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Economy & Finance 25 Growth uncertainty Macau sees its slowest economic growth since 2009 28 Golden opportunities The recipe for success in breaking into the mainland market
Politics 33 Fourth time unlucky Lawmakers have again thrown out a bill on trade unions
Special 37 New leadership China’s new leadership dreams of China’s rise
Greater China 44 Time for the giants Hong Kong’s new cruise terminal is expected to open in June
Property 48 Waiting game Mortgage interest rates may rise sooner than expected
Gaming 54 Clearing the air Ventilation systems maker says the law on smoking has two important shortcomings
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56 Uneasy rider Casino resorts in Cotai are not doing enough to cater to guests arriving on motorbikes 58 Overworked, outta here Casino workers are the least committed and least happy with their jobs, several surveys find 62 Profit sharing Four out of the six gaming operators in Macau will issue dividends for 2012 64 Experience counts A study links customer service experience to satisfaction and loyalty 66 Asia’s ‘only’ Vegas-style casino Solaire is the first of four gaming resorts planned for a new casino strip at Manila Bay and is run by some familiar Macau faces 71 Philippine expansion Melco Crown signs a US$600 million Philippine casino deal 72 Beachside limbo Vietnam’s Ho Tram Strip developer has missed its opening target, but still remains confident of success 75 Pokies addicts Australia gambles on moves to tackle slot machine problem gamblers
MB Report 77 Snail’s pace The government is going too soft and slow on environmental protection
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Hospitality 88 Guiding principle The lifeblood of the city’s prosperity, tourists are increasingly angry about their treatment and tour guides are in the hot seat 94 Seeing stars Fine dining in Macau lags behind the world’s great cities because it cannot compete for skilled manpower, says a celebrity chef 98 Healthy appetites Future Bright hopes to command a 5 percent share of the market for food souvenirs
Business 103 Riches in rags More designers are heading here and making a go of the rag trade, perhaps heralding a new dawn for the fashion industry 107 Consuming passions The Richemont group’s chief executive in the Asia-Pacific region, Alain Li, is optimistic about growth despite slower-than-expected sales
Human Resources 110 A desirable home The more Portuguese who apply for residence in Macau, the longer they have to wait to get it
Society 112 Modern poverty Subsidised groceries help Macau’s working poor put food on the table, while charities tend to the scars
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Photo: Carmo Correia
117 Corporate Social Responsibility 114 Shouldering the load The emerging practice of corporate social responsibility is all about burnishing brands and company reputations
Arts & Culture 117 Studio hunting Artist Konstantin Bessmertny is thinking of moving his studio to Hong Kong because Macau has become too expensive 122 Homemade triumph This year’s Macau Arts Festival features more than 30 acts, half of which have deep local roots
Opinion 12 From the publisher’s desk Paulo A. Azevedo 14 Editorial Alexandra Lages 36 Judicious reform Óscar Madureira 53 Straight talk José I. Duarte 87 Budding diplomats Keith Morrison 102 Games people play Gustavo Cavaliere 109 What is executive coaching? André Ribeiro 126 Debt-friendly stimulus Robert J. Shiller
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PAULO A. AZEVEDO FOUNDER AND PUBLISHER
from the publisher’s
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RANDOM CONSIDERATIONS
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On sensitive issues, such as human rights and freedom of expression, political naivety is irresponsible and leads to a needless loss of credibility at global forums, and damages international reputations
APRIL 2013
understand the difficulty faced by the government in accepting that the Legislative Assembly might have something to say about urban planning. Only someone ignorant of the assembly’s composition, or the sometimes unabashed advantage a business – or person – might gain when discussing policy at the mini-parliament, could believe members of the assembly bring balance to its legislative initiatives. With the level of government input in urban planning, and taking into account the way relationships work in the city, it is hard not to feel that the public interest, and discussions extremely important to the population, are irrelevant. As the norm, the less discussion there is, the greater the freedom to act arbitrarily. And since when did arbitrary behaviour become synonymous with upholding society’s rights and freedoms?
Utter hypocrisy The hypocrisy of political speech is irritating and occasionally obscene. In handling leases for land, there are two competing ideas. There is a demand that land should never be exempt from an open, transparent tender process, particularly where casino construction is involved. Yet some exceptions are allowed, although the guidelines are opaque and there is no formula to prevent arbitrary abuses, which easily escape scrutiny – thanks in part to the silence of the masses. Hong Kong is sometimes seen as an example for Macau to follow when legal experts have doubts. The controversial urban planning law
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is one example. However there is another opinion that Macau and Hong Kong are quite different and should not copy each other. This hypocritical political debate has the tendency to validate some acts because they simply cannot be explained any other way. It creates an ideal setting for those people looking to obscure questionable acts.
security policy, or because it is just easier to plead ignorance, rather than holding our heads high, apologising and moving on. Lying about government bodies, and quoting silly examples regarding the real protection of human rights, should be regarded as a case of lèse-majesté. Publicly saying the election for the chief executive is held in an open and democratic manner is just imbecilic.
Systematic lies
Illusory compromise
Macau’s officials have to wise up. In politics, naivety is not just counterproductive, it is treacherous. On sensitive issues, such as human rights and freedom of expression, political naivety is irresponsible and leads to a needless loss of credibility at global forums, and damages international reputations. The city’s reputation must be protected at all costs. Standing before the United Nations Human Rights Committee during the presentations of treaties and offering the same old, fragile defence of the wrong options, is just asking to be mocked. Macau has the right to deny entry to undesirable individuals if there is evidence they pose a threat to safety and order, but repeatedly denying entry to Hong Kong journalists without irrefutable proof is a clear attack on the rights Macau is sworn to uphold. A lack of justification is serious enough, but when it happens in front of the Human Rights Committee it is without peer. While Macau enjoys certain rights and a political climate the public can almost be proud of, there are cracks in the system. They exist because the public lacks the courage to accept mistakes will be made. Equally, there is not enough courage to correct them, either because there are conservative forces negatively influencing
The criticisms regarding the annual financial support provided by the Macau Foundation have switched to targeting their quantity, as if in denial that the foundation was created to fund projects that benefit Macau’s social, economic and cultural development. Criticising financial donations is like throwing sand into the eyes of a less than attentive individual. Critics should be examining the evaluation process that directs the funds, as well as the poor quality of some the projects and reputations of the associations that receive the money. It is important to create an independent structure that investigates possible conflicts of interest in awarding grants and in assessing the outcomes. Such a body would, more importantly, determine the compatibility of the people involved in the process, in the name of transparency, a cause the government is intent to publicise. If an oversight body does not materialise, the temptation will be for the foundation to blindly start cutting funding to institutions with less social and politically relevant missions. It would be an easy and unscientific way to justify the foundation’s claims that it is judicious with the public’s money.
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alexandra@macaubusiness.com
ALEXANDRA LAGES ASSISTANT EDITOR-IN-CHIEF
IGNITION SWITCH
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Cleaning up the environment cannot wait any longer. The city cannot rely solely on new areas of reclaimed land and the Light Rail Transit system – currently under construction – to improve the environment
APRIL 2013
he environment and green technology were at the forefront of public discussion during last month’s Macao International Environmental Cooperation Exhibition and Forum. It was the sixth edition of the annual fair and I wonder what has changed over those years. Every year, the number of exhibitors increases. More agreements are signed and the outcome is always portrayed as more positive than the year before. Does this mean Macau is a greener city that has changed for the better? Unfortunately not. Some of the cornerstone policies of a considered plan to protect the environment are yet to be implemented. There is still a long way to go, which frustrates me. In a city blessed with remarkable economic growth and with a European heritage, it is disappointing that there is not more political courage to introduce greener policies. The city’s Environmental Protection Bureau was set up in 2009. Four years later, it is difficult to see any significant progress. The bureau has been too slow to act and has been ineffective when it has acted. And when it comes to matters of environmental protection, slow to act means too late. The bureau is yet to release its 10-year plan for environmental protection from 2010 to 2020. The plan was meant to start in 2010 and establish targets for 2015. That it has not yet been launched is shameful. Four years since the bureau’s inception and there are still no rules to assess the environmental impact of development. The government says it will complete the legislation this year. Meanwhile, construction and development goes on, without specific rules to assess environmental impact. Construction is accelerating in Coloane, the part of Macau that enjoys the cleanest air, is relatively underdeveloped and should be protected. The “reduce, re-use and recycle” mantra means practically nothing in Macau. The government implemented a recycling campaign last year that encouraged residents to collect recyclable materials. The government must do more than give money to households and industry in an attempt
to increase recycling rates. It should create an integrated recycling scheme and invite waste management companies to bid for the right to run it. At the same time, it must foster awareness and promote public education. Then the public will have access to a free waste collection service and be involved in a substantial recycling scheme that engages concerned citizens using more than just a fistful of dollars. The government has offered tax reductions for environmentally friendly vehicles and imposed curbs on some sources of greenhouse gases. Yet air quality here is getting worse. There are more drivers on the roads because the number of licensed vehicles is increasing. It has been suggested that the government’s tax breaks and handouts are being used to fund the purchase of new cars. The government has thrown its weight behind the importation of electric cars. They are free from any taxes, but importers say there are no other regulations to help boost their numbers on the road. Electric cars and motorcycles are expensive and a consumer is likely to opt for the cheapest option: a vehicle powered by traditional fuels. The government has to set an example. All of its fleet should be electric or at least more environmentally friendly – including buses and taxis used in public transport. The Transport Bureau announced last year that electric buses would run on six routes in Taipa. Progress on the initiative has stalled. There are some regulations for operators running the city’s revamped public bus system. The government told operators to buy cleanerrunning vehicles but there are many buses in bad shape still in use. Cleaning up the environment cannot wait any longer. The city cannot rely solely on new areas of reclaimed land and the Light Rail Transit system – currently under construction – to improve the environment. At last month’s exhibition, I realised there are a significant number of enterprises here with much to offer. It is time that the government took the environment seriously. It is time for more action and fewer words.
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Editorial Council Paulo A. Azevedo, Emanuel Graça, Tiago Azevedo, Duncan Davidson, José I. Duarte Founder and Publisher Paulo A. Azevedo VOL.1 Nº107
pazevedo@macaubusiness.com
Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com
Assistant Editor-in-Chief Alexandra Lages alexandra@macaubusiness.com Cover illustration: Rui Rasquinho
Executive Senior Analyst José I. Duarte jid@macaubusiness.com
Art Directors Connie Chong, Luis Almoster design@macaubusiness.com
Hong Kong Bureau Michael Hoare (Chief), Anil Stephen michael.hoare@macaubusiness.com
Events Director Margarida Luz signature@macaubusiness.com
Special Correspondent Muhammad Cohen
Advertising Bina Gupta José Reis
jreis@macaubusiness.com
Xu Yu, Irene
Beijing Correspondent Maria João Belchior
irene.xu@macaubusiness.com
maria_belchior@yahoo.com.br
Media Relations
Manila Correspondent Max V. de Leon
GRIFFIN Consultoria de Media Limitada
maxdeleon_080975@yahoo.com
Assistant to the Publisher Laurentina da Silva ltinas@macaubusiness.com
Translations PROMPT Editorial Services, Poema Language Services Ltd, TLS Translation and Language Services Agencies AFP, Lusa
Office Manager Elsa Vong elsavong@macaubusiness.com
Photography António Mil-Homens, António Leong, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro,John Si, Manuel Cardoso, MSP Agency, Naty Tôrres, Agencies Illustration G. Fox, Rui Rasquinho
editor@macaubusiness.com
Regular Contributors André Ribeiro, Branko Milanovic, David Cheung, David Green, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Gustavo Cavaliere, Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang
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info@muhammadcohen.com
Letters to the editor
Contributing Editors Christina Yang Ting Yan, Dennis Ferreira, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Ferreira da Silva, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lois Iwase, Luciana Leitão, Mandy Kuok, Michael Grimes, Sara Farr, Sara Silva Moreira, Sofia Jesus, Xi Chen, Yuci Tai
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Address: Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No. 679 Av. do Dr. Francisco Vieira Machado, Macau Tel: (853) 2833 1258 / 2870 5909 Fax: (853) 2833 1487 Email: editor@macaubusiness.com APRIL 2013
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HUTCHISON FINED MOP370,000 FOR BLACKOUT
Local mobile operator Hutchison Telephone Co Ltd will be fined MOP370,000 (US$46,250) for two crashes on its network service last year. The Bureau of Telecommunications Regulation said that the operator is to be fined MOP150,000 and MOP220,000 for the two breakdowns in June and October respectively, affecting a total of 90,000 mobile phone users. The regulator added that the service failures were caused by a single wrong instruction keyed into the network.
INFLATION TO STABILISE AT AROUND 5-6 PERCENT
XI JINPING WARNS MACAU OF ADVERSITY China’s new president met with Chief Executive Fernando Chui Sai On for the first time Newly-installed Chinese President Xi Jinping (R) said that Macau was going through a “good phase” but warned it of “adversities to come”. Mr Xi, who was also recently installed as head of the Chinese Communist Party, was speaking last month during a meeting in Beijing with the chief
executives of Hong Kong and Macau. He said he hoped Macau would learn how to overcome problems that restricted its development, without saying what those problems were. It was Mr Xi’s first meeting with the leaders of China’s two special administrative regions since he became head of state.
Secretary for Economy and Finance Francis Tam Pak Yuen told media late last month that this year’s inflation will remain at a high level, of around 5 to 6 percent, due to strong internal demand. However, Mr Tam said the evolution of the consumer price index would be “more stable” compared with last year. The official expects inflation to ease this month after reaching 6.16 percent in February, the highest level since August. Last month’s price hikes were fuelled by the Lunar New Year holidays, which are traditionally a peak season for tourism.
TENDER FOR FERRY TERMINAL REVAMP
The Land, Public Works and Transport Bureau launched a tender process for the renovation works at the Outer Harbour Ferry Terminal. The proposals for the one-year contract will be opened on April 25. The works will mainly be carried out on the terminal’s first and second floors, and will involve adding luggage facilities and a baggage carousel. The works were originally scheduled to begin last September, after the government resumed full control of the structure in December 2011. APRIL 2013
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RETAIL STILL SHORT ON LABOUR
The sector needs over 3,000 more staff but salaries offered are unattractive
Macau’s retail sector continues to remain short on labour, the latest survey on manpower needs and wages by the Statistics and Census Service shows. At the end of last year, there were almost 3,100 vacancies in the sector. That represents a job vacancy rate of 13.4 percent, one of the highest in Macau. Aside from Macau’s manpower shortage, one of the possible reasons for the industry’s inability to fill positions is the below-average wages offered by retailers: in December, a salesperson earned on average MOP10,230 (US$1,279), while the overall median monthly wage in Macau during the fourth quarter of 2012 stood at MOP12,000. As of December-end, over 23,300 people were working in retail.
NEW HENGQIN LAND BLOCK OPEN TO FORTUNE 500 FIRMS
Hengqin Island development officials have put a block of land up for auction only for bidders from Macau, the mainland and overseas who are among Fortune magazine’s top 500 companies worldwide. The price of the 32,000-square metre block of land is set at 688 million yuan (MOP860 million) or about 3,580 yuan for each square metre of floor area. The auction will take place online this month. Joint bids and bids from individuals will not be accepted. At least 55 percent of the built area must be dedicated to office space and hotels. The remaining area is set aside for financial institutions and serviced apartments.
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CIVIL SERVANTS TO GET PAY RISE
The government has raised civil service pay by 6.06 percent this year starting from May. The pay rise will cost the government an estimated MOP633 million (US$79.1 million) this year. The government will not backdate the increase to the beginning of the year.
MACAU FREIGHT RATES HIGHER
The cost of bringing in imports from Hong Kong by sea will jump by 10 to 15 percent this month. The chairman of the board of supervisors of the Association of Macau Shipping Industry, Tou Man Kan, said that companies are increasing their rates to catch up with the surges in inflation and operating costs. Mr Tou said the surge in operating costs was due to increases in the price of fuel, port fees and wages.
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LOANS FOR YOUNG ENTREPRENEURS BY JUNE Only residents aged 21 to 35 will be eligible to apply for the special loan The government is to launch an interest free loan scheme for young entrepreneurs in the second quarter this year. Young residents aged 21 to 35 wanting to start their own companies will be eligible
to apply for the special loan, the Economic Services Bureau said. The proposed upper limit of loans is MOP300,000 (US$37,500) and the maximum loan period will be eight years.
DELTA ASIA’S CHAIRMAN REBUFFS NORTH KOREA LINKS
Delta Asia Bank Ltd’s chairman, Stanley Au Chong Kit, has strongly rebuffed statements from the chairman of the Foreign Affairs Committee of the U.S. House of Representatives, Ed Royce, who said that the North Korean regime was still using Delta Asia for illicit transactions. Mr Au said Mr Royce’s statements were “very irresponsible” and guaranteed that Delta Asia has not had any business relations with North Korea since 2005. Mr Royce suggested that Washington should impose further sanctions on Macau’s Delta Asia Bank. The United States accused Delta Asia of laundering money for the North Korean government in 2005 and froze about US$25 million (MOP200 million) in funds kept in the bank. The money was unfrozen two years later. Currently, the bank is still banned from doing business with U.S. financial institutions, which in effect prevents it from dealing in foreign currency.
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The plan for easy loans for young entrepreneurs was announced by Chief Executive Fernando Chui Sai On in his annual policy address in November.
CTM CUTS OVERSEAS CALL TARIFF Companhia de Telecomunicações de Macau SARL (CTM) announced an average reduction of 25 percent on charges for long distance calls. The tariff cut came into force last month and can be applied to users making calls to 89 jurisdictions. However for more popular destinations like Hong Kong, the United Kingdom and the United States, the rate of reduction was only 10 percent.
INDIVIDUAL VISA NEEDS OPTIMISATION: LIAISON OFFICE
The director of the Central People’s Government Liaison Office in Macau, Bai Zhijian, said that Macau should focus on how to optimise the individual visitor scheme for mainland Chinese tourists, but should not tighten the policy. Mr Bai said the city should “strive for a balance” in serving both residents and visitors. His comments came after the government’s think tank announced it will carry out a study to assess the effect of the mainland’s individual visa scheme on the city’s economic development.
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More workers in casinos The number of gaming employees increased last year. A decrease in the employee turnover rate shows that human resources in this sector were more stable compared with 2011.
AIRPORT WELCOMES 390,000 IN FEBRUARY The Macau International Airport handled over 390,000 passengers in February, representing an increase of 25 percent in comparison with the same period one year before. According to the Macau International Airport Company Ltd (CAM), the airport benefited from the Lunar New Year celebrations. The airport also recorded a 21-percent increase in aircraft movements.
GOVERNMENT SURPLUS HITS MOP19.5 BILLION
54,835
The number of people that were working in the gaming sector at the end of the fourth quarter of 2012, up by 9.2 percent year-on-year.
The government had a surplus of MOP19.5 billion (US$2.4 billion) in January and February this year, according to official data. This is an increase of 15.4 percent compared to the same period last year. The amount is close to one-half of the MOP41.1 billion surplus estimated in the budget for the whole year.
5.3%
The employee recruitment rate in 2012, down by 5.5 percentage points year-on-year.
23,895
MOP18,040
The average earnings (excluding bonuses and allowances) of full-time employees by December 2012, up by 7.9 percent year-on-year.
2,144
The number of job vacancies at the end of the fourth quarter of 2012, down by 130 year-on-year.
3.8%
The employee turnover rate in December 2012, which dropped by 0.6 percentage points year-on-year.
APRIL 2013
SOURCES: STATISTICS AND CENSUS SERVICE
The number dealers working in the gaming sector in 2012, an increase of 6.9 percent year-on-year.
BANKING OPERATING PROFITS DROP Macau’s banking sector saw its operating profits for January drop by 1.2 percent, data released by the monetary authority shows. The city’s banks achieved operating profits of MOP489.8 million (US$61.2 million). The banking sector witnessed an improvement in profitability in 2012. Last year, the total operating profits of the sector increased 24.4 percent year-on-year to MOP6.3 billion, a new record.
Economy & Finance
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Growth uncertainty Macau has seen its slowest economic growth since 2009. And things are not looking much brighter, with economists predicting single-digit growth for 2013 BY SARA FARR
he debt crisis in Europe and the slow recovery in the United States following the global financial crisis, will impact the growth of Macau’s gross domestic product (GDP) this year. Economic growth slowed down to 9.9 percent in 2012. Last month the secretary for economy and finance, Francis Tam Pak Yuen, said Macau could expect similar growth this year. “We are paying close attention to the global economy and we forecast a rebound, which means that Macau’s economy will remain stable and [GDP] growth will be single-digit [this year],” Mr Tam was quoted by local media as saying.
Photo: Luís Almoster
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Economy & Finance
There are a number of key factors that come into play here. These include the economic situation in Europe and the United States. Local economist and professor at the University of Macau, Henry Lei Chun Kwok, says that there is some uncertainty on the global economic outlook, while the ‘yet to be fully recovered’ Chinese economy is also expecting a low GDP rate this year. The economist explains that this may ultimately affect China’s recovery process and the Chinese export market. “It may be hard for the country to rely on export activities as its growth driving force,” Mr Lei told Macau Business. In addition, he says, with the mainland having announced a lower growth target, it may be harder for China to achieve double-digit growth in the coming years. “All in all, it should affect the pace of growth of China as well as that of Macau which depends heavily on tourists expenditures from [mainland] China.”
Not all bad Although the numbers are not as high as those in the last two consecutive years, with GDP growing 21.8 percent in 2011 and 27.5 percent in 2010, single-digit growth is not necessarily a bad thing. “It may help to cool down the over-heated economy and its price level,” the scholar says. Lei also adds that given the global economic uncertainty, the enlarged base year GDP, the progress of the ongoing casino projects in the territory, as well as the objective of achieving economic diversity, “it may be harder for Macau to have double digit economic growth of over 20 percent in the near future.” As it stands now, Macau’s economy relies strongly on several external factors: the global economic outlook, the performance of the Chinese economy and the policies implemented by Mainland China’s central government. This, according to Lei, makes it even harder to predict the numbers for this year. “A high single-digit or a double-digit rate of under 15 percent may be feasible given the current economic scale,” the economist says. Other economists have suggested, just like Mr Tam, that growth will remain at single-digit levels this year. José Sales Marques, a local economist at the University of Macau, was quoted last month by our sister publication Business Daily as saying that GDP growth is not likely to go over the 10 percent mark due to the various external factors. “The Chinese economy cooled down a bit, as well as the visitor arrivals and their expenditure, particularly shopping spending. This also shows we are vulnerable to external changes,” Mr Marques was quoted as saying.
Diversification is key Official data shows that Macau’s GDP annual growth slowed down to 9.9 percent in real terms last year, reaching MOP348.2 billion (US$43.5 billion). It is the slowest growth rate Macau has recorded since 2009, when GDP grew a mere 1.7 percent. Although it is the first time that growth has fallen under 10 percent, both GDP and per-capita GDP reached new all-time APRIL 2013
highs and surpassed numbers set the year before. Per-capita GDP amounted to MOP611,930 in 2012. According to the Statistics and Census Service, the GDP growth of 9.9 percent was mainly fueled by gaming, tourism and domestic demand. Exports of gaming services increased by 6.9 percent, while visitor spending rose by 6.4 percent. In regards to domestic demand, investment expanded by 19.1 percent due to the increasing number of public construction projects. Private consumption also rose by 9.1 percent, while government spending rose by 6.9 percent. Exports jumped by 23.2 percent. Officia data shows that in 2012 the main factors contributing to Macau’s economic growth were an increase of 13.4 percent in gross gaming revenue, a 15 percent increase in total visitor spending, an increase of 10.8 percent in the number of hotel guests, an upsurge of 54.8 percent in public investment, and an increase of 22 percent in the value of retail sales. Employees’ salaries also increased by between 13.4 percent and 17 percent. In the fourth quarter of 2012, GDP expanded by 8.5 percent, mainly due to a spur in exports and investment. Among the major components, exports of gaming services increased by 3.9 percent, gross fixed capital formation expanded by 21.8 percent, private consumption expenditure rose by 7.2 percent, while that of the government rose by 7.8 percent. Merchandise exports went up by 17.4 percent. Despite estimates by local economists that Macau’s GDP growth will remain in the single-digits this year, the Economist Intelligence Unit (EIU) foresees otherwise. In their latest report quoted by the news website MacauHub, analysts project growth rates of around 9.7 percent for this year and 13.7 percent in 2014. Overall this equates to average growth of 11.7 percent per year for the next two years. In addition, the report also predicts that investment will grow 17.3 percent this year and 14 percent next year. This is mainly due to the number of development projects currently underway in Cotai. In 2012, investment grew by 54.8 percent. The report suggests that not only will investment grow, but consumer spending will also increase in the next two years. Despite this, analysts expect inflation to drop, with a rate of 5.8 percent predicted for 2013, and 6.4 percent for 2014. The government has said time and time again that diversification is the key to sustainable economic development. Last month, secretary Tam reiterated that same idea and further added that, “Macau needs to be ready for adversity.” According to the secretary, Macau is already witnessing sustainable economic development: construction of large scale projects. In addition, the SAR is set to enhance regional integration to further promote economic co-operation. However, Mr Tam was also quick to add that regional co-operation should not be limited to the mainland. As such, the government plans to increase regional co-operation with countries in Southeast Asia, and continue to strengthen ties with Portuguese-speaking countries.
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Economy & Finance
“The Exhibition and Trade Centre for Products from Macau and Portuguese-Speaking Countries� in Jiangmen
Golden opportunities One bakery believes it has the recipe for success in breaking into the mainland market BY MANDY WONG
arkets in the mainland are presented as both untapped opportunities and a series of challenges for small and medium enterprises. And although more companies here are investing across the border, there are opportunities yet to be taken, according to government officials. The Exhibition and Trade Centre for Products from Macau and Portuguese-Speaking Countries was set up by the Macau Importers and Exporters Association in Jiangmen, northeast of Macau. It was intended to be a one-year project to help small and medium-sized enterprises (SMEs) break into the mainland market, however it has so far been unsuccessful, so the association has extended the project for another 12 months in the hope of getting results. The number of investments by Macau companies in mainland ventures increased last year, but the amount they invested decreased sharply. The Ministry of Commerce in Beijing approved 303 investments involving Macau companies last year, 7.1 percent more than in 2011. But the combined value of
M
APRIL 2013
these investments fell by 25.7 percent to US$510 million (MOP4.08 billion). The number of investments in January by Macau companies in the mainland was 23, half as many as a year earlier. The combined value of these
investments almost quintupled to US$50 million compared to one year before. Macau Importers and Exporters Association chairman Tsui Wai Kwan says mainland consumption and demand has been on the rise over the past few years, so many Macau businesses have become dealers in the vicinity of the city in foreign products, including wine, coffee, and canned goods from Portuguesespeaking countries. However, Mr Tsui says it is not easy for Macau businesses to get the products that they deal in into the mainland. Not only must they find suitable buyers, but they must also struggle through timeconsuming thickets of red tape.
Cultivated tastes
Tsui Wai Kwan
More than 40 Macau businesses are benefitting from the trade centre’s presence in Jiangmen, but Mr Tsui says they tend to give priority to their business in Macau. The scarcity of manpower in Macau also hampers these companies, making them hesitate to try to develop markets in the mainland. Some are content to stick with what they have in
29
October Fifth Bakery’s production plant in Jiangmen
Macau and eventually miss golden opportunities in the mainland. One successful investment in the mainland by a Macau company is October Fifth Bakery’s. Demand for bakery products is booming here but the market is incredibly competitive, and exploring opportunities on the mainland was a sensible choice. “There are already several leading old brands in the local market and we have to go a long way before we can emerge profitably on the local scene,” says company president Lao Ngai Leong. “The only way to succeed is to adopt a different approach, to cultivate the mainland and international markets by blending Macau’s age-old pastrymaking methods with modern technologies, in order to provide authentically flavoured Macau-style baked products.” The company established a plant in Jiangmen in 2004 and is focused on expansion in the mainland, taking advantage of its low prices in an otherwise unpromising market. Newly-built facilities in Xinhui in Jiangmen started operating 2011, increasing production in response to higher demand. The company now has nearly 9,000 outlets in the mainland. Mr Lao says the bakery puts the safety and quality of its products first. It has set up a system for product recalls. In this way its brand has gained popularity among wary consumers in the vast mainland market. It has been accredited as a famous brand of Guangdong.
October Fifth Bakery in Macau
Mr Lao says his company faced many difficulties in the early stages. To enter the mainland it had to pay a lot of money in slotting fees to have its products on display in shops. As the brand grew, counterfeiters began copying its products. The police seized the fake products and arrested the counterfeiters, who were subsequently convicted.
Value proposition Mr Lao says October Fifth Bakery has five core values. They are essential for business development. “Be confident about the market and the products, be determined to over-
Lao Ngai Leong
come problems, be sincere to consumers, be genuine and be cautious in business,” he says. The mainland economy is thriving, and income per head and consumption are increasing. The government there is taking measures to stimulate domestic demand. Mr Lao believes the mainland market is full of opportunities for Macau brands and products, and points out that the Macau government helps Macau enterprises cultivate business there. Many Macau enterprises would like to know about how to build brand reputation in the mainland. Mr Lao says they must make themselves familiar with investment conditions there and find out how to position their products in the market. Only a prudent investment strategy will have satisfactory results in a completely new market, he says. Mr Lao says enterprises should have a thorough grasp of policies, the law and regulations in the part of the mainland they intend to penetrate, and of how developed it is, including the state of its infrastructure and transport services. He says enterprises should look out for market trends and be able to adapt to the ever-changing market conditions. They should also keep their manufacturing methods up to date, he says. Lack of money and other resources may make Macau SMEs feel inadequate in the face of the enormous market in the mainland. Mr Lao advises such enterprises to find partners in Macau and avoid investing alone. APRIL 2013
30
Economic Trends by José I. Duarte GDP slowdown
GRAPH 1 - Gross Domestic Product Current prices
Chained prices
400,000
MOP million
300,000
200,000
100,000
GRAPH 1
The publication of the gross domestic product figures for 2012 confirmed the expected slowdown in economic growth. The growth rate, in current prices, came down from values in excess of 30 percent in the two previous years to just over 18 percent. In real terms, measured in chained prices based on the year 2010, last year’s growth was 9.9 percent. That was less than half of the 21.2 percent posted in the previous year and almost a third of the 27.5 percent registered in 2010. This slowdown was somehow, natural. First, as the economy grows its growth rates tend inevitably to go down. Secondly, the two previous years growth rates were anomalous. GRAPH 2
0 2004
2005
2006
2007
2008
2009
2010
2011
2012
GRAPH 2 - GDP components Private consumption expenditure
Government final consumption expenditure
Gross fixed capital formation
Exports
Imports
750,000
The economy has been recovering from two world crisis years when it posted unusually low growth rates. Remember that in 2008 and 2009 those rates were just 3.4 percent and 1,7 percent. This year’s rate is, nonetheless, below the average from the last eight years that stands at 12.4 percent. The main driver of growth last year was, in absolute terms, exports. However, in relative terms the factor driving growth was investment in fixed capital. (Note that the investment figures retained here only include physical capital, omitting the changes in inventory component.) GRAPH 3
MOP million
500,000
250,000
0 2004
2005
2006
2007
2008
2009
2010
2011
2012
GRAPH 3 - GDP annual variation, by major components Private consumption expenditure
Government final consumption expenditure
Gross fixed capital formation
Exports
Imports
160,000
MOP million
120,000
80,000
40,000
0
-40,000 2005
2006
APRIL 2013
2007
2008
2009
2010
2011
2012
At current prices fixed capital rose last year more than 27 percent, about ten percentage points above its average since 2008. Conversely, exports, the usual driving force in both absolute and relative terms, grew by 14.3 percent, almost 4 percentage points below the average for the same period. In terms of absolute annual variations, the interruption of growth is well visible in Chart 3. It was not more pronounced in 2009 due to a significant contraction in imports, which is reflected in the positive value the variation takes in that year. There it is clearly apparent that the period 2010-11 was one of recovery of the pre-crisis trend. It is that trend that this year’s figures seem to have reverted.
