advice of the Monetary Authority. In addition, under the Offshore Service Law, the Chief Executive, may, on the advice of the Monetary Authority, grant permission for the establishment of offshore financial institutions.

PENSION FUNDS Since the “Legal Framework of Private Pension Funds” was fully enforced in 2003, life insurance companies have actively expanded their pension fund management business. There are currently seven life insurance companies and one pension fund management company carrying on private pension fund management business, while 36 pension funds have been established under the applicable regulations, comprising five closed funds and 31 open funds. As of the end of 2009, total assets under pension fund management amounted to MOP5.16 billion, an increase of 23 percent, which would benefit 74,600 employees. The entities that have established pension fund schemes under the applicable regulations are mainly large organisations, such as public utilities, gaming companies, financial institutions, schools and hotels. The participation of small and medium enterprises and self-employed persons is comparatively low.

THE BIG PICTURE The financial and banking sectors in Macau underwent rapid development towards the end of the 1980s. At present, financial institutions consist of banks, insurance companies, finance companies, financial intermediaries, bureaux de change, cash remittance companies, non-banking credit agencies and the representative offices of overseas financial institutions. The banking industry accounts for the lion’s share. With the exception of three off-shore banks, all the banks in Macau are retail banks with full banking licenses. Among them is the Postal Savings Bank, which opened in 1917. Currently, its primary target customers are civil servants; it is also responsible for the management of the Fund of Allowances of Housing Loans for the government.

THE WATCHDOG

NO CRISIS

The Monetary Authority of Macau (AMCM) was established in 1989 with the function of a quasi-central bank. It supervises monetary, financial and insurance operations in Macau. It also advises the government on policies in those areas. The AMCM is also prepared for streamlining the legal framework as well as adopting international best practices in the areas under its jurisdiction. It is also responsible for monitoring the external solvency of the local currency, the pataca (MOP), and ensuring the currency’s full convertibility.

Growth has been sustained in the banking system, which has shown great stability over the years. As of the end of last year, aggregate assets of the 27 banks operating in Macau amounted to MOP426.9 billion which was a record, or a growth of 18.7 percent. The Capital Adequacy Ratio (CAR) was kept at a high level of 15.6 percent, which was well above the minimum 8.0 percent stipulated by the Basel Committee on Banking Supervision. The non-performing loan ratio was 0.61 percent, which suggests continued good asset quality.

MAY 2010

THE INSURANCE INDUSTRY

EXPERT VIEW

The local insurance industry is made up of 23 insurance companies, 11 of which are life companies and the remaining 12 are involved in non-life business. Eight are local companies and the remaining 15 are branches of overseas companies. In 2009, the intermediary sector was made up of 2,997 insurance intermediaries, comprising 2,178 individual agents, 52 local corporate agents, 12 overseas corporate agents, 732 salesmen, 14 overseas brokers and 9 local brokers. Although it experienced some volatility brought about by the financial crisis, the local insurance market as a whole has preserved its stability and vitality. Premium receipts for all sorts of insurance have remained stable, but claims have not shown any abnormalities. Profit has gradually returned to pre-eruption level. Total premiums for 2009 amounted to MOP3.26 billion, of which MOP0.93 billion belonged to non-life, while life premiums amounted to MOP2.33 billion, gradually approaching the record of the previous year.

Reaping a profit

THE PATACA The pataca has been the legal tender of Macau for more than a century. As early as 1905, the former Portuguese administration authorised the Banco Nacional Ultramarino (BNU) to issue pataca notes. In October 1995, the Bank of China (BOC) became the second agent bank for note issuing. Although more than one bank is now authorised to issue notes in Macau, overall power to issue currency is still retained by the government. Under the currency board system, all the patacas issued must be 100-percent-backed by foreign exchange reserves. This enables the Monetary Authority to ensure the full convertibility of the pataca into its reserve currency – the Hong Kong dollar – thus establishing the linked exchange rate relationship between the pataca and the Hong Kong dollar. As the Hong Kong dollar is pegged to the US dollar, the pataca is indirectly pegged to the US dollar at an exchange rate of one US dollar to about eight patacas.

o understand how the Macau banking system works, it is important to identify the main determinants of bank profitability in the territory. However, few studies have been performed on this topic. The work of Anna Vong and Hoi Si Chan, both from the Faculty of Business Administration at the University of Macau, published in the July 2009 issue of the “Macau Monetary Research Bulletin”, is by far the best in this area. It includes data from 1993 until 2007. “In the first place, individual bank characteristics are able to explain a substantial part of bank profitability in Macau,” the researchers say. “Banks with more equity capital are perceived to have more safety and such an advantage can be translated into higher profitability,” Vong and Hoi explain. Their study also revealed that a higher loanto-total assets ratio may not necessarily lead to bigger profits. This is due to the competitive credit market condition and successive cuts in interest rates – so the interest spread, i.e. the important determinant of profitability, becomes narrower. A lower spread together with a higher loanloss provision can lead to lower profitability. Therefore, instead of loan size, it is the spread and the quality of the loan that matter in order to boost bank profitability. One interesting result of this study is that smaller banks, on average, achieve a higher return on assets than larger ones. In terms of macro-economic indicators, only the inflation rate plays an important role in explaining the banks’ return on assets. “The positive relationship between inflation and bank performance suggests that a bank’s income increases more with inflation than its costs,” the researchers write. This means banks in Macau tend to be more profitable in an inflationary environment. As for other macro-economic indicators like economic growth, real interest rates, sector size and market power, Vong and Hoi conclude that these all show no impact on bank profitability. MAY 2010

5050

INTERVIEW

Still expanding PERSONAL, OR RETAIL BANKING, STILL HAS ROOM TO GROW IN MACAU, SAYS CYNTHIA VU, SENIOR PERSONAL FINANCIAL SERVICES MANAGER AT THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED. LOCAL CLIENTS ARE STARTING TO DEMAND NEW PRODUCTS WITH MORE OPTIONS AND WANTING TO KNOW MORE ABOUT THEM – A LESSON LEARNED FROM THE INTERNATIONAL FINANCIAL CRISIS

ow has personal banking developed in Macau since the liberalisation of gaming, in 2002? Several opportunities were created because lots of expats came to Macau to work. They had to stay here for long periods and, simple as that, they needed bank accounts for their salaries and to handle their earnings, they needed to send money back home... In addition, there was an increase in transactions in the property market, with prices going up, since more people were looking for a place to live. From the banks’ point of view, this meant more mortgages. Also, because of the overall income growth of the local people with the new job opportunities created by the liberalisation of gaming, banks needed to look for more wealth management products to offer to clients. Then came the international financial crisis, which didn’t seem to impact the personal banking sector in Macau, right? The impact was not that big. The situation was not like in Hong Kong or in other

places, because the local market was a bit simpler and smaller, with not too complicated investment products. Meanwhile, although this year the outlook is still a bit volatile, it has been a good stage to get ahead and prepare for the years to come. How is competition between banks in the personal financial services area? The market is very aggressive. Competition is still quite keen because Macau is a small place and there are several banks operating here. Do you expect demand for personal financial services in Macau to continue to expand? As long as the economic outlook remains positive and while visitors still continue to flock to the territory, we believe the personal income of individuals will also go up, making the personal financial services area attractive. Besides that, there will be more public investment in infrastructure like the Hong Kong – Macau – Zhuhai Bridge, which is also positive. In the future, more wealth

management products are due to be introduced into the local market because people are earning more and need a broader product offer to help them to manage their financial resources better. Also, the latest developments regarding RMB business, allowing the territory to enlarge its offer in this area, will build a support for more product introduction.

“Competition is still quite keen because Macau is a small place and there are several banks operating here”

Shopping around M

acau’s customers are not faithful to only one bank. Cynthia Vu, senior personal financial services manager at the city’s Hongkong and Shanghai Banking Corporation Limited (HSBC) says, “Generally speaking, Macau people still tend to use several banks and not be restricted to only one or two. “They will shop around and look for what they consider to be the best products,” she notes. She also believes that Chinese customers are not any different from expatriates in Macau: “It all depends on the customer’s previous experience in terms of investment when it comes to personal banking.” One thing is for sure: locals are still not that used MAY 2010

to more complex personal financial products like those available in Hong Kong. But Vu expects this to change in the short term, with a higher acceptance of innovative services. This, she stresses, doesn’t mean more problems in understanding how the new products work, because she says, “actually, after the international financial crisis, we should make things simpler and not the other way around”. However, clients are asking for more personalised offerings. “They are already more receptive to products that provide them more options to choose from,” observes Vu. Finally, “because of what happened during the international financial crisis, customers also want to know more about the products,” she concludes.

5151

FEATURE

Elite clients U

So the RMB business may constitute an important share of revenue in future? I think so. China is very supportive of Macau and Hong Kong promoting new RMB business areas. This will be very positive in the future. What are HSBC’s most successful products in Macau? We are doing quite well in the wealth management sector. We have very strong support from our company, with regular investment updates for our customers, so that they can review their portfolio in order to better invest their money. We also have a dedicated sales force to do our financial planning

services for our customers, which is a very elite-based approach, instead of a product-push one. That is our edge and can help customers to better manage their financial situation during their life cycle, and to find the products or services that better suit them. What are your expectations for 2010 in regards to personal banking? In Macau, people will still mainly look for wealth management products with high returns rather than deposits, because interest rates are still low. Mortgages may also be an active sector this year.

nlike personal or retail banking which targets mass market customers, private banking aims to cater for high networth clients. Generally speaking, private banking targets people with total financial assets of more than US$1 million. This means providing personalised banking services, including deposits, lines of credit, securities brokerage, and management of stocks, bonds, real estate, mutual funds, and other assets. Just before the international financial crisis, private banking was one of the fastest growth sectors in the global banking industry, with private banks seeing their assets under management more than doubling in just one year, as the rich got richer. China has shown the fastest growth in this area, well ahead of Russia and India, which are second and third, respectively. In Macau, the casino boom enlarged the number of people looking for private banking. However, it took time for such services to become common in the territory, although some foreign banks located in Hong Kong were already providing them to Macau-based clients. A big change happened on March 2008. A year after it became the first mainland bank to launch private banking operations, the Bank of China officially launched its private banking business in Macau. Private banking services offered by local banks are however, not limited to the local population. There is demand among mainlanders who want to bypass the regulations and restrictions of the mainland financial markets and the limited investment products available there. For the future, getting exclusive and innovative products seems to be the key to success in private banking. According to a survey by Barclays Capital published last month, standing out from the crowd and adapting to a changing regulatory environment are viewed by Asian wealth managers as the most pressing challenges for private banking today. MAY 2010

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OPINION

Xiaoqing (Maggie) Fu ASSOCIATE PROFESSOR IN FINANCE AND PROGRAM COORDINATOR FOR THE BBA IN THE FACULTY OF BUSINESS ADMINISTRATION AT THE UNIVERSITY OF MACAU

A sound business Banking in Macau has been built on strong fundamentals to protect itself against the undoubted external risks inherent in the international marketplace

Macau’s second key industry, the banking sector has contributed more than 7.5 percent of the city’s GDP over the past three years. According to the 2010 Report on the Index of Economic Freedom released by the United States-based Heritage Foundation, Macau’s banking sector is “modern, competitive and free from state influence”. Although the global economic environment is still uncertain and markets are volatile, Macau remains sound and stable with raised profitability, improved asset quality, ample liquidity and adequate capital. Good balance sheet In December 2009, there were 27 banks in Macau, 12 local and 15 branches of overseas banks. Taken together, their balance sheets and loan books grew by 18.75 percent and 23.91 percent respectively compared with the previous year. The loan portfolio breakdown shows that external loans, which account for 46 percent of the total loan books, rose by 45 percent in 2009. More than half the external loans were taken by Hong Kong and the mainland. Domestic loans, accounting for 54 percent of total loans, rose by 10 percent. Total bank deposits increased by 11.56 percent compared with 2.53 perecent in 2008. Non-resident deposits accounted for 27 percent only over the last three years, and the loan-to-deposit ratio was 60.8 percent in 2009, an increase of 5 percent. In profit Turning to the profitability of the banking sector in Macau, operating results increased by 8.26 percent, compared with the 16.78 percent decrease recorded in 2008. In terms of asset quality, the non-performing loan ratio dropped from 1.12 percent to 0.62 percent between 2008 and 2009. Meanwhile, the capital adequacy ratio rose from 15.01 percent to 15.58 percent, well above the minimum 8 percent recommended by the Bank for International Settlements. The outstanding performance of Macau’s banking industry in 2009 might be attributable to the following factors. First, the dominant size of resident deposits provided a solid foundation for sources of funds. This made the banks in Macau less vulnerable to international capital flights. Second, the majority of external loans were placed in areas not highly adversely influenced by the financial crisis. Third, the relatively high loan-to-deposit ratio indicates that banks were heavily engaged in traditional commercial banking business. And such activities were coupled with limited exposure to the external derivative markets, and hence made the local banking industry look sound and stable. Fourth, the scope of service was broadened so that the banks were able to upgrade themselves by servicing the regional economy. RMB revolution Meanwhile, last year saw the start of the business of RMB settlement for cross-border trade. The scope of RMB business for individuals has also been permitted to grow. These arrangements have led to a substantial increase in RMB MAY 2010

business in Macau while the Macau pataca has obtained wider circulation in Mainland China. Another factor is that many banks in Macau have stepped up efforts to control and manage financial risks. They have established early warning systems and the financial risks are managed by the credit management committees as well as the asset and liabilities management committees. Finally, the regulatory authority in Macau – the Monetary Authority of Macau (AMCM) – implemented timely and appropriate measures to shake off the crisis at an early stage. For example, the full deposit protection measure was launched by the AMCM after the outbreak of the financial crisis in order to maintain the confidence of consumers in the banking industry. In addition, various guidelines on business continuity have been issued by the AMCM to ensure that banks are able to maintain their stability. Not immune However, Macau is a small but open economy and therefore the banking industry is not completely immune to the volatilities of external economies. The average return on assets (ROA) and return on equity (ROE) dropped slightly to 0.85 percent and 18.97 percent from 0.93 percent and 19.30 percent in 2008, respectively, reflecting the challenges facing the banks. Specifically, the temporary measure to provide full cover for all deposits will expire at the end of 2010. An appropriate solution is needed to maintain the public confidence as there are still many factors of uncertainty in the global economy. Overall, in 2009, the banking industry in Macau seized the opportunity upon the gradual recovery of the global economy to broaden the scope of services, upgrade quality of service and facilitate business performance. Meanwhile, banks in Macau actively devoted resources to carve out nonperforming loans, enhance risk management and cost control, and improve overall operational efficiency. As a result, the general business situation of the banking industry has improved against a background of financial turmoil.

MAY 2010

Labour

No-one happy

The new regime for imported labour aims to protect the rights of local workers, however, it increases costs for employers BY EMANUEL GRAĂ&#x2021;A

MAY 2010

Labour Day trouble

This year’s Labour Day demonstration left 41 people injured, among them two journalists and 32 police officers. Confrontations between the demonstrators and the authorities started when the marchers tried to break through police barricades while trying to gain access to Almeida Ribeiro Avenue, one of the city’s main arteries. Conflicts began when the demonstrators tried to ram previously positioned police barriers and the authorities fought back with tear gas. As clashes escalated, the police then resorted to pepper spray and water cannons in a bid to disperse the protesters who then reacted with bottles, stones and flag poles. According to media reports, the demonstrators – estimated at between 1,000 and 1,500 - started their march in the beginning of the afternoon and they were led by local worker’s associations. The activists’ main demands were more social housing, better job protection for local residents, a more effective fight against corruption and a tougher stance on illegal workers.

struction industry will be set at a minimum of 1:1. Last month, the Labour Affairs Bureau (DSAL) carried out spot checks on construction sites to monitor the proportions – in several places the number of imported workers was higher than the proposed ratio.

Photo: Carmo Correia | Lusa

Hard to understand

acau’s new regime for the hiring of non-resident labour came into effect on April 26. While it is looked on with distrust by bosses and workers, migrant workers are still trying to understand what is at stake. For Chief Executive Fernando Chui Sai On, the new regime – comprised of the Imported Labour Law and several administrative regulations – mainly acts as a protection for local workers’ employment rights.

But it is still a work in progress. The government is currently drafting by-laws to further regulate the ratios between local and imported workers, and the withdrawal of imported labour. Related regulations will soon be passed to the Executive Council for discussions and approval, according to Chui. However, the Secretary for Economy and Finance, Francis Tam Pak Yuen, has already announced that the ratio of local to imported workers in the con-

One of the problems with the new imported labour regime is that it is not crystal clear. For instance, the ratios to be implemented between the number of local and imported workers won’t be fixed and can vary within the same industry. According to the coordinator of the executive committee of the Standing Committee for the Coordination of Social Affairs, Shuen Ka Hung, each industry will be given a general proportion of imported to local workers. However, those figures may vary according to the “actual conditions” of different companies, added Shuen, who also heads the DSAL. As for the 1:1 ratio for the construction industry, it has already drawn criticism from both employers and employees. Tommy Lau, president of the Macau Association of Building Contractors and Developers stresses such a ratio is too strict. MAY 2010

Labour

Lau, who is also a lawmaker, says that after construction restarts at full steam at Sands China’s sites 5 and 6 in Cotai, together with the construction of the light railway, there simply won’t be enough local manpower to cope with the demand. According to previous information provided by Las Vegas Sands, 10,000 to 12,000 construction workers will be employed by the company after the full restart of its stalled hotel-casino projects on the strip. Even some local labour rights activists agree that it is not possible to keep a 1:1 ratio in such a scenario. However, their main concern is not the new regime, but the government’s capacity to enact it.

In the government’s hands

Although it was designed to make the importation of labour more transparent, the new regime is quite arbitrary. The government can revoke a permit at any moment, so long as such action is “duly justified through plausible reasons of public interest, namely those which result from changes in the economic situation.” Under the new regime, the acceptance of applications for the hiring of non-resident workers, the concession of new permits and the renewal of previously conceded permits, may also be temporarily suspended by the government, with no time limits. This covers only certain professional categories, or economic or industrial activities. For now, the government has announced that, in addition to what is already the case for croupiers and professional drivers, floor supervisors in casinos are also set to become “local only” jobs.

Extra costs

Businesses say the new regime means higher costs because it introduces a compulsory “employment fee”. Employers are now required to pay a MOP200 monthly fee for each nonresident worker hired. To assist the troubled manufacturing industry, this sector will enjoy a 50 percent discount on the levy. Domestic workers are exempted. Employers who fail to pay the levy can face fines from MOP300-1,000 per non-resident worker. The fees will be collected by the MAY 2010

Security Social Fund and used for social security purposes regarding local residents. There were 73,932 non-resident

workers in Macau at the end of February, according to official data. Of those, 6,311 worked in the manufacturing sector and 14,534 were domestic workers.

When to import workers T

he new regime aims to overcome the non-existence or insufficiency of resident workers able to do the job in a cost-effective and efficient manner. It says a non-resident worker shall be hired on a time-limited basis and resident workers shall have precedence, both in regards to the hiring, as well as keeping an employment position, stresses the regime. Other general principles of the regime claim non-resident workers shall be given equal treatment to resident workers, in regards to rights, obligations and working conditions. Most importantly, the hiring of non-resident workers shall respect the principle of remuneration equality for work of an identical nature or value regardless of whether such is provided by a resident or non-resident worker. Non-resident workers are legally understood as the people without right of residence in Macau who are authorised to temporarily provide a professional activity under an employment contract.

57 employers have to pay a minimum of MOP500 per month as housing allowance to each imported worker.

Riot police used water cannons and pepper spray to disperse a crowd taking part in a May Day march

Not happy

“The costs of hiring non-resident workers will be higher and the proceedings to get permits for imported labour are more complex,” complains the president of the board of directors of the powerful Macau Chamber of Commerce, Hoi Sai Un. In his opinion, this is an extra burden that can especially hurt local Small and Medium-sizedEnterprises (SMEs). The number of local companies employing non-resident workers more

than doubled from 3,228 in mid-2007 to around 6,800 last year, according to official data. Most are SMEs.

Job and a bed

The costs to business don’t stop there. Dormitories provided by employers to imported workers, are also obliged to comply with a clear minimum set of health and living conditions. Each imported worker is now entitled to a place to stay with a usable area of no less than 3.5 square metres, and also to his or her own bed. If a dormitory is shared by more than one worker, each of the bedrooms must come with a fan. The rooms need to have a bathroom equipped with a hot/cold shower facility and a washing machine for every eight imported workers or less. If no accommodation is provided,

The minimum living conditions stated in the new regime seem not to be standard so far, at least in the construction sector. Just days before the new regime came into effect, the DSAL led two raids on construction sites in Macau where it found illegal dormitories with poor hygiene conditions. One of the raids targeted Galaxy Macau’s construction site, in Cotai, were the DSAL detected a complex of illegal dormitories for around 800 imported workers. At the site, reporters found a notice that alerted workers about the DSAL’s inspections, including dates. Raids can work on construction sites, but are harder in the case of imported domestic helpers. The new regime says that if they are to stay at their work places, employers have to give their domestic helpers a space in the house that can protect their privacy, as well as provide them with basic living facilities especially a bed, wardrobe and bathroom for their use. But, without a complaint, it will be hard to detect offences. Photo: Ym Yik | EPA

More than half of Macau’s imported workers come from the mainland – 40,914, followed by the Philippines – 10,817 - and Vietnam – 6,637. The hospitality and food and beverage sectors employ the most – more than 16,000. Domestic workers are the second biggest group.

Poor conditions

Locals want priority

If employers are not happy with the new regime, the Federation of Trade Unions of Macau (FAOM), the territory’s biggest worker’s organisation, is also cautious. For the federation, the new regime alone is not enough. “The government should ensure that local workers’ employment rights are not impaired,” the FAOM stressed in a statement. Meanwhile, the federation is studying the implementation of a minimum wage in Macau. According to the FAOM, if a minimum wage for foreign employees is set, that would prevent cheap imported labour and what the federation labels as “unfair competition”. The FAOM accuses the high percentage of foreign labour of eroding the bargaining power of local residents when it comes to improving their working conditions and increasing their wages. This is why it wants to ensure that the use of imported labour does not unduly affect wage rates for local workers. MAY 2010

Labour

Job not done

The role imported workers play in Macau is still to be properly studied and their grievances remain unanswered by the government BY EMANUEL GRAÇA

hile a new regime for the hiring of non-resident workers has been put in place, a proper debate about the importance of imported labour is still to be had. Macau has no official data detailing the contribution of non-resident labour to the territory’s economy. Al-

legations that imported workers are “stealing” jobs from locals are still to be backed by any truly rigorous and independent study. The new regime doesn’t help to increase the profile of non-residents among locals, giving no permanent communication channel between the government and migrant

A risky business

workers. For instance, the future special committee to handle issues regarding the importation of labour has no plans to include representatives from this group, according to the coordinator of the executive committee of the Standing Committee for the Coordination of Social Affairs, Shuen Ka Hung.

Mention imported labour in Macau and illegal labour isn’t far behind. The government has pledged to combat the problem of illegal workers, but they remain in significant numbers, especially in construction, small and medium enterprises and as domestic helpers. For a better wage, illegal workers sometimes risk their own lives, since they have no protection at all. Last month, a 43-year-old man was found seriously injured near a construction site at Taipa Grande Hill, with bamboo sticks having gone through the right side of his chest. The man eventually admitted he was an illegal construction worker.

MAY 2010

Imported labour is not covered by the social security regime.

Almost no protection

The lack of welfare for imported labour has drawn attention from the International Trade Union Confederation (ITUC). In its 2009 Annual Survey of Trade Violations, the ITUC wrote that imported workers in Macau “are denied the most basic forms of protection.” “Although migrant workers usually have employment contracts, they have no right to collective bargaining and no effective legal recourse in the case of unfair dismissal,” the report said. “While they are entitled

Proportional system of labour to be created “soon”

The government is preparing an administrative regulation in order to create a proportional system to deal with the number of imported workers to be authorised to each industry. The proposal should be approved in “the short term”, the Secretary for Economy and Finance Francis Tam Pak Yuen said. Tam added a proportion of local to non-local workers will be formulated in a number of industries. Some industries will be restricted from importing any labour at all. For instance, in the casino industry, the government plans to include floor supervisors in the restriction, in addition to what already happens with croupiers. The government is also preparing an exit mechanism to reduce the number of imported workers in Macau, Tam added.

Construction workers get subsidised course

to compensation as a result of dismissal before the termination of their contracts, it is common practice for migrant workers to be issued with short-term contracts: resulting in failure to be compensated,” the ITUC accused.

