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26 Economy & Finance 26 Rainbow’s end The results of the government push for economic diversification are still not visible
Politics 34 The usual suspects Analysts say the indirect elections for the Legislative Assembly are opaque
Greater China 38 Waste crisis Hong Kong launches a 10-year plan to reduce waste per capita 40 Make trade, not war The European Union and China have much to lose if a trade war breaks out 42 New worries Air pollution, food safety and education make the mainland’s new middle class anxious
Law 44 For better or worse The lawyers association has put forward a proposal to permit law firms to operate as general partnerships 46 Advocate and aesthete Rui Cunha is hoping to give back to the city the benefits of the experience it has given him
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Society 49 Faltering first steps The number of crèche places is insufficient to meet growing demand
Transport 52 Bridging the silence There are no updates on the construction progress being made on the Hong Kong-Zhuhai-Macau Bridge
Property 54 Known unknowns Amid record-high property prices, should would-be homebuyers wait before taking the plunge?
Gaming 62 Last one in SJM Holdings has finally received official approval to develop a casino resort in Cotai 66 The casino comeback Low gaming revenue growth rates in the U.S. are a thing of the past 68 Crown jewel James Packer wants to build a casino for Asian high rollers in Sydney
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Special 71 Raising the stakes A comprehensive report on the best of last month’s G2E Asia 2013
Hospitality 92 Switch off, chill out The Westin has a new general manager 95 High and dry The Four Seasons has acquired a pool cover system to create floor space for MICE events 98 Beware of “fruit bombs” Wines around the world are getting more alcoholic
Business 100 Hock horror drama The government seems to know little about pawnbroking in the city 106 A clean act Jeeves of Belgravia opens a shop in Macau
Marketing 108 Return to sender Complaints about unsolicited direct marketing via mobile messages are increasing
Human Resources 110 Troubled sleep Shifts and overtime work are harming the quality of sleep of the city’s workforce
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Photo: Luís Almoster
100 Arts & Culture 114 Celebrating China’s heritage The Cultural Affairs Bureau is focusing this year’s National Cultural Heritage Day celebrations on Yunnan province 116 To die for “The Addams Family” visits the Cultural Centre this summer
Opinion 12 From the publisher’s desk Paulo A. Azevedo 14 Editorial Emanuel Graça 31 Bubble, toil and trouble André Ribeiro 37 Small city, big data Keith Morrison 48 China’s e-tail revolution Richard Cooper and Richard Dobbs 59 Urban muddle José I. Duarte 70 Black deeds Gustavo Cavaliere 107 Learning about growth from austerity Michael Spence 113 Harnessing the remittance boom Kanayo F. Nwanze
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pazevedo@macaubusiness.com PAULO A. AZEVEDO FOUNDER AND PUBLISHER
from the publisher’s
UNREAL THREAT desk OF UNREST
I
To say that importing more manpower is a “threat” to the city’s workers is irresponsible and deceptive
t takes the noise from just a handful of people, including a pair of Legislative Assembly members heading into an election, to make the government waiver on a policy proposal that, believe it or not, is entirely correct. This is the story of Macau. This is a city where you might have infamous scandals permeating society, including cronyism that would earn business people and politicians a prison sentence elsewhere, but no action is taken. This is a city where officialdom’s lethargic approach has created a can of worms. Still, no action. However, when a few people suggest the city is headed for social unrest – historically China’s biggest fear – their voices drive so much hype that politicians endure sleepless nights. Such is the case with a government proposal to create a system allowing non-resident tertiary students studying in Macau to stay and work here after they graduate. The idea has sparked fierce opposition from some labour groups, who argue the system would harm residents. Only someone with ulterior motives could be interested in publicly opposing such a sensible measure. The unemployment rate is so low that the workforce is fully employed. In reality, Macau lacks manpower. In the next five to eight years, ongoing development will mean tens of thousands of workers are needed and they simply do not exist. It takes only basic arithmetic to spot the trend. Without workers, there is no competitiveness. No competitiveness, no growth. No growth, no creation of wealth.
Narrow focus
Critics of the proposal would do better to question the qualifications offered by
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some “universities” here, which often have their quality challenged. These are institutions thriving on questionable government grants that escape inquiry because the Commission Against Corruption prefers to entertain itself with more trivial issues. Apparently, the city’s graft buster lacks the courage or the will to do more. It is their approach that should be investigated. The public might ask why there is neither a ranking nor statistics to identify what workers the city lacks and in what number. With that information, the city’s leaders could create a new special quota system for workers. This would be an extreme measure but, with the way the city is headed, we need all the help we can find. To say that importing more manpower is a “threat” to the city’s workers is irresponsible and deceptive. Comments such as these are the product of people who seem to have something to gain from these misconceptions. More difficult to grasp is the government’s hesitant and uneasy position on the proposal. The government must have the courage to cope with its responsibilities, knowing full well it is virtually impossible to please everyone all the time. Officials must act in a way that contributes towards Macau’s sustainable development. They should not be serving the interests of cliques. If they are incapable of making the right decision, even on obvious problems such as manpower, they would be better off folding and informing Beijing they do not have the ability to carry on.
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MAY 2013
emanuel.graca@macaubusiness.com EMANUEL GRAÇA EDITOR-IN-CHIEF
SMOKE AND MIRRORS
T
The 800-pound gorilla in the room is whether the city’s associations are as representative of society as the electoral system seems to assume. I would say they are not
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he game is on. Candidates for the Legislative Assembly have until early next month to register for September’s elections. Most of the focus has been on the candidates in the direct elections – candidates in the indirect elections being out of the media spotlight, for the most part. Last year’s timid political reforms added two directly elected seats to the Legislative Assembly and two indirectly elected seats. The electorate at large will directly elect 14 members and representatives of associations will indirectly elect 12. The Chief Executive, as before, will appoint seven. The indirectly elected bloc in the assembly will benefit most from the political reforms. The number of indirectly elected members will increase by 20 percent, while the number of directly elected members will increase by only 17 percent. The proportion of the seats held by the indirectly elected bloc will increase to 36 percent from 34 percent, while the proportion held by the directly elected bloc will increase by one percentage point to 42 percent. Only up to 22 representatives of each association will be entitled to vote in the indirect elections. The 12 indirectly members will represent five functional constituencies. The question is how these seats will be filled. Election after election, no seat for any functional constituency is contested. In the last elections, in 2009, 10 candidates ran for 10 seats. Instead, association leaders meet behind closed doors, before the elections, to do most of the horse-trading to decide who will get a seat. This practice usually favours supporters of the government, be it the government in Beijing or the government here. The bigger question is not how shady the indirect elections are. Those that framed last year’s political reforms
deliberately omitted to make indirect elections more open. The 800-pound gorilla in the room is whether the city’s associations are as representative of society as the electoral system seems to assume. I would say they are not.
Unscrutinised shoo-ins
More than 700 associations are entitled to vote in the indirect elections this year, official data show. But it is unclear how many of these associations actually do anything regularly or have any social relevance. The electoral registration information posted online by the Public Administration and Civil Service Bureau makes no mention of how many members each association has. But anecdotal evidence indicates that a considerable chunk of the city’s population plays no active part in any association. On the other hand, often businessmen are on the boards of various associations. It is little wonder that two businessmen now represent the welfare, culture, education and sport functional constituency, and that they have done little in the assembly for their constituents. Experience has shown us that indirect elections are mainly a way to ensure that traditional cliques are handsomely represented in the assembly without having to endure much public scrutiny. They would probably not be so handsomely represented if they had to win the votes of ordinary people. Often pro-democracy activists demand the abolition of the seats in the assembly held by governmentappointed members. The Chief Executive chooses these members. His choices are undemocratic but he is accountable for his actions. Are those that choose the indirectly elected members similarly accountable for their actions?
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Editorial Council Paulo A. Azevedo, Emanuel Graça, Tiago Azevedo, José I. Duarte, Mandy Kuok Founder and Publisher Paulo A. Azevedo VOL.1 Nº110
pazevedo@macaubusiness.com
Editor-in-Chief Emanuel Graça Cover photo: Luís Almoster
emanuel.graca@macaubusiness.com
Assistant Editor-in-Chief Alexandra Lages alexandra@macaubusiness.com
Group Senior Analyst José I. Duarte jid@macaubusiness.com
Art Directors Connie Chong, Luís Almoster design@macaubusiness.com
Hong Kong Bureau Michael Hoare (Chief) michael.hoare@macaubusiness.com
Mary Ann Benitez Events Director Margarida Luz
signature@macaubusiness.com
Special Correspondent Muhammad Cohen
Advertising Bina Gupta José Reis
jreis@macaubusiness.com
Beijing Correspondent Maria João Belchior
Xu Yu, Irene
irene.xu@macaubusiness.com
maria_belchior@yahoo.com.br
Media Relations
Manila Correspondent Max V. de Leon maxdeleon_080975@yahoo.com
Assistant to the Publisher Laurentina da Silva ltinas@macaubusiness.com
Office Manager Elsa Vong elsavong@macaubusiness.com
Photography António Mil-Homens, António Leong, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro, John Si, Luís Almoster, Manuel Cardoso, MSP Agency, 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 Cherry Lee, Christina Yang Ting Yan, Cláudia Aranda, Dennis Ferreira, Derek Proctor (Bangkok), Filipa Queiroz, Hélder Beja, João Ferreira da Silva, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lois Iwase, Luciana Leitão, Mandy Wong, Mary Ann Benitez, Michael Grimes, Sara Farr, Sara Silva Moreira, Sofia Jesus, Tracy Ma, 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
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HOLE IN ONE The Macau Special Olympics Golf Masters is already Asia’s biggest tournament of its kind BY MIKE ARMSTRONG
C
aesars Golf Macau served as the ‘battleground’ for the Special Olympics Golf Masters 2013 in April, with both venue and standard of play attracting their deserved share of accolades. Two competitions in one tournament proved to be a winning formula, with the best in the world serving as a great inspiration for the further development of Special Olympics golfers in Asia, in an event again hosted by the Charity Association of Macau Business Readers. Encouraged by the positive feedback from last year’s trial outing, the organisation sought to up the ante this year in terms of facilities, planning and, most importantly, player participation. Austrian athlete Johanna Pramstaller described the event as a “fantastic” week. “I made many new friends and had so much fun spending time here in Asia. Thank you all for making this happen!” she said. Jeffrey Swanson, her coach and technical director of golf for Special Olympics Europe-Eurasia, said the experience was overwhelming. “Everybody went ‘all out’ and we all drew a winning hand with the Special Olympics in Macau. It couldn’t have been better.” Overall, 47 athletes from all over the world, accompanied by 27 coaches, competed on three consecutive days on the greens of Caesars Golf Macau. They were accompanied
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by 25 local guardian players (golfing partners who were ‘assigned’ to provide support to the athletes). Two different competitions were organised – one mixed contest for basic level players, and one advanced competition for the most skilled Special Olympics golfers.
Great golf
The basic level players from the Asia Pacific area were the organisers’ priority, as their mission is to develop Special Olympics golf throughout the region. Teams from as far away as Australia, Brunei, Taiwan, India, Korea and Malaysia joined neighbouring Hong Kong and the mainland for this exclusive invitational in Macau. The city was also represented. Tellingly, it was the prospect of competing in this event that encouraged the mainland, Malaysia, India and Brunei to develop their own Special Olympics golf programmes, even though the pool of players is still relatively limited. Nike and other supporters, who generously provided players with professional club sets, lent further impetus to the tournament. Special Olympics players not only used the clubs during the competition, but were able to take them back home to help develop other players in their home countries. This year, the organisers also opened up the invitation to Special Olympics players with greater calibre golf skills, who got to challenge Macau’s best golfers in a one-on-one 36hole tournament. This required a change in the official Special Olympics mechanics, in order to encourage the desired interaction and to really make competitors feel part of the local society. In all, 17 golfers from Australia, Austria, Taiwan, Great Britain, Hong Kong, South Korea and South Africa were pitted against 17 local regulars and former professional golfers. To prepare the competition, both the organisers and the
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Special Olympics Macau head went all the way to Korea – twice – in order to talk to Special Olympics International representatives: once during the 2012 World Congress, and again during the World Winter Games in Pyeong Chang in January this year.
Next step
All in all, 12 different nations and regions from diverse corners of the world were welcomed to Macau and were offered, according to feedback, a “superb spectacle with luxurious accommodation” in the five-star Sheraton Macao. They also enjoyed outstanding side events, including a full-day sightseeing tour and a VIP visit to The House of Dancing Water show. “This city is awesome!” said South African Thomas Lugg, considered the world’s best Special Olympics golfer. “I really do want to come back!” A partnership between Caesars Golf, Melco Crown Entertainment Ltd and Sands China Ltd, also with the support of the Sport Development Board and the Macau Government Tourist Office, the Special Olympics Golf Masters has established a new benchmark for corporate events in Macau. Given the success of this venture, further gaming operators and suppliers are now being tapped to help create the biggest annual Special Olympics golf event in the world. Tournament director Stefan Kuehn says the next step is to make the tournament a public attraction – getting people on the greens cheering teams and individuals along, and interacting and socialising with them. “We are confident that there are still some possibilities to expand and improve,” Mr Kuehn says. “Our dream is to organise an annual Masters series in Asia, which always showcases the final in Macau.”
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MINIMUM WAGE BILL READY BY YEAR-END
The bill will only apply to cleaning and building security staff in the private sector Secretary for Economy and Finance Francis Tam Pak Yuen vowed last month to submit a bill to the Legislative Assembly on a statutory minimum wage for private sector cleaning and building security staff, by the end of this year or early 2014. The government recently proposed a MOP23 (US$2.9) to MOP28 hourly pay rate as the minimum wage for cleaning and building security workers. The proposal was presented during a meeting of the Standing Committee for the Coordination of Social Affairs. The committee comprises representatives of unions, employers and the government.
FITCH WARNS BANKS OF INCREASED RISKS
Fitch Ratings says in a new report issued last month that Macau banks could see their risk profiles weaken, as their exposure to the mainland continues to climb. The agency expects credit growth to accelerate to 30 percent this year, up from 26 percent in 2012, primarily led by mainland-related trade financing. The ratings agency adds that Macau banks are also exposed to mainland risk through their lending to the gaming sector, whose revenues are mainly supported by mainland tourists.
TRADE UNIONS DEMAND MATERNITY LEAVE EXTENSION
The Macau Federation of Trade Unions has urged the government to extend maternity leave to 90 days, and to implement five to seven days paternity leave with full pay. The association released a survey on job security for pregnant and postnatal women in Macau last month. It shows that almost 50 percent of the respondents regarded 90 days as a reasonable length for maternity leave. Currently, workers in the private sector are only entitled to 56 days of paid maternity leave, while those in the public sector get 90 days.
MORE SUSPICIOUS TRANSACTIONS REPORTS
The number of reports of suspicious transactions rose by 17.7 percent year-on-year in 2012, the Financial Intelligence Office says. According to the office’s latest newsletter, there were 1,840 suspicious transactions reports last year. Of those, 1,328 cases or 72.2 percent of the total were from the gaming sector. Casinos are required to report to the Gaming Inspection and Coordination Bureau, any transaction worth over MOP500,000 (US$62,530). Most of the other cases were in the banking or insurance sectors. On the other hand, the number of cases sent to the prosecutors office for further investigation dropped from 190 to 166.
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TRANSPORT BUREAU UNDER FIRE
The bureau’s supervision of bus operations and bus fare payments is lacking, says Audit Commission The Audit Commission slammed the Transport Bureau last month for failing to exercise its role in monitoring the public bus service. In a report, the public spending watchdog said the bureau has not been doing a satisfactory job in monitoring bus frequencies, the collection of cash boxes, environmental protection and the three operators’ service provider
CSR WINS WASTE COLLECTION TENDER
CSR - Macau Waste Systems Co Ltd will continue to be the city’s solid waste collector for the next 10 years. The company, a joint venture between Hong Kong’s Swire SITA Waste Services Ltd and Macau’s HN Group, won the tender launched by the government, the Environmental Protection Bureau announced last month. CSR submitted a bid of MOP2.1 billion (US$263 million), the lowest among the five bidders. The new service contract should come into effect in the next quarter.
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payment calculations. In response, the bureau said in a statement that it would further strengthen its supervision of the service. In addition, the bureau announced it has fined China Telecom over MOP3.5 million (US$437,500) for failing to meet the deadline for the implementation of a GPS system within the public transport system.
MACAO WATER GETS 5.92-PERCENT HIKE
Macao Water Supply Co Ltd will receive a 5.92-percent increase in the payment it receives from the government, the Maritime Administration announced last month. However, this will be less than one-quarter of the increase the company asked for a year ago. The regulator’s director Susana Wong Soi Man said it had considered different factors like the inflation rate, the company’s operating results and profits, and the public’s level of satisfaction with Macao Water.
MACAU PASS POSTS RECORD HIGH PROFITS
Macau Pass SA’s profits soared almost 23-times last year, reaching MOP3.16 million (US$395,000). It was the best year ever for the Macau Pass payment system. In 2011, the company’s profits fell to less than MOP139,000, which Macau Pass claimed was due to an almost eight-fold increase in capital investment. Over a million Macau Pass stored-value cards were issued last year, up by 24 percent from the previous year.
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SALARY NOT THE MOST IMPORTANT FOR UNIVERSITY STUDENTS A survey says the majority mentioned having a job related to their area of study A high salary is not the first thing most Macau university students will be looking for once they hit the labour market, a new study by online-job website MacauHR found. Salary came in fourth on the ranking of job criteria and expectations. Having a job related to their area of study was the most important issue, highlighted by 74 percent of the university students surveyed. Some 54 percent stated that the job must be of interest to them. Around 41 percent said that there must be a clear-cut career
path and opportunity for promotion, while 40 percent of students surveyed included salary in their criteria list. When it came to the topic of money, 57 percent of students expected to make between MOP11,000 (US$1,375) and 15,000 per month. Around 5 percent hoped to earn MOP15,000 or above. For the survey, Macau HR interviewed over 100 students in March, comprised mostly of year 3 and year 4 university attendees.
MALO CLINIC ACQUIRED BY TAIWAN GROUP
Taiwanese group Taivex Therapeutics Corp has bought a majority stake in Pacific Health Care Ltd, the Macauregistered company that runs the Malo Clinic in the Venetian Macao, said a company source quoted by Portuguese news agency Lusa. The amount of the investment made by the Taiwanese group, which operates clinics on the island and in the mainland, was not disclosed. Under the new management, the Malo Clinic will try to explore new markets and offer new services, namely gynaecology and assisted reproduction, the source said.
MACAU MORE COMPETITIVE
Macau’s competitiveness ranking among 293 cities in the Greater China region went up by three places last year, the Chinese Academy of Social Sciences said. The report published last month by the State Council’s think-tank shows Macau placed 10th in last year’s ranking of overall competitiveness, up from 13th place in 2011. It also means Macau is once again among the top 10 most competitive Chinese cities, for the first time since 2007.
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AIR MACAU TO LEASE TWO SMALL AIRBUS
Air Macau Co Ltd will get two new Airbus A321-200 aircraft, a United States aircraft leasing firm announced. Californiabased Air Lease Corp said last month that it has signed “long term lease agreements” with Air Macau for the two aircraft. The aircraft are scheduled for delivery in October 2014 and March 2015, the New York-listed company added.
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RETAIL SALES SOAR The total value of retail sales for the first quarter of 2013 totalled MOP15.43 billion (US$1.9 billion), up by 17 percent year-on-year, official data shows. Sales of watches, clocks and jewellery amounted to 30 percent of the total, followed by sales of goods in department stores (15 percent). After removing the effect of price changes, the volume of retail sales for the first quarter of 2013 increased by 15 percent year-on-year.
NEW BUSINESSES UP
SOURCE: STATISTICS AND CENSUS SERVICE
A total of 988 new companies were incorporated in the first quarter of this year, up by 107 year-on-year. Official data shows the total value of registered capital decreased by 22.4 percent to MOP154 million (US$19.25 million). The majority of new incorporations were operating in wholesale and retail (401), business services (184) and construction (127).
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GOVT INVESTS LESS From January to April, the government only spent 2.4 percent of the MOP17.9 billion (US$2.2 billion) budgeted for the 2013 public investment plan, data from the Financial Services Bureau shows. In the first four months of this year, the government spent just MOP424.7 million – a decrease of 58.3 percent compared to the same period last year.
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Economic Trends
27 government drive to make the economy more diverse has made scant progress. The economy has been growing at annual rates of about 10 percent but the city is ever more dependent on gaming. Industries earmarked by the government as having potential to diversify the economy, such as the meetings, incentives, conventions and exhibitions (MICE) industry and creative and cultural industries, have failed to take off. In the first quarter of this year gross domestic product was MOP94.7 billion (US$11.8 billion), 10.8 percent more than a year earlier in real terms. Gaming turnover made up MOP84.8 billion of that sum. The government itself is increasingly dependent on gaming. It gets 83 percent of its revenue from the gaming industry. The results of the government’s economic diversification efforts are “still far from satisfactory”, says economist Henry Lei Chun Kwok, an assistant professor at the University of Macau. “The government has attempted to speed up the development of the MICE and cultural industries,
apart from telling casino operators to invest more in non-gaming areas. Nevertheless, given the rapid expansion of the gaming sector in terms of turnover and GDP contribution, the progress of the new industries is still rather limited, as measured by GDP share,” Mr Lei says. Beijing has repeatedly prodded Macau to put more effort into economic diversification. The deputy chairman of the National Development and Reform Commission, Zhang Xiaoqiang, said last month it was “going to take some time” before the economy was appreciably more diverse. Mr Zhang said the casino boom following the liberalisation of the gaming market had sucked up the city’s resources, stunting the development of small and medium enterprises in other industries.
Chorus of warnings University of Saint Joseph visiting professor Susana Mieiro says Macau suffers from a form of Dutch Disease, so called because exploitation by the Netherlands of vast deposits of natural gas in the North Sea during the 1960s caused the country’s currency to strengthen,
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Economic Trends
Art for All Society
Macau Creations
Worker Playground
STUCK IN NEUTRAL T
he call to diversify the economy by nurturing creative and cultural industries is a fixture of the government’s rhetoric but more needs to be done, according to the workers at the coalface. The Cultural Affairs Bureau established a department to oversee cultural and creative industries in 2010. In the same year, the government established an advisory committee that brought together officials and industry representatives. Artist James Chu Cheok Son is president of the Art for All Society, a not-for-profit group that promotes artistic talent. He says officials have ignored proposals put forward at the committee’s meetings. The government announced in 2010 that it would back a creative industries fund. It has not materialised yet. There is also a lack of home-grown talent, the by-product of universities failing to nurture creativity, Mr Chu says. The government should take measures to attract talent from abroad to help build up cultural and creative industries, he argues. Consumers too should be better educated. Mr Chu says art sales have increased but about 80 percent of buyers are expatriates.
There is a lack of home-grown talent, the by-product of universities failing to nurture creativity, says artist James Chu Macau Creations’ Wilson Lam says the government has put a lot of effort into promoting creative and cultural industries
Musician Cheang Chi Tat and two friends created a clothing brand called “Worker Playground” JUNE 2013
Macau Creations Ltd has the biggest privately owned portfolio of creative brands in Macau. The company designs custom-made products that use works by Macau artists as motifs. It opened its first shop in 2010 and has expanded to three. Chief executive and creative director Wilson Lam Chi Ian says the government has put a lot of effort into promoting creative and cultural industries. They are industries yet to achieve success but some progress has been made, he says. Mr Lam says business is difficult because the products are manufactured in small volumes. Short production runs are expensive and it is squeezing profit margins.
Elusive mass
Any creative or cultural industry here is heavily dependent on tourism. Macau has more than 28 million tourists a year, most from the mainland. Mr Lam says most mainlanders either like to spend on expensive branded goods or are looking for bargains. Creative and cultural products are neither. They are not famous enough for conspicuous consumers, nor cheap enough for the bargainhunters. Listen to the businessmen in these industries and a leading complaint is high rents that hamper the development of their businesses. The government has assigned the C Shop near the New Yaohan department store and the Tourism Activities Centre near the Ruins of St Paul’s as product showrooms. It has earmarked an empty commercial building in Tap Seac Square for use as a shopping centre. The government has been considering since 2004 the designation of part of the St Lazarus area as a creative district. Albergue SCM and 10 Fantasia, two establishments dedicated to promoting cultural and creative industries, have opened there. There are other businesses in the area but it lacks critical mass. Despite the headwinds faced by these industries, some entrepreneurs are banking on them. Musician Cheang Chi Tat and two friends opened Union Planning & Design Co Ltd last year. They created a clothing brand called “Worker Playground” – a reference to the old Macau Federation of Trade Unions Workers Stadium. “Worker Playground” clothes are available here, in Beijing and online. Mr Cheang says sales have been improving but the company has yet to break even. The company produces small batches of clothing, making procurement a problem. And operating costs eat up profit margins. For now, Mr Cheang says the business is a sideline. BY MANDY WONG
29 making its exports so prohibitively expensive that its manufacturing industries shrivelled up. Ms Mieiro says the gaming business, while more volatile than the natural resources business, has had a similar effect on Macau’s economy. “We found that Macau shows one of the symptoms of this disease because, since the gaming industry was opened up in 2002, exports have declined substantially,” she says. Fitch Ratings warned Macau last month about the risk it is taking in allowing its economy to depend too much on gaming. “The economy and public finances have become increasingly tied to gaming-sector performance,” the report said. The European Union said in April that deficits in infrastructure and labour are hampering diversification in Macau. The EU’s report says economic diversification has made “limited progress” because of infrastructure bottlenecks and the absence of ancillary business clusters. It says the scarcity of suitable workers is a “key constraint” on economic diversification, as gaming and related industries continue to outbid other industries in attracting labour.
The results of the government’s economic diversification efforts are “still far from satisfactory”, says economist Henry Lei
University of Saint Joseph visiting professor Susana Mieiro says the government should invest in education
Out of focus The unemployment rate is 1.9 percent, the lowest ever, and demand for labour is set to surge with the opening of new casino
REVENUE FROM GAMING AS A PERCENTAGE OF GDP 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
REVENUE FROM DIRECT GAMING TAXES AS PERCENTAGE OF GOVERNMENT REVENUE
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2006
2007
2008
2009
2010
2011
2012
2013
Source: Statistics and Census Service
resorts in Cotai from 2015 onwards. The official estimate is that the city will require 45,000 extra workers by 2016. The hotel and casino industries will need nearly 40,000 of them. The government is considering allowing non-resident students studying at the city’s universities to take up employment here after graduation. Trade unions have expressed fierce opposition to this proposal, saying it would harm the interests of resident workers. At present, non-resident students are obliged to leave once they graduate, regardless of their willingness to stay or interest from employers to hire them. If they wish to work here, their prospective employers must follow the ordinary procedure for importing labour, quotas and all.