31 GRAPH 4
GRAPH 4 - Expenditure real variation, select components (2010 chained prices) Household consumption
Government purchases
Government Employees
Construction
Machinery and equipment
GDP
MOP million
300,000
200,000
100,000
0 2005
2006
2007
2008
2009
2010
2011
2012
GRAPH 5 - GDP per capita, private and public consumption (2010 chained prices) Household consumption
Government purchases
Government Employees
120,000 100,000
MOP
80,000 60,000
Let us look now into some figures at a lower level of aggregation, for private and public expenditure. These include household consumption, government purchases and employee compensation, and investment in construction and investment in machinery and equipment. The share of these components in GDP has declined over the last years. The combined share, in real terms, stood at more than 64 percent in 2008. It dropped to figures below 40 percent in the last two years. These changes reflect the increasing weight of external trade in the creation of the regions’ wealth. Globally, these expenditure elements follow roughly the economic cycle. However, one component, investment in construction, rose last year well above the rate for total GDP. It jumped by 24.3 percent. The last two years indicate this element is rising again, both in absolute and relative terms. But it has not yet reached the values registered in between 2006 and 2008. Investment in machinery grew last year by a comparatively modest 2.5 percent, almost one fourth of the total GDP growth rate. This makes it one of the less dynamic elements of the regions’ economic activity. Government purchases are another component growing significantly. The 9.4 percent growth measured, in real terms, last year, suggests both an extension of the government activity and a growing cost of that activity. Note that the figures do not include the compensation of employees, which rose at the lower rate of 5.1 percent. GRAPH 5 & 6
40,000 20,000 0 2005
2006
2007
2008
2009
2010
2011
2012
GRAPH 6 - Incorporations by industry, 2001-2012 Construction
Machinery and equipment
Imports of goods
Imports of services
160,000
The final charts (Chart 5 and Chart 6) show de growth of the same components per capita, using the simple average population for each year. Private and public consumption per capita are risen throughout the period almost without disturbances. A slight slowdown in 2008 or 2009 does not alter the overall pattern. Investment per capita in construction follows the overall investment cycle with significant oscillations in relative terms. The last chart adds also the data for imports of goods and services, which are closely related to the patterns of consumption and investment. Both display neatly the effects of the 2008-9 contraction and seem particularly sensitive to the changes in the overall growth rates.
MOP
120,000
80,000
40,000
0 2005
2006
2007
2008
2009
2010
2011
2012
APRIL 2013
Statistical Digest
Economic output
Year-on-year change (%)
2012 GDP at current prices
MOP 348.2 billion
GDP in chained prices
MOP 304.0 billion
GDP per capita at current prices
MOP 611,930
GDP per capita in chained prices
MOP 534,141
Employment Oct - Dec 2012
18.0 9.9 13.9 6.1
1.9%
Median monthly employment MOP 10,000 earnings (Oct - Dec 2011) Labour force participation
350,000 72.4%
11.1 4.0 percentage -0.8 points
Non-resident workers (end-balance)
110,552
17.6
Unemployment rate
Employed population
Money and prices 2012-end Domestic loans to private sector MOP 190.0 billion Resident deposits
MOP 366.8 billion
Foreign exchange reserves*
MOP 132.5 billion
Inflation rate (full year 2012)
6.1%
External merchandise trade 2012 Exports
MOP 8.2 billion
Imports Trade balance
--
Notes
1.9%
-0.2 percentage points
Dec 2012 - Feb 2013
MOP 12,000
Oct-Dec 2012
350,600 72.0%
16.5 1.3 percentage -1.2 points
113,276
15.3
Latest MOP 197.0 billion
Dec2012 - Feb 2013 Feb 2013
Year-on-year change (%)
6.2%
22.2 25.9 -percentage 0.4 points
Latest
Year-on-year change (%)
MOP 381.8 billion MOP 137.0 billion
Year-on-year change (%)
Dec 2012 - Feb 2013
2012
Year-on-year change (%)
Latest
Year-on-year change (%)
MOP 72.8 billion
Utility consumption 2012
Natural Gas
--
MOP 7.2 billion - MOP 6.2 billion
Balance
Liquefied Petroleum Gas
Q4 2012
MOP 70.9 billion - MOP 62.8 billion
MOP 56.7 billion
Gasoline
Q4 2012
Year-on-year change (%)
Latest
17.5 25.8 -percentage 0.3 points
MOP 1.0 billion
Latest
Year-on-year change (%)
MOP 10.8 billion MOP 1.7 billion
Year-on-year change (%)
75.3 million m3 4,205 million kWh 87.1 million L 43,615 tons -- million m3
MOP 10.4 billion
23.7 19.0 56.1 19.7
MOP 12.1 billion
14.9 13.7 15.8 14.1
- Direct tax revenue from gaming MOP 107.0 billion
Notes
16.5 8.5 ---
62.0 31.0 -27.0
Total expenditure
Electricity
---
Year-on-year change (%)
MOP 129.5 billion
Water
MOP 83.5 billion
17.1 13.9 --
Public accounts Total revenue
MOP 98.1 billion
Year-on-year change (%)
-0.3 percentage points
Year-on-year change (%)
Latest
5.9 million m3 2.2 290 million kWh 5.4 7.3 million L 5.6 4,587 tons 1.8 --100
6.7 9.0 6.6 1.5 -100
Notes Jan 2013 Jan 2013 Jan 2013 Feb 2013
Notes Jan 2013 Jan 2013 Jan 2013
Notes Jan 2013 Jan 2013 Jan 2013 Jan 2013
Notes Jan 2013 Jan 2013 Jan 2013 Jan 2013 Jan 2013
Transport and communications 2012-end Licensed vehicles - Automobiles - Motorcycles Mobile telephone users Internet services subscribers
217,335 101,712 115,623 1,613,457 231,582
Year-on-year change (%)
5.3 6.9 4.0 19.2 10.7
Latest
218,909 102,906 116,003 1,579,672 233,452
Year-on-year change (%)
5.5 7.4 3.8 14.3 10.8
* A new fiscal reserve system was introduced in January 2012, impacting the way foreign exchange reserves are accounted for APRIL 2013
Notes Jan 2013 Jan 2013 Jan 2013 Jan 2013 Jan 2013
Source: Statistics and Census Service and Financial Services Bureau
32
Politics
33
Fourth time unlucky The Legislative Assembly has again thrown out a bill that would have given trade unions the right to represent workers BY CLÁUDIA ARANDA
hirteen years after the establishment of the Macau Special Administrative Region, its labour law still does not comply with Article 27 of its Basic Law. And it is unlikely to do so in the near future, as the Legislative Assembly rejected a bill on trade unions last month for the fourth time. Article 27 of the Basic Law entitles Macau people to freedom of speech; freedom of the press and publication; freedom of association, assembly, procession and demonstration; and the freedom to form and join trade unions, and to strike. However, there is no enabling legislation that allows trade unions to represent workers legally or to call strikes. A directly elected member of the Legislative Assembly, José Pereira Coutinho, has been trying for years to correct this omission. Mr Coutinho is
T
president of the Macau Civil Servants Association, which is the main public sector union, although it also accepts members working in the private sector. He submitted a bill on trade unions to the assembly last month. It was the third time he pushed such bill to the assembly. But his peers rejected it. It vetoed the bill by 16 votes to eight. There were four abstentions. The assembly threw out Mr Coutinho’s bill because its members are “probusiness”, he says. “Many assembly members are businessmen, which makes the introduction of such rules more difficult,” he says. Industry is the most powerful force in the assembly. Of its 29 members, only about one-third have no connections to the business world. Legislators with business interests claimed the bill would damage the city’s image and economy. Some said the bill
would endanger the stability of Macau’s economy as it gives special rights to the workers.
Parliamentary tactics The assembly rejected bills on trade unions submitted by Mr Coutinho in 2007 and 2009. The first member of the assembly to introduce a bill on trade unions after the handover was Jorge Fão, in 2005. Mr Fão was head of the Macau Civil Servants Association at the time. He told Macau Business that for such a bill to prosper, it requires the lobbying of members to begin early on in the life of the assembly. “It should be presented at the beginning of the legislature and not at the end of the legislature, close to the elections,” he says. Mr Fão says that, just as in his day, members of the assembly still prefer to take a conservative approach, remaining APRIL 2013
34
Politics
within their comfort zone and avoiding taking sides. Mr Coutinho says he did all he could to enlist the support of other members. The timing of the bill’s submission – with only a few months to go before elections to the assembly – put pressure on the directly-elected members “to make them feel more responsible”, he said. The business sector claimed the assembly is too busy reviewing important laws, including the urban planning bill and the land law revision before this year’s election. Mr Coutinho is seeking re-election in September. Of the 12 directly elected seats in the assembly, four are held by representatives of business interests.
Workers’ rights The bill was meant to protect the rights of all workers, including civil servants and imported labour, to freedom of association. It would have exempted workers from court costs incurred during labour disputes. It proposed that imported workers be allowed to form unions and be represented in the Standing Committee
APRIL 2013
The assembly rejected bills on trade unions submitted by Pereira Coutinho in 2007 and 2009. The first member of the assembly to introduce a bill on trade unions after the handover was Jorge Fão, in 2005
for the Coordination of Social Affairs, which brings together representatives of the government, employers and employees. It would have made an employer that sought to deny employees their right to trade union representation liable to a fine of up to MOP50,000 (US$6,250) per employee. Mr Coutinho says that so far this year, the Macau Civil Servants Association has received 50 reports of labour disputes. Last year the association gave its support to an average of 50 workers a day. He thinks Macau “lacks legislation to put resident and non-resident workers on the same rung in respect to fundamental rights, such as pay for overtime, for shift work and night work, and also other rights, such as access to non-mandatory welfare schemes, by engaging employers and making them responsible for paying a share of those schemes”. Mr Coutinho says workers employed by the casinos are more vulnerable because, acting individually, they have less power to negotiate employment contracts with the gaming concessionaires.
36 ÓSCAR ALBERTO MADUREIRA LAWYER
Judicious reform GO AHEAD AND CHANGE THE LAW, BUT DO IT WISELY AND ONLY WHERE CHANGE IS NECESSARY
A
s Macau’s economy matures, new challenges must be faced by this peculiar and highly profitable special administrative region. The government’s main headache is no longer how to achieve pleasing rates of economic growth but how to keep what growth we have steady and sustainable. One of the most important foundations of this endeavour is Macau’s legal system and its ability to adapt to new strains in society. The law’s “big codes” were all enacted in 1999, when the city could barely imagine the scale and speed of its subsequent development. Since then, society has undergone a transformation that most leaders of opinion here say is changing the unique characteristics of the city, and contributing to the loss of its identity. The rise of the middle class, who are better educated and more insistent on greater order, on the observance of their rights and on a better quality of life, may endanger the competitiveness of Macau, especially its competitiveness against regional cities where gaming industries are sprouting. But Macau’s relatively free market, which is one of the reasons it has the most profitable gaming industry in the world, is becoming ever more regulated. I doubt that the regulation wonks are truly contributing to improving the legal system and ultimately to making economic growth sustainable. The law is certainly not without its faults, but it is nonetheless the result of an ancient and precise legislative tradition imported from Portugal, Germany, Italy and France. There, making law was not a task monopolised by a group of respectable businessmen and women seated in a legislative chamber, but a task for highly skilled academics and experienced politicians.
Competitive advantage Preliminary work on the “big codes” took several years and the final versions were the result of thousands of hours of discussion among the most brilliant brains teaching in those countries. Furthermore, because of its European origin, certain aspects of the legal system in Macau were tried and tested for decades elsewhere, such as in APRIL 2013
Germany and Portugal, where they were substantially amended and improved before being instituted here. The uniqueness of Macau’s legal system in the Pearl River Delta should not be regarded as a barrier to cohesion within the region, but as a competitive advantage. A legal regime different from those of its neighbours gives Macau what it takes to maintain a second system within one country. Copying juridical concepts from Hong Kong or the mainland may make the delta more uniform, but would also mean a loss of Macau’s individuality, and ultimately of an identity built up over more than 400 years. These are some of the reasons for the government to resist the temptation, and the pressure from lobby groups, to make or import new and unsuitable laws. These new and unsuitable laws may be
meant to fill gaps or rectify failures in the present legal system, but they add to uncertainty surrounding the legal system. There is certainly room for improvement in the law and in the years to come, as the city matures, the public will demand improvements and adaptations to meet their high standards. The law should not be excluded from an improvement process. More important than simply making new laws however, is the necessity to make new laws that properly serve the needs of the people. The standards of excellence required by the government as a means to make Macau count for something in the Pearl River Delta should be applied in all endeavours, and especially in building or altering the foundations of a developed society – those foundations being the law.
SPECIAL NEW LEADERSHIP
XI’S DREAM OF CHINA’S RISE
THE NEW PRESIDENT’S SPEECH AIMS TO BOOST THE PARTY: ANALYSTS
SPECIAL NEW LEADERSHIP 38 ew leader Xi Jinping has urged China to pursue the “Chinese dream” but experts say behind the grandiose words, he is single-minded in his aim to bolster Communist Party rule. The president faces myriad challenges from pollution and graft to territorial spats, unsteady growth in the world’s number two economy, and widespread inequality bringing with it the threat of social unrest. In his first speech as head of state, broadcast live on almost every major television channel, Mr Xi called for “the continued realisation of the great renaissance of the Chinese nation and the Chinese dream”, laying out a vision of a stronger military and ever-higher living standards. After ten years of interminable and sometimes incomprehensible speeches from Hu Jintao, the 59-year-old Mr Xi struck a far more confident, relaxed and reflective tone, keeping with his desire to drop the jargon traditionally sprinkled through official speeches and text. The 25-minute address last month closed a parliament meeting which named Mr Xi as head of state and Li Keqiang as premier, four months after the pair took the top two posts in the ruling Communist Party – the real source of their power. Mr Xi’s “Chinese dream” concept is itself an effort to “redefine the purpose of the party, so that there is a greater sense of the party being united with the people”, says David Zweig, a professor at Hong Kong University of Science and Technology. Like all leaders since Deng Xiaoping, Mr Xi agrees with the need for China to press ahead with economic reforms pursued since the old command-style communist system began to be disbanded in 1978, spurring an historic economic boom. Since November, when he took over the reins as party chief from Hu Jintao, Mr Xi has proclaimed the need to fight growing corruption which threatens, in his own words, to “kill the party” that has ruled China since 1949. But despite the threat of corruption and protests about social and environmental issues, the Communist Party appears unwilling to countenance political reforms.
The show must go on Mr Xi’s over-riding priority, says Steve Tsang, an expert in Chinese politics at Britain’s University of Nottingham, is “whatever it takes to keep the show on, the party in power and [make] China more powerful and influential”.
Mr Xi’s “Chinese dream” concept is itself an effort to redefine the purpose of the party, so that there is a greater sense of the party being united with the people, says David Zweig APRIL 2013
“They will be trying to project a clear image and message to the country in China that they are tackling the big issues like corruption, like government abuse of power.” Scott Harold, a China expert at the Rand Corporation in the United States, says: “If you look at Xi Jinping there are reasons to think that he believes that now China is a great power, and China has to act like a great power.” But the outlook for social reforms, for which a consensus apparently has yet to be reached among top leaders, remains unclear. Hints appeared in state media after Mr Xi took over as party chief that significant changes could be in the offing, such as an end to China’s notorious “re-education” labour camps, but the message was later rolled back and in the event no firm announcements were made. “He’s got to work within the realities of the Chinese system,” says John Delury, a Chinese history expert at Yonsei University in Seoul. The lack of any such major initiatives at the NPC illustrates the party’s difficulty in achieving the required internal agreement beforehand.
Paring state role Both Mr Xi and Mr Li stuck to the party’s long-held consensus on the need for economic reforms to ensure growth, while increasing military power and avoiding political change that could threaten its grip on power. Analysts said Mr Xi’s concept of a “great renaissance” was a slogan designed to have broad appeal, without any firm commitments to specific reforms. Mr Li, the newly appointed premier, pledged to open the economy to more market forces and strip power from the government to achieve 7.5 percent annual growth through 2020 and spread the benefits of the nation’s expansion. Mr Li, now in charge of the day-to-day running of the government, said that “maintaining sustainable economic growth” would be his administration’s top priority. But ensuring such a performance would be difficult, he said. China recorded its slowest growth for more than a decade last year amid weakened demand in key export markets. “What the market can do, we should release more to the market”, he said without giving details of specific economic reforms. Both leaders reiterated the party’s repeated pledges to fight corruption, with Mr Li saying that the government had an “unshakable resolve” to do so. “Since we have chosen public service we should give up all thought of making money,” the premier said. He also vowed stronger support for migrant workers in cities, as the Communist Party pushes urbanisation to fuel growth constrained by a shrinking labour force and limits on a property market where new home prices posted the broadest advance since December 2011. Mr Li’s economic team retained People’s Bank of China Governor Zhou Xiaochuan and added sovereign wealth fund chief Lou Jiwei as finance minister. Mr Zhou, 65, and Mr Lou, 62, will be joined by new Commerce Minister Gao Hucheng, 61, and Xu Shaoshi, 61, the new head of the National Development and Reform Commission, the economic planning agency.
SEEKING TO BOOST EFFICIENCY C
hina unveiled a government restructuring plan last month, cutting cabinet-level entities by two and dissolving its powerful Railways Ministry, as the country’s new leaders look to boost efficiency and combat corruption. The reforms mark the biggest reduction in ministries since 1998 when then-premier Zhu Rongji oversaw the overhaul of the State Council, and coincide with growing public concern over transparency and overlapping bureaucracies. The government will join the Family Planning Commission – the agency that controls the controversial onechild policy – with the Health Ministry, and strengthen the powers of the food and drug regulators, it said in a report released during the ongoing annual meeting of parliament. “Currently, numerous operational, organisational and division of labour problems exist in State Council ministries,” State Council Secretary-General Ma Kai said in a speech on the plan to the National People’s Congress. The restructuring plan, which will cut cabinet-level agencies to 25, will also boost the role of the food and drug regulators, placing it within the cabinet in response to an almost never-ending series of scandals over product safety.AFP
SPECIAL NEW LEADERSHIP 40
RAISED BY ELITE, STEELED BY TURMOIL
PREMIER’S UPHILL BATTLE
our years ago in Mexico, China’s new president provided a rare glimpse of a leader who was born into a revolutionary aristocracy and came of age in the tumult of Mao Zedong’s Cultural Revolution. In a steely defence of his country against criticism from abroad, Xi Jinping said: “In the midst of international financial turmoil, China was still able to solve the problem of feeding its 1.3 billion people, and that was already our greatest contribution to humankind.” “Some foreigners with full bellies and nothing better to do engage in finger-pointing at us,” he went on. “First, China does not export revolution; second, it does not export famine and poverty; and third, it does not mess around with you. So what else is there to say?” Last month, Mr Xi sported the dark suit and cautious public mask that is the uniform of the party leadership as he took his place as the head of state. Mr Xi assumed the role of Communist Party and military chief from Hu Jintao in November at a key party congress, and last month completed his rise to the top, replacing the departing president. The new president of China’s 1.35 billion people is a relaxed, affable contrast to his stiff predecessors – but whether there will be an accompanying change of substance remains to be seen. Mr Xi’s first months in power as head of the ruling Communist Party have shown a “new style, but short on delivery so far”, JeanPierre Cabestan of Baptist University of Hong Kong told AFP, describing him as “old wine in a new bottle”. The 59-year-old is the first Chinese leader to have been born after the Communists took power in 1949, and is one of the party’s “princelings” – the privileged offspring of those who played key roles in the revolution. He rose to the top of the secretive party by serving as a compromise pick, able to navigate between competing factions, including those of departing leader Hu Jintao and the influential former president Jiang Zemin. Mr Xi has an impeccable political pedigree as the son of a revolutionary hero, and has a pop star wife, Peng Liyuan, who holds the rank of army general and has starred in state broadcaster CCTV New Year’s gala for years. But his father Xi Zhongxun, a respected Communist elder, was purged during the 1966-76 Cultural Revolution, and Mr Xi himself was sent to the Chinese countryside to live and work alongside peasants, as were many educated youths. Xi joined the Communist Party while labouring in the poor northern province of Shaanxi and in 1975 moved to Beijing to study at the prestigious Tsinghua University, earning a degree in chemical engineering. He went on to oversee some of China’s most economically dynamic areas, including Fujian and Zhejiang provinces and Shanghai, earning himself a reputation as a proponent of economic reforms and an effective manager. In March 2007, the tall and portly Mr Xi secured the top job in China’s commercial capital. Seven months later, he was promoted to the party’s Standing Committee – the ruling inner-circle. As of last month, Mr Xi fulfilled his destiny. But like all incoming Chinese leaders, he will need to consolidate power, and whatever his personal beliefs, few expect him to stray far from the Communist template of gradually opening the economy while maintaining tight political control.
i Keqiang has had a colourful career, rising from manual labourer on a rural commune to the number two leader of the world’s most populous nation, but he could struggle to enforce his will. The 57-year-old has developed a reputation as a man who cares about the less well-off in society, perhaps as a result of his humble roots. A career bureaucrat who speaks fluent English, Mr Li has a more youthful bearing than his stiff party peers, and has voiced support for the kind of economic reforms many experts say China sorely needs for continued growth. Like his predecessor Wen Jiabao, Mr Li’s real power comes from his position as number two in China’s ruling Communist Party, where he is seen as having ties to a more populist faction associated with former President Hu Jintao. Mr Li was born in 1955 in Anhui province, the son of a local official. He reportedly rejected his father’s offer to groom him for the local party leadership, enrolling instead at Beijing’s prestigious Peking University to study law after time spent at a commune. He joined the party in 1976 and became involved in student politics as head of the university’s student federation from 1978 to 1982. After graduation, he slowly worked his way up the party ladder. In the meantime, the politician also completed his PhD in economics. He joined the upper echelons of the party’s youth league in the 1980s, when Mr Hu was in charge of the organisation. Mr Li was chosen as deputy secretary of the party in Henan province in 1998 and became party secretary of Liaoning province in 2004. He became China’s youngest provincial governor when he was tasked to run Henan. But his tenure in the rural and heavily populated province was marked by a series of unfortunate events – including fires and the spread of HIV through contaminated blood – that led to him to earn a reputation for having “bad luck”. Fortunately he found success in boosting Henan’s economy. He then impressed many by his efforts to revitalise Liaoning, an industrial province that suffered following China’s economic reforms. But Mr Li’s lack of allies in the party’s top decision-making body, the Politburo Standing Committee, leaves him lacking “political heft”, says Patrick Chovanec, a China analyst and chief strategist at Silvercrest Asset Management in New York. In order to exert influence, Mr Li will need to secure the support of new president Xi Jinping, who has more personal allies and ties to retired officials as a “princeling”, he adds. Since becoming the Communist Party’s number-two last year, Mr Li’s biggest move has been a government restructuring announced last week, which saw the abolition of China’s powerful and often corrupt railways ministry. But analysts say the scale of the restructuring achieved so far points to the challenges ahead. “We have seen minimal cosmetic changes, he was not able to pull off a major restructuring,” Willy Lam from the Chinese University of Hong Kong told AFP. Some fear parallels between Mr Li and his predecessor, who struggled to force through policies as he battled with factions in the upper reaches of the party, and officialdom in the provinces and ministries.
APRIL 2013
SPECIAL NEW LEADERSHIP 41
UNWANTED ATTENTION
KEEP UP THE CENSORSHIP FIGHT, URGES AN ACCLAIMED CHINESE FILMMAKER BY HELEN ROWE*
hinese filmmakers must fight censorship even if it means removing their name from their own work, one-time banned Chinese director Lou Ye argued during an interview with AFP. His crime thriller “Mystery” won the best picture at the Asian Film Awards last month. The event is organised by the Hong Kong International Film Festival. Lou’s film, his second since he was banned from filming in China for five years in 2006, tackles the subject of a new breed of wealthy and middle income men in post-socialist China, for whom taking a mistress is the norm, in a practice that harks back to imperial China. It was also nominated for best director and best actress for Hao Lei’s portrayal of a betrayed wife. “The film is about a very small group of people. It is about what happens between two women, the double life that this man leads, but through this I get to talk about things that happen in wider society,” he said in Paris where the film was shown as part of a China programme at the city’s Forum des Images in February. “What is important to me is the way in which we see that all the protagonists are linked to the death of this young girl, the way that no-one can say this has nothing to do with me,” he said. According to Lou, having a mistress is now commonplace in China for anyone with sufficient means. “Currently we see this way of life in particular among people who have money,” he said, adding that it was seen as a status symbol for men, while a woman acting in the same way would be stigmatised.
Secret shots The film is his second since the end of the ban imposed after he took his love story “Summer Palace”, set around the taboo subject of the 1989 pro-democracy Tiananmen Square protests, to Cannes without official approval. Lou responded by continuing to work, filming his next feature “Spring Fever” in secret using a handheld camera as well as “Love and Bruises” which came out after the ban expired. Although now able to film in China again, Lou remains the subject of unwanted attention from censors. After submitting the script for “Mystery”, Lou waited for five months for a response. Authorisation was given but demands for last minute changes followed. Although described as “minimal” by Lou, he still regards them as unacceptable.
“The very existence of censors is a worry for all film directors. In China it is a reality,” Chinese director Lou Ye “I used social networks in China to tell everyone that they were demanding modifications, and I entered into a dialogue with the censors, and in the end came up with something that was satisfactory,” he said. “The very existence of censors is a worry for all film directors. In China it is a reality,” he said. Lou urges all filmmakers to play their part in ensuring an end to the power of the censor. “All directors have a responsibility for the fact that censorship continues today in China,” he said, adding that there had been some progress in recent years “considering the situation before”. In the meantime, his next film is an adaptation of a novel by Bi Feiyu about blind masseurs, which he hopes to finish this year. “I hope that for my next film my name will be on the screen,” he said. AFP NEWS AGENCY
NEW TARGETS C
hina’s top media regulator will expand pre-broadcast censorship to cover television documentaries, in an apparent boost to an already formidable control apparatus. China’s State Administration of Radio, Film and Television (SARFT) told TV stations and producers that all documentaries would have to be approved in advance of being shown, the Beijing Morning Post reported. The notice would bring censorship of TV documentaries into line with requirements on non-fiction films, it said. A notice posted on SARFT’s website on Monday said that TV production companies, including joint Chinese-foreign co-productions, should report documentary topics in advance. The notice did not detail topics which would be censored, but said the move would “promote the healthy development of television documentaries”. Previous censorship guidelines released by SARFT have outlawed films which “distort” China’s history, or contain “murder, violence, horror, evil spirits and devils and excessively terrifying scenes”. APRIL 2013
SPECIAL NEW LEADERSHIP
Smog envelopes Tiananmen Square at the closing session of the NPC
Attendants place tea cups for the top Chinese leaders at the closing session of NPC in the Great Hall of the People in Beijing
Ethnic minority delegates cast their votes during the election of the new premier
MOMENTS
Newly elected President Xi Jinping walks to the podium to address the closing session of the NPC
Former Chinese President Hu Jintao (L) follows newly elected President Xi Jinping as they arrive at the closing session of the NPC
New Premier Li Keqiang holds a rare press conference for foreign and non-official media
Delegates review the voting paperwork at the fifth plenary session of the NPC
Xi Jinping signs an autograph for an ethnic minority delegate during the election of the new president of China
44
Greater China
Time for the giants Hong Kong’s new cruise terminal is expected to open in June BY MARY ANN BENITEZ*
here before airplanes flew in and out of Kai Tak, cruise ships will now sail in and out of the tip of the old runway from June. Hong Kong’s latest showcase will soon open to the world’s giant cruise ships at the Kai Tak Cruise Terminal, more than a decade after the idea was first broached. About 37,000 passengers on 16 ships will be among the first to use the terminal between its opening in June and April next year. Its second berth is set to open by 2014. The site had lain vacant for 15 years since Kai Tak airport closed in 1998 and was replaced by the Hong Kong International Airport in Chek Lap Kok. Work on the long-awaited terminal, which was designed by Foster + Partners, began in 2009, however the government failed to find a suitable candidate to build the terminal, and eventually decided to build it itself at a cost of HK$7.2
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APRIL 2013
billion (US$928 million). Hong Kong’s cruise terminal will provide “efficient services for embarking and disembarking cruise passengers, and enjoyable rooftop garden and dining experiences for locals and visitors alike.’’ Costing about HK$8.15 billion to build, the Cruise Terminal is expected to bring in between HK$1.5 billion and HK$2.6 billion a year by 2023 and will create 5,300 to 8,900 jobs. At 2,789 feet long, the terminal will have the world’s largest gangways, or passenger boarding bridges. The main building is three-storeys high, topped by a rooftop garden of 30,000 square feet. The ground level will have the baggage handling area, customs hall, back office functions and the passenger arrival area. On the level above is the passenger drop-off area. The second floor has check-in and waiting areas as well as a public colonnade, shops and cafes. The large public roof garden has
spaces for informal picnics and outdoor dining.