Still studying

For now, many non-resident workers are more worried about trying to understand what has changed with the new regime. Peduli Buruh Migran Indonesia, an Indonesian migrant worker organisation in Macau, says its members have difficulty in understanding the new regime just from reading the Imported Labour Law. The organisation has also asked for a special law for nonresident domestic workers, since their job nature is quite specific.

Requests from imported workers, however, do not seem to be a priority for the government. They have repeatedly asked for more regulation on local recruitment agencies, with no success. Those agencies are accused of charging migrant workers illegal recruiting fees, equivalent to up to 10 months of salary. Non-resident workers also unsuccessfully opposed the prohibition of freely changing jobs, which was introduced by the new imported labour regime. This means they can no longer change jobs without justified reasons. Under the new laws, imported workers are required to leave the territory for half a year before they can be issued a new work permit to work for another employer.

The government is to launch a subsidised course for unemployed and underemployed construction workers. The plan will last one month and aims to increase the workers’ competitiveness while reducing their economical difficulties. A total of 2,500 workers will be included, receiving a subsidy up to MOP3,240 each. Local construction workers have severely criticised the government in recent weeks, saying it is not doing enough to protect their employment rights. The average daily wage of construction workers was MOP529 in the first quarter of 2010, the same as in the previous quarter, according to official data. However, the average daily wage of unskilled workers - MOP313 - registered a decrease of 12.3 percent.

Unemployment stable

Macau’s January to March unemployment rate remained stable at 2.9 percent. The number of unemployed increased by about 300 from the previous period to 9,500, with 5.9 percent being fresh labour force entrants searching for their first job. Underemployment also remained unchanged at 1.8 percent in comparison with the previous period (December 2009 - February 2010), according to official data. Total labour force was 323,300 in January - March 2010, with the employed population increasing by 600 over the previous period to 313,800. Employment in the retail trade and the hotel sector saw increases from the previous period, while the construction sector and wholesale trade registered a decrease. MAY 2010

Labour

Taxing times

The hotly contested tax on the hiring of non-resident employees has taken effect, but domestic workers are exempt BY VANESSA AMARO

s of last month, employers who want to hire a non-resident employee will have to pay MOP200 per month, or risk a fine of between MOP300 to MOP1000. Domestic servants are exempt and the manufacturing sector will benefit from a 50 percent discount. Executive Council spokesperson Leong Heng Teng said the administrative regulations pertaining to the regulation of the law on hiring non-resident workers will be more lenient towards domestic servants and the manufacturing sector. The hiring of non-residents to do domestic work frees up local workers, cutting back on demand for the services of non-resident workers, and thereby

MAY 2010

contributing to the development of the local labour market, said Leong.

Provides permit

The MOP200 monthly payment – which will go into the social security fund does not entitle the employee to fixed residence status, but rather provides him/her with a permit to stay while the employment contract is in effect. The move also stipulates a 50 percent tax reduction for employers of non-resident workers in the manufacturing industry as a way of supporting the sector. The imposition of the tax has been hotly contested by migrant workers.

More money

An Executive Council spokesperson said

an increase to the maximum amount of the Credit Guarantee Plan for Small and Medium Enterprises, from the present MOP200 million to MOP500 million will be proposed. The spokesman said this was because “having assessed the impact of the global financial crisis on the local economy, the amount previously awarded is already depleted and it’s still necessary to support the local companies”. The increase raises the ceiling on the total amount of guarantees given by the government to loans granted by banking institutions, from MOP300 million to MOP600 million. The objective is to alleviate the financial difficulties of small and medium enterprises with an injection of capital. “Small and medium enterprises still need the support and assistance of the Macau SAR Government within a certain time frame in the future,” said Leong.

Subsidy to continue

The Executive Council said the additional subsidy payable to employees who have a quarterly income of less than MOP12,000 will continue. The assigned value is equal to last year’s; a maximum of MOP12,000 per year. Recipients must work 152 hours monthly for most general sectors, while industrial workers in textiles, clothing and leather need to work 128 hours per month to apply for extra income. Other conditions include: being 40 years of age; a permanent resident; and registered in the Social Security Fund. Last year, 9,000 requests for the supplementary subsidy were approved, costing the public coffers a total of MOP32 million.

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

Contract killings FOR A SMALL SUM, MACAU’S EMPLOYERS CAN AVOID ANY ETHICAL OR EVEN CONTRACTUAL OBLIGATIONS TO THEIR EMPLOYEES. THE CITY’S LABOUR LAWS PROTECT THE POWERFUL, NOT THE POWERLESS Without warning, a friend of mine working in Macau was recently served notice that her contract was to be terminated peremptorily, before its expiry/renewal date. No reason was given. The letter of notice contained the customary lie ‘I regret to inform you. . .’. A person’s life devastated at the stroke of a pen. Employers and employees alike may pore over the fine details of an employment contract in Macau, examining terms, conditions, whether it is a fixed term or variable term contract (the two kinds operating in Macau), giving of notice, terms of dismissal and renewal, duration, benefits, allowances and the suchlike. The problem is that such contracts are superseded by Macau’s labour laws to the extent that, when employers want to get rid of you, they can do so, extremely easily and almost without any repercussions, virtually regardless of what it says in the contract. In my view, the contract is nearly worthless, and the odds are stacked against the employee. Employers can and do turn Macau’s labour laws to their own advantage. They fire workers without warning, at 15 days’ notice, prematurely ending contracts, and the Macau law enables them to do so and to get away with it almost scot-free. So employers can transgress ethical obligations to their employees without so much as a second thought or any sense of shame or wrongdoing. Macau’s employment law is weak, as it does not really protect workers from autocratic dictators dismissing staff without warning or even a reason, and the only recourse that employees have is to the Labour Affairs Bureau for mediation or to the law courts. Employers can and do behave like feudal overlords in their squalid, tyrannical fiefdoms. The only penalty that Macau’s employers have to pay is a trivial sum of money by way of compensation, which is algorithmically calculated and yields low amounts, plus perhaps a tiny fine, and this exonerates them from any moral obligations to their workers. Article 68 of Macau’s Labour Relations Law 7/2008 states that ‘The employer may rescind the contract at any time, irrespective of just cause, in which case the employee is entitled to a compensation for an amount equivalent to . . . [a sum calculated by formula]. Article 70 states that ‘In the event of rescission of a fixed term contract without just cause by the employer before the expiry of the contract’s term, the employer is obliged to pay the employee a compensation calculated according to the period between the date of the rescission and the expiry date of the contract mutually agreed upon, equivalent to three days of the basic remuneration for each month or period of less than a month’. So, employers don’t need a reason; just pay up and the workers have to go. Employers in Macau can clap their hands because, for a small sum of money, they are relieved of any real moral, ethical,

or even contractual obligations to their employees. They need give no reason at all for firing you. If they don’t like your look, your clothing, the way you walk, your accent, anything, they simply pay up and off you have to go. They don’t even have to tell you why they are firing you, so prejudice and power trump morals and ethics. The problem is that the law here protects the powerful and does little to protect the powerless in Macau, and employers know it. What compounds the problem is that, in Macau, though there is some mediation by the Labour Affairs Bureau (and attempts at mediation can be legally enforced), and there are law courts for employees to sue employers for wrongful dismissal or breach of contract, there is nothing like an Employment Tribunal, an Industrial Tribunal, or a powerful Trade Union movement, and employers exploit this mercilessly. There is no Equal Opportunities Commission, no Employment Disputes legislation worth talking about, not even an ombudsman. An agenda for Macau’s putative ‘sunshine government’. So, if you are a loyal, committed, decent worker conscientiously going about your work in Macau, look out – you are not safe, you are not spared the unethical behaviour of a despotic boss. Your employment is only a function of money and power. Despots fire people to keep their workers jumping to order and in fear. It ensures compliance, subservience and kowtowing to cruelty and bullying. What’s your contract worth? Not much. MAY 2010

Labour

Foreign bodies As tempers reach boiling point on the issue of imported labour, some say legislation in the area is not clear enough, while others believe it is up to companies to take a different approach to hiring BY LUCIANA LEITÃO

acau’s labour market is a frenetic place these days: if it’s not angry local workers clashing with police over their demands for meetings with top officials, it’s the police uncovering criminal scams by employers to get round the laws governing foreign worker quotas. All this has led the government to adopt a get-tough attitude. Recently, the Secretary for Economy and Finance announced the creation of a blacklist for companies who get involved in shady labour importation practices, and the Human Resources Office say they are going to strengthen supervision. The government is also set to review all requests to hire non-resident workers. Human Resources Office co-ordinator Wong Chi Hong told Macau Business illegal importation practices will not be tolerated: “The Human Resources Office and the Labor Affairs Bureau will strengthen inspections of establishments, before and after allowing the importation of workers,” he said. At the same time, there will be a revision of the way applications are handled.

Current regime

Wong says the recruitment of non-resident workers is designed to complement the local labour supply and is only allowed when positions can’t be filled locally. When assessing applications, the volume of production of the requesting company, as well as the relative importance of the productive unit within its sector, and importance of the business to society’s overall economic goals, are also taken into account. For non-specialised professionals, Wong says, apart from the availability of local workers, the government also looks at the functions of the workers companies intend to hire, as well as their usefulness in the training of local workers. MAY 2010

Apart from these criteria, officials also take into account economic and social conditions, as well as the demands of the local employment market. “Only after this analysis, does the decision regarding the import of labour take place,” Wong says.

Faulty system

Sunkoshi-International IHR employment agency manager, José Carlos Mesquita, says problems exist because of inflexibility in the law. For example, even today, the blue card quota defines where a worker must perform his job: “I remember a case where factories had a quota on the fourth floor, so they could not use the worker on the third floor,” says Mesquita, adding another example of the boss of a babysitter who was fined because she was taking the child to school. According to Mesquita, this lack of accuracy in the law means some people still request many more people than they need and these workers end up working for other people. This, he says, is the main illegal scheme being used. Another problem with the legislation is the time required to apply for and renew blue cards - the red tape. “This opens up many temptations to resort to illegal acts. The government should take care of the needs of the companies. Sometimes, it takes three or four months to renew the blue cards of workers,” says Mesquita.

New mechanism

He adds that a new mechanism should be created that is faster and more simple and straightforward.. The manager also believes the quota regime should be applied differently. “I think it would be more fair to have one ratio between local and foreign workers – something like, you have ten workers and two/three/four/five foreign workers - because, in Macau, some com-

panies have more foreign workers than locals,” he says. The current system enables some companies to have several foreign workers, while others have only two. “If they have a real system, then I know, right from the beginning, what I need to do to fulfill the conditions,” Mesquita says, adding that this would end confusion. “The employment business is murky. The big cake is when you recruit management staff overseas, but the overseas companies manage this. The second big piece of the cake is when big casinos recruit middle management, but we – the local companies - don’t touch it, because the operators go directly to the Philippines or Thailand. “The big business is out of your control. What you can do is small business, which needs a lot of work and is not well paid,” Mesquita concludes.

Yes to “Macau first”

Director of Macau HR, Mark Ham-

mons, is more cautious: “The ‘Macau First’ policy is wise as long as it recognises both the value that foreign talent can bring, as well as the value that they can leave behind,” he says, referring to the role foreigners perform in training locals. Hammons believes top local talent exists, but takes a lot of effort to find. “The top brands with the most sophisticated recruiting campaigns can find the local talent they need, but smaller companies or those that are less diligent in their recruitment efforts often have difficulties,” he says. Sometimes, one hears about schemes in which companies artificially manipulate the ratio of local to foreign

workers. In Hammons’ opinion however, as the director of one of the biggest employment companies in Macau, these illegal approaches are unnecessary and counter-productive, as monitoring systems are constantly being refined to catch and punish cheaters. Given the ‘Macau First’ policy, Hammons believes the key to getting a foreign worker is to show how he or she will really make a unique contribution — not only to the individual business but to the long-term growth and development of Macau as a whole. That is why professionals who can play a training role and help develop local staff are especially valuable.

Long term view

Nevertheless, although he understands the goal behind the current restrictive government policies, Hammons believes the executive could benefit from taking a long term view in the formation of its foreign labour policies, allowing a temporary increase in foreigner workers to help ease this transition, and then reducing quotas again later. The new legislation on the recruitment of non-resident workers has just come into force, with new sanctions and stronger punishments for those who commit infractions or crimes related to the import of labour. Foreign labour in Macau could be heading for more grim times.

MAY 2010

Labour

he Macau labour market is finally recovering after a substantial period in the dumps as a result of the global economic downturn. As the Cotai Strip buzzes with activity, new job opportunities are appearing for residents and non-residents alike. That is the main conclusion of the MSS Recruitment Limited report on the current employment climate. Macau Business was given a sneak pre-publication preview of the report before being published and it reveals that Macau’s employment market is expanding with employers offering jobs, and incentives.

Cotai buzz

The buzz on Cotai and a raft of private and public sector developments, including the light rail and the Macau-Hong Kong-Zhuhai bridge, means the coming years will see abundant career opportunities, says the managing director of MSS Recruitment, Jiji Tu. “Companies are keen to employ locals who have passion and are willing to learn. They are also totally committed to in-house and external training, which enables locals to be promoted internally,” says Tu. However, companies are complaining about official restrictions on the importation of labour.

Thousands needed

Jobs, jobs, jobs Macau Business has had exclusive access to a wide ranging report into employment prospects in the city – and it makes for largely positive reading BY LUCIANA LEITÃO

MAY 2010

“Economic recovery is visible and the number of visitors is going up as the construction on mega projects will resume,” says Shun Tak human resources director, Raymond Chan. “Macau Tower needs property management, human resources and accounting professionals,” says Chan. As Sands China gets moving on Cotai they are looking to fill 12,000 jobs, plus 15,000 in the convention and exhibition, retail, transportation, hotel, entertainment and gaming sectors. “We need a lot of front-line people”, the senior vice president of human resources, António Ramirez, told MSS.

Local drive

Trevor Martin, Galaxy’s senior vice president, says he needs 7,000 new staff for their 550,000 square-metre property, claiming most will be locals. Galaxy is looking for graduates in finance, accounting, project management, engineering, customer services,

65 continue to be employed due to the shortage of local specialists. “That is a positive thing, because it means staff will be able to learn,” she says. Henry Brockman, chairman of the British Business Association, says he understands the official position, but believes that the government should loosen restrictions on the import of workers, considering the training benefits for local professionals. As for Paul Lam, president of the executive committee of the Macau Human Resources Association and deputy general manager of the Macao Water Supply Company, “there are more vacancies in the service industry, especial-

ly in newly opened hotels and casinos”. However, Lam believes Macau faces certain challenges, particularly: “In filling vacancies in the local market, especially technical positions, such as engineers, technicians and skilled workers, and to retain younger staff,” he says.

Room for optimism

Nevertheless, he still finds reasons to be optimistic. “Recent graduates will join the labour market, and some mainland students have an interest in working in Macau after their graduation. We hope that this may relieve the stress on the current labour market,” he adds.

Jiji Tu

food and beverage and administration. It’s “definitely a more interesting year” ahead for MGM Grand Macau says company vice president, Wendy Yu, partly because of the opening of the landmark luxury shopping centre One Central. The main opportunities will be in the casino, but MGM will also be recruiting staff for related departments, such as security, food and beverage as well as other services. According to Hyatt International director of recruitment – Asia Pacific, Peter Wade, there are rising opportunities in the hospitality sector, with openings for room staff, front office clerks, room attendants and food and beverage staff. “Applications for roles at Grand Hyatt are always welcome”, he says in the report. There are also openings ahead at DFS Group Limited, a luxury retailer catering to the travelling public, since they are looking for local sales associates and management candidates to work in their two luxury stores at Four Seasons and City of Dreams.

No importation

All the operators claim they are looking mainly for local workers, but they will all have to import some staff as the supply of sufficiently skilled locals is nowhere near enough. Tu says even though the companies “are competing on their staff retention strategies [fringe benefits, better salaries]”, specialised foreign labour will MAY 2010

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

Protection racket But leaving that aside for now, protestations to the contrary notwithstanding, the timing and contents of the new policies can only be considered as a “buy-out” of certain labour sectors in the run-up to demonstrations which have been announced for the first of May. As they stand, albeit coming from a government that so often has invoked its liberal credentials to justify a hands-off approach to some economic matters, they are probably the most illiberal measures taken since the handover. And, I would dare to say, certainly amongst the most misguided also. They will provide an irresistible incentive to fraud, traffic of influences and favour trading. Let us first remember some basic economics. The economy is expected to grow: if for nothing else, because several new gambling and hotel facilities are in the pipeline and significant public works are foreseen. Even allowing for the possibility of outstanding increases in productivity, we can only expect a distinct increase in the workforce. Otherwise, it will not be possible to sustain the expected or desired economic growth. For all practical purposes, Macau can be considered technically at full employment. Participation rates are already very high – close to 80 percent for men and over 65 percent for women – without noticeable changes even in the face of last year’s economic slowdown. The unemployment rate has been hovering around 3 percent in relative terms, and around 10,000 people, in absolute terms, since the mid-2006. The slight spike in the first half of 2009 was rapidly re-absorbed in the second half. A growing share of the unemployed is constituted by older people, often combined with comparatively low qualifications. Their prospects of employment are relatively weak in the most dynamic sectors. The demographic trends are not favourable to a sustained increase of the resident workforce. All this can be summarised very neatly in the next sentence. We will need more non-resident workers, both to fill the ranks of the driving sectors and to diversify the economy. You might expect the government, therefore, to be focused on attracting qualified workers and innovative companies, bringing skills and know-how unavailable locally, encouraging them to reside and invest in the region. Tough luck. The measures announced seem made to measure to scare away non-resident workers – and the companies willing to employ them. If approved, the new rules, coupled with threats of stricter – which sometimes will just mean selective - enforcement, will increase insecurity among non-residents. It will also discriminate heavily against them, regardless of functions, competence, experience or length of stay. The main criterion will just be: do you have a resident card or not. As for the residents, it will certainly breed a sense of MAY 2010

Photo: Luís Almoster | MSPagency.org

THE GOVERNMENT HAS JUST ANNOUNCED A SERIES OF MEASURES TO PROTECT LOCALS RESIDENT’S “RIGHT TO A JOB”. IT WOULD BE INTERESTING TO SEE THE GOVERNMENT DEFINING THE NATURE AND SCOPE OF THIS RIGHT.

entitlement unrelated to merit or achievement. That’s a bad social recipe, bound to make itself felt beyond just the realm of the labour market. So we will have the enforcement of mandatory ratios between locals and non-locals, defined occasionally by a commission that will take into account “the opinion of the industry, the number of candidates, the availability of local workers and the economic situation”. In addition, non-residents will be fired first (no local fired unless all non-residents are fired, it is said – is it possible that they believe this to be realistic?) and access blocked to certain activities, where only locals will be admitted. In other words, the government will be trying to micromanage, on a continuous basis, the various segments of the labour market. Right or wrong, there are serious doubts that they can actually do this. Not only that, it leaves the field wide open for all kinds bargaining, influence and pressure. These measures are unrealistic, unfair and promote arbitrariness and murky dealings. The problems of the resident labour force lie elsewhere and these measures will do nothing to deal with them. Even on preliminary inspection, they fail in both economic and governance terms. Their most likely outcomes will be expedient decisions that satisfy contingent interests and reward their access to the right bureaucratic levers in each instance. This is fertile ground for increased arbitrariness and uncertainty. Is this what leading businesses need and the good citizens aspire to?

Global Management Challenge 2009 International Final

May

Event: GTI Asia Taipei

Date: 18th Venue: Khanty Mansiysk, Russia Organiser: Macau Management Association Address: 9/F ACM Building, 175 Rua de Xangai, Macau Tel: (853) 8296 0708 Fax: (853) 2832 3267 Website: www.gmc-asia.com E-mail: gmc@mma.org.mo

Date: 2nd – 4th Venue: Taipei World Trade Centre Organiser: Haw Ji Co., Ltd. Address: 2F, No. 17, PaoChing St., SongShan Dist., Taipei City 10585, Taiwan Tel: (886) 2 27607407 Fax: (886) 2 27623873 Website: www.gtiexpo.com.tw E-mail: robert@taiwanslot.com.tw

July

Global iGaming Summit & Expo (GIGSE) Date: 11th – 13th Venue: Palais des Congres, Montreal, Canada Organiser: Clarion Gaming Address: Earls Court Exhibition Centre, London, SW5 9TA, UK Tel: (44) 0 20 7370 8567 Website: www.gigse.com E-mail: ewa.bakun@clariongaming.com

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

Corruption and State of Law

Date: 14th – 15th Venue: TBC Organiser: Macau Lawyers’ Association Address: 11/F World Trade Centre, 918 Av. da Amizade, Macau Tel: (853) 2872 8121 Fax: (853) 2872 8127 Website: www.aam.org.mo E-mail: aam@macau.ctm.net

Gaming Asia Expo

June

G2E Asia (Global Gaming Expo Asia 2010) Date: 8th – 10 th Venue: The Venetian Macao-Resort-Hotel Organiser: AGA | Reed Exhibitions Address: 39/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Tel: (852) 2824 0330 Fax: (852) 2824 0178 Website: www.g2easia.com E-mail: shermen.ho@reedexpo.com.hk

International Hotel Investment Forum 2010 Asia Pacific Date: 14th – 16th Venue: The Venetian Macao-Resort-Hotel Organiser: Questex Asia Limited Address: 501 Cambridge House Taikoo Place, 979 King’s Road, Quary Bay, Hong Kong Tel: (852) 2559 2772 Fax: (852) 2559 7002 Website: www.ihif_asiapacific.com E-mail: jdu@questexasia.com

HA+DExpo (The Hospitality Architecture + Design Exhibition and Conference)

Asian Infrastructure & Property Development Summit

Date: 17th – 18th Venue: The Venetian Macao-Resort-Hotel Organiser: Questex Asia Address: 501 Cambridge House Taikoo Place, 979 King’s Road, Quary Bay, Hong Kong Tel: (852) 2559 2772 Fax: (852) 2559 7002 Website: http://hadexpo.questexevents.net/ E-mail: jdu@questexasia.com

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

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

Sportsbetting and Lotteries Asia Date: 20 th – 22nd Venue: Hong Kong Organiser: Beacon Events Address: 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong Tel: (852) 2219 0111 Fax: (852) 2219 0112 Website: www.SportsBettingAsiaCongress.com E-mail: info@BeaconEvents.com

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

: A Macau Business partner event MAY 2010

Property

Strong momentum

Home values are being buoyed by growing transaction volume and rising demand, prompting the government to address the issue of housing affordability for middle income earners BY ALAN TSO

Photo: LuĂs Almoster | MSPagency.org

MAY 2010

fficial data based on stamp duty records show that 2,381 homes valued at MOP5.14 billion were sold in the first two months of this year – a clear indicator of the property market’s upward momentum. But an even rosier picture is painted by Centaline Property Agency (Macau), which estimates that the total number of residential transactions in the first quarter of 2010 is more than 6,000.

Affordability

Amid rising property prices, affordability has re-emerged as a pressing social issue. In a bid to ease the inflationary pressure of mass-market residential properties, the government has announced that it will put up a plot of land for auction within this year and the site will be designated for the development of small-sized residential units. In a related development, the government is also encouraging developers to convert under-used industrial buildings into mass-market residential properties. The authorities have received several applications of this kind since the scheme was launched in March.

Two-pronged

With this two-pronged approach, the government is expected to make homes more affordable for middle income earners, while avoiding affecting the healthy growth of the high-end residential market.

NUMBER OF TRANSACTIONS

YEAR

MONTH

2009

January

VALUE (10^6 MOP)

YEAR

MONTH

2009

January

172

February

235

February

372

March

394

March

594

April

580

April

May

775

May

1,156

June

922

June

1,627

July

1,339

July

2,767

August

1,730

976

August

Brisk sales

According to the agency, the brisk sale of several new residential properties launched lately, will probably further prop up housing prices in Macau as current homeowners are offered more options to trade up for newer and better homes. It also points out that potential buyers hunting for bargains in the secondary market are likely to be disappointed because most of the sellers are standing firm on their asking price in the wake of the robust economic recovery. To show its confidence in the local property market, Centaline will open a new branch this month and increase its staff to 120, after seeing its presence in Macau expanded to 5 outlets in April.

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

Residential units sold as per record of stamp duty*:

2010

299

980

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

1,084

2010

January

3,140

February

1,995

* Note: Data include transactions of residential units valued below three million patacas, which are exempt from the payment of stamp duty according to a new government scheme.