Still waiting Economists say economic diversification takes a long time. They say it can take decades for some industries that the government is trying to nurture to grow to a viable size. Mr Lei says that as long as gaming continues to expand at annual rates of 10 percent and more, it will be hard for the econ-
86% 84% 82% 80% 78% 76% 74% 72% 70% 68% 66% 2008
2009
2010
2011
2012
2013 (Jan-Apr)
Source: Financial Services Bureau
omy to become appreciably more diverse. It will not happen in the next five years, he says. “Most businessmen are still focusing on making money out of gaming, tourism and real estate.” The government should make a long-term plan for economic diversification, Mr Lei says. The plan should call for regular assessments of any progress. “The government has invested a lot to support the development of the MICE and cultural industries but we lack assessment reports as well as a detailed records of the actual contribution of these sectors to the economy,” Mr Lei says. Official data show that 230 MICE events were held here in the first quarter, 15 percent fewer than a year earlier. Ms Mieiro wants the government to spend its revenue from gaming taxes on its economic diversification drive. Government investments in education and healthcare should take place now so the city can reap the benefits later, after the growth in gaming begins to slow. This would “develop the local labour force’s skills, in order to give workers the ability to embrace new jobs in other economic sectors in the future,” she says. JUNE 2013
Economy & Finance
Economic output
Year-on-year change (%)
2012 GDP at current prices
MOP 348.2 billion
GDP in chained prices
MOP 324.4 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 earnings
MOP 12,000
Employed population 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
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)
MOP 94.7 billion MOP 84.9 billion
---
Year-on-year change (%)
-0.3 percentage points
6.1%
External merchandise trade 2012
352,000 71.8% 115,601
16.2
Year-on-year change (%)
2012
Year-on-year change (%)
Balance
MOP 72.8 billion
Utility consumption 2012 Water Electricity
14.9 13.7 15.8 14.1
Gasoline Liquefied Petroleum Gas Natural Gas
Year-on-year change (%)
75.3 million m3 4,205 million kWh 87.1 million L 43,615 tons -- million m3
Notes
Jan-Mar 2013
MOP 70.9 billion - MOP 62.8 billion
MOP 56.7 billion
--
9.1 2.1 percentage -0.6 point
17.5 25.8 -percentage 0.3 points
- Direct tax revenue from gaming MOP 107.0 billion
--
MOP 12,000
Imports
Total expenditure
Q1 2013
Feb-Apr 2013
Year-on-year change (%)
MOP 129.5 billion
Q1 2013
1.9%
17.1 13.9 --
Total revenue
18.0 10.8 ---
-0.1 percentage point
MOP 8.2 billion
Public accounts
Notes
Year-on-year change (%)
Latest
Exports Trade balance
Year-on-year change (%)
Latest
6.7 9.0 6.6 1.5 -100
Latest MOP 202.1 billion
Feb-Apr 2013 Feb-Apr 2013 Apr 2013
Year-on-year change (%)
Notes
5.2%
23.1 26.1 0.9 percentage -1.5 points
Latest
Year-on-year change (%)
MOP 383.0 billion MOP 130.0 billion
MOP 2.3 billion MOP 19.0 billion - MOP 16.7 billion
Latest
18.5 11.3 -10.4 Year-on-year change (%)
MOP 39.6 billion
21.2 15.7 -11.6 32.7
Latest
Year-on-year change (%)
MOP 48.8 billion MOP 40.6 billion MOP 9.2 billion
17.9 million m3 4.8 873 million kWh 6.3 21.1 million L 4.9 12,397 tons -2.7 ---
Mar 2013 Mar 2013 Mar 2013 Apr 2013
Notes Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013
Notes Jan-Apr 2013 Jan-Apr 2013 Jan-Apr 2013 Jan-Apr 2013
Notes Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013
Transport and communications 2012-end Licensed vehicles - Automobiles - Motorcycles Mobile telephone users Internet services subscribers
JUNE 2013
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
219,246 103,431 115,815 1,551,535 236,345
Year-on-year change (%)
5.4 7.4 3.7 9.3 10.7
Notes Mar 2013 Mar 2013 Mar 2013 Mar 2013 Mar 2013
Source: Statistics and Census Service and Financial Services Bureau
30
31 ANDRÉ RIBEIRO CONSULTANT AND EXECUTIVE COACH - andre@extracoaching.com
Bubble, toil and trouble THE STOCK MARKET BUBBLE HAS A GOLD-AND-SILVER LINING
T
he stock market rally since last November has been strong, the Dow Jones Industrial Average (DJIA) thrusting above 15,000 points, and the S&P 500 surpassing 1,600 points for the first time ever. One important cause of the rise in equity prices this year is the massive injections of liquidity by central banks. There may be a correction of 5 percent to 10 percent in the middle of this year with the DJIA on its way to probably exceed 17,000 in the next few months, reaching the upper boundary of the megaphone pattern I wrote about in these pages in March. U.S. stock markets are probably in the final stage of forming a big multi-year top, which will be followed by the deepest stock market decline in years. The present pattern of movement in the prices of precious metals and mining stocks is similar to the pattern in 2008, when the price of gold began rebounding from a drop of about 30 percent, on its way to climbing above its previous peak about a year later. The price of gold between April 1 and April 15 this year, fell by 18 percent or $220 per ounce, plunging by 9 percent in just one day. However, strong demand for physical gold cushioned the fall, and by the end of the month the price had recovered to about $150 above the floor of the latest trough. Many retail investors took the opportunity to buy, and queues formed in gold shops in Macau, Hong Kong and mainland China. Investors often focus on financial markets and news, and fail to understand that gold and silver are commodities governed
by the conventional law of supply and demand. If the price falls, demand increases.
Modern alchemy Few analysts or investors are aware that the prices of gold and silver have been depressed for decades by investors concentrating on the financial markets. Data for the futures markets is available, but there are no relevant statistics for over-the-counter markets. This is explains why steep falls in the prices of precious metals can coincide with shortages of physical gold and silver and increased demand for them. If central banks intervene in the gold market from day to day, they do not do it publicly. There are great financial temptations to rig the markets for precious metals, just like the London interbank offered rate was rigged. A correction in the prices of gold and silver and of mining stocks, which has been happening for almost two years, is nearly complete. The prices are set for a big rally. The rally may be about to begin in the next few weeks. Sentiment among investors and technical indicators are like they were in the past when markets hit bottom. These are trends that individuals and institutions can take advantage of, and so make a profit from their investment portfolios. Who knows? Perhaps in the future Macau will have a sovereign wealth fund to play with. The views expressed here are those of the author and are not investment calls by Macau Business JUNE 2013
32
Economic Trends by JosĂŠ I. Duarte Growth spurt
GRAPH 1 - Population, by sex Females
Males
600,000
Macau will soon gain its 600,000th inhabitant, probably in the second half of this year. GRAPH 1
Number of people
400,000
200,000
0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
The city’s population has been growing steadily since 2000. More than 150,000 people have been added to the tally since then, meaning the population has been growing at an average annual rate of more than 2.5 percent, fast enough for it to double in under 30 years. A decrease in the population in 2009 only serves to accentuate how remarkable the growth has been since 2000. More of the population are women than men. But the proportion of the population that women make up tends to decrease when population growth is fastest. This is a sign that when economic growth requires extra workers, it requires most of those workers to be men. GRAPH 2
GRAPH 2 - Life expectancy at birth Total
Males
Females
86
Life expectancy, an indicator of quality of life, has risen as the population has grown. Babies born here today can expect to live 3.8 years longer than those born just after the handover. Women usually live longer than men and girls born here today can expect to live 4.4 years longer than those born in 2000. GRAPH 3
84
Years
82
80
78
76 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
GRAPH 3 - Population, actual and projected growth Actual population
Government projection based on 2006 data
Government projection based on 2011 data
800,000
Number of people
700,000
600,000
500,000
400,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
JUNE 2013
The ageing population and complex flows of migrants together play havoc with efforts to accurately predict what the population will look like in the future, and so confound any plans the government or business may make in anticipation. Two long-term government projections have been made since the handover, one based on population data for 2006, and the other based on data for 2011. The first projection predicted that the population in 2011 would be more than 15 percent higher than it actually was. It erred by 15 percent in five years. The initial signs are that the second projection underestimates population growth. It has erred by 2.5 percent in one year.
33
House rules
GRAPH 4 - Dwellings by age group, and proportion of households living in dwellings in each group 2001
2006
2011
60%
Percentage of households
50%
GRAPH 4
The housing construction boom in the 1990s meant that by 2001 about 36.7 percent of the population were living in homes that had been built in the preceding 10 years. Almost 80 percent were living in homes that had been built in the preceding 20 years. The housing construction slowdown in the late 1990s and early 2000s meant that by 2006 more than 13 percent of the population were living in homes that had been built in the preceding 10 years, and about 70 percent were living in homes that had been built in the preceding 20 years. The trend of households occupying ever-older homes persisted until 2011. The proportion of households living in homes that were at least 20 years old more than doubled between 2001 and 2011.
40%
30% 20%
10%
0% Under 10 years
Between 10 and 19 years
Between 20 and 29 years
30 years and over
Unknown
GRAPH 5 - Dwellings by type of tenure, and proportion of households living in dwellings of each type
GRAPH 5
2001
2006
2011
80%
60% Percentage of households
Macau had 178,600 households last year. Data from the censuses in 2001, 2006 and 2011 give us an idea of the sorts of homes they live in.
The proportion of households that own their own homes has been decreasing. The proportion had fallen to 70.8 percent in 2011, a drop of almost 6 percentage points since 2001. Conversely, the proportion of households that rent their homes had risen by 5.5 percentage points. Even so, the rate of home ownership is exceptionally high. GRAPH 6
One sign of better quality of life is that the sharing of one home by two or more households, once common, is all but history. The number of households that occupy one home exclusively keeps rising – an indication of increasing affluence. Only 400 households, or 0.2 percent of the total, were sharing a home with another household last year.
40%
20%
0% Owner-occupied
Rented
Perquiste of employment
Other
GRAPH 6 - Sharing of dwellings by households All households
Households exclusively occupying one home
180,000
Number of households
175,000
170,000
165,000
160,000 2007
2008
2009
2010
2011
2012
JUNE 2013
34
Politics
The usual suspects Recycled through assemblies, the Legislative Assembly’s indirectly elected members harm the democratic process, analysts say BY LUCIANA LEITÃO
ndirect elections to the Legislative Assembly are opaque and dominated by traditional cliques, political analysts say. They add that the low turnover of indirectly elected members damages politics. Few changes are expected in the way the indirectly elected seats in the Legislative Assembly will be filled in this year’s elections, to take place in September. The new assembly will have 12 indirectly elected seats, two more than the outgoing assembly. The new assembly will have 33 seats in all, four more than the outgoing assembly. Indirectly elected members of the assembly will represent five functional constituencies. The professions will have three seats in the new assembly, one more than before; business will have four seats, the same as before; and labour will have two seats, also the same as before. In the outgoing assembly the welfare, education, culture and sport constituency has two seats. In the new assembly welfare and education will have one seat and culture and sport will have two. Most of the negotiations about who will win an indirectly elected seat will probably take place behind closed doors before the elections. This practice usually favours supporters of the government and Beijing. Indirectly elected seats have never been contested since the handover. Things were not different under Portuguese rule. In the last elections, in 2009, 10 candidates ran for 10 seats. Since 1992, the president of the assembly has been an indirectly elected member: first Anabela Ritchie, then Susana Chou and now Lau Cheok Va. Several influential figures, most in business, have become members of the assembly through indirect election.
I
Number of associations
ASSOCIATIONS ENTITLED TO VOTE IN INDIRECT ELECTIONS TO THE LEGISLATIVE ASSEMBLY, BY CONSTITUENCY 200 180 160 140 120 100 80 60 40 20 0 Business
Labour
Professions
Welfare
Culture
Education
Sport
Source: : Public Administration and Civil Service Bureau
JUNE 2013
35 Analysts highlight the low turnover of indirectly elected members. Mr Lau has been an indirectly elected member representing labour since 1988. Leonel Alves has been an indirectly elected member representing the professions since 1992. Mr Alves is running again this year.
Political fraction Since 2001, Chui Sai Cheong has represented the professions, Kou Hoi In and Cheang Chi Keong have represented business, and Chan Chak Mo has represented the welfare, culture, education and sport constituency. A political analyst at the University of Saint Joseph, Eric Sautedé, points out that some countries limit the number of terms a member of the legislature can serve for. Mr Sautedé says that to increase the turnover of indirectly elected members, Macau needs political parties. At present, associations substitute for parties in the political arena. “First, start by having a law on political parties in Macau, so they can groom new leaders, not just based on family connections and nepotism, as happens now,” he says. Defenders of the status quo argue that indirect elections allow people from all walks of life to engage in politics. They also argue that the indirectly elected and government-appointed members of the assembly are needed to run the city’s executive-led political system. In 2005, less than 19 percent of the population was actively engaged in an association, shows a survey. Delegates of 625 registered associations were entitled to vote in indirect elections in 2001. The number of associations entitled to vote rose to 905 in 2005 and 973 in 2009, before falling to 719 this year, official data shows. Mr Sautedé says these figures are a fraction of the estimated number of associations in the city. Research by the Macau Polytechnic Institute’s Strategic Studies Centre for Sustainable Development found the city had about 3,700 associations in 2007, more than double the number at the time of the handover.
Food culture To be entitled to vote in indirect elections, an association must register, must have been established for at least seven years and must have belonged to a functional constituency for at least four years. Any ticket of candidates in indirect elections must have the support of at least 20 percent of the associations that make up the functional constituency it seeks to represent. Associations delegate members of their boards to cast their ballots. Each association is entitled to a maximum of 22 votes in September’s elections, double the number in the 2009 elections. An association delegate has just one vote. Membership of the board of more than one association does not entitle the delegate to more than one vote, even if each association belongs to a different constituency. Mr Sautedé points out that this arrangement excludes ordinary members of associations. “Normally, people vote for their representatives in intermediate elections, like in the United States, and these vote for the final outcome. It’s a two-vote process, not like in Macau.” He says that in many cases, indirectly elected members of the assembly, having secured a seat, fail to represent their constituencies satisfactorily. Mr Sautedé says one such member is Mr Chan, who chairs the United Association of Food and Beverage Merchants of Macau and is also the boss of restaurant operator Future Bright Holdings Ltd. JUNE 2013
36
Politics
“He does not represent the culture sector. His positions don’t correspond to his constituency, unless we think of him because of the food fair,” Mr Sautedé says.
Celebrity voters Mr Sautedé sees no redeeming features in the city’s electoral system. He says it must be badly flawed if it allows Mr Chui, a brother of the Chief Executive, and Chui Sai Peng, a cousin of the Chief Executive, to secure seats in the assembly. Associations entitled to vote in September’s indirect elections have until early August to register the delegates that will cast their ballots. But each has already nominated a representative as part of the voter registration process. The lists of representatives contain the names of several prominent figures, particularly the list of the business constituency. It includes Tommy Lau Veng Seng of the Macau Association of Building Contractors and Developers, who is a government-appointed member of the assembly; Victor Ng of the Macau Importers and Exporters Association, who is a former president of the Macao Foundation; and Stanley Au Chong Kit of the Small and Medium Enterprises Asso-
JUNE 2013
ciation, who ran for Chief Executive in 1999 but lost the election to Edmund Ho Hau Wah. The culture and sport constituency representatives include Ambrose So Shu Fai of the Military Club, who is chief executive of SJM Holdings Ltd. The professional constituency representatives include Lionel Leong Vai Tac of the Macau Development Strategy Research Centre, who is a member of the Executive Council. The welfare and education representatives include Ho Wai Tim of the China University of Political Science and Law Alumni Association of Macao, who has connections with more than 20 associations, including the Macau Ecological Society.
Pony club Directly elected assembly member and advocate of democracy Ng Kuok Cheong says last year’s political reforms failed to open up the indirect election system. The reforms simply increased the number of indirectly elected seats, increased the number of functional constituencies and increased the number of votes each association has. “It just encourages association lead-
ers to provide lunch or dinner to 22 members instead of 11, to control the results,” Mr Ng says. Mr Ng says traditional, pro-government associations control much of what happens in indirect elections. They exercise particular control of elections in the business, labour and professional constituencies, which will together have nine representatives in the new assembly, Mr Ng says. Professor Larry So Man Yum of the Macau Polytechnic Institute, a specialist in public policy, says some larger associations wield extra clout in the horse-trading that decides who gets a seat in the assembly, so ensuring that the outcome is favourable to them. “To a very large extent, in the business sector, the candidates usually come from the Macau Chamber of Commerce,” he says. “They present no campaign or political project whatsoever.” Mr So says larger associations often act as umbrellas for smaller associations to shelter under, like the Macau Federation of Trade Unions. “At the end of the day, they can have all their votes. It’s not a genuine election. It’s only a gauge of money and background.”
37 KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com
Small city, big data MACAU CAN LEARN A LOT FROM READING THE SIGNS HIDDEN IN MOUNTAINS OF BITS AND BYTES ig data has been with us for many years. Viktor MayerSchönberger’s and Kenneth Cukier’s 2013 book, “Big Data: A revolution that will transform how we live, work and think”, charts this quiet revolution that has been taking place for more than a decade. Big data can bring huge gains in efficiency and wholesale changes in how organisations and cities operate, from government departments to small businesses. Big data yield associations, trends, relationships and patterns impossible to detect in small data, or by conventional social scientific research. They indicate the supremacy of correlation over causation and hypothesis testing. The new gurus are the data analysts, who collect, process, and analyse billions of pieces of data, working with predictive analytics and data mining. Big data touches all aspects of our lives, from predicting pregnancy to managing logistics, traffic and public transport, health services, flight bookings, weather forecasting, pollution control, business, crime prevention, mortgages, marketing, investment and credit worthiness. From Google and Facebook to Walmart and Amazon, from small businesses to mighty corporations and global industries, from governments to individuals, all benefit from big data. Does Macau use big data? Does it have übergeeks who can handle big data? If it did, it would be a big breakthrough for its many government departments and businesses, large or small.
B
Jams today If big data can help ease traffic jams in Los Angeles, with its 4,500 sets of traffic lights and over 7 million cars on the road each day, just think how much it could improve the dire traffic problems in a toytown like Macau, with its mere 130,000 vehicles on the road each day. If New Jersey can process data from cameras and sensors along its 4,200 kilometres of road to reduce traffic congestion, just think what could be done in Macau, with its mere 320 kilometres of road, even down to locating parking spots in its jam-packed streets. If placing sensors along the streets of Boston can identify where road works are needed to, say, fill potholes, just think how much this could improve the ghastly state of the roads in Macau, where there seem to be more holes and bumps than cars. Macau’s public and private coffers are bulging, and money would be well spent on installing sophisticated data collection sensors. If a small city in Iowa can use big data to improve its public transport system, then why not Macau? If a small utility company in the north of England can use big data make gains in efficiency, then why not in Macau? If big data can benefit a small or medium sized enterprise in the United States, whether a restaurant or a florist’s or anything in between, then why not in Macau?
Grist to the mill Take Macau’s ailing, unhealthy health services. In 2011, the latest year that figures are available for, there were
nearly 400,000 emergency service call-outs, over 1 million consultations with practitioners of Chinese traditional medicine or therapy, over 5 million auxiliary diagnostic and therapeutic examinations, and nearly one-third of a million days spent in hospital by in-patients. There is plenty of scope here for Macau to collect and use big data. Take the number of tourists we have. Last year, over 28 million people visited Macau and over one-quarter of a million entered or left each day, making the city one of the most-visited in the world. Surely we can utilise big data. Publicly available data is far less extensive here than in many other places. The difference is due not simply to Macau’s smallness and lack of openness, but also to the absence of detail, or “granularity”, in what data is available. If there was more public data then researchers could really benefit the city by analysing relatively big data.
Big questions Of course, there are causes for worry in the use of big data: the desirability of replacing studies of causation with studies of correlation (and false correlation), the hidden biases in big data, and the hype surrounding it. Using big data raises questions of ethics, privacy, traceability, accountability, surveillance, individual human agency and responsibility. If Macau is to use big data, then it needs specialists in big data analytics and commensurate development of its data protection measures. Recent breaches of data security here have had limited consequences for the perpetrators. The use of big data is something that the Office for Personal Data Protection has a lot to learn about. Big numbers do not necessarily speak for themselves, but big data presents big opportunities. Can little Macau seize the big day? JUNE 2013
38
Greater China
Waste crisis Hong Kong launches plan to address city’s grave problem with waste
n army of road sweepers and refuse collectors keep the streets clean in the heart of Hong Kong – but on the outskirts, growing mountains of waste are testament to what campaigners say is an environmental crisis. While the city may look well-kept, its three huge outdoor landfill sites are piled high with rubbish and are set to reach capacity by 2020, according to the government’s Environmental Protection Department. Some predictions say the first will be full in a year or two. “We need to have a clear roadmap for waste reduction, otherwise our rub-
A
JUNE 2013
bish will be on the streets in seven years’ time,” environmental scientist Professor Jonathan Wong, of the Hong Kong Baptist University, says. The majority of the 13,000 tonnes of rubbish dumped at landfills in Hong Kong each day is termed ‘municipal solid waste’, generated by households, business and industry. With a population of more than 7 million, Hong Kong is sending 1.3 kilograms of municipal solid waste per person to landfills daily. Most of it is ‘domestic waste’ – rubbish from homes and institutions including schools, as well as
refuse collected by public cleaning services, from food to furniture. Its per capita generation of domestic waste is significantly higher than other leading Asian cities, including Tokyo, Seoul and Taipei. The public’s attitude to consumption has been partly blamed for the problem. “Hong Kong is a fast-moving city and people want to keep up with the trends, whether it’s clothing or iPhones,” says Angus Ho, executive director of Hong Kong environmental non-governmental organisation Greeners Action. “They may have a perfectly good piece
39
With a population of more than 7 million, Hong Kong is sending 1.3 kilograms of municipal solid waste per person to landfills daily. Most of it is ‘domestic waste’
of furniture but they will dump it for a new one because there is no sense of responsibility – there’s a habit of consuming and disposing of things.”
Details of waste charging will be released in the middle of this year, the Hong Kong government says.
Struggling for solutions
While the government keeps its eyes on the bigger picture when it comes to managing the city’s waste, smaller-scale groups are trying to get the message across at the grass roots. Hong Kong Recycles is a nonprofit organisation set up last year, which issues four reusable bags to its subscribers so that they can separate their paper, plastic, metal and glass for recycling – the bags are picked up from their doorsteps once a week. Although some apartment blocks in the city already have recycling bins, they are often too small for the number of residents. “A lot of Hong Kong people do care about the environment and want to recycle, but they don’t want to walk down to a community centre or to wheelie bins with their rubbish. We thought of a way to make it easier for them,” says operations manager Joshua Tan. Subscribers pay HK$25 a week for the service and there are currently 250 clients, including corporates, plus a waiting list, says Mr Tan. Retail company director Marc Dambrines, 39, who has lived in Hong Kong for 17 years, says he signed up because HK Recycles was able to explain clearly to him where his rubbish would go and how it would be used. “It’s easy to recycle, but often you don’t know what happens at the end of the process,” he says. Hong Kong already recycles around half of its waste, but Professor Wong says compulsory recycling should be introduced as part of any government waste reduction plan. “The government and people need to join hands now to cope with the crisis,” he says. For many in Hong Kong however, the frenetic pace of daily life means thinking about waste is not high on their list. “Most people don’t worry about it. I think about how much my household produces, but sometimes convenience is a priority,” says 40-year-old housewife Ophelia, who believes waste charging would make a difference. “It would give me a push to do better,” she says. “Chinese people are very money-minded. If we’re charged for something we will be more careful.”
Mr Ho, along with other campaigners, also blames government inertia for Hong Kong’s mountains of rubbish. Last month, the government launched a 10-year plan to reduce waste by 40 percent per person. The ‘blueprint’ document proposed reaching its reduction target by expanding recycling, levying duties on household rubbish and improving waste-related infrastructure. It also mooted the possibility of building incinerators and extending existing landfill sites. But the proposal to build an incinerator is unpopular with residents and some environmentalists. “To face the challenges of the waste issue fundamentally, we need the joint efforts of the entire community to embrace an environmentally sustainable culture in daily life,” the city’s environmental minister Wong Kam-sing told reporters. The city’s Environmental Protection Department had previously published a 10-year framework for managing the city’s waste in 2005 but has been criticised for failing to implement much of the plan. The government and green groups believe that waste charging for households and businesses according to the amount they dispose of is the key to reducing the amount of rubbish generated – such schemes have worked well in Taipei and Seoul. But successive administrations have been hesitant to take on the public, commerce and political opponents to push through that policy. “The government doesn’t want to do anything too drastic and creative because they will face a hard time in LegCo [Hong Kong’s legislative council],” Edwin Lau, director of Friends of the Earth Hong Kong says. “An effective framework is there – they don’t need to reinvent the wheel. They just need to get it rolling,” he says. Mr Lau says the HK$0.50 (US$0.06) plastic bag levy, introduced in 2009 and which currently covers 3,000 shops including supermarkets and convenience stores, shows how effective a charging system can be in changing people’s behaviour. The Environmental Protection Department says use of plastic bags at the retailers under the scheme has reduced by 90 percent.
The right push
AFP NEWS AGENCY JUNE 2013
40
Greater China he latest tit-for-tat E.U.-China trade disputes could signal worse to come but both sides have a lot to lose if things get out of hand and harm the much-needed economic growth they seek, analysts say. In the last month alone, the two have locked horns over solar panels, steel tubes and telecoms equipment, sparking fears of a trade war between two of the world’s biggest trading partners. Analysts say the increase in tensions could simply reflect the fact that both are feeling the pressure from a sharp economic slowdown. China grew at its slowest pace in 13 years in 2012 while the E.U. economy, sapped by the debt crisis and soaring unemployment, is mired in a record-long recession. “I think the fact that the E.U. is in a negative growth spiral cannot be divorced from their trade actions with China,” says Sergio Marchi, head of the Marchi Group management consultancy and former Canadian International Trade Minister and ambassador to the World Trade Organisation. E.U. political leaders “at this time of job losses and economic hardship want to demonstrate to their constituents that they are tough in the face of any challenges from China,” Mr Marchi says. But the danger is that they go too far. “The E.U. must be careful in not overplaying its hand. China understands politics but they don’t like being put on the public spot, especially if it runs the risk of losing face publicly. If they decide to fight back, then the E.U. might be facing a lose-lose scenario,” Mr Marchi adds.
T
Main loser
Make trade, not war The European Union and China have much to lose if trade war breaks out, analysts say
BY BRYAN MCMANUS*
JUNE 2013
Zhang Hanlin, professor at the University of International Business and Economics in Beijing, says the main loser in any trade war would “certainly be the E.U., E.U. consumers and E.U. industry,” not China. “The E.U. is recovering and definitely needs the support of the global market because the E.U., like China, is an economy that depends a lot on foreign demand,” Mr Zhang says. The stakes are enormous. E.U. exports to China totalled US$212 billion (MOP1.7 trillion) last year, with imports US$334 billion, making theirs one of the biggest trading relationships in the world. Analysts say the risks are even greater with a new political leadership in Beijing, which may be more sensitive to slights. So far, their response has been firm but guarded.
41 China “does not want ... a trade war,” Chinese commerce ministry spokesman Shen Danyang said last month after the E.U. threatened an anti-subsidy probe into telecoms imports. “We hope the E.U. will not take actions that do no good to either side.” Brussels was careful too in announcing the telecoms probe, highlighting it as a “decision in principle” taken pending “negotiations towards an amicable solution with the Chinese authorities.”