Cruise hub In 2002, a “Cruise Market Study for Hong Kong” commissioned by the Hong Kong Tourism Board confirmed that Hong Kong, with its world-class infrastructure and tourism facilities, is “well placed to become a regional cruise hub for North China, South China Sea and the Far East.’’ It was estimated in the market study that the total spending from the passenger cruise sector could reach between HK$1.3 billion HK$3.3 billion per annum in 2010. Hong Kong should be wellplaced to benefit from the growth in the industry, as “many international cruise operators consider Hong Kong as a ‘must’ for their trans-Pacific destination”. The existing berthing facilities at Ocean Terminal have become inadequate to accommodate the mega cruise
45 ships. The Ocean Terminal in Tsim Sha Tsui, which has served the cruise industry for more than five decades, will also embark on improvements. Bill Flora, director – USA of the Hong Kong Tourism Board was quoted in Travel Agent magazine as saying that the total number of Asian cruise passengers could reach seven million by 2020, based on projected China cruise market growth. Around that time Asia could represent 20 percent of the global cruise market. Hong Kong welcomed nearly 1.4 million cruise passengers in 2012, Flora said. The new Kai Tak Cruise Terminal will be able to handle ships of up to 220,000 gross registered tonnage. It will also be able to process 3,000 passengers an hour. The first new cruise berth will open this year; it can accommodate ships of up to 1,492 feet in length. A second berth opening in summer 2014 will accommodate ships up to 1,295 feet. Commissioner for Tourism Philip Yung sees the new Cruise Terminal as an “important part of its strategy to develop Hong Kong into a leading cruise hub in the region. “This new terminal’s iconic design renders it not only a landmark in our beautiful Victoria Harbour, but also
The new Kai Tak Cruise Terminal will be able to handle ships of up to 220,000 gross registered tonnage a premier functional facility that will hopefully take cruise travel to a whole new level. The terminal can berth the world’s largest cruise vessels, and its highly efficient passenger clearance and baggage handling facilities aim to provide the greatest possible extent of convenience and efficiency for passengers,’’ he adds.
All aboard! Mr Yung also noted the announcement by the Chinese government in Beijing in June last year that mainland tour groups would be allowed to take cruises from Hong Kong to Taiwan, and then visit Japan or Korea in the same journey before returning to the mainland. “This is really good news for both Hong Kong and cruise operators, as the measure allows us to tap the growing mainland market and organise more interesting itineraries in the East Asian region,’’ he said. In March this year, the new Cruise
Terminal welcomed its first ship, a 965foot luxury vessel, Celebrity Millennium, before the formal opening. The ship carried more than 2,000 passengers berthed at the Kai Tak Cruise Terminal as it headed to Hong Kong from Halong Bay in Vietnam. Worldwide Cruise Terminals Consortium won the right to operate and manage the terminal. The grouping is made up of Worldwide Flight Services, Royal Caribbean Cruises and Neo Crown, which is owned by Shun Tak Holdings. The consortium is required to pay the government a fixed rent for the 10year operation of about HK$13 million. In addition, the government will receive a percentage of the operator’s gross receipts as variable rent, with the percentage increasing from 7.3percent to 34percent as gross receipts rise. The government also plans to install on-shore power supply at the Kai Tak Cruise Terminal, so that cruise vessels with such facilities will benefit. “The government will also work to legislate the requirement for oceangoing vessels at berth to switch to lowsulphur diesel after consultation with the maritime sector will also develop new shore excursion programs to lure overseas visitors,” the tourism commissioner Yung said. * ASSISTANT NEWS EDITOR OF THE STANDARD NEWSPAPER HONG KONG
APRIL 2013
46
Fighting hub The Venetian Macao hosts a memorable boxing event featuring one of the most famous Chinese athletes he CotaiArena staged another fantastic night of entertainment on April 6 featuring the professional debut of Zou Shiming, headlining a brilliant boxing card. The night was memorable for both the public and for Zou, who made his worldwide debut as a pro boxer at The Venetian Macao. The two-time Olympic Gold Medalist and three-time World Amateur Champion, signed with legendary Hall of Fame boxing promoter Bob Arum’s Top Rank in Beijing, in January. Zou, 31, had trained at The Venetian and The Palazzo in Las Vegas, with Hall of Fame trainer Freddie Roach and Miguel Diaz in the lead up to the event. He made his pro debut as a flyweight with Roach and Diaz working his corner. One of the most popular Olympic athletes in China, Zou was also the world’s greatest amateur light flyweight, capturing gold medals at the World Amateur Championships in 2005, 2007 and 2011, along with gold medals at the 2008 and 2012 Summer Olympic Games. He has an Olympic bronze medal from the 2004 games, a result that made him his nation’s first Olympic medalist in boxing. He is also China’s first boxing gold medalist in the World Amateur Championships and the Olympics. Champions and legends Zou’s contender at the 15,000-seat CotaiArena was Mexican boxer Eleazar Valenzuela in a 4-round matchup. Eleazar has been fighting as a professional for 11 months. The nine-bout event also featured World Boxing Association (WBA) / World Boxing Organization (WBO) flyweight champion and Filipino-American Brian “Hawaiian Punch” Viloria, defending his
Zou Shiming
APRIL 2013
Sponsored Feature
47 unified titles against Top-10-contender Juan Francisco Estrada, in addition to two-time WBO junior lightweight champion Roman “Rocky” Martinez, defending his title against undefeated No. 1 contender Diego Magdaleno. The undercard featured former WBO junior featherweight champion and current No. 1 contender Wilfredo Vazquez Jr., of Puerto Rico, who battled Yasutako Ishimoto, of Japan, in a 10-round junior featherweight bout; and WBO flyweight mandatory challenger Milan “El Metodico” Melindo, of the Philippines against Tommy Seran from India. Thai fighter Cheroenchai Sithsaithong battled Filipino David Penalosa in a 6-round super bantamweight fight, while Japanese Rysei Yoshida challenged Australian Paul Fleming in an 8-round super featherweight bout. The undercard also featured Ngaotawan Sithsaithong from Thailand against Filipino Dodie Boy Penalosa in an 8-round featherweight battle. Legendary two-time world heavyweight champion “Big George” Foreman was ringside at the event, providing blow-by-blow commentary for HBO2, who televised the event in the U.S. The Venetian Macao launched a special accommodation and event ticket package for sports fans. The Zou Shiming “Fists of Gold” Package started at just HK$2,988 for stays on fight night, and came with the following exclusive advantages: Two tickets to the Zou Shiming “Fists of Gold” event, accommodation for two in a Royale Suite, and breakfast for two. For all the fight results see www.toprank.com.
Brian Viloria
Juan Francisco Estrada
Varied offerings The Top Rank event at The Venetian Macao was another way Sands China is implementing its entertainment strategy, part of its effort to help diversify Macau’s tourism economy through the varied offerings of its integrated resort city on Cotai. It recently hosted the highly-successful greater China debut of Ultimate Fighting Championship (UFC) in November, and has held numerous sporting events with some of the world’s most well-known athletes – from basketball greats Kobe Bryant and Scottie Pippen to tennis legends Pete Sampras and Roger Federer, and golf sensations like Rory McElroy and Lee Westwood. “Sands China was proud to host Zou’s professional debut, and we look forward to opportunities to bring many more Top Rank events to Macau in the future,” said Edward Tracy, President and Chief Executive Officer, Sands China Ltd. “The company is glad to contribute to the city becoming one of Asia’s top entertainment hubs and a world centre of tourism and leisure.” (Bouts and times subject to change)
Roman Martinez
Eleazar Valenzuela
Diego Magdaleno APRIL 2013
48
Property
Waiting game Mortgage interest rates may rise sooner than expected leading some buyers to sit on the sidelines BY ALEXANDRA LAGES
would-be homebuyer says he has the money to buy his first flat in Macau. However, after looking around for something suitable, he has decided to sit it out for another year. “I gave up. The speculation in the market is huge, especially in the Areia Preta district and Taipa,” says the buyer, who declined to give his full name. His budget is about MOP6 million (US$750,000). Having heard that Hong Kong banks are increasing their mortgage interest rates, he feels it is too risky to buy a home right now. “I heard the news of Hong Kong increasing interest rates and, for sure, the same will hap-
A
APRIL 2013
pen in Macau. But what I fear the most is that the real estate bubble could burst this year, so that’s why I’ve decided to wait and see,” he says. At the same time, the buyer fears that instead of falling, home prices in Macau will continue to climb to levels equivalent to those in Hong Kong. He is trapped. He would like to pay about MOP12,000 a month to service a mortgage, but if mortgage interest rates here rose, he could pay another MOP2,000 a month. “I can afford to pay MOP14,000 tops but I would lose some quality of life,” he says.
People in the real estate business think banks here will follow Hong Kong’s lead, meaning homebuyers will face greater financial difficulty. Hong Kong’s two biggest mortgage lenders, HSBC Holdings Plc and Standard Chartered Plc, raised their prime mortgage rates last month for the first time since 2011, by 0.25 percentage points, in response to tighter regulatory restrictions.
Twin speed Centaline (Macau) Property Agency Ltd sales director Noelle Cheung says: “The same may happen here”. Century 21 Realty Macau’s sales
49 manager, Patrick Chiu, says: “Historically, Macau always follows Hong Kong. So mortgage rates are likely to increase.” Both estate agents expect the number of homes sold, and the prices they fetch to ease slightly if banks here raise interest rates. “Even today, with the new rules for mortgage loans, it’s already difficult for new buyers to buy a home, even if they sell a unit to buy a new one. An increase in the interest rates will cool the market, because people cannot afford to pay the monthly instalments,” says Mrs Cheung. In contrast, Jones Lang LaSalle (Macau) Ltd’s head of residential property, Jeff Wong Chi Wai, sees no need for banks here to increase interest rates. He says Hong Kong’s circumstances are different, as banks there are subject to tighter regulatory restrictions. The Hong Kong Monetary Authority told Hong Kong’s banks in February to limit their risk weighting for new mortgage lending for homes to 15 percent, just in case residential property values dropped. This was after the government there took further measures to cool the property market, doubling the stamp duty on purchases of property costing more than HK$2 million. Monetary Authority of Macau chairman Anselmo Teng Lin Seng says the circumstances in Hong Kong are different from those in Macau. The Macau government will leave it up to the banks to decide whether to follow HSBC and Standard Chartered in Hong Kong.
Economic comeback
Conjecture is rife in the property market that Macau’s government will follow Hong Kong’s in taking new measures to cool the market
Bank of China Ltd Macau branch deputy general manager Ip Sio Kai said last month that Macau’s banks would not necessarily follow Hong Kong’s, but that homebuyers should be prepared for higher interest rates, just in case. Mr Ip remarked that the United States economy was recovering, and that there was a slight chance of an increase in US interest rates next year – which would mean higher interest rates here, as the pataca is pegged indirectly to the US dollar. American billionaire financier George Soros told CNBC in January that US interest rates would jump as soon as there were clear signs that the US economy was picking up. Mr Soros expects US interest rates to rise this year. The Portuguese news agency Lusa last month quoted Midland Realty Macau’s managing director, Ronald
Cheung Yat Fai, as saying that if interest rates here rose, many property buyers would be unable to afford to service their mortgages. Mr Cheung said the reason why Macau people had three times more purchasing power now than in the late 1990s, was that interest rates were low and they did not worry about the future. Conjecture is rife in the property market that Macau’s government will follow Hong Kong’s in taking new measures to cool the market. Some people in the real estate business say the government here is about to double the stamp duty on purchases of flats by buyers that already own more than one home.
Before a fall Bloomberg news agency quoted Buggle Lau, chief analyst of Hong Kong real estate agency Midland Holdings Ltd, as saying that he expected the number of homes sold in Hong Kong last month to fall below 3,000 because of the new curbs. Housing prices there are forecast to fall by up to 10 percent this year. If Mr Lau’s prediction is correct, the number of homes sold last month would be the lowest since 2003, near the end of a six-year slump in Hong Kong’s property market. In Macau, the value of new mortgage lending for homes was MOP3 billion in January, 13.7 percent more than the month before, rising for the first time in four months. But January’s total was far below the peak last September, when homebuyers rushed to take out loans before the government introduced new curbs on the overheating property market. In October, the government made yet another attempt to cool the property market, reducing the maximum proportion of the value of a home that a bank is allowed to lend, for homes worth more than MOP6 million. With the new rules, Macau residents who want to buy a completed home priced between MOP6 million and MOP8 million are only able to borrow up to 60 percent of that amount from the bank. For non-residents, the ratio is even lower – 50 percent. Housing prices were 5.8 percent higher in January than the month before, data from the Financial Services Bureau shows. The average price per square metre of residential space was MOP74,524. Altogether, 1,144 homes were sold in January, 310 more than the month before. APRIL 2013
Property Statistics
Construction - private sector
Year-on-year change (%)
2012
2,558 2,443 100 15 1,592 1,526 49 17
Building units completed - Residential - Commercial and offices - Industrial and others Building units started - Residential - Commercial and offices - Industrial and others
84.4 122.3 -56.7 -73.7 -26.3 -25.7 -43.0 -15.0
Transactions (1) 25,419 16,917 7,175 9,742
Total units transacted - Residential - New building - Old building Resident buyers (as percentage of total buyers) - Commercial and offices Resident buyers (as percentage of total buyers) - Parking spaces - Industrial and others Total value of total units transacted (2)
3.2 points -5.0
n/a 5,122 408
n/a -26.6 19.0
MOP74.2 billion
- New building
MOP48.8 billion
- Old building
MOP25.5 billion MOP19.0 billion
- Commercial and offices - Parking spaces
MOP3.4 billion
- Industrial and others
MOP4.3 billion
32.3 26.1 17.8 45.9 49.7 22.8 120.6
109.4 113.9 148.1 92.0
Under MOP1 million MOP1 million to MOP1.9 million MOP2 million to MOP2.9 million MOP3 million to MOP3.9 million MOP4 million or above
Year-on-year change (%)
MOP70,407 /m
2
- Macau Peninsula
MOP71,159 /m
2
- Taipa
MOP64,138 /m2
- Coloane
MOP79,008 /m
Macau
2
6.8 8.4 -0.5 -5.0
Jan 2013 Jan 2013 Jan 2013 Jan 2013 Jan 2013
Notes Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012
93.4 473 43
3.3 points 168.8 38.7
Jan-Dec 2012
170.3 221.0 234.7 195.1 89.1 311.7 -9.6
Jan-Dec 2012
percentage
MOP4.0 billion MOP1.9 billion MOP1.2 billion MOP0.4 billion MOP0.3 billion
Jan-Dec 2012
Jan-Dec 2012 Jan-Dec 2012
Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012 Jan-Dec 2012
Year-on-year change (%)
Latest
1.1 31.1 25.7 77.3 448.2
96 173 176 133 603
Average transaction price of residential units (3) Dec 2012
Jan 2013
percentage Jan-Dec 2012
MOP5.9 billion
-45.5 -27.1 -4.8 17.8 42.0
1,466 3,372 3,011 2,141 6,927
Jan 2013
7.1 points 28.0
MOP7.7 billion
Year-on-year change (%)
Jan 2013
98.8 169
Transaction price of residential units (1) 2012
Notes
Year-on-year change (%)
1,866 1,181 536 645 percentage
90.3 2,972
28.6 41.7 0.0 0.0 1,785.7 2,400.0 400.0 100.0
Latest
-8.0 -1.5 -7.8 3.7
MOP100.9 billion
- Residential
45 34 10 1 132 125 5 2
Year-on-year change (%)
2012
Year-on-year change (%)
Latest
Notes Jan 2013 Jan 2013 Jan 2013 Jan 2013 Jan 2013
Month-on-month change (%)
Latest MOP70,385 /m
2
MOP71,116 /m
2
MOP62,766 /m2 MOP89,615 /m
2
-5.6 -4.6 -9.0 8.6
Notes Feb 2013 Feb 2013 Feb 2013 Feb 2013
(1) The data covers transactions with stamp duty paid during the reporting period, including transactions exempted from stamp duty (2) Figures are rounded, therefore they may not add up exactly (3) The data covers transactions with stamp duty bill issued during the reporting period, including transactions exempted from stamp duty APRIL 2013
Source: Statistics and Census Service and Financial Services Bureau
50
Property | Market Watch Notable residential property transactions - 01/02 to 28/02, 2013
51
Source: Midland Realty (Macau) Ltd
District
Property
Unit
Coloane
One Oasis Cotai South
Block 12, M/F, units A-E and I, J
7,054
Coloane
One Oasis Cotai South
Block 12, M/F, units F-H
3,404
24,761,000
7,274
Macau
Pearl Horizon
Block 4, H/F, unit C
1,746
12,729,000
7,290
Taipa
Windsor Arch
Block 9, H/F, unit B
1,468
12,000,000
8,174
Macau
Pearl Horizon
Block 3, M/F, unit C
1,652
11,883,000
7,193
Macau
Pearl Horizon
Block 3, M/F, unit C
1,652
11,463,000
6,939
Macau
Pearl Horizon
Block 4, M/F, unit C
1,746
11,065,000
6,337
Macau
Pearl Horizon
Block 4, H/F, unit D
1,399
11,055,000
7,902
Macau
Pearl Horizon
Block 4, M/F, unit C
1,746
10,745,000
6,154
Macau
Pearl Horizon
Block 4, L/F, unit C
1,746
10,475,000
5,999
Macau
Pearl Horizon
Block 4, M/F, unit E
1,650
10,210,000
6,188
Macau
The Residencia
Block 5, M/F, unit B
1,696
10,200,000
6,014
Macau
Pearl Horizon
Block 8, H/F, unit A
1,248
9,944,000
7,968
Macau
Pearl Horizon
Block 3, M/F, unit E
1,393
9,815,000
7,046
Macau
Pearl Horizon
Block 3, M/F, unit D
1,382
9,495,000
6,870
Floor area (sq. ft)
Sale price (HK$)
Price per sq.ft. (HK$)
49,699,000
7,046
Macau
Pearl Horizon
Block 17, M/F, unit D
1,302
9,018,000
6,926
Macau
Pearl Horizon
Block 4, H/F, unit A
1,274
8,479,000
6,655
Macau
Pearl Horizon
Block 4, M/F, unit B
1,260
8,234,000
6,535
Macau
Pearl Horizon
Block 3, M/F, unit F
1,177
7,701,000
6,543
Macau
Pearl Horizon
Block 4, M/F, unit A
1,267
7,633,000
6,024
Macau
Pearl Horizon
Block 4, M/F, unit F
1,169
7,498,000
6,414
Macau
Pearl Horizon
Block 17, H/F, unit E
938
7,035,000
7,500
Macau
Pearl Horizon
Block 17, H/F, unit F
952
6,988,000
7,340
Macau
Pearl Horizon
Block 17, H/F, unit E
938
6,895,000
7,351
Macau
Pearl Horizon
Block 17, M/F, unit F
952
6,783,000
7,125
Macau
Pearl Horizon
Block 17, M/F, unit E
938
6,690,000
7,132
Macau
Pearl Horizon
Block 4, M/F, unit G
1,051
6,145,000
5,847
Macau
Pearl Horizon
Block 17, H/F, unit H
767
5,160,000
6,728
Macau
Pearl Horizon
Block 15, H/F, unit H
797
5,100,000
6,399
Macau
Pearl Horizon
Block 13, H/F, unit H
767
5,005,000
6,525
Macau
Pearl Horizon
Block 17, M/F, unit H
797
4,755,000
5,966
Coloane
One Oasis Cotai South
Block 5, L/F, unit D
877
4,648,100
5,300
Taipa
Jardim Drag達o Precioso
L/F, unit AA
1,067
4,280,000
4,011
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable residential property rentals - 01/02 to 28/02, 2013 Type
Property
Unit
Source: Midland Realty (Macau) Ltd
Floor area (sq. ft)
Rent price (HK$)
Price per sq.ft. (HK$)
Macau
One Central
Block 5, H/F, unit A
2,287
44,000
19.24
Macau
One Central
Block 1, H/F, unit E
1,842
38,000
20.63
Macau
Lake View Tower
H/F, unit Q
2,517
35,000
13.91
Macau
One Central
Block 7, H/F, unit A
1,269
29,000
22.85
Macau
One Central
Block 7, M/F, unit C
1,173
27,000
23.02
Macau
One Central
Block 1, H/F, unit A
1,273
27,000
21.21
Macau
One Central
Block 7, M/F, unit D
1,176
26,000
22.11
Taipa
Nova City
Block 7, H/F, unit D
2,505
21,000
8.38
Taipa
Nova City
Block 14, M/F, unit B
1,314
14,800
11.26
Taipa
Flower City
Edf. Lei Hong, H/F, unit E
1,268
12,000
9.46
Taipa
Edf. Hung Fat Garden
Block 2, M/F, unit N
1,280
12,000
9.38
1,280
12,000
9.38
785
8,000
10.19
Taipa
Edf. Hung Fat Garden
Block 2, L/F, unit J
Macau
Villa de Mer
Block 3, M/F, unit E
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
APRIL 2013
52
Property
LA SCALA TRIAL ON APRIL 29 The trial of Chinese Estates Holdings Ltd boss Joseph Lau Luen Hun and BMA Investment chairman Steven Lo Kit Sing regarding the land where luxury residential project La Scala is being built, will resume on April 29. The trial’s original January start date was postponed because six of the accused were absent,
DEVELOPER TO GET RECLAIMED LAND
Hong Kong developer Kerry Properties Ltd is set to get a plot in one of Macau’s five new reclaimed areas in return for giving up part of the land granted for the Galaxy Macau resort in 2009. Although the exchange procedure is still “under discussion”, the firm expects the new site “to be within one of Macau’s new land reclamation projects”, the developer told in a filing. The government pledged to grant the developer another piece of land with a value of at least MOP69.8 million (US$8.7 million), the money Kerry originally paid for the Cotai plot. Kerry received the Cotai plot in 1996 for the construction of an exhibition and convention centre.
THREE MONTHS TO GET LICENCE The law regulating real estate activities comes into effect on July 1 Estate agencies and property brokers will have from April 3 until June 30 to apply to the Housing Bureau for three-year temporary licences. The law regulating real estate activities, passed last October, requires all estate agencies and property brokers to obtain temporary licences allowing them to operate until they pass examinations held by the Labour Affairs Bureau, which will entitle them to permanent licences. The law will come into effect on July 1.
APRIL 2013
including Mr Lau, the head of property developer Chinese Estates Holdings Ltd, who was said to be unwell at the time. The Public Prosecutions Office has accused Mr Lau, Mr Lo and six others of being part of the web of corruption woven by Ao Man Long when he was secretary for transport and public works.
CHINA STATE CONSTRUCTION TRIPLES REVENUE
State-owned China State Construction International Holdings Ltd reported revenues of over HK$859.5 million (US$110.7 million) last year in Macau, more than three-times higher than the HK$243 million posted a year before. However its gross profits in Macau dropped by 16.2 percent to HK$59.6 million last year. The company is involved in several projects in Macau, of which the biggest is the Nova Park residential project in Taipa, owned by conglomerate Shun Tak Holdings Ltd.
53 JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com
Straight talk WHAT ARE THE PLANS TO INSTALL NATURAL GAS INFRASTRUCTURE IN MACAU? HOW MUCH WILL THAT IMPACT CITY TRAFFIC AND THE DAILY LIFE OF RESIDENTS? anguage is possibly humanity’s most amazing invention. Its immense plasticity and variety never ceases to awe. I do not want to offer a column about the wonders, or horrors, of imagination that language can elicit. I would be happy if we could agree on a simple proposition that, sometimes, some accuracy in words is necessary. At certain levels and in certain circumstances, a dose of vagueness may be needed to smooth out some of the rougher sides of human affairs. But when people try to communicate rationally, with objectivity, there must be some kind of agreement between the speakers about what words mean, or the specific context in which they are being used. We must be confident that people mean what they say, and that what they say means the same for them as it does for us, otherwise communication breaks down. That clarity or precision, is especially desirable when we talk about the legal norms that frame economic relations, contracts and policies. At this point, you may be asking “What is all this about?” This discussion was triggered by the publication in the Official Gazette of a dispatch by the chief executive that fixes the prices for natural gas distribution; and, in particular, by the explanations provided to the media by the Office for the Development of the Energy Sector, which bears the Portuguese acronym GDSE. Great emphasis was given to the free and open operations of the market. The dispatch fixed prices charged to each type of user. The price is the result of adding two elements: an acquisition cost and a distribution cost. The first cost is the same for all users and the second varies according to the class of user. In addition, a maintenance charge will be determined by the operators and levied on residential users. We are told the market will set that charge but it cannot exceed MOP20 per user. Just as an aside, who determines that charge? Moreover, the official notice alerts consumers that additional price rises “cannot be ruled out” as international prices are increasing.
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Curly prose Let us set this straight. Both the importation and distribution of natural gas are considered a public service. The operation of this industry is granted to a single operator under a public concession regime. The activity is regulated by a contract signed between the administration and operator. The cost to the end-user is fixed by the authority of the chief executive. In principle, the government could change the cost of importing gas, and consequently the final price, at any time, as gas prices overseas evolved. To sum up, this is an economic activity classified as a public service, provided by a single company holding a legal monopoly for 25 years, with prices that are set administratively.
There is nothing in this arrangement even remotely related to the operation of a market, much less a free one. The only competition, if there is to be some, that can be possible in this market is for the provision of gas, and installation and maintenance of the infrastructure inside buildings, including gas meters and pipes. The public was not told if and how that activity will be regulated, or how the providers will compete among themselves. Will they bid for market share inside buildings, or building by building? In blocks or chunks of blocks? By neighbourhoods? The official release reassures us that operators will have to show the government “statistical data about usage and charges”. The exact purpose of this obligation or how it deviates from the typical reporting obligations that companies face, is unclear. The companies are free to set the value of the maintenance fee, as long as it does not exceed MOP20, which is competition of a sort, right?
Timely questions To set the example, the government’s release says prices have already been fixed for the public housing buildings in Seac Pai Van. Unfortunately, my sources could not tell me who the providers were or how they got the job. The price arrived at, and you could not have guessed incorrectly, was MOP20 per user. It is unclear how the “market”, free or otherwise, is going to function. Should the public take this as a demonstration of the market at work? When it was introduced, natural gas was hailed as a cheaper and more environmentally friendly alternative to other sources of energy. The price advantage of using LPG has reduced significantly since then, and we are on notice for possible future price increases. It seems business and household consumers are being prepared to focus on the environmental advantages. The public was also informed in the past that the entire city would be ready to use natural gas. It seems the service currently covers just the public housing estate mentioned earlier and about one-third of Cotai (what this figure means is not completely clear in the media reports). The network will be extended to the University of Macau campus on Hengqin Island later in the year. So, the gas network supplies just the easy bits so far. The infrastructure is being built from scratch, far from the main corridors of traffic or the city’s more densely built-up and populated areas. What are the plans to install natural gas infrastructure on the peninsula? How much will that impact city traffic and the daily life of residents? Can anyone come forward with a clarification? The earlier, the better. APRIL 2013
54
Gaming
Clearing the air The law on smoking has two important shortcomings, says a maker of ventilation systems BY LUCIANA LEITÃO
he law on smoking refers to only six indoor air quality parameters when it should refer to eight – by including parameters for ozone and bacteria – according to Vesa Makipaa, the president of a Finnish ventilation system company, Lifa Air Ltd. Most casinos in Macau use ventilation systems made by Lifa. Mr Makipaa spoke to Macau Business after a conference at the Macao International Environmental Cooperation Forum and Exhibition. The conference was about air quality in casinos now that the law requires them to have separate smoking and non-smoking areas. Mr Makipaa says concentrations of ozone and bacteria in indoor areas should not be neglected. The law on smoking sets limits on the permissible amounts of carbon monoxide, carbon dioxide, respirable suspended particulate (PM10), respirable suspended particulate (PM2.5), Benzo(a)pyrene and volatile organic compounds in the air in casino smoking areas. But it says nothing about ozone and bacteria. Ozone at sea level is hazardous to humans. But Mr Makipaa says there are companies in Macau offering ways to get rid of the smell of tobacco smoke by using ozone. “It’s very good technology, no doubt. But the concentration of ozone must be very high so you get the chemical reaction. But if it is high enough, it is very hazardous for human beings,” he says. Mr Makipaa also says he cannot understand why so little attention is paid to bacteria in this part of the world. “If you think of how many people are coming from the south of mainland China, it is the area where some of the pandemics are coming from. We should be very concerned about that,” he says.
Now, all concentrate… The law says smoking areas should take up no more than half of the space in casinos meant for public use. But trade unions say some casinos are concenAPRIL 2013
Illustration: Rui Rasquinho
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trating the tables for the most popular games in their smoking areas, meaning more croupiers and other employees on the gaming floor are exposed to tobacco smoke than would otherwise be necessary. Mr Makipaa says he understands the concern of the unions for their members’ health. “We saw this experience in the USA, but there, gamblers don’t smoke as much as here. Here, 80 percent of gamblers smoke,” he says. Where there are non-smoking areas and smoking areas, smokers will obviously just crowd into the smoking areas, making the air in the smoking areas worse than it would be otherwise. “The density of people is higher and the concentration of smoking pollutant contaminants will be higher,” Mr Makipaa says. He says Lifa has a different approach, which has been tried in Europe and the United States. “We have an integrated filtration system on the table,” he says. The problem is that in Macau casinos are not allowed to fix anything to their tables. So Mr Makipaa is trying to work out
how such a system can be installed here. Lifa Air is proposing a system that can recycle the air in a casino. “Roughly about 80 percent of air will be re-circulated, so only 10 to 20 percent will be fresh air from outdoors. Therefore it’s critical to filter the air, otherwise if you don’t filter it properly you have a concentration of the six parameters,” Mr Makipaa says. He says some premises have ventilation systems that use air drawn in from outside. “Some have used a lot of fresh air from outdoors and then they have achieved a reasonable level of contaminant levels by doing like this,” he says. But these systems cannot cool the hot air they draw in from outside in the summer. “In practice, either it is extremely warm inside the casino or they just have to clean the air and rotate the existing air and reduce the fresh air from outdoors,” Mr Makipaa says. He says Lifa’s technology is designed not for casinos but for premises where air quality is especially important, such as hospitals and public transport terminals. Even so, the company’s biggest customers here are casinos, along with the government and hotels.
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AERL ROLLING CHIP BID FOR COTAI CENTRAL MGM CHINA NOT EYEING TURNOVER DOWN IN 2012 COMPLETION EXTENSION PHILIPPINES FOR NOW VIP room gaming promoter Asia Entertainment & Resources Ltd (AERL) announced that its unaudited rolling chip turnover for 2012 dropped by 9 percent year-on-year to US$18.1 billion (MOP145 billion). The Nasdaq-listed company’s net income also decreased by 9 percent to US$70.1 million last year from US$77.3 million. Asia Entertainment & Resources promotes four VIP gaming rooms in Macau, at StarWorld, Galaxy Macau, Cotai Sands Central and City of Dreams.
Las Vegas Sands Corp says it “expects to apply” to the Macau government for an extension of the May 2014 deadline it was set by the government for completing Sands Cotai Central casino resort on Cotai. The company has not said how much of an extension it is likely to seek. This will be the third time it has asked for more time for its Cotai project. The government originally gave the company a May 2014 deadline to complete Sands Cotai Central.
MGM China’s Chief Executive Officer Grand Bowie says the firm is “unlikely” to invest in the Philippines “at this time” and prefers to stay focused on the construction of its Cotai project. The company’s Cotai project broke ground earlier this year. The property will cost US$2.6 billion (MOP20.8 billion) to build. It will include as many as 500 gaming tables. Mr Bowie was referring to the Philippines reportedly wanting to take over as the world’s gaming capital by 2017.
WYNN MACAU FINED FOR PRIVACY BREACH The case refers to an investigation into former shareholder Kazuo Okada
expectation of the hotel customers”, the office said. The gaming operator also failed to get the regulator’s approval before transferring data outside Macau, to the United States where its parent company Wynn Resorts Ltd is based, the office added. The case refers to an investigation launched by Wynn Resorts in late 2011 into its former shareholder Kazuo Okada.