Source: DSEC

Graph 1 Average transaction value of residential properties Value (10^3 MOP)

3000 2500 2000 1500 1000 500 0

Jan

Feb

Mar

Apr

May

Jun

2009

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb 2010

Graph 2 Average transaction price of residential units per m2 Value (MOP) 3000 2500 2000 1500 1000 500 0

2007

Graph 3. Proportion of buyers:

11% 89%

Non-Residents

Residents

Graph 4. Proportion of buyers:

25% 75%

Non-Residents

Residents

2008

2009

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

3,650

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

5,136 MAY 2010

(10^6 MOP)

Property

No man’s land

Officials are preparing to take back more than 20 underdeveloped plots of land from developers if they don’t start building the projects they promised

BY EMANUEL GRAÇA

hree-and-a-half years have passed since former Secretary for Transport and Public Works Ao Man Long was arrested in a corruption scandal involving brides, land granting, power abuse and money laundering. However, almost nothing has changed in the way land granting is done in Macau. Now, the government is set to take the first step, by asking developers to hand back the undeveloped plots of land they were given, the current Secretary for Transport and Public Works, Lau Si Io has announced. Penalties for delays in development will also be made tougher, he adds.

plots of land recorded as undeveloped “for several years.” Of those, more than 20 cases are classified as “more serious,” the DSSOPT tells Macau Business. However, the bureau won’t reveal which plots are at risk of being reverted to the government, namely if there are any in that situation in Cotai. The leaseholders of the cases considered “more serious” were notified last month by the DSSOPT. If they fail to demonstrate that development is underway, the government will take back the plots of land, according to Lau.

Still waiting

Chief Executive Fernando Chui Sai On also stressed in his 2010 Policy Address that the government will repossess plots granted to casino operators and other

According to the Land, Public Works and Transport Bureau (DSSOPT), currently there are around 100 cases of

Are casinos at risk?

Land concessions under the microscope A fter a long period with no official meetings, the Legislative Assembly’s Provisional Committee for the Analysis of Land and Public Concessions will finally meet again this month. And the topic couldn’t be any hotter: land concessions for gaming operators. Representatives from the government will also join the meeting, scheduled to take place on May 7. This is the standing committee’s first meeting since November 2009. It is almost certain that lawmakers will discuss the details of Galaxy’s land concession in Cotai. Galaxy has been granted a 440,248 square-metre parcel of land, divided into four sections which can each be individually transferred to a third party. Some lawmakers also want to call Galaxy’s executives to the committee to discuss the land concession. However, there have been MAY 2010

disagreements among legislators on whether standing committees can debate specific cases in such detail or if they are only authorised to discuss laws and general policies. The standing committee’s president, Kwan Tsui Hang, expects to already have a preliminary report ready on Macau’s land grant system in August, even if discussions within the group are still on-going by then. A similar committee was also created by the last legislature, after the Ao Man Long scandal erupted. The group made several proposals to the government to improve the land grant system, but almost no changes have been introduced yet. There was only an increase in the reference values in the land premium calculation formula, in September 2007. According to the Secretary for Transport and Public Works, Lau Si Io, the government is working hard to finish the Land Law revision by this year.

companies if they remain undeveloped. The goal is to transform them into public housing and small-sized residential apartments, he said. The DSSOPT hasn’t elaborated on which casino concessionaires Chui is targeting. But Macau Studio City is among the plots handed out for gaming projects which has barely seen any development at all. The concession contract was signed in October 2001 between the government and East Asia Satellite Television – a non-wholly owned subsidiary of eSun Holdings. The document stated that the first phase of the project should have been ready by 2004. The contract signed didn’t include any gaming facilities, which were only introduced in the project later. Meanwhile, there have been agreement problems amongst the developers of Macau Studio City - a joint venture between New Cotai, LLC and East Asia Satellite Television – regarding the development and the timing for the completion of financing. East Asia Satellite Television has filed a statement of claim with the High Court in Hong Kong claiming that New Cotai and others failed to co-operate and progress the Macau Studio City project.

Wynn ok

Wynn Macau already ear-marked a land plot in Cotai two-and-a-half years ago, where it plans to build a new hotel-casino. However, this is not considered an undeveloped site since the final concession contract hasn’t been approved by the government yet. “If approved, it would allow us to construct an integrated casino and fivestar resort of up to approximately 6.9 million square feet, including space for gaming, accommodation, food and beverage, retail, leisure, landscaping areas and convention/meeting areas,” according to Wynn Macau. Although there is no concession

Photo: LuĂs Almoster | MSPagency.org

MAY 2010

Property

contract, Wynn’s plot has already been fenced for a long time. Macau Business asked the DSSOPT if that is legal and was authorised by the government, but received no reply.

Pressure for housing

One of the main reasons why the government is getting tougher on undeveloped land is because of the growing social demand for more affordable housing. Several lawmakers and major local associations have criticised the lack of public housing and small-sized residential apartments. They accuse the government of handing land to developers at low prices for the construction of luxury complexes, and not caring enough about the living conditions of locals. In response, officials are preparing an open land auction and industrial building revitalisation measures to increase the supply of small to medium sized residential units. Lau announced that a 30,000 square foot land parcel will be auctioned in the near future – but didn’t say where. The winning bidder will be allowed to construct more than 500 small to medium

MAY 2010

“They accuse the government of handing land land to developers at low prices for construction of luxury complexes and not caring enough about the living conditions of locals’’ sized residential units, which are only a little bigger than the economic housing standards. The government also wants to promote the demolition of old, single-ownership industrial buildings and rebuild them for residential use.

Filling in the lake

Although the government intends to reclaim undeveloped plots, it will go ahead with a project to fill in an artificial lake in Cotai – commonly called Yin San lagoon – to build Macau’s second public hospital. The hospital will be built on the east

side of Estrada do Istmo, between the Seac Pai Van Reservoir and the Macau Dome, occupying a total of 50,000 square metres. The first phase of construction is expected to begin in the second half of 2011. The government’s choice was harshly criticised by New Macau Association. The organisation, which had three lawmakers elected in last year’s elections, opposed filling in the lake, noting that there are several large undeveloped sites nearby. One is a 106,000 square meter plot owned by a company controlled by Chui Sai Cheong, Chui Sai On’s elder brother, the media reported. According to the concession contract available in the Official Gazette, a four-star hotel was supposed to have been built on the site by January 2009. The government rejects New Macau Association’s criticism. It says the water in the lake has been polluted by construction projects nearby and poses a health risk. The Environmental Protection Bureau has also stressed that the lake has no especial ecological interest.

Photo: LuĂs Almoster | MSPagency.org

Industrial revolution

Public tenders and the revitalisation of industrial land is the way forward for social homes

he government is poised to promote the provision of land by public tender and the revitalization of industrial buildings in a bid to increase the number of small and medium size housing units. The Secretary for Transport and Public Works, Lau Si Io, says plans for implementing these measures have already been defined. It is expected that an experimental total area of 30,000 square feet will be set aside for their construction. Strict rules will be imposed to ensure that the original intentions of the

plan are followed, says the Office of the Secretary for Transport and Public Works. With this initiative Lau believes more than 500 economic homes can be built on one plot of land. â&#x20AC;&#x153;After this measure is implemented, according to market reactions, we will study and analyse the results to deem whether or not to continue,â&#x20AC;? the office said. As for the revitalization of industrial buildings, Lau said this was part of the governing policies guidelines for this year.

The measure will first encompass cases where rebuilding will be done from scratch. The remaining cases where the revitalization of industrial buildings is requested will be studied later. In the meantime, far, it has already received several requests to change the original purpose of some buildings, all of which pertain to singular properties. At present, the government is also preparing measures to encourage and simplify the procedures to guide developers to build housing units of small and medium size.

MAY 2010

Property

House rules

After announcing relatively healthy 2009 profit results, the Shun Tak Group has welcomed moves for more regulation of the property market, but only if the rules are given time to bed down BY KAHON CHAN

ore regulation will be good for Macau’s housing market says the Shun Tak Group. Group sales director Warren Leung Cheuk Hang says the market is selfdisciplined and consistently healthy and should be given more time to reach maturity. Meanwhile, one of Hong Kong’s

major real estate agencies says that constraints imposed on speculation in the mainland market may lead to an influx of capital to buy homes in Macau.

Nine rules

Last month, the Hong Kong government announced “nine rules” to encourage disclosures by property developers in

Less revenue, more profit

hun Tak Holdings’ full year profits for 2009 amounted to HK$1.19 billion (MOP1.2 billion), excluding the revaluation surplus on investment properties and net gains on the sale of its share in the Mandarin Oriental hotel. However, the company’s revenue fell from HK$4.47 billion (MOP4.52 billion) in 2008 to HK$3.33 billion (MOP3.36 billion) in 2009. The outlook for the Westin resort was “challenging” and the volume of TurboJet passengers suffered a slide of 17 percent due to a slump in the tourist market. With the economy recovering and business to expand, Shun Tak also highlighted the “sumptuous and contemporary” columbarium project in Taipa. With completion scheduled for the second quarter of 2011, the company expects it to attract significant interest.

MAY 2010

their sales brochures, including the display of a non-furnished showflat, minimum thresholds for first-price lists and clear disclosure of a property’s location. It even threatened a maximum stamp duty tax if speculation spread to the cheaper apartments. Shun Tak Holdings sales director, Warren Leung Cheuk Hang, says the company will comply with the Hong Kong guidelines, but noted that buyers from Hong Kong have learned their lesson and are better informed. The most successful real estate salesperson in Hong Kong, who once worked for the powerful developer Cheung Kong, notes that the local market is in good health, even with little regulation. “There have been no major complaints of misleading information supplied by agencies or real estate promoters. Transparency is good and, even without the legal obligation, developers often disclose all areas clearly in their catalogues,” says Leung. He does however defend more regulation by the government provided that sufficient time is provided for the rules to take shape. “Within three to eight years, I believe that [the housing market] is going to be, I will not say more tightly regulated, but more mature in terms of its supporting infrastructure,” he predicts.

A great treasure

Comparing Macau in 2010 with Hong Kong in the 1980s, he says a sign of maturity is the familiarity with mortgages, which is a present reality in the Macau market. “Macau is actually a great treasure. Of all the apartments’ proprietors, 77 percent are free of mortgage and the ‘cash flow’ is huge. This explains why even projects due for completion in three years can sell quickly,” says Leung. He forecasts a minimum rise of 10 percent in prices and an increase of 30 percent in transactions this year, while underscoring the rise in property values is a long-term trend and that “there is no bubble in the market”.

Brakes on speculation

And at a time when the mainland is putting the brakes on market speculation, Stanley Poon, director of Centaline (Macau), believes that investors will bring money to Macau and Hong Kong,

75 looking for opportunities, though the difference may not be obvious since non-Macau buyers are responsible for only 10 to 12 percent of all transactions. Poon disagrees with the idea that some local buyers are only “professionals” at the call of capital from the mainland, saying locals have strong purchasing power. The Hong Kong-headquartered agency recently opened a branch in Macau–with another to follow soon– and hopes to raise MOP80 million in commissions during 2010.Shun Tak will be the sales representative for the Sociedade de Turismo e Diversões de Macau (STDM) apartment building in front of Wynn Macau and Hotel Lisboa. Details will be unveiled within a week or two and prices will be slightly below those of the luxury apartments at One Central Residences.

Sands aims for US$12 billion from Macau sale Las Vegas Sands chairman Sheldon Adelson hopes to raise up to US$12 billion (MOP96 billion) from the sale of the group’s malls and apartments in Macau. “It will be like US$12 billion if we add up all the apartments and all the retail in Macau,” including those in buildings still under construction, Adelson told Bloomberg. The assets ear-marked for potential sale include the Four Seasons and St. Regis apartments as well as the shopping malls in the Venetian and in the Four Seasons, Adelson said. He didn’t provide any schedule for the completion of the deal, but said selling could start in the second semester of 2012. “That is our fundamental business model - we get our money back from the sale of non-core business assets,” he said. Meanwhile, the Secretary for Economy and Finance, Francis Tam Pak Yuen, said the government has not received yet any request from any gaming operator to sell part of its non-core business assets in Macau. “We need to understand how a potential assets’ sale is to happen since the gaming concession contract states that, in the end, the casino must he handed out to the government,” Tam said. “We will study it on a case-by-case approach, depending on each request,” he added.

MAY 2010

Gaming

The billions race Casinos break a new record and surpass MOP13 billion for the first time

acau’s casinos have broken monthly revenue records for the second time this year, pulling in more than MOP14.1 billion (US$1.762 billion) in April. According to data compiled by Lusa News Agency, April’s revenues surpassed MOP14.1 billion, and were 70 percent more than in April 2009, when MOP8.34 billion (US$1.04 billion) was taken in. In accumulated terms, the first four months of 2010 have generated MOP55.1 billion (US$6.887 billion)

in revenues against the MOP34.358 billion (US$4.294 billion) during the same period in 2009, a 60 percent increase. April’s new record follows the previous record set in January, when gross revenues reached nearly MOP14 billion (US$1.75 billion). Lusa has had access to provisional figures from the operators, indicating that Stanley Ho Hung Sun’s Sociedade de Jogos de Macau has kept the first place in the rankings, with a market share just above 33 percent, followed by

Gaming Results: Gross Revenue

In Million MOP (1HKD:1.03MOP)

13,937

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

Sands China, with just over 21 percent, and Wynn Resorts – which recently opened Encore Macau - with a little more than 14 percent. The second half of the table is occupied by Melco/PBL, a joint-venture between Lawrence Ho, Stanley Ho’s son, and Australian magnate, James Packer, with around 13 percent, followed by Galaxy Resorts, with just over 11 percent, and MGM Macau, a joint-venture between MGM and Pansy Ho, daughter of Stanley Ho, with just under seven percent of market share.

11,268 8,340

8,799

9,570

12,600

12,215

13,400

13,569

Feb 10

Mar 10

14,100*

11,347

10,943

8,269

6,000 4,000 2,000 0

Apr 09

May 09

Jun 09

Jul 09

Aug 09

Sep 09

Oct 09

Nov 09

Dec 09

Jan 10

Apr 10

* Estimated MAY 2010

Gaming Results: Market Share Per Operator 2010

2009

Apr

May

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

SJM

31%

30%

23%

26%

31%

32%

31%

30%

32%

34%

33%

Sands China

26%

21%

26%

22%

24%

20%

24%

21%

22%

20%

21%

Galaxy

12%

10%

12%

13%

10%

11%

Wynn

14%

18%

14%

15%

13%

14%

12%

17%

13%

15%

13%

14%

Melco/PBL

10%

18%

16%

17%

13%

12%

16%

14%

13%

MGM

12%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

Melco/PBL

MGM

30 20 10 0

Apr 09

May 09

Jun 09

Jul 09

Aug 09

Sep 09

Oct 09

Nov 09

Dec 09

Jan 10

Feb 10

Mar 10

Apr 10

* Estimated

A happy golden goose Gaming inspectors have confirmed huge first quarter profits for Macau’s casinos

he Gaming Inspection and Coordination Bureau has confirmed that the first quarter of this year was the most profitable ever for Macau’s casinos, with gross revenues of MOP40.951 billion (US$5.118 billion). The data corresponds to numbers revealed by Lusa News Agency in early April for casino games, compiled from information obtained from the operators themselves. Between January and March, the Macau gaming sector, which also includes betting on horses and dog races, as well as football and basketball games, and Chinese and instant lotteries, generated gross revenues of MOP41.248 billion (US$5.156 billion). This is higher than the amount registered for the whole of 2004 when the city witnessed the opening of its first gaming venue not owned by Stanley Ho Hung Sun.

Big on baccarat

Baccarat played in VIP rooms remains the main source of casinos’ gross revenues in

casinos in Macau is rising by about 57 percent against that accrued during the first quarter of 2009. As for the operators - and only taking into account March when the Macau casinos generated MOP13.5 billion patacas, 42 percent more than that recorded for the same month in 2009 - Stanley Ho saw an increase in his market share, which reached 35 percent with over MOP4.5 billion in gross receipts, followed by Sands China, with about 19 percent market share, and Wynn Resorts with just over 13.5 percent.

Bottom half Macau, representing 70.23 percent of casino generated revenue or 69.72 percent of total gaming revenue. The baccarat played in common rooms has a weight of 19.6 percent of casino generated revenue or 19.45 percent of the whole sector’s revenue. In cumulative terms, the revenue from

The bottom half of the operator rankings was occupied by Melco/PBL with just over 12 percent market share, followed by Galaxy with almost 12 percent, and MGM with a little over 8.5 percent. With 33 operating casinos and six gaming operators, 4,811 gaming tables and 14,503 slot machines, Macau is considered the gaming industry’s world capital in terms of total revenue. MAY 2010

Gaming

CHASING THE DRAGON Las Vegas pioneer Steve Wynn knows a business opportinity when he sees it, and he knows they don’t come much bigger than Asia’s gaming mecca. As he opens his latest venture - the sumptuous Encore Macau – Wynn speaks exclusively to Macau Business about his plans to move to the city, his belief that people are the key to success and the simple formula that makes his Oriental odyessy tick

ou know the market here is different from Europe or the US. It’s not exactly Monte Carlo or Vegas and can be peculiar sometimes. So, what message are you trying to send to your clients, both mass and VIP, with Encore Macau? Steve Wynn: The idea that is responsible for us being here was expressed to me by Edmund Ho when we started the process in 2001 and 2002. I said at the time, “Edmund, you know, you don’t need an American company to build a big building, you MAY 2010

BY PAULO A. AZEVEDO do very well in China already, look at Hong Kong, look at Macau, look at Shanghai, look at Beijing, you don’t need any Americans to tell you how to build a fancy skyscraper. As a matter of fact, the buildings of Hong Kong in many cases are more beautiful than the ones in New York. What you need is a hospitality economy”. At the millennium, you did not have one. Stanley had done a good job keeping control of the gaming industry here, but to say that this was a hospitality culture would not be accurate in my opinion. And I said, “Until you have that hospitality culture you will not get what you want because at the end of the day it is people that make people happy, not buildings. And I think I can be helpful in that regard”.

At some point this idea of changing Macau got confused with Las Vegas, somehow the idea appeared that Macau was going to turn into Las Vegas and there would be a bunch of night clubs and show rooms and stuff. And of course that wasn’t accurate. Macau was going to develop based upon on its own Chinese roots. And when I got the concession he said “I’m counting on you Steve”. He helped me get this property. The government owned four of six lots and Stanley owned two. And he convinced Stanley to give them back and trade them out for the ones outback so we could have a site. The goal of the government to change this economy has been remarkably successful, partially due

Photo: Barbara Kraft

MAY 2010

Gaming

to our efforts, and Sheldon’s. This was not a retail capital in the Pacific Rim, Paulo, but it is today. Shopping here is as good as anywhere in the world. That has happened in five years. Not so easy to do. Go try and do it in Guangzhou, go try and do it in Fujian or Dalian, see how long it takes. This was not a culinary capital but the restaurants of Macau today have nothing to do with the restaurants of five years ago. You can eat in any restaurant in this city as good as you can anywhere else. The rooms available, the meeting rooms and bedrooms and suites in this city rival any rooms anywhere in the world, in five years. As I say, Paulo, today, the fanciest hotel building in the world is not in London, Paris, Las Vegas, Los Angeles, San Francisco, New York or Geneva, in Delhi, Mumbai or Singapore. The fanciest hotel in the world is in Macau. And that is what they wanted.

Early days

Las Vegas (…) has been in the market for 60 years. This one is five or six years old. Nobody got business until 2004/5. It’s five years. We opened in 2006. You come by yourself and you stay at Encore, next week, or the week after, and you tell me that there’s a noticeable difference between the service in this hotel and the one in Las Vegas. We started in 2006 with a group of kids here, who are dying to do good, who have great attitude, and we show them, and we work, and they get comfortable, and they feel safe. We didn’t cut back any salaries, we didn’t go from 48 hours to 40 hours, we didn’t take away any thirteenth month. We gave a cost of living increase of 10 percent to our line of employees when the rents got too expensive here. We don’t worry about money. We worry about making our employees safe. And that is the beginning of the culture. And I tell you it’s alive in this building Paulo.

Having stayed at Wynn Las Vegas and at Encore, beautiful properties, what struck me most was the service, something that I still cannot see [at that level] in Macau.

As an investor don’t you think it’s a little bit difficult to deal with the labour market with all these restrictions for instance? Naturally, when it comes to specialised people, like chefs… But this

NO, OBAMA CAN’T Y

ou’ve been very harsh obout the Obama administration lately. Is that behind your thoughts of moving to Macau? No, I’m thinking of moving to Macau because we are clearly more Chinese than we are American, but my criticism of the administration, which has Democrats and Republicans alike at the moment in the congress, is based upon a reckless, reckless squandering of money. Huge, unsustainable borrowings, they are going to attack, not me, but the working class of America. If you keep printing money

MAY 2010

and borrowing money you are going to devalue the dollar to the point where all the employees are taking a twenty five percent cut in their salaries because money won’t buy what it did before and it lowers the standard of living. What changes would a move to Macau mean for Wynn’s US operations? None. So, basically its just the big boss spending more time in Macau? And headquarters. Is that because your commitment is growing not only in Macau but also in Asia? In Macau. At this point? Yes, and likely to remain so for the next five, six or seven years… ten years and you go where you work. I’m here and I like it here, I’m comfortable here, I’m safe here, my employees are safe, I think the government of China and Macau is stable.

government has been understanding about it. They have given us the support that we have asked for. Every once in a while we had to beg for it but we got what we wanted. Listen, there is a lot of pressure here to keep the local citizens employed. What the hell, why not? If I were in the government I would do exactly the same thing. It’s not an unreasonable request to take care of the people who live here first. But when we made our case about needing a specialist in order to make the people who work here successful, they have been respectful of those requests. But I have to make my case, we all do.

Taking time to get it right Encore Las Vegas will have Surrender, a new night club to add to others. In Macau you had that experience with Tryst and then you decided not to. Is it because the Macau crowd is more difficult to control? The late night crowd that came to Tryst frightened us a little bit. We had a couple of fights, one of my employees got beat up. I don’t think we were ready for that then. I think what’s appropriate for Macau changes here just as government policy does when necessary. And I think as we go along there’s going to be a time for that here. When I did it two years ago it was too soon. When? Macau is trying - at least some people are trying - to have more glamour, more entertainment. Yes, we do have fantastic new restaurants but when will it be possible to also educate the market to come to Macau to go to shows? Slow down with the shows. This happens in stages. First, it becomes a place that people trust they can stay at. Beautiful hotels, great service, great food and shopping. Those are the safe beginnings. And then the market (…) and people come here not just to gamble but because it’s good to be here. Instead of saying what we have not yet accomplished I think it’s very important to remind ourselves of how far we have come in so quick a time.

Photo: Luís Almoster | MSPagency.org

“We are building Cotai, unless we are told not to. We were asked to slow down and we did.We have been told that we are to continue. But the point is, there is no hurry” Las Vegas took five times longer to do the same things. If you had said fifteen years ago that Las Vegas would be a shopping capital, in 1994, and the food capital, everybody would have laughed at you, including the so-called smart guys that had the other places. After I opened Mirage I wouldn’t have believed it and all of the sudden, boom. There were no night clubs in 1999. And all of the sudden, ten years later it’s a 750 million dollar industry. The days of putting baccarat tables in an office building are over in this city. This city is a destination and if you want to do business in Macau you better come with your guns loaded, with big bread, big money and big plans, because you are up against big competition and the bar goes up. Five

years, it’s very fast. At the end of the day it’s also your fault. When you showed us that we can have more and more, it’s natural that people start wanting more than 100 percent. Now we want 110 percent… That’s the world we are living in. Steven Spielberg, my friend says, Steve, it is tough now. The things that would get a wow fifteen years ago wouldn’t get a yawn today. You go to make a movie and it’s terrible, the public gets spoiled, their expectations rise. The government wanted to raise expectations and the only way you raise expectations is by the truth, by showing people a better way.

Headquarter move on the way Have you talked to Edmund Ho recently?