Trade spats
China “does not want ... a trade war,” Chinese commerce ministry spokesman Shen Danyang said
The E.U. is not blind to other Chinese sensitivities. For example, Beijing has expressed concerns over what it sees as U.S. efforts to contain its power in Asia and the Pacific as President Barack Obama ‘pivots’ back to the region. It has also noted E.U.U.S. plans for what could be the biggest free trade agreement in the world. An E.U. official said that during April’s visit to China by E.U. foreign affairs head Catherine Ashton, Chinese officials had “mentioned again” the possibility of Brussels and Beijing concluding a free trade agreement. While the E.U. feels an investment protection accord would be best at this stage, the official said the E.U. had reassured Beijing a U.S. accord was “not aimed at closing the transatlantic relationship” but rather at opening it up, including to China. “Europe is poised to launch this process as soon as China is ready and we look forward to working with the new Chinese government to reach a deal,” E.U. trade spokesman John Clancy said last month of the investment accord. “This would be a first step – when we see progress in these talks with China [we could] also envisage to consider a free trade agreement,” Mr Clancy added. At the same time as there have been disputes, there have also been agreements. Last month, for example, the European Commission approved a US$900-million tie-up between Sweden’s Volvo Trucks and China’s Dongfeng Motor, which will create the world’s biggest lorry maker ahead of Germany’s Daimler. “I would not give the current trade spats ... more importance than they are due,” says European Liberal Democrat lawmaker Sir Graham Watson. “Dumping investigations are the normal currency of international trade ... during the last Commission, it was all about shoes and bras,” Mr Watson says. “The Brussels-Beijing relationship * AFP NEWS AGENCY will go on as before.” JUNE 2013
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Greater China
Nancy (right), Li Na’s daughter, practicing an intellectual game accompanied by her mother (left) during an intellectual training class in Beijing
New worries
Concerns about education, air pollution and food safety are troubling the mainland’s rising middle class BY TOM HANCOCK*
ith two cars, foreign holidays and a cook for their apartment, one Beijing family epitomises the new middle class created by the mainland’s decades of rapid economic growth – and its resulting worries. Li Na, 42, a caterer at the capital’s zoo, and her husband Chi Shubo, 48, who works for a state-owned investment company, have seen their fortunes transformed since she arrived in Beijing 20 years ago from Shandong, a coastal province. Then, she cycled for hours from a shared dormitory to visit her husband’s workplace. Now she commutes in a car made by an American firm and they holiday with their 11-year-old daughter in Japan, South Korea and the United States. Tens of millions of others have made a similar transition. About 10 percent of
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the mainland’s 1.35 billion people now count as middle class, according to the Organisation for Economic Cooperation and Development, a figure set to rise to 40 percent by 2020. But their concerns about air pollution, food safety and the mainland’s education system show the challenges facing the country’s newly appointed leaders, who have promised a shift away from the model of growth at all costs. Every year, Mrs Li and her husband set a goal to improve their lives. “We always have a plan,” she says. “For example, this year I might want a new camera, and my husband will help make that come true.” The family’s four-bedroom apartment in a Beijing suburb was the most important purchase of their lives. “We struggled half our lives to buy it,” Mrs
Li says, over a breakfast of fried eggs and bacon.
What you know... In a picture of comfortable suburban living, their daughter, who goes by the English name Nancy, sprawls on a vast sofa opposite a huge flat-screen Sony television, nuzzling the family’s fluffy brown dog. Mrs Li says her top priority is Nancy’s education. It is not a school day, but her iPhone alarm rings to signal that it is time for the girl’s first lesson. She steers her Chevrolet Epica sedan past forests of near-identical apartment blocks to the Haidian Youth Palace, a relic of Maoist-era China which now holds classes aimed at boosting children’s creativity. At weekends Nancy has sessions in
43 traditional Chinese calligraphy, and a badminton class “with a private coach”, Mrs Li says. In the past year, the young girl swapped learning the piano for a new instrument, the ocarina, a pocketsized flute. Nancy has only three or four hours of free time a day on weekends, Mrs Li says, as she seeks to hold her position in the mainland’s highly competitive education system.
... and who you know A glut of graduates created by the expansion of the mainland’s university system means the graduate unemployment rate is higher than for the general population – making winning a place at the very best colleges ever more crucial. Getting into a top school is not always about ability, Mrs Li says, with cash donations sometimes involved. “Sometimes parents need to do extra work, give out red envelopes, and even then success can depend on your contacts.” This year has bought some more worrying lessons. When thick smog blanketed northern China, sending pollution levels soaring in the capital, Nan-
About 10 percent of the mainland’s 1.35 billion people now count as middle class, according to the Organisation for Economic Cooperation and Development, a figure set to rise to 40 percent by 2020 cy learned about PM 2.5, the name given to invisible pollutants that can damage children’s lungs. She reaches into the pocket of her mother’s car seat and pulls out a face mask. “My mum made me wear this every day in January and February because the PM 2.5 was very bad,” she says. At lunchtime, the family gathers in a chain restaurant over plates of braised pork, spicy tofu and buns filled with redbean paste. But eating out is becoming a rarer treat. Years of scandals involving poisoned food – from tainted milk to re-
processed “gutter oil”, taken from drains and sold as new, to rat meat passed off as lamb – make the family nervous about Beijing’s restaurants. “I try to make sure my daughter eats outside as little as possible,” Mrs Li says. At dinnertime, Nancy runs to the door to greet her father, while a domestic helper cooks dozens of seafood-filled dumplings. Mrs Li pulls a bottle of imported Australian wine from a cabinet, before deciding on a New Zealand red. Worries about safety mean they source their food carefully, ideally from farms near Mrs Li’s hometown, she says, adding: “There is corruption in the industry, which makes the problem worse.” The family have benefited hugely from decades of rapid economic growth, but Mrs Li hopes for more from the mainland’s new leadership, formally installed in March. “Ordinary people are losing faith in the government, because of problems accumulating over a long period,” she says. “I don’t think their main duty is to improve the economy... it’s to improve the quality of life, so that we don’t have to eat oil from the gutter, or worry * AFP NEWS AGENCY about milk.”
JUNE 2013
Law
Lawyers association president Jorge Neto Valente says changes to the structure of law firms was discussed twice during the 1990s but no action was taken JUNE 2013
Photo: Carmo Correia
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For better or worse Decades of debate are done – law firms may soon have the option to operate as partnerships BY LUCIANA LEITÃO
aw firms are closer to being able to select an organisational structure that would allow more lawyers to share the profits and liabilities of their practice. The Macau Lawyers Association, which is also the industry’s regulator, put forward a proposal to permit law firms to operate as general partnerships. After three heated general meetings, it has held a vote and passed a draft bill. Currently, law firms operate either as commercial companies or professional corporations. Some firms have a single partner with additional lawyers employed as associates. Lawyers association president Jorge Neto Valente says changes to the structure of law firms was discussed twice during the 1990s but no action was taken. At the time, lawyers were reluctant to change because of concerns it would restrict their independence and increase conflicts of interest. Mr Neto Valente says however that the existing system can cause problems. “Each lawyer is at his own risk, which allows a lawyer from a firm to accept one case, while another colleague from the same firm can accept the opposite side. ” Mr Neto Valente says he is not aware of this ever having taken place. Far more likely are conflicts of interests in handling big clients such as gaming operators, which may be involved in several cases at once. This could lead to a variation of the situation the association has reservations about, with a lawyer from a firm defending a gaming company in one action, while another colleague from the same firm is prosecuting it in another. “It is hard not to get in someone else’s way,” Mr Neto Valente says. Conflicts such as these are less likely to occur in general partnerships. “When one hires a lawyer [of a firm], that mandate is extended to the others,” he says.
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Words and deeds The recently approved proposal is very similar to those discussed in the 1990s.
And it attracted similarly animated debate, although the association’s latest draft makes it optional for law firms to operate as a general partnership. Sources in the legal industry say those in charge of the city’s biggest law firms may not be interested in sharing the profit generated from their substantial revenue streams. One issue contested at the association was if liability should be limited among the partners of a law firm. The final decision was for unlimited liability. Lawyer João Nuno Riquito headed a committee within the association to draft the proposal. He says the draft ensures a lawyer in a general partnership maintains the same duties as a sole practitioner.
GLITCH IN THE MACHINE T
he Macau Lawyers Association has finalised a proposal that gives law firms the freedom to form as general partnerships but is wondering where to send it. The lawyers are a bit confused about the next legal step for their approved proposal. Lawyer Frederico Rato says it is unclear if the government or the Legislative Assembly should approve the document. The Basic Law seems to suggest the government should take charge. But a piece of 2009 legislation clarifying the law-making roles of the government and the Legislative Assembly seems to argue it should be the latter. Macau Lawyers Association president Jorge Neto Valente says the proposal currently exists as a bylaw. The government can directly approve bylaws without needing to send them to the assembly. Mr Neto Valente says the process of turning the proposal into law could be a lengthy one if the bill needs the approval of the assembly.
“It is important that the rules are the same and that the liability rules are the same,” he says. Mr Riquito says he is considering converting his law firm into a general partnership. Members of the Macau Lawyers Association also debated whether or not it would be admissible for lawyers to integrate into a general partnership, but still practice law by themselves in some cases. “We have decided that lawyers, be it partners or not of general partnerships, can only practice law within their firms,” Mr Riquito says.
Competitive cost Lawyer Álvaro Rodrigues says the new model will mean the profession is more transparent to clients and the wider community. “It generates transparency for third parties. It contributes to better practice and better service to the community,” he says. Lawyer Frederico Rato says the adoption of the general partnership model is a sign of “maturity”, bringing a “touch of modernity and openness to the free, but regulated, practice of law”. The proposal is “balanced” and will bring a “qualitative improvement”. He sees a future where professional ethics are reinforced and an increasing specialisation of law firms. However, Mr Rato says the new model may make it easier and more attractive for big, international firms to establish a foothold here, drawn by the volume of business generated by the gaming sector. Mr Neto Valente admits some lawyers are afraid of the competition. He says any practitioner will always need to meet the standards of the Macau Lawyers Association to be able to practice. A decision has not yet been taken as to whether his eponymous firm will change its structure. “People forget that they will also have to pay for certain things,” he says. Partners in the new firms will not only share the profits but also expenses. JUNE 2013
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Law
Advocate and aesthete Rui Cunha’s feelings for the law and the arts make him and his foundation a Macau institution BY LUCIANA LEITÃO
ui Cunha is endeavouring to bequeath to Macau some of the wisdom and taste acquired during his career as a lawyer and patron of the arts. After more than 20 years here – originally at the invitation of gaming magnate Stanley Ho Hung Sun – Mr Cunha has made Macau his home, and is hoping to give back to the city the benefits of the experience it has given him. He created the Rui Cunha Foundation a year ago to give the legal system the support he says it needs. “I began by thinking of creating only a study centre, but later I started to think of creating an institution to uphold the study centre. So I created a foundation,” Mr Cunha says. The foundation has two purposes. It was created to analyse and systematise the law and propose new laws. “Up to 1999, we had no need to be concerned with the law that governs society, and people accepted that situation.” After the handover, he says the duty of stewardship of Macau’s law passed to its citizens. A centre that considers, studies and disseminates the law became a necessity. “We run the risk of being exposed to all the influences of other systems, or even total absorption by Chinese law.” His foundation set out to promote debate on legal issues. However, whereas the debate was public before, now the foundation is trying to concentrate the debate among 10 or 15 entities that can play an active role in the law. Mr Cunha says one big obstacle hinders the foundation’s work: a scarcity of competent translators.
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Motivation patron The second purpose of the foundation is to help Macau artists, especially young artists, find places to show off their talents, so they can gain confidence and develop. JUNE 2013
The idea, Mr Cunha says, was that “the foundation would serve to promote and show what they are worth, so they feel motivated”. The first artist to exhibit under the auspices of the foundation, Wong Soi Lon, was subsequently invited to show his work in Paris. Wong has also exhibited in Lisbon, and an art gallery in the Portuguese city of Oporto invited him to put his work on display. Mr Cunha says Wong has gained strength from the experience. “After one year, when we opened a new exhibition of another local artist, people commented on how different he looked,” he says. Born in 1941, Mr Cunha describes himself as “curious” about the arts. And it has been a constant presence in his life. When Mr Cunha studied law in Lisbon in the 1960s, he worked as a television director’s assistant. In the early days of television drama, performances were live. “There were no video cameras recording. We did theatre on air,” he says. “I even had the opportunity to follow such a career but at the time I chose to be more conservative.” Still, Mr Cunha’s choice allowed him to pursue an interest in photography that he indulged during a spell in Africa. “I was fortunate enough to find a few friends with the same taste and we even entered some competitions.”
In the blood During his more than 10 years of practising law in Angola, Mozambique and East Timor, Mr Cunha came to appreciate the art of each region. “I have with me objects that I brought from each of those places, that identify the places, and whenever I look at those objects, I always remember something from those times.” Mr Cunha is the son and grandson
Like others before and since, Rui Cunha arrived in Macau intending to stay for one year, then decided to stay for one more, and eventually never left and now has no intention of doing so
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of lawyers. His family lived for three generations in Daman, then a Portuguese colony, on the west coast of India. He received his secondary schooling in Goa – which was then another Portuguese colony on India’s west coast – before going to Lisbon to study law. From 1965 to 1981 he served as prosecutor, attorney-general and high court judge in Portugal and in various Portuguese colonies. When he reached the age of 40, Macau beckoned. Mr Cunha was serving as a court martial judge in Lisbon when a Chinese friend, who knew him from his days in East Timor, telephoned him. The friend passed the phone to Mr Ho, who said he was looking for a lawyer to set up a legal department for his Sociedade de Turismo e Diversões de Macau SA (STDM). Two weeks later Mr Cunha was in Macau, working for Mr Ho.
Mr Cunha says he never regretted hanging up his judge’s robe. “The judicial career was something I was doing with passion but, at a certain point, it transformed into something that I didn’t feel connected to.”
Pupil turns teacher Like others before and since, Mr Cunha arrived in Macau intending to stay for one year, then decided to stay for one more, and eventually never left and now has no intention of doing so. Soon after arriving, he established his own legal practice. In 1996, Mr Cunha was one of the founding partners of C&C Macau Lawyers. “It has grown, and now we are 70 people,” he says. In the meantime, Mr Cunha maintained his collaboration with Mr Ho. Mr Cunha was present at critical mo-
ments in STDM’s history, notably the modification of its gaming concession in 2002, which broke its monopoly of the gaming market. Today, Mr Cunha is an executive director of Mr Ho’s SJM Holdings Ltd. Mr Cunha says that over the years his relationship with Mr Ho has always been cordial, and even though they have disagreed at times, their mutual respect persists. Mr Cunha says he owes his views on life and how life should be lived to Mr Ho. “He is the mentor of the way I see the society and how we should serve. That’s what he did. I was with him, I learned and I want to do a bit of the same,” he says. Mr Cunha says that even though he has put down roots in Portugal, he plans to stay in Macau for good. “Today, I feel more part of Macau than Portugal.” JUNE 2013
48 RICHARD COOPER PROFESSOR OF INTERNATIONAL ECONOMICS AT HARVARD UNIVERSITY
RICHARD DOBBS DIRECTOR OF THE MCKINSEY GLOBAL INSTITUTE
China’s e-tail revolution THE COUNTRY’S APPROACH TO E-TAIL IS POISED TO BE ONE OF THE FORCES SHAPING THE EMERGING-MARKET INTERNET REVOLUTION
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hen you think about centres of technological innovation, Silicon Valley, Seattle and Seoul are probably the first places that come to mind. After all, they are the homes of Amazon, Apple, Facebook, Google, Intel, Microsoft and Samsung – companies whose innovations transform the way other sectors, from financial services to telecoms and media, do business. Now, however, the rise of “e-tail” (consumer-facing e-commerce) in China is enabling Hangzhou – the base of Alibaba, China’s largest online retailer – to join their ranks. Indeed, on April, Alibaba signalled its ambitions by buying an 18-percent stake in Sina Weibo, China’s version of Twitter. And, as with technology hubs elsewhere, innovations born in Hangzhou are determining the development path of related industries. China’s e-tail market is the world’s second largest (after that of the United States), with an estimated US$210 billion (MOP1.7 trillion) in revenue last year. Since 2003, the market has posted a compound annual growth rate of over 110 percent. By 2020, China’s e-tail market could be as large as today’s markets in the U.S., Japan, the United Kingdom, Germany and France combined. Despite a broadband penetration rate of only 30 percent, e-tail commanded 5 to 6 percent of total retail sales in China in 2012, on par with the United States. And the sector is already profitable: Chinese e-tailers are logging margins of 8 to 10 percent of earnings before interest, taxes and amortisation, which is slightly larger than the average margin for physical retailers.
Coming of age Two features of Chinese e-commerce stand out. First, roughly 90 percent of Chinese e-tail is conducted on ad-funded virtual marketplaces. On these platforms – which resemble eBay and Amazon Marketplace – manufacturers, retailers and individuals offer products and services to consumers through online storefronts. By contrast, in the U.S., Europe and Japan, roughly 70 percent of the market is composed of e-tailers running their own websites, whether online-only merchants like Amazon or traditional brick-and-mortar retailers such as Carrefour, Dixons and Walmart. Moreover, according to a study by the McKinsey Global Institute, online purchases in China do not simply replace offline purchases. Rather, e-tail supports incremental consumption: US$1 of online consumption seems to generate roughly US$0.40 of additional sales. And incremental spending as a share of total spending is even higher in China’s less-developed cities, where a shortage of brick-and-mortar retailers means that online shopping provides access to otherwise unavailable products and brands. Mass consumption in China and other emerging economies is coming of age in the Internet era. Given that industry structures JUNE 2013
are still developing in many of these countries, e-tail is set to shape not only the retail landscape, but also the manufacturing and financial-services industries – and even the urban landscape itself. In most countries, the retail sector has typically developed in three stages: first, local or regional players dominate, before a smaller number of national companies takes over, with e-tailers ultimately challenging traditional businesses. But China lacks national leaders, with the top five Chinese retailers in different product categories commanding less than 20 percent of the market, compared to up to 60 percent in the United States. And establishing a strong physical presence throughout the country will be time-consuming and expensive.
Shaping development By contrast, Alibaba (which owns marketplaces such as Taobao) and 360buy.com (which focuses on electronics) rank among China’s top ten retailers, and already provide national coverage through the reach of express delivery companies. As a result, China’s retail sector seems more likely to follow a two-stage development path, with e-tailers emerging as the major national players. The ability afforded by online marketplaces to new players to attain national – and international – prominence without massive upfront investment will profoundly affect how both retailers and manufacturers approach new consumer markets. The Japanese retailer Uniqlo, for example, used such marketplaces to expand into China in 2009. Likewise, by removing some of the benefits of scale and specialisation that characterise the consumer goods industry elsewhere, e-tail enables new manufacturers to join the market, selling goods like apparel and cosmetics directly from workshops and factories to consumers. Such businesses are also leveraging their broad access and widely recognised brands to expand their role in the financial services sector. Finally, e-tail could shape China’s urban development and transform leisure activities. Urban centres worldwide revolve around shops, whether on main street or at the mall, with many consumers viewing shopping as a leisure activity. China’s evolution will likely entail smaller main streets and malls, with large distribution centres near city limits. Citizens will spend more free time engaging in other activities, such as dining out. All of these changes could alter the use and pricing of real estate. Other emerging markets are likely to follow a similar course. Chinese e-tailers are already using their advantages in exporting products from the country’s factories to expand internationally. And enterprises in other countries are adopting a similar online business model. China may have largely missed the Industrial Revolution in the nineteenth century. But its approach to e-tail is poised to be one of the forces shaping the emerging-market Internet revolution of the twenty-first century.
Society
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Faltering first steps A baby boom has outstripped the number of day care places for infants and toddlers BY TRACY MA
he number of births in Macau has been increasing steadily since 2002. It peaked at more than 7,300 last year, driven by traditional beliefs. The last lunar year was a Year of the Dragon, believed to be a good year to have children. The bad news for parents is that the number of places in crèches is insufficient to meet demand. Macau has 37 crèches with slightly more than 5,300 places altogether, according to the Social Welfare Bureau website. To cope with growing demand, the
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bureau increased the maximum number of children in each class to 28 from 25 in 2010. The bureau said last month that it was studying the feasibility of raising the cap again. Its decision will be based on the findings of a study to be released later this year. The head of the University of Macau’s educational research centre, Teresa Vong Sou Kuan, says increasing the number of children in each class may hinder their development. The Social Welfare Bureau says it is supporting the opening of five new
crèches this year, which will bring the number of places to almost 6,600. One new facility has already opened. Even with the additional five crèches, the city will have places for just onethird of the eligible children. Crèches cater for children aged between three months and three years. Although not compulsory, many parents send their children to day care. Toddlers must be enrolled in kindergarten when they are three years old. A report by the Collective Wisdom Policy Centre, which is connected to the JUNE 2013
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Society
The Women’s General Association has received more than 16,000 applications from 7,000 parents for new places in its seven facilities this year. There are just 600 vacancies available
General Union of Neighbourhood Associations of Macau, estimates that at least 4,200 extra places are needed to satisfy demand.
Push and pull The Women’s General Association has received more than 16,000 applications from 7,000 parents for new places in its seven facilities this year. There are just 600 vacancies available. One of its crèches, in Fai Chi Kei, received about 3,000 applications for 50 vacancies. “I want to send my kid to the crèche. Since he is my only child, I wish him to learn better how to communicate with others,” one parent told Macau Business. For many working couples with young children, day care is a necessity, particularly if they cannot afford a housemaid or nanny, and have no family member they can rely on. The Women’s General Association says all-day care is most in demand and that afternoons-only care is least in demand. “Nowadays, both husband and wife work full-time. They don’t have time JUNE 2013
to stay home and feed their children,” says Wong Kuan Kit, who is in charge of one of the association’s crèches. Ms Wong says demand increases as children approach kindergarten age. “The most immediate problem for our crèches is the lack of places for children who are getting ready to attend kindergarten in the next academic year. Parents want their children to be better prepared for school but our vacancies are limited.” Many couples work in the hospitality and gaming industries, so there have been increasing calls for aroundthe-clock care. One of the most vocal proponents of 24-hour-a-day crèches is Legislative Assembly member Angela Leong On Kei, who is also an executive director of gaming company SJM Holdings Ltd.
Labour intensive The government says it negotiating with crèches to extend their opening hours. There is also an argument that the casinos should provide crèches for their staff.
Most crèches are not-for-profit enterprises and are subsidised by the Social Welfare Bureau. They are run by grassroots associations, religious groups and schools. Only a handful of crèches seek to make a profit. They cater to wealthier families and charge higher fees. Ms Wong says setting up a nursery is a complicated process for private companies, impeded by red tape and difficulties in finding staff. Qualified teachers prefer to work in kindergartens, where they are entitled to a government subsidy on top of their base salary, she says. About 840 people were working in crèches in the first quarter of this year, official data shows. There were about 40 vacancies for staff. Workers were paid an average salary of MOP10,280 (US$1,285), below Macau’s median monthly pay of MOP12,000. The Collective Wisdom Policy Centre says a crèche needs to have at least 17 staff to function properly.
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Transport
Bridging the silence It should be at the midpoint of its construction timetable but it is unclear what progress is being made on the Hong Kong-Zhuhai-Macau Bridge BY ALEXANDRA LAGES
hen was the last time you heard any news on the construction of the Hong Kong-Zhuhai-Macau Bridge? The last official update was made in October by the Macau government, but the Infrastructure Development Office says there is nothing more to say on its progress. Observers have different opinions on this lack of information. Professor Larry So Man Yum, a public policy expert at the Macau Polytechnic Institute, says Macau people are not interested in the project. Sonny Lo Shiu Hing, co-director of the Centre for Governance and Citizenship at the Hong Kong Institute of Education, blames the government for poor communication. Macau is currently building an island reclaimed from the sea where the main section of the bridge will land on the western side of the Pearl River Delta. The project was forecast to be ready by the end of last year, according to a 2011
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statement from the Infrastructure Development Office, which is in charge of the Hong Kong-Zhuhai-Macau Bridge project for the Macau side. A spokesperson from the bureau said there was no more information to provide, aside from that posted on the bridge’s website. The latest information there is dated October 2012. According to the office’s 2011 statement, 50 percent of the land reclamation work to build the island was complete. Macau was to pay about one third of the RMB2.3 billion (MOP3 billion) to build the 200-hectare island. The reclamation work, coordinated by the Zhuhai government, started in December 2009.
Junior partner The island will host the Macau border crossing facilities. The government also has plans to build two giant car parks with capacities for 2,000 and 5,500 ve-
hicles, to accommodate cars coming from the mainland or Hong Kong. “I don’t see a lot of news on the bridge, even in Chinese-language newspapers. It seems the community is not much interested about it,” Mr So says. Macau is the smallest of the three partners in this project, which is largely being led by the other two governments. “Maybe it is not the exact time to provide more information,” he says. Mr So says there are a number of issues yet to be agreed on between the three parties. For example, it has not been decided if public buses will be able to use the mega-bridge, or whether vehicles from Hong Kong and Zhuhai will be allowed to drive on Macau’s roads and vice-versa. “We are a small partner, so we just have to wait and see.” Mr Lo, the author of a book on political change in Macau, says there is something wrong with the government’s
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THE DELTA BRIDGE T
he Y-shaped Hong Kong-Zhuhai-Macau Bridge is the first major, combined bridge and tunnel sea crossing in China. Upon completion, the travel time by car from Hong Kong to Macau or Zhuhai will be reduced from more than three hours to half an hour. The goal is to help boost road transport and tourism around the Pearl River Delta. The 29.6-km main section runs from the artificial island off the Areia Preta district to an artificial island just west of Hong Kong’s border. It comprises 22.9 km of bridgework, a 6.7-km tunnel and two artificial islands. The tunnel is needed so that the bridge does not interfere with shipping in the Pearl River Delta. It will run 40 metres below sea level. From the artificial island off the Areia Preta district, two sea viaducts will connect the main section to Macau and Zhuhai, respectively. The bridge will carry a dual three-lane carriageway and will have a speed limit of 100 km/h. The bridge will have a 120-year lifespan and be able to withstand winds of more than 200 km/h.
system for releasing information about the bridge. “With the creation of [Chief Executive] Fernando Chui Sai On’s system of spokespersons, I would expect the information system to be more transparent and clearer for more members of the public. It is also not easy to get information on Hengqin Island. This problem is not special to the bridge.” Work on the bridge began four years ago. It was expected to be operational by the end of 2016 but they may be delays. Work on the Hong Kong side of the project was delayed for three months until January. The construction was put on hold after a temporary work platform collapsed at the site in October, killing one worker and injuring 14 others. The bridge’s final cost is unclear and its costing, complex. Official forecasts from 2009 estimated the bill would be more than RMB70 billion. The Macau, Hong Kong and Zhuhai governments will share that cost, although not evenly. JUNE 2013
Property
Photo: Luﾃｭs Almoster
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Known unknowns If investors cannot afford to buy a home, they should consider waiting on the sidelines: this is the wisdom of the pundits BY LUCIANA LEITﾃグ
JUNE 2013
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Midland Realty (Macau) Ltd chief executive Ronald Cheung Yat Fai says housing prices are firm and will not fall sharply any time soon He says property investors that have earned a lot by buying and selling in the past few years should be in no hurry to buy at this point. If they buy more property, they should be prepared for lower returns – for a while at least. “The market is still hot but not as hot as a few months ago,” Mr Cheung says. The property cycle will bring around another chance to buy in three or four years, he adds. Mr Wong advises would-be homebuyers with shallow pockets to think carefully. “They have only one bet with the money,” he says. “If they don’t have the money, they have to save it, and then they can wait until the market eventually drops and buy then, instead of buying just because other people are doing it.” Jones Lang LaSalle Macau’s head of residential property, Jeff Wong, says housing prices have risen by 50 percent in the past year. “Basically, the fundamentals of Macau are still pretty good, and we expect in the next two to three years to be on an uptrend,” Mr Wong says.