Photo: Luís Almoster
Wynn Macau Ltd was fined MOP20,000 (US$2,500) for breaching the privacy law by publicly disclosing the personal information of hotel guests. The Personal Data Protection Office said that the gaming operator has already paid two MOP10,000 fines for breaching two principles regarding the handling of personal data. Wynn Macau disclosed “sensitive data” of its hotel customers to a third party, which was “already beyond the reasonable
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56
Gaming
Uneasy rider Casino resorts in Cotai are not doing enough to cater to guests arriving on motorbikes BY LUCIANA LEITÃO
ore than half the vehicles on Macau’s roads are motorcycles, but few casino resorts on the Cotai Strip cater to riders, providing little in the way of parking. There are about 116,000 motorbikes on the road and about 88,000 private cars here. At Galaxy Macau there are about 1,200 parking spaces, with just 184 set aside for motorbikes ridden by guests. The casino resort’s vice-president of hotel operations, Paul Town, says motorcyclists are welcome. “We’ve had places available for over a year,” he says. But he concedes there is no signage alerting riders to where they are. Mr Town says Galaxy Macau has enough parking for all vehicles. The second phase of the casino resort, due to be ready by 2015, will include more parking spaces and more room for motorbikes. “We’ll have more spaces for all types of vehicles,” he says. Motorcyclists not only have to cope with a scarcity of parking for motorbikes at Cotai’s casino resorts, but also with a scarcity of nearby public parking spaces. Many riders park illegally and a substantial proportion of motorcycles outside casino resorts on the strip belong to the resorts’ staff. City of Dreams has 240 parking spaces for motorbikes. All are reserved for staff. “So far we’ve found the spaces have satisfied the demand,” the casino resort told Macau Business in a written statement. City of Dreams said it had found that demand from patrons for parking for motorbikes was low. It said its ratio of parking spaces assigned to cars versus motorbikes was in line with requirements under the law.
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Bus alternative The contracts that underpin the lease of land to Cotai’s casino resorts do not specify how much motorcycle parking should be provided. Instead, the contracts have a generic clause that says parking for “motor vehicles” must be provided. The APRIL 2013
contracts do not say how many spaces should be provided for any type of motor vehicle. The Transport Bureau says the number of parking spaces for motorbikes in Cotai is adequate. It told Macau Business that Cotai had a large number of parking spaces and that the area was served by buses. The bureau says there are 666 spaces for light vehicles and a further 1,212 for motorcycles at the Estrada Flor de Lótus car park, near the border checkpoint, and at two public parking lots at the Centre for Driving Lessons and Exams. There is additional parking at sports facilities nearby that offer
spaces for 1,600 light vehicles and 1,040 motorcycles. “Various private developments in the area also provide car parks open to the public, providing about 5,000 spaces for light vehicles and around 3,000 for motorcycles,” it says. The bureau says the law requires hotels and casinos to offer parking for light vehicles, motorcycles and coaches; pick up and drop off zones for coaches and taxis; and short-stay waiting zones for vehicles. Macau Business asked Sands China Ltd for details of its arrangements for motorbike parking, but had not received a response before going to print.
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Casino gaming 2011 MOP 304.1 billion
Gross gaming revenue (2012)
5,302 16,056 34 casinos
Gaming tables Slot machines Number of casinos
Market share per casino operator* 2012 SJM Holdings Ltd Galaxy Entertainment Group Ltd Sands China Ltd Wynn Macau Ltd Melco Crown Entertainment Ltd MGM China Holdings Ltd
27% 19% 19% 12% 14% 10%
Year-on-year change (%)
MOP 31.3 billion
13.5 10.7 14.3 1 casino
25.4 3.5 3.3 1 casino
5,485 16,585 35 casinos
Year-on-year change (%)
-2 3 3 -2 -1 --
Year-on-year change (%)
Latest
Latest
percentage points percentage points percentage points percentage point percentage point
Month-on-month change (%)
27% 18% 21% 11% 14% 9%
1 ---1 1 -1
percentage point
Notes Mar 2013 Dec 2012 Dec 2012 Dec 2012
Notes Mar 2013 Mar 2013 Mar 2013
percentage point percentage point percentage point
Mar 2013 Mar 2013 Mar 2013
Gross revenue from casino games Roulette Blackjack VIP Baccarat Baccarat
MOP892 million MOP2,950 million MOP210,850 million MOP66,251 million
Fantan
MOP249 million
Cussec
MOP5,546 million
Paikao
MOP87 million
Mahjong Slot machines 3-Card Poker Fish-Prawn-Crab
MOP203 million MOP13,244 million MOP211 million MOP22 million
3-Card Baccarat Game
MOP347 million
Craps
MOP137 million
Texas Holdem Poker
MOP289 million
Lucky Wheel Live Multi Game
MOP35 million MOP895 million
Stud Poker
MOP1,472 million
Casino War
MOP246 million
Fortune 3 Card Poker
MOP206 million
Year-on-year change (%)
13.9 8.8 7.5 36.1 18.0 16.2 -23.7 190.0 15.9 10.5 -56.9 23.5 -9.3 4.3 0.0 187.8 12.5 8.8 46.1
Latest MOP234 million MOP773 million MOP54,831 million MOP18,763 million MOP72 million MOP1,466 million MOP19 million MOP43 million MOP3,504 billion MOP54 million MOP6 million MOP84 million MOP33 million MOP77 million MOP9 million MOP314 million MOP410 million MOP64 million MOP70 million
Year-on-year change (%)
-8.2 3.1 2.9 34.6 26.3 12.6 -29.6 59.3 15.2 12.5 -25.0 16.7 -38.9 8.5 12.5 175.4 12.9 -9.9 89.2
Notes Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012
Gross revenue from other gaming activities 2012 Greyhound Racing
MOP205 million
Horse Racing
MOP356 million
Chinese Lottery
MOP6 million
Instant Lottery
MOP0.0014 million
Sports Betting - Football
MOP418 million
Sports Betting - Basketball
MOP111 million
Year-on-year change (%)
-31.0 -19.1 --61.1 15.5 29.1
Latest MOP55 million MOP96 million MOP1 million MOP0.0005 million MOP99 million MOP36 million
Year-on-year change (%)
-5.2 -7.7 -50.0 -58.3 -3.9 89.5
* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent
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Notes Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012
Source: Gaming Inspection and Coordination Bureau and industry sources
2012
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Gaming
Overworked, outta here
Workers in tourism-related jobs are the city’s least satisfied when it comes to their work and casino workers are the least committed, a survey finds
hey are the workers that move the economy relentlessly forward, but they do not seem to be happy playing the game. Recent research has found employees in industries that depend mainly on tourists are the least satisfied with their jobs, and the most likely to move on. Among them are gaming industry employees, who are the least committed to their jobs. The first edition of the Macau Human Resource Monitoring Survey found that most of the workforce says they are “moderately satisfied with their jobs”. But of the workers in 16 different categories of jobs, only leisure and entertainment staff, and food and beverage industry employees feel worse about their jobs than workers in gaming. The survey by the Institute of Tourism Studies research centre found that gaming workers’ satisfaction with their pay, job security, social environment and the way they are recognised, treated and supervised in the workplace, is below the citywide average. Gaming industry employees are also the least committed to their employers, scoring 2.63 on a scale of one to five, with five indicating complete commitment. They scored 3.11 on a scale of one to five regarding their intention to stick with their jobs, less than the average score of 3.18. The institute interviewed a randomly selected sample of 525 people for the survey and about 16 percent worked in gaming. The survey found lower levels of job satisfaction and commitment not only among gaming industry employees, but also among employees of several other industries that rely on tourism spending.
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Checking out Handling about 28 million tourists a year seems to be at the heart of the headaches for Macau’s workforce. Of the surveyed participants, 56 percent worked in tourism related industries, including gaming and casinos, wholesale and retail, food and beverage, APRIL 2013
hotels and resorts, travel companies, leisure, entertainment and business meetings. In general, the results showed these workers were “significantly” less satisfied with their jobs than the average. In areas such as job security, supervision and how they perceive they are treated, the scores were significantly less than the average. Workers in tourism-related industries “perceived themselves as significantly under-compensated” and were also “more likely to quit their organisations”. However, they reported lower levels of job related stress – a 2.64 score on a scale of 1 to 5 – than the survey’s average of 2.7. Workers in tourism-related jobs considered their jobs to be “low in autonomy, task identity and skill variety” and the amount of feedback on their performance “was inadequate on average”. In jobs other than tourism, construction workers were the most satisfied with their jobs, followed by civil servants and social security employees, all with above average scores. The survey interviewed both Macau residents and non-residents employed full time. Overall, non-resident work permit holders were less satisfied with their jobs than residents. They were mostly unhappy with their salaries and social environment. They felt they earned less than resident workers, and had lower scores for commitment to their employers, and showed less intention to continue working at their jobs. Non-resident employees also felt that their work impacted on their social life more. Overall, work-family conflicts (the interference of work issues in family life) and family-work conflicts (the interference of family issues in work) were more noticeable among married employees, who presented “significantly higher-than-average” levels of such problems. Single parents were particularly affected by the interference of work issues in their family life. Work-induced conflict at home was also “significantly” higher among workers
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GENERAL JOB SATISFACTION OF TOURISM RELATED INDUSTRY WORKERS MICE
Leisure and entertainment
Travel agencies and tours companies
Hotels and resorts
Scale of 1 to 5
Food and beverage
Gaming and casinos
Wholesale and retail 0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
JOB STRESS OF TOURISM RELATED INDUSTRY WORKERS MICE
Leisure and entertainment
Travel agencies and tours companies
Hotels and resorts
Scale of 1 to 5
Food and beverage
Gaming and casinos
Wholesale and retail 0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
WORKERS’ INTENTION TO STAY IN THE JOB MICE
Leisure and entertainment
Travel agencies and tours companies
Scale of 1 to 5
Hotels and resorts
Food and beverage
Gaming and casinos
Wholesale and retail 0
0.5
1
1.5
2
2.5
3
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3.5
4
4.5
5
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Gaming who occupied senior positions in their organisations. Middle or supervisory level employees, as well as top-level staff, all reported above average levels of conflict.
Shifted thinking
Raw deal
Gaming employees are unhappy with their lot at work, blaming pressure, shift work and threats from gamblers
he most recent edition of the Macau Employee Confidence and Satisfaction Index, released in March, found that gaming employees are unhappier than those who do not work in the sector. The findings show happiness had deteriorated from the same time last year. Croupiers were less confident about their work, scoring 3.05 on a one to five scale where five was considered highly satisfied. Remuneration helped raise a smile, with croupiers happier about their pays than workers from non-casino industries, the Macau Post Daily reported. The Institute for Sustainable Development at the Macau University of Science and Technology conducted the annual survey in February. Based on more than 1,000 interviews, the survey showed the confidence and satisfaction indices for resident workers dropped slightly, by 0.3 of a percentage point, compared to last year’s results. The
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authors considered these values as “stable”. A survey by the Macau Gaming Enterprises Staff Association found that almost 4 percent of gaming workers in its survey were at risk of attempting suicide. The association polled 491 casino workers and asked them to score their experiences across a range of workplace scenarios on a scale of one to four – with four being the most stressful. The group says that any score averaging above three overall suggests the person might be prone to suicidal thoughts or at risk from self-harm. A total of 3.7 percent registered more than three points. About 26 percent of the survey sample scored 2.5 points or above, which represented a “high suicidal tendency”. The report suggests insults and threats directed at staff from casino players when they lose are a factor, negatively affecting workers’ mental health.
Employees with irregular working hours were also more affected by problems of balancing work and family commitments. They were less satisfied with their jobs than those who did not have to work shifts, and they also had satisfaction levels that were below average. These workers also felt less compensated in their jobs than those with regular working hours. They presented a lower intention to stay with their companies and higher levels of job-related stress. In general, salaries and supervision at work were the two main factors workers in Macau were most unhappy with. However, overall, workers who earned more than MOP10,000 a month were “significantly” happier about their jobs than those who did not. The same trend was observed among those who held at least a bachelor’s degree. “Workers not likely to stay for long in their organisations tend to be young (aged 18 to 27), single and earn less than MOP10,000 monthly,” the study said. The survey also showed that the more senior the role, the greater the level of commitment and the more positive the perception of the organisation’s climate. The survey’s authors say the findings “should be cause for long-term concern”. Their recommendations include a revision of the nature of jobs, especially at the supervisory and management level. They suggest, for instance, that middle managers should be relieved from “unnecessary operation tasks”, in order to have more time to concentrate on “leadership tasks”. Pay structures also need to be revised, with benefits and compensation “up to par with rising living standards and inflation”. These measures may help improve the loyalty of employees to some extent, but improving the work environment, reducing stress and helping balance work and family life were “more likely to increase organisational commitment and long-term intention to stay”. The authors advised employers to be “open and transparent”, particularly in terms of career management planning. They also recommended organisations “provide employee-care or counselling services”. As for the problems faced by those working on shifts, the researchers suggested the schedules should be redesigned so less rotation is required. Stabilising shifts allowed staff more time for their personal lives.
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MACAU WILL NOT FALL BEHIND ITS RIVALS
Photo: Luís Almoster
Francis Tam says Macau casinos have created competitive advantages
The secretary for Economy and Finance Francis Tam Pak Yuen is confident that the local gaming industry has created competitive advantages in the leisure and tourism sector to compete against its rivals in region.
Speaking to reporters on the sidelines of a public event, Mr Tam said that Macau’s casino sector was developing into an international leisure tourism centre and has already built a solid foundation, the Macau Post Daily reported.
U.S. WANTS “ROBUST OVERSIGHT” OF MACAU’S JUNKETS
The U.S. Department of State has called for Macau to “continue to strengthen interagency coordination” to prevent money laundering in the gaming industry. The State Department’s latest annual International Narcotics Control Strategy Report says the priority should be to introduce “robust oversight of junket operators, mandating due diligence over non-regulated gaming collaborators, and implementing cross-border currency reporting”. Macau also should enhance its ability to support international investigations of money laundering or terrorism financing, the State Department says.
TYCOON PROBE MAY HAVE MACAU LINKS
Liu Han, the head of one of China’s largest private-sector conglomerates Hanlong (Group) Co Ltd, has been detained in a money-laundering probe related to Macau casinos, according to media reports. Mr Liu’s detention is related to investigations over money laundering in Macau casinos, the reports say, citing unidentified people familiar with the matter.
He was commenting on the possible impact of the newly opened Solaire mega-casino in Manila, after it was reported that it would be paying higher commissions than local operators to attract local junket operators.
JUDGE REJECTS SANDS’ MOVE TO THROW OUT MACAU CASE
Nevada’s Judge Rob Bare ruled against Las Vegas Sands Corp’s effort to throw out a case against it by Hong Kong businessman Richard Suen who says he is owed millions of dollars for helping the operator get a gaming license in Macau. The trial will take place at Clark County District Court in Las Vegas and will bring Sands Chairman and CEO Sheldon Adelson to the witness stand on April 4. This will be the second trial in the breach-of-contract case brought against the casino operator by Mr Suen, principal of a company called Round Square Ltd. Las Vegas Sands is the parent company of Macau-based gaming operator Sands China Ltd.
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Gaming
Profit sharing Four out of the six gaming operators in Macau will issue dividends for 2012 BY SARA FARR
he city’s casino industry hit an all-time record high last year, reaching total gross gaming revenues of MOP304 billion (US$38.1 billion). Of the six local gaming operators, only Galaxy Entertainment Group and Melco Crown Entertainment Ltd did not announce a special dividend for 2012. SJM Holdings Ltd generated an annual net profit of HK$6.75 billion last year, an increase of 27.1 percent, thanks to its leading share of the Macau gaming market. In February, the company of gaming tycoon Stanley Ho Hung Sung announced a final dividend of HK$0.50 per share and a special dividend of HK$0.30, up by 16.3 percent and 36.4 percent respectively from a year before. SJM’s gaming revenue rose by 4.5 percent to HK$78.88 billion, while its
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earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 10.1 percent to HK$7.63 billion. The company said it maintained its lead in the market with an overall share of 26.7 percent in 2012. Galaxy Entertainment just announced its 2012 results late last month. The operator’s net profit attributable to shareholders jumped a staggering 146 percent to HK$7.4 billion in 2012. The operator’s full year revenue grew by 38 percent to almost HK$56.7 billion, and adjusted EBITDA was up 71 percent to just under HK$9.8 billion in 2012. However, Francis Lui Yiu Tung, the company’s vice chairman, said it would not be issuing a dividend, thinking it best to offer investors long-term value by reinvesting its strong cash bal-
ances into phase three and four of Galaxy Macau, its casino resort on Cotai. He said that for the time being, he does not believe that returning capital in dividends is the best approach. With phase two of the project barely started, Galaxy Entertainment is planning to start construction of phases three and four at the end of this year. Last month, Sands China Ltd also recommended the payment of a final dividend of HK$0.66 per share for the year ended December 31, 2012, after it posted a profit of HK$3.7 billion in the fourth quarter of last year, up by 52.3 percent compared to the same period in 2011. The payment of the final dividend is subject to the approval of the company’s shareholders at the upcoming annual general meeting scheduled for May 31.
63 Sands’ total net revenues increased 48.1 percent to HK$15.3 billion, while EBITDA rose 4.1 percent to HK$4.8 billion in the fourth quarter of 2012. For the whole of 2012, Sands China alone generated practically 60 percent of Las Vegas Sands’ overall revenue.
Bad luck
Of the six local gaming operators, only Galaxy Entertainment Group and Melco Crown Entertainment did not announce a special dividend for 2012
Following a stunning success in 2012, MGM China Holdings Ltd declared a dividend for the first time in the company’s history in February. The operator’s net profit rose by 38 percent to HK$4.5 billion in 2012. Total revenue was HK$21.8 billion, up by 7.4 percent from HK$20.3 billion in 2011. This was mainly due to growth in table games and slot machine operations. The company’s special dividend is HK$1.02 per share. The good luck was not knocking on Wynn Macau Ltd’s door, though. Wynn Resorts Ltd’s net revenues for 2012 dropped 2.2 percent to US$5.2 billion, compared to US$5.3 billion in 2011. According to a company statement, this was primarily driven by a decline in its Macau operations of 3.2 percent. Wynn Macau Ltd’s net revenues reached US$3.7 billion in 2012, a 3.4 percent drop from US$3.8 billion in 2011. This was mainly caused by lower VIP segment turnover last year. Nonetheless, the company also announced that its net profit increased by nine percent to HK$6.4 million in 2012. The operator has recommended the payment of a final dividend of HK$1.24 per share for 2012 late last month. However, it is subject to shareholders’ approval. Melco Crown Entertainment is also on a winning streak, but it will not pay a dividend for 2012. The operator reported strong financial performance with profit increasing to HK$1.12 billion, compared to HK$280 million last year. Melco Crown’s net profit rose by as much as 41.6 percent last year. It reported net income of US$71.4 million in 2012 and net revenue of US$415.8 million. Its co-parent company Melco International Development Ltd recommended the payment of a final dividend of HK1.5 cents per share, late last month. The pre-tax profit contribution from Melco Crown to Melco International was HK$1.18 billion due to “the continuing growth in [the] Macau gaming market,” the company said in a filing.
EYES WIDE OPEN A
fter a new gaming revenue record in 2012, analysts and experts are bullish on Macau´s casino business for this year. Analysts at Las Vegas-based research centre Galaviz and Company LLC estimate Macau’s gross gaming revenues will grow by nine percent “with a month-on-month banded growth range of one percent to 12 percent.” Deutche Bank expects gross gaming revenues to go up by 15.2 percent this year to US$13.5 billion (HK$104.8 billion), while the VIP sector will increase by 4.1 percent to US$27.4 billion. Nonetheless, Galaviz and Co’s analysts say that with the mainland having announced greater emphasis on stomping out corruption throughout the whole country including Macau, this could mean that the central government is “becoming serious about enhanced regulatory oversight of Macau.” “This has tremendous implications for what the future of Macau will be, from an operational perspective,” they say. So far Macau handles oversight of regulatory issues on its own, but Galaviz and Co warn that “2013 could be the year that (the Chinese) central government asserts itself in Macau in a more aggressive manner than it has in the past 10 years.” In addition, the state of Nevada in the United States is likely to pay closer attention to activities here in Macau. This could mean bad news for the gaming industry, because with the Chinese central government keeping a close eye on Macau’s gaming industry, media scrutiny is expected to increase with a particular focus on the negative perceptions of the industry. Analysts are of the opinion that neither the mainland nor Macau are prepared to handle such scrutiny. “There is high likelihood that the central government of China will commission a special committee (internal) to look at the activity of junket operators that operate in Macau, and to determine if a greater level of regulatory law enforcement oversight is required,” Galaviz and Co says. If scrutiny of junket operators increases, it could impact revenue flow into Macau, perhaps not immediately, but certainly in the long run. Analysts worry that regulation violations occur on a day-to-day basis in Macau. These include incidents of loan-sharking, illegal debt collection and money laundering.
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Experience counts There is good news for Macau in a newly published paper that links customer service experience to satisfaction and loyalty BY MUHAMMAD COHEN
asino operators in Macau often face the complaint that their customer service fails to reach the heights of the opulent resorts they have created. Questions also linger about whether the Las Vegas-style big box resorts that each Macau gaming company plans to open in Cotai over the next few years are the optimal model for Macau’s tourism development. A new study on customer perceptions of service brings Macau’s casino operators positive results on both fronts. Findings in a new paper by Institute for
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Tourism Studies (IFT) faculty member Ip Kin Anthony Wong indicate that megaresorts are the right choice for the Macau market and that, even in terms of customer service, hardware can be more important than software. Mr Wong’s article, “Exploring customer equity and the role of service experience in the casino service”, published in the International Journal of Hospitality Management last month, examines both the practical and emotional aspects of customer service experience, backed by hard data gathered though surveys of pa-
trons at Macau casino complexes. “Understanding customer experience is especially important for the casino industry,” Mr Wong writes, “because it is becoming more experience-driven.” The article aims to plug a gap in the existing academic literature by creating a comprehensive theoretical framework, supported with empirical data, to better understand the customer service experience in the hospitality industry.
SEE for service The paper compiles its findings from
65 tionship equity (“a blend of customers’ perceived financial and recognition benefits that are offered by a service provider,” Mr Wong says) and brand equity. The overall goal is to determine how those factors relate to customer loyalty. The survey results reveal that SEE and relationship equity are key factors in delivering customer satisfaction, which, in turn, builds brand equity and customer loyalty. In other words, customers who feel well served and properly appreciated for their patronage will harbour positive feelings toward the property and its brand.
Photo: Luís Almoster
Scanning the servicescape
customer surveys into a measure known as “Service Experience Equity” (SEE) that combines service environment, employee service, service convenience and hedonic services, defined as those that provide pleasure, excitement or fun. “SEE arises as a result of the interactions of a service provider’s physical and affective offerings, such as the service environment, employee service, value – [defined as] service convenience, price, complementary services – hedonic service, such as entertainment options, both free and paid, brand image and novelty, and others, such as surprise and perceived luck,” Mr Wong, an assistant professor at IFT’s Tourism College, explains. “I didn’t present all of these in this particular study. But my other studies do find these as important experience criteria.” The paper attempts to link SEE findings to customer satisfaction, rela-
Digging deeper into the findings, customers ranked the service environment as the most important factor in building SEE. Employee service trailed, followed by hedonic services and service convenience. Elements of the service environment – also known as the servicescape – are the casino resort’s physical components, including architectural design, layout, equipment and signage. The top rating for the servicescape is a positive finding for Macau, according to Mr Wong. “Given that the industry constantly faces problems with lack of human resources, casino operators should strive to utilise the service environment to increase the service experience, and hence mitigate the problem in employee services.” The article’s findings on Macau casinos are based on results from 274 surveys. Among the respondents, 56 percent were men and 44 percent were women; 66 percent were between the ages of 20 and 39; 60 percent were from mainland China and 14 percent were from Hong Kong; 73 percent had an individual monthly income of US$1,250 (MOP10,000) or less; and 26 percent spent less than US$65 in the casino, while 21 percent spent more than US$500. In the section dealing with the study’s implications for management, Mr Wong writes, “[F]indings of this study suggest that casino managers should prioritise their effort in crafting the service environment, turning it from a mundane place into a fabulous showroom for an indulgence, as the service environment is the most critical dimension of customers’ service experience. Yet, a memorable service experience does not arise merely with bricks and mortar. To excite and delight the customers, hospitality service providers
should also rely on an empathic serving staff and offering hedonic services (for example, streetmosphere and live performance) in order to create a favourable experience via interactions at each touch point throughout the service delivery.” Mr Wong equates the experience customers seek with that found in a theme park such as Disneyland, which, he notes, puts customer experience at the centre of its business philosophy. “In the casino industry, customers demand more than hardcore gaming services,” Mr Wong tells Macau Business in an interview. “My findings also show that the Venetian ranks top in service experience. It is also the most frequently mentioned casino in Macau. People enjoy the Las Vegas experience even though it is artificial.”
Go big Megaresorts provide the best platform for delivering unique and memorable experiences, Mr Wong contends. “The megaresorts as well as the newly built casinos offer far better experiences than the traditional casinos. Many casino patrons are looking beyond hardcore gambling,” he says. “Casinos offer tourists and residents a theme-park like experience. Mainland Chinese are especially attracted by these casinos, for example, for photo shooting and sightseeing.” In his paper, Mr Wong observes that customers are increasingly demanding more “thrills and perks” from their hospitality experiences. He writes, “Serving customers with enticing themes may be the next frontier as it goes beyond the predominant value framework which focuses on price, quality, and convenience.” But he warns that not every theme concept succeeds. Perhaps most controversially, the article suggests that customers may be willing to pay a premium for an enhanced customer experience. It cites Disney theme parks, Starbucks, Singapore Airlines, the Forum Shop at Caesars Palace in Las Vegas, and Wynn Resorts as examples of charging more for a unique experience. Mr Wong suggests that traditional value propositions still matter. “However, what truly can differentiate one service provider from another is the experience customers receive from the service encounter because every experience is unique”. APRIL 2013
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Solaire’s VIP area upstairs
acau has been called ‘Asia’s Las Vegas’ but the operators of the Philippines’ newest gaming property –Solaire Resort & Casino in the fledgling Entertainment City at Manila Bay – don’t think it ever will be. They believe it’s possible there will be two casino gaming hubs in East Asia. The predominant one will be Macau but with a uniquely Chinese flavour. The other one could be Entertainment City with a much more Las Vegas feel to it. “We believe we are the only Las Vegas-style casino in Asia today,” says Michael French, Solaire’s chief operating officer. “The rest of them are casinos that have roots in Las Vegas but are not Las Vegas style. The Venetian Macao is not the Vegas experience,” he asserts. “The Filipino culture is more like American culture
Asia’s ‘only’ M Vegas-style casino That’s the bold claim of Solaire, the first of four gaming resorts planned for a new casino strip at Manila Bay in the Philippines and run by some familiar Macau faces BY MICHAEL GRIMES
APRIL 2013
from an entertainment point of view etc. We realised we shouldn’t try and implant a Chinese-style gaming experience and hope the Filipinos will like it,” states Michael French. “All of our research told us Filipinos see gaming as entertainment, they want to have fun, they like to see pretty girls, they like complimentary drinks etc. Chinese people like to have fun, but they compartmentalise their gaming and entertainment experiences. For Chinese people the gaming is serious. And when that’s done, it’s time to party. Vegas made its fortune by people going partying and gaming at the same time.” Michael French is a sixyear veteran of gaming resort management in Macau so has seen life from both sides of the South China Sea as well as from the United States. He is a former senior vice president, and general manager of Melco
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Crown Entertainment Ltd’s VIP-focused Taipa property Altira Macau, and a former senior vice president of its sister Cotai property City of Dreams. Dennis Andreaci, his senior vice president for gaming at Solaire, has served in several senior Macau roles including SVP of gaming operations at Galaxy Entertainment Group Ltd’s Galaxy Macau.
VIP offer Where the ‘fun’ stops – in casino management terms – and the serious business of trying to generate big casino revenue for Solaire begins, is in the upstairs VIP area with its 95 tables. Mr French says rolling chip commission and revenue share incentives are both available to junket operators to encourage them to bring international high rollers over. Ben Lee of iGamiX Management & Consulting Ltd tells Macau Business following Solaire’s opening on March 16 that six junkets had been signed up initially – three Chinese junkets, two Korean ones and a single junket from Taiwan. The consultancy reported they were being offered either a 1.5 percent rolling chip commission or a 52.5 percent revenue share. In the Macau market the government expects operators to cap chip commission at 1.25 percent, though it hasn’t given any official guidelines on revenue share levels as far as Macau Business is aware. Ben Lee of iGamiX adds that one of Solaire’s junkets said there was an additional incentive available there on revenue share of 3.5 percent – taking it to 56 percent – if the junket exceeded by 35 percent a minimum monthly roll of HK$80 million. “On the straight [rolling chip] commission side, the breakdown is 1.4 percent plus 0.1 percent for expenses and a bonus of 0.1 percent if they again exceeded their target by 35 percent,” adds iGamiX. Michael French declines to go into the details of Solaire’s offer to junkets, but concedes the importance of VIPs to the US$1.2 billion project.
“Eighty percent of the gaming revenue in the casino industry comes from 20 percent of the gaming customers. That’s not unusual,” he explains. “Overall the tax rate here in the Philippines is 27 percent [of the gross] for mass and 15 percent for rolling chip/ VIP/international junket players. That compares to Macau’s 40 percent. The thinking is of course that if we have a lower tax rate, that allows us more flexibility in commissions paid to the junket operators, thus incentivising them to bring their customers here.”
Macau connection A 9.5 percent equity partner in Solaire Resort is Global Gaming Asset Management (GGAM), a company chaired by William Weidner, a former president
“We believe we are the only Las Vegas-style casino in Asia today. The rest of them are casinos that have roots in Las Vegas but are not Las Vegas-style” Michael French, Solaire’s chief operating officer
and chief operating officer of Las Vegas Sands Corp and the man who led the development of Sands Macao and The Venetian Macao. Also on the GGAM management team are Bradley Stone as president, and Garry W. Saunders as executive vice president. Mr Stone is a former executive vice president of LVS who oversaw the construction of its Marina Bay Sands casino resort property in Singapore. Mr Saunders is also chairman of SHFL entertainment Inc., a supplier of casino slots, electronic tables and card shufflers in major casino markets including Macau and Singapore. Gaming tax rates “absolutely do make a difference” when it comes to offering gaming jurisdictions a competitive edge, Bradley Stone tells Macau Business.