I spoke to him on the phone the other day because I’m working on something I would like to do and I asked his advice. But I haven’t seen Edmund because I was sick. I’m guessing he is still happy with your projects here… Our goal has always been that after five years or six years or ten years, the people of Macau would be saying we are glad that they came, they are good neighbors. If we could do that, then our future would be happy and we would be here forever. Frankly I’ve been thinking of moving our headquarters here to Macau. How seriously are you thinking about it? Very seriously. MAY 2010

Gaming

What would the consequences of a move like that be? I would live here more than in Las Vegas. I am already a resident, I have had my card for the last two years, we are a Chinese company. There have been some government decisions, however, that from a gaming point of view could raise some eyebrows. First there was a commission cap, then a table cap, where do you see the government intervening next and is this good or should the market be a little bit more open with less interference from the government? I would not under any circumstances say that the government has interfered. They have trusted the operators to do their job. That’s why you see all these buildings, some of them standing unfinished. I know that the subject of table caps has been brought up but there is no table cap at the moment. But, a whole bunch of tables were put out in some of these casinos that were never used. So, some wanted to use the tables that they had and move to another building, they could build two more hotels. My own feeling is that everything I’ve seen from the government has been well considered and intelligent, much more so than in America. And so, if we are allowed to break ground and build our hotel in Cotai, I’m sure we will

have a casino. So, I don’t consider table caps or the discussion of table caps to be a threat to us in any way, shape or form. But I don’t have as many tables as the other guys. We just make more money with the ones we have. I don’t need thousands of tables in a casino in order to build the kinds of hotels that I want people to stay at. On the 5,500 tables cap, you don’t have that many... I have 400 and change. So you will need tables for your Cotai project? I won’t need any more than I have here. Still, if the government says the industry can’t go over 5,500… Well, then we wouldn’t build the hotel. What I am saying is they are not going to tell you to build the hotel and then tell you can’t have a casino in it. If they want the jobs, if they want the taxes, if they encourage us to do a project I’m sure that they will allow us to have an appropriately sized casino. I totally trust the government to make that decision intelligently.

A green plan for Cotai A company from your group has a very large piece of land already fenced off in Cotai. Yet,

NOT SO MAGNIFICENT SEVEN W

ynn Macau’s VIP segment almost doubled in 2009 from the previous year and Steve Wynn considers this the result of his “very intelligent” relationship with junket operators. The gaming tycoon has revealed to Macau Business that he refused to work with seven junkets because they

MAY 2010

failed a compliance examination. “Every 90 days at our board meeting, Governor Miller, who is the head of our compliance committee, [presents] our latest report. “We conducted fifty three investigations of junket operators, forty six of those junket operators were found acceptable and seven were not,” Wynn said.

a real willingness doesn’t seem to exist to open at this stage. Can you confirm your commitment to invest in Cotai? We are actively in the final stages with the government. We have a warehouse on the property. We are building Cotai, unless we are told not to. We were asked to slow down and we did, because things were over heating in the market as you know. But we have been told that we are to continue and we are prepared to continue. But the point is, there is no hurry. Let Sheldon finish his buildings, let’s have an orderly development of Macau, let’s learn from one another, let’s take one step at a time. It’s happening very fast as it is, we don’t have to have a stampede here. And besides, the community can’t stand a stampede. Listen, we have 51 acres and I’m going to build one hotel, with gardens. I’m going to give the Chinese people what they don’t get usually: space, gardens, places to walk, not five hotels, not two hotels, one hotel. Do you think you will be criticised by some sectors of society for having just one hotel on such a big chunk of property? It will be an integrated resort. [City of Dreams] have 27 acres with four hotels on the property. Now they made it urban. I want it to be an integrated destination. A resort can’t be urban, it’s got to have other things: recreational spaces, entertainment, like what I did with Bellagio and what I do in Wynn [Las Vegas]. Frankly speaking, Cotai today is urban. There’s hardly any landscaping, there are no gardens, there are no outdoor recreational spaces, the kind of things I like to do. Does Wynn Resorts intend to build the Cotai project by itself or in joint ventures with partners? By myself. No joint venture. Is it true that Wynn Resorts is also looking into, or prospecting for other investments in Macau? I can’t think of any right now. Well, I can give you a couple of examples: Fisherman’s Wharf ,

Macau Studio City? No, we are looking for opportunities to participate in the community but not to make an investment per say, another business, no. If we do any business it will be in our property in Cotai.

Dealing with the junkets How is your relationship with Macau’s junket operators? Great. Do you see any problems over what the Nevada regulators are now saying with regards to re-assessing Macau’s VIP operations? Well, they don’t have to do that in our case, because ever since 2006, when we opened this hotel, every month we have provided the state of Nevada with the report about any

junket relationships we have, the investigations that we have conducted independently before we made those arrangements, the ones that we have accepted, the ones that we rejected. So, we have avoided any problems. We have an independent investigation always with an assistant director of the FBI or someone from the Hong Kong police or combinations of the two. Understanding that it’s very easy, whether you are in Macau, or you are in Monaco, or Las Vegas, to get mixed up with someone you shouldn’t get mixed up with, and you are not allowed to do that if you are in a regulated business. That was easy to anticipate, easy to see. How much imagination did it take that there had to be a way of avoiding a problem? So, we instituted the program four years ago, every month since then. So, when Nevada says they want to revisit, they are not talking about us.

How does Wynn Resorts Macau implement anti-money laundering supervision mechanisms over transactions in VIP areas? It’s very easy to do it. First of all, the dead chip program is very helpful. Money laundering is where someone takes illicit game money that they cannot pay taxes on, or explain, and then turns it into money that they can pay taxes on and then uses it for investments. They take black market money and turn it into white market money that is taxable. Junket operators come to the junket players and they buy chips. They can’t cash those chips, they have to bet them. They have to play or we give them back the same money. Nothing gets washed, it gets returned to them. If someone has to buy these chips there is a difference between laundry and a garbage disposal, so with the dead chip program MAY 2010

Gaming

“We started with a group of kids, dying to do good, and show[ed] them. We didn’t cut salaries, we gave a cost of living increase when the rents got too expensive. We don’t worry about money. We worry about making our employees safe. That’ the beginning of the culture. And it’s alive in this building”

the Mirage and the Bellagio, so we have had the biggest chunk of Asian business anyway since 1980 and the mid 80’s, so I had relationships with all the Chinese players all these years, twenty years before we were in business in Macau. And incidentally, Paulo, now that you mention it, Wynn opened up in 2005 in Las Vegas, the Sands opened up in Macau in 2004, a year before Wynn in Las Vegas. In 2005 and 2006, before we opened in Macau the biggest baccarat Asian business in Las Vegas was at Wynn, not at the Venetian, so the Venetian’s role having the Sands next door did not take the Chinese players away from me and Wynn, because they were used to us, they didn’t care who owned the casino, they went to the fanciest place. You pulled your Foxwoods casino investment in Philadelphia, what didn’t make you happy? The project? The expected ROI, the potential market growth? We issued a statement when we withdrew and it was a carefully worded statement. It said, although we believed in the business opportunity in Pennsylvania and thought it was exciting for our company, this particular transaction did not meet our standards, which meant it was this particular deal. You are also not interested in Atlantic city, or at least not with Morgan Stanley’s casino... Not at all, in Atlantic city not at all.

they can’t do it. Now, if someone comes here with cash into our program, not the junket, and says I want to buy a bunch of chips and doesn’t gamble and then goes back and tries to cash the chips, we don’t give them back a cheque, we give them back the money, because we know everybody that is gambling, because we follow them. You know, we rate them, we have people at the tables and if a junket operator does anything like that, we catch him and we throw the junket operator out of the building.

happened to us. First of all, it’s so obvious when they do it, it’s like putting an electric sign on your forehead.

Has that happened in the past? No, we have not had a money laundering problem here, it has never

Was Macau influential in that? We got new customers from Macau. Remember, I’m the guy from

MAY 2010

Winning with a focused business plan How do you see Macau-style VIP operations growing in the US, is baccarat really becoming relevant in your properties in Nevada? It’s a third of my business.

Are you living in a time where gaming investments must be outside the US, or if they are in the US, must be really very carefully planned? What’s going on over there? The answer is yes, you said it perfectly. You listen to your own question, that’s my answer. What about Asia? It’s great, gets the deals right, if the government is stable. Listen, I came here because I met Edmund Ho, and it was clear I was talking to a very serious, legitimate man. It’s always about people, whether it’s a hotel that you are staying at or a government that you are trusting, it’s about people.

MAY 2010

Gaming

Keeping it clean Macau regulators will soon carry out the first ever audit of internal controls in the city’s casinos. It is designed to keep gaming clean and ensure the stability of the city BY EMANUEL GRAÇA

MAY 2010

he March announcement by Chief Executive Fernando Chui Sai that Macau would conduct its first internal-controls audit on casinos is set to become a reality in the second half of this year. The goal is to evaluate – and in the future try to ensure - their compliance with basic internal control procedures. It is the first audit since the Gaming Inspection and Coordination Bureau (DICJ) issued the Minimum Internal Control Requirements (MICR) in August 2006, with a six-month grace period for compliance. The MICR sets the government’s minimum expectations for internal control systems. The MICR covers a broad spectrum of risks. Concessionaires must establish and maintain an adequately resourced internal audit capability, to enable frequent and thorough testing of the adequacy of internal controls.

No cause for alarm

The director of the DICJ, Joaquim Manuel das Neves says the audit decision is not connected with any systemic defects or weaknesses. The audit was initially scheduled to take place two years after the MICR went into effect, but was postponed. Neves tells Macau Business that the MICR introduced a string of proceedings impacting everything from slot-machines to chip management, so gaming operators needed extra time to comply. Now, it is time to check how things are going: the audit will cover all gaming concessionaires and the DICJ’s goal is to have it finished by the end of this year, the director says.

Photo: Luís Almoster | MSPagency.org

MICR revision

The audit is just the first stage, as later the DICJ wants to update the MICR. “The objective is to understand if there are some requirements and proceedings that can be improved,” the DICJ director explains. The updating aims to cope with the recent cap imposed on the commissions of gaming promoters. Neves assures us everything is “going ok,” although there were some initial bumps while implementing the cap. The cap came into effect in September 2009, but a gentlemen’s agreement meant it really only kicked in properly two months later, in December. This was because the gaming operators asked the government for some MAY 2010

Gaming

extra time so they could change their agreements with gaming promoters. To check how the cap is being implemented, the DICJ plans to complete meetings with gaming operators and promoters during the first half of 2010, says Neves.

In control

Internal control procedures allow both gaming operators and the government to better control what happens inside casinos. Among other things, they allow the recording of the amount wagered on each gaming table and the amount paid to players. Most jurisdictions require casinos to have a documented set of internal controls over almost every aspect of a casino’s operations. Others require the regulator to approve these while some require the documented controls to meet a set of specified standards – this

is the case with Macau. Good internal control procedures in Macau’s casinos are essential to ensure a sound set of public finances. Government revenue is hostage to the gaming operators’ performance: in the first quarter of 2010, direct taxes from gaming totalled MOP14 billion, representing 86 percent of the public finance revenue, provisional data from the Finance Services Bureau shows. Generally speaking, the internal control policies and procedures should include: table game management; cash and chips management; gaming inventory management; management of gaming promoters; and financial closing and reporting.

Cleaning up the laundry

Internal controls are also important for preventing money laundering. A 2006 guideline, issued by the

No change T

he Gaming Inspection and Coordination Bureau (DICJ) has no plans to review the minimum financial reporting requirements for gaming operators. Its director Joaquim Manuel das Neves tells Macau Business: “Gaming operators are already obliged to have their financial statements audited by external auditors,” adding that there is no need for improvements. Economist Albano Martins agrees. “This follows the best international practices,” he says. Martins stresses, however, that there is a huge difference between the short reports gaming concessionaires are obliged to publish in the local press and the information they need to hand in to the Financial Services Bureau. “The government has perfect knowledge of the financial status of each gaming operator,” he says. For Martins, the real issue is on how the government uses the information provided. “There could be a specialised working group in charge of only analysing the financial statements presented by gaming companies,” he suggests. MAY 2010

DICJ, specifically requires casinos to report gaming transactions equal to or exceeding MOP500,000, or the equivalent in other currencies to the DICJ, and all suspicious activities, to the Financial Intelligence Office (GIF). The results are already there: Macau’s casinos were responsible for 1,585 reports of suspected money laundering between 2007 and 2009 – this represents 58.3 percent of the total reports handled by GIF. To make things easier in future, the DICJ wants to integrate all the antimoney laundering requirements in the MICR. “One of the objectives of revising the MICR is to concentrate all the minimum requirements in only one set of guidelines,” explains Neves. One step ahead But gaming operators are not waiting for the government to update their own internal control proceedings. Wynn Macau’s audit committee reviewed the internal control system last month and “considered the system effective and adequate,” the company’s annual reports says. Sands China carries out an annual review of the effectiveness of its internal control system. This includes financial, operational and compliance controls, and risk management functions of the company’s business operations. At Sociedade de Jogos de Macau (SJM), the internal audit department provides quarterly reports with findings and recommendations to improve the effectiveness of the internal control system.

Galaxy completes loan to fund Cotai resort

alaxy Entertainment Group has bagged a six year HK$8.8 billion club loan from a consortium of leading Asian banks.

The money will be used to finish the company’s HK$14.1 billion Galaxy Macau resort on the Cotai Strip. The consortium of banks includes the Industrial & Commercial Bank of China (Macau) Ltd, Bank of China Limited, Macau Branch, DBS Bank Ltd., Hang Seng Bank Limited, The Hongkong and Shanghai Banking Corporation Limited, Banco Nacional Ultramarino and Guangdong Development Bank. Galaxy also reaffirmed the schedule for opening Galaxy Macau early 2011. “The terms of the club loan are significantly more favourable than the group’s existing bonds with a prevailing interest rate of Hibor plus 4.5 percent and the flexibility to draw down funds to finance the completion of Galaxy Macau,’’ the company said. “The terms of the loan are favourable for Galaxy and it helps

cuts their debt-serving costs,” agrees Gabriel Chan, an analyst at Credit Suisse Group AG in Hong Kong. “This is positive for Galaxy because it removes some overhanging concern of them securing capital expenditure for the project,” Chan told Bloomberg. Meanwhile, Galaxy deputy chairman Francis Lui said he is confident that the Macau government’s recently announced cap on gambling tables will not affect Galaxy Macau and that the project will have enough gaming tables. “We don’t believe the Macau government will limit our development. It’s not in its interest,” he said. Galaxy Macau will have capacity for more than 600 tables and 1,500 electronic gaming machines in five themed casino halls.

MGM Grand Macau results improve MGM Grand Macau’s operating income is expected reach US$49 million (MOP392 million) in the first quarter of 2010, MGM Mirage has announced in its preliminary results. The operating income included depreciation expense of US$22 million (MOP176 million), a significant improvement compared to an operating loss of US$5 million (MOP40 million) in the 2009 first quarter, which included depreciation expense of US$21 million (MOP168 million). MGM Grand Macau, a joint-venture between MGM Mirage and businesswoman Pansy Ho Chiu King, is expected to be listed in Hong Kong in the third quarter of 2010. Globally, MGM Mirage - the biggest casino owner on the Las Vegas Strip - posted a preliminary first-quarter net income loss of US$96.7 million.

MGM Mirage to change name MGM Mirage is set to change its name to MGM Resorts International. The company is currently asking shareholders to approve the new name. Despite dropping the Mirage from its name, the company has given an assurance that it doesn’t intend to sell The Mirage hotel-casino, in Las Vegas. “MGM Resorts International better represents our company’s growing global presence,” company Chairman and Chief Executive Officer Jim Murren says. “As a truly international company, our name should clearly reflect that.” MGM Mirage owns MGM Grand Macau in a joint venture with businesswoman Pansy Ho Chiu King. MAY 2010

Gaming

If the cap fits Gaming table cap concerns aside, casino stocks are fairing well BY RAY CHAN

espite a funds outflow from the Hong Kong market, investor caution over the US economic recovery, and further interest rate hikes to curb an overheating mainland housing market, Hong Kong-listed casino stocks continue to outperform the benchmark Hang Seng Index. On a year-on-year basis, the five casino stocks recorded an average of more than 20 percent return as against a 2 percent decline overall in the Hang Seng.

Outperforming

Interestingly, year-on-year, casino operators like SJM, Galaxy Entertainment and the lagging Melco, outperformed the Las Vegas operators such as Sands China and Wynn Macau, as a less demanding valuation helped to boost the stocks’ rebound. Between March 20, 2009 and April 19, 2010, shares in

Melco divests its Macau IT business Melco International Development Limited is to dispose of its indirect wholly-owned subsidiary, Elixir International Limited. Elixir is engaged in sale of hardware and software in Macau and the provision of related maintenance and consultancy services. Melco will sell the entire equity interest of Elixir International Limited for HK$371,029. In addition, Melco will receive a HK$40 million loan repayment. The purchaser is a new company jointly owned by Leong Van Tat and Liu Man Fai, who are currently the chief executive officer and the chief financial officer of Elixir, respectively. Lawrence Ho, group chairman and CEO of Melco, said: “I believe this transaction is at the best interest of the shareholders’ value. Through the disposal of non-core business, Melco can further streamline and focus its businesses on the leisure and entertainment segment.” The disposal has no effect on the Group’s 39.5 percent equity ownership in Elixir Gaming Technologies, Inc, a provider of electronic gaming machines on a participation basis in Pan-Asia. MAY 2010

SJM, the largest gaming operator by revenue, and Hong Kongbased Galaxy both doubled, benefitting from rising mainland visitor numbers. Interestingly, the worst performance in valuations (both Return on Asset and Return on Equity) came from the company that tripled its share price last year, Wynn.

Relatively stable

Wynn Macau remained relatively stable, both in terms of valuations and cash flow, mainly due to a careful capital expenditure plan. Galaxy Entertainment finally announced its long-awaited refinancing plan, which was welcomed by investors and analysts. The company said it secured a six-year HK$8.8 billion loan from a consortium of Asian banks, such as the Macau-based

STDM expects losses Sociedade de Turismo e Diversões de Macau (STDM) is expecting to register losses in 2009, because, for the first time, its results won’t include those of Sociedade de Jogos de Macau (SJM) which was listed in July 2008. STDM’s annual report is expected to be released still in the first half of 2010. Without disclosing any figures, STDM director Pansy Ho Chiu King noted that the international financial crisis had a negative impact on the company. Meanwhile, Pansy Ho said her father, SJM and STDM boss Stanley Ho Hung Sun, is “fit and well” and recovering well.

VIP promoter boosts rolling chip turnover Asia Entertainment & Resources Ltd. (AERL) said its unaudited rolling chip turnover for the first quarter was US$1.894 billion, up 132 percent year-on-year. Rolling chip turnover for March 2010 was US$496.7 million, up 93 percent year-over-year, compared to US$257.8 million for the month of March 2009. AERL operates through its subsidiaries as a VIP room gaming promoter. The company currently takes part in the promotion of two VIP gaming rooms in Macau: one at MGM Grand Macau and the other at the StarWorld.

91 Banco Nacional Ultramarino (BNU), Bank of China, ICBC Macau, HSBC, Hang Seng Bank, and Guangdong Development Bank, with a prevailing interest rate of 4.5 percentage points above HIBOR (Hong Kong Interbank offered rates). The company raised US$350 million in bonds by paying an interest rate of 9.875 percent last year, with a maturity in 2012.

Cap confusion

Galaxy deputy chairman Francis Lui Yiu tung said the company is not worried about the limid on gaming tables implemented earlier this year by the Chief Executive Fernado Chui Sai On. The government is to cap gaming table numbers at 5,500, an increase from existing numbers of 4,700. This has generated confusion and concern among foreign investors as they try to get some clarity on the issue. Macau based gaming consultant, Ben Lee of IGamiX Management & Consulting Ltd confirmed that there has been a flurry of phone calls since that announcement, as investors and anlysts try to work out the implications for pending projects such as Sands’ parcel 5/6 and Galaxy’s Cotai resort.

Real question

“The real question here is what constitutes ‘existing tables’? said Lee. “Is it the number of actual tables currently out on the gaming floors or the maximum number of tables that each property had previously been approve ?’ehe asked. In any event, the government has given themselves some manouevring room to deal with the operators, Lee added. For now, the US rival Las Vegas Sands’ Lot 5 and Lot 6 expansion project in Macau’s Cotai area will have about 670 tables at its opening, Chief Executive Steve Jacobs told the Wall Street Journal.

1Q 2010

4Q 2009

3Q 2009

2Q 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

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

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% -50.0% -60.0%

1Q 2009

4Q 2008

26,252 26,019 16,828 5,804 1,533 687 489 223 150 47

24,358 24,078 15,616 5,186 1,478 654 503 174 177 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 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

32,036 31,781 21,742 6,536 1,616 723 473 215 161 53

25,619 25,408 16,287 5,898 1,533 638 432 253 125 40

Macau Patacas (Million)

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)

Chinese Lottery Instant Lottery

QoQ%

Source: Gaming Inspection and Coordination Bureau; Bloomberg MAY 2010

Gaming

Cotai is the future: Melco Crown

aming operator Melco Crown has finally explained why it terminated an agreement to acquire a Macau Peninsula site where it planned to build a casino. “Our decision to terminate the agreement to acquire the Macau Peninsula site was based on our view that Cotai has established itself as the primary location for future development projects,’’ the company said in its annual report, filed in the US Security and Exchange Commission. Melco Crown entered into a conditional agreement to acquire the site, near the Macau Cultural Centre in May 2006, at a price of HK$1.5

billion, of which the company paid a deposit of HK$100 million. However, the acquisition agreement was terminated in December 2009 and Melco Crown was refunded the deposit. According to an earlier report in the Sydney Morning Herald, the land is owned by companies associated with the third wife of Stanley Ho Hung Sun, Chan Un Chan. Stanley Ho’s son, Lawrence, is co-chairman of Melco Crown. The casino, called Trinity, had been scheduled to open later this year and was estimated to cost US$675 million. Meanwhile, Melco Crown also says in its annual report it is “in the final stage of concluding a revision” to

its land lease agreement for City of Dreams, pursuant to which it will be able to increase the developed gross floor area by approximately 1.6 million square feet. “It is our current plan to develop an apartment hotel tower at City of Dreams and we continue to assess market conditions and other operating factors to ascertain whether this plan represents best use of the potential developable opportunity at City of Dreams,’’ Melco Crown explained. Sands China’s intention to sell its Four Seasons apartment hotel in a cooperative form of ownership has drawn criticism from some lawmakers and even the government has said the building shouldn’t have residential purposes. Finally, Melco Crown states in the annual report that its agreement with New Cotai to operate the Macau Studio City casino remains in place. However, the company notes that the formal opening of Macau Studio City has not yet been announced and that there are consensus problems amongst the resort developers – eSun Holdings, CapitaLand Integrated Resorts and New Cotai – regarding the development and the timing for the completion of financing.

Melco unit faces court A group of four American hedge funds are seeking damages in a suit against Elixir Gaming Technologies, a slot machine distribution company owned by Lawrence Ho Yau Lung’s Melco International Development. The hedge funds accuse Elixir of “fraud or deceit” that resulted in unspecified “millions of dollars” in damages, the South China Morning Post reported. The case is being analysed by a federal court in Manhattan and initial pre-trial conference is set for this month. Among the defendants are Elixir, Melco, Ho and 14 other directors and employees of Elixir. The hedge funds claim that Melco acquired majority control of Elixir in 2007 “through fraudulent and otherwise improper means”, and that the defendants “engaged in a scheme to deceive the market and a course of conduct that artificially inflated the price of the company’s common stock and operated as a fraud or deceit upon plaintiffs and purchasers”, the South China Morning Post reported. Hedge funds Prime Mover Capital Partners of New York and three funds run by the managers of Los Angeles-based Strata Fund L.P. are asking for compensatory damages plus interest, in addition to their legal costs, after shares in Elixir fell more than 90 per cent.“The company intends to vigorously defend itself against these allegations and remains laser focused on driving continued improvements in our core operations,” Elixir chairman and chief executive Clarence Chung said in a statement. Chung is also named as a defendant. MAY 2010

Media too cool on Macau The Macau casino industry is under-represented in the English-language media worldwide, says PR specialist Ernest Franklin Martin. Martin analysed 13,000 articles mentioning Macau gaming published between 2004 and the first quarter of 2010, the Macau Daily Times reported. He found that despite the city having higher gaming revenues than Las Vegas, “Sin City” still attracts more media attention. Martin also found that there was a problem with what he called “reputation’’ levels for the Macau gaming industry as a whole, but the trend began to improve as of the end of September 2009. At present the Macau operators have “mid-tolower levels of reputation”, said Martin.