Picky buyers
mid record-high property prices, should would-be homebuyers wait before taking the plunge? Those in the know say it depends on the circumstances. But their rule of thumb is that prospective investors should wait for prices to fall, while prospective owner-occupiers with sufficient wherewithal should buy now. Midland Realty (Macau) Ltd chief executive Ronald Cheung Yat Fai says housing prices are firm and will not fall sharply any time soon. Mr Cheung cities official figures saying that the number of homes sold has fallen, but the prices paid for them have increased.
A
Should would-be homebuyers buy now or wait? Mr Wong says there is no stock answer to the question. It depends on how much they would need to borrow and how much they earn. He says prospective owner-occupiers with enough money should consider buying, if only to save on rent. “If you have a stable job – for example, working in the government – you have job security and you can accumulate money every month. Then you can consider.” He says prospective investors should be more careful about the sort of property they buy. “For investment you need to be more picky. Before, you could take any location, any product.” For the next three years, at least, the supply of housing will remain tight, Mr Wong says. Continuing economic growth in Macau and the maintenance of ultra-easy monetary policy in the United States, which makes it cheap to
borrow here because the pataca is indirectly pegged to the U.S. dollar, may keep Macau awash with money. This, combined with the imbalance between housing supply and demand, may mean higher housing prices. “Prices may even go up another level,” he says.
News rush Mr Wong acknowledges it is hard for would-be homebuyers to wait. “Usually, people always want to buy at the same time,” he says. “People all want to buy in Macau because there is much good news around that pushes them into buying. If 10,000 people have money to buy at the same time, do we have 10,000 units for them?” The answer is “no”, he says, so prices keep rising. Mr Wong says, in contrast, when the environment changes, everybody rushes to sell, making prices drop steeply. “There are insufficient buyers to buy that lump sum of properties.” An associate professor of finance at the University of Macau, Rose Lai Neng, says would-be homebuyers should consider several factors before deciding whether or not to buy. They should ask themselves if they really urgently need a home, and are not being led into buying one as an investment or following the lead of others. Ms Lai says would-be homebuyers should ask themselves if they could afford the mortgage payments if interest rates increased. “We are not talking about a mortgage of two years but of 20 years, when there is more than enough time for one or two interest rate cycles.” If they wait before buying, they run the risk that prices will continue to rise but, on the other hand, while prices may surge, they might plunge if the economic environment changes, she says. “Ultimately, it is the affordability that matters,” Ms Lai argues. “Once the housing unit is bought for the purpose of being lived in, a price upsurge or plummet should not affect the life of the household.” JUNE 2013
56
Property
OVER 7,600 FLATS UNDER CONSTRUCTION The government expects more than 6,600 flats will be completed in the next three years
A total of 88 projects comprising 7,620 flats were being built in the first quarter of this year, the Lands, Transport and Public Works Bureau said in a press statement last month. The bureau expects more than 6,600 flats in 21 projects to be completed in the next three years. The statement also said that the bureau issued housing
permits to 102 flats in eight projects during the first three months of this year, while 44 more flats were up for final inspection. In the January-March period, the bureau was reviewing the construction plans for 239 new projects that could provide over 30,400 flats.
TELOK EYES MORE MACAU PROJECTS
Hong Kong-based property firm Telok Real Estate Partners is planning two more projects for Macau. Telok partner Philip Pang told the South China Morning Post that the firm has been negotiating land deals to develop one or two more projects here. He said the developer would focus on projects that cater for first-time homebuyers and up-graders, with selling prices of between HK$3 million (US$387,000) and HK$4 million.
THE FOUNTAINSIDE FINAL SALES LAUNCHED
The final sales phase of The Fountainside, a luxury lowdensity residential development, was launched last month. The 22 homes on offer during this final sales phase consist of 15 standard units, three special units and four villas. The Macau Properties Opportunities Fund, managed by Sniper Capital, owns the project on Penha Hill. Construction began about two years go and should be completed soon. JUNE 2013
STUDY ON LOCALS-ONLY HOUSING LAUNCHED
The government has commissioned a study to the University of Macau on housing exclusive for Macau residents. It will also analyse whether the sales of houses should be restricted to individuals or include companies as well, and look at other issues such as the re-sale of such properties. Last September, the Hong Kong government launched a pilot scheme for a “Hong Kong land for Hong Kong people� policy. About 1,100 flats will be sold to permanent residents of Hong Kong on the condition that they can only sell the flats to other permanent residents for the next 30 years.
Property | Market Watch AVERAGE TRANSACTION PRICE PER SQUARE METRE OF RESIDENTIAL UNITS BY DISTRICT AS PER STAMP DUTY RECORDS
57
Source: DSEC
(MOP) District
2011
2012
2013
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Macau
44,269
36,345
41,519
45,453
55,427
58,305
64,869
Macau Peninsula
42,296
35,416
39,228
41,266
47,461
51,662
63,336
74,751
Ilha Verde
44,075
37,154
34,363
39,520
53,011
47,599
50,042
59,546 53,391
77,975
Tamagnini Barbosa
34,159
31,614
30,563
30,276
40,011
42,983
46,640
Areia Preta and Iao Hon
32,586
31,455
32,246
34,454
40,951
41,740
48,756
50,647
Areia Preta new reclamation zone (NATAP)
51,255
43,308
45,984
47,446
52,276
67,636
85,137
92,598
Mรณng Hรก and Reservoir
33,789
32,225
36,135
35,428
39,438
41,253
47,885
42,567
Fai Chi Kei
37,637
35,682
33,401
37,690
45,077
46,402
48,419
57,356
Lamau Docks
35,081
39,655
38,787
46,543
60,767
58,544
60,271
71,502
Horta e Costa and Ouvidor Arriaga
32,889
34,592
38,461
35,943
48,889
48,433
44,359
55,041
Barca
30,370
27,438
27,574
29,132
35,055
39,387
43,591
44,939
Patane and Sรฃo Paulo
27,901
28,945
29,676
28,885
31,064
38,919
48,228
41,890
Conselheiro Ferreira de Almeida
30,460
29,030
33,714
29,877
39,443
37,162
40,335
51,672
Guia
54,703
38,596
57,699
59,312
56,944
52,187
52,876
48,943
ZAPE
30,228
30,410
31,196
32,537
36,957
37,479
42,962
48,051
NAPE and Praia Grande Bay reclamation area
76,634
60,393
61,126
63,534
76,876
79,246
92,964
99,186
Downtown Macau
27,862
29,745
28,197
30,503
35,733
40,881
45,105
50,941
Barra / Manduco
36,663
30,180
32,085
30,292
39,231
40,100
40,918
50,029
Praia Grande and Penha
34,709
36,672
32,470
37,189
41,408
48,245
46,571
48,487
Taipa
42,457
38,162
45,057
48,107
66,804
67,579
67,218
71,474
Ocean Gardens and Taipa Pequena
45,435
36,629
36,115
41,319
42,510
48,183
58,458
55,605
Downtown Taipa
38,869
36,733
45,243
45,305
57,363
68,036
67,105
72,391
University and Pac On Bay
34,566
37,502
41,668
37,899
41,044
43,071
48,258
54,909
Pac On and Taipa Grande
73,898
68,090
66,910
83,346
103,267
91,129
86,932
90,107
City and Jockey Club
28,948
27,588
35,360
36,659
42,552
46,549
43,837
53,866
Coloane
70,098
61,893
64,063
83,173
78,197
81,928
82,350
102,993
Notes: 1. The above information covers building units with stamp duty paid in the reference quarter 2. Including residential units that were exempt from the payment of stamp duty ~ No figure provided/confidential data
AVERAGE TRANSACTION PRICE PER SQUARE METRE OF OFFICE UNITS BY MAIN DISTRICT AS PER STAMP DUTY RECORDS
Source: DSEC
(MOP) 2011 District
Q2
2012
Q3
Q4
Q1
2013
Q2
Q3
Q4
Q1
Macau
36,618
34,011
38,404
40,362
47,767
49,245
47,925
63,511
ZAPE
35,277
23,937
34,674
39,520
39,598
37,774
50,865
56,098
NAPE and Praia Grande Bay reclamation area
37,909
35,200
39,068
41,283
50,784
52,760
45,672
68,475
Downtown Macau
32,506
32,004
37,662
36,006
47,413
43,730
52,148
60,169
Praia Grande and Penha
31,391
35,023
37,549
44,969
~
40,164
~
~
Notes: Only covers office buildings with ten storeys or higher ~ No figure provided/confidential data
JUNE 2013
58
Property | Market Watch
Notable residential property transactions - 29/04 to 26/05, 2013
Source: Ricacorp (Macau) Properties Ltd
District
Property
Unit
Coloane
One Oasis Cotai South
Block 5, H/F, unit B
3,563
28,440,000
7,982
Coloane
One Oasis Cotai South
Block 5, H/F, unit A
3,578
22,963,000
6,418
Macau
The Residencia
Block 3, M/F, unit A
1,750
13,880,000
7,931
Coloane
One Oasis Cotai South
Block 7, H/F, unit D
1,745
10,900,000
6,246
Taipa
Nova City
Block 13, H/F, unit A
1,734
10,400,000
5,998
Macau
Villa de Mer
Block 1, H/F, unit A
1,703
10,000,000
5,872
Macau
Villa de Mer
Block 4, M/F, unit A
1,475
9,780,000
6,631
Floor area (sq. ft)
Sale price (HK$)
Price per sq.ft. (HK$)
Coloane
One Oasis Cotai South
Block 9, M/F, unit F
1,770
9,740,000
5,503
Macau
Villa de Mer
Block 4, M/F, unit A
1,475
9,600,000
6,508
Macau
Villa de Mer
Block 4, M/F, unit C
1,371
9,300,000
6,783
Taipa
Kings Ville
Block 2, H/F, unit F
1,423
9,200,000
6,465
Macau
Villa de Mer
Block 1, H/F, unit F
1,459
8,880,000
6,086
Coloane
One Oasis Cotai South
Block 2, L/F, unit E
2,066
8,800,000
4,259
Macau
La Baie du Noble
Block 1, H/F, unit C
1,600
8,580,000
5,363
Coloane
One Oasis Cotai South
Block 2, L/F, unit A
1,936
8,370,000
4,323
Taipa
Kings Ville
Block 2, H/F, unit C
1,423
8,260,000
5,805
Coloane
One Oasis Cotai South
Block 6, L/F, unit D
1,676
8,230,000
4,911
Coloane
One Oasis Cotai South
Block 2, H/F, unit F
1,848
8,030,000
4,345
Macau
The Praia
Block 3, H/F, unit Q
1,199
7,800,000
6,505
Coloane
One Oasis Cotai South
Block 9, M/F, unit G
1,270
7,730,000
6,087
Taipa
Pacifica Garden
H/F, unit C
1,226
7,600,000
6,199
Macau
Green Island
Block 2, M/F, unit N
1,334
7,600,000
5,697
Macau
Green Island
Block 2, M/F, unit L
1,591
7,600,000
4,777
Taipa
Pacifica Garden
H/F, unit C
1,226
7,480,000
6,101
Macau
Green Island
Block 3, M/F, unit N
1,334
7,480,000
5,607
Macau
The Praia
Block 4, H/F, unit V
938
6,700,000
7,143
Macau
The Praia
Block 4, H/F, unit X
979
6,700,000
6,844
Macau
Pearl Horizon
Block 5, M/F, unit F
1,103
6,650,000
6,029
Macau
The Praia
Block 2, H/F, unit I
1,016
6,350,000
6,250
Coloane
One Oasis Cotai South
Block 4, M/F, unit G
1,177
6,000,000
5,098
Macau
Villa de Mer
Block 1, H/F, unit E
940
5,950,000
6,330
Taipa
Nova Taipa
Block 26, M/F, unit J
849
5,820,000
6,855
Macau
Villa de Mer
Block 5, L/F, unit F
708
5,350,000
7,556
Macau
The Riviera
Block 1, H/F, unit D
866
5,280,000
6,097
Macau
The Riviera
Block 1, H/F, unit D
866
5,280,000
6,097
Macau
Villa de Mer
Block 4, H/F, unit E
826
4,980,000
6,029
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable residential property rentals - 29/04 to 26/05, 2013 Type
Property
Unit
Source: Ricacorp (Macau) Properties Ltd
Floor area (sq. ft)
Rent price (HK$)
Price per sq.ft. (HK$)
Macau
Le Royal Arc
H/F, unit B
2,803
48,000
17.12
Macau
One Central
Block 2, H/F, unit B
2,267
38,000
16.76
Taipa
One Grantai
Block 3, M/F, unit I
2,300
28,000
12.17
Taipa
Nova City
Block 11, M/F, unit D
2,505
26,000
10.38
Taipa
Kings Ville
Block 2, M/F, unit E
1,901
25,000
13.15
Macau
The Residencia
Block 2, H/F, unit A
2,448
25,000
10.21
Taipa
One Grantai
Block 6, M/F, unit Y
2,158
23,000
10.66
Macau
The Residencia
Block 1, H/F, unit B
1,693
18,000
10.63
Macau
Villa de Mer
Block 1, M/F, unit A
1,703
18,000
10.57
Taipa
The Buckingham
M/F, unit F
1,186
16,500
13.91
Taipa
Nova City
Block 10, H/F, unit F
1,339
16,000
11.95
Macau
The Praia
Block 3, H/F, unit N
1,558
16,000
10.27
Taipa
Nova City
Block 12, M/F, unit F
1,340
15,000
11.19
Taipa
Nova City
Block 10, H/F, unit F
1,339
14,800
11.05
Macau
The Residencia
Block 4, H/F, unit C
1,209
13,000
10.75
Macau
Villa de Mer
Block 2, L/F,unit D
734
8,500
11.58
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
JUNE 2013
59 JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com
Urban muddle
THE URBAN PLANNING BILL CREATES A LOOPHOLE BIG ENOUGH TO ALLOW THE GOVERNMENT TO DO ALMOST ANYTHING IT LIKES or years, urban planning or, to be more precise, its absence has been a hot topic in Macau. In the meantime, the fabric of the city has undergone big changes, many irreversible and certainly not all of them for the better. Several pieces of legislation are now going through the mill: bills on urban planning, on the rejuvenation of old districts, on the protection of urban heritage. The Land Law, which regulates land granting by the government, is also up for review. All deal in one way or another with the critical issues of how the city is organised, and relate to the space where we live and earn a living. Few issues could be more relevant to our shared future. And yet, these multiple parallel efforts do not seem to signify any coherent approach or understanding. On the contrary, there is a pervasive feeling of diffusion of effort, lack of coordination and weak linkages between the various legislation proposals. The way the legislation has been debated does not allay those concerns. The city centre has several buildings classified by UNESCO as World Heritage sites. The organisation has demanded an urban management plan for the area. The Legislative Assembly, in the words of the chairman of the standing committee that is dealing with the urban planning bill, is unaware of the demand. So much for coordination and coherence. But nothing is more bewildering than the way the urban planning bill would allow its own rules to be set aside. It is normal that exceptions to rules should be considered, and the bill ought to say what the exceptions are. The clearer and more precise the norms are, the less scope there is for abuse or arbitrary decisions. What does the bill say? It says urban plans can be suspended in case of “public interest of relevant importance” [sic], such as in the event of “war, terrorist attacks, major epidemics or other cases of force majeure” and to avert natural calamities. The government alone has the power to decide on that suspension.
F
Take cover The public interest is difficult to define and, certainly, we would assume that it would be invoked only in dealing with the most important matters. Redundancy here may add drama but not clarity. After all, it is clearly in the public interest in the long run to have proper urban planning, regardless of the obstacles that may be encountered along the way. The examples that the bill gives of circumstances in which urban plans can be disregarded are, to say the least, surprising. Do we really need the bill to say that urban plans may be suspended in the event of war or a terrorist attack? And why does it say so? Since a terrorist attack is usually a discrete event, what sense would there be in disregarding urban plans while it is going on? Does the bill mean to say that urban plans can be
disregarded in anticipation of an attack, or in dealing with the consequences of an attack? The perplexity the bill causes does not end there. The bill says that urban plans can be disregarded in the event of major epidemics. Presumably, urban plans cannot be disregarded in the event of minor epidemics. “Other cases of force majeure”, unless they are natural calamities, are even more difficult to define. But then the bill says urban plans can be disregarded to “prevent” natural calamities. We could argue that the better way to minimise the impact of natural calamities, which by definition cannot be prevented, may be to implement good urban planning.
Serving suggestion Apparently, members of the Legislative Assembly had the same doubts about the bill or, at least, thought it was worded too vaguely. Apparently, the government answered that it was impossible to specify all the “other cases of force majeure”. This answer seemed to satisfy the members. One wonders why they bothered to ask. One also wonders what those who drafted the urban planning bill had in mind when setting out the circumstances in which urban plans can be disregarded, other than to create a loophole big enough to allow the government to do almost anything it likes. And, since the legislative process is so slow, one wonders how much of a city we will have left to plan once all these bills are enacted. JUNE 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
20.3 17.0 61.7 -14.9
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-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013
Notes Mar 2012 Mar 2012 Mar 2012
92.2 444 48
17.2 points 55.8 108.7
Mar 2012
86.7 92.8 121.0 32.0 19.4 119.0 385.6
Mar 2012
percentage
MOP7.3 billion MOP2.0 billion MOP1.4 billion MOP0.4 billion MOP0.7 billion
Mar 2012 Mar 2012
Mar 2012 Mar 2012
Mar 2012 Mar 2012 Mar 2012 Mar 2012 Mar 2012 Mar 2012
Year-on-year change (%)
Latest
-63.4 -45.1 -21.7 -20.3 109.2
56 145 155 126 960
Average transaction price of residential units (3) Dec 2012
Jan-Mar 2013
Mar 2012
percentage
MOP9.3 billion
-45.5 -27.1 -4.8 17.8 42.0
1,466 3,372 3,011 2,141 6,927
Jan-Mar 2013
6.0 points -20.7
MOP11.9 billion
Year-on-year change (%)
Jan-Mar 2013
97.8 157
Transaction price of residential units (1) 2012
Notes
Year-on-year change (%)
2,091 1,442 831 611 percentage
90.3 2,972
658.3 829.2 345.5 -275.6 410.7 -30.0 33.3
Latest
-8.0 -1.5 -7.8 3.7
MOP100.9 billion
- Residential
273 223 49 1 154 143 7 4
Year-on-year change (%)
2012
Year-on-year change (%)
Latest
Notes Mar 2013 Mar 2013 Mar 2013 Mar 2013 Mar 2013
Month-on-month change (%)
Latest MOP85,465 /m
2
MOP86,561 /m
2
MOP76,790 /m2 MOP96,539 /m
2
-3.0 5.7 1.1 -14.5
Notes Apr 2013 Apr 2013 Apr 2013 Apr 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 JUNE 2013
Source: Statistics and Census Service and Financial Services Bureau
60
61
61
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JUNE 2013
62
Gaming
Last one in
SJM Holdings is the last gaming operator to receive official approval for a Cotai casino resort
JM Holdings Ltd, Macau’s biggest casino operator by marker share, has been finally granted a piece of land in Cotai to develop a casino resort. The company expects to spend about HK$20 billion (US$2.6 billion) on the project. The grant was published last month in the Official Gazette. In October, SJM Holdings had already said it would need to pay the government a contract premium of MOP2.15 billion (US$269 million) for the land, which has an area of 70,468 square meters. SJM Holdings was the last company among Macau’s six gaming operators to receive official approval to develop a casino resort in Cotai. It filed its initial request in 2006. The company currently runs 17
S
JUNE 2013
casinos here, the majority operated by third parties. The late start is unlikely to be a major drawback, says Macquarie Capital Securities Ltd, an affiliate of global financial institution Macquarie Group. “We believe that table constraints in the market are going to start becoming increasingly apparent as the Macau government continues to abide by its table caps. This will make SJM Holdings’ excess number of tables all the more attractive,” analysts Gary Pinge and Roger Tse wrote in a note. “These tables have been underutilised to date because of the fact that they are housed in older properties within Macau,” they added. “However, as SJM Holdings builds its property on Cotai, it will be able to move these low perform-
ing tables into better properties, thereby increasing the yield on the tables.”
Joining forces SJM Holdings expects to break ground in Cotai this year. Construction should be completed by between 2016 and 2017. The company plans to build a casino resort with capacity for up to 700 live gaming tables, 1,000 slot machines and 2,000 hotel rooms. SJM Holdings’ plot is the smallest of all the gaming operators. Chief executive Ambrose So Shu Fai announced last month that the company will combine land and resources with Legislative Assembly member and SJM director Angela Leong On Kei, to build a bigger resort. Mrs Leong already has government
63
SMART DEAL G
SJM Holdings expects to break ground in Cotai this year. Construction should be completed by between 2016 and 2017 consent for a separate 180,000-square metre piece of land next to SJM Holdings’ plot. The plot is held by a firm called Macau Theme Park and Resort Ltd, headed by Mrs Leong. According to 2010 reports, the company was full of high-profile local businesspeople. Besides Mrs Leong, Legislative Assembly member Chan Chak Mo was project manager, while government-appointed assembly member Vong Hin Fai was the legal adviser. Assembly member Chui Sai Cheong, the elder brother of Chief Executive Fernando Chui Sai On, was among the founding directors of the company. However, he reportedly left the company in mid-2010. Macau Theme Park plans to spend
MOP10.4 billion on building 6,000 hotel rooms, an indoor beach, two theme parks and a “4-D theatre”. “The theme park will include a budget hotel and a family-themed resort, along with amusement facilities for children,” Mrs Leong said last month. She added the project could be completed by 2017, about the same time as SJM Holdings’ casino resort. SJM Holdings wants to finalise the deal with Macau Theme Park in the second half of the year. “We are now discussing how [SJM Holdings] can rent the [Macau Theme Park] land and we will make an announcement in due course,” stated Mr So last month. “The possibility is very high that we will develop [the project] together.”
alaxy Entertainment Group Ltd announced last month that it will buy the Grand Waldo casino resort. Galaxy Entertainment said in a filing to the Hong Kong Stock Exchange it would pay HK$3.25 billion (US$419 million) for the property. The company says it is looking for further acquisition opportunities in Macau. Get Nice Holdings Ltd, which has a majority stake in the Grand Waldo, also confirmed the deal. Last year, Get Nice failed to sell its share in the loss-making property to an unidentified “international group”. Grand Waldo is one of the thirdparty owned satellite casinos operating under Galaxy Entertainment’s gaming licence. The gaming operator said the acquisition “is a strategic investment and is expected to have synergistic effect” on the group’s development in Cotai. Grand Waldo is located across the road from Galaxy Macau. The deal is to be completed in the next quarter. Union Gaming Research says that the acquisition was a smart move, as it allowed the gaming operator to acquire 38 gaming tables at an attractive price. “We have long argued that it would make sense for Macau’s gaming operators to acquire tables (and the underlying physical assets if need be) from the various third-party satellite casinos,” Macau-based analysts Grant Govertsen and Felicity Chiang wrote in a note. Union Gaming estimates there are nearly 1,200 gaming tables in operation today at 19 third-party satellite casinos, most of which are operated by SJM Holdings Ltd, as well as four by Galaxy Entertainment and one by Melco Crown Entertainment Ltd. “Tables are a finite and scarce resource (and therefore extremely valuable) in the context of the Macau government’s market-wide cap on the number of tables,” Mr Govertsen and Ms Chiang wrote. “We believe that the best way to think about the acquisition of Grand Waldo is in terms of what its gaming assets could generate if they performed at least inline with Galaxy Entertainment’s existing wholly-owned gaming tables.” JUNE 2013
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Gaming
MACAU LEGEND GEARS UP FOR HONG KONG IPO
The company has started pre-marketing for its US$600 million initial public offering Macau Legend Development Ltd has kicked off pre-marketing for its planned approximately US$600 million (MOP4.8 billion) Hong Kong initial public offering, Reuters reported. Reuters said that Macau Legend plans to price the IPO on June 21, with the listing scheduled for June 27. Brokerage firm CLSA Asia-Pacific Markets is arranging the offer.
The proceeds from the IPO will go toward financing the redevelopment of the Fisherman’s Wharf theme park. Macau Legend is controlled by businessman David Chow Kam Fai and is a result of a merger between Landmark Macau, Pharaoh’s Palace Casino and Macau Fisherman’s Wharf.
MGM COTAI ON TRACK
MGM China Holdings Ltd’s project in Cotai is on track to be completed by mid-2016, chief executive Grant Bowie said. “We’ll have the foundations finished by the end of this year... and with the contractor now on board, we can obviously start building the infrastructure in 2014,” Mr Bowie told our sister publication Business Daily. China State Construction International Holdings Ltd has signed a HK$10.5-billion (US$1.35-billion) deal to act as the main contractor for the project.
LAS VEGAS SANDS TO PAY SUEN US$102 MILLION
Las Vegas Sands Corp has been ordered by the Nevada District Court to pay US$101.6 million (MOP813 million) to Hong Kong businessman Richard Suen. Mr Suen won a trial over his claims that he was owed money by Las Vegas Sands, for helping the casino operator obtain a gaming licence in Macau. It was the second time the businessman’s claims have gone to trial. In 2010, the Nevada Supreme Court reversed a US$58.7 million jury award in favour of Mr Suen, and sent the case back for a new trial. Las Vegas Sands is the parent company of Macau-based gaming operator Sands China Ltd.
JUNE 2013
WYNN VS OKADA CASE HALTED
Wynn Resorts Ltd announced last month that a Nevada judge has paused a lawsuit over the way the company forcibly bought back the stake of Japanese businessman Kazuo Okada. The goal is to allow U.S. prosecutors to pursue a criminal investigation into possible bribery actions by Mr Okada and his companies in the Philippines, Wynn Resorts said. Clark County District Judge Elizabeth Gonzalez granted the case a six-month freeze. Last year, Wynn Resorts decided to forcibly buy out Mr Okada’s 20 percent stake in the company, after a year-long internal investigation concluded that the Japanese businessman allegedly offered cash payments to executives at the Philippines casino regulator, breaching U.S. anti-corruption laws.