“Nothing is going to be the next Macau – unless we see gaming in Shanghai or somewhere like that. We’re not trying to be the next Macau” Bradley Stone, president, Global Gaming Asset Management APRIL 2013
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“Nothing is going to be the next Macau – unless we see gaming in Shanghai or somewhere like that. We’re not trying to be the next Macau. People in Hong Kong will continue to go to Macau, but we hope once in a while they’ll come over here to do something different and experience something different. We do have the advantage of a lower [gaming] tax rate. We’ll use that in terms of our [junket] commissions, but it’s not necessarily [in order] to go right at Macau. It’s to encourage people and give them more reasons to come to the Philippines once in a while and try out our resort,” states |Mr Stone. “We will have some junket rooms that are full time junket rooms like Macau has. But we’ll have a lot of what we call casual junkets, where they come in for a couple of days and we give them a temporary space,” explains Bradley Stone. “They’re not going to be able to come every day like they do in Macau. In Macau those junket rooms are operating 24-7. The people are either coming from some part of China or Hong Kong or whatever. We will have a limited amount of that. We will have a lot more junkets coming in that are smaller and will come for a couple of days. I think we’ll get some foreign business that Macau doesn’t get so much of, because you can’t fly directly to Macau. You have to go through Hong Kong,” says the GGAM executive. “As a country – by 2017 – the Philippines doesn’t need to be doing 35 percent of Macau [current] VIP
Solaire – which cost US$750 million for the first phase and so far has 500 hotel rooms – compares strongly to the best of Macau and Las Vegas. A ‘Phase 1a’ is currently under way at a cost of US$400 million and management says it will double the total resort area APRIL 2013
People power – 50,000 applied for Solaire’s 4,500 posts
69 [revenue]; we don’t need to be 25 percent; we don’t need to be 15; we don’t even need to be ten. If we do seven or eight percent [equivalent VIP GGR] of what Macau does today – which is in total say roughly US$30 billion [annually in VIP] – then we’ll do very well,” adds Mr Stone.
Aspirational mass floor He describes the mass-market floor at Solaire – which has 200 tables and 1,200 slots – as “aspirational” and aimed at the upper segment of the mass market. On opening day, minimum bets on the mass live dealer tables appeared to be mostly 500 pesos – that’s below HK$100. It is several years since Macau Business recalls seeing HK$100 minimum bets available in the major Macau casinos. But it’s probably appropriate to the Philippines, were gross domestic product per capita was US$4,295 (HK$33,339) last year on a purchasing power parity basis, according to the country’s National Statistical Coordination Board. “People aspire to move up in life,” says Bradley Stone, referring to Solaire’s mass floor. “You can’t make a venue intimidating, so that people feel uncomfortable. In this space they’ll feel very comfortable – whether they’re betting 500 pesos a hand, or 5,000 pesos a hand in the mass area. The mass doesn’t want to be in a crummy place.” Solaire certainly isn’t. The property – which cost US$750 million for the first phase and so far has 500 hotel rooms – compares strongly to the best of Macau and Las Vegas. A
On opening day, minimum bets on the mass live dealer tables appeared to be mostly 500 pesos – that’s below HK$100. It is several years since Macau Business recalls seeing HK$100 minimum bets available in the major Macau casinos
‘Phase 1a’ is currently under way at a cost of US$400 million and management says it will double the total resort area. Such a big investment requires a stable political and regulatory environment. Bradley Stone dismisses suggestions that the Philippines might not be a robust jurisdiction when it comes to anti-money laundering rules and fighting corruption. “As a regulated industry, the Philippines [casino industry] is up there,” he tells Macau Business. “There are lot of places that are a lot less regulated. So we feel very comfortable about the regulatory regime here. And so do the [financial] markets. There are only two things that stop you going into another market. One is that the regulators are uncomfortable about you going in. The other is the markets are uncomfortable about it. The markets clearly aren’t uncomfortable because we were seven times oversubscribed on our IPO [initial public offering] by the biggest [investment] firms in the world – the Fidelities, the Capital Researches, the Singapore sovereign fund – etc., etc.,” explains Mr Stone. “In this property here we own nine and a half percent of the public shares. We would have liked to own more, but we couldn’t. That’s what Ricky [Razon, chairman of Solaire’s majority Philippines-listed owner Bloomberry Resorts Corp.] was willing to do with us. Here, we’re a manager and part owner. And as I say to the shareholders, ‘You should feel good about that’ because we own more than the public owns in terms of shares. So our interests are aligned as a management company. We’re not just sitting there trying to earn a fee,” states Mr Stone. “There are other projects that we might announce shortly that are more management fee based. And Bill Weidner [GGAM chairman] has been working on Matsu [a casino proposal for Taiwan]. That would be something we would own and maybe find partners for. It’s a question of whatever fits. But the key for us and anything we get involved in – even if it’s just managing – is ‘Can we bring a value add?’ “We prefer to be selective about our projects in order to keep our good reputation and get a good return for whoever the owner is – whether it’s us or someone else. And by managing a better return for all the investors, we also make more,” says Mr Stone.
MACAU DESIGNS ON AND IN MANILA C
onde Group, an international design consultancy with operations in Macau and clients in the local gaming industry, has been involved in the creation of branding and marketing materials for the new Solaire Resort & Casino in Manila. “We first developed the look and feel of the brand, its market positioning and the elements of distinction and differentiation,” says Rebecca Choi, one of the firm’s directors. “Then we worked on the development of the applications to all ‘collaterals’ of the hotel, resort and gaming,” she adds. “Collaterals are pretty much anything a guest can feel or touch – from printed materials to packaging and the paper napkins used to serve drinks. We also worked together with Solaire on the development of the restaurants’ branding.” The main branding for Solaire featuring a half sun with rays flowing from it, was the idea of Las Vegas-based firm SK+G. The Solaire property, which has 500 rooms in its first phase, opened on March 16 with a ceremony attended by the country’s president, Benigno Aquino III. Conde Group’s gaming industry customers in Macau include: Sociedade de Jogos de Macau; Galaxy Entertainment Group Ltd’s Galaxy Macau; Mocha slot clubs; and Sands China Ltd. Conde Group was invited to bid for the Solaire contract because an executive who approved some of its work for Sands China Ltd in Macau then moved to the new Manila M.G. project.
Solaire snack pack designs
Computer tablet case with casino branding
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Philippine expansion Melco Crown signs a US$600 million Philippine casino deal acau mogul Lawrence Ho’s gaming firm signed an agreement last month to invest US$600 million (HK$4.7 billion) in a giant casino project in Manila, boosting the Philippines’ bid to join the world’s gambling big league. The investment in the Belle Grande integrated gaming resort is Melco Crown Entertainment Ltd’s fi rst venture in the casino business outside its Macau base, Mr Ho told a news conference. “We’re very excited about our project. We think that the Philippines is one of the fastest-growing and most exciting countries around,” Mr
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Ho said before overseeing the signing of the deal with Philippine billionaire Henry Sy. Mr Ho’s Melco Crown partner James Packer, an Australian billionaire, was also in Manila for the signing of the joint venture agreement with Sy-controlled Belle Corp, which is building the casino. It is set to open by mid-2014 inside a giant complex on Manila Bay called Entertainment City. Belle Corp was one of four firms given licences by the Philippine government to build gaming resorts worth at least US$1 billion each on the 100-hectare site. The first of the four casinos,
The investment in the Belle Grande integrated gaming resort is Melco Crown’s first venture in the casino business outside its Macau base
Macau casino tycoon Lawrence Ho (L), Australian billionaire James Packer (C) and Philippine partner Henry Sy (R) attend the Manila launch of the joint venture project
US$1.2 billion Solaire, opened for business in March. After Solaire and Belle Grande, two other casinos - one controlled by Japanese tycoon Kazuo Okada and the other by Malaysia’s Genting Group -are set to open between 2015 and 2017. The Philippine government is hoping Entertainment City can draw millions of newly wealthy Asians, boosting tourism and eventually generating up to US$10 billion in annual revenues. “For the next probably 30 to 50 years the main growth in entertainment and gaming is going to be in Asia,” said Mr Ho, co-chairman and chief executive of Melco Crown. “We think our Philippine venture is going to be a key contributor to our business,” he added. “This is definitely a city where people love to enjoy and live life.” Clustering of rivals Mr Ho said he was impressed by Solaire’s offerings during a visit on the eve of its launch, adding the clustering of rivals in a single hub would help all draw more customers. He expects gaming revenues in the Philippines to triple to US$3 billion by 2015, from about US$1 billion annually. “If you project that and extrapolate it even further down the road, the Philippines in five, six years could be effectively the size of Las Vegas or Singapore,” he said, referring to the world’s other major gaming hubs. As the only one among the planned or existing Manila casinos with a Macau connection, Mr Ho said Belle Grande would draw more Chinese tourists to the Philippines. “Ultimately, we do have one of the largest databases in terms of Chinese and also Asian visitors. I think that’s going to be a significant contributor to our success,” he said. Ho said he was not worried about potential fallout from a tense territorial dispute between China and the Philippines over islands and waters in the South China Sea. “Hopefully these issues will resolve themselves in the near future,” he said. * AFP NEWS AGENCY APRIL 2013
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Gaming
Beachside limbo Vietnam’s Ho Tram Strip developer has missed its opening target, but still remains confident of success BY MUHAMMAD COHEN
sian Coast Development Limited (ACDL) expected to be celebrating the opening of its first Ho Tram Strip beachfront casino resort in Vietnam last month with 541 five-star rooms, 90 live tables and 500 electronic gaming machines. The property, to be managed by MGM International Resorts, showed it was ready with several successful trials for hundreds of guests. Staff of 2,000 were trained and ready to serve, while construction continued on a second tower to bring the key count to 1,100 and a golf course designed by Greg Norman. Instead of a grand opening, March brought news that MGM had pulled out of its agreement to operate the resort, and minority partner Pinnacle Enter-
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tainment had written down US$25 million (MOP200 million) of its US$110.6 million Ho Tram investment. Earlier, bankers froze lines of credit to ACDL while the company awaited key government approvals. (The Vietnamese government has meanwhile announced its formal approval of all ACDL’s requested amendments to its investment certificate early this month.) ACDL remains confident in the project, and even sceptics concede the Ho Tram Strip, 130 kilometres south of Ho Chi Minh City’s airport, with a casino off-limits to Vietnamese, has long term potential. “We have believed in our success from day one,” ACDL chief executive office Lloyd Nathan tells Macau Busi-
ness. “Like every project, particularly one in a new gaming jurisdiction, we have had our fair share of challenges. But so far we have surmounted every one of them and remain confident that we will continue to do so.”
No MGM, no cry MGM agreed in November 2008 to manage the first of up to five resorts on the 168 hectare site that includes a two kilometre beachfront, and the erstwhile MGM Grand Ho Tram remained featured on the MGM website weeks after its withdrawal announcement. “At the project or micro level we enjoyed a close working relationship with MGM and together have built a dynamic energised team at the resort, all
73 of whom are our employees, who were being managed on our behalf by MGM,” Mr Nathan, who served as MGM Resorts International’s global gaming unit president when it negotiated the deal to manage the Ho Tram before joining ACDL in 2010, says. “At a macro level, I am sure MGM has strategic objectives that go far beyond any one relationship, however close.” Even though MGM had no capital investment in the project, Gaming Market Advisors principal Andrew Klebanow warns the project carried risks for the Las Vegas giant that also controls MGM Macau. “With 2,000 employees, a host program with satellite offices in other countries and the general costs of operating a seaside resort, expenses will be high,” Mr Klebanow says. “Given the government’s firm decision not to allow Vietnamese citizens to wager in the casino, the overall gaming market will forever be very limited. MGM leadership probably came to the decision that the risks associated with operating a casino resort under such a constraint were simply too great.” MGM, as well as Pinnacle and ACDL’s principal investor Harbinger Capital, declined requests from Macau Business to comment for this article. “In my opinion, MGM considered the prospect of further delays and made the decision to deploy management resources on other projects,” Mr McKnight says. “Note that MGM is in the process of bidding for opportunities in at least three cities in North America and is undertaking an additional project in Las Vegas.” “From an MGM perspective, we think the announcement is a modest positive,” Union Gaming Group analyst Bill Lerner wrote in a note to clients following the withdrawal. “The project has had a number of issues from the start and we don’t believe current forecasts or valuation contemplated this exposure for MGM. It has been our view that MGM would have been structurally/economically disincentivised to redirect VIP play to Ho Tram that it could capture on a fully consolidated basis in Macau.”
Think PNK? Union put a sell rating on Pinnacle, which trades on the New York Stock Exchange under the symbol PNK, in October after estimating Ho Tram EBITDA (earnings before interest, taxes, depreciation and amortisation) at US$55 mil-
lion. ACDL says it has already spent “in excess of $500 million” on the project. ACDL is currently evaluating candidates to manage the resort. “We are considering all options,” Mr Nathan says. “We have received renewed interest from a number of parties who were previously not interested in participating in the project due to the first resort already having an identified manager.” “The property does not need a US or Macau casino operator to succeed,” Mr Klebanow, a veteran Las Vegas executive, says. “It does need an internationally recognised hotel brand to fill the hotel, but a regional gaming operator can operate the casino.”
“We have received renewed interest from a number of parties who were previously not interested in participating in the project due to the first resort already having an identified manager,” says Lloyd Nathan Pinnacle took a 26 percent ownership stake in ACDL in 2011 for US$95 million, and last year invested another US$15.6 million, though its stake now stands at 24 percent. The company, which traces its roots back to California’s legendary Hollywood Park race course, also operates casinos and racinos in several US states. Pinnacle plans to manage Ho Tram’s second resort under a new “Asia facing brand” developed with ACDL, Nathan said in a 2011 interview. So far there’s no indication that Pinnacle will operate the first resort. Pinnacle is currently finalising its US$2.8 billion Ameristar Casinos acquisition – which led Union to raise its
WAITING FOR THE HO TRAM W
ith the first tower of its initial Ho Tram resort completed and its second tower rising, developer Atlantic Coast Development Limited (ACDL) was awaiting amendment of its Investment Certificate from Vietnam’s government to open. The amendment is required because ACDL missed its development deadline on the Investment Certificate. The amendment only came early this month. “As you know, any gaming project from Singapore to Macau requires a multitude of approvals, from the gaming entitlement itself to a liquor license,” ACDL chief executive Lloyd Nathan explains to Macau Business. “There is a process to be followed relating to each approval and some are interlinked. We are comfortable that all required approvals to open the resort will result from that process.” “Certainly, the political and policy dimension in Vietnam has always appeared to us to be very complex – just as it is in Macau, China, Japan and other emerging jurisdictions,” Wells Fargo Securities senior analyst Cameron McKnight observes. Due to delays in the Investment Certificate amendment, Vietnamese banks cut off a US$175 million line of credit to ACDL in November with about US$96 million remaining. Those funds were earmarked to complete construction and provide US$35 million in working capital for the opening. Principal investor Harbinger Capital has committed an additional US$30 million to the project. Delays in opening may have prompted MGM Resorts International to withdraw from its agreement to manage the first of Ho Tram’s planned five casino resorts. MGM’s general manager John Shigley will stay on at Ho Tram until June 2 to assist with the transition. ACDL has 2,000 resort staff trained and drawing pay. M.C. APRIL 2013
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Gaming
stock rating to hold when announced in December – expected to close late this year. In its annual report released last month, Pinnacle cautioned that further Ho Tram opening setbacks could lead to additional write downs.
On the horizon Despite delays in the finalisation of Vietnam’s gaming law and licensing, Mr Nathan still envisions Ho Tram as a successful gaming destination. “We see that demand far exceeds supply in Asia. We also see a demand for propositions beyond the pure Macau model. Macau has been an incredible success story, but at its heart it has a particular type of offering, a particular type of customer, and draws primarily from a relatively narrow geographic base. We have an offering that is differentiated, broader and, at the same time, has a cross-appeal with Macau customers seeking an alternative offering.” Once Ho Tram’s first resort is cleared for launch, ACDL believes the destination will sell itself. “Upon opening, among other things, we will be the only large scale integrated resort in Vietnam, in an exclusive location within two hours of a metropolis of over 10 million people, and with access from multiple modalities of transport including VIP helicopter transfer directly to the site, road, ferries and private jets. The
APRIL 2013
demand for such facilities within Asia is high and growing but the existence of them is limited,” Mr Nathan declares. “So yes, we believe we have something unique and of high value and interest.” Analysts remain divided about Ho Tram’s prospects. “At this point, we think further development [of Ho Tram] is likely contingent on the success of Phase One,” Mr McKnight, who follows both Pinnacle and MGM shares in the US, says. “Ultimately, we think Ho Tram has the ingredients to be successful and we see plenty of long term potential. In the near term, final regulatory approvals are the hurdle and, after that, developing a loyal client base within the region is the next step.” Union Gaming’s Bill Lerner cites several challenges for Ho Tram, including a 10 percent withholding tax on casino winnings, Vietnam’s plan to use Nevada gaming regulations as an in-
Union Gaming’s Bill Lerner cites several challenges for Ho Tram, including a 10 percent withholding tax on casino winnings
terim measure in the absence of a final Gaming Decree, questions about sufficient electrical power for the resort, and the ban on Vietnamese casino players. “For Pinnacle, the lack of a management partner creates yet another issue for their significant investment in Vietnam,” he wrote last month. “Given Ho Tram’s location two and a half hours from Ho Chi Minh City’s airport, it will be difficult to attract overnight gamers,” Mr Klebanow says. “For a gamer, there are an awful lot of casino destinations that are far more convenient. As for family vacationers, there are a lot of vacation options in Southeast Asia that offer luxurious beachside accommodations and many are also more convenient.” Mr Klebanow believes Vietnam’s decision not to allow its nationals, except those also holding foreign passports, to play in its casinos limits its potential. “Ho Tram may be modestly profitable but it will never generate anything close to the revenues enjoyed by casinos in Macau and Singapore. The Vietnamese casino industry will never attract the billions of dollars in capital investment like Singapore and Macau; it will never create the tens of thousands of jobs and it will not have the tremendous positive economic impact those other jurisdictions enjoy. That is the price of the government’s decision.”
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Pokies addicts
Australia gambles on moves to tackle slot machine problem gamblers
BY MADELEINE COOREY*
t’s just after morning opening at Sydney’s Randwick Labor Club and already a few regulars are at the slot machines (or “pokies” as they are better known) for a quiet flutter. Electronic poker machines are the most popular form of betting in Australia, but concerns about problem gamblers have prompted the government to introduce reforms to help keep their spending under control. “The big picture is we’re becoming a nanny state,” says Peter Bell, a retiree who likes playing the machines, just like he enjoys betting on horse races. He insists he is not a problem gambler. “I spend a lot more money at the racetrack than I ever do at a poker machine,” the 70-year-old jokes. There are about 200,000 electronic gaming machines in Australia, with about 600,000 Australians playing them
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at least weekly, according to a Productivity Commission report released in 2010. However, concerned that 15 percent of these players are problem gamblers whose money accounts for about 40 percent of spending, the government has moved to encourage all players to “pre-commit” to a financial limit before they start so they don’t over-spend. Under legislation passed late in 2012, while the scheme will remain voluntary, poker machine manufacturers must put the new pre-commitment technology on all new machines by the end of 2014. Warnings will also flash up on players’ screens with messages questioning them along the lines of, “How long have you been playing?” and “Have you spent beyond your limits?” The biggest clubs will also limit daily cash withdrawals from automatic teller machines to AUD$250
(MOP2,075) although this will not apply to casinos. Anti-gambling campaigners say the scheme does not go far enough, since played at high intensity, it is easy to lose AUD$1,500 (US$1,550) or more an hour on a poker machine. “We think it’s next to useless,” says Erin McMallum, whose Getup! organisation has been pushing for maximum bets to be dropped to one dollar, a move that would limit losses to about AUD$120 an hour. “People don’t voluntarily restrict themselves. Half the time they don’t even realise they have a problem.”
Love to gamble McMallum says problem gambling is widespread in Australia, with many stories of people losing their homes, their relationships and even family members to suicide. APRIL 2013
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Gaming
“Australia does have quite a unique problem in relation to problem gambling addiction, especially to poker machines,” she says. “The machines here are prolific, they are exceptionally high loss, and you can find them almost anywhere every club, pub, bar, casino. They are hard to avoid if you do happen to have an addiction.” The clubs industry, which derives revenue from the pokies, is also nonplussed by voluntary pre-commitment,
with the executive director of Clubs Australia, Anthony Ball, saying players would be reluctant to use it. “Let’s remember, people are playing a poker machine for the same reason they might bet on a horse or play the lotteries - they want to win. It’s a feeling of freedom, it’s their recreation,” he says. “To get a card, to register brings a whole different feel to it.” Australians love a gamble, with the Melbourne Cup horse race known as
“the race that stops a nation” and the national day to commemorate fallen soldiers, Anzac Day, known for its “two-up” betting on the toss of a coin. “The punt is engrained in Australian culture,” explains Ball. Club membership is around 11.6 million people out of a population of around 23 million, and the industry says it employs 96,000, making an economic contribution of some AUD$7.2 billion each year. What concerns Ball is that the national government has for the first time ever, with the voluntary pre-commitment legislation, “involved itself in the regulation of poker machines”. Ball says the technology would not be a “silver bullet” for problem gambling, and the government’s plan for pre-commitment to be mandatory in the Canberra region as part of a trial will fail dismally. “We think that mandatory precommitment will not help people - you don’t give a problem gambler a gambling card, that doesn’t work. It’s like giving an alcoholic drinking tickets. It’s a crazy thing to do,” he says. “We say you need to get to those people and take them away from the gambling environment and into an effective * AFP NEWS AGENCY treatment regime.”
mbreport ENVIRONMENT
SAVE THE SNAILS The Environmental Protection Bureau seems to be doing a good job, but too slowly BY LUCIANA LEITÃO
he Environmental Protection Bureau is pressing on with its work but strong headwinds are hindering its progress. Observers are unanimous in applauding the bureau’s creation. Its performance, however, is hampered by the division of responsibility for environmental matters among various government departments. The government set up the Environmental Protection Bureau in 2009, giving it the task of formulating environmental policy, making environmental plans, drafting environmental legislation, enforcing environmental law, arranging environmental education and publicity, enhancing environmental awareness and expediting the advent of impact assessments.
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Photo: Luís Almoster
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mbreport ENVIRONMENT 78 Macau Ecological Society chairman Ho Wai Tim congratulates the bureau on completing the tasks the government gave it last year: to make an environmental protection plan for 2010 to 2020, to propose arrangements for environmental impact assessments and to begin trials of electric bus services. Mr Ho says the bureau has done good work on solid waste management policy and food waste management policy. “That’s a great job for Macau sustainability,” he says. The 2010-2020 Environmental Protection Plan is a good one. “They have pointed out the essential points for future development,” he says. But Mr Ho criticises the bureau for having outside institutions do most of the work on the environmental plan, rather than Macau groups. For example, the South China Institute of Environmental Sciences in Guangzhou edited the Environmental Protection Plan and the draft arrangements for environmental impact assessments. He also regrets the failure to apply the law on environmental impact assessments, a law he regards as essential for Macau’s development. “We hope it can be all set in place in 2013,” Mr Ho says.
Loads of rubbish The law requires developers to make impact assessments but there is no subsidiary legislation governing how they should go about it. Secretary for Transport and Public Works Lau Si Io said in January that the government would issue guidelines for environmental impact assessments of development projects this year. Mr Ho says Macau is under a lot of environmental pressure, in view of the number of people – residents and visitors – crammed into its small area. “It causes big pressure in the solid waste department. There is no more space to solve the solid waste problem,” he says. He says rubbish is one of the most pressing threats to the environment that the bureau must avert. Mr Ho proposes that the government solve the rubbish problem in cooperation with Guangdong, using the province’s recycling capabilities. The Environmental Protection Bureau replaced the Environment Council of Macau. Unlike its predecessor, the bureau has the power to enforce the law. The president of the Environmental Industry Association is António Trindade, the chief executive of CESL Asia, APRIL 2013
which runs the rubbish incinerator on the peninsula and the sewage treatment plants on the peninsula and Taipa. Mr Trindade believes the bureau answers the need for an environmental protection body that is more than just advisory. However, he says that because the government took its time allocating responsibilities for environmental protection, it was slow to shoulder those responsibilities. “I’m not only talking about the bureau – that has a more generic role – but also the Office for the Development of the Energy Sector and the Maritime Administration. There is
also a fourth entity, the Civic and Municipal Affairs Bureau, which has certain responsibilities in urban infrastructure, urban cleaning and sewage,” he says.
Lacking authority Mr Trindade thinks the advent of the Environmental Protection Bureau meant a change for the better. He says the arrangements for environmental impact assessments are an example of this. But he complains that improvement is hampered by various government departments, under different secretaries, still
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THROW MONEY AT IT
Photo: Luís Almoster
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Macau Ecological Society chairman Ho Wai Tim says Macau is under a lot of environmental pressure, in view of the number of people crammed into its small area
having various environmental responsibilities. Mr Trindade is ambivalent about whether the Environmental Protection Bureau should take charge of all environmental matters. “It makes sense to have an entity dedicated to the energy issue, as Macau must probably be one of the places in the world with higher consumption per person,” he says. But he says environmental problems beyond the ambit of the bureau need to be solved. “There should be more intervention in searching for changes to the transportation system of Macau,” Mr
he purpose of the government’s MOP200 million (US$25 million) environmental protection fund is to subsidise the acquisition of environmentfriendly technology, products or equipment by companies and associations. The fund had made 580 grants, together worth about MOP58 million, by last October. The median amount of each grant was about MOP35,000. The Environmental Protection Bureau said in a written reply to questions from Macau Business that the companies given grants were in the retailing, food and beverage, construction and engineering, entertainment, education and culture, telecommunications, real estate, financial services, tourism and transport industries. The bureau said the companies had requested the money to buy energysaving lighting, induction ovens, equipment for treating oily fumes, efficient air conditioning systems, equipment for purifying the air and water-warming systems. Successful applicants are granted up to 80 percent of the cost, to a maximum of MOP500,000. Only one grant per applicant per year is given. The fund has pushed back the deadline for applications for grants from the end of last year to the end of this year.
Trindade says. So he thinks one body should coordinate the various government departments. The head of the Macau Green Student Union, Joe Chan, gives the Environmental Protection Bureau a passing mark. Mr Chan praises the bureau for its work in the field of environmental education. But he thinks the bureau lacks real authority. “It has no right to interfere with governmental or private construction projects. It can only give out advice, or suggestions to compromise or to reduce the impact on the environment,” he says. APRIL 2013
mbreport ENVIRONMENT 80 Mr Chan believes the bureau is inefficient because many environmental matters are the responsibility of other government departments. ”Many natural resources (except for the wetlands in Cotai) are governed by the Civic and Municipal Affairs Bureau. Power-saving projects are mainly handled by the Office for the Development of the Energy Sector. Water-saving projects are handled by the Maritime Administration,” he says.
Too long Mr Chan says some matters are within the scope of more than one department, such as waste recycling in general, and food waste recycling in particular. “These are under both the Civic and Municipal Affairs Bureau and the Environmental Protection Bureau, but they do not closely cooperate on them. They use different advertisements and recycling bins, which makes many citizens confused,” he says. But most of all he thinks the bureau should speed up the introduction of environmental impact assessments. “At present, it still has too passive a role in
many environmental issues. People expect a more responsible and determined department to fight for them,” he says. The Environmental Protection Bureau said in a written reply to questions from Macau Business that, having consulted the public about its draft arrangements for environmental impact assessments, it will issue a list of the sort of projects that must adhere to them. Chan Shek Kiu is a professor at the University of Saint Joseph and a member of the Environmental Consultative Committee. Mr Chan says the Environmental Protection Bureau often takes too long to do its work and is not open enough to public scrutiny. “For instance, in the eighties I was involved in the protection of the environment in Macau as an appointed member of the Environment Council. At the time I was involved in drafting the noise pollution law. Even now, I know the bureau is doing something, but it is still not finished. It really takes too long,” he says.
Polluters pay Mr Chan says that, other than this, the bureau has been doing a good job, and
has made a difference to the city. “For instance, in front of our building, people from the Environmental Protection Bureau and the police stop cars to measure the exhaust fumes coming from the vehicles,” he says. But he says the bureau could do better. In particular, he thinks the government should do a deal with restaurants and casino resorts on the treatment of food waste. Mr Chan thinks the principle that polluters should pay for the pollution they cause should be applied in a place as rich as Macau. “For example, you don’t have to pay for sewage. Other countries add a percentage to the water bill to pay for sewage,” he says. He suggests that the government should engage the casinos in talks about how to reduce the air pollution that their courtesy coaches cause. More generally, the government should limit the number of motor vehicles powered by internal combustion engines and promote the use of electric vehicles, he says. Mr Chan sees signs of progress, such as the recycling of water by some hotels, but thinks Macau could do more to protect its environment. “It has money. Why not use sea water instead of potable water to flush the toilet?” he says. He believes the bureau lacks authority. “Even the Environmental Protection Department in Hong Kong has more power. It can fine you,” he says.
Reorganisation hint
BIG CITY, DIM LIGHTS A
movement to observe Earth Hour every month instead of every year has the support of 15 hotels in Macau, which together have almost 14,000 rooms. Earth Hour is observed every March, when households and businesses around the world are encouraged to turn off non-essential lights for one hour on a specific day, to remind the public about the perils of climate change. Conrad Macao at Sands Cotai Central casino resort began the movement for a monthly Earth Hour after dousing its lights on January 17. The aim is to get casinos and hotels to switch off all their exterior lights and any non-essential indoor lights from 8.30pm to 9.30pm on the first Tuesday of every month. Conrad Macao has pledged to douse its lights twice a month if 10 other Macau hotels agree to do so just once a month.
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Mr Chan says the division of responsibility for environmental matters among various departments hinders the Environmental Protection Bureau in its work. “For certain aspects, you still need other departments, but the Environmental Protection Bureau should be at the centre of power. Air pollution, for instance, should be brought under the bureau, not done simply by the Macau Meteorological and Geophysical Bureau,” he says. He thinks the Environmental Protection Bureau could be more open. “We give advice to them and we don’t know much about what they are doing,” he says. The Environmental Protection Bureau told Macau Business that one department could not be responsible for all aspects of environmental protection. But it said the government would “continue to improve the working methods of its different organs, rationalising the division of functions in each department”.
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Electric jolt required Motorists are shunning electric cars out of ignorance, an advocate of green vehicles says BY ALEXANDRA LAGES
lectric vehicles (EVs) are tax-free in Macau. Pundits say EVs are a significant part of the solution to the problem of air pollution here. But how many electric cars or motorcycles have you actually seen in the streets lately? Tax breaks are clearly not enough to persuade motorists to go electric, however a study by the University of Macau has found that motorists can save significant money in the longer term by using vehicles powered by electricity, rather than traditional internal combustion engines. Herman Ching Tze Wood, the lead researcher in the study, urges the government to be more vociferous in telling the public about the advantages of
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electric vehicles, otherwise motorists will continue driving conventional motor vehicles. “Gasoline will run out very soon, maybe in the next 30 or 50 years. We need to have some solutions for the future,” Mr Ching says. His study found that on average, an electric vehicle cost up to MOP440,000 after tax, while a conventional motor vehicle costs about MOP140,000 on average. Despite this, he says buyers need to see beyond the initial price difference and look at the bigger picture. Buying an electric vehicle has one major advantage. “The cost savings on monthly fuel consumption and various maintenance expenditures will compensate for the higher up-front initial cost,” the report says.