Macau boosts Wynn results

US regulators probe Macau

everal US gaming regulators are analysing Macau casinos and possible links to organised criminals, Reuters reports. Nevada’s Gaming Control Board is looking at Las Vegas Sands operations, following a report by the news agency about an alleged connection between the company and a Macau-based businessman alleged to have ties to organized crime. “At the conclusion of our analysis of the situation in its entirety, this agency will move appropriately as governed by Nevada law and standards required of our Nevada licenses,” Randall Sayre, a member of the Nevada Gaming Control Board, said in an e-mailed statement to Reuters. Sayre said the situation at Sands, along with the general environment regarding VIP operations in Macau, was known to the agency and would be addressed “at the point the investigative product is ripe for consideration.” Sands operates casinos in Macau, Las Vegas Strip and Bethlehem, Pennsylvania. A spokesman for the Pennsylvania Gaming Control Board told Reuters that “the review of suitability by the Bureau of Investigations and Enforcement is ongoing for all license holders, and it will not confirm or deny whether this is a matter in which it is actively investigating.” Sands is not alone. According to Reuters, MGM Mirage will be investigated by the Illinois Gaming Board, after the state of New Jersey found that the company’s Macau partner, Pansy Ho, allegedly has links to organized crime. “We’re ready to provide whatever additional information they may request,” MGM Mirage spokesman Alan Feldman told Reuters. MGM owns a 50 percent stake in the Grand Victoria Casino, in Elgin, Illinois. The Michigan Gaming Control Board said it was also reviewing MGM, which owns a share in MGM Grand Detroit casino, after the New Jersey findings. The Mississippi Gaming Commission said it was reviewing the New Jersey report on MGM Mirage, according to the commission’s deputy director, Allen Godfrey. In Nevada, where MGM operates 14 casinos, regulators have no plans to reopen this case. “Nevada’s position has not changed, and there are no plans to reassess the joint venture relationship between MGM Mirage and Ms. Ho,” Randall Sayre, a member of Nevada’s Gaming Control Board, told Reuters.

Wynn Resort’s global operations took in revenues of US$908.9 in the first quarter of 2010, boosted from US$740 million in the same period last year on healthy Macau figures. Asia’s gaming mecca saw a 31.6 percent jump in revenues for Wynn Macau. There was a 9.3 percent revenue increase from the company’s Las Vegas operations. Net income attributable to Wynn Resorts for the first quarter of 2010 was US$27 million compared to a net loss of US$33.8 million a year ago. At Wynn Macau, first quarter of 2010 net revenues were US$590.6 million compared to US$448.7 million in the first quarter of 2009. Wynn Macau generated adjusted property EBITDA of $181.6 million compared to US$114.6 million in the first quarter of 2009.

Wynn drops Philadelphia plans Wynn Resorts says it has ended negotiations regarding the potential opening of a casino project in Philadelphia, USA. “We are fascinated by the legalization of full gaming in Pennsylvania and stimulated by the opportunity that it presents for Wynn Resorts, but this particular project did not, in the end, present an opportunity that was appropriate for our company,” the company’s chairman and CEO, Steve Wynn said.

Sterne Agee bets on Macau Sterne Agee has raised its full year Macau grossgaming estimates for 2010, which now call for growth of 36 percent over 2009 results. Sterne Agee’s previous estimates called for approximately 25 percent Macau market growth in 2010. Sterne Agee is one of the oldest and largest privately-held brokerage firms left in the United States.

Cotai for all All gaming companies in Macau will be allowed to have a footprint in Cotai, according to an unnamed source quoted by the Portugueselanguage daily Jornal Tribuna de Macau. The same source added that the government will keep the promises made to the gaming operators. Currently, Sands China, Melco Crown and Galaxy have secured a presence on the Cotai Strip. Wynn has indentified a site of approximately 52 acres in Cotai and submitted an application to the Macau government to obtain the right to lease this parcel – it is now waiting for the final approval of this application. As for MGM Grand Paradise and SJM, both have shown interest in investing in Cotai, but are still out: MGM is waiting for the government’s approval while SJM has said it is waiting to see how the market develops. Jornal Tribuna de Macau says that the decision to allow all gaming operators to expand to Cotai will not clash with the government’s cap on the number of gaming tables at 5,500 since the cap is valid only until 2013. MAY 2010

Gaming

Ties that last

Software firm Oribis has a one-on-one relationship with MacauSlot and is playing the long game in terms of expansion BY LUCIANA LEITÃO

he restriction of Macauslot’s gaming activity to soccer and NBA basketball could be one reason behind its recently announced decrease in turnover. As a result, Sociedade de Loterias e Apostas Mútuas de Macau (Macauslot) – has previously stated that it intends to approach the government to propose a license for betting on other sports. “It would be a relatively straightforward process to expand their online offering across other sports”, observes David Loveday, chief executive officer of Orbis, the software provider for Macauslot. “When working with long-established customers such as Macauslot, the integration process for Orbis software is actually quite fast. The OpenBet platform is, as the name suggests, entirely open. It allows seamless integration with third parties and the addition of add-on applications; it is robust, scalable and flexible,” he says. On whether the government should license more sports betting operators, Orbis’ CEO is cautious: “Macauslot is a strategic partner who we value and would always consult if the situation changes in Macau.”

Unlicensed bookies

Illegal bookmaking might also be behind some of the problems Macauslot has been having, even though, for Loveday, it is common to all legal operators and developers. “Orbis has a strong track record in compliance and our software cannot be used to involve players from anywhere other than tier 1 jurisdictions [developed betting markets regulated by law],” he says. Being free to do as they wish and working in a different tax regime, unlicensed bookies might be attracting more clients in the short-term. However, in terms of long-term strategy, they are exposed to more risk mainly because, as more and more legitimate operators (part-Government licensees) enter the market, the clear benefits of trading in legal websites far outstrip any minor price improvements that may be offered.

Partnership with Macauslot

Macauslot is mainly owned by Sociedade de Turismo e Diversões de Macau (STDM). Founded in 1989, it started off as the first governmentfranchised company offering the sale of instant winning lottery tickets on passenger ferries running between Hong Kong and Macau. In 1998, the company was authorised to develop soccer betting, becoming the first government-franchised company in Asia to operate a sports betting business. Four years later a government-franchise for basketball betting followed. Orbis has been the software provider for Macauslot for MAY 2010

David Loveday

10 years. “Orbis has integrated our world-leading OpenBet platform into the Macauslot system, allowing access to third parties and various applications through the pioneering open platform,” Loveday explains. It works side by side with the Macau Government using very strict guidelines and levels of approval for all bettingrelated businesses. “We build and tailor our software according to specifications provided to us by Macauslot. Those specifications include key functionality that is required or necessary to satisfy the conditions of operating under a Macau license,” Loveday outlines. The Orbis CEO says the the fundamentals of sports betting in Macau are very similar to those in the west. Therefore, according to Loveday, Asian software is concerned with quality and the types of bets. Nevertheless, he says the types of bets in Macau are very

95 different from the ones in the United Kingdom, and are rooted in Asian handicap betting.

Mainland chance

The online gaming sector seems to be eager to join the mainland market, but up to this point, it is impossible. “Like other businesses in this sector, we are keen to work with the mainland, but legally and in an approved way. “It would be a natural extension for our solid operations currently in place and we would be well positioned to take advantage,” he says. According to the CEO, the most probable route for expansion may come via government-regulated, existing institutions. Let us not forget that gambling is still illegal in China, although welfare and sports lotteries are allowed, but under very particular circumstances. Loveday says: “By continuing to work very closely with Macauslot and respecting the laws and wishes of the government, we can present new jurisdictions with a clean slate and proven integrity.” In addition to Macau, the company also operates in Australia. “Orbis is keen to enter new legalised areas and offer the same world-leading OpenBet platform used by the world’s largest betting operators, to new potential partners in all tier 1 jurisdictions.”

Gaming tax boost Macau registered a budget surplus of MOP12.9 billion in the first quarter of 2010, with direct taxes from gaming increasing 60 percent. The surplus represents a year-on-year growth of 105.1 percent. Direct taxes from gaming totalled MOP14 billion, representing 86 percent of the public finance revenue between January and March, provisional data from the Finance Services Bureau shows. In the first quarter of 2010, the government’s total revenue rose 54.9 percent year-on-year to MOP 16.4 billion. Meanwhile, the government’s total expenditure dropped 18.7 percent, to MOP3.5 billion.

Singapore no match Sociedade de Jogos de Macau (SJM) chief executive, Ambrose So, said Singapore’s gaming project will be no match for Macau. “I don’t think that it will have too much impact on Macau Singapore is a financial centre and gaming business there is only a part of the overall tourism industry,” he said. “I don’t think Singapore would like to develop gaming business like Macau does, as its main industry,” So added. The SJM chief also stressed again SJM is adopting a “wait and see” approach regarding its plans for the Cotai Strip.

MAY 2010

Spring/Summer 2010 Collections The Fine Art of Haute Couture What you should pick from this season ready-to-wear Do not waste time and money! Shopping advises from professionals that might just save your day

BREAKDOWN BY THE NUMBERS

THE FIGURES BEHIND SOME FASHION FACTS

1200 the number

of pairs of shoes owned by Imelda Marcos, wife of former Phillipines president, Ferdinand Marcos

US$40,000

amount of money spent on shoes by the character Carrie Bradshaw from “Sex & The City”

Over 500

the number of times, 90’s supermodel Claudia Schiffer has appeared on covers of fashion magazines

600 seconds

how long a typical runway show lasts

US$807,000 amount of money raised when Christie’s auctioned Givenchy’s ‘little black dress’ worn by Audrey Hepburn in “Breakfast at Tiffany’s”

0 degrees

1959 the year Barbie was born. She turned 50 last December

1873 the year

the typical American blue jeans were invented by Jacob Davis and Levi Strauss

the temperature in the hermetacally sealed “glacier” box that housed Chanel’s Autumn/Winter 10/11 fashion show

Fashion Statement The definition in the urban dictionary is simple. A ‘Fashion Statement’ is simply clothes that draw attention to the person who wears them. So this means that whether you are a man or a woman, all you have to do to make you’re own fashion statement, is dress yourself for some attention. For some people it might just be as easy as that, but truth be told, these statements generally come with rules and those rules change every season of the year. So the basic question about fashion statements is: Do you wear a statement or does the statement wear you? Statements in fashion are just like fashion trends: they come and go after a while. For instance, do you remember every time you look at those old pictures that get you thinking “How in the hell did I have the courage to wear that?” In fact, at the time, more than succumbing to a trend, you were stating something, your own opinion, your group’s opinion, or you were just a reflection of society’s image at the time. In this fashion issue, we try to understand a little bit more about fashion designer statements and their works of art. We confess to falling in love with the Spring/Summer 2010 haute couture collection by Dior, and we wave goodbye to Alexander McQueen, remembering the innovative designer and his amazing shoes creations. As we’ve said before, some of us are born with such an eye for fashion styles, that whatever we put on is flawless. But others of us, more human, have to call for emergency measures. And if you have the money, then things get much easier. This month we meet a Shopping Advisor, a person that basically tells her clients what to buy, what to wear and what to avoid in the process. If you can’t afford that type of advice, just try to take the best from our own tips in this issue. Fully dedicated to gentlemen suits, we give you the dos and the don’ts for this season’s most wanted pieces of cloth. This Essential Fashion issue wraps it all up with some amazing photos from the Paris and New York haute couture and ready-to-wear collections, and of course, we spice things up with some lingerie. Once again, we give you the tips, the decision to act on it is up to you!

Fashion Decade Revival’s good and bad

Good From conventional suit in sober colours and hats, to the “Teddy boys” and Ivy League looks, not forgetting the motor cycle fanatics “Ton-Up Boys”. Men’s fashion looked really classy.

Bad 50’s

The one and only Mini Skirt phenomenon! We love it and it loves us!

60’s

Pin-up look taken to the extreme! While it seems like a fairly easy look to recreate, it’s actually even easier to end up looking like a rejected extra from “Grease”.

Winklepickers were sharp shoes, quite literally, with a pointed toe. Winklepickers were popular mainstream fashion for young men in the early 60s. The pointed toe was also fashionable for young ladies’ shoes, which were also known by the same name. Polyester and Disco combined. Like the Bee Gees used to sing: “It’s a tragedy”.

Flower Power, printed t-shirts, trainers and canvas shoes. Needless to say: casual!

70’s

Liberty equals creativity. You do not want to accessorize, you want to “excessorize”. Think Madonna!

The Grunge Rock look looks sexier as time goes by. And the classic blazer was really your best buy from those days!

80’s

Garish neon greens, yellows, pinks and blues might look good on teenagers nowadays, but if you are a working person just do not exaggerate. Please…

90’s

The Capri pants! This particular item should have appeared back then with an instruction book and heavy penalties for those who dared to cross the line.

THE SEVEN DEADLY SINS IN FASHION 1 Envy: Stealing your best friend’s style - Everyone has one, but attempting to copy a friend’s entire look - or even a single item of clothing - can have disastrous results if you have different body shapes or colouring.

5 Wrath: Hating - and hiding - your figure. Everyone has hang-ups about parts of their bodies. Identify your shape - whether it’s slim and straight or curvy - and dress accordingly.

2 Sloth: Slipping into sloppy dressing habits - Chipped nail polish, dirty or broken fingernails and messy hair are the three biggest culprits when it comes to sloppy dressing.

6 Lust: Discarding anything without a designer label. Designer clothes are fun in moderation, but when the latest sunglasses, trainers, hat and coat are worn en masse, it becomes too much.

3 Gluttony: Cramming your cupboards with too many clothes - Filling your wardrobe with too many clothes can be just as bad as not having enough - five identical black skirts are no use if you have nothing to go with them. 4 Pride: Leaving nothing to the imagination - Just because you’ve got it, doesn’t mean you have to flaunt it. Toorevealing clothes are an all-too-common fashion crime. At work particularly, skimpy skirts, sheer fabric and tiny tops are truly a fashion crime.

7 Greed: Growing out of your clothes - but refusing to admit it. Fitting into size 10 in one shop doesn’t necessarily mean you’ll be the same size in all shops, so swallow your pride and opt for a bigger fit if necessary.

FEATURE

Christian Dior Spring-Summer 2010 Collection

It’s such a * NEW LOOK

American Designer Charles James, and his inspiration of debut de siècle ladies that rode en amazones (side saddle), inform the cut and asymmetric posture of the new tailleur bar. Riding jackets, halterneck dresses, and riding skirts are cut in Monsieur Dior’s beloved classic English tailoring fabrics of red grain de poudre, fuchsia wool satin, tricotine, cotton piqué and tailoring checks. Both Charles James and Christian Dior share a love for the iconic feminine silhouettes and illustrations of the naughty nineties, as personified by the 1890s Gibson Girl. This bold femininity leads to the spirit of James’ most infamous client and collector Millicent Rogers. The eccentric heiress clashed daring coloured satins of magenta, petrol blue, olive and sapphire, all encrusted with heavy crystal embroideries, and adorned herself with oversized jewels. The salons are decorated with his ladies in twotoned duchess satin grand ball gowns shaded in the palette of a Cecil Beaton portrait. The expansive skirts are cut to evoke the gesture of the drape of a skirt when riding. “From l’amazones and dressage to his iconic ball gowns, we gaze at the influences behind Monsieur Dior’s New Look”, says John Galliano. This collection goes back to Charles James and it goes back to Christian Dior himself

100

HOMMAGE

L’Enfant Terrible waves goodbye

who in the fifties presented the New Look. After the austerity in France of World War II, Christian Dior created a popular dress silhouette with a narrow waist and a full skirt featuring yards of fabric which spoke to prosperity and abundance: The New Look. *Harper’s Bazaar editor-in-chief Carmel Snow’s exclamation after Dior’s first fashion collection launch in 1947.

Late on the 11th of February, Alexander McQueen, a fourtime winner of the British Designer of the Year Award, was found dead at his home in London, aged 40, after an apparent suicide. McQueen was the creative director of his own label, which was bought out by Gucci, and was one of Britain’s most lauded fashion designers. His death came just over a week after his mother, Joyce died, and almost three years since his close friend and style guru, Isabella Blow, also committed suicide. Blow, a magazine editor and muse to milliner Philip Treacy, drank weed killer after being diagnosed with ovarian cancer. A British Vogue profile says McQueen’s most recent collection, spring/summer 2010, was critically acclaimed as his best ever. “Who knows?” couture king Karl Lagerfeld said. “Perhaps after flirting with death too often, death attracts you. There was always some attraction to death, his designs were sometimes de-humanised. I found his work very interesting, never banal.” Alexandra Shulman, editor of British Vogue, said: “He influenced a whole generation of designers. His brilliant imagination knew no bounds as he conjured up collection after collection of extraordinary designs. His death is the hugest loss to anyone who knew him and for very many who didn’t.” McQueen cut his teeth as a tailor in Savile Row, where legend has it that he left his distinctive mark in the form of hand-written obscenities, in the lining of a jacket for Prince Charles, heir to the throne. He designed the famous “bumster” trousers displaying the cleavage between models’ buttocks in a parody of low-slung trousers worn by workers, and survived general condemnation over a collection of ripped clothing entitled “Highland Rape”, the first time anyone had chosen to send supposed rape victims down the catwalk. McQueen viewed Yves Saint Laurent as a genius and a source of inspiration. When the French designer died in 2008, McQueen said Saint Laurent was “the reason why I am in fashion”. “To me fashion should predict the time we live in. He did this is the 60s and 70s,” McQueen said at the time. “Pure genius and a man that I always revered and tried to emulate.”

101

HAUTE COUTURE

Chanel Karl Lagerfeld sprang a series of surprises in a sumptuous confection of a collection for Chanel. There was no Little Black Dress to be seen and the traditional Chanel suit, too, was redesigned, the slim, A-line skirt being replaced by little shorts, or culottes, trimmed with tulle. There was not even a gilt chain or hint of gold to be seen. Lagerfeld called the collection “neon-baroque”, a reference to the acid yellow, candy-pink and fluorescent lime hues which appeared like icing, amidst a delicate tableau of frosted pastels, champagne and cream; and one hint of black, in the form of a large “kipper tie”, embellished with a crystal brooch, which punctuated the front of a classic, white silk, columngown. The collection paraded like a master class in the fragile delicacy of handwork, which can be achieved by the artisans in the Chanel atelier.

Zuhair Murad The Lebanese designer presented his new Spring/Summer 2010 collection entitled “The Officer’s Muse” at Hotel de la Monnaie in Paris. Officer Jackets, fringed shoulders, round buttons ... this season, the Lebanese designer draws a sensual and dynamic line, delicately taken from the male universe. Black, gold and khaki dominate the show, but the designer also saves some space for burning red, sparkling green and azure blue. The forms and fabrics are very diverse: draped silk, crystals, gemstones, organza, sequins and beads come together in amazing harmony.

102

Givenchy Ricardo Tisci has taken some risky steps for Spring 2010. This is one of the most complicated and elaborate collections for this season combining absolutely sewn to perfection and fit/fall beautifully with a gothic sense. Too much of a mixture that nevertheless results in fine pieces.

Valentino For many of the Haute Couture catwalks, the movie Avatar was an inspiration. Valentino’s show called to mind Neytiri from Avatar. Maria Grazia Chiuri and Pier Paolo Piccioli went in a youthful direction, experimenting with colour, and allowing neutrals and acid tones to share the spotlight, with models donning Na’vi-blue shoulders and sheer headpieces that covered the eyes and resembled Neytiri’s banshee-riding accessory staple.

Lanvin An exquisite collection, Lanvin Springs has a metallic note. With draped movements, the dresses are rich in artisans work and absolutely fabulous.

103

TRENDS

Spring/Summer 2010 Fashion Trends

BALMAIN

MATTHEW WILLIAMSON

Masculine Elements

DIANE VON FUSRTENBERG

Heavy Print

GILES DEACON

Everything from boyfriend sweaters to fitted pants are coming in bold geometric patterns and animal prints. This trend both complements and contrasts the neutral tone style. Heavy print leggings are going to be especially hot for Spring. Whether floral, striped, abstract, bold or subdued... patterns on pants are giving us new bold wardrobe options for the warmer months.

STELLA MCCARTNEY

LOUIS VUITTON

Peek-A-Boo Denim Trend

Expect denim jackets to be peeking out from underneath leather jackets and oversized blazers. They’re a subtle nod to the 90s without overdoing it, seeing as how fashion has certainly had its share of flannel lately. It also adds a nice layered look that is casual and smart-looking. Don’t forget the ripped, the torn and the patched denim.

104

Blazers and vests are still in, but now they’re worn with shorts and leggings. Big shoulders are coming back as well, meaning that the 80s are now officially vintage. Why not play up the masculine tones with a feminine accessory like a hairband of a locket? It will add a little bit of tomboy chic to the outfit. Don’t forget the military look.

NICOLE FARHI

Looser Pants

ISABEL MARANT

For the last 10 years, skinny pants have dominated legwear. This trend ultimately led to the legging revolution of the last five years. This Spring, there are much looser pants, suggesting a possible end to the skinny jean decade.

2010 is an exciting year for fashion; experts predict that we’ll emerge from the global financial crisis and, as a result, we can expect to see a new standard of fashion rising up. Classically inspired but with a serious infusion of the sex and skin, this is what we’ll be wearing in 2010.

DIANE VON FUSRTENBERG

ALEXANDER WANG

Sportswear

CHARLOTTE RONSON

STELLA MCCARTNEY

Rarely do sports and high fashion have similar aesthetics. In Spring 2010, laceup shorts, V-neck sweaters and fashionconscious sweatpants make an effortlessly sexy and competitive look.

PROENZA SCHOULER

Neutral Tones

Neutral tones create that elegant, barely there look. Champagne, beige and all shades of grey are in. Part of the reason why this neutral color style has emerged is because there is so much print and energy in other trends this season, which suggests that neutral will also outlive these other trends.

JAEGER LONDON

CHARLOTTE RONSON

Palette of vivid colours

It looks as though we’re in for a very greenbased season with a wide variety being featured in the palette; though also prevalent are pinks, blues, browns and even a neon green. Spring/Summer 2010 is all about mixing the outrageous with the elegant. There is a nod to trends of the past, but this Spring, fashion is taking a big step in a new direction. It’s about smart and sexy looks paired with sporty and delicate styles. LOUIS VUITTON

STELLA MCCARTNEY

FENDI

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INTERVIEW

Fashion just for you Have you ever heard of a fashion advisor before? A fashion expert, also commonly referred to as an image specialist, is an individual who consults with you or gives you recommendations on the latest fashion trends. Professional fashion, image and shopping advisors are those who spend several hours every week reviewing the most recent trends in fashion. Si Wai Cheong, started out as a fashion design student and turned out as a Private Shopper at The Venetian for The Shoppes at Four Seasons, a mall with some of the most luxury fashion brands worldwide. Essential spoke to Si Wai Cheong to try to find out when the best time is to get that specialist advice. 106

What is your job about? What does a fashion advisor do? A fashion advisor is a personal stylist and a personal shopper. It’s all about giving advice and creating a new wardrobe for clients who are looking for a little change, helping people who don’t have time to look at fashion news and also people who don’t know how to match clothes together! I just try to refresh my clients’ wardrobes respecting their styles and their tastes! What kind of clients do you have? My clients are mostly wealthy people that come to Macau usually for tourism. Most of my clients are from Mainland China and they approach my service in order to find that special look or just to focus on some products.

BIG SPENDER

Secrets et Merveilles A high jewellery collection between myth and reality “Cartier, King of Jewellers and Jeweller of Kings”… The story is forever being transmitted as a legend that flows through the centuries, a wondrous tale of which Cartier’s latest high jewellery collection reveals the secrets. Around 70 unique pieces dedicated to femininity, as the jeweller becomes the master and magical storyteller through one of the most exceptional collections of precious gems and fine pearls. Jewels with a Queen’s profile: the Peacock Queen, a creature displaying her flamboyant attire, the Pearl Queen and her courtesan’s drapes, the Snake Queen whose scales and body bewitch the spirits, and the Diamond Queen, more sidereal and sparkling than any other.

How do you proceed with your clients? What is the process? A client contacts me and we set an appointment. During the first meeting, we discuss the client’s fashion wishes, tastes, lifestyle… I listen carefully and try to properly view their expectations. Then, we set a full shopping trip day that I organise with a schedule at our Shoppes at The Venetian or I bring the suggestions to our Private Shopper Cabinet and show the client my suggestions and some surprising solutions. I can also explain many associations that the client can do with the new purchases. Either way my clients will not have to deal with practical details (delivery, touches..)…So it’s also a luxury shopping experience! Who’s more interested in Shopping advice, men or women? Actually, most of my clients are men. Women do seem to have more of an eye for shopping at this level, but men feel a little bit lost in the process. They don’t know where to start with such a wide brand choice, so most of the time they end up buying a product not because it suits them better, but because of the brand image. So, my job in these cases is to try to find out the right and individual style so I can find those particular items for the clients. What’s the most difficult aspect of your work? The clients focus on one or two brands. Most of the time I have to show the client there are more options than just brand X or brand Y and that’s difficult, because they’ve never heard or they’re not aware that for a certain type of style, we should mix more brands and different items. 107

REVIEW

SHOES, SHOES AND SHOES... ALSO BAGS

Made in Italy The new Spring-Summer collection revisits tradition and the icons of the brand with a contemporary twist. Tod’s understated and refined luxury is directed towards a sophisticated woman through hushed tones and elegant ambiance. The D Bag is an iconic product par excellence that has retained the brand’s essential DNA and the iconic Gommino shoes get a new twist with sailing details and bright colours. Together with the rubber sole loafer and new sneaker, they are perfect for both urban-casual or long week-ends. High heeled sandals with retro style add a sophisticated and feminine touch to the new collection.