Gaming Statistics
Casino gaming 2012 MOP 304.1 billion
Gross gaming revenue
5,485 16,585 35 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 (%)
13.5 3.5 3.3 1 casino
MOP 29.6 billion
13.5 9.7 1.9 1 casino
5,749 16,406 35 casinos
Year-on-year change (%)
-2 3 3 -2 -1 --
Year-on-year change (%)
Latest
Latest
(estimated)
percentage points percentage points percentage points percentage points percentage point
Month-on-month change (%)
23% 19% 21% 12% 14% 11%
-3 2 -2 -2 2
percentage points percentage points
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Notes May 2013 Mar 2013 Mar 2013 Mar 2013
Notes May 2013 May 2013 May 2013
percentage points percentage points percentage points
May 2013 May 2013 May 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 MOP268 million MOP795 million MOP57,815 million MOP20,016 million MOP62 million MOP1,553 million MOP22 million MOP45 million MOP3,572 billion MOP52 million MOP4 million MOP93 million MOP13 million MOP74 million MOP10 million MOP323 million MOP415 million MOP63 million MOP87 million
Year-on-year change (%)
82.3 14.2 9.8 32.3 -4.6 14.7 -15.4 -11.8 8.0 -5.5 -33.3 2.2 -56.7 -25.0 132.4 19.9 -11.3 112.2
Notes Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013
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 MOP46 million MOP121 million MOP1 million MOP0.0013 million MOP101 million MOP46 million
Year-on-year change (%)
-14.8 37.5 -50.0 550.0 -1.0 27.8
* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent
JUNE 2013
Notes Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013 Jan-Mar 2013
Source: Gaming Inspection and Coordination Bureau and industry sources
2012
66 66
Gaming
The casino comeback With U.S. gaming revenue growing for a third year, there is much to be optimistic about, says the American Gaming Association BY SA SARA RA FFARR ARR AR R
T
JUNE 2013
last year, who were paid US$13.2 billion in wages, tips and benefits, the report says.
Cash for coffers Gaming’s growth had a positive economic effect on tax revenues. “The increase in revenues expectedly led to an increase in direct gaming tax contributions as well, with companies returning US$8.6 billion to state and local communities – an 8.5-percent increase over 2011 figures,” the report says. The most substantial annual increase rate in gaming revenue was enjoyed by Kansas, up by 603.7 percent to US$341 million. Maryland took in US$378 million, a 142.6-percent increase. These states, along with New York and Maine, saw significant growth from casino openings or increases in capacity. The good news was not universal. The opening of new casinos created competition, leading to declines in more mature markets. CASINO GAMING REVENUE IN THE U.S. 40
US$ billion
he numbers do not lie. They also reflect an underlying improvement in consumer confidence. After three consecutive years of growth, the United States gaming industry is a good-news story. It recorded its second-highest annual gross gaming revenue last year, according to the “State of the States” report released last month by the American Gaming Association. The survey says gross gaming revenue reached US$37.34 billion (MOP299 billion) last year, a 4.8-percent increase over the year before, and second only to revenue recorded in 2007. The comparable figure in Macau was US$38 billion. The annual report weighs up the gaming industry’s impact on the U.S. economy and the public’s perception of the country’s gambling houses. The data excludes casinos operating inside land set aside for indigenous Americans. Last year’s growth was due to improvements in the U.S. economy and increased consumer spending, along with the opening of new casino properties in major markets such as New York City and Ohio. “After three years of increasing growth and positive signs in all sectors of the industry, it’s clear we have weathered the recession. Whether we look at jobs, casino visitors served or tax revenues being provided, the bottom line is that there is much to be optimistic about in the commercial casino industry,” says association president Frank Fahrenkopf. Mr Fahrenkopf will retire at the end of this month, after more than 17 years heading the association. Geoff Freeman will replace him. The gaming industry employed more than 332,000 people
35
30
25 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: US regulatory agencies, “State of States” report * Excludes casinos on Native American reserves
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YOUTHFUL OUTLOOK T
he gambling habits of young adult gamblers in the U.S. could shape the casinos of the future, says the American Gaming Association’s “State of the States” report. Table games are more popular with the 21- to 35-year-olds, as are bars, shopping, spas and pools. Young adults are more likely to take part in other forms of gambling such as casual betting with friends or gambling online. Although the typical young visitor says they are unlikely to return to a casino in the next 12 months, polls show otherwise. The “acceptability rates” of heading to a casino are also higher among younger survey respondents. According to a survey last year, 54 percent of young adults surveyed considered gaming acceptable for anyone, while 35 percent said casino gambling was acceptable for others but not for themselves. About 10 percent considered gaming not acceptable. Among Americans aged older than 60, 17 percent considered gaming inappropriate, and 41 percent said it was acceptable for others but not for them. A similar percentage considered it acceptable for anyone.
That was the case for New Jersey, home to Atlantic City, which saw a drop of 8 percent in gross gaming revenue. “America’s Favourite Playground” has also struggled for customers since Hurricane Sandy last year. The Las Vegas Strip was the country’s biggest casino market, valued at US$6.2 billion, with Atlantic City a distant second at US$3.1 billion. Of the 223.7 million Americans old enough to gamble legally, 34 percent had visited a casino in the previous 12 months, whether they gambled or not, indicates a poll included in the “State of States” report. Young adults aged 21 to 35 had the highest rate of casino visits, with 39 percent going to a casino in the past 12 months. People between 50 and 64 were the second biggest group of visitors at 36 percent. Slot machines and video poker were the most popular games, attracting six out of 10 gamblers, followed by blackjack at 19 percent and roulette at 8 percent. Fine-dining and seeing a show or concert were the most popular non-gaming activities among U.S. casino-goers, with 69 percent and 55 percent participating in those activities. Casinos are less popular than lotteries, which were the most popular form of gambling last year. About 53 percent of Americans bought at least one lottery ticket last year, compared to 32 percent gambling at a casino and 6 percent betting at the track. Eighty-six percent of casino visitors said they set a budget for when they gamble. For 53 percent, the limit was less than US$100 a day.
HIGH STAKES HIGH-TECH
U
nited States manufacturers of gaming equipment and technology had a good year, recording gains in all key areas. Total revenue rose to US$13 billion (MOP104 billion) last year, an all-time high and a 5.7-percent increase from 2011, the American Gaming Association’s “State of the States” report says. This market segment employed more than 31,000 people, who earned US$2.3 billion in salaries and wages. Employment increased by 3 percent in year-on-year terms, and workers earnings increased by 4.6 percent. The average annual wage was about US$73,300, signifi cantly higher than the country’s average annual income of US$45,700. The report predicts further growth in the near term as new technology and regulatory approvals give traditional gaming suppliers an opportunity to capitalise on online, interactive, mobile and content opportunities.
JUNE 2013
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Gaming
Crown jewel James Packer picks petal skyscraper for Sydney casino ycoon James Packer has picked a British firm to design his proposed billion-dollar casino for Asian high-rollers in Sydney, saying it will be “instantly recognisable around the world”. The Australian mogul wants his 60-storey building to rival the Sydney Opera House in the iconic structure stakes and to make it happen selected Wilkinson Eyre Architects ahead of two American firms also on the shortlist. Wilkinson Eyre is best known for designing Gardens by the Bay in Singapore, the Mary Rose Museum in Britain and the Guangzhou International Finance Centre in the mainland. “When completed, Crown Sydney will be instantly recognisable around the world,” said Mr Packer, who already operates casinos in Melbourne and Perth, and is one of the two controlling shareholders of Macau-based gaming operator Melco Crown Entertainment Ltd, with a 33.7-percent stake. “Its iconic curves and fine lines celebrate the harbour and create an architectural ‘post-
T
card’ that will help attract international tourists and assist Sydney to compete with other global destinations,” he said last month.
Prime location Mr Packer’s plan is for a six-star hotel – Sydney’s first – and a VIP invitationonly gaming resort that will be the first in the world with no slot machines. If permission is granted, it will be constructed at the Barangaroo development site in the shadow of the Sydney Harbour Bridge, a prime harbour side location once a working dock. Wilkinson Eyre director Paul Baker said it was one of the best sites in the world to develop and the architecture would take its inspiration from nature. “Its curved geometry emanates from three petal forms which twist and rise together,” he said in describing the building. “The first petal peels off, spreading outward to form the main hotel room accommodation, with the remaining two twisting together toward the sky.” The New South Wales state gov-
ernment is still considering whether to give Mr Packer’s company Crown Ltd the green light, which would require it to issue a second Sydney casino licence. Rival Echo Entertainment Group Ltd, which owns the Star casino in nearby Pyrmont, has lodged a counter-offer to expand its facilities and extend its exclusive casino licence beyond its expiry date of November 2019. The New South Wales state government has given both Crown and Echo Entertainment until June 21 to deliver final details on their competing proposals. Last month, Crown dumped its 10-percent stake in Echo Entertainment. Mr Packer said he wanted to focus on his own casino proposal, free from any association with the rival entertainment group. Since his father Kerry’s death in 2005, Mr Packer has moved the family business away from its traditional media operations and focused on creating Crown, a worldwide gambling empire. Asian high-rollers, particularly the growing ranks of wealthy Chinese, are his target.
AFP NEWS AGENCY JUNE 2013
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COURT REJECTS COTAI TRADEMARKS Las Vegas Sands Corp has had four requests blocked The Court of Second Instance has rejected attempts by Las Vegas Sands Corp to register four trademarks that use the words “Cotai” and “Cotai Strip”. The court rejected calls to register the trademarks “Cotai Strip Cotaiticketing”,
“Cotai Strip CotaiExpo”, “Cotai Strip CotaiArena” and “Cotai Strip CotaiTravel”. It said both the expressions “Cotai” and “Cotai Strip” stand for a specific area of the city where gaming, hotel and entertainment activities are being
developed. The court said these expressions fail to distinguish Las Vegas Sands from its competitors. Las Vegas Sands is the parent company of Macau-based Sands China Ltd.
GOVT TO STUDY WOMEN’S GAMBLING BEHAVIOUR
The Social Welfare Bureau announced last month it will conduct a survey to study the behaviour patterns of local women actively participating in gaming. The bureau has found that 32 percent of the people who had asked for help last year to deal with problem gambling were women. The study has been commissioned to the University of Macau.
GALAXY ENTERTAINMENT JOINS HANG SENG INDEX
Galaxy Entertainment Group Ltd will be added to Hong Kong’s benchmark Hang Seng Index with effect from June 17. Galaxy will take the place of Esprit Holdings Ltd – a retailer and manufacturer of fashion clothing. The number of index members will remain at 50. Galaxy Entertainment joins market rival Sands China Ltd, which entered the Hang Seng Index in June last year.
OVER 10 GAMBLERS PER MONTH SEEK BAN
Gaming Inspection and Coordination Bureau vice-director Leong Man Ion said that about 12 gamblers each month have applied for the voluntary self-exclusion programme, since the government launched it in November. Mr Leong was quoted by the Macao Post Daily as saying that most of the applications were made by the gamblers themselves. Applicants were mainly aged between 21 and 50 years of age. The new scheme allows people to request a voluntary casino entry ban. JUNE 2013
70 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com
Black deeds
CASINO FLOORS ARE HAUNTED BY MANAGERS IN DARK SUITS AND SERIOUS FACES THAT SCARE STAFF AWAY
I
recently read that the “Men in Black” franchise will be revived for a fourth instalment. “Men in Black 3” earned a franchise record US$624 million (MOP5 billion) worldwide. I think we could ask the producers to use Macau as the setting for the fourth movie, ignoring the UNESCO-listed World Heritage sites and beaches of Coloane, and using the city’s casinos instead. They swarm with people seemingly straight out of Men in Black, the secret agency that polices extra-terrestrial refugees in the films. To us mere mortals, these people are known as casino floor managers. Walk into any casino and you will find dozens of them, wearing black suits, walking stiffly with frowning faces. They are fitted with bad attitudes every morning, and set loose on the casino floors to do their job. I have not yet seen any of them using that metal rod the Men in Black use to make people forget. In the movie, it is called being “neuralysed”. Here they use their negative attitudes to humiliate casino employees. Employee turnover causes casino human resource managers to have sleepless nights. A widely-held belief in the industry is that staff change jobs just for fun. The reality is that poor management practices are a major reason for low staff retention rates. The city’s Men in Black, with their big egos and arrogance, are often the culprits. As the human resources saying goes: “people leave
managers, not companies”. They join firms with high expectations but often leave because they do not get on with their direct supervisors.
No satisfaction The relationship between job satisfaction and turnover is one of the most researched topics in human resources literature, with many studies finding a consistent relationship between employee happiness and retention rates. It is obvious to academics that dissatisfied employees are more likely to leave an organisation. There are eight categories widely used to assess job satisfaction: supervision, company identity, nature of work, amount of work, physical working conditions, co-workers, financial rewards and career future. Pay is obviously one of the most important factors influencing turnover in Macau, especially among young adults. The nature of work is also becoming increasingly important as workers become more affluent and attain higher education levels. A human resources manager at a casino once told me after one of his croupiers left: “He worked for only three months and complained that we didn’t use his brain or talent enough. The job was not interesting, so he quit.” However, supervision is also becoming an important cause of job dissatisfaction at the city’s casinos. Inflexible managers with poor leadership and interpersonal skills are driving employees away, particularly since job opportunities here are abundant.
Being human Floor managers play a crucial role in retaining employees. Pay is more or less standard across the sector, as are other benefits. As for the nature of work, casinos cannot do much about it. A croupier must deal cards, a slot attendant must serve patrons. Supervision is the one area where casino operators can more easily improve job satisfaction. The gaming industry’s turnover problem is more related to poor management practices than poor employee attitudes. This is where the city’s Men in Black come in. They can play a major role in ensuring high job satisfaction rates on the casino floor. Of course, they are not completely to blame. A lack of a coherent human resources system of practice adds to the problem. Let us not forget, it is the human resources department that hires casino floor managers, often dismissing the fact that the people hired lack the interpersonal skills needed for the task. Human resources managers at casinos need to overcome their fatalistic thinking in the face of high turnover rates. There is a lot they can do. They must devise new strategies to deal with the problem and the priority must be to make their Men in Black behave more humanely towards their subordinates. JUNE 2013
71
Raising the stakes A comprehensive report on the best of last month’s G2E Asia 2013
JUNE 2013
72
Prime portal G2E Asia 2013 offered a comprehensive look at the future of the regional gaming industry asino industry leaders again met in Macau last month for the Global Gaming Expo (G2E) Asia, the largest gaming exhibition and conference event dedicated to the Asian gaming market. The trade show was attended by thousands of gaming executives from around the world looking to gain the information and insights needed to succeed in the region. On display, were the industry’s latest products, JUNE 2013
services and technologies. The annual fair posted a nearly 20-percent increase in net floor space year-on-year, boasting approximately 7,000 square metres of exhibit hall space. It featured over 130 exhibitors this year, who are increasingly modifying their products to appeal to an Asian audience. “The machine companies are taking their Asian content to a new level,” Marcus Prater, executive
director of the Association of Gaming Equipment Manufacturers, said. “Manufacturers have shifted their development to the type of game that appeals to mainland players,” he noted, adding that it was based on feedback from gamers.
Exhibitors satisfied Organised by the American Gaming Association and Reed Exhibitions, G2E Asia celebrated its seventh edition this year. “Thanks to burgeoning growth since its 2007 debut, G2E Asia has established itself as an industrydefining platform for international suppliers of slot machines, gaming signs, game designs, table games, cash handling devices and other gaming solutions,” says Frank
73
Viva Las Vegas After last month’s Global Gaming Expo (G2E) Asia, industry professionals are now busy booking their trips to attend G2E Las Vegas. The American version of the trade show and conference event will take place from September 23 to September 26 at the Sands Expo and Convention Centre in Las Vegas. Also organised by the American Gaming Association and Reed Exhibitions, G2E made its debut in fall 2001, committed to the idea of creating an event “by the industry, for the industry”. As of mid-last month, almost 400 companies had already registered for more than 24,000 square metres of exhibit hall space at G2E 2013. Last year, close to 25,000 people attended the event.
Competition on the way
Fahrenkopf, the departing president and chief executive of the American Gaming Association. “These businesses, looking to enter the Chinese and Asian markets, together with local suppliers keen to expand overseas, consider G2E Asia a prime portal to accelerate growth in Asia – the most exciting market in the world right now,” he says. “The boom shows little signs of slowing as established gaming powerhouses thrive and new markets laden with opportunity continue to emerge.” Exhibitors were overall satisfied with the attendance figures and feedback from trade visitors. “We were extremely pleased to bring a great range of already highly successful international product developments to G2E Asia, and we
were extremely encouraged to see the very positive operator response,” says Jens Halle, managing director for gaming supplier Austrian Gaming Industries GmbH. “Definitely, through the show, Interblock brand awareness has been strengthened and our sales position has been strategically reshaped for further growth,” says Michael Hu, sales director for Asia. Executives for Amatic Industries GmbH say this year’s G2E Asia presence turned out to be very exciting for the company. “We are extremely pleased with the feedback,” Thomas Engstberger, sales manager at Amatic Industries, commented. Next year’s G2E Asia is scheduled for May, again at the Venetian Macao.
The Macau Gaming Equipment Manufacturers Association will launch its own trade show in November, the body announced last month, at the Global Gaming Expo (G2E) Asia. The new event – to be known as Macau Gaming Show – will be held from November 14 to 16 at the Venetian Macao. It may contain a conference programme as well, but the details have not been confirmed. “We are not trying to push down G2E Asia,” Jay Chun, chairman of the Macau Gaming Equipment Manufacturers Association and also chairman of local casino equipment firm LT Game Ltd, told our sister publication Business Daily. “I think there will be value in two shows.” Mr Chun said the response from G2E Asia exhibitors to the idea of a new show had been “quite positive”. JUNE 2013
74
Window to the world Several exhibitors made use of G2E Asia to promote new products and services By Michael Grimes
lovenia’s Interblock used G2E Asia 2013 to demonstrate ‘Pop’n Poker’, a proprietary game that combines the excitement of keno and lotto and adds
a poker theme. It features a domed casing with bouncing balls and patent-pending technology that displays the results of the drawn balls on 52 liquid crystal displays. “We think this product is a head turner on any casino floor,” Tina Ferko, Interblock’s marketing director, told Macau Business. “The generator is very fast and it can generate 20 results for keno drawing within a few seconds,” she explained. ‘Pop’n Poker’ is part of Interblock’s G4D – Diamond product range of electronic table games.
hilippines boxing legend Manny Pacquiao may visit Macau this autumn – prior to his November comeback fight at the Venetian Macao – to launch a new Aristocrat Leisure Ltd slot machine game based on his career, says his manager Eric Pineda. Aristocrat’s game, ‘Mega Manny Jackpots’, is a progressive-style slot product. The game is still under development, but a prototype was on show at G2E Asia.
Two important features of the game are that Manny’s opponents are ghost-like figures on the graphics, and the Filipino hero, the first-ever boxer to be a world champion at eight different weights, doesn’t ever lose a fight. “Manny Pacquiao is such an iconic figure and such a hero in the region and across the world that we’re very excited to be involved with this product,” said David Punter, general manager Asia Pacific for Aristocrat.
JUNE 2013
T Game Ltd, controlled by Hong Kong-listed Paradise Entertainment Ltd, is best known for its electronic table games. But at G2E Asia the firm showed other parts of its product range. LT Game’s Intelligent Cash Access offers functions including ticket purchase and ticket redemption for casino players. “It’s been developed with a partner from South Korea,” says Betty Zhao, the company’s sales and marketing manager. The product can store and issue a large volume of cash and of tickets. That is an important consideration for casino managers working on Asia’s often-crowded casino floors. It has five stackers for bills, and is compatible with ticket printers made by FutureLogic Inc and TransAct Technologies Inc. The bill validator interface is also compatible with industrystandard equipment, says the company.
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ransAct Technologies Inc, a leading maker of printers for transaction-based industries, displayed the latest version of its Epicentral Print System for casinos at G2E Asia. Epicentral works in conjunction with TransAct’s Epic 950 ticket printer – a product already installed in many slot machines in Asia. It allows casino operators to create promotional coupons and marketing messages for uncarded as well as carded players, and print those promotions in real time at a slot machine, an electronic table game or even at a live dealer table in properties where ticket-in, ticket-out technology is available on live games. “Within Epicentral itself, we’ve built a new module called Redemption Centre,” Tracey Chernay, executive vice president for sales and marketing, told Macau Business. “That’s something that evolved out of working with the casinos and what they required. It helps with the process of coupon redemption, it reprints coupons if you need to, or void one, or check to see if one has already been redeemed.” Gaming Partners International Corp wanted to create a jeton – a casino currency with a long tradition in Europe – that had the easy handling qualities of U.S.-style casino chips. It succeeded with its Bourgogne & Grasset J2 Jeton, now going a step further with the J3, which was on display at G2E Asia. “The design our team originally came up with had four circular edge spots. The immediate feedback we got from the customers was: ‘We love the feel, we love to be able to stack them and have them more like an American-style chip, but we’d like to have a lot more flexibility with the edge spots,’” explains Kirsten Clark, GPI’s senior vice-president and chief operating officer for Asia. Edge spots help distinguish different denominations in a stack of casino currency at the table or in the chip tray. “We went back to the R&D drawing table, and figured out a way to engineer a jeton with edge spots that give you the diversification you have with an American-style chip,” she explains.
atvian manufacturer DLV showed off its new Diamond HD cabinet at G2E Asia. The 24-inch widescreen product supports cashless use and comes with the option of a bill acceptor or ticket printer. The show was also used to present nine new games from DLV plus a multigame function for its new platform – Diamond Games Ultra. One of the games offered is DLV’s popular ‘Gauya Quest’, a mystery progressive jackpot that can act as a standalone game or as network-based system. DLV was founded in 1994 and initially focused on its home turf in the Baltic region, but gradually expanded its presence into international markets including the European Union, non-EU countries in Eastern Europe, Central America and South America. In 2010, the company had its first sales success in Asia with several installations in Cambodia. “We’ve had a lot of interest from Asian customers in the new cabinet and the Diamond Games Ultra collection,” said Oksana Sushinka, DLV’s marketing manager. anada’s NRT Technology Corp developed its QuickJack line of automated kiosks for casinos in 1997 after receiving its first gaming licence. Initially a jackpot dispenser, the QuickJack range now includes self-service kiosks for multiple tasks including ticket redemption, ticket printing and cash dispensing. QuickJack offers networked versions for central management and reporting, or a standalone one for smaller gaming operators. The firm has installed units at major Macau casinos as well as in Singapore. At G2E Asia, NRT also displayed the latest interface for its award-winning Cash Handling System software. CHS Mobile is a computer tablet product allowing casino managers using NRT’s kiosks to review their operation online and even send commands to them remotely. “If you click the remote buttons via the tablet, you can shut down a unit, reboot it, put it in service or take it out of service – that’s really useful if you have a big casino floor or multiple venues,” explains Kevin Lam, NRT’s regional account manager. JUNE 2013
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Steve Walther
Coming out party After years of small-scale presence in Asia, Konami Gaming aims to hit the jackpot By Muhammad Cohen
ith roots 40 years deep in Japan’s automated amusement market, Konami Gaming Inc is no stranger to Asia. The first Japanese supplier to enter the U.S. slot machine market and a top five player globally, Konami is also no stranger to the casino business. However, the company has been a virtual stranger to Asia’s gaming floors. Konami’s new games product management director Steve Walther thinks it is time for a major introduction. “In a year, we hope to be a significant player in the region,” Mr Walther, who joined Konami in February, says. “There are recognised leaders in the region. We want to be spoken of as a threat to their market share.” JUNE 2013
At G2E Asia last month, Konami began the campaign into the regional conversation with products aimed at Macau, Singapore, the Philippines and South Korea. “We’ve brought out a mix of titles, games profiled and designed for Asia,” Mr Walther says. Products featured at the trade show included four-level mystery progressive link ‘Dragon’s Victory’, plus titles like ‘China Mystery’ and ‘Dynasty Riches’. “The games have strong Asian themes, good volatility and multi-language support,” Mr Walther, with 20 years of industry experience centred on gaming machines, says.
Incremental strategy Konami’s drive for overnight success
in Asia’s casinos has been years in the making. The company, which started renting and repairing jukeboxes in 1969 then branched into other forms of coin operated entertainment, first entered the gaming machine market in Australia in 1997. For nearly a decade, Konami has had small numbers of machines in Macau, the Philippines, Malaysia and, more recently, in Singapore. “Konami doesn’t enter a market until it thinks it will be successful. We make sure we have the right products for customers and the capability for great customer service,” Mr Walther says. “The important thing is to see the degree of penetration we see [with Konami products] in other markets.”
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Last September, Konami announced the opening of a Singapore office to focus on Asia’s second largest gaming market, as well as Macau and the region’s emerging opportunities, with veteran gaming executive John Gomes in charge. “A Singapore presence helps with that market and with its proximity to Macau,” Mr Walther says. “We want to make sure we have the right infrastructure in place,” he tells Macau Business. “We don’t want to flood the market with products we can’t support.”
Writing the script Konami has been “listening and observing”, to develop themes and game math attuned to the Asian market. “We’re implementing features into products that we think will resonate with customers in the region,” Mr Walther explains. The southern California native
compares developing a game to writing a screenplay. “It’s about developing the story, a game that will resonate with the player. You build the story around a core set of mathematics that will benefit the player and the venue.” Las Vegas-based Konami Gaming, a subsidiary of Japanese digital entertainment developer Konami Corp and sister company to gaming specialist Konami Australia Pty Ltd, develops games in Japan, Las Vegas and Australia. “The multiple sites enable us to blend those regions’ skills to create stronger games,” Mr Walther says. “Our games have legs – they’re lasting 50 percent longer than average on the gaming floor. That’s another reason why we don’t flood the market. We develop games that we can be confident have lasting appeal.” Macau ranks high in Konami’s plans for growth in Asia. “Macau is a growing powerhouse in gaming. Over the next
few years, it will grow another 50 percent. It’s a marvel of the world,” Mr Walther observes. It’s also a “magnet” market. “What Macau does, the rest of Asia and a large percentage of the world will follow,” he says. “We have to be strong here because this area is going to migrate its appeal globally. The people who are going to operate the mega-resorts in Korea, the Philippines, anywhere in this region, are going to cut their teeth here in Macau. If things are proven to be successful here, they’ll want to migrate them to emerging markets as well.” Mr Walther won’t put a number on Konami’s market share goal in Macau or the region. “We want to gain a signifi cant percentage of the market. That means you have to be a top four or top five provider. As more suppliers enter the market, being in the top five in Asia is signifi cant,” he says with a smile.
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Cath Burns
London eye on Macau
TCS John Huxley chief Cath Burns has her focus on tables, where the action is in Macau By Muhammad Cohen
JUNE 2013
uring six years in Macau, Cath Burns witnessed a gaming “explosion” that ultimately drove her halfway around the world. But despite the move, her attention remains firmly fixed on Macau. Last March, Ms Burns joined London-based TCS John Huxley as group chief executive officer, after serving as slot-machine supplier Bally Technologies Inc’s vice president for Asia Pacific since 2006, based in Macau. “After being here and watching the table game explosion, I wanted to come to a company focused on tables,” Ms Burns told Macau Business at last month’s G2E Asia trade show. She describes TCS John Huxley as “a tables company: anything that goes on a table, over a table, under a table.” That includes chippers, shufflers, displays, management systems, table games, and technology to integrate and link them all. Although TCS John Huxley is headquartered in London, “we’re very focused on Asia,” Ms Burns says. “We’re using Asia to drive innovation. We’ve got products aimed at Asian operators that we’ll then sell globally.” She cites TCS John Huxley’s Omni Baccarat Display as an example of a Macau innovation that has gone global. It’s not just equipment that’s going global from the region. “Baccarat is now the number one game in Las Vegas,” Ms Burns notes. “You’re seeing that being driven by Chinese players.” To facilitate the development process in the region, TCS John Huxley has placed its head of product here in Macau, as part of its Asia Pacific headquarters with 28 people. “Macau is the linchpin,” Ms Burns says, “because that’s where the innovation is coming from” in table games. In Macau, tables are where the action is. Table games accounted for over 95 percent of Macau’s casino gross gaming revenue of MOP304.1 billon (US$38 billion) last year, and the city’s 5,749 gaming tables as of Marchend are more than twice the number found on the Las Vegas Strip. It is not just sheer numbers that make Macau the global breeding ground for table innovation, according Ms Burns. “Competition among operators is fierce and player demand is rising. That combination creates demand to innovate.”