Taking into account these savings, the report indicates that it would take eight years to recoup the initial extra outlay on an electric vehicle. During those eight years, powering an electric vehicle would displace over six tonnes less carbon dioxide than a conventional vehicle. “Additional reductions could be achieved when more renewable energy sources or non-coal electricity is used for generation of electricity,” the report says.
Two wheels The University of Macau researchers did road tests of electric and conventional vehicles, and found that the power bill for electric vehicles was 70.4 percent cheaper than the fuel bill for conventional APRIL 2013
mbreport ENVIRONMENT 82 vehicles. They also found that charging the electric vehicle resulted in 51.9 percent less carbon dioxide being emitted from the process of generating electricity it charge them only. The study found the cost of maintaining an electric vehicle is one-fifth of the cost of maintaining a conventional vehicle. After any motor vehicle clocks up 60,000 km, the owner should have it serviced regularly. But while owners of a conventional vehicles pay MOP5,000 on average for a service every subsequent 12,000 km, owners of an electric vehicles would only need to pay MOP1,000. The study also points out that an electric vehicle is exempt from the annual road tax of MOP850. Another study by the University of Macau suggests that two-wheelers rather than four-wheelers should be used to open up the market for electric vehicles here. More than half of the licensed vehicles in Macau are motorcycles, according to official figures. “Motorcycles are not only widely used by private users, but also business users,” the report points out. It suggests that charging stations for electric vehicles be set up to work only during off-peak hours, to avoid overburdening the power supply. It takes six to seven hours to recharge an electric vehicle completely, but only three hours to recharge it so its battery is 75 percent full. The off-peak period for electricity demand is from 8pm to 9am.
Mr Ching believes there is great potential for electric vehicles in Macau because the city’s compact size means motor vehicles do not need a great distance range. But he says the government should do more to promote electric vehicles than just offering tax breaks. “Tax incentives were announced in 2010, but you cannot see electric vehicles on the streets. This means the incentives are not attractive,” he says. “The government faces a problem,” Mr Ching says. Electric vehicles are expensive, and most people would like to have a subsidy in their hands before they buy, he says. “If they do not see the big picture, it will be very difficult for citizens to buy a green car.”
Minority of one Mr Ching says the government should make it clear to the public how much cheaper electric vehicles are in the long run. He also says the government should overcome the reluctance of private motorists and operators of public transport to go electric by setting an example. “The government should try first,” Mr Ching says. He says that in other cities, governments use considerable numbers of electric vehicles, but that here the government has just one. “There are other green vehicles in the government, but none of them are electric,” he says. Macau has imported three batterypowered electric vehicles. In April 2010, Companhia de Electricidade de Macau SA acquired one, and a car hire company
NICE COOL SUNSHINE H
ong Kong’s Green Power Industry Ltd (GPI) intends to invite logistics and transport companies to take part in a pilot scheme in Macau to test solar-powered air conditioning in motor vehicles, says a director of the company, Jacky Lau Yun-hong. GPI has been collaborating with the Hong Kong Polytechnic Institute in fitting solar panels on the roofs of vehicles. GPI says that using solar power to run the air conditioning cuts a vehicle’s fuel consumption by up to 25 percent. Mr Lau says the system has been tried out in Hong Kong in taxis, people carriers, minibuses, buses, utility
APRIL 2013
vehicles and trucks. The government here has approved the system as an energy-saving measure, so buyers are eligible for government subsidies. The price of a system ranges from MOP40,000 (US$5,000) to MOP150,000, depending on the sort of vehicle it will be fitted to. GPI says a system will pay for itself in about two years, and that the solar panels will last for over 20 years. Mr Lau says his company intends to apply similar technology in ships and homes. He has given no schedule for the pilot scheme in Macau.
another, and ran them for nearly for two years. The Environmental Protection Bureau bought the third last September.
Give ’em a break Mr Ching estimates that more than half of Macau’s motor vehicles were bought after 2005, in a buying spree caused by the expansion of the casino industry. He is critical of government policy on conventional vehicles, and laments that buses and casino coaches here are only required to meet the Euro IV emission standard, while Europe has moved on to the higher Euro V standard. Mr Ching complains that roadworthiness inspections only become compulsory for vehicles here when they are 10 years old, while inspections become compulsory for vehicles in Hong Kong when they are just six years old. He says vehicles here are not properly maintained. “Most users start
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BAD AIR DAY
Photo: Luís Almoster
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University of Macau researchers did road tests of electric and conventional vehicles, and found that the power bill for electric vehicles was 70.4 percent cheaper than the fuel bill for conventional vehicles
thinking about that after 10 years,” he says. Mr Ching says the bus operators here lag behind those in Hong Kong and elsewhere. “Some investors are interested in investing in electric buses, since some are running in Hong Kong, but they are not being driven in Macau,” he says. Some members of the Legislative Assembly have urged the government to extend the tax breaks on the purchase of electric cars to electric motorcycles and electric buses. However, Environmental Protection Bureau vice-director Vai Hoi Iong has said there are already other incentives to buy electric motorcycles and electric buses. This year, the government is expected to impose stricter limits on the emissions of both new motor vehicles and those already on the road. It is also considering how to get the most polluting vehicles off the road.
he quality of Macau’s air is getting worse as the number of vehicles on the road increases. The number of motor vehicles in Macau is rising, despite government efforts to curb the growth. At the same time, the quality of the air is deteriorating. Air pollution worsened in January, particularly near main roads and in residential areas of the peninsula, and began improving again only in February, the Macau Meteorological and Geophysical Bureau says. The peninsula has had at least seven days of bad air quality so far this year. It had eight days of bad air quality in the whole of last year. The bureau said the poorer air on these days was due to the accumulation of air pollutants caused by dry weather and weak wind. In January the daily index of air quality on the roadside averaged 112.1 points, and the daily index of air quality on the peninsula averaged 96.1. Air quality is considered bad when the index exceeds 100. The government has been trying to control the number of new vehicles, but without success. In the fi rst 11 months of last year, 12 percent more cars were sold here than in the corresponding period of 2011, the Macau Motor Traders Association says. Tax breaks on the purchase of environmentally friendly cars, introduced in March last year, spurred the growth in sales, the association says. The government has said it intends to subsidise the phasingout of polluting motor vehicles to the tune of up to MOP400 million (US$50 million), but has yet to say how it will go about it. The government said in January that it wished to get rid of all highly polluting vehicles – which make up over one-quarter of vehicles on the road – in about 10 years. The number of licensed motor vehicles in Macau was 218,909 at the end of January, 5.5 percent more than a year earlier.
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mbreport ENVIRONMENT 84
Toilet to tap The government hopes to introduce treated wastewater into the city’s water supply no later than 2015
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he government is drafting a policy that mandates water supplies should be supplemented with treated waste water by 2015. Casino developments in Cotai and public housing will be expected to use treated water in toilets and on gardens, among other uses, according to recent reports. The Maritime Administration is handling the project and is preparing a tender for next year. A bylaw governing the supply of recycled water will be completed later this year. By 2015 the government expects to commence building a water treatment plant in Coloane with the capacity to treat 12,000 cubic metres of water a day. A second plant is apparently scheduled for construction on the peninsula by 2022 with capacity to supply 52,000 cubic metres of water a day. It will most likely be located on reclaimed land. Costings for the projects have not been made public. The twin plants mean the government should meet a shortterm goal to supply about 12,000 cubic metres of treated water each day. In the longer term, the government expects that about 10 percent of water consumed daily will be provided by the
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A 10-year plan produced by the government says the treated water will be used in newly developed areas of the city, mainly for flushing toilets and watering public gardens treatment plants, with about 30,000 cubic meters supplied each day. The average volume of water consumed in Macau is between 230,000 cubic metres and 250,000 cubic metres daily. Within just a few years, consumption is expected to increase to about 300,000 cubic metres a day. Maritime Administration Director Susana Wong Soi Man said the twin pressures of a shortage of fresh water and rapid development had placed undue pressure on existing water supplies.
Casinos buy-in Households can expect to pay less for treated water. The tariff will be set at about 85 percent of the price for potable water. Of greater concern for conservation is consumption in the city’s business sector. Industry consumes about 70 percent of the city’s water supply. The government has urged all gaming operators with new projects in Cotai to install water-recycling equipment to help conservation efforts. Currently, very few casinos are equipped with a treatment system. Water consumption at the city’s hotels and casinos reached about 17 million cubic metres last year. A 10-year plan produced by the government says the treated water will be used in newly developed areas of the city, mainly for flushing toilets and watering public gardens. The “recycled” water is likely to be used at public housing in Seac Pai Van, around Pac On in Taipa and the University of Macau campus on Hengqin Island. The government expects about one-third of water used in Seac Pai Van will come from a treatment plant. On the peninsula, treated water will be supplied to Ilha Verde and any projects to be built on land reclaimed from the sea. The government expects the price of water from the mainland to increase by 15 percent next year. Under the Guangdong-Macau Water Supply Agreement, the price is adjusted every three years. Ms Wong said the tariff to endusers would not be increased. The government spent MOP95 million (US$11.89 million) last year subsidising each cubic metre of water by MOP1.25. APRIL 2013
If you know of an event 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”.
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April Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
10 th – 12th
APAC Investments Summit 2013
Venetian Macao-Resort-Hotel, Macau Marcus Evans 9 Demostheni Severi Avenue, Nicosia 1080, Cyprus (357) 22 849 300 (357) 22 849 307 www.apacinvestmentssummit.com webenquiries@marcusevanscy.com 18th – 19 th
Mobile Payments & NFC World Summit 2013 Eaton Hong Kong, Hong Kong Symphony Global 10 Anson Road, #26-04 International Plaza, Singapore 079903, Singapore (65) 6474 1471 (65) 6725 8438 www.symphonyglobal.com enquiry@symphonyglobal.com th
30 – 2
nd
May
Annual Investment Meeting 2013
Dubai International Convention & Exhibition Centre, Dubai Annual Investment Meeting Organising Committee P.O. Box 10161 Dubai, United Arab Emirates (971) 4 39 23232 (971) 4 39 23232 www.aimcongress.com info@aimcongress.com
May Date: Event: Venue: Organiser: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
15th – 16th
Asia Pacific Hotel Investment Conference Dusit Thani Bangkok Hotel, Bangkok, Thailand Questex Asia Events http://ihif.questexevents.net marketing@questexasia.com 21st – 23rd
G2E Asia
Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
23rd – 24th
Japanese Investments Summit 2013 Hotel Chinzanso Tokyo, Tokyo, Japan Marcus Evans 6F HANY Higashi-kanda-Bldg, 2-1-8 Higashi-kanda, Chiyoda-ku, Tokyo 101-0031, Japan (81) 3 5823 0688 (81) 3 5823 0689 www.japaneseinvestmentsummit.com webenquiries@marcusevanscy.com 27th - 30 th
CMO Asia Summit 2013 Venetian Macao-Resort-Hotel, Macau Marcus Evans 9 Demostheni Severi Avenue, Nicosia 1080, Cyprus (357) 22 849 300 (357) 22 849 307 www.cmoasiasummit.com webenquiries@marcusevanscy.com
June Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
24th - 27th
Corruption & Compliance Asia Congress To be advised, Hong Kong Beacon Events 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.corruptionandcompliance-asia.com info@beaconevents.com 27th - 28th
Banking & Finance Compliance Summit To be advised, Hong Kong Beacon Events 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.bankingandfinancecompliance.com info@beaconevents.com
Venetian Macao-Resort-Hotel, Macau Reed Exhibitions and American Gaming Expo 39/F Hopewell Centre, 183 Queens Road East, Wanchai, Hong Kong (852) 2824 0330 (852) 2824 0246 www.g2easia.com info@g2easia.com
APRIL 2013
: A Macau Business partner event
87 KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com
Budding diplomats STUDENTS HAVE VALUABLE LESSONS IN TEACHING THE PUBLIC HOW TO PREVENT DIPLOMATIC SPATS FROM FLARING INTO SOMETHING MORE SERIOUS acau is having to come to terms with rapid internationalisation. It urgently needs expert international negotiators. But how can we teach people to improve international relations through negotiation and to settle international disagreements? In his 2011 book “Change Leader – Learning to Do What Matters Most”, distinguished Canadian author Michael Fullan makes the telling comment that we learn leadership less by reading about it and more by leading. Book knowledge on the topic, he demonstrates, is insufficient, often contradictory and of limited help in handling the nitty-gritty of leadership. Rather, leadership is practical, learned by doing it. Negotiating matters of international relations is the same. One can prepare and train negotiators, and it is important to do so, but the best teacher is often experience – learning by doing. What better preparation for international negotiations is there than to teach university students, those budding international negotiators and builders of international relationships, by having them conduct a real-life simulation on international relations? An interesting example of this took place in February. Some 60 students from three universities in Macau came together for a weekend to work on a high-level negotiation, simulated under realistic conditions, of an international settlement of the very real dispute over territorial and other claims in the South China Sea. Students from countries in five continents joined together to draft and vote on a proposed resolution. The simulation was run by the Hong Kong America Centre of the Chinese University of Hong Kong, with three facilitators who were richly experienced in international relations. The exercise was framed by the United Nations Convention on the Law of the Sea and the 2002 Declaration on the Conduct of Parties in the South China Sea by China and members of the Association of Southeast Asian Nations (ASEAN).
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Stress tests Student teams represented the countries with claims to territory in the South China Sea (Brunei, Mainland China, Malaysia, the Philippines and Vietnam) and other interested parties such as Taiwan, Japan, the United States, ASEAN, oil companies, fishing associations and the research community. The resolution dealt with five issues: sovereignty claims; military and security relations; the exploitation of resources such as oil and fishing; maritime commerce; and protection of the environment, involving joint scientific research. The claimant countries voted on the resolution, and any reservations or dissensions were noted. It was startling to observe the creativity of the students and the seriousness with which they addressed the issues. Also remarkable was the clarity of their articulation of problems and solutions, and their understanding of the issues and their complexity. The intensity of the formal and informal negotiations among the students was striking, as was their skill in working under pressure to meet tight deadlines. They handled disagreement
within or between groups with ease. Their ability to respond to challenges, to compromise and to make concessions was tested, but their capacities to listen carefully, think quickly and answer thoughtfully were conspicuous. Overall, it was extraordinary how they handled a steep learning curve and how much information on the issues from various different sources they could absorb.
Valuing compromise What were the students doing? They were learning by doing, focusing on real-life matters, tussling with complex issues, working in teams composed of members who were previously unfamiliar with each other. In short, they were having to combine knowledge, skill and ability to deal with each other sensitively and critically. The teams quickly realised that, whilst sovereignty was a big factor in the settlement, it was not the only factor. They realised that in important pieces of the negotiation, sovereignty would have to be set aside. They swiftly recognised the power to be found in coalitions of governments and interested parties in flexible combinations, and the sensitivities involved in working with disparate groups. One facilitator described the simulation’s important purpose as discovering where the “yes” was between the teams of negotiators – meaning to identify points of convergence and agreement – with a clear commitment to solving territorial disputes in the South China Sea. Particularly striking was the emergence of a driving value across the entire group: to seek an agreed, peaceful solution that all parties could sign. Sabre-rattling was out. Who says the oldies have nothing to learn from youngsters? APRIL 2013
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THE LIFEBLOOD OF THE CITY’S PROSPERITY, TOURISTS ARE INCREASINGLY ANGRY ABOUT THEIR TREATMENT AND TOUR GUIDES ARE IN THE HOT SEAT BY ALEXANDRA LAGES ILLUSTRATIONS BY RUI RASQUINHO ive or take, Macau welcomes about 30 million tourists each year. In January alone, 757,000 tourists entered the city on package tours. Leading each of those groups was a tour guide. Around the world, tour guides work hard, but there are few places on Earth where tour guides have a greater workload than in Macau. The number of complaints from tourists has been increasing and some critics have pinned the blame on tour guides, arguing they lack professionalism, and willingly draw tourists into scams to earn money on the side from commissions. The Macau Government Tourist Office (MGTO) received 168 complaints from tourists last year, a 38.8 percent increase from the year before. APRIL 2013
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Those in the tourism industry say dissatisfaction is not simply a matter of guides’ lack of professionalism, but a more complex problem that must be solved by the government here and in the mainland. “The fact that there was a 38.8-percent increase is a cautionary sign for our industry. However, we cannot say that our tour guides lack quality just because of the increasing complaints,” says Amy So Siu Ian, the programme coordinator for the University of Macau’s degree in hospitality and gaming management. The government-funded Institute for Tourism Studies (IFT) teaches a compulsory tour guide course. Would-be tour guides have to take a 180-hour-long course and pass an examination in order to receive certification and a licence from the tourist office. Guides have to take a refresher programme every three years to renew their licences. “Training is not the problem,” says Diamantina Coimbra, director of the Tourism and Hotel School at the tourism institute.
Tough crowd
Photos: Luís Almoster
Ms Coimbra says the quality of the institute’s training course is guaranteed. “In the past few years there have been some complaints about the quality of tour guides but the problem is not with training but in working conditions”, she says. Michael Chan Chun Chin is the institute’s heritage course coordinator, and was once a tour guide himself.
He says the main source of complaints stems from miscommunications between the mainland-based travel agents, who organise the tours and aggregate tourists, but do not adequately communicate their itineraries. About 74 percent of tour groups in January came from the mainland. “The problem is not because of Macau. Groups are pushed to Macau without paying accommodation fees or the total fare for the tour, without informing the agent here,” he says. The situation is exacerbated by a need for guides to establish good communications with their tour groups in a short period of time. “Most visitors to Macau are on ‘day-tours’ of two days and one night,” he says. “Zero-fare tours” or “negative-fare tours” are another problem. A zero-fare tour has small additional fees – or none at all – but fails to cover all its costs. To make up the shortfall, tourists are forced to visit shops and pressured into buying cheap goods that are overpriced. Macau Tourist Guide Association president Angelina Wu says the complaints against tour guides are wrecking the profession’s image. The problem comes from cheap prices for tours and guides who are forced into doing “something to cover the expenses”. “It’s very difficult to convince visitors to pay higher fares for the tours,” she says. In February, a tour guide called the police for fear of being
NUMBER OF STUDENTS AND GRADUATES OF THE TOUR GUIDE COURSE 350 Students
Graduates
300 250 200 150 100 50 0 2007
2008
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2009
2010
2011
2012
“In the past few years there have been some complaints about the quality of tour guides but the problem is not with training but in working conditions”, says Diamantina Coimbra, director of the Tourism and Hotel School
91 hurt when a group of mainlanders complained that their itinerary excluded casinos that were listed in the schedule produced by the travel agency. After two days in Hong Kong, the group landed here and was told that an additional RMB200 (MOP255) had to be paid by each tourist to visit the selected casinos, because the tour guide considered them as options. A spokesperson from MGTO pointed out that the complaint cases generally involve a variety of issues and “it is not suitable to make a hasty appraisal of the professional quality of tour guides simply based on the increase in the number [of complaints]”. “We believe that the increase in the number of complaints is attributed to the Macau Government Tourist Office’s wider promotion of our hotline service. Besides our promotions at different local hotels, major ports and MGTO information counters in Macau, the promotional videos are broadcasted on our website and in different districts to inform visitors of the available hotline service, a convenient channel for enquiries and complaints for visitors to Macau,” it was said in a written reply.
Solutions wanted Of the 168 complaints received by the tourist office last year, 48 were from tourists who lost contact with their guide or were abandoned. Another 45 complaints were about overcharging by tour operators. Nineteen tourists complained about their tour itineraries, hotel facilities or food. The majority of the complaints, 155, were filed by mainlanders. Ms Coimbra says solutions should be found at a very high level, hopefully between governments. “Not even the Macau government can solve this problem. It has to be discussed between Macau and the provinces that are sending those tourists to Macau,” she says. She says that there is nothing that IFT can do in terms of training and education. “Most of our students only need 10 or 20 percent of the knowledge we teach when doing the job, but we require 100 percent in the examination. When they [guides] are running a group, visitors do not want to listen
to the guide’s explanations. Most of them just want to take a picture and it’s enough,” she says. Only high school graduates can enrol in the tour guide course. The contents of the programme include Macau’s culture and history, tourism attractions, an introduction to tourism, theory and practice of tour guiding, and first aid. The tourist office and several mainland provinces have signed agreements committing each party to “Quality and Honest Macau Tours”. The goal is to combat the zero-fare tours and negative-fare tours with a code of conduct for mainland travel agencies arranging tours to Macau. Ms Wu says not all of the travel agencies that sign the agreements actually follow the guidelines. She wants greater controls imposed. The tourist office has urged tour operators to attract tourists through offering quality tourism experiences and not competing on price alone. The office is drafting a new law to regulate the activities of travel agencies, which is expected to be completed this year. Ms So wants the government to undertake detailed research to pinpoint the real reasons for the increase in the number of complaints before identifying where tour guides need to improve.
The MGTO says that the increase in the number of complaints against tour guides is attributed to a wider promotion of the office’s hotline service
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Little glamour, all slog Just one in five tour guide course graduates work in the industry, where the work is hard and the money is too little indy Lei, 31, has just sailed through an interview for a job at a publishing company but has plans to become a licensed tour guide. She enjoys the city’s culture and heritage, and being a tour guide is how she wants to spend her retirement. “With the licence, I can be a parttime tour guide. And I just think of my retirement and to have a licence like that would be good,” she says. She is attending the tour guide course at the Institute for Tourism Studies. Elizabeth Calangi graduated from the course but did not become a full time tour guide. Mrs Calangi, 50, finished each of the three courses for tour guides: the 180hour Tour Guide Course; the 36-hour Macau Heritage Tour Guide Course; and the 24-hour Cultural Heritage Interpretation for World Heritage Sites that is recognised by UNESCO. Instead she decided to stay in her job as a director of membership and marketing. The course for tour guides was for self-development only, she says, as her job includes showing businesspeople and clients around the city. She is not alone in turning down tourism jobs. Each year, IFT has about 400 places for students in its tour guide course. It says just half are filled and about only two-thirds end up graduating. Between 2007 and last year, 1,227 students enrolled in the course. Some 718 graduated. The coordinator of the institute’s heritage courses, Michael Chan Chun Chin, says many students in the tour guide course do not work as hard as they should, because they enrol for personal development and not because they actually want to become professional tour guides. There were 1,664 licensed tour
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guides in Macau at the end of February, the Macau Government Tourist Office says. “In the past five years, the number of licensed guides has kept rising, making an overall increase of 28.5 percent,” a bureau spokesperson says.
School rules Ms Diamantina Coimbra is the director of the Tourism and Hotel School at the Institute for Tourism Studies. She says there is a high drop-out rate and some graduates quit the industry after only a few months because of the working conditions. Qualified guides do not earn a basic salary and have to work hard to survive. “Every year we train a very large number of people, but not all of them go on to work as tour guides. The students gain all the knowledge we want them to gain but the reality is that when they go to work it’s totally different,” she says. Ms Coimbra says that despite the course’s focus on history, culture and heritage, the working conditions for guides do not allow them to reveal their potential. “The travel agency gets the group with only a very little amount of money and they have to pay for the driver, the hotel and food,” says Ms Coimbra. “So they have to find a way to have everything paid for. How do they do that? By getting commissions from somewhere,” she says. “If you have a group for two hours, you would not take them to the Ruins of St. Paul’s to look at the façade, but to a shop, hoping they might buy something to put some money in your pocket. This is the reality.” Once every three years the law says guides have to come back to the institute to take a refresher seminar and sit a written test to renew their credentials
“Agencies don’t want to hire guides as full-time workers because during the low season they have no money to pay their salary,” says Macau Tourist Guide Association president Angelina Wu
Photo: Luís Almoster
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or work permit. About 400 people attend the refresher programme each year. Of Macau’s 1,600 tour guides, 60 percent are female, 90 percent are freelancers and their average age is about 40 years old, says Macau Tourist Guide Association president Angelina Wu.
‘Very hard work’ Salaries are paid by the hour, according to the languages they speak. “Guides that only speak Chinese will earn a little bit less. If they speak Japanese, for instance, they will get a higher amount,” Ms Wu says. A more experienced guide will earn
MOP200 (US$25) an hour, while less experienced ones earn about MOP800 a day. “Agencies don’t want to hire them as full-time workers because during the low season they have no money to pay their salary, sick leave or annual leave,” she says. Ms Wu was a tour guide for 20 years but also owned a souvenir shop near the Ruins of St Paul’s to supplement her income during the low season. “I enjoyed the job very much but I was not earning enough money and I was always under too much pressure,” she says.
Guides work from 8am to 9pm every day of the week when they are on the job. Ms Wu says that because it is a “very hard work” it is difficult to find new blood. But there are enough professionals to meet the demands of the tourism industry because most tourists do not join tours. The Macau Government Tourist Office says tour guides have been listed in the self-employed category used by the Social Security Fund since 2006, to allow guides easier access to government assistance and help protect the rights of A.L. self-employed guides. APRIL 2013
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Seeing stars Fine dining in Macau lags behind the world’s great cities because it cannot compete for skilled manpower, says a celebrity chef
BY ALEXANDRA LAGES PHOTOS CARMO CORREIA
he shortage of suitable workers hampers every business here, perhaps none more so than restaurants owned by masters of the culinary arts such as Joël Robuchon. The French chef, who has more Michelin stars under his belt than anyone else in the world, told Macau Business in an exclusive interview that fine dining here was developing quickly, but lagged behind fine dining in other cities where he has restaurants, such as Las Vegas and Monaco. Robuchon was in Macau last month to visit to his new restaurant, Robuchon au Dôme, at the Grand Lisboa hotel. Robuchon au Dôme has been open for more than a year, having supplanted Robuchon a Galera at the Lisboa Hotel, which had been open for more than 10 years. In this year’s Michelin Guide, the new restaurant is the only one in Macau with three stars, having inherited the three-star rating of its predecessor. In the Elite Traveller World’s Top Restaurants Guide 2012, the new restaurant is ranked 43rd. Robuchon says much remains to be done. “Macau is developing very, very fast. However, for Macau to be at the same level as other international cities, it has to work more on the people, both in recruitment and training,” he says. “To set up this restaurant, when we started, we had to train a lot of people.” Were it not for a lack of qualified restaurant manpower here, Robuchon says, fine dining in Macau could easily be as good as it is in cities such as Las Vegas. Robuchon has 17 restaurants around the world. He is planning to open three more this year: one in Istanbul, one in Bangkok and the other in Mumbai. He has restaurants in nine cities with an average of two locations per city, but Robuchon Au Dôme is his only restaurant in Macau. And don’t expect any others any time soon. “At the moment, we have no plans to open a new restaurant here because this is actually high quality and it’s important to concentrate on this one, to improve it. I don’t want to create competition between two restaurants,” Robuchon says. “In Las Vegas we had only one restaurant for eight years. It’s going to be the same in Macau.”
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Fitting Stage The Miele Guide recently dubbed Robuchon au Dôme the best restaurant in Asia – better than Singapore’s Iggy’s, which had APRIL 2013
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Robuchon au Dôme’s executive chef Francky Semblat and Joël Robuchon APRIL 2013
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won the accolade a record three times but which is now ranked fourth. Robuchon au Dôme is the only restaurant in Macau on the Miele Guide’s list. The publisher of the guide said the new restaurant provided “a fitting stage for the brilliance of chef Francky Semblat… proving once more that dining is a holistic experience”. Robuchon au Dôme’s predecessor here, Robuchon a Galera, had been a fixture in the Miele Guide’s list of the top 20 restaurants since the guide’s inception five years ago. The guide ranked Robuchon a Galera fourth last year. Robuchon says the Miele Guide is still a novelty and it is too soon to tell what effect its opinions will have on the marAPRIL 2013
ket. But he agrees that Robuchon au Dôme is “more attractive” than Robuchon a Galera, not only because of its food, but also because it is on the top floor of the Grand Lisboa and offers diners stunning views. “I’m very happy because the restaurant is always full. Most of all, we have more and more regular clientele, especially local clients, but also those coming from Hong Kong. If clients come back, it means they like it. Our goal is achieved because we have the loyalty of the local clientele, who we consider diners from Macau and Hong Kong.”
Favoured offspring Robuchon feels that setting up a restaurant is almost like rear-
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Tour of duty
Joël Robuchon no longer does the cooking but he is fully committed to managing his restaurants
hef Joël Robuchon, now 68, retired from the kitchen at the age of 50, having seen stress kill some of his peers. But his idea of retirement is rather unique. Robuchon says he has no hobbies. He says he has no time for hobbies. After he retired from the kitchen, he began opening restaurants around the world that subsequently began to collect stars in the Michelin Guide. Now he devotes his waking hours to taking care of his restaurants. “I have no really free time. I work every day, even on Saturdays or Sundays. I have no days off,” Robuchon says. “I only take two months of vacation per year, in July and August. I spend time in Spain. But this work is very impassioning. I love my work, even if it is too stressful and competitive. I’m fine with that. It’s really motivating,” he says. Robuchon is the only chef in the world with 28 Michelin stars to his name. He won the first two for the Hotel Nikko de Paris, where he was executive chef and food and beverage manager. Robuchon opened the first restaurant of his own, Jamin, in Paris in 1981. The restaurant won its first Michelin star in its first year, its second the following year and its third the year after that. He set up the first Joël Robuchon restaurant in 1994, and that year the International Herald Tribune dubbed it the best restaurant in the world. Today, Robuchon strives to ensure that his restaurants continue to deserve the renown that their Michelin stars give them. “Of course, there is pressure. Even today, after all these years, I still feel the pressure every day. It’s important to take care of the stars,” he says.