Out of this world Alexander McQueen shoes for Spring/ Summer 2010 are literally out of this world and have created mixed feelings. Some of the shoes look like a cross between cocoons and helmets. Although several of the shoes may look rather extreme to most of us, their mission is to capture attention. Mission accomplished. The very creative McQueen collection exudes a mystical and futuristic aura and we are sure that its impact will prevail.

Reebok Wonders Wonder Woman, is undoubtedly one of the most iconic fictional characters in our history. So iconic that Reebok has decided to liken the Reebok Freestyle High to the most popular female superhero. The Reebok Freestyle High “Wonder Woman” is clearly inspired by Wonder Woman’s sexy costume, which is also inspired by the American flag. Now all you’re missing is the Lasso of Truth. Price:MOP1600

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Standing on top of Creativity Acne Jeans unites innovative jeans styles with a versatile wardrobe for men and women, ranging from basic cotton T-shirts, to tailored jackets to luxurious accessories and shoes. While every collection forms a concept, each piece can be worn separately and mixed effortlessly with other brands. By designing simple, functional clothes, Acne Jeans aims to create a modern framework for individuality. Check out Acne Jeans Spring/Summer 2010 proposals.

Chanel Gothic-Lolita The preponderance of chunky clogs and wooden platforms plays as quite a contrast against feminine, textured, cone heels and layered floral-vamp sandals. But this strange variance in footwear makes sense when taken with Chanel’s 2010 show as a whole. Ultimately, if you are looking at the shoes alone, you are probably going to find yourself in a love-hate relationship with the clogs, no matter how dolled up they are. But the decorated pumps are heaven. So, if these ultra-feminine, gothic-Lolita influences trickle down into mainstream fashion, that’s a trend we love.

Summery Carousel Mulberry’s Spring and Summer Season has turned out to be a very good surprise, not only in terms of leather goods, but also the whole outfit. Playfully set against a gumdrop-bright background of painted carousel horses, Mulberry’s Spring/Summer 2010 collection is a complete 80’s-inspired flashback.

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TAKE NOTES

CHECK OUT THE RIGHT WAY TO WEAR A SUIT

So what elements should you look for? The Cut of the Suit In men’s suiting there’s a move away from the ‘skinny boy’ suit, but that’s not to say slim is out altogether nor that a boxy cut has replaced it. Instead, think of a cut that would appeal to a military officer, one that accents a sense of the masculine through three key silhouette elements: broad shoulders, slim waist and slim trousers.

Double Breasted Suits and Sports coats

Men’s fashion trends are few and far between; yes, a lot of women’s trends are eventually adapted to the men’s market, but if 2010 men’s hair trends prove anything, it is that classics will always rule when it comes to men’s fashion. Unsurprisingly it’s no different when it comes to men’s suits. While suiting and formal-wear trends for men aren’t seasonal (unless, of course, you’re talking about the weight of the cloth) and play out over several years, 2010 continues the change in men’s suiting that has risen to the fore in recent years. For the foreseeable future the trend in men’s suiting revolves around the classics, but more specifically modern takes on the classics. A good suit for this decade will take the best elements from the peak eras of men’s suiting (think the formality of the Victorian era, the savoir faire of the 1930s and the skinny detailing of the 1960s) and apply them to a modern silhouette. 110

The double-breasted suit is back. Those of you old enough to remember the last time the double breasted suit or sports coat was in (the 1980s through to the mid 1990s) may remember the boxy cut it inevitably came with. Fear not, that cut is gone. In its place is a cut that pairs broad shouldered with a slim waist, a cut that defies what double breasted suits were originally designed to do: hide a plump figure. Instead they’re now designed to accent and to heighten the perfect masculine shape: the V-shaped, well-worked body.

Three-Piece Suits Let’s face it: the waistcoat has long been a dead item for most men, but thanks to aresurgence in its popularity in men’s street wear, the suit waistcoat is back with a vengeance. Well, not quite a vengeance but it’s back, it’s subtle and it’s classic. And that means that in 2009 we’ll witness the return of the three-piece suit.

Choosing The Perfect Suit Yes, suits in 2010 are all about classic elements, but there are still plenty of factors away from the trend elements that you have to contemplate. Consider all of the following before making an investment in a suit this year.

How Many Buttons? The amount of buttons a single-breasted suit jacket should sport is really a matter of personal preference, but allow us to offer you the following.

FASHION & SEX

One Button A single button falls into the realm of a fashion suit; it’s been a trend before and will go out again. And there’s a reason for it: within reason, the more buttons a suit jacket has the taller a gentleman looks.

Two Buttons The most preferred for a modern suit. It conveys height, slims the waist, and fits perfectly within the realm of fashion and classicism.

Three Buttons Very much a look of the 1990’s, it’s making a comeback and has been seen amongst the tailored wares of Tom Ford and Ralph Lauren’s Purple Label. Three buttons convey a greater sense of height than a two button suit, but are harder to pull off.

The Shoulder A lot of suit terms can be mixed and matched, but we like the ‘British rolled-shoulder.’ Others might call it something else, but it is effectively where the shoulder padding finishes. A lot of Italian and US-based designers prefer to have the shoulder padding finish precisely where the bone does. A British rolled shoulder has the padding extend over the shoulder and roll down into the sleeve, and figures into men’s suiting as another visual trick - this time designed to make the shoulders seem broader and the arms better built.

Vents This one is really simple: choose a suit with two side vents. The only time to break this rule is if you’re buying a dinner suit. When tailored correctly, a suit jacket with side vents is always preferential due to the perfect silhouette it can provide.

Lapels Since the mid-20th century, notched lapels on a suit have been the staple, but as we return towards classic tailoring in 2010 we’ll see a return of the peaked lapel. Last at the fore of fashion in the 1920s, the peaked lapel is another of the great visual elements of a men’s suit: it helps convey the much coveted V-shape.That said, notched lapels aren’t out of fashion and both are an equally good investment.

What’s in your head? Is this obsession with lingerie simply a ploy thought up by retailers to lure men and women to the notion that sexy undergarments are a necessary part of a good love life? Or is lingerie popular because men are visual creatures who get excited when they see a woman dressed in seductive underwear? Perhaps it’s a little bit of both, but there’s no doubt that lingerie does have its positive effects on both men and women. Lingerie has been used as a sexual mechanism for years now and there’s no possibility of its slowing down anytime soon. Some men don’t see the point in paying hundreds of dollars for something that is going to come off in approximately 30 seconds, but others appreciate every thread on a woman’s body. Taste aside, men do love the element of surprise when their women get undressed, and there’s this whole other private outfit worn with them in mind and for which they’re the inspiration. Sometimes lingerie can help us escape from the treacherous monotony that is everyday life. Women love lingerie because it makes them feel not only sexy, but feminine. It’s hard for women to keep up that ‘hot mama’ look on a daily basis, so lingerie separates those ordinary days from the extraordinary days. And believe it or not, sometimes women wear sexy lingerie under their everyday clothes just to give themselves that boost of confidence they need to get on with their day. However, take it from us, men are not quite as simple as ladies’ magazines would have us believe. Research has shown that men are stimulated by variety, so even if you wear the same red crotchless knickers he loves every night, he will eventually get bored. Different styles of lingerie can reflect a different side of a woman’s sexual persona, so he’ll get to experience a different kind of woman each night. Besides, it’s a fact that everyone loves to feel special and when a woman buys that sexy item especially for her man, he should (he must) feel like a million dollars simply because she wants to impress him. See it as a private showing and only the two of you are invited to the unveiling.

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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

Next month look for Cars

guide to indulgence

2611 2629 2615 2419 2628a 2606 2618 1036b 2442a 2623c 2015 2323 2643 2312 2428 2108 2706 2642 2007a 2301, 2660 2610 2711 2523 2006 2705 1001a 2400 2207 2402 2646 2402c 2432 2118a 2010 1044 2019a 2622a 2625a 2446 2009 2212a 2023a 1013a 1001/ 2623b 2107 2105 1019 2201 2632 2109 K1 2616 2025 1020a K3 2207a 2020 2700 2660 2115 2612 2103 1008 2300a 2635 2401 2111 2603 2407 2413 2612b 2012 2440 2628 2641 2302c K5 2706 2640a 2627 2631 2601 2429 2120a 1013 2008 K6 2510 2201a 2031a 2328 2636

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

1208 1212 2835b 2836 2805 & 2806 1130 & 1131 1129 2845 2802 1223 2850 2801a 1207 2856 2812 2801 2816 2846 1211 2820 2835a 2847 2851 1226 2858 1215 2807 2838 2859 2829 2837 2840 2817 2849 2857 2813 2831 2841 2808 2848 2823 1213 2800 2825 2818 2839 2833 2821 & 2822 2809 1128 2850a 2832 2842 2853 & 2855

JOSEPH E. STIGLITZ PROFESSOR OF ECONOMICS AT COLUMBIA UNIVERSITY AND WINNER OF THE 2001 NOBEL MEMORIAL PRIZE IN ECONOMICS

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No time for a trade war THE BATTLE WITH THE UNITED STATES OVER CHINA’S EXCHANGE RATE CONTINUES. WHEN THE GREAT RECESSION BEGAN, MANY WORRIED THAT PROTECTIONISM WOULD REAR ITS UGLY HEAD. TRUE, G-20 LEADERS PROMISED THAT THEY HAD LEARNED THE LESSONS OF THE GREAT DEPRESSION. BUT 17 OF THE G-20’S MEMBERS INTRODUCED PROTECTIONIST MEASURES JUST MONTHS AFTER THE FIRST SUMMIT IN NOVEMBER 2008. THE “BUY AMERICA” PROVISION IN THE UNITED STATES’ STIMULUS BILL GOT THE MOST ATTENTION. STILL, PROTECTIONISM WAS CONTAINED, PARTLY DUE TO THE WORLD TRADE ORGANIZATION. Continuing economic weakness in the advanced economies risks a new round of protectionism. In America, for example, more than one in six workers who would like a full-time job can’t find one. These were among the risks associated with America’s insufficient stimulus, which was designed to placate members of Congress as much as it was to revive the economy. With soaring deficits, a second stimulus appears unlikely, and, with monetary policy at its limits and inflation hawks being barely kept at bay, there is little hope of help from that department, either. So protectionism is taking pride of place. The US Treasury has been charged by Congress to assess whether China is a “currency manipulator.” Although President Obama has now delayed for some months when Treasury Secretary Timothy Geithner must issue his report, the very concept of “currency manipulation” itself is flawed: all governments take actions that directly or indirectly affect the exchange rate. Reckless budget deficits can lead to a weak currency; so can low interest rates. Until the recent crisis in Greece, the US benefited from a weak dollar/euro exchange rate. Should Europeans have accused the US of “manipulating” the exchange rate to expand exports at its expense? Although US politicians focus on the bilateral trade deficit with China – which is persistently large – what matters is the multilateral balance. When demands for China to adjust its exchange rate began during George W. Bush’s administration, its multilateral trade surplus was small. More recently, however, China has been running a large multilateral surplus as well. Saudi Arabia also has a bilateral and multilateral surplus: Americans want its oil, and Saudis want fewer US products. Even in absolute value, Saudi Arabia’s multilateral merchandise surplus of $212 billion in 2008 dwarfs China’s $175 billion surplus; as a percentage of GDP, Saudi Arabia’s currentaccount surplus, at 11.5% of GDP, is more than twice that of China. Saudi Arabia’s surplus would be far higher were it not for US armaments exports. In a global economy with deficient aggregate demand, current-account surpluses are a problem. But China’s currentaccount surplus is actually less than the combined figure for Japan and Germany; as a percentage of GDP, it is 5%, compared to Germany’s 5.2%. Many factors other than exchange rates affect a country’s trade balance. A key determinant is national savings. America’s multilateral trade deficit will not be significantly narrowed until America saves significantly more; while the Great Recession induced higher household savings (which were near zero), this has been more than offset by the increased government deficits.

Adjustment in the exchange rate is likely simply to shift to where America buys its textiles and apparel – from Bangladesh or Sri Lanka, rather than China. Meanwhile, an increase in the exchange rate is likely to contribute to inequality in China, as its poor farmers face increasing competition from America’s highly subsidized farms. This is the real trade distortion in the global economy – one in which millions of poor people in developing countries are hurt as America helps some of the world’s richest farmers. During the 1997-1998 Asian financial crisis, the renminbi’s stability played an important role in stabilizing the region. So, too, the renminbi’s stability has helped the region maintain strong growth, from which the world as a whole benefits. Some argue that China needs to adjust its exchange rate to prevent inflation or bubbles. Inflation remains contained, but, more to the point, China’s government has an arsenal of other weapons (from taxes on capital inflows and capital-gains taxes to a variety of monetary instruments) at its disposal. But exchange rates do affect the pattern of growth, and it is in China’s own interest to restructure and move away from high dependence on export-led growth. China recognizes that its currency needs to appreciate over the long run, and politicizing the speed at which it does so has been counterproductive. (Since it began revaluing its exchange rate in July 2005, the adjustment has been half or more of what most experts think is required.) Moreover, starting a bilateral confrontation is unwise. Since China’s multilateral surplus is the economic issue and many countries are concerned about it, the US should seek a multilateral, rules-based solution. Imposing unilateral duties after unilaterally labeling China a “currency manipulator” would undermine the multilateral system, with little payoff. China might respond by imposing duties on those American products effectively directly or indirectly subsidized by America’s massive bailouts of its banks and car companies. No one wins from a trade war. So America should be wary of igniting one in the midst of an uncertain global recovery – as popular as it might be with politicians whose constituents are justly concerned about high unemployment, and as easy as it is to look for blame elsewhere. Unfortunately, this global crisis was made in America, and America must look inward, not only to revive its economy, but also to prevent a recurrence. Joseph E. Stiglitz is a PROFESSOR OF ECONOMICS AT COLUMBIA UNIVERSITY AND WINNER OF THE 2001 NOBEL MEMORIAL PRIZE IN ECONOMICS. His most recent book, Freefall: Free Markets and the Sinking of the World Economy, is now available in French, German, and Japanese, and will be shortly available in Spanish, Italian, and Chinese. MAY 2010

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Gaming

Only in Singapore Marina Bay Sands President and CEO Thomas Arasi tells Macau Business that Las Vegas Sands’ US$5.6 billion integrated resort couldn’t have been built anywhere else and describes the advantages of opening second in Singapore’s two-casino market by Muhammad Cohen in Singapore

hat are you most proud of about Marina Bay Sands and how will it enhance Singapore’s attractiveness as a vacation and business travel destination? Marina Bay Sands is a unique destination offering once-in-a-lifetime experiences for leisure and business travellers. It’s the overall experience and the fact that we offer something for everyone under one roof that makes this destination so special. Where else can you find one destination with landmark architecture, the breathtaking Sands SkyPark [a rooftop pool, restaurant and lounge area 55 stoMAY 2010

ries above Singapore], the best celebrity chef restaurants, Southeast Asia’s first long-running Broadway show “The Lion King”, and luxury shopping including Louis Vuitton’s first ever island shop floating on Marina Bay? [The “floating” shop is a pavilion with a glass exterior that looks like a crystal and is connected to the resort by an underwater tunnel.] Beyond the numbers and economic benefits ascribable to Singapore, Marina Bay Sands will be a very big part of creating a new mystique, inviting image and buzz in the tourism, convention and business communities across Asia and across the world. It will add to the

allure of Singapore, which is already a great city.

Coming attractions What’s the projected schedule for completion of the rest of the integrated resort (IR)? The first fase was opened on April 27, and this includes 963 out of 2,560 hotel rooms, part of the shopping mall and convention centre, our first three celebrity chef restaurants plus other dining options, and the casino. Our grand opening on June 23 will see us open the remaining hotel rooms,

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Meet the new boss THOMAS ARASI became the first President and CEO of Marina Bay Sands Pte Ltd in August 2009, and is overseeing every aspect of the integrated resort. Since earning a BA in Hotel and Restaurant Management from New York’s Cornell University, Arasi has spent more than two decades in hospitality operations, branding and real estate development. Prior to joining Marina Bay Sands, Arasi led three international businesses for Bass Hotels and Resorts, which does business as InterContinental Hotels, including serving as Global Brand Manager of Crowne Plaza Hotels and Resorts and as President of the group’s Americas division. He was also President and CEO of Lodgian Inc, operator of 110 hotels in the US and Canada. In real estate development, Arasi was President of Portman Holdings, a multibillion dollar real estate developer with properties in North America, China, India and Korea, and he was President of Tishman Hotel Corp, which owns and manages large resort and convention assets. Sands SkyPark, the Event Plaza along with more great shops and restaurants. Our theatres, debuting with “The Lion King”, and the museum will open later in the year. What is the synergy between the different components of Marina Bay Sands? Is there an overriding theme to the IR? Marina Bay Sands has something

Thomas Arasi

for everyone and every component of our destination brings a compelling proposition that will add to that once-ina-lifetime experience for our visitors. Whether it’s our magnificent rooftop Sands SkyPark, our celebrity chef restaurants, “The Lion King”, or our exciting nightclubs Avalon and Pangaea, each aspect of our property is nothing short of amazing.

Teamwork the key What is the single biggest key to success for Marina Bay Sands? Our team members! Just recently, we saw the first groups of team members moving into Marina Bay Sands and we will see thousands more moved in at the end of April. MAY 2010

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Gaming

Now, it’s our job to breathe life into that amazing building and to make it the best hotel, convention centre, casino, retail space, restaurant, theatre, and museum. Our team members – every one of us – are the heart and soul of this amazing property. What’s the dynamic of competing against another brand new world-class integrated resort across the bridge? Will there be synergy between the two IRs? Having not one but two integrated resorts will boost Singapore as a leading travel destination. Each property is unique, targeting a different customer segment, so tourists to Singapore will benefit from a greater variety of destinations and attractions.

Learning curves Las Vegas Sands Chairman Sheldon Adelson said he was happy to see Resorts World Sentosa open first so you could learn from its mistakes. What has Marina Bay Sands learned? With any large scale opening or event, there will be a range of operational issues that will need to be addressed. We have been given the opportunity to understand some of the situations people face when visiting a new integrated resort in Singapore and to develop solutions to meet the requirements in the market. Was Marina Bay Sands disadvantaged in terms of hiring staff by opening second? There is a buzz created by the integrated resorts amongst job seekers in Singapore and this translates to a strong interest in jobs at Marina Bay Sands. Response for our recruitment activities has been overwhelming. Other than career fairs, our online platform and recruitment centre at Mountbatten have drawn tens of thousands of job-seekers. What about local punters? What is Marina Bay Sands doing to ensure they give your property a chance? In the coming weeks, we will MAY 2010

launch a new and exciting loyalty program for our guests. How is Marina Bay Sands progressing with direct premium players? How much does LVS´ experience in Las Vegas and Macau help? We are leveraging the extensive network of relationships with premium players established by our teams in Las Vegas and Macau. Together with our ongoing networking events in the region, we are making significant progress in attracting premium players to our destination. Your background is hospitality rather than gaming. What advantages has your background given you for this task? What’s surprised you about this project? About working in Asia? We couldn’t build anything like Marina Bay Sands anywhere but in Singapore. In my meetings with government officials so far, I’ve been impressed by their commitment to Singapore, its people, way of life and commercial orientation, sophistication and outstanding work ethic. Few places in the world have all these attributes, which, in combination with its dynamic tourism, highly advanced group meetings industry and world-class businesses, provided the right home for Las Vegas Sands to make this incredible investment in the Singapore community. Given my love for this industry and its team members and customers, this is without question the best opportunity of my lifetime. I love the food, the style, the culture and the feel of Singapore. I feel extremely fortunate to have this opportunity to work with such fantastic team members. As icing on the cake, I love Asia, and Singapore is the best place in the region.

Non-gaming component What does your selection say about the importance of the non-gaming components of Marina Bay Sands? The casino at Marina Bay Sands is only one component of our overall integrated resort and takes up less than just three percent of our total gross floor area. Visitors will come from Asia and around the world because they can have so many different experiences under one roof.

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Big bay, big future Las Vegas Sands’ US$5.5 billion Marina Bay Sands in Singapore opened its doors last month, and Chairman Sheldon Adelson insists it will be the company’s most valuable property by Muhammad Cohen in Singapore

ess than two years ago as Las Vegas Sands Corporation (LVS) hovered on the brink of bankruptcy, the partially built triple towers of Marina Bay Sands looked like tombstones for the company’s ambitions in Singapore. But last month’s debut of the world’s most expensive standalone casino resort, confirmed that LVS and its Asian dreams beyond Macau, may come true. “This is the future of gaming,” LVS Chairman and CEO Sheldon Adelson declared at the April 27 soft opening of the US$5.5 billion (MOP44 billion) integrated resort (IR), originally slated to debut in December last year. “The integrated resort is going to be the model for the world. There are 110 countries around the world where gaming is legalised, but it’s

purely casinos. You only find a property like this here and in Las Vegas.”

City landmark

Marina Bay Sands (MBS) includes 2,560 hotels rooms in three towers connected by the 133,000 square foot SkyPark, with a front like a ship’s bow overlooking Singapore from a height of 57 stories that has already become a city landmark. The IR also includes an 800,000 square foot shopping mall, a 1.3 million square foot convention centre, and a 161,500 square foot casino. “Marina Bay Sands is a quantum leap from anything I’ve ever seen,” AG Leisure Partners Managing Director Sean Monaghan says. “The IR structure is amazing, and the main gaming floor is a mind blower.” The gaming floor is the MAY 2010

Gaming 118 Gaming

most finished part of the IR, with nearly all of the 600 tables and 1,600 slot machines ready at the opening - and the most polished. The casino is spread across four levels, with a majority of the tables and machines on the first level. The upper levels form rings above, looking down on the main level, with a ceiling rising 40 metres, more than 10 stories, and topped with a chandelier with 132,000 Swarovski crystals and 66,000 LEDs. “When you walk onto that main gaming floor, there’s a presence,” Monaghan observes. “People were just standing there, looking at the design.”

Lion King coming

In its first phase, MBS has opened 963 hotel rooms, 35 shops of a planned 300, and MAY 2010

more than 60 percent of its convention space. The SkyPark and remainder of the hotel rooms will open in June. Other components, including a resident production of The Lion King and a lotus-shaped museum, will open later this year, with final completion expected in early 2011. Adelson expects MBS “will be our most valuable” single property and that the IR will earn back its investment within five years, compared with a claimed four year payback on the US$2.4 billion Venetian Macao LVS opened three years ago. According to LVS President Michael Leven, a 20 percent return on its MBS investment would mean annual profits of US$1.75 billion. He adds that a 20 percent return on the compa-

ny’s US$2.1 billion equity investment – the remaining US$3.6 billion is financed by debt – would mean profits of US$450 million.

Category killer

When fully opened, the property will attract 70,000 to 80,000 daily visitors, MBS President and CEO Thomas Arasi says, expressing particular optimism about MICE. “This property is a category killer,” he says. “We are going to blow away the meeting planner community.” He believes MICE could eventually comprise 50 percent of the total revenue at the IR. “In the initial going, I think most of the revenue will come from the [gaming] tables,” Leven predicts. In Las Vegas, gaming accounts for less than 40 percent of total revenue, while in Macau,

gaming brings in more than 80 percent of profits. “It will take a while for non-gaming to generate profits,” University of Nevada, Reno Institute for the Study of Gambling and Commercial Gaming Director William Eadington observes. “Singapore will probably be closer to Macau’s nongaming revenue percentages at first. So the VIP segment will be critical.” Singapore’s tax structure favours premium play, taxing it at just 12 percent, compared with 22 percent for mass play - in Macau, all gaming revenue is taxed at 38 or 39 percent.

Government restrictions

But, conversely, the premium market is constrained by the Singapore government’s re-

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will not release estimates on the size and scope of the Singapore market for gaming and the other IR components. “If you want projections, look at what the analysts have written,” he says. However, analysts’ projections of Singapore’s gaming market run from a low of US$2.1 billion up to US$5 billion. “When I ask them where they’re getting their estimates, they can’t tell me,” Leven offers.