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TCS John Huxley does business with each operator in the market and meets with them as frequently as once a week to keep attuned and learn what operators want, she says.
Felt in the spotlight At G2E Asia 2013, TCS John Huxley showcased its ‘Sic Bo Blaze’ table, a product that Ms Burns says was created based on a request from a Macau customer. The Blaze model replaces the traditional sic bo acrylic tabletop with a felt top, which makes it easier to place and move chips. The table has embedded LED lighting to illuminate winning spots for each roll. Those changes increase operational efficiency, Ms Burns says. “The dealer likes it more, the customer likes it more,” she adds.
TCS John Huxley also showed its baccarat table with LED display capability built in, a product based on a request from an operator that wanted a better way to identify the banker and player, Ms Burns says. As cards are dealt, they are read by the shoe, shown on a display above the table, and table lights indicate the results of the hand, reducing the chances of dealer error. Lights on the tabletop are just the tip of the iceberg. “Tables are not just tables anymore,” Ms Burns explains. “The table is collecting data to help the operators run their business more efficiently.” TCS John Huxley table products include its new Gaming Floor Live product, a real-time game optimisation tool designed to maximise profitability. It achieves this by monitoring in real time the turnover on each game, the speed of play and the number
of players per table, among other criteria. The data collected allows the operator to evaluate dealer accuracy and characteristics of play, as well as information for surveillance teams. At G2E Asia, TCS John Huxley also showed its range of proprietary table games. ‘Dragon 21’ combines blackjack and baccarat, with two hands playing one against the other and players betting on the outcome. The table games, which also include enhancements on baccarat, roulette and poker, can be run under TCS John Huxley’s Supernova Table Bonus System, adaptable for any game and which delivers floor wide progressive and game bonusing. “These products are all derivatives out of this market,” Ms Burns says.
On the move TCS John Huxley also highlighted its Xia Tablet that puts a standard roulette game on a tablet computer with a live feed. Baccarat and blackjack versions of the Xia Tablet are scheduled to be released this year. The tablet is portable, so players can bring it to a smoking area, restaurant, bar, pool or hotel room. The tablet can be placed at a kiosk for the player to take away, or installed on a bar top or in other areas. “Europe is the fastest adopter because it’s such a mobile environment,” Ms Burns says. However, TCS John Huxley remains focused on Asia and particularly on Macau because that is where the growth is. “Last year was our best year in Asia,” Ms Burns says. “We’re hoping to capitalise on that growth. Asia is our second biggest market behind Europe and we hope that trend continues.” For the year ahead, Ms Burns says she would be happy with growth of just under 10 percent. “That’s good, controlled growth. It’s difficult to predict, however. It depends on how fast we can get products out.” Coming back to Macau for G2E Asia, Ms Burns spots several differences since she moved out in late 2011. “What’s the same is the fantastic energy and innovation here. What’s changed is the number of operators moving at lightning speed to develop new properties.” JUNE 2013
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nternational Gaming Technology Inc (IGT) regional vice president for Asia Pacific Andrew Hely thinks his company hasn’t gotten a big enough piece of Asia’s electronic gaming machine market. The U.S. market share leader in machines aims to seize that “opportunity” in the year ahead, he adds. “Regionally, from a market share standpoint, our goal is to expand our footprint in Asia. I think we’re underrepresented,” Mr Hely tells Macau Business. “We think we’ve got the people side right,” he says. “We brought in some skilled sales people from Australia. Now the focus is on product.” IGT has invested in products specifically designed for the region, and it showcased them at G2E Asia last month. “We want to bring in products attuned to the Asian player, not just in themes but in math models,” Mr Hely says. “We’re coming to the market with the broadest portfolio of offerings: games, systems and a path to interactive.” With Australia, Mr Hely’s home base, running flat, “Asia is consuming a disproportionate amount of time, energy and resources,” he says. “A lot of global growth is here.” Mr Hely forecasts double-digit growth in Asia for IGT’s upcoming fiscal year, with Macau leading the way.
Hot spots
Andrew Hely
Opportunity knocks
U.S. machine leader IGT invests heavily in Asian-themed games to raise its regional market share By Muhammad Cohen
JUNE 2013
Surveying the region, he notes, “the Philippines is the part that’s expanding most rapidly at the moment, and at Ho Tram in Vietnam, we have the system and a large chunk of the floor.” IGT also has products in Singapore and an office there, as well as selling in other regional markets through partners. However, Macau has IGT’s biggest office in Asia with 30 employees, and is at the centre of its regional strategy. “Macau is at the top of the heap in terms of care and attention,” Mr Hely says. “We want more footprint, but we understand we have to earn that right.” He estimates IGT currently holds a 10 percent share of Macau’s slot floors. “That’s the opportunity for us,” Mr Hely contends, based on market conditions. “Slot revenue continues to grow in Macau, though it’s still dwarfed by table revenue,” he says. “There’s
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a maturing process going on” that is helping to reshape the electronic gaming machine segment. “First, I think most operators are looking for a greater mix of product on the floor. Second, there’s the replacement cycle. We think operators are looking for replacement product, provided we can deliver a good value proposition,” Mr Hely says. “We realise that a game that works for Venetian might not work for Mocha. So a lot of effort is going into making sure we’ve got the right combination of products for Macau.”
Know your customer IGT has a headcount of 300 in its Beijing studio, which focuses on product development for the region. “The theory there is to leverage some of the Asian expertise with colours and symbols that Asian players like,” Mr Hely says. IGT also gets support for Asia from
studios in the U.S. and Australia, a market where math model preferences broadly resemble those in Asia, he notes. At last month’s G2E Asia, IGT showed what Mr Hely calls “marketattuned products” for the slot floor. The company displayed its progressive product ‘MegaJackpots Game Changer’, featuring Asian-related bonus themes. IGT also displayed several Asiantailored core games, including ‘Money Idol’, ‘Dragon Dance’ and ‘Silk Seduction’. “The math is done for this market, with graphics for this market,” Mr Hely says. The most striking exception to IGT’s emphasis on Asian-attuned products at its G2E Asia booth were premium slots based on popular U.S. television shows “CSI: Crime Scene Investigation” and “Sex and the City”. “We think there’s a market for some of these licensed products here, since
this is a destination market,” Mr Hely says. Behind the gaming floor, IGT also featured systems solutions at G2E Asia. Its customer relationship management system installations in Macau include City of Dreams and Wynn Macau. “We’re starting a journey with our interactive portfolio, as well,” Mr Hely adds. “We’re getting sign-ups for our DoubleDown programme, a social gaming platform. It’s a non-wager based gaming medium for displaying the content of land-based properties through social media.” Looking at the big picture in the region, Mr Hely admits IGT is aware that the company still has progress to make in Asia. “We know that we’ve got a way to go in the game. But we’re prepared. We’ve got a real partnership with our customers.”
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Srini Raghavan and Kurt Gissane
Harvest time Bally Technologies rolls out new games from its Asian studio opened last year By Muhammad Cohen
n March last year, gaming supplier Bally Technologies Inc began a drive to develop Asian-themed slot-machine games. The company opened a new studio in India with 11 developers, and shifted the focus of its existing studio there to Asian-themed content. It was a strategic decision driven by the company’s leadership in other fields, Bally’s senior vice president for Asia Pacific Srini Raghavan says. “We are the global leader in systems. We want to be that for games. We want to be number one or a strong number two.” As the new studio geared up, Bally JUNE 2013
extended its Asian-themed content push to company studios in Sydney and the United States. “We’re starting to see the fruits of that labour,” Bally’s managing director for Asia Pacific Kurt Gissane says. At G2E Asia last month, Bally unveiled ‘Zhi Nu’, the first of four romantic-landscape novel games linked to a progressive multi-jackpot, designed for Macau and the Asian market. The game is based on a Chinese folklore tale about the forbidden romance between the goddess Zhi Nu and her mortal lover. “Asian customers identify with the theme immediately,” Mr Gissane says.
‘Zhi Nu’ forms the cutting edge of what Bally expects will be a growing library of Asian-themed content designed to drive growth on the region’s slot floors. At G2E Asia, the company also showed ‘Fantastic 8’ and ‘Heavenly Empress’, two games developed in India, as well as ‘Perfect 8’, created in Australia. “We’re able to draw on all studios for our games for this market,” Mr Gissane says.
Trend setter “In the next year to year and a half, I hope to tell you that we’re growing our market share with new products,” Mr Raghavan says. Bally estimates its
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current share of the slot floor in Macau at around 10 percent. “Macau is obviously extremely important,” Mr Gissane says. He is based at Bally’s 60-strong Asia sales and service office here. “Macau is the largest gaming market in the world. It has the biggest and best operators in the world with flagship casinos here. Slots are not as big as other parts of the market, but everyone puts their latest and greatest products on the floor here. Other markets tend to watch Macau and follow.” For the new games, Macau’s slot regulations issued last year posed a challenge, particularly with regard to requirements for player selectable languages. “It’s a very good thing for the market, but it pushes out lead times for new products,” Mr Raghavan says. Bally’s new Asian-themed games can all switch between English and Chinese. Bally’s G2E Asia 2013 showings also included premium games ‘Tiki
Magic’, a follow-up to the popular ‘Cash Wizard’ game, and a second edition of ‘Michael Jackson King of Pop’. “We have hot brands, and in the premium space we compete very strongly,” Mr Gissane says. “Michael Jackson does extremely well. It’s one of the best products we have released in the Asia market and in the United States.” He adds, “Asian-themed content is not the ‘be all and end all’ of game performance here. It matters, but the math is the most critical part. For players, it may be a culturally relevant theme that draws them to the game, but it’s the math that keeps them there.”
Setting the course “Like our systems deliver performance for our customers, we want our games to do that same thing,” Mr Raghavan, who is based in Bangalore and also serves as Bally’s managing director for India, says.
“Our product management team is continually looking at what we want to offer customers. We use study groups and the competition’s offerings. Based on that, we are coming up with a direction for our development,” Mr Raghavan adds. “Innovation across the board is what we do best,” Mr Gissane says. To create products that deliver for players and operators, in addition to its new studio focus, Bally has taken two additional proactive steps. “We’ve done product testing in Macau, where we’ve gotten players to come in to play games in development,” Mr Gissane says. Bally also ran customer panels in Macau. “We had the operators’ main people for the slot floor with us for two days,” Mr Raghavan says. “We briefed them on what we were doing and took their feedback.” He says this shows how customer centric Bally is. “We want to know what will make them successful and what brings them value.”
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Gavin Isaacs
New name, raised game Former Shuffle Master makes it G2E Asia debut as SHFL Entertainment with fresh products By Muhammad Cohen
or the first time, the SHFL Entertainment Inc corporate name appeared at G2E Asia last month. But the 30-year-old company formerly known as Shuffle Master Inc, a veteran at G2E Asia, relied on a tried-and-true formula at the show: new products. “The whole focus for this show is the launch of new products,” SHFL chief executive Gavin Isaacs says. “We did it last year, and the past 12 months have been phenomenal.” New offerings from SHFL at G2E Asia, besides its changed name, included electronic and proprietary table games, slot machines and utilities products. “We’ve got some great new JUNE 2013
concepts,” Mr Isaacs says. “Everyone says they innovate – we deliver.” G2E Asia marked the global debut of TableMaster Fusion, SHFL’s latest electronic table offering. The fully automated product supports multiple games and even offers a choice of video dealers.
Double-digit growth The company also showed its range of new SHFL Fusion electronic table game products, including fully automated and live dealer versions with a widescreen player interface. This year, there was no repeat of the court injunction from Macau-based gaming supplier LT Game Ltd, which interrupted SHFL’s display of electronic
table games combining electronic betting with live dealers at G2E Asia 2012. SHFL is currently in litigation with LT Game, which contends it holds a patent in Macau on multi-terminal systems combining electronic betting with a live dealer and live baccarat. “We’d love to have a settlement,” Mr Isaacs tells Macau Business. “Meanwhile, the appropriate place for a dispute like this is the courts and that’s where it is right now.” At G2E Asia 2013, the SHFL Fusion electronic table game products were shown in an enclosed area within the company booth. That decision had nothing to do with legal issues, according to Mr Isaacs.
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“The entire e-table segment, especially our Fusion line, has been invested in, and we have upgraded both our hardware and our software. Fusion Hybrid and Fusion Virtual both have new cutting edge software interfaces and functionality which we wanted to highlight and frankly limit our competitors’ access.” “That was why we had the room: create some mystique and help protect our innovation,” Mr Isaacs says. “Our new electronic tables are doing very well outside Macau,” he adds. Mr Isaacs estimates SHFL’s market share in the Asian electronic table market beyond Macau at 15 percent. “We’d dearly love to bring them into Macau.” Despite the challenges in introducing some of its e-table products to Macau, SHFL is posting strong growth here. “We’re growing 20 percent a year here and I want to help keep it going. I expect Macau to be a strong market focus for us in the year ahead,” Mr Isaacs says. A new game in its Duo Fu Duo Cai progressive jackpot link, ‘Diamond Eternity’, highlighted SHFL’s slot machine offerings at the show. The booth also showcased ‘88 Fortunes VIP’, a standalone progressive version of the ‘88 Fortunes’ game from the Duo Fu Duo Cai line, designed for VIP players. Wilma Flintstone and Betty Rubble came all the way from the Stone Age to the show floor to help introduce SHFL’s ‘The Flintstones’ slot machine to the region. The three-level linked progressive theme based on the iconic American cartoon series has three base games and interactive bonus features. To support its offerings for Asia and beyond, in February SHFL acquired a development studio with 20 people in Qingdao, in the mainland. “We’ve worked with them for some time,” Mr Isaacs says. “We liked their work, so we decided to buy them.” The studio, formerly known as ProTec Games Inc, has links to Qingdao’s Ocean University of China, giving SHFL a talent pipeline. “We plan to invest in the studio and grow it,” Mr Isaacs says. While the studio currently focuses on supporting games for the Asia region and global
graphics, SHFL plans to expand its capabilities to include software development. “In time, they will do mathematics for games.”
Sorted by SHFL SHFL’s new ChipStar chip sorter made its Asian debut at G2E Asia after launching in London earlier this year. ChipStar is faster and requires less maintenance than its predecessors. SHFL is a world leader in utility products, dating back to its invention of the automatic card shuffler. “We want to be a leader in any market in which we operate,” Mr Isaacs says. “We’re investing in table games and slots to get to where we are in utilities.”
The company’s name change last October to SHFL supports that strategic goal. “As part of getting the company firing on all cylinders, we needed one name that fit every part of the business,” Mr Isaacs explains. The company has products in five categories: utility products, proprietary table games, electronic table games, electronic gaming machines and iGaming, its online entertainment segment. “In essence, we’re an intellectual property company. We hold 2,700 global patents,” Mr Isaacs says. “The reaction to the name change has been fantastic. No one thinks too much about it. Our staff is 100 percent behind it,” he reports.
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Electronic buzz
Electronic casino gaming is expected to increase as new gaming venues open in Cotai By Alexandra Lages
ive table games are the main source of casino gaming revenue here, but revenue from electronic games is expanding at a brisk pace, says Aruze Gaming Macau Ltd general manager Takahiro Usui. The manager of the Japanese supplier of electronic gaming equipment spoke to Macau Business after a forum on
gaming technology innovations at G2E Asia last month. Mr Usui sees growth of 10 percent in the use of electronic table games – or ETGs – by next year or the year after. “For the coming couple of years, I feel ETGs will be growing significantly.” He expects growth will coincide with the increase in casino capacity
in Cotai. The second phase of Galaxy Entertainment Group Ltd’s Galaxy Macau casino resort in Cotai is due to be completed in the middle of 2015. Melco Crown Entertainment Ltd’s Studio City is also due to open in 2015. “ETGs can be a compromise between tables and slots. It’s a new revenue stream for casinos, especially in Macau. An ETG is a ‘must’ item. You have to have one of each kind, at least,” Mr Usui says. The general manager for Asia Pacific of slot machine supplier Aristocrat Leisure Ltd, David Punter, says electronic gaming is a way to get round the curbs on the number of live gaming tables and the shortage of suitable labour in Macau. Up to last year, the government had capped the number of live gaming tables at 5,500, but from this year and at least until 2023, casinos can increase their tables at an average annual rate of 3 percent.
Twin speed Mr Punter says suppliers of slot machines are less optimistic about business this year. The government imposed its own technical standards for slot machines and electronic table games in February last year, although suppliers had until October to meet them. The main thrust of the Macau standards is that all slot machines and electronic table games must be accessible to speakers of Chinese. “Because of the regulation change in October, a lot of the manufacturers had to change the direction of what was happening to include the regulation. This is a positive thing for the region but it probably put us back a little bit on the development, technology and innovation,” Mr Punter says. He says slot machine operators are playing catch up with the market’s demands this year. Slot machines are becoming more entertaining. “Next year, we will be looking at the Galaxy expansion. That will be quite positive. The operators are demanding new products and technologies because we slowed that down a little bit because of the current regulation. There is an opportunity to pick that up.” JUNE 2013
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New wave breaks Macau needs to recreate itself to increase its appeal to the burgeoning mainland middle class
By Cláudia Aranda
nternational competition to attract outbound mainland tourists is cutthroat. To remain a leading contender, Macau’s strategy for attracting mainlanders must be more vigorous and aim to bring in non-gamblers and casual gamblers, says Ben Cavender, associate principal of China Market Research Group, a market intelligence firm in Shanghai. Mr Cavender says Macau should have a wider range of entertainment and non-gaming attractions to lure the burgeoning middle class in the mainland, with their deep pockets and appetite for culture. The city has the world’s biggest gaming market and is the secondmost popular destination for mainland tourists outside the mainland. But Mr Cavender says it cannot be complacent. “Mainland consumers are beginning to choose exotic destinations that are further afield... looking for more unique experiences,” he told a G2E Asia forum on the Chinese consumer last month. Mr Cavender says mainlanders perceive Macau to be a “purely gambling-focused destination, with not many other things to do, and not really appropriate for families and young children”. He says the city must change this perception urgently. It must make itself more appealing to mainlanders under the age of 35, who have great purchasing power and are keen on trendy culture, fine dining, historical outings, entertainment and shopping, he argues. Mr Cavender says casinos and hotels here are beginning to realise that the future is not just about VIP customers. “VIP customers have been responsible for 70 or 80 percent of the gaming revenues, but the casinos know now that there might be a 50-50 percent split between VIP customers and mass consumers in the future,” he says. “To compete with other markets, you need to stay modern. You need to
show consumers you are continuing to develop and to change.” The right approach is to open sophisticated new casino resorts that “seem like a fun and safe place for younger consumers”. New casino resorts must also offer visitors – families in particular – more choice and better value, he says.
Long-haul travel Mr Cavender says the transport system lags behind demand. “A greater range of direct flights from Macau to secondtier mainland cities would help.” It is estimated that the mainland has nearly 400 million consumers belonging to households with annual disposable incomes of between US$10,000 (MOP80,000) and US$70,000. “At this point, people start travelling overseas and shopping for more sophisticated products,” Mr Cavender says. More and more mainland
consumption is attributable to women, particularly women under 35. “If you look at who spends the money, it has shifted towards the female consumers,” Mr Cavender says. This is because mainland women are increasingly better educated, earn the same as men and have greater clout within the family. Mainlanders still like to go somewhere relatively close to home on their first trip outside the mainland. They prefer Macau and Hong Kong because the language and culture are similar, and because permission to go there is easier to obtain. They are also attracted to Southeast Asia, which has places suitable for families, such as Singapore or Malaysia. However, mainland tourists are gradually going further afield, to places such as the United States, Australia, South Africa, Kenya and France. Mr Cavender says Macau will suffer in the long run if mainland tourists bypass it. JUNE 2013
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Very important business Slow-growing VIP gaming revenue is far from out of steam By Cláudia Aranda
IP gaming revenue has slowed but it is still the largest segment of the market in Macau, observers of the casino industry say. They predict bright prospects for growth. Official data shows gross gaming revenue from VIP players grew by 7.5 percent last year after a 44.6-percent rate of growth in 2011. Revenues were up by 9.8 percent in the first quarter of this year. Since the fourth quarter of 2011, gross gaming revenue from massmarket players has increased at a faster rate than the VIP market segment. Participants at last month’s G2E Asia conference programme said revenue from premium mass-market players had propelled the segment to a never-before-seen prominence. Some casinos have seen waves of VIP players becoming premium mass-market gamblers. Premium mass-market gamblers do not borrow to bet, freeing them from the threat of repercussions if they have links to politics, for example. “If you look at the trend for the VIP market versus mass market, mass
JUNE 2013
market is still at a very steady 25 to 30 percent growth, whereas VIP is relatively more volatile,” says Kenneth Fong, the regional head of gaming and lodging research for JP Morgan. He forecasts VIP gaming revenue will grow by 10 to 15 percent for the rest of this year. VIP gaming revenue as a proportion of total gaming revenue has decreased steadily since the second quarter of 2011, when it peaked at 74 percent. In the first quarter of this year it was less than 68 percent. Even though VIP gaming revenue is growing at a reduced rate, a veteran junket operator, Yu Yio Hung, says he is confident about the future. Mr Yu has been in the business for 27 years and his company, CCUE, has VIP rooms in three casinos here. There will continue to be a strong need for junket operators, he says. The potential demand for VIP gaming is “huge”. “Ninety percent of the market in the mainland has not yet been tapped,” he says.
Class system Mr Yu is constantly on the lookout for
new VIP players from new markets. “If you have only one group of customers, once they are tapped out, you are not going to have more revenue,” he says. Mr Yu said at G2E Asia that he wanted a formal blacklist of VIP players who fail to repay their gambling debts. “I would like to see the setting-up of a database, a blacklist database, so that if a VIP customer has an unpaid balance, and therefore an outstanding debt, all the junket operators will know about it, so the player cannot then borrow more money from other junket operators and go bust.” There were 235 companies and individuals licensed in Macau to operate as junkets at the start of this year, 7.3 percent more than a year earlier, Gaming Inspection and Coordination Bureau data shows. There are no official figures on the number of VIP players that come to Macau each year. SJM Holdings Ltd chief financial officer Bob McBain estimates the pool of regular VIP players is between 150,000 people and 175,000 people. About 200,000 VIP players made 700,000 gambling trips to Macau last year, he says. Mr Fong says 200,000 to 500,000 VIP players gamble here. His estimate is based on the number of VIP gaming tables, the number of players per table and the hours spent playing. Casinos are increasingly assigning their players into distinct categories in an effort to get as much money out of them as possible. The marketing tool known as segmentation is being driven by the limit on the number of available tables and a shortage of croupiers, Mr Fong says. Casinos direct low-stakes players to slot machines and electronic table games, usher medium-stakes players towards the mass-market live gaming tables on the floor, and invite highstakes players – comprising premium mass-market and VIP players – to play at more exclusive tables.
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able to offer,” says Pagcor chairman and chief executive Cristino Naguiat. Pagcor operates 13 casinos and is also the gaming regulator. The company has no plans to have its own casino in the new Entertainment City. Mr Naguiat says the Philippine gaming industry generated more than US$2 billion in gross gaming revenue last year. Pagcor expects annual revenue to rise to US$10 billion by 2017 when all four casinos in Entertainment City are open. That much revenue would put the Philippines ahead of Singapore and Las Vegas, and make it second only to Macau.
Hostile environment
Solaire Resort and Casino
Glitz and grime The Philippines needs to improve its image in Greater China if it wants a greater share of the gaming market By Cláudia Aranda
he Philippines wants to become a destination for gamblers. But there is much to do if it is to reach its goal of being a third option alongside Macau and Singapore. At one G2E Asia forum last month, JP Morgan’s regional head of gaming and lodging research Kenneth Fong said the perception that the Philippines was unsafe and had rickety infrastructure might deter mainlanders from making the country their first choice gambling destination. Executives of the state-owned Philippine Amusement and Gaming Corp, known as Pagcor, say the Philippines wants to attract tourists with package holidays that include not only fancy casinos, but also tours to enjoy the country’s natural and cultural heritage. The Solaire Resort and Casino
opened this year in the new Entertainment City complex, which is being built on 120 hectares of land reclaimed from Manila Bay. The Solaire Resort is the first of four casino resorts in the complex. Each will cost at least US$1 billion (about MOP8 billion) and has at least one Filipino billionaire backing it. Macau-based Melco Crown Entertainment Ltd – the company behind City of Dreams and Studio City – is involved in one of the projects. Manila’s new gambling complex is meant to replicate the success of the Cotai Strip. The Philippine government hopes Entertainment City will increase the country’s gross gaming revenue and boost the economy. “Gaming will represent just a part of a complete package the new Manila Entertainment City complex will be
Manila wants mainstream tourism to complement the increase in gaming revenue. It hopes to welcome 10 million foreign visitors a year by 2016. There were 4.3 million tourist arrivals last year, 9 percent more than in 2011. It was a new record. By comparison, Macau recorded 28 million tourists last year. But tourism and gaming officials must first persuade would-be visitors that the Philippines is comfortable and convenient, and that tourists will not become victims of violent crime. The Sino-Philippine dispute over territory in the South China Sea, and the 2010 massacre of eight Hong Kong tourists on a bus hijacked in Manila by a disgruntled policeman, have slowed growth in arrivals from Greater China. Pagcor’s plans may yet be upset by the outcome of investigations by the Philippine and United States authorities into how Japanese businessman Kazuo Okada obtained a licence to operate a casino in Entertainment City. Pagcor has said that if the Philippine investigation finds evidence of any wrongdoing, it may revoke Mr Okada’s licence. Mr Okada was once the biggest shareholder in U.S. gaming company Wynn Resorts Ltd, the parent of Macau-based Wynn Macau Ltd. After a year-long investigation of its own, Wynn Resorts alleged that Mr Okada offered Pagcor executives cash and gifts with a combined value of about US$110,000. Mr Okada denies any wrongdoing. In light of the result of its investigation, Wynn Resorts decided to redeem Mr Okada’s 20-percent stake at a steep discount. JUNE 2013
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Sentosa Island in creating a casino resort that is a family destination. “We do have a chance. We can build very good infrastructure and transport links between China and the small islands. And we will be very competitive with other destinations.”