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ing a child. So his new restaurant here still needs a lot of nurturing. “We have to grow the restaurant step-by-step to make it better than the old restaurant,” he says. Macau now has more Michelin-starred restaurants than it did before. Robuchon’s new restaurant has three stars in this year’s Michelin Guide. Four more restaurants here have two stars and two others have a single star. “I’ve been in Macau for 12 years now and, of course, there’s more and more competition,” Robuchon says. He says his restaurant has to work harder to maintain the standard of its food and raise it. Macau’s restaurants must now rise to the challenge of satisfying an ever-greater variety of diners. “Before, the majority
Robuchon says the Michelin Guide is the best guide, as it is the most honest. “From the moment we got the three Michelin stars in Las Vegas, the restaurant has always been full. The same happened in Macau,” he says. In managing his 17 restaurants, Robuchon closely concerns himself with the food they serve, which, he says, is the most important aspect. He is keen to maintain the quality of each of his restaurants, because diners expect each to be as good as the others, whether it is in Singapore or Macau. “I go to each restaurant four times per year, for one week. I go there with three or four chefs, people that I know well. For instance, the chef of Robuchon au Dôme has worked with me for 16 years,” he says. To ease the stress that his chefs work under, Robuchon gives them a good measure of creative autonomy. “I’ve known my chefs for a long time. We are a team,” he says. “Of course, chefs are always stressed, but I try to give them some freedom to create.” A.L.
of the clientele was Chinese but now we can see more Western people, from Europe and America. Because of that we have changed our menu a bit,” Robuchon says. “We can compare Macau with Las Vegas. So there is a mix of people who come to the restaurant and the trend is for this mix between Westerners and Asians to continue to increase.” Robuchon is reticent about the profitability of his restaurants. Asked which is the most successful of his 17 restaurants, he says all are equal. But he admits that his oldest restaurants are his favourites, and his restaurant in Macau, although reincarnated with a new name in a new place, counts as one of his oldest. APRIL 2013
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Healthy appetites Future Bright hopes to command a 5 percent market share of the market for food souvenirs ith the number of tourist arrivals climbing to more than 28 million last year, there is a new breed of investor with an eye on the souvenirs that tourists take home. Restaurant operator Future Bright Holdings Ltd is placing a big bet on food. New product lines such as almond cookies, egg rolls and beef jerky have been considered since last year by the company. A statement to the Hong Kong Stock Exchange last month spells out a goal “to tap into this Macau food souvenir market by early 2014”. A marketing campaign in Macau, Hong Kong and Guangzhou will support the new products. Shops selling souvenirs in Macau have enjoyed double-digit growth for a number of years, but Macau Pastry Specialty Association president Alan Ho Hoi Meng warned in October that tourists were tending to spend less on souvenirs. Retailers expected a slowdown in sales last year and there was research underway to improve the appeal of prod-
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ucts destined for consumers with different tastes. Future Bright sees “lots of potential” in souvenir foods “in which there are few major players”. An analysis by the company found the value of the market could represent as much as HK$5 billion (US$644 million) in sales a year, based on an average MOP185 spent by each tourist on food souvenirs in the fourth quarter of last year.
Acquiring tastes Part of the plan to move into food products for tourists has been laid out. Future Bright says it will rent a gross floor area of about 930 square metres to house production facilities. Potential sites in Macau “are currently being identified”, the company says, and it expects they will cost about HK$12 million to 20 million to set up. Recently acquired land in the Macau section of the Zhuhai-Macau CrossBorder Industrial Park will eventually house a centralised food-processing and logistics centre, with some additional facilities for the production of foods for tourists. The centre will be housed in a fivestorey building – with a total gross floor area of about 9,400 square metres. A plan has already gone to the government for approval. Future Bright – whose managing director is president of the Macau Catering Industry Merchants General Association and a member of the Legislative Assembly, Chan Chak Mo – plans to sell its food souvenirs at restaurants and branded shops or counters. The stock market filing says the company’s management plans to be “able to capture 3–5 percent market share of this food souvenir market with-
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Future Bright sees “lots of potential” in souvenir foods in Macau “in which there are few major players”
in the 12 months upon its entry” into the category. An expansion of the company’s industrial catering business is also planned. By July, Future Bright will operate canteen services for the University of Macau at its new campus on Hengqin Island. The company rolled out the catering business two years ago. Its first contract was taking care of canteen services for the Macau Polytechnic Institute. Since last August, it has operated the canteen at the Macau University of Science and Technology, which serves about 9,000 students.
Dinners served The company expects more opportunities in catering are likely, with a hand-
ful of big development projects coming online between 2015 and 2017. Future Bright says it will “continue its current business model to cautiously expand its restaurant chain”, to meet what it predicts will be additional demand from tourists entering the city on the railway between Guangzhou and Gongbei, and the Hong Kong-Zhuhai-Macau Bridge, due to open in 2016. The group plans to open more than a dozen restaurants this year: two at the Macau International Airport; four at the University of Macau’s Hengqin campus, including a staff and student canteen; a number of Macau-style “cha chaan teng” restaurants; and one Shiki Hot Pot restaurant within a shopping complex. Despite higher operating costs, net profit grew 170.4 percent last year to
HK$242.3 million. Greater turnover from the food and beverage business, a one-off gain of HK$11.9 million from ending a lease agreement, and a “net fair value gain of HK$108.8 million on property investment businesses in Macau” helped profitability. Turnover increased 18.7 percent to HK$659.6 million. Turnover from the food and beverage business alone was HK$632 million, also representing a climb of 18.7 percent. The company expects an increase in rental income from its six-storey commercial property in Macau. Tenancy agreements there expire at the end of this year and rental income from the building was HK$14.1 million last year. The group has proposed a final dividend of HK4.5 cents a share. APRIL 2013
Tourism Statistics
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Visitor arrivals Year-on-year change (%)
2012 Total - Same-day visitors - Overnight visitors Average length of stay
28,082,292 14,504,994 13,577,298 1.0 day
0.3 -3.8 5.0 0.0 days
Year-on-year change (%)
Latest
4,689,161 2,459,066 2,230,095 0.9 days
2.1 -1.9 6.9 0.0 days
Notes Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Feb 2013
Visitors by place of residence 2012 Asia - Mainland - Guangdong - Fujian - Zhejiang - Hunan - Beijing - Shanghai - Tianjin - Chongqing Individual visit scheme - Hong Kong - Taiwan - Japan - South Korea - Others America Europe Oceania Others
27,356,924 16,902,499 7,929,668 811,288 620,196 587,904 326,469 505,280 127,635 194,420 7,131,904 7,081,153 1,072,052 395,989 444,773 1,460,458 306,521 262,692 129,165 26,990
Year-on-year change (%)
Latest
Year-on-year change (%)
0.3 4.6
4,580,655 2,982,384 1,402,831 115,944 99,875 84,786 68,927 101,572 21,916 32,194
2.3 7.3
Jan-Feb 2013
-0.7 -13.4 9.2 4.9 13.1 12.5 2.9 12.9 11.8 -4.0 -6.5 -33.3 0.5 -8.9 -6.6 0.7 -13.0 -16.5
Jan-Feb 2013
-3.3 -13.0 7.7 10.2 3.7 7.2 26.9 12.9 8.2 -6.6 -11.8 0.0 11.5 -4.6 -1.3 4.3 0.9 8.6
1,370,758 1,111,963 157,937 47,891 92,048 188,432 42,882 40,783 21,367 3,474
Notes
Jan-Feb 2013
Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013 Jan-Feb 2013
Hotels Hotel and guest-house rooms Hotel guests Hotel average occupancy rate Average length of stay
16.6 26,069 10.8 9,541,397 -1.0 83.1 1.40 nights -0.13
percentage point nights
Latest
Year-on-year change (%)
26,027 16.5 832,543 19.1 percentage 82.9 3.8 points 1.40 nights -0.13 nights
Notes Jan 2013 Jan 2013 Jan 2013 Jan 2013
Visitor expenditure 2011 Total spending (excluding gaming) MOP 45.3 billion - Non-shopping spending - Shopping spending Per-capita spending
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MOP 22.9 billion
22.4 billion MOP 1,619 MOP
Year-on-year change (%)
20 23 16 7
Latest MOP 14.6 billion MOP 7.5 billion MOP 7.1 billion MOP 2,019
Year-on-year change (%)
9 15 3 11
Notes Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012 Oct-Dec 2012
Source: Statistics and Census Service
Year-on-year change (%)
2012
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MGTO OPENS MOSCOW OFFICE The Tourist Office is seeking to tap into a new source of visitors
The opening was scheduled for a peak period of travel shows in the country, the office stressed in a statement, with Moscow hosting three events in the space of 10 days. The Macau tourism office has already joined the Luxury Travel Mart, held on March 14, and the Intourmarket International Travel Fair, which also took place last month.
Photo: Luís Almoster
The Macau Government Tourist Office (MGTO) opened a representative office in the Russian capital Moscow last month. “Russia is one of the most sought-after markets in the world in terms of tourism potential, and for Macau the Russian market is the fastest growing emerging market,” MGTO Director Maria Helena Senna Fernandes said in a statement.
AIRPORT FEES INCREASE
The government has increased the airport’s passenger service and security fees. Starting late April, the boarding passenger service fee will go
up from MOP90 (US$11.25) to MOP110. The security fee will be raised to MOP30, replacing an existing airport fee of MOP20.
REAL-TIME BORDER TRAFFIC NOW ONLINE Real-time information on border traffic at the Border Gate, Outer Ferry Terminal in NAPE and the Cotai borders can now be accessed online via official websites. The information platform will also describe the traffic status in four categories according to the required time for transit: “fast”, which takes about 15 minutes, “busy”, “crowded” and “traffic to be diverted”. For now the information is only displayed in Chinese and Portuguese languages. The English version of the information platform will be ready later this year. The websites are www.fsm.gov.mo/m and www.fsm.gov.mo/psp/.
Transit and transfer passengers are exempted. Only passengers aged above two years old will need to pay the new fees.
AIR MACAU POSTS RECORD-HIGH PROFIT
Air Macau Co Ltd profits reached a historic high of CNY229 million (MOP286 million) last year. According to the annual report of major shareholder Air China Ltd, this represents growth of 8 percent, up from about MOP250 million in 2011. Air Macau’s income from air transportation increased by 12.9 percent to CNY2.3 billion. The state-owned airline holds a 66.9 percent stake in Air Macau.
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102 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com
Games people play GRAND THEFT AUTO IS TAME; WAITING ON TABLES GRACIOUSLY WILL GET YOUR HEART PUMPING
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usiness should be fun. Making business fun can win more customers and help keep them for longer. And the way to make business fun is “gamification” or turning something that is not a game into a computer game. The key is reverse engineering what makes computer games effective and using it in your business. It is especially applicable to employee training. None other than the executive chairman of Google Inc, Eric Schmidt, said: “Everything in the future online is going to look like a multi-player game.” Companies such as Nike Inc, American Express Co, Microsoft Corp and Major League Baseball have used “game thinking” to increase customer and employee engagement and retention. In training, employees retain information and skills they acquire through game-based learning better than information and skills acquired through more conventional learning. With imagination, gamification and game-based learning can be used in many areas of the corporate world, such as product launches, service concepts, best practices, and the orientation and training of new employees. Computer games are still often dismissed as a fringe activity, of interest only to a small number of enthusiasts. So gamification may not be a helpful name. The word “game” means different things to different people. Usually, the word is associated with frivolity that has little or no productive purpose. But that is not what gamification is about. Gamification means using the mechanics of computer games in a serious context to engage players and solve problems.
purpose and the players must have one or more goals. The game must have rules and restrictions, and working within these limitations must motivate employees to face up to challenges by thinking creatively and strategically. Another important element is recognising the player’s actions and rewarding them, for example with scoreboards, scores, badges or prizes. And, most important of all, the players must be given feedback. Everyone needs feedback to tell us how near we are to reaching a goal. By following these principles and building motivation into all aspects of corporate culture, companies can achieve amazing results. A recent survey found that more than 500,000 people around the world play computer or video games for at least one hour a day. One-fifth of them are in China. It found that 47 percent of gamers are women. The results of the survey indicate that by 2015 half of all global organisations will be using gamification as their primary method of training employees. The results also indicate that by 2015 the global gamification market will be worth US$2.5 billion (MOP19.99 billion), and that it will double in size between 2012 and 2016. In the computer game industry, the main impetus for change comes from the “socialisation” of computer games, the result of playing online and the proliferation of portable electronic devices. This means training games can be played anywhere, at any time, becoming part of people’s lives. As telecommunications technology continues to evolve, new platforms, channels, and devices will redefine how companies use electronic media and their content.
Virtually real
Well played
For the game to be effective, employees must agree to take part. One important principle is that the game must have a
As a designer of training programmes for the hospitality industry, my approach is to use the best technology available and apply the principles from emerging trends to increase awareness among employees, encourage them to collaborate, help them to keep on learning, and improve their skills and lives. Some training games that employees regularly use are more complex than some of the most complex casino computer programs, but nobody has yet needed to be trained in how to play them. People learn how to play them just by playing them. The hospitality industry should consider using computer games to educate and train their employees. My company is about to launch an application for training hospitality and casino industry employees. The Macau Government Tourist Office is interested in the application because of its versatility and its ability to be used by many employees at once, which reduces the need to gather them together time after time for meetings or training sessions. The app saves time and money, and most of all encourages employees to take an active part in the development of their skills. Very soon Macau will have better-trained employees, whose service will be as outstanding as the service in any worldrenowned destination for international tourists. I look forward to it.
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Business
Design by Barbara Silva Dias | photo ﾂｩ Kester Celestino
RICHES IN RAGS
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More designers are heading here and making a go of the rag trade, perhaps heralding a new dawn for the fashion industry
BY LUCIANA LEITﾃグ
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hose who work in it, say the fashion business here is still in its infancy. Fashion items are difficult to produce and Macau is not such a big market. Yet more and more people are coming to Macau to work in the field, and this may give the business new impetus. Lines Lab is one of the most established fashion houses here. It has been growing since its inception in 2006, constantly adjusting its strategy to suit the market. That is why it is now less of a boutique, and more of a studio for the creative talents of founders Clara Brito and Manuel CS. They now like to produce more, and to produce it more regularly. “We now do distribution to other shops, so we’ve lost contact with clients in order to be able to launch two collections per year,” says Ms Brito.
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One of the problems the fashion business has is a lack of factories, which means creators of fashion must find them in the mainland. And mainland factories usually demand a share of what they make. However, Lines Lab now has a handle on these problems. “At this point we already know how the factories work,” Ms Brito says. This leaves the creative duo free to invest more time and money in their collections and to increase their turnover. Lines Lab is not the only fashion house getting more business. Ms Brito says foreigners and returning Macau expatriates are giving a new boost to the world of fashion here. “These people bring a new input to the city. It allows us to also be better in the way we manage our projects.”
“There are now more channels for designers to show their products,” says Clara Brito, founder of Lines Lab
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105 One returned Macau expatriate is Barbara Silva Dias. Ms Dias came home after studying in Britain, Italy, Thailand and Hong Kong, and went on to design the uniforms that the Air Macau cabin crew now wear.
Shades of grey Ms Brito says newcomers need time to get organised and to build their own networks, but they are getting there. She says greater competition brings greater quality all round. The Macau Productivity and Technology Transfer Centre organises events such as Macau Fashion Link and the Macau Fashion Festival, giving designers more opportunities to show their collections, and making them more visible to potential customers. “There are now more channels for designers to show their products,” Ms Brito says. The only institution here offering education in the field of fashion is the Macau Productivity and Technology Transfer Centre. The centre has a course leading to a diploma in fashion design and manufacture. One graduate of the centre is San Lee. Mr San has been in the business for only five years but he already has his own fashion label, ZICS, and loyal customers. He has a singular style, usually using only three colours in his designs: white, black and grey. He says it is hard to get more customers because it would require greater investment in production capacity. So his fashions are limited editions – and expensive. “Not a lot of locals buy high-end fashion and pay a lot to dress themselves,” Mr San says. All this means being a designer is only a sideline. “I’m working for an architect and I do fashion design part-time,” he says. Two years ago Mr San opened a shop in the Sun Star City shopping mall, where he displayed some of his designs. But the high rent and running costs meant the shop was not a paying proposition. He closed it. “Maybe the prices were not right. Also, there were a lot of competitors,” he says. Mr San now launches one spring and summer collection a year, usually in October during the Macau Fashion Festival event. Production is always a problem and he is constantly changing sewing workshops here.
“Not a lot of locals buy high-end fashion and pay a lot to dress themselves,” says San Lee, local fashion designer
Bags of money Sofia Bobone from Portugal, co-founded the Macau Banner Bag label in 2005, responding to a challenge laid down by the other co-founder, Miguel Quental, who wanted to recycle advertising banners. Ms Bobone insists that she is a graphic designer by vocation rather than a fashion designer, and that she started the business just to help protect the environment. The original idea was that companies would give their old PVC advertising banners to Macau Banner Bag, which would make them into bags for use as corporate giveaways. The trouble was that companies just could not cotton on to the idea, Ms Bobone says. “We decided to move on all the same,” she says. Macau Banner Bag went ahead with whatever old banners it could get its hands on and began making handbags and purses for sale to the general public. It launches one collection a year, always on World Environment Day. The business has some regular customers, most of them expatriates. “Portuguese like it. So do the Australians,” Ms Bobone says. Macau Banner Bag has no shop of its own but
“The market is small and people don’t want to look alike in Macau,” says Sofia Bobone, founder of Macau Banner Bag APRIL 2013
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Local graphic designer Aoman is not thinking of expanding from bags into clothes because “they do not pay” sells its products at the Portuguese Bookshop and occasionally at fairs held by the Macau Government Tourist Office. A common theme, production is a problem. “The market is small and people don’t want to look alike in Macau,” Ms Bobone says. So Macau Banner Bag orders only about 100 examples of each design.
Designers’ nursery
The CPTTM has created its own fashion label, MaConsef, to provide opportunities to potential fashion graduates APRIL 2013
Small production runs are unprofitable for bigger mainland factories and since Macau Banner Bag provides the bulk of the raw materials, their scope for making a profit is diminished. To overcome the reluctance of mainland factories to accept orders, Macau Banner Bag is considering using materials other than old PVC advertising banners. But the business will still use only recycled materials, Ms Bobone says. Aoman, who goes by only one name, is another graphic designer who has turned her hand to making handbags and purses. Ms Aoman has two shops in Sun Star City. One, A02, sells casual bags. The other, Anais, sells formal bags. She launches two collections each year, each time lining the bags with different materials and patterns. Ms Aoman is interested in fashion in general but is not thinking of expanding into clothes because they do not pay. “I would need to invest more money,” she says. Clothes require more creative work and a greater production effort, which she does not have time for, as she works as a teacher during the day. Besides, handbags are not as vulnerable as clothing to changing fashion trends, she believes. Fashion designers are eligible for support from the government’s aid scheme for small and medium enterprises. The Macau Productivity and Technology Transfer Centre says it helps fashion designers by letting them use equipment for making clothes, printing fabrics and sewing embroidery. The centre said in a written reply to questions from Macau Business that it launched its own fashion label, MaConsef, in 2008, to “provide opportunities to potential fashion graduates”. The potential graduates are chosen from students taking the centre’s diploma course. At present 16 of them make designs for the label. MaConsef is not a commercial venture. What it does is show collections designed by the students. It has shown their designs at the Taipei in Style, Hong Kong Fashion Week and Macau Fashion Festival events.
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Consuming passions
he Richemont Group is looking healthy, says its chief executive in the Asia-Pacific region. Alain Li tells Macau Business that the group is benefitting from the strength of its portfolio of brands and the buying power of its customers in Asia. Compagnie Financière Richemont SA of Switzerland and its subsidiaries make high-end goods. The group’s brands include Cartier, Montblanc, Piaget, Shanghai Tang, Vacheron Constantin and Van Cleef & Arpels. The group’s sales in the fourth quarter rose five percent year-on-year to US$3.8 billion (HK$29.5 billion). Analysts had expected sales growth of 7.6 percent. Sales growth fell short of expectations mainly because of the group’s performance in Asia, particularly in China, where sales were flat. The Asia-Pacific region is Richemont’s most important market, accounting for 40 percent of sales. Mr Li would not be drawn on the group’s performance in Asia. “Business is still in a very healthy situation in this part of the world,” he says, adding that the dip in sales for the Asia-Pacific region has not changed the group’s strategy. “Of course, there are new customers, new markets and I think if we look more at the macro signs or the demographics of this part of the world – China, but not only China, other parts of Asia – then we can expect more people to enter into the luxury market.” Mr Li says Richemont is not afraid of competition, as there is room in the market for high-end goods for all – even for new Richemont group brands. “There is more competition but, at the same time, more customers,” he says. A study by HSBC Plc last year found that Chinese consumers made up one-quarter of the market for expensive brands, having made up only 10 percent three years earlier.
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The Richemont group’s chief executive in the Asia-Pacific region, Alain Li, is optimistic about growth despite slower-than-expected sales BY LUCIANA LEITÃO
Photos: Carmo Correia
Cautious buyers The group’s marketing efforts carefully target would-be consumers. Mr Li says the group has invested “very heavily” in sales support. It has customer service centres in Beijing, Shanghai and Macau. The group has opened a Richemont Retail Academy in Shanghai. “It’s the front end of our operation. We don’t distinguish between different markets – brands are global – but what we do to support [them] has to do with the evolution of the market, maturity of the market and future potential growth of that market,” Mr Li says. APRIL 2013
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Two years ago the group established the Institute of Swiss Watchmaking in Hong Kong, and more recently also in Shanghai, where students take a twoyear course certified by the Watchmakers of Switzerland Training and Education Programme. “We can train people locally to sell in our shops, and to open new shops, and to be able to service our growing customers in the mainland,” Mr Li says. The decision to set up the facilities is designed to cover the shortfall in sales staff, the result of rapid growth that has pushed staff without experience onto the frontlines. Skilled watchmakers are also in short supply. “There are not a lot of home-grown watchmakers and there is no-one training them,” he says. Mr Li believes Chinese customers are now more knowledgeable about expensive brands and are starting to make the most informed decisions when they buy high-end goods. “A lot of the Chinese consumers do extensive research before they make a decision,” he says. The Chinese-language websites for each of the group’s brands help customers make up their minds. “Through travel and through the amount of information readily available, Chinese people are very keen to learn and study. Definitely the knowledge is extremely high in China today about our products,” Mr Li says. He says the high-end goods that sell well in Europe sell well in China, too. “I wouldn’t say there is any significant difference in terms of products that are successful in China or in Asia versus other parts of the world,” he says. The main difference, he says, is in the age of the customers and what motivates them to buy.
Travellers’ travails Richemont recently added Net-a-Porter and Peter Millar to its portfolio, bringing the number of brands it owns to 20. Some are more than 200 years old. “Of course, not all of them are present in China, but most of our brands entered Asia and specifically China very early on,” Mr Li says. Mainlanders must still travel if they wish to buy certain Richemont group goods. “Purdey, that makes shotguns for hunting, only have one shop in London. While Net-a-Porter, for instance, has just launched a shop in Hong Kong,” Mr Li says. APRIL 2013
One Richemont group brand has established a partnership with a regional agent to increase sales. Watch brand Baume & Mercier has a joint venture with Chow Tai Fook Jewellery Group Ltd so it can exploit Chow Tai Fook’s knowledge of the market in the mainland and its distribution network there. “We hope we can continue together and grow Baume & Mercier in China,” Mr Li says. He says the agreement is a unique one, with no further collaborations planned for the time being. “We’ll see. There are no plans to do that yet. It’s very early days for us,” he says. Makers of high-end goods have been particularly successful in the territory. “It is down to, of course, the infrastructure of Macau in terms of being a tax-free
area. Secondly, the demographics, with the opening up of Macau to people in the mainland. So we see the numbers increasing every year,” Mr Li says. The liberalisation of the gaming market here created a favourable environment for sales growth of expensive brands. “We have a number of our brands already with operations in Las Vegas, Monte Carlo, so we already have a bit of experience in operating in that kind of environment,” Mr Li says. He believes the new casino resorts in Cotai and development of the meetings, incentives, conventions and exhibitions market will mean more business for the Richemont group. All in all, Macau still has a lot of potential, he says, giving him every reason to be optimistic about the market here.
109 ANDRÉ RIBEIRO CONSULTANT AND EXECUTIVE COACH - andre@extracoaching.com
What is executive coaching? COACHING MIGHT PROVIDE THE KEY TO UNLOCKING THE POTENTIAL OF SOME MACAU EXECUTIVES
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xecutive coaching is a flourishing field that has become ever more widely known and ever more in demand. The thinking behind it is simple. Just as a personal trainer helps people achieve physical fitness, an executive coach will challenge an executive and support him to achieve results at work. A coach will employ a range of structures, models and methods to obtain results. One powerful attraction of coaching is that it makes the client commit to developing his potential and attaining his goals. The coach is a sounding board, a challenger to a client’s thinking, can help stimulate creativity, provides tools and techniques to deal with problems and gives feedback. Coaches can work with managers and executives at any level within an organisation, with an individual seeking growth and development. Most clients are sponsored by their organisation and could be initiated by the company or by the manager. The process will potentially involve similar training and development activities that a group undertakes, but coaching is a one-on-one practice, not a group activity. At the first meeting a coaching process is agreed upon. After that, the process usually lasts from six to 12 months. Coaching can take less time when there is an urgent, defined need.
Game changing A coach will identify objectives and define the results a client is prepared to commit to achieving. An assessment follows. It defines where the client is at, with a view to showing the gap between where they are and where they want to be. The organisation can contribute with an initial briefing. The process is always confidential. It is tailored to suit the
individual needs of the executive and the collective needs of the sponsoring organisation. Most companies use coaching to develop the capabilities of high-potential executives or to facilitate transition. There are some common themes among clients. They may want to propel the company to the next level, better manage time spent at work and away from it, improve performance at work, or prepare for a new role or learn techniques to cope with promotion. The coach works with clients to identify factors keeping them from achieving results, and builds an action plan to help them achieve their objectives. The costs vary according to the experience of the coach and the process, and can fall anywhere from MOP2,000 (US$250) a session to MOP20,000 a session. Coaching is effective in times of change, such as being promoted or managing a special project. In these situations, a coach can assist in developing the skills needed for a new role or situation, and measure, monitor and support their client to make sure they stay committed and take consistent action to guarantee results. To offer some real-life examples, processes might include: succession coaching in a family-owned, multinational wine company; coaching at an Internet consultancy; coaching a newly appointed chief executive of a global marketing services company; or developing high-potential executives at a telecommunications company. Executive coaching is in its infancy in East Asia but it appears to be creating a space for itself in the Asian corporate landscape, particularly as multinational organisations expand.
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Human Resources
A desirable The more Portuguese who apply for residence in Macau, the longer they have to wait to get it BY LUCIANA LEITﾃグ
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ortuguese now have to wait much longer than they used to when applying for residence here. Just a few years ago, an application for residence would be handled within three months. It can now take up to 12 months to hear if an application is successful or not. Lawyer Icﾃｭlia Berenguel thinks it takes longer because more people are applying and more submit incomplete applications. Figures from the immigration department of the Public Security Police show that in the past three years, the number of Portuguese applying for residence has increased by almost 50 percent. In the first
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111 two months of this year alone, 73 applied. Since 2011, the authorities have rejected only one application, because the applicant failed to meet the requirements. Mrs Berenguel says that regulations governing residence in Macau confer particular advantages on Portuguese or Chinese passport holders, as the regulations only mention these nationalities. Most Portuguese can get a temporary resident identity card if they are employed by a Macau company. They can get a resident identity card if they marry a permanent or temporary
The economic slump in the euro zone means more Portuguese are looking for work here
resident, or have cohabitated in a defacto relationship with one for two years or more. Portuguese can also apply for residence on the grounds that they have relatives here, or have a link to the city, having studied, lived or worked here. An application for temporary residence must be certified by a sponsor, who must be a permanent resident. After seven years here, a temporary resident can apply for permanent residence. Until recently, gaining temporary residence was quick and easy. But as the number of applications has increased, the process has become slower and more difficult. Most Portuguese working in Macau have residence status. But there are also many Portuguese holding work permits for imported labour, or blue cards. A blue card allows the holder to remain in Macau only for the duration of his or her employment contract. “I know many Portuguese with a blue card,” Mrs Berenguel says. “They are people with no specific technical qualifications, or with no certificates attesting to their qualifications.” The immigration department issued six blue cards to Portuguese in 2011. Last year it issued 17 and so far this year it has issued 24. At present, 36 Portuguese still hold blue cards. The economic slump in the euro zone means more Portuguese are looking for work here, so more are applying for residence. Macau Business asked the immigration department to clarify how long the process takes but did not receive a reply. Mrs Berenguel says it now takes five months, on average, but once took as little as three months.
Anxious wait Adriana Lucas had to wait one year for her Macau resident ID. She arrived 18 months ago to work in a casino resort, under the auspices of an internship programme run by the Portuguese government. When Ms Lucas’s internship finished, she was offered employment as an events executive and immediately applied for residence. “I filed the papers in June. I had a sponsor and everything else,” she says. Ms Lucas had heard that usually Portuguese applicants had to wait two months. She ended up waiting 12 months. As time dragged on, she be-
came concerned. “Someone suggested that it had something to do with the salary, that people earning more than MOP20,000 [US$2,500] would have a faster response,” she says. Ms Lucas’s job was never in peril. She had her blue card, which could be renewed with or without residence. But her boss was anxious to know the outcome, in view of the government’s curbs on imported labour.
No free ride Video director João Luís’ case is slightly different. “When I arrived to Macau, I already had a promise of a contract and I started off with a blue card,” he says. A month and a half month later, he applied for residence. “It was an easy procedure. I presented all the necessary documents. And then I waited for eight months.” In all that time he heard nothing about the progress of his application. He eventually got his resident ID, just one month before his blue card was due to expire. Ms Berenguel says incomplete applications, lacking the necessary supporting documents, are slowing down the government and extending the time it takes to process an application. And the applicants who have to wait the longest are those who apply on grounds that do not fit the mould, whether the grounds are that they have jobs here or that they have relatives here. The more straightforward your circumstances, the quicker you get your Macau resident ID. But Ms Berenguel says she thinks it is unreasonable to hustle the authorities to grant straightforward applications swiftly when they are flooded with less-straightforward or incomplete applications. She does not believe politics are at play, causing officials to drag their feet or reject applications. In other words, the government is not over-compensating for some sort of colonial cringe induced by the sight of yet another Portuguese. “If that were the case, how do you explain that most of the marriages and family reunion cases are approved?” she says. If fault is to be found it is not to be found in the attitudes of the authorities. “Some people think that just because they have a Portuguese passport they are able to reside in Macau. It is not so,” Mrs Berenguel says. APRIL 2013
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Society
Modern poverty Subsidised groceries help Macau’s working poor put food on the table, while charities tend the scars BY LUCIANA LEITÃO
ith inflation accelerating last year, a new type of poverty has emerged. These working poor do not qualify for government subsidies or food from Caritas’s food bank, but they cannot get by on their wages. Grassroots associations and trade unions have been behind the establishment of welfare shops popping up around the city. Some observers doubt that welfare shops are a complete answer to this new type of poverty, while others see the subsidised grocery stores as a way to buy votes. Government assistance is available to people living below the subsistence level. The Social Welfare Bureau says an individual needs a minimum income of MOP3,450 (US$432) a month to survive and an eight-member household needs a combined monthly minimum income of MOP16,150. In 2011, the government set the level at MOP3,000 for individuals and MOP14,350 for an eight-member household. Rises in the cost of fresh food and
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eating out meant consumer price inflation was 6.11 percent last year, diminishing the buying power of even those living above the subsistence level. It prompted the Holy House of Mercy of Macau, which is often referred to by its Portuguese name Santa Casa da Misericórdia de Macau or SCCM, to open a welfare shop at the SCMM Rehabilitation Centre for the Blind, next to the Macau Canidrome. The shop targets households that fall outside the criteria for government aid or for food from the Caritas Macau food bank. Its main beneficiaries are single-parent families or households with elderly, ailing or handicapped members.
Socially obligated The shop offers donations on the first Saturday of each month. It opened on February 2 and handed out household hampers to 212 households. The hampers contained basics such as rice, cooking oil, infant formula, canned food and cleaning materials.