Quality counts

strictions. Stringent licensing regulations for junket operators include extensive financial disclosure requirements. Casino operators are also required to inform the government in advance, of the arrival of junket customers and disclose benefits given to them. “We never expected to have Macau style junket operators here,” Leven comments. “We intend to run this business without junket operators, as we do in Las Vegas. Assuming our process works, it will be more profitable.” Singapore’s government also restricts the local market: Singapore citizens and permanent residents must pay a government levy of S$100 (MOP584) per visit or S$2,000 per year to enter each casino. Leven says the company

“The only scenario will be cannibalisation, especially on the key revenue stream – the casinos,” he notes. Posting on Professional Ground blog as ‘Expert IR’, this executive predicts that a 60 percent market share will be crucial for survival, and tipped MBS to win the lion’s share of the market. “We hope Resorts World does well,” Adelson said of his local rival. “Our success doesn’t depend on their failure and their

success doesn’t depend on our failure. I think we should work together to bring better quality and quantity of people to Singapore.” Key markets for MBS begin with its home turf Singapore, followed in importance by neighbouring Malaysia and Indonesia, according to Leven. The next level includes the rest of Southeast Asia, India, and Hong Kong. “We are not targeting mainland China,” Leven points out.

Singapore’s first IR, Genting Group’s Resorts World Sentosa, opened in February, but there have been no official figures released on its gaming revenue. AG Leisure Partners’ Monaghan estimates Resorts World’s daily revenue at US$2 to US$3 million per day. For the two IRs, Monaghan projects a combined annual gaming market of US$2.1 to US$2.3 billion, and he expects MBS will win 60 percent of the overall market. “I think Genting will face significant challenges going forward particularly when MBS completes their resort and ramps up their marketing,” Monaghan says adding, “Big punters tend to go high quality facilities.” A veteran regional casino executive in Singapore who asked not to be identified disputes whether the gaming market will double with the opening of MBS. MAY 2010

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SHANGHAI

EXPO 2010

MAY 2010

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THE SHANGHAI EXPO IS A WATERSHED FOR CHINA’S LARGEST CITY, JUST AS THE OLYMPICS PUT BEIJING IN THE GLOBAL SPOTLIGHT LIKE NEVER BEFORE. YOU’LL SEE WHY THIS MONTH

BETTER CITY, BETTER LIFE BY MARIA JOÃO BELCHIOR

uite simply, it’s 184 days of surprises. The Shanghai Expo 2010 will enter the history books as proof of China’s organisational skills. Since it was chosen as the host city in December 2002, Shanghai has spared no effort in transforming itself into one of the world’s most amazing cities. It also offers an unprecedented chance to establish business opportuniMAY 2010

ties and expand trade. Shanghai made use of its charming landscapes on the banks of the Huangpu River to construct an Expo site around the concept of “better city, better life”. Sustainable patterns of urban development have influenced the idea for the renewal of the host city and the construction of the Expo site itself. A cleaner city focused on environmentally friendly policies, with better managed traffic and making the best use of its natural resources, were some of the

main objectives. Shanghai has followed the pattern of previous hosts by recovering parts of the city which had been forgotten or were not being used to their full potential. Covering an area of more than five square kilometres, the Expo site makes use of both sides of the Huangpu River. In Pudong, on the East Side of the River, are the national pavilions and also some of the bigger facilities. In Puxi, visitors can see corporate

123 world after a huge US$430 million was spent. Charismatic hotels like the Peace and the Peninsula Hotels have also reopened. The story of the Bund began in 1843 when Shanghai opened for the trade with the West as a result of the Nanjing Treaty. With commerce came the international banks, and the old riverfront became known as the “Wall Street of Asia”. The renovation process followed the mantra of making a better city, and as such the number of traffic lanes were reduced from 11 to 4 and a new tunnel opened. The new Bund is less noisy and the traffic jams have eased. Dozens of trees have been planted along the banks of the river and more than 2,000 park benches installed. A place to enjoy the city and its river, the new Bund will again be one of the best places for leisure in Shanghai.

Window to the world

pavilions and have the chance to view some of the newest green technologies. Between the Lupu Bridge, the world’s longest arch bridge which opened in 2003, and the Nanpu Bridge, the Expo site is about the size of 990 football fields. The biggest in the world, the development has had repercussions across Shanghai.

New status, new Bund

Renowned as one of China’s most elegant cities, Shanghai has inspired

writers and filmmakers from across the world. The Bund, a long waterfront sidewalk on the Huangpu river, reopened last April after the longest and most expensive renewal process in a century. Two years were spent renovating the space to make it look more like it did in the 1930s when the Bund was the city’s most important place. Today the glamour is back and the long sidewalk will again become one of the most photographed places in the

Despite being the first developing country to host an Expo, China is not a beginner with mega events. Shanghai, China’s financial capital, is one of the main destinations of foreign investment. On average in recent years, Shanghai has received more than US$10 billion annually in Foreign Direct Investment (FDI). The input of the Expo has contributed to Shanghai becoming the number one recipient of FDI. Pudong, the East side of the River, has become a model for architects and investors. Today, the new area of Pudong is the core of the financial and business district. As manufacturing waned, Shanghai has become a city of services where all the big international companies want an office, just as in London or New York. As 2010’s main event for China, the Expo represents the end of a process that has taken almost a decade. In a show of cultural exchange, the six-month event will have a lasting legacy. The city’s 20 million inhabitants are expected to receive 70 million visitors. Although it is not targeted initially for an international audience, the Expo will see a record number of foreigners in town, if not tourists, then workers from the more than 190 national pavilions and 50 international organisations. MAY 2010

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SHANGHAI MAY BE THE HOST, BUT MACAU IS DOING MORE THAN ITS BIT TO MAKE THE BIGGEST SHOW ON EARTH THE BEST

RAISING THE LANTERN BY JOSÉ CARLOS MATIAS

acau’s pavilion is set to leave its mark on the Shanghai Expo. It’s a lantern, a jade rabbit, has an imperial edge, and some would say, is a tiny beacon lighting up the host country’s “Oriental Crown” Pavilion. The city’s Imperial Jade Rabbit Lantern showcases Macau’s cultural diversity, economic development and unique history and heritage. Inside, visitors can experience space and time travel, from the origins of Macau as a fishing village to a trade port and finally the world’s premier gaming hub. The theme, “Macau - Spirit of Cultures, Essence of Harmony” aims to honor the tolerance of the local people. It is also the SAR’s response to the overall theme and challenge of the Shanghai Expo: Better City, Better Life.

Tradition and modernity

City architect Carlos Marreiros is the author of the original concept. The Rabbit Lantern was inspired by the traditional lanterns used to commemorate the Moon Festival, held each year on the 15th day of the eighth month in the lunar calendar. The lanterns are made of colourful paper and usually in the shape of an animal, the most popular of which is the rabbit. Our floppy-eared friend is believed to have been the companion of the Moon Goddess Chang’e in Chinese mythology. The height of the structure – 19.9 meters –symbolises the year 1999 when Macau was returned to China. It is also environmentally friendly, using doubleglazing and acrylic paint for decoration. MAY 2010

However, the use of solar panels was dropped because the location of the building and direction it faces would not allow sufficient sunshine to optimize the panels, the Office for the Preparation of Macao’s Participation in the Shanghai World Expo said. Also, contrary to the original plan, the use of water collectors was also abandoned on cost grounds.

Embracing the motherland

Beneath the head of the Rabbit Lantern, a 10-meter high kinetic balloon welcomes visitors to both the Macau Pavilion and its neighbour, the Chinese Pavilion. In fact, there is a sort of dialogue between the mainland and the SAR pavilions, as during the day the Rabbit Lantern outer sides mirror China’s “Oriental Crown”. Furthermore, the main thrust behind the overall message brought by the Macau Pavilion is the region’s national pride and achievements since the handover. The office in charge of preparing Macau’s participation in the Expo says: “The walls of the pavilion are clear glass with a reflective mirror coating that reflects the China Pavilion. It shows that Macau is part of China and China is always in the heart of Macau”. The aim is also to showcase the city’s main industries, services, products, forums, exhibitions and promote the region’s artistic and sporting calendar. The SAR’s external relations with Portuguese speaking countries, Europe and Southeast Asia are also a focus.

Time and space travel

Inside the Rabbit Lantern, visitors find

a theater composed of two rings: the inner ring (“Ring of Time”), which works as the time machine; and the outer ring – the Ring of Harmonies - a spiral ramp built along side the inner ring. In the outer ring there are four zones of harmony: Harmony of Land and Sea; Harmony of Cultures; Harmony of Heritage and Modernity; and Harmony of Vibrant Macau. Visitors travel through the inner ring to reach top of the outer ring. Then, it’s through the spiral ring down

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FACTS AND FIGURES Size: 600 square-metres Total height (not including head and tail): 19.99 metres Size of head: 10 metres tall and 16 metres wide Total construction area: 1,500 square metres Total area of the exhibition ramp: 780 square metres Length of exhibition ramp: 250 metres Area of entrance hall: 145 square metres Area of hall on top floor: 80 square metres

to the exit of the pavilion. In a 20-minute film, visitors meet characters from the past and present. It was specially made for the Expo and more than 100 characters from Macau take part in this production, reflecting the city’s rich history and cultural diversity. They come across a 16th century Portuguese merchant, tourists looking for the newly built Macau Science Center, and get a glimpse of the region’s future, looking at the Hong KongMacau-Zhuhai bridge.

The city’s heritage and the modern skyscrapers and casinos meet Macau’s culinary delights, festivals of different ethnic groups and large scale events. All this is displayed through close to 100 hi-tech projectors with complex seamless coordination among the projectors.

Tak Seng On replica

In addition to the Rabbit Lantern, Macau’s Expo presence includes a full scale replica of the Tak Seng On building, a traditional pawnshop in

downtown Macau. The Tak Seng On Pawnshop replica displays scenes of Kung Fu heroes from Jin Yong’s novels which are projected onto the facade of the pawnshop. The real Tak Seng On Pawnshop was distinguished by UNESCO in 2004. Its presence is a tribute to the city’s architectural diversity. By the end of the Qing dynasty (1644-1911) the pawn business in Macau was flourishing, but with the advent of the banking industry, it gradually faded. MAY 2010

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PORTUGAL’S PAVILION AT THE SHANGHAI WORLD EXPO HAS A MACAU TOUCH: IT WAS DESIGNED BY A LOCAL CONSORTIUM AND LED BY ARCHITECT CARLOS COUTO, THE MAN WHO DESIGNED FISHERMAN’S WHARF AND THE LANDMARK

MADE IN MACAU BY EMANUEL GRAÇA

fter five centuries under Portuguese administration, the connection between Macau and Portugal has been re-activated at the Shanghai World Expo. PAL Asiaconsult, a company with Portuguese-pedigree established in Macau in 1982, won the open international tender for the design and construction of the building, a three million euro project with the theme “Portugal, a Square for the World”. Nearly three million people are expected to visit the 2,000 square-metre building.

Couto uncorked

Carlos Couto, a Portuguese architect who has lived in Macau for almost three decades, was in charge of its design, including one of its main features: the use of cork to decorate the exterior curtain walls and interior attaching veneers of the building. “This is a way to promote cork,” a Portuguese-sourced, recyclable and environmentally friendly material, Couto told Macau Business. Because cork is the bark of the cork oak tree which renews itself after harvesting, commercial exploitation is environmentally friendly, as not a single tree is cut down. Portugal is the world’s biggest producer – its annual output of 157,000 tonnes of cork is just over half of the world’s total.

Expo is set to be the world’s largest exhibition ever in terms of participating countries and visitors. “I particularly fell in love with this project,” he says. If the three most important factors for success in Shanghai Expo are location, location, location, then the local architect got a winning ticket: the Portugal pavilion is located at the Europe Square, in Zone C, which is to receive shows for up to 1,200 people. Couto also led one of the teams that participated in the Macau pavilion concept design competition. His “Glitter” concept came in third place overall.

Peculiar feature

Egg tart feature

Besides cork, one other peculiar feature of the Portugal pavilion is its form: Couto added triangular shapes to the original design of the building “presenting it with a very strong presence,” he says. Night illumination adds to the effect, the architect explains. For Couto, being the architect responsible for the Portugal pavilion “is a unique opportunity,” since Shanghai MAY 2010

Macau’s presence in the Portugal pavilion goes beyond construction. Inside, is a bakery with egg tarts provided by a local businessman who owns 30 stores in Shanghai selling the Portuguese delicacy. Also, one of the pavilion’s highlights showcases the relationship between Portugal and China during its history of about five centuries. Macau, of course, occupies a centre spot.

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ARCHITECT CARLOS MARREIROS DESIGNED THE MACAU PAVILION AND SAYS MANY PEOPLE WANT TO BRING THE BUILDING TO THE TERRITORY AFTER THE EXPO ENDS

THE RABBIT MAN BY EMANUEL GRAÇA

or the man who designed it, the Macau pavilion is a harmonious mix between tradition and modernity. “It gives me great pleasure to have won the Macau pavilion concept design competition,” says Carlos Marreiros. He says the rabbit lantern-shaped building has already drawn attention from all over the world as an attractive and funny design that reflects Macau’s unique identity. Located next door to the China pavilion is another important feature, notes Marreiros. This will ensure a lot of visitors will at least have a glance at the Rabbit Lantern.

Internationally recognised

For the local-born architect with partial Portuguese and Chinese descent, the Macau pavilion is the latest project in a long list including some internationally

recognised buildings. Marreiros was the man behind the Tap Seac Square renovation plan and he designed the Villa Konstantin Bessmertny, awarded with a Gold Medal in the Macau Architectural Awards 2009/2010. Is the Expo pavilion Marreiro’s best work ever? “No,” he replies. “Some of my previous works were more troublesome; anyway, as a ‘father’, I should not show any preference over my ‘children’,” he says.

Controversy

The Macau pavilion has had its share of problems too. It drew a lot of controversy as Marreiros accused the Office for Preparation of Macau’s Participation in the Shanghai World Expo of violating the intellectual property of the design by making adjustments to the initial project without consulting him. The director of the office,

Christiana Ieong Pou Yee, disagreed. Ieong said she had the right to change the design because the royalties and the intellectual property of the pavilion belonged to the government. The dispute is now set to be handled by the local courts.

The future

As for the pavilion’s future after the Shanghai Expo, it is still to be decided. But Marreiros told Macau Business there are many people who want to bring it to Macau. He backs this idea. “The Rabbit Lantern is an iconic building since it is going to represent Macau in the biggest World Expo ever, the first one in which Macau participates as a SAR and the first one to be organised by China,” Marreiros said. The architect even suggests a location: the new land reclamations projects in NAPE. MAY 2010

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A TEAM OF 140 LOCAL VOLUNTEERS WILL RECEIVE VISITORS AT BOTH THE MACAU PAVILION AND THE TAK SENG ON PAVILION

A VOLUNTEER SMILE

BY EMANUEL GRAÇA

smiling face and good social skills are a must for volunteers at Macau’s 2010 Shanghai World Expo pavilion. A total of 140 volunteers are promoting Macau. They include 19 students from the Institute For Tourism Studies (IFT), who are using the Shanghai Expo as an internship and be mainly responsible for customer service – they are even wearing the institute’s uniform. Apart from IFT students, each volunteer will be placed at the Expo for one month. All have been given special training focusing on pavilion operations and customer service as well as first aid.

Shanghai World Expo, around 1,000 local people applied to be volunteers. Of those, 600 applied directly to the Macau Preparation Office. In addition to Cantonese, English and Mandarin, some of the local volunteers also speak French or Japanese.

Volunteers have to bear their own transportation costs to and from Shanghai. Accommodation is provided for them as well as a RMB100 daily subsidy for food. Globally, Shanghai Expo has more than 72,000 volunteers to help the visitors getting their way around. Another 100,000 volunteers at the service stations in the city’s 18 districts and counties.

United nations

The volunteers are from about 40 countries and regions, and most are local university students or long-time Shanghai residents, according to the organisation. In addition to Expo volunteers, authorities in Shanghai have mobilised almost two million citizens to offer volunteer services to visitors during the event period.

Cast of thousands

According to the Office for Preparation of Macau’s Participation in the

MACAU’S DEBUT

he Shanghai World Expo is the second time Macau has partcipated in such an event. The territory’s debut took place 12 years ago in Lisbon. The year was 1998 and it was the 500th anniversary of the legendary Vasco da Gama’s discovery of

MAY 2010

the sea route to India. Lisbon organised a World Expo with the theme “The Oceans - a Heritage for the Future”. At the time Macau was still under Portuguese administration, and participated in the event with a 2,000 square metre pavilion. The MOP100 million project with the theme “Past, present and future” attracted over one million visitors. Fronted with a replica of the Ruins of St. Paul’s and including a miniature version of the Lou Lim Ieoc garden, it was chosen as one of the five best pavilions in the 1998 Expo. The pavilion also presented visitors with the opportunity to taste both Macanese and Chinese cuisine. To ensure the authenticity of flavours, most of the ingredients were sent directly from Macau. After Expo 98, the Macau pavilion was bought by Loures municipality, in Lisbon’s metropolitan area. The building was reconstructed in a green park and opened to the public in 2008.

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SPANISH SURPRISE

n stage for the six months of the Expo is the Catalan Group’s “La Fura Dels Baus”. Spanish organisers say it will be the biggest ever show in their 31 years on the road. The cast of 60 will travel through six cities from New York to Barcelona.

Called a “Window of the City”, the show features flying actors and a moving stage surrounded by 3D movie screens. There are daily performances and on peak days La Fura are expecting millions to attend. Experts in 3D technology, La Fura are one of the world’s most innovative

performance groups. From 1999 to 2000, the group made the “Millennium Man”, a giant man in a structure which welcomed in the new millenium in Barcelona’s Plaza Catalunya. But Shanghai will be the best ever, the Spanish group says.

FIRST TIMERS

ast Timor and North Korea make their international exhibition debuts in Shanghai. Geography and good diplomatic relations with China, made North Korea’s appearance possible. Pyongyang’s pavilion shows the story of the North Korean capital using photos, models and videos. The North Korean government only joined the International Bureau of Expositions (BIE) in 2007, but it didn’t participate in Expo 2008 in Zaragoza. For East Timor, the world’s smallest country which gained independence in 2002, the US$600,000 given by China made their pavilion possible. Inspired by the slogan “Be with us, be with the nature”, East Timor’s participation cost a total US$1 million. After East Timor became a sovereign country on May 20, 2002, China was the first country to establish diplomatic relations with the first country to be created in the 21st century. MAY 2010

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THE BIG ONE BY MARIA JOﾃグ BELCHIOR

Innovation and technology are the cornerstones of the Shanghai Expo 2010. But the largest event of its kind is expected to deliver much, much more

MAY 2010

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ocated in Puxi and Pudong on either side of the Huangpu River, the Expo is divided into different areas covering an area of many square-kilometres. Five stops on the subway help visitors to choose where to begin their visit. There are five zones from A to E, each covering 60 hectares with national and foreign pavilions. Divided along continental lines, the foreign nation pavilions include three types. The first types are designed and built by the official participants, the second by the organiser and rented to the participants, and the rest are jointly-built by the organiser and offered to developing nations free of charge.

Photo: Peter Parks

Oriental Crown

The biggest structure, the China National Pavilion was finished three months ahead of the opening. Located in zone A, the 63 metre high pavilion is certainly eyecatching. Covering 47,000 square metres, the structure is themed on “Chinese Wisdom in Urban Development” and is surrounded by the regional joint pavilion and those of Hong Kong, Macau and Taiwan. The concept of Oriental Crown goes back to imperial times and uses the same red colour as the walls of the Forbidden City in Beijing. Made of wood, it follows traditional Chinese architectural techniques. Expected to be the most visited site at the Expo, it is one of the five permanent buildings which will remain after the Expo, along with The Performance Centre, the Expo Boulevard, the Theme Pavilion and the World Expo Centre. Showing concern for sustainable development and a greener future, all four structures were built to optimise the use of energy. The goal of making this a low carbon Expo was spread as a message to all the participants at Shanghai 2010.

BILLIONS BOOST

huge investment in transport and infrastructure has been made for the Shanghai Expo. New avenues and ring roads criss-cross the city, a new terminal at the already very modern Pudong airport has sprung up, and a renewal of the subway system has revolutionised the way the city moves. The first Shanghai metro line opened in 1995. 15 years later, the city has eleven lines and the longest subway network in the country. Besides subway lines, visitors will have a public transport network that combines marine services with buses – and the subway. With 12 water traffic lines, Shanghai has the largest transport network ever created for an Expo. 120 electric buses has power to run for more than 100 kilometres, connect Pudong onthe East bank, to Puxi on the West bank, from morning till night. MAY 2010

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EXPO 2010 BY THE NUMBERS US$4.2 billion spent An area of 5.28 square-kilometres More than 70 million visitors expected 7,000 volunteers 800,000 visitors expected on individual peak days 160 yuan for a one-day ticket 5 permanent constructions to stay on after the Expo finishes 242 countries and international organisations taking part 7 million free tickets distributed among permanent households in Shanghai More than 420 kilometres of metro lines in service 4.7 million subway tickets sold on average per day More than 40,000 workers on site during construction More than 13,000 journalists to cover the event

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AFTER SO MUCH WORK AND INVESTMENT, IT’S EASY TO IMAGINE THE SUCCESS OF THE SHANGHAI EXPO, BUT MUCH MORE DIFFICULT TO PREDICT WHAT WILL HAPPEN WHEN IT ENDS IN OCTOBER

AFTER THE PARTY BY MARIA JOÃO BELCHIOR

number of the old industrial buildings housing the Expo exhibits have been refurbished and will remain once the temporary pavilion structures go. According to official sources, they will house museums and cultural facilities. The five main buildings constructed by the Chinese organisers will be used to host conferences, meetings, and other large scale events. The Expo site has revamped a once forgotten area on the east of Shanghai. Once the event is finished, the more than five square kilometres of the site could be left looking barren. However, as happened in Beijing after the Olympics, it won’t just be the venues that remain. Shanghai life will have been transformed: the new transport system MAY 2010

in the city being just one example. China’s largest city has also become a target city for the international market, and although housing prices have increased many-fold, the renewal of old neighbourhoods has recovered the charm of the city as it becomes a truly cosmopolitan centre. The phenomenon of gentrification, a socio-cultural change in cities that go through huge transformations, has turned the area around the Expo site into a luxury district. Architects who look at the changes to cities which host Expos, tend to agree that in the long term, it is in their overall interests to do so. It will probably take at least a year to guage what effect the area between the Nanpu and the Lupu Bridges, aka the Expo site, has had on Shanghai. Awakening the consciousness of visitors and locals alike by showing

them alternative ways of living and saving energy, is expected to be a major legacy of the six-month event. Getting closer to nature and building sustainable development has been the inspiration for the Chinese organisers and participating countries for 2010. With numerous solar panels installed in the Expo buildings, the event has a 5-megawatt solar power system. All the country pavilions have also decided to show their green technologies and to make their carbon footprint as small as possible. From Europe to New Zealand, visitors to the Expo will see a model for a greener future in the world. Italy and Finland are showcasing energy-saving pavilions, both in terms of the way they were built and how they function.

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Norway uses the roof of its pavilion to collect solar energy and make the entire pavilion self-sufficient. Denmark is lending bicycles to its visitors and inviting them to take a tour inside to see how free of cars Danish cities are. Japan is presenting its cutting edge technologies, where besides robots, visitors can also see a machine that can turn sewage into drinking water. In the Swiss pavilion, natural products such as soybean fiber, have been used for the external curtain of the pavilion. The environmentally-friendly concept continues with Londonâ&#x20AC;&#x2122;s zerocarbon approach, using a building that sustains ventilation, heating and cooling using wind, solar and thermo power. The examples go on and on. Every participating country is trying to make the best of its opportunity to show how can we contribute to a better life and a better world. MAY 2010

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INNOVATION NATION

nspiring the future has been a motto of Expos since their inception. Given that digital, multimedia and 3D effects are present at the majority of the pavilions, visitors can expect to be surprised by new images. But Shanghai 2010 also reveal some transport innovations such as a chairsized car.

The Japanese innovation called iReal, was jointly developed by General Motors who call it the Electric Network Vehicle. Ideal for short distances and city driving, the car weighs less than 500 kg and it is only 1.5 meters long. An alternative way of moving inside the Expo, the car is sure to be one of the main attractions.