Help wanted
From little things Casinos emerging on Taiwan’s outlying islands are not designed to compete directly with Macau By Alexandra Lages
aiwan envisages putting its first casino on the Matsu Islands, among the outlying islands near the mainland. People in the know say Taiwan’s casinos pose little threat to casinos here. “We are not a competitor to Macau. We have small plans because we have little room to build big resorts. I think we will have only one licence. Matsu will be a small-scale international resort destination,” deputy magistrate of Matsu county Chen Jing Zhong told Macau Business, after a G2E Asia forum last month on Taiwan’s progress towards establishing the industry. Mr Chen forecasts between 1 million and 2 million visitors a year, fewer than Macau gets in one month. A professor at the school of management of the National Taiwan University of Science and Technology, Liu Day Yang, expects Taiwan’s gaming industry to do little harm to Macau’s. He says each place taps a different market. Even so, a casino on the Matsu Islands would be “very competitive”, MAY 2013
says George Lin, whose law firm drafted the legislation regulating Taiwan’s new gaming industry. The Matsu Islands are close to Fujian province in the Chinese mainland. “We can see how close it is to Fuzhou and Xiamen, which are major cities,” says Mr Lin, managing partner at Lin and Partners. He says Taiwan is aiming to emulate the casino on Singapore’s
Taiwan’s effective rate of tax on gross gaming revenue will be more attractive to investors than Macau’s. “We are trying to create a tax environment very conducive to investors because of the lack of infrastructure,” Mr Lin says. Taiwan intends to tax the gross gaming revenue of any casinos built on its outlying islands at an effective rate of 15 to 17 percent. A casino tax of 7 percent will raise money for local governments to spend on infrastructure, a franchise tax of between 7 percent and 9 percent will be paid to the central government, and a tax of 0.5 percent will finance efforts to prevent problem gambling. Casino operators should also contribute 0.5 percent of their revenues to local education, cultural and welfare programmes. While Taiwan intends to tax gross gaming revenue at up to 17 percent, Macau’s tax rate is, in effect, 39 percent. The tax rates in the Philippines are 15 percent on revenue from VIP players and 27 percent on revenue from mass-market players. The actual tax rates in Singapore are 12 percent on revenue from VIP players and 22 percent on revenue from massmarket players. Taiwan set about legalising casinos on its outlying islands almost four years ago. Residents voted to allow casinos on the Matsu Islands in a referendum last year. Another referendum saw a vote against allowing casinos on another set of islands, the Penghu Islands. The bill to regulate casinos has been moving through the legislative process. Mr Lin says the first casino is expected to open on Matsu three to four years after the bill is passed. Mr Chen says the Taiwan government is relying on the mainland to support the tourism industry on the Matsu Islands. “We expect China to give us the same support that it gives to Macau and Singapore,” he says.
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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June Date: Event:
17th – 20 th
Date: Event:
5th – 7th
Venue: Organiser: Address:
Grosvenor House Hotel, London, United Kingdom International Association of Gaming Advisors 375 N Stephanie Street, Suite 1212 Henderson, NV 89014 USA (1) 202 973 8606 www.theiaga.org iagasummit@courtesyassoc.com
Venue: Organiser: Address:
Venetian Macao-Resort-Hotel, Macau A Plus PR & Advertising Co Room 1408, 14/F Luso International Bank Building, Rua do Dr Pedro José Lobo, Macau (853) 2870 3930 (853) 2871 6297 www.aplus1996.com info@aplus-pr.net
Tel: Website: E-mail:
2013 IAGA International Gaming Summit
Date: Event:
24th – 26th
Venue: Organiser: Address:
Hyatt Regency Hong Kong, 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
Tel: Fax: Website: E-mail:
Corruption & Compliance Asia Congress 2013
Date: Event:
27th
Venue: Organiser: Address:
Hyatt Regency Hong Kong, 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
Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser:
Tel: Website: E-mail:
Banking & Finance Compliance Summit 2013
28th – 30 th
2013 Communic Macau Expo Fisherman’s Wharf, Macau Macau High Technology Industry Chamber, Computer Chamber of Macau and E-Commerce Association of Macau (853) 6699 0853 www.communicmacau.com info@communicmacau.com
July Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
5th – 7th
6th Computer & Digital Products Expo
Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
5th Home & Household Products Expo
12th – 14th
Macao Franchise Expo 2013 Venetian Macao-Resort-Hotel, Macau Macao Trade and Investment Promotion Institute World Trade Centre Building, 1st & 4th floors, 918, Avenida da Amizade, Macau (853) 2831 3220 (853) 2831 3221 www.mfe.mo sec@mfe.mo
August Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
1st – 4th
2013 Guangdong & Macao Branded Products Fair Fisherman’s Wharf, Macau Macao Trade and Investment Promotion Institute World Trade Centre Building, 1st & 4th floors, 918, Avenida da Amizade, Macau (853) 8798 9636 853) 2872 6777 www.guangdongmacaofair.com info@guangdongmacaofair.com
Date: Event:
12th – 14th
Venue: Organiser: Address:
SCEC, Sydney, Australia Beacon Events 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.gamingdownunder.com info@beaconevents.com
Tel: Fax: Website: E-mail:
Gaming Racing & Wagering Australia 2013
Venetian Macao-Resort-Hotel, Macau A Plus PR & Advertising Co Room 1408, 14/F Luso International Bank Building, Rua do Dr Pedro José Lobo, Macau (853) 2870 3930 (853) 2871 6297 www.aplus1996.com info@aplus-pr.net
APRIL 2013
: A Macau Business partner event
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Hospitality
here are few hotels in the city with beach views as good as the Westin Resort Macau’s. But competition among hotels for business is fierce, and the Westin, which opened in 1993, needs a revamp to match its vista. The Westin has a new general manager, Gary Warnock, whose task is to keep the hotel up with the times. Mr Warnock’s predecessor, Stephan Winkler, told Macau Business in 2011 that he intended to reinvigorate the Westin by creating new food and drink outlets and by concentrating more on health and wellness. Mr Winkler’s plan stalled and Mr Warnock is now in charge of push starting it again. Mr Warnock says the owners of the Westin have given him all he needs to do it. “It’s actually happening,” he says. He hopes the revamp will begin by July 1 and end in September. It will not entail any major construction work. “All our rooms will be re-carpeted. We’ll have new furniture, flat-screen TVs. Every room will have 40-inch flat-screen TVs and 46-inch TVs in the lounge rooms,” he says. Modern wireless telecommunications will bring the rooms up to par. “Our customers are very switched on, with iPads and iPhones. We’ll have Wi-Fi throughout the property, not just in public areas,” Mr Warnock adds. He says the results will be an enhancement of what the Westin already offers. “We have the Friday and Saturday fantastic soirées, which is still the best value in town,” he says. “One of the items we have is Indian food, which guests say is the best Indian food they’ve tasted in Macau.”
Quiet weekends Mr Warnock says a new food and beverage director will mean new items on the menu. He adds new package deals for golfers may also be in the offing. “We want to work together with Macau Golf and Country Club to entice people from Hong Kong and the mainland, and also from Taiwan and Singapore,” he says. The opening of new hotels here makes competition for customers fierce but Mr Warnock says no competitor has what the Westin has. “We’re located on the beach, next to a golf course,” he says. “We’re not a casino, which is the number one thing differentiating us.” Mr Warnock means to keep putting emphasis on aspects of the hotel that are unique in Macau – such as afternoon teas and relaxation on the beach. “Our clients don’t want the casino experience. They don’t want the noise. The clientele that comes here are quite different from the ones on the Cotai strip.”
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Hospitality
Gary Warnock
Most of the Westin’s customers come from the mainland and Hong Kong, people, he says, wishing to “get away from the hustle and bustle” of their hometowns. “They come somewhere quiet for the weekend, to play some golf.”
Different market
HOTEL EXPERIENCE G
ary Warnock, the new general manager of the Westin Resort Macau, was born in Australia. For 20 years he was in the airline business, working in Australia, Taiwan, Africa and around the broader Asia-Pacific region in occupations that ranged from reservations agent to country manager. Mr Warnock has been in the hotel industry for more than 10 years, six of them working for Starwood Hotels & Resorts Worldwide Inc in China. He began working for Starwood in the Sheraton Shenzhen. Roles at the Westin Bund Centre Shanghai and the Sheraton Sanya Resort followed. He became general manager of the Westin Resort Macau last month.
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The Westin has only 208 rooms and suites. Mr Warnock says the hotel plays to its strengths as a smaller establishment, matching its service to the individual guest. “We work very hard to develop in our systems folios on all of the guests, so we understand what their needs are. We have that as a reference when they come back and stay with us again,” he says. The Westin has enjoyed a steady occupancy rate of 60 percent to 70 percent over the course of the past year, Mr Warnock says. He says this is due the kind of people that stay there. The Westin is owned by Sociedade de Turismo e Desenvolvimento Insular SARL, a company established by gaming magnate Stanley Ho Hung Sun. The resort is managed by Starwood Hotels & Resorts Worldwide Inc. Starwood manages both the Westin and the Sheraton Macau – two very different establishments. “The Westin is about rejuvenation and relaxation. Each one of our brands has a different customer in mind,” Mr Warnock says. He does not say how big the Westin’s share of the market is, but he points out that it is in a different market from the city’s bigger hotels. “Our sister-property down the road has 4,000 rooms – the Sheraton Macau. We don’t put ourselves in the same market as them or the Four Seasons or the Venetian.”
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High and dry The Four Seasons aims to nurture MICE in one of its swimming pools any couples have married in a swimming pool but few have done it without getting wet. Now any couple can – if they marry in the Four Seasons Hotel Macau. The hotel has just acquired a modular pool cover system, which allows it to create floor space for events such as weddings on top of one of its five outdoor swimming pools. Predictably enough, it calls its newest offer “Walk on Water”. Four Seasons marketing director Julius Santos says the rigid transparent platform formed by the pool covers can not only be used for weddings, but also for product launches – it is strong enough to support a car – and fashion shows. In short, any event that would normally be held in a hotel function room. “We wanted to be different from the rest of the hotels in Macau,” Mr Santos says. “With so many different properties opening in Cotai, the market is very competitive. You have to find a way to stand out.” All five casino resorts in Cotai have facilities for events arranged by the meetings, incentives, conventions and exhibitions (MICE) industry. In the next few years Cotai will have at least six new or greatly expanded casino resorts, all of which will have plenty of facilities for MICE industry events. A United States company custommade the Four Seasons pool cover system. The system cost more than HK$1 million (US$129,000). It consists of 95 acrylic modules that fit together to cover the entire swimming pool. The centre section can bear a load of up to 2,200 kg. The platform can be assembled in 24 hours and the modules can be lit in a variety of ways. Mr Santos says the Four Seasons began work on the “Walk on Water” project four years ago. It had the support of Sands China Ltd, which owns the hotel. The Four Seasons is now marketing the “Walk on Water” platform to event organisers. The hotel gave people in the MICE and fashion industries a demonstration last month. Mr Santos is bullish about the pros-
M
pects for the platform. “We have had a lot of interest,” he says.
Rigidity for flexibility The hotel is making a particular effort to rent out the “Walk on Water” platform for weddings. Mr Santos says one-fifth of the weddings held at the Four Seasons already take place outdoors. The Four Seasons held 50 percent more weddings last year than in 2011. Since 2011 the hotel has had what it calls a “wedding university programme”, which includes an intensive two-hour course meant to teach couples how to plan their weddings. The Four Seasons is also hoping
the “Walk on Water” platform will give organisers of meetings and conventions more flexibility to hold some parts of their events indoors and some parts outdoors. The Four Seasons has two ballrooms and three other function rooms. Mr Santos says people taking part in MICE events account for 20 percent of the room nights at the Four Seasons. “We are a bit more low-key than other properties, because of clients’ preferences,” he says. Four Seasons, which will be five years old in August, has some more tricks up its sleeve. “We have some stuff cooking but it is not the right moment now to unveil it,” Mr Santos says. JUNE 2013
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TOURISTS SPEND MORE
The total spending of visitors rose by 10 percent in the first quarter of 2013 The total spending of visitors, excluding gaming expenses, amounted to MOP14.5 billion (US$1.8 billion) in the first quarter of 2013, up by 10 percent year-on-year, the Statistics and Census Service said last month. Per-capita spending of visitors in the first three months of this year stood at MOP2,046, an increase of 8 percent year-on-year.
Visitors from the mainland had the highest per-capita spending, at MOP2,640, and those travelling under the individual visit scheme spent MOP2,993. Analysed by expenditure structure, visitors spent mainly on shopping (50 percent), accommodation (23 percent), and food and beverages (20 percent).
TOURIST NUMBERS TO RISE IN 2013
The head of the Travel Industry Council, Andy Wu Keng Kuong, expects the number of tourists to rise by 2 to 3 percent this year. This would push tourist arrivals to as many as 28.9 million, up from 28.1 million last year. Mr Wu believes the number of tourists from the mainland will continue to grow. He also expects to see double-digit growth in tourist arrivals from South Korea.
ALMOST 30 HOTEL PROJECTS WAITING FOR APPROVAL
Macau had as many as 10 hotels under construction at the end of March, according to a statement released by the Lands, Public Works and Transport Bureau. Of those, eight were located on the peninsula and the remaining two in Cotai. There are another 28 projects in the pipeline, waiting for approval. Overall, the 38 properties are expected to add up to 23,000 rooms to Macau’s hospitality sector. The 28 hotel projects still waiting for approval could provide a total of almost 18,600 new rooms.
HOTELS IN NEED OF 2,100 PEOPLE
The hotel sector was in need of 2,086 workers as of Marchend, data released by the Statistics and Census Service shows. The sector’s job vacancy rate stood at 4.5 percent. Even so, the number of vacancies was down by 18 percent from six months earlier. At the end of March, the city’s hotels employed almost 45,600 people, up by 2.3 percent from six months before. The average monthly earnings for full-time hotel employees stood at MOP13,820 (US$1,728) as of March-end, up by 8.6 percent year-on-year. JUNE 2013
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Hospitality
Beware of “fruit bombs” Rising alcohol levels give wine lovers a headache BY SUZANNE MUSTACICH*
o those New World Cabernets and Zinfandels make your head spin? Fed up with having to stop drinking after just one glass? Plenty of wine lovers around the world will have noticed their favourite tipples are getting stronger, and many of them are unhappy about the hangovers that come with increased alcohol levels. But it seems they have only themselves to blame as wine specialists say that changing consumer tastes are mainly responsible for driving the trend. Wine critics and advances in winemaking techniques also shoulder some of the blame for what experts say are unbalanced wines that can cause health risks and safety issues, casting a pall over the pleasure of imbibing. “The rise in alcohol content of wine is primarily man-made,” reported a working paper by the American Association of Wine Economists in 2011.
D
Balancing tastes Over the last two decades, drinkers have developed a passion for fruity, aromatic wines with round, silky tannins, encouraged by high ratings from critics. Even for growers who favour elegance over “fruit bombs”, the quest for ripe tannins has led to grapes with more sugar, which transforms during fermentation into higher alcohol levels. “I would stress that higher alcohol levels are never our aim, but rather the logical consequence of the way we work in the vineyards today, which has evolved considerably compared to how it was 20 or more years ago,” says Christian Seely, managing director of AXA Millesime’s wine estates in France and Portugal. A couple of decades ago, yields were twice what they are today, and very little sorting was done to select the best fruit. The alcohol levels might have been lower, but the tannins were often unripe, JUNE 2013
requiring years of cellaring to soften. Today vintners look for mature tannins in the grape skins and seeds – phenolic ripeness in the industry jargon – before the harvest, even if it means higher sugar content. “It is important to understand that the effect of achieving more regularly greater phenolic ripeness is not just to achieve higher sugar levels and so higher potential alcohol levels, but also, crucially, riper and finer tannins,” Mr Seely says. “We choose the date of picking based on our tasting of the grapes, but also on our analyses of polyphenols and IPTs (total phenolics), which usually indicate the optimum phenolic ripeness a couple of days after the desired sugar levels,” he says. But wine drinkers now say the alcohol levels have gone too far. “Going from drinking two glasses of wine with 12-percent alcohol to a similar amount of wine that contains 14-percent alcohol could put you from under to over the legal limit for driving,” says Michael Apstein, a columnist, gastroenterologist and assistant professor at Harvard Medical School. “We all enjoy wine, but we enjoy balanced wine. As soon as you get 14, 15 and 15.5 percent, you don’t have balanced wines,” adds Laurent Audeguin, a selection, research and development manager at the French Vine and Wine Institute.
Climate change matters At the same time, there is little interest in spoiling the party with the return of thin wines with unripe tannins. Climate change, while not the only factor, is compounding the problem. “Global warming is a bigger and bigger concern in the industry, because every year we have higher sugar content,” Mr Audeguin says. “We now face
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Over the last two decades, drinkers have developed a passion for fruity, aromatic wines with round, silky tannins, encouraged by high ratings from critics erratic rainfall, and less rainfall during the growing season, mainly in the Mediterranean vineyards, so we have to find varieties well-adapted to those conditions.” One option, says Mr Audeguin, is to introduce grape varieties that deliver lower alcohol in hot, dry growing conditions. With this in mind, the French Vine and Wine Institute has scoured southern Europe for likely candidates to import into France. “We are selecting grape varieties from south Italy, the Greek Peloponnese islands, Spain and Portugal. We don’t breed these, we just try to import these varieties and see how they perform in France. The plan is to have some varieties authorised in France within five years,” says Mr Audeguin. Vintners are also experimenting with new strategies in pruning, leaf canopy management and irrigation. In the meantime, low-alcohol wines are increasingly popular. Domaines Auriol, based in Languedoc-Roussillon, in France, produces So’ Light, a wine with 9-percent alcohol content that appeared on American store shelves last January. In Britain, according to Chris Wisson, a senior drinks analyst at Mintel, the low-alcohol wine market is worth 23 million pounds (MOP278 million) with strong growth pushed by government taxes on alcohol and health concerns. “The rising price of wine has made people try low-alcohol wines, and there is certainly a health side to it,” says Mr Wisson. Demand, he says, is driven primarily by women and young drinkers aged 18 to 24. For fine-wine stalwarts, there is another option. “Naturally if one sees a high alcohol level on the label of a bottle you need to adjust the amount you might decide to drink accordingly, but that is just common sense,” Mr Seely said. Common sense? Maybe. Common practice? Maybe not! * AFP NEWS AGENCY JUNE 2013
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Business
BY ALEXANDRA LAGES AND MANDY KUOK PHOTOS BY LUÍS ALMOSTER
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Business
acau’s centuriesold pawnbroking industry gained a new lease of life when the gaming market was liberalised in 2002. The number of pawnshops has more than tripled in the past 10 years to about 180, people in the business say. Some mainland gamblers use pawnshops to get around strict currency controls but the authorities appear to know little about the business. On the peninsula, pawnshops cluster round the casinos. Gamblers use them to pawn valuables to get money to gamble with. Mass-market players from the mainland also use pawnshops to bring more funds into Macau than the mainland’s restrictions would otherwise permit. Mainland tourists are allowed to bring in just RMB20,000 (MOP26,000) in cash. They are alJUNE 2013
lowed to use bank cards issued in the mainland to withdraw RMB10,000 a day from ATMs here. Unlike VIP players, mass-market players have no access to credit offered by gambling junket operators. To get round the limit on the amount of cash they are allowed to bring in, mass-market players from the mainland can go straight to a pawnshop as soon as they arrive and buy watches and jewellery, charging them to a prepaid card or credit card. They can immediately sell the valuables back to the pawnshop for cash to gamble with. Pawnbrokers usually charge a commission of between 5 percent and 10 percent on the deals. Macau General Chamber of Pawnbrokers president Chou Chin Leong says 80 percent of pawnshop customers are gamblers from the mainland. “Those that buy and resell to get cash are just a few,” he says. Mr Chou says about 80 percent of pawnshop customers use UnionPay prepaid cards to settle transactions. Macau Business asked the Monetary Authority of Macau for official figures for Union-
Pay transactions in pawnshops. The authority did not provide any data.
Chance to haggle Gaming consultant David Green says he thinks pawnbrokers play an appreciable role in providing mass-market gamblers from the mainland with cash for gambling. Union Gaming Research Macau analyst Grant Govertsen disagrees. “Given that the average mass-market customer’s contribution to gross gaming revenue is significantly lower than the limits on taking currency out of the mainland, I suspect that pawnshops are only responsible for a very small percentage of gaming revenue in Macau,” Mr Govertsen says. He does not think premium massmarket gamblers use pawnshops frequently to obtain cash. The typical premium mass-market gambler is quite a wealthy businessman, who is unlikely to need the services of a pawnbroker to move money around, he argues. Mr Chou says pawnshops play an important role in the tourism industry, not as places where gamblers can obtain
103 cash for their bets but as places where they can spend their winnings. “When tourists win money in the casino, they like to spend it in shops,” he says. “There are not so many shops open 24 hours in the city, and pawnshops can provide this kind of service.” Pawnshops import goods from Hong Kong, Japan and Europe, especially watches and jewellery, to sell here, Mr Chou says. “Many people think they can find good prices in our shops. They know it’s a good place to shop. If you go to a Louis Vuitton shop, you may get a 10-percent discount, but if you go to a pawnshop you can bargain more.”
Don’t ask, can’t tell The government seems to know little about pawnbroking. The Judiciary Police keep their eye on pawnshops because they can be used to fence stolen goods. Pawnbrokers are obliged to report regularly to the Judiciary Police the details of the transactions they make, including customers’ identities. Pawnbrokers are obliged to report to the Financial Intelligence Office any transaction that smacks of money laun-
The number of pawnshops has more than tripled in the past 10 years to about 180, people in the business say. Some mainland gamblers use pawnshops to get around strict currency controls but the authorities appear to know little about the business
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Business
TOWERING WEALTH H
istorical records mention pawnshops in Macau as far back as the Qing Dynasty, making pawnbroking here in the city four and a half centuries old. Regulation came to the industry early in the 20th century, when the law divided pawnshops into three types. At one extreme, Tong pawnbrokers would keep valuables pawned for up to three years before selling them, and charged the borrower the least interest. Somewhere in the middle were On pawnbrokers, who would keep valuables for a year or two and charge moderate interest. At the other extreme, Ngat pawnbrokers would keep valuables for between four and 12 months, and charged the most interest. The architecture of a pawnshop’s premises was a clue to its type. To keep the valuables pawned safe from flood, fire or thieving fingers, a Tong or On pawnshop usually had a high tower specially built for storing them, separated from the shop itself by a passage. The tower was built on stone foundations.
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Its brick walls were lined on the inside with steel. The windows were narrow and barred. The pawnshop business flourished in the early 1940s as refugees from the Second Sino-Japanese War (1937-1945) flooded into Macau from the mainland and Hong Kong. Macau ran short of basic commodities. Prices soared and many people had to pawn their valuables for money to survive. Prosperity returned to Macau in the late 20th century and pawnbrokers played a decreasing role in the financial system. But the liberalisation of the gaming market in 2002 brought new demand for their services as gamblers used them to turn valuables into cash to gamble with. This history is told by Macau’s museum of pawnbroking in Avenida Almeida Ribeiro. The museum is in the restored premises of the Tak Seng On pawnshop. A wealthy merchant founded Tak Seng On, meaning “virtue and success pawnshop”, in 1917.
105 dering. “According to our records, the Financial Intelligence Office has not received any suspicious transaction report from pawnshops,” says a spokesperson for the office. The government is unsure what the market is worth. Neither the Statistics and Census Service, the Monetary Authority of Macau, Macau Economic Services, nor the Financial Intelligence Office has any information about pawnbroking turnover. Even Mr Chou declines to estimate the annual turnover of the industry. “It’s very difficult to total an exact number for sales. Different companies have different kinds of goods to sell,” he says. The Macau General Chamber of Pawnbrokers, established in 2009, hopes the government will update its rules for pawnbroking, which are decades old. Mr Chou says it would help to know which government department oversees the industry. “We have had no formal meeting with the government yet because we don’t know which department is in charge.”
Macau General Chamber of Pawnbrokers president Chou Chin Leong says pawnbroking has changed a lot in recent years. Pawnshops are increasingly regarded as part of the retailing industry and less as credit institutions. “The sector has changed to become multi-service,” he says
Hard times Mr Chou says pawnbroking has changed a lot in recent years. Pawnshops are increasingly regarded as part of the retailing industry and less as credit institutions. “The sector has changed to become multi-service.” He says that despite the expansion of pawnbroking, it has seen better days. “In 2011, business increased a lot, but in 2012 it started going down 25 to 30 percent. I expect this year it will go down a further 10 percent compared to last year.” Increases in operating costs are narrowing profit margins, competition is becoming fiercer, and shop rents and the pay of employees are rising, Mr Chou says. He estimates that about 2,000 people work in pawnshops. “In order to survive, we are changing our business, but still some pawnshops are closing. About three are expected to close down this year,” he says. The gradual shift of the centre of gravity of the gaming industry from the peninsula to Cotai is also hurting pawnbroking, Mr Chou says. Pawnshops are not allowed in the shopping malls of the Cotai casino resorts, he explains. So pawnshops have opened instead in nearby Taipa Village. JUNE 2013
MICHAEL SPENCE NOBEL LAUREATE IN ECONOMICS AND PROFESSOR OF ECONOMICS AT NEW YORK UNIVERSITY
Learning about growth from austerity NO ONE BELIEVES THAT FISCAL BALANCE IS THE WHOLE GROWTH MODEL ANYWHERE
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n a recent set of studies, Carmen Reinhart and Kenneth Rogoff used a vast array of historical data to show that the accumulation of high levels of public (and private) debt relative to gross domestic product has an extended negative effect on growth. The size of the effect incited debate about errors in their calculations. Few, however, doubt the validity of the pattern. This should not be surprising. Accumulating excessive debt usually entails moving some part of domestic aggregate demand forward in time, so the exit from that debt must include more savings and diminished demand. The negative shock adversely impacts the non-tradable sector, which is large (roughly two-thirds of an advanced economy) and wholly dependent on domestic demand. As a result, growth and employment rates fall during the deleveraging period. In an open economy, deleveraging does not necessarily impair the tradable sector so thoroughly. But, even in such an economy, years of debt-fuelled domestic demand may produce a loss of competitiveness and structural distortions. And the crises that often divide the leveraging and deleveraging phases cause additional balance-sheet damage and prolong the healing process. Thanks in part to research by Ms Reinhart and Mr Rogoff, we know that excessive leverage is unsustainable and that restoring balance takes time. As a result, questions and doubts remain about an eventual return to the pre-crisis trend line for GDP and especially for employment. What this line of research explicitly does not tell us is that deleveraging will restore growth by itself. No one believes that fiscal balance is the whole growth model anywhere.
The cost of deleveraging Consider southern Europe. From the standpoint of growth and employment, public and private debt masked an absence of productivity growth, declining competitiveness in the tradable sector and a range of underlying structural shortcomings – including labour-market rigidities, deficiencies in education and skills training, and underinvestment in infrastructure. Debt drove growth, creating aggregate demand that would not have existed otherwise. (The same is true of the United States and Japan, though the details differ.) Government is not the sole actor in this. When the deleveraging cycle begins, the private sector starts to adjust structurally – a pattern clearly seen in the data on growth in the tradable side of the U.S. economy. Muted wage growth increases competitiveness, and underutilised labour and capital are redeployed. How fast this happens partly depends on the private sector’s flexibility and dynamism. But it also depends on the ability and willingness of government to provide a bridging function for the deficiency in aggregate demand, and to pursue reforms and investments that boost long-term growth prospects. If public-sector deleveraging is not a complete growth policy – and it isn’t – why is there so much attention on fiscal austerity and so little action (as opposed to lip service) on growth and employment? Several possibilities – not mutually exclusive – come to mind. One is that some policymakers think that fiscal balance really is the main pillar in a growth strategy: deleverage quickly and get on with it. The belief that the fiscal multiplier is usually low may have
contributed to underestimation of the short-run economic costs of austerity policies – and thus to persistently optimistic forecasts of growth and employment. Recent research by the International Monetary Fund on the context-specific variability of fiscal multipliers has raised serious questions about the costs and effectiveness of rapid fiscal consolidation.