The Macau General Union of Neighbourhood Associations and the Macau Federation of Trade Unions selected at least 200 of the households that received the hampers. “The criteria are very varied. You can have, for instance, a couple earning a total of MOP30,000 that are raising five children that go to school,” says SCMM head António José de Freitas. Each hamper has a retail value of between MOP700 and MOP1,000. The organisation has enough contributions from individuals and companies, including all the casino operators, to ensure that it can hand out hampers for the rest of the year. “It’s important that in Macau we have this mutual aid environment between the different communities, and it is very healthy to see that there are companies (concessionaries and others) that want to play their role in society or fulfil their social obligations,” Mr Freitas says. The group plans to have a different sponsor for its handouts each month.
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Bank of China Ltd sponsored the first handout and Sands China Ltd the second. “At least we help 200 families a month. So, if to each family we give a hamper that costs between MOP700 and MOP1,000, it means we’ll spend on average each month MOP180,000,” Mr Freitas says. He expects to spend around MOP2.2 million this year. The beneficiaries are not necessarily the same households every month. The Macau General Union of Neighbourhood Associations and the Macau Federation of Trade Unions decide who benefits.
Taking care Mr Freitas believes one welfare shop is enough, considering that Caritas Macau is already helping the poor with its food bank. “This welfare shop is a complementary structure for those that were left out of the food bank programme,” he says. As inflation diminishes buying power, the charitable organisation is not the only body helping out households in financial strife. Mr Freitas says the Macau Federation of Trade Unions has opened a supermarket in the north of the city which sells goods to eligible shoppers at discounted prices. “You have a ticket and you have to present it to be able to shop there,” he says. A member of the Legislative Council, Chan Meng Kam, has opened other, similar supermarkets.
The SCCM’s shop targets households that fall outside the criteria for government aid or for food from the Caritas Macau food bank Caritas Macau secretary-general Paul Pun Chi Meng says those in need must be helped. “In the old days, we had initiatives run by foreigners, with overseas contributions. Now it’s good that local people take action,” he says. Caritas Macau set up its food bank in cooperation with the Social Welfare Bureau, which donated MOP10 million to cover the expenses for two years. The food bank is for the unemployed, the homeless and people that receive no subsistence allowance from the government. Social Welfare Bureau data shows the food bank helped 1,214 families in 2011 and 1,295 families last year. At first, beneficiaries could use the food bank only once, after which they had to seek help elsewhere. Beneficiaries may now use the food bank twice. Mr Pun says more people are experiencing financial stress, creating real, greater mental stress. Welfare shops and the food bank take care of the financial problems, leaving Caritas Macau to con-
centrate more on relieving the health impacts. “Besides the food bank, we can provide further, psychological, support. We have received about 13,000 phone calls from citizens. More than one-third are facing emotional problems. They are not hungry,” Mr Pun says. “We have to take care of people from the psychological standpoint, so that they learn how to live better and solve their problems without further support from other individuals, non-governmental organisations or the government.”
Debts of gratitude Macau Polytechnic Institute social work lecturer Leung Kai-yin fears that some welfare shops may be used to buy votes in this year’s elections. Mr Leung says long-standing social conventions will mean that some beneficiaries may return the favour by voting for their benefactors. “They give discounts or advantages to people, especially old people, who think it is a good thing, so they may end up voting for the person in charge,” he says. “The elderly usually think they should be loyal to institutions.” The Social Welfare Bureau aids individuals and households living below the subsistence level. Last year the government gave subsistence allowances to 10,505 individuals, 609 fewer than in 2011, and to 5,930 households, 267 fewer than in 2011. APRIL 2013
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Corporate Social Responsibility
Shouldering the load The emerging practice of corporate social responsibility is all about burnishing brands and company reputations BY CHERRY LEE
orporate social responsibility (CSR) has been in fashion for decades in developed countries, but the concept has been adopted in Macau only in the past few years. The economic slump that followed the international financial crisis of 2008 had social costs, which led to widespread public handwringing. Since then, Macau enterprises have become more aware of their obligations and have begun to shoulder their share of the burden of social responsibility, according to Fanny Iu, Bank of China Ltd’s head of wealth management. Ms Iu says the liberalisation of Macau’s gaming market and the economic boom have fuelled corporate social responsibility efforts. “Macau people are getting richer but not all residents are enjoying the benefits of the economic boom. And we really want to help those in need,” she says. Carlos Noronha, an associate professor of business ad-
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ministration at the University of Macau, is an authority on corporate social responsibility. Mr Noronha says dispensing charity was once widely perceived as the only way for corporations to demonstrate how socially responsible they were. Paul Pun is the head of the charity organisation Caritas Macau. “Two to three decades ago, it was we that usually contacted the companies first. Most of the companies were willing to donate some money to charities like us, but they would ask us to put their names on the list as a favour,” Mr Pun says. “In the past, the CSR behaviour of local companies was limited to donations and related charitable activities. But nowadays things have changed, and local enterprises are much more active in promoting CSR activities,” he says. Community service and voluntary work are the most common ways for companies to show social responsibility. Large
enterprises usually form their own teams of volunteers and arrange a variety of activities such as visiting the elderly, visiting children’s homes or making handicrafts with the mentally handicapped.
Give to get Ms Iu says that of the 1,300 employees of the Macau branch of the Bank of China, 600 do volunteer work, giving up their spare time to serve the community. “Employee participation in community service is strongly encouraged,” she says. “We want to make [the beneficiaries] feel the love of society and let them know that they are never isolated, especially during festivals.” The company is rewarded with employees with broader horizons that better appreciate their own good fortune and are happier after helping others. “It is a win-win situation, and sometimes we get more than we give through taking part in the activities. Sometimes we tend to complain about our lives, but our situation is no worse than a lot of people’s, and it is within our capacity to help,” says Ms Iu. Cooperation among big companies in the practice is rare. Instead companies prefer to demonstrate independently how socially responsible they are. Big companies tend to turn to charitable bodies such as the Fuhong Society of Macau and the Tong Sin Tong for help in reaching people in need. Companhia de Telecomunicações de Macau SARL (CTM) spokesperson Eliza Chan says: “They have a mature network, which enables us to maximise our resources to reach more people in need.” Staff from CTM and The Venetian Macao make monthly visits to the elderly, or enjoy outings with them. Both companies outsource work to charitable bodies such as packaging or the distribution of leaflets. “The mentally handicapped are capable of handling those tasks and they are usually very responsible. Besides, it can also relieve the labour shortage,” says Ms Chan.
Growing concern The Venetian relies on the Macau Special Olympics group to help it to find employees among the disabled. The Sands China Ltd-owned casino employs disabled people to do a variety of jobs, ranging from photocopying to delivering mail. The tasks given depend on the employee’s abilities and the advice of professional instructors. “It is beneficial for the disabled to work in the world outside rehab centres,” says Sands China spokeswoman Melina Leong. “They usually work four to five hours per day, due to their physical limitations, but we always regard them as team members.” Ms Leong says The Venetian has made big donations to charitable bodies since 2004. “To make sure the money goes to the right place, we have always worked with government-registered organisations, and we require a detailed report afterwards,” she says.
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Paul Pun from Caritas says that nowadays local enterprises are much more active in promoting CSR activities
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Corporate Social Responsibility
In the past few years small and medium enterprises (SMEs) have also been keen on showing how socially responsible they are. The director of the Fuhong Society, Jennifer Chau, says: “Although they may not be able to support us financially, some of them are happy to offer us technical support.” An example was an offer to help the Fuhong Society to set up a small laundry where it employs the mentally handicapped. “An old couple, who used to run a local laundry shop, offered to teach our staff how to run the business when they learned about our project,” Ms Chau says.
The government does not require corporations to be socially responsible, however most big companies are eager to show how responsible they are
Greener shade Being socially responsible is not simply a matter of being charitable, says Mr Noronha. “Macau people are more concerned about issues such as environmental management, sustainable development of society, as well as labour issues,” he says. Thus, some enterprises are beginning to shoulder their social responsibilities by doing more relevant deeds, such as offering health care or holding environmental protection seminars. The government does not require corporations to be socially responsible, however most big companies are eager to show how responsible they are. “Large enterprises are rich in financial resources and labour, but small and medium enterprises cannot afford it,” Mr Noronha says. He says the primary purpose of CSR is to burnish brands and corporate reputations. “For example, gaming industry players are aware of the social problems that they create, and launch responsible gaming programmes or promote this concept to their guests in order to address community concerns, to minimise the negative impact on Macau society,” he says. Mr Noronha says some Macau subsidiaries follow the CSR policies of their parent companies in the mainland or other countries, where such policies are usually more mature. He says some companies with business that depends on government concessions may put more effort into appearing socially responsible when the concessions are up for renewal. Companies are paying more attention to the environment these days, and most make environmental protection part of their effort to show that they are socially responsible. For instance, they endeavour to conserve water and energy, and to separate their waste.
Charity at home The vice-president of facilities at Sands China Ltd, Mike Naylor, says that by making more efficient use of its air-conditioning system and by using LED lighting, The Venetian has cut APRIL 2013
its electricity bills by 50 percent. The casino resort intends to install a device that takes all the water out of its kitchen waste, to reduce the volume of the garbage. As for separating waste, Mr Noronha says: “The waste separation system is not fully developed in Macau. Waste separation dustbins are to be found everywhere, but all kinds of rubbish is lumped together when it is sent to the trash company.” The scholar also says that not all companies can afford the devices that they need to go green, least of all SMEs. Some companies count the welfare of their employees as a social responsibility. Many invest in training their employees and giving them career paths to follow. The purpose is to give employees a sense of belonging and to build loyalty to the company. “Work-life balance, career development, further study programmes and creating a harmonious working environment are all essential for employees’ welfare,” says Mr Noronha. Companhia de Electricidade de Macau SA spokeswoman Cecilia Nip says: “Our human resources department recently hosted a seminar with Caritas to teach employees how to release work pressure.” CTM spokesperson Eliza Chan says the company has a career development team. “Both in-house training and training outside are provided for our employees. Language and IT training are the most popular, but employees can also bring up new ideas as long as the courses are beneficial for their careers or lives,” she says. About 34 percent of The Venetian’s employees are expatriates, coming from 59 countries. To avert cultural friction among its employees, the casino resort gives centre stage to a different nationality each month. “For example, the canteen will have a special section serving Thai food during Thai cultural month, and we put up posters to disseminate knowledge of Thai culture,” says Sands China’s Ms Leong.
Arts & Culture
Studio hunting
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Artist Konstantin Bessmertny is thinking of moving his studio to Hong Kong because Macau has become too expensive BY LUCIANA LEITÃO
fter two decades of living in Macau, and having moved his studio 12 times, Russian artist Konstantin Bessmertny is tired – tired of the continual increases in his rent and the property squeeze here. Bessmertny, probably the city’s best-known international artist, is now looking at different studios in Macau, but, for the first time, also in Hong Kong. He has not yet made a final decision. Bessmertny came to Macau 20 years ago after being invited here time after time to exhibit. Most notably, his work was shown in an exhibition of contemporary Russian art held here and in Hong Kong. He chose to live in Macau because of its location, its blend of East and West, and because it was easy to live here. “It was so good for artists not to waste money on rentals, as in New York and Paris, just to be living here, working,” he says. But since then things have changed, and Bessmertny does not believe they have changed for the better. “I see how different Macau has become; how many problems Macau is facing; the speed of construction; investment and tourists,” he says. Bessmertny uses various media – his work includes sculpture
Photo: Carmo Correia
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Photo: Carmo Correia
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“I refuse to talk about the formula of sucess,� says Konstantin Bessmertny
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119 and installation art – so whenever he has to change his studio, the move is fraught with difficulties. “I’ve changed 12 times, five times because I wanted to improve conditions but most of the times I was asked to leave,” he says. After only one year in his present studio, he has been asked to leave. It was the moment Bessmertny realised Macau had lost its advantage over Hong Kong. “Macau was never an art market but was a great place to have a studio,” he says. Macau has only about 100 industrial buildings. Bessmertny was born in the eastern Russian city of Blagoveshchensk, near the Chinese border, in 1964. He attended the school of fine arts there. He completed his formal education at the Institute of Fine Arts in Vladivostok, where his work was shown in several exhibitions of contemporary Russian art.
Art workouts During his 20 years in Macau, Bessmertny has also stayed in the many homes he has around the world. Part of the year he works in Alcobaça in Portugal and, from time to time, he also works in Moscow. He believes it is impossible for him to choose just one place to live in and, even if he could, his work would require him to travel. “I don’t believe in this corporate life, because an artist needs to concentrate,” he says. Bessmertny likes Alcobaça because of the light there and its people. He likes Russia because it is his home country. “There is now more and more hope, with the changes occurring,” he says. He considers Macau a comfortable crossroad, with easy connections to the rest of Asia. Bessmertny may decide to stay in other parts of the world, depending on the work opportunities. He is now preparing for an exhibition in London in September, which will require him to spend a certain amount of time there beforehand. Bessmertny’s art mixes irony and sarcasm with music, literature, history, politics and current affairs, but always with a certain sensitivity. His latest way of approaching his art is a good example of how he works. Since last year he has been in the habit of doing a sort of creative stretching exercise before getting down to the real thing. “Every day, since September 15, I do one work, which is a warm-up before working in the studio,” Bessmertny says. APRIL 2013
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After two decades living in Macau, Russian artist Konstantin Bessmertny moved his studio 12 times
He even sold a few of these “warmups” at the London Art Fair, and now he will probably take others to sell at future exhibitions. Each piece is just a fragment, a seed of something greater.
Snakes and poodles Bessmertny always has a bit of fun. He points to one of his “warm-ups”. “In this one, Picasso is putting on his pants, after satisfying the lady he just painted,” he says. Some of these works required research. Others are the result of ideas that just popped into his head. “My favourite one is this image of Brezhnev calling the Soviet Union, surrounded by James Bond girls,” he says.
Bessmertny has yet to make up his mind about what to exhibit in London in September, but he says that, along with other works, he may take a set of his daily “warm-ups”. He is also thinking about street installations. His favourite medium is oils, even though he thinks it is the hardest medium. “You need to wait for oils to dry but it’s still my favourite. I study it and practise it all the time. And I believe in it.” Another advantage, he says, is that oil paint better withstands the passage of time. But he also uses several other media, such as collage, sculpture and installations.
A thread of dry humour runs through his work. He tells a story of how his poodle lost one eye to a snake, and points to an installation comprising a snake preserved in a bottle of alcohol and a picture of his dog in a vengeful mood. An artist should finish the work he starts, and to that end Bessmertny begins his day with meditation. “You have to discipline yourself,” he says. He is his own boss, so he must set his own schedule. “It is the biggest problem for artists. If they go, for instance, on a drinking spree or a travelling spree, it becomes very difficult to go back to work.”
Life is hard Bessmertny says he is true to his own beliefs. He accepts commissions but does them in his own way, accepting the money only if the patron accepts the work. He is often disturbed by what he regards as “signs of money” in the work of other artists. “It’s so ridiculous. That’s why I quit all institutions,” he says. “And I refuse to talk about the formula of success.” What is important, Bessmertny says, is that “the artist enjoys what they are doing”. If a patron happens to enjoy it, too, and wishes to pay for it, that is what makes an artist happy, he says. Art is Bessmertny’s vocation. But if art could no longer support him, he could always become a graphic designer
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or interior designer, he says. He has experience in other occupations. “During Brezhnev times, I worked as an illustrator for a funny newspaper. The head was an undercover dissident and we did everything together in be-
tween the lines,” Bessmertny says. He is a family man, being married with two children, one of whom also wishes to become an artist. “The boy studied philosophy and business, and he worked at Wynn Macau but in the end
he couldn’t do it. He realised he liked films,” Bessmertny says. He says it is just unfortunate that his son not only likes films, but wishes to direct them, too. “Being an artist is a very difficult life,” Bessmertny says.
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Arts & Culture
Drought and rain
HOMEMADE TRIUMPH THIS YEAR’S MACAU ARTS FESTIVAL FEATURES MORE THAN 30 ACTS, HALF OF WHICH HAVE DEEP LOCAL ROOTS
Next month, the city will be invaded by more than 30 acts from all corners of the world, when the Cultural Affairs Bureau presents the 24th edition of the Macau Arts Festival. The programme is a blend of international substance, Chinese sparkle and Macau highlights, as it aims to create a platform for cultural exchange. This year, the festival opens on May 3 and half of the programme comprises Macau productions. The festival presents a varied array of performances from the mainland, Portugal, Britain, France, Spain, the Netherlands, Belgium, Israel, Taiwan, Vietnam, Singapore and Hong Kong. The performances range from contemporary dance to traditional Beijing opera, multimedia performances, shadow puppetry, audiovisual architectural mappings and exhibitions. Shows for all tastes will take to the stage, not only at the city’s performing arts venues but also at many of Macau’s APRIL 2013
World Heritage sites. The programme begins and ends with two contemporary dance works. “Drought and Rain”, by renowned FrenchVietnamese director, choreographer and performance artist Ea Sola, lifts the curtain on this year’s edition. “FAR”, an anatomy-defying work by multi-award winning British choreographer Wayne McGregor, will close the festival. A team of choreographers from across Guangdong, Hong Kong and Macau have collaborated to deliver “Love Letters”, a dance performance that resulted from inter-regional co-operation. French choreographer and dance revolutionary Xavier Le Roy blends science with imagination to explore the infinite possibilities of the human body in “Self-Unfinished”. The Fresco Dance Company from Israel will present “Reflections”, dance performance combined with multimedia. “My Chair 20:13” is a version of dancer Pheobea Tsang’s debut work, featuring alumni of the Hong Kong Dance Company as principal performers, and musical accompaniment by
123 various young collaborating talents. Macau production “Here She Dances” joins multimedia arts with literary excerpts and dance.
For all ages With 15 different productions, theatre is also one of the festival’s highlights. “Han Yuniang”, a new adaptation of a classical work presented by the China National Beijing Opera Theatre, stars Dong Yuanyuan, artistic successor of famed performer Mei Lanfang. The audience will also have the opportunity to experience UNESCOlisted Cantonese opera with performances by the Macau General Association of Cantonese Opera and the Macau Kaifong Cantonese Opera Juvenile Troupe. Acclaimed Portuguese actors Maria Rueff and Joaquim Monchique will present the comedy “Home Sweet Home”. Singapore Drama Box will collaborate with talent from Macau in the form of an assistant director, a set designer and a performer to stage “Farewell: The Body in 16 Chapters”. Nine Years Theatre will perform “Who’s Afraid of Virgina Woolf?” by the three-time Pulitzer Prize winning American playwright Edward Albee. The product of a cast and crew from both Taiwan and Macau, “Wall of Fog” is a play inspired by American writer Eugene O’Neill’s “Long Day’s Journey into Night”. Prepare to laugh out loud with Dóci Papiaçám di Macau Drama Group, as they debut a new play, “A Vote for Love”. “Shooting Star” is a musical jointly produced by Spring-Time Experimental Theatre from Hong Kong and local troupe Theatre Farmers. Audiences are also invited to enjoy other local productions including “The Golden Dragon” by Theatre Horizon Macau, “A Gambling World” by Step Out, “The Winter’s Tale by William Shakespeare” by the Macao Youth Repertory Theatre, and “The Memorandum” by Hiu Kok Drama Association. Two puppetry acts will be offered to children: the theatre group Clair de Lune Théâtre from Belgium will bring “The Circus Has Arrived”, and “Hands Up” will be presented by Lejo from the Netherlands. Apart from the traditional concerts by the Macau Orchestra and the Macau Chinese Orchestra, the Macau Arts Festival will bring audiences a programme of three films re-
flecting the genius, intensity and glamour of the 1920s. It features soundtracks by the Octuor de France and four local musicians, as they provide the silent films with musical accompaniment, played live and synchronised to the masterpieces. Pingtan celebrities from the Jiangsu Province Pingtan Troupe have been invited to give masterful performances of a variety of famous songs. Suzhou Pingtan, also known as shuoshu, is a towering art form within traditional Chinese culture.
Multimedia world “Picnic in the Cemetery” is a work devised by local composer Njo Kong Kie, featuring excerpts from his album of the same name plus new compositions written especially for this event. The music is performed by The Folga Project, a quartet featuring Njo on piano, plus violin, cello and guitar. At the core of the festival programme are a number of other treats. Local artists, who studied under Spain’s Telenoika Audiovisual Open Creative Community, have created two audiovisual shows in “Mapping: Made in Macao I and II”, designed specifically for the façades of the Mandarin’s House and Tap Seac Square. The Macau Audio-visual Association Cut will also present a multimedia show at the St Paul’s Ruins. Art exhibitions are also featured in the festival. “Vanishing Techniques – Photography of Jean Baudrillard” showcases the French thinker’s unique photographic theory and practice. The Macau Museum will host “Fantasy World – Chinoiserie”, a display of European-made artefacts dating to the 17th and 18th centuries, inspired by an admiration for the Chinese art and philosophy being imported from the East during the Age of Enlightenment. The Macau Annual Visual Arts Exhibition is again as part of the Macau Arts Festival, for the purpose of promoting local visual art and encouraging homegrown talent to participate and exhibit their work. The Outdoor Performing Arts Showcase will be held in the northern part of the city to provide free access to the Macau Arts Festival for a wider audience. This year, the Cultural Affairs Bureau also presents Festival +, a programme that features a number of free admission pre-show talks, poetry reading, post-show sharing sessions and workshops. APRIL 2013
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Moments
THE OZZIE FUN MACHINE Here they are again, competing in terms of fun and great prizes with our own tournament. Well done Aristocrat team. The Australian supplier of technologies and services to the international gaming industry has been running its golf tournament for seven years now. And every time is better than the last.
Fortune King Legends team - Charlie Ward, David Punter, John Shigley and Matt Hurst
White Tiger team - John Heng, Frankie Tan, Joe Foo and Anthony Chan
5 Koi Legends team - Mark Copping, Alastair Dick, Richard Thomas and Nathan Tuck
5 Bats team - Nathan Drane, Michael Burnett, Racing Tycoon team - Luis Pereira, Iain Carlyle and Paulo Azevedo Jeremy Wilton and Geaspar Byrne
Team 50 Dragons Legends - Lindsay Stewart, Gary Hann, David Green and Trevor Croker
Dragons on the Lake team - Mark Daniels, Luka Softa, Peter Johns and Dennis Hudson
Inca Fortune team - Michael Tjendra, Anthony Yip and Stanley Tjendra
Big Fortune team - Stuart Cations, Brett Tolson, Robert Johnston and Phil Geappen
Aristocrat 7th Annual Asia Pacific Golf Day APRIL 2013
Tarzan & Jane team - Martin Wright, Tim Shepherd, Geoff McDowell and Chris Rogers
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Denise Stewart, Cherie Ward and Fran Thomas
Chipping Challenge 1st place winners - Cash Express Gold Class team Kenny Yeap, Nathan Carle, Sam McElhone and Andy Crisafi
Geoff McDowell and Chris Rogers
Gary Hann, Lindsay Stewart, Trevor Croker and David Green
2nd place winners - Fortune King Legends team Charlie Ward, John Shigley and David Punter
Having fun on the greens
Phil Geappen, Robert Johnston and Brett Tolson
Award dinner
5 Koi Legends team
Fortune King Legends team
Lindsay putting with a pool cue
Matt Hurst
Peter Johns
David Green
Gary Hann_Lindsay Stewart Berni Keefe, Beth Doherty and Kate Young APRIL 2013
126 ROBERT J. SHILLER PROFESSOR OF ECONOMICS AT YALE UNIVERSITY
Debt-friendly stimulus THERE IS A WAY OUT OF THE AUSTERITY TRAP, BY INCREASING TAXES EVEN MORE AND RAISING GOVERNMENT EXPENDITURE IN THE SAME PROPORTION
W
ith much of the global economy apparently trapped in a long and painful austerity-induced slump, it is time to admit that the trap is entirely of our own making. We have constructed it from unfortunate habits of thought about how to handle spiraling public debt. People developed these habits on the basis of the experiences of their families and friends: when in debt trouble, one must cut spending and pass through a period of austerity until the burden (debt relative to income) is reduced. That means no meals out for a while, no new cars, and no new clothes. It seems like common sense – even moral virtue – to respond in this way. However, while that approach to debt works well for a single household in trouble, it does not work well for an entire economy, for the spending cuts only worsen the problem. This is the paradox of thrift: belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls. There is a way out of this trap, but only if we tilt the discussion about how to lower the debt/GDP ratio away from austerity – higher taxes and lower spending – toward debt-friendly stimulus: increasing taxes even more and raising government expenditure in the same proportion. That way, the debt/GDP ratio declines because the denominator (economic output) increases, not because the numerator (the total the government has borrowed) declines. This kind of enlightened stimulus runs into strong prejudices. For starters, people tend to think of taxes as a loathsome infringement on their freedom, as if petty bureaucrats will inevitably squander the increased revenue on useless and ineffective government employees and programmes. But the additional work done does not necessarily involve only government employees, and citizens can have some voice in how the expenditure is directed. People also believe that tax increases cannot realistically be purely temporary expedients in an economic crisis, and that they must be regarded as an opening wedge that should be avoided at all costs. History shows, however, that tax increases, if expressly designated as temporary, are indeed reversed later. That is what happens after major wars, for example.
Insufficient demand We need to consider such issues in trying to understand why, for example, Italian voters last month rejected the sober economist Mario Monti, who forced austerity on them, notably by raising property taxes. Italians are in the habit of thinking that tax increases necessarily go only to paying off rich investors, rather than to paying for government services like better roads and schools. Keynesian stimulus policy is habitually described as deficit spending, not tax-financed spending. Stimulus by tax cuts might almost seem to be built on deception, for its effect on consumption and investment expenditure seems to require individuals to forget that they will be taxed later for public spending today, when the government repays the debt with interest. If individuals were rational and well informed, they might APRIL 2013
conclude that they should not spend more, despite tax cuts, since the cuts are not real. We do not need to rely on such tricks to stimulate the economy and reduce the ratio of debt to income. The fundamental economic problem that currently troubles much of the world is insufficient demand. Businesses are not investing enough in new plants and equipment, or adding jobs, largely because people are not spending enough – or are not expected to spend enough in the future – to keep the economy going at full tilt.
Collective decisions Debt-friendly stimulus might be regarded as nothing more than a collective decision by all of us to spend more to jump-start the economy. It has nothing to do with taking on debt or tricking people about future taxes. If left to individual decisions, people would not spend more on consumption, but maybe we can vote for a government that will compel us all to do that collectively, thereby creating enough demand to put the economy on an even keel in short order. Simply put, Keynesian stimulus does not necessarily entail more government debt, as popular discourse seems continually to assume. Rather, stimulus is about collective decisions to get aggregate spending back on track. Because it is a collective decision, the spending naturally involves different kinds of consumption than we would make individually – say, better highways, rather than more dinners out. But that should be okay, especially if we all have jobs. Balanced-budget stimulus was first advocated in the early 1940’s by William Salant, an economist in President Franklin Roosevelt’s administration, and by Paul Samuelson, then a young economics professor at the Massachusetts Institute of Technology. They argued that, because any government stimulus implies higher taxes sooner or later, the increase might as well come immediately. For the average person, the higher taxes do not mean lower after-tax income, because the stimulus will have the immediate effect of raising incomes. And no one is deceived. Many believe that balanced-budget stimulus – tax increases at a time of economic distress – is politically impossible. After all, French President François Hollande retreated under immense political pressure from his campaign promises to implement debtfriendly stimulus. But, given the shortage of good alternatives, we must not assume that bad habits of thought can never be broken, and we should keep the possibility of more enlightened policy constantly in mind. Some form of debt-friendly stimulus might ultimately appeal to voters if they could be convinced that raising taxes does not necessarily mean hardship or increased centralisation of decisionmaking. If and when people understand that it means the same average level of take-home pay after taxes, plus the benefits of more jobs and of the products of additional government expenditure (such as new highways), they may well wonder why they ever tried stimulus any other way.
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WHAT A LOAD GREEN LUNG DISEASE
A group of concerned residents have arranged a walk to Coloane Hill to draw attention to their opposition to a project to build a block of flats 100 metres tall near the hill. The would-be developer, Capital Estate Ltd chairman and Hotel Fortuna owner Sio Tak Hong, says he is determined to build high-rise housing in the city’s green lung. Mr Sio says he has the “absolute right” to develop the plot, as the land was obtained at auction in Hong Kong seven or eight years ago. Does he really? The government says further evaluation is needed of any harm the development may do to Coloane Hill. This case is a big test for the government. Will it heed the residents or succumb to Mr Sio’s lobbying? More residents should join the group opposed to the project and more walks should be arranged. Coloane should not be destroyed by property developers.
NOTHING BUT BILLS
Directly elected member of the Legislative Assembly José Pereira Coutinho is unstoppable. Even before the government announced the September 15 polling day for this year’s elections to the assembly, in which Mr Coutinho will endeavour to keep his seat, the president of the main civil service union was pushing a number of new bills. Frozen Spy has lost count of the number of bills Mr Coutinho has submitted to the assembly. They include an animal rights bill, a samesex marriage bill, a domestic violence bill, a trade unions bill and a bill to regulate housing rents. The same-sex marriage bill was a stroke of genius, a way for Mr Coutinho to court the votes of the gay community now that the president of the New Macau Association, Jason Chao Teng Hei, has revealed he is homosexual and has started a campaign for gay rights. Mr Chao ran for a seat in the assembly as a pan-democrat in 2009 and will run again this year. But why is Mr Coutinho pushing so many bills when the assembly has so little time left to deal with them before it is dissolved for the elections? Mr Coutinho seems to be campaigning already.
Companhia de Telecomunicações de Macau SARL (CTM) has at last tried to explain why its Internet connections are so slow. Vice-president of consumer marketing Ebel Cham told a press conference that CTM was not always to blame. Ms Cham said there were various reasons for sluggish connections, such as viruses in the browsers that subscribers use, or everybody trying to get access to the same websites at the same time. She said buffering of multimedia content also slowed things down. Ms Cham said CTM was trying various solutions to fix the problem, including spending MOP1.2 billion (US$150 million) on improving its network. Until the problem is solved, Frozen Spy suggests that subscribers use a good anti-virus software, avoid going online when Internet traffic is heavy and – if they wish to be entertained – put on a DVD or CD. If we take to heart Ms Cham’s suggestions, then maybe we will get the Internet speeds we are paying for. Take a bow, Ms Cham.
URBAN SURVIVAL SCHEME
A bus hit a lamp post in Areia Preta on the morning of March 25. Eleven passengers were slightly injured and treated at the public hospital. According to the police, the driver crashed his bus while trying to avoid another vehicle. The police say the driver was tested for alcohol and passed. Frozen Spy is concerned about people’s safety. Since the new arrangements for bus services began in August 2011, the number of accidents involving buses has risen. Passengers might like to consider a survival kit when they ride the buses. A crash helmet would be an essential part, just in case the novice driver encounters an obstacle that he cannot simply crush under the wheels of his overloaded vehicle.
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April 2013
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