NOT TO BE MISSED

ne day simply won’t be long enough to see everything on display at the sprawling Expo site. Apart from the iconic Chinese national exhibits, many other pavilions are expected to be the talk of the event. The architecture of some buildings is as impressive as that of the Chinese pavilion, and the only opportunity to see them is during the Expo as they will all be dismantled once it is finished. Called the “Seed Cathedral” the United Kingdom Pavilion is a six-storey structure pierced by more than 50,000 transparent acrylic rods each containing a plant designed to sway in the breeze. The visual effect is impressive even on days without wind. Twenty metres high, the pavilion is among the most innovative. When the event finishes in October the plants will be given to cultural exchanges and charity projects. Equally innovative is the Romanian pavilion which looks like an apple divided in two parts – an interior body and the slice of the apple. With the theme “Exchange of Ideas”, the design follows the concept of a green megapolis. Saudi Arabia’s offering is a spaceship-like pavilion with a hanging garden boasting more than 100 palm trees like an oasis in the desert. One of the most expensive pavilions at the Expo, Saudi Arabia invested US$146 million in its presence in Shanghai. One of the main attractions at the pavilion is the largest cinema screen ever made - 1,600 square metres showing images of the country. MAY 2010

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MAY 2010

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ALL YOU NEED IS ONE EXPO ‘PASSPORT’ TO EXPERIENCE THE DELIGHTS OF 190 COUNTRIES

THE WORLD ARRIVES

BY MARIA JOÃO BELCHIOR

t’s the organiser’s mantra: “We are not aiming at profit”, but the level of investment would suggest otherwise, surpassing US$4 billion. The mantra may have a grain of truth though. Proud to be the first developing country to host an Expo, China took an inclusive approach to make sure everyone is represented. The result is a unique richness of different cultures and histories.

Africa in one pavilion

As one of the main investors in Africa, China got right behind developing nations in their bid to participate in the Expo. With 43 countries in total, the Africa Joint Pavilion is located in area C of the Expo and is the biggest joint pavilion. Among the sub-Saharan African countries, Angola, South Africa and Nigeria are the only ones with their own pavilion. These three countries are important trade partners of China. The growing importance of Africa to China made possible the participation of small countries like Togo for example. Beijing attached a great importance on treating everyone the same and provided the financial and technical help to those who needed it most. It is expected the show will improve bilateral relations. China has diplomatic relations with 49 African countries. China’s presence in Africa can be seen through the construction of railways, roads, expressways, ports, airports, dams and bridges, as well as commerce across a rainbow of nations.

Portuguese speaking countries

Covering 2,000 square metres and located next to America Square at the Expo, the Brazil pavilion is covered by thousands of different pieces of wood painted in yellow and green like the national flag. The Brazilian organisers wanted to illustrate the abundance of the country’s forests. They are focused on MAY 2010

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the importance of renewable energies, and as such will stand out as one of the countries who make the best use of its own resources. On average, 45 percent of the total energy spent in Brazil is clean energy. Chosen to host the 2016 Olympics, Rio de Janeiro will be among the Brazilian urban centres introduced to the Chinese public in Shanghai. Also inspired by the idea of the richness of resources, the Portuguese pavilion is covered by pieces of cork, the main industry of the country. Dining and wine tasting take up significant space and the pavilion’s main theme is “Portugal, a square to the world”. The importance of five centuries of relations between Portugal and China is shown through a movie at the entrance of the pavilion.

Macau – a bridge

Macau, as the long standing bridge between Portugal and China is of vital relevance in the history of both countries. Mozambique, Cape Verde and Guinea-Bissau, three of the five African countries which speak Portuguese, are also represented inside the joint African pavilion. Angola and East Timor, two

other Portuguese speaking countries, will be in a different area with their own pavilions. Increasing trade between the mainland and the Portuguese speaking countries has been a phenomenon contributing to the Portuguese language becoming more important for new university students looking for job opportunities abroad.

Urban Best Practices Area

Providing an opportunity for cities to participate in the Expo independently, the concept of Urban Best Practices Area (UBPA) is in an enclosed area of the Expo site. Cities from Madrid to Macau are presented as case studies of dealing with sustainable urbanisation, protection of historical heritage and technological innovation. For the curious and experts alike, the UBPA area shows on-going concepts and experimental examples that can be used in different places. From China, the cities chosen as model examples are Ningbo, Xian, Shanghai, Chengdu and Macau and Hong Kong. The UBPA cities were chosen by an expert panel. MAY 2010

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lose to the Oriental Crown - the Chinese Pavilion in the centre of the Expo Hong Kong has its own pavilion with the theme “Potential Unlimited”. The concept is to show how the city has made the best of its limited land area, and to show how modern cities can grow not only in size but in living quality. The threelevel pavilion has a transparent chamber on the middle level, a symbol of the openness and transparency of Hong Kong society. The Hong Kong SAR also participates in the concept of Urban Best Practice Area with the already awarded idea of the Smart Card. The slogan “Smart Card, Smart City, Smart Life” is followed by visitors using dynamic video graphics, which react to the number and the movement of visitors.

HONG KONG ON SHOW MAY 2010

AFTER A LONG AND ENJOYABLE DAY AT THE EXPO SITE, FORGET YOUR TIRED LEGS AND GET OUT AND ABOUT TO SEE WHAT ELSE SHANGHAI HAS TO OFFER

DESTINATION SHANGHAI

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ACCOMMODATION

Shanghai has some of the most glamorous hotels in China. Buildings that go back to the first half of the last century have been reconstructed and turned into luxury and boutique hotels. A city icon, the Peace Hotel on the Bund is now divided. In the North section is the Fairmont Peace Hotel Shanghai which boasts more than 200 deluxe guestrooms and suites. In order to create the best view of Shanghai from the Bund, the hotel went through a three year renovation process which finished this year. With hundreds of high-rise hotels, the city now has another hidden charm with boutique hotels dotted across the old town. Some buildings were small mansions built by foreigners who lived in Shanghai before the founding of New China. Restored in recent years, these boutique hotels offer the cosy, nostalgic feel of the 1920’s mixed in with the vibrant modernity of today’s Shanghai.

WHERE TO GO

Nanjing Road, one of the oldest in Shanghai, is full of shops and cafes. At the end of the street, the People’s Square has three of the most famous museums in the city. The Urban and Planning Museum, the only place to appreciate the full size of the city, the Museum of Shanghai where Chinese antique art and the oldest collection of Bronzes from China are on display, and the Museum of Contemporary Art of China (MOCA).

WHAT TO EAT

The Expo will be the best place to try world food, with many countries offering a taste of their own culinary cultures. But more local tastes are also catered for. M on the Bund is among the best upscale restaurants in Shanghai and the menu is locally inspired. Another great local cuisine experience can be found at the Shanghai Grandmother (Shanghai Laolao), a tourist spot in the centre of the town which offers unpretentious, home-made food. As a port city, another local attraction is Mandarin fish, a Shanghainese-style, steamed fish.

ON CLOUD 9

Shanghai has hundreds of bars, so you will be spoiled for choice at night. The area known as the French Concession now has some of the trendiest places in the city. There are also bars in every hotel. Cloud 9 in the famous Jinmao Tower in Pudong, once the tallest building in the city, is renowned as the coolest bar in town, and on the 87th floor, it’s not for the fainthearted. A high-speed elevator gets you there in less than a minute, and it’s the closest you’ll get to the clouds outside a plane. MAY 2010

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STAMPEDE FOR SHANGHAI BY YUCI TAI

MAY 2010

he long-awaited Shanghai Expo is upon us, so if you haven’t already, you’d better start planning your trip because Expo fever is in full swing. The Deputy General Manager of China Travel Service Macao, Bill Pun, says individuals, organisations, schools and groups of travellers are flooding travel agents with requests. So far the firm has arranged 10 tours departing in May and June. Taking in accommodation and Expo tickets, because of demand and other factors, the cost of a tour has increased by 30 to 40 percent to between HK$2,000 and HK$4,000. An individual package ranges from HK$4,000 to HK$5,000, which covers airfare and Expo tickets. “People in Macau can purchase Expo tickets at two World Expo designated travel agencies, China Travel Service Macao Ltd. and New Sintra Travel agent, coupled with a map of the Expo. Shanghai’s transportation system is very convenient, so people should have no problem getting around,” Pun says. He added that the demand for hotel rooms is high and reminded people to book early. According to the official Expo 2010 website, tickets are not only available via websites andtelephone bookings at designated sales agencies, but also at the ticketing spots and self-ticketing machines on site from the opening date on May 1, 2010. Admission tickets are divided into individual and group types. Individuals can choose peak-day, single-day admission, peak-day special admission, standard-day single day admission, standard-day special admission, 3-day admission and 7-day admission and evening admission. For groups, visitors can choose general group admission and those for students. For more details, visit the World Expo 2010 Shanghai China Official website at http://www. en.expo2010.cn/

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MAY 2010

Tourism

Photo: Luís Almoster | MSPagency.org

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Holidays not gambling

More than two-thirds - 69 percent - of Macau visitors come here mainly for a vacation, according to the 2009 Visitor Expenditure Survey. The Statistics and Census Bureau said the other major purposes for a visit include business and attending conventions/exhibitions – 11 percent – or visiting relatives/friends – 7 percent. Only 8 percent of the visitors said they came to Macau mainly for gaming. However, 50 percent of the interviewed visitors said they had participated in gaming activities during their stay in Macau.

More hotel guests

A total of 578,877 guests checked into hotels and guesthouses in Macau in February 2010, up by 12.3 percent year-on-year. The majority – 54.6 percent of total – came from the mainland and Hong Kong - 20.7 percent. The average occupancy rate of the hotels and guest-houses increased by 8.5 percentage points year-on-year to 77.8 percent and that of the hotels reached 78.5 percent, with 3-star hotels leading at 82.2 percent. The average length of stay of the guests increased by 0.2 nights to 1.5 nights.At of the end of February 2010, total number of available guest rooms of the hotel sector increased by 1,360 year-on-year to 18,937 rooms.

Macau and Shenzhen fight “free tours”

The Macau Government Tourist Office and the Shenzhen Municipal Bureau of Culture, Sports and Tourism have signed a memorandum of understanding on “Quality and Honest Macau Tours”. The goal is to fight so-called zero-fare tours and negative-fare tours by establishing rules travel agencies operators must comply with when organising tours to Macau. A total of 33 Shenzhen travel agencies operators have already signed up. The rogue tours are those in which tourists don’t need to pay any fees or only a small amount that doesn’t cover all the costs. As they arrive to Macau, they usually are forced to visit several shops, with the operators insisting that they purchase goods, many of which are of low quality and exaggerated price. MAY 2010

More visitors

The total visitor arrivals to Macau in March 2010 increased by 6.7 percent year-on-year to 2.01 million. Same-day visitors accounted for 52.5 percent of the total visitor arrivals, with 553,692 coming from the mainland, according to official data. Visitors from the mainland grew by 8.2 percent year-on-year to 1.06 million - 52.6 percent of total visitor arrivals. Visitor arrivals totalled 6.12 millions in the first quarter of 2010, up by 12.1 percent year-on-year. In the first quarter, same-day visitors accounted for 52.0 percent of the total visitor arrivals.

Tourist Price Index up

The Tourist Price Index (TPI) for the first quarter of 2010 rose by 9.40 percent year-on-year to 161.81. The price index of accommodation increased by 11.66 percent, attributable to substantial rise of hotel room rates. The first quarter TPI went up by 2.04 percent quarter-to-quarter, of which the price indices of transport and communications; and restaurant services increased by 4.67 percent and 2.38 percent respectively. The average TPI for the last four quarters ended the first quarter of 2010 increased by 5.83 percent over the previous period. TPI reflects the price changes of goods and services purchased by visitors, which is compiled according to the consumption pattern of visitors.

Tourism study link-up

The Institute For Tourism Studies (IFT) has signed a cooperation agreement with the University of Nevada, Las Vegas (UNLV), Singapore Campus to offer a Master of Hospitality Administration (MHA) – Executive Programme in Macau. The graduate degree programme is slated to begin August 2010. UNLV’s Master of Hospitality Administration degree programme targets working professionals in the hospitality field. “Its flexible programme design, combining distance learning and on-site intensive one-week seminars, is a convenient model for industry professionals to keep their current employment while studying for an internationally recognised graduate degree,” IFT said.

best practices

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RICARDO ANDORINHO *

Up in the Air It’s an unlikely role for the man who could be considered Hollywood’s most-loved leading man. In the 2009 movie Up in the Air George Clooney plays the part of Ryan Bingham, a downsizing expert and motivational speaker trying to relieve people of life’s physical and emotional “baggage.” Ryan makes metaphorical use of a backpack, asking his audience to pack everything they have, starting with the little things before moving to the bigger stuff, and adding awkward items such as people and relationships. Using aphorisms like “the slower we move, the faster we die” or “Make no mistake, moving is living” Bingham tries to influence his listeners to lighten the weight of their “baggage.” We don’t want to lighten the weight of your “baggage,” but rather make sure that you understand that you have everything you need to be remarkably happy. What is your dream? Everyone has one. Are you picturing yoursel fliving it? Well, imagine that wonderful three months you always dreamed of spending in a Bali villa, but never had the courage to actually go for. The beautiful balloon ride you never took, or the Jaguar you have dreamt of since you were a little kid but have never even taken for a test drive or drafted a plan to acquire it. To follow your dreams or to meet your most lavish goals, you must start looking at things differently. One of the solutions is to seek out someone to help you design and execute your goals, personal or corporate wise. In the movie, while firing people, Bingham deals with the extreme emotions of clients, such as anguish, hostility, fear, and even despair. We think Ryan does a pretty good job since he actually

achieves his goal. Surprisingly enough, we also believe that he teaches people to follow their dreams or goals. It has been proven that once you are obliged to change something in your life, you will change in the right direction: what doesn’t kill you makes you stronger! In the next few months we will try to show you in this column that you do not need to be fired to start fulfilling your dreams. You know that an elephant has to be eaten bite by bite, and that’s exactly what we advise you to do once you start tackling your goals or dreams. Macau Business has embraced the MB Intelligence (MBi) project. The aim? To smooth progress and build dreams. Once you find the determination to start reaching for your dreams, it´s amazing to find out what a friend, a co-worker or maybe the person sitting next to you in the coffee shop can do for your dream. Maybe, that person has an amazing villa in Bali or drives the same Jaguar you always dreamt of taking for a ride. Fortunately, MBi has the chance to share its dream with Macau Business and its readers. Our goal is to motivate you to gain control of your life, believe in your dreams and help you to take action. Together, Macau Business and MBi want to make sure that you find yourself in the three percent of people who get what they want faster than they ever thought possible. * Business Developer | MB Intelligence Consultancy Limited (“MBi”) is a management consulting and outsourcing company which combines experience and comprehensive capabilities across all industries and business functions. Through business analysis and planning, and coaching and team building, MBi provides tailor made solutions to its clients within the Pearl River Delta Region assisting them identifying their highest-value opportunities, deal with their most critical challenges and renovate their businesses to improve financial performance using risk analysis.

MAY 2010

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Arts & Culture

YOU COULD ARGUE THAT IT IS MACAU’S BIGGEST AND MOST INCLUSIVE ARTS PROGRAMME – AND YOU’D FIND FEW WHO WOULD DISAGREE THAT ARTMUSING DESERVES THE MANTLE

BY JACK REGAN

FIND YOUR hen the Macau Cultural Centre (CCM) launches its “Artmusing Summer 2010” you know it is time to find your muse. With a programme covering 17 performances and workshops, Artmusing Summer spans July and August, and includes programmes for kids and adults. In fact there is something for the whole family.

Something for everyone

Be it theatre, dance, music, puppets, flying ballet, bedtime stories, modern hip-hop, educational activities, stage training in make-up, lighting and management, they are all there. Among the highlights is the awardwinning Canadian Mermaid Theatre of Nova Scotia, which relates the nighttime tale of two cute rabbits Goodnight Moon & The Runaway Bunny. MAY 2010

Then there is the The Magic of Peter Pan musical in which the wonderful Macau Orchestra plays a major part on July 16 and 17. The dance piece by Britain’s Northern Ballet Theatre company is renowned for its mix of aerial ballet and fun with magnificent sets, fantastic costumes and stunning special effects.

Hip-hop and monkeys

Also on show is Little Stories.com performed by the French company Accrorap, on August 20 and 21, bringing poetic stories to life through hip-hop. A well-known story is delivered by the little-known but very talented The Local Little Mountain Arts Association. The Last Journey to the West is based on the 400 year Journey to the West story, also known as The Legend of the Monkey King, which is one of the four great classical novels in

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Chinese literature. On stage on August 27 to 29, children will embark on Little Mountainâ&#x20AC;&#x2122;s humorous and playful take, with puppets, magic, dance, singing and a pinch of adventure, is pure entertainment.

Workshops too

The cultural centre is also putting on workshops for all ages. Among them, the Mermaid Theatre of Nova Scotia will travel from Canada to bring Happy Puppets to the children, allowing them entry to a wonderland of creativity and imagination making their own puppets. Families can also take part and

MUSE develop innovative new ways of communication between parents and their kids. Open workshops for adults include Life Rhythm - Body Activities and Education by Taiwanese dance group, Cloud Gate. It will involve parents and those who work with children through creative body activities. There are also various technical and backstage workshops to give people a chance to learn about setting the stage for any performance. Tickets are on sale from May 2 and workshop enrolments run from May 2 to 30.

MAY 2010

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Entertainment

PARTY PEOPLE T

he Macau Industry Night got off to a rip-roaring start with a full house at Club Cubic. Revellers from the six gaming operators, casino suppliers and service providers heeded the call and partied big. Club Cubic was crammed to capacity on April 29. Born in Las Vegas the concept of the industry night is to build bonds across the sector, regardless of who you work for. Organisers hailed it an unqualified success for the Macau entertainment

MAY 2010

scene. The evening’s program included R&B band Jimy Graham Electric Church, who played a range of well known hits, framed by the performances of very spirited dancers, plus mixes by guest DJ Fábio and resident DJ Alan. Drinks flowed freely throughout the event and until the wee hours and so did the crowds. The Macau Industry Night is a joint project between Club Cubic and Macau Business.

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MAY 2010

150

WENRAN JIANG CHAIR OF THE CHINA INSTITUTE AT THE UNIVERSITY OF ALBERTA AND SENIOR FELLOW OF THE ASIA PACIFIC FOUNDATION OF CANADA

Achieving a US-China strategic understanding RELATIONS BETWEEN THE UNITED STATES AND CHINA HAVE BEEN AT A LOW POINT IN RECENT MONTHS. TENSIONS OVER US ARMS SALES TO TAIWAN, PRESIDENT BARACK OBAMA’S MEETING WITH THE DALAI LAMA, DISPUTES OVER THE VALUE OF CHINA’S CURRENCY, A SUPPOSED SNUB OF OBAMA BY CHINESE LEADERS AT DECEMBER’S COPENHAGEN CLIMATE SUMMIT, AND THE RUPTURE BETWEEN GOOGLE AND CHINA HAVE ALL PLAYED A ROLE. But President Hu Jintao’s visit to Washington for the nuclear security summit, which followed a phone conversation between him and Obama, has set the stage for a serious and calm exchange of views on a range of bilateral and international issues, including Iran’s nuclear program. This calming of the diplomatic atmosphere was helped considerably by US Treasury Secretary Timothy Geithner delaying his report to Congress on whether or not China is a currency manipulator. Geithner even made a quick stop in Beijing on April 8 to meet Chinese Vice Premier Wang Qishan, prompting reports that China may let the renminbi float more flexibly. Nevertheless, before anyone concludes that US-China ties are warming up, it is worth noting that the two countries have starkly different views on how to manage their relationship. Take the recent Obama-Hu telephone conversation. Reports in the US following the hour-long exchange praised it as a turning point in bilateral relations, and headlines emphasized that Obama worked on Hu to achieve a common stand in sanctioning Iran over its pursuit of nuclear weapons. Yet Chinese news releases gave no indication of such a “breakthrough.” Instead, they stressed Hu’s demand that the US side “properly handle” the Taiwan and Tibet issues, which represent China’s “core interests.” There was not even a mention that the two leaders discussed Iran, other than one line saying that they exchanged views on international issues of common concern. Such discrepancies reflect a broader perception gap. On the American side, the emerging consensus is that the Obama administration began its term committed to working closely with China on a range of issues. It took extra steps in not being openly critical of China’s currency policy, launched the highprofile US-China Strategic and Economic Dialogue, delayed a meeting with the Dalai Lama prior to Obama’s China trip, and showed substantial patience with China’s concerns at the Copenhagen conference. But that conciliatory approach, which brought down on Obama domestic criticism, did not seem to be appreciated by the Chinese. Instead, China displayed sharp anger at the US arms sale to Taiwan, something that has been going on for decades, and to Obama’s low-key meeting with the Dalai Lama. Many in the Obama administration now ask: what is the point of being nice when there are no obvious benefits? MAY 2010

On the Chinese side, the initial accommodating approach by Obama, although met with a level of caution and skepticism, was perceived as an inevitable reflection of China’s rise and more equal status with the US. After all, many argue, China continues to buy US treasury bonds and now shoulders the largest amount of US debt, thus financing whatever the Americans are doing, from the wars in Iraq and Afghanistan to health-care reform at home. China has played a vital role in getting the global economy onto a speedier path to recovery, thanks to its effective stimulus package. China is also expected to help resolve the nuclear standoffs with North Korea and Iran, two counties that are hostile to the US but less of a threat to China. So China’s leaders felt a sense of betrayal when Obama, shortly after his positive visit to Beijing, went ahead with the arms sales to Taiwan and the meeting with the Dalai Lama. Many mainstream, liberal-minded Chinese academics complain that there is no fresh US approach to China. Rather, these are old policies that do not accommodate China’s new status or respond to “Chinese kindness.” The problem is not a lack of communication channels. Both countries have interacted with each other for almost four decades. There are no language problems, few cultural barriers, and plenty of conferences and personal correspondence. We have seen elegant op-eds written on both sides, more or less articulating how one side is right and the other side wrong. The end result? They talk past each other rather than with each other. The fundamental issue in today’s US-China relations is the strategic visions that both governments are developing to cope with China’s rise. Americans tend to think that what is good for America must be good for the world. But China – and much of the world, for that matter – may not agree. Chinese leaders, for their part, tend to believe that nothing matters much if it is not good for China in the first place. Both countries must acknowledge that they have their own domestic and foreign policy priorities. Some may be shared; some not. Others may conflict. To accommodate and bridge their different interests, the US and China need to engage in more than just frank discussions. Tangible strategic concessions from both sides must be made in order to promote cooperation and avoid confrontation.

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PUTTING HIS HOUSE IN ORDER We imagine Shun Ka Huen must be having difficulty making big building firms accountable for sub-contractors who work for them and employ illegal workers. Er, especially considering the type of workers who helped renovating the Labour Affairs (DSAL) director’s house in Taipa.

STUPID GESTURES INC

Meanwhile, the DSAL director has defended the technique of counting heads to control equality between local and non-resident workers. Bizarrely, he described it as a “stupid but effective” solution. It seems the government’s love of “scientific studies” hasn’t reached the DSAL, they favour manual labour. So people, make a line: one, two, three…

TSK, TSK...THE MISSING LINK Importing labour agencies are the elephants in the corner of the room whenever labour importation – particularly from the mainland – is debated. We wonder why they tend to allegedly escape the control of government officials. A candy for whoever gets the right answer!

GROWING GENEROSITY

Frozen Spy takes his hat off to the gaming operators who have followed in Stanley Ho’s footsteps to help the needy. This time, the beneficiaries were the Qinghai earthquake victims. Galaxy Entertainment, Melco Crown Entertainment, MGM and Sands China donated a total of MOP16 million. It’s obviously a politically correct gesture but it’s nice to know that certain examples from the past have continued.

RAISING HELL

The courts have finally woken up and asked the Commission Against Corruption for the material evidence found at Ao Man Long’s house. Imagine if they conclude that other big fish are involved. Other names about whom no other information has been published except in a 2008 exclusive cover story in this magazine that, at the time, made many people turn their heads the other way. We haven’t heard the last of this case yet… Experience has given Frozen Spy a deep well of scepticism, and we fear that “the protection of social harmony” will prevail over the search for the truth. Some things seldom change, except for the worse.

FAT CHANCE

PUSSYCAT POLICING

According to the Chief Executive, the Macau police deserve a commendation for showing “high restraint” while dealing with the May Day demonstrations. Yes, gone are the days when the police actively repressed demonstrators, instead of just using water cannons! Ah, the glorious days when anyone who dared to cross the line would be slapped senseless! No more! Hail to our enlightened law enforcers!

Now we know why meals in Coloane prison are so good. Fat inmates mean the guards don’t need to exercise. At least, that’s what prison guard candidates seem to believe, judging by the fact that half of them failed their fitness tests. Well, there is always the traffic police, their only function is to spend all day riding their scooters and writing out parking tickets…

DRIVING US CRAZY

So, the government has decided to change the special driving permits which exempted holders of mainland driving licenses from taking a test. What a shame! Just as we were getting used to people driving on the wrong side of the road and ignoring the most basic driving rules. Next thing you know they’ll rationalise the parking ticket regime.

MAY 2010

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May 2010

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IGT

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Macau Cultural Centre

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Macau Daily Times

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Macau Post Office

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MGM Grand Macau

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Star City Hotel and Casino

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Wynn Macau

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Zung Fu Motors – Mercedes

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