Incomplete models Estimates of the fiscal multiplier must be based on an assumption or a model that says what would have happened in the absence of government spending of some type. If the assumption or the model is wrong, so is the estimate. The counterfactual needs to be made explicit and assessed carefully and in context. In some countries with high levels of debt and impaired growth, fiscal stimulus could raise the risk premium on sovereign debt and be counterproductive; others have more flexibility. Countries vary widely in terms of household balance-sheet damage, which clearly affects the propensity to save – and hence the multiplier effect. Uncertainty is a reality and judgment is required. Then there is the time dimension. If infrastructure investment, for example, generates some growth and employment in the short to medium term and higher sustainable growth in the longer term, should we rule it out because some estimates of the multiplier are less than one? Similarly, if fiscal stimulus has a muted effect because the recipients of the income are saving to restore damaged household balance sheets, it is not clear we want to discount the accelerated deleveraging benefit, even if it shows up in domestic demand only later. Policymakers (and perhaps financial markets) may have believed that central banks would provide an adequate bridging function through aggressive unconventional monetary policy designed to hold down short- and long-term interest rates. Certainly central banks have played a critical role. But central banks have stated that they do not have the policy instruments to accelerate the pace of economic recovery. Among the costs and risks of their low-interest-rate policies are a return to the leveraged growth pattern and growing uncertainty about the limits of a central bank’s balance-sheet expansion. In other words, will the elevated asset values caused by low discount rates suddenly reset downward at some point? No one knows. Countries are subject to varying degrees of fiscal constraint, assuming (especially in the case of Europe) a limited appetite for unlimited, unconditional cross-border transfers. Those that have some flexibility can and should use it to protect the unemployed and the young, accelerate deleveraging and implement reforms designed to support growth and employment; others’ options – and thus their medium-term growth prospects – are more constrained. All countries – and policymakers – face difficult choices concerning the timing of austerity, perceived sovereign-credit risk, growth-oriented reforms and equitable sharing of the costs of restoring growth. So far, the burden-sharing challenge, along with naive and incomplete growth models, may have contributed to gridlock and inaction. Experience can be a harsh, though necessary, teacher. Growth will not be restored easily or quickly. Perhaps we needed the preoccupation with austerity to teach us the value of a balanced growth agenda. JUNE 2013
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Marketing
Return to sender
Complaints are on the rise against unsolicited mobile marketing messages BY ALEXANDRA LAGES AND MANDY KUOK
dy Ho and Joey Leung, both 30, often get short text messages from banks and their telecommunication providers on their mobile phones. “The number of messages is not too much but every day I get one or two,” Ms Ho says. The messages do not bother them that much and they have never asked the senders to stop. Kitty Lam, 40, is also used to re-
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With the September elections for the Legislative Assembly drawing near, Ms Ho, Ms Leung and Ms Lam say they have also received mobile messages from candidates running for a seat. “The messages just mention the election candidates, what they are doing or if they have an interview on television,” they say. Ms Leung says she has asked these people to stop sending her election-related messages but they still keep coming. “I’m thinking of going to the Office for Personal Data Protection to complain,” she says.
Free marketing ceiving unsolicited marketing messages every week. “I joined the membership of some shops. These shops, some banks and my telecom company send me messages. Every day I get three or four,” she says. Ms Lam is ambivalent about being spammed by advertisers. Sometimes the messages are useful, since they inform her about promotions.
As more companies embrace mobile marketing to promote their products and services, complaints regarding unsolicited direct marketing via mobile messages are increasing, says Ken Yang Chongwei, deputy director of the personal data protection office. While mobile marketing is not illegal, consumers have the right to opt out. And for marketers, there is little to gain if receivers regard their messages as spam. According to an exploratory study by the Xi’an Jiaotong University, the importance of consumer privacy, information value and frequency are crucial factors for mobile advertising targeting a Chinese audience. “There is a rapidly increasing number of complaints against direct marketing. Most of them complain that those parties are sending text messages to them without their consent. And some people complain that those companies are just neglecting their right to object to receiving those messages,” Mr Yang says. Even the city’s sex industry is making use of unsolicited mobile messages, by using mobile apps to spread messages to people who come into areas within a few hundred metres away of their service venues, according media reports. In the first four months of this year, the personal data protection office received 22 complaints about unsolicited direct marketing. There were 30 complaints last year, up from the five reported the previous year. Twelve cases of direct marketing through smartphone applications were reported last year, according to the office. Of these, 10 cases are still under investigation. This year, only one case has been reported. In general, most of the messages are
109 linked to the retail industry, data from the office shows. Since 2011, the office has sanctioned only one case, after a consumer asked a bank not to send him mobile direct marketing materials and the bank failed to erase his number from its database. In these cases, companies can face fines ranging from MOP4,000 (US$500) to MOP40,000. A marketing company must also have the consent of the client before making use of its personal data for any purpose. If not, firms face a fine ranging from MOP8,000 to MOP80,000.
Increased awareness There are two main legal channels through which companies gather personal information on clients in order to send them unsolicited marketing messages via smartphone applications, says Mr Yang. Either companies have information on clients because they made a purchase and provided their personal data, or the client joined a social or
“There is a rapidly increasing number of complaints against direct marketing,” says Ken Yang Chongwei, deputy director of the Office for Personal Data Protection
online group, whose policies allow companies to send them direct messages. Some companies also randomly select phone numbers and call or send them marketing messages, which is against the law. Reports of unsolicited marketing messages are increasing as people become more aware of their rights but it is difficult to get evidence, Mr Yang says. He calls on the public to continue reporting cases and to provide more background to help inquiries. “Some people do not wish to provide more information. Then, it is hard for us to probe whether the client has given any consent to the company,” he says. Mr Yang says the use of mobile messages for marketing purposes is a global trend and enforcement authorities face similar problems. “This is related to the rapid development of smartphone apps. Many years ago, if you wanted to do direct phone marketing, you had to pay. Now it is totally free. So many people are trying to take advantage of this.” Another situation that is increasingly common is that people are receiving more direct marketing messages and calls originating from other cities and regions. “In this situation, it is very hard for us to find out who the data controllers are and how they got the information,” Mr Yang says. To tackle the situation, the personal data protection office is seeking help from its overseas counterparts, he says, without disclosing further details. Macau is already part of the Global Privacy Enforcement Network and the Asia-Pacific Privacy Authorities, two organisations through which privacy authorities can form partnerships and exchange ideas on privacy regulations, new technology and the management of privacy enquiries and complaints. “In the past, we had three cases of international cooperation. But some countries and jurisdictions are not members and we have to find other ways to deal with that,” Mr Yang says. Hong Kong is also a member of the Asia-Pacific Privacy Authorities, but the mainland has not joined either organisation. “However, more and more personal data enforcement authorities are aware of these situations and we believe that in the future authorities may cooperate more closely to cope with this,” says Mr Yang. JUNE 2013
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Human Resources
Troubled sleep Shifts and overtime work are harming the physical and mental health of the workforce, striking at productivity
BY CLÁUDIA ARANDA ILLUSTRATIONS BY RUI RASQUINHO
acau’s workforce is finding it increasingly difficult to get a good night’s sleep. Human resources experts warn that the city’s sleep-starved workforce is a problem, with increased fatigue levels affecting productivity. University of Macau psychology professor Robert Taormina says a lack of sufficient sleep “can and will negatively affect” workers’ productivity. Although it is generally accepted that a working adult needs eight consecutive hours of sleep, Mr Taormina says the actual amount varies between individuals, how much quality sleep they get and their work. Long-term sleep deprivation translates into sleep deficit, which can impair reaction times, judgment capacity, vision and information processing. It also affects people’s short-term memory, productivity, motivation, vigilance and patience. A lack of sleep may be a widespread problem. Research by facilities management and business support services company Regus Plc found that 23 percent of workers in Hong Kong suffer from sleep deprivation. There is no similar data available for Macau. Nowhere are the effects of sleep deprivation more evident than in shift work. Macau’s economy is dominated by industries such as gaming, hospitality and entertainment where work around the clock means employees sleep irregular hours. Almost 80,000 people were employed in gaming by the end of last year. A further 54,000 people work in hospitality.
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Shift hopping Macau Gaming Industry Employees Association vice-president Leong Sun Iok says the organisation receives regular reports on how casinos manage their shift schedules. He says employees are often given a couple of days’ notice, or even less, when their shifts are changed according to the number of gamblers in the casino. The majority of the association’s members work in shifts on the gaming floor, mostly as croupiers, supervisors or managers. Mr Leong, who has worked in a casino, says although staff eventually adapt to the changing shifts “sleep is not restful, we often wake up with nightmares and feel constantly tired”. Shift workers are also more prone to family problems than other kinds of employees, according to a 2011 survey by the Macau-based Sheng Kung Hui Gambling Counselling and Family Wellness Centre. Research has found that workers adjust to a new shift if the change is permanent but the body faces a hard time coping if it is temporary. In non-fluctuating shift work, the shift in people’s daily cycles, or circadian rhythm, remains constant once the body adapts to it. JUNE 2013
Fluctuating shift work affects circadian rhythm by disrupting the body’s sleep-wake schedule. This happens when shift workers rotate between the three common shifts: morning, afternoon and night. Mr Leong says a continuous and increasing trend for the city’s workforce to develop poor sleeping habits could become a public health issue. “A huge part of the population is working in shifts and around 34,000 workers in the casinos are very young, below 30 years old,” he says. “If the government doesn’t take the initiative to change the state of affairs, that may become a huge health risk.”
Flexible scheduling Gertina van Schalkwyk, the head of the department of psychology at the University of Macau, says people need to know how adequate sleep and the treatment of sleep disorders can improve health and productivity. “If we don’t attend to this matter and if we do not educate Macau’s population on healthier sleeping behaviour, that could have an impact in the future,” she says. The Gaming Management Association is researching ways that casinos can better arrange shifts and annual leave for their staff. Association president Davis Fong Ka Chio, who heads the Institute for the Study of Commercial Gaming at the University of Macau, says researchers have received data from casino workers on their shift schedules. “The research is now at the second stage: approaching casinos to ask for information from their side, so that matching up, the full picture is possible,” Mr Fong says.
Nowhere are the effects of sleep deprivation more evident than in shift work. Macau’s economy is dominated by industries such as gaming, hospitality and entertainment where work around the clock means employees sleep irregular hours
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Human Resources
One aim of the research is to understand how different shift patterns affect productivity. There are reportedly more than 100 different kinds of shift schedules in use by Macau’s gaming industry. “We need to have that information in order to have a clearer picture before we are able to make conclusions,” Mr Fong says. Some experts argue that flexible working hours can help overcome sleep deprivation, creating more hours in the day for sleep or family life. “Flexitime usually means that a person can decide to come to work a bit earlier and leave a bit earlier or come later and leave later,” Mr Taormina says. However, it is not that simple, says Lancy Chui, regional managing director for Greater China at international human resources consultancy Manpower Inc. “Flexible hours are a possible way but it depends on job roles and industries,” she says, adding that it is harder for companies engaged in gaming and hospitality to implement flexible working hours.
Overtime blues Another factor is Macau’s labour shortage, Ms Chui says. Companies with staffing difficulties often make their staff work consecutive shifts, especially in the gaming industry. The good news is that “there are companies that have increased headcounts to shorten the shift hours and increased work breaks between shifts,” Ms Chui says. The goal is to boost employee retention by providing employees with a better work-life balance. Sleep deprivation also affects workers in industries that do not work shifts. Often, the workload requires working overtime, meaning less time for sleeping – in many cases without additional pay, although it is statutory that working extra hours be paid accordingly. Official data shows the average work week was 46.3 hours in the fourth quarter of last year. Evolution HR founder and managing director Jennifer Liao says overtime work is already a requirement in some industries, even if it is implicit. Again, in many cases, that is due to the city’s lack of available labour. In middle management, and senior or executive positions, working overtime during the weekends and holidays is almost inevitable, says Ms Liao. “If you look at the casinos’ executives, they can easily work more than 60 hours a week.” University of Macau mental health specialist Charles Zaroff says people do not seem to understand that a lack of sleep contributes to mental disorders. He says sleep-deprived workers can compensate with power naps to increase productivity and to relieve stress. “It has been shown in research, and everybody seems to know among the general population, that if an individual takes a break for sleep at work, he is more productive the rest of the day.” JUNE 2013
SHORT DAYS, LONG NIGHTS I
t is not just work that is taking a toll on the workforce’s sleep quality. Many workers have to sacrifice sleep to fit in personal commitments, either by waking up early or by going to bed late at night. There are also other environmental issues, such as an excess of neon lighting, affecting sleep quality, says Gertina van Schalkwyk, head of the department of psychology at the University of Macau. “If night is the only time people can relax and have time to go to a karaoke bar, then of course they will have to stay awake until late for their entertainment activities,” she says. This causes sleep deprivation as people often have to wake up early the next day. A study conducted last year by the University of Macau and the University of Hong Kong concluded that sleep duration and quality affect college students’ academic performance, and physical and psychological health. The less sleep, the greater the impact.
113 KANAYO F. NWANZE PRESIDENT OF THE INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT, A SPECIALISED UNITED NATIONS AGENCY
Harnessing the remittance boom WE SHOULD NOT IGNORE THE ENORMOUS DEVELOPMENT POTENTIAL OF REMITTANCES TO RURAL AREAS
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or more than a decade, Asia’s economies have been on the move – and so have its people. The scale of migration from rural to urban areas and across international borders is historically unprecedented and twenty-first-century Asia is its focal point. In Asia’s developing countries, the power and potential of remittances – the money that migrant workers send home to their families (many of whom live in poor and remote areas) – is immense. Currently, over 60 million migrant workers from the Asia-Pacific region account for more than half of all remittance flows to developing countries, sending home about US$260 billion (MOP2.1 trillion) in 2012. China, India and the Philippines are the three largest recipients of remittances, while Bangladesh, Indonesia, Pakistan and Vietnam are also in the top 10. The money is often a lifeline: it is estimated that 10 percent of Asian families depend on payments from abroad to obtain their food, clothing and shelter. But, while remittances to developing countries are five times higher than official development assistance, the enormous potential returns for society have not been realised – and can be secured only if the flow of money can be channelled into effective rural and agricultural development, particularly in fragile states and post-conflict countries. Doing so would contribute significantly to creating jobs, enhancing food security and fostering stability in countries emerging from strife. In order to establish such channels, we must scale up key initiatives, identify new opportunities and map out the road ahead.
Too expensive At the International Fund for Agricultural Development (IFAD), our starting point is always the three billion people who live in the rural areas of developing countries. We work to create conditions in which poor rural women and men can grow and sell more food, increase their incomes and determine the direction of their own lives. We believe that diasporas and the global donor community can leverage the flow of migrant investment if they form partnerships with national governments for long-term development of the rural communities that are so often the beginning of the migration chain. More than 215 million people around the world live outside of the countries they call home. But most families that rely on remittances operate outside of the world’s financial system as well. Despite the global prevalence of electronic money transfers, most migrant workers are excluded from the convenience of modern banking services, dependent on costly cash transfers that often require rural recipients to travel significant distances. As a result, migrant workers are forced to initiate more than one billion separate transactions worldwide each year. That means more than one billion trips for rural women and men to collect their money. Adding up the cost of the transfer, travel
China, India and the Philippines are the three largest recipients of remittances, while Bangladesh, Indonesia, Pakistan and Vietnam are also in the top 10 and time, remittances are far too expensive for people living in poverty. IFAD has been working in more than 40 countries to ensure that rural families can have easy access to remittances and are better able to use them as savings or investments that go back into their communities.
Empowering families The amount of money at stake is staggering: it is estimated that over the next five years, more than US$2.5 trillion will be sent in remittances to developing countries, with almost 40 percent – coming in the form of payments of US$50, US$100 or US$500 at a time – destined for rural areas. While the majority of family remittances will always be used to meet immediate needs, IFAD’s experience shows that rural families would seize opportunities to save and invest, even small amounts, if they had better options. While remittances should and can be leveraged to bring about impressive results in poverty reduction, let us not forget that there is an underlying issue that needs to be addressed. Young people, the leaders and farmers of tomorrow, are leaving their rural communities behind in search of better opportunities. We need to turn rural areas into vibrant and economically stable communities that provide opportunities for young people to earn a living, build their capacities and start a family. We should not ignore the enormous development potential of remittances to rural areas. Let us empower families to use their hard-earned money in ways that will help to make migration a matter of choice, not a necessity for the generations to come. JUNE 2013
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Arts & Culture
CELEBRATING CHINA’S HERITAGE MACAU MARKS NATIONAL CULTURAL HERITAGE DAY WITH A FOCUS ON YUNNAN PROVINCE hina this month celebrates its National Cultural Heritage Day, which is intended to make people more aware of the need to preserve the country’s cultural resources. To mark the occasion in Macau, the Cultural Affairs Bureau is hosting a series of activities over several days. The central government declared in 2005 that every second Saturday in June would be celebrated as Cultural Heritage Day to increase people’s awareness of the country’s rich heritage. Last year, the Cultural Affairs Bureau focused the celebrations on Inner Mongolian folk art. This year, it is Yunnan province’s time to shine, with activities jointly organised by the Department of Culture of Yunnan province, the Cultural Affairs Bureau and the central government. Among the highlights is “Memory of Yunnan”, a large-scale showcase to be held at Galaxy Macau and at the UNESCO-listed Lou Kau Mansion, with free entry. Numerous state- and province-level masters of Yunnan’s cultural JUNE 2013
heritage will perform, displaying their unique craftsmanship. The grand opening takes place on June 8, at 11.30am.
Red jade The exhibition at Galaxy Macau will run until June 23, with the live demonstrations ending on June 16. On display will be Jianshui purple pottery, also known as “red jade”, which has a history spanning nine centuries. Jianshui purple pottery is considered to be among the four most famous types of Chinese pottery, which also includes Yixing pottery from Jiangsu county, Qinzhou pottery from Guangxi province and Rongchang pottery from Sichuan province. It boasts a wide variety of articles, from jars to tea sets. Tie-dyeing techniques of the Bai ethnic group and traditional pu-erh tea production methods will also be showcased at Galaxy Macau. Visitors can also admire brocade fabric woven by the Dai ethnic group, Jianchuan woodcarving and the Yunnan production techniques used in silver-inlaid black copperware, among other traditional crafts. A Yunnan folk music group will also hold regular performances. The Lou Kau Mansion will host the “Memory of Yunnan” exhibition until June 16. There will be live demonstrations in the making of hulusi gourd flutes (or cucurbit flutes) and the
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traditional bamboo wicker weaving of the Dai ethnic group. Yunnan’s cultural heritage will again be in the spotlight in three free-entry performances, to take place at the Ruins of St. Paul’s on June 8 and 9 at 5pm, and at the Mandarin’s House on June 9 at 3pm. The line-up includes drum dancing of the Yi, Han and Hani ethnic groups, and traditional singing and dancing performances by several other Yunnan ethnic minorities. There will be also special musical instrument performances, including the traditional mouth-blown tree leaf. On June 9, at 2.30pm, professor Yang Deyun of the Yunnan University of Nationalities will give a lecture on the richness of Yunnan’s provincial cultural heritage and the diversity of its traditional folk culture at the Macau Museum. This lecture will focus on the protection of this diversity and will be conducted in Mandarin.
Shipbuilding era In joint celebration of National Cultural Heritage Day and International Archives Day, the Historical Archives of Macau is organising the exhibition “An Art of Precision – Shipbuilding in Macao: People, Craft and Society”. Through the records of oral interviews, documents, photographs and other objects on display, the exhibition gives
visitors a picture of the golden era of Macau’s shipbuilding. Lectures and workshops on the theme are also scheduled during the exhibition period, which runs from June 8 to December 7. Entry is free. There will also be a visual mapping show on the façade of the Mandarin’s House on June 8. This tailor-made performance shines a light on the history of the Mandarin’s House and the life of its former owner, Zheng Guanying, a 19th century Chinese reformer. The 10-minute show, with three performances from 8pm to 9pm, makes use of the same video technology employed in 2011 for a very popular performance at the Ruins of St Paul’s. The same technology was used more recently by the Venetian Macao during its “Winter in Venice” festival. The Macao Chinese Orchestra will join the Cultural Heritage Day celebrations with a performance of themes from the Jiangnan region, which lies south of the Lower Yangtze, including its instrumental “sizhu” music. The concert, on June 8, takes place at the Dom Pedro V Theatre. Several of Macau’s World Heritage sites and exhibition venues will adopt special opening hours, free to the public, on June 8 and 9. The Guia Lighthouse and Dom Pedro V Theatre will be open from 10am to 5pm and 10am to 6pm respectively, with guided tour services.
1 - Exhibition “An Art of Precision – Shipbuilding in Macao: People, Craft and Society”
3 - Yunnan silver-inlaid black copperware craftsman
2 - Dance performance by the Jingpo ethnic group, from Yunnan province
4 - Tie-dyeing by the Bai ethnic group
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merica’s eeriest family is visiting the Cultural Centre this summer. “The Addams Family” comes to town in the form of a macabre and humorous musical for all ages. Set at the Addams mansion, which is as iconic as the family itself, this hilarious original story has been described by its creators as “every father’s nightmare”. It tells audiences about a time when Wednesday Addams, the daughter, falls in love with a smart young man from a respectable, “normal” family, and asks her father to keep it a secret from her mother. Things take a sharp turn when the boyfriend’s parents are invited for dinner. “The Addams Family” is brought to new life in the hands of an award-winning production team. The musical began performances on Broadway in March 2010 and rapidly became one of Broadway’s biggest hits, regularly grossing more JUNE 2013
than US$1 million (MOP8 million) a week and going on to register more than 750 performances. The Chicago Tribune described the production as “classic, full-tilt, fast-paced, old-fashioned musical comedy” and Bloomberg News called it “uproarious”. The show is now on its first Asian tour. For fans in the know, the gang is all here, including dotty Grandma and loyal butler Lurch. “What’s great about the Addamses is they are a family unit whose interactions are their greatest joy,” say Phelim McDermott and Julian Crouch, who developed the production’s original direction and design. “The different generations of our audience will see themselves in the different family members – from Grandma to young Wednesday – who doesn’t have at least one of them in their own family?”
Crypt-ic clan The cultural impact of “The Addams Family” is significant. What began as an occasional cartoon gave rise to films, television series, commercials, merchandise of all kinds, and now a Broadway musical. The concept was the brainchild of Charles Addams. Born in the United States in 1912, Addams’ artistic talent
Photo: © Carol Rosegg Photo: © Carol Rosegg
Photo: © Carol Rosegg
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led him to become one of America’s best cartoonists. The New Yorker magazine first published his work in 1933, when he was just 21, and he was one of the magazine’s marquee contributors until his death in 1988. His iconic “Addams Family” cartoon series began as a single panel in 1938. At first, the family members did not have names, but when the 1960s TV show was in development, Addams was asked to provide a name and description for each character. “The Addams Family” premiered on American television in 1964. The series theme song, written by American composer Vic Mizzy, featured a memorable four-note bass line and finger-snaps as percussion.
Macabre movies Paramount Pictures released the film adaptation of “The Addams Family” in 1991. Directed by Barry Sonnenfeld, the film pays homage to the clan and recreates many
of the iconic images from the family’s early appearances as a cartoon strip. The most notable reference to the original illustrations is in the film’s opening sequence, where the family pours a cauldron of oil on a band of Christmas carollers. A 1993 sequel, “Addams Family Values”, retained the same lead cast and director and received greater critical acclaim than the original because it focused on the macabre humour that made the cartoons distinctive. The film was nominated for an Oscar for “Best Art/Set Direction”. “The Addams Family” characters and theme song have appeared in countless commercials since the 1960s, mostly in the United States, but also in Spain or Japan. There is an array of Addams Family memorabilia available online, from pinball machines to trading cards to card games. Now it is a musical. Prepare to have a R.I.P.-roaring good time. JUNE 2013
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Moments
STAR-STUDDED
NIGHT
Melco Crown Entertainment Ltd’s City of Dreams saw a star-studded evening at the grand opening of its “Taboo 2013” show, which took place last month. After a successful first season last year, the cabaret-inspired production by Franco Dragone, the mastermind behind The House of Dancing Water show, is back and with new acts. Nearly 200 celebrities attended the opening night, many coming from Hong Kong, to have their adrenaline pumped by the sexy and provocative show. Guests and performers having a good time
Sean Eav and Gigi Chao
Lynn Xiong and Christy Chung
Christine Ng and Kasey Lin pose with the Taboo performers JUNE 2013
Jennifer Tse
Stephen Hung and Deborah Valdez-Hung
Jessica Cambensy
The show
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CHEEKY START-UPS
The government is always stressing the need to diversify the economy. But the industries chosen by officials to wean the economy off gaming – the meetings, incentives, conventions and exhibitions industry, and cultural and creative industries – are slow developers. The good news is that Macau is not short of entrepreneurs – people that are not afraid to think big and take a risk. Unfortunately the fields in which they choose to specialise make them our illegitimate entrepreneurs. The city recorded last month its biggest case of smuggling of shredded tobacco since the handover, the biggest shipment of cocaine ever intercepted and its biggest case of smuggling of precious timber. Customs put the kibosh on these lucrative deals.
FADE TO BLACK
We live in a safe place, most of the time, but there are signs things are changing for the worse. Lawyer Jorge Menezes was assaulted last month while walking his son to school. Two men bashed him on the head with bricks and then fled. This is the second time in two years that a lawyer has been attacked in broad daylight. Mr Menezes said he believed the attack was an “act of intimidation” arising from his legal work. We deplore violence. The attack hurts the city’s reputation as one where laws are obeyed. Disputes should be settled in court with arguments, not in the street with bricks.
IT WOULDN’T HURT DISPOSABLE LEGISLATION
At last, Macau has a law to control sales of unfinished flats. The Legislative Assembly passed it last month and it is now in force. The law obliges a developer to finish the foundations of the building and to register the project before it is allowed to sell the flats in the block. What Frozen Spy cannot understand is why the assembly proposed the law should be revised one year after it comes into force. The assembly put forward the recommendation during the committee stage, a committee stage that lasted one year – yes, one year. Laws should have a lifespan longer than one year. If a law is not good enough to last longer than the time spent formulating it, you might wonder why it was passed in the first place.
Official data shows there were 2.5 doctors for every 1,000 people here last year. That is about the same level as in 2011 but far fewer than in other developed destinations. In the wealthy countries of the Organisation for Economic Co-operation and Development, there are 3.1 doctors on average for every 1,000 people. Frozen Spy wonders why Macau is so far behind. The city has the money to attract doctors. Nobody would oppose good medical professionals immigrating to the city. The slow-motion reaction of the government has the healthcare system on life support.
JUNE 2013
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June 2013
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Macau Cultural Centre
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Sport Development Bureau
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SHFL Entertainment
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